Subgrants and Membership Fees or Dues, 24544-24550 [2016-09384]
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data in AQS for 2015, that the Area
continues to attain the 2008 lead
NAAQS following EPA’s determination
of attainment.
Third, EPA proposing to approve the
maintenance plan for the Area and to
incorporate it into the SIP. As described
above, the maintenance plan
demonstrates that the Area will
continue to maintain the 2008 lead
NAAQS through 2026.
Fourth, EPA is proposing to approve
Tennessee’s request for redesignation of
the Area from nonattainment to
attainment for the 2008 lead NAAQS
contingent upon final action approving
the State’s Subpart 1 RACM
determination into the SIP. If finalized,
approval of the redesignation request for
the Bristol Area would change the
official designation the portion of
Sullivan County bounded by a 1.25
kilometer radius surrounding the UTM
coordinates 4042923 meters E, 386267
meters N, Zone 17, which surrounds the
Exide Facility, as found at 40 CFR part
81, from nonattainment to attainment
for the 2008 lead NAAQS.
VII. Statutory and Executive Order
Reviews
Under the CAA, redesignation of an
area to attainment and the
accompanying approval of a
maintenance plan under section
107(d)(3)(E) are actions that affect the
status of a geographical area and do not
impose any additional regulatory
requirements on sources beyond those
imposed by state law. A redesignation to
attainment does not in and of itself
create any new requirements, but rather
results in the applicability of
requirements contained in the CAA for
areas that have been redesignated to
attainment. Moreover, the Administrator
is required to approve a SIP submission
that complies with the provisions of the
Act and applicable Federal regulations.
See 42 U.S.C. 7410(k); 40 CFR 52.02(a).
Thus, in reviewing SIP submissions,
EPA’s role is to approve state choices,
provided that they meet the criteria of
the CAA. Accordingly, these proposed
actions merely approve state law as
meeting federal requirements and do not
impose additional requirements beyond
those imposed by State law. For that
reason, these proposed actions:
• Are not significant regulatory
actions subject to review by the Office
of Management and Budget under
Executive Orders 12866 (58 FR 51735,
October 4, 1993) and 13563 (76 FR 3821,
January 21, 2011);
• do not impose an information
collection burden under the provisions
of the Paperwork Reduction Act (44
U.S.C. 3501 et seq.);
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• are certified as not having a
significant economic impact on a
substantial number of small entities
under the Regulatory Flexibility Act (5
U.S.C. 601 et seq.);
• do not contain any unfunded
mandate or significantly or uniquely
affect small governments, as described
in the Unfunded Mandates Reform Act
of 1995 (Pub. L. 104–4);
• do not have Federalism
implications as specified in Executive
Order 13132 (64 FR 43255, August 10,
1999);
• are not economically significant
regulatory actions based on health or
safety risks subject to Executive Order
13045 (62 FR 19885, April 23, 1997);
• are not significant regulatory
actions subject to Executive Order
13211 (66 FR 28355, May 22, 2001);
• are not subject to requirements of
Section 12(d) of the National
Technology Transfer and Advancement
Act of 1995 (15 U.S.C. 272 note) because
application of those requirements would
be inconsistent with the CAA; and
• will not have disproportionate
human health or environmental effects
under Executive Order 12898 (59 FR
7629, February 16, 1994).
In addition, the SIP is not approved
to apply on any Indian reservation land
or in any other area where EPA or an
Indian tribe has demonstrated that a
tribe has jurisdiction. In those areas of
Indian country, the rule does not have
tribal implications as specified by
Executive Order 13175 (65 FR 67249,
November 9, 2000), nor will it impose
substantial direct costs on tribal
governments or preempt tribal law.
List of Subjects
40 CFR Part 52
Environmental protection, Air
pollution control, Incorporation by
reference, Intergovernmental relations,
Lead, Reporting and recordkeeping
requirements.
40 CFR Part 81
Environmental protection, Air
pollution control.
Authority: 42 U.S.C. 7401 et seq.
Dated: April 14, 2016.
Heather McTeer Toney,
Regional Administrator, Region 4.
[FR Doc. 2016–09600 Filed 4–25–16; 8:45 am]
BILLING CODE 6560–50–P
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LEGAL SERVICES CORPORATION
45 CFR Part 1627
Subgrants and Membership Fees or
Dues
Legal Services Corporation.
Further notice of proposed
rulemaking.
AGENCY:
ACTION:
The Legal Services
Corporation (LSC or Corporation)
proposes to revise its regulations
governing subgrants to third parties.
LSC published a Notice of Proposed
Rulemaking (NPRM) on April 20, 2015,
80 FR 21692. In response to the NPRM,
LSC received comments from five
organizations. The commenters
requested that LSC reconsider some of
the proposed changes to the regulations.
LSC has considered the comments and
now proposes additional revisions to
the rules. In this Further Notice of
Proposed Rulemaking (FNPRM), LSC
seeks comments on five proposed
revisions to the NPRM.
DATES: Comments must be submitted by
June 10, 2016.
ADDRESSES: You may submit comments
by any of the following methods:
Email: SubgrantRulemaking@lsc.gov.
Include ‘‘Part 1627 FNPRM’’ in the
subject line of the message.
Fax: (202) 337–6519, ATTN: Part 1627
FNPRM.
Mail: Stefanie K. Davis, Assistant
General Counsel, Legal Services
Corporation, 3333 K Street NW.,
Washington, DC 20007, ATTN: Part
1627 FNPRM.
Hand Delivery/Courier: Stefanie K.
Davis, Assistant General Counsel, Legal
Services Corporation, 3333 K Street
NW., Washington, DC 20007, ATTN:
Part 1627 FNPRM.
Instructions: Electronic submissions
are preferred via email with attachments
in Acrobat PDF format. LSC will not
consider written comments received
after the end of the comment period.
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), sdavis@lsc.gov.
SUPPLEMENTARY INFORMATION:
SUMMARY:
I. Introduction
LSC provided a more complete
history of this rulemaking in the April
20, 2015 NPRM. 80 FR 21692, Apr. 20,
2015. In brief, LSC initiated this
rulemaking to address an issue
identified by LSC’s Office of Inspector
General (OIG) through an audit of the
Corporation’s Technology Initiative
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Grant (TIG) program. In its audit report,
OIG disagreed with LSC management’s
(Management) interpretation and
application of the rules governing
subgrants and transfers of LSC funds
because ‘‘[t]he subgrant rule appears to
have been written with the LSC’s
principal legal service grants in mind,
such that ordinarily, programmatic
activities consist of the provision of
legal services, and business services can
easily be classified as ancillary. This
division is not as easy to make in the
case of TIG grants, and the rule does not
seem to have anticipated this problem.’’
Audit of Legal Services Corporation’s
Technology Initiative Grant Program,
Report No. AU–11–01, at 42, Dec. 2010.
LSC initiated this rulemaking in 2012
to resolve the conflict of opinions. In
2015, Management proposed expanding
this rulemaking to update these rules
more comprehensively. On April 12,
2015, the Operations and Regulations
Committee (Committee) of the Board
voted to recommend that the Board
approve publication of an NPRM in the
Federal Register for notice and
comment. On April 14, 2015, the Board
accepted the Committee’s
recommendation and approved
publication of the NPRM. The NPRM
was published in the Federal Register
on April 20, 2015, with a comment
closing date of May 20, 2015. 80 FR
21692, Apr. 20, 2015. After receiving a
request to extend the comment period,
LSC gave interested parties an
additional 21 days to respond to the
NPRM. 80 FR 29600, May 22, 2015.
II. Request for Comments
LSC received five comments during
the comment period. One LSC-funding
recipient, Northwest Justice Project
(NJP), and one non-LSC recipient, Metro
Volunteer Lawyers (MVL), each
submitted comments. The other three
comments came from OIG, the National
Legal Aid and Defender Association,
through its Civil Policy Group and its
Regulations and Policy Committee
(NLADA), and the American Bar
Association’s Standing Committee on
Legal Aid and Indigent Defense
(SCLAID). In response to the comments
received, LSC is considering several
revisions to the proposed rule,
including the ones described in this
FNPRM.
On April 18, 2016, the Committee
authorized publication of this FNPRM
in the Federal Register. This FNPRM is
limited to soliciting additional comment
on the proposed changes described
herein. Commenters need not reiterate
or resubmit comments in response to
this supplemental notice that they
previously submitted relating to these
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matters or other aspects of the proposed
rule. LSC will consider all public
comments submitted pursuant to the
NPRM published on April 20, 2015, and
in response to this FNPRM, when
drafting the final rule.
Proposed Change 1: Removing the
Proposed Definition of ‘‘Programmatic’’
The main purpose of this rulemaking
is to clarify that part 1627 applies only
to third-party awards made by a
recipient for the provision of legal
assistance.1 The current rule defines
subrecipient, in relevant part, as an
entity that accepts Corporation funds
from a recipient under a grant contract,
or agreement to conduct certain
activities specified by or supported by
the recipient related to the recipient’s
programmatic activities. 45 CFR
1627.2(b)(1). LSC proposed simplifying
the definition of subrecipient and
adding a definition of the term
programmatic that included an explicit
reference to the LSC Act’s definition of
legal assistance:
Programmatic means activities or functions
carried out to provide legal assistance, as
defined in § 1002 of the LSC Act, 42 U.S.C.
2996a(5). Programmatic activities do not
include the provision of goods or services by
vendors or consultants in the normal course
of business that the recipient would not be
expected to provide itself.
80 FR 21692, 21694, Apr. 20, 2015. LSC
proposed this definition to clearly limit
the term programmatic to those
activities in which the subrecipient
essentially stands in the recipient’s
shoes to provide legal assistance.
NLADA and NJP both objected to the
proposed definition. NLADA called the
definition:
ambiguous as to what activities which
involve the provision of legal services to
eligible clients fall within LSC’s definition of
programmatic in order to be considered a
subgrant rather than a procurement contract
for goods or services. . . . The proposed
definition is broad enough to encompass
activities and services that do not involve the
direct provision of legal services to eligible
clients.
NJP similarly stated that it ‘‘reads the
definition of ‘programmatic’ in
subsection (b) as too broad and
1 The LSC Act defines ‘‘legal assistance’’ as ‘‘the
provision of any legal services consistent with the
purposes and provisions of this subchapter.’’ 42
U.S.C. 2996a(5). LSC incorporated that definition at
45 CFR 1600.1, and that definition applies to part
1627. In contrast, LSC has defined the term ‘‘legal
assistance’’ more narrowly in other contexts to
mean legal analysis tailored to a client’s particular
issue as opposed to ‘‘legal information’’ that does
not involve the application of law to a person’s
specific problem. 45 CFR 1614.3(e) and (f); LSC
Case Service Report Handbook, p. 3 (2008, as
amended 2011).
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inconsistent for the purposes it appears
intended to achieve.’’ Both
organizations commented that the
definition could be read to include
transactions such as leasing office space.
NJP further read the definition as
potentially including the payment of bar
dues or travel reimbursements to staff,
and ‘‘providing fee-for-service contracts
to lawyers or legal organizations that
provide ongoing expertise in support of
recipients’ delivery of legal assistance,
none of which are ‘vendors or
consultants.’’’
Both commenters recommended that
LSC replace the phrase ‘‘activities or
functions carried out to provide legal
assistance’’ with ‘‘the delivery of legal
assistance to eligible clients.’’ They both
also recommended excluding ‘‘activities
conducted by entities not directly
involved in the delivery of legal
assistance to eligible clients’’ from the
definition. Finally, NLADA suggested
that LSC expand the definition of
programmatic to include ‘‘the provision
of services under a special LSC grant
project.’’
LSC agrees that its proposed
definition of the term programmatic
creates more problems than it solves.
Commenters identified several
ambiguities with the proposed
definition and suggested solutions, but
LSC determined that the potential
solutions themselves created problems.
For example, both NLADA and NJP
stated that LSC’s proposed definition
was too broad and unclear, so both
organizations offered language they
believe would clarify that programmatic
means only the delivery of legal
assistance to eligible clients. Both
NLADA’s and NJP’s suggested language,
however, would narrow the definition
beyond what LSC intended.
Additionally, both NLADA and NJP
would exclude ‘‘activities conducted by
entities not directly involved in the
delivery of legal assistance to eligible
clients.’’ It is unclear whether they
meant entities not directly involved in
the recipient’s delivery of legal
assistance to eligible clients or not
directly involved in the delivery of legal
assistance at all. LSC did not intend to
limit the types of organizations with
which recipients may contract. Rather,
the changes to the rule focus on the
nature of the work that is the subject of
the third-party agreement.
NLADA’s proposal to include
‘‘provision of services under a special
LSC grant project’’ in the definition of
programmatic also appears to be
inconsistent with LSC’s intent. The
proposed rule emphasizes the nature of
the activity funded, rather than the
method of funding. For example, if
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‘‘special LSC grant project’’ includes
TIG awards or disaster relief grants, then
‘‘the provision of services under a
special LSC grant project’’ could include
pure technology developments or
construction activities paid for using
those grant funds. LSC intends to
exclude from the rule those types of
activities when conducted by a third
party using LSC funds. By contrast,
awards to carry out legal services
activities would still be included in the
rule, even though the award is made
through a TIG.
Finally, NJP’s inclusion of payments
to experts ‘‘in support of recipients’
delivery of legal assistance’’ suggests
that the changes to the scope of the rule
may not have been clear. LSC intended
to limit the application of the subgrant
rule to only those situations in which
recipients provide funds to third parties
to carry out legal assistance activities
that recipients would otherwise be
expected to provide. This limitation
necessarily excludes contracts with
experts who provide a service to
recipients, whether the service is
preparing the organization’s taxes,
developing software for an online intake
system, or providing a recipient with
technical expertise on a case.
LSC has found it difficult to redefine
programmatic with a degree of precision
sufficient to give grantees clear guidance
about the term’s meaning. LSC
determined that the outer boundaries of
the term were the restrictive concept of
‘‘direct provision of legal assistance and
legal information to clients’’ and the
comprehensive concept of ‘‘anything
that supports the delivery of legal
assistance and legal information to
clients,’’ but could not develop a clear
statement of where the line between
programmatic and non-programmatic
activities lay. LSC analyzed fact patterns
using the five subgrant factors in the
Uniform Guidance, 2 CFR 200.330. LSC
intends to adopt this five-factor analysis
in part 1627. LSC determined that the
guidance provided by the factors is
adequate to assess whether a particular
arrangement with a third party should
be considered a subgrant or a
procurement contract. Including the
term programmatic did not improve the
factors’ utility.
In this FNPRM, LSC proposes to
remove the proposed definition of
programmatic in § 1627.2 and to remove
the term from the list of factors in
proposed § 1627.3(b)(2). In its place,
LSC proposes to define the term
procurement contract in § 1627.2(b).
LSC proposes to define and use this
term for two reasons. The first is to
highlight the distinction between
subgrants, which involve provision of
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legal assistance, and procurement
contracts, which are agreements to
purchase goods or services that a
recipient needs to carry out its LSC
grant. The second is that LSC
anticipates incorporating Uniform
Guidance principles applicable to
procurement contracts into part 1630
and the Property Acquisition and
Management Manual (PAMM) through
an ongoing rulemaking.
Proposed Change 2: Allowing Recipients
To Use Property or Services Acquired in
Whole or in Part With LSC Funds as
Support for a Subgrant
In the NPRM, LSC proposed to require
that recipients support subgrant
activities only with funds, rather than
allowing for in-kind provision of
property and services. 80 FR 21692,
21696, Apr. 20, 2015. With the
exception of OIG, all commenters
opposed the proposal. NLADA, NJP,
MVL, and SCLAID all expressed
concern that adopting this change
would jeopardize longstanding private
attorney involvement (PAI)
arrangements between LSC recipients
and bar associations or other legal aid
providers because it would impose
additional and unnecessary
administrative burdens on both parties.
They also opined that the proposal
conflicts with the PAI rule, which
explicitly allows recipients to support
private attorneys by providing them
with training, technical assistance,
access to recipient facilities, and use of
recipient libraries and other resources.
45 CFR 1614.4(b)(3). Their observations
differed in some respects, but they all
contended that the proposal had
significant flaws.
NLADA ‘‘urge[d] LSC to carefully
consider the possible adverse
consequences the framework set out in
[proposed § 1627.3(c)] may have on the
ability of LSC funded programs to
effectively carry out their mission to
promote equal access to justice and
provide high-quality civil legal
assistance to low-income Americans.’’
They viewed the proposed rule as
placing a ‘‘blanket prohibition on the
provision of goods and services by
recipients, that are in part or fully
funded by LSC, to support an agreement
with a third party to provide
programmatic services.’’ If this is LSC’s
intent, they continued,
a number of LSC funded programs would be
prevented from using one of their most
valuable assets—property they have invested
in to provide economical office space for
their operations. In a time of severe fiscal
constraints, this non-monetary asset could be
used in innovative ways to partner with
community organizations, particularly pro
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bono programs, to enhance the availability of
legal services for people who are poor and in
need of legal services.
They concluded their discussion of this
issue by expressing their understanding
that LSC must be able to ensure that
recipients spend their LSC funding only
on permissible activities. NLADA urged
LSC to consider alternatives that ‘‘will
not sever existing relationships or stifle
further development based on in kind
exchanges of goods and services funded
in part or wholly by LSC.’’
MVL quoted NLADA’s response at
length in its letter objecting to this
proposal. MVL provided a detailed
description of their relationship with
Colorado Legal Services (CLS):
Colorado Legal Services provides support
to MVL’s mission through office space and
intake personnel. CLS provides an in-kind
donation of office space to house MVL’s
Executive Director, Family Law Court
Program Coordinator, Legal Services
Coordinator, Rovira Scholar (a fellowship
position funded by a private benefactor), and
the Program Assistant. Additionally, nearly
all the cases that MVL handles are filtered
first through CLS’s intake team. CLS’s intake
team gathers essential information on the
legal issues of prospective clients and passes
that information to MVL to refer out to
volunteer attorneys.
MVL stated that a ‘‘major impact of the
proposed rule would be increased costs
of administration’’ to both it and CLS.
It also pointed out that the rule could
impact organizations with similar
arrangements by limiting or prohibiting
the receipt of in-kind services to assist
and alleviate costs for both
organizations; maintaining proximity to
and continuity with the referral source;
maintaining flexibility to serve its
community; and ‘‘contending with LSC
regulations contrary to organizational
missions, objectives, and
administration.’’ MVL concluded by
urging LSC to reject the proposed rule.
SCLAID expressed its opinion that the
proposal is inconsistent with the PAI
rule. More specifically, SCLAID was
concerned that ‘‘collaborative
relationships that have been established
with bar associations whose pro bono
programs have been housed at a
recipient’s office for years could be
greatly harmed by requiring that the pro
bono program now enter into a subgrant
arrangement.’’ SCLAID stated that
requiring bar-sponsored pro bono
programs to enter into a subgrant and
return some of the subgrant funds to the
recipient for rent would be ‘‘overly
burdensome and unnecessary.’’
NJP criticized LSC’s proposal as
‘‘seem[ing] to confuse cost allocation to
PAI with the notion of a subgrant’’ and
as creating ‘‘gross ambiguity’’ about
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whether recipients may provide in-kind
support to private attorneys under
§ 1614.4(b)(3). Additionally, NJP noted
that the language requiring subgrants to
be supported with LSC funds is
inconsistent with the PAI rule, which
directs recipients to spend ‘‘an amount
equal to at least twelve and one-half
percent (12.5%) of the recipient’s
annualized Basic Field-General award’’
to PAI activities. 45 CFR 1614.2(a). NJP
stated: ‘‘If the goal is to ensure that
subgrants mean the payment of LSC
funds to a third party to carry out legal
assistance activities, the definition of
‘subgrants’ in proposed § 1627.2(d)(1) is
adequate to accomplish this purpose.
. . . Moreover, accounting for the use of
LSC funds through auditing both
subgrants and PAI cost allocations is
adequate to ensure that LSC funds are
spent consistent with governing statutes
and regulations.’’ NJP suggested that
LSC could revise the definition of
subgrant to more specifically reference
the use of LSC funds and requested that
LSC not adopt proposed § 1627.3(c),
which limits subgrant funding to LSC
funds.
Upon consideration of the comments
received, LSC agrees that requiring
recipients to support subgrant activities
only with funds is burdensome and
inefficient. LSC understands that many
recipients’ most valuable assets may be
property and did not intend to disrupt
longstanding relationships with bar
associations and other organizations
that rely on exchanges of property for
services to carry out their legal services
programs. LSC remains concerned,
however, about accountability for LSCfunded resources and ensuring that
recipients are not using LSC-funded
property or services to support
organizations that engage in restricted
activities. LSC proposes several
revisions to part 1627 designed to allow
recipients to continue providing other
organizations LSC-funded office space
and other property and services to carry
out legal assistance activities consistent
with the requirements of the LSC Act,
LSC appropriations statutes, LSC’s other
governing statutes, and LSC’s
regulations.
First, LSC proposes to add a
definition for the term property, which
will encompass both real and personal
property. Second, LSC proposes to
remove proposed § 1627.3(c), which
required recipients to support all
subgrants with funds, rather than goods
or services. Third, LSC proposes to
redesignate the definition of the term
subgrant as § 1627.2(e) and revise it to
make clear that LSC funds and property
or services acquired in whole or in part
with LSC funds may be used to support
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a subgrant to a third party. Fourth, LSC
proposes a new § 1627.4(a)(2), which
explains how recipients are to assess the
value of the goods or services to be
awarded to a third party to carry out a
subgrant. Fifth, LSC proposes to add
language reflecting the decision to
permit in-kind subgrants in paragraph
(d)(2), which pertains to a recipient’s
responsibility to ensure its
subrecipient’s proper use of, accounting
for, and auditing of LSC resources.
Lastly, LSC proposes to add a new
paragraph (f) setting forth the
requirements for accounting for in-kind
subgrants.
Proposed Change 3: Establishing a
$15,000 Threshold at Which Recipients
Must Seek LSC’s Written Approval
Before Awarding a Subgrant
While considering whether to allow
recipients to use goods and services
purchased in whole or in part with LSC
funds as the basis for subgrants, LSC
also considered whether recipients
should be required to seek prior
approval of all such subgrants or only
when the value of the goods or services
supporting the subgrant exceeded a
certain threshold. LSC understands that
recipients have a wide range of
arrangements with other organizations
that assist in the recipients’ delivery of
legal assistance to eligible clients.
Arrangements on one end of the
spectrum could be quite limited and
informal—for example, giving office
space on a one-time basis to another
legal aid provider to hold a legal
information session on applying for
public benefits. An example of an
arrangement involving a greater
investment of recipient resources would
be one in which the recipient provides
office space and administrative support
to a bar association conducting a debt
collection clinic for four hours every
other Saturday. An arrangement
representing a significantly greater
investment of recipient resources would
be housing another non-profit
organization that takes referrals from the
recipient and places the referrals with
the organization’s own roster of
volunteers. While LSC must ensure
accountability for the use of property or
services acquired in whole or in part
with LSC funds in all of these
arrangements, the oversight tools that
LSC uses may vary based on the amount
of LSC-funded resources involved.
Under existing part 1627, all
subgrants are subject to the prior
approval requirement, regardless of cost.
In calendar year 2015, recipients
entered into 77 subgrants. Fifteen of the
subgrants were for less than $10,000,
with the smallest being for $2,000. Ten
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of the 77 subgrants originating in
calendar year 2015 exceeded $100,000.
LSC understands that recipients spend
significant amounts of time and
resources preparing subgrant
applications for LSC’s approval. LSC
estimates that LSC itself spends between
10 and 20 work hours reviewing each
subgrant application, with the time
spent on the application varying based
on the quality and complexity of the
application and the necessity of
involving several LSC offices in the
review. LSC determined that, on
balance, the burdens of prior approval
on both sides do not outweigh the
benefits of the increased oversight for
subgrants costing $15,000 or more.
Consequently, LSC proposes to
redesignate paragraph (a) from the
NPRM as paragraph (b) and introduce a
new paragraph (a) establishing the
thresholds for prior approval of
subgrants.
LSC wishes to emphasize two points
about the proposed prior approval
threshold. The first is that all awards
qualifying as subgrants under § 1627.3
are subject to 45 CFR part 1630 and the
restrictions set forth at proposed
§ 1627.5. Although subgrants for less
than $15,000 will no longer be subject
to the prior approval requirement, they
continue to be governed by part 1630
and § 1627.5. The second point is that
judicare arrangements and contracts
with private attorneys to provide legal
assistance to recipients’ clients are not
subject to the proposed prior approval
threshold in § 1627.4(a). LSC’s
longstanding policy, reflected in the
NPRM, has been to consider such
awards subgrants only when the cost of
such awards exceeds $25,000. 80 FR
21692, 21695, Apr. 20, 2015. Although
LSC sought comment in the NPRM
about whether the threshold should be
changed, LSC did not intend to change
its policy toward these awards.
Consequently, LSC will continue to
consider judicare arrangements and
contracts with private attorneys to
provide legal assistance to a recipient’s
clients as subgrants only when such
arrangements exceed the threshold
stated in § 1627.2(e)(2) for such awards,
which LSC proposed in the NPRM to set
at $60,000. All subgrants defined in
§ 1627.2(e)(2) will require prior
approval, consistent with LSC’s
longstanding policy.
In paragraph (a), LSC proposes to set
the prior approval threshold at $15,000
for both cash and in-kind subgrants.
LSC believes this amount represents a
significant enough investment of LSC
funding or LSC-funded property or
services that LSC should have increased
oversight over the award. In paragraph
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(a)(2)(i), LSC proposes to require
recipients to seek prior approval for
subgrants when either the fair market
value or the actual cost to the recipient
of the property or service that supports
the subgrant exceeds $15,000. LSC also
proposes to require recipients to obtain
independent property appraisals to
assess the fair market value of real
property that it contributes to a
subgrant. Because LSC believes that
$15,000 represents the amount at which
it should have increased oversight of
subgrants, LSC wants recipients to
evaluate the value of the asset being
exchanged based on both the fair market
value and their internal cost to
determine whether an amount that
represents $15,000 or more of LSC funds
is being given to a third party to carry
out legal assistance activities. In
paragraph (a)(2)(ii), LSC proposes to
adopt language from the Uniform
Guidance that requires recipients to
document and support the valuation of
property or services acquired in whole
or in part with LSC funds by the same
methods used internally for its other inkind valuations.
LSC proposes a technical changes to
§ 1627.4(b) to reflect its decision to
allow in-kind subgrants. In paragraph
(b), LSC proposes to insert language
stating that for all subgrants exceeding
the $15,000 threshold, recipients must
submit applications to LSC for prior
written approval.
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Proposed Change 4: Notifying
Recipients of Decisions on Requests for
Prior Approval of Subgrants
In the NPRM, LSC proposed to revise
the rules governing the subgrant
approval process. In paragraph (a), LSC
proposed to link the subgrant approval
process for Basic Field Grants more
closely to the annual grant competition
process. LSC also proposed to formalize
the procedures for recipients seeking to
make subgrants under LSC’s special
grant programs and those who need to
make subgrants in the middle of a
funding year. LSC also proposed to
eliminate the provision deeming
subgrants approved if LSC does not
respond within the 45-day period 2
because LSC believed that the provision
was both unnecessary to ensure timely
responses from LSC and reflective of
poor grants management policy.
2 Existing § 1627.3(a)(2) states that if LSC fails to
act on the subgrant proposal within 45 days of
submission, the recipient ‘‘shall notify the
Corporation of this failure’’ and gives LSC seven
additional days to respond to the proposal. The
subgrant is deemed approved if LSC fails to respond
within the additional seven days. For ease of
reference, we refer to the entire § 1627.3(a)(2)
period as ‘‘the 45-day period.’’
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NLADA objected to LSC’s proposal.
NLADA stated that the proposal ‘‘leaves
programs in a state of fiscal uncertainty
as to subgrant agreements,’’ and
recommended leaving the provision in
the rule to ‘‘preserve[] an important
backstop for recipients and
subrecipients who depend on LSCfunding and who, without hearing in a
timely fashion from LSC, may plan a
budget as if the funding has been
approved.’’ NLADA further argued that
‘‘it is important in keeping with LSC’s
focus on uniformity and consistent
application of rules and regulations that
all parties bear equitable burdens with
regard to meeting LSC statutory and
regulatory requirements.’’
LSC disagrees with NLADA’s
recommendation to leave the existing
rule in place. NLADA’s comments do
not reflect the greater assurance of a
timely response provided by the
consolidation of the Basic Field Grant
competition and subgrant approval
processes. Nor do they acknowledge
that responsible grants management
practices do not permit expending or
allowing the expenditure of funds
without the approval of the funding
agency.
Although it is not binding on LSC, we
look to the prior approval provisions of
2 CFR part 200 for guidance. The
Uniform Guidance describes certain
types of costs for which agencies may
require prior written approval. 2 CFR
200.308. Grantees must obtain prior
approval before incurring any of the
listed costs, unless the awarding agency
waives the requirement. Id. 200.308(d).
Section 200.308(i) of the Uniform
Guidance requires Federal agencies to
respond to a request for prior approval
within 30 days of receipt. Id. 200.308(i).
If a decision is still pending at the end
of the 30-day period, the agency must
advise the requester in writing of the
date by which the requester can expect
a decision. Id. The Uniform Guidance
does not include a provision deeming a
request approved based on agency
inaction.
LSC considered four options for
responding to NLADA’s comments. The
first was to retain the language proposed
in the NPRM. The second was to
reinstate the existing rule in its entirety.
The third was to reinstate the 45-day
limit, but include a provision stating
that if LSC does not respond, the
subgrant is deemed denied. The last
option was to include either a waiver
provision or a notice provision similar
to the ones provided in the Uniform
Guidance.
LSC determined that waiving
approval for subgrants was not an
appropriate solution. LSC must exercise
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appropriate oversight over recipients’
use of its funds, particularly when the
recipient proposes to give a significant
amount of funds to a third party to carry
out legal assistance activities. LSC did
not believe that it would be acting as a
responsible steward of appropriated
funds if it allowed recipients to make
subgrants above the proposed $15,000
threshold amount without LSC’s having
approved the proposal. Nor did LSC
believe that retaining the current rule
demonstrates appropriate grants
management policy because it would
allow a recipient to devote a significant
amount of LSC-funded resources to a
subgrant absent LSC’s explicit approval.
LSC also did not think that restoring the
45-day time frame for approving
subgrants with a provision deeming the
subgrant denied, rather than approved,
was a proper solution. This solution
seemed unnecessarily negative and
uninformative because it would leave a
recipient wondering if its proposal was
flawed and LSC simply had not told the
recipient what it needed to do to fix the
proposal or if LSC had reviewed the
proposal at all.
LSC proposes to respond to NLADA’s
comments by adopting a notice
provision similar to the one used by
OMB in the Uniform Guidance. LSC
proposes to include in the notice
described in paragraph (b) a statement
that if LSC has not responded to a
recipient’s request for approval of a
subgrant under paragraph (b)(2) or (b)(3)
within the number of days specified in
the notice, LSC will inform the recipient
in writing of the date when the recipient
may expect the decision. The notice will
be given only for subgrant approvals
requested as part of a special grant or
during the mid-year grant process. LSC
does not propose to include a similar
provision for subgrant approvals
requested during the Basic Field Grant
competition process because the
regulation already includes notification
deadlines. According to proposed
§ 1627.4(a)(1)(ii), LSC will inform a
recipient whether LSC has approved,
denied, or is suggesting modifications to
the subgrant at or about the same time
as LSC informs the recipient of its
decision on the recipient’s application
for Basic Field Grant funding. 80 FR
21692, 21699, Apr. 20, 2015.
Proposed Change 5: Adopting a Flexible
Timekeeping Requirement
In the NPRM, LSC proposed to
transfer existing 45 CFR 1610.7, which
contains the requirements applicable to
transfers of LSC funds, to part 1627 and
redesignate it as § 1627.5. LSC also
proposed to revise the existing
timekeeping requirement in § 1610.7(c)
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to adopt the timekeeping standards
applicable to recipients in part 1635.
LSC proposed this requirement to
provide a consistent standard for
recipients and subrecipients alike. LSC
specifically sought comment on this
proposal because LSC understood that
some subrecipients, particularly smaller
legal services programs, may have
difficulty complying with the
requirement. NJP and NLADA both
objected to LSC’s proposal to require all
subrecipients to comply with part
1635’s timekeeping requirements. OIG
supported the proposal.
NJP opposed the proposal for two
reasons. First, NJP argued that ‘‘private
attorney subrecipients must sufficiently
document their time spent on recipient
client activities to justify billings and
payment under a fee-for-service
contract.’’ NJP opined that because
private attorney subrecipients have their
own timekeeping systems, there is no
need for them to develop a timekeeping
system that complies with part 1635.
Second, NJP argued that private
attorneys would likely be both
unwilling to allocate time to LSCdefined categories of cases, matters, and
supporting activities and unwilling to
agree to make their personal time
records and timekeeping systems
subject to examination by auditors and
LSC representatives. NJP asserted that
requiring private attorneys to make their
private records available to LSC auditors
and reviewers would ‘‘create a
significant disincentive’’ for private
attorneys to participate in judicare or
other fee-for-service arrangements.
NLADA objected to the proposal as a
burdensome, one-size-fits-all approach
contrary to LSC’s interests in
maximizing grantees’ efficiency and
effectiveness and encouraging
collaborations with other organizations.
NLADA asserted that ‘‘[i]mposing one
standard time keeping requirement for
all subrecipients, who maintain
accountability with their own
timekeeping system, is counterproductive and will harm recipient’s
[sic] ability to maintain relationships
with subrecipients who are unable or
unwilling to conform their own
timekeeping system to LSC
requirements.’’ NLADA urged LSC to
adopt a ‘‘flexible option’’ that would
ensure accountability for the use of LSC
funds without imposing burdensome
requirements on subrecipients of LSC
funds.
LSC understands NLADA’s and NJP’s
concerns about the impact of the
proposed rule on subrecipients that
have their own timekeeping systems in
place. LSC agrees that requiring such
subrecipients to comply with LSC’s
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particular timekeeping requirements
may not be necessary to ensure that time
subrecipients spend providing legal
assistance and legal information is
accounted for appropriately. Regardless
of whether a subrecipient already has a
timekeeping system in place, LSC
believes that some level of timekeeping
by either the subrecipient or the
recipient is needed.
LSC considered three options for
responding to the comments. The first
was to keep the proposed language
without change. The second was to draft
a rule providing minimum standards for
timekeeping that LSC believes would
provide it with the information it needs
to ensure that subgrant funds are
properly accounted for, but that does
not prescribe how the recipient or
subrecipient keeps time. The third
option was to adopt part 1635compliant timekeeping as the default,
but to allow recipients to seek approval
from LSC for an alternate timekeeping
method that will ensure accountability
for the use of subgrant funds. This
option was similar to language LSC
proposed deleting from existing
§ 1627.3(c) that authorized recipients
and subrecipients to propose alternative
auditing methods. LSC proposed
deleting that language simply because it
had never been used, rather than
because it was ineffective.
LSC proposes adopting the second
option. In paragraph (c), LSC proposes
requiring that recipients be able to show
how much time subrecipient attorneys
and paralegals spent on cases and
matters and aggregate information on
pending and closed cases by legal
problem type. LSC does not propose to
require, however, that the subrecipient
collect the information or otherwise
dictate how the recipient and
subrecipient collect and maintain the
information. LSC proposes to leave
those decisions to the recipient and
subrecipient to negotiate as part of the
subgrant agreement.
LSC proposes one technical change to
§ 1627.5(d) as proposed in the NPRM.
To reflect LSC’s decision to allow inkind subgrants, LSC proposes to include
language stating that the prohibitions
and requirements of part 1610 apply
only to the subgranted funds, goods, or
services when the subgrant is for the
sole purpose of funding private attorney
involvement activities.
List of Subjects in 45 CFR Part 1627
Grant programs, Legal services.
For the reasons stated in the
preamble, the Legal Services
Corporation proposes to amend 45 CFR
part 1627, as proposed to be amended
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Frm 00031
Fmt 4702
Sfmt 4702
24549
at 80 FR 21692, April 20, 2015, as
follows:
PART 1627—SUBGRANTS AND
MEMBERSHIP FEES OR DUES
1. The authority citation is revised to
read as follows:
■
Authority: 42 U.S.C. 2996g(e).
2. Amend § 1627.2 as proposed to be
amended at 80 FR 21692, April 20, 2015
by:
■ a. Revising paragraph (b);
■ b. Redesignating paragraphs (c) and
(d) as paragraphs (d) and (e),
respectively, and revising them;
■ c. Adding a new paragraph (c); and
■ d. Designating the undesignated
paragraph captioned ‘‘Subrecipient’’ as
paragraph (f).
The revisions and additions read as
follows:
■
§ 1627.2
Definitions.
*
*
*
*
*
(b) Procurement contract means an
agreement between a recipient and a
third party under which the recipient
purchases property or services for the
benefit of the recipient that does not
qualify as a subgrant as defined in
paragraph (d)(1) of this section.
(c) Property means real property or
personal property.
(d) Recipient as used in this part
means any recipient as defined in
section 1002(6) of the Act and any
grantee or contractor receiving funds
from LSC under section 1006(a)(1)(B) of
the Act.
(e)(1) Subgrant means an award of
LSC funds or property or services
purchased in whole or in part with LSC
funds, from a recipient to a subrecipient
for the subrecipient to carry out part of
the recipient’s legal assistance activities
under the LSC grant, that has the
characteristics set forth in § 1627.3(b).
(2) Subgrant includes judicare
arrangements and contracts with private
attorneys for the direct delivery of legal
assistance under 45 CFR part 1614 only
when the cost of the arrangement or
contract exceeds $60,000.
*
*
*
*
*
■ 3. Amend § 1627.3 as proposed to be
amended at 80 FR 21692, April 20, 2015
by revising paragraphs (a) and (b)(2), (3),
and (5) to read as follows:
§ 1627.3
Characteristics of subgrants.
(a) In determining whether an
agreement between a recipient and
another entity should be considered a
subgrant or a procurement contract, the
substance of the relationship is more
important than the form of the
agreement. All of the characteristics
listed in paragraph (b) of this section
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may not be present in all cases, and the
recipient must use judgment in
classifying each agreement as a subgrant
or a procurement contract. The recipient
must make case-by-case determinations
whether each agreement that it makes
with another entity constitutes a
subgrant or a procurement contract.
(b) Characteristics that support the
classification of the agreement as a
subgrant include when the other entity:
*
*
*
*
*
(2) Has its performance measured in
relation to whether objectives of the LSC
grant were met;
(3) Has responsibility for
programmatic decision-making
regarding the delivery of legal assistance
under the recipient’s LSC grant;
*
*
*
*
*
(5) In accordance with its agreement,
uses LSC funds or property or services
acquired in whole or in part with LSC
funds, to carry out a program for a
public purpose specified in LSC’s
governing statutes and regulations, as
opposed to providing goods or services
for the benefit of the recipient.
*
*
*
*
*
■ 4. Amend § 1627.4 as proposed to be
amended at 80 FR 21692, April 20, 2015
by:
■ a. Redesignating paragraphs (a)
through (e) as paragraphs (b) through (f),
respectively;
■ b. Adding a new paragraph (a);
■ c. Revising the introductory text of
newly redesignated paragraph (b);
■ b. Redesignating the newly
redesignated paragraph (b)(5) as (b)(5)(i)
and adding paragraph (b)(5)(ii);
■ c. Revising the newly redesignated
paragraph (d)(2); and
■ d. Adding paragraph (g).
The revisions and additions read as
follows:
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§ 1627.4
Requirements for all subgrants.
(a) Threshold. (1) A recipient must
obtain LSC’s written approval prior to
making a subgrant when the cost of the
award is $15,000 or greater.
(2) Valuation of in-kind subgrants. (i)
If either the actual cost to the recipient
of the transferred property or service or
the fair market value of the transferred
property or service exceeds $15,000, the
recipient must seek written approval
from LSC prior to making a subgrant. If
the asset transferred involves leased
space, the fair market value of the office
space must be determined by an
independent property appraisal.
(ii) The valuation of the subgrant,
either by fair market value or actual cost
to the recipient of property or services,
must be documented and to the extent
feasible supported by the same methods
used internally by the grantee.
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(b) Corporation approval of subgrants.
Recipients must submit all applications
for subgrants exceeding the $15,000
threshold to LSC in writing for prior
written approval. LSC will publish
notice of the requirements concerning
the format and contents of the
application annually in the Federal
Register and on LSC’s Web site.
*
*
*
*
*
(5)
*
*
*
*
*
(ii) If a subgrant did not require prior
approval, and the recipient proposes a
change that will cause the total value of
the subgrant to exceed the threshold for
prior approval, the recipient must
obtain LSC’s prior written approval
before making the change.
*
*
*
*
*
(d) * * *
*
*
*
*
*
(2) The recipient must ensure that the
subrecipient properly spends, accounts
for, and audits funds or property or
services acquired in whole or in part
with LSC funds received through the
subgrant.
*
*
*
*
*
(g) Accounting for in-kind subgrants.
(1) The value of property or services
provided by a recipient to a subrecipient
through a subgrant is subject to the
audit and financial requirements of the
Audit Guide for Recipients and
Auditors and the Accounting Guide for
LSC Recipients. Subgrants involving inkind exchanges of property or services
may be separately disclosed and
accounted for, and reported upon in the
audited financial statements of a
recipient. The relationship between the
recipient and subrecipient will
determine the proper method of
financial reporting following generally
accepted accounting principles.
(2) If accounting for in-kind subgrants
is not practicable, a recipient may
convert the subgrant to a cash payment
and follow the accounting procedures in
paragraph (d) of this section.
■ 5. Amend § 1627.5 as proposed to be
amended at 80 FR 21692, April 20, 2015
by revising paragraphs (c) and (d) to
read as follows:
§ 1627.5 Applicability of restrictions,
timekeeping, and recipient priorities;
private attorney involvement subgrants.
*
*
*
*
*
(c) Timekeeping. A recipient must
account for how its subgrantees spend
LSC funds. Accurate and
contemporaneous time records must
identify for each attorney and paralegal:
(1) Time spent on each case or matter
by date and in increments not greater
than one-quarter of an hour;
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Fmt 4702
Sfmt 4702
(2) The unique case name or identifier
for each case;
(3) The category of action on which
time was spent for each matter; and
(4) The legal problem type for each
case or matter with a timekeeping
system able to aggregate time record
information on both closed and pending
cases by legal problem type.
(d) PAI subgrant. (1) The prohibitions
and requirements set forth in 45 CFR
part 1610 apply only to the subgranted
funds or property or services acquired
in whole or in part with LSC funds
when the subrecipient is a bar
association, pro bono program, private
attorney or law firm, or other entity that
receives a subgrant for the sole purpose
of funding private attorney involvement
activities (PAI) pursuant to 45 CFR part
1614.
(2) Any funds or property or services
acquired in whole or in part with LSC
funds and used by a recipient as
payment for a PAI subgrant are deemed
LSC funds for purposes of this
paragraph.
■ 6. Amend § 1627.6 as proposed to be
amended at 80 FR 21692, April 20, 2015
by revising paragraph (b) to read as
follows:
§ 1627.6
Subgrants to other recipients.
*
*
*
*
*
(b) The subrecipient must audit any
funds or property or services acquired
in whole or in part with LSC funds
provided by the recipient under a
subgrant in its annual audit and supply
a copy of this audit to the recipient. The
recipient must either submit the
relevant part of this audit with its next
annual audit or, if an audit has been
recently submitted, submit it as an
addendum to that recently submitted
audit.
*
*
*
*
*
Dated: April 19, 2016.
Stefanie K. Davis,
Assistant General Counsel.
[FR Doc. 2016–09384 Filed 4–25–16; 8:45 am]
BILLING CODE 7050–01–P
DEPARTMENT OF ENERGY
48 CFR Part 970
RIN 1991–AC03
Acquisition Regulation:
Nondisplacement of Qualified Workers
Under Service Contracts and Other
Changes to the Contractor Purchasing
System Clause
Department of Energy.
Notice of proposed rulemaking
and opportunity for comment.
AGENCY:
ACTION:
E:\FR\FM\26APP1.SGM
26APP1
Agencies
[Federal Register Volume 81, Number 80 (Tuesday, April 26, 2016)]
[Proposed Rules]
[Pages 24544-24550]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-09384]
=======================================================================
-----------------------------------------------------------------------
LEGAL SERVICES CORPORATION
45 CFR Part 1627
Subgrants and Membership Fees or Dues
AGENCY: Legal Services Corporation.
ACTION: Further notice of proposed rulemaking.
-----------------------------------------------------------------------
SUMMARY: The Legal Services Corporation (LSC or Corporation) proposes
to revise its regulations governing subgrants to third parties. LSC
published a Notice of Proposed Rulemaking (NPRM) on April 20, 2015, 80
FR 21692. In response to the NPRM, LSC received comments from five
organizations. The commenters requested that LSC reconsider some of the
proposed changes to the regulations. LSC has considered the comments
and now proposes additional revisions to the rules. In this Further
Notice of Proposed Rulemaking (FNPRM), LSC seeks comments on five
proposed revisions to the NPRM.
DATES: Comments must be submitted by June 10, 2016.
ADDRESSES: You may submit comments by any of the following methods:
Email: SubgrantRulemaking@lsc.gov. Include ``Part 1627 FNPRM'' in
the subject line of the message.
Fax: (202) 337-6519, ATTN: Part 1627 FNPRM.
Mail: Stefanie K. Davis, Assistant General Counsel, Legal Services
Corporation, 3333 K Street NW., Washington, DC 20007, ATTN: Part 1627
FNPRM.
Hand Delivery/Courier: Stefanie K. Davis, Assistant General
Counsel, Legal Services Corporation, 3333 K Street NW., Washington, DC
20007, ATTN: Part 1627 FNPRM.
Instructions: Electronic submissions are preferred via email with
attachments in Acrobat PDF format. LSC will not consider written
comments received after the end of the comment period.
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), sdavis@lsc.gov.
SUPPLEMENTARY INFORMATION:
I. Introduction
LSC provided a more complete history of this rulemaking in the
April 20, 2015 NPRM. 80 FR 21692, Apr. 20, 2015. In brief, LSC
initiated this rulemaking to address an issue identified by LSC's
Office of Inspector General (OIG) through an audit of the Corporation's
Technology Initiative
[[Page 24545]]
Grant (TIG) program. In its audit report, OIG disagreed with LSC
management's (Management) interpretation and application of the rules
governing subgrants and transfers of LSC funds because ``[t]he subgrant
rule appears to have been written with the LSC's principal legal
service grants in mind, such that ordinarily, programmatic activities
consist of the provision of legal services, and business services can
easily be classified as ancillary. This division is not as easy to make
in the case of TIG grants, and the rule does not seem to have
anticipated this problem.'' Audit of Legal Services Corporation's
Technology Initiative Grant Program, Report No. AU-11-01, at 42, Dec.
2010.
LSC initiated this rulemaking in 2012 to resolve the conflict of
opinions. In 2015, Management proposed expanding this rulemaking to
update these rules more comprehensively. On April 12, 2015, the
Operations and Regulations Committee (Committee) of the Board voted to
recommend that the Board approve publication of an NPRM in the Federal
Register for notice and comment. On April 14, 2015, the Board accepted
the Committee's recommendation and approved publication of the NPRM.
The NPRM was published in the Federal Register on April 20, 2015, with
a comment closing date of May 20, 2015. 80 FR 21692, Apr. 20, 2015.
After receiving a request to extend the comment period, LSC gave
interested parties an additional 21 days to respond to the NPRM. 80 FR
29600, May 22, 2015.
II. Request for Comments
LSC received five comments during the comment period. One LSC-
funding recipient, Northwest Justice Project (NJP), and one non-LSC
recipient, Metro Volunteer Lawyers (MVL), each submitted comments. The
other three comments came from OIG, the National Legal Aid and Defender
Association, through its Civil Policy Group and its Regulations and
Policy Committee (NLADA), and the American Bar Association's Standing
Committee on Legal Aid and Indigent Defense (SCLAID). In response to
the comments received, LSC is considering several revisions to the
proposed rule, including the ones described in this FNPRM.
On April 18, 2016, the Committee authorized publication of this
FNPRM in the Federal Register. This FNPRM is limited to soliciting
additional comment on the proposed changes described herein. Commenters
need not reiterate or resubmit comments in response to this
supplemental notice that they previously submitted relating to these
matters or other aspects of the proposed rule. LSC will consider all
public comments submitted pursuant to the NPRM published on April 20,
2015, and in response to this FNPRM, when drafting the final rule.
Proposed Change 1: Removing the Proposed Definition of ``Programmatic''
The main purpose of this rulemaking is to clarify that part 1627
applies only to third-party awards made by a recipient for the
provision of legal assistance.\1\ The current rule defines
subrecipient, in relevant part, as an entity that accepts Corporation
funds from a recipient under a grant contract, or agreement to conduct
certain activities specified by or supported by the recipient related
to the recipient's programmatic activities. 45 CFR 1627.2(b)(1). LSC
proposed simplifying the definition of subrecipient and adding a
definition of the term programmatic that included an explicit reference
to the LSC Act's definition of legal assistance:
---------------------------------------------------------------------------
\1\ The LSC Act defines ``legal assistance'' as ``the provision
of any legal services consistent with the purposes and provisions of
this subchapter.'' 42 U.S.C. 2996a(5). LSC incorporated that
definition at 45 CFR 1600.1, and that definition applies to part
1627. In contrast, LSC has defined the term ``legal assistance''
more narrowly in other contexts to mean legal analysis tailored to a
client's particular issue as opposed to ``legal information'' that
does not involve the application of law to a person's specific
problem. 45 CFR 1614.3(e) and (f); LSC Case Service Report Handbook,
p. 3 (2008, as amended 2011).
Programmatic means activities or functions carried out to
provide legal assistance, as defined in Sec. 1002 of the LSC Act,
42 U.S.C. 2996a(5). Programmatic activities do not include the
provision of goods or services by vendors or consultants in the
normal course of business that the recipient would not be expected
---------------------------------------------------------------------------
to provide itself.
80 FR 21692, 21694, Apr. 20, 2015. LSC proposed this definition to
clearly limit the term programmatic to those activities in which the
subrecipient essentially stands in the recipient's shoes to provide
legal assistance.
NLADA and NJP both objected to the proposed definition. NLADA
called the definition:
ambiguous as to what activities which involve the provision of legal
services to eligible clients fall within LSC's definition of
programmatic in order to be considered a subgrant rather than a
procurement contract for goods or services. . . . The proposed
definition is broad enough to encompass activities and services that
do not involve the direct provision of legal services to eligible
clients.
NJP similarly stated that it ``reads the definition of `programmatic'
in subsection (b) as too broad and inconsistent for the purposes it
appears intended to achieve.'' Both organizations commented that the
definition could be read to include transactions such as leasing office
space. NJP further read the definition as potentially including the
payment of bar dues or travel reimbursements to staff, and ``providing
fee-for-service contracts to lawyers or legal organizations that
provide ongoing expertise in support of recipients' delivery of legal
assistance, none of which are `vendors or consultants.'''
Both commenters recommended that LSC replace the phrase
``activities or functions carried out to provide legal assistance''
with ``the delivery of legal assistance to eligible clients.'' They
both also recommended excluding ``activities conducted by entities not
directly involved in the delivery of legal assistance to eligible
clients'' from the definition. Finally, NLADA suggested that LSC expand
the definition of programmatic to include ``the provision of services
under a special LSC grant project.''
LSC agrees that its proposed definition of the term programmatic
creates more problems than it solves. Commenters identified several
ambiguities with the proposed definition and suggested solutions, but
LSC determined that the potential solutions themselves created
problems. For example, both NLADA and NJP stated that LSC's proposed
definition was too broad and unclear, so both organizations offered
language they believe would clarify that programmatic means only the
delivery of legal assistance to eligible clients. Both NLADA's and
NJP's suggested language, however, would narrow the definition beyond
what LSC intended.
Additionally, both NLADA and NJP would exclude ``activities
conducted by entities not directly involved in the delivery of legal
assistance to eligible clients.'' It is unclear whether they meant
entities not directly involved in the recipient's delivery of legal
assistance to eligible clients or not directly involved in the delivery
of legal assistance at all. LSC did not intend to limit the types of
organizations with which recipients may contract. Rather, the changes
to the rule focus on the nature of the work that is the subject of the
third-party agreement.
NLADA's proposal to include ``provision of services under a special
LSC grant project'' in the definition of programmatic also appears to
be inconsistent with LSC's intent. The proposed rule emphasizes the
nature of the activity funded, rather than the method of funding. For
example, if
[[Page 24546]]
``special LSC grant project'' includes TIG awards or disaster relief
grants, then ``the provision of services under a special LSC grant
project'' could include pure technology developments or construction
activities paid for using those grant funds. LSC intends to exclude
from the rule those types of activities when conducted by a third party
using LSC funds. By contrast, awards to carry out legal services
activities would still be included in the rule, even though the award
is made through a TIG.
Finally, NJP's inclusion of payments to experts ``in support of
recipients' delivery of legal assistance'' suggests that the changes to
the scope of the rule may not have been clear. LSC intended to limit
the application of the subgrant rule to only those situations in which
recipients provide funds to third parties to carry out legal assistance
activities that recipients would otherwise be expected to provide. This
limitation necessarily excludes contracts with experts who provide a
service to recipients, whether the service is preparing the
organization's taxes, developing software for an online intake system,
or providing a recipient with technical expertise on a case.
LSC has found it difficult to redefine programmatic with a degree
of precision sufficient to give grantees clear guidance about the
term's meaning. LSC determined that the outer boundaries of the term
were the restrictive concept of ``direct provision of legal assistance
and legal information to clients'' and the comprehensive concept of
``anything that supports the delivery of legal assistance and legal
information to clients,'' but could not develop a clear statement of
where the line between programmatic and non-programmatic activities
lay. LSC analyzed fact patterns using the five subgrant factors in the
Uniform Guidance, 2 CFR 200.330. LSC intends to adopt this five-factor
analysis in part 1627. LSC determined that the guidance provided by the
factors is adequate to assess whether a particular arrangement with a
third party should be considered a subgrant or a procurement contract.
Including the term programmatic did not improve the factors' utility.
In this FNPRM, LSC proposes to remove the proposed definition of
programmatic in Sec. 1627.2 and to remove the term from the list of
factors in proposed Sec. 1627.3(b)(2). In its place, LSC proposes to
define the term procurement contract in Sec. 1627.2(b). LSC proposes
to define and use this term for two reasons. The first is to highlight
the distinction between subgrants, which involve provision of legal
assistance, and procurement contracts, which are agreements to purchase
goods or services that a recipient needs to carry out its LSC grant.
The second is that LSC anticipates incorporating Uniform Guidance
principles applicable to procurement contracts into part 1630 and the
Property Acquisition and Management Manual (PAMM) through an ongoing
rulemaking.
Proposed Change 2: Allowing Recipients To Use Property or Services
Acquired in Whole or in Part With LSC Funds as Support for a Subgrant
In the NPRM, LSC proposed to require that recipients support
subgrant activities only with funds, rather than allowing for in-kind
provision of property and services. 80 FR 21692, 21696, Apr. 20, 2015.
With the exception of OIG, all commenters opposed the proposal. NLADA,
NJP, MVL, and SCLAID all expressed concern that adopting this change
would jeopardize longstanding private attorney involvement (PAI)
arrangements between LSC recipients and bar associations or other legal
aid providers because it would impose additional and unnecessary
administrative burdens on both parties. They also opined that the
proposal conflicts with the PAI rule, which explicitly allows
recipients to support private attorneys by providing them with
training, technical assistance, access to recipient facilities, and use
of recipient libraries and other resources. 45 CFR 1614.4(b)(3). Their
observations differed in some respects, but they all contended that the
proposal had significant flaws.
NLADA ``urge[d] LSC to carefully consider the possible adverse
consequences the framework set out in [proposed Sec. 1627.3(c)] may
have on the ability of LSC funded programs to effectively carry out
their mission to promote equal access to justice and provide high-
quality civil legal assistance to low-income Americans.'' They viewed
the proposed rule as placing a ``blanket prohibition on the provision
of goods and services by recipients, that are in part or fully funded
by LSC, to support an agreement with a third party to provide
programmatic services.'' If this is LSC's intent, they continued,
a number of LSC funded programs would be prevented from using one of
their most valuable assets--property they have invested in to
provide economical office space for their operations. In a time of
severe fiscal constraints, this non-monetary asset could be used in
innovative ways to partner with community organizations,
particularly pro bono programs, to enhance the availability of legal
services for people who are poor and in need of legal services.
They concluded their discussion of this issue by expressing their
understanding that LSC must be able to ensure that recipients spend
their LSC funding only on permissible activities. NLADA urged LSC to
consider alternatives that ``will not sever existing relationships or
stifle further development based on in kind exchanges of goods and
services funded in part or wholly by LSC.''
MVL quoted NLADA's response at length in its letter objecting to
this proposal. MVL provided a detailed description of their
relationship with Colorado Legal Services (CLS):
Colorado Legal Services provides support to MVL's mission
through office space and intake personnel. CLS provides an in-kind
donation of office space to house MVL's Executive Director, Family
Law Court Program Coordinator, Legal Services Coordinator, Rovira
Scholar (a fellowship position funded by a private benefactor), and
the Program Assistant. Additionally, nearly all the cases that MVL
handles are filtered first through CLS's intake team. CLS's intake
team gathers essential information on the legal issues of
prospective clients and passes that information to MVL to refer out
to volunteer attorneys.
MVL stated that a ``major impact of the proposed rule would be
increased costs of administration'' to both it and CLS. It also pointed
out that the rule could impact organizations with similar arrangements
by limiting or prohibiting the receipt of in-kind services to assist
and alleviate costs for both organizations; maintaining proximity to
and continuity with the referral source; maintaining flexibility to
serve its community; and ``contending with LSC regulations contrary to
organizational missions, objectives, and administration.'' MVL
concluded by urging LSC to reject the proposed rule.
SCLAID expressed its opinion that the proposal is inconsistent with
the PAI rule. More specifically, SCLAID was concerned that
``collaborative relationships that have been established with bar
associations whose pro bono programs have been housed at a recipient's
office for years could be greatly harmed by requiring that the pro bono
program now enter into a subgrant arrangement.'' SCLAID stated that
requiring bar-sponsored pro bono programs to enter into a subgrant and
return some of the subgrant funds to the recipient for rent would be
``overly burdensome and unnecessary.''
NJP criticized LSC's proposal as ``seem[ing] to confuse cost
allocation to PAI with the notion of a subgrant'' and as creating
``gross ambiguity'' about
[[Page 24547]]
whether recipients may provide in-kind support to private attorneys
under Sec. 1614.4(b)(3). Additionally, NJP noted that the language
requiring subgrants to be supported with LSC funds is inconsistent with
the PAI rule, which directs recipients to spend ``an amount equal to at
least twelve and one-half percent (12.5%) of the recipient's annualized
Basic Field-General award'' to PAI activities. 45 CFR 1614.2(a). NJP
stated: ``If the goal is to ensure that subgrants mean the payment of
LSC funds to a third party to carry out legal assistance activities,
the definition of `subgrants' in proposed Sec. 1627.2(d)(1) is
adequate to accomplish this purpose. . . . Moreover, accounting for the
use of LSC funds through auditing both subgrants and PAI cost
allocations is adequate to ensure that LSC funds are spent consistent
with governing statutes and regulations.'' NJP suggested that LSC could
revise the definition of subgrant to more specifically reference the
use of LSC funds and requested that LSC not adopt proposed Sec.
1627.3(c), which limits subgrant funding to LSC funds.
Upon consideration of the comments received, LSC agrees that
requiring recipients to support subgrant activities only with funds is
burdensome and inefficient. LSC understands that many recipients' most
valuable assets may be property and did not intend to disrupt
longstanding relationships with bar associations and other
organizations that rely on exchanges of property for services to carry
out their legal services programs. LSC remains concerned, however,
about accountability for LSC-funded resources and ensuring that
recipients are not using LSC-funded property or services to support
organizations that engage in restricted activities. LSC proposes
several revisions to part 1627 designed to allow recipients to continue
providing other organizations LSC-funded office space and other
property and services to carry out legal assistance activities
consistent with the requirements of the LSC Act, LSC appropriations
statutes, LSC's other governing statutes, and LSC's regulations.
First, LSC proposes to add a definition for the term property,
which will encompass both real and personal property. Second, LSC
proposes to remove proposed Sec. 1627.3(c), which required recipients
to support all subgrants with funds, rather than goods or services.
Third, LSC proposes to redesignate the definition of the term subgrant
as Sec. 1627.2(e) and revise it to make clear that LSC funds and
property or services acquired in whole or in part with LSC funds may be
used to support a subgrant to a third party. Fourth, LSC proposes a new
Sec. 1627.4(a)(2), which explains how recipients are to assess the
value of the goods or services to be awarded to a third party to carry
out a subgrant. Fifth, LSC proposes to add language reflecting the
decision to permit in-kind subgrants in paragraph (d)(2), which
pertains to a recipient's responsibility to ensure its subrecipient's
proper use of, accounting for, and auditing of LSC resources. Lastly,
LSC proposes to add a new paragraph (f) setting forth the requirements
for accounting for in-kind subgrants.
Proposed Change 3: Establishing a $15,000 Threshold at Which
Recipients Must Seek LSC's Written Approval Before Awarding a Subgrant
While considering whether to allow recipients to use goods and
services purchased in whole or in part with LSC funds as the basis for
subgrants, LSC also considered whether recipients should be required to
seek prior approval of all such subgrants or only when the value of the
goods or services supporting the subgrant exceeded a certain threshold.
LSC understands that recipients have a wide range of arrangements with
other organizations that assist in the recipients' delivery of legal
assistance to eligible clients. Arrangements on one end of the spectrum
could be quite limited and informal--for example, giving office space
on a one-time basis to another legal aid provider to hold a legal
information session on applying for public benefits. An example of an
arrangement involving a greater investment of recipient resources would
be one in which the recipient provides office space and administrative
support to a bar association conducting a debt collection clinic for
four hours every other Saturday. An arrangement representing a
significantly greater investment of recipient resources would be
housing another non-profit organization that takes referrals from the
recipient and places the referrals with the organization's own roster
of volunteers. While LSC must ensure accountability for the use of
property or services acquired in whole or in part with LSC funds in all
of these arrangements, the oversight tools that LSC uses may vary based
on the amount of LSC-funded resources involved.
Under existing part 1627, all subgrants are subject to the prior
approval requirement, regardless of cost. In calendar year 2015,
recipients entered into 77 subgrants. Fifteen of the subgrants were for
less than $10,000, with the smallest being for $2,000. Ten of the 77
subgrants originating in calendar year 2015 exceeded $100,000. LSC
understands that recipients spend significant amounts of time and
resources preparing subgrant applications for LSC's approval. LSC
estimates that LSC itself spends between 10 and 20 work hours reviewing
each subgrant application, with the time spent on the application
varying based on the quality and complexity of the application and the
necessity of involving several LSC offices in the review. LSC
determined that, on balance, the burdens of prior approval on both
sides do not outweigh the benefits of the increased oversight for
subgrants costing $15,000 or more. Consequently, LSC proposes to
redesignate paragraph (a) from the NPRM as paragraph (b) and introduce
a new paragraph (a) establishing the thresholds for prior approval of
subgrants.
LSC wishes to emphasize two points about the proposed prior
approval threshold. The first is that all awards qualifying as
subgrants under Sec. 1627.3 are subject to 45 CFR part 1630 and the
restrictions set forth at proposed Sec. 1627.5. Although subgrants for
less than $15,000 will no longer be subject to the prior approval
requirement, they continue to be governed by part 1630 and Sec.
1627.5. The second point is that judicare arrangements and contracts
with private attorneys to provide legal assistance to recipients'
clients are not subject to the proposed prior approval threshold in
Sec. 1627.4(a). LSC's longstanding policy, reflected in the NPRM, has
been to consider such awards subgrants only when the cost of such
awards exceeds $25,000. 80 FR 21692, 21695, Apr. 20, 2015. Although LSC
sought comment in the NPRM about whether the threshold should be
changed, LSC did not intend to change its policy toward these awards.
Consequently, LSC will continue to consider judicare arrangements and
contracts with private attorneys to provide legal assistance to a
recipient's clients as subgrants only when such arrangements exceed the
threshold stated in Sec. 1627.2(e)(2) for such awards, which LSC
proposed in the NPRM to set at $60,000. All subgrants defined in Sec.
1627.2(e)(2) will require prior approval, consistent with LSC's
longstanding policy.
In paragraph (a), LSC proposes to set the prior approval threshold
at $15,000 for both cash and in-kind subgrants. LSC believes this
amount represents a significant enough investment of LSC funding or
LSC-funded property or services that LSC should have increased
oversight over the award. In paragraph
[[Page 24548]]
(a)(2)(i), LSC proposes to require recipients to seek prior approval
for subgrants when either the fair market value or the actual cost to
the recipient of the property or service that supports the subgrant
exceeds $15,000. LSC also proposes to require recipients to obtain
independent property appraisals to assess the fair market value of real
property that it contributes to a subgrant. Because LSC believes that
$15,000 represents the amount at which it should have increased
oversight of subgrants, LSC wants recipients to evaluate the value of
the asset being exchanged based on both the fair market value and their
internal cost to determine whether an amount that represents $15,000 or
more of LSC funds is being given to a third party to carry out legal
assistance activities. In paragraph (a)(2)(ii), LSC proposes to adopt
language from the Uniform Guidance that requires recipients to document
and support the valuation of property or services acquired in whole or
in part with LSC funds by the same methods used internally for its
other in-kind valuations.
LSC proposes a technical changes to Sec. 1627.4(b) to reflect its
decision to allow in-kind subgrants. In paragraph (b), LSC proposes to
insert language stating that for all subgrants exceeding the $15,000
threshold, recipients must submit applications to LSC for prior written
approval.
Proposed Change 4: Notifying Recipients of Decisions on Requests for
Prior Approval of Subgrants
In the NPRM, LSC proposed to revise the rules governing the
subgrant approval process. In paragraph (a), LSC proposed to link the
subgrant approval process for Basic Field Grants more closely to the
annual grant competition process. LSC also proposed to formalize the
procedures for recipients seeking to make subgrants under LSC's special
grant programs and those who need to make subgrants in the middle of a
funding year. LSC also proposed to eliminate the provision deeming
subgrants approved if LSC does not respond within the 45-day period \2\
because LSC believed that the provision was both unnecessary to ensure
timely responses from LSC and reflective of poor grants management
policy.
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\2\ Existing Sec. 1627.3(a)(2) states that if LSC fails to act
on the subgrant proposal within 45 days of submission, the recipient
``shall notify the Corporation of this failure'' and gives LSC seven
additional days to respond to the proposal. The subgrant is deemed
approved if LSC fails to respond within the additional seven days.
For ease of reference, we refer to the entire Sec. 1627.3(a)(2)
period as ``the 45-day period.''
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NLADA objected to LSC's proposal. NLADA stated that the proposal
``leaves programs in a state of fiscal uncertainty as to subgrant
agreements,'' and recommended leaving the provision in the rule to
``preserve[] an important backstop for recipients and subrecipients who
depend on LSC-funding and who, without hearing in a timely fashion from
LSC, may plan a budget as if the funding has been approved.'' NLADA
further argued that ``it is important in keeping with LSC's focus on
uniformity and consistent application of rules and regulations that all
parties bear equitable burdens with regard to meeting LSC statutory and
regulatory requirements.''
LSC disagrees with NLADA's recommendation to leave the existing
rule in place. NLADA's comments do not reflect the greater assurance of
a timely response provided by the consolidation of the Basic Field
Grant competition and subgrant approval processes. Nor do they
acknowledge that responsible grants management practices do not permit
expending or allowing the expenditure of funds without the approval of
the funding agency.
Although it is not binding on LSC, we look to the prior approval
provisions of 2 CFR part 200 for guidance. The Uniform Guidance
describes certain types of costs for which agencies may require prior
written approval. 2 CFR 200.308. Grantees must obtain prior approval
before incurring any of the listed costs, unless the awarding agency
waives the requirement. Id. 200.308(d). Section 200.308(i) of the
Uniform Guidance requires Federal agencies to respond to a request for
prior approval within 30 days of receipt. Id. 200.308(i). If a decision
is still pending at the end of the 30-day period, the agency must
advise the requester in writing of the date by which the requester can
expect a decision. Id. The Uniform Guidance does not include a
provision deeming a request approved based on agency inaction.
LSC considered four options for responding to NLADA's comments. The
first was to retain the language proposed in the NPRM. The second was
to reinstate the existing rule in its entirety. The third was to
reinstate the 45-day limit, but include a provision stating that if LSC
does not respond, the subgrant is deemed denied. The last option was to
include either a waiver provision or a notice provision similar to the
ones provided in the Uniform Guidance.
LSC determined that waiving approval for subgrants was not an
appropriate solution. LSC must exercise appropriate oversight over
recipients' use of its funds, particularly when the recipient proposes
to give a significant amount of funds to a third party to carry out
legal assistance activities. LSC did not believe that it would be
acting as a responsible steward of appropriated funds if it allowed
recipients to make subgrants above the proposed $15,000 threshold
amount without LSC's having approved the proposal. Nor did LSC believe
that retaining the current rule demonstrates appropriate grants
management policy because it would allow a recipient to devote a
significant amount of LSC-funded resources to a subgrant absent LSC's
explicit approval. LSC also did not think that restoring the 45-day
time frame for approving subgrants with a provision deeming the
subgrant denied, rather than approved, was a proper solution. This
solution seemed unnecessarily negative and uninformative because it
would leave a recipient wondering if its proposal was flawed and LSC
simply had not told the recipient what it needed to do to fix the
proposal or if LSC had reviewed the proposal at all.
LSC proposes to respond to NLADA's comments by adopting a notice
provision similar to the one used by OMB in the Uniform Guidance. LSC
proposes to include in the notice described in paragraph (b) a
statement that if LSC has not responded to a recipient's request for
approval of a subgrant under paragraph (b)(2) or (b)(3) within the
number of days specified in the notice, LSC will inform the recipient
in writing of the date when the recipient may expect the decision. The
notice will be given only for subgrant approvals requested as part of a
special grant or during the mid-year grant process. LSC does not
propose to include a similar provision for subgrant approvals requested
during the Basic Field Grant competition process because the regulation
already includes notification deadlines. According to proposed Sec.
1627.4(a)(1)(ii), LSC will inform a recipient whether LSC has approved,
denied, or is suggesting modifications to the subgrant at or about the
same time as LSC informs the recipient of its decision on the
recipient's application for Basic Field Grant funding. 80 FR 21692,
21699, Apr. 20, 2015.
Proposed Change 5: Adopting a Flexible Timekeeping Requirement
In the NPRM, LSC proposed to transfer existing 45 CFR 1610.7, which
contains the requirements applicable to transfers of LSC funds, to part
1627 and redesignate it as Sec. 1627.5. LSC also proposed to revise
the existing timekeeping requirement in Sec. 1610.7(c)
[[Page 24549]]
to adopt the timekeeping standards applicable to recipients in part
1635. LSC proposed this requirement to provide a consistent standard
for recipients and subrecipients alike. LSC specifically sought comment
on this proposal because LSC understood that some subrecipients,
particularly smaller legal services programs, may have difficulty
complying with the requirement. NJP and NLADA both objected to LSC's
proposal to require all subrecipients to comply with part 1635's
timekeeping requirements. OIG supported the proposal.
NJP opposed the proposal for two reasons. First, NJP argued that
``private attorney subrecipients must sufficiently document their time
spent on recipient client activities to justify billings and payment
under a fee-for-service contract.'' NJP opined that because private
attorney subrecipients have their own timekeeping systems, there is no
need for them to develop a timekeeping system that complies with part
1635. Second, NJP argued that private attorneys would likely be both
unwilling to allocate time to LSC-defined categories of cases, matters,
and supporting activities and unwilling to agree to make their personal
time records and timekeeping systems subject to examination by auditors
and LSC representatives. NJP asserted that requiring private attorneys
to make their private records available to LSC auditors and reviewers
would ``create a significant disincentive'' for private attorneys to
participate in judicare or other fee-for-service arrangements.
NLADA objected to the proposal as a burdensome, one-size-fits-all
approach contrary to LSC's interests in maximizing grantees' efficiency
and effectiveness and encouraging collaborations with other
organizations. NLADA asserted that ``[i]mposing one standard time
keeping requirement for all subrecipients, who maintain accountability
with their own timekeeping system, is counter-productive and will harm
recipient's [sic] ability to maintain relationships with subrecipients
who are unable or unwilling to conform their own timekeeping system to
LSC requirements.'' NLADA urged LSC to adopt a ``flexible option'' that
would ensure accountability for the use of LSC funds without imposing
burdensome requirements on subrecipients of LSC funds.
LSC understands NLADA's and NJP's concerns about the impact of the
proposed rule on subrecipients that have their own timekeeping systems
in place. LSC agrees that requiring such subrecipients to comply with
LSC's particular timekeeping requirements may not be necessary to
ensure that time subrecipients spend providing legal assistance and
legal information is accounted for appropriately. Regardless of whether
a subrecipient already has a timekeeping system in place, LSC believes
that some level of timekeeping by either the subrecipient or the
recipient is needed.
LSC considered three options for responding to the comments. The
first was to keep the proposed language without change. The second was
to draft a rule providing minimum standards for timekeeping that LSC
believes would provide it with the information it needs to ensure that
subgrant funds are properly accounted for, but that does not prescribe
how the recipient or subrecipient keeps time. The third option was to
adopt part 1635-compliant timekeeping as the default, but to allow
recipients to seek approval from LSC for an alternate timekeeping
method that will ensure accountability for the use of subgrant funds.
This option was similar to language LSC proposed deleting from existing
Sec. 1627.3(c) that authorized recipients and subrecipients to propose
alternative auditing methods. LSC proposed deleting that language
simply because it had never been used, rather than because it was
ineffective.
LSC proposes adopting the second option. In paragraph (c), LSC
proposes requiring that recipients be able to show how much time
subrecipient attorneys and paralegals spent on cases and matters and
aggregate information on pending and closed cases by legal problem
type. LSC does not propose to require, however, that the subrecipient
collect the information or otherwise dictate how the recipient and
subrecipient collect and maintain the information. LSC proposes to
leave those decisions to the recipient and subrecipient to negotiate as
part of the subgrant agreement.
LSC proposes one technical change to Sec. 1627.5(d) as proposed in
the NPRM. To reflect LSC's decision to allow in-kind subgrants, LSC
proposes to include language stating that the prohibitions and
requirements of part 1610 apply only to the subgranted funds, goods, or
services when the subgrant is for the sole purpose of funding private
attorney involvement activities.
List of Subjects in 45 CFR Part 1627
Grant programs, Legal services.
For the reasons stated in the preamble, the Legal Services
Corporation proposes to amend 45 CFR part 1627, as proposed to be
amended at 80 FR 21692, April 20, 2015, as follows:
PART 1627--SUBGRANTS AND MEMBERSHIP FEES OR DUES
0
1. The authority citation is revised to read as follows:
Authority: 42 U.S.C. 2996g(e).
0
2. Amend Sec. 1627.2 as proposed to be amended at 80 FR 21692, April
20, 2015 by:
0
a. Revising paragraph (b);
0
b. Redesignating paragraphs (c) and (d) as paragraphs (d) and (e),
respectively, and revising them;
0
c. Adding a new paragraph (c); and
0
d. Designating the undesignated paragraph captioned ``Subrecipient'' as
paragraph (f).
The revisions and additions read as follows:
Sec. 1627.2 Definitions.
* * * * *
(b) Procurement contract means an agreement between a recipient and
a third party under which the recipient purchases property or services
for the benefit of the recipient that does not qualify as a subgrant as
defined in paragraph (d)(1) of this section.
(c) Property means real property or personal property.
(d) Recipient as used in this part means any recipient as defined
in section 1002(6) of the Act and any grantee or contractor receiving
funds from LSC under section 1006(a)(1)(B) of the Act.
(e)(1) Subgrant means an award of LSC funds or property or services
purchased in whole or in part with LSC funds, from a recipient to a
subrecipient for the subrecipient to carry out part of the recipient's
legal assistance activities under the LSC grant, that has the
characteristics set forth in Sec. 1627.3(b).
(2) Subgrant includes judicare arrangements and contracts with
private attorneys for the direct delivery of legal assistance under 45
CFR part 1614 only when the cost of the arrangement or contract exceeds
$60,000.
* * * * *
0
3. Amend Sec. 1627.3 as proposed to be amended at 80 FR 21692, April
20, 2015 by revising paragraphs (a) and (b)(2), (3), and (5) to read as
follows:
Sec. 1627.3 Characteristics of subgrants.
(a) In determining whether an agreement between a recipient and
another entity should be considered a subgrant or a procurement
contract, the substance of the relationship is more important than the
form of the agreement. All of the characteristics listed in paragraph
(b) of this section
[[Page 24550]]
may not be present in all cases, and the recipient must use judgment in
classifying each agreement as a subgrant or a procurement contract. The
recipient must make case-by-case determinations whether each agreement
that it makes with another entity constitutes a subgrant or a
procurement contract.
(b) Characteristics that support the classification of the
agreement as a subgrant include when the other entity:
* * * * *
(2) Has its performance measured in relation to whether objectives
of the LSC grant were met;
(3) Has responsibility for programmatic decision-making regarding
the delivery of legal assistance under the recipient's LSC grant;
* * * * *
(5) In accordance with its agreement, uses LSC funds or property or
services acquired in whole or in part with LSC funds, to carry out a
program for a public purpose specified in LSC's governing statutes and
regulations, as opposed to providing goods or services for the benefit
of the recipient.
* * * * *
0
4. Amend Sec. 1627.4 as proposed to be amended at 80 FR 21692, April
20, 2015 by:
0
a. Redesignating paragraphs (a) through (e) as paragraphs (b) through
(f), respectively;
0
b. Adding a new paragraph (a);
0
c. Revising the introductory text of newly redesignated paragraph (b);
0
b. Redesignating the newly redesignated paragraph (b)(5) as (b)(5)(i)
and adding paragraph (b)(5)(ii);
0
c. Revising the newly redesignated paragraph (d)(2); and
0
d. Adding paragraph (g).
The revisions and additions read as follows:
Sec. 1627.4 Requirements for all subgrants.
(a) Threshold. (1) A recipient must obtain LSC's written approval
prior to making a subgrant when the cost of the award is $15,000 or
greater.
(2) Valuation of in-kind subgrants. (i) If either the actual cost
to the recipient of the transferred property or service or the fair
market value of the transferred property or service exceeds $15,000,
the recipient must seek written approval from LSC prior to making a
subgrant. If the asset transferred involves leased space, the fair
market value of the office space must be determined by an independent
property appraisal.
(ii) The valuation of the subgrant, either by fair market value or
actual cost to the recipient of property or services, must be
documented and to the extent feasible supported by the same methods
used internally by the grantee.
(b) Corporation approval of subgrants. Recipients must submit all
applications for subgrants exceeding the $15,000 threshold to LSC in
writing for prior written approval. LSC will publish notice of the
requirements concerning the format and contents of the application
annually in the Federal Register and on LSC's Web site.
* * * * *
(5)
* * * * *
(ii) If a subgrant did not require prior approval, and the
recipient proposes a change that will cause the total value of the
subgrant to exceed the threshold for prior approval, the recipient must
obtain LSC's prior written approval before making the change.
* * * * *
(d) * * *
* * * * *
(2) The recipient must ensure that the subrecipient properly
spends, accounts for, and audits funds or property or services acquired
in whole or in part with LSC funds received through the subgrant.
* * * * *
(g) Accounting for in-kind subgrants. (1) The value of property or
services provided by a recipient to a subrecipient through a subgrant
is subject to the audit and financial requirements of the Audit Guide
for Recipients and Auditors and the Accounting Guide for LSC
Recipients. Subgrants involving in-kind exchanges of property or
services may be separately disclosed and accounted for, and reported
upon in the audited financial statements of a recipient. The
relationship between the recipient and subrecipient will determine the
proper method of financial reporting following generally accepted
accounting principles.
(2) If accounting for in-kind subgrants is not practicable, a
recipient may convert the subgrant to a cash payment and follow the
accounting procedures in paragraph (d) of this section.
0
5. Amend Sec. 1627.5 as proposed to be amended at 80 FR 21692, April
20, 2015 by revising paragraphs (c) and (d) to read as follows:
Sec. 1627.5 Applicability of restrictions, timekeeping, and recipient
priorities; private attorney involvement subgrants.
* * * * *
(c) Timekeeping. A recipient must account for how its subgrantees
spend LSC funds. Accurate and contemporaneous time records must
identify for each attorney and paralegal:
(1) Time spent on each case or matter by date and in increments not
greater than one-quarter of an hour;
(2) The unique case name or identifier for each case;
(3) The category of action on which time was spent for each matter;
and
(4) The legal problem type for each case or matter with a
timekeeping system able to aggregate time record information on both
closed and pending cases by legal problem type.
(d) PAI subgrant. (1) The prohibitions and requirements set forth
in 45 CFR part 1610 apply only to the subgranted funds or property or
services acquired in whole or in part with LSC funds when the
subrecipient is a bar association, pro bono program, private attorney
or law firm, or other entity that receives a subgrant for the sole
purpose of funding private attorney involvement activities (PAI)
pursuant to 45 CFR part 1614.
(2) Any funds or property or services acquired in whole or in part
with LSC funds and used by a recipient as payment for a PAI subgrant
are deemed LSC funds for purposes of this paragraph.
0
6. Amend Sec. 1627.6 as proposed to be amended at 80 FR 21692, April
20, 2015 by revising paragraph (b) to read as follows:
Sec. 1627.6 Subgrants to other recipients.
* * * * *
(b) The subrecipient must audit any funds or property or services
acquired in whole or in part with LSC funds provided by the recipient
under a subgrant in its annual audit and supply a copy of this audit to
the recipient. The recipient must either submit the relevant part of
this audit with its next annual audit or, if an audit has been recently
submitted, submit it as an addendum to that recently submitted audit.
* * * * *
Dated: April 19, 2016.
Stefanie K. Davis,
Assistant General Counsel.
[FR Doc. 2016-09384 Filed 4-25-16; 8:45 am]
BILLING CODE 7050-01-P