[Federal Register Volume 59, Number 246 (Friday, December 23, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-31313]


[[Page Unknown]]

[Federal Register: December 23, 1994]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Administration for Children and Families

45 CFR Parts 301, 302, 303, 304 and 305

RIN-0970-AB40

 

Child Support Enforcement Program: Paternity Establishment and 
Revision of Child Support Enforcement Program and Audit Regulations

AGENCY: Office of Child Support Enforcement (OCSE), ACF, HHS.

ACTION: Final rule.

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SUMMARY: This final rule contains provisions regarding both paternity 
establishment and the audit. The paternity establishment provisions 
implement the requirements of section 13721 of the Omnibus Budget 
Reconciliation Act of 1993 (OBRA '93) signed by the President on August 
10, 1993, which amends title IV-D of the Social Security Act (the Act). 
These provisions require States to adopt procedures for a simple civil 
process for the voluntary acknowledgment of paternity, including early 
paternity establishment programs in hospitals. For paternity cases that 
remain contested, the statutory provisions require States to adopt a 
variety of procedures designed to streamline the paternity 
establishment process. These include the use of default orders, a 
presumption of paternity based on genetic test results, conditions for 
admission of genetic test results as evidence, and expedited decision-
making processes for paternity cases in which title IV-D services are 
being provided.
    In addition, this final regulation amends the Child Support 
Enforcement program regulations governing the audit of State Child 
Support Enforcement (IV-D) programs and the imposition of financial 
penalties for failure to substantially comply with the requirements of 
title IV-D of the Act. This regulation specifies how audits will 
evaluate State compliance with the requirements set forth in title IV-D 
of the Act and Federal regulations, including requirements resulting 
from the Family Support Act of 1988 and section 13721 of OBRA '93. This 
final regulation also redefines substantial compliance to place greater 
focus on performance and streamlines Part 305 by removing unnecessary 
sections.

EFFECTIVE DATE: December 23, 1994. For applicability provisions, see 
Supplementary Information Section.

FOR FURTHER INFORMATION CONTACT: Policy Branch, OCSE, specifically: 
Andrew Williams, (202) 401-1467 regarding paternity establishment 
provisions; Marilyn R. Cohen, (202) 401-5366 regarding expedited 
processes; and Lourdes Henry, (202) 401-5440 regarding the audit 
regulations.

SUPPLEMENTARY INFORMATION:

Applicability Provisions

    1. Paternity Establishment Provisions. The paternity establishment 
provisions of these regulations are applicable on and after December 
23, 1994, or the statutory effective date as described below, whichever 
occurs later. The Federal law provides that the statutory requirements 
are effective on the later of: (1) October 1, 1993, or (2) enactment by 
the State legislature of all required laws necessary to conform to the 
requirements. However, in no event shall the statutory requirements be 
effective later than the first day of the first calendar quarter 
beginning after the close of the first regular session of the State 
legislature that begins after August 10, 1993. In the case of a State 
that has a two-year legislative session, each year of such session 
shall be deemed to be a separate regular session of the State 
legislature.
    2. Audit Provisions. The audit provisions of these regulations are 
applicable for audits conducted for periods beginning on or after 
December 23, 1994.

Paperwork Reduction Act

    The information collection requirement regarding submittal of the 
State plan preprint page for the new paternity requirements was 
approved by the Office of Management and Budget under OMB control 
number 0970-0017. Otherwise, this rule does not require information 
collection activities and, therefore, no additional approvals are 
necessary under the Paperwork Reduction Act.

Statutory Authority

    1. Paternity Establishment Provisions. This final rule is published 
under the authority of section 466(a) of the Social Security Act (the 
Act), as amended by the Omnibus Budget Reconciliation Act of 1993 (OBRA 
'93) (Pub. L. 103-66). Section 466(a)(2), as amended, eliminates the 
State option for including paternity establishment in expedited 
processes, thereby requiring States to include paternity establishment 
in expedited processes. Subsection 466(a)(5)(C) requires States to have 
laws and procedures for a simple civil process for voluntarily 
acknowledging paternity under which the State must provide that the 
rights and responsibilities of acknowledging paternity are explained 
and ensure that due process safeguards are afforded. Such procedures 
must include a hospital-based program for the voluntary acknowledgment 
of paternity during the period immediately before or after the birth of 
a child. Subsection 466(a)(5)(D) requires States to have laws and 
procedures under which the voluntary acknowledgment of paternity 
creates a rebuttable, or at the option of the State, conclusive 
presumption of paternity, and under which such voluntary acknowledgment 
is admissible as evidence of paternity. Subsection 466(a)(5)(E) 
requires States to have laws and procedures under which the voluntary 
acknowledgment of paternity must be recognized as a basis for seeking a 
support order without requiring any further proceedings to establish 
paternity.
    Subsection 466(a)(5)(F) requires States to have laws and procedures 
which provide that (i) any objection to genetic test results must be 
made in writing within a specified number of days before any hearing at 
which such results may be introduced into evidence, and (ii) if no 
objection is made, the test results are admissible as evidence of 
paternity without the need for foundation testimony or other proof of 
authenticity or accuracy. Subsection 466(a)(5)(G) requires States to 
have laws and procedures which create a rebuttable or, at the option of 
the State, conclusive presumption of paternity upon genetic testing 
results indicating a threshold probability of the alleged father being 
the father of the child.
    Subsection 466(a)(5)(H) requires States to have laws and procedures 
requiring a default order to be entered in a paternity case upon a 
showing of service of process on the defendant and any additional 
showing required by State law. Section 466(a)(11) requires States to 
have laws and procedures under which the State must give full faith and 
credit to a determination of paternity made by any other State, whether 
established through voluntary acknowledgment or through administrative 
or judicial processes. These final regulations are also published under 
the general authority of section 1102 of the Act, which requires the 
Secretary to publish regulations that may be necessary for the 
efficient administration of the functions for which she is responsible 
under the Act.
    2. Audit Provisions. This final regulation is published under the 
authority of sections 1102, 402(a)(27), 452(a)(4), and 403(h) of the 
Act. Section 1102 authorizes the Secretary to publish regulations not 
inconsistent with the Act which may be necessary to efficiently 
administer the Secretary's functions under the Act. Section 402(a)(27) 
requires each State to operate a child support program in substantial 
compliance with the title IV-D State plan. Section 452(a)(4) requires 
an audit of each State IV-D program to assure compliance with title IV-
D requirements at least once every three years (or not less often than 
annually in the case of any State which is being penalized, or is 
operating under a corrective action plan). Finally, section 403(h) 
provides for the imposition of an audit penalty of not less than 1 nor 
more than 5 percent of a State's AFDC funding for any State which fails 
to substantially comply with title IV-D requirements within the period 
of time the Secretary determines to be appropriate for corrective 
action.

Background

    This final rule contains regulations that: (1) Implement the 
paternity establishment provisions of OBRA '93, and (2) revise the 
child support enforcement audit regulations. The proposed audit rule 
was published September 9, 1993 (58 FR 47417), and the proposed 
paternity rule on November 29, 1993 (58 FR 62599), each with 60-day 
public comment periods. These two proposed regulations overlapped in 
some areas. In particular, the ``credit for providing services'' 
portion of the proposed audit regulation was affected by changes to 
expedited process requirements made by the proposed paternity 
regulation. Furthermore, changes to paternity establishment 
requirements made by the proposed paternity regulation impacted which 
paternity requirements would be audited under the audit regulation. 
Because the two proposed regulations were at similar stages of the 
regulatory process and because they overlapped in certain areas, we 
decided to combine them in this final regulation.
    1. Paternity Establishment Provisions. Paternity establishment is a 
necessary first step in the child support enforcement process in cases 
where a child is born out-of-wedlock. In addition to child support, 
paternity establishment may result in other financial benefits for the 
child, including Social Security dependents' benefits, pension 
benefits, veterans' benefits, and possible rights of inheritance. 
Furthermore, paternity establishment may give children social and 
psychological advantages and a sense of family heritage, be a first 
step in creating a psychological and social bond between father and 
child, and provide important medical history information.
    The Federal government has long recognized the importance of 
paternity establishment. In 1975, by enactment of Title IV-D of the 
Social Security Act, Congress required States to establish public child 
support enforcement agencies and to provide paternity establishment 
services. The Child Support Enforcement Amendments of 1984 (Pub. L. 98-
378) required States to permit paternity to be established until a 
child's 18th birthday. The Family Support Act of 1988 (Pub. L. 100-485) 
contained several provisions designed to improve paternity 
establishment: A performance standard, timeframes for case processing, 
enhanced funding (90 percent Federal financial participation) for 
genetic testing, a requirement that States compel all parties in a 
contested paternity case to submit to genetic testing upon the request 
of a party, a requirement that States compel each parent to provide his 
or her social security number as part of the birth certificate issuance 
process, and a clarification of the expansion of the requirement 
permitting paternity establishment to 18 years of age.
    Partly as a result of these Federal efforts, the number of 
paternities established each year by the IV-D program has increased 
substantially from about 270,000 in FY 1987 to more than 553,000 in FY 
1993--an increase of over 100 percent in just six years. However, the 
percentage of children born out-of-wedlock also continues to increase. 
In 1991, almost 30 percent of American children, over 1.2 million 
children, were born to unmarried mothers. Currently, as reported by 
State agencies, paternity is only established for about one-sixth of 
the children who need it per year. Even in cases where paternity is 
established, the process is often lengthy and adversarial in nature.
    Therefore, the President and Congress decided to further reform the 
system through changes to title IV-D in the OBRA '93. The 
Administration proposed the new paternity requirements as an initial 
step in the President's efforts to improve the child support 
enforcement program. While this rule is based on existing law, it 
serves as a foundation for additional reforms proposed by the 
President's Welfare Reform bill.
    The amended statute and these implementing regulations are intended 
to increase both the number of paternities established for children 
born out-of-wedlock and the timeliness with which paternity 
establishment is accomplished. In particular, these provisions will 
increase the number of paternities established by voluntary 
acknowledgment. However, some cases will remain contested, and these 
reforms should expedite the process for resolving those cases as well.
    Many of these reforms are based on innovative State practices and 
recommendations of the U.S. Commission on Interstate Child Support. 
Congress created the Interstate Commission as part of the Family 
Support Act of 1988 to recommend ways of improving the interstate 
establishment and enforcement of child support awards. In 1992, the 
Commission issued its comprehensive final report to the Congress which 
contained numerous recommendations, including recommendations for 
improving paternity establishment in both interstate and intrastate 
cases.
    Because Congress added the newly-mandated practices to section 
466(a) of the Act, they are requirements which States must meet as a 
condition of State plan approval under section 454(20) of the Act. 
These regulations add the new State plan requirements to 45 CFR 302.70. 
Each State's title IV-D plan must be approved for the State to receive 
Federal financial participation in the operation of its Child Support 
Enforcement program.
    2. Audit Provisions. As a result of the enactment of the Child 
Support Enforcement Amendments of 1984, OCSE published final audit 
regulations on October 1, 1985, which governed the audits of State IV-D 
programs beginning in FY 1984. Section 452(a)(4) of the Act and 
implementing regulations require that OCSE conduct audits of the 
effectiveness of State Child Support Enforcement programs at least once 
every three years; specify that OCSE use a substantial compliance 
standard to determine whether each State has an effective IV-D program; 
provide that any State found not to have an effective IV-D program in 
substantial compliance with the requirements of title IV-D of the Act 
be given an opportunity to submit a corrective action plan and, upon 
approval by OCSE, to take the corrective action necessary to achieve 
substantial compliance with those requirements; provide for the use of 
a graduated penalty of not less than 1 nor more than 5 percent of the 
Federal share of a State's Aid to Families with Dependent Children 
(AFDC) program funds if a State is not in substantial compliance; and 
specify the period of time during which a penalty is effective.
    On August 4, 1989, a final rule, Standards for Program Operations, 
was published (54 FR 32284) to implement the requirements of sections 
121 and 122 of the Family Support Act. Specifically, this final rule 
revised 45 CFR parts 302 and 303 to specify standards for processing 
child support enforcement cases and timeframes for distributing child 
support collections under title IV-D of the Act. States were required 
to meet these standards beginning October 1, 1990.
    With regard to other Family Support Act requirements, on May 15, 
1991, a final rule was published which implemented the requirements 
governing $50 pass-through payments, guidelines for setting child 
support awards, mandatory genetic testing, paternity establishment and 
laboratory testing (56 FR 22335). The requirements governing immediate 
wage withholding, review and adjustment of support obligations and 
monthly notice of support collections were published on July 10, 1992 
(57 FR 30658). A final rule was published on November 19, 1992 (57 FR 
54515) to clarify timeframes for processing child support collections. 
Additional review and adjustment requirements were published December 
28, 1992 (57 FR 61559).
    As a result of the passage of time, the child support provisions of 
the Family Support Act and OBRA '93, and the necessary changes to 
program regulations, we reexamined the audit process and regulations 
and developed this final regulation. In doing so, we considered the 
impact of the new requirements on States and our experience with the 
audit process to date. We considered comments received in response to 
our notice of proposed rulemaking published September 9, 1993 (58 FR 
47417).
    Furthermore, we considered the concerns that many States and other 
groups have expressed about the current audit process. First, there is 
a concern that the scope, complexity, and length of the audit is 
expanding. OCSE audits cover numerous criteria and sub-criteria. The 
child support provisions of the Family Support Act of 1988 add to the 
complexity of the support enforcement program, and hence the audit 
process, by significantly expanding the number of criteria to be 
reviewed. Partly as a result of this growing scope and complexity, it 
takes an increasingly greater amount of time and effort to conduct 
audits. This may cause delays in obtaining results and in performing 
audits in other States. In addition, although service delivery is 
already the primary focus of the audit (i.e., the 75 percent case 
action standard), there is a concern that the audit should focus more 
on outcomes and results. Focusing more on outcomes and results, 
including the timeliness of providing services, would allow the audit 
to better measure State program performance.
    In response to concerns about the expanding scope of the audit, we 
have redefined substantial compliance to focus on certain criteria: (1) 
Service-related criteria that a significant number of States have 
failed to comply with in the past; and (2) new or newly-revised 
criteria. Eliminating certain administrative or procedural criteria and 
focusing on service-related criteria to the extent possible will 
produce a more results-oriented audit. The audit process is not the 
sole means through which State program development and compliance is 
determined. OCSE uses program reviews, the State plan approval process, 
the program audit process, and the audit resolution and tracking system 
to review and monitor State compliance and performance.
    This final regulation also specifies how audits would evaluate 
State compliance with the standards for program operations as well as 
other requirements mandated by the Family Support Act of 1988 and 
paternity establishment requirements of OBRA '93 by setting forth new 
and revised audit criteria and processes. The rule combines related 
requirements into groupings, and streamlines part 305 by removing 
unnecessary sections. The requirements in this final regulation are 
effective for audits conducted for periods beginning on or after 
December 23, 1994.

Description of Regulatory Provisions

    1. Paternity Establishment Provisions.

Required State Laws--Section 302.70(a)

    Section 466(a) of the Act requires a State to have laws that 
require the use of these new paternity procedures. Consistent with the 
rules implementing the Family Support Act requirements, a State may 
comply by issuing regulations, procedures, or court rules, instead of 
enacting laws, if they have the same force and effect under State law 
on the parties to whom they apply.
    To simplify the regulatory language, we have deleted effective 
dates of IV-D State plan requirements previously listed in 
Sec. 302.70(a).

Simple Civil Process for Voluntarily Acknowledging Paternity--Sections 
302.70(a)(5)(iii) and 303.5(a)

    This rule implements the requirements of new section 466(a)(5)(C) 
of the Act by amending Sec. 302.70(a)(5) to add new paragraph (iii). 
This provision requires each State to have laws and procedures for a 
simple civil process for voluntarily acknowledging paternity. Under 
such process, the State must provide that the rights and 
responsibilities of acknowledging paternity are explained and ensure 
that due process safeguards are afforded.
    The statute requires that the voluntary acknowledgment procedures 
include hospital-based programs. However, because the statute includes 
hospital-based programs as part of a broader requirement for voluntary 
acknowledgment procedures, we believe Congress intended these 
procedures to encompass more than just hospital-based programs. 
Therefore, new Sec. 302.70(a)(5)(iii)(B) requires that the procedures 
include a process for voluntarily acknowledging paternity outside of 
hospitals.
    IV-D Agency Activity. To reflect the newly-mandated procedures for 
the voluntary acknowledgment of paternity, Sec. 303.5(a) requires, for 
all cases referred to the IV-D agency or applying for services under 
Sec. 302.33 in which paternity has not been established, the IV-D 
agency must, as appropriate: (1) Provide an alleged father the 
opportunity to voluntarily acknowledge paternity, in accordance with 
Sec. 302.70(a)(5)(iii), and (2) attempt to establish paternity by legal 
process under State law. (The IV-D agency is not required to take 
additional action to establish paternity if, under State law, the 
acknowledgment itself establishes paternity).

Hospital-Based Paternity Establishment Programs--Sections 301.1, 
302.70(a)(5)(iii)(A), 303.5 (g) and (h), 304.20(b)(2), and 304.23(d)

    In enacting OBRA '93, the President and Congress recognized the 
importance of establishing a child's paternity as close to the time of 
birth as possible, by requiring hospital-based programs for obtaining 
voluntary acknowledgments. New Sec. 302.70(a)(5)(iii)(A) implements 
section 466(a)(5)(C) of the Act by requiring each State to have laws, 
regulations, and/or binding procedures for a hospital-based program for 
the voluntary acknowledgment of paternity during the period immediately 
before or after the birth of a child. At a minimum, new 
Sec. 302.70(a)(5)(iii)(A) requires State law, regulation, and/or 
binding procedure to compel all public and private birthing hospitals 
to participate in hospital-based programs, as defined in 
Sec. 303.5(g)(2). (However, under Sec. 302.70(d), a State may apply for 
an exemption from enacting a law, regulation, or procedure providing 
for a hospital-based program, if the State can assure that a hospital-
based program otherwise meeting Federal requirements is implemented in 
every birthing hospital in the State by January 1, 1995 (or later if 
Federal law governing the effective date allows) without the necessity 
of enacting binding laws or regulations). We define ``birthing 
hospital'' at Sec. 301.1 as a hospital that has an obstetric care unit 
or that provides obstetric services, or a birthing center associated 
with a hospital.
    Section 303.5(g) describes the State's responsibilities in 
implementing the hospital-based program. To accommodate divergent State 
practices, the State as a whole, rather than the IV-D agency in 
particular, is responsible for meeting the hospital-based program 
requirements at Sec. 303.5(g). This approach in no way relieves the 
State of the responsibility to meet Federal requirements as a condition 
of IV-D State plan approval.
    Section 303.5(g)(1) requires the State to establish, in cooperation 
with hospitals, a hospital-based program in every public and private 
birthing hospital. States must have laws, regulations, and/or binding 
procedures in place on October 1, 1993 (or if legislation is required, 
the beginning of the first calendar quarter after the close of the 
first regular session of the State legislature that began after August 
10, 1993). The programs must be operational in birthing hospitals 
statewide no later than January 1, 1995 (unless Federal law governing 
the effective date gives the State additional time; i.e., unless the 
State's first regular legislative session beginning after August 10, 
1993 precludes enactment by January 1, 1995).
    Elements of a Hospital-Based Program. Section 303.5(g)(2) defines a 
hospital-based program by listing the services and functions such a 
program must, at a minimum, provide during the period immediately 
before or after the birth of a child to an unmarried woman in the 
hospital. These services are based on information provided by States 
that previously implemented hospital-based programs. The State must 
ensure, in cooperation with the hospitals, that the program performs 
all of these functions.
    Each hospital-based program must provide voluntary acknowledgment 
services to unmarried mothers and alleged fathers. The program must 
provide services regardless of the child's public assistance status or 
whether an application has been filed for IV-D child support services.
    Under Sec. 303.5(g)(2)(i), a hospital-based program provides to 
both the mother and alleged father, if he is present in the hospital: 
(A) Written materials about paternity establishment, (B) the forms 
necessary to voluntarily acknowledge paternity, (C) a written 
description of the rights and responsibilities of acknowledging 
paternity, and (D) the opportunity to speak with staff, either by 
telephone or in person, who are trained to clarify information and 
answer questions about paternity establishment. In a case where the 
alleged father is not present at the hospital, the hospital-based 
program should provide to the unmarried mother the services described 
in Sec. 303.5(g)(2)(i).
    Under Sec. 303.5(g)(2)(ii), a hospital-based program provides the 
unmarried mother and alleged father, if he is present, the opportunity 
to voluntarily acknowledge paternity in the hospital. A hospital-based 
program, under Sec. 303.5(g)(2)(iii), must afford due process 
safeguards, as required by State law and procedure.
    Under Sec. 303.5(g)(2)(iv), a hospital-based program must forward 
completed acknowledgments or copies to the entity designated under 
Sec. 303.5(g)(8). This will ensure that the IV-D agency has access to 
and can use the acknowledgments in cases that become IV-D cases.
    Under Sec. 303.5(g)(3), a hospital-based program need not provide 
services related to acknowledging paternity in cases where the mother 
or alleged father is a minor or a legal action (e.g., adoption) is 
already pending, if provision of such services is precluded by State 
law.
    Under Sec. 303.5(g)(4), the State must require that a voluntary 
acknowledgment obtained through a hospital-based program be signed by 
both parents, and that the parents' signatures be authenticated by a 
notary or witness(es).
    Section 303.5(g)(5) requires the State to provide to all public and 
private birthing hospitals in the State written materials about 
paternity establishment, forms necessary to voluntarily acknowledge 
paternity, and copies of a written description of the rights and 
responsibilities of acknowledging paternity. Hospital-based programs 
will then distribute these materials and forms to unmarried mothers and 
alleged fathers in accordance with Sec. 303.5(g)(2)(i). While not a 
requirement, States may also wish to provide applications for, and 
materials relating to, IV-D services to hospitals for distribution to 
maternity patients or other interested parties.
    Section 303.5(g)(6) requires the State to provide staff training, 
guidance, and written instructions regarding the voluntary 
acknowledgment of paternity as necessary to operate the hospital-based 
program. Section 303.5(g)(7) requires the State to assess each birthing 
hospital's program on at least an annual basis.
    Section Sec. 303.5(g)(8) requires the State to designate an entity 
to which hospital-based programs must forward completed voluntary 
acknowledgments or copies. Under State procedures, this entity must be 
responsible for promptly recording identifying information about the 
acknowledgments with a statewide database, and the IV-D agency must 
have timely access to whatever identifying information and 
documentation it needs to determine in accordance with Sec. 303.5(h) if 
an acknowledgment has been recorded and to seek a support order on the 
basis of a recorded acknowledgment in accordance with Sec. 303.4(f). 
Under Sec. 303.5(h), in IV-D cases needing paternity establishment, the 
IV-D agency must determine if identifying information about a voluntary 
acknowledgment has been recorded in the statewide database, in 
accordance with Sec. 303.5(g)(8).
    FFP Availability for Hospital-Based Programs. This regulation 
expands Federal financial participation (FFP) availability for certain 
costs associated with hospital-based programs. Under 
Sec. 304.20(b)(2)(vi), FFP is available for payments of up to $20 to 
birthing hospitals and other entities that provide prenatal or birthing 
services for each voluntary acknowledgment obtained pursuant to an 
agreement with the IV-D agency. Section 304.20(b)(2)(vii) makes FFP 
available for the costs of developing written and audiovisual materials 
about paternity establishment and forms necessary to voluntarily 
acknowledge paternity and providing such materials to birthing 
hospitals and other entities that provide prenatal or birthing 
services. Section 304.20(b)(2)(viii) makes FFP available for reasonable 
and essential short-term training regarding voluntary acknowledgment of 
paternity associated with a State's hospital-based program as defined 
by Sec. 303.5(g)(2). This rule also modifies Sec. 304.23(d), which 
limits the availability of FFP for training to specific circumstances, 
to allow for FFP as provided for in Sec. 304.20(b)(2)(viii).

Effect of Voluntary Acknowledgment: Presumption of Paternity; 
Admissible as Evidence--Section 302.70(a)(5)(iv)

    This rule implements the requirements of section 466(a)(5)(D) of 
the Act by adding Sec. 302.70(a)(5)(iv). This provision requires each 
State to have laws and procedures under which the voluntary 
acknowledgment of paternity creates a rebuttable or, at the option of 
the State, conclusive presumption of paternity, and under which such 
voluntary acknowledgment is admissible as evidence of paternity. It is 
designed to ensure that voluntary acknowledgments are meaningful and 
used to expedite paternity establishment in every State.
    A rebuttable presumption shifts the burden of proof to the presumed 
father to disprove a paternity allegation. A conclusive presumption has 
the same effect as a judgment for paternity. Even if a State chooses to 
adopt a conclusive presumption, it may provide for conditions under 
which the presumption, like a judgment, can be challenged and 
potentially overturned (e.g., in cases where there is evidence that the 
acknowledgment was obtained by fraud or coercion, or where signatures 
were forged).

Conditions for Admission of Genetic Test Results as Evidence--Section 
302.70(a)(5)(v)

    In recent years, scientific advancements in genetic testing have 
revolutionized the paternity determination process in contested cases. 
Genetic tests can not only produce exclusionary evidence eliminating a 
man from consideration as the biological father, but can also provide 
convincing evidence reflecting the high probability that a particular 
man is the alleged father (inclusionary results), leaving little or no 
doubt as to whether an alleged father is actually the biological 
father. Statutory or case law in virtually all States provides that 
genetic test results are admissible as evidence. However, in some 
States, the process for admitting such evidence can be cumbersome.
    Section 302.70(a)(5)(v), which implements section 466(a)(5)(F) of 
the Act, should improve the process for admitting test results in legal 
proceedings. It requires each State to have laws and procedures which 
provide that any objection to genetic testing results must be made in 
writing within a specified number of days before any hearing at which 
such results may be introduced into evidence. Further, laws and 
procedures must specify that if no objection is made, a written report 
of the test results is admissible as evidence of paternity without the 
need for foundation testimony or other proof of authenticity or 
accuracy.

Presumption of Paternity Based on Genetic Test Results--Section 
302.70(a)(5)(vi)

    Section 466(a)(5)(G) of the Act and implementing regulation at 
Sec. 302.70(a)(5)(vi) require each State to have laws and procedures 
which create a rebuttable or, at the option of the State, conclusive 
presumption of paternity based on genetic testing results which 
indicate a threshold probability of the alleged father being the father 
of the child. A presumption of paternity should expedite paternity 
resolution.

Voluntary Acknowledgment Is Basis for Seeking Support Order--Sections 
302.70(a)(5)(vii) and 303.4(f)

    We are implementing section 466(a)(5)(E) of the Act by adding 
Sec. 302.70(a)(5)(vii). This provision requires each State to have laws 
and procedures under which a voluntary acknowledgment must be 
recognized as a basis for seeking a support order without requiring any 
further proceedings to establish paternity. As a result, filing a 
petition seeking a support order and information-gathering necessary 
for support order establishment should begin in a IV-D case as soon as 
a voluntary acknowledgment is obtained. This should help ensure that 
the child receives financial support at the earliest possible date.
    To reflect that a voluntary acknowledgment must serve as sufficient 
basis to seek establishment of a support order, we amended Sec. 303.4 
by adding paragraph (f). Section 303.4(f) requires the IV-D agency, in 
cases where a support order has not been established, to seek a support 
order based on a voluntary acknowledgment in accordance with 
Sec. 302.70(a)(5)(vii). Therefore, the IV-D agency must gather 
information and establish support administratively, by consent, or by 
filing a petition for support order establishment upon receipt of a 
voluntary acknowledgment of paternity.

Default Orders--Sections 302.70(a)(5)(viii) and 303.5(f)

    We have implemented the requirements of new section 466(a)(5)(H) of 
the Act by adding Sec. 302.70(a)(5)(viii). Under this provision, each 
State must have laws and procedures requiring that a default order be 
entered in a paternity case upon a showing that process has been served 
on the defendant in accordance with State law, that the defendant has 
failed to respond to service in accordance with State procedures, and 
any additional showing required by State law. State law must require, 
not simply allow, tribunals, upon proper motion, to enter default 
orders under these conditions.
    To reflect the new default order requirement, we added 
Sec. 303.5(f). It requires the IV-D agency to seek entry of a default 
order by the court or administrative authority in a paternity case by 
showing that process has been served on the defendant, that the 
defendant has failed to respond to service in accordance with State 
procedures, and any additional showing required by State law, in 
accordance with Sec. 302.70(a)(5)(viii).

Full Faith and Credit for Paternity Determinations--Section 
302.70(a)(11)

    We implemented the requirements of section 466(a)(11) of the Act by 
adding Sec. 302.70(a)(11). This provision requires each State to have 
laws and procedures under which the State must give full faith and 
credit to a determination of paternity made by any other State, whether 
established through voluntary acknowledgment or through administrative 
or judicial processes.
    This provision should improve interstate processing since a State, 
upon receiving a paternity determination made by another State, must 
recognize such determination and move forward with the next step (e.g., 
support order establishment or enforcement) without questioning or 
reopening the paternity issue.

Expedited Processes for Paternity Establishment--Sections 302.70(a)(2), 
303.4(d), and 303.101

    The Child Support Enforcement Amendments of 1984 (Pub. L. 98-378) 
required States to have an expedited process within their judicial or 
administrative systems for obtaining and enforcing child support 
orders. At the option of the State, the expedited processes could also 
include actions for establishment of paternity. Expedited process 
timeframes, established by regulation, have been effective in prompting 
States to adopt expedited administrative and quasi-judicial processes 
for establishing and enforcing support orders. Prior to enactment of 
OBRA '93, according to the IV-D State plans, 19 States had also opted 
to extend expedited processes to paternity establishment. However, in 
many jurisdictions the paternity establishment process, particularly in 
contested cases, is still protracted.
    To address this problem, OBRA '93 amended section 466(a)(2) of the 
Act to mandate use of expedited processes for establishing paternity. 
We have implemented this new provision by revising Sec. 302.70(a)(2) to 
require each State to have laws and procedures for expedited processes 
to establish paternity, in addition to the previously mandated 
expedited processes for establishing and enforcing child support 
orders.
    As specified in section 466(a)(2) of the Act, expedited processes 
are defined in Federal regulations. The provision of the Act regarding 
expedited processes for support order establishment and enforcement was 
previously implemented by Sec. 303.101. This rule amends these 
regulations to require expedited processes for paternity establishment. 
It also deletes Sec. 303.101(b)(3), which gave States the option of 
including paternity establishment in their expedited processes, since 
use of an expedited process for handling paternity cases is now 
mandatory.
    As with the expedited processes for support order establishment and 
enforcement, under expedited paternity establishment processes both 
intrastate and interstate cases must be included as required by 
Sec. 303.101(b)(1).
    Paternity and Support Establishment Timeframe. The regulatory 
definition of expedited process is based on timeframes--States must 
process IV-D cases within specified timeframes in order to be 
determined to be operating an expedited process. Because OBRA '93 
mandates the expansion of expedited processes to include paternity 
establishment, and because the regulatory definition of expedited 
process is based on timeframes, we reexamined previously-existing 
expedited process and program standard timeframes.
    Although paternity establishment was not included in expedited 
process prior to enactment of OBRA '93, there were two timeframes 
governing paternity establishment under standards for program 
operations (see chart below). First, former Sec. 303.5(a)(1) was a 
``front-end'' timeframe governing IV-D agency activity. It allowed the 
IV-D agency 90 calendar days, from the date of locating the alleged 
father, to file for paternity establishment or serve process (or 
document unsuccessful efforts), whichever occurred later in accordance 
with State procedures. Second, former Sec. 303.5(a)(2) was a ``back-
end'' timeframe governing court or administrative agency activity. It 
allowed one year, from successful service of process or the child 
becoming six months of age, to establish paternity or exclude the 
alleged father.
    There were also two sets of timeframes for support order 
establishment. First, there was a ``front-end'' timeframe at former 
Sec. 303.4(d) for IV-D agency activity. It allowed the IV-D agency 90 
calendar days, from establishing paternity or locating the obligor, to 
establish a support order (by consent) or complete service of process 
necessary to commence proceedings to establish a support order (or 
document unsuccessful efforts). Second, there were expedited process 
timeframes for support order establishment at previous 
Sec. 303.101(b)(2) governing activity within a State's quasi-judicial 
or administrative agency. Expedited process timeframes were designed to 
ensure that cases were adjudicated expeditiously in the State's court 
or administrative system. Under the previous definition of expedited 
process, a State's process or combination of processes was considered 
``expedited'' when the State completed support order establishment from 
service of process to disposition in 90 percent of all cases in 3 
months, 98 percent in 6 months, and 100 percent in 12 months. These 
timeframes also applied to enforcement actions.

                             Former Timeframes for Paternity and Order Establishment                            
----------------------------------------------------------------------------------------------------------------
   Action needed             Reg cite           Starting point        Time period            Ending point       
----------------------------------------------------------------------------------------------------------------
Establish Paternity  303.5(a)(1)............  Locate............  90 calendar days..  File for paternity or SOP,
                                                                                       whichever later.         
                     303.5(a)(2)............  SOP or child's      1 year............  Paternity established or  
                                               sixth month.                            man excluded.            
Establish Support    303.4(d)...............  Paternity           90 calendar days..  Support order established 
 Order.                                        establishment or                        or SOP.                  
                                               locate.                                                          
                     303.101(b) (2).........  Service of process  90% in 3 months;    Support order established/
                                                                   98% in 6 months;    recorded or action       
                                                                   100% in 1 year.     dismissed.               
----------------------------------------------------------------------------------------------------------------
SOP=Service of process; if agency is unable to serve process, it must document unsuccessful efforts.            

    This rule replaces the timeframes for paternity and support order 
establishment at Secs. 303.4(d), 303.5(a)(1), 303.5(a)(2), and 
303.101(b)(2) with two new timeframes (see chart below) at 
Secs. 303.4(d) and 303.101(b)(2)(i). Both of the new timeframes apply 
to IV-D cases needing support order establishment, regardless of 
whether paternity has been established.

                 New Timeframes for Establishment of Support Order and, if Necessary, Paternity                 
----------------------------------------------------------------------------------------------------------------
   Action needed             Reg cite           Starting point        Time period            Ending point       
----------------------------------------------------------------------------------------------------------------
Establish Support    303.4(d)...............  Locate............  90 calendar days..  Support order established 
 Order and, if                                                                         or SOP.                  
 Necessary,                                                                                                     
 Paternity.                                                                                                     
                     303.101(b)(2)(i).......  Service of process  75% in 6 months;    Support order established/
                                                                   90% in 12 months.   recorded or action       
                                                                                       dismissed.               
----------------------------------------------------------------------------------------------------------------
SOP=Service of process; if agency is unable to serve process, it must document unsuccessful efforts.            

    The new ``front-end'' timeframe at Sec. 303.4(d) requires the IV-D 
agency, within 90 calendar days of locating the alleged father or 
noncustodial parent, to establish a support order or complete service 
of process necessary to commence proceedings to establish a support 
order and, if necessary, paternity (or document unsuccessful attempts 
to serve process, in accordance with the State's guidelines defining 
diligent efforts under Sec. 303.3(c)).
    In addition, a State must meet the new ``back-end'' timeframe at 
Sec. 303.101(b)(2)(i) in order to have an expedited process for 
paternity establishment and support order establishment. This timeframe 
requires that actions to establish support orders be completed from the 
date of service of process to the time of disposition within the 
following timeframes: (A) 75 percent in 6 months; and (B) 90 percent in 
12 months.
    We define ``disposition'' in regulation at Sec. 303.101(b)(2)(iv) 
as the date on which a support order is officially established and/or 
recorded or the action is dismissed. This definition codifies policy 
previously stated at OCSE-AT-88-19. However, we have changed the word 
``obligation'' (contained in previous policy and the proposed rule) to 
``order'', at the suggestion of a commenter. Parents have the 
obligation to support their children from the time of birth; the 
establishment or recording of a child support order should be used to 
measure case disposition.
    Under Sec. 303.101(b)(2)(iii), for purposes of the expedited 
process timeframe for paternity and support order establishment, in 
cases where the IV-D agency uses long-arm jurisdiction and disposition 
occurs within 12 months of the date of service of process, the case may 
be counted as successful within the 6 month tier of the timeframe, 
regardless of when disposition occurs within the 12 months. Crediting 
the State's efforts to keep the proceeding as a one-State case in this 
way should encourage States to rely upon long-arm jurisdiction to the 
greatest extent possible.
    Unlike the previous paternity establishment timeframe at former 
Sec. 303.5(a)(2), the new expedited process timeframe begins with 
service of process, regardless of the age of the child.
    Enforcement Timeframes. The expedited process timeframe at 
Sec. 303.101(b)(2)(i) does not apply to enforcement. Instead, 
Sec. 303.101(b)(2)(ii) specifies that in IV-D cases where a support 
order has been established, actions to enforce the support order must 
be taken within the timeframes specified in Secs. 303.6(c)(2) and 
303.100. States will be required to meet the existing timeframe at 
Sec. 303.6(c)(2) for all enforcement actions other than income 
withholding and State/Federal income tax refund offset. The timeframe 
at Sec. 303.6(c)(2) requires enforcement action within no more than 30 
calendar days (if service of process is not needed) or 60 calendar days 
(if service of process is needed) of identifying a delinquency or other 
support-related noncompliance, or location of the absent parent, 
whichever is later. States will also be required to meet the existing 
timeframes at Sec. 303.100 in income withholding cases.
    Judges as Presiding Officers. By deleting the phrase ``and under 
which the presiding officer is not a judge of the court'' in former 
Sec. 303.101(a), we have eliminated the requirement which precluded 
using a judge as a presiding officer in carrying out expedited 
processes. With this change, expedited processes are now defined in 
Sec. 303.101(a) as administrative or expedited judicial processes, or 
both, which increase effectiveness and meet processing timeframes.
    Other Changes. We amended the safeguards required under 
Sec. 303.101(c) to include paternity establishment as well as support 
order establishment and enforcement. We revised Sec. 303.101(c)(1) to 
require that paternities as well as support orders established via 
expedited process, by means other than judicial process, must have the 
same effect under State law as paternities and orders established by 
full judicial process within the State. We also revised 
Sec. 303.101(c)(3) to require that the parties be provided a copy of 
the voluntary acknowledgment of paternity, paternity determination, 
and/or support order. The remaining safeguards are unchanged except 
that they now also apply to expedited paternity processes: The due 
process rights of the parties involved must be protected as required by 
Sec. 303.101(c)(2); there must be written procedures for ensuring the 
qualification of presiding officers as required by Sec. 303.101(c)(4); 
recommendations of presiding officers may be ratified by a judge as 
allowed by Sec. 303.101(c)(5); and action taken may be reviewed under 
the State's generally applicable judicial procedures as provided by 
Sec. 303.101(c)(6).
    We amended the functions of presiding officers in Sec. 303.101(d) 
to cover paternity establishment as well as support order establishment 
and enforcement. Section 303.101(d)(2) requires presiding officers to 
evaluate evidence and make recommendations to establish paternity as 
well as to establish and enforce orders. Section 303.101(d)(3) requires 
presiding officers to accept voluntary acknowledgments of paternity, in 
addition to voluntary acknowledgments of support liability and 
stipulated agreements setting the amount of support to be paid.
    Presiding officers will continue to have authority to enter default 
orders. However, we amended this requirement at Sec. 303.101(d)(4) to 
reflect the language of the default order provision in new 
Secs. 302.70(a)(5)(viii) and 303.5(f). As amended, Sec. 303.101(d)(4) 
requires that the functions of presiding officers include entering 
default orders upon showing that process has been served on the 
defendant in accordance with State law, that the defendant has failed 
to respond to service in accordance with State procedures, and any 
additional showing required by State law. This default order provision 
applies to paternity as well as support order establishment cases. We 
also added a new function for presiding officers in paternity cases at 
Sec. 303.101(d)(5)--ordering genetic tests in contested paternity cases 
in accordance with Sec. 303.5(d)(1).
    Furthermore, we amended Sec. 303.101(e) regarding exemptions from 
expedited process to recognize that expedited process now includes 
paternity establishment. Under the amended provision, a State is able 
to request an exemption from any of the expedited process requirements 
for a political subdivision on the basis of the effectiveness and 
timeliness of paternity establishment, support order issuance or 
enforcement within the political subdivision in accordance with the 
provisions of Sec. 302.70(d).
    2. Audit Provisions. This final regulation amends Part 305 in 
several ways: by revising the evaluation criteria to reflect 
requirements in 45 CFR parts 302 and 303 in effect prior to the Family 
Support Act that the States often had not substantially complied with 
in the past; by adding criteria to reflect the enactment of the Family 
Support Act of 1988 including those governing standards for program 
operations, guidelines for setting child support awards, immediate wage 
withholding, and review and adjustment of child support orders; by 
eliminating duplicative regulations from part 305; by adding evaluation 
criteria to reflect the paternity establishment provisions of the OBRA 
'93; and, by redefining criteria that States must meet to be determined 
to be in substantial compliance.

General Definitions--Sec. 301.1

    For consistency with the changes to part 305, the definition of 
``procedures'' is removed from Sec. 305.1(b) and placed in alphabetical 
order in Sec. 301.1.

Scope of Part 305--Sec. 305.0

    Regulations at Sec. 305.0 describe 45 CFR part 305 section by 
section. Sections 305.10 through 305.13 describe the audit; Sec. 305.20 
defines an effective program for purposes of an audit; Sec. 305.98 sets 
forth performance indicators; Sec. 305.99 governs the notice and 
corrective action period; and Sec. 305.100 governs the imposition of a 
penalty.
    Previously, sections 305.21 through 305.57 set forth criteria used 
to determine program effectiveness. However, Secs. 305.21 through 
305.57 merely cross-referenced and/or restated the requirements in the 
corresponding State plan regulations in part 302 and related program 
requirements in part 303. Accordingly, we have removed Secs. 305.21 
through 305.57 and, revised Sec. 305.20 which lists administrative 
criteria States must meet and service-related criteria for which States 
must have and use required procedures in a specified percentage of the 
cases reviewed for each criterion. In addition, we have revised 
Sec. 305.20 to permit the States, when timeframes are not met, to 
receive credit when the necessary service is provided during the audit 
period. Also, Sec. 305.20 cross-references relevant State plan and 
program regulations contained in parts 302 and 303.
    Accordingly, Sec. 305.0 is revised to state: Sections 305.10 
through 305.13 describe the audit; Sec. 305.20 sets forth audit 
criteria and subcriteria OCSE will use to determine program 
effectiveness and defines an effective program for purposes of an 
audit; Sec. 305.98 sets forth the performance indicators OCSE will use 
to determine State IV-D program effectiveness; Sec. 305.99 provides for 
the issuance of a notice and corrective action period if a State is 
found by the Secretary not to have an effective IV-D program; and 
Sec. 305.100 provides for the imposition of a penalty if a State is 
found by the Secretary not to have had an effective program and to have 
failed to take corrective action and achieve substantial compliance 
within the period prescribed by the Secretary.

Definitions--Sec. 305.1

    As previously discussed, the definition of ``procedures'' in 
Sec. 305.1(b) was moved to Sec. 301.1. Section 305.1 continues to 
provide that the definitions found in Sec. 301.1 apply to part 305.

Timing and Scope of the Audit--Sec. 305.10

    For consistency with the changes made elsewhere in part 305, 
Sec. 305.10(a) is revised to state that the audit of each State's 
program will be a comprehensive review using the criteria prescribed in 
Secs. 305.20 and 305.98. As a technical change, the title ``Standards 
for Audit of Governmental Organizations, Programs, Activities, and 
Functions'' in paragraph (c)(2) is changed to ``Government Auditing 
Standards.''

State Comments--Sec. 305.12

    Previous regulations at Sec. 305.12(a) provided for informing the 
IV-D agency during the audit entrance conference of those political 
subdivisions of the State that would be audited and making preliminary 
arrangements for personnel and information to be made available. We 
replaced this provision with more general language indicating that any 
necessary arrangements for conducting the audit will be made at the 
audit entrance conference. However, no change in current practice, or 
in the information provided to States, is intended or anticipated as a 
result of this change. States will continue to be notified in the 
letter they receive from OCSE in the quarter preceding commencement of 
the audit of all information necessary to prepare for the audit.

Effective Support Enforcement--Sec. 305.20

    Previous regulations at Sec. 305.20 set forth the criteria which 
are used to measure State compliance with the requirements of title IV-
D of the Act.
    1. Revised definition of substantial compliance. Section 305.20 
redefines the criteria that States must meet to be determined to be in 
substantial compliance. As part of this final rule, Sec. 305.20 is 
changed to address regulatory requirements including non-AFDC Medicaid 
and former AFDC cases, program standards and timeframes requirements, 
other program requirements under Pub. L. 100-485 (e.g., guidelines for 
setting child support awards, review and adjustment of child support 
orders, monthly notice of support collections, mandatory genetic 
testing, and immediate wage withholding) and paternity establishment 
requirements under OBRA '93.
    While program regulations specify how States must operate IV-D 
programs to be in compliance with State plan requirements and what 
program expenditures may qualify for Federal funding, audit regulations 
specify those requirements which must be met in order for a State to be 
determined to be in substantial compliance with the requirements of 
title IV-D of the Act and to avoid fiscal penalties. We have redefined 
substantial compliance to focus on certain criteria: (1) Service-
related criteria with which a significant number of States have failed 
to comply in the past; and (2) new or newly-revised criteria. Focusing 
on these criteria eliminates many of the administrative or procedural 
criteria which were previously part of substantial compliance 
determinations and which are currently being met, thereby making the 
audit more results-oriented. As previously stated, the audit process is 
not the sole means through which State program development and 
compliance is determined. OCSE uses program reviews, the State plan 
approval process, the program audit process, and the audit resolution 
and tracking system to review and monitor State compliance and 
performance.
    a. Ten percent materiality test. First, the determination of 
substantial compliance includes criteria that, based on past audits, 
many States have failed. In selecting these criteria, we specifically 
examined initial and annual audits conducted under the prior audit 
regulations, and determined the number of States that had failed each 
existing criterion compared to the number of audit reports issued since 
that criterion became effective.
    Therefore, the determination of substantial compliance includes 
examination of those criteria which, in general, more than ten percent 
of the States had failed during that period.
    The ten percent test is consistent with the auditing concept of 
``materiality.'' According to auditing theory, an audit should be able 
to detect errors and conditions that materially affect the ability of 
the child support program to achieve desired results and benefits. Ten 
percent is commonly used as a benchmark for materiality. In this case, 
we believe that if less than ten percent of States are failing a given 
criterion, we can omit that criterion from the determination of 
substantial compliance without materially affecting the audit's 
conclusions about the child support program in the State. However, if a 
specific criterion meets the other test for inclusion in substantial 
compliance (e.g., it is new or newly-revised), it is not deleted.
    More than ten percent of the States failed the following criteria: 
Reports and maintenance of records; separation of cash handling and 
accounting functions; establishing paternity; distribution; services to 
individuals not receiving AFDC or title IV-E foster care assistance; 
State parent locator service; support obligations; notice of collection 
of assigned support; Federal income tax refund offset; withholding of 
unemployment compensation; wage or income withholding; imposition of 
liens against real and personal property; posting security, bond or 
guarantee to secure payment of overdue support; and medical support 
enforcement.
    b. New and newly-revised criteria. After applying the ten percent 
materiality test to existing audit criteria, we turned to new 
requirements (for the most part, based on the Family Support Act of 
1988) that have not been audited in the past and which, therefore, 
cannot be judged by the ten percent materiality rule. All of these 
requirements will be evaluated in the determination of whether a 
State's IV-D program is in substantial compliance. Additionally, 
because there have been regulatory revisions to several other pre-
existing requirements (e.g., provision of services in interstate IV-D 
cases, services to individuals not receiving AFDC or title IV-E foster 
care assistance, and medical support requirements), we retained these 
revised criteria in the determination of substantial compliance.
    Based on past experience with State implementation of new or 
significantly-changed program requirements, we believe that States' 
activities related to requirements mandated by the Family Support Act 
and the OBRA '93 and revised, pre-existing requirements must be audited 
to ensure State compliance. These criteria are: Collection and 
distribution of support payments by the IV-D agency, Sec. 302.32; 
distribution of support collections, Sec. 302.51; notice of collection 
of assigned support, Sec. 302.54; guidelines for setting child support 
awards, Sec. 302.56; establishment of cases and maintenance of case 
records, Sec. 303.2; location of non-custodial parents, Sec. 303.3; 
establishment of support obligations, Sec. 303.4; establishment of 
paternity, Sec. 303.5; enforcement of support obligations, Sec. 303.6; 
State income tax refund offset, Sec. 303.6; provision of services in 
interstate IV-D cases, Sec. 303.7; review and adjustment of support 
obligations, Sec. 303.8; case closure, Sec. 303.11; securing medical 
support information, Sec. 303.30; securing and enforcing medical 
support obligations, Sec. 303.31; procedures for wage or income 
withholding, Sec. 303.100, and expedited processes, under Sec. 303.101.
    We emphasize that States are required to meet all Federal 
requirements contained in program regulations, whether or not the 
requirements are included under Sec. 305.20. Auditors may still examine 
requirements that are not contained in Sec. 305.20, but would issue 
management recommendations, instead of findings of substantial 
noncompliance, for failure to meet program requirements not included 
under Sec. 305.20. Implementation of management recommendations should 
help States to improve their performance. In addition, compliance with 
all program requirements will continue to be monitored by Regional 
Offices of the Administration for Children and Families through program 
and financial reviews and the State plan approval process.
    In addition to narrowing the number of criteria contained in the 
determination of substantial compliance, we have streamlined the audit 
regulations by grouping related requirements under certain criteria 
(e.g., wage or income withholding under enforcement).
    Grouping is merely a way to evaluate related requirements and will 
allow audit results to be reported in a more timely manner. States must 
still meet the requirements of each specific regulation cited.
    2. Criteria States must meet to be determined to be in substantial 
compliance. Section 305.20(a) requires that, for audit periods 
beginning on or after December 23, 1994, a State must meet the IV-D 
State plan requirements contained in part 302 of this chapter measured 
as set forth in paragraph (a).
    a. Administrative criteria. Under Sec. 305.20(a)(1), the State must 
meet the requirements under the following criteria:
    (1) Statewide Operations, Sec. 302.10;
    (2) Reports and Maintenance of Records, Sec. 302.15(a);
    (3) Separation of cash handling and accounting functions, 
Sec. 302.20; and
    (4) Notice of Collection of Assigned Support, Sec. 302.54.
    b. Service-related criteria.
    i. 90 percent standard for case opening and closure. Unless 
applications are provided upon request and accepted in a timely manner 
and cases are opened and maintained appropriately, needed IV-D services 
cannot be provided. Furthermore, with regard to case closure criteria, 
it is essential that only those cases for which there is no reasonable 
expectation of establishing paternity, obtaining a support order, or 
collecting child support, either now or in the future, are closed.
    In response to our request for comments regarding the 90 percent 
standard proposed in the September 9, 1993 proposed rule, we received 
many insightful comments, which are set forth later in this preamble. 
In reviewing comments to the proposed rule, we agree that all program 
services should be evaluated using a consistent standard (75 percent), 
and are limiting the application of the 90 percent standard to case 
opening requirements in Sec. 303.2(a) and case closure requirements in 
Sec. 303.11. The requirements at Sec. 303.2(b) regarding the standard, 
and the requirements at Sec. 303.2(a) regarding the opening of a case 
will be evaluated using the 90 percent standard establishment of a case 
record and determination of necessary action on the case will be 
evaluated using the 75 percent. Therefore, we require that, in order to 
be determined to be in substantial compliance, States must have and use 
the procedures for providing applications and information and accepting 
applications set forth in Sec. 303.2(a) and case closure requirements 
at Sec. 303.11, which were effective October 1, 1990, in at least 90 
percent of the cases reviewed for each criterion.
    To reflect the changes discussed above, Sec. 305.20(a)(2) provides 
that, for audits conducted for any period beginning on or after 
December 23, 1994, to be determined to be in substantial compliance, 
the State must have and use procedures required under the following 
criteria in at least 90 percent of the cases reviewed for each 
criterion:
    (1) Establishment of Cases, Sec. 303.2(a); and
    (2) Case Closure, Sec. 303.11.
    Under the case closure criteria, auditors will evaluate cases 
closed during the audit period to determine compliance with the 
requirements of Sec. 303.11. It is important to recognize that States 
will be evaluated to determine whether closure of cases was 
appropriate. As explained in response to comments in the final rule 
governing Standards for Program Operations (54 FR at 32303), States are 
not required to close cases, however, and should a case which meets the 
criteria for case closure be left open, it would not count against the 
State for the purpose of determining compliance.
    ii. 75 percent standard for providing services. Section 
305.20(a)(3) provides that, for audit periods beginning on or after 
December 23, 1994, to be determined to be in substantial compliance, 
the State must have and use procedures required under the following 
criteria in at least 75 percent of the cases reviewed for each 
criterion:
    (1) Collection and Distribution of Support Payments, including: 
Collection and distribution of support payments by the IV-D agency 
under Secs. 302.32(b) and (f); distribution of support collections 
under Sec. 302.51; and distribution of support collected in title IV-E 
foster care maintenance cases under Sec. 302.52;
    (2) Establishment of paternity and support orders, including: 
Establishment of a case under Sec. 303.2(b); services to individuals 
not receiving AFDC or title IV-E foster care assistance, under 
Secs. 302.33(a)(1) through (4); provision of services in interstate IV-
D cases under Secs. 303.7 (a), (b), and (c)(1) through (6), and (8) 
through (10); location of non-custodial parents under Sec. 303.3; 
establishment of paternity under Secs. 303.5(a) and (f); guidelines for 
setting child support awards under Sec. 302.56; and establishment of 
support obligations under Secs. 303.4 (d), (e) and (f);
    (3) Enforcement of support obligations, including, in all 
appropriate cases: Establishment of a case under Sec. 303.2(b); 
services to individuals not receiving AFDC or title IV-E foster care 
assistance, under Secs. 302.33 (a)(1) through (4); provision of 
services in interstate IV-D cases under Secs. 303.7(a), (b), and (c) 
(1) through (6), and (8) through (10); location of non-custodial 
parents under Sec. 303.3; enforcement of support obligations under 
Sec. 303.6, including submitting once a year all appropriate cases in 
accordance with Sec. 303.6(c)(3) to State and Federal income tax refund 
offset; and wage withholding under Sec. 303.100. In cases in which wage 
withholding cannot be implemented or is not available and the non-
custodial parent has been located, States must use or attempt to use at 
least one enforcement technique available under State law in addition 
to Federal and State income tax refund offset, in accordance with State 
laws and procedures and applicable State guidelines developed under 
Sec. 302.70(b) of this chapter;
    (4) Review and adjustment of child support orders, including: 
Establishment of a case under Sec. 303.2(b); services to individuals 
not receiving AFDC or title IV-E foster care assistance, under 
Secs. 302.33(a)(1) through (4); provision of services in interstate IV-
D cases under Secs. 303.7 (a), (b), and (c)(1) through (6), and (8) 
through (10); location of non-custodial parents under Sec. 303.3; 
guidelines for setting child support awards under Sec. 302.56; and 
review and adjustment of support obligations under Sec. 303.8; and
    (5) Medical support, including: Establishment of a case under 
Sec. 303.2(b); services to individuals not receiving AFDC or title IV-E 
foster care assistance, under Secs. 302.33(a)(1) through (4); provision 
of services in interstate IV-D cases under Secs. 303.7(a), (b), and (c) 
(1) through (6), and (8) through (10); location of non-custodial 
parents under Sec. 303.3; securing medical support information under 
Sec. 303.30; and securing and enforcing medical support obligations 
under Sec. 303.31.
    In this final regulation, we have established a standard for 
expedited processes at Secs. 303.101(b)(2) (i) and (iii), and 
corresponding audit criteria at Sec. 305.20(a)(5) to measure the 
establishment of a support order and, when necessary, the establishment 
of paternity. These changes reflect the paternity establishment 
provisions of the OBRA '93. Since States that need to establish 
paternity and a support order often complete both activities at about 
the same time, and the new expedited processes standard covers both 
activities, we have combined into a single grouping the audit criteria 
we will use to evaluate State compliance with Federal requirements for 
establishment of an order and paternity establishment under the 75 
percent audit standard. We believe that this change will further 
streamline the audit process.
    Location Evaluated as Part of Services Provided. Under this final 
regulation, location is not listed as a separate criterion but is 
included under the paternity and support order establishment, 
enforcement, review and adjustment, and medical support criteria. The 
location function is not an end in itself, but an essential component 
of delivering program services. We do not believe that this diminishes 
the significance of the location function. On the contrary, it 
underscores the need to use all appropriate location sources in order 
to proceed with delivering the necessary services in the case. 
Moreover, it is illustrative of the transition to a more results-
oriented, outcome-focused audit.
    Thus, if a case requires establishment of a support obligation and 
the non-custodial parent's whereabouts are unknown, the State must meet 
the applicable location requirements at Sec. 303.3 and, if the non-
custodial parent has been successfully located, the requirements for 
support obligation establishment at Secs. 303.4 (d), (e), and (f) and 
Sec. 302.56 in any case reviewed for purposes of the audit. If the 
State does not meet the location requirements in a case requiring 
support obligation establishment, it would be counted against the State 
in computing the efficiency rate for support obligation establishment 
and the audit findings would reflect that the State failed to 
substantially comply with the support obligation establishment 
requirements due, at least in part, to a failure to meet the location 
requirements. In response to our request for specific comments 
regarding the potential effect of evaluating locate as a component of 
other services rather than as a specific service, we received valuable 
and constructive input, which is described more extensively in the 
Response to Comments section later in this preamble.
    If a support obligation cannot be established because the parent 
from whom support is sought is not located, even though the State met 
all other location requirements (i.e., checked all appropriate sources 
and repeated location attempts) this would not be counted against the 
State. There is, currently, a perceived misunderstanding that States 
must obtain a successful outcome in a case in order to receive credit 
for having worked that case. We would like to clarify that if a State 
meets all Federal requirements, including timeframes, with respect to a 
particular case but cannot locate the non-custodial parent or alleged 
father, for example, the State would not be penalized for failure to 
provide the necessary service. Instead, we would credit the State with 
taking appropriate action.
    Interstate and Non-AFDC Services as Part of Services Provided. 
Under this final regulation, the provision of services in interstate 
cases, and services to individuals not receiving AFDC or title IV-E 
foster care are included under the paternity and support order 
establishment, enforcement, review and adjustment, and medical support 
criteria. It is long-standing Federal policy that all appropriate 
services should be provided in all cases regardless of type (non-AFDC 
IV-D; interstate IV-D). Therefore, we believe that all types of IV-D 
cases (i.e., AFDC, title IV-E foster care, non-AFDC, and interstate) 
should be evaluated in a similar manner. In addition, the requirements 
unique to interstate and non-AFDC cases are not an end in themselves, 
but an essential component of delivering program services for such 
cases. Furthermore, these changes are illustrative of a transition to a 
more results-oriented outcome-focused audit.
    Under this approach, States will still be held accountable for 
meeting requirements that are unique to interstate cases, 
Secs. 303.7(a), (b), (c)(1) through (6) and (8) through (10), as well 
as functions and services otherwise covered by criteria under 
Sec. 305.20 to determine whether the State is in substantial compliance 
with the requirement to provide appropriate services in an interstate 
case. Similarly, States will still be held accountable for meeting 
those aspects of Sec. 302.33 unique to non-AFDC IV-D cases (i.e., 
Secs. 302.33(a)(1) through (4)) to determine whether the State is in 
substantial compliance with requirements to provide services to non-
AFDC individuals. These changes are also addressed in the response to 
comments section of this preamble.
    Enforcement. Under this final regulation, use of some enforcement 
techniques would be mandatory in all appropriate cases in accordance 
with Federal requirements, i.e., wage withholding and submitting once a 
year all cases, in accordance with Sec. 303.6(c)(3), to State and 
Federal income tax refund offset. States must take these actions in all 
appropriate cases, in accordance with Sec. 303.6. Section 303.6(c)(3) 
requires annual submittal for income tax refund offset of all cases 
which meet the certification requirements under Sec. 303.102 and State 
guidelines developed under Sec. 302.70(b) for State income tax refund 
offset, and which meet the certification requirements under Sec. 303.72 
for Federal income tax refund offset.
    Cases exist in which wage withholding is not available or 
appropriate because, for example, the obligated parent is self-
employed, unemployed, or does not have a source of income subject to 
withholding; or the obligor and/or employer cannot be located. In these 
cases, if the non-custodial parent has been successfully located, some 
other enforcement technique, in addition to Federal and State income 
tax refund offset, must be used. States have discretion with respect to 
the use of other enforcement techniques (besides wage withholding and 
Federal and State income tax refund offset) as long as there is 
compliance with Federal regulations, State procedures, and guidelines 
developed by the State under Sec. 302.70(b) which outline when it is 
inappropriate to use an enforcement technique.
    Under this final regulation, for cases in which wage withholding 
cannot be implemented or is unavailable, States will receive credit, 
for audit purposes, for taking or attempting an enforcement action if 
they do any one of the following in accordance with Sec. 303.6: Impose 
a lien against real and personal property under Sec. 303.103; require 
the obligor to post security, bond, or other guarantee to secure 
payment of overdue support under Sec. 303.104; make information 
available to consumer credit reporting agencies under Sec. 303.105; 
withhold unemployment compensation under Sec. 302.65; or request full 
collection services by the Secretary of the Treasury under Sec. 303.71. 
A State will also receive credit for enforcement if it takes an 
enforcement action that is not specifically listed above, if the action 
is consistent with Federal or State laws and procedures.
    This final regulation emphasizes the use of wage withholding and 
income tax refund offset, which are often the most effective 
enforcement techniques, yet ensures that more difficult cases in which 
wage withholding cannot be utilized, are not ignored. For those cases 
in which wage withholding is not implemented, it ensures that at least 
one enforcement action is taken in each case during the audit period. 
States are encouraged to implement several enforcement techniques 
concurrently, although they will not be penalized for failure to do so.
    iii. Credit for providing services. Paragraph (a)(4) indicates 
that, with respect to meeting the 75 percent standard under 
Sec. 305.20(a)(3), for any audit period beginning on or after December 
23, 1994:
    (1) Notwithstanding timeframes for establishment of cases in 
Sec. 303.2(b); provision of services in interstate IV-D cases under 
Secs. 303.7 (a), (b), and (c) (4) through (6), (8) and (9); location 
and support order establishment under Secs. 303.3(b) (3) and (5), and 
303.4(d), if a support order needs to be established in a case and an 
order is established during the audit period in accordance with the 
State's guidelines for setting child support awards, the State will be 
considered to have taken appropriate action in that case for audit 
purposes.
    (2) Notwithstanding timeframes for establishment of cases in 
Sec. 303.2(b); provision of services in interstate IV-D cases under 
Secs. 303.7 (a), (b), and (c) (4) through (6), (8) and (9); location 
and review and adjustment of support orders contained in Secs. 303.3(b) 
(3) and (5), and 303.8, if a particular case has been reviewed and 
meets the conditions for adjustment under State laws and procedures in 
Sec. 303.8, and the order is adjusted, or a determination is made, as a 
result of a review that an adjustment is not appropriate, during the 
audit period in accordance with the State's guidelines for setting 
child support awards, the State will be considered to have taken 
appropriate action for review and adjustment of orders in that case for 
audit purposes.
    (3) Notwithstanding timeframes for establishment of cases in 
Sec. 303.2(b); provision of services in interstate IV-D cases under 
Secs. 303.7 (a), (b), and (c) (4) through (6), (8) and (9); location 
and wage withholding in Secs. 303.3(b) (3) and (5), and 303.100, if 
wage withholding is appropriate and implemented in a particular case, 
and wages are withheld during the audit period, the State will be 
considered to have taken appropriate action in that case for audit 
purposes.
    (4) Notwithstanding timeframes for establishment of cases in 
Sec. 303.2(b); provision of services in interstate IV-D cases under 
Secs. 303.7 (a), (b), and (c) (4) through (6), (8) and (9); location 
and enforcement of support obligations in Secs. 303.3(b) (3) and (5), 
and 303.6, if wage withholding is not appropriate in a particular case, 
and the State uses at least one enforcement technique available under 
State law in addition to Federal and State income tax refund offset, 
which results in a collection received during the audit period, the 
State will be considered to have taken appropriate action in the case 
for audit purposes.
    When a State is considered to have taken an appropriate action in a 
case for audit purposes, as stated above, the case would count towards 
meeting the 75 percent standard in Sec. 305.20(a)(3) for paternity and 
support order establishment, review and adjustment of support orders, 
and enforcement of support obligations, as appropriate. Under paragraph 
(a)(4), a State would receive credit in such an instance for taking an 
action in a case even if relevant timeframes are missed. These 
timeframes include the timeframe for establishment of cases under 
Sec. 303.2(b); timeframes for location in Secs. 303.3(b) (3) and (5); 
and timeframes for provision of services in interstate IV-D cases under 
Secs. 303.7 (a), (b), and (c) (4) through (6), (8) and (9).
    These credits are another indication of the transition to a more 
results-oriented audit. We believe that, for audit purposes, a State 
should not be penalized when intermediate timeframes are missed in a 
case if a successful result is achieved within the audit period (i.e., 
paternity and a support order are established, an order is adjusted or 
determined to be not needed, wages are withheld, or a collection is 
made), since these results are the primary goals of the child support 
enforcement program.
    Furthermore, we believe that this position is responsive to the 
concerns of States that missing an interim timeframe may create a 
disincentive to work the case through to completion of the action.
    However, under this final regulation, if interim timeframes are not 
met in a case, States would only get credit for taking an appropriate 
action if the action is successfully completed, not simply attempted, 
within the audit period. For example, if timeframes are missed in a 
case, a State can get credit for: Paternity and order establishment, 
only if paternity (if needed) and a support order are established; wage 
withholding, only if withholding is implemented and wages are withheld 
as a result; and support order adjustment, only if the order is 
adjusted or determined to not require adjustment.
    We emphasize that a State has to successfully complete an action in 
order to receive credit in a case only if timeframes are not met in the 
case. If, in a particular case, a State complies with the requirements, 
including the timeframes, the State will get credit for taking an 
action in that case even if the action is not successful.
    Collection of unpaid support through enforcement is a major goal of 
the program. As a result, when enforcement timeframes are missed, the 
State will be credited for wage withholding, or, if wage withholding is 
not appropriate in a given case, the use of some other appropriate 
enforcement technique available under State law, in addition to the 
Federal and State income tax refund offset, if such action results in a 
collection during the audit period. Wage withholding is subject to 
specific timeframes in Sec. 303.100. State and Federal income tax 
refund offset, also a highly efficient and effective procedure, are not 
subject to similar case processing timeframes. Other enforcement 
techniques are subject to the general timeframe in Sec. 303.6.
    Since some enforcement techniques, such as liens and consumer 
credit reporting, may not immediately result in collections and because 
it is difficult to determine when and if these actions have been 
successful in collecting support, States will only be credited when a 
collection is received. In successful wage withholding cases, 
collections usually occur almost immediately, so it is easy to 
determine when it has been successfully completed.
    We emphasize that all timeframes, including those for paternity and 
support order establishment, review and adjustment, and wage 
withholding, are still Federal requirements that States must meet. 
However, as described above, States may receive credit for taking an 
action under Sec. 305.20(a)(4) when the outcome is successful even if 
timeframes are missed in a case.
    c. Expedited processes. Paragraph (a)(5) requires that, for audit 
periods beginning on and after December 23, 1994, the State must meet 
the requirements for Expedited Processes under Sec. 303.101 to be in 
substantial compliance. Prior to the issuance of this final rule, the 
compliance percentages contained in the expedited processes regulation 
were used to evaluate State performance rather than the 75 percent 
audit standard. The new compliance percentages contained in the 
expedited processes regulation revised in this final rule will be 
evaluated in the same manner. Therefore, the evaluation of the 
expedited processes compliance percentages discussed earlier in this 
preamble will continue to be separated from the service-related 
category which is evaluated using a 75 percent standard.
    d. Performance indicators. Paragraph (a)(6) continues to require 
that the State must meet the criteria referred to in Sec. 305.98(c) of 
this part relating to the performance indicators prescribed in 
paragraph (a) of that section.

Paternity Establishment Percentage Standard--Proposed Sec. 305.97

    Section III of the Family Support Act of 1988 amended section 452 
of the Act by adding a new paternity establishment standard, at 
subsection (g), that States must meet for any fiscal year beginning on 
or after October 1, 1991. In the proposed rule, we proposed to add a 
new Sec. 305.97, titled Paternity Establishment Percentage Standard, 
which would set forth the requirements States must meet in order to be 
determined to be in substantial compliance with title IV-D of the Act. 
However, because of recent statutory changes to the standard, it will 
be dealt with separately and is not included in this final rule. As 
part of the OBRA '93 (Pub. L. 103-66), Congress revised the paternity 
establishment standard, including the description of data needed to 
calculate the ratio. Subsequently, Congress enacted Pub. L. 103-432 
which included technical amendments that corrected the description of 
the terms of the standard.

Performance Indicators--Sec. 305.98

    Section 305.98(c) is revised to indicate that OCSE continues to use 
the procedures and audit criteria in that paragraph to measure State 
performance. Paragraph (d) is revised to state that the performance 
indicator scoring system will be described and updated periodically by 
the Office (i.e., OCSE). We will publish any changes to the scoring 
system in the Federal Register in advance of their effective date.

Notice and Corrective Action Period--Sec. 305.99

    Former Sec. 305.99(b)(2) provided that the notice of substantial 
noncompliance identify any audit criteria listed in Secs. 305.20 
(a)(2), (b)(2) or (c)(2) that the State met only marginally (that is, 
in 75 to 80 percent of the cases reviewed). Revised Sec. 305.99(b)(2) 
provides that the notice of substantial noncompliance identify any 
audit criteria listed in Sec. 305.20(a)(3) of this part that the State 
met only marginally [that is, in 75 to 80 percent of cases reviewed for 
criteria in (a)(3)]. This change replaces the reference to Secs. 305.20 
(a)(2), (b)(2) or (c)(2) with Sec. 305.20(a)(3).

Response to Comments

    1. Paternity Establishment Provisions.
    In response to the Notice of Proposed Rulemaking published November 
29, 1993, in the Federal Register (58 FR 62599), we received over 60 
comments from representatives of State and local IV-D agencies, 
national organizations, advocacy groups, and private citizens. Their 
comments and our responses are as follows:

General Comments

    1. Comment: One commenter requested that OCSE liberally grant 
waivers from the new requirements if a State has laws, processes, or 
procedures which achieve the aims of the statutory paternity provisions 
under OBRA '93.
    Response: Procedures regarding exemptions are delineated at 
Sec. 302.70(d) and OCSE-AT-88-19. (Although the procedures in OCSE-AT-
88-19 refer to former expedited process requirements, these procedures 
may be used until they are updated to reflect the new expedited process 
requirements). A State may apply for an exemption from adopting any of 
the required State laws at Sec. 302.70(a) by submitting a request for 
an exemption to the Federal Regional Office. The Secretary will grant a 
State (or political subdivision in the case of expedited process 
requirements) an exemption for a period of up to three years in the 
limited instances where the State demonstrates that compliance would 
not increase the effectiveness and efficiency of its IV-D program.
    2. Comment: One commenter suggested that the statutory effective 
date should apply only to the Federal statutory provisions, and that 
States should be given additional time, after the issuance of final 
regulations, to comply with any Federal regulatory requirements 
implementing the statutory provisions. According to this commenter, the 
effective date of any regulatory requirements based upon the Federal 
statute should be linked to the end of each State's next legislative 
session following publication of the final rule.
    Response: We are not linking the effective date of this regulation 
to each State's next legislative session following publication of this 
rule. The statutory effective date, which is linked to States' 
legislative sessions, applies to statutory requirements, even if the 
statutory effective date occurred prior to publication of these final 
regulations. If the Federal statutory effective date for a State occurs 
after publication of these regulations, these regulations will not be 
effective until the statutory effective date. Furthermore, these 
regulations allow States until January 1, 1995 (or the Federal 
statutory effective date, if later) to implement hospital-based 
programs statewide. Therefore, we do not believe additional 
implementation time for regulatory requirements is necessary.
    3. Comment: One commenter suggested that we retain the list of 
effective dates, previously at Sec. 302.70(a), for required State laws.
    Response: To simplify the regulatory language, we have deleted 
effective dates of IV-D State plan requirements previously listed in 
Sec. 302.70(a). The effective dates had been listed to differentiate 
between requirements that became effective at different times. However, 
since all requirements listed at Sec. 302.70(a) are now effective, we 
believe it is unnecessarily cumbersome to enumerate all the various 
effective dates in the regulation. Each IV-D State plan requirement, 
including the new paternity ones, remains effective on the date 
indicated by the statute or implementing regulation.

Simple Civil Process for Voluntarily Acknowledging Paternity--Sections 
302.70(a)(5)(iii) and 303.5(a)

    a. General Requirements, Rights and Responsibilities, and Due 
Process.
    1. Comment: Several commenters questioned why requirements 
regarding general voluntary acknowledgment procedures are not as 
detailed as the requirements regarding hospital-based voluntary 
acknowledgment programs.
    Response: Regulations regarding the general voluntary 
acknowledgment process are not as detailed as those covering hospital-
based programs. The reason for this differentiation is that the vast 
majority of States, if not all States, had already implemented general 
voluntary acknowledgment procedures prior to the passage of OBRA '93. 
Given that no national problem has been identified regarding these 
existing State procedures, we do not want to impede their successful, 
ongoing operation. For example, States have already developed forms and 
materials that meet the requirements of State law and that have 
withstood judicial review. We do not want to impose detailed Federal 
requirements that would unnecessarily force States to develop new forms 
and materials.
    We do, however, encourage States to reexamine their existing 
voluntary acknowledgment procedures to ensure that they are simple, 
provide sufficient information to the parties, and are regularly used. 
The voluntary acknowledgment process should be available at any time to 
fathers who want to voluntarily acknowledge paternity. Ideally, States 
will allow fathers multiple opportunities to voluntarily acknowledge at 
any stage in the process. Even if a man is initially reluctant to 
voluntarily acknowledge parentage because he is unsure whether he is 
actually the father, he may be willing to do so after receiving genetic 
test results which indicate a high probability of paternity.
    While we have tried to avoid unnecessary Federal intervention 
regarding general voluntary acknowledgment requirements, there is a 
need for detailed Federal requirements regarding hospital-based 
programs. While some States had organized hospital-based programs prior 
to passage of OBRA '93, most of these programs were not statewide in 
scope. Therefore, in many parts of the country such programs do not yet 
exist or are not well-established. Detailed Federal requirements should 
help to ensure that such programs are properly implemented. As several 
commenters on the proposed rule pointed out, States which have 
implemented hospital-based programs have found that programs are most 
effective where trained staff and explanatory materials are available 
to assist the parents.
    In addition, the special circumstances of a hospital environment 
warrant detailed Federal oversight. For medical records staff and 
health care workers in hospital-based programs, providing voluntary 
acknowledgment services is only an ancillary activity to their main 
responsibilities. Hospital staff may not be as familiar with paternity 
and child support issues as IV-D or court staff involved in voluntary 
acknowledgment procedures outside of hospitals.
    Furthermore, as several commenters pointed out, during the hours 
following birth, the mother may be in physical pain, mentally exhausted 
or preoccupied, and inundated with information regarding the health and 
care of her newborn child. Hospital staff providing voluntary 
acknowledgment services may not be aware of salient issues in a case, 
such as domestic violence. (When voluntary acknowledgments are made 
outside of the hospital, child support personnel may be more likely to 
learn of such issues during initial interviews with the woman).
    In light of these special circumstances, the detailed requirements 
at Sec. 303.5(g) are designed to ensure that the voluntary 
acknowledgment process in hospitals is truly voluntary and appropriate, 
and that both the mother and alleged father have adequate information 
to make an informed decision.
    2. Comment: Many commenters recommended detailed and specific 
Federal requirements regarding the explanation of rights and 
responsibilities and due process safeguards.
    Response: We agree with commenters about the importance of this 
issue. Under regulations at Sec. 302.70(a)(5)(iii), States are required 
to explain to both parents the rights and responsibilities of 
acknowledging paternity. The explanation should describe the rights and 
responsibilities, including the duty to support the child financially, 
that each party will assume as a result of signing the acknowledgment. 
It should also describe rights that each party may be giving up by 
signing the acknowledgment (e.g., right to genetic testing). These 
rights and responsibilities will vary by State, depending on State law.
    For out-of-hospital acknowledgments, as long as the explanation 
meets State due process requirements, it may be verbal or in writing. 
However, we recommend that this disclosure of rights be provided in a 
written format that is clear and easily understood. Furthermore, we 
encourage States to place this written explanation on the 
acknowledgment form itself. As one commenter indicated, if a party 
later challenges the validity of an acknowledgment, a written 
explanation of rights and responsibilities on the form will provide 
evidence that notification occurred. Section 302.70(a)(5)(iii) also 
requires a State to meet any due process requirements necessary under 
State law and court rulings. (Federal requirements regarding hospital-
based programs are somewhat more prescriptive due to the special 
circumstances of a hospital environment as previously discussed. 
Hospital-based program requirements are discussed in greater detail 
later in this preamble).
    However, consistent with past policy, we are not mandating detailed 
Federal due process requirements. Generally, a State is in a better 
position than the Federal government to determine the exact nature of 
such requirements in light of the State's particular circumstances. As 
one commenter stressed, a State needs to tailor its requirements to 
address the legal effect of the acknowledgment under State law--e.g., 
whether the acknowledgment creates a rebuttable or conclusive 
presumption. States' due process requirements also vary depending on 
State law and court rulings. However, because of the importance of the 
due process and rights and responsibilities issue, OCSE is committed to 
providing technical assistance, within its available resources, 
including sharing sample forms and materials from other jurisdictions, 
in order to assist States.
    We also encourage States to consider, for both in-hospital and out-
of-hospital acknowledgments, a number of suggestions recommended by 
commenters, including providing: Both a verbal and a written 
description of the rights, responsibilities, and consequences resulting 
from acknowledging paternity; a clear, written explanation of the legal 
significance of a paternity acknowledgment under State law; a written 
notice that the parties may wish to seek legal advice prior to signing 
the acknowledgment; a written statement explaining that completion of 
the form is voluntary; procedures requiring the acknowledging parents 
to sign a statement indicating that they understand their rights and 
responsibilities; and training of staff and making IV-D agency staff 
available in person or by telephone to ensure that acknowledgments are 
voluntary and completed only after parents understand the consequences.
    3. Comment: Several commenters argued that special protections are 
needed, as a part of both in-hospital and out-of-hospital voluntary 
acknowledgment procedures, for cases involving illiterate, non-English 
speaking, mentally incapacitated, blind, or hearing-impaired persons.
    Response: We agree that special protections may be needed in such 
cases. However, just as a State generally has discretion regarding due 
process safeguards in ``regular'' cases, we are also giving States 
discretion in cases involving special circumstances. This allows each 
State to formulate policies which address its own particular 
requirements, including case law, regarding due process. States, IV-D 
agencies, and birthing hospitals are in the best position to determine 
the details of how to respond to special circumstances in their State's 
population or a facility's service area (e.g., languages other than 
English in which to publish materials and forms).
    Despite this discretion, we encourage and expect States and IV-D 
agencies to address the special circumstances mentioned by commenters, 
as necessary, by setting appropriate policies, developing materials, 
and providing training to both hospital-based program and IV-D staff. 
As commenters cautioned, acknowledgments in such cases may be 
challenged if appropriate safeguards are not followed. We believe that 
States have already shown sensitivity to these special circumstances 
and there is no need for direct Federal intervention. For example, 
several States have developed paternity establishment materials and 
forms in languages other than English.
    4. Comment: Several commenters suggested the need to include 
provisions regarding custody and visitation as part of the 
acknowledgment process. Some commenters suggested that parents, when 
given the opportunity to voluntarily acknowledge paternity, ought to be 
given the chance to complete forms regarding custody and visitation. 
Another commenter suggested that if the alleged father acknowledges 
paternity at the hospital, a custody order should also be entered for 
the mother at the same time to protect the mother's parental rights.
    Response: We are not mandating requirements regarding custody and 
visitation because the paternity provisions of OBRA '93 and the other 
provisions of title IV-D of the Act do not address custody or 
visitation issues, and these are essentially State matters. However, 
when giving the parents the opportunity to voluntarily acknowledge 
paternity, we would also encourage that both parents receive an 
explanation, either in writing or verbally, about the potential impact 
of an acknowledgment under State law on custody and visitation.
    b. Acknowledgment Form.
    1. Comment: We received numerous comments regarding the proposal to 
require that States use a standard acknowledgment form incorporating 
certain minimum elements. Some commenters objected to the mandated use 
of an acknowledgment form and questioned whether it would prohibit 
States from using other, previously-established methods for obtaining 
voluntary acknowledgments.
    Other commenters expressed concern about the specific elements that 
we proposed the forms should include. Commenters objected to mandating 
inclusion of: (1) Filing instructions because the instructions would 
not be applicable to all situations, (2) a line for the parents' social 
security numbers due to privacy concerns, and (3) parents' addresses 
due to the transitory nature of addresses. On the other hand, several 
commenters suggested that the form contain both the parents' and 
child's dates of birth--data elements that we had not proposed to 
require. Other commenters maintained that mandating any minimum form 
elements was unduly restrictive and that States should be allowed to 
design their own forms.
    Response: In response to commenters' concerns, we are not mandating 
use of a uniform acknowledgment form. As stated in the preamble to the 
proposed rule, mandating a form with minimum elements was intended to 
standardize interstate case processing. However, based on comments to 
the proposed rule, it is clear that our proposal would not have solved 
interstate problems. Some States use voluntary acknowledgment 
procedures, other than an acknowledgment form, that do not contain the 
uniform elements. Furthermore, because there is no agreement among 
States regarding what the elements of an acknowledgment form should be, 
State forms would have continued to vary in many respects even if some 
uniform elements were mandated. (Differences in State forms or 
procedures should not be an issue if an acknowledgment creates a 
determination of paternity subject to full faith and credit, but may be 
an issue if an acknowledgment does not create a determination of 
paternity). As one commenter pointed out, in order to avoid interstate 
problems, we would have to mandate use of a standardized national form. 
However, we believe a standardized national form would unnecessarily 
disrupt many States' long-standing and successfully-operating voluntary 
acknowledgment procedures.
    Although we are not mandating the use of a form with minimum 
elements, States must have procedures for a simple civil process for 
voluntarily acknowledging paternity in accordance with 
Sec. 302.70(a)(5)(iii). We anticipate that most States will use some 
type of acknowledgment form, and we encourage States to include on the 
form data elements that provide valuable locate and identifying 
information. These elements may include: Parents' social security 
numbers, dates of birth, and addresses. If a State's form includes the 
social security numbers of the parents, the recording of voluntary 
acknowledgments might be a way of obtaining social security numbers 
from parents as required during the birth registration process by 
section 205(c)(2)(C)(ii) of the Social Security Act. OCSE plans to 
provide States with examples of voluntary acknowledgment forms used in 
various jurisdictions around the country.
    2. Comment: Several commenters objected to the proposed requirement 
that a voluntary acknowledgment be signed by both parents. This 
provision of the proposed rule would have also required that the 
parents' signatures be authenticated by a notary or witness(es). 
According to commenters, it would be burdensome, time-consuming, 
costly, and unnecessary to have both parents sign the same form, 
particularly if the parents live in different States. These commenters 
noted that frequently in IV-D cases the mother is not present when the 
father acknowledges paternity but that she has previously named the 
acknowledging man as the father in writing. As one commenter suggested, 
the proposal may have made it necessary for the IV-D agency to find the 
mother once the man acknowledged, even if she had previously named the 
man as the father, to have her sign in front of a notary or witness the 
same acknowledgment form that the father signed. In addition, 
commenters noted that, under some existing State laws, a man can 
voluntarily acknowledge paternity without the mother's consent (only 
under certain circumstances in some States; e.g., if genetic test 
results create a presumption of paternity, or the mother is deceased or 
mentally incapacitated).
    Response: In response to commenters' concerns, for general 
voluntary acknowledgment procedures, we are not requiring that both 
parents sign the same form in front of a notary public or witness(es). 
We want to avoid unnecessary Federal interference with State's 
previously-established and successfully-operating voluntary 
acknowledgment procedures. We note, however, that if an acknowledgment 
form with signature lines for both parents contains space for a notary 
or witness to authenticate each signature separately (as recommended by 
one commenter), the parents do not necessarily have to sign the form at 
the same time.
    This rule does compel the State to require that a voluntary 
acknowledgment obtained through a hospital-based program be signed by 
both parents, and that the parents' signatures be authenticated by a 
notary or witness(es). We are including this requirement at 
Sec. 303.5(g)(4), rather than at Sec. 302.70 as in the proposed rule, 
since we are limiting its scope to hospital-based programs. Regarding 
mandating the use of notaries, we believe such a requirement would 
unnecessarily interfere with State practice and create problems in 
hospitals where notaries may not always be readily available.
    Since the mother will be present in cases in which the father signs 
a voluntary acknowledgment at the hospital, it is not burdensome to 
require that both parents sign in such cases (although they need not 
both sign the form at the same time). Furthermore, we want to ensure 
that the process at the hospital is truly voluntary and that an 
acknowledgment is made only when both parents agree about the man's 
paternity. Even if a man is willing to acknowledge paternity, the 
mother may deny that he is the father, or may not want paternity to be 
established (due to domestic violence or other circumstances). 
Hospitals should not have to mediate disputes or pursue cases where the 
parties disagree about the man's paternity. If a party in such a case 
wishes to establish paternity without the cooperation of the other 
party, he or she could contact the IV-D agency or a private attorney.
    States can meet the requirements of Sec. 303.5(g)(4) by developing 
and mandating the use of a form for hospital-based programs which 
contains signature lines for both parents and a notary public or 
witness(es).
    c. IV-D Agency Activity.
    1. Comment: One commenter suggested that the proposed requirement 
at Sec. 303.5(a), requiring the IV-D agency to offer the alleged father 
the opportunity to acknowledge paternity in IV-D cases in which 
paternity has not been established and a voluntary acknowledgment has 
not been obtained, was overly broad. The commenter suggested that there 
are cases, particularly under some State laws, where it is 
inappropriate to pursue a voluntary acknowledgment--e.g., cases where 
the alleged father is a minor or lacks the requisite mental capacity.
    Response: We revised this provision to require that the IV-D agency 
offer the alleged father, as appropriate, the opportunity to 
acknowledge paternity. If a IV-D agency determines that it would not be 
appropriate to offer the alleged father an opportunity to voluntarily 
acknowledge paternity, it must: (1) Document in the case record the 
specific reason it is inappropriate to seek an acknowledgment, and (2) 
attempt to establish paternity by legal process established under State 
law.
    Adding ``as appropriate'' allowed us to delete the phrase ``and a 
voluntary acknowledgment has not been obtained'' in the proposed 
introductory language of Sec. 303.5(a) describing the applicability of 
the provision. Since the IV-D agency acts in accordance with 
Sec. 303.5(a) ``as appropriate'', the provision now applies broadly to 
any case ``in which paternity has not been established''. Seeking a 
voluntary acknowledgment in a case where an acknowledgment has 
previously been obtained would not be appropriate.
    2. Comment: One commenter asked if mailing an acknowledgment form 
to the alleged father's last known address with no verification of 
receipt would meet the requirement at Sec. 303.5(a) for providing the 
alleged father the opportunity to voluntarily acknowledge paternity.
    Response: In order to satisfy this requirement, IV-D staff may 
contact the alleged father by telephone, written notice, or in person 
as appropriate under the circumstances and State law. Written notice 
may be given by mail, personal service, or other means; however, it 
must be addressed specifically to the individual alleged father. We 
strongly encourage that language in written notices be ``reader-
friendly'': i.e., clear and easy to understand. The IV-D agency should 
advise the man that the mother has named him as the father of the 
child, describe the procedures for voluntarily acknowledging paternity, 
and advise him of his rights and responsibilities. The IV-D agency must 
document in the case record when and how the alleged father is sent or 
given notice of the paternity action and the opportunity to voluntarily 
acknowledge.
    Mailing an acknowledgment form to the alleged father's last known 
address will satisfy this requirement, if the man can acknowledge 
paternity by completing and returning the form. However, the IV-D 
agency must meet the requirements mentioned above (advising the man 
that the mother has named him as the father of the child, describing 
the procedures for voluntarily acknowledging paternity, and advising 
him of his rights and responsibilities) via the form, attached written 
materials, or other means.
    Although mailing a form is sufficient to meet the requirement at 
Sec. 303.5(a), we encourage States to make additional efforts to 
facilitate acknowledgments. For instance, several States ask the father 
to come to the IV-D agency for a conference or hearing where he may 
voluntarily acknowledge. The conference allows IV-D staff to explain, 
in person, the rights and responsibilities associated with the 
establishment of paternity. Designated agency personnel are available 
to witness or notarize signatures on voluntary acknowledgments.
    If an alleged father refuses or is reluctant to voluntarily 
acknowledge paternity, States should encourage genetic testing. Men who 
are unsure, but willing to cooperate, will frequently consent to 
genetic testing. States could adopt procedures for conducting testing, 
if the alleged father consents, prior to a formal filing of an action 
to establish paternity with the court or administrative authority. Even 
in cases where the man is initially unwilling to voluntarily 
acknowledge, he may consent to genetic testing and subsequently 
acknowledge paternity if the test results show a high probability of 
paternity, without the need for a hearing or formal adjudication.
    3. Comment: One commenter requested clarification regarding whether 
the opportunity to voluntarily acknowledge could be given either before 
or after initiating legal action to establish paternity.
    Response: The IV-D agency may meet the requirement at Sec. 303.5(a) 
by offering the alleged father the opportunity to acknowledge paternity 
at any time--before or after initiating legal action to establish 
paternity. To clarify this, we have omitted the phrase ``if he fails to 
voluntarily acknowledge paternity'' (which was included in the text of 
the proposed Sec. 303.5(a)(2)), since it implied that the IV-D agency 
should seek a voluntary acknowledgment before attempting to establish 
paternity by legal process. Although we generally encourage States to 
offer the alleged father the opportunity to acknowledge before 
initiating legal process, we realize that some men will flee or 
otherwise avoid service of process if notified of the paternity issue 
prior to service.
    If a IV-D agency offers the man the opportunity to voluntarily 
acknowledge paternity prior to the initiation of legal action, the IV-D 
agency may want to inform the alleged father at the time it provides 
him an opportunity to acknowledge that formal paternity establishment 
action will begin if the alleged father does not acknowledge within a 
specified timeframe. On the other hand, a IV-D agency may choose to 
combine service of process necessary for a legal paternity 
determination with the offer of the opportunity to voluntarily 
acknowledge. For example, some States serve a notice or claim of 
alleged paternity and support obligation on the putative father, 
informing him of the opportunity to voluntarily acknowledge paternity. 
If the man fails to voluntarily acknowledge, the State can then 
adjudicate paternity based on the initial notice.

Hospital-Based Paternity Establishment Programs--Sections 301.1, 
302.70(a)(5)(iii)(A), 303.5 (g) and (h), 304.20(b)(2), and 304.23(d)

    a. General Requirement; State Law.
    1. Comment: One commenter questioned whether hospital-based 
programs would be effective, particularly since mothers of newborns 
stay in the hospital for such a short period of time.
    Response: Prior to the enactment of OBRA '93, about half of the 
States had already developed hospital-based programs to obtain 
voluntary acknowledgments of paternity (although often on less than a 
statewide basis). Even some hospitals in States without proactive, 
organized programs have, for years, accepted voluntary acknowledgments 
of paternity from maternity patients and alleged fathers. Typically, in 
an organized program, trained hospital employees provide information 
about paternity establishment to the parents, inform them of their 
rights, and give the putative father the opportunity to voluntarily 
acknowledge paternity. Such programs have been quite effective in 
obtaining voluntary paternity acknowledgments; some hospital-based 
programs have successfully obtained voluntary acknowledgments for about 
40 percent of their out-of-wedlock births. In developing these 
regulations, OCSE met with officials from established hospital-based 
programs in several States.
    The experience of States indicates a father of a child born to an 
unmarried mother is more likely to be present and to admit paternity 
during the time surrounding birth than later on. Early paternity 
establishment reduces location difficulties and administrative costs 
which can occur if paternity establishment is delayed. The earlier 
paternity is established, the sooner the child will have access to the 
father's medical benefits, medical history information, a legal 
relationship with the father, child support, and other benefits 
resulting from paternity establishment.
    To address the fact that mothers of newborns stay in the hospital 
only a short period of time after birth, States and their hospital-
based programs should attempt to offer paternity acknowledgment 
services during peak hospital visiting hours, which may be in the 
evening, to ensure that all unmarried parents have the opportunity to 
voluntarily acknowledge paternity. In addition, States are encouraged 
to provide information on the importance of paternity establishment 
prior to the birth of the child (e.g., at prenatal clinics and maternal 
and child health programs).
    2. Comment: Some commenters expressed concern that the proposed 
January 1, 1995 effective date for statewide implementation of the 
hospital-based program would be difficult to meet. One commenter 
suggested that OCSE provide training and technical assistance to help 
States meet this deadline. Commenters pointed out that in a few States 
the first legislative session after enactment of OBRA '93 will be in 
1995.
    Response: With one adjustment, we are keeping the effective dates 
as proposed. As required by the Federal statute, States must have laws, 
regulations and/or binding procedures required under 
302.70(a)(5)(iii)(A) in place on October 1, 1993 (or if legislation is 
required, by the beginning of the first calendar quarter after the 
close of the first regular session of the State legislature that begins 
after August 10, 1993).
    Under Sec. 303.5(g)(1), the hospital-based programs must be 
operational in birthing hospitals statewide no later than January 1, 
1995. Given the increasing number of out-of-wedlock births, we believe 
Congress intended these hospital-based programs to be implemented as 
quickly as possible, and we cannot justify further delay. Depending on 
State circumstances, the January 1, 1995 effective date gives States 
over a full year after the Federal mandate's effective date to gear-up 
to a statewide program. In the preamble to the proposed rule (58 FR 
62599, 62603), we encouraged States to begin implementing their 
hospital-based programs immediately, even if a State law had not yet 
passed, by contacting hospitals and appropriate agencies and developing 
forms, written materials, and training procedures.
    However, as commenters pointed out, OCSE cannot impose a regulatory 
effective date that is stricter than the statutory one. Therefore, we 
have added the phrase ``unless Federal law governing the effective date 
gives the State additional time'' to the January 1, 1995 effective date 
at Sec. 303.5(g)(1). This phrase only applies to States where: (1) the 
end of first regular legislative session beginning after enactment of 
OBRA '93 (on August 10, 1993) occurs after January 1, 1995, and (2) the 
State legislature needs to pass law regarding the hospital-based 
program in order for the State to comply with 
Sec. 302.70(a)(5)(iii)(A). A State meeting these conditions will have 
until the effective date contained in Federal statute to implement its 
hospital-based program statewide. Such a State, however, must have both 
its law in place and have its hospital-based program operational 
statewide by the Federal statutory effective date. We encourage States 
to establish their hospital-based program and mandate participation by 
birthing hospitals through regulation or procedure with the full force 
and effect of law. However, if enabling State legislation is necessary, 
the State can proceed with implementation planning and arrangements 
concurrent with consideration of the legislation.
    To facilitate the establishment of hospital-based programs, the IV-
D agency may enter into agreements or contracts with birthing hospitals 
or other State agencies. (Some type of formal agreement is required in 
order to receive FFP for $20 payments per acknowledgment; see 
discussion below). A State could also contract with a private entity or 
organization to implement the hospital-based program. For purposes of 
Title IV-D State plan requirements, the State will still be liable for 
ensuring that the required process has been implemented. We encourage 
the State to work closely with the State hospital association; State 
staff who have implemented existing programs indicate the hospital 
association was a key player in implementation.
    OCSE is committed to continuing to provide technical assistance to 
help States implement hospital-based programs quickly. To date, OCSE 
has sponsored a well-attended national conference for State agency 
personnel, published and disseminated ``In-Hospital Paternity 
Establishment: A Resource Guide'', and run feature stories in its 
nationally disseminated periodical, the Child Support Report, all of 
which addressed hospital-based program implementation issues.
    3. Comment: Two commenters requested that the regulations include 
an enforcement mechanism regarding the participation of birthing 
hospitals.
    Response: The statute did not include a Federal enforcement 
mechanism targeted directly at hospitals (such as a link to Medicaid or 
Medicare funding), and OCSE does not have the authority to establish 
such a mechanism by regulation.
    However, a State must meet the hospital-based program requirement 
at Sec. 302.70(a)(5)(iii)(A) as a condition of IV-D State plan 
approval. Each State's title IV-D plan must be approved for the State 
to receive Federal financial participation in the operation of its 
Child Support Enforcement program. At a minimum, new 
Sec. 302.70(a)(5)(iii)(A) requires State law, regulation, and/or 
binding procedure to compel all public and private birthing hospitals 
to participate in hospital-based programs as defined in 
Sec. 303.5(g)(2). At State option, State law may include an enforcement 
mechanism for dealing with noncompliance by hospitals.
    4. Comment: In the proposed rule, we suggested defining ``birthing 
hospital'' as a hospital that has a licensed obstetric care unit or is 
licensed to provide obstetric services, or a licensed birthing center 
associated with a hospital. One commenter argued that this proposed 
definition was too restrictive and did not account for the variety of 
licensing procedures used by States. According to the commenter, at 
least one State licenses hospitals generally, not according to whether 
they provide birthing services.
    Response: We have changed the definition of birthing hospital at 
Sec. 301.1 from what was originally proposed. A birthing hospital is 
now defined as a hospital that has an obstetric care unit or provides 
obstetric services, or a birthing center associated with a hospital. If 
a State licenses hospitals according to whether they have obstetric 
units or provide obstetric services, or if a State licenses birthing 
centers, the State may use the list of licensed entities to determine 
in which facilities hospital-based programs should be established.
    Since we do not believe programs should be mandated in hospitals 
(such as geriatric hospitals) that do not provide maternity services, 
we have limited the hospital-based program requirement to hospitals 
that either have an obstetric care unit or that provide obstetric 
services. In the definition of birthing hospital, we also include 
birthing centers associated with a hospital. A birthing center is a 
facility physically located outside a hospital that provides maternity 
services. Generally, such centers use midwives and provide services for 
women who expect no complications during birth. Frequently, a hospital 
will provide back-up services to a birthing center if complications 
develop. Since in some localities, a significant number of births occur 
in birthing centers, we believe voluntary acknowledgment programs 
should be established in such centers that are associated with 
hospitals.
    5. Comment: One commenter asked how the Federal OCSE would monitor 
State compliance with the hospital-based program requirements.
    Response: Section 454(20) of the Act requires that the State IV-D 
plan provide that the State shall have in effect all the laws required 
under the mandatory procedures established in section 466 of the Act. 
Since the requirements for hospital-based programs are part of the 
mandatory procedures set forth in section 466, States must demonstrate 
conformity with these requirements as a condition for having an 
approved State IV-D plan. As a condition of State plan approval, States 
must have a law (or procedure, rule, or regulation with the force of 
law) providing for a hospital-based program and requiring that all 
public and private birthing hospitals participate in the program in 
accordance with Sec. 302.70(a)(5)(iii)(A). In addition, as part of the 
State plan approval process, States will be asked to certify that 
hospital-based programs are operational in birthing hospitals statewide 
no later than January 1, 1995 (unless Federal law governing the 
effective date gives the State additional time) in accordance with 
Sec. 303.5(g)(1). States failing to demonstrate conformity with these 
requirements will be subject to State plan disapproval procedures 
outlined in OCSE-AT-86-21. Non-conformity could result in the 
suspension of all IV-D funding as well as loss of a portion of title 
IV-A funding to the State.
    b. Elements of a Hospital-Based Program.
    1. Comment: Numerous commenters recommended that Federal hospital-
based program requirements include detailed and specific provisions 
regarding due process safeguards and the explanation of rights and 
responsibilities. For example, some commenters suggested federally-
mandated training protocols, and safeguards to protect the mother, 
particularly in cases involving domestic violence.
    Response: As discussed earlier in response to comments, although we 
agree with the importance of affording due process and explaining 
rights and responsibilities, we have tried to avoid overly prescriptive 
Federal requirements that would unnecessarily disrupt or interfere with 
the operation of existing, successfully-functioning programs.
    However, OCSE is committed, within its available resources, to 
offering technical assistance and ``best practices'' regarding forms, 
written materials, and training procedures. Moreover, Federal 
requirements regarding hospital-based requirements are somewhat more 
detailed than the general voluntary acknowledgment requirements, due to 
the special conditions, discussed earlier, surrounding hospital-based 
programs.
    Under Sec. 303.5(g)(2)(i), a hospital-based program must provide to 
both the mother and alleged father, if he is present in the hospital: 
(A) Written materials about paternity establishment, (B) the forms 
necessary to voluntarily acknowledge paternity, (C) a written 
description of the rights and responsibilities of acknowledging 
paternity, and (D) the opportunity to speak with staff, either by 
telephone or in-person, who are trained to clarify information and 
answer questions about paternity establishment.
    The written materials about paternity establishment can be 
brochures, pamphlets, or similar materials that describe the benefits 
of paternity establishment and the consequences of a voluntary 
acknowledgment. Some States have begun using informational films or 
videos, in addition to written materials. The State may want to include 
a discussion of the potential impact of an acknowledgment on custody, 
visitation, and adoption.
    The description of rights and responsibilities may be a separate 
document or be included on the other written materials or forms. 
However, we encourage States to include the description on the form 
itself to serve as proof that notice of the rights and responsibilities 
was provided in the event the acknowledgment is later challenged. The 
description should list the rights each party is conceding by signing 
the acknowledgment. It should also describe the rights and 
responsibilities, including the duty to support the child financially, 
that each party will assume as a result of signing the acknowledgment. 
These rights and responsibilities will vary by State, depending on 
State law.
    In accordance with Sec. 303.5(g)(5), the State must provide the 
written materials, written description of rights and responsibilities, 
and acknowledgment forms to the birthing hospitals for distribution. 
The materials should be written in clear, easily understandable terms. 
The State is responsible for ensuring that birthing hospitals have an 
adequate supply of these items to distribute to unmarried mothers and 
alleged fathers upon birth of a child. Hospitals already distribute a 
variety of materials and forms to patients and can incorporate 
paternity materials and forms into their existing distribution 
procedures.
    Under Sec. 303.5(g)(4), the State must require that a voluntary 
acknowledgment obtained through a hospital-based program be signed by 
both parents, and that the parents' signatures be authenticated by a 
notary or witness(es). Therefore, an acknowledgment of paternity cannot 
be made in the hospital unless both the mother and the alleged father 
agree to acknowledge the man's paternity. The form used for 
acknowledging paternity in a hospital-based program should contain 
lines for both parents' signatures and authentication by a notary or 
witness(es).
    Under Sec. 303.5(g)(2)(iii), a hospital-based program must also 
afford any additional due process safeguards necessary under State law, 
court rulings, and special circumstances. We encourage States to work 
with hospitals to ensure that the voluntary aspect of the program is 
promoted and maintained. Neither the mother nor the father should be 
pressured into signing acknowledgments.
    One way of ensuring that the process remains voluntary is through 
training of appropriate personnel. Under Sec. 303.5(g)(6), the State 
must provide training, guidance, and written instructions regarding 
voluntary acknowledgment of paternity, as necessary to operate the 
hospital-based program. States may use classroom sessions, written 
instructions or handbooks, audio or video tapes, technical assistance 
provided via telephone, or other means to meet this requirement. 
Regardless of the method or combination of approaches, the State should 
ensure that staff, as they assume the responsibility, are instructed in 
the operations of the program. One State with an existing program has 
provided formal training every few years, while providing technical 
assistance and guidance via telephone and written instructions to 
supplement the training sessions. Another State is developing a 
videotape for training hospital-based program staff. OCSE plans to 
share knowledge of materials and experiences regarding training 
protocols and procedures.
    Finally, we encourage States to consider other safeguards suggested 
by commenters as a means of protecting women in cases potentially 
involving domestic violence. These include training workers to 
recognize possible domestic violence, and talking with the mother and 
alleged father separately so that the mother can raise any concerns 
privately and discreetly.
    2. Comment: Several commenters objected to the proposed requirement 
that a hospital-based program provide to both the mother and alleged 
father, if he is present in the hospital, the opportunity, prior to 
discharge from the hospital, to speak with staff, either by telephone 
or in person, who are trained to clarify information and answer 
questions about paternity establishment. The commenters suggested that, 
since mothers usually stay in the hospital only a short time after 
birth and the alleged father may only appear briefly at the hospital, 
it is unrealistic to expect hospital or IV-D workers to be able to talk 
with all parents about paternity establishment prior to discharge, 
particularly during weekend or evening hours. Some commenters also 
expressed concerns about the ability and propriety of hospital workers 
to respond to complex legal questions.
    Response: In response to commenters, we have not included the 
phrase ``prior to discharge'' in the final requirement at 
Sec. 303.5(g)(2)(i)(D). Therefore, a hospital-based program must give 
parents an opportunity to talk with staff, but not necessarily prior to 
discharge. The staff could either be hospital staff (e.g., medical 
social workers, medical records technicians, or medical provider 
staff), IV-D, or other agency staff. Most existing programs use 
hospital staff.
    To meet this requirement, a hospital-based program must: (1) Have 
staff in the hospital to talk with parents in person, or (2) provide 
written materials with a telephone number for State agency (IV-D or 
other agency) personnel that the parties may contact for additional 
information. A hospital-based program may utilize both of these 
approaches.
    We encourage hospital-based programs to have staff in the hospitals 
available to talk with the parties in person. Each program should make 
staff available, especially during evening and weekend visiting hours, 
to ensure that all unmarried mothers and alleged fathers present at the 
hospital are afforded an opportunity to acknowledge paternity. Notaries 
public or witnesses (designated hospital staff in some ongoing 
programs), as required under State law, should also be available to 
authenticate acknowledgments in the hospital. Staff can answer simple 
questions and assist parents in completing the forms. However, as 
commenters pointed out, hospital staff may not be able to answer legal 
questions regarding paternity establishment. In fact, at least one 
existing hospital-based program advises program staff not to answer 
legal questions; instead, the parents are given the telephone number of 
a State agency to contact. A hospital-based program may also want to 
advise parents that, if they have such questions, they should contact a 
legal services agency or an attorney.
    Some parents may not be able to reach State agency personnel via 
telephone, or may not decide to acknowledge, until after discharge from 
the hospital. Therefore, we recommend that acknowledgment forms include 
clear instructions that allow the parents to complete and mail an 
acknowledgment some time after leaving the hospital.
    3. Comment: Numerous commenters requested clarification regarding 
whether a hospital-based program must seek a voluntary acknowledgment 
prior to the birth of a child.
    Response: Regulations at Secs. 302.70(a)(5)(iii)(A) and 303.5(g) 
require hospital-based programs for the voluntary acknowledgment of 
paternity during the period immediately before or after the birth of a 
child to an unmarried woman in the hospital. The phrase ``during the 
period immediately before or after the birth of a child'' comes from 
section 466(a)(5)(C) of the statute. These provisions do not require a 
hospital-based program to seek a voluntary acknowledgment prior to the 
birth of a child. A hospital-based program should not seek a completed 
acknowledgment prior to birth unless State law recognizes the validity 
of pre-birth acknowledgments.
    However, regardless of whether a State's law recognizes pre-birth 
acknowledgments, the period prior to birth offers an opportunity to 
inform both parents about the value of paternity establishment and 
their rights and responsibilities. Several States have developed 
outreach programs in prenatal clinics and other facilities. These 
programs give parents the time and knowledge to make an informed 
decision, particularly since most mothers only stay a short period of 
time in the hospital after giving birth.
    4. Comment: Several commenters suggested that genetic testing be 
required for all newborns as a means of determining or confirming their 
parentage and preventing fraudulent acknowledgments of paternity. Other 
commenters recommended expanding the role of hospital-based programs to 
include voluntary genetic testing services.
    Response: We are not requiring genetic testing for all births as a 
means of preventing fraudulent acknowledgments. Under Sec. 303.5(g)(4), 
a State must require that a voluntary acknowledgment obtained through a 
hospital-based program be signed by both parents, and that the parents' 
signatures be authenticated by a notary or witness(es). We believe the 
number of cases where both parties would be willing to make a false 
claim of paternity is very small. Furthermore, the cost of providing 
genetic testing as a condition of acknowledging paternity in all cases 
would be significant. Fraudulent acknowledgments could be challenged in 
court where genetic tests could, of course, be ordered.
    Furthermore, we are not requiring hospital-based programs to offer 
the option of genetic testing as part of hospital-based programs. The 
statutory requirement for hospital-based programs does not include 
genetic testing, and we believe that imposing additional requirements 
will make statewide compliance by January 1, 1995 more difficult.
    Although not a requirement, we encourage States to incorporate the 
opportunity for genetic testing into their hospital-based programs. A 
readily available testing capability may persuade additional fathers to 
voluntarily acknowledge or expeditiously resolve any doubts as to 
paternity. A few States have begun to offer genetic testing in 
hospitals. Another State routinely obtains stipulations in the hospital 
where both parties agree to undergo genetic testing at a later date.
    c. Withholding Services in Some Cases.
    1. Comment: Several commenters suggested that a hospital-based 
program should not have to provide services in cases where the mother 
is considering adoption (even though an adoption is not yet pending) or 
is otherwise reluctant to acknowledge the man's paternity.
    Response: We have retained the requirement at Sec. 303.5(g)(3) as 
proposed. This allows a hospital-based program to withhold services 
related to acknowledging paternity, when necessitated by State law, in 
cases where the mother or alleged father is a minor or a legal action 
(e.g., relinquishment of parental rights for purposes of adoption) is 
already pending. Some States may have laws which prohibit voluntary 
acknowledgments of paternity by minors, or the State may want hospital-
based personnel to avoid interference in cases where a legal action is 
pending. Therefore, the hospital-based program is not required to 
provide services to the mother and alleged father in such cases, if 
provision of services is prohibited by State law. However, the services 
listed in Sec. 303.5(g)(2) should be provided to other unmarried 
parents.
    Certainly, if a mother is considering adoption (but action is not 
yet pending) or, for some other reason, does not want to acknowledge 
the man's paternity, she may decline to sign the voluntary 
acknowledgment. The in-hospital process is entirely voluntary, and an 
acknowledgment obtained through a hospital-based program requires the 
signatures of both parents. If the mother does not wish to participate 
and declines to identify the father, no further action is required on 
the part of the hospital.
    2. Comment: One commenter asked how the hospital will find out that 
circumstances in a particular situation permit paternity acknowledgment 
services to be withheld.
    Response: Generally, hospitals will be able to obtain this 
information from the patient (if an adoption is pending) or from 
hospital records (if a termination of parental rights or other 
proceeding is pending). In other cases, hospitals may only learn of the 
circumstances after talking with both the mother and alleged father 
(e.g., if he is a minor).
    3. Comment: Commenters asked if a hospital-based program must 
provide services in cases where the parents are not residents of the 
State, or in cases involving illegal aliens.
    Response: An individual's residency or citizenship status may not 
be a basis for excluding the person from an opportunity to acknowledge 
paternity. A hospital-based program must provide services to unmarried 
parents regardless of whether they are nonresidents or illegal aliens. 
Paternity establishment is a service in the best interest of the child 
and the residency or citizenship status of the parents does not reduce 
the child's interest in having legal paternity established.
    d. Annual Assessment.
    1. Comment: Several commenters objected to the proposed requirement 
mandating an annual assessment of each birthing hospital's program. 
Commenters suggested the requirement was overly burdensome, was not 
necessary to determine a program's effectiveness, and would require 
data that are not readily available. Other commenters suggested that 
the intent and requirements of the provision needed clarification.
    Response: We retained the assessment requirement in the final 
regulation. States must assess each birthing hospital's program on at 
least an annual basis. It is essential that a State not only establish 
hospital-based program procedures, but also follow-up to determine if 
such procedures are working. The intent of this requirement is not to 
establish performance quotas or to create pressure for hospitals to 
obtain acknowledgments, but rather to ensure that hospitals are 
actually operating programs. Staff turnover among hospital personnel or 
a depleted supply of forms or materials may disrupt or even suspend a 
hospital-based program's operation. The annual assessment will allow 
the State to detect whether such problems occur, and to take 
appropriate action (periodic staff training, regularly supplying new 
forms) to prevent them.
    The annual assessment requirement does not mandate a formal 
investigation or audit. Rather, it simply requires States to examine 
data which, in most States, should be available without the need for a 
special data collection. At a minimum, the annual assessment must 
examine the number of acknowledgments received from each hospital. If 
the State makes payments to the birthing hospitals for each voluntary 
acknowledgment obtained, it should already have access to data 
regarding the number of acknowledgments per hospital. We encourage the 
State to consider the number of acknowledgments as a percentage of the 
number of out-of wedlock births during the same period at each 
hospital, if data regarding births are available. This percentage will 
provide a more accurate measure of a hospital-based program's 
operation. Data regarding the number of out-of-wedlock births per 
hospital are already collected by vital statistics agencies in some 
States.
    If the number of acknowledgments received from a hospital seems 
unusually low or has declined significantly from the number received in 
the past, the State should contact the hospital to determine whether 
training or other assistance is needed.
    e. Forwarding and Recording Acknowledgments.
    1. Comment: We received numerous comments regarding the proposal to 
require procedures for filing voluntary acknowledgments with either the 
State IV-D agency or a centralized State agency that provides the State 
IV-D agency access to copies of, and identifying information on, the 
acknowledgments. The proposed rule also would have required the IV-D 
agency, in IV-D cases needing paternity establishment, to determine if 
a voluntary acknowledgment had been filed with the agency designated by 
the State.
    Many commenters suggested that, while a central database of 
information regarding acknowledgments might be useful, there is little, 
if any, benefit in requiring States to file actual copies of 
acknowledgments with a central entity. Actual copies may be needed at 
the local level by a court or agency, but not at the central or State 
level, during support order establishment or other proceedings. The 
commenters explained that many States already have procedures for 
filing acknowledgments with a local court or agency.
    One commenter suggested that we require all voluntary 
acknowledgments, not just those obtained through hospital-based 
programs, to be filed with a central entity.
    Response: We have significantly revised this requirement in light 
of comments to the proposed rule. The final regulation, at 
Sec. 303.5(g)(2)(iv) requires a hospital-based program to forward 
completed acknowledgments or copies to the entity designated under 
Sec. 303.5(g)(8). Section 303.5(g)(8) requires the State to designate 
an entity to which hospital-based programs must forward completed 
voluntary acknowledgments or copies. Under State procedures, this 
entity must be responsible for promptly recording identifying 
information about the acknowledgments with a statewide database, and 
the IV-D agency must have timely access to whatever identifying 
information and documentation it needs to determine in accordance with 
Sec. 303.5(h) if an acknowledgment has been recorded and to seek a 
support order on the basis of a recorded acknowledgment in accordance 
with Sec. 303.4(f).
    A State's procedures may provide for forwarding acknowledgments or 
copies to any entity designated by the State--a local court or agency, 
the vital statistics agency, the IV-D agency, or some other entity. We 
are not, as one commenter suggested, requiring the designated entity to 
be the State's vital statistics agency; we want to avoid unnecessary 
interference with States' previously-established procedures. A State 
can have more than one designated entity. The designated entity is 
responsible for recording identifying information about the 
acknowledgments with a statewide database (or, alternatively, for 
forwarding the acknowledgments or identifying information to another 
entity responsible for recording the identifying information with the 
statewide database). No matter what entity a State designates, the 
information should be recorded promptly so that necessary information 
and documentation will be readily available to the IV-D agency.
    The State must have one centralized, statewide database, which may 
be automated at State option, that contains identifying information 
about acknowledgments. The identifying information must be maintained 
in one automated database (if automated) or one central location (if 
not automated). The database may be established and maintained by the 
State IV-D agency, some other State agency, or a contractor under 
agreement with a State agency. If a State's database is maintained by 
the IV-D agency, we encourage the IV-D agency to incorporate the 
database into its statewide computerized support enforcement system. 
The database may be maintained by an agency other than the designated 
entity, as long as the designated entity records (or forwards to 
another entity for recording) with the statewide database identifying 
information about acknowledgments forwarded to the entity. The State 
may, at State option, develop procedures for filing or recording actual 
copies of acknowledgments, in addition to identifying information, in a 
statewide database.
    As with the proposed rule (58 FR 62599, 62601), the requirement for 
forwarding acknowledgments or copies is limited to hospital-based 
programs. (To clarify the applicability of this requirement, we are 
including it in the hospital-based program section at Sec. 303.5(g) 
rather than in Sec. 302.70 as proposed). We do not have authority to 
mandate that persons or entities in non-IV-D cases (except for 
hospital-based programs, which are required as a condition of IV-D 
State plan approval) adhere to these procedures. Forwarding/recording 
procedures are not necessary to link IV-D cases with acknowledgments 
obtained through the IV-D program, since the IV-D agency is already 
aware of such acknowledgments. However, for purposes of uniformity and 
centralized access, we strongly encourage States to expand their 
statewide databases to include identifying information on voluntary 
acknowledgments obtained from sources other than hospital-based 
programs. At State option, procedures for forwarding acknowledgments to 
the designated entity may be made available to any party who wishes to 
use the procedures. States may want to include instructions for 
forwarding the acknowledgment on the acknowledgment form itself. If a 
State's vital statistics agency (or similar agency responsible for 
birth registration) is the designated entity or maintains the statewide 
database of identifying information, the State may choose to link these 
forwarding/recording instructions with instructions for adding the 
father's name to the birth certificate.
    The purpose of these procedures is to ensure that the IV-D agency 
has a source for determining, in a IV-D case needing paternity 
establishment, whether or not an acknowledgment was obtained outside 
the IV-D system (e.g., at the hospital). The IV-D agency should use 
such previously-obtained acknowledgments of paternity as the basis for 
establishing and enforcing a child support order.
    To ensure that voluntary acknowledgments are used in IV-D case 
processing, Sec. 303.5(h) compels each IV-D agency to determine, in 
cases needing paternity establishment, if identifying information about 
a voluntary acknowledgment has been recorded in the statewide database 
mandated by Sec. 303.5(g)(8). Once a IV-D agency matches a case with a 
voluntary acknowledgment recorded in the statewide database, it must 
then use that acknowledgment to seek a support order in IV-D cases.
    When attempting to determine if a voluntary acknowledgment of 
paternity has previously been completed in a IV-D case needing 
paternity establishment, we encourage the IV-D agency to first ask the 
custodial parent whether the alleged father voluntarily acknowledged 
paternity at the hospital or at some other time. However, unless the 
custodial parent is able to provide a copy of the acknowledgment, 
asking the custodial parent, by itself, does not satisfy the 
requirement at Sec. 303.5(h) under which the IV-D agency must determine 
if an acknowledgment has been recorded with the statewide database. A 
recent evaluation of one city's hospital-based program found that, in 
IV-D cases where a voluntary acknowledgment had previously been 
obtained at the hospital, the IV-D agency was not aware of the 
acknowledgment in about half of the cases. Custodial parents may be 
unable or unwilling to tell the IV-D agency about a voluntary 
acknowledgment previously obtained in the hospital. Therefore, a State 
must have some other means, either automated or manual, for checking 
the records of the statewide database to determine if identifying 
information about an acknowledgment has been recorded with the 
statewide database. Although we encourage use of automated matching, we 
are not requiring such since the records of a State's designated entity 
may not be automated and we are not providing Federal financial 
participation for the development of a computer system for the 
designated entity. Regardless of whether the State uses an automated or 
manual process, the IV-D agency must have access to up-to-date 
information.
    A IV-D agency does not need to determine if a voluntary 
acknowledgment has been recorded with the statewide database in a case 
where the IV-D agency: (1) Is already aware that an acknowledgment has 
been completed and has documentation necessary to seek a support order 
on the basis of that acknowledgment; (2) knows that it is unlikely that 
an acknowledgment is recorded with the statewide database (e.g., the 
child's birth certificate indicates that the child was born in another 
State); or (3) does not have sufficient information to make a 
determination. In a case where a child was born in another State, the 
IV-D agency may check with the other State to determine if identifying 
information about an acknowledgment has been recorded. With respect to 
situations where sufficient information is lacking, we encourage the 
IV-D agency to search for an acknowledgment under the child's name if 
the custodial parent fails to provide the name of an alleged father. 
Failure of the custodial parent to provide the name of an alleged 
father is not a sufficient basis, by itself, for deciding not to 
determine if an acknowledgment has been recorded.
    Under State procedures, the IV-D agency must have timely access to 
whatever identifying information and documentation it needs, in a IV-D 
case, to determine in accordance with Sec. 303.5(h) if an 
acknowledgment has been recorded in the statewide database and to seek 
a child support order on the basis of a recorded acknowledgment in 
accordance with Sec. 303.4(f). This identifying information must 
include sufficient information to enable the IV-D agency to determine 
if an acknowledgment recorded in the statewide database matches a IV-D 
case needing paternity establishment--for example, names and social 
security numbers.
    Concerning documentation, in some States, the IV-D agency may need 
the original acknowledgment or an authenticated copy in order to 
establish a support order on the basis of the recorded acknowledgment. 
If this is the case, in order to satisfy Sec. 303.5(g)(8), under which 
the IV-D agency must have timely access to necessary information and 
documentation, the State may need procedures under which some entity 
(perhaps the entity designated to receive acknowledgments or copies 
from hospital-based programs under Sec. 303.5(g)(8)) maintains 
acknowledgments and gives the IV-D agency access to acknowledgments or 
copies. Identifying information in the statewide database should 
indicate the location where an acknowledgment or copy is maintained, if 
such information is necessary.
    If necessary, the IV-D agency should enter into agreements with: 
(1) The agency responsible for maintaining the statewide database (in 
order to obtain identifying information about acknowledgments recorded 
in the database), and (2) the entity that maintains the acknowledgments 
(in order to obtain authenticated copies). If allowable under State 
law, a State may also choose to give other agencies, besides the IV-D 
agency, access to the statewide database (e.g., agencies which need the 
records to establish benefit claims, such as Social Security).
    2. Comment: Several commenters requested that Federal financial 
participation (FFP) be available for costs associated with filing 
copies of acknowledgments with entities such as vital statistics 
agencies. One commenter asked whether 90 percent enhanced funding would 
be available for automated systems changes associated with filing 
procedures.
    Response: FFP is available for three related costs. First, under 
Sec. 304.20(b)(2)(i), which allows FFP for costs associated with 
reasonable efforts to determine the identity of a child's father, FFP 
is available for the IV-D agency's costs in determining, in accordance 
with Sec. 303.5(h), whether a voluntary acknowledgment has been 
recorded with the statewide database in IV-D cases needing paternity 
establishment. Second, FFP is available for reasonable and necessary 
costs, including fees, incurred by the IV-D agency in obtaining copies 
from an entity of documents such as voluntary acknowledgments or birth 
certificates. Third, FFP is available, under previously-existing 
policy, for the IV-D agency's costs incurred under an agreement, 
including the IV-D agency's costs of establishing an agreement, 
governing the routine exchange of information or documents regarding 
acknowledgments, between the IV-D agency and the designated entity 
(required by Sec. 303.5(g)(8)), the agency that maintains the statewide 
database, or any entity that gives the IV-D agency access to copies of 
acknowledgments (if such an agreement is necessary).
    However, FFP is not available for the costs of establishing, 
maintaining, or operating the designated entity (required under 
Sec. 303.5(g)(8)) or any entity where copies of acknowledgments are 
filed or maintained, unless that entity is theP IV-D agency. Similarly, 
FFP is not available for the costs of establishing, maintaining, or 
operating the statewide database of identifying information about 
voluntary acknowledgments, unless the agency that maintains that 
database is the IV-D agency.
    In addition, if a State needs to make changes to its IV-D statewide 
automated system in order to accommodate these new voluntary 
acknowledgment requirements (or other requirements in this rule), 
enhanced FFP is available for automated systems until September 30, 
1995. If changes are required after that date, regular FFP is 
available.
    3. Comment: We received several comments urging us to require that 
the State add the father's name to the child's birth certificate once 
the father acknowledges paternity.
    Response: Although we encourage such procedures and encourage 
States to consider any changes in law or procedure to facilitate this 
outcome as part of their implementation of OBRA '93 requirements, we 
have no authority to regulate State birth registration procedures. If a 
State chooses its vital statistics agency (or similar agency 
responsible for birth registration) as the designated entity or the 
agency responsible for its statewide database of identifying 
information on acknowledgments (required under Sec. 303.5(g)(8)), the 
State may want to link the forwarding/recording process with procedures 
for including the father's name on the birth certificate if an 
acknowledgment is sufficient basis for including the father's name on 
the certificate under State law. If a State's acknowledgment form 
includes the social security numbers of the parents, the recording of 
voluntary acknowledgments with a vital statistics agency may also be a 
way of obtaining social security numbers from parents as required 
during the birth registration process by section 205(c)(2)(C)(ii) of 
the Social Security Act.
    4. Comment: Some commenters requested that we prohibit filing 
agencies (such as vital statistics agencies or courts) from charging 
the State IV-D agency or IV-D agencies in other States fees for 
obtaining copies of voluntary acknowledgments or other records.
    Response: We do not have the authority to issue regulations 
forbidding State entities from charging fees for records.
    However, as mentioned above, Federal financial participation is 
available for reasonable and necessary costs, including fees, incurred 
by the IV-D agency in obtaining from an entity copies of documents such 
as voluntary acknowledgments or birth certificates.
    5. Comment: One commenter suggested that we mandate a system for 
officially recording and documenting genetic test results which create 
a presumption of paternity.
    Response: We do not think such a system is necessary. Most genetic 
testing takes place in the context of ongoing action to establish 
paternity. Once genetic test results either exclude an alleged father, 
create a presumption of paternity, or reflect inclusionary findings not 
rising to the level of a presumption, the action will move to the next 
step in the process. By contrast, a database of voluntary 
acknowledgments is needed since a large number of acknowledgments are 
obtained outside of an ongoing paternity/support order establishment 
process (e.g., in hospital-based programs).
    f. FFP Availability for Hospital-Based Programs.
    1. Comment: Numerous commenters requested that Federal financial 
participation (FFP) for hospital-based programs be expanded to cover 
additional costs, including the costs of hospital staff; travel for 
hospital staff attending training sessions; notaries; and other 
operating costs. Other commenters suggested that FFP availability 
should be extended to schools, WIC agencies, town clerks, and other 
agencies that might provide voluntary acknowledgment services.
    Response: FFP is available for certain costs associated with 
hospital-based programs. First, under previously-existing policy, FFP 
is available for the IV-D agency's costs incurred under necessary 
agreements between the IV-D agency and birthing hospitals or other 
State agencies, including the IV-D agency's costs of establishing such 
agreements. Second, FFP is available for IV-D staff that work on 
developing and implementing (e.g., training, drafting materials, 
meeting with hospital officials) the hospital-based program.
    Third, under new Sec. 304.20(b)(2)(vi), FFP is available for 
payments of $20 or less actually made to birthing hospitals for each 
voluntary acknowledgment obtained through a hospital-based program as 
defined by Sec. 303.5(g)(2). Several States have found such payments to 
be successful in obtaining the cooperation of hospitals. The $20 per 
voluntary acknowledgment is also available for voluntary 
acknowledgments obtained in other entities that provide prenatal or 
birthing services. In order for payments to be eligible for FFP, the 
birthing hospital or other entity must, however, have a formal 
agreement with the IV-D agency. States are not required to provide 
payments to hospitals.
    Fourth, Sec. 304.20(b)(2)(vii) makes FFP available for the costs of 
developing and providing to birthing hospitals and other entities that 
provide prenatal or birthing services written and audiovisual materials 
about paternity establishment and forms necessary to voluntarily 
acknowledge paternity.
    Finally, Sec. 304.20(b)(2)(viii) makes FFP available for reasonable 
and essential short-term training regarding voluntary acknowledgment of 
paternity associated with a State's hospital-based program as defined 
by Sec. 303.5(g)(2). Although the training must be short-term in order 
to be eligible for FFP, training may be provided on a periodic basis, 
as suggested by one commenter. This rule also modifies Sec. 304.23(d), 
which limits the availability of FFP for training to specific 
circumstances, to allow for FFP as provided for in 
Sec. 304.20(b)(2)(viii). Consistent with existing policy which allows 
FFP for the cost of judge's travel to attend training not associated 
with the judicial determination process, FFP would be available for the 
cost of hospital personnel's travel to attend reasonable and essential 
short-term training sessions regarding the hospital-based program.
    We encourage, but do not require, States to extend their hospital-
based programs beyond birthing hospitals to clinics, health 
departments, and other facilities. Since a mother's stay in a hospital 
after giving birth is relatively short, parents may benefit from 
receiving information about paternity establishment before birth, in 
prenatal clinics for example. To encourage the expansion of early 
paternity establishment programs beyond hospitals, FFP is available for 
developing and providing materials about paternity establishment and 
forms necessary to acknowledge, not only to hospitals, but to other 
entities that provide prenatal or birthing services. Similarly, FFP is 
available for payments of $20 or less, not only to birthing hospitals, 
but to other entities that provide prenatal or birthing services and 
obtain a voluntary acknowledgment pursuant to a written agreement with 
the IV-D agency.
    However, FFP is not available for other costs, including hospital 
operational and staff costs. We are not providing FFP for costs 
associated with voluntary acknowledgment services provided by schools, 
WIC agencies, town clerks, or other such entities. Except in limited 
and clearly defined circumstances as already enunciated, we do not 
believe the IV-D program should finance costs of hospitals, health care 
providers, vital statistics agencies, or public educational programs. 
As previously stated, FFP is available for payments of up to $20 per 
acknowledgment to birthing hospitals (and other providers of prenatal 
and birthing services who obtain acknowledgments). These hospitals may 
spend this money any way they choose--to pay for notaries, hospital 
staff, or other costs.
    FFP is available for the costs of developing and providing 
materials and forms as well as for the costs of training, as described 
above, regardless of whether these services are provided through a 
contractor or directly by the State. If an entity or organization other 
than the IV-D agency develops or distributes the paternity 
establishment materials, provides nominal payments per acknowledgment, 
or provides training to hospital-based program staff, that entity must 
have a written agreement with the IV-D agency in order for the State to 
receive FFP for these activities.
    2. Comment: One commenter asked whether the availability of FFP for 
payments of up to $20 per acknowledgment was contingent upon the 
establishment of an agreement between the IV-D agency and the birthing 
facility receiving the payment.
    Response: Yes, a written agreement is necessary. To clarify this, 
we have added the phrase ``pursuant to an agreement with the IV-D 
agency'' to the regulatory provision at Sec. 304.20(b)(2)(vi) allowing 
FFP for such payments.

Effect of a Voluntary Acknowledgment: Presumption of Paternity; 
Admissible as Evidence--Section 302.70(a)(5)(iv)

    1. Comment: Several commenters asked us to mandate that a voluntary 
acknowledgment creates a conclusive presumption of paternity, as a way 
of giving children finality and improving interstate uniformity. 
Conversely, other commenters argued that a presumption arising from a 
voluntary acknowledgment should always be rebuttable, since some 
acknowledging parents may mistakenly acknowledge paternity. One 
commenter asked that we specify a process for how to handle a case when 
a party who previously signed a voluntary acknowledgment of paternity 
later denies that the man named on the acknowledgment is the father.
    Response: We do not have the authority to either mandate or prevent 
a State from having laws under which a voluntary acknowledgment creates 
a conclusive presumption of paternity. Subsection 466(a)(5)(D) of the 
Act requires States to have laws and procedures under which the 
voluntary acknowledgment of paternity creates a rebuttable, or at the 
option of the State, conclusive presumption of paternity.
    Despite the concerns of commenters, we would like to emphasize the 
benefits of this provision of the Federal law. Prior to enactment of 
OBRA '93, in many States an acknowledgment was simply considered some 
evidence of paternity. The new Federal law and this implementing 
regulation ensure that the acknowledgment creates a rebuttable or 
conclusive presumption instead.
    In a paternity case, a rebuttable presumption is a rule of evidence 
that shifts the burden of proof to the presumed father to disprove 
paternity, if he chooses to contest paternity after the acknowledgment. 
A conclusive presumption has the same legal effect as a judgment for 
paternity. If a State enacts laws under which a voluntary 
acknowledgment creates a conclusive presumption, the State may still 
allow certain challenges, just as judgments can now be challenged. The 
mechanics of challenging an acknowledgment, whether a rebuttable or 
conclusive presumption, are left to State law and procedure.
    2. Comment: One commenter suggested that the term ``conclusive 
presumption,'' used in connection with both voluntary acknowledgments 
and genetic test results meeting a State's threshold, is confusing and 
subject to multiple interpretations.
    Response: We use the term ``conclusive presumption'' because it is 
used in the statute. Basically, a conclusive presumption has the same 
legal effect as a judgment or determination of paternity. For example, 
the law of one State where a voluntary acknowledgment creates a 
conclusive presumption reads: ``A written acknowledgment by both the 
man and woman that the man is the father of the named child legally 
establishes the man as the father of the child for all purposes.'' 
Another State's law reads: ``The parent and child relationship between 
a child and a man may be established by a written statement of the 
father and mother made under oath acknowledging paternity * * *. Such 
statement * * * shall have the same legal effect as a judgment * * *.''
     However, a State may still allow challenges to a conclusive 
presumption, just as judgments can be challenged (e.g., in cases where 
there is evidence that the acknowledgment was obtained by fraud or 
coercion, or where signatures were forged).

Conditions for Admission of Genetic Test Results as Evidence--Section 
302.70(a)(5)(v)

    1. Comment: Several commenters complained that the requirement 
regarding admission of genetic test results as evidence would interfere 
with their existing procedures. Some of these commenters requested that 
we allow alternative procedures, besides those contained in the 
proposed rule, for admission of genetic test results. One commenter 
asked us to permit a timeframe, within which objections to genetic test 
results must be made, triggered by the date of receipt of genetic test 
results.
    Response: Section 302.70(a)(5)(v) requires States to have laws and 
procedures under which any objection to genetic test results must be 
made in writing within a specified number of days before any hearing at 
which such results may be introduced into evidence; and if no objection 
is made, a written report of the test results is admissible as evidence 
of paternity without the need for foundation testimony or other proof 
of authenticity or accuracy.
    This provision has two major benefits. First, by only allowing 
challenges that are made within a designated timeframe, it prevents 
last-minute challenges to genetic test results. Last-minute challenges 
are particularly difficult to meet since they may require testimony 
from laboratory technicians and experts who often live out-of-state and 
must travel long distances.
    Second, in cases where no objection is timely raised, this 
provision expedites the process by allowing admission of a written 
report of the genetic test results without the need for foundation 
testimony. Prior to the enactment of OBRA '93, some States had 
cumbersome foundation requirements (e.g., requiring the testimony of 
every person involved with the chain of custody of the blood sample) 
that are unnecessary if no objection to the test results is raised.
    In some respects, this provision of the law and regulation gives 
States flexibility. States may set the ``specified number of days'' 
within which objections to genetic test results must be made before a 
hearing. The U.S. Commission on Interstate Child Support recommended 
that States require any objection to genetic testing results be made in 
writing at least 21 days prior to trial. Before the enactment of OBRA 
'93, at least four States had a timeframe that required an objection to 
genetic test results be made at least 20 days prior to trial; two 
States required objections to be made at least 30 days prior to trial.
    Furthermore, while this rule requires that genetic test results be 
admissible without foundation in cases where no timely objection is 
raised, the judge or decisionmaker who determines matters of fact still 
must decide what weight to accord the test results, in light of other 
evidence presented, if the results do not reach the State's threshold 
for creating a presumption of paternity. Moreover, this provision does 
not prevent a State or its tribunals from setting standards for 
laboratory accreditation or procedures and parameters regarding what 
type of tests can be admissible as evidence. While we encourage all 
States to admit genetic testing results that have proven to be 
reliable, we recognize that as new testing technologies are developed, 
there may be a need to critically examine new procedures in the 
scientific community and in the courts before test results from such 
procedures are used on a widespread basis.
    In other respects, however, this provision is very specific. 
Section 466(a)(5)(F) of the Act requires that an objection must be made 
``a specified number of days before a hearing at which such results may 
be introduced into evidence''. State timeframes that allow objections 
within a specified number of days of ``receiving a copy of the testing 
report'' or ``after service of the written test results'' do not 
require objections to be raised a specified period prior to the 
hearing, and therefore do not meet the requirements of Federal law. 
However, a State with such a timeframe would satisfy Federal 
requirements if: (1) Its State law also includes a timeframe for 
raising objections within a specified number of days prior to a 
hearing, or (2) its State law requires that a request for genetic tests 
must be made, and testing completed, within a specified number of days 
prior to the hearing. In other words, a State law which specified that 
objections must be made, for example, ``within 20 days of receipt of 
genetic testing results or 20 days prior to the hearing, whichever date 
is earliest,'' would meet the requirements of this rule.
    State statutes must require objections to be raised within a 
specified number of days before a hearing. Allowing objections ``within 
the time limit'' or ``within the time allowed by the court'' do not 
meet Federal requirements unless court rules, regulations, or other 
procedures also specify a standard number of days allowed by law.
    State law, in addition to including timeframes for raising 
objections to genetic test results, must also indicate that a written 
report of such results is admissible as evidence without foundation 
testimony if no written objection is raised. A State, through statute, 
regulation, or binding procedure, must meet both parts of the 
requirement at Sec. 302.70(a)(5)(v).
    2. Comment: To ensure due process, one commenter urged that States 
should be able to require foundation testimony (e.g., setting forth the 
chain of custody of the blood sample) unless the parties stipulate that 
genetic test results may be introduced as evidence.
    Response: As clearly indicated by the Federal statute, State law 
must provide that if no timely objection is made, genetic test results 
are admissible as evidence of paternity without the need for foundation 
testimony or other proof of authenticity or accuracy. This requirement 
does not compromise due process protections. The timeframe requiring 
objections to be made in writing before the hearing merely ensures that 
the other party is fairly informed and given a specified period within 
which to arrange for witnesses to testify in support of the test 
results. The alleged father can object to test results within the time 
period specified by the State in accordance with Sec. 302.70(a)(5)(v) 
and make any challenges warranted. If the test results are admitted, 
the alleged father can introduce other evidence (e.g., regarding his 
relationship with the mother during the probable period of conception). 
Even if the test results meet the State's threshold and create a 
presumption of paternity, the alleged father can attempt to rebut the 
presumption by presenting other evidence. It should be recognized that 
genetic test results are a unique form of material evidence in a 
paternity hearing. If there are serious doubts concerning chain of 
custody, laboratory procedures or analysis of the results, the testing 
can simply be replicated at the same facility or another laboratory. 
All ``objections'' to the evidence can and should be resolved before 
any hearing ever occurs.
    3. Comment: One commenter asked if a State could include an 
exception to its timeframe for raising objections to genetic test 
results, for cases where the party does not receive the genetic test 
results in time to comply with the objection period. Under the 
exception, the party would have to respond at least 24 hours (or a 
similar short period) prior to the hearing. This would prevent the IV-D 
office from having to request a continuance of the hearing in cases in 
which the test results are received after the timeframe for objecting 
has already expired.
    Response: Such an exception is allowable. Basically, the State 
would have two timeframes--a regular timeframe and a shorter timeframe 
for use when test results are received late (after the regular 
timeframe for objecting has elapsed). Federal requirements do not 
prevent a State from having more than one timeframe, as long as each 
timeframe includes a ``specified number of days'' and satisfies other 
requirements at Sec. 302.70(a)(5)(v).

Presumption of Paternity Based on Genetic Test Results--Section 
302.70(a)(5)(vi)

    1. Comment: Some commenters suggested that OCSE set a standard 
national threshold or a minimum threshold for creating a conclusive 
presumption of paternity.
    Response: We believe that by using the open-ended phrase ``a 
threshold probability'', the statute gives States flexibility to 
designate a specific threshold probability that creates a presumption 
of paternity. There appears to be no widespread agreement in the child 
support or genetic testing community presently regarding what 
percentage should be designated as the threshold, and commenters failed 
to suggest a specific threshold. Prior to the enactment of OBRA '93, 
about half of the States had adopted a presumption of paternity 
standard based on genetic test results. These States' statutory 
threshold probabilities generally fall at a point in the range of 95 to 
99 percent. We recommend that the remaining States choose a percentage 
within this range.
    2. Comment: In the preamble to the proposed rule, we suggested that 
the threshold probability should be the inclusionary probability that 
the alleged father is the biological father of the child. Some 
commenters requested that States be allowed to tie the threshold to 
either the paternity index or another statistical standard determined 
by the State based upon the results of the genetic tests.
    Response: The statute, and implementing regulation at 
Sec. 302.70(a)(5)(vi) require that a presumption of paternity be based 
upon genetic test results indicating a threshold probability of the 
alleged father being the father of the child. We are allowing a State 
to tie its threshold to an inclusionary probability, whether expressed 
as the paternity index or another statistical standard that indicates 
the probability, based upon the results of the specific testing 
performed, that the accused man is the biological father of the child.
    The paternity index expresses the likelihood that the alleged 
father is the true biological father compared to the likelihood that a 
random man of the same race is the father. The paternity index can be 
converted to a probability of paternity through a mathematical 
calculation, and is merely another way of expressing the ``likelihood'' 
or the inclusionary probability of paternity.
    3. Comment: One commenter suggested that tighter standards 
regarding the use or acceptance of genetic test results are needed if 
test results can create a conclusive presumption of paternity.
    Response: While OCSE does not have the statutory authority to 
establish such testing standards, some private entities do accredit 
genetic testing laboratories and techniques. We encourage States to use 
high-quality laboratories. OCSE provided a listing of laboratories in 
Directory: Genetic Testing Laboratories (July 1993, 3rd Edition).
    4. Comment: One commenter requested clarification regarding how 
States are to resolve cases involving both presumed and putative 
fathers or more than one presumed father.
    Response: In some cases, the presumption of paternity created by 
genetic test results may conflict with a presumption created by a 
voluntary acknowledgment, a presumption of legitimacy created by 
marriage, or another presumption. For example, a child born to a 
married woman is presumed to have been fathered by the woman's husband 
in most States; however, genetic test results could create a 
presumption (either rebuttable or conclusive) that another man is 
actually the father. State law determines how conflicting presumptions 
are handled, and several States have enacted legislation to address 
this issue. The Uniform Parentage Act (UPA), a model State law that 
approximately 18 States have enacted, provides that if two or more 
presumptions arise which conflict with each other, the presumption 
which, on the facts, is founded on the weightier considerations of 
policy and logic controls. Presumptions may be rebutted and, finally, 
the paternity issue is resolved by a court or administrative decree.
    The presumption based on genetic test results required by 
Sec. 302.70(a)(5)(vi) and the presumption based on a voluntary 
acknowledgment required by Sec. 302.70(a)(5)(iv) are evidentiary 
requirements. States may have laws which establish additional 
presumptions, and rules for resolving apparent conflicts. A conclusive 
presumption would take precedence over a rebuttable presumption. In 
cases where two or more rebuttable presumptions applied, the trier of 
fact would be required to sort out the evidentiary considerations and 
make the ultimate decision.

Voluntary Acknowledgment is Basis for Seeking Support Order--Sections 
302.70(a)(5)(vii) and 303.4(f)

    1. Comment: Numerous commenters objected to the proposed provision 
under which genetic test results meeting or exceeding a State's 
threshold probability must be recognized as the basis for seeking a 
support order without requiring any further proceedings to establish 
paternity. Many commenters suggested that since this provision was not 
in the Federal statute, OCSE did not have the authority to include it 
in regulation. Commenters also argued that such a requirement would 
unnecessarily interfere with existing, successful State procedures. For 
instance, according to commenters, since some States require a 
paternity proceeding to be filed before genetic test results can be 
obtained, paternity actions would have to be filed and immediately 
dismissed upon receipt of test results in most cases (either because 
the threshold probability was met, requiring action to seek a support 
order to begin, or because the man was excluded). According to another 
commenter, at least one State's law prohibits discovery of assets and 
income (necessary for support order establishment) until after 
paternity has been established or action is filed in court. Other 
commenters worried that this requirement would impede due process by 
not giving the alleged father sufficient opportunity to challenge the 
genetic testing evidence.
    Response: While we believe we do have authority under section 1102 
of the Act to include such a requirement, we are, in response to the 
overwhelming number of commenters, encouraging, but not mandating, that 
genetic test results meeting or exceeding the State's threshold be 
recognized as the basis for seeking a support order without further 
action to establish paternity. We are limiting the requirement at 
Sec. 302.70(a)(5)(vii) to what is explicitly mandated by the statute--a 
voluntary acknowledgment must be recognized as the basis for seeking a 
support order without further action to establish paternity.
    We had proposed to expand this requirement to genetic test results 
meeting a State's threshold as a way of ensuring that support orders 
are established as quickly as possible. However, as some commenters 
pointed out, as long as a State meets the expedited process timeframes 
under Sec. 303.101(b)(2), there is no need to unnecessarily interfere 
with a State's procedures. By limiting this requirement to what is 
mandated by statute, we are giving States more flexibility. This 
approach is more results-oriented since it ensures expeditious outcomes 
through timeframes rather than a prescriptive procedural requirement.
    However, we still encourage States to consider implementing 
procedures under which genetic test results meeting or exceeding the 
State's threshold must be recognized as the basis for seeking a support 
order without further action to establish paternity. In fact, such 
procedures may help States meet expedited process timeframes. For the 
purpose of consistency, a State may want to give the same weight to 
genetic test results (at a certain threshold level) as it does to a 
voluntary acknowledgment as the basis for seeking a support order. We 
do not believe such procedures compromise due process. If the 
presumption, based upon genetic test results, is rebuttable, and a 
written objection is timely filed, the alleged father may be given the 
opportunity during the support establishment proceeding to contest 
paternity.
    2. Comment: For States where a voluntary acknowledgment creates a 
rebuttable presumption of paternity, several commenters expressed 
confusion about how the State could seek a paternity determination 
based on the acknowledgment when OBRA '93 requires State law to 
recognize a voluntary acknowledgment as the basis for seeking a support 
order without further proceedings to establish paternity. One commenter 
asked whether a paternity determination is required if a support order 
can be entered without a paternity determination. Several other 
commenters suggested that if a State's voluntary acknowledgment creates 
a rebuttable presumption of paternity, the presumption should 
automatically ``ripen'' into a conclusive presumption or determination 
of paternity within a specified period of time.
    Response: Although a voluntary acknowledgment must serve as the 
basis for seeking a support order without further proceedings to 
establish paternity, the IV-D agency must still establish paternity in 
accordance with State law. The statute merely precludes State 
requirements that the paternity determination must be a separate, 
preliminary action prior to a proceeding seeking support for the child. 
The voluntary acknowledgment may be the basis for seeking an immediate 
temporary support order, pending a final determination of paternity, or 
the request for support and the paternity proceeding could be combined.
    The IV-D agency must meet two requirements once a father 
voluntarily acknowledges paternity. First, action to seek a child 
support order must begin based upon the acknowledgment, without waiting 
for further proceedings to establish paternity. Second, unless the 
acknowledgment by itself establishes paternity, the IV-D agency must 
take further action to establish paternity in accordance with legal 
process under State law.
    In order to meet both of these requirements, we encourage States 
where a voluntary acknowledgment creates a rebuttable presumption of 
paternity to combine paternity and support order establishment in the 
same proceeding, if both are needed in a case. If the IV-D agency seeks 
both paternity and support in the same proceeding, it may also be 
possible to obtain a temporary support order pending a final judgment.
    Alternatively, a State may choose to establish support awards on 
the basis of a rebuttable presumption of paternity, and to convert the 
presumption to a final paternity determination through subsequent 
administrative or judicial processes. For example, State law could 
provide that the rebuttable presumption of paternity becomes, by 
operation of State law, a conclusive presumption or a determination of 
paternity if not challenged within a specified period of time. Another 
option would be to permit the presumption to be challenged in a 
separate proceeding after the intermediate support order is entered 
based upon the voluntary acknowledgment. In any event, paternity 
establishment is a mandatory IV-D function, and a final determination 
must be made in accordance with the timeframes.
    If under State law, a voluntary acknowledgment creates a conclusive 
presumption of paternity (which is a legal determination of paternity), 
the IV-D agency does not need to take any further action to establish 
paternity and may immediately move to seek a support order on the basis 
of an acknowledgment.
    3. Comment: Several States' procedures provide for the filing or 
ratification of voluntary acknowledgments by a court or administrative 
agency. Commenters asked whether such filing/ratification could occur 
prior to initiation of action to establish a support order on the basis 
of the acknowledgment, or whether filing/ratification would be 
considered ``further proceedings to establish paternity'' under 
Sec. 302.70(a)(5)(vii). Other commenters asked if such filing/
ratification could occur as a prerequisite to the acknowledgment 
creating a rebuttable or conclusive presumption of paternity in 
accordance with Sec. 302.70(a)(5)(iv), or whether the acknowledgment 
itself would have to create a presumption of paternity.
    Response: In IV-D cases, we would not construe mere filing or 
ratification of an acknowledgment by a court or administrative agency 
as ``further proceedings to establish paternity'' (emphasis added) if 
such filing/ratification did not require a hearing and did not 
unreasonably delay seeking a support order. In most States with filing 
or ratification procedures, the process is pro forma and completed in a 
matter of days. If a State's filing/ratification procedures meet these 
conditions, it may file or ratify an acknowledgment prior to initiating 
support proceedings in IV-D cases. However, we encourage States to 
combine any filing/ratification process with the support order 
establishment process so that there will be no delay (e.g., if an 
acknowledgment must be filed with the court it could be done as part of 
the proceeding for support order establishment).
    Similarly, under current law, filing/ratification of an 
acknowledgment can be a prerequisite to the creation of a rebuttable or 
conclusive presumption of paternity. For example, the Uniform Parentage 
Act (UPA) establishes a presumption of paternity if a man 
``acknowledges his paternity of the child in a writing filed with the 
appropriate court or Vital Statistics Bureau (emphasis added) * * *.'' 
Some States require filing with a court or agency as part of the 
voluntary acknowledgment process itself. The issue of whether or not 
filing/ratification is part of the voluntary acknowledgment process or 
a post-acknowledgment prerequisite to the establishment of a 
presumption of a paternity is largely a matter of semantics. These 
procedures are matters of State discretion so long as the 
acknowledgment, ultimately, has presumptive evidentiary value and is 
recognized as the basis for seeking a support order.

Default Orders--Sections 302.70(a)(5)(viii) and 303.5(f)

    1. Comment: Commenters asked whether State law must provide for 
entry of a default order for both failure to appear at a hearing and 
failure to respond to a notice. Other commenters asked whether State 
law must require default orders even in cases where the defendant 
initially files an answer or other appropriate response, but later 
fails to appear at a hearing. In some States, a default order cannot be 
issued once the defendant files an initial answer or response, unless 
that initial answer is stricken.
    Response: We have reworded Sec. 302.70(a)(5)(viii) for clarity. 
State law must require entry of default orders upon showing that the 
alleged father failed to respond to service of process in accordance 
with State procedures (assuming that process was served and any other 
showing required under State law has been met). State procedures 
generally require the alleged father to file a written response within 
a certain timeframe or to appear on a specific date or within a 
reasonable period of time specified by the State. A State should link 
entry of a default order to failure of the alleged father to act in 
accordance with the procedure the State has established.
    In addition, State law need not require a default order to be 
entered if the alleged father initially responds in accordance with 
State procedures but later fails to appear at a hearing or respond to a 
notice. Section 302.70(a)(5)(viii) only requires States to enter 
default orders in cases where there is no initial response from the 
alleged father (upon showing of service of process and any additional 
showing required under State law). States may, however, choose to go 
beyond this minimum requirement by compelling tribunals to enter 
default orders in cases even if the alleged father initially responds. 
For example, some States provide for the use of default judgments to 
address situations in which the alleged father fails to cooperate with 
an order to appear for genetic testing.
    2. Comment: One commenter suggested that all alleged fathers should 
be provided advance notice specifying the conditions under which a 
default order may be entered.
    Response: We are leaving this matter to State law. We believe that 
States already provide advance notice whenever there is the potential 
for a default order, generally as part of the notice sent to the 
alleged father requesting him to respond or appear at a hearing. Some 
States may require additional proceedings prior to entry of the default 
order to ensure that the alleged father was properly notified and is 
competent to respond. States also may have procedures for challenging 
and setting aside default orders, and may notify the parties of this 
process when default orders are entered.
    3. Comment: One commenter suggested that the provision regarding 
default orders should be permissive rather than mandatory, thereby 
allowing exercise of judicial discretion based on the specific 
circumstances of each case.
    Response: To meet the requirements of the Federal statute, States 
must require, not simply allow, tribunals to enter default orders 
establishing paternity in accordance with Sec. 302.70(a)(5)(viii). 
Prior to enactment of OBRA '93, most States already had provisions for 
entry of judgments by default as part of their civil procedure code or 
statute. At least eleven States also had default provisions that 
applied specifically to paternity cases. However, in many States the 
default provision was permissive rather than compulsory. States may 
need to change such permissive default laws to meet Federal statutory 
requirements, which will ensure that default orders are routinely 
issued in paternity cases, where appropriate. Judicial discretion not 
to enter the default order still may be applied, for instance, where 
the circumstances indicate that the alleged father may not have been 
properly served or may not have had the capability to respond (e.g., he 
has a mental deficiency or is a minor).
    4. Comment: One commenter asked why the proposed regulation 
required State default laws to apply to contested paternity cases.
    Response: We have not included the word ``contested'' in the final 
requirement at Sec. 302.70(a)(5)(viii). We agree that use of the word 
``contested'' is unnecessary. Under some States' definition of a 
``contested'' case, a case may not actually be contested until the 
alleged father responds and denies paternity. The default provision 
applies to cases where the alleged father fails to respond.
    5. Comment: One commenter requested that we expand the default 
requirement to apply to support establishment actions as well as 
paternity actions.
    Response: Because the statute specifically limits the scope of the 
default provision to paternity establishment, we are limiting its 
application in this regulation. Therefore, these regulations do not 
compel State law to require that default orders be entered in support 
order establishment actions.
    Regulations at Sec. 303.101(d)(4) do require that presiding 
officers under expedited processes have the ability to enter default 
orders in both paternity and support establishment cases. However, 
State law may give the presiding officers discretion regarding whether 
or not to actually enter the default orders in support establishment 
actions. For example, if there is no evidence sufficient to apply the 
guidelines, it may be impossible to enter a support order by default. 
We encourage presiding officers to enter default orders in appropriate 
support establishment cases. In paternity establishment cases, State 
law must compel, not simply allow, presiding officers to enter default 
orders in accordance with Sec. 302.70(a)(5)(viii).
    6. Comment: Some commenters asked us to specify what ``additional 
showing'' is required for entry of a default order in accordance with 
Sec. 302.70(a)(5)(viii). For example, one commenter suggested that we 
specify that ``additional showing'' means a prima facie case.
    Response: Since the statute says ``any additional showing required 
by State law'' (emphasis added), States have discretion to specify 
their own requirements. These regulations reflect the discretion 
afforded by the statute. We recommend, in order to withstand possible 
future challenge, that States require some evidence of paternity, such 
as a sworn statement or allegation by the mother, before entering a 
default order. In addition, States may require some evidence or showing 
that the alleged father is not under a legal or medical disability or 
subject to protection of the Soldiers and Sailors Civil Relief Act (50 
U.S.C. Secs. 501-591).

Full Faith and Credit for Paternity Determinations--Section 
302.70(a)(11)

    1. Comment: Several commenters questioned how a State should treat 
a voluntary acknowledgment or genetic test results obtained by another 
State, particularly if the acknowledgment or test results created a 
rebuttable presumption in one State and a conclusive presumption in the 
other.
    Response: Under the principle of full faith and credit, an out-of-
State paternity judgment is to be given the same force and effect in 
other States as it is given in the State of origin. When a State gives 
full faith and credit to another State's paternity judgment, it honors 
that judgment according to its terms, just as if it had been entered in 
the second State.
    Under OBRA '93, a State must have laws providing that it will 
recognize a determination of paternity made by another State whether it 
is established through voluntary acknowledgment or through 
administrative or judicial processes. A conclusive presumption based 
upon genetic test results or a voluntary acknowledgment which creates a 
conclusive presumption of paternity in the State where it is 
acknowledged should have the same force and effect as a judgment for 
paternity. Other States must give full faith and credit to paternity 
determinations based upon another State's conclusive presumption.
    Generally, if no determination of paternity has previously been 
made, State law of the forum State (i.e., the State where the 
paternity/support action occurs) will determine the legal weight given 
to a voluntary acknowledgment, genetic test results, or other evidence 
(regardless of whether the acknowledgment, test results, or evidence 
were obtained by or in the State or by another State).
    2. Comment: Some commenters asked whether a paternity determination 
made by one State could be contested or overcome in another State, and 
if so, which State's laws and procedures are applicable.
    Response: A paternity determination, like a judgment, even though 
entitled to full faith and credit is generally subject to collateral 
attack. Depending on State law, a paternity determination could be 
attacked if it was fraudulently obtained, for example, or if the 
issuing tribunal lacked jurisdiction. A collateral attack may be 
barred, however, if the party challenging the determination had the 
opportunity to raise or previously raised the same issues at the time 
the paternity determination was made. The forum State's law governing 
choice of law will determine which State's laws and procedures apply 
when a judgment or paternity determination, otherwise entitled to full 
faith and credit, is challenged.
    3. Comment: One commenter requested guidance regarding the degree 
to which determinations of paternity established by default are subject 
to full faith and credit, since default orders are especially 
vulnerable to collateral attack based on claims of improper service of 
process.
    Response: A State must give full faith and credit to any 
determination of paternity, including a determination established by 
default. It is imperative that State tribunals require a showing of 
service of process prior to entry of a default order in accordance with 
Sec. 302.70(a)(5)(viii) in order to limit future challenges based on 
inadequate service.
    4. Comment: With the option for each State to implement rebuttable 
or conclusive presumptions both for voluntary acknowledgments and 
genetic test results meeting a State's threshold, one commenter asked 
how a State can determine the legal effect of an acknowledgment or test 
results obtained in another State for purposes of determining if that 
acknowledgment/test results should be afforded full faith and credit.
    Response: States may consult the Interstate Roster and Referral 
Guide which will continue to be regularly updated. Furthermore, in an 
interstate case, the initiating State should notify the responding 
State of the legal significance of any previously-obtained voluntary 
acknowledgment, genetic test results, or other presumptive evidence of 
paternity.
    5. Comment: One commenter asked that we require States to give full 
faith and credit to a paternity determination made by a Tribal Court.
    Response: The Full Faith and Credit Clause of the U.S. Constitution 
provides that ``full faith and credit shall be given in each State to 
the Public Acts, Records, and Judicial Proceedings of every other 
State.'' Congress, by enactment of 28 U.S.C. 1738 expanded full faith 
and credit to the judicial proceedings of any court of any ``State, 
Territory, or Possession of the United States''. Some States have 
interpreted that language to include tribal governments, and other 
States and Tribal Courts have voluntarily recognized and deferred to 
each others judgments and laws as a matter of comity.
    ``Full faith and credit'' is a concept based upon the respect and 
deference which the forum jurisdiction accords to the original 
rendering jurisdiction. We believe that paternity determinations made 
by Tribal Courts, especially those entered pursuant to cooperative 
agreement with the IV-D agency in accordance with State laws and 
Federal requirements, are entitled to such deference. We encourage 
States to voluntarily grant full faith and credit to tribal 
determinations of paternity, whether they are required to by Federal 
statute or not.

Expedited Processes for Paternity Establishment--Sections 302.70(a)(2), 
303.4(d), and 303.101

    a. Paternity and Support Establishment Timeframe.
    1. Comment: We received numerous comments regarding the proposed 
use of ``date of locating the alleged father or noncustodial parent'' 
as the starting point for the expedited process timeframe at 
Sec. 303.101(b)(2)(i). Most of these commenters objected to using 
location as the starting point. Several commenters recommended that the 
timeframe begin with ``date of service of process'' instead. According 
to the commenters, location should not be the starting point of the 
timeframe because: (1) Expedited process timeframes should only measure 
activity in a State's administrative/judicial system; (2) States might 
initiate administrative or judicial action in each case at the 
beginning of the expedited process timeframe (i.e., upon location), 
foregoing attempts to obtain voluntary acknowledgments of paternity or 
consent support orders due to a fear of exceeding the timeframe if 
administrative/judicial adjudication later became necessary; (3) the 
meaning of ``date of locating'' is unclear and hard to define; and (4) 
many cases require additional location services after initial location 
is completed, potentially resulting in the stopping (and subsequent 
restarting) of the expedited process timeframe each time a case needs 
additional location services.
    Response: In response to these numerous comments, the new expedited 
process timeframe at Sec. 303.101(b)(2)(i) begins with ``date of 
service of process'' rather than ``date of locating the alleged father 
or noncustodial parent''. By beginning with service of process, the new 
expedited process timeframe, compared to the timeframe in the proposed 
rule, is more consistent with the long-standing purpose of the 
expedited process requirement: to measure the timeliness of child 
support activity in a State's administrative or judicial system.
    However, as under prior regulations, timeframes are still needed to 
ensure that activity prior to service of process is completed quickly. 
The existing timeframe at Sec. 303.3(b)(3) measures the timeliness of 
location activity. In this final regulation, because we are retaining 
service of process as the starting point of the expedited process 
timeframe, we must also retain at Sec. 303.4(d) a timeframe which will 
measure activity between location and service of process. Therefore, we 
require that, within 90 calendar days of locating the alleged father or 
noncustodial parent, the IV-D agency must, regardless of whether 
paternity has been established, establish an order for support or 
complete service of process necessary to commence proceedings to 
establish a support order and, if necessary, paternity (or document 
unsuccessful attempts to serve process, in accordance with the State's 
guidelines defining diligent efforts under Sec. 303.3(c)).
    The new timeframe at Sec. 303.4(d) replaces the two former program 
standard timeframes previously at Secs. 303.4(d) and 303.5(a)(1). In 
cases where paternity establishment is needed, the IV-D agency would 
need to obtain both a voluntary acknowledgment of paternity and a 
consent support order, or else serve process, within the 90-calendar-
day timeframe. We have replaced two timeframes with one because we 
believe having separate timeframes for paternity and support 
establishment may have encouraged States to have separate proceedings 
for paternity establishment and support order establishment (and to 
take advantage of both timeframes). Instead, we want to encourage 
States to establish paternity and support (if both are needed) quickly 
and in the same proceeding whenever possible. This goal is also 
reflected in the new expedited process timeframe at 
Sec. 303.101(b)(2)(i) which subsumes paternity establishment (if 
necessary) within the requirement for support order establishment.
    In cases needing both paternity and support order establishment, 
the timeframe at Sec. 303.4(d) will encourage IV-D agencies to seek 
both a voluntary acknowledgment of paternity and a consent support 
order within 90 calendar days. Studies show that about a third of 
alleged fathers will voluntarily acknowledge paternity simply as a 
result of being given the opportunity. Even more fathers will 
acknowledge if genetic testing is completed and the test results show a 
high probability of paternity. A study of one locality in the early 
1980s, at a time when genetic testing was less powerful than it is 
using today's technology, found that about 90 percent of alleged 
fathers voluntarily acknowledged paternity after receiving genetic test 
results that showed a probability of paternity. In order to facilitate 
voluntary acknowledgments of paternity, a IV-D agency may want to offer 
parents the opportunity to voluntarily submit to genetic testing prior 
to commencing an administrative or judicial action. Just as the use of 
voluntary acknowledgment procedures in paternity cases should 
facilitate expeditious establishment of paternity, the use of 
stipulations and consent judgments should help expedite support order 
establishment.
    If unable to establish a support order by consent within the 90-
calendar-day timeframe, the IV-D agency must serve process (or document 
unsuccessful attempts to serve process) before the end of the 90 
calendar days. The service of process must be sufficient to commence 
administrative/judicial proceedings to establish a support order and, 
if necessary, paternity.
    For purposes of the timeframes at Secs. 303.4(d) and 
303.101(b)(2)(i), we will construe the term ``service of process'' 
broadly as any action that gives the State jurisdiction over the 
defendant under State law. This could include traditional service of 
process (e.g., personal service, certified mail) or consent to 
jurisdiction (e.g., waiver of formal service by signing a voluntary 
appearance), as long as the date the service event occurs is documented 
in the case record. Therefore, if a IV-D agency established a support 
order by consent, the date the noncustodial parent consented to 
jurisdiction could count as the date of service of process. If the 
consent order was established within 90 calendar days from location, 
the State could count the action as successful under the timeframe at 
Sec. 303.4(d). In addition, the case would count as disposition under 
the expedited process timeframe at Sec. 303.101(b)(2) since consent to 
jurisdiction would be considered ``service of process''. Allowing a 
consent order to be counted as disposition under expedited process 
should provide States an incentive to attempt to establish orders 
quickly by consent.
    To further encourage voluntary paternity acknowledgments and 
consent support orders, we will also allow States to satisfy the 
Sec. 303.4(d) timeframe by ``commencing proceedings'' with a formal 
notice requesting the alleged father/noncustodial parent to 
voluntarily: either (1) acknowledge paternity or consent to entry of a 
support order; or (2) appear at a conference or other proceeding where 
he may acknowledge paternity or consent to entry of a support order. 
The notice must be documented in the case records. It may be delivered 
or served by any procedure which meets State requirements, as long as a 
verifiable date of formal ``commencement of proceedings'' is returned 
and maintained in the case record. However, if the State counts such 
notices for purposes of the Sec. 303.4(d) timeframe, it must meet the 
expedited process timeframe at Sec. 303.101(b)(2)(i), which would be 
triggered by the notice. Under such circumstances, the IV-D agency 
would have additional time (longer than 90 calendar days) to obtain a 
consent order prior to filing an action with a court/administrative 
authority, but still must establish an order within the expedited 
process timeframe at Sec. 303.101(b)(2)(i), which would begin on the 
date that formal notice is given to the alleged father/noncustodial 
parent.
    The definition of location, the starting point of the revised 
timeframe at Sec. 303.4(d), will remain as stated in Sec. 303.3(a). 
Location means information concerning the physical whereabouts of the 
absent parent, or the absent parent's employer(s), other sources of 
income or assets, as appropriate, which is sufficient and necessary to 
take the next appropriate action in a case. As stated in the preamble 
to the final regulation implementing standards for program operations 
published on August 4, 1989 (54 FR 32284, 32297), States should 
determine whether the information is sufficient to proceed with 
necessary action, which may include service of process. Verification of 
the information would not be necessary in a situation where the State 
knows the information is sufficient to take the next appropriate 
action. At such time as it is determined that service of process cannot 
be effected because the information is not sufficient to take the next 
appropriate action, the case would be referred for additional location 
attempts.
    2. Comment: We received several comments regarding the proposal to 
create one expedited process timeframe for support establishment cases 
that would apply regardless of whether paternity had been established. 
Some commenters endorsed the simplicity and results-oriented nature of 
this approach. A few commenters opposed this proposal, arguing in favor 
of a separate timeframe for paternity establishment. According to 
opponents of a combined timeframe, establishing paternity and support 
in the same proceeding is untenable since, in some States, income and 
employment data cannot be obtained and/or verified until paternity is 
established, and the verification process can take several weeks.
    Response: We decided against having a separate timeframe with 
paternity establishment as an ``endpoint''. Instead, the new expedited 
process timeframe at Sec. 303.101(b)(2)(i) applies to IV-D cases 
needing support order establishment regardless of whether paternity has 
been established. The endpoint of the timeframe is either the date a 
support order is established/recorded or the date the action is 
dismissed. Therefore, in cases where paternity and support order 
establishment are needed, the IV-D agency must accomplish both actions 
within the timeframe (unless action is dismissed).
    We chose this approach for several reasons. First, it encourages 
States to establish paternity and support in the same proceeding, 
whenever possible, in cases where both actions are needed. A separate 
expedited process timeframe for paternity establishment would have 
suggested that States could have two separate proceedings (and both 
time periods) for paternity establishment and support order 
establishment. The combined timeframe covering both paternity and 
support order establishment at Sec. 303.101(b)(2)(i) does not require 
States to establish paternity and support concurrently in every case. 
After paternity is established in some cases, a continuance or other 
delay may be necessary to collect or verify financial information 
necessary to calculate a support order amount (particularly in a State 
where the guidelines calculation is complex). However, we want to 
encourage States to move quickly from paternity establishment to 
support order establishment and to complete both processes in the same 
proceeding whenever possible.
    Second, having one expedited process timeframe that encompasses 
both paternity and support order establishment provides an incentive 
for States to aggressively pursue early paternity establishment through 
hospital-based and similar programs. If paternity is established or 
acknowledged at birth, the State will have a head-start on meeting the 
expedited process timeframe if the case subsequently becomes a IV-D 
case, since one timeframe applies regardless of whether or not 
paternity needs to be established.
    Third, having one timeframe for establishment makes the expedited 
process requirement simpler and easier to understand.
    Finally, this approach is more results-oriented and gives States 
greater flexibility while still assuring expeditious outcomes. Instead 
of having an interim timeframe solely measuring paternity 
establishment, States are measured according to their ability to reach 
the end result (a support order) in an expeditious manner.
    3. Comment: We received several comments regarding the proposed 
percentage standards (75, 85, and 90 percent) in the expedited process 
timeframe for paternity and support order establishment. Several 
commenters argued that a 90 percent standard was too low since 10 
percent of cases would not be covered. Other commenters thought the 
percentage standards were reasonable, while one commenter thought they 
were too stringent. One commenter suggested that the timeframe have 
only two tiers--75 percent and 90 percent.
    Response: The expedited process timeframe for establishment cases 
at Sec. 303.101(b)(2)(i) contains 75 and 90 percent standards. As 
suggested by a commenter, for purposes of greater simplicity, we 
deleted the 85 percent standard.
    The tiered-nature of the timeframe (75 percent and 90 percent) is 
similar to the former expedited process timeframe. These tiers 
recognize that some cases take longer to process than others. They 
require that the significant majority of cases be processed within the 
shortest tier of the timeframe, but allow a longer period for some 
cases. The first tier is 75 percent--the audit standard that has 
traditionally been used for evaluating compliance with case processing 
requirements. The highest standard in the timeframe is 90 percent of 
cases, not 100 percent as in the previous expedited process 
requirement. By not imposing an absolute standard (100 percent of 
cases), we have recognized that there are complex cases, particularly 
some contested paternity cases, that cannot be resolved within the 
required time period.
    The 90 percent standard is also justified because we eliminated the 
provision which allowed IV-D agencies to exclude complex cases from 
expedited process. We deleted Sec. 303.101(b)(4) which allowed the 
State, if a case involved complex issues requiring judicial resolution, 
to establish a temporary support order under expedited processes and 
then refer the unresolved issues to the full judicial system for 
resolution. Since the new expedited process timeframe includes a 90 
percent standard rather than a 100 percent standard, States will be 
judged by their ability to meet the timeframe in all cases, including 
cases involving complex issues.
    4. Comment: We received several comments about the length of the 
proposed expedited process timeframe for establishment cases. Some 
commenters praised the reasonableness of the timeframe. Other 
commenters suggested that the timeframe be shortened, while one 
commenter thought it should be lengthened.
    Response: We have adjusted the length of the timeframe, from what 
we had proposed, since activity between locate and service of process 
will be measured by the 90-calendar-day timeframe at Sec. 303.4(d) 
rather than the expedited process timeframe at Sec. 303.101(b)(2)(i). 
The new expedited process timeframe requires disposition within 6 
months in 75 percent of cases and 12 months in 90 percent of cases.
    Under the new timeframe, an IV-D agency will generally have a 
shorter amount of time than under previously-existing timeframes to 
establish paternity and support in cases requiring both actions. 
However, it is difficult to directly compare the new expedited process 
timeframe to the previously-existing one since the two timeframes apply 
to different universes of cases. The former timeframe applied to cases 
requiring support order establishment, while the new timeframe applies 
to a broader universe--cases requiring support order establishment, 
regardless of whether paternity has been established.
    While a direct comparison between the former and new timeframes is 
difficult, we believe the length of the new timeframe is reasonable and 
is based on careful consideration of several factors. We took into 
account all of the steps in the paternity and support establishment 
processes. For paternity establishment, we considered that in some 
cases time is needed for contacting the alleged father to offer him the 
opportunity to voluntarily acknowledge; serving process; scheduling and 
conducting genetic testing; completing discovery; and scheduling and 
conducting trials or hearings. We also considered the amount of time 
that it takes for an IV-D agency to obtain test results from genetic 
testing laboratories in paternity cases. According to laboratories that 
we contacted, it generally takes about three weeks to receive the 
written report of results from the lab in a typical case. Although two 
commenters suggested that three weeks is inadequate, particularly in 
cases involving unusual circumstances, we believe the turnaround time 
for receiving genetic testing results is only a small portion of the 
expedited process timeframe and does not warrant expansion of the 
timeframe.
    For support order establishment, we considered that time may be 
needed for contacting the noncustodial parent; attempting to obtain a 
stipulation to an order; serving process; collecting income data and 
other information needed to determine the award amount; calculating the 
award amount using guidelines; and scheduling and conducting hearings. 
Many of these steps required for support order establishment can be 
accomplished in conjunction with paternity establishment in cases 
requiring both paternity and support order establishment. For example, 
an IV-D agency can serve process and obtain jurisdiction for paternity 
and support order establishment at the same time.
    In addition to carefully considering comments on the proposed rule 
regarding the timeframe, we contacted national organizations and State 
IV-D agencies to obtain whatever information exists regarding the 
amount of time it typically takes, overall, to establish paternity and 
support orders. We also looked at data gathered in OCSE audits.
    However, prior to the enactment of OBRA '93, few, if any, States 
had an array of laws which included all of the required features of the 
revised Federal statute. Although each reform, by itself, should 
expedite paternity establishment, the combined effect of adopting the 
entire spectrum of requirements holds tremendous potential for 
expediting the process.
    In particular, the voluntary acknowledgment procedures should allow 
States to establish paternity quickly in many cases. For those cases 
that remain contested, the regulations regarding default orders, 
admissibility of genetic tests, and presumptions of paternity based on 
genetic test results should collectively contribute to expediting the 
paternity determination process in contested cases.
    States may certainly go beyond the basic requirements of this rule 
and utilize a variety of other reforms to expedite the process for both 
paternity establishment and support order establishment. These reforms 
may include use of administrative procedures, court hearing officers, 
more efficient case scheduling, pretrial conferences, and improved 
coordination between the IV-D agency and the courts. In paternity 
cases, States may also want to seriously reexamine the necessity of 
allowing trial by jury. At least one State, for instance, has a law 
which provides that the alleged father does not have the right to 
demand a jury trial if genetic test results show a probability of 
paternity of 99 percent or higher.
    5. Comment: One commenter suggested that the timeframe should run 
from the date of locating ``the last necessary party to the action'', 
not from the date of locating ``the alleged father or noncustodial 
parent''. The commenter pointed out that an alleged father or non-
custodial parent may apply for IV-D services. In addition, some cases 
may involve both an alleged father and a presumed father.
    Response: Although, as discussed above, we did not implement the 
proposal to begin expedited process timeframes with the date of 
location, the commenter's suggestion is still relevant to the new 
timeframe at Sec. 303.4(d). However, in the interest of maintaining 
clarity and consistency with other regulatory requirements, we did not 
adopt the commenter's suggestion. We believe the phrase ``the last 
necessary party to the action'' would make the regulatory language too 
vague. In the vast majority of cases, it is the alleged father or 
noncustodial parent who must be located.
    However, in a case where the custodial parent, presumed father, or 
some other party besides the alleged father or noncustodial parent must 
be located and served in order for the case to proceed, the timeframe 
at Sec. 303.4(d) would not begin until that party is located.
    6. Comment: In the preamble to the proposed rule, we said there may 
be paternity establishment cases where under State law or procedures, 
it is inappropriate to establish a support order (e.g., if the 
noncustodial parent is a minor, incapacitated, or incarcerated). Such a 
case would still be counted as disposition if a duty to support is 
established within the timeframe (58 FR 62599, 62611). One commenter 
asked what we meant by ``duty to support''. In the commenter's State, 
it is a civic duty for any parent to support his or her child; the 
commenter asked if this duty to support by operation of law would 
suffice for disposition if the parent was a minor, incapacitated, 
incarcerated, or financially unable at the moment.
    Response: A duty to support, in this instance, means a judicial or 
administrative determination of the parent's legal obligation. A 
determination, under the guidelines or based upon specific 
circumstances, that there is no present ability to pay support would 
count as a disposition.
    7. Comment: We received two comments asking if exclusionary genetic 
test results, obtained from testing which was completed voluntarily or 
by stipulation prior to the filing of an action with a court or 
administrative authority, would count as disposition under expedited 
process.
    Response: Such test results will count as disposition if they are 
obtained after ``service of process'', as broadly defined for purposes 
of the timeframes at Secs. 303.4(d) and 303.101(b)(2)(i). (See 
discussion above). Because we are defining ``service of process'' 
broadly, ``service of process'' may occur prior to filing of an action 
with a court or administrative authority.
    If exclusionary test results are obtained and the man is eliminated 
from consideration as a possible father before a formal commencement of 
proceedings, the case would be excluded from the universe of cases 
evaluated under the expedited process timeframe, and would count 
neither as a ``success'' nor a ``failure'' under the timeframe. 
Presumably, in exclusion cases, the mother would be interviewed again 
and location efforts would begin to find the actual father.
    8. Comment: We received several comments requesting that a 
temporary order count as disposition under the expedited process 
timeframe.
    Response: A temporary order counts as disposition under the 
expedited process timeframe provided that the amount of support is 
determined in accordance with the State's guidelines for setting child 
support awards or there is a finding on the record that the application 
of guidelines would be unjust or inappropriate as specified under 
Sec. 302.56.
    9. Comment: Several commenters objected to the proposal that 
documented unsuccessful efforts to serve process would no longer stop 
timeframes. Commenters argued that some parents move frequently or 
purposely evade service making it virtually impossible to complete 
service in a short period of time.
    Response: In response to commenters, the new timeframe at 
Sec. 303.4(d) stops if the IV-D agency documents unsuccessful attempts 
to serve process, in accordance with the State's guidelines defining 
diligent efforts under Sec. 303.3(c). This is consistent with the 
program standards timeframes previously at Secs. 303.4(d) and 
303.5(a)(1).
    10. Comment: Several commenters suggested that certain cases be 
excluded from expedited processes. Specifically, commenters suggested 
excluding cases where it would be difficult to meet the timeframes, 
such as where the noncustodial parent is in the military, has filed for 
bankruptcy, or lives in another State. According to one commenter, 
without such an exclusion, a IV-D agency will be forced to dismiss (and 
later refile) difficult cases in order to meet the timeframe. In 
addition, some commenters suggested excluding cases where there is no 
legally reachable income on which to base an award or where the 
noncustodial parent has no ability to pay. According to commenters, 
actions to establish orders in such cases are futile and a waste of 
time and resources. Finally, one commenter asked that cases in which 
the custodial parent fails to cooperate be excluded from expedited 
process timeframes.
    Response: Although paternity cases involving alleged fathers in the 
military service, or who have declared bankruptcy, or who live in a 
different State often present additional challenges and may be more 
complicated, we are not excluding such cases from the expedited process 
requirement. Although some cases present more difficulty, all cases 
should be worked as quickly as possible. Nor are we aware of any 
empirical data upon which to identify and exclude particular categories 
of cases from expedited process. Even in the previous illustrations, we 
believe that actions can generally be pursued, and most cases will be 
resolved within the established timeframes. As an alternative to 
wholesale exclusions, we developed a 90 percent standard in recognition 
that it may be difficult to meet the timeframe in certain cases. This 
approach allows the IV-D agency to exceed the timeframes in a small 
percentage of cases, but does not allow the IV-D agency to 
automatically exempt entire categories of cases from receiving timely 
services.
    States should not dismiss a case simply to meet the timeframe. We 
believe the timeframe is reasonable for the great majority of cases, 
and IV-D agencies are allowed to exceed the timeframe in 10 percent of 
cases. Section 303.4(e) requires that if the court or administrative 
authority dismisses a petition for a support order without prejudice, 
the IV-D agency must, at the time of dismissal, examine the reasons for 
dismissal and determine when it would be appropriate to seek an order 
in the future, and seek a support order at that time. As part of this 
process, the reason for dismissal should be documented in the case 
record. A case dismissed for inappropriate reasons (i.e., simply to 
meet the timeframe), will be considered, for audit purposes, an error, 
rather than a success, under expedited process requirements.
    Furthermore, we are not allowing IV-D agencies to exclude from 
expedited process cases where there is no legally reachable income on 
which to base an award or where the noncustodial parent has no ability 
to pay. Prior to support establishment action (e.g., the discovery 
process, a hearing), it may be impossible to accurately identify cases 
where a noncustodial parent actually has no reachable income or ability 
to pay. Furthermore, even if a noncustodial parent currently has little 
or no ability to pay, his earnings may increase in the future. When 
that time comes, it may be easier for the IV-D agency to collect 
support if a nominal support order, or at least a finding of the duty 
to support, was previously entered. Although we are not explicitly 
excluding cases where the noncustodial parent has no ability to pay, in 
certain circumstances a determination that it would be inappropriate to 
establish a support order in a case (e.g., if the noncustodial parent 
is a minor, incapacitated, or incarcerated) may count as a disposition 
under expedited process requirements, as explained previously. See 
comment 6.
    Finally, as mentioned above, one commenter requested that AFDC 
cases where the custodial parent fails to cooperate (but IV-A fails to 
sanction noncooperation quickly) should be excluded from expedited 
process timeframes. Since the expedited process timeframe begins with 
service of process, cases where the custodial parent refuses to 
cooperate from the outset of the case are not a concern in meeting the 
timeframe. However, in other cases, the custodial parent may only 
refuse to cooperate later in the case (e.g., refusal to cooperate with 
genetic testing). The IV-D agency should clearly document the custodial 
parent's noncooperation and notify the IV-A agency for action in 
accordance with 45 CFR 232.12(c). If noncooperation is the reason for 
the IV-D agency's inability to move forward in a case (e.g., the 
custodial parent refuses to provide a blood sample for genetic 
testing), and the IV-D agency has taken all appropriate action, the 
case will be excluded from the audit sample.
    11. Comment: One commenter requested clarification regarding the 
extent to which States can claim credit under expedited process for 
acknowledgments of paternity obtained through a hospital-based program 
or simple, civil acknowledgment process.
    Response: Under the new expedited process requirement, a State can 
only count a case as a success once disposition is reached--i.e., once 
a support order is established/recorded or action is dismissed. 
Paternity establishment by itself, without a support order or 
determination that an order for support is not appropriate, will not 
count as a disposition, regardless of whether the paternity was 
established by voluntary acknowledgment or some other method. However, 
as States implement hospital-based and other simple voluntary 
acknowledgment programs, paternity will be presumed or established in 
more instances prior to the opening of a IV-D case. In these cases, the 
IV-D agency will be able to move directly to establishing a support 
order, making it easier to meet the expedited process timeframe.
    12. Comment: In the preamble to the proposed rule, we solicited 
comments regarding the proposal to begin paternity establishment 
timeframes at the same point in all cases, regardless of whether a 
child is younger than six months of age. Some commenters supported the 
proposal, while others opposed it. Opponents argued that some 
jurisdictions refuse to order genetic testing on infants under six 
months of age. According to these commenters, many of the new genetic 
testing technologies which make testing on infants easier have not yet 
been widely accepted in the scientific community, have not been 
certified by the American Association of Blood Banks (AABB), and are 
not covered by most States' existing contracts with genetic testing 
laboratories. One commenter also expressed concern about the workload 
impact on hospital staff (in cases involving umbilical cord sampling) 
and the fiscal impact on IV-D agencies and unmarried parents (due to 
the higher cost of new testing technologies). Another commenter 
suggested that a six-month delay was inconsequential since fathers in 
many AFDC cases provide little or no support.
    Response: The one-year paternity establishment timeframe at former 
Sec. 303.5(a)(2) included an exception for cases needing paternity 
establishment where the child was less than six months old. Under this 
exception, the timeframe did not begin in a case until the child 
reached six months of age. The exception reflected the practice of 
waiting to draw blood samples for certain genetic tests until after the 
infant was at least six months old.
    At the time that the six-month-old-child exception was included in 
regulation, we indicated, in the preamble to the Standards for Program 
Operations final rule, that in the future we would reexamine the 
exception in light of testing which does not require the child to be 
six months old (54 FR 32284, 32301). We have now reexamined the 
exception and deleted it. The expedited process timeframe at 
Sec. 303.101(b)(2)(i) begins with the date of service of process 
regardless of the age of the child.
    According to genetic testing laboratories that we contacted, 
genetic tests are valid when performed on a child under six months of 
age, as long as certain tests are not used. The American Association of 
Blood Banks (AABB) states that children under six months of age should 
not be tested for two serum protein genetic markers (Gm and Km). 
Testing for these markers could reveal maternal typings, rather than 
those of the child, in cases involving infants. However, many other 
tests, including those which examine red blood cell antigens, human 
leukocyte antigens (HLA) and deoxyribonucleic acid (DNA) can be 
accurately performed on infants.
    Although difficulty may be encountered in drawing a sufficient 
quantity of blood from a small infant in some cases, emerging 
technology helps to address this problem. This technology includes DNA 
testing which can be performed using a single spot of blood (obtained, 
for example, by a heel stick), DNA testing (where samples of the buccal 
cells lining the child's cheek are taken on a swab from inside the 
baby's mouth), and umbilical cord sampling where blood samples are 
taken from the newborn's umbilical cord. As a consequence, there is no 
longer any scientific necessity or basis for allowing the six-month-of-
age exception.
    In response to commenters concerns, we are not requiring that 
States use these new genetic testing technologies. We believe that 
Federal timeframes allow sufficient time even if such technologies are 
not used. Because the top tier of the expedited process timeframe is 90 
percent, States are allowed to exceed the timeframe in 10 percent of 
cases.
    While removal of the six-month exception does not require the use 
of certain genetic testing technologies, it does encourage States to 
initiate the paternity establishment process as soon as possible in 
each case. Even in a case where the father can initially provide only 
minimum support, the father's income may increase with time. 
Furthermore, it is often easier to locate the father and obtain his 
cooperation soon after birth. The earlier paternity is established, the 
sooner the child will have access to the father's medical benefits, 
medical history information, a relationship with the father, child 
support, and other benefits resulting from paternity establishment.
    13. Comment: We received a number of comments regarding the 
application of the expedited process establishment timeframe to 
interstate cases. One commenter suggested that we create a separate 
timeframe for interstate cases. The commenters also requested 
clarification and made suggestions regarding which state would be 
responsible for meeting the timeframe and when the timeframe would 
start in an interstate case.
    Response: As stated in Sec. 303.101(b)(1), expedited process 
requirements apply to both interstate and intrastate cases. We have not 
created a separate timeframe for interstate cases. This policy is 
consistent with policy regarding other timeframes, including program 
standard timeframes, which apply to interstate cases as well as 
intrastate cases. We believe the expedited process timeframe is 
reasonable for most interstate cases, and IV-D agencies are allowed to 
exceed the timeframe in 10 percent of cases. The timeframe at 
Sec. 303.4(d) also applies to both interstate and intrastate cases.
    The responding State is responsible for meeting timeframes, 
including the expedited process timeframe, in interstate cases. 
Regarding the starting point of the timeframe in an interstate case, 
the new expedited process timeframe begins with the date of service of 
process in the responding State. The timeframe at Sec. 303.4(d) begins 
upon receipt of a case by the local IV-D agency in the responding State 
responsible for the establishment of support orders. This approach is 
consistent with previously-issued policy regarding program standard 
timeframes that begin with the date of location (e.g., see preamble to 
final regulations on standards for program operations published August 
4, 1989 at 54 FR 32284, 32300).
    14. Comment: One commenter requested clarification regarding 
whether the new expedited process provision at Sec. 303.101(b)(2)(iii) 
required States to use long-arm jurisdiction. The commenter suggested 
that States should have flexibility to determine, on a case-by-case 
basis, whether or not to use long-arm in a case.
    Response: In paternity cases, Federal regulations at 
Sec. 303.7(b)(1) require a State to use its long-arm statute, if it has 
such a statute, where appropriate. OCSE also encourages, but does not 
require, States to use long-arm statutes in support establishment 
cases.
    In developing the new expedited process timeframe, we considered 
its impact on the use of long-arm jurisdiction. Cases brought under 
long-arm jurisdiction may require some additional work to establish 
jurisdiction over a nonresident. Therefore, IV-D agencies may have more 
difficulty meeting the expedited process timeframe in cases involving 
nonresident alleged fathers. Because we do not want the timeframe to 
force a IV-D agency to refer a case involving a nonresident alleged 
father/obligor to the State of his residence rather than asserting 
local jurisdiction over him whenever possible, a State will be given 
``credit'' for disposing of a case using long-arm jurisdiction. Under 
Sec. 303.101(b)(2)(iii), for purposes of the expedited process 
timeframe for paternity and support order establishment, in cases where 
the IV-D agency uses long-arm jurisdiction and disposition occurs 
within 12 months of service of process upon the alleged father or 
noncustodial parent, the case may be counted as a success within the 6-
month tier of the timeframe, regardless of when disposition occurs in 
the 12-month span following service of process.
    15. Comment: One commenter asked how a case would be evaluated 
under the audit if action to establish paternity or support using long-
arm jurisdiction is ``in process'' at the time of the audit but there 
has been no disposition.
    Response: A case where long-arm jurisdiction is used will be 
excluded from consideration under the audit for both the 6- and 12-
month tiers of the expedited process timeframe at 
Sec. 303.101(b)(2)(i), if action to establish paternity or support was 
still in progress and the 12-month-tier of the timeframe had not yet 
expired during the audit period. If the 12-month-tier of the timeframe 
had expired during the audit period without disposition, the case will 
count as an error under the 12-month standard but will be excluded from 
an evaluation of the 6-month standard.
    Generally, for cases worked by means other than long-arm 
jurisdiction, a case will only be evaluated under a particular 
timeframe if the timeframe expires during the audit period. However, if 
a timeframe expires during or after the audit period for a case with 
disposition within the audit period, the case will count as a success. 
If a timeframe expires during the audit period for a case without 
disposition within the audit period, the case will count as an error.
    16. Comment: One commenter asked if actions to establish medical 
support orders would still be subject to the expedited process 
timeframe.
    Response: Yes, establishment of medical support orders will be 
subject to the expedited process timeframe at Sec. 303.101(b)(2)(i). 
However, since medical support is usually included as a part of the 
child support order, not as a separate order, this should not be an 
issue.
    b. Enforcement Timeframes.
    1. Comment: Several commenters argued that expedited process 
timeframes for enforcement should not be deleted. They stressed the 
importance of ensuring that orders are enforced in a timely manner.
    Response: We agree about the importance of timely enforcement. 
However, to simplify and clarify enforcement requirements, we have 
deleted the expedited process timeframe for enforcement formerly at 
Sec. 303.101(b)(2). Under this timeframe, from the date of service of 
process, disposition had to occur within 3 months for 90 percent of 
cases, 6 months for 98 percent of cases, and 12 months for 100 percent 
of cases. The scope of this timeframe had been limited, applying only 
to enforcement activity in a State's administrative or judicial system 
that occurred after service of process. The timeframe was further 
limited since in the preamble to the final regulations implementing the 
Child Support Enforcement Amendments of 1984 (50 FR 19608, 19629) we 
stated that ``we did not require State's expedited processes to provide 
for bench warrants and subpoena and contempt powers.''
    It is much simpler and clearer to have one timeframe at 
Sec. 303.6(c)(2) covering all enforcement activities (other than income 
withholding and Federal/State income tax refund offset). This timeframe 
will ensure that States expeditiously enforce child support orders in 
IV-D cases. It requires enforcement action within no more than 30 
calendar days (if service of process is not needed) or 60 calendar days 
(if service of process is needed) of identifying a delinquency or other 
support-related noncompliance, or location of the absent parent, 
whichever is later.
    The preamble to the final rule governing standards for program 
operations (54 FR 32284, 32302) indicated that the 30/60 calendar-day 
timeframe at Sec. 303.6(c)(2) would apply to ``consent procedures and 
administrative procedures such as debt collection, telephone contact, 
demand letters, or publication of names''. However, we are now 
expanding the scope of this timeframe to cover all enforcement 
techniques other than wage withholding and State/Federal income tax 
refund offset. This includes, but is not limited to imposing liens on 
real or personal property; requiring the obligor to post security, 
bond, or other guarantee to secure payment of overdue support; 
reporting delinquency information to a consumer credit agency; 
withholding unemployment compensation; and other State remedies.
    The timeframes at Sec. 303.100 will continue to apply in wage 
withholding cases. These regulations, for example, include timeframes 
for sending advance notice to the obligor in initiated withholding 
cases, timeframes for procedures to contest withholding, and timeframes 
for interstate wage withholding.
    2. Comment: Two commenters contended that the timeframe at 
Sec. 303.6(c)(2) did not allow sufficient time for some enforcement 
actions. One of these commenters thought the timeframe would be 
particularly difficult to meet when using judicial enforcement remedies 
such as contempt. The other commenter pointed out that it was not cost-
effective to have frequent enforcement hearings in rural areas, due to 
the travel costs for IV-D attorneys and the tribunal's decisionmaker. 
Another commenter maintained that the 30/60 day timeframe was 
sufficient, provided that States adopt high volume enforcement 
procedures.
    Response: The timeframe at Sec. 303.6(c)(2) has been in effect 
since October 1, 1990 under regulations governing standards for program 
operations (54 FR 32284). We believe it is reasonable to expect that a 
support order be enforced within 30/60 calendar days (depending on 
whether service of process is necessary) of identifying a delinquency 
or location of the absent parent, whichever is later, as required by 
Sec. 303.6(c)(2). The timeframe allows for additional time in cases 
requiring service of process.
    In addition, we concur with the commenter who recommended that 
States adopt high volume enforcement procedures. Through extensive use 
of automation and administrative processes, a State can effectively and 
swiftly enforce a large number of cases.
    We are aware, however, that there may be some instances where it is 
difficult to meet the timeframe. Use of the 75 percent standard for 
audit purposes recognizes that action may take longer in some cases 
(such as cases involving the Soldiers and Sailors Relief Act (50 U.S.C. 
501-591)). Furthermore, the new ``credit for results'' provision of the 
audit regulation at Sec. 305.20(a)(4)(iv) will consider the State to 
have taken appropriate action for audit purposes, regardless of whether 
timeframes at Sec. 303.6 and other specified timeframes are met, if, in 
a case where wage withholding is not appropriate, the State uses at 
least one enforcement technique (in addition to Federal and State 
income tax refund offset) and a collection is received during the audit 
period.
    3. Comment: Two commenters questioned how often, if at all, a IV-D 
agency must take enforcement action in accordance with Sec. 303.6(c)(2) 
in chronic enforcement cases where the obligor has neither the assets 
nor the intent to comply with the order. One of the commenters argued 
that attempting enforcement action in a case where the IV-D agency 
knows the noncustodial parent cannot pay is a waste of resources.
    Response: Enforcement action may be appropriate even in cases where 
the IV-D agency believes that the obligor cannot pay since it is 
sometimes difficult for the IV-D agency to detect ``hidden'' assets or 
income. Enforcement action such as a contempt may stimulate an obligor 
to pay, even if he initially claimed he was unable.
    States have discretion with respect to which enforcement techniques 
other than wage withholding and Federal/State income tax refund offset 
are appropriate, as long as there is compliance with Federal 
regulations, State procedures, and guidelines developed under 
Sec. 302.70(b) which outline when it is not appropriate to use certain 
enforcement techniques.
    At a minimum, a IV-D agency must take any appropriate enforcement 
action (other than income withholding and Federal/State income tax 
refund offset) within 30 calendar days of identifying a delinquency, or 
60 calendar days if service is required. Once initial enforcement 
action is taken, if arrears are paid, but the obligor later falls into 
arrears again, the IV-D agency must again take any appropriate 
enforcement action within the 30/60-calendar-day timeframe.
    If an obligor fails to resume payments and/or pay arrearages after 
initial enforcement actions are taken, the IV-D agency should determine 
on a case-by-case basis the frequency with which it will take follow-up 
enforcement action (besides income withholding and Federal/State income 
tax refund offset). Under Sec. 303.6(c)(4), a IV-D agency must, in 
cases in which enforcement attempts have been unsuccessful, at the time 
an attempt to enforce fails, examine the reason the enforcement attempt 
failed and determine when it would be appropriate to take an 
enforcement action in the future, and take an enforcement action in 
accordance with the requirements of Sec. 303.6 at that time.
    Certainly, an obligor who claims no ability to pay could request a 
review, and an adjustment of the support order amount can be pursued if 
appropriate.
    4. Comment: Another commenter suggested that the terms ``taking an 
enforcement action'' and ``enforcement action taken'' in 
Sec. 303.6(c)(2) need to be defined.
    Response: Within the 30/60-calendar-day timeframe at 
Sec. 303.6(c)(2), the IV-D agency must ``take'' appropriate enforcement 
action. This means that the IV-D agency must, within the timeframe, 
commence and complete appropriate enforcement action that will 
potentially result in collections. Collections do not necessarily have 
to be received within the timeframe as a result of the enforcement 
action in order for the action to be considered ``taken'' and counted 
as a success under the timeframe. Examples of enforcement actions that 
would be considered ``taken'' for purposes of the timeframe at 
Sec. 303.6(c)(2) include, but are not limited to: Reporting arrearages 
to a credit reporting agency, imposing a lien against real or personal 
property, suspending or denying a professional or driver's license, or 
seizing property.
    5. Comment: We received comments seeking clarification regarding 
how enforcement timeframes would be audited. One commenter asked if the 
75 percent audit standard applied to the enforcement timeframes. 
Another commenter asked if a State that was out of compliance with the 
enforcement timeframes would also be out of compliance with expedited 
process requirements.
    Response: The 75 percent audit standard applies to enforcement 
timeframes at Secs. 303.6(c)(2) and 303.100. Failure to meet these 
timeframes in 75 percent of cases may result in an audit finding under 
the enforcement criteria at Sec. 305.20(a)(3)(iii), not the expedited 
process criteria at Sec. 305.20(a)(5).
    c. Judges as Presiding Officers.
    1. Comment: Several comments related to the use of judges in 
expedited processes. Favorable comments supported the results-oriented 
nature of the proposal. One commenter said the proposal would assist 
small counties that cannot justify the hiring of a referee or 
magistrate. Other commenters objected to the proposed change, arguing 
that it would weaken the use of administrative processes.
    Response: As we stated in the proposed rule, with the addition of 
paternity establishment to expedited processes, it is necessary to 
remove the prohibition against the use of judges as presiding officers 
in expedited processes. Currently, most States use judges as 
decisionmakers in the majority of paternity cases. Even States that 
effectively use an administrative process within the executive branch 
of government to process uncontested cases frequently transfer 
contested cases to the judicial system. If the Federal government 
suddenly and completely banned the use of judges as presiding officers 
in paternity establishment cases, the disruption caused by this abrupt 
change would offset the benefits of including paternity establishment 
in expedited process.
    Our approach gives States more flexibility while still achieving 
the desired outcome--expeditious processing of cases. By allowing 
States to use judges, States have the option to carry out the duties of 
a presiding officer by either a judge or a judge surrogate, according 
to their needs. A judge surrogate may be a hearing officer, referee, 
court master or other decision maker outside of the traditional court 
system.
    Allowing the use of judges as presiding officers is consistent with 
the statute. States have the option of using their existing judicial 
system or administrative processes for expedited processes as long as 
actions are performed in an effective and timely manner. The Act does 
not prohibit using a judge as the presiding officer for expedited 
processes.
    This revision is in no way a suggestion that States should abandon 
established quasi-judicial or administrative processes, nor is it meant 
to discourage other States from implementing such procedures. Many 
States have found administrative process to be crucial in expediting 
case processing. States currently using their judicial systems for 
paternity and child support cases may need to reconsider their present 
decision-making process in order to meet the new expedited process 
timeframes. Our intent in allowing judges to serve as presiding 
officers is to maximize the State's capability of operating a child 
support program that is effective and efficient and meets the needs of 
children.
    2. Comment: There were a few comments recommending deleting the 
prohibition of FFP for judges. One commenter asked whether FFP would be 
available under expedited judicial process for the costs of a court 
bailiff, court reporter, court secretary, court personnel, court space 
and court administrative costs resulting from IV-D activities.
    Response: Federal funding continues to be available for 
administrative costs associated with decisionmakers in administrative 
and quasi-judicial processes but is unavailable for costs of 
compensation of judges and other judicial expenses. Under 
Sec. 304.21(b), FFP is not available for the costs of:
    (1) Service of process and court filing fees unless the court or 
law enforcement agency would normally be required to pay the cost of 
such fees;
    (2) compensation (salary and fringe benefits) of judges;
    (3) travel and training related to the judicial determination 
process incurred by judges;
    (4) office-related costs, such as space, equipment, furnishings and 
supplies, incurred by judges; and
    (5) compensation (salaries and fringe benefits), travel and 
training, and office-related costs incurred by administrative and 
support staffs of judges. Administrative and support staffs of judges 
include court bailiffs, court reporters, court secretaries, and other 
court personnel.
    Federal regulations at Sec. 304.10 provide that, as a condition for 
FFP, the provisions of 45 CFR part 74, which establish uniform 
administrative requirements and cost principles, shall apply to all 
grants made to States under the IV-D program. Section 74.171 states 
that the rules for determining which services and activities meet the 
necessary expenditure test for Federal funding are provided by the 
Office of Management and Budget's (OMB) Circular A-87, ``Cost 
Principles for State and Local Governments.'' Attachment A., Section 
C.1.a. provides that allowable costs must ``(b)e necessary and 
reasonable for proper and efficient administration of the grant 
programs, be allocable thereto under these principles, and except as 
specifically provided herein, not be a general expense required to 
carry out the overall responsibilities of State (or) local * * * 
governments.''
    We do not believe compensation of judges and related court costs 
are allowable under the prescriptions of OMB Circular A-87. In the 
context of the IV-D program, expenditures are considered general State 
expenses if they are incurred as a result of general State requirements 
which are neither dependent on nor confined to the IV-D program. Most 
judges and courts have multiple responsibilities besides child support 
enforcement, and it would be difficult or impossible to accurately 
determine which costs are attributable to child support activities.
    Furthermore, OMB has proposed revisions of Circular A-87 issued 
October 14, 1988 (53 FR 40359). Attachment B, section 21.a of these 
proposed revisions specifies that general costs of government 
interagency services for which FFP is not available include ``(c)ost of 
the judiciary branch.'' While such an explicit reference to ``cost of 
the judiciary branch'' is not contained within the current version of 
Circular A-87, the proposed language indicates OMB's intent to treat 
such costs as general State or local government expenses.
    In addition to the OMB policy, the Senate Committee on Finance, in 
its report on H.R. 4325, which became the Child Support Enforcement 
Amendments of 1984, Pub. L. 98-378, stated that ``(i)t is not the 
intent of the Congress to match all costs that might be related to 
operating a child support enforcement program.'' (See S. Rep. No. 387, 
98th Cong., 2d Sess. 23 reprinted in 1984 U.S. Code Cong. & Admin News 
2397, 2419).
    Finally, while we have amended the expedited process requirements 
to give States the flexibility to determine the best way, including the 
possible use of judges, to expedite their procedures, we strongly urge 
States with administrative and quasi-judicial procedures to continue 
using such procedures. We also want to encourage other States to 
consider adopting such procedures. If we were to provide FFP for judges 
and related court costs, States with court-based systems would have 
less of an incentive to consider alternative, and potentially more 
expeditious, processes for providing services.
    3. Comment: One commenter requested clarification regarding which 
expedited process requirements a State could request an exemption from 
under Sec. 303.101(e).
    Response: The provision allowing exemptions from expedited process 
requirements is codified at section 466(a)(2) of the Act. By deleting 
the requirement that a presiding officer may not be a judge, these 
final regulations should reduce the necessity for exemptions for 
expedited processes. In fact, we do not believe any of the expedited 
process requirements would now be a logical basis for an exemption.
    Since exemptions were routinely granted to jurisdictions using 
judges that meet the expedited process timeframes, this rule allows 
jurisdictions that meet the timeframes to use judges without having to 
go through the exemption request and renewal processes. However, 
jurisdictions which use judges will be subject to audit scrutiny to 
determine if they are meeting the required expedited process 
timeframes, and will be subject to possible penalty if they fail to 
meet the timeframes. This approach will save time and money for both 
local and State agencies and the Federal Government, without 
sacrificing expediency in case processing.
    d. Other Issues.
    1. Comment: We received three comments regarding the requirement at 
Sec. 303.101(c)(3) that parties must be provided a copy of the 
paternity determination and support order. One commenter asked if 
``paternity determination'' includes a voluntary acknowledgment. 
Another commenter said furnishing an actual copy of the determination/
order is not possible when a party cannot be located, and suggested 
that the parties be provided notice, rather than a copy, of an order/
determination at the last known address. The third commenter requested 
clarification of initiating and responding State responsibilities under 
this requirement in interstate cases.
    Response: Section 303.101(c)(3) requires that the parties be 
provided a copy of any voluntary acknowledgment of paternity, paternity 
determination, or support order that is obtained or established through 
the IV-D agency's expedited process. We added voluntary acknowledgment 
of paternity to this requirement in response to the comment mentioned 
above. States must send an actual copy of the acknowledgment, 
determination, or order, not simply a notice. If allowable under State 
law and procedure, the copy may be mailed to the last known address of 
each party.
    Under this requirement, copies should be provided to both parents 
in AFDC and non-AFDC cases, and to any other State which has an 
assignment of support rights in the case.
    In an interstate case, the responding State should send a copy to 
the IV-D agency in the initiating State, rather than directly to the 
parent residing in the initiating State. The initiating State would 
then be responsible for forwarding a copy to the parent residing in the 
initiating State.
    2. Comment: We received two comments regarding changes to State 
automated systems necessitated by the new expedited process 
requirements. One commenter asked if enhanced Federal funding will be 
available for making changes to State systems to accommodate changes to 
expedited process requirements. Another commenter asked that the 
effective date of the expedited process requirements be delayed a year 
after issuance of final regulations to permit States to make necessary 
changes on automated systems to track the new standards.
    Response: FFP at the enhanced rate is available for development of 
statewide computerized support enforcement systems, including system 
changes necessitated by changes in Federal law (e.g., modifications 
necessary to implement changes to expedited processes) until September 
30, 1995. If modifications to the statewide computerized support 
enforcement systems are made after that date, regular FFP is available 
for the costs of those system modifications. The Child Support 
Enforcement systems certification review mandated by Sec. 302.85 will 
be based on the functionality to support requirements from the Family 
Support Act of 1988 and preceding requirements. If, however, a State 
requests certification subsequent to publication of these rules, we 
would permit the State the option of designing their paternity 
timeframes to meet OBRA '93 requirements.
    Since the statute has an effective date of October 1, 1993 (or 
later if enactment of State law is necessary to conform to the 
requirements), the effective date of these regulations cannot be 
delayed further. Although we recognize the demands placed upon States 
by the new requirements, we believe that Congress did not intend to 
delay implementation of these requirements beyond the effective date of 
the statute.
    3. Comment: One commenter asked if non-compliance with expedited 
process requirements would be treated as an audit issue or a State plan 
issue.
    Response: Section 302.70(a)(2) requires State plans to include laws 
and procedures for expedited processes. Therefore, failure to have 
relevant laws and procedures could result in disapproval of a State 
plan. States may need laws and procedures to implement required 
safeguards under Sec. 303.101(c) or functions under Sec. 303.101(d).
    Section 305.20(a)(5) requires that a State, as a condition of being 
determined in substantial compliance with title IV-D requirements, meet 
the requirements for expedited processes under Secs. 303.101(b)(2) (i) 
and (iii), and (e). Therefore, failure to meet expedited process 
timeframes could result in a determination of substantial noncompliance 
and imposition of the penalty.
    2. Audit Provisions.
    In response to the Notice of Proposed Rulemaking published 
September 9, 1993, in the Federal Register (58 FR 47417), OCSE received 
over 30 comments from State and local child support agencies and 
advocacy organizations. An overwhelming number of these commenters 
expressed their endorsement of, and appreciation for, OCSE's efforts to 
simplify audit regulatory provisions by consolidating and eliminating 
restatements of other provisions. Many commended the transition to a 
more results-oriented, outcome-focused process for conducting audits of 
State program performance. Following is a summary of the comments 
received and our responses:

Timing and Scope of the Audit--Sec. 305.10

    One comment was received regarding this provision, essentially 
indicating support for OCSE's use of government auditing standards as 
promulgated by the Comptroller General of the United States.

State Comments: Sec. 305.12

    1. Comment: Several commenters expressed concern that not advising 
States of information needed to conduct the audit until the time of the 
entrance conference will result in delay. They suggested that notice of 
such information requirements should be supplied in advance of the 
entrance conference. One commenter requested additional lead time to 
prepare for an audit. Another commenter urged that regulations be 
consistent with current audit practices relating to advance notice so 
as to allow States a sufficient preparatory period.
    Response: Written notice of an impending audit and information 
needed to perform the audit will be given to States, as is currently 
done, at least one quarter prior to the entrance conference. Changes to 
Sec. 305.12 only relate to the entrance conference, at which time 
auditors will explain how the audit will be performed and make any 
necessary arrangements for the field work of conducting the audit. 
Providing notice of the scheduling of an audit one quarter in advance 
of its commencement is consistent with long-standing government 
auditing standards.
    2. Comment: One commenter requested that interim audit reports be 
published closer in time to the conclusion of the field work enabling 
States to be more responsive in identifying and rectifying 
deficiencies.
    Response: OCSE is working to improve its performance in this area. 
In addition, any State, at any time, may request an oral briefing of 
the status of an audit-in-progress of its IV-D program. Furthermore, 
the changes made by this regulation to streamline and consolidate the 
approach to the audit should also expedite the process of issuing 
reports. Also, this process will be expedited as more States give the 
area audit offices access, via modems or terminals, to their automated 
systems and improvements are made to systems tools used to conduct 
audits in automated environments.

Effective Support Enforcement PProgram--Sec. 305.20

    1. Revised Definition of Substantial Compliance.
    a. Ten percent materiality test.
    1. Comment: Several commenters questioned the use of a ten percent 
materiality standard in determining criteria which are included in a 
determination of substantial compliance. A few suggested alternative 
tests reflecting other percentages. One commenter suggested that any 
criterion that does not further the goal of conducting a results-
oriented analysis should be eliminated. Two commenters expressed 
concern that application of the ten percent materiality test should be 
limited to initial audit results, indicating that application to 
follow-up audit findings could potentially increase the scope of 
criteria which are included in a determination of substantial 
compliance.
    Response: The materiality concept is a widely-accepted practice in 
the auditing profession. Materiality is defined as the relative 
importance or relevance of an item included in, or omitted from, the 
analysis of operations. Generally, a benchmark of ten percent, or a 
more stringent level (e.g., five percent) is used to quantify 
materiality. Among the qualitative factors which affect materiality are 
newness of the activity or changes in its condition, results of prior 
operations, level and extent of review or other form of independent 
oversight, adequacy of internal controls for ensuring compliance with 
laws and regulations, and public perceptions and political sensitivity 
of the areas under audit.
    In the context of the child support program, the test was 
administered against findings for which a penalty was imposed in past 
triennial and annual State program results/performance measurements 
audits, but not to follow-up audits conducted to determine whether a 
State has come into substantial compliance following a corrective 
action period.
    2. Comment: Three commenters requested that the ten percent 
materiality test should be applied subjectively to individual States to 
recognize prior State performance in the application of the test. 
Another commenter recommended a ``tiered'' approach through which audit 
criteria are categorized in assigned priority levels based on their 
significance to effective and efficient IV-D program operations.
    Response: Audits are designed to be objective so that all States 
are audited in relation to a consistent standard. The overall approach 
to the audit of State child support enforcement programs, as specified 
in this regulation, is an interim step under current law. Further 
revision and expansion of the results-orientation to the evaluation of 
State IV-D programs will be addressed as part of the President's 
Welfare Reform bill.
    3. Comment: One commenter questioned the frequency under which OCSE 
will apply the ten percent materiality test in order to revise or 
update the criteria to be evaluated in an audit.
    Response: The ten percent materiality test was first applied to 
initial and annual audit reports issued as of September 1990 using the 
prior audit regulations. Subsequent reapplication for audit reports 
issued through November 26, 1993 produced consistent findings and 
confirmed earlier results as to the incidence of failure across 30 
program criteria, all of which bear directly on the effectiveness of 
IV-D program operations. As we continue to revise the audit process, we 
will reapply the materiality test and make necessary changes when 
deemed appropriate.
    4. Comment: One commenter contended that because the ten percent 
materiality test, by its nature, focuses on areas of noncompliance, 
States' strengths, best practices, and effective management techniques 
are not identified. The commenter urged that such strengths should be 
emphasized as part of the audit. Another commenter proposed that OCSE 
clarify that any criteria excluded from substantial compliance 
evaluation can still be evaluated and be included in management 
recommendations furnished to the State as part of the audit findings. 
Another commenter, concurring with the use of management 
recommendations, suggested that such recommendations should incorporate 
best practices of all States in order to assist in program improvement 
for individual States.
    Response: Program audits are designed to determine whether State 
child support enforcement programs operate in conformity with Federal 
law and regulations. Auditors may still examine requirements that are 
not contained in Sec. 305.20, but deficiencies would be noted in the 
Audit Report as management recommendations. OCSE uses numerous other 
mechanisms to identify and share exemplary practices among the States, 
including publications, presentations at conferences, and provision of 
technical assistance (including assistance extended through the ten ACF 
regional offices).
    5. Comment: One commenter requested clarification as to the 
criteria which will not be audited as a result of satisfying the ten 
percent materiality test.
    Response: As a result of applying the ten percent materiality test 
to initial and annual audit reports issued through November 26, 1993 
using the prior audit regulations, the following criteria were 
eliminated from consideration for purposes of assessing substantial 
compliance: Cooperative arrangements; bonding of employees; procedures 
for making information available to consumer reporting agencies; 
payments to the family; spousal support; payment of support through the 
IV-D agency or other entity; single and separate organizational unit; 
incentive payments to States and political subdivisions; retroactive 
modification of child support arrearages; imposition of late payment 
fees on non-custodial parents who owe overdue support; State financial 
participation; fiscal policies and accountability; provision for 
withholding in all child support orders (Sec. 303.100(i)); 90 percent 
Federal financial participation for computerized support enforcement 
systems; recovery of direct payments; and publicizing the availability 
of support enforcement services.
    b. New and newly-revised criteria.
    1. Comment: One commenter asserted that new and newly-revised 
criteria should only be added to the audit criteria after the passage 
of a substantial period of time. The commenter contended that this 
approach would take into account the lag time between enactment of 
Federal law and publication of final regulations, and allow States time 
to come into compliance before being audited. Another commenter 
presented just the opposite concern, arguing that the practical effect 
of the audit standards will not apply for several years in many States. 
This commenter urged OCSE to publish the final regulations as quickly 
as possible and make the new audit standards applicable not only to any 
audit conducted after the date of publication, but also any audit in 
progress on the date of publication.
    Response The effective date of Federal statutory and regulatory 
requirements cannot be ignored. We have reviewed State implementation 
of the standards for program operations for management information and 
action, but not for penalty purposes. Furthermore, auditing new or 
newly-revised program requirements using related audit criteria ensures 
that expanded program mandates are being correctly interpreted and 
expeditiously applied. With respect to requirements under the Family 
Support Act, final regulations have already been published and States 
will be audited under such regulations for audit periods that begin on 
or after the date of publication of this final rule. Allowing any 
further extension of time before audits of State compliance with these 
requirements would be unwarranted. However, audits in progress as of 
the date of publication of these rules will be governed by the audit 
standards that were in effect at the start of the audit. These final 
rules will apply to audits conducted for any periods which begin on or 
after publication of this rule.
    2. Comment: Several commenters expressed concern that the 
streamlining of audit regulations and grouping of criteria will 
negatively impact audit results, giving the appearance of failing to 
meet a comprehensive criterion, when in actuality the deficiency only 
relates to a weakness in a single area.
    Response: By grouping criteria, OCSE will be better able to focus 
upon State delivery of required program services rather than specific 
incremental steps that occur in performing each program function. 
Grouping relates to the manner in which OCSE evaluates States' 
performance, rather than to what is evaluated. For a number of years, 
OCSE has evaluated several enforcement techniques under the audit in 
this manner and determined that this is an effective and efficient 
process. Under the regulation, a more streamlined approach to 
conducting audits will improve the ability of OCSE and States to more 
effectively and efficiently identify program deficiencies.
    3. Comment: One commenter suggested that efforts by OCSE to limit 
the scope of audits should be designed to ensure that audits can be 
conducted and completed in less time and with fewer State resources. 
The commenter expressed the belief that it was unclear whether the 
proposed new definition of substantial compliance would, in fact, 
actually reduce the need for States to dedicate substantial time and 
resources to the audit process.
    Response: In order to reduce the scope of the audit to the maximum 
extent possible, we have deleted from inclusion under the definition of 
substantial compliance audit criteria that States failed to meet in 10 
percent or less of the initial and annual compliance audits conducted 
by OCSE under prior audit regulations through November 26, 1993. Under 
this final rule, we will continue to use criteria that did not meet 
this test in determining whether the State is in substantial compliance 
with Federal requirements. In addition, we will, for the first time, 
conduct audits that evaluate State compliance with the provisions of 
the Family Support Act of 1988, including standards for program 
operations, immediate wage withholding, and review and adjustment of 
support orders.
    Federal law mandates that OCSE conduct audits to determine State 
compliance with Federal requirements, including the provisions of the 
Family Support Act of 1988. Without revisions made by this regulation 
to eliminate scrutiny of certain criteria, audits would certainly have 
taken longer than they currently do, once the Family Support Act 
requirements were included in the audit. In addition, States can reduce 
the burden of the audit and facilitate its completion by allowing the 
area audit office to have on-line access to their State automated 
systems and by maintaining appropriate records for sample selection and 
audit purposes. This rule will streamline the audit and is a 
significant step toward even more results-oriented measurements.
    2. Criteria: States Must Meet to be Determined to be in Substantial 
Compliance.
    a. Administrative criteria.
    1. Comment: One commenter expressed concern that holding States to 
100 percent compliance for Statewide operations, reports and 
maintenance of records, separation of cash handling and accounting 
functions, and notice of collection are unreasonable and should be 
lowered to account for unexpected problems.
    Response: We are not using a 100 percent compliance standard that 
involves the review of individual cases. Instead, in auditing these 
four requirements, OCSE will examine such functions through a review of 
the automated and/or manual processes a State has in place for meeting 
these functional requirements rather than the review of individual 
cases. As a result, the audit will assess the State's overall 
compliance for meeting these areas.
    2. Comment: Two commenters objected to evaluating State's 
compliance with expedited process using a 100 percent standard as 
excessive and unreasonable. One commenter requested postponement of the 
100 percent standard until expedited processes standards for paternity 
establishment, as required by Federal law as a result of enactment of 
the OBRA '93, are developed.
    Response: We agree with the comment that changes to the expedited 
processes standard to incorporate paternity establishment should be 
timed to coincide with these audit rules which apply to audits which 
begin on and after the date these rules become effective. Therefore, 
this regulation includes changes to Sec. 303.101 to incorporate 
paternity establishment. These changes and when they are effective have 
been discussed previously. The revised expedited processes standard 
requires compliance in 90 percent, instead of 100 percent, of the cases 
subject to the standard. Therefore, States are no longer required to 
meet a 100 percent standard for expedited processes.
    3. Comment: One commenter requested clarification of whether, for 
purposes of evaluating a State's compliance with the requirement to 
provide monthly notice of support payments collected to individuals who 
have assigned their rights to support, the determination will be based 
upon whether the State has a process in place for giving notice, or 
whether audits will focus on determining whether 100 percent of the 
cases in which notices would be required actually received notices. The 
commenter shared a concern that an attempted notice that is returned as 
undeliverable could result in an error finding, rendering the State out 
of compliance.
    Response: A determination regarding a State's compliance with the 
administrative criteria specified under Sec. 305.20(a)(1) will not be 
evaluated through an individual case review method. Rather, compliance 
will be measured on the basis of assessing whether the State has, and 
uses, an overall system or process designed to meet the specific 
requirements.
    b. Service-related criteria.
    i. 90 percent standard for evaluating certain case opening 
requirements and for evaluating case closure.
    1. Comment: Several commenters objected to the proposed 90 percent 
standard for review of establishment of cases under Sec. 303.2. They 
argued that the 90 percent criterion is arbitrary, unrealistic, and too 
stringent. One commenter remarked that such a standard inappropriately 
emphasizes initiating services in a case rather than delivering on-
going services which are evaluated under a lower standard. Some 
commenters stressed that application of a rigorous higher standard at a 
time when States lack fully operational automated systems is excessive 
and unwarranted.
    Response: Case opening is crucial to the child support process. 
Unless applications are provided promptly and accepted and processed in 
a timely manner, necessary IV-D services cannot be provided. In 
addition, in its focus on the need to create a government that works 
better and costs less, the Report of the National Performance Review 
has brought the issue of customer service to the forefront. We are 
committed to ensuring that the orientation of the child support program 
is upon delivering needed services to the customers of this program. 
Therefore, prompt response to a request for services and opening of a 
case cannot be overemphasized. However, we recognize that Sec. 303.2 
contains both case opening and case processing requirements. Program 
services or case processing requirements should be evaluated using a 
consistent standard. Therefore, we limit the application of the 90 
percent standard to case opening requirements in Sec. 303.2(a) rather 
than all the requirements of Sec. 303.2. Thus, requirements set forth 
in Sec. 303.2(b) regarding the establishment of a case record and 
determination of necessary action on a case will be evaluated under the 
75 percent standard. In addition, we will not evaluate the maintenance 
of case records requirements at Sec. 303.2(c) because they are similar 
to the reports and maintenance of records requirements at 
Sec. 302.15(a) evaluated under the audit.
    2. Comment: Another commenter suggested that auditors should look 
beyond the details of case opening and closure requirements to 
determine if action was taken on a case. They urged that if appropriate 
action was in fact taken, but the State failed to comply with every 
requirement under ``Establishment of cases and maintenance of case 
records'', the State should not be penalized. For example, if a State 
opened a case and determined necessary action in 30 days rather than 
the required 20 calendar days, but the action was taken within the 
audit period, the State should receive credit, without penalty, for 
having taken appropriate action. The commenter urged OCSE to confirm 
that a State will be considered to have complied with case 
establishment requirements, even if the State failed to meet the five-
day timeframe in Sec. 303.2(a)(2), or the 20-day timeframe in 
Sec. 303.2(b), provided that the State took appropriate action on the 
case during the audit period.
    Response: Under the final regulation, the 90 percent standard only 
applies to requirements governing the establishment of a case under 
Sec. 303.2(a). We believe that for providing applications and 
information and accepting applications as filed on the day the 
application and fee are received, a 90 percent standard is reasonable. 
Therefore, the 5-working-day-timeframe for sending an application in 
response to a written or telephone request, and other case opening 
requirements, will be evaluated for all cases using the 90 percent 
standard.
    As indicated above, the requirements in Sec. 303.2(b) regarding 
establishment of a case record and determination of necessary action on 
a case will be evaluated under the 75 percent standard. If the State 
failed to open a case and determine the necessary action to be taken 
within the 20-calendar-day timeframe under Sec. 303.2(b) but took 
necessary action (i.e., established a support order) within the audit 
period, the State would receive credit.
    3. Comment: One commenter indicated that a 90 percent standard for 
case opening and closure is not unnecessarily restrictive, provided 
that regulations do not propose a negative finding for failure to close 
a case that could have been closed. Another commenter agreed that 
States should not be penalized for keeping cases open even if the 
potential for success is low.
    Response: Because case closure is permissive, if a State does not 
close a case that meets one or more of the case closure criteria in 
Sec. 303.11, that case will not be subject to audit. As we explained in 
response to comments in the preamble to the final regulations governing 
Standards for Program Operations (54 FR 32303), States may elect to 
establish criteria for closure that are more stringent than those 
established under Federal rules.
    4. Comment: One commenter asserted that use of a 90 percent 
standard to evaluate case closure encourages States to leave cases open 
in an unworkable status in order to avoid audit penalties. The 
commenter claimed that the proposed 90 percent standard will allow a 
State which makes no effort to close unworkable cases to pass the audit 
on case closure. They further contended that a State which seeks to 
provide better services in workable cases by closing the unworkable 
cases could fail the audit if the auditors disagree with the agency's 
determination to close the case in more than one case out of ten.
    Response: The purpose of case closure criteria, and the basis for 
evaluating case closure at a 90 percent standard is to ensure that 
States do not close cases erroneously and inappropriately, which could 
result in denying individuals the services to which they are entitled. 
It is important for States to recognize that evaluation of a State's 
case closure process and activities is premised on whether 90 percent 
of the cases that were in fact closed were closed correctly (i.e., 
meeting one or more of the 12 enumerated case closure criteria), rather 
than a determination that 90 percent of the cases that could be closed 
were closed. We question whether a State would keep unworkable cases 
open and on its automated system merely to avoid audit scrutiny if a 
case is closed, especially given that Federal case closure regulations 
are quite clear and precise.
    5. Comment: One commenter requested that regulations should provide 
that a case would not be found out of compliance if the State closed 
the case in advance of expiration of the 60-day period following notice 
of proposed case closure provided that if new information was obtained 
or a request to reopen the case was received, the case would be 
reopened and worked.
    Response: Before a case is closed, all of the requirements in 
Sec. 303.11 must be met. Therefore, a State which adopts an approach 
such as that suggested by the commenter would be found to be out of 
compliance with the requirement at Sec. 303.11(c) which specifies that 
closure cannot occur until the 60-day period following notice to the 
custodial parent has elapsed.
    6. Comment: Several commenters suggested that any standard higher 
than 75 percent should be gradually phased in. Two commenters urged 
that any higher standard should be delayed until such time that States 
have certified computerized support enforcement systems. One commenter 
asserted that not all States have been audited under the 75 percent 
standard for the standards for program operations which became 
effective October 1, 1990. They recommended that OCSE gather some 
historical data in this area and evaluate State IV-D performance under 
those standards before changing the standard.
    Response: While automation of State child support enforcement 
programs will enhance States' capabilities for delivering program 
services, the effective dates of the Family Support Act requirements, 
including program standards, were not conditioned upon States having 
computerized support enforcement systems in place. The case opening and 
closure requirements, effective since October 1, 1990, have never been 
evaluated using a 75 percent standard. This final regulation will, for 
the first time, prescribe audit criteria for evaluating case opening, 
closure and other program standards requirements. The requirements to 
which the 90 percent standard apply are not dependent upon automated 
case processing through a computerized support enforcement system, but 
rather on IV-D caseworkers providing applications and information to 
individuals and closing only unworkable cases. As previously stated, 
OCSE believes that the 90 percent standard for these requirements is 
reasonable.
    7. Comment: Several commenters advocated that a 90 percent 
compliance standard be established for all criteria. One commenter 
noted that the 75 percent standard results in many cases remaining 
unworked, claiming that States can circumvent requirements by simply 
taking some action in 75 percent of the cases even if such actions are 
not substantive.
    Response: This commenter's perception reflects a misunderstanding 
of Federal title IV-D requirements which require States to take 
appropriate action in all cases referred for and applying for program 
services. Requirements for providing and accepting applications and 
closing cases are clear-cut, definitive, and follow specific steps. 
They are in the nature of administrative activities, distinguishable 
from activities connected with providing services which are more 
complex and which permit greater flexibility and discretion. Providing 
easy, prompt access to program services and closing only unworkable 
cases are critical to ensuring that individuals receive appropriate 
services.
    8. Comment: One commenter suggested that it would be more 
appropriate to place opening and closure of cases in the category of 
administrative criteria rather than in the category of service-related 
criteria.
    Response: Because we believe it is critical to provide access to 
services, case review rather than analysis of processes is important to 
determine that the State, in fact, meets the requirements for case 
opening and closure. Therefore, case opening and closure will be 
treated as service-related criteria, for which auditing by the case 
analysis method will be utilized.
    ii. 75 percent standard for providing services.
    1. Comment: Two commenters indicated that the 75 percent standard 
for providing services was too high. One commenter recommended that the 
75 percent standard should be lowered, and phased-in gradually, because 
of the current lack of automation capability. Several commenters 
recommended that States should be held to a higher standard than 75 
percent compliance, suggesting that a higher standard should be 
gradually phased-in, in conjunction with the automation requirements. 
Some recommended it should be phased-in at 80 percent compliance in 
1996; 85 percent in 1997; and 90 percent in 1998. Another commenter 
suggested having a range of standards for different criteria, but added 
that the acceptable range should never fall below 75 percent.
    Response: For over ten years, OCSE has used a 75 percent standard 
to determine State compliance with Federal program requirements. The 
standard has proven to be a reasonable expectation of the level of 
State performance in providing program services. Therefore, we will 
continue to use the 75 percent standard to evaluate the delivery of 
program services. Furthermore, under longstanding program requirements, 
as well as those added by the Family Support Act, comprehensive, 
statewide automation is not a prerequisite for providing mandatory 
program services. In fact, most of the requirements States must meet 
under the Family Support Act will have been effective for over five 
years before an audit under these regulations will be conducted. We 
believe that States will have had ample opportunity to implement these 
requirements prior to being audited to determine compliance.
    2. Comment: One commenter indicated concern that to achieve 
substantial compliance on marginally met criteria, the State must 
actually achieve a rating of at least 81 percent.
    Response: This is inaccurate. A State which achieves a compliance 
level of between 75 and 80 percent for a particular function is 
considered to have passed the audit and to be in substantial compliance 
for that function. While such a finding is considered to be 
``marginal,'' the finding will not be a basis for determining that the 
State is not in substantial compliance, and will be referenced in the 
penalty notification only for the purpose of bringing to the State's 
attention areas in which the State's performance is borderline. States 
do not need to specifically address areas of marginal compliance as 
part of their corrective action plan. Following corrective action, the 
marginal compliance areas must fall below 75 percent before a State 
will be considered to have failed that particular criterion.
    3. Comment: One commenter requested clarification of the 
requirements for review and adjustment. The commenter suggested that, 
if a review of an order is properly and timely conducted, but the need 
to adjust the order is not indicated, the action should be determined 
to be in compliance.
    Response: If review of an order results in a determination that no 
adjustment is appropriate, and the parties are properly notified of the 
results of such review and provided an opportunity to challenge such 
finding, action will be considered to have been taken for audit 
purposes.

Grouping of Locate Function Within Other Service-Related Categories

    1. Comment: Concerning the proposal to group ``location of non-
custodial parents'' under other functional components, several 
commenters favored listing location as part of other criteria because 
in many cases, in order to proceed on a case, location is an integral 
component of providing other functional service criteria. Several 
commenters opposed grouping location with other criteria, urging that 
it be retained as a separate identifiable criterion.
    Response: The location function is not an end in itself but is, in 
fact, often the initial step to providing all other major program 
services, including paternity establishment, support order 
establishment, enforcement, and review and adjustment of child support 
orders. Therefore, cases requiring non-custodial parent location will 
be evaluated under the major service or services required for the case. 
Thus, if a case requires paternity and support order establishment 
services and the alleged father's whereabouts are unknown, the State 
must take all appropriate action. If the State did not take appropriate 
action to locate the alleged father, this would be counted against the 
State in computing the efficiency rate for paternity and support order 
establishment. We do not believe that incorporating location within the 
functional service criteria underestimates or deemphasizes the 
importance of the location function. On the contrary, it underscores 
the need to exhaust location sources in order to proceed with necessary 
services for the case. Moreover, it exemplifies the transition to a 
more results-oriented audit.
    2. Comment: One commenter requested clarification about whether the 
need to relocate an individual before a service (e.g., establishment, 
enforcement) can be provided stops the applicable timeframe or permits 
the timeframe to be reset from the date of relocation.
    Response: When the State is providing a particular service, such as 
the establishment of a paternity and/or support order, and determines 
that a previously located alleged father needs to be relocated (for 
example, if service of process efforts fail), the establishment 
timeframe would stop if the State must return the case to the locate 
function. The 75-calendar-day and quarterly location timeframes in 
Secs. 303.3(b) (3) and (5) would apply once the case was returned to 
the locate function. After successful location of the alleged father, 
the establishment timeframes would start over again. The State's 
documentation of the events, services provided, and activities in a 
case will be used in determining the audit criteria appropriate for 
evaluating the case.
    3. Comment: One commenter questioned whether a State must use some 
other enforcement technique in addition to Federal and State income tax 
refund offset in situations in which the non-custodial parent's address 
is located but employment information or the location of assets is not 
known.
    Response: States have discretion in determining and selecting what 
enforcement technique, in addition to Federal and State income tax 
refund offset, to use in particular cases in which wage withholding may 
not be available or appropriate (e.g., self-employed). Not all 
enforcement techniques require employment information or identification 
of assets (e.g., making information available to consumer reporting 
agencies). When the State has located the absent parent's address, but 
employment information or assets are unknown, the State must use an 
enforcement remedy in addition to Federal and State income tax refund 
offset. The State may, for example, make information available to 
consumer reporting agencies, or require an obligor to post a bond or 
other guarantee to secure payment of overdue support.
    4. Comment: One commenter also requested clarification of the 
definition of location for purposes of the audit.
    Response: States should continue to focus their location efforts 
toward successfully ascertaining the whereabouts of obligated parents, 
their employers, and their assets to take necessary action in the case, 
using all appropriate sources in accordance with the requirements set 
forth in Sec. 303.3(b). However, in response to the request for a 
definition of location for audit purposes, OCSE will determine that a 
State has met the requirements for location if the State has, at a 
minimum, checked the following sources, when necessary and appropriate 
(e.g., a State uses sequential sources until the non-custodial parent 
is located), to ascertain information concerning the location of the 
non-custodial parent, his/her employer, and/or the non-custodial 
parent's assets: The custodial parent; Postal Service; State employment 
security agency and unemployment data; the Department of Motor Vehicles 
or the comparable State authority which issues driver's licenses and 
registers vehicles; credit bureaus; and the Federal Parent Locator 
Service. These sources were selected because of their proven level of 
effectiveness in successfully identifying useful location information 
in most cases. We believe that specification and use of these sources 
not only standardizes the location process but provides clear guidance 
to States as to how their location efforts will be evaluated under the 
audit.
    5. Comment: Several commenters expressed concern that evaluation of 
non-AFDC cases under Sec. 302.33 and interstate cases under Sec. 303.7 
as independent compliance criteria puts States in situations of double 
jeopardy. They pointed out that evaluation under both non-AFDC and/or 
interstate case criteria and under other audit criteria such as 
paternity establishment, enforcement, or review and adjustment, for 
example, is actually counting any deficiency twice (or more), thus 
causing the States to fail under two or more separate criteria as a 
result of a single deficiency. They requested reconsideration of the 
requirement that the non-AFDC and interstate case criteria be evaluated 
separately.
    Response: We agree with the commenter and have made the following 
changes to the proposal. We have deleted the separate audit criteria 
for evaluating the provision of service in interstate cases and added 
the provision of services in interstate IV-D cases under Secs. 303.7 
(a), (b), and (c)(1) through (6) and (8) through (10) to each of the 
service-related audit criteria at Secs. 305.20(a)(3) (ii), (iii), (iv) 
and (v). Under this final regulation, only those Sec. 303.7 
requirements that are unique to interstate cases, Secs. 303.7 (a), (b), 
and (c)(1) through (6) and (8) through (10), and do not involve 
functions and services otherwise covered by criteria under Sec. 305.20 
will be evaluated to determine whether the State is in substantial 
compliance with the requirement to provide appropriate interstate 
services. For example, in an interstate support order establishment 
case, a State will be evaluated for order establishment purposes under 
Sec. 305.20(a)(3)(ii) to determine whether it is in substantial 
compliance with the order establishment provisions under Secs. 303.4 
(d), (e), and (f). The State will be evaluated for interstate purposes 
under Sec. 305.20(a)(3)(ii) to determine whether it is in substantial 
compliance with the interstate provisions unique to interstate cases, 
including the failure to notify the initiating State in advance of the 
hearing of an order establishment case under Sec. 303.7(c)(8). 
Therefore, any deficiency identified will only be counted once.
    Similarly, we have deleted the separate audit criteria for 
evaluating services to non-AFDC, non-IV-E individuals and added 
services to non-AFDC and non-IV-E individuals under Secs. 302.33(a) (1) 
through (4) to each of the service-related audit criteria at 
Secs. 305.20(a)(3) (ii), (iii), (iv) and (v). Under this regulation, 
only those aspects of Sec. 302.33 unique to non-AFDC IV-D cases, such 
as acceptance of applications under Sec. 302.33(a)(1)(i), will be 
examined to determine whether the State is in substantial compliance 
with requirements unique to providing services to non-AFDC individuals. 
Determining whether the State provided a particular necessary service 
(e.g., enforcement) in a non-AFDC IV-D case or in an interstate case, 
will be addressed under the specific service category set forth under 
Secs. 305.20(a)(3) (ii), (iii), (iv), or (v). The State will be 
evaluated under the same service category for purposes of determining 
whether it is in substantial compliance with the services to non-AFDC 
and non-IV-E provisions unique to non-AFDC cases. This will eliminate 
``double jeopardy'' as described by the commenter. In addition, this is 
consistent with the movement of the audit to a more results-oriented 
process.
    iii. Credit for providing services.
    1. Comment: One commenter recommended that audit standards consider 
allowing either an exception to or a tolling of the timeframes in cases 
in which interim timeframes have been met but delays in achieving 
result were beyond the control of the IV-D agency.
    Response: States must provide necessary services within required 
timeframes in 75 percent of the cases evaluated under each audit 
criterion. The 75 percent substantial compliance test allows a 25 
percent margin for error into which such cases could fall and not 
result in the State being penalized for inadvertent delay.
    2. Comment: One commenter noted that credit is not available when 
the State fails to meet the administrative criteria and the following 
service-related criteria: Collection and distribution of support 
payments; services to individuals not receiving AFDC or title IV-E 
foster care assistance; provisions of services in interstate cases; and 
medical support.
    Response: We believe that, for audit purposes, a State should not 
be penalized when timeframes are missed in a case if a successful 
result is achieved (a support order is established or adjusted, or a 
collection is made), since these results are the main goals of the 
child support enforcement program. We further believe that this 
position is responsive to the widely-shared goal of a more results-
oriented approach to OCSE auditing and States' concern that missing an 
interim timeframe, when a successful result is achieved in a case, may 
create a disincentive to continue working the case. In addition, as 
discussed previously, the provision of services in interstate IV-D 
cases and services to non-AFDC, non-IV-E individuals is now evaluated 
under other service-related criteria. Therefore, if the State misses an 
interstate timeframe, but the appropriate service(s) included under 
Sec. 305.20(a)(4) is provided during the audit period, the State will 
be considered to have taken appropriate action for audit purposes. 
However, credit is not extended to all requirements since to do so 
would render meaningless timeframes established to ensure effective and 
efficient delivery of services. Furthermore, as previously explained, 
administrative criteria, such as Statewide operations, reports and 
maintenance of records, and separation of cash handling and accounting 
functions, are evaluated from an overall process standpoint rather than 
a case analysis approach.
    3. Comment: One commenter indicated support for the concept for 
providing credit even though timeframes are missed; however, the 
commenter urged that credit be given for actions attempted in the audit 
period although not successfully completed, provided that there is a 
reasonable expectation that the action will eventually be successful.
    Response: We disagree with such an approach. It would be highly 
subjective to predict or speculate about future success, in contrast to 
determining that the successful result has in fact been achieved. 
Achieving national consistency in applying such an auditing approach 
would also be a formidable, if not impossible, task. Therefore, the 
allowance of credit (i.e., action for audit purposes), for providing 
services despite a State's failure to accomplish the function within 
the designated timeframes is limited to case(s) in which successful 
results occur within the audit period. While we are striving to develop 
a more results-oriented approach to evaluating States' performance, we 
believe that following the commenter's suggestion would undermine the 
integrity and objectivity of the audit process.
    4. Comment: One commenter emphasized that it is essential that 
audit criteria not only consider actions taken, but that such actions 
actually be successful or closely related to a successful conclusion of 
the case. Another commenter recommended that OCSE specify that a State 
will receive credit, without penalty, for achieving a desired result 
even if the State did not meet every location requirement.
    Response: Currently, States are evaluated on whether they have 
taken the appropriate action or actions needed in a case. The 
particular action or actions that are warranted have been defined in 
Federal and State laws, policies and operational procedures independent 
of the audit process. The inclusion of program standards requirements 
within the audit criteria will further ensure that States follow these 
established policies and procedures, which are intended to facilitate 
achievement of a successful outcome. Furthermore, in order to receive 
any credit for actions when intermediate timeframes are missed, a State 
must actually achieve success within the audit period.
    5. Comment: One commenter recommended that a State be given credit 
for audit purposes even if the timeframes are not met if a child 
support order has been reviewed and a determination has been made 
within the audit period that no adjustment is appropriate. The 
commenter cited an example of a situation in which the review was 
conducted but as a result a determination was made that the order was 
presently in-line with guidelines and thus an adjustment not warranted. 
The commenter objected to the proposal to grant credit when timeframes 
are missed only if an adjustment was obtained.
    Response: We agree with the commenter that, for audit purposes, the 
State should be given credit when the timeframes are not met, but the 
State has reviewed the child support order and determined that no 
adjustment is needed, during the audit period. Therefore, the final 
regulation at Sec. 305.20(a)(4)(ii) provides that notwithstanding 
timeframes for establishment of cases, provision of services in 
interstate IV-D cases, location, and review and adjustment of support 
orders contained in Secs. 303.2(b), 303.7 (a), (b), (c) (4) through 
(6), (8), and (9), 303.3(b) (3) and (5), and 303.8, if a particular 
case has been reviewed and meets the conditions for adjustment under 
State law and procedures and Sec. 303.8, and the order is adjusted, or 
a determination is made, as the result of a review, that an adjustment 
is not needed, during the audit period in accordance with the State's 
guidelines for setting child support awards, the State will be 
considered to have taken appropriate action in that case for audit 
purposes.
    6. Comment: Numerous commenters expressed concern that, for 
purposes of receiving credit for enforcement when timeframes are not 
met, the State must have made a collection during the audit period. One 
commenter recommended that States be given credit for the attempt to 
use at least one other enforcement technique. Several commenters 
recommended that OCSE revise the proposed regulations to clarify that 
States will be given credit, without penalty, for taking or attempting 
a range of enforcement actions, even if no collection results. One 
commenter indicated that under the proposed criteria, cases with poor 
chances of success would be given priority, because the only way a 
State would be given credit for working these cases would be to do so 
within the timeframes. Another commenter argued that limiting credit 
when enforcement timeframes are missed to only those situations in 
which a collection is realized within the audit period, creates a 
timing issue if the legal action was initiated late in the audit period 
and the collection it generated was received after the audit period. 
One commenter asserted that it is counter-productive to require States 
to take an enforcement action, only to penalize the State when no 
collection is obtained during the audit period. Another commenter 
contended that legitimate attempts at enforcement will not receive 
credit, and recommended that audit compliance recognize a ``State's 
intent,'' even when it is unsuccessful.
    Response: States are required to provide child support services in 
accordance with Federal requirements, including standards for program 
operations timeframes. Under these requirements, the State must provide 
all required services so that children receive the support they need 
and deserve. The State should provide the necessary services in a 
timely manner rather than trying to anticipate what needs to be done to 
pass the audit. Under the new rule, granting the State credit when 
timeframes are missed should be the exception and not the norm. As long 
as all appropriate actions were taken within the allotted timeframes, 
States will receive credit for working the case even though no 
collection results from an enforcement action, or when the collection 
is received after the close of the audit period. A State receives 
credit for enforcement in situations in which the enforcement action 
was not completed in a timely manner only if a collection is received 
within the audit period.
    In an effort to focus more closely on measuring States' performance 
based on results achieved, we have developed a mechanism whereby 
missing the timeframe will not create a disincentive to following-
through with necessary action. Therefore, credit will be given to a 
State which achieves a successful result in a case in which the action 
was taken outside the required timeframe. Regarding enforcement actions 
accomplished outside the timeframes, we maintain that the only 
reasonable and objective measurement of a State's accomplishment which 
warrants the exception is the receipt of a collection within the audit 
period.
    7. Comment: Another commenter requested guidance concerning how 
collections can be linked to enforcement techniques where it is not 
possible to document the linkages.
    Response: A collection in a case in which enforcement action was 
taken, although not within the timeframes, will be a basis for credit 
regardless of whether that collection was a direct result of the 
specific remedy used.
    8. Comment: Several commenters suggested that credit be allowed for 
enforcement purposes if the State actually collects a significant 
proportion (80 to 90 percent) of the required current support due in a 
case during the audit period.
    Response: We believe that such an approach is unnecessary because 
we do not require that all current support due be collected before a 
State receives credit for enforcement. As long as some amount is 
collected as a result of enforcement action within the audit period, 
credit will be allowed regardless of whether timeframes are met or the 
full amount due is collected.
    9. Comment: One commenter sought assurance that use of contempt 
proceedings would be an acceptable enforcement technique in addition to 
Federal and State income tax refund offset where wage withholding is 
not available or appropriate.
    Response: While contempt proceedings are not necessarily the best 
approach, we recognize that in some States this remedy may be the only 
option under certain circumstances. Therefore, the use of contempt or 
any other enforcement action available under State law would suffice to 
meet the substantial compliance requirement for enforcement when wage 
withholding is not available or appropriate.
    10. Comment: One commenter requested clarification that States may 
continue to decide appropriate enforcement techniques in individual 
cases by using guidelines developed by the State for determining when 
use of a particular remedy would not be appropriate.
    Response: The commenter is correct in that States will be evaluated 
in their use of enforcement remedies which require consideration of 
State guidelines for determining when use of a particular procedure 
(e.g., imposition of liens on real and personal property) is 
inappropriate in a case.
    11. Comment: One commenter questioned an example used in the 
preamble to the proposed rule concerning the required use of alternate 
enforcement techniques when wage withholding is not available or 
appropriate. They asked whether an alternate remedy had to be used only 
in situations in which neither the employer nor the non-custodial 
parent could be located, or if the requirement applied even if one of 
the two (employer or the non-custodial parent) had been located.
    Response: In cases in which wage withholding cannot be implemented 
or is not available and the noncustodial parent has been located, 
States must use or attempt to use at least one enforcement technique 
available under State law in addition to Federal and State tax offset, 
in accordance with State laws and procedures and applicable State 
guidelines developed under Sec. 302.70(b). Under this provision, the 
State must use an alternative remedy when the noncustodial parent has 
been located and wage withholding cannot be implemented (e.g., the 
parent has no identified wages or the employer is unknown) or is not 
available (e.g., the parent is self-employed).
    12. Comment: One commenter questioned how a case would be evaluated 
when action was taken but not within timeframes and a successful result 
did not occur within the audit period. The commenter requested 
clarification of whether the case would be excluded from the audit or 
considered an error. They noted that when working a case, a State does 
not know the end result until the action is concluded.
    Response: If an action is taken outside of the prescribed 
timeframes and a successful result is not achieved during the audit 
period, it would be considered an error. Such cases would not be 
excluded from the evaluation. If a State adheres to the timeframes in 
taking the appropriate action in a case, the State will be credited 
with having taken an appropriate action. Credit for actions when 
timeframes are missed will only be extended where a successful result 
is achieved within the audit period.
    c. Expedited processes.
    1. Comment: One commenter requested further explanation of the 
mechanism for evaluating the State's compliance with expedited 
processes. Another commenter recommended that audit criteria for 
expedited processes be expanded to include legitimate continued court 
hearings for obligors as acceptable outcomes. The commenter contended 
that this approach would limit the temptation to simply request the 
court to enter a finding of contempt so the case can be dropped until 
the next audit period.
    Response: Prior to the issuance of this regulation, the expedited 
processes requirements at Sec. 303.101(b)(2) required the State to meet 
a 100 percent standard in one year. The corresponding audit regulation 
at Sec. 305.50 used the same standard in determining whether the State 
was in substantial compliance with Federal requirements. Under this 
regulation at Sec. 303.101(b)(2)(i), the State must, for cases needing 
support order establishment regardless of whether paternity has been 
established, establish a support order from the date of service of 
process to the time of disposition as follows: (1) 75 percent in 6 
months; and (2) 90 percent in 12 months. However, when the IV-D agency 
uses long-arm jurisdiction, and disposition takes place within 12 
months of locating the alleged father or noncustodial parent, the case 
may be counted as a success within the 6-month tier of the timeframe 
under Sec. 303.101(b)(2)(i) regardless of when disposition occurs. 
Under the new corresponding audit regulation at Sec. 305.20(a)(5), we 
will evaluate State compliance with expedited processes using the 
revised standards in Secs. 303.101(b)(2) (i) and (iii).
    With respect to the enforcement actions such as contempt 
proceedings, Sec. 303.101(b)(2)(ii) would apply. It references 
timeframes under Sec. 303.6(c)(2). Because State adherence to 
Sec. 303.6(c)(2) timeframes will be evaluated under a 75 percent 
standard, the occurrence of continuances in certain situations which 
delay case processing beyond the timeframes could be condoned. However, 
``taking'' an enforcement action under Sec. 303.6(c)(2) requires that 
the IV-D agency commence and complete appropriate enforcement action 
within the timeframe. Therefore, a continuance is not an acceptable 
outcome for purposes of meeting the expedited processes timeframes.

Paternity Establishment Percentage Standard--Proposed Sec. 305.97

    1. Comment: Several commenters pointed out that regulations should 
reflect the standard contained in OBRA '93, not the Family Support Act 
standard. Two commenters identified technical problems with the 
standard contained in OBRA '93, and suggested that OCSE wait until the 
statute is amended before issuing final regulations. One commenter 
suggested that the new standard, as revised by OBRA '93, should be 
developed into a proposed rule and disseminated for comment before 
final regulations are issued.
    Response: The commenter is correct. The proposed rule contained the 
Family Support Act standard rather than the OBRA '93 standard. Not only 
was the standard revised by OBRA '93, but it was more recently changed 
by Pub. L. 103-432, a law signed by the President on October 31, 1994. 
Because of these recent changes, we have not addressed in this 
regulation the paternity establishment standard or audit criteria for 
evaluating the standard.
    2. Comment: In the proposed rule (58 FR at 47423), we solicited 
comments regarding an option that would have allowed States meeting the 
paternity establishment percentage standard to be exempt from other 
paternity establishment audit criteria, including timeframes. Most 
commenters supported this results-oriented proposal. If this approach 
were taken, most commenters did not think it would be necessary to 
incorporate a timeliness measure in the paternity establishment 
percentage. One commenter suggested that the proposed approach be 
extended to all audit criteria. Another commenter suggested reversing 
the proposed approach by waiving the paternity establishment percentage 
standard when a State meets other paternity establishment audit 
criteria.
    Response: We appreciate commenters' views on this issue. However, 
we do not believe this is the time to make such a change. As we stated 
in the proposed rule, data reported incident to the paternity 
establishment percentage standard need to be tested and validated 
before we can consider exempting States that meet the paternity 
establishment percentage standard from meeting other paternity 
establishment audit criteria. Since Congress has recently changed the 
paternity establishment percentage standard, we will need to test and 
validate the appropriate data.
    As we stated in the notice of proposed rulemaking, we are also 
concerned that timeliness of paternity case processing is addressed by 
other audit criteria, but not by the paternity establishment percentage 
standard. No commenter suggested a way of incorporating a timeliness 
measure in the paternity establishment percentage standard.
    It is premature to extend the proposed approach to all other audit 
criteria, as one commenter suggested. Performance standards, similar to 
the paternity establishment percentage, have not been developed for 
other audit criteria. Finally, the proposed approach cannot be 
reversed--i.e., the paternity establishment percentage standard cannot 
be waived if a State meets other paternity establishment audit 
criteria. Federal law requires States to meet the paternity 
establishment percentage standard in order to be determined to be in 
substantial compliance with the Act.
    In addition, under the President's Welfare Reform bill, audits 
conducted by OCSE would not include the evaluation of State programs to 
determine State compliance with specific Federal requirements. Under 
the bill, States would conduct reviews to determine whether IV-D 
services are provided in accordance with program requirements. OCSE 
audits would focus on determining the reliability of State data 
including data use in the paternity establishment percentage standard 
reported to the Federal Government. The evaluation of State paternity 
activities, including the paternity standard, would no longer be 
included under an OCSE audit.

Performance Indicators--Sec. 305.98

    1. Comment: One commenter expressed concern that the proposed 
changes to Sec. 305.98 concerning the description and periodic update 
of the scoring system would permit OCSE to change the criteria in the 
future simply by issuing program instructions. The commenter suggested 
that any changes to the performance indicators criteria should be 
accomplished through the rulemaking process, not through issuance of 
instructions. Another commenter requested that the performance 
indicator ratio which requires comparison of the total amount of 
assistance furnished in AFDC IV-D cases to the total amount of AFDC 
collections in such cases should be rescinded, claiming that very few 
cases are affected by this. Alternatively, the commenter urged that if 
the criterion is retained, the related automation requirement should be 
delayed until the effective date of the computerized support 
enforcement system requirements in October 1995.
    Response: The changes made to Sec. 305.98 are limited to replacing 
the previous two-year frequency for updating the scoring system with 
updating, through the rulemaking process, whenever OCSE determines that 
it is necessary and appropriate. We believe the performance indicator 
which measures reimbursement of AFDC assistance payments which has been 
used since FY 1986 continues to be an effective measure of State 
performance. States are currently required to maintain data necessary 
to use this performance indicator.

Notice and Corrective Action Period--Sec. 305.99

    1. Comment: One commenter expressed concern about the treatment of 
compliance rates between 75 percent and 80 percent ``as marginal''. 
They contended that because if a State is only marginally complying 
with a particular criteria, and the State fails to address the 
situation through corrective action, such that a penalty may be 
imposed, in essence means that the minimum compliance rate is actually 
80 percent.
    Response: As explained in the response to comments in the preamble 
to the 1985 final rule governing the audit process (50 FR at 40136), 
marginal substantial compliance refers to the treatment--in the written 
notice to a State found not to be in substantial compliance with one or 
more title IV-D requirements--of those functional State plan-related 
audit criteria which the State met in only 75 to 80 percent of the 
cases reviewed.
    The commenter's contention is inaccurate. A determination that a 
State is in marginal compliance is not an indication of a deficiency 
upon which a penalty may be based unless the State fails to maintain a 
level of substantial compliance with respect to any marginally-met 
criteria cited in the penalty notice. A finding of marginal substantial 
compliance serves to alert a State to particular areas for which the 
State's performance is bordering upon failure. It signals a need for 
improvement.
    As we indicated in response to similar comments in the final rule 
promulgated in 1985 (50 FR at 40131), although the audit criteria the 
State marginally met cannot result in a finding of noncompliance or 
application of the penalty at the time of the notice, the State must, 
during the corrective action period, maintain substantial compliance in 
the areas cited in the notice as marginally acceptable to avoid 
subsequently losing funds under the penalty. Federal regulations 
require that the notice issued to the State concerning the audit 
findings must indicate the functional audit criteria that the State met 
only marginally.
    States for which a finding of a marginal substantial compliance is 
made with respect to one or more criteria during an audit are 
encouraged, but are not required, to address the concerns as part of 
their corrective action plan. Any criteria for which the State has been 
found to be in marginal substantial compliance are reexamined in 
conjunction with the follow-up review following the corrective action 
period to ensure that the State has maintained a level of substantial 
compliance (e.g., at least 75 percent). A State will not be penalized 
if, as part of a follow-up review, the areas identified in the previous 
audit as being in ``marginal'' substantial compliance remained 
marginal. However, if the follow-up review findings reflect that a 
criterion in marginal compliance slipped below 75 percent, a penalty 
could be imposed. We encourage States to improve their performance in 
all areas addressed in the notice.

Miscellaneous

    1. Comment: Three commenters contended that the proposed effective 
date for the audit rule changes is too lenient since States have had 
ample opportunity to meet mandatory requirements under the Family 
Support Act of 1988. They argued that States should be judged before 
publication of the final audit regulation because they have had more 
than enough time to prepare for audits.
    Response: Prior to the issuance of this final rule, OCSE had 
authority under 45 CFR Part 305 to evaluate State compliance with some 
of the requirements of the Family Support Act of 1988, including wage 
withholding, $50 pass-through payment, and the establishment of 
paternity until age 18. However, since we did not have the authority to 
evaluate all Family Support Act requirements for purposes of 
substantial compliance, the audit covered the provisions of the Family 
Support Act in a general manner to determine whether the States had 
implemented these requirements. Deficiencies identified were reported 
to the appropriate State officials as management findings. In addition, 
our regional offices conducted program reviews of State implementation 
of selected Family Support Act provisions, shared their findings with 
State agencies, and assisted in developing action steps to remedy any 
deficiencies identified. Under this final rule, we have included audit 
criteria that will now enable us to evaluate State compliance with all 
requirements of the Family Support Act. State failure to prospectively 
achieve substantial compliance with these requirements could result in 
imposition of the statutory audit penalty.
    2. Comment: One commenter recommended that audit criteria be 
expanded to include evaluations of State staffing standards designed to 
ensure that States are adequately complying with Federal regulations 
governing minimum organizational and staffing requirements. Another 
commenter requested that OCSE mandate caseload per worker ratios.
    Response: In response to comments in the preamble to the final rule 
governing Standards for Program Operations (54 FR 32306), we responded 
to similar concerns on staffing standards and resource allocation. We 
expressed our belief that States and localities should establish 
specific resource or staffing standards. We clarified that the Federal 
regulatory requirement has never been quantified as a national 
standard. We explained that while we believe that it is highly 
beneficial for IV-D programs to establish such standards, OCSE has not 
established universal standards because of the various factors unique 
to each State's or locality's operations. OCSE will continue to provide 
technical assistance and disseminate relevant information pertaining to 
resource or staffing standards.
    Because the issue of staffing standards has been articulated as a 
critical, and growing, concern for IV-D agencies, OCSE has issued a 
program improvement grant to develop a methodology for establishing 
staffing standards. Under the project awarded to the State of Virginia, 
the State operations contractor will streamline current operations 
through an operational analysis. The contractor will also develop a 
staffing standards methodology which will be applied to the streamlined 
operations. The project period is October 1993 to September 1996. 
Relevant information will be shared with other States on an ongoing 
basis. Furthermore, the President's Welfare Reform bill would require 
the Secretary to study and report to Congress on the staffing of each 
State's child support enforcement program.
    3. Comment: One commenter expressed concern about the efficacy of 
Federal audits, noting that there is considerable disparity between 
State internal audit results and Federal audit findings.
    Response: The variances between a State's internal audit and OCSE 
audit findings in the situation described by the commenter is 
attributable to the fact that the State audit is using its own State-
developed methodology and criteria in evaluating the child support 
program during a given period of time. The timeframe, requirements 
assessed, and the methodology employed may all be different than that 
of a Federal audit. Audits conducted by OCSE use the methodology 
described in the audit guide, which is available to States, and the 
criteria set forth in the audit regulations in 45 CFR part 305 in 
evaluating a State's IV-D program. In addition, OCSE audits build upon 
the results of audits conducted by States under the Single Audit Act 
which avoid duplicative audit activity.
    4. Comment: Some commenters contended that changes to the audit 
requirements during the time States are engaged in major efforts to 
automate their programs is disruptive to those efforts. One commenter 
advocated that implementation deadlines for the new rules should be 
delayed. The commenter stated that the penalty should be replaced with 
something more reasonable. Another commenter urged that the audit guide 
should be released at the same time as Federal regulations are 
published, and that it should describe the process and parts to be 
emphasized, so that States can implement their programs in the 
appropriate way and avoid costly revisions to their systems.
    Response: States are required to meet all Federal requirements set 
forth in law and regulations governing the IV-D program as a condition 
of having an approved State plan and continued eligibility for Federal 
financial participation in their programs. Audits of State performance 
are mandated by Federal law as a primary means to ensure that States, 
in fact, carry out these responsibilities. The OCSE audit guides are 
designed, developed, and disseminated to assist States. However, 
Federal law and regulations, not audit guides, are the bases upon which 
child support program audits are conducted, penalties imposed, and 
States held accountable.
    In enacting the explicit effective dates for various requirements 
under the Family Support Act of 1988, Congress did not intend for 
States to delay action to conform their laws and procedures to the 
requirements until such time as they had established a computerized 
support enforcement system. States have known about the Family Support 
Act requirements for more than five years, and have had 90 percent 
Federal funding for developing systems available for 13 years. Congress 
did not intend that States should be held harmless for their program 
deficiencies during the development of their automated systems. 
Furthermore, the audit process is not the sole means through which 
State program development and compliance is determined. OCSE uses 
program reviews, the State Plan approval process, the audit resolution 
and tracking system, as well as the established audit process, to 
review State compliance.
    5. Comment: One commenter submitted that audit samples should 
include paying cases, arguing that without such cases, States are only 
measured on their failures to monitor cases. They contended that audit 
findings may be skewed if such cases are eliminated from consideration 
in evaluating the State's performance.
    Response: Audit samples selected during the audit include all types 
of IV-D cases, including paying cases. In evaluating a State's 
performance through the audit process, cases that need enforcement or 
other action, including cases in paying status during the audit period, 
are examined to determine whether such action was taken appropriately 
in accordance with Federal and State program requirements, including 
relevant timeframes. If a State has taken the necessary action required 
by the particular case circumstances, credit will be given. Cases in 
paying status that did not require any action during the audit period 
will be examined as to whether collection and distribution requirements 
were met.
    6. Comment: One commenter contended that the proposal continues to 
stress process over product and imposes a single set of inflexible 
standards with arbitrary passing scores upon the 54 diverse State 
programs. The commenter urged that the OCSE and the IV-D system would 
be better served by moving toward a system of negotiated rulemaking 
nationally and a performance-based audit approach tailored to State 
programs.
    Response: In the national performance review as well as in 
Presidential Executive Order No. 12866, Federal agencies are strongly 
encouraged to utilize negotiated rulemaking. The Department is fully 
committed to this, as well as to our ongoing efforts to design a 
mechanism to evaluate States based on the results of their efforts. In 
addition, under the President's Welfare Reform bill, audits conducted 
by OCSE would not include the evaluation of State programs to determine 
State compliance with Federal requirements. Under the proposal, the 
State will conduct reviews to determine whether IV-D services were 
provided in accordance with program requirements. OCSE audits would 
focus on determining the reliability of State data reported to the 
Federal Government.
    7. Comment: In response to OCSE's certification in the proposed 
rule concerning regulatory flexibility analysis, one commenter 
suggested that the proposed regulations impact a substantial number of 
small entities inasmuch as most States rely on cooperative agreements 
with political subdivisions to attain program compliance objectives.
    Response: This regulation is applicable to Federal audits of State 
government programs. State governments, upon which these regulations 
will primarily impact, are not considered small entities under the 
Regulatory Flexibility Act.

Regulatory Flexibility Analysis

    The Secretary certifies, under 5 U.S.C. 605(b), as enacted by the 
Regulatory Flexibility Act (Pub. L. 96-354), that this regulation will 
not result in a significant impact on a substantial number of small 
entities. The primary impact is on State governments and individuals, 
which are not considered small entities under the Act. Also, while OBRA 
'93 requires States to pass laws that may impact hospitals, these 
regulations do not govern hospitals per se and therefore do not have a 
significant impact on a substantial number of small entities.

Regulatory Impact Analysis

    Executive Order 12866 requires that regulations be reviewed to 
ensure that they are consistent with the priorities and principles set 
forth in the Executive Order. The Department has determined that this 
rule is consistent with these priorities and principles. No costs are 
associated with this rule as it merely ensures consistency between the 
statute and regulations.

List of Subjects in 45 CFR Parts 301, 302, 303, 304, and 305

    Accounting, Child support, Grant programs--social programs, and 
Reporting and recordkeeping requirements.

(Catalog of Federal Domestic Assistance Program No. 93.563, Child 
Support Enforcement Program)

    Dated: July 14, 1994
Mary Jo Bane,
Assistant Secretary for Children and Families.
    Approved: September 7, 1994.
Donna E. Shalala,
Secretary.

    For the reasons set out in the preamble, title 45 chapter III of 
the Code of Federal Regulations is amended as follows:

PART 301--STATE PLAN APPROVAL AND GRANT PROCEDURES

    1. The authority citation for Part 301 continues to read as set 
forth below:

    Authority: 42 U.S.C. 651 through 658, 660, 664, 666, 667, 1301, 
and 1302.

    2. Section 301.1 is amended by adding in alphabetical order the 
definitions of ``Birthing hospital'' and ``Procedures'':


Sec. 301.1  General definitions.

* * * * *
    Birthing hospital means a hospital that has an obstetric care unit 
or provides obstetric services, or a birthing center associated with a 
hospital. A birthing center is a facility outside a hospital that 
provides maternity services.
* * * * *
    Procedures means a written set of instructions which describe in 
detail the step by step actions to be taken by child support 
enforcement personnel in the performance of a specific function under 
the State's IV-D plan. The IV-D agency may issue general instructions 
on one or more functions, and delegate responsibility for the detailed 
procedures to the office, agency, or political subdivision actually 
performing the function.
* * * * *

PART 302--STATE PLAN REQUIREMENTS

    3. The authority citation for Part 302 continues to read as 
follows:

    Authority: 42 U.S.C. 651 through 658, 660, 664, 666, 667, 1302, 
1396a(a)(25), 1396b(d)(2), 1396b(o), 1396b(p), and 1396(k).

    4. Section 302.70 is amended by revising paragraphs (a), 
introductory text, and (a)(2), and by adding new paragraphs (a)(5)(iii) 
through (a)(5)(viii) and (a)(11) to read as follows:


Sec. 302.70  Required State laws.

    (a) Required Laws. The State plan shall provide that, in accordance 
with sections 454(20) and 466 of the Act, the State has in effect laws 
providing for and has implemented the following procedures to improve 
program effectiveness:
* * * * *
    (2) Expedited processes to establish paternity and to establish and 
enforce child support orders having the same force and effect as those 
established through full judicial process, in accordance with the 
requirements set forth in Sec. 303.101 of this chapter;
* * * * *
    (5) * * *
    (iii) Procedures for a simple civil process for voluntarily 
acknowledging paternity under which the State must provide that the 
rights and responsibilities of acknowledging paternity are explained, 
and ensure that due process safeguards are afforded. Such procedures 
must include:
    (A) A hospital-based program in accordance with Sec. 303.5(g) for 
the voluntary acknowledgment of paternity during the period immediately 
before or after the birth of a child to an unmarried mother, and a 
requirement that all public and private birthing hospitals participate 
in the hospital-based program defined in Sec. 303.5(g)(2); and
    (B) A process for voluntarily acknowledging paternity outside of 
hospitals.
    (iv) Procedures under which the voluntary acknowledgment of 
paternity creates a rebuttable or, at the option of the State, 
conclusive presumption of paternity, and under which such voluntary 
acknowledgment is admissible as evidence of paternity;
    (v) Procedures which provide that any objection to genetic testing 
results must be made in writing within a specified number of days 
before any hearing at which such results may be introduced into 
evidence; and if no objection is made, a written report of the test 
results is admissible as evidence of paternity without the need for 
foundation testimony or other proof of authenticity or accuracy;
    (vi) Procedures which create a rebuttable or, at the option of the 
State, conclusive presumption of paternity upon genetic testing results 
indicating a threshold probability of the alleged father being the 
father of the child;
    (vii) Procedures under which a voluntary acknowledgment must be 
recognized as a basis for seeking a support order without requiring any 
further proceedings to establish paternity; and
    (viii) Procedures requiring a default order to be entered in a 
paternity case upon a showing that process was served on the defendant 
in accordance with State law, that the defendant failed to respond to 
service in accordance with State procedures, and any additional showing 
required by State law.
* * * * *
    (11) Procedures under which the State must give full faith and 
credit to a determination of paternity made by any other State, whether 
established through voluntary acknowledgment or through administrative 
or judicial processes.
* * * * *

PART 303--STANDARDS FOR PROGRAM OPERATIONS

    5. The authority citation for Part 303 continues to read as 
follows:

    Authority: 42 U.S.C. 651 through 658, 660, 663, 664, 666, 667, 
1302, 1396a(a)(25), 1396b(d)(2), 1396b(o), 1396b(p), and 1396(k).

    6. Section 303.4 is amended by revising paragraph (d) and adding 
paragraph (f) to read as follows:


Sec. 303.4  Establishment of support obligations.

* * * * *
    (d) Within 90 calendar days of locating the alleged father or 
noncustodial parent, regardless of whether paternity has been 
established, establish an order for support or complete service of 
process necessary to commence proceedings to establish a support order 
and, if necessary, paternity (or document unsuccessful attempts to 
serve process, in accordance with the State's guidelines defining 
diligent efforts under Sec. 303.3(c)).
* * * * *
    (f) Seek a support order based on a voluntary acknowledgment in 
accordance with Sec. 302.70(a)(5)(vii).
* * * * *
    7. Section 303.5 is amended by revising paragraph (a) and by adding 
paragraphs (f), (g), and (h) to read as follows:


Sec. 303.5  Establishment of paternity.

    (a) For all cases referred to the IV-D agency or applying for 
services under Sec. 302.33 of this chapter in which paternity has not 
been established, the IV-D agency must, as appropriate:
    (1) Provide an alleged father the opportunity to voluntarily 
acknowledge paternity in accordance with Sec. 302.70(a)(5)(iii); and
    (2) Attempt to establish paternity by legal process established 
under State law.
* * * * *
    (f) The IV-D agency must seek entry of a default order by the court 
or administrative authority in a paternity case by showing that process 
has been served on the defendant in accordance with State law, that the 
defendant has failed to respond to service in accordance with State 
procedures, and any additional showing required by State law, in 
accordance with Sec. 302.70(a)(5)(viii).
    (g) Hospital-based program.
    (1) The State must establish, in cooperation with hospitals, a 
hospital-based program in every public and private birthing hospital. 
These programs must be operational in birthing hospitals statewide no 
later than January 1, 1995 (unless Federal law governing the effective 
date gives the State additional time).
    (2) During the period immediately before or after the birth of a 
child to an unmarried woman in the hospital, a hospital-based program 
must, at a minimum:
    (i) Provide to both the mother and alleged father, if he is present 
in the hospital:
    (A) Written materials about paternity establishment,
    (B) the forms necessary to voluntarily acknowledge paternity,
    (C) a written description of the rights and responsibilities of 
acknowledging paternity, and
    (D) the opportunity to speak with staff, either by telephone or in 
person, who are trained to clarify information and answer questions 
about paternity establishment;
    (ii) Provide the mother and alleged father, if he is present, the 
opportunity to voluntarily acknowledge paternity in the hospital;
    (iii) Afford due process safeguards; and
    (iv) Forward completed acknowledgments or copies to the entity 
designated under Sec. 303.5(g)(8).
    (3) A hospital-based program need not provide services specified in 
paragraph (g)(2) of this section in cases where the mother or alleged 
father is a minor or a legal action is already pending, if the 
provision of such services is precluded by State law.
    (4) The State must require that a voluntary acknowledgment obtained 
through a hospital-based program be signed by both parents, and that 
the parents' signatures be authenticated by a notary or witness(es).
    (5) The State must provide to all public and private birthing 
hospitals in the State:
    (i) written materials about paternity establishment,
    (ii) forms necessary to voluntarily acknowledge paternity, and
    (iii) copies of a written description of the rights and 
responsibilities of acknowledging paternity.
    (6) The State must provide training, guidance, and written 
instructions regarding voluntary acknowledgment of paternity, as 
necessary to operate the hospital-based program.
    (7) The State must assess each birthing hospital's program on at 
least an annual basis.
    (8) The State must designate an entity to which hospital-based 
programs must forward completed voluntary acknowledgments or copies in 
accordance with Sec. 303.5(g)(2)(iv). Under State procedures, this 
entity must be responsible for promptly recording identifying 
information about the acknowledgments with a statewide database, and 
the IV-D agency must have timely access to whatever identifying 
information and documentation it needs to determine in accordance with 
Sec. 303.5(h) if an acknowledgment has been recorded and to seek a 
support order on the basis of a recorded acknowledgment in accordance 
with Sec. 303.4(f).
    (h) In IV-D cases needing paternity establishment, the IV-D agency 
must determine if identifying information about a voluntary 
acknowledgment has been recorded in the statewide database in 
accordance with Sec. 303.5(g)(8).
    8. Section 303.101 is amended by revising paragraphs (a), (b), 
(c)(1) and (3), (d) (2) through (4), and (e), and by adding paragraph 
(d)(5) to read as follows:


Sec. 303.101 Expedited processes.

    (a) Definition. Expedited processes means administrative or 
expedited judicial processes or both which increase effectiveness and 
meet processing times specified in paragraph (b)(2) of this section.
    (b) Basic requirement. (1) The State must have in effect and use, 
in interstate and intrastate cases, expedited processes as specified 
under this section to establish paternity and to establish and enforce 
support orders.
    (2) Under expedited processes:
    (i) In IV-D cases needing support order establishment, regardless 
of whether paternity has been established, action to establish support 
orders must be completed from the date of service of process to the 
time of disposition within the following timeframes: (A) 75 percent in 
6 months; and (B) 90 percent in 12 months.
    (ii) In IV-D cases where a support order has been established, 
actions to enforce the support order must be taken within the 
timeframes specified in Secs. 303.6(c)(2) and 303.100;
    (iii) For purposes of the timeframe at Sec. 303.101(b)(2)(i), in 
cases where the IV-D agency uses long-arm jurisdiction and disposition 
occurs within 12 months of service of process on the alleged father or 
noncustodial parent, the case may be counted as a success within the 6 
month tier of the timeframe, regardless of when disposition occurs in 
the 12 month period following service of process.
    (iv) Disposition, as used in paragraphs (b)(2)(i) and (iii) of this 
section, means the date on which a support order is officially 
established and/or recorded or the action is dismissed.
    (c) * * *
    (1) Paternities and orders established by means other than full 
judicial process must have the same force and effect under State law as 
paternities and orders established by full judicial process within the 
State;
* * * * *
    (3) The parties must be provided a copy of the voluntary 
acknowledgment of paternity, paternity determination, and/or support 
order;
* * * * *
    (d) * * *
    (2) Evaluating evidence and making recommendations or decisions to 
establish paternity and to establish and enforce orders;
    (3) Accepting voluntary acknowledgment of paternity or support 
liability and stipulated agreements setting the amount of support to be 
paid;
    (4) Entering default orders upon a showing that process has been 
served on the defendant in accordance with State law, that the 
defendant failed to respond to service in accordance with State 
procedures, and any additional showing required by State law; and
    (5) Ordering genetic tests in contested paternity cases in 
accordance with Sec. 303.5(d)(1).
* * * * *
    (e) Exemption for political subdivisions. A State may request an 
exemption from any of the requirements of this section for a political 
subdivision on the basis of the effectiveness and timeliness of 
paternity establishment, support order issuance or enforcement within 
the political subdivision in accordance with the provisions of 
Sec. 302.70(d) of this chapter.

PART 304--FEDERAL FINANCIAL PARTICIPATION

    9. The authority citation for Part 304 continues to read as 
follows:

    Authority: 42 U.S.C. 651 through 655, 657, 1302, 1396a(a)(25), 
1396b(d)(2), 1396b(o), 1396b(p), and 1396(k).

    10. Section 304.20 is amended by adding paragraphs (b)(2)(vi) 
through (viii) to read as follows:


Sec. 304.20  Availability and rate of Federal financial participation.

* * * * *
    (b) * * *
    (2) The establishment of paternity including:
* * * * *
    (vi) Payments up to $20 to birthing hospitals and other entities 
that provide prenatal or birthing services for each voluntary 
acknowledgment obtained pursuant to an agreement with the IV-D agency;
    (vii) Developing and providing to birthing hospitals and other 
entities that provide prenatal or birthing services written and 
audiovisual materials about paternity establishment and forms necessary 
to voluntarily acknowledge paternity; and
    (viii) Reasonable and essential short-term training regarding 
voluntary acknowledgment of paternity associated with a State's 
hospital-based program as defined by Sec. 303.5(g)(2).
* * * * *
    11. Section 304.23 is amended by revising paragraph (d) to read:


Sec. 304.23  Expenditures for which Federal financial participation is 
not available.

* * * * *
    (d) Education and training programs and educational services except 
direct cost of short term training provided to IV-D agency staff or 
pursuant to Secs. 304.20(b)(2)(viii) and 304.21.

PART 305--AUDIT AND PENALTY

* * * * *
    12. The authority citation for Part 305 is revised to read as set 
forth below:

    Authority: 42 U.S.C. 603(h), 604(d), 652(a)(1), (4) and (g), and 
1302.

    13. Section 305.0 is revised to read as follows:


Sec. 305.0  Scope.

    This part implements the requirements in sections 452(a)(4) and 
403(h) of the Act for an audit, at least once every three years, of the 
effectiveness of State Child Support Enforcement programs under title 
IV-D and for a possible reduction in Federal reimbursement for a 
State's title IV-A program pursuant to sections 403(h) and 404(d) of 
the Act. Sections 305.10 through 305.13 describe the audit. Section 
305.20 sets forth audit criteria and subcriteria the Office will use to 
determine program effectiveness and defines an effective program for 
purposes of an audit. Section 305.98 sets forth the performance 
indicators the Office will use to determine State IV-D program 
effectiveness.
    Section 305.99 provides for the issuance of a notice and corrective 
action period if a State is found by the Secretary not to have an 
effective IV-D program. Section 305.100 provides for the imposition of 
a penalty if a State is found by the Secretary not to have had an 
effective program and to have failed to take corrective action and 
achieve substantial compliance within the period prescribed by the 
Secretary.
    14. Section 305.1 is revised to read as follows:


Sec. 305.1  Definitions.

    The definitions found in Sec. 301.1 of this chapter are also 
applicable to this part.
    15. Section 305.10 is amended by revising the last sentence of 
paragraph (a) and paragraph (c)(2) to read as follows:


Sec. 305.10  Timing and scope of audit.

    (a) * * * The audit of each State's program will be a comprehensive 
review using the criteria prescribed in Secs. 305.20 and 305.98 of this 
part.
* * * * *
    (c) * * *
    (2) Use the audit standards promulgated by the Comptroller General 
of the United States in ``Government Auditing Standards.''
* * * * *
    16. Section 305.12 is amended by revising paragraph (a) to read as 
follows:


Sec. 305.12  State comments.

    (a) Prior to the start of the actual audit, the Office will hold an 
audit entrance conference with the IV-D agency. At that conference, the 
Office will explain how the audit will be performed and make any 
necessary arrangements.
* * * * *
    17. Section 305.20 is revised to read as follows:


Sec. 305.20  Effective support enforcement program.

    For the purposes of this part and section 403(h) of the Act, in 
order to be found to have an effective program in substantial 
compliance with the requirements of title IV-D of the Act:
    (a) For any audit period which begins on or after December 23, 
1994, a State must meet the IV-D State plan requirements contained in 
Part 302 of this chapter measured as follows:
    (1) The State must meet the requirements under the following 
criteria:
    (i) Statewide operations, Sec. 302.10;
    (ii) Reports and maintenance of records, Sec. 302.15(a);
    (iii) Separation of cash handling and accounting functions, 
Sec. 302.20; and
    (iv) Notice of collection of assigned support, Sec. 302.54.
    (2) The State must have and use procedures required under the 
following criteria in at least 90 percent of the cases reviewed for 
each criterion:
    (i) Establishment of cases, Sec. 303.2(a); and
    (ii) Case closure criteria, Sec. 303.11.
    (3) The State must have and use procedures required under the 
following criteria in at least 75 percent of the cases reviewed for 
each criterion:
    (i) Collection and distribution of support payments, including: 
Collection and distribution of support payments by the IV-D agency 
under Secs. 302.32(b) and (f); distribution of support collections 
under Sec. 302.51; and distribution of support collected in title IV-E 
foster care maintenance cases under Sec. 302.52;
    (ii) Establishment of paternity and support orders, including: 
Establishment of a case under Sec. 303.2(b); services to individuals 
not receiving AFDC or title IV-E foster care assistance, under 
Secs. 302.33(a)(1) through (4); provision of services in interstate IV-
D cases under Secs. 303.7(a), (b) and (c)(1) through (6) and (8) 
through (10); location of non-custodial parents under Sec. 303.3; 
establishment of paternity under Secs. 303.5(a) and (f); guidelines for 
setting child support awards under Sec. 302.56; and establishment of 
support obligations under Secs. 303.4(d), (e) and (f);
    (iii) Enforcement of support obligations, including, in all 
appropriate cases: Establishment of a case under Sec. 303.2(b); 
services to individuals not receiving AFDC or title IV-E foster care 
assistance, under Secs. 302.33(a)(1) through (4); provision of services 
in interstate IV-D cases under Secs. 303.7(a), (b) and (c)(1) through 
(6) and (8) through (10); location of non-custodial parents under 
Sec. 303.3; enforcement of support obligations under Sec. 303.6, 
including submitting once a year all appropriate cases in accordance 
with Sec. 303.6(c)(3) to State and Federal income tax refund offset; 
and wage withholding under Sec. 303.100. In cases in which wage 
withholding cannot be implemented or is not available and the non-
custodial parent has been located, States must use or attempt to use at 
least one enforcement technique available under State law in addition 
to Federal and State tax refund offset, in accordance with State laws 
and procedures and applicable State guidelines developed under 
Sec. 302.70(b) of this chapter;
    (iv) Review and adjustment of child support orders, including: 
establishment of a case under Sec. 303.2(b); services to individuals 
not receiving AFDC or title IV-E foster care assistance, under 
Secs. 302.33(a)(1) through (4); provision of services in interstate IV-
D cases under Secs. 303.7(a), (b) and (c)(1) through (6) and (8) 
through (10); location of non-custodial parents under Sec. 303.3; 
guidelines for setting child support awards under Sec. 302.56; and 
review and adjustment of support obligations under Sec. 303.8; and
    (v) Medical support, including: establishment of a case under 
Sec. 303.2(b); services to individuals not receiving AFDC or title IV-E 
foster care assistance, under Secs. 302.33(a)(1) through (4); provision 
of services in interstate IV-D cases under Secs. 303.7(a), (b) and 
(c)(1) through (6) and (8) through (10); location of non-custodial 
parents under Sec. 303.3; securing medical support information under 
Sec. 303.30; and securing and enforcing medical support obligations 
under Sec. 303.31.
    (4) With respect to the 75 percent standard in Sec. 305.20(a)(3):
    (i) Notwithstanding timeframes for establishment of cases in 
Sec. 303.2(b); provision of services in interstate IV-D cases under 
Secs. 303.7(a), (b) and (c)(4) through (6), (8) and (9); location and 
support order establishment under Secs. 303.3(b)(3) and (5), and 
303.4(d), if a support order needs to be established in a case and an 
order is established during the audit period in accordance with the 
State's guidelines for setting child support awards, the State will be 
considered to have taken appropriate action in that case for audit 
purposes.
    (ii) Notwithstanding timeframes for establishment of cases in 
Sec. 303.2(b); provision of services in interstate IV-D cases under 
Secs. 303.7(a), (b) and (c)(4) through (6), (8) and (9); and location 
and review and adjustment of support orders contained in 
Secs. 303.3(b)(3) and (5), and 303.8, if a particular case has been 
reviewed and meets the conditions for adjustment under State laws and 
procedures and Sec. 303.8, and the order is adjusted, or a 
determination is made, as a result of a review, during the audit 
period, that an adjustment is not needed, in accordance with the 
State's guidelines for setting child support awards, the State will be 
considered to have taken appropriate action in that case for audit 
purposes.
    (iii) Notwithstanding timeframes for establishment of cases in 
Sec. 303.2(b); provision of services in interstate IV-D cases under 
Secs. 303.7 (a), (b) and (c) (4) through (6), (8) and (9); and location 
and wage withholding in Secs. 303.3(b) (3) and (5), and 303.100, if 
wage withholding is appropriate in a particular case and wage 
withholding is implemented and wages are withheld during the audit 
period, the State will be considered to have taken appropriate action 
in that case for audit purposes.
    (iv) Notwithstanding timeframes for establishment of cases in 
Sec. 303.2(b); provision of services in interstate IV-D cases under 
Secs. 303.7 (a), (b) and (c) (4) through (6), (8) and (9); and location 
and enforcement of support obligations in Secs. 303.3(b) (3) and (5), 
and 303.6, if wage withholding is not appropriate in a particular case, 
and the State uses at least one enforcement technique available under 
State law, in addition to Federal and State income tax refund offset, 
which results in a collection received during the audit period, the 
State will be considered to have taken appropriate action in the case 
for audit purposes.
    (5) The State must meet the requirements for expedited processes 
under Secs. 303.101(b)(2) (i) and (iii), and (e).
    (6) The State must meet the criteria referred to in Sec. 305.98(c) 
of this part relating to the performance indicators prescribed in 
Sec. 305.98(a).
    18. Sections 305.21 through 305.57 are removed and reserved.


Secs. 305.21-305.57  [Removed and Reserved]

    19. Section 305.98 is amended by revising paragraph (c), 
introductory text, and paragraph (d) to read as follows:


Sec. 305.98  Performance indicators and audit criteria.

* * * * *
    (c) The Office shall use the following procedures and audit 
criteria to measure State performance.
* * * * *
    (d) The scoring system provided in paragraph (c) of this section 
will be described and updated whenever OCSE determines that it is 
necessary and appropriate by the Office in regulations.
    20. Section 305.99 is amended by revising paragraph (b)(2) to read 
as follows:


Sec. 305.99  Notice and corrective action period.

* * * * *
    (b) * * *
    (2) Identify any audit criteria listed in Sec. 305.20(a)(3) of this 
part that the State met only marginally [that is, in 75 to 80 percent 
of cases reviewed for criteria in Sec. 305.20(a)(3)];
* * * * *
[FR Doc. 94-31313 Filed 12-21-94; 8:45 am]
BILLING CODE 4150-04-P