[Federal Register Volume 61, Number 169 (Thursday, August 29, 1996)]
[Rules and Regulations]
[Pages 45757-45759]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-21661]


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LEGAL SERVICES CORPORATION
45 CFR Part 1639


Welfare Reform

AGENCY: Legal Services Corporation.

ACTION: Interim rule with request for comments.

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SUMMARY: This interim rule is intended to implement a provision in the 
Legal Services Corporation's (``Corporation'' or ``LSC'') FY 1996 
appropriations act which restricts recipients from initiating legal 
representation or challenging or participating in any way in an effort 
to reform a Federal or State welfare system. Although this rule is 
effective upon publication, the Corporation also solicits public 
comment on the interim rule in anticipation of adoption of a final rule 
at a later time.

DATES: This interim rule is effective on August 29, 1996. Comments must 
be submitted on or before October 28, 1996.

ADDRESSES: Comments should be submitted to the Office of the General 
Counsel, Legal Services Corporation, 750 First Street NE., 11th Floor, 
Washington, DC 20002-4250.

FOR FURTHER INFORMATION CONTACT: Victor M. Fortuno, General Counsel 
(202) 336-8910.

SUPPLEMENTARY INFORMATION: On May 19, 1996, the Operations and 
Regulations Committee (``Committee'') of the LSC Board of Directors 
(``Board'') requested the LSC staff to prepare an interim rule to 
implement Sec. 504(a)(16) of the Corporation's FY 1996 appropriations 
act, Pub. L. 104-134, 110 Stat. 1321 (1996), which restricts recipients 
of LSC funds from initiating legal representation or participating in 
any other way involving efforts to reform a Federal or State welfare 
system. The Committee held hearings on July 10 and 19, and the Board 
adopted this interim rule on July 20 for publication in the Federal 
Register. The Committee recommended and the Board agreed to publish 
this rule as an interim rule. An interim rule is necessary in order to 
provide prompt and critically necessary guidance to LSC recipients on 
legislation which is already effective and carries strong penalties for 
noncompliance. Because of the great need for guidance on how to comply 
with substantially revised legislative requirements, prior notice and 
public comment are impracticable, unnecessary, and contrary to the 
public interest. See 5 U.S.C. Secs. 553(b)(3)(B) and 553(d)(3). 
Accordingly, this rule is effective upon publication.
    However, the Corporation also solicits public comment on the rule 
for review and consideration by the Committee. After receipt of public 
comments, the Committee intends to hold public hearings to discuss 
written comments and hear oral comments. It is anticipated that a final 
rule will be issued which will supersede this interim rule.
    A section-by-section discussion of this interim rule is provided 
below.

Section 1639.1  Purpose

    The purpose of this new rule is to ensure that LSC recipients do 
not initiate litigation or challenge or participate in any effort to 
reform a Federal or State welfare system. In addition, the rule 
clarifies when recipients can engage in legal representation of a 
client seeking specific relief from a welfare agency and incorporates 
Sec. 504(e) of 110 Stat. 1321, which permits recipients to use non-LSC 
funds to comment on public rulemaking or respond to requests from 
legislative or administrative officials.

Section 1639.2  Definitions

    Federal or State welfare system is defined to include the Federal 
and State AFDC programs under Title IV-A of the Social Security Act, 42 
U.S.C. Sec. 601 et seq. These programs are the current Federal-State 
welfare cash assistance programs for needy families with dependent 
children. It would also include new programs or provisions enacted by 
Congress to replace or modify these programs, such as the block grant 
proposals for cash assistance in Title I of H.R. 3734, the Personal 
Responsibility and Work Opportunity Reconciliation Act of 1996, adopted 
by Congress on August 1, 1996. Also included in the definition would be 
any components or requirements from other public benefit or human 
service programs that are a part of the AFDC program, such as 
requirements of establishment of paternity and cooperation with child 
support enforcement. In addition, it would also include State changes 
in AFDC or JOBS programs, State efforts to implement any Federal block 
grant cash assistance program for needy families with children, and 
State efforts to eliminate AFDC and replace it with a new program (for 
example, the Wisconsin Works program). Federal or State welfare system 
would also include any State AFDC programs or their replacements 
conducted under waivers granted either by the Department of Health and 
Human Services pursuant to Sec. 1115 of the Federal Social Security Act 
or by enacted legislation.
    Finally, the definition would include State General Assistance, 
General Relief, Direct Relief, Home Relief or similar state means-
tested programs for basic subsistence which operate with State funding 
or under State mandate, and new programs enacted by States to replace 
or modify these programs. For example, if a State eliminated or 
replaced its General Assistance program, the new program would be 
included within the definition. In a State with county-run State 
General Assistance programs, State legislation or regulatory changes in 
those programs would be included within the definition of Federal or 
State welfare system.
    Federal or State welfare system does not include other Federal 
programs such as: the Job Training Partnership Act and pending 
legislation that would revise and consolidate job training, vocational 
education, and other training programs such as the Workforce 
Development Act; the Food Stamp Program, adult nutrition programs, 
child nutrition programs, Women and Infants Care (WIC) program, and the 
school lunch program; Social Security and Supplemental Security Income; 
Medicaid; Medicare; Unemployment Insurance; Veterans Benefits; Child 
Support Enforcement; and child welfare programs including adoption 
assistance, foster care and termination of parental rights.
    Reform of a Federal or State welfare system means an effort or 
action initiated or undertaken to effect legislative or regulatory 
proposals for changes in key components of the Federal or a State 
welfare system. For example, Federal legislative proposals to block 
grant the AFDC program and State legislative or regulatory proposals 
which implement any new Federal

[[Page 45758]]

block grant would be a reform of the Federal or State welfare system. 
State legislative or regulatory efforts to develop AFDC demonstration 
programs under Federal waiver authority and State efforts to eliminate 
or modify a State General Assistance program would also be reform.
    The regulation focuses on ``key'' components of a Federal or State 
welfare system because the statute references the ``welfare system,'' 
as distinguished from any particular provision of a welfare law or 
regulation. A change to a ``key component'' would cause a fundamental 
restructuring of the AFDC or General Assistance program such as the 
Federal proposals to block grant the AFDC program or waiver proposals 
to eliminate the AFDC programs and replace them with a new program that 
offers eligible families a subsidized job or a position in a work 
program. A ``key component'' would also include changes that would not 
fundamentally restructure the welfare system but would make significant 
changes in how the system operates, such as proposals or enactments in 
recent welfare reform waivers which: (1) impose time limits on the 
receipt of AFDC or General Assistance; (2) require work in exchange for 
receipt of assistance; (3) deny benefit increases for additional 
children (family cap); or (4) require teen parents to reside at home or 
to regularly attend school. Recipients may not initiate litigation 
challenging regulations or legislation incorporating these policies.
    A ``key component'' would not include technical or isolated changes 
in Federal or State welfare laws or regulations that are not made as 
part of an effort to change the basic structure of a welfare system or 
how a welfare system functions. For example, a change in an agency's 
child care reimbursement policy or a change in what assets are used to 
determine eligibility would not be a ``key component'' of a Federal or 
State welfare reform effort. A key component would also not include 
minor changes in policy that are not necessary to a State effort to 
reform the welfare system. Several examples from recent State activity 
illustrate changes that are not key components of a welfare reform 
effort.
    Thus, for example, a change in the definition of which costs 
associated with a required search for employment qualifies for 
reimbursement would not be considered a key component. Similarly, a 
policy changing the allowed value of an automobile which an applicant 
may own and remain eligible for AFDC, or the use to which the 
automobile must be put to qualify, would not be considered a key 
component.
    The term existing law is defined to mean Federal, State or local 
statutory law or ordinances.
    The definitions of Federal or State welfare system, reform and 
existing law all are consistent with the legislative history which led 
to the enactment of this new restriction. This legislative history 
included: debate around an amendment by Senator Gramm during 
consideration of the FY 1995 Commerce, Justice and State, the Judiciary 
and Related Agencies appropriations bill in July of 1994 (140 Cong. 
Rec., S. 9402 (July 31, 1994)); debate around an amendment by Senator 
Gramm during consideration of the Senate Welfare Reform bill on 
September 15, 1995 (141 Cong. Rec., S., 13640 (Sept. 15, 1995)); brief 
references made to the welfare reform prohibition during the debate on 
the Domenici Amendment in late September of 1995 [141 Cong. Rec., S. 
14671 (Sept. 29, 1995)] and during the debate on the Cohen-Bumpers 
Amendment on March 14, 1996 [142 Cong. Rec., S., 2055 (March 14, 
1996)]. The committee reports that accompanied the House appropriations 
legislation and the two conference committee reports accompanying H.R. 
2076 and H.R. 3019 also made brief reference to ``welfare reform'' 
advocacy and are part of the legislative history. The cases that are 
mentioned in these debates as objectionable are cases challenging 
specific new policies which eliminated State general assistance 
programs or made changes in key components of State AFDC programs that 
were enacted as part of an overall State welfare reform effort. For 
example, Members of Congress specifically referenced new state laws 
which imposed time limits on the receipt of benefits and ``family cap'' 
laws which denied benefits to a family for additional children. In 
addition, a major concern throughout these debates was the fear that 
legal services programs would challenge Federal block grant legislation 
replacing the AFDC program or State legislation or regulations created 
pursuant to the block grant authority. However, at no time during the 
debates did any Member of Congress mention cases challenging child 
support, Food Stamps, Medicaid, foster care, child welfare, SSI, 
Veterans benefits, Job Training or other programs, including other 
means-tested benefit programs.
    Language identical to that in 110 Stat. 1321 first appeared in 
Section 21 of H.R. 1806, the legislation co-sponsored by 
Representatives McCollum and Stenholm to reform the legal services 
program. Neither of these representatives provided any description of 
this new provision when the legislation was introduced. The only 
discussion by either co-sponsor about the meaning of the provision was 
a statement made by Rep. Bill McCollum during the House Reauthorization 
hearing in May 1995, in which he stated that legal services:

    Should be prohibited and restricted from being engaged in trying 
to change or reform the welfare systems that are undergoing changes 
in the States or at the Federal level, that is not their role, that 
they be able to represent individuals and do the bread-and-butter 
work, landlord-tenant problems, perhaps the welfare laws, making 
claims for people, and so forth, but not trying to reform the 
system.

(See, Transcript, Reauthorization of Legal Services Corporation, 
Tuesday, May 16, 1995, House of Representatives, Subcommittee on 
Commercial and Administrative Law, Committee on the Judiciary, 
Washington, D.C., p. 31)

Section 1639.3  Prohibition

    This section prohibits any involvement by a recipient in initiating 
legal representation or challenging or participating in efforts to 
reform a Federal or State welfare system. The prohibition includes, but 
is not limited to, litigation challenging laws or regulations enacted 
as part of a reform of a Federal or State welfare system; participating 
in rulemaking involving proposals that are being considered as part of 
a reform of a Federal or State welfare system; and lobbying or other 
advocacy before legislative or administrative bodies involving pending 
or proposed legislation that is part of a reform of a Federal or State 
welfare system. The prohibition also precludes litigation or other 
advocacy with regard to the granting or denying of State requests for 
Federal waivers or Federal requirements for AFDC including: (1) 
Participation at the State level before administrative agencies, the 
legislature or the Executive when waivers are under consideration; (2) 
commenting upon or engaging in other advocacy on waivers that are being 
considered by the Department of Health and Human Services; and (3) 
engaging in advocacy before Congress if Congress undertakes to adopt a 
State waiver request.

Section 1639.4  Permissible Representation of Eligible Clients

    This section incorporates the statutory language which permits a 
recipient to represent ``an individual eligible client who is seeking 
specific relief from a welfare agency, if such relief does not involve 
an effort to amend or otherwise

[[Page 45759]]

challenge existing law in effect on the date of the initiation of the 
representation.'' Pursuant to this provision, an action to enforce 
existing law would not be proscribed. Thus, when representing an 
eligible client seeking individual relief, a recipient may challenge a 
regulation or policy on the basis that it violates a higher State or 
Federal law. In addition, such representation might also challenge the 
agency's interpretation of the law or challenge the application of an 
agency's regulation or policy, or the law on which it is based, to the 
individual seeking relief.

Section 1639.5  Exception for Public Rulemaking and Responding to 
Requests With Non-LSC Funds

    The 1996 appropriations act includes a provision, Sec. 504(e) of 
110 Stat. 1321, which provides that nothing in Sec. 504--

    Shall be construed to prohibit a recipient from using funds 
derived from a source other than the Legal Services Corporation to 
comment on public rulemaking or to respond to a written request for 
information or testimony from a Federal, State or local agency, 
legislative body or committee, or a member of such an agency, body 
or committee, so long as the response is made only to the parties 
that make the request and the recipient does not arrange for the 
request to be made.

This exception applies to the prohibition on welfare reform lobbying 
and rulemaking in Sec. 504(a)(16). Therefore, recipients may use non-
LSC funds to make oral or written comments in a public rulemaking 
proceeding involving an effort to reform a Federal or State welfare 
system or to respond to a written request from a government agency or 
official thereof, elected official, legislative body, committee or 
member thereof, made to the employee or to a recipient, to testify or 
provide information regarding an effort to reform a State or Federal 
welfare system, provided that the response by the recipient is made 
only to the party making the request and the recipient does not arrange 
for the request to be made.

Section 1639.6  Recipient Policies and Procedures

    In order to ensure that the recipient's staff are fully aware of 
the restriction on welfare reform activity and to ensure that staff 
receive appropriate guidance, this section requires that recipients 
adopt written policies and procedures to guide its staff in complying 
with this part.

List of Subjects in 45 CFR Part 1639

    Grant programs-law; Legal services; Welfare reform.

    For reasons set forth in the preamble, Chapter XVI is amended by 
adding part 1639 as follows:

PART 1639--WELFARE REFORM

Sec.
1639.1  Purpose.
1639.2  Definitions.
1639.3  Prohibition.
1639.4  Permissible representation of eligible clients.
1639.5  Exceptions for public rulemaking and responding to requests 
with non-LSC funds.
1639.6  Recipient policies and procedures.

    Authority: Pub. L. 104-134, 110 Stat. 1321; 42 U.S.C. 2996g(e).


Sec. 1639.1  Purpose.

    The purpose of this rule is to ensure that LSC recipients do not 
initiate litigation, challenge or participate in efforts to reform a 
Federal or State welfare system. The rule also clarifies when 
recipients may engage in representation on behalf of an individual 
client seeking specific relief from a welfare agency and under what 
circumstances recipients may use funds from sources other than the 
Corporation to comment on public rulemaking or respond to requests from 
legislative or administrative officials involving a reform of a Federal 
or State welfare system.


Sec. 1639.2  Definitions.

    (a)(1) Federal or State welfare system as used in this Part means:
    (i) The Federal and State AFDC program under Title IV-A of the 
Social Security Act and new programs or provisions enacted by Congress 
or the States to replace or modify these programs, including State AFDC 
programs conducted under Federal waiver authority.
    (ii) General Assistance or similar state means-tested programs 
conducted by States or by counties with State funding or under State 
mandates, and new programs or provisions enacted by States to replace 
or modify these programs.
    (2) Federal or State welfare system does not include other public 
benefit programs unless changes to such programs are part of a reform 
of the AFDC or General Assistance programs.
    (b) Reform of Federal or State Welfare Systems as used in this Part 
means a legislative or administrative effort to change key components 
of the Federal or State welfare system, including laws and regulations 
that implement the changes.
    (c) Existing law as used in this part means Federal, State or local 
statutory laws or ordinances.


Sec. 1639.3  Prohibition.

    Except as provided in Secs. 1639.4 and 1639.5, recipients may not 
initiate legal representation, challenge or participate in any other 
way in efforts to reform a Federal or State welfare system. Prohibited 
activities include participation in:
    (a) Litigation challenging laws or regulations enacted as part of a 
reform of a Federal or State welfare system;
    (b) Rulemaking involving proposals that are being considered to 
implement a reform of a Federal or State welfare system;
    (c) Lobbying or other advocacy before legislative or administrative 
bodies undertaken directly or through grassroots efforts involving 
pending or proposed legislation that is part of a reform of a Federal 
or State welfare system; or
    (d) Litigation or other advocacy undertaken with regard to the 
granting or denying of State requests for Federal waivers of Federal 
requirements for AFDC.


Sec. 1639.4  Permissible representation of eligible clients.

    Recipients may represent an individual eligible client who is 
seeking specific relief from a welfare agency if such relief does not 
involve an effort to amend or otherwise challenge existing law in 
effect on the date of the initiation of the representation.


Sec. 1639.5  Exceptions for public rulemaking and responding to 
requests with non-LSC funds.

    Consistent with the provisions of Sec. 1612.6 (a)-(e), recipients 
may use non-LSC funds to comment in a public rulemaking proceeding or 
respond to a written request for information or testimony from a 
Federal, State or local agency, legislative body, or committee, or a 
member thereof, regarding an effort to reform a Federal or State 
welfare system.


Sec. 1639.6  Recipient policies and procedures.

    Each recipient shall adopt written polices and procedures to guide 
its staff in complying with this part.

    Dated: August 20, 1996.
Suzanne B. Glasow,
Senior Counsel for Operations & Regulations.
[FR Doc. 96-21661 Filed 8-28-96; 8:45 am]
BILLING CODE 7050-01-P