[Federal Register Volume 62, Number 76 (Monday, April 21, 1997)]
[Rules and Regulations]
[Pages 19417-19418]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-10034]


-----------------------------------------------------------------------

LEGAL SERVICES CORPORATION

45 CFR Part 1627


Subgrants and Membership Fees or Dues

AGENCY: Legal Services Corporation.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: This final rule amends only the fees and dues provisions of 
the Legal Services Corporation's (``Corporation'' or ``LSC'') 
regulation concerning subgrants, fees and dues. The revisions are 
intended to implement a restriction contained in the Corporation's FY 
1996 appropriations act which prohibits the use of LSC funds to pay 
membership dues to any private or nonprofit organization.

DATES: Effective May 21, 1997.

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. 505, a restriction in the Corporation's FY1996 
appropriations act, Pub. L. 104-134, 110 Stat. 1321 (1996), which 
prohibits use of LSC funds to pay dues to any private or nonprofit 
organization. The Committee held public hearings on July 9 and 19, and 
the Board adopted an interim rule on July 20 for publication in the 
Federal Register. The interim rule was published on Aug. 29, 1996 (61 
FR 45753), and the Corporation received 4 timely comments.
    After receipt of written public comment, the Committee held public 
hearings on the interim rule on December 13, 1996, and January 5, 1997. 
The Committee made a few revisions to the rule and recommended a 
revised version to the Board for final adoption on January 6, 1997. The 
Board made additional revisions and adopted this final rule for 
publication in the Federal Register.
    The Corporation's FY 1997 appropriations act became effective on 
October 1, 1996, see Pub. L. 104-208, 110 Stat. 3009. It incorporated 
by reference the Sec. 505 condition on LSC grants included in the FY 
1996 appropriations act that is implemented by this rule. Accordingly, 
the preamble and text of this rule continue to refer to the applicable 
section number of the FY 1996 appropriations act.
    This final rule revises Secs. 1627.2, 1627.4, 1627.7, and 1627.8 of 
the rule in effect prior to the interim rule (``prior rule''). In 
Sec. 1627.2, the definition of ``fees and dues'' has been replaced by a 
definition of ``membership fees or dues.'' Section 1627.4 has been 
completely revised. Section 1627.7 has been deleted, because it 
duplicates the training provisions in 45 CFR Sec. 1612. Section 1627.8 
has been renumbered as Sec. 1627.7, and a new Sec. 1627.8 is added 
regarding policies, procedures and recordkeeping. Also, the title of 
this rule has been revised to ``Subgrants and membership fees or 
dues.''
    Generally, the revisions prohibit any use of LSC funds to pay 
membership dues to any private or nonprofit organization. The prior 
rule allowed recipients to pay such dues, subject to certain 
limitations as to type of organization and amount of dues. Payment of 
dues with non-LSC funds continues to be permitted.
    Finally, Secs. 1627.1, 1627.3, 1627.5 and 1627.6 are not revised or 
reprinted here, because they deal exclusively with subgrants. Some of 
the comments urged the Corporation to revise these sections, especially 
in light of the recent revisions made to 45 CFR Part 1610 on transfers 
of funds. See Sec. 1610.7, 61 FR 63749 (Dec. 2, 1996). LSC will 
consider revisions to the rule's subgrant provisions in the near 
future.
    A section-by-section discussion of the revisions is provided below.

Section 1627.2  Definitions

    The term ``Fees and dues'' in Sec. 1627.2(c) has been redesignated 
as ``membership fees or dues.'' The prior rule used the term ``fees and 
dues.'' The interim rule changed the term to ``dues'' because the 
statutory provision in Sec. 505 refers only to ``dues'' and there is no 
statutory restriction on ``fees'' as previously defined in this part. 
Also, the definition of ``fees and dues'' was essentially a definition 
of ``dues.'' Deletion of the word ``fees'' in the interim rule, 
however, created the impression that a substantive change was intended. 
Because no change in meaning was intended, the Board changed the term 
to ``membership fees and dues,'' a term which the Board believes better 
illustrates the meaning of the terms used in the prior and interim 
rule.
    The term ``membership fees and dues'' is defined as payments for

[[Page 19418]]

membership or to acquire voting or participatory rights in an 
organization. This definition does not include payments for training 
sessions, goods, research materials and other such services. LSC funds 
may be expended for such services, provided the expenditures are made 
in accordance with applicable regulations, including 45 CFR Part 1630.

Section 1627.4  Membership Fees or Dues

    This section is entirely revised to prohibit any use of LSC funds 
for payment of membership fees or dues to private or nonprofit 
organizations. This prohibition includes payment of membership fees or 
dues for employees and volunteer attorneys to voluntary bar 
associations that are private or nonprofit organizations.
    The prohibition in this final rule, as in the interim rule, does 
not apply to non-LSC funds and does not extend to the payment of dues 
to governmental bodies. The comments on these provisions were generally 
favorable, especially in regard to the provisions allowing payment of 
dues with LSC funds to bar associations acting in a governmental 
capacity. Under this rule, payment of dues to a State Supreme Court or 
to a bar association acting as an administrative arm of the court or in 
some other governmental capacity in collecting membership fees or dues 
that are a requirement for an attorney to practice in that State, is 
deemed to be payment of membership fees or dues to a governmental body, 
and is not prohibited by this part. A few changes have been made to add 
clarity. Finally, although not included in the text of the rule, the 
Board has directed that the prohibition not be applied to FY 1995 
carryover funds that were used to pay dues prior to the August 29, 1996 
publication of the interim rule.
    Several provisions in the prior rule have been deleted because they 
are inconsistent with the new statutory prohibition. Thus, all 
references to the circumstances under which recipients could use LSC 
funds to pay for fees or dues, and all references to procedures 
required of recipients before they could expend funds for certain 
payments of fees or dues, are no longer applicable, because the new 
legislation prohibits the use of any LSC funds to pay dues. Thus, the 
provisions are no longer relevant.

Section 1627.7  Tax Sheltered Annuities, Retirement Accounts and 
Pensions

    Section 1627.8 of the prior rule is now renumbered as Sec. 1627.7.

Section 1627.8  Recipient Policies, Procedures and Recordkeeping

    This new section requires recipients to establish policies and 
procedures and to maintain records to document compliance with the 
requirements of this part.

List of Subjects in 45 CFR Part 1627

    Grant programs, Legal services.

    For reasons set forth in the preamble, 45 CFR part 1627 is amended 
as follows:

PART 1627--SUBGRANTS AND MEMBERSHIP FEES OR DUES

    1. The heading of part 1627 is revised to read as set forth above.
    2. The authority citation for part 1627 is revised to read as 
follows:

    Authority: 42 U.S.C. 2996e(b)(1), 2996f(a), and 2996g(e); Pub. 
L. 104-208, 110 Stat 3009; Pub. L. 104-134, 110 Stat 1321.

    3.-4. Section 1627.2 is amended by revising paragraph (c) to read 
as follows:


Sec. 1627.2  Definitions.

* * * * *
    (c) Membership fees or dues as used in this part means payments to 
an organization on behalf of a program or individual to be a member 
thereof, or to acquire voting or participatory rights therein.
    5. Section 1627.4 is revised to read as follows:


Sec. 1627.4  Membership fees or dues.

    (a) LSC funds may not be used to pay membership fees or dues to any 
private or nonprofit organization, whether on behalf of a recipient or 
an individual.
    (b) Paragraph (a) of this section does not apply to the payment of 
membership fees or dues mandated by a governmental organization to 
engage in a profession, or to the payment of membership fees or dues 
from non-LSC funds.
    6. Section 1627.7 is revised to read as follows:


Sec. 1627.7  Tax sheltered annuities, retirement accounts and pensions.

    No provision contained in this part shall be construed to affect 
any payment by a recipient on behalf of its employees for the purpose 
of contributing to or funding a tax sheltered annuity, retirement 
account, or pension fund.
    7. Section 1627.8 is revised to read as follows:


Sec. 1627.8  Recipient policies, procedures and recordkeeping.

    Each recipient shall adopt written policies and procedures to guide 
its staff in complying with this part and shall maintain records 
sufficient to document the recipient's compliance with this part.

    Dated: April 14, 1997.
Victor M. Fortuno,
General Counsel.
[FR Doc. 97-10034 Filed 4-18-97; 8:45 am]
BILLING CODE 7050-01-P