[Federal Register Volume 62, Number 108 (Thursday, June 5, 1997)]
[Rules and Regulations]
[Pages 30763-30767]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-14608]
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LEGAL SERVICES CORPORATION
45 CFR Part 1639
Welfare Reform
AGENCY: Legal Services Corporation.
ACTION: Final rule.
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SUMMARY: This final rule implements 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 litigation, lobbying or rulemaking
involving an effort 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.
EFFECTIVE DATE: This final rule is effective on July 7, 1997.
FOR FURTHER INFORMATION CONTACT: Office of the General Counsel, (202)
336-8817.
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 section 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 in efforts to reform a Federal or
State welfare system. The Committee held hearings on July 10 and 19,
1996, and the Board adopted an interim rule on July 20 which was
published in the Federal Register on August 29, 1996, with a request
for comments.
Subsequent to the adoption of the interim rule by the Board,
Congress enacted and the President signed the Personal Responsibility
and Work Opportunity Reconciliation Act of 1996, 110 Stat. 2105 (1996)
(``Personal Responsibility Act''). After receiving four timely comments
on the interim rule, the Committee held public hearings on the rule on
December 13, 1996, but, because of the enactment of the Personal
Responsibility Act, did not adopt a final rule. The Committee met again
on March 7, 1997, and adopted proposed revisions to the definitions in
the interim rule to include most provisions of the Personal
Responsibility Act and requested that the proposed revisions be
published for public comment. See 62 FR 14382 (March 26, 1997). The
Corporation received seventeen timely comments on the proposed rule,
including a comment from the Center for Law and Social Policy
(``CLASP''), submitted on behalf of the Project Advisory Group and the
National Legal Aid and Defender Association; two from bar associations
(American Bar Association and the Colorado Bar Association), four from
State or County agencies, and 10 from legal services grantees. The
Committee held public hearings on the rule on May 9 and the Board
adopted this final rule on May 10, 1997.
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 section 504 restriction on welfare reform included in
the FY 1996 appropriations. Accordingly, the
[[Page 30764]]
preamble and text of this rule continue to refer to the applicable
section number of the FY 1996 appropriations act.
This final rule revises the proposed rule's definitions of
``Federal or State welfare system'' and ``reform'' by merging the two
definitions into a new definition of ``an effort to reform a Federal or
State welfare system.'' This rule retains the proposed rule's exception
for the Child Support Enforcement provisions in the Personal
Responsibility Act and retains the proposed rule's inclusion of
regulations in the definition of ``existing law.''
A section-by-section discussion of this final rule is provided
below.
Section 1639.1 Purpose
The purpose of this rule is to ensure that LSC recipients do not
initiate litigation or participate in litigation, lobbying or
rulemaking involving an 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 section 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
The proposed rule would have revised the definition of ``Federal or
State welfare system'' to include all provisions of the Personal
Responsibility Act, except for the Child Support Enforcement provisions
in Title III. The earlier interim rule had included only Federal and
State Aid to Families with Dependent Children (``AFDC'') programs under
Title IV-A of the Social Security Act, 42 U.S.C. 601 et seq., and State
General Assistance, or similar State means-tested programs for basic
subsistence, which operate with State funding or under State mandate.
Most of the comments opposed the expanded reach of the proposed
definition. The comments stated that the legislative history of the
Corporation's welfare reform restriction mentioned only the AFDC and
General Assistance programs. The comments also asserted that certain
distinctions among the programs included in the Personal Responsibility
Act take most of the programs therein outside of what is commonly
understood to be welfare. For example, the comments stated that the
Social Security Income (``SSI'') provisions of Title II are not
welfare, because the program is operated by the Social Security
Administration, which is not a welfare agency. They also said that the
Food Stamp Program, amended by Title VIII, is not ``welfare,'' because
it is ``a safety net program'' administered by the United States
Department of Agriculture and is intended to ensure that low-income
households, including the working poor, have adequate nutrition. The
comments also contended that including most of the provisions in the
Personal Responsibility Act could adversely affect the ability of
programs to represent clients in the area of public benefits, because
they would first need to determine which parts of each welfare program
have undergone welfare reform and which parts have not been revised.
Most of the comments agreed with the proposed exclusion of the
Child Support Enforcement provisions from the definition, agreeing with
the Corporation that the Child Support Enforcement program is a law
enforcement program, not a welfare program. The comments pointed out
that the Child Support Enforcement program establishes and enforces
legal obligations between parents, and the funds collected and
distributed are private, not public, funds. Moreover, receipt of
services is not limited to persons on public assistance, but is
available to anyone who applies.
However, with one exception, the comments from State or local
agencies expressed an opposite view. The comments approved of the
proposed rule's broader definition, but also urged the Corporation to
include the Child Support Enforcement provisions, arguing that these
are a critical component of welfare reform, because they are
intricately linked with the welfare system and are monitored by the
United States Department of Health and Human Services (``HHS'').
The Board decided to include all of the provisions of the Personal
Responsibility Act, except for the Child Support Enforcement provisions
in Title III, based on its determination that Congress intended the
Personal Responsibility Act, in large measure, to constitute an effort
to reform the Federal and State welfare systems. It is true that the
legislative history of the Corporation's welfare reform restriction
used examples based on prior AFDC and General Assistance litigation.
However, the Board did not consider the examples in the legislative
history of the LSC welfare reform restriction as dispositive. During
the same time it was considering the welfare reform restriction,
Congress was working on, and soon thereafter enacted, the Personal
Responsibility Act, which was characterized by Congress as a sweeping
reform of a variety of Federal and State welfare systems. In
summarizing the agreement that became law, the conference report of the
Personal Responsibility Act provided that:
The Personal Responsibility and Work Opportunity Reconciliation
Act of 1996 puts in place the most fundamental reform of welfare
since the program's inception. * * * It takes the historic step of
eliminating a Federal entitlement program--Aid to Families with
Dependent Children--and replacing it with a block grant that
restores the states' fundamental role in assisting needy families.
It makes substantial reforms in the Food Stamp Program, cracking
down on fraud and abuse and applying tough work standards. It
reforms the Supplemental Security Income (SSI) disability program to
strengthen eligibility requirements. * * * It makes sweeping reforms
relating to noncitizens, strengthening the principle that immigrants
come to America to work, not to collect welfare benefits.
Conf. Rep. No. 725, 104th Cong., 2d Sess. (1996) (emphasis added).
Except for the arguments made regarding the Child Support
Enforcement provisions, the Board was unconvinced by most of the
distinctions set forth in the comments as to why particular titles of
or programs amended by the Personal Responsibility Act should be exempt
from the ``welfare reform'' restriction. Neither the text of the
Personal Responsibility Act nor its legislative history limited
``welfare reform'' to only Title I. The Board retained the proposed
rule's exclusion of the Child Support Enforcement provisions in Title
III because, unlike most of the other programs amended by the Personal
Responsibility Act, Child Support Enforcement (Title IV-D of the Social
Security Act) establishes and enforces legal support obligations
between parents. The support payments collected and distributed are
private funds, not public funds, and Title IV-D services are available
to any parent who applies for them, rather than being limited to
families on public assistance or even those in poverty. Indeed, the
majority of cases handled and nearly 75 percent of all funds collected
involve families not on public assistance. Although the Title IV-A
program contains provisions linking eligibility and benefits for AFDC
and Food Stamps with cooperation by parents with the Title IV-D agency,
this connection alone does not transform the Title IV-D program into a
welfare program.
Because the Board determined that the Personal Responsibility Act
constitutes an effort to reform Federal and State welfare systems, the
Board decided to merge the definitions of ``Federal or State welfare
system'' and ``reform'' into a new definition of ``an effort to reform
a Federal or State
[[Page 30765]]
welfare system.'' This more adequately tracks the language in the
statutory restriction and applies it to current welfare reform
legislation. The definition still includes State efforts to replace or
modify key components of their General Assistance programs, because the
legislative history of the welfare reform restriction identified such
programs as being within the restriction. The definition also includes
language which anticipates future reforms. The definition uses the term
``key components'' of a Federal or State welfare system when referring
to future efforts to reform a welfare system, because the statute
references a ``welfare system,'' as distinguished from any particular
provision of a welfare program. A change to a ``key component'' is
intended to mean a fundamental restructuring of a welfare program, such
as the transformation of an entitlement program into a block grant
program. Finally, several conforming revisions have also been made to
other provisions of the rule to be consistent with the revised
definition.
This rule's final definition of ``existing law'' has been revised
from the interim rule to clarify three points. ``Existing law'' is used
in the statutory limitation on the exception to the welfare reform
restriction. The exception permits recipients to represent individual
eligible clients to seek 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'' (emphasis added).
The first clarification made by the definition, which was included
in the proposed rule, is that ``existing law'' is limited to laws
enacted to reform a Federal or State welfare system. A broader meaning
would eviscerate the exception, because the type of law in the
limitation on the exception would be broader than the type of law in
the restriction itself. The comments generally approved of this change.
The second clarification made in the final definition, which was
also included in the proposed rule, is that ``existing law'' includes
properly promulgated regulations. Most of the comments disapproved of
this revision. One comment stated that because ``existing law'' is
defined to mean law enacted to reform a Federal or State welfare
system, it should not include regulations, which do not reform existing
welfare law; rather they implement Federal and State legislative
efforts that reform welfare law. The comments also gave examples of the
detrimental effect of including regulations in the definition. For
example, the comments alleged that including regulations in the
definition would prevent representation in some cases allowed under the
exception clause, because the rules of professional responsibility
preclude an attorney from representing a client if the attorney's other
obligations are likely to materially restrict avenues of relief that
would otherwise be available to the client. In essence, the comments
argued that including regulations in the definition would greatly
undermine the exception clause, because, when representing clients
before agencies, legal aid attorneys must often either challenge the
agency's interpretation of the law or at least lay the foundation for
such a challenge, should an effort to win benefits for the client under
the agency's regulations fail.
The Board decided to retain regulations in the definition of
``existing law'' largely because the statutory restriction uses the
term ``existing law'' without qualification. It is beyond cavil that
properly adopted regulations constitute law. Regulations not only
implement the express language of statutes, they also fill in the
statutory gaps and create substantive law. For this reason, Federal and
State administrative procedure acts require public notice and comment
before such rules are adopted. The Board also disagreed that the
inclusion of regulations in the definition eviscerates the exception.
The exception allows representation to seek relief that is available
under the existing law, whether statutory or regulatory, but does not
allow representation that would challenge or amend existing law. The
comments appear to be opposed not so much to the inclusion of
regulations as to the limitation clause itself, which prohibits
representation that would challenge or amend existing law. A point made
by many comments was that, in order to represent clients properly in
public benefits cases, an attorney must be able to challenge existing
law. Although the Corporation is sympathetic to the concerns raised, it
is not convinced that this definition will lead to the alleged
consequences. Regardless, the statutory restriction prohibits any
efforts to reform a Federal or State welfare system or to provide
representation that would challenge or seek to amend existing ``welfare
reform'' law and the Corporation believes including regulations within
the definition is necessary to implement that restriction.
To clarify that the definition applies to regulations that indeed
``make law,'' a third revision clarifies that the definition includes
only regulations ``that have been formally promulgated pursuant to
public notice and comment procedures.'' This change responds in part to
the comment from Atlanta Legal Aid, which stated that the legal basis
of Georgia regulations is unclear, in part because they are not
formally promulgated. One comment stated that the uncertainty of the
status of regulations and whether they implement welfare reform
legislation or un-reformed welfare law would cause an enforcement
problem. Auditors would not know if certain representation was improper
unless they are fully versed in a particular jurisdiction's welfare law
and in the legal status of any applicable regulations. The proposed
rule used the qualifying clause ``having the force and effect of law,''
but because comments found such language ambiguous, the Board replaced
it with language clarifying that ``existing law'' includes only
regulations that are promulgated pursuant to public notice and comment
procedures. This change should preclude any confusion auditors might
have experienced over the proposed rule's language.
In summary, the definition of ``existing law'' in this final rule
does not include regulations that have not been formally promulgated
under notice and comment procedures or that have not been issued to
implement reform of a Federal or State welfare system.
Section 1639.3 Prohibition
This section generally prohibits litigation, lobbying and
rulemaking activities involving an effort to reform a Federal or State
welfare system. The prohibition includes 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 before legislative or administrative bodies involving
pending or proposed legislation that is part of a reform of a Federal
or State welfare system.
Section 1639.4 Permissible Representation of Eligible Clients
This section implements the statutory exception in section
504(a)(16) 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
challenge existing law in effect on the date of the initiation of the
representation.'' Pursuant to this provision, an action to enforce
existing
[[Page 30766]]
law would not be proscribed. Thus, for example, when representing an
eligible client seeking individual relief from the actions of an agency
taken under a welfare reform law or regulation, a recipient may
challenge an agency policy on the basis that it violates an agency
regulation or State or Federal law or challenge the application of an
agency's regulation, or the law on which it is based, to the individual
seeking relief.
Section 1639.5 Exceptions for Public Rulemaking and Responding to
Requests With Non-LSC Funds
The 1996 appropriations act includes a provision, section 504(e) of
110 Stat. 1321, which provides that nothing in section 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 section 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. Recipients may also use non-LSC funds 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 is 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.
Transition Guidance
Recipients must take immediate steps to withdraw from pending cases
that were permitted by the interim regulation but which are now
prohibited by the final regulation. Such steps should be documented by
written notice to the client and written pleadings to the courts or
administrative agencies involved. However, where a court or agency will
not permit withdrawal in spite of a recipient's best efforts, the
Corporation will determine on a case-by-case basis whether continued
representation violates the regulation. During the period in which the
recipient is seeking alternative counsel or other proper ways to
conclude its involvement in such representation, it may file such
motions as are necessary to preserve its client's rights in the matter
on which representation is being provided.
List of Subjects in 45 CFR Part 1639
Grant programs, Legal services, Welfare reform.
For reasons set forth in the preamble, 45 CFR part 1639 is revised
to read 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: 42 U.S.C. 2996g(e); Pub. L. 104-208, 110 Stat. 3009;
Pub. L. 104-134, 110 Stat. 1321.
Sec. 1639.1 Purpose.
The purpose of this rule is to ensure that LSC recipients do not
initiate litigation involving, or 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) An effort to reform a Federal or State welfare system includes
all of the provisions, except for the Child Support Enforcement
provisions of Title III, of the Personal Responsibility and Work
Opportunity Reconciliation Act of 1996 (Personal Responsibility Act),
110 Stat. 2105 (1996), and subsequent legislation enacted by Congress
or the States to implement, replace or modify key components of the
provisions of the Personal Responsibility Act or by States to replace
or modify key components of their General Assistance or similar means-
tested programs conducted by States or by counties with State funding
or under State mandates.
(b) Existing law as used in this part means Federal, State or local
statutory laws or ordinances which are enacted as an effort to reform a
Federal or State welfare system and regulations issued pursuant thereto
that have been formally promulgated pursuant to public notice and
comment procedures.
Sec. 1639.3 Prohibition.
Except as provided in Secs. 1639.4 and 1639.5, recipients may not
initiate legal representation, or participate in any other way in
litigation, lobbying or rulemaking, involving an effort to reform a
Federal or State welfare system. Prohibited activities include
participation in:
(a) Litigation challenging laws or regulations enacted as part of
an effort to reform a Federal or State welfare system.
(b) Rulemaking involving proposals that are being considered to
implement an effort to reform a Federal or State welfare system.
(c) Lobbying before legislative or administrative bodies undertaken
directly or through grassroots efforts involving pending or proposed
legislation that is part of an effort to reform a Federal or State
welfare system.
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 45 CFR 1612.6 (a) through (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.
[[Page 30767]]
Sec. 1639.6 Recipient policies and procedures.
Each recipient shall adopt written policies and procedures to guide
its staff in complying with this part.
Dated: May 30, 1997.
Victor M. Fortuno,
General Counsel.
[FR Doc. 97-14608 Filed 6-4-97; 8:45 am]
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