[Federal Register Volume 69, Number 202 (Wednesday, October 20, 2004)]
[Rules and Regulations]
[Pages 61594-61597]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-23357]


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SOCIAL SECURITY ADMINISTRATION

20 CFR Parts 404 and 416

[Regulation Nos. 4 and 16]
RIN 0960-AF92


Administrative Review Process; Incorporation-by-Reference of Oral 
Findings of Fact and Rationale in Wholly Favorable Written Decisions

AGENCY: Social Security Administration (SSA).

ACTION: Final rules with request for comments.

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SUMMARY: We are revising our regulations to provide an alternative 
procedure that an Administrative Law Judge (ALJ) may use, in certain 
situations, to satisfy the existing requirement for issuing a written 
decision that gives the findings of fact and the reasons for the 
decision. If an ALJ enters a wholly favorable, oral decision into the 
record of a hearing, the ALJ, in certain situations, may fulfill the 
existing requirement for issuing a written decision that gives the 
findings and the reasons for the decision by issuing a written decision 
that incorporates by reference the findings of fact and the reasons 
stated orally at the hearing. Under the regulations as revised, this 
incorporation-by-reference procedure may not be used if the ALJ 
determines that the oral findings and reasons should be changed in the 
written decision. Where the ALJ determines that a change is required, 
the ALJ must issue a written decision that sets forth the findings of 
fact and the reasons for the decision under the existing procedure, 
without relying on the incorporation-by-reference procedure.

DATES: These rules are effective October 20, 2004. To be sure your 
comments are considered, we must receive them no later than December 
20, 2004.

ADDRESSES: You may give us your comments by: using our Internet site 
facility (i.e., Social Security Online) at http://policy.ssa.gov/pnpublic.nsf/LawsRegs or the Federal eRulemaking Portal at http://www.regulations.gov; e-mail to [email protected]; telefax to (410) 
966-2830; or letter to the Commissioner of Social Security, P.O. Box 
17703, Baltimore, MD 21235-7703. You may also deliver them to the 
Office of Regulations, Social Security Administration, 100 Altmeyer 
Building, 6401 Security Boulevard, Baltimore, MD 21235-6401 between 8 
a.m. and 4:30 p.m. on regular business days. Comments are posted on our 
Internet site, or you may inspect them on regular business days by 
making arrangements with the contact person shown in this preamble.
    Electronic Version: The electronic file of this document is 
available on the date of publication in the Federal Register on the 
Internet site for the Government Printing Office, http://www.gpoaccess.gov/fr/index.html. It is also available on our Internet 
site facility at http://policy.ssa.gov/pnpublic.nsf/LawsRegs.

FOR FURTHER INFORMATION CONTACT: Robert J. Augustine, Social Insurance 
Specialist, Office of Regulations, 100 Altmeyer Building, Social 
Security Administration, 6401 Security Boulevard, Baltimore, MD 21235-
6401, (410) 965-0020 or TTY 410-966-5609, for information about this 
notice. For information on eligibility or filing for benefits, call our 
national toll-free number, 1-800-772-1213 or TTY 1-800-325-0778, or 
visit our Internet site, Social Security Online, at http://www.socialsecurity.gov.

SUPPLEMENTARY INFORMATION:

[[Page 61595]]

Background

    We decide claims for Social Security benefits under title II of the 
Social Security Act (the Act) and for Supplemental Security Income 
(SSI) benefits under title XVI of the Act in an administrative review 
process that generally consists of four steps. Generally, individuals 
who are not satisfied with our initial determination may request 
reconsideration. Individuals who are not satisfied with our 
reconsidered determination may request a hearing, which is held by an 
ALJ in the Office of Hearings and Appeals (OHA). Individuals who are 
not satisfied with an ALJ's decision may request review by our Appeals 
Council. Individuals who have completed these steps and are not 
satisfied with our final decision may request judicial review of the 
decision in the Federal courts.
    On September 25, 2003, at a hearing before the House Ways and Means 
Subcommittee on Social Security, we outlined a long-term approach for 
achieving improvements in the overall disability determination process, 
especially for the purpose of reducing the time required to process 
disability claims. (A description of the approach is available at 
http://mwww.ba.ssa.gov/pressoffice/pr/DDPImprovement-pr.htm.)
    To improve the process in the interim, we have implemented a number 
of initiatives that could be undertaken in the short-term. At the ALJ 
hearing level, the short-term initiatives we have implemented include--
     Involving ALJs in early screening of claims to identify 
those claims in which a wholly favorable decision can be made on-the-
record without a hearing;
     Developing a new, electronically generated short-form 
format for use in wholly favorable decisions;
     Allowing ALJs to announce at the hearing wholly favorable, 
oral decisions that are followed by written decisions; and
     Expanding the use of technology in OHA, including the use 
of video teleconferencing, speech recognition software, and digital 
recording of hearings.
    Our existing regulations generally give an ALJ broad discretion in 
determining how hearings are to be conducted and do not preclude the 
ALJ from entering a wholly favorable, oral decision into the record at 
the close of the hearing (see 20 CFR 404.929, 404.944, 404.950, 
416.1429, 416.1444, and 416.1450). When we implemented the oral 
decision initiative in 2002, we gave our ALJs discretion to issue oral 
decisions when they concluded, upon full inquiry into the issues at the 
hearing, that a wholly favorable decision should be issued. This 
initiative contemplated that following the hearing, the ALJ would 
create and issue a short-form written decision to fulfill the 
requirements of 20 CFR 404.953 and 416.1453, which require issuance of 
a written decision that ``gives the findings of fact and the reasons 
for the decision.''
    To facilitate greater use of the oral decision procedure when its 
use is warranted, we are amending our regulations to authorize ALJs to 
issue wholly favorable, written decisions that incorporate by reference 
the findings of fact and reasons for the decisions that were orally 
stated by the ALJ at the hearing. Such written decisions will satisfy 
the existing regulatory requirement that an ALJ issue a written 
decision that ``gives the findings of fact and the reasons for the 
decision.''
    Under these final rules with request for comments, the wholly 
favorable written decision issued subsequent to the hearing may 
incorporate the oral findings and rationale by reference only if the 
ALJ determines that it is not necessary to change the oral findings or 
rationale in any way. If the ALJ determines that the oral findings or 
rationale should be changed, the written decision may not incorporate 
the orally stated findings and rationale by reference. The ALJ must 
issue a written decision that sets forth the findings of fact and the 
reasons for the decision under the existing procedures.
    We believe that the changes made by these rules will facilitate use 
of the oral decision procedure by eliminating the duplicative work that 
is involved in ALJs repeating the oral findings and reasons in the 
written decision. We expect that these rules will increase the 
efficiency with which the oral decision procedure may be used and will 
reduce the time required to issue wholly favorable decisions.

Explanation of Changes

    We are amending Sec. Sec.  404.953 and 416.1453 to provide that if 
an ALJ enters a wholly favorable, oral decision into the record of a 
hearing, the ALJ may fulfill the existing requirement for issuing a 
written decision that gives the findings of fact and the reasons for 
the decision by issuing a written decision that incorporates by 
reference the findings of fact and the reasons stated orally at the 
hearing. As noted above, the ALJ may use this procedure only if the ALJ 
does not determine that a change in the oral findings or reasons is 
required.
    These final rules specify that, where the ALJ determines that a 
change in the oral findings or reasons stated at the hearing is 
required, the ALJ must issue a written decision that sets forth the 
findings of fact and the reasons for the decision under our existing 
procedures for issuing written decisions. We are precluding use of the 
incorporation-by-reference procedure in these instances because it 
could be confusing for claimants and for our personnel who must 
subsequently effectuate or review the ALJ's decision.
    When the circumstances for using the incorporation-by-reference 
procedure are present, the ALJ is not required by these rules to rely 
on that procedure to give the findings of fact and the reasons for his 
or her decision. The ALJ retains the discretion in these circumstances 
to issue a decision in the short-form or full-length format. Our intent 
is to provide ALJs with a range of useful options for issuing wholly 
favorable decisions. Under these final rules, an ALJ who makes a wholly 
favorable oral decision at the hearing is required to include in the 
record, as an exhibit entered into the record at the hearing, a 
checksheet that sets forth key data, findings of fact, and narrative 
rationale for the decision. Preparation of the checksheet will aid the 
ALJ in determining if a wholly favorable decision is warranted. When 
the ALJ decides not to state an oral decision, the checksheet will 
constitute a working paper of the ALJ and will not be entered into the 
record. The checksheet will assist our staff in preparing a decision 
when an oral decision is stated but the incorporation-by-reference 
procedure is not used. The checksheet will also provide information 
needed by our personnel who implement or evaluate decisions that rely 
on the incorporation-by-reference procedure.
    As revised by these final rules, Sec. Sec.  404.953 and 416.1453 
specify that the incorporation-by-reference procedure will be used only 
in categories of cases that we identify in advance as suitable for its 
use. To begin with, we plan to apply this procedure, which requires use 
of a specialized checksheet and changes in our notice procedures, only 
in initial adult disability claims under title II and title XVI of the 
Act (excluding disabled widow/widowers and disabled adult child cases 
under title II).
    The revised regulations further specify that when we use the 
incorporation-by-reference procedure in a decision, we will provide the 
party or parties to the hearing a record of the oral decision upon 
written request. The parties will be advised of their right to

[[Page 61596]]

request a record of the oral decision in the notice of the decision. We 
may provide the record in the form of a typed transcript or a tape 
recording, a compact disc of a digital recording, or eventually an 
electronically propagated digital recording. We believe this procedure 
will help to ensure that the notice of decision is clear and easy to 
understand.
    In implementing these final rules, we will issue guidance 
instructing ALJs to explain to the parties, when announcing an oral 
decision, that the incorporation-by-reference procedure will not be 
used if the ALJ determines that the oral findings and reasons for the 
decision require change or if the ALJ decides that the procedure should 
not be used for any other reason. The ALJ will also explain that if the 
incorporation-by-reference procedure is not used, the written decision 
will set forth the findings of fact and the reasons for the decision in 
writing using our existing procedures and discuss any changes in the 
findings and reasons as stated at the hearing. The ALJ will further 
explain to the parties that they will be given an opportunity to 
comment on any possible changes that would make the written decision 
that is to be issued less than wholly favorable.
    Our implementing instructions will also provide that the written 
decision issued by an ALJ when the incorporation-by reference procedure 
is used shall be brief and shall be issued as an integral part of the 
notice of decision that we issue. Where the incorporation-by-reference 
procedure is used, the notice of decision will not attach a separate 
written decision (as all notices of decisions issued by ALJs currently 
do).

Clarity of the Final Rules

    Executive Order 12866, as amended by Executive Order 13258, 
requires each agency to write all rules in plain language. In addition 
to your substantive comments on these rules, we invite your comments on 
how to make the rules easier to understand. For example:
     Have we organized the material to suit your needs?
     Are the requirements in the rules clearly stated?
     Do the rules contain technical language or jargon that 
isn't clear?
     Would a different format (grouping and order of sections, 
use of headings, paragraphing) make the rules easier to understand?
     Would more (but shorter) sections be better?
     What else could we do to make the rules easier to 
understand?
     Could we improve clarity by adding tables, lists, or 
diagrams?

Regulatory Procedures

    Pursuant to section 702(a)(5)of the Social Security Act, 42 U.S.C. 
902(a)(5), we follow the Administrative Procedure Act (APA) rulemaking 
procedures specified in 5 U.S.C. 553 in the development of our 
regulations. The APA provides exceptions to its notice and public 
comment procedures when an agency finds that there is good cause for 
dispensing with such procedures on the basis that they are 
impracticable, unnecessary, or contrary to the public interest. We have 
determined that, under 5 U.S.C. 553(b)(B), good cause exists for 
dispensing with the notice and comment procedures in this case. Good 
cause exists because these rules only modify the procedures we use to 
issue wholly favorable decisions and do not change the substantive 
requirements that such decisions must satisfy. Therefore, we find that 
prior public comment on these rules is unnecessary.
    We are issuing these rules as final rules with a request for 
comments because we are interested in receiving public comments on the 
substance of these rules. We will make any changes in the rules that we 
determine are warranted by the comments we receive, and will issue 
revised rules if necessary. We also wish to consider the public 
comments on these rules in further assessing and developing our 
approach to making long-term changes to the disability claim process.
    In addition, we find good cause for dispensing with the 30-day 
delay in the effective date of a substantive rule, as provided for by 5 
U.S.C. 553(d). Considering the average processing times that 
individuals pursuing appeals of disability claims currently face, we 
find that it is in the public interest to make these rules effective 
upon publication.

Executive Order 12866, as Amended by Executive Order 13258

    We have consulted with the Office of Management and Budget (OMB) 
and determined that these final rules with request for comments meet 
the criteria for a significant regulatory action under Executive Order 
12866, as amended by Executive Order 13258. Thus, they were reviewed by 
OMB.

Regulatory Flexibility Act

    We certify that these rules will not have a significant economic 
impact on a substantial number of small entities as they affect 
individuals only. Therefore, a regulatory flexibility analysis as 
provided in the Regulatory Flexibility Act, as amended, is not 
required.

Paperwork Reduction Act

    These final rules with request for comments contain reporting 
requirements in Sec. Sec.  404.953(a) and 416.1453(a), as revised. We 
estimate that there will be 5,000 annual respondents, who will each 
make 1 request. We estimate that it will take an average of 5 minutes 
per request for an estimated annual burden of 417 hours. An Information 
Collection Request has been submitted to OMB for clearance. While these 
rules will be effective upon publication, these burdens will not be 
effective until cleared by OMB. We are soliciting comments on the 
burden estimate; the need for the information; its practical utility; 
ways to enhance its quality, utility and clarity; and on ways to 
minimize the burden on respondents, including the use of automated 
collection techniques or other forms of information technology. 
Comments should be submitted and/or faxed to the OMB desk officer for 
SSA within 30 days of publication of this final rule at the following 
address/number: Office of Management and Budget, Attn: Desk Officer for 
SSA, Fax Number: 202-395-6974.
    To receive a copy of the OMB clearance package, you may call the 
SSA Reports Clearance Officer on 410-965-0454.

(Catalog of Federal Domestic Assistance Program Nos. 96.001, Social 
Security-Disability Insurance; 96.002, Social Security-Retirement 
Insurance; 96.003, Social Security-Special Benefits for Persons Aged 
72 and Over; 96.004, Social Security-Survivors Insurance; 96.006, 
Supplemental Security Income)

List of Subjects

20 CFR Part 404

    Administrative practice and procedure, Blind, Disability benefits, 
Old-Age, Survivors and Disability Insurance, Reporting and 
recordkeeping requirements, Social Security.

20 CFR Part 416

    Administrative practice and procedure, Aged, Blind, Disability 
benefits, Public assistance programs, Reporting and recordkeeping 
requirements, Supplemental Security Income (SSI).

    Dated: July 14, 2004.
Jo Anne B. Barnhart,
Commissioner of Social Security.

0
For the reasons set out in the preamble, subpart J of part 404 and 
subpart N of part 416 of chapter III of title 20 of the

[[Page 61597]]

Code of Federal Regulations are amended as set forth below:

PART 404--FEDERAL OLD-AGE, SURVIVORS AND DISABILITY INSURANCE 
(1950- )

0
1. The authority citation for subpart J of part 404 continues to read 
as follows:

    Authority: Secs. 201(j), 204(f), 205(a), (b), (d)-(h), and (j), 
221, 225, and 702(a)(5) of the Social Security Act (42 U.S.C. 
401(j), 404(f), 405(a), (b), (d)-(h), and (j), 421, 425, and 
902(a)(5)); sec. 5, Pub. L. 97-455, 96 Stat. 2500 (42 U.S.C. 405 
note); secs. 5, 6(c)-(e), and 15, Pub. L. 98-460, 98 Stat. 1802 (42 
U.S.C. 421 note).

0
2. Section 404.953 is amended by redesignating current paragraph (b) as 
paragraph (c) and adding a new paragraph (b), to read as follows:


Sec.  404.953  The decision of an administrative law judge.

* * * * *
    (b) Wholly favorable oral decision entered into the record at the 
hearing. The administrative law judge may enter a wholly favorable oral 
decision into the record of the hearing proceedings. If the 
administrative law judge enters a wholly favorable oral decision into 
the record of the hearing proceedings, the administrative law judge may 
issue a written decision that incorporates the oral decision by 
reference. The administrative law judge may use this procedure only in 
those categories of cases that we identify in advance. The 
administrative law judge may only use this procedure in those cases 
where the administrative law judge determines that no changes are 
required in the findings of fact or the reasons for the decision as 
stated at the hearing. If a wholly favorable decision is entered into 
the record at the hearing, the administrative law judge will also 
include in the record, as an exhibit entered into the record at the 
hearing, a document that sets forth the key data, findings of fact, and 
narrative rationale for the decision. If the decision incorporates by 
reference the findings and the reasons stated in an oral decision at 
the hearing, the parties shall also be provided, upon written request, 
a record of the oral decision.
* * * * *

PART 416--SUPPLEMENTAL SECURITY INCOME FOR THE AGED, BLIND AND 
DISABLED

0
3. The authority citation for subpart N of part 416 continues to read 
as follows:

    Authority: Secs. 702(a)(5), 1631, and 1633 of the Social 
Security Act (42 U.S.C. 902(a)(5), 1383, and 1383b).

0
4. Section 416.1453 is amended by redesignating current paragraphs (b) 
and (c) as paragraphs (c) and (d) respectively and adding a new 
paragraph (b), to read as follows:


Sec.  416.1453  The decision of an administrative law judge.

* * * * *
    (b) Wholly favorable oral decision entered into the record at the 
hearing. The administrative law judge may enter a wholly favorable oral 
decision into the record of the hearing proceedings. If the 
administrative law judge enters a wholly favorable oral decision into 
the record of the hearing proceedings, the administrative law judge may 
issue a written decision that incorporates the oral decision by 
reference. The administrative law judge may use this procedure only in 
those categories of cases that we identify in advance. The 
administrative law judge may only use this procedure in those cases 
where the administrative law judge determines that no changes are 
required in the findings of fact or the reasons for the decision as 
stated at the hearing. If a wholly favorable decision is entered into 
the record at the hearing, the administrative law judge will also 
include in the record, as an exhibit entered into the record at the 
hearing, a document that sets forth the key data, findings of fact, and 
narrative rationale for the decision. If the decision incorporates by 
reference the findings and the reasons stated in an oral decision at 
the hearing, the parties shall also be provided, upon written request, 
a record of the oral decision.
* * * * *
[FR Doc. 04-23357 Filed 10-19-04; 8:45 am]
BILLING CODE 4191-02-P