[Federal Register Volume 77, Number 20 (Tuesday, January 31, 2012)]
[Proposed Rules]
[Pages 4749-4754]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-1984]
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LEGAL SERVICES CORPORATION
45 CFR Parts 1606, 1618, and 1623
Termination, Limited Reductions in Funding, and Debarment
Procedures; Recompetition; Enforcement; Suspension Procedures
AGENCY: Legal Services Corporation.
ACTION: Notice of Proposed Rulemaking.
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SUMMARY: This Notice of Proposed Rulemaking (NPRM) proposes amendments
to the Legal Services Corporation's regulations on termination
procedures, enforcement, and suspension procedures.
DATES: Comments on the NPRM are due April 2, 2012.
FOR FURTHER INFORMATION CONTACT: Mattie Cohan, Senior Assistant General
Counsel, Office of Legal Affairs, Legal Services Corporation, 3333 K
Street NW., Washington DC 20007; (202) 295-1624 (ph); (202) 337-6519
(fax); [email protected].
SUPPLEMENTARY INFORMATION:
Background
Introduction
The Legal Services Corporation (LSC) Act (the Act) provides general
authority to the Corporation ``to insure the compliance of recipients
and their employees with the provisions of [the Act] and the rules,
regulations, and guidelines promulgated pursuant to [the Act].'' \1\
LSC's principal regulation discussing general enforcement authority and
procedures is the Enforcement Procedures regulation at 45 CFR part
1618. In accordance with the requirements of part 1618, LSC uses a
variety of enforcement tools, formal and informal, to ensure
compliance. Among these are informal consultations and compliance
training, on-site Case Service Report/Case Management System reviews,
the imposition of Required Corrective Actions (RCAs), and the
imposition of Special Grant Conditions (SGCs) at the beginning of a
grant year. Several additional enforcement tools are provided for in
LSC-adopted regulations and are available to the Corporation to address
significant non-compliance by a recipient. In particular, LSC has
adopted suspension procedures (45 CFR part 1623) and questioned-cost
procedures (45 CFR part 1630). LSC has also adopted grant termination
procedures (45 CFR part 1606) that provide for the termination of
funding in whole or part in cases of a recipient's substantial
noncompliance with LSC statutory or regulatory requirements and other
policies, instructions, or grant terms and conditions. Under the grant-
termination provisions, a reduction of five percent or more of a
recipient's funding is considered a termination and can be implemented
only in compliance with the termination procedures.\2\ Reductions of
funding of less than five percent are not considered terminations. In
order to reduce a recipient's funding by less than five percent without
using the 1606 termination procedures, additional procedures have to be
established by rulemaking.\3\ LSC has not yet adopted regulations
establishing such standards and procedures. LSC also has the authority
under Part 1606 to debar recipients from eligibility to receive future
grants.
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\1\ LSC Act, section 2996e(b)(1)(A); 42 U.S.C. 1006(b)(1)(A).
\2\ 45 CFR 1606.2(d).
\3\ 45 CFR 1606.2(d)(2)(v).
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The majority of LSC recipients are in substantial compliance with
LSC requirements most of the time. When non-compliance occurs,
recipients almost always work diligently and cooperatively with LSC
staff to come promptly into compliance, but there have been exceptions.
LSC is now considering adding enforcement tools to increase LSC's
flexibility in addressing compliance issues.
LSC's consideration of the adoption of additional enforcement tools
responds to concerns expressed by the Government Accountability Office
[[Page 4750]]
(GAO) in its report, Legal Services Corporation: Improved internal
controls needed in grants management and oversight, GAO-08-37 (December
2007). In that report, the GAO noted that LSC has ``limited options for
sanctioning or replacing poor-performing recipients.'' GAO-08-37 at 17.
Indeed, as discussed at further length below, the existing enforcement
mechanisms available to LSC are best suited to situations involving
numerous and/or very significant violations, or to situations in which
compliance issues are technical or minor. Consequently, several of
LSC's most potent existing enforcement mechanisms are not practicable
in most instances and are therefore rarely used. Other, less onerous
mechanisms are more practicable, but are largely dependent on the
recipient's cooperation. LSC does not have enforcement mechanisms well
suited to violations or compliance issues in an intermediate range--
material but not extreme, or multiple but not profuse, in situations
where a recipient does not voluntarily take corrective action in a
timely manner.
Existing Enforcement Mechanisms
LSC relies primarily on RCAs to remedy compliance problems. The LSC
Office of Compliance and Enforcement (OCE) estimates that in
approximately 90 percent of cases in which RCAs are imposed, recipients
implement the RCAs on a timely and satisfactory basis. In approximately
ten percent of the cases, however, a recipient fails to implement the
required corrective actions in a timely or satisfactory manner.
In some instances in which recipients have failed to implement RCAs
in a timely or satisfactory manner, LSC has imposed SGCs. Although SGCs
may be substantively identical to the measures contained in RCAs, SGCs
elevate the matter by formally incorporating the conditions into the
recipient's grant documents and ensure that the recipient's Board
Chair, who has to sign the SGCs, is aware of an ongoing problem.
Although LSC has had some success with SGCs, LSC has also encountered
instances in which a recipient that has failed to comply with an RCA
has also failed to comply with an SGC. Moreover, SGCs have thus far
only been imposed at the beginning of a grant year, impacting their
availability and utility depending on the timing of a particular
compliance situation.
In recent years, LSC has increasingly used short-term funding, that
is, providing a grant for less than a year (e.g., month-to-month), to
encourage compliance. But short-term funding can be invoked only when a
recipient is at the end of a grant term and competing for a new grant.
Short-term funding can be destabilizing for a recipient, particularly
if the recipient does not have significant non-LSC funding sources.
Thus, although short-term funding can be a powerful enforcement
mechanism, it is likely to be used only in limited situations.
Suspension of funding is another existing enforcement mechanism of
limited utility. Suspension of funding is most effective to get a
recipient to perform a specific action in a discrete period of time,
such as providing access to records or adopting a new policy or
procedure. Because suspension of funding can have significant effects
on client service, it is generally not appropriate when the violation
at issue cannot be ``remedied'' by future action (for example, the
representation of an ineligible client in a closed matter cannot be
``undone''). Even when suspension might be an appropriate tool, the
current regulations cap the suspension period at 30 days, except for
violations involving failure to provide the Office of Inspector General
with an acceptable audit. In situations where LSC might otherwise have
considered imposing a suspension, LSC has determined that the resources
required to pursue the suspension process would not be well invested
given that, under the current regulations, any funds withheld would
have to be released to the recipient at the end of the 30-day
suspension period, regardless of whether the violation had been
remedied.
LSC has rarely invoked its most serious enforcement tools,
termination and debarment. There are several reasons for this. First,
in most instances termination and debarment are not warranted. But even
in situations where such sanctions might be warranted, these tools are
rarely used because of the protracted process and the extensive
resources, both for LSC and the recipient, that these sanctions entail.
In addition, LSC must carefully consider the disruption that
termination would cause to client service in the recipient's service
area, particularly because a number of recipients have statewide
service areas. Finding new providers is a significant challenge and
serves as a disincentive for the Corporation to eliminate or disqualify
existing grantees except under the most extreme circumstances.
The practical limitations on the suspension, termination, and
debarment remedies have other important implications. Some violations
are serious and significant even if the recipient takes timely steps to
ensure that the violations do not recur. In these situations,
imposition of suspension, termination, or debarment may not be
appropriate, but the imposition of a RCA may result in a perception
that the recipient ``got away with'' the violation without a
commensurate penalty.
In light of its experience with the existing enforcement
mechanisms, LSC is proposing to amend its regulations at 45 CFR parts
1606, 1618, and 1623 to adopt standards and procedures for limited
reductions in funding, to allow for the imposition of SGCs during a
grant year, and to amend the maximum suspension period from 30 to 90
days. The proposed changes are discussed in greater detail below.
Amending Part 1606 To Include Standards and Procedures for Limited
Reductions in Funding
The adoption of standards for a reduction in funding of less than
five percent would provide LSC with additional flexibility in
fashioning appropriate enforcement responses and obtaining recipient
compliance. And when a reduction in funding of less than five percent
is proposed, LSC should be able to use a less cumbersome process than
the existing termination process, which applies to any funding
reduction of five percent of more. In a few cases, a recipient has
violated restrictions but a 1606 termination would have been excessive,
and LSC has been without an available sanction commensurate with the
nature of the violation. Recovery of expended funds through a
questioned-cost proceeding, although a necessary and useful mechanism
to ensure that recipient funds are used only as permitted, is in the
nature of restitution and serves an essentially different purpose than
a sanction such as a limited reduction in funding. Moreover, the amount
of funds improperly expended may bear no relation to the seriousness of
the violation and simply recovering them may, therefore, not be a
remedy commensurate with the violation. In such cases, an intermediate
sanction, such as a limited reduction in funding, could provide LSC
with a meaningful and appropriate sanction to use to address the
infraction. The option to impose a reduction in funding of less than
five percent would also reduce the risk that a recipient's client
services or ability to implement corrective action would suffer due to
a significant lack of resources.
Accordingly, LSC is proposing to add a new section to Part 1606 to
implement procedures for the reduction of a recipient's funding in an
amount less than five percent of the recipient's
[[Page 4751]]
current annual level of financial assistance. The proposed procedure is
modeled on the suspension procedure in Part 1623, because those
procedures provide a significant opportunity for recipient input and
due process without being unduly complex.
Authority and Responsibility
The proposed Sec. 1606.15(a) \4\ is an introductory paragraph
setting forth a statement of LSC's authority to impose limited
reductions in funding and LSC's responsibility to follow the procedures
and requirements set forth in the section before doing so. LSC believes
it is clear from the language of the proposed text that any reduction
would be only for the particular grant year in which the reduction of
funding is imposed. For example, if a recipient were in the second year
of a three-year grant term and LSC imposed a two percent reduction in
funding for that grant year, the reduction would affect the recipient's
funds for that second year of the grant term only, and there would be
no effect on the recipient's level of funding for the third year of the
grant term.
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\4\ In accordance with Federal Register requirements, LSC is not
quoting the proposed regulatory text language in this preamble.
Readers are referred to the regulatory text section supra.
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Grounds and Criteria for Limited Reductions in Funding
Proposed paragraphs (b) and (c) address the permissible grounds and
criteria for the imposition of a limited (less than five percent)
reduction in funding. The proposed grounds for a limited reduction in
funding are the same as those for both terminations and suspensions,
although, as explained below, the procedures for a limited reduction
would be less onerous. The proposed language also makes clear that the
magnitude of a limited reduction in funding in a particular situation
(e.g., one percent or three percent) will also be determined with
reference to the same criteria. Any limited reduction in funding should
be tailored to and commensurate with to the nature of the violation,
and the proposed language is intended to reflect this expectation.
The Process for Limited Reductions in Funding
Proposed paragraphs (d) through (g) set forth the process LSC would
follow to impose a limited (less than five percent) reduction in
funding on a recipient and are based on the process set forth in Sec.
1623.4 of the suspension rule. As noted above, LSC believes that the
suspension procedures provide a straightforward procedure with a
significant opportunity for recipient input and due process. The
provisions guarantee recipients written notice of proposed limited
reductions in funding, include an explanation of the basis for the
proposed reduction, along with the opportunity to provide a formal,
written response. Recipients would also have an opportunity to request
an informal, in-person meeting to resolve issues. LSC believes that the
proposed procedures provide significant process protections to
recipients without being nearly as resource-intensive and time-
consuming as the formal hearing process used for terminations, and that
the proposed protections are commensurate with the sanction of a
funding reduction of less than five percent.
Other Conforming Amendments to Part 1606
LSC is proposing to amend the title of part 1606 to reference
limited reductions in funding. Because a limited reduction in funding
is not a termination, LSC believes that adding the reference to limited
reductions in funding to the title of part 1606 is necessary for
accuracy and will assist readers in locating the limited reduction in
funding procedures in LSC's regulations. LSC is also proposing
amendments to Sec. Sec. 1606.2, ``Definitions,'' and 1606.13,
``Interim and termination funding; reprogramming,'' to harmonize these
sections with the proposed new section.
First, LSC is proposing to amend Sec. 1606.2(d)(2)(v), which
specifies that a reduction in a recipient's funding of less than five
percent is not a termination. That section currently provides that no
such reduction shall be imposed except in accordance with regulations
promulgated by the Corporation. Because LSC is now proposing to
promulgate such regulations, LSC proposes to delete this sentence and
substitute a cross-reference to the proposed new Sec. 1606.15.
Second, LSC proposes to amend Sec. 1606.3(b) to make clear that
the magnitude of a termination of funding in a particular situation
(e.g., five percent or twenty percent or a termination in whole) will
be determined with reference to the criteria listed in this section.
LSC believes that this expectation in implicit in the current
regulation, and that any termination of funding should be tailored to
and commensurate with the nature of the violation. LSC believes that
the clarifying language reinforces this expectation and should be
inserted here to be consistent with the proposed language in proposed
new Sec. 1606.15.
Third, LSC proposes to amend paragraphs (a), (b), and (d) of Sec.
1606.13, ``Interim and termination funding; reprogramming.'' \5\
Section 1606.13 currently addresses issues related to funding during
and upon the conclusion of termination procedures and Corporation's use
of funds recovered through a termination proceeding. LSC believes these
provisions should be equally applicable in cases involving a limited
reduction in funding. Accordingly, LSC proposes to amend paragraphs
(a), (b), and (d) of Sec. 1606.13 to include references to limited
reduction in funding procedures pursuant to Sec. 1606.15.
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\5\ Amendment of paragraph (c) is not necessary because that
paragraph addresses close-out funding, which applies only to
circumstances involving a termination in whole.
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With respect to proposed paragraph (d), LSC is also proposing a
substantive change. The current provision reflects the Corporation's
longstanding policy that recovered funds are generally to be used in
the service area which the funds originally supported, unless the
Corporation exercises its discretion to reallocate the funds for some
other basic field purpose, such as for making emergency or other
special grants. Although this policy is appropriate in many cases
involving recovered funds, in the case of limited reductions in funding
and terminations, especially terminations in part, the funds are being
recovered as a sanction against the recipient. As most service areas
only have one recipient operating within them, a presumption or
expectation that funds be returned to the same service area would imply
a presumption toward or expectation of returning funds to the very
recipient from which they had been taken as a sanction. It is highly
likely that in such cases LSC would choose to exercise its discretion
to reallocate the funds, so as to avoid returning the funds to the
recipient from which they had been taken.\6\ It is therefore more
appropriate for this section not to reflect any presumption or
expectation and, instead, simply to give the Corporation discretion to
reallocate the funds for basic field purposes.
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\6\ It is more likely that in the case of a termination in whole
that the Corporation would choose to exercise its discretion to
return the recovered funds to the original service area to fund
services by an interim or new recipient. In such a case, however,
LSC would presumably be providing the funds to an entity other than
the terminated recipient.
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Amending Part 1618 To Permit the Imposition of Special Grant Conditions
During a Grant Year
LSC's current standard grant assurances (applicable to all
recipients)
[[Page 4752]]
provide that SGCs may be imposed on a recipient prior to the awarding
of a new grant or at the beginning of a new year of a multi-year grant
term. The Corporation's experience has been that imposing SGCs is a
particularly effective way of capturing a recipient's attention and
securing compliance with LSC requirements. LSC believes it would be
helpful to be able to impose SGCs on a recipient during the course of a
grant year when a recipient has been found to be in violation of an
applicable requirement. Such authority would make SGCs available
whenever they might be necessary, rather than only at the beginning of
a grant year, which may or may not correspond to the timing of the
matter occasioning the SGC. Although this is an action LSC might be
able to take without rulemaking, LSC is invoking the rulemaking process
to provide an opportunity for public comment on this proposal.
Accordingly, LSC proposes to amend 45 CFR 1618.5 to add language
providing that whenever there is substantial reason to believe that a
recipient has persistently or intentionally violated the Act, or, after
notice, has failed to take the appropriate remedial or disciplinary
action to ensure compliance by its employees with the Act, and attempts
at informal resolution have been unsuccessful, the Corporation may
impose SGCs on the recipient during the grant year.
Amending Part 1623 To Increase Maximum Period of Suspension of Funding
Pending Corrective Action
LSC is proposing to change the current maximum suspension
limitation from 30 days to 90 days. Although section 1011(2) of the LSC
Act provides that a suspension of financial assistance shall not be
continued for longer than 30 days unless the recipient has been
afforded reasonable notice and opportunity for a timely, full, and fair
hearing conducted, when requested, by an independent hearing examiner,
section 501(b) of LSC's FY 1998 appropriation legislation (which has
been carried forth in each subsequent appropriation) expressly renders
that provision inoperative. LSC is thus within its current statutory
authority to increase the maximum suspension period through regulatory
action. (Although it may appear irregular to adopt a regulation
implementing a provision of law appearing in an appropriations act
which, by its terms, is time-limited, there is ample precedent for this
in the LSC context. LSC's authorizing legislation has not been amended
since 1977, and since 1996 a significant number of substantive
restrictions and provisions superseding those in the LSC Act have been
contained on a recurring basis in LSC's annual appropriations
legislation. In order to comply with these provisions in a practical
manner, LSC has adopted implementing regulations. This was the case
with 1998 amendments to the suspension rule that LSC now proposes to
further amend. See 63 FR 64646 (November 23, 1998).) As with limited
reductions in funding, LSC believes that a longer potential maximum
suspension period can be a useful option because of its expected
deterrent effect (thereby enhancing the efficacy of non-monetary
enforcement mechanisms) and as a meaningful enforcement tool in itself
in the infrequent situations in which it would be needed.
The preamble to the current version of part 1606 explains that the
30-day limit was chosen to:
Reflect[ ] the presumption that a suspension of too long a
duration would likely endanger a recipient's ability to continue
service to its clients. A suspension is intended to be used for
extraordinary circumstances when prompt intervention is likely to
bring about immediate corrective action. The Corporation, therefore,
should act quickly to determine that the problem is solved and is
unlikely to reoccur, the appropriate corrective action has been
taken, or initiate a termination process under part 1606.
63 FR 64646 at 64648 (Nov. 23, 1998). However, although the Corporation
originally anticipated that proceeding to termination if a 30-day
suspension was not successful in obtaining corrective action would be a
practicable option, in practice that has not turned out to be the case
(for the reasons discussed above). In addition because of the short
duration of the current maximum suspension period, LSC has rarely
actually imposed a suspension.\7\ Having the option of a longer term
would make suspension a more practical option, and a 90-day cap would
mitigate the concern about the potential effects of ``a suspension of
too long a duration'' on client service expressed in the preamble
quoted above. For example, a more practical suspension option would
have been useful in a few situations in which recipients refused to
provide LSC access to certain records. LSC believes that having had a
more credible suspension option may have provided an incentive to those
recipients to be more cooperative in producing these records.
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\7\ The exception to this is in cases involving a recipient's
failure to provide the Office of Inspector General with an
acceptable audit. However, in these cases, the suspension term runs,
as required by statute, until an audit is completed.
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LSC anticipates that the maximum 90-day suspension would be
warranted only in rare cases, and would only seek to apply the minimum
suspension period it believes would be necessary to result in the
required corrective action being taken. Moreover, a recipient facing or
subject to a suspension can forestall implementation or shorten the
length of a suspension by taking the necessary actions to come into
compliance. As is currently the case, full funding would be restored
upon the timely and satisfactory implementation of all required
corrective actions, or earlier at LSC's discretion if circumstances
warranted (such as if the recipient were making regular and reasonable
progress toward the implementation of corrective actions, even if not
all actions had been completed, and if LSC determined that lifting the
suspension was appropriate). Thus, although extending the maximum
suspension period is an option with potentially significant
consequences, LSC believes that the due process procedures that apply
to the suspension process, combined with the fact that the recipient
can take action that will terminate the suspension, provide adequate
protection to recipients. LSC is of the opinion, however, that in
situations where a suspension of longer than 90 days might be
warranted, LSC other available sanctions (such as a reduction in
funding as proposed herein or termination) would likely be as or more
effective. LSC notes that Federal grant-making agencies are not limited
to applying suspensions of funding to any particular maximum day limit.
For reasons set forth above, and under the authority of 42 U.S.C.
2996g(e), LSC proposes to amend 45 CFR chapter XVI as follows:
PART 1606--TERMINATION, LIMITED REDUCTION IN FUNDING, AND DEBARMENT
PROCEDURES; RECOMPETITION
1. The authority citation for part 1606 continues to read as
follows:
Authority: 42 U.S.C. 2996e(b)(1) and 2996f(a)3); Pub. L. 105-
199, 111 Stat 2440, Secs. 501(b) and (c) and 504; Pub. L. 104-134,
110 Stat. 1321.
2. The heading for part 1606 is revised to read as set forth above.
3. Amend Sec. 1606.2 by revising paragraph (c) and adding
paragraph (e) to read as follows:
Sec. 1606.2 Definitions.
* * * * *
[[Page 4753]]
(c) Limited reduction in funding means a reduction in funding of
less than 5 percent of a recipient's current annual level of financial
assistance imposed by the Corporation in accordance with Sec. 1606.15
of this Part.
* * * * *
(e)(1) Termination means that a recipient's level of financial
assistance under its grant or contract with the Corporation will be
reduced in whole or in part prior to the expiration of the term of a
recipient's current grant or contract. A partial termination will
affect only the recipient's current year's funding, unless the
Corporation provides otherwise in the final termination decision.
(2) A termination does not include:
(i) A reduction of funding required by law, including a reduction
in or rescission of the Corporation's appropriation that is apportioned
among all recipients of the same class in proportion to their current
level of funding;
(ii) A reduction or deduction of LSC support for a recipient under
the Corporation's fund balance regulation at 45 CFR part 1628;
(iii) A recovery of disallowed costs under the Corporation's
regulation on costs standards and procedures at 45 CFR part 1630;
(iv) A withholding of funds pursuant to the Corporation's Private
Attorney Involvement rule at 45 CFR part 1614; or
(v) A limited reduction of funding as defined in this paragraph.
4. Amend Sec. 1603.3 by revising paragraph (b) introductory text
to read as follows:
Sec. 1606.3 Grounds for a termination.
* * * * *
(b) A determination of whether there has been a substantial
violation for the purposes of paragraph (a)(1) of this section, and the
magnitude of any termination in whole or in part, will be based on
consideration of the following criteria:
* * * * *
5. Amend Sec. 1606.13 by revising paragraphs (a), (b), and (d) to
read as follows:
Sec. 1606.13 Interim and termination funding; reprogramming.
(a) Pending the completion of termination or limited reduction in
funding proceedings under this part, the Corporation shall provide the
recipient with the level of financial assistance provided for under its
current grant or contract with the Corporation.
(b) After a final decision has been made to terminate a recipient's
grant or contract or to impose a limited reduction in funding, the
recipient loses all rights to the terminated or reduced funds.
* * * * *
(d) Funds recovered by the Corporation pursuant to a termination or
limited reduction in funding shall be reallocated by the Corporation
for basic field purposes at its sole discretion.
6. Add a Sec. 1606.15 to read as follows:
Sec. 1606.15 Limited reductions of funding.
(a) The Corporation may, in accordance with the procedures and
requirements set forth in this section, impose a limited reduction of
funding by reducing a recipient's funding in an amount less than 5% of
the recipient's current annual level of financial assistance.
(b) Grounds for limited reduction in funding. A limited reduction
of funding may be imposed when the Corporation determines that
termination in whole or in part of the recipient's grant is not
warranted, but that there nevertheless has been a substantial violation
by the recipient of an applicable provision of law, or a rule,
regulation, guideline or instruction issued by the Corporation, or a
term or condition of the recipient's current grant or contract with the
Corporation.
(c) A determination whether there has been a substantial violation
for the purposes of paragraph (b) of this section, and the magnitude of
the limited reduction in funding, will be based on consideration of the
criteria set forth in Sec. 1606.3(b).
(d) When the Corporation has made a determination to impose a
limited reduction in funding in accordance with this section, the
Corporation shall provide a written determination to the recipient and
the Chair of the recipient's governing body. The determination shall:
(1) State the grounds, the amount, and the effective date for the
limited reduction in funding;
(2) Identify, with reasonable specificity, any facts or documents
relied on as justification for the limited reduction in funding;
(3) Specify what, if any, corrective action the recipient can take
to avoid the limited reduction in funding;
(4) Advise the recipient that it may request, within five business
days of receipt of the determination, an informal meeting with the
Corporation at which it may attempt to show that the limited reduction
in funding should not be imposed; and
(5) Advise the recipient that, within 10 days of its receipt of the
determination and without regard to whether it requests an informal
meeting, it may submit written materials in opposition to the limited
reduction in funding.
(e) If the recipient requests an informal meeting with the
Corporation, the Corporation shall designate the time and place for the
meeting. The meeting shall occur within five business days after the
recipient's request is received.
(f) If the recipient neither requests an informal meeting nor
submits any written materials in opposition to the determination, the
determination will be deemed effective at the end of the 10-day period
following recipient's receipt of the determination.
(g) If an informal meeting is conducted and/or written materials
are submitted by the recipient, the Corporation shall consider any
written materials submitted by the recipient in opposition to the
limited reduction in funding and any oral presentation or written
materials submitted by the recipient at an informal meeting. After
considering such materials, the Corporation shall decide within 30 days
whether the limited reduction in funding should become effective and
shall notify the recipient and the recipient's Board Chair in writing
of its decision.
PART 1618--ENFORCEMENT PROCEDURES
7. The authority citation for Part 1618 continues to read as
follows:
Authority: Secs. 1007(a)(8); 1006(b)(6); 1006(b)(4) (42 U.S.C.
2996f(a)(8); 2996e(b)(6); 29963(b)(4)).
8. Amend Sec. 1618.5 by revising paragraph (b) to read as follows:
Sec. 1618.5 Duties of the Corporation.
* * * * *
(b) Whenever there is substantial reason to believe that a
recipient has persistently or intentionally violated the Act, or, after
notice, has failed to take the appropriate remedial or disciplinary
action to ensure compliance by its employees with the Act, and attempts
at informal resolution have been unsuccessful, the Corporation may
proceed to suspend or terminate financial support to the recipient
pursuant to the procedures set forth in parts 1623 and 1606,
respectively; may impose Special Grant Conditions on the recipient
during the grant year; or may take other action to enforce compliance
with the Act.
PART 1623--SUSPENSION PROCEDURES
9. The authority citation for Part 1623 continues to read as
follows:
[[Page 4754]]
Authority: 42 U.S.C. 2996e(b)(1); Pub. L. 104-134, 110 Stat.
1321, Sec. 509; Pub. L. 105-119, 111 Stat. 2440, Sec. 501(b).
10. Amend Sec. 1623.4 by revising paragraph (e) to read as
follows:
Sec. 1623.4 Suspension procedures.
* * * * *
(e) The Corporation may at any time rescind or modify the terms of
the final determination to suspend and, on written notice to the
recipient, may reinstate the suspension without further proceedings
under this part. Except as provided in paragraph (f) of this section,
the total time of a suspension shall not exceed 90 days, unless the
Corporation and the recipient agree to a continuation of the suspension
without further proceedings under this part.
* * * * *
Victor M. Fortuno,
Vice President & General Counsel.
[FR Doc. 2012-1984 Filed 1-30-12; 8:45 am]
BILLING CODE 7050-01-P