[Federal Register Volume 84, Number 23 (Monday, February 4, 2019)]
[Rules and Regulations]
[Pages 1404-1407]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-00896]


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LEGAL SERVICES CORPORATION

45 CFR Part 1607


Governing Bodies

AGENCY: Legal Services Corporation.

ACTION: Final rule.

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SUMMARY: The Legal Services Corporation (LSC) is adopting a final rule 
amending its regulation related to recipient governing bodies. This 
final rule changes two requirements and gives increased flexibility to 
recipient governing bodies in how they recruit, appoint, and retain 
client-eligible members. First, LSC is revising the definition of the 
term eligible client to remove the requirement that a client-eligible 
board member be financially eligible at the time of reappointment to a 
governing body. Second, LSC is eliminating the requirement that client-
eligible members be appointed by outside groups. The final rule gives 
each recipient governing body the discretion to continue applying these 
provisions if it wishes but eliminates the requirement to do so.

DATES: This final rule is effective on February 4, 2019.

FOR FURTHER INFORMATION CONTACT: Stefanie K. Davis, Assistant General 
Counsel, Legal Services Corporation, 3333 K Street NW, Washington, DC 
20007; (202) 295-1563 (phone), (202) 337-6519 (fax), or [email protected].

SUPPLEMENTARY INFORMATION: 

I. Background

    In December 1977, Congress amended Section[thinsp]1007(c) of the 
LSC Act. Public Law 95-222, 91 Stat. 1619. Through the amendment, 
Congress directed LSC to fund only those organizations whose governing 
bodies consisted of ``one-third . . . persons who are, when selected, 
eligible clients who may also be representatives of associations or 
organizations of eligible clients.'' 91 Stat. at 1622. LSC published a 
notice of proposed rulemaking (NPRM) to implement the new requirement 
in May 1978. In that NPRM, LSC proposed to define ``eligible client'' 
as an ``individual eligible to receive legal assistance under the LSC 
Act.'' 43 FR 21902, May 22, 1978. The proposed definition narrowed the 
LSC Act's definition of the term ``[e]ligible client,'' which the Act 
defines as ``any person financially unable to afford legal 
assistance.'' Sec. 1002(3), Public Law 88-452, title X; 42 U.S.C. 
2996a(3). LSC also proposed to adopt a requirement that eligible client 
members ``be selected from, or designated by, a variety of appropriate 
groups including, but not

[[Page 1405]]

limited to, client and neighborhood associations and organizations.'' 
Id. This language reflected LSC's ``attempt to insure that programs 
will be accountable to the communities that they serve.'' On July 28, 
1978, LSC adopted the proposed rule without change. 43 FR 32772, July 
28, 1978.
    The provisions governing the appointment of client-eligible members 
to recipient governing bodies remained unchanged for 16 years. In 1994, 
LSC proposed to revise Part 1607 in two relevant ways. First, LSC 
proposed to amend the regulation to reflect its interpretation of the 
statutory language requiring one-third of a recipient governing body's 
members to be ``persons who are, when selected, eligible clients'':

    [T]he language has been revised to make it clear that client 
board members must be eligible at the time of their appointment to 
each term of office. Thus, a client member who is financially 
eligible for services when first appointed to a recipient's board 
may not be reappointed to a second or subsequent term if, at the 
time of reappointment, the client board member is no longer 
financially eligible for LSC-funded services.

59 FR 30885, 30886, June 16, 1994. The second proposed revision ``would 
codify the current LSC interpretation of the language to require that 
client board members be selected by client groups that have been 
designated by the recipient.'' Id. at 30886-87.

    In a final rule published on December 19, 1994, LSC adopted both 
proposed changes. LSC revised the proposed definition of ``eligible 
client'' to clarify that the member had to be financially eligible ``to 
receive legal assistance under the Act and part 1611'' of LSC's 
regulations. 59 FR 65249-50, Dec. 19, 1994. In so doing, LSC rejected 
comments recommending that LSC expand the definition to include 
individuals whose income exceeds LSC's financial eligibility limit, but 
who are eligible to receive non-LSC-funded legal assistance from a 
recipient. LSC limited the definition to individuals who were 
financially eligible for LSC-funded legal assistance because it 
``wished to insure that the focus of the legal services program remains 
on the indigent population.'' Id. at 65250. As it did in 1978, LSC 
adopted a narrower definition of the term ``eligible client'' than the 
one provided in Section 1002 of the LSC Act.
    With respect to LSC's proposal to require that client-eligible 
members be appointed by organizations or associations, LSC received 
comments both in support of and opposing the requirement. In the 
preamble to the final rule, LSC explained that favorable comments 
``supported the clarification and the policy choice that it 
represented.'' Id. at 65251. LSC provided more detailed explanations of 
the comments in opposition. One basis for opposition was the difficulty 
or inability for some recipients to comply with the requirement because 
``often there are no organized client groups within the service area 
and, even when there are, it is not necessarily true that client groups 
speak for the client community.'' Id. at 65251. The other was that 
``recipients often come into contact with program clients or other 
financially eligible individuals who would make good client board 
members but who, for one reason or another, are not involved with any 
client group.'' Id. LSC adopted the language from the NPRM without 
change.
    In 2015, LSC Board Member Julie Reiskin provided Management with a 
memorandum detailing concerns clients had expressed to her. The primary 
concerns were that some client governing body members were not truly 
representative of the population eligible for LSC-funded legal services 
and that the rule required more than Section[thinsp]1007(c) of the LSC 
Act, which states that client-eligible members (1) must be eligible 
when selected, and (2) may be representatives of associations or 
organizations of eligible clients. 42 U.S.C. 2996f(c). Following up on 
this memorandum, in 2017, the Office of Legal Affairs (OLA) 
participated in Board Member Reiskin's and President Sandman's client-
listening session at the National Legal Aid and Defender Association's 
(NLADA) annual conference. Recipients and their clients communicated 
that the two provisions discussed above present obstacles to recruiting 
and retaining qualified client-eligible members.
    LSC added rulemaking on part 1607 to its annual rulemaking agenda 
in April 2017. On April 8, 2018, the Operations and Regulations 
Committee (``Committee'') of the Board voted to recommend that the 
Board authorize rulemaking on part 1607. The Board voted to authorize 
rulemaking on April 10, 2018. On July 25, 2018, the Committee voted to 
recommend that the Board approve publication of an NPRM in the Federal 
Register for public comment. On July 26, 2018, the Board accepted the 
Committee's recommendation and voted to approve publication of the 
NPRM. LSC published the NPRM in the Federal Register on August 6, 2018. 
83 FR 38270, Aug. 6, 2018. The comment period remained open for sixty 
days and closed on October 5, 2018.
    On January 17, 2019, the Committee voted to recommend that the 
Board adopt this final rule and approve its publication in the Federal 
Register. On January 18, 2019, the Board voted to adopt and publish 
this final rule.
    Materials regarding this rulemaking are available in the open 
rulemaking section of LSC's website at http://www.lsc.gov/about-lsc/laws-regulations-guidance/rulemaking. After the effective date of the 
rule, those materials will appear in the closed rulemaking section at 
http://www.lsc.gov/about-lsc/laws-regulations-guidance/rulemaking/closed-rulemaking.

II. Section-by-Section Discussion of Proposed Changes and Comments

    LSC received 91 timely comments during the public comment period--
74 from individual client-eligible board members of recipients; 5 from 
other individual recipient non-client board members; 4 from LSC 
recipients' executive directors; 2 from entire recipient boards of 
directors; and 6 from others, including NLADA. An overwhelming majority 
of the comments favored the proposed changes.

Sec.  1607.1 Purpose

    LSC proposed no changes to this section. LSC received no comments 
on this section.

Sec.  1607.2 Definitions

    LSC proposed to remove the requirement that a board member be 
financially eligible ``at the time of appointment to each term of 
office to the recipient's governing body.'' This change will allow, but 
not require, recipient governing bodies to permit client-eligible 
members who improve their financial position to serve consecutive terms 
on a recipient's governing body.
    LSC received 91 comments on the proposed change to this section. 
Seventy-six commenters agreed with the change, 10 commenters disagreed 
with the change, and 5 commenters discussed the change but did not 
express overall support or disagreement.
    Comments: Executive directors, client-eligible board members, other 
individual board members of recipients, and entire recipient boards of 
directors who favored the change described how difficult the 
eligibility requirement makes it for recipient boards to recruit and 
retain quality board members. One executive director stressed that this 
is particularly true for recipients located in rural areas. Of 
recruiting, a client-eligible board member commented that recipient 
boards struggle to find client-eligible community members to serve

[[Page 1406]]

because it costs money to get to meetings and events, when ``this money 
could be spent on bread and milk.'' In discussing the difficulties of 
retention, an executive director described losing an impressive client-
eligible board member who had represented a large rural area and was an 
active committee member because ``[h]er job promotion at a nonprofit 
serving homeless individuals disqualified her for continued service on 
the board.'' A second executive director wrote:

    [G]iven the complexity of LSC restrictions and the 
responsibilities of a Board for nonprofit management, new income 
eligible clients and lawyers alike, face a steep learning curve. 
Allowing for continued participation on the Board by formerly income 
eligible clients will allow them to learn and provide increasingly 
important support to their programs.

A client-eligible board member explained that good client-eligible 
representatives ``share information with and connect people to Legal 
Aid for help who otherwise would not have known what to do'' and argued 
that good representatives should ``get to stay on the board, regardless 
of income, as long as the person has lived in poverty.''

    NLADA summarized the sentiments expressed in many client-eligible 
board member comments about the enduring experience of poverty: ``Many 
client-eligible board members feel that an improvement in their 
financial situation does not erase their understanding of what it means 
to live in poverty or their connections to the communities in which 
they have always lived.'' Client-eligible board members and many other 
stakeholders expressed the perversity of ``forcing out'' a client-
eligible board member for improving their financial circumstance. One 
client-board member wrote that graduation from eligible to non-eligible 
financial status should be celebrated rather than punished. Another 
commented that the requirement makes clients feel as though making 
financial gain is wrong. A third stated that client members ``should 
not be penalized for trying to improve their life'' or better their 
``financial health.''
    Moreover, commenters emphasized that client-eligible board members' 
financial improvements are often modest. An administrative assistant 
employed by a recipient explained that

[i]f a single client board member's monthly income rises to $1,400, 
they are technically no longer client-eligible, but that extra $135 
is not going to change much of anything. They still would not be 
able to afford a private attorney. They are still going to be in the 
same situation[.]

Just one client-eligible board member expressed the contrary sentiment 
that only a person currently living in poverty ``can understand, 
explain, and propose ways to overcome issues'' facing low-income 
individuals.

    Client-eligible board members, executive directors, and entire 
recipient boards of directors alike approved of increasing the 
flexibility for recipient governing boards to decide whether to appoint 
a client-eligible board member to an additional term without 
reassessing the member's financial eligibility. A recipient commented 
that ``such a decision should be made with no bias as to income.'' 
Another wrote, ``we would be troubled to lose such a member for a 
second term solely based on improved financial circumstances.'' In 
describing the importance of increased flexibility, an executive 
director wrote about his current board chairperson--a client-eligible 
board member--stating that management and other board members 
encouraged and supported the board chairperson in earning a higher 
education degree, which will likely lead to increased income. The 
executive director commented how unfortunate it would be if this 
member's success resulted in ineligibility to continue serving on the 
board.
    Of the ten commenters opposed to the change, all were client-
eligible board members. Three thought the proposed change limited the 
number of opportunities for other client-eligible members of the 
community to serve on boards. One stressed that LSC's focus should be 
to ensure clients are ``represented well'' on grantee boards and argued 
that the proposed change supported a recent phenomenon of client voices 
being pushed out of board discussions. A second wrote that ``people of 
privilege in positions of relative power without oversight would be 
emboldened to exclude client board members'' and that ``the LSC program 
and community program should'' jointly decide whether to retain 
``members who improve their financial situation[s].'' A third expressed 
concern that ``[i]f a board member does not qualify for services, the 
board member cannot give first-hand input'' on ``whether their Legal 
Aid programs' system is working or needs to be changed.''
    NLADA and a few client-eligible board members expressed concern 
about how many consecutive terms a client-eligible board member may 
serve once they are no longer financially eligible. Those who expressed 
this concern still supported the rule as written--to give discretion to 
grantees to decide when reappointment is appropriate.
    Response: LSC adopts the proposed rule as final without changes. 
More than 83 percent of commenters favored applying the financial 
eligibility requirement for client-eligible board members to the 
initial appointment only, and not to subsequent, consecutive terms. LSC 
carefully considered the concerns submitted by the commenters who 
opposed the change. But the totality of the comments support LSC's 
conclusion that providing recipients with increased flexibility to 
retain high-quality client-eligible members--regardless of income--for 
additional consecutive terms is more likely to result in good 
representation of and for the client community than the current version 
of the rule. The rule is also consistent with the statutory language of 
Section 1007(c) of the LSC Act that ``at least one-third of [the 
recipient's governing body] consists of persons who are, when selected, 
eligible clients . . . .'' Where the current requirement of 
demonstrating financial eligibility at the time of appointment to each 
term of office has worked well for a recipient, the final rule allows 
the recipient to continue applying that requirement. On the other hand, 
the rule permits the recipient to reappoint a client-eligible board 
member to a successive term even if their income exceeds the financial 
eligibility income limit.

Sec.  1607.3 Composition

    LSC proposed to eliminate the Sec.  [thinsp]1607.3(c) requirement 
that client-eligible members be appointed by groups. The final rule 
will require recipients to ``solicit recommendations from groups in a 
manner that reflects, to the extent possible, the variety of interests 
within the client community . . . .''
    LSC received 91 comments on the proposed change to this section. 
Eighty-one commenters agreed with the change, 5 commenters disagreed 
with the change, and 5 commenters wrote about the change but did not 
express overall support or disagreement.
    Comments: Many commenters who favored the change approved giving 
recipient governing bodies the flexibility to ``recruit and keep the 
absolute best and most qualified client-eligible board members'' in the 
way that each body sees fit. An administrative assistant working for a 
recipient described the current procedure:

    From an administrative perspective, it has been extremely 
difficult getting organizations to refer clients for our board. The 
last three referrals we received were willing and

[[Page 1407]]

otherwise suitable, but over-income. And many organizations put-off 
or have ignored our requests altogether because it is time-
consuming. Our client board member turnover rate has been high and 
participation low because many organization referrals have been 
forced, and/or not well-considered.

A board described a conflict it routinely experiences--that ``[t]he 
appointing organizations themselves are often in search of well 
qualified members of their own constituencies to serve on their 
boards.'' Moreover, a client-eligible board member, other board member, 
executive director, and NLADA each wrote that for rural programs, 
meeting this requirement is particularly difficult-- ``nearly 
impossible.''

    All types of stakeholders commented that many client-eligible 
community members are interested in serving on boards. One executive 
director described meeting clients and client-eligible community 
members who expressed their interest in board service but explained 
that the current appointment procedure stands in the way: ``[W]e must 
then work to identify a potential sponsoring organization in their own 
community, with mixed success[. W]e have lost strong contributors to 
the Board because of our inability to achieve a match, given the 
limited staff time and resources that can be devoted to this 
requirement.'' NLADA thinks the proposed rule will solve this problem:

    Grantees may still use the procedure required by the existing 
1607.3(c). They would, however, also be free to adopt their own 
unique appointment procedures to best help them find, recruit, and 
appoint client-eligible board members. [T]he goal of these 
procedures would still be to appoint client-eligible board members 
that reasonably reflect the diversity of the client population in 
their service area.

NLADA favors the change.

    Of the five commenters opposed to the change, all were client-
eligible board members. In discussing board member and client-board 
member dynamics, a commenter explained that client-eligible board 
members rely on appointing organizations to ensure their concerns are 
heard by the attorney board members. For recipients who do not have a 
community program to appoint board members, the commenter proposed that 
``client members from adjacent communities be nominated and allowed to 
attend.'' A second stressed that the change would result in tribal 
organizations going unrepresented on boards: ``[B]oard members selected 
by regional agencies to serve on the legal services board represent 
multiple chapter houses. These . . . chapter houses are communities 
that are heard and present solutions to [tribal leadership]. There is 
no cultural sensitivity in this matter from Anglo board members.'' A 
third wrote that if the change was implemented, ``community 
organizations should have the first opportunity to fill the position'' 
before recipients.
    Response: LSC adopts the proposed rule as final without changes. 
More than 89 percent of comments favored eliminating the requirement 
that client-eligible board members be appointed by groups. Based on the 
substance of the comments, LSC concludes that the benefits to 
recipients that are likely to flow from their governing boards' 
increased flexibility to recruit and appoint client eligible members--
as described by executive director, client-eligible board members, and 
other board members--outweigh the potential harms described. Also, 
unlike the requirement that the majority of attorney members of 
recipient governing bodies be appointed by state, county, or local bar 
associations, LSC's governing statutes do not require client-eligible 
members to be appointed by groups.
    Where the current procedure of having outside organizations appoint 
client-eligible board members works well for a recipient, the final 
rule allows the recipient to continue using the procedure. Where the 
current procedure does not work well, LSC intends that this change 
makes it easier for recipients to recruit and appoint client-eligible 
board members. This final rule gives the recipient governing body the 
authority and flexibility to implement an appointment procedure that 
takes its local circumstances into account.

Sec.  1607.4 Functions of a Governing Body

    LSC proposed no changes to this section. LSC received no comments 
on this section.

Sec.  1607.5 Compensation

    LSC proposed no changes to this section. LSC received no comments 
on this section.

Sec.  1607.6 Waiver

    LSC proposed no changes to this section. LSC received no comments 
on this section.

List of Subjects in 45 CFR Part 1607

    Grant program--law, Legal services.

    For the reasons discussed in the preamble, the Legal Services 
Corporation amends 42 CFR part 1607 as follows:

PART 1607--GOVERNING BODIES

0
1. The authority citation for part 1607 is revised to read as follows:

    Authority:  42 U.S.C. 2996g(e).


0
2. Amend Sec.  [thinsp]1607.2 by revising paragraph (c) to read as 
follows.


Sec.  1607.2   Definitions.

* * * * *
    (c) Eligible client member means a board member who is financially 
eligible to receive legal assistance under the Act and part 1611 of 
this chapter, without regard to whether the person actually has 
received or is receiving legal assistance at that time. Eligibility of 
client members must be determined by the recipient or, if the recipient 
so chooses, by the nominating organization(s) or group(s) in accordance 
with written policies adopted by the recipient
* * * * *

0
3. Amend Sec.  [thinsp]1607.3 by revising paragraph (c) to read as 
follows:


Sec.  1607.3   Composition.

* * * * *
    (c) At least one-third of the members of a recipient's governing 
body must be eligible client members when initially appointed by the 
recipient. The recipient must solicit recommendations for eligible 
client members from a variety of appropriate groups designated by the 
recipient that may include, but are not limited to, client and 
neighborhood associations and community-based organizations that 
advocate for or deliver services or resources to the client community 
served by the recipient. Recipients should solicit recommendations from 
groups in a manner that reflects, to the extent possible, the variety 
of interests within the client community, and eligible client members 
should be selected so that they reasonably reflect the diversity of the 
eligible client population served by the recipient, including race, 
gender, ethnicity and other similar factors.
* * * * *

    Dated: January 30, 2019.
Stefanie Davis,
Assistant General Counsel.
[FR Doc. 2019-00896 Filed 2-1-19; 8:45 am]
 BILLING CODE 7050-01-P