[Federal Register Volume 86, Number 199 (Tuesday, October 19, 2021)]
[Proposed Rules]
[Pages 57770-57773]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-22553]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Administration for Children and Families

45 CFR Part 305

RIN 0970-AC86


Paternity Establishment Percentage Performance Relief

AGENCY: Office of Child Support Enforcement (OCSE), Administration for 
Children and Families (ACF), Department of Health and Human Services 
(HHS).

ACTION: Notice of proposed rulemaking.

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SUMMARY: Due to the impact of the COVID-19 public health emergency on 
state child support program operations, the Office of Child Support 
Enforcement (OCSE) proposes to modify the Paternity Establishment 
Percentage (PEP) from the 90 percent performance threshold to 50 
percent for Federal Fiscal Years (FFY) 2020 and 2021 in order for a 
state to avoid a financial penalty. OCSE also proposes to provide that 
adverse findings of data reliability audits of a state's paternity 
establishment data will not result in a financial penalty.

DATES: Consideration will be given to written comments on this notice 
of proposed rulemaking (NPRM) received on or before November 18, 2021.

ADDRESSES: You may submit comments, identified by [docket number and/or 
Regulatory Information Number (RIN) number], by one of the following 
methods:
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     Mail: Written comments may be submitted to: Office of 
Child Support Enforcement, Attention: Director of Policy and Training, 
330 C Street SW, Washington, DC 20201.
    Instructions: All submissions received must include the agency name 
and docket number or RIN for this rulemaking. All comments received 
will be posted without change to https://www.regulations.gov, including 
any personal information provided.

[[Page 57771]]


FOR FURTHER INFORMATION CONTACT: Eliza Lowe, Senior Policy Specialist, 
the OCSE Division of Policy and Training, at [email protected]. Deaf 
and hearing impaired individuals may call the Federal Dual Party Relay 
Service at 1-800-877-8339 between 8 a.m. and 7 p.m. Eastern Time.

SUPPLEMENTARY INFORMATION:

Submission of Comments

    Comments should be specific, address issues raised by the proposed 
rule, and explain reasons for any objections or recommended changes. 
Additionally, we will be interested in comments that indicate agreement 
with the proposals. We will not acknowledge receipt of the comments we 
receive. However, we will review and consider all comments that are 
germane and are received during the comment period. We will respond to 
these comments in the preamble to the final rule. In this NPRM, we 
specifically seek public comment on the timeframe for the relief 
proposed, and whether the relief period should extend to include FFY 
2022.

Statutory Authority

    This NPRM is published under the authority granted to the Secretary 
of Health and Human Services by section 1102 of the Social Security Act 
(the Act) (42 U.S.C. 1302). Section 1102 of the Act authorizes the 
Secretary to publish regulations, not inconsistent with the Act, as may 
be necessary for the efficient administration of the functions with 
which the Secretary is responsible under the Act. The proposed relief 
from the Paternity Establishment Percentage performance penalty under 
this NPRM is based on statutory authority granted under section 
452(g)(3)(A) of the Act (42 U.S.C. 652(g)(3)(A)).

Justification

    The purpose of this proposed rule is to provide targeted and time-
limited relief to states from penalties due to the impact of the 
national public health emergency (PHE) caused by COVID-19 on state 
program performance. The pandemic has had an enormous adverse impact on 
child support services delivered by states under Title IV-D of the Act. 
Due to disruptions to state child support operations and to court 
operations during the PHE, states are experiencing significant workload 
burdens and service backlogs.
    In particular, states have indicated that the PHE has created 
numerous challenges in their ability to establish paternity/parentage 
in child support cases. Establishing paternity, a core function of the 
child support program as stated in section 452(a)(1) of the Act, is an 
essential step in securing a support order and ultimately support for a 
child. Because of the importance of paternity/parentage establishment 
in the success of the child support program, a state's paternity 
establishment performance, measured using the Paternity Establishment 
Percentage (PEP), is a federally-required performance measure under 
section 452(g) of the Act.
    While states have some discretion under their Title IV-D State Plan 
for their paternity and parentage establishment procedures and have 
developed programs that range from highly-administrative to more 
judicially-based, they also have commonalities in these procedures. 
States are required, for example, to have hospital-based, voluntary 
paternity acknowledgement programs to establish parentage for non-
marital birth families in uncontested cases and to have procedures for 
genetic testing in contested cases.
    The pandemic has made it difficult for state child support programs 
to perform many of the in-person functions needed to establish 
paternity/parentage. Barriers to this process include the limitations 
of on-site genetic-testing operations, office-staffing issues due to 
staff telework or illness, and people's inability to visit offices for 
case intake or genetic testing. In addition, many hospitals have 
limited visitation policies during the PHE, which led many states to 
suspend their hospital-based voluntary paternity/parentage 
establishment programs. Finally, in many jurisdictions, courts halted 
certain civil proceedings, including child support cases requiring 
paternity/parentage establishment.\1\ While most courts are now 
operational, child support cases remain backlogged.\2\ The situation 
continues to impact state's paternity establishment performance for FFY 
2021.
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    \1\ Hurst, John, ``PEP in a Pandemic Environment,'' NCSEA Child 
Support CommuiniQue, (April, 2021) and Fickler, Wade and Sarah 
Scherer, ``The NCSL Blog: COVID-19's Snowballing Effect on Child 
Support, Custody, Visitation, Economic Security'' (April 21, 2020).
    \2\ Ibid.
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    Since the start of the pandemic in early 2020, states have appealed 
for relief from program requirements in order to support their 
operations during the crisis. OCSE is able to provide certain 
flexibilities for administrative requirements under the Robert T. 
Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5170) 
(See OCSE Dear Colleague Letter 20-04: Flexibilities for State and 
Tribal Child Support Agencies during COVID-19 Pandemic \3\). However, 
these flexibilities do not extend to relief for financial penalties 
related to performance or adverse data reliability audit findings. 
States are concerned that PEP-related financial penalties, which like 
all child support performance penalties are imposed in the form of a 
reduction in the Temporary Assistance for Needy Families (TANF) program 
funding to states, place an undue burden on state budgets and threaten 
funding that supports the very families who are most in need during 
this time of crisis.
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    \3\ https://www.acf.hhs.gov/css/policy-guidance/flexibilities-state-and-tribal-child-support-agencies-during-covid-19-pandemic.
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    The adverse impact of the pandemic on paternity establishment is 
evident in the data. According to OCSE's FFY 2020 data, which are based 
on data that states submit and OCSE compiles, 41 out of the 54 states 
(50 states and the District of Columbia, Guam, Puerto Rico, and the 
Virgin Islands) experienced a decrease in their paternity establishment 
performance as measured by their PEP percentage. More problematic, 
according to these data, as many as 18 states appear to have failed to 
meet the 90 percent threshold and may be subject to financial penalties 
if they fail to take sufficient corrective action to achieve the 
appropriate PEP performance level in the subsequent year.
    This regulatory action is time sensitive because it must be in 
effect before states are subject to penalties and adverse data 
reliability audit findings. States are desperately seeking confirmation 
from OCSE that they will have relief from these penalties against their 
state TANF grants. Such penalties would be an overwhelming burden on 
state budgets and threaten critical funding needed during this COVID-19 
PHE.

Background: PEP Performance Requirement

    The PEP performance requirement, which is part of the overall 
performance, audit, penalties, and incentives system for child support, 
is established under 452(g) of the Act and 45 CFR 305.40. Section 
452(a)(4)(C)(i) of the Act requires the Secretary to determine whether 
State-reported data used to determine the performance levels are 
complete and reliable. Additionally, section 409(a)(8)(A) of the Act 
and 45 CFR 305.61(a)(1) provides for a financial penalty if there is a 
failure to achieve the required level of performance or an audit 
determines that the data is incomplete or unreliable.

[[Page 57772]]

    The minimum acceptable level of performance for the PEP is 90 
percent or an improvement of 2 to 6 percentage points over the previous 
year's level of performance. Section 409(a)(8) of the Act and 45 CFR 
305.61(a)(2) impose automatic corrective action for the subsequent 
fiscal year. A state also must submit complete and reliable data used 
in the PEP calculation, which will be audited according to 45 CFR 
305.60.
    If a state fails to meet the annual 90 percent PEP standard, or to 
show improvement in the subsequent year (2 to 6 percentage points), the 
amount of the initial penalty will be equal to one percent of the 
adjusted State Family Assistance Grant for the TANF program. A penalty 
against the TANF grant will also be imposed if the state fails to 
submit complete and reliable PEP data and there is an adverse data 
reliability audit finding for PEP in the subsequent year. The penalty 
will continue to be assessed in accordance with section 409(a)(8)(B) of 
the Act and 45 CFR 305.61 until the state is determined to have 
submitted complete and reliable data and achieved the required 
performance level. In accordance with 45 CFR 262.1(e)(1), the state 
must expend additional state funds equal to the amount of the penalty 
(which will not count toward the maintenance-of-effort requirement 
under TANF) the year after the TANF penalty is assessed.
    In recent years prior to the pandemic, OCSE has imposed an average 
of one penalty for PEP performance annually, as nearly all states have 
consistently met or exceeded the PEP performance measure. This 
indicates that the failure in performance in FFY 2020 is due to the 
unprecedented circumstances of the PHE. In addition, in the last ten 
years, OCSE has imposed no penalties due to adverse data reliability 
audit findings related to the PEP measure.

Proposed PEP Penalty Relief

    OCSE proposes providing relief through this regulation by modifying 
the requirements related to the PEP performance measure. Section 
452(g)(3) of the Act authorizes the Secretary ``to take into account 
such additional variables as the Secretary identifies (including the 
percentage of children in a State who are born out of wedlock or for 
whom support has not been established) that affect the ability of a 
State to meet the requirements of [section 452(g) of the Act].'' OCSE 
proposes that the effect of the COVID-19 PHE on states is one such 
additional variable, due to the unprecedented nature and scope of the 
pandemic's impact on the child support program as described above. 
Therefore, OCSE proposes modifying the required PEP to a lower 
performance threshold and setting aside adverse data reliability audit 
findings related to PEP, thereby allowing states that are not able to 
meet data performance and data reliability audit requirements to avoid 
the financial penalty for the years when the pandemic had its greatest 
impact on the child support program.
    OCSE proposes modifying the PEP threshold of 90 percent to a lower 
threshold of 50 percent for FFYs 2020 and 2021. The rationale for 
choosing 50 percent is based on the value of this percentage in Table 1 
under 45 CFR 305.33, Determination of applicable percentages based on 
performance levels. Fifty percent is the lowest possible PEP level in 
the table that still has performance value because it is the lowest PEP 
performance for which a state still gets credit in the calculation of 
incentives. Below 50 percent, the state's applicable percentage for PEP 
performance is valued at zero. In addition, we propose a 50 percent 
threshold because, according to OCSE's FFY 2020 data, no state has a 
FFY 2020 PEP level below 65 percent. Therefore, a PEP level of 50 
percent will ensure that no state will be subject to a financial 
penalty while state agency operations are disrupted due to the ongoing 
PHE.
    This proposed rule is time limited and data informed to provide 
relief narrowly and specifically in response to the ongoing PHE. We 
propose modifying the PEP threshold for FFYs 2020 and 2021 to align 
with the timeframe when states experienced the greatest impact of the 
public health emergency. After the relief period, starting for FFY 
2022, the PEP performance thresholds will revert back to the usual 
levels described under 45 CFR 305.40(a)(1), and states will once again 
be subject to penalties for adverse data reliability audit findings 
related to the PEP measure after an automatic corrective action year as 
specified in 45 CFR 305.42. In this NPRM, we specifically seek public 
comment on the timeframe for the relief proposed, and whether the 
relief period should extend to include FFY 2022.
    Finally, this proposed relief maintains the integrity of the system 
of performance, audit, penalties, and incentives that has driven 
success and accountability in the child support program for over two 
decades. The proposed regulation provides relief from the PEP measure 
and data reliability audit penalties but does not otherwise change the 
process for other performance measures, data collection and reporting, 
audits, or incentives.

Section-by-Section Discussion of the Provisions of This Proposed Rule

Section 305.61: Penalty for Failure To Meet IV-D Requirements.

    We propose to add a new provision to Part 305 Program Performance 
Measures, Standards, Financial Incentives and Penalties, to provide 
short-term relief from financial penalties related to the paternity 
establishment percentage measure, due to the impact of the COVID-19 
pandemic on state IV-D operations. We propose adding a new paragraph 
(e) to Sec.  305.61, Penalty for failure to meet IV-D requirements, to 
modify the criteria by which states are subject to financial penalties 
for the PEP requirements. The proposed modified criteria are that the 
acceptable performance level of paternity establishment percentage 
under Sec.  305.40(a)(1) is reduced from 90 percent to 50 percent and 
the adverse findings of data reliability audits of a state's paternity 
establishment data under Sec.  305.60 will not result in a financial 
penalty. The proposed modifications are applicable to FFYs 2020 and 
2021.
    In summary, the rationale for this NPRM, which proposes modifying 
the PEP requirements, is based on the statutory allowance under section 
452(g)(3)(A) of the Act that the Secretary may consider additional 
variables that affect a state's ability to meet PEP requirements due to 
the COVID-19 PHE. However, the proposed modifications are only for FFYs 
2020 and 2021. In addition, the proposed modifications are based on 
data that indicate PEP declined for 41 states during the pandemic, and 
approximately one third of states will be subject to a financial 
penalty related to these declines if they do not take sufficient 
corrective action in the subsequent corrective action year. During this 
COVID-19 PHE, OCSE has carefully considered the impact of the pandemic 
on state performance. The proposed regulation limits adding further 
burden on states by providing relief from penalties against state 
public assistance funding.

Paperwork Reduction Act

    No new information collection requirements are imposed by these 
regulations.

Regulatory Flexibility Analysis

    The Secretary certifies that, under 5 U.S.C. 605(b), as enacted by 
the Regulatory Flexibility Act (Pub. L. 96-354), this rule will not 
result in a significant impact on a substantial number of small 
entities. The primary impact is on State governments. State

[[Page 57773]]

governments are not considered small entities under the Regulatory 
Flexibility Act.

Regulatory Impact Analysis

Executive Orders 12866 and 13563

    Executive Orders 12866 and 13563 direct agencies to assess all 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). Executive 
Order 13563 emphasizes the importance of quantifying both costs and 
benefits, of reducing costs, of harmonizing rules, and of promoting 
flexibility. This rule meets the standards of Executive Order 13563 
because it creates a short-term public benefit, at minimal cost to the 
Federal Government, by not imposing penalties against a state's TANF 
grant, during a time when public assistance funds are critically 
needed.
    Executive Order 12866 provides that the Office of Information and 
Regulatory Affairs (OIRA) at the Office of Management and Budget (OMB) 
will review all significant rules. OIRA has determined that this NPRM 
is significant and was accordingly reviewed by OMB.
    A regulatory impact analysis (RIA) must be prepared for major rules 
with economically significant effects ($100 million or more in any one 
year). ACF does not anticipate that this proposed rulemaking is likely 
to have an economic impact of $100 million or more in any one year, and 
therefore does not meet the definition of ``economically significant'' 
under Executive Order 12866. Accordingly, OIRA has determined that this 
rulemaking is `not major' under Subtitle E of the Small Business 
Regulatory Enforcement Fairness Act of 1996 (also known as the 
Congressional Review Act).

Unfunded Mandates Reform Act of 1995

    The Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4) requires 
agencies to prepare an assessment of anticipated costs and benefits 
before issuing any rule that may result in an annual expenditure by 
state, local, and tribal governments, in the aggregate, or by the 
private sector, of $100 million or more (adjusted annually for 
inflation). That threshold level is currently approximately $164 
million. This rule does not impose any mandates on state, local, or 
tribal governments, or the private sector, that will result in an 
annual expenditure of $164 million or more.

Assessment of Federal Regulations and Policies on Families

    Section 654 of the Treasury and General Government Appropriations 
Act of 1999 requires Federal agencies to determine whether a proposed 
policy or regulation may affect family well-being. If the agency's 
determination is affirmative, then the agency must prepare an impact 
assessment addressing seven criteria specified in the law. This 
regulation does not impose requirements on states or families. This 
regulation will not have an adverse impact on family well-being as 
defined in the legislation.

Executive Order 13132

    Executive Order 13132 prohibits an agency from publishing any rule 
that has federalism implications if the rule either imposes substantial 
direct compliance costs on state and local governments and is not 
required by statute, or the rule preempts state law, unless the agency 
meets the consultation and funding requirements of section 6 of the 
Executive order. This rule does not have federalism impact as defined 
in the executive order.

List of Subjects in 45 CFR Part 305

    Child support, Program performance measures, standards, financial 
incentives, and penalties.

(Catalog of Federal Domestic Assistance Programs No. 93.563, Child 
Support Enforcement Program.)

JooYeun Chang,
Acting Assistant Secretary for Children and Families.
Xavier Becerra,
Secretary.

    For the reasons stated in the preamble, the Department of Health 
and Human Services proposes to amend 45 CFR part 305 as set forth 
below:

PART 305--PROGRAM PERFORMANCE MEASURES, STANDARDS, FINANCIAL 
INCENTIVES, AND PENALTIES

0
1. The authority citation for part 305 continues to read as follows:

    Authority:  42 U.S.C. 609(a)(8), 652(a)(4) and (g), 658a, and 
1302.

0
2. In Sec.  305.61 revise paragraph (e) to read as follows:


Sec.  305.61  Penalty for failure to meet IV-D requirements.

* * * * *
    (e) COVID-19 paternity establishment percentage penalty relief. Due 
to the adverse impact of the COVID-19 pandemic on State IV-D 
operations, the criteria by which states are subject to financial 
penalties for the paternity establishment percentage under paragraph 
(a) of this section are temporarily modified for fiscal years 2020 and 
2021 as follows:
    (1) The acceptable level of paternity establishment percentage 
performance under Sec.  305.40(a)(1) is modified for fiscal years 2020 
and 2021 from 90 percent to 50 percent, and
    (2) The adverse findings of data reliability audits of a State's 
paternity establishment data under Sec.  305.60 will not result in a 
financial penalty for fiscal years 2020 and 2021.
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[FR Doc. 2021-22553 Filed 10-18-21; 8:45 am]
BILLING CODE 4184-42-P