Federal Register / Vol. 65, No. 131 / Friday, July 7, 2000 / Rules and Regulations 41879

List of Subjects in 39 CFR Part 111

Administrative practice and

procedure, Postal Service.

PART 111—[AMENDED]

1. The authority citation for 39 CFR

Part 111 continues to read as follows:

Authority: 5 U.S.C. 552(a); 39 U.S.C. 101,

401, 403, 404, 414, 3001–3011, 3201–3219,

3403–3406, 3621, 3626, 5001.

2. Amend the following sections of

the Domestic Mail Manual as set forth

below:

M Mail Preparation and Sortation

* * * * *

M800 All Automation Mail

M810 Letter-Size Mail

Mail 1.0 BASIC STANDARDS

* * * * *

1.3 Documentation

[Amend 1.3 to read as follows:]

A complete, signed postage statement,

using the correct USPS form or an

approved facsimile, must accompany

each mailing and must be supported by

documentation produced by PAVEcertified (or, except for Periodicals,

MAC-certified) software or by

standardized documentation under

P012. Exception: For mailings of fewer

than 10,000 pieces, presort and rate

documentation is not required if postage

at the correct rate is affixed to each

piece or if each piece is of identical

weight and the pieces are separated by

rate when presented for acceptance.

Mailers may use a single postage

statement and a single documentation

report for all rate levels in a single

mailing. Standard Mail (A) mailers may

use a single postage statement and a

single documentation report for both an

automation carrier route mailing and a

mailing containing pieces prepared at 5-

digit, 3-digit, and basic automation rates

as applicable, submitted for entry at the

same time. Documentation of postage is

not required if the correct rate is affixed

to each piece or if each piece is of

identical weight and the pieces are

separated by rate when presented for

acceptance. Combined mailings of

Periodicals publications also must also

be documented under M200. First-Class

and Standard Mail (A) mailings

prepared under the value added refund

procedures or as combined mailings of

different postage payment methods or

different rates of postage affixed must

meet additional standardized

documentation requirements under

P014 and P760.

* * * * *

[Add new 1.8 to read as follows:]

1.8 Presentation

Upon presentation of letter-size

automation rate First-Class Mail and

Standard Mail (A) mailings to the Postal

Service for verification, mailers must

present all mixed AADC trays together,

and such trays must either be adjacent

to one another or side by side, and must

be placed as the top layer(s) on any

given container. Containerization

instructions for First-Class Mail letters

and cards may be established by local

Postal Service managers.

* * * * *

P Postage and Payment Methods

* * * * *

P700 Special Postage Payment

Systems

* * * * *

P760 First-Class or Standard Mail (A)

Mailings With Different Payment

Methods

* * * * *

2.0 POSTAGE

* * * * *

2.3 Precanceled Pieces—First-Class

Mail

[Amend 2.3 by revising the first

sentence to read as follows:]

Pieces with precanceled stamps in a

combined mailing must not weigh more

than 1 ounce and must bear postage in

any denomination of precanceled

stamps permitted in a Presorted or

automation rate mailing. Additional

postage due for precanceled stamp

pieces in a combined mailing is

deducted from the mailer’s postage due

advance deposit account. Full postage at

single-piece First-Class Mail rates must

be paid on accompanying single-piece

rate mail using one of the methods

under P100. Additional preparation to

verify postage due may be required by

the Postal Service.

* * * * *

An appropriate amendment to 39 CFR

111.3 will be published to reflect these

changes.

Stanley F. Mires,

Chief Counsel, Legislative.

[FR Doc. 00–17094 Filed 7–6–00; 8:45 am]

BILLING CODE 7710–12–U

LEGAL SERVICES CORPORATION

45 CFR Part 1635

Timekeeping Requirement

AGENCY: Legal Services Corporation.

ACTION: Final rule.

SUMMARY: This final rule revises the

Legal Services Corporation’s rule on

timekeeping to assure that allocations of

expenditures of LSC funds are

supported by accurate records. The final

rule requires that recipient time records

for attorneys and paralegals reflect the

date as well as the amount of time spent

on each case, matter or supporting

activity. The final rule also requires that

part-time attorneys and paralegals who

also work for organizations that engage

in restricted activities certify that they

have not worked on such restricted

activities (except for de minimis actions)

during any time for which they are

compensated with LSC funds nor used

recipient resources for restricted

activities. Finally, the final rule adds a

definition for the term restricted

activities.

EFFECTIVE DATE: This final rule is

effective on August 7, 2000.

FOR FURTHER INFORMATION CONTACT:

Mattie C. Condray, Senior Assistant

General Counsel, Office of Legal Affairs,

Legal Services Corporation, 750 First

Street, N.E., Washington, DC 20002–

4250; 202–336–8817;

mcondray@lsc.gov.

SUPPLEMENTARY INFORMATION: The

publication of this final rule completes

a process dating back to early 1998. In

February of that year, the LSC’s Office

of Inspector General (OIG) issued a

Summary Report on Audits of Selected

Grantees for Compliance with Selected

Regulations which found that

timekeeping records could not

demonstrate that recipients’ part-time

attorneys and paralegals do not work on

restricted activities during any time for

which they are compensated by the

recipient for their services. The OIG

recommended that the LSC revise its

timekeeping rule to require that parttime attorneys and paralegals maintain

timekeeping records for all hours

worked for the recipient by date and

time of day. The Operations and

Regulations Committee (Committee) of

the LSC Board of Directors (Board) met

in September 1998, to consider the OIG

recommendation and other proposed

revisions to the existing timekeeping

rule. Following that meeting, LSC

published a Notice of Proposed

Rulemaking (NPRM) for public

comment on October 22, 1998 (63 FR

56594).

Under the existing rule, all recipients

are required to keep contemporaneous

records of the amount of time their

attorneys and paralegals spend on each

case, matter or supporting activity. The

NPRM proposed three changes to this

41880 Federal Register / Vol. 65, No. 131 / Friday, July 7, 2000 / Rules and Regulations

basic requirement. First, LSC proposed

that full-time attorneys and paralegals

be required to record the date that time

was spent on each case, matter or

supporting activity, in addition to the

amount of time spent. The second

proposed change would have required

that time records for part-time attorneys

and paralegals who also work for

organizations which engage in restricted

activities (a term of art referring to those

activities in which organizations

receiving LSC funding may not engage

due to statutory and regulatory

limitations) provide the date and exact

time of day for time spent on each case,

matter or supporting activity. The third

change proposed that time records for

both full-time and part-time attorneys

and paralegals be consistent with the

recipient’s time and attendance records

used for payroll purposes.

In addition to the proposed changes to

the text of § 1635.3(b)(1), LSC requested

comment on whether LSC should, as an

alternative to the date and time of day

record requirement being proposed for

part-time attorneys and paralegals,

require such employees to certify in

writing that they had not engaged in any

restricted activities during any time for

which they were paid by the recipient.

The NPRM did not contain any

proposed language relating to a

certification requirement, but invited

comment on the matter of certification

or other alternatives to the

recordkeeping requirement that might

address the OIG’s concerns.

Most of the comments LSC received

on the NRPM preferred the certification

option over the date and time of day

record proposed on the basis that the

requirement to keep records by time of

day was too onerous given the typical

workday patterns of legal services

attorney and paralegals. Some

commenters also objected to the

proposal that all attorney and paralegal

time records reflect the date as well as

the amount of time spent as unnecessary

and administratively burdensome. Many

of the comments also objected to the

proposal that time records be consistent

with payroll records, fearing that the

proposal would place recipients in

jeopardy of being in non-compliance

with the Fair Labor Standards Act.

The Committee met in February 1999,

to consider the comments on the NPRM.

After considering the comments

received, along with the

recommendations of the OIG and staff,

the Committee decided to retain certain

elements of the NPRM, revise others,

and to republish the proposed rule for

further public comment. The new

proposed rule (‘‘republished NPRM’’),

issued on April 5, 1999 (64 FR 16383),

replaced the previous proposal that

part-time attorneys and paralegals be

required to record the exact date and

time for time worked with a certification

requirement. Under a new proposed

§ 1635.3(e), LSC proposed to require

part-time attorneys and paralegals who

also work for organizations that engage

in restricted activities to certify on a

quarterly basis that they had not worked

on restricted activities during any time

for which they were compensated with

LSC funds nor used recipient resources

for restricted activities. The proposed

certification requirement contained an

exception for de minimis activities,

acknowledging that certain activities,

such as opening or briefly screening

mail or taking a phone call to schedule

another time to discuss restricted

activity matters, are often unavoidable.

Related to this issue, the republished

NPRM added a new § 1635.2 (c),

containing a proposed definition of

‘‘restricted activities.’’

The republished NPRM retained the

previously proposed requirement that

all attorney and paralegal time records

provide the date for each timekeeping

entry. LSC was not convinced that this

requirement would pose an undue

administrative burden on recipients and

that reference to a particular timeframe

was necessary to an understanding of

the records. The republished NPRM,

however, did invite specific comment

from those recipients whose current

recordkeeping systems did not include

recording by date on the anticipated

effect of the proposal.

Finally, LSC deleted the previously

proposed requirement that time keeping

records be consistent with payroll

records. Although LSC did not agree

with the comments that the proposal

would require recipients to run afoul of

the Fair Labor Standards Act, LSC

determined that the proposed

recordkeeping consistency requirement

was not necessary. The original

proposal was intended to address a

problem related to timekeeping records

in a period during which many

recipients were divesting themselves of

matters which they were no longer

permitted to handle as the result of

legislative changes to the program in

1996. Since that time, however, the

divestitures have been completed and

LSC staff and OIG agreed that the risk

of non-compliance with the new

restrictions has decreased significantly,

eliminating the need for consistency

between payroll and timekeeping

records. Thus, in light of the changed

circumstances and the concerns raised

by the comments, LSC decided simply

to drop this proposal from the

republished NPRM.

LSC received three comments on the

republished NPRM. All of the comments

generally favored the certification

approach over the earlier proposal

requiring part-time attorneys and

paralegals to keep time by recording the

exact time of day for each case, matter

or supporting activity. The comments

suggested making some specific changes

to the language in several of the sections

to improve what the commenters

considered the clarity of the language

rather than the substance of the

proposed requirements. These

comments are discussed at greater

length in the Section-by-Section

Analysis, below.

After a meeting in November 1999 to

consider the comments and staff report

on the republished NPRM, the

Committee made a number of additional

revisions to the rule and voted to

recommend to the Board that the rule be

adopted as revised. Subsequently, the

Board adopted as final the Committee’s

revised and reported version of the rule,

as set forth below.

Section-by-Section Analysis

Section 1635.1 Purpose

The final rule retains the provisions of

the current rule. No comments were

received on this section.

Section 1635.2 Definitions

The final rule adopts in § 1635.2(c), a

modified definition of the term

‘‘restricted activities’’ to clarify the

meaning of that term as used in the

certification requirement (§ 1635.3(d)).

Restricted activities are now defined as

those activities that are prohibited in 45

CFR part 1610.

Restricted activities is a term of art

which refers to activities which

recipients are statutorily prohibited

from engaging in by the LSC Act or

Section 504 of the 1996 LSC

appropriations act. The term is defined

at length in the LSC’s regulations

relating to the use of non-LSC funds,

transfer of LSC funds and program

integrity at 45 CFR 1610.2 (a) and (b).

See 62 FR 27695 (May 21, 1997).

Because these definitions cite to the

restrictions’ statutory sources and each

restriction’s implementing regulation, if

available, LSC proposed to define

‘‘restricted activities’’ as those activities

inconsistent with section 504 in 45 CFR

1610.2 (a) and (b).

Several commenters requested that

LSC clarify the definition. Upon further

reflection, LSC determined that

although the § 1610.2 definitions list the

types of activities that are restricted by

law, other portions of part 1610 provide

additional useful information. For

Federal Register / Vol. 65, No. 131 / Friday, July 7, 2000 / Rules and Regulations 41881

example, part 1610 also contains

information which explains the scope of

the restrictions, especially in regard to

the types of funds that may not be used

for various activities. LSC, accordingly,

is changing the definition of ‘‘restricted

activities’’ in this final rule to refer to

the use of that term in the entirety of

part 1610. LSC believes that making

reference to part 1610 for definition of

the ‘‘restricted activities’’ will

sufficiently inform recipients as to the

intended meaning and scope of the

term, as they should be well versed in

the provisions of part 1610 whose

violations have serious implications for

their LSC funding. LSC also believes

that the revised definition clarifies that

nothing in the proposed rule is intended

to expand the scope of any restriction or

the type of recipient funds implicated

by a particular statutory or regulatory

restriction.

The final rule retains, with minor

clarifying changes, the definition of

matter in 1635.2(b). The term ‘‘referral’’

is added to the list of examples of

indirect services to clarify that the

process of interviewing an applicant,

determining eligibility and making a

referral to a PAI attorney or other agency

is a matter.

The final rule retains the definitions

of case in 1635.2(a) and supporting

activity in 1635.2(d).

Section 1635.3 Timekeeping

Requirement

Section 1635.3(b)(1) of the final rule

adopts a requirement that all recipient

attorneys and paralegals provide the

date as well as the amount of time spent

on each case, matter or supporting

activity in their time-keeping records.

LSC believes that timekeeping records

have little significance unless put into

the context of a particular time frame.

The previous rule already implied a

connection between timekeeping

records and a particular date because it

required that timekeeping records be

made contemporaneously. In practice,

the timekeeping records of most LSC

recipients already provide the date in

their timekeeping records. Thus, LSC

did not consider the proposal to add a

date requirement to the regulation to be

burdensome. Nonetheless, when the

proposed rule was republished, LSC

requested those recipients whose

records did not provide the date to

comment on how the requirement might

affect their programs. No comments

were received on this particular issue.

Rather, one comment on the date

requirement stated that it was not an

unreasonable additional burden on

recipients, in part because most current

timekeeping systems used by LSC

recipients already include the date in

the information routinely collected.

Accordingly, LSC has adopted the date

requirement in the final rule.

The final rule contains a new

paragraph (d) (corresponding to

proposed paragraph (e) in the

republished NPRM) requiring that any

attorney or paralegal who works parttime for a recipient and part-time for an

organization that engages in restricted

activities to certify in writing that, with

the exception of de minimis actions, he

or she has not worked on restricted

activities during the time he or she was

being compensated by the recipient, nor

used recipient resources for restricted

activities. Paragraph (d) also sets forth a

standard for determining if an action

can be classified as de minimis: de

minimis actions are those that are of

little substance; require little time; are

not initiated by the part-time attorney or

paralegal; and, for the most part, are

unavoidable.

Activities that would meet the

standard include answering the

telephone and establishing another nonLSC program time with the caller to

discuss the restricted activity, or

opening and briefly screening mail.

Actions that would not meet this

standard include researching, preparing

legal documents, meeting with or

providing advice to the client and

conferring with third parties on behalf

of the client. Although the examples

listed above are not intended to provide

an exhaustive list of permissible and

impermissible actions, LSC cautions

recipients that it intends to interpret the

de minimis standard strictly to permit

only a very narrow range of actions. LSC

is taking this position in order to ensure

that part-time attorneys and paralegals

are not engaged in restricted activities

while being compensated by the

recipient or using recipient resources for

restricted activities.

In the republished NPRM, the

proposed regulatory text for this

paragraph contained examples of de

minimis actions. Two comments

requested that LSC provide additional

examples of permitted actions and

clarify the meaning of the exception.

Rather than cluttering up the regulatory

text with additional examples, LSC

believes that it is better to set forth a

standard for de minimis actions in the

regulatory text and include a discussion

and examples of de minimis actions in

the preamble. The final rule reflects this

judgment.

The proposed regulatory text and the

related preamble discussion had stated

that the certification requirement did

not apply to de minimis actions ‘‘related

to a restricted activity that does not

involve working on the restricted

activity.’’ LSC received a comment

noting that the references to ‘‘working

on the related activity’’ constitute a

tautology that reiterates the same

concept without providing sufficient

guidance on the scope of the exception.

LSC agrees that the reference to

‘‘working on restricted activities’’ is

vague and repetitive. Accordingly, that

phrase has been deleted from the final

rule.

LSC also received comments

suggesting adding the term ‘‘nonsubstantive’’ after de minimis. LSC has

determined that the term ‘‘nonsubstantive’’ should not be added to the

regulation because it does not clarify the

meaning of de minimis. The meaning of

de minimis (trifling; small matter; of

little importance) is sufficiently similar

to that of the term ‘‘non-substantive’’

(small amount; having little practical

importance) that including both terms

would be repetitive and not helpful.

One comment suggested replacing

‘‘works’’ with ‘‘is employed’’ to clarify

that the part-time attorney or paralegal

has an employee/employer relationship

with the recipient. For the purposes of

this rule, either term has the same

meaning. Accordingly, the final rule

retains the term ‘‘works’’ as proposed,

without change.

Another comment requested a

clarification that the term ‘‘time period’’

refers to the specific hours or work days

the part-time attorney or paralegal is

expected to work for the recipient rather

than payroll periods during which the

employee may work part-time for both

the recipient and another organization

that engages in restricted activities. LSC

has deleted the word ‘‘period’’ from the

final rule so that the language makes

clear that the time referred to is the

specific time the attorney or paralegal

works for the recipient and for which he

or she is paid by the recipient.

The final rule requires that

certifications be made quarterly on a

form determined by LSC. The

republished NPRM proposed that

certifications be made to LSC on a

quarterly basis on dates established by

LSC. One comment questioned the need

for quarterly certifications stating that

such frequent reporting would put a

significant administrative burden on the

recipient. The comment also suggested

that LSC not establish a specific date on

which a certification needs to be made,

but require certification on or before a

particular date instead. One comment

also noted that the LSC has not always

provided recipients with the

appropriate forms in a timely manner.

LSC disagrees that the quarterly

requirement would impose a significant

41882 Federal Register / Vol. 65, No. 131 / Friday, July 7, 2000 / Rules and Regulations

administrative burden on recipients, but

agrees that it is unnecessary for LSC to

set a date upon which the certification

is due. The final rule reflects these

determinations. In addition, the final

rule requires LSC to provide recipients

with an appropriate form by the

effective date of the final rule.

LSC received one comment suggesting

that LSC require recipients to submit the

certifications to LSC. LSC does not

believe such a requirement is necessary.

The certification requirement is

intended to be a recordkeeping rather

than a reporting requirement. The

information is to be maintained by

recipients so that it is available to

auditors or LSC staff for annual audits

or on-site reviews. A recipient would

need to submit certifications to LSC

only when requested to do so by LSC.

Accordingly, this suggestion has not

been adopted in the final rule.

The final rule eliminates the old

paragraph (c) because it is outdated.

This paragraph required that the time

keeping system must be implemented

within 30 days of the effective date of

the regulation or within 30 days of the

effective date of a grant or contract,

whichever is later. The preamble states

that the final rule becomes effective 30

days after publication. LSC management

routinely provides new grantees with

deadlines for compliance with various

grant requirements, such as governing

board composition and reporting

requirements. Thus, the continued

inclusion of this requirement is not

necessary. This change was not

contained in either the original or

republished NPRMs, but as it is a

technical, procedural change that has no

adverse effect on recipients subject to

this rule it may be made without prior

public notice and comment. 5 U.S.C.

553(b).

In the final rule, paragraph (d) is

relettered as (c) and contains a minor

conforming language change. The final

rule deletes the phrase ‘‘from the time

of implementation.’’ The timekeeping

system must be capable of aggregating

the time record information on both

closed and pending cases by the legal

problem type from the commencement

of the case. The deleted phrase is

confusing and unnecessary.

Section 1635.4 Administrative

Provisions

The final rule retains the provisions of

the current rule. No comments were

received on this section.

For reasons set forth above, LSC

revises 45 CFR part 1635 to read as

follows:

Sec.

1635.1 Purpose.

1635.2 Definitions.

1635.3 Timekeeping requirement.

1635.4 Administrative provisions.

Authority: 42 U.S.C. 2996e(b)(1)(A),

2996g(a), 2996g(b), 2996g(e).

§ 1635.1 Purpose.

This part is intended to improve

accountability for the use of all funds of

a recipient by:

(a) Assuring that allocations of

expenditures of LSC funds pursuant to

45 CFR part 1630 are supported by

accurate and contemporaneous records

of the cases, matters, and supporting

activities for which the funds have been

expended;

(b) Enhancing the ability of the

recipient to determine the cost of

specific functions; and

(c) Increasing the information

available to LSC for assuring recipient

compliance with Federal law and LSC

rules and regulations.

§ 1635.2 Definitions.

As used in this part—

(a) A case is a form of program service

in which an attorney or paralegal of a

recipient provides legal services to one

or more specific clients, including,

without limitation, providing

representation in litigation,

administrative proceedings, and

negotiations, and such actions as advice,

providing brief services and

transactional assistance, and assistance

with individual PAI cases.

(b) A matter is an action which

contributes to the overall delivery of

program services but does not involve

direct legal advice to or legal

representation of one or more specific

clients. Examples of matters include

both direct services, such as but not

limited to, community education

presentations, operating pro se clinics,

providing information about the

availability of legal assistance, and

developing written materials explaining

legal rights and responsibilities; and

indirect services, such as training,

continuing legal education, general

supervision of program services,

preparing and disseminating desk

manuals, PAI recruitment, referral,

intake when no case is undertaken, and

tracking substantive law developments.

(c) Restricted activities means those

activities that recipients may not

undertake as set out in 45 CFR part

1610.

(d) A supporting activity is any action

that is not a case or matter, including

management in general, and fundraising.

§ 1635.3 Timekeeping requirement.

(a) All expenditures of funds for

recipient actions are, by definition, for

cases, matters, or supporting activities.

The allocation of all expenditures must

be carried out in accordance with 45

CFR part 1630.

(b) Time spent by attorneys and

paralegals must be documented by time

records which record the amount of

time spent on each case, matter, or

supporting activity.

(1) Time records must be created

contemporaneously and account for

time by date and in increments not

greater than one-quarter of an hour

which comprise all of the efforts of the

attorneys and paralegals for which

compensation is paid by the recipient.

(2) Each record of time spent must

contain: for a case, a unique client name

or case number; for matters or

supporting activities, an identification

of the category of action on which the

time was spent.

(c) The timekeeping system must be

able to aggregate time record

information on both closed and pending

cases by legal problem type.

(d) Recipients shall require any

attorney or paralegal who works parttime for the recipient and part-time for

an organization that engages in

restricted activities to certify in writing

that the attorney or paralegal has not

engaged in restricted activity during any

time for which the attorney or paralegal

was compensated by the recipient or has

not used recipient resources for

restricted activities. The certification

requirement does not apply to a de

minimis action related to a restricted

activity. Actions consistent with the de

minimis standard are those that meet all

or most of the following criteria: actions

that are of little substance; require little

time; are not initiated by the part-time

employee; and, for the most part, are

unavoidable. Certifications shall be

made on a quarterly basis and shall be

made on a form determined by LSC.

§ 1635.4 Administrative provisions.

Time records required by this section

shall be available for examination by

auditors and representatives of LSC, and

by any other person or entity statutorily

entitled to access to such records. LSC

shall not disclose any time record

except to a Federal, State or local law

enforcement official or to an official of

an appropriate bar association for the

purpose of enabling such bar association

official to conduct an investigation of an

alleged violation of the rules of

professional conduct.

Victor M. Fortuno,

General Counsel and Vice President for Legal

Affairs.

[FR Doc. 00–17130 Filed 7–6–00; 8:45 am]

BILLING CODE 7050–01–P