30446 Federal Register / Vol. 63, No. 107 /Thursday, June 4, 1998 / Proposed Rules

§ 1606.10 Final decision.

(a) If neither the Corporation nor the

recipient requests review by the

President, a recommended decision

shall become final 10 calendar days

after receipt by the recipient.

(b) The recipient or the Corporation

may seek review by the President of a

recommended decision. A request shall

be made in writing within 10 days after

receipt of the recommended decision by

the party seeking review and shall state

in detail the reasons for seeking review.

(c) The President’s review shall be

based solely on the information in the

administrative record of the termination

or debarment proceedings and any

additional submissions, either oral or in

writing, that the President may request.

(d) As soon as practicable after receipt

of the request for review of a

recommended decision, but not later

than 30 days after the request for

review, the President may adopt,

modify, or reverse the recommended

decision, or direct further consideration

of the matter. In the event of

modification or reversal, the President’s

decision shall conform to the

requirements of § 1606.9(b).

(e) The President’s decision shall

become final upon receipt by the

recipient.

§ 1606.11 Qualifications on hearing

procedures.

(a) The Corporation may

simultaneously take action to debar and

terminate a recipient within the same

hearing procedure that is set out in

§§ 1606.6 through 1606.10 of this part.

In such a case, the same hearing officer

shall oversee both the termination and

debarment actions.

(b) If the Corporation does not

simultaneously take action to debar and

terminate a recipient under paragraph

(a) of this section and initiates a

debarment action based on a prior

termination under § 1606.4(b) (1) or (2),

the hearing procedures set out in

§ 1606.6 through 1606.10 shall not

apply. Instead:

(1) The President shall appoint a

hearing officer to review the matter and

make a written recommended decision

on debarment.

(2) The hearing officer’s

recommendation shall be based solely

on the information in the administrative

record of the termination proceedings

providing grounds for the debarment

and any additional submissions, either

oral or in writing, that the hearing

officer may request.

(3) If neither party appeals the hearing

officer’s recommendation within 10

days of receipt of the recommended

decision, the decision shall become

final.

(4) Either party may appeal the

recommended decision to the President

who shall review the matter and issue

a final written decision pursuant to

§ 1606.9(b).

(c) All final debarment decisions shall

state the effective date of the debarment

and the period of debarment, which

shall be commensurate with the

seriousness of the cause for debarment

but shall not be for longer than 6 years.

(d) The Corporation may reverse a

debarment decision upon request for the

following reasons:

(1) Newly discovered material

evidence;

(2) Reversal of the conviction or civil

judgment upon which the debarment

was based;

(3) Bona fide change in ownership or

management of a recipient;

(4) Elimination of other causes for

which the debarment was imposed; or

(5) Other reasons the Corporation

deems appropriate.

§ 1606.12 Time and waiver.

Except for the 6-year time limit for

debarments in § 1606.11(c), any period

of time provided in these rules may,

upon good cause shown and

determined, be extended:

(a) By the designated employee who

issued the proposed decision until a

hearing officer has been appointed;

(b) By the hearing officer, until the

recommended decision has been issued;

(c) By the President at any time.

§ 1606.13 Interim funding.

(a) Pending the completion of

termination 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) Failure by the Corporation to meet

a time requirement of this part does not

preclude the Corporation from

terminating a recipient’s grant or

contract with the Corporation.

§ 1606.14 Recompetition.

After a final decision has been issued

by the Corporation terminating financial

assistance to a recipient in whole for

any service area, the Corporation shall

implement a new competitive bidding

process for the affected service area.

Until a new recipient has been awarded

a grant pursuant to such process, the

Corporation shall take all practical steps

to ensure the continued provision of

legal assistance in the service area

pursuant to § 1634.11.

PART 1625—[REMOVED AND

RESERVED]

For the reasons set out in the

preamble, and under the authority of 42

U.S.C. 2996g(e), 45 CFR part 1625 is

proposed to be removed and reserved.

Dated: May 29, 1998.

Victor M. Fortuno,

General Counsel.

[FR Doc. 98–14772 Filed 6–3–98; 8:45 am]

BILLING CODE 7050–01–P

LEGAL SERVICES CORPORATION

45 CFR Part 1623

Suspension Procedures

AGENCY: Legal Services Corporation.

ACTION: Proposed rule.

SUMMARY: This proposed rule

substantially revises the Legal Services

Corporation’s rule on procedures for the

suspension of financial assistance to

recipients to implement changes in the

law governing how the Corporation

deals with post-award grant disputes.

DATES: Comments should be received on

or before August 3, 1998.

ADDRESSES: Comments should be

submitted to the Office of the General

Counsel, Legal Services Corporation,

750 First St. NE., 11th Floor,

Washington, DC 20002–4250.

FOR FURTHER INFORMATION CONTACT:

Office of the General Counsel, 202–336–

8817.

SUPPLEMENTARY INFORMATION: The

Operations and Regulations Committee

(Committee) of the Legal Services

Corporation’s (LSC) Board of Directors

(Board) met on April 5, 1998, in

Phoenix, Arizona, to consider proposed

revisions to the Corporation’s rule on

procedures for suspending funding to

LSC recipients. The Committee made

several changes to the draft rule and

adopted this proposed rule for

publication in the Federal Register for

public comment. This proposed rule is

intended to implement major changes in

the law governing how the Corporation

deals with post-award grant disputes.

Prior to 1996, LSC recipients could

not be denied refunding, nor could their

funding be suspended or their grants

terminated, unless the Corporation

complied with sections 1007(a)(9) and

1011 of the LSC Act, 42 U.S.C. 2996 et

seq., as amended. For suspensions, the

Corporation could not suspend financial

assistance unless the recipient had been

provided reasonable notice and an

opportunity to show cause why the

action should not be taken. For

terminations and denials of refunding,
Federal Register / Vol. 63, No. 107 /Thursday, June 4, 1998 / Proposed Rules 30447

the Corporation was required to provide

the opportunity for a ‘‘timely, full and

fair hearing’’ before an independent

hearing examiner.

In 1996, the Corporation implemented

a system of competition for grants that

ended a recipient’s right to yearly

refunding. Under the competition

system, grants are now awarded for

specific terms, and, at the end of a grant

term, a recipient has no right to

refunding and must reapply as a

competitive applicant for a new grant.

The FY 1998 appropriations act made

additional changes to the law affecting

LSC recipients’ rights to continued

funding. See Pub. L. 105–119, 111 Stat.

2440 (1997). Section 501(b) of the

appropriations act provides that a

recipient’s hearing rights under sections

1007(a)(9) and 1011 are no longer

applicable to the provision, denial,

suspension, or termination of financial

assistance to recipients. This proposed

rule implements this new law as it

applies to suspensions. This proposed

rule would also remove 45 CFR part

1625 from the Code of Federal

Regulations as no longer consistent with

applicable law.

Another proposed rule, also in this

publication of the Federal Register,

deals with the new law as it applies to

terminations and denials of refunding.

See Proposed rule 45 CFR part 1606,

which would revise the Corporations’s

policies and procedures for terminations

and proposes to add provisions dealing

with debarments and recompetition.

The change in the law regarding

suspensions does not mean that grant

recipients have no hearing rights before

their funds are suspended.

Constitutional due process generally

requires that a discretionary grant

recipient is entitled to ‘‘some type of

notice’’ and ‘‘some type of hearing’’

before its grant funding can be

suspended or terminated during the

grant period. Stein, Administrative Law

at § 53.05(4). However, the new law

emphasizes a congressional intent to

strengthen the ability of the Corporation

to ensure that recipients are in full

compliance with the LSC Act and

regulations. See H. Rep. No. 207, 105th.

Cong., 1st Sess. 140 (1997). Accordingly,

under this proposed rule, the hearing

procedures for suspensions have been

streamlined. The changes emphasize the

seriousness with which the Corporation

takes its obligation to ensure that

recipients comply with the terms of

their grants and provide quality legal

assistance but, at the same time,

recipients are provided notice and a fair

opportunity to be heard before any

suspension action is taken.

Section-by-Section Analysis

Section 1623.1 Purpose

This section is revised to clarify the

purpose of a suspension, as opposed to

other sanctions the Corporation might

choose to apply to a recipient. A

suspension is one of several actions that

may be taken by the Corporation in a

post-award grant dispute to ensure the

compliance of LSC recipients with the

terms of their LSC grants. A suspension

is generally used by Federal agencies as

a temporary withdrawal of a grantee’s

authority to obligate or receive grant

funds, pending corrective action by the

grantee or a decision by the agency to

terminate the grant. Stein J.,

Administrative Law at § 53.02(3).

Suspensions are intended to be used in

emergency situations which require

prompt action and thus are normally not

subject to full administrative appeals.

Id. For example, the Corporation might

choose to suspend when quick action is

necessary to safeguard against a loss of

LSC funds or the Corporation believes

that prompt action will bring about

corrective action and prevent the likely

recurrence of violations.

Section 1623.2 Definition

The definition of suspension is

revised to clarify the nature of a

suspension and the differences between

a suspension and a termination. The

proposed definition states that a

suspension withholds funding to a

recipient until the end of the suspension

period. This means that when the

Corporation suspends funding after a

hearing under this part, it may only

withhold the funds until the end of the

suspension period as provided in

§ 1623.4(e) and (f). After the suspension

period, the Corporation returns the

funds to the recipient, and either begins

termination proceedings or determines

that the recipient is taking adequate

steps to cure the problem. By contrast,

a termination is a permanent taking of

a recipient’s financial assistance. When

the Corporation terminates funding, in

whole or in part, the funds are not

returned to the recipient, even if the

problems are cured at a later date.

Section 1623.3 Grounds for

Suspension

Paragraph (a) of this section sets out

the grounds for most suspensions. The

underlying reason for a suspension is a

substantial violation by the recipient of

the terms of its LSC grant. A decision to

suspend, rather than terminate, funding

will usually be made when the

Corporation has reason to believe that

prompt action is necessary to safeguard

LSC funds, effect an immediate cure for

the problem at issue, or prevent further

substantive harm.

A provision setting out new proposed

criteria for determining whether there

has been a ‘‘substantial violation’’ is

included in this section in paragraph

(b). The current rules on suspension,

termination and denial of refunding

include two different undefined

standards. Terminations or suspensions

are undertaken for substantial violations

and denial of refunding for significant

violations. Because there has been some

confusion over the years about the scope

of the meaning of the two standards, the

Committee included this paragraph in

the rule to provide better guidance to

recipients on what constitutes a

violation sufficient to constitute

grounds for a suspension action.

The proposed criteria include the

consideration of whether the violation is

intentional, the importance of the

restriction or requirement violated, and

whether the violation is of a serious

nature rather than merely technical or

minor. The Corporation would also

consider whether the immediate

problem is part of a history of violations

by the recipient. These criteria would

permit the Corporation to take action,

for example, for a single serious

violation.

The fourth criterion permits the

Corporation to consider whether the

violation was intentional. Although the

Committee included this criterion in the

proposed rule, it requests public

comment on other standards that might

be more appropriate: for example,

whether the recipient ‘‘knowingly and

willfully’’ committed the violation.

Paragraph (c) implements section 509

of the Corporation’s 1996 appropriations

act, which has been incorporated by the

Corporation’s FY 1998 appropriations

act. Section 509 requires recipients to

complete audits which are consistent

with the guidance promulgated by the

Office of Inspector General. In addition,

it authorizes the Corporation, after

receiving a recommendation from the

OIG, to suspend funding to a recipient

who fails to have an acceptable audit

and allows the Corporation to continue

the suspension until the recipient has

completed an acceptable audit. An audit

is acceptable when it is deemed to be

acceptable by the OIG. This generally

means that the audit is prepared

according to the OIG audit guidances,

which consist of the LSC Audit Guide

for Recipients and Auditors and any

relevant bulletins issued by the OIG.

Pursuant to this provision, the OIG

determines whether an audit is

acceptable and makes a

recommendation to the Corporation to

suspend. The Corporation then may
30448 Federal Register / Vol. 63, No. 107 /Thursday, June 4, 1998 / Proposed Rules

suspend and the suspension will be

ended when the OIG determines that the

audit is acceptable.

Section 1623.4 Suspension Procedures

The suspension procedures in this

section are substantially the same as in

the current rule, but are set out in a new

structure for clarity. However, several

changes have been made.

First, references to the employee who

ordered a suspension are replaced by a

reference to the Corporation. Second,

this section deletes the provision in

§ 1623.3(c) of the current rule that

requires the Corporation, except for

unusual circumstances, to give the

recipient an opportunity to take

effective corrective action before

suspending funding. Instead, paragraph

(a)(3) provides the Corporation the

flexibility needed in extraordinary

circumstances addressed by

suspensions to suspend funding before

corrective action has taken place.

However, the Corporation must identify

any corrective action the recipient can

undertake to avoid or end the

suspension in the proposed

determination.

Paragraph (a) of this section

authorizes the Corporation to issue a

written proposed determination to

suspend funding to the recipient. The

use of ‘‘proposed’’ before

‘‘determination’’ is intended to clarify

that the Corporation has not made a

prejudgment but rather has reason to

believe that grounds exist for a

suspension. The recipient then has the

burden to show cause why the

suspension should not take place. The

Committee seeks comments on whether

the language in the rule adequately

describes this intent.

The proposed determination is

required to state the grounds for the

action, identify the relevant facts and

documents underlying the

determination, specify any corrective

action the recipient may take, and

advise the recipient of its right to submit

written materials in response to the

proposed determination and to request

an informal hearing with the

Corporation. Paragraph (c) requires the

Corporation to consider all materials

and oral evidence presented under this

section and, if the Corporation thereafter

determines that grounds for a

suspension exist, the Corporation may

issue a written final determination to

suspend and shall provide that

determination to the recipient.

Paragraph (e) permits the Corporation

to rescind or modify the terms of the

final determination to suspend and,

after providing written notice to the

recipient, reinstate the suspension

without any additional proceedings

under this part. Paragraph (e) also states

that, except for suspensions for the

failure of a recipient to complete an

audit consistent with the guidance

promulgated by the Office of Inspector

General, a suspension shall not exceed

30 days, unless there is agreement

between the recipient and the

Corporation to extend the suspension

for up to 60 days. This reflects the

presumption that a suspension of too

long a duration would likely endanger

a recipient’s ability to function. A

suspension is intended to be used for

extraordinary circumstances when

prompt intervention is likely to bring

about immediate corrective action. At

some point, the Corporation should

either end the suspension because the

problem is solved and is unlikely to

reoccur, or because the recipient is

seriously attempting to come into

compliance; or initiate a termination

process under part 1606.

Paragraph (f) implements section 509

of Public Law 104–134, which requires

that suspensions for failure to have an

acceptable audit should last until the

recipient has completed an acceptable

audit.

Section 1623.5 Time Extension and

Waiver

This section provides that extensions

of time may be provided for good cause,

except for the time limits in § 1623.4(e).

It also permits any other provision of

this part to be waived or modified by

agreement of the recipient and the

Corporation for good cause.

Section 1623.6 Interim Funding

Generally, this section is the same as

in the current rule. It requires the

Corporation to continue funding the

recipient at the current level during

suspension proceedings. This is

necessary to prevent an injustice if the

proceedings reveal that a suspension is

not in order and to ensure the continued

availability of legal services to the poor

in the recipient’s service area. Paragraph

(b) provides that a failure of the

Corporation to meet a time requirement

does not preclude the Corporation from

suspending a recipient’s grant or

contract with the Corporation. See

Brock v. Pierce County, 476 U.S. 253

(1986).

List of Subjects in 45 CFR Part 1623

Administrative practice and

procedures, legal services.

For reasons set forth in the preamble,

LSC proposes to revise 45 CFR part 1623

to read as follows:

PART 1623—SUSPENSION

PROCEDURES

Sec.

1623.1 Purpose.

1623.2 Definition.

1623.3 Grounds for suspension.

1623.4 Suspension procedures.

1623.5 Time extensions and waiver.

1623.6 Interim funding.

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).

§ 1623.1 Purpose.

The purpose of this rule is to:

(a) Ensure that the Corporation is able

to take prompt action when necessary to

safeguard LSC funds or to ensure the

compliance of a recipient with

applicable provisions of law, or a rule,

regulation, guideline or instruction

issued by the Corporation, or the terms

and conditions of a recipient’s grant or

contract with the Corporation; and

(b) Provide procedures for prompt

review that will ensure informed

deliberation by the Corporation when it

has made a proposed determination that

financial assistance to a recipient

should be suspended.

§ 1623.2 Definition.

For the purposes of this part,

suspension means an action taken

during the term of the recipient’s

current grant or contract with the

Corporation that withholds financial

assistance to a recipient, in whole or in

part, until the end of the suspension

period pending corrective action by the

recipient or a decision by the

Corporation to initiate termination

proceedings.

§ 1623.3 Grounds for suspension.

(a) Financial assistance provided to a

recipient may be suspended when the

Corporation determines that there 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; and the Corporation has

reason to believe that prompt action is

necessary to:

(1) Safeguard LSC funds; or

(2) Ensure immediate corrective

action necessary to bring a recipient into

compliance with an applicable

provision of law, or a rule, regulation,

guideline or instruction issued by the

Corporation, or the terms and

conditions of the recipient’s grant or

contract with the Corporation.

(b) A determination of whether there

has been a substantial violation for the

purposes of paragraph (a) of this section
Federal Register / Vol. 63, No. 107 /Thursday, June 4, 1998 / Proposed Rules 30449

will be based on consideration of the

following criteria:

(1) The importance and number of

restrictions or requirements violated;

(2) The seriousness of the violation;

(3) The extent to which the violation

is part of a pattern; and

(4) Whether the violation was

intentional.

(c) Financial assistance provided to a

recipient may also be suspended by the

Corporation pursuant to a

recommendation by the Office of

Inspector General when the recipient

has failed to have an acceptable audit in

accordance with the guidance

promulgated by the Corporation’s Office

of Inspector General.

§ 1623.4 Suspension procedures.

(a) When the Corporation has made a

proposed determination, based on the

grounds set out in § 1623.3, that

financial assistance to a recipient

should be suspended, the Corporation

shall serve a written proposed

determination on the recipient. The

proposed determination shall:

(1) State the grounds and effective

date for the proposed suspension;

(2) Identify, with reasonable

specificity, any facts or documents

relied upon as justification for the

suspension;

(3) Specify what, if any, corrective

action the recipient can take to avoid or

end the suspension;

(4) Advise the recipient that it may

request, within 5 days of receipt of the

proposed determination, an informal

meeting with the Corporation at which

it may attempt to show that the

proposed suspension should not be

imposed; and

(5) Advise the recipient that, within

10 days of its receipt of the proposed

determination and without regard to

whether it requests an informal meeting,

it may submit written materials in

opposition to the proposed suspension.

(b) 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 5 days after the

recipient’s request is received.

(c) The Corporation shall consider any

written materials submitted by the

recipient in opposition to the proposed

suspension and any oral presentation or

written materials submitted by the

recipient at an informal meeting. If, after

considering such materials, the

Corporation determines that the

recipient has failed to show that the

suspension should not become effective,

the Corporation may issue a written

final determination to suspend financial

assistance to the recipient in whole or

in part and under such terms and

conditions the Corporation deems

appropriate and necessary.

(d) The final determination shall be

promptly transmitted to the recipient in

a manner that verifies receipt of the

determination by the recipient, and the

suspension shall become effective when

the final determination is received by

the recipient or on such later date as is

specified therein.

(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 30 days, unless the Corporation

and the recipient agree to a continuation

of the suspension for up to a total of 60

days without further proceedings under

this part.

(f) When the suspension is based on

the grounds in § 1623.3(c), a recipient’s

funds may be suspended until an

acceptable audit is completed.

§ 1623.5 Time extensions and waiver.

(a) Except for the time limits in

§ 1623.4(e), any period of time provided

in this part may be extended by the

Corporation for good cause. Requests for

extensions of time shall be considered

in light of the overall objective that the

procedures prescribed by this part

ordinarily shall be concluded within 30

days of the service of the proposed

determination.

(b) Any other provision of this part

may be waived or modified by

agreement of the recipient and the

Corporation for good cause.

§ 1623.6 Interim funding.

(a) Pending the completion of

suspension 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) Failure by the Corporation to meet

a time requirement of this part shall not

preclude the Corporation from

suspending a recipient’s grant or

contract with the Corporation.

Dated: May 29, 1998.

Victor M. Fortuno,

General Counsel.

[FR Doc. 98–14773 Filed 6–3–98; 8:45 am]

BILLING CODE 7050–01–P

DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety

Administration

49 CFR Part 571

[Docket No. NHTSA–98–3881; Notice 01]

RIN 2127–AH21

Federal Motor Vehicle Safety

Standards; Transmission Shift Lever

Sequence, Starter Interlock, and

Transmission Braking Effect

AGENCY: National Highway Traffic

Safety Administration (NHTSA),

Department of Transportation.

ACTION: Request for comments.

SUMMARY: NHTSA is considering

whether to issue a proposal to amend

the Federal motor vehicle safety

standard on transmission shift lever

sequence to add requirements for

vehicles without conventional

mechanical transmission shift levers.

This is in response to a petition received

from BMW of North America, Inc.

(BMW). BMW has been exploring the

possibility of producing vehicles with

electronically-controlled transmissions

that do not use the conventional

mechanical lever that, when engaged,

places the transmission in the desired

gear. Rather than conventional shift

levers, these systems would employ

shift mechanisms such as a rotary

switch, keypad, touch screen, joystick,

voice activation, or some other method.

Some of these designs, however, do not

comply with requirements in Standard

No. 102.

DATES: Comments must be received on

or before September 2, 1998.

ADDRESSES: Comments must refer to the

docket and notice numbers cited at the

beginning of this notice and be

submitted to: Docket Management,

Room PL–401, 400 Seventh Street SW.,

Washington, DC 20590. It is requested,

but not required, that two copies of the

comments be provided. The Docket

Section is open on weekdays from 10:00

a.m. to 5 p.m.

FOR FURTHER INFORMATION CONTACT: For

non-legal issues: Mr. Chris Flanigan,

Office of Safety Performance Standards,

NHTSA, 400 Seventh Street, SW,

Washington, DC 20590. Mr. Flanigan’s

telephone number is (202) 366–4918

and his facsimile number is (202) 366–

4329.

For legal issues: Ms. Dorothy Nakama,

Rulemaking Division, Office of Chief

Counsel, NHTSA, 400 Seventh Street,

SW, Washington, DC 20590. Ms.

Nakama’s telephone number is (202)