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[Federal Register Volume 87, Number 103 (Friday, May 27, 2022)]
[Rules and Regulations]
[Pages 32090-32094]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-11391]

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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: Final rule.

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SUMMARY: Due to the impact of the COVID-19 public health emergency 
(PHE) on State child support program operations, OCSE modifies the 
Paternity Establishment Percentage (PEP) from the 90 percent 
performance threshold to 50 percent for Federal Fiscal Years (FFY) 
2020, 2021, and 2022 in order for a State to avoid a financial penalty. 
OCSE also provides that adverse findings of data reliability audits of 
a State's paternity establishment data will not result in a financial 
penalty in FFYs 2020, 2021, and 2022.

DATES: This rule is effective on May 27, 2022.

FOR FURTHER INFORMATION CONTACT: Kimberly Smith, Senior Advisor, OCSE 
Division of Policy and Training, at [email protected] or (202) 401-
5679. 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:

I. Statutory Authority

    This rule 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 relief from the 
PEP performance penalty under this rule is based on statutory authority 
granted under section 452(g)(3)(A) of the Act (42 U.S.C. 652(g)(3)(A)).

II. Background

    This rule provides targeted and time-limited relief to States from 
penalties due to the impact of the national 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, especially on paternity/parentage establishment, a core 
function of the child support program under section 452(a)(1) of the 
Act.
    A State's paternity establishment performance, measured using the 
PEP, is a federally required performance measure under section 452(g) 
of the Act. Penalties related to the PEP performance measure are 
imposed as a reduction in the Temporary Assistance for Needy Families 
(TANF) program funding to States.
    Section 452(g)(3) of the Act authorizes the Secretary ``to take 
into account such additional variables as the Secretary

[[Page 32091]]

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 [PEP performance measures] 
requirements of [section 452(g) of the Act].'' 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.
    FFY 2020 data indicated PEP performance declined for 41 States 
during the pandemic, with approximately one-third of States subject to 
a financial penalty if they did not take sufficient corrective action 
in FFY 2021. FFY 2021 preliminary data indicate that nine of the States 
that faced a financial penalty for PEP performance for FFY 2020, along 
with four new States, would be assessed penalties without this rule.
    In this rule, OCSE modifies the required PEP to a lower performance 
threshold of 50 percent for FFYs 2020, 2021, and 2022 and sets aside 
adverse data reliability audit findings related to PEP. This allows 
States that are not able to meet the PEP performance measure and data 
reliability audit requirements to avoid the financial penalty for FFYs 
2020, 2021, and 2022 when the pandemic had its greatest impact on the 
child support program. Based on preliminary performance data submitted 
by States for FFY 2020 and 2021, 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 rule is time-limited and data-informed to provide relief 
narrowly and specifically in response to the ongoing PHE for FFYs 2020, 
2021, and 2022. After the relief period, starting for FFY 2023, the PEP 
performance thresholds will revert back to the usual levels described 
under section 452(g) of the Act and 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.
    The relief in this final rule 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 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.

III. Summary Description of the Regulatory Provision

    The notice of proposed rulemaking (NPRM) was published in the 
Federal Register on October 19, 2021 (86 FR 57770 through 57773). The 
comment period ended November 18, 2021.
    OCSE received 26 sets of comments from States, organizations, and 
other interested entities and individuals, which were posted on 
www.regulations.gov.

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

    In the NPRM, we proposed 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 PEP measure due to the impact of the COVID-19 PHE on 
State IV-D operations. Specifically, we proposed 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 modified criteria are that the 
acceptable performance level of PEP measure 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 modifications, 
as proposed, are applicable to FFYs 2020 and 2021. In the NPRM, we 
specifically requested public comment on the timeframe for the relief 
and whether the relief period should be extended to include FFY 2022.
    The vast majority of commenters supported the proposed relief and 
supported the extension of the timeframe to FFY 2022. We received one 
comment from an individual opposed to the regulation all together and a 
comment supporting the relief but not the extension of the relief 
period to FFY 2022. In drafting the final rule, the following are 
OCSE's Response to Comments including the rationale for any changes 
made to the proposed rule and a final summary of regulatory changes. In 
addition, for clarity and emphasis, in the final rule, OCSE also added 
a reference to 452(g)(A) of the Act, which is the specific statutory 
cite that provides the Secretary with discretionary authority to modify 
the required PEP level.

IV. Response to Comments

    Comment 1: State agencies, child support organizations, child 
support professionals, and other entities and individuals who submitted 
comments were unequivocal in their support of the proposed relief and 
rationale described in the NPRM.
    One commenter agreed with the conclusion in the NPRM that across-
the-board State reductions in the PEP levels in FFY 2020 are directly 
attributable to the pandemic, based on performance trends for the last 
10 years. Up until FFY 2020, almost all States achieved PEP levels 
above 90 percent each year.
    Most commenters mentioned the variety of impacts of the pandemic on 
the ability to obtain voluntary acknowledgments of paternity. For 
example, one commenter described multiple effects of the pandemic on 
voluntary acknowledgment processes: (1) Restrictions preventing fathers 
access to the hospital after a mother gives birth; (2) closure of local 
vital statistics offices; (3) restrictions preventing hospital access 
by State staff and contractors who provide training, technical 
assistance, and monitoring to hospital staff administering voluntary 
paternity programs; and (4) staffing shortages resulting in hospital 
staff sending paternity acknowledgment paperwork home with the mother 
rather than completing it at the hospital.
    One commenter described the compounded performance problem in their 
State because their program has historically had a very strong in-
hospital, voluntary acknowledgment program. In this State, children 
whose paternity was not acknowledged through the in-hospital program 
due to pandemic restrictions must now be acknowledged at the city or 
town municipality or through the judicial process. These latter 
processes are more complex, may involve fees, take longer, and also are 
impacted by the pandemic.
    Most commenters, especially from States with judicial-based child 
support programs, described the large and ongoing impact of the 
pandemic on court systems, where courts were initially closed and legal 
actions delayed, and where backlogs persist. One commenter noted that 
even as the courts and child support offices have shifted to virtual 
processes, the new mode of working has reduced productivity in some 
jurisdictions. Also, the pandemic has reduced in-person office visits, 
administrative proceedings, and court hearings.
    Several commenters noted the disruption to genetic testing programs 
due to child support office closures, court closures, and staffing 
shortages. One commenter noted the challenge of being able to access 
alternate testing sites, such as prisons and correctional facilities. A 
commenter described the

[[Page 32092]]

efforts to relocate their State's genetic testing services from 
courthouses in response to the pandemic and noted that genetic testing 
appointment attendance rates for alleged fathers declined 20 percent 
and for mothers declined 24 percent, compared to pre-pandemic rates. A 
commenter noted that genetic testing programs were also impacted 
because clinical laboratory resources were diverted for pandemic-
related testing.
    Commenters also described other kinds of barriers that impacted PEP 
performance. One State commenter described that they are unable to 
legally serve parties by mail, as certified mail is now being marked 
``COVID-19'' and found insufficient for legal service. Two commenters 
noted that the pandemic suspension of cooperation requirements for TANF 
recipients has removed an important tool that incentivized recipients 
to attend appointments necessary for paternity establishment.
    Notably, several States that will not be subject to PEP penalties, 
either because they met PEP performance during the pandemic or they 
expect to meet performance in the corrective action year, support 
providing the relief to other States under these pandemic 
circumstances.
    Several commenters particularly noted the need for the relief to be 
finalized as soon as possible to help States plan resources during 
these challenging times. One commenter discussed the additional costs 
to programs to respond to the disaster and that the demand of meeting 
PEP standards, which has always been challenging, places further stress 
on the programs. Confirmation of penalty relief in this rule would 
allow programs to focus on recovery and restoration of pre-pandemic 
performance. One commenter noted their State had requested PEP penalty 
relief from OCSE early in the pandemic 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). However, the Stafford Act 
flexibilities do not extend to relief for financial penalties related 
to performance or adverse data reliability audit findings.
    Response 1: Based on the overwhelming support for the proposed 
relief from penalties related to the PEP measure, for the reasons 
described in the NPRM and by the majority of commenters, OCSE agrees 
that this relief is needed and should be provided. The COVID-19 
pandemic is unprecedented; time-limited, targeted relief from PEP-
related performance penalties is appropriate.
    Comment 2: One individual opposed the relief, disagreeing that 
COVID-19 was a reason for reducing the PEP performance threshold to 50 
percent. The commenter stated that this relief was not needed in other 
pandemics and State child support agencies should try like everyone 
else to work virtually or even go back to mailing in the genetic tests. 
Finally, the commenter stated this relief is unfair to children who 
would be left without a sense of comfort.
    Response 2: We disagree. As noted by the majority of commenters, 
there are a number of operational challenges that justify this 
temporary modification of the required PEP levels.
    Comment 3: In support of the proposed relief, two commenters stated 
that States should not be subject to PEP performance penalties during 
the pandemic because these are circumstances beyond the States' 
control.
    Response 3: OCSE clarifies that this relief is appropriate in 
response to the nationwide COVID-19 pandemic. Other future events or 
actions, including future pandemics, that create circumstances beyond a 
State's control may not necessarily require this extraordinary 
regulatory response. The current child support performance, audit, 
penalties, and incentives system is designed to drive performance. 
States that experience individual challenges that impact performance, 
whether these challenges are within or outside the States' immediate 
control, are motivated to recover from setbacks and strive to achieve 
performance goals, as States have over the last two decades. This time-
limited and targeted relief is a one-time response to the unprecedented 
COVID-19 pandemic.
    Comment 4: A few States noted the importance of not imposing PEP 
penalties because of the direct impact on State TANF funds that support 
families who may be especially in need during the pandemic. One State 
TANF agency commented on how the reduction in the TANF grant will 
directly harm families, despite the TANF agency's continued efforts to 
work closely with the State's child support agency to facilitate 
paternity establishment for their service recipients.
    Response 4: Under section 409(a)(12) of the Act and 45 CFR 
262.1(e)(1), a performance penalty imposed against a State's TANF grant 
would not result in an overall reduction in the State's TANF funding 
that is available to public assistance recipients because the state is 
required to make up the missing federal dollars with State funds. 
Rather, the requirement on States to make up this funding will put a 
strain on State public assistance and social services budgets overall, 
which will impact families needing assistance.
    Comment 5: Twenty-three commenters supported extending the 
timeframe for the relief from penalties related to PEP performance and 
from adverse findings of data reliability audits of a State's paternity 
establishment data. The majority supported the extension as described 
in the proposed rule to include FFY 2022.
    Most commenters noted that the pandemic continues to impact child 
support operations, especially the operations necessary for paternity 
establishment, and expected the impact to last well into FFY 2022. One 
commenter expected the following issues to persist into FFY 2022: 
Backlogs with courts and vital statistics agencies; low DNA sample 
collection due to families missing appointments; suspension of TANF 
recipient cooperation requirements; and disruption of voluntary 
acknowledgment processes at hospitals and birthing centers, resulting 
in paperwork being sent home and delays in families processing them. 
Two commenters noted that an extension is appropriate since the 
national PHE currently extends to January 2022 (at the time of the 
comment).
    Commenters stated that there is no definitive end to the pandemic 
in the foreseeable future, that the end of the pandemic is uncertain, 
and that States being able to return to 90 percent PEP levels in FFY 
2022 is not realistic, given the ongoing challenges. According to one 
commenter, it will take at least the remainder of FFY 2022 to work 
through backlogs in courts and agency offices of paternity cases, and 
this situation is especially acute in court systems where other types 
of cases have been prioritized over child support cases. According to 
another commenter, some States have indicated that the cumulative 
effects of the pandemic may result in a further decrease in their PEP 
levels in FFY 2021, and this negative momentum is likely to carry over 
in FFY 2022 and possibly beyond.
    One State commented that because the PHE has been extended to at 
least the beginning of the second quarter of FFY 2022, the impact of 
the pandemic will affect States' abilities to establish paternity for 
at least half of the performance year. The Delta variant, according to 
several commenters, is adversely impacting State programs into FFY 
2022. One commenter stated that the Delta variant appeared just as the

[[Page 32093]]

pandemic seemed to be abating, caused a spike in cases and reimposition 
of pandemic restrictions, and that it is too early to tell if a new 
variant will surface and cause more disruption.
    Several State commenters from States that did not expect to be 
subject to PEP penalties during the pandemic period strongly supported 
or saw no harm in extending the relief to FFY 2022 for other States.
    Response 5: OCSE supports extending the proposed relief period to 
include FFY 2022 for the reasons described by the commenters due to 
initial indications from FFY 2021 performance data that the pandemic 
continues to adversely affect paternity establishment performance, and 
in order to give States more time to plan and adjust for the resumption 
of operation and performance standards.
    According to OCSE's preliminary FFY 2021 data, 13 of the 54 State 
child support programs (the 54 programs include the 50 States, the 
District of Columbia, Guam, Puerto Rico, and the Virgin Islands) appear 
to have failed to meet the 90 percent PEP performance threshold. These 
include 9 States that previously failed to meet the 90 percent 
threshold in FFY 2020 and 4 new States that met PEP performance 
thresholds in FFY 2020 but failed in FFY 2021.
    These data show that the pandemic continues to have an oversized 
and ongoing impact on States' abilities to establish paternity and meet 
performance thresholds. Not only were half of the 18 States that failed 
to meet performance in FFY 2020 unable to recover their performance in 
the subsequent year, but four additional States failed, despite having 
achieved PEP performance thresholds the year before. In addition, the 
PHE, first declared on January 31, 2020, was extended again on January 
14, 2022, effective January 16, 2022.\1\
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    \1\ The determination that a PHE exists due to COVID-19 was 
first issued on January 31, 2020 and has been renewed every 90 days 
under section 319 of the Public Health Service Act (42 U.S.C. 247d). 
See Renewal of Determination That A Public Health Emergency Exists, 
dated January 14, 2022, available at: https://aspr.hhs.gov/legal/PHE/Pages/COVID19-14Jan2022.aspx.
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    In order to allow States more time to plan and adjust to regain 
performance standards, given the ongoing, unpredictable nature of the 
pandemic, including the fast spread of successive COVID-19 variants, 
OCSE agrees it is appropriate to extend the relief period to include 
performance for FFY 2022.
    Comment 6: One commenter opposed the relief entirely for any time 
period, as noted in comment 2, and one commenter, who supported the 
relief for the proposed period of FFYs 2020 and 2021, opposed the 
extension to FFY 2022. According to this latter commenter, States 
inform them that paternity establishment operations are fully 
operational and that it is incumbent on HHS to return to normal 
operations and hold States accountable for program operations, 
including paternity establishment, which is a central function. The 
commenter recommended limiting relief to when State operations were 
most impacted by pandemic restrictions.
    Response 6: OCSE disagrees and will extend the relief to FFY 2022 
due to the unprecedented nature of the pandemic and to allow States 
more time to plan and adjust. However, after the relief period, 
starting for FFY 2023, the PEP performance thresholds will revert back 
to the usual levels, and States will again be responsible for 
performance and subject to penalties for adverse data reliability audit 
findings related to the PEP measure after an automatic corrective 
action year.
    Comment 7: Several commenters suggested extending the relief beyond 
FFY 2022. One commenter suggested an option for an extension into FFY 
2023 if circumstances warrant, and others requested flexibility to 
extend the relief into the future as needed or for any future FFY in 
which the country remains under a PHE due to COVID-19. Another, citing 
the possibility of the rise of a new variant and general uncertainty, 
suggested that the Secretary of HHS be given the authority to extend 
penalty relief in future years without the need to issue another 
regulation. This commenter said that there is strong justification to 
extend the relief through FFY 2022, after which we can review the need 
for further action and whether the Secretary could continue to extend 
the relief if the pandemic and States' need for relief are ongoing.
    Response 7: OCSE agrees to extend the relief through FFY 2022 to 
provide States one additional year. However, the relief must be time-
limited and targeted.
    Comment 8: One State suggested that for the extension year, FFY 
2022, the PEP threshold be modified from 90 percent to 75 percent, 
instead of the 50 percent proposed in the rule. The commenter reasoned 
that 75 percent is at the low end of the level just below 90 percent in 
45 CFR 305.40(a)(1) and allows States that are still working through 
paternity establishment challenges to gradually increase performance 
rather than meet a more rigorous 90 percent level.
    Response 8: For the reasons discussed in the previous comments and 
responses and for simplicity, OCSE will provide the same modification 
levels in extending the relief to FFY 2022 as provided for the first 2 
years of the relief.
    Comment 9: A commenter suggested that States that have met or 
exceeded the 90 percent performance threshold during the pandemic 
period receive an incentive, such as not having a full paternity 
establishment audit for FFY 2021 and FFY 2022.
    Response 9: OCSE proposed regulatory relief in response to COVID-19 
that is narrowly targeted towards relieving States of PEP-related 
penalties and does not include other forms of relief or incentives.
    Summary of Regulatory Changes: For the reasons described above and 
in careful consideration of the comments, we finalize 45 CFR 305.61(e) 
by extending the relief period to FFY 2022 and referencing the specific 
statutory cite that provides the Secretary with discretionary authority 
to modify the required PEP level, 452(g)(A) of the Act.

V. Regulatory Review

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 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.

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    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 final 
rule is significant and was accordingly reviewed by OMB.
    ACF determined that the costs to title IV-D agencies as a result of 
this rule will not be ``economically significant'' as defined in 
Executive Order 12866 (have an annual effect on the economy of $100 
million or more or adversely affect in a material way the economy, a 
sector of the economy, productivity, competition, jobs, the 
environment, public health or safety, or State, local, or tribal 
governments or communities). 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.
    January Contreras, Assistant Secretary of the Administration for 
Children and Families, approved this document on May 5, 2022.

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.)

    Dated: May 23, 2022.
Xavier Becerra,
Secretary, Department of Health and Human Services.

    For the reasons discussed in the preamble, the Department of Health 
and Human Services amends 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 add 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 modified for fiscal years 2020, 2021, and 2022, 
in accordance with section 452(g)(A) of the Act, as follows:
    (1) The acceptable level of paternity establishment percentage 
performance under Sec.  305.40(a)(1) is modified for fiscal years 2020, 
2021, and 2022 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, 2021, and 2022.
* * * * *
[FR Doc. 2022-11391 Filed 5-26-22; 8:45 am]
BILLING CODE 4184-42-P
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