[Federal Register Volume 61, Number 232 (Monday, December 2, 1996)]
[Rules and Regulations]
[Pages 63749-63754]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-30619]
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LEGAL SERVICES CORPORATION
45 CFR Part 1610
Use of Non-LSC Funds
AGENCY: Legal Services Corporation.
ACTION: Final rule.
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SUMMARY: This final rule revises the Legal Services Corporation's
(``Corporation'' or ``LSC'') interim rule concerning the use of non-LSC
funds by LSC recipients. The revisions to this rule are intended to
implement provisions first appearing in the Corporation's Fiscal Year
(``FY'') 1996 appropriations act that are currently incorporated by
reference in the Corporation's FY 1997 appropriations act. With a few
exceptions, many of the new statutory conditions effectively restrict a
recipient's non-LSC funds to the same degree they restrict a
recipient's LSC funds. This rule also clarifies the extent to which
conditions on a recipient's non-LSC funds apply when a recipient
transfers its funds to another person or entity. Technical revisions
are also made to the rule.
DATES: This final rule is effective on January 1, 1997.
FOR FURTHER INFORMATION CONTACT: Victor Fortuno, General Counsel, (202)
336-8910.
SUPPLEMENTARY INFORMATION: On May 19, 1996, the Operations and
Regulations Committee (``Committee'') of the LSC Board of Directors
(``Board'') requested the LSC staff to prepare an interim rule to
implement section 504 in the Corporation's FY 1996 appropriations act,
Pub. L. 104-134, 110 Stat. 1321 (1996), which applied most conditions
contained therein to any person or entity receiving LSC funds,
effectively restricting virtually all of a recipient's funds to the
same degree that it restricts LSC funds. The Committee held hearings on
staff proposals on July 8 and 19, and the Board adopted an interim rule
on July 20 for publication in the Federal Register. Although the
interim rule was effective upon publication, see 61 FR 41960 (August
13, 1996), the Corporation also solicited comments on the rule for
review and consideration by the Committee and Board.
The Corporation received 8 comments on the rule. The Committee held
public hearings on the rule on September 29, 1996, and made several
recommendations for revisions to the Board. The Board adopted this
final rule on September 30, 1996.
The Corporation's FY 1997 appropriations act became effective on
October 1, 1996, see Pub. L. 104-208, 110 Stat. 3009. It incorporated
by reference the Sec. 504 conditions on LSC grants and other sections
of the FY 1996 appropriations act implemented by this rule.
Accordingly, the preamble and text of this rule continue to refer to
the appropriate section number of the FY 1996 appropriations act.
As did the interim rule, this final rule generally serves two
purposes. First, it incorporates the new statutory conditions which
apply to both a recipient's LSC and non-LSC funds. Past appropriations
acts applied restrictions contained in those acts only to the funds
appropriated thereunder. In contrast, the new statutory provisions
prohibit LSC from funding any recipient that engages in certain
specified activities or that fails to act in a manner consistent with
new statutory requirements. Second, this rule retains several technical
revisions made in the interim rule which corrected provisions in the
prior rule that had never been revised to be consistent with
longstanding amendments to the LSC Act. Finally, in
[[Page 63750]]
response to public comment, this rule revises provisions in the interim
rule dealing with transfers of a recipient's funds.
A section-by-section discussion of this final rule is provided
below.
Section 1610.1 Purpose
The purpose of this rule is to implement statutory conditions on a
recipient's use of non-LSC funds. These conditions are found in the LSC
Act (``Act''), 42 U.S.C. Sec. 2996 et seq., and Pub. L. 104-134, 110
Stat. 1321 (1996), as incorporated by Pub. L. 104-208, 110 Stat. 3009
(1996).
Section 1610.2 Definitions
The interim rule revised the definition of ``purposes prohibited by
the LSC Act'' in several ways. It deleted reference to a prohibition on
the representation of juveniles, because the prohibition is no longer
in the LSC Act. It also deleted reference to those restrictions on
activities in the LSC Act that are now included in the broader
restriction in the Corporation's appropriations act. Numbering changes
were also made to correspond to the numbering changes that were made by
the 1977 amendments to the LSC Act. These changes have been retained in
the final rule.
The interim rule also deleted reference to fee-generating cases
from the definition of a ``purpose prohibited by the LSC Act.'' The
deletion had a very narrow impact on recipients, in that they could
take fee-generating cases with private funds without following the
procedures set out in 45 CFR part 1609. However, LSC staff recommended
and the Board agreed that the reference to fee-generating cases should
be included in the final rule.
The deletion of the provision relating to fee-generating cases was
based on an analysis that the provision in the Act merely imposes
procedural requirements and does not prohibit the taking of fee-
generating cases. On reflection, however, the Board concluded that the
fee-generating provision is a prohibition.
One comment stated that the definition of ``purpose prohibited by
the LSC Act'' is deficient, because the word ``purpose'' is not
adequately defined in either the LSC Act or part 1610. The LSC Act and
part 1610, however, do not attempt to define the word ``purpose;''
rather, the rule interprets the clause in the LSC Act that includes the
word--``purpose prohibited by the LSC Act''-- by specifically listing
every activity the Corporation has determined to be a prohibited
purpose under the Act. The prohibited purposes listed in this
definition have been in the definition since 1978, and the listing has
been and still is very specific, in that it cites to sections of the
LSC Act containing the prohibited purposes as well as to the
regulations implementing those sections. In addition, the use of
``purpose'' is well understood in Federal Appropriations Law, and is
rooted in 31 U.S.C. Sec. 1301(a), which requires the use of Federal
funds for the purposes for which they are appropriated. See Principles
of Federal Appropriations Law, Chapter 4, ``Availability of
Appropriations: Purpose'' at 4-1 (1991). No changes were made in
response to this comment.
``Activity prohibited by or inconsistent with Section 504'' lists
the prohibitions and requirements in section 504 (a) of the
Corporation's FY 1996 appropriations act that have been included by
reference in the Corporation's FY 1997 appropriations act. These
prohibitions and requirements apply to a recipient's activities,
regardless of the source of funding. The definition also makes
reference to subsections 504(b) and 504(e), which provide exceptions to
those conditions on specific activities supported by non-LSC funds.
A few comments suggested that the Corporation should distinguish
between those conditions on funds in the definition of ``activity
prohibited by or inconsistent with Section 504'' that are prohibitions,
such as restrictions on class actions and certain lobbying activities,
and those that are operational requirements, such as those on
priorities and timekeeping. The main concern of the comments relates to
application of the rule to transfers of recipients' funds. The Board
agreed that the concerns raised by the comments should be addressed,
but did not make any changes to the definition. Rather, it made changes
reflected in Sec. 1610.7, which deals with the application of the
conditions in this definition to transfers of recipient funds.
The definitions for ``IOLTA funds,'' ``non-LSC funds,'' ``private
funds,'' ``public funds,'' and ``tribal funds'' are the same as in the
interim rule. ``IOLTA funds'' is defined as funds derived from programs
established by State court rules or legislation that collect and
distribute interest earned on lawyers' client trust accounts. ``Non-LSC
funds'' are funds derived from a source other than the Corporation and
would include both public and private funds. ``Private funds'' are
defined as funds derived from an individual or entity other than a
governmental source or LSC. ``Public funds'' is similar to the
definition of ``public funds'' in part 1600, but also clarifies that,
for the purposes of this part, IOLTA funds will be treated in the same
manner as public funds. ``Tribal funds'' are defined as funds received
by a recipient from an Indian tribe or from a private nonprofit
foundation or organization that are given for the benefit of Indians or
Indian tribes.
The definitions of ``private attorney,'' ``law firm,'' and ``State
or local entity of attorneys'' have been deleted as no longer
necessary, due to changes made by the Board to Sec. 1610.6 of the
interim rule, as discussed below.
A new definition of ``transfer'' has been added that was not
included in the interim rule. The definition is necessary to clarify
the application of this part to a transfer of recipient funds, as
discussed below under Sec. 1610.7. A ``transfer'' is defined as a
transfer of a recipient's funds for the purpose of conducting
programmatic activities that are normally conducted by the recipient,
such as the representation of eligible clients, or that provide direct
support to the recipient's legal assistance activities. A transfer is
not intended to include a non-programmatic fee-for-service arrangement
or a payment for goods or services.
Section 1610.3 Prohibition
The prohibition section in the interim rule included the new
statutory restrictions on various activities in Section 504. No
comments were received suggesting changes to this section, and the only
changes made in the final rule are technical.
Section 1610.4 Authorized Use of Other Funds
This section clarifies that the restrictions in section 504 apply
to activities supported by all funds except tribal funds, while those
restrictions in the LSC Act which are not covered by section 504 apply
only to LSC and private funds.
Section 1610.4(a): Paragraph (a) sets out an exception included in
both the LSC Act and Section 504 for tribal funds. The exception
exempts tribal funds from the general prohibition on the use of non-LSC
funds, as long as the tribal funds are used for the purposes for which
they were provided.
Section 1610.4(b). Section 1610.4(b) implements the exception in
the LSC Act for public funds which permits recipients to use public
funds in accordance with the purposes for which the funds were
provided. However, because the Corporation's FY 1996 appropriations act
contains no exception for public funds for most of its restrictions on
activities, language is included providing that public funds
[[Page 63751]]
may not be used for any activity prohibited by or inconsistent with
Section 504. In accordance with current LSC policy, the section also
provides that for purposes of applying this regulation, IOLTA funds are
to be treated the same as public funds.
Section 1610.4(c). Paragraph (c) states the exception that allows
recipients to use private funds if they use them for the purposes for
which they were provided, and if they do not use their private funds
for any activity prohibited by the LSC Act or prohibited by or
inconsistent with Sec. 504.
Section 1610.4(d). Section 1610.4(d) reflects Sec. 504(d)(2)(B) of
the Corporation's FY 1996 appropriations act, which provides that a
recipient may use non-LSC funds to provide legal assistance to
financially ineligible persons, provided that the funds are used for
the specific purpose for which they were received and are not used in a
manner that violates the LSC Act or Sec. 504.
Section 1610.5 Notification
This section incorporates the requirement of Sec. 504(d)(1) of the
appropriations act that recipients may not accept funds from non-LSC
sources unless they provide written notice to the funders that their
funds may not be used in any manner inconsistent with the LSC Act or
Sec. 504. The requirement applies only to cash contributions;
recipients are not required to notify persons or organizations who make
non-cash donations or volunteer their time or services to the
recipient.
In an effort to relieve recipients of some of the administrative
burden that might be imposed by the notice requirement, the interim
regulation contained a de minimis exception. The exception relieves
recipients of the notice requirement for contributions of less than
$250. One comment questioned whether the rule intends that LSC
recipients follow the same reporting requirements and guidelines used
by the IRS in reporting donations of $250 or more. The comment also
asked when and how often notification is required and commented that it
is impracticable to include the notice in a one or two page community-
wide solicitation letter.
Section 1610.5 is not intended to implement the IRS instructions
and guidelines concerning contributions to charities; therefore, it
does not incorporate the IRS reporting or other procedural
requirements. Rather, it simply recognizes that, because recipients
must provide acknowledgements for donations for $250 or more for IRS
purposes, it does not constitute any significant additional burden to
incorporate the required notification into the acknowledgement. No
change has been made in response to this comment.
Section 504(d)(1) and the interim rule required notification before
the recipient ``accepts'' the funds. The Corporation has advised
recipients in Program Letter 96-3 that notice should be given during
the course of soliciting funds or applying for a grant or contract. For
unsolicited donations, the program letter states that notice should be
given in the recipient's letter acknowledging the contribution. For
contracts and grants already awarded for which notice has not been
given, recipients are advised in the program letter to notify the
funding source before the next payment is accepted. No change has been
made in response to this comment.
Finally, the notification requirement relates to funds received by
recipients as grants, contracts or charitable donations from funders
other than the Corporation, which are intended to fund the non-profit
work of the recipient. It does not include funds received from sources
such as court payment to attorneys for their work under court
appointments; nor does it include payments to the recipient for rent,
bank interest, or sale of goods, such as manuals.
The Board determined that the substance of this section, including
the under-$250 de minimis exception, should be retained. Nonetheless,
the Board made two changes to this section in the final rule. First, in
response to a comment from a recipient that receives tribal funds,
paragraph (a) is revised to clarify that notification is required only
when the funds are in fact restricted. Thus, when a recipient receives
tribal funds to which the restrictions do not apply, no notice is
required to the source of the funds. This language clarifies that
notice is not required for those restrictions on non-LSC funds that are
found exclusively in the LSC Act. Second, for clarity, a technical
change was made to paragraph (b) by adding ``receipt of `` before
contributions.
Section 1610.6 Applicability
This section in the interim rule addressed two distinct situations.
Paragraph (a) addressed the applicability of this part to a recipient's
use of non-LSC funds for court appointments and for certain criminal
representation as permitted under section 1010(c) of the LSC Act. The
rest of the section dealt with transfers of a recipient's funds.
For clarity, the final rule treats these issues in two separate
sections: the subject matter of paragraph (a) becomes the whole of
Sec. 1610.6, and a new Sec. 1610.7 (corresponding to Secs. 1610.6(b)
and (c) of the interim rule) is created to address the transfer of
funds provisions.
Comments on paragraph (a) of the interim rule expressed concern and
confusion about the scope of the paragraph. Most of the confusion
focused on the paragraph's attempt to implement a provision in section
1010(c) of the LSC Act. Section 1010(c) generally requires that if a
recipient's LSC funds are subject to a prohibition under the LSC Act, a
recipient's private funds are also subject to the same prohibition. An
exception to this requirement, however, was included in the Act for
``private attorneys, private law firms, or other State or local
entities of attorneys, or * * * legal aid societies having separate
public defender programs.'' This exception was intended to provide
relief for these individuals and entities with limited or special
grants or contracts made by the Corporation, such as demonstration
grants. See Conf. Rep. No. 845 93rd Cong., 2d Sess. 30-31 (1974); Cong.
Rec. H5132-33 ( June 21, 1973); H3952-53 (May 16, 1974); S12629 (July
16, 1974); S12923, 12925, 12935, 12954 (July 18, 1974). The exception
was also intended to allow the Corporation to fund the civil legal
assistance activities of programs, such as legal aid societies, with
separate public defender programs.
The new statutory conditions in the Corporation's FY 1996
appropriations act, as incorporated by the Corporation's FY 1997
appropriations act, modify this exception because the Corporation is
prohibited from giving grants to any person or entity that does not
comply with the conditions set out in section 504. Accordingly, the
Board decided to revise paragraph (a) in the final rule to limit the
exception to a recipient's public defender programs and projects which
provide legal representation in criminal proceedings and actions
challenging criminal convictions, and to explicitly permit such
representation on behalf of aliens and prisoners. There is no conflict
with the restrictions in section 504 on representation of aliens and
prisoners because these restrictions apply only to civil
representation. Except for the narrow category of separately funded
public defender programs or projects protected by section 1010(c), LSC
recipients are prohibited from engaging in or using resources for any
criminal representation.
The interim rule's exception for criminal or related cases accepted
by a recipient or subrecipient pursuant to a
[[Page 63752]]
court appointment has been retained as paragraph (b) in the final rule.
Section 1610.7 Transfers of Recipient Funds
A new Sec. 1610.7 has been added to this rule to address the
applicability of the statutory conditions listed in Sec. 1610.2 (a) and
(b) when a recipient transfers its LSC or non-LSC funds to another
individual or entity (hereinafter, both ``individual'' and ``entity''
are referred to as ``entity''). This section replaces Sec. 1610.6 (b)
and (c) of the interim rule. The statutory conditions on a recipient's
funds in the LSC Act and the Corporation's current appropriations act
do not address the effect of these provisions on a transfer of a
recipient's funds to another entity. However, as a matter of policy,
the Corporation has historically applied such provisions to transfers
of a recipient's funds. See, for example, 45 CFR parts 1627 and 1632
and Program Letter dated December 11, 1995. This policy reflects the
intent of the Corporation that transfers of funds not become a means to
circumvent statutory conditions on a recipient's LSC and non-LSC funds.
The interim rule continued this policy. Comments made it clear,
however, that more specific guidance was necessary. Other comments
described situations where Congressional intent would not be served by
strict application of this policy. Accordingly, certain substantive
changes have been made by the Board in this final rule, as described
below.
Section 1610.7(a) (Transfers of LSC funds): Paragraph (a) provides
that, for transfers of LSC funds, the conditions in Sec. 1610.2 (a) and
(b) of this part, except as modified by paragraphs (c) and (d) of this
section, will apply to both the LSC funds and the non-LSC funds of the
entity receiving those funds. This requirement is based on the
Corporation's interpretation of legislative intent that the statutory
conditions on LSC funds attach to a recipient's non-LSC funds and that,
in most situations, this should also be the case when LSC funds are
transferred by a recipient. Otherwise, recipients would be able to
avoid legislative intent by simply transferring their LSC funds to
other persons or entities.
Section 1610.7(b) (Transfers of non-LSC funds): This paragraph
provides that, for a transfer of non-LSC funds, the conditions in
Sec. 1610.2 (a) and (b) of this part, except as modified by paragraphs
(c) and (d) of this section, will apply to the funds transferred but
not to the other funds of the entity receiving the funds. When a
recipient transfers its non-LSC funds to an entity that has no LSC
funds, the conditions remain attached to the transferred funds; but
because they are not LSC funds, the other funds of the entity are not
affected. The Corporation requires that the transferred non-LSC funds
be subject to the conditions, because otherwise recipients would be
able to avoid the conditions on their non-LSC funds by simply
transferring the funds.
Section 1610.7(c): Modifications to the requirements in paragraphs
(a) and (b) of this section are set out in this paragraph which
provides that the Sec. 1610.2(b) requirements regarding priorities and
timekeeping be modified for entities that receive transfers of
recipients' funds. The provisions on priorities and timekeeping are
administrative requirements more appropriately applicable to a
recipient's own use of its funds. The intent is to assure greater
accountability for the recipient's use of its funds. The administrative
burden of extending these requirements to all funds of an entity to
which a recipient's funds are transferred would be significant.
Accordingly, the final rule applies the administrative requirements
on priorities and timekeeping only to the funds transferred and only to
the extent to ensure accountability for those funds. Thus, paragraph
(c) requires that entities receiving a transfer of recipient funds must
either use the funds consistent with the recipient's priorities or
establish their own priorities for the use of those funds. In regard to
timekeeping, the language tracks the statutory requirement so that such
entities are required to maintain records of time spent on each case or
matter undertaken with the funds transferred. However, they are not
required to keep time in accordance with the Corporation's timekeeping
regulation, 45 CFR part 1635.
Section 1610.7(d) (Transfers for PAI activities): Paragraph (d)
responds to comments from the American Bar Association and others that
pointed out that many of the individual attorneys, private firms, and
bar associations that provide representation or establish projects or
programs for referral of cases pursuant to a recipient's private
attorney involvement program (``PAI'') would not be able to continue
their involvement in PAI if involvement meant the application of all of
the conditions listed in this part to their other funds.
The Board determined that a strict application of the Corporation's
policy to PAI activities would significantly undermine PAI efforts.
Accordingly, this paragraph provides an exception for the other funds
of bar associations, private attorneys and other entities when the sole
purpose of the transfer is to fund involvement in PAI activities. Such
activities would include establishing judicare panels or referral
services. This paragraph does not authorize any involvement in any
restricted activities with the funds transferred. It is clear in this
paragraph and under part 1614 that no activities inconsistent with the
conditions on the use of LSC funds may be attributed to a recipient's
PAI requirement under part 1614.
Section 1610.8 Accounting
This section has been renumbered from the interim rule but has not
been otherwise revised. This section sets out the general accounting
requirement for recipients for their non-LSC funds. Currently,
recipients are directed by the accounting guidance issued by the
Corporation.
List of subjects in 45 CFR Part 1610
Grant programs--law, Legal services.
For reasons set forth in the preamble, LSC revises 45 CFR part 1610
to read as follows:
PART 1610--USE OF NON-LSC FUNDS
Sec.
1610.1 Purpose.
1610.2 Definitions.
1610.3 Prohibition.
1610.4 Authorized use of other funds.
1610.5 Notification.
1610.6 Applicability.
1610.7 Transfers of recipient funds.
1610.8 Accounting.
Authority: 42 U.S.C. 2996i; 110 Stat. 3009 (1996); 110 Stat.
1321 (1996).
Sec. 1610.1 Purpose.
This part is designed to implement statutory restrictions on the
use of non-LSC funds by LSC recipients.
Sec. 1610.2 Definitions.
(a) Purpose prohibited by the LSC Act means any activity prohibited
by the following sections of the LSC Act and those provisions of the
Corporation's regulations that implement such sections of the Act:
(1) Sections 1006(d)(3), 1006(d)(4), 1007(a)(6), and 1007(b)(4) of
the LSC Act and 45 CFR part 1608 of the LSC Regulations (Political
activities);
(2) Section 1007(a)(10) of the LSC Act (Activities inconsistent
with professional responsibilities);
(3) Section 1007(b)(1) of the LSC Act and 45 CFR part 1609 of the
LSC regulations (Fee-generating cases);
(4) Section 1007(b)(2) of the LSC Act and 45 CFR part 1613 of the
LSC Regulations (Criminal proceedings);
[[Page 63753]]
(5) Section 1007(b)(3) of the LSC Act and 45 CFR part 1615 of the
LSC Regulations (Actions challenging criminal convictions);
(6) Section 1007(b)(7) of the LSC Act and 45 CFR part 1612 of the
LSC Regulations (Organizing activities);
(7) Section 1007(b)(8) of the LSC Act (Abortions);
(8) Section 1007(b)(9) of the LSC Act (School desegregation); and
(9) Section 1007(b)(10) of the LSC Act (Violations of Military
Selective Service Act or military desertion).
(b) Activity prohibited by or inconsistent with Section 504 means
any activity prohibited by, or inconsistent with the requirements of,
the following sections of 110 Stat. 1321 (1996) and those provisions of
the Corporation's regulations that implement those sections:
(1) Section 504(a)(1) and 45 CFR part 1632 of the LSC Regulations
(Redistricting);
(2) Sections 504(a) (2) through (6), as modified by Sections 504
(b) and (e), and 45 CFR part 1612 of the LSC Regulations (Legislative
and administrative advocacy);
(3) Section 504(a)(7) and 45 CFR part 1617 of the LSC Regulations
(Class actions);
(4) Section 504(a)(8) and 45 CFR part 1636 of the LSC Regulations
(Statement of facts and client identification);
(5) Section 504(a)(9) and 45 CFR part 1620 of the LSC Regulations
(Priorities);
(6) Section 504(a)(10) and 45 CFR part 1635 of the LSC Regulations
(Timekeeping);
(7) Section 504(a)(11) and 45 CFR part 1626 of the LSC Regulations
(Aliens);
(8) Section 504(a)(12) and 45 CFR part 1612 of the LSC Regulations
(Public policy training);
(9) Section 504(a)(13) and 45 CFR part 1642 of the LSC Regulations
(Attorneys' fees);
(10) Section 504(a)(14) (Abortion litigation);
(11) Section 504(a)(15) and 45 CFR part 1637 of the LSC Regulations
(Prisoner litigation);
(12) Section 504(a)(16), as modified by Section 504(e), and 45 CFR
part 1639 of the LSC Regulations (Welfare reform);
(13) Section 504(a)(17) and 45 CFR part 1633 of the LSC Regulations
(Drug-related evictions); and
(14) Section 504(a)(18) and 45 CFR part 1638 of the LSC Regulations
(In-person solicitation).
(c) IOLTA funds means funds derived from programs established by
State court rules or legislation that collect and distribute interest
on lawyers' trust accounts.
(d) Non-LSC funds means funds derived from a source other than the
Corporation.
(e) Private funds means funds derived from an individual or entity
other than a governmental source or LSC.
(f) Public funds means non-LSC funds derived from a Federal, State,
or local government or instrumentality of a government. For purposes of
this part, IOLTA funds shall be treated in the same manner as public
funds.
(g) Transfer means a transfer of a recipient's funds for the
purpose of conducting programmatic activities that are normally
conducted by the recipient, such as the representation of eligible
clients, or that provide direct support to the recipient's legal
assistance activities.
(h) Tribal funds means funds received from an Indian tribe or from
a private nonprofit foundation or organization for the benefit of
Indians or Indian tribes.
Sec. 1610.3 Prohibition.
A recipient may not use non-LSC funds for any purpose prohibited by
the LSC Act or for any activity prohibited by or inconsistent with
section 504, unless such use is authorized by Secs. 1610.4, 1610.6 or
1610.7 of this part.
Sec. 1610.4 Authorized use of other funds.
(a) A recipient may receive tribal funds and expend them in
accordance with the specific purposes for which the tribal funds were
provided.
(b) A recipient may receive public or IOLTA funds and use them in
accordance with the specific purposes for which they were provided, if
the funds are not used for any activity prohibited by or inconsistent
with section 504.
(c) A recipient may receive private funds and use them in
accordance with the purposes for which they were provided, provided
that the funds are not used for any activity prohibited by the LSC Act
or prohibited or inconsistent with section 504.
(d) A recipient may use non-LSC funds to provide legal assistance
to an individual who is not financially eligible for services under
part 1611 of this chapter, provided that the funds are used for the
specific purposes for which those funds were provided and are not used
for any activity prohibited by the LSC Act or prohibited by or
inconsistent with section 504.
Sec. 1610.5 Notification.
(a) Except as provided in paragraph (b) of this section, no
recipient may accept funds from any source other than the Corporation,
unless the recipient provides to the source of the funds written
notification of the prohibitions and conditions which apply to the
funds.
(b) A recipient is not required to provide such notification for
receipt of contributions of less than $250.
Sec. 1610.6 Applicability.
Notwithstanding Sec. 1610.7(a), the prohibitions referred to in
Secs. 1610.2(a)(4) (Criminal proceedings), (a)(5) (Actions challenging
criminal convictions), (b)(7) (Aliens) or (b)(11) (Prisoner litigation)
of this part will not apply to:
(a) A recipient's or subrecipient's separately funded public
defender program or project; or
(b) Criminal or related cases accepted by a recipient or
subrecipient pursuant to a court appointment.
Sec. 1610.7 Transfers of recipient funds.
(a) For a transfer of LSC funds, the prohibitions and requirements
referred to in this part, except as modified by paragraphs (c) and (d)
of this section, will apply both to the funds transferred and to the
non-LSC funds of the person or entity.
(b) For a transfer of non-LSC funds, the prohibitions and
requirements referred to in this part, except as modified by paragraphs
(c) and (d) of this section, will apply to the funds transferred, but
will not apply to the other non-LSC funds of the person or entity.
(c)(1) In regard to the requirement in Sec. 1610.2(b)(5) on
priorities, persons or entities receiving a transfer of LSC or non-LSC
funds shall either:
(i) Use the funds transferred consistent with the recipient's
priorities; or
(ii) Establish their own priorities for the use of the funds
transferred consistent with 45 CFR part 1620;
(2) In regard to the requirement in Sec. 1610.2(b)(6) on
timekeeping, persons or entities receiving a transfer of LSC or non-LSC
funds are required to maintain records of time spent on each case or
matter undertaken with the funds transferred.
(d) For a transfer of LSC or non-LSC funds to bar associations, pro
bono programs, private attorneys or law firms, or other entities for
the sole purpose of funding private attorney involvement activities
(PAI) pursuant to 45 CFR part 1614, the prohibitions or requirements of
this part shall apply only to the funds transferred.
Sec. 1610.8 Accounting.
Funds received by a recipient from a source other than the
Corporation shall be accounted for as separate and distinct
[[Page 63754]]
receipts and disbursements in a manner directed by the Corporation.
Dated: November 26, 1996.
Victor M. Fortuno,
General Counsel.
[FR Doc. 96-30619 Filed 11-29-96; 8:45 am]
BILLING CODE 7050-01-P
