Final Rule - 45 CFR Part 1639: Welfare Reform

SUMMARY: This Final Rule amends the Legal Services Corporation's rule relating to limitations on grantee activities challenging or seeking reform of a welfare system. The main change, to delete the prohibition on the representation of an individual seeking welfare benefits if any such representation involves an effort to amend or otherwise challenge existing law, is necessitated to conform the regulation to the U.S. Supreme Court's decision Legal Services Corporation v. Velazquez, et al. A definition of a term only used in the now deleted phrase is also being deleted.

DATES: This final rule is effective May 20, 2002.

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: On February 28, 2001, the United States Supreme Court issued a decision in Legal Services Corporation v. Velazquez, et al., Nos. 99-603 and 99-960, 121 S. Ct. 1043, 2001 WL 193738 (U.S.), striking down as unconstitutional the restriction prohibiting LSC grantees from challenging welfare reform laws when representing clients seeking specific relief from a welfare agency. The stricken restriction was first imposed by Congress in section 504(a)(16) of the FY 1996 Legal Services Corporation appropriations legislation (the Omnibus Consolidated Rescissions and Appropriations Act of 1996, Pub. L. 104-134, 110 Stat. 1321-53 (1996)) and was retained in each subsequent annual LSC appropriation through FY 2002. The relevant portion of section 504(a)(16) prohibited funding of any organization:

that initiates legal representation or participates in any other way, in litigation, lobbying, or rulemaking, involving an effort to reform a Federal or State welfare system, except that this paragraph shall not be construed to preclude a recipient from representing an individual eligible client who is seeking specific relief from a welfare agency if such relief does not involve an effort to amend or otherwise challenge existing law in effect on the date of the initiation of the representation.

 This restriction was incorporated into LSC's regulations at 45 CFR Part 1639. Specifically, 45 CFR 1639.3, Prohibition, provides that:

Except as provided in §§1639.4 and 1639.5, recipients may not initiate legal representation, or participate in any other way in litigation, lobbying or rulemaking, involving an effort to reform a Federal or State welfare system. Prohibited activities include participation in:

(a) Litigation challenging laws or regulations enacted as part of an effort to reform a Federal or State welfare system.

(b) Rulemaking involving proposals that are being considered to implement an effort to reform a Federal or State welfare system.

(c) Lobbying before legislative or administrative bodies undertaken directly or through grassroots efforts involving pending or proposed legislation that is part of an effort to reform a Federal or State welfare system.

 45 CFR 1639.4, Permissible representation of eligible clients, provides that:

Recipients may represent an individual eligible client who is seeking specific relief from a welfare agency, if such relief does not involve an effort to amend or otherwise challenge existing law in effect on the date of the initiation of the representation.⁽¹⁾

 The Supreme Court in Velazquez, upholding the decision of the Court of Appeals, invalidated that portion of the statute which provides that representation of an individual eligible client seeking specific relief from a welfare agency may not involve an effort to amend or otherwise challenge existing law. The Court held that such a qualification constitutes impermissible viewpoint discrimination under the First Amendment because it "clearly seeks to discourage challenges to the status quo." 121 S. Ct. 1043, 1047 (2001).

 In determining specifically which language in the 1996 Act to strike as invalid, the Supreme Court noted that the Court of Appeals had concluded that congressional intent regarding severability was unclear. Since that "determination was not discussed in the briefs of either party or otherwise contested" in the appeal to the Supreme Court, the majority opinion noted that it was exercising its "discretion and prudential judgement" by declining to address the issue. Id. at 1053. Instead, the Supreme Court opted to simply affirm the decision of the Court of Appeals to "invalidate the smallest possible portion of the statute, excising only the viewpoint-based proviso rather than the entire exception of which it is a part." Id. at 1052.

 The effect of the Velazquez decision was to render the stricken language null and void. This means that the limitation on representation of an individual eligible client seeking specific relief from a welfare agency which prohibits any such representation from involving an effort to amend or otherwise challenge existing law is not valid and may not be enforced or given effect. An individual eligible client seeking relief from a welfare agency may be represented by a recipient without regard to whether the relief involves an effort to amend or otherwise challenge existing welfare reform law.

 In light of foregoing, at its June 2001 meeting the LSC Board of Directors identified Part 1639 as an appropriate subject for rulemaking for the purpose of amending the regulation to make it conform to the decision in Velazquez. LSC published a notice of proposed rulemaking on November 26, 2001, proposing to amend part 1639 by deleting the words "if such relief does not involve an effort to amend or otherwise challenge existing law in effect on the date of the initiation of the representation" and by changing the comma after the word "agency" to a period.⁽²⁾

 LSC received six comments on the NPRM. All of the commenters supported the proposed change. Each of the comments also suggested that LSC should remove the definition of "existing law" at 1639.2(b), since the only place in which the term appears is in the phrase to be deleted. LSC agrees that the deletion of the definition of the term "existing law" is appropriate. Accordingly, the term is being deleted and, as there will now be only one paragraph in this section remaining, paragraph (a) is being relabeled to remove the paragraph designator.

 One commenter also suggested that LSC restate the guidance in Program Letter 01-3 that a recipient may represent an individual eligible client seeking relief from a welfare agency without regard to whether the relief involves an effort to amend or otherwise challenge existing welfare reform law. Although LSC believes that this is clear from the regulatory action, LSC has no objection to reiterating this point and does so herewith.

 For reasons set forth above, LSC revises 45 CFR Part 1639 as follows:

PART 1639 - WELFARE REFORM

 1.   The authority citation continues to read as follows:

Authority 42 U.S.C. 2996g(e); Pub. L. 104-208, 110 Stat. 3009; Pub. L. 104-134, 110 Stat. 1321.

 2.   Section 1639.2 is being amended to remove the paragraph designator (a) from before the definition of "an effort to reform a Federal or State welfare system" and to delete paragraph (b) in its entirety. Section 1639.2 is revised to read in its entirety:

§ 1639.2 Definitions.

An effort to reform a Federal or State welfare system" includes all of the provisions, except for the Child Support Enforcement provisions of Title III, of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (Personal Responsibility Act), 110 Stat. 2105 (1996), and subsequent legislation enacted by Congress or the States to implement, replace or modify key components of the provisions of the Personal Responsibility Act or by States to replace or modify key components of their General Assistance or similar means-tested programs conducted by States or by counties with State funding or under State mandates.

§ 1639.4 [Amended]

 3.   Section 1639.4 is amended by removing the words "if such relief does not involve an effort to amend or otherwise challenge existing law in effect on the date of the initiation of the representation" and by changing the comma after the word "agency" to a period.

Victor M. Fortuno
General Counsel & Vice President for Legal Affairs
April 18, 2002