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Federal Register / Vol. 86, No. 95 / Wednesday, May 19, 2021 / Rules and Regulations April 20, 2021, the Board voted to adopt and publish this final rule.
Materials regarding this rulemaking are available in the open rulemaking section of LSCs website at http
www.lsc.gov/about-lsc/laws-regulationsguidance/rulemaking. After publication of the final rule, materials will migrate to the closed rulemaking section of LSCs website.
II. Section-by-Section Discussion of Proposed Changes and Comments LSC received eleven relevant commentsnine from executive directors of grantee organizations, one from the National Legal Aid and Defender Association NLADA, and one from the Management Information Exchange. LSC also had a follow-up conversation with NLADA about their concerns with proposed 1635.5.

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1635.1 What is the purpose of this section?
LSC proposed making technical edits to this section for clarity.
Comments: NLADA affirmatively endorsed the proposed changes. Four other commenters stated that they joined in NLADAs comments generally.
No other comments explicitly referenced this section.
Response: LSC adopts the proposed rule as final without changes.
1635.2 Definitions LSC proposed revising the definition of the term case in paragraph a to be more consistent with the definition of the same term in the Case Service Report Handbook. LSC proposed introducing a new definition for the term case oversight in paragraph b of this section.
Comments: LSC received few comments addressing this section, and the opinions about the changes varied.
NLADA endorsed the proposed changes;
they liked the addition of the new term case oversight and liked that it can be billed as a matter or case activity. One commenter, like NLADA, supported the addition of case oversight as a new time activity that will capture the review of cases at closing and the review of open cases. However, they wanted LSC to make it more explicit whether case oversight is a matter or case activity.
The sole commenter who criticized the change stated that case oversight is newly defined, and it is not clear why. They suggested explaining or removing the definition as unnecessary.
Response: LSC adopts the proposed rule as final with minor changes. LSC
will include language in the definition explaining that a supervisors case oversight activities may be included
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within case activities when it involves extensive work on a single casefor example, reviewing, in detail, the advice provided to a clientand included within supporting activities when the oversight involves the aggregate work on a number of different cases, such as reviewing multiple files for a retainers or citizenship attestations.
1635.3 Who is covered by the timekeeping requirement?
LSC proposed creating a new section dedicated to explaining which recipient employees must report time consistent with the requirements of this section.
LSC proposed replacing the language limiting the application to part 1635 to recipient employees with language extending part 1635 to any recipient employee whose salary is allocated, in whole or in part, to any of the recipients funding sources as a direct cost.
Comments: LSC received six comments about this section. All commenters objected to LSCs proposed changes to this section, although they proposed different solutions.
NLADA said that the proposed requirement covers a broader group of recipient employees than necessary.
They recommended that LSC revisit this proposal or add clarification about distinguishing between employees doing substantive legal work and nonsubstantive work. Generally, the comments evinced a concern among NLADAs stakeholders that the proposed rule would require a legal aid employee who is doing non-substantive work like screening or intake but whose salary is billed as a direct cost to comply with the part 1635 timekeeping requirementsan outcome that they believe to be over-inclusive and burdensome.
Three comments suggested that clearly defining paralegal is a better solution to the problem. One commenter stated that they are confused as to who must keep time under the proposed change; they stated that the preamble had many different definitions, but the actual regulation was minimalist.
They proposed that the language instead be changed to, Any attorney, paralegal, or other recipient employees who perform substantive legal work that is charged as a direct cost as defined in 45 CFR 1630.5d must keep time according to the standards set forth in 1635.4.
Another commenter suggested LSC
add a sentence so that the definition of paralegal does not include nonattorney time on administrative or supporting tasks that are not directly involved in providing clients
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substantive legal services, regardless of whether the compensation for the staff is characterized as direct or indirect in any applicable grant award.
Response: LSC adopts the proposed rule as final with changes. LSC did not intend for employees doing an insubstantial amount of work on a grant such as intake or screening to be subject to the timekeeping requirement.
Rather, the intention was for anyone doing work identifiable to a grant to comply with the timekeeping requirement. LSC will modify the final rule in line with the suggestion of a commenter, so that the rule is clear that employees must comply with section 1635.4 when the work is charged to any award as a direct cost.
1635.4 What are LSCs timekeeping standards?
LSC proposed replacing existing section 1635.3 with a new section 1635.4 that adopts documentation requirements for personal compensation from the Uniform Guidance. LSC
specifically sought comment on the question of when employees covered by part 1635 must record their time in a recipients timekeeping system.
Paragraph a proposed to establish several requirements for recipients timekeeping records, including that records encompass both LSC-funded and all other activities compensated by the recipient on an integrated basis. LSC
specifically requested comments on the question of when employees covered by part 1635 must record their time in a recipients timekeeping system.
Paragraph b proposed to require recipients to maintain records for employees who are not exempt from Fair Labor Standards Act overtime requirements stating the total number of hours worked each day. Paragraph c proposed to require recipients to use the same documentation and standards to justify counting salaries and wages of staff working on the LSC grant toward the cost-matching requirements of any Federal awards that they use to charge the salaries to the LSC grant.
Paragraph d proposed to allow recipients to establish the increments for which employees subject to part 1635 report their time, with the recommendation that the increment be no greater than one-quarter of an hour.
LSC proposed that paragraph e be a rewrite of previous paragraph d, with the language clarified and the reference to de minimis activities removed.
Comments: All eleven commenters discussed the proposed changes to this section. The comments on 1635.4
clustered around five major subcategories, outlined below.

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