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Federal Register / Vol. 86, No. 95 / Wednesday, May 19, 2021 / Rules and Regulations
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additional administrative costs, is not necessarily the most sensible approach for salaried staff working on the basic field grant, and would not necessarily provide any clear benefit when it comes to accurately allocating direct costs across funding sources.

The commenters read the proposed changes as meaning that LSC would require the reconciling of hours between a recipients payroll system and timekeeping system. One commenter discussed the fact that most payroll records do not reflect total hours that attorneys work. Rather, payroll tracks attendance and leave. Thus, they assert that payroll and timekeeping systems cannot be linked. Echoing this theme, another commenter said that the proposed changes conflates two separate, independent record keeping systems. This commenter stated that in most situations, the payroll and timekeeping records for attorneys will not match. Another commenter said that the requirement to reconcile deprives organizations of flexibility and options . . . by conflating these systems in the timekeeping regulation.
At least five commenters simply indicated that they didnt know what LSC meant by reconciling. A
commenter urged LSC not to adopt proposed 1635.5. But if LSC does adopt it, they asked that LSC clarify if reconciliation means a true reconciliationan accounting process that ensures two sets of records are in agreementor a more general comparison of records. Furthermore, this commenter advocated for LSC to allow the sampling of data as a means of comparison.
Other commenters expressed confusion over why LSC issued the proposed change in the first place. One commenter pointed out that LSC already can review timekeeping records as part of its annual audit. This commenter would like LSC to provide a more detailed discussion of the challenges it has faced so that it can provide alternate solutions. Additionally, another commenter would like to have a better understanding of LSCs needs in proposing this change. NLADA is unclear what the benefit would be to LSC.
Finally, a commenter suggested that 1635.5 not be added to the Timekeeping Requirement, but instead be located in part 1630Cost Standards and Procedures.
In LSCs conversation with NLADA, NLADA reiterated its stakeholders concerns with proposed 1635.5.
NLADA stated that they would like for LSC to clarify why the reconciliation requirement was incorporated in the first place. They said that recipient
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organizations reported that if they knew what the underlying problem was that LSC was attempting to correct with this rulemaking, they could then make alternative suggestions that would be less burdensome for them.
Response: LSC appreciates the commenters thoughtful concerns and will remove this section from the final rule. LSC drafted this proposed change to address issues raised by its compliance staff regarding difficulty they had experienced finding support in recipients records to justify salaries and wages the recipient charged directly to LSC grants and contracts. The comments make clear that LSCs proposed approach raises legitimate concerns about administrative burdens on grantees, as well as whether the approach will address the oversight concern LSC intended to resolve. LSC
will proceed with finalizing the rest of the changes proposed in this rulemaking; upon completion of this rulemaking, LSC will initiate conversations with stakeholders about how to address LSCs oversight needs while responding to stakeholders concerns.
Section 1635.6 Who outside the recipient has access to these records?
LSC proposed to make only stylistic changes to changes to this section.
Comments: NLADA stated that they did not have any objections to these changes. All other comments were silent on this section.
Response: LSC will redesignate this section as 1635.5 in the final rule and adopt the rule without additional changes.
Additional Comments Comments: NLADA and another commenter suggested that changes not be implemented until 2022. An additional commenter requested that LSC invite further discussion before adoption of any of the provisions.
Response: LSC agrees with the commenters. LSC will adopt the rule with an effective date of January 1, 2022.
List of Subjects in 45 CFR Part 1635
Grant programlaw; Legal services;
Reporting and recordkeeping requirements.
For the reasons discussed in the preamble, the Legal Services Corporation revises 45 CFR part 1635 to read as follows:
PART 1635TIMEKEEPING
REQUIREMENT
Sec.

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1635.1 What is the purpose of this part?
1635.2 Definitions.
1635.3 Who is covered by the timekeeping requirement?
1635.4 What are LSCs timekeeping standards?
1635.5 Who outside the recipient has access to these records?
Authority: 42 U.S.C. 2996ge.
1635.1

What is the purpose of this part?

This part is intended to improve recipient accountability for the use of all funds by:
a Assuring that allocations of direct costs to a recipients LSC grant pursuant to 45 CFR part 1630 are supported by accurate records of the cases, matters, and supporting activities for which the funds have been expended;
b Enhancing the recipients ability to determine the cost of specific functions;
and c Increasing the information available to LSC for assuring recipient compliance with Federal law and LSC
rules and regulations.
1635.2

Definitions.

As used in this part a Case means a form of program service in which a recipient employee provides legal assistance to one or more specific clients, including but not limited to providing representation in litigation, administrative proceedings, and negotiations, and such actions as advice, providing brief services, and transactional assistance.
b1 Case oversight means a supervisors review of a case for regulatory compliance, consistency with Case Service Report reporting rules, and quality control purposes. Case oversight activities include, but are not limited to, review of file for retainer, citizenship attestation or documentation of eligible non-citizen status, and documentation of financial eligibility determination;
review of closing codes; and review of advice provided or pleadings filed.
2 Case oversight activities may be counted as case activity when the supervisor conducts extended review of the substantive legal advice provided in the case. Case oversight activities may be reported as a supporting activity when it represents the aggregate of a supervisors time spent doing brief review of a large number of cases.
c Matter means an action that contributes to the overall delivery of program services but does not involve direct legal advice to or legal representation of one or more specific clients. Examples of matters include both direct services, such as community education presentations, operating pro se clinics, providing information about the availability of legal assistance, and
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