82 FR 20444 - Fee-Generating Cases
LEGAL SERVICES CORPORATION Federal Register Volume 82, Issue 83 (May 2, 2017)
Federal Register Volume 82, Issue 83 (May 2, 2017)
| Page Range | 20444-20447 | |
| FR Document | 2017-08835 |
[Federal Register Volume 82, Number 83 (Tuesday, May 2, 2017)] [Rules and Regulations] [Pages 20444-20447] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2017-08835] ======================================================================= ----------------------------------------------------------------------- LEGAL SERVICES CORPORATION 45 CFR Part 1609 Fee-Generating Cases AGENCY: Legal Services Corporation. ACTION: Final rule. ----------------------------------------------------------------------- SUMMARY: This final rule revises the Legal Services Corporation (LSC or Corporation) regulation regarding fee-generating cases. This rule clarifies the definition of ``fee-generating case,'' clarifies that brief advice is permitted by the regulation, and revises how a recipient accounts for attorneys' fees awards. DATES: This final rule is effective on June 1, 2017. FOR FURTHER INFORMATION CONTACT: Stefanie K. Davis, Assistant General Counsel, Legal Services Corporation, 3333 K Street NW., Washington, DC 20007; (202) 295-1563 (phone), (202) 337-6519 (fax), or sdavis@lsc.gov. SUPPLEMENTARY INFORMATION: I. Background Section 1007(b)(1) of the Legal Services Corporation Act of 1974 prohibits recipients from using LSC funds ``to provide legal assistance (except in accordance with guidelines promulgated by the Corporation) with respect to any fee-generating case[.]'' 42 U.S.C. 2996f(b)(1). LSC implemented this provision through 45 CFR part 1609. In the preamble to the original part 1609, LSC explained that the private bar is generally ``eager to accept contingent fee cases and cases in which there may be an award of attorneys' fees to be paid by the opposing party pursuant to [statute].'' 41 FR 38505, Sept. 10, 1976. LSC therefore drafted part 1609 to ``insure that recipients do not use scarce legal services resources when private attorneys are available to provide effective representation and . . . assist eligible clients to obtain appropriate and effective legal assistance.'' 45 CFR 1609.1(a), (b). Nevertheless, LSC recognized that ``there may be instances when no private attorney is willing to represent an individual, because the recovery of a fee is unlikely, the potential fee is too small, or some other reason.'' 41 FR 38505. To balance these considerations, LSC (1) defined ``fee-generating case'' to prohibit recipients from accepting cases that a private attorney would take, and (2) provided exceptions to the prohibition when adequate representation by the private bar is unavailable and contains safeguards to prevent recipients from taking cases the private bar would accept. Id. The definition of ``fee-generating case'' includes ``every situation in which an attorney reasonably may expect to receive a fee for services from any source except the client.'' Id. Specifically, LSC defined ``fee-generating case'' as ``any case or matter which, if undertaken on behalf of an eligible client by an attorney in private practice, reasonably may be expected to result in a fee for legal services from an award to a client, from public funds, or from the opposing party.'' Id. In Sec. 1609.3, LSC established circumstances in which a recipient may use LSC funds to provide legal assistance in a fee-generating case, such as after the case has been rejected by the local lawyer referral service or by two private attorneys. 45 CFR 1609.3(a)(1). In 1996, LSC proposed two changes to clarify the meaning of ``fee- generating case.'' First, LSC proposed ``[a] technical numerical change'' to the definition of ``fee-generating case'' which was intended ``to clarify that the definition includes fees from three sources: an award (1) to a client, (2) from public funds, or (3) from the opposing party.'' 61 FR 45765, Aug. 29, 1996. This proposed change resulted in comments about whether LSC intended to make substantive changes to the definition. 62 FR 19398, Apr. 21, 1997. Because LSC did not intend to change the definition and sought to avoid confusion about its intent, the Board of Directors (``Board'') rejected the numerical changes proposed in the Notice of Proposed Rulemaking (``NPRM''). Id. Nevertheless, the Board implemented a second proposed change by adopting language that explained what is not a ``fee-generating case.'' Id. The revision excluded court appointments from the definition because such cases, even where fees are paid, are considered a professional obligation. Id. Additionally, the revision excluded situations where recipients undertake representation under a contract with a government agency or other entity and the agency or entity pays the recipient ``because a contract payment does not constitute fees that come from an award to a client or attorneys' fees that come from the losing party in a case, or from public funds.'' Id.; see 45 CFR 1609.2(b). LSC has not made substantive changes [[Page 20445]] to the definition of ``fee-generating case'' since this revision. When a recipient may take a fee-generating case, part 1609 also prescribes how recipients account for attorneys' fees received in the case. Part 1609 requires the fees to be remitted to the recipient. 41 FR 38505, Sept. 10, 1976. In 1984, LSC adopted a new section, Sec. 1609.6, that requires attorneys' fees received by the recipient to be returned to the fund from which the resources to litigate the case came. 49 FR 19657, May 9, 1984. In other words, if the recipient funds a case half with LSC funds and half with private funds, Sec. 1609.6 requires the recipient to allocate any attorneys' fees received to each fund in equal proportion. Section 1609.6 also requires that fees be recorded during the accounting period in which the program receives the award. Id. In 1996, LSC's appropriation legislation provided that no LSC funds could be used to provide financial assistance to a recipient that receives attorneys' fees pursuant to any federal or state law. Sec. 504(a)(13), Pub. L. 104-134, 110 Stat. 1321, 1321-55; 75 FR 21507, Apr. 26, 2010. To implement this legislation, LSC created a separate rule, 45 CFR part 1642. 62 FR 25862, May 12, 1997 (final rule); 61 FR 45762, Aug. 29, 1996 (interim final rule). LSC moved Sec. 1609.6 to part 1642 and revised the provision to require recipients to allocate fees from cases or matters supported in whole or in part with LSC funds to the LSC fund in the same proportion that the case or matter was funded with LSC funds. Id. In a departure from then-existing Sec. 1609.6, LSC did not propose to dictate how recipients allocated remaining fees to their non-LSC accounts. Id. In 2010, Congress repealed the prohibition on accepting and retaining attorneys' fees. Sec. 533, Pub. L. 111-117, 123 Stat. 3034, 3157. LSC subsequently repealed part 1642 but retained two provisions relevant to accounting for attorneys' fee awards and accepting reimbursement of costs from a client. 75 FR 6816, Feb. 11, 2010 (interim final rule); 75 FR 21506, Apr. 26, 2010 (final rule). LSC placed these two provisions in part 1609 at Sec. Sec. 1609.4 and 1609.6, respectively. 75 FR 21508. LSC has made no changes to either section since then. LSC added rulemaking on part 1609 to its annual rulemaking agenda in June 2015. On July 17, 2016, the Operations and Regulations Committee (``Committee'') of the Board voted to recommend that the Board authorize rulemaking on part 1609. The Board voted to authorize rulemaking on July 18, 2016. On January 26, 2017, the Committee voted to recommend that the Board approve publication of an NPRM in the Federal Register for notice and comment. On January 28, 2017, the Board accepted the Committee's recommendation and voted to approve publication of the NPRM. LSC published the notice of proposed rulemaking in the Federal Register on February 13, 2017. 82 FR 10446, Feb. 13, 2017. The comment period remained open for thirty days and closed on March 15, 2017. Materials regarding this rulemaking are available in the open rulemaking section of LSC's Web site at http://www.lsc.gov/about-lsc/laws-regulations-guidance/rulemaking. After the effective date of the rule, those materials will appear in the closed rulemaking section at http://www.lsc.gov/about-lsc/laws-regulations-guidance/rulemaking/closed-rulemaking. II. Section-by-Section Discussion of Comments and Regulatory Provisions LSC received two comments during the public comment period. One comment was submitted by Northwest Justice Project (NJP), an LSC-funded recipient. The other comment was submitted by the National Legal Aid and Defender Association (NLADA) by its Civil Council, the elected representative body that establishes policy for the NLADA Civil Division, and its Regulations Committee. Both commenters were generally supportive of LSC's proposed changes to part 1609. III. Proposed Changes Section 1609.1 Purpose. LSC proposed no changes to this section. LSC received no comments on this section. Section 1609.2 Definition. Recipients have repeatedly requested guidance regarding what constitutes a fee-generating case as defined in Sec. 1609.2(a). Questions have included whether paid court appointments are fee- generating cases and whether ``advice and counsel'' or ``brief services'' are prohibited if the case may, during subsequent extended representation, develop into a fee-generating case. Recipients have also sought guidance regarding permissible sources of fees. Section 1609.2 currently provides, ``Fee-generating case means any case or matter which, if undertaken on behalf of an eligible client by an attorney in private practice, reasonably may be expected to result in a fee for legal services from an award to a client, from public funds or from the opposing party.'' 45 CFR 1609.2(a). A reader could interpret ``award'' as modifying only ``to a client'' and not to include an ``award . . . from public funds or [an award] from the opposing party.'' Thus, under the current definition, a recipient might accept a case that may result in an award from public funds, a result not intended by LSC. Therefore, LSC proposed removing ``from public funds or from the opposing party'' from the definition. Additionally, LSC proposed revising part 1609 to clarify that a recipient may provide brief services to an eligible client despite the possibility that the case ultimately may result in fees otherwise restricted by part 1609. In AO-2015-002, LSC considered whether a recipient may provide ``advice and counsel'' or ``limited services'' (as defined in 45 CFR 1611.2(a) and (e)) to an eligible client where the matter might constitute a fee-generating case if extended services were provided. Based on the language of Sec. 1609.3, which prohibits recipients from using LSC funds to provide assistance in ``every situation in which an attorney reasonably may expect to receive a fee[,]'' LSC concluded an ``attorney's reasonable expectation of such fees would not typically arise until after . . . initial advice or brief services was under way or had been completed.'' AO-2015-002, June 17, 2015. LSC proposed incorporating this clarification into part 1609 by adding a separate paragraph to Sec. 1609.2(b). The proposed paragraph explained that ``advice and counsel'' or ``limited services'' in matters that may later constitute fee-generating cases are not prohibited by part 1609. Finally, in response to questions regarding court appointments, current Sec. 1609.2(b) states that a court appointment pursuant to a statute or court rule or practice that is equally applicable to all attorneys in the jurisdiction is not a fee-generating case. 45 CFR 1609.2. LSC did not propose to change this language in the NPRM. Comments: NJP ``assume[d] that deletion of the source of the award to a client in proposed Sec. 1609.2(a) is intended to denote the availability of an attorneys' fee from funds that are paid to a lawyer from a monetary award to compensate the client for the injury or claim that is the subject to the litigation.'' NJP continued, ``As LSC notes, recipients may request, collect and retain an award of attorney fees as provided by law, so long as such a request is in the name of the recipient or the award is remitted to the recipient and accounted for pursuant to Sec. 1609.4.'' NJP provided no comment on proposed Sec. 1609.2 besides its assumption. [[Page 20446]] NLADA ``fully supports'' clarifying that advice and counsel or limited services do not fall within the meaning of fee-generating case. In NLADA's view, ``[t]he provision is beneficial to LSC eligible clients by affording them the opportunity to receive brief advice or services regarding a fee generating case. The program can provide legal advice or take limited action that can be critical to preserving the client's rights[.]'' Response: LSC is unsure what NJP's assumption means. If NJP is assuming the proposed language means that a case in which a court awards fees directly to the attorney rather than awarding fees to the client is no longer a ``fee-generating case'' for purposes of part 1609, the assumption is incorrect. LSC intends part 1609 to require recipients and their attorneys to consider whether cases that may result in fee awards are ones that can be handled by the private bar before accepting such cases. LSC does not intend to permit a recipient to accept a fee-generating case without first attempting to refer the case to the private bar simply because the court may award the attorneys' fee portion of an award directly to the recipient or its attorney instead of the client. Nevertheless, this restriction does not prohibit a recipient from accepting cases where permitted by Sec. 1609.2(b) or Sec. 1609.3. LSC believes the language in the proposed rule provides sufficient clarity regarding the intent of the rule and therefore adopts the proposed version in this final rule. Section 1609.3 General requirements. LSC proposed a technical change to the heading of Sec. 1609.3 to more accurately reflect the topic it addresses. Section 1609.3 briefly sets forth the general prohibition on a recipient using LSC funds to provide legal assistance in a fee-generating case. The bulk of Sec. 1609.3, however, prescribes the circumstances and procedures under which recipients may accept fee-generating cases. To more aptly reflect the substance of Sec. 1609.3, LSC proposed to rename Sec. 1609.3 Authorized representation in a fee-generating case. LSC received no comments on this change and therefore adopts the proposed version in this final rule. Section 1609.4 Accounting for and use of attorneys' fees. LSC proposed to revise part 1609's requirement to account for receipt of attorneys' fees. Currently, Sec. 1609.4 requires that attorneys' fees received in a case that the recipient used some amount of LSC funds to handle be allocated to the LSC grant account in proportion to which the LSC funds were used. 45 CFR 1609.4(a). This language requires the accounting only for attorneys' fees received by the recipient, which could be interpreted to mean that attorneys' fees awarded to a staff attorney in his or her own name need not be remitted to the recipient or be subject to the accounting requirement. To clarify that attorneys' fee awards received by either the recipient or a recipient's staff attorney are subject to the accounting requirement, LSC proposed the following revisions to Sec. 1609.4. First, LSC proposed to require recipients to file any petitions for attorneys' fees in the name of the recipient and not in the name of any staff attorney. To the extent a jurisdiction may allow an attorneys' fee petition in the recipient's name rather than a staff attorney's name, this change would help ensure that the court would award attorneys' fees to the organization and not to an individual staff attorney. LSC proposed placing this addition as Sec. 1609.4(a), and redesignating paragraphs (a) and (b) of existing Sec. 1609.4 as paragraphs (b) and (c), respectively. Second, LSC proposed to state explicitly in Sec. 1609.4(b) that, in the event a jurisdiction requires attorneys' fee petitions to be made in a staff attorney's name, the staff attorney must remit the award to the recipient, which must then allocate an award of attorneys' fees to its LSC grant account in proportion to the amount of LSC funds used to obtain the award. LSC believed that these two changes accommodate variations in state and local rules governing the award of attorneys' fees and help ensure that any attorneys' fee awards supported by LSC funds are adequately credited to LSC funds. Finally, to more aptly describe the substance of Sec. 1609.4, LSC proposed changing the heading to Requesting and receiving attorneys' fees. Comment: NJP had no concerns about requiring fee petitions to be made in the recipient's name to the extent permitted by law. NLADA generally supported the proposed revision clarifying that attorneys' fees are to be awarded to the recipient. NLADA, however, relayed a recipient's concern that state court rules may require licensed, individual attorneys to be designated on a petition for attorneys' fees instead of an organization. This contrasts with the proposed rule, which requires petitions for attorneys' fees to be filed in the name of the recipient ``to the extent permitted by law.'' Recognizing there may be differences among statutes, court rules, and other rules, NLADA recommended that the rule be revised to state ``to the extent required by law or rules in the jurisdiction.'' Response: LSC will adopt the recommendation with one change. As NLADA noted, LSC does not intend for an attorney to violate any applicable law or any applicable rule in his or her petition for attorney fees. To clarify that the regulation requires compliance with both the law and rules, LSC will add the language recommended by NLADA, except that LSC will use the conjunction ``and'' between the phrases ``to the extent permitted by law'' and ``rules in the jurisdiction.'' Section 1609.5 Acceptance of reimbursement from a client. To create consistency in the verbs used in the headings for Sec. Sec. 1609.4 and 1609.5 and more aptly describe the substance of the latter section, LSC proposed to change the heading to Receiving reimbursement from a client. LSC proposed no substantive changes to this section. LSC received no comments on this section. Consequently, LSC adopts the language proposed in the NPRM in this final rule Section 1609.6 Recipient policies, procedures and recordkeeping. LSC proposed no changes to this section. LSC received no comments on this section. List of Subjects in 45 CFR Part 1609 Administrative practice and procedure, Grant programs--law, Legal services. For the reasons set forth in the preamble, the Legal Services Corporation amends 45 CFR part 1609 as follows: PART 1609--FEE-GENERATING CASES 0 1. The authority citation for part 1609 is revised to read as follows: Authority: 42 U.S.C. 2996g(e). 0 2. In Sec. 1609.2: 0 a. Revise the section heading and paragraph (a); 0 b. Remove ``, or'' at the end of paragraph (b)(1) and add a semicolon in its place; 0 c. Remove the period at the end of paragraph (b)(2) and add ``; or'' in its place; and 0 d. Add paragraph (b)(3). The revision and addition read as follows: Sec. 1609.2 Definitions. (a) Fee-generating case means any case or matter which, if undertaken on [[Page 20447]] behalf of an eligible client by an attorney in private practice, reasonably may be expected to result in a fee for legal services from an award to a client. (b) * * * (3) A recipient provides only advice and counsel or limited services, as those terms are defined in 45 CFR 1611.1(a) and (e), to an eligible client. 0 3. Revise the heading of Sec. 1609.3 to read as follows: Sec. 1609.3 Authorized representation in a fee-generating case. * * * * * 0 4. Revise Sec. 1609.4 to read as follows: Sec. 1609.4 Requesting and receiving attorneys' fees. (a) Any petition seeking attorneys' fees for representation supported in whole or in part with funds provided by LSC, shall, to the extent permitted by law and rules in the jurisdiction, be filed in the name of the recipient. (b) Attorneys' fees received by a recipient or an employee of a recipient for representation supported in whole or in part with funds provided by LSC shall be allocated to the fund in which the recipient's LSC grant is recorded in the same proportion that the amount of LSC funds expended bears to the total amount expended by the recipient to support the representation. (c) Attorneys' fees received shall be recorded during the accounting period in which the money from the fee award is actually received by the recipient and may be expended for any purpose permitted by the LSC Act, regulations, and other law applicable at the time the money is received. 0 5. Revise the heading of Sec. 1609.5 to read as follows: Sec. 1609.5 Receiving reimbursement from a client. * * * * * Dated: April 26, 2017. Stefanie K. Davis, Assistant General Counsel. [FR Doc. 2017-08835 Filed 5-1-17; 8:45 am] BILLING CODE 7050-01-P
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G. Protest Activities Dated: April 24, 2017. To balance these considerations, LSC
The Coast Guard respects the First Benjamin A. Cooper, (1) defined ‘‘fee-generating case’’ to
Amendment rights of protesters. Captain, U.S. Coast Guard Captain of the prohibit recipients from accepting cases
Port, Delaware Bay. that a private attorney would take, and
Protesters are asked to contact the
[FR Doc. 2017–08819 Filed 4–27–17; 4:40 pm] (2) provided exceptions to the
person listed in the FOR FURTHER
prohibition when adequate
INFORMATION CONTACT section to BILLING CODE 9110–04–P
representation by the private bar is
coordinate protest activities so that your
unavailable and contains safeguards to
message can be received without
prevent recipients from taking cases the
jeopardizing the safety or security of LEGAL SERVICES CORPORATION
private bar would accept. Id. The
people, places or vessels.
45 CFR Part 1609 definition of ‘‘fee-generating case’’
List of Subjects in 33 CFR Part 165 includes ‘‘every situation in which an
Fee-Generating Cases attorney reasonably may expect to
Harbors, Marine safety, Navigation
receive a fee for services from any
(water), Reporting and recordkeeping AGENCY: Legal Services Corporation. source except the client.’’ Id.
requirements, Security measures, ACTION: Final rule. Specifically, LSC defined ‘‘fee-
Waterways.
generating case’’ as ‘‘any case or matter
For the reasons discussed in the SUMMARY: This final rule revises the which, if undertaken on behalf of an
preamble, the Coast Guard amends 33 Legal Services Corporation (LSC or eligible client by an attorney in private
CFR part 165 as follows: Corporation) regulation regarding fee- practice, reasonably may be expected to
generating cases. This rule clarifies the result in a fee for legal services from an
PART 165—REGULATED NAVIGATION definition of ‘‘fee-generating case,’’ award to a client, from public funds, or
AREAS AND LIMITED ACCESS AREAS clarifies that brief advice is permitted by from the opposing party.’’ Id. In
the regulation, and revises how a § 1609.3, LSC established circumstances
■ 1. The authority citation for part 165 recipient accounts for attorneys’ fees
continues to read as follows: in which a recipient may use LSC funds
awards. to provide legal assistance in a fee-
Authority: 33 U.S.C. 1231; 50 U.S.C. 191; generating case, such as after the case
DATES: This final rule is effective on
33 CFR 1.05–1, 6.04–1, 6.04–6, and 160.5; has been rejected by the local lawyer
Department of Homeland Security Delegation June 1, 2017.
FOR FURTHER INFORMATION CONTACT:
referral service or by two private
No. 0170.1.
Stefanie K. Davis, Assistant General attorneys. 45 CFR 1609.3(a)(1).
■ 2. Add § 165.T05–0152 to read as In 1996, LSC proposed two changes to
follows: Counsel, Legal Services Corporation,
clarify the meaning of ‘‘fee-generating
3333 K Street NW., Washington, DC
§ 165.T05–0152 Security Zone; Schuylkill case.’’ First, LSC proposed ‘‘[a] technical
20007; (202) 295–1563 (phone), (202)
River; Philadelphia, PA. numerical change’’ to the definition of
337–6519 (fax), or sdavis@lsc.gov.
‘‘fee-generating case’’ which was
(a) Definitions. As used in this SUPPLEMENTARY INFORMATION: intended ‘‘to clarify that the definition
section, designated representative includes fees from three sources: an
means a Coast Guard Patrol I. Background
award (1) to a client, (2) from public
Commander, including a Coast Guard Section 1007(b)(1) of the Legal funds, or (3) from the opposing party.’’
petty officer, warrant or commissioned Services Corporation Act of 1974 61 FR 45765, Aug. 29, 1996. This
officer operating a Coast Guard vessel prohibits recipients from using LSC proposed change resulted in comments
and a Federal, State, and local law funds ‘‘to provide legal assistance about whether LSC intended to make
enforcement officer designated by or (except in accordance with guidelines substantive changes to the definition. 62
assisting the Captain of the Port, promulgated by the Corporation) with FR 19398, Apr. 21, 1997. Because LSC
Delaware Bay in the enforcement of the respect to any fee-generating case[.]’’ 42 did not intend to change the definition
security zone. U.S.C. 2996f(b)(1). LSC implemented and sought to avoid confusion about its
(b) Location. The following area is a this provision through 45 CFR part intent, the Board of Directors (‘‘Board’’)
security zone: All the waters of the 1609. In the preamble to the original rejected the numerical changes
Schuylkill River from the Market Street part 1609, LSC explained that the proposed in the Notice of Proposed
Bridge north to the Fairmount dam. private bar is generally ‘‘eager to accept Rulemaking (‘‘NPRM’’). Id.
(c) Regulations. (1) Under the general contingent fee cases and cases in which Nevertheless, the Board implemented
security zone regulations in subpart D of there may be an award of attorneys’ fees a second proposed change by adopting
this part, persons may not enter the to be paid by the opposing party language that explained what is not a
security zone described in paragraph (b) pursuant to [statute].’’ 41 FR 38505, ‘‘fee-generating case.’’ Id. The revision
of this section unless authorized by the Sept. 10, 1976. LSC therefore drafted excluded court appointments from the
COTP or the COTP’s designated part 1609 to ‘‘insure that recipients do definition because such cases, even
representative. not use scarce legal services resources where fees are paid, are considered a
(2) To request permission to enter the when private attorneys are available to professional obligation. Id.
security zone, contact the COTP or the provide effective representation and Additionally, the revision excluded
COTP’s representative on VHF–FM . . . assist eligible clients to obtain situations where recipients undertake
channel 16. All persons and vessels in appropriate and effective legal representation under a contract with a
the security zone must comply with all assistance.’’ 45 CFR 1609.1(a), (b). government agency or other entity and
jstallworth on DSK7TPTVN1PROD with RULES
lawful orders or directions given to Nevertheless, LSC recognized that the agency or entity pays the recipient
them by the COTP or the COTP’s ‘‘there may be instances when no ‘‘because a contract payment does not
designated representative. private attorney is willing to represent constitute fees that come from an award
(d) Enforcement period. This section an individual, because the recovery of a to a client or attorneys’ fees that come
will be enforced from April 27, 2017 fee is unlikely, the potential fee is too from the losing party in a case, or from
through April 29, 2017 from 10:00 a.m. small, or some other reason.’’ 41 FR public funds.’’ Id.; see 45 CFR 1609.2(b).
to 6:00 p.m. each day. 38505. LSC has not made substantive changes
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to the definition of ‘‘fee-generating case’’ 18, 2016. On January 26, 2017, the could interpret ‘‘award’’ as modifying
since this revision. Committee voted to recommend that the only ‘‘to a client’’ and not to include an
When a recipient may take a fee- Board approve publication of an NPRM ‘‘award . . . from public funds or [an
generating case, part 1609 also in the Federal Register for notice and award] from the opposing party.’’ Thus,
prescribes how recipients account for comment. On January 28, 2017, the under the current definition, a recipient
attorneys’ fees received in the case. Part Board accepted the Committee’s might accept a case that may result in
1609 requires the fees to be remitted to recommendation and voted to approve an award from public funds, a result not
the recipient. 41 FR 38505, Sept. 10, publication of the NPRM. LSC intended by LSC. Therefore, LSC
1976. In 1984, LSC adopted a new published the notice of proposed proposed removing ‘‘from public funds
section, § 1609.6, that requires rulemaking in the Federal Register on or from the opposing party’’ from the
attorneys’ fees received by the recipient February 13, 2017. 82 FR 10446, Feb. definition.
to be returned to the fund from which 13, 2017. The comment period remained Additionally, LSC proposed revising
the resources to litigate the case came. open for thirty days and closed on part 1609 to clarify that a recipient may
49 FR 19657, May 9, 1984. In other March 15, 2017. provide brief services to an eligible
words, if the recipient funds a case half Materials regarding this rulemaking client despite the possibility that the
with LSC funds and half with private are available in the open rulemaking case ultimately may result in fees
funds, § 1609.6 requires the recipient to section of LSC’s Web site at http:// otherwise restricted by part 1609. In
allocate any attorneys’ fees received to www.lsc.gov/about-lsc/laws-regulations- AO–2015–002, LSC considered whether
each fund in equal proportion. Section guidance/rulemaking. After the effective a recipient may provide ‘‘advice and
1609.6 also requires that fees be date of the rule, those materials will counsel’’ or ‘‘limited services’’ (as
recorded during the accounting period appear in the closed rulemaking section defined in 45 CFR 1611.2(a) and (e)) to
in which the program receives the at http://www.lsc.gov/about-lsc/laws- an eligible client where the matter might
award. Id. regulations-guidance/rulemaking/ constitute a fee-generating case if
In 1996, LSC’s appropriation closed-rulemaking. extended services were provided. Based
legislation provided that no LSC funds on the language of § 1609.3, which
could be used to provide financial II. Section-by-Section Discussion of
prohibits recipients from using LSC
assistance to a recipient that receives Comments and Regulatory Provisions
funds to provide assistance in ‘‘every
attorneys’ fees pursuant to any federal LSC received two comments during situation in which an attorney
or state law. Sec. 504(a)(13), Pub. L. the public comment period. One reasonably may expect to receive a
104–134, 110 Stat. 1321, 1321–55; 75 FR comment was submitted by Northwest fee[,]’’ LSC concluded an ‘‘attorney’s
21507, Apr. 26, 2010. To implement this Justice Project (NJP), an LSC-funded reasonable expectation of such fees
legislation, LSC created a separate rule, recipient. The other comment was would not typically arise until after . . .
45 CFR part 1642. 62 FR 25862, May 12, submitted by the National Legal Aid and initial advice or brief services was under
1997 (final rule); 61 FR 45762, Aug. 29, Defender Association (NLADA) by its way or had been completed.’’ AO–2015–
1996 (interim final rule). LSC moved Civil Council, the elected representative 002, June 17, 2015. LSC proposed
§ 1609.6 to part 1642 and revised the body that establishes policy for the incorporating this clarification into part
provision to require recipients to NLADA Civil Division, and its 1609 by adding a separate paragraph to
allocate fees from cases or matters Regulations Committee. Both § 1609.2(b). The proposed paragraph
supported in whole or in part with LSC commenters were generally supportive explained that ‘‘advice and counsel’’ or
funds to the LSC fund in the same of LSC’s proposed changes to part 1609. ‘‘limited services’’ in matters that may
proportion that the case or matter was III. Proposed Changes later constitute fee-generating cases are
funded with LSC funds. Id. In a not prohibited by part 1609.
departure from then-existing § 1609.6, Section 1609.1 Purpose. Finally, in response to questions
LSC did not propose to dictate how LSC proposed no changes to this regarding court appointments, current
recipients allocated remaining fees to section. LSC received no comments on § 1609.2(b) states that a court
their non-LSC accounts. Id. this section. appointment pursuant to a statute or
In 2010, Congress repealed the court rule or practice that is equally
prohibition on accepting and retaining Section 1609.2 Definition. applicable to all attorneys in the
attorneys’ fees. Sec. 533, Pub. L. 111– Recipients have repeatedly requested jurisdiction is not a fee-generating case.
117, 123 Stat. 3034, 3157. LSC guidance regarding what constitutes a 45 CFR 1609.2. LSC did not propose to
subsequently repealed part 1642 but fee-generating case as defined in change this language in the NPRM.
retained two provisions relevant to § 1609.2(a). Questions have included Comments: NJP ‘‘assume[d] that
accounting for attorneys’ fee awards and whether paid court appointments are deletion of the source of the award to a
accepting reimbursement of costs from a fee-generating cases and whether client in proposed § 1609.2(a) is
client. 75 FR 6816, Feb. 11, 2010 ‘‘advice and counsel’’ or ‘‘brief services’’ intended to denote the availability of an
(interim final rule); 75 FR 21506, Apr. are prohibited if the case may, during attorneys’ fee from funds that are paid
26, 2010 (final rule). LSC placed these subsequent extended representation, to a lawyer from a monetary award to
two provisions in part 1609 at §§ 1609.4 develop into a fee-generating case. compensate the client for the injury or
and 1609.6, respectively. 75 FR 21508. Recipients have also sought guidance claim that is the subject to the
LSC has made no changes to either regarding permissible sources of fees. litigation.’’ NJP continued, ‘‘As LSC
section since then. Section 1609.2 currently provides, notes, recipients may request, collect
LSC added rulemaking on part 1609 ‘‘Fee-generating case means any case or and retain an award of attorney fees as
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to its annual rulemaking agenda in June matter which, if undertaken on behalf of provided by law, so long as such a
2015. On July 17, 2016, the Operations an eligible client by an attorney in request is in the name of the recipient
and Regulations Committee private practice, reasonably may be or the award is remitted to the recipient
(‘‘Committee’’) of the Board voted to expected to result in a fee for legal and accounted for pursuant to
recommend that the Board authorize services from an award to a client, from § 1609.4.’’ NJP provided no comment on
rulemaking on part 1609. The Board public funds or from the opposing proposed § 1609.2 besides its
voted to authorize rulemaking on July party.’’ 45 CFR 1609.2(a). A reader assumption.
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![20446 Federal Register / Vol. 82, No. 83 / Tuesday, May 2, 2017 / Rules and Regulations
NLADA ‘‘fully supports’’ clarifying amount of LSC funds to handle be may be differences among statutes, court
that advice and counsel or limited allocated to the LSC grant account in rules, and other rules, NLADA
services do not fall within the meaning proportion to which the LSC funds were recommended that the rule be revised to
of fee-generating case. In NLADA’s used. 45 CFR 1609.4(a). This language state ‘‘to the extent required by law or
view, ‘‘[t]he provision is beneficial to requires the accounting only for rules in the jurisdiction.’’
LSC eligible clients by affording them attorneys’ fees received by the recipient, Response: LSC will adopt the
the opportunity to receive brief advice which could be interpreted to mean that recommendation with one change. As
or services regarding a fee generating attorneys’ fees awarded to a staff NLADA noted, LSC does not intend for
case. The program can provide legal attorney in his or her own name need an attorney to violate any applicable law
advice or take limited action that can be not be remitted to the recipient or be or any applicable rule in his or her
critical to preserving the client’s subject to the accounting requirement. petition for attorney fees. To clarify that
rights[.]’’ To clarify that attorneys’ fee awards the regulation requires compliance with
Response: LSC is unsure what NJP’s received by either the recipient or a both the law and rules, LSC will add the
assumption means. If NJP is assuming recipient’s staff attorney are subject to language recommended by NLADA,
the proposed language means that a case the accounting requirement, LSC except that LSC will use the conjunction
in which a court awards fees directly to proposed the following revisions to ‘‘and’’ between the phrases ‘‘to the
the attorney rather than awarding fees to § 1609.4. First, LSC proposed to require extent permitted by law’’ and ‘‘rules in
the client is no longer a ‘‘fee-generating recipients to file any petitions for the jurisdiction.’’
case’’ for purposes of part 1609, the attorneys’ fees in the name of the
recipient and not in the name of any Section 1609.5 Acceptance of
assumption is incorrect. reimbursement from a client.
LSC intends part 1609 to require staff attorney. To the extent a
recipients and their attorneys to jurisdiction may allow an attorneys’ fee To create consistency in the verbs
consider whether cases that may result petition in the recipient’s name rather used in the headings for §§ 1609.4 and
in fee awards are ones that can be than a staff attorney’s name, this change 1609.5 and more aptly describe the
handled by the private bar before would help ensure that the court would substance of the latter section, LSC
accepting such cases. LSC does not award attorneys’ fees to the organization proposed to change the heading to
intend to permit a recipient to accept a and not to an individual staff attorney. Receiving reimbursement from a client.
fee-generating case without first LSC proposed placing this addition as LSC proposed no substantive changes to
attempting to refer the case to the § 1609.4(a), and redesignating this section. LSC received no comments
private bar simply because the court paragraphs (a) and (b) of existing on this section. Consequently, LSC
may award the attorneys’ fee portion of § 1609.4 as paragraphs (b) and (c), adopts the language proposed in the
an award directly to the recipient or its respectively. NPRM in this final rule
attorney instead of the client. Second, LSC proposed to state
Section 1609.6 Recipient policies,
Nevertheless, this restriction does not explicitly in § 1609.4(b) that, in the procedures and recordkeeping.
prohibit a recipient from accepting cases event a jurisdiction requires attorneys’
fee petitions to be made in a staff LSC proposed no changes to this
where permitted by § 1609.2(b) or section. LSC received no comments on
§ 1609.3. attorney’s name, the staff attorney must
remit the award to the recipient, which this section.
LSC believes the language in the
proposed rule provides sufficient clarity must then allocate an award of List of Subjects in 45 CFR Part 1609
regarding the intent of the rule and attorneys’ fees to its LSC grant account Administrative practice and
therefore adopts the proposed version in in proportion to the amount of LSC procedure, Grant programs—law, Legal
this final rule. funds used to obtain the award. LSC services.
believed that these two changes
Section 1609.3 General requirements. accommodate variations in state and For the reasons set forth in the
local rules governing the award of preamble, the Legal Services
LSC proposed a technical change to Corporation amends 45 CFR part 1609
the heading of § 1609.3 to more attorneys’ fees and help ensure that any
attorneys’ fee awards supported by LSC as follows:
accurately reflect the topic it addresses.
Section 1609.3 briefly sets forth the funds are adequately credited to LSC PART 1609—FEE-GENERATING
general prohibition on a recipient using funds. CASES
LSC funds to provide legal assistance in Finally, to more aptly describe the
a fee-generating case. The bulk of substance of § 1609.4, LSC proposed ■ 1. The authority citation for part 1609
§ 1609.3, however, prescribes the changing the heading to Requesting and is revised to read as follows:
circumstances and procedures under receiving attorneys’ fees.
Authority: 42 U.S.C. 2996g(e).
which recipients may accept fee- Comment: NJP had no concerns about
requiring fee petitions to be made in the ■ 2. In § 1609.2:
generating cases. To more aptly reflect ■ a. Revise the section heading and
the substance of § 1609.3, LSC proposed recipient’s name to the extent permitted
by law. NLADA generally supported the paragraph (a);
to rename § 1609.3 Authorized ■ b. Remove ‘‘, or’’ at the end of
representation in a fee-generating case. proposed revision clarifying that
paragraph (b)(1) and add a semicolon in
LSC received no comments on this attorneys’ fees are to be awarded to the
its place;
change and therefore adopts the recipient. NLADA, however, relayed a
■ c. Remove the period at the end of
proposed version in this final rule. recipient’s concern that state court rules
paragraph (b)(2) and add ‘‘; or’’ in its
may require licensed, individual
place; and
jstallworth on DSK7TPTVN1PROD with RULES
Section 1609.4 Accounting for and use of attorneys to be designated on a petition ■ d. Add paragraph (b)(3).
attorneys’ fees. for attorneys’ fees instead of an The revision and addition read as
LSC proposed to revise part 1609’s organization. This contrasts with the follows:
requirement to account for receipt of proposed rule, which requires petitions
attorneys’ fees. Currently, § 1609.4 for attorneys’ fees to be filed in the § 1609.2 Definitions.
requires that attorneys’ fees received in name of the recipient ‘‘to the extent (a) Fee-generating case means any
a case that the recipient used some permitted by law.’’ Recognizing there case or matter which, if undertaken on
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![Federal Register / Vol. 82, No. 83 / Tuesday, May 2, 2017 / Rules and Regulations 20447
behalf of an eligible client by an DEPARTMENT OF COMMERCE Management Act (16 U.S.C. 1801 et
attorney in private practice, reasonably seq.).
may be expected to result in a fee for National Oceanic and Atmospheric Under § 635.5(b)(1), dealers must
legal services from an award to a client. Administration electronically submit reports on sharks
that are first received from a vessel on
(b) * * * 50 CFR Part 635 a weekly basis through a NMFS-
(3) A recipient provides only advice approved electronic reporting system.
[Docket No. 160620545–6999–02]
and counsel or limited services, as those Reports must be received by no later
terms are defined in 45 CFR 1611.1(a) RIN 0648–XF211 than midnight, local time, of the first
and (e), to an eligible client. Tuesday following the end of the
Atlantic Highly Migratory Species; reporting week unless the dealer is
■ 3. Revise the heading of § 1609.3 to Commercial Blacktip Sharks, otherwise notified by NMFS. Under
read as follows: Aggregated Large Coastal Sharks, and § 635.28(b)(4), the quotas of certain
Hammerhead Sharks in the Western species and/or management groups are
§ 1609.3 Authorized representation in a
Gulf of Mexico Sub-Region; Closure linked. If quotas are linked, when the
fee-generating case.
AGENCY: National Marine Fisheries specified quota threshold for one
* * * * * management group or species is reached
Service (NMFS), National Oceanic and
■ 4. Revise § 1609.4 to read as follows: Atmospheric Administration (NOAA), and that management group or species
Commerce. is closed, the linked management group
§ 1609.4 Requesting and receiving or species closes at the same time
attorneys’ fees. ACTION: Temporary rule; closure.
(§ 635.28(b)(3)). The quotas for
(a) Any petition seeking attorneys’ SUMMARY: NMFS is closing the aggregated LCS and the hammerhead
fees for representation supported in commercial fishery for blacktip sharks, shark management groups in the
whole or in part with funds provided by aggregated large coastal sharks (LCS) western Gulf of Mexico sub-region are
LSC, shall, to the extent permitted by and hammerhead shark management linked (§ 635.28(b)(4)(iii)). The blacktip
groups in the western Gulf of Mexico shark quota in the western Gulf of
law and rules in the jurisdiction, be
sub-region. This action is necessary Mexico sub-region is not linked to the
filed in the name of the recipient.
because the commercial landings of aggregated LCS or hammerhead shark
(b) Attorneys’ fees received by a aggregated LCS in the western Gulf of quotas. Regulations at § 635.28(b)(2) and
recipient or an employee of a recipient Mexico sub-region for the 2017 fishing § 635.28(b)(5) authorize the closure of
for representation supported in whole or season exceeded 80 percent of the the blacktip shark fishery in the Gulf of
in part with funds provided by LSC available commercial quota as of April Mexico at a regional or sub-regional
shall be allocated to the fund in which 26, 2017, and the aggregated LCS and level when landings have reached or are
the recipient’s LSC grant is recorded in hammerhead shark management groups expected to reach 80 percent of the
the same proportion that the amount of are quota-linked under the regulations. quota or, after considering certain
LSC funds expended bears to the total The blacktip shark fishery in the criteria and relevant factors, before
amount expended by the recipient to western Gulf of Mexico sub-region will those situations occur.
support the representation. be closed to minimize regulatory Under § 635.28(b)(2) and
discards of aggregate LCS in the western § 635.28(b)(3), when NMFS calculates
(c) Attorneys’ fees received shall be that the landings for any species and/or
recorded during the accounting period Gulf of Mexico sub-region, which are
often caught in conjunction with management group of either a non-
in which the money from the fee award linked or a linked group have reached
blacktip sharks in the commercial shark
is actually received by the recipient and or are projected to reach a threshold of
fisheries. This closure will affect anyone
may be expended for any purpose 80 percent of the available quota, NMFS
commercially fishing for sharks in the
permitted by the LSC Act, regulations, western Gulf of Mexico sub-region. will file for publication with the Office
and other law applicable at the time the of the Federal Register a notice of
DATES: The commercial fishery for
money is received. closure for all of the species and/or
blacktip sharks, aggregated LCS and management groups of either a non-
■ 5. Revise the heading of § 1609.5 to hammerhead shark management groups linked or linked group that will be
read as follows: in the western Gulf of Mexico sub- effective no fewer than 5 days from date
region are closed effective 11:30 p.m. of filing. From the effective date and
§ 1609.5 Receiving reimbursement from a local time May 2, 2017 until the end of
client. time of the closure until and if NMFS
the 2017 fishing season on December 31, announces, via a notice in the Federal
* * * * * 2017, or until and if NMFS announces Register, that additional quota is
Dated: April 26, 2017. via a notice in the Federal Register that available and the season is reopened,
additional quota is available and the the fisheries for all linked species and/
Stefanie K. Davis,
season is reopened. or management groups and specified
Assistant General Counsel. FOR FURTHER INFORMATION CONTACT: non-linked species and/or management
[FR Doc. 2017–08835 Filed 5–1–17; 8:45 am] Lauren Latchford or Karyl Brewster- groups are closed, even across fishing
BILLING CODE 7050–01–P Geisz 301–427–8503; fax 301–713–1917. years.
SUPPLEMENTARY INFORMATION: The On November 23, 2016 (81 FR 84491),
Atlantic shark fisheries are managed NMFS announced that for 2017, the
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under the 2006 Consolidated Highly commercial western Gulf of Mexico
Migratory Species (HMS) Fishery blacktip shark sub-regional quota was
Management Plan (FMP), its 331.6 metric tons (mt) dressed weight
amendments, and implementing (dw) (730,425 lb dw), the western Gulf
regulations (50 CFR part 635) issued of Mexico aggregated LCS sub-regional
under authority of the Magnuson- quota was 72.0 mt dw (158,724 lb dw),
Stevens Fishery Conservation and and the western Gulf of Mexico
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Document Created: 2017-05-02 00:04:56
Document Modified: 2017-05-02 00:04:56
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Rules and Regulations | |
| Action | Final rule. | |
| Dates | This final rule is effective on June 1, 2017. | |
| Contact | Stefanie K. Davis, Assistant General Counsel, Legal Services Corporation, 3333 K Street NW., Washington, DC 20007; (202) 295-1563 (phone), (202) 337-6519 (fax), or [email protected] | |
| FR Citation | 82 FR 20444 | |
| CFR Associated | Administrative Practice and Procedure; Grant Programs-Law and Legal Services |
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