Child Support Enforcement Program; State Plan Approval and Grant Procedures, State Plan Requirements, Standards for Program Operations, Federal Financial Participation, Computerized Support Enforcement Systems

In reviewing the regulations for corrections missed in the interim final rule, we found a typographical error in § 302.65. To correct this, we are making a technical change to correct the spelling of “criteria” in paragraph (c)(7).

Required State Laws—§ 302.70

1. Comment: Two commenters pointed out that since §§ 303.103 and 303.105 are eliminated, references to them in paragraphs (a)(4) and (7) should be eliminated.

Response: We agree and are deleting these references. In addition to the changes raised by commenters, we are making a similar technical correction to paragraph (c) by replacing “§§ 303.100 through 303.105 of this chapter” with “§§ 303.100 through 303.102 and § 303.104 of this chapter”.

2. Comment: Two commenters noted that paragraph (a)(5)(ii) refers to obsolete “§§ 232.40 through 232.49 of this title” and should be changed to refer to section 454(29) of the Act.

Response: We have deleted the regulatory references in that clause and added the reference to section 454(29) of the Act.

3. Comment: One commenter recommended that we remove paragraphs (a)(1) through (a)(11) as they restate the provisions of the Act but retain introductory language in paragraph (a).

Response: Paragraphs (a)(1) through (11) not only restate provisions in section 466 of the Act, they also cross-reference related requirements in Part 303 of the regulations. We are looking at the best way to present these requirements and will address any needed changes during future revisions to this section.

4. Comment: One commenter noted that we should replace “wages” with “income” in paragraph (a)(8).

Response: We have made this technical revision for consistency with section 466(a)(1) and (b) of the Act.

Procedures for the Imposition of Late Payment Fees on Noncustodial Parents Who Owe Overdue Support—§ 302.75

1. Comment: A commenter noted that paragraph (b)(6) refers to § 305.50, which no longer exists.

Response: The reference to § 305.50 in the interim final regulation was a typographical error. In paragraph (b)(6), we are correcting the citation by changing “§ 305.50” to “§ 304.50”.

Mandatory Computerized Support Enforcement System—§ 302.85

1. Comment: A commenter suggested editing paragraph (b)(2), governing the conditions for waiver of certain automated systems requirements, because it refers to 45 CFR part 305 which was removed and reserved by the interim final rule.

Response: Since publication of the interim final rule, a new part 305 was added to the regulations. Section 305.63 of this part contains requirements for determining substantial compliance with title IV-D of the Act as a result of an audit conducted under § 305.60. Thus, we are not changing the reference to part 305 in this section.

Location of Noncustodial Parents—§ 303.3

1. Comment: With the expanded Federal Parent Locator Service (FPLS), States submit cases in their State Case Registries to the Federal Case Registry (FCR). When a new case is submitted to the FCR, it is matched proactively with other data in the FPLS and States receive locate information automatically. Now that this proactive matching occurs, the commenter asked if there is still a need for States to submit cases quarterly to the FPLS for locate? Also, is it still necessary to access all appropriate location sources, including the FPLS, within 75 calendar days of determining that location is necessary and to make repeated locate attempts, including transmitting cases to the FPLS, when new information becomes available on a case?

Response: Proactive matching between the FCR and the National Directory of New Hires (NDNH) occurs each time new information is added to an FCR or NDNH record on an individual. The proactive match information is sent electronically to State IV-D agencies daily when a match occurs to link a IV-D case with newly provided information. This is a major enhancement to program locate processes and leads to location of individuals sought in many child support cases. Further location attempts may remain necessary in cases where people are self-employed, employed but not reported, unemployed but not receiving unemployment compensation, or employed outside the United States by entities that do not report to the FPLS. In addition, location efforts are needed to find assets, debts, and other information that enables an agency to proceed with a case even though proactive match information is provided on new hires, quarterly wages and unemployment compensation. OCSE has issued PIQ-01-02, dated February 28, 2001, to address these changes. The PIQ indicates States are not required to submit cases to the FPLS for searches of other locate sources, but OCSE encourages this if the State has reason to believe that an FPLS query may be helpful. States are not required to submit cases to the FPLS quarterly, nor are they required to make repeated locate attempts to the FPLS, when new information becomes available, since constant updating of FCR and NDNH databases and ongoing proactive matching are in place.

Establishment of Paternity—§ 303.5

1. Comment: A commenter noted that this section is amended to include administrative orders for genetic testing. As amended, the language eliminates reference to certain paternity actions taken in court. The commenter asked if we intend to drop the requirement for the child support agency to obtain an order for repayment of costs for genetic tests if the tests were ordered as part of a court process.

Response: In § 303.5(d)(2) we deleted “legal” to indicate that a contested paternity case is any action in which the issue of paternity may be raised under State law and one party denies paternity. The action may occur through an administrative or judicial process. The amendment deleting “legal” did not eliminate court actions.

2. Comment: Two commenters asked whether the phrase in paragraph (c) which reads “and use through competitive procurement laboratories” is correct.

Response: This phrase is accurate. States must follow competitive procurement practices, consistent with requirements at 45 CFR part 74, and use accredited laboratories that perform legally and medically acceptable genetic tests at reasonable cost, consistent with requirements at section 466(a)(5)(F) of the Act.

3. Comment: One commenter noted that the use of the phrase “alleged father who has denied paternity” in paragraph (e)(3) is inconsistent with section 466(a)(5)(B)(ii)(I) of the Act which requires recoupment from the alleged father if paternity is established, whether or not he denies paternity.

Response: Section 466(a)(5)(B)(ii)(I) of the Act provides for recoupment at State option only in contested cases where the agency has to order genetic tests and paternity is established. The commenter raises issues that go beyond the scope of this technical rulemaking. We will consider this comment in future revisions to this section through proposed rulemaking.

Provision of Services in Interstate IV-D Cases—§ 303.7

1. Comment: Several commenters noted that the preamble to the interim final rule (64 FR 6241) indicates paragraph (b)(1) is amended to require States to use their long-arm statute to establish paternity, but there is no corresponding requirement in the regulation itself.

Response: We have corrected this error by revising paragraph (b)(1) to read: “Use its long-arm statute to establish paternity, when appropriate.” As indicated in the preamble to the interim final rule, all States have long-arm paternity establishment authority under UIFSA.

2. Comment: One commenter suggested changing “wage withholding to “income withholding” in paragraph (b)(2).

Response: We agree and have made this change for consistency with section 466(a)(1) and (b) of the Act which refer to income withholding.

3. Comment: One commenter noted that the preamble indicated that regulatory references in paragraphs (c)(7)(ii) and (iii) were placed in the correct numerical order, but there was no corresponding change in the regulation itself.

Response: We have made these changes, as intended in the interim final rule. In paragraph (c)(7)(ii) we are correcting “§§ 303.4 and 303.101 of this part and § 303.31 of this chapter” to read “§§ 303.4, 303.31 and 303.101 of this part”. Similarly, in paragraph (c)(7)(iii) we are correcting “§§ 303.6 and 303.100 through 303.102 and 303.104 of this part and § 303.31 of this chapter” to read “§§ 303.6, 303.31, 303.100 through 303.102, and 303.104 of this part”.

4. Comment: Several commenters suggested that § 303.7(c)(7)(iv) be revised to require the IV-D agency to forward payments to the initiating State within 2 business days of the date of receipt in the State Disbursement Unit of the responding State.

Response: We agree that this suggestion is consistent with section 454B of the Act, which requires SDUs to disburse certain amounts within 2 business days of receipt, but it is not required by statute and therefore not included in this rulemaking. The 2-day time frame applies only to collections from employers and collections of other periodic income. Collections that do not result from periodic income, such as tax refund offsets, lottery winning intercept, or levies of assets, are not required to be distributed within 2 days, as there may be appeals of these types of collections. We will consider changes to time frames applicable to interstate cases in the next revision to § 303.7 under a Notice of Proposed Rulemaking.

Review and Adjustment of Child Support Orders—§ 303.8

1. Comment: There were two comments concerning definitions for “review” and “adjustment” that were in the former § 303.8. One commenter suggested that we retain the former definitions of “review” and “adjustment”, but rename them as “guidelines review” and “guidelines adjustment”. The commenter made this suggestion because most States will continue with guideline reviews.

The second commenter believed that the language for this section might be construed to mandate administrative reviews. The commenter suggested that we amend the regulation by including a process for challenging a proposed adjustment or determination, apart from the review that takes place in the judicial setting. The commenter believes that if their State complies with the new provisions, there would be no proposed order or adjustment. In the commenter's State, a litigant files a motion with the court, the court rules on the motion; and either party can appeal the order.

Response: We agree with these comments. We have reinstated the terms “review” and “adjustment” from the former § 303.8(a)(1) and (3) as applicable to guidelines reviews only.

Reinstating the definition of “review” also clarifies that reviews are not mandated to be conducted only by administrative process. The definition for “review” includes “proceeding before a court, quasi-judicial process, or administrative body”.

2. Comment: One commenter was concerned that the 15-day timeframe to determine whether to conduct a review was eliminated.

Response: The 15-day timeframe to determine whether or not to conduct a review was removed because it conflicts with the requirement that States review, at least once every 3 years, any case upon receipt of a request for review.

3. Comment: We received a few comments about notices. Two commenters questioned whether the requirement to provide the notice of the right to request a review is met by placing such notice in the order. Another commenter asked, in a case with multiple orders, which State sends the notice of the right to request a review and the notice of the results of the review. A fourth commenter asked when to send these notices and how to implement this requirement since each case has a different date of application, different date of review, and States vary in frequency permitted between reviews.

Response: Section 466(a)(10)(C) of the Act requires the State to provide notice to each parent subject to the order not less than once every 3 years informing them of their right to request the State to review and, if appropriate, adjust the order pursuant to this paragraph. The paragraph also states that the notice may be included in the order. Including the notice in the order merely takes care of the first year requirement; the triennial requirement must still be fulfilled.

With respect to cases with multiple orders, the State that is working the case should send the notice of the right to request a review, or if it issues an order, may include the notice in the order. Notice of the right to request a review must be sent every 3 years thereafter if the State continues to work the case. Any State that conducts a review must send the notice of the results of the review. A review conducted in a case with multiple orders would include a determination of the controlling order and reconciliation of all arrearages under the orders in accordance with the Uniform Interstate Family Support Act (UIFSA). Once a controlling order determination is made, UIFSA governs who has jurisdiction to adjust or modify the controlling order.

Since section 466(a)(10)(C) was effective October 1, 1996, States should have notice procedures in place. Each State has authority to meet this requirement in a manner that is most efficient for its system and resources. Notices can be sent all at one time or on a staggered basis according to the State's own procedures.

4. Comment: There were two comments regarding the use of thresholds and change of circumstances. One commenter noted that an Office of Inspector General report indicated that 40 States maintained the requirement to meet thresholds showing a substantial change in circumstances before a review is conducted or an adjustment is made, which they use regardless of the frequency of reviews. The commenter asked whether thresholds for the 3-year reviews upon request could be less prohibitive than the thresholds for reviews that are conducted more frequently that require a substantial change of circumstances. Another commenter thought that even the 3-year reviews should require a substantial change in circumstances since it is required by the more frequent reviews.

Response: States may not require proof or a showing of a change in circumstances in a 3-year review upon request. Under section 466(a)(10)(A)(iii) of the Act, and upon request, 3-year reviews, and adjustment, if appropriate, are automatic, without any proof of a change of circumstances. If a party desires a review sooner than once every 3 years, the party must show a substantial change of circumstances for an adjustment of the order, consistent with section 466(a)(10)(B) of the Act.

In reviewing § 303.8 and the comments received, we determined that the changes made by the interim final rule were not fully reflective of the statutory requirements in section 466(a)(10) of the Act and that this was leading to confusion about what States must do to meet the requirements. Therefore, in addition to reinstating the definitions for “review” and “adjustment” from the original regulation in response to comments, we have decided to replace the paragraph (b) language published in the interim final rule with the language in the statute at section 466(a)(10) of the Act. We are revising paragraph (c) to clarify that States may use a quantitative standard only in cases involving the use of automated methods in accordance with section 466(a)(10)(A)(i)(III) of the Act. That section alone refers to orders being “eligible for adjustment,” recognizing there might be some standard set to determine eligibility for adjustment. The other two methods of review (guidelines and cost-of-living) do not contain this language. Sections 303.8(a) and (d) through (f) remain as published in the interim final rule. A summary of the changes to this section follows.

We are revising paragraph (b)(1) by restating the requirements of section 466(a)(10)(A)(I)(i) of the Act that the State must have procedures under which reviews are performed every 3 years upon request of either parent or, in the case of an assignment under part A, upon the request of the State agency, taking into account the best interests of the child. For clarity, and consistency with section 466(a)(10) of the Act, paragraph (b)(1)(i) is added to the regulation to explain guideline reviews; paragraph (b)(1)(ii) is added to explain cost of living adjustment (COLA) reviews; and paragraph (b)(1)(iii) is added to explain the automated reviews. These three subparagraphs repeat the statutory requirements of section 466(a)(10)(A)(i)(I)-(III).

Current paragraph (b)(2) of the regulation is redesignated as paragraph (b)(6) and revised to be consistent with the statute, as discussed below.

We are adding a new paragraph (b)(2) which restates section 466(a)(10)(A)(ii) of the Act, to specify that either party may contest an adjustment within 30 days after the date of the notice of the adjustment in the case of a COLA or automated review by making a request for a guideline review, and adjustment, if appropriate.

We are reinstating former definitions for “adjustment” and “review” in a new paragraph (b)(3) for use in guideline reviews only, in response to comments.

We are restating section 466(a)(10)(A)(iii) of the Act in a new paragraph (b)(4), which specifies that adjustments under guideline reviews do not require proof or showing of a change in circumstances.

We are adding new paragraph (b)(5) to restate section 466(a)(10)(B) of the Act regarding making a request for a review outside the 3-year cycle. If the requesting party demonstrates a substantial change in circumstances, the State must adjust the order in accordance with its guidelines.

We are redesignating former paragraph (b)(2) as new paragraph (b)(6) and revising it to restate section 466(a)(10)(C) of the Act regarding notice not less than once every 3 years informing parents of their right to request a review. We have retained the provision in the current regulation that the notice must specify the place and manner in which the request should be made.

Paragraph (c) is amended by adding a paragraph title and the words “using automated methods under paragraph (b)(1)(iii)” to indicate that the reasonable quantitative standard for determining adequate grounds for petitioning for adjustment of the order applies only when the review is done using automated methods, as required under section 466(a)(10)(A)(i)(III) of the Act.

Paragraphs (d) through (f) are unchanged with the exception of the technical changes of adding a title to paragraph (d), changing the words “to petition for” to “initiate an” in paragraph (d) and substituting “must” for “will” in paragraph (f).

Agreements To Use the Federal Parent Locator Service (FPLS) in Parental Kidnapping and Child Custody Cases—§ 303.15

1. Comment: One commenter thought that paragraph (a)(1) which defines authorized persons should be revised consistent with changes made by the Adoption and Safe Families Act of 1997 (ASFA).

Response: ASFA amended section 453 of the Act by adding title IV-B and title IV-E agencies to the list of authorized persons to whom FPLS information may be disclosed for the purpose of establishing parentage. Section 302.35(c) already includes these authorized persons, in accordance with ASFA amendments to section 453 of the Act. ASFA did not amend the list of authorized persons in section 463 of the Act, which governs the regulations at § 303.15.

We amended this section, but failed to amend the title. We are revising the section title to reflect the addition of “visitation” determinations as an authorized purpose of the agreements. We are also making technical changes in paragraph (a)(1)(i) by replacing the period at the end with a semicolon and in paragraph (a)(1)(ii) by replacing “visistation” with “visitation” and by adding “or” after the semi-colon.

Minimum Organizational and Staffing Requirements—§ 303.20

1. Comment: One commenter noted that paragraph (e)(3) refers to parts 220, 222 and 226 of 45 CFR chapter II, which no longer exist.

Response: We agree with the commenter and have removed the reference to the obsolete regulations.

2. Comment: One commenter noted that paragraph (g) remains although it refers to part 305, which was removed.

Response: Requirements governing audits to determine substantial compliance with title IV-D requirements under section 452(a)(4) of the Act were placed back in part 305 by final regulations governing incentives and penalties published December 27, 2000 (see OCSE-AT-01-01). Therefore, the reference to part 305 is accurate.

Safeguarding Information—§ 303.21

1. Comment: Commenters expressed varied opinions regarding removing, retaining or revising this regulation. One commenter recommended that we retain this regulation as the following will be lost: (1) Paragraphs (a)(1) and (3) limit the sharing of information; (2) paragraph (a)(4) clarifies that information may be shared with officials charged with investigating physical, mental, or sexual abuse; and (3) paragraph (b) prohibits disclosure of case specific identifying information to legislative bodies. The new language of section 454(26) of the Act is not as precise and does not clarify what would be unauthorized. Moreover, the commenter noted that § 307.13 deals only with information in the States' computerized databases. The commenter believes it is important to retain privacy rights of IV-D participants.

Another commenter agreed that the regulation was inconsistent with PRWORA and should be deleted or substantially revised. The commenter encourages the Secretary to issue an updated regulation to replace this regulation as soon as possible. States' access to information has been vastly expanded under PRWORA and States need guidance on use of data and disclosure of information, including dealing with the family violence indicator.

A third commenter indicated that eliminating paragraph (b) while OCSE works on its new regulation might result in broader disclosure to legislative bodies during this time of intensive study of TANF and child support enforcement programs.

Response: We are maintaining our decision to delete this regulation because it was not responsive to the post-welfare reform environment. It protected information only on applicants and recipients of IV-D services. It did not protect information that IV-D agencies have on noncustodial parents and children, nor did it protect information that IV-D agencies now have on persons who may not be involved in a IV-D case, such as new hires, wage earners and individuals receiving unemployment compensation. Section 454(26) of the Act requires States to have safeguards in effect to protect all confidential information handled by the State agency. It further prohibits release of information under certain circumstances such as when there is a protective order in place. The regulation allowed broader disclosure of some information that is no longer permitted under the Act. Release of personal information to legislative bodies is not permitted under section 454(26) of the Act, which requires States to protect confidential information in their possession.

A work group of State and Federal members met in 2001 to discuss the types of issues that need to be addressed in publication of a proposed replacement regulation, which is now under development. We recognize the importance of protecting the privacy of data handled by IV-D agencies. Despite the deletion of § 303.21, certain safeguarding requirements remain in effect that cover States' automated systems. For example, final rules issued August 3, 1998 (63 FR 44795) on Statewide automated systems address safeguarding of information contained in the States' child support databases.

Securing and Enforcing Medical Support Obligations—§ 303.31

1. Comment: Several commenters asked whether the IV-D agency is required to enforce an order which requires the noncustodial parent to provide health insurance in instances where the custodial parent already provides such coverage and does not want the noncustodial parent's coverage. One of the commenters suggested allowing a waiver of the requirement to enforce the noncustodial parent's coverage. The commenter suggested that the waiver could include petitioning the court or administrative authority to include the custodial parent's coverage in the order, and pursuing coverage from the noncustodial parent only if the custodial parent does not have coverage other than Medicaid.

Response: If a support order requires a noncustodial parent to provide health insurance coverage, the only way for a IV-D agency to avoid enforcing that order is a change to the order. There is no authority under sections 466(a)(19) or 452(f) of the Act to waive the requirement to enforce noncustodial parents' health insurance coverage. Section 452(f) requires the Secretary of HHS to issue regulations requiring IV-D agencies to include medical support as part of any child support order and to enforce medical support whenever health care coverage is available to the noncustodial parent at a reasonable cost. Section 466(a)(19) of the Act requires the use of the National Medical Support Notice (NMSN) to enforce an order that contains a requirement for health care coverage. Unless the order allows for alternative coverage, a IV-D agency must send the NMSN to the noncustodial parent's employer, if known, as required in section 466(a)(19) of the Act and § 303.32, published December 27, 2000 and effective March 27, 2001 (see OCSE-AT-01-02).

2. Comment: Two commenters indicated that regulations should assure that all orders include health insurance, consistent with section 452(f) of the Act. Another commenter recommended that we revise paragraphs (b)(1), (2), and (4) to delete any references to “petition”, just as CSPIA deleted the reference to “petition” in section 452(f) of the Act.

Response: We agree that CSPIA required the Secretary, in section 452(f), to issue regulations requiring IV-D agencies to include medical support as part of any child support order. Separate regulations will be issued that offer the public an opportunity for comment.

Requests by the State Parent Locator Service (SPLS) for Information From the Federal Parent Locator Service (FPLS)—§ 303.70

1. Comment: One commenter suggested we revise paragraph (d)(1) by replacing “to obtain information or to facilitate the discovery of any individual” with “to obtain information on, or to facilitate the discovery of, the location of any individual”. The commenter noted that paragraph (d)(1) does not track section 453(a)(3) of the Act which states that the FPLS may be used for the purpose of enforcing any Federal or State law with respect to the unlawful taking or restraint of a child. The commenter expressed concern if the change to paragraph (e)(1)(i), which governs fees for use of the FPLS, means that IV-D agencies will be charged fees for cases other than just non-IV-A, locate only, and parental kidnapping/child custody cases. The commenter indicated that IV-D agencies should not have to pay fees for use of the FPLS in IV-A cases. Finally, the commenter proposed that the paragraph (e)(1)(iii) cite should be to section 453(k)(3) of the Act, not to section 453(k) of the Act.

Response: We did not make the revision described in the first comment. While the regulation language is not exact, we believe it generally covers the requirement. We agree with the commenter's second comment and have added “Federal or” before “State” for consistency with the statute. Regarding the commenter's third concern about being charged additional fees for use of the FPLS, PRWORA changed the requirements on FPLS fees and now States must pay for all information received from the FPLS pursuant to section 453(k)(3) of the Act. (See DCL-00-73, dated June 28, 2000, which explains OCSE's charges to States for using the FPLS.) We agree with the commenter's final point and have revised paragraph (e)(1)(iii) by citing section 453(k)(3) of the Act.

Requests for Collection of Past-Due Support by Federal Tax Refund Offset—§ 303.72

1. Comment: One commenter noted three instances of “Secretary of the Treasury” that should be replaced by “Secretary of the U. S. Treasury”.

Response: We agree with the comment and made this change throughout the section. In addition, we are making a technical change by revising “an title IV-A” to “a title IV-A” in paragraph (a)(3)(iv). Finally, paragraph (h)(3) is amended to delete the language “fSecretary of the U.S. Treasuryt” which was included in the paragraph in error.

Procedures for Income Withholding—§ 303.100

1. Comment: Several commenters noted that some references to “wages” have not been replaced by “income”.

Response: We will make these changes in paragraphs (e)(1)(i) and (g).

2. Comment: One commenter noted that the preamble does not explain that paragraphs (h)(5)(i) through (iii), (6) and (7) have been deleted or why.

Response: The interim final rule explained that former paragraph (h) was redesignated as paragraph (f) and revised to provide updated standards for program operations for both the traditional two-state interstate income withholding remedy and UIFSA's new one-state direct income withholding remedy. Former paragraphs (h)(5)(i)-(iii) were deleted because PRWORA revised section 466(b)(4) of the Act to remove the requirements for an advance notice in cases of initiated income withholding. We did not intend to delete former paragraphs (h)(6) and (7), which govern due process and which State law governs in interstate withholding situations. Since these paragraphs were inadvertently omitted in the interim final rule, they are reinstated in this regulation and redesignated as paragraphs (f)(4) and (5).

3. Comment: One commenter noted that throughout this section the term “wages” is replaced with the term “income”, but the term “employer” was not similarly expanded upon. The continued use of the term “employer” seems to limit the impact of the requirements provided in this section to income derived only from employers.

Response: Use of the term “employer” is consistent with its use in section 466(b) of the Act.

4. Comment: One commenter asked whether the 14-day implementation time frame has been eliminated in paragraph (e)(1)(ix). If it has been eliminated, can State laws provide a time frame for employers to implement income withholding?

Response: The 14-day time frame was tied to the advance notice to the noncustodial parent that was eliminated by PRWORA. Section 466(b)(6)(A)(i) of the Act and § 303.100(e)(1)(ix) state that employers must pay the withheld amount to the SDU within 7 business days after the date the amount would have been paid or credited to the employee.

5. Comment: One commenter noted that Basic Housing Allowances/separate rations are not taxable and should not be included in income withholding; only basic pay should be included.

Response: Our regulations at § 302.56 say that a State shall have procedures for setting guidelines and that the guidelines must take into consideration all earnings and income of the noncustodial parent. Basic housing allowances and rations are not excluded from the definition of income subject to withholding under section 466(b)(8) of the Act.

6. Comment: Two commenters pointed out a conflict between § 303.100(e)(2) and (3) that require income withholding notices to employers to be issued within 15 calendar days while Federal law at section 454A(g)(1)(A)(i) of the Act requires notices to be sent to employers within 2 business days. This commenter asked whether there are actually 2 different requirements.

Response: Sections 453A(g)(1) of the Act requires the State to transmit an income withholding notice to an employer within 2 business days after the date information regarding a newly hired employee is entered into the State Directory of New Hires. Section 454A(g)(1)(A)(i) of the Act and implementing regulations at § 307.11(c)(1)(i) require the statewide automated system to transmit income withholding orders and notices to employers and other debtors within 2 business days after receipt of notice of income and the income source subject to withholding from a court, another State, an employer, the Federal Parent Locator Service, or another source recognized by the State. Under these provisions, the 2-day time frame for sending a withholding order or notice applies only to situations in which the State Directory of New Hires or the statewide automated system receives notice of the new hire or income source subject to withholding. We have revised paragraphs (e)(2) and (3) to include reference to the 2-day timeframe for sending the withholding notice as described above and retained the 15-day time frame in the current regulation for other situations where notification is not received by the State Directory of New Hires or the automated system.

7. Comment: One commenter noted that the reference to “paragraph (f)(1) of this section” in paragraph (e)(4) is in error. The correct reference should be to “paragraph (e)(1)”.

Response: We agree with the commenter and in response to this technical error have made the correction to paragraph (e)(4) by replacing the citation “paragraph (f)(1) of this section” with “paragraph (e)(1) of this section”.

Expedited Processes—§ 303.101

1. Comment: A commenter recommended that paragraph (b)(2) be revised to reference review and adjustment timeframes at § 303.8(e).

Response: As currently written, § 303.101 provides for expedited processes for establishing and enforcing support orders. The commenter suggests a modification to this section to add expedited review and adjustment of orders. We consider this to be a substantive change that is not appropriate for this technical rulemaking. We will consider this comment in any future revision to this section.

We are making a technical correction in paragraph (a) of this section by inserting a period after “Definition”.

Collection of Overdue Support by State Income Tax Refund Offset—§ 303.102

1. Comment: One commenter noted in § 303.102(a)(1) the word “or” needs to be inserted following “section 408(a)(3) of the Act”.

Response: We agree with this comment. In § 303.102(a)(1), we are making a technical correction by inserting the word “or” following “section 408(a)(3) of the Act”. In addition, we are making an editorial change to the language of paragraph (g)(1) because, as it currently reads, subparagraph (ii) is a sentence fragment with no subject.

Procedures for the Imposition of Liens against Real and Personal Property—§ 303.103

1. Comment: One commenter suggested that Federal guidance regarding implementing lien requirements is necessary.

Response: To clarify the issue of direct imposition of liens across State lines, we issued OCSE-PIQ-99-06 on August 16, 1999. We believe further guidance in this area is more appropriate through development of technical assistance publications and examples of model practices used by States. Current information on State lien and levy laws may be found on the OCSE Web site at “www.acf.dhhs.gov/programs/cse”. Click on “Online Interstate Roster and Referral Guide (IRG)”, then click on a particular State, and then click on “View State FIDM Information” for a matrix of lien information specific to each State.

Availability and Rate of Federal Financial Participation—§ 304.20

1. Comment: One commenter suggested that paragraph (b)(1)(iii)(C) be revised to include “Indian Tribes or Tribal Organizations” as added in § 302.34. Section 304.20(b)(1)(iii)(C) cross-references § 302.34.

Response: We agree with the commenter. We have revised § 304.20(b)(1)(iii)(C) to read: “Cooperation with courts, law enforcement officials, and Indian Tribes or Tribal organizations pursuant to § 302.34 of this chapter.”

2. Comment: One commenter indicated that paragraphs (b)(1)(viii)(C) and (ix)(C) were removed because the IV-A agency no longer determines cooperation. The commenter suggests that these paragraphs be reinstated and revised, as there is still an exchange of information between IV-D and IV-A about cooperation determinations made by the IV-D agency. Section 304.20(b)(1)(ix) prior paragraph (D) was removed for the same reasons and it should also be reinstated and revised.

Response: In § 304.20, paragraphs (b)(1)(viii)(C) and (b)(1)(ix)(C) were removed because of the transfer of responsibility for determining cooperation from the IV-A agency and the Medicaid agency to the IV-D agency. Therefore, agreements are no longer necessary. Any activity associated with the IV-D agency's determination of cooperation under section 454(29) of the Act is an allowable cost under the IV-D program.

Determination of Federal Share of Collections—§ 304.26

1. Comment: One commenter indicated that regulations for the determination of the Federal share of collections are confusing. The commenter recommends deleting “to the extent of its participation in the financing of the title IV-A and title IV-E payments” in paragraph (a) and indicating that the Federal share be determined pursuant to section 457(c)(2) of the Act.

Response: We agree and revised paragraph (a) by deleting the confusing language and adding that, in computing the Federal share of support collections for assistance made under titles IV-A and IV-E, the State must use the Federal medical assistance percentage (FMAP) in effect for the fiscal year in which the amount is distributed, as defined in section 457(c)(3) of the Act.

2. Comment: One commenter notes that the 4th, 5th and 6th sentences of the preamble description are inaccurate and should be replaced with: “Section 457(c)(3)(A) defines the FMAP rate to be 75 percent in the case of Puerto Rico, the Virgin Islands, Guam and American Samoa. Section 457(c)(3)(B) specifies that the FMAP rates as defined at section 1905(b) of the Act be used for any other State.” The commenter also suggests that we revise paragraph (a) by removing “to the extent of its participation in the financing of the title IV-A and title IV-E payment” and add “the Federal share of the support collections” in its place and revise the next sentence to read: “In computing the Federal share of support collections for assistance made under titles IV-A and IV-E, the State shall use the Federal medical assistance percentage (FMAP) in effect for the fiscal year in which the amount is distributed as defined in sections 457(c)(3) and 1905(b) of the Act.”

Response: We agree with the commenter and have included these changes with minor editorial modifications. We are revising paragraph (a) of this section to be consistent with the revised language of sections 457(c)(2) and (3) of the Act that specifies the use of the Federal Medical Assistance Percentage (FMAP) formula in calculating the Federal share of child support collections. Section 457(c)(2) specifies that the Federal share of collections is the portion of the amount collected resulting from the application of the FMAP in effect for the fiscal year in which the amount is distributed. Section 457(c)(3)(A) defines the FMAP rate to be 75 percent for Puerto Rico, the Virgin Islands, Guam, and America Samoa. Section 457(c)(3)(B) specifies that the FMAP rates for any other State are as defined in section 1905(b) of the Act, as in effect on September 30, 1995.

Repayment of Federal Funds by Installments—§ 304.40

1. Comment: One commenter suggests that in the last sentence of paragraph (b)(3), we delete “Quarterly Statement of Expenditures (SRA-OA-41) reports” and replace it with “Quarterly Report of Expenditures and Estimates”.

Response: We agree with the commenter and are updating the reference to the form since the name of the form has changed. We are amending paragraph (b)(3) of this section by removing “Quarterly Statement of Expenditures (SRA-OA-41) reports” and replacing it with “Quarterly Report of Expenditures and Estimates”.

Definitions—307.1

In paragraph (c) we are replacing “non-AFDC” with “non-IV-A” to eliminate the obsolete reference to the old AFDC program.

Functional Requirements for Computerized Support Enforcement Systems in Operation by October 1, 1997—§ 307.10

We have made technical corrections in paragraphs (b)(10) and (b)(14)(ii) and (iii) to correct two typographical errors and change “AFDC” to “IV-A''.

Paperwork Reduction Act

Information collection requirements of the Paperwork Reduction Act of 1995 (44 U.S.C. 3507 (d)) were fulfilled for this final rule. All required State plan preprints were approved by OMB on March 5, 2003 under OMB No. 0970-0017. Also new forms were approved as OMB Nos. 0970-0085 on December 5, 2000 (Standard Interstate Forms), 0970-0152 on March 27, 2001 (Lien and Subpoena Forms), and 0970-0154 on March 7, 2001 (Income Withholding Form). Technical corrections were made to the Lien Form, which was reissued in May 2002, but no new information collection was required by the change. An additional information collection burden consisted of updating the State plan by removing the State plan preprint page for Section 3.12, Payment of Support through the IV-D agency or Other Entity. This was required because 45 CFR 302.57, Procedures for payment of support through the IV-D agency or other entity, was removed by the interim final rule. OMB approved this information collection burden on September 13, 1999 under OMB No. 0970-0017. Otherwise, this rule does not require information collection activities, and, therefore, no additional approvals are necessary under the Paperwork Reduction Act.

Regulatory Flexibility Analysis

The Secretary certifies, under 5 U.S.C. 605(b), as enacted by the Regulatory Flexibility Act (Pub. L. 96-354), that this rule will not result in a significant impact on a substantial number of small entities. The primary impact is on State governments and individuals and results from restating the provisions of the statute. State governments are not considered small entities under the Act.

Regulatory Impact Analysis

Executive Order 12866 requires that regulations be reviewed to ensure that they are consistent with the priorities and principles set forth in the Executive Order. The Department has determined that this rule is consistent with these priorities and principles. No costs are associated with this rule as it merely ensures consistency between the statute and regulations.

Unfunded Mandates Reform Act of 1995

Section 202 of the Unfunded Mandates Reform Act of 1995 requires that a covered agency prepare a budgetary impact statement before promulgating a rule that includes any Federal mandate that may result in the expenditure by State, local, and Tribal governments, in the aggregate, or by the private sector, of $100 million or more in any one year.

If a covered agency must prepare a budgetary impact statement, section 205 further requires that it select the most cost-effective and least burdensome alternative that achieves the objectives of the rule and is consistent with the statutory requirements. In addition, section 203 requires a plan for informing and advising any small governments that may be significantly or uniquely impacted by the final rule.

We have determined that the final rule will not result in the expenditure by State, local, and Tribal governments, in the aggregate, or by the private sector, of more than $100 million in any one year. Accordingly, we have not prepared a budgetary impact statement, specifically addressed the regulatory alternatives considered, or prepared a plan for informing and advising any significantly or uniquely impacted small governments.

Congressional Review

This final rule is not a major rule as defined in 5 U.S.C. chapter 8.

Assessment of Federal Regulations and Policies on Families

Section 654 of the Treasury and General Government Appropriations Act of 1999 requires Federal agencies to determine whether a proposed policy or regulations may affect family well being. If the agency's determination is affirmative, then the agency must prepare an impact assessment addressing seven criteria specified in the law. These regulations will not have an impact on family well being as defined in the legislation. This regulation merely aligns existing Federal regulations with Federal legislation and, like the Federal legislation, will positively impact families needing support.

Executive Order 13132

Executive Order 13132 on Federalism applies to policies that have Federalism implications, defined as “regulations, legislative comments or proposed legislation, and other policy statements or actions that have substantial direct effects on the States, or on the distributions of power and responsibilities among the various levels of government”. This rule does not have Federalism implications for State or local governments as defined in the Executive Order.

(Catalog of Federal Domestic Assistance Programs No. 93.563, Child Support Enforcement Program)

Dated: October 28, 2002.

Wade F. Horn,

Assistant Secretary for Children and Families.

Approved: January 30, 2003.

Tommy G. Thompson,

Secretary.

(a) Definition. For purposes of this section, Parent includes any custodial parent or noncustodial parent (or for purposes of requesting a review, any other person or entity who may have standing to request an adjustment to the child support order).

(b) Required procedures. Pursuant to section 466(a)(10) of the Act, when providing services under this chapter:

(1) The State must have procedures under which, every 3 years (or such shorter cycle as the State may determine), upon the request of either parent, or, if there is an assignment under part A, upon the request of the State agency under the State plan or of either parent, the State shall with respect to a support order being enforced under this part, taking into account the best interests of the child involved:

(i) Review and, if appropriate, adjust the order in accordance with the guidelines established pursuant to section 467(a) of the Act if the amount of the child support award under the order differs from the amount that would be awarded in accordance with the guidelines;

(ii) Apply a cost-of-living adjustment to the order in accordance with a formula developed by the State; or

(iii) Use automated methods (including automated comparisons with wage or State income tax data) to identify orders eligible for review, conduct the review, identify orders eligible for adjustment, and apply the appropriate adjustment to the orders eligible for adjustment under any threshold that may be established by the State.

(2) If the State elects to conduct the review under paragraph (b)(1)(ii) or (iii) of this section, the State must have procedures which permit either party to contest the adjustment, within 30 days after the date of the notice of the adjustment, by making a request for review and, if appropriate, adjustment of the order in accordance with the child support guidelines established pursuant to section 467(a) of the Act.

(3) If the State conducts a guideline review under paragraph (b)(1)(i) of this section:

(i) Review means an objective evaluation, conducted through a proceeding before a court, quasi-judicial process, or administrative body or agency, of information necessary for application of the State's guidelines for support to determine:

(A) The appropriate support award amount; and

(B) The need to provide for the child's health care needs in the order through health insurance coverage or other means.

(ii) Adjustment applies only to the child support provisions of the order, and means:

(A) An upward or downward change in the amount of child support based upon an application of State guidelines for setting and adjusting child support awards; and/or

(B) Provision for the child's health care needs, through health insurance coverage or other means.

(4) The State must have procedures which provide that any adjustment under paragraph (b)(1)(i) of this section shall be made without a requirement for proof or showing of a change in circumstances.

(5) The State must have procedures under which, in the case of a request for a review, and if appropriate, an adjustment outside the 3-year cycle (or such shorter cycle as the State may determine) under paragraph (b)(1) of this section, the State shall review and, if the requesting party demonstrates a substantial change in circumstances, adjust the order in accordance with the guidelines established pursuant to section 467(a) of the Act.

(6) The State must provide notice not less than once every 3 years to the parents subject to the order informing the parents of their right to request the State to review and, if appropriate, adjust the order consistent with this section. The notice must specify the place and manner in which the request should be made. The initial notice may be included in the order.

(c) Standard for adequate grounds. The State may establish a reasonable quantitative standard based upon either a fixed dollar amount or percentage, or both, as a basis for determining whether an inconsistency between the existent child support award amount and the amount of support determined as a result of a review using automated methods under paragraph (b)(1)(iii) of this section is adequate grounds for petitioning for adjustment of the order.

(d) Health care needs must be adequate basis. The need to provide for the child's health care needs in the order, through health insurance or other means, must be an adequate basis under State law to initiate an adjustment of an order, regardless of whether an adjustment in the amount of child support is necessary. In no event shall the eligibility for or receipt of Medicaid be considered to meet the need to provide for the child's health care needs in the order.

(e) Timeframes for review and adjustment. Within 180 calendar days of receiving a request for a review or locating the non-requesting parent, whichever occurs later, a State must: Conduct a review of the order and adjust the order or determine that the order should not be adjusted, in accordance with this section.

(f) Interstate review and adjustment. (1) In interstate cases, the State with legal authority to adjust the order must conduct the review and adjust the order pursuant to this section.

(2) The applicable laws and procedures for review and adjustment of child support orders, including the State guidelines for setting child support awards, established in accordance with § 302.56 of this chapter, are those of the State in which the review and adjustment, or determination that there be no adjustment, takes place.

(f) * * *

(4) The withholding must be carried out in full compliance with all procedural due process requirements of the State in which the noncustodial parent is employed.

(5) Except with respect to when withholding must be implemented which is controlled by the State where the support order was entered, the law and procedures of the State in which the noncustodial parent is employed shall apply.

(g) Distribution of collections. (1) The State must distribute collections received as a result of State income tax refund offset:

(i) In accordance with section 457 of the Act and §§ 302.51 and 302.52 of this chapter; and

(a) From the amounts of support collected by the State and retained as reimbursement for title IV-A payments and foster care maintenance payments under title IV-E, the State shall reimburse the Federal government the Federal share of the support collections. In computing the Federal share of support collections for assistance payments made under titles IV-A and IV-E, the State shall use the Federal medical assistance percentage in effect for the fiscal year in which the amount is distributed. The Federal medical assistance percentage is:

(1) 75 percent for Puerto Rico, the Virgin Islands, Guam, and American Samoa; and

(2) As defined in section 1905(b) of the Act as in effect on September 30, 1995, for any other State.

[FR Doc. 03-11223 Filed 5-9-03; 8:45 am]

BILLING CODE 4184-01-U