Final TANF Rule as published in the Federal Register 4/12/1999

17804 Federal Register / Vol. 64, No. 69 / Monday, April 12, 1999 / Rules and Regulations
Response: A State may choose to send
its responses by certified mail, but we
are not convinced that we need to
include this as a regulatory requirement.
Comment: A commenter asked that
we specify in the regulations that we
would not assess any penalties pending
the resolution of a State’s claim of
reasonable cause.
Response: If a State claims reasonable
cause and we find against the State, the
State may then submit a corrective
compliance plan or file an appeal to the
HHS Departmental Appeals Board
(DAB), as discussed in § 262.7. If the
State does not take either action, we will
assess the penalty in the quarter or fiscal
year that immediately follows our final
decision, as appropriate. However, if the
State submits a corrective compliance
plan, we will not assess a penalty until
the corrective compliance process is
completed. If the State appeals to the
DAB, we will not assess the penalty
until the appeals process is completed.
If the DAB upholds our decision, we
will take the penalty and charge interest
back to the date of our final response
that formally notifies the Governor of
the State of an adverse action.
Section 262.5—Under What General
Circumstances Will We Determine That
a State Has Reasonable Cause? (§ 272.5
of the NPRM)
Under the provisions of section 409,
we will not impose certain of the
penalties if a State demonstrates that it
had reasonable cause. Also, we will
reduce or excuse certain penalties if a
State corrects or discontinues the
violations under an accepted corrective
compliance plan.
After reviewing these statutory
provisions, we decided that we should
not consider the reasonable cause
exception of the statute in isolation.
Rather, we would view it in conjunction
with the provision for developing
corrective compliance plans. In this
context, we acknowledge the new
Federal and State roles under TANF and
commit to working with States to
minimize adversarial Federal-State
issues. Our primary task is to help each
State operate the most effective program
it can to meet the needs of its caseload
and the goals and provisions of the law.
Through these rules, we hope to focus
States on positive steps that they should
take to correct situations that resulted in
a determination that they are subject to
a penalty, rather than to let them simply
avoid the penalty. As such, we consider
it appropriate to emphasize the use of
the corrective compliance plan process
over the reasonable cause exception.
Consequently, we have decided to limit
the list of reasonable cause criteria.
In the discussion that follows, we
describe: (1) the factors that we will
consider in deciding whether or not to
excuse a penalty based on a State’s
claim of reasonable cause; (2) the
contents of an acceptable corrective
compliance plan; and (3) the process for
applying these provisions. Our goal is to
treat the reasonable cause and corrective
compliance plan provisions as part of an
integrated process.
We have included factors that would
be applicable to all penalties for which
the reasonable cause provision applies.
We will find that a State has reasonable
cause under the following situations: (1)
Natural disasters and other calamities
(e.g., hurricanes, tornadoes,
earthquakes, fires, floods, etc.) whose
disruptive impact was so significant as
to cause the State’s failure to meet a
requirement; (2) formally issued Federal
guidance that provided incorrect
information resulting in the State’s
failure; and (3) isolated problems of
minimal impact that are not indicative
of a systemic problem (e.g., although a
State’s policies and procedures require
that Federal TANF assistance be timelimited
to five years and include
computer safeguards to protect against
violations, ten families somehow slip
through and receive assistance for
longer than five years).
We also have included two separate
factors that would apply in cases when
the State fails to satisfy the minimum
participation rates, and one specific
factor that would apply to cases when
the State fails to meet the five-year limit.
We discuss these specific factors in our
preamble discussion of domestic
violence and §§ 261.52 and 264.3.
As discussed elsewhere in this
preamble, we have also added a factor
that will apply if States fail to meet
either of the first two deadlines for FY
2000 for submitting complete and
accurate reports under the new
reporting requirements. We added this
factor in response to comments and out
of our own concern about the possible
concurrent demands of Y2K and TANF
reporting requirements. States must be
in a position to commit the systems
resources necessary to become Y2K
compliant in order to ensure that there
is no disruption in the benefits to their
neediest citizens.
We did not have the latitude under
the law merely to extend the reporting
deadlines (because they are set in
statute). Also, we were unwilling to
extend the ‘‘emergency reporting’’ into
FY 2000 and provide a later effective
date for the new reporting provisions
because important TANF provisions
(e.g., the work participation rates)
depend upon consistent data and
policies throughout the entire fiscal
year. Thus, we have addressed the
concern as a reasonable cause issue.
Under the new provision, States that
miss the deadlines for submitting
complete and accurate data for the first
two quarters of FY 2000 will receive
reasonable cause if: (1) they can clearly
demonstrate that their failure was
attributable to Y2K compliance
activities; and (2) they submit the
required data by July 1, 2000.
In determining reasonable cause
under all of these regulatory criteria, we
will consider the efforts the State made
to meet the requirement. We will also
take into consideration the duration and
severity of the circumstances that led to
the State’s failure to achieve the
requirement. The burden of proof rests
with the State to explain fully the
circumstances, events, or occurrences
that constitute reasonable cause for its
failure to meet a particular requirement.
The State must provide us with
sufficient relevant information and
documentation to substantiate its claim
of reasonable cause. We have added a
provision to the regulations to clarify
the factors that we will consider and the
State’s burden of proof. If we find that
the State has reasonable cause, we will
not impose the penalty.
We received quite a number of
comments on this section. We discuss
the comments and the changes we made
to the regulations below.
Comment: Virtually all commenters
with comments on this section argued
that our proposed list of reasonable
cause factors was too narrow and that
we needed to give ourselves more
discretion. Commenters gave a number
of examples of factors that we should
consider, including good faith effort,
circumstances beyond the State’s
control, inadequate Federal guidance,
increases in a State’s caseload,
characteristics of the caseload, high
unemployment rates or other labor
market characteristics, changing
economic conditions, and other adverse
economic factors.
Response: As we noted in the NPRM,
PRWORA did not specify any definition
of reasonable cause or indicate what
factors we should use in deciding
whether to grant a reasonable cause
exception for a penalty. In our
deliberations on reasonable cause
factors, we considered the diverse
opinions expressed during our
consultation process and our NPRM
comment period, as well as the need to
support the commitment of Congress,
the Administration, and States to the
work and other objectives of the TANF
program. In keeping with these
objectives, we are providing reasonable