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6332 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulationsthe provision of VR services areresolved in a timely fashion.Finally, some commentersrecommended that the regulationsrequire DSUs to inform individuals ateach stage of the rehabilitation processof their right to appeal a counselor’sdetermination.Discussion: The Secretary believesthat it is necessary to clarify in the finalregulations that time extensions forinformally resolving an individual’sappeal of a counselor’s determinationunder paragraph (a) of this section mustbe agreed to by both parties and mustbe specific in length. This change isnecessary to ensure the timelyresolution of disputes through formalreview procedures.Section 102(d)(5) of the Act, which isimplemented by paragraph (b)(2) of thissection, states that the DSU may notinstitute a suspension, reduction, ortermination of services being providedunder the individual’s IWRP pendingfinal resolution of an individual’schallenge to a determination of arehabilitation counselor unless theindividual so requests or the serviceshave been obtained throughmisrepresentation, fraud, collusion, orcriminal conduct on the part of theindividual. This statutory prohibitiondoes not apply to assessment or otherservices that are not included in theIWRP. Similarly, the statutory referenceto services ‘‘being provided under theIWRP’’ means that the DSU isprohibited from suspending only thoseservices in the IWRP that the individualhas begun to receive prior to requestinga review of a counselor’s determination.However, the Secretary notes that theDSU cannot discontinue a serviceduring a regular interruption in thatservice (e.g., between semesters at aninstitution of higher education in whichtraining is provided) as long as theservice is included in the IWRP and hasbeen initiated.The Secretary agrees that any Statepolicy used as a basis for an impartialhearing officer’s decision underparagraph (b)(4) of this section or for amodification of that decision by thedirector of the DSU under paragraph(b)(9) of this section must be consistentwith Federal statutory and regulatoryrequirements.Section 361.57(b)(7) of the proposedand final regulations requires that anydecision by a DSU director to review thedecision of an impartial hearing officermust be based on standards of reviewestablished under written State policy.Although DSUs have the discretion toestablish appropriate standards ofreview, the Secretary intends thatstandards developed under paragraph(b)(7) of this section be consistent withRSA policy, specifically Chapter 0545 ofthe Rehabilitation Services Manual(Clients’’ Rights to Appeal Decisions),which specifies a number offundamental issues that should beaddressed in connection withdetermining whether to review ahearing officer’s decision (e.g., Is theinitial decision arbitrary, capricious, anabuse of discretion or otherwiseunreasonable? Is the initial decisionconsistent with the facts of the case andapplicable Federal and State policies?).Section 361.57(b)(10) of the proposedregulations provided that if the DSUdirector decided to review the decisionof an impartial hearing officer, thedirector would provide to the individuala full report of the director’s finaldecision and of the findings andgrounds for the decision. The Secretaryintended the term ‘‘grounds’’ to includeany applicable law or policy on whichthe decision was based and believes thatchanging that term in the finalregulations to ‘‘statutory, regulatory, andpolicy grounds’’ will clarify thisintention. As stated previously, anyState policy that is used to support thedirector’s decision must be consistentwith Federal statutory and regulatoryrequirements.The proposed regulations would haveafforded DSUs the discretion to developtimelines for the prompt handling ofappeals instead of specifying Federaltimelines for certain stages of theappeals process. However, there wasnear-unanimity among commenters inopposing this change from currentregulations. The commenters stressedthe importance of protecting individualsfrom delays in the resolution of issuesaffecting an individual’s receipt of VRservices and vigorously asserted thatFederal timelines are the best means ofensuring that State appeal proceduresare conducted in a timely fashion.For the reasons stated by thecommenters, the Secretary agrees thatthe current regulatory timelines shouldbe retained in the final regulations. Stateunits have not indicated that the Federaltimelines are unreasonable orunnecessarily burdensome. Moreover,commenters on the proposedregulations indicated that a number ofDSUs have failed to meet the currenttimelines in the past. In light of thesecomments, the Secretary believes that atthis time affording DSUs the additionalflexibility to develop their owntimelines for handling appeals is neitherwarranted nor appropriate and thatretaining the current timelines does notimpose additional costs on DSUs.Finally, the Secretary agrees thatindividuals must be informed of theirappeal rights during key stages of therehabilitation process. Section 361.46(a)(8) and (a)(9) requires that theserights, as well as the availability ofrepresentation through the ClientAssistance Program (CAP) under 34 CFRpart 370, be clearly delineated in theIWRP. Moreover, § 361.43(c) requiresDSUs to provide individuals withinformation concerning the CAPwhenever an individual is foundineligible to receive VR services. TheSecretary believes that these provisionssufficiently ensure that individuals areapprised of their right to challenge anydetermination made by a counselorregarding the provision or denial ofservices.Changes: The Secretary has revised§ 361.57 to clarify that time extensionsfor informally resolving an individual’srequest for review of a counselor’sdetermination under paragraph (a) mustbe specific and agreed upon by bothparties. In addition, paragraphs (b)(4)and (b)(9) of this section have beenrevised to clarify that any State policyon which the decision of an impartialhearing officer or DSU director is basedmust be consistent with applicableFederal requirements. Paragraph (b)(10)of this section also has been amended toclarify that the director’s decision andcorresponding report must specify thestatutory, regulatory, or policy groundsfor the decision. Finally, the Secretaryalso has revised this section by applyingspecific timelines to certain stages of theappeals process. Like the currentregulations, the final regulations requirethat an impartial hearing officer conducta formal hearing within 45 days of anindividual’s request for review; that thehearing officer render a decision within30 days of the completion of thehearing; and that the DSU director issuea final decision within 30 days ofnotifying the individual of the director’sintent to review the initial decision. Therequirement that the individual benotified of the director’s intent to reviewthe initial decision within 20 days of itsissuance is specified in the Act and isimplemented by § 361.57(b)(5) of theregulations. Because the currentregulatory timelines have beenreinserted into this section of the finalregulations, the Secretary has removedfrom the final regulations therequirement under paragraph (c) of theproposed regulations that the DSUdevelop timelines applicable to thesestages of the review process.§ 361.60 Matching RequirementsComments: Two commenters opposedthe prohibition in this section againstusing third party in-kind contributionsto meet the non-Federal share under the