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Final Rule: Income Withholding; Review and Adjustment; Notice of Assigned Support Collected

AT-92-02

Published: July 10, 1992
Information About:
State/Local Child Support Agencies
Topics:
Case Management, Review and Modification, Employer Responsibilities, Income/Wage Withholding
Types:
Policy, Action Transmittals (AT), Regulations

ACTION TRANSMITTAL

OCSE-AT-92-02

July 10, 1992

TO:STATE AGENCIES ADMINISTERING CHILD SUPPORT ENFORCEMENT PLANS UNDER TITLE IV-D OF THE SOCIAL SECURITY ACT AND OTHER INTERESTED INDIVIDUALS

SUBJECT:Final Rule - Immediate Income Withholding; Review and Adjustment of Child Support Orders; Notice of Assigned Support Collected

ATTACHMENT:Attached is a final rule which implements sections 101, 103(c) and 104 of the Family Support Act of 1988 (P.L. 100-485). Current Federal regulations are revised to require that States establish immediate income withholding, with certain exceptions, in the case of support orders issued or modified on or after November 1, 1990, and being enforced under the IV-D State plan; effective October 13, 1990, to require periodic review of support orders pursuant to a State plan, and adjustment of such orders, as appropriate, in accordance with State guidelines for support award amounts; and, beginning January 1, 1993, to require that States provide monthly notices of collections to individuals who have assigned their rights to support to the State unless the State obtains a waiver in order to send quarterly notices. Section 103(c) also establishes more specific review and adjustment requirements effective October 13, 1993, and those requirements will be addressed in a separate rulemaking.

REGULATION REFERENCE:45 CFR Parts 302 and 303.

SUPERSEDED MATERIAL: OCSE-AT-90-07, dated August 17, 1990

EFFECTIVE DATE:July 10, 1992

INQUIRIES: ACF Regional Administrators

Allie Page Matthews

Deputy Director

Office of Child Support Enforcement

DEPARTMENT OF HEALTH AND HUMAN SERVICES

ADMINISTRATION FOR CHILDREN AND FAMILIES

OFFICE OF CHILD SUPPORT ENFORCEMENT

45 CFR PARTS 302 and 303

RIN 0970-AA63

Child Support Enforcement Program: Immediate Income Withholding; Review and Adjustment of Child Support Orders; Notice of Assigned Support Collected

AGENCY: Office of Child Support Enforcement (OCSE), HHS

ACTION: Final rule

SUMMARY: This final rule implements three provisions of the Family Support Act of l988 (P.L. 100-485). Section 101 of this Act requires immediate wage withholding, with certain exceptions, in the case of support orders issued or modified on or after November 1, 1990, and being enforced under the IV-D State plan. Immediate wage withholding begins January 1, 1994, for ordersissued on or after that date, if the case is not being enforced by the IV-D program. Section 103(c) of this Act requires periodic review of support orders and adjustment, as appropriate, in accordance with State guidelines for support award amounts, effective October 13, 1990. Section 103(c) also establishes more specific review and adjustment requirements effective October 13, 1993; those requirements will be addressed in a separate rulemaking. Section 104 of this Act requires monthly notices of collections to individuals who have assigned their rights to support to the State. Monthly notices are required beginning January 1, 1993, unless the State obtains a waiver in order to send quarterly notices.

EFFECTIVE DATE: July 10, 1992. The various compliance dates of the statutory requirements are listed below:

November 1, 1990 -- Immediate Income Withholding (õõ302.70 and 303.100)

October 13, 1990 -- Review and Adjustment of Orders (õõ302.70, 303.4, and 303.8)

October 13, 1993 -- Review and Adjustment of Orders

January 1, 1993 -- Notice of Assigned Support Collected (õ302.54)

January 1, 1994 -- Immediate Income Withholding, all orders

FOR FURTHER INFORMATION, CONTACT: Policy Branch, OCSE, specifically:

Marilyn Cohen (202) 401-5366 regarding review and adjustment ofchild support orders

Lourdes Henry (202) 401-5440 regarding monthly notice of support collected

Craig Hathaway (202) 401-5367 regarding immediate wage withholding

SUPPLEMENTARY INFORMATION

PAPERWORK REDUCTION ACT

Public reporting burden for the collection of information requirements in this final regulation, including the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information, is estimated as follows:

Requirement Average Time per Response

õ302.54(b)(1) and (2): notices 30 seconds

õ302.54(c): waiver 1 hour, one time

õ302.70(a)(10): procedures 8 hours, one time

õ303.8(b)(1): plan 8 hours, one time

õ303.100(b)(3): agreement 1 minute

õ303.100(f)(1)(ii): payment 30 seconds

These information collection requirements were approved under OMB control number 0970-0110.

STATUTORY AUTHORITY

This regulation is published under the authority of the following provisions of the Social Security Act (the Act), as amended by P.L. 100-485: sections 466(a)(8) and (b)(3) with respect to immediate income withholding; section 466(a)(10) with respect to periodic review of individual support award amounts; and section 454(5)(A) covering timing of notice of support collections. This regulation is also published under the general authority of section 1102 of the Act, which requires the Secretary to publish regulations that may be necessary for the efficient administration of the functions for which he is responsible under the Act.

BACKGROUND AND DESCRIPTION OF REGULATORY PROVISIONS

1. Notice of Assigned Support Collected

Former 45 CFR 302.54 required States, at least annually, to provide notice of the amount of support payments collected during the past year to individuals who have assigned rights to support under 45 CFR 232.11. The notice must list separately payments collected from each absent parent when more than one absent parent owes support to the family and indicate the amount of support collected which was paid to the family. This regulation implemented section 454(5) of the Act as amended by the Child Support Enforcement Amendments of 1984.

Section 104 of the Family Support Act of 1988 amended section 454(5)(A) of the Act to require States to send a monthly notice of support payments to individuals who have assigned support rights to the State. A State may provide quarterly notices if the Secretary determines that a monthly notice would impose an unreasonable administrative burden on the State.

To implement these statutory changes, we redesignated the current õõ302.54(a) and (b) as new paragraphs (a)(1) and (2) which remain in effect until December 31, 1992.

Effective January 1, 1993, õ302.54(b) requires that the State have in effect procedures for issuing monthly notices.

Under õ302.54(b)(1), the IV-D agency is required to provide a monthly notice of the amount of support payments collected for each month to individuals who have assigned rights to support under õ232.11, unless no collection is made in the month, and the assignment is no longer in effect, or the conditions for issuance of a quarterly notice set forth in paragraph (c) are met. If, in a former AFDC case which continues to receive IV-D services, a State is collecting support for a previous period for which the assignment remains in effect in accordance with õ302.51(f), the State must send a monthly notice to the family.

Section 302.54(b)(2) requires the monthly notice to list separately payments collected from each absent parent when more than one absent parent owes support to the family and indicate the amount of current support and arrearages collected and the amount of support collected which was paid to the family. If no support collection is made during a month, the State is not required to provide a notice to the family. A State may, at its option, provide a monthly notice when no support collections are received.

Under õ302.54(c), a waiver may be granted allowing the State to provide quarterly, rather than monthly, notices if the State doesnot have an automated system that performs child support enforcement program activities, or has an automated system that is unable to generate monthly notices. Effective October 1, 1995, States are required to have in effect automated systems that perform child support enforcement activities. Upon the request of a State, the Office may grant a waiver to permit a State to provide quarterly, rather than monthly, notices, if the State: (1) Until September 30, 1995, does not have an automated system that performs child support enforcement activities consistent with õ302.85 or has an automated system that is unable to generate monthly notices; or (2) uses an automated voice response system which provides the information required under paragraph (b)(2).

Under paragraph (c)(2), a quarterly notice must be provided in accordance with conditions set forth in paragraph (b)(1) and must contain the information set forth in paragraph (b)(2).

2. Review and Adjustment of Child Support Orders

Beginning with the enactment of the Child Support Enforcement Amendments of l984 (P.L. 98-378), each State had to establish guidelines for child support award amounts in the State, as a condition for State IV-D plan approval. These guidelines were not binding, but had to be made available to all judges and other officials with authority to determine award amounts.

Under section 103 of P.L. 100-485, Congress required that States use the guidelines as a rebuttable presumption that the amount of the award computed according to the guidelines is the correct amount of child support to be awarded. A written or specific finding on the record that the application of the guidelines would be unjust or inappropriate in a particular case, as determined by State criteria, is sufficient to rebut the presumption in that case. To ensure further that the use of the guidelines will result in appropriate support award amounts, section 103 requires that the guidelines be reviewed at least once every four years. Final regulations governing these aspects of section 103 were published on May 15, 1991 (56 FR 22335).

Use of guidelines does not ensure that orders, over time, continue to meet the support standards set by the guidelines. To address this problem, section 103 of P.L. 100-485 phases in a requirement for the periodic review and adjustment of support orders, in accordance with the support guidelines in the State.

Under section 103, the Social Security Act (the Act) is amended by adding a new section 466(a)(10) of the Act. Section 466(a)(10)(A), effective October 13, 1990, requires States to have procedures for review and adjustment of orders in IV-D cases, consistent with a State plan indicating how and when review and adjustment would occur. Review may take place at the request of either parent subject to the order or may be initiated by the State itself. An adjustment to the award is required, as appropriate, if the award amount is found not to be in accordancewith the State's guidelines, which must be used as a rebuttable presumption in establishing or adjusting support obligations in the State.

The new section 466(a)(10)(B), effective October 13, 1993 (or earlier at State option), requires the State to have implemented a process whereby orders enforced under title IV-D will be reviewed within 36 months after establishment of the order or the most recent review of the order and adjusted in accordance with the State's guidelines for support award amounts.

The new section 466(a)(10)(C) requires States to have procedures for notifying each parent subject to an order in effect in the State, that is being enforced under the State plan, of their rights concerning reviews and proposed adjustments. Each parent must be notified: of the right to request the State to review the order; of any review, at least 30 days before it commences; and of a proposed adjustment or of a determination that there should be no change in the award amount. In the latter case, the parent must have at least 30 days after notification to initiate proceedings to challenge the proposed adjustment or determination.

Proposed regulations governing review and adjustment requirements of section 103 were published on August 15, 1990 (55 FR 33414).

We received many comments in response to the proposed rule which urged that we delay publication of final regulations governingreview and adjustment requirements until demonstration projects underway in a number of States were completed. These projects, mandated by section 103(e) of P.L. 100-485, are developing, testing and evaluating model procedures for reviewing child support award amounts in Delaware, Colorado, Illinois and Florida. The results of the demonstration projects are required to be reported to Congress by March 31, 1992. A similar project was conducted in Oregon and the final report was issued in April 1991. Commenters also raised difficult issues with respect to review and adjustment, especially those concerning requirements for interstate cases. In response to these concerns, we have decided to publish a separate rule on the review and adjustment requirements which are effective October 13, 1993 to benefit fully from the wisdom gained from the review and adjustment projects. We believe this is the most prudent approach, given the time remaining before the 1993 requirements go into effect. Therefore, this final rule only addresses the requirements for review and adjustment effective October 13, 1990.

Section 302.70 Required laws.

Under õ302.70 States are required to enact certain laws and implement certain procedures designed to improve the effectiveness of the Child Support Enforcement program. Paragraph (a)(10) requires States to enact necessary laws and have procedures in effect for the review and adjustment of child support orders in accordance with the requirements of

45 CFR 303.8. Because of the addition of paragraph (a)(10) and revisions to õ303.100, we are making technical corrections to õ302.70(a) by revising paragraph (a)(8). We are making technical corrections to õ302.70(d)(1) and (2) to clarify that a State may apply for an exemption from any of the requirements of õ302.70(a) if it can demonstrate that compliance would not increase the effectiveness and efficiency of its Child Support Enforcement program.

Establishment of Support Obligations--Section 303.4

Section 303.4(c) is amended to require States to periodically review and adjust child support orders, as appropriate, in accordance with õ303.8.

Provision of Services in Interstate IV-D Services--Section 303.7

Section 303.7(b)(2) is amended to clarify that the 20 calendarday time frame for referral of an interstate case is tied to the receipt of any information necessary to process the case, if appropriate.

Review and Adjustment of Orders--Section 303.8

The title of this section has been changed to "Review and Adjustment of Child Support Orders," to be consistent with the statutory language of P.L. 100-485.

Section 303.8(a)--Definitions

Section 303.8(a) contains definitions designed to clarify key aspects of the review and adjustment process.

Paragraph õ303.8(a)(1) limits "adjustment" to the child support provisions of an order. Under õ303.8(a)(1)(i), "adjustment" means 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. Under õ303.8(a)(1)(ii), "adjustment" also means the provision for the health care needs of the child through health insurance or other means.

Paragraph (a)(2) defines "parent" for purposes of õ303.8 to include 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 supportorder).

Paragraph (a)(3) defines "review" as 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 the appropriate support award amount, and the need for a provision in the order addressing the child(ren)'s health care needs through health insurance or other means under State guidelines.

Section 303.8(b)--Plan for review and adjustment.

Plan

Paragraph (b) requires the State to develop and implement a plan for review and adjustment of orders by October 13, 1990. Under paragraph (b)(1), the State must have a written and publicly available plan indicating how and when a child support order, in effect in the State, will be periodically reviewed and adjusted. Paragraph (b)(2) specifies the requirements that the State must meet for the period October 13, 1990 through October 12, 1993 with respect to orders being enforced in IV-D cases. Paragraph (b)(2)(i) requires that the State must use the plan specified in paragraph (b)(1) to determine whether such orders should be reviewed. Paragraph (b)(2)(ii) specifies that the State must initiate a review, in accordance with the plan, at the request of either parent subject to the order or of a IV-D agency.

Pre-review notice

Paragraph (b)(2)(iii) specifies the requirements for notifying each parent subject to a child support order in effect in the State regarding review and adjustment. Under this paragraph, the State must notify each parent of any planned review of the orderat least 30 calendar days before commencement of the review.

Adjustment of the Order

Paragraph (b)(2)(iv) specifies that if the review determines that there should be a change in the child support award amount, the State must adjust the order in accordance with the State's guidelines for child support described in õ302.56. In addition, an adjustment must be made if the review determines that provision for the health care needs of the child(ren) in the form of health insurance or other means, as indicated by the State's guidelines, is required.

Post-Review Notice

Paragraph (b)(2)(v) specifies the requirements for notifying each parent subject to a child support order in effect in the State following any review. This paragraph requires notification of (A) any adjustment or a determination that there should be no change in the order; and (B) each parent's right to initiate proceedings to challenge the adjustment or determination, either through pre-decision review, appeal or administrative review, within at least 30 calendar days of the date of the notice.

3. Wage or Income Withholding

Section 3 of the Child Support Enforcement Amendments of 1984 (P.L. 98-378) added sections 454(20) and 466 of the Act to require all States to implement certain mandatory procedures which had been proven to noticeably increase the effectiveness of State programs, including procedures for wage withholding.

Section 466 required that States have in effect two distinct procedures for carrying out a program for wage withholding. The first, required under section 466(a)(1) and (b) of the Act, pertained only to cases being enforced through the IV-D agency. Under this requirement, States must have and use a procedure under which wages of an absent parent shall be subject to withholding in IV-D cases on the date the absent parent fails to make payments in an amount equal to one-month's support obligation. States were also required to implement the withholding at any earlier date that is in accordance with State law or that the absent parent may request. Withholding was to begin without amendment to the order or further action by the court. The Act also specified other elements of the withholding system for IV-D cases such as requirements for prior notice to the absent parent, basis for appeal, restrictions on the maximum amounts to be withheld, notice to the employer, and interstate withholding. These requirements were implemented in regulationsat former 45 CFR 303.100(a) through (g).

The second procedure, required by section 466(a)(8) of the Act, and implemented at former õ303.100(h), provided that all new or modified orders issued in the State include a provision for wage withholding when an arrearage occurs, in order to ensure that withholding is available without the necessity of filing an application for IV-D services.

Section 101 of P.L. 100-485 amends section 466 of the Act to require that States enact laws and implement procedures for immediate income withholding in certain cases. Under amended section 466(b)(3), a new subparagraph (A) provides that immediate withholding is required, effective November 1, 1990, for all IV-D cases with new or modified orders on the effective date of the order, unless one of the parties demonstrates, and the court or administrative authority finds good cause not to require the withholding, or a written agreement is reached between the parties which provides for an alternative arrangement.

For cases being enforced by the IV-D agency which are not subject to immediate withholding, section 101 of P.L. 100-485 amends the current requirements at section 466(b)(3) by creating a new subparagraph (B) which provides that the absent parent's wage shall be subject to withholding on the earliest of: the date on which arrearages occur which are at least equal to the supportpayable for one month; the date on which the absent parent requests that withholding begin; the date on which the custodial parent requests that withholding begin (in accordance with the standards and procedures the State may establish); or an earlier date the State may select.

Section 101 of P.L. 100-485 also amends section 466(a)(8) of the Act by revising the current language as redesignated subparagraph (A) to require that child support orders not described in subparagraph (B) contain wage withholding provisions, and creating a new subparagraph (B) to require that, effective January 1, 1994, States have procedures providing for withholding in all support orders not being enforced by the IV-D agency, regardless of whether support payments are in arrears, on the effective date of the order, except that such wages shall not be subject to withholding in any case where one of the parties demonstrates, and the court or administrative authority finds that there is good cause not to require immediate income withholding or a written agreement is reached between the parties which provides for an alternative arrangement.

To address these statutory changes we have adopted the following regulatory amendments:

We have amended õ303.100 to reiterate the statutory changes outlined above by revising paragraph (a) so that it will nowcover withholding requirements which are common to all orders being enforced under the IV-D State plan, and redesignating paragraphs (b) and (c) as new paragraphs (d) and (e), to provide for advance notice to the absent parent and for procedures when the absent parent contests the withholding in cases where it is not immediate (i.e., initiated withholding). We have created a new paragraph (b) providing for immediate withholding for those orders which are issued or modified on or after November 1, 1990, and a new paragraph (c) providing for initiated withholding for orders not subject to immediate withholding under paragraph (b). We have also redesignated paragraphs (d), (e) and (g) as new paragraphs (f), (g), and (h) to provide for, in both immediate and initiated IV-D withholding, notice to the employer, procedures for administration, and interstate withholding. Former paragraph (f), which allowed States the option to extend withholding to other forms of income, has been moved to a new paragraph (a)(9) since it is applicable to all types of withholding. Finally, we have redesignated paragraph (h) as new paragraph (i) to address provision for withholding in non-IV-D child support orders.

General Withholding Requirements

We have consolidated the requirements which are common to all IV-D withholdings in õ303.100(a) using the unchanged statutory authority of section 466(b) of the Act. Paragraphs (a)(1) and (2) require that States must provide for wage withholding for allIV-D cases for both current and overdue support. Paragraph (a)(3) establishes limits of amounts to be withheld in all IV-D cases, as required by the Consumer Credit Protection Act (hereinafter CCPA). Paragraph (a)(4) requires that withholding in all IV-D cases must occur without the need for any amendment to the order or any other action by the court or entity that issued it, except actions required or permitted under õ303.100.

Paragraph (a)(5), requires that States develop procedures for allocation of support among families when there is more than one withholding in a case but in no case shall the allocation result in a withholding not being implemented for one of the support obligations. This revision is not specified in the statute. However, we are using the authority granted to the Secretary at section 1102 of the Act to publish regulations not inconsistent with the Act which may be necessary to efficiently administer the Secretary's functions under the Act. Upon publication of the current requirement in 1985, we stated that, in response to comments received on the proposed rule, we had changed the requirement that the employer respond to multiple withholdings on a first-come-first-served basis to one in which the State would allocate support payments among the families. We also suggested several mechanisms States could use in allocating amounts to be withheld, one of which was to give top priority to AFDC cases. We have since become aware that some States may have implemented this suggestion by deciding to allocate all available withholdingup to the CCPA limit to the AFDC family, leaving no amounts available for a second non-AFDC family. This was not our intent, and this language in paragraph (a)(5) clarifies that, although a State may give priority to AFDC families, in no case shall the allocation result in another non-AFDC family receiving no support through the withholding process.

Paragraph (a)(6) requires that IV-D withholdings be carried out in full compliance with all procedural and due process requirements of the State.

Paragraph (a)(7) requires States to have procedures for promptly terminating withholding in all cases when there is no longer a current order and all arrearages have been satisfied. At State option, a State may also allow termination when the absent parent requests termination and withholding has not been terminated previously and subsequently initiated, and the absent parent meets the conditions for an alternative arrangement set forth under paragraph (b)(3).

Paragraph (a)(8) requires that States must have procedures for promptly refunding amounts improperly withheld. Paragraph (a)(9) permits a State to extend its withholding system to include forms of income other than wages.

Under paragraph (a)(10), support orders issued or modified in IV-D cases must require the absent parent to keep the IV-D agency informed of the name and address of his or her current employer, whether the absent parent has access to employment-related health insurance coverage and, if so, the health insurance policy information. This will simplify implementation of withholding.

Immediate Withholding in IV-D Cases

We have implemented section 466(b)(3)(A) of the Act by creating a new õ303.100(b) providing for immediate wage withholding. Paragraph (b)(1) requires that, in the case of a support order being enforced under title IV-D that is issued or modified on or after November 1, 1990, the wages of an absent parent shall be subject to withholding, regardless of whether support payments are in arrears, on the effective date of the order, except that such wages shall not be subject to withholding in any case where one of the parties demonstrates, and the court or administrative authority finds, that there is good cause not to require immediate withholding, or a written agreement is reached between the parties which provides for an alternative arrangement.

Paragraphs (b)(2) and (b)(3) establish minimum definitions of "good cause" and "written agreement." Although not specified in the statute, we are using our authority under section 1102 of the Act to set these requirements because we believe that Congress intended that immediate withholding would be implemented in most cases. Consequently, paragraph (b)(2) provides that a finding of good cause by the court or administrative authority must be based on, at a minimum: (i) A written determination and explanation of why implementing immediate withholding would not be in the bestinterests of the child; and (ii) Proof of timely payment of previously ordered support in cases involving the modification of support orders. We believe that the best interests of the child should remain paramount and other concerns secondary. Certainly, payment of past-ordered support will provide a measure of the absent parent's good faith. In modification proceedings, States may choose not to allow past timely payment to justify avoiding immediate withholding.

These criteria were formulated to exclude certain other considerations. For example, we do not believe that good cause would be demonstrated if the absent parent objects to immediate withholding on the grounds that it would be inconvenient, since the purpose of the support order and withholding is to provide for the best interests of the child. Payroll deduction is a convenient means of paying debts. Moreover, the overall thrust of the immediate withholding provisions have, in effect, removed any reason for an employer to believe that the employee is not meeting his or her obligations in a responsible manner, since all child support orders (IV-D and non-IV-D) will eventually be subject to this automatic provision. This also means that a demonstration by the absent parent that he or she has established a good credit rating should not qualify for good cause, since the imposition of immediate withholding contains no assumption that the absent parent would default on support payments. Also, a credit rating may or may not take into consideration an absentparent's support obligation, or that obligation may not be heavily weighted.

Paragraph (b)(3) provides that a "written agreement" means a written alternative arrangement signed by both parents, and, at State option, the State in IV-D cases in which there is an assignment of support rights to the State, and reviewed and entered in the record by the court or by an administrative authority. We have given States the option in IV-D cases in which there is an assignment of support rights to the State to be a party to any alternative arrangement between the absent and custodial parents which meets the above condition because of the State and Federal interest in securing support for those in need of public assistance. We have provided that such written agreement be reviewed and entered in the record by the court or administrative authority for protection of the best interests of the child as well as the parents. Such an agreement may contain stipulations between the custodial and absent parents, and, at State option, the State in IV-D cases in which support rights have been assigned, which are in addition to those required under this paragraph.

Initiated Wage Withholding

We have implemented revised section 466(b)(3)(B) of the Act by creating a new õ303.100(c) for initiated wage withholding in cases where immediate withholding, as set forth in õ303.100(b), would not apply because the support order was issued before, and not modified after, November 1, 1990. Paragraph (c), in conjunction with paragraphs (a), (d), (e) and (f) will continue, with some modification, the original wage withholding requirements contained in P.L. 98-378 for existing orders being enforced under title IV-D.

Section 303.100(c) sets forth requirements for withholding with respect to cases in which wages are not subject to immediate withholding in paragraph (b), including cases subject to a good cause finding or a written agreement. Under paragraph (1), the wages of the absent parent shall become subject to withholding on the date on which payments which the absent parent has failed to make under a support order are at least equal to the support payable for one month or, if earlier, and without regard to whether there is an arrearage, the earliest of: (i) The date on which the absent parent requests that withholding begin; (ii) The date on which the custodial parent requests that withholding begin, if the State determines, in accordance with such procedures and standards as it may establish, that the requestshould be approved; or (iii) Such earlier date as State law or procedure may provide. In the latter instance, we have specified that the State may select an earlier date via law or procedure to indicate that this must apply on an across-the-board, rather than a case-by-case basis. For example, a State may wish to set a lower trigger of one week's support delinquency, rather than the outside limit of a month's delinquency required by statute and regulation. The State may not apply a more stringent standard on an individual case basis, but must apply it to all cases if this approach is selected.

These provisions parallel the requirements of P.L. 98-378 with one important exception. The new requirement at section 466(b)(3)(B)(ii) of the Act and at õ303.100(c)(1)(ii) now allows the custodial parent to request that withholding be imposed without regard to whether support payments are in arrears, if the State agrees based on procedures and standards which it may establish to determine when this is appropriate. Since the statute has given States authority to determine the criteria under which such requests by the custodial parent may be approved, we have not established requirements for these procedures and standards. However, such procedures and standards may not limit custodial parents' requests to cases where the 30-day triggering arrearage is met or cases where the custodial parent requests review and adjustment of the order and the order is adjusted. Under this provision, a State could

choose to establish a simple administrative procedure to implement withholding upon custodial parent request if an absent parent is not meeting the terms of a written agreement for an alternative arrangement, or the support order was established or modified before November 1, 1990. Alternatively, a State may opt to require a return to court in order to implement withholding where no qualifying arrearage exists. In any case, State statute, rules or procedures must provide for withholding upon request in cases not subject to withholding in which the 30-day triggering arrearage has not been met, and in which State standards are met. This provision will also enable States which desire to do so to bridge the gap between the original initiated withholding mandated in P.L. 98-378 and the new immediate withholding requirements of P.L. 100-485 by incorporating either some, or all, of the new immediate withholding provisions on behalf of their existing initiated withholding caseload. We encourage States to establish expedited procedures for custodial parents in such cases to request withholding as a means of ensuring regular and timely support payments consistent with protecting the due process rights of the other parent.

Paragraph (c)(2) requires the State to send the advance notice required under paragraph (d) to the absent parent within 15 calendar days of the appropriate date under paragraph (c)(1) if the absent parent's address is known on that date, or, if the absent parent's address is not known on that date, within 15calendar days of locating the absent parent. Obviously, advance notice is unnecessary if the absent parent requests withholding under paragraph (c)(1)(i).

Paragraph (c)(3) requires that the only basis for contesting an initiated withholding is a mistake of fact, defined as an error in identity of the absent parent or in the amount of support due.

Advance Notice to the Absent Parent in Cases of Initiated Withholding

Section 303.100(d)(1) requires timely advance notice to the absent parent in cases of initiated withholding on the date specified in paragraph (c)(2) and specifies the required contents of the notice. We have also established a timeframe, in paragraph (d)(2)(ii), for sending notice to the employer in States which are not required to provide advance notice to the absent parent because they had a withholding system in effect on August 16, 1984, which provides any other procedures necessary to meet the procedural due process requirements of State law. Under this timeframe, a State is required to send notice to the employer under paragraph (f) within 15 calendar days of the appropriate date specified in paragraph (c)(1) if the employer's address is known on that date, or, if the employer's address is not known on that date, within 15 calendar days of locating the employer's address.

State Procedures When the Absent Parent Contests Initiated Withholding in Response to the Advance Notice

Section 303.100(e) addresses State procedures to be followed when the absent parent contests a proposed initiated withholding. We have changed the citations within this paragraph to reflect theredesignation of other paragraphs in this section.

Notice to the Employer for Immediate and Initiated Withholding

Section 303.100(f) provides for notice to the employer for both immediate and initiated wage withholding. In paragraph (f)(1)(ii), we have added a requirement that the employer report to the State the date on which the amount sent to the State was withheld from the absent parent's wages. This date is needed by the State to ensure proper distribution of support under current statute and regulations. If the employer fails to report this date to the State, the IV-D agency must, in accordance with õ302.51(a)(4), reconstruct the date of withholding by contacting the employer or comparing actual amounts collected with the pay schedule specified in the court or administrative order.

Paragraph (f)(2) requires that, in the case of immediate wage withholding under paragraph (b), the State must issue the notice to the employer specified in paragraph (f)(1) within 15 calendar days from the date the support order is entered if the employer's address is known on that date, or, if the address is unknown on that date, within 15 calendar days of locating the employer's address. We believe that a 15-day turnaround is consistent with the intent of immediate wage withholding. Paragraph (f)(3) requires that, in cases of initiated withholding, if the absent parent fails to contest withholding within the period specified,the State must send the notice to the employer within 15 calendar days of the end of the contact period if the employer's address is known on that date, or, if the address is unknown on that date, within 15 calendar days of locating the employer's address. Paragraph (f)(4) requires that if the absent parent changes employment within the State when a withholding is in effect, the State must notify the absent parent's new employer within 15 calendar days of locating the new employer's address, in accordance with the requirements of paragraph (f)(1) that the withholding is binding on the new employer.

Administration of Withholding

Section 303.100(g), provides for certain administrative actions by the States and is applicable to both immediate and initiated withholding.

With the technology available to transfer funds electronically, many employers have payroll systems (or contracts with service bureaus) which can automatically deposit wages in more than one financial account. We encourage employers, who currently have the capability to do so, to begin remitting withheld wages electronically as soon as possible to any State's withholding agency which has the capability to receive such funds electronically on the same day funds are deposited in employees'bank accounts. OCSE is developing model procedures for electronic transfer of child support payments through cooperation with the National Automated Clearinghouse Association (NACHA) which sets rules and administers the Automated Clearinghouse Network. A work group has also been formed representing employers, financial institutions and child support agencies to develop a standard format for transferring both income withholding payments and the related data. OCSE will continue to keep States informed of efforts in this area. In anticipation of the requirement that all States have operational automated child support enforcement systems by October 1, 1995, in accordance with section 123 of P.L. 100-485, we require in paragraph (g)(2) that, no later than October 1, 1995, the State must be capable of receiving withheld amounts and accounting information which are electronically transmitted by the employer to the State. This will greatly reduce the time it takes for support payments to reach families in need of them.

Under õ303.100(g), States are allowed to designate more than one public or private entity to administer withholding on a State or local basis under the supervision of the State withholding agency. However, because of the need to reduce the burden on employers and to simplify procedures for electronic transfer of withheld amounts, we encourage States to designate a single public agency to administer withholding in IV-D cases. This willsimplify withholding for employers in both intrastate and interstate cases whether it is accomplished through electronic transfer or other means, and is essential to ensure a simple process for electronic transfer of withheld child support obligations.

We also encourage States to use electronic funds transfer for withholding wages in non-IV-D cases. In many States, funds paid through wage withholding could be deposited directly in custodial parents' bank accounts. Custodial parents' bank account statements would provide good documentation of payments received. Using direct deposit in non-IV-D cases would enable States to implement wage withholding easily in non-IV-D cases. (Historically, payment in IV-D cases have gone through the IV-D system rather than directly to custodial parents' accounts because of additional information needed in IV-D cases.)

Interstate Withholding

Section 303.100(h), requiring that State law must provide for procedures to extend the State's withholding system so that system will include interstate cases, is applicable to immediate and initiated withholding. Paragraph (h)(1) provides that a responding State may register orders for purposes of withholding only if registration is for the sole purpose of obtaining jurisdiction for enforcement of the order; does not confer jurisdiction on the court or agency for any other purpose (such as modification of the original support order or resolution of custody or visitation disputes); and does not delay implementation of withholding beyond the timeframes in paragraph (h)(5). This is a formal statement in the regulations of our policy since wage withholding was originally enacted in l984, with a clarification that "delay" means a delay beyond required timeframes.

Paragraph (h)(3) requires that the initiating State must notify the State in which the absent parent is employed within 20 calendar days of a determination that withholding is required in a particular case, and, if appropriate, receipt of any information necessary to carry out the withholding. For consistency, we have also amended the requirements at õ303.7(b)(2), for provision of services in interstate cases, torequire that within 20 calendar days of determining the absent parent is in another State, and, if appropriate, the receipt of any information needed to process the case, the initiating IV-D agency must refer any interstate case to the responding State's interstate registry for action, including URESA petitions and requests for location, document verification, administrative reviews in Federal income tax refund offset cases, wage withholding, and State income tax refund offset in IV-D cases. In addition, the last sentence of paragraph (h)(3) requires that, if necessary, the State where the support order is entered must provide the information necessary to carry out the withholding within 30 calendar days of receipt of the request for information.

Under paragraph (h)(4), the State in which the absent parent is employed must implement withholding in accordance with paragraph (h)(5) upon receipt of the notice required in paragraph (h)(3). Finally, paragraph (h)(5) requires that the State where the absent parent is employed must provide the absent parent with notice, if appropriate; an opportunity to contest an initiated withholding, if appropriate; send notice to the employer; and notify the initiating State when the absent parent is no longer employed in the responding State. Paragraphs (h)(6) and (7) set forth choice of law requirements in interstate cases.

Provision for Withholding in Child Support Orders

Paragraph (i) amends the former requirement in 45 CFR 303.100(h) which implemented the requirement in section 466(a)(8) of the Act that all child support orders include provision for withholding, to assure that withholding is available if arrearages occur, without the necessity of filing application for IV-D services. In requiring all orders issued after January 1, 1994, to be subject to immediate withholding (except where exclusions due to good cause or alternate arrangement between the parties are applicable), section 101(b) of P.L. 100-485 redesignated prior section 466(a)(8) (which was effective October 1, 1985) as section 466(a)(8)(A) and limited its applicability to orders not covered under the immediate withholding requirement for all non-IV-D orders issued in 1994 and thereafter. Therefore, since prior section 466(a)(8) was effective October 1, 1985, we have limited the applicability of 45 CFR 303.100(i) to orders which were issued between October 1, 1985 and January 1, 1994, or are modified on or after January 1, 1994. In response to comments on the proposed rule, we are not including in this final rule requirements effective for non-IV-D orders issued in 1994 and thereafter.

Response to Comments

We received comments on the proposed rule published August 15, 1990, in the Federal Register (54 FR 33414) from over 70 commenters representing national organizations, State and local IV-D agencies, child advocacy groups and private citizens. Comments and our responses appear below.

I. Notice of Assigned Support Collected

General

1. Comment: We received many comments stating that sending monthly notices to individuals who have assigned rights to support under õ232.11 would be costly due to the price of postage; would be time-consuming and take time away from providing other mandated services; create a tremendous burden on the States; and cause confusion on the part of the AFDC recipient resulting in increased letters and phone calls. Another commenter recommended that States be permitted to provide quarterly notices of collection to avoid increased program costs. One commenter suggested that the regulation be amended to require a monthly notice only upon request.

Response: Section 104 of the Family Support Act of 1988 amended section 454(5)(A) of the Social Security Act to require States to send a monthly notice of support payments collected to individuals who have assigned rights to support to the State. The statute does not authorize States to send notices only upon request but does allow a State to provide quarterly notices if the Secretary determines with respect to a State that requiring such notice on a monthly basis would impose an unreasonable administrative burden.

2. Comment: One commenter asked, if States are contracting with individual counties to provide IV-D services, is the monthly notice requirement at õ302.54(b)(2) passed on to the counties?

Response: Yes, a political subdivision operating the IV-D program for the State must provide monthly notice in accordance with õ302.54. However, it is permissible for the State to issue all such notices at its option.

3. Comment: One commenter asked us to clarify whether the amount of support collected includes the $50 pass-through payments for each month of collection.

Response: Yes, the notice should reflect the amount of support collected, including the $50 pass-through payments.

Content of Notice

1. Comment: We received several comments suggesting including additional information in the notice, i.e., the amount of support paid that month, year to date amount paid and amount applied to the AFDC debt and the debt to the family. The commenters suggested that the notice should be sent to non-AFDC, AFDC and Medicaid clients and should be sent at least quarterly even if no payments have been made.

Response: The monthly notice must include the amount of support paid during that month. However, the Federal requirements are minimum standards. States have the option to include additional information in the monthly notice to individuals who have assigned rights to support under õ232.11 or to send notice to individuals other than those who have assigned rights to support under õ232.11.

Providing one-time notice under proposed õ302.54(b)(1)

1. Comment: Many commenters objected to the proposed requirement at õ302.54(b)(1) that the IV-D agency must notify individuals who have assigned rights under õ232.11 that a monthly notice will be provided for each month in which support is collected. Some commenters maintained that there is no statutory requirement for providing such a notice, and that the proposed language went beyond the intent of Congress. Several commenters felt that such a notice would be redundant, costly, and confusing. Another commenter asserted that this one-time notice would involve the production and mailing of notices at considerable expense to the States, with no benefit to clients. One commenter claimed that there was no compelling reason for announcing that monthly notices will be provided and contended that if the monthly notices were clearly worded and understandable, no prior explanation should be required. These commenters recommended that the advance notice requirement be deleted. One commenter suggested that a notice be required even when no collection had been made in that month so as not to cause confusion and an increase in the number of telephone inquiries. This commenter suggested giving the client the option of waiving the right to receive the notice on a monthly basis.

Response: We proposed that a one-time notice be provided toindividuals who have assigned rights to support under õ232.11 to inform these individuals that if no support collection was made during a month, the State would no longer provide a notice to the family. Prior policy with respect to annual notice of support collections required States to provide an annual notice even if no collections were made during the year. Because States will be required, effective January 1, 1993, to provide monthly, rather than annual notice, we are not requiring States effective that date to send a monthly notice even if no collection is made. In view of the overwhelming negative response to the one-time advance notice requirement, and the distinct possibility that it will create more confusion than it will eliminate, we are deleting it from the final rule. States may determine how or whether to deal with any confusion over this change in policy. One suggestion would be to include this change in policy as part of the last annual notice before monthly notices begin to be sent.

Automated voice response system/toll-free telephone numbers

1. Comment: We received a number of comments in favor of using an automated voice response system to meet the monthly notice requirements. The commenters believe this method is faster, more cost effective and more convenient than a computer-generated form mailed to the custodial parent once a month. One commenter requested that we put language in the regulation regarding using an automated voice response system. Another commenter stated that providing a monthly notice at the request of the recipient, is contradicting HHS's position on the proper interpretation of the statute that notice may not be sent only upon request. On the other hand, another commenter argued that the final regulations should change the word "provide" to "send" for consistency with the statute, clarify that written notice must be sent and that an automated voice response system does not meet the requirement for sending a monthly notice.

Response: Section 454(5)(A) does not require that monthly notice be "sent," but rather that the AFDC "individual will be notified on a monthly basis...." We believe that automated voice response systems have proven to be worthwhile, cost-effective and in some ways more responsive than monthly written notice. In using an automated voice response system, an individual would place a toll-free call to a specified telephone number, provide certainpersonal identification information to guarantee confidentiality, and receive a message over the telephone regarding the amount of support collected during the month on his or her behalf, case status and other information. A number of States currently use such a system with positive responses from AFDC recipients. In the State of Washington, the Department of Social and Health Services has an automatic response system called KIDS (Kids Information Delivery System) which responds to questions regarding child support case activities. This system receives an average of 23,000 calls per day. The IV-D staff view the system as a relief from the overwhelming number of calls (freeing them to pursue establishment and enforcement activities), and clients see the benefits of obtaining quick information about their payments. The District of Columbia also has an automated voice response system that handles more than 700 calls per day. The system operates 24-hours a day and can handle more telephone calls more efficiently than a comparable activity using human operators. Agency staff use the time made available by this system to perform needed enforcement activities. This system is updated daily with no necessity of downtime. In addition, the IV-D program in Philadelphia, Pennsylvania has an automated voice response system which handles more than 2,000 calls per day.

However, we agree that the use of an automated voice response system alone may not be adequate. Therefore, these final regulations require States which have an automated voice responsesystem to provide quarterly, rather than monthly, written notices. In this way, individuals entitled to notice of collections will benefit from both easy access to information through the automated voice response system as well as being assured quarterly written notice of collections. (See also discussion following under Waivers.)

2. Comment: One commenter stated that since an automated voice response system only reaches those who want the information, a State with a non-automated hotline should be allowed to do likewise. The State can answer the inquiries manually by accessing its automated distribution system. Local offices can also respond to such inquiries. The option should be given to all States regardless of whether the State has an automated voice response system.

Response: While use of both systems require a request to be made for information, we do not believe use of a hotline is equally effective. Use of an automated voice response system eliminates the need for State employees to respond to individual requests, a task that has proved overwhelming in State after State. Use of an automated voice response system allows State employees to work cases, not just answer questions about status. While use of a hotline manned by caseworkers can be a helpful public service, it may not substitute for monthly notice. Access to information through an automated voice response system enables individualsserved by the program to obtain information quickly and conveniently.

3. Comment: One commenter indicated that clients should receive a monthly written notice if payments are made, and that having a toll-free number available for them to call is not acceptable. Many low income families do not have telephones.

Response: While some families do not have telephones, anyone has access to a public telephone. Automated voice response systems are accessed using toll-free numbers and, therefore, obviate any long distance telephone charges. In addition, quarterly notices must be sent if the State uses an automated voice response system.

4. Comment: One commenter asked us not to allow States to substitute phone inquiry systems, automated or otherwise, for monthly written notices of child support collections. The information needed to make the notice meaningful is much too complex to be conveyed in response to a telephone inquiry.

Response: Automated voice response systems have proved to be very effective at providing information about case status and collections. Automated daily updates of this information are also possible. We believe that a system of this type can be designed to be easily understandable, effective, and

efficient and provide all of the information required by these regulations.

5. Comment: One commenter asked us to clarify whether or not the automated voice response system is eligible for enhanced Federal Financial Participation (FFP).

Response: The development of an automated voice response system is eligible for enhanced Federal funding at the 90 percent matching rate if the functionality is an integral part of an approved Statewide comprehensive automated system and if all other requirements for IV-D funding are met. If the automated voice response system is developed apart from the Statewide comprehensive system, funding is available at the regular match rate of 66 percent. In either case, Federal matching at 66 percent is available for operation of the automated voice response system.

Waivers under proposed õ302.54(c)

1. Comment: One commenter suggested that a waiver be allowed even if a State has an operational automated system which can produce the monthly notices and that waivers be renewable periodically after October 1, 1995. A commenter requested continuing waivers especially if a State is under court order requiring the issuance of notices more complex than those required to meet Federal regulatory requirements. Another commenter asked if the availability of a toll-free phone number for collection information (as well as general information) would be considered as an additional factor justifying permission being granted for quarterly notices. One commenter asked if a State can apply for a waiver of the monthly notice requirement if it has a certified automated system, but believes that the mailing costs would be excessive.

Response: We revised the regulations to allow indefinite waiver of the monthly notice requirement if States send quarterly notices and have an automated voice response system which provides all required information in õ302.54(b)(2). We believe that the combination of quarterly notices and an automated voice response system adequately addresses divergent concerns with respect to administrative burden and a State's responsibility to provide notice. The regulation does not allow use of a hotlinemanned by agency employees during regular business hours to justify sending quarterly notices because it is not as accessible as an automated response system, is too labor intensive, can divert resources from other pressing enforcement agency responsibilities, and, too frequently, is inadequate to meet the demands for information. Given the availability and advantages of an automated voice response system and the mandate that all States develop automated information management systems by 1995, we do not believe use of a hotline is an adequate substitute for monthly or quarterly notice.

With respect to granting waivers based on mailing costs, section 454(5)(A) of the Act allows quarterly notices only if a State demonstrates an unreasonable administrative (not just cost) burden. Any such costs, moreover, must be balanced against the benefits of frequent notices of collection which the Congress perceived in enacting this statutory requirement.

States that generate monthly notices using their automated system and States which receive waivers to provide quarterly notices should not be overly burdened by these requirements. Therefore, the Office may grant a waiver to permit a State to provide quarterly, rather than monthly, notices, if the State: (1) Until September 30, 1995, does not have an automated child support enforcement system that performs child support enforcement activities consistent with õ302.85 or has an automated systemthat is unable to generate monthly notices; or (2) uses an automated voice response system which provides the information required under paragraph (b)(2). A quarterly notice must be provided in accordance with conditions set forth in paragraph (b)(1) and must contain the information set forth in paragraph (b)(2). For a waiver to provide quarterly notices to be extended beyond September 30, 1995, the State must use an automated voice response system which provides the information required under paragraph (b)(2). Waivers will be granted as a part of the State plan approval process.

2. Comment: A few commenters stated that waivers should not be given to States with computer systems that do not currently generate notices. States should be required to program computers to generate notices.

Response: Effective October 1, 1995, States are required to have in effect Statewide automated child support enforcement systems. However, many States do not currently have a comprehensive automated system. Any automated system developed to meet the 1995 requirements for a Statewide system must produce mandated notices of collections. We believe it is reasonable to allow a State that cannot currently generate notices using an automated system a waiver to send quarterly notices because sending monthly notices would impose an unreasonable administrative burden on the State.

3. Comment: One commenter asked us to clarify for those States which are not State-administered whether the waiver will include all jurisdictions within the State.

Response: For States which are not State-administered, the waiver will include all jurisdictions within the State.

II. Review and Adjustment of Support Orders

This final regulation only addresses requirements for review and adjustment of support orders effective October 13, 1990. We are issuing a separate regulation to address the requirements for review and adjustment which take effect on and after October 13, 1993. In that regulation, we will address, for the post-October 1993 period, specific requirements for interstate review and adjustment, grounds for adjustment, timeframes for review and adjustment, and notice of the right to request a review.

Comments and our responses which relate to the October 13, 1990 requirements for review and adjustment appear below:

Section 302.70 - Required State Laws

1. Comment: Several commenters indicated that State agencies need a strong Federal mandate to support their efforts to obtain new legislation that will facilitate a comprehensive periodic review and adjustment program. They suggested that õ302.70(a)(10) be expanded to specifically require States to adopt laws that provide for: 1) a quantitative standard for adjustment, 2) agency subpoena power that may be enforced

administratively and 3) a clear statement that agreements between parents settling child support obligations are contrary to public policy.

Response: Section 303.8 sets forth specific Federal requirements for review and adjustment of orders effective October 13, 1990. Congress allowed States discretion in developing their plans for how and when child support orders in effect in the State will be periodically reviewed and adjusted between 1990 and 1993. In 1993, more stringent requirements become effective requiring reviews in certain cases at 36-month intervals. As States develop their plans and enact legislation implementing review and adjustment in the States, we encourage them to consider authorizing agency subpoena power that may be enforced administratively, and otherwise facilitating the review and adjustment process in anticipation of the 1993 statutory mandates. The OCSE is funding several demonstrations related to periodic review and adjustment, and we are committed to widely disseminating knowledge of desirable practices employed by the demonstration States or learned elsewhere across the country. However, we do not believe such specific mandates were intended by the Congress with respect to States' review and adjustment activities between 1990 and 1993.

With respect to stipulated agreements, any child support obligation incorporated within such agreement must be set inaccordance with State guidelines for child support awards, or there must be a written finding or finding on the record by the court or administrative agency determining that the guideline amount is unjust or inappropriate in the particular case. (See final rules on presumptive guidelines published May 15, 1991 (56 FR 22335)).

2. Comment: In response to the requirement that States have laws effective October 13, 1990 requiring that States have procedures for review and adjustment of child support orders, one commenter contended that this timeframe was unreasonable as it would be virtually impossible to have State law enacted by October 13, 1990.

Response: Section 466(a)(10) of the Act was enacted on October 13, 1988. This permitted States a full two-year implementation period within which to enact legislation and procedures in order to be in compliance with the requirements effective on October 13, 1990.

3. Comment: One commenter requested that õ302.70(d)(1) be changed to permit States to apply for an exemption from the required State law criteria for review and adjustment. The commenter indicated that under certain circumstances a State could demonstrate that procedures for review and modification would not increase the effectiveness and efficiency of its ChildSupport Enforcement program based on the cost of implementing these procedures.

Response: We have revised paragraph õ302.70(d)(1) to eliminate reference to specific mandated procedures. By referencing õ302.70(a) in its entirety, States may request an exemption from any mandated procedure, including review and adjustment of orders. Exemption requests must meet the requirements of OCSE-AT-88-19 (December 28, 1988).

4. Comment: One commenter asked whether OCSE has the authority to direct the activities of courts or other agencies serving non-IV-D clients in regard to review and modification of support orders.

Response: OCSE does not have the authority under the Family Support Act to direct the activities of courts or other agencies with respect to review and adjustment of orders in non-IV-D cases. However, the State, in order to have an approved State IV-D plan, may need to enact laws and procedures which bind the courts and other authorities involved in the review and adjustment of orders being enforced under the IV-D program. As directed by the Congress, the Secretary of HHS is also conducting a study of the impact of extending review and adjustment services to non-IV-D cases.

Section 303.4 - Establishment of Support Obligations

1. Comment: Several commenters urged OCSE to put timeframes in a separate section, independent of the timeframes for establishing support orders set forth in õ303.4 because 90 days is insufficient time for review and adjustment in certain cases such as interstate cases.

Response: We have not included timeframes for review and adjustment in õ303.4(d) because we agree that separate timeframes for review and adjustment are warranted. States have flexibility in their plans for review and adjustment to indicate how and when child support orders will be periodically reviewed and adjusted for the three years commencing on October 13, 1990. Therefore, we are not setting timeframes for review and adjustment in this final rule. We address timeframes for review and adjustment of orders in a separate regulation to be issued governing requirements effective on and after October 13, 1993.

State Responsibilities and IV-D Agency Responsibilities

1. Comment: Questions were raised on the State's responsibilities as differentiated from the IV-D agency's responsibilities. One commenter noted that the language of

P.L. 100-485 distinguishes the State's duties which may be carried out by the IV-D agency or by some other arm of the State from other duties which are specifically the responsibility of the State IV-D agency. The commenter further noted that proposed õ303.8 reflected this distinction in the description of the State's responsibilities for conducting the review and adjustment process. The commenter was concerned that the preamble rationale contradicted this by specifying that the IV-D agency must respond to requests for review by the absent parent for review and adjustment.

The commenter presented the following rationale: The review and adjustment section of P.L. 100-485 clearly distinguishes between the "State" and "State child support enforcement agency," or IV-D agency. Under that section, some duties lie generally with the State, which means that they may be carried out by the IV-D agency, or by some other arm of the State, according to the individual State scheme. Other duties are assigned to the State child support agency, and are specifically the responsibility of that entity.

Section 466(a)(10)(A) states, "The State must, at the request of either parent subject to the order, or [at the request] of a State child support enforcement agency, initiate a review of such order, and adjust such order, as appropriate, in accordance with the guidelines...." The statute makes a clear distinction between the "State" and the "State child support enforcement [or IV-D] agency," a distinction that is recognized throughout the Federal regulations, most particularly in the definition 45 CFR 301.1. There, "State" is defined as "the several States, the District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, and Guam," while "IV-D agency" (the State child support enforcement agency referred to in the Family Support Act) is defined as "the single and separate organizational unit in the State that has the responsibility for administering or supervising the administration of the State plan under title IV-D of the Act." To interpret the statute any other way would require the IV-D agency to respond to a request for modification from itself, a function not within its power to provide, and by its terms contradictory.

This distinction between the duties of the State and those of the IV-D agency is crucial. State child support enforcement agencies were created under Title IV-D of the Social Security Act with a specific goal and purpose: to reduce AFDC dependency and promote family economic self-sufficiency, by establishing and enforcing child support awards. This is a valid State purpose, carried outby one State entity. Yet States have many goals and interests, carried out by many entities. States have, for example, an interest in creating just and impartial forums for the resolution of disputes and protection of all State citizens. Commonly, this State purpose is realized through the State court system, quasi-judicial processes, State administrative processes, or some combination thereof.

Response: We agree with the commenter's characterization of the statute and believe it is the best way to accommodate divergent State processes for establishing/adjusting child support awards. Therefore, õ303.8 reflects the distinction between the State and the IV-D agency in the description contained therein of the State's responsibilities for conducting the review and adjustment process. Throughout the provision, the regulation consistently describes the duty of conducting the review and adjustment process as a State responsibility. This appropriately reflects the Act, which does not specify the IV-D agency (or any other State entity) as the specific locus for the State's responsibility to conduct reviews and adjustments. The commenter was correct in pointing out that our statement in the preamble should have stated that the State, not the IV-D agency responds to the absent parent's request for review and adjustment. At the State's discretion, the forum for review and adjustment may be the State court system, a State administrative process, or some other mechanism.

These regulations appropriately reflect statutory language which places responsibility for review and adjustment with the State. However, while this allows States to develop review and adjustment processes within appropriate forums or agencies in the State, it in no way relieves the State of the responsibility to meet Federal requirements, as a condition of IV-D State plan approval, or from the consequences specified by statute should they fail to do so.

States may allocate the various review and adjustment functions as they see fit between the administrative agency and the courts, or based on the availability of administrative, quasi-judicial, and judicial processes. By virtue of their varied administrative and judicial structures, States may choose to allocate differently the screening, review, and adjustment functions, with some conducting much of the review process in the administrative agency, while others place the review process in the adjudicatory body, whether it be through quasi-judicial or judicial process, or a combination thereof.

We urge States to examine the work underway in those States with Federally-supported demonstration projects or who are otherwise pursuing innovative approaches to carry out review and adjustment. For example, both Florida and Colorado review and adjust orders using the judicial system but attempt to obtain obligor and obligee stipulations to a modified order prior tofiling a motion to adjust in court. Delaware uses the IV-D administrative agency for some processes and the court for others. Delaware is testing two review and adjustment processes: a mediation process using the existing structure and a mail-based stipulation process, thereby requiring two separate sets of procedures. Oregon uses the IV-D agency for the entire review and adjustment process. The Oregon agency found advantages to using an administrative process, including the fact that it was less costly and that hearings could be conducted with the parties by telephone.

The regulations would allow States to address issues which arise in some States where there may be a perceived conflict of interest for a IV-D agency attorney, such as representing or advocating for an obligor seeking a downward adjustment. The

IV-D agency must provide services deemed appropriate and in the best interests of the child. In cases in which application of the guidelines indicates the appropriate support award amount is less than the obligor is currently required to pay, we do not believe there will be a conflict for the State IV-D agency to serve primarily an administrative function rather than that of legal advocate and present these facts to the decision-maker.

Section 303.8 - Review and Adjustment of Child Support Orders

Scope of Adjustment - Section 303.8(a)(1)

1. Comment: Several commenters suggested that the regulatory language refer to "adjustment" rather than "modification" to be consistent with the statutory language. They indicated that the use of the term "adjustment" would enable States to change the support award amount in accordance with guidelines without having to otherwise show a change in circumstances necessary to warrant a modification, which may be required by State statutory or case law.

Response: We concur with the suggestion that regulatory language be consistent with statutory language. Therefore, we use the term "adjustment" instead of "modification". In addition, we are using "orders" instead of "obligations" as "orders" is the term used in section 466(a)(10) of the Act.

2. Comment: One commenter requested that we add a definition of "support" to include the availability of health insurance coverage as a basis for triggering the modification process.

Response: Under current regulations at õ303.31(b)(1), the IV-D agency is required to petition for health insurance that isavailable to the absent parent at reasonable cost in cases in which there is an assignment of support rights to the State and the custodial parent does not have satisfactory health insurance other than Medicaid, and in other cases when requested by the individual applying for services. Rather than define "support" we believe it is more appropriate, and achieves the same goal, to define "adjustment" to mean an upward or downward change in the amount of child support based upon an application of State guidelines, consistent with the requirements at õ302.56, for setting and adjusting child support awards and/or providing for the child's health care needs through health insurance or other means.

3. Comment: One commenter asked whether the IV-D agency is responsible for modification of alimony provisions of an order. The commenter questioned mortgage and schooling provisions when treated as support in an order, and suggested that IV-D services be clearly limited to situations where child support is explicitly spelled out. Applications for services should be rejected if other factors are weighed heavily in the original order.

Response: Section 103 of the Family Support Act specifically provides for review and adjustment of child support orders only. Clearly, under the law which this regulation implements, review and adjustment does not extend to aspects of the decree otherthan child support. The law links the review and adjustment process to use of guidelines for setting child support awards. Therefore, neither the law nor these regulations provide an avenue under the IV-D program for adjusting spousal support awards. Under õ302.31(a)(2), effective October 1, 1985, the State must secure support for a spouse or former spouse who is living with the child or children, but only if a support obligation has been established for that spouse and the child support obligation is being enforced under the title IV-D State plan. Furthermore, these regulations are not meant to create an avenue under the IV-D program for review and adjustment of ancillary provisions for orders, such as custody or visitation rights. The IV-D agency should inform the applicant of what services are available under the IV-D program, what other services may be available and the cost thereof, and what services the IV-D agency may not provide.

Definition of Parent - Section 303.8(a)(2)

1. Comment: One commenter requested us to define parent to include "custodial parent, non-custodial parent or any custodial beneficiary".

Response: We complied with this request in our definition of parent. This will ensure that the appropriate persons affected by a review and/or adjustment will be contacted during the process.

2. Comment: Several commenters asked that the definition of "parent" be extended to include State IV-E and Medicaid agencies.

Response: We have defined "parent" to include any custodial

parent or non-custodial parent (or for purposes of requesting a

review, any person or entity who may have standing to request an

adjustment to the child support order). We have not further

delineated what persons or entities may be considered a "parent"

for purposes of review. While we recognize that, generally, the

parties to a child support order are the two parents, other

custodial placements for children receiving IV-D services are

possible, under which an individual or entity acts in the stead

of a parent. For example, a child for whom child support is due under an order may be in foster care placement and receiving

services through the State IV-E program. Certainly, if the State is either a party to the underlying support order or, under State law or procedure, has standing to bring or intervene in a legal

proceeding for adjustment of the amount of child support, the

State IV-E agency could request a review in such a case.

3. Comment: Several commenters raised concerns about providing review and adjustment of orders in Medical Assistance Only (MAO) cases. One commenter noted that such cases have medical support rights assigned to the Medicaid Agency, not to the IV-D agency. Another commenter requested MAO cases be treated as non-AFDC cases as there is no child support assignment.

Response: Non-AFDC applicants for Medicaid services are required to assign medical support rights to the State as a condition of receiving Medicaid and are treated as non-AFDC cases under the IV-D program. See final regulations on providing services in these cases published February 26, 1991 (56 FR 7988). The IV-D agency is required to seek health insurance coverage in these cases in accordance with õ303.31. However, if the custodial parent has satisfactory health insurance coverage or the order requires the absent parent to provide health insurance coverage, the State must review and adjust the order only upon request ofthe absent or custodial parent.

Definition of Review - Section 303.8(b)(3)

1. Comment: One commenter requested the definition of review be placed with other definitions in õ303.8 for clarity.

Response: We agree that all the definitions pertaining to review should be in one section. Therefore, we have placed the definition of review in õ303.8(a).

2. Comment: Several commenters requested that we not require "complete, accurate, up-to-date" information as part of our definition of review to allow States to impute income to a parent who may be unemployed or underemployed or for whom no income information could be obtained.

Response: We agree with this suggestion and have deleted these terms in the final regulation. "Review" is defined as an objective evaluation of information necessary for application of the guidelines. Income may be imputed to a party by a decisionmaker, when appropriate, and permitted under State law and procedures.

3. Comment: A commenter suggested that review and adjustment be defined as a "legal proceeding before a court or administrativebody at which a new support award is determined by engaging in fact-finding to determine those facts necessary for the calculation of a support award under the State's guidelines and determining what the new award shall be". Another commenter suggested that review be defined as an administrative, quasi-judicial or judicial process, with a right of appeal.

Response: We agree with these commenters and have incorporated their concepts in the definition of "review". The definition of "review" is "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: (i) the appropriate support award amount, and (ii) the need to provide for the health care needs of the child(ren), through health insurance or other means. The definition is broad enough to allow flexibility concerning where the review takes place to recognize variances in State processes across the country. Therefore, States may decide the appropriate forum for conducting reviews.

Plan for Review and Adjustment - õ303.8(b)

Written and Publicly Available Plan - õ303.8(b)(1)

1. Comment: One commenter felt that public availability of the plan for review and adjustment would be too burdensome. Another commenter recommended public input to the State's plan for review and adjustment.

Response: We have reviewed these suggestions and believe it is important for the plan to be available to the public. This requirement need not be burdensome if States publicize where one may go to examine a copy of the State's plan which is available for public inspection. Although there is no requirement to have public input, we encourage States to ask for and respond to public comments.

2. Comment: One commenter suggested we maintain the distinction between the State's plan for review and adjustment and the State IV-D plan in the final rule and preamble.

Response: We have maintained the distinction between the State's plan for review and adjustment and the State IV-D plan by noting, as appropriate, the title IV-D State plan or State's plan for review and adjustment.

Commitment of Resources

1. Comment: The proposed regulation required that the plan must "...show the commitment of resources necessary to review orders in all IV-D cases upon the request of either parent subject to the order or of a State child support enforcement agency." Numerous commenters asked for a definition of resources and felt that it would be difficult for a State to show the commitment of resources. They pointed out that this requirement is not specified in the Family Support Act nor in any other pertinent regulation.

Response: In response to many comments stressing how difficult it would be for States to show the commitment of resources, we are deleting this proposed requirement. We believe the requirement is unnecessary because existing regulations at õ303.20(c)(5) require States to have an organizational structure and sufficient resources to meet program requirements, including performance and time standards contained in Federal regulations. This includes adequate resources to establish and adjust support orders.

Targeting Cases for Review

1. Comment: Numerous commenters requested that we delete the proposed requirement that the plan must target cases for reviewbetween 1990 and 1993, and modify orders, if appropriate, in IV-D cases in which there is an assignment of support rights to the State because there is no justification for giving priority to public assistance clients over non-public-assistance clients. One commenter asked whether a State plan can specify reviewing only AFDC cases with support orders over 10 years old.

Response: We have deleted this requirement from the final regulation. From October 13, 1990 to October 13, 1993, the IV-D agency may request review in those cases that meet the criteria for review and adjustment under the State's plan. This is consistent with Congressional intent to allow States flexibility during the first three years of review and adjustment of orders. We encourage States to seriously explore and test innovative processes during this period. States should use the period between October 13, 1990 and October 12, 1993 to prepare and plan for more stringent requirements in 1993. However, we strongly encourage States to target for review and adjustment the oldest cases or those cases that seem ripe for review (particularly those in which there is an assignment of support rights to the State) in anticipation of the 1993 requirement that specifies "...the order is to reviewed not later than 36 months after the establishment of the order or the most recent review..." (See also responses in next section for discussion of the need for States to anticipate impact of reviewing most orders over three years old effective October 13, 1993.)

With respect to reviewing only AFDC cases with support orders over 10 years old, a State's plan for review and adjustment may not exclude large categories of IV-D cases, for example non-AFDC cases, entirely.

Which Orders Must Be Reviewed

1. Comment: One commenter recommended we make clear that the State must initiate a review at the request of either parent only if the case meets the criteria set out in the State's plan.

Response: Effective October 13, 1990, each State is required to have developed and implemented a plan for the review and adjustment of orders. The plan must indicate how and when child support orders in effect in the State are to be reviewed. Between October 13, 1990 and October 12, 1993 each State's plan would specify adequate thresholds, grounds, timeframes or other conditions governing the review and adjustment process in the State. We agree that upon receipt of a request from either parent or the IV-D agency, a decision to review and adjust, if appropriate, must be made based on the State's plan.

While States are given latitude in conducting reviews according to individual State plans between 1990 and 1993, we advise States to consider implementing the 1993 requirements from the very beginning in both statute, where needed, and in the State's plan for review. This would ensure a minimum of disruption from an administrative standpoint, as well as encourage a more rapid implementation of the program changes that Congress envisioned. Between now and 1993, States should plan to review their existingIV-D cases in which support is assigned to the State and the orders will be more than three years old by October 13, 1993. States should anticipate the statutory requirement that, effective October 13, 1993, the State must review and adjust, if appropriate, most orders in AFDC cases which have not been reviewed or modified within the past 36 months. Some States have implemented plans under which the entire AFDC caseload is being reviewed in equal monthly proportions (and opportunity is being given to the parties in non-AFDC cases to request a review) in advance of the October 13, 1993 effective date, so that the number of cases with orders over three years old will be fewer on that date, and more manageable. Advance planning in recognition of the potential impact of, and mandatory requirement for, the periodic review of cases at three-year intervals is a prudent consideration.

2. Comment: Several commenters have requested clarification of the State's responsibilities as of October 13, 1993. They would like to know whether all cases that are 36 months old or older are immediately subject to review on October 13, 1993, if there is an assignment of support rights to the State. These commenters argued that the State merely has to begin a process to review such orders on that date and has until some future date, perhaps 3 years later, to complete reviews on all old orders.

Response: Section 466(a)(10)(B) of the Act specifies

" ...beginning 5 years after enactment of this paragraph or such earlier date as the State may select, the State must implement a process for the periodic review and adjustment of child support orders being enforced under this part under which the order is to be reviewed not later than 36 months after the establishment of the order or the most recent review ...." The statute requires this review, and adjustment if appropriate, in most AFDC cases but only upon request in non-AFDC cases. Therefore, starting on October 13, 1993, States are required to review child support orders in AFDC cases that are 36 months old or older unless the State determines the review would not be in the best interests of the child and neither parent has requested a review. The statute does not allow States an extended period after 1993 to complete reviews in old orders.

We disagree with commenters that States should be given additional time after 1993 to review and adjust orders over three years old. Congress has given States five years to prepare for the 1993 requirements and did not intend a State to wait a full five years after enactment of the Family Support Act to begin to review old orders. State have considerable advance notice in order to adopt any necessary laws, to anticipate the number of cases potentially needing review when the 36-month requirement becomes effective, and to otherwise address the operational implementation in a meaningful way. Further delay would only result in children being deprived of the appropriate amount offinancial and medical support to which they are entitled. Therefore, starting in 1993 is not enough; States should be anticipating the impact of the 1993 date and should be working to reduce the number of old orders which require review. States are strongly urged to begin this process as soon as possible so that it is not too cumbersome a task in 1993.

3. Comment: One commenter asked if the review is to be initiated or completed 36 months after establishment of the order or of the most recent review.

Response: A review must be initiated, not completed, within 36 months after establishment of the order or the most recent review.

4. Comment: Commenters suggested that States be required to adopt criteria that are broad and inclusive, thus ensuring that orders that have never been updated or are very old will automatically qualify; that AFDC and non-AFDC cases be treated the same; and that no category of cases is systematically excluded from review.

Response: States have discretion to establish conditions and circumstances to qualify a case for review in their plan for review and adjustment. However, they cannot categorically exclude any segment of the caseload, e.g., non-AFDC cases orinterstate cases in which there is an order in the State that can be adjusted under State law.

5. Comment: One commenter asked whether the plan can identify circumstances that would not warrant a review. Commenters asked whether a request may be rejected if it is deemed frivolous. Another commenter noted that the plan adopted by the State should articulate the standards which the State will employ in determining whether an award will be subject to review.

Response: States' plans for review and adjustment must articulate how and when orders in the State will be reviewed. This means the State's plan must address what the process for review and adjustment is, as well as under what circumstances an order will or will not be reviewed and adjusted. Therefore, States should adopt plans for review and adjustment of orders which articulate standards and criteria for rejecting requests as frivolous, such as frequent requests where there is no indication of a substantial change in circumstances. If the criteria for review articulated in the State's plan are not met in a particular case in which review has been requested, the State may decline to conduct the review.

6. Comment: The majority of commenters recommended that inconsistency with the guidelines be adequate grounds for adjustments, regardless of whether the order was establishedunder the guidelines, unless the inconsistency is considered negligible under the State's procedures. The commenters argued that the award amount indicated by the guidelines is rebuttable, thereby permitting an opportunity to present additional information that may have been taken into consideration in setting the original award amount.

Response: Section 466(a)(10)(A) of the Act requires that orders be adjusted, as appropriate, according to the State's guidelines. This rule applies regardless of whether or not the original order was established under the State's guidelines. Section 467 of the Act and regulations published on May 15, 1991, at 45 CFR 302.56 require guidelines to be used as a rebuttable presumption in setting all child support awards. We agree that information applied in setting the original order and still relevant may be presented during the review to rebut the amount of support indicated by the guidelines.

Because of the discretion given to the States during the first three years of review and adjustment, we are not mandating that inconsistency with the guidelines be adequate grounds for adjustment between 1990 and 1993. Many State laws require proof of a substantial change in circumstances before adjusting an order and inconsistency with the guidelines would not currently meet that test. States are encouraged to adopt quantitative standards (percentage and/or fixed dollar amounts or both) todetermine whether an inconsistency is sufficient to justify an adjustment.

7. Comment: One commenter stated that no guidance is given as to whether and under what circumstances the IV-D agency has an affirmative duty to request a review. The commenter suggested that regulations could further define IV-D agency responsibilities by directing that the IV-D agency request reviews in all cases in which (a) the support rights have been assigned to the State; (b) the IV-D agency determines that the present award is lower than the amount likely to be ordered under the State's guidelines and the difference is not negligible; and (c) the agency determines that said review would be in the best interests of the child.

Response: While we have not specified in this final rule governing 1990-1993 requirements under what circumstances the

IV-D agency has an affirmative duty to request a review, we strongly encourage States to include the commenter's suggestions in their plan for review and adjustment. Affirmative, aggressive action during the period prior to October 1993, will ensure an easier transition to the more stringent requirements that become effective at that time.

8. Comment: Several commenters asked how a State documents a review when automatic matches with appropriate databases indicate that modification should not currently be pursued. Another commenter asked whether computer matching of IV-D cases against wage reporting systems, public assistance records, unemployment insurance rolls, etc., constitute a review assuming neither parent requests a review. Another commenter asked how a review is defined when the State initiates an evaluation of cases by applying certain criteria to computer-generated case listings and matches these against other databases. Several commenters questioned whether notices need to be sent to parties where pre-screening indicates that no modification would be warranted under the State's guidelines.

Response: There is no requirement for pre-screening or pre-review, but States may place pre-screening procedures in their plans for review and adjustment. These pre-screening procedures may identify cases with low potential for adjustment. A State's plan between 1990 and 1993 establishes under what circumstances a review will be conducted. A State is not required to review orders absent a request for a review by a parent or IV-D agency between 1990 and 1993 unless its plan requires it to do so.

Some States, however, are reviewing cases whether or not there isa request. This is especially worthwhile in AFDC cases given the requirement for review of most orders in AFDC cases which is effective October 13, 1993. However, regardless of the basis for review, States should not rely solely on computer matching to conduct a review as it may not ensure up-to-date, complete and accurate information necessary to apply the State's guidelines. In conducting a review, it may be necessary to obtain information from the parties, in addition to use of the automated resources.

Oregon, in its final report on the review and adjustment demonstration project, determined that disposition of cases using their Partial Automated Review (PAR) procedure often took longer and was more labor intensive. Experience showed that the new award amounts computed by PAR after accessing automated data sources were frequently based on incomplete data as to earnings or allowable deductions. Accordingly, the parents usually submitted additional information so that a new calculation had to be performed. Moreover, the preliminary results obtained under PAR created false expectations in many situations, with the consequence that staff time was consumed in responding to parents' complaints when the final result was lower or higher than expected.

It is important to recognize the distinction between review and "pre-screening". Pre-screening of cases against automatedrecords in accordance with the State's review and adjustment plan to determine whether a case qualifies for a review is appropriate. However, pre-screening does not meet the definition of a review as specified in õ303.8(a)(3). Therefore, a complete review must be conducted if a case meets the conditions for review under a State's review and adjustment plan. Otherwise, the specification in the statute that a review will produce a determination that an order should be adjusted or that no change is necessary would not be met. The advance notice is only required if a review is to be conducted.

9. Comment: Some commenters had concerns about the use of pro se processes. One commenter recommended that we clearly state in regulations that a State is not required to review and adjust an order if the parties elect to proceed on their own, either pro se or with a private attorney. Another commenter asked whether the requesting party can proceed with a pro se action without the IV-D agency being involved. Commenters questioned whether the agency can recommend use of a pro se process if the case does not meet the criteria for modification but a parent insists it take place.

Response: Establishing pro se processes for seeking adjustments to orders simplifies the process and ensures access to reviews for anyone who may seek an adjustment. If a party elects to proceed on their own behalf, either pro se or through privatecounsel, the State is not required to review the order or seek an adjustment. Pro se kits can be offered when a request for review and adjustment does not meet the State's criteria for review under its review and adjustment plan. At least one State which utilizes an administrative review and adjustment process has a pro se "do it yourself" kit for court adjustment of orders. This kit is provided to requestors in cases which the IV-D agency has deemed through a preliminary review do not meet the criteria for review under the State's plan. In addition, the kit is provided to: 1) requestors who the agency deemed do not qualify for a review, 2) those who meet the agency criteria but prefer court review, 3) those whose change in income is the reason for the request but recomputation using the guidelines does not meet the required minimum threshold for adjustment, 4) those requestors who claim a special circumstance requiring court determination, and 5) those cases in which the agency finding is disputed and cannot be resolved through supervisory review. The State's forum for pro se adjustment can be judicial, administrative or a combination of the two.

Advance Notice of Review - õ303.8(b)(2)(iii)

1. Comment: Numerous commenters indicated confusion as to who is entitled to an advance notice of review. One commenter suggested having different types of notices required when one party to a case requests a review as compared to when the State initiates a review. Another commenter recommended that each parent be notified of a review.

Response: The State must notify each parent of a review regardless of whether one or both of the parties requested the review or the State initiated the review. One form of notice can be used whether a parent, both parents, or the State makes the request for review.

2. Comment: One commenter asked if the purpose of the 30-day advance notice is to advise the parties that a review which could result in modification will be conducted; or to advise the parties that a completed review indicates a modification is appropriate. In addition, this commenter also wanted to know if this means that the review cannot be conducted until the 30-day period expires.

Response: The purpose of the 30-day advance notice required under õ303.8(b)(2)(iii) is to advise the parties that a reviewwill be conducted and to give them an opportunity to submit pertinent information. Generally, as required by the statute, the review cannot be conducted until the 30 days expire. However, the parties may jointly agree to waive this 30 day requirement. Following a review, another notice is required under õ303.8(b)(2)(v) advising each parent of any adjustment or determination that there should be no change in the child support award amount and of each parent's right to initiate proceedings to challenge the adjustment or determination within at least 30 calendar days after the date of the notice.

3. Comment: There were several comments on notifying parents of the likely outcome of the review in the advance notice. One commenter requested the parents be notified in the advance notice of review of: 1) the amount of the proposed adjustment, 2) a date by which a party must note an objection, 3) the date and time of the proceeding and 4) the adjustment or determination that there should be no change.

Response: Because the review has not taken place, the advance notice of review required under õ303.8(b)(2)(iii) should not include the amount of the proposed adjustment or date by which a party must note an objection. (See earlier discussion about the results of the Oregon demonstration project's Partial Automated Review and notice to parents.) The notice should include details about when and where the review will take place, as well as anynecessary information the parties must provide the State. The proposed adjustment or determination that there should be no change in the order and date by which objections can be made are specified in the notice to the parties required under õ303.8(b)(2)(v) which is provided after the review is completed.

4. Comment: Several commenters inquired about providing advance notice and subsequent reviews of support orders to parents who had not been located. They asked whether the State can forward the notice to the last address of record.

Response: Generally, notices cannot be sent to individuals whom the State is unable to locate. However, if permitted by State due process requirements, notices by publication or by mailing to the last known address of record may be used. If a party to an order cannot be located, the State may be unable to secure information necessary to conduct the review. If the State cannot proceed with the review because of inadequate information, the case file should be documented and no review would be required until location efforts required under õ303.3 are successful.

5. Comment: Several commenters asked for clarification about whether the requirement to notify parties of a proposed review is satisfied by sending the parties copies of a legal pleading such as a complaint or petition to modify or an administrative notice of review.

Response: Sending the parties copies of the complaint or petition to adjust the order will satisfy the requirement to provide advance notice of a review if the copies are sent 30 days before the complaint or petition is heard.

6. Comment: One commenter asked us to remove the requirement to wait 30 days before initiating the review after sending the advance notice so that the review could be commenced immediately upon selection of the case.

Response: The 30-day advance notice is mandated by statute and cannot be deleted. In addition, 30 days allows adequate time to gather information necessary to conduct the review. However, as indicated previously, parties may jointly stipulate to a waiver of the 30 day requirement.

7. Comment: There was an inquiry as to whether the notice requirement applies in AFDC and foster care cases.

Response: Section 303.8(b)(2)(iii) requires States to send advance notice to "notify each parent subject to a child support order in effect in the State of any review of the order at least 30 calendar days before commencement of the review" in any IV-D case in which an order is to be reviewed.

Requiring Parents to Provide Necessary Information

1. Comment: Several commenters recommended that we require that support orders require parties to the order to provide information necessary to conduct a review. Another commenter felt it is unreasonable to assume that either party will provide the necessary information. There were questions concerning safeguarding of shared information.

Response: A State may require in its advance notice that each party provide specified information necessary to conduct the review. States are also permitted and encouraged to make the provision of information a requirement in the support order. States must make every effort to obtain and use information necessary to apply the State's guidelines. States should attempt to secure the necessary information by accessing employment security or other records rather than relying totally on the parties to provide the information. With respect to concerns about safeguarding of shared information under õ303.21(a)(1), the use or disclosure of information concerning applicants or recipients of support enforcement services is limited to the purposes directly connected with the administration of the plan or program for Child Support Enforcement and AFDC programs, among others.

2. Comment: One commenter asked us to clarify that requests for information to accomplish the review be sent at the same time as the notice of review.

Response: We encourage the States to request specific information needed to accomplish the review in the advance notice of review.

3. Comment: A number of commenters raised concerns about financial information. One commenter asked that we define the income verification process, whether the parents can be provided with court-approved financial affidavits and if wage reporting information can be required to be verified with the payor prior to review. One commenter asked whether sending financial statements is sufficient advance notice of a review. In addition, they asked whether a review may commence if all documentation is received before the 30-day period expires.

Response: The State may send financial statements to be completed by parties as part of the advance notice of review. However, the parties must be notified that a review will take place 30 days following the notice. With respect to starting the review as soon as all information is received, section 466(a)(10)(C)(i) of the Act requires States to notify the parties 30 days before commencing the review. Therefore, the State must wait the full 30 days before starting the review unless theparties jointly agree to waive the requirement. The necessity and extent of income verification is determined according to State standards and guidelines.

4. Comment: A commenter asked us to require States to adopt laws granting IV-D agencies administrative subpoena power.

Response: We are not requiring States to enact such laws in this rule because of the flexibility given States by the Congress to develop processes for review and adjustment over the 1990-1993 period. However, we encourage them to do so as a means of improving their ability to obtain information. One of the demonstration States, Illinois, found legislation enacted giving subpoena power to the administrative agency to be very beneficial. The Illinois IV-D agency reports that the information gained from employers is useful not only in assessing the financial status of the responsible relative, but also in updating addresses and locating the absent parent. The use of administrative subpoena power has reduced delays in the filing of motions as the legal representatives do not have to wait for additional evidence to support their findings. In Colorado, another demonstration State, the IV-D agency issues administrative subpoenas to any obligor who fails to return an affidavit for child support issued with the initial notice. The administrative subpoenas require the non-responding parties to bring the requested financial information to an adjustmenthearing at the IV-D office. Obligors who fail to respond to the administrative subpoena may be served with a motion to compel, which requires a court appearance. Because information on the financial situation of both parents is necessary for application of Colorado guidelines, administrative subpoenas may also be served upon non-AFDC obligees who fail to return affidavits.

Post-Review Notice of Results and Right to Challenge - õ303.8(b)(2)(v)

1. Comment: One commenter felt 30 days to challenge the adjustment or determination that there should be no adjustment is an unnecessary and time consuming step. Another commenter recommended allowing 30 days to appeal the decision.

Response: This requirement is mandated by section 466(a)(10)(C) of the Act. States are required to notify each parent "of a proposed adjustment (or determination that there should be no change) in the child support award amount and (that) such parent is afforded not less than 30 days after such notification to initiate proceedings to challenge such adjustment (or determination)."

2. Comment: One commenter asked if the notice of results of the review could be an order of a referee, a recommendation of a mediator, or an administrative finding subject to judicial review, rather than a letter without legal impact.

Response: Any of these alternatives are acceptable, if they are acceptable under the State's law and procedures.

3. Comment: One commenter inquired how the post-review noticerequirement relates to the right to appeal when review is conducted in a judicial setting. The commenter felt that the proposed regulation was written in such a way that the court notification cannot substitute for IV-D notice as the court will not "propose" a modification.

Response: The post-review notice is to inform each parent of the result of the review and the right of each parent to challenge the adjustment or determination, not to adjust by initiating proceedings within at least 30 calendar days after the notice. In jurisdictions that permit "de novo" review in these instances, the parties may present additional information at the hearing or appeal. The post-review requirement can be met by States with traditional judicial processes as long as any party to the order has not less than 30 days to challenge the determination. Since we believe appeal of a decision meets the intent of Congress, õ303.8(b)(2)(v) refers to any adjustment to the order. Our change is to minimize any duplication of, or delay in, the process as long as an individual's due process rights are protected.

4. Comment: One commenter suggested the challenge occur within the modification process to eliminate some of the duplicate notices, waiting periods, and guessing about what the court will do.

Response: While objections can be raised and supporting evidence offered during the process, a challenge to the finding by the decisionmaker cannot be raised until the results are reported to the parents. Upon notice of the results, either or both parents may decide to challenge the results.

5. Comment: A commenter asked if the regulations need to specify whether the challenge to the review is to be heard through an administrative or judicial process or whether it is up to the State.

Response: States have discretion and authority to designate the appropriate forum for hearing challenges to adjustments or determinations that there be no adjustment to the order.

Miscellaneous Questions on the Audit and Interstate Process

1. Comment: One commenter asked whether a State would be subject to an audit exception if, following the criteria in the State's plan for review and adjustment, the State rejects a frivolous request for review.

Response: The State would not be subject to an audit exception if it follows its plan's criteria for review and adjustment of orders.

2. Comment: One commenter asked how States will be audited against the 1990 review and adjustment requirements.

Response: The States will be audited to determine if they are in substantial compliance with requirements for review and adjustment of orders effective October 13, 1990, in accordance with the requirements of õ303.8, and the State's plan for review and adjustment established in accordance with õ303.8.

3. Comment: Numerous comments were made regarding the need for explicit guidance and requirements governing interstate processing of review and adjustment requests.

Response: Because of the complexities of interstate review and adjustment and State flexibility with respect to review andadjustment between 1990 and 1993, we are allowing States to determine how best to perform review and adjustment in interstate cases for those three years but will address specific interstate case processing requirements beginning October 13, 1993 under separate rule.

Between October 13, 1990 and October 12, 1993, the States must have established State plans for review and adjustment and implement and follow these plans. Interstate cases must be processed according to the requirements of õ303.7. If an initiating State sends a request for review and adjustment to the responding State, the responding State must decide if the review is appropriate in accordance with its plan for review and must adjust the order if appropriate and permitted under its State law.

III. Immediate Income Withholding

Section 303.100 - Wage or Income Withholding

General Withholding Requirements

1. Comment: One commenter asked that we clarify that the wage withholding requirements apply to spousal support when such support is included in the child support order being enforced by the State.

Response: Spousal support must be withheld in cases where such support is included in the child support order being enforced under the title IV-D State plan.

2. Comment: Section 303.100(a)(2) requires that, in addition to the amount withheld to pay the current month's obligation, the amount to be withheld must include an amount to be applied toward liquidation of overdue support. A commenter claimed that this requirement will pose problems for States because of requirements for presumptive guidelines at 45 CFR 302.56. The commenter was concerned that judges may be encouraged to determine the amount of the obligation according to the guidelines, but then allocate a portion of that amount to be applied to overdue support, thereby reducing the amount available for current support.

Response: Neither the wage withholding requirements of this section nor the presumptive guidelines requirements at 45 CFR 302.56 support this interpretation. Guidelines are used to determine the underlying obligation, not the payment schedule. The total amount to be withheld to satisfy current and overdue support is subject to limitations contained in paragraph (a)(3) regarding maximum amounts allowed under the Consumer Credit Protection Act (CCPA). In any case, amounts withheld must be used first to satisfy current support, and any additional amounts applied to satisfy arrearages. The presumptive guidelines should not be used as either a basis or a limit for determining the amount to be withheld to satisfy arrearages.

3. Comment: One commenter asked that we define overdue support for purposes of wage withholding. This commenter was concerned that in some paternity cases the initial support award contains, in addition to current support, a support debt for a prior period, and should not be considered arrearages for purposes of wage withholding.

Response: Section 301.1 defines overdue support as a delinquency pursuant to an obligation determined under a court order or established under State law. A support debt created for a prior period in an initial support order entered prior to November 1, 1990, would not meet the conditions established in õ303.100(c)(1) as an arrearage qualifying for triggering initiated withholding,since this amount would not reflect payments which the absent parent failed to make under a support order, i.e., payments which accrued pursuant to a support order and which were not paid timely. In cases of immediate withholding under õ303.100(b), an amount applied to reduce this debt may be included in the total amount to be withheld. However, the existence of such a support debt would not preclude the obligor from meeting the requirements for good cause or an alternative arrangement under paragraphs (b)(1)(i) and (ii) if the order requires an amount to be paid periodically toward liquidation of the debt.

4. Comment: One commenter asked that paragraph (a)(3), limiting withheld amounts to the limits imposed by the CCPA, be cross-referenced with paragraph (a)(9) allowing States to extend withholding to income other than wages.

Response: We did not revise paragraph (a)(9) as requested because the CCPA limits under 15 U.S.C. 1673(b) apply only to periodic payment of compensation for personal services, whether denominated as wages, salary, commission, bonus, or otherwise, including periodic payments pursuant to a pension or retirement program, and including payments under title II of the Social Security Act for disability, since those payments are based on coverage earned through wages or salaries. Some States may extend withholding to other forms of income (State lottery winnings, dividend payments, etc.) which do not fall within theCCPA definition of compensation for personal service and would therefore not be subject to the CCPA limits.

5. Comment: A commenter asked that we clarify the requirement in paragraph (a)(4) that withholding must occur without the need for any amendment to the order involved or any other action by the court or entity that issued it, since provisions under this section may require hearings on mistakes of fact at paragraph (e) or where a State requires the court or administrative entity to reverse a good cause finding.

Response: We agree, and have added the phrase "other than that required or permitted under this section" to the end of paragraph (4). For example, a return to court may be appropriate or necessary to reverse a good cause finding, cancel an alternative arrangement, or implement withholding upon the custodial parent's request if the triggering arrearage has not been met. In cases of triggered withholding, returning to court to amend the underlying support order to provide for withholding is explicitly prohibited. As we stated previously in response to comments in the final rule on implementation of the Child Support Amendments of 1984 (50 FR 19623), the requirement at 466(b)(2) of the Act does not rule out a judge signing a withholding order, if this process does not involve a hearing or a court appearance.

6. Comment: A number of commenters responded to the proposedchange in paragraph (a)(5), that, in cases where there is more than one notice for withholding, the State must allocate amounts available, but in no case shall allocation result in withholding not being implemented for one of the families. Several commenters felt that the proposed change was not specific enough and that it would not remedy the problem of unequal or unfair allocations adequately. A commenter pointed out that a State could satisfy this requirement by allocating a token amount (one dollar) in withholding for one of the families involved. Some commenters wanted the language to require the court or administrative authority which issued the support order(s) to allocate amounts, not the IV-D agency. Other commenters felt that any change to the former requirement, which allowed States to allocate according to their own criteria, would further complicate an allocation process already misunderstood by many families. Some commenters felt that allocation was an insurmountable problem at this time and should not be regulated until further study. Finally, one commenter insisted that this allocation policy could result, in situations where an absent parent has two obligations only one of which is for current support, in the family with the order for current support receiving the entire allocation and the other family none.

Response: We believe that the clarification in paragraph (a)(5), which will ensure that allocation will result in each family benefiting from withholding, reasonably addresses the problem. We do not agree this clarification complicates allocation or that a State would allocate a token amount to a family. We agree that, in giving current support a priority, in some cases an allocation by the IV-D agency will result in withholding not being implemented for the family which is owed arrearages only. However, other enforcement tools such as Federal and State income tax refund offset are available.

7. Comment: Many commenters strongly objected to the proposed language in paragraph (a)(7)(ii) that withholding could be terminated when the absent parent requests termination, withholding has not been terminated previously and subsequently initiated, and the absent parent meets the conditions for an alternative arrangement. Many commenters felt that withholding should only be terminated according to paragraph (a)(7)(i), i.e., when there is no longer a current order for support and all arrearages have been satisfied. Several commenters also felt that allowing termination for any other reason would be contrary to the intent of Congress in establishing immediate withholding. Other commenters objected to allowing the absent parent to request termination, noting that terminating withholding would never be consistent with the best interests of the child. Several commenters claimed that termination procedures would be administratively burdensome, requiring costly staff time to deal with requests and additional staff time to re-apply withholding when arrearages subsequently occurred. Other commenters claimedthat States had in many cases already restricted termination based on assurances by Congress that immediate and constant wage withholding are the best way to assure payments and protect the well being of children. Some commenters expressed their concern that, if a subsequent alternative arrangement is allowed, some absent parents would subject custodial parents to undue pressure. One commenter pointed out that in its State 50 percent of all collections are through wage withholding and that 75 percent of all obligors eventually accrue arrearages. Another commenter felt that if the custodial and absent parents wanted termination after implementation of withholding, the IV-D case should be closed. One commenter asked that a good cause finding be added to the criteria for termination.

Response: In response to these comments, we have provided that States who believe that termination of immediate withholding should be restricted have the authority to do so. Paragraph (a)(7)(i) now requires that, for all cases, the State must have procedures for promptly terminating withholding when there is no longer a current order for support and all arrearages have been satisfied. States who wish to afford the absent parent the added opportunity to request termination at an earlier date have the option at paragraph (a)(7)(ii) to provide for this if withholding has not been terminated previously and subsequently initiated and the absent parent meets the conditions for an alternate arrangement set forth under paragraph (b)(3). We agree thatStates who expressed concerns regarding the termination of withholding, the subsequent occurrence of future delinquencies, and the unavoidable administrative burden if arrearages again occur, should have the authority to limit termination, if they so choose.

8. Comment: Several commenters objected to the requirement at paragraph (a)(8) that the State have procedures for promptly refunding to absent parents amounts which have been improperly withheld. One commenter asked that we make clear that this referred only to withheld amounts retained by the State, since if it were otherwise, the State would have to recoup the overpayment from the custodial parent. Another commenter asked that this "new" requirement be deleted, since if withheld amounts had been passed on to the custodial parent, the absent parent should pursue reimbursement from the custodial parent. This commenter felt it would be administratively burdensome to the State and the absent parent should use remedies under State law. Another commenter suggested that it would be administratively simpler to allow the IV-D agency to credit the absent parent's account.

Response: This is not a new requirement; it is a restatement of former paragraph (a)(10). This provision does not refer only to withheld amounts retained by the State. Any amounts improperly withheld, even if they have been sent to the custodial parent, must be promptly refunded by the State to the absent parent. Subsequent to the refund, the State may attempt to recover any amounts sent to the custodial parent. Federal funding is not available under 45 CFR 304.20 for these refunds. OMB Circular A-87 precludes Federal funding for "any loss arising from uncollectible accounts and other claims and related costs." However, this does not preclude the State from negotiating directly with the absent parent under State law to apply the refund to other arrearages or future support.

Immediate Withholding

1. Comment: Several commenters objected to the provisions establishing exceptions to immediate withholding which were set forth in paragraphs (b)(1) and (2). These commenters felt that the provisions for good cause and for alternative arrangements would not meet the goal of immediate withholding for all cases and would be administratively burdensome to States.

Response: The provisions for good cause and alternative arrangements are mandated by the statute at section 466(b)(3)(A) of the Act. However, as stated in the preamble to the proposed rule, we are aware that some States have laws and procedures which do not allow exceptions to immediate withholding for good cause and/or alternative arrangements. States have the option of applying for an exemption from these provisions in accordance with regulations at 45 CFR 302.70(d) and program instructions at OCSE-AT-88-12 dated December 12, 1988 if they can demonstrate that the enactment of these requirements would not increase the effectiveness and efficiency of the State Child Support Enforcement Program.

2. Comment: A number of commenters responded to our solicitation of comments on whether the establishment of escrow accounts should be included as conditions for good cause and/or alternative arrangements. Most favored requiring escrow accountsin the amount equal to the support payable for two months as a condition for both a finding of good cause and for an alternative arrangement. One commenter urged that the escrow account be for an amount equal to one year's support. Another commenter recommended either an escrow account or a form of electronic funds transfer as an alternative requirement. Several commenters stated that such a requirement would ensure that the family would continue to receive support upon a default in payment. One commenter suggested that escrow accounts be allowed as an option.

Response: Although many commenters advocated requiring escrow accounts in an amount equal to the support payable for two months as a condition for both a finding of good cause and an alternative arrangement, we have not mandated escrow accounts because there is no evidence of the need for Federal regulation in this regard. Federal regulations at 45 CFR 303.103 already require States to have in effect and use procedures which require that absent parents post security, bond or give some other guarantee to secure support in appropriate cases. Certainly, States who believe this to be a valuable tool may require an escrow account as a means to ensure that funds are available should the obligor become delinquent.

3. Comment: One commenter pointed out that the proposed requirements that the absent parent agree to keep the IV-D agency apprised of his or her current employer and information on anyemployment related health insurance coverage at paragraphs (b)(2)(iii) and (b)(3) for good cause and alternative arrangements, respectively, were duplicative of the requirement at paragraph (a)(10) for all withholding orders.

Response: We agree, and have eliminated these provisions from paragraphs (b)(2) and (3).

4. Comment: One commenter asked if the conditions for reaching a determination of good cause contained in paragraphs (b)(2)(i), and (ii) must both be met, or if the phrase "at least" meant that meeting one of the conditions was sufficient for a finding of good cause.

Response: Both remaining conditions must be met as the minimum criteria for a finding of good cause.

5. Comment: One commenter recommended that there would be other reasons for allowing good cause beyond the best interest of the child, such as extraordinary hardship on the obligor.

Response: The provisions of paragraph (b)(2) are minimum requirements, and States may establish criteria in addition to those set forth in this rule. However, we do not believe that an automatic withholding of support from an obligor's wages should constitute an extraordinary hardship.

6. Comment: Several commenters claimed that the establishment of a definition for good cause was an abuse of regulatory authority and that alternatively, courts should be required to provide written justifications of their good cause findings.

Response: Although the statute did not define good cause, we have used our authority under section 1102 of the Act to set these requirements because we believe that Congress intended that immediate withholding would be implemented in most cases.

7. Comment: We received many comments in response to our solicitation of views regarding whether the State should be a required party, rather than a party at State option, to any alternative arrangement between the absent and custodial parents in a IV-D case in which there is an assignment of support rights to the State. Several commenters felt that the State should be a required party in all IV-D cases, not just those in which support rights have been assigned. These commenters were concerned that it would be unlikely for any alternate arrangement to be in the best interest of a child and that State oversight was needed. One commenter favored the State being a required party in all cases because of the administrative burden caused by subsequent delinquencies. Another commenter asked that the States not be precluded from being a required party to an alternate agreement in any IV-D case because there should be no distinction between cases with assigned support and those without. Some commentersrecommended that the State be a required party only in AFDC cases where both the State and the Federal governments had a vested interest in securing support for those in need of public assistance. A number of commenters favored the language in the proposed rule, allowing the State to be a required party to any alternate arrangement at State option in cases in which there is an assignment of support rights. One commenter asked if the phrase "at State option" meant that the option would allow individual county jurisdictions within the State to exercise or not to exercise the option.

Response: The final rule retains the language in the proposed rule allowing States the option of requiring the State to be a party to a written alternate arrangement in cases in which there is an assignment of support rights to the State. Since opinions on this issue varied so greatly, we believe that States should be allowed the flexibility to choose the best approach. Any State which believes it is essential for the State to be a party in any case involving assigned support may so require under this option. If a State chooses to exercise this option, it may establish procedures which allow local jurisdictions discretion for State involvement based on the circumstances of the case.

8. Comment: Several commenters asked for clarification of the requirement that the written agreement be reviewed and entered by the court or administrative authority. Several commenters wantedthe final rule to explicitly require that the court have the authority to approve the written agreement and not to enter agreements found to be inappropriate. Other commenters were concerned that the court or administrative authority could substitute its judgment for that of the parties if the review included approval authority. These commenters urged that the final rule specify that the court or administrative authority could not disapprove alternative agreements.

Response: The statute at section 466(b)(3)(A) clearly requires the court or administrative authority to determine whether good cause not to implement withholding exists. The statute does not create a similar role for the court or administrative authority with respect to written agreements for alternative arrangements. We have used our regulatory authority only to require the court or administrative authority in these cases to review and enter such agreements in the record.

Initiated Wage Withholding

1. Comment: One commenter requested that the definition of payments which the absent parent has failed to make at paragraph (c)(1) be based on the absent parent's established payment schedule (i.e., weekly, biweekly or monthly payments). This commenter reasoned that withholding should be initiated if the absent parent missed any one payment.

Response: Section 466(b)(3)(B) of the Act requires that, in cases not subject to immediate withholding, the wages of an absent parent shall become subject to withholding on the date on which payments which the absent parent has failed to make are at least equal to the support payable for one month. The requirement is based on the amount which is owed, not when it is due. However, the statute at section 466(b)(3)(B)(iii) allows States to establish an earlier triggering date if they so choose.

2. Comment: Another commenter asked that the regulations should make provisions for potential changes in States' laws which may allow violations of visitation agreements to trigger withholding.

Response: Matters pertaining to visitation and custody are separate from support and should not be used to trigger withholding. Withholding should not be used as a punitivemeasure, particularly for reasons which do not relate to child support.

3. Comment: We received many comments regarding paragraph (c)(1)(ii) which requires that, in cases not subject to immediate withholding, withholding be implemented on the date the custodial parent requests that withholding begin, if the State determines, under such procedures and standards as it may establish, the request should be approved. Several commenters stated that the custodial parent should not be allowed to request withholding if the absent parent had not accrued a qualifying arrearage. One commenter stated that such a provision was inconsistent with the requirements for advance notice to the absent parent when arrearages occur. Another commenter claimed that this provision could be used by the custodial parent to harass the absent parent. One commenter questioned why a State would implement withholding if the case is not before the court for modification or there is no arrearage. Another commenter felt that this provision would add to the enforcement tools available under title IV-D and would provide a bridge between the former withholding requirements and those mandated through immediate withholding for those cases which have support orders entered before November 1, 1990. This commenter recommended that the provision be further strengthened by specifying that, for cases in which support rights had been assigned to the State, the State may request that withholding be implemented.

Response: Section 466(b)(3)(B)(ii) of the Act explicitly requires withholding to be triggered, without regard to whether there is an arrearage, on the date the custodial parent requests it, if the State determines, in accordance with such procedures and standards as it may establish, that the request should be approved. Therefore, States must establish procedures which specify the circumstances in which a custodial parent request for withholding will be granted in cases not subject to immediate withholding and in which the 30 day triggering arrearage has not been met. If the State determines that withholding will be implemented under those procedures, the absent parent must be given advance notice of the withholding in accordance with paragraphs (c)(2) and (d)(1). Moreover, the procedures and standards adopted by the State for approving the custodial parent's request should prevent harassment.

In establishing it's procedures, a State should consider whether it is appropriate to require further action by the court for cases in which there has been a determination of good cause not to implement immediate wage withholding, an alternative arrangement exists or an order was established or modified prior to November 1, 1990. For example, a State could opt to remove the good cause determination or negate an alternative arrangement before withholding is initiated. Although we encourage States toadopt simple administrative procedures to ensure the timely initiation of custodial parent requests, we believe that States should also ensure that their procedures extend appropriate protections to the non-custodial parent as well.

Advance Notice to the Absent Parent in Initiated Withholding

1. Comment: The majority of commenters were concerned that the requirement that the State send the advance notice to the absent parent within 5 working days of the appropriate date under paragraph (c)(1) was unrealistic. Several commenters suggested that a 15 working day timeframe was more feasible, while other commenters were in favor of 10 working days. Another commenter stated that the 5 day timeframe could only be met when all State support enforcement programs are fully automated. One commenter felt that establishing any timeframe for this requirement violated the statutory mandate which provides that the wages of an absent parent become subject to withholding on the appropriate date identified in paragraph (c)(1). A commenter also pointed out that advance notice to the absent parent was not necessary in cases where the absent parent had requested withholding.

Response: We agree that the proposed 5 working day timeframe was too stringent. Consequently, we have changed the timeframe for

sending the notice of withholding to the absent parent to within 15 calendar days of the appropriate date in paragraph (c)(1) which requires initiated withholding under certain conditions in cases where the wages of an absent parent are not subject to immediate withholding. Although the statute requires that the wages of an absent parent become subject to withholding on the date identified in paragraph (c)(1), we realize that it is unrealistic to expect that the notice be sent on that date, although it is clear that the State must have in effect procedures which identify the date when an action takes place which triggers withholding.

The former regulations for withholding at õ303.100(a)(4) addressed this issue by requiring that the State take steps to implement withholding on the appropriate date. We believe that the most realistic approach to ensuring that timely action takes place is to establish measurable timeframes for this requirement. The revised requirements at section 466(b) of the Act eliminated the requirement that advance notice be sent to the absent parent on the day wages become subject to withholding. Because Congress deleted this requirement, it is reasonable to allow States time to send the notice. Moreover, the 15 calendar day timeframe parallels several other requirements under regulations for program standards in 45 CFR Part 303.

Finally, we agree with the comment that it is unnecessary for the

advance notice to be sent to the absent parent when the absent parent has requested that withholding be implemented. Moreover, we would point out that notice of withholding is not required in cases subject to immediate withholding or in interstate cases in which the absent parent has previously received notice of withholding.

2. Comment: One commenter asked if the requirement at proposed paragraph (c)(2), that the State must send advance notice to the absent parent within 5 working days of the appropriate date under paragraph (c)(1) if the absent parent's address is known or, if not known, within 5 days of location, referred to obtaining an address or verifying that the absent parent is at the location.

Response: The extent and specifics of verification procedures are left to the States. The State must ensure the absent parent's due process rights under State law are protected.

3. Comment: A number of commenters were concerned that the requirement at proposed paragraph (c)(3), providing that in cases where there has been a finding of good cause, withholding not be implemented upon request of the custodial parent under paragraph (c)(1)(ii) until the finding had been reversed, was unauthorized by the statute. One commenter asked that the regulation should specify that the support order require that a good cause finding ceases only upon a qualifying delinquency. Another commenter

claimed that reopening a good cause finding would result in a misuse of the State's resources.

Response: We have eliminated the specific regulatory provision that a good cause finding must be reversed before the custodial parent's request for withholding can be approved. We recognize that the statute provides both for a good cause exemption from immediate wage withholding and for custodial parents to initiate wage withholding by request without providing guidance on which provision takes precedence. However, the law does require that States must have in place procedures to review and approve, if appropriate under their procedures and standards, a custodial parent's request. Therefore, we believe that States are in the best position to determine the circumstances under which a custodial parent's request will be approved. We urge that States consider the issue of removal of good cause determination when they develop their review procedures, but will not require that it specifically be included in their procedures.

4. Comment: One commenter recommended that proposed paragraph (c)(4), providing that the only basis for contesting a withholding is a mistake of fact, be changed to require that if the amount of current or overdue support is at issue, the court should be required to modify the support order to reflect the correct amount of support or arrearages and issue the withholding

notice rather than requiring an additional hearing on a claimed mistake of fact.

Response: This is a restatement of former language at õ303.100(a)(4). Section 466(b)(2) of the Act requires that withholding must occur without the need for any amendment to the support order involved or for any further action, other than those required under section 466, by the court or administrative authority which issued the support order. Any State law or procedure (other than to reverse a determination of good cause, cancel an alternative arrangement or implement withholding at the custodial parent's request) which requires a return to court in order to implement withholding is contrary to this requirement.

Procedures When the Absent Parent Contests Initiated Withholding

1. Comment: One commenter asked that the final regulation provide that the State procedures required at paragraph (e) when the absent parent contests initiated withholding include the right of the custodial parent to contest any claims.

Response: While we have not required such procedures to include the custodial parent's right to contest the claim, any procedure conducted pursuant to paragraph (e) with respect to a claim that there is a mistake of fact should provide an opportunity for all

relevant evidence to be presented, including evidence from the custodial parent.

Notice to the Employer for Immediate and Initiated Withholding

1. Comment: One commenter asked if the provision at paragraph (f)(1)(ii), requiring the employer report to the State the date on which an amount was withheld, was intended to establish the date of collection for purposes of distribution or the initial date of receipt for meeting program standards timeframes.

Response: The date the wages were withheld establishes the date of collection for distribution purposes at 45 CFR 302.51; it is not used as the initial date of receipt in the State, which starts measurement of the timeframe within which support must be sent to the family under requirements at 45 CFR 302.32. Provisions at 45 CFR 302.51(a)(4) require that, with respect to payments made through wage or other income withholding and received by the IV-D agency on or after January 1, 1989, the date of collection for distribution purposes in all IV-D cases must be the date of withholding. If the employer fails to report the date of withholding, the IV-D agency must reconstruct that date by contacting the employer or comparing actual amounts collected with the pay schedule specified in the court or administrative order.

2. Comment: One commenter recommended that the requirement at paragraph (f)(1)(ii) that the employer send amounts withheld to the State within 10 working days be changed to 30 calendar days. This commenter maintained that since the statute at section 466(b)(6)(B) requires that methods must be established by the State to simplify the withholding process, and employers find it simpler to send one monthly payment, the timeframe should be extended.

Response: The 10-day requirement has been in effect since May 18, 1985. We believe that to extend this timeframe would be inconsistent with Congressional intent that support collected be expeditiously distributed.

3. Comment: We received several comments objecting to the proposed requirement at paragraph (f)(1)(xi) that the notice to the employer must indicate that the absent parent is required under a support order to provide health insurance coverage. One commenter stated that such a requirement would involve both the IV-D agency and the employer in a meaningless task, since, if the obligor does not sign up for coverage, the employer has no authority to compel enrollment. Another commenter pointed out that the IV-D agency is required to enforce health insurance requirements in support orders. One commenter pointed out that the IV-D agency had no authority to require employers to take

action based on the information provided and such information would not assist the employer in complying with the withholding order. Another commenter felt that the requirement needed strengthening and should be amended to require the employer to report quarterly the obligor's insurance company name, policy number and dependents covered.

Response: We agree that this proposed requirement will not assist in enforcing health insurance requirements and have deleted it from the final rule. However, States with such authority, including Minnesota, Washington and Iowa, may provide such language in their notice to the employer. In addition, States at their discretion may choose to require employers to provide quarterly reports of the obligor's insurance company's name, policy number and dependents covered. In addition, Oregon has already moved in this direction through a modification of quarterly employer reporting for employment security purposes.

4. Comment: A number of commenters objected to the requirement at proposed paragraph (f)(2) that in a case of immediate wage withholding the State must issue the notice to the employer within 5 working days of the effective date of the order, or of locating the absent parent. Some commenters argued that the 5 day requirement was not realistic in light of administrative factors beyond the IV-D agency's control. One commenter recommended a timeframe of 10 working days; another commenter

recommended 15 working days; and another commenter favored 30 calendar days. Several commenters also pointed out that marking the timeframe from the effective date of the support order would be impossible in some instances since some orders are made effective retroactive to the date a petition for support is filed or the date a paternity action is instituted. These commenters recommended that the timeframe commence from the date the order is entered. Another commenter suggested that the requirement be changed to within 5 working days of the receipt of the order by the IV-D agency.

Response: We have changed the timeframe in the final rule to 15 calendar days. This provides a more realistic approach and is consistent with other timeframes established in this rule and in regulations for program standards. We also agree with those commenters who pointed out the difficulty in complying with a timeframe which commences with an "effective" date and have changed the final rule to provide that notice to withhold be sent to the employer within 15 calendar days of the date the support order is entered.

Administration of Withholding

1. Comment: One commenter was concerned that the proposed requirement at paragraph (g)(2)(ii) that the State may designate only one entity to administer withholding in each jurisdiction will mean that every wage withholding action in every support order in the State will become a IV-D case. This commenter complained that this situation would result in increases in workloads and additional tax burdens on State and local taxpayers since there is no Federal financial participation in cases where an application for IV-D services has not been made. It was suggested that since Congress authorized a study regarding the impact of immediate withholding in non-IV-D cases, this proposed requirement should not be issued in final regulations until the results of the study are available.

Response: The requirement for only one wage withholding entity in each jurisdiction applies only to administration of withholding of IV-D cases and has been in effect since October 1, 1985. States have the option of establishing a separate mechanism for the administration of withholding for non-IV-D cases.

2. Comment: We received comments responding to the proposed requirement at paragraph (g)(3) that effective October 1, 1995,States must be capable of receiving withheld amounts and accounting information which are electronically transmitted by the employer to the State. One commenter stated that the requirement was premature and that the issue should not be regulated until procedures for transmitting support payments have been agreed upon by OCSE and the National Automated Clearing House Association (NACHA) and the process of transmitting payments has been tested. This commenter suggested that the proposed rule be withdrawn and that OCSE promulgate this requirement in 1995. Another commenter felt that this rule should appear instead in regulations for automated systems and that it include procedures for all collections, such as transfer of interstate payments and collections from county depositories to the State agency responsible for distribution.

Response: This provision was drafted in anticipation of the requirement that all States have operational automated child support enforcement systems by October 1, 1995. We believe that it is important that States have as much advance notice of this requirement as possible so that this capability can be included in the design of their automated systems. States are encouraged to extend this capability for all collections. We are currently pursuing a national initiative on this issue in cooperation with NACHA. The goal of this project is to develop a Child Support Convention, a set of procedures with a selected format to be used by employers to electronically transfer income withholdingpayments and standardized data elements which will contain case related information about the withholding. As part of developing these procedures we have contacted all State IV-D agencies for assistance, and will continue to involve the States in the ongoing developments.

Interstate Withholding

1. Comment: We received many comments regarding the proposed requirement at paragraph (h)(1) that States may register orders from other States only if it is for the sole purpose of establishing jurisdiction for enforcement of the order, does not confer jurisdiction for any other purpose, and does not delay withholding. Most commenters strongly supported this requirement, and several stated that support orders from their States had been registered by other States when interstate withholding had been requested and that the underlying order was subsequently modified downward in the responding jurisdiction.

Several commenters recommended strengthening the requirement. One commenter stated that the phrase "does not delay" would not assure compliance, since some States would claim that registration did not delay enforcement compared to their procedures for full URESA registration. Another commenter recommended that the final rule prohibit any registration whatsoever of the support order by the responding State. One commenter claimed that the proposed requirement was designed to allow a certain State to continue to register orders, with resulting delays, and suggested that any registration was not consistent with Congressional intent.

Finally, one commenter recommended that there be no restrictions on registration. This commenter argued that the better procedure is to allow the responding State to modify the order as necessary to enforce the other State's order through withholding. The commenter claimed that the proposed language clearly prefers administrative process for interstate wage withholding and that the limitations on registration were not feasible for judicial situations, since the absent parent may raise ability to pay defenses to enforcement. It was argued that this situation would necessitate a delay in enforcement of the order, including wage withholding and that such delay illustrates the futility of separating enforcement and adjustment authority. The commenter further maintained that the complexity of the subject requires careful coordination with ongoing efforts of the Commission on Interstate Child Support authorized under section 126 of P.L. 100-485, and the National Conference of Commissioners on Uniform State Laws (NCCUSL) which is redrafting URESA.

Response: We do not believe that an absolute prohibition on registration of orders for the purpose of wage withholding is feasible at this time due to the varied legal and administrative systems among the States. However, we do agree that the language can be strengthened regarding conditions under which registration is permitted, and have added language to specify that registration create no delay beyond the timeframes contained in paragraph (h)(5) regarding notice to the obligor, opportunity ofthe obligor to contest, and notice to the employer.

With respect to the comment recommending that there be no limits on registration, we strongly disagree. Registration of the underlying support order for the purpose of enforcement of a withholding notice may not open the underlying order to modification. Any State which allows such modifications is not in conformance with the requirements of section 466(b)(2) of the Act which provides that withholding must occur without the need for any amendment to the support order involved and section 466(b)(9) which provides that a State must extend its withholding system so that system will include withholding from income derived within such State in cases where the applicable support orders were issued in other States.

Congressional intent on this issue has been clearly articulated since the adoption of P.L. 98-378 in 1984: "Withholding must occur without amendment of the order or further action by the court. The Committee believes that this requirement is particularly crucial to the effectiveness of any income withholding provision, because it means that the custodial parent will not have to experience the costs and delays involved in returning to court to get a garnishment decree or a new support order." (Senate Report 98-387, page 27). In addition, the Model Interstate Income Withholding Act, published in 1984 by the American Bar Association and the National Conference of StateLegislatures (under a contract from OCSE), explicitly provides that entry by the responding State of the initiating State's support order shall not confer jurisdiction on the courts or agencies of the responding State for any purpose other than income withholding. OCSE recently conducted a review of State law and practices on this issue, and has notified States identified as having problems in this area that any responding State's registration procedure which opens the underlying support order to modification or delays implementation of withholding is not in conformance with Federal requirements.

We agree with the need for ongoing coordination with the Interstate Commission and with the NCCUSL. In fact, the NCCUSL's Drafting Committee and the Interstate Commission's members have agreed to coordinate their efforts with respect to interstate child support enforcement. As referenced earlier, the work of both groups is scheduled for completion in 1992.

2. Comment: One commenter requested that the final rule clarify the requirements for notifying the obligor in interstate wage withholding proceedings.

Response: Under paragraph (h)(5)(i) notice must be given to the absent parent in accordance with paragraph (d), if appropriate, and under paragraph (h)(5)(ii), the absent parent must be given an opportunity to contest the withholding in accordance withparagraph (e), if appropriate. Notice would not be appropriate and, in fact, is not permitted, in immediate withholding in interstate cases, or in cases in which withholding was previously ordered as a result of a triggering arrearage.

3. Comment: Several commenters noted that the proposed requirement at paragraph (h)(3) providing that the initiating State must notify the responding State to implement wage withholding within 5 days of a determination that withholding is required was inconsistent with other regulatory requirements. These commenters pointed out that this conflicts with existing requirements at 45 CFR 303.7(b)(2) providing that the initiating State refer an interstate case for enforcement to the responding State's central registry within 20 calendar days of determining that the absent parent is in another State. Other commenters asked that the proposed requirement be changed to 30 calendar days.

Response: We agree that the proposed timeframe of 5 working days was inconsistent with existing requirements and have changed this timeframe in the final rule at paragraph (h)(3) to provide that the initiating State must notify the responding State to implement withholding within 20 calendar days of determining that withholding is required in a particular case, and, if appropriate, receipt of any information necessary to carry out the withholding. For consistency, we are also revisingõ303.7(b)(2) to tie the 20 calendar day timeframe for referral of an interstate case to the receipt of any information necessary to process the case. An interstate request for withholding is, of course, not needed in cases where a State has long arm jurisdiction over the employer and can implement withholding directly.

4. Comment: We received comments objecting to the 5-day requirement at proposed paragraph (h)(5) for the responding State to send the notice of withholding to the employer, as unrealistic.

Response: We agree and have changed this timeframe to 15 calendar days in the final rule which is consistent with a number of other timeframes in this section.

Immediate Withholding In Non-IV-D Cases

1. Comment: A number of commenters complained that the requirements set forth in paragraph (i), for immediate withholding in non-IV-D cases, were premature since the requirement had a statutory effective date of January 1, 1994. Several commenters pointed out that, since section 101(c) of P.L. 100-485 required that OCSE conduct a study on making immediate withholding mandatory in all cases, final regulations should be postponed so that questions regarding the administrative feasibility and cost implications of such a requirement could be evaluated in light of the fact that no Federal financial participation was available for this activity. One commenter cited preliminary information on one project indicating that there were many complaints from private parties who objected to immediate withholding when a IV-D application had not been filed.

Response: We agree with commenters that it is premature to attempt to regulate this issue. Consequently, we have eliminated proposed paragraph (i) for immediate withholding in non-IV-D cases. As a result, new paragraph (i) requires that there be a provision for withholding in non-IV-D child support orders, to ensure that withholding as a means of support is available without the necessity of filing an application for IV-D services.

LIST OF SUBJECTS

45 CFR Part 302

Child support

Grant programs--social programs

Reporting and recordkeeping requirements

Unemployment compensation

45 CFR Parts 303

Child support

Grant programs--social programs

Reporting and recordkeeping requirements

EXECUTIVE ORDER 12291

The Secretary has determined, in accordance with Executive Order 12291, that this rule does not constitute a "major" rule. A major rule is one that is likely to result in:

(1) An annual effect on the economy of $100 million;

(2) A major increase in costs or prices for consumers, individual industries, Federal, State or local government agencies, or geographic regions; or

(3) Significant adverse effects on competition, employment, investment, productivity, innovation, or the ability of United States-based enterprises to compete with foreign-based enterprises in domestic or export markets.

This rule implements specific requirements of P.L. 100-485 and will not result in additional costs to the States of $100 million or more. Any costs will be administrative, and we believe increased collections as a result of support order adjustments and immediate wage withholding will exceed increased administrative costs.

REGULATORY FLEXIBILITY ANALYSIS

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

(Catalog of Federal Domestic Assistance Program No. 93,023, Child Support Enforcement Program.)

Dated:

_____________________________________

Jo Anne B. Barnhart

Assistant Secretary for

Children and Families

Dated:

Approved:

_____________________________________

Louis W. Sullivan, M.D.

Secretary

For the reasons set out in the preamble, 45 CFR Chapter III is amended to read as follows:

PART 302--STATE PLAN REQUIREMENTS [AMENDED]

1. The authority citation for Part 302 continues to read as follows:

Authority: 42 U.S.C. 651 through 658, 660, 664, 666, 667, 1302, 1396a(a)(25), 1396b(d)(2), 1396b(o), 1396b(p) and 1396(k).

2. Section 302.54 of this chapter is revised to read as follows:

õ302.54 Notice of collection of assigned support.

(a) Until December 31, 1992, the State plan shall provide as follows:

(1) The IV-D agency, at least annually, must send a notice of the amount of support payments collected during the past year to individuals who have assigned rights to support under õ232.11 of this title.

(2) The notice must list separately payments collected from each absent parent when more than one absent parent owes support to the family and must indicate the amount of support collected which was paid to the family.

(b) Effective January 1, 1993, the State plan shall provide that the State has in effect procedures for issuing notices of collections as follows:

(1) The IV-D agency must provide a monthly notice of the amount of support payments collected for each month to individuals who have assigned rights to support under õ232.11 of this title, unless no collection is made in the month, the assignment is nolonger in effect and there are no longer any assigned arrearages, or the conditions in paragraph (c) of this section are met.

(2) The monthly notice must list separately payments collected from each absent parent when more than one absent parent owes support to the family and must indicate the amount of current support, the amount of arrearages collected and the amount of support collected which was paid to the family.

(c)(1) The Office may grant a waiver to permit a State to provide quarterly, rather than monthly, notices, if the State:

(i) Until September 30, 1995, does not have an automated system that performs child support enforcement activities consistent with õ302.85 of this part or has an automated system that is unable to generate monthly notices; or

(ii) Uses a toll-free automated voice response system which provides the information required under (b)(2) of this section.

(2) A quarterly notice must be provided in accordance with conditions set forth in paragraph (b)(1) of this section and such notice must contain the information set forth in paragraph (b)(2) of this section.

3. Section 302.70 of this title is amended by revising paragraph

(a)(8), adding a new paragraph (a)(10) and revising paragraphs (d)(1) and the first sentence of (d)(2) to delete reference to subparagraphs (a)(1) through (8) to read as follows:

õ 302.70 [Amended]

(a) * * *

(8) Procedures under which all child support orders which are issued or modified in the State will include provision for withholding from wages, in order to assure that withholding as a means of collecting child support is available if arrearages occur without the necessity of filing an application for services under õ302.33 of this part, in accordance with

õ303.100(i) of this chapter;

* * * * *

(10) Effective October 13, 1990, procedures for the review and adjustment of child support orders, in accordance with the requirements of õ303.8 of this chapter.

* * * * *

(d)(1) Exemption. A State may apply for an exemption from any of the requirements of paragraph (a) of this section by the

submittal of a request for exemption to the appropriate Regional Office.

(2) Basis for granting exemption. The Secretary will grant a State, or political subdivision in the case of paragraph (a)(2), an exemption from any of the requirements of paragraph (a) of this section for a period not to exceed three years if the State demonstrates that compliance would not increase the effectiveness and efficiency of its Child Support Enforcement program

PART 303--[AMENDED]

4. The authority citation for part 303 continues to read as follows:

Authority: 42 U.S.C. 651 through 658, 660, 663, 664, 666, 667, 1302, 1396a(a)(25), 1396b(d)(2), 1396b(o), 1396b(p) and 1396(k).

5. In õ303.4, paragraph (c) is revised as follows:

õ303.4 [Amended]

* * * * *

(c) Periodically review and adjust child support orders, as appropriate, in accordance with õ303.8 of this part.

* * * * *

6. In õ303.7, paragraph (b)(2) is revised as follows:

õ303.7 [Amended]

* * * * *

(b) Initiating State IV-D agency responsibilities.

* * * * *

(2) Except as provided in paragraph (b)(1) of this section, within 20 calendar days of determining that the absent parent is in another State, and, if appropriate, receipt of any necessary information needed to process the case, refer any interstate IV-D case to the responding State's interstate central registry for action, including URESA petitions and requests for location, document verification, administrative reviews in Federal income tax refund offset cases, wage withholding, and State income tax refund offset in IV-D cases.

* * * * *

7. A new õ303.8 is added to read as follows:

õ303.8 Review and adjustment of child support orders.

(a) Definitions. For purposes of this section:

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

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

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

(2) "Parent" includes any custodial parent or non-custodial 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).

(3) "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:

(i) The appropriate support award amount; and

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

(b) Plan for review and adjustment. (1) Effective on October 13, 1990, the State must have a written and publicly available plan indicating how and when child support orders in effect in the State will be periodically reviewed and adjusted.

(2) During the period from October 13, 1990 through October 12, 1993, the State must, for orders being enforced under this chapter:

(i) Determine whether such orders should be reviewed, using the plan specified in paragraph (b)(1) of this section;

(ii) Initiate a review, in accordance with the plan, at the request of either parent subject to the order or of a IV-D agency;

(iii) Notify each parent subject to a child support order of any review of the order at least 30 calendar days before commencement of the review;

(iv) Adjust the order when the review determines that there should be a change in the child support award amount, or that health insurance should be required, as indicated by the review in accordance with the State's guidelines for support described in õ302.56 of this chapter.

(v) Following any review, notify each parent subject to a child support order in effect in the State, of:

(A) Any adjustment or a determination that there should be no change in the order; and

(B) Each parent's right to initiate proceedings to challenge the adjustment or determination, either through pre-decision review, appeal, or administrative review, within at least 30 calendar days after the date of the notice.

8. Section 303.100 is revised as follows:

õ303.100 Procedures for wage or income withholding.

(a) General withholding requirements. (1) The State must ensure that in the case of each absent parent against whom a support order is or has been issued or modified in the State, and is being enforced under the State plan, so much of his or her wages must be withheld, in accordance with this section, as is necessary to comply with the order.

(2) In addition to the amount to be withheld to pay the current month's obligation, the amount to be withheld must include an amount to be applied toward liquidation of overdue support.

(3) The total amount to be withheld under paragraphs (a)(1), (a)(2) and, if applicable, (f)(1)(iii) of this section may not exceed the maximum amount permitted under section 303(b) of the Consumer Credit Protection Act (15 U.S.C. 1673(b)).

(4) In the case of a support order being enforced under the State plan, the withholding must occur without the need for any amendment to the support order involved or any other action by the court or entity that issued it other than that required or permitted under õ303.100.

(5) If there is more than one notice for withholding against a single absent parent, the State must allocate amounts available for withholding giving priority to current support up to the limits imposed under section 303(b) of the Consumer Credit Protection Act (15 U.S.C. 1673(b)). The State must establish procedures for allocation of support among families, but in no case shall the allocation result in a withholding for one of the support obligations not being implemented.

(6) The withholding must be carried out in full compliance with all procedural due process requirements of the State.

(7) The State must have procedures for promptly terminating withholding:

(i) In all cases, when there is no longer a current order for support and all arrearages have been satisfied; or,

(ii) At State option, when the absent parent requests termination and withholding has not been terminated previously and subsequently initiated, and the absent parent meets the conditions for an alternative arrangement set forth under paragraph (b)(3) of this section.

(8) The State must have procedures for promptly refunding to absent parents amounts which have been improperly withheld.

(9) The State may extend its withholding to include withholding from forms of income other than wages.

(10) Support orders issued or modified in IV-D cases must include a provision requiring the absent parent to keep the IV-D agency informed of the name and address of his or her current employer, whether the absent parent has access to health insurance coverage at reasonable cost and, if so, the health insurance policy information.

(b) Immediate withholding in IV-D cases. (1) In the case of a support order being enforced under this part that is issued or modified on or after November 1, 1990, the wages of an absent parent shall be subject to withholding, regardless of whether support payments by such parent are in arrears, on the effective date of the order, except that such wages shall not be subject to withholding under this paragraph in any case where:

(i) Either the absent or custodial parent demonstrates, and the court or administrative authority finds, that there is good cause not to require immediate withholding; or (ii) A written agreement is reached between the absent and custodial parent, and, at State option, the State in IV-D cases in which there is an assignment of support rights to the State, which provides for an alternative arrangement.

(2) For the purposes of this paragraph, any finding that there is good cause not to require immediate withholding must be based on at least:

(i) A written determination that, and explanation by the court or administrative authority of why, implementing immediate wage withholding would not be in the best interests of the child; and

(ii) Proof of timely payment of previously ordered support in cases involving the modification of support orders.

(3) For purposes of this paragraph, "written agreement" means a written alternative arrangement signed by both the custodial and absent parent, and, at State option, by the State in IV-D cases in which there is an assignment of support rights to the State, and reviewed and entered in the record by the court or administrative authority.

(c) Initiated withholding in IV-D cases. In the case of wages not subject to immediate withholding under paragraph (b) of this section, including cases subject to a finding of good cause or to a written agreement:

(1) The wages of the absent parent shall become subject to withholding on the date on which the payments which the absent parent has failed to make under a support order are at leastequal to the support payable for one month or, if earlier, and without regard to whether there is an arrearage, the earliest of:

(i) The date on which the absent parent requests that withholding begin;

(ii) The date on which the custodial parent requests that withholding begin, if the State determines, in accordance with such procedures and standards as it may establish, that the request should be approved; or

(iii) Such earlier date as State law or procedure may provide.

(2) The State must send the advance notice required under paragraph (d) of this section to the absent parent within 15 calendar days of the appropriate date under paragraph (c)(1) of this section if the absent parent's address is known on that date, or, if the absent parent's address is not known on that date, within 15 calendar days of locating the absent parent.

(3) The only basis for contesting a withholding under this paragraph is a mistake of fact, which for purposes of this paragraph means an error in the amount of current or overdue support or in the identity of the alleged absent parent.

(d) Advance notice to the absent parent in cases of initiated withholding. (1) On the date specified in paragraph (c)(2) ofthis section, the State must send advance notice to the absent parent regarding the initiated withholding. The notice must inform the absent parent:

(i) Of the amount of overdue support that is owed, if any, and the amount of wages that will be withheld;

(ii) That the provision for withholding applies to any current or subsequent employer or period of employment;

(iii) Of the procedures available for contesting the withholding and that the only basis for contesting the withholding is a mistake of fact;

(iv) Of the period within which the absent parent must contact the State in order to contest the withholding and that failure to contact the State within the specified time limit will result in the State notifying the employer to begin withholding; and

(v) Of the actions the State will take if the individual contests the withholding, including the procedures established under paragraph (e) of this section.

(2)(i) The requirements for advance notice to the absent parent under paragraph (d)(1) of this section and for State procedures when the absent parent contests the withholding in response tothe advance notice under paragraph (e) of this section do not apply in the case of any State which had a withholding system in effect on August 16, 1984 if the system provided on that date, and continues to provide, any other procedures as may be necessary to meet the procedural due process requirements of State law.

(ii) Any State in which paragraph (d)(2)(i) of this section applies must meet all other requirements of this section and must send notice to the employer under paragraph (f) of this section within 15 calendar days of the appropriate date specified in paragraph (c)(1) of this section if the employer's address is known on that date, or, if the employer's address is not known on that date, within 15 calendar days of locating the employer's address.

(e) State procedures when the absent parent contests initiated withholding in response to the advance notice. The State must establish procedures for use when an absent parent contests the withholding. Within 45 calendar days of sending advance notice to the absent parent under paragraph (d) of this section, the State must:

(1) Provide the absent parent an opportunity to present his or her case to the State;

(2) Determine if the withholding shall occur based on an evaluation of the facts, including the absent parent's statement of his or her case;

(3) Notify the absent parent whether or not the withholding is to occur and, if it is to occur, include in the notice the time frames within which the withholding will begin and the information given to the employer in the notice required under paragraph (f) of this section; and

(4) If withholding is to occur, send the notice required under paragraph (f) of this section.

(f) Notice to the employer for immediate and initiated withholding. (1) To initiate withholding, the State must send the absent parent's employer a notice which includes the following:

(i) The amount to be withheld from the absent parent's wages, and a statement that the amount actually withheld for support and other purposes, including the fee specified under paragraph (f)(1)(iii) of this section, may not be in excess of the maximum amounts permitted under section 303(b) of the Consumer Credit Protection Act (15 U.S.C. 1673(b));

(ii) That the employer must send the amount to the State (or to such other individual or entity as the State may direct) within10 working days of the date the absent parent is paid, and must report to the State (or to such other individual or entity as the State may direct) the date on which the amount was withheld from the absent parent's wages;

(iii) That, in addition to the amount withheld for support, the employer may deduct a fee established by the State for administrative costs incurred for each withholding, if the State permits a fee to be deducted;

(iv) That the withholding is binding upon the employer until further notice by the State;

(v) That the employer is subject to a fine to be determined under State law for discharging an absent parent from employment, refusing to employ, or taking disciplinary action against any absent parent because of the withholding;

(vi) That, if the employer fails to withhold wages in accordance with the provisions of the notice, the employer is liable for the accumulated amount the employer should have withheld from the absent parent's wages;

(vii) That the withholding under this section shall have priority over any other legal process under State law against the same wages;

(viii) That the employer may combine withheld amounts from absent parents' wages in a single payment to each appropriate agency requesting withholding and separately identify the portion of the single payment which is attributable to each individual absent parent;

(ix) That the employer must implement withholding no later than the first pay period that occurs after 14 working days following the date the notice was mailed; and

(x) That the employer must notify the State promptly when the absent parent terminates employment and provide the absent parent's last known address and the name and address of the absent parent's new employer, if known.

(2) In the case of an immediate wage withholding under paragraph (b) of this section, the State must issue the notice to the employer specified in paragraph (f)(1) of this section within 15 calendar days of the date the support order is entered if the employer's address is known on that date, or, if the address is unknown on that date, within 15 calendar days of locating the employer's address.

(3) In the case of initiated withholding, if the absent parent fails to contact the State to contest withholding within theperiod specified in the advance notice in accordance with the requirements of paragraph (d)(1)(iv) of this section, the State must send the notice to the employer required under paragraph (f)(1) of this section within 15 calendar days of the end of the contact period if the employer's address is known on that date, or, if the address is unknown on that date, within 15 calendar days of locating the employer's address.

(4) If the absent parent changes employment within the State when a withholding is in effect, the State must notify the absent parent's new employer, in accordance with the requirements of paragraph (f)(1) of this section, that the withholding is binding on the new employer.

(g) Administration of withholding. (1) The State must designate a public agency to administer withholding in accordance with procedures specified by the State for keeping adequate records to document, track, and monitor support payments.

(2)(i) The State may designate public or private entities to administer withholding on a State or local basis under the supervision of the State withholding agency if the entity or entities are publicly accountable and follow the procedures specified by the State; and (ii) The State may designate only one entity to administer withholding in each jurisdiction.

(3) Effective October 1, 1995, the State must be capable of receiving withheld amounts and accounting information which are electronically transmitted by the employer to the State.

(4) Amounts withheld must be distributed in accordance with section 457 of the Act and õõ302.32, 302.51 and 302.52 of this chapter.

(5) The State must reduce its IV-D expenditures by any interest earned by the State's designee on withheld amounts.

(h) Interstate withholding. (1) The State law must provide for procedures to extend the State's withholding system so that the system will include withholding from income or wages derived within the State in cases where the applicable support orders were issued in other States. A State may require registration of orders from other States for purposes of enforcement through withholding only if registration is for the sole purpose of obtaining jurisdiction for enforcement of the order; does not confer jurisdiction on the court or agency for any other purpose (such as modification of the underlying or original support order or resolution of custody or visitation disputes); and does not delay implementation of withholding beyond the timeframes established in paragraph (h)(5) of this section.

(2) The State law must require employers to comply with awithholding notice issued by the State.

(3) Within 20 calendar days of a determination that withholding is required in a particular case, and, if appropriate, receipt of any information necessary to carry out withholding, the initiating State must notify the IV-D agency of the State in which the absent parent is employed to implement interstate withholding. The notice must contain all information necessary to carry out the withholding, including the amount requested to be withheld, a copy of the support order and a statement of arrearages, if appropriate. If necessary, the State where the support order is entered must provide the information necessary to carry out the withholding within 30 calendar days of receipt of a request for information by the initiating State.

(4) The State in which the absent parent is employed must implement withholding in accordance with paragraph (h)(5) of this section upon receipt of the notice required in paragraph (h)(3) of this section.

(5) The State in which the absent parent is employed must:

(i) Within 15 calendar days of location of the absent parent and his or her employer, send notice to the absent parent, if appropriate, in accordance with the requirements of paragraph (d) of this section;

(ii) Provide the absent parent with an opportunity to contest the withholding, if appropriate, in accordance with paragraph (e) of this section;

(iii) Send notice to the employer in accordance with the requirements of paragraph (f) of this section; and

(iv) Notify the State in which the custodial parent is receiving services when the absent parent is no longer employed in the State and provide the name and address of the absent parent and new employer, if known.

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

(7) 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 absent parent is employed shall apply.

(i) Provision for withholding in all child support orders. Child support orders issued or modified in the State between October 1, 1985, and January 1, 1994, or modified on or after January 1, 1994, must have a provision for withholding of wages, in order toensure that withholding as a means of support is available if arrearages occur without the necessity of filing an application for IV-D services. This requirement does not alter the requirement governing all IV-D cases in paragraph (a)(4) of this section that enforcement under the State plan must proceed without the need for a withholding provision in the order.