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NPRM: Consumer Reporting Agencies; Certified Statewide Systems; President's Reform Initiative

AT-96-02

Published: January 31, 1996
Information About:
State/Local Child Support Agencies
Topics:
State Systems
Types:
Policy, Action Transmittals (AT), Regulations
Tags:
Credit Reporting

ACTION TRANSMITTAL

OCSE-AT-96-02

January 31, 1996   

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

SUBJECT:       Proposed Rule - Amendments to Federal regulations
               governing procedures for making information
               available to Consumer Reporting Agencies;
               extension of the deadline for certified Statewide
               systems; and revisions for the President's Reform
               Initiative

ATTACHMENT:    Attached is a proposed rule, published in the
               Federal Register on January 29,1996 (61 FR 2774)
               that would amend Federal regulations governing
               procedures for making information available to
               Consumer Reporting Agencies and revise or remove
               regulations, in part or whole, in response to the
               President's Memorandum of March 4, 1995 to heads
               of Departments and Agencies which announced a
               government-wide Regulatory Reinvention Initiative
               to reduce or eliminate mandated burdens on States,
               other governmental agencies or the private sector.
               In addition, the proposal would extend to October
               1, 1997 the deadline for having a certified
               operational computerized support enforcement
               system.

REGULATION
REFERENCE:     45 CFR Parts 301, 302, 303, 304, 306 and 307.

DATES:         Consideration will be given to written comments
               received by March 29, 1996.  Address comments to:
               Office of Child Support Enforcement, Department of
               Health and Human Services, 370 L'Enfant Promenade,
               S.W., Washington, D.C. 20447, Attention:
               Director, Policy and Planning Division.


INQUIRIES:     ACF Regional Administrators
                                                               
                              David Gray Ross
                              Deputy Director
                              Office of Child Support
                                Enforcement


[Federal Register: January 29, 1996 (Volume 61, Number 19)]
[Proposed Rules]              
[Page 2774-2781]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]


DEPARTMENT OF HEALTH AND HUMAN SERVICES
Administration for Children and Families
45 CFR Parts 301, 302, 303, 304, 306 and 307
RIN 0970-AB57

Child Support Enforcement Program; State Plan Approval and Grant
Procedures, State Plan Requirements, Standards for Program Operations,
Federal Financial Participation and Optional Cooperative Agreements for
Medical Support Enforcement Computerized Support Enforcement Systems
AGENCY: Office of Child Support Enforcement (OCSE).
ACTION: Notice of proposed rulemaking.
-----------------------------------------------------------------------
SUMMARY: This proposed rule would amend Federal regulations governing
procedures for making information available to consumer reporting
agencies (CRAs). These provisions implement the requirements of section
212 of the Social Security Act Amendments of 1994 (Pub. L. 103-432)
which require States to adopt procedures for periodic reporting of
information to CRAs, effective October 1, 1995. This proposed rule
would implement Public Law 104-35 which was enacted on October 12, 1995
which revises section 454(24) of the Social Security Act.

[[Page 2775]]
    In addition, it would revise or remove regulations, in part or
whole, in response to the President's Memorandum of March 4, 1995 to
heads of Departments and Agencies which announced a government-wide
Regulatory Reinvention Initiative to reduce or eliminate burdens on
States, other governmental agencies or the private sector.

DATES: Consideration will be given to comments received by March 29,
1996.
ADDRESSES: Send comments to Director, Office of Child Support
Enforcement, Administration for Children and Families, 370 L'Enfant
Promenade, SW., 4th floor, Washington, DC 20447. Attention: Director,
Policy and Planning Division, Mail Stop: OCSE/DPP. Comments will be
available for public inspection Monday through Friday, 8:30 a.m. to
5:00 p.m. on the 4th floor of the Department's offices at the above
address.
FOR FURTHER INFORMATION CONTACT: Policy Branch, OCSE, specifically:
    Tom Killmurray (202) 401-4677 regarding mandatary reporting of
child support information to consumer reporting agencies;
    Marilyn R. Cohen (202) 401-5366 regarding all other regulatory
revisions.
 

SUPPLEMENTARY INFORMATION:
Paperwork Reduction Act
    The information collection requirement regarding submittal of the
State plan preprint page was approved by the Office of Management and
Budget under OMB control number 0960-0385. State plan preprint page
revisions necessitated by this proposed rule will be submitted to OMB
for approval. Otherwise, this rule does not require information
collection activities and, therefore, no additional approvals are
necessary under the Paperwork Reduction Act of 1980 (Pub. L. 96-511).
Statutory Authority
    These proposed regulations are published under the authority of
section 466(a) of the Social Security Act (the Act), as amended by the
Social Security Act Amendments of 1994. Section 466(a)(7), as amended,
requires States to have procedures which establish periodic reporting
of child support arrearage information to CRAs. The statutory effective
date for required reporting of child support information in certain
cases to consumer reporting agencies is October 1, 1995. The name of
any parent who owes overdue support and is at least two months
delinquent in the payment of support and the amount of such delinquency
must be reported to CRAs.
    Section 466(a)(7) contains three exceptions to the periodic
reporting requirement. First, if the amount of the overdue support
involved in any case is less than $1,000, information regarding such
amount shall be made available only at the option of the State.
Secondly, any information with respect to an absent parent shall be
made available under such procedures, only after notice has been sent
to such absent parent of the proposed action, and such absent parent
has been given a reasonable opportunity to contest the accuracy of such
information (and after full compliance with all procedural due process
requirements of the State). Finally, such information shall not be made
available to a CRA which the State determines does not have sufficient
capability to make systematic and timely use of such information, or an
entity which has not furnished evidence satisfactory to the State that
the entity is a CRA.
    This regulation is also proposed under the authority granted to the
Secretary by section 1102 of the Act. Section 1102 of the Act requires
the Secretary to publish regulations that may be necessary for the
efficient administration of the functions for which she is responsible
under the Act. In accordance with the Presidential directive to
executive branch regulatory agencies to identify existing regulations
that are redundant or obsolete, OCSE has examined Part 300 of Title 45,
Code of Federal Regulations to evaluate those areas where regulations
should be removed.
Background
    The Child Support Enforcement Amendments of 1984 (Pub. L. 98-378)
featured provisions that required critical improvements in State and
local child support enforcement programs. Making child support
delinquency information available to credit bureaus upon their request
was one of the statutorily prescribed procedures required of States by
the 1984 amendments.
    Reporting overdue child support owed by obligors to consumer
reporting agencies (CRAs) is an effective enforcement technique that
has several benefits. It creates an incentive for obligors to make
prompt and consistent payments, because delinquent payment information
could negatively impact their credit history, thus endangering their
purchasing power. Credit reporting may be particularly effective in
cases involving self-employed obligors, which can be among the most
challenging cases to work. Because many self-employed obligors are
highly dependent on credit to operate their businesses, impeding their
credit or purchasing power may deter noncompliance.
    The addition of information about unpaid child support on
individual credit records may make it less likely for obligors to incur
other debts which could interfere with their ability to pay child
support. Finally, reporting of child support delinquencies may help
child support recipients obtain credit. Child support information is
often used to substantiate income by custodial parents attempting to
obtain credit. CRAs may use the information reported by IV-D agencies
to verify overdue child support and subsequent payment information.
    Much of the expansion of credit reporting was due to enactment of
the Child Support Enforcement Amendments of 1984, which mandated that
States respond to CRA requests for information on obligors who are
$1,000 or more in arrears and reside in the State. Most States have
gone beyond the legal requirement and are routinely reporting
information to CRAs.
    In addition, the Ted Weiss Act of 1992 (Pub. L. 102-537) amended
the Fair Credit Reporting Act (15 U.S.C. 1681a[f]) to require consumer
credit reporting agencies to include in consumer reports information,
no more than seven years old, on overdue child support when provided by
child support enforcement agencies, or received otherwise and verified
by any local, State or Federal agency.
    Currently, approximately 40 States operate routine periodic credit
reporting processes, without the necessity of a request from the credit
bureau. Most of the States report information to CRAs if arrearages
reach or exceed $1,000; several report arrearages of lesser accruals.
California has no minimum amount, and in fact, reports all ordered
child support to credit bureaus irrespective of a delinquency. Under
the proposed rule, States will have the flexibility to decide what
``periodic'' reporting is; some States may report monthly, others may
report quarterly. The majority of States report information to CRAs on
a monthly basis, a few others on a bimonthly or annual basis. The
method of reporting varies. Thirty-six States report in an automated
manner, using, for example, tape matches; nine States provide
information manually; several States employ a combination of both
reporting methods.
    The President and Congress decided to improve this enforcement tool
with the Social Security Act Amendments of 1994 (Pub. L. 103-432).
These reforms are based on successful State practices as well as a
recommendation by the U.S.

[[Page 2776]]
Commission on Interstate Child Support in its comprehensive report to
the Congress, ``Supporting our Children: A Blueprint for Reform.''
Because Congress added the mandate to section 466(a) of the Act,
reporting to credit bureaus is a requirement which States must meet as
a condition of State plan approval under section 454 of the Act.
    This proposed rule is also in response to the President's
Memorandum of March 4, 1995 to heads of Departments and Agencies which
announced a government-wide Regulatory Reinvention Initiative to reduce
or eliminate mandated burdens on States, other governmental agencies or
the private sector.
    The Presidential Memorandum required agencies, by June 1, 1995, to
conduct a page-by-page review of all regulations to eliminate or revise
those that are outdated or otherwise in need of reform. OCSE conducted
such a review, resulting in the proposed revisions, set forth in this
document. Both substantive and technical changes are proposed including
recodification such as renumbering and terminology revisions.
    In our analysis of existing regulations, we took a cautionary
approach recognizing that significant legislation to overhaul the
welfare system, including major reform to the child support enforcement
program, is actively pending before the 104th Congress. Accordingly,
numerous existing rules will potentially be affected. We have deferred
recommending any changes in existing rules which may be impacted by
enactment of an incipient legislative change. However, we consider the
changes in this proposed rule as only the first part of our response to
the President's Regulation Reinvention Initiative. We will work with
our partners to identify additional regulations which should be
reevaluated given the new direction of regulatory reinvention.
Description of Regulatory Provisions
    We propose to make technical revisions, including recodification,
to the following regulations, in addition to amending section 303.105,
``Procedures for making information available to consumer reporting
agencies''.

Section 301.1  General Definitions
    We propose that the specified years for Applicable matching rate of
``1983 through 1987, 70 percent, FY 1988 and FY 1989, 68%,'' referenced
in section 301.1 be removed as such dates have passed.

Section 301.15  Grants
    We propose two technical revisions in this section. Part of the
mailing address in paragraph (a)(1) should be updated by replacing,
``Social and Rehabilitation Service, Attention: Finance Division,
Washington, DC 20201'' with ``Administration for Children and Families,
Office of Program Support, Division of Formula, Entitlement and Block
Grants, 370 L'Enfant Promenade, SW., Washington, DC 20447.'' In
addition, we propose to replace the phrase, ``Subpart G Matching and
Cost Sharing'' with ``45 CFR 74.23 Cost Sharing or Matching'' and
replace the phrase ``Subpart I Financial Reporting Requirements'' with
``45 CFR 74.52 Financial Reporting'' in paragraph (e). We propose this
latter revision to coincide with substantial revisions of 45 CFR Part
74 by DHHS August 25, 1994 (59 FR 43760).

Section 302.15  Reports and Maintenance of Records
    This rule implements section 454(10) of the Act which does not
specify use of microfilm for record retention. We propose that
paragraph (b) ``Conditions for Optional Use of Microfilm Copies,'' be
removed as microfilm use is obsolete due to automatic case tracking and
electronic filing capability. The proposed change will result in the
following: Paragraph (a) will be without designation, paragraphs (a)(1)
and (a)(2) will be redesignated (a) and (b), and roman numerals (i)
through (vii) will be redesignated as arabic numbers (1) through (7),
respectively. Removal of the microfilm reference does not preclude
States from continuing to use microfilm as an information storage
medium.

Section 302.33  Services to Individuals Not Receiving AFDC or Title IV-
E  Foster Care Assistance
    We propose to remove paragraph (c)(1), Application Fee, as it
refers to requirements in effect prior to October 1, 1985, which date
has passed. Thus, paragraph (2) will be renumbered as paragraph (1) and
paragraph (3) will be renumbered as paragraph (2). In addition, we
propose to remove paragraph (e) Assignment. Because a State is not
required to take an assignment but has discretion to do so, this
section is being removed as a ``non-mandatory'' aspect of existing
rules. Removal of this subsection does not preclude a State from taking
an assignment of rights from a non-AFDC recipient of IV-D services if
necessary under State law or practice in order to deliver program
service.

Section 302.34  Cooperative Arrangements
    The authorities for this rule are sections 1102 and 454(7) of the
Act. We propose to remove paragraph (b). As the result of the passage
of time, cooperative agreements should meet Sec. 303.107 criteria at
this time. This revision would leave paragraph (a) without designation.
We further propose to revise the first sentence of the remaining
paragraph by adding ``under Sec. 303.107'' after ``cooperative
arrangements.''

Section 302.36  Provision of Services in Interstate IV-D Cases
    The authorities for this rule are section 454(9) of the Act which
addresses standards prescribed by the Secretary and section 1102 of the
Act which addresses the Secretarial authority to issue regulations
necessary for program administration. These requirements were placed in
regulation to clarify that States are required to provide all necessary
IV-D services in interstate cases. However, we propose to remove
paragraphs (a)(1) through (a)(5), to eliminate repeating
Sec. 303.7(c)(7), explicit provisions which specify the various
functional responsibilities by the responding State. This does not
alter the requirement for provision of services; it merely removes
unnecessary text referenced elsewhere. This proposed revision would
remove ``for:'' at the end of paragraph (a) and subparagraphs (a)(1)
through (a)(5), thus ending the paragraph with the word, ``chapter.''
Section 302.37  Distribution of Support Payments
    This rule implements section 454(11) of the Act. We propose to
remove it because it references Secs. 302.32 and 302.51 which duplicate
this section.

Section 302.54  Notice of Collection of Assigned Support
    This rule implements section 454(5) of the Act which does not
specify dates. Therefore, we propose to remove paragraph (a) which is
obsolete as it specifies requirements in effect until December 31,
1992, which event has now passed.
    Thus, paragraph (b) would be redesignated paragraph (a) and
paragraph (c) would be redesignated paragraph (b), respectively.
    We also propose to revise paragraph (b)(2) by adding the word,
``collected'' after the second mention of ``support'' to read as
follows: ``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

[[Page 2777]]
amount of current support collected, the amount of arrearages collected
and the amount of support collected which was paid to the family.''
This addition is made to clarify that it is the amount actually
collected, not the amount owed that must be included in the notice, and
will be consistent with the statutory language at section 454(5)(A) of
the Act.
    Section 302.54(c)(1)(i) specifies one of the grounds upon which a
State may be granted a waiver to permit the issuance of quarterly,
rather than monthly, notices of the amount of support collected.
Waivers granted under this criterion were based upon the State's lack
of a computerized support enforcement system consistent with Federal
requirements or the lack of an automated system that is able to
generate monthly notices. Such waivers were valid through September 30,
1995. On October 12, 1995, Public Law 104-35 was signed into law, which
revised Section 454(24) of the Social Security Act. The revised statute
extends the date by which States will have in effect, and approved by
the Secretary, a operational automated data processing and information
retrieval system meeting all requirements of Federal law from October
1, 1995 to October 1, 1997. Because waivers available under
Sec. 302.54(c)(1)(i) are linked to the deadline by which States must
have operational automated systems, we propose to revise the date
clause to read ``Until September 30, 1997,''. Any automated system
developed to meet the Federal requirements for a certified
comprehensive Statewide system must produce mandated monthly notices of
collections. States with previous waivers that expired September 30,
1995 can apply for extension of the waiver if the State does not have a
computerized support enforcement system consistent with Federal
requirements or lacks an automated system that is able to generate
monthly notices. Extension of waivers will be granted as part of the
State plan approval process.

Section 302.70  Required State Laws
    Section 466(a) of the Act requires a State to enact laws providing
for these new requirements. Consistent with implementation of the
Family Support Act requirements, however, States may implement
provisions using regulation, procedure, or court rule, instead of law,
if such regulation, procedure, or rule has the same force and effect
under State law on the parties to whom they apply.
    We propose to revise section 302.70(a)(7) to reflect the statutory
amendment which mandates reporting of certain child support arrearage
information to credit reporting agencies. Each IV-D State plan
requirement remains effective on the date indicated by the statute or
implementing regulation.

Section 302.85  Mandatory Computerized Support Enforcement System
    On October 12, 1995, Public Law 104-35 was signed into law, which
revises Section 454(24) of the Social Security Act. The revised statute
extends the date by which States will have in effect, and approved by
the Secretary, an operational automated data processing and information
retrieval system meeting all requirements of Federal law from October
1, 1995 to October 1, 1997. Because the deadline by which States must
have operational automated systems has been changed, we propose to
remove the date in paragraph (a)(2) ``October 1, 1995'' and replace it
with ``October 1, 1997.''

Section 303.10  Procedures for Case Assessment and Prioritization
    This rule was issued under authority of section 1102 of the Act, as
part of implementation of the Child Support Enforcement Amendments of
1984 (Pub. L. 98-378). We propose to remove this section because case
assessment and prioritization procedures are permissive and standards
for an effective program at 45 CFR Part 303 require the State to
provide necessary IV-D services in all cases in an efficient and
effective manner. Therefore, it is not necessary to place this
information in regulation.

Section 303.31  Securing and Enforcing Medical Support Obligations
    This rule implements section 452(f) of the Act. We propose to
replace references to ``Sec. 306.50(a)'' with ``Sec. 303.30'' in
paragraphs (b)(6) and (b)(7). This technical change is required to
correct a clerical error. Revisions to Secs. 303.30 and 303.31 set
forth in the final rule issued March 8, 1991 did not make these
technical changes.

Section 303.73  Applications to Use The Courts of the United States to
Enforce Court Orders
    This regulation is based on sections 452(a)(8) and 460 of the Act.
An Action Transmittal (AT) issued February 6, 1976 (OCSE-AT-76-1) and
revised May 12, 1976 (OCSE-AT-76-8) covers paragraphs (a) and (b) of
the regulation. Since the requirements in this regulation are
infrequently used, it is sufficient for users to follow guidance in the
AT. The AT gives express instructions for submitting cases for
consideration for referral to Federal court. Paragraph (c) is
unnecessary to be placed in regulation as it merely specifies internal
instructions to the Regional Office.
    Therefore, we propose to revise the end of the introductory portion
of paragraph (a) by removing, ``to demonstrate that'' and completing
the paragraph by adding, ``in accordance with instructions issued by
the Office,'' thus removing paragraphs (a)(1) through (c).

Section 303.100   Procedures for Wage or Income Withholding
    In the administration of wage or income withholding,
Sec. 303.100(g)(3) requires 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. This
effective date for electronic funds transfer capability was directly
linked to the date by which States are required to have operational
automated child support enforcement systems. On October 12, 1995,
Public Law 104-35 was signed into law, which revises Section 454(24) of
the Social Security Act. The revised statute extends the date by which
States will have in effect, and approved by the Secretary, an
operational automated data processing and information retrieval system
meeting all requirements of Federal law from October 1, 1995 to October
1, 1997. Because the deadline by which States must have operational
automated systems has been changed, we propose to revise the
introductory clause in paragraph (g)(3) to remove the phrase
``Effective October 1, 1995,'' and replace it with ``Effective October
1, 1997,''.

Section 303.105  Procedures for Making Information Available to
Consumer Reporting Agencies
    We propose to implement the requirements of amended section
466(a)(7) by revising the heading of 45 CFR 303.105, Procedures for
making information available to consumer reporting agencies, to read:
``Procedures for periodic reporting of information to consumer
reporting agencies.''
    Under Sec. 303.105(a), the definition of ``consumer reporting
agency'' remains the same. The definition, which mirrors the language
in the Fair Credit Reporting Act (15 U.S.C. 1681a[f]), has not been
changed.
    We propose to revise paragraph (b), to specify that States must use
this procedure when a non-custodial absent parent owes overdue support
exceeding $1,000 and is at least two months in arrears. The provision
of information by

[[Page 2778]]
IV-D agencies is no longer triggered by the request of a CRA, but is
now required to be reported under the above criteria. The use of such
procedures is optional to the State in cases where the absent parent
owes less than $1,000 in arrears. Allowing for optional reporting in
cases of less than $1,000 in arrears is in keeping with the Federal/
State partnership in administering child support enforcement and
allowing for maximum State flexibility.
    States may wish to take advantage of reporting when a non-custodial
parent owes overdue support less than $1,000 because many child support
orders have low monthly payment amounts. Otherwise, several months
arrearage could result before triggering reporting at the $1,000
threshold. Some States, including California, have found it beneficial
to report all child support accounts to CRAs for such reasons as ease
of administration and conformance to the credit reporting industry
standard of reporting all debt and payment information. In order to
give States maximum flexibility, there are no further requirements
regarding the frequency or manner in which delinquent support
information is shared with CRAs. This flexibility is also intended to
allow for uninterrupted reporting in States where current procedures
may already meet the new requirement.
    The cases in which information is sent to the CRA may be further
limited by the State through the use of State guidelines (45 CFR
303.105(b)). Criteria may be developed to determine which cases are
inappropriate for reporting to CRAs. For example, State developed
guidelines might exclude the reporting of cases where abuse or violence
has been threatened or has occurred.
    In addition, we propose to revise paragraph (b) by removing the
second sentence specifying that State guidelines should be made
generally available to the public as to when use or application of
reporting child support arrearages to credit reporting agencies would
not carry out the purposes of the program or would be otherwise
inappropriate in the circumstances. We are proposing this revision
since the statute mandates reporting of all cases which qualify based
on arrearages and expressly specifies the bases for exceptions.
Guidelines for not submitting cases are no longer appropriate.
    We invite State comments on any existing reporting criteria they
may use. Comments received on this subject will be widely disseminated
because examples may be helpful to other States in formulating their
own guidelines.
    In accordance with section 466(a)(7)(C) of the Act, under proposed
paragraph (c) of section 303.105, States are required to withhold
information from a CRA which does not have sufficient capability to
make accurate use of the information in a systematic and timely manner.
In order to maximize flexibility, States will be free to use their own
criteria in determining what constitutes a ``systematic and timely''
use of the reported information under amended section 466(a)(7)(C) of
the Act. States are also required to withhold information from an
entity which has not furnished satisfactory evidence to the State that
it is a CRA.
    Under amended section 466(a)(7) of the Act, the provision which
allowed for a fee for furnishing such information to be imposed on the
requesting CRA by the State has been deleted. Therefore, we propose
that the corresponding text involving the optional fee under the
existing Sec. 303.105(c) be removed.
    In accordance with section 466(a)(7)(b) of the Act, paragraph (d)
requires the State to provide the noncustodial parent an advance notice
and an opportunity to contest the accuracy of this information.
Paragraph (e) requires the State to comply with all applicable
procedural due process requirements of the State before releasing the
information. The requirements imposed in paragraphs (d) and (e) have
been required by the statute since it was enacted in 1984 and were not
amended. Therefore, paragraph (d) and (e) remain unchanged by this
proposed rule.
    To ensure that this proposed rule maximizes State flexibility, we
generally have not proposed to add regulatory requirements that go
beyond statutory requirements. However, there is one area where we
believe additional Federal regulatory guidance is needed--credit
reporting in interstate cases. Because interstate cases involve
interaction between one or more States, there is a need for national
standards to ensure uniformity and clarity.
    The statute does not address which State (initiating or responding)
should report to credit bureaus in interstate cases. Based on input
that we have received from several States, Federal guidance is needed
in this area to avoid duplication, confusion, and double-reporting. For
example, if both the initiating and responding States report arrears
owed under a child support order in a case, both reports may appear on
the obligor's credit record. As a result, the credit record would
indicate that the obligor owes two separate debts to two different
child support agencies, when in fact the two reports are for the same
arrearage. Such misleading double-reporting creates unnecessary
duplication of effort for child support agencies, generates time-
consuming inquiries and complaints, and is unfair to obligors.
    To address these problems, we are proposing new paragraph (f) in
Sec. 303.105 which provides: for cases where an initiating State
requests, in accordance with Sec. 303.7(b), a responding State to
enforce a support order, the responding State will report to consumer
reporting agencies. The initiating State will not report.
    We are proposing that the responding State be responsible for
credit reporting since it is usually the State that implements
enforcement remedies (except for Federal income tax refund offset which
is implemented by the initiating State). The responding State can
coordinate credit reporting with the other enforcement techniques that
it is using. In addition, the responding State may have the most up-to-
date payment and location information about the obligor. Finally, since
the obligor often lives in the responding State, the responding State
is more likely to report to credit reporting agencies which focus on
the area where the obligor lives. Many credit reporting agencies only
maintain records for certain localities and regions, and even a major
credit bureau may have more complete information for individuals in a
particular region of the country.
    Credit reporting in interstate cases where there are multiple
support orders governing the same period of time can be particularly
complex. Under the Uniform Reciprocal Enforcement of Support Act
(URESA), interstate proceedings are considered ``new'' proceedings,
even if a valid, enforceable support order already exists. As a result,
multiple, yet valid, orders in varying amounts in different States have
been entered for the same children. If arrearages owed for the same
period of time under more than one order are reported to credit
agencies, the obligor will appear to owe multiple debts even though,
under State law, an obligor receives credit under all orders for any
payment made. Therefore, the reporting of arrears under multiple orders
exaggerates the amount that the obligor actually owes.
    The Uniform Interstate Family Support Act (UIFSA) and the Full
Faith and Credit for Child Support Orders Act (Pub. L. 103-383) will
eventually alleviate the multiple order problem. These laws, which
together limit the ability of a State to enter or modify an order if a
valid order already exists, will replace multiple orders with a system
[[Page 2779]]
under which only one support order is effective at any one time.
However, this transition will take a matter of years--until all of the
children with multiple orders emancipate. We welcome comments
concerning possible ways to address this multiple order problem.
    In addition, we welcome comments regarding the general issue of
credit reporting in interstate cases, particularly whether there is a
need for Federal regulation in this area and whether you agree with our
proposal.
    Finally, in addition to reporting information to CRAs, States
routinely obtain valuable location information from CRAs. The
requirements of this section do not preclude a State from obtaining
information from CRAs. Many States already reap the benefits of using
CRAs as a source of valuable information. States may make requests of
consumer reporting agencies for such purposes as location of non-
custodial parents, location of assets, and determination of ability to
pay support.

Section 304.10  General Administrative Requirements
    We propose to replace the parenthetical phrase, ``(with the
exception of Subpart G, Matching and Cost Sharing and Subpart I,
Financial Reporting Requirements)'' with ``(with the exception of 45
CFR 74.23, Cost Sharing or Matching and 45 CFR 74.52, Financial
Reporting).'' We are proposing this revision to coincide with
substantial revisions of 45 CFR Part 74 by DHHS August 25, 1994 (59 FR
43760).

Section 304.20  Availability and Rate of Federal Financial Participation
    We propose to make several technical revisions to update and
correct this section. In paragraph (b)(1)(iii), we propose to replace
the phrase ``Subpart P'' with ``* * * in accordance with the
Procurement Standards found in 45 CFR 74.40 et. seq..'' We are
proposing this revision to coincide with substantial revisions of 45
CFR Part 74 by DHHS August 25, 1994 (59 FR 43760) because the
regulation is applicable to both agencies. In paragraph (b)(1)(vi), we
propose to change the reference from ``Sec. 302.16'' to
``Sec. 304.15.'' We propose this technical revision because Sec. 304.15
is a cross-reference to the DHHS regulations on cost allocation at 45
CFR Part 95, Subpart E which replaced 45 CFR 302.16. In paragraph
(b)(3)(iv), we propose to replace ``attachment'' with ``withholding'',
in order to make the terminology consistent with the enactment of the
Child Support Enforcement Amendments of 1984 (Pub. L. 98-378) which
created a new section 466 of the Act including paragraph (a)(1) and (b)
for ``wage withholding'' and implementing regulations at 45 CFR
303.100. In paragraph (b)(8), we propose to correct a clerical error by
replacing ``Sec. 302.2'' with ``Sec. 303.2.'' Finally, in paragraph
(b)(11), we propose to remove ``Part 306, Subpart B, of this chapter''
and replace with ``sections 303.30 and 303.31''. We are proposing this
technical fix to update this section to reflect the revision made in
1990 to redesignate Part 306 Subpart B as sections 303.30 and 303.31.
Section 304.95  State Commissions on Child Support
    This rule was required by section 15 of Public Law 98-378 to be
implemented by December 1, 1984 with a report of findings and
recommendations to the Governor by October 1, 1985. We propose to
remove this section as the requirement for a State to have a Commission
on Child Support as a condition of eligibility for Federal funding
expired on October 1, 1985. Although it is no longer mandatory, nothing
precludes a State from having such a Commission.

Part 306  Optional Cooperative Agreements for Medical Support
Enforcement; Section 306.0 Scope of This Part, Section 306.2
Cooperative Agreement, Section 306.10 Functions To Be Performed under a
Cooperative Agreement, Section 306.11 Administrative Requirements of
Cooperative Agreements, Section 306.20 Prior Approval of Cooperative
Agreements, Section 306.21 Subsidiary Cooperative Agreements With
Courts and Law Enforcement Officials, Section 306.22 Purchase of
Service Agreements, and Section 306.30 Source of Funds
    Cooperative agreements for medical support enforcement was first
added to the IV-D regulations (Part 306) in the February 11, 1980 joint
final rule by the Health Care Financing Administration (HCFA) and OCSE
implementing section 11 of Public Law 95-142 which added a new section
1912 to the Social Security Act. Section 1912 authorized the Third
Party Liability (TPL) program in the Medicaid agency and required the
State to require Medicaid recipients, as a condition of Medicaid
eligibility, to assign their support rights to any medical support and
to cooperate with the State in establishing paternity and obtaining
third party payments. Section 1912 also required the State plan to
provide for the State Medicaid agency to make cooperative agreements
with the State IV-D agency, and other appropriate agencies, courts, and
law enforcement officials to assist in the TPL program, with an
incentive payment to political subdivision, other State, or other
entity that makes the TPL collection.
    As a result of an increasing degree of responsibility for IV-D
agencies to perform medical support functions, very few of the
functions listed in Sec. 306.10 continue to be optional. Many of the
requirements listed as ``optional'' for IV-D agencies to perform under
agreements with State Medicaid agencies have become mandatory under
title IV-D (e.g., obtain sufficient health insurance information,
Sec. 303.30; secure health insurance coverage, Sec. 303.31). This
leaves only two optional procedures in Sec. 306.10 ((f) file insurance
claims and (h) take direct action to recover TPL).
    We propose that Part 306 be removed and reserved. This will give
States flexibility to enter into cooperative agreements with Medicaid
agencies to perform activities which are beyond the mandatory medical
support activities of the IV-D program. Cooperative agreements for
medical support enforcement is a statutory requirement mandated on the
Health Care Financing Administration (HCFA) which was placed in
regulation at 42 CFR 433.152 but optional for IV-D. This proposed
removal will not affect the continuation of existing cooperative
agreements or formulation of future agreements between State child
support agencies and State Medicaid agencies.

Section 307.5  Mandatory Computerized Support Enforcement Systems
    On October 12, 1995, Public Law 104-35 was signed into law, which
revises Section 454(24) of the Social Security Act. The revised statute
extends the date by which States will have in effect, and approved by
the Secretary, an operational automated data processing and information
retrieval system meeting all requirements of Federal law from October
1, 1995 to October 1, 1997. Because the deadline by which States must
have operational automated systems has been changed, we propose to
remove the date in paragraph (a) ``October 1, 1995'' and replace it
with ``October 1, 1997.''

Section 307.15  Approval of Advance Planning Documents for Computerized
Support Enforcement Systems
    On October 12, 1995, Public Law 104-35 was signed into law, which
revises Section 454(24) of the Social Security Act. The revised statute
extends the date by which States will have in effect, and approved by
the Secretary, an operational automated data processing

[[Page 2780]]
and information retrieval system meeting all requirements of Federal
law from October 1, 1995 to October 1, 1997. Because the deadline by
which States must have operational automated systems has been changed,
we propose to remove the date in paragraph (b)(2) ``October 1, 1995''
and replace it with ``October 1, 1997.''

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

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

List of Subjects
45 CFR Part 301
    Child support, Grant programs/social programs.
45 CFR Part 302
    Child support, Grant programs/social programs, Reporting and
recordkeeping requirements.
45 CFR Parts 303 and 304
    Child support, Grant programs/social programs, Reporting and
recordkeeping requirements.
45 CFR Part 306
    Child support, Grant programs/social programs, Medicaid.
45 CFR Part 307
    Child support, Grant programs/social programs, Computerized support
enforcement systems.
(Catalog of Federal Domestic Assistance Programs No. 93.563, Child
Support Enforcement Program)

    Dated: December 1, 1995.
Mary Jo Bane,
Assistant Secretary for Children and Families.

    For the reasons discussed above, we propose to amend title 45
chapter III of the Code of Federal Regulations as follows:
PART 301--STATE PLAN APPROVAL AND GRANT PROCEDURES
    1. The authority citation for Part 301 continues to read as set
forth below:
    Authority: 42 U.S.C. 651 through 658, 660, 664, 666, 667, 1301,
and 1302.
    2. Section 301.1 is amended by revising the definition for
``Applicable matching rate'' to read as follows:
Sec. 301.1  General definitions.
* * * * *
    Applicable matching rate means the rate of Federal funding of State
IV-D programs' administrative costs for the appropriate fiscal year.
The applicable matching rate for FY 1990 and thereafter is 66 percent.
* * * * *
Sec. 301.15  [Amended]
    3. In 301.15, paragraph (a)(1) is amended by revising ``Social and
Rehabilitation Service, Attention: Finance Division, Washington, DC
20201'' to read ``Administration for Children and Families, Office of
Program Support, Division of Formula, Entitlement and Block Grants, 370
L'Enfant Promenade, S.W., Washington, D.C. 20447'' and paragraph (e) is
amended by revising, ``Subpart G Matching and Cost Sharing'' to read
``45 CFR 74.23 Cost Sharing or Matching'' and revising ``Subpart I
Financial Reporting Requirements'' to read ``45 CFR 74.52 Financial
Reporting.''

PART 302--STATE PLAN REQUIREMENTS
    4. The authority citation for Part 302 continues to read as
follows:
    Authority: 42 U.S.C. 651 through 658, 664, 666, 667, 1302,
1396a(a)(25), 1396b(d)(2), 1396b(o), 1396b(p), 1396(k).
Sec. 302.15  [Amended]
    5. In section 302.15, paragraph (b) is removed and paragraphs (a)
introductory text, (a)(1) introductory text, (a)(1)(i) through (vii)
and (2) are redesignated as Sec. 302.15 introductory text, (a)
introductory text, (a)(1) through (7) and (b) respectively.
Sec. 302.33  [Amended]
    6. In section 302.33, paragraph (c)(1) is removed, paragraphs
(c)(2) and (c)(3) are redesignated as (c)(1) and (c)(2), and paragraph
(e) is removed.
Sec. 302.34  [Amended]
    7. In section 302.34, paragraph (b) is removed, paragraph (a) is
amended by removing the paragraph designation and by adding ``under
Sec. 303.107'' after ``cooperative arrangements'' in the first
sentence.
Sec. 302.36  [Amended]
    8. In section 302.36, paragraph (a) introductory text is amended by
removing ``for:'' and inserting a period in its place at the end of the
paragraph and removing paragraphs (a)(1) through (a)(5).
Sec. 302.37  [Removed]
    9. Section 302.37 is removed.
    10. In section 302.54, paragraph (a) is removed, paragraphs (b) and
(c) are redesignated (a) and (b), respectively, the reference to
``Until September 30, 1995'' in new designated paragraph (b)(1)(i) is
revised to read ``Until September 30, 1997'', and newly designated
paragraph (a)(2) is revised to read as follows:
Sec. 302.54  Notice of collection of assigned support.
* * * * *
    (a) * * *
    (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 collected, the
amount of arrearages collected and the amount of support collected
which was paid to the family.
* * * * *
    11. Section 302.70(a)(7) is revised to read as follows:
Sec. 302.70  Required State laws.
    (a) * * *
    (7) Procedures which require the State to periodically report
information regarding the amount of overdue support owed by an absent
parent to consumer reporting agencies in accordance with Sec. 303.105
of this chapter;
* * * * *
Sec. 302.85  [Amended]
    12. In Section 302.85, reference to ``October 1, 1995'' in
paragraph (a)(2) is revised to read ``October 1, 1997.''
PART 303--STANDARDS FOR PROGRAM OPERATIONS
    13. 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).
Sec. 303.10  [Removed]
    14. Section 303.10 is removed.
Sec. 303.31  [Amended]
    15. In 303.31, reference to ``Sec. 306.50(a)'' is revised to read
Sec. 303.30 in paragraphs (b)(6) and (b)(7).
    16. Section 303.73 is revised to read as follows:
   
[[Page 2781]]
Sec. 303.73  Applications to use the courts of the United States to
enforce court orders.
    The IV-D agency may apply to the Secretary for permission to use a
United States district court to enforce a support order of a court of
competent jurisdiction against an absent parent who is present in
another State if the IV-D agency can furnish evidence in accordance
with instructions issued by the office.
Sec. 303.100  [Amended]
    17. In section 303.100, reference to ``October 1, 1995'' in
paragraph (g)(3) is revised to read ``October 1, 1997.''
    18-19. Section 303.105 is amended by revising the section heading
and paragraphs (b) and (c) and adding new paragraph (f) to read as
follows:
Sec. 303.105  Procedures for periodic reporting of information to
consumer reporting agencies.
* * * * *
    (b) For cases in which the amount of overdue support exceeds $1,000
and is at least two months in arrears, the IV-D agency must have in
effect procedures to periodically report the name of the absent parent
and the amount of arrears to consumer reporting agencies.
    (c) The information shall not be made available to a consumer
reporting agency which:
    (1) the State determines does not have sufficient capability to
make use of the information in a systematic and timely manner; or
    (2) has not furnished satisfactory evidence to the State that it is
a consumer reporting agency.
* * * * *
    (f) Interstate. For cases where an initiating State requests, in
accordance with Sec. 303.7(b), a responding State to enforce a support
order, the responding State will report to consumer reporting agencies
in accordance with this section. The initiating State will not report.

PART 304--FEDERAL FINANCIAL PARTICIPATION
    20. The authority citation for Part 304 continues to read as
follows:
    Authority: 42 U.S.C. 651 through 655, 657, 1302, 1396a(a)(25),
1396b(d)(2), 1396b(o), 1396(p), and 1396(k).
Sec. 304.10  [Amended]
    21. In section 304.10, the parenthetical phrase ``(with the
exception of Subpart G, Matching and Cost Sharing and Subpart I,
Financial Reporting Requirements)'' is revised to read ``(with the
exception of 45 CFR 74.23, Cost Sharing or Matching and 45 CFR 74.52,
Financial Reporting).''
Sec. 304.20  [Amended]
    22. In section 304.20, paragraph (b)(1)(iii) introductory text is
amended by replacing ``Subpart P'' with ``in accordance with the
Procurement Standards found in 45 CFR 74.40 et seq.'', paragraph
(b)(1)(vi) is amended by revising the reference to ``Sec. 302.16'' to
read ``Sec. 304.15'', paragraph (b)(3)(iv) is amended by revising the
term ``attachment'' to read ``withholding;'', paragraph (b)(8) is
amended by revising the reference ``Sec. 302.2'' to read ``Sec. 303.2''
and, paragraph (b)(11) is amended by revising ``Part 306, Subpart B, of
this chapter'' to read ``sections 303.30 and 303.31''.
Sec. 304.95  [Removed]
    23. Section 304.95 is removed.

PART 306--OPTIONAL COOPERATIVE AGREEMENTS FOR MEDICAL SUPPORT
ENFORCEMENT--[REMOVED AND RESERVED]
    24. Part 306 is removed and reserved.

PART 307--COMPUTERIZED SUPPORT ENFORCEMENT SYSTEMS
    25. The authority citation for part 307 continues to read as
follows:
    Authority: 42 U.S.C. 652 through 658, 664, 666, 667, and 1302.
Sec. 307.5  [Amended]
    26. In section 307.5, reference to ``October 1, 1995'' in paragraph
(a) is revised to read ``October 1, 1997.''
Sec. 307.15  [Amended]
    27. In section 307.15, reference to ``October 1, 1995'' in
paragraph (b)(2) is revised to read ``October 1, 1997.''
[FR Doc. 96-1254 Filed 1-26-96; 8:45 am]
BILLING CODE 4150-04-P