Federal Old-Age, Survivors, and Disability Insurance Benefits; Supplemental Security Income for the Aged, Blind, and Disabled; Organization and Procedures; Application of Circuit Court Law

Federal RegisterMay 6, 1998

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SOCIAL SECURITY ADMINISTRATION

20 CFR Parts 404 and 416

RIN 0960-AE74

Federal Old-Age, Survivors, and Disability Insurance Benefits;

Supplemental Security Income for the Aged, Blind, and Disabled;

Organization and Procedures; Application of Circuit Court Law

AGENCY: Social Security Administration (SSA).

ACTION: Final rules.

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SUMMARY: These final regulations revise the current regulations

governing how we apply holdings of the United States Courts of Appeals

(circuit courts) that we determine conflict with our interpretation of

the Social Security Act or regulations in adjudicating claims under

title II and title XVI of the Social Security Act (the Act). The

regulations explain the new goal we have adopted to ensure that

Acquiescence Rulings (ARs) are developed and issued promptly and the

new procedures we are implementing to identify claims pending in the

administrative review process that might be affected by ARs.

EFFECTIVE DATES: These amendments are effective June 5, 1998.

FOR FURTHER INFORMATION CONTACT: Gary Sargent, Litigation Staff, Social

Security Administration, 6401 Security Boulevard, Baltimore, MD 21235,

(410) 965-1695 for information about these rules. For information on

eligibility or claiming benefits, call our national toll free number,

1-800-772-1213.

SUPPLEMENTARY INFORMATION: On January 11, 1990, (55 FR 1012) we

published final regulations, set out at 20 CFR 404.985 and 416.1485, to

implement a revised policy explaining how we apply circuit court

holdings that we determine conflict with our interpretation of the Act

or regulations to subsequent claims within that circuit involving the

same issue. Under those regulations, we prepare ARs which explain the

circuit court holdings and provide instructions to adjudicators, at all

levels of the administrative review process, on how to apply the

circuit court's holding to subsequent claims within the circuit

involving the same issue. Those regulations reflected the agency's

decision in 1985 to abandon its prior policy of applying circuit court

holdings that we determined conflicted with our interpretation of the

Act or regulations only to the named party or parties to the decision,

rather than to other cases pending in the administrative review process

involving the same issue or issues.

On July 2, 1996, we issued Social Security Ruling (SSR) 96-1p (61

FR 34470) clarifying and reaffirming the rules established in the 1990

regulations. Since that time, we have reviewed our rules and our

implementing procedures to determine what changes could be instituted

to further improve the acquiescence process. Based upon that review, on

September 18, 1997, we published at 62 FR 48963, proposed revisions to

the acquiescence regulations, which we are now publishing as final

rules.

The proposed rules provided the addition of new paragraphs

404.985(b)(1) and 416.1485(b)(1) to establish a general goal for

issuing ARs no later than 120 days from the date of our receipt of a

precedential circuit court decision. The proposed rules also provided,

by the addition of new paragraphs 404.985(b)(3) and 416.1485(b)(3), for

new procedures to identify claims pending within SSA which may be

affected by an AR that may subsequently be issued. These same sections

also provided that, once an AR is issued, we will send notices to those

individuals whose claims have been identified as potentially being

affected by the AR informing them of their right to request a

readjudication, as described in paragraphs 404.985(b)(2) and

416.1485(b)(2) of the rules.

The Final Rules

The Role of Litigation in the Policymaking Process

Our review indicated that it is important to reaffirm the principle

that our goal in administering our programs is to have uniform,

national program standards. Our procedures, which provide for

acquiescence within the circuit when a circuit court issues a

precedential decision containing a holding that we determine conflicts

with our interpretation of the Act or regulations, result in differing

rules in different sections of the country. This situation is not

desirable and ordinarily should not, if possible, continue

indefinitely.

Therefore, we wish to make it clear that generally ARs are

temporary measures. When we receive a precedential circuit court

decision containing a holding that we determine conflicts with our

interpretation of the Act or regulations, we consider whether the rules

at issue should be changed on a nationwide basis to conform to the

court's holding. If we continue to believe that our interpretation of

the statute or regulations at issue is correct and we seek further

judicial review of the circuit court's decision, we will stay further

development of the AR until the judicial review process runs its

course. If our assessment shows that we should change our rules and

adopt a circuit court's holding nationwide, we will, at the time we

publish the AR, have determined the steps necessary to do so. This may

require changing our regulations or rulings; it may also require

seeking a clarifying legislative change to the Act. We would then

proceed to issue an AR because changing our nationwide rules through

legislation or rulemaking may require a significant period of time.

Similarly, if our assessment shows that our rules represent a

reasonable interpretation of the Act or regulations, but we are unable

to resolve the matter by seeking further judicial review, we will issue

an AR and at the time we publish the AR have determined the appropriate

steps to attempt to address the issue which was the subject of the

circuit court's holding. This may mean issuing clarifying regulations

or seeking legislation. There are certain instances when an issue

cannot be resolved, such as a constitutional issue which the Supreme

Court chooses not to review or legislation is required but not enacted

and, therefore, an AR may remain in effect.

Although our goal to have uniform national standards is implicit in

the current regulations, we are including in this preamble an explicit

statement of our commitment to maintaining a uniform nationwide system

of rules. In addition to making minor editorial corrections to the

current regulations, these rules amend the regulations in two

substantive areas, as follow:

Establishing a Timeliness Goal for Issuing ARs

A common criticism regarding the acquiescence process has involved

the length of time it has taken for us to prepare and issue an AR. As a

result, we have reassessed our procedures and have decided to place in

our regulations our goal to release an AR for publication in the

Federal Register no later than 120 days from the time we receive a

precedential circuit court decision for which the AR is being issued,

unless further judicial review of that decision is pending. This

timeframe will also not apply when publication of an AR requires such

coordination with the Department of Justice and/or other Federal

agencies that it becomes no longer feasible. We are adding new

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paragraphs 404.985(b)(1) and 416.1485(b)(1) so that the public is fully

informed of this new timeframe.

Identifying Pending Claims Which May Be Affected by an AR

When we published the 1990 acquiescence regulations, we noted that

a number of commenters on the 1988 proposed regulations (53 FR 46628

(November 18, 1988)) urged that we take action to identify and list

pending claims that might be affected by an AR. In the response to that

comment, we stated at 55 FR at 1013:

As a matter of operational necessity, some time will always

elapse between the date of a court decision and the time that we

could notify all adjudicators to begin listing cases which might be

affected by its holding. Thus, a substantial number of cases would

not be listed for later readjudication. The process which these

comments suggest presumes instantaneous, comprehensive

identification of all cases, which operationally we cannot

accomplish. Therefore, despite the fact that requiring claimants to

seek readjudication does require some action on their part, we have

concluded that this is the most efficient and effective way to

proceed and have not adopted these comments in the final

regulations.

The basic facts noted in that response remain valid. Despite improved

technology, it is still operationally impossible for us to identify all

pending claims that might be affected by an AR. However, we have

reassessed this situation and have now decided that it would be

appropriate to identify pending claims that might be affected by an AR,

as expeditiously as possible, even though we may not be able to

identify all such claims.

Therefore, as described in paragraphs 404.985(b)(3) and

416.1485(b)(3), we are implementing the following procedures. As soon

as possible after we receive a precedential circuit court decision that

we find may contain a holding that conflicts with our interpretation of

the Act or regulations, we will develop and provide our adjudicators

with criteria that they will use to identify pending claims we are

deciding within the relevant circuit that might be affected, if we

subsequently determine that an AR is required. If an AR is subsequently

released, a notice will be sent informing the claimants in these cases

that might be affected by the AR that an AR has been issued that might

affect the claim. The notice to the claimant will also explain the

procedures for obtaining a readjudication of the claim under the AR. If

we develop criteria and begin identifying claims, but subsequently

determine that an AR is not required, the notices will not be sent.

We will notify adjudicators of the appropriate criteria to be used

to identify claims no later than 10 days after we receive a circuit

court decision that we determine may contain a holding which conflicts

with our interpretation of the Act or regulations. Although we believe

that the new procedure to identify pending claims within the relevant

circuit that might be affected will greatly reduce the number of

claimants who would have to learn of the issuance of the AR through the

Federal Register publication of it or otherwise, the new procedure will

likely not identify all individuals whose claims may be subject to the

AR. For this reason, we have retained the readjudication procedure in

paragraphs 404.985(b)(2) and 416.1485(b)(2) to ensure the protection of

all claimants. Additionally, if a claimant or an adjudicator brings to

our attention that a claim could potentially be affected by a circuit

court decision that might become the subject of an AR, we will, if

appropriate, identify that case pending a decision as to whether an AR

is necessary in the circuit court decision in question.

These regulations do not apply to current and reopened claims

governed by the court-approved settlement in Stieberger v. Sullivan,

801 F. Supp. 1079 (S.D. N.Y. 1992), to the extent that the regulations

are inconsistent with the settlement.

Public Comments

These regulatory provisions were published in the Federal Register

as a notice of proposed rulemaking (NPRM) on September 18, 1997 (62 FR

48963). We provided the public a 60-day comment period. We received a

total of five statements containing multiple comments in response to

this NPRM, two from individuals who are attorney representatives of

claimants and three from legal services organizations.

Comment: One commenter recommended that the 120-day timeframe for

publishing an AR specified in the NPRM be reduced to coincide with the

date of the issuance of the circuit court's mandate under Rule 41 of

the Federal Rules of Appellate Procedure. The commenter stated that

this would allow SSA at least 52 days to prepare and release an AR.

Another commenter stated that an AR should be effective as of the date

of the order of the circuit court for which the AR is being issued.

Response: We have not adopted these comments. By necessity, some

time will always elapse between the date of a court decision and the

date that we publish an AR for that decision, due to the practical

impossibility of immediately taking all the steps necessary for

implementing a circuit court decision. Because, as we note below,

interpreting and applying a circuit court's holding may not be a simple

matter, we have decided that 120 days from the date we receive the

court's decision is the appropriate timeframe for us to thoroughly

analyze the decision, determine that it contains a holding conflicting

with our interpretation of the Act or regulations, and develop an AR to

provide as specific a statement as possible explaining SSA's

interpretation of the holding and how SSA will apply the holding when

adjudicating claims within the applicable circuit. Therefore, ARs will

generally continue to be effective as of the date of publication, and

the readjudication procedures will continue to be available with

respect to claims decided between the date of the court decision and

publication of the AR. The new provision in the regulation for

identifying pending claims potentially affected by the court's holding

will further protect the rights of claimants whose claims are

adjudicated during the period prior to the effective date of the AR. We

relied on similar reasoning in not adopting a comment on the 1990

acquiescence regulations, 55 FR at 1016, which suggested that ARs

should be effective as of the date of the circuit court decision.

Comment: One commenter stated that the regulations establishing the

process for identifying claims affected by precedential circuit court

holdings should provide a procedure for ``listing'' affected claims

(including those decided beyond the 120-day timeframe if publication of

an AR is delayed) and should provide our adjudicators with instructions

for readjudicating these claims. The same commenter asked who would be

responsible for identifying the affected claims and suggested that the

regulations assign this responsibility to specific SSA personnel.

Response: The regulations establish a new process for identifying

pending claims that may be affected by publication of an AR. We will

begin to list identified claims no later than 10 days after the date

the precedential circuit court decision is received by SSA.

Identification criteria and instructions will be issued to all of our

adjudicators in the circuit who will be responsible for deciding, in

accordance with those criteria and instructions, whether a particular

claim may be affected by the court's holding. We believe that

adjudicators are best suited to identify these claims because ARs apply

to all levels of adjudication, not

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only to the ALJ and Appeals Council levels, unless a court holding by

its nature applies to only certain levels of adjudication. If

publication of an AR is delayed beyond the 120-day timeframe, the

identification process will continue until the AR is issued. After an

AR is published, additional instructions for each AR will be issued to

all adjudicators in the circuit as needed.

Comment: One commenter stated that paragraph 404.985(b)(3) of the

regulations should explicitly reflect the timeframe which was contained

in the preamble to the NPRM that, within 10 days after SSA receives a

circuit court decision for which it determines an AR may be required,

SSA will provide instructions to adjudicators on the criteria for

identifying pending claims that might be subject to readjudication if

an AR is subsequently published for that court decision.

Response: Ordinarily we do not include operational processing time

goals in regulations. However, because of our commitment to the timely

publication of ARs, we have provided in these regulations that, in

general, an AR will be released for publication in the Federal Register

no later than 120 days from receipt of the court's decision. We believe

the operational steps necessary for identifying pending claims are

appropriately placed in the various detailed instructions that will be

issued to adjudicators. Since the specific elements of the

identification process are an operational matter, we have not placed it

within the regulations. When we issue implementing instructions, they

will contain the operational details necessary for us to inform

adjudicators and others in the claims process of the appropriate

criteria to be used to identify claims no later than 10 days after we

receive a circuit court decision that we determine may contain a

holding which conflicts with our interpretation of the Act or

regulations.

Comment: One individual suggested that any process that does not

provide for notice to all claimants, including claimants who received

determinations between the date of the circuit court decision and the

date we start identifying claimants who could potentially be affected

by an AR (generally 10 days after our receipt of the circuit court

decision), is ``wholly inadequate.''

Response: As we pointed out in the NPRM, we recognize that the new

procedure may not identify all individuals who could be affected by an

AR. Consequently, we have retained the readjudication procedures in

paragraphs 404.985(b)(2) and 416.1485(b)(2) to ensure the protection of

all claimants. We expect that, generally, very few claims that could

potentially be affected by an AR will be adjudicated during the

relatively short period before we begin to identify claimants. However,

claimants can bring to our attention and adjudicators can identify such

claims during this period. While the procedures contained in our

regulations require some action on the claimant's part, we have

concluded that, from an operational standpoint, we cannot always

accomplish instantaneous, comprehensive identification of all claims.

We believe the new procedure represents the best balance we can strike

between service to claimants and operational limitations.

Comment: Two commenters suggested that we publish our decision not

to issue an AR for a circuit court holding that we determine does not

conflict with our interpretation of the Act or regulations. One of

these commenters also suggested that we should publish a notice in the

Federal Register whenever we are unable to meet the 120-day timeframe

for publishing an AR.

Response: We have not adopted these comments. We review

approximately 600 circuit court decisions each year to determine

whether an AR is required. We believe that publishing notices in the

Federal Register for each of these decisions is an inefficient and

costly way to inform the public and the courts about our conclusions

with respect to acquiescence. We also do not believe it would be

efficient to require SSA to publish a notice whenever issuance of an AR

is delayed beyond the 120-day timeframe. We believe that we will

provide the highest quality service to the public by focusing our

limited resources on publishing ARs within the 120-day timeframe

specified in these regulations and on notifying individual claimants

identified under the procedure in paragraphs 404.985(b)(3) and

416.1485(b)(3) about circuit court decisions that may affect their

claims.

Comment: One commenter suggested that the regulations should not

limit readjudications under an AR to the particular issue addressed by

the AR but instead should allow de novo review of the entire claim.

Response: Claims pending administrative review will receive de novo

review when adjudicated under an AR. Under the 1990 acquiescence

regulations, which we have not changed in this regard, other claims in

which administrative appeal rights have lapsed are readjudicated based

upon a consideration of the issues covered by the AR. To the extent

that those issues covered by the AR affect other issues in the claim,

those other issues will also be addressed as part of the

readjudication. However, we do not believe that the Act requires us to

automatically afford lapsed claims being readjudicated the opportunity

for de novo review.

Comment: One commenter suggested that the regulations should permit

full appeal rights as to a finding that a claim is not subject to

readjudication under an AR.

Response: This question was addressed in the preamble to the 1990

acquiescence regulations, 55 FR at 1014. We do not believe that

permitting further review on the question of whether or not an AR

applies to a pending claim is appropriate. Once we conclude that

readjudication is not necessary, the next step should be an appeal on

the substantive merits of the claim itself, not the readjudication

question. When a decision is reached on appeal concerning the

substantive issue(s), the readjudication issue will be resolved. In

cases where a person did not appeal timely and subsequently becomes

aware of an AR that may apply to his or her claim, the readjudication

procedure is available. Also, claimants may request to have their

lapsed claims reopened and we may do so if the grounds for reopening

are met.

We continue to believe that the combination of appeal,

readjudication, and reopening provides a fair process that protects the

rights of claimants.

Comment: One commenter expressed the view that paragraph

404.985(b)(2) should not require claimants to identify the appropriate

AR when seeking readjudication. The commenter suggests that a claimant

should be allowed to seek readjudication by identifying the appropriate

circuit court decision, without also identifying the AR.

Response: We have adopted this comment and modified the new

paragraphs under 404.985(b)(2) and 416.1485(b)(2) to specify that the

claimant may request application of the AR to his or her case by either

citing the AR or, in the alternative, by specifying the holding or

portion of a circuit court decision which could change the prior

determination in their case. It should be noted, however, that the 1990

regulations provided under paragraphs 404.985(b) and 416.1485(b) that

one way a claimant may obtain a readjudication was by submitting a

statement which cited the AR; the regulations did not state that this

was, and we did not intend this to be, an absolute requirement for

obtaining readjudication.

Regulation paragraphs 404.985(b)(3) and 416.1485(b)(3) provide for

the identification by SSA of pending claims which might be affected by

the issuance

[[Page 24930]]

of an AR. When an AR is published, we will send individual notices for

those claims. In addition, as stated in the preamble to the NPRM, a

claimant or an adjudicator may bring to our attention a claim that

could be potentially affected by a circuit court decision and we will,

if appropriate, identify that claim pending our decision as to whether

an AR is necessary for the circuit court decision in question.

Comment: One individual observed that the regulations result in the

application of differing rules in different sections of the country,

which is not desirable, and the regulations can cause the differing

rules to continue indefinitely without restoring national uniformity.

The commenter suggested that we establish a formal process to oversee

litigation and to make changes in national rules whenever a district or

circuit court decision conflicted with our rules.

Response: As discussed in the preamble to the 1990 acquiescence

regulations, 55 FR at 1012-1013, a number of studies on the subject of

Federal acquiescence have noted that nationwide adoption of the

decision of the first circuit court to address an issue (intercircuit

acquiescence) would preclude other circuit courts from considering the

issue. In 1984, when Congress considered legislation that would have

required SSA to acquiesce in circuit court decisions, the Solicitor

General of the United States expressed similar concerns, stating that

the practical effect of that legislation would be to require the

Department of Justice to consider seeking Supreme Court review of the

first adverse decision on an issue by any court of appeals. The

Department of Justice reiterated these concerns in 1997 when Congress

was again considering legislation to address the issue of acquiescence

by Federal agencies.

An approach that would require nationwide adoption of the first

circuit court decision on a particular issue would not improve SSA's

adjudicatory and policy making processes, but would instead result in

the first circuit that happened to rule on an issue setting SSA's

national rules on that subject. In effect, the circuit court that would

rule first would rule last. This result could hardly be intended by any

reasonable interpretation of acquiescence and would undermine the

advantages, which have been recognized by the Supreme Court, of having

issues considered by more than one circuit court.

Moreover, we acquiesce only in the holdings of Federal circuit

courts and not in holdings of Federal district courts within a circuit.

See SSR 96-1p (61 FR 34470). This is consistent with the well-

recognized principle that one district court's decision does not

constitute binding precedent applicable to other claims arising within

that district. There is no such thing as the ``law of the district.''

Indeed, even within the same district, one judge may disagree with the

holding in a decision by another judge. Thus, despite a district court

holding in a decision that may conflict with our interpretation of the

Act or regulations, we will continue to apply our nationwide rules when

adjudicating claims within that district court's jurisdiction unless

the court directs otherwise such as may occur in a class action.

Comment: Several commenters expressed the opinion that we have not

fully implemented our existing acquiescence policy because, in

reviewing circuit court holdings to determine whether they conflict

with our rules, we read the holdings too narrowly and, thus,

incorrectly decide that an AR is not necessary. The commenters

suggested that this was caused by a lack of specific standards for

determining when a circuit court holding conflicts with our rules. One

commenter said that it was inappropriate for us to interpret circuit

court holdings and that we should be limited to merely implementing the

``policy directive'' stated by the court.

Response: We review every circuit court decision to determine

whether a circuit court's holding conflicts with our interpretation of

the Act or regulations. Since our acquiescence policy became effective

in 1985, we have published 68 ARs. There has been a dramatic decline in

litigation based on allegations that we have refused to acquiesce in

specific circuit court decisions since the adoption of the 1990

acquiescence regulations.

As discussed in the preamble to the 1990 acquiescence regulations,

55 FR at 1012, the vast majority of adverse circuit court decisions do

not conflict with our interpretation of the Act and regulations; they

are based either on the issue of whether substantial evidence supports

SSA's final administrative decision or on the issue of whether the

final administrative decision adheres to established agency rules. A

court holding based on the adjudicator's failure to follow established

rules does not conflict with the rules themselves. Identifying the

holding of a particular circuit court decision and determining whether

or not the holding conflicts with our interpretation of the Act and

regulations are not always clear or simple matters, and this may

account for the concern expressed by these commenters about how we

implement acquiescence policy.

Establishing specific standards for evaluating whether a court

holding conflicts with our interpretation of the Act and regulations

would be impractical because of the diversity and complexities both of

the programs and policies we administer and of the court decisions

concerning these programs and policies. For example, the policies and

issues considered in adjudicating disability claims usually involve

technical medical and vocational concepts, which are very different

from the benefit computation and family relationship questions

frequently considered in retirement and survivors claims. Because

explaining how we will apply the circuit court holding within the

circuit is also not a clear and simple matter, we do not believe that a

standard for analyzing all circuit court holdings would be feasible.

Consequently, we have declined to adopt this comment.

By statute, establishing rules and procedures governing SSA's

programs is the responsibility of the Commissioner of Social Security.

Furthermore, court decisions generally resolve individual claims and

neither address similar circumstances, nor are written in a way that

necessarily instructs our adjudicators how to apply the courts'

holdings to other claims. We believe that to ensure uniform and

consistent adjudication procedures necessary for the administration of

a national program, SSA must analyze and interpret circuit court

holdings that we determine conflict with SSA's nationwide rules to

provide our adjudicators as specific a statement as possible of how to

apply the holding in the course of adjudicating other claims.

If a person believes that we have overlooked or misconstrued a

holding in a court of appeals decision, that person may bring this

matter to our attention and we will respond appropriately.

Comment: Two commenters suggested that SSA should amend the current

acquiescence regulations to direct adjudicators to follow circuit court

precedent whether or not an AR has been issued. It was also suggested

that SSR 96-1p, which sets forth a different policy from that suggested

by the commenters, be withdrawn immediately.

Response: Both the preamble to the 1990 acquiescence regulations,

55 FR at 1013, and SSR 96-1p, published on July 2, 1996, explain the

basis for our longstanding policy that SSA adjudicators are to follow

SSA's nationwide rules until the

[[Page 24931]]

Commissioner determines that a circuit court holding is in conflict

with our national rules and publishes an AR instructing adjudicators on

how the decision is to be followed within the applicable circuit.

Circuit court decisions generally resolve individual claims and are not

necessarily written in a way that instructs our adjudicators on how to

consistently apply the courts' holdings to other claims, particularly

when the numerous possible situations to which they may apply are

considered. The meaning and scope of a court holding are not always

clear and can be subject to disparate interpretations.

If each of SSA's over 15,000 adjudicators were permitted to apply

his or her own interpretation of a circuit court decision in resolving

these difficult questions, rather than relying on guidance from the

Commissioner in the form of an AR, it could result in conflicting

standards being used by decisionmakers, even within the same circuit.

Furthermore, the Commissioner has the responsibility by statute to

administer the Social Security programs and establish the agency's

rules and procedures. If the Commissioner abdicated that responsibility

by allowing individual adjudicators to decide claims according to his

or her individual interpretation of the law, it would be impossible for

the Commissioner to carry out his responsibility to administer the

Social Security programs in an effective and efficient manner on a

nationwide basis, and to ensure consistent and uniform application of

SSA's rules. Indeed, some adjudicators might apply the circuit court's

decision in ways less favorable to claimants than the court intended.

Furthermore, it would not necessarily be apparent what standard was

applied by an individual adjudicator; therefore, unlike the standards

established by the Commissioner in an AR, the interpretation of a

circuit court decision by an individual adjudicator might not be

readily susceptible to judicial scrutiny.

In addition, adjudicators at the initial and reconsideration levels

of review generally do not have any legal training in interpreting and

applying circuit court decisions. If authority to apply circuit court

decisions in the absence of an AR was extended only to ALJs and the

Appeals Council, it would further undermine uniformity in

decisionmaking by creating different standards of adjudication at

different levels of administrative review.

For all these reasons, we continue to believe that the AR is the

fairest and most effective method to achieve uniform acquiescence in

circuit court holdings that conflict with SSA's nationwide rules. This

approach is consistent with the longstanding legal principle that it is

the responsibility of the Commissioner, not individual adjudicators, to

establish SSA's rules and policies (including how to apply a circuit

court holding which conflicts with SSA's nationwide rules). Any erosion

of this legal principle would represent a radical change in the Federal

administrative structure, and would undermine a Federal department or

agency head's accountability for the administration of the agency's

programs. Therefore, it is the role and responsibility of individual

adjudicators to decide claims by applying the rules and policies

established by the Commissioner to the facts of an individual case.

Comment: One individual suggested that we clarify our longstanding

regulatory language setting forth SSA's authority to rescind an AR when

we subsequently publish a new regulation addressing an issue not

previously included in our regulations.

Response: This provision has been in the regulations since 1990 and

courts have not found that it has been misapplied. We do not believe

there is a need for a clarifying amendment to this particular provision

at this time.

Comment: One commenter questioned the legality of relitigating in

the same circuit an issue addressed by an AR. Another questioned

whether the regulations permit SSA to relitigate an issue within the

same circuit after publication of an AR if we later publish a

nationwide regulation reaffirming our original position on the issue.

Response: These final rules make no changes in our relitigation

policies and procedures which were set forth in the 1990 acquiescence

regulations. We do not believe that a Federal agency is legally

precluded from relitigating an issue within a circuit that has

previously issued a ruling adverse to the Government's position. When

we published the 1990 acquiescence regulations, we discussed some of

the authorities supporting our position on relitigation and stated that

we would not use relitigation as a primary means for resolving

conflicts in statutory and regulatory interpretation. To date, we have

never used the relitigation procedures outlined in the 1990

regulations. Those regulations state that if we do decide to relitigate

an issue, we will publish a notice of our intention in the Federal

affected claimants.

As discussed in the preamble to the 1990 acquiescence regulations,

55 FR at 1015, when we determine that a circuit court holding conflicts

with our interpretation of the Act and regulations, we generally expect

to resolve the conflict by actively pursuing our right to seek further

judicial review, revisiting the same issue in related litigation,

clarifying our regulations, or seeking statutory amendments. The

regulations outline a process for relitigating a court's holding within

the same circuit after publication of an AR, which requires certain

specific activating events. Publication of a regulation, by itself, is

not an activating event for relitigation.

Based on our analysis of the comments, and for the reasons set

forth above, we are publishing the proposed rules as final rules with

the changes to paragraphs 404.985(b)(2) and 416.1485(b)(2) discussed

above. We have also made minor editorial and technical changes for

clarification and consistency.

Regulatory Procedures

Executive Order 12866

We have consulted with the Office of Management and Budget (OMB)

and determined that these rules do not meet the criteria for a

significant regulatory action under Executive Order 12866. Thus, they

are not subject to OMB review.

Regulatory Flexibility Act

We certify that these regulations will not have a significant

economic impact on a substantial number of small entities because these

rules affect only individuals. Therefore, a regulatory flexibility

analysis as provided in the Regulatory Flexibility Act, as amended, is

not required.

Paperwork Reduction Act

These regulations contain information collection requirements in

paragraphs 404.985(b) and 416.1485(b). We have received approval for

these requirements from OMB under OMB No. 0960-0581 which expires

November 30, 2000.

(Catalog of Federal Domestic Assistance Program Nos. 96.001, Social

Security-Disability Insurance; 96.002, Social Security-Retirement

Insurance; 96.003, Social Security-Special Benefits for Persons Aged

72 and Over; 96.004, Social Security-Survivors Insurance; 96.006,

Supplemental Security Income)

List of Subjects

20 CFR Part 404

Administrative practice and procedure, Death benefits, Disability

[[Page 24932]]

benefits, Old-Age, Survivors and Disability insurance, Reporting and

recordkeeping requirements, Social security.

20 CFR Part 416

Administrative practice and procedure, Aged, Blind, Disability

benefits, Public assistance programs, Reporting and recordkeeping

requirements Supplemental Security Income (SSI).

Dated: April 27, 1998.

Kenneth S. Apfel,

Commissioner of Social Security.

For the reasons set out in the preamble, subpart J of part 404 and

subpart N of part 416 of chapter III of title 20 of the Code of Federal

Regulations are amended as set forth below:

PART 404--FEDERAL OLD-AGE, SURVIVORS AND DISABILITY INSURANCE

(1950-)

20 CFR part 404, subpart J, is amended as follows:

1. The authority citation for subpart J of part 404 continues to

read as follows:

Authority: Secs. 201(j), 205(a), (b), (d)-(h), and (j), 221,

225, and 702(a)(5) of the Social Security Act (42 U.S.C. 401(j),

405(a), (b), (d)-(h), and (j), 421, 425, and 902(a)(5)); 31 U.S.C.

3720A; sec. 5, Pub. L. 97-455, 96 Stat. 2500 (42 U.S.C. 405 note);

secs. 5, 6(c)-(e), and 15, Pub. L. 98-460, 98 Stat. 1802 (42 U.S.C.

421 note).

2. Section 404.985 is revised to read as follows:

Sec. 404.985 Application of circuit court law.

The procedures which follow apply to administrative determinations

or decisions on claims involving the application of circuit court law.

(a) General. We will apply a holding in a United States Court of

Appeals decision that we determine conflicts with our interpretation of

a provision of the Social Security Act or regulations unless the

Government seeks further judicial review of that decision or we

relitigate the issue presented in the decision in accordance with

paragraphs (c) and (d) of this section. We will apply the holding to

claims at all levels of the administrative review process within the

applicable circuit unless the holding, by its nature, applies only at

certain levels of adjudication.

(b) Issuance of an Acquiescence Ruling. When we determine that a

United States Court of Appeals holding conflicts with our

interpretation of a provision of the Social Security Act or regulations

and the Government does not seek further judicial review or is

unsuccessful on further review, we will issue a Social Security

Acquiescence Ruling. The Acquiescence Ruling will describe the

administrative case and the court decision, identify the issue(s)

involved, and explain how we will apply the holding, including, as

necessary, how the holding relates to other decisions within the

applicable circuit. These Acquiescence Rulings will generally be

effective on the date of their publication in the Federal Register and

will apply to all determinations and decisions made on or after that

date unless an Acquiescence Ruling is rescinded as stated in paragraph

(e) of this section. The process we will use when issuing an

Acquiescence Ruling follows:

(1) We will release an Acquiescence Ruling for publication in the

Federal Register for any precedential circuit court decision that we

determine contains a holding that conflicts with our interpretation of

a provision of the Social Security Act or regulations no later than 120

days from the receipt of the court's decision. This timeframe will not

apply when we decide to seek further judicial review of the circuit

court decision or when coordination with the Department of Justice and/

or other Federal agencies makes this timeframe no longer feasible.

(2) If we make a determination or decision on your claim between

the date of a circuit court decision and the date we publish an

Acquiescence Ruling, you may request application of the published

Acquiescence Ruling to the prior determination or decision. You must

demonstrate that application of the Acquiescence Ruling could change

the prior determination or decision in your case. You may demonstrate

this by submitting a statement that cites the Acquiescence Ruling or

the holding or portion of a circuit court decision which could change

the prior determination or decision in your case. If you can so

demonstrate, we will readjudicate the claim in accordance with the

Acquiescence Ruling at the level at which it was last adjudicated. Any

readjudication will be limited to consideration of the issue(s) covered

by the Acquiescence Ruling and any new determination or decision on

readjudication will be subject to administrative and judicial review in

accordance with this subpart. Our denial of a request for

readjudication will not be subject to further administrative or

judicial review. If you file a request for readjudication within the

60-day appeal period and we deny that request, we shall extend the time

to file an appeal on the merits of the claim to 60 days after the date

that we deny the request for readjudication.

(3) After we receive a precedential circuit court decision and

determine that an Acquiescence Ruling may be required, we will begin to

identify those claims that are pending before us within the circuit and

that might be subject to readjudication if an Acquiescence Ruling is

subsequently issued. When an Acquiescence Ruling is published, we will

send a notice to those individuals whose cases we have identified which

may be affected by the Acquiescence Ruling. The notice will provide

information about the Acquiescence Ruling and the right to request

readjudication under that Acquiescence Ruling, as described in

paragraph (b)(2) of this section. It is not necessary for an individual

to receive a notice in order to request application of an Acquiescence

Ruling to his or her claim, as described in paragraph (b)(2) of this

section.

Acquiescence Ruling. After we have published an Acquiescence Ruling to

reflect a holding of a United States Court of Appeals on an issue, we

may decide under certain conditions to relitigate that issue within the

same circuit. We may relitigate only when the conditions specified in

paragraphs (c)(2) and (3) of this section are met, and, in general, one

of the events specified in paragraph (c)(1) of this section occurs.

(1) Activating events:

(i) An action by both Houses of Congress indicates that a circuit

court decision on which an Acquiescence Ruling was based was decided

inconsistently with congressional intent, such as may be expressed in a

joint resolution, an appropriations restriction, or enactment of

legislation which affects a closely analogous body of law;

(ii) A statement in a majority opinion of the same circuit

indicates that the court might no longer follow its previous decision

if a particular issue were presented again;

(iii) Subsequent circuit court precedent in other circuits supports

our interpretation of the Social Security Act or regulations on the

issue(s) in question; or

(iv) A subsequent Supreme Court decision presents a reasonable

legal basis for questioning a circuit court holding upon which we base

an Acquiescence Ruling.

(2) The General Counsel of the Social Security Administration,

after consulting with the Department of Justice, concurs that

relitigation of an issue and application of our interpretation of the

Social Security Act or regulations to selected claims in the

[[Page 24933]]

administrative review process within the circuit would be appropriate.

(3) We publish a notice in the Federal Register that we intend to

relitigate an Acquiescence Ruling issue and that we will apply our

interpretation of the Social Security Act or regulations within the

circuit to claims in the administrative review process selected for

relitigation. The notice will explain why we made this decision.

(d) Notice of relitigation. When we decide to relitigate an issue,

we will provide a notice explaining our action to all affected

claimants. In adjudicating claims subject to relitigation,

decisionmakers throughout the SSA administrative review process will

apply our interpretation of the Social Security Act and regulations,

but will also state in written determinations or decisions how the

claims would have been decided under the circuit standard. Claims not

subject to relitigation will continue to be decided under the

Acquiescence Ruling in accordance with the circuit standard. So that

affected claimants can be readily identified and any subsequent

decision of the circuit court or the Supreme Court can be implemented

quickly and efficiently, we will maintain a listing of all claimants

who receive this notice and will provide them with the relief ordered

by the court.

(e) Rescission of an Acquiescence Ruling. We will rescind as

obsolete an Acquiescence Ruling and apply our interpretation of the

Social Security Act or regulations by publishing a notice in the

Federal Register when any of the following events occurs:

(1) The Supreme Court overrules or limits a circuit court holding

that was the basis of an Acquiescence Ruling;

(2) A circuit court overrules or limits itself on an issue that was

the basis of an Acquiescence Ruling;

(3) A Federal law is enacted that removes the basis for the holding

in a decision of a circuit court that was the subject of an

Acquiescence Ruling; or

(4) We subsequently clarify, modify or revoke the regulation or

ruling that was the subject of a circuit court holding that we

determined conflicts with our interpretation of the Social Security Act

or regulations, or we subsequently publish a new regulation(s)

addressing an issue(s) not previously included in our regulations when

that issue(s) was the subject of a circuit court holding that

conflicted with our interpretation of the Social Security Act or

regulations and that holding was not compelled by the statute or

Constitution.

PART 416--SUPPLEMENTAL SECURITY INCOME FOR THE AGED, BLIND, AND

DISABLED

20 CFR part 416, subpart N, is amended as follows:

1. The authority citation for subpart N continues to read as

follows:

Authority: Secs. 702(a)(5), 1631, and 1633 of the Social

Security Act (42 U.S.C. 902(a)(5), 1383, and 1383b).

2. Section 416.1485 is revised to read as follows:

Sec. 416.1485 Application of circuit court law.