Tribal Temporary Assistance for Needy Families Program (Tribal TANF) and Native Employment Works (NEW) Program

SUMMARY: The Administration for Children and Families (ACF) proposes to

issue regulations to implement key Tribal provisions of the Personal

Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA)

and the Balanced Budget Act of 1997, Pub. L. 105-33. PRWORA established

the Tribal Temporary Assistance for Needy Families program and a tribal

work program which we have named the Native Employment Works (NEW)

program at the suggestion of some Indian tribes. The Balanced Budget

Act of 1997 made technical corrections to PRWORA.

DATES: You must submit comments by September 21, 1998.

ADDRESSES: You may mail or hand-deliver comments to the Administration

for Children and Families, Office of Community Services, Division of

Tribal Services, 5th Floor, 370 L'Enfant Promenade, SW, Washington, DC

20447. You may also transmit written comments electronically via the

Internet. To transmit comments electronically, or download an

electronic version of the proposed rule, you should access the ACF

Welfare Reform Home Page at http:/www.acf.dhhs.gov/news/welfare and

follow any instructions provided.

We will make all comments available for public inspection on the

5th Floor, 901 D Street, SW, Washington, DC 20447, from Monday through

Friday between the hours of 9 a.m. and 4 p.m. Eastern time, except for

holidays. For additional information, see Supplementary Information

section of the preamble.

FOR FURTHER INFORMATION, CONTACT: John Bushman, Director, Division of

Tribal Services, Office of Community Services, ACF, at 202-401-2418,

Raymond Apodaca, at 202-401-5020 or Ja-Na Oliver, NEW Team Leader at

202-401-5713.

Deaf and hearing-impaired individuals may call the Federal Dual

Party Relay Service at 1-800-877-8339 from Monday through Friday

between the hours of 8 a.m. and 7 p.m., Eastern time.

SUPPLEMENTARY INFORMATION:

Comment Procedures

We will not consider comments received beyond the 60-day comment

period in developing the final rule. Because of the large volume of

comments we anticipate, we will accept written comments only. In

addition, your comments should:

Be specific;

Address issues raised by the proposed rule;

Where appropriate, propose alternatives;

Explain reasons for any objections or recommended changes;

and

Reference the specific section of the proposed rule that

you are addressing.

We will not acknowledge the comments we receive. However, we will

review and consider all comments that are germane and that are received

during the comment period.

Table of Contents

I. The Personal Responsibility and Work Opportunity Reconciliation

Act of 1996

II. Regulatory Framework

A. Consultations

B. Related Regulations under Development

C. Statutory Context

D. Regulatory Reform

E. Scope of This Rulemaking

F. Applicability of the Rules

III. Principles Governing Regulatory Development

A. Tribal Flexibility

B. Regulatory Authority

C. Accountability for Meeting Program Requirements and Goals

IV. Discussion of Individual Regulatory Provisions

A. Part 286--Tribal TANF Program Provisions

B. Part 287--Native Employment Works (NEW) Program

V. Regulatory Impact Analyses

A. Executive Order 12866

B. Regulatory Flexibility Analysis

C. Paperwork Reduction Act

D. Unfunded Mandates Reform Act of 1995

I. The Personal Responsibility and Work Opportunity Reconciliation

Act of 1996

On August 22, 1996, President Clinton signed the ``Personal

Responsibility and Work Opportunity Reconciliation Act of 1996''

(PRWORA) into law. The first title of this new law (Pub. L. 104-193)

establishes a comprehensive welfare reform program which is designed to

change the nation's welfare system. The new program is called Temporary

Assistance for Needy Families, or TANF, in recognition of its focus on

moving recipients into work and time-limited assistance.

PRWORA repeals the existing welfare program known as Aid to

Families with Dependent Children (AFDC), which provided cash assistance

to needy families on an entitlement basis. It also repeals the related

programs known as the Job Opportunities and Basic Skills Training

(JOBS) program and Emergency Assistance (EA).

The new law reflects agreement on several key principles:

Welfare programs should be designed to help move people

from welfare to work.

Welfare should be a short-term, transitional experience,

not a way of life.

Parents should receive the child care and the health care

they need to protect their children as they move from welfare to work.

Child support programs should become tougher and more

effective in securing support from absent parents.

Because many factors contribute to poverty and dependency,

solutions to these problems should not be ``one size fits all.'' The

system should allow States, Tribes, and localities to develop diverse

and creative responses to their own problems.

The Federal government should place more emphasis on

program results.

The new law provides federally-recognized Indian tribes, or

consortia of such Tribes, the opportunity to apply for funding under

section 412 of the Social Security Act (or the Act), as amended by

PRWORA, to operate their own TANF programs beginning July 1, 1997.

Indian tribes that choose to administer a Tribal TANF program have

been given broad flexibility to set TANF eligibility rules and to

decide what benefits are most appropriate for their service areas and

populations. Tribes may try new, far-reaching approaches that can

respond more effectively to the needs of families within their own

unique environments. The TANF program challenges Tribal governments to

foster positive changes in the culture of the welfare system and to

take responsibility for program results and outcomes.

Under the new statute, TANF funding and assistance for families

comes with new expectations and responsibilities. Adults receiving

assistance are expected to engage in work activities and develop the

capability to support themselves and their families before their time-

limited assistance runs out. Tribes who take on the responsibility for

administering a TANF program will be expected to

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assist recipients making the transition to employment. Tribal TANF

grantees also will be expected to meet work participation rates and

other critical program requirements in order to avoid penalties and

maintain their Federal funding.

In meeting these expectations, Tribes need to examine the needs of

their service areas and service populations, identify the causes of

long-term underemployment and dependency, and work with families,

communities, businesses, and other social service agencies in resolving

employment barriers.

In addition to establishing the Tribal TANF program, PRWORA

authorizes funding, to the former Tribal JOBS grantees, for a tribal

program ``to make work activities available * * *''. Based upon Tribal

recommendations, we have designated this tribal work activities program

as the Native Employment Works (NEW) program. Tribes are encouraged to

focus the NEW program on work activities and on services which support

participation in work activities. In addition, Tribes are encouraged to

create and expand employment opportunities when possible.

The new welfare reform legislation not only gives Tribes new

opportunities, as in the case of the TANF program, and continued

responsibilities, as in the case of the NEW program, it also

dramatically affects intergovernmental relationships. It challenges

Federal, Tribal, State and local governments to foster positive changes

in the culture of welfare. It transforms the way agencies do business,

requiring true partnerships with each other, community organizations,

businesses and needy families.

II. Regulatory Framework

A. Consultations

In the spirit of both regulatory reform and PRWORA, and consistent

with the Secretary's policy on consultation with Indian tribes, we

implemented a broad consultation strategy prior to drafting this Notice

of Proposed Rulemaking (NPRM). We had discussions with a number of

different audiences, including representatives of Tribal, State, and

local governments. We solicited both written and oral comments and

worked to ensure that concerns raised during this process were shared

with both the staff working on individual regulatory issues and key

policy-makers.

The purpose of these efforts was to gain a variety of informational

perspectives about the potential benefits and pitfalls of various

regulatory approaches.

The discussions and written comments were very useful in helping us

identify key issues and evaluate policy options. However, we would like

to emphasize that, although we used this early input to draft the

proposed rules, this is not the only opportunity to provide comments.

All interested parties now have the opportunity to comment on specific

policy proposals contained in this NPRM. We will review all comments

submitted during the comment period and will take them into

consideration before issuing a final rule.

B. Related Regulations Under Development

This NPRM addresses the provisions of the Tribal TANF and NEW; the

NPRM on the State TANF program was published in the Federal Register on

November 20, 1997. This NPRM addresses, but does not contain proposed

rules for the Alaska TANF comparability criteria, which the Secretary

will develop in consultation the State of Alaska and the Alaska Native

entities eligible to operate TANF. We will publish the Alaska TANF

comparability criteria at a later date. There are no other regulations

related to the Tribal TANF or NEW program under development.

This NPRM does not include the provisions for the new Tribal

Welfare-to-Work (WTW) program at section 412(a)(3) of the Act, as

created by section 5001(c) of Pub. L. 105-33. The Secretary of Labor is

responsible for issuing rules for this program.

C. Statutory Context

These proposed rules reflect PRWORA, as enacted, and the amendments

contained in Pub. L. 105-33.

Pub. L. 105-33 created the new Welfare-to-Work (WTW) program, made

a few substantive changes to the TANF and NEW program, and made

numerous technical corrections to the TANF statute. Throughout the

preamble discussion and the appendices, you will note references to the

amendments made by this legislation. However, as previously mentioned,

this NPRM includes only a limited number of changes related to the new

WTW provisions. The Department of Labor has primary responsibility for

administering the program and issuing the WTW regulations. We have

responsibility for issuing rules on the WTW data collection

requirements, but will do that at a subsequent date.

D. Regulatory Reform

In its latest Document Drafting Handbook, the Office of the Federal

Register supports the efforts of the National Performance Review and

encourages Federal agencies to produce more reader-friendly

regulations. In drafting this proposed rule, we have paid close

attention to this guidance. Individuals who are familiar with our

existing welfare regulations should notice that this package

incorporates a distinctly different, more readable style.

E. Scope of This Rulemaking

Because there are no existing Tribal TANF or NEW regulations, this

package is intended to cover the proposed rules as they relate to the

provisions of the Tribal TANF and NEW programs (including definitions

of common and frequently used terms).

F. Applicability of the Rules

A Tribe may operate its TANF and/or NEW program under a reasonable

interpretation of the statute prior to publication of final rules.

Thus, in determining whether a Tribe is subject to a penalty under TANF

or a disallowance under the NEW program, we will not apply regulatory

interpretations retroactively. However, Tribes are bound by any Policy

Announcements issued by ACF, including those issued in advance of final

regulations.

III. Principles Governing Regulatory Development

A. Tribal Flexibility

In the Conference Report to PRWORA, Congress stated that the best

welfare solutions come from those closest to the problems, not from the

Federal government. Thus, the legislation provides Tribes with the

opportunity to reform welfare in ways that work best to serve the needs

of their service areas and service populations. It gives Tribes the

flexibility to design their own programs, define who will be eligible,

establish what benefits and services will be available, and develop

their own strategies for achieving program goals, including how to help

recipients move into the work force.

To ensure that our rules support the legislative goals of PRWORA,

we are also committed to gathering information on how Tribes are

responding to the new opportunities available to them. We reserve the

right to revisit some issues, either through proposed legislation or

regulation, if we identify situations where our rules are not

furthering the objectives of the Act.

[[Page 39368]]

B. Regulatory Authority

Early consultation input from Indian tribes suggested that the

intent of Congress to provide for program flexibility should limit the

extent to which we regulate Tribal TANF and NEW programs. However,

Congress gave us more authority to regulate the Tribal TANF and NEW

programs than State TANF programs.

Unlike the process for reviewing and accepting plans for State

TANF, the statute requires us to approve Tribal TANF plans. While we

propose maximum flexibility in program design and procedures, we

believe that it is important for us to set forth, in regulations, the

process for the submission and approval of plans and other program

requirements.

Tribal TANF programs must meet minimum work participation rates,

and Tribal TANF recipients are subject to maximum time limits for the

receipt of assistance as well as penalties for failure to meet program

requirements. While these requirements are specified in PRWORA for

State TANF programs, we will establish these for each Tribal program

with Tribal input. Although the proposed rules suggest flexibility in

how these requirements are established, we believe that it is important

for us to lay out, in regulations, the criteria that we propose to use.

Although Tribes that operate TANF programs are subject to some of

the same statutory requirements as are States, there are some

requirements that do not apply to Tribes, such as the prohibitions in

section 408. At the same time, the statute provides options to States

such as the option to exempt families from applicable time limits due

to hardship, that we propose to make available to Tribes, unless

precluded by other legal authority. Thus, since the statute does not

treat Tribes and States in the same way, we believe the Tribal TANF

regulations should reflect this.

C. Accountability for Meeting Program Requirements and Goals

The new law gives Tribes flexibility to design their TANF programs

in ways that strengthen families and promote work, responsibility, and

self-sufficiency. At the same time, however, it reflects a commitment

to ensuring that the goals of welfare reform are met. To this end, the

statutory provisions on data collection and penalties are crucial

because they give us the authority we need to track what is happening

to needy families and children under the new law, measure program

outcomes, and promote key program objectives.

While we have proposed rules on data collection and reporting

requirements for State TANF programs, this Notice of Proposed

Rulemaking lays down our proposal specific to the Tribal programs. This

is because the Tribal TANF programs will not be subject to the final

rules for the State TANF programs. Thus, we need to ensure that there

is a clear understanding of the data collection and reporting

requirements as they apply to Tribes.

IV. Discussion of Individual Regulatory Provisions

The following is a discussion of all the regulatory provisions we

have included in this package. The discussion follows the order of the

regulatory text, addressing each part and section in turn.

A. PART 286--TRIBAL TANF PROGRAM PROVISIONS

Subpart A--General Tribal TANF Provisions

What does this part cover? (Sec. 286.1)

This part contains our proposed rule for the implementation of

section 412 of the Social Security Act, except for section 412(a)(2)

which is covered in part 287. Section 412 allows federally-recognized

Indian tribes, certain specified Alaska Native organizations and Tribal

consortia to submit plans for the administration of a Temporary

Assistance for Needy Families (TANF) program.

In this proposed rule, we have tried to retain the flexibility

provided by the statute to the Tribal Family Assistance program. At the

same time, we recognize the need to set forth the general rules that

will govern the program.

In addition, in recognition of the unique legal relationship the

United States has with Tribal governments, these regulations will be

applied in a manner that respects and promotes a government-to-

government relationship between Tribal governments and the United

States government, Tribal sovereignty, and the realization of Indian

self-governance.

In this proposed rule the terms ``Tribal Family Assistance

program'' or ``TFAP'' and ``Tribal TANF program'' are used

interchangeably.

What definitions apply to this part? (Sec. 286.5)

This section of the proposed rule includes definitions of the terms

used in part 286. Where appropriate, it also includes cross-references

which direct the reader to other sections or subparts of the proposed

rule for additional information.

In drafting this section of the proposed rule, we chose not to

define every term used in the statute and in these proposed

regulations. We understand that excessive definitions may unduly and

unintentionally limit Tribal flexibility in designing programs that

best serve their needs.

For example, we have not defined ``Indian family'' or ``service

population.'' Each Tribe administering its own Tribal TANF program is

permitted by the statute to define its service population. Because

funding for the Tribal TANF program is based on State expenditures of

Federal funds on Indian families during fiscal year 1994, we believe

the Tribal TANF program was intended to serve primarily Indian

families. However, in order to provide flexibility to Tribes and

States, Tribes may define service population and have the option of

including only a portion of the Tribal enrollment, only Tribal members,

all Indians, or even non-Indians residing in the service area. It will

be up to each Tribe submitting a TANF plan to define the service

population that the plan covers. The service population definition

provided by a Tribe in turn determines what data the State would be

asked to provide to calculate the amount of the Tribal TANF grant. Note

that at Sec. 286.65(d)(2) if a Tribe chooses to include non-Indian

families in its service population definition, the Tribe is required to

demonstrate State agreement with the inclusion of that portion of the

Tribe's service population.

We also have not defined the individual work activities that count

for the purpose of calculating a Tribe's work participation rate. These

are terms the Tribe should define in designing its Tribal TANF program.

We believe Tribes should have maximum flexibility to define these terms

as appropriate for their program design.

Readers will note that we use the term ``we'' throughout the

regulation and preamble. The term ``we'' means the Secretary of the

Department of Health and Human Services or any of the following

individuals or agencies acting on the Secretary's behalf: The Assistant

Secretary for Children and Families, the Regional Administrators for

Children and Families, the Department of Health and Human Services, and

the Administration for Children and Families.

Readers should also note that we use the term ``Tribe'' throughout

the regulation and preamble. The term ``Tribe'' means federally-

recognized Indian tribes, consortia of such Indian tribes, and the 13

entities in the State of Alaska that are eligible to administer a

Tribal Family Assistance program, under an approved plan. It also

refers to

[[Page 39369]]

the Indian tribes and the Alaska Native organizations that are eligible

to administer a NEW program because they operated a Tribal JOBS program

in fiscal year 1995.

We have provided necessary definitions from PRWORA for the readers'

convenience. However, we have chosen not to augment these statutory

definitions.

We also have provided clarifying, operational and administrative

definitions in the interest of developing a clearer, more coherent and

succinct regulation. These include common acronyms and definitions we

believe are needed in order to understand the nature and scope of the

provisions in this proposed rule. Some of these terms have commonly

understood meanings; others are consistent with proposed definitions

included in the State TANF NPRM. We advise readers to review all the

terms in this section carefully because many of them determine the

application of substantive requirements.

Federal requirements related to the expenditures of Federal grant

funds necessitate the use of precise definitions. An example of such a

definition is that used for the term ``administrative costs'' which

triggers particular Federal grant requirements (see Sec. 286.40).

Assistance. The terms ``assistance'' and ``families receiving

assistance'' are used in the PRWORA in many critical places that affect

the Tribal TANF program, including: (1) In the numerator and

denominator of the work participation rates in section 407(b); and (2)

the data collection requirements of section 411(a). Largely through

reference, the term also affects the scope of the penalty provision in

section 409(a)(1). Thus, it is important that Tribes have a definition

of ``assistance.'' For the purposes of the Tribal TANF program, we

propose to adopt the same definition of assistance as developed and

included in the NPRM for the State TANF program.

Because PRWORA is a block grant, a Tribe may provide some forms of

support under TANF that would not commonly be considered public

assistance. Some of this support might resemble the types of short-

term, crisis-oriented support that were provided previously by the

States under the EA program. Other forms might be more directly related

to the work objectives of the Act and not have a direct monetary value

to the family. We are proposing to exclude some of these forms of

support from the definition of assistance.

The general legislative history for this title indicates that

Congress meant that this term encompass more than cash assistance (H.R.

Rep. No. 725, 104 Cong., 2d Sess (1996)). Therefore, as we suggested in

our January policy announcement (TANF-ACF-PA-97-1) for State TANF

programs, the definition of assistance should encompass most forms of

support. However, we recognized two basic forms of support that would

not be considered welfare and proposed to exclude them from the

definition. In brief, the two exclusions were: (1) Services that had no

direct monetary value and did not involve direct or indirect income

support; and (2) one-time, short-term assistance.

In the proposed rule, we are clarifying that child care, work

subsidies, and allowances that cover living expenses for individuals in

education or training are included within the definition of assistance.

For this purpose, child care includes payments or vouchers for direct

child care services, as well as the value of direct child care services

provided under contract or a similar arrangement. It does not include

child care services such as information and referral or counseling, or

child care provided on a short-term, ad hoc basis. Work subsidies

include payments to employers to help cover the costs of employment or

on-the-job training.

We are also proposing to define one-time, short-term assistance as

assistance that is paid no more than once in any twelve-month period,

is paid within a 30-day period, and covers needs that do not extend

beyond a 90-day period. In response to the policy announcement, we

received a number of questions about what the term ``one-time, short-

term'' meant. Based on our experience with the EA program, we realized

that a wide range of interpretations was possible, and we were

concerned that ``short-term'' or ``one-time'' could be defined to

encompass many situations where assistance was of a significant and

ongoing nature. We believe our proposal will give Tribes the

flexibility to meet short-term and emergency needs (such as an

automobile repair), without invoking too many administrative

requirements and undermining the objectives of the Act. We welcome

comments on whether the proposed policy achieves this end.

Under the policy announcement and this proposed rule, we define the

minimum types of services and benefits that must be included as

assistance. Based on comments we received, we considered allowing

Tribes to include additional kinds of benefits and services, at their

option. However, we were concerned that varying Tribal definitions

would create additional comparability problems with respect to data

collection and penalty determinations. Also, we were concerned that an

expanded definition might have undesirable program effects.

If Tribes expanded their definitions of assistance, they would have

to apply that same definition under all provisions of the regulations.

Thus, if something fell within the definition of assistance, the family

receiving that type of benefit would be subject to work requirements,

and Federal time limits; and the family would have to be included in

the Tribe's data collection and reporting.

In response to the policy announcement, we received a number of

questions about the treatment of TANF assistance under the child

support enforcement program. The Office of Child Support Enforcement

will issue guidance on the distribution of child collections under

PRWORA; this guidance will explain the treatment of TANF assistance

under the new distribution rules.

For those concerned about the inclusion of child care in the

definition of assistance, we would point out the child care

expenditures made under the Child Care Development Fund program are not

subject to TANF requirements, including time limits for the receipt of

assistance.

As a part of the Tribal TANF Financial Report that is being

developed, we will propose to collect data on how much of the program

expenditures are being spent on different kinds of ``assistance'' and

``non-assistance.'' If the data that will be collected show that large

portions of the program resources are being spent on ``non-

assistance,'' we would have concerns that the flexibility in our

definition of ``assistance'' is undermining the goals of the

legislation. We would then look more closely at the ``non-assistance''

being provided and try to assess whether work requirements, time limits

and case-record data would be appropriate for those cases. If

necessary, we would consider a change to the definition of

``assistance'' or other remedies.

While our definition excludes some forms of support as

``assistance,'' the exclusions do not apply to the eligible Alaska

Tribal entities and the State of Alaska in determining whether the

Alaska Tribal entities' Tribal TANF programs are comparable to Alaska's

State TANF program. For example, an Alaska Tribal entity that

implements a Tribal TANF program may choose to include ``direct

services'' as part of their benefit level definition, and these

``direct services'' would trigger the TANF requirements, i.e., work

requirements, time limits, and data

[[Page 39370]]

collection and reporting. Please refer to Sec. 286.150 for more

information on the Alaska comparability requirement.

Finally, we would like to note that Sec. 286.5 contains a

definition of ``administrative costs.'' This definition is important

because we are proposing, at Sec. 286.40, to limit to 20 percent the

amount of Tribal TANF funds that a Tribe may use for administrative

costs.

Who is eligible to operate a Tribal TANF program? (Sec. 286.10)

This section of the proposed rule specifies which Indian tribes are

eligible to submit Tribal Family Assistance Plans (TFAPs).

In general, any federally-recognized Indian tribe is eligible to

submit a Tribal Family Assistance Plan. However, with respect to the

State of Alaska, only the 12 Alaska Native regional nonprofit

corporations specified at section 419 of the Act, plus the Metlakatla

Indian Community of the Annette Islands Reserve may submit a TFAP.

In addition, a consortium of eligible Indian tribes may develop and

submit a single TFAP.

Subpart B--Tribal TANF Funding

How is the amount of a Tribal Family Assistance Grant determined?

(Sec. 286.15)

How will we resolve disagreements over the State-submitted data

used to determine the amount of a Tribal Family Assistance Grant?

(Sec. 286.20)

We have combined the discussions for these two sections of the

proposed rule because they are interrelated. These sections of the

proposed rule discuss how the amount of a Tribal Family Assistance

Grant (TFAG) will be determined and the actions we believe will be

necessary to resolve disagreements over the data received from a State.

PRWORA requires the Secretary to pay TFAGs to federally-recognized

Indian tribes with approved 3-year Tribal Family Assistance Plans. To

determine the amount of a TFAG, we must use data submitted by the State

or States in which the Indian tribe is located. Section 412(a)(1)(B)

specifies the data that we will use. The statute provides that, for

each fiscal year 1997-2002, an Indian tribe that has an approved Tribal

Family Assistance Plan will receive an amount equal to the Federal

share (including administrative expenditures, which would include

systems costs) of all expenditures (other than child care expenditures)

by the State or States under the AFDC and Emergency Assistance (title

IV-A) programs, and the JOBS (title IV-F) program for fiscal year (FY)

1994 for Indian families residing in the service area(s) identified in

the Tribal Family Assistance Plan. For Tribes that operated a Tribal

JOBS program in FY 1994, the State title IV-F expenditures (including

administrative costs) used in the calculation of the TFAG would be for

expenditures made by the State on behalf of non-member Indians and non-

Indians, if either or both are included in the Tribal TANF population

and are living in the designated Tribal TANF service area(s). Any

expenditures by the State for Tribal members who were served by the

State JOBS program will also be included in the determination.

Section 412(a)(1)(B)(ii)(II) of the statute allows Tribes the

opportunity to disagree with State-submitted data and to submit

additional information relevant to our determination of the TFAG

amount. We believe Tribes should have an opportunity to submit relevant

information in instances in which the State has failed to submit

requested data on a timely basis. However, we believe the lack of

State-submitted data will be a very rare occurrence.

We will request State data based on the Tribe's identified service

area and population, which may include areas outside the reservation

and non-Indian families. We will allow States 21 days from the date of

our request to submit the requested data before notifying the affected

Tribe of its option under section 412(a)(1)(B)(ii)(II) of PRWORA to

submit its own data. This time frame should allow States adequate time

to gather and submit the data. However, in order for us to notify the

State of any reduction in its grant not later than three months before

payment of any quarterly installment, as specified by section 405(b),

we will use the best available data to determine the amount of the

TFAG, if the State has not submitted the specified data at the end of

the 21-day period. Our experience to date has shown that we need time

to resolve any issues related to determining the amount of a TFAG in

order to meet the statutory requirement for notification to the State

of the reduction in the amount of their State TANF grant.

We also believe a Tribe should have a reasonable period of time in

which to review the State-submitted data and make a determination as to

whether or not it concurs with the data. We have determined that a

twenty-one (21) day period should be sufficient for this activity.

Therefore, we propose to allow a Tribe 21 days from when it receives

the State-submitted data from us to notify us of its concurrence or

non-concurrence with the data.

Once we receive State data, we will share it with the Tribe. We

will also facilitate any meeting or discussions between the Tribe and

the State to answer any questions the Tribe has about the submitted

data. Any meetings or discussions to answer the Tribe's questions about

the data need to be held within the proposed 21-day period for Tribal

concurrence. We believe it is in the best interests of both the Tribe

and the State to reach a consensus on the State data. However, if the

Tribe finds it cannot concur with the State data and has notified us to

this effect, we will provide the Tribe an additional 21 days to submit

additional relevant information. It will then be our responsibility

under section 412(a)(1)(B)(ii)(II) to make the final determination as

to the amount of the TFAG after review of the information submitted by

the Tribe.

In instances in which the State has not submitted the requested

data within the time period given, we will notify the Tribe. We will

give the Tribe 21 days from the date of our notification to submit

relevant data. This 21-day time frame is the same time frame we have

proposed for Tribes to submit information if they disagree with State-

submitted data. In the absence of State-submitted data, we propose to

use relevant Tribe-submitted data to determine the amount of the TFAG.

If a Tribe disagrees with the data submitted by the State, we will

use the State-submitted data and any additional relevant information

submitted by the Tribe to determine the amount of the TFAG. Relevant

Tribal data may include, but are not limited to, Census Bureau data,

data from the Bureau of Indian Affairs, data from other Federal

programs, and tribal records.

Once the amount of the TFAG is officially determined, we will

notify both the Tribe and the State of the Secretary's decision. Our

goal will be to resolve any data issues at least two weeks prior to

when we are required to notify the State. We will make official

notification of the amount of the State Family Assistance Grant

reduction to the appropriate State(s) no later than 90 days before the

payment of the State's next quarterly SFAG installment.

What is the process for retrocession of a Tribal Family Assistance

Grant? (Sec. 286.25)

As defined at Sec. 286.5, retrocession is a voluntary termination

of a Tribal TANF program. Section 412 of the Act does not include a

provision for retrocession. However, we recognize that Tribes

voluntarily implement a TANF program for their needy families and

should, therefore, be afforded the opportunity to withdraw their

agreement to operate the program. For

[[Page 39371]]

example, a Tribe may lose a State's commitment to provide State funds

for Tribal TANF, which could significantly impact the Tribe's financial

ability to operate the program. Based on overwhelming support and

comments by both Tribes and States, we determined the necessity of a

retrocession provision in these regulations.

In providing for the retrocession of a Tribal TANF program, we

recognize several needs. Thus, the proposed specified time frame is

intended to ensure that: (1) There is minimal disruption of services to

families in need of assistance; (2) a Tribe makes an informed decision

in determining whether or not to cease operating the Tribal TANF

program; and (3) a State is provided adequate notice to ensure

continuity of program services.

A Tribe that decides to terminate its Tribal TANF program must

notify the Secretary in writing of its decision and the reason(s) for

retrocession at least 120 days prior to the effective date of the

termination. The effective date must coincide with the end of the grant

period (i.e., September 30). This deadline reflects our intention to

notify the State no later than 90 days prior to the effective date of

the termination. We believe this will give the State ample time to

implement services for the families who had been served by the Tribal

TANF program.

For Tribes that retrocede, the provisions of 45 CFR part 92 will

apply with regard to closeout of the grant. The Tribe must return all

unobligated funds to the Federal government. The appropriate SFAG will

be increased by the amount of the TFAG.

Tribes that retrocede the program may be eligible to operate a

Tribal TANF program at a later date. However, in the proposed rule we

state that we will not approve another TFAP until the Tribe can

demonstrate that the reasons for the earlier retrocession no longer

exist and that all outstanding penalty amounts have been repaid. We

will not return the TANF program to the Tribe unless and until we are

certain that it has resolved any outstanding problems.

A Tribe that retrocedes a Tribal TANF program is responsible for

complying with the data collection and reporting requirements and all

other program requirements for the period before the retrocession is

effective. In addition, the Tribe is liable for any applicable

penalties (see subpart D); and it is subject to the provisions of 45

CFR part 92 and OMB Circulars A-87 and A-133, and other Federal

statutes and regulations applicable to the TANF program. The Tribe also

will be responsible for any penalties resulting from audits covering

the period up to the effective date of retrocession. Please refer to

Sec. 286.170 for the discussion on penalties.

What are proper uses of Tribal Family Assistance Grant funds?

(Sec. 286.30)

Section 412 of the Act does not specify the particular purposes for

which a TFAG may be used. However, under these proposed rules any such

use must be consistent with section 401(a) of the Act. We believe the

Tribes should have the same flexibility as the States in their use of

TANF funds. Therefore, we propose at Sec. 286.30 that the Tribal TANF

grantees will be able to use their TFAGs for the same purposes as

States may use their TANF funds as specified in section 404(a) of the

Act.

Thus, a Tribe may use its TFAG in any reasonable manner to

accomplish the purposes of part A of title IV of the Act. This may

include the provision of low-income households with assistance in

meeting home heating and cooling costs. In addition, we believe that

Tribes should be able to use their TFAGs in any manner that was an

authorized use of funds under the AFDC and JOBS programs, as those

programs were in effect on September 30, 1995.

In determining whether a welfare-related service or activity may be

funded with its TFAG, a Tribe should refer to the purposes of TANF, as

described in section 401 of the Act, as well as to section 404(a).

Tribes should be aware that TANF funds may be used only for welfare-

related services or activities reasonably calculated to accomplish the

purposes of part IV-A of the Act. TANF funds are not authorized to be

used to contribute to or otherwise support non-TANF programs. Use of

TANF funds to support non-TANF programs or other unauthorized purpose

shall give rise to penalties under section 409(a)(1) of the Act (made

applicable to Tribes by section 412(g).

What uses of Tribal Family Assistance Grant funds are improper?

(Sec. 286.35)

Just as section 412 of the Act does not specify the particular

purposes for which Tribal Family Assistance Grant funds may be used, it

does not specify any prohibitions or restrictions on the use of TFAG

funds in a Tribal TANF program. As we are proposing rules for the uses

of Tribal Family Assistance Grants, we believe it is important to

indicate in this proposed rule what would not be a proper use of a

TFAG. Section 401 of the Act makes clear that TFAG funds are restricted

to the operation and administration of the TANF program. Tribal TFAG

funds may not be used to contribute to or to subsidize non-TANF

programs. Any use of TFAG funds to contribute to or otherwise support

non-TANF programs will be considered an improper use of TANF funds and

subject to penalties under Sec. 286.170.

We propose to restrict the use of a TFAG to providing welfare-

related services and assistance to families that include either a minor

child who resides with a custodial parent or other adult caretaker

relative of the child or a pregnant individual. In addition, we propose

that a TFAG may be used to provide welfare-related services or

assistance for no more than the number of months specified in a Tribe's

approved TFAP.

OMB Circular A-87 includes restrictions and prohibitions that limit

the use of a TFAG. In addition, all provisions in 45 CFR part 92 and

OMB Circular A-133 apply to the Tribal TANF program. TANF is not one of

the Block Grant programs exempt from the requirement of part 92 because

OMB has determined that TANF should be subject to part 92.

Non-Citizens

Title IV of PRWORA establishes restrictions on the use of TANF

funds to provide assistance to certain individuals who are not citizens

of the United States. These restrictions are part of the definition of

eligible family at Sec. 286.5. Individuals who do not meet the criteria

at Sec. 286.5 may not receive TANF assistance paid with Tribal Family

Assistance Grant funds.

Construction and Purchase of Facilities

The Comptroller General of the United States has prohibited the use

of Federal funds for the construction or purchase of facilities or

buildings unless there is explicit statutory authority permitting such

use. Since the statute is silent on this, a Tribe may not use its TFAG

for construction or for the purchase of facilities or buildings.

Program Income

We have received inquiries as to whether TANF funds may be used to

generate program income. An example of program income is the income a

Tribe earns if it sells a product (e.g., a software program) developed,

in whole or mostly with TANF funds.

Tribes may generate program income to defray costs of the program.

Under 45 CFR 92.25, there are several options for how this program

income may be treated. To give Tribes flexibility in the use of TFAGs,

we are proposing to permit Tribes to add to their Tribal Family

Assistance Grant program income that has been earned by the Tribe.

Tribes must use such program

[[Page 39372]]

income for the purposes of the TANF program and for allowable TANF

services, activities and assistance. We will not require Tribes to

report on the amount of program income earned, but they must keep on

file financial records on program income earned and the purposes for

which it is used in the event of an audit or review.

Is there a limit on the percentage of a Tribal Family Assistance

Grant that can be used for administrative costs? Sec. 286.40

Under section 404(b) of the Act no more than 15 percent of a

State's SFAG may be spent on administrative expenditures. Expenditures

by a State for information technology and computerization needed for

tracking or monitoring cases covered by the TANF program are excluded

from the 15 percent limit. Because section 404(b) is not applicable to

Tribal TANF programs, we asked in our discussions with Tribes and

States, what limit, if any, should be placed on administrative

expenditures under the Tribal TANF program. Many respondents indicated

that a limit on administrative expenditures should not be applied to

Tribal TANF programs. Other respondents indicated that Tribes do not

have the same level of experience in operating this kind of welfare

program as do States, and, that if a limit had to be set, any limit

should be higher than the State TANF limit. Respondents also cited both

the additional start-up expenses that Tribes will experience and the

new requirements of the TANF program as a reason to set a higher limit

for Tribal TANF programs.

In our deliberations on whether to propose a limit on

administrative expenditures, we considered various options. One was to

follow the statute and be silent on the issue. The second option was to

apply the same limit placed on States. The third option was to set a

limit that recognizes the special needs of Tribes mentioned above. In

whatever option we choose, we felt it necessary to ensure that most of

a Tribal TANF grant would be available to carry out the primary

objective of the TANF statute.

We understand the reason why many of the respondents said that an

administrative expenditure limit should not be placed on Tribal TANF

programs. However, not placing a limit could result in depriving needy

families of the program benefits Congress intended families to receive.

We believe setting a limit on administrative expenditures is more

consistent with the purposes of the Act. Placing a limit on

administrative expenditures guarantees that the major portion of a

Tribal TANF grant goes to assisting needy families.

We will respond to the fact that Tribes do not have the same level

of experience operating welfare programs as do the States. In addition,

we want to recognize that Tribes will need to expend a larger portion

of their grant funds on administration than States because they cannot

take advantage of economies of scale. Therefore, at Sec. 286.40 we

propose to limit Tribal TANF administrative expenditures during any

grant period to 20 percent of a Tribal TANF grant. Thus, each Tribal

TANF grantee will be required to expend at least 80 percent of its

grant on direct program services (and technology) during the grant

period.

Because expenditures for information technology and computerization

needed for tracking and monitoring of cases under the TANF program by

the States will be excluded from the administrative expenditure limit,

these same expenditures by Tribes will also be excluded from the Tribal

limit.

If a Tribe's administrative costs exceed the 20 percent limit, the

penalty for misuse of funds (refer to Sec. 286.170) will apply. The

penalty will be the amount spent on administrative costs in excess of

20 percent. We will take an additional penalty in the amount of 5

percent of the adjusted TFAG if we find that a Tribe has intentionally

exceeded the 20 percent limit.

Tribes must allocate costs to proper programs. Under the Federal

Appropriations Law, grantees must use funds in accordance with the

purpose for which they were appropriated. In addition, as stated

previously, the grants administration regulations at part 92, and OMB

Circular A-87, ``Cost Principles for State, Local, and Indian Tribal

Governments'', apply to the TANF program. OMB Circular A-87, in

particular, establishes the procedures and rules applicable to the

allocation of costs among programs and the allowability of costs under

Federal grant programs such as TANF.

What types of costs are subject to the administrative cost limit on

Tribal Family Assistance Grants? (Sec. 286.45)

Of particular interest to our Tribal partners and other interested

parties will be the definition of the costs that are included as

administrative costs because of the proposed rule at Sec. 286.40 that

places a limit on administrative expenditures. In the development of

the NPRM for the State TANF program, we consulted with State and local

representatives and other parties and organizations on the extent to

which we should define administrative costs.

Just as with the State TANF program, we considered not proposing a

Federal definition. That option had appeal because: (1) It is

consistent with the philosophy of a block grant; (2) we took a similar

approach in some other policy areas (i.e., in not defining individual

work activities); (3) we support the idea that we should focus on

outcomes, rather than process; and (4) the same definition might not

work for each Tribe. Also, we were concerned we could exacerbate

consistency problems if we created a Federal definition. Because of the

wide variety of definitions in other related Federal programs, adoption

of a single national definition could create variances in operational

procedures within Tribal agencies and add to the complexities

administrators would face in operating these programs.

At the same time, we were hesitant to defer totally to Tribal

definitions. The philosophy underlying this provision is very

important; in the interest of protecting needy families and children,

it is critical that the substantial majority of Federal TANF funds go

towards helping needy families. If we did not provide some definition,

it would be impossible to ensure that the limit had meaning. Also, we

felt that it would be better to give general guidance to Tribes than to

get into disputes with individual Tribes about whether their

definitions represented a ``reasonable interpretation of the statute.''

We thought that it was very important that any definition be

flexible enough not to unnecessarily constrain Tribal choices on how

they deliver services. We believe a traditional definition of

administrative costs would be inappropriate because the TANF program is

unique, and we expect TANF to evolve into something significantly

different from its predecessors and from other welfare-related

programs. Specifically, we expect TANF to be a more service-oriented

program, with substantially more resources devoted to case management

and fewer distinctions between administrative activities and services

provided to recipients.

The definition we have proposed does not directly address case

management or eligibility determination. We understand that, especially

for Tribal programs, the same individuals may be performing both

activities. In such cases, to the extent that a worker's activities are

essentially administrative in nature (e.g., traditional eligibility

determinations or verifications), the portion of the worker's time

spent on such activities can be treated as administrative costs.

However, to the extent that a worker's time is spent on case-management

functions or delivering services to clients, that

[[Page 39373]]

portion of the worker's time can be charged as program costs.

We believe that the definition we have proposed will not create a

significant new administrative burden on Tribes. We believe that it is

flexible enough to facilitate effective case management, accommodate

evolving TANF program designs, and support innovation and diversity

among Tribal TANF programs. It also has the significant advantage of

being closely related to the definition in effect under the Job

Training Partnership Act (JTPA). Thus, it should facilitate the

coordination of Welfare-to-Work and TANF activities and support the

transition of hard-to-employ TANF recipients into the work force.

We have not included specific language in the proposed rule about

treatment of costs incurred by subgrantees, contractors, community

service providers, and other third parties. Neither the statute nor the

proposed regulations make any provision for special treatment of such

costs. Thus, the expectation is that administrative costs incurred by

these entities would be part of the total administrative cost cap. In

other words, it is irrelevant whether costs are incurred by the TANF

agency directly or by other parties.

We realize this policy may create additional administrative burdens

for the Tribe and do not want to unnecessarily divert resources to

administrative activities. At the same time, we do not want to distort

agency incentives to contract for administrative or program services.

In seeking possible solutions for this problem, we looked at the JTPA

approach (which allows expenditures on services that are available

``off-the-shelf'' to be treated entirely as program costs), but did not

think that it provided an adequate solution. We thought that too few of

the service contracts under TANF would qualify for simplified treatment

on that basis.

We welcome comments on how to deal with this latter dilemma, as

well as comments on our overall approach to the definition of

administrative costs.

Must Tribes obligate all Tribal Family Assistance Grant funds by

the end of the fiscal year in which they are awarded? (Sec. 286.50)

Section 404(e) of the statute does not apply to Tribal TANF or NEW

programs. Section 404(e) allows States to reserve amounts paid to the

State for any fiscal year for the purpose of providing TANF assistance

without fiscal year limitation. Section 412 is silent on an obligation

period for Tribal TANF or NEW program funds. However, Federal

Appropriations Law (at 31 U.S.C. 1301(c)) states ``An appropriation in

a regular, annual appropriation law may be construed to be permanent or

available continuously only if the appropriation-- (1) is for rivers

and harbors, lighthouses, public buildings, or the pay of the Navy and

Marine Corps; or (2) expressly provides that it is available after the

fiscal year covered by the law in which it appears.'' This statutory

provision precludes us granting to Tribes the authority to reserve

TFAGs grants paid to them without fiscal year limitation. Therefore,

Tribes must obligate their TFAGs by the end of the fiscal year in which

they are awarded. In accordance with the authority granted to us by 45

CFR 92.23(b), we propose to extend to 12 months the period of time when

unliquidated obligations must be liquidated by Tribes.

Subpart C--Tribal TANF Plan Content and Processing

How can a Tribe apply to administer a Tribal TANF program?

(Sec. 286.55)

Any eligible Indian tribe or Alaska Native regional non-profit

corporation or intertribal consortium that wishes to administer a

Tribal TANF program must submit a three-year Tribal Family Assistance

Plan to the Secretary of the Department of Health and Human Services.

This requirement extends to those Tribes that are operating a Pub. L.

102-477 employment and training program (please refer to Sec. 286.140

for information on this).

Who submits a Tribal Family Assistance Plan? (Sec. 286.60)

The chief executive officer of the Tribe, eligible Alaska Tribal

entity, or Tribal consortium must sign and submit the TFAP. This is

generally the Tribal Chairperson. The TFAP must also be accompanied by

a Tribal resolution indicating Tribal Council support for the proposed

Tribal TANF program. In the case of a Tribal consortium, the TFAP must

be accompanied by Tribal resolutions from all members of the

consortium. These Tribal Council resolutions must demonstrate each

individual Tribe's support of the consortium, the delegation of

decision-making authority to the consortium's governing board, and the

Tribe's recognition that matters involving relationships between the

Tribal TANF consortia and the State and/or Federal government on TANF

matters are the express responsibility of the consortium's governing

board.

We recognize that changes in the leadership of a Tribe or some

other event may cause a participating Tribe to rethink its

participation in the consortium and/or in Tribal TANF. If, for example,

a subsequently elected Council decided to terminate participation in

the consortium and in TANF, that decision might create a need for time

to reintegrate a Tribal program or a part of the Tribal program into

the State program. Thus, we propose at Sec. 286.60(c) that, when one of

the participating Tribes in a consortium wishes to withdraw from the

consortium for purposes of either withdrawing from Tribal TANF

altogether or to operate its own Tribal TANF program, that the Tribe

needs to notify both the consortium and us of this fact at least 120

days prior to the planned effective date. This notification time frame

is especially applicable if the Tribe was withdrawing from Tribal TANF

altogether and the Tribe's withdrawal will cause a change to the

service area or population of the consortium.

A Tribe withdrawing from a consortium for purposes of operating its

own program must, in addition to the notification specified in the

previous paragraph, submit its own Tribal TANF plan that meets the plan

requirements at Sec. 286.65 and the time frames specified at

Sec. 286.140.

What must be included in the Tribal Family Assistance Plan?

(Sec. 286.65)

The TANF program concerns work, responsibility, and self-

sufficiency for families. To that end, section 412(b) of the Act lists

six features of a Tribal Family Assistance Plan.

Approach to Providing Welfare-Related Services

The TFAP must outline the Tribe's strategy for providing welfare-

related services. The Act does not specify what this outline must

entail; however, we believe it is important that it includes

information necessary for anyone to understand what services will be

provided and to whom the services will be provided.

To that end, we propose that the Tribal Family Assistance Plan must

include, but is not limited to, information such as general eligibility

criteria and special populations to be served, a description of the

assistance and services to be offered, and the means by which they will

be offered using TANF funds.

The description of general eligibility requirements consists of the

Tribe's definition of ``eligible family,'' including income and

resource limits that make a family ``needy,'' and the Tribe's

definition of ``Tribal member family'' or ``Indian family''. The

description of the services and

[[Page 39374]]

assistance to be provided includes whether the Tribe will provide cash

assistance, and what other assistance and services will be provided.

The PRWORA discusses a variety of special populations who can

benefit from a TANF Program. While the statute does not require a

Tribal TANF program to provide specific or targeted services to these

populations, if the Tribe opts to do so, it must include a discussion

of those services in the TFAP. For example, teen parents without a

secondary degree are a special target population for State TANF-related

services. If a Tribe wants to provide specific services to teen

parents, it needs to describe the specific services in the plan.

We are proposing to require information in the Tribal TANF plan

regarding whether services will be provided to families who are

transitioning off TANF assistance due to employment. Section 411(a)(5)

requires Tribes to report, on a quarterly basis, the total amount of

TANF funds expended to provide transitional services to families that

have ceased to receive assistance because of employment, along with a

description of such services. Therefore, we believe it prudent for ACF

and the public to know whether the Tribe's TANF program provides

transitional services and, if so, what types of services will be

offered.

Questions have been raised about the potential dual eligibility of

Indians for State and Tribal TANF programs. It is the position of the

Department that section 417 of the Act precludes our regulating the

conduct of States in this area. Nonetheless, we note that the issue of

the dual eligibility of Indians raises constitutional concerns about

the denial of state citizenship rights under the fourteenth amendment.

We also note that, under section 408(c) of the Act, State TANF programs

are subject to title VI of the Civil Rights Act of 1964 and certain

other Federal non-discrimination provisions.

As TANF focuses on outcomes, we believe a TFAP needs to identify

the Tribe's goals for its TANF program and indicate how it will measure

progress towards those goals. We believe this will help focus efforts

on achieving positive outcomes for families. Progress can be measured

longitudinally over time or over the short term, but should be clearly

targeted on those being served by the Tribal TANF program. For example:

The incidence of teen pregnancy will be reduced by approximately X %

over the three-year period of the TFAP, or educational achievement by

teen parents receiving TANF assistance will experience an overall gain

of at least one grade level over the three year-period of the TFAP.

Sections 402(a)(4)(A) and (B) of the Act require States to certify

that local governments and private sector organizations have been

consulted regarding the State TANF plan and design of welfare services

and have had at least 45 days to submit comments on the plan. We

propose similar requirements as part of the Tribal TANF plan process.

We propose a public comment period as a means of soliciting input into

the design of the Tribal TANF program and providing a means through

which Tribes may design a program which truly meets the community's

needs. This public comment period should afford affected parties the

opportunity to review and comment on a Tribe's TFAP. While the Act does

not specifically require Tribes to conduct a public comment period

prior to submission of the TFAP, previous experience demonstrates the

value of such a comment period towards tailoring the program to meet

the individual circumstances of those who will be affected by the

program and its far-reaching impact on Tribal children and families.

Furthermore, we discern Congressional recognition in the Act of the

value of public comment on the content of TANF plans and the design of

welfare services. We believe that this is equally applicable to Tribal

TANF plans.

Finally, it is important that individuals who apply for and/or

receive TANF are afforded due process should the Tribe take an adverse

action against them. Therefore, the TFAP must include an assurance that

the Tribe has developed a specific TANF dispute resolution process.

This process must be used when individuals or families dispute the

Tribe's decision to deny, reduce, suspend, sanction or terminate

assistance.

Child Support Enforcement

Just as the enactment of PRWORA created opportunities for Tribes to

operate their own TANF programs, it provided new opportunities to

ensure that Tribal families receive child support from responsible

parents. The relationship between TANF and child support enforcement

programs is important, regardless of whether the State or Tribe

operates one or both of these programs. In addition, the relationship

between self-sufficiency and child support becomes extremely important

for TANF families because of the time-limited nature of TANF

assistance.

Under PRWORA, in order to receive a TANF block grant, a State must

certify that it operates a child support enforcement program meeting

requirements under title IV-D of the Act. A State child support

enforcement program must provide the following services to TANF and

former TANF recipients and to others who apply for services: Location

of parents, establishment of paternity and support orders and

enforcement of orders. In order to receive TANF assistance from a

State, a TANF applicant or recipient must assign any rights to support

to the State and cooperate with the child support enforcement program

in establishing paternity and securing support. Collections of assigned

support are used to reduce State and Federal costs of the TANF program.

PRWORA does not place similar requirements on Tribes or families

receiving Tribal TANF assistance. Tribes are not required to certify

that they are operating a child support enforcement program as a

condition of receiving a Tribal TANF grant. Nor is there any

requirement that Tribal TANF applicants and recipients assign all

rights to support as a condition of receipt of Tribal TANF. There are,

therefore, no penalties to the Tribe for failing to operate a child

support enforcement program nor to a Tribal TANF recipient for failing

to cooperate with child support efforts. However, several Tribes with

approved Tribal TANF plans are requiring Tribal TANF recipients to

cooperate with child support efforts.

Prior to enactment of PRWORA, title IV-D of the Act placed

responsibility for the delivery of child support enforcement services

with the States. Consequently, States have attempted to provide child

support services on Tribal lands but have generally been constrained in

their abilities to establish paternity, or establish or enforce child

support orders with respect to noncustodial parents who reside within

the jurisdiction of a Tribe because of sovereignty and jurisdictional

issues. Therefore, arrangements for child support services on Tribal

lands may involve a specific agreement to recognize State or county

jurisdiction on Tribal lands for the narrow purpose of child support

enforcement. In such agreements, Tribes agree to allow the child

support agency to extend State program procedures to the reservation.

Alternatively, some States and Tribes have entered into cooperative

agreements under which a Tribal entity provides child support services

on Tribal lands and receives funding from the State.

Under PRWORA, requirements for State/Tribal cooperative agreements,

as

[[Page 39375]]

well as direct Federal funding of Tribes for operating child support

enforcement programs, were addressed for the first time in title IV-D

of the Act. Section 5546 of the Balanced Budget Act of 1997 made

technical amendments to the cooperative agreements language in section

454(33) of the Act and to direct funding of Tribal child support

enforcement programs under section 455(f) of the Act.

Issues relating to responsibilities for providing child support

enforcement services for Tribal TANF assistance cases and distribution

of support collections in such cases have already been raised in

several States and Tribes must work together to determine how Tribal

TANF and State child support programs will work best for Tribal

families. More than ever before, this collaboration is critical.

Since child support is a critical component of self-sufficiency for

many single parent families, Tribes need to determine whether they want

to condition a family's eligibility for Tribal TANF assistance on

cooperation with the State child support enforcement program. If the

Tribe will so condition eligibility, the TFAP should so specify.

Tribes that have entered into, or will enter into, cooperative

agreements with their States on child support matters have decided that

child support is a critical issue for families. Likewise, Tribes that

will decide, after regulations have been issued, to operate their own

child support enforcement programs know the importance of child

support. We invite comments from readers as to whether Tribes should be

required to condition Tribal TANF eligibility on cooperation with child

support enforcement efforts if they either operate their own child

support enforcement programs or have cooperative agreements with their

States.

Provision of Services

As required by section 412(b)(1)(B), the TFAP must indicate whether

the welfare-related services provided under this plan will be provided

by the Indian tribe or through agreements, contracts or compacts with

inter-Tribal consortia, States, or other entities. The Tribe determines

which Tribal agency will have the lead responsibility for the overall

administration of the Tribal TANF program. The designated lead agency

plans, directs and operates the Tribal TANF Program on behalf of the

Tribe. While it has the flexibility to contract many portions of the

Tribal TANF program with public and/or private entities, the lead

agency must maintain overall administrative control of the program. The

lead agency is required to administer the Tribal TANF plans, submit the

Tribal TANF Family Assistance Plan, coordinate Tribal TANF services

with other Tribal and State programs, and collect and submit required

data. Although not required by statute, we are proposing at

Sec. 286.65(b) to require Tribes to identify the lead agency in the

TFAP because of its importance in the overall administration of and

responsibility for the Tribal TANF program. The plan must also include

a description of the administrative structure for supervision of the

Tribal TANF program, including the designated unit responsible for the

program and its location within the Tribal government.

For lead agencies that wish to enter into agreements or contracts

with other entities, the TFAP needs to specify how the welfare-related

services will be provided, e.g., through sub-contracts. In the instance

of Tribal consortia, the lead agency fulfills the same responsibility

as the designated unit discussed above.

Population/Service Area

Section 412(b)(1)(C) requires that a TFAP identify the population

and service area or areas to be served by the plan. Yet the statute

defines neither of these terms.

In our consultation with Tribes on how service area and population

should be defined, we heard from Tribes that they should be given

flexibility to define their own Tribal TANF service area and

population. We have also heard that, at least in the case of Oklahoma,

we might expect disagreements between Tribes to arise if service area

parameters were not established for Tribes in that State. This concern

is due to the fact that none of the Tribes in Oklahoma, except for one,

have reservations. Our intent in this proposed rule is to balance

Tribal flexibility with the need to afford consideration to Tribes who

disagree with another Tribe's proposed service area or population.

Therefore, with regards to service population, Tribes have the

flexibility to decide whether their TFAP will serve all Indian families

within the service area or solely the enrolled members of the Tribe. A

Tribe would convey its decision in the TFAP. If the TFAP provides for

services to all Indian families within the service area, then the Tribe

agrees to provide such services. If the TFAP provides for services

solely to families of enrolled members of the Tribe, then the Tribe

does not agree to provide services to the families of non-enrolled

Indians residing in the service area of the Tribe.

Regardless of the decision reached by the Tribe in this matter, the

responsibility for TANF services to non-Indian families in the Tribal

service area resides with the State TANF program, unless the Tribe has

negotiated an agreement with the State to allow the Tribe to serve non-

Indian families within the Tribal service area. If such an agreement

has been reached, the Tribe must include a copy of the agreement or

other such documentation of State concurrence, such as a letter from

the State, with the TFAP.

There may be various reasons why both a Tribe and the State would

want the Tribe to provide TANF assistance to all needy families in its

service area (for example, there are very few non-Indian families in

the service area). We believe this flexibility to allow a Tribe to

include non-Indians in its service population, with State agreement,

benefits both Tribes and States.

In those instances where non-enrolled Indians or non-Indians are

served by the Tribal TANF Program, the Tribal TANF program is the final

authority on the services to be provided. The non-enrolled member's

Tribe or the State(s) cannot decide on the nature of the services to be

provided by the Tribal TANF program.

With regards to service area, a Tribal TANF service area could

include the Tribe's reservation or just portions of the reservation. It

could also include ``near reservation areas'' meeting BIA requirements

as outlined at 25 CFR 20.1(r). For Tribes without land bases, the

service area could include all or part of the Tribe's service area as

defined by BIA.

In the case of claimed service areas extending beyond the Tribe's

``near reservation area'' or BIA-defined service area, we are concerned

about possible complications resulting from misunderstandings on the

scope of the service area. Therefore, if a Tribe claims an alternative

service area, the TFAP should clearly define the demographic extent of

such areas and include a memorandum of understanding with the

appropriate State(s) agency or Tribal government reflecting State(s) or

Tribal agreement to the servicing of the Tribal TANF service population

by the Tribal TANF Program in the extended area.

Likewise, for Tribes in Oklahoma, if the Tribe defines its service

area as other than just its ``tribal jurisdiction statistical area''

(TJSA), the Tribe must include an agreement with the appropriate Tribal

government reflecting that Tribe's agreement to the service area. TJSAs

are areas delineated for each federally-recognized Tribe in

[[Page 39376]]

Oklahoma without a reservation by the Census Bureau.

Duplicative Assistance

Section 412(b)(1)(D) indicates that an individual receiving

assistance from a Tribal TANF program may not receive assistance from

another State or Tribal TANF program for the same purpose. The TFAP

must contain an assurance that families receiving assistance under the

Tribal TANF plan will not receive duplicative services under any other

State or Tribal TANF plan. The Tribe must develop a process to ensure

that duplication does not occur and must include a description of that

process in the TFAP. We believe any process the Tribe develops should

include a mutual information exchange between the Tribe and State(s)

and other nearby Tribal TANF grantees.

Employment Opportunities

Section 412(b)(1)(E) requires that Tribes identify in their TFAPs

the employment opportunities in and near the service area or areas of

the Indian tribe. Section 286.65(g) of the proposed rule reiterates

this requirement. The employment opportunities within and near the

Tribal TANF service area will greatly impact the service population's

ability to obtain and maintain employment. In designing the Tribal TANF

program, Tribes should consider current unemployment rates, public and

private sector employment opportunities, and education and training

resources. These factors should provide a basis for the Tribe's

proposed work activities, work participation requirements, penalties

against individuals, and time limits.

Section 412(b)(1)(D) also requires that TFAPs identify the manner

in which the Indian tribe will cooperate and participate in enhancing

employment opportunities for TANF recipients consistent with any

applicable State standards. At Sec. 286.65(g)(2) we reiterate the

statutory requirement that the TFAPs describe how the Tribe will

enhance employment opportunities for their TANF recipients. Tribes

should consider the best means by which they can work with other Tribal

or State agencies, and other private and public sector entities on or

near the reservation, to enhance employment opportunities. These

efforts may be through memoranda of understanding or other public-

private partnerships. These activities should also be consistent with

any State employment standards (for example, a State minimum wage

requirement).

Fiscal Accountability

As required by section 412(b)(1)(F), the TFAP must provide an

assurance that the Tribe applies the fiscal accountability provisions

of section 5(f)(1) of the Indian Self-Determination and Education

Assistance Act (25 U.S.C. 450c(f)(1)), relating to the submission of a

single-agency audit report required by chapter 75 of title 31, United

States Code.

Establishing Minimum Work Participation Requirements, Time Limits for

the Receipt of Welfare-Related Services and Penalties Against

Individuals

PRWORA promotes self-sufficiency and independence while holding

individuals to a higher standard of personal responsibility for the

support of their children than prior law. The legislation expands the

concept of mutual responsibility, introduced under the Family Support

Act of 1988, that income assistance to families with able-bodied adults

should be transitional and conditioned upon their efforts to become

self-sufficient. These goals are reflected in the State TANF provisions

requiring individuals to participate in work activities, limiting the

number of months that assistance will be provided, and penalizing

individuals for failure to participate in work activities as required.

Minimum work participation requirements, time limits for the

receipt of assistance and penalties against individuals who refuse to

participate in work activities as required are explicitly stated for

the State TANF programs in the statute. For the Tribal TANF programs,

these three components are not specified. Instead, section 412(c) of

the Act provides that for each Tribal TANF grantee Tribal TANF minimum

work participation requirements, time limits for the receipt of

welfare-related services, and penalties against individuals are to be

established by the Secretary with the participation of the Tribes.

The statute further specifies that Tribal TANF work participation

requirements and time limits are to be consistent with the purposes of

TANF and consistent with the economic conditions and resources

available to each Tribe. In addition, penalties against individuals are

to be similar to those found in section 407(e) of the statute. However,

the statute does not specify a process or procedure to be used to

establish minimum work participation requirements, appropriate time

limits for the receipt of welfare-related services, and penalties

against individuals for each Tribal TANF grantee.

During discussions with Tribes and States as to what process should

be used to establish these requirements for each Tribal TANF grantee,

many suggested that we use the proposal a Tribe includes in its Tribal

TANF plan as the basis for negotiating and establishing these

requirements. We agree that it would be prudent to establish these

requirements as part of the TANF plan process so that Tribes will know

in advance of accepting the TANF program grant the requirements to

which they are committing and for which they will be held accountable.

Thus, we propose that each Tribe specify its proposal for minimum

work participation requirements, time limits for the receipt of

welfare-related services, penalties against individuals who refuse to

participate in work activities as required, and related policies in its

Tribal TANF plan. In addition, the Tribe must include a rationale for

its proposals and related policies in the plan. The rationale should

address how the Tribe's proposal is consistent with the purposes of

TANF and is consistent with the economic conditions and resources

available to the Tribe. In addition, for its proposal for penalties

against individuals, the rationale should indicate how they are similar

to the requirements applicable to States as specified at section 407(e)

of the Act.

Examples of the information that we would expect to be included to

illustrate the Tribe's proposal include, but are not limited to:

Poverty, unemployment, jobless and job surplus rates; education levels

of adults in the service area; availability of and/or accessibility to

resources (educational facilities, transportation) to help families

become employable and find employment; and employment opportunities on

and near the service area.

We propose to review and evaluate a Tribe's proposal for these

components as part of the review and approval process for the entire

plan. Additional information or discussion about a Tribe's proposal may

be necessary before we approve the plan.

Minimum work participation requirements are further detailed at

Secs. 286.70-105 of the proposed regulation. The proposed rules at

Secs. 286.110-120 contain additional information on time limits.

Information on penalties against individuals is outlined at

Secs. 286.125-135.

What information on minimum work participation requirements must a

Tribe include in its Tribal Family Assistance Plan? (Sec. 286.70)

[[Page 39377]]

As Tribes focus on assisting adults in obtaining work and earning

paychecks quickly, parents receiving assistance from a Tribal TANF

program are also expected to meet new and more stringent work

requirements.

Section 401(a)(2) of the Act states that one of the purposes of

TANF is to promote job preparation and work to help needy families

become self-sufficient. The statute, at section 407, provides specific

individual work participation requirements and participation rate goals

to ensure this purpose is carried out under State TANF programs. For

State TANF programs, work participation requirements encompass (1) the

proportion of TANF families participating in the activities

(participation rate targets); (2) the activity level to be required of

families, e.g., average number of hours of work per week; (3) the

activities that families must be engaged in, e.g., subsidized

employment, vocational training, etc.; and (4) exemptions, limitations

and special rules related to work requirements.

In providing flexibility in establishing work participation

requirements, Congress recognized that Tribal economies and resources

will vary and affect a Tribal TANF family's and program's ability to

meet the work requirements imposed upon State TANF recipients and State

TANF programs. Since the statutory language requires that the work

requirements take into consideration the economic conditions and

resources available to each Tribe, we cannot establish across-the board

minimum work requirements that would be applied to all Tribes.

Additionally, written and verbal feedback from Tribes indicated

overwhelming support for negotiating on a case-by-case basis with each

individual Tribe (as opposed to applying an across-the-board minimum)

that will reflect the differences among Tribal economies and resources.

In order to have the information needed to establish minimum work

participation requirements for each Tribal grantee, we propose at

Sec. 286.70 that each Tribe specify in its TFAP: (1) The targeted

participation rates for each of the fiscal years covered by the plan;

(2) the minimum number of hours families will be required to

participate in work activities for each of the fiscal years covered by

the plan; (3) the work activities that count towards the work

requirement; (4) any limitations and special rules related to work

requirements; and (5) if the targeted rates, the minimum number of

required hours, or the work activities are different from those

required of State TANF programs, the rationale for the Tribe's proposed

work requirements, including how they are consistent with the purposes

of TANF and with the economic conditions and resources available to the

Tribe.

Considering that many Tribal families reside in remote areas and

lack of adequate transportation is a major concern, the proposed

regulation at Sec. 286.70(b)(2)(i) allows a Tribe to include reasonable

transportation time to and from the activity site in determining the

number of hours of participation. Counting transportation time may be

indicative of the economic conditions and resources available to a

Tribe, and transportation is an economic resource.

Therefore, if a Tribe proposes to count reasonable transportation

time towards the minimum number of hours individuals participate, the

Tribe's TFAP will need to so specify. The Tribe's definition of

``reasonable'' would also have to be included in the plan. However, we

would also expect Tribes proposing to include reasonable transportation

time in determining the number of hours of work participation, to

demonstrate that their overall proposal for number of hours is

consistent with the purposes of TANF.

As discussed above, the Tribe's rationale for its proposed work

participation requirements could include, but is not limited to:

Poverty, unemployment, jobless and job surplus rates; education levels

of adults in the service area; availability and/or accessibility to

resources (educational facilities, transportation) to help families

become employable and find employment; and employment opportunities on

and near the service area.

We are proposing not to require an explanation for any element of a

Tribe's minimum work participation requirements proposal if a Tribe

chooses to adopt the requirements, the limitations or special rules

related to work requirements applicable to the State TANF programs.

There would be no need for us to negotiate on this element; we would,

in these cases, defer to the Tribe's decision to target the

requirements/limitations/special rules established for States. However,

as noted above, any Tribe proposing to include reasonable

transportation time as part of its proposal on minimum hours of

participation will have to include a rationale for this decision.

What additional information on minimum work participation rates

must be included in a Tribal Family Assistance Plan? (Sec. 286.75)

We recognize that the statute requires two separate participation

rate targets that State TANF programs must meet; one for all families

and a separate one for two-parent families. However, the statute

pertaining to Tribal TANF programs does not stipulate that there be two

separate Tribal TANF participation rates to meet; rather, we interpret

the flexibility in negotiating work requirements with Tribes pursuant

to section 412(c) of the statute to include whether there should be one

or more participation rates. We propose at Sec. 286.70(c)(1) that it

will be at the Tribe's option to propose one rate for all families; a

rate for all families and two-parent families (the two rates States are

subject to); or two separate rates for one-parent families and two-

parent families. A Tribe that proposes more than one rate would be held

accountable for achieving both rates; failing either could result in

the participation rate penalty. A Tribe that proposed only the overall

rate would be held accountable for only one. We invite the reader's

comments to these proposals.

We have decided not to reiterate in this proposed rule the work

participation rates for State TANF programs; Tribes should refer to

section 407(a) of the Act for this information. Tribes can use these

rates as a guide in determining their own proposal for participation

rate targets. The proposed rule at Sec. 286.75(a) requires a rationale

from the Tribe if it proposes work participation rates other than those

required of State TANF programs.

The proposed regulation at Sec. 286.75(b) suggests, but does not

require, that Tribes propose rates that increase over time. While the

Act does not specify that rates increase over time, we believe that,

consistent with the intent of the statute, increasing rates reflect the

need to ensure that increasing numbers of families are progressively

engaged in necessary activities before they reach their time limit.

We recognize that many Tribes may not have experience in operating

a welfare program that emphasizes placing a significant portion of the

caseload into work activities. Consequently, establishing realistic

participation rates may initially be a Tribe's ``best guess.''

Additionally, we recognize that resources available to Tribes as well

as Tribal economies may change significantly from year to year. We are,

therefore, proposing at Sec. 286.75(c) to allow Tribes the opportunity

to renegotiate rates in advance of each year's target.

How will we calculate the work participation rates? (Sec. 286.80)

[[Page 39378]]

Similar to the calculations for State participation rates, the

proposed regulations at Sec. 286.80 indicate that the yearly

participation rate will be the average of the monthly participation

rates. Monthly rates, for each rate approved in the Tribe's TANF plan,

will be determined by a ratio with the numerator and denominator

defined as follows:

Numerator: The number of families receiving assistance (including

minor heads-of-household) engaged in work activities as defined in the

Tribe's approved TANF plan for the required number of hours.

Denominator: The number of families with an adult or minor head-of-

household receiving TANF assistance from the Tribe.

This calculation will be appropriately modified depending upon

whether the Tribe chooses to target (1) an all-family rate, (2) an all-

family rate and a two-parent rate, or (3) a one-parent rate and a two-

parent rate.

We have also made it clear in this proposed rule that a Tribe may

count as a month of participation any partial months of assistance, if

an adult in the family is engaged in work activities for the minimum

average number of hours in each full week that the family receives

assistance in that month. These families are already included in the

denominator since they are recipients of assistance in that month.

Exclusions From Work Participation Rate Calculations

The PRWORA does not specify exclusions from the participation rate

calculations for Tribal TANF programs. However, consistent with the

flexibility provided State TANF programs, we are proposing at

Sec. 286.80(c)(2) to allow Tribes to exclude from the total number of

TANF families (the denominator): (1) those families who have a child

under the age of one if the Tribe opts to exempt these families from

participating in activities (and so specified in the Tribe's TANF

plan); and (2) on a limited basis, those families who are sanctioned

for non-compliance.

The statute at section 407(b)(1)(B)(i)(II) precludes States from

excluding families sanctioned for non-compliance with the work

participation requirements from the denominator if the families have

been sanctioned for more than three months out of a twelve-month

period. We considered whether to apply the same restriction to Tribal

TANF work participation rate calculations. We were concerned that if we

did not apply the same restriction and allowed Tribes to exclude

sanctioned families indefinitely, then we would be inadvertently

encouraging Tribes to discontinue their efforts in bringing those

families into compliance and working towards self-sufficiency.

Therefore, we are proposing at Sec. 286.80(c)(2)(A) that families

sanctioned for non-compliance with the work participation requirements

are to be excluded from the denominator only if they have not been

sanctioned for more than three months (whether or not consecutively)

out of the last twelve months.

The proposed regulations do not provide for any other exclusions in

calculating the Tribal TANF participation rate. However, in light of

the Secretary's authority to negotiate work participation requirements

that reflect economic conditions and resources available to a Tribe, we

welcome comments about whether there should be additional exclusions.

We considered whether we should negotiate exclusions from the work

participation rate calculations on a case-by-case basis with each

individual Tribe. We rejected this approach because we believe a

uniform method for calculating Tribal TANF work participation rates

will help ensure that penalties are applied equitably across Tribes

administering a TANF program. Additionally, since the rates themselves

will be negotiated with each individual Tribe, such negotiations will

already take into account unique circumstances which may make it

difficult for certain families to participate in work activities.

However, we welcome comments about whether exclusions should be

negotiated on a case-by-case basis.

Two-Parent Families

Section 407(b)(2) of the Act, as amended by the Balanced Budget Act

of 1997, requires a State to not consider as a two-parent family a

family in which one of the parents is disabled for purposes of the work

participation rate. Thus, a two-parent family in which one of the

parents is disabled will be treated as a single-parent family for

purposes of calculating the work participation rate. We propose at

Sec. 286.80(e) to make this provision applicable to Tribal TANF

programs as well.

How many hours per week must an adult or minor head-of-household

participate in work-related activities to count in the numerator of the

work participation rate? (Sec. 286.85)

For Tribal TANF programs the statute does not specify the minimum

number of hours individuals must participate in order to be counted for

participation rate calculations. The Act gives us the authority to

negotiate these requirements with Tribes. The draft regulation at

Sec. 286.85 proposes that the minimum average number of hours per week

for State TANF families presumptuously applies to Tribal TANF families

as well. However, unlike the State requirements, we propose to provide

Tribes the opportunity to rebut this presumption. Tribes will be

permitted to establish fewer minimally required hours for families if a

Tribe provides appropriate justification in its TANF plan. For example,

the availability and accessibility of resources may not enable Tribal

individuals to participate at the minimum number of hours per week

required of State TANF recipients.

What, if any, are the special rules concerning counting work for

single custodial parents, caretaker relatives and two-parent families?

(Sec. 286.90)

Section 407(c)(2)(B) of the Act enables States to consider as

engaged in work a custodial parent or caretaker relative with a child

under age 6, who is the only parent or caretaker relative in the

family, if s(he) participates for an average of 20 hours per week. We

propose to extend this provision to Tribal TANF programs.

The Balanced Budget Act of 1997 amended section 407(c)(1)(B)(i) of

the Act to allow both parents in a two-parent family to share the

number of hours required to be considered as engaged in work for

purposes of meeting State TANF work requirements. The proposed

regulation at Sec. 286.90 indicates that Tribal TANF programs will also

be able to apply this policy.

What activities count towards the work participation rate?

(Sec. 286.95)

PRWORA does not specify the work activities required of Tribal TANF

recipients but instead authorizes the establishment of minimum work

participation requirements, which include work activities, for each

Tribal grantee. The overwhelming feedback we received in discussions

with Tribes suggested that the work activities identified for States in

the statute be considered activities that count toward a Tribal TANF

participation rate with two caveats: (1) That they not be limited to

those activities; and (2) that they not be further defined in the

regulations. Therefore, at Sec. 286.95 we are listing the same

activities found at section 407(b) of the Act. In addition, we are

providing Tribes further flexibility to identify additional activities

that they would consider acceptable and necessary in helping families

work towards self-sufficiency. For example, a Tribe may identify

subsistence activities or substance abuse treatment as activities the

Tribe believes necessary to help families achieve self-sufficiency.

[[Page 39379]]

Furthermore, since we are not defining the work activities in the

proposed regulations for States, but are instead asking States to

define them, we feel it is appropriate to afford Tribes the same

definition flexibility.

What limitations concerning vocational education, job search and

job readiness assistance exist with respect to the work participation

rate? (Sec. 286.100)

Comments we received recommended that Tribal TANF work activities

not be subject to the same restrictions on vocational training as are

placed on State TANF programs by statute (i.e., not be limited to 12

months). Because Tribal families may have minimal work skills and

experience, and Tribal work opportunities may be much more limited,

Tribes should have the flexibility to engage Tribal families in more

extensive training. Therefore, the proposed regulation at

Sec. 286.100(a) does not impose the same limitation that is imposed

upon States.

However, with respect to the job search/job readiness limitation

required of State TANF programs, we believe that Tribal TANF families

should also not simply be asked to job search or participate in job

readiness activities as their sole activity for lengthy periods of

time. Therefore, the proposed regulation at Sec. 286.100(b) is similar

to the provision found at section 407(c)(2)(A)(i) that limits to six

weeks in a fiscal year the length of time that a State can consider

participation in job search/job readiness in a fiscal year by any

individual to be considered engaged in work.

We are also proposing to afford Tribes the option afforded to

States that if the unemployment rate in a Tribal TANF service area is

at least 50 percent greater than the United States' total unemployment

rate for the fiscal year, then job search and job readiness assistance

can be counted for up to twelve weeks during that fiscal year.

However, unlike for State TANF programs, we are proposing at

Sec. 286.100(c) that if job search is conducted on an ancillary basis

as part of another activity, then time spent in job search activities

can count without limitation. We believe that as long as a family is

engaging in activities in addition to job searching, then including

hours spent in job search as part of their other activities is

consistent with the intent of the law, to help families reach their

goal of achieving self-sufficiency as soon as possible.

What safeguards are there to ensure that participants in Tribal

TANF work activities do not displace other workers? (Sec. 286.105)

Section 407(f)(2) of the Act contains two safeguards to ensure that

in helping welfare recipients become self-sufficient, we do not

jeopardize the economic well-being of non-TANF families through

displacement. First, a recipient may not be assigned to a vacant

position if the employer has placed other individuals on layoff from

the same or equivalent job. Second, an employer may not terminate the

employment of any regular employee in order to create a vacancy for the

employment of a TANF recipient. We believe these safeguards provide

important protection for all workers and need to be in place under both

Tribal and State TANF programs. Furthermore, we do not intend for these

provisions to preempt or supersede any Tribal laws providing greater

protection for employees.

Time Limits

In addition to promoting self-sufficiency and independence through

employment, PRWORA stresses the temporary nature of welfare and limits

the number of months that assistance can be provided with TANF funds.

PRWORA provides a 60-month (or less, at State option) time limit for

the receipt of TANF assistance under State TANF programs. The time

limit provisions include not only the length of time that assistance

can be provided, but also what months of assistance will count toward

the time limit and whether any categories of recipients are exempt from

the time limit rules. We have the authority, under section 412(c) of

the Act, to establish for each Tribe, with the participation of the

Tribe, appropriate time limits for receipt of welfare-related services.

Once established for each Tribe, the Tribe may not use its TFAG to

provide welfare-related services to a family that includes an adult

beyond the established time limit.

Section 412(c)(2) of the statute further provides that the time

limits established for Tribal TANF programs must be consistent with the

purposes of TANF and consistent with the economic conditions and

resources available to each Tribe. This principle has been echoed in

our on-going consultation with Tribes and Tribal organizations. The

comments we have received strongly suggests that the Tribal TANF time

limits should reflect the unique circumstances of each service area and

service population.

What information on time limits for the receipt of welfare-related

service must a Tribe include in its Tribal Family Assistance Plan?

(Sec. 286.110)

As part of its plan, a Tribe will propose a time limit for receipt

of Tribal TANF assistance that will apply to its service population and

provide a rationale for its proposal. By ``time limit,'' we mean the

maximum number of months (whether or not consecutive) that federally

funded assistance will be provided to a Tribal TANF family that

includes an adult. The proposed time limit should reflect the intent of

Congress that welfare should be temporary and not a way of life. The

proposal should also take into consideration those factors that may

impact on the length of time that a TANF family might be expected to

need in order to find employment and become self-sufficient.

To allow for maximum flexibility, we are not requiring that the

same time limit apply throughout the Tribal TANF service area. A Tribe

should have the option to decide that because economic conditions and

the availability and accessibility of services vary, it is appropriate

to establish different time limits by geographic area. For example, a

Tribe could choose to establish a shorter time limit for a part of the

service area that has many employment opportunities than for another

part of the service area with high unemployment.

If a Tribe proposes to use the 60-month time limit that applies

under State TANF programs, we would not expect a detailed explanation

of the rationale. However, if the Tribe proposes to provide assistance

for longer than 60 months, it should explain how that time limit was

determined. As mentioned earlier, examples of the information that we

would expect to be included to illustrate the Tribe's proposal include,

but are not limited to: Poverty, unemployment, jobless and job surplus

rates; education levels of adults in the service area; availability of

and/or accessibility to resources (educational facilities,

transportation) to help families become employable and find employment;

and employment opportunities on and near the service area.

As part of the negotiation process, we may ask for additional

information and/or further discussion before the proposed time limits

are approved. This would ensure that all factors are considered in

establishing appropriate time limits for a Tribal TANF program.

Determining if the Time Limit Has Been Exceeded

Section 408(a)(7) of the Act provides that States may not use

Federal funds to provide assistance to a family that includes an adult

who has received assistance for more than five years. In other words,

if a family does not include

[[Page 39380]]

any adults who are receiving assistance (i.e., only the children

receive assistance), then the time limit does not apply. We propose to

make the Tribal TANF requirements consistent with the State

requirements in this area. The intent of Congress is that families

should achieve self-sufficiency through employment. It does not seem

reasonable to apply the time limit requirement to cases where only

children are receiving assistance, and employment is not an option.

Section 408(a)(7)(B) of the Act requires States to disregard

certain months of assistance in determining if the 60-month time limit

has been exceeded. Specifically, State TANF programs do not count any

month during which a minor who was not head of the household or married

to the head of the household received assistance. For the reasons

explained below, we propose to apply this disregard provision to

Tribes.

The decision as to whether a family has met the time limit is based

on how long the adults have received assistance. Therefore, it does not

seem reasonable to include months when an individual received

assistance as a minor. However, Tribes, like States, would count months

when a minor received assistance as the head of a household or as the

spouse of the head of the household. The reason is that minor heads of

households and minors who are married to heads of household are

generally treated as adults in terms of other program requirements

under the Act.

Section 407(a)(7)(D) of the Act, as amended by the Balanced Budget

Act of 1997, requires that Tribes and States disregard as a month of

assistance any month during which an adult lived in Indian country or

an Alaskan Native village in which at least 50 percent of the adults

were not employed. To determine whether 50 percent of the adults were

not employed, the statute allows the use of any reliable data with

respect to the month. This would allow the use of the Labor Force

Report, which is issued every two years by the Bureau of Indian

Affairs, Department of Labor Unemployment Data, or any other reliable

data source or combination of data sources.

Can Tribes makes exceptions to the established time limit for

families? (Sec. 286.115)

For State TANF programs, section 408(a)(7)(C) of the Act allows for

two hardship exceptions from the 60-month time limit: (1) Families that

meet the State's definition of ``hardship''; and (2) families that

include an individual who has been battered or subjected to extreme

cruelty. A State may exempt no more than 20 percent of its average

monthly caseload under these exceptions.

Section 412(c) of the Act does not mention a similar exception for

Tribal TANF programs. However, because the time limit provisions

include not only how long a family may receive Tribal TANF benefits,

but also who is subject to the time limits, it is reasonable that

Tribes should have the option to provide for similar exceptions from

their established time limits. The proposed regulations provide that we

will negotiate the maximum percentage of cases in the Tribe's caseload

which may be exempted from the established time limits.

Although the proposed regulations include the same definition of

``battered or subjected to extreme cruelty'' as is set forth in section

408(a)(7)(C)(iii) for State TANF, we request comments as to whether

there are additional situations particular to Tribes that should be

included in this proposed definition. We also invite comments on

whether this exception should be defined in regulations at all or left

to each Tribe to define.

Does the receipt of TANF assistance under a State or other Tribal

TANF program count towards a Tribe's TANF time limit? (Sec. 286.120)

Under section 408(a)(7) of the Act, a State must consider receipt

of TANF benefits under other State programs in determining if the 60-

month time limit has been exceeded. Although section 412 of the Act

does not include a similar requirement for Tribal TANF programs, we

believe that prior receipt of TANF must also be counted by Tribes when

determining if the time limit has been exceeded. We do not believe the

intent of Congress was otherwise. Thus, a Tribe must count towards an

adult's time limit all prior months of TANF assistance funded with TANF

block grant funds, except for any month that was exempt or disregarded

by statute or regulation.

Penalties Against Individuals

As stated earlier, the PRWORA promotes self-sufficiency and

independence by providing people with more work opportunities while

holding individuals to a higher standard of personal responsibility for

the support of their children. The legislation expands the concept of

mutual responsibility, introduced under the Family Support Act of 1988,

that income assistance to families with able-bodied adults should be

transitional and conditioned upon their efforts to become self-

sufficient. As Tribes focus on helping adults get work and earn

paychecks quickly, parents are also expected to meet new, tougher work

requirements. We will expect Tribes to ensure that parents understand

what is required of them, and to develop proposals for penalties

against individuals that reflect the importance of those requirements.

What information on penalties against individuals must be included

in a Tribal Family Assistance Plan? (Sec. 286.125)

What is the penalty if an individual refuses to engage in work

activities? (Sec. 286.130)

Can a family, with a child under age 6, be penalized because a

parent refuses to work because (s)he cannot find child care?

(Sec. 286.135)

This proposed rule combines the discussions of these three sections

of this part because of the inter-relationship among them.

As mentioned above, section 412(c) of the Act gives flexibility to

establish penalties against individuals, and related policies, for each

Tribal TANF grantee. Section 412(c)(3) specifies that penalties against

individuals established for each Tribal TANF grantee must be similar to

comparable provisions in section 407(e). However, the statute does not

specify a process or procedure to accomplish this.

As discussed earlier, we propose to use the Tribal TANF plan

process to establish the requirements related to penalties against

individuals and related policies that will become a part of the Tribal

TANF program. In addition, the Tribe must include a rationale for its

proposal and related policies in the plan. The rationale needs to

address how the Tribe's proposal is: Consistent with the purposes of

section 412 of the Act; consistent with the economic conditions and

resources available to the Tribe; and similar to the requirements

applicable to States as specified at section 407(e) of the Act.

States are required to reduce the amount of assistance otherwise

payable to the family pro rata (or more at State option) for the period

during the month in which the individual refused to engage in work as

required, subject to good cause and other exceptions determined by the

State. The States also are given, by the statute at section

407(e)(1)(B), the option to terminate the case.

In addition, a State may establish, pursuant to section 407(e)(1)

of the Act, good cause exceptions to penalties for failure to engage in

work as required. We believe that Tribes must also be able to establish

reasonable good cause exceptions because penalties against individuals

established for each Tribal

[[Page 39381]]

TANF grantee must be comparable to those specified at section 407(e). A

Tribe must include a rationale for its good cause exceptions. The

rationale should address how the good cause exceptions are reasonable

and how they relate to the goals of the Tribe's TANF program.

As specified in the statute at section 407(e)(2), a State may not

reduce or terminate assistance to a single custodial parent caring for

a child under age six for refusing to engage in work as required, if

the parent demonstrates an inability (as determined by the State) to

obtain needed child care. The parent's demonstrated inability must be

for one of the following reasons:

Appropriate child care within a reasonable distance from

the individual's home or work site is unavailable;

Informal child care by a relative or under other

arrangements is unavailable or unsuitable; or

Appropriate and affordable formal child care arrangements

are unavailable.

We believe a comparable provision should apply to Tribal TANF

programs as the lack of child care may be even more acute on remote

Indian reservations.

Under section 402(a)(7) States may opt to establish and enforce

standards and procedures for identifying and helping victims of

domestic violence. If the State has chosen to establish these

standards, it may waive certain program requirements, including work

requirements, in cases where compliance would make it more difficult

for an individual receiving assistance to escape domestic violence or

would unfairly penalize victims or individuals who are at risk of

further violence. The State must determine that the individual

receiving the program waiver has good cause for failing to comply with

the requirements. Tribes may also wish to consider whether to establish

their own standards and procedures related to victims of domestic

violence.

There may be other reasons a Tribe may want to impose a penalty on

an individual who refuses to cooperate with program requirements other

than work activity requirements. For example, a Tribe may want to

impose a penalty on a custodial parent who refuses to cooperate with a

child support enforcement program.

Based on the above information, we believe the Tribe's TANF plan

must address the following questions:

(1) Will the Tribe impose a pro rata reduction, or more at Tribal

option, or will it terminate assistance to a family which includes an

adult or minor head-of-household that refuses to engage in work as

required?

(2) What will be the proposed Tribal policies with respect to a

single custodial parent, with a child under the age of 6, who refuses

to engage in work activities because of a demonstrated inability to

obtain child care?

(3) What good cause exceptions, if any, does the Tribe propose

which will allow individuals to avoid penalties for failure to engage

in work activities? What is the rationale for these exceptions?

(4) What other rules governing penalties does the Tribe propose?

(5) What, if any, will be the Tribe's policies in relation to

victims of domestic violence?

With respect to the prohibition on penalizing single custodial

parents with a child under age 6, we want to underscore the pivotal

role of child care in supporting work and that the lack of appropriate,

affordable child care can create unacceptable hardships on children and

families. To keep families moving toward self-sufficiency, Tribes may

want to consider adopting a process or procedure that enables a family

to demonstrate its inability to obtain needed child care. Just as

States must have policies for continuing benefits to a single-parent

family when it demonstrates that it is unable to work due to the lack

of child care for a child under the age of six, it is important for

Tribes to have policies too. Like States, Tribes should inform eligible

parents that the time during which they are excepted from the penalty

will count towards the time limit on benefits, unless the Tribe's

approved time limit proposal provides for an exception.

The proposed regulations for the Child Care and Development Fund

(CCDF) reinforce the importance of providing this vital information to

parents by requiring the child care Lead Agency, as part of its

consumer education efforts, to inform parents about the penalty

exception to the TANF work requirement. It must also provide parents

with the information outlined above concerning the process or

procedures for demonstrating an inability to obtain needed child care.

Because the Tribe will have the authority to determine whether the

individual has adequately demonstrated an inability to obtain needed

child care, we expect the Tribe to provide families with the criteria

that it will use to implement the exception and the means by which a

parent can demonstrate such an inability. In providing these criteria,

each Tribe needs to define the following terms: ``Appropriate child

care,'' ``reasonable distance,'' ``unsuitability of informal care,''

and ``affordable child care arrangements.'' In the proposed CCDF rule,

we require the Lead Agency for child care to coordinate with the TANF

agency in order to understand how the TANF agency defines and applies

the terms of the statute regarding the exception to the penalty and to

include those definitions and criteria in the CCDF plan.

As the role of child care is pivotal in supporting work activities,

it is important for the Tribal and State CCDF programs to coordinate

fully with the Tribal TANF program. Coordination between CCDF and TANF

is critical to the success of both programs.

In addressing the economic conditions and available resources in

support of its proposal for penalties against individuals, the Tribe

may refer back to the information already provided in the plan in

relation to the Tribe's proposal for minimum work participation

requirements and time limits. It may also offer additional information

in support of its proposal.

Tribal TANF Plan Processing

What are the applicable time frames and procedures for submitting a

Tribal Family Assistance Plan? (Sec. 286.140)

The PRWORA does not give a date by which a Tribe must submit a

Tribal Family Assistance Plan. In establishing the time frame within

which a Tribe must submit the TFAP, we have to consider two factors.

The first is the requirement found at section 405(b) of the Act that we

provide to a State timely notice of the amount of the reduction to its

State Family Assistance Grant (SFAG) that results from the operation of

a Tribal TANF program. The statute requires this notice to be made 3

months before we take the reduction in the State's SFAG quarterly

installment. The second consideration is the authority at section

412(b)(2) of the Act which provides for Secretarial approval of each

Tribal Family Assistance Plan.

As mentioned in the discussion on determining the amount of a

Tribal Family Assistance Grant, our experience to date has indicated

that we need sufficient time to request data from the State, receive

and process it, and resolve any issues, prior to making official notice

to the State. We have outlined time frames at Sec. 286.15 for

requesting State data and resolving any issues concerning the data. In

order to meet these time frames and meet the requirement for a three-

month notice to the State, the proposed regulation at Sec. 286.140

requires a Tribe to submit to us a letter of intent, unless the Tribes

have already requested, received and resolved any issues regarding the

State-

[[Page 39382]]

supplied data. We will use the letter of intent to request the data

from the State and thus will need to specify the Tribe's proposed

implementation date and proposed service area and population. We have

proposed time frames for the submission of the letter of intent at

Sec. 286.140(a).

In order to meet the approval requirement, including review,

discussion, and where appropriate, modification of the TFAP in

consultation with the Tribe, we have determined that we will need a

minimum of 120 days to accomplish these actions for Tribes who propose

to implement a program on the first day of a calendar quarter.

Therefore, the proposed regulation at Sec. 286.140(a) requires the

formal submission of a Tribal TANF plan to us based on the dates

specified in the table below.

A Tribe will be able to implement a Tribal TANF program on the

first day of any month. However, due to the requirement for a three-

month notification to the State of its adjusted quarterly SFAG amount,

a Tribe who wishes to implement a TANF program on other than the first

day of a calendar quarter, i.e., January 1, April 1, July 1 or October

1, will need to submit both its letter of intent and its formal plan as

if the proposed implementation date was the first day of a calendar

quarter. The following table illustrates, based on implementation

dates, when a Tribe needs to submit its letter of intent and formal

plan in order for us to meet the statutory requirement for notification

to the State.

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If proposed implementation date is: The letter of intent is due: The formal plan is due: And we must notify the State by:

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January 1, February 1 or March 1...... July 1 of previous year....... September 1 of previous year. October 1 of previous year.

April 1, May 1 or June 1.............. October 1 of previous year.... December 1 of previous year.. January 1 of same year.

July 1, August 1 or September 1....... January 1 of same year........ March 1 of same year......... April 1 of same year.

October 1, November 1 or December 1... April 1 of same year.......... June 1 of same year.......... July 1 of same year.

--------------------------------------------------------------------------------------------------------------------------------------------------------

We had considered whether to establish a format or preprint for the

Tribal TANF plans. In discussions with Tribes, we heard from some

Tribes that did not want us to dictate plan format. Yet we also heard

from some Tribes that indicated they would appreciate having a

preprint, similar to the one that was used for the Tribal JOBS program.

We invite additional comments from readers as to whether to develop and

require the use of a specific format or preprint for use by Tribes in

submitting TFAPs. One option would be to develop an optional plan

preprint.

As noted above, the Secretary has explicit authority to approve

Tribal TANF plans. In exercising this authority, we plan to work with

each Tribe that submits a TFAP to ensure that plans contain the

information required by statute and regulation. A Tribe may make

revisions to its plan during the review process. In instances where we

disapprove a plan, the proposed regulation at Sec. 286.140(e) provides

an appeal process.

Public Law 102-477

Pub. L. 102-477, the Indian Employment, Training and Related

Services Demonstration Act of 1992, allows Tribes to integrate certain

federally funded employment, training and related services programs

into a single plan. The purpose of this public law is to improve the

effectiveness of these programs and services.

The PRWORA requires the Secretary to review and approve all TFAPs

for Tribes seeking to operate a Tribal TANF Program. Those requirements

are found at section 412(a). Section 5 of Pub. L. 102-477 states ``the

programs that may be integrated in a demonstration project * * * shall

include any program under which an Indian tribe is eligible for receipt

of funds.'' In order to receive a Tribal Family Assistance Grant,

Tribes must first have approved Tribal TANF plans. Therefore, the

proposed regulation at Sec. 286.140(f) indicates that a Tribe must have

separate approval of its TFAP from the Secretary before it can

integrate the Tribal TANF program into a Pub. L. 102-477 plan.

How is a Tribal Family Assistance Plan amended? (Sec. 286.145)

Section 412 of the statute does not address amendments to Tribal

TANF plans. We believe that Tribes need to have an opportunity, during

the period covered by a plan, to amend the plan. Thus, the proposed

regulation at Sec. 286.145 allows Tribes to amend TFAPs.

In addition, the proposed regulation establishes the procedure for

the submission, review and implementation of a Tribal TANF plan

amendment. We propose to require the submission to the Secretary of a

plan amendment no later than thirty (30) days prior to the

implementation of the amendment. The implementation date for an

approved amendment will to be the first day of any month. We will take

action to approve or disapprove the proposed amendment within fourteen

(14) days. If we disapprove a plan amendment, the Tribe will be given

an opportunity to appeal the decision. Use of TANF funds for services

or activities under an amendment cannot be made until the

implementation date of the approved amendment.

Specials Provisions for Alaska

What special provisions apply to Alaska? (Sec. 286.150)

What is the process for developing the comparability criteria that

are required in Alaska? (Sec. 286.155)

What happens when a dispute arises between the State of Alaska and

the Tribal TANF eligible entities in the State related to the

comparability criteria? (Sec. 286.160)

If the Secretary, in the State of Alaska, or any of the Tribal TANF

eligible entities in the State of Alaska want to amend the

comparability criteria, what is the process for doing so?

(Sec. 286.165)

Section 412(i) of the Act requires the Tribal TANF eligible

entities in the State of Alaska to operate a program in accordance with

requirements comparable to the State of Alaska's TANF program. In

response to this provision in the statute, we sponsored a meeting in

Anchorage on November 15, 1996, to begin discussions on welfare reform

and the Alaska-specific comparability issue. During that meeting a

group formed, consisting of representatives from each of the Tribal

TANF eligible entities, as defined in section 417(4)(B) of the Act, the

Alaska State Department of Health and Social Service and ACF. This

``Single Points of Contact (SPOC)'' group has met regularly to discuss

welfare reform issues unique to Alaska and worked on developing an

initial comparability criteria document. This process, developed in the

absence of any written Federal guidance, continues to further the

communication among the Federal Government, the State and the 13

eligible Tribal TANF eligible entities in the State. The 13 eligible

entities have

[[Page 39383]]

agreed to submit Tribal TANF plans for implementation no sooner than

July 1, 1998, and thus, the comparability criteria document will

continue to be refined until such time as an eligible entity submits

the first Alaska Tribal TANF plan.

Because of the extensive work being done by the SPOC group, and the

consultation that continues to take place, we have decided not to

regulate either the specific comparability criteria or the process by

which the comparability criteria will be developed. We believe that the

SPOC group has a well-developed process for working on the Alaska-

specific challenges of welfare reform and that allowing the greatest

level of flexibility possible for this group will achieve the best

results. However, we have chosen to include regulations on how to

settle disputes that cannot be resolved through this process, as well

as regulations on how to amend the comparability criteria. Based on the

comments we received during the preconsultation process, we determined

that regulations would be helpful in these two areas.

Subpart D--Accountability and Penalties

It is clear that, in enacting the applicable penalties at section

409(a) of the Act, Congress intended for Tribal flexibility to be

balanced with Tribal accountability. To assure that Tribes fulfil their

new responsibilities under the TANF program, Congress established a

number of penalties and requirements under section 409. The penalty

areas indicate the areas of performance that Congress found most

significant and appropriate for Tribal programs. Through specific

sanctions, Congress provided the Secretary authority to enforce

particular provisions in the law.

As referenced in section 412 of the Act, section 409(a) includes

four penalties that can be imposed on Tribes. This subpart of the

proposed rule covers these penalties.

What penalties will apply to Tribes? (Sec. 286.170)

The four penalties that apply to Tribes are as follows:

(1) A penalty of the amount by which a Tribe's grant was used in

violation of part IV-A of the Act;

(2) A penalty of five percent of the TFAG as a result of findings

which show that the Tribe intended to violate a provision of the Act;

(3) A penalty in the amount of the outstanding loan plus the

interest owed on the outstanding amount for failure to repay a Federal

loan; and

(4) A penalty for failure to satisfy the minimum work participation

rates.

As specified in section 409(a)(3), the participation rate penalty

amount will depend on whether the Tribe was under a penalty for this

reason in the preceding fiscal year. If a penalty was not imposed on

the Tribe in the preceding year, the penalty reduction will be a

maximum of five percent of the TFAG in the following year. If a penalty

was imposed in the preceding year, the penalty reduction will be

increased by 2 percent per year, up to a maximum of 21 percent. We will

take into consideration the severity of the failure in determining the

amount of the penalty. In our consultation with Tribes, we have been

advised that it will be difficult to satisfy the participation rates

because of economic conditions (e.g., high unemployment rates) in

Tribal service areas. Although these conditions will be considered in

establishing the minimum participation rates for each TFAG program, we

recognize that it may still be difficult for Tribes to meet this

requirement. For this reason, we propose to take into consideration the

following two factors in determining the amount of the penalty: (1)

Increases in the unemployment rate in the Tribe's service area, and (2)

changes in TFAG caseload (e.g., increases in the number of families

receiving services).

If we impose a penalty on a Tribe, the following fiscal year's TFAG

will be reduced. In calculating the amount of the penalty, all

applicable penalty percentages will be added together and the total

will be applied to the amount of the TFAG that would have been payable

if no penalties were assessed against the Tribe. As a final step, other

(non-percentage) penalty amounts will be subtracted. If this

calculation would result in the TFAG being reduced by more than 25

percent, we propose to apply the State TANF limitation in section

409(d). In applying the penalties against a State TANF program, we

cannot reduce the State's block grant by more than 25 percent in any

quarter. If we are unable to collect the entire penalty in a fiscal

year, any excess penalty amounts will be applied against the grants for

succeeding years. We propose to treat Tribes like States and limit the

amount of TFAG reduction due to penalties to 25 percent in any given

fiscal year.

Failure To Repay a Federal Loan

Section 406 permits Tribes to borrow funds to operate their TANF

programs. Tribes must use these loan funds for the same purposes as

apply to other Federal TANF funds. In addition, the statute also

specifically provides that Tribes may use such loans for welfare anti-

fraud activities and for the provision of assistance to Indian families

that have moved from the service area of a State or other Tribe

operating a Tribal TANF program. Tribes have three years to repay loans

and must pay interest on any loans received. We will be issuing a

program instruction notifying Tribes and States of the application

process and the information needed for the application.

Section 409(a)(6) establishes a penalty for Tribes that do not

repay loans provided under section 406. We will penalize Tribes for

failing to repay a loan provided under section 406 (see

Sec. 286.170(a)(4) and Sec. 286.185). A specific vehicle for

determining a Tribe's compliance with this requirement is unnecessary.

In our loan agreements with Tribes, we will specify due dates for the

repayment of the loans and will know if payments are not made.

Outstanding Penalties and Retrocession

In developing these proposed rules, a question arose concerning how

we will treat situations where a Tribe decides to retrocede the TANF

program. Since the Tribe will no longer receive a TFAG, we would be

unable to collect any penalty by withholding or offsetting in the

succeeding fiscal year. However, we stipulate in the proposed

regulation that a Tribe that retrocedes a Tribal TANF program is

responsible for the payment of any penalty that may be assessed for the

period the program was in effect.

Replacement of Penalty Amounts

Section 409(a)(12) of the Act requires a State to expend its own

funds to replace any reduction in its SFAG due to the imposition of a

penalty. This is to prevent recipients from also being penalized for

the State's failure to administer its program in accordance with the

requirements of the Act. We believe that a similar failure by a Tribe

should not cause Tribal TANF recipients to be penalized. For this

reason, in the same fiscal year as a penalty is imposed, at

Sec. 286.170(c)(1) we propose to require a Tribe to expend Tribal funds

to replace any reduction in the TFAG resulting from penalties that have

been imposed. The Tribe must document compliance with this provision on

its TANF Financial Report.

As amended by the Balanced Budget Act of 1997, section 409(a)(12)

states that failure of a State to replace any reduction in its SFAG

amount due to penalties may result in a penalty of not more than 2

percent of the SFAG, plus the amount that was required to be replaced.

However, we do not want to

[[Page 39384]]

subject Tribes to a penalty that is so severe that services to

recipients are jeopardized. Therefore, we propose at Sec. 286.170(c)(2)

to impose a similar, but not the same, penalty on Tribes. We stipulate

in the proposed rule that we may impose a penalty of not more than 2

percent of the TFAG if a Tribe fails to expend its own funds to replace

any reduction in the TFAG due to penalties.

We invite comments on our decision to impose this requirement.

How will we determine if Tribal Family Assistance Grant funds were

misused or intentionally misused? (Sec. 286.175)

It is clear that in establishing the many penalties at section

409(a) of the Act, Congress expressed its intent that both States and

Tribes balance flexibility with accountability. Because of the

differences in the requirements for State and Tribal programs, as

mentioned above, section 412 specifies that only four of the

requirements and penalties under section 409 apply to Tribes. The

penalty areas, or rather, the areas of Tribal performance that Congress

found significant and attached fiscal sanctions to, vary considerably.

Thus, in considering what method to employ in monitoring Tribal

performance, we concluded that no one method could be employed. The

following explains the different methods we will use to determine if a

Tribe used TFAG funds in violation of the Act.

Misuse of Funds

The penalty at Sec. 286.170(a)(1) and Sec. 286.175(a) provides that

if a Tribe has been found to have used funds in violation of title IV-A

through an audit conducted under the Single Audit Act (31 U.S.C.

Chapter 75), as referenced in section 102(f) of the Indian Self-

Determination Act Amendments of 1994 (Pub. L. 103-413), the Tribe is

subject to a penalty in the amount misused. This is the only penalty

for which Congress identified a method for determining a penalty.

Under the requirements of the Single Audit Act, Tribes operating

Federal grant programs meeting a monetary threshold (currently $300,000

for all Federal grants) must conduct an annual audit. Those Tribes

which meet the threshold must comply with this annual audit

requirement.

The single audit is an organization-wide audit that reviews Tribal

performance in many program areas. We implemented the Single Audit Act

through use of Office of Management and Budget (OMB) Circular A-128,

``Audits of State and Local Governments.'' Because of amendments made

to the Single Audit Act in 1996, OMB recently revised this circular and

a similar circular for non-profit organizations, A-133. Effective June

30, 1997, A-128 has been rescinded, with the result that the revised A-

133 now includes the single audit requirements for States, local

governments, Indian tribes and non-profit organizations.

In conducting their audits, among the tools auditors use are the

statute and regulations for each program and a compliance supplement

issued by OMB that focuses on certain areas of primary concern. Upon

issuance of final regulations, we will prepare a TANF program

compliance supplement.

The Single Audit Act does not preclude us or other Federal offices

or agencies, such as the Office of the Inspector General (OIG), from

conducting audits or reviews. In fact, we conclude that we have

specific authority to conduct additional audits or reviews. Under 31

U.S.C. 7503(b),

. . . a Federal agency may conduct, or arrange for additional

audits which are necessary to carry out its responsibilities under

Federal law or regulation. The provisions of this chapter do not

authorize any non-Federal entity (or subrecipient thereof) to

constrain, in any manner, such agency from carrying out or arranging

for such additional audits, except that the Federal agency shall

plan such audits to not be duplicative of audits of Federal awards.

Thus, although the single audit will be our primary means for

determining if a Tribe has misused funds, we may, through our own

audits and reviews, or through OIG and its contractors, conduct audits

or reviews of the Tribal TANF program which will not be duplicative of

single organization-wide audit activities. Our need to conduct such

audits may arise from complaints from individuals and organizations,

requests by the Congress to review particular areas of interest, or

other indications which signal problems in Tribal compliance with TANF

program requirements. These additional reviews and audits may be the

basis for assessing a penalty under this section.

Intentional Misuse of Funds

Where a penalty is determined for the misuse of funds, we may apply

a second penalty if we determine that the Tribe has intentionally

misused its TFAG. The proposed criteria for determining ``intentional

misuse'' are found at Sec. 286.175(c). We propose that the single audit

should be the primary means for determining this penalty as it is

linked to the penalty for misuse of funds. However, as with the use of

the single audit for misuse of funds, we may also conduct other reviews

and audits in response to complaints from individuals and organizations

or other indications which signal problems with compliance with TANF

program requirements. These additional reviews and audits may be the

basis for assessing a penalty under this section.

Additional Single Audit Discussion

Although we propose that the single audit be the primary means to

determine the specific penalties for misuse and intentional misuse of

TFAG funds, we will not ignore other single audit findings such as

Tribal non-compliance with the minimum participation rate requirement.

Where the single audit is used to determine a penalty for failure to

satisfy the minimum participation rate, the penalty that will apply is

the percentage reduction described at Sec. 286.170(a)(3), not the

dollar-for-dollar penalty at Sec. 286.170(a)(1) for misuse of funds.

The single audit may also reveal Tribal non-compliance with the

negotiated time limit requirements (see Sec. 286.110). Since Tribes are

not subject to the State penalty at section 409(a)(9) for failure to

comply with the time limit provisions, the question arose as to whether

the Tribe's failure should be treated as a misuse of funds. Because the

penalty for misuse of funds is equal to the amount that was spent

incorrectly, the Tribal penalty could potentially be higher than the 5

percent penalty for States. As a result, a Tribe could be subject to a

higher penalty by comparison. To avoid disparate treatment of States

and Tribes in this area, we propose to limit any potential penalty for

failure to comply with the Tribal time limits to a maximum of 5

percent.

Similarly, where we, or OIG, conduct an audit or review and have

findings that could result in a penalty, the penalty amount that will

apply is the penalty amount associated with the specific penalty under

section 409(a) of the Act.

How will we determine if a Tribe fails to meet the minimum work

participation rate(s)? (Sec. 286.180)

Tribal compliance with the minimum work participation rates under

Sec. 286.80 will be primarily monitored through the information

required by section 411(a) of the Act. The proposed rule at Sec. 286.70

provides additional information on minimum work participation

requirements.

Some of the data required to be reported by section 411(a) of the

Act were included to gather information in this area. Thus, we

concluded that the section 411(a) data collection tools would be our

primary means for

[[Page 39385]]

determining this penalty. Our ability to meet our program management

responsibilities may also mean that we will conduct reviews in the

future to verify the data submitted by Tribes, particularly in this

area where a fiscal penalty is applicable.

Timely and accurate data is essential if we are to determine Tribal

compliance in this area. Thus, if a Tribe fails to submit a timely

report, we will consider this as a failure by the Tribe to meet its

work participation rate requirements and will enforce the penalty for

failure to meet the work participation requirements. Likewise, if the

data indicating that the Tribe has met its participation rate is found

to be so inaccurate as to seriously raise a doubt that the Tribe has

met these requirements, we may enforce the participation rate penalty.

Although we propose that the single audit should be the primary

means for determining certain specific penalties for misuse or

intentional misuse of TFAG funds, if a single audit detects Tribal non-

compliance in the minimum participation rate area, we cannot ignore

that finding. Therefore, we will consider imposing a penalty based on

the single audit in this area. The penalty amount that will apply is

the penalty under section 409(a)(3) for failure to meet the

participation rates and not the penalty under section 409(a)(1) for

misuse of funds.

What is the penalty for a Tribe's failure to repay a Federal loan?

(Sec. 286.185)

If the Tribe fails to repay its loan, plus any accumulated

interest, in accordance with its agreement with ACF, we will reduce the

Tribe's TFAG for the immediately succeeding fiscal year by the

outstanding loan amount, plus any interest owed. Neither the reasonable

cause provisions at Sec. 286.200 of this chapter nor the corrective

compliance plan provisions at Sec. 286.205 of this chapter apply when a

Tribe fails to repay a Federal loan. Please refer to Sec. 286.210 for

more information on this penalty.

When are the TANF penalty provisions applicable? (Sec. 286.190)

Tribes may choose to implement the TANF program at different times,

but no earlier than July 1, 1997. In our consultation with Tribes, we

received several comments concerning the difficulties that Tribes will

face in attempting to implement a TANF program. Unlike States that were

operating AFDC and similar welfare programs prior to implementing TANF,

Tribes may not have this past history on which to build. We received

several recommendations to provide for a grace period for

implementation before we begin to assess any Tribal penalties.

Section 116(a)(2) of PRWORA delays the effective dates of some

provisions for States, and we propose to apply a similar rule for

Tribes. States are generally held accountable for meeting the

requirements of the Act from the first day that the program is

implemented. However, Congress delayed the effective dates of some

provisions because it recognized that States may need some lead time in

implementing certain requirements. In a number of instances it provided

that the related penalty requirements will not apply for six months

after the State implements a TANF plan. Similarly, while Tribes will be

held accountable for the penalties for misuse and intentional misuse of

funds from the date of implementation of TANF, the penalty for failure

to satisfy minimum participation rates will not apply until six months

after the date of implementation of the Tribal TANF program.

In the period prior to the issuance of final rules, Tribes must

implement the TANF provisions in accordance with a reasonable

interpretation of the statute. If a Tribe's actions are found to be

inconsistent with the final regulations, but it has acted in accordance

with a reasonable interpretation of the statute and its approved TFAP,

no penalty will be taken against the Tribe. However, if a Tribe is

found to be liable for a penalty prior to the issuance of final rules,

the Tribe may present its arguments for ``reasonable cause,'' which, if

granted, will result in no penalty being taken.

What happens if a Tribe fails to meet TANF requirements?

(Sec. 286.195)

If we determine that a Tribe has failed to meet any of the

requirements included in the penalty provisions, we will notify the

Tribe in writing. Our notification to the Tribe will include: (1) The

penalty, including the specific penalty amount; (2) the basis for our

decision; (3) an explanation of the Tribe's opportunity to submit a

reasonable cause justification and/or corrective compliance plan where

appropriate; and, (4) an invitation to the Tribe to present its

arguments if it believes that the data or method for making the

decision was in error, or that the Tribe's actions, in the absence of

Federal regulations, were based on a reasonable interpretation of the

statute.

Reasonable Cause and Corrective Compliance Plan

Provisions at sections 409(b) of the Act state that we can excuse

or reduce certain penalties if we determine that the Tribe has

reasonable cause for failing to comply with certain requirements that

are subject to a penalty. At Sec. 286.200 Tribes will have the

opportunity to demonstrate reasonable cause upon receipt of a written

notification of a proposed penalty.

Section 409(c) of the Act, as amended by the Balanced Budget Act of

1997, provides that prior to imposing certain penalties against a

Tribe, we will notify the Tribe of the violation and allow the Tribe

the opportunity to enter into a corrective compliance plan which

outlines how the Tribe will correct the violation and ensure continuing

compliance with TANF requirements.

How may a Tribe establish reasonable cause for failing to meet a

requirement that is subject to application of a penalty? (Sec. 286.200)

In the discussion that follows, we will describe the factors that

we will consider in deciding whether or not to excuse a penalty based

on a Tribe's claim of reasonable cause, describe the contents of an

acceptable corrective compliance plan that will correct the problems

that resulted in a penalty, and discuss the process for applying these

provisions.

PRWORA did not specify any definition of reasonable cause or

indicate what factors we should use in determining a reasonable cause

exceptions for a penalty. We propose to consider only certain, limited

factors when we decide whether or not to excuse a penalty for

reasonable cause.

During our deliberations on reasonable cause factors, we considered

the opinions presented during our consultation process as well as the

need to support the commitment of Congress, the Administration, States,

and Tribes to the objectives of the TANF program, including program

accountability. In keeping with these objectives, we propose a limited

number of reasonable cause factors with an emphasis on corrective

solutions. These are the same reasonable cause factors that we propose

for State programs.

We propose factors which would be applicable to all penalties for

which the reasonable cause provision applies and, in the case of the

penalty for failure to satisfy the minimum participation rates, one

additional factor only applicable to that specific penalty.

General reasonable cause may include the following: (1) Natural

disasters and other calamities (e.g., hurricanes, tornadoes,

earthquakes, fires, floods, etc.) whose disruptive impact was so

significant that the Tribe failed to meet a requirement; (2) formally

issued Federal guidance which provided incorrect information resulting

in the

[[Page 39386]]

Tribe's failure, or guidance that was issued after a Tribe implemented

the requirements of the Act based on a different but reasonable

interpretation of the Act; and (3) isolated, non-recurring problems of

minimum impact that are not indicative of a systemic problem.

We are also proposing one additional specific reasonable cause

factor for a Tribe's failure to satisfy minimum work participation

rates. Under the proposed rule at Sec. 286.200(b), a Tribe may

demonstrate that its failure is due to its granting of good cause to

victims of domestic violence. In this case, the Tribe must show that it

would have achieved the work participation rate(s) if cases with good

cause were removed from both parts of the calculation (i.e., from the

denominator and the numerator described in Sec. 286.80). In addition, a

Tribe must show that it granted good cause in accordance with policies

approved in the Tribe's Family Assistance Plan (refer to Sec. 286.125).

We understand that limited employment opportunities in many Tribal

service areas may affect a Tribe's ability to satisfy the participation

rates. However, as explained in Sec. 286.95, the work participation

requirements established for each Tribe will take into consideration

the Tribe's economic conditions and resources. We invite comments on

the additional reasonable cause factor for failure to meet work

participation requirements, as well as whether there are other factors

we should consider for determining reasonable cause.

The burden of proof rests with the Tribe to adequately and fully

explain what circumstances, events, or other occurrences constitute

reasonable cause with reference to failure to meet a particular

requirement. The Tribe must provide us with all relevant information

and documentation to substantiate its claim of reasonable cause for

failure to meet one or more of these requirements.

What if a Tribe does not have reasonable cause for failing to meet

a requirement? (Sec. 286.205)

As mentioned above, section 409(c) of the Act, as amended by the

Balanced Budget Act of 1997, provides that prior to imposing certain

penalties against a Tribe, the Tribe will be given the opportunity to

enter into a corrective compliance plan.

The corrective compliance plan must identify the action steps,

outcomes, and time frames for completion that the Tribe believes will

fully and adequately correct the violation. We recognize that each plan

will be specific to the violation (or penalty) and that each Tribe

operates its TANF program in a unique manner. Thus, we will review each

plan on a case-by-case basis. Our determination to accept a plan will

be guided by the extent to which the Tribe's plan indicates that it

will correct the situation leading to the penalty.

In instances where a Tribe used its TFAG in a manner that is

prohibited (see Sec. 286.175 on misuse of funds), we will expect that

it will remove this expenditure from its TANF accounting records and

provide steps to assure that such a problem does not recur.

Section 409(c)(3) of the Act appropriately requires that a

violation be corrected ``in a timely manner.'' A Tribe's timely

correction of problems resulting in a penalty is critical if for no

other reason than to assure that the Tribe is not subject to subsequent

penalties. While we recognize that the types of problems Tribes

encounter may vary, some concern exists that, if we do not restrict the

length of a corrective compliance plan, there is the possibility a

Tribe could indefinitely prolong the corrective compliance process,

leaving problems unresolved into another fiscal year. As a result, the

Tribe's ability to operate an effective program to serve the needs of

its service population would be severely limited.

Therefore, we are considering a proposal to limit the period

covered by a corrective compliance plan to 6 months, i.e., the plan

period ends 6 months from the date we accept a Tribe's compliance plan.

We believe that, for most violations, Tribes will have some indication

prior to our notice that a problem exists and will be able to begin

addressing the problem prior to submitting the corrective compliance

plan. Therefore, we think it fair and reasonable that the corrective

compliance plan period begin with our acceptance of the plan, giving

the Tribe sufficient time to correct or terminate the violation(s). We

would like to hear comments from Tribes and other interested parties on

this proposal on the appropriate time period for a corrective

compliance plan.

Our review of a Tribe's efforts to complete its action steps and

achieve the outcomes within the time frames established in the plan

will determine if the penalty will be fully excused, reduced, or

applied in full.

Corrective Compliance Plan Review

During the 60-day period defined below, we propose to consult with

the Tribe on any modifications to the corrective compliance plan and

seek mutual agreement on a final plan. Any modifications to the Tribe's

corrective compliance plan resulting from such consultation will

constitute the Tribe's final corrective compliance plan and will

obligate the Tribe to initiate the corrective actions specified in that

plan.

We may either accept the Tribe's corrective compliance plan within

the 60-day period that begins on the date the plan is received by us,

or reject the plan during this same period. If a Tribe does not agree

to modify its plan as we recommend, we may reject the plan. If we

reject the plan, we will immediately notify the Tribe that the penalty

is imposed. The Tribe may appeal this decision in accordance with the

provisions of section 410 of the Act and the proposed regulations at

Sec. 286.215. If we have not taken an action to reject a plan by the

end of the 60-day period, the plan is accepted, as required by section

409(c)(1)(D) of the Act.

If a Tribe corrects or discontinues, as appropriate, the problems

in accordance with its corrective compliance plan, we will not impose

the penalty. If we find that the Tribe has acted in substantial

compliance with its plan but the violation has not been fully

corrected, we may decide to reduce the amount of the penalty or, if the

situation is compelling, excuse the penalty in its entirety. We will

make a determination of substantial compliance based upon information

and documentation furnished by the Tribe. In determining substantial

compliance, we will consider the willingness of the Tribe to correct

the violation and the adequacy of the corrective actions undertaken by

the Tribe pursuant to its plan.

Process

Because both the reasonable cause and the corrective compliance

plan provisions apply, we propose to establish the determination of

reasonable cause in conjunction with the determination of acceptability

of a Tribe's corrective compliance plan, if any is submitted. Thus, we

propose that a Tribe may submit to us its justification for reasonable

cause and corrective compliance plan within 60 days of the receipt of

our notice of failure to comply with a requirement.

A Tribe may choose to submit reasonable cause justification without

a corrective compliance plan. If we do not accept the Tribe's

justification, the Tribe will be notified in writing. This notification

will also inform the Tribe of its opportunity to submit a corrective

compliance plan. The Tribe will have a 60-day period that begins with

the date of the notice of the violation to submit to us a corrective

compliance plan to correct the violation. A Tribe may also choose to

submit only a corrective compliance plan if it believes that the

reasonable cause factors do not apply to the particular penalty.

[[Page 39387]]

Although we do not propose to require corrective compliance plans

when a Tribe has reasonable cause for failing to meet a requirement

which is subject to a penalty, we want to stress the importance of

corrective action to prevent similar problems from recurring. While a

Tribe may have a very good explanation why it failed to satisfy a

requirement under the Act, we will work with the Tribe to identify

solutions to eliminate these problems or prevent them from recurring.

Otherwise, they may well continue and detract from the Tribe's ability

to operate an effective program to serve the needs of its families. Our

goal is to focus on positive steps to improve the program.

Due Dates

The Tribe's response to our notification that it has failed to meet

a requirement under section 409(a) of the Act, either including its

reasonable cause justification and/or its corrective compliance plan,

must be postmarked within 60 days of the receipt of our notification

letter to the Tribe. Also, if a Tribe believes that our determination

is incorrect, any documentation supporting its position should be

submitted within 60 days of the date of the receipt of our notice.

If, upon review of the Tribe's submittal, we find that we need

additional information, the Tribe must provide the information within

two weeks of the date of our request. This is to make sure we are able

to respond timely.

Imposing the Penalty

Once a final decision is made to impose a full or partial penalty,

we will notify the Tribe that its TFAG will be reduced and inform the

Tribe of its right to appeal our decision to the Departmental Appeals

Board (the Board).

In imposing a penalty, we will not reduce any TFAG to a Tribe by

more than 25 percent. If this limitation of 25 percent prevents us from

recovering the full amount of penalties during a fiscal year, we will

carry the penalty forward and reduce the TFAG for the immediately

succeeding fiscal year by the remaining amount.

What penalties cannot be excused? (Sec. 286.210)

Sections 409(b)(2) and 409(c)(3), as amended by the Balanced Budget

Act of 1997, provide that reasonable cause and corrective compliance

plan are not available for certain penalties. One of these penalties is

the penalty for failure to repay a Federal loan issued under section

406. Thus we cannot forgive any outstanding loan amount or the interest

owed on the outstanding amount.

The other penalty that cannot be excused is the penalty for failure

to replace any grant reduction resulting from other penalties that have

been imposed.

How can a Tribe appeal our decision to take a penalty?

(Sec. 286.215)

Section 410 of the Act provides that within five days after the

date the Secretary takes any adverse action under this part with

respect to a State, the Secretary shall notify the chief executive

officer of the State of the adverse action. We believe that it is

reasonable to make these same appeal provisions, including the time

frames in section 410, available for Tribes. Thus, within 60 days after

the date a Tribe receives notice of such adverse action, the Tribe may

appeal the action, in whole or in part, to the Board by filing an

appeal with the Board. Where not inconsistent with section 410(b)(2), a

Tribes's appeal to the Board will be subject to our regulations at 45

CFR part 16.

By inclusion in this rule, section 410(b)(2) provides that the

Board shall consider an appeal filed by the Tribe on the basis of

documentation the Tribe may submit, along with any additional

information required by the Board to support a final decision. In

deciding whether to uphold an adverse action or any portion of such

action, the Board shall conduct a thorough review of the issues and

make a final determination within 60 days after the appeal is filed.

Finally, a Tribe may obtain judicial review of a final decision by

the Board by filing an action within 90 days after the date of the

final decision with the district court of the United States in the

judicial district where the Tribe or TFAG service area is located. The

district court shall review the final decision of the Board on the

record established in the administrative proceeding, in accordance with

the standards of review prescribed by subparagraphs (A) and (E) of

section 706(2) of title 5, U.S.C. The review will be on the basis of

the documents and supporting data submitted to the Board.

Subpart E--Data Collection and Reporting Requirements

General Approach

Section 412(h) of the Act makes section 411, regarding the data

collection and reporting requirements for States, applicable to Tribes.

The requirements for States are addressed separately under the proposed

State TANF regulations published November 20, 1997. Although the

reporting requirements stipulated under the proposed State TANF

regulations are also required of Tribes under the statute, some of the

particular data elements are not applicable. In order to minimize

misunderstandings about what data elements are applicable to Tribes, we

s

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