Cost Standards and Procedures; Purchasing and Property Management

Issuing agencies

Abstract

This final rule revises the Legal Services Corporation's (LSC or Corporation) regulations governing cost allowability, prior approval requirements, and property and procurement standards applicable to LSC recipients. The final rule clarifies when recipients must obtain prior approval for expenditures of LSC funds; increases the monetary threshold for prior approval; clarifies the treatment of proceeds from fundraising activities supported with LSC funds; provides additional flexibility in LSC's review of prior approval requests; clarifies documentation requirements for prior approval requests; and revises the deadline and requirements for accounting for LSC funds invested in real estate. These amendments are intended to clarify existing requirements, reduce administrative burden, promote consistent oversight and enforcement, and strengthen accountability in the use of Federal funds.

Full Text

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<title>Federal Register, Volume 91 Issue 213 (Thursday, November 5, 2026)</title>
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[Federal Register Volume 91, Number 213 (Thursday, November 5, 2026)]
[Rules and Regulations]
[Pages 69720-69725]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-22649]


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LEGAL SERVICES CORPORATION

45 CFR Parts 1630 and 1631


Cost Standards and Procedures; Purchasing and Property Management

AGENCY: Legal Services Corporation.

ACTION: Final rule.

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SUMMARY: This final rule revises the Legal Services Corporation's (LSC 
or Corporation) regulations governing cost allowability, prior approval 
requirements, and property and procurement standards applicable to LSC 
recipients. The final rule clarifies when recipients must obtain prior 
approval for expenditures of LSC funds; increases the monetary 
threshold for prior approval; clarifies the treatment of proceeds from 
fundraising activities supported with LSC funds; provides additional 
flexibility in LSC's review of prior approval requests; clarifies 
documentation requirements for prior approval requests; and revises the 
deadline and requirements for accounting for LSC funds invested in real 
estate. These amendments are intended to clarify existing requirements, 
reduce administrative burden, promote consistent oversight and 
enforcement, and strengthen accountability in the use of Federal funds.

DATES: This final rule is effective on June 1, 2027.

FOR FURTHER INFORMATION CONTACT: Brittany Sims Nwankwoala, Assistant 
General Counsel, Legal Services Corporation, 1825 I St. NW, Ste. 800, 
Washington, DC 20006; (202) 295-1599 (phone), or <a href="/cdn-cgi/l/email-protection#9af4edfbf4f1edf5fbf6fbf8daf6e9f9b4fdf5ec"><span class="__cf_email__" data-cfemail="2b455c4a45405c444a474a496b475848054c445d">[email&#160;protected]</span></a>.

SUPPLEMENTARY INFORMATION:

I. Background

    The Legal Services Corporation Act of 1974 authorizes LSC to 
establish regulations governing the use of grant funds and to ensure 
appropriate stewardship of Federal resources. See 42 U.S.C. 2996g(e). 
LSC sets forth its cost standards and prior approval requirements in 45 
CFR part 1630 and its procurement and property management requirements 
in 45 CFR part 1631.
    LSC last revised part 1630 in 2017 to provide uniform standards 
governing the allowability and allocation of costs charged to LSC 
grants and contracts. Among other things, the 2017 rule required costs 
to be actually incurred, reasonable and necessary, allocable to the 
grant or contract, consistent with generally accepted accounting 
principles and recipient accounting practices, and adequately 
documented. The 2017 rule also established requirements governing prior 
written approval and questioned cost proceedings. As part of that 
rulemaking, LSC increased the prior approval threshold from $10,000 to 
$25,000 to account for inflation.

[[Page 69721]]

    During the same rulemaking, LSC incorporated its property 
acquisition and management policies into the Code of Federal 
Regulations as 45 CFR part 1631. Part 1631 establishes standards for 
purchasing, leasing, using, and disposing of LSC-funded personal 
property and real estate and for using LSC funds to contract for 
services.
    In 2022, LSC conducted a retrospective review of its regulations to 
determine whether existing provisions remained clear, effective, and 
aligned with current programmatic and compliance realities. That review 
identified several provisions in parts 1630 and 1631 that recipients 
and LSC staff found difficult to administer consistently or that lacked 
sufficient clarity for recipients and oversight staff. Subsequent 
discussions with the Office of Compliance and Enforcement, the Office 
of Inspector General (OIG), and other internal stakeholders confirmed 
those concerns.
    LSC determined that regulatory action was appropriate to address 
ambiguities in its cost standards, prior approval requirements, and 
property and procurement regulations that had resulted in inconsistent 
interpretation and application. Since LSC last substantively revised 
parts 1630 and 1631 in 2017, changes in recipient operations, 
procurement practices, and fiscal environments have exposed limitations 
in the existing regulatory framework that guidance alone cannot 
resolve.

II. Procedural History of This Rulemaking

    On January 22, 2026, the Operations and Regulations Committee 
(Committee) of LSC's Board of Directors (Board) voted to recommend that 
the Board authorize LSC to engage in rulemaking on parts 1630 and 1631. 
On January 27, 2026, the Board accepted the Committee's recommendation 
and authorized LSC to engage in rulemaking.
    On March 19, 2026, the Committee voted to recommend that the Board 
authorize publication of a Notice of Proposed Rulemaking (NPRM). On 
March 23, 2026, the Board voted to authorize LSC to publish the NPRM 
for notice and comment.
    On April 30, 2026, LSC published the NPRM in the Federal Register. 
91 FR 23228, Apr. 30, 2026. LSC sought public comment on LSC's proposed 
revisions concerning the prior approval threshold and timing 
requirements, fundraising proceeds, review timelines for prior approval 
requests, documentation supporting prior approval requests, and 
accounting for LSC funds invested in real estate. The comment period 
closed on June 29, 2026.
    Materials regarding this rulemaking are available in the open 
rulemaking section of LSC's website at <a href="https://www.lsc.gov/about-lsc/laws-regulations-and-guidance/rulemaking">https://www.lsc.gov/about-lsc/laws-regulations-and-guidance/rulemaking</a>. After the effective date of 
the rule, those materials will appear in the closed rulemaking section 
at <a href="https://www.lsc.gov/about-lsc/laws-regulations-and-guidance/rulemaking/closed-rulemaking">https://www.lsc.gov/about-lsc/laws-regulations-and-guidance/rulemaking/closed-rulemaking</a>.

III. Discussion of Comments and Regulatory Provisions

    LSC received three comments during the public comments period: (1) 
the National Legal Aid and Defender Association (NLADA); (2) Community 
Legal Services located in Orlando, Florida, an LSC funding recipient; 
and (3) James E. Scarborough, an individual contributor. All commenters 
expressed support for several elements of the proposed revisions to 
parts 1630 and 1631.
    NLADA stated that it supported LSC's proposal to raise the prior 
approval threshold to $50,000, which they stated would help reduce low-
risk administrative burdens. They also supported the plan to provide 
greater flexibility in accounting deadlines tied to recipients' audited 
financial statements. Additionally, NLADA requested that LSC further 
clarify the fundraising reimbursement rule to define what counts as 
``fundraising costs'' and to exclude all staff salaries from that 
definition to avoid impractical tracking burdens and unintended 
inefficiencies.
    Jeffrey D. Harvey, CEO of Community Legal Services in Orlando, FL, 
requested additional clarification on how the proposed standard for 
recipients to obtain prior approval before they incur a legal 
obligation to expend LSC funds applies to recurring or month-to-month 
contracts, allocation changes over time, and whether these situations 
trigger prior approval under the new rule.
    James E. Scarborough supported LSC's efforts to reduce 
administrative burden and clarify requirements. He asked LSC to provide 
stronger justification for the proposed $50,000 prior-approval 
threshold, consider alternative approaches, and offer additional 
implementation guidance for the revised fundraising and accounting 
provisions.

IV. Section-by-Section Discussion of Proposed Changes and Comments

A. Part 1630--Cost Standards and Procedures

Sec.  1630.5 Standards Governing Allowability of Costs Under LSC Grants 
or Contracts
    LSC proposed to revise Sec.  1630.5(i) to clarify the treatment of 
proceeds from fundraising activities supported in whole or in part with 
LSC funds. LSC added Sec.  1630.5(i) in 2017 to codify its longstanding 
policy permitting recipients to use LSC funds for allowable fundraising 
activities undertaken to increase the resources available to carry out 
the purposes of an LSC grant. OIG urged LSC to require recipients to 
treat fundraising proceeds as derivative income or, alternatively, to 
require recipients to reimburse the LSC account for allowable 
fundraising costs before allocating the remaining proceeds to other 
accounts.
    LSC has determined that fundraising proceeds should not be included 
in the definition of derivative income. The definition of derivative 
income adopted in the 1997 final rule limits that term to income 
generated by activities directly supported by Federal grant funds and 
excludes grants, contracts, or contributions from non-LSC sources. 
Furthermore, LSC has determined that proceeds generated through 
fundraising are not ``earned'' within the meaning of derivative income. 
Unlike costs incurred in the ordinary course of business operations, 
fundraising expenses are distinctly different; they are incurred for 
the purpose of soliciting contributions and do not transform those 
contributions into earned income. Similarly, gifts are not considered 
earned income. Treating fundraising proceeds as derivative income would 
be inconsistent with that framework
    Comments: NLADA requested clarification regarding what constitutes 
a ``fundraising cost'' subject to the proposed reimbursement 
requirement. NLADA agreed that reimbursement is reasonable when LSC 
funds are used for costs directly associated with a fundraising 
activity, such as venue/space rental fees, food, or other expenses 
associated with planning and hosting a fundraising event. NLADA 
expressed concern, however, that the proposed language could be 
interpreted to include staff salaries, efforts to secure grants, and 
costs associated with creating promotional or educational materials. 
NLADA stated that such an interpretation could require recipients to 
track and retrospectively allocate staff time and other ordinary 
operating costs

[[Page 69722]]

whenever those activities ultimately contribute to successful 
fundraising. NLADA also noted that restrictions applicable to another 
grant may prevent a recipient from using the proceeds of that grant to 
reimburse its LSC account. NLADA therefore requested that LSC clarify 
what constitutes a fundraising cost or identify costs that are not 
subject to the reimbursement requirement. James Scarborough similarly 
recommended that LSC provide implementation guidance or examples 
concerning the treatment of fundraising proceeds
    Response: LSC Management agrees that clarification is appropriate. 
LSC intends the reimbursement requirement to apply to costs directly 
attributable to a fundraising activity for which the recipient receives 
fundraising proceeds. For example, if a recipient uses LSC funds to pay 
for venue/space, food, printing, or other costs incurred specifically 
to conduct a fundraising event, the recipient must reimburse its LSC 
account from the proceeds of that activity in an amount equal to the 
LSC funds used for those costs. LSC does not intend the provision to 
require recipients to identify and reimburse ordinary personnel, 
administrative, outreach, or educational costs merely because those 
activities or materials subsequently contribute to fundraising. 
Similarly, the provision does not require reimbursement for the costs 
of staff salaries incurred in preparing grant applications. Nor does 
LSC intend to require a recipient to use the proceeds of a grant or 
contribution in a manner inconsistent with restrictions imposed by the 
source of those funds. The relevant inquiry is whether the cost was 
incurred specifically for the fundraising activity rather than whether 
an activity or work product ultimately contributed to the recipient's 
ability to obtain non-LSC funds.
    LSC believes this interpretation addresses NLADA's concerns while 
effectuating the purpose of the amendment. The final rule therefore 
retains the proposed reimbursement requirement. LSC provides this 
explanation to clarify the scope of the requirement and will provide 
additional implementation guidance as necessary. LSC adopts the 
proposed amendments to Sec.  1630.5 without change.
Sec.  1630.6 Prior Approval
    The existing regulations contain inconsistent language describing 
the amount of LSC funds that triggers the prior approval requirement. 
Section 1630.6(b)(1) provides that, without LSC's prior written 
approval, a recipient may not expend ``$25,000 or more'' of LSC funds 
on specified transactions, while Sec.  1631.8(a) applies when a 
recipient uses ``more than $25,000'' of LSC funds. The latter 
formulation reflects the language of the prior version of the rule and 
the standard LSC intended to apply consistently.
    LSC proposed to eliminate this inconsistency and clarify that 
recipients must obtain prior written approval before incurring a legal 
obligation to expend LSC funds in excess of the applicable threshold. 
This clarification reflects LSC's existing enforcement practice and 
provides recipients with a clearer point at which prior approval is 
required for procurement planning purposes.
    LSC also proposed to increase the prior approval threshold from 
$25,000 to $50,000. The $25,000 threshold has remained unchanged since 
2017 despite inflation, changes in procurement practices, and the 
increasing complexity of recipient operations. Transactions that may 
not have warranted individualized review when the threshold was adopted 
now routinely exceed $25,000. Maintaining the existing threshold may 
therefore divert recipient and LSC staff resources to transactions that 
present comparatively lower compliance risks.
    LSC Management believes the higher threshold appropriately focuses 
oversight resources on higher-risk expenditures while reducing an 
unnecessary administrative burden on recipients. For costs apportioned 
between LSC funds and one or more other funding sources, prior approval 
is required when the portion allocable to LSC funds exceeds $50,000.
    The final rule also clarifies that recipients must obtain prior 
approval before incurring a legal obligation to expend LSC funds in 
excess of the applicable threshold. This provision establishes a clear 
and administrable point at which the approval requirement attaches and 
avoids uncertainty about whether a recipient may enter a binding 
agreement before seeking LSC's approval.
    Comments: NLADA supported increasing the prior approval threshold 
from $25,000 to $50,000 and clarifying that the threshold applies when 
expenditures exceed $50,000. NLADA stated that the increase would 
reduce administrative burdens associated with lower-risk transactions 
and allow recipients and LSC to focus resources on higher-risk 
expenditures. James Scarborough generally supported increasing the 
threshold but requested additional explanation for selecting $50,000 
and suggested that LSC consider alternatives, including inflation-
indexed, grant-specific, or risk-based thresholds. Community Legal 
Services requested clarification regarding when a recipient ``incur[s] 
a legal obligation to expend LSC funds,'' particularly for recurring or 
month-to-month contracts and costs whose allocation to LSC funds 
changes over time. He also asked how the standard would address 
arrangements structured to avoid the prior approval threshold.
    Response: Generally, a recipient must obtain prior approval before 
incurring a legal obligation to expend more than $50,000 in LSC funds. 
However, if the recipient cannot reasonably determine the amount it 
will charge to LSC when it enters into the contract, it must seek prior 
approval once it reasonably anticipates that its charges to LSC under 
the contract will exceed $50,000. This may occur, for example, because 
the recipient requires additional services under a contract or because 
a change in funding sources increases the portion of the costs 
allocated to LSC. A recipient that reasonably does not anticipate 
exceeding the threshold when it enters into the contract does not 
violate the prior approval requirement by entering into the contract 
without LSC approval.
    For example, a recipient may enter into a multi-year consulting 
contract without prior approval if, at the outset, it reasonably 
expects to charge less than $50,000 of the contract costs to LSC funds. 
If the recipient determines two years into the contract that it will 
need additional services and realizes that the amount charged to LSC 
will exceed $50,000, the recipient must seek prior approval at that 
time. The same principle applies when changes in funding or cost 
allocations increase the portion of a contract that the recipient 
expects to charge to LSC funds.
    Alternately, if a recipient enters into a multi-year contract under 
which the amount payable in any single year is less than $50,000, but 
the recipient knows at the time it enters into the contract that the 
total amount payable over the term of the contract will exceed $50,000 
in LSC funds, then the recipient must obtain prior approval from LSC 
before entering into the contract.
    Recipients remain responsible for monitoring their expenditures and 
complying with their procurement policies regardless of whether LSC 
prior approval is initially required. LSC adopts the proposed 
amendments to Sec.  1630.6 without change.

[[Page 69723]]

B. Part 1631--Purchasing and Property Management

Sec.  1631.3 Prior Approval Process
    Under existing Sec.  1631.3(b), LSC generally must decide whether 
to approve or deny a request involving purchases or leases of personal 
property, contracts for services, and capital improvements within 30 
days after receiving materials LSC deems sufficient to decide. For 
purchases of real estate, the corresponding period is 60 days. The 
regulation also provides that LSC will inform a recipient within 20 
days after receiving the initial request whether additional information 
is necessary.
    LSC's experience administering the regulation has demonstrated that 
complex or atypical requests may require additional information that 
LSC could not reasonably identify during its initial review. A fixed 
interpretation of the 30- and 60-day provision could therefore impair 
LSC's ability to obtain information necessary to evaluate a transaction 
after the initial review period.
    The final rule clarifies how the 30- and 60-day decision periods 
apply when LSC determines that additional information is necessary to 
decide a prior approval request. The period runs from LSC's receipt of 
all materials it deems sufficient to make a decision. If, during its 
review, LSC determines that more information is necessary, including 
after LSC has previously requested additional information, the initial, 
applicable decision period does not continue to run while LSC awaits 
the requested information. Upon receipt of the additional information, 
LSC will determine whether the materials are sufficient to make a 
decision, and the applicable 30- or 60-day decision period will begin 
from the date LSC has received the materials it deems sufficient. This 
clarification preserves the existing decision periods while recognizing 
that LSC may need to request additional information more than once 
before it has sufficient information to complete its review.
    The final rule also increases the threshold applicable to exigent 
circumstances in Sec.  1631.3(d)(1) from $25,000 to $50,000, consistent 
with the amendments to Sec. Sec.  1630.6 and 1631.8.
    Comments: Commenters supported LSC's efforts to clarify and 
streamline the prior approval process. NLADA specifically supported 
increasing the prior approval threshold to $50,000 because the higher 
threshold will reduce administrative burdens associated with lower-risk 
transactions.
    Response: This amendment maintains consistency with the prior 
approval threshold established in Sec. Sec.  1630.6 and 1631.8. LSC 
adopts the proposed amendments to Sec.  1631.3 without change.
Sec.  1631.8 Requests for Prior Approval
    Consistent with the amendments to Sec.  1630.6, the final rule 
increases the threshold in Sec.  1631.8(a) from $25,000 to $50,000. A 
recipient using more than $50,000 of LSC funds to purchase or lease 
personal property or contract for services must therefore request and 
receive LSC's prior approval.
    LSC also proposed to clarify the documentation required under Sec.  
1631.8(b)(3). The existing rule requires documentation showing that the 
recipient followed its procurement policies and procedures in 
soliciting, reviewing, and approving the purchase, lease, or contract 
for services. Recipients have expressed uncertainty about the type of 
supporting documentation LSC expects, resulting in requests that 
require supplementation after submission.
    The final rule clarifies that the required documentation consists 
of the documents maintained in the recipient's procurement files that 
demonstrate adherence to the recipient's procurement policies and 
procedures. LSC believes this clarification will make the requirement 
easier to administer and reduce the need for recipients to supplement 
prior approval requests after submission.
    Comments: Commenters supported increasing the prior approval 
threshold and aligning the provisions governing when prior approval is 
required.
    Response: LSC adopts the proposed amendments to Sec.  1631.8 
without change.
Sec.  1631.15 Capital Improvements
    Consistent with the amendments to Sec. Sec.  1630.6, 1631.3, and 
1631.8, the final rule increases the threshold in Sec.  1631.15(a) from 
$25,000 to $50,000. A recipient must obtain LSC's prior written 
approval before using more than $50,000 LSC funds to make capital 
improvements to real estate.
    Although the NPRM did not specifically identify Sec.  1631.15(a) 
for revision due to staff omission, the amendment is a logical 
outgrowth of the proposal pursuant to the Administrative Procedure Act 
(APA). See 5 U.S.C. 553(b)(A)-(B). The NPRM expressly proposed 
increasing the $25,000 threshold to $50,000 in Sec. Sec. Sec.  1630.6, 
1631.3, and 1631.8 under the same circumstances addressed by Sec.  
1631.15. The proposal provided sufficient notice, detail, and rationale 
for LSC's intent to increase the current amount, and does not introduce 
a new regulatory approach or materially alter the content of the 
proposal.
    Furthermore, a commenter reviewing the proposed amendments to 
Sec. Sec. Sec.  1630.3, 1630.6, and 1631.8 reasonably could anticipate 
that LSC could also make the corresponding change in Sec.  1631.15. 
Therefore, LSC concludes that the amendment to Sec.  1631.15 is within 
the scope of the proposed rule and the APA's logical outgrowth 
doctrine.
    Comments: While commenters did not explicitly review this 
provision, they supported increasing prior approval thresholds under 
the same circumstances and aligning provisions governing when prior 
approval is required.
    Response: LSC adopts the proposed amendments to Sec.  1631.15.
Sec.  1631.19 Accounting and Reporting to LSC
    Existing Sec.  1631.19 requires a recipient to maintain an 
accounting of LSC funds relating to the purchase or maintenance of real 
estate purchased with LSC funds and to provide that accounting to LSC 
no later than April 30 of the following year or in its annual audited 
financial statements. The April 30 deadline assumes a calendar-year 
fiscal year and has caused confusion and difficulty for recipients 
operating on different fiscal calendars.
    The final rule eliminates the fixed April 30 deadline. Instead, 
recipients must provide the required accounting annually no later than 
the date on which they are required to submit their annual audited 
financial statements to LSC's Office of Inspector General. Tying the 
accounting deadline to an existing reporting requirement accommodates 
recipients with different fiscal years and provides a consistent event-
based deadline.
    The final rule also clarifies that the accounting is cumulative. A 
recipient must maintain an accounting of the amount of LSC funds used 
to pay acquisition, financing, and capital improvement costs for each 
LSC-funded property, over the life of the property.
    In the preamble to the 2016 Notice of Proposed Rulemaking, LSC 
identified additional costs, including insurance, maintenance, and 
taxes, as costs for which recipients should account. See 81 FR 75006, 
75017, Oct. 28, 2016. The regulatory text ultimately required 
recipients to include only LSC funds used for acquisition costs, 
financing, and capital improvements. See 82 FR 37327 37344, Aug. 10, 
2017. Since

[[Page 69724]]

promulgating part 1631, LSC has required recipients to report only the 
categories identified in the regulatory text.
    LSC uses this information to determine accurately the amount of LSC 
funds invested in real property so that, upon disposition, the 
appropriate amount of proceeds attributable to LSC's investment may be 
returned to the LSC grant. Insurance and maintenance costs are not 
included in LSC's assessment of its interest in real estate. Although 
insurance and maintenance costs allocated to an LSC grant must 
independently satisfy applicable cost standards, LSC has determined 
that the administrative cost of including those expenditures in the 
Sec.  1631.19 accounting exceeds the benefit to LSC.
    Comments: Commenters supported replacing the April 30 deadline with 
a deadline tied to the submission of individual recipients' annual 
audited financial statements. James Scarborough recommended that LSC 
provide implementation guidance or examples regarding the revised 
accounting deadline, particularly for recipients with different fiscal 
years and during the transition to the new requirements.
    Response: To address the transition concern raised by James 
Scarborough, LSC will provide recipients sufficient time and 
implementation guidance before the revised requirements take effect. 
Recipients will not be required to resubmit an accounting that became 
due before the effective date solely to conform to the revised deadline 
or format. LSC will provide additional implementation guidance as 
necessary. LSC adopts the proposed amendments to Sec.  1631.9 without 
change.

List of Subjects

45 CFR Part 1630

    Accounting, Government contracts, Grant program--law, Hearing and 
appeal procedures, Legal services, Questioned costs.

45 CFR Part 1631

    Government contracts, Grant programs--law, Legal services, Real 
property acquisition.

    For the reasons stated in the preamble, the Legal Services 
Corporation amends 45 CFR Chapter XVI as follows:

PART 1630--COST STANDARDS AND PROCEDURES

0
1. The authority citation for part 1630 continues to read:

    Authority: 42 U.S.C. 2996g(e).


0
2. Amend Sec.  1630.5 by revising paragraph (i) to read as follows:


Sec.  1630.5  Standards governing allowability of costs under LSC 
grants or contracts.

* * * * *
    (i) Fundraising. (1) Costs associated with fundraising for the 
purpose of increasing recipient funds available to carry out the 
purposes of the LSC grant are allowable and allocable to the LSC grant 
if they meet the requirements of this section.
    (2) A recipient that charges fundraising costs to the LSC grant 
shall reimburse its LSC account from the fundraising proceeds in an 
amount equal to the amount charged to the LSC grant.
    (3) Fundraising proceeds are not derivative income within the 
meaning of Sec. Sec.  1630.2(b) and 1630.17(c).
* * * * *

0
3. Amend Sec.  1630.6 by revising paragraphs (b)(1) introductory text 
and (3), and adding paragraph (b)(5) to read as follows:


Sec.  1630.6   Prior approval.

* * * * *
    (b) * * *
    (1) Without LSC's prior written approval, a recipient may not 
expend more than $50,000 of LSC funds on any of the following:
* * * * *
    (3) For costs apportioned between LSC funds and one or more other 
funding sources, this requirement applies when the cost allocable to 
LSC funds is greater than $50,000.
* * * * *
    (5) Recipients must obtain LSC's prior approval before incurring a 
legal obligation to expend LSC funds in excess of the applicable 
threshold.
* * * * *

PART 1631--PURCHASING AND PROPERTY MANAGEMENT

0
4. The authority citation for part 1631 continues to read as follows:

    Authority: 42 U.S.C. 2996g(e).

0
5. Amend Sec.  1631.3 by revising paragraphs (b)(1) and (2), and (d)(1) 
introductory text to read as follows:


Sec.  1631.3  Prior approval process.

* * * * *
    (b)(1) For purchases or leases of personal property, contracts for 
services, and capital improvements, LSC will make a decision to approve 
or deny a request for prior approval within 30 days of receiving 
materials LSC deems sufficient to decide. LSC will inform a recipient 
within 20 days of receiving the prior approval request whether LSC 
needs additional information to make a decision. If LSC requests 
additional information, the 30-day period will restart and begin upon 
LSC's receipt of the requested information.
    (2) For purchases of real estate, LSC will make a decision within 
60 days of receiving materials LSC deems sufficient to decide. LSC will 
inform a recipient within 20 days of receiving the initial prior 
approval request whether LSC needs additional information to make a 
decision If LSC requests additional information, the 60-day period will 
restart and begin upon LSC's receipt of the requested information.
* * * * *
    (d) * * *
    (1) A recipient may use more than $50,000 of LSC funds to purchase 
personal property or award a contract for services without seeking 
LSC's prior approval if the purchase or contract is necessary;
* * * * *

0
6. Amend Sec.  1631.8 by revising paragraphs (a) and (b)(3) to read as 
follows:


Sec.  1631.8  Requests for prior approval.

    (a) As required by 45 CFR 1630.6 and 1631.3, a recipient using more 
than $50,000 of LSC funds to purchase or lease personal property or 
contract for services must request and receive LSC's prior approval.
    (b) * * *
    (3) Documentation showing that the recipient followed its 
procurement policies and procedures in soliciting, reviewing, and 
approving the purchase, lease, or contract for services (i.e., the 
documents recipients have in their procurement files to demonstrate 
adherence with the recipient's policies and procedures).

0
7. Amend Sec.  1631.15 by revising paragraph (a) to read as follows:


Sec.  1631.15  Capital Improvements.

    (a) As required by 45 CFR 1630.6 and 1631.3, a recipient must 
obtain LSC's prior written approval before using more than $50,000 of 
LSC funds to make capital improvements to real estate.
* * * * *

0
8. Revise Sec.  1631.19 to read as follows:


Sec.  1631.19  Accounting and reporting to LSC.

    A recipient must maintain an accumulative accounting of the amount 
of LSC funds it uses to pay for acquisition, financing, and capital 
improvements costs for each of its LSC-funded properties. The recipient 
must provide the accounting to LSC annually by no later than the date 
recipients are required to submit their annual audited

[[Page 69725]]

financial statements to LSC's Office of Inspector General.

    Dated: November 3, 2026.
Stefanie Davis,
Deputy General Counsel and Ethics Officer, Legal Services Corporation.
[FR Doc. 2026-22649 Filed 11-4-26; 8:45 am]
BILLING CODE 7050-01-P


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