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This rule would provide the regulatory framework for new Federal licensing of shelter care providers for unaccompanied children. This framework would be used when State governments do not provide State licensing for such providers under certain circumstances. The new office created to manage the Federal licensing will be proposed to be located within the Administration for Children and Families, but not within the Office of Refugee Resettlement.

Statement of Need:

ORR’s Unaccompanied Children (UC) Program is responsible for the administration of childcare shelters that provide care to UC arriving in the United States, prior to being placed with vetted sponsors. As of December 2021, ORR supports over 250 licensed care provider shelters in 25 states under approximately 150 separate grants between ORR and its network of care providers.

In addition, the Flores Settlement Agreement (FSA) generally requires that UC be placed in a state-licensed shelters subject to certain exceptions and expresses a specific preference for placements in geographic locations in which a majority of children are apprehended. Critically, none of ORR’s authorizing statutes mandate placement in state-licensed shelters.

ORR has cultivated a large network of state-licensed shelters and developed close, cooperative relationships with many of the partner states that oversee and enforce their own licensing processes for ORR care providers. Accordingly, ORR has not attempted to fulfill all of the functions of, nor provide the services typically performed by, state agencies involved in the licensure and oversight of child care facilities with respect to compliance with state licensing requirements, such as conducting facility inspections, facilitating and processing background checks, and investigating child abuse/neglect allegations.

Recent actions by Texas and Florida to restrict or exempt from state licensure of ORR UC care provider facilities have required ORR to re-evaluate how to continue providing care for UC consistent with the FSA’s expectation that children be placed in state-licensed shelters in those states, which represent a significant proportion of ORR's overall UC bed space. ACF has determined that the HSA’s and TVPRA’s broad grant of authority to ORR to manage the care and custody of UC authorizes the Department of Health and Human Services (HHS) to federally license shelters that house UC where states abdicate their traditional licensing responsibilities. This authority has been further delegated to ACF. ACF believes this change is necessary because additional states have recently taken steps to sever ORR grantees’ access to state licensure through executive action. ACF has determined that implementing federal licensure in these states can substantively address concerns underlying the FSA's requirement that UC shelters be state licensed (e.g. establishment and monitoring of facility standards not addressed by ORR policies, by authorities that are independent of ORR).

To continue serving UC and maintain quality of care in states that have restricted the availability of licensure to UC care providers, ORR has determined that the most effective response is for HHS, through ACF, to develop federal licensing standards for its care provider facilities under certain circumstances. ORR will propose that this function be carried out by the proposed Office of Residential Licensure for Unaccompanied Children (ORLUC), to sit within ACF but independent of ORR. That office would oversee the issuance of licensing standards, implement monitoring, and oversee associated processes including federal license revocations.

Summary of the Legal Basis:

ORR has broad statutory authority concerning the care and custody of UC through the Homeland Security Act of 2002 (HSA), 6 U.S.C. 279, and the William Wilberforce Trafficking Victims Protection Reauthorization Act of 2008 (TVPRA), 8 U.S.C. 1232.

Alternatives:

If this rule is not issued, ACF will lack the legal authority to issue licenses and enforce licensing requirements in states that have acted to restrict the availability of licensure to organizations funded by ORR to carry out the UC program. This would limit ACF's ability to ensure the safety and well-being of children in its care, and to comply with the intent of the FSA.

Anticipated Costs and Benefits:

The proposed regulations would result in costs to federal licensees, prospective federal licensees, ORR, and to ACF in implementing the proposed federal licensure program.  Based on ACF’s analysis, costs associated with the proposed regulations range from approximately $153 to $220 per licensee for submitting licensure applications and corrective action plans, as necessary.  In addition, ACF conducted a regulatory impact analysis to assess costs associated with other requirements in the proposed rule such as updating policy and/or training staff, hiring additional staff, and implementing facility changes.  At this time, ACF lacks the ability to estimate the potential costs specific to potentially affected care providers, especially with regard to changes to facilities.  Therefore, ACF is required to make assumptions general to all prospective federal licensees in implementing any necessary changes.  On average, ACF estimates that updates to affected facility policies or staff training will cost licensees between $17.32 and $34.68 per childcare worker.  Should a federal licensee need to hire additional staff in order to come into compliance with federal licensure standards, ACF estimates the average cost to be $36,361 per year per worker.  

The proposed rule would also result in associated federal costs of the establishment and operation of ORLUC.  Based on ACF’s analysis, the federal costs associated with the proposed regulations would be approximately $6.4 million in the first fiscal year once they are finalized.  ACF also notes that many potential federal licensees discussed in this proposed rule are ACF grantees and the costs of maintaining compliance with licensing requirements are allowable costs to grant awards under the Basic Considerations for cost provisions at 45 CFR part 75, sections 403 through 405, if that the costs are reasonable, necessary, ordinary, treated consistently, and are allocable to the award.  Additional costs associated with the policies discussed in this proposed rule that were not budgeted, and cannot be absorbed within existing budgets, would be allowable for the grant recipient to submit a request for supplemental funds to cover the costs, and may therefore result in additional federal costs.

Risks:

No programmatic risks are anticipated.