[Title 20 CFR ]
[Code of Federal Regulations (annual edition) - April 1, 2006 Edition]
[From the U.S. Government Printing Office]



[[Page i]]



          20


          Part 500 to End

                         Revised as of April 1, 2006


          Employees' Benefits
          
          


________________________

          Containing a codification of documents of general 
          applicability and future effect

          As of April 1, 2006
          With Ancillaries
                    Published by
                    Office of the Federal Register
                    National Archives and Records
                    Administration
                    A Special Edition of the Federal Register

[[Page ii]]

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                            Table of Contents



                                                                    Page
  Explanation.................................................       v

  Title 20:
          Chapter IV--Employees' Compensation Appeals Board, 
          Department of Labor                                        3
          Chapter V--Employment and Training Administration, 
          Department of Labor                                       11
          Chapter VI--Employment Standards Administration, 
          Department of Labor                                      863
          Chapter VII--Benefits Review Board, Department of 
          Labor                                                   1057
          Chapter VIII--Joint Board for the Enrollment of 
          Actuaries                                               1075
          Chapter IX--Office of the Assistant Secretary for 
          Veterans' Employment and Training Service, 
          Department of Labor                                     1107
  Finding Aids:
      Table of CFR Titles and Chapters........................    1157
      Alphabetical List of Agencies Appearing in the CFR......    1175
      List of CFR Sections Affected...........................    1185

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                     ----------------------------

                     Cite this Code: CFR
                     To cite the regulations in 
                       this volume use title, 
                       part and section number. 
                       Thus, 20 CFR 501.1 refers 
                       to title 20, part 501, 
                       section 1.

                     ----------------------------

[[Page v]]



                               EXPLANATION

    The Code of Federal Regulations is a codification of the general and 
permanent rules published in the Federal Register by the Executive 
departments and agencies of the Federal Government. The Code is divided 
into 50 titles which represent broad areas subject to Federal 
regulation. Each title is divided into chapters which usually bear the 
name of the issuing agency. Each chapter is further subdivided into 
parts covering specific regulatory areas.
    Each volume of the Code is revised at least once each calendar year 
and issued on a quarterly basis approximately as follows:

Title 1 through Title 16.................................as of January 1
Title 17 through Title 27..................................as of April 1
Title 28 through Title 41...................................as of July 1
Title 42 through Title 50................................as of October 1

    The appropriate revision date is printed on the cover of each 
volume.

LEGAL STATUS

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HOW TO USE THE CODE OF FEDERAL REGULATIONS

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OMB CONTROL NUMBERS

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Federal agencies to display an OMB control number with their information 
collection request.

[[Page vi]]

Many agencies have begun publishing numerous OMB control numbers as 
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CFR INDEXES AND TABULAR GUIDES

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[[Page vii]]

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                              Raymond A. Mosley,
                                    Director,
                          Office of the Federal Register.

April 1, 2006.

[[Page ix]]



                               THIS TITLE

    Title 20--Employees' Benefits is composed of three volumes. The 
first volume, containing parts 1-399, includes all current regulations 
issued by the Office of Workers' Compensation Programs, Department of 
Labor and the Railroad Retirement Board. The second volume, containing 
parts 400-499, includes all current regulations issued by the Social 
Security Administration. The third volume, containing part 500 to End, 
includes all current regulations issued by the Employees' Compensation 
Appeals Board, the Employment and Training Administration, the 
Employment Standards Administration, the Benefits Review Board, the 
Office of the Assistant Secretary for Veterans' Employment and Training 
(all of the Department of Labor) and the Joint Board for the Enrollment 
of Actuaries. The contents of these volumes represent all current 
regulations codified under this title of the CFR as of April 1, 2006.

    An Index to chapter III appears in the second volume.

    For this volume, Cheryl E. Sirofchuck was Chief Editor. The Code of 
Federal Regulations publication program is under the direction of 
Frances D. McDonald, assisted by Alomha S. Morris.

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                      TITLE 20--EMPLOYEES' BENEFITS




                  (This book contains part 500 to end)

  --------------------------------------------------------------------
                                                                    Part

chapter iv--Employees' Compensation Appeals Board, 
  Department of Labor.......................................         501

chapter v--Employment and Training Administration, 
  Department of Labor.......................................         601

chapter vi--Employment Standards Administration, Department 
  of Labor..................................................         701

chapter vii--Benefits Review Board, Department of Labor.....         801

chapter viii--Joint Board for the Enrollment of Actuaries...         900

chapter ix--Office of the Assistant Secretary for Veterans' 
  Employment and Training Service, Department of Labor......        1001

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 CHAPTER IV--EMPLOYEES' COMPENSATION APPEALS BOARD, DEPARTMENT OF LABOR




  --------------------------------------------------------------------
Part                                                                Page
501             Rules of procedure..........................           5

[[Page 5]]



PART 501_RULES OF PROCEDURE--Table of Contents




Sec.
501.1 Definitions.
501.2 Scope and applicability of rules; composition and jurisdiction of 
          the Board.
501.3 Application for review.
501.4 Transmittal of record.
501.5 Oral argument.
501.6 Decisions.
501.7 Petition for reconsideration.
501.8 Docket of proceedings; inspection of docket and records.
501.9 Regulation of proceedings.
501.10 Number of copies of pleadings and related documents; service; 
          computation of time.
501.11 Appearances.
501.12 Intervention.
501.13 Place of proceedings.

    Authority: Sec. 32, 39 Stat. 749, 5 U.S.C. 8145; sec. 3, 
Reorganization Plan No. 2 of 1946, 60 Stat. 1095; 3 CFR 1943-48 Comp., 
p. 1064; sec. 2, Reorganization Plan No. 19 of 1950, 64 Stat. 1272; 3 
CFR 1949-53 Comp., p. 1010.

    Source: 27 FR 12186, Dec. 8, 1962, unless otherwise noted.



Sec. 501.1  Definitions.

    (a) Act means the Federal Employees' Compensation Act and any 
statutory extension or application thereof.
    (b) Board means the Employees' Compensation Appeals Board.
    (c) Office means the Office of Workers' Compensation Programs and in 
the case of employees of the Canal Zone Government and of the Panama 
Canal Company, the Governor of the Canal Zone.
    (d) Director means the Director of the Office and in the case of 
employees of the Canal Zone Government and of the Panama Canal Company, 
the Governor of the Canal Zone.
    (e) Party means any person admitted and named as a party on the 
docket of the Board, including any intervenors.
    (f) Counsel includes any person who is a member in good standing of 
the bar of the Supreme Court of the United States or the highest court 
of any State, territory, or the District of Columbia.

[27 FR 12186, Dec. 8, 1962, as amended at 29 FR 13519, Oct. 1, 1964]



Sec. 501.2  Scope and applicability of rules; composition and 
jurisdiction of the Board.

    (a) The regulations in this part provide the rules of practice of 
the Board in hearing and deciding appeals from final decisions of the 
Office.
    (b) The Board consists of three members appointed by the Secretary 
of Labor, one of whom is designated as Chairman of the Board and 
administrative officer.
    (c) The Board has jurisdiction to consider and decide appeals from 
the final decision of the Office in any case arising under the Act. The 
Board may review all relevant questions of law, fact, and discretion in 
such cases. There shall be no appeal with respect to any interlocutory 
matter disposed of by the Office during the pendency of a case. The 
review of a case shall be limited to the evidence in the case record 
which was before the Office at the time of its final decision.



Sec. 501.3  Application for review.

    (a) Who may file. Any person adversely affected by a final decision 
of the Director, or his duly authorized representative, may file an 
application for review of such decision by the Board.
    (b) Place of filing. Any application for review shall be filed with 
the Clerk of the Board, Employees' Compensation Appeals Board, U.S. 
Department of Labor, Washington, DC 20210.
    (c) Form of application; contents. An application for review should 
be filed with the Board upon Form AB-1 (Application for Review). Any 
application made without the use of the form shall contain the following 
information: The full name and address of the applicant, the name of the 
injured or deceased employee, the employing establishment, the case file 
number assigned to the case by the Office, a description of the 
particular injury involved, the date of the injury, the place of injury, 
and the date of the decision being appealed. If the applicant is being 
represented by another person in the proceeding, the name and address of 
such representative should be stated. Each application shall include a 
succinct statement indicating the contentions of the applicant and 
describing with particularity

[[Page 6]]

any findings of fact, conclusions of law, or exercise of (or failure to 
exercise) discretion complained of. Any application containing 
incomplete information shall be returned to the applicant with a 
description of the additional information needed and a reasonable 
opportunity for furnishing any such information shall be allowed.
    (d) Time for filing. (1) Except as provided in paragraph (d)(2) of 
this section, any application for review by a person residing within the 
United States or Canada must be filed within 90 days from the date of 
issuance of the final decision of the Director, and any application for 
review by a person residing outside the United States or Canada must be 
filed within 180 days from the date of issuance.
    (2) For good cause shown, the Board may in its discretion waive a 
failure to file an application within the time limitations provided in 
paragraph (d)(1) of this section, but for no longer than one year from 
the date of issuance of the final decision of the Director.
    (3) Date of filing--(i) Date or receipt. Except as otherwise 
provided in this section, a notice of appeal is considered to have been 
filed only as of the date it is received in the office of the clerk of 
the Board.
    (ii) Date of mailing. If the notice is sent by mail and the fixing 
of the date of delivery as the date of filing would render the appeal 
untimely, it will be considered to have been filed as of the date of 
mailing. The date appearing on the postmark (when available and legible) 
shall be prima facie evidence of the date of mailing. If there is no 
postmark or it is not legible, other evidence, such as, but not limited 
to, certified mail receipts, certificate of service and affidavits, may 
be used to establish the date of mailing.
    (e) Briefs and supporting statements. Any application for review may 
be accompanied by a brief or supporting statement.

[27 FR 12186, Dec. 8, 1982, as amended at 53 FR 49491, Dec. 7, 1988]



Sec. 501.4  Transmittal of record.

    (a) The Board shall serve upon the Director a copy of each 
application for review and any brief or supporting statement 
accompanying it. Within 60 days from the date of such service, the 
Director, through his legal representative, the Solicitor of Labor, 
shall transmit to the Board the record of the proceeding to which the 
application refers and a statement in support of his decision, or other 
pleading, as appropriate, signed on his behalf by his legal 
representative.
    (b) On application of the Director, the Board may in its discretion 
extend the 60-day time for submittal to the Board of the record of 
proceedings and accompanying statement or pleading.

[42 FR 62471, Dec. 13, 1977]



Sec. 501.5  Oral argument.

    (a) Notice. Whenever any party requests an opportunity to present 
oral argument the Board shall schedule the case for argument. Each party 
shall be notified at least 10 days before the date of argument. The 
notice shall state the issues to be heard, as determined by the Board.
    (b) Time allowed. Generally not more than 1 hour shall be allowed 
for oral argument by any party although in appropriate cases the Board 
may in its discretion extend or shorten the time allowed.
    (c) Failure to respond to notice. Failure to respond to a notice of 
oral argument shall not prejudice the rights of any party to the 
proceeding. The Board in its discretion may set the case for further 
argument upon notice or it may proceed to dispose of the appeal pursuant 
to Sec. 501.6.



Sec. 501.6  Decisions.

    (a) The decision of the Board shall contain a written opinion 
setting forth the reasons for the action taken and an appropriate order. 
The decision may consist of affirmance, reversal, remand for further 
development of the evidence, or other appropriate action. A copy of the 
decision shall be sent by the Board to all parties in interest. The case 
record shall be returned to the Director with a copy of the decision.
    (b) A decision of not less than two members shall be the decision of 
the Board.
    (c) The decision of the Board shall be final as to the subject 
matter appealed and such decision shall not be subject to review, except 
by the Board.

[[Page 7]]

    (d) The decision of the Board shall be final upon the expiration of 
30 days from the date of the filing of the order, unless the Board shall 
in its order fix a different period of time or reconsideration by the 
Board is granted.



Sec. 501.7  Petition for reconsideration.

    (a) Procedure for filing. A petition for reconsideration of a 
decision of the Board may be filed with the Board within 30 days from 
the date of the order, or, if another period is specified in the order, 
then prior to the time when the order becomes final. The petition shall 
state the grounds relied upon, including any matters claimed to have 
been erroneously decided and shall specify the alleged errors. The 
petition may be in letter form.
    (b) Answer; procedure for disposition of petitions. Upon the filing 
of a petition for reconsideration, each of the other parties to the 
proceeding may file an answer thereto within such time as may be fixed 
by the Board. If reconsideration should be granted, reargument upon 
reasonable notice may be allowed in the discretion of the Board. After 
reconsideration of a case the Board shall either grant or deny the 
petition.



Sec. 501.8  Docket of proceedings; inspection of docket and records.

    (a) Maintenance of docket. A docket of all proceedings shall be 
maintained by the Board. Each proceeding shall be assigned a number in 
chronological order upon the date on which an application for review is 
received. Each proceeding shall be generally considered in the order in 
which it is docketed, although for good cause shown the Board may 
advance the order in which a particular case is to be considered. 
Correspondence or further applications in connection with any pending 
case shall refer to the docket number of that case.
    (b) Inspection of docket and records. The docket of the Board shall 
be open to public inspection. The Board shall publish its decisions in 
such form as to be readily available for inspection, and shall allow the 
public inspection thereof at the permanent location of the Board. 
Inspection of the papers and documents included in the case record of 
any proceeding before the Board shall be permitted or denied in 
accordance with the standards provided in Sec. 1.22 of this title. The 
Chairman of the Board shall exercise the functions prescribed in 29 CFR 
70.74a.

[27 FR 12186, Dec. 8, 1962, as amended at 37 FR 26710, Dec. 15, 1972]



Sec. 501.9  Regulation of proceedings.

    The proceedings shall be conducted under the supervision of the 
Chairman or Acting Chairman, who shall regulate such matters as the 
granting of continuances, acceptance of briefs and other procedural 
matters.



Sec. 501.10  Number of copies of pleadings and related documents; 
service; computation of time.

    (a) Except as provided in paragraph (b) of this section, any 
application, pleading, petition, brief or other memorandum shall be 
filed in duplicate (original and 1 copy) with the Board; the Board shall 
serve the copy upon the other party.
    (b) Instead of filing the duplicate of any such document with the 
Board, the party submitting it may serve the duplicate or copy directly 
upon the Director and make a notation to that effect upon the copy filed 
with the Board.
    (c) Any notice or order required under this part to be given or 
served shall be by certified or registered mail or by personal service.
    (d) Computation of Time. (1) In computing any period of time 
prescribed or allowed by these rules or by direction of the Board, the 
first day counted shall be the day after the event from which the time 
period begins to run, and the last day for filing shall be included in 
the computation. If the last day for filing falls on a Saturday, Sunday, 
or Federal holiday, the first working day thereafter shall be the last 
day for timely filing. For purposes of computing the time for filing a 
notice of appeal or a petition for reconsideration, the event which 
commences the running of the time period shall be construed as occurring 
on the date the relevant decision is issued, and not the date the 
decision is actually received.
    (2) Whenever a paper is served on the Board by mail, paragraph 
(d)(1) of this section will be deemed complied with if the envelope 
containing the paper is

[[Page 8]]

postmarked within the time period allowed, computed as in paragraph 
(d)(1) of this section. If there is no postmark, or it is not legible, 
other evidence, such as, but not limited to, certified mail receipts, 
certificate of service and affidavits, may be used to establish the date 
of mailing.
    (3) A waiver or an extension of the time limitations for filing a 
paper, other than a notice of appeal or a petition for reconsideration, 
may be requested by motion.

[27 FR 12186, Dec. 8, 1962, as amended at 53 FR 49491, Dec. 7, 1988]



Sec. 501.11  Appearances.

    (a) Representation. In any proceeding before the Board, a party may 
appear in person, or by counsel or any other duly authorized person, 
including any accredited representative of an employee organization. No 
person shall be recognized as representing an appellant or intervenor 
unless there shall be filed with the Board a statement in writing, 
signed by the party to be represented, authorizing such representation. 
Such representative when accepted shall continue to be recognized unless 
he should abandon such capacity, withdraw, or the appellant or 
intervenor directs otherwise.
    (b) Former members of the Board; other employees of the Department 
of Labor. A former member of the Board shall not be allowed to 
participate as counsel or other representative before the Board in any 
proceeding until two years from the termination of his status as a Board 
member. The practice of other former employees of the Department of 
Labor are governed by 29 CFR 2.2 and 2.3.
    (c) Debarment of counsel or other representative. Whenever in any 
proceeding the Board finds that a person acting as counsel or other 
representative for any party to the proceeding is guilty of unethical or 
unprofessional conduct, the Board may order that such person be excluded 
from further acting as counsel or other representative in such 
proceeding. An appeal may be taken to the Secretary of Labor from such 
an order, but the proceeding shall not be delayed or suspended pending 
disposition of the appeal, although the Board may suspend the proceeding 
for a reasonable time for the purpose of enabling the party to obtain 
different counsel or other representative. Whenever the Board has issued 
an order precluding a person from further acting as counsel or other 
representative in a proceeding, the Board shall within a reasonable time 
thereafter submit to the Secretary of Labor a report of the facts and 
circumstances surrounding the issuance of the order, and shall recommend 
what action the Secretary of Labor should take in regard to the 
appearance of such person as counsel or other representative in other 
proceedings before the Board. Before any action is taken debarring such 
person as counsel or representative from other proceedings, he shall be 
furnished notice and opportunity to be heard on the matter.
    (d) Fees. No claim for legal or other service rendered in respect to 
a proceeding before the Board to or on account of any person, shall be 
valid unless approved by the Board or by a member thereof. No contract 
for a stipulated fee or for a fee upon a contingent basis shall be 
recognized by the Board, and no fee for service shall be approved except 
upon an application to the Board supported by a sufficient statement of 
the extent and character of the necessary work done before the Board on 
behalf of the interested party. Except where such representation is 
gratuitous, the fee approved by the Board, or by a member thereof, shall 
be reasonably commensurate with the actual necessary work performed by 
such representative, taking into account the capacity in which the 
representative has appeared, the amount of the compensation involved, 
and the circumstances of the appellant.



Sec. 501.12  Intervention.

    The Board may permit any person whose rights may be affected by any 
proceeding before the Board to intervene therein whenever such person 
shows in a written petition to intervene that such rights are so 
affected. The petition should state with precision and particularity (a) 
the rights affected; and (b) the nature of any argument he intends to 
make.

[[Page 9]]



Sec. 501.13  Place of proceedings.

    The Board shall sit in Washington, DC.

[[Page 11]]



 CHAPTER V--EMPLOYMENT AND TRAINING ADMINISTRATION, DEPARTMENT OF LABOR




  --------------------------------------------------------------------
Part                                                                Page
601             Administrative procedure....................         328
602             Quality control in the Federal-State 
                    unemployment insurance system...........         331
603             Income and eligibility verification system..         351
606             Tax credits under the Federal Unemployment 
                    Tax Act; advances under Title XII of the 
                    Social Security Act.....................         361
609             Unemployment compensation for Federal 
                    civilian employees......................         364
614             Unemployment compensation for ex-
                    servicemembers..........................         401
615             Extended benefits in the Federal-State 
                    Unemployment Compensation Program.......         423
616             Interstate arrangement for combining 
                    employment and wages....................         425
617             Trade adjustment assistance for workers 
                    under the Trade Act of 1974.............         429
618-621         [Reserved]
625             Disaster unemployment assistance............         437
626             Introduction to the regulations under the 
                    Job Training Partnership Act............         455
627             General provisions governing programs under 
                    Titles I, II, and III of the act........         464
628             Programs under Title II of the Job Training 
                    Partnership Act.........................         676
629-630         [Reserved]
631             Programs under Title III of the Job Training 
                    Partnership Act.........................         701
632             Indian and Native American employment and 
                    training programs.......................         730
633             Migrant and seasonal farmworker programs....         733
634             Labor market information programs under 
                    Title IV, Part E of the Job Training 
                    Partnership Act.........................         748
636             Complaints, investigations and hearings.....         754

[[Page 12]]

637             Programs under Title V of the Job Training 
                    Partnership Act.........................         328
638             Job Corps program under Title IV-B of the 
                    Job Training Partnership Act............         331
639             Worker adjustment and retraining 
                    notification............................         351
640             Standard for benefit payment promptness--
                    unemployment compensation...............         361
641             Provisions governing the Senior Community 
                    Service Employment Program..............         364
645             Provisions governing welfare-to-work grants.         401
646             [Reserved]
650             Standard for appeals promptness--
                    unemployment compensation...............         423
651             General provisions governing the Federal-
                    State Employment Service System.........         425
652             Establishment and functioning of State 
                    employment services.....................         429
653             Services of the Employment Service System...         437
654             Special responsibilities of the Employment 
                    Service System..........................         455
655             Temporary employment of aliens in the United 
                    States..................................         464
656             Labor certification process for permanent 
                    employment of aliens in the United 
                    States..................................         676
657             Provisions governing grants to State agencies 
                    for employment services activities [Reserved]
658             Administrative provisions governing the Job 
                    Service System..........................         701
660             Introduction to the regulations for 
                    workforce investment systems under Title 
                    I of the Workforce Investment Act.......         730
661             Statewide and local governance of the 
                    workforce investment system under Title 
                    I of the Workforce Investment Act.......         733
662             Description of the one-stop system under 
                    Title I of the Workforce Investment Act.         748
663             Adult and dislocated worker activities under 
                    Title I of the Workforce Investment Act.         754
664             Youth activities under Title I of the 
                    Workforce Investment Act................         770
665             Statewide workforce investment activities 
                    under Title I of the Workforce 
                    Investment Act..........................         779
666             Performance accountability under Title I of 
                    the Workforce Investment Act............         783
667             Administrative provisions under Title I of 
                    the Workforce Investment Act............         788

[[Page 13]]

668             Indian and Native American programs under 
                    Title I of the Workforce Investment Act.         815
669             National farmworkers jobs program under 
                    Title I of the Workforce Investment Act.         832
670             The Job Corps under Title I of the Workforce 
                    Investment Act..........................         842
671             National emergency grants for dislocated 
                    workers.................................         859

[[Page 15]]



PART 601_ADMINISTRATIVE PROCEDURE--Table of Contents




  Subpart A_Approval, Certification and Findings With Respect to State 
  Laws and Plans of Operation for Normal and Additional Tax Credit and 
                             Grant Purposes

Sec.
601.1 General.
601.2 Approval of State unemployment compensation laws.
601.3 Findings with respect to State laws and plans of operation.
601.4 Certification for tax credit.
601.5 Withholding payments and certifications.

                  Subpart B_Grants, Advances and Audits

601.6 Grants for administration of unemployment insurance and employment 
          service.
601.7 [Reserved]
601.8 Agreement with Postmaster General.
601.9 Audits.

    Authority: 5 U.S.C. 301; 26 U.S.C. Chapter 23; 29 U.S.C. 49k; 38 
U.S.C. Chapters 41 and 42; 39 U.S.C. 3202(a)(1)(E) and 3202 note; 42 
U.S.C. 1302; and Secretary of Labor's Order No. 4-75, 40 FR 18515.

    Source: 15 FR 5886, Aug. 31, 1950; 23 FR 1267, Mar. 1, 1958, unless 
otherwise noted.



  Subpart A_Approval, Certification and Findings With Respect to State 
  Laws and Plans of Operation for Normal and Additional Tax Credit and 
                             Grant Purposes



Sec. 601.1  General.

    (a) State unemployment compensation laws are approved and certified 
as provided in section 3304 of the Internal Revenue Code of 1954; 
findings are made regarding reduced rates permitted by a State law 
(section 3303(a) of the Internal Revenue Code of 1954) and such laws are 
certified as provided in section 3303(b) of the Internal Revenue Code of 
1954; findings are made regarding the inclusion of specified provisions 
(section 303(a) of the Social Security Act) in State laws approved under 
section 3304(a) of the Internal Revenue Code of 1954; findings are made 
whether the States have accepted the provisions of the Wagner-Peyser Act 
and whether their plans of operation for public employment offices 
comply with the provisions of said Act.
    (b) Normal and additional tax credit is given to taxpayers against 
taxes imposed by section 3301 of the Internal Revenue Code of 1954.
    (c) Grants of funds are made to States for administration of their 
employment security laws if their unemployment compensation laws and 
their plans of operation for public employment offices meet required 
conditions of Federal law. (Section 303(a) of the Social Security Act; 
section 3304(a) of the Internal Revenue Code of 1954; sections 6, 7, and 
8 of the Wagner-Peyser Act.)
    (d) As used throughout this Part, the terms ``Secretary'' or 
``Secretary of Labor'' shall refer to the Secretary of Labor, U.S. 
Department of Labor, or his or her designee.

[15 FR 5886, Aug. 31, 1950; 23 FR 1267, Mar. 1, 1958, as amended at 61 
FR 19983, May 3, 1996]



Sec. 601.2  Approval of State unemployment compensation laws.

    States may at their option submit their unemployment compensation 
laws for approval (section 3304(a) of the Internal Revenue Code of 
1954).
    (a) Submission. The States submit to the Regional Administrator, 
Employment and Training Administration (RAETA) two copies of the State 
unemployment compensation law properly certified by an authorized State 
official to be true and complete, together with a written request for 
approval.
    (b) Review of State law. The RAETA reviews the State law and 
forwards one copy to the central office of the Employment and Training 
Administration with his comments. The central office reviews the RAETA's 
comments and analyzes the State law from the standpoint of the 
requirements of section 3304(a) of the Internal Revenue Code of 1954.
    (c) Approval. The Secretary of Labor determines whether the State 
law contains the provisions required by section 3304(a) of the Internal 
Revenue Code of 1954. If the State law is approved, the Secretary 
notifies the Governor of the State within 30 days of the submission of 
such law.
    (d) Certification. On December 31 of each taxable year the Secretary 
of

[[Page 16]]

Labor certifies, for the purposes of normal tax credit (section 
3302(a)(1) of the Internal Revenue Code of 1954), to the Secretary of 
the Treasury each State the law of which he has previously approved. 
(See also Sec. 601.5.)

(Approved by the Office of Management and Budget under control number 
1205-0222)

[15 FR 5886, Aug. 31, 1950; 23 FR 1267, Mar. 1, 1958, as amended at 49 
FR 18295, Apr. 30, 1984; 50 FR 51241, Dec. 16, 1985]



Sec. 601.3  Findings with respect to State laws and plans of operation.

    For purposes of grants, findings are made regarding the inclusion in 
State unemployment compensation laws, approved under section 3304(a) of 
the Internal Revenue Code of 1954, of provisions required by section 
303(a) of the Social Security Act (see Sec. 601.2); findings are also 
made whether a State has accepted the provisions of the Wagner-Peyser 
Act and whether its plan of operation for public employment offices 
complies with the provisions of said act. For purposes of additional tax 
credit, findings are made regarding reduced rates of contributions 
permitted by the State law (section 3303(a) (1) of the Internal Revenue 
Code of 1954).

So that the Secretary of Labor may be enabled to determine the status of 
State laws and plans of operation, all relevant State materials, such as 
statutes, executive and administrative orders, legal opinions, rules, 
regulations, interpretations, court decisions, etc., are required to be 
submitted currently.
    (a) Submission. The States submit currently to the RAETA two copies 
of relevant State material, properly certified by an authorized State 
official to be true and complete.
    (b) Review. The RAETA reviews the State material and forwards one 
copy to the central office with his comments. The central office reviews 
the material from the standpoint of its conformity with section 303(a) 
of the Social Security Act, section 3303(a) of the Internal Revenue Code 
of 1954, or the Wagner-Peyser Act, as the case may be.
    (c) Findings. The Secretary makes findings as provided in the cited 
sections of the Federal law. In the event that the Secretary is unable 
to make the findings required for certification for payment or for 
certification of the law for purposes of additional tax credit, further 
discussions with State officials are undertaken.

(Approved by the Office of Management and Budget under control number 
1205-0222)

[15 FR 5886, Aug. 31, 1950; 23 FR 1267, Mar. 1, 1958, as amended at 49 
FR 18295, Apr. 30, 1984; 50 FR 51241, Dec. 16, 1985]



Sec. 601.4  Certification for tax credit.

    (a) Within 30 days after submittal of a State unemployment 
compensation law for such purpose, the Secretary certifies to the State 
agency, in accordance with the provisions of section 3303(b)(3) of the 
Internal Revenue Code of 1954, his findings regarding reduced rates of 
contributions allowable under such law. On December 31 of each taxable 
year the Secretary certifies to the Secretary of the Treasury the law of 
each State, certified with respect to such year under section 3304 of 
the Internal Revenue Code of 1954 (see Sec. 601.2), which he finds 
allows reduced rates with respect to such taxable year only in 
accordance with the provisions of section 3303(a) of the Internal 
Revenue Code of 1954.
    (b) With regard to certification for payment, see Sec. 601.6.



Sec. 601.5  Withholding payments and certifications.

    (a) When withheld. Payment of funds to States or yearend 
certification of State laws, or both, are withheld when the Secretary 
finds, after reasonable notice and opportunity for hearing:
    (1) That any provision required by section 303(a) of the Social 
Security Act is no longer included in the State unemployment 
compensation law; or
    (2) That the State unemployment compensation law has been so changed 
as no longer to meet the conditions required by section 3303(a) of the 
Internal Revenue Code of 1954 (section 3303(b)(3) of the Internal 
Revenue Code); or
    (3) That the State unemployment compensation law has been so amended 
as no longer to contain the provisions specified in section 3304(a) or 
has failed to comply substantially with any such provision and such 
finding has become effective (section 3304(c) of the Internal Revenue 
Code of 1954); or

[[Page 17]]

    (4) That in the administration of the State unemployment 
compensation law there has been a failure to comply substantially with 
required provisions of such law (section 303(b)(2) of the Social 
Security Act and section 3303(b)(3) of the Internal Revenue Code of 
1954); or
    (5) That in the administration of the State unemployment 
compensation law there has been a denial, in a substantial number of 
cases, of benefits due under such law, except that there may be no such 
finding until the question of entitlement has been decided by the 
highest judicial authority given jurisdiction under such State law 
(section 303(b)(1) of the Social Security Act); or
    (6) That a State fails to make its unemployment compensation records 
available to the Railroad Retirement Board or fails to cooperate with 
Federal agencies charged with the administration of unemployment 
compensation laws (section 303(c) of the Social Security Act); or
    (7) That a State no longer has a plan of operation for public 
employment offices complying with the provisions of the Wagner-Peyser 
Act; or
    (8) That a State agency has not properly expended, in accordance 
with an approved plan of operation, the Federal monies paid it for 
administration of its public employment service.
    (b) Informal discussion. Such hearings are generally not called, 
however, until after every reasonable effort has been made by regional 
and central office representatives to resolve the question involved by 
conference and discussion with State officials. Formal notification of 
the date and place of a hearing does not foreclose further negotiations 
with State officials.
    (c) Notice of noncertification. If, at any time during the taxable 
year, the Secretary of Labor has reason to believe that a State whose 
unemployment compensation law he has previously approved may not be 
certified, he promptly notifies the Governor of the State to that effect 
(section 3304(d) of the Internal Revenue Code of 1954).
    (d) Notice of hearing. Notice of hearing is sent by the Secretary of 
Labor to the State employment security agency. The notice sets forth the 
purpose of the hearing, the time, date, and place at which the hearing 
will be held, and the rules of procedure which will be followed. At a 
hearing the State is given an opportunity to present arguments and all 
relevant evidence, written or oral. The Secretary makes the necessary 
determination or findings, on the basis of the record of such hearings. 
A notice of the Secretary's determination or finding is sent to the 
State employment security agency.
    (e) Civil Rights Act issues. To the extent that any proposed 
withholding of funds involves circumstances within the scope of title VI 
of the Civil Rights Act of 1964 and the regulations promulgated 
thereunder, the procedure set forth in 29 CFR part 31 shall be 
applicable.
    (f) Tax credit reductions. (1) Section 3302(c)(2) of the Internal 
Revenue Code of 1954 prescribes the conditions under which the total 
credits otherwise allowable under section 3302 for a taxable year in the 
case of a taxpayer subject to the unemployment compensation law of a 
State shall be reduced on account of an outstanding balance of advances 
made to the State pursuant to title XII of the Social Security Act. As 
amended by section 110(a) of the Emergency Compensation and Special 
Unemployment Assistance Extension Act of 1975 (Pub. L. 94-45, approved 
June 30, 1975; 89 Stat. 236, 239), and as further amended by title II of 
the Emergency Unemployment Compensation Extension Act of 1977 (Pub. L. 
95-19, approved April 12, 1977; 91 Stat. 39, 43), the incremental 
reductions in total credits will not apply to a State with respect to 
the taxable years beginning on January 1, 1975, January 1, 1976, January 
1, 1977, January 1, 1978, and January 1, 1979, if the Secretary of Labor 
finds as to each such year that the State has studied and taken 
appropriate action with respect to the financing of its unemployment 
compensation program so as substantially to accomplish the purpose of 
restoring the fiscal soundness of the State's unemployment account in 
the Unemployment Trust Fund and permitting the repayment within a 
reasonable time of any advances made to the State's account pursuant to 
title XII of the Social Security Act.

[[Page 18]]

    (2) The Secretary of Labor's finding with respect to a State as to 
any of the taxable years 1975, 1976, 1977, 1978, and 1979 will be based 
on his determination as to whether the State has taken appropriate 
action resulting in:
    (i) Amendment of its unemployment compensation law, effective in or 
prior to the taxable year with respect to which the finding is made, or 
effective at the beginning of the succeeding taxable year, increasing 
the State's unemployment tax rate, increasing the State's unemployment 
tax base, or changing the State's experience rating formula, or a 
combination of such changes, so as to be estimated by the Secretary to 
achieve for the taxable year with respect to which the finding is made 
or for the period following the effective date of the amendment:
    (A) An average employer tax rate, computed as a percentage of the 
total wages in employment covered by the State's unemployment 
compensation law, which exceeds the State's average annual benefit cost 
rate, computed as a percentage of the total wages in employment covered 
by the State's unemployment compensation law, for the ten calendar years 
immediately preceding the year with respect to which the finding is 
made; and
    (B) An effective minimum employer tax rate which is not less than 
1.0 percent of the wages of any employer which are subject to tax under 
the Federal Unemployment Tax Act for the same year; and
    (C) An effective maximum employer tax rate which exceeds 2.7 percent 
of the wages of any employer which are subject to tax under the Federal 
Unemployment Tax Act for the same year, or provision for no reduced rate 
of contributions for any employer subject to the State unemployment 
compensation law; or
    (ii)(A) Amendment of its unemployment compensation law increasing 
the State's unemployment tax rate, increasing the State's unemployment 
tax base, or changing the State's experience rating formula, or a 
combination of such changes, so as to be estimated by the Secretary of 
Labor to result in increasing contributions to the State's unemployment 
fund, for the taxable year with respect to which the finding is made, 
and the allocation from such increased contributions of a sum sufficient 
to make the repayment in the amount and within the time limit prescribed 
in paragraph (f)(2)(ii)(B) of this section; and
    (B) Repayment to the Treasury of the United States, for credit to 
the Federal unemployment account in the Unemployment Trust Fund, prior 
to November 10 of the taxable year with respect to which the finding is 
made, of an amount equal to the amount of the additional tax which would 
be payable by all taxpayers subject to the unemployment compensation law 
of the State for that taxable year if (1) for any year prior to 1978, 
the reduction in total credits prescribed by section 3302(c)(2)(A) of 
the Internal Revenue Code of 1954 for that taxable year was applied 
without regard to the amendment added by section 110(a) of the Emergency 
Compensation and Special Unemployment Assistance Extension Act of 1975, 
and (2) for any year after 1977, the reduction in total credits 
prescribed by the applicable provisions of section 3302(c)(2) of the 
Internal Revenue Code of 1954 for that taxable year was applied without 
regard to the amendment added by section 110(a) of the Emergency 
Compensation and Special Unemployment Assistance Extension Act of 1975; 
and
    (C) Determination by the Secretary that unemployment reserves and 
income from contributions in the State unemployment fund will be 
adequate to meet benefit payment obligations without title XII advances 
during the 6-month period beginning November 1 of the year in which such 
determination is made.
    (3)(i) An application for deferral under this paragraph (f) must be 
requested and filed with the Secretary of Labor by the Governor of a 
State no later than July 1 of the taxable year for which such deferral 
is requested. Such application shall be in such form, and shall be 
accompanied by such documentation, as the Secretary of Labor shall 
prescribe.
    (ii) A finding by the Secretary of Labor with respect to a State 
shall be made as of November 10 of the taxable year with respect to 
which the finding

[[Page 19]]

is made, and such finding shall be published in the Federal Register 
together with the reasons for the finding.

[30 FR 6942, May 22, 1965, as amended at 43 FR 13828, Mar. 31, 1978]



                  Subpart B_Grants, Advances and Audits



Sec. 601.6  Grants for administration of unemployment insurance and 
employment service.

    Grants of funds for administration of State unemployment insurance 
and public employment service programs are made to States under section 
302(a) of the Social Security Act, the Wagner-Peyser Act, and the 
Appropriation Acts.
    (a) Requests for funds. The forms and instructions used by State 
agencies in requesting funds are available upon request from the 
Employment and Training Administration, Department of Labor, Washington, 
DC 20210, and at the regional offices. The forms and instructions call 
for detailed information for each budgetary period concerning the 
specific amounts requested for personal services and other current 
expenses of State agencies, supported by workload and unit-cost 
estimates. Supplementary budget requests are processed in the same 
manner as regular requests. The Administration's representatives in the 
regional offices furnish assistance to the State agencies in preparing 
requests for funds.
    (b) Processing of requests. State agencies send their requests for 
funds to the RAETA who reviews the requests and forwards them to the ETA 
National Office with his recommendation as to the amounts necessary for 
proper and efficient administration of the State unemployment 
compensation law and employment service program.

The ETA National Office appraises the requests and the recommendations 
of the regional representatives from a nationwide point of view, 
examining each State's request in the light of the experience of other 
States to insure equitable treatment among the States in the allocation 
of funds made available by Congress for the administration of State 
unemployment compensation laws and public employment service programs.
    (c) Action by ETA National Office. If the ETA National Office 
approves the State's budget request, the State agency is notified; and, 
provided the conditions precedent to grants continue during the 
budgetary period, certifications for payment, under the approved budget, 
stating the amounts, are made by the ETA National Office to the 
Secretary of the Treasury quarterly. Upon denial of a request, in whole 
or in part, the State agency is notified and the RAETA is instructed to 
negotiate with the State with a view to removing the basis for denial.

(Approved by the Office of Management and Budget under control number 
1205-0132)

[15 FR 5886, Aug. 31, 1950, as amended at 42 FR 4724, Jan. 25, 1977; 49 
FR 18295, Apr. 30, 1984]



Sec. 601.7  [Reserved]



Sec. 601.8  Agreement with Postmaster General.

    The Secretary of Labor and the Postmaster General have been directed 
by the Congress (title II of the Labor-Federal Security Agency 
Appropriation Act, 1950) to prescribe a mutually satisfactory procedure 
whereby official State employment security postal matter will be handled 
without the prepayment of postage. In lieu of such prepayments, the 
Secretary periodically certifies to the Secretary of the Treasury for 
payment to the U.S. Postal Service the amount necessary to cover the 
cost of State agency mailings. The amount of payment is based on a 
formula agreed upon by the Secretary of Labor and the U.S. Postal 
Service.

[15 FR 5886, Aug. 31, 1950, as amended at 42 FR 4724, Jan. 25, 1977]



Sec. 601.9  Audits.

    The Department of Labor's audit regulations at 41 CFR 29-70.207-2(h) 
and (i), 41 CFR 29-70.207-3, and 41 CFR 29-70.207-4 shall apply with 
respect to employment service and unemployment insurance programs.

[46 FR 7766, Jan. 23, 1981]

[[Page 20]]



PART 602_QUALITY CONTROL IN THE FEDERAL-STATE UNEMPLOYMENT INSURANCE 
SYSTEM--Table of Contents




                      Subpart A_General Provisions

Sec.
602.1 Purpose.
602.2 Scope.

                     Subpart B_Federal Requirements

602.10 Federal law requirements.
602.11 Secretary's interpretation.

                    Subpart C_State Responsibilities

602.20 Organization.
602.21 Standard methods and procedures.
602.22 Exceptions.

                   Subpart D_Federal Responsibilities

602.30 Management.
602.31 Oversight.

               Subpart E_Quality Control Grants to States

602.40 Funding.
602.41 Proper expenditure of Quality Control granted funds.
602.42 Effect of failure to implement Quality Control program.
602.43 No incentives or sanctions based on specific error rates.

Appendix A to Part 602--Standard For Claim Determinations--Separation 
          Information

    Authority: 42 U.S.C. 1302.

    Source: 52 FR 33528, Sept. 3, 1987, unless otherwise noted.



                      Subpart A_General Provisions



Sec. 602.1  Purpose.

    The purpose of this part is to prescribe a Quality Control (QC) 
program for the Federal-State unemployment insurance (UI) system, which 
is applicable to the State UI programs and the Federal unemployment 
benefit and allowance programs administered by the State Employment 
Security Agencies (SESA) under agreements between the States and the 
Secretary of Labor (Secretary). QC will be a major tool to assess the 
timeliness and accuracy of State administration of the UI program. It is 
designed to identify errors in claims processes and revenue collections 
(including payments in lieu of contributions and Extended Unemployment 
Compensation Account collections), analyze causes, and support the 
initiation of corrective action.



Sec. 602.2  Scope.

    This part applies to all State laws approved by the Secretary under 
the Federal Unemployment Tax Act (section 3304 of the Internal Revenue 
Code of 1954, 26 U.S.C. section 3304), to the administration of the 
State laws, and to any Federal unemployment benefit and allowance 
program administered by the SESAs under agreements between the States 
and the Secretary. QC is a requirement for all States, initially being 
applicable to the largest permanently authorized programs (regular UI 
including Combined-Wage-Claims) and federally-funded programs 
(Unemployment Compensation for Ex-Servicemen and Unemployment 
Compensation for Federal Employees). Other elements of the QC program 
(e.g., interstate, extended benefit programs, benefit denials, and 
revenue collections) will be phased in under a schedule determined by 
the Department in consultation with State agencies.



                     Subpart B_Federal Requirements



Sec. 602.10  Federal law requirements.

    (a) Section 303(a)(1) of the Social Security Act (SSA), 42 U.S.C. 
503(a)(1), requires that a State law include provision for:

    Such methods of administration . . . as are found by the Secretary 
of Labor to be reasonably calculated to insure full payment of 
unemployment compensation when due.

    (b) Section 303(a)(6), SSA, 42 U.S.C. 505(a)(6), requires that a 
State law include provision for:

    The making of such reports, in such form and containing such 
information, as the Secretary of Labor may from time to time require, 
and compliance with such provisions as the Secretary of Labor may from 
time to time find necessary to assure the correctness and verification 
of such reports.

    (c) Section 303(b), SSA, 42 U.S.C. 503(b), provides in part that:


[[Page 21]]


    Whenever the Secretary of Labor, after reasonable notice and 
opportunity for hearing to the State agency charged with the 
administration of the State law, finds that in the administration of the 
law there is--

                                * * * * *

    (2) a failure to comply substantially with any provision specified 
in subsection (a);

the Secretary of Labor shall notify such State agency that further 
payments will not be made to the State until the Secretary of Labor is 
satisfied that there is no longer any such denial or failure to comply. 
Until he is so satisfied, he shall make no further certification to the 
Secretary of the Treasury with respect to such State . . . .

    (d) Certification of payment of granted funds to a State is withheld 
only when the Secretary finds, after reasonable notice and opportunity 
for hearing to the State agency--
    (1) That any provision required by section 303(a) of the Social 
Security Act is no longer included in the State unemployment 
compensation law, or
    (2) That in the administration of the State unemployment 
compensation law there has been a failure to comply substantially with 
any required provision of such law.



Sec. 602.11  Secretary's interpretation.

    (a) The Secretary interprets section 303(a)(1), SSA, to require that 
a State law provide for such methods of administration as will 
reasonably ensure the prompt and full payment of unemployment benefits 
to eligible claimants, and collection and handling of income for the 
State unemployment fund (particularly taxes and reimbursements), with 
the greatest accuracy feasible.
    (b) The Secretary interprets sections 303(a)(1) and 303(a)(6), SSA, 
to authorize the Department of Labor to prescribe standard definitions, 
methods and procedures, and reporting requirements for the QC program 
and to ensure accuracy and verification of QC findings.
    (c) The Secretary interprets section 303(b)(2), SSA to require that, 
in the administration of a State law, there shall be substantial 
compliance with the provisions required by sections 303(a) (1) and (6). 
Further, conformity of the State law with those requirements is required 
by section 303(a) and Sec. 601.5(a) of this chapter.
    (d) To satisfy the requirements of sections 303(a) (1) and (6), a 
State law must contain a provision requiring, or which is construed to 
require, the establishment and maintenance of a QC program in accordance 
with the requirements of this part. The establishment and maintenance of 
such a QC program in accordance with this part shall not require any 
change in State law concerning authority to undertake redeterminations 
of claims or liabilities or the finality of any determination, 
redetermination or decision.



                    Subpart C_State Responsibilities



Sec. 602.20  Organization.

    Each State shall establish a QC unit independent of, and not 
accountable to, any unit performing functions subject to evaluation by 
the QC unit. The organizational location of this unit shall be 
positioned to maximize its objectivity, to facilitate its access to 
information necessary to carry out its responsibilities, and to minimize 
organizational conflict of interest.



Sec. 602.21  Standard methods and procedures.

    Each State shall:
    (a) Perform the requirements of this section in accordance with 
instructions issued by the Department, pursuant to Sec. 602.30(a) of 
this part, to ensure standardization of methods and procedures in a 
manner consistent with this part;
    (b) Select representative samples for QC study of at least a minimum 
size specified by the Department to ensure statistical validity (for 
benefit payments, a minimum of 400 cases of weeks paid per State per 
year);
    (c) Complete prompt and in-depth case investigations to determine 
the degree of accuracy and timeliness in the administration of the State 
UI law and Federal programs with respect to benefit determinations, 
benefit payments, and revenue collections; and conduct other 
measurements and studies necessary or appropriate for carrying out the 
purposes of this part; and in conducting investigations each State 
shall:

[[Page 22]]

    (1) Inform claimants in writing that the information obtained from a 
QC investigation may affect their eligibility for benefits and inform 
employers in writing that the information obtained from a QC 
investigation of revenue may affect their tax liability,
    (2) Use a questionnaire, prescribed by the Department, which is 
designed to obtain such data as the Department deems necessary for the 
operation of the QC program; require completion of the questionnaire by 
claimants in accordance with the eligibility and reporting authority 
under State law,
    (3) Collect data identified by the Department as necessary for the 
operation of the QC program; however, the collection of demographic data 
will be limited to those data which relate to an individual's 
eligibility for UI benefits and necessary to conduct proportions tests 
to validate the selection of representative samples (the demographic 
data elements necessary to conduct proportions tests are claimants' date 
of birth, sex, and ethnic classification); and
    (4) Conclude all findings of inaccuracy as detected through QC 
investigations with appropriate official actions, in accordance with the 
applicable State and Federal laws; make any determinations with respect 
to individual benefit claims in accordance with the Secretary's 
``Standard for Claim Determinations--Separation Information'' in the 
Employment Security Manual, part V, sections 6010-6015 (appendix A of 
this part);
    (d) Classify benefit case findings resulting from QC investigations 
as:
    (1) Proper payments, underpayments, or overpayments in benefit 
payment cases, or
    (2) Proper denials or underpayments in benefit denial cases;
    (e) Make and maintain records pertaining to the QC program, and make 
all such records available in a timely manner for inspection, 
examination, and audit by such Federal officials as the Secretary may 
designate or as may be required or authorized by law;
    (f) Furnish information and reports to the Department, including 
weekly transmissions of case data entered into the automated QC system 
and annual reports, without, in any manner, identifying individuals to 
whom such data pertain; and
    (g) Release the results of the QC program at the same time each 
year, providing calendar year results using a standardized format to 
present the data as prescribed by the Department; States will have the 
opportunity to release this information prior to any release by the 
Department.

(Approved by the Office of Management and Budget under Control Number 
1205-0245)



Sec. 602.22  Exceptions.

    If the Department determines that the QC program, or any constituent 
part of the QC program, is not necessary for the proper and efficient 
administration of a State law or in the Department's view is not cost 
effective, the Department shall use established procedures to advise the 
State that it is partially or totally excepted from the specified 
requirements of this part. Any determination under this section shall be 
made only after consultations with the State agency.



                   Subpart D_Federal Responsibilities



Sec. 602.30  Management.

    (a) The Department shall establish required methods and procedures 
(as specified in Sec. 602.21 of this part); and provide technical 
assistance as needed on the QC process.
    (b) The Department shall consider and explore alternatives to the 
prescribed sampling, study, recordkeeping, and reporting methodologies. 
This shall include, but not be limited to, testing the obtaining of 
information needed for QC by telephone and mail rather than in face-to-
face interviews.
    (c) The Department shall maintain a computerized data base of QC 
case data which is transmitted to the Department under Sec. 602.21, 
which will be combined with other data for statistical and other 
analysis such as assessing the impact of economic cycles, funding 
levels, and workload levels on program accuracy and timeliness.



Sec. 602.31  Oversight.

    The Department shall review QC operational procedures and samples,

[[Page 23]]

and validate QC methodology to ensure uniformity in the administration 
of the QC program and to ensure compliance with the requirements of this 
part. The Department shall, for purposes of determining eligibility for 
grants described in Sec. 602.40, annually review the adequacy of the 
administration of a State's QC program.



               Subpart E_Quality Control Grants to States



Sec. 602.40  Funding.

    (a) The Department shall use established procedures to notify States 
of the availability of funds for the operation of QC programs in 
accordance with this part.
    (b) The Department may allocate additional resources, if available, 
to States for analysis of date generated by the QC program, to increase 
the number of claims sampled in areas where more information is needed, 
for pilot studies for the purpose of expanding the QC program, and for 
corrective action.



Sec. 602.41  Proper expenditure of Quality Control granted funds.

    The Secretary may, after reasonable notice and opportunity for 
hearing to the State agency, take exception to and require repayment of 
an expenditure for the operation of a QC program if it is found by the 
Secretary that such expenditure is not necessary for the proper and 
efficient administration of the QC program in the State. See sections 
303(a)(8), 303(a)(9) and 303(b)(2), SSA, and 20 CFR 601.5. For purposes 
of this section, an expenditure will be found not necessary for proper 
and efficient administration if such expenditure fails to comply with 
the requirements of subpart C of this part.

[52 FR 33528, Sept. 3, 1987, as amended at 52 FR 34343, Sept. 10, 1987]



Sec. 602.42  Effect of failure to implement Quality Control program.

    Any State which the Secretary finds, after reasonable notice and 
opportunity for hearing, has not implemented or maintained a QC program 
in accordance with this part will not be eligible for any grants under 
title III of the Social Security Act until such time as the Secretary is 
satisfied that there is no longer any failure to conform or to comply 
substantially with any provision specified in this part. See sections 
303(a)(1), 303(a)(6), and 303(b)(2), SSA, and 20 CFR 601.5.



Sec. 602.43  No incentives or sanctions based on specific error rates.

    Neither sanctions nor funding incentives shall be used by the 
Department to influence the achievement of specified error rates in 
State UI programs.

 Appendix A to Part 602--Standard for Claim Determinations--Separation 
                               Information

         Employment Security Manual (Part V, Sections 6010-6015)

    6010 Federal Law Requirements. Section 303(a)(1) of the Social 
Security Act requires that a State law include provision for:
    ``Such methods of administration . . . as are found by the Secretary 
to be reasonably calculated to insure full payment of unemployment 
compensation when due.''
    Section 303(a)(3) of the Social Security Act requires that a State 
law include provision for:
    ``Opportunity for a fair hearing before an impartial tribunal, for 
all individuals whose claims for unemployment compensation are denied.''
    Section 3304(a)(4) of the Federal Unemployment Tax Act and section 
303(a)(5) of the Social Security Act require that a State law include 
provision for:
    ``Expenditure of all money withdrawn from an unemployment fund of 
such State, in the payment of unemployment compensation. . . .''
    Section 3306(h) of the Federal Unemployment Tax Act defines 
``compensation'' as ``cash benefits payable to individuals with respect 
to their unemployment.''
    6011 Secretary's Interpretation of Federal Law Requirements. The 
Secretary interprets the above sections to require that a State law 
include provisions which will insure that:
    A. Individuals who may be entitled to unemployment compensation are 
furnished such information as will reasonably afford them an opportunity 
to know, establish, and protect their rights under the unemployment 
compensation law of such State, and
    B. The State agency obtains and records in time for the prompt 
determination and review of benefit claims such information as will 
reasonably insure the payment of benefits to individuals to whom 
benefits are due.
    6012 Criteria for Review of State Law Conformity with Federal 
Requirements:

[[Page 24]]

    In determining the conformity of a State law with the above 
requirements of the Federal Unemployment Tax Act and the Social Security 
Act as interpreted by the Secretary, the following criteria will be 
applied:
    A. Is it required that individuals who may be entitled to 
unemployment compensation be furnished such information of their 
potential rights to benefits, including the manner and places of filing 
claims, the reasons for determinations, and their rights of appeal, as 
will insure them a reasonable opportunity to know, establish, and 
protect their rights under the law of the State?
    B. Is the State agency required to obtain, in time for prompt 
determination of rights to benefits such information as will reasonably 
insure the payment of benefits to individuals to whom benefits are due?
    C. Is the State agency required to keep records of the facts 
considered in reaching determinations of rights to benefits?
    6013 Claim Determinations Requirements Designed To Meet Department 
of Labor Criteria:
    A. Investigation of claims. The State agency is required to obtain 
promptly and prior to a determination of an individual's right to 
benefits, such facts pertaining thereto as will be sufficient reasonably 
to insure the payment of benefits when due.
    This requirement embraces five separate elements:
    1. It is the responsibility of the agency to take the initiative in 
the discovery of information. This responsibility may not be passed on 
to the claimant or the employer. In addition to the agency's own 
records, this information may be obtained from the worker, the employer, 
or other sources. If the information obtained in the first instance 
discloses no essential disagreement and provides a sufficient basis for 
a fair determination, no further investigation is necessary. If the 
information obtained from other sources differs essentially from that 
furnished by the claimant, the agency, in order to meet its 
responsibility, is required to inform the claimant of such information 
from other sources and to afford the claimant an opportunity to furnish 
any further facts he may have.
    2. Evidentiary facts must be obtained as distinguished from ultimate 
facts or conclusions. That a worker was discharged for misconduct is an 
ultimate fact or conclusion; that he destroyed a machine upon which he 
was working is a primary or evidentiary fact, and the sort of fact that 
the requirement refers to.
    3. The information obtained must be sufficient reasonably to insure 
the payment of benefits when due. In general, the investigation made by 
the agency must be complete enough to provide information upon which the 
agency may act with reasonable assurance that its decision is consistent 
with the unemployment compensation law. On the other hand, the 
investigation should not be so exhaustive and time-consuming as unduly 
to delay the payment of benefits and to result in excessive costs.
    4. Information must be obtained promptly so that the payment of 
benefits is not unduly delayed.
    5. If the State agency requires any particular evidence from the 
worker, it must give him a reasonable opportunity to obtain such 
evidence.
    B. Recording of facts. The agency must keep a written record of the 
facts considered in reaching its determinations.
    C. Determination notices.
    1. The agency must give each claimant a written notice of:
    a. Any monetary determination with respect to his benefit year;
    b. Any determination with respect to purging a disqualification if, 
under the State law, a condition or qualification must be satisfied with 
respect to each week of disqualification; but in lieu of giving written 
notice of each determination for each week in which it is determined 
that the claimant has met the requirements for purging, the agency may 
inform the claimant that he has purged the disqualification for a week 
by notation of his applicant identification card or otherwise in 
writing.
    c. Any other determination which adversely affects \1\ his rights to 
benefits, except that written notice of determination need not be given 
with respect to:
---------------------------------------------------------------------------

    \1\ A determination ``adversely affects'' claimant's right to 
benefits if it (1) results in a denial to him of benefits (including a 
cancellation of benefits or wage credits or any reduction in whole or in 
part below the weekly or maximum amount established by his monetary 
determination) for any week or other period; or (2) denies credit for a 
waiting week; or (3) applies any disqualification or penalty; or (4) 
determines that he has not satisfied a condition of eligibility, 
requalification for benefits, or purging a disqualification; or (5) 
determines that an overpayment has been made or orders repayment or 
recoupment of any sum paid to him; or (6) applies a previously 
determined overpayment, penalty, or order for repayment or recoupment; 
or (7) in any other way denies claimant a right to benefits under the 
State law.
---------------------------------------------------------------------------

    (1) A week in a benefit year for which the claimant's weekly benefit 
amount is reduced in whole or in part by earnings if, the first time in 
the benefit year that there is such a reduction, he is required to be 
furnished a booklet or leaflet containing the information set forth 
below in paragraph 2f(1). However, a written notice of determination is 
required if: (a) there is a dispute concerning the reduction with 
respect to any week (e.g.,

[[Page 25]]

as to the amount computed as the appropriate reduction, etc.); or (b) 
there is a change in the State law (or in the application thereof) 
affecting the reduction; or
    (2) Any week in a benefit year subsequent to the first week in such 
benefit year in which benefits were denied, or reduced in whole or in 
part for reasons other than earnings, if denial or reduction for such 
subsequent week is based on the same reason and the same facts as for 
the first week, and if written notice of determination is required to be 
given to the claimant with respect to such first week, and with such 
notice of determination, he is required to be given a booklet or 
pamphlet containing the information set forth below in paragraphs 2f(2) 
and 2h. However, a written notice of determination is required if: (a) 
there is a dispute concerning the denial or reduction of benefits with 
respect to such week; or (b) there is a change in the State law (or in 
the application thereof) affecting the denial or reduction; or (c) there 
is a change in the amount of the reduction except as to the balance 
covered by the last reduction in a series of reductions.
    Note: This procedure may be applied to determinations made with 
respect to any subsequent weeks for the same reason and on the basis of 
the same facts: (a) that claimant is unable to work, unavailable for 
work, or is disqualified under the labor dispute provision; and (b) 
reducing claimant's weekly benefit amount because of income other than 
earnings or offset by reason of overpayment.
    2. The agency must include in written notices of determinations 
furnished to claimants sufficient information to enable them to 
understand the determinations, the reasons therefor, and their rights to 
protest, request reconsideration, or appeal.
    The written notice of monetary determination must contain the 
information specified in the following items (except h) unless an item 
is specifically not applicable. A written notice of any other 
determination must contain the information specified in as many of the 
following items as are necessary to enable the claimant to understand 
the determination and to inform him of his appeal rights. Information 
specifically applicable to the individual claimant must be contained in 
the written notice of determination. Information of general application 
such as (but not limited to) the explanation of benefits for partial 
unemployment, information as to deductions, seasonality factors, and 
information as to the manner and place of taking an appeal, extension of 
the appeal period, and where to obtain information and assistance may be 
contained in a booklet or leaflet which is given the claimant with his 
monetary determination.
    a. Base period wages. The statement concerning base-period wages 
must be in sufficient detail to show the basis of computation of 
eligibility and weekly and maximum benefit amounts. (If maximum benefits 
are allowed, it may not be necessary to show details of earnings.)
    b. Employer name. The name of the employer who reported the wages is 
necessary so that the worker may check the wage transcript and know 
whether it is correct. If the worker is given only the employer number, 
he may not be able to check the accuracy of the wage transcript.
    c. Explanation of benefit formula--weekly and maximum benefit 
amounts. Sufficient information must be given the worker so that he will 
understand how his weekly benefit amount, including allowances for 
dependents, and his maximum benefit amount were figured. If benefits are 
computed by means of a table contained in the law, the table must be 
furnished with the notice of determination whether benefits are granted 
or denied.
    The written notice of determination must show clearly the weekly 
benefit amount and the maximum potential benefits to which the claimant 
is entitled.
    The notice to a claimant found ineligible by reason of insufficient 
earnings in the base period must inform him clearly of the reason for 
ineligibility. An explanation of the benefit formula contained in a 
booklet or pamphlet should be given to each claimant at or prior to the 
time he receives written notice of a monetary determination.
    d. Benefit year. An explanation of what is meant by the benefit year 
and identification of the claimant's benefit year must be included in 
the notice of determination.
    e. Information as to benefits for partial unemployment. There must 
be included either in the written notice of determination or in a 
booklet or pamphlet accompanying the notice an explanation of the 
claimant's rights to partial benefits for any week with respect to which 
he is working less than his normal customary full-time workweek because 
of lack of work and for which he earns less than his weekly benefit 
amount or weekly benefit amount plus earnings, whichever is provided by 
the State law. If the explanation is contained in the notice of 
determination, reference to the item in the notice in which his weekly 
benefit amount is entered should be made.
    f. Deductions from weekly benefits.
    (1) Earnings. Although written notice of determinations deducting 
earnings from a claimant's weekly benefit amount is generally not 
required (see paragraph 1 c (1) above), where written notice of 
determination is required (or given) it shall set forth the amount of 
earnings, the method of computing the deduction in sufficient detail to 
enable the claimant to verify the accuracy of the deduction, and his 
right to protest, request redetermination, and appeal. Where a written 
notice of determination is given to the claimant because there has been 
a

[[Page 26]]

change in the State law or in the application of the law, an explanation 
of the change shall be included.
    Where claimant is not required to receive a written notice of 
determination, he must be given a booklet or pamphlet the first time in 
his benefit year that there is a deduction for earnings which shall 
include the following information:
    (a) The method of computing deductions for earnings in sufficient 
detail to enable the claimant to verify the accuracy of the deduction;
    (b) That he will not automatically be given a written notice of 
determination for a week with respect to which there is a deduction for 
earnings (unless there is a dispute concerning the reduction with 
respect to a week or there has been a change in the State law or in the 
application of the law affecting the deduction) but that he may obtain 
such a written notice upon request; and
    (c) A clear statement of his right to protest, request a 
redetermination, and appeal from any determination deducting earnings 
from his weekly benefit amount even though he does not automatically 
receive a written notice of determination; and if the State law requires 
written notice of determination in order to effectuate a protest, 
redetermination, or appeal, he must be so advised and advised also that 
he must request a written notice of determination before he takes any 
such action.
    (2) Other deductions.
    (a) A written notice of determination is required with respect to 
the first week in claimant's benefit year in which there is a reduction 
from his benefits for a reason other than earnings. This notice must 
describe the deduction made from claimant's weekly benefit amount, the 
reason for the deduction, the method of computing it in sufficient 
detail to enable him to verify the accuracy of such deduction, and his 
right to protest, request redetermination, or appeal.
    (b) A written notice of determination is not required for subsequent 
weeks that a deduction is made for the same reason and on the basis of 
the same facts, if the notice of determination pursuant to (2)(a), or a 
booklet or pamphlet given him with such notice explains (i) the several 
kinds of deductions which may be made under the State law (e.g., 
retirement pensions, vacation pay, and overpayments); (ii) the method of 
computing each kind of deduction in sufficient detail that claimant will 
be able to verify the accuracy of deductions made from his weekly 
benefit payments; (iii) any limitation on the amount of any deduction or 
the time in which any deduction may be made; (iv) that he will not 
automatically be given a written notice of determination for subsequent 
weeks with respect to which there is a deduction for the same reason and 
on the basis of the same facts, but that he may obtain a written notice 
of determination upon request; (v) his right to protest, request 
redetermination, or appeal with respect to subsequent weeks for which 
there is a reduction from his benefits for the same reason, and on the 
basis of the same facts even though he does not automatically receive a 
written notice of determination; and (vi) that if the State law requires 
written notice of determination in order to effectuate a protest, 
redetermination, or appeal, he must be so advised and advised also that 
he must request a written notice of determination before he takes any 
such action.
    g. Seasonality factors. If the individual's determination is 
affected by seasonality factors under the State law, an adequate 
explanation must be made. General explanation of seasonality factors 
which may affect determinations for subsequent weeks may be included in 
a booklet or pamphlet given claimant with his notice of monetary 
determination.
    h. Disqualification or ineligibility. If a disqualification is 
imposed, or if the claimant is declared ineligible for one or more 
weeks, he must be given not only a statement of the period of 
disqualification or ineligibility and the amount of wage-credit 
reductions, if any, but also an explanation of the reason for the 
ineligibility or disqualification. This explanation must be sufficiently 
detailed so that he will understand why he is ineligible or why he has 
been disqualified, and what he must do in order to requalify for 
benefits or purge the disqualification. The statement must be 
individualized to indicate the facts upon which the determination was 
based, e.g., state, ``It is found that you left your work with Blank 
Company because you were tired of working; the separation was voluntary, 
and the reason does not constitute good cause,'' rather than merely the 
phrase ``voluntary quit.'' Checking a box as to the reason for the 
disqualification is not a sufficiently detailed explanation. However, 
this statement of the reason for the disqualification need not be a 
restatement of all facts considered in arriving at the determination.
    i. Appeal rights. The claimant must be given information with 
respect to his appeal rights.
    (1) The following information shall be included in the notice of 
determination:
    (a) A statement that he may appeal or, if the State law requires or 
permits a protest or redetermination before an appeal, that he may 
protest or request a redetermination.
    (b) The period within which an appeal, protest, or request for 
redetermination must be filed. The number of days provided by statute 
must be shown as well as either the beginning date or ending date of the 
period. (It is recommended that the ending date of the appeal period be 
shown, as this is the more understandable of the alternatives.)

[[Page 27]]

    (2) The following information must be included either in the notice 
of determination or in separate informational material referred to in 
the notice:
    (a) The manner in which the appeal, protest, or request for 
redetermination must be filed, e.g., by signed letter, written 
statement, or on a prescribed form, and the place or places to which the 
appeal, protest, or request for redetermination may be mailed or hand-
delivered.
    (b) An explanation of any circumstances (such as nonworkdays, good 
cause, etc.) which will extend the period for the appeal, protest, or 
request for redetermination beyond the date stated or identified in the 
notice of determination.
    (c) That any further information claimant may need or desire can be 
obtained together with assistance in filing his appeal, protest, or 
request for redetermination from the local office.
    If the information is given in separate material, the notice of 
determination would adequately refer to such material if it said, for 
example, ``For other information about your (appeal), (protest), 
(redetermination) rights, see pages ---- to ---- of the -------- (name 
of pamphlet or booklet) heretofore furnished to you.''
    6014 Separation Information Requirements Designed To Meet Department 
of Labor Criteria:
    A. Information to agency. Where workers are separated, employers are 
required to furnish the agency promptly, either upon agency request or 
upon such separation, a notice describing the reasons for and the 
circumstances of the separation and any additional information which 
might affect a claimant's right to benefits. Where workers are working 
less than full time, employers are required to furnish the agency 
promptly, upon agency request, information concerning a claimant's hours 
of work and his wages during the claim periods involved, and other facts 
which might affect a claimant's eligibility for benefits during such 
periods.
    When workers are separated and the notices are obtained on a request 
basis, or when workers are working less than full time and the agency 
requests information, it is essential to the prompt processing of claims 
that the request be sent out promptly after the claim is filed and the 
employer be given a specific period within which to return the notice, 
preferably within 2 working days.
    When workers are separated and notices are obtained upon separation, 
it is essential that the employer be required to send the notice to the 
agency with sufficient promptness to insure that, if a claim is filed, 
it may be processed promptly. Normally, it is desirable that such a 
notice be sent to the central office of the agency, since the employer 
may not know in which local office the workers will file his claim. The 
usual procedure is for the employer to give the worker a copy of the 
notice sent by the employer to the agency.
    B. Information to worker.
    1. Information required to be given. Employers are required to give 
their employees information and instructions concerning the employees' 
potential rights to benefits and concerning registration for work and 
filing claims for benefits.
    The information furnished to employees under such a requirement need 
not be elaborate; it need only be adequate to insure that the worker who 
is separated or who is working less than full time knows he is 
potentially eligible for benefits and is informed as to what he is to do 
or where he is to go to file his claim and register for work. When he 
files his claim, he can obtain more detailed information.
    In States that do not require employers to furnish periodically to 
the State agency detailed reports of the wages paid to their employees, 
each employer is required to furnish to his employees information as to 
(a) the name under which he is registered by the State agency, (b) the 
address where he maintains his payroll records, and (c) the workers' 
need for this information if and when they file claims for benefits.
    2. Methods for giving information. The information and instructions 
required above may be given in any of the following ways:
    a. Posters prominently displayed in the employer's establishment. 
The State agency should supply employers with a sufficient number of 
posters for distribution throughout their places of business and should 
see that the posters are conspicuously displayed at all times.
    b. Leaflets. Leaflets distributed either periodically or at the time 
of separation or reduction of hours. The State agency should supply 
employers with a sufficient number of leaflets.
    c. Individual notices. Individual notices given to each employee at 
the time of separation or reduction in hours.
    It is recommended that the State agency's publicity program be used 
to supplement the employer-information requirements. Such a program 
should stress the availability and location of claim-filing offices and 
the importance of visiting those offices whenever the worker is 
unemployed, wishes to apply for benefits, and to seek a job.
    6015 Evaluation of Alternative State Provisions with Respect to 
Claim Determinations and Separation Information. If the State law 
provisions do not conform to the suggested requirements set forth in 
sections 6013 and 6014, but the State law contains alternative 
provisions, the Bureau of Employment Security, in collaboration with the 
State agency, will study the actual or anticipated effects of

[[Page 28]]

the alternative provisions. If the Administrator of the Bureau concludes 
that the alternative provisions satisfy the criteria in section 6012, he 
will so notify the State agency. If the Administrator of the Bureau does 
not so conclude, he will submit the matter to the Secretary. If the 
Secretary concludes that the alternative provisions satisfy the criteria 
in section 6012, the State agency will be so notified. If the Secretary 
concludes that there is a question as to whether the alternative 
provisions satisfy the criteria, the State agency will be advised that 
unless the State law provisions are appropriately revised, a notice of 
hearing will be issued as required by the Code of Federal Regulations, 
title 20, section 601.5.



PART 603_INCOME AND ELIGIBILITY VERIFICATION SYSTEM--Table of Contents




Sec.
603.1 Purpose.

          Subpart A_Income and Eligibility Verification System

603.2 Definitions.
603.3 Eligibility condition for claimants.
603.4 Notification to claimants.
603.5 Disclosure of information.
603.6 Agreement between State unemployment compensation agency and 
          requesting agency.
603.7 Protection of confidentiality.
603.8 Obtaining information from other agencies and crossmatching with 
          wage information.
603.9 Effective date of rule.

                   Subpart B_Quarterly Wage Reporting

603.20 Effective date of rule.
603.21 Alternative system.

    Authority: Sec. 1102, Social Security Act, ch. 531, 49 Stat. 647, as 
amended (42 U.S.C 1302); Reorganization Plan No. 2 of 1949, 63 Stat. 
1065, 14 FR 5225.

    Source: 51 FR 7207, Feb. 28, 1986, unless otherwise noted.



Sec. 603.1  Purpose.

    (a) Section 2651 of Public Law 98-369 (the Deficit Reduction Act of 
1984) amended title XI of the Social Security Act to include a 
requirement that States have an income and eligibility verification 
system in effect which would be used in verifying eligibility for, and 
the amount of, benefits available under several Federally assisted 
programs including the Federal-State unemployment compensation program. 
The Act requires that employers in each State make quarterly wage 
reports to a State agency, which may be the State unemployment 
compensation agency, and that wage information and benefit information 
obtained from other agencies be used in verifying eligibility for 
benefits. The requirement of quarterly wage reporting may be waived if 
the Secretary of Labor (in consultation with the Secretary of Health and 
Human Services and the Secretary of Agriculture) determines the State 
has in effect an alternative system which is as effective and timely as 
quarterly wage reporting for the purposes of providing employment 
related income and eligibility data.
    (b) Section 2651(d) of Public Law 98-396 added a new section 303(f) 
of the Social Security Act (42 U.S.C. 503(f)), to provide that the 
agency charged with the administration of the State unemployment 
compensation law shall provide that information shall be requested and 
exchanged for purposes of income and eligibility verification in 
accordance with a State system which meets the requirements of section 
1137 of the Social Security Act, as added by Public Law 98-369. The 
regulations in this part are issued to implement this requirement.



          Subpart A_Income and Eligibility Verification System



Sec. 603.2  Definitions.

    For the purposes of this part:
    (a) State unemployment compensation agency means the agency charged 
with the administration of the unemployment compensation law approved by 
the Secretary of Labor under section 3304 of the Internal Revenue Code 
of 1954 (26 U.S.C. 3304).
    (b) Wage information means information about wages as defined in the 
State's unemployment compensation law and includes the Social Security 
Number (or numbers, if more than one) and quarterly wages of an 
employee, and the name, address, State, and (when known) Federal 
employer identification number of an employer reporting wages under a 
State unemployment compensation law, except that in a State in which 
wages are not required

[[Page 29]]

to be reported under the unemployment compensation law, ``wage 
information'' means:
    (1) That wage information which is reported under provisions of 
State law which fulfill the requirements of section 1137 of the Social 
Security Act; or
    (2) That information which is obtained through an alternative system 
which fulfills the requirements of section 1137 of the Social Security 
Act.
    (c) Claim information means information regarding:
    (1) Whether an individual is receiving, has received or has applied 
for unemployment compensation;
    (2) The amount of compensation the individual is receiving or is 
entitled to receive;
    (3) The individual's current (or most recent) home address; and
    (4) Whether the individual has refused an offer of work and, if so, 
a description of the job offered including the terms, conditions, and 
rate of pay.
    (5) Any other information contained in the records of the State 
unemployment compensation agency which is needed by the requesting 
agency to verify eligiblity for, and the amount of, benefits.
    (d) Requesting agency means:
    (1) Any State or local agency charged with the responsibility of 
enforcing the provisions of the Aid to Families with Dependent Children 
program under a State plan approved under part A of title IV of the 
Social Security Act;
    (2) Any State or local agency charged with the responsibility of 
enforcing the provisions of the Medicaid program under a State plan 
approved under title XIX of the Social Security Act;
    (3) Any State or local agency charged with the responsibility of 
enforcing the provisions of the Food Stamp program under the Food Stamp 
Act of 1977;
    (4) Any State or local agency charged with the responsibility of 
enforcing a program under a plan approved under title I, X, XIV, or XVI 
of the Social Security Act;
    (5) Any State or local child support enforcement agency charged with 
the responsibility of enforcing child support obligations under a plan 
approved under part D of title IV of the Social Security Act; and
    (6) The Secretary of Health and Human Services in establishing or 
verifying eligibility or benefit amounts under titles II and XVI of the 
Social Security Act (section 1137(a)).



Sec. 603.3  Eligibility condition for claimants.

    (a) The State unemployment compensation agency shall require, as a 
condition of eligibility for unemployment benefits, that each claimant 
for benefits furnish to the agency his/her social security number (or 
numbers if he/she has more than one such number), and the agency shall 
utilize such numbers in the administration of the unemployment 
compensation program so as to associate the agency's records pertaining 
to each claimant with the claimant's social security number(s).
    (b) If the State agency determines that a claimant has refused or 
failed to provide a Social Security Number, then that individual shall 
be ineligible to participate in the unemployment compensation program.
    (c) Any claimant held ineligible for not supplying a social security 
number may become eligible upon providing the State agency with such 
number retroactive to the extent permitted under State law. (Section 
1137(a)(1)).



Sec. 603.4  Notification to claimants.

    Claimants shall be notified at the time of filing an initial claim 
for benefits through a written statement on or provided with the initial 
claim form and periodically thereafter that information available 
through the income and eligibility verification system will be requested 
and utilized by requesting agencies as defined in Sec. 603.2(d) 
(section 1137(a)(6)). Provisions of a printed notice on or attached to 
any subsequent additional claims will satisfy the requirement for 
periodic notice thereafter.



Sec. 603.5  Disclosure of information.

    The State unemployment compensation agency will disclose to 
authorized requesting agencies, as defined in Sec. 603.2(d), which have 
entered into an agreement in accordance with this part, wage and claim 
information as defined herein contained in the records of such State 
agency as is deemed by

[[Page 30]]

the requesting agency to be needed in verifying eligibility for, and the 
amount of, benefits. Standardized formats established by the Secretary 
of Health and Human Services (in consultation with the Secretary of 
Agriculture) will be adhered to by the State unemployment compensation 
agency. (Section 1137(a)(4)).



Sec. 603.6  Agreement between State unemployment compensation agency 
and requesting agency.

    (a) The State unemployment compensation agency will enter into 
specific written agreements with any requesting agency as defined in 
this part.
    (b) The agreements will include, but need not be limited, to the 
following:
    (1) The purposes for which requests will be made and the specific 
information needed;
    (2) Identification of all agency officials, by position, with 
authority to request information;
    (3) Methods and timing of the requests for information, including 
the format to be used, and the period of time needed to furnish the 
requested information;
    (4) Basis for establishing the reporting periods for which 
information will be provided;
    (5) Provisions for determining appropriate reimbursement from the 
requesting agency for the costs incurred in providing data, including 
any new developmental costs associated with furnishing data to the 
requesting agency and calculated in accordance with the provisions of 
OMB Circular A-87;
    (6) Safeguards to ensure that information obtained from the State 
unemployment compensation agency will be protected against unauthorized 
access or disclosure. At a minimum, such procedures will comply with the 
requirements of Sec. 603.7.
    (c) The requirements in paragraphs (a) and (b) of this section shall 
also apply to requesting agencies receiving information from a State 
unemployment compensation agency in another State and shall be 
administered by the State unemployment compensation agency disclosing 
the information (section 1137(a)(4) and (a)(7)).



Sec. 603.7  Protection of confidentiality.

    (a) State unemployment compensation agencies shall require 
requesting agencies receiving information under this part to comply with 
the following measures to protect the confidentiality of the information 
against unauthorized access or disclosure:
    (1) The information shall be used only to the extent necessary to 
assist in the valid administrative needs of the program receiving such 
information and shall be disclosed only for these purposes as defined in 
this agreement;
    (2) The requesting agency shall not use the information for any 
purposes not specifically authorized under an agreement that meets the 
requirements of Sec. 603.6;
    (3) The information shall be stored in a place physically secure 
from access by unauthorized persons;
    (4) Information in electronic format, such as magnetic tapes or 
discs, shall be stored and processed in such a way that unauthorized 
persons cannot retrieve the information by means of computer, remote 
terminal or other means;
    (5) Precautions shall be taken to ensure that only authorized 
personnel are given access to on-line files;
    (6)(i) The requesting agency shall instruct all personnel with 
access to the information regarding the confidential nature of the 
information, the requirements of this part, and the sanctions specified 
in State unemployment compensation laws against unauthorized disclosure 
of information covered by this part, and any other relevant State 
statutes, and
    (ii) The head of each State agency shall sign an acknowledgment on 
behalf of the entire agency attesting to the agency's policies and 
procedures regarding confidentiality.
    (b) Any requesting agency is authorized to redisclose the 
information only as follows:
    (1) Any wage or claim information may be given to the individual who 
is the subject of the information;
    (2) Information about an individual may be given to an attorney or 
other duly authorized agent representing the individual if the 
individual has given written consent and the information is needed in 
connection with a claim for

[[Page 31]]

benefits against the requesting agency; and
    (3) Any wage or claim information may be given to another requesting 
agency as defined in this part or to any criminal or civil prosecuting 
authorities acting for or on behalf of the requesting agency if 
provision for such redisclosure is contained in the agreement between 
the requesting agency and the State unemployment compensation agency.
    (c) The requesting agency shall permit the State unemployment 
compensation agency to make onsite inspections to ensure that the 
requirements of State unemployment compensation laws and Federal 
statutes and regulations are being met (section 1137(a)(5)(B).



Sec. 603.8  Obtaining information from other agencies and crossmatching 
with wage information.

    (a) The State unemployment compensation agency shall obtain such 
information from the Social Security administration and any requesting 
agency as may be needed in verifying eligibility for, and the amount of, 
benefits.
    (b) To the extent that such information shall be determined likely 
to be productive in identifying ineligibility for benefits and 
preventing incorrect payments, the State unemployment compensation 
agency shall crossmatch quarterly wage information with unemployment 
benefit payment information (section 1137(a)(2)).
    (c) To the extent necessary, the United States Department of Labor 
may amplify on the requirements for state compliance with this section 
in instructions issued and published for comment in the Federal Register 
under the provisions of section 1137(a)(2) of the Social Security Act.



Sec. 603.9  Effective date of rule.

    The effective date of this subpart A rule is May 29, 1986, after 
consultation with the Secretary of Health and Human Services and the 
Secretary of Agriculture, may by waiver grant a delay in this effective 
date if the State submits within 90 days of publication of this rule in 
final form a plan describing a good faith effort to comply with the 
requirements of section 1137 (a) and (b) of the Social Security Act 
through but not beyond September 30, 1986.



                   Subpart B_Quarterly Wage Reporting



Sec. 603.20  Effective date of rule.

    The requirement that employers in a State report quarterly wage 
information to a State agency (which may be the State unemployment 
compensation agency), is effective September 30, 1988 (section 
1137(a)(3)).



Sec. 603.21  Alternative system.

    The Secretary of Labor (in consultation with the Secretary of Health 
and Human Services and the Secretary of Agriculture) may waive the 
provision that employers in a State are required to make quarterly wage 
reports to a State agency if the Secretary determines that the State has 
in effect an alternative system which is as effective and timely for 
purposes of providing employment related income and eligibility data for 
the purposes described in section 1137 of the Social Security Act. 
Criteria for such waiver and the date for submitting requests for such 
waiver will be issued, if necessary, by the United States Department of 
Labor and published for comment in the Federal Register.



PART 606_TAX CREDITS UNDER THE FEDERAL UNEMPLOYMENT TAX ACT; ADVANCES 
UNDER TITLE XII OF THE SOCIAL SECURITY ACT--Table of Contents




                            Subpart A_General

Sec.
606.1 Purpose and scope.
606.2 Total credits allowable.
606.3 Definitions.
606.4 Redelegation of authority.
606.5 Verification of estimates and review of determinations.
606.6 Information, reports, and studies.

Subpart B--Tax Credit Reduction [Reserved]

               Subpart C_Relief From Tax Credit Reduction

606.20 Cap on tax credit reduction.
606.21 Criteria for cap.
606.22 Application for cap.
606.23 Avoidance of tax credit reduction.

[[Page 32]]

606.24 Application for avoidance.
606.25 Waiver of and substitution for additional tax credit reduction.
606.26 Application for waiver and substitution.

                     Subpart D_Interest on Advances

606.30 Interest rates on advances.
606.31 Due dates for payment of interest. [Reserved]
606.32 Types of advances subject to interest.
606.33 No payment of interest from unemployment fund. [Reserved]
606.34 Reports of interest payable. [Reserved]
606.35 Order of application for repayments. [Reserved]

                 Subpart E_Relief from Interest Payment

606.40 May/September delay.
606.41 High unemployment deferral.
606.42 High unemployment delay.
606.43 Maintenance of solvency effort.
606.44 Notification of determinations.

    Authority: 42 U.S.C. 1102; 26 U.S.C. 7805(a); Secretary's Order No. 
4-75 (40 FR 18515).

    Source: 53 FR 37429, Sept. 26, 1988, unless otherwise noted.



                            Subpart A_General



Sec. 606.1  Purpose and scope.

    (a) In general. The regulations in this part 606 are issued to 
implement the tax credit provisions of the Federal Unemployment Tax Act, 
and the loan provisions of title XII of the Social Security Act. The 
regulations on tax credits cover all of the subjects of 3302 of the 
Federal Unemployment Tax Act (FUTA), except subsections (c)(3) and (e). 
The regulations on loans cover all of the subjects in title XII of the 
Social Security Act.
    (b) Scope. This part 606 covers general matters relating to this 
part in this subpart A, and in the following subparts includes specific 
subjects described in general terms as follows:
    (1) Subpart B describes the tax credit reductions under the Federal 
Unemployment Tax Act, which relate to outstanding balances of advances 
made under title XII of the Social Security Act.
    (2) Subpart C describes the various forms of relief from tax credit 
reductions, and the criteria and standards for grant of such relief in 
the form of--
    (i) A cap on tax credit reduction,
    (ii) Avoidance of tax credit reduction, and
    (iii) Waiver of and substitution for additional tax credit 
reduction.
    (3) Subpart D describes the interest rates on advances made under 
title XII of the Social Security Act, dues dates for payment of 
interest, and other related matters.
    (4) Subpart E describes the various forms of relief from payment of 
interest, and the criteria and standards for grant of such relief in the 
form of--
    (i) May/September delay of interest payments,
    (ii) High unemployment deferral of interest payments,
    (iii) High unemployment delay of interest payments, and
    (iv) Maintenance of solvency effort required to retain a deferral 
previously granted.



Sec. 606.2  Total credits allowable.

    The total credits allowed to an employer subject to the tax imposed 
by section 3301 of the Federal Unemployment Tax Act shall not exceed 5.4 
percent with respect to taxable years beginning after December 31, 1984.



Sec. 606.3  Definitions.

    For the purposes of the Acts cited and this part--
    (a) Act means as appropriate the Federal Unemployment Tax Act (26 
U.S.C. 3301-3311), or title XII of the Social Security Act (42 U.S.C. 
1321-1324).
    (b) Advance means a transfer of funds to a State unemployment fund, 
for the purpose of paying unemployment compensation, from the Federal 
unemployment account in the Unemployment Trust Fund, pursuant to section 
1202 of the Social Security Act.
    (c) Benefit-cost ratio for cap purposes for a calendar year is the 
percentage obtained by dividing--
    (1) The total dollar sum of--
    (i) All compensation actually paid under the State law during such 
calendar year, including in such total sum all regular, additional, and 
extended compensation, as defined in section 205 of the Federal-State 
Extended Unemployment Compensation Act of 1970, and excluding from such 
total sum--

[[Page 33]]

    (A) Any such compensation paid for which the State is entitled to 
reimbursement or was reimbursed under the provisions of any Federal Law, 
and
    (B) Any such compensation paid which is attributable to services 
performed for a reimbursing employer, and which is not included in the 
total dollar amount reported under paragraph (c)(1)(i)(A) of this 
section, and
    (ii) Any interest paid during such calendar year on any advance, by
    (2) The total wages (as defined in Sec. 606-3(l)) with respect to 
such calendard year. If any percentage determined by this computation 
for a calendar year is not a multiple of 0.1 percent, such percentage 
shall be reduced to the nearest multiple of 0.1 percent.
    (d) Contributions means payments required by a State law to be made 
into an unemployment fund by any person on account of having individuals 
in his employ, to the extent that such payments are made by him without 
being deducted or deductible from the remuneration of individuals in his 
employ.
    (e) Federal unemployment tax means the excise tax imposed under 
section 3301 of the Federal Unemployment Tax Act on employers with 
respect to having individuals in their employ.
    (f) Fiscal year means the Federal fiscal year which begins on 
October 1 of a year and ends on September 30, of the next succeeding 
year.
    (g) FUTA referes to the Federal Unemployment Tax Act.
    (h) State unemployment fund or unemployment fund means a special 
fund established under a State law for the payment of unemployment 
compensation to unemployed individuals, and which is an ``unemployment 
fund'' as defined in section 3306(f) of the Federal Unemployment Tax 
Act.
    (i) Taxable year means the calendar year.
    (j) Unemployment tax rate means, for any taxable year and with 
respect to any State, the percentage obtained by dividing the total 
amount of contributions paid into the State unemployment fund with 
respect to such taxable year by total wages as defined in Sec. 
606.3(l).
    (k) Wages, taxable means the total sum of remuneration which is 
subject to contributions under a State law.
    (l) Wages, total means the total sum of all remuneration covered by 
a State law, disregarding any dollar limitation on the amount of 
remuneration which is subject to contributions under the State law.



Sec. 606.4  Redelegation of authority.

    (a) Redelegation to UIS Director. The Director, Unemployment 
Insurance Service (hereinafter ``UIS Director''), is redelegated 
authority to make the determinations required under this part. This 
redelegation is contained in Employment and Training Order No. 1-84, 
published in the Federal Register on November 14, 1983 (48 FR 51870).
    (b) Delegation by Governor. The Governor of a State, as used in this 
part, refers to the highest executive official of a State. Wherever in 
this part an action is required by or of the Governor of a State, such 
action may be taken by the Governor or may be taken by a delegatee of 
the Governor if the Department is furnished appropriate proof of an 
authoritative delegation of authority.



Sec. 606.5  Verification of estimates and review of determinations.

    The Department of Labor (hereinafter ``Department'') shall verify 
all information and data provided by a State under this part, and the 
State shall comply with such provisions as the Department considers 
necessary to assure the correctness and verification of such information 
and data. The State agency of a State affected by a determination made 
by the UIS director under this part may seek review of such 
determination by a higher level official of the Employment and Training 
Administration.



Sec. 606.6  Information, reports, and studies.

    A State shall furnish to the Secretary of Labor such information and 
reports and conduct such studies as the Secretary determines are 
necessary or appropriate for carrying out the purposes of this part, 
including any additional information or data the UIS Director may 
require for the purposes of making determinations under subparts C and E 
of this part. This collection has been approved by the Office of

[[Page 34]]

Management and Budget under control number 1205-0205.

Subpart B--Tax Credit Reduction [Reserved]



               Subpart C_Relief From Tax Credit Reduction



Sec. 606.20  Cap on tax credit reduction.

    (a) Applicability. Subsection (f) of section 3302 of FUTA authorizes 
a limitation (cap) on the reduction of tax credits by reason of an 
outstanding balance of advances, if the UIS Director determines with 
respect to a State, on or before November 10 of a taxable year, that--
    (1) No action was taken by the State during the 12-month period 
ending on September 30 of such taxable year which has resulted, or will 
result, in a reduction in the State's unemployment tax effort, as 
defined in Sec. 606.21(a);
    (2) No action was taken by the State during the 12-month period 
ending on September 30 of such taxable year which has resulted, or will 
result, in a net decrease in the solvency of the State unemployment 
compensation system, as defined in Sec. 606.21(b);
    (3) The State unemployment tax rate (as defined in Sec. 606.3(j)) 
for the taxable year equals or exceeds the average benefit-cost ratio 
(as defined in Sec. 606.3(c)) for the calendar years in the five-
calendar year period ending with the calendar year immediately preceding 
the taxable year for which the cap is requested, under the rules 
specified in Sec. 606.21 (c) and (d); and
    (4) The outstanding balance of advances to the State on September 30 
of the taxable year was not greater than the outstanding balance of 
advances to the State on September 30 of the third preceding taxable 
year.
    (b) Maximum tax credit reduction. If a State qualifies for a cap, 
the maximum tax credit reduction for the taxable year shall not exceed 
0.6 percent, or, if higher, the tax credit reduction that was in effect 
for the taxable year preceding the taxable year for which the cap is 
requested.
    (c) Year not taken into account. If a State qualifies for a cap for 
any year, the year and January 1 of the year to which the cap applies 
will not be taken into account for purposes of determining reduction of 
tax credit for subsequent taxable years.
    (d) Partial caps. Partial caps obtained under subsection (f)(8) are 
no longer available. Nevertheless, for the purposes of applying section 
3302(c)(2) to subsequent taxable years, partial cap credits earned will 
be taken into account for purposes of determining reduction of tax 
credits. Also, the taxable year to which the partial cap applied (and 
January 1 thereof) will be taken into account for purposes of 
determining reduction of tax credits for subsequent taxable years.



Sec. 606.21  Criteria for cap.

    (a) Reduction in unemployment tax effort. (1) For purposes of 
paragraph (a)(1) of Sec. 606.20, a reduction in a State's unemployment 
tax effort will have occurred with respect to a taxable year if any 
action is or was taken (legislative, judicial, or administrative,) that 
is effective during the 12-month period ending on September 30 of such 
taxable year, which has resulted in or will result in a reduction of the 
amount of contributions paid or payable or the amounts that were or 
would have been paid or payable but for such action.
    (2) Actions that will result in a reduction in tax effort include, 
but are not limited to, a reduction in the taxable wage base, the tax 
rate schedule, tax rates, or taxes payable (including surtaxes) that 
would not have gone into effect but for the legislative, judicial, or 
administrative action taken. Notwithstanding the foregoing criterion, a 
reduction in unemployment tax effort resulting from any provision of the 
State law enacted prior to August 13, 1981, will not be taken into 
account as a reduction in the State's unemployment tax effort for the 
purposes of this section.
    (b) Net decrease in solvency. For purposes of paragraph (a)(2) of 
Sec. 606.20, a net decrease in the solvency of the State's unemployment 
compensation system will have occurred with respect to a taxable year if 
any action is or was taken (legislative, judicial, or administrative), 
that is effective during the 12-month period ending on September 30 of 
such taxable year, which

[[Page 35]]

has resulted in or will result in an increase in benefits without at 
least an equal increase in taxes, or a decrease in taxes without at 
least an equal decrease in benefits. Notwithstanding the foregoing 
criterion, a decrease in solvency resulting from any provision of the 
State law enacted prior to August 13, 1981, will not be taken into 
account as a reduction in solvency of the State's unemployment 
compensation system for the purposes of this section.
    (c) State unemployment tax rate. For purposes of paragraph (a)(3) of 
Sec. 606.20, the State unemployment tax rate is defined in Sec. 
606.3(j). If such percentage is not a multiple of 0.1 percent, the 
percentage shall remain unrounded.
    (d) State five-year average benefit cost ratio. For purposes of 
paragraph (a)(3) of Sec. 606.20, the average benefit cost ratio for the 
five preceding calendar years is the percentage determined by dividing 
the sum of the benefit cost ratios for the five years by five. If such 
percentage is not a multiple of 0.1 percent, the percentage shall remain 
unrounded.



Sec. 606.22  Application for cap.

    (a) Application. (1) The Governor of the State shall make 
application, addressed to the Secretary of Labor, no later than July 1 
of a taxable year with respect to which a State requests a cap on tax 
credit reduction. The Governor is required to notify the Department on 
or before October 15 of such taxable year of any action occurring after 
the date of the initial application and effective prior to October 1 of 
such year that would impact upon the State's application.
    (2) The UIS Director will make a determination on the application on 
or before November 10 of such taxable year, will notify the applicant 
and the Secretary of the Treasury of such determination, and will cause 
notice of such determination to be published in the Federal Register.
    (b) Anticipated impact statement. In support of the application by 
the Governor, there shall be submitted with the application (on or 
before October 15), for the purposes of the criteria described in 
Sec. Sec. 606.20(a) (1) and (2) and 606.21 (a) and (b), a description 
of all statutory provisions enacted or amended, regulations adopted or 
revised, administrative policies and procedures adopted or revised, and 
judicial decisions given effect, which are effective during the 12-month 
period ending on September 30 of the taxable year for which a cap on tax 
credit reduction is requested, and an anticipated impact statement (AIS) 
for each such program action in the following respect--
    (1) The estimated dollar effect on each program action upon 
expenditures for compensation from the State unemployment fund and for 
the amounts of contributions paid or payable in such 12-month period, 
including the effect of interaction among program actions, and with 
respect to program actions for which dollar impact cannot be estimated 
or is minor or negligible, indicate whether the impact is positive or 
negative;
    (2) If a program action has no such dollar effect, an explanation of 
why there is or will be no such effect;
    (3) A description of assumptions and methodology used and the basis 
for the financial estimate of the impact of each program action 
described in paragraphs (b)(1) and (b)(2) of this section; and
    (4) A comparision of the program actions described in paragraphs 
(b)(1) and (b)(2) of this section with the program actions prior to the 
Federal fiscal year (as defined in Sec. 606.3(f)) which ends on such 
September 30.
    (c) Unemployment tax rate. With respect to the unemployment tax rate 
criterion described in Sec. Sec. 606.20(a)(3) and 606.21(c), the 
application shall include an estimate for the taxable year with respect 
to which a cap on tax credit reduction is requested and actual data for 
the prior two years as follows:
    (1) The amount of taxable wages as defined in Sec. 606.3(k);
    (2) The amount of total wages as defined in Sec. 606.3(l); and
    (3) The estimated distribution of taxable wages, as defined in Sec. 
606.3(k), by tax rate under the State law.
    (d) Benefit cost ratio. With respect to the benefit cost ratio 
criterion described in Sec. Sec. 606.20(a)(3) and 606.21(d), the 
application shall include for each of the five calendar years prior to 
the taxable year for which a cap on tax

[[Page 36]]

credit reduction is requested, the following data:
    (1) The total dollar sum of compensation actually paid under the 
State law during the calendar year, including in such total sum all 
regular, additional, and extended compensation as defined in section 205 
of the Federal-State Extended Unemployment Compensation Act of 1970, but 
excluding from such total sum--
    (i) The total dollar amount of such compensation paid for which the 
State is entitled to reimbursement or was reimbursed under the 
provisions of any Federal law;
    (ii) The total dollar amount of such compensation paid which is 
attributable to services performed for a reimbursing employer, and which 
is not included in the total amount reported under paragraph (d)(1)(i) 
of this section;
    (2) The total dollar amount of interest paid during the calendar 
year on any advance; and
    (3) The total dollar amount of wages (as defined in Sec. 606.3(l)) 
with respect to such calendar year.
    (e) Documentation required. Copies of the sources of or authority 
for each program action described in paragraph (b) of this section shall 
be submitted with each application for a cap on tax credit reduction. In 
addition, a notation shall be made on each AIS of where all figures 
referred to are contained in reports required by the Department or in 
other data sources.
    (f) State contact person. The Department may request additional 
information or clarification of information submitted bearing upon an 
application for a cap on tax credit reduction. To expedite requests for 
such information, the name and telephone number of an appropriate State 
official shall be included in the application by the Governor.



Sec. 606.23  Avoidance of tax credit reduction.

    (a) Applicability. Subsection (g) of section 3302 of FUTA authorizes 
a State to avoid a tax credit reduction for a taxable year by meeting 
the three requirements of subsection (g). These requirements are met if 
the UIS Director determines that:
    (1) Advances were repaid by the State during the one-year period 
ending on November 9 of the taxable year in an amount not less than the 
sum of--
    (i) The potential additional taxes (as estimated by the UIS 
Director) that would be payable by the State's employers if paragraph 
(2) of section 3302(c) of FUTA were applied for such taxable year (as 
estimated with regard to the cap on tax credit reduction for which the 
State qualifies under Sec. Sec. 606.20 to 606.22 with respect to such 
taxable year), and
    (ii) Any advances made to such State during such one-year period 
under title XII of the Social Security Act;
    (2) There will be adequate funds in the State unemployment fund (as 
estimated by the UIS Director) sufficient to pay all benefits when due 
and payable under the State law during the three-month period beginning 
on November 1 of such taxable year without receiving any advance under 
title XII of the Social Security Act; and
    (3) There is a net increase (as estimated by the UIS Director) in 
the solvency of the State unemployment compensation system for the 
taxable year and such net increase equals or exceeds the potential 
additional taxes for such taxable year as estimated under paragraph 
(a)(1)(i) of this section.
    (b) Net increase in solvency. (1) The net increase in solvency for a 
taxable year, as determined for the purposes of paragraph (a)(3) of this 
section, must be attributable to legislative changes made in the State 
law after the later of--
    (i) September 3, 1982, or
    (ii) The date on which the first advance is taken into account in 
determining the amount of the potential additional taxes.
    (2) The UIS Director shall determine the net increase in solvency by 
first estimating the difference between revenue receipts and benefit 
outlays under the law in effect for the year for which avoidance is 
requested, as if the relevant changes in State law referred to in 
paragraph (b)(1) of this section were not in effect for such year. The 
UIS Director shall then estimate the difference between revenue receipts 
and benefit outlays under the law in effect for the year for which the 
avoidance is

[[Page 37]]

requested, taking into account the relevant changes in State law 
referred to in paragraph (b)(1) of this section. The amount (if any) by 
which the second estimated difference exceeds the first estimated 
difference shall constitute the net increase in solvency for the 
purposes of this section.
    (c) Year taken into account. If a State qualifies for avoidance for 
any year, that year and January 1 of that year to which the avoidance 
applies will be taken into account for purposes of determining reduction 
of tax credits for subsequent taxable years.



Sec. 606.24  Application for avoidance.

    (a) Application. (1) The Governor of the State shall make 
application, addressed to the Secretary of Labor, no later than July 1 
of a taxable year with respect to which a State requests avoidance of 
tax credit reduction. The Governor is required to notify the Department 
on or before October 15 of such taxable year of any action impacting 
upon the State's application occurring subsequent to the date of the 
initial application and on or before November 10.
    (2) The UIS Director will make a determination on the application as 
of November 10 of such taxable year, will notify the applicant and the 
Secretary of the Treasury of such determination, and will cause notice 
of such determination to be published in the Federal Register.
    (b) Information. (1) The application shall include a statement of 
the amount of advances repaid and to be repaid during the one-year 
period ending on November 9 of the taxable year for which avoidance is 
requested. If the amount repaid as of the date of the application is 
less than the amount required to satisfy the provisions of Sec. 
606.23(a)(1), the Governor shall provide a report later of the 
additional repayments that have been made in the remainder of the one-
year period ending on November 9 of the taxable year, for the purposes 
of meeting the provisions of Sec. 606.23(a)(1).
    (2) The application also shall include estimates of revenue 
receipts, benefit outlays, and end-of-month fund balance for each month 
in the period beginning with September of the taxable year for which 
avoidance is requested through the subsequent January. Actual data for 
the comparable period of the preceding year also shall be included in 
the application in order to determine the reasonableness of such 
estimates.
    (3) The application also shall include a description of State law 
changes, effective for the taxable year for which the avoidance is 
requested, which resulted in a net increase in the solvency of the State 
unemployment compensation system, and documentation which supports the 
State's estimate of the net increase in solvency for such taxable year.



Sec. 606.25  Waiver of and substitution for additional tax credit 
reduction.

    A provision of subsection (c)(2) of section 3302 of FUTA provides 
that, for a State that qualifies, the additional tax credit reduction 
applicable under subparagraph (C), beginning in the fifth consecutive 
year of a balance of outstanding advances, shall be waived and the 
additional tax credit reduction applicable under subparagraph (B) shall 
be substituted. The waiver and substitution are granted if the UIS 
Director determines that the State has taken no action, effective during 
the 12-month period ending on September 30 of the year for which the 
waiver and substitution are requested, which has resulted or will result 
in a net decrease in the solvency of the State unemployment compensation 
system as determined for the purposes of Sec. Sec. 606.20(a)(2) and 
606.21(b).



Sec. 606.26  Application for waiver and substitution.

    (a) Application. The Governor of the State shall make application 
addressed to the Secretary of Labor, no later than July 1 of a taxable 
year with respect to which a State requests waiver and substitution. Any 
such application shall contain the supportive data and information 
required by Sec. 606.22(b) for the purposes of Sec. Sec. 606.20(a)(2) 
and 606.21(b). The Governor is required to notify the Department on or 
before October 15 of such taxable year of action occurring after the 
date of the initial application and effective prior to October 1 of such 
year that would impact upon the State's application.

[[Page 38]]

    (b) Notification of determination. The UIS Director will make a 
determination on the application as of November 10 of the taxable year, 
will notify the applicant and the Secretary of the Treasury of the 
resulting tax credit reduction to be applied, and will cause notice of 
such determination to be published in the Federal Register.



                     Subpart D_Interest on Advances



Sec. 606.30  Interest rates on advances.

    Advances made to States pursuant to title XII of the Social Security 
Act on or after April 1, 1982, shall be subject to interest payable on 
the due dates specified in Sec. 606.31.\1\ The interest rate for each 
calendar year will be 10 percent or, if less, the rate determined by the 
Secretary of the Treasury and announced to the States by the Department.
---------------------------------------------------------------------------

    \1\ (Editorial note: This section will be added at a later date.)
---------------------------------------------------------------------------



Sec. 606.31  Due dates for payment of interest. [Reserved]



Sec. 606.32  Types of advances subject to interest.

    (a) Payment of interest. Except as otherwise provided in paragraph 
(b) of this section each State shall pay interest on any advance made to 
such State under title XII of the Social Security Act.
    (b) Cash flow loans. Advances repaid in full prior to October 1 of 
the calendar year in which made are deemed cash flow loans and shall be 
free of interest; provided, that the State does not receive an 
additional advance after September 30 of the same calendar year. If such 
additional advance is received by the State, interest on the completely 
repaid earlier advance(s) shall be due and payable not later than the 
day following the date of the first such additional advance. The 
administrator of the State agency shall notify the Secretary of Labor no 
later than September 10 of those loans deemed to be cash flow loans and 
not subject to interest. This notification shall include the date and 
amount of each loan made in January through September and a copy of 
documentation sent to the Secretary of the Treasury requesting loan 
repayment transfer(s) from the State's account in the Unemployment Trust 
Fund to the Federal unemployment account in such Fund.



Sec. 606.33  No payment of interest from unemployment fund. [Reserved]



Sec. 606.34  Reports of interest payable. [Reserved]



Sec. 606.35  Order of application for repayments. [Reserved]



                 Subpart E_Relief from Interest Payment



Sec. 606.40  May/September delay.

    Subsection (b)(3)(B) of section 1202 of the Social Security Act 
permits a State to delay payment of interest accrued on advances made 
during the last five months of the Federal fiscal year (May, June, July, 
August, and September) to no later than December 31 of the next 
succeeding calendar year. If the payment is delayed, interest on the 
delayed payment will accrue from the normal due date (i.e., September 
30) and in the same manner as if the interest due on the advance(s) was 
an advance made on such due date. The Governor of a State which has 
decided to delay such interest payment shall notify the Secretary of 
Labor no later than September 1 of the year with respect to which the 
delay is applicable.



Sec. 606.41  High unemployment deferral.

    (a) Applicability. Subsection (b)(3)(C) of section 1202 of the 
Social Security Act permits a State to defer payment of, and extend the 
payment for, 75 percent of interest charges otherwise due prior to 
October 1 of a year if the UIS Director determines that high 
unemployment conditions existed in the State.
    (b) High unemployment defined. For purposes of this section, high 
unemployment conditions existed in the State if the State's rate of 
insured unemployment (as determined for purposes of 20 CFR 615.12) under 
the State law with respect to the period consisting of the first six 
months of the preceding calendar year equalled or exceeded 7.5 percent; 
this means that in

[[Page 39]]

weeks 1 (that week which includes January 1 of the year) through 26 of 
such preceding calendar year, the rate of insured unemployment reported 
by the State and accepted by the Department under 20 CFR part 615 must 
have averaged a percentage equalling or exceeding 7.5 percent.
    (c) Schedule of deferred payments. The State must pay prior to 
October 1 one-fourth of the interest due, and must pay a minimum of one-
third of the deferred amount prior to October 1 in each of the three 
years following the year in which deferral was granted; at the State's 
option payment of deferred interest may be accelerated.
    (d) Related criteria. Timely payment of one-fourth of the interest 
due prior to October 1 is a precondition to obtaining deferral of 
payment of 75 percent of the interest due. No interest shall accrue on 
such deferred interest.
    (e) Application for deferral and determination. (1) The Governor of 
a State which has decided to request such deferral of interest payment 
shall apply to the Secretary of Labor no later than July 1 of the 
taxable year for which the deferral is requested.
    (2) The UIS Director will determine whether deferral is or is not 
granted on the basis of the Department's records of reports of the rates 
of insured unemployment and information obtained from the Department of 
the Treasury as to the timely and full payment of one-fourth of the 
interest due.



Sec. 606.42  High unemployment delay.

    (a) Applicability. Paragraph (9) of section 1202 (b) of the Social 
Security Act permits a State to delay for a period not exceeding nine 
months the interest payment due prior to October 1 if, for the most 
recent 12-month period prior to such October 1 for which data are 
available, the State had an average total unemployment rate of 13.5 
percent or greater.
    (b) Delayed due date. An interest payment delayed under paragraph 
(9) must be paid in full not later than the last official Federal 
business day prior to the following July 1; at the State's option 
payment of delayed interest may be accelerated. No interest shall accrue 
on such delayed payment.
    (c) Application for delay in payment and determination. (1) The 
Governor of a State which has decided to request delay in payment of 
interest under paragraph (9) shall apply to the Secretary of Labor no 
later than July 1 of the taxable year for which the delay is requested.
    (2) The UIS Director will determine whether delay is or is not 
granted on the basis of seasonally unadjusted civilian total 
unemployment rate data published by the Department's Bureau of Labor 
Statistics.



Sec. 606.43  Maintenance of solvency effort.

    (a) Applicability. Legislative-action interest deferrals obtained 
under subsection (b)(8) (A) through (C) of section 1202 of the Social 
Security Act are no longer available. Nevertheless, States must maintain 
their solvency effort with respect to any such deferrals approved in 
1983, 1984, and 1985 in order for the deferral to continue to apply in 
each subsequent year of deferral.
    (b) Determination regarding maintenance of solvency effort. (1) The 
UIS Director shall determine if there is a net reduction in solvency 
effort by first estimating revenue receipts and benefit outlays under 
the law in effect in the 12-month period ending on September 30 of the 
year for which continuation of deferral is requested as if it were 
effective in the base year (12-month period for which the first deferral 
was granted).
    (2) The UIS Director shall then compare revenue receipts and benefit 
outlays for the base year (previously estimated at the time of the 
original deferral) with revenue receipts and benefit outlays estimated 
in paragraph (b)(1) of this section.
    (3) If the sum of--
    (i) The percentage increase in revenue receipts from the base year 
to the year for which the continuation of deferral is requested (as 
estimated in paragraph (b)(1) of this section), and
    (ii) The percentage decrease in benefit outlays from the base year 
to the year for which the continuation of deferral is requested (as 
estimated in paragraph (b)(1) of this section),

is equal to or greater than the sum of such percentages achieved for the 
12-

[[Page 40]]

month period ending on September 30 of the year for which the latest 
deferral was obtained, the State will have maintained its solvency 
effort, but if less, then a reduction in solvency effort will have 
occurred.
    (4) Notwithstanding the results of the calculation in paragraph 
(b)(3) of this section, if there is no increase in revenue receipts or 
no decrease in benefit outlays between the base year and the year for 
which continuation of deferral is requested, then a reduction in 
solvency effort will have occurred.
    (c) Effect of determination. (1) If the UIS Director determines that 
a State has maintained its solvency effort, continuation of deferral 
will be granted, and the State will be required to timely pay the 
deferred interest payable prior to October 1 of the year with respect to 
which such determination is made.
    (2) If the UIS Director determines that a State failed to maintain 
its solvency effort, all deferred interest shall be due and payable 
prior to October 1 of the year with respect to which such determination 
is made.
    (d) Application and information. (1) The Governor of a State which 
has decided to request continuation of a previously approved deferral of 
interest payments shall apply to the Secretary of Labor no later than 
July 1 of the year for which continuation is requested. The Governor is 
required to notify the Department on or before September 1 of such 
taxable year of any action impacting upon the State's application which 
has occurred or will occur subsequent to the date of the initial 
application and on or before September 30.
    (2) In support of the application by the Governor, there shall be 
submitted for the purposes of the estimates required in paragraph (b) of 
this section documentation as specified in Sec. 606.22 (b)(1) through 
(4), (c) and (f) and bearing upon the application for continuation of 
deferral, in terms of the relevant comparison between revenue receipts 
and benefit outlays.



Sec. 606.44  Notification of determinations.

    The UIS Director will make determinations under Sec. Sec. 606.41, 
606.42, and 606.43 on or before September 10 of the taxable year, will 
promptly notify the applicants and the Secretary of the Treasury of such 
determinations, and will cause notice of such determinations to be 
published in the Federal Register. The UIS Director also will inform the 
Secretary of the Treasury and cause notice to be published in the 
Federal Register of information with respect to delayed payment of 
interest as provided in Sec. 606.40.



PART 609_UNEMPLOYMENT COMPENSATION FOR FEDERAL CIVILIAN EMPLOYEES
--Table of Contents




                      Subpart A_General Provisions

Sec.
609.1 Purpose and application.
609.2 Definitions of terms.

                Subpart B_Administration of UCFE Program

609.3 Eligibility requirements for UCFE.
609.4 Weekly and maximum benefit amounts.
609.5 Claims for UCFE.
609.6 Determinations of entitlement; notices to individual.
609.7 Appeal and review.
609.8 The applicable State for an individual.
609.9 Provisions of State law applicable to UCFE claims.
609.10 Restrictions on entitlement.
609.11 Overpayments; penalties for fraud.
609.12 Inviolate rights to UCFE.
609.13 Recordkeeping; disclosure of information.
609.14 Payments to States.
609.15 Public access to Agreements.
609.16 Administration in absence of an Agreement.
609.17 Information, reports, and studies.

             Subpart C_Responsibilities of Federal Agencies

609.20 Information to Federal civilian employees.
609.21 Findings of Federal agency.
609.22 Correcting Federal findings.
609.23 Furnishing additional information.
609.24 Reconsideration of Federal findings.
609.25 Furnishing other information.
609.26 Liaison with Department.

    Authority: 5 U.S.C. 8508; Secretary's Order No. 4-75, 40 FR 18515; 
(5 U.S.C. 301). Interpret and apply secs. 8501-8508 of title 5, United 
States Code.

    Source: 47 FR 54687, Dec. 3, 1982, unless otherwise noted.

[[Page 41]]



                      Subpart A_General Provisions



Sec. 609.1  Purpose and application.

    (a) Purpose. Subchapter I of chapter 85, title 5 of the United 
States Code, as amended by Pub. L. 94-566, 90 Stat. 2667, 5 U.S.C. 8501-
8508, provides for a permanent program of unemployment compensation for 
unemployed Federal civilian employees. The unemployment compensation 
provided for in subchapter I is hereinafter referred to as unemployment 
compensation for Federal employees, or UCFE. The regulations in this 
part are issued to implement the UCFE Program.
    (b) First rule of construction. The Act and the implementing 
regulations in this part shall be construed liberally so as to carry out 
the purposes of the Act.
    (c) Second rule of construction. The Act and the implementing 
regulations in this part shall be construed so as to assure insofar as 
possible the uniform interpretation and application of the Act 
throughout the United States.
    (d) Effectuating purpose and rules of construction. (1) In order to 
effectuate the provisions of this section, each State agency shall 
forward to the United States Department of Labor (hereafter Department), 
not later than 10 days after issuance, a copy of each judicial or 
administrative decision ruling on an individual's entitlement to payment 
of UCFE or to credit for a waiting period. On request of the Department, 
a State agency shall forward to the Department a copy of any 
determination or redetermination ruling on an individual's entitlement 
to UCFE or waiting period credit.
    (2) If the Department believes that a determination, 
redetermination, or decision is inconsistent with the Department's 
interpretation of the Act or this part, the Department may at any time 
notify the State agency of the Department's view. Thereafter the State 
agency shall issue a redetermination or appeal if possible, and shall 
not follow such determination, redetermination, or decision as a 
precedent; and, in any subsequent proceedings which involve such 
determination, redetermination, or decision, or wherein such 
determination, redetermination, or decision is cited as precedent or 
otherwise relied upon, the State agency shall inform the claims deputy 
or hearing officer or court of the Department's view and shall make all 
reasonable efforts, including appeal or other proceedings in an 
appropriate forum, to obtain modification, limitation, or overruling of 
the determination, redetermination, or decision.
    (3) If the Department believes that a determination, 
redetermination, or decision is patently and flagrantly violative of the 
Act or this part, the Department may at any time notify the State agency 
of the Department's view. If the determination, redetermination, or 
decision in question denies UCFE to a claimant, the steps outlined in 
paragraph (d)(2) of this section shall be followed by the State agency. 
If the determination, redetermination, or decision in question awards 
UCFE to a claimant, the benefits are ``due'' within the meaning of 
section 303(a)(1) of the Social Security Act, 42 U.S.C. 503(a)(1), and 
therefore must be paid promptly to the claimant. However, the State 
agency shall take the steps outlined in paragraph (d)(2) of this 
section, and payments to the claimant may be temporarily delayed if 
redetermination or appeal action is taken not more than one business day 
following the day on which the first payment otherwise would be issued 
to the claimant; and the redetermination action is taken or appeal is 
filed to obtain a reversal of the award of UCFE and a ruling consistent 
with the Department's view; and the redetermination action or appeal 
seeks an expedited redetermination or appeal within not more than two 
weeks after the redetermination action is taken or the appeal is filed. 
If redetermination action is not taken or appeal is not filed within the 
above time limit, or a redetermination or decision is not obtained 
within the two-week limit, or any redetermination or decision or order 
is issued which affirms the determination, redetermination, or decision 
awarding UCFE or allows it to stand in whole or in part, the benefits 
awarded must be paid promptly to the claimant.
    (4)(i) If any determination, redetermination, or decision, referred 
to in paragraph (d)(2) or paragraph (d)(3) of this section, is treated 
as a precedent for any future UCFE claim or claim

[[Page 42]]

under the UCX Program (part 614 of this chapter), the Secretary will 
decide whether the Agreement with the State entered into under the Act 
shall be terminated.
    (ii) In the case of any determination, redetermination, or decision 
that is not legally warranted under the Act or this part, including any 
determination, redetermination, or decision referred to in paragraph 
(d)(3) of this section, the Secretary will decide whether the State 
shall be required to restore the funds of the United States for any sums 
paid under such a determination, redetermination, or decision, and 
whether, in the absence of such restoration, the Agreement with the 
State shall be terminated and whether other action shall be taken to 
recover such sums for the United States.
    (5) A State agency may request reconsideration of a notice issued 
pursuant to paragraph (d)(2) of paragraph (d)(3) of this section, and 
shall be given an opportunity to present views and arguments if desired.
    (6) Concurrence of the Department in a determination, 
redetermination, or decision shall not be presumed from the absence of a 
notice issued pursuant to this section.



Sec. 609.2  Definitions of terms.

    For the purposes of the Act and this part:
    (a) Act means subchapter I of chapter 85, title 5, United States 
Code, 5 U.S.C. 8501-8508.
    (b) Agreement means the agreement entered into pursuant to the Act 
between a State and the Secretary under which the State agency of the 
State agrees to make payments of unemployment compensation in accordance 
with the Act and the regulations and procedures thereunder prescribed by 
the Department.
    (c) Based period means the base period as defined by the applicable 
State law for the benefit year.
    (d) Benefit year means the benefit year as defined by the applicable 
State law, and if not so defined the term means the period prescribed in 
the agreement with the State or, in the absence of an Agreement, the 
period prescribed by the Department.
    (e) Federal agency means any department, agency, or governmental 
body of the United States, including any instrumentality wholly or 
partially owned by the United States, in any branch of the Government of 
the United States, which employs any individual in Federal civilian 
service.
    (f) Federal civilian service means service performed in the employ 
of any Federal agency, except service performed--
    (1) By an elective official in the executive or legislative branches 
of the Government of the United States;
    (2) As a member of the Armed Forces or the Commissioned Corps of the 
National Oceanic and Atmospheric Administration;
    (3) By Foreign Service personnel for whom special separation 
allowances are provided under chapter 14 of title 22 of the United 
States Code;
    (4) Outside the 50 States, the Commonwealth of Puerto Rico, the 
Virgin Islands, and the District of Columbia, by an individual who is 
not a citizen of the United States;
    (5) By an individual excluded by regulations of the Office of 
Personnel Management from civil service retirement coverage provided by 
subchapter III of chapter 83 of title 5 of the United States Code 
because the individual is paid on a contract or fee basis;
    (6) By an individual receiving nominal pay and allowances of $12 or 
less a year;
    (7) In a hospital, home, or other institution of the United States 
by a patient or inmate thereof;
    (8) By a student-employee as defined by 5 U.S.C. 5351; that is: (i) 
A student nurse, medical or dental intern, resident-in-training, student 
dietitian, student physical therapist, or student occupational 
therapist, assigned or attached to a hospital, clinic, or medical or 
dental laboratory operated by an agency as defined in section 5351; or
    (ii) Any other student-employee, assigned or attached primarily for 
training purposes to such a hospital, clinic, or medical or dental 
laboratory operated by such an agency, who is designated by the head of 
the agency with the approval of the Office of Personnel Management;

[[Page 43]]

    (9) By an individual serving on a temporary basis in case of fire, 
storm, earthquake, flood, or other similar emergency;
    (10) By an individual employed under a Federal relief program to 
relieve the individual from unemployment;
    (11) As a member of a State, county, or community committee under 
the Agricultural Stabilization and Conservation Service or of any other 
board, council, committee, or other similar body, unless such body is 
composed exclusively of individuals otherwise in the full-time employ of 
the United States;
    (12) By an officer or member of the crew on or in connection with an 
American vessel which is: (i) Owned by or bareboat chartered to the 
United States, and
    (ii) The business of which is conducted by a general agent of the 
Secretary of Commerce; and
    (iii) If contributions on account of such service are required under 
section 3305(g) of the Internal Revenue Code of 1954 (26 U.S.C. 3305(g)) 
to be made to an unemployment fund under a State law;
    (13) By an individual excluded by any other Federal law from 
coverage under the UCFE Program; or
    (14) By an individual whose service is covered by the UCX Program to 
which part 614 of this chapter applies.
    (g) Federal employee means an individual who has performed Federal 
civilian service.
    (h) Federal findings means the facts reported by a Federal agency 
pertaining to an individual as to: (1) Whether or not the individual has 
performed Federal civilian service for such an agency;
    (2) The period or periods of such Federal civilian service;
    (3) The individual's Federal wages; and
    (4) The reasons for termination of the individual's Federal civilian 
service.
    (i) Federal wages means all pay and allowances, in cash and in kind, 
for Federal civilian service.
    (j) First claim means an initial claim for unemployment compensation 
under the UCFE Program, the UCX Program (part 614 of this chapter), a 
State law, or some combination thereof, whereby a benefit year is 
established under an applicable State law.
    (k) Official station means the State (or country, if outside the 
United States) designated on a Federal employee's notification of 
personnel action terminating the individual's Federal civilian service 
(Standard Form 50 or its equivalent) as the individual's ``duty 
station.'' If the form of notification does not specify the Federal 
employee's ``duty station'', the individual's official station shall be 
the State or country designated under ``name and location of employing 
office'' on such form or designated as the individual's place of 
employment on an equivalent form.
    (l) Secretary means the Secretary of Labor of the United States.
    (m) State means the 50 States, the District of Columbia, the 
Commonwealth of Puerto Rico, and the Virgin Islands.
    (n) State agency means the agency of the State which administers the 
applicable State law and is administering the UCFE Program in the State 
pursuant to an Agreement with the Secretary.
    (o)(1) State law means the unemployment compensation law of a State 
approved by the Secretary under section 3304 of the Internal Revenue 
Code of 1954, 26 U.S.C. 3304, if the State is certified under section 
3304(c) of the Internal Revenue Code of 1954, 26 U.S.C. 3304(c).
    (2) Applicable State law means the State law made applicable to a 
UCFE claimant by Sec. 609.8.
    (p)(1) Unemployment compensation means cash benefits (including 
dependents' allowances) payable to individuals with respect to their 
unemployment, and includes regular, additional, emergency, and extended 
compensation.
    (2) Regular compensation means unemployment compensation payable to 
an individual under any State law, but not including additional 
compensation or extended compensation.
    (3) Additional compensation means unemployment compensation totally 
financed by a State and payable under a State law by reason of 
conditions of high unemployment or by reason of other special factors.

[[Page 44]]

    (4) Emergency compensation means supplementary unemployment 
compensation payable under a temporary Federal law after exhaustion of 
regular and extended compensation.
    (5) Extended compensation means unemployment compensation payable to 
an individual for weeks of unemployment in an extended benefit period, 
under those provisions of a State law which satisfy the requirements of 
the Federal-State Extended Unemployment Compensation Act of 1970, as 
amended, 26 U.S.C. 3304 note, and part 615 of this chapter, with respect 
to the payment of extended compensation.
    (q) Week means, for purposes of eligibility for and payment of UCFE, 
a week as defined in the applicable State law.
    (r) Week of unemployment means a week of total, part-total, or 
partial unemployment as defined in the applicable State law, which shall 
be applied in the same manner and to the same extent to all employment 
and earnings, and in the same manner and to the same extent for the 
purposes of the UCFE Program, as if the individual filing for UCFE were 
filing a claim for State unemployment compensation.



                Subpart B_Administration of UCFE Program



Sec. 609.3  Eligibility requirements for UCFE.

    An individual shall be eligible to receive a payment of UCFE or to 
waiting period credit with respect to a week of unemployment if:
    (a) The individual has Federal civilian service and Federal wages in 
the base period under the applicable State law;
    (b) The individual meets the qualifying employment and wage 
requirements of the applicable State law, either on the basis of Federal 
civilian service and Federal wages alone or in combination with service 
and wages covered under a State law or under the UCX Program (part 614 
of this chapter);
    (c) The individual has filed an initial claim for UCFE and, as 
appropriate, has filed a timely claim for waiting period credit or a 
payment of UCFE with respect to that week of unemployment; and
    (d) The individual is totally, part-totally, or partially 
unemployed, and is able to work, available for work, and seeking work 
within the meaning of or as required by the applicable State law, and is 
not subject to disqualification under this part or the applicable State 
law, with respect to that week of unemployment.



Sec. 609.4  Weekly and maximum benefit amounts.

    (a) Total unemployment. The weekly amount of UCFE payable to an 
eligible individual for a week of total unemployment shall be the amount 
that would be payable to the individual as unemployment compensation for 
a week of total unemployment as determined under the applicable State 
law.
    (b) Partial and part-total unemployment. The weekly amount of UCFE 
payable for a week of partial or part-total unemployment shall be the 
amount that would be payable to the individual as unemployment 
compensation for a week of partial or part-total unemployment as 
determined under the applicable State law.
    (c) Maximum amount. The maximum amount of UCFE which shall be 
payable to an eligible individual during and subsequent to the 
individual's benefit year shall be the maximum amount of all 
unemployment compensation that would be payable to the individual as 
determined under the applicable State law.
    (d) Computation rules. (1) The weekly and maximum amounts of UCFE 
payable to an individual under the UCFE Program shall be determined 
under the applicable State law to be in the same amount, on the same 
terms, and subject to the same conditions as the State unemployment 
compensation which would be payable to the individual under the 
applicable State law if the individual's Federal civilian service and 
Federal wages assigned or transferred under this part to the State had 
been included as employment and wages covered by that State law.
    (2) All Federal civilian service and Federal wages for all Federal 
agencies shall be considered employment with a single employer for 
purposes of the UCFE Program.

[[Page 45]]



Sec. 609.5  Claims for UCFE.

    (a) First claims. A first claim for UCFE shall be filed by an 
individual in any State agency of any State (or Canada) according to the 
applicable State law, and on a form prescribed by the Department which 
shall be furnished to the individual by the State agency where the claim 
is filed.
    (b) Weekly claims. Claims for waiting week credit and payments of 
UCFE for weeks of unemployment shall be filed in any State agency (or 
Canada) at the times and in the manner as claims for State unemployment 
compensation are filed under the applicable State law, and on forms 
prescribed by the Department which shall be furnished to the individual 
by the State agency where the claim is filed.
    (c) Secretary's standard. The procedure for reporting and filing 
claims for UCFE and waiting period credit shall be consistent with this 
part 609 and the Secretary's ``Standard for Claim Filing, Claimant 
Reporting, Job Finding and Employment Services'' (Employment Security 
Manual, part V, sections 5000 et seq.).



Sec. 609.6  Determinations of entitlement; notices to individual.

    (a) Determination of first claim. The State agency whose State law 
applies to an individual under Sec. 609.8 shall, promptly upon the 
filing of a first claim for UCFE, determine whether the individual is 
eligible and whether a disqualification applies, and, if the individual 
is found to be eligible, the individual's benefit year and the weekly 
and maximum amounts of UCFE payable to the individual.
    (b) Determinations of weekly claims. The State agency promptly 
shall, upon the filing of a claim for payment of UCFE or waiting period 
credit with respect to a week, determine whether the individual is 
entitled to a payment of UCFE or waiting period credit with respect to 
such week, and, if entitled, the amount of UCFE or waiting period credit 
to which the individual is entitled.
    (c) Redetermination. The provisions of the applicable State law 
concerning the right to request, or authority to undertake, 
reconsideration of a determination pertaining to State unemployment 
compensation under the applicable State law shall apply to 
determinations pertaining to UCFE.
    (d) Notices to individual. The State agency promptly shall give 
notice in writing to the individual of any determination or 
redetermination of a first claim, and, except as may be authorized under 
paragraph (g) of this section, of any determination or redetermination 
of any weekly claim which denies UCFE or waiting period credit or 
reduces the weekly amount or maximum amount initially determined to be 
payable. Each notice of determination or redetermination shall include 
such information regarding the determination or redetermination and 
notice of right to reconsideration or appeal, or both, as is furnished 
with written notices of determinations and redeterminations with respect 
to claims for State unemployment compensation; and where information 
furnished by a Federal agency was considered in making the 
determination, or redetermination, the notice thereof shall include an 
explanation of the right of the individual to seek additional 
information pursuant to Sec. 609.23 and/or a reconsideration of Federal 
findings pursuant to Sec. 609.24.
    (e) Obtaining information for claim determinations. (1) Information 
required for the determination of claims for UCFE shall be obtained by 
the State agency from claimants, employers, and others, in the same 
manner as information is obtained for claim purposes under the 
applicable State law, but information (including additional and 
reconsidered Federal findings) shall be obtained from the Federal agency 
that employed the UCFE claimant as prescribed in Sec. Sec. 609.21 
through 609.25. On request by a UCFE claimant, the State agency shall 
seek additional information pursuant to Sec. 609.23 and reconsideration 
of Federal findings pursuant to Sec. 609.24.
    (2) If Federal findings have not been received from a Federal agency 
within 12 days after the request for information was submitted to the 
Federal agency, the State agency shall determine the individual's 
entitlement to UCFE on the basis of an affidavit completed by the 
individual on a form prescribed by the Department. In addition,

[[Page 46]]

the individual shall submit for examination by the State agency any 
documents issued by the Fedeal agency (for example, Standard Form 50 or 
W-2) verifying that the individual performed services for and received 
wages from such Federal agency.
    (3) If Federal findings received by a State agency after a 
determination has been made under this section contain information which 
would result in a change in the individual's eligibility for or 
entitlement to UCFE, the State agency promptly shall make a 
redetermination and notify the individual, as provided in this section. 
All payments of UCFE made prior to or after such redetermination shall 
be adjusted in accordance therewith.
    (f) Promptness. Full payment of UCFE when due shall be consistent 
with this part 609 and shall be made with the greatest promptness that 
is administratively feasible, but the provisions of part 640 of this 
chapter (relating to promptness of benefit payments) shall not be 
applicable to the UCFE Program.
    (g) Secretary's standard. The procedures for making determinations 
and redeterminations, and furnishing written notices of determinations, 
redeterminations, and rights of appeal to individuals applying for UCFE, 
shall be consistent with this part 609 and with the Secretary's 
``Standard for Claim Determinations--Separation Information'' 
(Employment Security Manual, part V, sections 6010 et seq.).



Sec. 609.7  Appeal and review.

    (a) Applicable State law. The provisions of the applicable State law 
concerning the right of appeal and fair hearing from a determination or 
redetermination of entitlement to State unemployment compensation shall 
apply to determinations and redeterminations of eligibility for or 
entitlement to UCFE and waiting period credit. Any such determination or 
redetermination shall be subject to appeal and review only in the manner 
and to the extent provided in the applicable State law with respect to 
determinations and redeterminations of entitlement to State unemployment 
compensation.
    (b) Rights of appeal and fair hearing. The provisions on right to 
appeal and opportunity for a fair hearing with respect to claims for 
UCFE shall be consistent with this part and with sections 303(a)(1) and 
303(a)(3) of the Social Security Act, 42 U.S.C. 503(a)(1) and 503(a)(3).
    (c) Promptness on appeals. (1) Decisions on appeals under the UCFE 
Program shall accord with the Secretary's ``Standard for Appeals 
Promptness--Unemployment Compensation'' in part 650 of this chapter, and 
with Sec. 609.1(d).
    (2) Any provision of an applicable State law for advancement or 
priority of unemployment compensation cases on judicial calenders, or 
otherwise intended to provide for the prompt payment of unemployent 
compensation when due, shall apply to proceedings involving claims for 
UCFE.
    (d) Appeal and review by Federal agency. If a Federal agency 
believes that a State agency's determination or redetermination of an 
individual's eligibility for or entitlement to UCFE is incorrect, the 
Federal agency may seek appeal and review of such determination or 
redetermination in the same manner as an interested employer may seek 
appeal and review under the applicable State law.



Sec. 609.8  The applicable State for an individual.

    (a) The applicable State. The applicable State for an individual 
shall be the State to which the individual's Federal civilian service 
and Federal wages are assigned or transferred under this section. The 
applicable State law for the individual shall be the State law of such 
State.
    (b) Assignment of service and wages. (1) An individual's Federal 
civilian service and Federal wages shall be assigned to the State in 
which the individual had his or her last official station prior to 
filing a first claim unless:
    (i) At the time a first claim is filed the individual resides in 
another State in which, after separation from Federal civilian service, 
the individual performed service covered under the State law, in which 
case all of the individual's Federal civilian service and wages shall be 
assigned to the latter State; or
    (ii) Prior to filing a first claim an individual's last official 
station was outside the States, in which case all of the

[[Page 47]]

individual's Federal civilian service and Federal wages shall be 
assigned to the State in which the individual resides at the time the 
individual files a first claim, provided the individual is personally 
present in a State when the individual files the first claim.
    (2) Federal civilian service and wages assigned to a State in error 
shall be reassigned for use by the proper State agency. An appropriate 
record of a reassignment shall be made by the State agency which makes 
the reassignment.
    (3) Federal civilian service and Federal wages assigned to a State 
shall be transferred to another State where such transfer is necessary 
for the purposes of a combined-wage claim filed by an individual.
    (c) Assignment deemed complete. All of an individual's Federal 
civilian service and Federal wages shall be deemed to have been assigned 
to a State upon the filing of a first claim. Federal civilian service 
and Federal wages shall be assigned to a State only in accordance with 
paragraph (b) of this section.
    (d) Use of assigned service and wages. All assigned Federal civilian 
service and Federal wages shall be used only by the State to which 
assigned or transferred in accordance with paragraph (b) of this 
section.



Sec. 609.9  Provisions of State law applicable to UCFE claims.

    (a) Particular provisions applicable. Except where the result would 
be inconsistent with the provisions of the Act or this part or the 
procedures thereunder prescribed by the Department, the terms and 
conditions of the applicable State law which apply to claims for, and 
the payment of, State unemployment compensation shall apply to claims 
for, and the payment of, UCFE and claims for waiting period credit. The 
provisions of the applicable State law which shall apply include, but 
are not limited to:
    (1) Claim filing and reporting;
    (2) Information to individuals, as appropriate;
    (3) Notices to individuals and Federal agencies, as appropriate, 
including notice to each individual of each determination and 
redetermination of eligibility for or entitlement to UCFE;
    (4) Determinations and redeterminations;
    (5) Ability to work, availability for work, and search for work; and
    (6) Disqualifications.
    (b) IBPP. The Interstate Benefit Payment Plan shall apply, where 
appropriate, to individuals filing claims for UCFE.
    (c) Wage combining. The State's provisions complying with the 
Interstate Arrangement for Combining Employment and Wages (part 616 of 
this chapter) shall apply, where appropriate, to individuals filing 
claims for UCFE.
    (d) Procedural requirements. The provisions of the applicable State 
law which apply hereunder to claims for and the payment of UCFE shall be 
applied consistently with the requirements of title III of the Social 
Security Act and the Federal Unemployment Tax Act which are pertinent in 
the case of State unemployment compensation, including but not limited 
to those standards and requirements specifically referred to in the 
provisions of this part, except as provided in paragraph (f) of Sec. 
609.6.



Sec. 609.10  Restrictions on entitlement.

    (a) Disqualification. If the week of unemployment for which an 
individual claims UCFE is a week to which a disqualification for State 
unemployment compensation applies under the applicable State law, or 
would apply but for the fact that the individual has no right to such 
compensation, the individual shall not be entitled to a payment of UCFE 
for that week.
    (b) Allocation of terminal annual leave payments. Lump-sum terminal 
annual leave payments shall not be allocated by a Federal agency and 
shall be allocated by a State agency in the same manner as similar 
payments to individuals employed by private employers are allocated 
under the applicable State law. In a State in which a private employer 
has an option as to the period to which such payments shall be 
allocated, such payments shall be allocated to the date of separation 
from employment.

[[Page 48]]



Sec. 609.11  Overpayments; penalties for fraud.

    (a) False statements and representations. Section 8507(a) of the Act 
provides that if a State agency, the Department, or a court of competent 
jurisdiction finds that an individual--
    (1) Knowingly has made, or caused to be made by another, a false 
statement or representation of a material fact, or knowingly has failed, 
or caused another to fail, to disclose a material fact; and
    (2) As a result of that action has received an amount as UCFE to 
which the individual was not entitled; the individual shall repay the 
amount to the State agency or the Department. Instead of requiring 
repayments, the State agency or the Department may recover the amount by 
deductions from UCFE payable to the individual during the 2-year period 
after the date of the finding. A finding by a State agency or the 
Department may be made only after an opportunity for a fair hearing, 
subject to such further review as may be appropriate under Sec. 609.7.
    (b) Prosecution for fraud. Section 1919 of title 18, United States 
Code, provides that whoever makes a false statement or representation of 
a material fact knowing it to be false, or knowingly fails to disclose a 
material fact, to obtain or increase for himself or for any other 
individual any payment authorized to be paid under chapter 85 of title 
5, United States Code, or under an agreement thereunder, shall be fined 
not more than $1,000 or imprisoned not more than one year, or both.
    (c) Absence of fraud. If a State agency or court of competent 
jurisdiction finds that an individual has received a payment of UCFE to 
which the individual was not entitled under the Act and this part, which 
was not due to a false statement or representation as provided in 
paragraph (a) or (b) of this section, the individual shall be liable to 
repay to the applicable State the total sum of the payment to which the 
individual was not entitled, and the State agency shall take all 
reasonable measures authorized under any State law or Federal law to 
recover for the account of the United States the total sum of the 
payment to which the individual was not entitled.
    (d) Recovery by offset. (1) The State agency shall recover, insofar 
as is possible, the amount of any overpayment which is not repaid by the 
individual, by deductions from any UCFE payable to the individual under 
the Act and this part, or from any unemployment compensation payable to 
the individual under any Federal unemployment compensation law 
administered by the State agency, or from any assistance or allowance 
payable to the individual with respect to unemployment under any other 
Federal law administered by the State agency.
    (2) A State agency shall also recover, insofar as is possible, the 
amount of any overpayment of UCFE made to the individual by another 
State, by deductions from any UCFE payable by the State agency to the 
individual under the Act and this part, or from any unemployment 
compensation payable to the individual under any Federal unemployment 
compensation law administered by the State agency, or from any 
assistance or allowance payable to the individual with respect to 
unemployment under any other Federal law administered by the State 
agency.
    (3) Recoupment of fraudulent overpayments referred to in paragraph 
(a) of this section shall be limited to the 2-year period stated in that 
paragraph. Recoupment of fraudulent overpayments referred to in 
paragraph (b) of this section, and nonfraudulent overpayments referred 
to in paragraph (c) of this section shall be subject to any time 
limitation on recoupment provided for in the State law that applies to 
the case.
    (e) Debts due the United States. UCFE payable to an individual shall 
be applied by the State agency for the recovery by offset of any debt 
due to the United States from the individual, but shall not be applied 
or used by the State agency in any manner for the payment of any debt of 
the individual to any State or any other entity or person except 
pursuant to a court order for child support or alimony in accordance 
with the law of the State and section 459 of the Social Security Act, 42 
U.S.C. 659.
    (f) Application of State law. (1) Except as indicated in paragraph 
(a) of this section, any provision of State law

[[Page 49]]

that may be applied for the recovery of overpayments or prosecution for 
fraud, and any provision of State law authorizing waiver of recovery of 
overpayments of unemployment compensation, shall be applicable to UCFE.
    (2) In the case of any finding of false statement or representation 
under the Act and paragraph (a) of this section, or prosecution for 
fraud under 18 U.S.C. 1919 or pursuant to paragraph (f)(1) of this 
section, the individual shall be disqualified or penalized in accordance 
with the provisions of the applicable State law relating to fraud in 
connection with a claim for State unemployment compensation.
    (g) Final decision. Recovery of any overpayment of UCFE shall not be 
enforced by the State agency until the determination or redetermination 
establishing the overpayment has become final, or if appeal is taken 
from the determination or redetermination, until the decision after 
opportunity for a fair hearing has become final.
    (h) Procedural requirements. (1) The provisions of paragraphs (c), 
(d), and (g) of Sec. 609.6 shall apply to determinations and 
redeterminations made pursuant to this section.
    (2) The provisions of Sec. 609.7 shall apply to determinations and 
redeterminations made pursuant to this section.
    (i) Fraud detection and prevention. Provisions in the procedures of 
each State with respect to detection and prevention of fraudulent 
overpayments of UCFE shall be, as a minimum, commensurate with the 
procedures adopted by the State with respect to State unemployment 
compensation and consistent with the Secretary's ``Standard for Fraud 
and Overpayment Detection'' (Employment Security Manual, part V, section 
7510 et seq.).
    (j) Recovered overpayments. An amount repaid or recouped under this 
section shall be--
    (1) Deposited in the fund from which payment was made, if the 
repayment was to a State agency; or
    (2) Returned to the Treasury of the United States and credited to 
the current applicable appropriation, fund, or account from which 
payment was made, if the repayment was to the Department.



Sec. 609.12  Inviolate rights to UCFE.

    Except as specifically provided in this part, the rights of 
individuals to UCFE shall be protected in the same manner and to the 
same extent as the rights of persons to State unemployment compensation 
are protected under the applicable State law. Such measures shall 
include protection of applicants for UCFE from waiver, release, 
assignment, pledge, encumbrance, levy, execution, attachment, and 
garnishment of their rights to UCFE, except as provided in Sec. 609.11. 
In the same manner and to the same extent, individuals shall be 
protected from discrimination and obstruction in regard to seeking, 
applying for, and receiving any right to UCFE.



Sec. 609.13  Recordkeeping; disclosure of information.

    (a) Recordkeeping. Each State agency will make and maintain records 
pertaining to the administration of the UCFE Program as the Department 
requires, and will make all such records available for inspection, 
examination, and audit by such Federal officials or employees as the 
Department may designate or as may be required by law.
    (b) Disclosure of Information. Information in records maintained by 
a State agency in administering the UCFE Program shall be kept 
confidential, and information in such records may be disclosed only in 
the same manner and to the same extent as information with respect to 
State unemployment compensation and the entitlement of individuals 
thereto may be disclosed under the applicable State law. This provision 
on the confidentiality of information maintained in the administration 
of the UCFE Program shall not apply, however, to the Department or for 
the purposes of Sec. Sec. 609.11 or 609.13, or in the case of 
information, reports and studies required pursuant to Sec. Sec. 609.17 
or 609.25, or where the result would be inconsistent with the Freedom of 
Information Act (5 U.S.C. 552), the Privacy Act of 1974 (5 U.S.C. 552a), 
or regulations of the Department promulgated thereunder.



Sec. 609.14  Payments to States.

    (a) State entitlement. Each State is entitled to be paid by the 
United States

[[Page 50]]

with respect to each individual whose base period wages included Federal 
wages, an amount bearing the same ratio to the total amount of 
compensation paid to such individual as the amount of the individual's 
Federal wages in the individual's base period bears to the total amount 
of the individual's base period wages.
    (b) Payment. Each State shall be paid, either in advance or by way 
of reimbursement, as may be determined by the Department, the sum that 
the Department estimates the State is entitled to receive under the Act 
and this part for each calendar month. The sum shall be reduced or 
increased by the amount which the Department finds that its estimate for 
an earlier calendar month was greater or less than the sum which should 
have been paid to the State. An estimate may be made on the basis of a 
statistical, sampling, or other method agreed on by the Department and 
the State agency.
    (c) Certification by the Department. The Department, from time to 
time, shall certify to the Secretary of the Treasury the sum payable to 
each State under this section. The Secretary of the Treasury, before 
audit or settlement by the General Accounting Office, shall pay the 
State in accordance with the certification from the funds for carrying 
out the purposes of the Act and this part.
    (d) Use of money. Money paid a State under the Act and this part may 
be used solely for the purposes for which it is paid. Money so paid 
which is not used solely for these purposes shall be returned, at the 
time specified by the Agreement, to the Treasury of the United States 
and credited to the current applicable appropriation, fund, or account 
from which payments to states under the Act and this part may be made.



Sec. 609.15  Public access to Agreements.

    The State agency of a State will make available to any individual or 
organization a true copy of the Agreement with the State for inspection 
and copying. Copies of an Agreement may be furnished on request to any 
individual or organization upon payment of the same charges, if any, as 
apply to the furnishing of copies of other records of the State agency.



Sec. 609.16  Administration in absence of an Agreement.

    (a) Administering Program. The Department shall administer the UCFE 
Program through personnel of the Department or through other 
arrangements under procedures prescribed by the Department, in the case 
of any State which does not have an Agreement with the Secretary as 
provided for in 5 U.S.C. 8502. The procedures prescribed by the 
Department under this section shall be consistent with the Act and this 
part.
    (b) Applicable State law. On the filing by an individual of a claim 
for UCFE in accordance with arrangements under this section, UCFE shall 
be paid to the individual, if eligible, in the same amount, on the same 
terms, and subject to the same conditions as would be paid to the 
individual under the applicable State law if the individual's Federal 
civilian service and Federal wages had been included as employment and 
wages under the State law. Any such claim shall include the individual's 
Federal civilian service and Federal wages, combined with any service 
and wages covered by State law. However, if the individual, without 
regard to his or her Federal civilian service and Federal wages, has 
employment or wages sufficient to qualify for compensation during the 
benefit year under that State law, then payments of UCFE under this 
section may be made only on the basis of the individual's Federal 
civilian service and Federal wages.
    (c) Fair hearing. An individual whose claim for UCFE is denied under 
this section is entitled to a fair hearing under rules of procedure 
prescribed by the Department. A final determination by the Department 
with respect to entitlement to UCFE under this section is subject to 
review by the courts in the same manner and to the same extent as is 
provided by section 205(g) of the Social Security Act, 42 U.S.C. 405(g).

[[Page 51]]



Sec. 609.17  Information, reports, and studies.

    State agencies shall furnish to the Department such information and 
reports and conduct such studies as the Department determines are 
necessary or appropriate for carrying out the purposes of the UCFE 
Program.



             Subpart C_Responsibilities of Federal Agencies



Sec. 609.20  Information to Federal civilian employees.

    Each Federal agency shall:
    (a) Furnish information to its employees as to their rights and 
responsibilities under the UCFE Program and 18 U.S.C. 1919; and
    (b) Furnish a completed copy of a form approved by the Department, 
``Notice to Federal Employee About Unemployment Compensation,'' in 
accordance with instructions thereon, to each employee at the time of 
separation from Federal civilian service, when transferred from one 
payroll office to another, or when the office responsible for 
distribution of the form is advised that an individual is in nonpay 
status for seven consecutive days or more.



Sec. 609.21  Findings of Federal agency.

    (a) Answering request. Within four workdays after receipt from a 
State agency of a request for Federal findings on a form furnished by 
the State agency, and prescribed by the Department, a Federal agency 
shall make such Federal findings, complete all copies of the form, and 
transmit the completed copies to the State agency. If documents 
necessary for completion of the form have been assigned to an agency 
records center or the Federal Records Center in St. Louis, the Federal 
agency shall obtain the necessary information from the records center. 
Any records center shall give priority to such a request.
    (b) Failure to meet time limit. If a completed form containing the 
Federal agency's findings cannot be returned within four workdays of 
receipt, the Federal agency immediately shall inform the State agency, 
and shall include an estimated date by which the completed form will be 
returned.
    (c) Administrative control. Each Federal agency shall maintain a 
control of all requests for Federal findings received by it, and the 
Federal agency's response to each request. The records shall be 
maintained so as to enable the Federal agency to ascertain at any time 
the number of such forms that have not been returned to State agencies, 
and the dates of the Federal agency's receipt of such unreturned forms.



Sec. 609.22  Correcting Federal findings.

    If a Federal agency ascertains at any time within one year after it 
has returned a completed form reporting its findings, that any of its 
findings were erroneous, it shall promptly correct its error and forward 
its corrected findings to the State agency.



Sec. 609.23  Furnishing additional information.

    On receipt of a request for additional information from a State 
agency, a Federal agency shall consider the information it supplied 
initially in connection with such request and shall review its findings. 
The Federal agency promptly shall forward to the State agency such 
additional findings as will respond to the request. The Federal agency 
shall, if possible, respond within four workdays after the receipt of a 
request under this section.



Sec. 609.24  Reconsideration of Federal findings.

    On receipt of a request for reconsideration of Federal findings from 
a State agency, the Federal agency shall consider the initial 
information supplied in connection with such request and shall review 
its findings. The Federal agency shall correct any errors or omissions 
in its findings and shall affirm, modify, or reverse any or all of its 
findings in writing. The Federal agency promptly shall forward its 
reconsidered findings to the requesting authority. The Federal agency 
shall, if possible, respond within four workdays after the receipt of a 
request under this section.

[[Page 52]]



Sec. 609.25  Furnishing other information.

    (a) Additional Information. In addition to the information required 
by Sec. Sec. 609.21, 609.22, 609.23, and 609.24, a Federal agency shall 
furnish to a State agency or the Department, within the time requested, 
any information which it is not otherwise prohibited from releasing by 
law, which the Department determines is necessary for the administration 
of the UCFE Program.
    (b) Reports. Federal agencies shall furnish to the Department or 
State agencies such reports containing such information as the 
Department determines are necessary or appropriate for carrying out the 
purposes of the UCFE Program.



Sec. 609.26  Liaison with Department.

    To facilitate the Department's administration of the UCFE Program, 
each Federal agency shall designate one or more of its officials to be 
the liaison with the Department. Each Federal agency will inform the 
Department of its designation(s) and of any change in a designation.



PART 614_UNEMPLOYMENT COMPENSATION FOR EX-SERVICEMEMBERS--Table of 
Contents




                      Subpart A_General Provisions

Sec.
614.1 Purpose and application.
614.2 Definitions of terms.

                 Subpart B_Administration of UCX Program

614.3 Eligibility requirements for UCX.
614.4 Weekly and maximum benefit amounts.
614.5 Claims for UCX.
614.6 Determinations of entitlement; notices to individual and Federal 
          military agency.
614.7 Appeal and review.
614.8 The applicable State for an individual.
614.9 Provisions of State law applicable to UCX claims.
614.10 Restrictions on entitlement.
614.11 Overpayments; penalties for fraud.
614.12 Schedules of remuneration.
614.13 Inviolate rights to UCX.
614.14 Recordkeeping; disclosure of information.
614.15 Payments to States.
614.16 Public access to Agreements.
614.17 Administration in absence of an Agreement.
614.18 Information, reports, and studies.

   Subpart C_Responsibilities of Federal Military Agencies and State 
                                Agencies

614.20 Information to ex-servicemembers.
614.21 Findings of Federal military agency.
614.22 Correcting Federal findings.
614.23 Finality of findings.
614.24 Furnishing other information.
614.25 Liaison with Department

Appendix A to Part 614--Standard for Claim Filing, Claimant Reporting, 
          Job Finding, and Employment Services
Appendix B to Part 614--Standard for Claim Determination--Separation 
          Information
Appendix C to Part 614--Standard for Fraud and Overpayment Detection

    Authority: 5 U.S.C. 8508; Secretary's Order No. 4-75 (40 FR 18515).

    Source: 47 FR 54697, Dec. 3, 1982, unless otherwise noted.



                      Subpart A_General Provisions



Sec. 614.1  Purpose and application.

    (a) Purpose. Subchapter II of chapter 85, title 5 of the United 
States Code (5 U.S.C. 8521-8525) provides for a permanent program of 
unemployment compensation for unemployed individuals separated from the 
Armed Forces. The unemployment compensation provided for in subchapter 
II is hereinafter referred to as Unemployment Compensation for Ex-
servicemembers, or UCX. The regulations in this part are issued to 
implement the UCX Program.
    (b) First rule of construction. The Act and the implementing 
regulations in this part shall be construed liberally so as to carry out 
the purposes of the Act.
    (c) Second rule of construction. The Act and the implementing 
regulations in this part shall be construed so as to assure insofar as 
possible the uniform interpretation and application of the Act 
throughout the United States.
    (d) Effectuating purpose and rules of construction. (1) In order to 
effectuate the provisions of this section, each State agency shall 
forward to the United States Department of Labor (hereafter Department), 
not later than 10 days after issuance, a copy of each judicial or 
administrative decision ruling on an individual's entitlement to payment 
of UCX or to credit for a waiting period. On request of the Department, 
a State agency shall forward to

[[Page 53]]

the Department a copy of any determination or redetermination ruling on 
an individual's entitlement to UCX or waiting period credit.
    (2)(i) If the Department believes that a determination, 
redetermination, or decision is inconsistent with the Department's 
interpretation of the Act or this part, the Department may at any time 
notify the State agency of the Department's view. Thereafter, the State 
agency shall issue a redetermination or appeal if possible, and shall 
not follow such determination, redetermination, or decision as a 
precedent; and, in any subsequent proceedings which involve such 
determination, redetermination, or decision, or wherein such 
determination, redetermination, or decision is cited as precedent or 
otherwise relied upon, the State agency shall inform the claims deputy 
or hearing officer or court of the Department's view and shall make all 
reasonable efforts, including appeal or other proceedings in an 
appropriate forum, to obtain modification, limitation, or overruling of 
the determination, redetermination, or decision.
    (ii) If the Department believes that a State agency has failed to 
use, or use in a timely manner, the crossmatch mechanism at the claims 
control center designated by the Department, the Department may at any 
time notify the State of the Department's view. Thereafter, the State 
agency shall take action to ensure that operable procedures for the 
effective utilization of the claims control center are in place and 
adhered to. In any case of any determination, redetermination, or 
decision that is not legally warranted under the Act or this part had 
the State used, or used in a timely manner, the crossmatch mechanism at 
the claims control center designated by the Department, State agency 
shall take the steps outlined in paragraph (d)(2)(i) of this section.
    (3) If the Department believes that a determination, 
redetermination, or decision is patently and flagrantly violative of the 
Act or this part, the Department may at any time notify the State agency 
of the Department's view. If the determination, redetermination, or 
decision in question denies UCX to a claimant, the steps outlined in 
paragraph (2) above shall be followed by the State agency. If the 
determination, redetermination, or decision in question awards UCX to a 
claimant, the benefits are ``due'' within the meaning of section 
303(a)(1) of the Social Security Act, 42 U.S.C. 503(a)(1), and therefore 
must be paid promptly to the claimant. However, the State agency shall 
take the steps outlined in paragraph (d)(2) of this section, and 
payments to the claimant may be temporarily delayed if redetermination 
or appeal action is taken not more than one business day following the 
day on which the first payment otherwise would be issued to the 
claimant; and the redetermination action is taken or appeal is filed to 
obtain a reversal of the award of UCX and a ruling consistent with the 
Department's view; and the redetermination action or appeal seeks an 
expedited redetermination or appeal within not more than two weeks after 
the redetermination action is taken or the appeal is filed. If 
redetermination action is not taken or appeal is not filed within the 
above time limit, or a redetermination or decision is not obtained 
within the two-week limit, or any redetermination or decision or order 
is issued which affirms the determination, redetermination, or decision 
awarding UCX or allows it to stand in whole or in part, the benefits 
awarded must be paid promptly to the claimant.
    (4)(i) If any determination, redetermination, or decision, referred 
to in paragraph (d)(2) or paragraph (d)(3) of this section, is treated 
as a precedent for any future UCX claim or claim under the UCFE Program 
(part 609 of this chapter), the Secretary will decide whether the 
Agreement with the State entered into under the Act shall be terminated.
    (ii) In the case of any determination, redetermination, or decision 
that is not legally warranted under the Act or this part, including any 
determination, redetermination, or decision referred to in paragraph 
(d)(2) or in paragraph (d)(3) of this section, the Secretary will decide 
whether the State shall be required to restore the funds of the United 
States for any sums paid under such a determination, redetermination, or 
decision, and whether, in absence of such restoration, the Agreement 
with

[[Page 54]]

the State shall be terminated and whether other action shall be taken to 
recover such sums for the United States.
    (5) A State agency may request reconsideration of a notice issued 
pursuant to paragraph (d)(2) or paragraph (d)(3) of this section, and 
shall be given an opportunity to present views and arguments if desired.
    (6) Concurrence of the Department in a determination, 
redetermination, or decision shall not be presumed from the absence of a 
notice issued pursuant to this section.

(Approved by the Office of Management and Budget under control number 
1205-0163)

[47 FR 54697, Dec. 3, 1982, as amended at 53 FR 40553, Oct. 17, 1988; 53 
FR 43799, Oct. 26, 1988; 57 FR 59799, Dec. 15, 1992]



Sec. 614.2  Definitions of terms.

    For purposes of the Act and this part:
    (a) Act means subchapter II of chapter 85 of title 5 of the United 
States Code, 5 U.S.C. 8521-8525.
    (b) Agreement means the Agreement entered into pursuant to 5 U.S.C. 
8502 between a State and the Secretary under which the State agency of 
the State agrees to make payments of unemployment compensation in 
accordance with the Act and the regulations and procedures thereunder 
prescribed by the Department.
    (c) Base period means the base period as defined by the applicable 
State law for the benefit year.
    (d) Benefit year means the benefit year as defined by the applicable 
State law, and if not so defined the term means the period prescribed in 
the Agreement with the State or, in the absence of an Agreement, the 
period prescribed by the Department.
    (e) Ex-servicemember means an individual who has performed Federal 
military service.
    (f) Federal military agency means any of the Armed Forces of the 
United States, including the Army, Air Force, Navy, Marine Corps, and 
Coast Guard, and the National Oceanic and Atmospheric Administration 
(Department of Commerce).
    (g) Federal military service means active service (not including 
active duty in a reserve status unless for a continuous period of 90 
days or more) in the Armed Forces or the Commissioned Corps of the 
National Oceanic and Atmospheric Administration if with respect to that 
service--
    (1) The individual was discharged or released under honorable 
conditions (and, if an officer, did not resign for the good of the 
service); and
    (2)(i) The individual was discharged or released after completing 
his/her first full term of active service which the individual initially 
agreed to serve, or
    (ii) The individual was discharged or released before completing 
such term of active service--
    (A) For the convenience of the Government under an early release 
program,
    (B) Because of medical disqualification, pregnancy, parenthood, or 
any service-incurred injury or disability,
    (C) Because of hardship, or
    (D) Because of personality disorders or inaptitude but only if the 
service was continuous for 365 days or more.
    (h) Federal military wages means all pay and allowances in cash and 
in kind for Federal military service, computed on the basis of the pay 
and allowances for the pay grade of the individual at the time of his or 
her latest discharge or release from Federal/military service, as 
determined in accordance with the Schedule of Remuneration applicable at 
the time the individual files his or her first claim for compensation 
for a benefit year.
    (i) First claim means an initial claim for unemployment compensation 
under the UCX Program, the UCFE Program (part 609 of this chapter), or a 
State law, or some combination thereof, first filed by an individual 
after the individual's latest discharge or release from Federal military 
service, whereby a benefit year is established under an applicable State 
law.
    (j) Military document means an official document or documents issued 
to an individual by a Federal military agency relating to the 
individual's Federal military service and discharge or release from such 
service.
    (k) Period of active service means a period of continuous active 
duty (including active duty for training purposes) in a Federal military 
agency or agencies, beginning with the date of entry

[[Page 55]]

upon active duty and ending on the effective date of the first discharge 
or release thereafter which is not qualified or conditional.
    (l) Schedule of Remuneration means the schedule issued by the 
Department from time to time under 5 U.S.C. 8521(a)(2) and this part, 
which specifies for purposes of the UCX Program, the pay and allowances 
for each pay grade of servicemember.
    (m) Secretary means the Secretary of Labor of the United States.
    (n) State means the 50 States, the District of Columbia, the 
Commonwealth of Puerto Rico, and the Virgin Islands.
    (o) State agency means the agency of the State which administers the 
applicable State unemployment compensation law and is administering the 
UCX Program in the State pursuant to an Agreement with the Secretary.
    (p)(1) State law means the unemployment compensation law of a State 
approved by the Secretary under section 3304 of the Internal Revenue 
Code of 1986, 26 U.S.C. 3304, if the State is certified under section 
3304(c) of the Internal Revenue Code of 1986, 26 U.S.C. 3304(c).
    (2) Applicable State law means the State law made applicable to a 
UCX claimant by Sec. 614.8.
    (q)(1) Unemployment compensation means cash benefits (including 
dependents' allowances) payable to individuals with respect to their 
unemployment, and includes regular, additional, emergency, and extended 
compensation.
    (2) Regular compensation means unemployment compensation payable to 
an individual under any State law, but not including additional 
compensation or extended compensation.
    (3) Additional compensation means unemployment compensation totally 
financed by a State and payable under a State law by reason of 
conditions of high unemployment or by reason of other special factors.
    (4) Emergency compensation means supplementary unemployment 
compensation payable under a temporary Federal law after exhaustion of 
regular and extended compensation.
    (5) Extended compensation means unemployment compensation payable to 
an individual for weeks of unemployment in an extended benefit period, 
under those provisions of a State law which satisfy the requirements of 
the Federal-State Extended Unemployment Compensation Act of 1970, as 
amended, 26 U.S.C. 3304 note, and part 615 of this chapter, with respect 
to the payment of extended compensation.
    (r) Unemployment Compensation for Ex-Servicemember means the 
unemployment compensation payable under the Act to claimants eligible 
for the payments, and is referred to as UCX.
    (s) Week means, for purposes of eligibility for and payment of UCX, 
a week as defined in the applicable State law.
    (t) Week of unemployment means a week of total, part-total, or 
partial unemployment as defined in the applicable State law, which shall 
be applied in the same manner and to the same extent to all employment 
and earnings, and in the same manner and to the same extent for the 
purposes of the UCX Program, as if the individual filing for UCX were 
filing a claim for State unemployment compensation.

[47 FR 54697, Dec. 3, 1982, as amended at 53 FR 40554, Oct. 17, 1988; 53 
FR 43799, Oct. 26, 1988; 57 FR 59799, Dec. 15, 1992]



                 Subpart B_Administration of UCX Program



Sec. 614.3  Eligibility requirements for UCX.

    An individual shall be eligible to receive a payment of UCX or 
waiting period credit with respect to a week of unemployment if:
    (a) The individual has Federal military service and Federal military 
wages in the base period under the applicable State law;
    (b) The individual meets the qualifying employment and wage 
requirements of the applicable State law, either on the basis of Federal 
military service and Federal military wages alone or in combination with 
service and wages covered under a State law or under the UCFE Program 
(part 609 of this chapter);
    (c) The individual has filed an initial claim for UCX and, as 
appropriate, has filed a timely claim for waiting period credit or 
payment of UCX with respect to that week of unemployment; and

[[Page 56]]

    (d) The individual is totally, part-totally, or partially 
unemployed, and is able to work, available for work, and seeking work 
within the meaning of or as required by the applicable State law, and is 
not subject to disqualification under this part or the applicable State 
law, with respect to that week of unemployment.

[47 FR 54697, Dec. 3, 1982, as amended at 53 FR 40554, Oct. 17, 1988; 57 
FR 59799, Dec. 15, 1992]



Sec. 614.4  Weekly and maximum benefit amounts.

    (a) Total unemployment. The weekly amount of UCX payable to an 
eligible individual for a week of total unemployment shall be the amount 
that would be payable to the individual as unemployment compensation for 
a week of total unemployment as determined under the applicable State 
law.
    (b) Partial and part-total unemployment. The weekly amount of UCX 
payable for a week of partial or part-total unemployment shall be the 
amount that would be payable to the individual as unemployment 
compensation for a week of partial or part-total unemployment as 
determined under the applicable State law.
    (c) Maximum amount. The maximum amount of UCX which shall be payable 
to an eligible individual during and subsequent to the individual's 
benefit year shall be the maximum amount of all unemployment 
compensation that would be payable to the individual as determined under 
the applicable State law.
    (d) Computation rules. The weekly and maximum amounts of UCX payable 
to an individual under the UCX Program shall be determined under the 
applicable State law to be in the same amount, on the same terms, and 
subject to the same conditions as the State unemployment compensation 
which would be payable to the individual under the applicable State law 
if the individual's Federal military service and Federal military wages 
assigned or transferred under this part to the State had been included 
as employment and wages covered by that State law, subject to the use of 
the applicable Schedule of Remuneration.

[47 FR 54697, Dec. 3, 1982, as amended at 53 FR 40554, Oct. 17, 1988; 57 
FR 59800, Dec. 15, 1992]



Sec. 614.5  Claims for UCX.

    (a) First claims. A first claim for UCX shall be filed by an 
individual in any State agency of any State according to the applicable 
State law, and on a form prescribed by the Department which shall be 
furnished to the individual by the State agency where the claim is 
filed.
    (b) Weekly claims. Claims for waiting week credit and payments of 
UCX for weeks of unemployment shall be filed in any State agency (or 
Canada) at the times and in the manner as claims for State unemployment 
compensation are filed under the applicable State law, and on forms 
prescribed by the Department which shall be furnished to the individual 
by the State agency where the claim is filed.
    (c) Secretary's standard. The procedures for reporting and filing 
claims for UCX and waiting period credit shall be consistent with this 
part 614 and the Secretary's ``Standard for Claim Filing, Claimant 
Reporting, Job Finding and Employment Services'' in the Employment 
Security Manual, part V, sections 5000-5004 (appendix A of this part).

[47 FR 54697, Dec. 3, 1982, as amended at 53 FR 40554, Oct. 17, 1988]



Sec. 614.6  Determinations of entitlement; notices to individual and 
Federal military agency.

    (a) Determinations of first claim. Except for findings of a Federal 
military agency and the applicable Schedule of Remuneration which are 
final and conclusive under Sec. 614.23, the State agency whose State 
law applies to an individual under Sec. 614.8 shall, promptly upon the 
filing of a first claim for UCX, determine whether the individual is 
otherwise eligible, and, if the individual is found to be eligible, the 
individual's benefit year and the weekly and maximum amounts of UCX 
payable to the individual.
    (b) Determinations of weekly claims. The State agency promptly 
shall, upon the filing of a claim for a payment of

[[Page 57]]

UCX or waiting period credit with respect to a week, determine whether 
the individual is entitled to a payment of UCX or waiting period credit 
respect to such week, and, if entitled, the amount of UCX or waiting 
period credit to which the individual is entitled.
    (c) Redetermination. The provisions of the applicable State law 
concerning the right to request, or authority to undertake, 
reconsideration of a determination pertaining to State unemployment 
compensation under the applicable State law shall apply to 
determinations pertaining to UCX.
    (d) Notices to individual and Federal military agency. (1) The State 
agency promptly shall give notice in writing to the individual of any 
determination or redetermination of a first claim, and, except as may be 
authorized under paragraph (g) of this section, of any determination or 
redetermination of any weekly claim which denies UCX or waiting period 
credit or reduces the weekly amount or maximum amount initially 
determined to be payable. Each notice of determination or 
redetermination shall include such information regarding the 
determination or redetermination and notice of right to reconsideration 
or appeal, or both, as is furnished with written notices of 
determinations and redeterminations with respect to claims for State 
unemployment compensation. Such notice shall include the findings of any 
Federal military agency utilized in making the determination or 
redetermination, and shall inform the individual of the finality of 
Federal findings and the individual's right to request correction of 
such findings as is provided in Sec. 614.22.
    (2) A notice of claim filing and subsequent notices of monetary and 
nonmonetary determinations on a UCX claim shall be sent to each Federal 
military agency for which the individual performed Federal military 
service during the appropriate base period, together with notice of 
appeal rights of the Federal military agency to the same extent that 
chargeable employers are given such notices under State law and practice 
unless an alternate mechanism is established by the Department of Labor 
in lieu of such notices.
    (e) Obtaining information for claim determinations. (1) Information 
required for the determination of claims for UCX shall be obtained by 
the State agency from claimants, employers, and others, in the same 
manner as information is obtained for claim purposes under the 
applicable State law, but Federal military findings shall be obtained 
from military documents, the applicable Schedule of Remuneration, and 
from Federal military agencies as prescribed in Sec. Sec. 614.21 
through 614.24.
    (f) Promptness. Full payment of UCX when due shall be consistent 
with this part and shall be made with the greatest promptness that is 
administratively feasible, but the provisions of part 640 of this 
chapter (relating to promptness of benefit payments) shall not be 
applicable to the UCX Program.
    (g) Secretary's standard. The procedures for making determinations 
and redeterminations, and furnishing written notices of determinations, 
redeterminations, and rights of appeal to individuals appying for UCX 
and to appropriate Federal military agencies shall be consisent with 
this part 614 and the Secretary's ``Standard for Claim Determinations-
Separation Information'' in the Employment Security Manual, part V, 
sections 6010-6015 (Appendix B of this part).

[47 FR 54697, Dec. 3, 1982, as amended at 53 FR 40554, Oct. 17, 1988]



Sec. 614.7  Appeal and review.

    (a) Applicable State Law. The provisions of the applicable State law 
concerning the right of appeal and fair hearing from a determination or 
redetermination of entitlement to State unemployment compensation 
(exclusive of findings which are final and conclusive under Sec. 
614.25) shall apply to determinations and redeterminations of 
eligibility for or entitlement to UCX and waiting period credit. Any 
such determination or redetermination shall be subject to appeal and 
review only in the manner and to the extent provided in the applicable 
State law with respect to determinations and redeterminations of 
entitlement to State unemployment compensation.

(Section 614.24 governs appeals of findings of the Veterans 
Administration)


[[Page 58]]


    (b) Rights of appeal and fair hearing. The provisions on right of 
appeal and opportunity for a fair hearing with respect to claims for UCX 
shall be consistent with this part and with sections 303(a)(1) and 
303(a)(3) of the Social Security Act, 42 U.S.C. 503(a)(1) and 503(a)(3).
    (c) Promptness on appeals. (1) Decisions on appeals under the UCX 
Program shall accord with the Secretary's ``Standard for Appeals 
Promptness--Unemployment Compensation'' in part 650 of this chapter, and 
with Sec. 614.1(d).
    (2) Any provision of an applicable State law for advancement or 
priority of unemployment compensation cases on judicial calendars, or 
otherwise intended to provide for the prompt payment of unemployment 
compensation when due, shall apply to proceedings involving claims for 
UCX.
    (d) Appeal and review by Federal military agency. If a Federal 
military agency believes that a State agency's determination or 
redetermination of an individual's eligibility for or entitlement to UCX 
is incorrect, the Federal military agency may seek appeal and review of 
such determination or redetermination in the same manner as an 
interested employer may seek appeal and review under the applicable 
State law.



Sec. 614.8  The applicable State for an individual.

    (a) The applicable State. The applicable State for an individual 
shall be the State to which the individual's Federal military service 
and Federal military wages are assigned or transferred under this 
section. The applicable State law for the individual shall be the State 
law of such State.
    (b) Assignment of service and wages. (1) When an individual files a 
first claim, all of the individual's Federal military service and 
Federal military wages shall be deemed to be assigned to the State in 
which such claim is filed, which shall be the ``Paying State'' in the 
case of a combined-wage claim. (Sec. 616.6(e) of this chapter.)
    (2) Federal military service and Federal military wages assigned to 
a State in error shall be reassigned for use by the proper State agency. 
An appropriate record of the reassignment shall be made by the State 
agency which makes the reassignment.
    (c) Assignment deemed complete. All of an individual's Federal 
military service and Federal military wages shall be deemed to have been 
assigned to a State upon the filing of a first claim. Federal military 
service and Federal military wages shall be assigned to a State only in 
accordance with paragraph (b) of this section.
    (d) Use of assigned service and wages. All assigned Federal military 
service and Federal military wages shall be used only by the State to 
which assigned in accordance with paragraph (b) of this section, except 
that any Federal military service and Federal military wages which are 
not within the base period of the State to which they were assigned 
shall be subject to transfer in accordance with part 616 of this chapter 
for the purposes of any subsequent Combined-Wage Claim filed by the 
individual.



Sec. 614.9  Provisions of State law applicable to UCX claims.

    (a) Particular provisions applicable. Except where the result would 
be inconsistent with the provisions of the Act or this part or the 
procedures thereunder prescribed by the Department, the terms and 
conditions of the applicable State law which apply to claims for, and 
the payment of, State unemployment compensation shall apply to claims 
for, and the payment of, UCX and claims for waiting period credit. The 
provisions of the applicable State law which shall apply include, but 
are not limited to:
    (1) Claim filing and reporting;
    (2) Information to individuals, as appropriate;
    (3) Notices to individuals, as appropriate, including notice to each 
individual of each determination and redetermination of eligibility for 
or entitlement to UCX;
    (4) Determinations and redeterminations;
    (5) Ability to work, availability for work, and search for work; and
    (6) Disqualifications, except in regard to separation from any 
Federal military agency.

[[Page 59]]

    (b) IBPP. The Interstate Benefit Payment Plan shall apply, where 
appropriate, to individuals filing claims for UCX.
    (c) Wage combining. The State's provisions complying with the 
Interstate Arrangement for Combining Employment and Wages (part 616 of 
this chapter) shall apply, where appropriate, to individuals filing 
claims for UCX.
    (d) Procedural requirements. The provisions of the applicable State 
law which apply hereunder to claims for and the payment of UCX shall be 
applied consistently with the requirements of title III of the Social 
Security Act and the Federal Unemployment Tax Act which are pertinent in 
the case of State unemployment compensation, including but not limited 
to those standards and requirements specifically referred to in the 
provisions of this part, except as provided in paragraph (f) of Sec. 
614.6.



Sec. 614.10  Restrictions on entitlement.

    (a) Disqualification. If the week of unemployment for which an 
individual claims UCX is a week to which a disqualification for State 
unemployment compensation applies under the applicable State law, the 
individual shall not be entitled to a payment of UCX for that week. As 
provided in Sec. 614.9(a), no disqualification shall apply in regard to 
separation from any Federal military agency.
    (b) Effect of ``days lost''. The continuity of a period of an 
individual's Federal military service shall not be deemed to be 
interrupted by reason of any ``days lost'' in such period, but ``days 
lost'' shall not be counted for purposes of determining:
    (1) Whether an individual has performed Federal military service;
    (2) Whether an individual meets the wage and employment requirements 
of a State law; or
    (3) The amount of an individual's Federal military wages.
    (c) Allocation of military accrued leave. A State agency shall 
allocate the number of days of unused military leave specified in an ex-
servicemember's military document, for which a lump-sum payment has been 
made, in the same manner as similar payments by private employers to 
their employees are allocated under the applicable State law, except 
that the applicable Schedule of Remuneration instead of the lump-sum 
payment shall be used to determine the amount of the claimant's Federal 
military wages. In a State in which a private employer has an option as 
to the period to which such payments shall be allocated, such payments 
shall be allocated to the date of the individual's latest discharge or 
release from Federal military service. An allocation under this 
paragraph shall be disregarded in determining whether an individual has 
had a period of active service constituting Federal military service.
    (d) Education and training allowances. An individual is not entitled 
to UCX under the Act or this part for a period with respect to which the 
individual receives:
    (1) A subsistence allowance for vocational rehabilitation training 
under chapter 31 of title 38 of the United States Code, 38 U.S.C. 1501 
et seq., or under part VIII of Veterans Regulation Numbered 1(a); or
    (2) An educational assistance allowance or special training 
allowance under chapter 35 of title 38 of the United States Code, 38 
U.S.C. 1700 et seq.



Sec. 614.11  Overpayments; penalties for fraud.

    (a) False statements and representations. Section 8507(a) of the Act 
provides that if a State agency, the Department, or a court of competent 
jurisdiction finds that an individual--
    (1) Knowingly has made, or caused to be made by another, a false 
statement or representation of a material fact, or knowingly has failed, 
or caused another to fail, to disclose a material fact; and
    (2) As a result of that action has received an amount as UCX to 
which the individual was not entitled; the individual shall repay the 
amount to the State agency or the Department. Instead of requiring 
repayment, the State agency or the Department may recover the amount by 
deductions from UCX payable to the individual during the 2-year period 
after the date of the finding. A finding by a State agency or the 
Department may be made only after an opportunity for a fair hearing,

[[Page 60]]

subject to such further review as may be appropriate under Sec. 614.7.
    (b) Prosecution for fraud. Section 1919 of title 18, United States 
Code, provides that whoever makes a false statement or representation of 
a material fact knowing it to be false, or knowingly fails to disclose a 
material fact, to obtain or increase for himself or for any other 
individual any payment authorized to be paid under chapter 85 of title 
5, United States Code, or under an agreement thereunder, shall be fined 
not more than $1,000 or imprisoned not more than one year, or both.
    (c) Absence of fraud. If a State agency or court of competent 
jurisdiction finds that an individual has received a payment of UCX to 
which the individual was not entitled under the Act and this part, which 
was not due to a false statement or representation as provided in 
paragraph (a) or (b) of this section, the individual shall be liable to 
repay to the applicable State the total sum of the payment to which the 
individual was not entitled, and the State agency shall take all 
reasonable measures authorized under any State law or Federal law to 
recover for the account of the United States the total sum of the 
payment to which the individual was not entitled.
    (d) Recovery by offset. (1) The State agency shall recover, insofar 
as is possible, the amount of any overpayment which is not repaid by the 
individual, by deductions from any UCX payable to the individual under 
the Act and this part, or from any unemployment compensation payable to 
the individual under any Federal unemployment compensation law 
administered by the State agency, or from any assistance or allowance 
payable to the individual with respect to unemployment under any other 
Federal law administered by the State agency.
    (2) A State agency shall also recover, insofar as is possible, the 
amount of any overpayment of UCX made to the individual by another State 
by deductions from any UCX payable by the State agency to the individual 
under the Act and this part, or from any unemployment compensation 
payable to the individual under any Federal unemployment compensation 
law administered by the State agency, or from any assistance or 
allowance payable to the individual with respect to unemployment under 
any other Federal law administered by the State agency.
    (3) Recoupment of fraudulent overpayments referred to in paragraph 
(a) of this section shall be limited to the 2-year period stated in that 
paragraph. Recoupment of fraudulent overpayments referred to in 
paragraph (b) of this section, and nonfraudulent overpayments referred 
to in paragraph (c) of this section shall be subject to any time 
limitation on recoupment provided for in the State law that applies to 
the case.
    (e) Debts due the United States. UCX payable to an individual shall 
be applied by the State agency for the recovery by offset of any debt 
due to the United States from the individual, but shall not be applied 
or used by the State agency in any manner for the payment of any debt of 
the individual to any State or any other entity or person except 
pursuant to a court order for child support or alimony in accordance 
with the law of the State and section 459 of the Social Security Act, 42 
U.S.C. 659.
    (f) Application of State law. (1) Except as indicated in paragraph 
(a) of this section, any provision of State law that may be applied for 
the recovery of overpayments or prosecution for fraud, and any provision 
of State law authorizing waiver of recovery of overpayments of 
unemployment compensation, shall be applicable to UCX.
    (2) In the case of any finding of false statement of representation 
under the Act and paragraph (a) of this section, or prosecution for 
fraud under 18 U.S.C. 1919 or pursuant to paragraph (f)(1) of this 
section, the individual shall be disqualified or penalized in accordance 
with the provision of the applicable State law relating to fraud in 
connection with a claim for State unemployment compensation.
    (g) Final decision. Recovery of any overpayment of UCX shall not be 
enforced by the State agency until the determination or redetermination 
establishing the overpayment has become final, or if appeal is taken 
from the determination or redetermination, until the decision after 
opportunity for a fair hearing has become final.

[[Page 61]]

    (h) Procedural requirements. (1) The provisions of paragraphs (c), 
(d), and (g) of Sec. 614.6 shall apply to determinations and 
redeterminations made pursuant to this section.
    (2) The provisions of Sec. 614.7 shall apply to determinations and 
redeterminations made pursuant to this section.
    (i) Fraud detection and prevention. Provisions in the procedures of 
each State with respect to detection and prevention of fraudulent 
overpayments of UCX shall be, as a minimum, commensurate with the 
procedures adopted by the State with respect to State unemployment 
compensation and consistent with this part 614 and the Secretary's 
``Standard for Fraud and Overpayment Detection'' in the Employment 
Security Manual, part V, sections 7510-7515 (Appendix C of this part), 
and provide for timely use of any crossmatch mechanism established by 
the Department.
    (j) Recovered overpayments. An amount repaid or recouped under this 
section shall be--
    (1) Deposited in the fund from which payment was made, if the 
repayment was to a State agency; or
    (2) Returned to the Treasury of the United States and credited to 
the current applicable appropriation, fund, or account from which 
payment was made, if the repayment was to the Department.

[47 FR 54697, Dec. 3, 1982, as amended at 53 FR 40555, Oct. 17, 1988]



Sec. 614.12  Schedules of remuneration.

    (a) Authority. Section 8521(a)(2) of chapter 85, title 5 of the 
United States Code, 5 U.S.C. 8521(a)(2), requires the Secretary of Labor 
to issue from time to time, after consultation with the Secretary of 
Defense, a Schedule of Remuneration specifying the pay and allowances 
for each pay grade of members of the Armed Forces.
    (b) Elements of schedule. A schedule reflects representative amounts 
for appropriate elements of the pay and allowances, whether in cash or 
kind, for each pay grade of members of the Armed Forces, with a 
statement of the effective date of the schedule. Benefit amounts for the 
UCX Program are computed on the basis of the Federal military wages for 
the pay grade of the individual at the time of the individual's latest 
discharge or release from Federal military service, as specified in the 
schedule applicable at the time the individual files his or her first 
claim for compensation for the benefit year.
    (c) Effective date. Any new Schedule of Remuneration shall take 
effect beginning with the first week of the calendar quarter following 
the calendar quarter in which such schedule is issued, and shall remain 
applicable until a subsequent schedule becomes effective. Prior 
schedules shall continue to remain applicable for the periods they were 
in effect.
    (d) Publication. Any new Schedule of Remuneration shall be issued by 
the Secretary of Labor to the State agencies and the Federal military 
agencies. Promptly after the issuance of a new Schedule of Remuneration 
it shall be published as a notice in the Federal Register.



Sec. 614.13  Inviolate rights to UCX.

    Except as specifically provided in this part, the rights of 
individuals to UCX shall be protected in the same manner and to the same 
extent as the rights of persons to State unemployment compensation are 
protected under the applicable State law. Such measures shall include 
protection of applicants for UCX from waiver, release, assignment, 
pledge, encumbrance, levy, execution, attachment, and garnishment of 
their rights to UCX, except as provided in Sec. 614.11. In the same 
manner and to the same extent, individuals shall be protected from 
discrimination and obstruction in regard to seeking, applying for, and 
receiving any right to UCX.



Sec. 614.14  Recordkeeping; disclosure of information.

    (a) Recordkeeping. Each State agency will make and maintain records 
pertaining to the administration of the UCX Program as the Department 
requires, and will make all such records available for inspection, 
examination, and audit by such Federal officials or employees as the 
Department may designate or as may be required by law.
    (b) Disclosure of information. Information in records maintained by 
a State

[[Page 62]]

agency in administering the UCX Program shall be kept confidential, and 
information in such records may be disclosed only in the same manner and 
to the same extent as information with respect to State unemployment 
compensation and the entitlement of individuals thereto may be disclosed 
under the applicable State law. This provision on the confidentiality of 
information maintained in the administration of the UCX Program shall 
not apply, however, to the Department or for the purposes of Sec. Sec. 
614.11 or 614.14, or in the case of information, reports and studies 
required pursuant to Sec. Sec. 614.18 or 614.26, or where the result 
would be inconsistent with the Freedom of Information Act, 5 U.S.C. 552, 
the Privacy Act of 1974, 5 U.S.C. 552a, or regulations of the Department 
promulgated thereunder.



Sec. 614.15  Payments to States.

    (a) State entitlement. Each State is entitled to be paid by the 
United States with respect to each individual whose base period wages 
included Federal military wages, an amount bearing the same ratio to the 
total amount of compensation paid to such individual as the amount of 
the individual's Federal military wages in the individual's base period 
bears to the total amount of the individual's base period wages.
    (b) Payment. Each State shall be paid, either in advance or by way 
of reimbursement, as may be determined by the Department, the sum that 
the Department estimates the State is entitled to receive under the Act 
and this part for each calendar month. The sum shall be reduced or 
increased by the amount which the Department finds that its estimate for 
an earlier calendar month was greater or less than the sum which should 
have been paid to the State. An estimate may be made on the basis of a 
statistical, sampling, or other method agreed on by the Department and 
the State agency.
    (c) Certification by the Department. The Department, from time to 
time, shall certify to the Secretary of the Treasury the sum payable to 
each State under this section. The Secretary of the Treasury, before 
audit or settlement by the General Accounting Office, shall pay the 
State in accordance with the certification from the funds for carrying 
out the purposes of the Act and this part.
    (d) Use of money. Money paid a State under the Act and this part may 
be used solely for the purposes for which it is paid. Money so paid 
which is not used solely for these purposes shall be returned, at the 
time specified by the Agreement, to the Treasury of the United States 
and credited to the current applicable appropriation, fund, or account 
from which payments to States under the Act and this part may be made.



Sec. 614.16  Public access to Agreements.

    The State agency of a State will make available to any individual or 
organization a true copy of the Agreement with the State for inspection 
and copying. Copies of an Agreement may be furnished on request to any 
individual or organization upon payment of the same charges, if any, as 
apply to the furnishing of copies of other records of the State agency.



Sec. 614.17  Administration in absence of an Agreement.

    (a) Administering program. The Department shall administer the UCX 
Program through personnel of the Department or through other 
arrangements under procedures prescribed by the Department, in the case 
of any State which does not have an Agreement with the Secretary as 
provided for in 5 U.S.C. 8502. The procedures prescribed by the 
Department under this section shall be consistent with the Act and this 
part.
    (b) Applicable State law. On the filing by an individual of a claim 
for UCX in accordance with arrangements under this section, UCX shall be 
paid to the individual, if eligible, in the same amount, on the same 
terms, and subject to the same conditions as would be paid to the 
individual under the applicable State law if the individual's Federal 
military service and Federal military wages had been included as 
employment and wages under the State law. Any such claims shall include 
the individual's Federal military service and Federal military wages, 
combined with any service and wages covered by State law. However, if 
the individual,

[[Page 63]]

without regard to his or her Federal military service and Federal 
military wages, has employment or wages sufficient to qualify for 
compensation during the benefit year under that State law, then payments 
of UCX under this section may be made only on the basis of the 
individual's Federal military service and Federal military wages.
    (c) Fair hearing. An individual whose claim for UCX is denied under 
this section is entitled to a fair hearing under rules of procedures 
prescribed by the Department. A final determination by the Department 
with respect to entitlement to UCX under this section is subject to 
review by the courts in the same manner and to the same extent as is 
provided by section 205(g) of the Social Security Act, 42 U.S.C. 405(g).



Sec. 614.18  Information, reports, and studies.

    State agencies shall furnish to the Department such information and 
reports and conduct such studies as the Department determines are 
necessary or appropriate for carrying out the purposes of the UCX 
Program.



   Subpart C_Responsibilities of Federal Military Agencies and State 
                                Agencies



Sec. 614.20  Information to ex-servicemembers.

    At the time of discharge or release from Federal military service, 
each Federal military agency shall furnish to each ex-servicemember 
information explaining rights and responsibilities under the UCX Program 
and 18 U.S.C. 1919, and military documents necessary for filing claims 
for UCX.



Sec. 614.21  Findings of Federal military agency.

    (a) Findings in military documents. Information contained in a 
military document furnished to an ex-servicemember shall constitute 
findings to which Sec. 614.23 applies as to:
    (1) Whether the individual has performed active service in the Armed 
Forces or the Commissioned Corps of the National Oceanic and Atmospheric 
Administration;
    (2) The beginning and ending dates of the period of active service 
and ``days lost'' during such period;
    (3) The type of discharge or release terminating the period of 
active service;
    (4) The individuals' pay grade at the time of discharge or release 
from active service; and
    (5) The narrative reason or other reason for separation from active 
service.
    (b) Discharges not under honorable conditions. A military document 
which shows that an individual's discharge or release was under other 
than honorable conditions shall also be a finding to which Sec. 614.23 
applies.

[53 FR 40555, Oct. 17, 1988]



Sec. 614.22  Correcting Federal findings.

    (a) Request for correction. (1) If an individual believes that a 
finding specified in Sec. 614.21 is incorrect or that information as to 
any finding has been omitted from a military document, the individual 
may request the issuing Federal military agency to correct the military 
document. A request for correction may be made through the State agency, 
which shall forward such request and any supporting information 
submitted by the individual to the Federal military agency.
    (2) The Federal military agency shall promptly forward to the 
individual or State agency making the request the corrected military 
document. Information contained in a corrected military document issued 
pursuant to such a request shall constitute the findings of the Federal 
military agency under Sec. 614.21.
    (3) If a determination or redetermination based on a finding as to 
which correction is sought has been issued by a State agency before a 
request for correction under this paragraph is made, the individual who 
requested such correction shall file a request for redetermination or 
appeal from such determination or redetermination with the State agency, 
and shall inform the State agency of the request for correction.
    (4) An individual who files a request for correction of findings 
under this paragraph shall promptly notify the State agency of the 
action of the Federal military agency on such request.

[[Page 64]]

    (b) State agency procedure when request made. (1) If a determination 
of entitlement has not been made when an individual notifies a State 
agency of a request for correction under paragraph (a) of this section, 
the State agency may postpone such determination until the individual 
has notified the State agency of the action of the Federal military 
agency on the request.
    (2) If a determination of entitlement has been made when an 
individual notifies a State agency that a request for correction of 
Federal findings has been made, or if an individual notifies a State 
agency prior to a determination of entitlement that a request has been 
made but such determination is not postponed by the State agency, the 
individual may file a request for redetermination or appeal in 
accordance with the applicable State law.
    (3) Except as provided in paragraph (c) of this section, no 
redetermination shall be made or hearing scheduled on an appeal until 
the individual has notified the State agency of the action of the 
Federal military agency on a request for correction under paragraph (a) 
of this section.
    (c) State agency procedure when request answered. On receipt of 
notice of the action of a Federal military agency on a request for 
correction of its findings, a State agency shall:
    (1) Make a timely determination or redetermination of the 
individual's entitlement, or
    (2) Promptly schedule a hearing on the individual's appeal.

If such notice is not received by a State agency within one year of the 
date on which an individual first filed a claim, or such notice is not 
given promptly by an individual, a State agency without further 
postponement may make such determination or redetermination or schedule 
such hearing.
    (d) Findings corrected without request. Information as to any 
finding specified in Sec. 614.21 contained in a corrected military 
document issued by a Federal military agency on its own motion shall 
constitute the findings of such agency under Sec. 614.21, if notice 
thereof is received by a State agency before the period for 
redetermination or appeal has expired under the State law. On timely 
receipt of such notice a State agency shall take appropriate action 
under the applicable State law to give effect to the corrected findings.



Sec. 614.23  Finality of findings.

    The findings of a Federal military agency referred to in Sec. Sec. 
614.21 and 614.22, and the Schedules of Remuneration issued by the 
Department pursuant to the Act and Sec. 614.12, shall be final and 
conclusive for all purposes of the UCX Program, including appeal and 
review pursuant to Sec. 614.7 or Sec. 614.17.

[53 FR 40555, Oct. 17, 1988]



Sec. 614.24  Furnishing other information.

    (a) Additional information. In addition to the information required 
by Sec. Sec. 614.21 and 614.22, a Federal military agency shall furnish 
to a State agency or the Department, within the time requested, any 
information which it is not otherwise prohibited from releasing by law, 
which the Department determines is necessary for the administration of 
the UCX Program.
    (b) Reports. Federal military agencies shall furnish to the 
Department or State agencies such reports containing such information as 
the Department determines are necessary or appropriate for carrying out 
the purposes of the UCX Program.

[47 FR 54697, Dec. 3, 1982, as amended at 53 FR 40555, Oct. 17, 1988]



Sec. 614.25  Liaison with Department

    To facilitate the Department's administration of the UCX program, 
each Federal military agency shall designate one or more of its 
officials to be the liaison with the Department. Each Federal military 
agency will inform the Department of its designation(s) and of any 
change in a designation.

[53 FR 40555, Oct. 17, 1988]

[[Page 65]]

 Appendix A to Part 614--Standard for Claim Filing, Claimant Reporting, 
                  Job Finding, and Employment Services

        Employment Security Manual (Part V, Sections 5000-5004) *
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    * Revises subgrouping 5000-5004.
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                         5000-5099 Claims Filing

5000 Standards for Claim Filing, Claimant Reporting, Job Finding, and 
          Employment Services
    A. Federal law requirements. Section 3304(a)(1) of the Federal 
Unemployment Tax Act and section 303(a)(2) of the Social Security Act 
require that a State law provide for:
    ``Payment of unemployment compensation solely through public 
employment offices or such other agencies as the Secretary may 
approve.''
    Section 3304(a)(4) of the Federal Unemployment Tax Act and section 
303(a)(5) of the Social Security Act require that a State law provide 
for:
    ``Expenditure of all money withdrawn from an unemployment fund of 
such State, in the payment of unemployment compensation. * * *''
    Section 303(a)(1) of the Social Security Act requires that the State 
law provide for:
    ``Such methods of administration * * * as are found by the Secretary 
to be reasonably calculated to insure full payment of unemployment 
compensation when due.''
    B. Secretary's interpretation of Federal law requirements.
    1. The Secretary interprets section 3304(a)(1) of the Federal 
Unemployment Tax Act and section 303(a)(2) of the Social Security Act to 
require that a State law provide for payment of unemployment 
compensation solely through public employment offices or claims offices 
administered by the State employment security agency if such agency 
provides for such coordination in the operations of its public 
employment offices and claims offices as will insure: (a) The payment of 
benefits only to individuals who are unemployed and who are able to work 
and available for work, and (b) that individuals claiming unemployment 
compensation (claimants) are afforded such placement and other 
employment services as are necessary and appropriate to return them to 
suitable work as soon as possible.
    2. The Secretary interprets all the above sections to require that a 
State law provide for:
    a. Such contact by claimants with public employment offices or 
claims offices or both, (1) as will reasonably insure the payment of 
unemployment compensation only to individuals who are unemployed and who 
are able to work and available for work, and (2) that claimants are 
afforded such placement and other employment services as are necessary 
and appropriate to facilitate their return to suitable work as soon as 
possible; and
    b. Methods of administration which do not unreasonably limit the 
opportunity of individuals to establish their right to unemployment 
compensation due under such State law.

5001 Claim Filing and Claimant Reporting Requirements Designed to 
Satisfy Secretary's Interpretation
    A. Claim filing--total or part-total unemployment.
    1. Individuals claiming unemployment compensation for total or part-
total unemployment are required to file a claim weekly or biweekly, in 
person or by mail, at a public employment office or a claims office 
(these terms include offices at itinerant points) as set forth below.
    2. Except as provided in paragraph 3, a claimant is required to file 
in person:
    a. His new claim with respect to a benefit year, or his continued 
claim for a waiting week or for his first compensable week of 
unemployment in such year; and
    b. Any other claim, when requested to do so by the claims personnel 
at the office at which he files his claim(s) because questions about his 
right to benefits are raised by circumstances such as the following:
    (1) The conditions or circumstances of his separation from 
employment;
    (2) The claimant's answers to questions on mail claim(s) indicate 
that he may be unable to work or that there may be undue restrictions on 
his availability for work or that his search for work may be inadequate 
or that he may be disqualified;
    (3) The claimant's answers to questions on mail claims create 
uncertainty about his credibility or indicate a lack of understanding of 
the applicable requirement; or
    (4) The claimant's record shows that he has previously filed a 
fraudulent claim.
    In such circumstances, the claimant is required to continue to file 
claims in person each week (or biweekly) until the State agency 
determines that filing claims in person is no longer required for the 
resolution of such questions.
    3. A claimant must be permitted to file a claim by mail in any of 
the following circumstances:
    a. He is located in an area requiring the expenditure of an 
unreasonable amount of time or money in traveling to the nearest 
facility established by the State agency for filing claims in person;
    b. Conditions make it impracticable for the agency to take claims in 
person;
    c. He has returned to full-time work on or before the scheduled date 
for his filing a claim, unless the agency makes provision for

[[Page 66]]

in-person filing at a time and place that does not interfere with his 
employment;
    d. The agency finds that he has good cause for failing to file a 
claim in person.
    4. A claimant who has been receiving benefits for partial 
unemployment may continue to file claims as if he were a partially 
unemployed worker for the first four consecutive weeks of total or part-
total unemployment immediately following his period of partial 
unemployment so long as he remains attached to his regular employer.
    B. Claim filing--partial unemployment. Each individual claiming 
unemployment compensation for a week (or other claim period) during 
which, because of lack of work, he is working less than his normal 
customary full-time hours for his regular employer and is earning less 
than the earnings limit provided in the State law, shall not be required 
to file a claim for such week or other claim period earlier than 2 weeks 
from the date that wages are paid for such claim period or, if a low 
earnings report is required by the State law, from the date the employer 
furnished such report to the individual. State agencies may permit 
claims for partial unemployment to be filed either in person or by mail, 
except that in the circumstances set forth in section A 3, filing by 
mail must be permitted, and in the circumstances set forth in section A 
2 b, filing in person may be required.

5002 Requirement for Job Finding, Placement, and other Employment 
Services Designed to Satisfy Secretary's Interpretation
    A. Claims personnel are required to assure that each claimant is 
doing what a reasonable individual in his circumstances would do to 
obtain suitable work.
    B. In the discretion of the State agency:
    1. The claims personnel are required to give each claimant such 
necessary and appropriate assistance as they reasonably can in finding 
suitable work and at their discretion determine when more complete 
placement and employment services are necessary and appropriate for a 
claimant; and if they determine more complete services are necessary and 
appropriate, the claims personnel are to refer him to employment service 
personnel in the public employment office in which he has been filing 
claim(s), or, if he has been filing in a claims office, in the public 
employment office most accessible to him; or
    2. All placement and employment services are required to be afforded 
to each claimant by employment service personnel in the public 
employment office most accessible to him, in which case the claims 
personnel in the office in which the claimant files his claim are to 
refer him to the employment service personnel when placement or other 
employment services are necessary and appropriate for him.
    C. The personnel to whom the State agency assigns the 
responsibilities outlined in paragraph B above are required to give 
claimants such job-finding assistance, placement, and other employment 
services as are necessary and appropriate to facilitate their return to 
suitable work as soon as possible.
    In some circumstances, no such services or only limited services may 
be required. For example, if a claimant is on a short-term temporary 
layoff with a fixed return date, the only service necessary and 
appropriate to be given to him during the period of the layoff is a 
referral to suitable temporary work if such work is being performed in 
the labor market area.
    Similarly, claimants whose unemployment is caused by a labor dispute 
presumably will return to work with their employer as soon as the labor 
dispute is settled. They generally do not need services, nor do 
individuals in occupations where placement customarily is made by other 
nonfee charging placement facilities such as unions and professional 
associations.
    Claimants who fall within the classes which ordinarily would require 
limited services or no services shall, if they request placement and 
employment services, be afforded such services as are necessary and 
appropriate for them to obtain suitable work or to achieve their 
reasonable employment goals.
    On the other hand, a claimant who is permanently separated from his 
job is likely to require some services. He may need only some direction 
in how to get a job; he may need placement services if he is in an 
occupation for which there is some demand in the labor market area; if 
his occupation is outdated, he may require counseling and referral to a 
suitable training course. The extent and character of the services to be 
given any particular claimant may change with the length of his 
unemployment and depend not only on his own circumstances and 
conditions, but also on the condition of the labor market in the area.
    D. Claimants are required to report to employment service personnel, 
as directed, but such personnel and the claims personnel are required to 
so arrange and coordinate the contacts required of a claimant as not to 
place an unreasonable burden on him or unreasonably limit his 
opportunity to establish his rights to compensation. As a general rule, 
a claimant is not required to contact in person claims personnel or 
employment service personnel more frequently than once a week, unless he 
is directed to report more frequently for a specific service such as 
referral to a job or a training course or counseling which cannot be 
completed in one visit.
    E. Employment service personnel are required to report promptly to 
claims personnel in the office in which the claimant

[[Page 67]]

files his claim(s): (1) His failure to apply for or accept work to which 
he was referred by such personnel or when known, by any other nonfee-
charging placement facility such as a union or a professional 
association; and (2) any information which becomes available to it that 
may have a bearing on the claimant's ability to work or availability for 
work, or on the suitability of work to which he was referred or which 
was offered to him.

5004 Evaluation of Alternative State Provisions. If the State law 
provisions do not conform to the ``suggested State law requirements'' 
set forth in sections 5001 and 5002, but the State law contains 
alternative provisions, the Manpower Administrator, in collaboration 
with the State agency, will study the actual or anticipated effect of 
the alternative provisions. If the Manpower Administrator concludes that 
the alternative provisions satisfy the requirements of the Federal law 
as construed by the Secretary (see section 5000 B) he will so notify the 
State agency. If he does not so conclude, he will submit the matter to 
the Secretary. If the Secretary concludes that the alternative 
provisions satisfy such requirements, the State agency will be so 
notified. If the Secretary concludes that there is a question as to 
whether the alternative provisions satisfy such requirements, the State 
agency will be advised that unless the State law provisions are 
appropriately revised, a notice of hearing will be issued as required by 
the Code of Federal Regulations, title 20, section 601.3.

[53 FR 40555, Oct. 17, 1988; 53 FR 43799, Oct. 26, 1988]

  Appendix B to Part 614--Standard for Claim Determination--Separation 
                               Information

         Employment Security Manual (Part V, Sections 6010-6015)

6010-6019 Standard for Claim Determinations--Separation Information *
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    * Revises subgrouping 6010-6019
---------------------------------------------------------------------------

6010 Federal Law Requirements. Section 303(a)(1) of the Social Security 
          Act requires that a State law include provision for:
    ``Such methods of administration . . . as are found by the Secretary 
to be reasonably calculated to insure full payment of unemployment 
compensation when due.''
    Section 303(a)(3) of the Social Security Act requires that a State 
law include provision for:
    ``Opportunity for a fair hearing before an impartial tribunal, for 
all individuals whose claims for unemployment compensation are denied.''
    Section 3304(a)(4) of the Federal Unemployment Tax Act and section 
303(a)(5) of the Social Security Act require that a State law include 
provision for:
    ``Expenditure of all money withdrawn from an unemployment fund of 
such State, in the payment of unemployment compensation * * *.
    Section 3306(h) of the Federal Unemployment Tax Act defines 
``compensation'' as ``cash benefits payable to individuals with respect 
to their unemployment.''

6011 Secretary's Interpretation of Federal Law Requirements. The 
Secretary interprets the above sections to require that a State law 
include provisions which will insure that:
    A. Individuals who may be entitled to unemployment compensation are 
furnished such information as will reasonably afford them an opportunity 
to know, establish, and protect their rights under the unemployment 
compensation law of such State, and
    B. The State agency obtains and records in time for the prompt 
determination and review of benefit claims such information as will 
reasonably insure the payment of benefits to individuals to whom 
benefits are due.

6012 Criteria for Review of State Law Conformity with Federal 
Requirements
    In determining the conformity of a State law with the above 
requirements of the Federal Unemployment Tax Act and the Social Security 
Act as interpreted by the Secretary, the following criteria will be 
applied:
    A. Is it required that individuals who may be entitled to 
unemployment compensation be furnished such information of their 
potential rights to benefits, including the manner and places of filing 
claims, the reasons for determinations, and their rights of appeal, as 
will insure them a reasonable opportunity to know, establish, and 
protect their rights under the law of the State?
    B. Is the State agency required to obtain, in time for prompt 
determination of rights to benefits such information as will reasonably 
insure the payment of benefits to individuals to whom benefits are due?
    C. Is the State agency required to keep records of the facts 
considered in reaching determinations of rights to benefits?
6013 Claim Determinations Requirements Designed To Meet Department of 
          Labor Criteria
    A. Investigation of claims. The State agency is required to obtain 
promptly and prior to a determination of an individual's right to 
benefits, such facts pertaining thereto as will be sufficient reasonably 
to insure the payment of benefits when due.
    This requirement embraces five separate elements:
    1. It is the responsibility of the agency to take the initiative in 
the discovery of information. This responsibility may not be passed on 
the claimant or the employer. In

[[Page 68]]

addition to the agency's own records, this information may be obtained 
from the worker, the employer, or other sources. If the information 
obtained in the first instance discloses no essential disagreement and 
provides a sufficient basis for a fair determination, no further 
investigation is necessary. If the information obtained from other 
sources differs essentially from that furnished by the claimant, the 
agency, in order to meet its responsibility, is required to inform the 
claimant of such information from other sources and to afford the 
claimant an opportunity to furnish any further facts he may have.
    2. Evidentiary facts must be obtained as distinguished from ultimate 
facts or conclusions. That a worker was discharged for misconduct is an 
ultimate fact or conclusion; that he destroyed a machine upon which he 
was working is a primary or evidentiary fact, and the sort of fact that 
the requirement refers to.
    3. The information obtained must be sufficient reasonably to insure 
the payment of benefits when due. In general, the investigation made by 
the agency must be complete enough to provide information upon which the 
agency may act with reasonable assurance that its decision is consistent 
with the unemployment compensation law. On the other hand, the 
investigation should not be so exhaustive and time-consuming as unduly 
to delay the payment of benefits and to result in excessive costs.
    4. Information must be obtained promptly so that the payment of 
benefits is not unduly delayed.
    5. If the State agency requires any particular evidence from the 
worker, it must give him a reasonable opportunity to obtain such 
evidence.
    B. Recording of facts. The agency must keep a written record of the 
facts considered in reaching its determinations.
    C. Determination notices
    1. The agency must give each claimant a written notice of:
    a. Any monetary determination with respect to his benefit year;
    b. Any determination with respect to purging a disqualification if, 
under the State law, a condition or qualification must be satisfied with 
respect to each week of disqualification; but in lieu of giving written 
notice of each determination for each week in which it is determined 
that the claimant has met the requirements for purging the agency may 
inform the claimant that he has purged the disqualification for a week 
by notation on his applicant identification card or otherwise in 
writing.
    c. Any other determination which adversely affects \1\ his rights to 
benefits, except that written notice of determination need not be given 
with respect to:
---------------------------------------------------------------------------

    \1\ A determination ``adversely affects'' claimant's right to 
benefits if it: (1) Results in a denial to him of benefits (including a 
cancellation of benefits or wage credits or any reduction in whole or in 
part below the weekly or maximum amount established by his monetary 
determination) for any week or other period; or (2) denies credit for a 
waiting week; or (3) applies any disqualification or penalty; or (4) 
determines that he has not satisfied a condition of eligibility, 
requalification for benefits, or purging a disqualification; or (5) 
determines that an overpayment has been made or orders repayment or 
recoupment of any sum paid to him; or (6) applies a previously 
determined overpayment, penalty, or order for repayment or recoupment; 
or (7) in any other way denies claimant a right to benefits under the 
State law.
---------------------------------------------------------------------------

    (1) A week in a benefit year for which the claimant's weekly benefit 
amount is reduced in whole or in part by earnings if, the first time in 
the benefit year that there is such a reduction, he is required to be 
furnished a booklet or leaflet containing the information set forth 
below in paragraph 2f(1). However, a written notice of determination is 
required if: (a) There is a dispute concerning the reduction with 
respect to any week (e.g., as to the amount computed as the appropriate 
reduction, etc.); or (b) there is a change in the State law (or in the 
application thereof) affecting the reduction; or
    (2) Any week in a benefit year subsequent to the first week in such 
benefit year in which benefits were denied, or reduced in whole or in 
part for reasons other than earnings, if denial or reduction for such 
subsequent week is based on the same reason and the same facts as for 
the first week, and if written notice of determination is required to be 
given to the claimant with respect to such first week, and with such 
notice of determination, he is required to be given a booklet or 
pamphlet containing the information set forth below in paragraphs 2f(2) 
and 2h. However, a written notice of determination is required if: (a) 
There is a dispute concerning the denial or reduction of benefits with 
respect to such week; or (b) there is a change in the State law (or in 
the application thereof) affecting the denial or reduction; or (c) there 
is a change in the amount of the reduction except as to the balance 
covered by the last reduction in a series of reductions.
    Note: This procedure may be applied to determinations made with 
respect to any subsequent weeks for the same reason and on the basis of 
the same facts: (a) That claimant is unable to work, unavailable for 
work, or is disqualified under the labor dispute provision; and (b) 
reducing claimant's weekly

[[Page 69]]

benefit amount because of income other than earnings or offset by reason 
of overpayment.
    2. The agency must include in written notices of determinations 
furnished to claimants sufficient information to enable them to 
understand the determinations, the reasons therefor, and their rights to 
protest, request reconsideration, or appeal.
    The written notice of monetary determination must contain the 
information specified in the following items (except h) unless an item 
is specifically not applicable. A written notice of any other 
determination must contain the information specified in as many of the 
following items as are necessary to enable the claimant to understand 
the determination and to inform him of his appeal rights. Information 
specifically applicable to the individual claimant must be contained in 
the written notice of determination. Information of general application 
such as (but not limited to) the explanation of benefits for partial 
unemployment, information as to deductions, seasonality factors, and 
information as to the manner and place of taking an appeal, extension of 
the appeal period, and where to obtain information and assistance may be 
contained in a booklet or leaflet which is given the claimant with his 
monetary determination.
    a. Base period wages. The statement concerning base-period wages 
must be in sufficient detail to show the basis of computation of 
eligibility and weekly and maximum benefit amounts. (If maximum benefits 
are allowed, it may not be necessary to show details of earnings.)
    b. Employer name. The name of the employer who reported the wages is 
necessary so that the worker may check the wage transcript and know 
whether it is correct. If the worker is given only the employer number, 
he may not be able to check the accuracy of the wage transcript.
    c. Explanation of benefit formula--weekly and maximum benefit 
amounts. Sufficient information must be given the worker so that he will 
understand how his weekly benefit amount, including allowances for 
dependents, and his maximum benefit amount were figured. If benefits are 
computed by means of a table contained in the law, the table must be 
furnished with the notice of determination whether benefits are granted 
or denied.
    The written notice of determination must show clearly the weekly 
benefit amount and the maximum potential benefits to which the claimant 
is entitled.
    The notice to a claimant found ineligible by reason of insufficient 
earnings in the base period must inform him clearly of the reason for 
ineligibility. An explanation of the benefit formula contained in a 
booklet or pamphlet should be given to each claimant at or prior to the 
time he receives written notice of a monetary determination.
    d. Benefit year. An explanation of what is meant by the benefit year 
and identification of the claimant's benefit year must be included in 
the notice of determinaton.
    e. Information as to benefits for partial unemployment. There must 
be included either in the written notice of determination or in a 
booklet or pamphlet accompanying the notice an explanation of the 
claimant's rights to partial benefits for any week with respect to which 
he is working less than his normal customary full-time workweek because 
of lack of work and for which he earns less than his weekly benefit 
amount or weekly amount plus earnings, whichever is provided by the 
State law. If the explanation is contained in the notice of 
determination, reference to the item in the notice in which his weekly 
benefit amount is entered should be made.
    f. Deductions from weekly benefits.
    (1) Earnings. Although written notice of determinations deducting 
earnings from a claimant's weekly benefit amount is generally not 
required (see paragraph 1c (1) above), where written notice of 
determination is required (or given) it shall set forth the amount of 
earnings, the method of computing the deduction in sufficient detail to 
enable the claimant to verify the accuracy of the deduction, and his 
right to protest, request redetermination, and appeal. Where a written 
notice of determination is given to the claimant because there has been 
a change in the State law or in the application of the law, an 
explanation of the change shall be included.
    Where claimant is not required to receive a written notice of 
determination, he must be given a booklet or pamphlet the first time in 
his benefit year that there is a deduction for earnings which shall 
include the following information:
    (a) The method of computing deductions for earnings in sufficient 
detail to enable the claimant to verify the accuracy of the deduction;
    (b) That he will not automatically be given a written notice of 
determination for a week with respect to which there is a deduction for 
earnings (unless there is a dispute concerning the reduction with 
respect to a week or there has been a change in the State law or in the 
application of the law affecting the deduction) but that he may obtain 
such a written notice upon request; and
    (c) A clear statement of his right to protest, request a 
redetermination, and appeal from any determination deducting earnings 
from his weekly benefit amount even though he does not automatically 
receive a written notice of determination; and if the State law requires 
written notice of determination in order to effectuate a protest, 
redetermination, or appeal, he must be so advised and advised also that 
he must request a written notice of determination before he takes any 
such action.

[[Page 70]]

    (2) Other deductions.
    (a) A written notice of determination is required with respect to 
the first week in claimant's benefit year in which there is a reduction 
from his benefits for a reason other than earnings. This notice must 
describe the deduction made from claimant's weekly benefit amount, the 
reason for the deduction, the method of computing it in sufficient 
detail to enable him to verify the accuracy of such deduction, and his 
right to protest, request redetermination, or appeal.
    (b) A written notice of determination is not required for subsequent 
weeks that a deduction is made for the same reason and on the basis of 
the same facts, if the notice of determination pursuant to (2)(a), or a 
booklet or pamphlet given him with such notice explains: (i) The several 
kinds of deductions which may be made under the State law (e.g., 
retirement pensions, vacation pay, and overpayments); (ii) the method of 
computing each kind of deduction in sufficient detail that claimant will 
be able to verify the accuracy of deductions made from his weekly 
benefit payments; (iii) any limitation on the amount of any deduction or 
the time in which any deduction may be made; (iv) that he will not 
automatically be given a written notice of determination for subsequent 
weeks with respect to which there is a deduction for the same reason and 
on the basis of the same facts, but that he may obtain a written notice 
of determination upon request; (v) his right to protest, request 
redetermination, or appeal with respect to subsequent weeks for which 
there is a reduction from his benefits for the same reason, and on the 
basis of the same facts even though he does not automatically receive a 
written notice of determination; and (vi) that if the State law requires 
written notice of determination in order to effectuate a protest, 
redetermination, or appeal, he must be so advised and advised also that 
he must request a written notice of determination before he takes any 
such action.
    g. Seasonality factors. If the individual's determination is 
affected by seasonality factors under the State law, an adequate 
explanation must be made. General explanations of seasonality factors 
which may affect determinations for subsequent weeks may be included in 
a booklet or pamphlet given with his notice of monetary determination.
    h. Disqualification or ineligibility. If a disqualification is 
imposed, or if the claimant is declared ineligible for one or more 
weeks, he must be given not only a statement of the period of 
disqualification or ineligibility and the amount of wage-credit 
reductions, if any, but also an explanation of the reason for the 
ineligibility or disqualification. This explanation must be sufficiently 
detailed so that he will understand why he is ineligible or why he has 
been disqualified, and what he must do in order to requalify for 
benefits or purge the disqualification. The statement must be 
individualized to indicate the facts upon which the determination was 
based, e.g., state, ``It is found that you left your work with Blank 
Company because you were tired of working; the separation was voluntary, 
and the reason does not constitute good cause,'' rather than merely the 
phrase ``voluntary quit.'' Checking a box as to the reason for the 
disqualification is not a sufficiently detailed explanation. However, 
this statement of the reason for the disqualification need not be a 
restatement of all facts considered in arriving at the determination.
    i. Appeal rights. The claimant must be given information with 
respect to his appeal rights.
    (1) The following information shall be included in the notice of 
determination:
    (a) A statement that he may appeal or, if the State law requires or 
permits a protest or redetermination before an appeal, that he may 
protest or request a redetermination.
    (b) The period within which an appeal, protest, or request for 
redetermination must be filed. The number of days provided by statute 
must be shown as well as either the beginning date or ending date of the 
period. (It is recommended that the ending date of the appeal period be 
shown, as this is the more understandable of the alternatives.)
    (2) The following information must be included either in the notice 
of determination or in separate informational material referred to in 
the notice:
    (a) The manner in which the appeal, protest, or request for 
redetermination must be filed, e.g., by signed letter, written 
statement, or on a prescribed form, and the place or places to which the 
appeal, protest, or request for redetermination may be mailed or hand-
delivered.
    (b) An explanation of any circumstances (such as nonworkdays, good 
cause, etc.) which will extend the period for the appeal, protest, or 
request for redetermination beyond the date stated or identified in the 
notice of determination.
    (c) That any further information claimant may need or desire can be 
obtained together with assistance in filing his appeal, protest, or 
request for redetermination from the local office.
    If the information is given in separate material, the notice of 
determination would adequately refer to such material if it said, for 
example, ``For other information about your (appeal), (protest), 
(redetermination) rights, see pages ---- to ---- of the ----------------
------------ (name of pamphlet or booklet) heretofore furnished to 
you.''
6014 Separation Information Requirements Designed To Meet Department of 
          Labor Criteria

[[Page 71]]

    A. Information to agency. Where workers are separated, employers are 
required to furnish the agency promptly, either upon agency request or 
upon such separation, a notice describing the reasons for and the 
circumstances of the separation and any additional information which 
might affect a claimant's right to benefits. Where workers are working 
less than full time, employers are required to furnish the agency 
promptly, upon agency request, information concerning a claimant's hours 
of work and his wages during the claim periods invovled, and other facts 
which might affect a claimant's eligibility for benefits during such 
periods.
    When workers are separated and the notices are obtained on a request 
basis, or when workers are working less than full time and the agency 
requests information, it is essential to the prompt processing of claims 
that the request be sent out promptly after the claim is filed and the 
employer be given a specific period within which to return the notice, 
preferably within 2 working days.
    When workers are separated and notices are obtained upon separation, 
it is essential that the empolyer be required to send the notice to the 
agency with sufficient promptness to insure that, if a claim is filed, 
it may be processed promptly. Normally, it is desirable that such a 
notice be sent to the central office of the agency, since the employer 
may not know in which local office the worker will file his claim. The 
usual procedure is for the employer to give the worker a copy of the 
notice sent by the employer to the agency.
    B. Information to worker.
    1. Information required to be given. Employees are required to give 
their employers information and instructions concerning the employees' 
potential rights to benefits and concerning registration for work and 
filing claims for benefits.
    The information furnished to employees under such a requirement need 
not be elaborate; it need only be adequate to insure that the worker who 
is separated or who is working less than full time knows he is 
potentially eligible for benefits and is informed as to what he is to do 
or where he is to go to file his claim and register for work. When he 
files his claim, he can obtain more detailed information.
    In States that do not require employers to furnish periodically to 
the State agency detailed reports of the wages paid to their employees, 
each employer is required to furnish to his employees information as to: 
(a) The name under which he is registered by the State agency, (b) the 
address where he maintains his payroll records, and (c) the workers' 
need for this information if and when they file claims for benefits.
    2. Methods for giving information. The information and instructions 
required above may be given in any of the following ways:
    a. Posters prominently displayed in the employer's establishment. 
The State agency should supply employers with a sufficient number of 
posters for distribution throughout their places of business and should 
see that the posters are conspicuously displayed at all times.
    b. Leaflets. Leaflets distributed either periodically or at the time 
of separation or reduction of hours. The State agency should supply 
employers with a sufficient number of leaflets.
    c. Individual notices. Individual notices given to each employee at 
the time of separation or reduction in hours.
    It is recommended that the State agency's publicity program be used 
to supplement the employer-information requirements. Such a program 
should stress the availability and location of claim-filing offices and 
the importance of visiting those offices whenever the worker is 
unemployed, wishes to apply for benefits, and to seek a job.

6015 Evaluation of Alternative State Provisions with Respect to Claim 
Determinations and Separation Information. If the State law provisions 
do not conform to the suggested requirements set forth in sections 6013 
and 6014, but the State law contains alternative provisions, the Bureau 
of Employment Security, in collaboration with the State agency, will 
study the actual or anticipated effects of the alternative provisions. 
If the Administrator of the Bureau concludes that the alternative 
provisions satisfy the criteria in section 6012, he will so notify the 
State agency. If the Administrator of the Bureau does not so conclude, 
he will submit the matter to the Secretary. If the Secretary concludes 
that the alternative provisions satisfy the criteria in section 6012, 
the State agency will be so notified. If the Secretary concludes that 
there is a question as to whether the alternative provisions satisfy the 
criteria, the State agency will be advised that unless the State law 
provisions are appropriately revised, a notice of hearing will be issued 
as required by the Code of Federal Regulations, title 20, Sec. 601.5.

[53 FR 40557, Oct. 17, 1988; 53 FR 43799, Oct. 26, 1988]

  Appendix C to Part 614--Standard for Fraud and Overpayment Detection

         Employment Security Manual (Part V, Sections 7510-7515)

7510-7519 Standard for Fraud and Overpayment Detection


[[Page 72]]


7510 Federal Law Requirements. Section 303(a)(1) of the Social Security 
Act requires that a State law include provision for:
    ``Such methods of administration * * * as are found by the Secretary 
to be reasonably calculated to insure full payment of unemployment 
compensation when due.''
    Section 1603(a)(4) of the Internal Revenue Code and section 
3030(a)(5) of the Social Security Act require that a State law include 
provision for:
    ``Expenditure for all money withdrawn from an unemployment fund of 
such State, in the payment of unemployment compensation * * * ''
    Section 1607(h) of the Internal Revenue Code defines 
``compensation'' as ``cash benefits payable to individuals with respect 
to their unemployment.''

7511 The Secretary's Interpretation of Federal Law Requirements. The 
Secretary of Labor interprets the above sections to require that a State 
law include provision for such methods of administration as are, within 
reason, calculated (1) to detect benefits paid through error by the 
agency or through willful misrepresentation or error by the claimant or 
others, and (2) to deter claimants from obtaining benefits through 
willful misrepresentation.
7513 Criteria for Review of State Conformity With Federal Requirements. 
In detemining State conformity with the above requirements of the 
Internal Revenue Code and the Social Security Act, as interpreted by the 
Secretary of Labor, the following criteria will be applied:
    A. Are investigations required to be made after the payment of 
benefits, (or, in the case of interstate claims, are investigations made 
by the agent State after the processing of claims) as to claimants' 
entitlement to benefits paid to them in a sufficient proportion of cases 
to test the effectiveness of the agency's procedures for the prevention 
of payments which are not due? To carry out investigations, has the 
agency assigned to some individual or unit, as a basic function, the 
responsibility of making or functionally directing such investigations?
    Explantaion: It is not feasible to prescribe the extent to which the 
above activities are required; however, they should always be carried on 
to such an extent that they will show whether or not error or willful 
misrepresentation is increasing or decreasing, and will reveal problem 
areas. The extent and nature of the above activities should be varied 
according to the seriousness of the problem in the State. The 
responsible individual or unit should:
    1. Check paid claims for overpayment and investigate for willful 
misrepresentation or, alternatively, advise and assist the operating 
units in the performance of such functions, or both;
    2. Perform consultative services with respect to methods and 
procedures for the prevention and detection of fraud; and
    3. Perform other services which are closely related to the above.
    Although a State agency is expected to make a full-time assignment 
of responsibility to a unit or individual to carry on the functions 
described above, a small State agency might make these functions a part-
time responsibility of one individual. In connection with the detection 
of overpayments, such a unit or individual might, for example:
    (a) Investigate information on suspected benefit fraud received from 
any agency personnel, and from sources outside the agency, including 
anonymous complaints;
    (b) Investigate information secured from comparisons of benefit 
payments with employment records to detect cases of concurrent working 
(whether in covered or noncovered work) and claiming of benefits 
(including benefit payments in which the agency acted as agent for 
another State).
    The benefit fraud referred to herein may involve employers, agency 
employees, and witnesses, as well as claimants.
    Comparisons of benefit payments with employment records are commonly 
made either by post-audit or by industry surveys. The so-called ``post-
audit'' is a matching of central office wage-record files against 
benefit payments for the same period. ``Industry surveys'' or ``mass 
audits'' are done in some States by going directly to employers for pay-
roll information to be checked against concurrent benefit lists. A plan
    A. of investigation based on a sample post-audit will be considered 
as partial fulfillment of the investigation program; it would need to be 
supplemented by other methods capable of detecting overpayments to 
persons who have moved into noncovered occupations or are claiming 
interstate benefits.
    B. Are adequate records maintained by which the results of 
investigations may be evaluated? *
---------------------------------------------------------------------------

    * Revises section 7513 as issued 5/5/50.
---------------------------------------------------------------------------

    Explanation. To meet this criterion, the State agency will be 
expected to maintain records of all its activities in the detection of 
overpayments, showing whether attributable to error or willful 
misrepresentation, measuring the results obtained through various 
methods, and noting the remedial action taken in each case. The adequacy 
and effectiveness of various methods of checking for willful 
misrepresentation can be evaluated only if records are kept of the 
results obtained. Internal reports on fraudulent and erroneous 
overpayments are needed by State agencies for self-evaluation. Detailed 
records should be maintained in order that the State agency may 
determine, for example, which of several methods of checking currently 
used are the most productive. Such records

[[Page 73]]

also will provide the basis for drawing a clear distinction between 
fraud and error.
    C. Does the agency take adequate action with respect to publicity 
concerning willful misrepresentation and its legal consequences to deter 
fraud by claimants? *
    Explanation. To meet this criterion, the State agency must issue 
adequate material on claimant eligibility requirements and must take 
necessary action to obtain publicity on the legal consequences of 
willful misrepresentation or willful nondisclosure of facts.
    Public announcements on convictions and resulting penalties for 
fraud are generally considered necessary as a deterrent to other 
persons, and to inform the public that the agency is carrying on an 
effective program to prevent fraud. This alone is not considered 
adequate publicity. It is important that information be circulated which 
will explain clearly and understandably the claimant's rights, and the 
obligations which he must fulfill to be eligible for benefits. Leaflets 
for distribution and posters placed in local offices are appropriate 
media for such information.

7515 Evalauation of Alternative State Provisions with Respect to 
Erroneous and Illegal Payments. If the methods of administration 
provided for by the State law do not conform to the suggested methods of 
meeting the requirements set forth in section 7511, but a State law does 
provide for alternative methods of administration designed to accomplish 
the same results, the Bureau of Employment Security, in collaboration 
with the State agency, will study the actual or anticipated effect of 
the alternative methods of administration. If the Bureau concludes that 
the alternative methods satisfy the criteria in section 7513, it will so 
notify the State agency. If the Bureau does not so conclude, it will 
submit to the Secretary the results of the study for his determination 
of whether the State's alternative methods of administration meet the 
criteria.\*\
---------------------------------------------------------------------------

    \*\ Revises section 7513 as issued 5/5/50.
---------------------------------------------------------------------------



PART 615_EXTENDED BENEFITS IN THE FEDERAL-STATE UNEMPLOYMENT COMPENSATION 
PROGRAM--Table of Contents




Sec.
615.1 Purpose.
615.2 Definitions.
615.3 Effective period of the program.
615.4 Eligibility requirements for Extended Benefits.
615.5 Definition of ``exhaustee.''
615.6 Extended Benefits; weekly amount.
615.7 Extended Benefits; maximum amount.
615.8 Provisions of State law applicable to claims.
615.9 Restrictions on entitlement.
615.10 Special provisions for employers.
615.11 Extended Benefit Periods.
615.12 Determination of ``on'' and ``off'' indicators.
615.13 Announcement of the beginning and ending of Extended Benefit 
          Periods.
615.14 Payments to States.
615.15 Records and reports.

    Authority: 26 U.S.C. 7805; 42 U.S.C. 1102; Secretary's Order No. 4-
75 (40 FR 18515).

    Source: 53 FR 27937, July 25, 1988, unless otherwise noted.



Sec. 615.1  Purpose.

    The regulations in this part are issued to implement the ``Federal-
State Extended Unemployment Compensation Act of 1970'' as it has been 
amended, which requires, as a condition of tax offset under the Federal 
Unemployment Tax Act (26 U.S.C. 3301 et seq.), that a State unemployment 
compensation law provide for the payment of extended unemployment 
compensation during periods of high unemployment to eligible individuals 
as prescribed in the Act. The benefits provided under State law, in 
accordance with the Act and this part, are hereafter referred to as 
Extended Benefits, and the program is referred to as the Extended 
Benefit Program.



Sec. 615.2  Definitions.

    For the purposes of the Act and this part--
    (a) Act means the ``Federal-State Extended Unemployment Compensation 
Act of 1970'' (title II of Pub. L. 91-373; 84 Stat. 695, 708), approved 
August 10, 1970, as amended from time to time, including the 1980 
amendments in section 416 of Pub. L. 96-364 (94 Stat. 1208, 1310), 
approved September 26, 1980, and in sections 1022 and 1024 of Pub. L. 
96-499 (94 Stat. 2599, 2656, 2658) approved December 5, 1980, and the 
1981 amendments in sections 2401 through 2404 and section 2505(b) of 
Pub. L. 97-35 (95 Stat. 357, 874-875, 884) approved August 13, 1981, and 
the 1982 amendment in section 191 of Pub. L. 97-248 (96 Stat. 324, 407) 
approved September 3, 1982, and the 1983 amendment in section 522 of 
Pub. L. 98-21 (97 Stat. 65, 148) approved April 20, 1983.

[[Page 74]]

    (b) Base period means, with respect to an individual, the base 
period as determined under the applicable State law for the individual's 
applicable benefit year.
    (c)(1) Benefit year means, with respect to an individual, the 
benefit year as defined in the applicable State law.
    (2) Applicable benefit year means, with respect to an individual, 
the current benefit year if, at the time an initial claim for Extended 
Benefits is filed, the individual has an unexpired benefit year only in 
the State in which such claim is filed, or, in any other case, the 
individual's most recent benefit year. For this purpose, the most recent 
benefit year for an individual who has unexpired benefit years in more 
than one State when an initial claim for Extended Benefits is filed, is 
the benefit year with the latest ending date or, if such benefit years 
have the same ending date, the benefit year in which the latest 
continued claim for regular compensation was filed. The individual's 
most recent benefit year which expires in an Extended Benefit Period is 
the applicable benefit year if the individual cannot establish a second 
benefit year or is precluded from receiving regular compensation in a 
second benefit year solely by reason of a State law provision which 
meets the requirement of section 3304(a)(7) of the Internal Revenue Code 
of 1986 (26 U.S.C. 3304(a)(7)).
    (d) Compensation and unemployment compensation means cash benefits 
(including dependents' allowances) payable to individuals with respect 
to their unemployment, and includes regular compensation, additional 
compensation and extended compensation as defined in this section.
    (e) Regular compensation means compensation payable to an individual 
under a State law, and, when so payable, includes compensation payable 
pursuant to 5 U.S.C. chapter 85, but does not include extended 
compensation or additional compensation.
    (f) Additional compensation means compensation totally financed by a 
State and payable under a State law by reason of conditions of high 
unemployment or by reason of other special factors and, when so payable, 
includes compensation payable pursuant to 5 U.S.C. chapter 85.
    (g) Extended compensation means the extended unemployment 
compensation payable to an individual for weeks of unemployment which 
begin in an Extended Benefit Period, under those provisions of a State 
law which satisfy the requirements of the Act and this part with respect 
to the payment of extended unemployment compensation, and, when so 
payable, includes compensation payable pursuant to 5 U.S.C. chapter 85, 
but does not include regular compensation or additional compensation. 
Extended compensation is referred to in this part as Extended Benefits.
    (h) Eligibility period means, with respect to an individual, the 
period consisting of--
    (1) The weeks in the individual's applicable benefit year which 
begin in an Extended Benefit Period, or with respect to a single benefit 
year, the weeks in the benefit year which begin in more than one 
Extended Benefit Period, and
    (2) If the applicable benefit year ends within an Extended Benefit 
Period, any weeks thereafter which begin in such Extended Benefit 
Period, but an individual may not have more than one eligibility period 
with respect to any one exhaustion of regular benefits, or carry over 
from one eligibility period to another any entitlement to Extended 
Benefits.
    (i) Sharable compensation means:
    (1) Extended Benefits paid to an eligible individual under those 
provisions of a State law which are consistent with the Act and this 
part, and that does not exceed the smallest of the following:
    (i) 50 percent of the total amount of regular compensation payable 
to the individual during the applicable benefit year; or
    (ii) 13 times the individual's weekly amount of Extended Benefits 
payable for a week of total unemployment, as determined pursuant to 
Sec. 615.6(a); or
    (iii) 39 times the individual's weekly benefit amount, referred to 
in (ii), reduced by the regular compensation paid (or deemed paid) to 
the individual during the applicable benefit year; and
    (2) Regular compensation paid to an eligible individual with respect 
to

[[Page 75]]

weeks of unemployment in the individual's eligibility period, but only 
to the extent that the sum of such compensation, plus the regular 
compensation paid (or deemed paid) to the individual with respect to 
prior weeks of unemployment in the applicable benefit year, exceeds 26 
times and does not exceed 39 times the average weekly benefit amount 
(including allowances for dependents) for weeks of total unemployment 
payable to the individual under the State law in such benefit year: 
Provided, that such regular compensation is paid under provisions of a 
State law which are consistent with the Act and this part.
    (3) Notwithstanding the preceding provisions of this paragraph, 
sharable compensation shall not include any regular or extended 
compensation with respect to which a State is not entitled to a payment 
under section 202(a)(6) or 204 of the Act or Sec. 615.14 of this part.
    (j)(1) Secretary means the Secretary of Labor of the United States.
    (2) Department means the United States Department of Labor, and 
shall include the Employment and Training Administration, the agency of 
the United States Department of Labor headed by the Assistant Secretary 
of Labor for Employment and Training to whom has been delegated the 
Secretary's authority under the Act in Secretary's Order No. 4-75 (40 FR 
18515) and Secretary's Order No. 14-75.
    (k)(1) State means the States of the United States, the District of 
Columbia, the Commonwealth of Puerto Rico, and the U. S. Virgin Islands.
    (2) Applicable State means, with respect to an individual, the State 
with respect to which the individual is an ``exhaustee'' as defined in 
Sec. 615.5, and in the case of a combined wage claim for regular 
compensation, the term means the ``paying State'' as defined in Sec. 
616.6(e) of this chapter.
    (3) State agency means the State Employment Security Agency of a 
State which administers the State law.
    (l)(1) State law means the unemployment compensation law of a State, 
approved by the Secretary under section 3304(a) of the Internal Revenue 
Code of 1986 (26 U.S.C. 3304(a)).
    (2) Applicable State law means the law of the State which is the 
applicable State for an individual.
    (m)(1) Week means, for purposes of eligibility for and payment of 
Extended Benefits, a week as defined in the applicable State law.
    (2) Week means, for purposes of computation of Extended Benefit 
``on'' and ``off'' and ``no change'' indicators and insured unemployment 
rates and the beginning and ending of Extended Benefit Periods, a 
calendar week.
    (n)(1) Week of unemployment means a week of total, part-total, or 
partial unemployment as defined in the applicable State law, which shall 
be applied in the same manner and to the same extent to the Extended 
Benefit Program as if the individual filing a claim for Extended 
Benefits were filing a claim for regular compensation, except as 
provided in paragraph (n)(2) of this section.
    (2) Week of unemployment in section 202(a)(3)(A) of the Act means a 
week of unemployment, as defined in paragraph (n)(1) of this section, 
for which the individual claims Extended Benefits or sharable regular 
benefits.
    (o) For the purposes of section 202(a)(3) of the Act--
    (1) Employed, for the purposes of section 202(a)(3)(B)(ii) of the 
Act, and employment, for the purposes of section 202(a)(4) of the Act, 
means service performed in an employer-employee relationship as defined 
in the State law; and that law also shall govern whether that service 
must be covered by it, must consist of consecutive weeks, and must 
consist of more weeks of work than are required under section 
202(a)(3)(B) of the Act;
    (2) Individual's capabilities, for the purposes of section 
202(a)(3)(C), means work which the individual has the physical and 
mental capacity to perform and which meets the minimum requirements of 
section 202(a)(3)(D);
    (3) Reasonably short period, for the purposes of section 
202(a)(3)(C), means the number of weeks provided by the applicable State 
law;
    (4) Average weekly benefit amount, for the purposes of section 
202(a)(3)(D)(i), means the weekly benefit amount (including dependents' 
allowances payable for a week of total unemployment and

[[Page 76]]

before any reduction because of earnings, pensions or other 
requirements) applicable to the week in which the individual failed to 
take an action which results in a disqualification as required by 
section 202(a)(3)(B) of the Act;
    (5) Gross average weekly remuneration, for the purposes of section 
202(a)(3)(D)(i), means the remuneration offered for a week of work 
before any deductions for taxes or other purposes and, in case the 
offered pay may vary from week to week, it shall be determined on the 
basis of recent experience of workers performing work similar to the 
offered work for the employer who offered the work;
    (6) And, as used in section 202(a)(3)(D)(ii), shall be interpreted 
to mean ``or'';
    (7) Provisions of the applicable State law, as used in section 
202(a)(3)(D)(iii), include statutory provisions and decisions based on 
statutory provisions, such as not requiring an individual to take a job 
which requires traveling an unreasonable distance to work, or which 
involves an unreasonable risk to the individual's health, safety or 
morals; and such provisions shall also include labor standards and 
training provisions required under sections 3304(a)(5) and 3304(a)(8) of 
the Internal Revenue Code of 1986 and section 236(e) of the Trade Act of 
1974;
    (8) A systematic and sustained effort, for the purposes of section 
202(a)(3)(E), means--
    (i) A high level of job search activity throughout the given week, 
compatible with the number of employers and employment opportunities in 
the labor market reasonably applicable to the individual,
    (ii) A plan of search for work involving independent efforts on the 
part of each individual which results in contacts with persons who have 
the authority to hire or which follows whatever hiring procedure is 
required by a prospective employer in addition to any search offered by 
organized public and private agencies such as the State employment 
service or union or private placement offices or hiring halls,
    (iii) Actions by the individual comparable to those actions by which 
jobs are being found by people in the community and labor market, but 
not restricted to a single manner of search for work such as registering 
with and reporting to the State employment service and union or private 
placement offices or hiring halls, in the same manner that such work is 
found by people in the community,
    (iv) A search not limited to classes of work or rates of pay to 
which the individual is accustomed or which represent the individual's 
higher skills, and which includes all types of work within the 
individual's physical and mental capabilities, except that the 
individual, while classified by the State agency as provided in Sec. 
615.8(d) as having ``good'' job prospects, shall search for work that is 
suitable work under State law provisions which apply to claimants for 
regular compensation (which is not sharable),
    (v) A search by every claimant, without exception for individuals or 
classes of individuals other than those in approved training, as 
required under section 3304(a)(8) of the Internal Revenue Code of 1986 
or section 236(e) of the Trade Act of 1974,
    (vi) A search suspended only when severe weather conditions or other 
calamity forces suspension of such activities by most members of the 
community, except that
    (vii) The individual, while classified by the State agency as 
provided in Sec. 615.8(d) as having ``good'' job prospects, if such 
individual normally obtains customary work through a hiring hall, shall 
search for work that is suitable work under State law provisions which 
apply to claimants for regular compensation (which is not sharable);
    (9) Tangible evidence of an active search for work, for the purposes 
of section 202(a)(3)(E), means a written record which can be verified, 
and which includes the actions taken, methods of applying for work, 
types of work sought, dates and places where work was sought, the name 
of the employer or person who was contacted and the outcome of the 
contact;
    (10) Date of a disqualification, as used in section 202(a)(4), means 
the date the disqualification begins, as determined under the applicable 
State law;
    (11) Jury duty, for purposes of section 202(a)(3)(A)(ii), means the 
performance of service as a juror, during all periods

[[Page 77]]

of time an individual is engaged in such service, in any court of a 
State or the United States pursuant to the law of the State or the 
United States and the rules of the court in which the individual is 
engaged in the performance of such service; and
    (12) Hospitalized for treatment of an emergency or life-threatening 
condition, as used in section 202(a)(3)(A)(ii), has the following 
meaning: ``Hospitalized for treatment'' means an individual was admitted 
to a hospital as an inpatient for medical treatment. Treatment is for an 
``emergency or life threatening condition'' if determined to be such by 
the hospital officials or attending physician that provide the treatment 
for a medical condition existing upon or arising after hospitalization. 
For purposes of this definition, the term ``medical treatment'' refers 
to the application of any remedies which have the objective of effecting 
a cure of the emergency or life-threatening condition. Once an 
``emergency condition'' or a ``life-threatening condition'' has been 
determined to exist by the hospital officials or attending physician, 
the status of the individual as so determined shall remain unchanged 
until release from the hospital.
    (p)(1) Claim filed in any State under the interstate benefit payment 
plan, as used in section 202(c), means any interstate claim for a week 
of unemployment filed pursuant to the Interstate Benefit Payment Plan, 
but does not include--
    (i) A claim filed in Canada,
    (ii) A visiting claim filed by an individual who has received 
permission from his/her regular reporting office to report temporarily 
to a local office in another State and who has been furnished intrastate 
claim forms on which to file claims, or
    (iii) A transient claim filed by an individual who is moving from 
place to place searching for work, or an intrastate claim for Extended 
Benefits filed by an individual who does not reside in a State that is 
in an Extended Benefit Period,
    (2) The first 2 weeks, as used in section 202(c), means the first 
two weeks for which the individual files compensable claims for Extended 
Benefits under the Interstate Benefit Payment Plan in an agent State in 
which an Extended Benefit Period is not in effect during such weeks, and
    (q) Benefit structure as used in section 204(a)(2)(D), for the 
requirement to round down to the ``nearest lower full dollar amount'' 
for Federal reimbursement of sharable regular and sharable extended 
compensation means all of the following:
    (1) Amounts of regular weekly benefit payments,
    (2) Amounts of additional and extended weekly benefit payments,
    (3) The State maximum or minimum weekly benefit,
    (4) Partial and part-total benefit payments,
    (5) Amounts payable after deduction for pensions, and
    (6) Amounts payable after any other deduction required by State law.



Sec. 615.3  Effective period of the program.

    An Extended Benefit Program conforming with the Act and this part 
shall be a requirement for a State law effective on and after January 1, 
1972, pursuant to section 3304(a)(11) of the Internal Revenue Code of 
1986, (26 U.S.C. 3304(a)(11)). Continuation of the program by a State in 
conformity and substantial compliance with the Act and this part, 
throughout any 12-month period ending on October 31 of a year subsequent 
to 1972, shall be a condition of the certification of the State with 
respect to such 12-month period under section 3304(c) of the Internal 
Revenue Code of 1986 (26 U.S.C. 3304(c)). Conformity with the Act and 
this part in the payment of regular compensation and Extended Benefits 
to any individual shall be a continuing requirement, applicable to every 
week as a condition of a State's entitlement to payment for any 
compensation as provided in the Act and this part.



Sec. 615.4  Eligibility requirements for Extended Benefits.

    (a) General. An individual is entitled to Extended Benefits for a 
week of unemployment which begins in the individual's eligibility period 
if, with respect to such week, the individual is an exhaustee as defined 
in Sec. 615.5, files a timely claim for Extended Benefits,

[[Page 78]]

and satisfies the pertinent requirements of the applicable State law 
which are consistent with the Act and this part.
    (b) Qualifying for Extended Benefits. The State law shall specify 
whether an individual qualifies for Extended Benefits by earnings and 
employment in the base period for the individual's applicable benefit 
year as required by section 202(a)(5) of the Act, (and if it does not 
also apply this requirement to the payment of sharable regular benefits, 
the State will not be entitled to a payment under Sec. 615.14), as 
follows:
    (1) One and one-half times the high quarter wages; or
    (2) Forty times the most recent weekly benefit amount, and if this 
alternative is adopted, it shall use the weekly benefit amount 
(including dependents' allowances) payable for a week of total 
unemployment (before any reduction because of earnings, pensions or 
other requirements) which applied to the most recent week of regular 
benefits; or
    (3) Twenty weeks of full-time insured employment, and if this 
alternative is adopted, the term ``full-time'' shall have the meaning 
provided by the State law.



Sec. 615.5  Definition of ``exhaustee.''

    (a)(1) ``Exhaustee'' means an individual who, with respect to any 
week of unemployment in the individual's eligibility period:
    (i) Has received, prior to such week, all of the regular 
compensation that was payable under the applicable State law or any 
other State law (including regular compensation payable to Federal 
civilian employees and Ex-Servicemembers under 5 U.S.C. chapter 85) for 
the applicable benefit year that includes such week; or
    (ii) Has received, prior to such week, all of the regular 
compensation that was available under the applicable State law or any 
other State law (including regular compensation available to Federal 
civilian employees and Ex-Servicemembers under 5 U.S.C. chapter 85) in 
the benefit year that includes such week, after the cancellation of some 
or all of the individual's wage credits or the total or partial 
reduction of the individual's right to regular compensation; or
    (iii) The applicable benefit year having expired prior to such week 
and the individual is precluded from establishing a second (new) benefit 
year, or the individual established a second benefit year but is 
suspended indefinitely from receiving regular compensation, solely by 
reason of a State law provision which meets the requirement of section 
3304(a)(7) of the Internal Revenue Code of 1954 (26 U.S.C. 3304(a)(7)): 
Provided, that, an individual shall not be entitled to Extended Benefits 
based on regular compensation in a second benefit year during which the 
individual is precluded from receiving regular compensation solely by 
reason of a State law provision which meets the requirement of section 
3304(a)(7) of the Internal Revenue Code of 1986 (26 U.S.C. 3304(a)(7)); 
or
    (iv) The applicable benefit year having expired prior to such week, 
the individual has insufficient wages or employment, or both, on the 
basis of which a new benefit year could be established in any State that 
would include such week; and
    (v) Has no right to unemployment compensation for such week under 
the Railroad Unemployment Insurance Act or such other Federal laws as 
are specified by the Department pursuant to this paragraph; and
    (vi) Has not received and is not seeking for such week unemployment 
compensation under the unemployment compensation law of Canada, unless 
the Canadian agency finally determines that the individual is not 
entitled to unemployment compensation under the Canadian law for such 
week.
    (2) An individual who becomes an exhaustee as defined above shall 
cease to be an exhaustee commencing with the first week that the 
individual becomes eligible for regular compensation under any State law 
or 5 U.S.C. chapter 85, or has any right to unemployment compensation as 
provided in paragraph (a)(1)(v) of this section, or has received or is 
seeking unemployment compensation as provided in paragraph (a)(1)(vi) of 
this section. The individual's Extended Benefit Account

[[Page 79]]

shall be terminated upon the occurrence of any such week, and the 
individual shall have no further right to any balance in that Extended 
Benefit Account.
    (b) Special Rules. For the purposes of paragraphs (a)(1)(i) and 
(a)(1)(ii) of this section, an individual shall be deemed to have 
received in the applicable benefit year all of the regular compensation 
payable according to the monetary determination, or available to the 
individual, as the case may be, even though--
    (1) As a result of a pending appeal with respect to wages or 
employment or both that were not included in the original monetary 
determination with respect to such benefit year, the individual may 
subsequently be determined to be entitled to more or less regular 
compensation, or
    (2) By reason of a provision in the State law that establishes the 
weeks of the year in which regular compensation may be paid to the 
individual on the basis of wages in seasonal employment--
    (i) The individual may be entitled to regular compensation with 
respect to future weeks of unemployment in the next season or off 
season, as the case may be, but such compensation is not payable with 
respect to the week of unemployment for which Extended Benefits are 
claimed, and
    (ii) The individual is otherwise an exhaustee within the meaning of 
this section with respect to rights to regular compensation during the 
season or off season in which that week of unemployment occurs, or
    (3) Having established a benefit year, no regular compensation is 
payable during such year because wage credits were cancelled or the 
right to regular compensation was totally reduced as the result of the 
application of a disqualification.
    (c) Adjustment of week. If it is subsequently determined as the 
result of a redetermination or appeal that an individual is an exhaustee 
as of a different week than was previously determined, the individual's 
rights to Extended Benefits shall be adjusted so as to accord with such 
redetermination or decision.



Sec. 615.6  Extended Benefits; weekly amount.

    (a) Total unemployment. (1) The weekly amount of Extended Benefits 
payable to an individual for a week of total unemployment in the 
individual's eligibility period shall be the amount of regular 
compensation payable to the individual for a week of total unemployment 
during the applicable benefit year. If the individual had more than one 
weekly amount of regular compensation for total unemployment during such 
benefit year, the weekly amount of extended compensation for total 
unemployment shall be one of the following which applies as specified in 
the applicable State law:
    (i) The average of such weekly amounts of regular compensation,
    (ii) The last weekly benefit amount of regular compensation in such 
benefit year, or
    (iii) An amount that is reasonably representative of the weekly 
amounts of regular compensation payable during such benefit year.
    (2) If the method in paragraph (a)(1)(iii) of this section is 
adopted by a State, the State law shall specify how such amount is to be 
computed. If the method in paragraph (a)(1)(i) of this section is 
adopted by a State, and the amount computed is not an even dollar 
amount, the amount shall be raised or lowered to an even dollar amount 
as provided by the applicable State law for regular compensation.
    (b) Partial and part-total unemployment. The weekly amount of 
Extended Benefits payable for a week of partial or part-total 
unemployment shall be determined under the provisions of the applicable 
State law which apply to regular compensation, computed on the basis of 
the weekly amount of Extended Benefits payable for a week of total 
unemployment as determined pursuant to paragraph (a) of this section.



Sec. 615.7  Extended Benefits; maximum amount.

    (a) Individual account. An Extended Benefit Account shall be 
established for each individual determined to be eligible for Extended 
Benefits, in the

[[Page 80]]

sum of the maximum amount potentially payable to the individual as 
computed in accordance with paragraph (b) of this section.
    (b) Computation of amount in individual account. (1) The amount 
established in the Extended Benefit Account of an individual, as the 
maximum amount potentially payable to the individual during the 
individual's eligibility period, shall be equal to the lesser of--
    (i) 50 percent of the total amount of regular compensation 
(including dependents' allowances) payable to the individual during the 
individual's applicable benefit year; or
    (ii) 13 times the individual's weekly amount of Extended Benefits 
payable for a week of total unemployment, as determined pursuant to 
Sec. 615.6(a); or
    (iii) 39 times the individual's weekly benefit amount referred to in 
(ii), reduced by the regular compensation paid (or deemed paid) to the 
individual during the individual's applicable benefit year.
    (2) If the State law so provides, the amount in the individual's 
Extended Benefit Account shall be reduced by the aggregate amount of 
additional compensation paid (or deemed paid) to the individual under 
such law for prior weeks of unemployment in such benefit year which did 
not begin in an Extended Benefit Period.
    (c) Changes in accounts. (1) If an individual is entitled to more or 
less Extended Benefits as a result of a redetermination or an appeal 
which awarded more or less regular compensation or Extended Benefits, an 
appropriate change shall be made in the individual's Extended Benefit 
Account pursuant to an amended determination of the individual's 
entitlement to Extended Benefits.
    (2) If an individual who has received Extended Benefits for a week 
of unemployment is determined to be entitled to more regular 
compensation with respect to such week as the result of a 
redetermination or an appeal, the Extended Benefits paid shall be 
treated as if they were regular compensation up to the greater amount to 
which the individual has been determined to be entitled, and the State 
agency shall make appropriate adjustments between the regular and 
extended accounts. If the individual is entitled to more Extended 
Benefits as a result of being entitled to more regular compensation, an 
amended determination shall be made of the individual's entitlement to 
Extended Benefits. If the greater amount of regular compensation results 
in an increased duration of regular compensation, the individual's 
status as an exhaustee shall be redetermined as of the new date of 
exhaustion of regular compensation.
    (3) If an individual who has received Extended Benefits for a week 
of unemployment is determined to be entitled to less regular 
compensation as the result of a redetermination or an appeal, and as a 
consequence is entitled to less Extended Benefits, any Extended Benefits 
paid in excess of the amount to which the individual is determined to be 
entitled after the redetermination or decision on appeal shall be 
considered an overpayment which the individual shall have to repay on 
the same basis and in the same manner that excess payments of regular 
compensation are required to be repaid under the applicable State law. 
If such decision reduces the duration of regular compensation payable to 
the individual, the claim for Extended Benefits shall be backdated to 
the earliest date, subsequent to the date when the redetermined regular 
compensation was exhausted and within the individual's eligibility 
period, that the individual was eligible to file a claim for Extended 
Benefits. Any such changes shall be made pursuant to an amended 
determination of the individual's entitlement to Extended Benefits.
    (d) Reduction because of trade readjustment allowances. Section 
233(d) of the Trade Act of 1974 (and section 204(a)(2)(C) of the Act), 
requiring a reduction of Extended Benefits because of the receipt of 
trade readjustment allowances, shall be applied as follows:
    (1) The reduction of Extended Benefits shall apply only to an 
individual who has not exhausted his/her Extended Benefits at the end of 
the benefit year;
    (2) The amount to be deducted is the product of the weekly benefit 
amount for Extended Benefits multiplied by the number of weeks for which 
trade

[[Page 81]]

readjustment allowances were paid (regardless of the amount paid for any 
such week) up to the close of the last week that begins in the benefit 
year; and
    (3) The amount to be deducted shall be deducted from the balance of 
Extended Benefits not used as of the close of the last week which begins 
in the benefit year.



Sec. 615.8  Provisions of State law applicable to claims.

    (a) Particular provisions applicable. Except where the result would 
be inconsistent with the provisions of the Act or this part, the terms 
and conditions of the applicable State law which apply to claims for, 
and the payment of, regular compensation shall apply to claims for, and 
the payment of, Extended Benefits. The provisions of the applicable 
State law which shall apply to claims for, and the payment of, Extended 
Benefits include, but are not limited to:
    (1) Claim filing and reporting;
    (2) Information to individuals, as appropriate;
    (3) Notices to individuals and employers, as appropriate;
    (4) Determinations, redeterminations, and appeal and review;
    (5) Ability to work and availability for work, except as provided 
otherwise in this section;
    (6) Disqualifications, including disqualifying income provisions, 
except as provided by paragraph (c) of this section;
    (7) Overpayments, and the recovery thereof;
    (8) Administrative and criminal penalties;
    (9) The Interstate Benefit Payment Plan;
    (10) The Interstate Arrangement for Combining Employment and Wages, 
in accordance with part 616 of this chapter.
    (b) Provisions not to be applicable. The State law and regulations 
shall specify those of its terms and conditions which shall not be 
applicable to claims for, or payment of, Extended Benefits. Among such 
terms and conditions shall be at least those relating to--
    (1) Any waiting period;
    (2) Monetary or other qualifying requirements, except as provided in 
Sec. 615.4(b); and
    (3) Computation of weekly and total regular compensation.
    (c) Terminating disqualifications. A disqualification in a State 
law, as to any individual who voluntarily left work, was suspended or 
discharged for misconduct, gross misconduct or the commission or 
conviction of a crime, or refused an offer of or a referral to work, as 
provided in sections 202(a) (4) and (6) of the Act--
    (1) As applied to regular benefits which are not sharable, is not 
subject to any limitation in sections 202(a) (4) and (6);
    (2) As applied to eligibility for Extended Benefits, shall require 
that the individual be employed again subsequent to the date of the 
disqualification before it may be terminated, even though it may have 
been terminated on other grounds for regular benefits which are not 
sharable; and if the State law does not also apply this provision to the 
payment of what would otherwise be sharable regular benefits, the State 
will not be entitled to a payment under the Act and Sec. 615.14 in 
regard to such regular compensation; and
    (3) Will not apply in regard to eligibility for Extended Benefits in 
a subsequent eligibility period.
    (d) Classification and determination of job prospects. (1) As to 
each individual who files an initial claim for Extended Benefits (or 
sharable regular compensation), the State agency shall classify the 
individual's prospects for obtaining work in his/her customary 
occupation within a reasonably short period, as ``good'' or ``not 
good,'' and shall promptly (not later than the end of the week in which 
the initial claim is filed) notify the individual in writing of such 
classification and of the requirements applicable to the individual 
under the provisions of the applicable State law corresponding to 
section 202(a)(3) of the Act and this part. Such requirements shall be 
applicable beginning with the week following the week in which the 
individual is furnished such written notice.
    (2) If an individual is thus classified as having good prospects, 
but those prospects are not realized by the close

[[Page 82]]

of the period the State law specifies as a reasonably short period, the 
individual's prospects will be automatically reclassified as ``not 
good'' or classified as ``good'' or ``not good'' depending on the 
individual's job prospects as of that date.
    (3) Whenever, as part of a determination of an individual's 
eligibility for benefits, an issue arises concerning the individual's 
failure to apply for or accept an offer of work (sections 
202(a)(3)(A)(i) and (F) of the Act and paragraphs (e) and (f) of this 
section), or to actively engage in seeking work (sections 
202(a)(3)(A)(ii) and (E) of the Act and paragraph (g) of this section), 
a written appealable determination shall be made which includes a 
finding as to the individual's job prospects at the time the issue 
arose. The reasons for allowing or denying benefits in the written 
notice of determination shall explain how the individual's job prospects 
relate to the decision to allow or deny benefits.
    (4) If an individual's job prospects are determined in accordance 
with the preceding paragraph (3) to be ``good,'' the suitability of work 
will be determined under the standard State law provisions applicable to 
claimants for regular compensation which is not sharable; and if 
determined to be ``not good,'' the suitability of work will be 
determined under the definition of suitable work in the State law 
provisions corresponding to sections 202(a)(3) (C) and (D) of the Act 
and this part. Any determination or classification of an individual's 
job prospects is mutually exclusive, and only one suitable work 
definition shall be applied to a claimant as to any failure to accept or 
apply for work or seek work with respect to any week.
    (e) Requirement of referral to work. (1) The State law shall 
provide, as required by section 202(a)(3)(F) of the Act and this part, 
that the State agency shall refer every claimant for Extended Benefits 
to work which is ``suitable work'' as provided in paragraph (d)(4) of 
this section, beginning with the week following the week in which the 
individual is furnished a written notice of classification of job 
prospects as required by paragraphs (d)(1) and (h) of this section.
    (2) To make such referrals, the State agency shall assure that each 
Extended Benefit claimant is registered for work and continues to be 
considered for referral to job openings as long as he/she continues to 
claim benefits.
    (3) In referring claimants to available job openings, the State 
agency shall apply to Extended Benefit claimants the same priorities, 
policies, and judgments as it does to other applicants, except that it 
shall not restrict referrals only to work at higher skill levels, prior 
rates of pay, customary work, or preferences as to work or pay for 
individuals whose prospects of obtaining work in their customary 
occupations have been classified as or determined to be ``not good.''
    (4) For referral purposes, any work which does not exceed the 
individual's capabilities shall be considered suitable work for an 
Extended Benefit claimant whose job prospects have been classified as or 
determined to be ``not good'', except as modified by this paragraph (e).
    (5) For Extended Benefit claimants whose prospects of obtaining work 
in their customary occupations have been classified as or determined to 
be ``not good'', work shall not be suitable, and referral to a job shall 
not be made, if--
    (i) The gross average weekly remuneration for the work for any week 
does not exceed the sum of the individual's weekly benefit amount plus 
any supplemental unemployment benefits (SUB) (as defined in section 
501(c)(17)(D) of the Internal Revenue Code of 1986) payable to the 
individual,
    (ii) The work is not offered in writing or is not listed with the 
State employment service,
    (iii) The work pays less than the higher of the minimum wage set in 
section 6(a)(1) of the Fair Labor Standards Act of 1938, without regard 
to any exemption, or any applicable State or local minimum wage, or
    (iv) Failure to accept or apply for the work would not result in a 
denial of compensation under the provisions of the applicable State law 
as defined in Sec. 615.2(o)(7).
    (6) In addition, if the State agency classifies or determines that 
an individual's prospects for obtaining work in his/her customary 
occupation within

[[Page 83]]

a reasonably short period are ``good,'' referral shall not be made to a 
job if such referral would not be made under the State law provisions 
applicable to claimants for regular benefits which are not sharable, and 
such referrals shall be limited to work which the individual is required 
to make a ``systematic and sustained effort'' to search for as defined 
in Sec. 615.2(o)(8).
    (7) For the purposes of the foregoing paragraphs of this paragraph 
(e), State law applies regarding whether members of labor organizations 
shall be referred to nonunion work in their customary occupations.
    (8) If the State law does not also apply this paragraph (e) to 
individuals who claim what would otherwise be sharable regular 
compensation, the State will not be entitled to payment under the Act 
and Sec. 615.14 in regard to such regular compensation.
    (f) Refusal of work. (1) The State law shall provide, as required by 
section 202(a)(3)(A)(i) of the Act and this part, that if an individual 
who claims Extended Benefits fails to accept an offer of work or fails 
to apply for work to which he/she was referred by the State agency--
    (i) If the individual's prospects for obtaining work in his/her 
customary occupation within a reasonably short period are determined to 
be ``good,'' the State agency shall determine whether the work is 
suitable under the standard State law provisions which apply to 
claimants for regular compensation which is not sharable, and if 
determined to be suitable the individual shall be ineligible for 
Extended Benefits for the week in which the individual fails to apply 
for or accept an offer of suitable work and thereafter until the 
individual is employed in at least four weeks with wages from such 
employment totalling not less than four times the individual's weekly 
benefit amount, as provided by the applicable State law; or
    (ii) If the individual's prospects for obtaining work in his/her 
customary occupation are determined to be ``not good,'' the State agency 
shall determine whether the work is suitable under the applicable State 
law provisions corresponding to sections 202(a)(3) (C) and (D) of the 
Act and paragraphs (e)(5) and (f)(2) of this section, and if determined 
to be suitable the individual shall be ineligible for Extended Benefits 
for the week in which the individual fails to apply for or accept an 
offer of suitable work and thereafter until the individual is employed 
in at least four weeks with wages from such employment totalling not 
less than four times the individual's weekly benefit amount, as provided 
by the applicable State law.
    (2) For an individual whose prospects of obtaining work in his/her 
customary occupation within the period specified by State law are 
classified or determined to be ``not good,'' the term ``suitable work'' 
shall mean any work which is within the individual's capabilities, 
except that work shall not be suitable if--
    (i) The gross average weekly remuneration for the work for any week 
does not exceed the sum of the individual's weekly benefit amount plus 
any supplemental unemployment benefits (SUB) (as defined in section 
501(c)(17)(D) of the Internal Revenue Code of 1986) payable to the 
individual,
    (ii) The work is not offered in writing or is not listed with the 
State employment service, or
    (iii) The work pays less than the higher of the minimum wage set in 
section 6(a)(1) of the Fair Labor Standards Act of 1938, without regard 
to any exemption, or any applicable State or local minimum wage,
    (iv) Failure to accept or apply for the work would not result in a 
denial of compensation under the provisions of the applicable State law 
as defined in Sec. 615.2(o)(7).
    (3) For the purposes of the foregoing paragraphs of this paragraph 
(f), State law applies regarding whether members of labor organizations 
shall be referred to nonunion work in their customary occupations.
    (4) If the State law does not also apply this paragraph (f) to 
individuals who claim what would otherwise be sharable regular 
compensation, the State will not be entitled to payment under the Act 
and Sec. 615.14 in regard to such regular compensation.
    (g) Actively seeking work. (1) The State law shall provide, as 
required by sections 202(a)(3) (A)(ii) and (E) of the

[[Page 84]]

Act and this part, that an individual who claims Extended Benefits shall 
be required to make a systematic and sustained effort (as defined in 
Sec. 615.2(o)(8)) to search for work which is ``suitable work'' as 
provided in paragraph (d)(4) of this section, throughout each week 
beginning with the week following the week in which the individual is 
furnished a written notice of classification of job prospects as 
required by paragraphs (d)(1) and (h) of this section, and to furnish to 
the State agency with each claim tangible evidence of such efforts.
    (2) If the individual fails to thus search for work, or to furnish 
tangible evidence of such efforts, he/she shall be ineligible for 
Extended Benefits for the week in which the failure occurred and 
thereafter until the individual is employed in at least four weeks with 
wages from such employment totalling not less than four times the 
individual's weekly benefit amount, as provided by the applicable State 
law.
    (3)(i) A State law may provide that eligibility for Extended 
Benefits be determined under the applicable provisions of State law for 
regular compensation which is not sharable, without regard to the active 
search provisions otherwise applicable in paragraph (g)(1) of this 
section, for any individual who fails to engage in a systematic and 
sustained search for work throughout any week because such individual 
is--
    (A) Serving on jury duty, or
    (B) Hospitalized for treatment of an emergency or life-threatening 
condition.
    (ii) The conditions in (i) (A) and (B) must be applied to 
individuals filing claims for Extended Benefits in the same manner as 
applied to individuals filing claims for regular compensation which is 
not sharable compensation.
    (4) For the purposes of the foregoing paragraphs of this paragraph 
(g), State law applies regarding whether members of labor organizations 
shall be required to seek nonunion work in their customary occupations.
    (5) If the State law does not also apply this paragraph (g) to 
individuals who claim what would otherwise be sharable regular 
compensation, the State will not be entitled to payment under the Act 
and Sec. 615.14 in regard to such regular compensation.
    (h) Information to claimants. The State agency shall assure that 
each Extended Benefit claimant (and claimant for sharable regular 
compensation) is informed in writing--
    (1) Of the State agency's classification of his/her prospects for 
finding work in his/her customary occupation within the time set out in 
paragraph (d) as ``good'' or ``not good,''
    (2) What kind of jobs he/she may be referred to, depending on the 
classification of his/her job prospects,
    (3) What kind of jobs he/she must be actively engaged in seeking 
each week depending on the classification of his/her job prospects, and 
what tangible evidence of such search must be furnished to the State 
agency with each claim for benefits, and
    (4) The resulting disqualification if he/she fails to apply for work 
to which referred, or fails to accept work offered, or fails to actively 
engage in seeking work or to furnish tangible evidence of such search 
for each week for which Extended Benefits or sharable regular benefits 
are claimed, beginning with the week following the week in which such 
information is furnished in writing to the individual.



Sec. 615.9  Restrictions on entitlement.

    (a) Disqualifications. If the week of unemployment for which an 
individual claims Extended Benefits is a week to which a 
disqualification for regular compensation applies, including a reduction 
because of the receipt of disqualifying income, or would apply but for 
the fact that the individual has exhausted all rights to such 
compensation, the individual shall be disqualified in the same degree 
from receipt of Extended Benefits for that week.
    (b) Additional compensation. No individual shall be paid additional 
compensation and Extended Benefits with respect to the same week. If 
both are payable by a State with respect to the same week, the State law 
may provide for the payment of Extended Benefits instead of additional 
compensation with respect to the week. If Extended Benefits are payable 
to an individual by one State and additional compensation is payable to 
the individual for the

[[Page 85]]

same week by another State, the individual may elect which of the two 
types of compensation to claim.
    (c) Interstate claims. An individual who files claims for Extended 
Benefits under the Interstate Benefit Payment Plan, in a State which is 
not in an Extended Benefit Period for the week(s) for which Extended 
Benefits are claimed, shall not be paid more than the first two weeks 
for which he/she files such claims.
    (d) Other restrictions. The restrictions on entitlement specified in 
this section are in addition to other restrictions in the Act and this 
part on eligibility for and entitlement to Extended Benefits.



Sec. 615.10  Special provisions for employers.

    (a) Charging contributing employers. (1) Section 3303(a)(1) of the 
Internal Revenue Code of 1986 (26 U.S.C. 3303(a)(1)) does not require 
that Extended Benefits paid to an individual be charged to the 
experience rating accounts of employers.
    (2) A State law may, however, consistently with section 3303(a)(1), 
require the charging of Extended Benefits paid to an individual; and if 
it does, it may provide for charging all or any portion of such 
compensation paid.
    (3) Sharable regular compensation must be charged as all other 
regular compensation is charged under the State law.
    (b) Payments by reimbursing employers. If an employer is reimbursing 
the State unemployment fund in lieu of paying contributions pursuant to 
the requirements of State law conforming with sections 3304(a)(6)(B) and 
3309(a)(2) of the Internal Revenue Code of 1986 (26 U.S.C. 3304(a)(6)(B) 
and 3309(a)(2)), the State law shall require the employer to reimburse 
the State unemployment fund for not less than 50 percent of any sharable 
compensation that is attributable under the State law to service with 
such employer; and as to any compensation which is not sharable 
compensation under Sec. 615.14, the State law shall require the 
employer to reimburse the State unemployment fund for 100 percent, 
instead of 50 percent, of any such compensation paid.



Sec. 615.11  Extended Benefit Periods.

    (a) Beginning date. Except as provided in paragraph (d) of this 
section, an Extended Benefit Period shall begin in a State on the first 
day of the third calendar week after a week for which there is a State 
``on'' indicator in that State.
    (b) Ending date. Except as provided in paragraph (c) of this 
section, an Extended Benefit Period in a State shall end on the last day 
of the third week after the first week for which there is a State 
``off'' indicator in that State.
    (c) Duration. An Extended Benefit Period which becomes effective in 
any State shall continue in effect for not less than 13 consecutive 
weeks.
    (d) Limitation. No Extended Benefit Period may begin in any State by 
reason of a State ``on'' indicator before the 14th week after the ending 
of a Prior Extended Benefit Period with respect to such State.



Sec. 615.12  Determination of ``on'' and ``off'' indicators.

    (a) Standard State indicators. (1) There is a State ``on'' indicator 
in a State for a week if the head of the State agency determines, in 
accordance with this section, that, for the period consisting of that 
week and the immediately preceding 12 weeks, the rate of insured 
unemployment (not seasonally adjusted) under the State law--
    (i) Equalled or exceeded 120 percent of the average of such rates 
for the corresponding 13-week periods ending in each of the preceding 
two calendar years, and
    (ii) Equalled or exceeded 5.0 percent.
    (2) There is a State ``off'' indicator in a State for a week if the 
head of the State agency determines, in accordance with this section, 
that, for the period consisting of that week and the immediately 
preceding 12 weeks, the rate of insured unemployment (not seasonally 
adjusted) under the State law--
    (i) Was less than 120 percent of the average of such rates for the 
corresponding 13 week periods ending in each of the preceding two 
calendar years, or
    (ii) Was less than 5.0 percent.
    (3) The standard State indicators in this paragraph (a) shall apply 
to weeks beginning after September 25, 1982.

[[Page 86]]

    (b) Optional State indicators. (1)(i) A State may, in addition to 
the State indicators in paragraph (a) of this section, provide by its 
law that there shall be a State ``on'' indicator in the State for a week 
if the head of the State agency determines, in accordance with this 
section, that, for the period consisting of that week and the 
immediately preceding 12 weeks, the rate of insured unemployment (not 
seasonally adjusted) under the State law equalled or exceeded 6.0 
percent even though it did not meet the 120 percent factor required 
under paragraph (a).
    (ii) A State which adopts the optional State indicator must also 
provide that, when it is in an Extended Benefit Period, there will not 
be an ``off'' indicator until (A) the State rate of insured unemployment 
is less than 6.0 percent, and (B) either its rate of insured 
unemployment is less than 5.0 percent or is less than 120 percent of the 
average of such rates for the corresponding 13-week periods ending in 
each of the preceding two calendar years.
    (2) The optional State indicators in this paragraph (b) shall apply 
to weeks beginning after September 25, 1982.
    (c) Computation of rate of insured unemployment--(1) Equation. Each 
week the State agency head shall calculate the rate of insured 
unemployment under the State law (not seasonally adjusted) for purposes 
of determining the State ``on'' and ``off'' and ``no change'' 
indicators. In making such calculations the State agency head shall use 
a fraction, the numerator of which shall be the weekly average number of 
weeks claimed in claims filed (not seasonally adjusted) in the State in 
the 13-week period ending with the week for which the determination is 
made, and the denominator of which shall be the average monthly 
employment covered by the State law for the first four of the last six 
calendar quarters ending before the close of the 13-week period. The 
quotient obtained is to be computed to four decimal places, and is not 
otherwise rounded, and is to be expressed as a percentage by multiplying 
the resultant decimal fraction by 100.
    (2) Counting weeks claimed. To determine the average number of weeks 
claimed in claims filed to serve as the numerator under paragraph 
(c)(1), the State agency shall include claims for all weeks for regular 
compensation, including claims taken as agent State under the Interstate 
Benefit Payment Plan. It shall exclude claims--
    (i) For Extended Benefits under any State law,
    (ii) For additional compensation under any State law, and
    (iii) Under any Federal law except joint claims which combine 
regular compensation and compensation payable under 5 U.S.C. chapter 85.
    (3) Method of computing the State 120 percent factor. The rate of 
insured unemployment for a current 13-week period shall be divided by 
the average of the rates of insured unemployment for the corresponding 
13-week periods in each of the two preceding calendar years to determine 
whether the rate is equal to 120 percent of the average rate for the two 
years. The quotient obtained shall be computed to four decimal places 
and not otherwise rounded, and shall be expressed as a percentage by 
multiplying the resultant decimal fraction by 100. The average of the 
rates for the corresponding 13-week periods in each of the two preceding 
calendar years shall be one-half the sum of such rates computed to four 
decimal places and not otherwise rounded. To determine which are the 
corresponding weeks in the preceding years--
    (i) The weeks shall be numbered starting with week number 1 as the 
first week ending in each calendar year.
    (ii) The 13-week period ending with any numbered week in the current 
year shall correspond to the period ending with that same numbered week 
in each preceding year.
    (iii) When that period in the current year ends with week number 53, 
the corresponding period in preceding years shall end with week number 
52 if there is no week number 53.
    (d) Amendment of State indicator rates. (1) Because figures used for 
determinations under this section may contain errors and because it is 
not practical to apply any correction in a State ``on'' or ``off'' or 
``no change'' indicator retroactively either to recover amounts paid or 
to adjudicate claims for past periods in which claimants failed to make 
the

[[Page 87]]

required active search for work, any determination by the head of a 
State agency of an ``on'' or ``off'' or ``no change'' indicator shall 
not be corrected more than three weeks after the close of the week to 
which it applies. If any figure used in the computation of a rate of 
insured unemployment is later found to be wrong, the correct figure 
shall be used to redetermine the rate of insured unemployment and of the 
120 percent factor for that week and all subsequent weeks, but no 
determination of previous ``on'' or ``off'' or ``no change'' indicator 
shall be affected unless the redetermination is made within the time the 
indicator may be corrected under the first sentence of this paragraph 
(d)(1). Any change hereunder shall be subject to the concurrence of the 
Department as provided in paragraph (e) of this section.
    (2) Any determination of the rate of insured unemployment and its 
effect on an ``on'' or ``off'' or ``no change'' indicator may be 
challenged by appeal or by other proceedings, as shall be provided by 
State law, but the implementation of any change in the indicator from 
one week to another shall not be stayed or postponed. In a hearing on 
any such challenge the issue may be limited to the accuracy of the 
determination of the rate of insured unemployment. If an error in that 
rate affecting the ``on'' or ``off'' or ``no change'' indicator is 
discovered in such a hearing or other proceeding, its retroactive effect 
shall be limited as provided in paragraph (d)(1).
    (e) Notice to Secretary. Within 10 calendar days after the end of 
any week with respect to which the head of a State agency has determined 
that there is an ``on,'' or ``off,'' or ``no change'' indicator in the 
State, the head of the State agency shall notify the Department of the 
determination. The notice shall state clearly the State agency head's 
determination of the specific week for which there is a State ``on'' or 
``off'' or ``no change'' indicator. The notice shall include also the 
State agency head's findings supporting the determination, with a 
certification that the findings are made in accordance with the 
requirements of this Sec. 615.15. Determinations and findings made as 
provided in this section shall be accepted by the Department, but the 
head of the State agency shall comply with such provisions as the 
Department may find necessary to assure the correctness and verification 
of notices given under this paragraph. A notice shall not become final 
for purposes of the Act and this part until such notice is accepted by 
the Department.



Sec. 615.13  Announcement of the beginning and ending of Extended 
Benefit Periods.

    (a) State indicators. Upon receipt of the notice required by Sec. 
615.12(e) which is acceptable to the Department, the Department shall 
publish in the Federal Register a notice of the State agency head's 
determination that there is an ``on'' or an ``off'' indicator in the 
State, as the case may be, the name of the State and the beginning or 
ending of the Extended Benefit Period, whichever is appropriate. The 
Department shall also notify appropriate news media, the heads of all 
other State agencies, and the Regional Administrators of the Employment 
and Training Administration of the State agency head's determination of 
such State ``on'' or ``off'' indicator and of its effect.
    (b) Publicity by State. Whenever a State agency head determines that 
there is an ``on'' indicator in the State by reason of which an Extended 
Benefit Period will begin in the State, or an ``off'' indicator by 
reason of which an Extended Benefit Period in the State will end, the 
head of the State agency shall promptly announce the determination 
through appropriate news media in the State and notify the Department in 
accordance with Sec. 615.12(e). Such announcement shall include the 
beginning or ending date of the Extended Benefit Period, whichever is 
appropriate. In the case of an Extended Benefit Period that is about to 
begin, the announcement shall describe clearly the unemployed 
individuals who may be eligible for Extended Benefits during the period, 
and in the case of an Extended Benefit Period that is about to end, the 
announcement shall also describe clearly the individuals whose 
entitlement to Extended Benefits will be terminated.

[[Page 88]]

    (c) Notices to individuals. (1) Whenever there has been a 
determination that an Extended Benefit Period will begin in a State, the 
State agency shall provide prompt written notice of potential 
entitlement to Extended Benefits to each individual who has established 
a benefit year in the State that will not end prior to the beginning of 
the Extended Benefit Period, and who exhausted all rights under the 
State law to regular compensation before the beginning of the Extended 
Benefit Period.
    (2) The State agency shall provide such notice promptly to each 
individual who begins to claim sharable regular benefits or who exhausts 
all rights under the State law to regular compensation during an 
Extended Benefit Period, including exhaustion by reason of the 
expiration of the individual's benefit year.
    (3) The notices required by paragraphs (c) (1) and (2) of this 
section shall describe those actions required of claimants for sharable 
regular compensation and Extended Benefits and those disqualifications 
which apply to such benefits which are different from those applicable 
to other claimants for regular compensation which is not sharable.
    (4) Whenever there has been a determination that an Extended Benefit 
Period will end in a State, the State agency shall provide prompt 
written notice to each individual who is currently filing claims for 
Extended Benefits of the forthcoming end of the Extended Benefit Period 
and its effect on the individual's right to Extended Benefits.



Sec. 615.14  Payments to States.

    (a) Sharable compensation. (1) The Department shall promptly upon 
receipt of a State's report of its expenditures for a calendar month 
reimburse the State in the amount of the sharable compensation the State 
is entitled to receive under the Act and this part.
    (2) The Department may instead advance to a State for any period not 
greater than one day the amount the Department estimates the State will 
be entitled to be paid under the Act and this part for that period.
    (3) Any payment to a State under this section shall be based upon 
the Department's determination of the amount the State is entitled to be 
paid under the Act and this part, and such amount shall be reduced or 
increased, as the case may be, by any amount by which the Department 
finds that a previous payment was greater or less than the amount that 
should have been paid to the State.
    (4) Any payment to a State pursuant to this paragraph (a) shall be 
made by a transfer from the extended unemployment compensation account 
in the Unemployment Trust Fund to the account of the State in such Fund, 
in accordance with section 204(e) of the Act.
    (b) Payments not to be made to States. Because a State law must 
contain provisions fully consistent with sections 202 and 203 of the 
Act, the Department shall make no payment under paragraph (a) of this 
section, whether or not the State is certified under section 3304(c) of 
the Internal Revenue Code of 1986--
    (1) In respect of any regular or extended compensation paid to any 
individual for any week if the State does not apply--
    (i) The provisions of the State law required by section 202(a)(3) 
and this part, relating to failure to accept work offered or to apply 
for work or to actively engage in seeking work, as to weeks beginning 
after October 31, 1981, except for any State which the State legislature 
did not meet in 1981 as to weeks beginning after October 1, 1982 or the 
provisions of State law required by section 202(a)(4) and this part, 
relating to terminating a disqualification, as to weeks beginning after 
March 31, 1981;
    (ii) The provisions of the State law required by section 202(a)(5) 
and this part, relating to qualifying employment, as to weeks beginning 
after September 25, 1982; or
    (2) In respect of any regular or extended compensation paid to any 
individual for any week which was not payable by reason of the provision 
of the State law required by section 202(c) and this part, as to weeks 
which begin after May 31, 1981, or May 31, 1982, as determined by the 
Department with regard to each State.
    (c) Payments not to be reimbursed. The Department shall make no 
payment

[[Page 89]]

under paragraph (a) of this section, whether or not the State is 
certified under section 3304(c) of the Internal Revenue Code of 1986, in 
respect of any regular or extended compensation paid under a State law--
    (1) As provided in section 204(a)(1) of the Act and this part, if 
the payment made was not sharable extended compensation or sharable 
regular compensation;
    (2) As provided in section 204(a)(2)(A) of the Act, if the State is 
entitled to reimbursement for the payment under the provisions of any 
Federal law other than the Act;
    (3) As provided in section 204(a)(2)(B) of the Act, if for the first 
week in an individual's eligibility period with respect to which 
Extended Benefits or sharable regular benefits are paid to the 
individual, that first week begins after December 5, 1980, and the State 
law provides for the payment (at any time or under any circumstances) of 
regular compensation to any individual for the first week of 
unemployment in any such individual's benefit year; except that--
    (i) In the case of a State with respect to which the Department 
finds that legislation is required in order to end the payment (at any 
time or under any circumstances) of regular compensation for any such 
first week of unemployment, this paragraph (c)(3) shall not apply to the 
first week in an individual's eligibility period which began before the 
end of the first regularly scheduled session of the State legislature 
that ends after January 4, 1981, as determined by the Department; and
    (ii) In the case of a State law which is changed so that regular 
compensation is not paid at any time or under any circumstances with 
respect to the first week of unemployment in any individual's benefit 
year, this paragraph (c)(3) shall not apply to any week which begins 
after the effective date of such change in the State law; and
    (iii) In the case of a State law which is changed so that regular 
compensation is paid at any time or under any circumstances with respect 
to the first week of unemployment in any individual's benefit year, this 
paragraph (c)(3) shall apply to all weeks which begin after the 
effective date of such change in the State law;
    (4) As provided in section 204(a)(2)(C) of the Act and this part, 
for any week with respect to which Extended Benefits are not payable 
because of the payment of trade readjustment allowances, as provided in 
section 233(d) of the Trade Act of 1974, and Sec. 615.7(d). This 
paragraph (c)(4) applies to any week which begins after October 31, 
1982, or 1983, as determined by the Department in regard to each State;
    (5) As provided in section 204(a)(2)(D) of the Act and this part, if 
the State does not provide for a benefit structure under which benefits 
are rounded down to the next lower dollar amount, for the 50 percent 
Federal share of the amount by which sharable regular or Extended 
Benefits paid to any individual exceeds the nearest lower full dollar 
amount. This paragraph (c)(5) shall apply to any sharable regular 
compensation or Extended Benefits paid to individuals whose eligibility 
periods begin on or after October 1, 1983, unless a later date, as 
determined by the Department, applies in a particular State under the 
grace period of section 191(b)(2) of Pub. L. 97-248;
    (6) As provided in section 204(a)(3) of the Act, to the extent that 
such compensation is based upon employment and wages in service 
performed for governmental entities or instrumentalities to which 
section 3306(c)(7) of the Internal Revenue Code of 1986 (26 U.S.C. 
3306(c)(7)) applies, in the proportion that wages for such service in 
the base period bear to the total base period wages;
    (7) If the payment made was not sharable extended compensation or 
sharable regular compensation because the payment was not consistent 
with the requirements of--
    (i) Section 202(a)(3) of the Act, and Sec. 615.8 (e), (f), or (g);
    (ii) Section 202(a)(4) of the Act, and Sec. 615.8(c); or
    (iii) Section 202(a)(5) of the Act, and Sec. 615.4(b);
    (8) If the payment made was not sharable extended compensation or 
sharable regular compensation because there was not in effect in the 
State an Extended Benefit Period in accord with the Act and this part; 
or

[[Page 90]]

    (9) For any week with respect to which the claimant was either 
ineligible for or not entitled to the payment.
    (d) Effectuating authorization for reimbursement. (1) If the 
Department believes that reimbursement should not be authorized with 
respect to any payments made by a State that are claimed to be sharable 
compensation paid by the State, because the State law does not contain 
provisions required by the Act and this part, or because such law is not 
interpreted or applied in rules, regulations, determinations or 
decisions in a manner that is consistent with those requirements, the 
Department may at any time notify the State agency in writing of the 
Department's view. The State agency shall be given an opportunity to 
present its views and arguments if desired.
    (2) The Department shall thereupon decide whether the State law 
fails to include the required provisions or is not interpreted and 
applied so as to satisfy the requirements of the Act and this part. If 
the Department finds that such requirements are not met, the Department 
shall notify the State agency of its decision and the effect thereof on 
the State's entitlement to reimbursement under this section and the 
provisions of section 204 of the Act.
    (3) Thereafter, the Department shall not authorize any payment under 
paragraph (a) of this section in respect of any sharable regular or 
extended compensation if the State law does not contain all of the 
provisions required by sections 202 and 203 of the Act and this part, or 
if the State law, rules, regulations, determinations or decisions are 
not consistent with such requirements, or which would not have been 
payable if the State law contained the provisions required by the Act 
and this part or if the State law, rules, regulations, determinations or 
decisions had been consistent with such requirements. Loss of 
reimbursement for such compensation shall begin with the date the State 
law was required to contain such provisions, and shall continue until 
such time as the Department finds that such law, rules and regulations 
have been revised or the interpretations followed pursuant to such 
determinations and decisions have been overruled and payments are made 
or denied so as to accord with the Federal law requirements of the Act 
and this part, but no reimbursement shall be authorized with respect to 
any payment that did not fully accord with the Act and this part.
    (4) A State agency may request reconsideration of a decision issued 
pursuant to paragraph (d)(2) above, within 10 calendar days of the date 
of such decision, and shall be given an opportunity to present views and 
arguments if desired.
    (5) Concurrence of the Department in any State law provision, rule, 
regulation, determination or decision shall not be presumed from the 
absence of notice issued pursuant to this section or from a 
certification of the State issued pursuant to section 3304(c) of the 
Internal Revenue Code of 1986.
    (6) Upon finding that a State has made payments for which it claims 
reimbursement that are not consistent with the Act or this part, such 
claim shall be denied; and if the State has already been paid such claim 
in advance or by reimbursement, it shall be required to repay the full 
amount to the Department. Such repayment may be made by transfer of 
funds from the State's account in the Unemployment Trust Fund to the 
Extended Unemployment Compensation Account in the Fund, or by offset 
against any current advances or reimbursements to which the State is 
otherwise entitled, or the amount repayable may be recovered for the 
Extended Unemployment Compensation Account by other means and from any 
other sources that may be available to the United States or the 
Department.
    (e) Compensation under Federal unemployment compensation programs. 
The Department shall promptly reimburse each State which has paid 
sharable compensation based on service covered by the UCFE and UCX 
Programs (parts 609 and 614 of this chapter, respectively) pursuant to 5 
U.S.C. chapter 85, an amount which represents the full amount of such 
sharable compensation paid under the State law, or may make advances to 
the State. Such amounts shall be paid from the Federal Employees 
Compensation Account established

[[Page 91]]

for those programs, rather than from the Extended Unemployment 
Compensation Account.
    (f) Combined-wage claims. If an individual was paid benefits under 
the Interstate Arrangement for Combining Employment and Wages (part 616 
of this chapter) any payment required by paragraph (a) of this section 
shall be made to the States which contributed the wage credits.
    (g) Interstate claims. Where sharable compensation is paid to an 
individual under the provisions of the Interstate Benefit Payment Plan, 
any payment required by paragraph (a) of this section shall be made only 
to the liable State.



Sec. 615.15  Records and reports.

    (a) General. State agencies shall furnish to the Secretary such 
information and reports and make such studies as the Secretary decides 
are necessary or appropriate for carrying out the purposes of the Act 
and this part.
    (b) Recordkeeping. Each State agency will make and maintain records 
pertaining to the administration of the Extended Benefit Program as the 
Department requires, and will make all such records available for 
inspection, examination and audit by such Federal officials or employees 
as the Secretary or the Department may designate or as may be required 
by law.
    (c) Weekly report of Extended Benefit data. Each State shall file 
with the Department within 10 calendar days after the end of each 
calendar week a weekly report entitled ETA 539, Extended Benefit Data. 
The report shall include:
    (1) The data reported on the form ETA 539 for the week ending 
(date). Week-ending dates shall always be the Saturday ending date of 
the calendar week beginning at 12:01 a.m. Sunday and ending 12:00 p.m. 
Saturday.
    (2)(i) The number of continued weeks claimed for regular 
compensation in claims filed during the week ending (date). The report 
shall include intrastate continued weeks claimed and interstate 
continued weeks claimed (taken as agent State) but shall exclude 
interstate continued weeks claimed (received as liable State) and 
continued weeks claimed for regular compensation filed solely under 5 
U.S.C. chapter 85; and
    (ii) The report of the number of continued weeks claimed filed in 
the State for regular compensation shall not be adjusted for 
seasonality.
    (3) The average weekly number of weeks claimed in claims filed in 
the most recent calendar week and the immediately preceding 12 calendar 
weeks.
    (4) The rate of insured unemployment for the current 13-week period.
    (5) The average of the rates of insured unemployment in 
corresponding 13-week periods in the preceding two years.
    (6) The current rate of insured unemployment as a percentage of the 
average of the rates in the corresponding 13-week periods in the 
preceding two years.
    (7) The 12 month average monthly employment covered by the State law 
for the first 4 of the last 6 complete calendar quarters ending prior to 
the end of the last week of the current 13-week period to which the 
insured unemployment data relate. Such covered employment shall exclude 
Federal civilian and military employment covered by 5 U.S.C. chapter 85.
    (8) The date that a State Extended Benefit Period begins or ends, or 
a report that there is no change in the existing Extended Benefit Period 
status.
    (d) Methodology. The State agency head shall submit to the 
Department, for approval, the method used to identify and select the 
weeks claimed which are used in the determination of an ``on'' or 
``off'' or ``no change'' indicator. Any change proposed in the method of 
identification and selection of such weeks claimed constitutes a new 
plan which must be submitted to and approved by the Department prior to 
implementing the new plan.

(Approved by the Office of Management and Budget under control number 
1205-0028)



PART 616_INTERSTATE ARRANGEMENT FOR COMBINING EMPLOYMENT AND WAGES--Table 
of Contents




Sec.
616.1 Purpose of arrangement.
616.2 Consultation with the State agencies.
616.3 Interstate cooperation.

[[Page 92]]

616.4 Rules, regulations, procedures, forms--resolution of 
          disagreements.
616.5 Effective date.
616.6 Definitions.
616.7 Election to file a Combined-Wage Claim.
616.8 Responsibilities of the paying State.
616.9 Responsibilities of transferring States.
616.10 Reuse of employment and wages.
616.11 Amendment of arrangement.

    Authority: Sec. 3304(a)(9)(B), 84 Stat. 702; 26 U.S.C. 
3304(a)(9)(B); Secretary's Order No. 20-71, August 13, 1971.

    Source: 36 FR 24992, Dec. 28, 1971, unless otherwise noted.



Sec. 616.1  Purpose of arrangement.

    This arrangement is approved by the Secretary under the provisions 
of section 3304(a)(9)(B) of the Federal Unemployment Tax Act to 
establish a system whereby an unemployed worker with covered employment 
or wages in more than one State may combine all such employment and 
wages in one State, in order to qualify for benefits or to receive more 
benefits.



Sec. 616.2  Consultation with the State agencies.

    As required by section 3304(a)(9)(B), this arrangement has been 
developed in consultation with the State unemployment compensation 
agencies. For purposes of such consultation in its formulation and any 
future amendment the Secretary recognizes, as agents of the State 
agencies, the duly designated representatives of the Interstate 
Conference of Employment Security Agencies.



Sec. 616.3  Interstate cooperation.

    Each State agency will cooperate with every other State agency by 
implementing such rules, regulations, and procedures as may be 
prescribed for the operation of this arrangement. Each State agency 
shall identify the paying and the transferring State with respect to 
Combined-Wage Claims filed in its State.



Sec. 616.4  Rules, regulations, procedures, forms--resolution of 
disagreements.

    All State agencies shall operate in accordance with such rules, 
regulations, and procedures, and shall use such forms, as shall be 
prescribed by the Secretary in consultation with the State unemployment 
compensation agencies. All rules, regulations, and standards prescribed 
by the Secretary with respect to intrastate claims will apply to claims 
filed under this arrangement unless they are clearly inconsistent with 
the arrangement. The Secretary shall resolve any disagreement between 
State agencies concerning the operation of the arrangement, with the 
advice of the duly designated representatives of the State agencies.



Sec. 616.5  Effective date.

    This arrangement shall apply to all new claims (to establish a 
benefit year) filed under it after December 31, 1971.



Sec. 616.6  Definitions.

    These definitions apply for the purpose of this arrangement and the 
procedures issued to effectuate it.
    (a) State. ``State'' includes the States of the United States of 
America, the District of Columbia, and the Commonwealth of Puerto Rico, 
and includes the Virgin Islands effective on the day after the day on 
which the Secretary approves under section 3304(a) of the Internal 
Revenue Code of 1954 (26 U.S.C. 3304(a)), an unemployment compensation 
law submitted to the Secretary by the Virgin Islands for approval.
    (b) State agency. The agency which administers the unemployment 
compensation law of a State.
    (c) Combined-Wage Claim. A claim filed under this arrangement.
    (d) Combined-Wage Claimant. A claimant who has covered wages under 
the unemployment compensation law of more than one State and who has 
filed a claim under this arrangement.
    (e) Paying State. (1) The State in which a Combined-Wage Claimant 
files a Combined-Wage Claim, if the claimant qualifies for unemployment 
benefits in that State on the basis of combined employment and wages.
    (2) If the State in which a Combined-Wage Claimant files a Combined-
Wage Claim is not the Paying State under the criterion set forth in 
paragraph (e)(1) of this section, or if the Combined-Wage Claim is filed 
in Canada or the Virgin Islands, then the Paying State shall be that 
State where the

[[Page 93]]

Combined-Wage Claimant was last employed in covered employment among the 
States in which the claimant qualifies for unemployment benefits on the 
basis of combined employment and wages: Provided, That, this paragraph 
(e)(2) shall read as if the Virgin Islands was not referred to therein, 
effective on the day after the day on which the Secretary approves under 
section 3304(a) of the Internal Revenue Code of 1954 (26 U.S.C. 
3304(a)), an unemployment compensation law submitted to the Secretary by 
the Virgin Islands for approval.
    (f) Transferring State. A State in which a Combined-Wage Claimant 
had covered employment and wages in the base period of a paying State, 
and which transfers such employment and wages to the paying State for 
its use in determining the benefit rights of such claimant under its 
law.
    (g) Employment and wages. ``Employment'' refers to all services 
which are covered under the unemployment compensation law of a State, 
whether expressed in terms of weeks of work or otherwise. ``Wages'' 
refers to all remuneration for such employment.
    (h) Secretary. The Secretary of Labor of the United States.
    (i) Base period and benefit year. The base period and benefit year 
applicable under the unemployment compensation law of the paying State.

[36 FR 24992, Dec. 28, 1971, as amended at 39 FR 45215, Dec. 31, 1974; 
43 FR 2625, Jan. 17, 1978]



Sec. 616.7  Election to file a Combined-Wage Claim.

    (a) Any unemployed individual who has had employment covered under 
the unemployment compensation law of two or more States, whether or not 
he is monetarily qualified under one or more of them, may elect to file 
a Combined-Wage Claim. He may not so elect, however, if he has 
established a benefit year under any State or Federal unemployment 
compensation law and:
    (1) The benefit year has not ended, and
    (2) He still has unused benefit rights based on such benefit 
year.\1\
---------------------------------------------------------------------------

    \1\ The Federal-State Extended Unemployment Compensation Act of 
1970, title II, Public Law 91-373, section 202(a)(1), limits the payment 
of extended benefits with respect to any week to individuals who have no 
rights to regular compensation with respect to such week under any State 
unemployment compensation law or to compensation under any other Federal 
law and in certain other instances. This provision precludes any 
individual from receiving any Federal-State extended benefits with 
respect to any week for which he is eligible to receive regular benefits 
based on a Combined Wage Claim. (See section 5752, part V of the 
Employment Security Manual.)
---------------------------------------------------------------------------

    (b) For the purposes of this arrangement, a claimant will not be 
considered to have unused benefit rights based on a benefit year which 
he has established under a State or Federal unemployment compensation 
law if:
    (1) He has exhausted his rights to all benefits based on such 
benefit year; or
    (2) His rights to such benefits have been postponed for an 
indefinite period or for the entire period in which benefits would 
otherwise be payable; or
    (3) Benefits are affected by the application of a seasonal 
restriction.
    (c) If an individual elects to file a Combined-Wage Claim, all 
employment and wages in all States in which he worked during the base 
period of the paying State must be included in such combining, except 
employment and wages which are not transferrable under the provisions of 
Sec. 616.9(b).
    (d) A Combined-Wage Claimant may withdraw his Combined-Wage Claim 
within the period prescribed by the law of the paying State for filing 
an appeal, protest, or request for redetermination (as the case may be) 
from the monetary determination of the Combined-Wage Claim, provided he 
either:
    (1) Repays in full any benefits paid to him thereunder, or
    (2) Authorizes the State(s) against which he files a substitute 
claim(s) for benefits to withhold and forward to the paying State a sum 
sufficient to repay such benefits.
    (e) If the Combined-Wage Claimant files his claim in a State other 
than the paying State, he shall do so pursuant to the Interstate Benefit 
Payment Plan.

[[Page 94]]



Sec. 616.8  Responsibilities of the paying State.

    (a) Transfer of employment and wages--payment of benefits. The 
paying State shall request the transfer of a Combined-Wage Claimant's 
employment and wages in all States during its base period, and shall 
determine his entitlement to benefits (including additional benefits, 
extended benefits and dependents' allowances when applicable) under the 
provisions of its law based on employment and wages in the paying State, 
if any, and all such employment and wages transferred to it hereunder. 
The paying State shall apply all the provisions of its law to each 
determination made hereunder, even if the Combined-Wage Claimant has no 
earnings in covered employment in that State, except that the paying 
State may not determine an issue which has previously been adjudicated 
by a transferring State. Such exception shall not apply, however, if the 
transferring State's determination of the issue resulted in making the 
Combined-Wage Claim possible under Sec. 616.7(b)(2). If the paying 
State fails to establish a benefit year for the Combined-Wage Claimant, 
or if he withdraws his claim as provided herein, it shall return to each 
transferring State all employment and wages thus unused.
    (b) Notices of determination. The paying State shall give to the 
claimant a notice of each of its determinations on his Combined-Wage 
Claim that he is required to receive under the Secretary's Claim 
Determinations Standard and the contents of such notice shall meet such 
Standard. When the claimant is filing his Combined-Wage Claims in a 
State other than the paying State, the paying State shall send a copy of 
each such notice to the local office in which the claimant filed such 
claims.
    (c) Redeterminations. (1) Redeterminations may be made by the paying 
State in accordance with its law based on additional or corrected 
information received from any source, including a transferring State, 
except that such information shall not be used as a basis for changing 
the paying State if benefits have been paid under the Combined-Wage 
Claim.
    (2) When a determination is made, as provided in paragraph (a) of 
this section, which suspends the use of wages earned in employment with 
an educational institution during a prescribed period between successive 
academic years or terms or other periods as prescribed in the law of the 
paying State in accordance with section 3304(a)(6)(A)(i)-(iv) of the 
Internal Revenue Code of 1954, the paying State shall furnish each 
transferring State involved in the combined-Wage Claim an adjusted 
determination used to recompute each State's proportionate share of any 
charges that may accumulate for benefits paid during the period of 
suspended use of school wages. Wages which are suspended shall be 
retained by the paying State for possible future reinstatement to the 
Combined-Wage Claim and shall not be returned to the transferring State.
    (d) Appeals. (1) Except as provided in paragraph (d)(3) of this 
section, where the claimant files his Combined-Wage Claim in the paying 
State, any protest, request for redetermination or appeal shall be in 
accordance with the law of such State.
    (2) Where the claimant files his Combined-Wage Claim in a State 
other than the paying State, or under the circumstances described in 
paragraph (d)(3) of this section, any protest, request for 
redetermination or appeal shall be in accordance with the Interstate 
Benefit Payment Plan.
    (3) To the extent that any protest, request for redetermination or 
appeal involves a dispute as to the coverage of the employing unit or 
services in a transferring State, or otherwise involves the amount of 
employment and wages subject to transfer, the protest, request for 
redetermination or appeal shall be decided by the transferring State in 
accordance with its law.
    (e) Recovery of prior overpayments. If there is an overpayment 
outstanding in a transferring State and such transferring State so 
requests, the overpayment shall be deducted from any benefits the paying 
State would otherwise pay to the claimant on his Combined-Wage Claim 
except to the extent prohibited by the law of the paying State. The 
paying State shall transmit the amount deducted to the transferring 
State or credit the deduction against

[[Page 95]]

the transferring State's required reimbursement under this arrangement. 
This paragraph shall apply to overpayments only if the transferring 
State certifies to the paying State that the determination of 
overpayment was made within 3 years before the Combined-Wage Claim was 
filed and that repayment by the claimant is legally required and 
enforceable against him under the law of the transferring State.
    (f) Statement of benefit charges. (1) At the close of each calendar 
quarter, the paying State shall send each transferring State a statement 
of benefits charged during such quarter to such State as to each 
Combined-Wage Claimant.
    (2) Except as provided in paragraphs (c)(2), (f)(3), and (f)(5) of 
this section, each such charge shall bear the same ratio to the total 
benefits paid to the Combined-Wage Claimant by the paying State as the 
claimant's wages transferred by the transferring State bear to the total 
wages used in such determination. Each such ratio shall be computed as a 
percentage, to three or more decimal places.
    (3) Charges to the transferring State shall not include the costs of 
any benefits paid which are funded or reimbursed from the Federal 
Unemployment Benefits and Allowances account in the U.S. Department of 
Labor appropriation, including:
    (i) Benefits paid pursuant to 5 U.S.C. 8501-8525; and
    (ii) Benefits which are reimbursable under part B of title II of the 
Emergency Jobs and Unemployment Assistance Act of 1974 (Pub. L. 93-567).
    (4) With respect to benefits paid after December 31, 1978, except as 
provided in paragraphs (f)(3) and (f)(5) of this section, all 
transferring States will be charged by the paying State for Extended 
Benefits in the same manner as for regular benefits.
    (5) With respect to new claims establishing a benefit year effective 
on and after July 1, 1977, the United States shall be charged directly 
by the paying State, in the same manner as is provided in paragraphs 
(f)(1) and (f)(2) of this section, in regard to Federal civilian service 
and wages and Federal military service and wages assigned or transferred 
to the paying State and included in Combined-Wage Claims in accordance 
with this part and parts 609 and 614 of this chapter. With respect to 
new claims effective before July 1, 1977, prior law shall apply.

(26 U.S.C. 3304(a)(9)(B); Secretary's Order No. 4-75, (40 FR 18515))

[36 FR 24992, Dec. 28, 1971, as amended at 43 FR 2625, Jan. 17, 1978; 45 
FR 47109, July 11, 1980]



Sec. 616.9  Responsibilities of transferring States.

    (a) Transfer of employment and wages. Each transferring State shall 
promptly transfer to the Paying State the employment and wages the 
Combined-Wage Claimant had in covered employment during the base period 
of the paying State. Any employment and wages so transferred shall be 
transferred without restriction as to their use for determination and 
benefit payments under the provisions of the paying State's law.
    (b) Employment and wages not transferable. Employment and wages 
transferred to the paying State by a transferring State shall not 
include:
    (1) Any employment and wages which have been transferred to any 
other paying State and not returned unused, or which have been used in 
the transferring State as the basis of a monetary determination which 
established a benefit year.
    (2) Any employment and wages which have been canceled or are 
otherwise unavailable to the claimant as a result of a determination by 
the transferring State made prior to its receipt of the request for 
transfer, if such determination has become final or is in the process of 
appeal but is still pending. If the appeal is finally decided in favor 
of the Combined-Wage Claimant, any employment and wages involved in the 
appeal shall forthwith be transferred to the paying State and any 
necessary redetermination shall be made by such paying State.
    (c) Reimbursement of paying State. Each transferring State shall, as 
soon as practicable after receipt of a quarterly statement of charges 
described

[[Page 96]]

herein, reimburse the paying State accordingly.

(26 U.S.C. 3304(a)(9)(B); Secretary's Order No. 4-75, (40 FR 18515))

[36 FR 24992, Dec. 28, 1971, as amended at 45 FR 47109, July 11, 1980]



Sec. 616.10  Reuse of employment and wages.

    Employment and wages which have been used under this arrangement for 
a determination of benefits which establishes a benefit year shall not 
thereafter be used by any State as the basis for another monetary 
determination of benefits.



Sec. 616.11  Amendment of arrangement.

    Periodically the Secretary shall review the operation of this 
arrangement, and shall propose such amendments to the arrangement as he 
believes are necessary or appropriate. Any State unemployment 
compensation agency or the ICESA may propose amendments to the 
arrangement. Any proposal shall constitute an amendment to the 
arrangement upon approval by the Secretary in consultation with the 
State unemployment compensation agencies. Any such amendment shall 
specify when the change shall take effect, and to which claims it shall 
apply.



PART 617_TRADE ADJUSTMENT ASSISTANCE FOR WORKERS UNDER THE TRADE ACT 
OF 1974--Table of Contents




                            Subpart A_General

Sec.
617.1 Scope.
617.2 Purpose.
617.3 Definitions.
617.4 Benefit information to workers.

              Subpart B_Trade Readjustment Allowances (TRA)

617.10 Applications for TRA.
617.11 Qualifying requirements for TRA.
617.12 Evidence of qualification.
617.13 Weekly amounts of TRA.
617.14 Maximum amount of TRA.
617.15 Duration of TRA.
617.16 Applicable State law.
617.17 Availability and active search for work.
617.18 Disqualifications.
617.19 Requirement for participation in training.

                     Subpart C_Reemployment Services

617.20 Responsibilities for the delivery of reemployment services.
617.21 Reemployment services and allowances.
617.22 Approval of training.
617.23 Selection of training methods and programs.
617.24 Preferred training.
617.25 Limitations on training under subpart C of this part.
617.26 Liable and agent State responsibilities.
617.27 Subsistence payments.
617.28 Transportation payments.
617.29 Application of EB work test.

                     Subpart D_Job Search Allowances

617.30 General.
617.31 Applications.
617.32 Eligibility.
617.33 Findings required.
617.34 Amount.
617.35 Time and method of payment.

                     Subpart E_Relocation Allowances

617.40 General.
617.41 Applications.
617.42 Eligibility.
617.43 Time of relocation.
617.44 Findings required.
617.45 Amount.
617.46 Travel allowance.
617.47 Moving allowance.
617.48 Time and method of payment.

                      Subpart F_Job Search Program

617.49 Job Search Program.

          Subpart G_Administration by Applicable State Agencies

617.50 Determinations of entitlement; notices to individuals.
617.51 Appeals and hearings.
617.52 Uniform interpretation and application.
617.53 Subpoenas.
617.54 State agency rulemaking.
617.55 Overpayments; penalties for fraud.
617.56 Inviolate rights to TAA.
617.57 Recordkeeping; disclosure of information.
617.58 Unemployment insurance.
617.59 Agreements with State agencies.
617.60 Administration requirements. [Reserved]
617.61 Information, reports, and studies.
617.62 Transitional procedures.
617.63 Savings clause.

[[Page 97]]

617.64 Termination of TAA program benefits.
617.65 Transition procedures for amendments in sections 2671 and 2672 of 
          Pub. L. 98-369 (Deficit Reduction Act of 1984).
617.66 Transition procedures for amendments in sections 13002 through 
          13009 of Pub. L. 99-272 (the Consolidated Omnibus Budget 
          Reconciliation Act of 1985).
617.67 Transition guidelines for the 1988 amendments.

Appendix A to Part 617--Standard for Claim Filing, Claimant Reporting, 
          Job Finding, and Employment Services
Appendix B to Part 617--Standard for Claim Determinations--Separation 
          Information
Appendix C to Part 617--Standard for Fraud and Overpayment Detection

    Authority: 19 U.S.C. 2320; Secretary's Order No. 3-81, 46 FR 31117.

    Source: 51 FR 45848, Dec. 22, 1986, unless otherwise noted.



                            Subpart A_General



Sec. 617.1  Scope.

    The regulations in this part 617 pertain to:
    (a) Adjustment assistance, such as counseling, testing, training, 
placement, and other supportive services for workers adversely affected 
under the terms of chapter 2 of title II of the Trade Act of 1974, as 
amended (hereafter referred to as the Act);
    (b) Trade readjustment allowances (hereafter referred to as TRA) and 
other allowances such as allowances while in training, job search and 
relocation allowances; and
    (c) Administrative requirements applicable to State agencies to 
which such individuals may apply.



Sec. 617.2  Purpose.

    The Act created a program of trade adjustment assistance (hereafter 
referred to as TAA) to assist individuals, who became unemployed as a 
result of increased imports, return to suitable employment. The TAA 
program provides for reemployment services and allowances for eligible 
individuals. The regulations in this part 617 are issued to implement 
the Act.



Sec. 617.3  Definitions.

    For the purposes of the Act and this part 617:
    (a) Act means chapter 2 of title II of the Trade Act of 1974, Pub. 
L. 93-618, 88 Stat. 1978, 2019-2030 (19 U.S.C. 2271-2322), as amended.
    (b) Adversely affected employment means employment in a firm or 
appropriate subdivision of a firm, including workers in any agricultural 
firm or subdivision of an agricultural firm, if workers of such firm or 
appropriate subdivision are certified under the Act as eligible to apply 
for TAA.
    (c) Adversely affected worker means an individual who, because of 
lack of work in adversely affected employment:
    (1) Has been totally or partially separated from such employment; or
    (2) Has been totally separated from employment with the firm in a 
subdivision of which such adversely affected employment exists.
    (d) Appropriate week means the week in which the individual's first 
separation occurred.
    (e) Average weekly hours means a figure obtained by dividing:
    (1) Total hours worked (excluding overtime) by a partially separated 
individual in adversely affected employment in the 52 weeks (excluding 
weeks in such period during which the individual was sick or on 
vacation) preceding the individual's first qualifying separation, by
    (2) The number of weeks in such 52 weeks (excluding weeks in such 
period during which the individual was sick or on vacation) in which the 
individual actually worked in such employment.
    (f) Average weekly wage means one-thirteenth of the total wages paid 
to an individual in the individual's high quarter. The high quarter for 
an individual is the quarter in which the total wages paid to the 
individual were highest among the first four of the last five completed 
calendar quarters preceding the individual's appropriate week.
    (g) Average weekly wage in adversely affected employment means a 
figure obtained by dividing:
    (1) Total wages earned by a partially separated individual in 
adversely affected employment in the 52 weeks (excluding the weeks in 
that period the individual was sick or on vacation) preceding the 
individual's first qualifying separation, by

[[Page 98]]

    (2) The number of weeks in such 52 weeks (excluding the weeks in 
that period the individual was sick or on vacation) the individual 
actually worked in such employment.
    (h) Benefit period means, with respect to an individual:
    (1) The benefit year and any ensuing period, as determined under the 
applicable State law, during which the individual is eligible for 
regular compensation, additional compensation, extended compensation, or 
federal supplemental compensation, as these terms are defined by 
paragraph (oo) of this section; or
    (2) The equivalent to such a benefit year or ensuing period provided 
for under the Federal unemployment insurance law.
    (i) Bona fide application for training means an individual's signed 
and dated application for training filed with the State agency 
administering the TAA training program, on a form necessarily containing 
the individual's name, petition number, local office number, and 
specific occupational training. This form shall be signed and dated by a 
State agency representative upon receipt.
    (j)(1) Certification means a certification of eligibility to apply 
for TAA issued under section 223 of the Act with respect to a specified 
group of workers of a firm or appropriate subdivision of a firm.
    (2) Certification period means the period of time during which total 
and partial separations from adversely affected employment within a firm 
or appropriate subdivision of a firm are covered by the certification.
    (k) Commuting area means the area in which an individual would be 
expected to travel to and from work on a daily basis as determined under 
the applicable State law.
    (l) Date of separation means:
    (1) With respect to a total separation--
    (i) For an individual in employment status, the last day worked; and
    (ii) For an individual on employer-authorized leave, the last day 
the individual would have worked had the individual been working; and
    (2) With respect to a partial separation, the last day of the week 
in which the partial separation occurred.
    (m) Eligibility period means the period of consecutive calendar 
weeks during which basic or additional TRA is payable to an otherwise 
eligible individual, and for an individual such eligibility period is--
    (1) Basic TRA. (i) With respect to a first qualifying separation (as 
defined in paragraph (t)(3)(i)(A) of this section) that occurs on a day 
that precedes August 23, 1988, the 104-week period beginning with the 
first week following the week with respect to which the individual first 
exhausts all rights to regular compensation (as defined in paragraph 
(oo)(1) of this section) in such individual's first benefit period (as 
described in Sec. 617.11(a)(1)(iv)) or Sec. 617.11(a)(2)(iv), 
whichever is applicable), and
    (ii) With respect to a total qualifying separation (as defined in 
paragraph (t)(3)(i)(B) of this section) that occurs on or after August 
23, 1988--or before August 23, 1988, if the individual also had a prior 
first qualifying separation under the same certification--the 104-week 
period beginning with the first week following the week in which such 
total qualifying separation occurred;
    Provided, that, an individual who has a second or subsequent total 
qualifying separation within the certification period of the same 
certification shall be determined to have a new 104-week eligibility 
period based upon the most recent such total qualifying separation; but 
the rule of this proviso shall not be applicable in the case of an 
individual who had a total qualifying separation before August 23, 1988, 
and also had a prior first qualifying separation (as referred to in 
paragraph (m)(1)(i) of this section) within the certification period of 
the same certification, if the individual's 104-week eligibility period 
based upon the total qualifying separation (as referred to in paragraph 
(m)(1)(i) of this section) would end on a date earlier than the ending 
date of the individual's eligibility period which is based upon the 
prior first qualifying separation; and
    (2) Additional TRA. With respect to additional weeks of TRA, and any 
individual determined under this part 617

[[Page 99]]

to be entitled to additional TRA, the consecutive calendar weeks that 
occur in the 26-week period that--
    (i) Immediately follows the last week of entitlement to basic TRA 
otherwise payable to the individual, or
    (ii) Begins with the first week of training approved under this part 
617, if such training begins after the last week described in paragraph 
(m)(2)(i) of this section, or
    (iii) Begins with the first week in which such training is approved 
under this part 617, if such training is so approved after the training 
has commenced; but approval of training under this part 617 after the 
training has commenced shall not imply or justify approval of a payment 
of basic or additional TRA with respect to any week which ended before 
the week in which such training was approved, nor approval of payment of 
any costs of training or any costs or expenses associated with such 
training (such as travel or subsistence) which were incurred prior to 
the date of the approval of such training under this part 617.
    (n) Employer means any individual or type of organization, including 
the Federal government, a State government, a political subdivision, or 
an instrumentality of one or more governmental entities, with one or 
more individuals performing service in employment for it within the 
United States.
    (o) Employment means any service performed for an employer by an 
officer of a corporation or an individual for wages.
    (p) Exhaustion of UI means exhaustion of all rights to UI in a 
benefit period by reason of:
    (1) Having received all UI to which an individual was entitled under 
the applicable State law or Federal unemployment compensation law with 
respect to such benefit period; or
    (2) The expiration of such benefit period.
    (q) Family means the following members of an individual's household 
whose principal place of abode is with the individual in a home the 
individual maintains or would maintain but for unemployment:
    (1) A spouse;
    (2) An unmarried child, including a stepchild, adopted child, or 
foster child, under age 21 or of any age if incapable of self-support 
because of mental or physical incapacity; and
    (3) Any other person whom the individual would be entitled to claim 
as a dependent for income tax purposes under the Internal Revenue Code 
of 1954.
    (r) First benefit period means the benefit period established after 
the individual's first qualifying separation or in which such separation 
occurs.
    (s) First exhaustion of UI means the first time in an individual's 
first benefit period that the individual exhausts all rights to UI; 
first exhaustion shall be deemed to be complete at the end of the week 
the exhaustion occurs.
    (t)(1) First separation means, for an individual to qualify as an 
adversely affected worker for the purposes of TAA program benefits 
(without regard to whether the individual also qualifies for TRA), the 
individual's first total or partial separation within the certification 
period of a certification, irrespective of whether such first separation 
also is a qualifying separation as defined in paragraph (t)(2) of this 
section;
    (2) Qualifying separation means, for an individual to qualify as an 
adversely affected worker and for basic TRA--
    (i) Prior to August 23, 1988, the individual's first (total or 
partial) separation within the certification per-iod of a certification, 
with respect to which the individual meets all of the requirements of 
Sec. 617.11(a)(1) (i) through (iv), and which qualifies as a first 
qualifying separation as defined in paragraph (t)(3)(i)(A) of this 
section, and
    (ii) At any time before, on, or after August 23, 1988, any total 
separation of the individual within the certification period of a 
certification (other than a first qualifying separation as defined in 
paragraph (t)(3)(i)(A) of this section), with respect to which the 
individual meets all of the requirements in Sec. 617.11(a)(2) (i) 
through (iv), and which qualifies as a total qualifying separation as 
defined in paragraph (B) of (t)(3)(i)(B) of this section;
    (3) ``First qualifying separation'' means--
    (i) For the purposes of determining an individual's eligibility 
period for basic TRA--

[[Page 100]]

    (A) With respect to a separation that occurs before August 23, 1988, 
the individual's first (total or partial) separation within the 
certification period of a certification, with respect to which the 
individual meets all of the requirements of Sec. 617.11(a)(1) (i) 
through (iv), and
    (B) With respect to a separation that occurs before, on, or after 
August 23, 1988 (other than a first qualifying separation as defined in 
paragraph (t)(3)(i)(A) of this section), the first total separation of 
the individual within the certification period of a certification, with 
respect to which the individual meets all of the requirements in Sec. 
617.11(a)(2) (i) through (iv); and
    (ii) For the purposes of determining the weekly and maximum amounts 
of basic TRA payable to an individual, with respect to a separation that 
occurs before, on, or after August 23, 1988, the individual's first 
(total or partial) separation within the certification period of a 
certification if, with respect to such separation, the individual meets 
the requirements of Sec. 617.11(a)(1) (i), (ii) and (iv) or Sec. 
617.11(a)(2) (i), (ii) and (iv).
    (u) Head of family means an individual who maintains a home for a 
family. An individual maintains a home if over half the cost of 
maintenance is furnished by the individual or would be furnished but for 
unemployment.
    (v) Impact date means the date stated in a certification issued 
under the Act on which total or partial separations began or threatened 
to begin in a firm or a subdivision of a firm.
    (w) Job search program means a job search workshop or job finding 
club.
    (x) Job search workshop means a short (1 to 3 days) seminar designed 
to provide participants with knowledge that will enable the participants 
to find jobs. Subjects should include, but not be limited to, labor 
market information, resume writing, interviewing techniques, and 
techniques for finding job openings.
    (y) Job finding club means a job search workshop which includes a 
period of 1 to 2 weeks of structured, supervised activity in which 
participants attempt to obtain jobs.
    (z) Layoff means a suspension of or separation from employment by a 
firm for lack of work, initiated by the employer, and expected to be for 
a definite or indefinite period of not less than seven consecutive days.
    (aa) Liable State and Agent State are defined as follows:
    (1) Liable State means, with respect to any individual, the State 
whose State law is the applicable State law as determined under Sec. 
617.16 for all purposes of this Part 617.
    (2) Agent State means, with respect to any individual, any State 
other than the State which is the liable State for such individual.
    (bb) On-the-job training means training provided by an employer to 
an individual who is employed by the employer.
    (cc) Partial separation means that during a week ending on or after 
the impact date specified in the certification under which an adversely 
affected worker is covered, the individual had:
    (1) Hours of work reduced to 80 percent or less of the individual's 
average weekly hours in adversely affected employment; and
    (2) Wages reduced to 80 percent or less of the individual's average 
weekly wage in such adversely affected employment.
    (dd) Regional Administrator means the appropriate Regional 
Administrator of the Employment and Training Administration, United 
States Department of Labor (hereafter Department).
    (ee) Remuneration means remuneration as defined in the applicable 
State law.
    (ff) Secretary means the Secretary of Labor, U.S. Department of 
Labor, or his or her designee.
    (gg) Separate maintenance means maintaining another (second) 
residence, in addition to the individual's regular place of residence, 
while attending a training facility outside the individual's commuting 
area.
    (hh) State means the States of the United States, the District of 
Columbia, and the Commonwealth of Puerto Rico, and the term ``United 
States'' when used in a geographical sense includes such Commonwealth.

[[Page 101]]

    (ii) State agency means the State Employment Security Agency; the 
employment service of the State; any State agency carrying out title III 
of the Job Training Partnership Act; or any other State or local agency 
administering job training or related programs with which the Secretary 
has an agreement to carry out any of the provisions of the Act.
    (jj) State law means the unemployment compensation law of a State 
approved by the Secretary under section 3304 of the Internal Revenue 
Code of 1954 (26 U.S.C. 3304).
    (kk) Suitable work means, with respect to an individual:
    (1) Suitable work as defined in the applicable State law for 
claimants for regular compensation (as defined in paragraph (oo)(1) of 
this section); or
    (2) Suitable work as defined in applicable State law provisions 
consistent with section 202(a)(3) of the Federal-State Extended 
Unemployment Compensation Act of 1970;

whichever is applicable, but does not in any case include self-
employment or employment as an independent contractor.
    (ll) Total separation means a layoff or severance of an individual 
from employment with a firm in which, or in a subdivision of which, 
adversely affected employment exists.
    (mm) Trade adjustment assistance (TAA) means the services and 
allowances provided for achieving reemployment of adversely affected 
workers, including TRA, training and other reemployment services, and 
job search allowances and relocation allowances.
    (nn) Trade readjustment allowance (TRA) means a weekly allowance 
payable to an adversely affected worker with respect to such worker's 
unemployment under subpart B of this part 617.
    (oo) Unemployment insurance (UI) means the unemployment compensation 
payable to an individual under any State law or Federal unemployment 
compensation law, including chapter 85, title 5 of the United States 
Code, and the Railroad Unemployment Insurance Act. ``UI'' includes 
``regular compensation,'' ``additional compensation,'' ``extended 
compensation,'' and ``federal supplemental compensation,'' defined as 
follows:
    (1) Regular compensation means unemployment compensation payable to 
an individual under any State law, and, when so payable, includes 
unemployment compensation payable pursuant to chapter 85, title 5 of the 
United States Code, but does not include extended compensation, 
additional compensation, or federal supplemental compensation;
    (2) Additional compensation means unemployment compensation totally 
financed by a State and payable under a State law by reason of 
conditions of high unemployment or by reason of other special factors 
and, when so payable, includes unemployment compensation payable 
pursuant to chapter 85, title 5 of the United States Code; and
    (3) Extended compensation means the extended unemployment 
compensation payable to an individual for weeks of unemployment which 
begin in an Extended Benefit Period, under those provisions of a State 
law which satisfy the requirements of the Federal-State Extended 
Unemployment Compensation Act of 1970 and regulations governing the 
payment of extended unemployment compensation, and, when so payable, 
includes unemployment compensation payable pursuant to chapter 85, title 
5 of the United States Code, but does not include regular compensation, 
additional compensation, or federal supplemental compensation. Extended 
compensation is also referred to in this part 617 as Extended Benefits 
or EB.
    (4) Federal supplemental compensation means the supplemental 
unemployment compensation payable to individuals who have exhausted 
their rights to regular and extended compensation, and which is payable 
under the Federal Supplemental Compensation Act of 1982 or any similar 
Federal law enacted before or after the 1982 Act.
    (pp) Wages means all compensation for employment for an employer, 
including commissions, bonuses, and the cash value of all compensation 
in a medium other than cash.
    (qq) Week means a week as defined in the applicable State law.

[[Page 102]]

    (rr) Week of unemployment means a week of total, part total, or 
partial unemployment as determined under the applicable State law or 
Federal unemployment compensation law.

[51 FR 45848, Dec. 22, 1986, as amended at 53 FR 32348, Aug. 24, 1988; 
59 FR 926, 927, Jan. 6, 1994; 61 FR 19983, May 3, 1996]



Sec. 617.4  Benefit information to workers.

    (a) Providing information to workers. State agencies shall provide 
full information to workers about the benefit allowances, training, and 
other employment services available under subparts B through E of this 
part 617 and about the petition and application procedures, and the 
appropriate filing dates, for such allowances, training and services.
    (b) Providing assistance to workers. State agencies shall provide 
whatever assistance is necessary to enable groups of workers, including 
unorganized workers, to prepare petitions or applications for program 
benefits.
    (c) Providing information to State vocational education agencies and 
others. State agencies shall inform the State Board for Vocational 
Education or equivalent agency and other public or private agencies, 
institutions, and employers, as appropriate, of each certification 
issued under section 223 of the Act and of projections, if available, of 
the needs for training under section 236 of the Act as a result of such 
certification.
    (d) Written and newspaper notices--(1) Written notices to workers. 
(i) Upon receipt of a certification issued by the Department of Labor, 
the State agency shall provide a written notice through the mail of the 
benefits available under subparts B through E of this part 617 to each 
worker covered by a certification issued under section 223 of the Act 
when the worker is partially or totally separated or as soon as possible 
after the certification is issued if such workers are already partially 
or totally separated from adversely affected employment.
    (ii) The State agency will satisfy this requirement by obtaining 
from the firm, or other reliable source, the names and addresses of all 
workers who were partially or totally separated from adversely affected 
employment before the certification was received by the agency, and 
workers who are thereafter partially or totally separated within the 
certification period. The State agency shall mail a written notice to 
each such worker of the benefits available under the TAA Program. The 
notice must include the following information:
    (A) Worker group(s) covered by the certification, and the article(s) 
produced as specified in the copy of the certification furnished to the 
State agency.
    (B) Name and the address or location of workers' firm.
    (C) Impact, certification, and expiration dates in the certification 
document.
    (D) Benefits and reemployment services available to eligible 
workers.
    (E) Explanation of how workers apply for TAA benefits and services.
    (F) Whom to call to get additional information on the certification.
    (G) When and where the workers should come to apply for benefits and 
services.
    (2) Newspaper notices. (i) Upon receipt of a copy of a certification 
issued by the Department affecting workers in a State, the State agency 
shall publish a notice of such certification in a newspaper of general 
circulation in areas in which such workers reside. Such a newspaper 
notice shall not be required to be published, however, in the case of a 
certification with respect to which the State agency can substantiate, 
and enters in its records evidence substantiating, that all workers 
covered by the certification have received written notice required by 
paragraph (d)(1) of this section.
    (ii) A published notice must include the following kinds of 
information:
    (A) Worker group(s) covered by the certification, and the article(s) 
produced as specified in the copy of the certification furnished to the 
State agency.
    (B) Name and the address or location of workers' firm.
    (C) Impact, certification, and expiration dates in the certification 
document.
    (D) Benefits and reemployment services available to eligible 
workers.

[[Page 103]]

    (E) Explanation of how and where workers should apply for TAA 
benefits and services.
    (e) Advice and assistance to workers. In addition to the information 
and assistance to workers as required under paragraphs (a) and (b) of 
this section, State agencies shall--
    (1) Advise each worker who applies for unemployment insurance under 
the State law of the benefits available under subparts B through E of 
this part and the procedures and deadlines for applying for such 
benefits.
    (2) Facilitate the early filing of petitions under section 221 of 
the Act and Sec. 617.4(b) for any workers that the agency considers are 
likely to be eligible for benefits. State agencies shall utilize 
information received by the State's dislocated worker unit to facilitate 
the early filing of petitions under section 221 of the Act by workers 
potentially adversely affected by imports.
    (3) Advise each adversely affected worker to apply for training 
under Sec. 617.22(a) before, or at the same time as, the worker applies 
for trade readjustment allowances under subpart B of this part.
    (4) Interview each adversely affected worker, as soon as 
practicable, regarding suitable training opportunities available to the 
worker under Sec. 617.22(a) and review such opportunities with the 
worker.

[51 FR 45848, Dec. 22, 1986, as amended at 59 FR 927, Jan. 6, 1994]



              Subpart B_Trade Readjustment Allowances (TRA)



Sec. 617.10  Applications for TRA.

    (a) Before and after certification. An individual covered under a 
certification or a petition for certification may apply to a State 
agency for TRA. A determination shall be made at any time to the extent 
necessary to establish or protect an individual's entitlement to TRA or 
other TAA, but no payment of TRA or other TAA may be made by a State 
agency until a certification is made and the State agency determines 
that the individual is covered thereunder.
    (b) Timing of applications. An initial application for TRA, and 
applications for TRA for weeks of unemployment beginning before the 
initial application for TRA is filed, may be filed within a reasonable 
period of time after publication of the determination certifying the 
appropriate group of workers under section 223 of the Act. However, an 
application for TRA for a week of unemployment beginning after the 
initial application is filed shall be filed within the time limit 
applicable to claims for regular compensation under the applicable State 
law. For purposes of this paragraph (b), a reasonable period of time 
means such period of time as the individual had good cause for not 
filing earlier, which shall include, but not be limited to, the 
individual's lack of knowledge of the certification or misinformation 
supplied the individual by the State agency.
    (c) Applicable procedures. Applications shall be filed in accordance 
with this subpart B and on forms which shall be furnished to individuals 
by the State agency. The procedures for reporting and filing 
applications for TRA shall be consistent with this part 617 and the 
Secretary's ``Standard for Claim Filing, Claimant Reporting, Job Finding 
and Employment Services'', Employment Security Manual, part V, sections 
5000 et seq. (Appendix A of this part).
    (d) Advising workers to apply for training. State agencies shall 
advise each worker of the qualifying requirements for entitlement to TRA 
and other TAA benefits at the time the worker files an initial claim for 
State UI, and shall advise each adversely affected worker to apply for 
training under subpart C of this part before, or at the same time, the 
worker applies for TRA, as required by Sec. 617.4(e)(1) and (3).

[51 FR 45848, Dec. 22, 1986, as amended at 59 FR 928, 943, Jan. 6, 1994



Sec. 617.11  Qualifying requirements for TRA.

    (a) Basic qualifying requirements for entitlement--(1) Prior to 
November 21, 1988. To qualify for TRA for any week of unemployment that 
begins prior to November 21, 1988, an individual must meet each of the 
following requirements of paragraphs (a)(1) (i) through (vii) of this 
section:

[[Page 104]]

    (i) Certification. The individual must be an adversely affected 
worker covered under a certification.
    (ii) Separation. The individual's first qualifying separation (as 
defined in paragraph (t)(3)(i) of Sec. 617.3) before application for 
TRA must occur:
    (A) On or after the impact date of such certification; and
    (B) Before the expiration of the two-year period beginning on the 
date of such certification, or, if earlier, before the termination date, 
if any, of such certification.
    (iii) Wages and employment. (A) In the 52-week period (i.e., 52 
consecutive calendar weeks) ending with the week of the individual's 
first qualifying separation, the individual must have had at least 26 
weeks of employment at wages of $30 or more a week in adversely affected 
employment with a single firm or subdivision of a firm. Evidence that an 
individual meets this requirement shall be obtained as provided in Sec. 
617.12. Employment and wages covered under more than one certification 
may not be combined to qualify for TRA.
    (B)(1) For the purposes of paragraph (a)(1)(iii) of this section, 
any week in which such individual--
    (i) is on employer-authorized leave from such adversely affected 
employment for purposes of vacation, sickness, injury, maternity, or 
inactive duty or active duty military service for training, or
    (ii) does not work in such adversely affected employment because of 
a disability compensable under a workers' compensation law or plan of a 
State or the United States, or
    (iii) had adversely affected employment interrupted to serve as a 
full-time representative of a labor organization in such firm or 
subdivision,

shall be treated as a week of employment at wages of $30 or more;
    (2) Provided, that--
    (i) not more than 7 weeks in the case of weeks described in 
paragraph (a)(1)(iii)(B)(1)(i) or paragraph (a)(1)(iii)(B)(1)(iii) of 
this section, or both, and (ii) not more than 26 weeks described in 
paragraph (a)(1)(iii)(B)(1)(ii) of this section,

may be treated as weeks of employment for purposes of paragraph 
(a)(1)(iii) of this section.
    (C) Wages and employment creditable under paragraph (a)(1)(iii) of 
this section shall not include employment or wages earned or paid for 
employment which is contrary to or prohibited by any Federal law.
    (iv) Entitlement to UI. The individual must have been entitled to 
(or would have been entitled to if the individual had applied therefor) 
UI for a week within the benefit period--
    (A) in which the individual's first qualifying separation occurred, 
or
    (B) which began (or would have begun) by reason of the filing of a 
claim for UI by the individual after such first qualifying separation.
    (v) Exhaustion of UI. The individual must:
    (A) Have exhausted all rights to any UI to which the individual was 
entitled (or would have been entitled to if the individual had applied 
therefor); and
    (B) Not have an unexpired waiting period applicable to the 
individual for any such UI.
    (vi) Extended Benefit work test. (A) The individual must--
    (1) Accept any offer of suitable work, as defined in Sec. 
617.3(kk), and actually apply for any suitable work the individual is 
referred to by the State agency, and
    (2) Actively engage in seeking work and furnish the State agency 
tangible evidence of such efforts each week, and
    (3) Register for work and be referred by the State agency to 
suitable work,

in accordance with those provisions of the applicable State law which 
apply to claimants for Extended Benefits and which are consistent with 
Part 615 of this Chapter.
    (B) The Extended Benefit work test shall not apply to an individual 
with respect to claims for TRA for weeks of unemployment beginning prior 
to the filing of an initial claim for TRA, nor for any week which begins 
before the individual is notified that the individual is covered by a 
certification issued under the Act and is fully informed of the Extended 
Benefit work test requirements of paragraph (a)(1)(vi) of this section 
and Sec. 617.17. Prior to such notification and advice, the individual 
shall not be subject to the Extended Benefit work test requirements, nor 
to any State timely

[[Page 105]]

filing requirement, but shall be required to be unemployed and able to 
work and available for work with respect to any such week except as 
provided for workers in approved training in Sec. 617.17(b)(1).
    (vii) Job search program participation. (A) The individual is 
enrolled in, participating in, or has successfully completed a job 
search program which meets the requirements of Sec. 617.49(a); or the 
State agency has determined that no acceptable job search program is 
reasonably available under the criteria set forth in Sec. 617.49(c).
    (B) The job search program requirement shall not apply to an 
individual with respect to claims for TRA for weeks of unemployment 
beginning prior to the filing of an initial claim for TRA, nor for any 
week which begins before the individual is notified that the individual 
is covered by a certification issued under the Act and is fully informed 
of the job search program requirement of paragraph (a)(1)(vii) of this 
section and Sec. 617.49.
    (C) The job search program requirement shall not apply to an 
individual, as a qualifying requirement for TRA, with respect to any 
week ending after November 20, 1988, but cooperating State agencies are 
encouraged to continue to utilize job search programs after November 20, 
1988, as an effective tool to assist adversely affected workers in 
finding suitable employment, particularly unemployed workers who have 
completed training or for whom the training requirement has been waived 
under Sec. 617.19.
    (2) On and after November 21, 1988. To qualify for TRA for any week 
of unemployment that begins on or after November 21, 1988, an individual 
must meet each of the following requirements of paragraphs (a)(2) (i) 
through (vii) of this section:
    (i) Certification. The individual must be an adversely affected 
worker covered under a certification.
    (ii) Separation. The individual's first qualifying separation (as 
defined in paragraph (t)(3)(i) of Sec. 617.3) before application for 
TRA must occur:
    (A) On or after the impact date of such certification; and
    (B) Before the expiration of the two-year period beginning on the 
date of such certification, or, if earlier, before the termination date, 
if any, of such certification.
    (iii) Wages and employment. (A) In the 52-week period (i.e., 52 
consecutive calendar weeks) ending with the week of the individual's 
first qualifying separation, or any subsequent total qualifying 
separation under the same certification, the individual must have had at 
least 26 weeks of employment at wages of $30 or more a week in adversely 
affected employment with a single firm or subdivision of a firm. 
Evidence that an individual meets this requirement shall be obtained as 
provided in Sec. 617.12. Employment and wages covered under more than 
one certification may not be combined to qualify for TRA.
    (B)(1) For the purposes of paragraph (a)(2)(iii) of this section, 
any week in which such individual--
    (i) Is on employer-authorized leave from such adversely affected 
employment for purposes of vacation, sickness, injury, maternity, or 
inactive duty or active duty military service for training, or
    (ii) Does not work in such adversely affected employment because of 
a disability compensable under a workers' compensation law or plan of a 
State or the United States, or
    (iii) Had adversely affected employment interrupted to serve as a 
full-time representative of a labor organization in such firm or 
subdivision, or
    (iv) Is on call-up for the purpose of active duty in a reserve 
status in the Armed Forces of the United States (if such week began 
after August 1, 1990), provided such active duty is ``Federal service'' 
as defined in part 614 of this chapter,

shall be treated as a week of employment at wages of $30 or more;
    (2) Provided, that--
    (i) Not more than 7 weeks in the case of weeks described in 
paragraph (a)(2)(iii)(B)(1) (i) or (iii) of this section, or both, and
    (ii) Not more than 26 weeks described in paragraph (a)(2)(iii)(B)(1) 
(ii) or (iv) of this section,

may be treated as weeks of employment for purposes of paragraph 
(a)(2)(iii) of this section.

[[Page 106]]

    (C) Wages and employment creditable under paragraph (a)(2)(iii) of 
this section shall not include employment or wages earned or paid for 
employment which is contrary to or prohibited by any Federal law.
    (iv) Entitlement to UI. The individual must have been entitled to 
(or would have been entitled to if the individual had applied therefor) 
UI for a week within the benefit period--
    (A) in which the individual's first qualifying separation occurred, 
or
    (B) which began (or would have begun) by reason of the filing of a 
claim for UI by the individual after such first qualifying separation.
    (v) Exhaustion of UI. The individual must:
    (A) Have exhausted all rights to any UI to which the individual was 
entitled (or would have been entitled if the individual had applied 
therefor); and
    (B) Not have an unexpired waiting period applicable to the 
individual for any such UI.
    (vi) Extended Benefit work test. (A) The individual must--
    (1) Accept any offer of suitable work, as defined in Sec. 
617.3(kk), and actually apply for any suitable work the individual is 
referred to by the State agency, and
    (2) Actively engage in seeking work and furnish the State agency 
tangible evidence of such efforts each week, and
    (3) Register for work and be referred by the State agency to 
suitable work,

in accordance with those provisions of the applicable State law which 
apply to claimants for Extended Benefits and which are consistent with 
part 615 of this chapter.
    (B) The Extended Benefit work test shall not apply to an individual 
with respect to claims for TRA for weeks of unemployment beginning prior 
to the filing of an initial claim for TRA, nor for any week which begins 
before the individual is notified that the individual is covered by a 
certification issued under the Act and is fully informed of the Extended 
Benefit work test requirements of paragraph (a)(2)(vi) of this section 
and Sec. 617.17. Prior to such notification and advice, the individual 
shall not be subject to the Extended Benefit work test requirements, nor 
to any State timely filing requirement, but shall be required to be 
unemployed and able to work and available for work with respect to any 
such week except as provided in Sec. 617.17(b)(2) for workers enrolled 
in, or participating in, a training program approved under Sec. 
617.22(a).
    (vii) Participation in training. (A) The individual must--
    (1) Be enrolled in or participating in a training program approved 
pursuant to Sec. 617.22(a), or
    (2) Have completed a training program approved under Sec. 
617.22(a), after a total or partial separation from adversely affected 
employment within the certification period of a certification issued 
under the Act, or
    (3) Have received from the State agency a written statement under 
Sec. 617.19 waiving the participation in training requirement for the 
individual.
    (B) The participation in training requirement of paragraph 
(a)(2)(vii) of this section shall not apply to an individual with 
respect to claims for TRA for weeks of unemployment beginning prior to 
the filing of an initial claim for TRA, nor for any week which begins 
before the individual is notified that the individual is covered by a 
certification issued under the Act and is fully informed of the 
participation in training requirement of paragraph (a)(2)(vii) of this 
section and Sec. 617.19.
    (C) The participation in training requirement of paragraph 
(a)(2)(vii) of this section shall apply, as a qualifying requirement for 
TRA, to an individual with respect to claims for TRA for weeks of 
unemployment commencing on or after November 21, 1988, and beginning 
with the first week following the week in which a certification covering 
the individual is issued under the Act, unless the State agency has 
issued a written statement to the individual under Sec. 617.19 waiving 
the participation in training requirement for the individual.
    (D) For purposes of paragraph (a)(2)(vii) of this section, the 
following definitions shall apply:
    (1) Enrolled in Training. A worker shall be considered to be 
enrolled in training when the worker's application for training is 
approved by the State agency and the training institution has

[[Page 107]]

furnished written notice to the State agency that the worker has been 
accepted in the approved training program which is to begin within 30 
calendar days of the date of such approval. (A waiver under Sec. 617.19 
shall not be required for an individual who is enrolled in training as 
defined herein.)
    (2) Completed Training. A worker shall be considered to have 
completed a training program if the training program was approved, or 
was approvable and is approved, pursuant to Sec. 617.22, and the 
training was completed subsequent to the individual's total or partial 
separation from adversely affected employment within the certification 
period of a certification issued under the Act, and the training 
provider has certified that all the conditions for completion of the 
training program have been satisfied.
    (3) Special rules for workers separated in 1981 to 1986 period. (i) 
Basic conditions. Under section 1425(b) of the Omnibus Trade and 
Competitiveness Act of 1988 (the ``OTCA'') (Pub. L. 100-418) the time 
limit on the eligibility period for basic TRA in section 233(a)(2) of 
the Act (before and after the amendment by Public Law 100-418), and the 
210-day time limit in section 233(b) of the Act on the filing of a bona 
fide application for training in order to qualify for additional TRA, 
are set aside and shall be disregarded for any individual separated from 
adversely affected employment in the period which began on August 13, 
1981, and ended on April 7, 1986: Provided, That, any such individual 
must meet all of the following requirements of paragraphs (a)(3)(i)(A) 
through (E) of this section to qualify for TRA for any week.
    (A) Period of separation. The separation of the individual must have 
occurred on a date within the period which began on August 13, 1981 and 
ended on April 7, 1986.
    (B) Total separation required. Such separation must be a ``total 
separation'' as defined in Sec. 617.3(ll), and a ``total qualifying 
separation'' as defined in Sec. 617.3(t)(3)(i)(B); and, for the 
purposes of determining whether an individual has been continuously 
unemployed, as defined in Sec. 617.3(t)(3)(i)(E), only the last such 
total separation within the August 13, 1981 to April 7, 1986 period 
shall be taken into account.
    (C) Other standard requirements. The individual must, with respect 
to such total separation, meet all of the requirements of paragraphs 
(a)(2)(i) through (v) of this section.
    (D) Participation in training. (1) The individual must meet the 
requirements of paragraph (a)(2)(vii) of this section, with respect to 
being enrolled in or participating in a training program approved 
pursuant to Sec. 617.22(a), as to each week TRA is claimed, and not be 
ineligible under Sec. 617.18(b)(2) for failure to begin participation 
in such training or for ceasing to participate in such training.
    (2) With respect to participation in training, as required under 
paragraph (a)(3) of this section, the break in training provisions of 
Sec. 617.15(d) shall be applicable, and the waiver of participation 
provisions in Sec. 617.19 shall not be applicable.
    (E) Continuously unemployed. (1) The individual must have been 
continuously unemployed since the date of the individual's total 
separation referred to in paragraph (a)(2)(vii)(B) of this section, not 
taking into account for the purposes of this determination any work in 
which the individual was employed in seasonal employment, odd jobs, or 
part-time, temporary employment.
    (2) For purposes of Sec. 617.11(a)(3)(i)(E)(1), continuously 
unemployed shall mean the individual has not been engaged in any 
employment, except for seasonal employment, odd-jobs, or part-time, 
temporary employment. Employment shall be considered:
    (i) Seasonal employment when seasonality provisions of the 
applicable State law are applicable to such employment; or
    (ii) An odd job when the established period of employment occurs 
within five (5) consecutive days or less; or
    (iii) Part-time, temporary employment when a termination date of one 
hundred fifty (150) days or less was established at the time of 
employment, and the average weekly hours for the job, over the period of 
employment, was less than 30 hours per week.

[[Page 108]]

    (ii) TRA payments prospective only. The provisions of paragraph 
(a)(3) of this section apply to payments of TRA only for weeks which 
begin after August 23, 1988, and with respect to training in which the 
individual becomes enrolled and begins participation before or after 
such date, and which is approved under Sec. 617.22(a) before or after 
such date. No payment of TRA may be authorized under paragraph (a)(3) of 
this section for any week which ends before such training is approved 
under Sec. 617.22(a).
    (iii) Other special rules. (1) Although the last total qualifying 
separation of an individual will be used for the purposes of the 
determination under paragraph (a)(3)(i)(B) of this section, the 
individual's first qualifying separation (as defined in paragraph 
(t)(3)(ii) of Sec. 617.3) must be used to determine the weekly and 
maximum amounts payable to the individual in accordance with Sec. Sec. 
617.13 and 617.14.
    (2) No individual shall be determined to be eligible for TRA under 
paragraph (a)(3) of this section if the individual has previously 
received all of the basic and additional TRA to which the individual was 
entitled.
    (3) The 26-week eligibility period for additional TRA is applicable 
under paragraph (a)(3) of this section, as such term is defined in 
paragraph (m)(2) of Sec. 617.3.
    (4) Special rules for oil and gas workers--retroactive--(i) Basic 
conditions. Under section 1421(a)(1)(B) of the OTCA, individuals 
employed by independent firms engaged in exploration or drilling for oil 
and natural gas who were separated after September 30, 1985, may be 
entitled, retroactively, to TAA program benefits, but only if, as to any 
such individual, all of the conditions in the following provisions of 
paragraph (a)(4) of this section are met.
    (ii) Prior certification. Individuals covered by this paragraph 
(a)(4) do not include any individual covered under a certification (made 
with respect to the same firm or subdivision of a firm) that was issued 
under section 223 of the Act without regard to the amendments to section 
222 of the Act (relating to oil and gas workers) made by section 1421 
(a)(1)(A) of the OTCA.
    (iii) Petition. (A) To apply for a certification under section 223 
covering workers referred to in section 1421 (a)(1)(B) of the OTCA, a 
petition must have been filed in the Office of Trade Adjustment 
Assistance after August 23, 1988, and on or before November 18, 1988, by 
or on behalf of a group of workers of such a firm or subdivision of a 
firm.
    (B) A petition, to be valid, may not be signed by or on behalf of an 
individual referred to in paragraph (a)(4)(ii) of this section.
    (iv) Certification. (A) As provided in section 1421(a) (1)(B) of the 
OTCA, a certification issued pursuant to section 223 of the Act will not 
be subject to the one-year limitation on the impact date which is 
specified in section 223(b) of the Act, but the impact date of any such 
certification may not be a date earlier than October 1, 1985.
    (B) A certification shall not be issued under the authority of 
section 1421(a)(1)(B) of the OTCA if a certification could have been 
issued under section 223 of the Act before or after the amendment made 
by section 1421(a)(1)(A) of the OTCA.
    (v) Coverage of certification. Individuals covered by a 
certification issued under the authority of section 1421(a)(1)(B) of the 
OTCA will be eligible to apply for TAA program benefits as follows:
    (A) Basic and additional TRA, retroactively and prospectively, 
subject to the conditions stated in paragraph (a)(4) of this section;
    (B) Training, prospectively, subject to the conditions stated in 
subpart C of this part;
    (C) Job search allowances, prospectively, subject to the conditions 
stated in subpart D of this part; and
    (D) Relocation allowances, prospectively, subject to the conditions 
stated in subpart E of this part.
    (vi) TRA entitlement. To qualify for TRA for any week, an individual 
must meet all of the following requirements of paragraphs (a)(4)(vi)(A) 
through (D) of this section;
    (A) Certification. The individual must be an adversely affected 
worker covered under a certification issued pursuant to section 223 of 
the Act and under

[[Page 109]]

the authority of section 1421(a)(1)(B) of the OTCA.
    (B) Date of separation. The date of the individual's most recent 
total separation (as defined in Sec. 617.3) must be a date after 
September 30, 1985, and within the certification period of the 
certification under which the worker is covered. Separations occurring 
prior to October 1, 1985, shall be disregarded for the purposes of 
determining whether an individual experienced a total separation after 
September 30, 1985.
    (C) Other standard requirements. (1) With respect to weeks of 
unemployment that begin after September 30, 1985, but prior to November 
21, 1988, the individual must, with respect to the separation referred 
to in paragraph (a)(4)(vi)(B) of this section, meet all of the 
requirements of paragraph (a)(1)(i) through (vii) of this section, and
    (2) With respect to weeks of unemployment that begin on or after 
November 21, 1988, the individual must meet all of the requirements of 
paragraphs (a)(2)(i) through (vii) of this section.
    (D) Other special rules. (1) Although an individual's most recent 
total or partial separation after September 30, 1985 must be used for 
the purposes of this paragraph (a)(4)(vi)(B) of this section, the 
individual's first qualifying separation (as defined in paragraph 
(t)(3)(ii) of Sec. 617.3) must be used to determine the weekly and 
maximum amounts payable to the individual in accordance with Sec. Sec. 
617.13 and 617.14.
    (2) The 60-day preclusion rule in paragraph (b)(1) of this section 
shall not be applicable to an individual covered by a certification 
referred to in paragraph (a)(4)(vi)(A) of this section, and who is 
eligible for TRA under the provisions of paragraph (a)(4) of this 
section.
    (3) The 26-week eligibility period for additional TRA (as defined in 
paragraph (m)(2) of Sec. 617.3) is applicable under paragraph (a)(4) of 
this section.
    (b) First week of entitlement. The first week any individual may be 
entitled to a payment of basic TRA shall be the later of:
    (1) The first week beginning more than 60 days after the date of the 
filing of the petition which resulted in the certification under which 
the individual is covered (except in the case of oil and gas workers to 
whom paragraph (a)(4) of this section applies); or
    (2) The first week beginning after the individual's exhaustion of 
all rights to UI including waiting period credit, as determined under 
Sec. 617.11(a)(1)(v) or Sec. 617.11(a)(2), as appropriate.

[59 FR 928, Jan. 6, 1994]



Sec. 617.12  Evidence of qualification.

    (a) State agency action. When an individual applies for TRA, the 
State agency having jurisdiction under Sec. 617.50(a) shall obtain 
information necessary to establish:
    (1) Whether the individual meets the qualifying requirements in 
Sec. 617.11;
    (2) The individual's average weekly wage; and
    (3) For an individual claiming to be partially separated, the 
average weekly hours and average weekly wage in adversely affected 
employment.
    (b) Insufficient data. If information specified in paragraph (a) of 
this section is not available from State agency records or from any 
employer, the State agency shall require the individual to submit a 
signed statement setting forth such information as may be required for 
the State agency to make the determinations required by paragraph (a) of 
this section.
    (c) Verification. A statement made under paragraph (b) of this 
section shall be certified by the individual to be true to the best of 
the individual's knowledge and belief and shall be supported by evidence 
such as Forms W-2, paycheck stubs, union records, income tax returns, or 
statements of fellow workers, and shall be verified by the employer.
    (d) Determinations. The State agency shall make the necessary 
determinations on the basis of information obtained pursuant to this 
section, except that if, after reviewing information obtained under 
paragraph (b) of this section against other available data, including 
agency records, it concludes that such information is not reasonably 
accurate, it shall make appropriate adjustments and shall make the 
determination on the basis of the adjusted data.

[[Page 110]]



Sec. 617.13  Weekly amounts of TRA.

    (a) Regular allowance. The amount of TRA payable for a week of total 
unemployment (including a week of training approved under subpart C of 
this part 617 or under the provisions of the applicabIe State law) shall 
be an amount equal to the most recent weekly benefit amount of UI 
(including dependents' allowances) payable to the individual for a week 
of total unemployment preceding the individual's first exhaustion of UI 
following the individual's first qualifying separation: Provided, that 
in a State in which weeks of UI are paid in varying amounts related to 
wages with separate employers, the weekly amount of TRA shall be 
calculated as it would be to pay extended compensation: Provided, 
further, that where a State calculates a base amount of UI and 
calculates dependents' allowances on a weekly supplemental basis. TRA 
weekly benefit amounts shall be calculated in the same manner and under 
the same terms and conditions as apply to claimants for UI, except that 
the base amount shall not change.
    (b) Increased allowance. An individual in training approved under 
subpart C of this part 617 who is thereby entitled for any week to TRA 
and a training allowance under any other Federal law for the training of 
workers shall be paid in the amount computed under paragraph (a) of this 
section or, if greater, the amount to which the individual would be 
entitled under such other Federal law if the individual applied for such 
allowance, as provided in section 232(b) of the Act. A payment under 
this paragraph (b) shall be in lieu of any training allowance to which 
the individual is entitled under such other Federal law.
    (c) Reduction of amount. An amount of TRA payabIe under paragraph 
(a) or (b) of this section for any week shall be reduced (but not below 
zero) by:
    (1) Income that is deductible from UI under the disqualifying income 
provisions of the applicable State law or Federal unemployment 
compensation law;
    (2) The amount of a training allowance (other than a training 
allowance referred to in paragraph (b) of this section) under any 
Federal law that the individual receives for such week, as provided in 
section 232(c) of the Act. This paragraph (c) shall apply to Veterans 
Educational Assistance, Pell Grants, Supplemental Educational 
Opportunity Grants, and other training allowances under any Federal law 
other than for the training of workers; and
    (3) Any amount that would be deductible from UI for days of absence 
from training under the provisions of the applicable State law which 
apply to individuals in approved training.

[51 FR 45848, Dec. 22, 1986, as amended at 53 FR 32349, Aug. 24, 1988]



Sec. 617.14  Maximum amount of TRA.

    (a) General rule. Except as provided under paragraph (b) of this 
section, the maximum amount of TRA payable to an individual under a 
certification shall be the amount determined by:
    (1) Multiplying by 52 the weekly amount of TRA payable to such 
individual for a week of total unemployment, as determined under Sec. 
617.13(a); and
    (2) Subtracting from the product derived under paragraph (a)(1) of 
this section, the total sum of UI to which the individual was entitled 
(or would have been entitled if the individual had applied therefor) in 
the individual's first benefit period described in Sec. 
617.11(a)(1)(iv) or, as appropriate, Sec. 617.11(a)(2)(iv). The 
individual's full entitlement shall be subtracted under this paragraph, 
without regard to the amount, if any, that was actually paid to the 
individual with respect to such benefit period.
    (b) Exceptions. The maximum amount of TRA determined under paragraph 
(a) of this section will not include:
    (1) The amount of dependents' allowances paid as a supplement to the 
base weekly amount determined under Sec. 617.13(a);
    (2) The amount of the difference between the individual's weekly 
increased allowances determined under Sec. 617.13(b) and the 
individual's weekly amount determined under Sec. 617.13(a); and
    (3) The amounts paid for additional weeks determined under Sec. 
617.15(b);

but nothing in this paragraph (b) shall affect an individual's 
eligibility for

[[Page 111]]

such supplemental, increased or additional allowances.
    (c) Reduction for Federal training allowance. (1) If a training 
allowance referred to in Sec. 617.13(c)(2) is paid to an individual for 
any week of unemployment with respect to which the individual would be 
entitled (determined without regard to any disqualification under Sec. 
617.18(b)(2)) to TRA, if the individual applied for TRA for such week, 
each week shall be deducted from the total number of weeks of TRA 
otherwise payable to the individual.
    (2) If the training allowance referred to in paragraph (c)(1) of 
this section is less than the amount of TRA otherwise payable to the 
individual for such week, the individual shall, when the individual 
applies for TRA for such week, be paid TRA in an amount not to exceed 
the amount equal to the difference between the individual's regular 
weekly TRA amount, as determined under Sec. 617.13(a), and the amount 
of the training allowance paid to the individual for such week, as 
provided in section 232(c) of the Act.

[51 FR 45848, Dec. 22, 1986, as amended at 53 FR 32349, Aug. 24, 1988; 
54 FR 22277, May 23, 1989; 59 FR 931, Jan. 6, 1994]



Sec. 617.15  Duration of TRA.

    (a) Basic weeks. An individual shall not be paid basic TRA for any 
week beginning after the close of the 104-week eligibility period (as 
defined in Sec. 617.3(m)(1)), which is applicable to the individual as 
determined under Sec. Sec. 617.3 (m)(1), 617.3(t), and 617.67(e).
    (b) Additional weeks. (1) To assist an individual to complete 
training approved under subpart C of this part, payments may be made as 
TRA for up to 26 additional weeks in the 26-week eligibility period (as 
defined in Sec. 617.3(m)(2)) which is applicable to the individual as 
determined under Sec. Sec. 617.3(m)(2) and 617.67(f).
    (2) To be eligible for TRA for additional weeks, an individual must 
make a bona fide application for such training--
    (i) within 210 days after the date of the first certification under 
which the individual is covered, or
    (ii) if later, within 210 days after the date of the individual's 
most recent partial or total separation (as defined in Sec. Sec. 
617.3(cc) and 617.3(ll)) under such certification.
    (3) Except as provided in paragraph (d) of this section, payments of 
TRA for additional weeks may be made only for those weeks in the 26-week 
eligibility period during which the individual is actually participating 
fully in training approved under Sec. 617.22(a).
    (c) Limit. The maximum TRA payable to any individual on the basis of 
a single certification is limited to the maximum amount of basic TRA as 
determined under Sec. 617.14 plus additional TRA for up to 26 weeks as 
provided in paragraph (b) of this section.
    (d) Scheduled breaks in training. (1) An individual who is otherwise 
eligible will continue to be eligible for basic and additional weeks of 
TRA during scheduled breaks in training, but only if a scheduled break 
is not longer than 14 days, and the following additional conditions are 
met:
    (i) The individual was participating in the training approved under 
Sec. 617.22(a) immediately before the beginning of the break; and
    (ii) The break is provided for in the published schedule or the 
previously established schedule of training issued by the training 
provider or is indicated in the training program approved for the 
worker; and, further
    (iii) The individual resumes participation in the training 
immediately after the break ends.
    (2) A scheduled break in training shall include all periods within 
or between courses, terms, quarters, semesters and academic years of the 
approved training program.
    (3) No basic or additional TRA will be paid to an individual for any 
week which begins and ends within a scheduled break that is 15 days or 
more.
    (4) The days within a break in a training program that shall be 
counted in determining the number of days of the break for the purposes 
of paragraph (d) of this section shall include all calendar days 
beginning with the first day of the break and ending with the last day 
of the break, as provided for in the schedule of the training provider, 
except that any Saturday, Sunday, or official State or National holiday 
occurring during the scheduled break in training, on which training 
would not

[[Page 112]]

normally be scheduled in the training program if there were no break in 
training, shall not be counted in determining the number of days of the 
break for the purposes of paragraph (d) of this section.
    (5) When the worker is drawing basic TRA, the maximum amount of TRA 
payable is not affected by the weeks the worker does not receive TRA 
while in a break period, but the weeks will count against the 104-week 
eligibility period.
    (6) When the worker is drawing additional weeks of TRA to complete 
training, any weeks for which TRA is not paid will count against the 
continuous 26-week eligibility period and the number of weeks payable.

[59 FR 931, Jan. 6, 1994]



Sec. 617.16  Applicable State law.

    (a) What law governs. The applicable State law for any individual, 
for all of the purposes of this part 617, is the State law of the 
State--
    (1) In which the individual is entitled to UI (whether or not the 
individual has filed a claim therefor) immediately following the 
individual's first separation (as defined in paragraph (t)(1) of Sec. 
617.3), or
    (2) If the individual is not so entitled to UI under the State law 
of any State immediately following such first separation, or is entitled 
to UI under the Railroad Unemployment Insurance Act (RRUI), the State 
law of the State in which such first separation occurred.
    (b) Change of law. The State law determined under paragraph (a) of 
this section to be the applicable State law for an individual shall 
remain the applicable State law for the individual until the individual 
becomes entitled to UI under the State law of another State (whether or 
not the individual files a claim therefor).
    (c) UI entitlement. (1) An individual shall be deemed to be entitled 
to UI under a State law if the individual satisfies the base period 
employment and wage qualifying requirements of such State law.
    (2) In the case of a combined-wage claim (Part 616 of this chapter), 
UI entitlement shall be determined under the law of the paying State.
    (3) In case of a Federal UI claim, or a joint State and Federal UI 
claim (Parts 609 and 614 of this Chapter), UI entitlement shall be 
determined under the law of the State which is the applicable State for 
such claims.
    (d) RRUI claimants. If an individual is entitled to UI under the 
Railroad Unemployment Insurance Act, the applicable State law for 
purposes of paragraphs (a) and (b) of this section is the law of the 
State in which the individual's first qualifying separation occurs.
    (e) Liable State. The State whose State law is determined under this 
section to be the applicable State law for any individual shall be the 
liable State for the individual for all purposes of this part 617. Any 
State other than the liable State shall be an agent State.

[59 FR 932, Jan. 6, 1994]



Sec. 617.17  Availability and active search for work.

    (a) Extended Benefit work test applicable. Except as provided in 
paragraph (b) of this section, an individual shall, as a basic condition 
of entitlement to basic TRA for a week of unemployment--
    (1) be unemployed, as defined in the applicable State law for UI 
claimants, and
    (2) be able to work and available for work, as defined in the 
applicable State law for UI claimants, and
    (3) satisfy the Extended Benefit work test in each week for which 
TRA is claimed, as set forth in Sec. Sec. 617.11(a)(1) (vi) and 
617.11(a)(2)(vi).
    (b) Exceptions--(1) Prior to November 21, 1988. The conditions 
stated in paragraphs (a) and (b) of this section shall not be applicable 
to an individual actually participating in training approved under the 
applicable State law or under Sec. 617.22(a), or during a scheduled 
break in the training program if (as determined for the purposes of 
Sec. 617.15 (d)) the individual participated in the training 
immediately before the beginning of the break and resumes participation 
in the training immediately after the break ends, unless the individual 
is ineligible or subject to disqualification under the applicable State 
law or Sec. 617.18 (b)(2).
    (2) On and after November 21, 1988. The conditions stated in 
paragraphs (a)(2) and (a)(3) of this section shall not be

[[Page 113]]

applicable to an individual who is enrolled in or participating in a 
training program approved under Sec. 617.22 (a), or during a break in 
the training program if (as determined for the purposes of Sec. 
617.15(d)) the individual participated in the training immediately 
before the beginning of the break and resumes participation in the 
training immediately after the break ends.

[59 FR 932, Jan. 6, 1994]



Sec. 617.18  Disqualifications.

    (a) State law applies. Except as stated in paragraph (b) of this 
section and Sec. 617.55(b), an individual shall not be paid TRA for any 
week of unemployment the individual is or would be disqualified to 
receive UI under the disqualification provisions of the applicable State 
law, including the provisions of the applicable State law which apply to 
EB claimants and which are consistent with section 202(a)(3) of the 
Federal-State Extended Unemployment Compensation Act of 1970.
    (b) Disqualification of trainees--(1) State law inapplicable. A 
State law shall not be applied to disqualify an individual from 
receiving either UI or TRA because the individual:
    (i) Is enrolled in or is participating in a training program 
approved under Sec. 617.22(a); or
    (ii) Refuses work to which the individual has been referred by the 
State agency, if such work would require the individual to discontinue 
training, or if added to hours of training would occupy the individual 
more than 8 hours a day or 40 hours a week, except that paragraph 
(b)(1)(ii) of this section shall not apply to an individual who is 
ineligible under paragraph (b)(2) of this section; or
    (iii) Quits work, if the individual was employed in work which was 
not suitable (as defined in Sec. 617.22(a)(1)), and it was reasonable 
and necessary for the individual to quit work to begin or continue 
training approved for the individual under Sec. 617.22(a).
    (2) Trainees ineligible. (i) An individual who, without justifiable 
cause, fails to begin participation in a training program which is 
approved under Sec. 617.22(a), or ceases to participate in such 
training, or for whom a waiver is revoked pursuant to Sec. 617.19(c), 
shall not be eligible for basic TRA, or any other payment under this 
part 617, for the week in which such failure, cessation, or revocation 
occurred, or any succeeding week thereafter until the week in which the 
individual begins or resumes participation in a training program that is 
approved under Sec. 617.22(a).
    (ii) For purposes of this section and other provisions of this Part 
617, the following definitions shall be used:
    (A) Failed to begin participation. A worker shall be determined to 
have failed to begin participation in a training program when the worker 
fails to attend all scheduled training classes and other training 
activities in the first week of the training program, without 
justifiable cause.
    (B) Ceased participation. A worker shall be determined to have 
ceased participation in a training program when the worker fails to 
attend all scheduled training classes and other training activities 
scheduled by the training institution in any week of the training 
program, without justifiable cause.
    (C) Justifiable cause. For the purposes of paragraph (b)(2) of this 
section, the term ``justifiable cause'' means such reasons as would 
justify an individual's conduct when measured by conduct expected of a 
reasonable individual in like circumstances, including but not limited 
to reasons beyond the individual's control and reasons related to the 
individual's capability to participate in or complete an approved 
training program.
    (c) Disqualification while in OJT. In no case may an individual 
receive TRA for any week with respect to which the worker is engaged in 
on-the-job training.

[51 FR 45848, Dec. 22, 1986, as amended at 53 FR 32350, Aug. 24, 1988; 
59 FR 932, Jan. 6, 1994]



Sec. 617.19  Requirement for participation in training.

    (a) In general--(1) Basic requirement. (i) All individuals otherwise 
entitled to basic TRA, for all weeks beginning on and after November 21, 
1988, must either be enrolled in or participating in a training program 
approved under Sec. 617.22(a), or have completed a training program 
approved under Sec. 617.22(a), as provided in Sec. 617.11(a)(2)(vii), 
in order to

[[Page 114]]

be entitled to basic TRA payments for any such week (except for 
continuation of payments during scheduled breaks in training of 14 days 
or less under the conditions stated in Sec. 617.15(d)). The training 
requirement of paragraph (a)(1)(i) of this section shall be waived in 
writing on an individual basis, solely in regard to entitlement to basic 
TRA, if approval of training for the individual is not feasible or is 
not appropriate, as determined in accordance with paragraph (a)(2) of 
this section.
    (ii) As a principal condition of entitlement to additional TRA 
payments, all individuals must actually be participating in a training 
program approved under Sec. 617.22(a), for all weeks beginning before 
November 21, 1988, and for all weeks beginning on and after November 21, 
1988 (except for continuation of payments during breaks in training 
under the conditions stated in Sec. 617.15(d)). Paragraph (a)(2) of 
this section is not applicable in regard to additional TRA, and the 
participation in training requirement of paragraph (a)(1)(ii) of this 
section may not be waived under any circumstances.
    (2) Waiver of participation requirement. When it is determined, in 
accordance with paragraph (a)(2) of this section, that it is not 
feasible or is not appropriate (as such terms are defined in paragraph 
(b) of this section) to approve a training program for an individual 
otherwise entitled to basic TRA, the individual shall be furnished a 
formal written notice of waiver, with an explanation of the reason(s) 
for the waiver and a statement of why training is not feasible or is not 
appropriate in the case of such individual. At a minimum, the written 
statement furnished to the individual shall contain information required 
by Sec. 617.50(e) as well as the following information:
    (i) Name and social security number of the individual;
    (ii) Petition number under which the worker was certified;
    (iii) A statement why the agency has determined that it is not 
feasible or is not appropriate to approve training for the individual at 
that time, and the reason(s) for the finding;
    (iv) A statement that the waiver will be revoked at any time that 
feasible and appropriate training becomes available;
    (v) Any other advice or information the State agency deems 
appropriate in informing the individual;
    (vi) Signature block (with signature) for the appropriate State 
official; and
    (vii) Signature block (with signature) for the worker's 
acknowledgement of receipt.
    (3) Denial of a waiver. In any case in which a determination is made 
to deny to any individual a waiver of the participation requirement, the 
individual shall be furnished a formal written notice of denial of 
waiver, which shall contain all of the information required of formal 
written notices under paragraph (a)(2) of this section.
    (4) Procedure. Any determination under paragraph (a)(2) or paragraph 
(a)(3) of this section shall be a determination to which Sec. Sec. 
617.50 and 617.51 apply, including the requirement that any written 
notice furnished to an individual shall include notice of the 
individual's appeal rights as is provided in Sec. 617.50(e).
    (b) Reasons for issuing a waiver. (1) For the purposes of paragraphs 
(a)(2) and (a)(3) of this section, a waiver of the participation in 
training requirement shall be issued to an individual only upon a 
supported finding that approval of a Sec. 617.22(a) training program 
for that individual is not feasible or is not appropriate at that time.
    (i) Feasible and appropriate. For the purposes of this section:
    (A) Feasible. The term feasible means:
    (1) training is available at that time which meets all the criteria 
of Sec. 617.22(a);
    (2) the individual is so situated as to be able to take full 
advantage of the training opportunity and complete the training; and
    (3) funding is available to pay the full costs of the training and 
any transportation and subsistence expenses which are compensable.

The funding referred to in paragraph (b)(1)(i)(A)(3) of this section 
includes not only TAA program funds but also all other funds available 
under any of the provisions of the Job Training Partnership Act 
(including Title III) or any other Federal, State or private

[[Page 115]]

source that may be utilized for training approvable under Sec. 
617.22(a). Further, the individual's situation in respect to undertaking 
training (as referred to in paragraph (b)(1)(i)(A)(2) of this section) 
shall include taking into account personal circumstances that preclude 
the individual from being able to participate in and complete the 
training program, such as the availability of transportation, the 
ability to make arrangements for necessary child care, and adequate 
financial resources if the weeks of training exceeds the duration of UI 
and TRA payments.
    (B) Appropriate. The term appropriate means being suitable or 
compatible, fitting, or proper. Appropriate, therefore, refers to 
suitability of the training for the worker (including whether there is a 
reasonable prospect which is reasonably foreseeable that the individual 
will be reemployed by the firm from which separated), and compatibility 
of the training for the purposes of the TAA Program. In these respects, 
suitability of training for the individual is encompassed within the 
several criteria in Sec. 617.22 (a), and compatibility with the program 
is covered by the various provisions of subpart C of this part which 
describe the types of training approvable under Sec. 617.22(a) and the 
limitations thereon.
    (ii) Basis for application. Whether training is feasible or 
appropriate at any given time is determined by finding whether, at that 
time, training suitable for the worker is available, the training is 
approvable under subpart C of this part including the criteria in Sec. 
617.22(a), the worker is so situated as to be able to take full 
advantage of the training and satisfactorily complete the training, full 
funding for the training is available from one or more sources in 
accordance with Sec. Sec. 617.24 and 617.25, the worker has the 
financial resources to complete the training when the duration of the 
training program exceeds the worker's eligibility for TRA, and the 
training will commence within 30 days of approval.
    (2) Particular applications. The reasons for any determination that 
training is not feasible or is not appropriate shall be in accord with 
the following:
    (i) Not feasible because--
    (A) The beginning date of approved training is beyond 30 days, as 
required by the definition for ``Enrolled in training'' in Sec. 
617.11(a)(2)(vii)(D),
    (B) Training is not reasonably available to the individual,
    (C) Training is not available at a reasonable cost,
    (D) Funds are not available to pay the total costs of training, or
    (E) Personal circumstances such as health or financial resources, 
preclude participation in training or satisfactory completion of 
training,
    (F) Other (explain).
    (ii) Not appropriate because--
    (A)(1) The firm from which the individual was separated plans to 
recall the individual within the reasonably foreseeable future (State 
agencies must verify planned recalls with the employer),
    (2) Planned recall. For the purpose of determining whether the 
recall or reemployment of an individual is reasonably foreseeable (for 
the purposes of this section and Sec. 617.22), either a specific or 
general type of recall (as set out) shall be deemed to be sufficient.
    (i) Specific recall. A specific recall is where an individual or 
group of individuals who was separated from employment is identified and 
notified by the employer to return to work within a specified time 
period.
    (ii) General recall. A general recall is where the employer 
announces an intention to recall an individual or group of individuals, 
or by other action reasonably signals an intent to recall, without 
specifying any certain date or specific time period.
    (iii) Reasonably foreseeable. For purposes of determining whether 
training should be denied and a training waiver granted, because of a 
planned recall that is reasonably foreseeable, such a planned recall 
includes a specific recall and also includes a general recall (as 
defined in paragraph (b)(2)(ii)(A)(2) of this section) if the general 
recall in each individual's case is reasonably expected to occur before 
the individual exhausts eligibility for any regular UI payments for 
which the individual is or may become entitled. A general recall, in 
which the timing of the recall is reasonably expected to occur after the 
individual's exhaustion of any regular UI

[[Page 116]]

to which the individual is or may become entitled, shall not be treated 
as precluding approval of training, but shall be treated as any other 
worker separation for these purposes.
    (B) The duration of training suitable for the individual exceeds the 
individual's maximum entitlement to basic and additional TRA payments 
and the individual cannot assure financial responsibility for completing 
the training program,
    (C) The individual possesses skills for ``suitable employment'' and 
there is a reasonable expectation of employment in the foreseeable 
future, or
    (D) Other (explain).
    (3) Waivers and able and available. An individual who has been 
furnished a written notice of waiver under paragraph (a)(2) of this 
section (or denial of waiver under paragraph (a)(3) of this section) 
shall be subject to all of the requirements of Sec. 617.17(a), which 
shall continue until the individual is enrolled in a training program as 
required by paragraph (a)(2)(vii) of Sec. 617.11.
    (c) Waiver review and revocations. (1) State agencies must have a 
procedure for reviewing regularly (i.e., every 30 days or less) all 
waivers issued under this section to individuals, to ascertain that the 
conditions upon which the waivers were granted continue to exist. In any 
case in which the conditions have changed--i.e., training has become 
feasible and appropriate--then the waiver must be revoked, and a written 
notice of revocation shall be furnished to the individual involved.
    (2) In addition to the periodic reviews required by paragraph (c)(1) 
of this section, State agencies must have a procedure for revoking 
waivers in individual cases promptly whenever a change in circumstances 
occurs. For example, a written notice of revocation shall be issued to 
the individual concurrent with the approval of the training in which the 
individual has enrolled (if such training is scheduled to commence 
within 30 days), and shall not be issued prior to such approval.
    (3) State agencies may incorporate a revocation section in the 
waiver form or on a separate revocation form. Any determination under 
paragraph (c) of this section shall be a determination to which 
Sec. Sec. 617.50 and 617.51 apply. The information included in a 
written notice of revocation issued under this paragraph (c) shall 
include all of the information required for written notices issued under 
paragraph (a)(2) of this section.
    (d) Recordkeeping and reporting. (1) State agencies must develop 
procedures for compiling and reporting on the number of waivers issued 
and revoked, by reason, as specified in paragraphs (b) and (c) of this 
section, and report such data to the Department of Labor as requested by 
the Department.
    (2) State agencies are not required to forward copies of individual 
waiver and revocation notices to the Department of Labor, unless 
specifically requested by the Department. However, each State agency 
shall retain a copy of every individual waiver and revocation notice 
issued by the State, for such period of time as the Department requires.

(Approved by the Office of Management and Budget under control number 
1205-0016)

[59 FR 932, Jan. 6, 1994]



                     Subpart C_Reemployment Services



Sec. 617.20  Responsibilities for the delivery of reemployment services.

    (a) State agency referral. Cooperating State agencies shall be 
responsible for:
    (1) Advising each adversely affected worker to apply for training 
with the State agency responsible for reemployment services, while the 
worker is receiving UI payments, and at the time the individual files an 
initial claim for TRA; and
    (2) Referring each adversely affected worker to the State agency 
responsible for training and other reemployment services in a timely 
manner.
    (b) State agency responsibilities. The responsibilities of 
cooperating State agencies under subpart C of this part include, but are 
not limited to:
    (1) Interviewing each adversely affected worker regarding suitable 
training opportunities reasonably available to each individual under 
subpart C of this part, reviewing such opportunities with each 
individual, informing each

[[Page 117]]

individual of the requirement for participation in training as a 
condition for receiving TRA, and accepting each individual's application 
for training. Such training may be approved for any adversely affected 
worker at any time after a certification is issued and the worker is 
determined to be covered without regard to whether the worker has 
exhausted all rights to unemployment insurance;
    (2) Registering adversely affected workers for work;
    (3) Informing adversely affected workers of the reemployment 
services and allowances available under the Act and this Part 617, the 
application procedures, the filing date requirements for such 
reemployment services and the training requirement for receiving TRA;
    (4) Determining whether suitable employment, as defined in Sec. 
617.22(a)(1), is available;
    (5) Providing counseling, testing, placement, and supportive 
services;
    (6) Providing or procuring self-directed job search training, when 
necessary;
    (7) Providing training, job search and relocation assistance;
    (8) Developing a training plan with the individual;
    (9) Determining which training institutions offer training programs 
at a reasonable cost and with a reasonable expectation of employment 
following the completion of such training, and procuring such training;
    (10) Documenting the standards and procedures used to select 
occupations and training institutions in which training is approved;
    (11) Making referrals and approving training programs;
    (12) Monitoring the progress of workers in approved training 
programs;
    (13) Developing, and periodically reviewing and updating 
reemployment plans for adversely affected workers;
    (14) Developing and implementing a procedure for reviewing training 
waivers and revocations at least every 30 days to determine whether the 
conditions under which they are issued have changed; and
    (15) Coordinating the administration and delivery of employment 
services, benefits, training, and supplemental assistance for adversely 
affected workers with programs under the Act and under Title III of the 
Job Training Partnership Act.

[59 FR 934, Jan. 6, 1994]



Sec. 617.21  Reemployment services and allowances.

    Reemployment services and allowances shall include, as appropriate, 
the services and allowances as set forth in this section, provided that 
those services included within the scope of paragraphs (a) through (e) 
of this section shall be provided for under any other Federal law other 
than the Act.
    (a) Employment registration. To ensure, so far as practical, that 
individuals are placed in jobs which utilize their highest skills and 
that applicants qualified for job openings are appropriately referred, 
applications for registration shall be taken on adversely affected 
workers who apply for reemployment services.
    (b) Employment counseling. When local job opportunities are not 
readily available, counseling shall be used to assist individuals to 
gain a better understanding of themselves in relation to the labor 
market so that they can more realistically choose or change an 
occupation or make a suitable job adjustment.
    (c) Vocational testing. Testing shall be used to determine which 
individual skills or potentials can be developed by appropriate 
training.
    (d) Job development. A State agency shall develop jobs for 
individuals by soliciting job interviews from public or private 
employers and shall work with potential employers to customize or 
restructure particular jobs to meet individual needs.
    (e) Supportive services. Supportive services shall be provided so 
individuals can obtain or retain employment or participate in employment 
and training programs leading to eventual placement in permanent 
employment. Such services may include work orientation, basic education, 
communication skills, child care, and any other services necessary to 
prepare an individual for full employment in accordance with the 
individual's capabilities and employment opportunities.

[[Page 118]]

    (f) On-the-job training (OJT). OJT is training, in the public or 
private sector, and may be provided to an individual who meets the 
conditions for approval of training, as provided in Sec. 617.22(a), and 
who has been hired by the employer, while the individual is engaged in 
productive work which provides knowledge or skills essential to the full 
and adequate performance of the job.
    (g) Classroom training. This training activity is any training of 
the type normally conducted in a classroom setting, including vocational 
education, and may be provided to individuals when the conditions for 
approval of training are met, as provided in Sec. 617.22(a), to impart 
technical skills and information required to perform a specific job or 
group of jobs. Training designed to enhance the employability of 
individuals by upgrading basic skills, through the provision of courses 
such as remedial education or English-as-a-second-language, shall be 
considered as remedial education approvable under Sec. 617.22(a) if the 
criteria for approval of training under Sec. 617.22(a) are met.
    (h) Self-directed job search. Self-directed job search programs 
shall be initiated to assist individuals in developing skills and 
techniques for finding a job. Such programs vary in design and operation 
and call for a carefully structured approach to individual needs. There 
are basic elements or activities common to all approaches. These 
include:
    (1) Job search workshop. A short (1-3 days) seminar designed to 
provide participants with knowledge on how to find jobs, including labor 
market information, applicant resume writing, interviewing techniques, 
and finding job openings.
    (2) Job finding club. Encompasses all elements of the Job Search 
Workshop plus a period (1-2 weeks) of structured, supervised application 
where participants actually seek employment.
    (i) Job search allowances. The individual, if eligible, shall be 
provided job search allowances under subpart D of this part 617 to 
defray the cost of seeking employment outside of the commuting area.
    (j) Relocation allowances. The individual, if eligible, shall be 
provided relocation allowances under subpart E of this part 617 to 
defray the cost of moving to a new job outside of the commuting area.

[51 FR 45848, Dec. 22, 1986, as amended at 59 FR 934, Jan. 6, 1994]



Sec. 617.22  Approval of training.

    (a) Conditions for approval. Training shall be approved for an 
adversely affected worker if the State agency determines that:
    (1) There is no suitable employment (which may include technical and 
professional employment) available for an adversely affected worker.
    (i) This means that for the worker for whom approval of training is 
being considered under this section, no suitable employment is available 
at that time for that worker, either in the commuting area, as defined 
in Sec. 617.3(k), or outside the commuting area in an area in which the 
worker desires to relocate with the assistance of a relocation allowance 
under subpart E of this part, and there is no reasonable prospect of 
such suitable employment becoming available for the worker in the 
foreseeable future. For the purposes of paragraph (a)(1) of this section 
only, the term ``suitable employment'' means, with respect to a worker, 
work of a substantially equal or higher skill level than the worker's 
past adversely affected employment, and wages for such work at not less 
that 80 percent of the worker's average weekly wage.
    (2) The worker would benefit from appropriate training. (i) This 
means that there is a direct relationship between the needs of the 
worker for skills training or remedial education and what would be 
provided by the training program under consideration for the worker, and 
that the worker has the mental and physical capabilities to undertake, 
make satisfactory progress in, and complete the training. This includes 
the further criterion that the individual will be job ready on 
completion of the training program.
    (3) There is a reasonable expectation of employment following 
completion of such training. (i) This means that, for that worker, given 
the job market conditions expected to exist at the time of

[[Page 119]]

the completion of the training program, there is, fairly and objectively 
considered, a reasonable expectation that the worker will find a job, 
using the skills and education acquired while in training, after 
completion of the training. Any determination under this criterion must 
take into account that ``a reasonable expectation of employment'' does 
not require that employment opportunities for the worker be available, 
or offered, immediately upon the completion of the approved training. 
This emphasizes, rather than negates, the point that there must be a 
fair and objective projection of job market conditions expected to exist 
at the time of completion of the training.
    (4) Training approved by the Secretary is reasonably available to 
the worker from either governmental agencies or private sources (which 
may include area vocational education schools, as defined in section 
195(2) of the Vocational Education Act of 1963, and employers). (i) This 
means that training is reasonably accessible to the worker within the 
worker's commuting area at any governmental or private training (or 
education) provider, particularly including on-the-job training with an 
employer, and it means training that is suitable for the worker and 
meets the other criteria in paragraph (a) of this section. It also means 
that emphasis must be given to finding accessible training for the 
worker, although not precluding training outside the commuting area if 
none is available at the time within the worker's commuting area. 
Whether the training is within or outside the commuting area, the 
training must be available at a reasonable cost as prescribed in 
paragraph (a)(6) of this section.
    (ii) In determining whether or not training is reasonably available, 
first consideration shall be given to training opportunities available 
within the worker's normal commuting area. Training at facilities 
outside the worker's normal commuting area should be approved only if 
such training is not available in the area or the training to be 
provided outside the normal commuting area will involve less charges to 
TAA funds.
    (5) The worker is qualified to undertake and complete such training. 
(i) This emphasizes the worker's personal qualifications to undertake 
and complete approved training. Evaluation of the worker's personal 
qualifications must include the worker's physical and mental 
capabilities, educational background, work experience and financial 
resources, as adequate to undertake and complete the specific training 
program being considered.
    (ii) Evaluation of the worker's financial ability shall include an 
analysis of the worker's remaining weeks of UI and TRA payments in 
relation to the duration of the training program. If the worker's UI and 
TRA payments will be exhausted before the end of the training program, 
it shall be ascertained whether personal or family resources will be 
available to the worker to complete the training. It must be noted on 
the worker's record that financial resources were discussed with the 
worker before the training was approved.
    (iii) When adequate financial resources will not be available to the 
worker to complete a training program which exceeds the duration of UI 
and TRA payments, the training shall not be approved and consideration 
shall be given to other training opportunities available to the worker.
    (6) Such training is suitable for the worker and available at a 
reasonable cost. (i) Such training means the training being considered 
for the worker. Suitable for the worker means that paragraph (a)(5) of 
this section is met and that the training is appropriate for the worker 
given the worker's capabilities, background and experience.
    (ii) Available at a reasonable cost means that training may not be 
approved at one provider when, all costs being considered, training 
substantially similar in quality, content and results can be obtained 
from another provider at a lower total cost within a similar time frame. 
It also means that training may not be approved when the costs of the 
training are unreasonably high in comparison with the average costs of 
training other workers in similar occupations at other providers. This 
criterion also requires taking into consideration the funding of 
training costs from sources other than TAA

[[Page 120]]

funds, and the least cost to TAA funding of providing suitable training 
opportunities to the worker. Greater emphasis will need to be given to 
these elements in determining the reasonable costs of training, 
particularly in view of the requirements in Sec. 617.11(a) (2) and (3) 
that TRA claimants be enrolled in and participate in training.
    (iii) For the purpose of determining reasonable costs of training, 
the following elements shall be considered:
    (A) Costs of a training program shall include tuition and related 
expenses (books, tools, and academic fees), travel or transportation 
expenses, and subsistence expenses;
    (B) In determining whether the costs of a particular training 
program are reasonable, first consideration must be given to the lowest 
cost training which is available within the commuting area. When 
training, substantially similar in quality, content and results, is 
offered at more than one training provider, the lowest cost training 
shall be approved; and
    (C) Training at facilities outside the worker's normal commuting 
area that involves transportation or subsistence costs which add 
substantially to the total costs shall not be approved if other 
appropriate training is available.
    (b) Allowable amounts for training. In approving a worker's 
application for training, the conditions for approval in paragraph (a) 
of this section must be found to be satisfied, including assurance that 
the training is suitable for the worker, is at the lowest reasonable 
cost, and will enable the worker to obtain employment within a 
reasonable period of time. An application for training shall be denied 
if it is for training in an occupational area which requires an 
extraordinarily high skill level and for which the total costs of the 
training are substantially higher than the costs of other training which 
is suitable for the worker.
    (c) Previous approval of training under State law. Training 
previously approved for a worker under State law or other authority is 
not training approved under paragraph (a) of this section. Any such 
training may be approved under paragraph (a) of this section, if all of 
the requirements and limitations of paragraph (a) of this section and 
other provisions of Subpart C of this part are met, but such approval 
shall not be retroactive for any of the purposes of this Part 617, 
including payment of the costs of the training and payment of TRA to the 
worker participating in the training. However, in the case of a 
redetermination or decision reversing a determination denying approval 
of training, for the purposes of this Part 617 such redetermination or 
decision shall be given effect retroactive to the issuance of the 
determination that was reversed by such redetermination or decision; but 
no costs of training may be paid unless such costs actually were 
incurred for training in which the individual participated, and no 
additional TRA may be paid with respect to any week the individual was 
not actually participating in the training.
    (d) Applications. Applications for, selection for, approval of, or 
referral to training shall be filed in accordance with this subpart C 
and on forms which shall be furnished to individuals by the State 
agency.
    (e) Determinations. Selection for, approval of, or referral of an 
individual to training under this subpart C, or a decision with respect 
to any specific training or non-selection, non-approval, or non-referral 
for any reason shall be a determination to which Sec. Sec. 617.50 and 
617.51 apply.
    (f) Length of training and hours of attendance. The State agency 
shall determine the appropriateness of the length of training and the 
hours of attendance as follows:
    (1) The training shall be of suitable duration to achieve the 
desired skill level in the shortest possible time;
    (2) Length of training. The maximum duration for any approvable 
training program is 104 weeks (during which training is conducted) and 
no individual shall be entitled to more than one training program under 
a single certification.
    (3) Training program. (i) For purposes of this Part 617, a training 
program may consist of a single course or group of courses which is 
designed and approved by the State agency for an individual to meet a 
specific occupational goal.

[[Page 121]]

    (ii) When an approved training program involves more than one course 
and involves breaks in training (within or between courses, or within or 
between terms, quarters, semesters and academic years), all such breaks 
in training are subject to the ``14-day break in training'' provision in 
Sec. 617.15(d), for purposes of receiving TRA payments. An individual's 
approved training program may be amended by the State agency to add a 
course designed to satisfy unforeseen needs of the individual, such as 
remedial education or specific occupational skills, as long as the 
length of the amended training program does not exceed the 104-week 
training limitation in paragraph (f)(2) of this section.
    (4) Full-time training. Individuals in TAA approved training shall 
attend training full time, and when other training is combined with OJT 
attendance at both shall be not less than full-time. The hours in a day 
and days in a week of attendance in training shall be full-time in 
accordance with established hours and days of training of the training 
provider.
    (g) Training of reemployed workers. Adversely affected workers who 
obtain new employment which is not suitable employment, as described in 
Sec. 617.22(a)(1), and have been approved for training may elect to:
    (1) Terminate their jobs, or
    (2) Continue in full- or part-time employment, to undertake such 
training, and shall not be subject to ineligibility or disqualification 
for UI or TRA as a result of such termination or reduction in 
employment.
    (h) Fees prohibited. In no case shall an individual be approved for 
training under this subpart C for which the individual is required to 
pay a fee or tuition.
    (i) Training outside the United States. In no case shall an 
individual be approved for training under this subpart C which is 
conducted totally or partially at a location outside the United States.

[51 FR 45848, Dec. 22, 1986, as amended at 53 FR 32350, Aug. 24, 1988; 
59 FR 935, Jan. 6, 1994]



Sec. 617.23  Selection of training methods and programs.

    (a) State agency responsibilities. If suitable employment as 
described in Sec. 617.22(a)(1), is not otherwise available to an 
individual or group of individuals, it is the responsibility of the 
State agency to explore, identify, develop and secure training 
opportunities and to establish linkages with other public and private 
agencies, Private Industry Councils (PICs), employers, and Job Training 
Partnership Act (JTPA) service delivery area (SDA) grant recipients, as 
appropriate, which return adversely affected workers to employment as 
soon as possible.
    (b) Firm-specific retraining program. To the extent practicable 
before referring an adversely affected worker to approved training, the 
State agency shall consult with the individual's adversely affected firm 
and certified or recognized union, or other authorized representative, 
to develop a retraining program that meets the firm's staffing needs and 
preserves or restores the employment relationship between the individual 
and the firm. The fact that there is no need by other employers in the 
area for individuals in a specific occupation for which training is 
undertaken shall not preclude the development of an individual 
retraining program for such occupation with the adversely affected firm.
    (c) Methods of training. Adversely affected workers may be provided 
either one or a combination of the following methods of training:
    (1) Insofar as possible, priority will be given to on-the-job 
training, which includes related education necessary to acquire skills 
needed for a position within a particular occupation, in the firm or 
elsewhere pursuant to Sec. Sec. 617.24, 617.25, and 617.26, including 
training for which the firm pays the costs. This ensures that on-the-job 
training provides the skills necessary for the individual to obtain 
employment in an occupation rather than a particular job at a specific 
site; and
    (2) Institutional training, with priority given to providing the 
training in public area vocational education schools if it is determined 
that such

[[Page 122]]

schools are at least as effective and efficient as other institutional 
alternatives, pursuant to Sec. Sec. 617.24, 617.25, and 617.26.
    (d) Standards and procedures. The State agency shall document the 
standards and procedures used to select occupations and training 
institutions in which training is approved. Such occupations and 
training shall offer a reasonable expectation (not necessarily a prior 
guarantee) of employment following such training.
    (1) Standards. The State agency shall approve training in 
occupations for which an identifiable demand exists either in the local 
labor market or in other labor markets for which relocation planning has 
been implemented. If practicable, placement rates and employer reviews 
of curriculum shall be used as guides in the selection of training 
institutions.
    (2) Procedures. In determining the types of training to be provided, 
the State agency shall consult with local employers, appropriate labor 
organizations, Job Service Improvement Program Committees, JTPA SDA 
grant recipients, PICs, local educational organizations, local 
apprenticeship programs, local advisory councils established under the 
Carl D. Perkins Vocational Education Act, and post-secondary 
institutions.
    (3) Exclusions. In determining suitable training the State agency 
shall exclude certain occupations, where:
    (i) Lack of employment opportunities exist as substantiated by job 
orders and other pertinent labor market data; or
    (ii) The occupation provides no reasonable expectation of permanent 
employment.



Sec. 617.24  Preferred training.

    Training programs that may be approved under Sec. 617.22(a) 
include, but are not limited to--
    (a) On-the-job training,
    (b) Any training program provided by a State pursuant to Title III 
of the Job Training Partnership Act,
    (c) Any training program approved by a private industry council 
established under the Job Training Partnership Act,
    (d) Any program of remedial education,
    (e) Any training program (other than a training program described in 
paragraph (c) of Sec. 617.25) for which all, or any portion, of the 
costs of training the worker are paid--
    (1) Under any other Federal or State program other than this Subpart 
C, or
    (2) From any other source other than this section, but not including 
sources personal to the individual, such as self, relatives, or friends, 
and
    (f) Any other training program approved by the Department.

[59 FR 936, Jan. 6, 1994]



Sec. 617.25  Limitations on training under Subpart C of this part.

    The second sentence of amended section 236(a)(1) of the Act provides 
that an adversely affected worker shall be entitled to have payment of 
the costs of training approved under the Act paid on the worker's 
behalf, subject, however, ``to the limitations imposed by'' section 236. 
The limitations in section 236 which are implemented in this section 
concern the restrictions on approval of training which are related 
directly or indirectly to the conditions on training which are 
approvable or on the funding of training costs.
    (a) On-the-job training. The costs of on-the-job training approved 
Subpart C of this part for a worker, which are paid from TAA funds, 
shall be paid in equal monthly installments. Such costs may be paid from 
TAA funds, and such training may be approved under subpart C of this 
part, however, only if the State agency determines that:
    (1) No currently employed individual is displaced by such eligible 
worker, including partial displacement such as a reduction in the hours 
of non-overtime work, wages, or employment benefits;
    (2) Such training does not impair existing contracts for services or 
collective bargaining agreements;
    (3) In the case of training which would be inconsistent with the 
terms of a collective bargaining agreement, written concurrence has been 
obtained from the concerned labor organization;
    (4) No other individual is on layoff from the same or any 
substantially equivalent job for which such eligible worker is being 
trained;

[[Page 123]]

    (5) The employer has not terminated the employment of any regular 
employee or otherwise reduced the work force with the intention of 
filling the vacancy so created by hiring the eligible worker;
    (6) The job for which the eligible worker is being trained is not 
being created in a promotional line that will infringe in any way upon 
the promotional opportunities of currently employed individuals;
    (7) Such training is not for the same occupation from which the 
worker was separated and with respect to which such worker's group was 
certified pursuant to section 222 of the Act;
    (8) The employer certifies to the State agency that the employer 
will continue to employ the eligible worker for at least 26 weeks after 
completing the training if the worker desires to continue such 
employment and the employer does not have due cause to terminate such 
employment;
    (9) The employer has not received payment under this Subpart C or 
under any other Federal law for any other on-the-job training provided 
by such employer which failed to meet the requirements of paragraphs 
(a)(1) through (a)(6) of this section or such other Federal law; and
    (10) The employer has not taken, at any time, any action which 
violated the terms of any certification described in paragraph (a)(8) of 
this section made by the employer with respect to any other on-the-job 
training provided by the employer for which the employer has received a 
payment under Subpart C of this part (or the prior provisions of Subpart 
C of this part).
    (b) Other authority and restrictions on funding--
    (1) In general. Section 236(a) contains several provisions which 
allow the costs of a training program approved under the Act to be 
paid--
    (i) Solely from TAA funds,
    (ii) Solely from other public or private funds, or
    (iii) Partly from TAA funds and partly from other public or private 
funds,

but also precludes the use of TAA funds or funds under another Federal 
law where such use of funds would result in duplication of payment of 
training costs. Those authorities and restrictions are spelled out in 
paragraph (b) of this section: Provided, that, private funds may not 
include funds from sources personal to the individual, such as self, 
relatives, or friends.
    (2) Section 236(a)(5)(E) of the Act. (i) In general. Paragraph 
(5)(E) of section 236(a) of the Act specifies one of the types of 
training programs approvable under the Act, as including a program 
(other than a training program described in section 236(a)(7) (paragraph 
(b)(5) of this section)) for which all, or any portion, of the costs of 
the training program are paid--
    (A) Under any Federal or State program other than the Act, or
    (B) From any source other than TAA funds.
    (ii) Application. Paragraph (E) of section 236(a)(5) of the Act thus 
authorizes prearrangements between cooperating State agencies 
administering the TAA program and the authorities administering any 
other Federal, State, or private funding source, to agree upon any mix 
of TAA funds and other funds for paying the costs of a training program 
approved under Subpart C of this part. Any such prearrangement must 
contain specific commitments from the other authorities to pay the costs 
they agree to assume.
    (3) Section 236(a)(6) of the Act. (i) In general. Paragraph (6) of 
section 236(a) of the Act is related to section 236(a)(5)(E) in 
providing that the costs of a training program approved under the Act 
are not required to be paid from TAA funds to the extent that such costs 
are paid under any Federal or State program other than the Act or from 
any source other than the Act.
    (ii) Application. (A) Although paragraph (6) of section 236(a) of 
the Act is expressed in terms of the costs not being required to be paid 
from TAA funds, it authorizes the mixing of TAA funds and funds from any 
other Federal, State or private source. Therefore, sharing the future 
costs of training is authorized where prior costs were paid from another 
Federal, State or private source, but this does not authorize 
reimbursement from TAA funds of any training costs which were incurred 
and for which payment became due prior to the approval of the training 
program under Subpart C of this

[[Page 124]]

part. In utilizing the authority under paragraph (b)(3) of this section 
for sharing training costs, prearrangements shall be entered into as 
required under paragraph (b)(2) of this section before any TAA funds are 
obligated.
    (B) Paragraph (6) of section 236(a) contains a special restriction 
on the authority derived thereunder to use TAA funds in sharing training 
costs. Therefore, before approving any training program under Subpart C 
of this part, which may involve sharing of the training costs under the 
authority of paragraph (b)(3) of this section, the cooperating State 
agencies for the TAA program shall require the worker to enter into a 
written agreement with the State under which TAA funds will not be 
applied for or used to pay any portion of the costs of the training the 
worker has reason to believe will be paid by any other governmental or 
private source.
    (4) Section 236(a)(4) of the Act. (i) In general. (A) Paragraph (4) 
of section 236(a) of the Act (paragraph (3) of section 236(a) before 
August 23, 1988) continues to provide, as it did before the addition of 
paragraphs (5)(E), (6), and (7) to section 236(a), that:
    (1) When the costs of training are paid from TAA funds under subpart 
C of this part, no other payment for such costs of training may be made 
under any other Federal law; and
    (2) When the payment of the costs of training has already been made 
under any other Federal law, or the costs are reimbursable under any 
other Federal law and a portion of the costs has already been paid under 
such other Federal law, payment of such training costs may not be made 
from TAA funds.
    (B) Paragraph (4) of section 236(a) also requires that: The 
provisions of paragraphs (b)(4)(i) (A)(1) and (A)(2) of this section 
shall not apply to, or take into account, any funds provided under any 
other provision of Federal law which are used for any purpose other than 
the direct payment of the identical costs incurred in training the 
adversely affected worker under the TAA Program, even if such other use 
has the effect of indirectly paying or reducing any portion of the costs 
involved in training the adversely affected worker.
    (ii) Application. (A) Although the prohibition on duplicate payments 
in the first part of section 236(a)(4) remains fully implemented in this 
section, the second part of section 236(a)(4) on the sharing of costs 
from TAA funds and other Federal fund sources is modified by the 
explicit provisions of paragraphs (5)(E) and (6) of section 236(a), as 
set forth in paragraphs (b)(2) and (b)(3) of this section.
    (B) When the direct costs of a training program approvable under 
subpart C of this part are payable from TAA funds and are also wholly or 
partially payable under another Federal law, or under any State law or 
from private, nongovernmental sources, the TAA Program agencies shall 
establish procedures which ensure that TAA funds shall not be utilized 
to duplicate funds available from another source, but this preclusion of 
duplication does not prohibit and shall not discourage sharing of costs 
under prearrangements authorized under paragraphs (b)(2) and (b)(3) of 
this section.
    (C)(1) Therefore, pursuant to paragraph (4) of section 236(a), 
paragraph (b)(4) of this section continues to prohibit duplicate payment 
of training costs, which is consistent with the general prohibition 
expressed in subpart C of this part, against any use of TAA funds to 
duplicate payment of training costs in any circumstances. Paragraph 
(b)(4) of this section also continues to prohibit taking into account, 
in determining whether training costs are payable from TAA funds, any 
payments to the worker under any other Federal law which may have the 
effect of indirectly paying all or a portion of the training costs. Such 
indirect payments include Veterans Educational Assistance, Pell Grants, 
and Supplemental Educational Opportunity Grants, which are paid to the 
individual. However, any payments to the individual under these programs 
are deductible from TRA payable to the individual under Sec. 
617.13(c)(2).
    (2) When payments of Veterans Educational Assistance, Pell Grants, 
and Supplemental Educational Opportunity Grants are made to the training 
provider, instead of the individual, and are used for training costs, 
such payments shall be taken into account as direct

[[Page 125]]

payment of the training costs under other Federal law for the purposes 
of this section.
    (5) Section 236(a)(7) of the Act. (i) In general. Paragraph (7) of 
section 236(a) of the Act provides that a training program shall not be 
approved under the Act if--
    (A) all or a portion of the costs of such training program are paid 
under any nongovernmental plan or program,
    (B) the adversely affected worker has a right to obtain training or 
funds for training under such plan or program, and
    (C) such plan or program requires the worker to reimburse the plan 
or program from funds provided under the Act, or from wages paid under 
such training program, for any portion of the costs of such training 
program paid under the plan or program.
    (ii) Application. Paragraph (7) of section 236(a), which is 
implemented in paragraph (b)(5) of this section, reinforces the 
prohibition in Sec. 617.22(h) against approval of a training program 
under subpart C of this part if the worker is required to pay a fee or 
tuition. The provisions of paragraph (b) and paragraph (h) of this 
section shall be given effect as prohibiting the approval under subpart 
C of this part of any training program if the worker would be requested 
or required, at any time or under any circumstances, to pay any of the 
costs of a training program, however small, from any TAA funds given to 
the worker or from any other funds belonging to the worker from any 
source whatever. Aside from this stringent limitation, however, 
paragraph (7) of section 236(a) of the Act implicitly authorizes 
training approved under this subpart C to be wholly or partly funded 
from nongovernmental (i.e., employer, union or other private) sources.

[59 FR 936, Jan. 6, 1994]



Sec. 617.26  Liable and agent State responsibilities.

    (a) Liable State. The liable State means, for any individual, the 
State which administers the applicable State law (as determined under 
Sec. 617.16). The liable State is responsible for making all 
determinations, redeterminations, and decisions on appeals on all claims 
for program benefits under this part 617, including waivers and 
revocations of waivers pursuant to Sec. 617.19, subsistence payments 
pursuant to Sec. 617.27, and transportation payments pursuant to Sec. 
617.28. Upon receiving a copy of a certification issued by the 
Department, with respect to an affected firm in the State, the liable 
State also is responsible for publishing newspaper notices as provided 
in Sec. 617.4(d), furnishing information and assistance to workers as 
provided in Sec. 617.4, furnishing reemployment services under subparts 
C, D, and E of this part to all eligible workers covered by such 
certification, and carrying out other activities and functions required 
by the State's Agreement with the Secretary entered into pursuant to 
Sec. 617.59. All determinations pertaining to any individual's 
eligibility for or entitlement to any program benefit under this part 
617 shall be subject to the provisions of Sec. Sec. 617.50 and 617.51.
    (b) Agent State. Agent State means, for any individual, any State 
other than the liable State for the individual. Agent States shall be 
responsible for cooperating fully with the liable State and assisting 
the liable State in carrying out its activities and functions. These 
agent State responsibilities shall be part of the activities and 
functions undertaken by the agent States under their Agreements entered 
into pursuant to Sec. 617.59. Agent State responsibilities include 
cooperating with liable States in taking applications and claims for 
TAA, providing reemployment services to certified workers in accordance 
with subparts B, C, D and E of this part, providing interstate claimants 
with TAA program information and assistance, assisting applicants or 
claimants to file claims for TAA program benefits and services, 
cooperating with the liable State by providing information needed to 
issue determinations, redeterminations, and decisions on appeals, and 
procuring and paying the cost of any approved training, including 
subsistence and transportation costs, according to determinations issued 
by the liable State.

[59 FR 938, Jan. 6, 1994]

[[Page 126]]



Sec. 617.27  Subsistence payments.

    (a) Eligibility. A trainee under this subpart C shall be afforded 
supplemental assistance necessary to pay costs of separate maintenance 
when the training facility is located outside the commuting area, but 
may not receive such supplemental assistance for any period for which 
the trainee receives such a payment under the JTPA, or any other law, or 
for any day referred to under Sec. 617.28(c)(3) pursuant to which a 
transportation allowance is payable to the individual, or to the extent 
the individual is entitled to be paid or reimbursed for such expenses 
from any other source.
    (b) Amount. Subsistence payments shall not exceed the lesser of:
    (1) The individual's actual per diem expenses for subsistence; or
    (2) 50 percent of the prevailing per diem rate authorized under the 
Federal travel regulations (see 41 CFR part 101-7) for the locale of the 
training.
    (c) Applications. Applications for subsistence payments shall be 
filed in accordance with this subpart C and on forms which shall be 
furnished to trainees by the State agency. Such payments shall be made 
on completion of a week of training, except that at the beginning of a 
training project a State agency may advance a payment for a week if it 
determines that such advance is necessary to enable a trainee to accept 
training. An adjustment shall be made if the amount of an advance is 
less or more than the amount to which the trainee is entitled under 
paragraph (b) of this section. A determination as to an application made 
under this section shall be subject to Sec. Sec. 617.50 and 617.51.
    (d) Unexcused absences. No subsistence payment shall be made to an 
individual for any day of unexcused absence as certified by the 
responsible training facility.



Sec. 617.28  Transportation payments.

    (a) Eligibility. A trainee under this subpart C shall be afforded 
supplemental assistance necessary to pay transportation expenses if the 
training is outside the commuting area, but may not receive such 
assistance if transportation is arranged for the trainee as part of a 
group and paid for by the State agency or to the extent the trainee 
receives a payment of transportation expenses under another Federal law, 
or to the extent the individual is entitled to be paid or reimbursed for 
such expenses from any other source.
    (b) Amount. A transportation allowance shall not exceed the lesser 
of:
    (1) The actual cost for travel by the least expensive means of 
transportation reasonably available between the trainee's home and the 
training facility; or
    (2) The cost per mile at the prevailing mileage rate authorized 
under the Federal travel regulations. See 41 CFR part 101-7.
    (c) Travel included. Travel for which a transportation allowance 
shall be paid includes travel:
    (1) At the beginning and end of the training program;
    (2) When the trainee fails for good cause, as described in Sec. 
617.18(b)(2), to complete the training program; and
    (3) For daily commuting, in lieu of subsistence, but not exceeding 
the amount otherwise payable as subsistence for each day of commuting.
    (d) Applications. Applications for transportation payments shall be 
filed in accordance with this subpart C and on forms which shall be 
furnished to trainees by the State agency. Payments may be made in 
advance. An adjustment shall be made if the amount of an advance is less 
or more than the amount to which the trainee is entitled under paragraph 
(b) of this section. A determination as to an application made under 
this section shall be subject to Sec. Sec. 617.50 and 617.51.



Sec. 617.29  Application of EB work test.

    (a) Registration for employment. Adversely affected workers who have 
exhausted all rights to UI and who otherwise qualify for TRA under Sec. 
617.11, shall, except as provided in paragraph (b) of this section:
    (1) Register for work and be referred to work by the State agency in 
the same manner as required for EB claimants under the applicable State 
law provisions which are consistent with section 202(a)(3) of the 
Federal-State Extended Unemployment Compensation Act of 1970; and

[[Page 127]]

    (2) Be subject to the work test requirements for EB claimants under 
the applicable State law provisions which are consistent with section 
202(a)(3) of the Federal-State Extended Unemployment Compensation Act of 
1970.
    (b) Exceptions. Paragraph (a) of this section shall not apply to any 
week an individual is undergoing training approved under this subpart C.



                     Subpart D_Job Search Allowances



Sec. 617.30  General.

    A job search allowance shall be granted an adversely affected worker 
to assist the individual in securing a job within the United States as 
provided in this subpart D.



Sec. 617.31  Applications.

    (a) Forms. Applications for job search allowances shall be filed in 
accordance with this subpart D and on forms which shall be furnished to 
individuals by the State agency.
    (b) Submittal. An application may be submitted to a State agency at 
any time by an individual who has been totally or partially separated 
whether or not a certification covering the individual has been made. 
However, an application must be submitted to a State agency before the 
job search begins for the job search allowance to be granted, and the 
job search may not be approved until after the individual is covered 
under a certification.
    (c) Time limits. Notwithstanding paragraph (b) of this section, a 
job search allowance application may be approved only if submitted 
before:
    (1) The 365th day after the date of the certification under which 
the individual is covered, or the 365th day after the date of the 
individual's last total separation, whichever is later; or
    (2) The 182d day after the concluding date of training approved 
under subpart C of this part 617, or approved under the regulations 
superseded by this part 617.



Sec. 617.32  Eligibility.

    (a) Conditions. Job search allowance eligibility requires:
    (1) A timely filed application;
    (2) Total separation from adversely affected employment at the time 
the job search commences;
    (3) Registration with the State agency which shall furnish the 
individual such reemployment services as are appropriate under subpart C 
of this part 617.
    (4) A determination by the State agency that the individual has no 
reasonable expectation of securing suitable employment in the commuting 
area, and has a reasonable expectation of obtaining suitable employment 
of long-term duration outside the commuting area and in the area where 
the job search will be conducted. For the purposes of this section, the 
term ``suitable employment'' means suitable work as defined in Sec. 
617.3(kk) (1) or (2), whichever is applicable to the individual; and
    (5) Completion of the job search within a reasonable period not 
exceeding 30 days after the day on which the job search began.
    (b) Completion of job search. A job search is deemed completed when 
the individual either secures employment or has contacted each employer 
to whom referred by the State agency in connection with a job search.
    (c) Verification of employer contacts. The State agency shall verify 
contacts with employers certified by the individual.

[51 FR 45848, Dec. 22, 1986, as amended at 59 FR 938, Jan. 6, 1994]



Sec. 617.33  Findings required.

    (a) Findings by liable State. Before final payment of a job search 
allowance may be approved, the following findings shall be made by the 
liable State:
    (1) The individual meets the eligibility requirements for a job 
search allowance specified in Sec. 617.32(a) (1) through (4);
    (2) The application for a job search allowance was submitted by the 
individual within the time limits specified in Sec. 617.31(c); and
    (3) The individual completed the job search within the time limits 
stated in Sec. 617.32(a)(5), and the requirements of paragraphs (b) and 
(c) of Sec. 617.32 have been met.

[[Page 128]]

    (b) Agent State. (1) When an individual files an application for a 
job search allowance with respect to a job search conducted in a State 
other than the liable State, the State agency of the State in which the 
individual conducts the job search shall serve as the agent State and be 
responsible for assisting the individual in conducting the job search 
and in filing an application for a job search allowance with the liable 
State, and for assisting the liable State by furnishing to it any 
information required for the liable State's determination of the claim.
    (2) The agent State shall cooperate fully with the liable State in 
carrying out its activities and functions with regard to such 
applications.

[59 FR 938, Jan. 6, 1994]



Sec. 617.34  Amount.

    (a) Computation. The amount of a job search allowance shall be 90 
percent of the total costs of each of the following allowable 
transportation and subsistence items:
    (1) Travel. The more cost effective mode of travel reasonably 
available shall be approved by using:
    (i) The actual cost of round trip travel by the most economical 
public transportation the individual reasonably can be expected to take 
from the individual's residence to the area of job search; or
    (ii) The cost per mile at the prevailing mileage rate authorized 
under the Federal travel regulations (see 41 CFR part 101-7) for such 
roundtrip travel by the usual route from the individual's residence to 
the area of job search.
    (2) Lodging and meals. The cost allowable for lodging and meals 
shall not exceed the lesser of:
    (i) The actual cost to the individual of lodging and meals while 
engaged in the job search; or
    (ii) 50 percent of the prevailing per diem allowance rate authorized 
under the Federal travel regulations (see 41 CFR part 101-7) for the 
locality where the job search is conducted.
    (b) Limit. The total job search allowances paid to an individual 
under a certification may not exceed $800, regardless of the number of 
job searches undertaken by the individual. The amounts otherwise payable 
under paragraph (a) of this section shall be reduced by any amounts the 
individual is entitled to be paid or reimbursed for such expenses from 
any other source.

[51 FR 45848, Dec. 22, 1986, as amended at 51 FR 45869, Dec. 22, 1986; 
53 FR 32351, Aug. 24, 1988; 59 FR 939, Jan. 6, 1994]



Sec. 617.35  Time and method of payment.

    (a) Determinations. A State agency shall promptly make and record 
determinations necessary to assure entitlement of an individual to a job 
search allowance at any time, before or after a certification covering 
the individual is made. No job search allowance may be paid or advanced 
to an individual until the State agency determines that the individual 
is covered under a certification. A State agency shall make payment as 
promptly as possible upon determining that the individual is covered 
under a certification and is otherwise eligible.
    (b) Payment. Unless paragraph (a) of this section applies, a job 
search allowance shall be paid promptly after an individual completes a 
job search and complies with paragraph (d) of this section.
    (c) Advances. A State agency may advance an individual (except an 
individual not yet covered under a certification) 60 percent of the 
estimated amount of the job search allowance payable on completion of 
the job search, but not exceeding $360, within 5 days prior to 
commencement of a job search. Such advance shall be deducted from any 
payment under paragraph (b) of this section.
    (d) Worker evidence. On completion of a job search, the individual 
shall certify on forms furnished by the State agency as to employer 
contacts made and amounts expended daily for lodging and meals. Receipts 
shall be required for all lodging and purchased transportation expenses 
incurred by the individual pursuant to the job search. An adjustment 
shall be made if the amount of an advance is less or more than the 
amount to which the individual is entitled under Sec. 617.34.

[[Page 129]]



                     Subpart E_Relocation Allowances



Sec. 617.40  General.

    A relocation allowance shall be granted an adversely affected worker 
to assist the individual and the individual's family, if any, to 
relocate within the United States as stated in this subpart E. A 
relocation allowance may be granted an individual only once under a 
certification. A relocation allowance shall not be granted to more than 
one member of a family with respect to the same relocation. If 
applications for a relocation allowance are made by more than one member 
of a family as to the same relocation, the allowance shall be paid to 
the head of the family if otherwise eligible.



Sec. 617.41  Applications.

    (a) Forms. Applications for a relocation allowance shall be filed in 
accordance with this subpart E and on forms which shall be furnished by 
the State agency.
    (b) Submittal. An application may be submitted to the State agency 
at any time by an individual who has been totally or partially separated 
regardless of whether a certification covering the individual has been 
made. However, an application must be submitted to a State agency before 
the relocation begins for the relocation allowance to be granted, and 
the relocation may not be approved until after the individual is covered 
under a certification.
    (c) Time limits. Notwithstanding paragraph (b) of this section, an 
application for a relocation allowance may not be approved unless 
submitted before:
    (1) The 425th day after the date of the certification under which 
the individual is covered, or the 425th day after the date of the 
individual's last total separation, whichever is later; or
    (2) The 182d day after the concluding date of training approved 
under subpart C of this part 617, or approved under the regulations 
superseded by this part 617.



Sec. 617.42  Eligibility.

    (a) Conditions. Eligibility for a relocation allowance requires:
    (1) A timely filed application;
    (2) Total separation from adversely affected employment at the time 
relocation commences;
    (3) No prior receipt of a relocation allowance under the same 
certification;
    (4) Relocation within the United States and outside the individual's 
present commuting area;
    (5) Registration with the State agency which shall furnish the 
individual such reemployment services as are appropriate under subpart C 
of this part 617;
    (6) A determination by the State agency that the individual has no 
reasonable expectation of securing suitable employment in the commuting 
area, and has obtained suitable employment affording a reasonable 
expectation of employment of long-term duration, or a bona fide offer of 
such suitable employment, outside the commuting area and in the area of 
intended relocation. For the purposes of this section, the term 
``suitable employment'' means suitable work as defined in Sec. 
617.3(kk) (1) and (2), whichever is applicable to the individual; and
    (7) Relocation beginning within a reasonable period, as determined 
under Sec. 617.43(b), and completion of such relocation within a 
reasonable period of time as determined in accordance with Federal 
travel regulations and Sec. 617.43(a).
    (b) Job search. Applications for a relocation allowance and a job 
search allowance may not be approved concurrently, but the prior payment 
of a job search allowance shall not otherwise preclude the payment of a 
relocation allowance.

[51 FR 45848, Dec. 22, 1986, as amended at 59 FR 939, Jan. 6, 1994]



Sec. 617.43  Time of relocation.

    (a) Applicable considerations. In determining whether an 
individual's relocation is completed in a reasonable period of time, a 
State agency, among other factors, shall consider whether:
    (1) Suitable housing is available in the area of relocation;
    (2) The individual can dispose of the individual's residence;
    (3) The individual or a family member is ill; and
    (4) A member of the individual's family is attending school and when 
the

[[Page 130]]

member can best be transferred to a school in the area of relocation.
    (b) Time limits. The reasonable period for actually beginning a 
relocation move shall expire 182 days after the date of application for 
a relocation allowance, or 182 days after the conclusion of training 
approved under subpart C of this part 617, or approved under the 
regulations in former 29 CFR part 91, in effect prior to its 
redesignation as this 20 CFR part 617 and its concurrent revision.



Sec. 617.44  Findings required.

    (a) Findings by liable State. Before final payment of a relocation 
allowance may be approved, the following findings shall be made by the 
liable State:
    (1) The individual meets the eligibility requirements for a 
relocation allowance specified in Sec. 617.42(a) (1) to (6) and Sec. 
617.42(b).
    (2) The application for a relocation allowance was submitted by the 
individual within the time limits specified in Sec. 617.41(c);
    (3) The individual began and completed the relocation within the 
limitations specified in Sec. 617.42(a)(7) and Sec. 617.43; and
    (4) The liable State has verified (directly or through the agent 
State) with the employer, and finds, that the individual has obtained 
suitable employment affording a reasonable expectation of employment of 
long-term duration, or a bona fide offer of such suitable employment, in 
the area of intended relocation, in accordance with Sec. 617.42(a)(6).
    (b) Agent State. (1) When an individual relocates in a State other 
than the liable State, the State agency of the State in which the 
individual relocates shall serve as the agent State and be responsible 
for:
    (i) Assisting the individual in relocating to the State, and in 
filing an application for a relocation allowance with the liable State, 
and
    (ii) Assisting the liable State by furnishing to it any information 
required for the liable State's determination on the claim.
    (2) The agent State shall cooperate with the liable State in 
carrying out its activities and functions with regard to such 
applications. When requested by the liable State, the agent State shall 
verify with the employer and report to the liable State whether the 
individual has obtained suitable employment affording a reasonable 
expectation of employment of long-term duration, or a bona fide offer of 
such suitable employment.

[59 FR 939, Jan. 6, 1994]



Sec. 617.45  Amount.

    (a) Items allowable. The amount payable as a relocation allowance 
shall include the following items:
    (1) 90 percent of the travel expenses for the individual and family, 
if any, from the individual's place of residence to the area of 
relocation, as determined under Sec. 617.46;
    (2) 90 percent of the expenses of moving household goods and 
personal effects of the individual and family, if any, not to exceed the 
maximum number of pounds net weight authorized under the Federal travel 
regulations (see 41 CFR part 101-7), between such locations, as 
determined under Sec. 617.47; and
    (3) A lump sum payment, equal to 3 times the individual's average 
weekly wage, not to exceed $800.
    (b) Reduction. The amount otherwise payable under paragraphs (a)(1) 
and (a)(2) of this section shall be reduced by any amount the individual 
is entitled to be paid or reimbursed for such expenses from any other 
source.

[51 FR 45848, Dec. 22, 1986, as amended at 51 FR 45869, Dec. 22, 1986]



Sec. 617.46  Travel allowance.

    (a) Computation. The amount of travel allowance (including lodging 
and meals) payable under Sec. 617.45(a)(1) shall be 90 percent of the 
total costs of each of the following allowable transportation and 
subsistence items:
    (1) Transportation. The more cost effective mode of transportation 
reasonably available shall be approved by using:
    (i) The actual cost of transportation for the individual and family, 
if any, by the most economical public transportation the individual and 
family reasonably can be expected to take from

[[Page 131]]

the individual's old residence to the individual's new residence in the 
area of relocation; or
    (ii) The cost per mile at the prevailing mileage rate authorized 
under the Federal travel regulations (see 41 CFR part 101-7) for the 
usually traveled route from the individual's old residence to the 
individual's new residence in the area of relocation. No additional 
mileage shall be payable for family members traveling on the same trip 
in the same vehicle.
    (2) Lodging and meals. The cost allowable for lodging and meals for 
an individual or each member of the individual's family shall not exceed 
the lesser of:
    (i) The actual cost to the individual for lodging and meals while in 
travel status; or
    (ii) 50 percent of the prevailing per diem allowance rate authorized 
under the Federal travel regulations (see 41 CFR part 101-7) for the 
locality to which the relocation is made.
    (b) Separate travel. If, for good cause, a member or members of an 
individual's family must travel separately to the individual's new 
residence, 90 percent of the total costs of such separate travel, 
computed in accordance with paragraph (a) of this section, shall be 
included in calculating the total amount the individual is entitled to 
be paid under this subpart E. For purposes of this paragraph (b), good 
cause means such reasons as would justify the family member's inability 
to relocate with the other members of the individual's family, including 
but not limited to reasons related to the family member's health, 
schooling or economic circumstances.
    (c) Limitation. In no case may the individual be paid a travel 
allowance for the individual or a member of the individual's family more 
than once in connection with a single relocation.

[51 FR 45848, Dec. 22, 1986, as amended at 53 FR 32351, Aug. 24, 1988]



Sec. 617.47  Moving allowance.

    (a) Computation. The amount of a moving allowance payable under 
Sec. 617.45(a)(2) shall be 90 percent of the total of the allowable 
costs under either (1), (2), or (3) of this paragraph, and 90 percent of 
the total allowable costs under (4) of this paragraph:
    (1) Commercial carrier. Allowable costs for moving household goods 
and personal effects of an individual and family, if any, shall not 
exceed the maximum number of pounds net weight authorized under the 
Federal travel regulations (see 41 CFR part 101-7) by commercial carrier 
from the individual's old residence to the individual's new residence in 
the area of relocation, including reasonable and necessary accessorial 
charges, by the most economical commercial carrier the individual 
reasonably can be expected to use. Before undertaking such move, the 
individual must submit to the State agency an estimate from a commercial 
carrier as to the cost thereof. Accessorial charges shall include the 
cost of insuring such goods and effects for their actual value or 
$10,000, whichever is least, against loss or damage in transit, if a bid 
from a licensed insurer is obtained by the individual and approved by 
the State agency before departure. If a State agency finds it is more 
economical to pay a carrier an extra charge to assume the responsibility 
of a common carrier for such goods and effects, 90 percent of such extra 
charge, but not exceeding $50, shall be paid in lieu of the cost of 
insurance.
    (2) Trailer or rental truck--(i) Trailer. If household goods and 
personal effects are moved by trailer, the allowable costs shall be:
    (A) If the trailer is hauled by private vehicle, the cost per mile 
for the use of the private vehicle at the prevailing mileage rate 
authorized under the Federal travel regulations (see 41 CFR part 101-7) 
for the usually traveled route from the individual's old residence to 
the individual's new residence in the area of relocation; and
    (B) lf the trailer is rented, and of the type customarily used for 
moving household goods and personal effects, the rental fee for each day 
reasonably required to complete the move; or
    (C) The actual charge if hauling is by commercial carrier,
    (ii) Rental truck. If household goods and personal effects are moved 
by rental truck of the type customarily used

[[Page 132]]

for moving household goods and personal effects, the allowable costs 
shall be:
    (A) The rental fee for each day reasonably required to complete the 
move; and
    (B) The necessary fuel for such rental truck paid by the individual.
    (3) House trailer. If a house trailer or mobile home was used as the 
individual's place of residence in the old area and will be so used in 
the new area, the allowable costs of moving such house trailer or mobile 
home shall be:
    (i) The commercial carrier's charges for moving the house trailer or 
mobile home;
    (ii) Charges for unblocking and reblocking;
    (iii) Ferry charges, bridge, road, and tunnel tolls, taxes, fees 
fixed by a State or local authority for permits to transport the unit in 
or through its jurisdiction, and retention of necessary flagmen; and
    (iv) The cost of insuring the house trailer or mobile home, and the 
personal effects of the individual and family, against loss or damage in 
transit, in accordance with the provisions in paragraph (a)(1) of this 
section.
    (4) Temporary storage. If temporary storage of household goods and 
personal effects is necessary, the cost of such temporary storage for a 
period not to exceed 60 days.
    (b) Travel. Payments under this section shall be in addition to 
payments for travel expenses for the individual and family, if any, 
under Sec. 617.45(a)(1), except that the allowable cost for a private 
vehicle used to haul a trailer may not be paid under this section if any 
cost with respect to such private vehicle is payable under any other 
provisions of this subpart E.



Sec. 617.48  Time and method of payment.

    (a) Determinations. A State agency shall promptly make and record 
determinations necessary to assure an individual's entitlement to a 
relocation allowance at any time, before or after a certification 
covering the individual is made. No relocation allowance may be paid or 
advanced to an individual until the State agency determines that the 
individual is covered under a certification. A State agency shall make 
payment as promptly as possible upon determining that the individual is 
covered under a certification and is otherwise eligible.
    (b) Travel and moving allowances. Allowances computed under 
Sec. Sec. 617.46 and 617.47 shall be paid as follows:
    (1) Travel--(i) Transportation and subsistence. The amounts 
estimated under Sec. 617.46 at 90 percent of the lowest allowable costs 
shall be paid in advance at the time an individual departs from the 
individual's residence to begin relocation or within 10 days prior 
thereto. An amount payable for a family member approved for separate 
travel shall be paid to the individual at the time of such family 
member's departure or within 10 days prior thereto.
    (ii) Worker evidence. On completion of a relocation, the individual 
shall certify on forms furnished by the State agency as to the amount 
expended daily for lodging and meals. Receipts shall be required for all 
lodging and purchased transportation expenses incurred by the individual 
and family, if any, pursuant to the relocation. An adjustment shall be 
made if the amount of an advance is less or more than the amount to 
which the individual is entitled under Sec. 617.46.
    (2) Moving. The amount estimated under Sec. 617.47 at 90 percent of 
the lowest allowable costs shall be paid:
    (i) Commercial carrier. (A) If household goods and personal effects 
are moved by commercial carrier, 90 percent of the amount of the 
estimate submitted by the individual under Sec. 617.47(a)(1) and 
approved by the State agency for covering the cost of such move, and 90 
percent of the other charges approved by the State agency under Sec. 
617.47(a)(1) shall be advanced by check or checks payable to the carrier 
and insurer, and delivered to the individual at the time of the 
scheduled shipment or within 10 days prior thereto. On completion of the 
move, the individual shall promptly submit to the State agency a copy of 
the bill of lading prepared by the carrier, including a receipt 
evidencing payment of moving costs. The individual shall with such 
submittal reimburse the State agency the amount, if any, by which the 
advance made under

[[Page 133]]

this paragraph (b)(2)(i) exceeds 90 percent of the actual moving costs 
approved by the State agency. The individual shall be paid the 
difference if the amount advanced was less than 90 percent of the actual 
moving costs approved by the State agency.
    (B) If more economical, a State agency may make direct arrangements 
for moving and insuring an individual's household goods and personal 
effects with a carrier and insurer selected by the individual and may 
make payment of 90 percent of moving and insurance costs directly to the 
carrier and insurer. No such arrangement shall release a carrier from 
liability otherwise provided by law or contract for loss or damage to 
the individual's goods and effects. The United States shall not be or 
become liable to either party for personal injury or property loss 
damage under any circumstances.
    (ii) Trailer or rental truck--(A) Private vehicle with trailer. If 
the move is by private vehicle and trailer, the allowable cost for the 
use of the private vehicle shall be made at the time payment is made 
under paragraph (b)(1) of this section.
    (B) Rental trailer or rental truck. If the move is by rental trailer 
or rental truck:
    (1) The individual shall submit an estimate of the rental cost from 
the rental agency; and
    (2) 90 percent of such estimated rental cost may be advanced by 
check payable to the order of the individual and the rental agency at 
the time payment is made under paragraph (b)(1) of this section; and
    (3) On completion of the move the individual shall submit promptly 
to the State agency a receipted bill itemizing and evidencing payment of 
the rental charges for the trailer or truck and fuel costs, and shall 
reimburse the State agency for the amount, if any, by which the advance 
made for the trailer or truck exceeds 90 percent of the rental charges 
approved by the State agency. If the amount of the advance was less than 
90 percent of the rental charges, the individual shall be paid the 
difference.
    (iii) House trailer. If a house trailer or mobile home is moved by 
commercial carrier, the individual shall submit to the State agency an 
estimate of the cost of the move by the commercial carrier. A check for 
90 percent of the amount of the estimate, if approved, payable to the 
individual and the carrier, may be delivered to the individual at the 
time of the scheduled move or within 10 days prior thereto.
    (c) Lump sum allowance. The lump sum allowance provided in Sec. 
617.45(a)(3) shall be paid when arrangements are completed for 
relocation of the individual and family, if any, but not more than 10 
days before the earlier of the individual's anticipated departure from 
the individual's residence to begin relocation or the anticipated date 
of shipment of the individual's household goods and personal effects.
    (d) Relocation completed. A relocation is completed when an 
individual and family, if any, and their household goods and personal 
effects arrive at the individual's residence in the area of relocation. 
If no household goods and personal effects are moved, a relocation is 
completed when the individual and family, if any, arrive in the area of 
relocation and establish a residence in the new area. The later arrival 
of a family member approved for separate travel shall not alter the date 
a relocation was completed.



                      Subpart F_Job Search Program



Sec. 617.49  Job Search Program.

    (a) Program requirements. (1) A worker, after being separated from 
adversely affected employment, must participate in an approved job 
search program (JSP), or have completed a JSP, as a condition for 
receiving TRA, except where the State agency determines that an 
acceptable JSP is not reasonably available.
    (2) A TRA claimant is subject to participation in a JSP as a 
condition for receiving TRA for weeks of unemployment which begin after 
the date the claimant is notified of the requirement and has filed an 
initial claim for TRA. The claimant is not subject to the JSP as a 
condition for receiving TRA for weeks which begin prior to that date.
    (3) When the State agency determines that the worker has failed to 
begin participation in an approved JSP, or ceased to participate in such 
a

[[Page 134]]

JSP before completion, and there is no justifiable cause for such 
failure or cessation, no TRA may be paid to the worker for weeks 
beginning with the week that failure or cessation occurred when it is 
determined that such failure or cessation was without justifiable cause. 
TRA may be paid thereafter to an otherwise eligible worker only for 
weeks beginning with the week the worker begins or resumes participation 
in an approved JSP or complete the JSP. For purposes of this paragraph 
(a)(3), justifiable cause means such reasons as would justify an 
individual's conduct when measured by conduct expected of a reasonable 
individual in like circumstances, including but not limited to reasons 
beyond the individual's control and reasons related to the individual's 
capability to enroll in an approved JSP or complete the JSP.
    (4) A worker in training approved under Sec. Sec. 617.22 through 
617.26, or approved by the State agency under State law, is excepted 
from the JSP qualifying requirement while the worker is attending and 
making satisfactory progress in the training. This exception applies 
whether training begins before or after entitlement to basic TRA 
commences, and also applies after training begins for a worker who is 
attending a JSP program. Exceptions to the JSP qualifying requirement 
must be documented in the worker's claim file by the State agency.
    (b) Approved JSPs. A job search program may be approved if:
    (1) The JSP is provided through the JTPA, the public employment 
service, or any other Federal or State funded program, and complies with 
paragraphs (w), (x), and (y) of Sec. 617.3.
    (2) The JSP is sponsored by a company or firm from which the worker 
has been separated, and complies with paragraphs (w), (x), and (y) of 
Sec. 617.3.
    (c) Determination of reasonably available. (1) Reasonably available 
means an existing approved JSP that is located in the worker's normal 
commuting area, as defined in Sec. 617.3, and has sufficient capacity 
to accommodate the worker.
    (2) When the State determines that a JSP is not reasonably available 
for a worker, the requirement is not a condition of qualifying for TRA 
for the weeks involved. When a determination is made with respect to a 
worker, the State agency must document its determination, and the weeks 
involved, in the worker's claim file, prior to making TRA payments to 
the worker.
    (3) The State agency may issue a blanket waiver of the JSP 
qualifying requirement for TRA for groups of workers, where deemed 
appropriate, when it is determined that there is no functioning JSP.
    (4) All determinations that a JSP is not reasonably available should 
extend only for that period of time that a JSP is not reasonably 
available, and the exception for workers in approved training should 
extend until the completion of training. If the State determines that a 
JSP is reasonably available at a later date, then the JSP qualifying 
requirement must be met for entitlement to basic TRA for weeks of 
unemployment beginning with the week in which JSP becomes reasonably 
available.
    (d) JSP allowances. Subsistence and transportation costs shall be 
approved for workers participating in JSPs when deemed appropriate and 
within available State funding levels. Costs incurred may not exceed 
those allowable for training under Sec. Sec. 617.27 and 617.28, if, and 
when, the State refers a worker to a JSP outside the normal commuting 
area.
    (e) Termination of requirement. The job search program requirement 
set out in this section shall not be a condition of entitlement to TRA 
for any week which begins after November 20, 1988.

[53 FR 32351, Aug. 24, 1988, as amended at 54 FR 22277, May 23, 1989; 59 
FR 939, Jan. 6, 1994]



          Subpart G_Administration by Applicable State Agencies



Sec. 617.50  Determinations of entitlement; notices to individuals.

    (a) Determinations of initial applications for TRA or other TAA. The 
State Agency whose State law is the applicable State law under Sec. 
617.16 shall upon the filing of an initial application for TRA or other 
TAA promptly determine the individual's entitlement to such TRA or other 
TAA under this part 617, and may accept for such purposes information 
and findings supplied by another State agency under this part 617.

[[Page 135]]

    (b) Determinations of subsequent applications for TRA or other TAA. 
The State agency shall, upon the filing of an application for payment of 
TRA, or subsistence and transportation under Sec. Sec. 617.27 and 
617.28, with respect to a week, promptly determine whether the 
individual is eligible for a payment of TRA, or subsistence and 
transportation, with respect to such week, and, if eligible, the amount 
of TRA, or subsistence and transportation, for which the individual is 
eligible. In addition, the State agency promptly shall, upon the filing 
of a subsequent application for job search allowances (where the total 
of previous job search allowances paid the individual was less than 
$600), determine whether the individual is eligible for job search 
allowances, and, if eligible, the amount of job search allowances for 
which the individual is eligible.
    (c) Redeterminations. The provisions of the applicable State law 
concerning the right to request, or authority to undertake, 
reconsideration of a determination pertaining to a claim for UI under 
the applicable State law shall apply to determinations pertaining to all 
forms of TAA under this part 617.
    (d) Use of State law. In making determinations or redeterminations 
under this section, or in reviewing such determinations or 
redeterminations under Sec. 617.51, a State agency shall apply the 
regulations in this part 617. As to matters committed by this part 617 
to the applicable State law, a State agency, a hearing officer, or a 
State court shall apply the applicable State law and regulations 
thereunder, including procedural requirements of such State law or 
regulations, except so far as such State law or regulations are 
inconsistent with this part 617 or the purpose of this part 617: 
Provided, that, no provision of State law or regulations on good cause 
for waiver of any time limit, or for late filing of any claim, shall 
apply to any time limitation referred to or specified in this part 617, 
unless such State law or regulation is made applicable by a specific 
provision of this part 617.
    (e) Notices to individual. The State agency shall notify the 
individual in writing of any determination or redetermination as to 
entitlement to TAA. Each determination or redetermination shall inform 
the individual of the reason for the determination or redetermination 
and of the right to reconsideration or appeal in the same manner as 
determinations of entitlement to UI are subject to redetermination or 
appeal under the applicable State law.
    (f) Promptness. Full payment of TAA when due shall be made with the 
greatest promptness that is administratively feasible.
    (g) Procedure. Except where otherwise required by the Act or this 
part 617, the procedures for making and furnishing determinations and 
written notices of determinations to individuals, shall be consistent 
with the Secretary's ``Standard for Claim Determinations--Separation 
Information,'' Employment Security Manual, part V, sections 6010-6015 
(appendix B of this part).

[51 FR 45848, Dec. 22, 1986, as amended at 59 FR 939, 943, Jan. 6, 1994]



Sec. 617.51  Appeals and hearings.

    (a) Applicable State law. A determination or redetermination under 
this part 617 shall be subject to review in the same manner and to the 
same extent as determinations and redeterminations under the applicable 
State law, and only in that manner and to that extent. Proceedings for 
review of a determination or redetermination may be consolidated or 
joined with proceedings for review of a determination or redetermination 
under the State law where convenient or necessary. Procedures as to the 
right of appeal and opportunity for fair hearing shall be consistent 
with sections 303(a) (1) and (3) of the Social Security Act (42 U.S.C. 
503(a) (1) and (3)).
    (b) Appeals promptness. Appeals under paragraph (a) of this section 
shall be decided with a degree of promptness meeting the Secretary's 
``Standard on Appeals Promptness--Unemployment Compensation'' (part 650 
of this chapter). Any provisions of the applicable State law for 
advancement or priority of UI cases on judicial calendars, or otherwise 
intended to provide for prompt payment of UI when due, shall apply to 
proceedings involving entitlement to TAA under this part 617.

[[Page 136]]



Sec. 617.52  Uniform interpretation and application.

    (a) First rule of construction. The Act and the implementing 
regulations in this part 617 shall be construed liberally so as to carry 
out the purpose of the Act.
    (b) Second rule of construction. The Act and the implementing 
regulations in this part 617 shall be construed so as to assure insofar 
as possible the uniform interpretation and application of the Act and 
this part 617 throughout the United States.
    (c) Effectuating purpose and rules of construction. (1) To 
effectuate the purpose of the Act and this part 617 and to assure 
uniform interpretation and application of the Act and this part 617 
throughout the United States, a State agency shall forward, not later 
than 10 days after issuance, to the Department a copy of any judicial or 
administrative decision ruling on an individual's entitlement to TAA 
under this part 617. On request of the Department, a State agency shall 
forward to the Department a copy of any determination or redetermination 
ruling on an individual's entitlement to TAA under this part 617.
    (2) If the Department believes that a determination, 
redetermination, or decision is inconsistent with the Department's 
interpretation of the Act or this part 617, the Department may at any 
time notify the State agency of the Department's view. Thereafter, the 
State agency shall issue a redetermination or appeal if possible, and 
shall not follow such determination, redetermination, or decision as a 
precedent; and, in any subsequent proceedings which involve such 
determination, redetermination, or decision, or wherein such 
determination, redetermination, or decision is cited as precedent or 
otherwise relied upon, the State agency shall inform the claims deputy 
or hearing officer or court of the Department's view and shall make all 
reasonable efforts, including appeal or other proceedings in an 
appropriate forum, to obtain modification, limitation, or overruling of 
the determination, redetermination, or decision.
    (3) If the Department believes that a determination, 
redetermination, or decision is patently and flagrantly violative of the 
Act or this part 617, the Department may at any time notify the State 
agency of the Department's view. If the determination, redetermination, 
or decision in question denies TAA to an individual, the steps outlined 
in paragraph (c)(2) of this section shall be followed by the State 
agency. If the determination, redetermination, or decision in question 
awards TAA to an individual, the benefits are ``due'' within the meaning 
of section 303(a)(1) of the Social Security Act (42 U.S.C. 503(a)(1)), 
and therefore must be paid promptly to the individual. However, the 
State agency, shall take the steps outlined in paragraph (c)(2) of this 
section, and payments to the individual may be temporarily delayed if 
redetermination or appeal action is taken not more than one business day 
following the day on which the first payment otherwise would be issued 
to the individual; and the redetermination action is taken or appeal is 
filed to obtain a reversal of the award of TAA and a ruling consistent 
with the Department's view; and the redetermination action or appeal 
seeks an expedited redetermination or appeal within not more than two 
weeks after the redetermination action is taken or the appeal is filed. 
If redetermination action is not taken or appeal is not filed within the 
above time limit, or a redetermination or decision is not obtained 
within the two-week limit, or any redetermination or decision or order 
is issued which affirms the determination, redetermination, or decision 
awarding TAA or allows it to stand in whole or in part, the benefits 
awarded must be paid promptly to the individual.
    (4) (i) If any determination, redetermination, or decision, referred 
to in paragraph (c)(2) or paragraph (c)(3) of this section, is treated 
as a precedent for any future application for TAA, the Secretary will 
decide whether the Agreement with the State entered into under the Act 
and this part 617 shall be terminated and Sec. 617.59(f) applied.
    (ii) In the case of any determination, redetermination, or decision 
that is not legally warranted under the Act or

[[Page 137]]

this part 617, including any determination, redetermination, or decision 
referred to in paragraph (c)(2) or paragraph (c)(3) of this section, the 
Secretary will decide whether the State shall be required to restore the 
funds of the United States for any sums paid under such a determination, 
redetermination, or decision, and whether, in the absence of such 
restoration, the Agreement with the State shall be terminated and Sec. 
617.59(f) applied and whether other action shall be taken to recover 
such sums for the United States.
    (5) A State agency may request reconsideration of a notice issued 
pursuant to paragraph (c)(2) or paragraph (c)(3) of this section, and 
shall be given an opportunity to present views and arguments if desired. 
Such request shall be made to the Secretary and may include views and 
arguments on the matters to be decided by the Secretary under paragraph 
(c)(4) of this section.
    (6) Concurrence of the Department in a determination, 
redetermination, or decision shall not be presumed from the absence of a 
notice issued pursuant to this section.

(Approved by the Office of Management and Budget under control number 
1205-0222)



Sec. 617.53  Subpoenas.

    A State agency may issue subpoenas for attendance of witnesses and 
production of records on the same terms and conditions as under the 
State law. Compliance may be enforced on the same terms and conditions 
as under the State law, or, if a State court declines to enforce a 
subpoena issued under this section, the State agency may petition for an 
order requiring compliance with such subpoena to the United States 
District Court within the jurisdiction of which the relevant proceeding 
under this part 617 is conducted.



Sec. 617.54  State agency rulemaking.

    A State agency may establish supplemental procedures not 
inconsistent with the Act or this part 617 or procedures prescribed by 
the Department to further effective administration of this part 617. The 
exact text of such supplemental procedure or procedures, certified as 
accurate by a responsible official, employee, or counsel of the State 
agency, shall be submitted to the Department, on a form supplied by the 
Department. No supplemental procedure shall be effective unless and 
until approved by the Department. Approval may be granted on a temporary 
basis, not to exceed 90 days, in cases of administrative necessity. On 
reasonable notice to a State agency, approval of a supplemental 
procedure may be withdrawn at any time. If public notice and opportunity 
for hearing would be required under a State law for adoption of a 
similar or analogous procedure involving UI, such public notice and 
opportunity for hearing shall be afforded by the State agency as to the 
supplemental procedure.

(Approved by the Office of Management and Budget under control number 
1205-0222)



Sec. 617.55  Overpayments; penalties for fraud.

    (a) Determination and repayment. (1) If a State agency or a court of 
competent jurisdiction determines that any person or individual has 
received any payment under this part 617 to which the person or 
individual was not entitled, including a payment referred to in 
paragraph (b) or paragraph (c) of this section, such person or 
individual shall be liable to repay such amount to the State agency, and 
the State agency shall recover any such overpayment in accordance with 
the provisions of this part 617; except that the State agency may waive 
the recovery of any such overpayment if the State agency determines, in 
accordance with the guidelines prescribed in paragraph (a)(2) of this 
section, that:
    (i) The payment was made without fault on the part of such person or 
individual; and
    (ii) Requiring such repayment would be contrary to equity and good 
conscience.
    (2)(i)(A) In determining whether fault exists for purposes of 
paragraph (a)(1)(i) of this section, the following factors shall be 
considered:
    (1) Whether a material statement or representation was made by the 
person or individual in connection with the application for TAA that 
resulted in the overpayment, and whether the person or individual knew 
or should have

[[Page 138]]

known that the statement or representation was inaccurate.
    (2) Whether the person or individual failed or caused another to 
fail to disclose a material fact, in connection with an application for 
TAA that resulted in the overpayment, and whether the person or 
individual knew or should have known that the fact was material.
    (3) Whether the person or individual knew or could have been 
expected to know, that the person or individual was not entitled to the 
TAA payment.
    (4) Whether, for any other reason, the overpayment resulted directly 
or indirectly, and partially or totally, from any act or omission of the 
person or individual or of which the person or individual had knowledge, 
and which was erroneous or inaccurate or otherwise wrong.
    (5) Whether there has been a determination of fraud under paragraph 
(b) of this section or section 243 of the Act.
    (B) An affirmative finding on any one of the factors in paragraphs 
(a)(2)(i)(A) of this section precludes waiver of overpayment recovery.
    (ii)(A) In determining whether equity and good conscience exists for 
purposes of paragraph (a)(1)(ii) of this section, the following factors 
shall be considered:
    (1) Whether the overpayment was the result of a decision on appeal, 
whether the State agency had given notice to the person or individual 
that the case has been appealed and that the person or individual may be 
required to repay the overpayment in the event of a reversal on appeal, 
and whether recovery of the overpayment will not cause extraordinary and 
lasting financial hardship to the person or individual.
    (2) Whether recovery of the overpayment will not cause extraordinary 
financial hardship to the person or individual, and there has been no 
affirmative finding under paragraph (a)(2)(ii)(A) of this section with 
respect to such person or individual and such overpayment.
    (B) An affirmative finding on either of the foregoing factors in 
paragraphs (a)(2)(ii)(A) of this section precludes waiver of overpayment 
recovery.
    (C)(1) For the purpose of paragraph (a)(2)(ii) of this section, an 
extraordinary financial hardship shall exist if recovery of the 
overpayment would result directly in the person's or individual's loss 
of or inability to obtain minimal necessities of food, medicine, and 
shelter for a substantial period of time; and an extraordinary and 
lasting financial hardship shall be extraordinary as described above and 
may be expected to endure for the foreseeable future.
    (2) In applying this test in the case of attempted recovery by 
repayment, a substantial period of time shall be 30 days, and the 
foreseeable future shall be at least three months. In applying this test 
in the case of proposed recoupment from other benefits, a substantial 
period of time and the foreseeable future shall be the longest potential 
period of benefit entitlement as seen at the time of the request for a 
waiver determination. In making these determinations, the State agency 
shall take into account all potential income of the person or individual 
and the person's or individual's firm, organization, or family and all 
cash resources available or potentially available to the person or 
individual and the person's or individual's firm, organization, or 
family in the time period being considered.
    (3) Determinations granting or denying waivers of overpayments shall 
be made only on request for a waiver determination. Such request shall 
be made on a form which shall be furnished to the person or individual 
by the State agency. Notices of determination of overpayments shall 
include an accurate description of the waiver provisions of paragraph 
(a) of this section, if the State agency has elected to allow waivers of 
TAA overpayments.
    (4) Each State shall have the option to establish a policy as to 
whether the waiver provisions of this section shall be applied to TAA 
overpayments. A State's decision on its policy shall not be controlled 
by whether it waives UI overpayments, but the State's decision shall be 
published for the information of the public and the Department.
    (5)(i) Unless an overpayment is otherwise recovered, or is waived 
under paragraph (a) of this section, the State agency shall recover the 
overpayment by deduction from any sums payable to such person or 
individual under:

[[Page 139]]

    (A) This part 617;
    (B) Any Federal unemployment compensation law administered by the 
State agency; or
    (C) Any other Federal law administered by the State agency which 
provides for the payment of unemployment assistance or an allowance with 
respect to unemployment.
    (ii) In addition, a State agency may recover the overpayment from 
unemployment insurance payable to such person or individual under the 
State law.
    (b) Fraud. If a State agency or a court of competent jurisdiction 
finds that any person or individual:
    (1) Knowingly has made, or caused another to make, a false statement 
or representation of a material fact; or
    (2) Knowingly has failed, or caused another to fail, to disclose a 
material fact; and as a result of such false statement or 
representation, or of such nondisclosure, such individual has received 
any payment under this part 617 to which the person or individual was 
not entitled, such person or individual shall, in addition to any other 
penalty provided by law, be ineligible for any further payments under 
this part 617.
    (c) Training, job search and relocation allowances. (1) If an 
individual fails, with good cause, to complete training, a job search, 
or a relocation, any payment or portion of a payment made under this 
part 617 to such individual or any person that is not properly and 
necessarily expended in attempting to complete such training, job 
search, or relocation, shall constitute an overpayment.
    (2) If an individual fails, without good cause, to complete 
training, a job search, or a relocation, any payment made under this 
part 617 to such individual or any person shall constitute an 
overpayment.
    (3) Such overpayment shall be recovered or waived as provided in 
paragraph (a) of this section.
    (d) Final determination. Except for overpayments determined by a 
court of competent jurisdiction, no repayment may be required, and no 
deduction may be made, under this section until a determination under 
paragraph (a) of this section by the State agency has been made, notice 
of the determination and an opportunity for a fair hearing thereon has 
been given to the person or individual concerned, and the determination 
has become final.
    (e) Deposit. Any amount recovered by a State agency under this 
section shall be deposited into the Federal fund or account from which 
payment was made.
    (f) Procedural requirements. (1) The provisions of paragraphs (c), 
(e), and (g) of Sec. 617.50 shall apply to determinations and 
redeterminations made pursuant to this section.
    (2) The provisions of Sec. 617.51 shall apply to determinations and 
redeterminations made pursuant to this section.
    (g) Fraud detection and prevention. State procedures for the 
detection and prevention of fraudulent overpayments of TAA shall be, as 
a minimum, commensurate with the procedures adopted by the State with 
respect to State unemployment compensation and consistent with the 
Secretary's ``Standard for Fraud and Overpayment Detection,'' Employment 
Security Manual, Part V, sections 7510-7515 (Appendix C of this part).
    (h) Debts due the United States or Others. (1) Notwithstanding any 
provision of this part 617, TAA payable to a person or an individual 
under this part 617 shall be applied by the State agency for the 
recovery by offset of any debt due the United States from the person or 
individual.
    (2) TAA shall not be applied or used by the State agency in any 
manner for the payment of any debt of any person or individual to any 
State or any other entity or person, except that TRA payable to an 
individual shall be payable to someone other than the individual if 
required by State law and Federal law to satisfy the individual's 
obligation for child support or alimony.
    (i) Definition of person. For purposes of this section, a person 
includes any employer or other entity or organization as well as the 
officers and officials thereof who may bear individual responsibility.

[59 FR 939, Jan. 6, 1994, as amended at 59 FR 943, Jan. 6, 1994]

[[Page 140]]



Sec. 617.56  Inviolate rights to TAA.

    Except as specifically provided in this part 617, the rights of 
individuals to TAA shall be protected in the same manner and to the same 
extent as the rights of persons to UI are protected under the applicable 
State law. Such measures shall include protection of applicants for TAA 
from waiver, release, assignment, pledge, encumbrance, levy, execution, 
attachment, and garnishment of their rights to TAA, except as provided 
in Sec. 617.55. In the same manner and to the same extent, individuals 
shall be protected from discrimination and obstruction in regard to 
seeking, applying for, and receiving any right to TAA.



Sec. 617.57  Recordkeeping; disclosure of information.

    (a) Recordkeeping. Each State agency will make and maintain records 
pertaining to the administration of the Act as the Secretary requires 
and will make all such records available for inspection, examination and 
audit by such Federal officials as the Secretary may designate or as may 
be required by law. Such recordkeeping will be adequate to support the 
reporting of TAA activity on reporting form ETA 563 approved under OMB 
control number 1205-0016.
    (b) Disclosure of information. Information in records maintained by 
a State agency in administering the Act shall be kept confidential, and 
information in such records may be disclosed only in the same manner and 
to the same extent as information with respect to UI and the entitlement 
of individuals thereto may be disclosed under the applicable State law. 
Such information shall not, however, be disclosed to an employer or any 
other person except to the extent necessary to obtain information from 
the employer or other person for the purposes of this part 617. This 
provision on the confidentiality of information maintained in the 
administration of the Act shall not apply, however, to the Department or 
for the purposes of Sec. 617.55 or paragraph (a) of this section, or in 
the case of information, reports and studies required pursuant to Sec. 
617.61, or where the result would be inconsistent with the Freedom of 
Information Act (5 U.S.C. 552), the Privacy Act of 1974 (5 U.S.C. 552a), 
or regulations of the Department promulgated thereunder (see 29 CFR 
parts 70 and 70a).



Sec. 617.58  Unemployment insurance.

    Unemployment insurance payable to an adversely affected worker shall 
not be denied or reduced for any week by reason of any right to a 
payment of TAA under the Act and this part 617.



Sec. 617.59  Agreements with State agencies.

    (a) Authority. Before performing any function or exercising any 
jurisdiction under the Act and this part 617, a State or State agency 
(as defined in Sec. 617.3(ii)) shall execute an Agreement with the 
Secretary meeting the requirements of the Act.
    (b) Execution. An Agreement under paragraph (a) of this section 
shall be signed on behalf of a State or State agency by an authorized 
official of the State or such State agency, and the signature shall be 
dated. The authority of the State or State agency official shall be 
certified by the Attorney General of the State or counsel for the State 
agency, unless the Agreement is signed by the Governor of the State. An 
agreement will be executed on behalf of the United States by the 
Secretary.
    (c) Public access to Agreements. The State agency will make 
available to any individual or organization an accurate copy of the 
Agreement with the Agency for inspection and copying. Copies of an 
Agreement may be furnished on request to any individual or organization 
upon payment of the same charges, if any, as apply to the furnishing of 
copies of other records of the State agency.
    (d) Amended Agreement. A State or State agency shall execute an 
amended Agreement with the Secretary prior to administering any 
amendments to the TAA provisions of the Trade Act of 1974.
    (e) Agent of United States. In making determinations, 
redeterminations, and in connection with proceedings for review thereof, 
a State or State agency which has executed an Agreement as provided in 
this section shall be an agent of the United States and shall

[[Page 141]]

carry out fully the purposes of the Act and this part 617.
    (f) Breach. If the Secretary finds that a State or State agency has 
not fulfilled its commitments under its Agreement under this section, 
section 3302(c)(3) of the Internal Revenue Code of 1986 shall apply. A 
State or State agency shall receive reasonable notice and opportunity 
for hearing before a finding is made under section 3302(c)(3) whether 
there has been a failure to fulfill the commitments under the Agreement.
    (g) Secretary's review of State agency compliance. The appropriate 
Regional Administrator shall be initially responsible for the periodic 
monitoring and reviewing of State and State agency compliance with the 
Agreement entered into under this section.
    (h) Program coordination. State agencies providing employment 
services, training and supplemental assistance under Subpart C of this 
part shall, in accordance with their Agreements under this section, 
coordinate such services and payments with programs and services 
provided by State Service Delivery Areas, Private Industry Councils, and 
substate grantees under the Job Training Partnership Act and with the 
State agency administering the State law.
    (i) Administration absent State Agreement. In any State in which no 
Agreement under this section is in force, the Secretary shall administer 
the Act and this part 617 and pay TAA hereunder through appropriate 
arrangements made by the Department, and for this purpose the Secretary 
or the Department shall be substituted for the State or cooperating 
State agency wherever appropriate in this part 617. Such arrangements 
shall include the requirement that TAA be administered in accordance 
with this part 617, and the provisions of the applicable State law 
except to the extent that such State law is inconsistent with any 
provision of this part 617 or section 303 of the Social Security Act (42 
U.S.C. 503) or section 3304(a) of the Internal Revenue Code of 1986 (26 
U.S.C. 3304(a)), and shall also include provision for a fair hearing for 
any individual whose application for TAA is denied. A final 
determination under paragraph (i) of this section as to entitlement to 
TAA shall be subject to review by the courts in the same manner and to 
the same extent as is provided by section 205(g) of the Social Security 
Act (42 U.S.C. 405(g)).

[51 FR 45848, Dec. 22, 1986, as amended at 53 FR 32351, Aug. 24, 1988; 
59 FR 941, Jan. 6, 1994]



Sec. 617.60  Administration requirements. [Reserved]



Sec. 617.61  Information, reports, and studies.

    A State agency shall furnish to the Secretary such information and 
reports and conduct such studies as the Secretary determines are 
necessary or appropriate for carrying out the purposes of the Act and 
this part 617.



Sec. 617.62  Transitional procedures.

    The procedures for administering the Trade Act of 1974 before and 
after the amendments made by title XXV of the Omnibus Budget 
Reconciliation Act of 1981 (Pub. L. 97-35) are as follows:
    (a) TRA. The provisions contained in subpart B of this part 617 
shall apply with respect to the qualifying requirements for TRA for 
adversely affected workers who are separated on or after October 1, 
1981, and were not entitled to TRA for any week of unemployment 
beginning before October 1, 1981. In addition, such provisions shall 
apply to TRA payable for weeks of unemploymant beginning after September 
30, 1981, to adversely affected workers separated before October 1, 
1981. Any adversely affected worker entitled to TRA for any week of 
unemployment beginning before October 1, 1981, shall be entitled to TRA 
as follows:
    (1) Weeks before October 1, 1981. For weeks of unemployment 
beginning before October 1, 1981, TRA eligibility shall be determined 
under the provisions of the law and regulations in effect before the 
amendments made by title XXV of the Omnibus Budget Reconciliation Act of 
1981 (Pub. L. 97-35).
    (2) Weeks after September 30, 1981. (i) Basic weeks (UI exhaustion). 
For any week of unemployment beginning after September 30, 1981, TRA 
eligibility for an individual who has exhausted all rights to UI prior 
to such week shall be

[[Page 142]]

determined under subpart B of this part 617, except that the maximum 
amount of basic TRA payable to the individual for any such week of 
unemployment shall be an amount equal to the product of the amount of 
TRA payable to the individual for a week of total unemployment (as 
determined under Sec. 617.13(a)) multiplied by a factor determined by 
subtracting from fifty-two the sum of:
    (A) The number of weeks preceding the first week which begins after 
September 30, 1981, including all weeks in the individual's first 
benefit period, and which are within the period covered by the same 
certification as such week of unemployment, for which the individual was 
entitled to a payment of TRA or UI (or would have been entitled to a 
payment of TRA or UI if the individual had applied therefor); plus
    (B) The number of weeks preceding such first week that are 
deductible under section 232(d) of the Trade Act of 1974 in effect 
before the amendments made by the Omnibus Budget Reconciliation Act of 
1981.
    (C) The amount of TRA payable to an individual under this paragraph 
(a)(2)(i) shall be subject to adjustment on a week-to-week basis as may 
be required by Sec. 617.13(b).
    (ii) Basic weeks UI entitlement. For any week of unemployment 
beginning after September 30, 1981, TRA eligibility for an individual 
who still has entitlement to UI shall be discontinued until the 
individual exhausts all rights to UI as provided in Sec. 6.17.11(a)(5). 
After exhaustion of all rights to UI, payment of TRA shall be determined 
under subpart B of this part 617, except that the maximum amount of 
basic TRA payable to the individual for ensuing weeks of unemployment 
shall be an amount equal to the remainder of:
    (A) The maximum amount of basic TRA as computed under paragraph 
(a)(2)(i) of this section; minus
    (B) The total sum of UI to which the individual was entitled (or 
would have been entitled if the individual had applied therefor) for 
weeks beginning after September 30, 1981.
    (iii) Additional weeks. With respect to any week of unemployment 
beginning after September 30, 1981, for an individual who is in training 
approved under section 236 of the Trade Act of 1974, and who was 
receiving TRA for basic or additional weeks beginning before October 1, 
1981, the weekly amount of TRA for any additional weeks beginning after 
September 30, 1981, shall be determined under subpart B of this part 
617.
    (3) Transitional eligibility period. (i) Basic weeks. Any individual 
who was eligible for a basic TRA payment for any week beginning before 
October 1, 1981, shall not be eligible for a basic TRA payment for any 
week beginning after September 30, 1981, and which begins more than 52 
weeks after the individual has exhausted all rights to regular 
compensation in the first benefit period (as provided in Sec. 
617.15(a)).
    (ii) Additional weeks. Any individual who was eligible for a TRA 
payment for an additional week beginning before October 1, 1981, shall 
not be eligible for a TRA payment for any additional week beginning 
after September 30, 1981, unless such additional week begins wtthin:
    (A) 26 weeks after the last week of the individual's entitlement to 
basic TRA, or
    (B) 78 weeks after the individual exhausted regular compensation in 
the first benefit period, whichever occurs first (as provided in Sec. 
617.15).
    (b) Training, other reemployment services, and allowances. (1) 
Applications for training filed before October 1, 1981, concerning the 
approval of such training after September 30, 1981, shall be determined 
under subpart C of this part 617.
    (2) Applications for transportation and subsistence payments while 
in training, and job search and relocation allowances filed after 
September 30, 1981, shall be determined under the applicable subpart C, 
D, or E of this part 617.
    (3) Individuals who have had self-financed training approved prior 
to October 1, 1981, shall not be reimbursed for training and related 
expenses incurred while in such training. However, such individuals may 
have their eligibility for approved training considered under the 
criteria outlined in the amended section 236 of the Act and in

[[Page 143]]

Sec. 617.22, and, if approved, shall be entitled to have post-approval 
training costs paid.
    (c) Fraud and recovery of overpayments. The fraud and overpayment 
recovery provisions of this subpart G shall take effect on August 13, 
1981, and shall apply to all overpayments outstanding on that date or 
determined on or after that date.
    (d) Required amendments to State law. The provisions of section 
2514(a)(2)(D) of the Omnibus Budget Reconciliation Act of 1981 (Pub. L. 
97-35) (relating to amendment of State laws) shall apply to State laws 
for the purposes of certifications under section 3304(c) of the Internal 
Revenue Code of 1984 on October 31 of any taxable year after 1981; 
except that, in any State in which the legislature of that State--
    (1) Does not meet in a session which begins after August 13, 1981, 
and before September 1, 1982, and
    (2) If in session on August 13, 1981, and does not remain in session 
for at least 25 calendar days thereafter, the date of ``1981'' in this 
paragraph (d) shall be deemed to be ``1982.''

[51 FR 45848, Dec. 22, 1986, as amended at 53 FR 32352, Aug. 24, 1988]



Sec. 617.63  Savings clause.

    The amendments to the Act made by title XXV of the Omnibus Budget 
Reconciliation Act of 1981 (Pub. L. 97-35) shall not abate or otherwise 
affect entitlement to TAA under the Trade Act of 1974 or any appeal 
which was pending on October 1, 1981, or on the date of enactment of any 
such amendment, as applicable, or prevent any appeal from any 
determination thereunder which did not become final prior to such 
applicable date if appeal or petition is filed within the time allowed 
for appeal or petition.



Sec. 617.64  Termination of TAA program benefits.

    The following rules are applicable to the termination of TAA 
benefits under the Act:
    (a) No application for TRA, or transportation or subsistence payment 
while in training approved under subpart C of this part 617, shall be 
approved, and no payment of TRA or payment for transportation or 
subsistence occurring on or before the termination date shall be made 
after the termination date specified in the Act, unless the claim for 
TRA or an invoice for transportation and subsistence is presented to the 
State agency and a final determination is made on the amount payable on 
or before the termination date in the Act.
    (b) No payment of job search or relocation allowances shall be made 
after the termination date specified in the Act, unless an application 
for such allowances was approved, such job search or relocation was 
completed, and a final determination made on the amount payable for such 
benefits by the State agency on or before the termination date in the 
Act.
    (c) No training under subpart C of this part shall be approved 
unless a determination regarding the approval of such training was made 
on or before the termination date in the Act, and such training 
commenced on or before such termination date. Consistent with the 
requirements of section 236(a)(1) of the Act, and the termination 
provisions of paragraph (c) of this section, a final determination must 
be made on the invoice for the training costs by the State agency on or 
before the termination date specified in the Act to cover tuition 
related expenses. Determinations on tuition bills shall be limited to 
the training term, quarter, semester or other period beginning on or 
before the termination date in the Act. The training period should be in 
accord with normal billing practices of the training provider and/or 
State agency approval practices.

[59 FR 941, Jan. 6, 1994]



Sec. 617.65  Transition procedures for amendments in sections 2671 and 
2672 of Pub. L. 98-369 (Deficit Reduction Act of 1984).

    The procedures for administering the Trade Act of 1974 as amended by 
the Deficit Reduction Act of 1984 are as follows:
    (a) TRA. (1) The provisions in subpart B of this part 617 shall 
apply to workers who would lose additional weeks of TRA payments because 
of delays in approving applications for training. Workers who filed 
timely, bona fide applications for training shall be eligible to receive 
additional weeks of TRA

[[Page 144]]

payments beginning the first week of training when their applications 
for training are approved on or after July 18, 1984, and the first week 
of such training begins later than the first week which follows the last 
week of entitlement to basic TRA.
    (2) Workers whose applications for training were approved prior to 
July 18, 1984, are covered under the provisions of the Trade Act of 1974 
as in effect prior to July 18, 1984, and are not entitled to additional 
weeks of TRA by reason of the amendment in section 2671 of the Deficit 
Reduction Act of 1984 or Sec. 617.15(b) of this part.
    (b) Job Search Allowances. (1) The provisions in subpart D of this 
part 617 shall apply to timely applications for job search allowances 
that are approved on or after July 18, 1984.
    (2) Workers whose applications for job search allowances that were 
filed timely but were approved before July 18, 1984, in the aggregate 
authorized amount of $600, are covered under the provisions of the Trade 
Act of 1974 in effect prior to July 18, 1984, and are not entitled to 
receive the increase in the allowance level provided in section 2672(a) 
of the Deficit Reduction Act of 1984 and Sec. 617.34(b) of this part.
    (c) Relocation allowances. (1) The provisions in subpart E of this 
part 617 shall apply to timely applications for relocation allowances 
that are approved on or after July 18, 1984.
    (2) Workers whose applications for relocations allowances were filed 
timely but were approved before July 18, 1984, are covered under the 
provisions of the Trade Act of 1974 in effect prior to July 18, 1984, 
and are not entitled to receive the increase in the lump sum allowance 
level provided in section 2672(b) of the Deficit Reduction Act of 1984 
and Sec. 617.45(a)(3) of this part.

[51 FR 45870, Dec. 22, 1986]



Sec. 617.66  Transition procedures for amendments in sections 13002 
through 13009 of Pub. L. 99-272 (the Consolidated Omnibus Budget 
Reconciliation Act of 1985).

    The procedures for administering the Trade Act of 1974 before and 
after the amendments made by the Pub. L. 99-272 are as follows:
    (a) Duration of TRA. The provisions contained in Sec. 617.15 
expanding the eligibility period for payment of basic TRA benefits from 
52 weeks to 104 weeks shall apply only to those claimants whose 
eligibility periods begin on or after April 7, 1986, or who have a 
previously established 52-week TRA eligibility period that ends on or 
after April 7, 1986. Workers with 52-week eligibility periods that end 
before April 7, 1986, will not have their eligibility periods extended 
to 104 weeks.
    (b) TRA payments--(1) Retroactive TRA payments. Retroactive claims 
of eligible workers may be approved for weeks of unemployment beginning 
with the first week after the week which includes December 18, 1985. 
Claims for weeks beginning before April 7, 1986 (or, if later, before 
claimants are notified of their potential entitlement and have filed 
claims for retroactive benefits) are not subject to the application of 
the Extended Benefits (EB) work test, nor to the State timely filing 
requirement. Claimants shall be subject to those requirements for weeks 
of unemployment beginning after the date eligible workers are notified 
of such requirements and have filed claims for such benefits.
    (2) Employer-authorized leave, disability leave and union service. 
The change to Sec. 617.11(a)(3) for crediting weeks of specified leave 
to qualify for TRA will apply only to initial claims for basic TRA filed 
with the State agency by eligible workers on or after April 7, 1986.
    (c) Job search program. The job search program requirement applies 
to workers certified under petitions for trade adjustment assistance 
filed with the Department on or after April 7, 1986.
    (d) Training and other amendments. Other amendments in Pub. L. 99-
272 are effective on April 7, 1986, and apply to applications for TAA 
benefits approved on or after April 7, 1986.
    (e) Application of Gramm-Rudman. TRA payments to workers made under 
part 1 of chapter 2 of title II of the Trade Act of 1974 and this part 
shall be reduced by a percentage equal to the non-defense sequester 
percentage applied in the Sequestration Report (submitted under the 
Balanced Budget and Emergency Deficit Control Act of 1985

[[Page 145]]

and dated January 21, 1986) of the Comptroller General of the United 
States for Fiscal Year 1986, for the period from March 1, 1986 to 
October 1, 1986.

[53 FR 32352, Aug. 24, 1988]



Sec. 617.67  Transition guidelines for the 1988 Amendments.

    The provisions of part 3 of subtitle D of title I of the Omnibus 
Trade and Competitiveness Act of 1988 (the ``OTCA''), Public Law 100-
418, approved on August 23, 1988, made material changes in the TAA 
Program for workers that are reflected in the amended regulations 
published with this new section on transition guidelines for the 1988 
Amendments. States and cooperating State agencies shall be guided by the 
following paragraphs of this section in the transition to the TAA 
Program as modified by the 1988 Amendments and reflected in the 
preceding provisions of this part 617, as well as in the interim 
operating instructions issued by the Department which are superseded by 
these regulations. The operating instructions in GAL 15-90, and the 
Changes thereto, shall continue in effect as guidance on the proper 
application of the 1988 Amendments except as modified in these final 
regulations. (GAL 15-90 is available from the Office of Trade Adjustment 
Assistance, U.S. Department of Labor, 200 Constitution Ave., NW., room 
C-4318, Washington, DC 20210.)
    (a) Oil and gas workers--prospective. Workers in firms or 
appropriate subdivisions of firms engaged in exploration or drilling for 
oil or natural gas are newly covered under the TAA Program by an 
amendment to section 222 of the Trade Act of 1974. This is a permanent 
change in the Act having prospective effect, and became effective on 
August 23, 1988. Oil and gas workers covered by a certification issued 
pursuant to section 223 of the Act and the regulations at 29 CFR part 90 
shall be entitled to basic and additional TRA and other TAA Program 
benefits on precisely the same terms and conditions as apply to other 
workers covered by other certifications and which are specifically set 
forth in this part 617.
    (b) Oil and gas workers--retroactive. Oil and gas workers referred 
to in paragraph (a) of this section, who were separated from adversely 
affected employment after September 30, 1985, are covered retroactively 
under section 1421(a)(1)(B) of the OTCA, if they are covered by a 
certification issued pursuant to section 223 of the Act which is in 
response to a petition filed in the Office of Trade Adjustment 
Assistance on or before November 18, 1988. Administration of TAA Program 
benefits to these workers shall be on precisely the same terms and 
conditions as apply to other workers covered by other certifications, 
except that the limitations of the impact date provision of section 
223(b) and the 60-day preclusion in section 231(a) may not be applied to 
these workers.
    (c) Benefit information to workers. (1) An amendment to section 225 
of the Act requires individualized and published notices to workers 
covered by certifications issued pursuant to section 223 of the Act. 
This amendment became effective as a requirement on September 22, 1988, 
and is applicable to all certifications issued on and after that date. 
Individualized notices and published notices shall contain the 
information specifically set forth in this part 617.
    (2) Section 239(f) of the Act requires cooperating State agencies to 
furnish four discrete items of information and advice to individuals 
about TAA Program benefits, commencing with such advice and information 
to every individual who applies for unemployment insurance under each 
State's unemployment compensation law. See Sec. 617.4(e). This 
amendment became effective on August 23, 1988. Information and advice 
required by section 239(f) shall be provided in accordance with this 
part 617.
    (d) Training and eligibility requirements for TRA. Effective on 
November 21, 1988, in general, enrollment and participation in, or 
completion of, a training program approved under subpart C is required 
as a condition of entitlement to basic TRA. Amendments to sections 
231(a)(5), 231(b), and 231(c) of the Act incorporate this new 
requirement, replacing the job search program requirement which remains 
in effect

[[Page 146]]

through November 20, 1988. Continuation of the job search program 
requirement through November 20, 1988, and installation of the training 
program requirement on and after November 21, 1988, is required of all 
applicants for basic TRA.
    (e) Eligibility period for basic TRA. (1) Effective on August 23, 
1988, and with respect to all decisions (i.e., all determinations, 
redeterminations, and decisions on appeals) issued on or after that 
date, the eligibility period for basic TRA is changed from the prior 
law. Prior to the OTCA amendments, section 233(a)(2) provided that the 
eligibility period for an individual was a fixed 104-week period that 
immediately followed the week with respect to which the individual first 
exhausted all rights to regular benefits after the individual's first 
qualifying separation. Under section 233(a)(2) the new eligibility 
period is movable, and is the 104-week period that immediately follows 
the week in which the worker's most recent total qualifying separation 
occurs under the same, single certification. Under the effective date 
provisions of the OTCA, section 233(a)(2) applies to all decisions 
(i.e., determinations, redeterminations, and decisions on appeals) 
issued on and after August 23, 1988. Further, the law to be applied in 
making any such decision is the law as in effect on the date such a 
decision is made. These interpretative rules apply in all cases, 
regardless of whether the total qualifying separation occurred before, 
on, or after August 23, 1988, except as noted in paragraph (e)(3) of 
this section.
    (2) The major significance of the change in section 233(a)(2) is 
that, effective for all decisions (i.e., determinations, 
redeterminations, and decisions on appeals) issued on or after August 
23, 1988, it applies to the ``most recent'' total qualifying separation. 
This means that, after the first qualifying separation before August 23, 
1988, or the first total qualifying separation on and after August 23, 
1988, with each subsequent total qualifying separation of an individual 
under the same certification the individual's eligibility period must be 
redetermined as the 104-week period that immediately follows the week in 
which such subsequent separation occurred.
    (3) Section 1430(g) of the OTCA requires that the new eligibility 
period not be applied with respect to any total qualifying separation 
occurring before August 23, 1988, if as a result of applying section 
233(a)(2) the individual would have an eligibility period with an 
earlier expiration date than the expiration date of the eligibility 
period established under the prior law and based on a first qualifying 
separation which occurred under the same certification before August 23, 
1988. Therefore, for decisions (i.e., determinations, redeterminations, 
and decisions on appeals) issued on or after August 23, 1988, for a 
worker who had a first qualifying separation under the same 
certification before August 23, 1988, it must be determined what the 
individual's eligibility period is based upon the prior law, and, if the 
individual also had a subsequent total qualifying separation, what the 
individual's eligibility period is based on the amended law. Only if the 
subsequent total qualifying separation occurred before August 23, 1988, 
and the expiration date of the new eligibility period ends on the same 
date or a later date than the expiration date of the old eligibility 
period may the new eligibility period be applied to the individual, and 
in that event it must be applied; if the new eligibility period would 
end on a date earlier than the ending date of the eligibility period 
based on the worker's first qualifying separation, section 1430(g) 
operates to preclude the application of amended section 233(a)(2).
    (4) Computation of the weekly and maximum amounts of basic TRA do 
not change under the 1988 Amendments in the OTCA. They must continue to 
be based upon the first benefit period which is related to the worker's 
first total or partial separation under the same certification 
regardless of whether such first separation occurs before, on, or after 
August 23, 1988. Upon the occurrence of a second or subsequent 
separation under the same certification which is a total qualifying 
separation under this part 617, the individual's eligibility period will 
be 104 weeks after the week of such second or

[[Page 147]]

subsequent (total qualifying) separation, but no change will be made in 
the weekly or maximum amounts of basic TRA as computed in relation to 
the first separation. Therefore, for any decision (i.e., determination, 
redetermination, or decision on appeal) issued on or after August 23, 
1988, whenever an individual files a new TRA claim it will be necessary 
to determine whether the individual's most recent separation was a total 
qualifying separation, and, if so, whether the individual had a prior 
partial or total separation within the certification period of the same 
certification which was a first qualifying separation. If such most 
recent (total qualifying) separation occurred before August 23, 1988, 
and was not the individual's first qualifying separation, then:
    (i) The eligibility period will be the 104 weeks beginning with the 
week following the week in which the most recent total qualifying 
separation occurred or 104 weeks after the first exhaustion of regular 
UI following the first qualifying separation, whichever is longer, and
    (ii) The individual's weekly amount of basic TRA, as computed under 
Sec. 617.13, and the individual's maximum amount of basic TRA, as 
computed under Sec. 617.14, are established or remain fixed as 
determined with respect to the individual's first benefit period 
following the first separation which is within the certification period 
of the certification covering the individual.
    (f) Eligibility period for additional TRA. One technical and one 
conforming change are made by the OTCA in section 233(a)(3) of the Act, 
but have no effect on the 26-week eligibility period for additional TRA 
as the statute has been interpreted and applied in the past. Therefore, 
the 26-week eligibility period begins with the first week of training if 
the training begins after exhaustion of basic TRA. Further, if the 
training begins before approval is obtained under this part 617, the 26-
week eligibility period begins with the week in which the determination 
of approval is issued, if there is any scheduled training session in 
that week after the date of the determination.
    (g) Eligibility for TRA during breaks in training. (1) Paragraph (f) 
of section 233 of the Act, added by the OTCA, provides for the payment, 
under specified conditions, of both basic and additional TRA during 
scheduled breaks in a training program, provided the conditions for such 
payments are met as expressed in this part 617. By making this provision 
applicable to basic TRA as well as additional TRA, paragraph (f) of 
section 233 of the Act changes the prior law for both. Previously, basic 
TRA was payable during training breaks, but additional TRA was payable 
solely with respect to weeks of training. Under new section 233(f), both 
basic and additional TRA are payable during training breaks, but only if 
the break does not exceed 14 days. Now, as under the prior law, weeks 
when TRA is not payable will still count against the eligibility periods 
for both basic and additional TRA, and in the case of additional TRA it 
will also count against the number of weeks payable.
    (2) Paragraph (f) of section 233 of the Act is effective with regard 
to all decisions (i.e., all determinations, redeterminations, and 
decisions on appeals) made on or after August 23, 1988, regardless of 
when the training was approved under section 236 of the Trade Act, or 
whether the training was approved or is approvable under section 236 as 
amended by the 1988 Amendments, or when the break in training began or 
ended. In making any decision involving paragraph (f) of section 233 of 
the Act, the law to be applied is the law as in effect on the date the 
decision is made.
    (h) Retroactive eligibility for TRA. (1) Effective on August 23, 
1988, section 1425(b) of the OTCA provides for an open-ended waiver of 
the time limit in section 233(a)(2) on the eligibility period for basic 
TRA, and the 210-day time limit in section 233(b) on filing a bona fide 
application for training in order to qualify for additional TRA. This 
waiver provision applies solely to workers who experienced a total 
qualifying separation in the period which began on August 13, 1981 and 
ended on April 7, 1986. Other conditions must be met that are specified 
in section 1425(b) and in this part 617.
    (2) Altogether, nine conditions must be met for workers to obtain 
TRA payments under this special provision.

[[Page 148]]

(See Sec. 617.11(a)(3).) Further, this special provision applies solely 
to weeks which begin after August 23, 1988; no retroactive payments may 
be made under this special provision. Finally, only the two specific 
time limitations are waived, and all other requirements of the prior and 
amended law apply, including the first separation rule (relating to 
computation of the weekly and maximum amounts of basic TRA payable), the 
26-week eligibility period for additional TRA, and the break provision 
of section 233(f).
    (i) Training for adversely affected workers. Extensive amendments to 
section 236 are made in the OTCA which, except for some technical and 
conforming changes that take effect on November 21, 1988, all became 
effective on August 23, 1988. These changes must be effectuated in 
accordance with this part 617.
    (j) Agreements with States. Section 239 also was amended by the 
OTCA, to require new terms and conditions in the section 239 agreements. 
This requires new agreements to be executed between the States and the 
Secretary of Labor, and gives new emphasis to the contractual nature of 
the obligations entered into by the States to administer the TAA Program 
in strict accordance with the Act and the regulations and operating 
instructions issued by the Department.
    (k) Other. Other matters covered by the OTCA amendments, as well as 
the matters discussed in the preceding paragraphs of this section, 
shall, to the extent that the States may be involved in their 
implementation, be effectuated in strict accordance with the Act and the 
regulations and operating instructions issued by the Department, and as 
of the respective effective dates of the various provisions of the OTCA.

[59 FR 941, Jan. 6, 1994]

 Appendix A to Part 617--Standard for Claim Filing, Claimant Reporting, 
                  Job Finding, and Employment Services

         Employment Security Manual (Part V, Sections 5000-5004)

                         5000-5099 Claims Filing

  5000 Standard for Claim Filing, Claimant Reporting, Job Finding, and 
                           Employment Services

    A. Federal law requirements. Section 3304(a)(1) of the Federal 
Unemployment Tax Act and section 303(a)(2) of the Social Security Act 
require that a State law provide for:
    ``Payment of unemployment compensation solely through public 
employment offices or such other agencies as the Secretary may 
approve.''
    Section 3304(a)(4) of the Federal Unemployment Tax and section 
303(a)(5) of the Social Security Act require that a State law provide 
for:
    ``Expenditure of all money withdrawn from an unemployment fund of 
such State, in the payment of unemployment compensation * * *''
    Section 303(a)(1) of the Social Security Act requires that the State 
law provide for:
    ``Such methods of administration * * * as are found by the Secretary 
to be reasonably calculated to insure full payment of unemployment 
compensation when due.''
    B. Secretary's interpretation of federal law requirements.
    1. The Secretary interprets section 3304(a)(1) of the Federal 
Unemployment Tax Act and section 303(a)(2) of the Social Security Act to 
require that a State law provide for payment of unemployment 
compensation solely through public employment offices or claims offices 
administered by the State employment security agency if such agency 
provides for such coordination in the operations of its public 
employment offices and claims offices as will insure (a) the payment of 
benefits only to individuals who are unemployed and who are able to work 
and available for work, and (b) that individuals claiming unemployment 
compensation (claimants) are afforded such placement and other 
employment services as are necessary and appropriate to return them to 
suitable work as soon as possible.
    2. The Secretary interprets all the above sections to require that a 
State law provide for:
    a. Such contact by claimants with public employment offices or 
claims offices or both, (1) as will reasonably insure the payment of 
unemployment compensation only to individuals who are unemployed and who 
are able to work and available for work, and (2) that claimants are 
afforded such placement

[[Page 149]]

and other employment services as are necessary and appropriate to 
facilitate their return to suitable work as soon as possible; and
    b. Methods of administration which do not unreasonably limit the 
opportunity of individuals to establish their right to unemployment 
compensation due under such States law.

   5001 Claim Filing and Claimant Reporting Requirements Designed To 
                   Satisfy Secretary's Interpretation

    A. Claim filing--total or part-total unemployment
    1. Individuals claiming unemployment compensation for total or part-
total unemployment are required to file a claim weekly or biweekly, in 
person or by mail, at a public employment office or a claims office 
(these terms include offices at itinerant points) as set forth below.
    2. Except as provided in paragraph 3, a claimant is required to file 
in person.
    a. His new claim with respect to a benefit year, or his continued 
claim for a waiting week or for his first compensable week of 
unemployment in such year; and
    b. Any other claim, when requested to do so by the claims personnel 
at the office at which he files his claim(s) because questions about his 
right to benefits are raised by circumstances such as the following:
    (1) The conditions or circumstances of his separation from 
employment;
    (2) The claimant's answers to questions on mail claim(s) indicate 
that he may be unable to work or that there may be undue restrictions on 
his availability for work or that his search for work may be inadequate 
or that he may be disqualified;
    (3) The claimant's answers to questions on mail claims create 
uncertainty about his credibility or indicate a lack of understanding of 
the applicable requirements; or
    (4) The claimant's record shows that he has previously filed a 
fraudulent claim.
    In such circumstances, the claimant is required to continue to file 
claims in person each week (or biweekly) until the State agency 
determines that filing claims in person is no longer required for the 
resolution of such questions.
    3. A claimant must be permitted to file a claim by mail in any of 
the following circumstances:
    a. He is located in an area requiring the expenditure of an 
unreasonable amount of time or money in traveling to the nearest 
facility established by the State agency for filing claims in person;
    b. Conditions make it impracticable for the agency to take claims in 
person;
    c. He has returned to full-time work on or before the scheduled date 
for his filing a claim, unless the agency makes provision for in-person 
filing at a time and place that does not interfere with his employment;
    d. The agency finds that he has good cause for failing to file a 
claim in person.
    4. A claimant who has been receiving benefits for partial 
unemployment may continue to file claims as if he were a partially 
unemployed worker for the first four consecutive weeks of total or part-
total unemployment immediately following his period of partial 
unemployment so long as he remains attached to his regular employer.
    B. Claim filing--partial unemployment. Each individual claiming 
unemployment compensation for a week (or other claim period) during 
which, because of lack of work, he is working less than his normal 
customary full-time hours for his regular employer and is earning less 
than the earnings limit provided in the State law, shall not be required 
to file a claim for such week or other claim period earlier than 2 weeks 
from the date that wages are paid for such claim period or, if a low 
earnings report is required by the State law, from the date the employer 
furnished such report to the individual. State agencies may permit 
claims for partial unemployment to be filed either in person or by mail, 
except that in the circumstances set forth in section A 3, filing by 
mail must be permitted, and in the circumstances set forth in section A 
2 b, filing in person may be required.

   5002 Requirement for Job Finding, Placement, and Other Employment 
         Services Designed To Satisfy Secretary's Interpretation

    A. Claims personnel are required to assure that each claimant is 
doing what a reasonable individual in his circumstances would do to 
obtain suitable work.
    B. In the discretion of the State agency:
    1. The claims personnel are required to give each claimant such 
necessary and appropriate assistance as they reasonably can in finding 
suitable work and at their discretion determine when more complete 
placement and employment services are necessary and appropriate for a 
claimant; and if they determine more complete services are necessary and 
appropriate, the claims personnel are to refer him to employment service 
personnel in the public employment office in which he has been filing 
claim(s), or, if he has been filing in a claims office, in the public 
employment office most accessible to him; or
    2. All placement and employment services are required to be afforded 
to each claimant by employment service personnel in the public 
employment office most accessible to him in which case the claims 
personnel in the office in which the claimant files his claim are to 
refer him to the employment service personnel when placement or other 
employment services are necessary and appropriate for him.

[[Page 150]]

    C. The personnel to whom the State agency assigns the 
responsibilities outlined in paragraph B above are required to give 
claimants such job-finding assistance, placement, and other employment 
services as are necessary and appropriate to facilitate their return to 
suitable work as soon as possible.
    In some circumstances, no such services or only limited services may 
be required. For example, if a claimant is on a short-term temporary 
layoff with a fixed return date, the only service necessary and 
appropriate to be given to him during the period of the layoff is a 
referral to suitable temporary work if such work is being performed in 
the labor market area.
    Similarly, claimants whose unemployment is caused by a labor dispute 
presumably will return to work with their employer as soon as the labor 
dispute is settled. They generally do not need services, nor do 
individuals in occupations where placement customarily is made by other 
nonfee charging placement facilities such as unions and professional 
associations.
    Claimants who fall within the classes which ordinarily would require 
limited services or no services shall, if they request placement and 
employment services, be afforded such services as are necessary and 
appropriate for them to obtain suitable work or to achieve their 
reasonable employment goals.
    On the other hand, a claimant who is permanently separated from his 
job is likely to require some services. He may need only some direction 
in how to get a job; he may need placement services if he is in an 
occupation for which there is some demand in the labor market area; if 
his occupation is outdated, he may require counseling and referral to a 
suitable training course. The extent and character of the services to be 
given any particular claimant may change with the length of his 
unemployment and depend not only on his own circumstances and 
conditions, but also on the condition of the labor market in the area.
    D. Claimants are required to report to employment service personnel, 
as directed, but such personnel and the claims personnel required to so 
arrange and coordinate the contacts required of a claimant as not to 
place an unreasonable burden on him or unreasonably limit his 
opportunity to establish his rights to compensation. As a general rule, 
a claimant is not required to contact in person claims personnel or 
employment service personnel more frequently than once a week, unless he 
is directed to report more frequently for a specific service such as 
referral to a job or a training course or counseling which cannot be 
completed in one visit.
    E. Employment service personnel are required to report promptly to 
claims personnel in the office in which the claimant files his claim(s): 
(1) his failure to apply for or accept work to which he was referred by 
such personnel or when known, by any other nonfee-charging placement 
facility such as a union or a professional association; and (2) any 
information which becomes available to it that may have a bearing on the 
claimant's ability to work or availability for work, or on the 
suitability of work to which he was referred or which was offered to 
him.

             5004 Evaluation of Alternative State Provisions

    If the State law provisions do not conform to the ``suggested State 
law requirements'' set forth in sections 5001 and 5002, but the State 
law contains alternative provisions, the Manpower Administrator, in 
collaboration with the State agency, will study the actual or 
anticipated affect of the alternative provisions. If the Manpower 
Administrator concludes that the alternative provisions satisfy the 
requirements of the Federal law as construed by the Secretary (see 
section 5000 B) he will so notify the State agency. If he does not so 
conclude, he will submit the matter to the Secretary. If the Secretary 
concludes that the alternative provisions satisfy such requirements, the 
State agency will be so notified. If the Secretary concludes that there 
is a question as to whether the alternative provisions satisfy such 
requirements, the State agency will be advised that unless the State law 
provisions are appropriately revised, a notice of hearing will be issued 
as required by the Code of Federal Regulations, title 20, section 601.3.

[59 FR 943, Jan. 6, 1994]

 Appendix B to Part 617--Standard for Claim Determinations--Separation 
                               Information

    6010 Federal Law Requirements. Section 303(a)(1) of the Social 
Security Act requires that a State law include provision for:
    ``Such methods of administration . . . as are found by the Secretary 
to be reasonably calculated to insure full payment of unemployment 
compensation when due.''
    Section 303(a)(3) of the Social Security Act requires that a State 
law include provision for:
    ``Opportunity for a fair hearing before an impartial tribunal, for 
all individuals whose claims for unemployment compensation are denied.''
    Section 3304(a)(4) of the Federal Unemployment Tax Act and section 
303(a)(5) of the Social Security Act require that a State law include 
provision for:
    ``Expenditure of all money withdrawn from an unemployment fund of 
such State, in the payment of unemployment compensation. . . .
    Section 3306(h) of the Federal Unemployment Tax Act defines 
``compensation'' as

[[Page 151]]

``cash benefits payable to individuals with respect to their 
unemployment.''
    6011 Secretary's Interpretation of Federal Law Requirements. The 
Secretary interprets the above sections to require that a State law 
include provisions which will insure that:
    A. Individuals who may be entitled to unemployment compensation are 
furnished such information as will reasonably afford them an opportunity 
to know, establish, and protect their rights under the unemployment 
compensation law of such State, and
    B. The State agency obtains and records in time for the prompt 
determination and review of benefit claims such information as will 
reasonably insure the payment of benefits to individuals to whom 
benefits are due.
    6012 Criteria for Review of State Law Conformity with Federal 
Requirements:
    In determining the conformity of a State law with the above 
requirements of the Federal Unemployment Tax Act and the Social Security 
Act as interpreted by the Secretary, the following criteria will be 
applied:
    A. Is it required that individuals who may be entitled to 
unemployment compensation be furnished such information of their 
potential rights to benefits, including the manner and places of filing 
claims, the reasons for determinations, and their rights of appeal, as 
will insure them a reasonable opportunity to know, establish, and 
protect their rights under the law of the State?
    B. Is the State agency required to obtain, in time for prompt 
determination of rights to benefits such information as will reasonably 
insure the payment of benefits to individuals to whom benefits are due?
    C. Is the State agency required to keep records of the facts 
considered in reaching determinations of rights to benefits?
    6013 Claim Determinations Requirements Designed To Meet Department 
of Labor Criteria:
    A. Investigation of claims. The State agency is required to obtain 
promptly and prior to a determination of an individual's right to 
benefits, such facts pertaining thereto as will be sufficient reasonably 
to insure the payment of benefits when due.
    This requirement embraces five separate elements:
    1. It is the responsibility of the agency to take the initiative in 
the discovery of information. This responsibility may not be passed on 
to the claimant or the employer. In addition to the agency's own 
records, this information may be obtained from the worker, the employer, 
or other sources. If the information obtained in the first instance 
discloses no essential disagreement and provides a sufficient basis for 
a fair determination, no further investigation is necessary. If the 
information obtained from other sources differs essentially from that 
furnished by the claimant, the agency, in order to meet its 
responsibility, is required to inform the claimant of such information 
from other sources and to afford the claimant an opportunity to furnish 
any further facts he may have.
    2. Evidentiary facts must be obtained as distinguished from ultimate 
facts or conclusions. That a worker was discharged for misconduct is an 
ultimate fact or conclusion; that he destroyed a machine upon which he 
was working is a primary or evidentiary fact, and the sort of fact that 
the requirement refers to.
    3. The information obtained must be sufficient reasonably to insure 
the payment of benefits when due. In general, the investigation made by 
the agency must be complete enough to provide information upon which the 
agency may act with reasonable assurance that its decision is consistent 
with the unemployment compensation law. On the other hand, the 
investigation should not be so exhaustive and time-consuming as unduly 
to delay the payment of benefits and to result in excessive costs.
    4. Information must be obtained promptly so that the payment of 
benefits is not unduly delayed.
    5. If the State agency requires any particular evidence from the 
worker, it must give him a reasonable opportunity to obtain such 
evidence.
    B. Recording of facts. The agency must keep a written record of the 
facts considered in reaching its determinations.
    C. Determination notices:
    1. The agency must give each claimant a written notice of:
    a. Any monetary determination with respect to his benefit year;
    b. Any determination with respect to purging a disqualification if, 
under the State law, a condition or qualification must be satisfied with 
respect to each week of disqualification; but in lieu of giving written 
notice of each determination for each week in which it is determined 
that the claimant has met the requirements for purging, the agency may 
inform the claimant that he has purged the disqualification for a week 
by notation on his applicant identification card or otherwise in 
writing.
    c. Any other determination which adversely affects his rights to 
benefits, except that written notice of determination need not be given 
with respect to:
    (1) A week in a benefit year for which the claimant's weekly benefit 
amount is reduced in whole or in part by earnings if, the first time in 
the benefit year that there is such a reduction, he is required to be 
furnished a booklet or leaflet containing the information set forth 
below in paragraph 2f(1). However, a written notice of determination is 
required if: (a) there is a dispute concerning the reduction with 
respect to any week (e.g., as to the amount computed as the appropriate 
reduction, etc.); or (b) there is a

[[Page 152]]

change in the State law (or in the application thereof) affecting the 
reduction; or
    (2) Any week in a benefit year subsequent to the first week in such 
benefit year in which benefits were denied, or reduced in whole or in 
part for reasons other than earnings, if denial or reduction for such 
subsequent week is based on the same reason and the same facts as for 
the first week, and if written notice of determination is required to be 
given to the claimant with respect to such first week, and with such 
notice of determination, he is required to be given a booklet or 
pamphlet containing the information set forth below in paragraph 2f(2) 
and 2h. However, a written notice of determination is required if: (a) 
there is a dispute concerning the denial or reduction of benefits with 
respect to such week; or (b) there is a change in the State law (or in 
the application thereof) affecting the denial or reduction; or (c) there 
is a change in the amount of the reduction except as to the balance 
covered by the last reduction in a series of reductions.
    Note: This procedure may be applied to determinations made with 
respect to any subsequent weeks for the same reason and on the basis of 
the same facts: (a) that claimant is unable to work, unavailable for 
work, or is disqualified under the labor dispute provision; and (b) 
reducing claimant's weekly benefit amount because of income other than 
earnings or offset by reason of overpayment.
    2. The agency must include in written notices of determinations 
furnished to claimants sufficient information to enable them to 
understand the determinations, the reasons therefor, and their rights to 
protest, request reconsideration, or appeal.
    The written notice of monetary determination must contain the 
information specified in the following items (except h) unless an item 
is specifically not applicable. A written notice of any other 
determination must contain the information specified in as many of the 
following items as are necessary to enable the claimant to understand 
the determination and to inform him of his appeal rights. Information 
specifically applicable to the individual claimant must be contained in 
the written notice of determination. Information of general application 
such as (but not limited to) the explanation of benefits for partial 
unemployment, information as to deductions, seasonality factors, and 
information as to the manner and place of taking an appeal, extension of 
the appeal period, and where to obtain information and assistance may be 
contained in a booklet or leaflet which is given the claimant with his 
monetary determination.
    a. Base period wages. The statement concerning base-period wages 
must be in sufficient detail to show the basis of computation of 
eligibility and weekly and maximum benefit amounts. (If maximum benefits 
are allowed, it may not be necessary to show details of earnings.)
    b. Employer name. The name of the employer who reported the wage is 
necessary so that the worker may check the wage transcript and know 
whether it is correct. If the worker is given only the employer number, 
he may not be able to check the accuracy of the wage transcript.
    c. Explanation of benefit formula--weekly and maximum benefit 
amounts. Sufficient information must be given the worker so that he will 
understand how his weekly benefit amount, including allowances for 
dependents, and his maximum benefit amount were figured. If benefits are 
computed by means of a table contained in the law, the table must be 
furnished with the notice of determination whether benefits are granted 
or denied.
    The written notice of determination must show clearly the weekly 
benefit amount and the maximum potential benefits to which the claimant 
is entitled.
    The notice to a claimant found ineligible by reason of insufficient 
earnings in the base period must inform him clearly of the reason for 
ineligibility. An explanation of the benefit formula contained in a 
booklet or pamphlet should be given to each claimant at or prior to the 
time he receives written notice of a monetary determination.
    d. Benefit year. An explanation of what is meant by the benefit year 
and identification of the claimant's benefit year must be included in 
the notice of determination.
    e. Information as to benefits for partial unemployment. There must 
be included either in the written notice of determination or in a 
booklet or pamphlet accompanying the notice an explanation of the 
claimant's rights to partial benefits for any week with respect to which 
he is working less than his normal customary full-time workweek because 
of lack of work and for which he earns less than his weekly benefit 
amount or weekly benefit amount plus earnings, whichever is provided by 
the State law. If the explanation is contained in the notice of 
determination, reference to the item in the notice in which his weekly 
benefit amount is entered should be made.
    f. Deductions from weekly benefits:
    (1) Earnings. Although written notice of determinations deducting 
earnings from a claimant's weekly benefit amount is generally not 
required (see paragraph 1 c (1) above), where written notice of 
determination is required (or given) it shall set forth the amount of 
earnings, the method of computing the deduction in sufficient detail to 
enable the claimant to verify the accuracy of the deduction, and his 
right to protest, request redetermination, and appeal. Where a written 
notice of determination is given to the claimant because there has been 
a change in the State law or in the application

[[Page 153]]

of the law, an explanation of the change shall be included.
    When claimant is not required to receive a written notice of 
determination, he must be given a booklet or pamphlet the first time in 
his benefit year that there is a deduction for earnings which shall 
include the following information:
    (a) The method of computing deductions for earnings in sufficient 
detail to enable the claimant to verify the accuracy of the deduction;
    (b) That he will not automatically be given a written notice of 
determination for a week with respect to which there is a deduction for 
earnings (unless there is a dispute concerning the reduction with 
respect to a week or there has been a change in the State law or in the 
application of the law affecting the deduction) but that he may obtain 
such a written notice upon request; and
    (c) A clear statement of his right to protest, request a 
redetermination, and appeal from any determination deducting earnings 
from his weekly benefit amount even though he does not automatically 
receive a written notice of determination; and if the State law requires 
written notice of determination in order to effectuate a protest, 
redetermination, or appeal, he must be so advised and advised also that 
he must request a written notice of determination before he takes any 
such action.
    (2) Other deductions:
    (a) A written notice of determination is required with respect to 
the first week in claimant's benefit year in which there is a reduction 
from his benefits for a reason other than earnings. This notice must 
describe the deduction made from claimant's weekly benefit amount, the 
reason for the deduction, the method of computing it in sufficient 
detail to enable him to verify the accuracy of such deduction, and his 
right to protest, request redetermination, or appeal.
    (b) A written notice of determination is not required for subsequent 
weeks that a deduction is made for the same reason and on the basis of 
the same facts, if the notice of determination pursuant to (2) (a), or a 
booklet or pamphlet given him with such notice explains (i) the several 
kinds of deductions which may be made under the State law (e.g., 
retirement pensions, vacation pay, and overpayments); (ii) the method of 
computing each kind of deduction in sufficient detail that claimant will 
be able to verify the accuracy of deductions made from his weekly 
benefit payments; (iii) any limitation on the amount of any deduction or 
the time in which any deduction may be made; (iv) that he will not 
automatically be given a written notice of determination for subsequent 
weeks with respect to which there is a deduction for the same reason and 
on the basis of the same facts, but that he may obtain a written notice 
of determination upon request; (v) his right to protest, request 
redetermination, or appeal with respect to subsequent weeks for which 
there is a reduction from his benefits for the same reason, and on the 
basis of the same facts even though he does not automatically receive a 
written notice of determination; and (vi) that if the State law requires 
written notice of determination in order to effectuate a protest, 
redetermination, or appeal, he must be so advised and advised also that 
he must request a written notice of determination before he takes any 
such action.
    g. Seasonality factors. If the individual's determination is 
affected by seasonality factors under the State law, an adequate 
explanation must be made. General explanations of seasonality factors 
which may affect determinations for subsequent weeks may be included in 
a booklet or pamphlet given claimant with his notice of monetary 
determinations.
    h. Disqualification or ineligibility. If a disqualification is 
imposed, or if the claimant is declared ineligible for one or more 
weeks, he must be given not only a statement of the period of 
disqualification or ineligibility and the amount of wage-credit 
reductions, if any, but also an explanation of the reason for the 
ineligibility or disqualification. This explanation must be sufficiently 
detailed so that he will understand why he is ineligible or why he has 
been disqualified, and what he must do in order to requalify for 
benefits or purge the disqualification. The statement must be 
individualized to indicate the facts upon which the determination was 
based, e.g., state, ``It is found that you left your work with Blank 
Company because you were tired of working; the separation was voluntary, 
and the reason does not constitute good cause,'' rather than merely the 
phrase ``voluntary quit.'' Checking a box as to the reason for the 
disqualification is not a sufficiently detailed explanation. However, 
this statement of the reason for the disqualification need not be a 
restatement of all facts considered in arriving at the determination.
    i. Appeal rights. The claimant must be given information with 
respect to his appeal rights.
    (1) The following information shall be included in the notice of 
determination:
    (a) A statement that he may appeal or, if the State law requires or 
permits a protest or redetermination before an appeal, that he may 
protest or request a redetermination.
    (b) The period within which an appeal, protest, or request for 
redetermination must be filed. The number of days provided by statute 
must be shown as well as either the beginning date or ending date of the 
period. (It is recommended that the ending date of the appeal period be 
shown, as this is the more understandable of the alternatives.)
    (2) The following information must be included either in the notice 
of determination

[[Page 154]]

or in separate informational material referred to in the notice:
    (a) The manner in which the appeal, protest, or request for 
redetermination must be filed, e.g., by signed letter, written 
statement, or on a prescribed form, and the place or places to which the 
appeal, protest, or request for redetermination may be mailed or hand-
delivered.
    (b) An explanation of any circumstances (such as nonworkdays, good 
cause, etc.) which will extend the period for the appeal, protest, or 
request for redetermination beyond the date stated or identified in the 
notice of determination.
    (c) That any further information claimant may need or desire can be 
obtained together with assistance in filing his appeal, protest, or 
request for redetermination from the local office.
    If the information is given in separate material, the notice of 
determination would adequately refer to such material if it said, for 
example, ``For other information about your (appeal), (protest), 
(redetermination) rights, see pages ---- to ---- of the ---- (name of 
pamphlet or booklet) heretofore furnished to you.''
    6014 Separation Information Requirements Designed To Meet Department 
of Labor Criteria:
    A. Information to agency. Where workers are separated, employers are 
required to furnish the agency promptly, either upon agency request or 
upon such separation, a notice describing the reasons for and the 
circumstances of the separation and any additional information which 
might affect a claimant's right to benefits. Where workers are working 
less than full time, employers are required to furnish the agency 
promptly, upon agency request, information concerning a claimant's hours 
of work and his wages during the claim periods involved, and other facts 
which might affect a claimant's eligibility for benefits during such 
periods.
    When workers are separated and the notices are obtained on a request 
basis, or when workers are working less than full time and the agency 
requests information, it is essential to the prompt processing of claims 
that the request be sent out promptly after the claim is filed and the 
employer be given a specific period within which to return the notice, 
preferably within 2 working days.
    When workers are separated and notices are obtained upon separation, 
it is essential that the employer be required to send the notice to the 
agency with sufficient promptness to insure that, if a claim is filed, 
it may be processed promptly. Normally, it is desirable that such a 
notice be sent to the central office of the agency, since the employer 
may not know in which local office the worker will file his claim. The 
usual procedure is for the employer to give the worker a copy of the 
notice sent by the employer to the agency.
    B. Information to worker:
    1. Information required to be given. Employers are required to give 
their employees information and instructions concerning the employees' 
potential rights to benefits and concerning registration for work and 
filing claims for benefits.
    The information furnished to employees under such a requirement need 
not be elaborate; it need only be adequate to insure that the worker who 
is separated or who is working less than full time knows he is 
potentially eligible for benefits and is informed as to what he is to do 
or where he is to go to file his claim and register for work. When he 
files his claim, he can obtain more detailed information.
    In States that do not require employers to furnish periodically to 
the State agency detailed reports of the wages paid to their employees, 
each employer is required to furnish to his employees information as to 
(a) the name under which he is registered by the State agency, (b) the 
address where he maintains his payroll records, and (c) the workers' 
need for this information if and when they file claims for benefits.
    2. Methods for giving information. The information and instructions 
required above may be given in any of the following ways:
    a. Posters prominently displayed in the employer's establishment. 
The State agency should supply employers with a sufficient number of 
posters for distribution throughout their places of business and should 
see that the posters are conspicuously displayed at all times.
    b. Leaflets. Leaflets distributed either periodically or at the time 
of separation or reduction of hours. The State agency should supply 
employers with a sufficient number of leaflets.
    c. Individual notices. Individual notices given to each employee at 
the time of separation or reduction in hours.
    It is recommended that the State agency's publicity program be used 
to supplement the employer-information requirements. Such a program 
should stress the availability and location of claim-filing offices and 
the importance of visiting those offices whenever the worker is 
unemployed, wishes to apply for benefits, and to seek a job.
    6015 Evaluation of Alternative State Provisions with Respect to 
Claim Determinations and Separation Information. If the State law 
provisions do not conform to the suggested requirements set forth in 
sections 6013 and 6014, but the State law contains alternative 
provisions, the Bureau of Employment Security, in collaboration with the 
State agency, will study the actual or anticipated effects of the 
alternative provisions. If the Administrator of the Bureau concludes 
that the alternative provisions satisfy the criteria in

[[Page 155]]

section 6012, he will so notify the State agency. If the Administrator 
of the Bureau does not so conclude, he will submit the matter to the 
Secretary. If the Secretary concludes that the alternative provisions 
satisfy the criteria in section 6012, the State agency will be so 
notified. If the Secretary concludes that there is a question as to 
whether the alternative provisions satisfy the criteria, the State 
agency will be advised that unless the State law provisions are 
appropriately revised, a notice of hearing will be issued as required by 
the Code of Federal Regulations, title 20, Sec. 601.5.

[51 FR 45848, Dec. 22, 1986. Redesignated at 59 FR 943, Jan. 6, 1994]

  Appendix C to Part 617--Standard for Fraud and Overpayment Detection

    7510 Federal Law Requirements. Section 303(a)(1) of the Social 
Security Act requires that a State law include provision for:
    ``Such methods of administration . . . as are found by the Secretary 
to be reasonably calculated to insure full payment of unemployment 
compensation when due.''
    Section 1603(a)(4) of the Internal Revenue Code and section 
3030(a)(5) of the Social Security Act require that a State law include 
provision for:
    ``Expenditure of all money withdrawn from an unemployment fund of 
such State, in the payment of unemployment compensation . . .''
    Section 1607(h) of the Internal Revenue Code defines 
``compensation'' as ``cash benefits payable to individuals with respect 
to their unemployment.''
    7511 The Secretary's Interpretation of Federal Law Requirements. The 
Secretary of Labor interprets the above sections to require that a State 
law include provision for such methods of administration as are, within 
reason, calculated (1) to detect benefits paid through error by the 
agency or through willful misrepresentation or error by the claimant or 
others, and (2) to deter claimants from obtaining benefits through 
willful misrepresentation.
    7513 Criteria for Review of State Conformity With Federal 
Requirements. In determining State conformity with the above 
requirements of the Internal Revenue Code and the Social Security Act, 
as interpreted by the Secretary of Labor, the following criteria will be 
applied:
    A. Are investigations required to be made after the payment of 
benefits, (or, in the case of interstate claims, are investigations made 
by the agent State after the processing of claims) as to claimants' 
entitlement to benefits paid to them in a sufficient proportion of cases 
to test the effectiveness of the agency's procedures for the prevention 
of payments which are not due? To carry out investigations, has the 
agency assigned to some individual or unit, as a basic function, the 
responsibility of making or functionally directing such investigations?
    Explanation: It is not feasible to prescribe the extent to which the 
above activities are required; however, they should always be carried on 
to such an extent that they will show whether or not error or willful 
misrepresentation is increasing or decreasing, and will reveal problem 
areas. The extent and nature of the above activities should be varied 
according to the seriousness of the problem in the State. The 
responsible individual or unit should:
    1. Check paid claims for overpayment and investigate for willful 
misrepresentation or, alternatively, advise and assist the operating 
units in the performance of such functions, or both;
    2. Perform consultative services with respect to methods and 
procedures for the prevention and detection of fraud; and
    3. Perform other services which are closely related to the above.
    Although a State agency is expected to make a full-time assignment 
of responsibility to a unit or individual to carry on the functions 
described above, a small State agency might make these functions a part-
time responsibility of one individual. In connection with the detection 
of overpayments, such a unit or individual might, for example:
    (a) Investigate information on suspected benefit fraud received from 
any agency personnel, and from sources outside the agency, including 
anonymous complaints;
    (b) Investigate information secured from comparisons of benefit 
payments with employment records to detect cases of concurrent working 
(whether in covered or noncovered work) and claiming of benefits 
(including benefit payments in which the agency acted as agent for 
another State).
    The benefit fraud referred to herein may involve employers, agency 
employees, and witnesses, as well as claimants.
    Comparisons of benefit payments with employment records are comonly 
made either by post-audit or by industry surveys. The so-called ``post-
audit'' is a matching of central office wage-record files against 
benefit payments for the same period. ``Industry surveys'' or ``mass 
audits'' are done in some States by going directly to employers for pay-
roll information to be checked against concurrent benefit lists. A plan 
of investigation based on a sample post-audit will be considered as 
partial fulfillment of the investigation program; it would need to be 
supplemented by other methods capable of detecting overpayments to 
persons who have moved into noncovered occupations or are claiming 
interstate benefits.
    B. Are adequate records maintained by which the results of 
investigations may be evaluated?

[[Page 156]]

    Explanation. To meet this criterion, the State agency will be 
expected to maintain records of all its activities in the detection of 
overpayments, showing whether attributable to error or willful 
misrepresentation, measuring the results obtained through various 
methods, and noting the remedial action taken in each case. The adequacy 
and effectiveness of various methods of checking for willful 
misrepresentation can be evaluated only if records are kept of the 
results obtained. Internal reports on fraudulent and erroneous 
overpayments are needed by State agencies for self-evaluation. Detailed 
records should be maintained in order that the State agency may 
determine, for example, which of several methods of checking currently 
used are the most productive. Such records also will provide the basis 
for drawing a clear distinction between fraud and error.
    C. Does the agency take adequate action with respect to publicity 
concerning willful misrepresentation and its legal consequences to deter 
fraud by claimants?
    Explanation. To meet this criterion, the State agency must issue 
adequate material of claimant eligibility requirements and must take 
necessary action to obtain publicity on the legal consequences of 
willful misrepresentation or willful nondisclosure of facts.
    Public announcements on convictions and resulting penalties for 
fraud are generally considered necessary as a deterrent to other 
persons, and to inform the public that the agency is carrying on an 
effective program to prevent fraud. This alone is not considered 
adequate publicity. It is important that information be circulated which 
will explain clearly and understandably the claimant's rights, and the 
obligations which he must fulfill to be eligible for benefits. Leaflets 
for distribution and posters placed in local offices are appropriate 
media for such information.
    *7515 Evaluation of Alternative State Provisions with Respect to 
Erroneous and Illegal Payments. If the methods of administration 
provided for by the State law do not conform to the suggested methods of 
meeting the requirements set forth in section 7511, but a State law does 
provide for alternative methods of administration designed to accomplish 
the same results, the Bureau of Employment Security, in collaboration 
with the State agency, will study the actual or anticipated effect of 
the alternative methods of administration. If the Bureau concludes that 
the alternative methods satisfy the criteria in section 7513, it will so 
notify the State agency. If the Bureau does not so conclude, it will 
submit to the Secretary the results of the study for his determination 
of whether the State's alternative methods of administration meet the 
criteria.

[51 FR 45848, Dec. 22, 1986. Redesignated at 59 FR 943, Jan. 6, 1994]

                        PARTS 618-621 [RESERVED]



PART 625_DISASTER UNEMPLOYMENT ASSISTANCE--Table of Contents




Sec.
625.1 Purpose; rules of construction.
625.2 Definitions.
625.3 Reemployment assistance.
625.4 Eligibility requirements for Disaster Unemployment Assistance.
625.5 Unemployment caused by a major disaster.
625.6 Weekly amount; jurisdictions; reductions.
625.7 Disaster Unemployment Assistance: Duration.
625.8 Applications for Disaster Unemployment Assistance.
625.9 Determinations of entitlement; notices to individual.
625.10 Appeal and review.
625.11 Provisions of State law applicable.
625.12 The applicable State for an individual.
625.13 Restrictions on entitlement; disqualification.
625.14 Overpayments; disqualification for fraud.
625.15 Inviolate rights to DUA.
625.16 Recordkeeping; disclosure of information.
625.17 Announcement of the beginning of a Disaster Assistance Period.
625.18 Public access to Agreements.
625.19 Information, reports and studies.
625.20 Saving clause.
625.30 Appeal Procedures for Guam, American Samoa, Commonwealth of the 
          Northern Mariana Islands, Federated States of Micronesia, 
          Republic of the Marshall Islands, and the Trust Territory of 
          the Pacific Islands.

Appendix A to Part 625--Standard for Claim Filing, Claimant Reporting, 
          Job Finding, and Employment Services
Appendix B to Part 625--Standard for Claim Determinations--Separation 
          Information
Appendix C to Part 625--Standard for Fraud and Overpayment Detection

    Authority: 42 U.S.C. 1302; 42 U.S.C. 5164; 42 U.S.C. 5189a(c); 42 
U.S.C. 5201(a); Executive Order 12673 of March 23, 1989 (54 FR 12571); 
delegation of authority from the Director of the Federal Emergency 
Management Agency to the Secretary of Labor, effective December 1, 1985 
(51 FR 4988); Secretary's Order No. 4-75 (40 FR 18515).

[[Page 157]]


    Source: 42 FR 46712, Sept. 16, 1977, unless otherwise noted.



Sec. 625.1  Purpose; rules of construction.

    (a) Purpose. Section 410 of ``The Robert T. Stafford Disaster Relief 
and Emergency Assistance Act'' amended the program for the payment of 
unemployment assistance to unemployed individuals whose unemployment is 
caused by a major disaster, and to provide reemployment assistance 
services to those individuals. The unemployment assistance provided for 
in section 410 of the Act is hereinafter referred to as Disaster 
Unemployment Assistance, or DUA. The regulations in this part are issued 
to implement sections 410 and 423 of the Act.
    (b) First rule of construction. Sections 410 and 423 of the Act and 
the implementing regulations in this part shall be construed liberally 
so as to carry out the purposes of the Act.
    (c) Second rule of construction. Sections 410 and 423 of the Act and 
the implementing regulations in this part shall be construed so as to 
assure insofar as possible the uniform interpretation and application of 
the Act throughout the United States.
    (d) Effectuating purpose and rules of construction. (1) In order to 
effectuate the provisions of this section, each State agency shall 
forward to the United States Department of Labor, on receipt of a 
request from the Department, a copy of any determination or 
redetermination ruling on an individual's entitlement to DUA.
    (2) If the Department believes a determination or redetermination is 
inconsistent with the Secretary's interpretation of the Act, the 
Department may at any time notify the State agency of the department's 
view. Thereafter, the State agency shall appeal if possible, and shall 
not follow such determination or redetermination as a precedent; and in 
any subsequent proceedings which involve such determination or 
redetermination, or wherein such determination or redetermination is 
cited as precedent or otherwise relied upon, the State agency shall 
inform the hearing officer of the Department's view and shall make all 
reasonable efforts to obtain modification, limitation, or overruling of 
the determination or redetermination.
    (3) A State agency may request reconsideration of a notice that a 
determination or redetermination is inconsistent with the Act, and shall 
be given an opportunity to present views and arguments if desired. If a 
determination or redetermination setting a precedent becomes final, 
which the Department believes to be inconsistent with the Act, the 
Secretary will decide whether the Agreement with the State shall be 
terminated.
    (4) Concurrence of the Department in a determination or 
redetermination shall not be presumed from the absence of a notice 
issued pursuant to this paragraph.

[42 FR 46712, Sept. 16, 1977, as amended at 55 FR 554, Jan. 5, 1990]



Sec. 625.2  Definitions.

    For the purposes of the Act and this part:
    (a) Act means sections 410 and 423 of The Robert T. Stafford 
Disaster Relief and Emergency Assistance Act (formerly section 407 of 
the ``Disaster Relief Act of 1974'', Pub. L. 93-288, 88 Stat. 143, 156, 
approved May 22, 1974), 42 U.S.C. 5177, 5189a, as amended by The 
Disaster Relief and Emergency Assistance Amendments of 1988, Pub. L. 
100-707, 102 Stat. 4689, 4704, 4705, approved November 23, 1988.
    (b) Agreement means the Agreement entered into pursuant to the Act, 
between a State and the Secretary of Labor of the United States, under 
which the State agency of the State agrees to make payments of Disaster 
Unemployment Assistance in accordance with the Act and the regulations 
and procedures thereunder prescribed by the Secretary.
    (c) Announcement date means the first day on which the State agency 
publicly announces the availability of Disaster Unemployment Assistance 
in the State, pursuant to Sec. 625.17.
    (d) Compensation means unemployment compensation as defined in 
section 85(b) of the Internal Revenue Code of 1986, and shall include 
any assistance or allowance payable to an individual with respect to 
such individual's unemployment under any State law or Federal 
unemployment compensation

[[Page 158]]

law unless such governmental unemployment compensation program payments 
are not considered ``compensation'' by ruling of the Internal Revenue 
Service or specific provision of Federal and/or State law because such 
payments are based on employee contributions which are not deductible 
from Federal income tax liability until the total nondeductible 
contributions paid by the employee to such program has been paid or are 
not ``compensation'' as defined under paragraph (d)(5) of this section. 
Governmental unemployment compensation programs include (but are not 
limited to) programs established under: a State law approved by the 
Secretary of Labor pursuant to section 3304 of the Internal Revenue 
Code, chapter 85 of title 5 of the United States Code, the Railroad 
Unemployment Insurance Act (45 U.S.C. 351 et seq.), any Federal 
supplementary compensation law, and trade readjustment allowances 
payable under chapter 2 of title II of the Trade Act of 1974 (19 U.S.C. 
2271 et seq.). ``Compensation'' also includes ``regular compensation'', 
``additional compensation'', ``extended compensation'', ``Federal 
supplementary compensation'', and ``disability payments'' defined as 
follows:
    (1) Regular compensation means compensation payable to an individual 
under any State law or the unemployment compensation plan of a political 
subdivision of a State and, when so payable, includes compensation 
payable pursuant to 5 U.S.C. chapter 85 (parts 609 and 614 of this 
chapter), but not including extended compensation or additional 
compensation.
    (2) Additional compensation means compensation totally financed by a 
State and payable under a State law by reason of conditions of high 
unemployment or by reason of other special factors, and, when so 
payable, includes compensation payable pursuant to 5 U.S.C. chapter 85.
    (3) Extended compensation means compensation payable to an 
individual for weeks of unemployment in an extended benefit period, 
under those provisions of a State law which satisfy the requirements of 
the Federal-State Extended Unemployment Compensation Act of 1970 (title 
II, Pub. L. 91-373; 84 Stat. 695, 708; part 615 of this chapter), as 
amended with respect to the payment of extended compensation, and, when 
so payable, includes additional compensation and compensation payable 
pursuant to 5 U.S.C. chapter 85.
    (4) Federal supplementary compensation means supplemental 
compensation payable under a temporary Federal law after exhaustion of 
regular and extended compensation.
    (5) Disability payments means cash disability payments made pursuant 
to a governmental program as a substitute for cash unemployment payments 
to an individual who is ineligible for such payments solely because of 
the disability, except for payments made under workmen's compensation 
acts for personal injuries or sickness.
    (e) Date the major disaster began means the date a major disaster 
first occurred, as specified in the understanding between the Federal 
Emergency Management Agency and the Governor of the State in which the 
major disaster occurred.
    (f) Disaster Assistance Period means the period beginning with the 
first week following the date the major disaster began, and ending with 
[the 26th week subsequent to the date the major disaster was declared.
    (g) Disaster Unemployment Assistance means the assistance payable to 
an individual eligible for the assistance under the Act and this part, 
and which is referred to as DUA.
    (h) Federal Coordinating Officer means the official appointed 
pursuant to section 302 of The Robert T. Stafford Disaster Relief and 
Emergency Assistance Act, to operate in the affected major disaster 
area.
    (i) Governor means the chief executive of a State.
    (j) Initial application means the first application for DUA filed by 
an individual, on the basis of which the individual's eligibility for 
DUA is determined.
    (k) Major disaster means a major disaster as declared by the 
President pursuant to section 401 of The Robert T. Stafford Disaster 
Relief and Emergency Assistance Act.

[[Page 159]]

    (l) Major disaster area means the area identified as eligible for 
Federal assistance by the Federal Emergency Management Agency, pursuant 
to a Presidential declaration of a major disaster.
    (m) Secretary means the Secretary of Labor of the United States.
    (n) Self-employed individual means an individual whose primary 
reliance for income is on the performance of services in the 
individual's own business, or on the individual's own farm.
    (o) Self-employment means services performed as a self-employed 
individual.
    (p) State means any State of the United States, the District of 
Columbia, the Commonwealth of Puerto Rico, the United States Virgin 
Islands, the Territory of Guam, American Samoa, Commonwealth of the 
Northern Mariana Islands, Federated States of Micronesia, Republic of 
the Marshall Islands, and the Trust Territory of the Pacific Islands.
    (q) State agency means--
    (1) In all States except the Territory of Guam, American Samoa, 
Commonwealth of the Northern Mariana Islands, Federated States of 
Micronesia, Republic of the Marshall Islands and the Trust Territory of 
the Pacific Islands, the agency administering the State law; and
    (2) In the Territory of Guam, American Samoa, Commonwealth of the 
Northern Mariana Islands, Federated States of Micronesia, Republic of 
the Marshall Islands and the Trust Territory of the Pacific Islands, the 
agency designated in the Agreement entered into by the State.
    (r)(1) State law means, with respect to--
    (i) The States of the United States, the District of Columbia, the 
Commonwealth of Puerto Rico, and the Virgin Islands, the unemployment 
compensation law of the State which has been approved under section 
3304(a) of the Internal Revenue Code of 1986 (26 U.S.C. 3304(a)); and
    (ii) The Territory of Guam, American Samoa, Commonwealth of the 
Northern Mariana Islands, Federated States of Micronesia, Republic of 
the Marshall Islands and the Trust Territory of the Pacific Islands, the 
Hawaii Employment Security Law.
    (2) Applicable State law means, for an individual, the State law of 
the applicable State for an individual as provided in Sec. 625.12.
    (s) Unemployed worker means an individual who was employed in or was 
to commence employment in the major disaster area at the time the major 
disaster began, and whose principal source of income and livelihood is 
dependent upon the individual's employment for wages, and whose 
unemployment is caused by a major disaster as provided in Sec. 
625.5(a).
    (t) Unemployed self-employed individual means an individual who was 
self-employed in or was to commence self-employment in the major 
disaster area at the time the major disaster began, and whose principal 
source of income and livelihood is dependent upon the individual's 
performance of service in self-employment, and whose unemployment is 
caused by a major disaster as provided in Sec. 625.5(b).
    (u) Wages means remuneration for services performed for another, 
and, with respect to a self-employed individual, net income from 
services performed in self-employment.
    (v) Week means a week as defined in the applicable State law.
    (w) Week of unemployment means--
    (1) For an unemployed worker, any week during which the individual 
is totally, part-totally, or partially unemployed. A week of total 
unemployment is a week during which the individual performs no work and 
earns no wages, or has less than full-time work and earns wages not 
exceeding the minimum earnings allowance prescribed in the applicable 
State law. A week of part-total unemployment is a week of otherwise 
total unemployment during which the individual has odd jobs or 
subsidiary work and earns wages not exceeding the maximum earnings 
allowance prescribed in the applicable State law. A week of partial 
unemployment is a week during which the individual works less than 
regular, full-time hours for the individual's regular employer, as a 
direct result of the major disaster, and earns wages not exceeding the 
maximum earnings allowance prescribed by the applicable State law.

[[Page 160]]

    (2) For an unemployed self-employed individual, any week during 
which the individual is totally, part-totally, or partially unemployed. 
A week of total unemployment is a week during which the individual 
performs no services in self-employment or in an employer-employee 
relationship, or performs services less than full-time and earns wages 
not exceeding the minimum earnings allowance prescribed in the 
applicable State law. A week of part-total unemployment is a week of 
otherwise total unemployment during which the individual has odd jobs or 
subsidiary work and earns wages not exceeding the maximum earnings 
allowance prescribed in the applicable State law. A week of partial 
unemployment is a week during which the individual performs less than 
the customary full-time services in self-employment, as a direct result 
of the major disaster, and earns wages not exceeding the maximum 
earnings allowance prescribed by the applicable State law, or during 
which the only activities or services performed are for the sole purpose 
of enabling the individual to resume self-employment.
    (3) If the week of unemployment for which an individual claims DUA 
is a week with respect to which the individual is reemployed in a 
suitable position or has commenced services in self-employment, that 
week shall be treated as a week of partial unemployment if the week 
qualifies as a week of partial unemployment as defined in this 
paragraph.

[42 FR 46712, Sept. 16, 1977, as amended at 55 FR 554, Jan. 5, 1990; 56 
FR 22805, May 16, 1991]



Sec. 625.3  Reemployment assistance.

    (a) State assistance. Except as provided in paragraph (b) of this 
section, the applicable State shall provide, without reimbursement from 
any funds provided under the Act, reemployment assistance services under 
any other law administered by the State to individuals applying for DUA 
and all other individuals who are unemployed because of a major 
disaster. Such services shall include, but are not limited to, 
counseling, referrals to suitable work opportunities, and suitable 
training, to assist the individuals in obtaining reemployment in 
suitable positions as soon as possible.
    (b) Federal assistance. In the case of American Samoa, Commonwealth 
of the Northern Mariana Islands, Federated States of Micronesia, 
Republic of the Marshall Islands, and the Trust Territory of the Pacific 
Islands, the Department of Labor, in consultation with the Federal 
Emergency Management Agency, will determine what reemployment services 
are needed by DUA applicants, and if any available Federal programs of 
reemployment assistance services can be implemented in that 
jurisdiction.

[55 FR 554, Jan. 5, 1990; as amended at 56 FR 22806, May 16, 1991]



Sec. 625.4  Eligibility requirements for Disaster Unemployment 
Assistance.

    An individual shall be eligible to receive a payment of DUA with 
respect to a week of unemployment, in accordance with the provisions of 
the Act and this part if:
    (a) That week begins during a Disaster Assistance Period;
    (b) The applicable State for the individual has entered into an 
Agreement which is in effect with respect to that week;
    (c) The individual is an unemployed worker or an unemployed self-
employed individual;
    (d) The individual's unemployment with respect to that week is 
caused by a major disaster, as provided in Sec. 625.5;
    (e) The individual has filed a timely initial application for DUA 
and, as appropriate, a timely application for a payment of DUA with 
respect to that week;
    (f) That week is a week of unemployment for the individual;
    (g) The individual is able to work and available for work within the 
meaning of the applicable State law: Provided, That an individual shall 
be deemed to meet this requirement if any injury caused by the major 
disaster is the reason for inability to work or engage in self-
employment; or, in the case of an unemployed self-employed individual, 
the individual performs service or activities which are solely for the 
purpose of enabling the individual to resume self-employment;

[[Page 161]]

    (h) The individual has not refused a bona fide offer of employment 
in a suitable position, or refused without good cause to resume or 
commence suitable self-employment, if the employment or self-employment 
could have been undertaken in that week or in any prior week in the 
Disaster Assistance Period; and
    (i) The individual is not eligible for compensation (as defined in 
Sec. 625.2(d)) or for waiting period credit for such week under any 
other Federal or State law, except that an individual determined 
ineligible because of the receipt of disqualifying income shall be 
considered eligible for such compensation or waiting period credit. An 
individual shall be considered ineligible for compensation or waiting 
period credit (and thus potentially eligible for DUA) if the individual 
is under a disqualification for a cause that occurred prior to the 
individual's unemployment due to the disaster, or for any other reason 
is ineligible for compensation or waiting period credit as a direct 
result of the major disaster.

[42 FR 46712, Sept. 16, 1977, as amended at 55 FR 555, Jan. 5, 1990]



Sec. 625.5  Unemployment caused by a major disaster.

    (a) Unemployed worker. The unemployment of an unemployed worker is 
caused by a major disaster if--
    (1) The individual has a ``week of unemployment'' as defined in 
Sec. 625.2(w)(1) following the ``date the major disaster began'' as 
defined in Sec. 625.2(e), and such unemployment is a direct result of 
the major disaster; or
    (2) The individual is unable to reach the place of employment as a 
direct result of the major disaster; or
    (3) The individual was to commence employment and does not have a 
job or is unable to reach the job as a direct result of the major 
disaster; or
    (4) The individual has become the breadwinner or major support for a 
household because the head of the household has died as a direct result 
of the major disaster; or
    (5) The individual cannot work because of an injury caused as a 
direct result of the major disaster.
    (b) Unemployed self-employed individual. The unemployment of an 
unemployed self-employed individual is caused by a major disaster if--
    (1) The individual has a ``week of unemployment'' as defined in 
Sec. 625.2(w)(2) following the ``date the major disaster began'' as 
defined in Sec. 625.2(e), and such unemployment is a direct result of 
the major disaster; or
    (2) The individual is unable to reach the place where services as a 
self-employed individual are performed, as a direct result of the major 
disaster; or
    (3) The individual was to commence regular services as a self-
employed individual, but does not have a place or is unable to reach the 
place where the services as a self-employed individual were to be 
performed, as a direct result of the major disaster; or
    (4) The individual cannot perform services as a self-employed 
individual because of an injury caused as a direct result of the major 
disaster.
    (c) Unemployment is a direct result of the major disaster. For the 
purposes of paragraphs (a)(1) and (b)(1) of this section, a worker's or 
self-employed individual's unemployment is a direct result of the major 
disaster where the unemployment is an immediate result of the major 
disaster itself, and not the result of a longer chain of events 
precipitated or exacerbated by the disaster. Such an individual's 
unemployment is a direct result of the major disaster if the 
unemployment resulted from:
    (1) The physical damage or destruction of the place of employment;
    (2) The physical inaccessibility of the place of employment in the 
major disaster area due to its closure by or at the request of the 
federal, state or local government, in immediate response to the 
disaster; or
    (3) Lack of work, or loss of revenues, provided that, prior to the 
disaster, the employer, or the business in the case of a self-employed 
individual, received at least a majority of its revenue or income from 
an entity in the major disaster area that was either damaged or 
destroyed in the disaster, or an entity in the major disaster area 
closed by the

[[Page 162]]

federal, state or local government in immediate response to the 
disaster.

[42 FR 46712, Sept. 16, 1977, as amended at 55 FR 555, Jan. 5, 1990; 56 
FR 22806, May 16, 1991; 66 FR 56962, Nov. 13, 2001; 68 FR 10937, Mar. 6, 
2003]



Sec. 625.6  Weekly amount; jurisdictions; reductions.

    (a) In all States, except as provided in paragraphs (c) and (d) of 
this section, the amount of DUA payable to an unemployed worker or 
unemployed self-employed individual for a week of total unemployment 
shall be the weekly amount of compensation the individual would have 
been paid as regular compensation, as computed under the provisions of 
the applicable State law for a week of total unemployment. In no event 
shall such amount be in excess of the maximum amount of regular 
compensation authorized under the applicable State law for that week.
    (1) Except as provided in paragraph (a)(2) or (b) of this section, 
in computing an individual's weekly amount of DUA, qualifying employment 
and wage requirements and benefit formula of the applicable State law 
shall be applied; and for purposes of this section, employment, wages, 
and self-employment which are not covered by the applicable State law 
shall be treated in the same manner and with the same effect as covered 
employment and wages, but shall not include employment or self-
employment, or wages earned or paid for employment or self-employment, 
which is contrary to or prohibited by any Federal law, such as, but not 
limited to, section 3304(a)(14)(A) of the Federal Unemployment Tax Act 
(26 U.S.C. 3304(a)(14)(A)).
    (2) For purposes of paragraph (a)(1) of this section, the base 
period to be utilized in computing the DUA weekly amount shall be the 
most recent tax year that has ended for the individual (whether an 
employee or self-employed) prior to the individual's unemployment that 
was a direct result of the major disaster. The self-employment income to 
be treated as wages for purposes of computing the weekly amount under 
this paragraph (a) shall be the net income reported on the tax return of 
the individual as income from all self-employment that was dependent 
upon the performance of services by the individual. If an individual has 
not filed a tax return for the most recent tax year that has ended at 
the time of such individual's initial application for DUA, such 
individual shall have a weekly amount determined in accordance with 
paragraph (e)(3) of this section.
    (3) As of the date of filing an initial application for DUA, family 
members over the age of majority, as defined under the statutes of the 
applicable State, who were customarily or routinely employed or self-
employed as a family unit or in the same self-employment business prior 
to the individuals' unemployment that was a direct result of the major 
disaster, shall have the wages from such employment or net income from 
the self-employment allocated equally among such adult family members 
for purposes of computing a weekly amount under this paragraph (a), 
unless the documentation to substantiate employment or self-employment 
and wages earned or paid for such employment or self-employment 
submitted as required by paragraph (e) of this section supports a 
different allocation. Family members under the age of majority as of the 
date of filing an initial application for DUA shall have a weekly amount 
computed under this paragraph (a) based on the actual wages earned or 
paid for employment or self-employment rather than an equal allocation.
    (b) If the weekly amount computed under paragraph (a) of this 
section is less than 50 percent of the average weekly payment of regular 
compensation in the State, as provided quarterly by the Department, or, 
if the individual has insufficient wages from employment or insufficient 
or no net income from self-employment (which includes individuals 
falling within paragraphs (a)(3) and (b)(3) of Sec. 625.5) in the 
applicable base period to compute a weekly amount under paragraph (a) of 
this section, the individual shall be determined entitled to a weekly 
amount equal to 50 percent of the average weekly payment of regular 
compensation in the State.
    (1) If an individual was customarily or routinely employed or self-
employed

[[Page 163]]

less than full-time prior to the individual's unemployment as a direct 
result of the major disaster, such individual's weekly amount under this 
paragraph (b)(1) shall be determined by calculating the percent of time 
the individual was employed or self-employed compared to the customary 
and usual hours per week that would constitute the average per week 
hours for year-round full-time employment or self-employment for the 
occupation, then applying the percentage to the determined 50 percent of 
the average weekly amount of regular compensation paid in the State. The 
State agency shall utilize information furnished by the applicant at the 
time of filing an initial application for DUA and any labor market or 
occupational information available within the State agency to determine 
the average per week hours for full-time employment or self-employment 
for the occupation. If the weekly amount computed for an individual 
under this paragraph (b)(1) is less than the weekly amount computed 
under paragraph (a) of this section for the individual, the individual 
shall be entitled to the higher weekly amount.
    (2) The weekly amount so determined under paragraph (b)(1) of this 
section, if not an even dollar amount, shall be rounded in accordance 
with the applicable State law.
    (c) In the Territory of Guam and the Commonwealth of the Northern 
Mariana Islands, the amount of DUA payable to an unemployed worker or 
unemployed self-employed individual for a week of total unemployment 
shall be the average of the payments of regular compensation made under 
all State laws referred to in Sec. 625.2(r)(1)(i) for weeks of total 
unemployment in the first four of the last five completed calendar 
quarters immediately preceding the quarter in which the major disaster 
began. The weekly amount so determined, if not an even dollar amount, 
shall be rounded to the next higher dollar.
    (d) In American Samoa, Federated States of Micronesia, Republic of 
the Marshall Islands and the Trust Territory of the Pacific Islands, the 
amount of DUA payable to an unemployed worker or unemployed self-
employed individual for a week of total unemployment shall be the amount 
agreed upon by the Regional Administrator, Employment and Training 
Administration, for Region IX (San Francisco), and the Federal 
Coordinating Officer, which shall approximate 50 percent of the area-
wide average of the weekly wages paid to individuals in the major 
disaster area in the quarter immediately preceding the quarter in which 
the major disaster began. The weekly amount so determined, if not an 
even dollar amount, shall be rounded to the next higher dollar.
    (e) The State agency shall immediately determine, upon the filing of 
an initial application for DUA, a weekly amount under the provisions of 
paragraphs (a) through (d) of this section, as the case may be, based on 
the individual's statement of employment or self-employment preceding 
the individual's unemployment that was a direct result of the major 
disaster, and wages earned or paid for such employment or self-
employment. An immediate determination of a weekly amount shall also be 
made where, in conjunction with the filing of an initial application for 
DUA, the individual submits documentation substantiating employment or 
self-employment and wages earned or paid for such employment or self-
employment, or, in the absence of documentation, where any State agency 
records of employment or self-employment and wages earned or paid for 
such employment or self-employment, justify the determination of a 
weekly amount. An immediate determination shall also be made based on 
the individual's statement or in conjunction with the submittal of 
documentation in those cases where the individual was to commence 
employment or self-employment on or after the date the major disaster 
began but was prevented from doing so as a direct result of the 
disaster.
    (1) In the case of a weekly amount determined in accordance with 
paragraph (e) of this section, based only on the individual's statement 
of earnings, the individual shall furnish documentation to substantiate 
the employment or self-employment or wages earned from or paid for such 
employment or self-employment or documentation to support that the 
individual was to commence employment

[[Page 164]]

or self-employment on or after the date the major disaster began. In 
either case, documentation shall be submitted within 21 calendar days of 
the filing of the initial application for DUA.
    (2) Any individual who fails to submit documentation to substantiate 
employment or self-employment or the planned commencement of employment 
or self-employment in accordance with paragraph (e)(1) of this section, 
shall be determined ineligible for the payment of DUA for any week of 
unemployment due to the disaster. Any weeks for which DUA was already 
paid on the application prior to the date of the determination of 
ineligibility under this paragraph (e)(2) are overpaid and a 
determination shall be issued in accordance with Sec. 625.14(a). In 
addition, the State agency shall consider whether the individual is 
subject to a disqualification for fraud in accordance with the 
provisions set forth in Sec. 625.14(i).
    (3) For purposes of a computation of a weekly amount under paragraph 
(a) of this section, if an individual submits documentation to 
substantiate employment or self-employment in accordance with paragraph 
(e)(1), but not documentation of wages earned or paid during the base 
period set forth in paragraph (a)(2) of this section, including those 
cases where the individual has not filed a tax return for the most 
recent tax year that has ended, the State agency shall immediately 
redetermine the weekly amount of DUA payable to the individual in 
accordance with paragraph (b) of this section.
    (4) Any individual determined eligible for a weekly amount of DUA 
under the provisions of paragraph (e)(3) of this section may submit 
necessary documentation to substantiate wages earned or paid during the 
base period set forth in paragraph (a)(2) of this section, including 
those cases where the individual has not filed a tax return for the most 
recent tax year that has ended, at any time prior to the end of the 
disaster assistance period. A redetermination of the weekly amount 
payable, as previously determined under paragraph (b) of this section, 
shall immediately be made if the wages earned or paid for services 
performed in employment or self-employment reflected in such 
documentation is sufficient to permit a computation under paragraph (a) 
of this section of a weekly amount higher than was determined under 
paragraph (b) of this section. Any higher amount so determined shall be 
applicable to all weeks during the disaster assistance period for which 
the individual was eligible for the payment of DUA.
    (f)(1) The weekly amount of DUA payable to an unemployed worker or 
unemployed self-employed individual for a week of partial or part-total 
unemployment shall be the weekly amount determined under paragraph (a), 
(b), (c) or (d) of this section, as the case may be, reduced (but not 
below zero) by the amount of wages that the individual earned in that 
week as determined by applying to such wages the earnings allowance for 
partial or part-total employment prescribed by the applicable State law.
    (2) The weekly amount of DUA payable to an unemployed self-employed 
individual for a week of unemployment shall be the weekly amount 
determined under paragraph (a), (b), (c) or (d) of this section, as the 
case may be, reduced (but not below zero) by the full amount of any 
income received during the week for the performance of services in self-
employment, regardless of whether or not any services were performed 
during the week, by applying the earnings allowance as set forth in 
paragraph (f)(1) of this section. Notwithstanding the definition of 
``wages'' for a self-employed individual under Sec. 625.2(u), the term 
``any income'' for purposes of this paragraph (f)(2) means gross income.

[60 FR 25568, May 11, 1995]



Sec. 625.7  Disaster Unemployment Assistance: Duration.

    DUA shall be payable to an eligible unemployed worker or eligible 
unemployed self-employed individual for all weeks of unemployment which 
begin during a Disaster Assistance Period.



Sec. 625.8  Applications for Disaster Unemployment Assistance.

    (a) Initial application. An initial application for DUA shall be 
filed by an individual with the State agency of the applicable State 
within 30 days after

[[Page 165]]

the announcement date of the major disaster as the result of which the 
individual became unemployed, and on a form prescribed by the Secretary 
which shall be furnished to the individual by the State agency. An 
initial application filed later than 30 days after the announcement date 
of the major disaster shall be accepted as timely by the State agency if 
the applicant had good cause for the late filing, but in no event shall 
an initial application be accepted by the State agency if it is filed 
after the expiration of the Disaster Assistance Period. If the 30th day 
falls on a Saturday, Sunday, or a legal holiday in the major disaster 
area, the 30-day time limit shall be extended to the next business day.
    (b) Weekly applications. Applications for DUA for weeks of 
unemployment shall be filed with respect to the individual's applicable 
State at the times and in the manner as claims for regular compensation 
are filed under the applicable State law, and on forms prescribed by the 
Secretary which shall be furnished to the individual by the State 
agency.
    (c) Filing in person. (1) Except as provided in paragraph (c)(2) of 
this section, all applications for DUA, including initial applications, 
shall be filed in person.
    (2) Whenever an individual has good cause for not filing any 
application for DUA in person, the application shall be filed at such 
time, in such place, and in such a manner as directed by the State 
agency and in accordance with this part and procedures prescribed by the 
Secretary.
    (d) IBPP. The ``Interstate Benefit Payment Plan'' shall apply, where 
appropriate, to an individual filing applications for DUA.
    (e) Wage combining. The ``Interstate Arrangement for Combining 
Employment and Wages'' (part 616 of this chapter) shall apply, where 
appropriate, to an individual filing applications for DUA: Provided, 
That the ``Paying State'' shall be the applicable State for the 
individual as prescribed in Sec. 625.12.
    (f) Procedural requirements. (1) The procedures for reporting and 
filing applications for DUA shall be consistent with this part, and with 
the Secretary's ``Standard for Claim Filing, Claimant Reporting, Job 
Finding and Employment Services,'' Employment Security Manual. Part V, 
sections 5000 et seq. (appendix A of this part), insofar as such 
standard is not inconsistent with this part.
    (2) The provisions of the applicable State law which apply hereunder 
to applications for and the payment of DUA shall be applied consistent 
with the requirements of title III of the Social Security Act and the 
Federal Unemployment Tax Act which are pertinent in the case of regular 
compensation, including but not limited to those standards and 
requirements specifically referred to in the provisions of this part.

(Approved by the Office of Management and Budget under control number 
1205-0051)

(Pub. L. No. 96-511)

[42 FR 46712, Sept. 16, 1977, as amended at 49 FR 18295, Apr. 30, 1984; 
55 FR 555, Jan. 5, 1990]



Sec. 625.9  Determinations of entitlement; notices to individual.

    (a) Determination of initial application. (1) The State agency shall 
promptly, upon the filing of an initial application for DUA, determine 
whether the individual is eligible, and if the individual is found to be 
eligible, the weekly amount of DUA payable to the individual and the 
period during which DUA is payable.
    (2) An individual's eligibility for DUA shall be determined, where a 
reliable record of employment, self-employment and wages is not 
obtainable, on the basis of an affidavit submitted to the State agency 
by the individual, and on a form prescribed by the Secretary which shall 
be furnished to the individual by the State agency.
    (b) Determinations of weekly applications. The State agency shall 
promptly, upon the filing of an application for a payment of DUA with 
respect to a week of unemployment, determine whether the individual is 
entitled to a payment of DUA with respect to that week, and, if 
entitled, the amount of DUA to which the individual is entitled.
    (c) Redetermination. The provisions of the applicable State law 
concerning the right to request, or authority to

[[Page 166]]

undertake, reconsideration of a determination pertaining to regular 
compensation under the applicable State law shall apply to 
determinations pertaining to DUA.
    (d) Notices to individual. The State agency shall give notice in 
writing to the individual, by the most expeditious method, of any 
determination or redetermination of an initial application, and of any 
determination of an application for DUA with respect to a week of 
unemployment which denies DUA or reduces the weekly amount initially 
determined to be payable, and of any redetermination of an application 
for DUA with respect to a week of unemployment. Each notice of 
determination or redetermination shall include such information 
regarding the determination or redetermination and notice of right to 
reconsideration or appeal, or both, as is furnished with written notices 
of determination and written notices of redeterminations with respect to 
claims for regular compensation.
    (e) Promptness. Full payment of DUA when due shall be made with the 
greatest promptness that is administratively feasible.
    (f) Secretary's Standard. The procedures for making determinations 
and redeterminations, and furnishing written notices of determinations, 
redeterminations, and rights of appeal to individuals applying for DUA, 
shall be consistent with this part and with the Secretary's ``Standard 
for Claim Determinations--Separation Information,'' Employment Security 
Manual. Part V, sections 6010 et seq. (Appendix B of this part).

(Approved by the Office of Management and Budget under control number 
1205-0051)

(Pub. L. No. 96-511)

[42 FR 46712, Sept. 16, 1977, as amended at 49 FR 18295, Apr. 30, 1984; 
55 FR 555, Jan. 5, 1990]



Sec. 625.10  Appeal and review.

    (a) States of the United States. (1) Any determination or 
redetermination made pursuant to Sec. 625.9, by the State agency of a 
State (other than the State agency of the Territory of Guam, American 
Samoa, Commonwealth of the Northern Mariana Islands, Federated States of 
Micronesia, Republic of the Marshall Islands, or the Trust Territory of 
the Pacific Islands) may be appealed by the applicant in accordance with 
the applicable State law to the first-stage administrative appellate 
authority in the same manner and to the same extent as a determination 
or redetermination of a right to regular compensation may be appealed 
under the applicable State law, except that the period for appealing 
shall be 60 days from the date the determination or redetermination is 
issued or mailed instead of the appeal period provided for in the 
applicable State law. Any decision on a DUA first-stage appeal must be 
made and issued within 30 days after receipt of the appeal by the State.
    (2) Notice of the decision on appeal, and the reasons therefor, 
shall be given to the individual by delivering the notice to such 
individual personally or by mailing it to the individual's last known 
address, whichever is most expeditious. The decision shall contain 
information as to the individual's right to review of the decision by 
the appropriate Regional Administrator, Employment and Training 
Administration, if requested within 15 days after the decision was 
mailed or delivered in person to the individual. The notice will include 
the manner of requesting such review, and the complete address of the 
Regional Administrator. Notice of the decision on appeal shall be given 
also to the State agency (with the same notice of right to review) and 
to the appropriate Regional Administrator.
    (b) Guam, American Samoa, and the Trust Territory of the Pacific 
Islands. (1) In the case of an appeal by an individual from a 
determination or redetermination by the State agency of the Territory of 
Guam, American Samoa, Commonwealth of the Northern Mariana Islands, 
Federated States of Micronesia, Republic of the Marshall Islands, or the 
Trust Territory of the Pacific Islands, the individual shall be entitled 
to a hearing and decision in accordance with Sec. 625.30 of this part.
    (2) Notice of the referee's decision, and the reasons therefor, 
shall be given to the individual by delivering the notice to the 
individual personally or by mailing it to the individual's last

[[Page 167]]

known address, whichever is most expeditious. The notice of decision 
shall contain information as to the individual's right to review of the 
decision by the Regional Administrator, Employment and Training 
Administration, for Region IX (San Francisco), and the manner of 
obtaining such review, including the address of the Regional 
Administrator. Notice of the decision on appeal shall be given also to 
the State agency and to the Regional Administrator.
    (c) Review by Regional Administrator. (1) The appropriate Regional 
Administrator, Employment and Training Administration, upon request for 
review by an applicant or the State agency shall, or upon the Regional 
Administrator's own motion may, review a decision on appeal issued 
pursuant to paragraph (a) or (b) of this section.
    (2) Any request for review by an applicant or a State agency shall 
be filed, and any review on the Regional Administrator's own motion 
shall be undertaken, within 15 days after notice of the decision on 
appeal was delivered or mailed to the individual.
    (3)(i) A request for review by an individual may be filed with the 
appropriate State agency, which shall forward the request to the 
appropriate Regional Administrator, Employment and Training 
Administration, or may be filed directly with the appropriate Regional 
Administrator.
    (ii) A request for review by a State agency shall be filed with the 
appropriate Regional Administrator, and a copy shall be served on the 
individual by delivery to the individual personally or by mail to the 
individual's last known address.
    (iii) When a Regional Administrator undertakes a review of a 
decision on the Regional Administrator's own motion, notice thereof 
shall be served promptly on the individual and the State agency.
    (iv) Whenever review by a Regional Administrator is undertaken 
pursuant to an appeal or on the Regional Administrator's own motion, the 
State agency shall promptly forward to the Regional Administrator the 
entire record of the case.
    (v) Where service on the individual is required by paragraph 
(c)(3)(ii) of this section, adequate proof of service shall be furnished 
for the record before the Regional Administrator, and be a condition of 
the Regional Administrator undertaking review pursuant to this 
paragraph.
    (4) The decision of the Regional Administrator on review shall be 
rendered promptly, and not later than the earlier of--
    (i) 45 days after the appeal is received or is undertaken by the 
Regional Administrator, or
    (ii) 90 days from the date the individual's appeal from the 
determination or redetermination was received by the State agency.
    (5) Notice of the Regional Administrator's decision shall be mailed 
promptly to the last known address of the individual, to the State 
agency of the applicable State, and to the Director, Unemployment 
Insurance Service. The decision of the Regional Administrator shall be 
the final decision under the Act and this part, unless there is further 
review by the Assistant Secretary as provided in paragraph (d) of this 
section.
    (d) Further review by the Assistant Secretary. (1) The Assistant 
Secretary for Employment and Training on his own motion may review any 
decision by a Regional Administrator issued pursuant to paragraph (c) of 
this section.
    (2) Notice of a motion for review by the Assistant Secretary shall 
be given to the applicant, the State agency of the applicable State, the 
appropriate Regional Administrator, and the Director, Unemployment 
Insurance Service.
    (3) When the Regional Administrator and the State agency are 
notified of the Assistant Secretary's motion for review, they shall 
forward all records in the case to the Assistant Secretary.
    (4) Review by the Assistant Secretary shall be solely on the record 
in the case, any other written contentions or evidence requested by the 
Assistant Secretary, and any further evidence or arguments offered by 
the individual, the State agency, the Regional Administrator, or the 
Director, Unemployment Insurance Service, which are mailed to the 
Assistant Secretary within 15 days after mailing the notice of motion 
for review.

[[Page 168]]

    (5) Upon review of a case under this paragraph, the Assistant 
Secretary may affirm, modify, or reverse the decision of the Regional 
Administrator, and may remand the case for further proceedings and 
decision in accordance with the Assistant Secretary's decision.
    (6) The decision of the Assistant Secretary shall be made promptly, 
and notice thereof shall be sent to the applicant, the State agency, the 
Regional Administrator, and the Director, Unemployment Insurance 
Service.
    (7) The decision of the Assistant Secretary shall be final and 
conclusive, and binding on all interested parties, and shall be a 
precedent applicable throughout the States.
    (e) Procedural requirements. (1) All decisions on first-stage 
appeals from determinations or redeterminations by the State agencies 
must be made within 30 days of the appeal; therefore, the Secretary's 
``Standard for Appeals Promptness-Unemployment Compensation'' in part 
650 of this chapter shall not apply to the DUA program.
    (2) The provisions on right of appeal and opportunity for hearing 
and review with respect to applications for DUA shall be consistent with 
this part and with sections 303(a)(1) and 303(a)(3) of the Social 
Security Act, 42 U.S.C. 503(a)(1) and 503(a)(3).
    (3) Any petition or other matter required to be filed within a time 
limit under this section shall be deemed to be filed at the time it is 
delivered to an appropriate office, or at the time of the postmark if it 
is mailed via the United States Postal Service to an appropriate office.
    (4) If any limited time period specified in this section ends on a 
Saturday, Sunday, or a legal holiday in the major disaster area, the 
time limit shall be extended to the next business day.

[42 FR 46712, Sept. 16, 1977, as amended at 55 FR 555, Jan. 5, 1990; 56 
FR 22805, May 16, 1991]



Sec. 625.11  Provisons of State law applicable.

    The terms and conditions of the State law of the applicable State 
for an individual, which apply to claims for, and the payment of regular 
compensation, shall apply to applications for, and the payment of, DUA 
to each such individual, only as specifically set forth in the 
provisions of this part.



Sec. 625.12  The applicable State for an individual.

    (a) Applicable State. The applicable State for an individual shall 
be that State in which the individual's unemployment is the result of a 
major disaster.
    (b) Limitation. DUA is payable to an individual only by an 
applicable State as determined pursuant to paragraph (a) of this 
section, and--
    (1) Only pursuant to an Agreement entered into pursuant to the Act 
and this part, and with respect to weeks in which the Agreement is in 
effect; and
    (2) Only with respect to weeks of unemployment that begin during a 
Disaster Assistance Period.

[42 FR 46712, Sept. 16, 1977, as amended at 55 FR 556, Jan. 5, 1990]



Sec. 625.13  Restrictions on entitlement; disqualification.

    (a) Income reductions. The amount of DUA payable to an individual 
for a week of unemployment, as computed pursuant to Sec. 625.6, shall 
be reduced by the amount of any of the following that an individual has 
received for the week or would receive for the week if the individual 
filed a claim or application therefor and took all procedural steps 
necessary under the appropriate law, contract, or policy to receive such 
payment:
    (1) Any benefits or insurance proceed from any source not defined as 
``compensation'' under Sec. 625.2(d) for loss of wages due to illness 
or disability;
    (2) A supplemental unemployment benefit pursuant to a collective 
bargaining agreement.
    (3) Private income protection insurance;
    (4) Any workers' compensation by virtue of the death of the head of 
the household as the result of the major disaster in the major disaster 
area, prorated by weeks, if the individual has become the head of the 
household and is seeking suitable work because the head of the household 
died as the result of the major disaster in the major disaster area; and
    (5) The prorated amount of a retirement pension or annuity under a 
public

[[Page 169]]

or private retirement plan or system, prorated, where necessary, by 
weeks, but only if, and to the extent that, such amount would be 
deducted from regular compensation payable under the applicable State 
law.
    (6) The prorated amount of primary benefits under title II of the 
Social Security Act, but only to the extent that such benefits would be 
deduced from regular compensation if payable to the individual under the 
applicable State law.
    (b) Disqualification. (1) An individual shall not be entitled to DUA 
for any week after the week in which the individual is reemployed in a 
suitable position.
    (2) An individual who refuses without good cause to accept a bona 
fide offer of reemployment in a position suitable to the individual, or 
to investigate or accept a referral to a position which is suitable to 
and available to the individual, shall not be entitled to DUA with 
respect to the week in which such refusal occurs or in any subsequent 
week in the Disaster Assistance Period. For the purposes of this 
paragraph, a position shall not be deemed to be suitable for an 
individual if the circumstances present any unusual risk to the health, 
safety, or morals of the individual, if it is impracticable for the 
individual to accept the position, or if acceptance for the position 
would, as to the individual, be inconsistent with any labor standard in 
section 3304(a)(5) of the Federal Unemployment Tax Act, 26 U.S.C. 
3304(a)(5), or the comparable provisions of the applicable State law.

[42 FR 46712, Sept. 16, 1977, as amended at 55 FR 556, Jan. 5, 1990]



Sec. 625.14  Overpayments; disqualification for fraud.

    (a) Finding and repayment. If the State agency of the applicable 
State finds that an individual has received a payment of DUA to which 
the individual was not entitled under the Act and this part, whether or 
not the payment was due to the individual's fault or misrepresentation, 
the individual shall be liable to repay to the applicable State the 
total sum of the payment to which the individual was not entitled, and 
the State agency shall take all reasonable measures authorized under any 
State law or Federal law to recover for the account of the United States 
the total sum of the payment to which the individual was not entitled.
    (b) Recovery by offset. (1) The State agency shall recover, insofar 
as is possible, the amount of any outstanding overpayment of DUA made to 
the individual by the State, by deductions from any DUA payable to the 
individual under the Act and this part, or from any compensation payable 
to the individual under any Federal unemployment compensation law 
administered by the State agency, or from any assistance or allowance 
payable to the individual with respect to unemployment under any other 
Federal law administered by the State agency.
    (2) The State agency shall also recover, insofar as possible, the 
amount of any outstanding overpayment of DUA made to the individual by 
another State, by deductions from any DUA payable by the State agency to 
the individual under the Act and this part, or from any compensation 
payable to the individual under any Federal unemployment compensation 
law administered by the State agency, or from any assistance or 
allowance payable to the individual with respect to unemployment under 
any other Federal law administered by the State agency.
    (3) If the State has in effect an agreement to implement the cross-
program offset provisions of section 303(g)(2) of the Social Security 
Act (42 U.S.C. 503(g)(2)), the State shall apply the provisions of such 
agreement to the recovery of outstanding DUA overpayments.
    (c) Debts due the United States. DUA payable to an individual shall 
be applied by the State agency for the recovery by offset of any debt 
due to the United States from the individual, but shall not be aplied or 
used by the State agency in any manner for the payment of any debt of 
the individual to any State or any other entity or person.
    (d) Recovered overpayments. Overpayments recovered in any manner 
shall be credited or returned, as the case may be, to the appropriate 
account of the United States.
    (e) Application of State law. Any provision of State law authorizing 
waiver of recovery of overpayments of compensation shall not be 
applicable to DUA.

[[Page 170]]

    (f) Final decision. Recovery of any overpayment of DUA shall not be 
enforced by the State agency until the determination establishing the 
overpayment has become final, or if appeal is taken from the 
determination, until the decision after opportunity for a fair hearing 
has become final.
    (g) Procedural requirements. (1) The provisions of paragraphs (c), 
(d), and (f) of Sec. 625.9 shall apply to determinations and 
redeterminations made pursuant to this section.
    (2) The provisions of Sec. 625.10 shall apply to determinations and 
redeterminations made pursuant to this section.
    (h) Fraud detection and prevention. Provisions in the procedures of 
each State with respect to detection and prevention of fraudulent 
overpayments of DUA shall be, as a minimum, commensurate with the 
procedures adopted by the State with respect to regular compensation and 
consistent with the Secretary's ``Standard for Fraud and Overpayment 
Detection,'' Employment Security Manual, part V, sections 7510 et seq. 
(Appendix C of this part).
    (i) Disqualification for fraud. Any individual who, with respect to 
a major disaster, makes or causes another to make a false statement or 
misrepresentation of a material fact, knowing it to be false, or 
knowingly fails or causes another to fail to disclose a material fact, 
in order to obtain for the individual or any other person a payment of 
DUA to which the individual or any other person is not entitled, shall 
be disqualified as follows:
    (1) If the false statement, misrepresentation, or nondisclosure 
pertains to an initial application for DUA--
    (i) The individual making the false statement, misrepresentation, or 
nondisclosure shall be disqualified from the receipt of any DUA with 
respect to that major disaster; and
    (ii) If the false statement, misrepresentation, or nondisclosure was 
made on behalf of another individual, and was known to such other 
individual to be a false statement, misrepresentation, or nondisclosure, 
such other individual shall be disqualified from the receipt of any DUA 
with respect to that major disaster; and
    (2) If the false statement, misrepresentation, or nondisclosure 
pertains to a week for which application for a payment of DUA is made--
    (i) The individual making the false statement, misrepresentation, or 
nondisclosure shall be disqualified from the receipt of DUA for that 
week and the first two compensable weeks in the Disaster Assistance 
Period that immediately follow that week, with respect to which the 
individual is otherwise entitled to a payment of DUA; and
    (ii) If the false statement, misrepresentation, or nondisclosure was 
made on behalf of another individual, and was known to such other 
individual to be a false statement, misrepresentation, or nondisclosure, 
such other individual shall be disqualified from the receipt of DUA for 
that week and the first two compensable weeks in the Disaster Assistance 
Period that immediately follow that week, with respect to which the 
individual is otherwise entitled to a payment of DUA.
    (j) Criminal penalties. The provisions of this section on recovery 
of overpayments and disqualification for fraudulently claiming or 
receiving any DUA to which an individual was not entitled under the Act 
and this part shall be in addition to and shall not preclude any 
applicable criminal prosecution and penalties under State or Federal 
law.

[42 FR 46712, Sept. 16, 1977, as amended at 55 FR 556, Jan. 5, 1990]



Sec. 625.15  Inviolate rights to DUA.

    Except as specifically provided in this part, the right of 
individuals to DUA shall be protected in the same manner and to the same 
extent as the rights of persons to regular unemployment compensation are 
protected under the applicable State law. Such measures shall include 
protection of applicants for DUA from waiver, release, assignment, 
pledge, encumbrance, levy, execution, attachment, and garnishment, of 
their rights to DUA. In the same manner and to the same extent, 
individuals shall be protected from discrimination and obstruction in 
regard to seeking, applying for and receiving any right to DUA.

[[Page 171]]



Sec. 625.16  Recordkeeping; disclosure of information.

    (a) Recordkeeping. Each State agency will make and maintain records 
pertaining to the administration of the Act as the Secretary requires, 
and will make all such records available for inspection, examination, 
and audit by such Federal officials or employees as the Secretary may 
designate or as may be required by law.
    (b) Disclosure of information. Information in records made and 
maintained by a State agency in administering the Act shall be kept 
confidential, and information in such records may be disclosed only in 
the same manner and to the same extent as information with respect to 
regular compensation and the entitlement of individuals thereto may be 
disclosed under the applicable State law, and consistently with section 
303(a)(1) of the Social Security Act, 42 U.S.C. 503(a)(1). This 
provision on the confidentiality of information obtained in the 
administration of the Act shall not apply, however, to the United States 
Department of Labor, or in the case of information, reports and studies 
requested pursuant to Sec. 625.19, or where the result would be 
inconsistent with the Freedom of Information Act (5 U.S.C. 552), the 
Privacy Act of 1974 (5 U.S.C. 552a), or regulations of the United States 
Department of Labor promulgated thereunder.



Sec. 625.17  Announcement of the beginning of a Disaster Assistance 
Period.

    Whenever a major disaster is declared in a State, the State agency 
shall promptly announce throughout the major disaster area by all 
appropriate news media that individuals who are unemployed as the result 
of the major disaster may be entitled to DUA; that they should file 
initial applications for DUA as soon as possible, but not later than the 
30th day after the announcement date; the beginning date of the Disaster 
Assistance Period; and where individuals may obtain further information 
and file applications for DUA.



Sec. 625.18  Public access to Agreements.

    The State agency of a State will make available to any individual or 
organization a true copy of the Agreement with the State for inspection 
and copying. Copies of an Agreement may be furnished on request to any 
individual or organization upon payment of the same charges, if any, as 
apply to the furnishing of copies of other records of the State agency.



Sec. 625.19  Information, reports and studies.

    (a) Routine responses. State agencies shall furnish to the Secretary 
such information and reports and make such studies as the Secretary 
decides are necessary or appropriate for carrying out the purposes of 
the Act and this part.
    (b) Final Report. In addition to such other reports as may be 
required by the Secretary, within 60 days after all payments of Disaster 
Unemployment Assistance as the result of a major disaster in the State 
have been made, the State agency shall submit a final report to the 
Secretary. A final report shall contain a narrative summary, a 
chronological list of significant events, pertinent statistics about the 
Disaster Unemployment Assistance provided to disaster victims, brief 
statements of major problems encountered, discussion of lessons learned, 
and suggestions for improvement of the program during future major 
disasters.

(Approved by the Office of Management and Budget under control number 
1205-0051)

(Pub. L. No. 96-511)

[15 FR 5886, Aug. 31, 1950; 23 FR 1267, Mar. 1, 1958, as amended at 49 
FR 18295, Apr. 30, 1984]



Sec. 625.20  Saving clause.

    The regulations in this part do not apply to applications, 
determinations, hearings, or other administrative or judicial 
proceedings, with respect to any major disaster declared prior to 
November 23, 1988, and such applications, determinations, hearings, or 
other administrative or judicial proceeding shall remain subject to the 
Act and the Regulations in this part issued thereunder which were in 
effect prior to that date.

[42 FR 46712, Sept. 16, 1977, as amended at 55 FR 557, Jan. 5, 1990]

[[Page 172]]



Sec. 625.30  Appeal Procedures for Guam, American Samoa, Commonwealth 
of the Northern Mariana Islands, Federated States of Micronesia, Republic 
of the Marshall Islands, and the Trust Territory of the Pacific Islands.

    (a) Designation of referee. The Director of the Unemployment 
Insurance Service shall designate a referee of a State agency to hear 
and decide appeals under this section from determinations and 
redeterminations by the State agencies of the Territory of Guam, 
American Samoa, Commonwealth of the Northern Mariana Islands, Federated 
States of Micronesia, Republic of the Marshall Islands, and the Trust 
Territory of the Pacific Islands.
    (b) Appeals to referee. (1) A DUA applicant may appeal from a 
determination or redetermination issued by the State agency of the 
Territory of Guam, American Samoa, Commonwealth of the Northern Mariana 
Islands, Federated States of Micronesia, Republic of the Marshall 
Islands, or the Trust Territory of the Pacific Islands within 60 days 
after the mailing of notice and a copy of such determination or 
redetermination to such applicant's last known address, or in the 
absence of mailing within 60 days after delivery in person thereof to 
such applicant. The appeal shall be in writing and may be filed with any 
office of the State agency.
    (2) Notice that an appeal has been filed may be given or mailed, in 
the discretion of the referee, to any person who has offered or is 
believed to have evidence with respect to the claim.
    (3) An appeal shall be promptly scheduled and heard, in order that a 
decision on the appeal can be issued within 30 days after receipt of the 
appeal by the State agency. Written notice of hearing, specifying the 
time and place thereof and those questions known to be in dispute, shall 
be given or mailed to the applicant, the State agency, and any person 
who has offered or is believed to have evidence with respect to the 
claim 7 days or more before the hearing, except that a shorter notice 
period may be used with the consent of the applicant.
    (c) Conduct of hearings. Hearings before the referee shall be 
informal, fair, and impartial, and shall be conducted in such manner as 
may be best suited to determine the DUA applicants' right to 
compensation. Hearings shall be open to the public unless sufficient 
cause for a closed hearing is shown. The referee shall open a hearing by 
ascertaining and summarizing the issue or issues involved in the appeal. 
The applicant may examine and cross-examine witnesses, inspect 
documents, and explain or rebut any evidence. An opportunity to present 
argument shall be afforded such applicant, and such argument shall be 
made part of the record. The referee shall give such applicant, if not 
represented by counsel or other representative, every assistance that 
does not interfere with the impartial discharge of the referee's duties. 
The referee may examine such applicant and other witnesses to such 
extent as the referee deems necessary. Any issue involved in the claim 
shall be considered and passed upon even though such issue was not set 
forth as a ground of appeal.
    (d) Evidence. Oral or written evidence of any nature, whether or not 
conforming to the legal rules of evidence, may be accepted. Any official 
record of the State agency, including reports submitted in connection 
with administration of the DUA program, may be included in the record if 
the applicant is given an opportunity to examine and rebut the same. A 
written statement under oath or affirmation may be accepted when it 
appears impossible or unduly burdensome to require the attendance of a 
witness, but a DUA applicant adversely affected by such a statement must 
be given the opportunity to examine such statement, to comment on or 
rebut any or all portions thereof, and whenever possible to cross-
examine a witness whose testimony has been introduced in written form by 
submitting written questions to be answered in writing.
    (e) Record. All oral testimony before the referee shall be taken 
under oath or affirmation and a transcript thereof

[[Page 173]]

shall be made and kept. Such transcript together with all exhibits, 
papers, and requests filed in the proceeding shall constitute the record 
for decision.
    (f) Withdrawal of appeal. A DUA applicant who has filed an appeal 
may withdraw such appeal with the approval of the referee.
    (g) Nonappearance of DUA applicant. Failure of a DUA applicant to 
appear at a hearing shall not result in a decision being automatically 
rendered against such applicant. The referee shall render a decision on 
the basis of whatever evidence is properly before him/her unless there 
appears to be a good reason for continuing the hearing. An applicant who 
fails to appear at a hearing with respect to his/her appeal may within 
seven days thereafter petition for a reopening of the hearing. Such 
petition shall be granted if it appears to the referee that such 
applicant has shown good cause for his/her failure to attend.
    (h) Notice of referee's decision and further review--(1) Decision. A 
copy of the referee's decision, which shall include findings and 
conclusions, shall promptly be given or mailed to the applicant, the 
State agency, and to the Regional Administrator, Employment and Training 
Administration, for Region IX (San Francisco). The decision of the 
referee shall be accompanied by an explanation of the right of such 
applicant or State agency to request review by the Regional 
Administrator and the time and manner in which such review may be 
instituted, as provided in paragraph (a)(2) of Sec. 625.10.
    (2) Time limit for decision. A decision on an appeal to a referee 
under this section shall be made and issued by the referee not later 
than 30 days after receipt of the appeal by the State agency.
    (3) Further review. Further review by the Regional Administrator or 
the Assistant Secretary with respect to an appeal under this section 
shall be in accordance with paragraphs (c) and (d) of Sec. 625.10.
    (i) Consolidation of appeals. The referee may consolidate appeals 
and conduct joint hearings thereon where the same or substantially 
similar evidence is relevant and material to the matters in issue. 
Reasonable notice of consolidation and the time and place of hearing 
shall be given or mailed to the applicants or their representatives, the 
State agency, and to persons who have offered or are believed to have 
evidence with respect to the DUA claims.
    (j) Representation. A DUA applicant may be represented by counsel or 
other representative in any proceedings before the referee or the 
Regional Administrator. Any such representative may appear at any 
hearing or take any other action which such applicant may take under 
this part. The referee, for cause, may bar any person from representing 
an applicant, in which event such action shall be set forth in the 
record. No representative shall charge an applicant more than an amount 
fixed by the referee for representing the applicant in any proceeding 
under this section.
    (k) Postponement, continuance, and adjournment of hearings. A 
hearing before the referee shall be postponed, continued, or adjourned 
when such action is necessary to afford a DUA applicant reasonable 
opportunity for a fair hearing. In such case notice of the subsequent 
hearing shall be given to any person who received notice of the prior 
hearing.
    (l) Information from agency records. Information shall be available 
to a DUA applicant, either from the records of the State agency or as 
obtained in any proceeding herein provided for, to the extent necessary 
for proper presentation of his/her case. All requests for information 
shall state the nature of the information desired as clearly as possible 
and shall be in writing unless made at a hearing.
    (m) Filing of decisions. Copies of all decisions of the referee 
shall be kept on file at his/her office or agency for at least 3 years.

[55 FR 557, Jan. 5, 1990, as amended at 56 FR 22805, May 16, 1991]

[[Page 174]]

 Appendix A to Part 625--Standard for Claim Filing, Claimant Reporting, 
                  Job Finding, and Employment Services

         Employment Security Manual (Part V, Sections 5000-5004)

  5000 Standard for Claim Filing, Claimant Reporting, Job Finding, and 
                           Employment Services

    A. Federal law requirements. Section 3304(a)(1) of the Federal 
Unemployment Tax Act and section 303(a)(2) of the Social Security Act 
require that a State law provide for: ``Payment of unemployment 
compensation solely through public employment offices or such other 
agencies as the Secretary may approve.''
    Section 3304(a)(4) of the Federal Unemployment Tax Act and section 
303(a)(5) of the Social Security Act require that a State law provide 
for: ``Expenditure of all money withdrawn from an unemployment fund of 
such State, in the payment of unemployment compensation * * *''
    Section 303(a)(1) of the Social Security Act requires that the State 
law provide for: ``Such methods of administration . . . as are found by 
the Secretary to be reasonably calculated to insure full payment of 
unemployment compensation when due.''
    B. Secretary's interpretation of federal law requirements: 1. The 
Secretary interprets section 3304(a)(1) of the Federal Unemployment Tax 
Act and section 303(a)(2) of the Social Security Act to require that a 
State law provide for payment of unemployment compensation solely 
through public employment offices or claims offices administered by the 
State employment security agency if such agency provides for such 
coordination in the operations of its public employment offices and 
claims offices as will insure (a) the payment of benefits only to 
individuals who are unemployed and who are able to work and available 
for work, and (b) that individuals claiming unemployment compensation 
(claimants) are afforded such placement and other employment services as 
are necessary and appropriate to return them to suitable work as soon as 
possible.
    2. The Secretary interprets all the above sections to require that a 
State law provide for: a. Such contact by claimants with public 
employment offices or claims offices or both, (1) as will reasonably 
insure the payment of unemployment compensation only to individuals who 
are unemployed and who are able to work and available for work, and (2) 
that claimants are afforded such placement and other employment services 
as are necessary and appropriate to facilitate their return to suitable 
work as soon as possible; and b. Methods of administration which do not 
unreasonably limit the opportunity of individuals to establish their 
right to unemployment compensation due under such State law.

   5001 Claim Filing and Claimant Reporting Requirements Designed To 
                   Satisfy Secretary's Interpretation

    A. Claim filing--total or part-total unemployment: 1. Individuals 
claiming unemployment compensation for total or part-total unemployment 
are required to file a claim weekly or biweekly, in person or by mail, 
at a public employment office or a claims office (these terms include 
offices at itinerant points) as set forth below.
    2. Except as provided in paragraph 3, a claimant is required to file 
in person: a. His new claim with respect to a benefit year, or his 
continued claim for a waiting week or for his first compensable week of 
unemployment in such year; and b. Any other claim, when requested to do 
so by the claims personnel at the office at which he files his claim(s) 
because questions about his right to benefits are raised by 
circumstances such as the following:
    (1) The conditions or circumstances of his separation from 
employment;
    (2) The claimant's answers to questions on mail claim(s) indicate 
that he may be unable to work or that there may be undue restrictions on 
his availability for work or that his search for work may be inadequate 
or that he may be disqualified;
    (3) The claimant's answers to questions on mail claims create 
uncertainty about his credibility or indicate a lack of understanding of 
the applicable requirements; or
    (4) The claimant's record shows that he has previously filed a 
fraudulent claim.
    In such circumstances, the claimant is required to continue to file 
claims in person each week (or biweekly) until the State agency 
determines that filing claims in person is no longer required for the 
resolution of such questions.
    3. A claimant must be permitted to file a claim by mail in any of 
the following circumstances: a. He is located in an area requiring the 
expenditure of an unreasonable amount of time or money in traveling to 
the nearest facility established by the State agency for filing claims 
in person; b. Conditions make it impracticable for the agency to take 
claims in person; c. He has returned to full-time work on or before the 
scheduled date for his filing a claim, unless the agency makes provision 
for in-person filing at a time and place that does not interfere with 
his employment; d. The agency finds that he has good cause for failing 
to file a claim in person.
    4. A claimant who has been receiving benefits for partial 
unemployment may continue to file claims as if he were a partially 
unemployed worker for the first four consecutive weeks of total or part-
total unemployment

[[Page 175]]

immediately following his period of partial unemployment so long as he 
remains attached to his regular employer.
    B. Claim filing--partial unemployment. Each individual claiming 
unemployment compensation for a week (or other claim period) during 
which, because of lack of work, he is working less than his normal 
customary full-time hours for his regular employer and is earning less 
than the earnings limit provided in the State law, shall not be required 
to file a claim for such week or other claim period earlier than 2 weeks 
from the date that wages are paid for such claim period or, if a low 
earnings report is required by the State law, from the date the employer 
furnished such report to the individual. State agencies may permit 
claims for partial unemployment to be filed either in person or by mail, 
except that in the circumstances set forth in section A 3, filing by 
mail must be permitted, and in the circumstances set forth in section A 
2 b, filing in person may be required.

   5002 Requirement for Job Finding, Placement, and other Employment 
         Services Designed To Satisfy Secretary's Interpretation

    A. Claims personnel are required to assure that each claimant is 
doing what a reasonable individual in his circumstances would do to 
obtain suitable work.
    B. In the discretion of the State agency: 1. The claims personnel 
are required to give each claimant such necessary and appropriate 
assistance as they reasonably can in finding suitable work and at their 
discretion determine when more complete placement and employment 
services are necessary and appropriate for a claimant; and if they 
determine more complete services are necessary and appropriate, the 
claims personnel are to refer him to employment service personnel in the 
public employment office in which he has been filing claim(s), or, if he 
has been filing in a claims office, in the public employment office most 
accessible to him; or
    2. All placement and employment services are required to be afforded 
to each claimant by employment service personnel in the public 
employment office most accessible to him in which case the claims 
personnel in the office in which the claimant files his claim are to 
refer him to the employment service personnel when placement or other 
employment services are necessary and appropriate for him.
    C. The personnel to whom the State agency assigns the 
responsibilities outlined in paragraph B above are required to give 
claimants such job-finding assistance, placement, and other employment 
services as are necessary and appropriate to facilitate their return to 
suitable work as soon as possible.
    In some circumstances, no such services or only limited services may 
be required. For example, if a claimant is on a short-term temporary 
layoff with a fixed return date, the only service necessary and 
appropriate to be given to him during the period of the layoff is a 
referral to suitable temporary work if such work is being performed in 
the labor market area.
    Similarly, claimants whose unemployment is caused by a labor dispute 
presumably will return to work with their employer as soon as the labor 
dispute is settled. They generally do not need services, nor do 
individuals in occupations where placement customarily is made by other 
nonfee charging placement facilities such as unions and professional 
associations.
    Claimants who fall within the classes which ordinarily would require 
limited services or no services shall, if they request placement and 
employment services, be afforded such services as are necessary and 
appropriate for them to obtain suitable work or to achieve their 
reasonable employment goals.
    On the other hand, a claimant who is permanently separated from his 
job is likely to require some services. He may need only some direction 
in how to get a job; he may need placement services if he is in an 
occupation for which there is some demand in the labor market area; if 
his occupation is outdated, he may require counseling and referral to a 
suitable training course. The extent and character of the services to be 
given any particular claimant may change with the length of his 
unemployment and depend not only on his own circumstances and 
conditions, but also on the condition of the labor market in the area.
    D. Claimants are required to report to employment service personnel, 
as directed, but such personnel and the claims personnel are required to 
so arrange and coordinate the contracts required of a claimant as not to 
place an unreasonable burden on him or unreasonably limit his 
opportunity to establish his rights to compensation. As a general rule, 
a claimant is not required to contact in person claims personnel or 
employment service personnel more frequently than once a week, unless he 
is directed to report more frequently for a specific service such as 
referral to a job or a training course or counseling which cannot be 
completed in one visit.
    E. Employment service personnel are required to report promptly to 
claims personnel in the office in which the claimant files his claim(s): 
(1) his failure to apply for or accept work to which he was referred by 
such personnel or when known, by any other nonfee-charging placement 
facility such as a union or a professional association; and (2) any 
information which becomes available to it that may have a bearing on the 
claimant's ability to work or availability for work, or on the 
suitability of work to which he was referred or which was offered to 
him.

[[Page 176]]

             5004 Evaluation of Alternative State Provisions

    If the State law provisions do not conform to the ``suggested State 
law requirements'' set forth in sections 5001 and 5002, but the State 
law contains alternative provisions, the Manpower Administrator, in 
collaboration with the State agency, will study the actual or 
anticipated affect of the alternative provisions. If the Manpower 
Administrator concludes that the alternative provisions satisfy the 
requirements of the Federal law as construed by the Secretary (see 
section 5000 B) he will so notify the State agency. If he does not so 
conclude, he will submit the matter to the Secretary. If the Secretary 
concludes that the alternative provisions satisfy such requirements, the 
State agency will be so notified. If the Secretary concludes that there 
is a question as to whether the alternative provisions satisfy such 
requirements, the State agency will be advised that unless the State law 
provisions are appropriately revised, a notice of hearing will be issued 
as required by the Code of Federal Regulations, title 20, section 601.5.

[55 FR 558, Jan. 5, 1990]

 Appendix B to Part 625--Standard for Claim Determinations--Separation 
                               Information

         Employment Security Manual (Part V, Sections 6010-6015)

   6010-6019 Standard for Claim Determinations--Separation Information

    6010 Federal Law Requirements. Section 303(a)(1) of the Social 
Security Act requires that a State law include provision for: ``Such 
methods of administration . . . as are found by the Secretary to be 
reasonably calculated to insure full payment of unemployment 
compensation when due.''
    Section 303(a)(3) of the Social Security Act requires that a State 
law include provision for: ``Opportunity for a fair hearing before an 
impartial tribunal, for all individuals whose claims for unemployment 
compensation are denied.''
    Section 3304(a)(4) of the Federal Unemployment Tax Act and section 
303(a)(5) of the Social Security Act require that a State law include 
provision for: ``Expenditure of all money withdrawn from an unemployment 
fund of such State, in the payment of unemployment compensation . . . 
.''
    Section 3306(h) of the Federal Unemployment Tax Act defines 
``compensation'' as ``cash benefits payable to individuals with respect 
to their unemployment.''
    6011 Secretary's Interpretation of Federal Law Requirements. The 
Secretary interprets the above sections to require that a State law 
include provisions which will insure that: A. Individuals who may be 
entitled to unemployment compensation are furnished such information as 
will reasonably afford them an opportunity to know, establish, and 
protect their rights under the unemployment compensation law of such 
State, and
    B. The State agency obtains and records in time for the prompt 
determination and review of benefit claims such information as will 
reasonably insure the payment of benefits to individuals to whom 
benefits are due.
    6012 Criteria for Review of State Law Conformity with Federal 
Requirements. In determining the conformity of a State law with the 
above requirements of the Federal Unemployment Tax Act and the Social 
Security Act as interpreted by the Secretary, the following criteria 
will be applied:
    A. Is it required that individuals who may be entitled to 
unemployment compensation be furnished such information of their 
potential rights to benefits, including the manner and places of filing 
claims, the reasons for determinations, and their rights of appeal, as 
will insure them a reasonable opportunity to know, establish, and 
protect their rights under the law of the State?
    B. Is the State agency required to obtain, in time for prompt 
determination of rights to benefits such information as will reasonably 
insure the payment of benefits to individuals to whom benefits are due?
    C. Is the State agency required to keep records of the facts 
considered in reaching determinations of rights to benefits?

 6013 Claim Determinations Requirements Designed To Meet Department of 
                             Labor Criteria.

    A. Investigation of claims. The State agency is required to obtain 
promptly and prior to a determination of an individual's right to 
benefits, such facts pertaining thereto as will be sufficient reasonably 
to insure the payment of benefits when due.
    This requirement embraces five separate elements:
    1. It is the responsibility of the agency to take the initiative in 
the discovery of information. This responsibility may not be passed on 
to the claimant or the employer. In addition to the agency's own 
records, this information may be obtained from the worker, the employer, 
or other sources. If the information obtained in the first instance 
discloses no essential disagreement and provides a sufficient basis for 
a fair determination, no further investigation is necessary. If the 
information obtained from other sources differs essentially from that 
furnished by the claimant, the agency, in order to meet its 
responsibility, is required to inform the claimant of such information 
from other sources and to afford the claimant an opportunity to furnish 
any further facts he may have.
    2. Evidentiary facts must be obtained as distinguished from ultimate 
facts or conclusions. That a worker was discharged for misconduct is an 
ultimate fact or conclusion; that he destroyed a machine upon which he

[[Page 177]]

was working is a primary or evidentiary fact, and the sort of fact that 
the requirement refers to.
    3. The information obtained must be sufficient reasonably to insure 
the payment of benefits when due. In general, the investigation made by 
the agency must be complete enough to provide information upon which the 
agency may act with reasonable assurance that its decision is consistent 
with the unemployment compensation law. On the other hand, the 
investigation should not be so exhaustive and time-consuming as unduly 
to delay the payment of benefits and to result in excessive costs.
    4. Information must be obtained promptly so that the payment of 
benefits is not unduly delayed.
    5. If the State agency requires any particular evidence from the 
worker, it must give him a reasonable opportunity to obtain such 
evidence.
    B. Recording of facts. The agency must keep a written record of the 
facts considered in reaching its determinations.
    C. Determination notices
    1. The agency must give each claimant a written notice of:
    a. Any monetary determination with respect to his benefit year;
    b. Any determination with respect to purging a disqualification if, 
under the State law, a condition or qualification must be satisfied with 
respect to each week of disqualification; but in lieu of giving written 
notice of each determination for each week in which it is determined 
that the claimant has met the requirements for purging, the agency may 
inform the claimant that he has purged the disqualification for a week 
by notation on his application identification card or otherwise in 
writing.
    c. Any other determination which adversely affects \1\ his rights to 
benefits, except that written notice of determination need not be given 
with respect to:
---------------------------------------------------------------------------

    \1\ A determination ``adversely affects'' claimant's right to 
benefits if it (1) results in a denial to him of benefits (including a 
cancellation of benefits or wage credits or any reduction in whole or in 
part below the weekly or maximum amount established by his monetary 
determination) for any week or other period; or (2) denies credit for a 
waiting week; or (3) applies any disqualification or penalty; or (4) 
determines that he has not satisfied a condition of eligibility, 
requalification for benefits, or purging a disqualification; or (5) 
determines that an overpayment has been made or orders repayment or 
recoupment of any sum paid to him; or (6) applies a previously 
determined overpayment, penalty, or order for repayment or recoupment; 
or (7) in any other way denies claimant a right to benefits under the 
State law.
---------------------------------------------------------------------------

    (1) A week in a benefit year for which the claimant's weekly benefit 
amount is reduced in whole or in part by earnings if, the first time in 
the benefit year that there is such a reduction, he is required to be 
furnished a booklet or leaflet containing the information set forth 
below in paragraph 2 f (1). However, a written notice of determination 
is required if: (a) there is a dispute concerning the reduction with 
respect to any week (e.g., as to the amount computed as the appropriate 
reduction, etc.); or (b) there is a change in the State law (or in the 
application thereof) affecting the reduction; or
    (2) Any week in a benefit year subsequent to the first week in such 
benefit year in which benefits were denied, or reduced in whole or in 
part for reasons other than earnings, if denial or reduction for such 
subsequent week is based on the same reason and the same facts as for 
the first week, and if written notice of determination is required to be 
given to the claimant with respect to such first week, and with such 
notice of determination, he is required to be given a booklet or 
pamphlet containing the information set forth below in paragraphs 2 f 
(2) and 2 h. However, a written notice of determination is required if: 
(a) there is a dispute concerning the denial or reduction of benefits 
with respect to such week; or (b) there is a change in the State law (or 
in the application thereof) affecting the denial or reduction; or (c) 
there is a change in the amount of the reduction except as to the 
balance covered by the last reduction in a series of reductions.
    Note: This procedure may be applied to determinations made with 
respect to any subsequent weeks for the same reason and on the basis of 
the same facts: (a) that claimant is unable to work, unavailable for 
work, or is disqualified under the labor dispute provision; and (b) 
reducing claimant's weekly benefit amount because of income other than 
earnings or offset by reason of overpayment.
    2. The agency must include in written notices of determinations 
furnished to claimants sufficient information to enable them to 
understand the determinations, the reasons therefor, and their rights to 
protest, request reconsideration, or appeal.
    The written notice of monetary determination must contain the 
information specified in the following items (except h) unless an item 
is specifically not applicable. A written notice of any other 
determination must contain the information specified in as many of the 
following items as are necessary to enable the claimant to understand 
the determination and to inform him of his appeal rights. Information 
specifically applicable to the individual claimant must be contained in 
the written notice of determination. Information of general application 
such as (but

[[Page 178]]

not limited to) the explanation of benefits for partial unemployment, 
information as to deductions, seasonality factors, and information as to 
the manner and place of taking an appeal, extension of the appeal 
period, and where to obtain information and assistance may be contained 
in a booklet or leaflet which is given the claimant with his monetary 
determination.
    a. Base period wages. The statement concerning base-period wages 
must be in sufficient detail to show the basis of computation of 
eligibility and weekly and maximum benefit amounts. (If maximum benefits 
are allowed, it may not be necessay to show details of earnings.)
    b. Employer name. The name of the employer who reported the wages is 
necessary so that the worker may check the wage transcript and know 
whether it is correct. If the worker is given only the employer number, 
he may not be able to check the accuracy of the wage transcript.
    c. Explanation of benefit formula--weekly and maximum benefit 
amounts. Sufficient information must be given the worker so that he will 
understand how his weekly benefit amount, including allowances for 
dependents, and his maximum benefit amount were figured. If benefits are 
computed by means of a table contained in the law, the table must be 
furnished with the notice of determination whether benefits are granted 
or denied.
    The written notice of determination must show clearly the weekly 
benefit amount and the maximum potential benefits to which the claimant 
is entitled.
    The notice to a claimant found ineligible by reason of insufficient 
earnings in the base period must inform him clearly of the reason for 
ineligibility. An explanation of the benefit formula contained in a 
booklet or pamphlet should be given to each claimant at or prior to the 
time he receives written notice of a monetary determination.
    d. Benefit year. An explanation of what is meant by the benefit year 
and identification of the claimant's benefit year must be included in 
the notice of determination.
    e. Information as to benefits for partial unemployment. There must 
be included either in the written notice of determination or in a 
booklet or pamphlet accompanying the notice an explanation of the 
claimant's rights to partial benefits for any week with respect to which 
he is working less than his normal customary full-time workweek because 
of lack of work and for which he earns less than his weekly benefit 
amount or weekly benefit amount plus earnings, whichever is provided by 
the State law. If the explanation is contained in the notice of 
determination, reference to the item in the notice in which his weekly 
benefit amount is entered should be made.
    f. Deductions from weekly benefits
    (1) Earnings. Although written notice of determinations deducting 
earnings from a claimant's weekly benefit amount is generally not 
required (see paragraph 1 c(1) above), where written notice of 
determination is required (or given) it shall set forth the amount of 
earnings, the method of computing the deduction in sufficient detail to 
enable the claimant to verify the accuracy of the deduction, and his 
right to protest, request redetermination, and appeal. Where a written 
notice of determination is given to the claimant because there has been 
a change in the State law or in the application of the law, an 
explanation of the change shall be included.
    Where claimant is not required to receive a written notice of 
determination, he must be given a booklet or pamphlet the first time in 
his benefit year that there is a deduction for earnings which shall 
include the following information:
    (a) The method of computing deductions for earnings in sufficient 
detail to enable the claimant to verify the accuracy of the deduction;
    (b) That he will not automatically be given a written notice of 
determination for a week with respect to which there is a deduction for 
earnings (unless there is a dispute concerning the reduction with 
respect to a week or there has been a change in the State law or in the 
application of the law affecting the deduction) but that he may obtain 
such a written notice upon request; and
    (c) A clear statement of his right to protest, request a 
redetermination, and appeal from any determination deducting earnings 
from his weekly benefit amount even though he does not automatically 
receive a written notice of determination; and if the State law requires 
written notice of determination in order to effectuate a protest, 
redetermination, or appeal, he must be so advised and advised also that 
he must request a written notice of determination before he takes any 
such action.
    (2) Other deductions
    (a) A written notice of determination is required with respect to 
the first week in claimant's benefit year in which there is a reduction 
from his benefits for a reason other than earnings. This notice must 
describe the deduction made from claimaint's weekly benefit amount, the 
reason for the deduction, the method of computing it in sufficient 
detail to enable him to verify the accuracy of such deduction, and his 
right to protest, request redetermination, or appeal.
    (b) A written notice of determination is not required for subsequent 
weeks that a deduction is made for the same reason and on the basis of 
the same facts, if the notice of determination pursuant to (2)(a), or a 
booklet or pamphlet given him with such notice explains (i) the several 
kinds of deductions which may be made under the State law

[[Page 179]]

(e.g., retirement pensions, vacation pay, and overpayments); (ii) the 
method of computing each kind of deduction in sufficient detail that 
claimant will be able to verify the accuracy of deductions made from his 
weekly benefit payments; (iii) any limitation on the amount of any 
deduction or the time in which any deduction may be made; (iv) that he 
will not automatically be given a written notice of determination for 
subsequent weeks with respect to which there is a deduction for the same 
reason and on the basis of the same facts, but that he may obtain a 
written notice of determination upon request; (v) his right to protest, 
request redetermination, or appeal with respect to subsequent weeks for 
which there is a reduction from his benefits for the same reason, and on 
the basis of the same facts even though he does not automatically 
receive a written notice of determination; and (vi) that if the State 
law requires written notice of determination in order to effectuate a 
protest, redetermination, or appeal, he must be so advised and advised 
also that he must request a written notice of determination before he 
takes any such action.
    g. Seasonality factors. If the individual's determination is 
affected by seasonality factors under the State law, an adequate 
explanation must be made. General explanations of seasonality factors 
which may affect determinations for subsequent weeks may be included in 
a booklet or pamphlet given claimant with his notice of monetary 
determination.
    h. Disqualification or ineligibility. If a disqualification is 
imposed, or if the claimant is declared ineligible for one or more 
weeks, he must be given not only a statement of the period of 
disqualification or ineligibility and the amount of wage-credit 
reductions, if any, but also an explanation of the reason for the 
ineligibility or disqualification. This explanation must be sufficiently 
detailed so that he will understand why he is ineligibile or why he has 
been disqualified, and what he must do in order to requalify for 
benefits or purge the disqualification. The statement must be 
individualized to indicate the facts upon which the determination was 
based, e.g., state, ``It is found that you left your work with Blank 
Company because you were tired of working; the separation was voluntary, 
and the reason does not constitute good cause,'' rather than merely the 
phrase ``voluntary quit.'' Checking a box as to the reason for the 
disqualification is not a sufficiently detailed explanation. However, 
this statement of the reason for the disqualification need not be a 
restatement of all facts considered in arriving at the determination.
    1. Appeal rights. The claimant must be given information with 
respect to his appeal rights.
    (1) The following information shall be included in the notice of 
determination:
    (a) A statement that he may appeal or, if the State law requires or 
permits a protest or redetermination before an appeal, that he may 
protest or request a redetermination.
    (b) The period within which an appeal, protest, or request for 
redetermination must be filed. The number of days provided by statute 
must be shown as well as either the beginning date or ending date of the 
period. (It is recommended that the ending date of the appeal period be 
shown, as this is the more understandable of the alternatives.)
    (2) The following information must be included either in the notice 
of determination or in separate informational material referred to in 
the notice:
    (a) The manner in which the appeal, protest, or request for 
redetermination must be filed, e.g., by signed letter, written 
statement, or on a prescribed form, and the place or places to which the 
appeal, protest, or request for redetermination may be mailed or hand-
delivered.
    (b) An explanation of any circumstances (such as nonworkdays, good 
cause, etc.) which will extend the period for the appeal, protest, or 
request for redetermination beyond the date stated or identified in the 
notice of determination.
    (c) That any further information claimant may need or desire can be 
obtained together with assistance in filing his appeal, protest, or 
request for redetermination from the local office.
    If the information is given in separate material, the notice of 
determination would adequately refer to such material if it said, for 
example, ``For other information about your (appeal), (protest), 
(redetermination) rights, see pages ---- to ---- of the ---------------- 
(name of pamphlet or booklet) heretofore furnished to you.''

6014 Separation Information Requirements Designed To Meet Department of 
                             Labor Criteria

    A. Information to agency. Where workers are separated, employers are 
required to furnish the agency promptly, either upon agency request or 
upon such separation, a notice describing the reasons for and the 
circumstances of the separation and any additional information which 
might affect a claimant's right to benefits. Where workers are working 
less than full time, employers are required to furnish the agency 
promptly, upon agency request, information concerning a claimant's hours 
of work and his wages during the claim periods involved, and other facts 
which might affect a claimant's eligibility for benefits during such 
periods.
    When workers are separated and the notices are obtained on a request 
basis, or when workers are working less than full time and the agency 
requests information, it is essential to the prompt processing of claims 
that the request be sent out promptly after the claim is filed and the 
employer be

[[Page 180]]

given a specific period within which to return the notice, preferably 
within 2 working days.
    When workers are separated and notices are obtained upon separation, 
it is essential that the employer be required to send the notice to the 
agency with sufficient promptness to insure that, if a claim is filed, 
it may be processed promptly. Normally, it is desirable that such a 
notice be sent to the central office of the agency, since the employer 
may not know in which local office the worker will file his claim. The 
usual procedure is for the employer to give the worker a copy of the 
notice sent by the employer to the agency.
    B. Information of worker. 1. Information required to be given. 
Employers are required to give their employees information and 
instructions concerning the employees' potential rights to benefits and 
concerning registration for work and filing claims for benefits.
    The information furnished to employees under such a requirement need 
not be elaborate; it need only be adequate to insure that the worker who 
is separated or who is working less than full time knows he is 
potentially eligible for benefits and is informed as to what he is to do 
or where he is to go to file his claim and register for work. When he 
files his claim, he can obtain more detailed information.
    In States that do not require employers to furnish periodically to 
the State agency detailed reports of the wages paid to their employees, 
each employer is required to furnish to his employees information as to 
(a) the name under which he is registered by the State agency, (b) the 
address where he maintains his payroll records, and (c) the workers' 
need for this information if and when they file claims for benefits.
    2. Methods for giving information. The information and instructions 
required above may be given in any of the following ways:
    a. Posters prominently displayed in the employer's establishment. 
The State agency should supply employers with a sufficient number of 
posters for distribution throughout their places of business and should 
see that the posters are conspicuously displayed at all times.
    b. Leaflets. Leaflets distributed either periodically or at the time 
of separation or reduction of hours. The State agency should supply 
employers with a sufficient number of leaflets.
    c. Individual notices. Individual notices given to each employee at 
the time of separation or reduction in hours.
    It is recommended that the State agency's publicity program be used 
to supplement the employer-information requirements. Such a program 
should stress the availability and location of claim-filing offices and 
the importance of visiting those offices whenever the worker is 
unemployed, wishes to apply for benefits, and to seek a job.
    6015 Evaluation of Alternative State Provisions with Respect to 
Claim Determinations and Separation Information. If the State law 
provisions do not conform to the suggested requirements set forth in 
sections 6013 and 6014, but the State law contains alternative 
provisions, the Bureau of Employment Security, in collaboration with the 
State agency, will study the actual or anticipated effects of the 
alternative provisions. If the Administrator of the Bureau concludes 
that the alternative provisions satisfy the criteria in section 6012, he 
will so notify the State agency. If the Administrator of the Bureau does 
not so conclude, he will submit the matter to the Secretary. If the 
Secretary concludes that the alternative provisions satisfy the criteria 
in section 6012, the State agency will be so notified. If the Secretary 
concludes that there is a question as to whether the alternative 
provisions satisfy the criteria, the State agency will be advised that 
unless the State law provisions are appropriately revised, a notice of 
hearing will be issued as required by the Code of Federal Regulations, 
title 20, section 601.5.

[55 FR 559, Jan. 5, 1990]

  Appendix C to Part 625--Standard for Fraud and Overpayment Detection

         Employment Security Manual (Part V, Sections 7510-7515)

         7510-7519 Standard for Fraud and Overpayment Detection

    7510 Federal Law Requirements. Section 303(a)(1) of the Social 
Security Act requires that a State law include provision for:
    ``Such methods of administration * * * as are found by the Secretary 
to be reasonably calculated to insure full payment of unemployment 
compensation when due.''
    Section 1603(a)(4) of the Internal Revenue Code and section 
3030(a)(5) of the Social Security Act require that a State law include 
provision for:
    ``Expenditure of all money withdrawn from an unemployment fund of 
such State, in the payment of unemployment compensation * * *''
    Section 1607(h) of the Internal Revenue Code defines 
``compensation'' as ``cash benefits payable to individuals with respect 
to their unemployment.''
    7511 The Secretary's Interpretation of Federal Law Requirements. The 
Secretary of Labor interprets the above sections to require that a State 
law include provision for such methods of administration as are, within 
reason, calculated (1) to detect benefits paid through error by the 
agency or through willful misrepresentation or error by the

[[Page 181]]

claimant or others, and (2) to deter claimants from obtaining benefits 
through willful misrepresentation.
    7513 Criteria for Review of State Conformity With Federal 
Requirements. In determining State conformity with the above 
requirements of the Internal Revenue Code and the Social Security Act, 
as interpreted by the Secretary of Labor, the following criteria will be 
applied:
    A. Are investigations required to be made after the payment of 
benefits, (or, in the case of interstate claims, are investigations made 
by the agent State after the processing of claims) as to claimants' 
entitlement to benefits paid to them in a sufficient proportion of cases 
to test the effectiveness of the agency's procedures for the prevention 
of payments which are not due? To carry out investigations, has the 
agency assigned to some individual or unit, as a basic function, the 
responsibility of making or functionally directing such investigations?
    Explanation: It is not feasible to prescribe the extent to which the 
above activities are required; however, they should always be carried on 
to such an extent that they will show whether or not error or willful 
misrepresentation is increasing or decreasing, and will reveal problem 
areas. The extent and nature of the above activities should be varied 
according to the seriousness of the problem in the State. The 
responsible individual or unit should:
    1. Check paid claims for overpayment and investigate for willful 
misrepresentation or, alternatively, advise and assist the operating 
units in the performance of such functions, or both;
    2. Perform consultative services with respect to methods and 
procedures for the prevention and detection of fraud; and
    3. Perform other services which are closely related to the above.
    Although a State agency is expected to make a full-time assignment 
of responsibility to a unit or individual to carry on the functions 
described above, a small State agency might make these functions a part-
time responsibility of one individual. In connection with the detection 
of overpayments, such a unit or individual might, for example:
    (a) Investigate information on suspected benefit fraud received from 
any agency personnel, and from sources outside the agency, including 
anonymous complaints;
    (b) Investigate information secured from comparisons of benefit 
payments with employment records to detect cases of concurrent working 
(whether in covered or noncovered work) and claiming of benefits 
(including benefit payments in which the agency acted as agency for 
another State).
    The benefit fraud referred to herein may involve employers, agency 
employees, and witnesses, as well as claimants.
    Comparisons of benefit payments with employment records are commonly 
made either by post-audit or by industry surveys. The so-called ``post-
audit'' is a matching of central office wage-record files against 
benefit payments for the same period. ``Industry surveys'' or ``mass 
audits'' are done in some States by going directly to employers for pay-
roll information to be checked against concurrent benefit lists. A plan
    A. of investigation based on a sample post-audit will be considered 
as partial fulfillment of the investigation program; it would need to be 
supplemented by other methods capable of detecting overpayments to 
persons who have moved into noncovered occupations or are claiming 
interstate benefits.
    B. Are adequate records maintained by which the results of 
investigations may be evaluated?
    Explanation: To meet this criterion, the State agency will be 
expected to maintain records of all its activities in the detection of 
overpayments, showing whether attributable to error or willful 
misrepresentation, measuring the results obtained through various 
methods, and noting the remedial action taken in each case. The adequacy 
and effectiveness of various methods of checking for willful 
misrepresentation can be evaluated only if records are kept of the 
results obtained. Internal reports on fraudulent and erroneous 
overpayments are needed by State agencies for self-evaluation. Detailed 
records should be maintained in order that the State agency may 
determine, for example, which of several methods of checking currently 
used are the most productive. Such records also will provide the basis 
for drawing a clear distinction between fraud and error.
    C. Does the agency take adequate action with respect to publicity 
concerning willful misrepresentation and its legal consequences to deter 
fraud by claimants?
    Explanation: To meet this criterion, the State agency must issue 
adequate material on claimant eligibility requirements and must take 
necessary action to obtain publicity on the legal consequences of 
willful misrepresentation or willful nondisclosure of facts.
    Public announcements on convictions and resulting penalties for 
fraud are generally considered necessary as a deterrent to other 
persons, and to inform the public that the agency is carrying on an 
effective program to prevent fraud. This alone is not considered 
adequate publicity. It is important that information be circulated which 
will explain clearly and understandably the claimant's rights, and the 
obligations which he must fulfill to be eligible for benefits. Leaflets 
for distribution and posters placed in local offices are appropriate 
media for such information.
    7515 Evaluation of Alternative State Provisions with Respect to 
Erroneous and Illegal Payments. If the methods of administration 
provided for by the State law do not conform

[[Page 182]]

to the suggested methods of meeting the requirements set forth in 
section 7511, but a State law does provide for alternative methods of 
administration designed to accomplish the same results, the Bureau of 
Employment Security, in collaboration with the State agency, will study 
the actual or anticipated effect of the alternative methods of 
administration. If the Bureau concludes that the alternative methods 
satisfy the criteria in section 7513, it will so notify the State 
agency. If the Bureau does not so conclude, it will submit to the 
Secretary the results of the study for his determination of whether the 
State's alternative methods of administration meet the criteria.

[55 FR 562, Jan. 5, 1990]



PART 626_INTRODUCTION TO THE REGULATIONS UNDER THE JOB TRAINING 
PARTNERSHIP ACT--Table of Contents




Sec.
626.1 Scope and purpose of the Job Training Partnership Act.
626.2 Format of the Job Training Partnership Act regulations.
626.3 Purpose, scope, and applicability of the Job Training Partnership 
          Act regulations.
626.4 Table of contents for the Job Training Partnership Act 
          regulations.
626.5 Definitions.

    Authority: 29 U.S.C. 1579(a).

    Source: 59 FR 45815, Sept. 2, 1994, unless otherwise noted.



Sec. 626.1  Scope and purpose of the Job Training Partnership Act.

    It is the purpose of the Job Training Partnership Act (JTPA or the 
Act) to establish programs to prepare youth and adults facing serious 
barriers to employment for participation in the labor force by providing 
job training and other services that will result in increased employment 
and earnings, increased educational and occupational skills, and 
decreased welfare dependency, thereby improving the quality of the work 
force and enhancing the productivity and competitiveness of the Nation 
(section 2).



Sec. 626.2  Format of the Job Training Partnership Act regulations.

    (a) Regulations promulgated by the Department of Labor to implement 
the provisions of the Act are set forth in parts 626 through 638 of 
title 20, chapter V, of the Code of Federal Regulations, with the 
exception of the veterans' employment program's chapter IX regulations 
of the Office of the Assistant Secretary for Veterans' Employment and 
Training, which are set forth at part 1005 of title 20.
    (b) Nondiscrimination and equal opportunity requirements and 
procedures, including complaint processing and compliance reviews, will 
be governed by the provisions of 29 CFR part 34 and will be administered 
by the Department of Labor (Department or DOL) Directorate of Civil 
Rights.
    (c) General authority for the JTPA regulations is found at section 
169 of the Act. Specific statutory authorities other than section 169 
are noted throughout the JTPA regulations.



Sec. 626.3  Purpose, scope, and applicability of the Job Training 
Partnership Act regulations.

    (a) Parts 626 through 638 of this chapter and part 1005 of chapter 
IX (Veterans' employment programs under title IV, part C of the Job 
Training Partnership Act) establish the Federal programmatic and 
administrative requirements for JTPA grants awarded by the Department of 
Labor to eligible grant recipients.
    (b) Parts 626 through 638 of this chapter and part 1005 of chapter 
IX apply to recipients and subrecipients of JTPA funds.



Sec. 626.4  Table of contents for the Job Training Partnership Act 
regulations.

    The table of contents for the regulations under the Job Training 
Partnership Act, 20 CFR parts 626-638 and 1005,\1\ is as follows:
---------------------------------------------------------------------------

    \1\ Part 1005 was removed at 59 FR 26601, May 23, 1994.
---------------------------------------------------------------------------

    PART 626--INTRODUCTION TO THE REGULATIONS UNDER THE JOB TRAINING 
                             PARTNERSHIP ACT

Sec.
626.1 Scope and purpose of the Job Training Partnership Act.
626.2 Format of the Job Training Partnership Act regulations.
626.3 Purpose, scope and applicability of the Job Training Partnership 
          Act regulations.
626.4 Table of contents for the Job Training Partnership Act 
          regulations.

[[Page 183]]

626.5 Definitions.

      PART 627--GENERAL PROVISIONS GOVERNING PROGRAMS UNDER THE ACT

                      Subpart A--Scope and Purpose

627.100 Scope and Purpose of Part 627.

                     Subpart B--Program Requirements

627.200 Governor/Secretary agreement.
627.205 Public service employment prohibition.
627.210 Nondiscrimination and nonsectarian activities.
627.215 Relocation.
627.220 Coordination with programs under title IV of the Higher 
          Education Act including the Pell grant program.
627.225 Employment generating activities.
627.230 Displacement.
627.235 General program requirements.
627.240 On-the-job training.
627.245 Work experience.
627.250 Interstate agreements.

   Subpart C--Payments, Supportive Services and Benefits and Working 
                               Conditions

627.300 Scope and purpose.
627.305 Payments.
627.310 Supportive Services.
627.315 Benefits and working conditions.

                   Subpart D--Administrative Standards

627.400 Scope and purpose.
627.405 Grant agreement and funding.
627.410 Reallotment and reallocation.
627.415 Insurance.
627.420 Procurement.
627.422 Selection of service providers.
627.423 Funding restrictions for ``high-risk'' recipients and 
          subrecipients.
627.424 Prohibition of subawards to debarred and suspended parties.
627.425 Standards for financial management and participant data systems.
627.430 Grant payments.
627.435 Cost principles and allowable costs.
627.440 Classification of costs.
627.445 Limitations on certain costs.
627.450 Program income.
627.455 Reports required.
627.460 Requirements for records.
627.463 Public access to records.
627.465 Property management standards.
627.470 Performance standards.
627.471 Reorganization plan appeals.
627.475 Oversight and monitoring.
627.477 Governor's determination of substantial violation.
627.480 Audits.
627.481 Audit resolution.
627.485 Closeout.
627.490 Later disallowances and adjustments after closeout.
627.495 Collection of amounts due.

      Subpart E--Grievances Procedures at the State and Local Level

627.500 Scope and purpose.
627.501 State grievance and hearing procedures for noncriminal 
          complaints at the recipient level.
627.502 Grievance and hearing procedures for noncriminal complaints at 
          the SDA and SSG levels.
627.503 Recipient-level review.
627.504 Noncriminal grievance procedure at employer level.

    Subpart F--Federal Handling of Noncriminal Complaints and other 
                               Allegations

627.600 Scope and purpose.
627.601 Complaints and allegations at the Federal level.
627.602 Resolution of investigative findings.
627.603 Special handling of labor standards violations under section 143 
          of the Act.
627.604 Alternative procedure for handling labor standards violations 
          under section 143--Binding arbitration.
627.605 Special Federal review of SDA and SSG-level complaints without 
          decision.
627.606 Grant officer resolution.
627.607 Grant Officer resolution of Governor's failure to promptly take 
          action.

             Subpart G--Sanctions for Violations of the Act

627.700 Scope and purpose.
627.702 Sanctions and corrective actions.
627.703 Failure to comply with procurement provisions.
627.704 Process for waiver of State liability.
627.706 Process for advance approval of a recipient's contemplated 
          corrective actions.
627.708 Offset process.

     Subpart H--Hearings by the Office of Administrative Law Judges

627.800 Scope and purpose.
627.801 Procedures for filing request for hearing.
627.802 Rules of procedure.
627.803 Relief.
627.804 Timing of decisions.
627.805 Alternative dispute resolution.
627.806 Other authority.

                    Subpart I--Transition Provisions

627.900 Scope and purpose.
627.901 Transition period.
627.902 Governor's actions.
627.903 Actions which are at the discretion of the Governor.
627.904 Transition and implementation.
627.905 Guidance on contracts and other agreements.
627.906 Determinations on State and SDA implementation.

[[Page 184]]

  PART 628--PROGRAMS UNDER TITLE II OF THE JOB TRAINING PARTNERSHIP ACT

                      Subpart A--Scope and Purpose

628.100 Scope and purpose of part 628.

                        Subpart B--State Planning

628.200 Scope and purpose.
628.205 Governor's coordination and special services plan.
628.210 State Job Training Coordinating Council.
628.215 State Human Resource Investment Council.

                        Subpart C--State Programs

628.300 Scope and purpose.
628.305 State distribution of funds.
628.310 Administration.
628.315 Education coordination and grants.
628.320 Services for older individuals.
628.325 Incentive grants, capacity building and technical assistance.

                Subpart D--Local Service Delivery System

628.400 Scope and purpose.
628.405 Service delivery areas.
628.410 Private Industry Council.
628.415 Selection of SDA grant recipient and administrative entity.
628.420 Job training plan.
628.425 Review and approval.
628.426 Disapproval or revocation of the plan.
628.430 State SDA submission.

 Subpart E--Program Design Requirements for Programs Under Title II of 
                    the Job Training Partnership Act

628.500 Scope and purpose.
628.505 Eligibility.
628.510 Intake, referrals, and targeting.
628.515 Objective assessment.
628.520 Individual service strategy.
628.525 Limitations.
628.530 Referrals of participants to non-title II programs.
628.535 Limitations on job search assistance.
628.540 Volunteer program.
628.545 Linkages and coordination.
628.550 Transfer of funds.

                      Subpart F--The Adult Program

628.600 Scope and purpose.
628.605 Eligibility.
628.610 Authorized services.

       Subpart G--The Summer Youth Employment and Training Program

628.700 Scope and purpose.
628.701 Program goals and objectives.
628.702 Enriched Educational Component.
638.703 Private Sector Summer Jobs.
628.704 Eligibility.
628.705 SYETP authorized services.
628.710 Period of program operation.

                    Subpart H--Youth Training Program

628.800 Scope and purpose.
628.803 Eligibility.
628.804 Authorized services.

                        PARTS 629-630 [Reserved]

 PART 631--PROGRAMS UNDER TITLE III OF THE JOB TRAINING PARTNERSHIP ACT



                      Subpart A--General Provisions

631.1 Scope and purpose.
631.2 Definitions.
631.3 Participant eligibility.
631.4 Approved training rule.

 Subpart B--Additional Title III Administrative Standards and Procedures

631.11 Allotment and obligation of funds by the Secretary.
631.12 Reallotment of funds by the Secretary.
631.13 Classification of costs at State and substate levels.
631.14 Limitations on certain costs.
631.15 Federal reporting requirements.
631.16 Complaints, investigations, and penalties.
631.17 Federal monitoring and oversight.
631.18 Federal by-pass authority.
631.19 Appeals.

                    Subpart C--Needs-Related Payments

631.20 Needs-related payments.

                     Subpart D--State Administration

631.30 Designation or creation and functions of a State dislocated 
          worker unit or office and rapid response assistance.
631.31 Monitoring and oversight.
631.32 Allocation of funds by the Governor.
631.33 State procedures for identifying funds subject to mandatory 
          Federal reallotment.
631.34 Designation of substate areas.
631.35 Designation of substate grantees.
631.36 Biennial State plan.
631.37 Coordination activities.
631.38 State by-pass authority.

                        Subpart E--State Programs

631.40 State program operational plan.
631.41 Allowable State activities.

                      Subpart F--Substate Programs

631.50 Substate plan.
631.51 Allowable substate program activities.
631.52 Selection of service providers.

[[Page 185]]

631.53 Certificate of continuing eligibility.

   Subpart G--Federal Delivery of Dislocated Worker Services Through 
                     National Reserve Account Funds

631.60 General.
631.61 Application for funding and selection criteria.
631.62 Cost limitations.
631.63 Reporting.
631.64 General Administrative Requirements.
631.65 Special Provisions for CAETA and DDP.

                          Subpart H [Reserved]

            Subpart I--Disaster Relief Employment Assistance

631.80 Scope and Purpose.
631.81 Availability of funds.
631.82 Substate allocation.
631.83 Coordination.
631.84 Allowable projects.
631.85 Participant eligibility.
631.86 Limitations on disaster relief employment.
631.87 Definitions.

  PART 632--INDIAN AND NATIVE AMERICAN EMPLOYMENT AND TRAINING PROGRAMS

                         Subpart A--Introduction

632.1 [Reserved]
632.2 Scope and purpose.
632.3 Format for these regulations.
632.4 Definitions.

   Subpart B--Designation Procedures for the Native American Grantees

632.10 Eligibility requirements for designation as a Native American 
          grantee.
632.11 Designation of Native American grantees.
632.12 Alternative arrangements for the provision of services, 
          nondesignation.
632.13 Review of denial of designation as a Native American grantee, or 
          rejection of a comprehensive annual plan.

  Subpart C--Program Planning, Application and Modification Procedures

632.17 Planning process.
632.18 Regional and national planning meetings.
632.19 Grant application content.
632.20 Submission of grant applications.
632.21 Application disapproval.
632.22 Modification of a Comprehensive Annual Plan (CAP) and/or Master 
          Plan.
632.23 Termination and corrective action of a CAP and/or Master Plan.

           Subpart D--Administrative Standards and Procedures

632.31 General.
632.32 Financial management systems.
632.33 Audits.
632.34 Program income.
632.35 Native American grantee contracts and subgrants.
632.36 Procurement standards.
632.37 Allowable costs.
632.38 Classification of costs.
632.39 Administrative cost plan.
632.40 Administrative staff and personnel standards.
632.41 Reporting requirements.
632.42 Grant closeout procedures.
632.43 Reallocation of funds.
632.44 Sanctions for violation of the Act.

                Subpart E--Program Design and Management

632.70 Waiver of regulations under parts 632 and 636.
632.75 General responsibilities of Native American grantees.
632.76 Program management systems.
632.77 Participant eligibility determination.
632.78 Training activities.
632.79 Employment activities.
632.80 Other activities.
632.81 Payments to participants.
632.82 Benefits and working conditions for participants.
632.83 FICA.
632.84 Non-Federal status of participants.
632.85 Participant limitations.
632.86 Nondiscrimination and nonsectarian activities.
632.87 Equitable provision of services to the eligible population and 
          significant segments.
632.88 General responsibilities of the Department.
632.89 Performance standards.

            Subpart F--Prevention of Fraud and Program Abuse

632.115 General.
632.116 Conflict of interest.
632.117 Kickbacks.
632.118 Nepotism.
632.119 Political patronage.
632.120 Political activities.
632.121 Lobbying activities.
632.122 Unionization and antiunionization activities; work stoppages.
632.123 Maintenance of effort.
632.124 Theft or embezzlement from employment and training funds; 
          improper inducement; obstruction of investigations and other 
          criminal provisions.
632.125 Responsibilities of Native American grantees, subgrantees and 
          contractors for preventing fraud and program abuse and for 
          general program management.

[[Page 186]]

                          Subpart G [Reserved]

Subpart H--Job Training Partnership Act Programs Under Title IV, Section 
                                   401

632.170 Eligibility for funds.
632.171 Allocation of funds.
632.172 Eligibility for participation in Title IV, Section 401.
632.173 Allowable program activities.
632.174 Administrative costs.

        Subpart I--Summer Youth Employment and Training Programs

632.250 General.
632.251 Eligibility for funds.
632.252 Allocation of funds.
632.253 Special operating provision.
632.254 Program startup.
632.255 Program planning.
632.256 Submission of applications.
632.257 Eligibility for participation.
632.258 Allowable activities.
632.259 Vocational exploration program.
632.260 Worksite standards.
632.261 Reporting requirements.
632.262 Termination date for the summer program.
632.263 Administrative costs.

           PART 633--MIGRANT AND SEASONAL FARMWORKER PROGRAMS

                   Subpart A--Introductory Provisions

633.102 Scope and purpose of Title IV, Section 402 programs.
633.103 Format for these regulations.
633.104 Definitions.
633.105 Allocation of funds.
633.106 Eligibility for allocable funds.
633.107 Eligibility for participation in Section 402 programs.

          Subpart B--Grant Planning and Application Procedures

633.201 Grant planning and application procedures in general.
633.202 Announcement of State planning estimates and invitation to 
          submit a grant application.
633.203 Review of funding request.
633.204 Responsibility review.
633.205 Notification of selection.

         Subpart C--Program Design and Administrative Procedures

633.301 General responsibilities.
633.302 Training activities and services.
633.303 Allowable costs.
633.304 Section 402 cost allocation.
633.305 General benefits and working conditions for program 
          participants.
633.306 Retirement benefits.
633.307 Packages of benefits.
633.308 Non-Federal status of participants.
633.309 Recordkeeping requirements.
633.310 Bonding.
633.311 Management information systems.
633.312 Grantee contracts and subgrants.
633.313 Administrative staff and personnel standards.
633.314 Reports required.
633.315 Replacement, corrective action, termination.
633.316 Closeout procedures.
633.317 Reallocation of funds.
633.318 Nondiscrimination and nonsectarian activities.
633.319 Lobbying, political activities and unionization.
633.320 Nepotism.
633.321 Performance standards for Section 402 programs.
633.322 Sanctions for violation of the Act.

 PART 634--LABOR MARKET INFORMATION PROGRAMS UNDER TITLE IV, PART E OF 
                    THE JOB TRAINING PARTNERSHIP ACT

              Comprehensive Labor Market Information System

634.1 General.
634.2 Availability of funds.
634.3 Eligible recipients.
634.4 Statistical standards.
634.5 Federal oversight.

                           PART 635 [RESERVED]

           PART 636--COMPLAINTS, INVESTIGATIONS, AND HEARINGS

636.1 Scope and purpose.
636.2 Protection of informants.
636.3 Complaint and hearing procedures at the grantee level.
636.4 Grievance procedures at the employer level.
636.5 Exhaustion of grantee level procedure.
636.6 Complaints and investigations at the Federal level.
636.7 Subpoenas.
636.8 Initial and final determination; request for hearing at the 
          Federal level.
636.9 Opportunity for informal review.
636.10 Hearings before the Office of Administrative Law Judges.
636.11 Final action.

  PART 637--PROGRAMS UNDER TITLE V OF THE JOB TRAINING PARTNERSHIP ACT

                      Subpart A--General Provisions

Sec.
637.100 Scope and purpose.
637.105 Definitions.

                Subpart B--Program Planning and Operation

637.200 Allotments to States.
637.205 Notice of intent to participate.
637.210 Incentive bonus program applications.

[[Page 187]]

637.215 Review and approval of applications for incentive bonus 
          payments.
637.220 Eligibility criteria for individuals to be counted in 
          determining incentive bonuses.
637.225 Determination of incentive bonus.
637.230 Use of incentive bonuses.

  Subpart C--Additional Title V Administrative Standards and Procedures

637.300 Management systems, reporting and recordkeeping.
637.305 Federal monitoring and oversight.
637.310 Audits.

                  Subpart D--Data Collection [Reserved]

    PART 638--JOB CORPS PROGRAM UNDER TITLE IV-B OF THE JOB TRAINING 
                             PARTNERSHIP ACT

                      Subpart A--Purpose and Scope

638.100 General.

                         Subpart B--Definitions

638.200 Definitions.

      Subpart C--Funding, Site Selection, and Facilities Management

638.300 Eligibility for funds and eligible deliverers.
638.301 Funding procedures.
638.302 Center performance measurement.
638.303 Site selection and facilities management.
638.304 Historical preservation.
638.305 Capital improvements.
638.306 Protection and maintenance of contract center facilities owned 
          or leased by Job Corps.
638.307 Facilities surveys.

 Subpart D--Enrollment, Transfers, Terminations, and Placements in the 
                                Job Corps

638.400 Eligibility for participation.
638.401 Outreach and screening of participants.
638.402 Enrollment by readmission.
638.403 Selective service.
638.404 Transfers.
638.405 Extensions of enrollment.
638.406 Federal status of students.
638.407 Terminations.
638.408 Transportation.
638.409 Placement and job development.

                      Subpart E--Center Operations

638.500 Orientation program.
694.501 Student handbook.
638.502 Job Corps basic education program.
638.503 Vocational training.
638.504 Occupational exploration programs.
638.505 Scheduling of training.
638.506 Purchase of vocational supplies and equipment.
638.507 Work experience.
638.508 Sale of services or objects.
638.509 Leisure-time employment.
638.510 Health care and services.
638.511 Drug use and abuse.
638.512 Sexual behavior and harassment.
638.513 Death.
638.514 Residential support services.
638.515 Recreation/avocational program.
638.516 Laundry, mail, and telephone service.
638.517 Counseling.
638.518 Intergroup relations program.
638.519 Incentives system.
638.520 Student government and leadership program.
638.521 Student welfare associations.
638.522 Evaluation of student progress.
638.523 Food service.
638.524 Allowances and allotments.
638.525 Clothing.
638.526 Tort and other claims.
638.527 Federal employees' compensation.
638.528 Social Security.
638.529 Income taxes.
638.530 Emergency use of personnel, equipment, and facilities.
638.531 Limitations on the use of students in emergency projects.
638.532 Annual leave.
638.533 Other student absences.
638.534 Legal services to corpsmembers.
638.535 Voting rights.
638.536 Religious rights.
638.537 Disclosure of information.
694.538 Disciplinary procedures and appeals.
638.539 Complaints and disputes.
638.540 Cooperation with agencies and institutions.
638.541 Job Corps training opportunities.
638.542 Child care services.
638.543 Community relations program.

           Subpart F--Applied Vocational Skills Training (VST)

638.600 Applied vocational skills training (VST) through work projects.
638.601 Applied VST budgeting.

      Subpart G--Experimental, Research, and Demonstration Projects

638.710 Experimental, research, and demonstration projects.

                  Subpart H--Administrative Provisions

638.800 Program management.
638.801 Staff training.
638.802 Student records management.
638.803 Safety.
638.804 Environmental health.
638.805 Security and law enforcement.
638.806 Property management and procurement.
638.807 Imprest and petty cash funds.
638.808 Center financial management and reporting.
638.809 Audit.

[[Page 188]]

638.810 Reporting requirements.
638.811 Review and evaluation.
638.812 State and local taxation of Job Corps deliverers.
638.813 Nondiscrimination, nonsectarian activities.
638.814 Lobbying; political activities; unionization.
638.815 Charging fees.

[59 FR 45815, Sept. 2, 1994, as amended at 60 FR 58229, Nov. 27, 1995]



Sec. 626.5  Definitions.

    In addition to the definitions contained in section 4 of the Act, 
the following definitions of terms used in the Act or parts 626-631 of 
this chapter apply as appropriate to programs under titles I, II, and 
III of the Act:
    Accrued expenditures means charges made to the JTPA program. 
Expenditures are the sum of actual cash disbursements, the amount of 
indirect expense incurred, and the net increase (or decrease) in the 
amounts owed by the recipient for the goods and other property received, 
for services performed by employees, contractors, subgrantees, 
subcontractors, and other payees, and other amounts becoming owed under 
programs for which no current services or performance are required, such 
as annuities, insurance claims, and other benefit payments.
    Act means the Job Training Partnership Act.
    ALJ means an administrative law judge in the Office of 
Administrative Law Judges of the U.S. Department of Labor.
    Awarding agency means: (1) With respect to a grant, the Department 
of Labor; and (2) with respect to a subgrant or contract, the party that 
awarded the subgrant or contract.
    Capacity building means the systematic improvement of job functions, 
skills, knowledge, and expertise of the personnel who staff and 
administer employment and training and other closely related human 
service systems. Capacity building is designed to enhance the 
effectiveness, to strengthen the caliber of customer services provided 
under the Act and other Federal, State, and local employment and 
training programs, and improve coordination among them. Capacity 
building includes curriculum development, appropriate training, 
technical assistance, staff development, and other related activities.
    Chief elected official (CEO) means the official or officials, or 
their representatives, of the jurisdiction or jurisdictions which 
requested designation by the Governor as a service delivery area.
    Commercial organizations means private for-profit entities.
    Commercially available off-the-shelf training package means a 
training package sold or traded to the general public in the course of 
normal business operations, at prices based on established catalog or 
market prices. To be considered as ``sold to the general public,'' the 
package must be regularly sold in sufficient quantities to constitute a 
real commercial market to buyers that must include other than JTPA 
programs. The package must include performance criteria pertaining to 
the delivery of the package which may include participant attainment of 
knowledge, skills or a job.
    Contractor means the organization, entity, or individual that is 
awarded a procurement contract under the recipient's or subrecipient's 
procurement standards and procedures.
    Cost means accrued expenditure.
    Department means the U.S. Department of Labor.
    DOL means the U.S. Department of Labor.
    ETA means the Employment and Training Administration of the U.S. 
Department of Labor.
    Family is defined at section 4(34) of the Act. An ``individual with 
a disability'' shall, for the purposes of income eligibility 
determination, be considered to be an unrelated individual who is a 
family unit of one, consistent with the definition of ``economically 
disadvantaged'' at section 4(8) of the Act. The Governor may provide 
interpretations of the term ``family'' related to how ``dependent 
children'' are defined for programs within a State, consistent with the 
Act, and all applicable rules and regulations, and State or local law. 
Such interpretations by the Governor may address the treatment of 
certain individuals who may need to be viewed discretely in the income 
eligibility determination process, such as runaways, emancipated youth, 
and

[[Page 189]]

court adjudicated youth separated from the family.
    The phrase ``living in a single residence'' with other family 
members includes temporary, voluntary residence elsewhere (e.g., 
attending school or college, or visiting relatives). It does not include 
involuntary temporary residence elsewhere (e.g., incarceration, or 
placement as a result of a court order).
    Family income means ``income'' as defined by the Department of 
Health and Human Services in connection with the annual poverty 
guidelines. Such income shall not include unemployment compensation, 
child support and public assistance (including Aid to Families with 
Dependent Children, Supplemental Security Income, Emergency Assistance 
money payments, and non-federally funded General Assistance or General 
Relief money payments), as provided for at section 4(8) of the Act. In 
addition, such income shall also exclude foster child care payments, 
educational financial assistance received under title IV of the Higher 
Education Act (20 U.S.C. 1087), as amended by section 479(B) of the 
Higher Education Act Amendments of 1992), needs-based scholarship 
assistance, and income earned while on active military duty and other 
benefit payments specified at 38 U.S.C. 4213, items (1) and (3). The 
Governor may, for the purposes of determining income eligibility for 
services to older individuals under section 204(d)(5) of the Act, 
exclude up to 25 percent of Social Security and Old Age Survivors' 
Insurance benefit payments under title II of the Social Security Act, 
(42 U.S.C., section 401, et seq.) from the definition of family income. 
In addition, when a Federal statute specifically provides that income or 
payments received under such statute shall be excluded in determining 
eligibility for and the level of benefits received under any other 
federal statute, such income or payments shall be excluded in JTPA 
eligibility determinations.
    Funding period means the period of time when JTPA funds are 
available for expenditure. Unless a shorter period of time is specified 
in a title III discretionary award, the JTPA funding period is the 3-
year period specified in JTPA section 161(b); the program year in which 
Federal funds are obligated to the recipient, and the two succeeding 
program years.
    Governor means, in addition to the definition at section 4(9) of the 
Act, the recipient of JTPA funds awarded to the State under titles I 
through III.
    Grant means an award of JTPA financial assistance by the U.S. 
Department of Labor to an eligible JTPA recipient. (Also, see Sec. Sec. 
627.405 and 627.430 of these regulations).
    Grantee means the recipient.
    Individual service strategy (ISS) is defined in Sec. 628.520 of 
this chapter.
    Job search assistance (also including job search skills training and 
job club activities) means the provision of instruction and support to a 
participant to give the participant skills in acquiring full time 
employment. The services provided may include, but are not limited to, 
resume writing, interviewing skills, labor market guidance, telephone 
techniques, information on job openings, and job acquisition strategies, 
as well as the provision of office space and supplies for the job 
search.
    Job Training Partnership Act means Public Law (Pub. L.) 97-300, as 
amended, 29 U.S.C. 1501, et seq.
    JTPA means the Job Training Partnership Act.
    Nontraditional employment, as applied to women, means occupations or 
fields of work where women comprise less than 25 percent of the 
individuals employed in such occupation or field of work as provided 
periodically by the Department in the Federal Register. (Pub. L. 102-
235, Nontraditional Employment for Women Act).
    OALJ means the Office of Administrative Law Judges of the U.S. 
Department of Labor.
    Obligations means the amounts of orders placed, contracts and 
subgrants awarded, goods and services received, and similar transactions 
during a funding period that will require payment by the recipient or 
subrecipient during the same or a future period.
    OIG means the Office of Inspector General of the U.S. Department of 
Labor.
    PIC means a private industry council.
    Participant means an individual who has been determined to be 
eligible to

[[Page 190]]

participate in and who is receiving services (except post-termination 
services authorized under sections 204(c)(4) and 264(d)(5) and followup 
services authorized under section 253(d)) under a program authorized by 
the JTPA. Participation shall be deemed to commence on the first day, 
following determination of eligibility, on which the participant began 
receiving subsidized employment, training, or other services provided 
under the JTPA. (section 4(37)).
    Program year means the 12-month period beginning July 1 of the 
indicated year.
    Recipient means the entity to which a JTPA grant is awarded directly 
from the Department of Labor to carry out the JTPA program. The 
recipient is the entire legal entity that received the award and is 
legally responsible for carrying out the JTPA program, even if only a 
particular component of the entity is designated in the grant award 
document. For JTPA grants under titles I, II and III, except for certain 
discretionary grants awarded under title III, part B, the State is the 
recipient.
    SDA means a service delivery area designated by the Governor 
pursuant to section 101(a)(4) of the Act. As used in these regulations, 
SDA may also refer to the entity that administers the JTPA program 
within the designated area.
    SDA grant recipient means the entity that receives JTPA funds for a 
service delivery area directly from the recipient.
    Secretary means the Secretary of Labor, U.S. Department of Labor, or 
his or her designee.
    Section, as used in this chapter, means a section of the Act unless 
the text specifically indicates otherwise.
    Service provider means a public agency, private nonprofit 
organization, or private-for-profit entity that delivers educational, 
training, employment or supportive services to JTPA participants. Awards 
to service providers may be made by subgrant, contract, subcontract, or 
other legal agreement.
    Stand-in costs means costs paid from non-Federal sources that a 
recipient proposes to substitute for Federal costs that have been 
disallowed as a result of an audit or other review. In order to be 
considered as valid substitutions, the costs (1) shall have been 
reported by the grantee as uncharged program costs under the same title 
and in the same program year in which the disallowed costs were incurred 
(2) shall have been incurred in compliance with laws, regulations, and 
contractual provisions governing JTPA, and (3) shall not result in a 
violation of the applicable cost limitations.
    State is defined at section 4(22) of the Act. For cash payment 
purposes, the definition of ``State'' contained in the Department of the 
Treasury regulations at 31 CFR 205.3 shall apply to JTPA programs.
    State council means the State Job Training Coordinating Council 
(SJTCC) or, in a State with a Human Resource Investment Council (HRIC) 
pursuant to Sec. 628.215 of this chapter, the HRIC.
    Subgrant means an award of JTPA financial assistance in the form of 
money, or property in lieu of money, made under a grant by a recipient 
to an eligible subrecipient. It also means a subgrant award of JTPA 
financial assistance by a subrecipient to a lower tier subrecipient. The 
term includes financial assistance when provided by any legal agreement, 
even if the agreement is called a contract, but does not include 
procurement purchases from vendors nor does it include any form of 
assistance received by program participants.
    Subgrantee means a subrecipient.
    Subrecipient means the legal entity to which a subgrant is awarded 
and which is accountable to the recipient (or higher tier subrecipient) 
for the use of the funds provided. For JTPA purposes, distinguishing 
characteristics of a subrecipient include items such as determining 
eligibility of applicants, enrollment of participants, performance 
measured against meeting the objectives of the program, responsibility 
for programmatic decisionmaking, responsibility for compliance with 
program requirements, and use of the funds awarded to carry out a JTPA 
program or project, as compared to providing goods or services for a 
JTPA program or project (vendor). Depending on local circumstances, the 
PIC, local elected official, or administrative entity may

[[Page 191]]

be a subrecipient. SDA grant recipients and JTPA title III substate 
grantees are particular types of subrecipients.
    Substate grantee (SSG) means that agency or organization selected to 
administer programs pursuant to section 312(b) of the Act. The substate 
grantee is the entity that receives JTPA title III funds for a substate 
area directly from the Governor.
    Technical assistance is a facet of capacity building which may 
include but is not limited to information sharing, dissemination and 
training on program models and job functions; peer-to-peer networking 
and problem solving; guides; and interactive communication technologies.
    Title, as used in this chapter, means a title of the Act, unless the 
text of the regulation specifically indicates otherwise.
    Vendor means an entity responsible for providing generally required 
goods or services to be used in the JTPA program. These goods or 
services may be for the recipient's or subrecipient's own use or for the 
use of participants in the program. Distinguishing characteristics of a 
vendor include items such as: Providing the goods and services within 
normal business operations; providing similar goods or services to many 
different purchasers, including purchasers outside the JTPA program; and 
operating in a competitive environment. A vendor is not a subrecipient 
and does not exhibit the distinguishing characteristics attributable to 
a subrecipient, as defined above. Any entity directly involved in the 
delivery of program services not available to the general public, with 
the exception of an employer providing on-the-job training, shall be 
considered a subrecipient rather than a vendor.
    Wagner-Peyser Act means 29 U.S.C. 49, et seq.

[59 FR 45815, Sept. 2, 1994, as amended at 61 FR 19983, May 3, 1996]



PART 627_GENERAL PROVISIONS GOVERNING PROGRAMS UNDER TITLES I, II, 
AND III OF THE ACT--Table of Contents




                       Subpart A_Scope and Purpose

Sec.
627.100 Scope and purpose of this part 627.

                     Subpart B_Program Requirements

627.200 Governor/Secretary agreement.
627.201 Waivers.
627.205 Public service employment prohibition.
627.210 Nondiscrimination and nonsectarian activities.
627.215 Relocation.
627.220 Coordination with programs under title IV of the Higher 
          Education Act including the Pell grant program.
627.225 Employment generating activities.
627.230 Displacement.
627.235 General program requirements.
627.240 On-the-job training.
627.245 Work experience.
627.250 Interstate agreements.

   Subpart C_Payments, Supportive Services, and Benefits and Working 
                               Conditions

627.300 Scope and purpose.
627.305 Payments.
627.310 Supportive services.
627.315 Benefits and working conditions.

                   Subpart D_Administrative Standards

627.400 Scope and purpose.
627.405 Grant agreement and funding.
627.410 Reallotment and reallocation.
627.415 Insurance.
627.420 Procurement.
627.422 Selection of service providers.
627.423 Funding restrictions for ``high-risk'' recipients and 
          subrecipients.
627.424 Prohibition of subawards to debarred and suspended parties.
627.425 Standards for financial management and participant data systems.
627.430 Grant payments.
627.435 Cost principles and allowable costs.
627.440 Classification of costs.
627.445 Limitations on certain costs.
627.450 Program income.
627.455 Reports required.
627.460 Requirements for records.
627.463 Public access to records.
627.465 Property management standards.
627.470 Performance standards.
627.471 Reorganization plan appeals.
627.475 Oversight and monitoring.
627.477 Governor's determination of substantial violation.
627.480 Audits.
627.481 Audit resolution.
627.485 Closeout.
627.490 Later disallowances and adjustments after closeout.
627.495 Collection of amounts due.

      Subpart E_Grievances Procedures at the State and Local Level

627.500 Scope and purpose.

[[Page 192]]

627.501 State grievance and hearing procedures for noncriminal 
          complaints at the recipient level.
627.502 Grievance and hearing procedures for noncriminal complaints at 
          the SDA and SSG levels.
627.503 Recipient-level review.
627.504 Noncriminal grievance procedure at employer level.

     Subpart F_Federal Handling of Noncriminal Complaints and Other 
                               Allegations

627.600 Scope and purpose.
627.601 Complaints and allegations at the Federal level.
627.602 Resolution of investigative findings.
627.603 Special handling of labor standards violations under section 143 
          of the Act.
627.604 Alternative procedure for handling labor standards violations 
          under section 143--binding arbitration.
627.605 Special Federal review of SDA- and SSG-level complaints without 
          decision.
627.606 Grant Officer resolution.
627.607 Grant Officer resolution of Governor's failure to promptly take 
          action.

              Subpart G_Sanctions for Violations of the Act

627.700 Purpose and scope.
627.702 Sanctions and corrective actions.
627.703 Failure to comply with procurement provisions.
627.704 Process for waiver of State liability.
627.706 Process for advance approval of a recipient's contemplated 
          corrective actions.
627.708 Offset process.

      Subpart H_Hearings by the Office of Administrative Law Judges

627.800 Scope and purpose.
627.801 Procedures for filing request for hearing.
627.802 Rules of procedure.
627.803 Relief.
627.804 Timing of decisions.
627.805 Alternative dispute resolution.
627.806 Other authority.

                     Subpart I_Transition Provisions

627.900 Scope and purpose.
627.901 Transition period.
627.902 Governor's actions.
627.903 Actions which are at the discretion of the Governor.
627.904 Transition and implementation.
627.905 Guidance on contracts and other agreements.
627.906 Determinations on State and SDA implementation.

    Authority: 29 U.S.C. 1579(a); Sec. 6305(f), Pub. L. 100-418, 102 
Stat. 1107; 29 U.S.C. 1791i(e).

    Source: 59 FR 45821, Sept. 2, 1994, unless otherwise noted.



                       Subpart A_Scope and Purpose



Sec. 627.100  Scope and purpose of this part 627.

    (a) This part sets forth requirements for implementation of programs 
under titles I, II, and III of the Job Training Partnership Act.
    (b) Subpart B provides general program requirements that apply to 
all programs under the titles I, II, and III of the Act, except as 
provided elsewhere in the Act or this chapter. These requirements 
include the Governor/Secretary agreement, the nondiscrimination and 
nonsectarian activity provisions, coordination provisions with Higher 
Education Act programs, and the prohibitions on public service 
employment, relocation assistance, displacement, and employment 
generating activities. This subpart also sets forth comprehensive rules 
for on-the-job training for JTPA participants as well as for work 
experience.
    (c) Subpart C sets forth requirements for allowable payments to JTPA 
participants.
    (d) Subpart D establishes the administrative and financial standards 
and requirements that apply to funds received under the Act.
    (e) Subpart E establishes the procedures that apply to the handling 
of noncriminal complaints under the Act at the Governor, the SDA, and 
title III SSG levels.
    (f) Subpart F establishes the procedures that apply to the filing, 
handling, and review of complaints at the Federal level.
    (g) Subpart G sets forth the provisions that apply to the sanctions 
and corrective actions that may be imposed by the Secretary for 
violations of the Act, regulations, or grant terms and conditions.
    (h) Subpart H sets forth procedures that apply to hearing by the 
Office of the Administrative Law Judges.

[[Page 193]]



                     Subpart B_Program Requirements



Sec. 627.200  Governor/Secretary agreement.

    (a)(1) To establish a continuing relationship under the Act, the 
Governor and the Secretary shall enter into a Governor/Secretary 
agreement. The agreement shall consist of a statement assuring that the 
State shall comply with (i) the Job Training Partnership Act and all 
applicable rules and regulations and (ii) the Wagner-Peyser Act and all 
applicable rules and regulations. The agreement shall specify that 
guidelines, interpretations, and definitions, adopted and issued by the 
Governor and identified pursuant to section 124 of the Act, shall, to 
the extent that they are consistent with the Act and applicable rules 
and regulations, be accepted by the Secretary.
    (2) Either the Governor or the Secretary may seek a modification, 
revision, or termination of the agreement at any time, to be effective 
at the end of a program year.
    (b) Except as provided at part B of title III of the Act and part 
631, subpart G, of this chapter, the State shall be the grant recipient 
of JTPA funds awarded under titles I, II, and III.



Sec. 627.201  Waivers.

    (a)(1) The Governor may request, and the Secretary may grant, a 
waiver of specific provisions of these regulations to the extent that 
such request is consistent with the provisions of the Act.
    (2) In requesting a waiver under paragraph (a)(1) of this section, 
the Governor shall demonstrate how it will either improve the targeting 
of services to the hard to serve, increase the level of basic and 
occupational skills training provided by the JTPA program in the State, 
contribute to the provision of academic enrichment services to youth, 
promote coordination of JTPA programs with other human resource 
programs, or substantially improve the job placement outcomes of the 
JTPA program.
    (3) Waivers granted by the Secretary shall be effective for no more 
than four years from the date the waiver is granted.



Sec. 627.205  Public service employment prohibition.

    No funds available under titles I, II-A, II-C, or III-A of the Act 
may be used for public service employment (sections 141(p) and 
314(d)(2)).



Sec. 627.210  Nondiscrimination and nonsectarian activities.

    (a)(1) Recipients, SDA grant recipients, title III substate 
grantees, and other subrecipients shall comply with the 
nondiscrimination provisions of section 167 of the Act.
    (2) Nondiscrimination and equal opportunity requirements and 
procedures, including complaint processing and compliance reviews, are 
governed by the provisions of 29 CFR part 34 and are administered and 
enforced by the DOL Directorate of Civil Rights.
    (3) Funds may be used to meet a recipient's or subrecipient's 
obligation to provide physical and programmatic accessibility and 
reasonable accommodation in regard to the JTPA program as required by 
Section 504 of the Rehabilitation Act of 1973, as amended, and the 
Americans with Disabilities Act of 1990.
    (b) The employment or training of participants in sectarian 
activities is prohibited.



Sec. 627.215  Relocation.

    (a) No funds provided under the Act shall be used, or proposed for 
use, to encourage or to induce the relocation of an establishment, or 
part thereof, that result in the loss of employment for any employee or 
such establishment at the original location.
    (b) For 120 days after the commencement or the expansion of 
commercial operations of a relocating establishment, no funds provided 
under this Act shall be used for customized or skill training, on-the-
job training, or company-specific assessments of job applicants or 
employees, for any relocating establishment or part thereof at a new, or 
expanded location, if the relocation of such establishment or part 
thereof results in a loss of employment for any employee of such 
establishment at the original location.
    (c) For the purposes of this section, relocating establishment means 
a business entity, including a successor-in-

[[Page 194]]

interest, which is moving any operations from a facility in one labor 
market area within the United States and its territories to a new or 
expanding facility in another labor market area. For the purposes of 
this section, a labor market area is an area within which individuals 
can readily change employment without changing their place of residence.
    (d) Pre-award review. To verify that an establishment which is new 
or expanding is not, in fact, relocating employment from another area, 
standardized pre-award review procedures developed by the State shall be 
completed and documented jointly by the service delivery area or 
substate grantee and the establishment as a prerequisite to JTPA 
assistance. The review should include names under which the 
establishment does business, including successors-in-interest; the name, 
title, and address of the company official certifying the information; 
the name and address of the facility in the other geographic location 
which is being closed or from which business is being transferred; a 
statement from the employer about job losses at that location; the 
nature of the products or business being transferred; the date the 
facility will commence or expand operations, and whether JTPA assistance 
is sought in connection with past or impending job losses at other 
facilities.
    (e) Violations and sanctions. The Department will promptly review 
and take appropriate action with regard to alleged violations of the 
provisions of paragraphs (a) and (b) of this section. Procedures for the 
investigation and resolution of the violations are provided for under 
subpart F of this part. Sanctions and remedies are provided for under 
subpart G of this part.



Sec. 627.220  Coordination with programs under title IV of the Higher 
Education Act including the Pell grant program.

    (a) Coordination. Financial assistance programs under title IV of 
the Higher Education Act of 1965, as amended (HEA) (the Pell Grant 
program, the Supplemental Education Opportunity Grant program, the Work-
study program, and Federal loan programs such as Federal Perkins Loans. 
Federal Stafford Loans and Federal Direct Stafford Loans) provide 
student financial aid and are available to JTPA participants enrolling 
in postsecondary level education programs. SDA's and title III SSG's 
shall establish coordination procedures and contractual safeguards to 
ensure that JTPA funds are used in addition to funds otherwise available 
in the area and are coordinated with these funding sources.
    (b) Affordable programs. (1) The SDA shall assist the participant 
early in the objective assessment, as appropriate, to establish 
eligibility for Pell Grants, student loans and other forms of financial 
aid.
    (2) The SDA or SSA shall record in the ISS or participant record the 
participant's training-related financial assistance needs and the mix of 
JTPA and other funds, including Pell Grant funds (sections 141(b), 
107(b), 205(b) and 265(b)).
    (3) The SDA shall ensure, to the extent practicable, that available 
Federal, State, and local resources are coordinated sufficiently to meet 
the training and education-related costs of services, so that the 
participant can afford to complete the agreed-upon program successfully.
    (4) Participants shall not be required to apply for or access 
student loans, or incur personal debt as a condition of JTPA 
participation.
    (c) Information sharing. To prevent duplication of funding and to 
streamline the tracking of the participant's financial needs and use of 
funds when HEA, title IV programs are involved, contracts and agreements 
with educational institutions shall require the educational 
institution's financial aid officer to inform the SDA's/SSG's of the 
amounts and disposition of any HEA, title IV awards and other types of 
financial aid to each JTPA participant awarded after the enrollment of 
the participant, as part of a continuing, regular information sharing 
process (section 141(b)).

[[Page 195]]



Sec. 627.225  Employment generating activities.

    (a)(1) No funds available under the Act shall be used for employment 
generating activities, economic development activities, investment in 
revolving loan funds, capitalization of businesses, investment in 
contract bidding resource centers, or similar activities.
    (2) No funds available under titles I, II, or III of the Act shall 
be used for foreign travel for employment generating activities, 
economic development activities, or similar activities.
    (b) JTPA funds may be used for normal employer outreach and job 
development activities including, but not limited to: contacts with 
potential employers for the purpose of placement of JTPA participants; 
participation in business associations (such as chambers of commerce); 
JTPA staff participation on economic development boards and commissions, 
and work with economic development agencies, to provide information 
about JTPA and to assist in making informed decisions about community 
job training needs; subscriptions to relevant publications; general 
dissemination of information on JTPA programs and activities; labor 
market surveys; and development of on-the-job training (OJT) 
opportunities, as defined in Sec. 627.240; and other allowable JTPA 
activities in the private sector.



Sec. 627.230  Displacement.

    (a) No currently employed worker shall be displaced by any 
participant (including partial displacement such as a reduction in the 
hours of nonovertime work, wages, or employment benefits).
    (b) No participant shall be employed or job opening filled: (1) When 
any other individual is on layoff from the same or any substantially 
equivalent job, or
    (2) When the employer has terminated any regular employee without 
cause or otherwise reduced its workforce with the intention of filling 
the vacancy so created by hiring a participant whose wages are 
subsidized under the Act.
    (c) Violations and sanctions. The Department will promptly review 
and take appropriate action with regard to alleged violations of the 
provisions of paragraphs (a) and (b) of this section. Procedures for the 
investigation and resolution of violations are provided for under 
subpart F of this part. Sanctions and remedies are provided for under 
subpart G of this part.



Sec. 627.235  General program requirements.

    (a) The requirements set forth in sections 141, 142 and 143 of the 
Act apply to all programs under titles I, II, and III of the Act, except 
as provided elsewhere in the Act.
    (b) Recipients shall ensure that an individual enrolled in a JTPA 
program meets the requirements of section 167(a)(5) of the Act, Section 
3 of the Military Selective Service Act (50 U.S.C. App. 453) and other 
requirements applicable to programs funded under the specific section or 
title of the Act under which the participant is enrolling (section 604).
    (c) Recipients shall ensure that individuals are enrolled within 45 
days of the date of eligibility determination or a new eligibility 
determination (including new application, if necessary) shall be made, 
except that eligible summer program applicants under title II-B may be 
enrolled within 45 days into a summer youth enrollee pool, and no 
subsequent eligibility determination need be made prior to participation 
during the period of that summer program. In addition, the 45-day 
enrollment requirement shall not apply for individuals who have a valid 
certificate of continuing eligibility under the title III program, as 
described in Sec. 631.3 and Sec. 631.53 of this chapter.
    (d) Programs operated under titles I, II, and III of the Act are not 
subject to the provisions of 29 CFR part 97, ``Uniform Administrative 
Requirements for Grants and Cooperative Agreements to State and Local 
Governments,'' except as otherwise explicitly provided in this chapter.
    (e) If a recipient or SDA imposes a requirement that is in addition 
to the provisions of the Act and these regulations relating to the 
administration and operation of programs funded by the Act, the 
recipient or SDA shall identify the requirement as a State- or

[[Page 196]]

SDA-imposed requirement (section 124).



Sec. 627.240  On-the-job training.

    (a) General--(1) On-the-job training (OJT) means training by an 
employer in the private or public sector given to a participant who, 
after objective assessment, and in accordance with the ISS, has been 
referred to and hired by the employer following the development of an 
agreement with the employer to provide occupational training in exchange 
for reimbursement of the employer's extraordinary costs. On-the-job 
training occurs while the participant is engaged in productive work 
which provides knowledge and skills essential to the full and adequate 
performance of the job.
    (2) This does not preclude a participant who has been trained by one 
employer from ultimately being placed in a comparable training-related 
position with another employer.
    (3) On-the-job training may be sequenced with or accompanied by 
other types of training such as classroom training or literacy training.
    (b) Duration of OJT. (1) OJT authorized for a participant shall be 
limited to a period not in excess of that required for the participant 
to acquire the skills needed for the OJT position. Except as described 
in paragraph (b) (3) of this section, the period of reimbursement to the 
employer under an OJT agreement shall not exceed 6 months of training.
    (2) The 6-month duration of OJT may be expressed as a number of 
hours, days, or weeks the participant is expected to work in a 6-month 
period if the participant works full-time.
    (3) In the event that a participant's regular employment is less 
than full-time and less than 500 hours of OJT has occurred by the end of 
6 months, that participant may remain in OJT until 499 hours OJT hours 
have occurred.
    (4)(i) Recipients shall develop policies and procedures for 
determining the average training duration for occupations including to 
reflect an individual participant's need for additional training time, 
or reduction in training time to reflect the individual participant's 
partial acquisition of needed skills. (In no case should an individual 
who is fully skilled in an occupation be placed in OJT in that 
occupation.)
    (ii) In determining the average training time, consideration should 
be given to recognized reference materials, such as the ``Dictionary of 
Occupational Titles'' (DOT) and employer training plans. Such materials 
need not be limited to the DOT, however.
    (5) On-the-job training is encouraged, but not required, in all 
occupations with significant training content, particularly in higher-
skill occupations appropriate to the participant's needs. Training plans 
may be developed that recognize the full duration of the OJT period 
necessary for the full and adequate performance of the job, but the 
period of reimbursement may not exceed the duration in paragraph (a)(1) 
or (a)(2) of this section.
    (6) When the OJT period in a given occupation for a participant for 
whom the ISS identifies OJT as appropriate varies from the average for 
that occupation, the basis for the variation shall be recorded in the 
ISS.
    (c) On-the-job training payments to employers. (1) On-the-job 
training payments to employers are deemed to be in compensation for the 
extraordinary costs associated with training participants and in 
compensation for the costs associated with the lower productivity of 
such participants. Employers shall not be required to document such 
extraordinary costs or lower productivity (section 141(g)(1)).
    (2)(i) On-the-job training payments to employers shall not, during 
the period of such training, average more than 50 percent of the wages 
paid by the employer to OJT participants.
    (ii) On-the-job training payments to employers may be based upon 
scheduled raises or regular pay increases.
    (iii) On-the-job training payments may not be based on overtime, 
shift differential, premium pay and other nonregular wages paid by the 
employer to participants.
    (iv) On-the-job training payments may not be based upon periods of 
time such as illness, holidays, plant downtime or other events in which 
no training occurs.
    (3) Employers which provide classroom or vestibule training to meet 
the

[[Page 197]]

specific training needs of JTPA participants to equip them with 
education and knowledge necessary to the OJT occupation may be 
separately reimbursed for training costs, such as instructors and 
training material.
    (d) On-the-job training agreements. (1) Each OJT agreement shall, at 
a minimum, specify the occupation(s) for which training is to be 
provided, the duration of the training, the number of participants to be 
trained in each occupation, wage rates to be paid, the rate of 
reimbursement, the maximum amount of reimbursement, a job description or 
training outline that reflects what the participant will learn, and any 
other separate classroom training that may be provided.
    (2) The agreement shall provide that the employer will maintain and 
make available time and attendance, payroll and other records to support 
amounts reimbursed under OJT contracts.
    (e) Labor standards. OJT participants shall be compensated by the 
employer at the same rates, including periodic increases, as similarly 
situated employees, but in no event less than the higher of the minimum 
wage specified under the Fair Labor Standards Act of 1938, as amended or 
the applicable State or local minimum wage. Participants must receive 
the same benefits and have the same working conditions as similarly 
situated employees.
    (f) Suitability of participants. (1) Only those participants who 
have been assessed and for whom OJT has been determined as an 
appropriate activity in the participant's ISS may be referred to an 
employer for participation in OJT.
    (2) An individual referred to the JTPA program by an employer may be 
enrolled in an OJT program with such employer only upon completion of 
the objective assessment and individual service strategy in which OJT 
with such employer has been determined to be an appropriate activity and 
only if the employer has not already hired such individual.
    (3) OJT with the participant's previous or current employer in the 
same, a similar, or an upgraded job is not permitted.
    (g) Monitoring. (1) OJT agreements shall be monitored periodically 
on-site by the entity issuing the contract to assure that the validity 
and propriety of amounts claimed for reimbursement are substantiated by 
payroll and time and attendance records and that the training is being 
provided as specified in the agreement.
    (2) Brokering contractors shall conduct on-site monitoring of the 
OJT employers and other subcontractors to verify compliance with 
subcontract terms before making payments.
    (3) Nothing in this paragraph (g) shall relieve recipients and SDA's 
from responsibility for monitoring expenditures under the Act.
    (h) Employer eligibility. (1) OJT agreements shall not be entered 
into with employers which, under previous agreements, have exhibited a 
pattern of failing to provide OJT participants with continued long-term 
employment as regular employees with wages, benefits and working 
conditions at the same level and to the same extent as similarly 
situated employees. This prohibition does not apply to OJT agreements 
for youth in the program under title II-B who are returning to school.
    (2) Governors shall issue procedures and criteria to implement the 
requirement in paragraph (h)(1) of this section, which shall specify the 
duration of the period of loss of eligibility. The procedures and 
criteria shall provide that situations in which OJT participants quit 
voluntarily, are terminated for cause, or are released due to 
unforeseeable changes in business conditions will not necessarily result 
in termination of employer eligibility.
    (i) Brokered OJT. Each agreement with an OJT employer that is 
written by a brokering contractor (not written directly by the SDA/SSA 
or recipient) shall specify and clearly differentiate the services to be 
provided by the brokering contractor (including but not limited to 
outreach, recruitment, training, counseling, assessment, placement, 
monitoring, and followup), the employer and other agencies and 
subcontractors, including services provided with or without cost by 
other agencies or subcontractors.
    (j) Youth OJT. OJT conducted under title II-C shall meet the 
requirements of subpart H of part 628 of this chapter (628.804), as well 
as the requirements of

[[Page 198]]

this section. Where OJT is provided to youth concurrently enrolled under 
titles II-B and II-C, the source of funding for the OJT shall govern 
which requirements apply.
    (k) Employment and employee leasing agencies--(1) Definition. The 
terms employment agency and employee leasing agency mean an employer 
that provides regular, on-going employment (i.e., not probationary, 
temporary, or intermittent employment) in a specific occupation and, for 
a fee, places employees at the worksite of another employer to perform 
work for such employer.
    (2) Employment and employee leasing agencies that meet the other 
requirements of this section may be eligible for OJT agreements when the 
agreement specifies the source of training and specifies that the 
payments are for the extraordinary training costs of the entity 
providing the training.



Sec. 627.245  Work experience.

    (a) Definition. Work experience means a short-term or part-time 
training assignment with a public or private nonprofit organization for 
a participant who needs assistance in becoming accustomed to basic work 
requirements. It is prohibited in the private for-profit sector.
    (b) Suitability. Work experience should be designed to promote the 
development of good work habits and basic work skills.
    (c) Duration of work experience. Participation in work experience 
shall be for a reasonable length of time, based on the needs of the 
participant. The duration of work experience shall be recorded in the 
participant's ISS.
    (d) Combination with other services. Work experience under titles 
II-A and C shall be accompanied either concurrently or sequentially by 
other services designed to increase the basic education and/or 
occupational skills of the participant, as recorded in the ISS.
    (e) Work experience is not an allowable activity under title III of 
the Act. (Sections 204(b) and (c), 253(a), and 264 (c) and (d).)



Sec. 627.250  Interstate agreements.

    The Secretary hereby grants authority to the several States to enter 
into interstate agreements and compacts in accordance with section 127 
of the Act and, as specified in Sec. 627.420(g), Procurement.



   Subpart C_Payments, Supportive Services, and Benefits and Working 
                               Conditions



Sec. 627.300  Scope and purpose.

    This subpart sets forth requirements for allowable payments to JTPA 
participants under titles I and II. These include needs-based payments 
under title II, incentive and bonus payments under title II, work-based 
training payments under title II, and payments for combined activities 
under title II. Requirements for supportive services under titles I, II, 
and III, including financial assistance and needs-related payments, are 
also included in this subpart. This subpart also sets forth rules for 
benefits and working conditions for JTPA participants. These include 
requirements for: Compliance with applicable labor laws; workers' 
compensation coverage or medical and accident insurance where there is 
no State workers' compensation coverage; and working conditions which 
are not detrimental to the participant's health and safety.



Sec. 627.305  Payments.

    (a)(1) General. Allowable types of payments which may be made to 
participants are: Needs-based payments for eligible individuals in 
programs under title II; incentive and bonus payments for participants 
in title II programs; work-based training payments for work experience, 
entry employment experience, internships and other work-based training 
activities; payments for participants in title II-B activities; and 
training payments for combined activities in title II programs. These 
payments shall be made in accordance with paragraphs (b) through (f) of 
this section.
    (2) A participant shall receive no payments for training activities 
in which the participant fails to participate without good cause 
(section 142(a)(1)).
    (3) The SDA shall ensure to the extent possible that similarly 
situated participants receive similar payments.
    (4) Payments to participants, broadly defined for this subsection as 
all funds

[[Page 199]]

distributed to participants except OJT wages, shall not be considered as 
income for the purposes of determining eligibility for and the amount of 
income transfer and in-kind aid furnished under any Federal or federally 
assisted program based on need, other than as provided under the Social 
Security Act (section 142(b)).
    (5) The SDA is responsible for meeting any applicable Internal 
Revenue Service and Fair Labor Standards Act requirements (section 
142(a)(3)).
    (6) An SDA may set fixed levels for any non-wage payment.
    (b) Needs-based payments. (1) Participants in programs funded under 
title II may receive needs-based payments when such payments are 
necessary to enable the individual to participate in training programs. 
Payments shall be made in accordance with a locally developed policy 
which is included in the job training plan approved by the Governor.
    (2) The individual determination of participants' needs-based 
payments and the amount of such payments shall be based upon the results 
of the continuing objective assessment and determined in accordance with 
a locally developed policy. The provisions and amount of such payments 
shall be recorded in the ISS.
    (c) Incentive and bonus payments. Participants in programs funded 
under title II may receive incentive and bonus payments based on their 
attendance and performance in accordance with a locally developed 
policy. The policy shall be described in the job training plan approved 
by the Governor and shall include a specification of the requirements 
for the receipt of such payments and the level of payments.
    (d) Work-based training payments. Individuals participating in work 
experience, in entry employment experience programs, in limited 
internships for youth in the private sector, or in other work-based 
training activities under title II of the Act may receive work-based 
training payments which may be wages.
    (e) Summer participants may receive training payments for 
participation in activities under title II-B.
    (f) Training payments for combined activities. For title II 
programs, participants in one of the activities described in paragraph 
(d) of this section for which work-based training payments are payable 
for more than 50 percent of the participant's time, including classroom 
training, may also receive training payments for hours of participation 
in classroom training.



Sec. 627.310  Supportive services.

    (a)(1) The SDA or SSG shall develop a policy on supportive services 
in accordance with the definition at section 4(24) of the Act. This 
policy shall be included in the job training plan approved by the 
Governor (section 4(24)). Supportive services may be provided to 
participants through in-kind or cash assistance, or by arrangement with 
another human service agency when necessary to enable an individual who 
is eligible for training under a JTPA assisted program, but who cannot 
afford to pay for such services, to participate in such JTPA-assisted 
program.
    (2) In the event that an SDA or SSG adopts a policy of providing a 
fixed reimbursement for a particular supportive service to all 
participants, it shall, as part of its policy, state the rationale for 
its choice and the fixed amounts it has adopted.
    (b) Limited supportive services may be provided to applicants in 
order to permit them to complete the application process.
    (c) Necessary supportive services shall be recorded in a 
participant's ISS under title II or should be recorded in a 
participant's individual readjustment plan under title III. When 
supportive services are provided in accordance with paragraph (b) of 
this section, information on any supportive service provided may be 
maintained for future inclusion in an ISS.
    (d) The SDA or SSG shall ensure, to the extent possible, that 
similarly situated participants receive similar supportive services.
    (e) For title II participants, necessary supportive services (with 
the exception of financial assistance) may be provided for up to one 
year following termination as post-termination or followup services 
(sections 4(24), 204(b)(2)(J), and 204(c)(4)). For title III 
participants, the provisions at section 314(c)(15) of the Act shall 
apply.

[[Page 200]]

    (f) An SDA or SSG may set fixed levels of benefit for any supportive 
service.
    (g)(1) For purposes of title II, financial assistance is defined as 
a general supportive service payment for the purpose of retaining 
participants in training.
    (2) Financial assistance payments may be considered to be necessary 
for participation in training for title II participants, i.e., a 
separate, individual determination of need is not necessary.
    (h) Needs-related payments. The requirements pertaining to needs-
related payments provided for under section 315(b) under title III of 
the Act, are described in part 631 of this chapter.



Sec. 627.315  Benefits and working conditions.

    (a) In the development and conduct of programs funded under the Act, 
SDA's and SSG's shall ensure that participants are not assigned to work 
for employers which do not comply with applicable labor laws, including 
wage and hour, occupational health and safety, and child labor laws (29 
CFR part 570).
    (b) To the extent that a State workers' compensation law is 
applicable, workers' compensation benefits in accordance with such law 
shall be available with respect to injuries suffered by participants. 
Where a State's workers' compensation law is not applicable, recipients 
and subrecipients shall secure insurance coverage for injuries suffered 
by such participants in all JTPA work-related activities. Income 
maintenance coverage (e.g., contributions for unemployment 
compensation), is not required for participants (section 143(a)(3)).
    (c) Where a participant is engaged in activities not covered under 
the Occupational Safety and Health Act of 1970, as amended, the 
participant shall not be required or permitted to work, be trained, or 
receive services in buildings or surroundings or under working 
conditions which are unsanitary, hazardous, or dangerous to the 
participant's health or safety. A participant employed or trained for 
inherently dangerous occupations, e.g., fire or police jobs, shall be 
assigned to work in accordance with reasonable safety practices (section 
143(a)(2)).



                   Subpart D_Administrative Standards



Sec. 627.400  Scope and purpose.

    This subpart establishes the administrative and financial standards 
and requirements that apply to funds received under the Act.



Sec. 627.405  Grant agreement and funding.

    (a)(1) Pursuant to Sec. 627.200 of this part and the Governor/
Secretary agreement, each program year there will be executed a grant 
agreement signed by the Governor or the Governor's designated 
representative and the Secretary or the Secretary's designated 
representative (Grant Officer).
    (2) The grant agreement described in paragraph (a)(1) of this 
section shall be the basis for Federal obligation of funds for the 
program year for programs authorized by titles I, II, and III, including 
any title III discretionary projects awarded to the State, and such 
other funds as the Secretary may award under the grant.
    (b) Funding. The Secretary shall allot funds to the States in 
accordance with sections 162, 202, 252, 262, and 302 of the Act. The 
Secretary shall obligate such allotments through Notices of Obligation.
    (c) Pursuant to instructions issued by the Secretary, additional 
funds may be awarded to States for the purpose of carrying out the 
administrative activities described in section 202(c)(1)(A) when a State 
receives an amount under such section that is less than $500,000 
(section 453(d)).
    (d) Termination. Each grant shall terminate when the period of 
availability for expenditure (funding period), as specified in section 
161(b) of the Act, has expired and shall be closed in accordance with 
Sec. 627.485, of this part, Closeout.



Sec. 627.410  Reallotment and reallocation.

    (a)(1) The Governor shall reallocate title II-A and II-C funds among 
service delivery areas within the State in accordance with the 
provisions of section

[[Page 201]]

109(a) of the Act. The amount to be reallocated, if any, shall be based 
on SDA obligations of the funds allocated separately to each SDA for 
title II-A or II-C programs.
    (2) The Governor shall not establish reallocation requirements that 
are inconsistent with the provisions of section 109(a) of the Act.
    (b) The Secretary shall reallot title II-A and II-C funds among the 
States in accordance with the provisions of section 109(b) of the Act. 
The amounts to be reallotted, if any, shall be based on State 
obligations of the funds allotted separately to each State for title II-
A or II-C programs, excluding funds allotted under section 202(c)(1)(D) 
and the State's obligation of such funds.
    (c) Title III funds shall be reallotted by the Secretary in 
accordance with section 303 of the Act.



Sec. 627.415  Insurance.

    (a) General. Each recipient and subrecipient shall follow its normal 
insurance procedures except as otherwise indicated in this section and 
Sec. 627.465, Property Management Standards.
    (b) DOL assumes no liability with respect to bodily injury, illness, 
or any other damages or losses, or with respect to any claims arising 
out of any activity under a JTPA grant or agreement whether concerning 
persons or property in the recipient's or any subrecipient's 
organization or that of any third party.



Sec. 627.420  Procurement.

    (a) General. (1) For purposes of this section, the term procurement 
means the process which leads to any award of JTPA funds.
    (2) The Governor, in accordance with the minimum requirements 
established in this section, shall prescribe and implement procurement 
standards to ensure fiscal accountability and prevent waste, fraud, and 
abuse in programs administered under this Act.
    (3) When procuring property and services, a State shall follow the 
same policies and procedures it uses for procurements from its non-
Federal funds, provided that the State's procurement procedures also 
comply with the minimum requirements of this section.
    (4) Each subrecipient shall use its own procurement procedures which 
reflect applicable State and local laws and regulations, provided that 
the subrecipient's procurement procedures also comply with the 
requirements of this section and the standards established by the 
Governor, pursuant to paragraph (a)(2) of this section.
    (5) States and subrecipients shall not use funds provided under JTPA 
to duplicate facilities or services available in the area (with or 
without reimbursement) from Federal, State, or local sources, unless it 
is demonstrated that the JTPA-funded alternative services or facilities 
would be more effective or more likely to achieve performance goals 
(sections 107(b) and 141(h)).
    (6) Awards are to be made to responsible organizations possessing 
the demonstrated ability to perform successfully under the terms and 
conditions of a proposed subgrant or contract. A determination of 
demonstrated ability shall be done in accordance with the requirements 
contained in Sec. 627.422 (b) and (d).
    (b) Competition. (1) Each State and subrecipient shall conduct 
procurements in a manner which provides full and open competition. Some 
of the situations considered to be restrictive of competition include, 
but are not limited to:
    (i) Placing unreasonable requirements on firms or organizations in 
order for them to qualify to do business;
    (ii) Requiring unnecessary experience and excessive bonding;
    (iii) Noncompetitive pricing practices between firms or 
organizations or between affiliated companies or organizations;
    (iv) Noncompetitive awards to consultants that are on retainer 
contracts;
    (v) Organizational conflicts of interest;
    (vi) Specifying only a ``brand name'' product instead of allowing 
``an equal'' product to be offered and describing the performance of 
other relevant requirements of the procurement;
    (vii) Overly restrictive specifications; and
    (viii) Any arbitrary action in the procurement process.

[[Page 202]]

    (2) Each State and subrecipient shall have written procedures for 
procurement transactions. These procedures shall ensure that all 
solicitations:
    (i) Incorporate a clear and accurate description of the technical 
requirements for the material, product, or service to be procured 
(including quantities). Such description shall not, in competitive 
procurements, contain features which unduly restrict competition; and
    (ii) Identify all requirements which the offerors must fulfill and 
all other factors to be used in evaluating bids or proposals.
    (3) Each State and subrecipient shall ensure that all prequalified 
lists of persons, firms, or other organizations which are used in 
acquiring goods and services are current and include sufficient numbers 
of qualified sources to ensure maximum open and free competition.
    (c) Conflict of interest. (1) Each recipient and subrecipient shall 
maintain a written code of standards of conduct governing the 
performance of persons engaged in the award and administration of JTPA 
contracts and subgrants. To the extent permitted by State or local law 
or regulation, such standards of conduct will provide for penalties, 
sanctions, or other disciplinary actions for violations of such 
standards by the awarding agency's officers, employees, or agents, or by 
awardees or their agents.
    (2) Staff conflict of interest. Each recipient and subrecipient 
shall ensure that no individual in a decisionmaking capacity shall 
engage in any activity, including participation in the selection, award, 
or administration of a subgrant or contract supported by JTPA funds if a 
conflict of interest, real or apparent, would be involved.
    (3) PIC conflict of interest. (i) A PIC member shall not cast a 
vote, nor participate in any decisionmaking capacity, on the provision 
of services by such member (or any organization which that member 
directly represents), nor on any matter which would provide any direct 
financial benefit to that member.
    (ii) Neither membership on the PIC nor the receipt of JTPA funds to 
provide training and related services shall be construed, by itself, to 
violate provisions of section 141(f) of the Act or Sec. 627.420.
    (4) A conflict of interest under paragraphs (c) (2) and (3) of this 
section would arise when:
    (i) The individual,
    (ii) Any member of the individual's immediate family,
    (iii) The individual's partner, or
    (iv) An organization which employs, or is about to employ, any of 
the above, has a financial or other interest in the firm or organization 
selected for award.
    (5) The officers, employees, or agents of the agency and PIC members 
making the award will neither solicit nor accept gratuities, favors, or 
anything of monetary value from awardees, potential awardees, or parties 
to subagreements. States and subrecipients may set minimum rules where 
the financial interest is not substantial or the gift is an unsolicited 
item of nominal intrinsic value.
    (d) Methods of procurement. (1) Each State and subrecipient shall 
use one of the following methods of procurement, as appropriate for each 
procurement action:
    (i) Small purchase procedures--simple and informal procurement 
methods for securing services, supplies, or other property that do not 
cost more than $25,000 in the aggregate. Recipients and subrecipients 
shall not break down one purchase into several purchases merely to be 
able to use small purchase procedures. The Governor shall establish 
standards for small purchase procedures to ensure that price or rate 
quotations will be documented from an adequate number of qualified 
sources.
    (ii) Sealed bids (formal advertising)--bids are publicly solicited 
procurements for which a firm-fixed-price award (lump sum or unit price) 
or other fixed-price arrangement is awarded to the responsible bidder 
whose bid, conforming with all the material terms and conditions of the 
invitation for bids, is the lowest in price. The Governor shall 
establish standards for sealed bids which include requirements that 
invitations for bids be publicly advertised, and that bids be solicited 
from an adequate number of organizations.

[[Page 203]]

    (iii) Competitive proposals--normally conducted with more than one 
source submitting an offer and either a fixed-price or cost-
reimbursement type award is made. The Governor shall establish standards 
for competitive proposals which include requirements for the 
establishment of a documented methodology for technical evaluations and 
award to the responsible offeror whose proposals are most advantageous 
to the program with price, technical, and other factors considered.
    (iv) Noncompetitive proposals (sole source)--procurement through 
solicitation of a proposal from only one source, the funding of an 
unsolicited proposal, or when, after solicitation of a number of 
sources, competition is determined inadequate. Each State and 
subrecipient shall minimize the use of sole source procurements to the 
extent practicable, but in every case the use of sole source 
procurements shall be justified and documented. On-the-job training 
(OJT) awards (except OJT brokering awards, which shall be selected 
competitively) and the enrollment of individual participants in 
classroom training may be sole sourced. For all other awards, 
procurement by noncompetitive proposals may be used only when the award 
is infeasible under small purchase procedures, sealed bids, or 
competitive proposals and one of the following circumstances applies:
    (A) The item or service is available only from a single source;
    (B) The public exigency or emergency need for the item or service 
does not permit a delay resulting from competitive solicitation;
    (C) For SDAs, SSGs and subrecipients, the awarding agency authorizes 
noncompetitive proposals; for States, the noncompetitive proposal is 
approved through the State's normal sole source approval process;
    (D) After solicitation of a number of sources, competition is 
determined inadequate;
    (2) Pass Throughs--The procurement rules do not apply to pass 
throughs of monies from any unit of State or local government (or SDA or 
SSG administrative entities) to other such units, such as a local 
educational agency or public housing authority. To qualify as a pass 
through, the receiving entity must either further pass through the 
monies to another such entity or procure services in accordance with the 
procurement rules.
    (e) Cost or price analysis. (1) Each recipient, in accordance with 
the minimum requirements established in this section, shall establish 
standards on the performance of cost or price analysis.
    (2) Each recipient and subrecipient shall perform a cost or price 
analysis in connection with every procurement action, including 
modifications (except for modifications where a determination has been 
made that they do not have a monetary impact). The method and degree of 
analysis depends on the facts surrounding the particular procurement and 
pricing situation. At a minimum, the awarding agency shall make 
independent estimates before receiving bids or proposals. A cost 
analysis is necessary when the offeror is required to submit the 
elements of the estimated cost (e.g., as in the case of subrecipient 
relationships), when adequate price competition is lacking, and for sole 
source procurements, including modifications or change orders. A price 
analysis shall be used when price reasonableness can be established on 
the basis of a catalog or market price of a commercial product sold in 
substantial quantities to the general public or based on prices set by 
law or regulation (including situations involving inadequate price 
competition and sole source procurements where a price analysis may be 
used in lieu of a cost analysis). When a cost analysis is necessary and 
there is inadequate price competition, the offeror shall certify that to 
the best of its knowledge and belief, the cost data are accurate, 
complete, and current at the time of agreement on price. Awards or 
modifications negotiated in reliance on such data should provide the 
awarding agency a right to a price adjustment to exclude any significant 
sum by which the price was increased because the awardee had knowingly 
submitted data that were not accurate, complete, or current as 
certified.
    (3) JTPA procurements shall not permit excess program income (for 
nonprofit and governmental entities) or

[[Page 204]]

excess profit (for private for-profit entities). If profit or program 
income is included in the price, the awarding agency shall negotiate 
profit or program income as a separate element of the price for each 
procurement in which there is no price competition and in all cases 
where cost analysis is performed. To establish a fair and reasonable 
profit or program income, consideration shall be given to:
    (i) The complexity of the work to be performed;
    (ii) The risk borne by the awardee;
    (iii) The offeror's investment;
    (iv) The amount of subcontracting/subgranting;
    (v) The quality of the offeror's record of past performance;
    (vi) Industry profit rates in the surrounding geographical area for 
similar work; and
    (vii) Market conditions in the surrounding geographical area.
    (4) Each recipient and subrecipient may charge to the agreement only 
those costs which are consistent with the allowable cost provisions of 
Sec. 627.435 of this part, including the guidelines issued by the 
Governor, as required at Sec. 627.435(i) of this part.
    (5) The cost plus a percentage of cost method shall not be used.
    (f) Oversight. (1) Each recipient and subrecipient shall conduct and 
document oversight to ensure compliance with the procurement standards, 
in accordance with the requirements of Sec. 627.475 of this part, 
Oversight and monitoring.
    (2) Each recipient and subrecipient shall maintain an administration 
system which ensures that vendors and subrecipients perform in 
accordance with the terms, conditions, and specifications of their 
awards.
    (g) Transactions between units of government. (1) Except as provided 
in paragraph (g)(2) of this section, procurement transactions between 
units of State or local governments, or any other entities organized 
principally as the administrative entity for service delivery areas or 
substate areas, shall be conducted on a cost reimbursable basis. Cost 
plus type awards are not allowable.
    (2) In the case of procurement transactions with schools that are a 
part of these entities, such as State universities and secondary 
schools, when tuition charges or entrance fees are not more than the 
educational institution's catalogue price, necessary to receive specific 
training, charged to the general public to receive the same training, 
and for training of participants, the tuition and/ or entrance fee does 
not have to be broken out by items of cost.
    (h) Award provisions. Each recipient and subrecipient agreement 
shall:
    (1) Clearly specify deliverables and the basis for payment; and
    (2) In the case of awards to subrecipients, contain clauses that 
provide for:
    (i) Compliance with the JTPA regulations;
    (ii) Assurance of nondiscrimination and equal opportunity as found 
in 29 CFR 34.20, Assurance required; duration of obligation; covenants.
    (3) In the case of awards to vendors, contain clauses that provide 
for:
    (i) Access by the recipient, the subrecipient, the Department of 
Labor, the Comptroller General of the United States, or any of their 
duly authorized representatives to any books, documents, papers, and 
records (including computer records) of the contractor or subcontractor 
which are directly pertinent to charges to the program, in order to 
conduct audits and examinations and to make excerpts, transcripts, and 
photocopies; this right also includes timely and reasonable access to 
contractor's and subcontractor's personnel for the purpose of interviews 
and discussions related to such documents;
    (4) In the case of awards to both subrecipients and vendors, contain 
clauses that provide for:
    (i) Administrative, contractual, or legal remedies in instances 
where contractors/subgrantees violate or breach agreement terms, which 
shall provide for such sanctions and penalties as may be appropriate;
    (ii) Notice of 29 CFR 97.34 requirements pertaining to copyrights 
(agreements which involve the use of copyrighted materials or the 
development of copyrightable materials);
    (iii) Notice of requirements pertaining to rights to data. 
Specifically,

[[Page 205]]

the awarding agency and the Department of Labor shall have unlimited 
rights to any data first produced or delivered under the agreement 
(agreements which involve the use/development of computer programs/ 
applications, or the maintenance of databases or other computer data 
processing program, including the inputing of data);
    (iv) Termination for cause and for convenience by the awarding 
agency, including the manner by which the termination will be effected 
and the basis for settlement;
    (v) Notice of awarding agency requirements and regulations 
pertaining to reporting;
    (vi) Audit rights and requirements;
    (vii) Payment conditions and delivery terms;
    (viii) Process and authority for agreement changes; and
    (ix) Provision against assignment;
    (5) The Governor may establish additional clauses, as deemed 
appropriate, for State and subrecipient procurements.
    (i) Disputes. (1) The Governor shall ensure that the recipient and 
each subrecipient have protest procedures to handle and resolve disputes 
relating to their procurements. A protester shall exhaust all 
administrative remedies with the subrecipient before pursuing a protest 
at a higher level.
    (2) Violations of law will be handled in accordance with the 
requirements contained in Sec. 627.500(c).
    (j) Each recipient and subrecipient shall maintain records 
sufficient to detail the significant history of a procurement. These 
records shall include, but are not necessarily limited to, the 
following: rationale for the method of procurement, selection of 
agreement type, awardee selection or rejection, and the basis for the 
agreement price.



Sec. 627.422  Selection of service providers.

    (a) Service providers selected under titles I, II, and III of the 
Act shall be selected in accordance with the provisions of section 107 
of the Act, except that section 107(d) shall not apply to training under 
title III.
    (b) Consistent with the requirements of this section, the Governor 
shall establish standards to be followed by recipients and subrecipients 
in making determinations of demonstrated performance, prior to the award 
of all agreements under titles I, II, and III of the Act. These 
standards shall comply with the requirements of this section, Sec. 
627.420, of this part, Procurement, and section 164(a)(3) of the Act. 
The standards shall require that determinations of demonstrated 
performance will be in writing, and completed prior to the award of an 
agreement.
    (c) Each recipient and subrecipient, to the extent practicable, 
shall select service providers on a competitive basis, in accordance 
with the standards established in Sec. 627.420(b) of this part, 
Procurement. When a State, SDA, SSG, or administrative entity determines 
that services other than intake and eligibility determination will be 
provided by its own staff, a determination shall be made of the 
demonstrated performance of the entity to provide the services. This 
determination: Shall be in writing; shall take into consideration the 
matters listed in paragraph (d) of this section; and may, if 
appropriate, be documented and described in the Job Training Plan, 
GCSSP, or EDWAA plan.
    (d) Awards are to be made to organizations possessing the 
demonstrated ability to perform successfully under the terms and 
conditions of a proposed subgrant or contract. Where comparable 
proposals have been received from an offeror which has demonstrated 
performance and a high-risk recipient/subrecipient, and a determination 
has been made that both proposals are fundable, the award should be made 
to the offeror which has demonstrated performance, unless other factors 
dictate a contrary result. Determinations of demonstrated performance 
shall be in writing, and take into consideration such matters as whether 
the organization has:
    (1) Adequate financial resources or the ability to obtain them;
    (2) The ability to meet the program design specifications at a 
reasonable cost, as well as the ability to meet performance goals;
    (3) A satisfactory record of past performance (in job training, 
basic skills training, or related activities), including demonstrated 
quality of training;

[[Page 206]]

reasonable drop-out rates from past programs; where applicable, the 
ability to provide or arrange for appropriate supportive services as 
specified in the ISS, including child care; retention in employment; and 
earning rates of participants;
    (4) For title II programs, the ability to provide services that can 
lead to the achievement of competency standards for participants with 
identified deficiencies;
    (5) A satisfactory record of integrity, business ethics, and fiscal 
accountability;
    (6) The necessary organization, experience, accounting and 
operational controls; and
    (7) The technical skills to perform the work.
    (e) In selecting service providers to deliver services in a service 
delivery area/substate area, proper consideration shall be given to 
community-based organizations (section 107(a)). These community-based 
organizations, including women's organizations with knowledge about or 
experience in nontraditional training for women, shall be organizations 
which are recognized in the community in which they are to provide 
services. Where proposals are evenly rated, and one of these proposals 
has been submitted by a CBO, the tie breaker may go to the CBO.
    (f) Appropriate education agencies in the service delivery area/
substate area shall be provided the opportunity to provide educational 
services, unless the administrative entity demonstrates that alternative 
agency(ies) or organization(s) would be more effective or would have 
greater potential to enhance the participants' continued educational and 
career growth (section 107(c)). Where proposals are evenly rated, and 
one of these proposals has been submitted by an educational institution, 
the tie breaker shall go to the educational institution.
    (g) In determining demonstrated performance of institutions/
organizations which provide training, such performance measures as 
retention in training, training completion, job placement, and rates of 
licensure shall be taken into consideration.
    (h) Service providers under agreements to conduct projects under 
section 123(a)(2) shall be selected in accordance with the requirements 
of this section.
    (i) The requirements of section 204(d)(2)(B) shall be followed in 
entering into agreements to provide services for older individuals 
funded under title II, part A.
    (j) Additional requirements for selection of service providers by 
substate grantees are described at section 313(b)(6) of the Act and 
Sec. 631.52 of this chapter.
    (k) Amounts for service providers. Each SDA/SSG shall ensure that, 
for all services provided to participants through contracts, grants, or 
other agreements with a service provider, such contract, grant, or 
agreement shall include appropriate amounts necessary for administration 
and supportive services (section 108(b)(5)).
    (l) When a State, SDA or SSG has a policy of awarding additional 
points to proposals received from such organizations as minority 
business enterprises and women-owned businesses, and this policy is 
generally applicable to its other funds, the State, SDA or SSG may apply 
this policy to the JTPA funds.



Sec. 627.423  Funding restrictions for ``high-risk'' recipients and 
subrecipients.

    (a) A recipient or subrecipient may be considered ``high-risk'' if 
an awarding agency determines that the recipient or subrecipient is 
otherwise responsible, but:
    (1) Has a history of unsatisfactory performance;
    (2) Is not financially stable;
    (3) Has a management system which does not meet the management 
standards set forth in this part; or
    (4) Has not conformed to terms and conditions of a previously 
awarded grant or subgrant.
    (b) If the awarding agency determines that an award will be made to 
a ``high-risk'' recipient or subrecipient, then special funding 
restrictions that address the ``high-risk'' status may be included in 
the award. Funding restrictions may include, but are not limited to:
    (1) Payment on a reimbursement basis;

[[Page 207]]

    (2) Requiring additional and/or more detailed financial or 
performance reports;
    (3) Additional monitoring;
    (4) Requiring the recipient or subrecipient to obtain specific 
technical or management assistance; and/or
    (5) Establishing additional prior approvals.
    (c) If an awarding agency decides to impose such funding 
restrictions, the awarding official will notify the recipient or 
subrecipient as early as possible, in writing, of:
    (1) The nature of the funding restrictions;
    (2) The reason(s) for imposing them;
    (3) The corrective actions which must be taken before they will be 
removed and the time allowed for completing the corrective actions; and
    (4) The method of requesting reconsideration of the restrictions 
imposed.



Sec. 627.424  Prohibition of subawards to debarred and suspended parties.

    (a) No recipient or subrecipient shall make any awards or permit any 
awards at any tier to any party which is debarred or suspended or is 
otherwise excluded from or ineligible for participation in Federal 
assistance programs in accordance with the Department of Labor 
regulations at 29 CFR part 98.
    (b) Recipients and subrecipients shall comply with the applicable 
requirements of the Department of Labor regulations at 29 CFR part 98.



Sec. 627.425  Standards for financial management and participant data 
systems.

    (a)(1) General. The financial management system and the participant 
data system of each recipient and subrecipient shall provide federally 
required records and reports that are uniform in definition, accessible 
to authorized Federal and State staff, and verifiable for monitoring, 
reporting, audit, program management, and evaluation purposes (sections 
165(a)(1) and (2), and 182).
    (2) An awarding agency may review the adequacy of the financial 
management system and participant data system of any recipient/
subrecipient as part of a preaward review or at any time subsequent to 
award.
    (b) Financial systems. Recipients and subrecipients shall ensure 
that their own financial systems as well as those of their subrecipients 
provide fiscal control and accounting procedures that are:
    (1) In accordance with generally accepted accounting principles 
applicable in each State including:
    (i) Information pertaining to subgrant and contract awards, 
obligations, unobligated balances, assets, liabilities, expenditures, 
and income;
    (ii) Effective internal controls to safeguard assets and assure 
their proper use;
    (iii) A comparison of actual expenditures with budgeted amounts for 
each subgrant and contract;
    (iv) Source documentation to support accounting records; and
    (v) Proper charging of costs and cost allocation; and
    (2) Sufficient to:
    (i) Permit preparation of required reports;
    (ii) Permit the tracing of funds to a level of expenditure adequate 
to establish that funds have not been used in violation of the 
applicable restrictions on the use of such funds;
    (iii) As required by section 165(g), permit the tracing of program 
income, potential stand-in costs and other funds that are allowable 
except for funding limitations, as defined in Sec. 627.480(f) of this 
part, Audits; and
    (iv) Demonstrate compliance with the matching requirement of section 
123(b)(2).
    (c) Applicant and participant data systems. Each recipient and 
subrecipient shall ensure that records are maintained:
    (1) Of each applicant for whom an application has been completed and 
a formal determination of eligibility or ineligibility made;
    (2) Of each participant's enrollment in a JTPA-funded program in 
sufficient detail to demonstrate compliance with the relevant 
eligibility criteria attending a particular activity and with the 
restrictions on the provision and duration of services and specific 
activities imposed by the Act; and

[[Page 208]]

    (3) Of such participant information as may be necessary to develop 
and measure the achievement of performance standards established by the 
Secretary.



Sec. 627.430  Grant payments.

    (a) Except as provided in paragraph (h)(2) of this section, JTPA 
grant payments shall be made to the Governor in accordance with the Cash 
Management Improvement Act of 1990 (31 U.S.C. 6501, et seq.), Department 
of Treasury regulations at 31 CFR part 205, and the State Agreement 
entered into with the Department of the Treasury.
    (b) Basic standard. Except as provided in paragraphs (d) and (e) of 
this section, each recipient and subrecipient shall be paid in advance, 
provided it demonstrates the willingness and ability to limit advanced 
funds to the actual immediate disbursement needs in carrying out the 
JTPA program.
    (c) Advance payments. To the maximum extent feasible, each 
subrecipient shall be provided advance payments via electronic funds 
transfer, following the procedures of the awarding agency.
    (d) Reimbursement. (1) Reimbursement is the preferred method when 
the requirements in paragraph (b) of this section are not met.
    (i) Each recipient shall submit requests for reimbursement in 
accordance with the provisions at 31 CFR part 205.
    (ii) Each subrecipient shall submit requests for reimbursement in 
accordance with requirements established by the awarding agency.
    (2) Each subrecipient shall be paid as promptly as possible after 
receipt of a proper request for reimbursement.
    (e) Working capital advance payments. If a subrecipient cannot meet 
the criteria for advance payments described in paragraph (b) of this 
section, and the awarding agency has determined that reimbursement is 
not feasible because the subrecipient lacks sufficient working capital, 
the awarding agency may provide cash on a working capital advance 
payment basis. Under this procedure, the awarding agency shall advance 
cash to the subrecipient to cover its estimated disbursement needs for 
an initial period, generally geared to the subrecipient's disbursing 
cycle. In no event may such an advance exceed 20 percent of the award 
amount. Thereafter, the awarding agency shall reimburse the subrecipient 
for its actual cash disbursements. The working capital advance method of 
payment shall not be used by recipients or subrecipients if the reason 
for using such method is the unwillingness or inability of the recipient 
or subrecipient to provide timely advances to the subrecipient to meet 
the subrecipient's actual cash disbursements.
    (f) Effect of program income, refunds, and audit recoveries on 
payment. Each recipient and subrecipient shall disburse cash received as 
a result of program income, rebates, refunds, contract settlements, 
audit recoveries, and interest earned on such funds before requesting 
additional cash payments.
    (g) Cash depositories. (1) Consistent with the national goal of 
expanding the opportunities for minority business enterprises, each 
recipient and subrecipient is encouraged to use minority-owned banks (a 
bank which is at least 50 percent owned by minority group members). 
Additional information may be obtained from the Minority Business 
Development Agency, Department of Commerce, Washington, DC 20230.
    (2) A recipient or subrecipient shall not be required to maintain a 
separate bank account but shall separately account for Federal funds on 
deposit.
    (h) Interest earned on advances. (1) An interest liability shall 
accrue on advance payments between Federal agencies and State 
governments, as provided by the Cash Management Improvement Act (31 
U.S.C. 6501, et seq.) and implementing regulations at 31 CFR part 205.
    (2) Each recipient and subrecipient shall account for interest 
earned on advances of Federal funds as program income, as provided at 
Sec. 627.450 of this part, Program income.



Sec. 627.435  Cost principles and allowable costs.

    (a) General. To be allowable, a cost shall be necessary and 
reasonable for the proper and efficient administration of the program, 
be allocable to the program, and, except as provided herein, not be a 
general expense required to

[[Page 209]]

carry out the overall responsibilities of the Governor or a governmental 
subrecipient. Costs charged to the program shall be accorded consistent 
treatment through application of generally accepted accounting 
principles appropriate to the JTPA program, as determined by the 
Governor.
    (b) Whether a cost is charged as a direct cost or as an indirect 
cost shall be determined in accordance with the descriptions of direct 
and indirect costs contained in the OMB Circulars identified in DOL's 
regulations at 29 CFR 97.22(b).
    (c) Costs allocable to another Federal grant, JTPA program, or cost 
category may not be shifted to a JTPA grant, subgrant, program, or cost 
category to overcome fund deficiencies, avoid restrictions imposed by 
law or grant agreements, or for other reasons.
    (d) Applicable credits such as rebates, discounts, refunds, and 
overpayment adjustments, as well as interest earned on any of them, 
shall be credited as a reduction of costs if received during the same 
funding period that the cost was initially charged. Credits received 
after the funding period shall be returned to the Department as provided 
for at Sec. 627.490(b).
    (e) The following costs are not allowable charges to the JTPA 
program:
    (1) Costs of fines and penalties resulting from violations of, or 
failure to comply with, Federal, State, or local laws and regulations;
    (2) Back pay, unless it represents additional pay for JTPA services 
performed for which the individual was underpaid;
    (3) Entertainment costs;
    (4) Bad debts expense;
    (5) Insurance policies offering protection against debts established 
by the Federal Government;
    (6) Contributions to a contingency reserve or any similar provision 
for unforeseen events;
    (7) Costs prohibited by 29 CFR part 93 (Lobbying Restrictions) or 
costs of any salaries or expenses related to any activity designed to 
influence legislation or appropriations pending before the Congress of 
the United States; and
    (8) Costs of activities prohibited in Sec. 627.205, Public service 
employment prohibition; Sec. 627.210, Nondiscrimination and 
nonsectarian activities; Sec. 627.215, Relocation; Sec. 627.225, 
Employment generating activities; and Sec. 627.230, Displacement, of 
this part.
    (f)(1) The cost of legal expenses required in the administration of 
grant programs is allowable. Legal expenses include the expenses 
incurred by the JTPA system in the establishment and maintenance of a 
grievance system, including the costs of hearings and appeals, and 
related expenses such as lawyers' fees. Legal expenses does not include 
costs resulting from, and after, the grievance process such as fines and 
penalties, which are not allowable, and settlement costs, which are 
allowable to the extent that such costs included in the settlement would 
have been allowable if charged to the JTPA program at the time they were 
incurred.
    (2) Legal services furnished by the chief legal officer of a State 
or local government or staff solely for the purpose of discharging 
general responsibilities as a legal officer are unallowable.
    (3) Legal expenses for the prosecution of claims against the Federal 
Government, including appeals to an Administrative Law Judge, are 
unallowable.
    (g) Costs of travel and incidental expenses incurred by volunteers 
are allowable provided such costs are incurred for activities that are 
generally consistent with section 204(c)(6) of the Act.
    (h) Contributions to a reserve for a self-insurance program, to the 
extent that the type and extent of coverage and the rates and premiums 
would have been allowed had insurance been purchased to cover the risks, 
are allowable.
    (i) The Governor shall prescribe and implement guidelines on 
allowable costs for SDA, SSG, and statewide programs that are consistent 
with the cost principles and allowable costs provisions of paragraphs 
(a) through (h) of this section and that include, at a minimum, 
provisions that specify the extent to which the following cost items are 
allowable or unallowable JTPA costs and, if allowable, guidelines on 
conditions or the extent of allowability, documentation requirements, 
and any prior approval requirements applicable to such cost items:

[[Page 210]]

    (1) Compensation for personal services of staff, including wages, 
salaries, supplementary compensation, and fringe benefits;
    (2) Costs incurred by the SJTCC, HRIC, PIC's, and other advisory 
councils or committees;
    (3) Advertising costs;
    (4) Depreciation and/or use allowances;
    (5) Printing and reproduction costs;
    (6) Interest expense;
    (7) Expenditures for transportation and travel;
    (8) Payments to OJT employers, training institutions, and other 
vendors;
    (9) Fees or profits;
    (10) Insurance costs, including insurance coverage for injuries 
suffered by participants who are not covered by existing workers' 
compensation, and personal liability insurance for PIC members;
    (11) Acquisitions of capital assets;
    (12) Building space costs, including rent, repairs, and alterations;
    (13) Pre-agreement costs;
    (14) Fund-raising activities;
    (15) Professional services, including organizational management 
studies conducted by outside individuals or firms; and
    (16) Taxes.



Sec. 627.440  Classification of costs.

    (a) Allowable costs for programs under title II and title III shall 
be charged (allocated) to a particular cost objective/category to the 
extent that benefits are received by such cost objective/category. Joint 
and similar types of costs may be charged initially to a cost pool used 
for the accumulation of such costs pending distribution in due course to 
the ultimate benefitting cost objective/category. The classification of 
costs for programs under title III of the Act are set forth at Sec. 
631.13 of this chapter, Classification of costs at State and substate 
levels.
    (b) For State-administered programs under Title II, the State is 
required to plan, control, and charge expenditures against the following 
cost objectives/categories:
    (1) Titles II-A and II-C (combined)--capacity building and technical 
assistance (sections 202(c)(1)(B) and 262(c)(1)(B) of the Act to carry 
out activities pursuant to sections 202(c)(3)(A) and 262(c)(3)(A) of the 
Act);
    (2) Titles II-A and II-C (combined)--8 percent coordination 
(sections 202(c)(1)(C) and 262(c)(1)(C) of the Act to carry out 
activities pursuant to section 123(d)(2)(A) of the Act);
    (3) Titles II-A and II-C (combined)--8 percent services/direct 
training (sections 202(c)(1)(C) and 262(c)(1)(C) of the Act to carry out 
activities pursuant to section 123(d)(2)(B) of the Act);
    (4) Titles II-A and II-C (combined)--8 percent services/training-
related and supportive services (sections 202(c)(1)(C) and 262(c)(1)(C) 
of the Act to carry out activities pursuant to section 123(d)(2)(B) of 
the Act);
    (5) Titles II-A and II-C (combined)--8 percent services/
administration (sections 202(c)(1)(C) and 262(c)(1)(C) of the Act to 
carry out activities pursuant to section 123(d)(2)(B) of the Act);
    (6) Titles II-A and II-C (combined)--8 percent services to 
disadvantaged (section 202(c)(1)(C) and 262(c)(1)(C) of the Act to carry 
out activities pursuant to section 123(d)(2)(C) of the Act);
    (7) Title II-A--older individuals/direct training (section 
202(c)(1)(D) of the Act to carry out activities pursuant to section 
204(d) of the Act);
    (8) Title II-A--older individuals/training-related and supportive 
services (section 202(c)(1)(D) of the Act to carry out activities 
pursuant to section 204(d) of the Act);
    (9) Title II-A--older individuals/administration (section 
202(c)(1)(D) of the Act to carry out activities pursuant to section 
204(d) of the Act); and
    (10) Title II--administration (sections 202(c)(1)(A) and 
262(c)(1)(A) of the Act to carry out activities pursuant to Title II of 
the Act, including Title II-B).
    (c)(1) SDA grant recipients and their subrecipients shall plan, 
control, and charge expenditures, excluding incentive funds received 
pursuant to sections 202(c)(1)(B) and 262(c)(1)(B) of the Act, against 
the following cost objectives/categories:
    (i) Title II-A--direct training services;
    (ii) Title II-C--direct training services;

[[Page 211]]

    (iii) Title II-A--training-related and supportive services;
    (iv) Title II-C--training-related and supportive services;
    (v) Title II-B--training and supportive services;
    (vi) Title II-A--administration;
    (vii) Title II-B--administration; and
    (viii) Title II-C--administration.
    (2) Incentive funds received pursuant to sections 202(c)(1)(B) and 
262(c)(1)(B) of the Act, may be combined and accounted for in total, 
without regard to cost categories or cost limitations.
    (d) States and subrecipients shall use the following definitions in 
assigning costs to the cost categories contained in paragraphs (b) and 
(c) of this section:
    (1) Direct training services--title II-A. Costs for direct training 
services that may be charged to the title II-A program are:
    (i) The personnel and non-personnel costs directly related to 
providing those services to participants specified in section 204(b)(1) 
of the Act and which can be specifically identified with one or more of 
those services. Generally, such costs are limited to:
    (A) Salaries, fringe benefits, equipment, supplies, space, staff 
training, transportation, and other related costs of personnel directly 
engaged in providing training; and
    (B) Salaries, fringe benefits, and related non-personnel costs of 
program component supervisors and/or coordinators as well as clerical 
staff, provided such staff work exclusively on activities or functions 
specified in section 204(b)(1) of the Act or allocations of such costs 
are made based on actual time worked or other equitable cost allocation 
methods;
    (ii) Books, instructional materials, and other teaching aids used by 
or for participants;
    (iii) Equipment and materials used in providing training to 
participants;
    (iv) Classroom space and utility costs;
    (v) Costs of insurance coverage of participants as specified at 
Sec. 627.315(b) of this part, Benefits and Working Conditions;
    (vi) Payments to vendors for goods or services procured for the use 
or benefit of program participants for direct training services, 
including:
    (A) Payments for commercially available training packages purchased 
competitively pursuant to section 141(d)(3) of the Act;
    (B) Tuition charges, entrance fees, and other usual and customary 
fees of an educational institution when such tuition charges, entrance 
fees, or other fees are not more than the educational institution's 
catalogue price, necessary to receive specific training, charged to the 
general public to receive the same training, and are for training of 
participants; and
    (C) Payments to OJT employers, but not brokering contractors. Costs 
incurred under brokering arrangements shall be allocated to all of the 
benefitting cost categories, and
    (vii) Payments to JTPA participants that represent hours spent in a 
direct training activity (e.g., wages, work-based training payments, 
training payments for combined activities), including work experience, 
vocational exploration, limited internships, and entry employment.
    (2) Direct training services--title II-C. Costs for direct training 
services that may be charged to the title II-C program are the costs 
identified in paragraph (d)(1) of this section as well as costs directly 
related to providing those services to participants specified in section 
264(c)(1) of the Act and which can be specifically identified with one 
or more of those services.
    (3) Training-related and supportive services--title II-A. Costs for 
training-related and supportive services that may be charged to the 
title II-A program are:
    (i) The personnel and non-personnel costs directly related to 
providing outreach, intake, and eligibility determination, as well as 
those services to participants specified in section 204(b)(2) of the 
Act, and which can be specifically identified with one or more of those 
services. Generally, such costs are limited to:
    (A) Salaries, fringe benefits, equipment, supplies, space, staff 
training, transportation, and other related costs of personnel directly 
engaged in providing training-related and/or supportive services; and

[[Page 212]]

    (B) Salaries, fringe benefits, and related non-personnel costs of 
program component supervisors and/or coordinators as well as clerical 
staff, provided such staff work exclusively on activities or functions 
specified in section 204(b)(2) of the Act or allocations of such costs 
are made based on actual time worked or another equitable allocation 
method.
    (ii) Needs-based payments, cash incentives and bonuses, other 
financial assistance and supportive services to participants and 
applicants, where applicable.
    (4) Training-related and supportive services--title II-C. Costs for 
training-related and supportive services that may be charged to the 
title II-C program are the costs identified in paragraph (d)(3) of this 
section, as well as costs directly related to providing those services 
to participants specified in section 264(c)(2) of the Act and which can 
be specifically identified with one or more of those services.
    (5) Administration. The costs of administration are those portions 
of necessary and allowable costs associated with the overall management 
and administration of the JTPA program and which are not directly 
related to the provision of services to participants or otherwise 
allocable to the program cost objectives/categories in paragraphs 
(b)(1)-(8) or (c)(1) (i)-(v) of this section. These costs can be both 
personnel and non-personnel and both direct and indirect. Costs of 
administration shall include:
    (i) Except as provided in paragraph (e)(1) of this section, costs of 
salaries, wages, and related costs of the recipient's or subrecipient's 
staff or PIC staff engaged in:
    (A) Overall program management, program coordination, and general 
administrative functions, including the salaries and related costs of 
the executive director, JTPA director, project director, personnel 
officer, fiscal officer/bookkeeper, purchasing officer, secretary, 
payroll/insurance/property clerk and other costs associated with 
carrying out administrative functions;
    (B) Preparing program plans, budgets, schedules, and amendments 
thereto;
    (C) Monitoring of programs, projects, subrecipients, and related 
systems and processes;
    (D) Procurement activities, including the award of specific 
subgrants, contracts, and purchase orders;
    (E) Providing State or local officials and the general public with 
information about the program (public relations);
    (F) Developing systems and procedures, including management 
information systems, for assuring compliance with program requirements;
    (G) Preparing reports and other documents related to the program 
requirements;
    (H) Coordinating the resolution of audit findings;
    (I) Evaluating program results against stated objectives; and
    (J) Performing such administrative services as general legal 
services, accounting services, audit services; and managing purchasing, 
property, payroll, and personnel;
    (ii) Costs for goods and services required for administration of the 
program, including such goods and services as rental or purchase of 
equipment, utilities, office supplies, postage, and rental and 
maintenance of office space;
    (iii) The costs of organization-wide management functions; and
    (iv) Travel costs incurred for official business in carrying out 
program management or administrative activities, including travel costs 
incurred by PIC members.
    (e) Other cost classification guidance. (1) Personnel and related 
non-personnel costs of the recipient's or subrecipient's staff, 
including project directors, who perform services or activities that 
benefit two or more of the cost objectives/categories identified in this 
section may be allocated to the benefitting cost objectives/categories 
based on documented distributions of actual time worked or other 
equitable cost allocation methods.
    (2) Indirect or overhead costs normally shall be charged to 
administration, except that specific costs charged to an overhead or 
indirect cost pool that can be identified directly with a JTPA cost 
objective/category other than administration may be charged to

[[Page 213]]

the JTPA cost objective/category directly benefitted. Documentation of 
such charges shall be maintained.
    (3) Where an award to a subrecipient is for a ``commercially 
available off-the-shelf training package,'' as defined at Sec. 626.5 of 
this chapter, the subrecipient may charge all costs of such package to 
the direct training services cost category.
    (4) Profits, fees, and other revenues earned by a subrecipient that 
are in excess of actual costs incurred, to the extent allowable and 
consistent with the guidelines on allowable costs prescribed by the 
Governor in accordance with Sec. 627.435(i). Cost principles and 
allowable costs, may be allocated to all three cost categories based on 
the proportionate share of actual costs incurred attributable to each 
category.



Sec. 627.445  Limitations on certain costs.

    (a) State-administered programs--(1) Services for older individuals. 
Of the funds allocated for any program year for section 202(c)(1)(D) of 
the Act to carry out activities pursuant to section 204(d) of the Act--
    (i) Not less than 50 percent shall be expended for the cost of 
direct training services; and
    (ii) Not more than 20 percent shall be expended for the cost of 
administration.
    (2) State education services. Of the funds allocated for any program 
year for sections 202(c)(1)(C) and 262(c)(1)(C) of the Act to carry out 
activities pursuant to section 123(d)(2)(B) of the Act--
    (i) Not less than 50 percent shall be expended for the cost of 
direct training services; and
    (ii) Not more than 20 percent shall be expended for the cost of 
administration.
    (3) The limitations specified in paragraph (a)(2) of this section 
shall apply to the combined total of funds allocated for sections 
202(c)(1)(C) and 262(c)(1)(C) of the Act.
    (b) SDA allocations. (1) In applying the title II-A and II-C cost 
limitations specified in section 108(b)(4) of the Act, the funds 
allocated to a service delivery area shall be net of any:
    (i) Transfers made in accordance with sections 206, 256, and 266 of 
the Act; and
    (ii) Reallocations made by the Governor in accordance with section 
109(a) of the Act.
    (2) The limitations specified in paragraph (b)(1) of this section 
shall apply separately to the funds allocated for title II-A and title 
II-C programs.
    (3) The title II-B administrative cost limitation of 15 percent 
shall be 15 percent of the funds allocated for any program year to a 
service delivery area, excluding any funds transferred to title II-C in 
accordance with section 256 of the Act (section 253(a)(3)).
    (c)(1) The State shall establish a system to regularly assess 
compliance with the cost limitations including periodic review and 
corrective action, as necessary.
    (2) States and service delivery areas shall have the 3-year period 
of fund availability to comply with the cost limitations in section 108 
of the Act and paragraphs (a) and (b) of this section (section 161(b)).
    (d) Administrative costs incurred by a community-based organization 
or non-profit service provider shall not be included in the limitation 
described in section 108(b)(4)(A) of the Act if:
    (1) Such costs are incurred under an agreement that meets the 
requirements of section 141(d)(3)(C) (i) and (ii) of the Act;
    (2) The total administrative expenditures of the service delivery 
area, including the administrative expenditures of such community-based 
organizations or non-profit service providers, do not exceed 25 percent 
of the funds allocated to the service delivery area for the program year 
of allocation; and
    (3) The total direct training expenditures of the service delivery 
area, including the direct training expenditures of such community-based 
organizations or non-profit service providers, is equal to or exceeds 50 
percent of the funds allocated to the service delivery area for the 
program year less one-half of the percentage by which the total 
administrative expenditures of the service delivery area exceeds 20 
percent. For example, if the total administrative expenditures of the 
service delivery area is 24 percent, then the total direct training 
expenditures of the service delivery area must be at least 48 percent.

[[Page 214]]

    (e) The provisions of this section do not apply to any title III 
programs.
    (f) The provisions of this section do not apply to any designated 
SDA which served as a concentrated employment program grantee for a 
rural area under the Comprehensive Employment and Training Act (section 
108(d)).



Sec. 627.450  Program income.

    (a) Definition of program income. (1) Program income means income 
received by the recipient or subrecipient that is directly generated by 
a grant or subgrant supported activity, or earned only as a result of 
the grant or subgrant. Program income includes:
    (i) Income from fees for services performed and from conferences;
    (ii) Income from the use or rental of real or personal property 
acquired with grant or subgrant funds;
    (iii) Income from the sale of commodities or items fabricated under 
a grant or subgrant;
    (iv) Revenues earned by a governmental or non-profit service 
provider under either a fixed-price or reimbursable award that are in 
excess of the actual costs incurred in providing the services; and
    (v) Interest income earned on advances of JTPA funds.
    (2) Program income does not include:
    (i) Rebates, credits, discounts, refunds, etc., or interest earned 
on any of them, which shall be credited in accordance with Sec. 
627.435(d), Cost principles and allowable costs;
    (ii) Taxes, special assessments, levies, fines, and other such 
governmental revenues raised by a recipient or subrecipient; or
    (iii) Income from royalties and license fees for copyrighted 
material, patents, patent applications, trademarks, and inventions 
developed by a recipient or subrecipient.
    (3) Property. Proceeds from the sale of property shall be handled in 
accordance with the requirements of Sec. 627.465 of this part, Property 
management standards.
    (b) Cost of generating program income. Costs incidental to the 
generation of program income may be deducted, if not already charged to 
the grant, from gross income to determine program income.
    (c) Use of program income. (1)(i) A recipient or subrecipient may 
retain any program income earned by the recipient or subrecipient only 
if such income is added to the funds committed to the particular JTPA 
grant or subgrant and title under which it was earned and such income is 
used for that title's purposes and under the terms and conditions 
applicable to the use of the grant funds.
    (ii) A State may use interest it earns on JTPA funds, deposited by 
the United States to the State's account, to satisfy the requirement at 
31 U.S.C. 6503(c) that the State pay interest on such deposits.
    (iii) The classification of costs in Sec. Sec. 627.440 and 631.13 
shall apply to the use of program income.
    (iv) The administrative cost limitation in Sec. Sec. 627.445 and 
631.14 shall apply to the use of program income, except that program 
income used in accordance with paragraph (c)(1)(ii) of this section 
shall be exempt from the administrative cost limitations.
    (2) Program income generated under title II may also be used to 
satisfy the matching requirement of section 123(b) of the Act.
    (3) Program income shall be used prior to the submission of the 
final report for the funding period of the program year of funds to 
which the earnings are attributable.
    (4) If the subrecipient that earned program income cannot use such 
income for JTPA purposes, the recipient may permit another entity to use 
the program income for JTPA purposes.
    (5) Program income not used in accordance with the requirements of 
this section shall be remitted to the Department of Labor.
    (d) Program and other income after the funding period. Rental income 
and user fees on real and personal property acquired with JTPA funds 
shall continue to be JTPA program income in subsequent funding periods. 
There are no Federal requirements governing the disposition of all other 
income that is earned after the end of the funding period.



Sec. 627.455  Reports required.

    (a) General. The Governor shall report to DOL pursuant to 
instructions

[[Page 215]]

issued by DOL. Reports shall be submitted no more frequently than 
quarterly, in accordance with section 165(f) of the Act, and within 45 
calendar days after the end of the report period. Additional reporting 
requirements for title III are set forth at Sec. 631.15 of this 
chapter.
    (b) A recipient may impose different forms or formats, shorter due 
dates, and more frequent reporting requirements on subrecipients, 
however, the recipient is required to meet the reporting requirements 
imposed on it by DOL.
    (c) DOL may provide computer outputs to recipients to expedite or 
contribute to the accuracy of reporting. DOL may accept the required 
information from recipients in electronically reported format or 
computer printouts instead of prescribed forms.
    (d) Financial reports. (1) Financial reports for programs under 
titles I, II, and III shall be submitted to DOL by each State quarterly 
and by program year of appropriation.
    (2) Each recipient shall report program outlays on an accrual basis. 
If the recipient's accounting records are not normally kept on the 
accrual basis, the recipient shall develop such accrual information 
through an analysis of the documentation on hand.
    (3) A final financial report is required 90 days after the 
expiration of a funding period (see Sec. 627.485 of this part, 
Closeout).
    (4) Pursuant to section 104(b)(13) of the Act, the SDA shall 
annually report to the Governor. Among other items, this report shall 
include information on the extent to which the SDA has met the goals for 
the training and training-related placement of women in nontraditional 
employment.



Sec. 627.460  Requirements for records.

    (a) Records, including the records identified in section 165(g) of 
the Act, shall be retained in accordance with section 165(e) of the Act. 
In establishing the time period of record retention requirements for 
records of subrecipients, the State may either:
    (1) Impose the time limitation requirement of section 165(e) of the 
Act; or
    (2) Require that subrecipient records for each funding period be 
retained for 3 years after the subrecipient submits to the awarding 
agency its final expenditure report for that funding period. Records for 
nonexpendable property shall be retained for a period of three years 
after final disposition of the property.
    (b) The Governor shall ensure that the records under this section 
shall be retained beyond the prescribed period if any litigation or 
audit is begun or if a claim is instituted involving the grant or 
agreement covered by the records. In these instances, the Governor shall 
ensure that the records shall be retained until the litigation, audit, 
or claim has been finally resolved.
    (c) In the event of the termination of the relationship with a 
subrecipient, the Governor or SDA or title III SSG shall be responsible 
for the maintenance and retention of the records of any subrecipient 
unable to retain them.
    (d) Record storage. Records shall be retained and stored in a manner 
which will preserve their integrity and admissibility as evidence in any 
audit or other proceeding. The burden of production and authentication 
of the records shall be on the custodian of the records.
    (e) Federal and awarding agencies' access to records--(1) Records of 
recipients and subrecipients. The awarding agency, the Department of 
Labor (including the Department of Labor's Office of Inspector General), 
and the Comptroller General of the United States, or any of their 
authorized representatives, have the right of timely and reasonable 
access to any books, documents, papers, computer records, or other 
records of recipients and subrecipients that are pertinent to the grant, 
in order to conduct audits and examinations, and to make excerpts, 
transcripts, and photocopies of such documents. This right also includes 
timely and reasonable access to recipient and subrecipient personnel for 
the purpose of interview and discussion related to such documents.
    (2) Expiration of right of access. The right of access in this 
section is not

[[Page 216]]

limited to the required retention period but shall last as long as the 
records are retained.



Sec. 627.463  Public access to records.

    (a) Public access. Except as provided in paragraph (b) of this 
section, records maintained by recipients or subrecipients pursuant to 
Sec. 627.460 shall be made available to the public upon request, 
notwithstanding the provisions of State or local law.
    (b) Exceptions. This requirement does not apply to:
    (1) Information, the disclosure of which would constitute a clearly 
unwarranted invasion of personal privacy; or
    (2) Trade secrets, or commercial or financial information, obtained 
from a person and privileged or confidential.
    (c) Fees. For processing of a request for a record under this 
section, a fee may be charged to the extent sufficient to recover the 
cost applicable to processing such request (section 165(a)(4)).



Sec. 627.465  Property management standards.

    (a) States and governmental subrecipients. Real property, equipment, 
supplies, and intangible property acquired or produced after July 1, 
1993, by States and governmental subrecipients with JTPA funds shall be 
governed by the definitions and property requirements in the DOL 
regulations at 29 CFR part 97, except that prior approval by the 
Department of Labor to acquire property is waived.
    (b) Nongovernmental subrecipients. Except as provided in paragraph 
(c) of this section, real and personal property, including intangible 
property, acquired or produced after July 1, 1993, by nongovernmental 
subrecipients with JTPA funds shall be governed by the definitions and 
property management standards of OMB Circular A-110, as codified by 
administrative regulations of the Department of Labor in 29 CFR Part 95, 
except that prior approval by the Department of Labor to acquire 
property is waived.
    (c) Special provisions for property acquired under subgrants to 
commercial organizations--(1) Scope. This paragraph (c) applies to real 
and personal property other than supplies that are acquired or produced 
after July 1, 1993, under a JTPA subgrant to a commercial organization.
    (2) Property acquired by commercial subrecipients. Title to property 
acquired or produced by a subrecipient that is a commercial organization 
shall vest in the awarding agency, provided such agency is a 
governmental entity or nongovernmental organization that is not a 
commercial organization. Property so acquired or produced shall be 
considered to be acquired or produced by the awarding agency and 
paragraph (a) or (b) of this section, as appropriate, shall apply to 
that property. If the awarding agency is also a commercial organization, 
title shall vest in the higher level, non-commercial awarding agency 
that made the subaward to the commercial subrecipient.
    (3) Approval for acquisition. A subrecipient that is a commercial 
organization shall not acquire property subject to this section without 
the prior approval of the awarding agency.
    (d) Notification to the Secretary of real property acquisitions. 
Recipients shall notify the Secretary immediately upon acquisition of 
real property with JTPA funds, including acquisitions by subrecipients. 
Such notification shall include the location of the real property and 
the Federal share percentage.
    (e) Property procured before July 1, 1993. (1) Personal or real 
property procured with JTPA funds or transferred from programs under the 
Comprehensive Employment and Training Act must be used for purposes 
authorized by the Act. Subject to the Secretary's rights to such 
property, the Governor shall maintain accountability for property in 
accordance with State procedures and the records retention requirements 
of Sec. 627.460 of this part.
    (2) The JTPA program must be reimbursed the fair market value of any 
unneeded property retained by the Governor for use in a non-JTPA 
program. The proceeds from the sale of any property or transfer of 
property to a non-JTPA program must be used for purposes authorized 
under the Act.



Sec. 627.470  Performance standards.

    (a) General. The Secretary shall prescribe performance standards for 
adult programs under title II-A, for youth

[[Page 217]]

programs under title II-C, for dislocated worker programs under title 
III, and for older worker programs under section 204(d) of the Act. Any 
performance standards developed for employment competencies shall be 
based on such factors as entry level skills and other hiring 
requirements.
    (b) Pursuant to instructions and time lines issued by the Secretary, 
the Governor shall:
    (1) Collect the data necessary to set performance standards pursuant 
to section 106 of the Act; and
    (2) Maintain records and submit reports required by sections 
106(j)(3), 165(a)(3), (c)(1), and (d) and 121(b)(6) of the Act.
    (c) Title II performance standards. (1) The Governor shall establish 
SDA performance standards for title II within the parameters set by the 
Secretary pursuant to sections 106(b) and (d) of the Act and apply the 
standards in accordance with section 202(c)(1)(B) of the Act.
    (2) The Governor shall establish incentive award policies pursuant 
to section 106(b)(7) of the Act, except for programs operated under 
section 204(d) of the Act. Pursuant to section 106(b)(8) of the Act, 
Governors may not consider standards relating gross program expenditures 
to performance measures in making such incentive awards.
    (3) The Governor shall provide technical assistance to SDA's failing 
to meet performance standards established by the Secretary for a given 
program year (section 106(j)(2)).
    (4)(i) If an SDA fails to meet a prescribed number of the 
Secretary's performance standards for 2 consecutive years, the Governor 
shall notify the Secretary and the service delivery area of the 
continued failure and impose a reorganization plan (section 106(j)(4)).
    (ii) The number of standards deemed to constitute failure shall be 
specified by the Secretary biennially and shall be based on an 
appropriate proportion of the total number established by the Secretary 
for that performance cycle. In determining failure, the specified 
proportion shall be applied separately to each year of the two year 
cycle.
    (iii) A reorganization plan shall not be imposed for a failure to 
meet performance standards other than those established by the 
Secretary.
    (iv) A reorganization plan shall be considered to be imposed when, 
at a minimum:
    (A) The problem or deficiency is identified,
    (B) The problem is communicated to the SDA, and
    (C) The SDA is provided an initial statement of the actions or steps 
required and the timeframe within which they are to be initiated. A 
final statement of required steps and actions is to be issued within 30 
days.
    (d)(1) If the Governor does not impose a reorganization plan, 
required by paragraph (c)(4) of this section, within 90 days of 
notifying the Grant Officer of an SDA's continued failure to meet 
performance standards, the Grant Officer shall develop and impose such a 
plan (section 106(j)(5)).
    (2) Before imposing a reorganization plan, the Grant Officer shall 
notify the Governor and SDA in writing of the intent to impose the plan 
and provide both parties the opportunity to submit comments within 30 
days of receipt of the Grant Officer's notice.
    (e) An SDA subject to a reorganization plan under paragraphs (c)(4) 
or (d) of this section may, within 30 days of receiving notice of such 
action, appeal to the Secretary to revise or rescind the reorganization 
plan under the procedures set forth at Sec. 627.471 of this subpart, 
Reorganization plan appeals (section 106(j)(6)(A)).
    (f) Secretarial action to recapture or withhold funds. (1) The Grant 
Officer shall recapture or withhold an amount not to exceed one-fifth of 
the State administration set-aside allocated under sections 202(c)(1)(A) 
and 262(c)(1)(A) of the Act when:
    (i) The Governor has failed to impose a reorganization plan under 
paragraph (c)(4) of this section, for the purposes of providing 
technical assistance under a reorganization plan imposed by the 
Secretary (section 106(j)(5)(B)); or
    (ii) The Secretary determines in an appeal provided for at paragraph 
(e) of this section, and set forth at Sec. 627.471 of this subpart, 
that the Governor has not provided appropriate technical assistance as 
required at section 106(j)(2) (section 106(j)(6)(B)).

[[Page 218]]

    (2)(i) A Governor of a State that is subject to recapture or 
withholding under paragraph (f)(1) of this section may, within 30 days 
of receipt of such notice, appeal such recapture or withholding to the 
Secretary.
    (ii) The Secretary may consider any comments submitted by the 
Governor and shall make a decision within 45 days after the appeal is 
received.
    (g) Title III performance standards. (1) The Governor shall 
establish SSG performance standards for programs under title III within 
the parameters set annually by the Secretary pursuant to section 106(c) 
and (d) of the Act.
    (2) Any performance standard for programs under title III shall make 
appropriate allowances for the difference in cost resulting from serving 
workers receiving needs-related payments authorized under Sec. 631.20 
of this chapter (section 106(c)(2)).
    (3) The Secretary annually shall certify compliance, if the program 
is in compliance, with the title III performance standards established 
pursuant to paragraph (a) of section 322(a)(4) of the Act.
    (4) The Governor shall not establish standards for the operation of 
programs under title III that are inconsistent with the performance 
standards established by the Secretary under provisions of section 
106(c) of the Act (section 311(b)(8)).
    (5) When an SSG fails to meet performance standards for 2 
consecutive years, the Governor may institute procedures pursuant to the 
Governor's by-pass authority in accordance with Sec. 631.38(b) of this 
chapter or require redesignation of the substate grantee in accordance 
with Sec. 631.35 of this chapter, as appropriate.



Sec. 627.471  Reorganization plan appeals.

    (a) A reorganization plan imposed by the Governor, as provided for 
at Sec. Sec. 627.470(c)(4) or 627.477(b)(2) of this part, or by the 
Secretary, as provided for at Sec. 627.470(d) of this part, may be 
appealed directly to the Secretary without prior exhaustion of local 
remedies.
    (b)(1) Appeals shall be submitted to the Secretary, U.S. Department 
of Labor, Washington, DC 20210, ATTENTION: ASET. A copy of the appeal 
shall be provided simultaneously to the Governor.
    (2) The Secretary shall not accept an appeal dated later than 30 
days after receipt of written notification from the Governor or the 
Secretary.
    (3) The appealing party shall explain why it believes the decision 
to impose the reorganization plan is contrary to the provisions of 
section 106 of the Act.
    (4) The Secretary shall accept the appeal and make a decision only 
with regard to determining whether or not the decision to impose the 
reorganization plan is inconsistent with section 106 of the Act. The 
Secretary may consider any comments submitted by the Governor or the 
SDA, as appropriate. The Secretary shall make a final decision within 60 
days after this appeal is received (section 106(j)).



Sec. 627.475  Oversight and monitoring.

    (a) The Secretary may monitor all recipients and subrecipients of 
financial assistance pursuant to section 163 of the Act.
    (b) The Governor is responsible for oversight of all SDA and SSG 
activities and State-supported programs. The Governor shall develop and 
make available for review a State monitoring plan. The plan shall 
specify the mechanism which:
    (1) Ensures that established policies to achieve program quality and 
outcomes meet the objectives of the Act and regulations promulgated 
thereunder;
    (2) Enables the Governor to determine if SDA's and SSG's have 
demonstrated substantial compliance with the requirements for oversight;
    (3) Determines whether the Job Training Plan shall be disapproved 
consistent with the criteria contained in section 105(b)(1) of the Act;
    (4) Regularly examines expenditures against the cost categories and 
cost limitations specified in the Act and these regulations;
    (5) Ensures that all areas of SDA and SSG operations are monitored 
onsite regularly, but not less than once annually; and
    (6) Provides for corrective action to be imposed if conditions in 
paragraphs (b)(1)-(4) of this section are not met.

[[Page 219]]

    (c) The Governor shall issue instructions to SDA's and title III 
SSG's on the development of a substate monitoring plan. The instructions 
for development of the monitoring plan, at a minimum, shall address the 
monitoring scope and frequency, and the Secretary's emphasis and 
direction. The substate monitoring plan shall be part of the job 
training plan.
    (d) The Governor shall establish general standards for PIC oversight 
responsibilities. The required PIC standards shall be included in the 
Governor's Coordination and Special Services Plan (GCSSP).
    (e)(1) The PIC, pursuant to standards established by the Governor, 
shall establish specific policies for monitoring and oversight of SDA 
performance which shall be described in the job training plan.
    (2) The PIC shall exercise independent oversight over activities 
under the job training plan which shall not be circumscribed by 
agreements with the appropriate chief elected official(s) of the SDA.
    (f) The PIC and chief elected official(s) may conduct such oversight 
as they, individually or jointly, deem necessary or delegate oversight 
responsibilities to an appropriate entity pursuant to their mutual 
agreement.



Sec. 627.477  Governor's determination of substantial violation.

    (a) Except as provided at paragraph (d) of this section, if, as a 
result of financial and compliance audits or otherwise, the Governor 
determines that there is a substantial violation of a specific provision 
of this Act or the regulations under this Act, and corrective action has 
not been taken, the Governor shall
    (1) Issue a notice of intent to revoke approval of all or part of 
the plan affected; or
    (2) Impose a reorganization plan, which may include
    (i) Restructuring the private industry council involved;
    (ii) Prohibiting the use of designated service providers;
    (iii) Selecting an alternative entity to administer the program for 
the service delivery area involved;
    (iv) Merging the service delivery area into 1 or more other existing 
service delivery areas; or
    (v) Other such changes as the Secretary or Governor determines 
necessary to secure compliance (section 164(b)(1)).
    (b)(1) The actions taken by the Governor pursuant to paragraph 
(a)(1) of this section may be appealed to the Secretary as provided at 
Sec. 628.426 of this chapter (section 164(b)(2)(A)).
    (2) The actions taken by the Governor pursuant to paragraph (a)(2) 
of this section may be appealed to the Secretary, as provided at Sec. 
627.471 of this part (section 164(b)(2)(B)).
    (c) Allegations that the Governor failed to promptly take the 
actions required under paragraph (a) of this section shall be handled 
under Sec. 627.607 of this part (section 164(b)(3)).
    (d) This section does not apply to remedial actions for SDA failures 
to meet performance standards, which are provided for at Sec. 627.470 
of this part, and do not apply to remedial actions for the failure to 
comply with procurement standards, which are provided for at Sec. 
627.703 of this part.



Sec. 627.480  Audits.

    (a) Non-Federal Audits--(1) Governments. Each recipient and 
governmental subrecipient is responsible for complying with the Single 
Audit Act of 1984 (31 U.S.C. 7501-7) and 29 CFR part 96, the Department 
of Labor regulations which implement Office of Management and Budget 
(OMB) Circular A-128, ``Audits of State and Local Governments''.
    (2) Non-governmental organizations. Each non-governmental recipient 
or subrecipient shall comply with OMB Circular A-133, ``Audits of 
Institutions of Higher Education and Other Nonprofit Institutions'', as 
implemented by the Department of Labor regulations at 29 CFR part 96. 
The provisions of this paragraph (a)(2) do not apply to any non-
governmental organization that is:
    (i) A commercial organization; or
    (ii) A hospital or an institution of higher education for which 
State or local governments choose to apply OMB Circular A-128.

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    (3) Commercial organizations. A commercial organization which is a 
recipient or subrecipient and which receives $25,000 or more a year in 
Federal financial assistance to operate a JTPA program shall have an 
audit that:
    (i) Is usually performed annually, but not less frequently than 
every two years;
    (ii) Is completed within one year after the end of the period 
covered by the audit and submitted to the awarding agency within one 
month after completion;
    (iii) Is either:
    (A) An independent financial and compliance audit of Federal funds 
that includes coverage of the JTPA program within its scope, and is 
conducted and prepared in accordance with generally accepted government 
auditing standards; or
    (B) An organization-wide audit that includes financial and 
compliance coverage of the JTPA program within its scope.
    (b) Federal audits. The notice of audits conducted or arranged by 
the Office of Inspector General or the Comptroller General shall be 
provided in advance, as required by section 165(b) of the Act.
    (c) Audit reports. (1) Audit reports of recipient-level entities and 
other organizations which receive JTPA funds directly from the U.S. 
Department of Labor shall be submitted to the Office of Inspector 
General.
    (2) Audit reports of organizations other than those described in 
paragraph (c)(1) of this section shall be submitted to the entity which 
provided the JTPA funds.
    (d) Each entity that receives JTPA program funds and awards a 
portion of those funds to one or more subrecipients shall:
    (1) Ensure that each subrecipient complies with the applicable audit 
requirements;
    (2) Resolve all audit findings that impact the JTPA program with its 
subrecipient and ensure that corrective action for all such findings is 
instituted within 6 months after receipt of the audit report (where 
appropriate, corrective action shall include debt collection action for 
all disallowed costs); and
    (3) Maintain an audit resolution file documenting the disposition of 
reported questioned costs and corrective actions taken for all findings. 
The ETA Grant Officer may request that an audit resolution report, as 
specified in paragraph (e)(2) of this section, be submitted for such 
audits or may have the audit resolution reviewed through the compliance 
review process.
    (e)(1) Audits of recipient-level entities and other organizations 
which receive JTPA funds directly from DOL and all audits conducted by 
or under contract for the Office of Inspector General shall be issued by 
the OIG to the Employment and Training Administration after acceptance 
by OIG.
    (2) After receipt of the audit report, the ETA Grant Officer shall 
request that the State submit an audit resolution report documenting the 
disposition of the reported questioned costs, i.e., whether allowed or 
disallowed, the basis for allowing questioned costs, the method of 
repayment planned or required, and corrective actions, including debt 
collection efforts, taken or planned.
    (f) If the recipient intends to propose the use of ``stand-in'' 
costs as substitutes for otherwise unallowable costs, the proposal shall 
be included with the audit resolution report. To be considered, the 
proposed ``stand-in'' costs shall have been reported as uncharged JTPA 
program costs, included within the scope of the audit, and accounted for 
in the auditee's financial system, as required by Sec. 627.425 of this 
part, Standards for financial management and participant data systems. 
To be accepted, stand-in costs shall be from the same title, and program 
year as the costs which they are proposed to replace, and shall not 
result in a violation of the applicable cost limitations.
    (g) After receiving the audit resolution report, the ETA Grant 
Officer shall review the report, the recipient's disposition, and any 
liability waiver request submitted in accordance with Sec. 627.704 of 
this part. If the Grant Officer agrees with all aspects of the 
recipient's disposition of the audit, the Grant Officer shall so notify 
the recipient. If the Grant Officer disagrees with the recipient's 
conclusion on specific points in the audit, the Grant Officer

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shall resolve the audit through the initial and final determination 
process described in Sec. 627.606 of this part.



Sec. 627.481  Audit resolution.

    (a) Federal audit resolution. When the OIG issues an audit report to 
the Employment and Training Administration for resolution, the ETA Grant 
Officer shall provide a copy of the report to the recipient (if it does 
not already have the report), along with a request that the recipient 
submit its audit resolution report as specified in Sec. 627.480(e)(2) 
of this part, unless the Grant Officer chooses to proceed directly 
against the recipient pursuant to Sec. 627.601 of this part.
    (1) For audits of recipient-level entities and other organizations 
which receive JTPA funds directly from DOL, the Grant Officer shall 
request that the audit resolution report be submitted within 60 days 
from the date that the audit report is issued by the OIG.
    (2) For audits of subrecipient organizations, the Grant Officer 
shall provide the recipient with a 180-day period within which to 
resolve the audit with its subrecipient(s), and shall request that the 
audit resolution report be submitted at the end of that 180-day period.
    (b) After receiving the audit resolution report, the ETA Grant 
Officer shall review the report, the recipient's disposition, any 
liability waiver request, and any proposed ``stand-in'' costs. If the 
Grant Officer agrees with all aspects of the recipient's disposition of 
the audit, the Grant Officer shall so notify the recipient, constituting 
final agency action on the audit. If the Grant Officer disagrees with 
the recipient's conclusion on specific points in the audit, or if the 
recipient fails to submit its audit resolution report, the Grant Officer 
shall resolve the audit through the initial and final determination 
process described in Sec. 627.606 of this part. Normally, the Grant 
Officer's notification of agreement (a concurrence letter) or 
disagreement (an initial determination) with the recipient's audit 
resolution report will be provided within 180 days of the Grant 
Officer's receipt of the report.
    (c) Non-Federal audit resolution. (1) To ensure timely and 
appropriate resolution for audits of all subrecipients, including SDA 
grant recipients and title III SSG's, and to ensure recipient-wide 
consistency, the Governor shall prescribe standards for audit resolution 
and debt collection policies and procedures that shall be included in 
each job training plan in accordance with section 104(b)(12) of the Act.
    (2) The Governor shall prescribe an appeals procedure for audit 
resolution disputes which, at a minimum, provides for:
    (i) The period of time, not less than 15 days nor more than 30 days, 
after the issuance of the final determination in which an appeal may be 
filed;
    (ii) The rules of procedure;
    (iii) Timely submission of evidence;
    (iv) The timing of decisions; and
    (v) Further appeal rights, if any.



Sec. 627.485  Closeout.

    (a) General. The Grant Officer shall close out each annual JTPA 
grant agreement within a timely period after the funding period covered 
by the award has expired.
    (b) Revisions to the reported expenditures for a program year of 
funds may be made until 90 days after the time limitation for 
expenditure of JTPA funds, as set forth in section 161(b) of the Act, 
has expired. The Grant Officer may extend this deadline if the recipient 
submits a written request with justification. After that time, the Grant 
Officer shall consider all reports received as final and no additional 
revisions may be made.
    (c) When closing out a JTPA grant, the Grant Officer shall notify 
the recipient, by certified mail, that, since the time limitation for 
expenditure of funds covered by the grant award has expired, it is the 
Department of Labor's intent to close the annual grant as follows:
    (1) Cost adjustment. Based on receipt of reports in paragraph (b) of 
this section, the Grant Officer shall make upward or downward 
adjustments to the allowable costs; and
    (2) Cash adjustment. DOL shall make prompt payment to the recipient 
for allowable reimbursable costs; the recipient shall promptly refund to 
DOL any

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balance of cash advanced that is in excess of allowable costs for the 
grant award being closed.
    (d) The recipient shall have an additional 60 days after the date of 
the notice described in paragraph (c) of this section in which to 
provide the Grant Officer with information as to the reason(s) why 
closeout should not occur.
    (e) At the end of the 60-day period described in paragraph (d) of 
this section, the Grant Officer shall notify the recipient that closeout 
has occurred, unless information provided by the recipient, pursuant to 
paragraph (d) of this section, indicates otherwise.



Sec. 627.490  Later disallowances and adjustments after closeout.

    The closeout of a grant does not affect:
    (a) The Grant Officer's right to disallow costs and recover funds on 
the basis of a later audit or other review;
    (b) The recipient's obligation to return any funds due as a result 
of later refunds, corrections, subrecipient audit disallowances, or 
other transactions;
    (c) Records retention requirements in Sec. 627.460 of this part, 
Requirements for records, and Sec. 627.463 of this part, Public access 
to records;
    (d) Property management requirements in Sec. 627.465 of this part, 
Property management standards; and
    (e) Audit and audit resolution requirements in Sec. 627.480 of this 
part, Audits and Sec. 627.481 of this part, Audit resolution.



Sec. 627.495  Collection of amounts due.

    (a) Any funds paid to a recipient in excess of the amount to which 
the recipient is finally determined to be entitled under the terms of 
the grant constitute a debt to the Federal Government. If not paid 
within a reasonable period after demand, the Secretary may take any 
actions permitted by law to recover the funds.
    (b) The Secretary shall charge interest on an overdue debt in 
accordance with the Federal Claims Collection Standards (4 CFR ch. II).



      Subpart E_Grievances Procedures at the State and Local Level



Sec. 627.500  Scope and purpose.

    (a) General. This subpart establishes the procedures which apply to 
the handling of noncriminal complaints under the Act at the Governor, 
the SDA, and the SSG levels. Nothing contained in this subpart shall be 
deemed to prejudice the separate exercise of other legal rights in 
pursuit of remedies and sanctions available outside the Act.
    (b) Handling of discrimination complaints. Complaints of 
discrimination pursuant to section 167(a) of the Act shall be handled 
under 29 CFR part 34.
    (c) Complaints and reports of criminal fraud, waste, and abuse. 
Information and complaints involving criminal fraud, waste, abuse or 
other criminal activity shall be reported through the Department's 
Incident Reporting System, directly and immediately to the DOL Office of 
Inspector General, Office of Investigations, 200 Constitution Avenue 
NW., Room S5514, Washington, DC 20210, or to the corresponding Regional 
Inspector General for Investigations, with a copy simultaneously 
provided to the Employment and Training Administration. The Hotline 
number is 1-800-347-3756. Other complaints of a noncriminal nature will 
continue to be handled under the procedures set forth in this part, 
subparts E and F, and through the Department's Incident Reporting 
System.
    (d) Non-JTPA remedies. Whenever any person, organization, or agency 
believes that a recipient, an SDA, an SSG, or other subrecipient has 
engaged in conduct that violates the Act and that such conduct also 
violates a Federal statute other than JTPA, or a State or local law, 
that person, organization, or agency may, with respect to the non-JTPA 
cause of action, institute a civil action or pursue other remedies 
authorized under such other Federal, State, or local law against the 
recipient, the SDA, the SSG, or other subrecipient, without first 
exhausting the remedies in this subpart. Nothing in the Act or this 
chapter shall:
    (1) Allow any person or organization to file a suit which alleges a 
violation of JTPA or regulations promulgated

[[Page 223]]

thereunder without first exhausting the administrative remedies 
described in this subpart; or
    (2) Be construed to create a private right of action with respect to 
alleged violations of JTPA or the regulations promulgated thereunder.



Sec. 627.501  State grievance and hearing procedures for noncriminal 
complaints at the recipient level.

    (a)(1) Each recipient shall maintain a recipient-level grievance 
procedure and shall ensure the establishment of procedures at the SDA 
level and the SSG level for resolving any complaint alleging a violation 
of the Act, regulations promulgated thereunder, grants, or other 
agreements under the Act. The procedures shall include procedures for 
handling complaints and grievances arising in connection with JTPA 
programs operated by each SDA, SSG, and subrecipient under the Act 
(section 144(a)).
    (2) The procedures described in paragraph (a)(1) of this section 
shall also provide for resolution of complaints arising from actions 
taken by the recipient with respect to investigations or monitoring 
reports.
    (b) The recipient's grievance hearing procedure shall require 
written notice to interested parties of the date, time, and place of the 
hearing; an opportunity to present evidence; and a written decision. For 
matters under paragraph (a)(2) of this section, the notice of hearing 
shall indicate the nature of the violation(s) which the hearing covers.



Sec. 627.502  Grievance and hearing procedures for noncriminal 
complaints at the SDA and SSG levels.

    (a) Each SDA and SSG, pursuant to guidelines established by the 
recipient, shall establish procedures for resolving complaints and 
grievances arising in connection with JTPA programs operated by the SDA, 
the SSG, and other subrecipients under the Act. The procedures also 
shall provide for resolution of complaints arising from actions taken by 
the SDA or the SSG with respect to investigations or monitoring reports 
of their subgrantees, contractors, and other subrecipients (section 
144(a)).
    (b) Each SDA and SSG grievance hearing procedure shall include 
written notice of the date, time, and place of the hearing; an 
opportunity to present evidence; a written decision; and a notice of 
appeal rights.
    (c) The SDA and SSG procedures shall provide for a decision within 
60 days of the filing of the complaint.



Sec. 627.503  Recipient-level review.

    (a) If a complainant does not receive a decision at the SDA or the 
SSG level within 60 days of filing the complaint or receives a decision 
unsatisfactory to the complainant, the complainant shall have the right 
to request a review of the complaint by the recipient. The recipient 
shall issue a decision within 30 days of receipt of the complaint.
    (b) The recipient shall also provide for an independent review, by a 
reviewer who is independent of the JTPA program, of a complaint 
initially filed at the recipient level on which a decision was not 
issued within 60 days of receipt of a complaint or on which the 
complainant has received an adverse decision. A decision shall be made 
within 30 days of receipt by the recipient.
    (c) A request for review under the provisions of paragraphs (a) or 
(b) of this section shall be filed within 10 days of receipt of the 
adverse decision or, if no timely decision is rendered, within 15 days 
from the date on which the complainant should have received a timely 
decision.
    (d) With the exception of complaints alleging violations of the 
labor standards under section 143 of the Act, the recipient's decision 
is final unless the Secretary exercises the authority for Federal-level 
review in accordance with the provisions at Sec. 627.601 of this part, 
Complaints and grievances at the Federal level. Complaints alleging 
violations of section 143 of the Act shall be handled under the 
procedures set forth at Sec. 627.603 of this part, special handling of 
labor standards violations under section 143.



Sec. 627.504  Noncriminal grievance procedure at employer level.

    (a) Recipients, SDA's, SSG's, and other subrecipients shall assure 
that other employers, including private-for-

[[Page 224]]

profit employers of participants under the Act, have a grievance 
procedure relating to the terms and conditions of employment available 
to their participants (section 144(b)).
    (b)(1) Employers under paragraph (a) of this section may operate 
their own grievance system or may utilize the grievance system 
established by the recipient, the SDA, or the SSG under this subpart, 
except as provided for in paragraph (b)(2) of this section. Employers 
shall inform participants of the grievance procedures they are to follow 
when the participant begins employment.
    (2) If an employer is required to use a certain grievance procedure 
under a covered collective bargaining agreement, then those procedures 
should be followed for the handling of JTPA complaints under this 
section.
    (c) An employer grievance system shall provide for, upon request by 
the complainant, a review of an employer's decision by the SDA, or the 
SSG and the recipient if necessary, in accordance with Sec. Sec. 
627.501 and 627.502 of this part.



     Subpart F_Federal Handling of Noncriminal Complaints and Other 
                               Allegations



Sec. 627.600  Scope and purpose.

    (a) This subpart establishes the procedures which apply to the 
filing, handling, and reviewing of complaints at the Federal level. 
Nothing in the Act or this chapter shall be construed to allow any 
person or organization to join or sue the Secretary with respect to the 
Secretary's responsibilities under JTPA except after exhausting the 
remedies in subpart E of this part and this subpart F.
    (b) Complaints of discrimination pursuant to section 167(a) of the 
Act shall be handled under 29 CFR part 34.



Sec. 627.601  Complaints and allegations at the Federal level.

    (a) The types of complaints and allegations that may be received at 
the Federal level for review include:
    (1) Complaints for which the recipient has failed to issue a timely 
decision as required by Sec. 627.503 of this part;
    (2) Alleged violations of the Act and/or the regulations promulgated 
thereunder resulting from Federal, State, and/or SDA and SSG monitoring 
and oversight reviews;
    (3) Alleged violations of the labor standards provisions at section 
143 of the Act;
    (4) Alleged violations of the relocation provisions in section 
141(c) of the Act; and
    (5) Other allegations of violations of the Act or the regulations 
promulgated thereunder.
    (b) Upon receipt of a complaint or allegation alleging any of the 
violations listed in paragraph (a) of this section, the Secretary may:
    (1) Direct the recipient to handle a complaint through local 
grievance procedures established under Sec. 627.502 of this part; or
    (2) Investigate and determine whether the recipient or 
subrecipient(s) are in compliance with the Act and regulations 
promulgated thereunder (section 163(b) and (c)).
    (3) Allegations of violations of sections 141(c) or 143 of the Act 
and Sec. 627.503 of this part shall be handled under paragraph (b)(2) 
of this section.



Sec. 627.602  Resolution of investigative findings.

    (a)(1) As a result of an investigation or monitoring by the 
Department, or of the actions specified in paragraph (b)(2) of Sec. 
627.601 of this part, the Grant Officer shall notify the recipient of 
the findings of the investigation and shall give the recipient a period 
of time, not to exceed 60 days, depending on the nature of the findings, 
to comment and to take appropriate corrective actions.
    (2) The Grant Officer shall review the complete file of the 
investigation and the recipient's actions. The Grant Officer's review 
shall take into account the sanction provisions of subpart G of this 
part. If the Grant Officer agrees with the recipient's handling of the 
situation, the Grant Officer shall so notify the recipient. This 
notification shall constitute final agency action.
    (3) If the Grant Officer disagrees with the recipient's handling of 
the matter, the Grant Officer shall proceed pursuant to Sec. 627.606 of 
this part, Grant officer resolution.

[[Page 225]]



Sec. 627.603  Special handling of labor standards violations under 
section 143 of the Act.

    (a) A complaint alleging JTPA section 143 violations may be 
submitted to the Secretary by either party to the complaint when:
    (1) The complainant has exhausted the grievance procedures set forth 
at subpart E of this part, or
    (2) The 60-day time period specified for reaching a decision under a 
procedure set forth at subpart E of this part has elapsed without a 
decision (section 144(a) and (d)(1)).
    (b)(1) The Secretary shall investigate the allegations contained in 
a complaint alleging violations of JTPA section 143, make a 
determination whether a violation has occurred, and issue a decision 
within 120 days of receipt by the Secretary of the complaint (section 
144(c) and (d)).
    (2) If the results of the Secretary's investigation indicate that a 
decision by a recipient under a procedure set forth at subpart E of this 
part requires modification or reversal, or that the 60-day time period 
for decision under section 144(a) has elapsed, the Secretary shall 
modify, reverse, or issue such decision.
    (3) If the Secretary modifies or reverses a decision made under a 
procedure set forth at subpart E of this part, or issues a decision 
where the 60-day time period has elapsed without a decision, the 
Secretary shall offer an opportunity for a hearing, in accordance with 
the procedures under section 166 of the Act and subpart H of this part 
(sections 144(d)(2) and 166(a)).
    (4) If the Secretary upholds a recipient's decision, the 
determination is the final decision of the Secretary (section 
144(d)(3)). This decision is not appealable to the Office of 
Administrative Law Judges.
    (c) Except as provided in paragraph (d) of this section, remedies 
available under this section to a grievant for violations of section 143 
of the Act shall be limited to:
    (1) Suspension or termination of payments under the Act;
    (2) Prohibition of placement of a participant, for an appropriate 
period of time, in a program under the Act with an employer that has 
violated section 143 of the Act, as determined under section 144(d) or 
(e) of the Act; and/or
    (3) Appropriate equitable relief (other than back pay) (section 
144(f)(1)).
    (d) Available remedies for violations of section 143(a)(4), (b)(1), 
(b)(3), and (d) of the Act include the remedies listed in paragraph (c) 
of this section, and may include the following:
    (1) Reinstatement of the grievant to the position held prior to 
displacement;
    (2) Payment of lost wages and benefits; and/or
    (3) Reestablishment of other relevant terms, conditions, and 
privileges of employment.
    (e) Nothing in this section shall be construed to prohibit a 
grievant from pursuing a remedy authorized under another Federal, State, 
or local law for a violation of section 143 of the Act (section 144(g)).



Sec. 627.604  Alternative procedure for handling labor standards 
violations under section 143 of the Act--binding arbitration.

    (a) A person alleging a violation of section 143 of the Act, as an 
alternative to processing the grievance under a procedure described at 
section 144 of the Act, may submit the grievance to a binding 
arbitration procedure, if a collective bargaining agreement covering the 
parties to the grievance so provides (section 144(e)(1)).
    (b) A person electing to have her/his complaint on JTPA section 143 
labor standard violations processed under binding arbitration 
provisions--
    (1) Shall choose binding arbitration before, and in lieu of, 
initiating a complaint under other grievance procedures established 
pursuant to section 144 of the Act, and
    (2) May not elect binding arbitration for a complaint that 
previously has been or is subject to any other grievance procedure 
established under the Act.
    (c) Binding arbitration decisions under the provisions of section 
144(e) of the Act are not reviewable by the Secretary.
    (d) The remedies available to a grievant under binding arbitration 
are limited to those set forth at section 144(f)(1)(C) and (f)(2) of the 
Act (section 144(e)(2)).

[[Page 226]]

    (e) Nothing in this section shall be construed to prohibit a 
grievant from pursuing a remedy authorized under another Federal, State, 
or local law for a violation of section 143 of the Act (section 144(g)).



Sec. 627.605  Special Federal review of SDA- and SSG-level complaints 
without decision.

    (a) Should the recipient fail to provide a decision as required in 
Sec. 627.503 of this part, the complainant may then request from the 
Secretary a determination whether reasonable cause exists to believe 
that the Act or regulations promulgated thereunder have been violated.
    (b) The Secretary shall act within 90 days of receipt of a request 
made pursuant to paragraph (a) of this section. Where there is 
reasonable cause to believe the Act or regulations promulgated 
thereunder have been violated, the Secretary shall direct the recipient 
to issue a decision adjudicating the dispute pursuant to recipient and 
local procedures. The Secretary's action does not constitute final 
agency action and is not appealable under the Act (sections 166(a) and 
144(c)). If the recipient does not comply with the Secretary's order 
within 60 days, the Secretary may impose a sanction upon the recipient 
for failing to issue a decision.
    (c) A request pursuant to paragraph (a) of this section shall be 
filed no later than 15 days from the date on which the complainant 
should have received a decision as required in Sec. 627.503 of this 
part. The complaint shall contain the following:
    (1) The full name, telephone number (if any), and address (if any) 
of the person making the complaint;
    (2) The full name and address of the respondent against whom the 
complaint is made;
    (3) A clear and concise statement of the facts, including pertinent 
dates, constituting the alleged violation;
    (4) The provisions of the Act, regulations promulgated thereunder, 
grant, or other agreement under the Act believed to have been violated;
    (5) A statement disclosing whether proceedings involving the subject 
of the request have been commenced or concluded before any Federal, 
State, or local authority, and, if so, the date of such commencement or 
conclusion, the name and address of the authority, and the style of the 
case; and
    (6) A statement of the date the complaint was filed with the 
recipient, the date on which the recipient should have issued decision, 
and an attestation that no decision was issued.
    (d)(1) A request pursuant to paragraph (a) of this section will be 
considered to have been filed when the Secretary receives from the 
complainant a written statement sufficiently precise to evaluate the 
complaint and the grievance procedure used by the recipient, the SDA, or 
the SSG.
    (2) When an imprecise request is received within the 15-day period 
prescribed in paragraph (a) of this section, the Secretary may extend 
the period for submission.



Sec. 627.606  Grant Officer resolution.

    (a) When the Grant Officer is dissatisfied with the State's 
disposition of an audit, as specified in Sec. 627.481 of this part, or 
other resolution of violations (including those arising out of incident 
reports or compliance reviews), with the recipient's response to 
findings resulting from investigations pursuant to Sec. 627.503 of this 
part, or if the recipient fails to comply with the Secretary's decision 
pursuant to Sec. 627.605(b) of this part, the initial and final 
determination process shall be used to resolve the matter.
    (b) Initial determination. The Grant Officer shall make an initial 
determination on the findings for both those matters where there is 
agreement and those where there is disagreement with the recipient's 
resolution, including the allowability of questioned costs or 
activities. Such initial determination shall be based upon the 
requirements of the Act, regulations promulgated thereunder, grants, 
contracts, or other agreements under the Act.
    (c) Informal resolution. The Grant Officer shall not revoke a 
recipient's grant in whole or in part, nor institute corrective actions 
or sanctions, without first providing the recipient with an opportunity 
to present documentation or arguments to resolve informally those 
matters in controversy contained in the initial determination.

[[Page 227]]

The initial determination shall provide for an informal resolution 
period which shall be at least 60 days from issuance of the initial 
determination. If the matters are resolved informally, the Grant Officer 
shall issue a final determination pursuant to paragraph (d) of this 
section which notifies the parties in writing of the nature of the 
resolution and may close the file.
    (d) Grant Officer's final determination. (1) If the matter is not 
fully resolved informally, the Grant Officer shall provide each party 
with a written final determination by certified mail, return receipt 
requested. For audits of recipient-level entities and other recipients 
which receive JTPA funds directly from DOL, ordinarily the final 
determination will be issued not later than 180 days from the date that 
the OIG issues the final approved audit report to the Employment and 
Training Administration. For audits of subrecipients conducted by the 
OIG, ordinarily the final determination will be issued not later than 
360 days from the date the OIG issues the final approved audit report to 
ETA.
    (2) A final determination under this paragraph (d) shall:
    (i) Indicate that efforts to informally resolve matters contained in 
the initial determination have been unsuccessful;
    (ii) List those matters upon which the parties continue to disagree;
    (iii) List any modifications to the factual findings and conclusions 
set forth in the initial determination;
    (iv) Establish a debt, if appropriate;
    (v) Require corrective action when needed;
    (vi) Determine liability, method of restitution of funds and 
sanctions; and
    (vii) Offer an opportunity for a hearing in accordance with subpart 
H of this part.
    (3) Unless a hearing is requested, a final determination under this 
paragraph (d) constitutes final agency action and is not subject to 
further review.
    (e) Nothing in this section shall preclude the Grant Officer from 
issuing an initial determination and/or final determination directly to 
a subrecipient, in accordance with section 164(e)(3) of the Act. In such 
a case, the Grant Officer shall inform the recipient of such action.



Sec. 627.607  Grant Officer resolution of Governor's failure to promptly 
take action.

    (a) An allegation, whether arising from a complaint, from monitoring 
or other information available to the Department, that a Governor failed 
to promptly take remedial action of a substantial violation of the Act 
or the regulations under this Act, as required by Sec. 627.477 of this 
part, shall be promptly investigated by the Department.
    (b) The Grant Officer shall notify the Governor of the findings of 
the investigation or monitoring and shall give the Governor a period of 
time, not to exceed 30 days, to comment on the nature of the findings 
and to take appropriate corrective actions.
    (c) The Grant Officer shall review the complete file of the 
investigation, monitoring, and the Governor's actions.
    (d) If the Grant Officer determines that, (1) as a result financial 
and compliance audits or otherwise, the Governor determined that there 
was a substantial violation of a specific provision of the Act or the 
regulations under this Act, and corrective action had not been taken 
and, (2) the Grant Officer determines that the Governor has not taken 
the actions required by Sec. 627.477(a), the Grant Officer shall take 
such actions required by Sec. 627.477(a).
    (e) The Grant Officer's determination, unless a hearing is 
requested, constitutes final agency action and is not subject to further 
review. (Section 164(b)(3)).



              Subpart G_Sanctions for Violations of the Act



Sec. 627.700  Purpose and scope.

    This subpart describes the sanctions and appropriate corrective 
actions that may be imposed by the Secretary for violations of the Act, 
regulations promulgated thereunder, or grant terms and conditions 
(sections 106(j)(5), 164 (b), (d), (e), (f), (g), and (h)).

[[Page 228]]



Sec. 627.702  Sanctions and corrective actions.

    (a) Except for actions under sections 106(j), 164 (b) and (f), and 
167 of the Act and the funding restrictions specified at Sec. 627.423 
of this part, Funding restrictions for ``high-risk'' recipients and 
subrecipients, the Grant Officer shall utilize initial and final 
determination procedures outlined in Sec. 627.606, Grant Officer 
resolution, of this part to impose a sanction or corrective action.
    (b) To impose a sanction or corrective action regarding a violation 
of section 167 of the Act, the Department shall utilize the procedures 
of 29 CFR part 34.
    (c) To impose a sanction or corrective action for failure to meet 
performance standards, where the recipient has not acted as required at 
section 106(j)(4), the Grant Officer shall utilize the procedures set 
forth at Sec. 627.470 (d) and (f).
    (d) To impose a sanction or corrective action for noncompliance with 
the procurement standards provisions set forth at Sec. Sec. 627.420 and 
627.703 of this part, where the recipient has not acted, the Grant 
Officer may utilize the procedures set forth at section 164(b) of the 
Act.
    (e) To impose a sanction or corrective action for the Governor's 
failure to promptly take remedial action of a substantial violation as 
required by Sec. 627.477 of this part, the Grant Officer shall utilize 
the procedure set forth in Sec. 627.607 of this part.
    (f) The recipient shall be held responsible for all funds under its 
grant(s). The recipient shall hold subrecipients, including SDA's and 
SSG's, responsible for JTPA funds received through the grant, and may 
ultimately hold the units of local government which constitute the SDA 
or the SSG responsible for such funds.
    (g) Nothing in this section shall preclude the Grant Officer from 
imposing a sanction directly against a subrecipient, as authorized in 
section 164(e)(3) of the Act. In such a case, the Grant Officer shall 
inform the recipient of such action.



Sec. 627.703  Failure to comply with procurement provisions.

    (a) If, as part of the recipient's annual on-site monitoring of its 
SDA's/SSG's, the recipient determines that an SDA/SSG is not in 
compliance with the procurement requirements established in accordance 
with the provisions at section 164(a)(3) of the Act and Sec. 627.420, 
of this part, Procurement, and Sec. 627.422 of this part, Selection of 
service providers, the recipient shall:
    (1) Require corrective action to secure prompt compliance; and
    (2) Impose the sanctions provided for under the provisions at 
section 164(b) if the recipient finds that the SDA/SSG has failed to 
take timely corrective action under paragraph (a)(1) of this section 
(section 164(a) (4) and (5)).
    (b) An action by the recipient to impose a sanction against either 
an SDA or SSG, in accordance with this section, may be appealed to the 
Secretary under the same terms and conditions as the disapproval of the 
respective plan, or plan modification, as set forth at Sec. 628.426(e), 
Review and approval (section 164(b)(2)).
    (c) If, upon a determination under paragraph (a)(2) of this section 
to impose a sanction under section 164(b) of the Act, the recipient 
fails to promptly take the actions required under paragraph (a)(2) of 
this section, the Secretary shall take such actions against the 
recipient or the SDA/SSG as appropriate (section 164(b)(3)).



Sec. 627.704  Process for waiver of State liability.

    (a) A recipient may request a waiver of liability as described in 
section 164(e)(2) of the Act.
    (b)(1) When the debt for which a waiver of liability is desired was 
established in a non-Federal resolution, such requests shall be 
accompanied by a resolution report.
    (2) When the ETA Grant Officer is resolving the finding(s) for which 
a waiver of liability is desired, such request shall be made no later 
than the informal resolution period described in Sec. 627.606(c) of 
this part.
    (c) A waiver of the recipient's liability can only be considered by 
the Grant Officer when the misexpenditure of JTPA funds:

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    (1) Occurred at a subrecipient level;
    (2) Was not a violation of section 164(e)(1) of the Act, or did not 
constitute fraud; or
    (3) If fraud did exist, it was perpetrated against the recipient/
subrecipient; and:
    (i) The recipient/subrecipient discovered, investigated, reported, 
and prosecuted the perpetrator of said fraud; and
    (ii) After aggressive debt collection action, it can be documented 
that there is no likelihood of collection from the perpetrator of the 
fraud.
    (4) The recipient has issued a final determination which disallows 
the misexpenditure, the recipient's appeal process has been exhausted, 
and a debt has been established; and
    (5) The recipient requests such a waiver and provides documentation 
to demonstrate that it has substantially complied with the requirements 
of section 164(e)(2)(A), (B), (C), and (D) of the Act.
    (d) The recipient shall not be released from liability for misspent 
funds under the determination required by section 164(e) of the Act 
unless the Grant Officer determines that further collection action, 
either by the recipient or subrecipient, would be inappropriate or would 
prove futile.



Sec. 627.706  Process for advance approval of a recipient's contemplated 
corrective actions.

    (a) The recipient may request advance approval from the Grant 
Officer for contemplated corrective actions, including debt collection 
actions, which the recipient plans to initiate or to forego. The 
recipient's request shall include a description and an assessment of all 
actions taken by the subrecipient to collect the misspent funds.
    (b) Based on the recipient's request, the Grant Officer may 
determine that the recipient may forego certain collection actions 
against a subrecipient where:
    (1) The subrecipient was not at fault with respect to the liability 
criteria set forth in section 164(e)(2)(A), (B), (C), and (D) of the 
Act;
    (2) The misexpenditure of funds:
    (i) Was not made by that subrecipient but by an entity that received 
JTPA funds from that subrecipient;
    (ii) Was not a violation of section 164(e)(1) of the Act, or did not 
constitute fraud; or
    (iii) If fraud did exist, it was perpetrated against the 
subrecipient, and:
    (A) The subrecipient discovered, investigated, reported, and 
prosecuted the perpetrator of said fraud; and
    (B) After aggressive debt collection action, it can be documented 
that there is no likelihood of collection from the perpetrator of the 
fraud.
    (3) A final determination which disallows the misexpenditure and 
establishes a debt has been issued at the appropriate level;
    (4) Final action within the recipient's appeal system has been 
completed; and
    (5) Further debt collection action by that subrecipient or the 
recipient would be either inappropriate or futile.



Sec. 627.708  Offset process.

    (a) In accordance with section 164(d) of the Act, the primary 
sanction for misexpenditure of JTPA funds is repayment.
    (b) A recipient may request that a debt, or a portion thereof, be 
offset against amounts allotted to the recipient, and retained at the 
recipient level for administrative costs, under the current or a future 
JTPA entitlement.
    (1) For title II grants, any offset shall be applied against the 
recipient level 5 percent administrative cost set-aside only and may not 
be distributed by the recipient among its subrecipients.
    (2) For title III grants, any such offset must be applied against 
that portion of funds reserved by the recipient for recipient level 
administration only and may not be distributed by the recipient among 
its subrecipients.
    (c) The Grant Officer may approve an offset request, under section 
164(d) of the Act, if the misexpenditures were not in violation of 
section 164(e)(1) of the Act.
    (d) If offset is granted, the debt shall not be fully satisfied 
until the Grant Officer reduces amounts allotted to the State by the 
amount of the misexpenditure.
    (e) The recipient shall not have the authority to reduce allocations 
to an

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SDA or SSG for misexpenditure of JTPA funds under section 164(d) of the 
Act.



      Subpart H_Hearings by the Office of Administrative Law Judges



Sec. 627.800  Scope and purpose.

    (a) The jurisdiction of the Office of the Administrative Law Judges 
(OALJ) extends only to those complainants identified in sections 141(c), 
144(d), 164(f), and 166(a) of the Act.
    (b) Actions arising under section 167 of the Act shall be handled 
under 29 CFR part 34.
    (c) All other disputes arising under the Act shall be adjudicated 
under the appropriate recipient or subrecipient grievance procedures or 
other applicable law.



Sec. 627.801  Procedures for filing request for hearing.

    (a) Within 21 days of receipt of a final determination imposing a 
sanction or corrective action or denying financial assistance, the 
applicant, the recipient, the SDA, the SSG, or other subrecipient, or a 
vendor against which the Grant Officer has imposed a sanction or 
corrective action may appeal the Grant Officer's determination to the 
OALJ. A request for a hearing shall be transmitted by certified mail, 
return receipt requested, to the Chief Administrative Law Judge, U.S. 
Department of Labor, 800 K Street, NW., Suite 400, Washington, DC 20001, 
with one copy to the departmental official who issued the determination.
    (b) The 21-day filing requirement in paragraph (a) of this section 
is jurisdictional. Failure to timely request a hearing acts as a waiver 
of the right to hearing.
    (c) A request for a hearing under this section shall state 
specifically those issues of the final determination upon which review 
is requested. Those provisions of the final determination not specified 
for review, or the entire final determination when no hearing has been 
requested within the 21 days, shall be considered resolved and not 
subject to further review. Only alleged violations of the Act, 
regulations promulgated thereunder, grant or other agreement under the 
Act fairly raised in the determination and the request for hearing are 
subject to review.
    (d) The procedures set forth in this subpart apply in the case of a 
complainant who has not had a dispute adjudicated under the alternative 
dispute resolution process set forth in Sec. 627.805 of this part 
within 60 days, except that the request for hearing before the OALJ must 
be filed within 15 days of the conclusion of the 60-day period. In 
addition to including the final determination upon which review is 
requested, the complainant shall include a copy of any Stipulation of 
Facts and a brief summary of proceedings.



Sec. 627.802  Rules of procedure.

    (a) The rules of practice and procedure promulgated by the OALJ, at 
subpart A of 29 CFR part 18, shall govern the conduct of hearings under 
this section, except that a request for hearing under this section shall 
not be considered a complaint to which the filing of an answer by DOL or 
a DOL agency or official is required. Technical rules of evidence shall 
not apply to hearings conducted pursuant to this part; however, rules or 
principles designed to assure production of the most credible evidence 
available and to subject testimony to cross-examination shall apply.
    (b) Prehearing procedures. In all cases, the ALJ should encourage 
the use of prehearing procedures to simplify and to clarify facts and 
issues.
    (c) Subpoenas. Subpoenas necessary to secure the attendance of 
witnesses and the production of documents or things at hearings shall be 
obtained from the ALJ and shall be issued pursuant to the authority 
contained in section 163(b) of the Act, incorporating 15 U.S.C. 49.
    (d) Timely submission of evidence. The ALJ shall not permit the 
introduction at the hearing of any documentation if such documentation 
has not been made available for review by the other parties to the 
proceeding either at the time ordered for any prehearing conference, or, 
in the absence of such an order, at least 3 weeks prior to the hearing 
date.
    (e) Burden of production. The Grant Officer shall have the burden of 
production to support her or his decision. To

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this end, the Grant Officer shall prepare and file an administrative 
file in support of the decision which shall be made part of the record. 
Thereafter, the party or parties seeking to overturn the Grant Officer's 
decision shall have the burden of persuasion.



Sec. 627.803  Relief.

    In ordering relief, the ALJ shall have the full authority of the 
Secretary under section 164 of the Act.



Sec. 627.804  Timing of decisions.

    The ALJ should render a written decision not later than 90 days 
after the closing of the record.



Sec. 627.805  Alternative dispute resolution.

    (a) Parties to a complaint under Sec. 627.801 of this part, 
Procedures for filing a request for hearing, may choose to waive their 
rights to an administrative hearing before the OALJ by choosing to 
transfer the settlement of their dispute to an individual acceptable to 
all parties for the purpose of conducting an informal review of the 
stipulated facts and rendering a decision in accordance with applicable 
law. A written decision will be issued within 60 days after the matter 
is submitted for informal review.
    (b) The waiver of the right to request a hearing before the OALJ may 
be revoked if a settlement has not been reached or a decision has not 
been issued within the 60 days provided in paragraph (a) of this 
section.
    (c) The decision rendered under this informal review process shall 
be treated as a final decision of an Administrative Law Judge pursuant 
to section 166(b) of the Act.



Sec. 627.806  Other authority.

    Nothing contained in this subpart shall be deemed to prejudice the 
separate exercise of other legal rights in pursuit of remedies and 
sanctions available outside the Act.



                     Subpart I_Transition Provisions



Sec. 627.900  Scope and purpose.

    (a) Regulations set forth at parts 626, 627, 628, 629, 630, 631, and 
637 of 20 CFR chapter V (1993) were amended, effective December 29, 
1992, and were published as an interim final rule to provide planning 
guidance for States and SDA's on the changes made to the JTPA program as 
a result of the 1992 JTPA amendments (See 57 FR 62004 (December 29, 
1992)). The transition provisions of the regulations were amended on 
June 3, 1992 (see 58 FR 31472, June 3, 1993). Those regulations and the 
statutory amendments were effective for the program year beginning July 
1, 1993 (PY 1993), and succeeding program years. For PY 1992, JTPA 
programs and activities shall continue under the regulations set forth 
at 20 CFR parts 626, 627, 628, 629, 630, 631, and 637 (1992).
    (b) In order to provide for the orderly transition to and 
implementation of the provisions of JTPA, as amended by the 1992 
amendments, this subpart I applies to the use of JTPA title II and title 
III funds allotted by formula to the States. Additional guidance on 
transition matters may be provided in administrative issuances. The 
provisions in this subpart are operational during the transition period 
for implementing the 1992 JTPA amendments.



Sec. 627.901  Transition period.

    The transition period ended June 30, 1993 unless otherwise stated. 
The intent of the transition period is to complete, to the extent 
possible, activity begun on or before June 30, 1993 under current policy 
and regulations and to ensure that all requirements mandated by the 1992 
JTPA amendments have been implemented.



Sec. 627.902  Governor's actions.

    The following are actions required to be taken prior to July 1, 
1993:
    (a) Review current policies, practices, procedures, and delivery 
systems to ensure that they conform to the requirements of the 
amendments;
    (b) Modify the Governor's coordination and special services plan in 
accordance with instructions issued by the Secretary;
    (c) Ensure that SDAs modify job training plans as necessary;
    (d) Execute a new Governor/Secretary agreement and a new grant 
agreement;

[[Page 232]]

    (e) Issue procurement standards that comply with the Act and these 
regulations, as described in Sec. 627.420 of this part, Procurement;
    (f) Issue instructions necessary to implement program year 1993 cost 
categories pursuant to Sec. 627.440 of this part, Classification of 
costs;
    (g) Issue instructions necessary for SDAs to report program 
expenditures by year of appropriation pursuant to Sec. 627.455 of this 
part, Reports required;
    (h) Certify private industry councils pursuant to Sec. 628.410 of 
this chapter, Private Industry Council.



Sec. 627.903  Actions which are at the discretion of the Governor.

    (a) Establish a State Human Resource Investment Council (HRIC);
    (b) Issue instructions to ``grandparent'' participants in JTPA 
programs as of June 30, 1993 for purposes of completing training;
    (c) Issue instructions for use of PY 1992 and prior year 6 percent 
performance standards incentive funds to further develop and implement 
data collection and management information systems to track the program 
experience of participants. PY 1993 and subsequent performance standards 
incentive funds may not to be used for this purpose;
    (d) Of the Title II and Title III unobligated balance of funds 
available as of June 30, 1993, any amount may be reprogrammed into PY 
1993 activity. The Department believes these amounts will be minimal and 
not represent a significant proportion of the funds available. Such 
reprogrammed funds will be subject to requirements contained in JTPA 
regulations effective July 1, 1993.



Sec. 627.904  Transition and implementation.

    (a) Review. The Governor shall conduct a comprehensive review of the 
current policies, procedures, and delivery systems relating to programs 
authorized under the Job Training Partnership Act for the purpose of 
ensuring the effective implementation of the amendments. Such a review 
shall include consideration of the appropriateness of current SDA 
designations, the representation on current State and local councils, 
the adequacy of current administrative systems, the effectiveness of 
current outreach, service delivery, and coordination activities, and 
other relevant matters.
    (b) Governor's Coordination and Special Services Plan (GCSSP). The 
GCSSP requires modification to assure conformance to the requirements of 
the amendments. The plan was to be modified pursuant to instructions 
issued by the Secretary and shall be submitted to the Secretary for 
review by May 15, 1993.
    (c) Job training plans. Service delivery area job training plans 
will require modification to comply with Sec. 628.420 of this chapter, 
Job training plan.
    (d) Governor/Secretary agreement and grant agreement. A new 
Governor/Secretary agreement is required to assure that the State shall 
comply with JTPA, as amended, and the applicable rules and regulations; 
the Wagner-Peyser Act, as amended, and the applicable rules and 
regulations. A new grant agreement is needed to provide the basis for 
Federal obligation of funds for programs authorized by Titles I, II, and 
III, and such other funds as the Secretary may award under the grant.
    (e) Procurement standards. In order to ensure fiscal accountability 
and prevent waste, fraud, and abuse in programs administered under JTPA, 
as amended, the Governor shall prescribe and implement procurement 
standards meeting the requirements of Sec. 627.420 of this part, 
Procurement. All procurements initiated on or after July 1, 1993 shall 
be governed by and follow the requirements in Sec. 627.420 of this 
part. Initiation of procurement means any sole source or small purchase 
awarded on or after July 1, 1993 and any Invitation for Bid or Request 
for Proposal issued on or after July 1, 1993.
    (f) Participants. In order to have the least possible disruption to 
program participants, during PY 1993, Governors and SDAs have the 
flexibility to grandfather participants already enrolled in JTPA 
programs up to and including June 30, 1993 under existing rules and 
regulations. All participants in programs on June 30, 1993, will be 
eligible for transfer to programs operated under the new provisions at 
any time

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beginning on July 1, 1993. ``Hard to serve'' barriers to participation, 
assessment and Individual Service Strategy provisions of the amendments 
will not apply to participants enrolled prior to July 1, 1993 or to 1993 
Title II-B participants.
    (g) Cost categories. (1) Cost categories applicable to PY 1992 and 
earlier funds will be subject to prior regulations either until the 
funds have been exhausted or program activity has been completed. In 
order to assist the orderly transition to and implementation of the new 
requirements of the 1992 JTPA amendments, an increase is allowed in the 
administrative cost limitation for PY 1992 funds from 15 percent to 20 
percent, with a corresponding adjustment to cost limitations for 
training and participant support. Specifically, not less than 80 percent 
of the title II-A funds shall be expended for training and participant 
support, and not less than 65 percent shall be expended for training.
    (2) Any prior year's carryover funds made available for use in PY 
1993 will be subject to the reporting requirements and cost categories 
applicable to PY 1993 funds.
    (3) In determining compliance with the JTPA cost limitations for PY 
1992, Governors may either:
    (i) Determine cost limitation compliance separately for funds 
expended in accordance with paragraphs (g)(1) and (g)(2) of this 
section; or
    (ii) Determine compliance for each cost category against the total 
PY 1992 funds, whether expended in accordance with the Act and 
regulations in effect prior to the 1992 amendments to JTPA or in 
accordance with the amended Act and these regulations. Using this 
option, the total combined funds expended for training and direct 
training should be at least 65 percent of PY 1992 SDA allocations.
    (4) In addition to the institutions specified in Sec. 
627.440(d)(1)(vi)(B), the costs of tuition and entrance fees of a 
postsecondary vocational institution specified at section 481(c) of the 
Higher Education Act (20 U.S.C. 1088(c)) may be charged to direct 
training services through June 30, 1995, when such tuition charges or 
entrance fees are not more than the educational institution's catalog 
price, are necessary to receive specific training, are charged to the 
general public to receive such training, and are for the training of 
participants.
    (h) Financial reporting. Notwithstanding reprogramming, expenditures 
must be recorded separately by year of appropriation.
    (i) Private Industry Council. The private industry councils shall be 
certified pursuant to Sec. 628.410 of this chapter, Private Industry 
Council.
    (j) Grievances, investigations, and hearings. Generally, all 
grievances, investigations and hearings pending on or before June 30, 
1993 should be resolved and settled under prior rules and procedures. 
Grievances, investigations, and hearings occurring on or after July 1, 
1993 will be governed by the procedures described in subparts E, F, and 
H of this part 627.
    (k) Summer program. (1) The Title II-B Summer Youth Employment 
Program for 1993 shall be governed by the Act and regulations in effect 
prior to the Amendments (prior to September 7, 1992).
    (2) Up to 10 percent of the 1993 title II-B funds available may be 
transferred to the title II-C program.
    (l) SDA designation. At the Governor's discretion, SDA's designated 
prior to July 1, 1992 need not be subject to the provisions of Sec. 
628.405, Service delivery areas.
    (m) Program implementation. The implementation by the States and 
SDA's of certain new program design requirements, particularly objective 
assessment and development of individual service strategies (ISS), may 
require additional time to fully implement beyond July 1, 1993. 
Reasonable efforts to implement the provisions of Sec. Sec. 628.515, 
628.520, and 628.530. as soon as possible after July 1, 1993, are 
expected to be made. However, it is not expected that every new 
participant will initially receive objective assessment, ISS, and 
referral to non-title II services for a period of 6 months, or until 
January 1, 1994.
    (n) Out-of-school youth ratio. The 50-percent out-of-school 
participants requirement for title II-C will be phased in during PY 1993 
and will not be the subject of compliance review until PY

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1994, beginning July 1, 1994. During PY 1993, however, SDA's must show 
significant improvement in the proportion of out-of-school youth being 
served and performance in increasing the service ratio will be monitored 
by the States and DOL during this implementation period.
    (o) Administrative issuances. Other implementation issues may be 
handled by administrative issuance. ETA will transmit such guidance 
directly to all Governors via a Training and Employment Guidance Letter 
(TEGL). Such TEGL's will be published as Notices in the Federal Register 
(section 701(i)).



Sec. 627.905  Guidance on contracts and other agreements.

    The Department does not intend for contracts, agreements, inter-
agency agreements, retainers, and similar arrangements to be negotiated 
and/or entered into for the sole purpose of applying previously existing 
rules and regulations. The 1992 JTPA amendments were effective July 1, 
1993. The Department intends that contracts, awards and agreements 
entered into on or before June 30, 1993 are to be used to serve and/or 
train participants enrolled on or before June 30, 1993, unless the 
contracts and agreements are modified to comply with the new amendments 
and regulations.



Sec. 627.906  Determinations on State and SDA implementation.

    (a) The Department expects that the States and SDA's will fully 
implement the provisions of the Act and these regulations regarding 
procurement, cost principles, cost categories, cost limitations, 
participant service requirements and eligibility beginning July 1, 1993.
    (b) The Department expects that the implementation by the States and 
SDA's of the program design features in these regulations, particularly 
objective assessment and development of the ISS, may require additional 
time beyond July 1, 1993 to fully implement.
    (c) In deciding to allow or disallow questioned costs related to the 
implementation of the provisions described in paragraph (b) of this 
section, the Grant Officer will consider the extent to which the State's 
and SDA's have made good faith efforts in properly implementing such 
provisions in the period July 1, 1993 through June 30, 1994.



PART 628_PROGRAMS UNDER TITLE II OF THE JOB TRAINING PARTNERSHIP ACT
--Table of Contents




                       Subpart A_Scope and Purpose

Sec.
628.100 Scope and purpose of part 628.

                        Subpart B_State Planning

628.200 Scope and purpose.
628.205 Governor's coordination and special services plan.
628.210 State Job Training Coordinating Council.
628.215 State Human Resource Investment Council.

                        Subpart C_State Programs

628.300 Scope and purpose.
628.305 State distribution of funds.
628.310 Administration.
628.315 Education coordination and grants.
628.320 Services for older individuals.
628.325 Incentive grants, capacity building and technical assistance.

                 Subpart D_Local Service Delivery System

628.400 Scope and purpose.
628.405 Service delivery areas.
628.410 Private Industry Council.
628.415 Selection of SDA grant recipient and administrative entity.
628.420 Job training plan.
628.425 Review and approval.
628.426 Disapproval or revocation of the plan.
628.430 State SDA submission.

Subpart E_Program Design Requirements for Programs Under Title II of the 
                      Job Training Partnership Act

628.500 Scope and purpose.
628.505 Eligibility.
628.510 Intake, referrals, and targeting.
628.515 Objective assessment.
628.520 Individual service strategy.
628.525 Limitations.
628.530 Referrals of participants to non-title II programs.
628.535 Limitations on job search assistance.
628.540 Volunteer program.
628.545 Linkages and coordination.
628.550 Transfer of funds.

                       Subpart F_The Adult Program

628.600 Scope and purpose.
628.605 Eligibility.

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628.610 Authorized services.

       Subpart G_The Summer Youth Employment and Training Program

628.700 Scope and purpose.
628.701 Program goals and objectives.
628.702 Eligibility.
628.705 SYETP authorized services.
628.710 Period of program operation.

                    Subpart H_Youth Training Program

628.800 Scope and purpose.
628.803 Eligibility.
628.804 Authorized services.

    Authority: 29 U.S.C. 1579(a).

    Source: 59 FR 45845, Sept. 2, 1994, unless otherwise noted.



                       Subpart A_Scope and Purpose



Sec. 628.100  Scope and purpose of part 628.

    (a) This part sets forth requirements for implementation of programs 
under title II of the Job Training Partnership Act, and includes the 
councils described in subpart B that have responsibilities under titles 
I, II, and III. In this part, the provisions generally pertaining to 
title II are covered in subparts B, C, D, and E. Matters specific to 
titles IIA, II-B, or II-C are addressed in subparts F, G, or H, 
respectively.
    (b) Title II-A Adult Training programs are to prepare adults for 
participation in the labor force by providing job training and other 
services that will result in increased employment and earnings, 
increased occupational and educational skills, reduced welfare 
dependency, and result in improved long-term employability.
    (c) Title II-B Summer Youth Employment and Training programs are to 
provide eligible youth with exposure to the world of work, to enhance 
the basic education skills of youth, to encourage school completion or 
enrollment in supplemental or alternative school programs and to enhance 
the citizenship skills of youth.
    (d) Title II-C Youth Training programs are to improve the long-term 
employability of youth; to enhance the educational, occupational and 
citizenship skills of youth; to encourage school completion or 
enrollment in alternative school programs; to increase the employment 
and earnings of youth; to reduce welfare dependency; and to assist youth 
in addressing problems that impair their ability to make successful 
transition from school to work, to apprenticeship, to the military or to 
postsecondary education and training.



                        Subpart B_State Planning



Sec. 628.200  Scope and purpose.

    This subpart provides requirements for the submission of the 
Governor's Coordination and Special Services Plan, as well as the 
procedures for plan review. This subpart also contains requirements for 
the composition and responsibilities of the State Job Training 
Coordinating Council and the State Human Resource Investment Council.



Sec. 628.205  Governor's coordination and special services plan.

    (a)(1) Submittal. By a date established by the Secretary, each State 
seeking financial assistance under the Act shall submit to the 
Secretary, biennially, the Governor's coordination and special services 
plan (GCSSP) encompassing two program years (section 121(a)).
    (2) The GCSSP shall address the requirements of section 121(b) of 
the Act, including a description of the Governor's coordination 
criteria; the measures taken by the State to ensure coordination and 
prevent duplication with the Job Opportunities and Basic Skills (JOBS) 
program; the certification of the implementation of the procurement 
system, as required at section 164(a)(6) of the Act; the technical 
assistance and training plan; goals, and the efforts to accomplish such 
goals, for the training and placement of women in nontraditional 
employment and apprenticeship; the projected use of resources, including 
oversight of program performance; program administration; program 
financial management and audit resolution procedures; capacity building; 
priorities and criteria for State incentive grants; and performance 
goals for State supported programs (section 121(b)).
    (b) GCSSP review. The Secretary shall review the GCSSP for overall 
compliance with the provisions of the Act. If the GCSSP is disapproved, 
the Secretary shall notify the Governor, in

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writing, within 45 days of submission of the reasons for disapproval so 
that the Governor may modify the plan to bring it into compliance with 
the Act (section 121(d)).
    (c) Information to SDA's. (1) In the year preceding the program 
years for which the plan is developed, the State shall make available to 
the SDA's in the State information on its plans to undertake State 
activities in program areas including education coordination grants, 
services to older workers, and capacity building.
    (2) The information described in paragraph (c)(1) of this section 
shall be provided to SDA's in sufficient time for SDA's to take it into 
consideration in developing local job training plans.



Sec. 628.210  State Job Training Coordinating Council.

    (a) The Governor shall appoint a State Job Training Coordinating 
Council (SJTCC) pursuant to section 122 of the Act. In lieu of a SJTCC, 
the Governor may establish and utilize a State Human Resource Investment 
Council (HRIC) pursuant to section 701 of the Act and in accordance with 
Sec. 628.215 of this part.
    (b) Consistent with section 122(a)(3) of the Act, the SJTCC shall be 
composed as follows: 30 percent, business and industry representatives; 
30 percent, State and local government and local education agency 
representatives; 30 percent, organized labor and community-based 
organization representatives; and 10 percent, representatives from the 
general public. The SJTCC shall have the specific functions and 
responsibilities outlined in sections 122, 317, and 501 of the Act.
    (c) Funding for the SJTCC shall be provided pursuant to sections 
202(c)(1)(A) and 262(c)(1)(A) of the Act.
    (d) The SJTCC shall:
    (1) Analyze the SDAs' reports made pursuant to section 104(b)(13) of 
the Act and make recommendations for technical assistance and corrective 
action, and
    (2) Prepare a summary of such reports and disseminate them to SDA's 
and service providers in the State and to the Secretary (section 
122(a)(5) and (6)).



Sec. 628.215  State Human Resource Investment Council.

    (a) Establishment and responsibilities. The State may, in accordance 
with sections 701, 702, and 703 of the Act, establish a State Human 
Resource Investment Council (HRIC). The HRIC's responsibilities are 
described at section 701(a) of the Act. The HRIC shall carry out the 
following responsibilities:
    (1) Review the provision of services and the use of funds and 
resources under applicable Federal human resource programs and advise 
the Governor on methods of coordinating such provision of services and 
use of funds and resources consistent with the laws and regulations 
governing such programs;
    (2) Advise the Governor on the development and implementation of 
State and local standards and measures relating to applicable Federal 
human resource programs and coordination of such standards and measures; 
and
    (3) Carry out the duties and functions prescribed for existing State 
councils described under the laws relating to the applicable Federal 
human resource programs, including the responsibilities of the State 
Council on Vocational Education (SCOVE) under Section 112 of the Carl D. 
Perkins Vocational and Applied Technology Education Act.
    (4) Perform other functions as specified by the Governor (section 
701).
    (b) Applicable Programs. For the purposes of this section, the 
programs included are those listed at section 701(b)(2) of the Act. A 
program shall be included only if the Governor and the head of the State 
agency responsible for the administration of the program jointly agree 
to include such program. In addition, programs under the Carl Perkins 
Vocational and Applied Technology Act shall require the agreement of the 
State council on vocational education (section 701(b)(1)(B)).
    (c) Composition. (1) The Governor shall establish procedures to 
ensure appropriate representation on the HRIC from among the categories 
of representation specified in section 702 of the Act.
    (2) In addition, when the functions and responsibilities of the 
SCOVE are included on the HRIC, the Governor is

[[Page 237]]

encouraged to consider appointing the State Director for Vocational 
Education as a representative on the HRIC.
    (d) Funding. (1) Funding to carry out the functions of the HRIC 
shall be available pursuant to section 703(a) of the Act.
    (i) The costs associated with the operation of the HRIC should be 
allocated among the various funding sources based on the relationship of 
each funding source or program to total spending of all applicable 
funding sources and programs (section 703(d)).
    (ii) Costs of the HRIC that are in excess of costs paid by funds 
from participating State agencies are, subject to the availability of 
funds from applicable JTPA sources, allowable JTPA costs (section 703(a) 
and (d)).
    (2) A HRIC which meets the requirements of title VII and includes 
each of the programs listed at section 701(b)(2)(A) of the Act shall be 
authorized to use JTPA State Education Coordination and Grants funds 
(section 123(a)(2)(D)(ii)).
    (e) Replacement of other councils. A HRIC meeting the requirements 
of title VII of the Act shall replace the councils of the participating 
programs listed at section 701(b)(2)(A) of the Act.
    (f) Expertise. The Governor shall ensure that in the composition of 
the HRIC and the staff of the HRIC there exists the proper expertise to 
carry out the functions of the HRIC and the council(s) it replaces 
(sections 702(c)(2) and 703(b)).
    (g) Certification. Each State, as part of the certification process 
to the Secretary, shall ensure that the council meets the requirements 
of sections 701, 702, and 703. This certification shall be made in 
writing and submitted to the Secretary, with a copy provided to the 
Secretary of Education, at least 90 days before the beginning of each 
period of 2 program years for which a job training plan is submitted 
under the Act.



                        Subpart C_State Programs



Sec. 628.300  Scope and purpose.

    This subpart provides requirements for the State-operated programs 
including the education coordination and grants, services to older 
workers, and incentive grants to SDA's and grants to SDA's for capacity 
building and technical assistance.



Sec. 628.305  State distribution of funds.

    (a) The funds made available to the Governor under sections 202(c) 
and 262(c) of the Act shall be used to carry out activities and services 
under this subpart.



Sec. 628.310  Administration.

    Funds provided to the Governor under sections 202(c)(1)(A) and 
262(c)(1)(A) of the Act may be used for overall administration, 
management, oversight of program performance; technical assistance to 
SDA's failing to meet performance standards, as described in section 
106(j)(1) of the Act; auditing; and activities under sections 121 and 
122 of the Act.



Sec. 628.315  Education coordination and grants.

    (a) Governor's responsibilities. The Governor shall allocate funds 
available pursuant to sections 202(c)(1)(C) and 262(c)(1)(C) of the Act 
to any State education agency. For the purposes of this section, ``State 
education agency'' shall not include the State agency which administers 
the JTPA program within the State or other agencies which do not have 
education as a primary and operational function, such as correctional 
agencies, although this limitation shall not preclude such an agency 
from being an ultimate subrecipient of funds (section 123(a)(1)).
    (b) Agreements. (1) The State education agency to be allocated funds 
under section 123(a)(1) of the Act shall participate in joint planning 
activities with the Governor in order to develop a plan which shall be 
submitted in the GCSSP (section 123(c)).
    (2) The Governor and the State education agency shall jointly agree 
on the plan required in paragraph (b)(1) of this section, which shall 
include a description of the agreements described in paragraph (b)(3) of 
this section (section 123(c)).
    (3) Projects to undertake the activities set forth in section 
123(a)(2) shall be conducted in accordance with agreements between the 
State education agency(ies) and administrative entities

[[Page 238]]

in service delivery areas in the State. The agreements may include other 
entities such as State agencies, local education agencies and 
alternative service providers (section 123(b)(1)(B)).
    (4)(i) When there is a failure by the State education agency and the 
Governor to develop the joint plan described in paragraph (b)(2) of this 
section, the Governor shall not allocate funds under section 123(a)(1) 
to such education agency nor shall such funds be available for 
expenditure by the Governor (section 123(c)).
    (ii) When no State education agency accepts the allocation of funds 
under section 123(a)(1), or when there is a failure to reach the 
agreement(s) specified in paragraph (b)(3) of this section, the funds 
may only be used by the Governor pursuant to section 123(e) and in 
accordance with the GCSSP (section 123(e)).
    (c) Allowable activities. (1) Funds made available for education 
coordination and grants under section 123 of the Act shall be used to 
pay the Federal share of education coordination and grants projects 
(section 123(a)(2)).
    (2) Projects, as defined at section 123(a)(2)(A), (B), and (C) of 
the Act shall be conducted for eligible individuals and should include 
those which:
    (i) Provide school-to-work services of demonstrated effectiveness, 
including youth apprenticeship programs;
    (ii) Provide literacy and lifelong learning opportunities and 
services of demonstrated effectiveness, including basic education and 
occupational skills training; and
    (iii) Provide statewide coordinated approaches to education and 
training services, including model programs, designed to train, place, 
and retain women in nontraditional employment (section 123(a)).
    (3) Projects for coordination of education and training may also be 
conducted which may include support activities pertaining to the HRIC 
which meets the requirements of title VII.
    (d) Expenditure requirements. (1)(i) At least 80 percent of the 
funds allocated under section 202(c)(1)(C) and section 262(c)(1)(C) of 
the Act shall be expended to pay for the Federal share of projects 
described in paragraph (c)(2) of this section (section 123(d)(2)(B)).
    (ii) The Governor shall assure that not less than 75 percent of the 
funds expended for such projects are expended for projects for eligible 
economically disadvantaged participants who experience barriers to 
employment. For purposes of meeting this requirement, participants 
meeting the conditions of section 263(a)(2)(B) and (C) and (g) of the 
Act may be considered economically disadvantaged (section 123(d)(2)(C)).
    (iii) Priority for funds not expended for the economically 
disadvantaged shall be given to title III participants and persons with 
barriers to employment.
    (iv) The Governor may assure compliance with the requirement to 
serve participants with barriers to employment by targeting projects to 
particular barrier groups (e.g., school dropouts).
    (2) Not more than 20 percent of funds allocated under section 
202(c)(1)(C) of the Act may be expended to:
    (i) Facilitate coordination of education and training services for 
participants in the projects described in section 123(a)(2)(A), (B) and 
(C), or
    (ii)(A) Support activities pertaining to a HRIC that meets the 
requirements of Sec. 628.215 of this part, or
    (B) Support activities pertaining to a State council which carries 
out functions similar to those of a HRIC if such council was established 
prior to July 1, 1992.
    (e) Contribution. (1) Except as provided in paragraph (e)(3) of this 
section, the State shall provide for the contribution of funds, other 
than the funds made available under this Act, of a total amount equal to 
the amounts allotted under Section 123;
    (2) The Governor shall define and assure the provision of adequate 
resources by the State to meet the requirements of paragraph (e)(1) of 
this section. Such amount may include the direct cost of employment and 
training services provided by other Federal programs or agencies if such 
use for matching is in accordance with the applicable Federal law 
governing the use of such funds.
    (3) When there is a failure to reach agreement between the State 
education agency and the administrative

[[Page 239]]

entity in the service delivery area, as set forth in paragraph (b)(3) of 
this section, the requirement for the contribution of funds shall not 
apply.
    (f) Eligible youth, age 14 through 15, may be served in the program 
under this section to the extent set forth in the agreements under 
paragraph (b)(3) of this section.



Sec. 628.320  Services for older individuals.

    (a) Consultation. (1) The Governor shall consult with the 
appropriate PIC's and chief elected official(s) prior to entering into 
agreements to provide services under section 204(d) and to assure that 
services provided to participants under section 204(d) are consistent 
with the programs and activities provided in the SDA to eligible older 
participants.
    (2) The GCSSP shall specify the process for accomplishing the 
consultation required by paragraph (a)(2) of this section.
    (b) Funds available under section 204(d) shall be used by the 
Governor to provide services on an equitable basis throughout the State, 
taking into account the relative share of the population of eligible 
older individuals residing in each SDA and the participation of such 
older individuals in the labor force.
    (c) Delivery of services. (1) Services to participants eligible 
under section 204(d) shall be delivered through agreements with SDA's, 
private industry councils, public agencies, private nonprofit 
organizations (including veterans organizations) and private-for-profit 
organizations.
    (2) Priority for delivery of services under this section shall be 
given to agencies and organizations which have a demonstrated 
effectiveness in providing training and employment services to such 
older individuals.
    (d) Eligibility. (1) Individuals provided services under section 
204(d) of the Act shall be economically disadvantaged, based on criteria 
applicable in the SDA in which they reside, and shall be age 55 or 
older. However, each program year not more than 10 percent of 
participants enrolled under section 204(d) may be individuals who are 
not economically disadvantaged but have serious barriers to employment 
as identified by the Governor and have been determined within the last 
12 months to meet the income eligibility requirements for title V of the 
Older Americans Act of 1965 (section 204(d)(5)(B)(i)).
    (2) The following criteria shall apply to joint programs for older 
workers.
    (i) In order to carry out a joint program with operators of programs 
under title V of the Older Americans Act, there shall be a written 
financial or non-financial agreement, or written joint program 
description when the entity which operates the JTPA and title V program 
are the same.
    (ii) Joint programs under this paragraph (d)(2) may include 
referrals between programs, co-enrollment and provision of services.
    (iii) Under agreements pursuant to this paragraph (d)(2), 
individuals eligible under title V of the Older Americans Act shall be 
deemed to satisfy the requirements of section 203(a)(2) of the Act 
(Older Americans Act, Pub. L. 103-171, section 510).
    (e) Applicable requirements. Except as provided in the Act, the 
provisions of title II-A shall apply to programs conducted under section 
204(d) (section 204(d)(6)).
    (f) The Governor shall make efforts to coordinate the delivery of 
services under section 204(d) with the delivery of services under title 
V of the Older Americans Act of 1965. Such coordination may include 
coenrollment, coordination of a continuum of services between this 
section and title V of the Older Americans Act and other appropriate 
linkages.
    (g) The Governor shall give consideration to assisting programs 
involving training for jobs in growth industries and jobs reflecting the 
use of new technological skills (section 204(d)(3)).



Sec. 628.325  Incentive grants, capacity building, and technical 
assistance.

    (a) Funds available to the Governor under sections 202(c)(1)(B) and 
262(c)(1)(B) of the Act shall be used to provide incentive grants to 
SDA's and for capacity building and technical assistance.
    (b) Incentive grants. (1) Not less than 67 percent of the funds 
available under sections 202(c)(1)(B) and 262(c)(1)(B) of

[[Page 240]]

the Act shall be used by the Governor to provide incentive grants for 
programs, except programs under section 204(d) of the Act, exceeding 
title II performance standards (section 106(b)(7)).
    (2) Incentive grant funds under this section shall be distributed by 
the Governor among SDA's within the State pursuant to section 106(b)(7) 
of the Act.
    (3) The Governor shall, as part of the annual statement of goals and 
objectives required by section 121(a)(1) of the Act, provide SDA's with 
the specific policies and procedures to implement section 106(b)(7) of 
the Act.
    (4) In a State which is the service delivery area, incentive grant 
funds shall be distributed in a manner determined by the Governor and 
described in the GCSSP. The Governor shall give consideration to 
recognizing the performance of service providers within the State.
    (5) SDA's should use incentive grant funds for capacity building and 
technical assistance activities and/or for the conduct of allowable 
Title II activities for eligible youth, eligible adults, or both, at the 
discretion of the SDA.
    (c) Capacity building and technical assistance. (1) Up to 33 percent 
of the funds available under sections 202(c)(1)(B) and 262(c)(1)(B) of 
the Act may be used by the Governor to provide capacity building and 
technical assistance efforts aimed at improving the competencies of the 
personnel who staff and administer JTPA including SDA's, service 
providers, State staff, private industry councils, other job training 
councils and related human service systems provided for in section 
205(a) of the Act.
    (2) In providing capacity building and technical assistance 
activities, the Governor shall:
    (i) Consult with SDA's concerning capacity building and technical 
assistance activities consistent with the process specified in the 
GCSSP;
    (ii) Ensure that the use of funds will assist front line staff 
providing services to participants by directing resources to SDA and 
service provider staff for capacity building efforts, building a 
statewide capacity building strategy based on an assessment of local 
capacity building needs developed in cooperation with the SDA's, and/or 
delivering training and technical assistance directly to the local 
level;
    (iii) Ensure that expenditures for the purchase of hardware/software 
are only for the development of Statewide communications and training 
mechanisms involving computer-based communication technologies that 
directly facilitate interaction with the National Capacity Building and 
Information Dissemination Network (National Network) described in 
section 453 of the Act and that facilitate the use of computer-based 
training techniques in capacity building and technical assistance 
activities;
    (iv) Ensure that State and local capacity building efforts are 
coordinated and integrated with the National Network, pursuant to 
sections 202(c)(3)(B) and 262(c)(3)(B) of the Act, and that materials 
developed with funds under this section are made available to be shared 
with other States, SDA's and the National Network. States and SDA's 
retain the flexibility to tailor Network products to their own needs 
and/or to produce and train on similar or related products when local 
circumstances so dictate and;
    (v) Provide technical assistance to service delivery areas failing 
to meet performance standards pursuant to section 106(j)(2) of the Act.
    (d) Cost sharing. (1) Cost sharing approaches are encouraged among 
States, SDA's and/or among other Federal, State, and local human service 
programs, including those listed in section 205(a) of the Act, in 
developing electronic communications, training mechanisms and/or 
contributing to the National Network.
    (2) All shared costs shall be allocated among the contributing 
funding sources on the basis of benefits received.



                 Subpart D_Local Service Delivery System



Sec. 628.400  Scope and purpose.

    This subpart sets forth requirements for the selection of service 
delivery areas, the establishment and responsibilities of the private 
industry council, and the selection of the SDA grant recipient and 
administrative entity.

[[Page 241]]

This subpart also contains the requirements for the local job training 
plan as well as the procedures for its review and approval by the State.



Sec. 628.405  Service delivery areas.

    (a)(1) The Governor, after receiving recommendations from the SJTCC, 
shall designate SDA's within the State in accordance with the provisions 
of section 101 of the Act.
    (2) SDA's may not be designated by the Governor more frequently than 
once every two years, and such designations shall be made to coincide 
with the two-year plan cycle for the GCSSP and local job training plans 
(i.e., the designation cannot be made for an off-year in this cycle).
    (3) Each request for designation as an SDA shall be submitted in a 
form and by a date established by the Governor. The procedures 
established by the Governor shall provide for the treatment of existing 
SDA's for the purposes of submitting SDA designation requests.
    (b)(1) The Governor shall approve SDA designation requests from 
entities with a population of 200,000 or more that satisfy the criteria 
specified in section 101(a)(4)(A) of the Act.
    (2) When there are competing applications under paragraph (b)(1) of 
this section for the same geographic area, the Governor shall designate 
the entity with the population closest to 200,000, if the remaining 
reduced area also continues to satisfy the criteria specified in section 
101(a)(4)(A) of the Act. The Governor shall offer to designate the 
remaining reduced area as an SDA as well.
    (3) When there are competing applications under paragraph (b)(1) of 
this section for the same geographic area and the designation of the 
entity with the population closest to 200,000 would have the effect of 
reducing the population of the competing entity to below a population of 
200,000, the Governor has the discretion to determine which request to 
honor.
    (d) The Governor may, in accordance with section 101(a)(4)(B) of the 
Act, approve a request to be a SDA from any unit, or contiguous units, 
of general local government, without regard to population, which serves 
a substantial portion of a labor market area. In making such 
designations, the Governor shall evaluate the degree to which a proposed 
service delivery area meets criteria established by the Governor which, 
at a minimum, shall include:
    (1) The capability to effectively deliver job training services;
    (2) The capacity to administer the job training program in 
accordance with the Act, applicable rules and regulations and State 
standards; and
    (3) The portion of a labor market to be served.
    (e) For the purposes of SDA designations under section 101(a)(4)(A) 
and (B) of the Act, the term ``substantial part'' and ``substantial 
portion'' of a labor market area shall be defined by the Governor, but 
shall not be less than 10% of the population of a labor market area.
    (f) All areas within the State shall be covered by designated SDA's. 
After honoring all requests for designation from eligible entities under 
section 101(a)(4)(A) of the Act, and making any qualified discretionary 
designations under section 101(a)(4)(B) of the Act, the Governor shall 
include uncovered areas in the State within other designated SDA's 
willing to accept them or within a State administered SDA.
    (g) Appeals. (1) Only an entity which meets the requirements of 
section 101(a)(4)(A) of the Act for designation as a service delivery 
area, but which has had its request to be an SDA denied, may appeal the 
Governor's denial of service delivery area designation to the Secretary 
of Labor.
    (2) Appeals made pursuant to paragraph (g)(1) of this section shall 
be submitted by certified mail, return receipt requested, to the 
Secretary, U.S. Department of Labor, Washington, DC 20210, Attention: 
ASET. A copy of the appeal shall simultaneously be provided to the 
Governor.
    (3) The Secretary shall not accept an appeal dated later than 30 
days after receipt of written notification of the denial from the 
Governor.
    (4) The appealing party shall explain why it believes the denial is 
contrary to the provisions of section 101 of the Act.

[[Page 242]]

    (5) The Secretary shall accept the appeal and make a decision only 
with regard to whether or not the denial is inconsistent with section 
101 of the Act. The Secretary may consider any comments submitted by the 
Governor. The Secretary shall make a final decision within 30 days after 
receipt of the appeal (section 101(a)(4)(C)).
    (6) The Secretary shall notify the Governor and the appellant in 
writing of the Secretary's decision.



Sec. 628.410  Private Industry Council.

    (a) Certification of the PIC. (1) The chief elected official(s) of 
the SDA shall establish and the Governor shall certify the private 
industry council (PIC) pursuant to section 102 of the Act.
    (2) The Governor shall review the certification of the PIC 
biennially, one year prior to the effective date of the 2-year SDA job 
training plan to the Governor. The Governor's review shall include:
    (i) The PIC composition, which shall be consistent with section 
102(a), (b), (c), and (d) of the Act and shall include the names of 
individuals nominated and their qualifications;
    (ii) The nomination process;
    (iii) The written agreement(s) among the appropriate chief elected 
official(s) and the PIC, including procedures for the development of the 
SDA job training plan and the selection of the grant recipient and 
administrative entity.
    (3) The chief elected official shall select labor representatives 
for the PIC from individuals recommended by recognized State and local 
labor federations. For purposes of this section, a labor federation is 
an alliance of two or more organized labor unions for the purpose of 
mutual support and action. An example of a recognized labor federation 
is the AFL-CIO.
    (b) Responsibilities of the PIC. Pursuant to section 103 of the Act, 
the PIC shall:
    (1) Provide policy and program guidance for all activities under the 
job training plan for the SDA;
    (2) In accordance with agreements negotiated with the appropriate 
chief elected official(s), determine the procedures for development of 
the job training plan and select the grant recipient and administrative 
entity for the SDA;
    (3) Independent oversight. As specified in subpart D of part 627 of 
this chapter, the PIC shall exercise independent oversight over programs 
and activities under the job training plan, which oversight shall not be 
circumscribed by agreements with the appropriate chief elected 
official(s) of the SDA;
    (4) Be a party to the designation of substate grantees under title 
III, as set forth in Sec. 631.35 of this chapter;
    (5) Establish guidelines for the level of skills to be provided in 
occupational skills training programs funded by the administrative 
entity;
    (6) Consult with the Governor on agreements to provide services for 
older individuals under section 204(d) of the Act;
    (7) Establish youth and adult competency levels consistent with 
performance standards established by the Secretary, based on such 
factors as entry level skills and other hiring requirements, in 
consultation with educational agencies and, where appropriate, with 
representatives of business, organized labor and community-based 
organizations pursuant to section 106(b)(5) and 107(d); and
    (8) Identify occupations for which there is a demand in the area 
served.
    (c) Substate plan. The PIC shall be provided the opportunity to 
review and comment on a substate grantee plan under title III of the Act 
prior to the submission of such plan to the Governor (section 313(a)).
    (d) [Reserved]
    (e) The State Employment Service agency shall develop jointly with 
each appropriate PIC and chief elected official(s) for the SDA those 
components of the plans required under the Wagner-Peyser Act which are 
applicable to the SDA. (See part 652 of this chapter).
    (f) Single SDA States. (1) In any case in which the service delivery 
area is a State, the SJTCC or a portion of the SJTCC may be 
reconstituted as a PIC if the PIC meets the requirements of section 
102(a) of the Act.
    (2) When the service delivery area is a State and the functions of 
the SJTCC are embodied in the HRIC, the HRIC or a portion of the HRIC 
may be reconstituted as a PIC if the requirements for

[[Page 243]]

private sector business representation at section 102(a)(1) of the Act 
are met (section 102(h)).



Sec. 628.415  Selection of SDA grant recipient and administrative entity.

    (a) Selection of SDA grant recipient. (1) The SDA grant recipient 
and the entity to administer the SDA's job training plan for title II, 
developed pursuant to section 104 of the Act, shall be selected by 
agreement of the PIC and chief elected official(s) of the SDA. These may 
be the same or different entities.
    (2) The specific functions and responsibilities of the entities 
described in paragraph (a)(1) of this section shall be spelled out in 
the agreement between the PIC and the chief elected official(s), and 
shall specifically address the provisions of section 141(i) of the Act 
(section 103(b)(1)).
    (b) Subrecipient requirements. (1) The Governor may establish 
requirements pertaining to subrecipient, including SDA grant recipient, 
responsibility for JTPA funds.
    (2) The requirements of paragraph (b)(1) of this section shall not 
preclude the selection of any entity identified in section 103(b) of the 
Act as SDA grant recipient.



Sec. 628.420  Job training plan.

    (a) The Governor shall issue instructions and schedules to assure 
that job training plans and plan modifications for SDA's within the 
State conform to all requirements of the Act.
    (b) The Governor's instructions for development of the SDA's job 
training plan shall require that the plan contain the following 
information:
    (1) A complete and detailed discussion of the elements found in 
section 104(b) of the Act, including goals for the training and training 
related placement of women in nontraditional employment and 
apprenticeships;
    (2) A discussion of the SDA's compliance with the Secretary's 
program goals, as outlined in the planning guidance provided to the 
Governor; and
    (3) An oversight plan for the SDA which includes: (i) A description 
of the oversight activities of the PIC and the chief elected 
official(s), and (ii) the SDA administrative entity's monitoring plan 
which includes the Governor's monitoring requirements for service 
providers.
    (c) The Governor may also require that the SDA job training plan 
contain a capacity building and technical assistance strategy that 
includes plans for designating capacity building as a staff function, 
assessing local capacity building needs, and developing and 
participating in computerized communication mechanisms.
    (d) The SDA job training plan shall be jointly approved and jointly 
submitted to the Governor by the PIC and the chief elected official(s) 
(section 103(d)).
    (e) Modifications. (1) Any major modification to the SDA job 
training plan shall be jointly approved and jointly submitted by the PIC 
and chief elected official(s) of the SDA to the Governor for approval.
    (2) For the purposes of this section, the circumstances which 
constitute a ``major'' modification shall be specified by the Governor.



Sec. 628.425  Review and approval.

    (a) Standards and procedures. The Governor shall establish standards 
and procedures for the review and approval or disapproval of the SDA job 
training plan and plan modifications that shall be provided to the SDA's 
at the same time as the instructions and schedules for preparation of 
the plans are provided.
    (b) Plan approval. Except when the Governor makes a finding under 
the provisions of section 105(b)(1) of the Act, the Governor shall 
approve the SDA job training plan or plan modification. The notice of 
approval shall be provided in writing to the chief elected official(s) 
and to the private industry council.



Sec. 628.426  Disapproval or revocation of the plan.

    (a) If the Governor disapproves the SDA job training plan or plan 
modification for any reason, the Governor shall notify the PIC and chief 
elected official(s) for the SDA in writing as provided in section 
105(b)(2) of the Act.
    (b) If the Governor disapproves the SDA job training plan or plan 
modification, the Governor shall provide the PIC and the chief elected 
official(s) for

[[Page 244]]

the SDA 30 days to correct the deficiencies and resubmit the plan or 
plan modification. Within 15 days after the plan or plan modification is 
resubmitted, the Governor shall make a final decision and shall notify 
the PIC and the appropriate chief elected official(s) of the SDA in 
writing of the final disapproval or approval.
    (c) Governor mediation. If the PIC and the appropriate chief elected 
official(s) of an SDA are unable to reach an agreement under the 
provisions of section 103 (b)(1) or (d) of the Act, any such party may 
request the Governor to mediate.
    (d) Failure to reach agreement. If the PIC and the chief elected 
official(s) fail to reach the required agreements in section 103 (b)(1) 
or (d) of the Act, funds may not be made available to an SDA under 
section 104 of the Act and the Governor shall merge the affected area 
into one or more other existing service delivery areas (section 
105(c)(1)).
    (e) Appeals. (1) In accordance with section 105(b)(2) of the Act, 
any final disapproval by the Governor of the SDA job training plan or 
modification may be appealed by the PIC and chief elected official(s) of 
the SDA to the Secretary.
    (2) The Secretary shall not accept an appeal dated later than 30 
days after receipt by the PIC and chief elected official(s) of the final 
disapproval of the SDA job training plan or modification from the 
Governor.
    (3) The Secretary shall accept an appeal under paragraph (e)(1) of 
this section and shall determine only whether the disapproval is clearly 
erroneous under section 105(b)(1) of the Act. The Secretary may consider 
any comments submitted by the Governor. In accordance with section 
105(b)(2) of the Act, the Secretary shall make a final decision within 
45 days after the appeal is received by the Secretary.
    (4) The Secretary shall notify the Governor and the appellant in 
writing of the Secretary's decision.
    (f) Appeals of plan revocations. Pursuant to section 164(b)(1) of 
the Act, a notice of intent to revoke approval of all or part of a plan 
may be appealed to the Secretary. Such appeals shall be treated as a 
disapproval under paragraphs (c) and (e) of this section, except that 
the revocation shall not become effective until the later of:
    (1) The time for appeal under paragraph (e) of this section has 
expired; or
    (2) The date on which the Secretary issues a decision affirming the 
revocation.
    (g) In the event that a plan is disapproved and the Governor's 
decision is upheld upon appeal, the Governor shall merge the affected 
area into other designated SDA's willing to accept it or include it in 
another SDA within the State.



Sec. 628.430  State SDA Submission.

    (a) Pursuant to section 105(d) of the Act, when the SDA is the 
State, the Governor shall submit to the Secretary, not less that 60 days 
before the beginning of the first of the two program years covered by 
the job training plan and in accordance with instructions issued by the 
Secretary, an SDA job training plan covering two program years. When the 
SDA is the State, modifications to the plan shall be submitted to the 
Secretary for approval.
    (b) When a State submits an SDA job training plan or plan 
modification pursuant to paragraph (a) of this section, the Secretary 
shall review the plan or plan modification for overall compliance with 
the provisions of the Act. The State's plan shall be considered approved 
unless, within 45 days of receipt of the submission described in 
paragraph (a) of this section, the Secretary notifies the Governor in 
writing of inconsistencies between the submission and requirements of 
specific provisions of the Act. If the plan or plan modification is 
disapproved, the Governor may appeal the decision by requesting a 
hearing before an administrative law judge pursuant to subpart H of part 
627 of this chapter.



Subpart E_Program Design Requirements for Programs Under Title II of the 
                      Job Training Partnership Act



Sec. 628.500  Scope and purpose.

    This subpart contains the regulations pertaining to the program 
design requirements common to all programs conducted under titles I 
(i.e., sections

[[Page 245]]

121 and 123) and II of the Act. Regulations specifically pertaining to 
the Adult Program can be found in subpart F of this part. Regulations 
pertaining to the Summer Youth Employment and Training Program can be 
found in subpart G of this part. Regulations pertaining to the Youth 
Training Program can be found in subpart H of this part.



Sec. 628.505  Eligibility.

    (a) Eligibility criteria. (1) Individuals who apply to participate 
in a program under title II shall be evaluated for eligibility based on 
age and economic disadvantage. Specific eligibility criteria for 
programs under title II, parts A, B, and C are described in this part.
    (2) Individuals served under title II shall be residents of the SDA, 
as determined by local government policy, except for the limited 
exceptions described in the job training plan, including joint programs 
operated by SDA's (section 141(e)).
    (b) Eligibility documentation. (1) In order to promote the uniform 
and standard application of eligibility criteria for participation in 
the JTPA program, the Department has issued an Eligibility Documentation 
TAG that provides guidance on acceptable documentation.
    (2) SDA utilization of eligibility guidance. When it is determined 
that the SDA or service provider has followed the guidance contained in 
the Eligibility Documentation TAG, the Grant Officer will not disallow 
questioned costs related to the required documentation concerning an 
individual's eligibility.



Sec. 628.510  Intake, referrals and targeting.

    (a) Collection of personal data. In addition to determining an 
applicant's eligibility, the intake process shall include a preliminary 
review of information relating to whether an applicant is included in 
one or more of the categories listed in section 203(b) of the Act.
    (b) Information on services. Upon application, an eligible 
individual shall be provided information by the SDA or its service 
providers on the full array of services available through the SDA and 
its service providers, including information for women about the 
opportunities for nontraditional training and employment.
    (c) Assessment during intake. Some limited assessment activities may 
be conducted during the intake process in order to determine an eligible 
applicant's suitability for title II program services. This assessment 
should be a method, in difficult cases, to finalize determinations for 
enrollment. The amount of assessment provided during intake is not 
restricted, however, assessment during intake shall be charged in 
accordance with Sec. 627.440(d)(3).
    (d) Referral of eligible applicants. During the intake process, 
determinations may be made prior to enrollment to refer an eligible 
applicant to another human service, training or education program deemed 
more suitable for the individual, including the Job Corps program. In 
these cases, information on the full array of services available in the 
SDA may be provided in written form with recommendations and written 
referrals to other appropriate programs. Copies of or notations of 
referrals will be maintained as documentation and may be recorded in an 
incomplete ISS. Further tracking or follow-up of referrals out of title 
II is not required.
    (e) Referrals from service providers to service delivery areas for 
additional assessment. (1) Each service provider shall ensure that an 
eligible applicant who cannot be served by its particular program shall 
be referred to the SDA for assessment, as necessary, and suitable 
referral to other appropriate programs. Each service provider shall also 
ensure that a participant who cannot be served by its particular program 
shall be referred to the SDA for further assessment, as necessary, and 
suitable referral to other appropriate programs, consistent with Sec. 
628.515.
    (2) Each SDA shall take the appropriate steps (e.g., contract 
provisions, local administrative issuances, and/or PIC policies) to 
ensure that its service providers adhere to the provisions of this 
section and that they maintain documentation of referrals.
    (3) Each SDA shall develop an appropriate mechanism to ensure 
suitability screening for eligible applicants or to

[[Page 246]]

apply the provisions of Sec. 628.530 for participants referred by 
service providers and describe such mechanism in its SDA job training 
plan.
    (f)(1) ``Most in need.'' SDA's that satisfy the requirements of 
sections 203(b) and 263 (b) and (d) pertaining to hard to serve 
individuals shall be deemed to meet the ``most in need'' criteria at 
section 141(a) of the Act.
    (2) The requirements referred to in paragraph (h)(1) of this section 
shall be calculated on the basis of new participants for whom services 
or training have been provided subsequent to the objective assessment.
    (g) The SDA's method of meeting the requirements of sections 203(b) 
and 263(b) pertaining to hard to serve individuals shall be implemented 
consistent with the equal opportunity provisions of 29 CFR part 34.



Sec. 628.515  Objective assessment.

    (a) General. The requirements of this section shall apply to 
programs conducted under title I (i.e., sections 121 and 123) and title 
II, parts A, B, and C.
    (b) Definition. (1) For purposes of this part, an objective 
assessment means an examination of the capabilities, needs, and 
vocational potential of a participant and is to be used to develop an 
individual service strategy and employment goal. Such assessment is 
customer-centered and a diagnostic evaluation of a participant's 
employment barriers taking into account the participant's family 
situation, work history, education, basic and occupational skills, 
interests, aptitudes (including interests and aptitudes for 
nontraditional occupations), attitude towards work, motivation, behavior 
patterns affecting employment potential, financial resources and needs, 
supportive service needs, and personal employment information as it 
relates to the local labor market.
    (2) For the program under title II-B, the objective assessment shall 
include an examination of the basic skills and supportive service needs 
of each participant and may include the other areas listed in paragraph 
(b)(1) of this section (sections 204(a)(1)(A), 253(c)(1) and 
264(b)(1)(A)).
    (c) Methods of objective assessment. (1) The SDA shall choose the 
most appropriate means to measure skills, abilities, attitudes, and 
interests of the participants. The methods used in conducting the 
objective assessment may include, but are not limited to, structured 
interviews, paper and pencil tests, performance tests (e.g., skills, 
and/or work samples, including those that measure interest and 
capability to train in nontraditional employment), behavioral 
observations, interest and/or attitude inventories, career guidance 
instruments, aptitude tests, and basic skills tests.
    (2) Instruments used for objective assessment may be developed at 
the local level; however, any formalized instruments nationally 
available should be used only for the specific populations for which 
they are normed.
    (d) Updating of assessments. Objective assessment should be treated 
as an ongoing process. As additional relevant information relating to a 
participant becomes available, it should be reviewed and considered for 
inclusion in the individual service strategy.
    (e) Other sources of objective assessment. Other non-JTPA 
assessments (e.g., through the Job Opportunities and Basic Skills (JOBS) 
program under title IV of the Social Security Act, or through schools) 
which have been completed within one year of application for services, 
and which meet the requirements of this section, may be used to comply 
with the requirement to assess each participant.



Sec. 628.520  Individual service strategy.

    (a) General. The requirements of this section shall apply to 
programs conducted under title I (i.e., sections 121 and 123) and title 
II, parts A, B and C.
    (b) Definition. (1) Individual service strategy (ISS) means an 
individual plan for a participant, which shall include an employment 
goal (including, for women, consideration of nontraditional employment), 
appropriate achievement objectives, and the appropriate combination of 
services for the participant based on the objective assessment conducted 
pursuant to Sec. 628.515 of this part, Objective assessment. In 
developing the ISS, the participant shall be counseled regarding

[[Page 247]]

required loan repayments if the participant chooses to incur personal 
indebtedness to participate in an education program. The participant 
shall also be apprised of the requirements for self-sufficiency and the 
occupational demands within the labor market.
    (2) Decisions concerning appropriate services shall be customer-
centered, and ensure that the participant is not excluded from training 
or career options consistent with the provisions of 29 CFR part 34 
concerning nondiscrimination and equal opportunity.
    (3) For the title II-B program, the ISS may include the components 
specified in paragraph (b)(1) of this section (sections 204(a)(1)(B), 
253(c)(2) and 264(b)(1)(B)). For purposes of titles II-B and II-C, the 
employment goal may be interpreted broadly and based on long-term career 
guidance.
    (c) Joint Development of ISS. The ISS shall be developed in 
partnership with the participant and reflect the needs indicated by the 
objective assessment and the expressed interests and desires of the 
participant. It is not a formal contract and signatures are not a 
requirement.
    (d) Review of ISS. The ISS shall be reviewed periodically to 
evaluate the progress of each participant in meeting the objectives of 
the service strategy, including an evaluation of the participant's 
progress in acquiring basic skills, and occupational skills, as 
appropriate, and the adequacy of the supportive services provided.
    (e) Provision of services. If JTPA resources are not sufficient to 
provide the full range of training or supportive services which might be 
identified in the ISS, the SDA shall make every reasonable effort to 
arrange for, through other community resources, basic and occupational 
skills training and supportive services identified as needed in the ISS 
for participants under titles II-A and II-C and, in addition, 
preemployment and work maturity skills training and work experience 
combined with skills training for participants under title II-C 
(sections 204(a)(1)(D) and 264(b)(1)(D).
    (f) SDA review of objective assessment and ISS. (1) The objective 
assessment and development of the ISS may be conducted by service 
providers.
    (2) The SDA administrative entity shall ensure that development of 
the ISS and the services provided, respond to the individual needs of 
the participant and that the combination of services to the participant 
is indicated by the results of the objective assessment.
    (g) ISS record of decisions. The ISS shall be used as the basic 
instrument for the SDA to record the results of decisions made about the 
combination and sequence of services for the participant based on the 
objective assessment. Justification for decisions may be referenced but 
need not be recorded in the ISS. These decisions shall include, but are 
not limited to, the employment goal and/or career cluster; referrals to 
other programs for specified activities; the provision and amount of 
supportive services; and the delivery agents and schedules for training 
and supportive services activities. The decisions for time and duration 
of OJT (Sec. 627.240 of this chapter) shall be briefly recorded in the 
ISS and may not reference other documents.
    (h) The ISS is a customer-centered case management tool and shall 
not be used as a compliance document.



Sec. 628.525  Limitations.

    Neither eligibility for nor participation in a JTPA program creates 
an entitlement to services, and nothing in the Act or this part shall be 
construed to establish a private right of action for a participant to 
obtain services described in the objective assessment or ISS.



Sec. 628.530  Referrals of participants to non-title II programs.

    (a) When it is determined, through the objective assessment and the 
ISS, that a participant would be better served by a program other than 
one under title II (e.g., Job Corps, Vocational Rehabilitation, State or 
local education, substance abuse treatment center, and/or dislocated 
worker programs), the participant shall be referred to the appropriate 
program. Such referral shall be recorded in the ISS.
    (b) In cases where there will be a continuing relationship with a 
participant, a referral to another program(s) for

[[Page 248]]

specific services will be part of the participant's title II program 
strategy and will be recorded in the ISS.
    (c) When there will not be a continuing relationship with a 
participant as the result of a referral to a program other than title 
II, and an assessment but no training component has been provided, the 
referral should be recorded in a partial ISS and the individual shall 
not be counted for purposes of calculating performance against the SDA's 
performance standards. Further tracking or follow-up of referrals out of 
title II is not required.



Sec. 628.535  Limitations on job search assistance.

    (a) General. Job search assistance is designed to give a participant 
skills in acquiring full time employment. (See Sec. 626.5 of this 
chapter, Definitions.)
    (b) Conditions. Job search activities may be conducted only:
    (1) For participants when specified as appropriate in the ISS; and
    (2) When delivered in conjunction with other training or educational 
services designed to increase the participant's ability to acquire 
employment. Additional services which may be provided in conjunction 
with job search include the direct training services listed in JTPA 
section 204(b)(1) of the Act, excluding standalone skill assessment, 
counseling, work experience and case management and the direct training 
services listed in 264(b) of the Act excluding tutoring, standalone 
skill assessment, counseling, work experience and case management. (See 
Sec. 627.245 of this chapter, ``Work Experience,'' especially Sec. 
627.245(d) regarding combination of other services.)
    (c) Exceptions. (1) Job search assistance activities, including job 
search skills, training, and job clubs may be provided without the 
accompanying services specified in paragraph (b) of this section only 
when:
    (i) The objective assessment and the ISS indicate that the 
additional services are not appropriate; and
    (ii) The activities are not available or accessible through other 
public agencies, including the Employment Service.
    (2) The exceptions in paragraph (c)(1) of this section apply to 
Title II-A and II-B and are not applicable to Title II-C programs (see 
Sec. 628.804 (d) and (e)).
    (d) Determination of job search availability. For purposes of this 
section, a determination of the availability of the job search 
assistance activity will be made by the SDA, in consultation with the 
employment service and documented in the local job training plan.
    (e) Older individuals. For purposes of this section, when an 
individual aged 55 or older indicates in the assessment a preference for 
immediate job placement, job search assistance may be provided on a 
stand-alone basis. The individual's preference shall be recorded in the 
ISS.



Sec. 628.540  Volunteer program.

    Pursuant to sections 204(c)(6) and 264(d)(7) of the Act, the SDA 
shall make opportunities available for individuals who have successfully 
participated in programs under this part to volunteer assistance, in the 
form of mentoring, tutoring, and other activities.



Sec. 628.545  Linkages and coordination.

    (a) General requirements. (1) To the extent practicable, and as 
permitted by law and regulations, the Governor shall, at the State 
level, facilitate coordination among the programs set forth at section 
205(a) and 265(b) of the Act, including, but not limited to, the 
establishment of State-level coordination agreements. The Governor may 
focus coordination through the SJTCC or the HRIC.
    (2) The SDA, in conducting programs under this part, shall establish 
appropriate linkages and coordination procedures with other Federal 
programs and appropriate State and local educational, social service, 
and public housing agencies, including with CBO's, business and labor 
organizations, volunteer groups and others, such as women and older 
worker organizations, and with appropriate education and training 
agencies, such as local JOBS programs, Employment Service offices which 
provide services for JTPA participants, and the local agencies on aging, 
to avoid duplication and to enhance the delivery of services, which 
shall be described in the SDA job

[[Page 249]]

training plan. Where a local agency declines to complete such a linkage 
with an SDA, the SDA shall reflect this information in its job training 
plan (section 104(b)).
    (b) SDA's are encouraged to facilitate effective ``one stop shop 
career centers'' and ``single point of contact'' delivery systems which 
may include:
    (1) The development of individual service strategy plans and of a 
common program application; and
    (2) A unified job development effort and comprehensive programmatic 
design (sections 104(b) (3) and (4), 205 (a) and (b) and 265).
    (c) Requirements for youth. For the youth programs under this part, 
formal agreements shall be established with appropriate local 
educational agencies which participate in JTPA programs which, at a 
minimum, shall specify:
    (1) The procedures for referring and serving in-school youth;
    (2) The methods of assessment of in-school youth; and
    (3) Procedures for notifying the SDA when a youth drops out of the 
school system.
    (d) Schoolwide projects. (1) In conducting a schoolwide project for 
low income individuals under sections 263(g) and 265(d) of the Act, the 
SDA shall establish a cooperative agreement with the appropriate local 
educational agency.
    (2) In addition to the requirements listed in paragraphs (a) and (b) 
of this section, the cooperative agreement shall include:
    (i) A description of the ways in which the JTPA schoolwide project 
will supplement the educational program of the school;
    (ii) Identification of measurable goals to be achieved by the 
schoolwide project and a provision for assessing the extent to which 
such goals are met;
    (iii) A description of the ways in which the program will use 
available JTPA and other education program resources;
    (iv) A description of the number of individuals to be served by the 
schoolwide project; and
    (v) Assurances that JTPA resources shall be used in coordination 
with existing sources of funds to supplement and not supplant them 
(section 107(b)).
    (3) In areas where there is more than one local educational agency, 
cooperative agreements for schoolwide projects are required only with 
those local education agencies that will participate in programs under 
schoolwide projects (section 263(g)).



Sec. 628.550  Transfer of funds.

    If described in the job training plan and approved by the Governor:
    (a) An amount up to 10 percent of the funds allocated to the SDA 
under section 202(b) of the Act for title II-A may be transferred to the 
program under title II-C of the Act;
    (b) An amount up to 20 percent of the funds allocated to the SDA 
under section 252(b) of the Act for title II-B may be transferred to the 
program under title II-C of the Act; and
    (c) An amount up to 10 percent of the funds allocated to the SDA 
under section 262(b) of the Act for title II-C may be transferred to the 
program under title II-A of the Act.



                       Subpart F_The Adult Program



Sec. 628.600  Scope and purpose.

    This subpart contains the regulations for the Adult Program under 
part A of Title II of the Act. The regulations in part 627 of this 
chapter and subpart E of this part apply to the Adult Program to the 
extent that they do not conflict with the provisions of this subpart.



Sec. 628.605  Eligibility.

    (a) Age and economic disadvantage. Except as provided in paragraph 
(b) of this section, an individual shall be eligible to participate 
under this part only if he or she is economically disadvantaged and 22 
years of age or older. There is no maximum age for eligibility.
    (b) Non-economically disadvantaged individuals. Up to 10 percent of 
the individuals served under this subpart in each SDA may be individuals 
who are not economically disadvantaged, if such individuals face serious 
barriers to employment in accordance with section 203(c) of the Act.
    (c) Requirement to assist hard-to-serve individuals. (1) Not less 
than 65 percent

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of adults who participate in the program under this subpart, including 
those who are not economically disadvantaged, shall have one or more of 
the additional barriers to employment as described in section 203(b) of 
the Act.
    (2) The 65 percent barrier requirement in paragraph (c)(1) of this 
section shall be calculated on the basis of participants for whom 
services or training have been provided subsequent to an objective 
assessment on July 1, 1993 or later.
    (d) Addition of barrier. An SDA may identify and add one additional 
serious barrier to employment to the categories listed at section 203(b) 
of the Act, in accordance with the specific procedures and requirements 
in section 203(d) of the Act.
    (e) Criteria for older workers under joint programs. (1) The SDA may 
establish written financial or non-financial agreements with sponsors of 
programs under title V of the Older Americans Act to carry out joint 
programs.
    (2) Joint programs under this paragraph (e) may include referrals 
between programs, co-enrollment and provision of services.
    (3) Under agreements entered into pursuant to this paragraph (e), 
individuals eligible under title V of the Older Americans Act shall be 
deemed to satisfy the requirements of section 203(a)(2) of the JTPA 
(Older Americans Act, Pub. L. 102-375, section 510).



Sec. 628.610  Authorized services.

    (a) The services that may be provided under this subpart are those 
described at section 204(b) of the Act.
    (b) Counseling and supportive services. Counseling and supportive 
services provided under this subpart may be provided to a participant 
for a period of up to 1 year after the date on which the participant 
completes the program.



       Subpart G_The Summer Youth Employment and Training Program



Sec. 628.700  Scope and purpose.

    This subpart contains the regulations for the Summer Youth 
Employment and Training Program (SYETP) under part B of title II of the 
Act. The regulations in part 627 of this chapter and subpart E of this 
part apply to the SYETP to the extent that they do not conflict with the 
provisions of this subpart.



Sec. 628.701  Program goals and objectives.

    (a) Each SDA shall establish written goals and objectives that shall 
be used in evaluating the effectiveness of its SYETP activities. Such 
goals and objectives may include enhancement of basic educational skills 
through improvement in school retention or academic performance 
(including mathematics and reading comprehension); encouragement of 
school completion or enrollment in supplementary or alternative school 
programs; improvement of employability skills, including provision of 
vocational exploration opportunities and exposure to the world of work; 
enhancement of youth citizenship skills; and demonstrated coordination 
with other appropriate community organizations.
    (b) Each SDA shall ensure that the activities and services offered 
under the SYETP are consistent with and will contribute to the 
achievement of the goals and objectives developed pursuant to paragraph 
(a) of this section.



Sec. 628.702  Eligibility.

    (a) Age and economic disadvantage. An individual is eligible to 
participate in programs funded under title II-B of the Act, if such 
individual is
    (1) Age 14 through 21; and
    (2)(i) Economically disadvantaged; or
    (ii) Has been determined to meet the eligibility requirements for 
free meals under the National School Lunch Act during the most recent 
school year. Most recent school year means the current school year 
unless the eligibility determination is made during an interim period 
between school terms, in which case the term means the preceding school 
year; or
    (iii) Is participating in a compensatory education program under 
Chapter I of title I of the Elementary and Secondary Education Act of 
1965; or
    (iv) Is participating in a schoolwide project as set forth at 
section 263(g) of the Act.

[[Page 251]]

    (b) Eligibility determination verification. The SDA may accept the 
same documentation utilized by the local educational agency for 
approving free lunch meals or an assurance by school officials 
concerning the students' participation in the free school lunch program 
under the National School Lunch Act.



Sec. 628.705  SYETP authorized services.

    (a) The services that may be provided under this subpart are those 
described at section 253 of the Act.
    (b) Basic and remedial education and preemployment and work maturity 
skills training. The SDA shall ensure the availability of basic or 
remedial education and preemployment and work maturity skills training 
for SYETP participants pursuant to the assessment process described in 
Sec. 628.515 of this part from funds available to the SDA or by other 
education and training programs, including, but not limited to, the Job 
Corps, the JOBS program, youth corps programs or alternative or 
secondary schools.
    (c) Work experience. (1) Work experience shall be conducted 
consistent with the provisions of Sec. 627.245 of this chapter.
    (2) Work experience provided under this subpart, to the extent 
feasible, shall include contextual learning opportunities which 
integrate the development of general competencies with the development 
of academic skills.
    (d) Concurrent enrollment. (1) Youth being served under the SYETP or 
the Youth Training Program authorized under title II-C of the Act (see 
subpart H of this part) are not required to be terminated from 
participation in one program to enroll in the other. The SDA may enroll 
such youth concurrently in programs under this subpart and subpart H of 
this part, pursuant to guidance to be issued by the Secretary, in order 
to promote continuity and coordination of services.
    (2) The requirement that not less than 65 percent of the total 
number of title II-C participants shall have one or more barriers to 
employment pursuant to section 263(c) and (d) of the Act shall apply to 
youth who are concurrently enrolled and will participate in the program 
under title II-C.
    (e) Followup services. (1) The SDA shall make followup services 
available for participants if the ISS indicates that such services are 
appropriate (section 253(d)).
    (2) Title II-B funds may be used for such followup services for one 
year after program participation, which may be concurrent with a period 
of any subsequent participation in the Title II-C program.
    (3) Followup services include the full array of supportive services 
described in section 4(24) of the Act, except for financial assistance, 
and may include such followup services as counseling, mentoring, or 
tutoring.
    (f) Classroom training. Classroom training provided under this 
subpart shall, to the extent feasible, include opportunities to apply 
knowledge and skills relating to academic subjects to the world of work.
    (g) Educational linkages. (1) In conducting the program assisted 
under this subpart, service delivery areas shall establish linkages with 
the appropriate educational agencies responsible for service to 
participants.
    (2) Such linkages shall include arrangements to ensure that there is 
a regular exchange of information relating to the progress, problems and 
needs of participants, including the results of assessments of the skill 
levels of participants.



Sec. 628.710  Period of program operation.

    (a) Except as provided under paragraph (b) of this section, the 
SYETP shall be conducted during the school vacation period occurring 
duri the summer months.
    (b) An SDA operating within the jurisdiction of one or more local 
educational agencies that operate schools on a year-round full-time 
basis may offer SYETP activities to participants in such a jurisdiction 
during the school vacation period(s) treated as the period(s) equivalent 
to a school summer vacation.



                    Subpart H_Youth Training Program



Sec. 628.800  Scope and purpose.

    This subpart contains the regulations for the Year-round Youth 
Program

[[Page 252]]

under part C of title II of the Act. The regulations in part 627 of this 
chapter and subpart E of this part apply to the Year-round Youth program 
to the extent that they do not conflict with the provisions of this 
subpart.



Sec. 628.803  Eligibility.

    (a) Out-of-school youth. An out of school youth is a youth who does 
not meet the definition of in-school youth as set forth in paragraph (b) 
of this section. An out-of-school youth shall be eligible to participate 
in programs under this subpart, if such individual is:
    (1) Age 16 through 21, and
    (2) Economically disadvantaged.
    (b) In-school youth. Definition. In-school youth means a youth who 
has not yet attained a high school diploma and is attending school full 
time. An in-school youth shall be eligible to participate in programs 
under this subpart, if such individual is:
    (1)(i) Age 16 through 21, or
    (ii) If provided in the job training plan, age 14 through 21 
inclusive; and
    (2)(i) Economically disadvantaged; or
    (ii) Participating in a compensatory education program under Chapter 
I of title I of the Elementary and Secondary Education Act of 1965; or
    (iii) Has been determined to meet the eligibility requirements for 
free meals under the National School Lunch Act during the most recent 
school year. Most recent school year means the current school year 
unless the eligibility determination is made during an interim period 
between school terms, in which case the term means the preceding school 
year.
    (c) Eligibility determination verification. The SDA may accept the 
same documentation utilized by the local educational agency for 
approving free lunch meals or an assurance by school officials 
concerning the students' participation in the free school lunch program 
under the National School Lunch Act. The Department shall provide 
guidance on this verification separate from these regulations.
    (d) Requirement to serve hard-to-serve individuals. (1) Not less 
than 65 percent of the in-school youth who participate in the program 
under this subpart, including those who are not economically 
disadvantaged, shall have one or more additional barriers to employment, 
as described in section 263(b) of the Act.
    (2)(i) Not less than 65 percent of the out-of-school youth who 
participate in the program under this subpart, including those who are 
not economically disadvantaged, shall have one or more barriers to 
employment, as described in section 263(d) of the Act, in addition to 
any criterion listed in paragraph (b)(2) of this section.
    (ii) All Job Corps participants shall be considered out-of-school 
and as having a barrier to employment.
    (3) The requirement of paragraphs (d)(1) and (2) of this section 
shall be calculated on the basis of participants for whom services or 
training have been provided subsequent to the objective assessment on 
July 1, 1993 or later.
    (e) Addition of barrier. An SDA may identify and add one additional 
serious barrier to employment to the categories listed at sections 
263(b) and (d) of the Act in accordance with the specific procedures and 
requirements in section 263(h) of the Act.
    (f) Services to non-economically disadvantaged individuals. Up to 10 
percent of the youth served by an SDA under this subpart may be 
individuals who are not economically disadvantaged, but such individuals 
shall face one or more serious barriers to employment in accordance with 
section 263(e) of the Act.
    (g) Eligibility based on schoolwide project participation. (1) In 
addition to the individuals who meet the conditions described in Sec. 
628.803 of this part, individuals who are not economically disadvantaged 
may participate in programs under this subpart if they are enrolled in a 
schoolwide project pursuant to section 263(g) of the Act.
    (2) For purposes of paragraph (g)(1) of this section, the term 
school means an individual building, facility, campus or a portion of 
the school such as the 11th or 12th grade.
    (3) A schoolwide project may be operated in a public school located 
in an urban census tract or non-metropolitan county with a poverty rate 
of 30 percent or above, and in which 70 percent or more of the students 
have at least

[[Page 253]]

one barrier to employment. The school shall make the determination on 
whether its students meet the barrier requirements.
    (4) The SDA shall determine which will be its schoolwide projects. 
Examples of schoolwide projects include, but are not limited to, school-
to-work programs; college awareness and application assistance programs; 
school restructuring to make the schools career academies or magnet 
schools; mentoring programs; business-education compacts; integration of 
work and learning; year-round extensions of summer STEP programs; 
community service programs, including linkages with youth service corps; 
programs to encourage teen parents to stay in school, including 
establishing child care centers; and work experience slots provided as 
incentives to stay in school.
    (h)(1) Out-of-school ratio. Not less than 50 percent of the total 
title II-C participants in each SDA shall be out-of-school youth 
(section 263(f)(1) of the Act). The Governor shall be responsible for 
determining the period for which the 50 percent requirement will be 
calculated based either on the period covered by the job training plan 
or on a program year basis.
    (2) For purposes of paragraph (h)(1) of this section, a youth who 
has attained a high school diploma or an equivalency, is habitually 
truant, as defined by State law, or is attending an alternative school 
program may be considered out of school. An alternative school program 
includes an alternative high school, an alternative course of study 
approved by the local educational agency, or a high school equivalency 
program. Such programs may be operated either within or outside of the 
local public school system, and can offer either a high school diploma 
or equivalency.
    (3) Schoolwide project ratios. Those in-school participants who are 
served under a schoolwide project shall not be counted in determining 
the ratio of in-school to out-of-school youth in paragraph (h)(1) of 
this section.



Sec. 628.804  Authorized services.

    (a) The SDA and the PIC shall take into consideration exemplary 
program strategies and services, including those selected for 
replication pursuant to section 453(c) of the Act concerning capacity 
building, in the development of services for programs under this 
subpart.
    (b) Except as provided in paragraph (c) of this section, in order to 
participate in programs under this part an individual who is under the 
age of 18 and a school dropout, as defined in section 4(38) of the Act, 
shall enroll in and attend a school, course or program described in 
section 264(d)(2)(B)(ii) and (iii). An alternative course of study shall 
be approved by the LEA and may include educational programs provided by 
community-based organizations.
    (c) An individual who is a school dropout, as defined in section 
4(38) of the Act, and under the age of 18 may participate in programs 
under this part without meeting the requirements of paragraph (b) of 
this section for a limited interim period which may be during the summer 
months, during periods between school terms, or when a course of study 
is not immediately available.
    (d) The provision of preemployment and work maturity skills training 
shall be accompanied either by work experience or by other additional 
services which are designed to increase the basic education or 
occupational skills of the participant (section 264(d)(3)(A)).
    (e) The provision of work experience, job search assistance, job 
search skills training, and job club activities under programs conducted 
under this subpart shall be accompanied by other additional services 
which are designed to increase the basic education or occupational 
skills of the participant (section 264(d)(3)(B)).
    (f) The additional services offered pursuant to paragraphs (d) and 
(e) of this section may be provided concurrently or sequentially with 
services provided under other education and training programs (e.g., Job 
Opportunities and Basic Skills programs under title IV of the Social 
Security Act, Job Corps (see part 638 of this chapter), or schools).
    (g) Schoolwide projects for low-income schools shall meet the 
conditions in sections 263(g)(1) and (2) of the Act.

[[Page 254]]

    (h) Entry employment experience is a training activity which may be 
conducted in public or private agencies. In all cases, this training 
activity shall increase or develop the long term employability of 
eligible in-school and out-of-school youth. Entry employment experiences 
may include, but are not limited to:
    (1) Work experience as described in Sec. 627.245 of this chapter; 
and
    (2) Cooperative education programs that coordinate educational 
programs with work in the private sector. Subsidized wages are not 
permitted in cooperative education programs.
    (i) Limited internships in the private sector under this subpart 
shall be designed to enhance the long-term employability of youth.
    (1) A limited internship shall be conducted pursuant to an agreement 
with an employer to provide structured on-site private sector exposure 
to work and the requirements for successful job retention.
    (2) A limited internship should be combined with classroom 
instruction relating to a particular position, occupation, industry or 
the basic skills and abilities to successfully compete in the local 
labor market.
    (j)(1) On-the-job (OJT) training activities approved under this 
subpart shall be consistent with the provisions of subpart B of part 627 
of this chapter and shall:
    (i) Be for positions that pay the participant a wage that equals or 
exceeds on the average wage at placement based on the most recent 
available data in the SDA for participants under title II-A;
    (ii) Be for positions that have career advancement potential; and
    (iii) Include a formal, written program of structured job training 
that will provide the participant with an orderly combination of 
instruction in work maturity skills, general employment competencies, 
and occupational specific skills.
    (2) In those cases where the OJT participant is a school dropout, 
the participant shall participate in an education program in accordance 
with paragraph (b) of this section.
    (k) Counseling and supportive services provided under this subpart 
may be provided to a participant for a period of up to 1 year after the 
date on which the participant completes the program. These include the 
full array of supportive services described in section 4(24) of the Act 
except for financial assistance.
    (l) Year-round operations. Programs for youth under this subpart 
shall:
    (1) Provide for a year-round education and training program that is 
coordinated with the appropriate local educational agencies, service 
providers, and other programs; and
    (2) As appropriate, ensure services for youth are available on a 
multiyear basis, consistent with the determined needs and goals of the 
youth served.
    (3) The year-round program delivery requirement of this paragraph 
does not prohibit schools on a 9-month operations schedule from 
providing services for programs under this part.

                        PARTS 629-630 [RESERVED]



PART 631_PROGRAMS UNDER TITLE III OF THE JOB TRAINING PARTNERSHIP ACT
--Table of Contents




                      Subpart A_General Provisions

Sec.
631.1 Scope and purpose.
631.2 Definitions.
631.3 Participant eligibility.
631.4 Approved training rule.

 Subpart B_Additional Title III Administrative Standards and Procedures

631.11 Allotment and obligation of funds by the Secretary.
631.12 Reallotment of funds by the Secretary.
631.13 Classification of costs at State and substate levels.
631.14 Limitations on certain costs.
631.15 Federal reporting requirements.
631.16 Complaints, investigations, and penalties.
631.17 Federal monitoring and oversight.
631.18 Federal by-pass authority.
631.19 Appeals.

                    Subpart C_Needs-Related Payments

631.20 Needs-related payments.

[[Page 255]]

                     Subpart D_State Administration

631.30 Designation or creation and functions of a State dislocated 
          worker unit or office and rapid response assistance.
631.31 Monitoring and oversight.
631.32 Allocation of funds by the Governor.
631.33 State procedures for identifying funds subject to mandatory 
          Federal reallotment.
631.34 Designation of substate areas.
631.35 Designation of substate grantees.
631.36 Biennial State plan.
631.37 Coordination activities.
631.38 State by-pass authority.

                        Subpart E_State Programs

631.40 State program operational plan.
631.41 Allowable State activities.

                       Subpart F_Substate Programs

631.50 Substate plan.
631.51 Allowable substate program activities.
631.52 Selection of service providers.
631.53 Certificate of continuing eligibility.

    Subpart G_Federal Delivery of Dislocated Worker Services Through 
                      National Reserve Account Fund

631.60 General.
631.61 Application for funding and selection criteria.
631.62 Cost limitations.
631.63 Reporting.
631.64 General administrative requirements.
631.65 Special provisions for CAETA and DDP.

Subpart H [Reserved]

             Subpart I_Disaster Relief Employment Assistance

631.80 Scope and purpose.
631.81 Availability of funds.
631.82 Substate allocation.
631.83 Coordination.
631.84 Allowable projects.
631.85 Participant eligibility.
631.86 Limitations on disaster relief employment.
631.87 Definitions.

    Authority: 29 U.S.C. 1579(a); Sec. 6305(f), Pub. L. 100-418, 102 
Stat 1107; Sec. 631.30(d)(7) also issued under 29 U.S.C. 2107(a); Sec. 
631.37(e) also issued under Sec. 402, Pub. L. 100-689, 102 Stat. 4178-
4179 (29 U.S.C. 1751 note).

    Source: 59 FR 45857, Sept. 2, 1994, unless otherwise noted.



                      Subpart A_General Provisions



Sec. 631.1  Scope and purpose.

    This part implements Title III of the Act. Title III programs seek 
to establish an early readjustment capacity for workers and firms in 
each State; to provide comprehensive coverage to workers regardless of 
the cause of dislocation; to provide early referral from the 
unemployment insurance system to adjustment services as an integral part 
of the adjustment process; to foster labor, management and community 
partnerships with government in addressing worker dislocation; to 
emphasize retraining and reemployment services rather than income 
support; to create an on-going substate capacity to deliver adjustment 
services; to tailor services to meet the needs of individuals; to 
improve accountability by establishing a system of mandated performance 
standards; to improve financial management by monitoring expenditures 
and reallotting available funds; and to provide the flexibility to 
target funds to the most critical dislocation problems.



Sec. 631.2  Definitions.

    In addition to the definitions contained in sections 4, 301, and 
303(e) of the Act and Part 626 of this chapter, the following 
definitions apply to programs under Title III of the Act and this part:
    Substantial layoff (for participant eligibility) means any 
reduction-in-force which is not the result of a plant closing and which 
results in an employment loss at a single site of employment during any 
30 day period for:
    (a)(1) At least 33 percent of the employees (excluding employees 
regularly working less than 20 hours per week); and
    (2) At least 50 employees (excluding employees regularly working 
less than 20 hours per week); or
    (b) At least 500 employees (excluding employees regularly working 
less than 20 hours per week).
    Substantial layoff (for rapid response assistance) means any 
reduction-in-force which is not the result of a plant closing and which 
results in an employment loss at a single site of employment during any 
30 day period for at

[[Page 256]]

least 50 employees (excluding employees regularly working less than 20 
hours per week) (section 314(b)(4)).



Sec. 631.3  Participant eligibility.

    (a) Eligible dislocated workers, as defined in section 301 of the 
Act, may participate in programs under this part. For the purposes of 
determining eligibility under section 301(a)(1)(A) of the Act, the term 
``eligible for'' unemployment compensation includes any individual whose 
wages from employment would be considered in determining eligibility for 
unemployment compensation under Federal or State unemployment 
compensation laws.
    (b)(1) Except as provided in paragraph (b)(3) of this section, 
workers who have not received an individual notice of termination but 
who are employed at a facility for which the employer has made a public 
announcement of planned closure shall be considered eligible dislocated 
workers with respect to the provision of basic readjustment services 
specifically identified in section 314(c) of the Act with the exception 
of supportive services and relocation assistance.
    (2) Individuals identified in paragraph (b)(1) of this section shall 
be eligible to receive all services authorized in sections 314 of the 
Act after a date which is 180 days prior to the scheduled closure date 
of the facility, subject to the provisions of Sec. 631.20 of this part 
and other applicable provisions regarding receipt of supportive 
services.
    (3) Paragraphs (b)(1) and (b)(2) of this section shall not apply to 
individuals who are likely to remain employed with the employer or to 
retire instead of seeking new employment.
    (4) For the purposes of paragraph (b)(1) of this section, the 
Governor shall establish criteria for defining public announcement. Such 
criteria shall include provisions that the public announcement shall be 
made by the employer and shall indicate a planned closure date for the 
facility (section 314(h)).
    (c) Eligible dislocated workers include individuals who were self-
employed (including farmers and ranchers) and are unemployed:
    (1) Because of natural disasters, subject to the provisions of 
paragraph (e) of this section; or
    (2) As a result of general economic conditions in the community in 
which they reside.
    (d) For the purposes of paragraph (c) of this section, categories of 
economic conditions resulting in the dislocation of a self-employed 
individual may include, but are not limited to:
    (1) Failure of one or more businesses to which the self-employed 
individual supplied a substantial proportion of products or services;
    (2) Failure of one or more businesses from which the self-employed 
individual obtained a substantial proportion of products or services;
    (3) Substantial layoff(s) from, or permanent closure(s) of, one or 
more plants or facilities that support a significant portion of the 
State or local economy.
    (e) The Governor is authorized to establish procedures to determine 
the eligibility to participate in programs under this part of the 
following categories of individuals:
    (1) Self-employed farmers, ranchers, professionals, independent 
tradespeople and other business persons formerly self-employed but 
presently unemployed.
    (2) Self-employed individuals designated in paragraph (d)(1) of this 
section who are in the process of going out of business, if the Governor 
determines that the farm, ranch, or business operations are likely to 
terminate.
    (3) Family members and farm or ranch hands of individuals identified 
under paragraphs (d)(1) and (2) of this section, to the extent that 
their contribution to the farm, ranch, or business meets minimum 
requirements as established by the Governor.
    (f) The Governor is authorized to establish procedures to identify 
individuals permanently dislocated from their occupations or fields of 
work, including self-employment, because of natural disasters. For the 
purposes of this paragraph (f), categories of natural disasters include, 
but are not limited to, any hurricane, tornado, storm, flood, high 
water, wind-driven water, tidal wave, tsunami, earthquake, volcanic

[[Page 257]]

eruption, landslide, mudslide, drought, fire, or explosion.
    (g) The State may provide services to displaced homemakers (as 
defined in section 4 of the Act) under this part only if the Governor 
determines that such services may be provided without adversely 
affecting the delivery of such services to eligible dislocated workers 
(section 311(b)(4)).
    (h) An eligible dislocated worker issued a certificate of continuing 
eligibility, as provided in Sec. 631.53 of this part, shall remain 
eligible for assistance under this part for the period specified in the 
certificate, not to exceed 104 weeks. The 45-day enrollment provisions 
described in subpart B of part 627 of this chapter shall be waived for 
eligible individuals who possess a valid certificate under this 
paragraph and it is not required that a new application be taken prior 
to participation.
    (i) An eligible dislocated worker who does not possess a valid 
certificate shall remain eligible if such individual:
    (1) Remains unemployed, or
    (2) Accepts temporary employment for the purpose of income 
maintenance prior to and/or during participation in a training program 
under this part with the intention of ending such temporary employment 
at the completion of the training and entry into permanent unsubsidized 
employment as a result of the training. Such temporary employment must 
be with an employer other than that from which the individual was 
dislocated. This provision applies to eligible individuals both prior to 
and subsequent to enrollment.
    (j) The Governor shall ensure that rapid response and basic 
readjustment services under Title III of JTPA are made available to 
workers who, under the NAFTA Worker Security Act (Pub. L. 103-182), are 
members of a group of workers (including workers in any agricultural 
firm or subdivision of an agricultural firm) for which the Governor has 
made a finding that (1) the sales or production, or both, of such firm 
or subdivision have decreased absolutely, and (2) imports from Mexico or 
Canada of articles like or directly competitive with articles produced 
by such firm or subdivision have increased; or (3) there has been a 
shift in production by such workers' firm or subdivision to Mexico or 
Canada of articles which are produced by the firm or subdivision.



Sec. 631.4  Approved training rule.

    An eligible dislocated worker who is participating in any retraining 
activity, except on-the-job training, under Title III of the Act or this 
part shall be deemed to be in training with the approval of the State 
agency for purposes of section 3304(a)(8) of the Internal Revenue Code 
of 1986. Participation in the approved training shall not disqualify the 
individual from receipt of unemployment benefits to which the individual 
is otherwise entitled (section 314(f)(2)).



 Subpart B_Additional Title III Administrative Standards and Procedures



Sec. 631.11  Allotment and obligation of funds by the Secretary.

    (a) Funds shall be allotted among the various States in accordance 
with section 302(b)(1) of the Act, subject to paragraph (b) of this 
section.
    (b) Funds shall be allotted among the various States in accordance 
with section 302(b)(2)(A) and (B) of the Act as soon as satisfactory 
data are available under section 462(e) of the Act.
    (c) Allotments for the Commonwealth of the Northern Mariana Islands 
and other territories and possessions of the United States shall be made 
by the Secretary in accordance with the provisions of section 302(e) of 
the Act.



Sec. 631.12  Reallotment of funds by the Secretary.

    (a) Based upon reports submitted by States pursuant to Sec. 631.15 
of this part, the Secretary shall make determinations regarding total 
expenditures of funds within the State with reference to the amount 
required to be reallotted pursuant to section 303(b) of the Act. For 
purposes of this paragraph (a)--
    (1) The funds to be reallotted will be an amount equal to the sum 
of:
    (i) Unexpended funds in excess of 20 percent of the prior program 
year's formula allotment to the State, and
    (ii) All unexpended funds from the formula allotment for the program 
year preceding the prior program year.

[[Page 258]]

    (2)(i) The current program year is the year in which the 
determination is made; and
    (ii) The prior program year is the year immediately preceding the 
current program year.
    (3) Unexpended funds shall mean the remainder of the total funds 
made available by formula that were available to the State for the prior 
program year minus total accrued expenditures at the end of the prior 
program year.
    (4) Reallotted funds will be made available from current year 
allotments made available by formula.
    (b) Based upon the most current and satisfactory data available, the 
Secretary shall identify eligible States, pursuant to the definitions in 
section 303(e) of the Act.
    (c) The Secretary shall recapture funds from States identified in 
paragraph (a) of this section and reallot and reobligate such funds by a 
Notice of Obligation (NOO) adjustment to current year funds to eligible 
States as identified in paragraph (b) of this section, as set forth in 
section 303(a), (b), and (c) of the Act.
    (d) Reallotted funds shall be subject to allocation pursuant to 
Sec. 631.32 of this part, and to the cost limitations at Sec. 631.14 
of this part.



Sec. 631.13  Classification of costs at State and substate levels.

    (a)(1) Allowable costs under Title III shall be planned, controlled, 
and charged by either the State or the substate grantee against the 
following cost categories: rapid response services, basic readjustment 
services, retraining services, needs-related payments and supportive 
services, and administration. Costs shall be reported to the Secretary 
of Labor in accordance with the reporting requirements established 
pursuant to Sec. 631.15 of this part.
    (2) All costs shall be allocable to a particular cost category to 
the extent that benefits are received by such category; and no costs 
shall be chargeable to a cost category except to the extent that 
benefits are received by such category.
    (b) Rapid response services shall include the cost of rapid response 
activities identified at section 314(b) of the Act.
    (1) Staff salary and benefit costs are chargeable to the rapid 
response services cost category only for that portion of staff time 
actually spent on rapid response activities.
    (2) All other costs are chargeable to the rapid response services 
cost category only to the extent that they are for rapid response 
purposes.
    (c) Basic readjustment services shall include the cost of basic 
readjustment services identified at section 314(c) of the Act, except 
that the cost of supportive services under section 314(c)(15) of the Act 
shall be charged to the needs-related payments and supportive services 
cost category, as provided in paragraph (e) of this section.
    (d) Retraining services shall include the cost of retraining 
services identified at section 314(d) of the Act.
    (e) Needs-related payments and supportive services shall include the 
cost of needs-related payments identified in section 314(e) of the Act, 
and supportive services identified in section 4(24) of the Act and 
provided for in section 314(c)(15) of the Act.
    (f)(1) Administration shall include the costs incurred by recipients 
and subrecipients in the administration of programs under Title III of 
the Act, and shall be that portion of necessary and allowable costs 
which is not directly related to the provision of services and otherwise 
allocable to the cost categories in paragraphs (b) through (e) of this 
section. The description of administrative costs in subpart D of part 
627 of this chapter shall be used by States and substate grantees as 
guidance in charging administration costs to Title III programs.
    (2) Administration does not include the costs of activities under 
section 314(b) of the Act and which are provided for in paragraph (b) of 
this section.
    (3) Administration shall include Title III funds used for 
coordination of worker adjustment programs with the Federal-State 
unemployment compensation system and with Chapter 2 of Title II of the 
Trade Act of 1974 (19 U.S.C. 2271, et seq.) and part 617 of this chapter 
(sections 311(b)(10) and 314(f)).

[[Page 259]]



Sec. 631.14  Limitations on certain costs.

    (a) Retraining services. Of the funds allocated to a substate 
grantee under part A of Title III for any program year, not less than 50 
percent shall be expended for retraining services specified under 
section 314(d) of the Act, unless a waiver of this requirement is 
granted by the Governor. The Governor shall prescribe criteria that will 
allow substate grantees to apply in advance for a waiver of this 
requirement, pursuant to section 315(a)(2) of the Act. The Governor 
shall prescribe the time and form for the submission of an application 
for such a waiver, as provided for at section 315(a)(3) of the Act. The 
Governor shall not grant a waiver that allows less than 30 percent of 
the funds expended by a substate grantee to be expended for retraining 
activities.
    (b) Needs-related payments and supportive services. Of the funds 
allocated to the Governor, or allocated to any substate grantee, under 
part A of Title III for any program year, not more than 25 percent may 
be expended to provide needs-related payments and other supportive 
services.
    (c) Administrative cost. Of the funds allocated to the Governor, or 
allocated to any substate grantee, under part A of Title III for any 
program year, not more than 15 percent may be expended to cover the 
administrative cost of programs.
    (d) Reallotted funds are subject to the cost limitations in 
paragraphs (a), (b) and (c) of this section.
    (e) Funds allocated (or distributed) to substate areas under the 
provisions of section 302(c)(1)(E) of the Act shall be considered funds 
allocated to a substate grantee for the program year of the funds' 
initial allotment to the State, and included in the cost limitations in 
paragraphs (a), (b) and (c) of this section.
    (f) Funds reserved by the Governor under the provisions of Section 
302(c)(1) of the Act, other than funds distributed to substate grantees 
under the provisions of JTPA section 302(c)(1)(E), shall be considered 
funds allocated to the Governor for the program year of the funds' 
initial allotment to the State and included in the cost limitations 
applicable to the Governor.
    (g) States and substate grantees shall have the full period of time 
that the funds are available to them to comply with the cost limitations 
described in JTPA section 315 and paragraphs (a), (b), and (c) of this 
section.
    (h) Combination of funds. (1) Substate grantees within a State may 
combine funds allocated under part A of Title III for provision of 
services to eligible dislocated workers from two or more substate areas. 
Funds contributed by the substate grantees under this section remain 
subject to the cost limitations which apply to each substate grantee's 
total allocation (section 315(d)).
    (2) To combine funds under this provision, substate grantees must be 
in contiguous substate areas or part of the same labor market area.
    (i) For the purposes of this section:
    (1) Allotment to the State means allotted by the formula described 
in section 302(b) of the Act, as adjusted by reallotments among the 
States, in accordance with section 303 of the Act. For purposes of 
determining availability and of applying cost limitations, funds will 
retain the identity of the program year in which they were initially 
allotted to a State, irrespective of subsequent reallotments.
    (2) Allocated to the substate grantee means allocated by the formula 
prescribed by the Governor under section 302(b) of the Act, and 
allocated (or distributed) under the provisions of section 302(c)(1)(E), 
as adjusted by within State reallocations implemented by the Governor 
through procedures established pursuant to section 303(d) of the Act. 
For purposes of determining availability and of applying cost 
limitations, funds will retain the identity of the program year in which 
they were initially allotted to the State.
    (3) Allocated to the Governor refers to funds reserved by the 
Governor for use in accordance with the provisions of section 302(c)(1) 
of the Act, exclusive of any such funds which are distributed or 
allocated to substate grantees pursuant to section 302(c)(1)(E).
    (j) The cost limitations described in this section do not apply to 
any designated substate grantee which served as a concentrated 
employment program grantee for a rural area under the

[[Page 260]]

Comprehensive Employment and Training Act (section 108(d)).



Sec. 631.15  Federal reporting requirements.

    Notwithstanding the requirements in subpart D of part 627 of this 
chapter, the Governor shall report to the Secretary pursuant to 
instructions issued by the Secretary for programs and activities funded 
under this part. Such reports shall include a cost breakdown of all 
funds made available under this part used by the State Dislocated Worker 
Unit for administrative expenditures. Reports shall be provided to the 
Secretary within 45 calendar days after the end of the report period 
(sections 165(a)(2) and 311(b)(11)).



Sec. 631.16  Complaints, investigations, and penalties.

    The provisions of this section apply in addition to the sanctions 
provisions in subpart G of part 627 of this chapter.
    (a) The Secretary shall investigate a complaint or report received 
from an aggrieved party or a public official which alleges that a State 
is not complying with the provisions of the State plan required under 
section 311(a) of the Act (section 311(e)(1)).
    (b) Where the Secretary determines that a State has failed to comply 
with its State plan, and that other remedies under the Act and part 627 
of this chapter are not available or are not adequate to achieve 
compliance, the Secretary may withhold an amount not to exceed 10 
percent of the allotment to the State for the program year in which the 
determination is made for each such violation (section 311(e)(2)(A)).
    (c) The Secretary will not impose the penalty provided for under 
paragraph (b) of this section until all other remedies under the Act and 
part 627 of this chapter for achieving compliance have been exhausted or 
are determined to be unavailable or inadequate to achieve State 
compliance with the terms of the State plan.
    (d) The Secretary will make no determination under this section 
until the affected State has been afforded adequate written notice and 
an opportunity to request and to receive a hearing before an 
administrative law judge pursuant to the provisions of subpart H of part 
627 of this chapter (section 311(e)(2)(B)).



Sec. 631.17  Federal monitoring and oversight.

    The Secretary shall conduct oversight of State administration of 
programs under this part, including the administration by each State of 
the rapid response assistance services provided in such State. The 
Secretary shall take the appropriate actions to ensure the 
effectiveness, efficiency and timeliness of services conducted by the 
State in accordance with Sec. 631.30(b) of this part (section 
314(b)(3)).



Sec. 631.18  Federal by-pass authority.

    (a) In the event that a State fails to submit a biennial State plan 
that is approved under Sec. 631.36 of this part, the Secretary shall 
make arrangements to use the amount that would be allotted to that State 
for the delivery in that State of the programs, activities, and services 
authorized under Title III of the Act and this part.
    (b) No determination may be made by the Secretary under this section 
until the affected State is afforded written notification of the 
Secretary's intent to exercise by-pass authority and an opportunity to 
request and to receive a hearing before an administrative law judge 
pursuant to the provisions of subpart H of part 627 of this chapter.
    (c) The Secretary will exercise by-pass authority only until such 
time as the affected State has an approved plan under the provisions of 
Sec. 631.36 of this part (section 321(b)).



Sec. 631.19  Appeals.

    Except as provided in this part, disputes arising in programs under 
this part shall be adjudicated under the appropriate State or local 
grievance procedures required by subpart E of part 627 of this chapter 
or other applicable law. Complaints alleging violations of the Act or 
this part may be filed with the Secretary, pursuant to subpart F of part 
627 of this chapter. Paragraphs (a) through (e) of this section refer to 
appeal rights set forth in this part.
    (a) Section 628.405(g) of this chapter (appeals of denial of SDA 
designation) shall apply to denial of substate area

[[Page 261]]

designations under Sec. 631.34(c)(1) and (3) of this part.
    (b) Section 628.426(e) of this chapter (appeals of final disapproval 
of SDA job training plans or modifications) shall apply to final 
disapproval of substate plans under Sec. 631.50(f) of this part.
    (c) Section 628.426(f) of this chapter (appeals of a Governor's 
notice of intent to revoke approval of all or part of a plan) shall 
apply to a Governor's notice of intent to exercise by-pass authority 
under Sec. 631.38 of this part.
    (d) Section 628.430(b) of this chapter (appeals of the Secretary's 
disapproval of a plan when the SDA is the State) shall apply to plan 
disapproval when the substate area is the State, as set forth in Sec. 
631.50(g) and (h) of this part.
    (e) Decisions pertaining to designations of substate grantees under 
Sec. 631.35 of this part are not appealable to the Secretary.



                    Subpart C_Needs-related payments



Sec. 631.20  Needs-related payments.

    (a) Title III funds available to States and substate grantees may be 
used to provide needs-related payments to participants in accordance 
with the approved State or substate plan, as appropriate.
    (b) In accordance with the approved substate plan, needs-related 
payments shall be provided to an eligible dislocated worker only in 
order to enable such worker to participate in training or education 
programs under this part. To be eligible for needs-related payments:
    (1) An eligible worker who has ceased to qualify for unemployment 
compensation must have been enrolled in a training or education program 
by the end of the thirteenth week of the worker's initial unemployment 
compensation benefit period, or, if later, by the end of the eighth week 
after an employee is informed that a short-term layoff will in fact 
exceed 6 months.
    (2) For purposes of paragraph (b)(1) of this section, the term 
enrolled in a training or education program means that the worker's 
application for training has been approved and the training institution 
has furnished written notice that the worker has been accepted in the 
approved training program beginning within 30 calendar days.
    (3) An eligible worker who does not qualify for unemployment 
compensation must be participating in a training or education program 
(section 314(e)(1)).
    (c) Needs-related payments shall not be provided to any participant 
for the period that such individual is employed, enrolled in, or 
receiving on-the-job training, out-of-area job search, or basic 
readjustment services in programs under the Act, nor to any participant 
receiving trade readjustment allowances, on-the-job training, out-of-
area job search allowances, or relocation allowances under Chapter 2 of 
Title II of the Trade Act of 1974 (19 U.S.C. 2271, et seq.) or part 617 
of this chapter (section 314(e)(1)).
    (d) The level of needs-related payments to an eligible dislocated 
worker in programs under this part shall not exceed the higher of:
    (1) The applicable level of unemployment compensation; or
    (2) The poverty level (as by the published by the Secretary of 
Health and Human Services) (section 314(e)(2)).



                     Subpart D_State Administration



Sec. 631.30  Designation or creation and functions of a State dislocated 
worker unit or office, and rapid response assistance.

    (a) Designation or creation of State dislocated worker unit or 
office. The State shall designate or create an identifiable State 
dislocated worker unit or office with the capabilities and functions 
identified in paragraph (b) of this section. Such unit or office may be 
an existing organization or new organization formed for this purpose 
(section 311(b)(2)). The State dislocated worker unit or office shall:
    (1) Make appropriate retraining and basic adjustment services 
available to eligible dislocated workers through substate grantees, and 
in statewide, regional or industrywide projects;
    (2) Work with employers and labor organizations in promoting labor-
management cooperation to achieve the goals of this part;
    (3) Operate a monitoring, reporting, and management system to 
provide

[[Page 262]]

adequate information for effective program management, review, and 
evaluation;
    (4) Provide technical assistance and advice to substate grantees;
    (5) Exchange information and coordinate programs with the 
appropriate economic development agency, State education and training 
and social services programs;
    (6) Coordinate with the unemployment insurance system, the Federal-
State Employment Service system, the Trade Adjustment Assistance program 
and other programs under this chapter;
    (7) Receive advance notice of plant closings and mass layoffs as 
provided at section 3(a)(2) of the Worker Adjustment and Retraining 
Notification Act (29 U.S.C. 2102(a)(2) and part 639 of this chapter);
    (8) Immediately notify (within 48 hours) the appropriate substate 
grantees following receipt of an employer notice of layoff or plant 
closing or of any other information that indicates a projected layoff or 
plant closing by an employer in the grantee's substate area, in order to 
continue and expand the services initiated by the rapid response team 
(section 311(b)(3)(D));
    (9) Fully consult with labor organizations where substantial numbers 
of their members are to be served; and
    (10) Disseminate throughout the State information on the 
availability of services and activities under Title III of the Act and 
this part.
    (b) Rapid response capability. The dislocated worker unit shall have 
one or more rapid response specialists, and the capability to provide 
rapid response assistance, on-site, for dislocation events such as 
permanent closures and substantial layoffs throughout the State. The 
State shall not transfer the responsibility for the rapid response 
assistance functions of the State dislocated worker unit to another 
entity, but the State may contract with another entity to perform rapid 
response assistance services. Nothing in this paragraph shall remove or 
diminish the dislocated worker unit's accountability for ensuring the 
effective delivery of rapid response assistance services throughout the 
State (section 311(b)(12)).
    (1) State rapid response specialists should be knowledgeable about 
the resources available through programs under this part and all other 
appropriate resources available through public and private sources to 
assist dislocated workers. The expertise required by this part includes 
knowledge of the Federal, State, and local training and employment 
systems; labor-management relations and collective bargaining 
activities; private industry and labor market trends; programs and 
services available to veterans; and other fields necessary to carry out 
the rapid response requirements of the Act.
    (2) The rapid response specialists should have:
    (i) The ability to organize a broad-based response to a dislocation 
event, including the ability to coordinate services provided under this 
part with other State-administered programs available to assist 
dislocated workers, and the ability to involve the substate grantee and 
local service providers in the assistance effort;
    (ii) The authority to provide limited amounts of immediate financial 
assistance for rapid response activities, including, where appropriate, 
financial assistance to labor-management committees formed under 
paragraph (c)(2) of this section;
    (iii) Credibility among employers and in the employer community in 
order to effectively work with employers in difficult situations; and
    (iv) Credibility among employee groups and in the labor community, 
including organized labor, in order to effectively work with employees 
in difficult situations.
    (3) The dissemination of information on the State dislocated worker 
unit's services and activities should include efforts to ensure that 
major employers, organized labor, and groups of employees not 
represented by organized labor, are aware of the availability of rapid 
response assistance. The State dislocated worker unit should make equal 
effort in responding to dislocation events without regard to whether the 
affected workers are represented by a union.
    (4) In a situation involving an impending permanent closure or 
substantial layoff, a State may provide funds,

[[Page 263]]

where other public or private resources are not expeditiously available, 
for a preliminary assessment of the advisability of conducting a 
comprehensive study exploring the feasibility of having a company or 
group, including the workers, purchase the plant and continue it in 
operation.
    (5) Rapid response specialists may use funds available under this 
part:
    (i) To establish on-site contact with employer and employee 
representatives within a short period of time (preferably 48 hours or 
less) after becoming aware of a current or projected permanent closure 
or substantial layoff in order to--
    (A) Provide information on and facilitate access to available public 
programs and services; and
    (B) Provide emergency assistance adapted to the particular permanent 
closure or substantial layoff; such emergency assistance may include 
financial assistance for appropriate rapid response activities, such as 
arranging for the provision of early intervention services and other 
appropriate forms of immediate assistance in response to the dislocation 
event;
    (ii) To promote the formation of labor-management committees as 
provided for in paragraph (c) of this section, by providing:
    (A) Immediate assistance in the establishment of the labor-
management committee, including providing immediate financial assistance 
to cover the start-up costs of the committee;
    (B) A list of individuals from which the chairperson of the 
committee may be selected;
    (C) Technical advice as well as information on sources of 
assistance, and liaison with other public and private services and 
programs; and
    (D) Assistance in the selection of worker representatives in the 
event no union is present;
    (iii) To provide ongoing assistance to labor-management committees 
described in paragraph (c) of this section by:
    (A) Maintaining ongoing contact with such committees, either 
directly or through the committee chairperson;
    (B) Attending meetings of such committees on an ex officio basis; 
and
    (C) Ensuring ongoing liaison between the committee and locally 
available resources for addressing the dislocation, including the 
establishment of linkages with the substate grantee or with the service 
provider designated by the substate grantee to act in such capacity;
    (iv) To collect information related to:
    (A) Economic dislocation (including potential closings or layoffs); 
and
    (B) All available resources within the State for serving displaced 
workers, which information shall be made available on a regular basis to 
the Governor and the State Council to assist in providing an adequate 
information base for effective program management, review, and 
evaluation;
    (v) To provide or obtain appropriate financial and technical advice 
and liaison with economic development agencies and other organizations 
to assist in efforts to avert worker dislocations;
    (vi) To disseminate information throughout the State on the 
availability of services and activities carried out by the dislocated 
worker unit or office; and
    (vii) To assist the local community in developing its own 
coordinated response and in obtaining access to State economic 
development assistance.
    (6) Notwithstanding the definition of ``substantial layoff (for 
rapid response assistance)'' at Sec. 631.2 of this part;
    (i) The Governor shall provide rapid response and basic readjustment 
services to members of a group of workers under the NAFTA Worker 
Security Act for which the Governor has made a finding under Sec. 
631.3(j); and
    (ii) The Governor may, under exceptional circumstances, authorize 
rapid response assistance provided by a State dislocated worker unit 
when the layoff is less than 50 or more individuals, is not at a single 
site of employment, or does not take place during a single 30 day 
period. For purposes of this provision, exceptional circumstances 
include those situations which would have a major impact upon the 
community(ies) in which they occur (section 314(b)).
    (c) Labor-management committees. As provided in sections 301(b)(1) 
and 314(b)(1)(B) of the Act, labor-management committees are a form of 
rapid

[[Page 264]]

response assistance which may be voluntarily established to respond to 
actual or prospective worker dislocation.
    (1) Labor management committees ordinarily include (but are not 
limited to) the following:
    (i) Shared and equal participation by workers and management, with 
members often selected in an informal fashion;
    (ii) Shared financial participation between the company and the 
State, using funds provided under Title III of the Act, in paying for 
the operating expenses of the committee; in some instances, labor union 
funds may help to pay committee expenses;
    (iii) A chairperson, to oversee and guide the activities of the 
committee who--
    (A) Shall be jointly selected by the labor and management members of 
the committee;
    (B) Is not employed by or under contract with labor or management at 
the site; and
    (C) Shall provide advice and leadership to the committee and prepare 
a report on its activities;
    (iv) The ability to respond flexibly to the needs of affected 
workers by devising and implementing a strategy for assessing the 
employment and training needs of each dislocated worker and for 
obtaining the services and assistance necessary to meet those needs;
    (v) A formal agreement, terminable at will by the workers or the 
company management, and terminable for cause by the Governor; and
    (vi) Local job identification activities by the chairperson and 
members of the committee on behalf of the affected workers.
    (2) Because they include employee representatives, labor-management 
committees typically provide a channel whereby the needs of eligible 
dislocated workers can be assessed, and programs of assistance developed 
and implemented, in an atmosphere supportive to each affected worker. As 
such, committees must be perceived to be representative and fair in 
order to be most effective.



Sec. 631.31  Monitoring and oversight.

    The Governor is responsible for monitoring and oversight of all 
State and substate grantee activities under this part. In such 
monitoring and oversight of substate grantees, the Governor shall ensure 
that expenditures and activities are in accordance with the substate 
plan or modification thereof, and with the cost limitations described in 
Sec. 631.14 of this part.



Sec. 631.32  Allocation of funds by the Governor.

    Of the funds allotted to the Governor by the Secretary under 
Sec. Sec. 631.11 and 631.12 of this part:
    (a) The Governor shall issue allocations to substate grantees, the 
sum of which shall be no less than 50 percent of the State's allotment 
(section 302(d)).
    (b)(1) The Governor shall prescribe the formula to be used in 
issuing substate allocations required under paragraph (a) of this 
section to substate grantees.
    (2) The formula prescribed pursuant to paragraph (b)(1) of this 
section shall utilize the most appropriate information available to the 
Governor. In prescribing the formula, the Governor shall include (but 
need not be limited to) the following information:
    (i) Insured unemployment data;
    (ii) Unemployment concentrations;
    (iii) Plant closing and mass layoff data;
    (iv) Declining industries data;
    (v) Farmer-rancher economic hardship data; and
    (vi) Long-term unemployment data.
    (3) The Governor may allow for an appropriate weight for each of the 
formula factors set forth in paragraph (b)(2) of this section. A weight 
of zero for any of the factors required in section 302(d) of the Act and 
identified in paragraph (b)(2) of this section shall only be made when a 
review of available data indicates that the factor is not relevant to 
determining the incidence of need for worker dislocation assistance 
within the State. The formula may be amended no more frequently than 
once each program year (section 302(d)).
    (c) The Governor may reserve an amount equal to not more than 40 
percent of the funds allotted to the State under Sec. 631.11 and Sec. 
631.12 of this part for State activities and for discretionary

[[Page 265]]

allocations to substate grantees (section 302(c)(1)).
    (d) The Governor may reserve an additional amount equal to not more 
than 10 percent of the funds allotted to the State under Sec. 631.11 of 
this part. The Governor shall allocate such funds, subject to the SJTCC 
or HRIC review and comment, during the first three quarters of the 
program year among substate grantees on the basis of need. Such funds 
shall be allocated to substate grantees and shall not be used for 
statewide activities. Such funds shall be included in each substate 
grantee's allocation for purposes of cost limitations, as described in 
Sec. 631.14 of this part (sections 302(c)(2) and 317(1)(B)).



Sec. 631.33  State procedures for identifying funds subject to mandatory 
Federal reallotment.

    The Governor shall establish procedures to assure the equitable 
identification of funds required to be reallotted pursuant to section 
303(b) of the Act. Funds so identified may be funds reserved by the 
State pursuant to section 302(c)(1)(A) through (D) of the Act and/or 
allocated to substate grantees pursuant to section 302(c)(1)(E), (c)(2) 
and/or (d) of the Act (section 303(d)). Such procedures may not exempt 
either State or substate funds from reallotment.



Sec. 631.34  Designation of substate areas.

    (a) The Governor, after receiving recommendations from the SJTCC or 
HRIC, shall designate substate areas for the State (section 312(a)).
    (b) In designating substate areas, the Governor shall:
    (1) Ensure that each service delivery area within the State is 
included within a substate area and that no SDA is divided among two or 
more substate areas; and
    (2) Consider the availability of services throughout the State, the 
capability to coordinate the delivery of services with other human 
services and economic development programs, and the geographic 
boundaries of labor market areas within the State.
    (c) Subject to paragraph (b) of this section, the Governor shall 
designate as a substate area:
    (1) Any single SDA that has a population of 200,000 or more;
    (2) Any two or more contiguous SDA's that:
    (i) In the aggregate have a population of 200,000 or more; and
    (ii) Request such designation; and
    (3) Any concentrated employment program grantee for a rural area as 
described in section 101(a)(4)(A)(iii) of the Act.
    (d) In addition to the entities identified in paragraph (c) of this 
section, the Governor may, without regard to the 200,000 population 
requirement, designate SDAs with smaller populations as substate areas.
    (e) The Governor may deny a request for substate area designation 
from a consortium of two or more SDAs that meets the requirements of 
paragraph (c)(2) of this section only upon a determination that the 
request is not consistent with the effective delivery of services to 
eligible dislocated workers in the relevant labor market area, or would 
otherwise not be appropriate to carry out the purposes of title III. The 
Governor will give good faith consideration to all such requests by a 
consortium of SDAs to be a substate area. In denying a consortium's 
request for substate area designation, the Governor shall set forth the 
basis and rationale for the denial (section 312(a)(5)).
    (f) In the case where the service delivery area is the State, the 
entire State shall be designated as a single substate area.
    (g)(1) Entities described in paragraphs (c)(1) and (3) of this 
section may appeal the Governor's denial of substate area designation to 
the Secretary of Labor. The procedures that apply to such appeals shall 
be those set forth at Sec. 628.405(g) for appeals of the Governor's 
denial of SDA designation.
    (2) An entity described in paragraph (c)(2) of this section that has 
been denied substate area designation may utilize the State-level 
grievance procedures required by section 144(a) of the Act and subpart E 
of part 627 of this chapter for the resolution of disputes arising from 
such a denial.
    (h) Designation of substate areas shall not be revised more 
frequently than once every two years. All such designations must be 
completed no

[[Page 266]]

later than four months prior to the beginning of any program year 
(section 312(a)(6)).



Sec. 631.35  Designation of substate grantees.

    The Governor may establish procedures for the designation of 
substate grantees.
    (a) Designation of the substate grantee for each substate area shall 
be made on a biennial basis.
    (b) Entities eligible for designation as substate grantees include:
    (1) Private industry councils in the substate area;
    (2) Service delivery area grant recipients or administrative 
entities designated under Title II of the Act;
    (3) Private non-profit organizations;
    (4) Units of general local government in the substate area, or 
agencies thereof;
    (5) Local offices of State agencies; and
    (6) Other public agencies, such as community colleges and area 
vocational schools.
    (c) Substate grantees shall be designated in accordance with an 
agreement among the Governor, the local elected official or officials of 
such area, and the private industry council or councils of such area. 
Whenever a substate area is represented by more than one such official 
or council, the respective officials and councils shall each designate 
representatives, in accordance with procedures established by the 
Governor (after consultation with the SJTCC or HRIC), to negotiate such 
agreement.
    (d) The agreement specified in paragraph (c) of this section shall 
set forth the conditions, considerations, and other factors related to 
the selection of substate grantees in accordance with section 312(b) of 
the Act.
    (e) The Governor shall negotiate in good faith with the parties 
identified in paragraph (c) of this section and shall make a good faith 
effort to reach agreement. In the event agreement cannot be reached on 
the selection of a substate grantee, the Governor shall select the 
substate grantee.
    (f) Decisions under paragraphs (c), (d), and (e) of this section are 
not appealable to the Secretary (section 312(b) and (c)).



Sec. 631.36  Biennial State plan.

    (a) In order to receive an allotment of funds under Sec. Sec. 
631.11 and 631.12 of this part, the State shall submit to the Secretary, 
in accordance with instructions issued by the Secretary, on a biennial 
basis, a biennial State plan (section 311). Such plan shall include:
    (1) Assurances that--
    (i) The State will comply with the requirements of Title III of the 
Act and this part;
    (ii) Services will be provided only to eligible displaced workers, 
except as provided in paragraph (a)(2) of this section;
    (iii) Services will not be denied on the basis of State of residence 
to eligible dislocated workers displaced by a permanent closure or 
substantial layoff within the State; and may be provided to other 
eligible dislocated workers regardless of the State of residence of such 
workers;
    (2) Provision that the State will provide services under this part 
to displaced homemakers only if the Governor determines that the 
services may be provided to such workers without adversely affecting the 
delivery of services to eligible dislocated workers;
    (3) A description of the substate allotment and reallotment 
procedures and assurance that they meet the requirements of the Act and 
this part;
    (4) A description of the State procurement system and procedures to 
be used under Title III of the Act and this part which are consistent 
with the provisions in subpart D of part 627 of this chapter; and
    (5) Assurance that the State will not prescribe any performance 
standard which is inconsistent with Sec. 627.470 of this chapter.
    (b) The State biennial plan shall be submitted to the Secretary on 
or before the May 1 immediately preceding the first of the two program 
years for which the funds are to be made available.
    (c) Any plan submitted under paragraph (a) of this section may be 
modified to describe changes in or additions to the programs and 
activities set forth in the plan. No plan modification shall

[[Page 267]]

be effective unless reviewed pursuant to paragraph (d) of this section 
and approved pursuant to paragraph (e) of this section.
    (d) The Secretary shall review State biennial plans and plan 
modifications, including any comments thereon submitted by the SJTCC or 
HRIC, for overall compliance with the provisions of the Act, this part, 
and the instructions issued by the Secretary.
    (e) A State biennial plan or plan modification is submitted on the 
date of its receipt by the Secretary. The Secretary shall approve a plan 
or plan modification within 45 days of submission unless, within 30 days 
of submission, the Secretary notifies the Governor in writing of any 
deficiencies in such plan or plan modification.
    (f) The Secretary shall not finally disapprove the State biennial 
plan or plan modification of any State except after written notice and 
an opportunity to request and to receive a hearing before an 
administrative law judge pursuant to the provisions of subpart H of part 
627 of this chapter.



Sec. 631.37  Coordination activities.

    (a) Services under this part shall be integrated or coordinated with 
services and payments made available under Chapter 2 of Title II of the 
Trade Act of 1974 (19 U.S.C. 2271, et seq.) and part 617 of this chapter 
and programs provided by any State or local agencies designated under 
section 239 of the Trade Act of 1974 (19 U.S.C. 2311) or part 617 of 
this chapter (section 311(b)(10)). Such coordination shall be effected 
under provisions of an interagency agreement when the State agency 
responsible for administering programs under this part is different from 
the State agency administering Trade Act programs.
    (b) States may use funds allotted under Sec. Sec. 631.11 and 631.12 
of this part for coordination of worker readjustment programs, (i.e., 
programs under this part and trade adjustment assistance under part 617 
of this chapter) and the unemployment compensation system consistent 
with the limitation on administrative expenses (see Sec. 631.14(a)(1) 
of this part). Each State shall be responsible for coordinating the 
unemployment compensation system and worker readjustment programs 
(section 314(f)).
    (c) Services under this part shall be coordinated with dislocated 
worker services under Title III of the Carl D. Perkins Vocational 
Education Act (20 U.S.C. 2351, et seq.) (section 311(b)(5)).
    (d) In promoting labor management cooperation, including the 
formation of labor-management committees under this part, the dislocated 
worker unit shall consider cooperation and coordination with labor-
management committees established under other authorities (section 
311(b)(3)(B)).
    (e) In accordance with section 402 of the Veterans' Benefits and 
Programs Improvement Act of 1988 (29 U.S.C. 1751 note) services under 
this part shall be coordinated with programs administered by the 
Department of Veterans Affairs and with other veterans' programs such as 
the Veterans' Job Training Act (29 U.S.C. 1721 note), title IV-C of the 
Job Training Partnership Act (29 U.S.C. 1721, et seq.), part 635 of this 
chapter, and the Transition Assistance Program.



Sec. 631.38  State by-pass authority.

    (a)(1) In the event that a substate grantee fails to submit a plan, 
or submits a plan which is not approved by the Governor (see Sec. 
631.50(f) of this part), the Governor may direct the expenditure of 
funds allocated to the substate area.
    (2) The Governor's authority under this paragraph (a) to direct the 
expenditure of funds remains in effect only until such time as a plan is 
submitted and approved, or a new substate grantee is designated (section 
313(c)).
    (3) The Governor shall not direct the expenditure of funds under 
this paragraph (a) until after the affected substate grantee has been 
afforded advance written notice of the Governor's intent to exercise 
such authority and an opportunity to appeal to the Secretary pursuant to 
the provisions of Sec. 628.426(e) of this chapter.
    (b)(1) If a substate grantee fails to expend funds allocated to it 
in accordance with its plan, the Governor, subject to appropriate notice 
and opportunity for comment in the manner required by section 105(b)(1), 
(2), and (3) of the Act, may direct the expenditure

[[Page 268]]

of funds only in accordance with the substate plan.
    (2) The Governor's authority under this paragraph (b) to direct the 
expenditure of funds shall remain in effect only until:
    (i) The substate grantee corrects the failure;
    (ii) The substate grantee submits an acceptable modification; or
    (iii) A new substate grantee is designated (section 313(a) and (d)).
    (3) The Governor shall not direct the expenditure of funds under 
this paragraph (b) until after the affected substate grantee has been 
afforded advance written notice of the Governor's intent to exercise 
such authority and an opportunity to appeal to the Secretary pursuant to 
the provisions of Sec. 628.426(e) of this chapter.
    (c) When the substate area is the State, the Secretary shall have 
the same authority as the Governor under paragraphs (a) and (b) of this 
section.



                        Subpart E_State Programs



Sec. 631.40  State program operational plan.

    (a) The Governor shall submit to the Secretary biennially, in 
accordance with instructions issued by the Secretary, a State program 
operational plan describing the specific activities, programs and 
projects to be undertaken with the funds reserved by the Governor under 
Sec. 631.32(c) of this part.
    (b) The State program operational plan shall include a description 
of the mechanisms established between the Federal-State Unemployment 
Compensation System, the Trade Adjustment Assistance Program, the State 
Employment service and programs authorized under title III of the Act 
and this part to coordinate the identification and referral of 
dislocated workers and the exchange of information.



Sec. 631.41  Allowable State activities.

    (a) States may use funds reserved under Sec. 631.32(c) of this 
part, subject to the provisions of the State biennial and program 
operational plans, for:
    (1) Rapid response assistance;
    (2) Basic readjustment services when undertaken in Statewide, 
regional or industrywide projects, or, initially, as part of rapid 
response assistance;
    (3) Retraining services, including (but not limited to) those in 
section 314(d) of the Act when undertaken in Statewide, industrywide and 
regional programs;
    (4) Coordination with the unemployment compensation system, in 
accordance with Sec. 631.37(b) of this part;
    (5) Discretionary allocation for basic readjustment and retraining 
services to provide additional assistance to substate areas that 
experience substantial increases in the number of dislocated workers, to 
be expended in accordance with the substate plan or a modification 
thereof;
    (6) Incentives to provide training of greater duration for those who 
require it; and
    (7) Needs-related payments in accordance with section 315(b) of the 
Act.
    (b) Activities shall be coordinated with other programs serving 
dislocated workers, including training under Chapter 2 of Title II of 
the Trade Act of 1974 (19 U.S.C. 2271, et seq.) and part 617 of this 
chapter.
    (c) Where appropriate, State-level activities should be coordinated 
with activities and services provided by substate grantees.
    (d) Retraining services provided to individuals with funds available 
to a State should be limited to those individuals who can most benefit 
from and are in need of such services.
    (e) Other than basic and remedial education, literacy and English 
for non-English speakers training, retraining services provided with 
funds available to a State shall be limited to those for occupations in 
demand in the area or another area to which the participant is willing 
to relocate, or in sectors of the economy with a high potential for 
sustained demand or growth.
    (f) Services provided to displaced homemakers should be part of 
ongoing programs and activities under Title III and this part and not 
separate and discrete programs.
    (g) Basic readjustment services described in Sec. 631.3(b)(1), 
provided to individuals who have not received a specific notice of 
termination or layoff and who work at a facility at which the

[[Page 269]]

employer has made a public announcement that such facility will close 
shall, to the extent practicable be funded by the State with funds 
reserved under Sec. 631.32(c) (section 314(h)).
    (h) The provisions of section 107(a), (b) and (e) of the Act (but 
not subsections (c) and (d) of section 107) and Sec. 627.422 of this 
chapter apply to State selection of service providers for funded 
activities authorized in Sec. 631.32(c) of this part.



                       Subpart F_Substate Programs



Sec. 631.50  Substate plan.

    (a) In order to receive an allocation of funds under Sec. 631.32 of 
this part, the substate grantee shall submit to the Governor a substate 
plan, in accordance with instructions issued by the Governor. Such plan 
shall meet the requirements of this section and shall be approved by the 
Governor prior to funds being allocated to a substate grantee.
    (b) The Governor shall issue instructions and schedules that assure 
that substate plans and plan modifications conform to all requirements 
of the Act and this part and contain the statement required by section 
313(b) of the Act.
    (c) Substate plans shall provide for compliance with the cost 
limitation provisions of Sec. 631.14 of this part.
    (d) The SJTCC or HRIC shall review and submit to the Governor 
written comments on substate plans.
    (e) Prior to the submission of the substate plan to the Governor, 
the substate grantee shall submit the plan to the parties to the 
agreement described in Sec. 631.35(c) of this part for review and 
comment (section 313(a)).
    (f) The Governor's review and approval (or disapproval) of a 
substate plan or plan modification, and appeals to the Secretary from 
disapprovals thereof, shall be conducted according to the provisions of 
section 105 of the Act and Sec. 628.426 of this chapter (section 
313(c)).
    (g) If a substate grantee fails to meet the requirements for plan 
submission and approval found in this section, the Governor may exercise 
the by-pass authority set forth at Sec. 631.38 of this part.
    (h) When the substate area is the State, the substate plan (and plan 
modification(s)) shall be submitted by the Governor to the Secretary. 
The dates for submission and consideration and the Secretary's review 
and approval (or disapproval) of the plan or plan modification, and 
appeals to administrative law judges from disapproval thereof, shall be 
conducted according to the provisions of Sec. 628.430 of this chapter.



Sec. 631.51  Allowable substate program activities.

    (a) The substate grantee may use JTPA section 302(c)(1), (c)(2), and 
(d) funds allocated by the Governor under Sec. 631.32 of this part for 
basic readjustment services, retraining services, supportive services 
and needs-related payments.
    (b) The provisions of Sec. Sec. 627.420 and 627.435 of this chapter 
(Procurement, Cost principles and allowable costs) apply to funds 
allocated to substate grantees under this part unless otherwise 
specifically provided for.
    (c) Other than basic and remedial education, literacy and English 
for non-English speakers training, retraining services provided with 
funds available to a substate area shall be limited to those for 
occupations in demand in the area or another area to which the 
participant is willing to relocate, or in sectors of the economy with a 
high potential for sustained demand or growth.
    (d) Retraining services provided to individuals with funds available 
to a substate area should be limited to those individuals who can most 
benefit from and are in need of such services (sections 312(e) and 
141(a)).



Sec. 631.52  Selection of service providers.

    (a) The substate grantee shall provide authorized JTPA Title III 
services within the substate area, pursuant to an agreement with the 
Governor and in accordance with the approved State plan and substate 
plan, including the selection of service providers.
    (b) The substate grantee may provide authorized JTPA Title III 
services directly or through contract, grant, or agreement with service 
providers (section 312(d)).

[[Page 270]]

    (c) Services provided to displaced homemakers should be part of 
ongoing programs and activities under Title III of the Act and this part 
and not separate and discrete programs.
    (d) The provisions of section 107(a), (b), (c) and (e) of the Act 
and Sec. 627.422 of this chapter apply to substate grantee selection of 
service providers as specified in this section.



Sec. 631.53  Certificates of continuing eligibility.

    (a) A substate grantee may issue to any eligible dislocated worker 
who has applied for the program authorized in this part a certificate of 
continuing eligibility. Such a certificate of continuing eligibility:
    (1) May be effective for periods not to exceed 104 weeks;
    (2) Shall not include any reference to any specific amount of funds;
    (3) Shall state that it is subject to the availability of funds at 
the time any such training services are to be provided; and
    (4) Shall be non-transferable.
    (b) Acceptance of a certificate of continuing eligibility shall not 
be deemed to be enrollment in training.
    (c) Certificates of continuing eligibility may be used, subject to 
the conditions included on the face of the certificate, in two distinct 
ways:
    (1) To defer the beginning of retraining: any individual to whom a 
certificate of continuing eligibility has been issued under paragraph 
(a) of this section shall remain eligible for retraining and education 
services authorized under this part for the period specified in the 
certificate, notwithstanding the definition of ``eligible dislocated 
worker'' in section 301(a) of the Act or the participant eligibility 
provisions in Sec. 631.3 of this part, and may use the certificate in 
order to receive retraining services, subject to the limitations 
contained in the certificate; or
    (2) To permit eligible dislocated workers to seek out and arrange 
their own retraining with service providers approved by the substate 
grantee; retraining provided pursuant to the certificate shall be in 
accord with requirements and procedures established by the substate 
grantee and shall be conducted under a grant, contract, or other 
arrangement between the substate grantee and the service provider.
    (d) Substate grantees shall ensure that records are maintained 
showing to whom such certificates of continuing eligibility have been 
issued, the dates of issuance, and the number redeemed by substate 
grantees.



    Subpart G_Federal Delivery of Dislocated Worker Services Through 
                     National Reserve Account Funds



Sec. 631.60  General.

    This subpart provides for the use of funds reserved to the Secretary 
for use under part B of title III of the Act. These funds may be used 
for the allowable activities, described in section 323 of the Act; 
demonstration programs, described in section 324 of the Act; the Defense 
Conversion Adjustment Program (DCAP), described in section 325 of the 
Act; the Defense Diversification Program (DDP), described in section 
325A of the Act; Clean Air Employment Transition Assistance (CAETA), 
described in section 326 of the Act; and similar uses and programs which 
may be added to part B of title III of the Act.



Sec. 631.61  Application for funding and selection criteria.

    To qualify for consideration for funds reserved by the Secretary for 
activities under section 323 of the Act, applications shall be submitted 
to the Secretary pursuant to instructions issued by the Secretary 
specifying application procedures, selection criteria, and approval 
process. Separate instructions will be issued for each category of grant 
awards, as determined by the Secretary.



Sec. 631.62  Cost limitations.

    The expenditure of funds provided to grantees under this subpart 
shall be consistent with the cost limitations specified in the grant. 
Applicants for grants under this subpart may propose, in their grant 
applications, reasonable costs to be incorporated into the grant. The 
Grant Officer may accept or modify such proposals at his/her discretion.

[[Page 271]]

Where proposals do not adequately justify to the Grant Officer's 
satisfaction the costs to be incorporated into the grant, the cost 
limitations that shall be applied shall be those specified in section 
315 of the Act and described in paragraphs (a), (b) and (c) of Sec. 
631.14 of this part.



Sec. 631.63  Reporting.

    (a) Grantees under part B of title III of the Act shall submit 
reports as prescribed by the Secretary.
    (b) Significant developments. Grantees shall notify the Secretary of 
developments that have a significant impact on the grant or subgrant 
supported activities, including problems, delays, or adverse conditions 
which may materially impair the ability to meet the objectives of the 
project. This notification shall include a statement of the action 
taken, or contemplated, and any assistance needed to resolve the 
situation.



Sec. 631.64  General administrative requirements.

    (a) Activities under this subpart may be carried out and funding 
provided directly to grantees other than States.
    (b) All grantees and subgrantees under this subpart that are States 
or substate grantees are subject to the provisions in part 627 of this 
chapter.
    (c) For grantees other than States and substate grantees, the 
following provisions shall apply to grants under this subpart.
    (1) Grievance procedures. (i) Each grantee shall establish and 
maintain a grievance procedure for grievances or complaints about its 
programs and activities from participants, subgrantees, subcontractors, 
and other interested persons. Hearings on any grievance shall be 
conducted within 30 days of filing of a grievance and decisions shall be 
made not later than 60 days after the filing of a grievance. Except for 
complaints alleging fraud or criminal activity, complaints shall be made 
within one year of the alleged occurrence.
    (ii) Grantees shall be subject to the provisions of section 144 of 
the Act, and 29 CFR part 95 or 97, as appropriate.
    (iii) If the grantee is already subject to the grievance procedure 
process and requirements established by the Governor (i.e., through 
another JTPA grant, subgrant, or contract), its adherence to that 
procedure shall meet the requirements of this paragraph (c)(1).
    (2) Uniform Administrative Standards. Grantees shall be subject to 
the standards and requirements described in 29 CFR part 95 or 97, as 
appropriate, as well as any additional standards prescribed in grant 
documents or Secretarial guidelines. If the grantee/ subgrantee is 
already subject to additional standards established by the Governor 
(i.e., through another JTPA grant, subgrant, or contract), its adherence 
to those standards shall meet the requirements of this paragraph (c)(2).



Sec. 631.65  Special provisions for CAETA and DDP.

    (a) Allowances for Job Search Outside the Commuting Area under 
CAETA. Allowances for job search outside the commuting area shall be an 
allowable activity under CAETA, only where it has been determined that 
the dislocated worker cannot reasonably be expected to secure suitable 
employment within the commuting area in which the worker resides. 
Procedures for determining whether a dislocated worker cannot reasonably 
be expected to secure suitable employment within the commuting area in 
which the dislocated worker resides shall be described in the grant 
application and shall be subject to approval by the Grant Officer. The 
cost of job search outside the commuting area shall be an allowable 
cost, but shall not provide for more than 90 percent of the cost of 
necessary job search expenses, and may not exceed a total of $800, 
unless the need for a greater amount is justified in the grant 
application and approved by the Grant Officer.
    (b) Relocation Allowances under CAETA. Relocation allowances under 
CAETA shall be allowable only where the eligible dislocated worker 
cannot reasonably be expected to secure suitable employment in the 
commuting area in which the worker resides and has obtained suitable 
employment affording a reasonable expectation of long-term duration in 
the area in which the worker wishes to relocate, or

[[Page 272]]

has obtained a bona fide offer of such employment, provided that the 
worker is totally separated from employment at the time relocation 
commences. The cost of relocation for an eligible dislocated worker 
shall not exceed an amount which is equal to the sum of the reasonable 
and necessary expenses incurred in transporting the dislocated worker 
and the dislocated worker's family, if any, and household effects, and a 
lump sum relocation allowance, equivalent to three times such worker's 
average weekly wage. The maximum relocation allowance, however, shall 
not exceed $800, unless a greater amount is justified in the grant 
application and approved by the Grant Officer. Necessary expenses shall 
be travel expenses for the dislocated worker and the dislocated worker's 
family and for the transfer of household effects. Reasonable costs for 
such travel and transfer expenses shall be by the least expensive, most 
reasonable form of transportation.
    (c) Needs-related payments under CAETA and DDP. Funds from grants 
for CAETA and DDP shall be available for needs-related payments to 
enable participants to participate in and complete training or education 
programs under those grants, subject to the following:
    (1) Needs-related payments shall be provided to the participant only 
if the participant:
    (i) Does not qualify or has ceased to qualify for unemployment 
compensation;
    (ii) Has been enrolled in training programs by the end of the 13th 
week of an individual's initial unemployment benefit period following 
the layoff or termination, or, if later, the end of the 8th week after 
an individual is informed that a short-term layoff will exceed six 
months;
    (iii) Is making satisfactory progress in training or education 
programs under this section, except that an individual shall not be 
disqualified pursuant to this clause for a failure to participate that 
is not the fault of the individual; and
    (iv) Currently receives, or is a member of a family which currently 
receives, a total family income (exclusive of unemployment compensation, 
child support payments, and welfare payments) which, in relation to 
family size, is not in excess of the lower living standard income level.
    (2) Needs-related payments shall be equal to the higher of:
    (i) The applicable level of unemployment compensation; or
    (ii) The poverty level determined in accordance with the criteria 
established by the Director of the Office of Management and Budget.
    (3) Total family income shall be reviewed periodically, based upon 
information obtained from participants with respect to such income and 
changes therein, to determine continued eligibility, or to begin 
payments to individuals previously found ineligible for needs-related 
payments under this section.

Subpart H [Reserved]



             Subpart I_Disaster Relief Employment Assistance



Sec. 631.80  Scope and purpose.

    This subpart establishes a Disaster Relief Employment Assistance 
program under title IV, part J of JTPA which shall be administered in 
conjunction with the title III National Reserve Grants Programs.



Sec. 631.81  Availability of funds.

    Funds appropriated to carry out this subpart may be made available 
by grant to the Governor of any State within which is located an area 
that has suffered an emergency or a major disaster as defined in 
paragraphs (1) and (2), respectively, of section 102 of the Disaster 
Relief Act of 1974 (42 U.S.C. 5122(1) and (2)) (referred to in this 
subpart as the ``disaster area''). The Secretary shall prescribe 
procedures for applying for funds.



Sec. 631.82  Substate allocation.

    (a) Not less than 80 percent of the grant funds available to any 
Governor under Sec. 631.81 of this part shall be allocated by the 
Governor to units of general local government located, in whole or in 
part, within such disaster areas.

[[Page 273]]

The remainder of such funds may be reserved by the Governor for use, in 
concert with State agencies, in cleanup, rescue, repair, renovation, and 
rebuilding activities associated with such major disaster.
    (b) The JTPA title III program substate grantee for the disaster 
area shall be the designated local entity for administration of the 
grant funds under this subpart.



Sec. 631.83  Coordination.

    Funds made available under this subpart to Governors and units of 
general local government shall be expended in consultation with--
    (a) Agencies administering programs for disaster relief provided 
under the Disaster Relief Act of 1974; and
    (b) The JTPA title II administrative entity and the private industry 
council in each service delivery area within which disaster employment 
programs will be conducted under this subpart.



Sec. 631.84  Allowable projects.

    Funds made available under this subpart to any unit of general local 
government in a disaster area--
    (a) Shall be used exclusively to provide employment on projects that 
provide food, clothing, shelter and other humanitarian assistance for 
disaster victims; and on projects involving demolition, cleanup, repair, 
renovation, and reconstruction of damaged and destroyed structures, 
facilities, and lands located within the disaster area; and
    (b) May be expended through public and private non-profit agencies 
and organizations engaged in such projects.



Sec. 631.85  Participant eligibility.

    An individual shall be eligible for disaster employment under this 
subpart if such individual is--
    (a)(1) Eligible to participate or enroll, or is a participant or 
enrolled, under Title III of the Act, other than an individual who is 
actively engaged in a training program; or
    (2) Eligible to participate in programs or activities assisted under 
Native American and Migrant Programs; and
    (3) Unemployed as a consequence of the disaster.
    (b) [Reserved]



Sec. 631.86  Limitations on disaster relief employment.

    No individual shall be employed under this subpart for more than 6 
months for work related to recovery from a single natural disaster 
(described in Sec. 631.3(f) of this part).



Sec. 631.87  Definitions.

    As used in this subpart, the term unit of general local government 
includes:
    (a) In the case of a community conducting a project in an Indian 
reservation or Alaska Native village, the grantee designated under the 
JTPA section 401 Indian and Native American Program (see part 632 of 
this chapter), or a consortium of such grantees and the State; and
    (b) In the case of a community conducting a project in a migrant or 
seasonal farmworker community, the grantee designated under the JTPA 
section 402 Migrant and Seasonal Farmworker Program (see part 633 of 
this chapter), or a consortium of such grantees and the State.



PART 632_INDIAN AND NATIVE AMERICAN EMPLOYMENT AND TRAINING PROGRAMS
--Table of Contents




                         Subpart A_Introduction

Sec.
632.1 [Reserved]
632.2 Scope and purpose.
632.3 Format for these regulations.
632.4 Definitions.

    Subpart B_Designation Procedures for the Native American Grantees

632.10 Eligibility requirements for designation as a Native American 
          grantee.
632.11 Designation of Native American grantees.
632.12 Alternative arrangements for the provision of services, 
          nondesignation.
632.13 Review of denial of designation as a Native American grantee, or 
          rejection of a Comprehensive Annual Plan.

   Subpart C_Program Planning, Application and Modification Procedures

632.17 Planning process.
632.18 Regional and national planning meetings.
632.19 Grant application content.
632.20 Submission of grant application.
632.21 Application disapproval.

[[Page 274]]

632.22 Modification of a Comprehensive Annual Plan (CAP) and/or Master 
          Plan.
632.23 Termination and corrective action of a CAP and/or Master Plan.

            Subpart D_Administrative Standards and Procedures

632.31 General.
632.32 Financial management systems.
632.33 Audits.
632.34 Program income.
632.35 Native American grantee contracts and subgrants.
632.36 Procurement standards.
632.37 Allowable costs.
632.38 Classification of costs.
632.39 Administrative cost plan.
632.40 Administrative staff and personnel standards.
632.41 Reporting requirements.
632.42 Grant closeout procedures.
632.43 Reallocation of funds.
632.44 Sanctions for violation of the Act.

                 Subpart E_Program Design and Management

632.70 Waiver of regulations under parts 632 and 636.
632.75 General responsibilities of Native American grantees.
632.76 Program management systems.
632.77 Participant eligibility determination.
632.78 Training activities.
632.79 Employment activities.
632.80 Other activities.
632.81 Payments to participants.
632.82 Benefits and working conditions for participants.
632.83 FICA.
632.84 Non-Federal status of participants.
632.85 Participant limitations.
632.86 Nondiscrimination and nonsectarian activities.
632.87 Equitable provision of services to the eligible population and 
          significant segments.
632.88 General responsibilities of the Department.
632.89 Performance standards.

             Subpart F_Prevention of Fraud and Program Abuse

632.115 General.
632.116 Conflict of interest.
632.117 Kickbacks.
632.118 Nepotism.
632.119 Political patronage.
632.120 Political activities.
632.121 Lobbying activities.
632.122 Unionization and antiunionization activities; work stoppages.
632.123 Maintenance of effort.
632.124 Theft or embezzlement from employment and training funds; 
          improper inducement; obstruction of investigations and other 
          criminal provisions.
632.125 Responsibilities of Native American grantees, subgrantees and 
          contractors for preventing fraud and program abuse and for 
          general program management.

Subpart G [Reserved]

Subpart H_Job Training Partnership Act Programs Under Title IV, Section 
                                   401

632.170 Eligibility for funds.
632.171 Allocation of funds.
632.172 Eligibility for participation in title IV, section 401.
632.173 Allowable program activities.
632.174 Administrative costs.

         Subpart I_Summer Youth Employment and Training Programs

632.250 General.
632.251 Eligibility for funds.
632.252 Allocation of funds.
632.253 Special operating provisions.
632.254 Program startup.
632.255 Program planning.
632.256 Submission of applications.
632.257 Eligibility for participation.
632.258 Allowable activities.
632.259 Vocational exploration program.
632.260 Worksite standards.
632.261 Reporting requirements.
632.262 Termination date for the summer program.
632.263 Administrative costs.

    Authority: 29 U.S.C. 1579(a).

    Source: 48 FR 48754, Oct. 20, 1983, unless otherwise noted.



                         Subpart A_Introduction



Sec. 632.1  [Reserved]



Sec. 632.2  Scope and purpose.

    It is the purpose of Native American programs to provide job 
training and employment activities consistent with the intent of title 
IV, part A, section 401. Such programs shall be administered in such a 
manner as to maximize the Federal commitment to support growth and 
development as determined by representatives of the communities and 
groups served by this section including furtherance of the policy of 
Indian Self-Determination.



Sec. 632.3  Format for these regulations.

    Regulations promulgated by the Department of Labor to implement the 
provisions of title IV, section 401 and

[[Page 275]]

Indian programs under title II-B of the Act are set forth in 20 CFR part 
632. This part in conjunction with part 636 contains all the regulations 
under the Act applicable to Indian and Native American programs.



Sec. 632.4  Definitions.

    Act--means the Job Training Partnership Act (29 U.S.C. section 1501 
et seq.).
    Capital improvement--means any modification, addition, restoration 
or other improvement:
    (a) Which increases the usefulness, productivity, or serviceable 
life of an existing building, structure, or major item of equipment;
    (b) Which is classified for accounting purposes as a ``fixed 
asset;'' and
    (c) The cost of which increases the recorded value of the existing 
building, structure, or major item of equipment and is subject to 
depreciation.
    Community based organization--means a private nonprofit organization 
which is representative of the Indian and Native American community or 
significant segments of the community and which provides employment and 
training services or activities.
    Comprehensive Annual Plan (CAP)--means the annual update to the 
Master Plan. The CAP will identify the work plan and budget for the 
annual 401 and title II, part B funding allocations.
    Construction--means the erection, installation, assembly or painting 
of a new structure or a major addition, expansion or extension of an 
existing structure and the related site preparation, excavation, filling 
and landscaping or other land improvements.
    Contract--means a procurement instrument, other than a grant, by 
which the Department, a Native American grantee or a subgrantee acquires 
and pays for property, services, supplies, materials or equipment.
    Contractor--means any person, corporation, partnership, public 
agency, or other entity which enters into a contract with the DOL, a 
Native American grantee or subgrantee under the Act.
    Department--means the United States Department of Labor (DOL) 
including its agencies and organizational units.
    Dependent--means any person for whom, both currently and during the 
previous 12 months, the participant has assumed 50 percent of the 
person's support.
    DINAP--means the Division of Indian and Native American Programs of 
the Department of Labor.
    DOL--means the U.S. Department of Labor.
    Economically disadvantaged--means an individual who
    (a) Receives, or is a member of a family which receives, cash 
welfare payments under a Federal, State, or local welfare program;
    (b) Has, or is a member of a family which has, received a total 
family income for the six-month period prior to application for the 
program involved (exclusive of unemployment compensation, child support 
payments, and welfare payments) which, in relation to family size, was 
not in excess of the higher of
    (1) The poverty level determined in accordance with criteria 
established by the Department of Health and Human Services, or
    (2) 70 percent of the lower living standard income level;
    (c) Is receiving food stamps pursuant to the Food Stamp Act of 1977;
    (d) Is a foster child on behalf of whom State or local government 
payments are made; or
    (e) Is a handicapped individual whose own income meets the 
requirements of paragraph (a) or (b) of this definition, but who is a 
member of a family whose income does not meet such requirements.
    Entered employment--means the act of securing unsubsidized 
employment for or by a participant.
    Entry level--means the lowest position in any promotional line, as 
defined locally by collective bargaining agreements, past practice, or 
applicable personnel rules.
    Family--means (a) One or more persons living in a single residence 
who are related to each other by blood, marriage, or adoption. A step-
child or a step-parent is considered to be related by marriage.
    (b)(1) For purposes of paragraph (a) of this definition, one or more 
persons not living in the single residence but who

[[Page 276]]

are claimed as a dependent on another person's Federal Income Tax return 
for the previous year is presumed, unless otherwise demonstrated, to be 
part of the other person's family.
    (2) A handicapped individual may be considered a family of one when 
applying for programs under the Act.
    (3) An individual 18 years of age or older, except as provided in 
(b) (1) or (2) of this definition, who receives less than 50 percent of 
support from the family, and who is not the principal earner nor the 
spouse of the principal earner shall not be considered a member of the 
family. Such an individual shall be considered a family of one.
    Family income--means all income actually received from all sources 
by all members of the family for the six-month period prior to 
application. Family size is the maximum number of family members during 
the six-month period prior to application. When computing family income, 
income of a spouse and other family members is counted for the portion 
of the six-month period prior to application that the person was 
actually a part of the family unit.
    (a) For the purposes of determining participant eligibility (and not 
for grantee allocations), family income includes:
    (1) Gross wages, including CSE, Work Experience and OJT paid from 
JTPA funds, and salaries (before deductions);
    (2) Net self-employment income (gross receipts minus operating 
expenses); and
    (3) Other money income received from sources such as interest, net 
rents, OASI (Old Age and Survivors Insurance) social security benefits, 
pensions, alimony, and periodic income from insurance policy annuities, 
and other sources of income.
    (b) Family income does not include:
    (1) Non-cash income such as food stamps, or compensation received in 
the form of food or housing;
    (2) Imputed value of owner-occupied property, i.e., rental value;
    (3) Public assistance payments;
    (4) Cash payments received pursuant to a State plan approved under 
titles I, IV, X or XVI of the Social Security Act, or disability 
insurance payments received under title II of the Social Security Act;
    (5) Federal, State or local unemployment benefits;
    (6) Capital gains and losses;
    (7) One time unearned income, such as, but not limited to:
    (i) Payments received for a limited fixed term under income 
maintenance programs and supplemental (private) unemployment benefits 
plans;
    (ii) One-time or fixed-term scholarship and fellowship grants;
    (iii) Accident, health, and casualty insurance proceeds;
    (iv) Disability and death payments, including fixed term (but not 
lifetime) life insurance annuities and death benefits;
    (v) One-time awards and gifts;
    (vi) Inheritance, including fixed term annuities;
    (vii) Fixed term workers' compensation awards;
    (viii) Terminal leave pay;
    (ix) Soil bank payments; and
    (x) Agriculture crop stabilization payments;
    (8) Pay or allowances which were previously received by any veteran 
while serving on active duty in the Armed Forces;
    (9) Educational assistance and compensation payments to veterans and 
other eligible persons under chapters 11, 13, 31, 34, 35, and 36, of 
title 38, United States Code;
    (10) Payments received under the Trade Act of 1974;
    (11) Black Lung payments received under the Benefits Reform Act of 
1977, Pub. L. 95-239, 30 U.S.C. 901;
    (12) Child support payments; and
    (13) Any income directly or indirectly derived from, or arising out 
of, any property held by the United States in trust for any Indian 
tribe, band or group or any individual; per capita payments; and 
services, compensation or funds provided by the United States in 
accordance with, or generated by, the exercise of any right guaranteed 
or protected by treaty; and any property distributed or income derived 
there-from, or any amounts paid to or for any individual member, or 
distributed to or for the legatees or next of kin of any member, derived 
from or arising

[[Page 277]]

out of the settlement of an Indian claim.
    Financial assistance--means any grant, loan, or any other 
arrangement by which the Department or Native American grantee provides 
or otherwise makes available assistance in the form of:
    (a) Funds;
    (b) Services of Federal or Native American grantee personnel; or
    (c) Real and personal property or any interest in or use of such 
property, including:
    (1) Transfers or leases of such property for less than fair market 
value or for reduced consideration and
    (2) Proceeds from a subsequent transfer or lease of such property if 
the Federal or Native American grantee share of its fair market value is 
not returned to the Federal Government or Native American grantee.
    Governing body--means a body consisting of duly elected or 
designated representatives, a body appointed by duly elected officials, 
or a body selected in accordance with traditional tribal means which has 
the authority to provide services to, and to enter into contracts, 
agreements and grants under this part on behalf of the organization or 
individuals who elected or designated them, elected the appointing 
official, or recognize the body selected in accordance with traditional 
tribal means.
    Governor--means the chief executive of any State.
    Handicapped individual--means any individual who has a physical or 
mental disability which for such individual constitutes or results in a 
substantial handicap to employment.
    Hawaiian Native--means any individual, any of whose ancestors were 
natives, prior to 1778, of the area which now comprises the State of 
Hawaii (Sec. 3(12)).
    JTPA--means the Job Training Partnership Act.
    Local Educational Agency (LEA)--means such an agency as defined in 
section 195(10) of the Vocational Educational Act of 1963. It shall 
further mean the governing bodies of any Bureau of Indian Affairs, 
tribal or reservation run agencies or school districts, or any nonprofit 
agency or tribally chartered entity providing educational services to 
Indian and Native American persons as determined by the Native American 
grantee.
    Low Income Housing--means: (a) For weatherization or winterization 
projects, those dwellings occupied by persons whose family income does 
not exceed 125 percent of the poverty level and which are:
    (1) Owned by the occupant;
    (2) Publicly owned;
    (3) Owned by a private nonprofit organization;
    (4) Cooperatively owned; or
    (5) For projects funded and approved by the Federal Energy 
Administration, privately owned rental housing.
    (b) For rehabilitation as part of community revitalization or 
stabilization, housing built or improved with the assistance of Federal, 
State or tribal programs, and those dwellings occupied by persons whose 
family income does not exceed 80 percent of the median income for the 
area, in accordance with section 8(f)(1) of the United States Housing 
Act of 1937 (42 U.S.C. 1437f) and which are:
    (1) Owned by the occupant;
    (2) Publicly owned;
    (3) Owned by a private nonprofit organization; or
    (4) Cooperatively owned.
    Lower living standard income level--means that income level 
(adjusted for regional, metropolitan, urban, and rural differences and 
family size) determined annually by the Secretary based on the most 
recent ``lower living family budget'' issued by the Secretary.
    Master plan--means the basic long term agreement between the 
Department and the Native American grantee. The master plan contains all 
basic eligibility determination and administrative information.
    Native American community benefit--means the outcome of allowable 
activities undertaken for the advancement of economic and social 
development in the Indian, Alaskan Native, and Hawaiian Native 
communities consistent with their goals and life styles as determined by 
representatives of the community.
    Offender--means any adult or juvenile who is or has been subject to 
any stage of the criminal justice process for whom services under this 
part may

[[Page 278]]

be beneficial or who requires assistance in overcoming artificial 
barriers to employment resulting from a record of arrest or conviction.
    Older worker--means a person who is 55 years of age or older.
    Participant--means an individual who has:
    (a) Been determined eligible for participation; and
    (b) Started receiving employment, training or services (except post-
termination services) funded under the Act, within 45 days of such 
determination.
    Poverty level--means the annual income level at or below which 
families are considered to live in poverty, as annually determined by 
the Department of Health and Human Services.
    Program income--means net income earned from grant or agreement 
supported activities. Such earnings include but are not limited to: 
income from service fees, sale of commodities, usage or rental fees, and 
royalities on patents or copyrights.
    Program year--means that 12-month period of time during which job 
training activities and services and provided to participants.
    Public assistance--means Federal, State, tribal, or local government 
cash payments for which eligibility is determined by a need or income 
test.
    Secretary--means the Secretary of Labor.
    Similarly employed--means that status of a person who is working for 
the same employer as the JTPA participant, is doing the same type of 
work, and is similarly classified with respect to employment status 
(e.g., full-time, permanent, or temporary).
    State--means the several States, the District of Columbia, the 
Commonwealth of Puerto Rico, the Virgin Islands, Guam, the Northern 
Marianas Islands, American Samoa, and the Trust Territory of the Pacific 
Islands.
    State Employment Security Agency (SESA)--means the State agency 
which exercises control over the Unemployment Insurance Service and the 
Employment Service.
    Subgrantee--means any person, corporation, partnership, public 
agency, or other entity, excluding private for profits concerns, which 
enters into a grant with the Native American Grantee.
    Underemployed persons--means:
    (a) Persons who are working part-time but seeking full-time work; or
    (b) Persons who are working full-time but whose current annualized 
wage rate (for a family of one), or whose family's current annualized 
income, is not in excess of:
    (1) The poverty level, or
    (2) 70 percent of the lower living standard income level.
    Unemployed persons--means individuals who are without jobs and who 
want and are available for work. The determination of whether 
individuals are without jobs shall be made in accordance with the 
criteria used by the Bureau of Labor Statistics of the Department of 
Labor in defining individuals as unemployed.



      Subpart B_Designation Procedures for Native American Grantees



Sec. 632.10  Eligibility requirements for designation as a Native 
American grantee.

    (a) All funds specifically identified in the Act as reserved for the 
benefit of Indian and Native American participants shall be disbursed by 
the Department only to Native American grantees designated pursuant to 
this subpart. Except for FY 1984, designation will be for a period of 
two years.
    (b) To be designated as a Native American grantee, an applicant must 
have:
    (1) A governing body;
    (2) For new grantees, an Indian or Native American population within 
its designated service area of at least 1,000 persons;
    (3) The capability to administer an Indian and Native American 
employment and training program. For purposes of this paragraph, 
``capability to administer'' means that the applicant can demonstrate 
that it possesses, or can acquire the managerial, technical, or 
administrative staff with the ability to properly administer government 
funds, develop employment and training opportunities, evaluate program 
performance and comply with the provisions of the Act and the 
regulations.

[[Page 279]]

In judging the applicant's request for designation, consideration shall 
be given to factors such as:
    (i) Previous experience in operating an effective employment and 
training program serving Indians or Native Americans;
    (ii) The number and kind of activities of similar magnitude and 
complexity that the applicant has successfully completed;
    (iii) Information from other Federal agencies regarding program 
performance or financial and management capability.
    (c) The Department will not designate an organization in cases where 
it is established that:
    (1) The agency's efforts to recover debts (for which three demand 
letters have been sent) established by final agency action have been 
unsuccessful, or
    (2) Fraud or criminal activity has been proven to exist within the 
organization, or
    (3) The amount under the funding formulas will not total at least 
$120,000 in all JTPA funds for the first year of the two-year 
designation period. In the event that this amount cannot be determined 
at the time of the Department's decision on the request for designation, 
the amount shall be estimated in part by reference to the funding levels 
for Native American programs for the prior fiscal or program year. An 
applicant for designation shall be designated notwithstanding the 
limitation in this paragraph of this subsection if it demonstrates that:
    (i) It has or expects to receive a combined total of $120,000 in 
funds or services for the first year of the 2-year designation period 
from JTPA and other human resource development programs, including but 
not limited to those providing for employment, education, vocational 
education, health, social or similar services; or
    (ii) It is recognized and directly funded by Federal agencies, such 
as the Indian-serving agencies within the Departments of the Interior, 
Health and Human Services or Education as the primary service delivery 
organization for the provision of human resource development services to 
Indians or Native Americans within the organization's customary service 
area. This provision shall be interpreted consistent with the Federal 
policy established in Pub. L. 96-638, the Indian Self-Determination Act; 
or
    (iii) It has demonstrated successful operation of an employment and 
training program at a level below $120,000 within the previous two 
years. For this purpose, success is the ability to adequately meet 
planned goals and stay within the grant's cost limits.
    (4) For a consortium to be designated, it must submit the consortium 
agreement which meets the requirements of this subpart.
    (d) Types of eligible Native American grantees:
    (1) Indian tribe, band or group. The Department shall designate as a 
Native American grantee an Indian tribe, band or group which meets the 
requirements in paragraphs (b) and (c) of this section.
    (2) Alaskan Native entity. The Department shall designate as a 
Native American grantee an Alaskan Native entity as defined in the 
Alaskan Native Claims Settlement Act which meets the requirements in 
paragraphs (b) and (c) of this section.
    (3) Hawaiian Native grantee. The Department may designate as a 
Native American grantee any private nonprofit organization or public 
agency representative of the Native Hawaiian community which meets the 
requirements in paragraphs (b) and (c) of this section and which the 
Department determines will best meet the needs of Native Hawaiians.
    (4) Public or private agencies. The Department may designate as a 
section 401 grantee a private nonprofit organization or public agency 
which meets the requirements in paragraphs (b) and (c) of this section 
to serve areas where there are significant numbers of Indians or Native 
Americans, but where there are no Indian tribes, bands or groups, 
Alaskan Native entities or Hawaiian sponsors or consortia of such 
sponsors eligible for designation.
    (5) Consortium grantees. The Department may designate as a Native 
American grantee a consortium of any of the types of grantees described 
in paragraphs (c), (1), (2), (3), and (4) of this

[[Page 280]]

section which may or may not be independently eligible. All such 
consortia shall meet the following requirements, in addition to the 
requirements in paragraphs (b) and (c) of this section:
    (i) All the members shall be in geographic proximity to one another. 
A consortium may operate in more than one State.
    (ii) An administrative unit shall be designated for operating the 
program, which may be a member of the consortium or an agency formed by 
the members. The administrative unit shall be delegated all powers 
necessary to administer the program effectively, including the power to 
enter into contracts and subgrants and other necessary agreements, to 
receive and expend funds, to employ personnel, to organize and train 
staff, to develop procedures for program planning, to monitor financial 
and program performance, and to modify the grant agreement through 
agreement with the Secretary. The right of reallocating funds within the 
consortium area shall be reserved to the consortium's members.
    (iii) The consortium shall be the Native American grantee. The 
consortium agreement shall be signed by an official or officials of each 
member of the consortium authorized to enter into a binding consortium 
and shall specify that each member shall be liable jointly or separately 
for claims established against the grantee. Additional standardized 
requirements for consortium agreements will be communicated to grantees 
under separate order.
    (e) In the situation where the Department does not designate Indian 
tribes, bands or groups or Alaska Native groups to serve such groups, 
the Department shall, to the maximum extent feasible, enter into 
arrangements for the provision of services to such groups with other 
types of section 401 grantees which meet with the approval of the Indian 
tribes, bands, groups or Alaska Native groups to be served (section 
401(d)). In such cases, the Department shall consult with the governing 
body of such Indian tribes, bands, groups or Alaska Native groups prior 
to the designation of a Native American grantee.
    (f) In designating Native American grantees to serve groups other 
than those in paragraph (e) of this section, such as nonreservation 
Indians and Native Hawaiians, the Department shall, whenever feasible, 
designate grantees which are directly controlled by Indian or Native 
American people. Where it is not feasible to designate such types of 
grantees, DINAP shall consult with Indian or Native American-controlled 
organizations in the area with respect to the designation of a Native 
American grantee. Where a private nonprofit organization is designated, 
DINAP shall require any such grantees not directly controlled by Indian 
or Native American people to establish a Native American Employment and 
Training Planning Council and to implement an Indian preference policy 
with respect to hiring of staff and contracting for services with regard 
to all funds provided pursuant to this part (sec. 7(b) of the Indian 
Self-Determination and Education Assistance Act).



Sec. 632.11  Designation of Native American grantees.

    (a) When designations are required and the potential grantee is not 
under a Master Plan agreement, an applicant for designation as a Native 
American grantee shall submit a notice of intent to apply for funds. 
Such notices of intent shall be postmarked by January 1 and be submitted 
to the Division of Indian and Native American Programs (DINAP), 
Employment and Training Administration, U.S. Department of Labor, 601 D 
Street NW., Washington, DC. 20213. Notices of intent may also be 
delivered to that office in person not later than the close of business 
on January 2 or the first business day of the designation year. Such 
notices of intent to apply shall be submitted on Standard Form 424 as a 
preapplication for Federal assistance. For applicants not under an 
active Master Plan agreement or the Master Plan agreement is due to 
expire during the year of designation, the following information shall 
be included in the notice of intent:
    (1) Evidence that the applicant meets the requirements for a Native 
American grantee contained in Sec. 632.10.

[[Page 281]]

    (2) A description of the geographic area or areas which the 
applicant proposes to serve, together with the Indian and Native 
American population in such areas, to the extent known. The description 
must include a list of States (if more than one), in alphabetical order, 
and under each State, a list of counties in alphabetical order, followed 
by a list of tribes, bands or groups (if any) in alphabetical order. If 
the applicant was a Native American grantee for the period prior to the 
one which is being applied for, the applicant must also list any 
counties and tribes, bands or groups which are being added to, or 
deleted from, the previous fiscal year's service area;
    (3) A description of the applicant's organization, including the 
legal status of the applicant, the process of selection of the governing 
body, the duties and responsibilities of the governing body, and in the 
case of private nonprofit organizations, a copy of the articles of 
incorporation;
    (4) Evidence of the applicant's capability to operate an Indian or 
Native American employment and training program, including a statement 
of the applicant's past successes in operating programs for Indians or 
other Native Americans and a statement of the applicant's experience in 
managing the types of programs and activities allowable under the Act;
    (5) A description of the planning process including employer 
involvement which the applicant proposes to undertake in developing a 
plan for the use of funds;
    (6) Information related to a grantee's administrative 
responsibility. The DOL will conduct an independent review to determine 
whether each applicant is currently delinquent in repaying any DOL 
claims or has any outstanding administrative problems. Applicants are, 
therefore, encouraged to submit any documents related to these factors 
including documents and correspondence previously submitted to DOL. 
Submittal of such materials will enable DOL to move rapidly to complete 
the Notice of Intent and grantee designation review process.
    (7) If the applicant is applying as a consortium, evidence that the 
consortium meets the requirements for a consortium in this part and a 
consortium agreement as specified in Sec. 632.10(d)(5)(iii).
    (b) If more than one organization submits a Notice of Intent for a 
geographic area, the Department will notify the organizations involved 
and conduct a special review for the area in question. The notice to the 
organizations will indicate any additional information needed and the 
review process to be followed.
    (c) If the applicant for designation is a current grantee, under a 
master plan agreement, and there is no change in the service area 
requested, only the Standard Form 424 and a statement(s) indicating that 
to the best of the applicant's knowledge, it meets the requirements of 
Sec. 632.10(c)(4) will be necessary and shall be submitted within the 
timeframe established in Sec. 632.11(a).
    (d) Responsibility Review. Prior to finally designating, 
conditionally designating or nondesignating the Department will conduct 
a review of the available records to determine whether or not the 
organization has failed any responsibility test. This review is intended 
to establish overall responsibility to administer Federal funds. With 
the exception of Sec. 632.11 (c)(1) and (c)(3), the failure to meet any 
one of the following responsibility test factors would not establish 
that the organization is irresponsible unless the failure is substantial 
or persistent. The responsibility tests are as follows:
    (1) The agency's efforts to recover debts (for which three demand 
letters have been sent) established by final agency action have been 
unsuccessful, or failure to comply with an approved repayment plan.
    (2) Serious administrative deficiencies have been identified in 
final findings and determination--such as failure to maintain a 
financial management system as required by Federal regulations.
    (3) Established fraud or criminal activity exists within the 
organization.
    (4) Wilfull obstruction of the audit process.
    (5) Substantial failure to provide services to applicants as agreed 
to in a current or recent grant or to meet performance standards 
requirements as

[[Page 282]]

provided for and developed pursuant to Sec. 632.89.
    (6) Failure to correct deficiencies brought to the grantee's 
attention in writing as a result of monitoring activities, reviews, 
assessments, etc.
    (7) Failure to return a grant closeout package on outstanding 
advances within 90 days of expiration date or receipt of closeout 
package, whichever is later, unless an extension has been requested and 
granted; final billings reflecting serious cost category or total budget 
cost overrun.
    (8) Failure to submit required reports.
    (9) Failure to properly report and dispose of government property as 
instructed by DOL.
    (10) Failure to have maintained cost controls resulting in excess 
cash on hand.
    (11) Failure to procure or arrange for audit coverage for any two 
year period when required by DOL.
    (12) Failure to audit subrecipient within the required period when 
applicable.
    (13) Final disallowed costs in excess of five percent of the grant 
or contract award.
    (14) Failure to establish a mechanism to resolve subrecipient's 
audit within established time frames.
    (e) On March 1 of each designation year, the Department shall 
designate or conditionally designate Native American grantees for the 
coming two program years. Each applicant shall be notified in writing of 
the determination. Those applicants that are not designated in whole or 
in part as Native American grantees may appeal under the complaint 
procedures available for this part. Conditional designations will 
include the nature of the conditions and the actions required to be 
finally designated.

(Approved by the Office of Management and Budget and assigned OMB 
control number 1205-0213)



Sec. 632.12  Alternative arrangements for the provision of services, 
nondesignation.

    (a) If no application for Native American grantee designation for an 
area is filed, or if the Department has denied such application for that 
area, the Department may designate and fund an entity to serve that 
area, pending the final resolution of any Petitions for Reconsideration 
or other actions taken pursuant to Sec. 632.13. An organization not 
designated in whole or in part may also appeal to an ALJ under the 
provisions of part 636. This further appeal will not in any way 
interfere with the Department's designation and funding of another 
organization to serve the area in question. The available remedy under 
such an appeal will be the right to be designated in the future rather 
than a retroactive or immediately effective designation status. 
Therefore, in the event the ALJ rules that the organization should have 
been designated and the organization continues to meet the requirements 
at Sec. Sec. 632.10 and 632.11, the Department will designate the 
successful appellant organization and fund within 90 days of the ALJ 
decision unless the end of the 90 day period is within six months of the 
end of the two year designation period. Any organization designated or 
funded for the area in question would be affected by this remedial 
action and undesignated. All parties must agree to this arrangement 
prior to funding. The alternate organization which loses its designation 
as a result of the application of this remedy may not appeal the 
undesignation.
    (b) If the grant officer finally disapproves a CAP pursuant to Sec. 
632.21 he/she may withdraw the Native American grantee's designation and 
immediately designate another entity to serve the area, pending the 
final resolution of any Petitions for Reconsideration or other actions 
taken pursuant to part 636.
    (c) If a Native American grantee's CAP is terminated or suspended in 
whole or in part, the Department (after an opportunity for a hearing 
except in emergency situations as described in section 164(f) of the 
Act) may designate another entity to serve the area.
    (d) If it is not feasible for the Department to designate another 
entity to serve the area under the conditions described in paragraphs 
(a), (b), and (c) of this section, the funds involved may be distributed 
at the Secretary's discretion to Native American grantees serving other 
areas.

[[Page 283]]



Sec. 632.13  Review of denial of designation as a Native American 
grantee, or rejection of a Comprehensive Annual Plan.

    (a) An applicant for designation as a Native American grantee which 
is refused such designation in whole or in part may file a Petition for 
Reconsideration with the Grant Officer within 14 days of receipt of a 
letter from the Department indicating its failure to be designated as a 
Native American grantee.
    (1) A Petition for Reconsideration shall be in writing, shall be 
signed by a responsible official of the applicant entity, and shall 
enumerate the factors which the applicant entity asserts should be 
reviewed by the Grant Officer in reconsidering the denial of its 
application.
    (2) Upon receipt of the Petition for Reconsideration, the Grant 
Officer shall, within 30 days, make one of the following determinations:
    (i) That based on the available information from the original 
request for designation and information supplied in the Petition for 
Reconsideration, the applicant entity should be designated as a Native 
American grantee;
    (ii) That the original determination made was correct; or
    (iii) That an informal conference between representatives of the 
applicant entity and the Grant Officer shall be held at a specified time 
and place to discuss the Petition for Reconsideration.
    (3) If an informal conference is held, the applicant entity shall 
have the opportunity to present any pertinent information which may 
further substantiate its petition. The Grant Officer shall notify the 
applicant entity of its final decision within 14 days after the informal 
conference is held.
    (4) All final determinations of the Grant Officer, which deny a 
Petition for Reconsideration, shall be in writing, shall state the 
reasons for the denial, shall be sent to the applicant by certified 
mail, return receipt requested, and shall notify the applicant entity 
that, within 21 days of its receipt of the notice, it may request a 
hearing pursuant to part 636.
    (b) A designated Native American grantee whose CAP has been rejected 
may file a Petition for Reconsideration pursuant to paragraph (a) of 
this section. Such petitions shall be handled under the procedures 
described in paragraph (a) of this section.



   Subpart C_Program Planning, Application and Modification Procedures



Sec. 632.17  Planning process.

    (a) Each Native American grantee shall establish a planning process 
for the development of its Master Plan and Comprehensive Annual Plan. 
This planning process shall involve consideration of the need for job 
training and employment services, appropriate means of providing needed 
services and methods of monitoring and assessing the services provided. 
Recognizing the importance of employer involvement in designing and 
implementing programs, each Native American grantee shall involve 
employers in program planning.
    (b) (1) Each Native American grantee's planning process shall 
involve consultation with major employers or organizations representing 
employers inside the grantee's designated service or surrounding labor 
market area. Such consultation shall include consideration of the 
opportunities for placement of program participants and the design of 
training activities and related services.
    (2) A description of the procedures used for this consultation shall 
be included in the grantee's Master Plan. The results of the 
consultation shall be described in the grantee's Comprehensive Annual 
Plan.
    (3) Native American grantees are encouraged to establish or to use 
existing formal advisory councils, such as Private Industry Councils, as 
vehicles for such consultation. Grantees are also encouraged to use all 
appropriate mechanisms, including Tribal Employment Rights Offices 
(TEROs), to insure maximum opportunity for the placement of participants 
in unsubsidized employment.
    (4) A Native American grantee will not be held responsible for the 
refusal of any employer or organization representing employers to engage 
in the consultation process described in this section.

[[Page 284]]

    (c) In addition to the requirement in paragraph (b) of this section, 
the planning process shall provide the opportunity for the involvement 
of the client community, service providers (such as appropriate 
community-based organizations) and educational agencies, tribal agencies 
or other Indian and Native American organizations whose programs are 
relevant to the provision of job training services within the grantee's 
service area.



Sec. 632.18  Regional and national planning meetings.

    Grant funds may be used for holding regional and national planning 
meetings, subject to restrictions of allowable costs.



Sec. 632.19  Grant application content.

    The basic document will be a four year Master Plan which will be 
supplemented each fiscal year by submission and approval of a 
Comprehensive Annual Plan (CAP). The Master Plan and CAP system will be 
implemented for 1985 or the first designation period following the FY 
1984 designations. Each designated grantee will be informed of and 
provided the necessary documents and requirements in sufficient time to 
complete grant actions without interrupting services to participants.



Sec. 632.20  Submission of grant application.

    (a) Beginning with 1985 or the first designation period after 1984, 
a Master Plan must be submitted by a date and pursuant to instructions 
issued by the Department. The approved Master Plan will remain in effect 
for four years unless terminated. During the fourth year of the Master 
Plan a new Master Plan must be submitted by a date and pursuant to 
instructions issued by the Department.
    (b) Each year a completed CAP is to be submitted for approval by 
registered mail to the Chief, DINAP by a date and pursuant to 
instructions announced by the Department. The CAP will be approved by 
DINAP if it is consistent with the basic provisions or the Master Plan 
and applicable regulations and formal directives.



Sec. 632.21  Application disapproval.

    (a) A CAP shall be disapproved by the Grant Officer if it fails to 
meet the requirements of the Act or the regulations.
    (b) No CAP shall be finally disapproved until the designated Native 
American grantee is provided with a description by the Chief, DINAP in 
writing of the CAP's defects and has been provided with at least 30 days 
to remedy such defect(s), but has failed to do so.
    (c) When a CAP is finally disapproved a notice of disapproval shall 
be transmitted by certified mail, return receipt requested, to the 
applicant, accompanied by a statement of the grounds of the disapproval 
and a statement that the applicant may file a Petition for 
Reconsideration with respect to the disapproval.



Sec. 632.22  Modification of a Comprehensive Annual Plan (CAP) and/or 
Master Plan.

    (a) The requirements for modifying a Master Plan and/or CAP will be 
included in administrative instructions issued by the Grant Officer upon 
final implementation of the Master Plan/CAP system.
    (b) Prior to implementing the Master Plan/CAP system, a formal 
modification will be required when:
    (1) There is a change of at least 25 percent or $25,000 (whichever 
is greater) in any cost category; or
    (2) There is a change of at least 25 percent or 25 individuals 
(whichever is greater) in the number of individuals to be served in any 
category of program activity.
    (c) The documentation to be submitted to the DINAP Federal 
Representative requesting such a modification shall consist of a letter 
explaining the need for the change and four copies of the proposed 
modification.
    (d) The Grant Officer should notify the Native American grantee of 
tentative approval or disapproval within 10 calendar days of receipt of 
the proposed modifications. The Grant Officer should notify the Native 
American grantee in writing of final approval or disapproval within 30 
calendar days of the receipt of the proposed modification.

[[Page 285]]

    (e) A Native American grantee may make any change in its Program 
Planning Summary and Budget Information Summary without prior approval, 
except as provided in this section.
    (f) Native American grantees shall notify DINAP by submitting a 
modification whenever there is a change in a name, address, or other 
similar information.
    (g) The Department will unilaterally modify a grant when a simple 
funding or performance period increase is required and it is consistent 
with the approved plan.

(Approved by the Office of Management and Budget and assigned OMB 
control number 1205-0213)



Sec. 632.23  Termination and corrective action of a CAP and/or Master 
Plan.

    (a) Emergency Termination. The Department may terminate or suspend a 
CAP designation or Master Plan under emergency termination procedures in 
accordance with section 164(f) of the Act. The provisions in part 636 
shall not apply in instances of emergency termination.
    (1) Instances under which emergency termination can occur include 
but are not limited to: Audit reports identifying numerous adverse 
findings in the area of financial control and management; information 
gathered through onsite monitoring which substantiates serious 
management, fiscal and/or performance problems, information from the 
Inspector General or gained through incident reports of poor 
performance, serious administrative problems and/or inability to protect 
and account for Federal funds.
    (2) Within 30 days of written termination notification to a grantee, 
the Department will secure applicable documents onsite, seize bank 
accounts relating to the program, arrange for the payment of legitimate 
bills and debts and arrange, to the degree feasible, for the continued 
provision of services to program enrollees.
    (b) Termination for Cause. Termination for cause can occur whenever 
there is a substantial or persistent violation of the governing rules 
and regulations or failure to comply with the grant terms and 
conditions. The following factors will be considered for termination:
    (1) Poor performance and inability to meet Federal standards related 
to such debt collection requirements as:
    (i) Failure to respond to demand letters from DOL for repayment of 
debts within the stated timeframe;
    (ii) Failure to comply with an approved repayment agreement revealed 
through monitoring or subsequent audit;
    (iii) Failure to take necessary corrective action to improve 
underperformance and to plan for more effective subsequent operations.
    (2) Nonperformance related to such requirements as:
    (i) Failure to submit required quarterly financial reports for two 
successive periods within 45 days after they are due;
    (ii) Failure to submit required quarterly performance reports for 
two successive periods within 45 days after they are due;
    (iii) Failure to develop a plan of action to correct deficiencies 
identified in an audit report or by an onsite monitoring review.
    (3) Nonperformance related to such requirements as:
    (i) Failure to comply with formal corrective action after due 
notice;
    (ii) Failure to comply with the requirements of the Act related to a 
grievance procedure and other requirements;
    (iii) Failure to submit a required modification within 10 days to 
adjust the grant award due to reduction in available funds, reductions 
due to debt collection action, etc.
    (c) In addition, the Department, by written notice, may terminate a 
grant in whole or in part in the event of a reduction in the funds 
available or a change in provisions for JTPA title IV, section 401 
programs by reason of congressional action.



            Subpart D_Administrative Standards and Procedures



Sec. 632.31  General.

    (a) This subpart describes requirements relating to the 
administration of grants by Native American grantees. Administrative 
requirements found in

[[Page 286]]

this subpart apply to all programs under the Act unless stated to the 
contrary for any specific program.
    (b) As referenced in this subpart, the requirements set forth in 41 
CFR parts 29-70, ``Administrative requirements governing all grants and 
agreements by which Department of Labor agencies award funds to State 
and local governments, Indian and Native American entities, public and 
private institutions of higher education and hospitals, and other quasi-
public and private nonprofit organizations,'' shall apply to grants 
under JTPA. Whenever the provisions of 41 CFR part 29-70 conflict with 
the provisions of part 632, the provisions of part 632 shall prevail.
    (1) The requirements in 41 CFR 29-70.1 set forth the policies which 
apply to all basic grants and agreements.
    (2) The requirements in 41 CFR 29-70.2 implement OMB Circular Nos. 
A-102 and A-110, and apply to all JTPA grants and agreements unless 
otherwise indicated in these regulations.



Sec. 632.32  Financial management systems.

    (a) Each Native American grantee, subgrantee and contractor shall 
maintain a financial management system which will provide accurate, 
current and complete disclosure of the financial transactions under each 
grant, subgrant or contract activity, and will enable each Native 
American grantee, subgrantee or contractor to evaluate the effectiveness 
of program activities and meet the reporting requirements of this 
subpart.
    (b) Each Native American grantee, subgrantee and contractor shall 
maintain its financial accounts so that the reports required by the 
Department may be prepared therefrom.
    (c) To be acceptable for audit under this subpart, a Financial 
Status Report shall be:
    (1) Current as of the cut-off date of the audit;
    (2) Taken directly from or linked by worksheet to the Native 
American grantee's books of original entry; and
    (3) Traceable to source documentation of the unit transaction.



Sec. 632.33  Audits.

    (a) General. The audit provisions of 41 CFR part 29-70 shall apply 
to Native American grantees. Until unified or single audit procedures 
are promulgated and implemented for nonprofit entities, the Office of 
the Inspector General shall be responsible for arranging and conducting 
audits of Native American grantees that are not Indian tribal 
governments.
    (b) Audit reports. Upon receipt of a final audit report the 
Inspector General will promptly transmit the audit report to the grantee 
for a comment period not to exceed 30 days.
    (c) Initial Determination. After the conclusion of the comment 
period for audits provided the grantee, the Grant Officer shall make an 
initial determination of the allowability of questioned costs or 
activities. Such determination should be based on the Act, regulations 
grants or other agreements under the Act.
    (d) Informal resolution. Except as provided in section 164(f) of the 
Act, the Grant Officer shall not revoke a grant, in whole or in part, 
nor institute corrective action or sanctions against a grantee without 
first providing the grantee with an opportunity to informally resolve 
those matters contained in the Grant Officer's initial determination. If 
the matters are informally resolved the Grant Officer shall notify the 
parties in writing of the nature of the resolution, which shall 
constitute the final determination, and may close the file.
    (e) Final determination. The Grant Officer shall, not later than 180 
days from the time the Inspector General issues the final approved audit 
report, issue a final determination that:
    (1) Indicates that efforts to informally resolve matters contained 
in the initial determination pursuant to paragraph (a) of the section 
have been unsuccessful.
    (2) Lists those matters upon which the parties continue to disagree.
    (3) Lists any modifications to the factual findings and conclusions 
set forth in the initial determination.
    (4) Lists any sanctions, and required corrective actions, including 
any other alteration or modification of the plan,

[[Page 287]]

grant, agreement or program intended by the Grant Officer.
    (5) Sets forth any appeal rights.



Sec. 632.34  Program income.

    (a) General. The provisions of 41 CFR 29-70.205, program income and 
interest earned, shall apply to Native American grantee programs.
    (b) Income generated under any program may be retained by the 
recipient to continue to carry out the program, notwithstanding the 
expiration of DOL financial assistance for that program.
    (c) Special provisions. Income earned as a result of activities of 
JTPA participants by an income generating enterprise, which is owned by 
an Indian tribe, band or group or an Alaskan native entity, and the 
profits of which are used exclusively for governmental, charitable, 
educational, civic, social or other similar purposes, may be retained by 
such enterprise and used in the same manner as other income of such 
enterprise.



Sec. 632.35  Native American grantee contracts and subgrants.

    (a) Contracts may be entered into between the Native American 
grantee and any party, public or private, for purposes set forth in the 
JTPA.
    (b) Subgrants may be entered into between the Native American 
grantee and units of State and local general government, Indian tribal 
government, public agencies or nonprofit organizations.
    (c) The Native American grantee is responsible for the development, 
approval and operation of all contracts and subgrants and shall require 
that its contractors and subgrantees adhere to the requirements of the 
Act, the regulations under the Act, and other applicable law. It shall 
also require contractors and subgrantees to maintain effective control 
and accountability over all funds, property and other assets covered by 
the contract or subgrant.
    (d) Each Native American grantee shall take action against its 
contractors and subgrantees to prevent or eliminate violations of the 
regulations, and to prevent misuse of JTPA funds.
    (e) Subgrantees are entitled to funding for administrative costs. 
The amount of such funding will be determined during the development of 
subgrants subject to the overall administrative costs of the grant.
    (f) If a contract or subgrant is cancelled in whole or in part, the 
Native American grantee shall develop procedures for ensuring continuity 
of service to affected participants to the extent feasible.
    (g) The Native American grantee may enter into contracts or 
subgrants which extend past the expiration date of the CAP but such 
extension shall not exceed 6 months. In such cases, the grantee shall 
continue to be responsible for the administration of such contracts and 
subgrants.
    (h) To the extent feasible, Native American Indian grantees shall 
give preference in the award of contracts and subgrants to Indian 
organizations and to Indian-owned economic enterprises as defined in 
section 3 of the Indian Financing Act of 1974 (25 U.S.C. 1452). Any 
contract or subgrant made by a Native American grantee shall require 
that, to the greatest extent feasible, preference and opportunities for 
training and employment in connection with such contract or subgrant 
shall be given to qualified Indians regardless of age, religion or sex 
and that the contractor or subgrantee shall comply with any Indian 
preference requirements established by the Native American grantee. All 
grantees, subgrantees and contractors shall include the requirements of 
this paragraph in all subcontracts and subgrants made by them (sec. 7(b) 
of the Indian Self-Determination and Education Assistance Act, Public 
Law 93-638 (25 U.S.C. 450 et seq.)).
    (i) The Native American grantee shall ensure that contractors and 
subgrantees maintain and make available for review by the grantee and 
the Department of Labor all records pertaining to the operations of 
programs under such contracts and subgrants consistent with the 
maintenance and retention of record requirements in 41 CFR parts 29-70.



Sec. 632.36  Procurement standards.

    (a) Native American grantees shall comply with the procurement 
systems and procedures found in 41 CFR 29-70.216, Procurement standards.

[[Page 288]]

    (b) Subject to the Indian preference provisions of Sec. 632.35(h), 
small and minority-owned businesses, including small businesses owned by 
women, within the service area of the Native American grantee, shall be 
provided maximum reasonable opportunity to compete for contracts for 
supplies and services. One means to provide for this is the use of set-
asides.
    (c) No funds shall be paid by the Native American grantee to any 
organization for the conduct of programs under the Act unless:
    (1) It has submitted an acceptable proposal;
    (2) Selection is performed on a merit basis;
    (3) It has not been seriously deficient in its conduct of, or 
participation in, any Department of Labor program in the past, or is not 
a successor organization to one that was seriously deficient in the 
past, unless the organization statisfactorily demonstrates that the 
deficiency has been or will be corrected and performance substantially 
improved; and
    (4) It has the administrative capability to perform effectively.



Sec. 632.37  Allowable costs.

    (a) General. To be allowable, a cost must be necessary and 
reasonable for proper and efficient administration of the grantee's 
program, be allocable thereto under these principles, and, except as 
provided herein, not be a general expense required to carry out the 
overall responsibilities of the grantee. Costs charged to the program 
shall be consistent with those normally allowed in like circumstances 
and, with applicable State and local law, rules or regulations as 
determined by the Native American grantee.
    (b) Unless otherwise indicated below, direct and indirect costs 
shall be charged in accordance with 41 CFR 29-70 and 41 CFR 1-15.7.
    (c) Costs associated with repairs, maintenance, and capital 
improvements of existing facilities used primarily for programs under 
the Act are allowable. Additionally, the costs of home repair, 
weatherization and rehabilitation are allowable when the work is 
performed on low income housing as defined in Sec. 632.4.
    (d) Section 401 funds may be used to pay the cost of incorporating a 
PIC, other planning body or consortium administrative entity for the 
purpose of carrying out programs under the Act. These costs are 
chargeable to administration.
    (e) Costs which are billed as a single unit charge do not have to be 
allocated or prorated among the several cost categories but may be 
charged entirely to training when the agreement:
    (1) Is for classroom training;
    (2) Is fixed unit price; and
    (3) Stipulates that full payment for the full unit price will be 
made only upon completion of training by a participant and placement of 
the participant into unsubsidized employment in the occupation trained 
for and at not less than the wage specified in the agreement.



Sec. 632.38  Classification of costs.

    Allowable costs shall be charged against the following four cost 
categories: Administration; training, employment and other (including 
supportive services).
    (a) Costs are allocable to a particular cost category to the extent 
that benefits are received by such category.
    (b) The Native American grantee is required to plan, control and 
charge expenditures against the aforementioned cost categories.
    (c) The Native American grantee is responsible for ensuring that, at 
a minimum, subgrant or subcontract recipients plan, control, and charge 
expenditures against the aforementioned cost categories.
    (d) Administrative costs consist of all direct and indirect costs 
associated with the management of the grantee's program. These costs 
include but are not limited to: the salaries and fringe benefits of 
personnel engaged in executive, fiscal, data collection, personnel, 
legal, audit, procurement, data processing, communications, maintenance, 
and similar functions; and related materials, supplies, equipment, 
office space costs, and staff training. Also included are salaries and 
fringe benefits of direct program administrative positions such as 
supervisors, program analysts, labor market analysts, and project 
directors. Additionally, all

[[Page 289]]

costs of clerical personnel, materials, supplies, equipment, space, 
utilities, and travel which are identifiable with these program 
administration positions are charged to administration.
    (e) Training costs consist of goods and services which directly 
affect program participants in a training activity. Training costs 
include, but are not limited to, the following: the costs associated 
with on-the-job training, salaries, fringe benefits, equipment and 
supplies of personnel engaged in providing training; books and other 
teaching aids; equipment and materials used in providing training to 
participants; classroom space and utility costs; employability 
assessment; job related counseling for participants; job search 
assistance and labor market orientation; participant allowances, and 
tuition and entrance fees which represent instructional costs which have 
a direct and immediate impact on participants. In addition, 250 hours of 
youth try-out employment is considered an allowable training cost. Youth 
try-out employment is that which meets the requirements of Sec. 632.78.
    (f) The compensation of individuals who both instruct participants 
and supervise other instructors must be prorated among the training and 
administration cost categories on the basis of time records or other 
equitable means. Similarly, tuition fees, and the costs of supplies used 
in the course of both participant instruction and other activities 
should be prorated among the benefitting uses.
    (g) Employment costs consist of those costs associated with 
community service employment and work experience as described in Sec. 
632.79.
    (h) Other costs include supportive services, services which are 
necessary to enable an individual to participate in training and 
assistance under this part, and those described in Sec. 632.80.
    (i) Costs which are not readily assignable to the training or 
employment cost category should be charged to either the administration 
or other category as appropriate.
    (j) Unemployment compensation costs are allowable for administrative 
staff hired in accordance with the administrative provisions of this 
part, and for CSE participants. Unemployment compensation costs are 
allowed for work experience only where required by State law.
    (k) Travel costs. (1) The cost of participant travel and staff 
travel necessary for the administration of programs under the Act are 
allowable costs, chargeable to the proper cost category, and must follow 
standard Federal travel requirements.
    (2) Travel costs of Native American grantee officials, including 
staff, board members, and advisory council members are allowable if the 
travel and costs specifically relate to programs under the Act. These 
costs will be charged to administration. Travel costs for officials of 
tribes or organizations belonging to a consortium require advance 
written approval from the Chief, DINAP, unless they are also officials 
of the Native American grantee organization.
    (3) Travel costs for participants using their personal vehicles in 
the performance of their jobs are allowable if the employing agency 
normally reimburses its other employees in this way. These costs shall 
be charged to supportive services.
    (4) Travel costs to enable participants to obtain employment or to 
participate in programs under the Act are allowable as supportive 
services.
    (l) Allocation of fixed unit charge. (1) When contractors or 
subgrantees bill the Native American grantee with a single unit charge 
containing costs which are chargeable to more than one cost category, 
the Native American grantee shall charge these costs to the cost 
categories in Sec. 632.38. For unit charges such as tuition fees for 
which the necessary detail cannot be provided, a reasonable estimate of 
the breakdown of the single unit charge among cost categories in Sec. 
632.38 will be sufficient, including for audit purposes. When such unit 
charges are normally billed as a single charge and the cumulative amount 
of such charges to a service provider does not exceed $25,000 within the 
grant year, proration will not be required. These costs may be charged 
to the category receiving the most benefit.
    (2) The provisions of this section shall not apply to vendors 
selling or

[[Page 290]]

leasing equipment and attendant service at a commercially established 
rate to Native American grantees or subgrantees.
    (3) In the case of multiuse equipment there must be a proration of 
costs or, if there is a predominant usage relating to one cost category, 
a charge shall be made to that category.
    (4) Any single cost, such as staff salaries or fringe benefits, 
which is properly chargeable to more than one cost category shall be 
prorated among the affected categories.



Sec. 632.39  Administrative cost plan.

    (a) All administrative funds for all programs operated under 
separate sections of the Act by a Native American grantee may be 
accounted for separately and be allocated by title and program activity 
or may be pooled into one fund. Planned expenditures from the fund shall 
be described in a separate section of the CAP.
    (b) The administrative cost plan may be modified during the program 
year.



Sec. 632.40  Administrative staff and personnel standards.

    (a) Staffing. Members of the population to be served shall be 
provided maximum employment opportunities at all levels of the JTPA 
grantee administration. Native American grantees shall establish systems 
to enhance the recruitment and hiring of qualified Indian and Native 
Americans and to provide opportunities for their further occupational 
training and career advancement.
    (b) Compensation. Compensation for administrative staff shall be at 
levels consistent with generally accepted business practices in the 
area. Such administrative wages, salaries, and fringe benefits are 
allowable administrative costs under JTPA.
    (c) Basic personnel standards. All grantee employees, including 
participants, engaged in the administration of programs under the Act 
shall be subject to the policies and methods of personnel administration 
as formally established by the Native American grantee.
    (d) Bonding. Native American grantees shall comply with the bonding 
requirements at 41 CFR 29-70.202b.



Sec. 632.41  Reporting requirements.

    Within 45 days of the end of each quarter, a Native American grantee 
shall submit to the Chief, DINAP by registered mail, financial and 
program reports. Accuracy of all reports must be verified by the chief 
executive officer or financial officer. When estimates are used the 
verification statement will so state. The exact reports to be submitted 
and reporting instructions as approved by the Office of Management and 
Budget will be announced to Native American grantees under separate 
order.



Sec. 632.42  Grant closeout procedures.

    Grant closeout will conform to the requirements at 41 CFR part 29-
70. As necessary, the Secretary shall issue supplementary closeout 
requirements.



Sec. 632.43  Reallocation of funds.

    When the DINAP determines that reallocation is appropriate, it shall 
give the Native American grantee 30-day notice of proposed action to 
remove funds from the grant. Such notice shall include specific reasons 
for the action being taken, and shall give the Native American grantee 
the opportunity to submit comments on the proposed reallocation of 
funds. These comments shall be submitted to DINAP within 30 days from 
the date of the notice. DINAP shall notify affected Native American 
grantees on any decision to reallocate funds. The Grant Officer shall 
finally reallocate by modifying the CAP.



Sec. 632.44  Sanctions for violation of the Act.

    (a) Pursuant to sections 164 (d), (e), (f), (g), and (h) of the Act, 
the Secretary may impose appropriate sanctions and corrective actions 
for violations of the Act, Regulations, or grant terms and conditions. 
Additionally, sanctions may include the following:
    (1) Offsetting debts, arising from misexpenditure of grant funds, 
against amounts to which the grantee is or may be entitled under the 
Act, except as provided in section 164(e)(1) of the Act. The debt shall 
be fully satisfied when the Secretary reduces amounts allotted to the 
grantee by the amount of the misexpenditure; and

[[Page 291]]

    (2) Determining the amount of Federal cash maintained by the grantee 
or its subgrantee or contract or in excess of reasonable grant needs, 
establishing a debt for the amount of such excessive cash, and charging 
interest on that debt.
    (b) Except for actions under section 164(f) and 167 of the Act, to 
establish a debt or violation subject to sanction and/or corrective 
action, the Secretary shall utilize initial and final determination 
procedures outlined in part 636.
    (c) To impose a sanction or corrective action regarding a violation 
of section 167 of the Act, the Secretary shall utilize the procedures of 
29 CFR part 31.
    (d) (1) The Secretary shall hold the grantee responsible for all 
funds under the grant. The grantee shall hold its subgrantees and 
contractors responsible for JTPA funds received through the grant.
    (2) The Secretary shall determine the liability of the grantee for 
misexpenditures of grant funds in accordance with section 164(e) of the 
Act, including the requirement that the grantee shall have taken prompt 
and appropriate corrective actions for misexpenditures by a subgrantee 
or contractor.
    (3) Prompt, appropriate, and aggressive debt collection action to 
recover any funds misspent by subgrantees or contractors ordinarily 
shall be considered a part of the corrective action required by section 
164(e)(2)(D) of the Act.
    (4) In making the determination required by section 164(e)(2) of the 
Act, the Secretary may determine, based on a request from the grantee, 
that the grantee may forego certain collection actions against a 
subgrantee or contractor where that subgrantee or contractor was not at 
fault with respect to the liability criteria set forth in section 
164(e)(2)(A) through section 164(e)(2)(D) of the Act. The Secretary 
shall consider such requests in assessing whether the grantee's 
corrective action was appropriate in light of section 164(e)(2)(D) of 
the Act.
    (5) The grantee shall not be released from liability for misspent 
funds under the determination required by section 164(e) of the Act 
until the Secretary determines that further collection action, either by 
the grantee or subgrantee or contractor, would be inappropriate or would 
prove futile.
    (e) Nothing in this section shall preclude the Secretary from 
imposing a sanction directly against a subgrantee or contractor as 
authorized in section 164(e)(3) of the Act. In such a case, the 
Secretary shall inform the grantee of the Secretary's action.



                 Subpart E_Program Design and Management



Sec. 632.70  Waiver of regulations under Parts 632 and 636.

    (a) A Native American section 401 grantee may request, and the 
Assistant Secretary of Labor for Employment and Training may grant, a 
waiver of specific provisions of 20 CFR Parts 632 and 636, or of any 
applicable administrative issuance, to the extent that such request is 
consistent with the provision of the Act.
    (b)(1) In requesting a waiver under this section, the Native 
American section 401 grantee shall demonstrate how it will enhance the 
provision of services or outcomes to participants, which may include, 
but are not limited to, the following purposes: improving the targeting 
of services to the hard-to-serve; increasing the level of basic and 
occupational skills training provided by the JTPA program; contributing 
to the provisions of academic enrichment services to youth; promoting 
coordination of JTPA programs with other human resources programs; or 
substantially improving the job placement outcomes of the JTPA program.
    (2) The request shall describe the regulatory requirements to be 
waived and demonstrate how such requirements impede the enhancement of 
the services and outcomes described in paragraph (b)(1) of this section.
    (3) The waiver request shall indicate how the grantee will modify 
its planning documents as a result of the waiver.
    (c) A waiver shall not be granted for:
    (1) Any statutory requirement;
    (2) The formula for allocation of funds;

[[Page 292]]

    (3) Eligibility requirements for services as provided in this part;
    (4) Requirements for public health or safety, labor standards, civil 
rights, occupational safety or health, or environmental protection; or
    (5) Prohibitions or restrictions relating to construction of 
buildings or facilities.
    (d) Waivers granted shall be effective for no more than four years 
from the date the waiver is granted.

[60 FR 58229, Nov. 27, 1995]



Sec. 632.75  General responsibilities of Native American grantees.

    This subpart sets out program operation requirements for Native 
American grantees including program management, linkages, coordination 
and consultation, allowable activities, participant benefits and 
duration of participation provisions. It also sets forth the 
responsibilities of Native American grantees with respect to 
nondiscrimination and equitable provision of services.



Sec. 632.76  Program management systems.

    (a) All Native American grantees shall establish management 
information systems to control and assess all programs. Native American 
grantees must institute and maintain effective systems for the overall 
management of all programs including:
    (1) Eligibility verification systems as described in Sec. 632.77;
    (2) Complaint and hearing procedures as described in part 636; and
    (3) Mechanisms for taking immediate corrective action where problems 
have been identified and for restitution of JTPA funds for improper 
expenditures.
    (b) All Native American grantees shall establish and maintain 
financial management and participant tracking systems in accordance with 
Sec. 632.32 and Sec. 632.77. The principal objectives of such systems 
shall be to provide the Native American grantee with systems necessary 
to effectively manage its program and to provide information necessary 
to design program activities and delivery mechanisms and complete 
Federal required reports.
    (c) Each Native American grantee shall establish and use procedures 
for the continuous, systematic assessment of program performance in 
relation to the performance standards and goals contained in its CAP.
    (d) Native American grantees shall establish and use procedures 
whereby the information collected and assessments conducted shall be 
considered in subsequent program planning and in the selection of 
service deliverers.



Sec. 632.77  Participant eligibility determination.

    (a) Each Native American grantee, and any subgrantees or contractors 
assigned responsibility for the determination of participant 
eligibility, shall be responsible for developing and maintaining a 
system which reasonably ensures an accurate determination and subsequent 
verification of eligibility based on the information presented at the 
time of application.
    (b) The ultimate responsibility for the selection of participants 
and the maintenance of participant records rests with the Native 
American grantee. However, the Native American grantee may assign the 
administration of this responsibility to subgrantees of contractors. The 
selected agency must provide adequate documentation of each 
participant's eligibility and retain in the participant's folder the 
information on which this determination is based.
    (c) The eligibility determination shall be based upon a signed, 
completed, application form which records all information necessary to 
determine eligibility, which attests that the information on the 
application is true to the best of the applicant's knowledge and 
acknowledging that such information is subject to verification and that 
falsification of the application shall be grounds for the participant's 
termination and may subject the applicant to prosecution under law. In 
the case of an applicant who is a minor (except minors who are 
emancipated or heads of households), the signature of the parent, 
responsibile adult or guardian is also required.
    (d) Native American grantees shall maintain documentation to ensure 
the credibility of the eligibility determination, which shall at a 
minimum:

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    (1) Include a completed application for participation;
    (2) Include records of all actions taken to correct deficiencies in 
the eligibility determination procedures; and
    (3) Show compliance with section 504 of the Act.
    (e) A participant determined to be ineligible shall immediately be 
terminated.
    (f) A Native American grantee may enter into an agreement with a 
State employment security agency (SESA) or other independent agency or 
organization as may be approved by the Department, for the verification 
of applicant eligibility within 45 days of enrollment. The Native 
American grantee shall monitor such verification procedures to ensure 
that erroneous verifications are not made deliberately or with 
insufficient care.
    (g) Participants may be transferred from one JTPA program to 
another, from one Native American grantee to another, from a Native 
American grantee to a SDA grant recipient, from a SDA grant recipient to 
a Native American grantee, or concurrently enrolled in programs 
sponsored by Native American grantees or SDA grant recipients, provided, 
except for age requirements, they were eligible for the subsequent or 
concurrent program when they were first enrolled.
    (h) Eligibility determinations for each program shall be made at the 
time of application. Applicants determined eligible may be enrolled as 
participants within 45 days of the date of the application without an 
update of the information on the application provided they did not 
obtain full-time permanent unsubsidized employment in the interim. This 
provision does not appy to the title II-B program.
    (i) Aliens described in section 167(a)(5) of the Act and who 
otherwise meet the eligibility requirements for programs under this 
part, may participate in a program if this is permitted by Indian law or 
the Native American grantee.



Sec. 632.78  Training activities.

    Native American grantees shall design and operate programs funded 
under the Act which support growth and development as determined by 
representatives of the Indian and Native American communities and groups 
served (sec. 401(a)). Training shall be only for occupations for which 
there is a demand in the area served or in another area to which the 
participant is willing to relocate, and consideration in the selection 
of training programs may be given to training in occupations determined 
to be in sectors of the economy which have a potential for sustained 
demand or growth. The CAP will provide evidence based on local labor 
market information that occupational demand exists for planned training. 
The basic types of training activities available to Native American 
grantees, subgrantees and contractors include, but are not limited, to 
the following:
    (a) Classroom training. This program activity is any training of the 
type normally conducted in an institutional setting, including 
vocational education, and designed to provide individuals with the 
technical skills and information required to perform a specific job or 
group of jobs. It may be coupled with other employment and training 
activities and may also include training designed to enhance the 
employability of individuals by upgrading basic skills, through the 
provision of courses such as remedial education, GED, training in the 
primary language of persons with limited English-speaking proficiency, 
or English-as-a-second-language training.
    (b) On-the-job training. (1) On-the-job training (OJT) is training 
in the private or public sector given to a participant, who has been 
hired first by the employer, and which occurs while the participant is 
engaged in productive work which provides knowledge or skills essential 
to the full and adequate performance of the job. This does not preclude 
a participant who has been hired by and received OJT from one employer 
from being ultimately placed with another employer. Innovative 
approaches to financing, particularly involving the sharing of training 
costs by the private sector are to be encouraged.
    (2) OJT may be coupled with other JTPA employment and training 
activities. As needed, OJT participants may receive any of the 
employment and

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training services or supportive services through the system, through 
community resources, or through employer resources.
    (3) Reimbursement. Payments to employers for OJT which shall not, 
during the period of such training, average more than 50 percent of the 
wages excluding fringe benefits paid by the employer to such 
participants, and payments in such amount shall be deemed to be in 
compensation for the extraordinary costs associated with the training 
costs and lower productivity of such participants. No direct wage 
payments will be made to OJT participants by the Native American 
Grantee.
    (4) OJT agreements. Employers will be held responsible with respect 
to JTPA costs only in accordance with the provisions of their OJT 
agreements. At a minimum, the OJT agreement shall contain the elements 
listed below. Native American grantees may place additional provisions 
in the OJT agreement only after a careful assessment is made of the 
additional burdens imposed on participating employers. Agreements may be 
entered into only with employers which have not been seriously deficient 
in their conduct of or participation in any DOL program. Each OJT 
agreement shall contain:
    (i) A brief training outline, including the length of training and 
the nature of the training;
    (ii) The method and maximum amount of reimbursement for OJT training 
costs;
    (iii) The number of participants to be trained;
    (iv) Job descriptions and specification of participant wage rates;
    (v) Reporting requirements;
    (vi) An assurance that payroll records, time and attendance records, 
job duties and documentation of classroom training, employment and 
training services, or supportive services, costs for which the employer 
is being reimbursed will be subject to review;
    (vii) A termination clause for nonperformance; and
    (viii) An assurance that the employer will comply with the Act and 
regulations.
    (c) Tryout employment. Tryout employment in private-for-profit 
worksites may be conducted in accordance with section 205(d)(3)(B) of 
the Act (sec. 141(K)).
    (d) Training assistance. Such assistance includes:
    (1) Orientation to the world of work;
    (2) Counseling. This includes employment and training related 
counseling and testing;
    (3) Job development;
    (4) Job search assistance. This includes transition services, such 
as job seeking skills instruction, individualized job search plan, labor 
market information, and other special activities for transition to 
unsubsidized employment;
    (5) Job referral and placement; and
    (6) Vocational Exploration Program (VEP). A Native American grantee 
may conduct a VEP program to expose participants to jobs available in 
the private sector through observation of such jobs, instruction, and, 
if appropriate, limited practical experience.
    (e) Combined activities. (1) A participant may be simultaneously or 
sequentially enrolled in two or more activities.
    (2) (i) Reimbursement may be up to 100 percent to employers, 
including private-for-profit employers, for expenditures for the costs 
of classroom training, employment and training assistance or supportive 
services for participants in combined activities including the costs of 
participants' wages paid by the employer for time spent in these 
activities during working hours.
    (ii) Reimbursement may be made on a cost reimbursement or fixed cost 
basis and shall be supported by business receipts, payroll, or other 
records normally kept by the employer.
    (iii) Nothing in this paragraph (b)(1) shall allow reimbursement to 
private-for-profit employers for the costs of OJT to exceed the amounts 
allowable in Sec. 632.78.



Sec. 632.79  Employment activities.

    (a) Community service employment (CSE). Community Service Employment 
is the type of work normally provided by government and includes, but is 
not limited to, work (including part-time work) in such fields as 
environmental quality, child care, health care,

[[Page 295]]

education, crime prevention and control, prisoner rehabilitation, 
transportation, recreation, maintenance of parks, streets and other 
public facilities, solid waste removal, pollution control, housing and 
neighborhood improvement, rural development, conservation, 
beautification, veterans outreach, development of alternative energy 
technologies, and other fields of human betterment and community 
improvement. It includes work performed by tribally sponsored or owned 
income generating enterprises owned by Indian tribes, bands, or groups, 
or Native Alaskan entities, provided the profits from such enterprises 
are used exclusively for functions normally performed by the governing 
body of such entities.
    (b) Work experience. (1) Work experience is a short-term or part-
time work assignment with an employing agency or an organization 
authorized to employ CSE participants. It is otherwise prohibited in the 
private-for-profit sector.
    (2) Participation in work experience shall be for a reasonable 
length of time, based on the needs of the participant, and subject to 
the restrictions set forth in Sec. 632.85.



Sec. 632.80  Other activities.

    (a) General. Native American grantees may conduct employment and 
training activities not described in this subpart. The CAP shall 
describe the basic design of activities undertaken as ``other 
activities'' and their objectives. These activities may include, but are 
not limited to:
    (1) Removal of artificial barriers to employment;
    (2) Job restructuring;
    (3) Revision or establishment of merit systems;
    (4) Development and implementation of affirmative action plans, 
including Indian preference plans and Tribal Employment Rights Office 
(TERO) programs.
    (5) Post termination services in Sec. 632.80 for up to 30 days 
following termination; and
    (6) Employment generating services.
    (b) Supportive services. Supportive services are those which are 
necessary to enable an individual eligible under this part, but who 
cannot afford to pay for such services, participate in the program. Such 
supportive services may include but are not limited to transportation, 
health care, special services and materials for the handicapped, child 
care, meals, temporary shelter, financial counseling, and other 
reasonable expenses required for participation in the training program 
and may be provided in-kind or through cash assistance.



Sec. 632.81  Payments to participants.

    (a) General. Each participant paid wages for employment activities, 
allowances for classroom training or reimbursed for OJT or tryout 
employment will be provided such benefits pursuant to section 142 of the 
Act.
    (b) Maximum wage rates for CSE. (1) The wages (including those 
received from overtime work and leave taken during the period of 
employment) paid to any CSE participant from funds under the Act shall 
be limited to a full-time rate of $10,000 per year (or the hourly, 
weekly, or monthly rate which, if full-time and annualized, would equal 
a rate of $10,000 per year). Approved rates above $10,000 are fixed at 
the CETA approved rate as of September 30, 1982, unless adjusted by the 
Secretary.
    (2) Fringe benefits payable from funds under the Act to any CSE 
participant may not exceed those regularly afforded to similarly 
employed non-JTPA workers.
    (3) Davis-Bacon wages. All laborers and mechanics employed by 
contractors or subcontractors in any construction, alteration, or 
repair, including painting and decorating, of projects, buildings, and 
works which are federally assisted under this Act, shall be paid wages 
at rates not less than those prevailing on similar construction in the 
locality as determined by the Secretary in accordnace with the Act of 
March 3, 1931, popularly known as the Davis-Bacon Act, and the 
implementing regulations in 29 CFR parts 1, 3, 5, and 7.
    (c) Payment of allowances. (1) A basic hourly allowance for 
regularly enrolled classroom training or services participants shall not 
exceed the higher of the

[[Page 296]]

State or Federal minimum hourly wage.
    (2) Native American grantees are encouraged to submit allowance 
payment designs which are less than in paragraph (c) (1) of this 
section. Through innovative reimbursement systems the number of 
participants should be maximized. The allowance payment system will be 
described in the Master Plan and as an option may include dependent 
allowances.
    (3) Repayments. Native American grantees shall require participants 
to repay the amount of any overpayment of allowances under this part, 
except if the overpayment was made in the absence of fault on the part 
of the participant. Where the Native American grantee requires 
repayment, any overpayment not repaid may be set off against any future 
allowance or other payments under the Act to which the participant may 
become entitled.
    (d) Combined activities. A primary activity is one in which a 
participant is enrolled for more than 50 percent of scheduled time. 
Participants enrolled in a primary activity for which wages are payable 
and simultaneously in an activity for which allowances are payable may, 
at the Native American grantee's option, be paid wages for all hours of 
participation. A participant enrolled in a primary activity for which 
allowances are payable may, at the Native American grantee's option, be 
paid allowances for all hours of participation, except when OJT is the 
non-primary component. However, in the latter case, before placing an 
individual in such an activity, the Native American grantee shall 
request a determination from the Internal Revenue Service as to whether 
income from the non-primary component is taxable.



Sec. 632.82  Benefits and working conditions for participants.

    The provisions of sections 142 and 143 of the Act shall apply to 
benefits and working conditions.



Sec. 632.83  FICA.

    Expenditures may be made from JTPA funds for taxes under the Federal 
Insurance Contribution Act (FICA), 26 U.S.C. 3101, et seq.



Sec. 632.84  Non-Federal status of participants.

    Participants shall not be deemed Federal employees and shall not be 
subject to the provisions of law relating to Federal employment.



Sec. 632.85  Participant limitations.

    (a) Except as provided in paragraph (c) of this section and for 
participants in programs that have other statutory limits, participation 
in work experience shall be limited to a maximum of 1,000 hours during 
any one year beginning with the day of enrollment in either CETA or 
JTPA.
    (b) No participant may receive wages for CSE for more than 78 weeks 
during a 2-year period from the participant's initial enrollment in 
either JTPA or in a program supported by the Comprehensive Employment 
and Training Act.
    (c) The limitation on work experience participation in JTPA set 
forth in paragraph (a) of this section:
    (1) Shall not apply to time spent by in-school youth or title II-B 
participants enrolled in a work experience program under the Act, nor 
shall such time be included in determining if an individual has reached 
such limitations; and
    (2) May be waived by the Chief, DINAP and the waiver justification 
described in the Master Plan or CAP.



Sec. 632.86  Nondiscrimination and nonsectarian activities.

    Pursuant to section 167(a) of the Act:
    (a) Subject to the restriction that services under section 401 of 
JTPA are legally available only to Indian and Native American persons, 
nondiscrimination and equal opportunity requirements and procedures, 
including complaint processing compliance reviews, will be governed by 
the provisions of 29 CFR parts 31 and 32 and will be administered by the 
Office of Civil Rights.
    (b) The employment or training of participants in sectarian 
activities is prohibited.

[[Page 297]]



Sec. 632.87  Equitable provision of services to the eligible population 
and significant segments.

    Native American grantees shall ensure and provide evidence in the 
Master Plan that a system is in place to afford all members of the 
eligible population within the service area for which the grantee was 
designated are afforded an equitable opportunity for employment and 
training activities and services.



Sec. 632.88  General responsibilities of the Department.

    The Department of Labor shall be responsible for:
    (a) Providing prompt notification to all Native American grantees of 
allocations of funds, proposed and final rules and program directives 
and procedures.
    (b) The development, after consultation with Native American 
grantees, of regulations, performance standards and program policies 
governing Native American programs. Such regulations and program 
policies shall take into account the special circumstances under which 
Native American programs operate (sec. 401 (h)(1)).
    (c) Providing Native American grantees with technical assistance, as 
the Secretary deems necessary, related to the administration and 
operation of JTPA programs (sec. 401(i)).
    (d) Taking appropriate action to establish administrative procedures 
and machinery within the Department, including the retention of 
personnel having particular competence in the field of Indian and Native 
American employment and training programs, for the selection, 
administration, monitoring and evaluation of such programs (sec. 
401(e)).



Sec. 632.89  Performance standards.

    The Department of Labor shall establish performance standards for 
all Native American grantees (section 401(h)(1)). Performance results, 
as judged against these standards, will not be used for grantee 
designation purposes for the Program Years 1985-1986. Performance 
results will be a factor in grantee designations for Program Years 1987-
1988, and beyond.



             Subpart F_Prevention of Fraud and Program Abuse



Sec. 632.115  General.

    (a) To ensure the integrity of the JTPA programs special efforts by 
grantees are necessary to prevent fraud and other program abuses. While 
any violation of the Act or regulations may constitute fraud or program 
abuse, this subpart F identifies and addresses those specific program 
problems of most concern to the Department.
    (b) This subpart sets forth specific responsibilities of Native 
American grantees, subgrantees and contractors and of the Secretary to 
prevent fraud and program abuse in JTPA programs.



Sec. 632.116  Conflict of interest.

    (a) No member of any advisory, planning, private industry council or 
governing body under the Act shall cast a vote on any matter which has a 
direct bearing on services to be provided by that member or any 
organization which such member directly represents or on any matter 
which would financially benefit such member or any organization such 
member represents.
    (b) Each Native American grantee, subgrantee or contractor shall 
avoid personal and organizational conflict of interest in awarding 
financial assistance and in the conduct of procurement activities 
involving funds under the Act in accordance with the code of conduct 
requirements set forth in 41 CFR 29-70.216-4.
    (c) Neither the Secretary nor any Native American grantee, 
subgrantee or contractor shall pay funds under the Act to any 
nongovernmental individual, institution or organization to conduct an 
evaluation of any program under the Act if such individual, institution 
or organization is associated with that program as a consultant or 
technical advisor.



Sec. 632.117  Kickbacks.

    No officer, employee or agent of any Native American grantee, 
subgrantee of contractor shall solicit or accept gratuities, favors or 
anything of monetary value from any actual or potential subgrantee, 
contractor or supplier.

[[Page 298]]



Sec. 632.118  Nepotism.

    (a) No Native American grantee, subgrantee, contractor or employing 
agency shall permit the hiring of any person in a staff position or as a 
participant if that person or a member of that person's immediate family 
is employed in an administrative capacity by the Native American 
grantee, subgrantee or contractor. The Native American grantee may waive 
this requirement if adequate justification is documented. The following 
are examples where the nepotism provision may be waived:
    (1) If there are no other persons eligible and available for 
participation or employment by the Native American grantee;
    (2) Where the Native American grantee's total service population is 
2,000 or less, or where the geographical situation of an Indian or 
Native American community is rural and isolated from other communities 
within the designated service area; or
    (3) Where the potential participant has a history of unemployment or 
dependence on public assistance.
    (b) A Native American grantee may develop its own nepotism policy in 
lieu of the policy in paragraph (a) of this section. The Chief, DINAP, 
shall review any such policy before its implementation and shall approve 
or disapprove it. Any such policy shall be described in the Master Plan 
and have adequate safeguards to prevent persons employed in an 
administrative capacity for the Native American grantee, its subgrantees 
or contractors from using such position to secure JTPA services or other 
benefits for a member of his or her immediate family. A satisfactory 
policy shall include the following minimum criteria:
    (1) All formal personnel procedures shall be followed;
    (2) There shall be full written disclosure to the governing body 
describing all advantages, conflicts and/or disadvantages which may 
result from the specific personnel action; and
    (3) No member of the immediate family of the applicant shall 
participate in the applicant's selection.
    (c) For purposes of this section, the term ``immediate family'' 
means wife, husband, son, daughter, mother, father, brother, and sister. 
The term ``staff position'' includes all JTPA staff positions funded 
under the Act such as instructors, counselors, and other staff involved 
in administrative, training or service activities. The term ``employed 
in an administrative capacity'' includes those persons who have overall 
administrative responsibility for a program including: All elected and 
appointed officials who have any responsibility for the obtaining of or 
approval of any grant funded under this part as well as other officials 
who have any influence or control over the administration of the 
program, such as the project director, deputy director and unit chiefs; 
and persons who have selection, hiring, placement or supervisory 
responsibilities for participants in a Native American employment and 
training program. The term excludes officials of entities belonging to a 
consortium who are not at the same time officials of the consortium. 
Persons serving on a Native American grantee's advisory councils or PIC 
shall not be considered to be in an administrative capacity.



Sec. 632.119  Political patronage.

    (a) No Native American grantee, subgrantee or contractor may select, 
reject, or promote a participant based on that individual's political 
affiliation or beliefs. The selection or advance of employees as a 
reward for political services or as a form of political patronage, 
whether or not the political service or patronage is partisan in nature, 
is prohibited.
    (b) There shall be no selection of subgrantees or contractors based 
on political affiliation.



Sec. 632.120  Political activities.

    (a) No program under the Act may involve political activities.
    (b) No participant may engage in partisan or nonpartisan political 
activities during hours for which the participant is paid with JTPA 
funds.
    (c) No participant may, at any time, engage in partisan or 
nonpartisan political activities in which such participant represents 
himself or herself as a spokesperson for the JTPA program.

[[Page 299]]



Sec. 632.121  Lobbying activities.

    No funds provided under the Act may be used in any way:
    (a) To attempt to influence in any manner a member of Congress to 
favor or oppose any legislative or appropriation by Congress; or
    (b) To attempt to influence in any manner State or local legislators 
to favor or oppose any legislation or appropriation by such legislators.



Sec. 632.122  Unionization and antiunionization activities; work 
stoppages.

    (a) No funds under the Act shall be used in any way to either 
promote or oppose unionization (sec. 143(c)(1)).
    (b) No participant in work experience or community service 
employment may be placed into, or remain working in, any position which 
is affected by labor disputes involving a work stoppage. If such a work 
stoppage occurs during the grant period, participants in affected 
positions must:
    (1) Be relocated to positions not affected by the dispute; or
    (2) Be suspended through administrative leave or other means; or
    (3) Where participants belong to the labor union involved in the 
work stoppage, they shall be treated in the same manner as other members 
of the union except that they may not remain in the affected positions. 
The grantee shall make every effort to relocate participants who wish to 
remain working into suitable positions unaffected by the work stoppage.
    (c) No person shall be referred to or placed in an on-the-job 
training position affected by a labor dispute involving a work stoppage 
and no payments may be made to employers for the training and employment 
of participants in on-the-job training during the periods of work 
stoppage.



Sec. 632.123  Maintenance of effort.

    (a) Funds provided under this Act shall only be used for activities 
which are in addition to those which would otherwise be available in the 
area in the absence of such funds.
    (b) Funds provided under this Act shall not be used to duplicate 
facilities or services available in the area (with or without 
reimbursement) from Federal, State, or local sources, unless the plan 
establishes that alternative services or facilities would be more 
effective or more likely to achieve performance goals.



Sec. 632.124  Theft or embezzlement from employment and training funds; 
improper inducement; obstruction of investigations and other criminal 
provisions.

    The criminal provision of 18 U.S.C. 665 states:
    (a) Whoever, being an officer, director, agent or employee of, or 
connected in any capacity with, any agency receiving financial 
assistance under the JTPA knowingly hires an ineligible individual or 
individuals; embezzles, willfully misapplies, steals, or obtains by 
fraud any of the money, funds, assets, or property which are the subject 
of a grant or contract of assistance pursuant to such Act shall be fined 
not more than $10,000 or imprisoned for not more than 2 years, or both; 
but if the amount so embezzled, misapplied, stolen, or obtained by fraud 
does not exceed $100, such person shall be fined not more than $1,000 or 
imprisoned not more than 1 year, or both.
    (b) Any person whoever willfully obstructs or impedes, or endeavors 
to obstruct or impede, an investigation or inquiry under the JTPA or the 
regulations thereunder, shall be punished by a fine of not more than 
$5,000 or by imprisonment for not more than 1 year, or by both such fine 
and imprisonment.
    (c) In addition to the criminal provisions set forth in paragraphs 
(a) and (b) of this section, individuals may be held criminally liable 
under other Federal laws. For example, 18 U.S.C. sections 600 and 601 
hold them liable if they:
    (1) Directly or indirectly promise any employment position, 
compensation, contract, appointment, or other benefit, provided for or 
made possible in whole or in part by funds under the Act, or any special 
consideration in obtaining any such benefit, to any person as 
consideration, favor, or regard for any political activity or for the 
support of, or opposition to, any candidate or any political party in 
connection with any general or special election to any political office, 
or in connection with any primary election or political convention or 
caucus held to select

[[Page 300]]

candidates for any political office (18 U.S.C. 600); or
    (2) Directly or indirectly knowingly cause or attempt to cause any 
person to make a contribution of a thing of value (including services) 
for the benefit of any candidate or any political party, by means of the 
denial or deprivation, or the threat of the denial or deprivation, of 
any employment or benefits funded under the Act (18 U.S.C. 601).



Sec. 632.125  Responsibilities of Native American grantees, subgrantees 
and contractors for preventing fraud and program abuse and for general 
program management.

    (a) Each Native American grantee shall establish and use internal 
program management procedures sufficient to prevent fraud and program 
abuse, including subgrantee and contractor fraud and abuse. The 
procedures to be used shall be identified in the Native American 
grantee's Master Plan.
    (b) Each Native American grantee, subgrantee and contractor shall 
ensure that sufficient, auditable, and otherwise adequate records are 
maintained which support the expenditure of all funds under the Act. 
Such records shall be sufficient to allow the Secretary to audit and 
monitor the Native American grantees', subgrantees', and contractors' 
programs and shall include the maintenance of a management information 
system in accordance with the requirements of Sec. 632.32.
    (c) Any person having knowledge of fraud, criminal activity or other 
abuse shall report such information directly and immediately to the 
Secretary. Similarly, all complaints involving such matters should also 
be reported to the Secretary directly and immediately.

Subpart G [Reserved]



Subpart H_Job Training Partnership Act Programs Under Title IV, Section 
                                   401



Sec. 632.170  Eligibility for funds.

    The Department shall provide funds under section 401 of the Act only 
to Native American grantees designated in accordance with Sec. 632.10.



Sec. 632.171  Allocation of funds.

    (a) One hundred percent, except as provided in Sec. 632.171(c), of 
the amount available for section 401 will be distributed by formula as 
follows:
    (1) Twenty-five percent of the available funds shall be allocated on 
the basis of the relative number of unemployed Indians and other Native 
Americans within the Native American grantee's geographic service area 
compared to the total number of unemployed Indians and other Native 
Americans in the United States.
    (2) Seventy-five percent of the available funds shall be allocated 
on the basis of the relative number of members of Indian and other 
Native Americans households, whose income is at or below the poverty 
level, within the Native American grantee's geographic service area 
compared to the total number of members of Indians and Native American 
households in poverty in the United States.
    (b) Commencing with Program Year 1985 and after consultation with 
Indian groups, the Department may reserve up to one percent of section 
401 funds. These funds may be used for technical assistance to improve 
the program's overall performance.
    (c) In situations when the Department determines that the formula 
allocation will result in severe disruption from one year to the next, a 
hold harmless or other factor to minimize such disruptions may be used.



Sec. 632.172  Eligibility for participation in title IV, section 401.

    (a) An Indian, Native Alaskan, or Native Hawaiian, as determined by 
the Native American Grantee, who is economically disadvantaged, or 
unemployed or underemployed is eligible to participate in a program 
under this subpart. For income eligibility purposes, the NAG may use 
either 6-months annualized or 12-months actual income.
    (b) Indians and other persons of Native American descent who meet 
the requirements of subsection (a) of this section and who are 
identified by the

[[Page 301]]

Federal or State government as ``landless'' or ``terminated'' or ``non-
federally recognized'' are included among those eligible to participate. 
These terms shall be broadly construed for the specific purpose of 
including, among others, terminated, State-recognized, or other groups 
or individuals previously determined to be eligible for Indian services 
under the Comprehensive Employment and Training Act.
    (c) A Native American grantee may enroll Indian and Native American 
participants in upgrading and retraining programs who are not 
unemployed, underemployed or economically disadvantaged where such 
participants meet the following eligibility requirements:
    (1) For upgrading, a person must be operating at less than full 
skill potential, and working for at least the prior 6 months with the 
same employer in either an entry level, unskilled or semiskilled 
position or a paid position with little or no advancement opportunity in 
a normal promotional line. Priority consideration shall be given to the 
workers who have been in entry level positions for the longest time.
    (2) For retraining a person must have received a bona fide notice of 
impending layoff and have been determined by the grantee as having 
little opportunity to be reemployed in the same or equivalent occupation 
or skill level within the labor market area.



Sec. 632.173  Allowable program activities.

    (a) Native American grantees may undertake programs and activities 
consistent with the purposes of the Act including, but not limited to, 
programs and activities described in Sec. Sec. 632.78 through 632.81.
    (b) Native American grantees are encouraged to develop innovative 
means of addressing the needs of unemployed, underemployed and 
economically disadvantaged members of their communities and of 
contributing to the permanent economic self-sufficiency of such 
communities.
    (c) Training and placement in the private sector will be emphasized. 
CSE and work experience are permitted when consistent over the long term 
with increasing earnings in unsubsidized employment. Expenditures for 
CSE are limited to 10 percent or the unemployment rate, based on data 
collected by an appropriate Federal or State agency including BIA, of a 
NAG's total section 401 allocation. For nonreservation grantees, the 
official BLS unemployment rate or State job service rate for the area 
will be used.
    (d) Wages and allowances are to be kept to a minimum to maximize 
funds to be used for training.
    (e) Innovative approaches to the private sector are encouraged.
    (f) Other activities described in Sec. 632.80 should use no more 
than 25 percent of the funds. This limitation may be increased to 
accommodate the extraordinary costs associated with special training 
projects where it is clear the benefits support the additional cost. An 
increase to this limitation shall be approved in instances such as, but 
not limited to, rural participants needing relocation for training, when 
the costs of housing, transportation, etc., for training participants 
cannot be met within a 25 percent limitation, and for TERO activities.



Sec. 632.174  Administrative costs.

    Administrative costs for this subpart are limited to and shall not 
exceed 20 percent of the funds available.



         Subpart I_Summer Youth Employment and Training Programs



Sec. 632.250  General.

    This subpart contains the policies, rules, and regulations of the 
Department in implementing and administering a Summer Youth Employment 
and Training Program for Indians and other Native Americans authorized 
by title II, part B of the Act.



Sec. 632.251  Eligibility for funds.

    Only Native American grantees described in section 401(c)(1) of the 
Act are eligible for summer youth program funds.



Sec. 632.252  Allocation of funds.

    (a) For this program the Secretary shall reserve the same percentage 
of JTPA 3(b) funds as were available in the CETA, IV-C Fiscal Year 1983 
program.

[[Page 302]]

    (b) Allocations shall be made to eligible Native American grantees 
on the basis of a formula using the best available data as determined by 
the Department in consultation with Native American groups and shall be 
published by the Secretary.



Sec. 632.253  Special operating provisions.

    Native American grantees shall:
    (a) Provide services to youths most in need;
    (b) Develop outreach and recruitment techniques aimed at all 
segments of the economically disadvantage youth population, especially 
school dropouts, youth not likely to return to school without assistance 
from the summer program, and youth who remain in school but are likely 
to be confronted with significant employment barriers relating to work 
attitude, aptitude, social adjustment, and other such factors;
    (c) Provide labor market orientation to participants. This 
orientation may include, as appropriate: vocational exposure, 
counseling, testing, resume preparation, job interview preparation, 
providing labor market information, providing information about other 
training programs available in the area, including apprenticeship 
programs, and similar activities. It may be provided on a group or 
individual basis. In providing labor market orientation, skill training 
and remedial education, each grantee shall make maximum efforts to 
develop cooperative relationships with other community resources so that 
these activities are provided in the summer program at no cost, or at 
minimum cost, to the summer program;
    (d) Assure that adequate supervision from skilled supervisors is 
provided to participants at each worksite;
    (e) Make appropriate efforts to encourage educational agencies and 
post-secondary institutions to award academic credit for the 
competencies participants gain from their participation in the summer 
program;
    (f) Ensure that appropriate efforts are made to closely monitor the 
performance of the summer program and measure program results against 
established goals;
    (g) Ensure that enrollee applications are widely available and that 
jobs are awarded among individuals most severely disadvantaged in an 
equitable fashion. Enrollment applications shall require the signature 
of the applicant or (in the case of minors) the parent or guardian 
attesting to the accuracy of the information, including income data, 
provided on the application; and
    (h) Provide participants with an orientation to the program which 
shall include, but not be limited to: purposes of the program and the 
conditions and standards (including such items as hours of work, pay 
provisions and complaint procedures) for such activities in the program.



Sec. 632.254  Program startup.

    During the planning and design phase of the program and prior to the 
close of the school year, only those activities outlined in Sec. 
632.255(b) are permissible. These activities shall be charged as 
administrative costs. Individuals may not begin participation in the 
program before the close of school.



Sec. 632.255  Program planning.

    (a)(1) In developing the summer program, the Native American grantee 
shall coordinate the summer plan with its title IV program.
    (2) Native American grantees shall use the planning process 
described in Sec. 632.17.
    (b) The following planning and design activities shall be allowable 
beginning October 1 of each year;
    (1) Hiring of staff (planners, worksite developers, intake 
specialists, etc.), provided, prior to the close of school all staff 
salaries and benefits shall be charged as administrative expenses, 
except that 45 days prior to the beginning of the summer program and 45 
days after the summer program, all staff costs and other program 
development costs may be charged pursuant to Sec. 632.38;
    (2) Development of the summer plan;
    (3) Worksite development;
    (4) Recruitment, intake and selection of participants;
    (5) Arrangements for supportive services;
    (6) Dissemination of program information;

[[Page 303]]

    (7) Development of coordination between schools and other services;
    (8) Staff training; and
    (9) Other activities that may be characterized as planning and 
design but not program operation.
    (c) Expenses incurred in such planning and design activities may, 
pursuant to Sec. 632.38, be paid from administrative funds received 
under other titles of the Act.



Sec. 632.256  Submission of applications.

    To the extent possible, Native American grantees will be notified of 
their summer youth allocation at the same time section 401 allocations 
are announced. The summer plan will be a separate part of the CAP and 
follow the same format as the CAP.



Sec. 632.257  Eligibility for participation.

    (a) An individual shall be eligible for participation if, at time of 
application, he or she is an Indian or Native American youth who is:
    (1) At the time of application, economically disadvantaged;
    (2) At the time of enrollment, age 14 through 21 inclusive; and
    (3) For income eligibility purposes, the NAG may use either six 
months annualized or 12 months actual income.
    (b) The nepotism provisions of this part shall not apply to this 
program,



Sec. 632.258  Allowable activities.

    Allowable activities are those listed in Sec. 632.78-80 except that 
community service employment is not permitted.



Sec. 632.259  Vocational exploration program.

    A Native American grantee may conduct a vocational exploration 
program for the purpose of exposing youth to the operation and types of 
jobs and instruction including, where appropriate, limited and short 
term practical experience.



Sec. 632.260  Worksite standards.

    (a)(1) Each Native American grantee shall develop a written 
agreement with worksite employers which complies with sections 142 and 
143 of the Act and which assures:
    (i) Adequate supervision of each participant;
    (ii) Adequate accountability for participant time and attendance; 
and
    (iii) Adherence to the rules and regulations governig the summer 
program.
    (2) Such written agreements may be memoranda of understanding, 
simple work statements or other documents which indicate an estimate of 
the number of participants at the worksite and any operational 
conditions governing the program at the worksite.
    (b) Each Native American grantee shall establish procedures for the 
monitoring and evaluation of each worksite to insure compliance with the 
worksite agreements and the terms and conditions of subgrants and 
contracts.
    (c) No participant shall be required to work, or be compensated for 
work with JTPA funds, for more than 40 hours of work per week.



Sec. 632.261  Reporting requirements.

    (a) Each Native American grantee shall submit an end of summer 
report which will include both financial and characteristics 
information. The report format will be issued to grantees under separate 
instructions.
    (b) The report in this section is to be submitted to Chief, DINAP by 
registered mail no later than 45 days after the end of the summer 
program.



Sec. 632.262  Termination date for the summer program.

    Participants may not be enrolled in the summer program beyond 
September 30, or beyond the date they resume school full-time, whichever 
occurs earlier. Allowable activities after September 30 include report 
and record preparation and submittal, completion of evaluations and 
assessments of worksite employers and the overall program or other 
elements of the summer program.



Sec. 632.263  Administrative costs.

    Administrative costs for this subpart are limited to and shall not 
exceed 20 percent of the funds available.

[[Page 304]]



PART 633_MIGRANT AND SEASONAL FARMWORKER PROGRAMS--Table of Contents




                    Subpart A_Introductory Provisions

Sec.
633.102 Scope and purpose of title IV, section 402 programs.
633.103 Format for these regulations.
633.104 Definitions.
633.105 Allocation of funds.
633.106 Eligibility for allocable funds.
633.107 Eligibility for participation in section 402 programs.

           Subpart B_Grant Planning and Application Procedures

633.201 Grant planning and application procedures in general.
633.202 Announcement of State planning estimates and invitation to 
          submit a grant application.
633.203 Review of funding request.
633.204 Responsibility review.
633.205 Notification of selection.

         Subpart C_Program Design and Administrative Procedures

633.301 General responsibilities.
633.302 Training activities and services.
633.303 Allowable costs.
633.304 Section 402 cost allocation.
633.305 General benefits and working conditions for program 
          participants.
633.306 Retirement benefits.
633.307 Packages of benefits.
633.308 Non-federal status of participants.
633.309 Recordkeeping requirements.
633.310 Bonding.
633.311 Management information systems.
633.312 Grantees contracts and subgrants.
633.313 Administrative staff and personnel standards.
633.314 Reports required.
633.315 Replacement, corrective action, termination.
633.316 Closeout procedures.
633.317 Reallocation of funds.
633.318 Nondiscrimination and nonsectarian activities.
633.319 Lobbying, political activities and unionization.
633.320 Nepotism.
633.321 Performance standards for section 402 programs.
633.322 Sanctions for violation of the Act.

    Authority: Job Training Partnership Act, sec.169 (29 U.S.C. 1501 et 
seq., Pub. L. 97-300, 96 Stat. 1322), unless otherwise noted.

    Source: 48 FR 48771, Oct. 20, 1983, unless otherwise noted.



                    Subpart A_Introductory Provisions



Sec. 633.102  Scope and purpose of title IV, section 402 programs.

    (a) It is the purpose of title IV, section 402, of the Act to 
provide job training, employment opportunities, and other services for 
those individuals who suffer chronic seasonal unemployment and 
underemployment in the agriculture industry. These conditions have been 
substantially aggravated by continual advancements in technology and 
mechanization resulting in displacement and contribute significantly to 
the Nation's rural employment problem. These factors substantially 
affect the entire national economy.
    (b) Because of farmworker employment and training problems, such 
programs shall be centrally administered at the national level. Programs 
and activities supported under this section shall in accordance with 
section 402(c)(3) of the Act:
    (1) Enable farmworkers and their dependents to obtain or retain 
employment;
    (2) Allow participation in other program activities leading to their 
eventual placement in unsubsidized agricultural or nonagricultural 
employment;
    (3) Allow activities leading to stabilization in agricultural 
employment; and
    (4) Include related assistance and supportive services.



Sec. 633.103  Format for these regulations.

    (a) Regulations promulgated by the Department to implement the 
provisions of title IV section 402 of the Act are set forth in 20 CFR 
part 633 and part 636. These parts contain all the regulations under the 
Act applicable to migrant and other seasonally employed farmworker 
programs.
    (b) Should the regulations at this part conflict with regulations at 
other parts of this title of the Code of Federal Regulations, the 
regulations at this part shall prevail with respect to programs and 
activities governed by this part.



Sec. 633.104  Definitions.

    The following definitions are applicable to section 402 programs.

[[Page 305]]

    Accrued expenditures shall mean total costs incurred during the 
reporting period for: (a) Goods and other tangible property received; 
(b) services performed by employees, contractors, subgrantees and other 
payees; and (c) other amounts becoming owed under programs for which no 
current services or performance is required such as annuities, insurance 
claims, and other benefit payments.
    Act shall mean the Job Training Partnership Act (29 U.S.C. 1501 et 
seq.).
    Allocation shall mean the amount of funds calculated in accordance 
with Sec. 633.105(b)(1) for section 402 programs in each State and 
distributed in accordance with the requirements of this part.
    Chief, DFREP shall mean the Chief of the Division of Farmworker and 
Rural Employment Programs in the Employment and Training Administration, 
Department of Labor.
    Construction shall mean the erection, installation, assembly, or 
painting of a new structure or a major addition, expansion, or extension 
of an existing structure, and the related site preparation, excavation, 
filling and landscaping or other land improvements.
    Department shall mean the United States Department of Labor (DOL), 
including its agencies and organizational units.
    DOL shall mean the United States Department of Labor.
    Employment shall mean the situation wherein a person(s) provides 
work or services for an employer for wages or salary. This includes 
self-employment. The satisfaction of workfare requirements does not 
constitute employment.
    Entered employment shall mean the act of securing unsubsidized 
employment for or by a participant. Seasonal agricultural placements 
will not be considered as unsubsidized employment secured for or by a 
participant for purposes of this definition unless it can be 
substantiated that the placement represents an upgraded position within 
agriculture and will not result in the continued underemployment of the 
individual.
    Entered employment, direct shall mean unsubsidized employment 
secured for or by a participant after receiving direct placement 
services not associated with training or subsidized employment.
    Entered employment, indirect shall mean unsubsidized employment 
secured for or by a participant after participation in training or 
subsidized employment.
    Family (a) shall mean one or more persons related by blood, 
marriage, or adoption. A step-child or a step-parent is considered to be 
related by marriage.
    (b)(1) For purposes of paragraph (a) of this definition, a person 
claimed as a dependent on another person's Federal Income Tax return for 
the previous year is presumed to be part of the other person's family.
    (2) A handicapped individual may be considered a family of one when 
applying for programs under the Act.
    (3) An individual 18 years of age or older, except as provided in 
(a) or (b) above, who receives less than 50 percent of support from the 
family, and who is not the principal earner nor the spouse of the 
principal earner, is not considered a member of the family. Such an 
individual is considered a family of one.
    Family income shall mean all income received from all sources for 
the eligibility determination period by persons who are family members 
at the time of eligibility determination.
    (a) For the purpose of determining eligibility (and not for 
allocations), family income includes:
    (1) Gross wages and salaries (before deductions);
    (2) Net self-employment income (gross receipts minus operating 
expenses); and
    (3) Other money income received from sources such as net rents, Old 
Age and Survivors Insurance, Social Security benefits, pensions, 
alimony, periodic income from insurance policy annuities, and other 
sources of income.
    (b) Earned family income does not include:
    (1) Non-cash income such as food stamps, or compensation received in 
the form of food or housing;
    (2) Rental value of owner-occupied property;
    (3) Public assistance payments;
    (4) Cash payments received pursuant to a State plan approved under 
titles I,

[[Page 306]]

IV, X or XVI of the Social Security Act, or disability insurance 
payments received under title II of the Social Security Act;
    (5) Federal, State or local unemployment benefits;
    (6) Payments made to participants in employment and training 
programs;
    (7) Capital gains and losses;
    (8) One-time unearned income, such as, but not limited to:
    (i) Payments received for a limited fixed term under income 
maintenance programs and supplemental (private) unemployment benefits 
plans;
    (ii) One-time or fixed-term scholarship and fellowship grants;
    (iii) Accident, health, and casualty insurance proceeds;
    (iv) Disability and death payments, including fixed term (but not 
lifetime) life insurance annuities and death benefits;
    (v) One-time awards and gifts;
    (vi) Inheritance, including fixed term annuities;
    (vii) Fixed-term workers' compensation awards;
    (viii) Terminal leave pay;
    (ix) Soil bank payments; and
    (x) Agriculture crop stabilization payments.
    (9) Pay or allowances received by any veteran while he/she was 
serving on active duty in the Armed Forces;
    (10) Educational assistance and compensation payments to veterans 
and other eligible persons under chapters 11, 13, 31, 34, 35, and 36 of 
title 38, United States Code;
    (11) Payments received under the Trade Act of 1974 as amended;
    (12) Black Lung payments received under the Benefits Reform Act of 
1977, Pub. L. 95-239, 30 USC 901; and
    (13) Child support payments.
    Farmwork shall mean, for eligibility purposes, work performed for 
wages in agricultural production or agricultural services as defined in 
the most recent edition of the Standard Industrial Classification (SIC) 
Code definitions included in industries 01--Agricultural Production--
Crops; 02--Agricultural Production--Livestock excluding 027--Animal 
Specialties; 07--Agricultural Services excluding 074--Veterinary 
Services, 0752--Animal Speciality Services, and 078--Landscape and 
Horticultural Services.
    Grantee shall mean any person, organization or other entity which 
receives JTPA funds directly from the Department.
    JTPA shall mean the Job Training Partnership Act.
    Migrant farmworker shall mean a seasonal farmworker who performs or 
has performed farmwork during the eligibility determination period (any 
consecutive 12-month period within the 24-month period preceding 
application for enrollment) which requires travel such that the worker 
is unable to return to his/her domicile (permanent place of residence) 
within the same day.
    Participant shall mean an individual who is:
    (a) Eligible for participation; and
    (b) Enrolled within 45 days of eligibility determination; and
    (c) Enrolled and receiving employment, training or services (except 
post-termination services) funded under the Act.
    Planning estimates shall mean the preliminary allocations announced 
for the purpose of providing target funding levels for each State.
    Program income shall mean net income earned from grant or agreement 
supported activities. Such earnings include, but are not limited to: 
income from service fees, sale of commodities, usage or rental fees, and 
royalties on patents or copyrights.
    Poverty level shall mean the annual income level at, or below which 
families are considered to live in poverty, as annually determined by 
HHS.
    Seasonal farmworker shall mean a person who during the eligibility 
determination period (any consecutive 12-month period within the 24-
month period preceding application for enrollment) was employed at least 
25 days in farmwork or earned at least $400 in farmwork; and who has 
been primarily employed in farmwork on a seasonal basis, without a 
constant year round salary.
    Section 402 programs shall mean the Migrant and Seasonal Farmworker 
Program, under section 402 of title IV of the Job Training Partnership 
Act.

[[Page 307]]

    The term subsidized employment shall mean employment created in the 
private or public sector and in private nonprofit agencies financed by 
the recipient's program funds or by other DOL funded programs, e.g., 
work experience and tryout employment.
    Supplemental funds shall mean any funds allocated in excess of that 
amount announced as a ``planning estimate.''
    Target area shall mean a geographic area to be served by a section 
402 grantee. Such an area may be a county, multicounty area, a State, or 
a multistate area.
    Target population shall mean farmworkers and their dependents who 
meet the requirements of Sec. 633.107.
    Underemployed persons shall mean:
    (a) Persons who are working part-time but seeking full-time work; or
    (b) Persons who are working full-time but whose current annualized 
wage rate (for a family of one), or whose family's current annualized 
income, is not in excess of:
    (1) The poverty level, or
    (2) 70 percent of the lower living standard income level.
    Unemployed individuals shall mean individuals who are without jobs 
and who want and are available for work. The determination of whether 
individuals are without jobs shall be made in accordance with the 
criteria used by the Bureau of Labor Statistics of the Department in 
defining individuals as unemployed.



Sec. 633.105  Allocation of funds.

    (a) National Account. (1) Up to 6 percent of the statutory reserves 
for section 402 activities may be set aside for the National Account to 
be used for technical assistance and for special projects funded at the 
discretion of the Department.
    (2) Funds from the National Account may be obligated by the 
Department by means of either contracts or grants to private nonprofit 
agencies, to private profitmaking organizations, to States and local 
units of government, or public agencies.
    (b) State allocations (allocable funds). (1) No less than 94 percent 
of the funds received for section 402 activities shall be allocated for 
farmworker programs in individual States in an equitable manner using 
the best data available as to the farmworker population as determined by 
the Department. The formula used to determine State allocations will be 
published in the Federal Register for review and comment, along with the 
rationale for such formula and proposed allocations, no later than 30 
days prior to the publication of the final allocations of available 
funds in the Federal Register.
    (2) Allocation Exceptions. (i) The Department reserves the right not 
to allocate any funds for use in a State whose allocation is less than 
$120,000.
    (ii) Those funds not allocated will be available for technical 
assistance and special projects funded at the discretion of the 
Department.
    (iii) Current grantees which are unsuccessful applicants for new 
grant funds shall be given notice that funds will expire and that a 
reasonable period will be given to phase out their operations. Such 
notice will not bind the Department to obligate additional funds. The 
notification of nonselection shall be the notice of termination of funds 
and departmental closeout requirements are to be followed.
    (3) Allocation Adjustment. In situations where the Department 
determines that the formula allocation will result in severe disruption 
of funding levels from one year to the next, a hold harmless or other 
factor to minimize such disruption may be used.
    (4) Funding cycle. Projects will be funded in accordance with a 
schedule to be specified by the Department in the Federal Register:
    (i) Announcement of State planning estimates and an invitation to 
submit applications for State(s) or area(s) open for competition as 
provided in the Solicitation for Grant Application (SGA).
    (ii) Deadline for submission of Preapplication for Federal 
Assistance Forms.
    (iii) Deadline for submission of applications.



Sec. 633.106  Eligibility for allocable funds.

    The following organizations and units of government shall be 
eligible to receive funds under section 402.

[[Page 308]]

    (a) A public agency;
    (b) A private nonprofit organization authorized by its charter or 
articles of incorporation to provide employment and training or such 
other services as are permitted by this subpart.



Sec. 633.107  Eligibility for participation in section 402 programs.

    (a) Eligibility for participation in section 402 programs is limited 
to those individuals who have, during any consective 12-month period 
within the 24-month period preceding their application for enrollment:
    (1) Been a seasonal farmworker or migrant farmworker as defined in 
Sec. 633.104; and,
    (2) Received at least 50 percent of their total earned income or 
been employed at least 50 percent of their total work time in farmwork; 
and,
    (3) Been identified as a member of a family which receives public 
assistance or whose annual family income does not exceed the higher of 
either the proverty level or 70 percent of the lower living standard 
income level.
    (4) Dependents of the above individuals are also eligible.
    (b) The 24-month period preceding application for enrollment shall 
be extended for persons who have been in the armed forces, incarcerated, 
hospitalized, or physically or mentally disabled. The extended period of 
time shall be not more than 24 months plus the amount of time the person 
was in the armed forces, incarcerated, detained at any Federal or State 
facility, hospitalized, or physically or mentally disabled. Such 
conditions shall be positively demonstrated by the applicant. This can 
be done by producing documentary evidence satisfactory to the grantee.
    (c) To be eligible for participation, individuals shall meet the 
requirements of sections 167(a)(5) and 504 of the Act.
    (d) A participant in another program or title under JTPA who met the 
eligibility criteria for section 402 at the time of enrollment into such 
other program or title may be transferred into, or enrolled 
concurrently, in the section 402 program. A section 402 participant who 
met the eligibility criteria for another program or title under JTPA at 
the time of enrollment into the section 402 program may also be 
transferred into or enrolled concurrently in such other program or 
title.
    (e) The grantee shall establish the necessary procedures for 
identifying and selecting participants and for eligibility determination 
and verification.
    (f) The provisions of section 181(k) of the Act are applicable to 
section 402 programs.



           Subpart B_Grant Planning and Application Procedures



Sec. 633.201  Grant planning and application procedures in general.

    Precondition for grant application: The Department will not consider 
an application for funding from any applicant in cases where it is 
established that:
    (a) The agency's efforts to recover debts (for which three demand 
letters have been sent) established by final agency action have been 
unsuccessful; or
    (b) Fraud or criminal activity has been proven to exist within the 
organization.



Sec. 633.202  Announcement of State planning estimates and invitation 
to submit a grant application.

    (a) Announcements. The Department, through a notice in the Federal 
Register, will announce State Planning estimates of section 402 funds 
and will publish an SGA for all areas open to competition. The SGA will 
contain all information needed by an applicant to apply for funding; 
i.e., general program description, rating criteria, and dates for 
submission of applications.
    (b) Intention to apply. Any eligible applicant intending to apply 
for funds shall submit a Preapplication for Federal Assistance to DOL by 
a specified date as announced in the Federal Register.
    (c) Applications for statewide programs are encouraged; however, the 
Department reserves the right to award grant funds to less than 
statewide areas.
    (d) Executive Order 12372, ``Intergovernmental Review of Federal 
Programs,'' and the implementing regulations at 30 CFR part 46 generally 
apply

[[Page 309]]

to this program. Pursuant to these requirements, in States which have 
established a consultation process expressly covering this program, 
applications shall be provided to the State for comment. Since States 
may also participate as competitors for this program, applications shall 
be submitted to the State upon the deadline for submission to the 
Department, instead of the usual 30-day period for review.



Sec. 633.203  Review of funding request.

    The SGA will identify all review standards including:
    (a) An understanding of the problems of migrant and seasonal 
farmworkers;
    (b) A familiarity with the area to be served;
    (c) A previously demonstrated capability to administer effectively a 
diversified employability development program for migrant and seasonal 
farmworkers.
    (d) General administrative and financial management capability.
    (e) Prior performance with respect to financial management, audit 
and program outcomes.



Sec. 633.204  Responsibility review.

    (a) Prior to final selection as a potential grantee the Department 
will conduct a review of the available records to determine whether or 
not the organization has failed any responsibility test. This review is 
intended to establish overall responsibility to administer Federal 
funds. With the exceptions of paragraphs (a)(1) and (a)(3) of this 
section, the failure to meet any one of the tests would not establish 
that the organization is irresponsible unless the failure is substantial 
or persistent. The responsibility tests are as follows:
    (1) The agency's efforts to recover debts (for which three demand 
letters have been sent) established by final agency action have been 
unsuccessful, or failure to comply with an approved repayment plan.
    (2) Serious administrative deficiencies identified in final findings 
and determinations--such as failure to maintain a financial management 
system as required by Federal regulations.
    (3) Established fraud or criminal activity within the organization.
    (4) Wilfull obstruction of the audit process.
    (5) Substantial failure to provide services to applicants as agreed 
to in a current or recent grant or to meet performance standard 
requirements as provided at Sec. 633.321 of this subpart.
    (6) Failure to correct deficiencies brought to the grantees' 
attention in writing as a result of monitoring activities, reviews, 
assessments, etc.
    (7) Failure to return a grant closeout package or outstanding 
advances within 90 days of expiration date or receipt of closeout 
package, whichever is later, unless an extension has been requested and 
granted; final billings reflecting serious cost category or total budget 
cost overrun.
    (8) Failure to submit required reports.
    (9) Failure to properly report and dispose of government property as 
instructed by DOL.
    (10) Failure to have maintained cost controls resulting in excess 
cash on hand.
    (11) Failure to procure or arrange for audit coverage for any two 
year period when required by DOL.
    (12) Failure to audit a subrecipient within the required period when 
applicable.
    (13) Final disallowed costs in excess of five percent of the grant 
or contract award.
    (14) Failure to establish a mechanism to resolve subrecipient's 
audit within established time frames.
    (b) This responsibility review is independent of the competitive 
process. Applicants failing to meet the requirements of this section 
will not be selected as potential grantees irrespective of their 
standing in the competition.



Sec. 633.205  Notification of selection.

    (a) Respondents to the SGA which are selected as potential grantees 
shall be so notified by the Department. The notification shall invite 
each potential grantee to negotiate the final terms and conditions of 
the grant, shall establish a reasonable time and place for the 
negotiation, and shall indicate the State or area to be covered by the 
grant. Funds may be awarded for two program years.

[[Page 310]]

    (b) In the event that no grant applications are received for a 
specific State or area or that those received are deemed to be 
unacceptable, or where a grant agreement is not successfully negotiated, 
the Department may give the Governor first right to submit an acceptable 
application pursuant to Sec. 633.201. Should the Governor not accept 
the offer within fifteen days, the Department may then (1) designate 
another organization or organizations, (2) reopen the area for 
competitive bidding, or (3) use the funds for national-account 
activities.
    (c) An applicant whose grant application is not selected by the 
Department to receive section 402 funds shall be notified in writing.
    (d) Applicants who submit grant applications which have been 
rejected may not resubmit a new grant application for the State(s) or 
area(s) in which they are interested in providing services until the 
area(s) is announced by the Department as reopened for competition.
    (e) Any applicant whose grant application is denied in whole or in 
part by the Department may request an administrative review as provided 
in part 636, with respect to whether there is a basis in the record to 
support the Department's decision. This appeal will not in any way 
interfere with the Department's designation and funding of another 
organization to service the area in question during the appeal period. 
The available remedy under such an appeal will be the right to be 
designated in the future rather than a retroactive or immediately 
effective selection status. Therefore, in the event the ALJ rules that 
the organization should have been selected and the organization 
continues to meet the requirements of this part, the Department will 
select and fund the organization within 90 days of the ALJ's decision 
unless the end of the 90-day period is within 6 months of the end of the 
funding period. Any organization selected and/or funded prior to the 
ALJ's decision will be affected in a manner prescribed by the 
Department. All parties will agree to the provisions of this paragraph 
as a condition for funding.



         Subpart C_Program Design and Administrative Procedures



Sec. 633.301  General responsibilities.

    (a) This subpart sets forth the program operation requirements for 
grantees under section 402, including program and fiscal management, 
coordination and consultation, allowable activities, participant 
benefits, and duration of participation. Unless otherwise indicated, 
grantees shall follow procedures as prescribed in DOL administrative 
regulations a 41 CFR part 29-70 and OMB Circular A-122.
    (b) Basic program design responsibilities of grantees. A grantee 
shall be responsible for:
    (1) Designing training which, to the maximum extent feasible, is 
consistent with every participant's fullest capabilites and will lead to 
employment opportunities enabling every participant to become 
economically self-sufficient.
    (2) Designing program activities which will, to the maximum extent 
feasible, contribute to the occupational development and upward mobility 
of every participant;
    (3) Providing training only to participants who are legally able to 
accept gainful employment in the occupation for which training is being 
provided; and
    (4) Making maximum efforts to achieve the goals and the performance 
standards set forth in the grant.



Sec. 633.302  Training activities and services.

    (a) A grantee may provide assistance to eligible individuals to 
obtain or retain employment, to participate in other program activities 
leading to their eventual placement in unsubsidized agricultural or 
nonagricultural employment, and to participate in activities leading to 
stabilization in agricultural employment through training and supportive 
services which may include, but are not limited to:
    (1) Job search assistance, including job clubs;
    (2) Job development;
    (3) Training, such as classroom, on-the-job, work experience, and 
tryout employment, in jobs skills for which demand exceeds supply;

[[Page 311]]

    (4) Training related and non-training related supportive services, 
including commuting assistance and financial and personal counseling;
    (5) Relocation assistance; and
    (6) Programs conducted in cooperation with employers or labor 
organizations to provide early intervention in the event of the 
disruption of employment opportunities.
    (b) Public service employment is not an allowable activity under 
section 402 programs.
    (c) Tryout employment shall conform to section 205(d)(3)(B) and 
section 141(k) of the Act.
    (d) A participant's enrollment in work experience shall not exceed 
1,000 hours in a one-year period.



Sec. 633.303  Allowable costs.

    (a) General. To be allowable, a cost must be necessary and 
reasonable for proper and efficient administration of the program, be 
allocable thereto under these principles, and, except as specifically 
provided herein, not be a general expense required to carry out the 
overall responsibilities of the recipient.
    (b) Unless otherwise indicated below, direct and indirect costs 
shall be charged in accordance with 41 CFR part 29-70 and OMB Circular 
A-122.
    (c) Funds may be used for construction activities only to:
    (1) Provide compensation to participants employed by public or 
private nonprofit agencies;
    (2) Reimburse OJT costs to private-for-profit employers;
    (3) Purchase equipment, materials, and supplies for use in the 
training of such participants; and
    (4) Cover costs of a training program in a construction occupation, 
including costs such as instructors' salaries, training tools, books, 
and needs-based payments and compensation to participants.
    (d) Costs associated with capital improvements (as defined in OMB 
Circular A-122, attachment B, sections 13 and 22) of existing facilities 
used primarily for programs under the Act are allowable with prior 
approval of the Department.
    (e) Unemployment compensation costs are allowable for administrative 
and program staff hired in accordance with the administrative provisions 
of the regulations, and for participants required by State law to be 
covered for unemployment compensation purposes.
    (f) Costs which are billed as a single unit charge do not have to be 
allocated or prorated among the several cost categories but may be 
charged entirely to training when the agreement:
    (1) Is for classroom training;
    (2) Is fixed unit price; and
    (3) Stipulates that full payment for the full unit price will be 
made only upon completion of training by a participant and placement of 
the participant into unsubsidized employment in the occupation trained 
for and at not less than the wage specified in the agreement.
    (g) Travel costs. (1) The cost of participant and staff travel 
necessary for the operation or administration of programs under the Act 
is allowable as provided herein.
    (2) Travel costs of section 402 administrative staff or members of 
governing boards of grantee organizations are allowable without the 
prior approval of the Department if the travel specifically relates to 
programs under section 402. All other travel to be charged to JTPA 
section 402 grants shall require the prior approval of the Department. 
These costs shall be charged to administration.
    (3) Travel costs of other grantee officials of multifunded programs 
changed with overall grantee responsibilities are allowable only if 
costs specifically relate to programs under section 402.
    (4) Travel costs to enable participants to obtain or retain 
employment, access other services or to participate in programs under 
this Act are allowable as direct costs but shall be limited to the 
grantee's jurisdiction or within daily commuting distance, unless part 
of an approved component of the grantee's program. These costs shall be 
charged to training-related supportive services.
    (5) Travel costs for participants in administrative or programmatic 
positions using their personal or other forms of transportation in the 
performance of their jobs are allowable and shall be charged 
appropriately.

[[Page 312]]

    (6) Travel policies of all grantees, subgrantees and contractors 
shall be generally consistent with those set forth in the Department's 
Travel and Transportation Manual.
    (h) Association membership. Grantees are permitted to use grant 
funds to join those associations which provide technical and 
administrative services in support of section 402 program efforts. The 
activities of such associations must be designed to contribute to the 
enhancement of professional and technical program knowledge. No 
financial assistance in the form of membership dues or other membership-
related costs can involve political or lobbying activities.
    (1) The cost shall be for a section 402 grantee's membership rather 
than an individual person's membership.
    (2) The cost of a membership shall be reasonably related to the 
value of the services or benefits received and shall not exceed $850 
annually.
    (3) Association-related costs shall be incorporated in the grantee's 
section 402 grant budget, charged to the administrative category, and as 
such, shall be subject to the overall administrative cost ceiling.
    (i) Allowances and reimbursements for board and advisory council 
members--(1) General. A reasonable allowance to members who attend 
meetings of any board, council, or committee for section 402 program 
purposes, and reimbursement of actual expenses connected with those 
meetings, are allowable costs, and may be paid for attendance at no more 
than six meeting days per grantee per quarter.
    (2) Allowances and loss of wages. Any individual or family member 
who is a member of a private nonprofit grantee or subgrantee 
policymaking body or of a public agency grantee or subgrantee farmworker 
advisory council is eligible to be paid and allowance provided:
    (i) such individual's family income does not exceed either 70 
percent of the lower living standard income level or the poverty level 
as established by HHS.
    (ii) Allowances may not be paid for attendance in excess of ten 
dollars per meeting, unless approved in advance by the Department.
    (3) Reimbursement for expenses. (i) All board members shall be 
eligible for receiving reimbursement for actual expenses of travel, 
meals, and lodging incurred in attending board meetings, or a per diem 
in lieu of actual expenses.
    (ii) Any individual or family member where family income does not 
exceed 70 percent of the lower living standard income level and who is a 
member of a private nonprofit grantee or subgrantee policymaking body or 
of a public agency grantee or subgrantee farmworker advisory council 
shall also be eligible for reimbursement of actual wages lost, if 
supported by a statement from the employer.
    (iii) The grantee shall define which expenses may be reimbursed, 
whether incurred as the result of actual meeting attendances or in 
performance of other official duties and responsibilities in connection 
with the program, and shall establish procedures for the reimbursement 
of such expenses.



Sec. 633.304  Section 402 cost allocation.

    (a) General. Allowable costs for section 402 programs shall be 
charged against the following four cost categories: Administration; 
training; training-related supportive services; and nontraining-related 
supportive services.
    (1) Costs are allocable to a particular cost category to the extent 
that benefits are received by such category.
    (2) All grantees are required to plan, control, and report 
expenditures against the aforementioned cost categories.
    (3) All grantees are responsible for ensuring that subgrantees and 
contractors plan, control, and report expenditures against the 
aforementioned cost categories.
    (b) Limitation on certain costs. (1) Costs for administration of the 
grant shall not exceed 20 percent of the total amount of the grant.
    (2) Costs for nontraining-related supportive services shall not 
exceed 15 percent of the total amount of the grant.
    (3) Costs for training shall be no less than 50 percent of the total 
amount of the grant.
    (c) Classification of costs by category. All grant costs shall be 
charged to the

[[Page 313]]

four cost categories listed above. Within each category costs shall be 
assigned and accounted for as follows:
    (1) Administration. Administration costs consist of all direct and 
indirect costs associated with the management of the program. 
Administrative costs shall be limited to those necessary to effectively 
operate the program. These costs include but are not limited to: the 
salaries and fringe benefits of personnel engaged in executive, fiscal, 
data collection, personnel, legal, audit, procurement, data processing, 
communications, maintenance, and similar functions; and related 
materials, supplies, equipment, office-space costs, and staff training.
    (i) Also included are salaries and fringe benefits of direct program 
administrative positions such as supervisors, program analysts, labor 
market analysts, and project directors. Additionally, all costs of 
clerical personnel, materials, supplies, equipment, space, utilities, 
and travel that are identifiable with these program-administration 
positions are charged to administration.
    (ii) Allowances and reimbursement costs for governing boards and 
advisory councils shall be prorated wherever applicable as 
administrative costs among all the grants, from whatever source, 
administered by the grantee.
    (2) Training. (i) Instruction and related costs consist of goods and 
services which affect those program participants who are in either a 
work environment, or classroom setting (including classroom training in 
conjunction with Vocational Exploration or Job Readiness or tryout 
employment) and shall be charged to training, i.e., salaries, fringe 
benefits, space, utility, travel and equipment. Training costs include, 
but are not limited to, the following: The costs associated with on-the-
job training services; employer outreach necessary to obtain job 
listings or job-training opportunities, salaries; fringe benefits; 
equipment and supplies of personnel engaged in providing training, 
including remedial education; job-related counseling for participants; 
employability assessment and job development; tuition fees, books and 
other teaching aids; equipment and materials used in providing training 
to participants, classroom space and utility costs; job search 
assistance, labor market orientation, and job referral costs. In 
addition:
    (ii) Wages and fringe benefits for participants in work experience, 
tryout employment, classroom training, shall be charged to training. 
Cost-of-living increases are considered wages.
    (iii) Allowances shall be charged to training.
    (iv) Any single cost which is properly chargeable to training and to 
one or more other categories shall be prorated among training and other 
appropriate cost categories.
    (3) Training-related supportive services. Costs of services which 
are necessary to enable an eligible individual to participate in 
training or subsidized employment under section 402 and to obtain 
subsequent unsubsidized employment shall be charged to training-related 
supportive services. Such supportive services may include but are not 
limited to transportation, health care, special services and materials 
for the handicapped, child care, meals, temporary shelter, financial 
counseling, and other reasonable expenses required for participation in 
the program and may be provided in-kind or through cash assistance. 
Training-related supportive services costs and related costs shall be 
charged to this cost category.
    (4) Nontraining-related supportive services. ``Services only'' are 
the costs of the goods and services provided to participants who are not 
engaged in work experience, tryout employment or training activities, 
including but not limited to such goods and services as: transportation, 
health care, temporary shelter, meals and other nutritional assistance, 
legal or paralegal assistance and emergency assistance.
    (d) Cost categories assignable to program activities. (1) Classroom 
training. Cost categories are: Training and training-related supportive 
services.
    (2) On-the-job training. Cost categories are: Training and training-
related supportive services.
    (3) Work Experience: Cost categories are: Training and training-
related supportive services.

[[Page 314]]

    (4) Tryout employment: Cost categories are: Training and training-
related supportive services.
    (5) Training assistance: Cost categories are: Training and training-
related supportive services.
    (6) Services only (no referral to employment): Cost category is: 
Nontraining-related supportive services.



Sec. 633.305  General benefits and working conditions for program 
participants.

    (a) Payments for on-the-job training (OJT) shall be made in 
accordance with sections 141(g) and 142(a)(2) of the Act.
    (b) Participants employed in work experience activities shall be 
paid wages in accordance with section 142(a)(3) of the Act.
    (c) Payments to individuals participating in programs under section 
402 shall conform to the provisions of section 142(b) of the Act.
    (d) Section 402 grantees shall not assist any activity under the Act 
unless the activity conforms to provisions of sections 142 and 143 of 
the Act.
    (e) A basic hourly allowance for regularly enrolled classroom 
training participants shall not exceed the higher of the State or 
Federal minimum hourly wage.



Sec. 633.306  Retirement benefits.

    No funds available under this Act may be used for contributions on 
behalf of any participant to retirement systems or plans (sec. 
143(a)(5)).



Sec. 633.307  Packages of benefits.

    (a) Where non-JTPA, similarly employed employees are covered under a 
benefits package which includes retirement, JTPA participants shall 
receive the non-retirement benefits (e.g., health, death, and 
disability-benefit coverage), at the same level and to the same extent 
as other employees. JTPA funds may be used to pay for those benefits.
    (b) JTPA funds may be used to purchase a package of benefits 
including retirement, provided the retirement portion of the package can 
be factored out of the package and adjusted accordingly.



Sec. 633.308  Non-Federal status of participants.

    Except where specifically provided to the contrary, participants in 
a program under the Act shall not be deemed Federal employees and shall 
not be subject to the provisions of law relating to Federal employment, 
including those related to hours of work, rates of compensation, leave, 
unemployment compensation, and Federal employment benefits.



Sec. 633.309  Recordkeeping requirements.

    (a) Each grantee shall ensure maintenance of systems whose financial 
management and participant data components provide federally-required 
records and reports that are accurate, uniform in definition, accessible 
to authorized Federal staff, and verifiable for monitoring, reporting, 
and evaluation purposes.
    (b) The grantee shall ensure that systems:
    (1) Maintain data elements used in required Federal reports in 
accordance with established program definitions contained in the Act and 
these regulations;
    (2) Follow consistent rules for aggregation of detailed data to 
summary levels;
    (3) Are able to track data from detailed records to summary reports;
    (4) Maintain procedures to ensure that information is current, 
complete, consistent, and accurate;
    (5) Meet generally accepted accounting principles as prescribed in 
41 CFR part 29-70;
    (6) Provide for adequate control of Federal funds and other assets;
    (7) Trace the funds to a level of expenditures adequate to 
demonstrate that funds have been spent lawfully;
    (8) Maintain internal controls to avoid conflict-of-interest 
situations and prevent irregular transactions or activities;
    (9) Support accounting records with source documentation such as 
cancelled checks, paid bills, contracts, grants, and agreements; and
    (10) Establish procedures that will minimize the time elapsing 
between the receipt of advanced funds and their disbursement.

[[Page 315]]



Sec. 633.310  Bonding.

    The grantee and all subgrantees shall ensure that every officer, 
director, agent, or employee authorized to act on their behalf in 
receiving or depositing funds into program accounts or in issuing 
financial documents, checks, or other instruments of payment for program 
costs shall be bonded to provide protection against loss. Those costs 
are chargeable to administration.



Sec. 633.311  Management information systems.

    All grantees shall establish and maintain a program and financial 
management system which meets Departmental standards and the 
requirements of Sec. 633.314.



Sec. 633.312  Grantees contracts and subgrants.

    (a) Grantee responsibility. (1) The grantee is responsible for 
development, approval and operation of all contracts and subgrants and 
shall require that its contractors and subgrantees adhere to the 
requirements of the Act, regulations promulgated under the Act, and 
other applicable laws as required by DOL.
    (2) The grantee shall require contractors and subgrantees to 
maintain effective control and accountability over all funds, property 
and other assets covered by the contract or subgrant.
    (3) Each grantee, subgrantee and contractor shall establish and use 
internal program management procedures sufficient to prevent fraud and 
abuse.
    (4) The grantee shall ensure that contractors and subgrantees 
maintain and make available for review by the grantee and the Department 
of Labor all records pertaining to the operations of programs under such 
contracts and subgrants, consistent with the maintenance and retention 
of record requirements.
    (5) Subgrantees are entitled to funding for administrative costs. 
The amount of such funding will be determined during the development of 
subgrants.
    (b) In the event an agreement or subgrant is cancelled, in whole or 
in part, the grantee may be required to develop procedures for ensuring 
continuity of service to participants.
    (c) Grantees are authorized to enter into classroom training or on-
the-job training contracts or subgrants which extend past the expiration 
date of the grant, but such extension shall not exceed six months. In 
such cases, the grantee shall continue to be responsible for the 
administration of such contracts and subgrants, unless, should the grant 
be terminated, such contract or subgrant is transferred to a successor 
grantee.



Sec. 633.313  Administrative staff and personnel standards.

    The following provisions shall be applicable only to private 
nonprofit grantees and to private nonprofit subgrantees receiving 
section 402 funds:
    (a) Personnel policies of grantees and subgrantees shall be stated 
in written form and available to the Department upon request.
    (b) Each grantee and subgrantee shall insure that its staff 
recruiting procedures afford adequate opportunity for the hiring and 
promotion of persons in the target population.
    (c) Grantees and subgrantees shall include the following provisions 
in their published personnel policies relating to outside employment of 
their employees in section 402 programs.
    (1) Such employment shall not interfere with the efficient 
performance of the employee's duties in the DOL-assisted programs;
    (2) Such employment shall not involve conflict of interest or 
conflict with the employee's duties in the DOL-assisted program;
    (3) Such employment shall not involve the performance of duties 
which the employee should perform as part of employment in the DOL-
assisted program; and
    (4) Such employment shall not occur during the employee's regular or 
assigned working hours in the DOL-assisted program, unless the employee 
during the entire day on which such employment occurs is on annual 
leave, compensatory leave, or leave without pay.
    (d) Salaries and wages. (1) Administrative and staff employees in 
section 402 programs shall be paid at a rate no lower than the 
applicable Federal, State, or local minimum wage rate,

[[Page 316]]

whichever is highest. The salary for each position shall be justified 
and documented by the grantee to the satisfaction of the Department.
    (2) Notwithstanding paragraph(d)(1) of this section, where a grantee 
or subgrantee has an established system, it may compensate its section 
402 program employees at existing rates in effect for comparable 
positions under such merit system. However, in order to use this 
methodology, the section 402 program employees must be filling types of 
positions in existence before the grantee or subgrantee received 
financial assistance under the section 402 program, and the salary scale 
must not have been changed as a result of such financial assistance.
    (e) Prorating salaries. Where an individual performs functions under 
several grants, his or her time shall be prorated among the different 
grants and the portion of the salary charged to the section 402 grant 
shall not exceed the percentage of time spent performing section 402 
functions.
    (f) Employee benefits. Employee benefits shall be at the same level 
and to the same extent as those positions in public or private nonprofit 
agencies in the area where the program is carried out.
    (g) Position responsibilities. (1) Each grantee and subgrantee shall 
maintain a written detailed job description identifying job functions 
and responsibilities for each administrative and staff position under 
its section 402 program.
    (2) Each position shall have specific hiring qualifications. 
Positions requiring higher salaries or wages shall include higher level 
of responsibilities commensurate with the salary.
    (h) Personnel procedures. (1) Each grantee and subgrantee shall 
maintain a personnel manual containing detailed procedures for hiring 
new employees, promoting present employees and granting salary 
increases.
    (2) Each grantee and subgrantee shall maintain documentation as to 
any personnel action (including hiring, promotion, and salary increases) 
involving its section 402 program employees.



Sec. 633.314  Reports required.

    Grantees shall report pursuant to instructions issued by the 
Department. Reports shall be submitted quarterly within 45 days after 
the end of the report period (sec. 165(a)(2)). Accuracy of all reports 
must be verified by the chief executive officer or financial officer. 
When estimates are used, the verification statement will so state.



Sec. 633.315  Replacement, corrective action, termination.

    (a) The Department may replace any grantee who during the grant 
period has been terminated by first offering the Governor the 
opportunity to submit an acceptable application. When such an offer is 
made and should the Governor decline, within 15 days, or should the 
Governor or his agent have been the terminated grantee, the Department 
may replace the grantee by (1) designating another organization or 
organizations, or (2) opening the area for competitive bidding.
    (b) The Department may also require appropriate corrective action as 
a condition of continued funding of a grantee whose performance has been 
found deficient, but not sufficient to warrant termination for cause or 
emergency treatment. Such appropriate corrective actions may include but 
are not limited to termination of subrecipient agreements, development 
of and compliance with corrective action plans, etc.
    (c) In cases where deficiencies are identified and efforts at 
corrective action have failed, the Department may apply sanctions, e.g., 
suspension of Letter of Credit, incremental funding, etc.
    (d) Termination for cause can occur whenever there is a violation of 
the governing rules and regulations, failure to comply with the grant 
terms and conditions and in such cases as:
    (1) Inability to meet Federal standards related to such debt 
collection requirements as:
    (i) Failure to respond to demand letters from DOL for repayment of 
debts within the stated timeframe;
    (ii) Failure to comply with approved repayment agreement;
    (2) Nonperformance related to such requirements as:

[[Page 317]]

    (i) Failure to submit required quarterly financial reports for two 
successive periods within 30 days after they are due;
    (ii) Failure to submit required quarterly performance report for two 
successive periods within 30 days after they are due;
    (iii) Failure to develop a plan of action to correct deficiencies 
identified in a final audit finding and determination or by an onsite 
monitoring review;
    (3) Nonperformance related to such requirements as:
    (i) Failure to comply with formal corrective action after due 
notice;
    (ii) Failure to comply with the requirements of the Act related to a 
grievance procedure and other requirements;
    (e) In addition, the Department, by written notice, may terminate a 
grant in whole or in part in the event of reduction in the funds 
available for JTPA title IV, section 402 programs by reason of 
congressional action, whether by authorization, appropriation, deferral, 
rescission or otherwise, or by reason of other legislative action, such 
as changes in service deliverers, program content or services to be 
provided, which makes it impracticable to continue the agreement under 
its original terms. In the event of a congressional reduction in funds, 
the reduction shall be apportioned on an equitable basis among section 
402 grantees. In the case of termination pursuant to this provision, the 
Department shall be liable for payment, in accordance with the payment 
provisions of this agreement, for services rendered and noncancellable 
obligations properly incurred prior to the effective date of 
termination.
    (f) Notwithstanding the provisions of part 636 the Department may 
terminate a grantee under emergency termination procedures in accordance 
with section 164(f) of the Act.
    (i) Instances under which emergency termination can occur include 
but are not limited to: Final audit findings and determinations 
identifying numerous adverse findings in the area of financial 
management; information gathered through onsite monitoring which 
substantiates serious management, fiscal and/or performance problems; 
documented information from the Inspector General or gained through 
incident reports of poor performance, serious administrative problems 
and/or inability to protect and account for Federal funds.
    (ii) Within 30 days of written termination notification to a 
grantee, the Department will secure applicable documents onsite, seize 
bank accounts relating to the program, arrange for the payment of 
legitimate bills and debts and arrange, to the degree feasible, for the 
continued provision of services to program enrollees.



Sec. 633.316  Closeout procedures.

    Grant closeout will conform to the requirements at 41 CFR part 29-
70. As necessary, the Department shall issue supplementary closeout 
requirements.



Sec. 633.317  Reallocation of funds.

    (a) In a limited number of circumstances, the Department may reduce 
a portion of a grant when it can be reasonably projected that the funds 
will not be used during the grant performance period or that they will 
not be used for DOL authorized carryover purposes. Such reduction of 
funds will only be undertaken after 30-days advance notice to the 
grantee.
    (b) Funds recaptured as a result of these grant reductions will be 
available for technical assistance or special projects funded at the 
discretion of the Department .



Sec. 633.318  Nondiscrimination and nonsectarian activities.

    Pursuant to section 167(a) of the Act:
    (a) Nondiscrimination and equal opportunity requirements and 
procedures, including complaint processing and compliance reviews, will 
be governed by the provisions of 29 CFR parts 31 and 32 and will be 
administered by the Office of Civil Rights.
    (b) The employment or training of participants in sectarian 
activities is prohibited.



Sec. 633.319  Lobbying, political activities and unionization.

    No funds provided under the Act may be used in any way:
    (a) To attempt to influence in any manner a member of Congress to 
favor

[[Page 318]]

or oppose any legislation or appropriation by Congress.
    (b) To attempt to influence in any manner State or local legislators 
to favor or oppose any legislation or appropriation by such legislators.
    (c) Which involves political activities (sec. 141(a)).
    (d) Which will assist, promote, or deter union organizing (sec. 
143(c)(1)).



Sec. 633.320  Nepotism.

    (a) No grantee, subgrantee, or employing agency may hire a person in 
an administrative capacity, staff position, or on-the-job training 
position funded under the Act if a member of that person's immediate 
family is engaged in an administrative capacity for that grantee, 
subgrantee, or employing agency.
    (b) No subgrantee or employing agency may hire a person in an 
administrative capacity, staff position or on-the-job training position 
funded under the Act, if a member of that person's immediate family is 
engaged in an administrative capacity for the grantee from which that 
subgrantee or employing agency obtains its funds. To the extent that an 
applicable State or local legal requirement regarding nepotism is more 
restrictive than this provision, such State or local requirement shall 
be followed.
    (c) For purposes of this section the term ``immediate family'' means 
wife, husband, son, daughter, mother, father, brother, brother-in-law, 
sister, sister-in-law, son-in-law, daughter-in-law, mother-in-law, 
father-in-law, aunt, uncle, niece, nephew, stepparent, and stepchild.



Sec. 633.321  Performance standards for section 402 programs.

    (a) The Secretary shall issue performance standards for section 402 
programs.
    (b) To issue performance standards, the Secretary shall:
    (1) Select the measures against which the standards will be set.
    (2) Prescribe the pre- and post-program measurement periods.
    (3) Determine standards for each of the measures, from which 
specific grantee standards can be determined in accordance with the 
parameters established by the Secretary.
    (c) No grantee shall be penalized for not meeting performance 
standards for the program years 1984-1986.



Sec. 633.322  Sanctions for violation of the Act.

    (a) Pursuant to sections 164 (d), (e), (f), (g), and (h) of the Act, 
the Secretary may impose appropriate sanctions and corrective actions 
for violations of the Act, regulations, or grant terms and conditions. 
Additionally, sanctions may include the following:
    (1) Offsetting debts, arising from misexpenditure of grant funds, 
against amounts to which the grantee is or may be entitled under the 
Act, except as provided in section (e)(1) of the Act. The debt shall be 
fully satisfied when the Secretary reduces amounts allotted to the 
grantee by the amount of the misexpenditure; and
    (2) Determining the amount of Federal cash maintained by the grantee 
or its subgrantee or contractor in excess of reasonable grant needs, 
establishing a debt for the amount of such excessive cash, and charging 
interest on that debt.
    (b) Except for actions under section 164(f) and 167 of the Act, to 
establish a debt or violation subject to sanction and/or corrective 
action, the Secretary shall utilize initial and final determination 
procedures outlined in 20 CFR part 636.
    (c) To impose a sanction or corrective action regarding a violation 
of section 167 of the Act, the Secretary shall utilize the procedures of 
29 CFR part 31.
    (d) (1) The Secretary shall hold the grantee responsible for all 
funds under the grant. The grantee shall hold its subgrantees and 
contractors responsible for JTPA funds received through the grant.
    (2) The Secretary shall determine the liability of the grantee for 
misexpenditures of grant funds in accordance with section 164(e) of the 
Act, including the requirement that the grantee shall have taken prompt 
and appropriate corrective actions for misexpenditures by a subgrantee 
or contractor.

[[Page 319]]

    (3) Prompt, appropriate, and aggressive debt collection action to 
recover any funds misspent by subgrantees or contractors ordinarily 
shall be considered a part of the corrective action required by section 
164(e)(2)(D) of the Act.
    (4) In making the determination required by section 164(e)(2) of the 
Act, the Secretary may determine, based on a request from the grantee, 
that the grantee may forego certain collection actions against a 
subgrantee or contractor where that subgrantee or contractor was not at 
fault with respect to the liability criteria set forth in section 
164(e)(2)(A) through section 164(e)(2)(D) of the Act. The Secretary 
shall consider such requests in assessing whether the grantee's 
corrective action was appropriate in light of section 164(e)(2)(D) of 
the Act.
    (5) The grantee shall not be released from liability for misspent 
funds under the determination required by section 164(e) of the Act 
until the Secretary determines that further collection action, either by 
the grantee or subgrantee or contractor, would be inappropriate or would 
prove futile.
    (e) Nothing in this section shall preclude the Secretary from 
imposing a sanction directly against a subgrantee or contractor as 
authorized in section 164(e)(3) of the Act. In such a case, the 
Secretary shall inform the grantee of the Secretary's action.



PART 634_LABOR MARKET INFORMATION PROGRAMS UNDER TITLE IV, PART E OF 
THE JOB TRAINING PARTNERSHIP ACT--Table of Contents




              Comprehensive Labor Market Information System

Sec.
634.1 General.
634.2 Availability of funds.
634.3 Eligible recipients.
634.4 Statistical standards.
634.5 Federal oversight.

    Authority: Job Training Partnership Act, sec. 169, (29 U.S.C. 1510 
et seq., Pub. L. 97-300, 96 Stat. 1322), unless otherwise noted.

    Source: 48 FR 48779, Oct. 20, 1983, unless otherwise noted.

              Comprehensive Labor Market Information System



Sec. 634.1  General.

    Pursuant to title IV, part E of the Job Training Partnership Act, 
the Secretary, in cooperation with the States, shall maintain a 
comprehensive system of Labor Market Information (LMI). This subpart 
contains regulations governing the comprehensive LMI system.



Sec. 634.2  Availability of funds.

    (a) The Secretary shall make available, from the amounts 
appropriated pursuant to section 461(a) of the Act and sections 3(a) and 
14 of the Wagner-Peyser Act, funds to support LMI activities and 
Federal-State cooperative statistical programs.
    (b) LMI programs may be funded through reimbursable agreements 
between the Secretary and the States.



Sec. 634.3  Eligible recipients.

    (a) For funds appropriated pursuant to JTPA title IV, part E, 
eligible recipients shall be the 50 States, the District of Columbia, 
the Commonwealth of Puerto Rico, the Virgin Islands, Guam, the Northern 
Mariana Islands, American Samoa, and the Trust Territory of the Pacific 
Islands.
    (b) For funds appropriated pursuant to the Wagner-Peyser Act, as 
amended, eligible recipients shall be the 50 States, the District of 
Columbia, the Commonwealth of Puerto Rico, Guam, and the Virgin Islands.



Sec. 634.4  Statistical standards.

    Recipients shall agree to provide required data following the 
statistical standards prescribed by the Bureau of Labor Statistics for 
cooperative statistical programs.



Sec. 634.5  Federal oversight.

    The Secretary shall take such action as necessary to ensure 
satisfactory recipient performance.



PART 636_COMPLAINTS, INVESTIGATIONS AND HEARINGS--Table of Contents




Sec.
636.1 Scope and purpose.
636.2 Protection of informants.

[[Page 320]]

636.3 Complaint and hearing procedures at the grantee level.
636.4 Grievance procedures at the employer level.
636.5 Exhaustion of grantee level procedure.
636.6 Complaints and investigations at the Federal level.
636.7 Subpoenas.
636.8 Initial and final determination; request for hearing at the 
          Federal level.
636.9 Opportunity for informal review.
636.10 Hearings before the Office of Administrative Law Judges.
636.11 Final action.

    Authority: 29 U.S.C. 1579(a).

    Source: 48 FR 48780, Oct. 20, 1983, unless otherwise noted.



Sec. 636.1  Scope and purpose.

    (a) General. This part establishes the procedures to receive, 
investigate and resolve complaints, and conduct hearings to adjudicate 
disputes under title IV (except part B) of the Act. It governs grievance 
procedures at the recipient or subrecipient level, the receipt and 
investigation of complaints at the Federal level, the procedures for 
resolving investigative findings, the rules of practice for adjudicative 
hearings, and the rendering of decisions pursuant to the Act. Judicial 
review of final action of the Department after opportunity for an 
administrative hearing has been exclusively established in the United 
States Courts of Appeals for the Circuits in which the affected parties 
reside or transact business.
    (b) Initiation of investigations. JTPA investigations may be 
initiated upon the request of any person or organization or by the 
Department on its own initiative.
    (c) Non-JTPA remedies. Whenever any person, organization or agency 
believes that a recipient or subrecipient has engaged in conduct that 
violates the Act and that such conduct also violates a Federal statute 
other than JTPA, or a State or local law, that person, organization or 
agency may, with respect to the non-JTPA cause of action, institute a 
civil action or pursue other remedies authorized under other Federal, 
State, or local law against the recipient or subrecipient without first 
exhausting the remedies in this subpart. For example, if a subrecipient 
believes that a grantee has breached the subgrant agreement between the 
grantee and itself, the subrecipient may institute a civil action for 
breach of contract in a State court if so authorized by State law. 
Nothing in the Act or this paragraph, shall:
    (1) Allow any person or organization to join or sue the Secretary 
with respect to his or her responsibilities under JTPA except after 
exhausting the remedies in this subpart.
    (2) Allow any person or organization to file a suit which alleges a 
violation of JTPA or these regulations without first exhausting the 
administrative remedies described in this subpart, or
    (3) Be construed to create a private right of action with respect to 
alleged violations of JTPA or the regulations.
    (d) Complaints of discrimination pursuant to section 167(a) of the 
Act will be handled under 29 CFR parts 31 and 32.

[48 FR 48780, Oct. 20, 1983, as amended at 55 FR 13007, Apr. 6, 1990]



Sec. 636.2  Protection of informants.

    (a) Informants. Where possible the identity of any person who has 
furnished information relating to, or assisted in an investigation of a 
possible violation of the Act will be held in confidence. Where 
disclosure of the person's identity is essential to assure a fair 
determination of the issues, or where necessary to effectively 
accomplish responsibilities under the Act, the Department may disclose 
such identity upon such conditions as will promote the continued receipt 
of confidential information by the Department and effectuate the 
protections and policies stated in paragraph (b) of this section. Any 
such disclosure shall be consistent with the Freedom of Information Act, 
the Privacy Act and other applicable law.
    (b) Retaliation prohibited. No person or agency may discharge, or in 
any other manner discriminate or retaliate against any person, or deny 
to any person a benefit to which that person is entitled under the 
provisions of the Act or the regulations because such person has filed 
any complaint, instituted or caused to be instituted any proceeding 
under or related to the Act, has testified or is about to testify in any 
such

[[Page 321]]

proceeding or investigation, or has provided information or assisted in 
an investigation.



Sec. 636.3  Complaint and hearing procedures at the grantee level.

    (a) Policy. (1) Each grantee shall establish and maintain a 
procedure for resolving any complaint alleging a violation of the Act, 
regulations, grant or other agreements under the Act, including any 
complaint arising in connection with the JTPA programs operated by the 
grantee or its subrecipients. Such complaint procedures must meet the 
requirements of this section. The complaint procedure shall provide for 
final resolution of complaints within 60 days after filing the 
complaint. Where existing complaints or grievance procedures include the 
elements set forth in this section, grantees may adopt such mechanism 
as, or as part of, their JTPA procedure.
    (2) Participants shall be provided, upon enrollment into employment 
or training, with a written description of the complaint procedures 
including notification of their right to file a complaint and 
instructions on how to do so. Grantees should designate an individual to 
monitor the operation of the complaint procedures, to ensure that 
complaints and related correspondence are logged and filed, to ensure 
that assistance is available for properly filling complaints, and to 
ensure the availability, coordination, and promptness of all elements of 
the procedures. Upon filing a complaint, and at each stage thereafter, 
each complaint shall be notified in writing of the next step in the 
procedure.
    (3) Complaints may be brought by any individual or organization 
including, but not limited to, program participants, subrecipients, 
contractors, staff of the grantee or subrecipient, applicants for 
participation or financial assistance, labor unions, and community-based 
organizations.
    (4) With the exception of complaints alleging fraud or criminal 
activity, the filing of a complaint pursuant to this section must be 
made within one year of the alleged occurrence.
    (5) The grantee may delegate the authority to operate and maintain 
the complaint and hearing procedure to its subrecipients except for 
complaints between the grantee and its subrecipients (e.g., audit 
disallowances), complaints involving more than one of its subrecipients, 
or complaints directly involving the operations or responsibilities of 
the grantee. Where the procedure is delegated, the grantee may provide 
for an appeal to itself from the decision of the subrecipient or the 
grantee may provide that the subrecipient's decision is the final 
decision of the grantee. Where the procedure is delegated, the grantee 
shall ensure that the procedures specified in this section are followed 
and a decision issued promptly within 60 days after a complaint is 
filed.
    (6) When a participant is an employee of a grantee or subrecipient 
and alleges that an occurrence constitutes a violation of the Act, 
regulations, grant, or other agreements under the Act, as well as a 
violation of the terms and conditions of employment under a State or 
local law or a collective bargaining agreement, the participant may 
pursue the complaint and hearing procedures under the State or local law 
or the collective bargaining agreement, pursuant to Sec. 636.4. A 
participant who selects the procedures provided in this section is not 
precluded from filing a complaint under Sec. 636.4, unless otherwise 
prohibited by State or local law, or applicable collective bargaining 
agreement.
    (b) Complaint procedures. The complaint resolution procedure shall 
include:
    (1) Opportunity to file a complaint. All complaints shall be in 
writing.
    (2) Opportunity for informal resolution of the complaint.
    (3) Written notification of an opportunity for a hearing when an 
informal resolution has not been accomplished. The notice shall state 
the procedures for requesting a hearing and shall describe the elements 
in the hearing procedures including those set forth in paragraph (c) of 
this section.
    (4) Opportunity to amend the complaint prior to a hearing.
    (5) Opportunity for a hearing pursuant to paragraph (c) of this 
section within 30 days of filing the complaint.

[[Page 322]]

    (6) A final written decision to the complainant which shall be made 
within 60 days of the filing of the complaint and provided to the 
parties by certified or registered mail, return receipt requested. The 
decision shall include:
    (i) A statement of facts and reason(s) for the decision.
    (ii) A statement that the procedures delineated in this section have 
been completed.
    (iii) A statement of any remedies to be applied.
    (iv) Notice of the right to file a complaint with the Grant Officer 
pursuant to Sec. 636.6 where any party disagrees with the decision.
    (c) Hearing procedure. A hearing shall be provided within 30 days 
after filing a complaint. The hearing procedure shall include:
    (1) Written notice of the date, time and place of the hearing, the 
manner in which it will be conducted, and the issues to be decided. 
Other interested parties may apply for notice. Such other interested 
party is a person or organization potentially affected by the outcome. 
The notice to other interested parties shall include the same 
information furnished to the complainant and shall further state whether 
such interested parties may participate in the hearing and if 
applicable, the method by which they may request such participation.
    (2) Opportunity to withdraw the request for hearing in writing 
before the hearing.
    (3) Opportunity to request rescheduling of the hearing for good 
cause.
    (4) Opportunity to be represented by an attorney or other 
representative of the complainant's choice.
    (5) Opportunity to call witnesses and introduce documentary 
evidence. Recipients or subrecipients shall cooperate in making 
available any persons under their control or employ to testify, if such 
persons are requested to testify by the complainant.
    (6) Opportunity to have records or documents relevant to the issues 
produced by their custodian when such records or documents are kept by 
or for the grantee or its subrecipient in the ordinary course of 
business.
    (7) Opportunity to question any witnesses or parties.
    (8) The right to an impartial hearing officer.
    (9) A verbatim record of the proceeding.
    (10) A written decision from the hearing officer to the 
complainant(s) and any other interested parties within 60 days of the 
filing of the complaint. This period may be extended with the written 
consent of all of the parties for good cause. The written decision shall 
include a statement of facts, a statement of reasons for the decision 
and a statement of any remedies to be applied. Where the hearing 
officer's decision is the grantee's final decision it shall be provided 
to the parties by certified or registered mail, return receipt 
requested.
    (11) Where a complaint procedure provides for a grantee's review of 
the hearing officer's decision, the grantee shall complete its review 
and provide a final written decision to the complainant(s), and any 
other parties, by certified or registered mail, return receipt 
requested, as provided in paragraph (c)(10) of this section within 60 
days after the complaint is filed.
    (12) Where local law, personnel rules or other applicable 
requirements specify procedures in addition to those specified above, 
similarly employed JTPA participants shall be notified of their right to 
use the same procedures.



Sec. 636.4  Grievance procedures at the employer level.

    (a) Policy. (1) Whenever the grantee or subrecipient is an employer, 
it shall continue to operate or shall establish and maintain for its 
participants a grievance procedure relating to the terms and conditions 
of JTPA employment. The employer who does not have a grievance procedure 
may use the complaint procedure established under Sec. 636.3. Employers 
shall inform participants of the procedures they are to follow.
    (2) A participant who elects the grievance procedure in this 
section, may also pursue a complaint under Sec. 636.3 where there is an 
alleged violation of the Act, regulations, grant or other agreement 
under the Act.

[[Page 323]]

    (b) Equal benefits. Where local law, personnel rules, or other 
applicable requirements specify procedures (including procedures for any 
adverse action or for termination of employment), similarly employed 
JTPA participants shall be notified of their right to use the same 
procedures, as well as JTPA procedures.



Sec. 636.5  Exhaustion of grantee level procedure.

    (a) Exhaustion required. No complainant may file a complaint with 
the Department until the grantee level procedures specified in Sec. 
636.3 have been exhausted.
    (b) Exhaustion exceptions. Complainants who have not exhausted the 
procedures at the grantee level may file the complaint at the Federal 
level, and the Department may accept such complaint if it determines 
that:
    (1) The grantee or subrecipient has not acted within the time frames 
specified in Sec. 636.3; or
    (2) The grantee's or subrecipient's procedures are not in compliance 
with Sec. 636.3; or
    (3) An emergency situation exists.



Sec. 636.6  Complaints and investigations at the Federal level.

    (a) General; final determination of reliable and probative evidence. 
Where local administrative remedies have been exhausted, section 144(c) 
of the Act requires that a final determination of the complaint shall be 
made within 120 days after the Department receives the complaint. The 
Department's resolution of non-criminal matters pursuant to section 
144(c) of the Act consists of the final determination under Sec. 
636.8(e) of whether there is reliable and probative evidence to support 
the allegation or belief that a grantee or subrecipient is failing to 
comply with the requirements of the Act, regulations, grant or other 
agreement under the Act.
    (b) Complaints. (1) Every complaint shall be filed in writing before 
the commencement of any investigation or corrective action shall be 
required. Complaints alleging discrimination under section 167, will be 
filed with the Regional Director, Office of Civil Rights (OCR). All 
other JTPA complaints will be filed with the appropriate Grant Officer. 
However, a complaint timely filed with either the Grant Officer or the 
Regional OCR Director shall be deemed properly filed and shall be 
referred (as necessary) to the appropriate office. The complaint shall 
be filed only after the grantee level procedures in Sec. 636.3 have 
been exhausted and no later than 30 days from the date of receipt of the 
written decision or notice required by Sec. 636.3. The complaint should 
contain the following:
    (i) The full name, telephone number (if any), and address of the 
person making the complaint.
    (ii) The full name and address of the respondent (the grantee or 
subrecipient or person against whom the complaint is made).
    (iii) A clear and concise statement of the facts, including 
pertinent dates, constituting the alleged violation.
    (iv) Where known, the provisions of the Act, regulations, grant or 
other agreements under the Act believed to have been violated.
    (v) A statement disclosing whether proceedings involving the subject 
of the complaint have been commenced or concluded before any Federal, 
State or local authority, and, if so, the date of such commencement or 
conclusion, the name and address of the authority and the style of the 
case.
    (vi) A copy of the final decision of the recipient or subrecipient 
issued pursuant to Sec. 636.3.
    (2) A complaint will be considered to have been received upon 
receipt by the appropriate Grant Officer. To be acceptable, the 
complaint must be a written statement sufficiently precise to both 
identify those against whom the allegations are made and to fairly 
afford the respondent an opportunity to prepare a defense. A complaint 
may be amended to cure defects or omissions, or to clarify and amplify 
allegations made therein, and such amendments relate back to the 
original filing date for purposes of timely filing.
    (3) A complaint once filed may be withdrawn only with the consent of 
the Grant Officer. If the complainant fails to cooperate or is 
unavailable, the complaint may be dismissed upon reasonable notice to 
the last known address of the complainant.

[[Page 324]]

    (c) Investigation of complaints. Whenever the Grant Officer receives 
a complaint filed in accordance with paragraphs (a) and (b) of this 
section, the complaint shall be investigated if it alleges that any 
person, grantee or subrecipient has failed to comply with the 
requirements of the Act, regulations, grant or other agreements under 
the Act. The Grant Officer shall promptly issue a notice to the grantee 
or subrecipient which shall include a copy or summary of the complaint 
and which shall direct the grantee or subrecipient to forward a copy of 
the complete administrative file, including a copy of the certified 
verbatim transcript of the hearing, within 15 days of receipt of such 
notice to the Grant Officer. Such investigation shall be completed and a 
conclusion made pursuant to Sec. 636.8(e) within 120 days of the filing 
of the complaint, except that the time may be extended with the written 
consent of all the parties.
    (d) Onsite review and other bases for investigation. If after an 
onsite review, monitoring visit, review of reports, data or other 
information, the Grant Officer has reason to believe that a grantee or 
subrecipient is failing to comply with the requirements of the Act, 
regulations, grant or other agreements under the Act, the Grant Officer 
or other designated authority shall inquire into the matter.
    (e) Utilizing other services. With the consent and cooperation of 
State agencies charged with the administration or enforcement of State 
laws, the Secretary may elect for the purpose of carrying out this part, 
to utilize the services of State, local and Tribal agencies and their 
employees, and notwithstanding any other provision of law, may 
reimburse, in whole or in part, such State and local agencies and their 
employees for services rendered for such purposes.
    (f) Criminal investigation. Notwithstanding any other provision of 
this part, investigation by the Department of any matter concerning a 
potential Federal criminal violation shall be conducted as the Inspector 
General shall direct pursuant to the powers granted by the Inspector 
General Act of 1978, Pub. L. 95-452, 92 Stat. 1101.



Sec. 636.7  Subpoenas.

    (a) Subpoenas in non-Inspector General investigations. (1) The 
Department, through the appropriate Assistant Secretary, may issue a 
subpoena directing the person named therein to appear before a 
designated representative at a designated time and place to verify or to 
produce documentary evidence, or both, relating to any matter arising 
under the Act being investigated. The Assistant Secretary, Solicitor or 
the Associate Solicitor for Employment and Training Legal Services, for 
good cause shown, may extend the time prescribed for compliance with 
such subpoenas.
    (2) Any motion to limit or quash any investigational subpoena shall 
be filed with the Chief Administrative Law Judge within 10 days after 
service of the subpoena, or, if the return date is less than 10 days 
after service of the subpoena, within such other time as may be allowed 
by the assigned Administrative Law Judge.
    (3) The timely filing of a motion to limit or quash an 
investigational subpoena shall stay the requirement of a return on the 
portion challenged. If the Administrative Law Judge rules subsequent to 
the return date, and the ruling denies the motion in whole or in part, 
the Administrative Law Judge shall specify a new return date.
    (4) All motions to limit or quash subpoenas, and the responses 
thereto, shall be part of the public record of the Office of the 
Administrative Law Judges except as otherwise ordered or provided under 
these regulations.
    (b) Noncompliance. (1) In cases of failure to comply with compulsory 
processes, appropriate action may be initiated including actions for 
enforcement, forfeiture, penalties or criminal actions.
    (2) The Solicitor of Labor, with the consent of the Attorney 
General, may:
    (i) Institute in the appropriate district court on behalf of the 
Department an enforcement proceeding in connection with the failure or 
refusal of a person, partnership, corporation, recipient or other entity 
to comply with or to obey a subpoena if the return date or any extension 
thereof has passed; or
    (ii) Request on behalf of the Department the institution of civil 
actions, as

[[Page 325]]

appropriate, if the return date or any extension thereof has passed 
including seeking civil contempt in cases where a court order enforcing 
compulsory process has been violated.



Sec. 636.8  Initial and final determination; request for hearing at 
the Federal level.

    (a) Initial determination. Upon the conclusion of a review of the 
entire administrative record of an investigation conducted pursuant to 
Sec. 636.6 or after the conclusion of the comment period for audits, 
the Grant Officer shall make an initial determination of the matter in 
controversy including the allowability of questioned costs or 
activities. Such determination shall be based upon the requirements of 
the Act, regulations, grants or other agreements, under the Act. The 
determination may conclude either:
    (1) That based upon the entire record there is no violation of the 
Act, regulations, grants or other agreements under the Act; or
    (2) That there is evidence to support the allegation, or finding of 
questioned costs or activities.
    (b) Contents of initial determination. (1) In the event that the 
Grant Officer makes a finding that there is evidence to support the 
allegation of a violation the initial determination shall:
    (i) Be in writing;
    (ii) State the basis of the determination, including factual 
findings and conclusions;
    (iii) Specify the costs or activities disallowed;
    (iv) Specify the corrective actions required and/or that sanctions 
may be imposed; and
    (v) Give notice of an opportunity for informal resolution of the 
matters as necessary to the appropriate parties, which should include 
all interested parties specified by the Grant Officer.
    (2) In the event that the Grant Officer makes a finding of no 
violation the initial determination shall:
    (i) Be in writing;
    (ii) State the bases of the determination (factual findings and 
conclusions); and
    (iii) Give notice of the opportunity to present additional 
information within 30 days of receipt of the initial determination.
    (3) The initial determination shall be mailed by certified mail 
return receipt requested to the parties and interested parties.
    (c) Allowability of certain questioned costs. In any case in which 
the Grant Officer determines that the recipient meets the requirements 
of section 164(e)(2)(A)-(D) of the Act, the Grant Officer may waive the 
imposition of sanctions (sec. 164(e)(3)). It is the responsibility of 
the grantee to request such waiver by the Grant Officer and to submit 
the evidence to be used to make the finding.
    (d) Informal resolution. Except as provided by section 164(f) of the 
Act, the Grant Officer shall not revoke a grant, in whole or in part, 
nor institute corrective action or sanctions against a grantee without 
first providing the grantee with an opportunity to informally resolve 
those matters contained in the Grant Officer's initial determination. If 
all matters are informally resolved, the Grant Officer shall notify the 
parties in writing of the nature of the resolution, which shall 
constitute final agency action, not subject to appeal, and shall close 
the file.
    (e) Final determination. (1) If all the parties and the Grant 
Officer cannot informally resolve any matter pursuant to paragraph (d) 
of this section, the Grant Officer shall provide each party with a final 
written determination by certified mail, return receipt requested. In 
the case of audits, the final determination shall be issued not later 
than 180 days after the receipt by the Grant Officer of the final 
approved audit report.
    (2) The final determination shall:
    (i) Indicate that efforts to informally resolve matters contained in 
the initial determination pursuant to paragraph (a) of this section have 
been unsuccessful;
    (ii) List those matters upon which the parties continue to disagree;
    (iii) List any modifications to the factual findings and conclusions 
set in the initial determination;
    (iv) List any sanctions, and required corrective actions, including 
any other alteration or modification of the plan,

[[Page 326]]

grant, agreement or program ordered by the Grant Officer; and
    (v) Inform the parties of their opportunity to request a hearing 
pursuant to these regulations.
    (3) If it is determined in the final notice that the complaint does 
not allege and/or the evidence does not indicate that there is reason to 
believe there may have been a violation of the Act, regulations, grants 
or other agreements under the Act, the Grant Officer shall dismiss the 
complaint without an offer of a hearing. Such dismissal shall constitute 
final agency action.



Sec. 636.9  Opportunity for informal review.

    (a) Parties to a complaint under Sec. 636.10 may choose to waive 
their rights to an administrative hearing before the Office of 
Administrative Law Judges (OALJ) by choosing to transfer the settlement 
of their dispute to an individual acceptable to all parties for the 
purpose of conducting an informal review of the stipulated facts and 
rendering a decision in accordance with applicable law. A written 
decision will be issued within 60 days after the matter is submitted for 
informal review.
    (b) The waiver of the right to request a hearing before the OALJ 
will automatically be revoked if a settlement has not been reached 
within the 60 days provided in paragraph (a) of this section.
    (c) The decision rendered under this informal review process shall 
be treated as a final decision of an Administrative Law Judge pursuant 
to section 166(b) of the Act.



Sec. 636.10  Hearings before the Office of Administrative Law Judges.

    (a) Jurisdiction. (1) Within 21 days of receipt of the Grant 
Officer's final determination, except for determinations under Sec. 
636.8(e)(3) dismissing the complaint without an opportunity to request a 
hearing, or on the expiration of 120 days of the filing of a complaint 
with the Grant Officer upon which no extensions have been mutually 
agreed, any affected grantee, subrecipient of complainant may transmit 
by certified mail, return receipt requested, a request for hearing to 
the Chief Administrative Law Judge, United States Department of Labor, 
800 K Street, NW., suite 400, Washington, DC 20001-8002 with a copy to 
the Grant Officer.
    (2) The request for hearing shall be accompanied by a copy of the 
Grant Officer's final determination, if issued, and shall specifically 
state those issues of the determination upon which review is requested. 
Those provisions of the determination not specified for review, or the 
entire determination when no hearing has been requested, shall be 
considered resolved and not subject to further review.
    (3) Except as otherwise provided by these regulations, only alleged 
violations of the Act, regulations, grants or other agreements under the 
Act fairly raised in grantee level proceedings under Sec. 636.3, 
alleged violations of recipient level procedures fairly raised before 
the Grant Officer, or complaints identified in sections 164(f) and 
166(a) of the Act are subject to review.
    (4) The same procedure set forth in paragraphs (a) (1) through (3) 
of this section applies in the case of a complainant who has not had a 
dispute adjudicated by the informal review process of Sec. 636.9 within 
the 60 days, except that the request for hearing before the OALJ must be 
filed within 15 days of the conclusion of the 60-day period. In addition 
to including the determination upon which review is requested, the 
complainant must include a copy of any Stipulation of Facts and a brief 
summary of proceedings.
    (5) Discretionary hearing. An opportunity for a hearing may also be 
extended when the appropriate Assistant Secretary determines that 
fairness and the effective operation of JTPA programs would be 
furthered.
    (b) Service and filing. Copies of all papers required to be served 
on a party or filed with the OALJ shall be filed simultaneously with the 
OALJ and served upon the parties of record or their representatives, and 
shall contain proof of such service.
    (c) Rules of Procedure. The rules of practice and procedure 
promulgated by the OALJ shall govern the conduct of hearings under this 
section.
    (d) Prehearing procedures. In all cases, the OALJ should encourage 
the use of prehearing procedures to simplify and clarify facts and 
issues.

[[Page 327]]

    (e) Subpoenas. Subpoenas necessary to secure the attendance of 
witnesses and the production of documents or things at hearings shall be 
obtained from the OALJ and shall be issued pursuant to the authority 
contained in section 163(b) of the Act, incorporating 15 U.S.C. section 
49.
    (f) Timely submission of evidence. The OALJ shall not permit the 
introduction at the hearing of documentation relating to the 
allowability of costs if such documentation has not been made available 
for review either at the time ordered for any prehearing conference, or, 
in the absence of such an order, at least three weeks prior to the 
hearing date.
    (g) Burden of production. The Department shall have the burden of 
production to support the Grant Officer's decision. To this end, the 
Grant Officer shall prepare and file an administrative file in support 
of the decision. Thereafter, the party or parties seeking to overturn 
the Grant Officer's decision shall have the burden of persuasion.
    (h) Review. (1) In all cases proceeding under Sec. 636.6, the 
Administrative Law Judge shall review the Administrative File and the 
request for hearing and shall determine whether there has been a full 
and fair hearing at the grantee level and whether there are no material 
factual issues unresolved. If the Administrative Law Judge determines 
that these two conditions are met, the case shall be decided upon the 
record and upon such briefs as the parties may submit. The 
Administrative Law Judge shall determine from the record whether there 
exists reliable and probative evidence to uphold the decision of the 
Grant Officer and shall, as appropriate, either affirm or remand the 
decision.
    (2) If the Administrative Law Judge determines that either of the 
two conditions is not met, he or she shall hold a hearing. In such 
cases, the Office of Administrative Law Judges shall have the full 
authority of the Secretary under section 164 of the Act, except with 
respect to the provisions of subsection (e) of that section.
    (3) Nothing in this subsection shall be construed to limit the right 
of the parties to seek a dismissal of the request for hearing or to seek 
summary judgment.
    (i) Termination of grant. When the decision terminates the grant in 
whole or in part after hearing pursuant to this subpart, the decision 
shall specify the extent of termination and the date upon which such 
termination becomes effective. Upon receipt of this notice, the grantee 
shall:
    (1) Discontinue further commitments of grant funds to the extent 
that they relate to the terminated portion of the grant.
    (2) Promptly cancel all subgrants, agreements and contracts 
utilizing funds under this grant to the extent that they relate to the 
terminated portion of the grant.
    (3) Settle, with the approval of the Secretary, all outstanding 
claims arising from such termination.
    (4) Submit, within a reasonable period of time, after the receipt of 
the notice of termination, a termination settlement proposal which shall 
include a final statement of all unreimbursed costs related to the 
terminated portion of the grant.
    (j) Alternative provision of services. If the final decision 
specifies suspension or termination of the grant, the Grant Officer 
shall determine how services shall be maintained in the grantee's area. 
As part of the determination, the Grant Officer shall determine whether 
any funds shall be reallocated to another recipient to serve the area 
formerly served by the terminated or suspended grant. The Grant Officer 
may also consider the desirability of providing direct Federal services 
to the area through appropriate means.
    (k) Timing of decisions. The Office of Administrative Law Judges 
should render a written decision not later than 90 days after the 
closing of the record.

[48 FR 48780, Oct. 20, 1983, as amended at 56 FR 54708, Oct. 22, 1991]



Sec. 636.11  Final action.

    The final decision of the Secretary pursuant to section 166(b) of 
the Act in cases heard by the Administrative Law Judges or decided by an 
informal reviewer, or the Grant Officer's final determination where 
there has been no such hearing, constitutes final agency

[[Page 328]]

action within the meaning of the Act and the Administrative Procedure 
Act, 5 U.S.C. 704.



PART 637_PROGRAMS UNDER TITLE V OF THE JOB TRAINING PARTNERSHIP ACT
--Table of Contents




                      Subpart A_General Provisions

Sec.
637.100 Scope and purpose.
637.105 Definitions.

                Subpart B_Program Planning and Operation

637.200 Allotments to States.
637.205 Notice of intent to participate.
637.210 Incentive bonus program applications.
637.215 Review and approval of applications for incentive bonus 
          payments.
637.220 Eligibility criteria for individuals to be counted in 
          determining incentive bonuses.
637.225 Determination of incentive bonus.
637.230 Use of incentive bonuses.

  Subpart C_Additional Title V Administrative Standards and Procedures

637.300 Management systems, reporting and recordkeeping.
637.305 Federal monitoring and oversight.
637.310 Audits.

Subpart D--Data Collection [Reserved]

    Authority: 29 U.S.C 1579(a); 29 U.S.C. 1791i(e).

    Source: 59 FR 45868, Sept. 2, 1994, unless otherwise noted.



                      Subpart A_General Provisions



Sec. 637.100  Scope and purpose.

    (a) This part implements Title V of the Act which creates a program 
to provide incentive bonuses to States for providing certain employable 
dependent individuals with job training to reduce welfare dependency, to 
promote self-sufficiency, to increase child support payments, and to 
increase employment and earnings (section 501).
    (b) This part applies to programs operated with funds under Title V 
of the Job Training Partnership Act.



Sec. 637.105  Definitions.

    In addition to the definitions contained in sections 4, 301, 303(e), 
and in Sec. 626.4 of this chapter, the following definitions apply to 
the administration of Title V of the Act and this part:
    Absent parent means an individual who is continuously absent from 
the household and who is a non-custodial parent of a dependent child 
receiving aid to families with dependent children (AFDC) under part A of 
title IV of the Social Security Act (42 U.S.C. 601, et seq.).
    Disability assistance means benefits offered pursuant to Title XVI 
of the Social Security Act, relating to the supplemental security income 
program.
    Federal contribution means the amount of the Federal component of 
cash payments to individuals within the participating State under 
welfare and/or disability assistance programs, including Part A of Title 
IV of the Social Security Act.



                Subpart B_Program Planning and Operation



Sec. 637.200  Allotments to States.

    (a) For each program year for which funds are appropriated to carry 
out programs under this part, the Secretary shall pay to each 
participating State the amount the State is eligible to receive in 
accordance with this part. No payments shall be made for any years for 
which funds are not appropriated and/or not available (section 502(a)).
    (b) If the appropriation is not sufficient to pay to each State the 
amount it is eligible to receive in accordance with this part, the State 
shall receive a percentage of the total available funds equal to the 
percentage of its bonus compared to the national total of bonuses 
(section 502(b)).
    (c) If an additional amount is made available after the application 
of paragraph (b) of this section, such additional amount shall be 
allocated among the States by increasing payment in the same manner as 
was used to reduce payment, except that no State shall be paid an amount 
which

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exceeds the amount to which it is eligible (section 502(c)).



Sec. 637.205  Notice of intent to participate.

    (a) Any State seeking to participate in the incentive bonus program 
shall notify the Secretary of its intent to do so no later than 30 days 
before the beginning of its first program year of participation (i.e., 
June 1) (section 505(a)).
    (b) Pursuant to instructions issued by the Secretary, the 
notification referenced in paragraph (a) of this section shall be in the 
form of a letter from the Governor to the Secretary advising the 
Secretary of the State's intention to apply for, receive and expend 
bonuses under this program in a manner consistent with this part 
(section 505(b)).
    (c) After the State's submission of a notice of intent to 
participate, incentive bonuses may be claimed by a State for any 
individual who:
    (1)(i) Was an absent parent of any child receiving AFDC at the time 
such individual was determined to be eligible for participation in 
programs under the Act;
    (ii) Has participated in education, training, or other activities 
(including the Job Corps) funded under the Act; and
    (iii) Pays child support for a child specified in paragraph (c)(1) 
of this sec-tion following termination from activities funded under the 
Act; or
    (2)(i) Is blind or disabled;
    (ii) Was receiving disability assistance at the time such individual 
was determined to be eligible for participation in programs under the 
Act;
    (iii) Has participated in education, training, or other activities 
(including the Job Corps) funded under the Act; and
    (iv) Earns from employment a wage or an income (section 506).
    (d) A Governor may withdraw the State's participation in the 
incentive bonus program in any program year by submitting a written 
notice of withdrawal.



Sec. 637.210  Incentive bonus program applications.

    (a) Any State seeking to receive an incentive bonus under this title 
shall submit an Incentive Bonus Program application pursuant to 
instructions issued by the Secretary that will contain the criteria for 
approval of such application. Each application shall contain, at a 
minimum, the following information:
    (1) A list of eligible individuals who met the requirements of Sec. 
637.220 of this part during the program year;
    (2) The amount of the incentive bonus attributable to each eligible 
individual who is claimed by the State; and
    (3) A statement certifying the availability of documentation to 
verify the eligibility of participants and the amount of the incentive 
bonus claimed by the State (section 505(b)).
    (b) The application for any program year shall be submitted by the 
State to the Secretary no later than August 31 following the end of the 
program year for which the bonus is being claimed. A copy of such 
application shall also be submitted at the same time to the appropriate 
DOL Employment and Training Administration Regional Office.



Sec. 637.215  Review and approval of applications for incentive bonus 
payments.

    (a) The Secretary shall review all applications for overall 
compliance with JTPA, the requirements of this part, and the 
instructions issued by the Secretary.
    (b) The Secretary shall inform a State within 30 days after receipt 
of the application whether or not its application has been approved.
    (c) If the application is not approved, the Department shall issue 
an initial notice of denial of payment indicating the reasons for such 
denial. The Governor will then have 30 days to respond to the reasons 
for the denial before a final decision is made.
    (d) If the Department determines that the additional information 
provided does not adequately respond to the questions raised in the 
initial review process, a final denial of payment shall be issued. The 
Governor may then appeal the decision in accordance with the procedures 
at subpart H of part 627 of this chapter (sections 504(c) and 505(c)).

[[Page 330]]



Sec. 637.220  Eligibility criteria for individuals to be counted in 
determining incentive bonuses.

    An individual shall be eligible to be counted as part of the State's 
request for an incentive bonus payment under this part if the 
individual:
    (a)(1) Was an absent parent of any child receiving AFDC at the time 
such individual was determined to be eligible for participation in 
programs under the Act;
    (2) Has participated in education, training, or other activities 
(including the Job Corps) funded under the Act; and
    (3) Pays child support for a child specified in paragraph (a)(1) of 
this section following termination from activities funded under the Act; 
or
    (b)(1) Is blind or disabled;
    (2) Was receiving disability assistance at the time such individual 
was determined to be eligible for participation in programs under the 
Act;
    (3) Has participated in education, training, or other activities 
(including the Job Corps) funded under the Act; and
    (4) Earns a wage or an income from employment (section 506).



Sec. 637.225  Determination of incentive bonus.

    The amount of the incentive bonus to be paid to each State shall be 
the total of the incentive bonuses claimed for each eligible individual 
within the State. The amount of the incentive bonus to be paid each 
State shall be determined by the sum of:
    (a) An amount equal to the total of the amounts of child support 
paid by each individual who is eligible under Sec. 637.220(a) of this 
part, for up to 2 years after such individual's termination from JTPA; 
and
    (b) An amount equal to the total reduction in the Federal 
contribution to the amounts received under title XVI of the Social 
Security Act (42 U.S.C. 1381, et seq.) by each individual who is 
eligible under Sec. 637.220(b) of this part, for up to 2 years after 
such individual's termination from JTPA (section 503).



Sec. 637.230  Use of incentive bonuses.

    (a) During any program year, the Governor may use an amount not to 
exceed 5 percent of the State's total bonus payment for the 
administrative costs incurred under this program, including data and 
information collection and compilation, recordkeeping, or the 
preparation of applications for incentive bonuses (section 
504(a)(1)(A)).
    (b) The remainder, not less than 95 percent of the incentive bonuses 
received, shall be distributed to SDAs and Job Corps Centers within the 
State in a manner consistent with an agreement between the Governor and 
these SDA's and centers. This agreement shall reflect an equitable 
method of distribution which is based on the degree to which the effort 
of the SDA and/or Center contributed to the State's qualification for 
incentive bonus funds under title V (section 504(a)(1)(B)).
    (c) Not more than 10 percent of the incentive bonus received in any 
program year by each SDA and/or Job Corps Center may be used for the 
administrative costs of establishing and maintaining systems necessary 
for operation of programs under title V, including the costs of 
providing incentive payments described in paragraph (d) of this section, 
technical assistance, data and information collection and compilation, 
management information systems, post-program followup activities, and 
research and evaluation activities (section 504(a)(2)).
    (d) Each SDA and/or Job Corps Center may make incentive payments to 
service providers, including participating State and local agencies, and 
community-based organizations, that demonstrate effectiveness in 
delivering employment and training services to eligible individuals 
under this title (section 504(b)).
    (e) All remaining funds received by each SDA shall be used for 
activities described in sections 204 and 264 of JTPA and shall be 
subject to the regulations governing the operation of programs under 
titles II-A and II-C of JTPA. All remaining funds received by each Job 
Corps Center shall be used for activities authorized under part B of 
title IV (section 504(a)(2).

[[Page 331]]



  Subpart C_Additional Title V Administrative Standards and Procedures



Sec. 637.300  Management systems, reporting and recordkeeping.

    (a) The Governor shall ensure that the State's financial management 
system and recordkeeping system comply with subpart D of part 627 of 
this chapter.
    (b) Notwithstanding the provisions of Sec. 629.455 of this chapter, 
the Governor shall report to the Secretary pursuant to instructions 
issued by the Secretary regarding activities funded under this part. 
Reports shall be required semi-annually and annually. Reports shall be 
provided to the Secretary within 45 calendar days after the end of the 
report period.
    (c) The Governor shall assure that appropriate and adequate records 
are maintained for the required time period to support all incentive 
bonus payment applications. Such records shall include documentation to 
support individuals' eligibility under this part.



Sec. 637.305  Federal monitoring and oversight.

    The Secretary shall conduct oversight of the programs and activities 
conducted in accordance with this part.



Sec. 637.310  Audits.

    The Governor shall ensure that the State complies with the audit 
provisions at Sec. 629.480 of this chapter.

Subpart D--Data Collection [Reserved]



PART 638_JOB CORPS PROGRAM UNDER TITLE IV-B OF THE JOB TRAINING 
PARTNERSHIP ACT--Table of Contents




                       Subpart A_Purpose and Scope

Sec.
638.100 General.

                          Subpart B_Definitions

638.200 Definitions.

      Subpart C_Funding, Site Selection, and Facilities Management

638.300 Eligibility for funds and eligible deliverers.
638.301 Funding procedures.
638.302 Performance measurement.
638.303 Site selection and facilities management.
638.304 Historical preservation.
638.305 Capital improvements.
638.306 Protection and maintenance of contract center facilities owned 
          or leased by Job Corps.
638.307 Facility surveys.

Subpart D_Enrollment, Transfers, Terminations, and Placements in the Job 
                                  Corps

638.400 Eligibility for participation.
638.401 Outreach and screening of participants.
638.402 Enrollment by readmission.
638.403 Selective Service.
638.404 Transfers.
638.405 Extensions of enrollment.
638.406 Federal status of students.
638.407 Terminations.
638.408 Transportation.
638.409 Placement and job development.

                       Subpart E_Center Operations

638.500 Orientation program.
638.501 Student handbook.
638.502 Job Corps basic education program.
638.503 Vocational training.
638.504 Occupational exploration program.
638.505 Scheduling of training.
638.506 Purchase of vocational supplies and equipment.
638.507 Work experience.
638.508 Sale of services or objects.
638.509 Leisure-time employment.
638.510 Health care and services.
638.511 Drug use and abuse.
638.512 Sexual behavior and harassment.
638.513 Death.
638.514 Residential support services.
638.515 Recreation/avocational program.
638.516 Laundry, mail, and telephone service.
638.517 Counseling.
638.518 Intergroup relations program.
638.519 Incentives system.
638.520 Student government and leadership programs.
638.521 Student welfare association.
638.522 Evaluation of student progress.
638.523 Food service.
638.524 Allowances and allotments.
638.525 Clothing.
638.526 Tort and other claims.
638.527 Federal employees' compensation.
638.528 Social Security.
638.529 Income taxes.

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638.530 Emergency use of personnel, equipment and facilities.
638.531 Limitation on the use of students in emergency projects.
638.532 Annual leave.
638.533 Other student absences.
638.534 Legal services to students.
638.535 Voting rights.
638.536 Religious rights.
638.537 Disclosure of information.
638.538 Disciplinary procedures and appeals.
638.539 Complaints and disputes.
638.540 Cooperation with agencies and institutions.
638.541 Job Corps training opportunities.
638.542 Child care services.
638.543 Community relations program.

           Subpart F_Applied Vocational Skills Training (VST)

638.600 Applied vocational skills training (VST) through work projects.
638.601 Applied VST budgeting.

      Subpart G_Experimental, Research, and Demonstration Projects

638.700 Experimental, research, and demonstration projects.

                   Subpart H_Administrative Provisions

638.800 Program management.
638.801 Staff training.
638.802 Student records management.
638.803 Safety.
638.804 Environmental health.
638.805 Security and law enforcement.
638.806 Property management and procurement.
638.807 Imprest and petty cash funds.
638.808 Center financial management and reporting.
638.809 Audit.
638.810 Reporting requirements.
638.811 Review and evaluation.
638.812 State and local taxation of Job Corps deliverers.
638.813 Nondiscrimination; nonsectarian activities.
638.814 Lobbying; political activities; unionization.
638.815 Charging fees.

    Authority: 29 U.S.C. 1579(a).

    Source: 55 FR 12996, Apr. 6, 1990, unless otherwise noted.



                       Subpart A_Purpose and Scope



Sec. 638.100  General.

    (a) Purpose and Scope. The purpose of this part is to delineate the 
policies, rules, and regulations that govern the operation of the Job 
Corps program, authorized under title IV-B of the Job Training 
Partnership Act (Act). Job Corps is one of the broad range of programs 
for youth authorized by the Act. Job Corps centers are located in both 
rural and urban areas and provide training, education, residential and a 
variety of other support services necessary to prepare students to 
become more responsible, productive, and employable. (Section 421)
    (b) Job Corps Policy and Requirements Handbook. The policies and 
procedures required in this part which are to be established by the Job 
Corps Director shall be contained in a policy and requirements handbook 
which shall be incorporated by reference in each contract or agreement 
to operate a Job Corps center, program, or entity.
    (c) Definitions. Definitions for terms used in this part are found 
in section 4 of the Act and in subpart B of this part. Statutory 
authority for the regulations in this part is found in section 169(a) of 
the Act (29 U.S.C. 1579(a)). Applicable statutory provisions, including 
sections of the Act other than section 169(a), are noted parenthetically 
in this part.



                          Subpart B_Definitions



Sec. 638.200  Definitions.

    In addition to the definitions contained in section 4 of the Act, 
the following definitions apply to programs under title IV-B of the Act 
and under this part:
    Absent Without Official Leave (AWOL) means the absence of a student 
without official leave. For purposes of tort claims, federal employees' 
compensation, pay status and leave accrual, a residential student is 
considered AWOL if AWOL for 24 continuous hours. A non-resident student 
is considered AWOL if AWOL for one full day of center training.
    Act means the Job Training Partnership Act.
    Allotment means:
    (1) A portion of the readjustment allowance prescribed by this part, 
which portion is paid monthly during the period of service of a student 
directly to a spouse of the student, to the child(ren) of the student, 
or to any other relative of the student who draws

[[Page 333]]

substantial support from the student; and
    (2) A supplement to the portion allotted by the student, made by the 
payment of an equal amount by DOL. (Section 429(d))
    Allowance means a benefit provided by DOL to students by cash, 
check, credit, voucher, direct provision, or otherwise for such personal 
travel, leave, quarters, subsistence, transportation, equipment, 
clothing, recreational services, and other expenses as the Job Corps 
Director may deem necessary or appropriate to the students' needs. 
(Section 429)
    Capital improvement means any modification, addition, restoration or 
other improvement:
    (1) Which increases the usefulness, productivity, or serviceable 
life of an existing site, facility, building, structure, or major item 
of equipment;
    (2) Which is classified for accounting purposes as a ``fixed 
asset''; and
    (3) The cost of which increases the recorded value of the existing 
building, site, facility, structure, or major item of equipment and is 
subject to depreciation.
    Center means an organizational entity, including all of its 
subparts, providing Job Corps training and designated as a Job Corps 
center by the Job Corps Director.
    Center Director means a center's chief official or the Center 
Director's designee.
    Center operator means an agency or contractor that runs a center 
under an agreement or contract with DOL.
    Center review board means the group at a center consisting of 
representatives from staff and students that reviews charges brought 
against students for infractions of center rules for which the penalty 
of termination might be imposed.
    Civilian Conservation Center (CCC) means a center operated on public 
land under an agreement between DOL and another federal agency, which 
shall provide, in addition to other training and assistance, programs of 
work experience to conserve, develop, or manage public natural resources 
or public recreational areas or to develop community projects in the 
public interest.
    Contract center means a center administered under a contract between 
Job Corps and a corporation, partnership, public agency, or similar 
legal entity.
    Contracting officer means a DOL official authorized to enter into 
contracts or agreements on behalf of DOL.
    Deliverer means any individual or organization that receives federal 
funds directly from DOL to establish, operate, or provide service to any 
Job Corps program or activity.
    Department of Labor (DOL) means the United States Department of 
Labor, including its agencies and organizational units.
    Disruptive home life means a home life characterized by such 
conditions as:
    (1) The youth is living in an orphanage or other protective 
institution;
    (2) The youth is suffering from serious parental or familial neglect 
or abuse; or
    (3) The youth's father, mother, or legal guardian is a chronic 
invalid, alcoholic, narcotics addict, or has any other serious health 
condition.
    Economically disadvantaged means an individual who:
    (1) Receives, or is a member of a family which receives, cash 
welfare payments under a Federal, State, or local welfare program;
    (2) Has, or is a member of a family which has received a total 
income for the 6-month (annualized) period prior to application to the 
program which, in relation to family size or for an individual, was not 
in excess of the higher of:
    (i) The poverty level determined in accordance with criteria 
established by the Department of Health and Human Services; or
    (ii) 70 percent of the lower living standard income level;
    (3) Is receiving (or has been determined within the 6-month period 
prior to the application for the program involved to be eligible to 
receive) food stamps pursuant to the Food Stamp Act of 1977, as 
administered by the U.S. Department of Agriculture;
    (4) Is a foster child on behalf of whom State or local government 
payments are made; or
    (5) Is an individual with handicaps whose own income meets the 
requirements of paragraphs (1) or (2) of this

[[Page 334]]

definition, but who may be a member of a family whose income does not 
meet such requirements.
    Employment and Training Administration (ETA) means the agency within 
DOL which includes the Job Corps.
    Enrollee means a student.
    Enrollment means:
    (1) For resident students, the period of time from the date the 
student leaves home to begin government-authorized travel to the 
assigned center to the date of the scheduled arrival at the official 
travel destination authorized by the Center Director upon termination 
from Job Corps; and
    (2) For nonresident students, the period of time from the time the 
student arrives at any center activity or program until he or she 
physically leaves such activity or program.
    Environmental health program means the center program of health, 
safety, and prevention of environmental hazards for staff and students.
    Facility survey means a review of center facilities conducted by 
professional architects and/or engineers to establish the condition of a 
facility and determine repairs, alterations, or replacement, if any, 
necessary to meet health and safety, building code or programmatic 
requirements.
    Family means persons living in a single residence who are related by 
blood, marriage, or decrees of court and are included in one or more the 
following categories:
    (1) A husband, wife and dependent children,
    (2) A parent or guardian and dependent children, and
    (3) A husband and wife. A step-child or step-parent is considered to 
be related by marriage.
    Finance center means the agency or contractor which handles the 
payment of student allowances, allotments, and transportation charges.
    Imprest fund means a cash fund of a fixed amount established by an 
advance of funds, without charge to an appropriation, from an agency 
finance or disbursing officer to a duly appointed cashier, for 
disbursement as needed from time to time in making payment in cash for 
relatively small purchases. Imprest funds occur only at CCCs. (For 
contract centers, see definition of ``petty cash fund''.)
    Income means all income actually received from all sources by an 
individual or, in the case of a family, by all members of the family for 
the 6-month (annualized) period prior to application. Family size is the 
maximum number of family members during the 6-month period prior to 
application. When computing family income, income of a spouse and other 
family members is counted for the portion of the 6-month (annualized) 
period prior to application that the person was actually a member of the 
family.
    (1) For the purpose of determining an individual's eligibility for 
participation in the Job Corps program, family income includes:
    (i) Gross wages, including wages from community service employment 
(CSE), work experience, and on-the-job training (OJT) paid from Job 
Training Partnership Act funds, and salaries (before deductions);
    (ii) Net self-employment income (gross receipts minus operating 
expenses); and
    (iii) Other money income received from sources such as interest, net 
rents, OASI (Old Age and Survivors Insurance) social security benefits, 
pensions, alimony, and periodic income from insurance policy annuities, 
and other sources of income.
    (2) Family income does not include:
    (i) Non-cash income such as food stamps or compensation received in 
the form of food or housing;
    (ii) Imputed value of owner-occupied property, i.e., rental value;
    (iii) Public assistance payments;
    (iv) Cash payments received pursuant to a State plan approved under 
title I, IV, X, or XVI of the Social Security Act, or disability 
insurance payments received under title II of the Social Security Act;
    (v) Federal, State, or local unemployment benefits;
    (vi) Capital gains and losses;
    (vii) One-time unearned income, such as, but not limited to:
    (A) Payments received for a limited fixed term under income 
maintenance programs and supplemental (private) unemployment benefits 
plans;

[[Page 335]]

    (B) One-time or fixed-term scholarship or fellowship grants;
    (C) Accident, health, and casualty insurance proceeds;
    (D) Disability and death payments including fixed-term (but not 
lifetime) life insurance annuities and death benefits;
    (E) One-time award and gifts;
    (F) Inheritance, including fixed-term annuities;
    (G) Fixed-term workers compensation awards;
    (H) Soil bank payments; and
    (I) Agricultural crop stabilization payments;
    (viii) Pay or allowance which were previously received by any 
veteran while serving on active duty in the Armed Forces;
    (ix) Educational assistance and compensation payments to veterans 
and other eligible persons under chapters 11, 13, 31, 34, 35, and 36, of 
title 38, U.S. Code;
    (x) Payments made under the Trade Act of 1974;
    (xi) Payments received under the Black Lung Benefits Act (30 U.S.C. 
901 et seq.);
    (xii) Any income directly or indirectly derived from, or arising out 
of, any property held by the United States in trust for any Indian 
tribe, band, or group or any individual; per capita payments; and 
services, compensation or funds provided by the United States in 
accordance with, or generated by, the exercise of any right guaranteed 
or protected by treaty; and any property distributed or income derived 
therefrom, or any amounts paid to or for the legatees or next of kin of 
any member, derived from or arising out of the settlement of an Indian 
claim; and
    (xiii) Child support payments.
    Individual means a person who lives alone, or who lives with 
unrelated individuals, or who lives in a single residence where no 
family member claims that person as a dependent. An individual with 
disabilities has an option of applying and being considered as a member 
of a family or as an individual.
    Individual with disabilities means any person within the definition 
at 29 CFR part 33 or 34 or 41 CFR part 60-741 as applicable. Although 
the definition employs the plural form ``disabilities,'' and individual 
with a single impairment is covered within the definition. See 
Sec. Sec. 638.539(g) and 638.811(a).
    Interagency Agreement means that formal agreement between DOL and 
another Federal agency administering and operating centers. This 
agreement establishes procedures for the funding, administration, 
operation, and review of those centers as well as the resolution of any 
disputes.
    Job Corps means the agency of the Department of Labor established by 
section 422 of the Job Training Partnership Act (JTPA) (29 U.S.C. 1692) 
to perform those functions of the Secretary of Labor set forth in title 
IV-B of JTPA (29 U.S.C. 1691 et seq.).
    Job Corps Director means the chief official of the Job Corps or the 
Job Corps Director's designee.
    Leisure-time employment means part-time paid employment of students.
    Lower living standard income level means the income level (adjusted 
for regional, metropolitan, urban, and rural differences and family 
size) determined annually by the Secretary based on the most recent 
``lower living family budget'' issued by the Secretary.
    Maximum benefits means the apportioning of various segments of Job 
Corps training so that individual needs of each student are met and the 
student achieves as much benefit from the Job Corps as his or her 
abilities allow.
    National office means the national office of Job Corps.
    National training contractor means a labor union, union-affiliated 
organization, business organization, or a combination thereof, having 
contracts with the national office (or in the case of CCCs, a Federal 
agency at the national level) to provide vocational training, placement, 
or other services under a single contract including multi-area 
operations.
    Occupational exploration program means the center program whereby a 
student is made aware of the vocational training opportunities made 
available by the center in order for the student to make an informed 
vocational selection.
    Operational support services means activities or services required 
for the operation of Job Corps, such as outreach

[[Page 336]]

and screening services, contracted vocational training and off-center 
educational training, placement services, certain health services, and 
miscellaneous logistical services.
    Petty cash fund means a cash fund of a fixed amount from a contract 
center finance or disbursing officer to a contract center's duly 
appointed cashier, for disbursement as needed from time to time in 
making payment in cash for relatively small purchases. Petty cash funds 
occur at contract centers. (For CCCs, see definition of ``imprest 
fund''.)
    Placement means student employment, entry into the Armed Forces, or 
enrollment in other training or education programs, within six months 
following termination from Job Corps (or such other period as may be 
announced by the Job Corps Director by notice in the Federal Register).
    Placement agency means an organization acting pursuant to a contract 
with Job Corps that provides placement services to students.
    Poverty level means the annual income level at or below which 
families are considered to live in poverty, as annually determined by 
the Department of Health and Human Services.
    Readjustment allowance means the money accumulated by and reserved 
for each student on a monthly basis during tenure in Job Corps that is 
paid in a lump sum after termination.
    Readmission means re-enrollment of a student who has previously been 
enrolled in Job Corps for less than 24 months and applies for 
reenrollment to the basic program and can be expected to complete a 
program within the remaining portion of the youth's 24-month enrollment 
period.
    Regional appeal board means the board designated by the Regional 
Director in a regional office that considers student appeals of 
disciplinary discharges.
    Regional Director means the chief official of a regional office or 
the Regional Director's designee.
    Regional office means a regional office of Job Corps.
    Regional Solicitor means the chief official of a regional office of 
the DOL Office of the Solicitor or the Regional Solicitor's designee.
    Screening agency means an organization acting pursuant to a contract 
with the Job Corps that performs outreach, screens, and enrolls youth 
into Job Corps.
    Secretary means the Secretary of Labor (the chief official of DOL) 
or the Secretary's designee.
    Site survey means a survey of a potential location for a center that 
includes a preliminary engineering evaluation of the condition and 
capacity of existing buildings, pavements, utility systems, installed 
equipment, and all other real property components as well as a 
preliminary cost estimate for acquisition of facilities, necessary 
rehabilitation, modification, and new construction required that would, 
among other considerations, take into account structural accessibility 
for persons with handicaps.
    State means one of the several States, the District of Columbia, the 
Commonwealth of Puerto Rico, the United States Virgin Islands, Guam, the 
Commonwealth of the Northern Mariana Islands, American Samoa, the 
Federated States of Micronesia, the Republic of the Marshall Islands, 
and the Republic of Palau/Trust Territory.
    Student means an individual who is enrolled in Job Corps.
    Student handbook means the document developed by the center operator 
and given to each student during orientation that outlines center 
services, rules, and regulations and student rights and 
responsibilities. See Sec. 638.501 of this part.
    Termination means the act of officially ending a student's 
enrollment in Job Corps for any reason.
    Transfer means the reassignment of a student from one center to 
another.
    Unauthorized goods means firearms and ammunition; explosives and 
incendiaries; knives with blades longer than 2'' (two inches); homemade 
weapons; all other weapons and instruments used primarily to inflict 
personal injury; stolen property; drugs, including alcohol, marijuana, 
depressants, stimulants, hallucinogens, tranquilizers, and drug 
paraphernalia except for drugs and/or paraphernalia that are prescribed 
for medical reasons; and any other goods prohibited by the center 
operator in the student handbook.

[[Page 337]]

    Utilization study means an architectural/engineering report which is 
developed subsequent to a site survey or assessment after the regional 
and national offices have agreed, on the basis of the site survey, that 
the site is potentially favorable for a center. After the utilization 
study is approved by the Job Corps Director it becomes the basis for 
scope of work, budget, design, rehabilitation, and construction of 
facilities for the center.
    Vocational skills training (VST) means activities that provide 
vocational instruction to students through actual construction or 
improvement of permanent facilities or other approved projects.
    Work experience program means a program for assignment of a student 
to an actual job situation, either on-center or off-center, for the 
purpose of enhancing a student's employability. Work experience 
requiring the student to work over 25 hours per week is subject to the 
provisions of the Fair Labor Standards Act and State and local minimum 
wage laws for hours worked in excess of 25 hours per week.

[55 FR 12996, Apr. 6, 1990, as amended at 58 FR 69099, Dec. 29, 1993]



      Subpart C_Funding, Site Selection, and Facilities Management



Sec. 638.300  Eligibility for funds and eligible deliverers.

    (a) Funds shall be made available by the Secretary to eligible 
deliverers for the operation of centers and for the provision of Job 
Corps operational support services.
    (b) Eligible deliverers for the operation of centers and for the 
operational support services necessary to center operation shall be 
units of Federal, State, and local government, State and local public 
agencies, private-for-profit and nonprofit organizations, Indian tribes 
and organizations, and labor unions, union-affiliated, and union/
management organizations.



Sec. 638.301  Funding procedures.

    (a) Contracting officers shall request proposals for the operation 
of all contract centers and for provision of operational support 
services, pursuant to the Federal Acquisition Regulation (48 CFR chapter 
1) and the DOL Acquisition Regulation (48 CFR chapter 29) for work to be 
done under contract. The requests for proposal for each contract center 
and for each operational support service contract shall describe 
specifications and standards unique to the operation of the center and 
for the provision of operational support services.
    (b) Job Corps contract center operators shall be selected and funded 
on the basis of proposals received, according to criteria established by 
the Job Corps Director. Such criteria shall be listed in the request for 
proposals.
    (c) The contracting officer shall negotiate with eligible deliverers 
for operational support services on the basis of the criteria developed 
for each specific service to be rendered. Such criteria shall be listed 
in the request for proposals.
    (d) The Secretary may enter into interagency agreements with 
eligible deliverers that are Federal agencies for the funding, 
establishment, and operation of CCCs. Such interagency agreements shall 
ensure compliance by such Federal agencies with the regulations under 
this part.
    (e) Job Corps payments to Federal agencies that operate CCCs shall 
be made by a transfer of obligational authority from DOL to the 
respective operating agency on a quarterly basis.
    (f) The Secretary is authorized to expend funds made available for 
Job Corps for the purpose of printing, binding, and disseminating data 
and other information related to Job Corps to public agencies, private 
organizations, and the general public. (Section 438(3)(A))
    (g) Notwithstanding the limitations of titles II, III, and IV of the 
Act, funds made available under those titles and transferred to the Job 
Corps program pursuant to Sec. 638.541 of this part may be used for the 
Job Corps program in accordance with the provisions of this part. 
(Sections 427(b) and 439)
    (h) (1) In accordance with this section and procedures established 
by the Job Corps Director, the contracting officers shall enter into 
contracts with public or private (including nonprofit) entities for the 
provision of outreach and

[[Page 338]]

screening services, which shall be performed in accordance with Sec. 
638.402 of this part and procedures established by the Job Corps 
Director. (Sections 424 and 425)
    (2) In accordance with this section and procedures established by 
the Job Corps Director, the contracting officers shall enter into 
contracts with public or private (including nonprofit) entities for the 
provision of placement services, which shall be performed in accordance 
with Sec. 638.409 of this part and procedures established by the Job 
Corps Director.
    (i) All agreements and contracts pursuant to this section shall be 
made pursuant to the Federal Property and Administrative Services Act of 
1949, as amended; the Federal Grant and Cooperative Agreement Act of 
1977; and the Federal Acquisition Regulation (48 CFR chapter 1) and the 
DOL Acquisition Regulation (48 CFR chapter 29).
    (j) All Job Corps contractors shall be provided with an equitable 
and negotiated management fee of not less than 1 percent of the contract 
amount.

[55 FR 12996, Apr. 6, 1990, as amended at 58 FR 69100, Dec. 29, 1993]



Sec. 638.302  Performance measurement.

    The Job Corps Director shall establish a national performance 
measurement system for centers and other program components which shall 
include annual performance standards.

[58 FR 69100, Dec. 29, 1993]



Sec. 638.303  Site selection and facilities management.

    (a) The Job Corps Director shall approve the location and size of 
all centers.
    (b) Contract centers shall be established, relocated or expanded in 
accordance with procedures established by the Job Corps Director.
    (c) For federally-operated centers, either the Job Corps Director or 
a Federal agency may propose a site on public lands and if discussions 
between them establish the advisability of such, the Job Corps Director 
may require that the agency submit a site survey and utilization study. 
If the Job Corps Director decides to establish a center, facilities 
engineering and real estate management will be conducted by the Job 
Corps Director or by the Federal agency pursuant to an interagency 
agreement and this part.



Sec. 638.304  Historical preservation.

    The Job Corps Director shall review the ``National Register of 
Historic Places,'' issued by the National Park Service, to identify 
sites, buildings, structures, and objects of archeological, 
architectural, or historic significance which could be destroyed or 
adversely affected by any proposed project or site selection. Procedures 
for review are included in the ``National Register of Historic Places'' 
at 36 CFR part 800.



Sec. 638.305  Capital improvements.

    Capital improvement projects and new construction on Job Corps 
Centers shall be requested and performed in accordance with procedures 
established by the Job Corps Director.



Sec. 638.306  Protection and maintenance of contract center facilities 
owned or leased by Job Corps.

    The Job Corps Director shall establish procedures for the protection 
and maintenance of contract center facilities owned or leased by Job 
Corps which shall be consistent with Federal Property Management 
Regulations at 41 CFR chapter 101.



Sec. 638.307  Facility surveys.

    The Job Corps Director shall issue procedures to conduct periodic 
facility surveys of centers.



Subpart D_Enrollment, Transfers, Terminations, and Placements in the Job 
                                  Corps



Sec. 638.400  Eligibility for participation.

    To participate in the Job Corps, a young man or woman must be an 
eligible youth who:
    (a) Is at least 16 and not yet 25 years of age at the time of 
enrollment, with the following exceptions:
    (1) In the case of an otherwise eligible individual with 
disabilities, there is no upper age limit;

[[Page 339]]

    (2) Not more than 20 percent of the individuals enrolled by Job 
Corps may be ages 22 through 24; and
    (3) Youths 14 to 15 years of age may be eligible for enrollment upon 
a specific determination by the Job Corps Director to enroll them;
    (b) Is a United States citizen, United States national, a lawfully 
admitted permanent resident alien, a lawfully admitted refugee or 
parolee, or other alien who has been permitted to accept permanent 
employment in the United States by the Attorney General or the 
Immigration and Naturalization Service;
    (c) Requires additional education, training, or intensive counseling 
and related assistance in order to secure and hold meaningful 
employment, participate successfully in regular school work, qualify for 
other suitable training programs, satisfy Armed Forces entry 
requirements, or qualify for a job where prior skill or training is a 
prerequisite;
    (d) Is economically disadvantaged;
    (e) Has sufficient ability to benefit from the program;
    (f) Demonstrates an interest in obtaining the maximum benefit from 
the program, as evidenced by a voluntary desire to enroll and the 
youth's signature on the application form;
    (g) Has a signed consent for enrollment from a responsible parent or 
guardian if the applicant is unemancipated and under the age of majority 
(unless the parent or guardian cannot be located), pursuant to 
applicable laws on age of majority and emancipation of minors;
    (h) Has established suitable arrangements for the care of any 
dependent children for the proposed period of enrollment;
    (i) Is not on probation, parole, or under a suspended sentence, or 
under the supervision of any agency as a result of court action or 
institutionalization, unless the court or other appropriate agency 
certifies in writing that release from the supervision of the agency is 
satisfactory to the agency and does not violate applicable laws and 
regulations;
    (j) To qualify for residential training, is currently living in an 
environment so characterized by cultural deprivations, a disruptive 
homelife, or other disorienting conditions as to substantially impair 
prospects for successful participation in a nonresidential program 
providing appropriate training, education, or assistance;
    (k) Is physically and emotionally able to participate in normal Job 
Corps duties without costly or extensive medical treatment;
    (1) Is free of any behavioral problem that would potentially prevent 
other enrollees from receiving the benefit of the program, or impede 
satisfactory relationships between the center to which the enrollee is 
assigned and surrounding communities; and
    (m) Has a background, characteristics, and physical and mental 
capabilities which provide reasonable expectations of employment after 
training.

[55 FR 12996, Apr. 6, 1990, as amended at 58 FR 69100, Dec. 29, 1993]



Sec. 638.401  Outreach and screening of participants.

    In accordance with procedures issued by the Job Corps Director:
    (a) The Regional Director, as contracting officer, shall contract 
with screening agencies, which shall perform Job Corps outreach and 
screening functions.
    (b) Screening agencies shall develop outreach and referral sources, 
actively seek out potential applicants, conduct personal interviews with 
all applicants, and determine who are interested and likely Job Corps 
participants. See also Sec. 638.541 of this part.
    (c) Screening agencies shall complete all Job Corps application 
forms.
    (1) Except as provided in paragraph (c)(2) of this section, 
screening agencies shall determine whether applicants meet the 
eligibility criteria in Sec. 638.400 of this part for participation in 
the Job Corps.
    (2) The Job Corps Director may provide that determinations with 
respect to one or more of the eligibility criteria set forth in Sec. 
638.400 of this part shall be made by the Regional Director on the basis 
of information and recommendations supplied by the screening agency.
    (3) An applicant for participation in the Job Corps who has been 
determined

[[Page 340]]

ineligible may appeal that determination pursuant to Sec. 638.539 of 
this part. (Sections 423, 424, 425, and 144(a))
    (d) In enrolling individuals who are to be nonresidential 
participants, priority shall be given to those eligible individuals who 
are single parents with dependent children.

[55 FR 12996, Apr. 6, 1990, as amended at 58 FR 69100, Dec. 29, 1993]



Sec. 638.402  Enrollment by readmission.

    Procedures for screening and selection of applicants for readmission 
shall be issued by the Job Corps Director.



Sec. 638.403  Selective Service.

    The Job Corps Director shall develop procedures to ensure that as a 
condition of enrollment and continued enrollment:
    (a) Each male applicant 18 years of age or older has evidence that 
he has complied with section 3 of the Military Selective Service Act (50 
U.S.C. App. 453), by presenting and submitting to registration if 
required pursuant to such section; and
    (b) When a male student turns 18 years of age after enrollment, he 
submits to the center operator evidence that he has complied with 
section 3 of the Military Selective Service Act (50 U.S.C. App. 453), by 
presenting and submitting to registration if required pursuant to such 
section. (Section 504)



Sec. 638.404  Transfers.

    Transfer of a student from one center of assignment to another 
center shall be made only in accordance with procedures issued by the 
Job Corps Director.



Sec. 638.405  Extensions of enrollment.

    The center operator shall see that the total length of enrollment of 
a student does not exceed two years (section 426(a)) except that an 
extension of enrollment may be authorized in accordance with procedures 
issued by the Job Corps Director. Students enrolled in advanced career 
training programs may be enrolled up to one additional year. (Section 
428(d)(1))



Sec. 638.406  Federal status of students.

    Students shall not be deemed Federal employees and shall not be 
subject to the provisions of law relating to Federal employment, 
including those relating to hours of work, rates of employment, leave, 
unemployment compensation, and Federal employee benefits, except as 
provided by 5 U.S.C. 8143(a) (Federal employees' compensation) and by 
Sec. Sec. 638.526 and 638.527 of this part. (Section 436(a))



Sec. 638.407  Terminations.

    The Job Corps Director shall issue procedures for the termination of 
students.



Sec. 638.408  Transportation.

    The transportation of students to and from centers shall occur in 
accordance with procedures issued by the Job Corps Director.



Sec. 638.409  Placement and job development.

    The overall objective of all Job Corps activities shall be to 
enhance each student's employability and to effect the successful 
placement of each student. Placement efforts shall concentrate on jobs 
related to a student's vocational training, on military service when 
this is the student's choice, or on acceptance and placement in other 
educational and/or training programs. The placement of students shall be 
performed in accordance with procedures issued by the Job Corps 
Director.
    (a) The Regional Director, as contracting officer, shall contract 
with placement agencies, which shall perform placement functions.
    (b) Placement agencies shall complete all Job Corps placement forms.



                       Subpart E_Center Operations



Sec. 638.500  Orientation program.

    The center operator shall design and implement a reception and 
orientation program in accordance with procedures issued by the Job 
Corps Director.



Sec. 638.501  Student handbook.

    Each center operator shall develop a student handbook which provides 
essential information to students for distribution to all students in 
accordance with procedures issued by the Job Corps Director.

[[Page 341]]



Sec. 638.502  Job Corps basic education program.

    The Job Corps Director shall prescribe or provide for basic 
education curricula to be used at centers. Students are considered to be 
in-school youths. The Job Corps Director, in coordination with regional 
offices, shall review and approve the basic education program at each 
center. Center operators shall provide the following educational 
programs at a minimum:
    (a) Reading and language skills;
    (b) Mathematics;
    (c) A program to prepare eligible students for the American Council 
on Education Tests of General Educational Development (GED);
    (d) World of work;
    (e) Health education;
    (f) Driver education; and
    (g) English as a second language (ESL) programs for selected center 
operators (regional offices shall arrange for the assignment of selected 
applicants needing ESL programs to the centers where such programs are 
available).



Sec. 638.503  Vocational training.

    (a) Each center shall provide enrollees with competency-based or 
individualized training in an area which will best contribute to the 
student's opportunities for permanent long-term employment. Specific 
vocational training programs offered at individual centers will be 
subject to the approval of the Job Corps Director in accordance with 
policies issued by the Job Corps Director.
    (b) The Job Corps Director may determine that it is appropriate to 
contract for vocational training programs at specific centers with 
national business, union, or union-affiliated organizations in order to 
facilitate entry of students into the workforce. All agreements with 
these national training contractors will be contracted at the national 
level in accordance with policies issued by the Job Corps Director; the 
Federal Acquisition Regulation (48 CFR chapter 1); the DOL Acquisition 
Regulation (48 CFR chapter 29); and, if CCCs, interagency agreements.



Sec. 638.504  Occupational exploration program.

    An occupational exploration program shall be provided by all centers 
in accordance with procedures issued by the Job Corps Director.



Sec. 638.505  Scheduling of training.

    The amount of time for each student's education and vocational 
training shall be apportioned to the individual needs of each student 
pursuant to procedures developed by the Job Corps Director.



Sec. 638.506  Purchase of vocational supplies and equipment.

    The Job Corps Director shall develop procedures for the low-cost 
sale to students of vocational tools, clothing, and other equipment that 
are prerequisites to employment.



Sec. 638.507  Work experience.

    (a) The center operator shall emphasize and implement programs of 
work experience for students through center program activities or 
through arrangement with employers. Work experience shall be under 
actual working conditions and should enhance the employability, 
responsibility, and confidence of the students.
    (b) The following limitations shall be observed in establishing work 
experience programs:
    (1) Students shall only be assigned to work meeting the safety 
standards of Sec. 638.803 of this part.
    (2) Any work experience arranged for employment not covered by a 
Federal, State, or local minimum wage law shall have prior regional 
office approval.
    (3) When work experience with pay is arranged, the student, for 
applicable wage provisions of the Davis-Bacon Act, the Fair Labor 
Standards Act, the Service Contract Act, and other applicable minimum 
wage laws, shall be considered a joint employee of the Job Corps and the 
work experience employer.
    (i) The wages paid by Job Corps (including the reasonable cost to 
Job Corps of room, board, and other facilities, as well as clothing and 
living allowances) shall be no less than the federal minimum wage rate 
set forth in

[[Page 342]]

section (6)(a)(1) of the Fair Labor Standards Act (FLSA) for up to 25 
hours a week. The work experience employer shall pay the student, in 
cash, any wages above the FLSA minimum whenever such additional amounts 
are required by the Davis-Bacon Act, the Service Contract Act, the State 
or local minimum wage law, or other applicable minimum wage law. For any 
time in excess of 25 hours per week, the work experience employer shall 
pay the student, in cash, no less than the entire wage at the wage rate 
required by applicable law.
    (ii) In addition to the cash wages required to be paid by work 
experience employers by paragraph (b)(3)(i) of this section, work 
experience employers, after the first six weeks of work by a student, 
shall also pay additional cash wages to the student at an hourly rate of 
25 percent of the wage set forth in section 6(a)(1) of the Fair Labor 
Standards Act.



Sec. 638.508  Sale of services or objects.

    The services rendered or objects produced at the center may be sold 
at cost to students or center employees, but shall not be sold in the 
community unless such services or products do not displace workers in 
the local community or result in the sale of products which compete with 
local merchants.



Sec. 638.509  Leisure-time employment.

    A center operator may authorize gainful leisure time employment of 
students as long as such employment does not interfere with required 
scheduled activities.



Sec. 638.510  Health care and services.

    The center operator shall provide a health program, including basic 
medical, dental, and mental health services, for all students from 
admission until termination from the Job Corps. The program shall be 
developed in accordance with procedures issued by the Job Corps 
Director.



Sec. 638.511  Drug use and abuse.

    The Job Corps Director shall develop procedures to ensure that each 
center operator offers students counseling and education programs 
related to drug and alcohol use and abuse.



Sec. 638.512  Sexual behavior and harassment.

    The Job Corps Director shall develop procedures to ensure that 
center operators establish rules concerning sexual behavior and 
harassment. See also Sec. Sec. 638.539(g) and 638.813(a) of this part.



Sec. 638.513  Death.

    In each case of student death, the center operator shall follow 
procedures established by the Job Corps Director, including notification 
of next of kin and for disposition of remains. See also Sec. 638.524(d) 
of this part.



Sec. 638.514  Residential support services.

    The center operator shall provide for residential support services 
structured as an integral part of the overall training program. This 
service shall include a secure, attractive physical and social 
environment, seven days a week, 24 hours a day, designed to enhance 
learning and personal development. All students, including nonresidents 
while they are on-center, shall be provided with the full program of 
applicable services in accordance with procedures issued by the Job 
Corps Director.



Sec. 638.515  Recreation/avocational program.

    The center operator shall develop a recreation/avocational program 
in accordance with procedures issued by the Job Corps Director.



Sec. 638.516  Laundry, mail, and telephone service.

    (a) The center operator shall provide adequate laundry services and 
supplies at no cost to students. Students shall be encouraged to 
launder, iron, and repair their personal clothing.
    (b) The center operator shall establish a system for prompt delivery 
of mail received by students in a manner that protects the 
confidentiality of such mail, and shall arrange for a sufficient number 
of conveniently located pay telephones for student use.



Sec. 638.517  Counseling.

    The center operator shall establish and conduct an ongoing 
structured counseling program in accordance with procedures issued by 
the Job Corps Director.

[[Page 343]]



Sec. 638.518  Intergroup relations program.

    The center operator shall conduct a structured intergroup relations 
program designed to reduce prejudice, prevent discriminatory behavior by 
staff and students, and increase understanding among racial/ethnic 
groups and between men and women. The program shall be developed in 
accordance with procedures issued by the Job Corps Director.



Sec. 638.519  Incentives system.

    The center operator shall establish and maintain its own incentives 
system for students in accordance with procedures established by the Job 
Corps Director.



Sec. 638.520  Student government and leadership programs.

    The center operator shall establish an elected student government 
and student leadership program in accordance with procedures established 
by the Job Corps Director.



Sec. 638.521  Student welfare association.

    The center operator shall develop a plan for the organization and 
operation of a student welfare association, to be run by an elected 
student government for the benefit of all students and with the help of 
a center staff advisor. This plan shall be developed in accordance with 
procedures issued by the Job Corps Director.
    (a) Student welfare association revenues may be derived from such 
sources as snack bars, vending machines, disciplinary fines, etc.
    (b) Student welfare association activities shall be funded from 
student welfare association revenues.



Sec. 638.522  Evaluation of student progress.

    The center operator shall implement a system to evaluate the 
progress of each student in receiving the maximum benefit from the 
program. The system shall be developed in accordance with procedures 
issued by the Job Corps Director.



Sec. 638.523  Food service.

    (a) The center operator shall ensure that meals for students are 
nutritionally well-balanced, of good quality, and sufficient in 
quantity, in accordance with procedures issued by the Job Corps 
Director. Food shall be prepared and served in a sanitary manner.
    (b) Non-students shall be charged for food provided for them unless 
prior regional office approval has been obtained. Such charges shall be 
sufficient to cover the cost of the food and its preparation.



Sec. 638.524  Allowances and allotments.

    (a) The Secretary shall periodically establish rates of allowances 
and allotments to be paid students pursuant to section 429 (a), (c), and 
(d) of the Act, and the Job Corps Director shall publish these rates as 
a notice in the Federal Register.
    (b) The Job Corps Director shall ensure that each student receives a 
readjustment allowance for each paid day of satisfactory participation 
in Job Corps after termination from the program if he/she terminates 
after 210 days in pay status or after 180 days if he/she is a maximum 
benefits or vocational completer. In the event that a student receives a 
medical termination, he/she shall be eligible for the accrued 
readjustment allowance, regardless of length of stay or other 
considerations. See also paragraph (d) of this section. (Section 
429(c)).
    (c) The Job Corps Director shall establish procedures to allow 
students to authorize deductions from their readjustment allowance, 
which shall be matched by an equal amount from Job Corps funds and sent 
biweekly as an allotment by the SPAMIS Data Center to the student's 
spouse, child(ren) or other dependent, if such spouse, child(ren) or 
other dependent resides in any State in the United States.
    (d) In the event of a student's death, any amount due, including the 
amount of any unpaid readjustment allowance, shall be paid in accordance 
with provisions of 5 U.S.C. 5582 (designation of beneficiary; order of 
precedence). (Section 429(c))

[55 FR 12996, Apr. 6, 1990, as amended at 60 FR 18993, Apr. 14, 1995]



Sec. 638.525  Clothing.

    The Job Corps Director shall establish procedures to provide 
clothing for

[[Page 344]]

all students by means of a clothing purchase allowance and by center 
issue.



Sec. 638.526  Tort and other claims.

    (a) Students shall be considered federal employees for purposes of 
the Tort Claims Act (28 U.S.C. 2671 et seq.). (Section 436(a)(3)). In 
the event a student is alleged to be involved in the damage, loss, or 
destruction of the property of others, or of causing personal injury to 
or the death of other individual(s), claims may be filed with the Center 
Director by the owner(s) of the property, the injured person(s), or by a 
duly authorized agent or legal representative of the claimant. The 
Center Director shall collect all of the facts, including accident and 
medical reports and the names and addresses of witnesses, and submit the 
claim for a decision to the DOL Regional Solicitor's Office. All tort 
claims for $25,000 or more shall be sent to the Associate Solicitor for 
Employee Benefits, U.S. Department of Labor, 200 Constitution Avenue, 
NW., Washington, DC 20210.
    (b) Whenever there is loss or damage to persons or property, which 
is believed to have resulted from operation of a Job Corps center and to 
be a proper charge against the Federal Government, a claim for such 
damage may be submitted by the owner(s) of the property, the injured 
person(s), or by a duly authorized agent or legal representative of the 
claimant to the Regional Solicitor, who shall determine if the claim is 
cognizable under the Tort Claims Act. Claims shall be filed no later 
than two years from the date of such loss or damage. If it is determined 
not to be cognizable, the Regional Solicitor shall consider the facts 
and may settle the claim pursuant to section 436(b) of the Act in an 
amount not to exceed $1,500.
    (c) The Job Corps may pay claims to students for lost, damaged, or 
stolen property, up to a maximum set by the Job Corps Director when such 
loss is not due to the negligence of the student. Students shall file 
claims no later than two years from the date of such loss. Students 
shall be compensated for losses when they are the result of a natural 
disaster or when the student's property is in the protective custody of 
the Job Corps, which shall be the case when the student is AWOL. The Job 
Corps Director shall provide for claims to be filed with regional 
offices for a determination on the claim. The regional office shall 
promptly notify the student and the center of its determination.



Sec. 638.527  Federal employees' compensation.

    (a) Students shall be considered federal employees for purposes of 
Federal employees' compensation (FEC). (Section 436(a)(2))
    (b) Resident students shall be considered to be in the ``performance 
of duty'' as Federal employees from the date they leave their homes and 
begin authorized travel to their center of assignment until the date of 
their scheduled arrival at the official travel destination upon the 
termination from Job Corps. During this period the youths shall be known 
as students, and this period shall constitute their period of 
enrollment. During this period, resident students shall be considered as 
in performance of duty at all times, during any and all of their 
activities, 24 hours a day, seven days a week, except as described in 
paragraph (d) of this section.
    (c) Non-resident students shall be considered to be ``in performance 
of duty'' as Federal employees from the time they arrive at any 
scheduled center activity or program until they physically leave such 
activity or program.
    (d) No student shall be considered as being in performance of duty 
status if he/she is absent without official leave (AWOL) or after 
arrival home on administrative leave without allowances.
    (e) In computing compensation benefits for disability or death, the 
monthly pay of a student shall be deemed that received under the 
entrance salary for a grade GS-2 Federal employee, and 5 U.S.C. 8113 (a) 
and (b) shall apply to students.
    (f) Compensation for disability shall not begin to accrue until the 
day following the date on which the injured student completes his or her 
Job Corps termination.

[[Page 345]]

    (g) Whenever a student is injured, develops an occupationally 
related illness, or dies while in the performance of duty, the Job Corps 
Director shall ensure that procedures set forth in the DOL Employment 
Standards Administration regulations at 20 CFR chapter I are followed. 
The Job Corps Director shall ensure that a thorough investigation of the 
circumstances and a medical evaluation are completed and that required 
forms are filed with the DOL Office of Workers' Compensation Programs.



Sec. 638.528  Social Security.

    The Act provides that students are covered by title II of the Social 
Security Act (42 U.S.C. 401 et seq.) and shall pay applicable employment 
taxes (e.g., the Federal Insurance Contributions Act (FICA) tax) on 
their living and readjustment allowances. (Section 436(a)(1))



Sec. 638.529  Income taxes.

    The Act provides that students are Federal employees for the 
purposes of the Internal Revenue Code of 1986 (title 26, U.S. Code). The 
Job Corps Director may obtain from tax authorities information regarding 
taxation of student income and provide this to center operators and to 
the finance center.



Sec. 638.530  Emergency use of personnel, equipment and facilities.

    The Job Corps Director may provide emergency assistance when there 
is a threat of natural disaster. Students may be asked to volunteer 
their services to help in such cases. The center operator shall arrange 
that any expenses consequent to such assistance shall be borne, to the 
extent possible, by the benefiting organization.



Sec. 638.531  Limitation on the use of students in emergency projects.

    The Job Corps Director shall develop procedures, when necessary, to 
safeguard the rights and safety of students who volunteer to be used in 
emergency situations.



Sec. 638.532  Annual leave.

    The Job Corps Director shall issue procedures to administer the 
accrual and use of student leave. Such procedures shall provide that:
    (a) Except for the initial pay period, students shall accrue annual 
leave at the rate of one calendar day for each pay period provided that 
the student was not AWOL or on administrative leave without pay during 
that pay period. For the initial pay period, a student shall accrue one 
day of annual leave regardless of the date of enrollment provided that 
the student was not AWOL or on administrative leave without pay from the 
date of enrollment. Accrual time shall begin on the day the student 
departs for a center and end on the date of his or her scheduled arrival 
home or at a place of employment.
    (b) Annual leave shall continue to accrue during periods of home, 
emergency, and administrative leave with pay and shall be suspended only 
when the student is AWOL or on administrative leave without allowances.
    (c) Students shall not be paid at termination for unused accrued 
leave.
    (d) Students may use accrued annual leave at any time subject to 
approval by the Center Director. Annual leave with transportation at 
government expense shall be allowed only after the student has spent 180 
days in pay status in Job Corps, and only once per year of enrollment.
    (e) Students shall not be charged annual leave for travel time to 
and from home and center by the most direct route. Saturdays, Sundays, 
and holidays that are officially recognized at the center shall not be 
charged as annual leave.



Sec. 638.533  Other student absences.

    The Job Corps Director shall develop procedures for authorized 
student absences and to account for all absences whether authorized or 
unauthorized.



Sec. 638.534  Legal services to students.

    (a) The Job Corps Director shall develop procedures to afford 
students effective and competent legal representation in criminal and 
certain civil cases. This shall include assisting students in obtaining 
free or low cost legal assistance or obtaining local attorneys or public 
defenders to represent students, and paying for such legal services 
(provided that attorney fees in criminal

[[Page 346]]

cases shall not be paid by Job Corps except in accordance with paragraph 
(b) of this section), in accordance with guidelines issued by the Job 
Corps Director.
    (b) Job Corps shall not pay the expenses of legal counsel or 
representation in any criminal case or proceeding for a student, unless 
the Center Director has certified to the Regional Director, and the 
Regional Director has approved, that a public defender is not available. 
With such approval of the Regional Director, Job Corps may compensate 
attorneys obtained pursuant to paragraph (a) of this section in criminal 
cases for reasonable expenses. Compensation shall be at the rates no 
higher than those set forth in the Criminal Justice Act of 1964, as 
amended (18 U.S.C. 3006A(d)).



Sec. 638.535  Voting rights.

    The Job Corps Director shall develop procedures to enable eligible 
students and staff to vote either locally or by absentee ballot. See 
also Sec. 638.8l4 (a) through (c) of this part.



Sec. 638.536  Religious rights.

    The right to worship or not worship as he/she chooses shall not be 
denied to any student. Religious services may not be held on-center 
unless the center is so isolated as to make transportation to and from 
community religious facilities impractical. If religious services are 
held on-center, no federal funds shall be paid to those who conduct such 
services. Services shall not be confined to one religious denomination. 
The center operator shall instruct students that students are not 
obligated by Job Corps to attend such services. See also Sec. Sec. 
638.539(g) and 638.813 of this part.



Sec. 638.537  Disclosure of information.

    (a) Requests for information. The Job Corps Director shall develop 
administrative procedures to respond to requests for information or 
records pertaining to students and such other disclosures as may be 
necessary.
    (b) Freedom of Information Act--(1) Disclosure. Disclosure of Job 
Corps information shall be in accordance with the Freedom of Information 
Act and shall be handled according to DOL regulations at 29 CFR part 70.
    (2) Contractors. Job Corps contractors are not ``agencies'' for 
Freedom of Information Act purposes. Therefore, their records are not 
subject to disclosure under the Freedom of Information Act or 29 CFR 
part 70.
    (c) Privacy Act of 1974. When DOL maintains a system of records 
covered by the Privacy Act of 1974, or provides by contract for a 
contractor, such as a screening agency or a contract center operator, to 
operate by or on behalf of the Job Corps such a system of records to 
accomplish a Job Corps function, the requirements of the DOL regulations 
at 29 CFR part 70a apply to such system or records.



Sec. 638.538  Disciplinary procedures and appeals.

    (a) The center operator shall establish reasonable rules and 
regulations for student behavior, in accordance with procedures 
developed by the Job Corps Director. Such rules shall be established to 
ensure high standards of behavior and conduct.
    (b) The center operator shall develop reasonable sanctions for 
breaking established rules, in accordance with procedures developed by 
the Job Corps Director.
    (c) The center operator shall ensure that all students have the 
opportunity for due process in disciplinary proceedings, in accordance 
with procedures developed by the Job Corps Director. Such center 
procedures, at a minimum, shall include center review boards where the 
penalty of termination might be imposed, and procedures for appealing, 
to a regional appeal board designated by the Regional Director, center 
decisions to terminate a student. See Sec. 638.407 of this part. The 
decision of the regional appeal board shall be final agency action.

[55 FR 12996, Apr. 6, 1990; 55 FR 23634, June 11, 1990]



Sec. 638.539  Complaints and disputes.

    (a) Center and other deliverer grievance procedures. Each center 
operator or other Job Corps deliverer shall establish and maintain a 
grievance procedure for complaints about its programs and activities 
from students and other

[[Page 347]]

interested parties. A hearing on each complaint shall be conducted, 
using the established grievance procedure, within 30 days of filing of 
the complaint and a decision on the complaint shall be made by the 
Center Director or with the knowledge of the Center Director not later 
than 60 days after the filing of the complaint. Except for a complaint 
alleging fraud or criminal activity, complaints shall be made within one 
year of the alleged occurrence. (Section 144(a))
    (b) Federal review of student grievances. Where a student or a 
person denied enrollment has exhausted the center or other deliverer 
grievance procedure established pursuant to paragraph (a) of this 
section, the student may appeal the decision to the regional appeal 
board. The regional appeal board shall review the appeal and determine 
within 120 days after receiving the appeal whether to reverse, affirm, 
or remand the decision. The decision of the regional appeal board shall 
be final agency action. (Section 144(c))
    (c) Federal review of non-student grievances. (1) Where the 
grievance or complaint is made by an interested party other than a 
student, should the deliverer fail to provide a decision as required in 
paragraph (a) of this section, the complainant may then request from the 
Regional Director a determination whether reasonable cause exists to 
believe that the Act or this part has been violated. The request shall 
be filed no later than 10 days from the date on which the complainant 
should have received a decision pursuant to paragraph (a) of this 
section, and shall describe with specificity the facts and the 
proceedings (if any) below.
    (2) The Regional Director shall act within 90 days of receipt of the 
request and where there is reasonable cause to believe the Act or this 
part has been violated shall direct the deliverer to issue a decision 
adjudicating the dispute pursuant to the deliverer's grievance 
procedures. The Regional Director's action is not final agency action on 
the merits of the dispute and therefore is not appealable under the Act. 
See sections 144(c) and 166(a) of the Act. If the deliverer does not 
comply with the Regional Director's order within 60 days, the Regional 
Director may impose a sanction on the deliverer for failing to issue a 
decision.
    (d) Failures to comply with the Act. Where DOL has reason to believe 
that the center operator or other deliverer is failing to comply with 
the requirements of the Act, the Regional Director shall investigate the 
allegation or belief and determine within 120 days after receiving the 
complaint whether such allegation or complaint is true. As the result of 
such a determination, the Regional Director may:
    (1) Direct the deliverer to handle a complaint through the grievance 
procedures established under paragraph (a) of this section; or
    (2) Investigate and determine whether the deliverer is in compliance 
with the Act and this part. If the Regional Director determines that the 
deliverer is not in compliance with the Act or this part, the 
appropriate sanctions set forth in section 164 of the Act shall be 
applied, subject to paragraph (e) or (f) of this section, as 
appropriate. (Section 163 (b) and (c))
    (e) Contract disputes. A dispute between DOL and a Job Corps 
contractor shall be handled only pursuant to the Contract Disputes Act 
and 41 CFR part 29-60.
    (f) Inter-agency disputes. A dispute between DOL and a federal 
agency operating a center shall be handled only pursuant to the 
interagency agreement with that agency for the operation of the center.
    (g) Nondiscrimination. Nondiscrimination requirements, procedures, 
complaint processing, and compliance reviews are governed by, as 
applicable, provisions of the following Department of Labor regulations:
    (1) 29 CFR part 34 and subparts B and C and Appendix A of 29 CFR 
part 32 for programs receiving financial assistance under JTPA.
    (2) 29 CFR part 33 for programs conducted by the Department of 
Labor; and
    (3) 41 CFR chapter 60 for entities that have a federal ``government 
contract'' as that term is defined in the applicable regulations.
    See also Sec. 638.813(a) of this part, regarding discrimination.

[55 FR 12996, Apr. 6, 1990, as amended at 58 FR 69100, Dec. 29, 1993]

[[Page 348]]



Sec. 638.540  Cooperation with agencies and institutions.

    The Job Corps Director shall develop guidelines for the national 
office's, the regional offices', and for deliverers' maintenance of 
cooperative relationships with other agencies and institutions, 
including law enforcement, educational institutions, communities, and 
other employment and training agencies.



Sec. 638.541  Job Corps training opportunities.

    The Job Corps Director shall develop policies and requirements which 
will ensure linkages, where feasible, with other Federal, State and 
local programs to enhance the provision of services to disadvantaged 
youth. These shall include, where appropriate: Referrals of enrollees; 
participant assessment; services accompanying pre-employment and work 
maturity skills training, work experience, job search skills training, 
basic skills training, and occupational skills training authorized under 
the Job Training Partnership Act for youth programs; and services 
supporting participants in the Job Opportunities and Basic Skills 
Training Program (JOBS) (section 427(b)). Such services may be provided 
sequentially or concurrently. Nothing in this part shall be construed to 
prohibit an individual who has been a participant in Job Corps from 
concurrently or subsequently participating in programs under title II of 
JTPA, or to prohibit an individual who has been a participant in 
programs under title II of JTPA from concurrently or subsequently 
participating in Job Corps.

[55 FR 12996, Apr. 6, 1990, as amended at 58 FR 69100, Dec. 29, 1993]



Sec. 638.542  Child care services.

    (a) Job Corps centers shall, where practicable, arrange for the 
provision of child care for students with dependent children.
    (b) Center operators may propose and, with the approval of the Job 
Corps Director, establish child care facilities.

[55 FR 12996, Apr. 6, 1990, as amended at 58 FR 69100, Dec. 29, 1993]



Sec. 638.543  Community relations program.

    Each center operator shall establish a community relations program, 
which shall include establishment of a community relations council which 
includes student representation. (Section 431)



           Subpart F_Applied Vocational Skills Training (VST)



Sec. 638.600  Applied vocational skills training (VST) through work 
projects.

    (a)(1) The Job Corps Director shall establish procedures for 
administering applied vocational skills training (VST) projects; such 
procedures shall include funding and reporting requirements, criteria to 
be used for granting approvals, and reviewing requirements.
    (2) Each applied VST project shall be submitted to the Regional 
Director for approval. The annual applied VST plan described in 
paragraph (c) of this section shall be submitted to the Regional 
Director for approval.
    (b) Applied VST may be provided in an actual working setting for 
training students in the construction and related trades. This shall 
involve authorized construction or other projects that result in 
finished facilities or products. This shall include conservation 
projects on Federal, State, and public lands, and projects performed for 
other organizations in accordance with policies established by the Job 
Corps Director. Centers may also perform applied VST public service 
projects for nearby communities and capital improvements for other Job 
Corps centers.
    (c) Applied VST shall be the major vehicle for the training of 
students in the construction and related trades. In each year, each 
center operator shall develop an annual applied VST plan for the coming 
year. In order to ensure that maximum training opportunities are 
available to students, the center vocational instructor (and/or the 
national training contractor, when applicable) shall participate in the 
planning and shall approve each project which involves his/her 
particular trade. Applied VST projects shall be planned in such a manner 
as to give priority to

[[Page 349]]

on-center rehabilitation and construction needs. The Job Corps Director 
shall establish annual funding levels to support applied VST programs 
and shall establish specific policies on limitation, documentation, and 
reporting requirements relating to applied VST programs.



Sec. 638.601  Applied VST budgeting.

    The Job Corps Director shall establish procedures to ensure that 
center operators maintain applied VST project funds as a separate center 
budget line item and maintain strict accountability for the use or 
nonuse of such funds. The approval of the Job Corps national office is 
necessary to transfer applied VST project funds to any other center 
budget category or program activity. In the case of civilian 
conservation centers, the use of VST project funds shall be governed by 
the interagency agreements.



      Subpart G_Experimental, Research, and Demonstration Projects



Sec. 638.700  Experimental, research, and demonstration projects.

    (a) The Job Corps Director, at his or her discretion, may undertake 
experimental, research, or demonstration projects for the purpose of 
promoting greater efficiency and effectiveness in the Job Corps program 
in accordance with section 433 of the Act.
    (b) The Job Corps Director may arrange for projects under this 
section to be undertaken jointly with other Federal or federally 
assisted programs.
    (c) The Secretary may waive any provision of this part that the 
Secretary finds would prevent the implementation of experimental, 
research, or demonstration project elements essential to a determination 
of their feasibility and usefulness.



                   Subpart H_Administrative Provisions



Sec. 638.800  Program management.

    (a) The Job Corps Director shall establish and use internal program 
management procedures sufficient to prevent fraud or program abuse. The 
Job Corps Director shall ensure that sufficient auditable and otherwise 
adequate records are maintained to support the expenditure of all funds 
under the Act.
    (b) The Job Corps Director shall provide guidelines for center 
staffing levels and qualifications. The guidelines shall adhere to 
standard levels of professional education and experience which are 
accepted generally within the fields of education and counseling.



Sec. 638.801  Staff training.

    The Job Corps Director shall establish guidelines for necessary 
training for national office, regional office, and deliverer staff.



Sec. 638.802  Student records management.

    The Job Corps Director shall develop guidelines for a system of 
maintaining records for each student during enrollment and for the 
disposition of such records after termination.



Sec. 638.803  Safety.

    (a) The Job Corps Director shall establish procedures to ensure that 
students are not required or permitted to work, to be trained, to 
reside, or to receive services in buildings or surroundings or under 
conditions that are unsanitary, hazardous, or lack proper ventilation. 
Whenever students are employed or trained for jobs, they shall be 
assigned to such jobs or training in accordance with appropriate health 
and safety practices.
    (b) The Job Corps Director shall develop a procedure to provide 
appropriate protective clothing for students in work or training.
    (c) The Job Corps Director shall develop procedures to ensure 
compliance with applicable DOL Occupational Safety and Health 
Administration regulations.



Sec. 638.804  Environmental health.

    The Job Corps Director shall provide guidelines for proper 
environmental health conditions.



Sec. 638.805  Security and law enforcement.

    (a) The Job Corps Director shall provide guidelines to protect the 
security

[[Page 350]]

of students, staff, and property on-center on a 24-hours-a-day, 7-days-
a-week basis.
    (b)(1) All property which would otherwise be under exclusive federal 
legislative jurisdiction shall be considered under concurrent 
jurisdiction with the appropriate State and locality with respect to 
criminal law enforcement as long as a center is operated on such 
property. This extends to portions of the property (e.g., housing and 
recreational facilities) in addition to the portions of the property 
used as the center or training facility.
    (2) The Job Corps Director shall ensure that centers on property 
under concurrent federal-State jurisdiction establish agreements with 
federal, State and local law enforcement agencies to enforce criminal 
laws on such property. (Section 435(d))
    (c) The Job Corps Director shall develop procedures to ensure that 
any searches of a student's personal area or belongings for unauthorized 
goods follow applicable right-to-privacy laws.



Sec. 638.806  Property management and procurement.

    The Job Corps Director shall develop procedures to establish and 
maintain a system for acquisition, protection, preservation, 
maintenance, and disposition of Job Corps real and personal property, 
and services so as to maximize its usefulness and to minimize operating, 
repair, and replacement costs.



Sec. 638.807  Imprest and petty cash funds.

    Federally operated centers shall establish auditable imprest funds. 
Contract centers shall establish auditable petty cash funds. The Job 
Corps Director shall develop procedures to ensure the security of and 
accountability for imprest and petty cash funds.



Sec. 638.808  Center financial management and reporting.

    The Job Corps Director shall establish procedures to ensure that 
each center operator and each subcontractor maintain a financial 
management system that will provide accurate, complete, and current 
disclosures of the financial results of Job Corps operations, and will 
provide sufficient data for effective evaluation of program activities. 
Fiscal accounts shall be maintained in a manner that ensures timely and 
accurate reporting as required by the Job Corps Director.



Sec. 638.809  Audit.

    (a) The Secretary of Labor, the DOL Office of Inspector General, the 
Comptroller General of the United States, and any of their duly 
authorized representatives, shall have access to any books, documents, 
papers, and records of the Job Corps deliverers and their subcontractors 
that are pertinent to the Job Corps program for the purpose of making 
surveys, audits, examinations, excerpts, and transcripts.
    (b) The Secretary shall, with reasonable frequency, survey, audit, 
or examine, or arrange for the survey, audit, or examination of Job 
Corps deliverers, or their subcontractors using Federal auditors or 
independent public accountants. Such surveys, audits, or examinations 
normally shall be conducted annually but not less than once every two 
years.



Sec. 638.810  Reporting requirements.

    The Job Corps Director shall establish procedures to ensure timely 
and complete reporting of such program information as is necessary to 
maintain accountability for the Job Corps program and funding.



Sec. 638.811  Review and evaluation.

    The Job Corps Director shall establish adequate program management 
to provide continuous examination of the performance of the components 
of the program.



Sec. 638.812  State and local taxation of Job Corps deliverers.

    The Act provides that transactions conducted by a private for-profit 
deliverer or a nonprofit deliverer in connection with the deliverer's 
operation of a center or other Job Corps program or activity shall not 
be considered as generating gross receipts. Such deliverer shall not be 
liable, directly or indirectly, to any State or subdivision thereof (nor 
to any person acting on behalf thereof) for any gross receipts taxes, 
business privilege taxes measured by gross receipts, or any similar

[[Page 351]]

taxes imposed on, or measured by, gross receipts in connection with any 
payments made to or by such deliverer for operating a center or other 
Job Corps program, or activity. Such deliverer shall not be liable to 
any State or subdivision thereof to collect or pay any sales, excise, 
use, or similar tax imposed upon the sale to or use by such deliverer of 
any property, service, or other item in connection with the operation of 
a center or other Job Corps program or activity. (Section 437(c))



Sec. 638.813  Nondiscrimination; nonsectarian activities.

    (a) Nondiscrimination. Center operators and other deliverers, and 
subcontractors and/or subrecipients of center operators and other 
deliverers shall comply with the nondiscrimination provisions of section 
167 of the Act and its implementing regulations, and with, as 
applicable, 29 CFR parts 31 and 32, part 33, and 41 CFR chapter 60. For 
the purposes of section 167 of the Act, students shall be considered as 
the ultimate beneficiaries of Federal financial assistance. (Section 
167)
    (b) Nonsectarian activities. Students shall not be employed or 
trained on the construction, operation, or maintenance of so much of any 
facility as is used or to be used for sectarian instruction or as a 
place for religious worship. (Section 167(a)(3))



Sec. 638.814  Lobbying; political activities; unionization.

    No funds provided under the Act may be used in any way:
    (a) To attempt to influence in any manner a member of Congress to 
favor or oppose any legislation or appropriation by Congress;
    (b) To attempt to influence in any manner a member of a State or 
local legislature to favor or oppose any legislation or appropriation by 
such legislature;
    (c) For any activity which involves political activities; or
    (d) For any activity which will assist, promote, or deter union 
organizing. (Sections 141(1) and 143(c)(1))



Sec. 638.815  Charging fees.

    No person or organization shall charge an individual a fee for the 
placement or referral of such individual in or to a training program 
under the Act. (Section 141(j))



PART 639_WORKER ADJUSTMENT AND RETRAINING NOTIFICATION--Table of Contents




Sec.
639.1 Purpose and scope.
639.2 What does WARN require?
639.3 Definitions.
639.4 Who must give notice?
639.5 When must notice be given?
639.6 Who must receive notice?
639.7 What must the notice contain?
639.8 How is the notice served?
639.9 When may notice be given less than 60 days in advance?
639.10 When may notice be extended?

    Authority: 29 U.S.C. 2107(a).

    Source: 54 FR 16064, Apr. 20, 1989, unless otherwise noted.



Sec. 639.1  Purpose and scope.

    (a) Purpose of WARN. The Worker Adjustment and Retraining 
Notification Act (WARN or the Act) provides protection to workers, their 
families and communities by requiring employers to provide notification 
60 calendar days in advance of plant closings and mass layoffs. Advance 
notice provides workers and their families some transition time to 
adjust to the prospective loss of employment, to seek and obtain 
alternative jobs and, if necessary, to enter skill training or 
retraining that will allow these workers to successfully compete in the 
job market. WARN also provides for notice to State dislocated worker 
units so that dislocated worker assistance can be promptly provided.
    (b) Scope of these regulations. These regulations establish basic 
definitions and rules for giving notice, implementing the provisions of 
WARN. The Department's objective is to establish clear principles and 
broad guidelines which can be applied in specific circumstances. 
However, the Department recognizes that Federal rulemaking cannot 
address the multitude of industry and company-specific situations in 
which advance notice will be given.
    (c) Notice encouraged where not required. Section 7 of the Act 
states:

It is the sense of Congress that an employer who is not required to 
comply with the notice requirements of section 3 should, to the

[[Page 352]]

extent possible, provide notice to its employees about a proposal to 
close a plant or permanently reduce its workforce.

    (d) WARN enforcement. Enforcement of WARN will be through the 
courts, as provided in section 5 of the statute. Employees, their 
representatives and units of local government may initiate civil actions 
against employers believed to be in violation of Sec. 3 of the Act. The 
Department of Labor has no legal standing in any enforcement action and, 
therefore, will not be in a position to issue advisory opinions of 
specific cases. The Department will provide assistance in understanding 
these regulations and may revise them from time to time as may be 
necessary.
    (e) Notice in ambiguous situations. It is civically desirable and it 
would appear to be good business practice for an employer to provide 
advance notice to its workers or unions, local government and the State 
when terminating a significant number of employees. In practical terms, 
there are some questions and ambiguities of interpretation inherent in 
the application of WARN to business practices in the market economy that 
cannot be addressed in these regulations. It is therefore prudent for 
employers to weigh the desirability of advance notice against the 
possibility of expensive and time-consuming litigation to resolve 
disputes where notice has not been given. The Department encourages 
employers to give notice in all circumstances.
    (f) Coordination with job placement and retraining programs. The 
Department, through these regulations and through the Trade Adjustment 
Assistance Program (TAA) and Economic Dislocation and Worker Adjustment 
Assistance Act (EDWAA) regulations, encourages maximum coordination of 
the actions and activities of these programs to assure that the negative 
impact of dislocation on workers is lessened to the extent possible. By 
providing for notice to the State dislocated worker unit, WARN notice 
begins the process of assisting workers who will be dislocated.
    (g) WARN not to supersede other laws and contracts. The provisions 
of WARN do not supersede any laws or collective bargaining agreements 
that provide for additional notice or additional rights and remedies. If 
such law or agreement provides for a longer notice period, WARN notice 
shall run concurrently with that additional notice period. Collective 
bargaining agreements may be used to clarify or amplify the terms and 
conditions of WARN, but may not reduce WARN rights.



Sec. 639.2  What does WARN require?

    WARN requires employers who are planning a plant closing or a mass 
layoff to give affected employees at least 60 days' notice of such an 
employment action. While the 60-day period is the minimum for advance 
notice, this provision is not intended to discourage employers from 
voluntarily providing longer periods of advance notice. Not all plant 
closings and layoffs are subject to the Act, and certain employment 
thresholds must be reached before the Act applies. WARN sets out 
specific exemptions, and provides for a reduction in the notification 
period in particular circumstances. Damages and civil penalties can be 
assessed against employers who violate the Act.



Sec. 639.3  Definitions.

    (a) Employer. (1) The term ``employer'' means any business 
enterprise that employs--
    (i) 100 or more employees, excluding part-time employees; or
    (ii) 100 or more employees, including part-time employees, who in 
the aggregate work at least 4,000 hours per week, exclusive of hours of 
overtime.

Workers on temporary layoff or on leave who have a reasonable 
expectation of recall are counted as employees. An employee has a 
``reasonable expectation of recall'' when he/she understands, through 
notification or through industry practice, that his/her employment with 
the employer has been temporarily interrupted and that he/she will be 
recalled to the same or to a similar job. The term ``employer'' includes 
non-profit organizations of the requisite size. Regular Federal, State, 
local and federally recognized Indian tribal governments are not 
covered. However, the term ``employer'' includes public and quasi-public 
entities which engage in business (i.e., take part in a commercial or 
industrial enterprise, supply a service or good on a

[[Page 353]]

mercantile basis, or provide independent management of public assets, 
raising revenue and making desired investments), and which are 
separately organized from the regular government, which have their own 
governing bodies and which have independent authority to manage their 
personnel and assets.
    (2) Under existing legal rules, independent contractors and 
subsidiaries which are wholly or partially owned by a parent company are 
treated as separate employers or as a part of the parent or contracting 
company depending upon the degree of their independence from the parent. 
Some of the factors to be considered in making this determination are 
(i) common ownership, (ii) common directors and/or officers, (iii) de 
facto exercise of control, (iv) unity of personnel policies emanating 
from a common source, and (v) the dependency of operations.
    (3) Workers, other than part-time workers, who are exempt from 
notice under section 4 of WARN are nonetheless counted as employees for 
purposes of determining coverage as an employer.
    (4) An employer may have one or more sites of employment under 
common ownership or control. An example would be a major auto maker 
which has dozens of automobile plants throughout the country. Each plant 
would be considered a site of employment, but there is only one 
``employer'', the auto maker.
    (b) Plant closing. The term ``plant closing'' means the permanent or 
temporary shutdown of a ``single site of employment'', or one or more 
``facilities or operating units'' within a single site of employment, if 
the shutdown results in an ``employment loss'' during any 30-day period 
at the single site of employment for 50 or more employees, excluding any 
part-time employees. An employment action that results in the effective 
cessation of production or the work performed by a unit, even if a few 
employees remain, is a shutdown. A ``temporary shutdown'' triggers the 
notice requirement only if there are a sufficient number of 
terminations, layoffs exceeding 6 months, or reductions in hours of work 
as specified under the definition of ``employment loss.''
    (c) Mass layoff. (1) The term ``mass layoff'' means a reduction in 
force which first, is not the result of a plant closing, and second, 
results in an employment loss at the single site of employment during 
any 30-day period for:
    (i) At least 33 percent of the active employees, excluding part-time 
employees, and
    (ii) At least 50 employees, excluding part-time employees.

Where 500 or more employees (excluding part-time employees) are 
affected, the 33% requirement does not apply, and notice is required if 
the other criteria are met. Plant closings involve employment loss which 
results from the shutdown of one or more distinct units within a single 
site or the entire site. A mass layoff involves employment loss, 
regardless of whether one or more units are shut down at the site.
    (2) Workers, other than part-time workers, who are exempt from 
notice under section 4 of WARN are nonetheless counted as employees for 
purposes of determining coverage as a plant closing or mass layoff. For 
example, if an employer closes a temporary project on which 10 permanent 
and 40 temporary workers are employed, a covered plant closing has 
occurred although only 10 workers are entitled to notice.
    (d) Representative. The term ``representative'' means an exclusive 
representative of employees within the meaning of section 9(a) or 8(f) 
of the National Labor Relations Act or section 2 of the Railway Labor 
Act.
    (e) Affected employees. The term ``affected employees'' means 
employees who may reasonably be expected to experience an employment 
loss as a consequence of a proposed plant closing or mass layoff by 
their employer. This includes individually identifiable employees who 
will likely lose their jobs because of bumping rights or other factors, 
to the extent that such individual workers reasonably can be identified 
at the time notice is required to be given. The term ``affected 
employees'' includes managerial and supervisory employees, but does not 
include business

[[Page 354]]

partners. Consultant or contract employees who have a separate 
employment relationship with another employer and are paid by that other 
employer, or who are self-employed, are not ``affected employees'' of 
the business to which they are assigned. In addition, for purposes of 
determining whether coverage thresholds are met, either incumbent 
workers in jobs being eliminated or, if known 60 days in advance, the 
actual employees who suffer an employment loss may be counted.
    (f) Employment loss. (1) The term ``employment loss'' means (i) an 
employment termination, other than a discharge for cause, voluntary 
departure, or retirement, (ii) a layoff exceeding 6 months, or (iii) a 
reduction in hours of work of individual employees of more than 50% 
during each month of any 6-month period.
    (2) Where a termination or a layoff (see paragraphs (f)(1)(i) and 
(ii) of this section) is involved, an employment loss does not occur 
when an employee is reassigned or transferred to employer-sponsored 
programs, such as retraining or job search activities, as long as the 
reassignment does not constitute a constructive discharge or other 
involuntary termination.
    (3) An employee is not considered to have experienced an employment 
loss if the closing or layoff is the result of the relocation or 
consolidation of part or all of the employer's business and, prior to 
the closing or layoff--
    (i) The employer offers to transfer the employee to a different site 
of employment within a reasonable commuting distance with no more than a 
6-month break in employment, or
    (ii) The employer offers to transfer the employee to any other site 
of employment regardless of distance with no more than a 6-month break 
in employment, and the employee accepts within 30 days of the offer or 
of the closing or layoff, whichever is later.
    (4) A ``relocation or consolidation'' of part or all of an 
employer's business, for purposes of paragraph Sec. 639.3(h)(4), means 
that some definable business, whether customer orders, product lines, or 
operations, is transferred to a different site of employment and that 
transfer results in a plant closing or mass layoff.
    (g) Unit of local government. The term ``unit of local government'' 
means any general purpose political subdivision of a State, which has 
the power to levy taxes and spend funds and which also has general 
corporate and police powers. When a covered employment site is located 
in more than one unit of local government, the employer must give notice 
to the unit to which it determines it directly paid the highest taxes 
for the year preceding the year for which the determination is made. All 
local taxes directly paid to the local government should be aggregated 
for this purpose.
    (h) Part-time employee. The term ``part-time'' employee means an 
employee who is employed for an average of fewer than 20 hours per week 
or who has been employed for fewer than 6 of the 12 months preceding the 
date on which notice is required, including workers who work full-time. 
This term may include workers who would traditionally be understood as 
``seasonal'' employees. The period to be used for calculating whether a 
worker has worked ``an average of fewer than 20 hours per week'' is the 
shorter of the actual time the worker has been employed or the most 
recent 90 days.
    (i) Single site of employment. (1) A single site of employment can 
refer to either a single location or a group of contiguous locations. 
Groups of structures which form a campus or industrial park, or separate 
facilities across the street from one another, may be considered a 
single site of employment.
    (2) There may be several single sites of employment within a single 
building, such as an office building, if separate employers conduct 
activities within such a building. For example, an office building 
housing 50 different businesses will contain 50 single sites of 
employment. The offices of each employer will be its single site of 
employment.
    (3) Separate buildings or areas which are not directly connected or 
in immediate proximity may be considered a single site of employment if 
they are in reasonable geographic proximity, used for the same purpose, 
and share the same staff and equipment. An example is an employer who 
manages a number

[[Page 355]]

of warehouses in an area but who regularly shifts or rotates the same 
employees from one building to another.
    (4) Non-contiguous sites in the same geographic area which do not 
share the same staff or operational purpose should not be considered a 
single site. For example, assembly plants which are located on opposite 
sides of a town and which are managed by a single employer are separate 
sites if they employ different workers.
    (5) Contiguous buildings owned by the same employer which have 
separate management, produce different products, and have separate 
workforces are considered separate single sites of employment.
    (6) For workers whose primary duties require travel from point to 
point, who are outstationed, or whose primary duties involve work 
outside any of the employer's regular employment sites (e.g., railroad 
workers, bus drivers, salespersons), the single site of employment to 
which they are assigned as their home base, from which their work is 
assigned, or to which they report will be the single site in which they 
are covered for WARN purposes.
    (7) Foreign sites of employment are not covered under WARN. U.S. 
workers at such sites are counted to determine whether an employer is 
covered as an employer under Sec. 639.3(a).
    (8) The term ``single site of employment'' may also apply to truly 
unusual organizational situations where the above criteria do not 
reasonably apply. The application of this definition with the intent to 
evade the purpose of the Act to provide notice is not acceptable.
    (j) Facility or operating unit. The term ``facility'' refers to a 
building or buildings. The term ``operating unit'' refers to an 
organizationally or operationally distinct product, operation, or 
specific work function within or across facilities at the single site.
    (k) State dislocated worker unit. The term ``State dislocated worker 
unit'' means a unit designated or created in each State by the Governor 
under title III of the Job Training Partnership Act, as amended by 
EDWAA.
    (l) State. For the purpose of WARN, the term ``State'' includes the 
50 States, the District of Columbia, the Commonwealth of Puerto Rico, 
and the U.S. Virgin Islands.



Sec. 639.4  Who must give notice?

    Section 3(a) of WARN states that ``an employer shall not order a 
plant closing or mass layoff until the end of a 60-day period after the 
employer serves written notice of such an order * * *.'' Therefore, an 
employer who is anticipating carrying out a plant closing or mass layoff 
is required to give notice to affected employees or their 
representative(s), the State dislocated worker unit and the chief 
elected official of a unit of local government. (See definitions in 
Sec. 639.3 of this part.)
    (a) It is the responsibility of the employer to decide the most 
appropriate person within the employer's organization to prepare and 
deliver the notice to affected employees or their representative(s), the 
State dislocated worker unit and the chief elected official of a unit of 
local government. In most instances, this may be the local site plant 
manager, the local personnel director or a labor relations officer.
    (b) An employer who has previously announced and carried out a 
short-term layoff (6 months or less) which is being extended beyond 6 
months due to business circumstances (including unforeseeable changes in 
price or cost) not reasonably foreseeable at the time of the initial 
layoff is required to give notice when it becomes reasonably foreseeable 
that the extension is required. A layoff extending beyond 6 months from 
the date the layoff commenced for any other reason shall be treated as 
an employment loss from the date of its commencement.
    (c) In the case of the sale of part or all of a business, section 
2(b)(1) of WARN defines who the ``employer'' is. The seller is 
responsible for providing notice of any plant closing or mass layoff 
which takes place up to and including the effective date (time) of the 
sale, and the buyer is responsible for providing notice of any plant 
closing or mass layoff that takes place thereafter. Affected employees 
are always entitled to notice; at all times the employer is responsible 
for providing notice.
    (1) If the seller is made aware of any definite plans on the part of 
the buyer to carry out a plant closing or mass

[[Page 356]]

layoff within 60 days of purchase, the seller may give notice to 
affected employees as an agent of the buyer, if so empowered. If the 
seller does not give notice, the buyer is, nevertheless, responsible to 
give notice. If the seller gives notice as the buyer's agent, the 
responsibility for notice still remains with the buyer.
    (2) It may be prudent for the buyer and seller to determine the 
impacts of the sale on workers, and to arrange between them for advance 
notice to be given to affected employees or their representative(s), if 
a mass layoff or plant closing is planned.



Sec. 639.5  When must notice be given?

    (a) General rule. (1) With certain exceptions discussed in 
paragraphs (b), (c) and (d) of this section and in Sec. 639.9 of this 
part, notice must be given at least 60 calendar days prior to any 
planned plant closing or mass layoff, as defined in these regulations. 
When all employees are not terminated on the same date, the date of the 
first individual termination within the statutory 30-day or 90-day 
period triggers the 60-day notice requirement. A worker's last day of 
employment is considered the date of that worker's layoff. The first and 
each subsequent group of terminees are entitled to a full 60 days' 
notice. In order for an employer to decide whether issuing notice is 
required, the employer should--
    (i) Look ahead 30 days and behind 30 days to determine whether 
employment actions both taken and planned will, in the aggregate for any 
30-day period, reach the minimum numbers for a plant closing or a mass 
layoff and thus trigger the notice requirement; and
    (ii) Look ahead 90 days and behind 90 days to determine whether 
employment actions both taken and planned each of which separately is 
not of sufficient size to trigger WARN coverage will, in the aggregate 
for any 90-day period, reach the minimum numbers for a plant closing or 
a mass layoff and thus trigger the notice requirement. An employer is 
not, however, required under section 3(d) to give notice if the employer 
demonstrates that the separate employment losses are the result of 
separate and distinct actions and causes, and are not an attempt to 
evade the requirements of WARN.
    (2) The point in time at which the number of employees is to be 
measured for the purpose of determining coverage is the date the first 
notice is required to be given. If this ``snapshot'' of the number of 
employees employed on that date is clearly unrepresentative of the 
ordinary or average employment level, then a more representative number 
can be used to determine coverage. Examples of unrepresentative 
employment levels include cases when the level is near the peak or 
trough of an employment cycle or when large upward or downward shifts in 
the number of employees occur around the time notice is to be given. A 
more representative number may be an average number of employees over a 
recent period of time or the number of employees on an alternative date 
which is more representative of normal employment levels. Alternative 
methods cannot be used to evade the purpose of WARN, and should only be 
used in unusual circumstances.
    (b) Transfers. (1) Notice is not required in certain cases involving 
transfers, as described under the definition of ``employment loss'' at 
Sec. 639.3(f) of this part.
    (2) An offer of reassignment to a different site of employment 
should not be deemed to be a ``transfer'' if the new job constitutes a 
constructive discharge.
    (3) The meaning of the term ``reasonable commuting distance'' will 
vary with local and industry conditions. In determining what is a 
``reasonable commuting distance'', consideration should be given to the 
following factors: geographic accessibility of the place of work, the 
quality of the roads, customarily available transportation, and the 
usual travel time.
    (4) In cases where the transfer is beyond reasonable commuting 
distance, the employer may become liable for failure to give notice if 
an offer to transfer is not accepted within 30 days of the offer or of 
the closing or layoff (whichever is later). Depending upon when the 
offer of transfer was made by the employer, the normal 60-day notice 
period may have expired and the plant

[[Page 357]]

closing or mass layoff may have occurred. An employer is, therefore, 
well advised to provide 60-day advance notice as part of the transfer 
offer.
    (c) Temporary employment. (1) No notice is required if the closing 
is of a temporary facility, or if the closing or layoff is the result of 
the completion of a particular project or undertaking, and the affected 
employees were hired with the understanding that their employment was 
limited to the duration of the facility or the project or undertaking.
    (2) Employees must clearly understand at the time of hire that their 
employment is temporary. When such understandings exist will be 
determined by reference to employment contracts, collective bargaining 
agreements, or employment practices of an industry or a locality, but 
the burden of proof will lie with the employer to show that the 
temporary nature of the project or facility was clearly communicated 
should questions arise regarding the temporary employment 
understandings.
    (3) Employers in agriculture and construction frequently hire 
workers for harvesting, processing, or for work on a particular building 
or project. Such work may be seasonal but recurring. Such work falls 
under this exemption if the workers understood at the time they were 
hired that their work was temporary. In uncertain situations, it may be 
prudent for employers to clarify temporary work understandings in 
writing when workers are hired. The same employers may also have 
permanent employees who work on a variety of jobs and tasks continuously 
through most of the calendar year. Such employees are not included under 
this exemption. Giving written notice that a project is temporary will 
not convert permanent employment into temporary work, making jobs exempt 
from WARN.
    (4) Certain jobs may be related to a specific contract or order. 
Whether such jobs are temporary depends on whether the contract or order 
is part of a long-term relationship. For example, an aircraft 
manufacturer hires workers to produce a standard airplane for the U.S. 
fleet under a contract with the U.S. Air Force with the expectation that 
its contract will continue to be renewed during the foreseeable future. 
The employees of this manufacturer would not be considered temporary.
    (d) Strikes or lockouts. The statute provides an exemption for 
strikes and lockouts which are not intended to evade the requirements of 
the Act. A lockout occurs when, for tactical or defensive reasons during 
the course of collective bargaining or during a labor dispute, an 
employer lawfully refuses to utilize some or all of its employees for 
the performance of available work. A lockout not related to collective 
bargaining which is intended as a subterfuge to evade the Act does not 
qualify for this exemption. A plant closing or mass layoff at a site of 
employment where a strike or lockout is taking place, which occurs for 
reasons unrelated to a strike or lockout, is not covered by this 
exemption. An employer need not give notice when permanently replacing a 
person who is deemed to be an economic striker under the National Labor 
Relations Act. Non-striking employees at the same single site of 
employment who experience a covered employment loss as a result of a 
strike are entitled to notice; however, situations in which a strike or 
lockout affects non-striking employees at the same plant may constitute 
an unforeseeable business circumstance, as discussed in Sec. 639.9, and 
reduced notice may apply. Similarly, the ``faltering company'' 
exception, also discussed in Sec. 639.9 may apply in strike situations. 
Where a union which is on strike represents more than one bargaining 
unit at the single site, non-strikers includes the non-striking 
bargaining unit(s). Notice also is due to those workers who are not a 
part of the bargaining unit(s) which is involved in the labor 
negotiations that led to the lockout. Employees at other plants which 
have not been struck, but at which covered plant closings or mass 
layoffs occur as a direct or indirect result of a strike or lockout are 
not covered by the strike/lockout exemption. The unforeseeable business 
circumstances exception to 60 days' notice also may apply to these 
closings or layoffs at other plants.

[[Page 358]]



Sec. 639.6  Who must receive notice?

    Section 3(a) of WARN provides for notice to each representative of 
the affected employees as of the time notice is required to be given or, 
if there is no such representative at that time, to each affected 
employee. Notice also must be served on the State dislocated worker unit 
and the chief elected official of the unit of local government within 
which a closing or layoff is to occur. Section 2(b)(1) of the Act states 
that ``any person who is an employee of the seller (other than a 
parttime employee) as of the effective date [time] of the sale shall be 
considered an employee of the purchaser immediately after the effective 
date [time] of the sale.'' This provision preserves the notice rights of 
the employees of a business that has been sold, but creates no other 
employment rights. Although a technical termination of the seller's 
employees may be deemed to have occurred when a sale becomes effective, 
WARN notice is only required where the employees, in fact, experience a 
covered employment loss.
    (a) Representative(s) of affected employees. Written notice is to be 
served upon the chief elected officer of the exclusive representative(s) 
or bargaining agent(s) of affected employees at the time of the notice. 
If this person is not the same as the officer of the local union(s) 
representing affected employees, it is recommended that a copy also be 
given to the local union official(s).
    (b) Affected employees. Notice is required to be given to employees 
who may reasonably be expected to experience an employment loss. This 
includes employees who will likely lose their jobs because of bumping 
rights or other factors, to the extent that such workers can be 
identified at the time notice is required to be given. If, at the time 
notice is required to be given, the employer cannot identify the 
employee who may reasonably be expected to experience an employment loss 
due to the elimination of a particular position, the employer must 
provide notice to the incumbent in that position. While part-time 
employees are not counted in determining whether plant closing or mass 
layoff thresholds are reached, such workers are due notice.
    (c) State dislocated worker unit. Notice is to be served upon the 
State dislocated worker unit. Since the States are restructuring to 
implement training under EDWAA, service of notice upon the State 
Governor constitutes service upon the State dislocated worker unit until 
such time as the Governor makes public State procedures for serving 
notice to this unit.
    (d) Chief elected official of the unit of local government. The 
identity of the chief elected official will vary according to the local 
government structure. In the case of elected boards, the notice is to be 
served upon the board's chairperson.



Sec. 639.7  What must the notice contain?

    (a) Notice must be specific. (1) All notice must be specific.
    (2) Where voluntary notice has been given more than 60 days in 
advance, but does not contain all of the required elements set out in 
this section, the employer must ensure that all of the information 
required by this section is provided in writing to the parties listed in 
Sec. 639.6 at least 60 days in advance of a covered employment action.
    (3) Notice may be given conditional upon the occurrence or 
nonoccurrence of an event, such as the renewal of a major contract, only 
when the event is definite and the consequences of its occurrence or 
nonoccurrence will necessarily, in the normal course of business, lead 
to a covered plant closing or mass layoff less than 60 days after the 
event. For example, if the non-renewal of a major contract will lead to 
the closing of the plant that produces the articles supplied under the 
contract 30 days after the contract expires, the employer may give 
notice at least 60 days in advance of the projected closing date which 
states that if the contract is not renewed, the plant closing will occur 
on the projected date. The notice must contain each of the elements set 
out in this section.
    (4) The information provided in the notice shall be based on the 
best information available to the employer at the time the notice is 
served. It is not the intent of the regulations, that errors in the 
information provided in a

[[Page 359]]

notice that occur because events subsequently change or that are minor, 
inadvertent errors are to be the basis for finding a violation of WARN.
    (b) As used in this section, the term ``date'' refers to a specific 
date or to a 14-day period during which a separation or separations are 
expected to occur. If separations are planned according to a schedule, 
the schedule should indicate the specific dates on which or the 
beginning date of each 14-day period during which any separations are 
expected to occur. Where a 14-day period is used, notice must be given 
at least 60 days in advance of the first day of the period.
    (c) Notice to each representative of affected employees is to 
contain:
    (1) The name and address of the employment site where the plant 
closing or mass layoff will occur, and the name and telephone number of 
a company official to contact for further information;
    (2) A statement as to whether the planned action is expected to be 
permanent or temporary and, if the entire plant is to be closed, a 
statement to that effect;
    (3) The expected date of the first separation and the anticipated 
schedule for making separations;
    (4) The job titles of positions to be affected and the names of the 
workers currently holding affected jobs.

The notice may include additional information useful to the employees 
such as information on available dislocated worker assistance, and, if 
the planned action is expected to be temporary, the estimated duration, 
if known.
    (d) Notice to each affected employee who does not have a 
representative is to be written in language understandable to the 
employees and is to contain:
    (1) A statement as to whether the planned action is expected to be 
permanent or temporary and, if the entire plant is to be closed, a 
statement to that effect;
    (2) The expected date when the plant closing or mass layoff will 
commence and the expected date when the individual employee will be 
separated;
    (3) An indication whether or not bumping rights exist;
    (4) The name and telephone number of a company official to contact 
for further information.

The notice may include additional information useful to the employees 
such as information on available dislocated worker assistance, and, if 
the planned action is expected to be temporary, the estimated duration, 
if known.
    (e) The notices separately provided to the State dislocated worker 
unit and to the chief elected official of the unit of local government 
are to contain:
    (1) The name and address of the employment site where the plant 
closing or mass layoff will occur, and the name and telephone number of 
a company official to contact for further information;
    (2) A statement as to whether the planned action is expected to be 
permanent or temporary and, if the entire plant is to be closed, a 
statement to that effect;
    (3) The expected date of the first separation, and the anticipated 
schedule for making separations;
    (4) The job titles of positions to be affected, and the number of 
affected employees in each job classification;
    (5) An indication as to whether or not bumping rights exist;
    (6) The name of each union representing affected employees, and the 
name and address of the chief elected officer of each union.

The notice may include additional information useful to the employees 
such as a statement of whether the planned action is expected to be 
temporary and, if so, its expected duration.
    (f) As an alternative to the notices outlined in paragraph (e) 
above, an employer may give notice to the State dislocated worker unit 
and to the unit of local government by providing them with a written 
notice stating the name of address of the employment site where the 
plant closing or mass layoff will occur; the name and telephone number 
of a company official to contact for further information; the expected 
date of the first separation; and the number of affected employees. The 
employer is required to maintain the other information listed in Sec. 
639.7(e) on site and readily accessible to the State disclocated worker 
unit and to the unit of general local government. Should

[[Page 360]]

this information not be available when requested, it will be deemed a 
failure to give required notice.



Sec. 639.8  How is the notice served?

    Any reasonable method of delivery to the parties listed under Sec. 
639.6 of this part which is designed to ensure receipt of notice of 
least 60 days before separation is acceptable (e.g., first class mail, 
personal delivery with optional signed receipt). In the case of 
notification directly to affected employees, insertion of notice into 
pay envelopes is another viable option. A ticketed notice, i.e., 
preprinted notice regularly included in each employee's pay check or pay 
envelope, does not meet the requirements of WARN.



Sec. 639.9  When may notice be given less than 60 days in advance?

    Section 3(b) of WARN sets forth three conditions under which the 
notification period may be reduced to less than 60 days. The employer 
bears the burden of proof that conditions for the exceptions have been 
met. If one of the exceptions is applicable, the employer must give as 
much notice as is practicable to the union, non-represented employees, 
the State dislocated worker unit, and the unit of local government and 
this may, in some circumstances, be notice after the fact. The employer 
must, at the time notice actually is given, provide a brief statement of 
the reason for reducing the notice period, in addition to the other 
elements set out in Sec. 639.7.
    (a) The exception under section 3(b)(1) of WARN, termed ``faltering 
company'', applies to plant closings but not to mass layoffs and should 
be narrowly construed. To qualify for reduced notice under this 
exception:
    (1) An employer must have been actively seeking capital or business 
at the time that 60-day notice would have been required. That is, the 
employer must have been seeking financing or refinancing through the 
arrangement of loans, the issuance of stocks, bonds, or other methods of 
internally generated financing; or the employer must have been seeking 
additional money, credit, or business through any other commercially 
reasonable method. The employer must be able to identify specific 
actions taken to obtain capital or business.
    (2) There must have been a realistic opportunity to obtain the 
financing or business sought.
    (3) The financing or business sought must have been sufficient, if 
obtained, to have enabled the employer to avoid or postpone the 
shutdown. The employer must be able to objectively demonstrate that the 
amount of capital or the volume of new business sought would have 
enabled the employer to keep the facility, operating unit, or site open 
for a reasonable period of time.
    (4) The employer reasonably and in good faith must have believed 
that giving the required notice would have precluded the employer from 
obtaining the needed capital or business. The employer must be able to 
objectively demonstrate that it reasonably thought that a potential 
customer or source of financing would have been unwilling to provide the 
new business or capital if notice were given, that is, if the employees, 
customers, or the public were aware that the facility, operating unit, 
or site might have to close. This condition may be satisfied if the 
employer can show that the financing or business source would not choose 
to do business with a troubled company or with a company whose workforce 
would be looking for other jobs. The actions of an employer relying on 
the ``faltering company'' exception will be viewed in a company-wide 
context. Thus, a company with access to capital markets or with cash 
reserves may not avail itself of this exception by looking solely at the 
financial condition of the facility, operating unit, or site to be 
closed.
    (b) The ``unforeseeable business circumstances'' exception under 
section 3(b)(2)(A) of WARN applies to plant closings and mass layoffs 
caused by business circumstances that were not reasonably foreseeable at 
the time that 60-day notice would have been required.
    (1) An important indicator of a business circumstance that is not 
reasonably foreseeable is that the circumstance is caused by some 
sudden, dramatic, and unexpected action or condition outside the 
employer's control. A principal client's sudden and unexpected 
termination of a major

[[Page 361]]

contract with the employer, a strike at a major supplier of the 
employer, and an unanticipated and dramatic major economic downturn 
might each be considered a business circumstance that is not reasonably 
foreseeable. A government ordered closing of an employment site that 
occurs without prior notice also may be an unforeseeable business 
circumstance.
    (2) The test for determining when business circumstances are not 
reasonably foreseeable focuses on an employer's business judgment. The 
employer must exercise such commercially reasonable business judgment as 
would a similarly situated employer in predicting the demands of its 
particular market. The employer is not required, however, to accurately 
predict general economic conditions that also may affect demand for its 
products or services.
    (c) The ``natural disaster'' exception in section 3(b)(2)(B) of WARN 
applies to plant closings and mass layoffs due to any form of a natural 
disaster.
    (1) Floods, earthquakes, droughts, storms, tidal waves or tsunamis 
and similar effects of nature are natural disasters under this 
provision.
    (2) To qualify for this exception, an employer must be able to 
demonstrate that its plant closing or mass layoff is a direct result of 
a natural disaster.
    (3) While a disaster may preclude full or any advance notice, such 
notice as is practicable, containing as much of the information required 
in Sec. 639.7 as is available in the circumstances of the disaster 
still must be given, whether in advance or after the fact of an 
employment loss caused by a natural disaster.
    (4) Where a plant closing or mass layoff occurs as an indirect 
result of a natural disaster, the exception does not apply but the 
``unforeseeable business circumstance'' exception described in paragraph 
(b) of this section may be applicable.



Sec. 639.10  When may notice be extended?

    Additional notice is required when the date or schedule of dates of 
a planned plant closing or mass layoff is extended beyond the date or 
the ending date of any 14-day period announced in the original notice as 
follows:
    (a) If the postponement is for less than 60 days, the additional 
notice should be given as soon as possible to the parties identified in 
Sec. 639.6 and should include reference to the earlier notice, the date 
(or 14-day period) to which the planned action is postponed, and the 
reasons for the postponement. The notice should be given in a manner 
which will provide the information to all affected employees.
    (b) If the postponement is for 60 days or more, the additional 
notice should be treated as new notice subject to the provisions of 
Sec. Sec. 639.5, 639.6 and 639.7 of this part. Rolling notice, in the 
sense of routine periodic notice, given whether or not a plant closing 
or mass layoff is impending, and with the intent to evade the purpose of 
the Act rather than give specific notice as required by WARN, is not 
acceptable.



PART 640_STANDARD FOR BENEFIT PAYMENT PROMPTNESS_UNEMPLOYMENT COMPENSATION
--Table of Contents




Sec.
640.1 Purpose and scope.
640.2 Federal law requirements.
640.3 Interpretation of Federal law requirements.
640.4 Standard for conformity.
640.5 Criteria for compliance.
640.6 Review of State compliance.
640.7 Benefit payment performance plans.
640.8 Enforcement of the standard.
640.9 Information, reports and studies.

    Authority: Sec. 1102, Social Security Act (42 U.S.C. 1302); 
Secretary's order No. 4-75, dated April 16, 1975 (40 FR 18515) (5 U.S.C. 
553). Interpret and apply secs. 303(a)(1) and 303(b)(2) of the Social 
Security Act (42 U.S.C. 503(a)(1), 503(b)(2)).

    Source: 43 FR 33225, July 28, 1978, unless otherwise noted.



Sec. 640.1  Purpose and scope.

    (a) Purpose. (1) Section 303(a)(1) of the Social Security Act 
requires, for the purposes of title III of that act, that a State 
unemployment compensation law include provision for methods of 
administration of the law that are reasonably calculated to insure the 
full payment of unemployment compensation when determined under the 
State law to be due to claimants. The standard in this part is issued to 
implement

[[Page 362]]

section 303(a)(1) in regard to promptness in the payment of unemployment 
benefits to eligible claimants.
    (2) Although the standard applies to the promptness of all benefit 
payments and the criteria apply directly to the promptness of first 
benefit payments, it is recognized that adequate performance is 
contingent upon the prompt determination of eligibility by the State as 
a condition for the payment or denial of benefits. Accordingly, implicit 
in prompt performance with respect to benefit payments is the 
corresponding need for promptness by the State in making determinations 
of eligibility. However, applicable Federal laws provide no authority 
for the Secretary of Labor to determine the eligibility of individuals 
under a State law.
    (b) Scope. (1) The standard in this part applies to all State laws 
approved by the Secretary of Labor under the Federal Unemployment Tax 
Act (section 3304 of the Internal Revenue Code of 1954, 26 U.S.C. 3304), 
and to the administration of the State laws.
    (2) The standard specified in Sec. 640.4 applies to all claims for 
unemployment compensation. The criteria for State compliance in Sec. 
640.5 apply to first payments of unemployment compensation under the 
State law to eligible claimants following the filing of initial claims 
and first compensable claims.



Sec. 640.2  Federal law requirements.

    (a) Conformity. Section 303(a)(1) of the Social Security Act, 42 
U.S.C. 503(a)(1), requires that a State law include provision for:

    Such methods of administration * * * as are found by the Secretary 
of Labor to be reasonably calculated to insure full payment of 
unemployment compensation when due.

    (b) Compliance. Section 303(b)(2) of the Social Security Act, 42 
U.S.C. 503(b)(2), provides in part that:

    Whenever the Secretary of Labor, after reasonable notice and 
opportunity for hearing to the State agency charged with the 
administration of the State law, finds that in the administration of the 
law there is:
    (1) * * *
    (2) a failure to comply substantially with any provision specified 
in subsection (a) of this section;

the Secretary of Labor shall notify such State agency that further 
payments will not be made to the State until the Secretary of Labor is 
satisfied that there is no longer any such * * * failure to comply.

    Until he is so satisfied, he shall make no further certification to 
the Secretary of the Treasury with respect to such State * * *.



Sec. 640.3  Interpretation of Federal law requirements.

    (a) Section 303(a)(1). The Secretary interprets section 303(a)(1) of 
the Social Security Act to require that a State law include provision 
for such methods of administration as will reasonable insure the full 
payment of unemployment benefits to eligible claimants with the greatest 
promptness that is administratively feasible.
    (b) Section 303(b)(2). (1) The Secretary interprets section 
303(b)(2) of the Social Security Act to require that, in the 
administration of a State law, there shall be substantial compliance 
with the provision required by section 303(a)(1).
    (2) The greatest promptness that is administratively feasible will 
depend upon the circumstances in each State that impacts upon its 
performance in paying benefits. Factors reasonably beyond a State's 
control may cause its performance to drop below the level of adequacy 
expressed in the table below as criteria for substantial compliance 
applicable to all States. Where it is demonstrated that failure to meet 
the criteria of adequacy is attributable to factors reasonably beyond 
the State's control and, in light of those factors, the State has 
performed at the highest level administratively feasible, it will be 
considered that the State is in substantial compliance with the Standard 
for conformity. Whether or not the State is in substantial compliance, 
the remedial provisions of Sec. Sec. 640.7 and 640.8 will be applicable 
when the pertinent criteria are not met.



Sec. 640.4  Standard for conformity.

    A State law will satisfy the requirement of section 303(a)(1), if it 
contains a provision requiring, or which is construed to require, such 
methods of administration as will reasonably insure the full payment of 
unemployment benefits to eligible claimants with the greatest promptness 
that is administratively feasible.

[[Page 363]]



Sec. 640.5  Criteria for compliance.

    The criteria in the schedule below shall apply in determining 
whether, in the administration of a State law, there has been 
substantial compliance with the provision required by section 303(a)(1) 
in the issuance of benefit payments to eligible claimants for the first 
compensable weeks of unemployment in their benefit years:

------------------------------------------------------------------------
                                           Percentage of first payments
                                           issued--days following end of
                                              first compensable week
                                         -------------------------------
                                          14 days,   21 days,
                                           waiting  nonwaiting  35 days,
                                            week       week        all
                                           States   States \1\   States
------------------------------------------------------------------------
                            Intrastate Claims
------------------------------------------------------------------------
Performance to be achieved for the 12-
 mo. period ending:
  Mar. 31, 1978.........................        80         80   ........
  Mar. 31, 1979.........................    \2\ 83     \2\ 83     \2\ 90
  Mar. 31, 1980, and thereafter.........        87         87         93
------------------------------------------------------------------------
                            Interstate Claims
------------------------------------------------------------------------
Performance to be achieved for the 12-
 mo. period ending:
  Mar. 31, 1978.........................        60         60   ........
  Mar. 31, 1979.........................    \2\ 65     \2\ 65     \2\ 75
  Mar. 31, 1980, and thereafter.........        70         70         78
------------------------------------------------------------------------
\1\ A nonwaiting week State is any State whose law does not require that
  a non-compensable period of unemployment be served before the payment
  of benefits commences.
\2\ Beginning with the month following the effective date of this
  revised regulation.


A State will be deemed to comply substantially, as set out in Sec. Sec. 
640.2(b) and 640.3(b), if its average performance, for the period of 
review, meets or exceeds the applicable criteria set forth above.



Sec. 640.6  Review of State compliance.

    (a) Annual reviews. The administration of each State law shall be 
reviewed annually for compliance, as set out in Sec. Sec. 640.2(b) and 
640.3(b). Annual reviews shall be for the 12-month period ending on 
March 31 of each year. An annual review with respect to any State shall 
be based upon the monthly reports of performance submitted to the 
Department by the State agency, any special reports of performance 
submitted to the Department by the State agency, any benefit payment 
performance plan applicable to the period being reviewed, any study or 
anylysis of performance relevant to the period being reviewed, and any 
other audit, study, or analysis as directed by the Department of Labor.
    (b) Periodic review. The administration of any State law may be 
reviewed at any other time, when there is reason to believe that there 
may be failure of compliance as set out in Sec. Sec. 640.2(b) and 
640.3(b). Such a review shall be based upon the same elements as may be 
required for an annual review.



Sec. 640.7  Benefit payment performance plans.

    (a) Annual plan. An annual benefit payment performance plan shall be 
submitted by a State agency to the Department of Labor when average 
performance over a 12-month period ending on March 31 of any year does 
not meet the criteria specified in Sec. 640.5. An annual plan shall be 
submitted by July 31 following the applicable March 31, and shall be a 
plan for the fiscal year that begins on the succeeding October 1. An 
annual plan shall be subject to continuing appraisal during the period 
it is in effect, and shall be subject to modification from time to time 
as may be directed by the Department of Labor after consultation with 
the State agency.
    (b) Periodic plan. A periodic benefit payment performance plan shall 
be submitted by a State agency when directed by the Department of Labor. 
A periodic plan may be in addition to, or a modification of an annual 
plan and may be required even though an annual plan covering the same 
period is not required. A periodic plan shall be subject to continuing 
appraisal during the period it is in effect, and shall be subject to 
modification from time to time as may be directed by the Department of 
Labor.
    (c) Content of plan. An annual plan or periodic plan shall set forth 
such corrective actions, performance and evaluation plans, and other 
matters as the Department of Labor directs, after consultation with the 
State agency.

(Approved by the Office of Management and Budget under control number 
1205-0132)

(Pub. L. No. 96-511)

[43 FR 33225, July 28, 1978, as amended at 49 FR 18295, Apr. 30, 1984]

[[Page 364]]



Sec. 640.8  Enforcement of the standard.

    (a) Action by the Department of Labor. When a State agency fails, 
for an extended period, to meet the standard set forth in Sec. 640.4 or 
the criteria specified in Sec. 640.5, or fails to show satisfactory 
improvement after having submitted a benefit payment performance plan of 
action, the Department of Labor shall pursue any of the following 
remedial steps that it deems necessary before considering application of 
the provisions of Sec. 640.2:
    (1) Initiate informal discussion with State agency officials 
pursuant to Sec. 601.5(b) of this chapter.
    (2) Conduct an evaluation of the State's benefit payment processes 
and analyze the reasons for the State's failure to meet the standard.
    (3) Recommend specific actions for the State to take to improve its 
benefit payment performance.
    (4) Request the State to submit a plan for complying with the 
standard by a prescribed date.
    (5) Initiate special reporting requirements for a specified period 
of time.
    (6) Consult with the Governor of the State regarding the 
consequences of the State's noncompliance with the standard.
    (7) Propose to the Governor of the State and on an agreed upon basis 
arrange for the use of expert Federal staff to furnish technical 
assistance to the State agency with respect to its payment operations.
    (b) Action by the Assistant Secretary. If, after all remedial steps 
have been exhausted, a State fails to take appropriate action, or 
otherwise fails to meet the standard specified in Sec. 640.4, the 
Assistant Secretary for Employment and Training shall, after taking all 
factors into consideration, recommend to the Secretary of Labor that 
appropriate notice be sent to the State agency and that an opportunity 
for a hearing be extended in accordance with section 303(b) of the 
Social Security Act.



Sec. 640.9  Information, reports and studies.

    A State shall furnish to the Secretary of Labor such information and 
reports and make such studies as the Secretary decides are necessary or 
appropriate to carry out this part.



PART 641_PROVISIONS GOVERNING THE SENIOR COMMUNITY SERVICE EMPLOYMENT 
PROGRAM--Table of Contents




                    Subpart A_Purpose and Definitions

Sec.
641.100 What does this part cover?
641.110 What is the SCSEP?
641.120 What are the purposes of the SCSEP?
641.130 What is the scope of this part?
641.140 What definitions apply to this part?

        Subpart B_Coordination With the Workforce Investment Act

641.200 What is the relationship between the SCSEP and the Workforce 
          Investment Act?
641.210 What services, in addition to the applicable core services, must 
          SCSEP grantees provide through the One-Stop Delivery System?
641.220 Does title I of WIA require the SCSEP to use OAA funds for 
          individuals who are not eligible for SCSEP services or for 
          services that are not authorized under the OAA?
641.230 Must the individual assessment conducted by the SCSEP grantee 
          and the assessment performed by the One-Stop Delivery System 
          be accepted for use by either entity to determine the 
          individual's need for services in the SCSEP and adult programs 
          under title IB of WIA?
641.240 Are SCSEP participants eligible for intensive and training 
          services under title I of WIA?

    Subpart C_The State Senior Employment Services Coordination Plan

641.300 What is the State Plan?
641.305 Who is responsible for developing and submitting the State Plan?
641.310 May the Governor delegate responsibility for developing and 
          submitting the State Plan?
641.315 Who participates in developing the State Plan?
641.320 Must all national grantees operating within a State participate 
          in the State planning process?
641.325 What information must be provided in the State Plan?
641.330 How should the State Plan reflect community service needs?
641.335 How should the Governor address the coordination of SCSEP 
          services with activities funded under title I of WIA?

[[Page 365]]

641.340 Must the Governor submit a State Plan each year?
641.345 What are the requirements for modifying the State Plan?
641.350 How should public comments be solicited and collected?
641.355 Who may comment on the State Plan?
641.360 How does the State Plan relate to the equitable distribution 
          (ED) report?
641.365 How must the equitable distribution provisions be reconciled 
          with the provision that disruptions to current participants 
          should be avoided?

    Subpart D_Grant Application, Eligibility, and Award Requirements

641.400 What entities are eligible to apply to the Department for funds 
          to administer SCSEP community service projects?
641.410 How does an eligible entity apply?
641.420 What factors will the Department consider in selecting grantees?
641.430 What are the eligibility criteria that each applicant must meet?
641.440 What are the responsibility conditions that an applicant must 
          meet?
641.450 Are there responsibility conditions that alone will disqualify 
          an applicant?
641.460 How will the Department examine the responsibility of eligible 
          entities?
641.465 Under what circumstances may the Department reject an 
          application?
641.470 What happens if an applicant's application is rejected?
641.480 May the Governor make recommendations to the Department on grant 
          applications?
641.490 When may SCSEP grants be awarded competitively?

                   Subpart E_Services to Participants

641.500 Who is eligible to participate in the SCSEP?
641.505 When is eligibility determined?
641.507 What types of income are included and excluded for participant 
          eligibility determinations?
641.510 What happens if a grantee/subgrantee determines that a 
          participant is no longer eligible for the SCSEP due to an 
          increase in family income?
641.515 How must grantees/subgrantees recruit and select eligible 
          individuals for participation in the SCSEP?
641.520 Are there any priorities that grantees/subgrantees must use in 
          selecting eligible individuals for participation in the SCSEP?
641.525 Are there any other groups of individuals who should be given 
          special consideration when selecting SCSEP participants?
641.530 Must the grantee/subgrantee always select priority or preference 
          individuals?
641.535 What services must grantees/subgrantees provide to participants?
641.540 What types of training may grantees/subgrantees provide to SCSEP 
          participants?
641.545 What supportive services may grantees/subgrantees provide to 
          participants?
641.550 What responsibility do grantees/subgrantees have to place 
          participants in unsubsidized employment?
641.555 What responsibility do grantees have to participants who have 
          been placed in unsubsidized employment?
641.560 May grantees place participants directly into unsubsidized 
          employment?
641.565 What policies govern the provision of wages and fringe benefits 
          to participants?
641.570 Is there a time limit for participation in the program?
641.575 May a grantee establish a limit on the amount of time its 
          participants may spend at each host agency?
641.580 Under what circumstances may a grantee terminate a participant?
641.585 Are participants employees of the Federal Government?
641.590 Are participants employees of the grantee, the local project, 
          and/or the host agency?

 Subpart F_Private Sector Training Projects Under Section 502(e) of the 
                                   OAA

641.600 What is the purpose of the private sector training projects 
          authorized under section 502(e) of the OAA?
641.610 How are section 502(e) activities administered?
641.620 How may an organization apply for section 502(e) funding?
641.630 What private sector training activities are allowable under 
          section 502(e)?
641.640 How do the private sector training activities authorized under 
          section 502(e) differ from other SCSEP activities?
641.650 Does the requirement that not less than 75 percent of the funds 
          be used to pay participant wages and fringe benefits apply to 
          section 502(e) activities?
641.660 Who is eligible to participate in section 502(e) private sector 
          training activities?
641.665 When is eligibility determined?
641.670 May an eligible individual be enrolled simultaneously in section 
          502(e) private sector training activities operated by one 
          grantee and a community service SCSEP project operated by a 
          different SCSEP grantee?
641.680 How should grantees report on participants who are co-enrolled?
641.690 How is the performance of section 502(e) grantees measured?

[[Page 366]]

                  Subpart G_Performance Accountability

641.700 What performance measures apply to SCSEP grantees?
641.710 How are these performance indicators defined?
641.715 What are the common performance measures?
641.720 How do the common performance measures affect grantees and the 
          OAA performance measures?
641.730 How will the Department set and adjust performance levels?
641.740 How will the Department determine whether a grantee fails, 
          meets, or exceeds negotiated levels of performance?
641.750 What sanctions will the Department impose if a grantee fails to 
          meet negotiated levels of performance?
641.760 What sanctions will the Department impose if a national grantee 
          fails to meet negotiated levels of performance under the total 
          SCSEP grant?
641.770 What sanctions will the Department impose if a national grantee 
          fails to meet negotiated levels of performance in any State it 
          serves?
641.780 When will the Department assess the performance of a national 
          grantee in a State?
641.790 What sanctions will the Department impose if a State grantee 
          fails to meet negotiated levels of performance?
641.795 Will there be incentives for exceeding performance measures?

                  Subpart H_Administrative Requirements

641.800 What uniform administrative requirements apply to the use of 
          SCSEP funds?
641.803 What is program income?
641.806 How must SCSEP program income be used?
641.809 What non-Federal share (matching) requirements apply to the use 
          of SCSEP funds?
641.812 What is the period of availability of SCSEP funds?
641.815 May the period of availability be extended?
641.818 What happens to funds that are unexpended at the end of the 
          Program Year?
641.821 What audit requirements apply to the use of SCSEP funds?
641.824 What lobbying requirements apply to the use of SCSEP funds?
641.827 What general nondiscrimination requirements apply to the use of 
          SCSEP funds?
641.833 What policies govern political patronage?
641.836 What policies govern political activities?
641.839 What policies govern union organizing activities?
641.841 What policies govern nepotism?
641.844 What maintenance of effort requirements apply to the use of 
          SCSEP funds?
641.847 What uniform allowable cost requirements apply to the use of 
          SCSEP funds?
641.850 Are there other specific allowable and unallowable cost 
          requirements for the SCSEP?
641.853 How are costs classified?
641.856 What functions and activities constitute costs of 
          administration?
641.859 What other special rules govern the classification of costs as 
          administrative costs or program costs?
641.861 Must SCSEP recipients provide funding for the administrative 
          costs of subrecipients?
641.864 What functions and activities constitute program costs?
641.867 What are the limitations on the amount of SCSEP administrative 
          costs?
641.870 Under what circumstances may the administrative cost limitation 
          be increased?
641.873 What minimum expenditure levels are required for participant 
          wages and fringe benefits?
641.876 When will compliance with cost limitations and minimum 
          expenditure levels be determined?
641.879 What are the fiscal and performance reporting requirements for 
          recipients?
641.881 What are the SCSEP recipient's responsibilities relating to 
          awards to subrecipients?
641.884 What are the grant closeout procedures?

           Subpart I_Grievance Procedures and Appeals Process

641.900 What appeal process is available to an applicant that does not 
          receive a grant?
641.910 What grievance procedures must grantees make available to 
          applicants, employees, and participants?
641.920 What actions of the Department may a grantee appeal and what 
          procedures apply to those appeals?
641.930 Is there an alternative dispute resolution process that may be 
          used in place of an OALJ hearing?

    Authority: 42 U.S.C. 3056 et seq.

    Source: 69 FR 19051, Apr. 9, 2004, unless otherwise noted.



                    Subpart A_Purpose and Definitions



Sec. 641.100  What does this part cover?

    Part 641 contains the Department of Labor's regulations for the 
Senior

[[Page 367]]

Community Service Employment Program (SCSEP), authorized under the title 
V of the Older Americans Act, 42 U.S.C. 3056 et seq., as amended by the 
Older Americans Act Amendments of 2000 (OAA), Public Law 106-501. This 
part, and other pertinent regulations expressly incorporated by 
reference, set forth the regulations applicable to the SCSEP.
    (a) Subpart A of this part contains introductory provisions and 
definitions that apply to this part.
    (b) Subpart B of this part describes the required relationship 
between the OAA and the Workforce Investment Act of 1998 (WIA), 29 
U.S.C. 2801 et seq. These provisions discuss the coordinated efforts to 
provide services through the integration of the SCSEP within the One-
Stop Delivery System.
    (c) Subpart C of this part sets forth the requirements for the State 
Senior Employment Services Coordination Plan (State Plan), such as 
required coordination efforts, public comments, and equitable 
distribution.
    (d) Subpart D of this part establishes grant planning and 
application requirements, including grantee eligibility, and 
responsibility review.
    (e) Subpart E of this part details SCSEP participant services.
    (f) Subpart F of this part provides the rules for projects designed 
to assure second career training and the placement of eligible 
individuals into unsubsidized jobs in the private sector.
    (g) Subpart G of this part outlines the performance accountability 
requirements. This subpart establishes requirements for performance 
measures, defines such measures, and establishes corrective actions, 
including the imposition of sanctions for failure to meet performance 
measures.
    (h) Subpart H of this part sets forth the administrative 
requirements for SCSEP grants.
    (i) Subpart I of this part describes the grievance and appeals 
processes and requirements.



Sec. 641.110  What is the SCSEP?

    The Senior Community Service Employment Program or the SCSEP is a 
program administered by the Department of Labor that serves low-income 
persons who are 55 years of age and older and who have poor employment 
prospects by placing them in part-time community service positions and 
by assisting them to transition to unsubsidized employment.



Sec. 641.120  What are the purposes of the SCSEP?

    The purposes of the SCSEP are to foster and promote useful part-time 
opportunities in community service activities for unemployed low-income 
persons who are 55 years of age or older and who have poor employment 
prospects; to foster individual economic self-sufficiency; and to 
increase the number of older persons who may enjoy the benefits of 
unsubsidized employment in both the public and private sectors.



Sec. 641.130  What is the scope of this part?

    The regulations in this part address the requirements that apply to 
the SCSEP. More detailed policies and procedures are contained in 
administrative guidelines issued by the Department. Throughout this 
part, phrases such as, ``according to instructions (procedures) issued 
by the Department'' or ``additional guidance will be provided through 
administrative issuance'' refer to the SCSEP Bulletins, technical 
assistance guides, and other SCSEP directives.



Sec. 641.140  What definitions apply to this part?

    The following definitions apply to this part:
    Authorized position level means the number of SCSEP enrollment 
opportunities that can be supported for a 12-month period based on the 
average national unit cost. The authorized position level is derived by 
dividing the total amount of funds appropriated for a Program Year by 
the national average unit cost per participant for that Program Year as 
determined by the Department. The national average unit cost includes 
all costs of administration, other participant costs, and participant 
wage and fringe benefit costs as defined in section 506(g) of the OAA. A 
grantee's total award is divided by the national unit cost to determine 
the

[[Page 368]]

authorized position level for each grant agreement.
    Co-enrollment applies to any individual who meets the qualifications 
for SCSEP participation as well as the qualifications for any other 
relevant program as defined in the Individual Employment Plan.
    Community service includes, but is not limited to, social, health, 
welfare, and educational services (including literacy tutoring); legal 
assistance, and other counseling services, including tax counseling and 
assistance and financial counseling; library, recreational, and other 
similar services; conservation, maintenance, or restoration of natural 
resources; community betterment or beautification; anti-pollution and 
environmental quality efforts; weatherization activities; and economic 
development. (OAA sec. 516(1)).
    Core Services means those services described in section 134(d)(2) of 
WIA.
    Department or DOL means the United States Department of Labor, 
including its agencies and organizational units.
    Disability is defined at section 101(8) of the OAA as follows: a 
disability attributable to mental or physical impairment, or a 
combination of mental and physical impairments, that results in 
substantial functional limitations in one or more of the following areas 
of major life activity: (A) Self-care, (B) receptive and expressive 
language, (C) learning, (D) mobility, (E) self-direction, (F) capacity 
for independent living, (G) economic self-sufficiency, (H) cognitive 
functioning, and (I) emotional adjustment.
    Equitable distribution report means a report based on the latest 
available Census data, which lists the optimum number of participant 
positions in each designated area in the State, and the number of 
authorized participant positions each grantee serves in that area, 
taking the needs of underserved counties into account. This report 
provides a basis for improving the distribution of SCSEP positions.
    Grant period means the time period between the effective date of the 
grant award and the ending date of the award, which includes any 
modifications extending the period of performance, whether by the 
Department's exercise of options contained in the grant agreement or 
otherwise. Also referred to as ``project period'' or ``award period.''
    Grantee means an entity receiving financial assistance directly from 
the Department to carry out SCSEP activities. The grantee is the legal 
entity that receives the award and is legally responsible for carrying 
out the SCSEP, even if only a particular component of the entity is 
designated in the grant award document. Grantees include States, Tribal 
organizations, territories, public and private nonprofit organizations, 
agencies of a State government or a political subdivision of a State, or 
a combination of such political subdivisions that receive SCSEP grants 
from the Department. (OAA sec. 502). In the case of the section 502(e) 
projects, grantee may be used to include private business concerns. As 
used here, ``grantees'' include ``grantees'' as defined in 29 CFR 97.3 
and ``recipients'' as defined in 29 CFR 95.2(g).
    Greatest economic need means the need resulting from an income level 
at or below the poverty guidelines established by the Department of 
Health and Human Services and approved by the Office of Management and 
Budget. (OAA sec. 101(27)).
    Greatest social need means the need caused by non-economic factors, 
which include: physical and mental disabilities; language barriers; and 
cultural, social, or geographical isolation, including isolation caused 
by racial or ethnic status that restricts the ability of an individual 
to perform normal daily tasks, or threatens the capacity of the 
individual to live independently. (OAA sec. 101(28)).
    Host agency means a public agency or a private nonprofit 
organization exempt from taxation under the provisions of section 
501(c)(3) of the Internal Revenue Code of 1986, other than a political 
party, which provides a work site and supervision for one or more 
participants. (See also OAA sec. 502(b)(1)(C)). A host agency may be a 
religious organization as long as the projects do not involve the 
construction, operation, or maintenance of any facility used or to be 
used as a place for religious instruction or worship.

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    Indian means a person who is a member of an Indian Tribe. (OAA sec. 
101(5)).
    Indian Tribe means any Tribe, band, nation, or other organized group 
or community of Indians (including Alaska Native village or regional or 
village corporation as defined in or established pursuant to the Alaska 
Native Claims Settlement Act) which:
    (1) Is recognized as eligible for the special programs and services 
provided by the United States to Indians because of their status as 
Indians; or
    (2) Is located on, or in proximity to, a Federal or State 
reservation or rancheria. (OAA sec. 101(6)).
    Individual employment plan or IEP means a plan for a participant 
that includes an employment goal, achievement of objectives, and 
appropriate sequence of services for the participant based on an 
assessment conducted by the grantee or subgrantee and jointly agreed 
upon by the participant. (OAA sec. 502(b)(1)(N)).
    Intensive services means those services authorized by section 
134(d)(3) of the Workforce Investment Act.
    Jobs for Veterans Act means the program established in section 2 of 
Public Law 107-288 (2002) (38 U.S.C. 4215), that provides a priority for 
veterans and the spouse of a veteran who died in a service-connected 
disability, the spouse of a member of the Armed Forces on active duty 
who has been listed for a total of more than 90 days as missing in 
action, captured in the line of duty by a hostile force, or forcibly 
detained by a foreign government or power, the spouse of any veteran who 
has a total disability resulting from a service-connected disability, 
and the spouse of any veteran who died while a disability so evaluated 
was in existence, who meet program eligibility requirements to receive 
services in any Department of Labor-funded workforce development 
program.
    Local Workforce Investment Area or local area means an area 
established by the Governor of a State under section 116 of the 
Workforce Investment Act.
    Local Board means a Local Workforce Investment Board established 
under section 117 of the Workforce Investment Act.
    National grantee means Federal public agencies and organizations, 
private nonprofit agencies and organizations, or Tribal organizations 
that operate under title V of the OAA that are capable of administering 
multi-State projects under a national grant from the Department. (See 
OAA sec. 506(g)(5)).
    OAA means the Older Americans Act as amended by the Older Americans 
Act Amendments of 2000 (Pub. L. 106-501; 42 U.S.C. 3056 et seq.).
    One-Stop Center means the One-Stop Center system in a WIA Local Area 
which must include a comprehensive One-Stop Center through which One-
Stop partners provide applicable core services and which provides access 
to other programs and services carried out by the One-Stop partners. 
(See WIA sec. 134(c)(2)).
    One-Stop Delivery System means a system under which employment and 
training programs, services, and activities are available through a 
network of eligible One-Stop partners, which assures that information 
about and access to core services is available regardless of where the 
individuals initially enter the statewide workforce investment system. 
(WIA sec. 134(c)(2)).
    One-Stop partner means an entity described in section 121(b)(1) of 
the Workforce Investment Act; i.e., required partners, and an entity 
described in section 121(b)(2) of the Workforce Investment Act, i.e., 
additional partners.
    Other participant (enrollee) cost means the cost of participant 
training, including the payment of reasonable costs to instructors, 
classroom rental, training supplies, materials, equipment, and tuition, 
and which may be provided on the job or in conjunction with a community 
service assignment, in a classroom setting, or under other appropriate 
arrangements; job placement assistance, including job development and 
job search assistance; participant supportive services to assist a 
participant to successfully participate in a project, including the 
payment of reasonable costs of transportation, health care and medical 
services, special job-related or personal counseling, incidentals (such 
as work shoes, badges, uniforms, eyeglasses, and tools), child and adult 
care, temporary

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shelter, and follow-up services; and outreach, recruitment and 
selection, intake orientation, and assessments. (OAA sec. 502(c)(6)(A)).
    Participant means an individual who is eligible for the SCSEP, has 
been enrolled and is receiving services as prescribed under subpart E of 
this part.
    Placement into public or private unsubsidized employment means full- 
or part-time paid employment in the public or private sector by a 
participant for 30 days within a 90-day period without the use of funds 
under title V or any other Federal or State employment subsidy program, 
or the equivalent of such employment as measured by the earnings of a 
participant through the use of wage records or other appropriate 
methods. (OAA sec. 513(c)(2)(A)).
    Poor employment prospects means the likelihood that an individual 
will not obtain employment without the assistance of the SCSEP or any 
other workforce development program. Persons with poor employment 
prospects include, but are not limited to, those without a substantial 
employment history, basic skills, and/or English-language proficiency; 
displaced homemakers, school dropouts, persons with disabilities, 
including disabled veterans, homeless individuals, and individuals 
residing in socially and economically isolated rural or urban areas 
where employment opportunities are limited.
    Program year means the one-year period beginning July 1 and ending 
on June 30. (OAA sec. 515(b)).
    Project means an undertaking by a grantee or subgrantee according to 
a grant agreement that provides community service, training, and 
employment opportunities to eligible individuals in a particular 
location within a State.
    Recipient means grantee. As used here, ``recipients'' include 
``recipients'' as defined in 29 CFR 95.2(g) and ``grantees'' as defined 
in 29 CFR 97.3.
    Residence means an individual's declared dwelling place or address 
as demonstrated by appropriate documentation.
    Retention in public or private unsubsidized employment means full- 
or part-time paid employment in the public or private sector by a 
participant for 6 months after the starting date of placement into 
unsubsidized employment without the use of funds under title V or any 
other Federal or State employment subsidy program. (OAA sec. 
513(c)(2)(B)).
    SCSEP means the Senior Community Service Employment Program 
authorized under title V of the OAA.
    Service area means the geographic area served by a local SCSEP 
project.
    State Workforce Agency means the State agency that administers the 
State Wagner-Peyser program.
    State Board means a State Workforce Investment Board established 
under section 111 of the Workforce Investment Act.
    State grantee means the entity designated by the Governor to enter 
into a grant with the Department to administer a State or territory 
SCSEP project under the OAA. Except as applied to funding distributions 
under section 506 of the OAA, this definition applies to the 50 States, 
Puerto Rico, the District of Columbia and the following territories: 
Guam, American Samoa, U.S. Virgin Islands, and the Commonwealth of the 
Northern Mariana Islands.
    State Plan means the State Senior Employment Services Coordination 
Plan required under section 503(a) of the OAA.
    Subgrantee means the legal entity to which a subaward of financial 
assistance, which may include a subcontract, is made by the grantee (or 
by a higher tier subgrantee or recipient), and that is accountable to 
the grantee for the use of the funds provided. As used here, 
``subgrantee'' includes ``subgrantees'' as defined in 29 CFR 97.3 and 
``subrecipients'' as defined in 29 CFR 95.2(kk).
    Subrecipient means a subgrantee.
    Title V of the OAA means 42 U.S.C. 3056 et seq. or title V of Public 
Law 106-501.
    Training services means those services authorized by section 
134(d)(4) of the Workforce Investment Act.
    Tribal organization means the recognized governing body of any 
Indian Tribe, or any legally established organization of Indians which 
is controlled, sanctioned, or chartered by such governing body. (OAA 
sec. 101(7)).

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    Workforce Investment Act or WIA means the Workforce Investment Act 
of 1998 (Public Law 105-220--Aug. 7, 1998; 112 Stat. 936); 29 U.S.C. 
2801 et seq.
    Workforce Investment Act regulations or WIA regulations means 
regulations at 20 CFR part 652 and parts 660-671.



        Subpart B_Coordination With the Workforce Investment Act



Sec. 641.200  What is the relationship between the SCSEP and the 
Workforce Investment Act?

    The SCSEP is a required partner under the Workforce Investment Act. 
As such, it is a part of the One-Stop Delivery System. SCSEP grantees 
are required to follow all applicable rules under WIA and its 
regulations. (WIA section 121(b)(1)(B)(vi) (29 U.S.C. 2841(b)(1)(B)(vi)) 
and the 29 CFR part 662 subpart B (Sec. Sec. 662.200 through 662.280))



Sec. 641.210  What services, in addition to the applicable core 
services, must SCSEP grantees provide through the One-Stop Delivery 
System?

    In addition to providing core services, SCSEP grantees must make 
arrangements through the One-Stop Delivery System to provide eligible 
and ineligible individuals with access to other activities and programs 
carried out by other One-Stop partners.



Sec. 641.220  Does title I of WIA require the SCSEP to use OAA funds for 
individuals who are not eligible for SCSEP services or for services that 
are not authorized under the OAA?

    No, SCSEP requirements continue to apply. Title V resources may only 
be used to provide title V services to title V-eligible individuals. The 
Workforce Investment Act creates a seamless service delivery system for 
individuals seeking workforce development services by linking the One-
Stop partners in the One-Stop Delivery System. Although the overall 
effect is to provide universal access to core services, SCSEP resources 
may only be used to provide services that are authorized and provided 
under the SCSEP to eligible individuals. Title V funds can be used to 
pay wages to SCSEP participants receiving intensive and training 
services under title I of WIA provided that the SCSEP participants are 
functioning in a community service assignment. All other individuals who 
are in need of the services provided under the SCSEP, but who do not 
meet the eligibility criteria to enroll in the SCSEP, should be referred 
to or enrolled in WIA or other appropriate partner programs. (WIA sec. 
121(b)(1)). These arrangements should be negotiated in the MOU.



Sec. 641.230  Must the individual assessment conducted by the SCSEP 

grantee and the assessment performed by the One-Stop Delivery System 
be accepted for use by either entity to determine the individual's 
need for services in the SCSEP and adult programs under title IB of WIA?

    Yes, section 502(b)(4) of the OAA provides that an assessment or IEP 
completed by the SCSEP satisfies any condition for an assessment, 
service strategy, or IEP completed at the One-Stop and vice-versa. These 
reciprocal arrangements and the contents of the SCSEP IEP and WIA IEP 
should be negotiated in the MOU. (OAA sec. 502(b)(4)).



Sec. 641.240  Are SCSEP participants eligible for intensive and training 
services under title I of WIA?

    (a) Yes, although SCSEP participants are not automatically eligible 
for intensive and training services under title I of WIA, Local Boards 
may deem SCSEP participants, either individually or as a group, as 
satisfying the requirements for receiving adult intensive and training 
services under title I of WIA.
    (b) SCSEP participants who have been assessed through an SCSEP IEP 
have received an intensive service according to 20 CFR 663.240(a) of the 
WIA regulations. SCSEP participants who seek unsubsidized employment as 
part of their SCSEP IEP, may require training to meet their objectives. 
The SCSEP grantee/subgrantee, the host agency, the WIA program, or 
another One-Stop partner may provide training as appropriate and as 
negotiated in the MOU.
    (c) The SCSEP provides opportunities for eligible individuals to 
engage in part-time community service activities

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for which they are compensated. These assignments are analogous to work 
experience activities or intensive service under 20 CFR 663.200 of the 
WIA regulations.
    (d) SCSEP participants may be paid wages while receiving intensive 
or training services provided that the participant is functioning in a 
community service assignment.



    Subpart C_The State Senior Employment Services Coordination Plan



Sec. 641.300  What is the State Plan?

    The State Senior Employment Services Coordination Plan (the State 
Plan) is a plan, submitted by the Governor in each State, as an 
independent document or as part of the WIA Unified Plan, that describes 
the planning and implementation process for SCSEP services in the State, 
taking into account the relative distribution of eligible individuals 
and employment opportunities within the State. The State Plan is 
intended to foster coordination among the various SCSEP grantees 
operating within the State and to facilitate the efforts of 
stakeholders, including State and Local Boards under WIA, to work 
collaboratively through a participatory process to accomplish the SCSEP 
program's goals. (OAA sec. 503(a)(1)). The State Plan provisions are 
listed at proposed Sec. 641.325.



Sec. 641.305  Who is responsible for developing and submitting the 
State Plan?

    The Governor of each State is responsible for developing and 
submitting the State Plan to the Department.



Sec. 641.310  May the Governor delegate responsibility for developing 
and submitting the State Plan?

    Yes, the Governor may delegate responsibility for developing and 
submitting the State Plan, provided that any such delegation is 
consistent with State law and regulations. To delegate responsibility, 
the Governor must submit to the Department a signed statement indicating 
the individual and/or organization that will be submitting the State 
Plan on his or her behalf.



Sec. 641.315  Who participates in developing the State Plan?

    (a) In developing the State Plan the Governor must obtain the advice 
and recommendations of representatives from:
    (1) The State and Area Agencies on Aging;
    (2) State and Local Boards under the Workforce Investment Act (WIA);
    (3) Public and private nonprofit agencies and organizations 
providing employment services, including each grantee operating an SCSEP 
project within the State, except as provided for in Sec. 641.320(b);
    (4) Social service organizations providing services to older 
individuals;
    (5) Grantees under title III of the OAA;
    (6) Affected communities;
    (7) Underserved older individuals;
    (8) Community-based organizations serving older individuals;
    (9) Business organizations; and
    (10) Labor organizations.
    (b) The Governor may also obtain the advice and recommendations of 
other interested organizations and individuals, including SCSEP program 
participants, in developing the State Plan. (OAA sec. 503(a)(2)).



Sec. 641.320  Must all national grantees operating within a State 
participate in the State planning process?

    (a) Yes, although section 503(a)(2) requires the Governor to obtain 
the advice and recommendations of SCSEP national grantees with no 
reciprocal provision requiring the national grantees to participate in 
the State planning process, the eligibility provision at section 
514(c)(5) requires grantees to coordinate with other organizations at 
the State and local level. Therefore, any national grantee that does not 
participate in the State planning process may be deemed ineligible to 
receive SCSEP funds in the following Program Year.
    (b) National grantees serving older American Indians are exempted 
from participating in the planning requirements under section 503(a)(8) 
of the OAA. These national grantees may choose not to participate in the 
State

[[Page 373]]

planning process, however, the Department encourages participation. If a 
national grantee serving older American Indians does not participate in 
the State planning process, it must describe its plans for serving older 
American Indians in its application for SCSEP grant funds.



Sec. 641.325  What information must be provided in the State Plan?

    The Department issues instructions detailing the information that 
must be provided in the State Plan. At a minimum, the State Plan must 
include information on the following:
    (a) The ratio of eligible individuals in each service area to the 
total eligible population in the State;
    (b) The relative distribution of:
    (1) Eligible individuals residing in urban and rural areas within 
the State;
    (2) Eligible individuals who have the greatest economic need;
    (3) Eligible individuals who are minorities; and
    (4) Eligible individuals who have the greatest social need;
    (c) The employment situations and the types of skills possessed by 
eligible individuals;
    (d) The localities and populations for which community service 
projects of the type authorized by title V are most needed;
    (e) Actions taken or planned to coordinate activities of SCSEP 
grantees with the activities being carried out in the State under title 
I of WIA;
    (f) A description of the State's procedures and time line for 
ensuring an open and inclusive planning process that provides meaningful 
opportunity for public comment;
    (g) Public comments received, and a summary of the comments;
    (h) A description of the steps taken to avoid disruptions to the 
greatest extent possible (see Sec. 641.365); and
    (i) Such other information as the Department may require in the 
State Plan instructions. (OAA sec. 503(a)(3)-(4), (6)).



Sec. 641.330  How should the State Plan reflect community service needs?

    The Governor must ensure that the State Plan identifies the types of 
community services that are needed and the places where these services 
are most needed. The State Plan should specifically identify the needs 
and locations of those individuals most in need of community services 
and the groups working to meet their needs. (OAA sec. 503(a)(4)(E)).



Sec. 641.335  How should the Governor address the coordination of SCSEP 
services with activities funded under title I of WIA?

    The Governor must seek the advice and recommendations from 
representatives of the State and Area Agencies on Aging in the State and 
the State and Local Boards established under title I of WIA. (OAA sec. 
503(a)(2)). The State Plan must describe the steps that are being taken 
to coordinate SCSEP activities within the State with activities being 
carried out under title I of WIA. (OAA sec. 503(a)(4)(F)). The State 
Plan must describe the steps being taken to ensure that the SCSEP is an 
active partner in each One-Stop Delivery System and the steps that will 
be taken to encourage and improve coordination with the One-Stop 
Delivery System.



Sec. 641.340  Must the Governor submit a State Plan each year?

    The Governor is not required to submit a full State Plan each year; 
however, at a minimum, the Governor must seek the advice and 
recommendations of the individuals and organizations identified in the 
statute at section 503(a)(2) about what, if any, changes are needed, and 
publish the changes to the State Plan for public comment each year and 
submit a modification to the Department.



Sec. 641.345  What are the requirements for modifying the State Plan?

    (a) Modifications are required when:
    (1) There are changes in Federal or State law or policy that 
substantially change the assumptions upon which the State Plan is based;
    (2) There are changes in the State's vision, strategies, policies, 
performance indicators, or organizational responsibilities;
    (3) The State has failed to meet performance goals and must submit a 
corrective action plan; or

[[Page 374]]

    (4) There is a change in a grantee or grantees.
    (b) Modifications to the State Plan are subject to the same public 
review and comment requirements that apply to the development of the 
State Plan under Sec. Sec. 641.325 and 641.350.
    (c) The Department will issue additional instructions for the 
procedures that must be followed when requesting modifications to the 
State Plan. (OAA sec. 503(a)(1)).



Sec. 641.350  How should public comments be solicited and collected?

    The Governor should follow established State procedures to solicit 
and collect public comments. The State Plan must include a description 
of the State's procedures and schedule for ensuring an open and 
inclusive planning process that provides meaningful opportunity for 
public comment.



Sec. 641.355  Who may comment on the State Plan?

    Any individual or organization may comment on the Plan.



Sec. 641.360  How does the State Plan relate to the equitable 
distribution (ED) report?

    The two documents address some of the same areas, and are prepared 
at different points in time. The ED report is prepared by State agencies 
at the beginning of each fiscal year and provides a ``snapshot'' of the 
actual distribution of all of the authorized positions within the State, 
grantee-by-grantee, and the optimum number of participant positions in 
each designated area based on the latest available Census data. It 
provides a basis for improving the distribution of SCSEP positions 
within the State. (See OAA sec. 508). The State Plan is prepared by the 
Governor and covers many areas in addition to equitable distribution, as 
discussed in Sec. 641.325, and sets forth a proposed plan for 
distribution of authorized positions in the State. Any distribution or 
redistribution of positions made as a result of a State Plan proposal 
will be reflected in the subsequent year's ED report, which then forms 
the basis for the proposed distribution in the next year's State Plan. 
This process is iterative in that it moves the authorized positions from 
over-served areas to underserved areas over a period of time.



Sec. 641.365  How must the equitable distribution provisions be 
reconciled with the provision that disruptions to current participants 
should be avoided?

    Governors must describe the steps that are being taken to comply 
with the statutory requirement to avoid disruptions in the State Plan. 
(OAA sec. 503(a)(6)). When there are new Census data indicating that 
there has been a shift in the location of the eligible population or 
when there is over-enrollment for any other reason, the Department 
recommends a gradual shift that encourages current participants in 
subsidized community service positions to move into unsubsidized 
employment to make positions available for eligible individuals in the 
areas where there has been an increase in the eligible population. The 
Department does not define disruptions to mean that participants are 
entitled to remain in a subsidized community service employment position 
indefinitely. As discussed in Sec. Sec. 641.570 and 641.575, grantees 
may, under certain circumstances, place time limits on an SCSEP 
community service assignment, thus permitting positions to be 
transferred over time. Grantees shall not transfer positions from one 
geographic area to another without first notifying the State agency 
responsible for preparing the State Plan and equitable distribution 
report. Grantees must submit, in writing, any proposed changes in 
distribution that occur after submissions of the equitable distribution 
report to the Federal Project Officer for approval. All grantees are 
strongly encouraged to coordinate any proposed changes in position 
distribution with the other grantees servicing in the State, including 
the State project director, prior to submitting the proposed changes to 
their Federal Project Officer for approval.

[[Page 375]]



    Subpart D_Grant Application, Eligibility, and Award Requirements



Sec. 641.400  What entities are eligible to apply to the Department 
for funds to administer SCSEP community service projects?

    (a) National grants. Entities eligible to apply for national grants 
include nonprofit organizations, Federal public agencies, and Tribal 
organizations. These entities must be capable of administering a multi-
State program. State and local agencies may not apply for these funds.
    (b) National grants in a State. Section 514(e)(3) of the OAA permits 
nonprofit organizations, public agencies, and States to receive SCSEP 
funds when a national grantee in a State fails to meet its performance 
measures in the second and third year of failure. The poor performing 
grantee that had its funds competed is not eligible to compete for the 
same funds.
    (c) State grants. Section 506(e) of the OAA requires the Department 
to enter into agreements with each State to provide SCSEP services. 
States may use individual State agencies, political subdivisions of a 
State, a combination of such political subdivisions, or a national 
grantee operating in the State to administer SCSEP funds. If the State's 
funds are competed under section 514(f) of the OAA, other agencies 
within the State, political subdivisions of a State, a combination of 
political subdivisions of a State, and national grantees operating in 
the State are eligible to apply for funds. Other States may not apply 
for this funding.



Sec. 641.410  How does an eligible entity apply?

    (a) General. An eligible entity must follow the application 
guidelines issued by the Department. The Department will issue 
application guidelines announcing the availability of State and national 
SCSEP funds whether they are awarded on a competitive or noncompetitive 
basis. The guidelines will contain application due dates, application 
instructions, and other necessary information. All entities must submit 
applications in accordance with the Department's instructions.
    (b) National grant applicants. All applicants for SCSEP national 
grant funds, except organizations proposing to serve older American 
Indians, must submit their applications to the Governor of each State in 
which projects are proposed before submitting the application to the 
Department. (OAA sec. 503(a)(5)).
    (c) State applicants. A State that submits a Unified Plan under WIA 
section 501 may include the State's SCSEP community service project 
grant application in its Unified Plan. Any State that submits an SCSEP 
grant application as part of its WIA Unified Plan must address all of 
the application requirements as published in the Department's 
instructions. State Plan applications and modifications are addressed in 
Sec. Sec. 641.340 and 641.345.



Sec. 641.420  What factors will the Department consider in selecting 
grantees?

    The Department will select grantees from among applicants that are 
able to meet the eligibility and responsibility review criteria at 
section 514 of the OAA. (Section 641.430 contains the eligibility 
criteria and Sec. Sec. 641.440 and 641.450 contain the responsibility 
criteria.) If there is a full and open competition, the Department also 
will take the rating criteria described in the Solicitation for Grant 
Application or other instrument into consideration, including the 
applicant's/grantee's past performance in any prior Federal grants or 
contracts for the past 3 years.



Sec. 641.430  What are the eligibility criteria that each applicant must 
meet?

    To be eligible to receive SCSEP funds, each applicant must be able 
to demonstrate:
    (a) An ability to administer a program that serves the greatest 
number of eligible participants, giving particular consideration to 
individuals with greatest economic need, greatest social need, poor 
employment history or prospects, and over the age of 60;
    (b) An ability to administer a program that provides employment for 
eligible individuals in communities in

[[Page 376]]

which they reside, or in nearby communities, that will contribute to the 
general welfare of the community;
    (c) An ability to administer a program that moves eligible 
participants into unsubsidized employment;
    (d) An ability to move participants with multiple barriers to 
employment into unsubsidized employment;
    (e) An ability to coordinate with other organizations at the State 
and local levels, including the One-Stop Delivery System;
    (f) An ability to properly manage the program, including its plan 
for fiscal management of the SCSEP program;
    (g) An ability to minimize program disruption for current 
participants if there is a change in project sponsor and/or location, 
and its plan for minimizing disruptions; and
    (h) Any additional criteria that the Secretary of Labor deems 
appropriate in order to minimize disruptions for current participants.



Sec. 641.440  What are the responsibility conditions that an applicant 
must meet?

    Each applicant must meet each of the listed responsibility ``tests'' 
by not having committed any of the acts of misfeasance or malfeasance 
described in Sec. 641.440(a)-(n) of this section.
    (a) The Department has been unable to recover a debt from the 
applicant, whether incurred by the applicant or by one of its 
subgrantees or subcontractors, or the applicant has failed to comply 
with a debt repayment plan to which it agreed. In this context, a debt 
is established by final agency action, followed by three demand letters 
to the applicant, without payment in full by the applicant.
    (b) Established fraud or criminal activity of a significant nature 
within the applicant's organization.
    (c) Serious administrative deficiencies identified by the 
Department, such as failure to maintain a financial management system as 
required by Federal regulations.
    (d) Willful obstruction of the auditing or monitoring process.
    (e) Failure to provide services to applicants as agreed to in a 
current or recent grant or to meet applicable performance measures.
    (f) Failure to correct deficiencies brought to the grantee's 
attention in writing as a result of monitoring activities, reviews, 
assessments, or other activities.
    (g) Failure to return a grant closeout package or outstanding 
advances within 90 days after the grant expiration date or receipt of 
closeout package, whichever is later, unless an extension has been 
requested and granted.
    (h) Failure to submit required reports.
    (i) Failure to properly report and dispose of Government property as 
instructed by the Department.
    (j) Failure to have maintained effective cash management or cost 
controls resulting in excess cash on hand.
    (k) Failure to ensure that a subgrantee complies with applicable 
audit requirements, including OMB Circular A-133 audit requirements 
specified at 20 CFR 667.200(b) and Sec. 641.821.
    (l) Failure to audit a subgrantee within the period required under 
Sec. 641.821.
    (m) Final disallowed costs in excess of five percent of the grant or 
contract award if, in the judgment of the Grant Officer, the 
disallowances are egregious findings.
    (n) Failure to establish a mechanism to resolve a subgrantee's audit 
in a timely fashion.



Sec. 641.450  Are there responsibility conditions that alone will 
disqualify an applicant?

    (a) Yes, an applicant may be disqualified if either of the first two 
responsibility tests listed in Sec. 641.440 is not met.
    (b) The remainder of the responsibility tests listed in Sec. 
641.440 require a substantial or persistent failure (for 2 or more 
consecutive years).
    (c) The second responsibility test addresses ``fraud or criminal 
activity of a significant nature.'' The existence of significant fraud 
or criminal activity will be determined by the Department and typically 
will include willful or grossly negligent disregard for the use, 
handling, or other fiduciary duties of Federal funding where the grantee 
has no effective systems, checks, or safeguards to detect or prevent 
fraud or criminal activity. Additionally, significant fraud or criminal 
activity will

[[Page 377]]

typically include coordinated patterns or behaviors that pervade a 
grantee's administration or are focused at the higher levels of a 
grantee's management or authority. To be consistent with the OAA section 
514(d)(4)(B), this determination will be made on a case-by-case basis 
regardless of what party identifies the alleged fraud or criminal 
activity.



Sec. 641.460  How will the Department examine the responsibility of 
eligible entities?

    The Department will conduct a review of available records to assess 
each applicant's overall fiscal and administrative ability to manage 
Federal funds. The Department's responsibility review may consider any 
available information, including the organization's history with regard 
to the management of other grants awarded by the Department or by other 
Federal agencies. (OAA sec. 514(d)(1) and (d)(2)).



Sec. 641.465  Under what circumstances may the Department reject an 
application?

    (a) The Department may question any proposed project component of an 
application if it believes that the component will not serve the 
purposes of the SCSEP program. The Department may reject the application 
if the applicant does not submit or negotiate an acceptable alternative.
    (b) The Department may reject any application that the Grant Officer 
determines unacceptable based on the content of the application, rating 
score, past performance, fiscal management, or any other factor the 
Grant Officer believes serves the best interest of the program, 
including the application's comparative rating in a competition.



Sec. 641.470  What happens if an applicant's application is rejected?

    (a) Any entity whose application is rejected in whole or in part 
will be provided a timely notice as well as an explanation, or 
debriefing, of the Department's basis for its rejection. Notifications 
will include an explanation of the Department's decision and suggestions 
as to how to improve the applicant's position for future competitions.
    (b) Incumbent grantees will not have an opportunity to cure in an 
open competition because that will create an inequity in favor of 
incumbents which already have opportunities to correct deficiencies 
through technical assistance, provided by the Department, under OAA sec. 
514(e)(2)(A).
    (c) If the Administrative Law Judge (ALJ) rules that the 
organization should have been selected, in whole or in part, and the 
organization continues to meet the requirements of this part, the matter 
must be remanded to the Grant Officer. The Grant Officer must, within 10 
working days, determine whether the slots which are the subject of the 
ALJ's decision will be awarded, in whole or in part, to the organization 
and the timing of the award. In making this determination, the Grant 
Officer must take into account disruption to participants, disruption to 
grantees and the operational needs of the SCSEP. The Grant Officer must 
return the decision to the ALJ for review. In the event that the Grant 
Officer determines that it is not feasible, the successful appellant 
will be awarded its bid preparation costs or a pro rata share of those 
costs if Grant Officer's finding applies to only a portion of the funds 
that would be awarded to the successful appellant. An applicant so 
selected is not entitled to the full grant amount but will only receive 
the funds remaining in the grant that have not been expended by the 
current grantee through its operation of the grant and its subsequent 
closeout. The available remedy in an SCSEP non-selection appeal is the 
right to be selected in the future as an SCSEP grantee for the remainder 
of the current grant cycle. Neither retroactive nor immediately 
effective selection status may be awarded as relief in a non-selection 
appeal under this section and Sec. 641.900.

Any organization selected and/or funded as an SCSEP grantee is subject 
to having its slots reduced or to being removed as an SCSEP grantee of 
an ALJ decision so orders. The Grant Officer provides instructions on 
transition and closeout to both the newly designated grantee and to the 
grantee whose slots are affected or which is being removed.

[[Page 378]]

All parties must agree to the provisions of this paragraph as a 
condition of being an SCSEP grantee.



Sec. 641.480  May the Governor make recommendations to the Department 
on grant applications?

    (a) Yes, each Governor will have a reasonable opportunity to make 
comments on any application to operate a SCSEP project located in the 
Governor's State before the Department makes a final decision on a grant 
award. The Governor's comments should be directed to the Department and 
may include the anticipated effect of the proposal on the overall 
distribution of program positions within the State; recommendations for 
redistribution of positions to underserved areas as vacancies occur in 
previously encumbered positions in other areas; and recommendations for 
distributing any new positions that may become available as a result of 
an increase in funding for the State. The Governor's recommendations 
should be consistent with the State Plan.
    (b) Under noncompetitive conditions, the Governor may make the 
authorized recommendations on all applications. However, under 
competitive conditions, the Governor has the option of making the 
authorized recommendations on all applications or only on those 
applications proposed for award following the rating process. It is 
incumbent on each Governor to inform the Department of his or her intent 
to review the applications before or after the rating process.



Sec. 641.490  When may SCSEP grants be awarded competitively?

    (a) The Department must hold a competition for SCSEP funds when a 
grantee (national grantee, national grantee in a State, or State 
grantee) fails to meet its performance measures; the eligibility 
requirements; or the responsibility tests established by section 514 of 
the OAA.
    (b) The Department may hold a full and open competition before the 
beginning of a new grant period, or if additional grantees are funded. 
The details of the competition will be provided in a Solicitation for 
Grant Applications published in the Federal Register. The Department 
believes that full and open competition is the best way to assure the 
highest quality of services to eligible participants.



                   Subpart E_Services to Participants



Sec. 641.500  Who is eligible to participate in the SCSEP?

    (a) Anyone who is at least 55 years old and who is a member of a 
family with an income that is not more than 125 percent of the family 
income levels prepared by the Department of Health and Human Services 
and approved by the Office of Management and Budget (OMB) (poverty 
guidelines) is eligible to participate in the SCSEP. (OAA sec. 516(2)). 
A person with a disability may be treated as a ``family of one'' for 
income eligibility determination purposes. The Department will issue 
administrative guidance on the procedures for computing family income 
for purposes of determining SCSEP eligibility.
    (b) States may enter into agreements between themselves to permit 
cross-border enrollment of eligible participants. Such agreements should 
cover both State and national grantee slots and must be submitted to the 
Department.



Sec. 641.505  When is eligibility determined?

    Initial eligibility is determined at the time individuals apply to 
participate in the SCSEP. Once individuals become SCSEP participants, 
the grantee/subgrantee is responsible for verifying their continued 
income eligibility at least once every 12 months. Grantees may also 
verify an individual's eligibility as circumstances require.



Sec. 641.507  What types of income are included and excluded for 
participant eligibility determinations?

    (a) The prior practice of excluding the first $500 of a 
participant's income for eligibility purposes is contrary to the section 
516(2) of the OAA, which limits SCSEP eligibility to no more than 125 
percent of the poverty guidelines established by OMB. Therefore,

[[Page 379]]

this practice will no longer be permitted, either for current 
participants or new applicants.
    (b) The Department will use the U.S. Census Bureau's Current 
Population Survey (CPS) as the standard for determining income 
eligibility for the SCSEP. The Department will issue administrative 
guidance regarding income definitions and income inclusion and exclusion 
standards for determining eligibility.



Sec. 641.510  What happens if a grantee/subgrantee determines that a 
participant is no longer eligible for the SCSEP due to an increase in 
family income?

    If a grantee/subgrantee determines that a participant is no longer 
eligible for the SCSEP, the grantee/subgrantee must give the participant 
written notification of termination within 30 days, and the participant 
must be terminated 30 days after the participant receives the notice. 
The only exception is for participants found ineligible because of 
providing false information who must be terminated immediately with 
written notification of the reason therefore. Grantees/subgrantees must 
refer such individuals to the services provided under the One-Stop 
Delivery System or other appropriate partner program. Participants may 
file a grievance according to the grantee's procedures and subpart I.



Sec. 641.515  How must grantees/subgrantees recruit and select eligible 
individuals for participation in the SCSEP?

    (a) Grantees and subgrantees must develop methods of recruitment and 
selection that assure that the maximum number of eligible individuals 
have an opportunity to participate in the program. To the extent 
feasible, grantees should seek to enroll individuals who are eligible 
minorities, limited English speakers, Indians, or who have the greatest 
economic need at least in proportion to their numbers in the area, 
taking into consideration their rates of poverty and unemployment. (OAA 
sec. 502(b)(1)(M)).
    (b) Grantees and subgrantees must list all community service 
opportunities with the State Workforce Agency and all appropriate local 
offices and must use the One-Stop Delivery System in the recruitment and 
selection of eligible individuals. (OAA sec. 502(b)(1)(H)).



Sec. 641.520  Are there any priorities that grantees/subgrantees must 
use in selecting eligible individuals for participation in the SCSEP?

    (a) Yes, in selecting eligible individuals for participation in the 
SCSEP, priority must be given to:
    (1) Individuals who are at least 60 years old (OAA sec. 516(2)); and
    (2) A veteran, or the spouse of a veteran who died of a service-
connected disability, a member of the Armed Forces on active duty, who 
has been listed for a total of more than 90 days as missing in action, 
captured in the line of duty by a hostile force, or forcibly detained by 
a foreign government or power, the spouse of any veteran who has a total 
disability resulting from a service-connected disability, and the spouse 
of any veteran who died while a disability so evaluated was in 
existence, who meet program eligibility requirements under section 2 of 
the Jobs for Veterans Act, Public Law 107-288 (2002).
    (b) Grantees must apply these priorities in the following order:
    (1) Veterans and qualified spouses at least 60 years old;
    (2) Other individuals at least 60 years old;
    (3) Veterans and qualified spouses aged 55-59; and
    (4) Other individuals aged 55-59.



Sec. 641.525  Are there any other groups of individuals who should be 
given special consideration when selecting SCSEP participants?

    Yes, in selecting participants from among those individuals who are 
eligible, special consideration must be given, to the extent feasible, 
to individuals who have incomes below the poverty level, who have poor 
employment prospects and who have the greatest social and/or economic 
need and to individuals who are eligible minorities, limited English 
speakers, or Indians, as further defined in Sec. 641.515. (OAA sec. 
502(b)(1)(M)).

[[Page 380]]



Sec. 641.530  Must the grantee/subgrantee always select priority or 
preference individuals?

    Grantees must always select qualified individuals in accordance with 
Sec. 641.520. Grantees must apply the preference, to the extent 
feasible, when selecting individuals within the priority groups, unless 
the grantee determines based on an assessment of their circumstances and 
the available community service employment opportunities, that a non-
preference individual should receive services over a preference 
individual. When the Department examines the characteristics of a 
grantee's participant population, the grantee may be asked to provide 
evidence that it is adhering to the enrollment priorities and 
preferences set forth in Sec. Sec. 641.515, 641.520, and 641.525.



Sec. 641.535  What services must grantees/subgrantees provide to 
participants?

    (a) When individuals are selected for participation in the SCSEP, 
the grantee/subgrantee is responsible for:
    (1) Providing orientation to the SCSEP, including information on 
project goals and objectives, community service assignments, training 
opportunities, available supportive services, the availability of a free 
physical examination, participant rights and responsibilities, and 
permitted and prohibited political activities (OAA sec. 502);
    (2) Assessing participants' work history, skills and interests, 
talents, physical capabilities, aptitudes, needs for supportive 
services, occupational preferences, training needs, potential for 
performing community service assignments, and potential for transition 
to unsubsidized employment as necessary, but no less frequently that two 
times during a twelve month period;
    (3) Using the information gathered during the assessment to develop 
IEPs for participants; except that if an assessment has already been 
performed and an IEP developed under title I of WIA, the WIA IEP will 
satisfy the requirement for an SCSEP assessment and IEP (see Sec. 
641.260) and updating the IEPs as necessary to reflect information 
gathered during the participant assessments (OAA sec. 502(b)(1)(N));
    (4) Placing participants in appropriate community service activities 
in the community in which they reside, or in a nearby community (OAA 
sec. 502(b)(1)(B));
    (5) Providing or arranging for necessary training specific to the 
participants' community service assignments (OAA sec. 502(b)(1)(I));
    (6) Assisting participants in arranging for other training 
identified in their SCSEP IEPs (OAA sec. 502(b)(1)(N));
    (7) Assisting participants in arranging for needed supportive 
services identified in their SCSEP IEPs (OAA sec. 502(b)(1)(N));
    (8) Providing participants with wages and fringe benefits for time 
spent working in the assigned community service employment activity (OAA 
sec. 502(c)(6)(A)(i));
    (9) Ensuring that participants have safe and healthy working 
conditions at their community service worksites (OAA sec. 502(b)(1)(J));
    (10) Verifying participant income eligibility at least once every 12 
months;
    (11) Assisting participants in obtaining unsubsidized employment, 
including providing or arranging for employment counseling in support of 
their IEPs;
    (12) Providing appropriate services for participants through the 
One-Stop Delivery System established under WIA (OAA sec. 502(b)(1)(O));
    (13) Providing counseling on participants' progress in meeting the 
goals and objectives identified in their IEPs, and in meeting their 
supportive service needs (OAA sec. 502(b)(1)(N)(iii));
    (14) Following-up with participants placed into unsubsidized 
employment during the first 6 months of placement to make certain that 
participants receive any follow-up services they may need to ensure 
successful placements; and
    (15) Following-up at 6 months with participants who are placed in 
unsubsidized employment to determine whether they are still employed 
(OAA sec. 513(c)(2)(B));

[[Page 381]]

    (b) In addition to the services listed in paragraph (a) of this 
section, grantees and subgrantees must provide service to participants 
according to administrative guidelines that may be issued by the 
Department.
    (c) Grantees may not use SCSEP funds for individuals who only need 
job search assistance or job referral services. Grantees may provide job 
search assistance and job club activities to participants who are 
enrolled in the SCESEP and are assigned to community service 
assignments.



Sec. 641.540  What types of training may grantees/subgrantees provide 
to SCSEP participants?

    (a) Grantees and subgrantees must arrange skill training that is 
realistic and consistent with the participants' IEP, and that makes the 
most effective use of their skills and talents. This section does not 
apply to training provided as part of a community service assignment.
    (b) Training may be provided before or after placement in a 
community service activity.
    (c) Training may be in the form of lectures, seminars, classroom 
instruction, individual instruction, on-the-job experiences, or other 
arrangements, including but not limited to, arrangements with other 
workforce development programs such as WIA. (OAA sec. 502(c)(6)(A)(ii)).
    (d) Grantees and subgrantees are encouraged to place a major 
emphasis on training available through on-the-job experience.
    (e) Grantees/subgrantees are encouraged to obtain training through 
locally available resources, including host agencies, at no cost or 
reduced cost to the SCSEP.
    (f) Grantees/subgrantees may pay reasonable costs for instructors, 
classroom rental, training supplies and materials, equipment, tuition, 
and other costs of training. Participants may be paid wages while in 
training. (OAA sec. 502(c)(6)(A)(ii)).
    (g) Grantees/subgrantees may pay for costs associated with travel 
and room and board necessary to participate in training.
    (h) Nothing in this section prevents or limits participants from 
engaging in self-development training available through other sources 
during hours when not assigned to community service activities.



Sec. 641.545  What supportive services may grantees/subgrantees provide 
to participants?

    (a) Grantees/subgrantees may provide or arrange for supportive 
services to assist participants in successfully participating in SCSEP 
projects, including but not limited to payment of reasonable costs of 
transportation; health care and medical services; special job-related or 
personal counseling; incidentals such as work shoes, badges, uniforms, 
eyeglasses, and tools; child and adult care; temporary shelter; and 
follow-up services. (OAA sec. 502(c)(6)(A)(iv)).
    (b) To the extent practicable, the grantee/subgrantee should provide 
for the payment of these expenses from other resources.



Sec. 641.550  What responsibility do grantees/subgrantees have to place 
participants in unsubsidized employment?

    Because one goal of the program is to foster economic self-
sufficiency, grantees and subgrantees should make reasonable efforts to 
place as many participants as possible into unsubsidized employment, in 
accordance with each participant's IEP. Grantees are responsible for 
working with participants to ensure that, for those participants whose 
IEPs include an unsubsidized employment goal, the participants are 
receiving services and taking actions designed to help them achieve this 
goal. Grantees and subgrantees must contact private and public employers 
directly or through the One-Stop Delivery System to develop or identify 
suitable unsubsidized employment opportunities. They must also encourage 
host agencies to assist participants in their transition to unsubsidized 
employment, including unsubsidized employment with the host agency.



Sec. 641.555  What responsibility do grantees have to participants who 
have been placed in unsubsidized employment?

    (a) Grantees must contact placed participants during the first 6 
months to

[[Page 382]]

determine if participants have the necessary supportive services to 
remain in the job.
    (b) Grantees must contact participants 6 months after placement to 
determine if they have been retained by the employer or use wage records 
to verify continued employment. (OAA sec. 513(c)(2)(B)).
    (c) Grantees may have other follow-up requirements under subparts G 
and H.



Sec. 641.560  May grantees place participants directly into unsubsidized 
employment?

    Grantees are encouraged to refer individuals who may be placed 
directly in an unsubsidized employment position to an employment 
provider, including the One-Stop for job placement assistance under WIA. 
The SCSEP encourages grantees to work closely with participants to 
develop an IEP and assessment to determine what training the individual 
may need. The Department encourages grantees to work with those 
participants who are the most difficult to place to provide them with 
the services necessary to develop the skills needed for job placement.



Sec. 641.565  What policies govern the provision of wages and fringe 
benefits to participants?

    (a) Wages. Grantees must pay participants the highest applicable 
minimum wage for time spent in orientation, training required by the 
grantee/subgrantee, and work in community service assignments. The 
highest applicable minimum wage is either the minimum wage applicable 
under the Fair Labor Standards Act of 1938; the State or local minimum 
wage for the most nearly comparable covered employment; or the 
prevailing rate of pay for persons employed in similar public 
occupations by the same employer.
    (b) Fringe benefits--(1) Required fringe benefits. Except as 
provided in paragraphs (b)(3) and (b)(4) of this section, grantees must 
ensure that participants receive all fringe benefits required by law.
    (i) Grantees must provide fringe benefits uniformly to all 
participants within a project or subproject, unless the Department 
agrees to waive this provision due to a determination that such a waiver 
is in the best interests of applicants, participants, and project 
administration.
    (ii) Grantees must offer participants the opportunity to receive 
physical examinations annually.
    (A) Physical examinations are a fringe benefit, and not an 
eligibility criterion. The examining physician must provide, to 
participants only, a written report of the results of the examination. 
Participants may, at their option, provide the grantee or subgrantee 
with a copy of the report.
    (B) Participants may choose not to accept the physical examination. 
In that case, the grantee or subgrantee must document this refusal, 
through a signed statement or other means, within 60 workdays after 
commencement of the community service assignment. Each year thereafter, 
grantees and subgrantees must offer the physical examination and 
document the offer and any participant's refusal.
    (iii) When participants are not covered by the State workers' 
compensation law, the grantee or subgrantee must provide participants 
with workers' compensation benefits equal to those provided by law for 
covered employment.
    (2) Allowable fringe benefit costs. Grantees may provide the 
following fringe benefits: annual leave; sick leave; holidays; health 
insurance; social security; and any other fringe benefits approved in 
the grant agreement and permitted by the appropriate Federal cost 
principles found in OMB Circulars A-87 and A-122, except for retirement 
costs. (See subpart H, Sec. Sec. 641.847 and 641.850).
    (3) Retirement. Grantees may not use grant funds to provide 
contributions into a retirement system or plan.
    (4) Unemployment compensation. Unless required by law, grantees may 
not pay the cost of unemployment insurance for participants.



Sec. 641.570  Is there a time limit for participation in the program?

    No, there is no time limit for participation in the SCSEP; however, 
a grantee may establish a maximum duration of enrollment in the grant 
agreement, when authorized by the Department. If

[[Page 383]]

there is such a time limit on enrollment established in the grant 
agreement, the grantee must provide for a system to transition 
participants to unsubsidized employment or other assistance before the 
maximum enrollment duration has expired. Provisions for transition must 
be reflected in the participant's IEP.



Sec. 641.575  May a grantee establish a limit on the amount of time 
its participants may spend at each host agency?

    Yes, grantees may establish limits on the amount of time that its 
participants may spend at a host agency. Such limits should be 
established in the grant agreement, as approved by the Department, and 
reflected in the participants' IEPs.



Sec. 641.580  Under what circumstances may a grantee terminate a 
participant?

    (a) If, at any time, a grantee or subgrantee determines that a 
participant was incorrectly declared eligible as a result of false 
information given by that individual, the grantee or subgrantee must 
immediately terminate the participant and provide the participant with a 
written notice that explains the reason for termination.
    (b) If, during annual income verification, a grantee finds a 
participant to be no longer eligible for enrollment because of changes 
in family income, the grantee may terminate the participant. In order to 
terminate the participant in such a case, the grantee must provide the 
participant with a written notice and terminate the participant 30 days 
after the participant receives the notice. (See Sec. 641.505).
    (c) If, at any time, the grantee or subgrantee determines that it 
incorrectly determined a participant to be eligible for the program 
through no fault of the participant, the grantee or subgrantee must give 
the participant immediate written notice explaining the reason(s) and 
must terminate the participant 30 days after the participant receives 
the notice.
    (d) A grantee and subgrantee may terminate a participant for cause. 
In doing so, the grantee or subgrantee must inform the participant, in 
writing, of the reason(s) for termination. Grantees must discuss the 
proposed reasons for such terminations in the grant application, and 
must discuss such reasons with participants and provide each participant 
a written copy of its policies for terminating a participant for cause 
or otherwise at the time of enrollment.
    (e) A grantee or subgrantee may terminate a participant if the 
participant refuses to accept a reasonable number of job offers or 
referrals to unsubsidized employment consistent with the SCSEP IEP and 
there are no extenuating circumstances that would hinder the participant 
from moving to unsubsidized employment.
    (f) When a grantee or subgrantee makes an unfavorable determination 
of enrollment eligibility under paragraphs (a), (b), and (c) of this 
section, it must give the individual a reason for termination and, when 
feasible, should refer the individual to other potential sources of 
assistance, such as the One-Stop Delivery System.
    (g) Any termination, as described in paragraphs (a) through (f) of 
this section, must be consistent with administrative guidelines issued 
by the Department, and the termination must be subject to the applicable 
grievance procedures described in Sec. 641.910.
    (h) Participants may not be terminated from the program solely on 
the basis of their age. Grantees and subgrantees may not impose an upper 
age limit for participation in the SCSEP.



Sec. 641.585  Are participants employees of the Federal Government?

    (a) No, participants are not Federal employees. (OAA sec. 504(a)).
    (b) If a Federal agency is a grantee or host agency, Sec. 641.590 
applies.



Sec. 641.590  Are participants employees of the grantee, the local 
project, and/or the host agency?

    Grantees must determine if a participant is an employee of the 
grantee, local project, or host agency as the definition of an 
``employee'' varies depending on the laws defining an employer/employee 
relationship.

[[Page 384]]



 Subpart F_Private Sector Training Projects Under Section 502(e) of the 
                                   OAA



Sec. 641.600  What is the purpose of the private sector training 
projects authorized under section 502(e) of the OAA?

    The purpose of the private sector training projects authorized under 
section 502(e) of the OAA is to allow States, public agencies, nonprofit 
organizations and private businesses to develop and operate projects 
designed to provide SCSEP participants with second career training and 
placement opportunities with private business concerns. In addition, the 
OAA provides section 502(e) grantees or contractors with opportunities 
to initiate or enhance their relationships with the private sector, 
fostering collaboration with the One-Stop Delivery System, improving 
their ability to meet and exceed performance standards, and broadening 
the range of options available to SCSEP participants.



Sec. 641.610  How are section 502(e) activities administered?

    (a) The Department may enter into agreements with States, public 
agencies, private nonprofit organizations, and private businesses to 
carry out section 502(e) projects.
    (b) To the extent possible, private sector training activities 
should emphasize different work modes, such as job sharing, flex-time, 
flex-place, arrangements relating to reduced physical exertion, and 
innovative work modes with a focus on second career training and 
placement in growth industries in jobs requiring new technological 
skills.
    (c) Grantees must coordinate section 502(e) private sector training 
activities with programs carried out under title I of WIA and with SCSEP 
projects operating in the area whenever possible.



Sec. 641.620  How may an organization apply for section 502(e) funding?

    Organizations applying for section 502(e) funding must follow the 
instructions issued by the Department which will be published in the 
Federal Register, or in another appropriate medium.



Sec. 641.630  What private sector training activities are allowable 
under section 502(e)?

    Allowable activities authorized under section 502(e) include:
    (a) Providing participants with services leading to transition to 
private sector employment, including:
    (1) Training in new technological skills;
    (2) On-the-job training with private-for-profit employers;
    (3) Work experience with private-for-profit employers;
    (4) Adult basic education;
    (5) Classroom training;
    (6) Occupational skills training;
    (7) In combination with other services listed in paragraphs (a)(1) 
through (6) of this section or in conjunction with the local One-Stop 
Delivery System, job clubs or job search assistance;
    (8) In combination with other services listed in paragraphs (a)(1) 
through (7) of this section, supportive services, which may include 
counseling, motivational training, and job development; or
    (9) Combinations of the above-listed activities.
    (b) Working with employers to develop jobs and innovative work modes 
including job sharing, flex-time, flex-place and other arrangements, 
including those relating to reduced physical exertion.



Sec. 641.640  How do the private sector training activities authorized 
under section 502(e) differ from other SCSEP activities?

    (a) The private sector training activities authorized under section 
502(e) are not required to have a community service project component. 
However, 502(e) participants must also be co-enrolled in a community 
service assignment in a SCSEP project.
    (b) The private sector training activities authorized under section 
502(e) focus solely on providing SCSEP-eligible individuals with second 
career training, placement opportunities, and other assistance necessary 
to obtain unsubsidized employment in the private sector.
    (c) The Department is authorized to pay all of the costs of section 
502(e) activities (i.e., there is no non-Federal

[[Page 385]]

share requirement). However section 502(e) grantees may choose to 
provide a non-Federal share and are encouraged to do so.
    (d) The Department may enter directly into agreements with private 
businesses for section 502(e) activities.
    (e) Grantees may fund private-for-profit and other organizations 
that do not have the IRS 501(c)(3) designation or are not public 
agencies to conduct section 502(e) activities if provided for in their 
grant or contract agreement with the Department.



Sec. 641.650  Does the requirement that not less than 75 percent of the 
funds be used to pay participant wages and fringe benefits apply to 
section 502(e) activities?

    Yes, under section 502(c)(6)(B) of the OAA, 75 percent of SCSEP 
funds made available through a grant must be used to pay for the wages 
and fringe benefits of participants employed under SCSEP projects. This 
requirement applies to the total grant, and not necessarily to 
individual components of the grant. For entities that receive an SCSEP 
grant for both community service projects and section 502(e) projects, 
the requirement applies to the total grant. For entities that receive 
only a section 502(e) grant, the requirement applies to that grant.



Sec. 641.660  Who is eligible to participate in section 502(e) private 
sector training activities?

    The same eligibility criteria used in the community service portion 
of the program apply for participation in the private sector training 
activities. (See subpart E, Sec. Sec. 641.500, 641.510, 641.520, 
641.525, and 641.530).



Sec. 641.665  When is eligibility determined?

    Eligibility is determined at the time individuals apply to 
participate in the SCSEP. Grantees may also verify an individual's 
eligibility as circumstances require.



Sec. 641.670  May an eligible individual be enrolled simultaneously 

in section 502(e) private sector training activities operated by one 
grantee and a community service SCSEP project operated by a different 
SCSEP grantee?

    Yes, an eligible individual must be enrolled simultaneously in 
section 502(e) private sector training activities and a community 
service SCSEP project, operated by two different SCSEP grantees. This is 
known as co-enrollment.



Sec. 641.680  How should grantees report on participants who are 
co-enrolled?

    Referrals from a regular SCSEP grantee to a 502(e) only grantee that 
result in an unsubsidized placement may also be credited to the 
referring SCSEP grantee. However, if the SCSEP grantee is also a 502(e) 
grantee, the unsubsidized placement of the participant may only be 
counted once. The Department will issue administrative guidance on 
additional requirements.



Sec. 641.690  How is the performance of section 502(e) grantees measured?

    (a) The following performance measures apply to section 502(e) 
grantees. The common performance measures that apply to this program 
are:
    (1) Entered employment;
    (2) Retention in employment; and
    (3) Earnings increase.
    (b) These measures are defined in and governed by subpart G of this 
part and the applicable provisions of administrative issuances 
implementing the SCSEP performance standards.
    (c) If a section 502(e) grantee fails to meet its performance 
standards, the Department may require corrective action, may provide 
technical assistance, or may decline to fund the grantee in the next 
Program Year.



                  Subpart G_Performance Accountability



Sec. 641.700  What performance measures apply to SCSEP grantees?

    (a) The OAA, at section 513(b), enumerates the indicators of 
performance as follows:

[[Page 386]]

    (1) The number of persons served, with particular consideration 
given to individuals with greatest economic need, greatest social need, 
or poor employment history or prospects, and individuals who are over 
the age of 60;
    (2) Community services provided;
    (3) Placement into and retention in unsubsidized public or private 
employment;
    (4) Satisfaction of the participants, employers, and their host 
agencies with their experiences and the services provided; and
    (5) Additional indicators of performance that the Department 
determines to be appropriate to evaluate services and performance.
    (b) The additional indicator of performance is earnings increase.



Sec. 641.710  How are these performance indicators defined?

    (a) For ease of calculation and to make the indicators better 
measures of performance, the Department has divided some of the 
indicators into multiple parts.
    (b) The individual indicators are defined as follows:
    (1) The number of persons served is defined by comparing the total 
number of participants served to a grantee's authorized number of 
positions adjusted for the differences in wages required paid in a State 
or area.
    (2) The number of persons served with the greatest economic need, 
greatest social need or with poor employment history or prospects and 
individuals who are over age 60 is defined by comparing the total number 
of participants served to the total number of participants who:
    (i) Have an income level at or below the poverty line; (OAA sec. 
101(27))
    (ii) Have physical and mental disabilities; language barriers; and 
cultural, social, or geographical isolation, including isolation caused 
by racial or ethnic status, that restricts the ability of the individual 
to perform normal daily tasks, or threatens the capacity of the 
individual to live independently; or (OAA sec. 101(28))
    (iii) Have poor employment history or prospects; and
    (iv) Are over the age of 60.
    (3) Community services provided is defined as the number of hours of 
community service provided by SCSEP participants. Community service is 
defined in the OAA at section 516(1) and in Sec. 641.140.
    (4) Placement into unsubsidized public or private employment is 
defined by comparing the number of participants placed into unsubsidized 
employment, as defined in Sec. 641.140, to the total number authorized 
positions. (OAA sec. 513(c)(2)(A)).
    (5) Retention in public or private unsubsidized employment means the 
number of participants retained in unsubsidized employment, as defined 
in Sec. 641.140, compared to the total number of those who are employed 
in the first quarter after exit--i.e., the number placed. (OAA sec. 
513(c)(2)(B)).
    (6) Satisfaction of participants means the results accumulated as 
the results of surveys of the participant customer group of their 
satisfaction with their experiences and the services provided.
    (7) Satisfaction of employers means the results accumulated as the 
results of surveys of the employer customer group of their satisfaction 
with their experiences and the services provided.
    (8) Satisfaction of host agencies means the results accumulated as 
the results of surveys of the host agency customer group of their 
satisfaction with their experiences and the services provided.
    (9) Earnings increase means the percentage change in earnings pre-
registration to post-program, and between the first quarter after exit 
and the third quarter after exit.
    (c) The Department will publish administrative issuances that 
elaborate on these definitions and their application.



Sec. 641.715  What are the common performance measures?

    The common performance measures are a Government-wide initiative 
adopted by the Department that apply to DOL-funded employment and job 
training programs. Adoption of these common measures across government 
will help implement the President's Management Agenda for budget and 
performance integration as well as reduce barriers to integrated service 
delivery through the local One-Stop Career Centers. Grantees will be 
required to report on the common performance

[[Page 387]]

measures as required under Sec. 641.879. The common performance measure 
indicators are:
    (a) Entered employment, defined as the percentage employed in the 
first quarter after program exit;
    (b) Retention in employment, defined as the percentage of those 
employed in the first quarter after exit who were still employed in the 
second and third quarter after program exit; and
    (c) Earnings increase, defined as the percentage change in earnings 
pre-registration to post-program; and between the first quarter after 
exit and the third quarter after exit.
    (d) Program efficiency is defined as the cost per participant.



Sec. 641.720  How do the common performance measures affect grantees 
and the OAA performance measures?

    One of the common performance measures, earnings increase, has been 
included as a performance measures under Sec. Sec. 641.700 and 641.710 
under the Secretary's discretionary authority. The two additional common 
performance measures will be used to determine the overall success of 
the program as compared to other programs Government-wide. The results 
will be the basis for making funding determinations for the SCSEP. The 
Department will require grantees to collect data for the common 
performance measures as a reporting requirement under Sec. 641.879.



Sec. 641.730  How will the Department set and adjust performance levels?

    (a) Before the beginning of each Program Year, the Department will 
negotiate and set baseline levels of negotiated performance for each 
measure with each grantee, taking into consideration the need to promote 
continuous improvement in the program overall, past performance, and, 
when applicable, the performance of similar programs.
    (b) The baseline level of negotiated performance for ``placement 
into public or private unsubsidized employment'' is set at 20 percent. 
(OAA sec. 513(a)(2)(C)).
    (c) Grantees may request adjustments from these baseline levels 
before or during the Program Year. Grantees may base such requests only 
on the factors in paragraph (d) of this section. The Department will 
issue guidance for negotiating adjustment requests.
    (d) Adjustments to performance levels may be made based on the 
following conditions only:
    (1) High rates of unemployment, poverty, or welfare recipiency in 
the areas served by a grantee relative to other areas of the State or 
Nation;
    (2) Significant economic downturns in the areas served by the 
grantee or in the national economy; or
    (3) Significantly higher numbers or proportions of participants with 
one or more barriers to employment served by a grantee relative to 
grantees serving other areas of the State or Nation. (OAA sec. 
513(a)(2)(B)).
    (e) Grantees may seek an adjustment to their performance levels, 
based on the factors listed in paragraph (d) of this section, during the 
negotiation process or during the grant period.



Sec. 641.740  How will the Department determine whether a grantee 
fails, meets, or exceeds negotiated levels of performance?

    (a) The Department will evaluate each performance indicator to 
determine the level of success that a grantee has achieved and take the 
aggregate to determine if, on the whole, the grantee met its performance 
objectives. The aggregate is calculated by combining the percentage 
results achieved on each of the individual measures to obtain an average 
score.
    (b) Once the aggregate is determined, if a grantee is unable to meet 
80 percent of the negotiated levels of performance for the aggregate of 
all of the performance measures, that grantee has failed to meet its 
performance measures. Performance in the range of 80 to 100 percent 
constitutes meeting the levels for the performance measures. Performance 
in excess of 100 percent constitutes exceeding the levels for the 
performance measures.
    (c) A national grantee in a State must meet 80 percent of the 
negotiated level of performance for its national measures, and it must 
meet the measures negotiated for the State in which the national grantee 
serves.

[[Page 388]]

    (d) The Department will impose the sanctions outlined in section 514 
of the OAA and in Sec. Sec. 541.750, 541.760, 541.770 and 541.790 when 
a grantee fails to meet overall negotiated levels of performance.
    (e) When a grantee fails one or more measures, but does not fail to 
meet its performance measures in the aggregate, the Department will 
provide technical assistance on the particular measures that a grantee 
failed.
    (f) The Department will provide further guidance through 
administrative issuances.



Sec. 641.750  What sanctions will the Department impose if a grantee 
fails to meet negotiated levels of performance?

    (a) Grantees that fail to meet negotiated levels of performance will 
be subject to the sanctions established in section 514 of the OAA. The 
sanctions that apply are grantee specific (i.e., national grantee, 
national grantee in a State, or State grantee). These sanctions range 
from requiring grantees to submit a corrective action plan and receive 
technical assistance, to competition of part of the grant funds, to a 
competition of all of the grant funds.
    (b) Until the Department establishes baseline levels for customer 
satisfaction measures, grantees that only fail the customer satisfaction 
performance measure, but meet or exceed all other performance measures, 
will not be subject to sanctions. The Department will provide additional 
instructions for how it will measure customer satisfaction.



Sec. 641.760  What sanctions will the Department impose if a national 
grantee fails to meet negotiated levels of performance under the total 
SCSEP grant?

    (a) The Department will annually assess the performance of each 
national grantee no later than 120 days after the end of a Program Year 
to determine if a national grantee has failed to meet its negotiated 
levels of performance. (OAA sec. 514(e)(1)).
    (b) If the Department determines that a national grantee has failed 
to meet its negotiated levels of performance for a Program Year, the 
national grantee must submit a corrective action plan not later than 160 
days after the end of that Program Year. The plan must detail the steps 
the national grantee will take to improve performance. The Department 
will provide technical assistance related to performance issue(s). (OAA 
sec. 514(e)(2)(A)-(e)(2)(B)).
    (c) If a national grantee fails to meet its negotiated levels of 
performance for a second consecutive Program Year, the Department will 
conduct a national competition to award an amount equal to 25 percent of 
that organization's funds in the following full Program Year. (OAA sec. 
514(e)(2)(C)). The Department reserves the right to specify the 
locations of the positions that will be subject to competition. The poor 
performing grantee that had its funds competed is not eligible to 
compete for the same funds.
    (d) If a national grantee fails to meet its negotiated levels of 
performance for a third consecutive Program Year, the Department will 
conduct a national competition to award an amount equal to the full 
amount of that organization's remaining grant after deducting the amount 
awarded in paragraph (c) of this section. (OAA sec. 514(e)(2)(D)). The 
poor performing grantee that had its funds competed is not eligible to 
compete for the same funds.
    (e) To the extent possible, the competitions outlined in paragraphs 
(c) and (d) of this section will be conducted in such a way as to 
minimize the disruption of services to participants. (OAA sec. 
514(e)(2)(C)).
    (f) The organizations selected to receive a grant through the 
national competitions discussed in paragraphs (c) and (d) of this 
section must continue to provide service to the geographic areas 
formerly served by the national grantee(s) whose positions were the 
subject of the competition. (OAA sec. 514(e)(2)(D)).



Sec. 641.770  What sanctions will the Department impose if a national 
grantee fails to meet negotiated levels of performance in any State it 
serves?

    (a) Each national grantee must be assessed on the performance of the 
projects it operates within any State. Such an assessment may lead to a 
finding that the national grantee has failed

[[Page 389]]

to meet negotiated levels of performance for its projects in a 
particular State. A national grantee's failure to meet performance 
measures in a State may be mitigated by justifying the failure, taking 
into consideration the adjustments permitted under section 513(a)(2)(B) 
of the OAA, or size of the project. (OAA sec. 514(e)(3)(A)).
    (b) If the Department determines that there has been a failure to 
meet negotiated levels of performance within a State, the Department 
will require a corrective action plan and may take other appropriate 
actions, including transfer of the responsibility for the project to 
other grantees or providing technical assistance. (OAA sec. 
514(e)(3)(B)).
    (c) The Department will take corrective action if there is a second 
consecutive Program Year of failure by a national grantee operating 
within a particular State. Such corrective action may include transfer 
of, or a competition for, all or a portion of the project(s) of the 
national grantee in the State to another entity. Entities that were the 
subject of this corrective action will not be eligible to receive the 
funds of the transfer or to compete. (OAA sec. 514(e)(3)(C)).
    (d) If there is a third consecutive Program Year of failure, the 
Department will conduct a competition for all of the funds available to 
a national grantee for operations within a particular State. Entities 
that are the subject of this corrective action will not be eligible to 
participate in the competition. (OAA sec. 514(e)(3)(D)).



Sec. 641.780  When will the Department assess the performance of a 
national grantee in a State?

    (a) The Department will assess the performance of a national grantee 
in a State annually.
    (b) The Department may also initiate an assessment of a national 
grantee's performance in a State if:
    (1) The Department receives information indicating that a grantee is 
having difficulty implementing a particular performance indicator; or
    (2) The Governor of a State, or his or her designee, requests the 
Department to review the performance of a particular national grantee 
serving in the State. (OAA sec. 514(e)(4)).



Sec. 641.790  What sanctions will the Department impose if a State 
grantee fails to meet negotiated levels of performance?

    (a) The Department will annually assess the performance of State 
grantees no later than 120 days after the end of a Program Year to 
determine if the State has failed to meet its negotiated levels of 
performance. (OAA sec. 514(f)(1)).
    (b) A State failing to meet its negotiated levels of performance 
must submit a corrective action plan not later than 160 days after the 
end of the Program Year in which the failure occurred. The plan must 
detail the steps the State will take to improve performance. The 
Department will also provide technical assistance. (OAA sec. 514(f)(2) 
and (f)(3)).
    (c) If a State fails to meet its negotiated levels of performance 
after two consecutive years, then the State must conduct a competition 
to award an amount equal to 25 percent of its allotted funds for the 
following year. The Department reserves the right to specify the 
locations of the positions that will be subject to competition.
    (d) In the event that a State fails to meet its negotiated levels of 
performance after three consecutive years, then the State must conduct a 
competition to award an amount equal to 100 percent of its allotted 
funds for the following year.
    (e) Entities that operated any portion of the State's program that 
contributed to the failure will not be eligible to participate in the 
competitions.



Sec. 641.795  Will there be incentives for exceeding performance 
measures?

    Yes, the Department will address non-financial incentives in 
administrative issuances. The Department is authorized by section 
515(c)(1) of the OAA to use recaptured funds to provide incentive 
grants. The Department will issue administrative guidance detailing how 
incentive grants will be awarded.

[[Page 390]]



                  Subpart H_Administrative Requirements



Sec. 641.800  What uniform administrative requirements apply to the 
use of SCSEP funds?

    (a) SCSEP recipients and subrecipients must follow the uniform 
administrative requirements and allowable cost requirements that apply 
to their type of organization. (OAA sec. 503(f)(2)).
    (b) Governments, State, local, and Indian Tribal Organizations that 
receive SCSEP funds under grants or cooperative agreements must follow 
the common rule implementing OMB Circular A-102, ``Grants and 
Cooperative Agreements with State and Local Governments'' (10/07/1994) 
(further amended 08/29/1977), codified at 29 CFR part 97.
    (c) Nonprofit and commercial organizations, institutions of higher 
education, hospitals, other nonprofit organizations, and commercial 
organizations that receive SCSEP funds under grants or cooperative 
agreements must follow the common rule implementing OMB Circular A-110, 
codified at 29 CFR part 95.



Sec. 641.803  What is program income?

    Program income, as described in 29 CFR 97.25 (governments) and 29 
CFR 95.2(bb) (nonprofit and commercial organizations), is income earned 
by the recipient or subrecipient during the grant period that is 
directly generated by an allowable activity supported by grant funds or 
earned as a result of the award of grant funds. Program income includes 
income earned from license fees and royalties for copyrighted material, 
patents, patent applications, trademarks, and inventions produced under 
an award. (See 29 CFR 95.24(e) and 29 CFR 97.25(e)). Costs of generating 
SCSEP program income may be deducted from gross income received by SCSEP 
recipients and subrecipients to determine SCSEP program income earned or 
generated provided these costs have not been charged to the SCSEP 
program.



Sec. 641.806  How must SCSEP program income be used?

    (a) SCSEP recipients that earn or generate program income during the 
grant period must add the program income to the Federal and non-Federal 
funds committed to the SCSEP program and use it for the program, as 
provided in 29 CFR 95.24(a) or 29 CFR 97.25(g)(2), as applicable.
    (b) Recipients that continue to receive an SCSEP grant from the 
Department must spend program income earned or generated from SCSEP 
funded activities after the end of the grant period for SCSEP purposes 
in the Program Year it was received.
    (c) Recipients that do not continue to receive an SCSEP grant from 
the Department must remit unexpended program income earned or generated 
during the grant period from SCSEP funded activities to the Department 
after the end of the grant period.



Sec. 641.809  What non-Federal share (matching) requirements apply to 
the use of SCSEP funds?

    (a) The Department will pay no more than 90 percent of the total 
cost of activities carried out under a SCSEP grant. (OAA sec. 
502(c)(1)).
    (b) All SCSEP recipients, including Federal agencies if there is no 
statutory exemption, must provide or ensure that at least 10 percent of 
the total cost of activities carried out under an SCSEP grant (non-
Federal share of costs) consists of non-Federal funds, except as 
provided in paragraphs (e) and (f) of this section.
    (c) Recipients must determine the non-Federal share of costs in 
accordance with 29 CFR 97.24 for governmental units, or 29 CFR 95.23 for 
nonprofit and commercial organizations.
    (d) The non-Federal share of costs may be provided in cash, or in-
kind, or a combination of the two. (OAA sec. 502(c)(2)).
    (e) A recipient may not require a subgrantee or host agency to 
provide non-Federal resources for the use of the SCSEP project as a 
condition of entering into a subrecipient or host relationship.
    (f) The Department may pay all of the costs of activities carried 
out under section 502(e) of the OAA. (OAA sec. 502(e)).
    (g) The Department may pay all of the costs of activities in an 
emergency or disaster project or a project in an

[[Page 391]]

economically distressed area. (OAA sec. 502(c)(1)).



Sec. 641.812  What is the period of availability of SCSEP funds?

    (a) Except as provided in Sec. 641.815, recipients must expend 
SCSEP funds during the Program Year for which they are awarded (July 1-
June 30). (OAA sec. 515(b)).
    (b) SCSEP recipients must ensure that no sub-agreement provides for 
the expenditure of any SCSEP funds before July 1, or after the end of 
the grant period, except as provided in Sec. 641.815.



Sec. 641.815  May the period of availability be extended?

    SCSEP recipients may request in writing, and the Department may 
grant, an extension of the period during which SCSEP funds may be 
obligated or expended. SCSEP recipients requesting an extension must 
justify that an extension is necessary. (OAA sec. 515(b)). The 
Department will notify recipients in writing of the approval or 
disapproval of any such requests.



Sec. 641.818  What happens to funds that are unexpended at the end 
of the Program Year?

    (a) The Department may recapture any unexpended funds at the end of 
any Program Year and use the recaptured funds during the two succeeding 
Program Years for:
    (1) Incentive grants;
    (2) Technical assistance; or
    (3) Grant and contract awards for any other SCSEP programs and 
activities. (OAA sec. 515(c)).
    (b) The Department will provide the necessary information through an 
administrative issuance.



Sec. 641.821  What audit requirements apply to the use of SCSEP funds?

    (a) Recipients and subrecipients receiving Federal awards of SCSEP 
funds must follow the audit requirements in paragraphs (b) and (c) of 
this section that apply to their type of organization. As used here, 
Federal awards of SCSEP funds include Federal financial assistance and 
Federal cost-reimbursement contracts received directly from the 
Department or indirectly under awards by SCSEP recipients or higher-tier 
subrecipients. (OAA sec. 503(f)(2)).
    (b) All governmental and nonprofit organizations that are recipients 
or subrecipients must follow the audit requirements of OMB Circular A-
133. These requirements are codified at 29 CFR parts 96 and 99 and 
referenced in 29 CFR 97.26 for governmental organizations; and in 29 CFR 
95.26 for institutions of higher education, hospitals, and other 
nonprofit organizations.
    (c) (1) The Department is responsible for audits of SCSEP recipients 
that are commercial organizations.
    (2) Commercial organizations that are subrecipients under the SCSEP 
program and that expend more than the minimum level specified in OMB 
Circular A-133 ($500,000, for fiscal years ending after December 31, 
2003) must have either an organization-wide audit conducted in 
accordance with OMB Circular A-133 or a program-specific financial and 
compliance audit.



Sec. 641.824  What lobbying requirements apply to the use of SCSEP funds?

    SCSEP recipients and subrecipients must comply with the restrictions 
on lobbying codified in the Department's regulations at 29 CFR part 93. 
(Also refer to Sec. 641.850(c), ``Lobbying costs.'')



Sec. 641.827  What general nondiscrimination requirements apply to the 
use of SCSEP funds?

    (a) SCSEP recipients, subrecipients, and host agencies are required 
to comply with the nondiscrimination provisions codified in the 
Department's regulations at 29 CFR parts 31 and 32.
    (b) Recipients and subrecipients of SCSEP funds are required to 
comply with the nondiscrimination provisions codified in the 
Department's regulations at 29 CFR part 37 if:
    (1) The recipient:
    (i) is a One-Stop partner listed in section 121(b) of WIA, and
    (ii) operates programs and activities that are part of the One-Stop 
Delivery System established under the Workforce Investment Act; or
    (2) The recipient otherwise satisfies the definition of 
``recipient'' in 29 CFR 37.4.
    (c) Recipients must ensure that participants are provided 
informational

[[Page 392]]

materials relating to age discrimination and/or their rights under the 
Age Discrimination in Employment Act of 1975 that are distributed to 
recipients by the Department pursuant to section 503(b)(3) of the OAA.
    (d) Questions about, or complaints alleging a violation of the 
nondiscrimination requirements cited in this section may be directed or 
mailed to the Director, Civil Rights Center, U.S. Department of Labor, 
Room N-4123, 200 Constitution Avenue, NW., Washington, DC 20210, for 
processing. (See Sec. 641.910(d)).
    (e) The specification of any right or protection against 
discrimination in paragraphs (a) through (d) of this section must not be 
interpreted to exclude or diminish any other right or protection against 
discrimination in connection with an SCSEP program that may be available 
to any participant, applicant for participation, or other individual 
under any applicable Federal, State, or local laws prohibiting 
discrimination, or their implementing regulations.



Sec. 641.833  What policies govern political patronage?

    (a) A recipient or subrecipient must not select, reject, promote, or 
terminate an individual based on political services provided by the 
individual or on the individual's political affiliations or beliefs. In 
addition, as indicated in Sec. 641.827(b), certain recipients and 
subrecipients of SCSEP funds are required to comply with the Workforce 
Investment Act nondiscrimination regulations in 29 CFR part 37. These 
regulations prohibit discrimination on the basis of political 
affiliation or belief.
    (b) A recipient or subrecipient must not provide funds to any 
subrecipient, host agency or other entity based on political 
affiliation.
    (c) SCSEP recipients must ensure that every entity that receives 
SCSEP funds through the recipient is applying the policies stated in 
paragraphs (a) and (b) of this section.



Sec. 641.836  What policies govern political activities?

    (a) No project under title V of the OAA may involve political 
activities. SCSEP recipients must ensure compliance with the 
requirements and prohibitions involving political activities described 
in paragraphs (b) and (c) of this section.
    (b) State and local employees involved in the administration of 
SCSEP activities may not engage in political activities prohibited under 
the Hatch Act (5 U.S.C. chapter 15), including:
    (1) Seeking partisan elective office;
    (2) Using official authority or influence for the purpose of 
affecting elections, nominations for office, or fund-raising for 
political purposes. (5 U.S.C. 1502).
    (c) SCSEP recipients must provide all persons associated with SCSEP 
activities with a written explanation of allowable and unallowable 
political activities under the Hatch Act. A notice explaining these 
allowable and unallowable political activities must be posted in every 
workplace in which SCSEP activities are conducted. The Department will 
provide the form and content of the notice and explanatory material by 
administrative issuance. (OAA sec. 502(b)(l)(P).
    (d) SCSEP recipients must ensure that:
    (1) No SCSEP participants or staff persons engage in partisan or 
nonpartisan political activities during hours for which they are being 
paid with SCSEP funds.
    (2) No participants or staff persons engage in partisan political 
activities in which such participants or staff persons represent 
themselves as spokespersons for the SCSEP program.
    (3) No participants are employed or out-stationed in the offices of 
a Member of Congress, a State or local legislator, or on the staff of 
any legislative committee.
    (4) No participants are employed or out-stationed in the immediate 
offices of any elected chief executive officer of a State or unit of 
general government, except that:
    (i) Units of local government may serve as host agencies for 
participants, provided that their assignments are non-political; and
    (ii) While assignments may technically place participants in such 
offices, such assignments actually must be concerned with program and 
service

[[Page 393]]

activities and not in any way involved in political functions.
    (5) No participants are assigned to perform political activities in 
the offices of other elected officials. Placement of participants in 
such offices in non-political assignments is permissible, however, 
provided that:
    (i) SCSEP recipients develop safeguards to ensure that participants 
placed in these assignments are not involved in political activities; 
and
    (ii) These safeguards are described in the grant agreement and are 
subject to review and monitoring by the SCSEP recipient and by the 
Department.



Sec. 641.839  What policies govern union organizing activities?

    Recipients must ensure that SCSEP funds are not used in any way to 
assist, promote, or deter union organizing.



Sec. 641.841  What policies govern nepotism?

    (a) SCSEP recipients must ensure that no recipient or subrecipient 
hires, and no host agency serves as a worksite for, a person who works 
in an SCSEP community service position if a member of that person's 
immediate family is engaged in a decision-making capacity (whether 
compensated or not) for that project, subproject, recipient, 
subrecipient, or host agency. The Department may exempt this requirement 
from worksites on Native American reservations and in rural areas 
provided that adequate justification can be documented, such as that no 
other persons are eligible and available for participation in the 
program.
    (b) To the extent that an applicable State or local legal 
requirement regarding nepotism is more restrictive than this provision, 
SCSEP recipients must ensure that the more restrictive requirement is 
followed.
    (c) For purposes of this section, ``Immediate family'' means wife, 
husband, son, daughter, mother, father, brother, sister, son-in-law, 
daughter-in-law, mother-in-law, father-in-law, brother-in-law, sister-
in-law, aunt, uncle, niece, nephew, stepparent, stepchild, grandparent, 
or grandchild.



Sec. 641.844  What maintenance of effort requirements apply to the use 
of SCSEP funds?

    (a) Employment of a participant funded under title V of the OAA is 
permissible only in addition to employment that would otherwise be 
funded by the recipient, subrecipient, and host agency without 
assistance under the OAA. (OAA sec. 502(b)(1)(F)).
    (b) Each project funded under title V:
    (1) Must result in an increase in employment opportunities in 
addition to those that would otherwise be available;
    (2) Must not result in the displacement of currently employed 
workers, including partial displacement such as a reduction in hours of 
non-overtime work, wages, or employment benefits;
    (3) Must not impair existing contracts for service or result in the 
substitution of Federal funds for other funds in connection with work 
that would otherwise be performed;
    (4) Must not substitute SCSEP-funded positions for existing 
Federally assisted jobs; and
    (5) Must not employ or continue to employ any participant to perform 
work that is the same or substantially the same as that performed by any 
other person who is on layoff. (OAA sec. 502(b)(1)(G)).



Sec. 641.847  What uniform allowable cost requirements apply to the use 
of SCSEP funds?

    (a) General. Unless specified otherwise in this part or the grant 
agreement, recipients and subrecipients must follow the uniform 
allowable cost requirements that apply to their type of organization. 
For example, a local government subrecipient receiving SCSEP funds from 
a nonprofit organization must use the allowable cost requirements for 
governmental organizations in OMB Circular A-87. The Department's 
regulations at 29 CFR 95.27 and 29 CFR 97.22 identify the Federal 
principles for determining allowable costs that each kind of 
organization must follow. The applicable Federal principles for each 
kind of organization are described in paragraphs (b)(1) through (b)(5) 
of this section. (OAA sec. 503(f)(2)).

[[Page 394]]

    (b) Allowable costs/cost principles. (1) Allowable costs for State, 
local, and Indian Tribal government organizations must be determined 
under OMB Circular A-87, ``Cost Principles for State, Local and Indian 
Tribal Governments.''
    (2) Allowable costs for nonprofit organizations must be determined 
under OMB Circular A-122, ``Cost Principles for Non-Profit 
Organizations.''
    (3) Allowable costs for institutions of higher education must be 
determined under OMB Circular A-21, ``Cost Principles for Educational 
Institutions.''
    (4) Allowable costs for hospitals must be determined in accordance 
with appendix E of 45 CFR part 74, ``Principles for Determining Costs 
Applicable to Research and Development Under Grants and Contracts with 
Hospitals.''
    (5) Allowable costs for commercial organizations and those nonprofit 
organizations listed in Attachment C to OMB Circular A-122 must be 
determined under the provisions of the Federal Acquisition Regulation 
(FAR), at 48 CFR part 31.



Sec. 641.850  Are there other specific allowable and unallowable cost 
requirements for the SCSEP?

    (a) Yes, in addition to the generally applicable cost principles in 
Sec. 641.847(b), the cost principles in paragraphs (b) through (g) of 
this section apply to SCSEP grants.
    (b) Claims against the Government. For all types of entities, legal 
expenses for the prosecution of claims against the Federal Government, 
including appeals to an Administrative Law Judge, are unallowable.
    (c) Lobbying costs. In addition to the prohibition contained in 29 
CFR part 93, SCSEP funds must not be used to pay any salaries or 
expenses related to any activity designed to influence legislation or 
appropriations pending before the Congress of the United States or any 
State legislature. (See Sec. 641.824).
    (d) One-Stop Costs. Costs of participating as a required partner in 
the One-Stop delivery system established in accordance with section 
134(c) of the Workforce Investment Act of 1998 are allowable, provided 
that SCSEP services and funding are provided in accordance with the 
Memorandum of Understanding required by the Workforce Investment Act and 
section 502(b)(1)(O) of the Older Americans Act, and costs are 
determined in accordance with the applicable cost principles.
    (e) Building repairs and acquisition costs. Except as provided in 
paragraph (e) of this section and as an exception to the allowable cost 
principles in Sec. 641.847(b), no SCSEP funds may be used for the 
purchase, construction, or renovation of any building except for the 
labor involved in:
    (1) Minor remodeling of a public building necessary to make it 
suitable for use for project purposes;
    (2) Minor repair and rehabilitation of publicly used facilities for 
the general benefit of the community; and
    (3) Minor repair and rehabilitation by participants of housing 
occupied by persons with low incomes who are declared eligible for such 
services by authorized local agencies.
    (f) Accessibility and reasonable accommodation. Recipients and 
subrecipients may use SCSEP funds to meet their obligations under 
section 504 of the Rehabilitation Act of 1973, as amended, and the 
Americans with Disabilities Act of 1990 and any other applicable Federal 
disability nondiscrimination laws to provide physical and programmatic 
accessibility and reasonable accommodation/modifications for, and 
effective communications with, individuals with disabilities. (29 U.S.C. 
794).
    (g) Participants' fringe benefit costs. Recipients and subrecipients 
may use SCSEP funds for participant fringe benefit costs only under the 
conditions set forth in Sec. 641.565.



Sec. 641.853  How are costs classified?

    (a) All costs must be classified as ``administrative costs'' or 
``program costs.'' (OAA sec. 502(c)(6)).
    (b) Recipients and subrecipients must assign participants' wage and 
fringe benefit costs and other participant (enrollee) costs such as 
supportive services to the Program Cost cost category. (See Sec. 
641.864). When participants' community service assignments involve 
functions whose costs are normally classified as Administrative Cost, 
compensation provided to the participants shall be charged as program 
costs instead of administrative costs, since participant wage and fringe 
benefit

[[Page 395]]

costs are always charged to the Program Cost category.



Sec. 641.856  What functions and activities constitute costs of 
administration?

    (a) The costs of administration are that allocable portion of 
necessary and reasonable allowable costs of recipients and first-tier 
subrecipients (as defined in paragraph (c) of this section) that are 
associated with those specific functions identified in paragraph (b) of 
this section and that are not related to the direct provision of 
programmatic services specified in Sec. 641.864. These costs may be 
both personnel and non-personnel and both direct and indirect costs.
    (b) The costs of administration are the costs associated with:
    (1) Performing overall general administrative and coordination 
functions, including:
    (i) Accounting, budgeting, financial, and cash management functions;
    (ii) Procurement and purchasing functions;
    (iii) Property management functions;
    (iv) Personnel management functions;
    (v) Payroll functions;
    (vi) Coordinating the resolution of findings arising from audits, 
reviews, investigations, and incident reports;
    (vii) Audit functions;
    (viii) General legal services functions; and
    (ix) Developing systems and procedures, including information 
systems, required for these administrative functions;
    (2) Oversight and monitoring responsibilities related to 
administrative functions;
    (3) Costs of goods and services used for administrative functions of 
the program, including goods and services such as rental or purchase of 
equipment, utilities, office supplies, postage, and rental and 
maintenance of office space;
    (4) Travel costs incurred for official business in carrying out 
administrative activities or the overall management of the program; and
    (5) Costs of information systems related to administrative functions 
(for example, personnel, procurement, purchasing, property management, 
accounting, and payroll systems) including the purchase, systems 
development, and operating costs of such systems. (OAA sec. 502(c)(4)).
    (c) First-tier subrecipients are those subrecipients that receive 
SCSEP funds directly from an SCSEP recipient and perform the following 
activities for all participants:
    (1) Eligibility determination;
    (2) Participant assessment;
    (3) Development of and placement into community service 
opportunities.



Sec. 641.859  What other special rules govern the classification of 
costs as administrative costs or program costs?

    (a) Recipients and subrecipients must comply with the special rules 
for classifying costs as administrative costs or program costs set forth 
in paragraphs (b) through (e) of this section.
    (b)(1) Costs of awards by recipients and first-tier subrecipients 
that are solely for the performance of their own administrative 
functions are classified as administrative costs.
    (2) Costs incurred by recipients and first tier subrecipients for 
administrative functions listed in Sec. 641.856(b) are classified as 
administrative costs.
    (3) Costs incurred by vendors performing administrative functions 
for recipients and first tier subrecipients are classified as 
administrative costs.
    (4) Except as provided in paragraph (b)(1), all costs incurred by 
subrecipients other than first-tier subrecipients are classified as 
program costs.
    (5) Except as provided in paragraph (b)(3) of this section (i.e., 
costs that are incurred to perform administrative functions for 
recipients and first tier subrecipients), all costs incurred by vendors 
are program costs. (See 29 CFR 99.210 for a discussion of factors 
differentiating subrecipients from vendors.)
    (c) Personnel and related non-personnel costs of staff who perform 
both administrative functions specified in Sec. 641.856(b) and 
programmatic services or activities must be allocated as administrative 
or program costs to the benefiting cost objectives/categories based on 
documented distributions of actual time worked or other equitable cost 
allocation methods.

[[Page 396]]

    (d) Specific costs charged to an overhead or indirect cost pool that 
can be identified directly as a program cost must be charged as a 
program cost. Documentation of such charges must be maintained.
    (e) Costs of the following information systems including the 
purchase, systems development and operating (e.g., data entry) costs are 
charged to the ``program cost'' category:
    (1) Tracking or monitoring of participant and performance 
information;
    (2) Employment statistics information, including job listing 
information, job skills information, and demand occupation information; 
and
    (3) Local area performance information.



Sec. 641.861  Must SCSEP recipients provide funding for the 
administrative costs of subrecipients?

    (a) Recipients and subrecipients must obtain funding for 
administrative costs to the extent practicable from non-Federal sources. 
(OAA sec. 502(c)(5)).
    (b) SCSEP recipients must ensure that sufficient funding is provided 
for the administrative activities of subrecipients that receive SCSEP 
funding through the recipient. Each SCSEP recipient must describe in its 
grant application the methodology used to ensure that subrecipients 
receive sufficient funding for their administrative activities. (OAA 
sec. 502(b)(1)(R)).



Sec. 641.864  What functions and activities constitute program costs?

    Program costs include, but are not limited to, the costs of the 
following functions:
    (a) Participant Wages and Fringe Benefits, consisting of wages paid 
and fringe benefits provided to participants for hours of community 
service assignments, as described in Sec. 641.565;
    (b) Outreach, recruitment and selection, intake, orientation, 
assessment, and preparation and updating of IEPs;
    (c) Participant training provided on the job, in a classroom 
setting, or utilizing other appropriate arrangements, consisting of 
reasonable costs of instructors' salaries, classroom space, training 
supplies, materials, equipment, and tuition;
    (d) Subject to the restrictions in Sec. 641.535(c), job placement 
assistance, including job development and job search assistance, job 
fairs, job clubs, and job referrals; and
    (e) Participant supportive services, as described in Sec. 641.545. 
(OAA sec. 502(c)(6)(A)).



Sec. 641.867  What are the limitations on the amount of SCSEP 
administrative costs?

    (a) Except as provided in paragraph (b), no more than 13.5 percent 
of the SCSEP funds received for a Program Year may be used for 
administrative costs.
    (b) The Department may increase the amount available for 
administrative costs to not more than 15 percent, in accordance with 
Sec. 641.870. (OAA sec. 502(c)(3)).



Sec. 641.870  Under what circumstances may the administrative cost 
limitation be increased?

    (a) SCSEP recipients may request that the Department increase the 
amount available for administrative costs. The Department may honor the 
request if:
    (1) The Department determines that it is necessary to carry out the 
project; and
    (2) The recipient demonstrates that:
    (i) Major administrative cost increases are being incurred in 
necessary program components, including liability insurance, payments 
for workers' compensation, costs associated with achieving unsubsidized 
placement goals, and other operation requirements imposed by the 
Department;
    (ii) The number of employment positions in the project or the number 
of minority eligible individuals participating in the project will 
decline if the amount available for paying the cost of administration is 
not increased; or
    (iii) The size of the project is so small that the amount of 
administrative expenses incurred to carry out the project necessarily 
exceeds 13.5 percent of the amount for such project. (OAA sec. 
502(c)(3)).
    (b) A request by a recipient or prospective recipient for an 
increase in the amount available for administrative costs may be 
submitted as part of

[[Page 397]]

the grant application or as a separate submission at any time after the 
grant award.



Sec. 641.873  What minimum expenditure levels are required for 
participant wages and fringe benefits?

    (a) Not less than 75 percent of the SCSEP funds provided under a 
grant from the Department must be used to pay for the wages and fringe 
benefits of participants in such projects, including awards made under 
section 502(e) of the OAA. (OAA sec. 502(c)(6)(B)).
    (b) An SCSEP recipient is in compliance with this provision if at 
least 75 percent of the total expenditures of SCSEP funds provided to 
the recipient were for wages and benefits, even if one or more 
subrecipients did not expend at least 75 percent of their SCSEP funds 
for wages and fringe benefits for community service projects.
    (c) Recipients receiving both general SCSEP funds and section 502(e) 
funds must meet the 75 percent requirement based on the total of both 
grants.



Sec. 641.876  When will compliance with cost limitations and minimum 
expenditure levels be determined?

    The Department will determine compliance by examining expenditures 
of SCSEP funds. The cost limitations and minimum expenditure level 
requirements must be met at the time all such funds have been expended 
or the period of availability of such funds has expired, whichever comes 
first.



Sec. 641.879  What are the fiscal and performance reporting requirements 
for recipients?

    (a) In accordance with 29 CFR 97.40 or 29 CFR 95.51, as appropriate, 
each SCSEP recipient must submit an SCSEP Quarterly Progress Report 
(QPR) to the Department in electronic format via the Internet within 30 
days after the end of each quarter of the Program Year (PY). The SCSEP 
recipient must prepare this report to coincide with the ending dates for 
Federal PY quarters. Each SCSEP recipient must also submit a final QPR 
to the Department within 90 days after the end of the grant period. If 
the grant period ends on a date other than the last day of a Federal 
Program Year quarter, the SCSEP recipient must submit the final QPR 
covering the entire grant period no later than 90 days after the ending 
date of the grant. The Department will provide instructions for the 
preparation of this report. (OAA sec. 503(f)(3)).
    (b) In accordance with 29 CFR 97.41 or 29 CFR 95.52, each SCSEP 
recipient must submit an SCSEP Financial Status Report (FSR) in 
electronic format to the Department via the Internet within 30 days 
after the ending of each quarter of the Program Year. Each SCSEP 
recipient must also submit a final FSR to the Department via the 
Internet within 90 days after the end of the grant period. If the grant 
period ends on a date other than the last day of a Federal PY quarter, 
the SCSEP recipient must submit the final FSR covering the entire grant 
period no later than 90 days after the ending date of the grant. The 
Department will provide instructions for the preparation of this report. 
(OAA sec. 503(f)(3)).
    (1) Financial data are required to be reported on an accrual basis, 
and cumulatively by funding year of appropriation. Financial data may 
also be required on specific program activities.
    (2) If the SCSEP recipient's accounting records are not normally 
kept on the accrual basis of accounting, the SCSEP recipient must 
develop accrual information through an analysis of the documentation on 
hand.
    (c) Each State agency receiving title V funds must annually submit 
an equitable distribution report of SCSEP positions by all recipients in 
the State. The Department will provide instructions for the preparation 
of this report. (OAA sec. 508).
    (d) Each SCSEP recipient that receives section 502(e) funds must 
submit reports on its section 502(e) activities. The Department will 
provide instructions for the preparation of these reports. (OAA sec. 
503(f)(3)).
    (e) Each SCSEP recipient must collect data and submit reports 
regarding the program performance measures and the common performance 
measures. See Sec. Sec. 641.700-641.720. The Department will provide 
instructions detailing these measures and how recipients must prepare 
this report.

[[Page 398]]

    (f) Each SCSEP recipient may be required to collect data and submit 
reports about the demographic characteristics of program participants. 
The Department will provide instructions detailing these measures and 
how recipients must prepare this report.
    (g) Federal agencies that receive and use SCSEP funds under 
interagency agreements must submit project fiscal and progress reports 
in accordance with this section. Federal recipients must maintain the 
necessary records that support required reports according to 
instructions provided by the Department. (OAA sec. 503(f)(3)).
    (h) Recipients may be required to maintain records that contain any 
other information that the Department determines to be appropriate in 
support of any other reports that the Department may require. (OAA sec. 
503(f)(3)).
    (i) Grantees submitting reports that cannot be validated or verified 
as accurately counting and reporting activities in accordance with the 
reporting instructions may be treated as failing to submit reports, 
which may result in failing one of the responsibility tests outlined in 
Sec. 641.440 and section 514(d) of the OAA.



Sec. 641.881  What are the SCSEP recipient's responsibilities relating 
to awards to subrecipients?

    (a) The SCSEP recipient is responsible for all grant activities, 
including the performance of SCSEP activities by subrecipients, and 
ensuring that subrecipients comply with the OAA and this part. (See also 
OAA sec. 514 on responsibility tests).
    (b) Recipients must follow their own procedures for allocating funds 
to other entities. The Department will not grant funds to another entity 
on the recipient's behalf.



Sec. 641.884  What are the grant closeout procedures?

    SCSEP recipients must follow the grant closeout procedures at 29 CFR 
97.50 or 29 CFR 95.71, as appropriate. The Department will issue 
supplementary closeout instructions to title V recipients as necessary.



           Subpart I_Grievance Procedures and Appeals Process



Sec. 641.900  What appeal process is available to an applicant that does 
not receive a grant?

    (a) An applicant for financial assistance under title V of the OAA 
that is dissatisfied because the Department has issued a determination 
not to award financial assistance, in whole or in part, to such 
applicant, may request that the Grant Officer provide the reasons for 
not awarding financial assistance to that applicant (debriefing). The 
request must be filed within 10 days of the date of notification 
indicating that it would not be awarded. The Grant Officer must provide 
the protesting applicant with a debriefing and with a written decision 
stating the reasons for the decision not to award the grant within 20 
days of the protest. Applicants may appeal to the U.S. Department of 
Labor, Office of Administrative Law Judges, within 21 days of the date 
of the Grant Officer's notice providing reasons for not awarding 
financial assistance. The appeal may be for a part or the whole of a 
denial of funding. This appeal will not in any way interfere with the 
Department's decisions to fund other organizations to provide services 
during the appeal period.
    (b) Failure to either request a debriefing within 10 days or to file 
an appeal within 21 days provided in paragraph (a) of this section 
constitutes a waiver of the right to a hearing.
    (c) A request for a hearing under this section must state 
specifically those issues in the Grant Officer's notification upon which 
review is requested. Those provisions of the Grant Officer's 
notification not specified for review, or the entire final determination 
when no hearing has been requested within the 21 days, are considered 
resolved and not subject to further review.
    (d) A request for a hearing must be transmitted by certified mail, 
return receipt requested, to the Chief Administrative Law Judge, U.S. 
Department of Labor, Suite 400, 800 K Street, NW., Washington, DC 20001, 
with one copy to the Departmental official who issued the determination.
    (e) The decision of the ALJ constitutes final agency action unless,

[[Page 399]]

within 20 days of the decision, a party dissatisfied with the ALJ's 
decision, in whole or in part, has filed a petition for review with the 
Administrative Review Board (ARB) (established under Secretary's Order 
No. 2-96, published at 61 FR 19978 (May 3, 1996)), specifically 
identifying the procedure, fact, law or policy to which exception is 
taken. The Department will deem any exception not specifically urged to 
have been waived. A copy of the petition for review must be sent to the 
opposing party at that time. Thereafter, the decision of the ALJ 
constitutes final agency action unless the ARB, within 30 days of the 
filing of the petition for review, notifies the parties that the case 
has been accepted for review. Any case accepted by the ARB must be 
decided within 180 days of acceptance. If not so decided, the decision 
of the ALJ constitutes final agency action.
    (f) The Rules of Practice and Procedures for Administrative Hearings 
Before the Office of Administrative Law Judges, set forth at 29 CFR part 
18, govern the conduct of hearings under this section, except that:
    (1) The appeal is not considered as a complaint; and
    (2) Technical rules of evidence, such as the Federal Rules of 
Evidence and subpart B of 29 CFR part 18, will not apply to any hearing 
conducted under this section. However, rules designed to assure 
production of the most credible evidence available and to subject 
testimony to test by cross-examination will be applied when the 
Administrative Law Judge conducting the hearing considers them 
reasonably necessary. The certified copy of the administrative file 
transmitted to the Administrative Law Judge by the official issuing the 
final determination must be part of the evidentiary record of the case 
and need not be moved into evidence.
    (g) The Administrative Law Judge should render a written decision no 
later than 90 days after the closing of the record.
    (h) The remedies available are provided in Sec. 641.470.
    (i) This section only applies to multi-year grant awards.



Sec. 641.910  What grievance procedures must grantees make available to 
applicants, employees, and participants?

    (a) Each grantee must establish, and describe in the grant 
agreement, grievance procedures for resolving complaints, other than 
those described by paragraph (d) of this section, arising between the 
grantee, employees of the grantee, subgrantees, and applicants or 
participants.
    (b) The Department will not review final determinations made under 
paragraph (a) of this section, except to determine whether the grantee's 
grievance procedures were followed, and according to paragraph (c) of 
this section.
    (c) Allegations of violations of Federal law, other than those 
described in paragraph (d) of this section, which are not resolved 
within 60 days under the grantee's procedures, may be filed with the 
Chief, Division of Older Worker Programs, Employment and Training 
Administration, U.S. Department of Labor, 200 Constitution Avenue, NW., 
Washington, DC 20210. Allegations determined to be substantial and 
credible will be investigated and addressed.
    (d) Questions about, or complaints alleging a violation of, the 
nondiscrimination requirements of Title VI of the Civil Rights Act of 
1964, Section 504 of the Rehabilitation Act of 1973, Section 188 of the 
Workforce Investment Act of 1998 (WIA), or their implementing 
regulations may be directed or mailed to the Director, Civil Rights 
Center, U.S. Department of Labor, Room N-4123, 200 Constitution Avenue, 
NW., Washington, DC 20210. In the alternative, complaints alleging 
violations of WIA section 188 may be filed initially at the grantee 
level. See 29 CFR 37.71, 37.76. In such cases, the grantee must use 
complaint processing procedures meeting the requirements of 29 CFR 37.70 
through 37.80 to resolve the complaint.



Sec. 641.920  What actions of the Department may a grantee appeal and 
what procedures apply to those appeals?

    (a) Appeals from a final disallowance of costs as a result of an 
audit must be made under 29 CFR 96.63.

[[Page 400]]

    (b) Appeals of suspension or termination actions taken on the 
grounds of discrimination are processed under 29 CFR part 31 or 37, as 
appropriate.
    (c) Protests and appeals of decisions not to award a grant, in whole 
or in part, will be handled under Sec. 641.900.
    (d) Upon a grantee's receipt of the Department's final determination 
relating to costs (except final disallowance of costs as a result of an 
audit, as described in paragraph (a) of this section), payment, 
suspension or termination or the imposition of sanctions, the grantee 
may appeal the final determination to the Department's Office of 
Administrative Law Judges, as follows:
    (1) Within 21 days of receipt of the Department's final 
determination, the grantee may transmit by certified mail, return 
receipt requested, a request for a hearing to the Chief Administrative 
Law Judge, United States Department of Labor, 800 K Street, NW., Room 
400 N, Washington, DC 20001 with a copy to the Department official who 
signed the final determination. The Chief Administrative Law Judge will 
designate an Administrative Law Judge to hear the appeal.
    (2) The request for hearing must be accompanied by a copy of the 
final determination, and must state specifically those issues of the 
determination upon which review is requested. Those provisions of the 
determination not specified for review, or the entire determination when 
no hearing has been requested within the 21 days, are considered 
resolved and not subject to further review.
    (3) The Rules of Practice and Procedures for Administrative Hearings 
Before the Office of Administrative Law Judges, set forth at 29 CFR part 
18, govern the conduct of hearings under this section, except that:
    (i) The appeal is not considered as a complaint; and
    (ii) Technical rules of evidence, such as the Federal Rules of 
Evidence and Subpart B of 29 CFR Part 18, will not apply to any hearing 
conducted under this section. However, rules designed to assure 
production of the most credible evidence available and to subject 
testimony to test by cross-examination will be applied when the 
Administrative Law Judge conducting the hearing considers them 
reasonably necessary. The certified copy of the administrative file 
transmitted to the Administrative Law Judge by the official issuing the 
final determination must be part of the evidentiary record of the case 
and need not be moved into evidence.
    (4) The Administrative Law Judge should render a written decision no 
later than 90 days after the closing of the record. In ordering relief, 
the ALJ may exercise the full authority of the Secretary under the OAA.
    (5) The decision of the ALJ constitutes final agency action unless, 
within 21 days of the decision, a party dissatisfied with the ALJ's 
decision, in whole or in part, has filed a petition for review with the 
Administrative Review Board (ARB) (established under Secretary's Order 
No. 2-96), specifically identifying the procedure, fact, law or policy 
to which exception is taken. The Department will deem any exception not 
specifically urged to have been waived. A copy of the petition for 
review must be sent to the opposing party at that time. Thereafter, the 
decision of the ALJ constitutes final agency action unless the ARB, 
within 30 days of the filing of the petition for review, notifies the 
parties that the case has been accepted for review. Any case accepted by 
the ARB must be decided within 180 days of acceptance. If not so 
decided, the decision of the ALJ constitutes final agency action.



Sec. 641.930  Is there an alternative dispute resolution process that 
may be used in place of an OALJ hearing?

    (a) Parties to a complaint that has been filed according to the 
requirements of Sec. 641.920 (a), (c), and (d) may choose to waive 
their rights to an administrative hearing before the OALJ. Instead, they 
may choose to transfer the settlement of their dispute to an individual 
acceptable to all parties who will conduct an informal review of the 
stipulated facts and render a decision in accordance with applicable 
law. A written decision must be issued within 60 days after submission 
of the matter for informal review.
    (b) Unless the parties agree in writing to extend the period, the 
waiver of the right to request a hearing before

[[Page 401]]

the OALJ will automatically be revoked if a settlement has not been 
reached or a decision has not been issued within the 60 days provided in 
paragraph (a) of this section.
    (c) The decision rendered under this informal review process will be 
treated as the final agency decision.



PART 645_PROVISIONS GOVERNING WELFARE-TO-WORK GRANTS--Table of Contents




                       Subpart A_Scope and Purpose

Sec.
645.100 What does this part cover?
645.110 What are the purposes of the Welfare-to-Work program?
645.120 What definitions apply to this part?
645.125 What are the roles of the local and State governmental partners 
          in the governance of the WtW program?
645.130 What are the effective dates for the Welfare-to-Work 1999 
          Amendments?
645.135 What is the effective date for spending Federal Welfare-to-Work 
          formula funds on newly eligible participants and newly 
          authorized services?

        Subpart B_General Program and Administrative Requirements

645.200 What does this subpart cover?
645.210 What is meant by the terms ``entity'' and ``project'' in the 
          statutory phrase ``an entity that operates a project'' with 
          Welfare-to-Work funds?
645.211 How must Welfare-to-Work funds be spent by the operating entity?
645.212 Who may be served under the general eligibility and noncustodial 
          parent eligibility (primary eligibility) provision?
645.213 Who may be served as an individual in the ``other eligibles'' 
          (30 percent) provision?
645.214 How will Welfare-to-Work participant eligibility be determined?
645.215 What must a WtW operating entity that serves noncustodial parent 
          participants do?
645.220 What activities are allowable under this part?
645.221 For what activities and services must local boards use contracts 
          and vouchers?
645.225 How do Welfare-to-Work activities relate to activities provided 
          under TANF and other related programs?
645.230 What general fiscal and administrative rules apply to the use of 
          Federal funds?
645.233 What are the time limitations on the expenditure of Welfare-to-
          Work grant funds?
645.235 What types of activities are subject to the administrative cost 
          limit on Welfare-to-Work grants?
645.240 What are the reporting requirements for Welfare-to-Work 
          programs?
645.245 Who is responsible for oversight and monitoring of Welfare-to-
          Work grants?
645.250 What procedures apply to the resolution of findings arising from 
          audits, investigations, monitoring, and oversight reviews?
645.255 What nondiscrimination protections apply to participants in 
          Welfare-to-Work programs?
645.260 What health and safety provisions apply to participants in 
          Welfare-to-Work programs?
645.265 What safeguards are there to ensure that participants in 
          Welfare-to-Work employment activities do not displace other 
          employees?
645.270 What procedures are there to ensure that currently employed 
          workers may file grievances regarding displacement and that 
          Welfare-to-Work participants in employment activities may file 
          grievances regarding displacement, health and safety standards 
          and gender discrimination?

   Subpart C_Additional Formula Grant Administrative Requirements and 
                               Procedures

645.300 What constitutes an allowable match?
645.310 What assurances must a State provide that it will make the 
          required matching expenditures?
645.315 What actions are to be taken if a State fails to make the 
          required matching expenditures?

              Subpart D_State Formula Grant Administration

645.400 Under what conditions may the Governor request a waiver to 
          designate an alternate local administering agency?
645.410 What elements will the State use in distributing funds within 
          the State?
645.415 What planning information must a State submit in order to 
          receive a formula grant?
645.420 What factors will be used in measuring State performance?
645.425 What are the roles and responsibilities of the State(s) and 
          local boards or alternate administering agencies?
645.430 How does the Welfare-to-Work program relate to the One-Stop 
          system and Workforce Investment Act (WIA) programs?

[[Page 402]]

              Subpart E_Welfare-to-Work Competitive Grants

645.500 Who are eligible applicants for competitive grant funds?
645.510 What is the required consultation with the Governor?
645.515 What are the program and administrative requirements that apply 
          to both the formula grants and competitive grants?
645.520 What are the application procedures and timeframes for 
          competitive grant funds?
645.525 What special consideration will be given to rural areas and 
          cities with large concentrations of poverty?

                 Subpart F_Administrative Appeal Process

645.800 What administrative remedies are available under this Part?

    Authority: 42 U.S.C. 603 (a)(5)(C)(viii).

    Source: 66 FR 2711, Jan. 11, 2001, unless otherwise noted.



                       Subpart A_Scope and Purpose



Sec. 645.100  What does this part cover?

    (a) Subpart A establishes regulatory provisions that apply to the 
Welfare-to-Work (WtW) programs conducted at the State and at the local 
area levels.
    (b) Subpart B provides general program requirements applicable to 
all WtW formula and competitive funds. The provisions of this subpart 
govern how WtW funds must be spent, who is eligible to participate in 
the program, allowable activities and their relationship to TANF, 
Governor's projects for long-term recipients, administrative and fiscal 
provisions, and program oversight requirements. This subpart also 
addresses worker protections and the establishment of a State grievance 
system.
    (c) Subpart C sets forth additional administrative standards and 
procedures for WtW Formula Grants, such as matching requirements and 
reallotment procedures.
    (d) Subpart D sets forth the conditions under which the Governor may 
request a waiver to designate an alternate administering agency, sets 
forth the formula elements that must be included in the within-State 
distribution formula, the submission of a State annual plan, the factors 
for measuring State performance, and the roles and responsibilities of 
the States and the local boards or alternate administering agencies.
    (e) Subpart E outlines general conditions and requirements for the 
WtW Competitive Grants.
    (f) Subpart F sets forth the administrative appeals process.
    (g) Regulatory provisions applicable to the Indian and Native 
American Welfare-to-Work Program (INA WtW) are found at 20 CFR part 646.



Sec. 645.110  What are the purposes of the Welfare-to-Work Program?

    The purposes of the WtW program are:
    (a) To facilitate the placement of hard-to-employ welfare recipients 
and certain noncustodial parents into transitional employment 
opportunities which will lead to lasting unsubsidized employment and 
self-sufficiency;
    (b) To provide a variety of activities, grounded in TANF's ``work 
first'' philosophy, to prepare individuals for, and to place them in, 
lasting unsubsidized employment;
    (c) To provide for a variety of post-employment and job retention 
services which will assist the hard-to-employ welfare recipient and 
certain noncustodial parents to secure lasting unsubsidized employment;
    (d) To provide targeted WtW funds to high poverty areas with large 
numbers of hard-to-employ welfare recipients.



Sec. 645.120  What definitions apply to this part?

    The following definitions apply under this part:
    Act means Title IV, Part A of the Social Security Act, 42 U.S.C. 
601-619.
    Adult means an individual who is not a minor child.
    Chief Elected Official(s) (CEOs) means:
    (1) The chief elected official of the sole unit of general local 
government in the service delivery area,
    (2) The individual or individuals selected by the chief elected 
officials of all units of general local government in such area as their 
authorized representative, or
    (3) In the case of a service delivery area designated under section 
101(a)(4)(A)(iii) of JTPA, the representative of the chief elected 
official for

[[Page 403]]

such area (as defined in section 4(4)(C) of JTPA) or as defined in 
section 101 of the Workforce Investment Act of 1988.
    Competitive grants means those grants in which WtW funds have been 
awarded by the Department under a competitive application process to 
local governments, PICs, and private entities (such as community 
development corporations, community-based and faith-based organizations, 
disability community organizations, and community action agencies) who 
apply in conjunction with a PIC or local government.
    Department or DOL means the U.S. Department of Labor.
    Employment activities means the activities enumerated at Sec. 
645.220(b).
    ETA means the Employment and Training Administration of the U.S. 
Department of Labor.
    Fiscal year (FY) means any 12-month period ending on September 30 of 
a calendar year.
    Formula grants means those grants in which WtW funds have been 
allotted to each Welfare-to-Work State, based on a formula prescribed by 
the Act, which equally considers States' shares of the national number 
of poor individuals and of adult recipients of assistance under TANF. 
The State is required to distribute not less than 85 percent of the 
allotted formula grant funds to service delivery areas in the State; and 
the State may retain not more than 15 percent for projects to help long-
term recipients of assistance enter unsubsidized employment. Unless 
otherwise specified, the term ``formula grant'' refers to the 85 percent 
and 15 percent funds.
    Governor means the Chief Executive Officer of a State.
    IV-D Agency (Child Support Enforcement) means the organizational 
unit in the State that has the responsibility for administering or 
supervising the administration of the State plan under title IV-D of the 
Act (SSA).
    Job Training Partnership Act or JTPA means Public Law (Pub. L.) 97-
300, as amended, 29 U.S.C. 1501, et seq.
    Local area means a local workforce investment area designated under 
section 116 of the Workforce investment Act of 1998, or a service 
delivery area designated under section 101 of the Job Training 
partnership Act, as appropriate.
    Local workforce investment board (local board) means a local board 
established under section 117 of the Workforce Investment Act, or a 
Private Industry Council established under section 102 of the Job 
Training Partnership Act (JTPA), which performs the functions authorized 
at section 103 of the JTPA, or an alternate administering agency 
designated under section 405(a)(5)(A)(vii)(II) of the Act and Sec. 
645.400 of this part.
    Minor child means an individual who has not attained 18 years of 
age, or has not attained 19 years of age and is a full-time student in a 
secondary school (or in the equivalent level of vocational or technical 
training).
    MOE means maintenance of effort. Under TANF, States are required to 
maintain a certain level of spending on welfare based on ``historic'' FY 
1994 expenditure levels (Section 409(a)(7) of the Act).
    PIC means a Private Industry Council established under Section 102 
of the Job Training Partnership Act, which performs the functions 
authorized at Section 103 of the JTPA.
    Political subdivision of a State means a unit of general purpose 
local government, as provided for in State laws and/or Constitution, 
which has the power to levy taxes and spend funds and which also has 
general corporate and police powers.
    Private entity means any organization, public or private, which is 
not a local board, PIC or alternate administering agency or a political 
subdivision of a State.
    PRWORA means the Personal Responsibility and Work Opportunity 
Reconciliation Act of 1996, Public Law (Pub. L.) 104-193, which 
established the TANF program.
    SDA means a service delivery area designated under section 101 of 
the Job Training Partnership Act or a local area designated under 
section 116 of the Workforce Investment Act of 1998, as appropriate.
    Secretary means the Secretary of Labor.
    Separate State program means a program operated outside of TANF in

[[Page 404]]

which the expenditures of State funds may count for TANF MOE purposes.
    State means the 50 States of the United States, the District of 
Columbia, the Commonwealth of Puerto Rico, the US Virgin Islands, Guam, 
and American Samoa, unless otherwise specified.
    State TANF Program means those funds expended under the State Family 
Assistance Grant (SFAG), the basic block grant allocated to the States 
under Section 403(a)(1) of the Act.
    TANF means Temporary Assistance for Needy Families Program 
established under PRWORA.
    TANF MOE means the expenditure of State funds that must be made in 
order to meet the Temporary Assistance for Needy Families Maintenance of 
Effort requirement.
    Unemployed means the individual is without a job and wants and is 
available for work.
    WIA means the Workforce Investment Act of 1998 (Pub. L. 105-220)(29 
U.S.C. 2801 et seq.).
    WtW means Welfare-to-Work.
    WtW State means those States that the Secretary of Labor determines 
have met the five conditions established at Section 403(a)(5)(A)(ii) of 
the Act. Only States that are determined to be WtW States can receive 
WtW grant funds.
    WtW statute means those provisions of the Balanced Budget Act of 
1997 containing certain amendments to PRWORA and establishing the new 
Welfare-to-Work program, amending Title IV of the Social Security Act, 
(codified at 42 U.S.C. 601-619).



Sec. 645.125  What are the roles of the local and State governmental 
partners in the governance of the WtW program?

    (a) Local boards or alternate administering agencies, in 
coordination with CEO's should establish policies, interpretations, 
guidelines and definitions to implement provisions of the WtW statute to 
the extent that such policies, interpretations, guidelines and 
definitions are not inconsistent with the WtW statute or regulations or 
with State policies.
    (b) States should establish policies, interpretations, guidelines 
and definitions to implement provisions of the WtW statute to the extent 
that such policies, interpretations, guidelines and definitions are not 
inconsistent with the WtW statute or regulations.
    (c) The Secretary, in consultation with other Federal Agencies, as 
appropriate, may publish guidance on interpretations of statutory and 
regulatory provisions. State and local policies, interpretations, 
guidelines and definitions that are consistent with interpretations 
contained in such guidance will be considered to be consistent with the 
WtW statute for purposes of this section.



Sec. 645.130  What are the effective dates for the Welfare-to-Work 1999 
Amendments?

    The legislative changes made by the 1999 amendments:
    (a) Are effective on November 29, 1999, except as provided in 
paragraphs (b) and (c) of this section;
    (b) Provisions relating to the eligibility of participants for WtW 
competitive grants are effective on January 1, 2000;
    (c)(1) Provisions relating to the eligibility of participants for 
WtW formula grants are effective on July 1, 2000, except that 
expenditures from allotments to the States, as discussed in Sec. 
645.135 of this subpart, must not have been made before October 1, 2000, 
for individuals who would not have been eligible under the criteria in 
effect before the changes made by the 1999 Amendments;
    (2) Provisions authorizing pre-placement vocational educational 
training and job training for WtW formula grants, at Sec. 645.220(b) of 
this part, are effective on July 1, 2000, except that expenditures from 
allotments to the States, as discussed in Sec. 645.135 of this subpart, 
must not have been made before October 1, 2000.



Sec. 645.135  What is the effective date for spending Federal 
Welfare-to-Work formula funds on newly eligible participants and newly 
authorized services?

    States and local areas may expend matching funds beginning July 1, 
2000. States and local areas may incur unpaid obligations within the 
normal course of business, beginning July 1, 2000, provided that the 
timing of those transactions ensures that drawdown of

[[Page 405]]

federal Welfare-to-Work formula funds to liquidate the obligations did 
not occur until October 1, 2000.



        Subpart B_General Program and Administrative Requirements



Sec. 645.200  What does this subpart cover?

    This subpart provides general program and administrative 
requirements for WtW formula funds, including Governors' funds for long-
term recipients of assistance, and for competitive grant funding 
(section 403(a)(5)).



Sec. 645.210  What is meant by the terms ``entity'' and ``project'' 
in the statutory phrase ``an entity that operates a project'' with 
Welfare-to-Work funds?

    The terms ``entity'' and ``project'', in the statutory phrase ``an 
entity that operates a project'', means:
    (a) For WtW substate formula funds:
    (1) ``Entity'' means the PIC, local board (or the alternate 
administering agency designated by the Governor and approved by the 
Secretary pursuant to Sec. 645.400 of this part) which administers the 
WtW substate formula funds in a local area(s). This entity is referred 
to in Sec. Sec. 645.211 through 645.225 of this part as the ``operating 
entity.''
    (2) ``Project'' means all activities, administrative and 
programmatic, supported by the total amount of the WtW substate formula 
funds allotted to the entity described in section (a)(1) of this 
paragraph.
    (b) For WtW Governors' funds for long-term recipients of assistance:
    (1) ``Entity'' means the agency, group, or organization to which the 
Governor has distributed any of the funds for long-term recipients of 
assistance, as described in Sec. 645.410 (b) and (c) of this part. This 
entity is referred to in Sec. Sec. 645.211 through 645.225 of this part 
as the ``operating entity.''
    (2) ``Project'' means all activities, administrative and 
programmatic, supported by the total amount of one discrete award of WtW 
Governors' funds for long-term recipients of assistance awarded to the 
entity described in section (b)(1) of this paragraph.
    (c) For competitive WtW funds:
    (1) ``Entity'' means an eligible applicant, as described in Sec. 
645.500 of this part, which is awarded a competitive WtW grant. This 
entity is referred to in Sec. Sec. 645.211 through 645.225 of this part 
as the ``operating entity.''
    (2) ``Project'' means all of the activities, administrative and 
programmatic, supported by the total amount of one discrete WtW 
competitive grant awarded to the entity described in section (c)(1) of 
this paragraph (section 403(a)(5)(C)).



Sec. 645.211  How must Welfare-to-Work funds be spent by the operating 
entity?

    An operating entity, as described in Sec. 645.210 of this subpart, 
may spend not more than 30 percent of the WtW funds allotted to or 
awarded to the operating entity to assist individuals who meet the 
``other eligibles'' eligibility requirements under Sec. 645.213 of this 
subpart. The remaining funds allotted to or awarded to the operating 
entity are to be spent to benefit individuals who meet the ``general 
eligibility'' and/or ``noncustodial parents'' eligibility requirements, 
under Sec. 645.212 of this subpart. (section 403(a)(5)(C) of the Act).



Sec. 645.212  Who may be served under the general eligibility and 
noncustodial parent eligibility (primary eligibility) provision?

    An individual may be served under this provision if:
    (a)(1) (S)he is currently receiving TANF assistance under a State 
TANF program, and/or its predecessor program, for at least 30 months, 
although the months do not have to be consecutive; or
    (2) (S)he will become ineligible for assistance within 12 months due 
to either Federal or State-imposed time limits on the receipt of TANF 
assistance. This criterion includes individuals (as well as children of 
noncustodial parents) exempted from the time limits due to hardship 
under section 408(a)(7)(C) of the Act or due to a waiver because of 
domestic violence under section 402(a)(7) of the Act, who would become 
ineligible for assistance within 12 months without the exemption or 
waiver;

[[Page 406]]

    (b) (S)he is no longer receiving TANF assistance because (s)he has 
reached either the Federal five-year limit or a State-imposed time limit 
on receipt of TANF assistance (section 403(a)(5)(C) of the Act); or
    (c) (S)he is a noncustodial parent of a minor child if:
    (1) The noncustodial parent is:
    (i) ``Unemployed,'' as defined in Sec. 645.120 of this part,
    (ii) ``Underemployed,'' as defined by the State in consultation with 
local boards and WtW competitive grantees, or
    (iii) ``Having difficulty paying child support obligations,'' as 
defined by the State in consultation with local boards and WtW 
competitive grantees and the State Child Support Enforcement (IV-D) 
Agency, and
    (2) At least one of the following applies:
    (i) The minor child, or the custodial parent of the minor child, 
meets the long-term recipient of TANF requirements of paragraph (a) of 
this section;
    (ii) The minor child is receiving or is eligible for TANF benefits 
and services;
    (iii) The minor child received TANF benefits and services during the 
preceding year; or
    (iv) The minor child is receiving or eligible for assistance under 
the Food Stamp program, the Supplemental Security Income program, 
Medicaid, or the Children's Health Insurance Program; and
    (3) The noncustodial parent is in compliance with the terms of a 
written or oral personal responsibility contract meeting the 
requirements of Sec. 645.215 of this subpart.
    (d) For purposes of determining whether an individual is receiving 
TANF assistance in paragraphs (a)(1) of this section and Sec. 
645.213(a), TANF assistance means any TANF benefits and services for the 
financially needy according to the appropriate income and resource 
criteria (if applicable) specified in the State TANF plan.



Sec. 645.213  Who may be served as an individual in the ``other 
eligibles'' (30 percent) provision?

    Any individual may be served under this provision if (s)he:
    (a) Is currently receiving TANF assistance (as described in Sec. 
645.212(d)) and either:
    (1) Has characteristics associated with, or predictive of, long-term 
welfare dependence, such as having dropped out of school, teenage 
pregnancy, or having a poor work history. States, in consultation with 
the operating entity, may designate additional characteristics 
associated with, or predictive, of long term-welfare dependence; or
    (2) Has significant barriers to self-sufficiency, under criteria 
established by the local board or alternate administering agency.
    (b) Was in foster care under the responsibility of the State before 
s(he) attained 18 years of age and is at least 18 but not 25 years of 
age or older at the time of application for WtW. Eligible individuals 
include those who were recipients of foster care maintenance payments as 
defined in section 475(4) under part E of the Social Security Act, or
    (c)(1) Is a custodial parent with income below 100 percent of the 
poverty line, determined in accordance with the most recent HHS Poverty 
Guidelines established under section 673(2) of the Omnibus Budget 
Reconciliation Act of 1981 (Pub. L. 97-35), including any revisions 
required by such section, applicable to a family of the size involved.
    (2) For purposes of paragraph (c)(1) of this section, income is 
defined as total family income for the last six months, exclusive of 
unemployment compensation, child support payments, and old-age and 
survivors benefits received under section 202 of the Social Security Act 
(42 U.S.C. 402).
    (3) A custodial parent with a disability whose own income meets the 
requirements of a program described in paragraph (c)(1) or (c)(3)(i) but 
who is a member of a family whose income does not meet such requirements 
is considered to have met the requirements of paragraph (c)(1) of this 
section.



Sec. 645.214  How will Welfare-to-Work participant eligibility be 
determined?

    (a) The operating entity, as described in Sec. 645.210(a)(1), 
(b)(1), and (c)(1) of this

[[Page 407]]

subpart, is accountable for ensuring that WtW funds are spent only on 
individuals eligible for WtW projects.
    (b) The operating entity must ensure that there are mechanisms in 
place to determine WtW eligibility for individuals who are receiving 
TANF assistance. These mechanisms:
    (1) Must include arrangements with the TANF agency to ensure that a 
WtW eligibility determination is based on information, current at the 
time of the WtW eligibility determination, about whether an individual 
is receiving TANF assistance, the length of receipt of TANF assistance, 
and when an individual may become ineligible for assistance, pursuant to 
Sec. Sec. 645.212 and 645.213 of this part (section 
403(a)(5)(I)(A)(ii)(dd)).
    (2) May include a determination of WtW eligibility for 
characteristics of long-term welfare dependence and for significant 
barriers to self-sufficiency under Sec. 645.213(a) of this subpart, 
based on information collected by the operating entity and/or the TANF 
agency up to six months prior to the WtW eligibility determination.
    (c) The operating entity must ensure that there are mechanisms in 
place to determine WtW eligibility for individuals who have reached the 
time limit on receipt of TANF, under Sec. 645.212(b) of this subpart; 
individuals who are not receiving TANF assistance (i.e., noncustodial 
parents under Sec. 645.212(c) of this subpart; individuals who are 
former foster care recipients under Sec. 645.213(b) of this subpart, 
and low-income custodial parents under Sec. 645.213(c) of this 
subpart). The mechanisms for establishing noncustodial parent 
eligibility must include a process for applying the preference required 
under Sec. 645.215(a) of this subpart, and may include an objective 
standard to be used as a presumptive determination for establishing the 
eligibility of the minor child for the programs specified in Sec. 
645.212(c)(2)(iv) of this subpart.



Sec. 645.215  What must a WtW operating entity that serves noncustodial 
parent participants do?

    (a) In programs that serve noncustodial parents, the operating 
entity must give preference to those noncustodial parents who qualify 
under Sec. 645.212(c)(2)(i) of this subpart over other noncustodial 
parents. The preference for admission into the program applies only to 
noncustodial parents and not to any other group eligible under the 
``general eligibility'' provisions of Sec. 645.212(a) or (b) or the 
``other eligibles'' provisions of Sec. 645.213. The preference does not 
require that the category of noncustodial parents eligible under Sec. 
645.212(c)(2)(i) must be exhausted before any other category of eligible 
noncustodial parents may be served. The operating entity may establish a 
process that gives preference to noncustodial parents eligible under 
Sec. 645.212(c)(2)(i) and that also provides WtW services to 
noncustodial parents eligible under the other provisions of Sec. 
645.212(c)(2).
    (b) In order to protect custodial parents and children who may be at 
risk of domestic violence, the operating entity must consult with 
domestic violence prevention and intervention organizations in the 
development of its WtW project serving noncustodial parents; and must 
not require the cooperation of the custodial parent as a condition of 
participation in the WtW program for either parent; and
    (c) The operating entity must ensure that personal responsibility 
contracts:
    (1) Take into account the employment and child support status of the 
noncustodial parent;
    (2) Include all of the following parties:
    (i) The noncustodial parent,
    (ii) The operating entity, and
    (iii) The agency responsible for administering the State Child 
Support Enforcement program as described under Title IV-D of the Act, 
unless the operating entity demonstrates to the Secretary of Labor with 
written documentation that it is not able to coordinate with the State 
IV-D agency;
    (3) Include the following elements:
    (i) A commitment by the noncustodial parent to cooperate:
    (A) In the establishment of paternity (if the participant is male) 
of the minor child at the earliest opportunity, through voluntary 
acknowledgment or other procedures, and
    (B) In the establishment of a child support order;

[[Page 408]]

    (ii) A commitment by the noncustodial parent to cooperate in the 
payment of child support for the minor child. This commitment may 
include a modification of an existing support order to take into 
account:
    (A) The ability of the noncustodial parent to pay such support; and
    (B) The participation of the noncustodial parent in the WtW program, 
and
    (iii) A commitment by the noncustodial parent to participate in 
employment or related activities that will enable the noncustodial 
parent to make regular child support payments. For noncustodial parents 
who have not reached 20 years of age, such activities may include:
    (A) Completion of high school,
    (B) Earning a general equivalency degree, or
    (C) Participating in other education directly related to employment;
    (iv) A description of the services to be provided to the 
noncustodial parent under the WtW program;
    (4) Contain a commitment by the noncustodial parent to participate 
in the services that are described in the personal responsibility 
contract under paragraph (c)(3)(iv) of this section; and
    (5) Be entered into no later than thirty (30) days after the 
individual is enrolled in and is receiving services through a WtW 
project funded under this part, unless the operating entity has 
determined that good cause exists to extend this period. This extension 
may not extend to a date more than ninety (90) days after the individual 
is enrolled in and receiving services through a WtW project funded under 
this part.



Sec. 645.220  What activities are allowable under this part?

    Entities operating WtW projects may use WtW funds for the following:
    (a) Job readiness activities, subject to the requirements of Sec. 
645.221 of this subpart.
    (b) Vocational educational training or job training. A participant 
is limited to six calendar months of such training if (s)he is not also 
employed or participating in an employment activity, as described in 
paragraph (c) of this section.
    (c) Employment activities which consist of any of the following:
    (1) Community service programs;
    (2) Work experience programs;
    (3) Job creation through public or private sector employment wage 
subsidies; and
    (4) On-the-job training.
    (d) Job placement services subject to the requirements of Sec. 
645.221 of this subpart.
    (e) Post-employment services which are provided after an individual 
is placed in one of the employment activities listed in paragraph (c) of 
this section, or in any other subsidized or unsubsidized job, subject to 
the requirements of Sec. 645.221 of this subpart. Post-employment 
services include such services as:
    (1) Basic educational skills training;
    (2) Occupational skills training;
    (3) English as a second language training; and
    (4) Mentoring.
    (f) Job retention services and support services that are provided 
after an individual is placed in a job readiness activity, as specified 
in paragraph (a) of this section; in vocational education or job 
training, as specified in paragraph (b) of this section; in one of the 
employment activities, as specified in paragraph (c) of this section, or 
in any other subsidized or unsubsidized job. WtW participants who are 
enrolled in Workforce Investment Act (WIA) or JTPA activities, such as 
occupational skills training, may also receive job retention and support 
services funded with WtW monies while they are participating in WIA 
activities. Job retention and support services can be provided with WtW 
funds only if they are not otherwise available to the participant. Job 
retention and support services include such services as:
    (1) Transportation assistance;
    (2) Substance abuse treatment (except that WtW funds may not be used 
to provide medical treatment);
    (3) Child care assistance;
    (4) Emergency or short term housing assistance; and
    (5) Other supportive services.
    (g) Individual development accounts which are established in 
accordance with the Act.

[[Page 409]]

    (h) Outreach, recruitment, intake, assessment, eligibility 
determination, development of an individualized service strategy, and 
case management may be incorporated in the design of any of the 
allowable activities listed in paragraphs (a) through (g) of this 
section (section 403(a)(5)(C) of the Act).



Sec. 645.221  For what activities and services must local boards use 
contracts or vouchers?

    (a) Local boards and PIC's must provide the following activities and 
services through vouchers or contracts with public or private providers: 
the job readiness activities described in Sec. 645.220(a) of this 
subpart, the job placement services described in Sec. 645.220(d) of 
this subpart, and the post-employment services described in Sec. 
645.220(e) of this subpart. Job placement services provided with 
contracts or vouchers are subject to the payment requirements at Sec. 
645.230(a)(3) of this subpart. If an operating entity is not a local 
board or a PIC, it may provide such services directly.
    (b) Local boards and PIC's which are directly providing job 
readiness activities or job placement and/or post-employment services 
must conform to the requirement in paragraph (a) of this section, to 
provide such services through contract or voucher, by February 12, 2001.



Sec. 645.225  How do Welfare-to-Work activities relate to activities 
provided through TANF and other related programs?

    (a) Activities provided through WtW must be coordinated effectively 
at the State and local levels with activities being provided through 
TANF (section 403(a)(5)(A)(vii)(II)).
    (b) The operating entity must ensure that there is an assessment of 
skills, prior work experience, employability, and other relevant 
information in place for each WtW participant. Where appropriate, the 
assessment performed by the TANF agency or JTPA should be used for this 
purpose.
    (c) The operating entity must ensure that there is an individualized 
strategy for transition to unsubsidized employment in place for each 
participant which takes into account participant assessments, including 
the TANF assessment and any JTPA assessment. Where appropriate, the TANF 
individual responsibility plan (IRP), a WIA individual employment plan, 
or a JTPA individual service strategy should be used for this purpose.
    (d) Coordination of resources should include not only those 
available through WtW and TANF grant funds, and the Child Care and 
Development Block Grant, but also those available through other related 
activities and programs such as the WIA or JTPA programs (One-Stop 
systems), the State employment service, private sector employers, labor 
organizations, business and trade associations, education agencies, 
housing agencies, community development corporations, transportation 
agencies, community-based and faith-based organizations, disability 
community organizations, community action agencies, and colleges and 
universities which provide some of the assistance needed by the targeted 
population (section 402(a)(5)(A)).



Sec. 645.230  What general fiscal and administrative rules apply to 
the use of Federal funds?

    (a) Uniform fiscal and administrative requirements.
    (1) State, local, and Indian tribal government organizations are 
required to follow the common rule ``Uniform Administrative Requirements 
for Grants and Cooperative Agreements to State and Local Governments'' 
which is codified in the DOL regulations at 29 CFR part 97.
    (2) Institutions of higher education, hospitals, and other non-
profit organizations and other commercial organizations are required to 
follow OMB Circular A-110 which is codified in the DOL regulations at 29 
CFR part 95.
    (3) In addition to the requirements at 29 CFR 95.48 and 29 CFR 
97.36(i), contracts or vouchers for job placement services supported by 
funds provided for this program must include a provision to require that 
at least one-half (\1/2\) of the payment occur after an eligible 
individual placed into the workforce has been in the workforce for six 
(6) months. This provision applies only to placement in unsubsidized 
jobs (section 403(a)(5)(C)(i)).

[[Page 410]]

    (4) In addition to the requirements at 29 CFR 95.42 and 29 CFR 
97.36(b)(3) which address codes of conduct and conflict of interest 
issues related to employees, it is also required that:
    (i) A local board or alternate administering agency member shall 
neither cast a vote on, nor participate in, any decision making capacity 
on the provision of services by such member (or any organization which 
that member directly represents), nor on any matter which would provide 
any direct financial benefit to that member or a member of his immediate 
family; and
    (ii) Neither membership on the local board or alternate 
administering agency nor the receipt of WtW funds to provide training 
and related services shall be construed, by itself, to violate these 
conflict of interest provisions.
    (5) The addition method, described at 29 CFR 97.25(g)(2), is 
required for the use of all program income earned under WtW grants. When 
the cost of generating program income has been charged to the program, 
the gross amount earned must be added to the WtW program. However, the 
cost of generating program income must be subtracted from the amount 
earned to establish the net amount of program income available for use 
under the grants when these costs have not been charged to the WtW 
program.
    (6) Any excess revenue over costs incurred for services provided by 
a governmental or non-profit entity must be included in program income 
earned.
    (b) Audit requirements. All recipients and subrecipients of 
Department of Labor WtW awards must comply with the audit requirements 
codified at 29 CFR part 96.
    (1) All governmental and non-profit organizations must follow the 
audit requirements of OMB Circular A-133 which is codified at 29 CFR 
part 99. This requirement is imposed at 29 CFR 97.26 for governmental 
organizations and at 29 CFR 95.26 for institutions of higher education, 
hospitals, and other non-profit organizations.
    (2) The Department is responsible for audits of commercial 
organizations which are direct recipients of WtW grants.
    (3) Commercial organizations which are WtW subrecipients and which 
expend more than the minimum level specified in OMB Circular A-133 
($300,000 as of April 15, 1999) must have either an organization-wide 
audit conducted in accordance with 29 CFR part 99 or a program specific 
financial and compliance audit.
    (c) Allowable costs/cost principles. The DOL regulations at 29 CFR 
95.27 and 29 CFR 97.22 identify the Federal principles for determining 
allowable costs which each kind of recipient and subrecipient must 
follow. For those selected items of cost requiring prior approval, the 
authority to grant or deny approval is delegated to the Governor.
    (1) State, local, and Indian tribal government organizations must 
determine allowability of costs in accordance with the provisions of OMB 
Circular A-87, ``Cost Principles for State and Local Governments.''
    (2) Non-profit organizations must determine allowability of costs in 
accordance with OMB Circular A-122, ``Cost Principles for Non-Profit 
Organizations.''
    (3) Institutions of higher education must determine allowability of 
costs in accordance with OMB Circular A-21, ``Cost Principles for 
Education Institutions.''
    (4) Hospitals must determine allowability of costs in accordance 
with the provisions of Appendix E of 45 CFR Part 74, ``Principles for 
Determining Costs Applicable to Research and Development Under Grants 
and Contracts with Hospitals.''
    (5) Commercial organizations and those non-profit organizations 
listed in Attachment C to OMB Circular A-122 must determine allowability 
of costs in accordance with the provisions of the Federal Acquisition 
Regulation (FAR) at 48 CFR Part 31.
    (d) Information technology costs. In addition to the allowable cost 
provisions identified in Sec. 645.235 of this subpart, the costs of 
information technology--computer hardware and software--will only be 
allowable under WtW grants when such computer technology is ``Year 2000 
compliant.'' To meet this requirement, information technology must be 
able to accurately process date/time data (including, but not limited 
to, calculating, comparing and sequencing) from, into and between the

[[Page 411]]

twentieth and twenty-first centuries, and the years 1999 and 2000. The 
information technology must also be able to make leap year calculations. 
Furthermore, ``Year 2000 compliant'' information technology when used in 
combination with other technology shall accurately process date/time 
data if the other information technology properly exchanges date/time 
data with it.
    (e) Prohibition on Construction or Purchase of Facilities. WtW 
federal funds may not be used to pay for the construction or purchase of 
facilities or buildings.
    (f) Prohibition on Business Start-up Costs. WtW federal funds may 
not be used to cover the costs of business start-up and/or capital 
ventures.
    (g) Government-wide debarment and suspension, and government-wide 
drug-free workplace requirements. All WtW grant recipients and 
subrecipients are required to comply with:
    (1) Government-wide requirements for debarment and suspension which 
are codified at 29 CFR part 98, subparts A through E; and
    (2) The government-wide requirements for a drug-free workplace. 
Recipients and subrecipients are required to comply with 29 CFR part 98, 
subpart F, except that the definition of ``grantee'' shall be read to 
include recipients and subrecipients.
    (h) Restrictions on Lobbying. All WtW grant recipients and 
subrecipients are required to comply with the restrictions on lobbying 
which are codified in the DOL regulations at 29 CFR Part 93.
    (i) Nondiscrimination. All WtW grant recipients and subrecipients 
are required to comply with the nondiscrimination provisions codified in 
the DOL regulations at 29 CFR parts 31 and 32. In addition, 29 CFR part 
37 applies to recipients of WtW financial assistance who are also WIA 
recipients and applies to recipients of WtW financial assistance who 
operate programs that are part of the One-Stop system established under 
the Workforce Investment Act, to the extent that the WtW programs and 
activities are being conducted as part of the One-Stop delivery system. 
Furthermore, WtW programs that are part of larger State agencies that 
are recipients of WIA title I financial assistance must also comply with 
the provisions of 29 CFR part 37. For purposes of this paragraph, the 
term ``recipient'' has the same meaning as the term is defined in 29 CFR 
part 37. That part also contains participant rights related to 
nondiscrimination.
    (j) Nepotism. (1) No individual may be placed in a WtW employment 
activity if a member of that person's immediate family is engaged in an 
administrative capacity for the employing agency.
    (2) To the extent that an applicable State or local legal 
requirement regarding nepotism is more restrictive than this provision, 
such State or local requirement shall be followed.



Sec. 645.233  What are the time limitations on the expenditure of 
Welfare-to-Work grant funds?

    (a) Formula grant funds: The maximum time limit for the expenditure 
of a given fiscal year allotment is three years from the effective date 
of the Federal grant award to the State. The maximum time limit will be 
allowed and will be specified in the Department's formula grant document 
for each fiscal year of funds provided to the State. Any remaining funds 
that have not been expended at the end of the expenditure period must be 
returned to the Department in accordance with the applicable closeout 
procedures for formula grants.
    (b) Competitive grant funds: The maximum time limit for the 
expenditure of these funds is three years from the effective date of 
award, but will, in all cases, be determined by the grant period and the 
terms and conditions specified in the Federal grant award agreement 
(including any applicable grant modification documents). Any remaining 
funds that have not been expended at the end of the approved grant 
period must be returned to the Department in accordance with the 
applicable closeout procedures for competitive grants (section 
503(a)(5)(C)(vii)).



Sec. 645.235  What types of activities are subject to the 
administrative cost limit on Welfare-to-Work grants?

    (a) Administrative cost limitation (section 404(b)(1)).--(1) Formula 
grants to states. Expenditures for administrative

[[Page 412]]

purposes under WtW formula grants to States are limited to fifteen 
percent (15%) of the grant award.
    (2) Competitive grants. The limitation on expenditures for 
administrative purposes under WtW competitive grants will be specified 
in the grant agreement but in no case shall the limitation be more than 
fifteen percent (15%) of the grant award.
    (3) Although administrative in nature, costs of information 
technology--computer hardware and software--needed for tracking and 
monitoring of WtW program, participant, or performance requirements, are 
excluded from the administrative cost limit calculation.
    (b) The costs of administration are that allocable portion of 
necessary and allowable costs associated with those specific functions 
identified in paragraph (c) of this section for the administration of 
the WtW program and which are not related to the direct provision of 
services to participants. These costs can be both personnel and non-
personnel and both direct and indirect.
    (c) The costs of administration are the costs associated with 
performing the following functions:
    (1) Performing overall general administrative functions and 
coordination of those functions under WtW including:
    (i) Accounting, budgeting, financial and cash management functions;
    (ii) Procurement and purchasing functions;
    (iii) Property management functions;
    (iv) Personnel management functions;
    (v) Payroll functions;
    (vi) Coordinating the resolution of findings arising from audits, 
reviews, investigations and incident reports;
    (vii) Audit functions;
    (viii) General legal services functions; and
    (ix) Developing systems and procedures, including information 
systems, required for these administrative functions;
    (2) Performing oversight and monitoring responsibilities related to 
WtW administrative functions,
    (3) Costs of goods and services required for administrative 
functions of the program, including goods and services such as rental or 
purchase of equipment, utilities, office supplies, postage, and rental 
and maintenance of office space;
    (4) Travel costs incurred for official business in carrying out 
administrative activities or the overall management of the WtW system; 
and
    (5) Costs of information systems related to administrative functions 
(for example, personnel, procurement, purchasing, property management, 
accounting and payroll systems) including the purchase, systems 
development and operating costs of such systems.
    (d)(1) Only that portion of the costs of WtW grantees that are 
associated with the performance of the administrative functions 
described in paragraph (c) of this section and awards to subrecipients 
or vendors that are solely for the performance of these administrative 
functions are classified as administrative costs. All other costs are 
considered to be for the direct provision of WtW activities and are 
classified as program costs.
    (2) Personnel and related non-personnel costs of staff who perform 
both administrative functions specified in paragraph (c) of this section 
and programmatic services or activities are to be allocated as 
administrative or program costs to the benefitting cost objectives/
categories based on documented distributions of actual time worked or 
other equitable cost allocation methods.
    (3) Specific costs charged to an overhead or indirect cost pool that 
can be identified directly as a program cost may be charged as a program 
cost. Documentation of such charges must be maintained.
    (4) Except as provided at paragraph (d)(1) of this section, all 
costs incurred for functions and activities of subrecipients and vendors 
are program costs.
    (5) Costs of the following information systems including the 
purchase, systems development and operating (e.g., data entry) costs are 
charged to the program category.
    (i) Tracking or monitoring of participant and performance 
information;
    (ii) Employment statistics information, including job listing 
information,

[[Page 413]]

job skills information, and demand occupation information; and
    (iii) Local area performance information.



Sec. 645.240  What are the reporting requirements for Welfare-to-Work 
programs?

    (a) General. State formula and other direct competitive grant 
recipients must report financial and participant data in accordance with 
revised instructions that will be issued by the Department after 
consultation with the Secretary of Health and Human Services, States, 
and organizations that represent State or local governments. Reports 
must be submitted to the Department quarterly. Existing WtW financial 
reporting instructions and formats are available on the WtW web site at 
http://wtw.doleta.gov/linkpages/tegltein.htm. The Internet reporting 
system for WtW grantees is accessible at http://
www.etareports.doleta.gov.
    (b) Subrecipient reporting. A State formula or other direct 
competitive grant recipient may impose different forms or formats, 
shorter due dates, and more frequent reporting requirements on 
subrecipients. However, the recipient is required to meet the reporting 
requirements imposed by the Department.
    (c) Financial reports. Each grant recipient must submit financial 
reports to the Department. Reported expenditures and program income must 
be on the accrual basis of accounting and cumulative by fiscal year of 
appropriation. If the recipient's accounting records are not normally 
kept on the accrual basis of accounting, the recipient must develop 
accrual information through an analysis of the documentation on hand.
    (d) Participant reports. Each grant recipient must submit 
participant reports to the Department. Participant data must be 
aggregate data, and, for most data elements, must be cumulative by 
fiscal year of appropriation.
    (e) Due dates. Financial and participant reports are due no later 
than 45 days after the end of each quarter. A final financial and 
participant report is required 90 days after the expiration of a funding 
period or the termination of grant support.



Sec. 645.245  Who is responsible for oversight and monitoring of 
Welfare-to-Work grants?

    (a) The Secretary may monitor all recipients and subrecipients of 
all grants awarded and funds expended under WtW. Federal oversight will 
be conducted primarily at the State level for formula grants and at the 
recipient level for competitive grants.
    (b) The Governor must monitor local boards (or other approved 
administrative entities) funded under the State's formula allocated 
grants on a periodic basis for compliance with applicable laws and 
regulations. The Governor must develop and make available for review a 
State monitoring plan.



Sec. 645.250  What procedures apply to the resolution of findings 
arising from audits, investigations, monitoring and oversight reviews?

    (a) Resolution of subrecipient level findings.
    (1) The WtW grantee is responsible for the resolution of findings 
that arise from its monitoring reviews, investigations and audits 
(including OMB Circular A-133 audits) of subrecipients.
    (2) A State or competitive grantee, as appropriate, must use the 
audit resolution, debt collection and appeal procedures that it uses for 
other Federal grant programs.
    (3) If a State or competitive grantee, as appropriate, does not have 
such procedures, it must prescribe standards and procedures for the WtW 
grant program.
    (b) Resolution of State level findings.
    (1) The Secretary is responsible for the resolution of findings that 
arise from Federal audits, monitoring reviews, investigations, incident 
reports, and recipient level OMB Circular A-133 audits.
    (2) The Secretary will use the DOL audit resolution process, 
consistent with the Single Audit Act of 1996 and OMB Circular A-133.
    (3) A final determination issued by a grant officer pursuant to this 
process may be appealed to the DOL Office of Administrative Law Judges 
under the procedures at Sec. 645.800.
    (c) Resolution of nondiscrimination findings. Findings arising from 
investigations or reviews conducted under

[[Page 414]]

nondiscrimination laws shall be resolved in accordance with those laws 
and the applicable implementing regulations.



Sec. 645.255  What nondiscrimination protections apply to participants 
in Welfare-to-Work programs?

    (a) All participants in WtW programs under this part shall have such 
rights as are available under all applicable Federal, State and local 
laws prohibiting discrimination, and their implementing regulations, 
including:
    (1) The Age Discrimination Act of 1975 (42 U.S.C. 6101 et seq.);
    (2) Section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794);
    (3) The Americans with Disabilities Act of 1990 (42 U.S.C. 12101 et 
seq.); and
    (4) Title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d et 
seq.).
    (b) Participants in work activities, as defined in section 407(a) of 
the Social Security Act, operated with WtW funds, shall not be 
discriminated against because of gender. Participants alleging gender 
discrimination may file a complaint using the State's grievance system 
procedures as described in Sec. 645.270 of this subpart (section 
403(a)(5)(J)(iii)) of the Act). Participants alleging gender 
discrimination in WtW programs conducted by One-Stop partners as part of 
the One-Stop delivery system may file a complaint using the complaint 
processing procedures developed and published by the State in accordance 
with the requirements of 29 CFR 37.70-37.80.
    (c) Complaints alleging discrimination in violation of any 
applicable Federal, State or local law, such as Title VII of the Civil 
Rights Act of 1964 (42 U.S.C. 2000e et seq.), Title IX of the Education 
Amendments of 1972 (20 U.S.C. 1681 et seq.), the Pregnancy 
Discrimination Act (42 U.S.C. 2000e (paragraph k)), or Section 188 of 
the Workforce Investment Act of 1998 (29 U.S.C. 2938), as well as those 
listed in paragraph (a) of this section, shall be processed in 
accordance with those laws and the implementing regulations.
    (d) Questions about or complaints alleging a violation of the 
nondiscrimination laws in paragraph (a) of this section may be directed 
or mailed to the Director, Civil Rights Center, U.S. Department of 
Labor, Room N-4123, 200 Constitution Avenue, NW, Washington, D.C. 20210 
for processing.



Sec. 645.260  What health and safety provisions apply to participants 
in Welfare-to-Work programs?

    (a) Participants in an employment activity operated with WtW funds, 
as defined in Sec. 645.220 of this part, are subject to the same health 
and safety standards established under State and Federal law which are 
applicable to similarly employed employees, of the same employer, who 
are not participants in programs under WtW.
    (b) Participants alleging a violation of these health and safety 
standards may file a complaint pursuant to the procedures contained in 
Sec. 645.270 of this part (section 403(a)(5)(J)(ii)).



Sec. 645.265  What safeguards are there to ensure that participants in 
Welfare-to-Work employment activities do not displace other employees?

    (a) An adult participating in an employment activity operated with 
WtW funds, as described in Sec. 645.220 (b) and (c) of this subpart, 
may fill an established position vacancy subject to the limitations in 
paragraph (c) of this section.
    (b) An employment activity operated with WtW funds, as described in 
Sec. 645.220(c) of this subpart, must not violate existing contracts 
for services or collective bargaining agreements. Where such an 
employment activity would violate a collective bargaining agreement, the 
appropriate labor organization and employer must provide written 
concurrence before the employment activity is undertaken.
    (c) An adult participating in an employment activity operated with 
WtW funds, as described in Sec. 645.220(c) of this subpart, must not be 
employed or assigned:
    (1) When any other individual is on layoff from the same or any 
substantially equivalent job within the same organizational unit;
    (2) If the employer has terminated the employment of any regular, 
unsubsidized employee or otherwise caused an involuntary reduction in 
its workforce with the intention of filling the vacancy so created with 
the WtW participant; and,

[[Page 415]]

    (3) If the employer has caused an involuntary reduction to less than 
full time in hours of any employee in the same or substantially 
equivalent job within the same organizational unit.
    (d) Regular employees and program participants alleging displacement 
may file a complaint pursuant to Sec. 645.270 of this part (section 
403(a)(5)(J)(i)).



Sec. 645.270  What procedures are there to ensure that currently 

employed workers may file grievances regarding displacement and 
that Welfare-to-Work participants in employment activities may file 
grievances regarding displacement, health and safety standards and 
gender discrimination?

    (a) The State shall establish and maintain a grievance procedure for 
resolving complaints from:
    (1) Regular employees that the placement of a participant in an 
employment activity operated with WtW funds, as described in Sec. 
645.220 of this part, violates any of the prohibitions described in 
Sec. 645.265 of this part; and
    (2) Program participants in an employment activity operated with WtW 
funds, as described in Sec. 645.220 of this part, that any employment 
activity violates any of the prohibitions described in Sec. Sec. 
645.255(d), 645.260, or 645.265 of this part.
    (b) Such grievance procedure should include an opportunity for 
informal resolution.
    (c) If no informal resolution can be reached within the specified 
time as established by the State as part of its grievance procedure, 
such procedure shall provide an opportunity for the dissatisfied party 
to receive a hearing upon request.
    (d) The State shall specify the time period and format for the 
hearing portion of the grievance procedure, as well as the time period 
by which the complainant will be provided the written decision by the 
State.
    (e) A decision by the State under paragraph (d) of this section may 
be appealed by any dissatisfied party within 30 days of the receipt of 
the State's written decision, according to the time period and format 
for the appeals portion of the grievance procedure as specified by the 
State.
    (f) The State shall designate the State agency which will be 
responsible for hearing appeals. This agency shall be independent of the 
State or local agency which is administering, or supervising the 
administration of the State TANF and WtW programs.
    (g) No later than 120 days of receipt of an individual's original 
grievance, the State agency, as designated in paragraph (f) of this 
section, shall provide a written final determination of the individual's 
appeal.
    (h) The grievance procedure shall include remedies for violations of 
Sec. Sec. 645.255(d), 645.260, and 645.265 of this part which may 
continue during the grievance process and which may include:
    (1) Suspension or termination of payments from funds provided under 
this part;
    (2) Prohibition of placement of a WtW participant with an employer 
that has violated Sec. Sec. 645.255(b), 645.260, and 645.265 of this 
part;
    (3) Where applicable, reinstatement of an employee, payment of lost 
wages and benefits, and reestablishment of other relevant terms, 
conditions, and privileges of employment; and,
    (4) Where appropriate, other equitable relief (section 
403(a)(5)(J)(iv)).
    (i) Participants alleging gender discrimination by WtW programs that 
are not part of the One-Stop system may file a complaint using the 
grievance system procedures described above. Participants alleging 
gender discrimination by WtW programs that are part of the One-Stop 
system may file a complaint using the procedures developed by the State 
under the WIA nondiscrimination regulations at 29 CFR 37.70-37.80.



    Subpart C_Additional Formula Grant Administrative Standards and 
                               Procedures



Sec. 645.300  What constitutes an allowable match?

    (a) A State is entitled to receive two (2) dollars of Federal funds 
for every one (1) dollar of State match expenditures, up to the amount 
available for allotment to the State based on the State's percentage for 
WtW formula grant for the fiscal year. The State is

[[Page 416]]

not required to provide a level of match necessary to support the total 
amount available to it based on the State's percentage for WtW formula 
grant. However, if the proposed match is less than the amount required 
to support the full level of Federal funds, the grant amount will be 
reduced accordingly (section 403(a)(5)(A)(i)(I)).
    (b) States shall follow the match or cost-sharing requirements of 
the ``Common Rule'' Uniform Administrative Requirements for Grants and 
Cooperative Agreements to State and Local Governments (codified for DOL 
at 29 CFR 97.24). Paragraphs (b)(1)(i) and (ii), (b)(3), and (b)(4) and 
(c)(1) of this section are in addition to the common rule requirements. 
Also, paragraphs included in the common rule which relate to the use of 
donated buildings and other real property as match have been excluded 
from this provision.
    (1) Only costs that would be allowable if paid for with WtW grant 
funds will be accepted as match.
    (i) Because the use of Federal funds is prohibited for construction 
or purchase of facilities or buildings except where there is explicit 
statutory authority permitting it, costs incurred for the construction 
or purchase of facilities or buildings shall not be acceptable as match 
for a WtW grant.
    (ii) Because the costs of construction or purchase of facilities or 
buildings are unallowable as match, the donation of a building or 
property as a third party in-kind contribution is also unallowable as a 
match for a WtW grant.
    (2) A match or cost-sharing requirement may be satisfied by either 
or both of the following:
    (i) Allowable costs incurred by the grantee, subgrantee or a cost 
type contractor under the assistance agreement. This includes allowable 
cost borne by non-Federal grants or by others and cash donations from 
non-Federal third parties.
    (ii) The value of third party in-kind contributions applicable to 
the FY period to which the cost-sharing or matching requirement applies.
    (3) No more than seventy-five percent (75%) of the total match 
expenditures may be in the form of third party in-kind contributions.
    (4) Match expenditures must be recorded in the books of account of 
the entity that incurred the cost or received the contribution. These 
amounts may be rolled up and reported as aggregate State level match.
    (c) Qualifications and exceptions--
    (1) The matching requirements may not be met by the use of an 
employer's share of participant wage payments (e.g., employer share of 
OJT wages).
    (2) Costs borne by other Federal grant agreements. A cost-sharing or 
matching requirement may not be met by costs borne by another Federal 
grant. This prohibition does not apply to income earned by a grantee or 
subgrantee from a contract awarded under another Federal grant.
    (3) General revenue sharing. For the purpose of this section, 
general revenue sharing funds distributed under 31 U.S.C. 6702 are not 
considered Federal grant funds.
    (4) Cost or contributions counted towards other Federal cost-sharing 
requirements. Neither costs nor the values of third party in-kind 
contributions may count towards satisfying a cost-sharing or matching 
requirement of a grant agreement if they have been or will be counted 
towards satisfying a cost-sharing or matching requirement of another 
Federal grant agreement, a Federal procurement contract, or any other 
award of Federal funds.
    (5) Costs financed by program income. Costs financed by program 
income, as defined in 29 CFR 97.25, shall not count towards satisfying a 
cost-sharing or matching requirement unless they are expressly permitted 
in the terms of the assistance agreement. (This use of general program 
income is described in 29 CFR 97.25(g)).
    (6) Services or property financed by income earned by contractors. 
Contractors under a grant may earn income from the activities carried 
out under the contract in addition to the amounts earned from the party 
awarding the contract. No costs of services or property supported by 
this income may count toward satisfying a cost-sharing or matching 
requirement unless other provisions of the grant agreement expressly 
permit this kind of income to be used to meet the requirement.

[[Page 417]]

    (7) Records. Costs and third party in-kind contributions counting 
towards satisfying a cost-sharing or matching requirement must be 
verifiable from the records of grantees and subgrantee or cost-type 
contractors. These records must show how the value placed on third party 
in-kind contributions was derived. To the extent feasible, volunteer 
services will be supported by the same methods that the organization 
uses to support the allocability of regular personnel costs.
    (8) Special standards for third party in-kind contributions.
    (i) Third party in-kind contributions count towards satisfying a 
cost-sharing or matching requirement only where, if the party receiving 
the contributions were to pay for them, the payments would be allowable 
costs.
    (ii) Some third party in-kind contributions are goods and services 
that, if the grantee, subgrantee, or contractor receiving the 
contribution had to pay for them, the payments would have been an 
indirect costs. Cost sharing or matching credit for such contributions 
shall be given only if the grantee, subgrantee, or contractor has 
established, along with its regular indirect cost rate, a special rate 
for allocating to individual projects or programs the value of the 
contributions.
    (iii) A third party in-kind contribution to a fixed-price contract 
may count towards satisfying a cost-sharing or matching requirement only 
if it results in:
    (A) An increase in the services or property provided under the 
contract (without additional cost to the grantee or subgrantee) or
    (B) A cost savings to the grantee or subgrantee.
    (iv) The values placed on third party in-kind contributions for 
cost-sharing or matching purposes must conform to the rules in the 
succeeding sections of this part. If a third party in-kind contribution 
is a type not treated in those sections, the value placed upon it must 
be fair and reasonable.
    (d) Valuation of donated services.
    (1) Volunteer services. Unpaid services provided to a grantee or 
subgrantee by individuals must be valued at rates consistent with those 
ordinarily paid for similar work in the grantee's or subgrantee's 
organization. If the grantee or subgrantee does not have employees 
performing similar work, the rates must be consistent with those 
ordinarily paid by other employers for similar work in the same labor 
market. In either case, a reasonable amount for fringe benefits may be 
included in the valuation.
    (2) Employees of other organizations. When an employer other than a 
grantee, subgrantee, or cost-type contractor furnishes free of charge 
the services of an employee in the employee's normal line of work, the 
services must be valued at the employee's regular rate of pay exclusive 
of the employee's fringe benefits and overhead costs. If the services 
are in a different line of work, paragraph (d)(1) of this section 
applies.
    (e) Valuation of third party donated supplies and loaned equipment 
or space.
    (1) If a third party donates supplies, the contribution must be 
valued at the market value of the supplies at the time of donation.
    (2) If a third party donates the use of equipment or space in a 
building but retains title, the contribution must be valued at:
    (i) the fair rental rate of the equipment or space for property 
donated by non-governmental entities, or
    (ii) a depreciation or use-allowance based on the property's market 
value at the time it was donated for property donated by governmental 
entities.



Sec. 645.310  What assurance must a State provide that it will make 
the required matching expenditures?

    In its State plan, a State must provide a written estimate of 
planned matching expenditures and describe the process by which the 
funds will be tracked and reported to ensure that the State meets its 
projected match (section 403(a)(5)(A)(i)(I)).



Sec. 645.315  What actions are to be taken if a State fails to make 
the required matching expenditures?

    (a) If State match expenditures do not satisfy the requirements of 
the FY grant award by the end of the three year fund availability 
period, the grant award amount will be reduced by the appropriate 
corresponding amount (i.e.,

[[Page 418]]

the grant will be reduced by two (2) dollars for each one (1) dollar 
shortfall in State matching funds) when the grant is closed out.
    (b) Compliance with the fifteen percent (15%) administrative cost 
limit will be recalculated based on the FY formula grant award amount, 
as reduced under paragraph (a) of this section.



              Subpart D_State Formula Grants Administration



Sec. 645.400  Under what conditions may the Governor request a waiver 
to designate an alternate local administering agency?

    (a)(1) The Governor may include in the State's WtW Plan a waiver 
request to select an agency other than the local board or PIC to 
administer the program for one or more local areas or SDA's in a State; 
or
    (2) When the Governor determines the local board or alternate 
administering agency has not coordinated its expenditures with the 
expenditure of funds provided to the State under TANF, pursuant to 
section 403(a)(5)(A)(vii)(II) of the Act, the Governor must request a 
waiver.
    (b) The Governor shall bear the burden of proving that the 
designated alternate administering agency, rather than the local board 
or other alternate administering agency, would improve the effectiveness 
or efficiency of the administration of WtW funds in the SDA. The 
Governor's waiver request shall include information to meet that burden. 
The Governor shall provide a copy of the waiver request and any 
supporting information submitted to the Secretary to the local board and 
CEO of the local area for which an alternative administering agency is 
requested.
    (c) The local board and CEO shall have fifteen (15) days in which to 
submit his or her written response to the Department. The local board 
and CEO shall provide a copy of such response to the Governor.
    (d) The Secretary will assess the waiver information submitted by 
the Governor, including input from the local board and CEO in reaching 
the decision whether to permit the use of an alternate administering 
agency.
    (e) The Secretary shall approve a waiver request if she determines 
that the Governor has established that the designated alternate 
administering agency, rather than the local board or other administering 
agency, will improve the effectiveness or efficiency of the 
administration of WtW funds provided for the benefit of the local area.
    (f) Where an alternate administering agency is approved by the 
Secretary, such administrative entity shall coordinate with the CEO for 
the applicable local area(s) regarding the expenditure of WtW grant 
funds in the local area(s).
    (g) The decision of the Secretary to approve or deny a waiver 
request will be issued promptly and shall constitute final agency 
action.



Sec. 645.410  What elements will the State use in distributing funds 
within the State?

    (a) Of the WtW funds allotted to the State, not less than 85 percent 
of the State allotment must be distributed to the local areas or SDA's 
in the State.
    (1) The State shall prescribe a formula for determining the amount 
of funds to be distributed to each local area or SDA in the State using 
no factors other than the three factors described in paragraphs (2) and 
(3) of this paragraph;
    (2) The formula prescribed by the Governor must include as one of 
the formula factors for distributing funds the provision at section 
403(a)(5)(A)(vi)(I)(aa) of the Act. The Governor is to distribute funds 
to a local area or SDA based on the number by which the population of 
the area with an income that is less than the poverty line exceeds 7.5 
percent of the total population of the area, compared to all such 
numbers in all such areas in the State. The Governor must assign a 
weight of not less than 50 percent to this factor;
    (3) The Governor shall distribute the remaining funds, if any, to 
the local area or SDA's utilizing only one or both of the following 
factors:
    (i) the local area or SDA's share of the number of adults receiving 
assistance under TANF or the predecessor

[[Page 419]]

program in the local area or SDA for 30 months or more (whether 
consecutive or not), relative to the number of such adults residing in 
the State;
    (ii) the local area or SDA's share of the number of unemployed 
individuals residing in the local area or SDA, relative to the number of 
such individuals residing in the State.
    (4) If the amount to be distributed to a local area or SDA by the 
Governor's formula is less than $100,000, the funds shall be available 
to be used by the Governor to fund projects described at paragraph (b) 
of this section.
    (5) States shall use the guidance provided at section 403(a)(5)(D) 
of the Act in determining the number of individuals with an income that 
is less than the poverty line.
    (6) Local Boards (or alternate administering agency) shall 
determine, pursuant to section 403(a)(5)(A)(vii)(I) of the Act, on which 
individual(s) and on which allowable activities to expend its WtW fund 
allocation.
    (7) The State must distribute the local boards' or SDAs' allocations 
in a timely manner, but not longer than 30 days from receipt of the 
State's fund allotment.
    (b) Of the funds allocated to the State, up to 15 percent of the 
funds may be retained at the State level to fund projects that appear 
likely to help long-term recipients of assistance enter unsubsidized 
employment. Any additional funds available as a result of the process 
described at paragraph (a)(4) of this section, shall also be available 
to be used to fund projects to help long-term recipients of assistance 
enter unsubsidized jobs.
    (c) The Governors may distribute the funds retained pursuant to 
paragraph (b) of this section to a variety of workforce organizations, 
in addition to local boards or alternate administering agencies, and 
other entities such as One-Stop systems, private sector employers, labor 
organizations, business and trade associations, education agencies, 
housing agencies, community development corporations, transportation 
agencies, community-based and faith-based organizations, disability 
community organizations, community action agencies, and colleges and 
universities which provide some of the assistance needed by the targeted 
population.



Sec. 645.415  What planning information must a State submit in order 
to receive a formula grant?

    (a) Each State seeking financial assistance under the formula grant 
portion of the WtW legislation must submit an annual plan meeting the 
requirements prescribed by the Secretary. This plan shall be in the form 
of an addendum to the TANF State plan and shall be submitted to the 
Secretaries of Labor and Health and Human Services.
    (b) The Secretary shall review the State plan for compliance with 
the statutory and regulatory provisions of the WtW program. The 
Secretary's decision whether to accept a State plan as in compliance 
with the Act shall constitute final agency action.
    (c) If the Governor has requested a waiver to permit the selection 
of an alternate administering agency in the State plan, the provisions 
of Sec. 645.400 of this part shall apply (section 403(a)(5)(A)(ii)).



Sec. 645.420  What factors will be used in measuring State performance?

    (a) The Department will use the following factors to measure State 
performance:
    (1) Job entry rate as measured by the proportion of WtW participants 
who enter either subsidized employment or unsubsidized employment,
    (2) Substantive job entry rate as measured by the proportion of WtW 
participants who are placed in or who have moved into subsidized or 
unsubsidized employment of 30 hours or more per week,
    (3) Retention as measured by the proportion of WtW participants who 
remain in unsubsidized employment six months in the second subsequent 
quarter after the quarter in which placement occurred after initial 
placement, and
    (4) Measured earnings gains of WtW participants who remain in 
unsubsidized employment six months after initial placement.
    (b) The formula for calculating the performance bonus is weighted as 
follows:

[[Page 420]]

    (1) 30 percent on job entry rate,
    (2) 30 percent on substantive job entry rate,
    (3) 20 percent on retention in unsubsidized employment,
    (4) 20 percent on earnings gains in unsubsidized employment.
    The formula will reflect general economic conditions on a State-by-
State basis.
    (c) The formula shall serve as the basis for the award of FY 2000 
bonus grants based on successful performance to be made in FY 2001 
(section 403(a)(5)(E)).



Sec. 645.425  What are the roles and responsibilities of the State(s) 
and local boards or alternate administering agencies?

    (a) State roles and responsibilities. A State:
    (1) Designates State WtW administering agency;
    (2) Provides overall administration of WtW funds, consistent with 
the WtW statute, WtW regulations and the State's WtW Plan;
    (3) Develops the State WtW Plan in consultation and coordination 
with appropriate entities in substate areas, such as One-Stop systems, 
private sector employers, labor organizations, business and trade 
associations, education agencies, housing agencies, community 
development corporations, transportation agencies, community-based and 
faith-based organizations, disability community organizations, community 
action agencies, and colleges and universities which provide some of the 
assistance needed by the targeted population (section 
403(a)(5)(A)(ii)(I)(cc));
    (4) Distributes funds to SDAs, consistent with the provisions 
described at Sec. 645.410(a) (section 403(a)(5)(A)(ii)(I)(bb));
    (5) Conducts oversight and monitoring of WtW activities and fund 
expenditures at the State and local levels for compliance with 
applicable laws and regulations, consistent with the provisions at Sec. 
645.245 and provides technical assistance as appropriate;
    (6) Ensures coordination of local board or alternate administering 
agency fund expenditures with the State TANF expenditures and other 
programs (section 403(a)(5)(A)(ii)(I)(dd));
    (7) Determines whether to request waivers to select an alternate 
administering agency consistent with the provisions described at Sec. 
645.400 of this part (sections 403(a)(5)(A)(ii)(I)(ee) and 
403(a)(5)(A)(vii)(III));
    (8) Manages and distributes State level WtW funds (15 percent), 
consistent with the provisions at Sec. 645.410(b) and (c) (section 
403(a)(5)(A)(vi)(III));
    (9) Ensures that the 15 percent administration limitation and the 
match requirement are met;
    (10) Ensures that worker protections provisions are observed and 
establishes an appropriate grievance process, consistent with Sec. Sec. 
645.255 through 645.270 of this part (section 403(a)(5)(J));
    (11) Provides comments on Competitive Grant Application(s) from 
eligible entities within the State, consistent with Sec. 645.510 of 
this part (section 403(a)(5)(B)(ii));
    (12) Cooperates with the Department of Health and Human Services on 
the evaluation of WtW programs (section 403(a)(5)(A)(ii)(III));
    (13) Provides technical assistance to PIC's, local boards or 
alternate administering agencies; and
    (14) Establishes internal reporting requirements to ensure Federal 
reports are accurate, complete and are submitted on a timely basis, 
consistent with Sec. 645.240 of this part.
    (b) Local Boards (or alternate administering agency) roles and 
responsibilities. A local board:
    (1) Has sole authority, in coordination with CEOs, to expend formula 
funds (section 403(a)(5)(A)(vii)(I));
    (2) Has authority to determine the individuals to be served in the 
local area (section 403(a)(5)(A)(vii)(I));
    (3) Has authority to determine the services to be provided in the 
local area (section 403(a)(5)(A)(vii)(I));
    (4) Ensures funds are expended on eligible recipients and on 
allowable activities, consistent with Sec. 645.410(a)(5) of this part;
    (5) Coordinates WtW fund expenditures with State TANF expenditures 
and other programs (section 403(a)(5)(A)(ii)(dd));
    (6) Ensures that there is an assessment and an individual service 
strategy in place for each WtW participant,

[[Page 421]]

consistent with Sec. 645.225(a) and (b) of this part;
    (7) Conducts oversight and monitoring of subrecipients, consistent 
with the provisions at Sec. 645.245 of this part;
    (8) Ensures worker protection provisions and grievance process are 
observed, consistent with State guidelines (section 403(a)(5)(J)); and
    (9) Consults with and provides comments on private entity 
Competitive Grant Application(s), consistent with the provisions at 
Sec. 645.500(b)(1)(i) of this part.



Sec. 645.430  How does the Welfare-to-Work program relate to the 
One-Stop system and Workforce Investment Act (WIA) programs?

    (a) As provided in the Workforce Investment Act regulations at 20 
CFR 663.620, the local WtW formula grant program operator is a required 
partner in the One-Stop system. 20 CFR part 662 describes the roles of 
such partners in the One-Stop system and applies to the WtW formula 
grant program operators. A Memorandum of Understanding must be developed 
between the Local Workforce Investment Board and the WtW program that 
meets the requirements of 20 CFR 662.300, such as containing provisions 
relating to the services to be provided through the One-Stop system and 
methods for referring individuals between the One-Stop operator and the 
partner WtW program.
    (b) WtW participants may also be served by the WIA programs and, 
through appropriate linkages and referrals, these individuals will have 
access to a broader range of activities and services through the 
cooperation of the WtW and WIA programs in the One-Stop system. For 
example, WtW participants, who are also determined eligible for WIA, and 
who need occupational skills training, may be referred through the One-
Stop system to receive WIA training. These participants are also 
eligible to receive services available under WtW, such as transportation 
and child care while participating in the WIA activity.
    (c) WIA participants, who are determined to be eligible for WtW, may 
also be served by the WtW programs through cooperation with the WIA 
programs in the One-Stop system. For example, WIA participants, who are 
also determined eligible for WtW, may be referred to the WtW program for 
job placement and other WtW assistance.
    (d) 29 CFR part 37 applies to recipients of WtW financial assistance 
who operate programs that are part of the One-Stop system established 
under WIA to the extent that the WtW programs and activities are being 
conducted as part of the One-Stop delivery system.



              Subpart E_Welfare-To-Work Competitive Grants



Sec. 645.500  Who are eligible applicants for competitive grants?

    (a) Eligible applicants for competitive grants are:
    (1) Local boards or alternate administering agencies
    (2) Political subdivisions of a State; and
    (3) Private entities, as defined in Sec. 645.120 of this part, 
including nonprofit organizations such as community development 
corporations, community-based and faith-based organizations, disability 
community organizations, community action agencies, and public and 
private colleges and universities, and other qualified private 
organizations.
    (b) Entities other than a local board or alternate administering 
agency or a political subdivision of the State must submit an 
application for competitive grant funds in conjunction with the 
applicable local board or alternate administering agency or political 
subdivision.
    (1) The term ``in conjunction with'' shall mean that the application 
submitted by such an entity must include a signed certification by both 
the applicant and either the applicable local board or alternate 
administering agency or political subdivision that:
    (i) The applicant has consulted with the applicable local board or 
alternate administering agency or political subdivision during the 
development of the application; and
    (ii) The activities proposed in the application are consistent with, 
and will be coordinated with, WtW efforts of the local board or 
alternate administering agency or political subdivision.

[[Page 422]]

    (2) If the applicant is unable to include such a certification in 
its application, the applicant will be required to certify, and provide 
information indicating that efforts were undertaken to consult with the 
local board or alternate administering agency or political subdivision 
and that the local board or alternate administering agency or political 
subdivision was provided a sufficient opportunity to cooperate in the 
development of the project plan and to review and comment on the 
application prior to its submission to the Secretary. ``Sufficient 
opportunity for local Board or alternate administering agency or 
political subdivision review and comment'' shall mean at least 30 
calendar days.
    (3) The certification described in paragraph (b)(1) of this section, 
or the evidence of efforts to consult described in paragraph (b)(2), 
must be with each local board or alternate administering agency or 
political subdivision included in the geographic area in which the 
project proposed in the application is to operate (section 
403(a)(5)(B)(ii)).



Sec. 645.510  What is the required consultation with the Governor?

    (a) All applicants for competitive grants, including local boards or 
alternate administering agencies and political subdivisions, must 
consult with the Governor by submitting their application to the 
Governor or the designated State administrative entity for the WtW 
program for review and comment prior to submission of the application to 
the Secretary. The application submitted to the Secretary must include:
    (1) Comments on the application from the State; or
    (2) Information indicating that the State was provided a sufficient 
opportunity for review and comment prior to submission to the Secretary. 
``Sufficient opportunity for State review and comment'' shall mean at 
least 15 calendar days.
    (b) For private entity applicants, the submission of the application 
for State review and comment must follow the 30 day period provided for 
local board or alternate administering agency/political subdivision 
review. Evidence of local board or alternate administering agency or 
political subdivision review should be included in the submission to the 
State (section 403(a)(5)(B)(ii)).



Sec. 645.515  What are the program and administrative requirements 
that apply to both the formula grants and competitive grants?

    (a) All of the general program requirements and administrative 
standards set by 29 CFR Part 645 Subpart B apply (section 403(a)(5)(C) 
and section 404(b)).
    (b) In addition, competitive grants will be subject to:
    (1) Supplemental reporting requirements; and
    (2) Additional monitoring and oversight requirements based on the 
negotiated scope-of-work of individual grant awards (section 
403(a)(5)(B)(iii) and (v)).



Sec. 645.520  What are the application procedures and timeframes for 
competitive grant funds?

    (a) The Secretary shall establish appropriate application 
procedures, selection criteria and an approval process to ensure that 
grant awards accomplish the purpose of the competitive grant funds and 
that available funds are used in an effective manner.
    (b) The Secretary shall publish such procedures in the Federal 
Register and establish submission timeframes in a manner that allows 
eligible applicants sufficient time to develop and submit quality 
project plans (section 403(a)(5)(B)(i) and (iii)).



Sec. 645.525  What special consideration will be given to rural areas 
and cities with large concentrations of poverty?

    (a) Competitive grant awards will be targeted to geographic areas of 
significant need. In developing application procedures, special 
consideration will be given to rural areas and cities with large 
concentrations of residents living in poverty.
    (b) Grant application guidelines will clarify specific requirements 
for documenting need in the local area (section 403(a)(5)(B)(iv)).

[[Page 423]]



                 Subpart F_Administrative Appeal Process



Sec. 645.800  What administrative remedies are available under this Part?

    (a) Within 21 days of receipt of a final determination that has 
directly imposed a sanction or corrective action pursuant to Sec. 
645.250(b) of this part, a recipient, subrecipient, or a vendor directly 
against which the Grant Officer has imposed a sanction or corrective 
action, may request a hearing before the Department of Labor Office of 
Administrative Law Judges, pursuant to the provisions of 29 CFR part 96 
subpart 96.6.
    (b) In accordance with 29 CFR 96.603(b)(2), the rules of practice 
and procedure published at 29 CFR part 18 shall govern the conduct of 
hearings under this section, except that a request for hearing under 
this section shall not be considered a complaint to which the filing of 
an answer by DOL or a DOL agency is required. Technical rules of 
evidence shall not apply to a hearing conducted pursuant to this part; 
however, rules or principles designed to assure production of the most 
credible evidence available and to subject testimony to cross-
examination shall apply.
    (c) The decision of the Administrative Law Judge (ALJ) shall 
constitute final agency action unless, within 20 days of the decision, a 
party dissatisfied with the decision of the ALJ has filed a petition for 
review with the Administrative Review Board (ARB) (established pursuant 
to the provisions of Secretary's Order No. 2-96, published at 61 FR 
19977 (May 3, 1996)), specifically identifying the procedure, fact, law 
or policy to which exception is taken. Any exception not specifically 
urged shall be deemed to have been waived. A copy of the petition for 
review must be sent to the opposing party at that time. Thereafter, the 
decision of the ALJ shall constitute final agency action unless the ARB, 
within 30 days of the filing of the petition for review, has notified 
the parties that the case has been accepted for review. Any case 
accepted by the ARB shall be decided within 120 days of such acceptance. 
If not so decided, the decision of the ALJ shall constitute final agency 
action.

                           PART 646 [RESERVED]



PART 650_STANDARD FOR APPEALS PROMPTNESS_UNEMPLOYMENT COMPENSATION--Table 
of Contents




Sec.
650.1 Nature and purpose of the standard.
650.2 Federal law requirements.
650.3 Secretary's interpretation of Federal law requirements.
650.4 Review of State law and criteria for review of State compliance.
650.5 Annual appeals performance plan.

    Authority: Sec. 1102 of the Social Security Act, 42 U.S.C. 1302; 
Secretary's Order No. 4-75, dated April 16, 1975. Interpret and apply 
secs. 303(a)(1), 303(a)(3), and 303(b)(2) of the Social Security Act (42 
U.S.C. 503(a)(1), 503(a)(3), 503(b)(2)).

    Source: 37 FR 16173, Aug. 11, 1972, unless otherwise noted.



Sec. 650.1  Nature and purpose of the standard.

    (a) This standard is responsive to the overriding concern of the 
U.S. Supreme Court in California Department of Human Resources v. Java, 
402 U.S. 121 (1971), and that of other courts with delay in payment of 
unemployment compensation to eligible individuals, including delays 
caused specifically by the adjudication process. The standard seeks to 
assure that all administrative appeals affecting benefit rights are 
heard and decided with the greatest promptness that is administratively 
feasible.
    (b) Sections 303(a) (1) and (3) of the Social Security Act require, 
as a condition for the receipt of granted funds, that State laws include 
provisions for methods of administration reasonably calculated to insure 
full payment of unemployment compensation when due, and opportunity for 
a fair hearing for all individuals whose claims for unemployment 
compensation are denied. The Secretary has construed these provisions to 
require, as a condition for receipt of granted funds, that State laws 
include provisions for hearing and deciding appeals for all unemployment 
insurance claimants who are parties to an administrative benefit appeal 
with

[[Page 424]]

the greatest promptness that is administratively feasible. What is the 
greatest promptness that is administratively feasible in an individual 
case depends on the facts and circumstances of that case. For example, 
the greatest promptness that is administratively feasible will be longer 
in cases that involve interstate appeals, complex issues of fact or law, 
reasonable requests by parties for continuances or rescheduling of 
hearings or other unforeseen and uncontrollable factors than it will be 
for other cases.
    (c) In addition, the Secretary has construed section 303(b)(2) of 
the Social Security Act as requiring States to comply substantially with 
the required provisions of State law. The Secretary considers as 
substantial compliance the issuance of minimum percentages of first 
level benefit appeal decisions within the periods of time specified in 
Sec. 650.4.
    (d) Although the interpretation of Federal law requirements in Sec. 
650.3 below applies to both first and second level administrative 
benefit appeals, the criteria for review of State compliance in Sec. 
650.3(b) apply only to first level benefit appeals.



Sec. 650.2  Federal law requirements.

    (a) Section 303(a)(1) of the Social Security Act requires that a 
State law include provision for:

    Such methods of administration * * * as are found by the Secretary 
of Labor to be reasonably calculated to insure full payment of 
unemployment compensation when due.

    (b) Section 303(a)(3) of the Social Security Act requires that a 
State law include provision for:

    Opportunity for a fair hearing, before an impartial tribunal, for 
all individuals whose claims for unemployment compensation are denied.

    (c) Section 303(b)(2) of the Social Security Act provides that:

    Whenever the Secretary of Labor, after reasonable notice and 
opportunity for hearing to the State agency charged with the 
administration of the State law, finds that in the administration of the 
law there is--
    (1) * * *
    (2) A failure to comply substantially with any provision specified 
in subsection (a) [303(a)]; the Secretary of Labor shall notify such 
State agency that further payments will not be made to the State until 
he is satisfied that there is no longer any such denial or failure to 
comply. Until the Secretary of Labor is so satisfied, he shall make no 
further certification to the Secretary of the Treasury with respect to 
such State * * *



Sec. 650.3  Secretary's interpretation of Federal law requirements.

    (a) The Secretary interprets sections 303(a)(1) and 303(a)(3) above 
to require that a State law include provision for--
    (1) Hearing and decision for claimants who are parties to an appeal 
from a benefit determination to an administrative tribunal with the 
greatest promptness that is administratively feasible, and
    (2) Such methods of administration of the appeals process as will 
reasonably assure hearing and decision with the greatest promptness that 
is administratively feasible.
    (b) The Secretary interprets section 303(b)(2) above to require a 
State to comply substantially with provisions specified in paragraph (a) 
of this section.



Sec. 650.4  Review of State law and criteria for review of State 
compliance.

    (a) A State law will satisfy the requirements of Sec. 650.3(a) if 
after calendar year 1973 it contains a provision requiring, or is 
construed to require, hearing and decision for claimants who are parties 
to an administrative appeal affecting benefit rights with the greatest 
promptness that is administratively feasible.
    (b) A State will be deemed to comply substantially with the State 
law requirements set forth in Sec. 650.3(a) with respect to first level 
appeals, if for the calendar year 1975 and ensuing years, the State has 
issued at least 60 percent of all first level benefit appeal decisions 
within 30 days of the date of appeal, and at least 80 percent of all 
first level benefit appeal decisions within 45 days. These computations 
will be derived from the State's regular reports required pursuant to 
the Employment Security Manual, part III, sections 4400-4450.\1\
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    \1\ The Employment Security Manual is available at each regional 
office of the Department of Labor and at the headquarters' office of 
each State employment security agency.

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[[Page 425]]

    (c) To afford the States a reasonable opportunity to make the 
changes necessary to meet these criteria, the Secretary will not 
evaluate substantial compliance until calendar year 1974 and for that 
year he will apply less stringent criteria than for future years. A 
State law will be deemed to comply substantially with the State law 
promptness requirement for calendar year 1974 if the State has issued at 
least 50 percent of all first level benefit appeal decisions within 30 
days of the date of appeal; at least 75 percent of its first level 
benefit appeal decisions within 45 days; and at least 90 percent of its 
first level benefit appeal decisions within 75 days. These computations 
also will be derived from the aforementioned reports required pursuant 
---------------------------------------------------------------------------
to the Employment Security Manual.

[37 FR 16173, Aug. 11, 1972, as amended at 41 FR 6757, Feb. 13, 1976]



Sec. 650.5  Annual appeals performance plan.

    No later than December 15, 1974, and the 15th of December of each 
ensuing year, each State shall submit an appeals performance plan 
showing how it will operate during the following calendar year so as to 
achieve or maintain the issuance of at least 60 percent of all first 
level benefit appeals decisions within 30 days of the date of appeal, 
and 80 percent within 45 days.

(Approved by the Office of Management and Budget under control number 
1205-0132)

(Pub. L. No. 96-511)

[41 FR 6757, Feb. 13, 1976, as amended at 49 FR 18295, Apr. 30, 1984]



PART 651_GENERAL PROVISIONS GOVERNING THE FEDERAL-STATE EMPLOYMENT 
SERVICE SYSTEM--Table of Contents






Sec. 651.10  Definitions of terms used in parts 651-658.

    Administrator, United States Employment Service (Administrator) 
means the chief official of the United States Employment Service (USES) 
or the Administrator's designee.
    Affirmative action means positive, result-oriented action imposed on 
or assumed by an employer pursuant to legislation, court order, consent 
decree, directive of a fair employment practice authority, government 
contract, grant or loan, or voluntary affirmative action plan adopted 
pursuant to the Affirmative Action Guidelines of the Equal Employment 
Opportunity Commission to provide equal employment opportunities for 
members of a specified group which for reasons of past custom, 
historical practice, or other nonoccupationally valid purposes has been 
discouraged from entering certain occupational fields.
    Agricultural worker means a worker, whose primary work experience 
has been in farmwork in industries with a Standard Industrial 
Classification (SIC) of 01-07, except 027, 074, 0752, and 078, whether 
alien or citizen, who is legally allowed to work in the United States.
    Applicant means a person who files an application for services with 
a local office of a State agency, with outstationed staff or with an 
outreach worker.
    Application card means the basic local office record for an 
applicant.
    A Bona Fide Occupational Qualification (BFOQ) means that an 
employment decision or request based on age, sex, national origin or 
religion is based on a finding that such characteristic is necessary to 
the individual's ability to perform the job in question. Since a BFOQ is 
an exception to the general prohibition against discrimination on the 
basis of age, sex, national origin or religion, it must be interpreted 
narrowly in accordance with the Equal Employment Opportunity Commission 
regulations set forth at 29 CFR parts 1604, 1605 and 1627.
    Clearance means activities in the placement process involving joint 
action of local offices in different labor market areas and/or States in 
the location, selection and the job referral of an applicant.
    Complaint means a representation made or referred to a State or 
local JS office of a violation of the JS regulations and/or other 
federal, State or local employment related law.

[[Page 426]]

    Complainant means the individual, employer, organization, 
association, or other entity filing a complaint.
    Day-haul means the assembly of workers at a pick-up point waiting to 
be employed, transportation of them to farm employment, and the return 
of the workers to the pick-up point on the same day. For the purposes of 
this definition ``day-haul'' shall exclude transportation and return of 
workers employed under regularly scheduled job orders such as corn 
detasseling jobs for youth.
    Decertification means the rescission by the Secretary of the year 
end certification made under Section 7 of the Wagner-Peyser Act to the 
Secretary of the Treasury that the State agency may receive funds 
authorized by the Wagner-Peyser Act.
    Dictionary of Occupational Titles (DOT) means the Dictionary of 
Occupational Titles, the reference work published by the USES which 
contains brief, non-technical definitions of U.S. job titles, 
distinguishing number codes, and worker trait data.
    DOL means the Department of Labor.
    D.O.T. means the Dictionary of Occupational Titles, the reference 
work published by the USES which contains brief, non-technical 
definitions of U.S. job titles, distinguishing number codes, and worker 
trait data.
    Employment and Training Administration (ETA) means the component of 
the Department of Labor containing the United States Employment Service 
(USES).
    Employer means a person, firm, corporation or other association or 
organization (1) which currently has a location within the United States 
to which U.S. workers may be referred for employment, and which proposes 
to employ a worker at a place within the United States and (2) which has 
an employer relationship with respect to employees under this subpart as 
indicated by the fact that it hires, pays, fires, supervises and 
otherwise controls the work of such employee. An association of 
employers shall be considered an employer if it has all of the indicia 
of an employer set forth in this definition. Such an association, 
however, shall be considered as a joint employer with the employer 
member if either shares in exercising one or more of the definitional 
indicia.
    Establishment means a public or private economic employing unit 
generally at a single physical location which produces and/or sells 
goods or services, for example, a mine, factory, store, farm orchard or 
ranch. It is usually engaged in one, or predominantly one, type of 
commerical or governmental activity. Each branch or subsidiary unit of a 
large employer in a geographical area or community should be considered 
an individual establishment, except that all such units in the same 
physical location shall be considered a single establishment. A 
component of an establishment which may not be located in the same 
physical structure (such as the warehouse of a department store) should 
also be considered as part of the parent establishment. For the purpose 
of the ``seasonal farmworker'' definition, farm labor contractors and 
crew leaders are not considered establishments; it is the organizations 
to which they supply the workers that are the establishments.
    Farmwork means work performed for wages in agricultural production 
or agricultural services in establishments included in industries 01--
Agricultural Production-Crops; 02--Agricultural Production-Livestock 
excluding 027--Animal Specialties; 07--Agricultural Services excluding 
074--Veterinary Services, 0752--Animal Speciality Services, and 078--
Landscape and Horticultural Services, as defined in the most recent 
edition of the Standard Industrial Classification (SIC) Code 
definitions.
    Farmworker, see Agricultural worker.
    Full application means an application for an applicant who has 
participated in an application interview and which includes the 
applicant's personal characteristics, work history and an occupational 
classification and DOT code.
    Hearing Officer means a Department of Labor Administrative Law 
Judge, designated to preside at DOL administrative hearings.
    Identification card (applicant identification card) means a card 
given to the applicant on which are recorded identifying information and 
the dates of the applicant's visits to the local employment office.

[[Page 427]]

    Intrastate job order means a job order describing one or more hard-
to-fill job openings, which a local office uses to request recruitment 
assistance from other local offices within the State.
    JS regulations means the Federal regulations at 20 CFR parts 601-
604, 620, 621, and 651-658, and at 29 CFR parts 8, 26, and 75.
    Job bank means a computer assisted system which provides listings of 
current job openings in the area, on a regular basis, for distribution 
to JS and WIN offices and to cooperating agencies.
    Job development means the process of securing a job interview with a 
public or private employer for a specific applicant for whom the local 
office has no suitable opening on file.
    Job information means information derived from data compiled in the 
normal course of employment service activities from reports, job orders, 
applications and the like.
    Job opening means a single job opportunity for which the local 
office has on file a request to select and refer on applicant or 
applicants.
    Job Information Service (JIS) means a unit or an area within a JS 
local office where applicants primarily, on a self-service basis or with 
minimum professional help, can obtain specific and general information 
on where and how to get a job.
    Job referral means (1) the act of bringing to the attention of an 
employer an applicant or group of applicants who are available for 
specific job openings and (2) the record of such referral. ``Job 
referral'' means the same as ``referral to a job.''
    Job Service (JS) means the nationwide system of public employment 
offices, funded through the United States Employment Service (USES) as 
grantee State agencies, and the various offices of the State agencies.
    Labor market area means a geographic area consisting of a central 
city (or cities) and the surrounding territory within a reasonable 
commuting distance.
    Labor Market Information (LMI) means that body of knowledge 
pertaining to the socio-economic forces influencing the employment 
process in specific labor market areas. These forces, which affect labor 
demand-supply relationships and define the content of the LMI program, 
include population and growth charcteristics, trends in industrial and 
occupational structure, technological developments, shifts in consumer 
demands, unionization, trade disputes, retirement practices, wage 
levels, conditions of employment, training opportunities, job vacancies, 
and job search information.
    Local office manager means the JS official in charge of all JS 
activities in a local office of a State agency.
    LMI means labor market information.
    Migrant farmworker is a seasonal farmworker who had to travel to do 
the farmwork so that he/she was unable to return to his/her permanent 
residence within the same day. Full-time students traveling in organized 
groups rather than with their families are excluded.
    Migrant food processing worker means a person who during the 
preceding 12 months has worked at least an aggregate of 25 or more days 
or parts of days in which some work was performed in food processing (as 
classified in the 1972 Standard Industrial Classification (SIC) 
definitions 201, 2033, 2035, and 2037 for food processing 
establishments), earned at least half of his/her earned income from 
processing work and was not employed in food processing year round by 
the same employer, provided that the food processing required travel 
such that the worker was unable to return to his/her permanent residence 
in the same day. Migrant food processing workers who are full-time 
students but who travel in organized groups rather than with their 
families are excluded.
    MSFW means a migrant farmworker, a migrant food processing worker, 
or a seasonal farmworker.
    Partial application means the application of an applicant who has 
not participated in an application interview and which does not include 
an occupational classification of DOT code. Partial applications 
prepared for Migrants and Seasonal Farmworkers must include a signed 
waiver for full services at that time in accordance with 20 CFR 653.103.

[[Page 428]]

    Placement means the hiring by a public or private employer of an 
individual referred by the employment office for a job or an interview, 
provided that the employment office completed all of the following 
steps:
    (a) Prepared a job order form prior to referral, except in the case 
of a job development contact on behalf of a specific applicant;
    (b) Made prior arrangements with the employer for the referral of an 
individual or individuals;
    (c) Referred an individual who had not been specifically designated 
by the employer, except for referrals on agricultural job orders for a 
specific crew leader or worker;
    (d) Verified from a reliable source, preferably the employer, that 
the individual had entered on a job; and
    (e) Appropriately recorded the placement.
    Program Budget Plan (PBP) means the annual planning document for the 
SESA required by Sec. 8 of the Wagner-Peyser Act containing the SESA's 
detailed planning, programming and budget for carrying out employment 
security activities. For the purpose of JS regulations, this definition 
shall be restricted to the employment service portion of the PBP.
    Public housing means housing operated by or on behalf of any public 
agency.
    RA; see Regional Administrator.
    Regional Administrator, Employment and Training Administration (RA) 
means the chief DOL Employment and Training Administration (ETA) 
official in each DOL regional office.
    Respondent means the employer or State agency (including a State 
agency official) who is alleged to have committed the violation 
described in a complaint.
    Rural area means an area which is not included in the urban area of 
a Standard Metropolitan Statistical Area and which has a population of 
less than 10,000.
    Seasonal farmworker means a person who during the preceding 12 
months worked at least an aggregate of 25 or more days or parts of days 
in which some work was performed in farmwork, earned at least half of 
his/her earned income from farmwork, and was not employed in farmwork 
year round by the same employer. For the purposes of this definition 
only, a farm labor contractor is not considered an employer. Non-migrant 
individuals who are full-time students are excluded.
    Secretary means the Secretary of the U.S. Department of Labor or the 
Secretary's designee.
    SESA; see State Employment Service Agency.
    Significant MSFW States shall be those States designated annually by 
ETA and shall include the twenty (20) States with the highest number of 
MSFW applicants.
    Significant MSFW local offices shall be those designated annually by 
ETA and include those local offices where MSFWs account for 10% or more 
of annual applicants and those local offices which the Administrator 
determines should be included due to special circumstances such as an 
estimated large number of MSFWs in the local office service area. In no 
event shall the number of significant MSFW local offices be less than 
100 offices on a nationwide basis.
    Significant bilingual MSFW local offices shall be those designated 
annually by ETA and include those significant MSFW offices where 10% or 
more of MSFW applicants are estimated to require service provisions in 
Spanish unless the Administrator determines other local offices also 
should be included due to special circumstances.
    Solicitor means the chief legal officer of the U.S. Department of 
Labor or the Solicitor's designee.
    Standard Metropolitan Statistical Area (SMSA) means a metropolitan 
area designated by the Bureau of Census which contains (1) at least one 
city of 50,000 inhabitants or more, or (2) twin cities with a combined 
population of at least 50,000.
    State shall include the fifty States, the District of Columbia, 
Guam, Puerto Rico, and the Virgin Islands.
    State Administrator means the chief official of the State Employment 
Security Agency (SESA).
    State agency means the State job service agency designated under 
section 4 of the Wagner-Peyser Act to cooperate with the USES in the 
operation of the job service system.

[[Page 429]]

    State Employment Security Agency (SESA) means the State agency 
which, under the State Administrator, contains both the State Employment 
service agency (State agency) and the State unemployment compensation 
agency.
    State hearing official means a State official designated to preside 
at State administrative hearings convened to resolve JS-related 
complaints pursuant to subpart E of part 658 of this chapter.
    Supportive services means services other than employment or training 
that are needed to enable individuals to obtain or retain employment, or 
to participate in employment and training programs.
    Tests means a standardized method of measuring an individual's 
possession of, interest in, or ability to acquire, job skills and 
knowledge. Use of tests by employment service staff must be in 
accordance with the provisions of:
    (1) 41 CFR part 60-3, Uniform Guidelines on Employee Selection 
Procedures;
    (2) 29 CFR part 1627, Records To Be Made or Kept Relating to Age; 
Notices To Be Posted; Administrative Exemptions; and
    (3) The Department of Labor's regulations on Nondiscrimination on 
the Basis of Handicap in Programs and Activities Receiving or Benefiting 
from Federal Financial Assistance, which have been published as 29 CFR 
part 32 at 45 FR 66706 (Oct. 7, 1980).
    Training means a planned, systematic sequence of instruction or 
other learning experience on an individual or group basis under 
competent supervision, which is designed to impart skills, knowledge, or 
abilities to prepare individuals for employment.
    Transaction means a single ES activity performed on behalf of an 
individual seeking assistance and/or the result of such an activity, 
e.g., applicant registration referral to a job, referral to a supportive 
service, counseling interview, testing, job development, job placement, 
enrollment in training, and inactivation of an applicant registration.
    United States Employment Service (USES) means the component of the 
Employment and Training Administration of DOL which was established 
under the Wagner-Peyser Act of 1933 to promote and develop a national 
system of public job service offices.
    Vocational Plan means a plan developed jointly by a counselor or 
counselor trainee and the applicant which describes: (1) The applicant's 
short-range and long-range occupational goals and (2) the actions to be 
taken to place the plan into effect.
    Work Incentive Program (WIN) means the employment and training 
program under part C of title IV of the Social Security Act, 
administered by a State agency (such as the State employment service) or 
another public or nonprofit private agency.

(Wagner-Peyser Act of 1933, as amended, 29 U.S.C. 49 et seq.; 5 U.S.C. 
301; and 38 U.S.C. chapters 41 and 42)

[45 FR 39457, June 10, 1980. Redesignated and amended at 7767, 7768, 
Jan. 23, 1981]



PART 652_ESTABLISHMENT AND FUNCTIONING OF STATE EMPLOYMENT SERVICES
--Table of Contents




                 Subpart A_Employment Service Operations

Sec.
652.1 Introduction and definitions.
652.2 Scope and purpose of the employment service system.
652.3 Basic labor exchange system.
652.4 Allotment of funds and grant agreement.
652.5 Services authorized.
652.6-652.7 [Reserved]
652.8 Administrative provisions.
652.9 Labor disputes.

                     Subpart B_Services for Veterans

652.100 Services for veterans.

   Subpart C_Wagner-Peyser Act Services in a One-Stop Delivery System 
                               Environment

652.200 What is the purpose of this subpart?
652.201 What is the role of the State agency in the One-Stop delivery 
          system?
652.202 May local Employment Service Offices exist outside of the One-
          Stop service delivery system?
652.203 Who is responsible for funds authorized under the Act in the 
          workforce investment system?
652.204 Must funds authorized under section 7(b) of the Act (the 
          Governor's reserve) flow through the One-Stop delivery system?
652.205 May funds authorized under the Act be used to supplement funding 
          for labor

[[Page 430]]

          exchange programs authorized under separate legislation?
652.206 May a State use funds authorized under the Act to provide ``core 
          services'' and ``intensive services'' as defined in WIA?
652.207 How does a State meet the requirement for universal access to 
          services provided under the Act?
652.208 How are core services and intensive services related to the 
          methods of service delivery described in Sec. 652.207(b)(2)?
652.209 What are the requirements under the Act for providing 
          reemployment services and other activities to referred UI 
          claimants?
652.210 What are the Act's requirements for administration of the work 
          test and assistance to UI claimants?
652.211 What are State planning requirements under the Act?
652.212 When should a State submit modifications to the five-year plan?
652.213 What information must a State include when the plan is modified?
652.214 How often may a State submit modifications to the plan?
652.215 Do any provisions in WIA change the requirement that State 
          merit-staff employees must deliver services provided under the 
          Act?
652.216 May the One-Stop operator provide guidance to State merit-staff 
          employees in accordance with the Act?

    Authority: 29 U.S.C. 49k; 38 U.S.C. chapters 41 and 42.



                 Subpart A_Employment Service Operations

    Source: 48 FR 50665, Nov. 2, 1983, unless otherwise noted.



Sec. 652.1  Introduction and definitions.

    (a) These regulations implement the provisions of the Wagner-Peyser 
Act, known hereafter as the Act, as amended by the Workforce Investment 
Act of 1998 (WIA). Congress intended that the States exercise broad 
authority in implementing provisions of the Act.
    (b) Except as otherwise provided the definitions contained in 
section 2 of the Act apply to these regulations.
    Act means the Wagner-Peyser Act (29 U.S.C. 49 et seq.).
    Department means the United States Department of Labor (DOL), 
including its agencies and organizational units.
    Governor means the chief executive of any State.
    JTPA means the Job Training Partnership Act of 1982 (29 U.S.C. 1501 
et seq.).
    State means any of the several States, the District of Columbia, the 
Commonwealth of Puerto Rico, the Virgin Islands, and Guam.
    State Agency means the State governmental unit designated under 
section 4 of the Act to cooperate with the Secretary in the operation of 
the public employment service system.
    State Workforce Investment Board (State Board) means the entity 
within a State appointed by the Governor under section 111 of the 
Workforce Investment Act.
    WIA means the Workforce Investment Act of 1998 (29 U.S.C. 2801 et 
seq.).

[48 FR 50665, Nov. 2, 1983, as amended at 64 FR 18761, Apr. 15, 1999; 65 
FR 49462, Aug. 11, 2000]



Sec. 652.2  Scope and purpose of the employment service system.

    The basic purpose of the employment service system is to improve the 
functioning of the nation's labor markets by bringing together 
individuals who are seeking employment and employers who are seeking 
workers.



Sec. 652.3  Basic labor exchange system.

    At a minimum, each State shall administer a labor exchange system 
which has the capacity:
    (a) To assist jobseekers in finding employment;
    (b) To assist employers in filling jobs;
    (c) To facilitate the match between jobseekers and employers;
    (d) To participate in a system for clearing labor between the 
States, including the use of standardized classification systems issued 
by the Secretary, under section 15 of the Act; and.
    (e) To meet the work test requirements of the State unemployment 
compensation system.

[48 FR 50665, Nov. 2, 1983, as amended at 64 FR 18762, Apr. 15, 1999]



Sec. 652.4  Allotment of funds and grant agreement.

    (a) Allotments. The Secretary shall provide planning estimates in 
accordance with section 6(b)(5) of the Act. Within 30 days of receipt of 
planning estimates from the Secretary, the

[[Page 431]]

State shall make public the substate resource distributions, and 
describe the process and schedule under which these resources will be 
issued, planned and committed. This notification shall include a 
description of the procedures by which the public may review and comment 
on the substate distributions, including a process by which the State 
will resolve any complaints.
    (b) Grant Agreement. To establish a continuing relationship under 
the Act, the Governor and the Secretary shall sign a Governor/Secretary 
Agreement, including a statement assuring that the State shall comply 
with the Act and all applicable rules and regulations. Consistent with 
this Agreement and section 6 of the Act, State allotments will be 
obligated through a Notification of Obligation.

(Approved by the Office of Management and Budget under control number 
1205-0209)



Sec. 652.5  Services authorized.

    The sums allotted to each State under section 6 of the Act must be 
expended consistent with an approved plan under 20 CFR 661.220 through 
661.240 and Sec. Sec. 652.211 through 652.214. At a minimum, each State 
shall provide the basic labor exchange elements at Sec. 652.3.

[65 FR 49462, Aug. 11, 2000]



Sec. Sec. 652.6-652.7  [Reserved]



Sec. 652.8  Administrative provisions.

    (a) Administrative Requirements. The Employment Security Manual 
shall not be applicable to funds appropriated under the Wagner-Peyser 
Act. Except as provided for in paragraph (f) of this section, 
administrative requirements and cost principles applicable to grants 
under this part 652 are as specified in 29 CFR part 97, Uniform 
Administrative Requirements for Grants and Cooperative Agreements to 
State and Local Governments, and OMB Circular A-87 (Revised).
    (b) Management systems, reporting and recordkeeping. (1) The State 
shall ensure that financial systems provide fiscal control and 
accounting procedures sufficient to permit preparation of required 
reports, and the tracing of funds to a level of expenditure adequate to 
establish that funds have not been expended in violation of the 
restrictions on the use of such funds (section 10(a)).
    (2) The financial management system and the program information 
system shall provide federally required records and reports that are 
uniform in definition, accessible to authorized Federal and State staff, 
and verifiable for monitoring, reporting, audit and evaluation purposes 
(section 10(c)).
    (c) Reports Required. (1) Each State shall make reports pursuant to 
instructions issued by the Secretary and in such format as the Secretary 
shall prescribe.
    (2) The Secretary is authorized to monitor and investigate pursuant 
to section 10 of the Act.
    (d) Special Administrative and Cost Provisions. (1) Neither the 
Department nor the State is a guarantor of the accuracy or truthfulness 
of information obtained from employers or applicants in the process of 
operating a labor exchange activity.
    (2) Prior approval authority, as described in various sections of 29 
CFR part 97, Uniform Administrative Requirements for Grants and 
Cooperative Agreements to State and Local Governments, and OMB Circular 
A-87 (Revised), is delegated to the State except that the Secretary 
reserves the right to require transfer of title on nonexpendable 
Automated Data Processing Equipment (ADPE), in accordance with 
provisions contained in 29 CFR 97.32(g). The Secretary reserves the 
right to exercise prior approval authority in other areas, after 
providing advance notice to the State.
    (3) Application for financial assistance and modification 
requirements shall be as specified under this part.
    (4) Cost of promotional and informational activities consistent with 
the provisions of the Act, describing services offered by employment 
security agencies, job openings, labor market information, and similar 
items are allowable.
    (5) Each State shall retain basic documents for the minimum period 
specified below:
    (i) Work Application: One year.
    (ii) Job Order: One Year.
    (6) Costs of employer contributions and expenses incurred for State 
agency

[[Page 432]]

fringe benefit plans that do not meet the requirements in OMB Circular 
A-87 (Revised) are allowable, provided that:
    (i) For retirement plans, on behalf of individuals employed before 
the effective date of this part, the plan is authorized by State law and 
previously approved by the Secretary; the plan is insured by a private 
insurance carrier which is licensed to operate this type of plan; and 
any dividends or similar credits due to participation in the plan are 
credited against the next premium falling due under the contract;
    (ii) For retirement plans on behalf of individuals employed after 
the effective date of this part, and for fringe benefit plans other than 
retirement, the Secretary grants a time extension to cover an interim 
period if State legislative action is required for such employees to be 
covered by plans which meet the requirements of OMB Circular A-87 
(Revised). During this interim period, State agency employees may be 
enrolled in plans open to State agency employees only. No such extension 
may continue beyond the 60th day following the completion of the next 
full session of the State legislature which begins after the effective 
date of this part;
    (iii) For fringe benefit plans other than retirement, the Secretary 
grants a time extension which may continue until such time as they are 
comparable in cost to those fringe benefit plans available to other 
similarly employed employees of the State on the condition that there 
are no benefit improvements. The Secretary may grant this time extension 
if the State agency can demonstrate that the extension is necessary to 
prevent loss of benefits to current States agency employees, retireees 
and/or their fringe benefit plan beneficiaries, or that it is necessary 
to avoid unreasonable expenditures on behalf of the employee or employer 
to maintain such fringe benefits for current employees and retirees. At 
such time as the cost of these fringe benefit plans becomes equitable 
with those available to other similarly employed State employees, the 
time extension will cease and the requirements of OMB Circular A-87 
(Revised) will apply;
    (iv) Requests for time extensions under this section will include an 
opinion of the State Attorney General, that either legislative action is 
required to accomplish compliance with OMB Circular A-87 (Revised) or, 
for (d)(6)(iii) of this section that such compliance would result in 
either loss of current benefits to State agency employees and retirees 
or unreasonable expenditures to maintain these benefits. Such requests 
will be filed with the Secretary no later than 30 days after the 
effective date of this part; and
    (v) Time extensions granted relative to (d)(6)(iii) of this section 
require a signed statement by the State agency Administrator, that no 
improvements have been made to fringe benefits under the extension and 
that the plan(s) is (are) not consistent with those available to other 
similarly employed State employees, for each year of the extension. 
Documentation supporting the affidavit shall be maintained for audit 
purposes.
    (7) Payments from the State's Wagner-Peyser allotment made into a 
State's account in the Unemployment Trust Fund for the purpose of 
reducing charges against Reed Act funds (section 903(c) of the Social 
Security Act, as amended (42 U.S.C. 1103(c)) are allowable costs, 
provided that:
    (i) The charges against Reed Act funds were for amounts 
appropriated, obligated, and expended for the acquisition of automatic 
data processing installations or for the acquisition or major renovation 
of State owned office building; and
    (ii) With respect to each acquisition of improvement of property 
pursuant to paragraph (d)(7)(i) of this section, the payments are 
accounted for in the State's records as credits against equivalent 
amounts of Reed Act Funds used for administrative expenditures.
    (e) Disclosure of Information. (1) The State shall assure the proper 
disclosure of information pursuant to section 3(b) of the Act.
    (2) The information specified in section 3(b) and other sections of 
the Act, shall also be provided to officers or any employee of the 
Federal Government of a State government lawfully charged with 
administration of unemployment

[[Page 433]]

compensation laws, employment service activities under the Act or other 
related legislation, but only for purposes reasonably necessary for the 
proper administration of such laws.
    (f) Audits, (1) At least once every 2 years, the State shall prepare 
or have prepared an independent financial and compliance audit covering 
each full program year not covered in the previous audit, except that 
funds expended pursuant to section 7(b) of the Act shall be audited 
annually.
    (2) The Comptroller General and the Inspector General of the 
Department shall have the authority to conduct audits, evaluations or 
investigations necessary to meet their responsibilities under sections 
9(b)(1) and 9(b)(2), respectively, of the Act.
    (3) The audit, conducted pursuant to paragraph (f)(1) or (f)(2) of 
this section, shall be submitted to the Secretary who shall make an 
initial determination. Such determinations shall be based on the 
requirements of the Act, regulations, and State plan.
    (i) The initial determination shall identify the audit findings, 
state the Secretary's proposed determination of the allowability of 
questioned costs and activities, and provide for informal resolution of 
those matters in controversy contained in the initial determination.
    (ii) The Secretary shall not impose sanctions and corrective actions 
without first providing the State with an opportunity to present 
documentation or arguments to resolve informally those matters in 
controversy contained in the Secretary's initial determination. The 
informal resolution period shall be at least 60 days from issuance of 
the initial determination and no more that 170 days from the receipt by 
the Secretary of the final approved audit report. If the matters are 
resolved informally, the Secretary shall issue a final determination 
pursuant to paragraph (f)(3)(iii) of this section which notifies the 
parties in writing of the nature of the resolution and may close the 
file.
    (iii) If the matter is not resolved informally, the Secretary shall 
provide each party with a final written determination by certified mail, 
return receipt requested. In the case of audits, the final determination 
shall be issued not later than 180 days after the receipt by the 
Secretary of the final approved audit report. The final determination 
shall:
    (A) Indicate that efforts to resolve informally matters contained in 
the initial determination have been unsuccessful;
    (B) List those matters upon which the parties continue to disagree;
    (C) List any modifications to the factual findings and conclusions 
set forth in the initial determination;
    (D) Establish a debt if appropriate;
    (E) Determine liability, method of restitution of funds and 
sanctions;
    (F) Offer an opportunity for a hearing in accordance with 20 CFR 
658.707 through 658.711 in the case of a final determination imposing a 
sanction or corrective action; and
    (G) Constitute final agency action unless a hearing is requested.
    (g) Sanctions for Violation of the Act. (1) The Secretary may impose 
appropriate sanctions and corrective actions for violation of the Act, 
regulations, or State plan, including the following:
    (i) Requiring repayment, for debts owed the Government under the 
grant, from non-Federal funds;
    (ii) Offsetting debts arising from the misexpenditure of grant 
funds, against amounts to which the State is or may be entitled under 
the Act, provided that debts arising from gross negligence or willful 
misuse of funds shall not be offset against future grants. When the 
Secretary reduces amounts allotted to the State by the amount of the 
misexpenditure, the debt shall be fully satisfied;
    (iii) Determining the amount of Federal cash maintained by the State 
or a subrecipient in excess of reasonable grant needs, establishing a 
debt for the amount of such excessive cash, and charging interest on 
that debt;
    (iv) Imposing other appropriate sanctions or corrective actions, 
except where specifically prohibited by the Act or regulations.
    (2) To impose a sanction or corrective action, the Secretary shall 
utilize the initial and final determination procedures outlined in 
(f)(3) of this section.

[[Page 434]]

    (h) Other violations. Violations or alleged violations of the Act, 
regulations, or grant terms and conditions except those pertaining to 
audits or discrimination shall be determined and handled in accordance 
with 20 CFR part 658, subpart H.
    (i) Fraud and abuse. Any persons having knowledge of fraud, criminal 
activity or other abuse shall report such information directly and 
immediately to the Secretary. Similarly, all complaints involving such 
matters should also be reported to the Secretary directly and 
immediately.
    (j) Nondiscrimination and Affirmative Action Requirements. States 
shall:
    (1) Assure that no individual be excluded from participation in, 
denied the benefits of, subjected to discrimination under, or denied 
employment in the administration or in connection with any services or 
activities authorized under the Act in violation of any applicable 
nondiscrimination law, including laws prohibiting discrimination on the 
basis of age, race, sex, color, religion, national origin, disability, 
political affiliation or belief. All complaints alleging discrimination 
shall be filed and processed according to the procedures in the 
applicable DOL nondiscrimination regulations.
    (2) Assure that discriminatory job orders will not be accepted, 
except where the stated requirement is a bona fide occupational 
qualification (BFOQ). See, generally, 42 U.S.C. 2000(e)-2(e), 29 CFR 
parts 1604, 1606, 1625.
    (3) Assure that employers' valid affirmative action requests will be 
accepted and a significant number of qualified applicants from the 
target group(s) will be included to enable the employer to meet its 
affirmative action obligations.
    (4) Assure that employment testing programs will comply with 41 CFR 
part 60-3 and 29 CFR part 32 and 29 CFR 1627.3(b)(iv).
    (5) Nondiscrimination and equal opportunity requirements and 
procedures, including complaint processing and compliance reviews, will 
be governed by the applicable DOL nondiscrimination regulations.

[48 FR 50665, Nov. 2, 1983, as amended at 64 FR 18762, Apr. 15, 1999; 65 
FR 49462, Aug. 11, 2000]



Sec. 652.9  Labor disputes.

    (a) State agencies shall make no job referral on job orders which 
will aid directly or indirectly in the filling of a job opening which is 
vacant because the former occupant is on strike, or is being locked out 
in the course of a labor dispute, or the filling of which is otherwise 
an issue in a labor dispute involving a work stoppage.
    (b) Written notification shall be provided to all applicants 
referred to jobs not at issue in the labor dispute that a labor dispute 
exists in the employing establishment and that the job to which the 
applicant is being referred is not at issue in the dispute.
    (c) When a job order is received from an employer reportedly 
involved in a labor dispute involving a work stoppage, State agencies 
shall:
    (1) Verify the existence of the labor dispute and determine its 
significance with respect to each vacancy involved in the job order; and
    (2) Notify all potentially affected staff concerning the labor 
dispute.
    (d) State agencies shall resume full referral services when they 
have been notified of, and verified with the employer and workers' 
representative(s), that the labor dispute has been terminated.
    (e) State agencies shall notify the regional office in writing of 
the existence of labor disputes which:
    (1) Result in a work stoppage at an establishment involving a 
significant number of workers; or
    (2) Involve multi-establishment employers with other establishments 
outside the reporting State.



                     Subpart B_Services for Veterans



Sec. 652.100  Services for veterans.

    Services for veterans are administered by the Office of the 
Assistant Secretary for Veterans' Employment and Training (OASVET). 
OASVET's general regulations are located in chapter IX of this title.

[54 FR 39354, Sept. 26, 1989]

[[Page 435]]



   Subpart C_Wagner-Peyser Act Services in a One-Stop Delivery System 
                               Environment

    Source: 65 FR 49462, Aug. 11, 2000, unless otherwise noted.



Sec. 652.200  What is the purpose of this subpart?

    (a) This subpart provides guidance to States to implement the 
services provided under the Act, as amended by WIA, in a One-Stop 
delivery system environment.
    (b) Except as otherwise provided, the definitions contained at 
subpart A of this part and section 2 of the Act apply to this subpart.



Sec. 652.201  What is the role of the State agency in the One-Stop 
delivery system?

    (a) The role of the State agency in the One-Stop delivery system is 
to ensure the delivery of services authorized under section 7(a) of the 
Act. The State agency is a required One-Stop partner in each local One-
Stop delivery system and is subject to the provisions relating to such 
partners that are described at 20 CFR part 662.
    (b) Consistent with those provisions, the State agency must:
    (1) Participate in the One-Stop delivery system in accordance with 
section 7(e) of the Act;
    (2) Be represented on the Workforce Investment Boards that oversee 
the local and State One-Stop delivery system and be a party to the 
Memorandum of Understanding, described at 20 CFR 662.300, addressing the 
operation of the One-Stop delivery system; and
    (3) Provide these services as part of the One-Stop delivery system.



Sec. 652.202  May local Employment Service Offices exist outside of 
the One-Stop service delivery system?

    (a) No, local Employment Service Offices may not exist outside of 
the One-Stop service delivery system.
    (b) However, local Employment Service Offices may operate as 
affiliated sites, or through electronically or technologically linked 
access points as part of the One-Stop delivery system, provided the 
following conditions are met:
    (1) All labor exchange services are delivered as a part of the local 
One-Stop delivery system in accordance with section 7(e) of the Act and 
Sec. 652.207(b);
    (2) The services described in paragraph (b)(1) of this section are 
available in at least one comprehensive physical center, as specified in 
20 CFR 662.100, from which job seekers and employers can access them; 
and
    (3) The Memorandum of Understanding between the State agency local 
One-Stop partner and the Local Workforce Investment Board meets the 
requirements of 20 CFR 662.300.



Sec. 652.203  Who is responsible for funds authorized under the Act 
in the workforce investment system?

    The State agency retains responsibility for all funds authorized 
under the Act, including those funds authorized under section 7(a) 
required for providing the services and activities delivered as part of 
the One-Stop delivery system.



Sec. 652.204  Must funds authorized under section 7(b) of the Act 
(the Governor's reserve) flow through the One-Stop delivery system?

    No, these funds are reserved for use by the Governor for the three 
categories of activities specified in section 7(b) of the Act. However, 
these funds may flow through the One-Stop delivery system.



Sec. 652.205  May funds authorized under the Act be used to supplement 
funding for labor exchange programs authorized under separate legislation?

    (a) Section 7(c) of the Act enables States to use funds authorized 
under sections 7(a) or 7(b) of the Act to supplement funding of any 
workforce activity carried out under WIA.
    (b) Funds authorized under the Act may be used under section 7(c) to 
provide additional funding to other activities authorized under WIA if:
    (1) The activity meets the requirements of the Act, and its own 
requirements;
    (2) The activity serves the same individuals as are served under the 
Act;
    (3) The activity provides services that are coordinated with 
services under the Act; and

[[Page 436]]

    (4) The funds supplement, rather than supplant, funds provided from 
non-Federal sources.



Sec. 652.206  May a State use funds authorized under the Act to provide 
``core services'' and ``intensive services'' as defined in WIA?

    Yes, funds authorized under section 7(a) of the Act must be used to 
provide core services, as defined at section 134(d)(2) of WIA and 
discussed at 20 CFR 663.150, and may be used to provide intensive 
services as defined at WIA section 134(d)(3)(C) and discussed at 20 CFR 
663.200. Funds authorized under section 7(b) of the Act may be used to 
provide core or intensive services. Core and intensive services must be 
provided consistent with the requirements of the Act.



Sec. 652.207  How does a State meet the requirement for universal access 
to services provided under the Act?

    (a) A State has discretion in how it meets the requirement for 
universal access to services provided under the Act. In exercising this 
discretion, a State must meet the Act's requirements.
    (b) These requirements are:
    (1) Labor exchange services must be available to all employers and 
job seekers, including unemployment insurance (UI) claimants, veterans, 
migrant and seasonal farmworkers, and individuals with disabilities;
    (2) The State must have the capacity to deliver labor exchange 
services to employers and job seekers, as described in the Act, on a 
Statewide basis through:
    (i) Self-service;
    (ii) Facilitated self-help service; and
    (iii) Staff-assisted service;
    (3) In each local workforce investment area, in at least one 
comprehensive physical center, staff funded under the Act must provide 
core and applicable intensive services including staff-assisted labor 
exchange services; and
    (4) Those labor exchange services provided under the Act in a local 
workforce investment area must be described in the Memorandum of 
Understanding (MOU).



Sec. 652.208  How are core services and intensive services related to 
the methods of service delivery described in Sec. 652.207(b)(2)?

    Core services and intensive services may be delivered through any of 
the applicable three methods of service delivery described in Sec. 
652.207(b)(2). These methods are:
    (a) Self-service;
    (b) Facilitated self-help service; and
    (c) Staff-assisted service.



Sec. 652.209  What are the requirements under the Act for providing 
reemployment services and other activities to referred UI claimants?

    (a) In accordance with section 3(c)(3) of the Act, the State agency, 
as part of the One-Stop delivery system, must provide reemployment 
services to UI claimants for whom such services are required as a 
condition for receipt of UI benefits. Services must be provided to the 
extent that funds are available and must be appropriate to the needs of 
UI claimants who are referred to reemployment services under any Federal 
or State UI law.
    (b) The State agency must also provide other activities, including:
    (1) Coordination of labor exchange services with the provision of UI 
eligibility services as required by section 5(b)(2) of the Act;
    (2) Administration of the work test and provision of job finding and 
placement services as required by section 7(a)(3)(F) of the Act.



Sec. 652.210  What are the Act's requirements for administration of the 
work test and assistance to UI claimants?

    (a) State UI law or rules establish the requirements under which UI 
claimants must register and search for work in order to fulfill the UI 
work test requirements.
    (b) Staff funded under the Act must assure that:
    (1) UI claimants receive the full range of labor exchange services 
available under the Act that are necessary and appropriate to facilitate 
their earliest return to work;
    (2) UI claimants requiring assistance in seeking work receive the 
necessary guidance and counseling to ensure they

[[Page 437]]

make a meaningful and realistic work search; and
    (3) UI program staff receive information about UI claimants' ability 
or availability for work, or the suitability of work offered to them.



Sec. 652.211  What are State planning requirements under the Act?

    The State agency designated to administer funds authorized under the 
Act must prepare for submission by the Governor, the portion of the 
five-year State Workforce Investment Plan describing the delivery of 
services provided under the Act in accordance with WIA regulations at 20 
CFR 661.220. The State Plan must contain a detailed description of 
services that will be provided under the Act, which are adequate and 
reasonably appropriate for carrying out the provisions of the Act, 
including the requirements of section 8(b) of the Act.



Sec. 652.212  When should a State submit modifications to the five-year 
plan?

    (a) A State may submit modifications to the five-year plan as 
necessary during the five-year period, and must do so in accordance with 
the same collaboration, notification, and other requirements that apply 
to the original plan. Modifications are likely to be needed to keep the 
strategic plan a viable and living document over its five-year life.
    (b) That portion of the plan addressing the Act must be updated to 
reflect any reorganization of the State agency designated to deliver 
services under the Act, any change in service delivery strategy, any 
change in levels of performance when performance goals are not met, or 
any change in services delivered by State merit-staff employees.



Sec. 652.213  What information must a State include when the plan is 
modified?

    A State must follow the instructions for modifying the strategic 
five-year plan in 20 CFR 661.230.



Sec. 652.214  How often may a State submit modifications to the plan?

    A State may modify its plan, as often as needed, as changes occur in 
Federal or State law or policies, Statewide vision or strategy, or if 
changes in economic conditions occur.



Sec. 652.215  Do any provisions in WIA change the requirement that State 
merit-staff employees must deliver services provided under the Act?

    No, the Secretary requires that labor exchange services provided 
under the authority of the Act, including services to veterans, be 
provided by State merit-staff employees. This interpretation is 
authorized by and consistent with the provisions in sections 3(a) and 
5(b) of the Act and the Intergovernmental Personnel Act (42 U.S.C. 4701 
et seq.). The Secretary has and has exercised the legal authority under 
section 3(a) of the Act to set additional staffing standards and 
requirements and to conduct demonstrations to ensure the effective 
delivery of services provided under the Act. No additional 
demonstrations will be authorized.



Sec. 652.216  May the One-Stop operator provide guidance to State 
merit-staff employees in accordance with the Act?

    Yes, the One-Stop delivery system envisions a partnership in which 
Wagner-Peyser Act labor exchange services are coordinated with other 
activities provided by other partners in a One-Stop setting. As part of 
the local Memorandum of Understanding, the State agency, as a One-Stop 
partner, may agree to have staff receive guidance from the One-Stop 
operator regarding the provision of labor exchange services. Personnel 
matters, including compensation, personnel actions, terms and conditions 
of employment, performance appraisals, and accountability of State 
merit-staff employees funded under the Act, remain under the authority 
of the State agency. The guidance given to employees must be consistent 
with the provisions of the Act, the local Memorandum of Understanding, 
and applicable collective bargaining agreements.



PART 653_SERVICES OF THE EMPLOYMENT SERVICE SYSTEM--Table of Contents




Subpart A--Basic Services of the Employment Service System [Reserved]

[[Page 438]]

     Subpart B_Services for Migrant and Seasonal Farmworkers (MSFWs)

Sec.
653.100 Purpose and scope of subpart.
653.101 Provision of services to migrant and seasonal farmworkers 
          (MSFWs).
653.102 Job information.
653.103 MSFW job applications.
653.104 Services to MSFW family members, farm labor contractors, and 
          crew members.
653.105 Job applications at day-haul facilities.
653.106 JS day-haul responsibilites.
653.107 Outreach.
653.108 State agency self-monitoring.
653.109 Data collection.
653.110 Disclosure of data.
653.111 State agency staffing requirements.
653.112 State agency program budget plans.
653.113 Processing apparent violations.

Subpart C--Services for Veterans [Reserved]

Subpart D--Services to the Handicapped [Reserved]

Subpart E--Support Services [Reserved]

             Subpart F_Agricultural Clearance Order Activity

653.500 Purpose and scope of subpart.
653.501 Requirements for accepting and processing clearance orders.
653.502 Changes in crop and recruitment situations.
653.503 Field checks.

    Authority: 38 U.S.C. chapters 41 and 42; Wagner-Peyser Act, as 
amended, 29 U.S.C. 49 et seq.; sec. 104 of the Emergency Jobs and 
Unemployment Assistance Act of 1974 Pub. L. 93-567, 88 Stat. 1845, 
unless otherwise noted.

Subpart A--Basic Services of the Employment Service System [Reserved]



     Subpart B_Services for Migrant and Seasonal Farmworkers (MSFWs)

    Source: 45 FR 39459, June 10, 1980, unless otherwise noted.



Sec. 653.100  Purpose and scope of subpart.

    This subpart sets forth the principal regulations of the United 
States Employment Service (USES) for counseling, testing, and job and 
training referral services for migrant and seasonal farmworkers (MSFWs) 
on a basis which is qualitatively equivalent and quantitatively 
proportionate to services provided to non-MSFWs. It also contains 
requirements that State agencies establish a system to monitor their own 
compliance with USES regulations governing services to MSFWs, including 
the regulations under this subpart. Special services to ensure that 
MSFWs receive the full range of employment related services are 
established under this subpart.



Sec. 653.101  Provision of services to migrant and seasonal farmworkers 
(MSFWs).

    (a) Each State agency and each local office shall offer to migrant 
and seasonal farmworkers (MSFWs) the full range of employment services, 
benefits and protections, including the full range of counseling, 
testing, and job and training referral services as are provided to non-
MSFWs. In providing such services, the State agency shall consider and 
be sensitive to the preferences, needs, and skills of individual MSFWs 
and the availability of job and training opportunities.
    (b) Each State agency shall assure that, in a local area, the same 
local offices, including itinerant and satellite offices, but exclusive 
of day-haul operations, offer services to both non-MSFWs and MSFWs. 
Separate farm labor service local offices, which offer only farmwork to 
agricultural workers while another local office serving the same 
geographical area offers other JS services to other applicants, are 
prohibited so that all applicants receive employment services on the 
same basis.



Sec. 653.102  Job information.

    All State agencies shall make job order information conspicuous and 
available to MSFWs in all local offices. This information shall include 
Job Bank information in local offices where it is available. Such 
information shall be made available either by computer terminal, 
microfiche, hard copy, or other equally effective means. Each 
significant MSFW local office shall provide adequate staff assistance to

[[Page 439]]

each MSFW to use the job order information effectively. In those offices 
designated as significant MSFW bilingual offices, such assistance shall 
be provided to MSFWs in Spanish and English, wherever requested or 
necessary, during any period of substantial MSFW activity.



Sec. 653.103  MSFW job applications.

    (a) Every local office shall determine whether or not applicants are 
MSFWs as defined at Sec. 651.10 of this chapter.
    (b) Except as provided in Sec. 653.105, when an MSFW applies for JS 
services at a local office or is contacted by an Outreach worker, the 
services available through the JS shall be explained to the MSFW. In 
local offices which have been designated as significant MSFW bilingual 
offices by ETA, this explanation shall be made in Spanish, if necessary 
or requested during any period of substantial MSFW activity. Other local 
offices shall provide bilingual explanations wherever feasible.
    (c) The local office staff member shall provide the MSFW a list of 
those services. The list shall be written in English and Spanish and 
shall specify those services which are available after completion of a 
full application and those services which are available after completion 
of a partial application. The JS staff member shall explain to each MSFW 
the advantages of completing a full application.

Applications shall be reviewed periodically by the local office manager 
or a member of his/her staff to ensure their accuracy and quality. 
Applications and the application-taking process shall also be reviewed 
during State and Federal onsite reviews by the State and Regional MSFW 
Monitor Advocates and/or review staff, who shall check overall accuracy 
and quality, and offer technical advice on corrections or improvements.
    (d) If the MSFW wishes to complete a full application, the staff 
shall provide all assistance necessary to complete the application and 
shall ensure that the form includes complete information. It shall 
include, to the extent possible, the significant history of the MSFW's 
prior employment, training and educational background and a statement of 
any desired employment and any training needs in order to permit a 
thorough assessment of the applicant's skills, abilities and 
preferences. All applicable items shall be completed according to the 
ETA instructions for preparation of the application card (ES-511). 
Additional Dictionary of Occupational Titles codes or keywords shall be 
assigned, where appropriate, based on the MSFW's work history, training, 
and skills, knowledges, and abilities. Secondary cards shall be 
completed and separately filed when keywords are not used. In extremely 
small local offices where the limited applicant load and file size does 
not require completion of secondary cards, additional D.O.T. codes shall 
be noted on the primary application card.
    (e) If an MSFW wishes any JS service, and does not wish or is unable 
to file a full application, the interviewer shall try to obtain as much 
information as possible for a partial application. The interviewer shall 
enter the information on the partial application. The interviewer shall 
offer to refer the applicant to any available jobs for which the MSFW 
may be qualified, and any JS services permitted by the limited 
information available. He/she shall advise the MSFW that he/she may file 
a full application at any time.
    (f) Partial applications shall be completed according to ETA 
instructions.
    (g) Partial applications for MSFWs shall be filed in accordance with 
local office procedures for filing other partial applications.
    (h) To minimize the need for additional applications in other 
offices, States shall issue JS cards to MSFWs at the initial visit under 
the following conditions:
    (1) When automated data retrieval systems are available in the 
State. In this instance, JS staff shall advise the MSFW that the JS card 
may be presented at any other JS office in the State and that services 
will be provided without completion of an additional application unless 
the services requested require additional information for adequate 
service delivery.
    (2) When an MSFW is referred on an interstate or intrastate order. 
In this instance, when it is known to the order-holding local office 
(through the

[[Page 440]]

presentation of an JS card or otherwise) that the MSFW has completed a 
full application or partial application in the applicant holding office 
or elsewhere, an additional application shall not be taken by the order-
holding office unless the MSFW requests JS services in addition to 
referral on the clearance order.

(Approved by the Office of Management and Budget under control number 
1205-0039)

(Pub. L. No. 96-511, 94 Stat. 2812 (44 U.S.C. 3501 et seq.))

[45 FR 39459, June 10, 1980, as amended at 46 FR 7772, Jan. 23, 1981; 47 
FR 145, Jan. 5, 1982]



Sec. 653.104  Services to MSFW family members, farm labor contractors, 
and crew members.

    (a) In addition to other requirements in this subpart, the following 
special requirements are established for services to MSFW family 
members, farm labor contractors and crew members. Except as provided at 
Sec. Sec. 653.103(e) and 653.105, no local office shall refer an MSFW 
family or crew unless each working member of the family or crew being 
referred, has filed either a full or partial application pursuant to 
Sec. 653.103(b) at a local office or has been issued a JS card in 
instances set forth in Sec. 653.103(h). Local offices may, upon 
request, provide general information, e.g., the types of crops in other 
areas, to farm labor contractors and family heads prior to the 
registration of all working members.
    (b) No local office shall accept an application from an individual 
for employment as a farm labor contractor or fill an agricultural job 
order submitted by a farm labor contractor (``FLC'') or farm labor 
contractor employee (``FLCE'') unless the FLC or FLCE shows or obtains a 
valid FLC certificate, or FLCE identification card where required by 
Federal law, and a valid State certification where required by State 
law. If a FLC or FLCE is temporarily without his or her valid FLC 
certificate or FLCE identification card the local office shall try to 
verify the existence of the valid certificate or identification card by 
telephoning the State central office and/or the Department of Labor's 
Employment Standards Administration regional office. The local office, 
however, shall not serve the FLC or FLCE until the existence of the 
valid certificate or identification card is verified.
    (c) Local offices may refer workers to registered farm labor 
contractors who are employers provided that a valid job order has been 
placed with the local office which clearly specifies all the terms and 
conditions of employment with the farm labor contractor shown as 
employer of record. Before a local office may refer workers to a farm 
labor contractor offering employment in another area of the State or in 
another State, one of two requirements must be met: Either a valid 
interstate clearance order from another State agency is on file in the 
office, or an intrastate order has been received from an office in 
another area of the State which is not within commuting distance of the 
office where the farm labor contractor is recruiting workers. Unless one 
of these conditions exists, the local office may only refer workers to a 
registered farm labor contractor who is an employer placing a local job 
order. Whenever the job order includes the provision of transportation, 
a FLC certificate authorizing transportation must be shown before 
workers are referred on the order.



Sec. 653.105  Job applications at day-haul facilities.

    If the State agency is operating a day-haul facility under the 
exceptional circumstances provisions described in Sec. 653.106(a), a 
list of JS services shall be distributed and a full application shall be 
completed whenever an MSFW requests the opportunity to file a full 
application unless this is impractical at that time. In such cases, a 
full application shall be taken at the earliest practical time. In all 
other cases, a list of JS services shall be distributed.



Sec. 653.106  JS day-haul responsibilities.

    (a) State agencies shall not establish, operate, or supervise any 
agricultural day-haul facilities unless exceptional circumstances 
warrant such action and prior approval of the Regional Administrator is 
obtained.
    (b) No JS applicants shall be referred to non-JS operated day-haul 
facilities, unless the applicant is referred on a specific job order and 
is provided with

[[Page 441]]

a checklist summarizing wages, working conditions, and other material 
specifications on the job order. Such checklists, where necessary, shall 
be in English and Spanish. State agencies shall use a standard checklist 
format provided by ETA unless a variance has been approved by the 
Regional Administrator. However, general labor market information on the 
availability of jobs, the level of activity of agricultural and 
nonagricultural employment, and crop conditions shall be provided, upon 
request, to applicants where specific referrals to employment cannot be 
made.
    (c) JS outreach workers shall visit all JS and non-JS operated day-
haul facilities with substantial activity during their operation for 
purposes of providing MSFWs with information and assistance pursuant to 
Sec. 653.107(j). Monitoring of such activity shall be conducted 
pursuant to Sec. 653.108(p).

(Approved by the Office of Management and Budget under control number 
1205-0039)

(Pub. L. No. 96-511, 94 Stat. 2812 (44 U.S.C. 3501 et seq.))

[45 FR 39459, June 10, 1980, as amended at 47 FR 145, Jan. 5, 1982]



Sec. 653.107  Outreach.

    (a) Each State agency shall operate an outreach program in order to 
locate and to contact MSFWs who are not being reached by the normal 
intake activities conducted by the local offices. Upon receipt of 
planning instructions and resource guidance from ETA, each State agency 
shall develop an annual outreach plan, setting forth numerical goals, 
policies and objectives. This plan shall be subject to the approval of 
the Regional Administrator as part of the program budget plan (PBP) 
process. Wherever feasible, State agencies shall coordinate their 
outreach efforts with those of public and private community service 
agencies and MSFW groups.
    (b) In determining the extent of their outreach program, States 
shall be guided by the following statement of ETA policy:
    (1) State agencies should make sufficient penetration in the 
farmworker community so that a large number of MSFWs are aware of the 
full range of JS services.
    (2) Signficant MSFW Local offices should conduct especially vigorous 
outreach in their service areas.
    (3) State agencies in supply States should conduct particularly 
thorough outreach efforts with extensive follow-up activities which 
capitalize on the relatively long duration of MSFW residence in the 
State.
    (c) The plan shall be based on the actual conditions which exist in 
the particular State, taking into account the State agency's history of 
providing outreach services, the estimated number of MSFWs in the State, 
and the need for outreach services in that State. The approval of the 
Regional Administrator shall be based upon his/her consideration of the 
following features of the outreach plan:
    (1) Assessment of need. This assessment of need shall include:
    (i) A review of the previous year's agricultural activity in the 
State.
    (ii) A review of the previous year's MSFW activity in the State.
    (iii) A projected level of agricultural activity in the State for 
the coming year.
    (iv) A projected number of MSFWs in the State for the coming year, 
which shall take into account data supplied by CETA 303 grantees, other 
MSFW organizations, employer organizations and federal and/or State 
agency data sources such as the Department of Agriculture and the United 
States Employment Service.
    (v) A statement of the consideration given to the State Monitor 
Advocate's recommendation as set forth in the annual summary developed 
under Sec. 653.108(t).
    (2) Assessment of available resources. This assessment of the 
resources available for outreach shall include:
    (i) The level of funds available from all sources, including the 
funds specifically made available to the State agency for outreach.
    (ii) Resources made available through existing cooperative 
agreements with public and private community service agencies and MSFW 
groups.
    (iii) Where fewer resources are available for outreach than in a 
prior year, a statement of why fewer resources are available.

[[Page 442]]

    (3) Proposed outreach activities. The proposed outreach activities 
shall be designed to meet the needs determined under paragraph (c)(1) of 
this section with the available resources determined under paragraph 
(c)(2) of this section. The plan for the proposed outreach activities 
shall include:
    (i) Numerical goals for the number of MSFWs to contacted during the 
fiscal year by JS staff. The number of MSFWs planned to be contacted by 
other agencies under cooperative arrangements during the fiscal year 
also should be included in the plan. These numerical goals shall be 
based on the number of MSFWs estimated to be in the State in the coming 
year, taking into account the varying concentration of MSFWs during the 
seasons in each geographic area, the range of services needed in each 
area and the number of JS and/or cooperating agency staff who will 
conduct outreach.
    (ii) Numerical goals for the staff years to be utilized for outreach 
during the fiscal year.
    (iii) The level of funding to be utilized for outreach during the 
fiscal year.
    (iv) The tools which will be used to conduct outreach contacts, 
including personal contact, printed matter, videotapes, slides, and/or 
cassette recordings.
    (v) The records to be maintained by the JS outreach staff--logs of 
daily contacts to include the number of MSFWs contacted and assistance 
provided. The name of the individual contacted should be recorded when:
    (A) An application for work is taken by an outreach worker,
    (B) A referral to a job is made by an outreach worker, and/or
    (C) A complaint is taken by an outreach worker.
    (d) In developing the outreach plan, the State agency shall solicit 
information and suggestions from CETA 303 grantees, other appropriate 
MSFW groups, public agencies, agricultural employer organizations, and 
other interested organizations. In addition, at least 45 days before 
submitting its final outreach plan to the Regional Administrator, the 
State agency shall provide a proposed plan to CETA 303 grantees, public 
agencies, agricultural employer organizations, and other organizations 
expressing an interest and allow at least 30 days for review and 
comment. The State agency shall:
    (1) Consider any comments received in formulating its final proposed 
plan.
    (2) Inform all commenting parties in writing whether their comments 
have been incorporated and, if not, the reasons therefore.
    (3) Transmit the comments and recommendations received and its 
responses to the Regional Administrator with the submission of the plan. 
(If the comments are received after the submission of the plan, they may 
be sent separately to the Regional Administrator.)
    (e) The outreach plan shall be submitted as an essential part of the 
State's annual PBP. The resource requirement of the plan shall be 
reflected in the PBP budget request. The plan, including the resource 
requirement, shall be reviewed by the Regional Administrator during the 
annual PBP approval process. The State agency shall be required to 
implement the approved outreach plan as part of its compliance with the 
PBP.
    (f) The Regional Administrator shall review and evaluate the 
outreach plan, including the assessments of needs and resources, in 
light of the history of the State's outreach efforts and the statements 
of policy set forth in Sec. 653.107(b). He/she shall approve the plan 
only if it demonstrates that adequate outreach will be conducted. The 
approved outreach plan shall be available for review by interested 
parties.
    (g) As part of the annual PBP process, funding of State agencies 
shall be contingent upon the substantial and timely compliance of the 
State agency with its prior year outreach plan. However, if the Regional 
Administrator makes a finding of good faith efforts, he/she may fund a 
State agency even though it did not achieve substantial and timely 
compliance.
    (h) For purposes of hiring and assigning staff to outreach duties, 
State agencies shall seek, through merit system procedures, qualified 
candidates:
    (1) Who are from MSFW backgrounds, and/or
    (2) Who speak Spanish, and/or

[[Page 443]]

    (3) Who are racially or ethnically representative of the MSFWs in 
the service area.
    (i) The five States with the highest estimated year round MSFW 
activity shall assign, in accordance with State merit staff 
requirements, full-time, year round staff to outreach duties. The 
remainder of the significant MSFW states shall make maximum efforts to 
hire outreach staff with MSFW experience for year round positions and 
shall assign outreach staff to work full-time during the period of the 
highest MSFW activity. Such outreach staff shall be bilingual if 
warranted by the characteristics of the MSFW population in the State, 
and shall spend a majority of their time in the field. The Regional 
Administrator may grant approval for a deviation from the requirements 
of this section if the State agency provides adequate evidence that 
outreach activities and service delivery to MSFWs would be improved 
through other staffing arrangements.
    (j) For purposes of this subpart, an outreach ``contact'' shall 
include either the presentation of information and offer of assistance 
specified in paragraphs (j)(1) and (j)(2) of this section, or the 
followup activity specified in paragraph (j)(3) of this section.
    (1) Outreach workers shall explain to MSFWs at their working, living 
or gathering areas, including day-haul sites, by means of written and 
oral presentations either spontaneous or recorded, in a language readily 
understood by them, the following;
    (i) The services available from the local office, including the 
availability of referrals to agricultural and nonagricultural 
employment, to training, to supportive services, as well as the 
availability of testing, counseling and other job development services;
    (ii) Types of specific employment opportunities which are currently 
available in the JS system;
    (iii) Information on the JS complaint system and other organizations 
serving MSFWs;
    (iv) A basic summary of farmworker rights with respect to the terms 
and conditions of employment;
    (v) Provided, however, That outreach workers shall not enter work 
areas to perform outreach duties described in this section on an 
employer's property without permission of the employer, unless otherwise 
authorized to enter by law, shall not enter workers' living areas 
without the permission of the workers, and shall comply with appropriate 
State laws regarding access.
    (2) After making the presentation, outreach workers shall urge the 
MSFWs to go to the local office to obtain the full range of JS services. 
If an MSFW cannot or does not wish to visit the local JS office, the 
outreach workers shall offer to provide on-site the following:
    (i) Assistance in the preparation of applications;
    (ii) If an unemployed MSFW, assistance in obtaining referral to 
specific employment opportunities currently available; if an employed 
MSFW, information regarding the types of employment opportunities which 
will become available upon the date on which the MSFW indicates that he/
she will be available following his/her current employment.
    (iii) Assistance in the preparation of either JS or non-JS related 
complaints;
    (iv) Receipt and subsequent referral of complaints to the local 
office complaint specialist or local officer manager;
    (v) Referral to supportive services for which the individual or a 
family member may be eligible;
    (vi) As needed, assistance in making appointments and arranging 
transportation for individual MSFWs or members of their family to and 
from local offices or other appropriate agencies.
    (3) Outreach workers shall make follow-up contacts as are necessary 
and appropriate to provide to the maximum extent possible the assistance 
specified in paragraphs (j)(1) and (j)(2) of this section.
    (4) In addition to the foregoing outreach contacts, the State agency 
shall publicize the availability of JS services through such means as 
newspaper and electronic media publicity. Contacts with public and 
priviate community agencies, employers and/or employer organizations, 
and MSFW groups also shall be utilized to facilitate the widest possible 
distribution of information concerning JS services.

[[Page 444]]

    (k) Outreach workers shall be alert to observe the working and 
living conditions of MSFWs and, upon observation, or upon receipt of 
information regarding a suspected violation of federal or State 
employment-related law, document and refer information to the local 
office manager for processing in accordance with Sec. 653.113.
    (l) Outreach workers shall be trained in local office procedures and 
in the services, benefits, and protections afforded MSFWs by the JS. 
They shall also be trained in the procedure for informal resolution of 
complaints. The program for such training shall be formulated by the 
State Administrator, pursuant to uniform guidelines developed by ETA, 
and each State's program shall be reviewed and commented upon in advance 
by the State MSFW Monitor Advocate.
    (m) During months when outreach activities are conducted, outreach 
workers shall maintain complete records of their contacts with MSFWs and 
the services they perform in accordance with a format developed by ETA. 
These records shall include a daily log, a copy of which shall be sent 
monthly to the local office manager and maintained on file for at least 
two years. These records shall include the number of contacts and names 
of contacts (where applicable), the services provided (e.g., whether a 
complaint was received, whether an application was taken, and whether a 
referral was made). Outreach workers also shall maintain records of each 
possible violation or complaint of which they have knowledge, and their 
actions in ascertaining the facts and referring the matters as provided 
herein. These records shall include a description of the circumstances 
and names of any employers who have refused outreach workers access to 
MSFWs pursuant to Sec. 653.107(l).
    (n) During months when outreach activities are conducted, each local 
office manager shall file with the State MSFW Monitor Advocate a monthly 
summary report of outreach efforts. These reports shall summarize 
information collected, pursuant to paragraph (m) of this section. The 
local office manager and/or other appropriate State office staff members 
shall assess the performance of outreach workers by examining the 
overall quality and productivity of their work, including the services 
provided and the methods and tools used to offer services. Performance 
shall not be judged solely by the number of contacts made by the worker. 
The monthly reports and daily outreach logs shall be made available to 
the State MSFW Monitor Advocate and federal On-Site Review Teams. In 
addition, the distribution of any special funds for outreach, should 
funds become available, shall be based on the effectiveness and need of 
the State's outreach program as monitored by ETA.
    (o) Outreach workers shall not engage in political, unionization or 
antiunionization activities during the performance of their duties.
    (p) Outreach workers shall be provided with, carry and display, upon 
request, identification cards or other material identifying them as 
employees of the State agency.

(Approved by the Office of Management and Budget under control number 
1205-0039)

(Pub. L. No. 96-511, 94 Stat. 2812 (44 U.S.C. 3501 et seq.))

[45 FR 39459, June 10, 1980, as amended at 47 FR 145, Jan. 5, 1982]



Sec. 653.108  State agency self-monitoring.

    (a) State Administrators shall assure that their State agencies 
monitor their own compliance with JS regulations in serving MSFWs on an 
ongoing basis. The State Administrator shall have overall responsibility 
for State agency self-monitoring.
    (b) The State Administrator shall appoint a State MSFW Monitor 
Advocate. The State Administrator shall inform farmworker organizations 
and other organizations with expertise concerning MSFWs of the opening 
and encourage them to refer qualified applicants to apply through the 
State merit system prior to appointing a State MSFW Monitor Advocate. 
Among qualified candidates determined through State merit system 
procedures, the State agencies shall seek persons (1) who are from MSFW 
backgrounds, or (2) who speak Spanish or other languages of a 
significant proportion of the State MSFW population, or

[[Page 445]]

(3) who are racially or ethnically similar to the MSFWs in the State, or 
(4) who have substantial work experience in farmworker activities.
    (c) The State MSFW Monitor Advocate shall have direct, personal 
access, whenever he/she finds it necessary, to the State Administrator 
and shall work in the State central office. The State MSFW Monitor 
Advocate shall have status and compensation as approved by the civil 
service classification system and be comparable to other State positions 
assigned similar levels of tasks, complexity and responsibility.
    (d) The State MSFW Monitor Advocates shall be assigned staff 
necessary to fulfill effectively all of his/her duties as set forth in 
this subpart. The number of staff positions shall be determined by 
reference to:
    (1) The number of MSFWs in the State, as measured at the time of the 
peak MSFW population (MSFW activity), and (2) the need for monitoring 
activity in the State. The MSFW Monitor Advocates shall devote full time 
to Monitor Advocate functions, except that the USES Administrator may 
reallocate positions from States of low MSFW activity to States of 
higher MSFW activity and may approve a plan for less than full-time work 
in States of low MSFW activity. Any such plan must demonstrate that the 
State MSFW Monitor Advocate function can be effectively performed with 
part-time staffing.
    (e) All State MSFW Monitor Advocates and Assistant MSFW Monitor 
Advocates shall attend within the first three months of their tenure a 
training session conducted by the Regional MSFW Monitor Advocate. They 
shall also attend whatever additional training sessions are required by 
the Regional or National MSFW Monitor Advocate.
    (f) The State MSFW Monitor Advocate shall provide any relevant 
documentation requested from the State agency by the Regional MSFW 
Monitor Advocate.
    (g) The State MSFW Monitor Advocate shall:
    (1) Conduct an ongoing review of the delivery of services and 
protections afforded by JS regulations to MSFWs by the State agency and 
local offices. The State MSFW Monitor Advocate, without delay, shall 
advise the State agency and local offices of (i) problems, deficiencies, 
or improper practices in the delivery of services and protections 
afforded by these regulations (including progress made in achieving 
affirmative action goals and timetables), and (ii) means to improve such 
delivery.
    (2) Participate in onsite local office MSFW formal monitoring 
reviews on a regular basis.
    (3) Assure that all significant MSFW local offices not reviewed 
onsite by Federal staff, are reviewed at least once a year by State 
staff, and that, if necessary, those local offices in which significant 
problems are revealed by required reports, management information, the 
JS complaint system or otherwise are reviewed as soon as possible.
    (4) Assure that the monitoring review format, developed by ETA, is 
used as a guideline in the conduct of local office MSFW onsite formal 
monitoring reviews. This format will ensure that applications and the 
application-taking process are reviewed during State onsite reviews by 
State MSFW Monitor Advocates and/or review staff, who shall check 
overall accuracy and quality, and offer technical advice on corrections 
or improvements.
    (5) Review the State agency's outreach plan, and on a random basis, 
the outreach workers' daily logs and other reports including those 
showing or reflecting the workers' activities, to ensure that they 
comply with the outreach plan.
    (h) Formal onsite MSFW monitoring reviews of local offices shall be 
conducted using the following procedures:
    (1) Before beginning such a review, the State MSFW Monitor Advocate 
and/or review staff shall study:
    (i) Program performance data,
    (ii) Reports of previous reviews,
    (iii) Corrective action plans developed as a result of previous 
reviews,
    (iv) Complaint logs, and
    (v) Complaints elevated from the office or concerning the office.
    (2) Upon completion of a local office onsite formal monitoring 
review, the State MSFW Monitor Advocate shall hold one or more wrap-up 
sessions with the local office manager and staff to

[[Page 446]]

discuss any obvious findings and offer initial recommendations and 
appropriate technical assistance.
    (3) After each review the State MSFW Monitor Advocate shall conduct 
an indepth analysis of the review data. The conclusions and 
recommendations of the State MSFW Monitor Advocate shall be put in 
writing, shall be sent to the State Administrator, to the offical of the 
State agency with line authority over the local office, and other 
appropriate State agency officials.
    (4) The state MSFW Monitor Advocate may recommend that the review 
responsibility set forth in this subsection be delegated to a 
responsible professional member of the administrative staff of the State 
agency, if and when the State Administrator finds such delegation 
necessary. In such event, the State MSFW Monitor Advocate shall be 
responsible for and shall approve the written report of the review.
    (5) The local office manager shall develop and propose a written 
corrective action plan. The plan shall be approved, or appropriately 
revised, by appropriate superior officials and the State MSFW Monitor 
Advocate. The plan shall include actions required to correct or to take 
major steps to correct any problems within 30 days or if the plan allows 
for more than 30 days for full compliance, the length of, and the 
reasons for, the extended period shall be specifically stated.
    (6) State agencies, through line supervisory staff, shall be 
responsible for assuring and documenting that the local office is in 
compliance within the time period designated in the plan. State agencies 
shall submit to the appropriate ETA regional offices copies of the 
onsite local office formal monitoring review reports and corrective 
action plans for significant local offices.
    (i) The State MSFW Monitor Advocate shall participate in federal 
reviews conducted pursuant to subpart G.
    (j) At the discretion of the State Administrator, the State MSFW 
Monitor Advocate may be assigned the responsibility as the complaint 
specialist. The State MSFW Monitor Advocate shall participate in and 
monitor the performance of the complaint system, as set forth at 20 CFR 
658.400 et seq. The State MSFW Monitor Advocate shall review the local 
office managers' informal resolution of complaints relating to MSFWs and 
shall ensure that the State agency transmits copies of the logs of MSFW 
complaints to the regional office quarterly.
    (k) The State MSFW Monitor Advocate also shall serve as an advocate 
to improve services for MSFWs within JS. The State MSFW Monitor Advocate 
shall establish ongoing liaison with CETA 303 and other organizations 
serving farmworkers, and employers and/or employer organizations, in the 
State. The State MSFW Monitor Advocate shall meet frequently with 
representatives of these organizations to receive complaints, assist in 
referrals of alleged violations to enforcement agencies, receive input 
on improving coordination with JS or improving JS services to MSFWs.
    (l) The State MSFW Monitor Advocate shall conduct frequent field 
visits to the working and living areas of MSFWs, and shall discuss JS 
services and other employment-related programs with MSFWs, crew leaders, 
and employers. Records shall be kept of each such visit.
    (m) The State MSFW Monitor Advocate shall participate in the 
appropriate regional public meeting(s) held by the Department of Labor 
Regional Farm Labor Coordinated Enforcement Committee.
    (n) The State MSFW Monitor Advocate shall ensure that outreach 
efforts in all significant MSFW local offices are reviewed at least 
yearly to ensure that there is continuing compliance with 20 CFR 
653.107. This review will include accompanying at least one outreach 
worker from each significant MSFW local office on his/her visits to 
MSFWs' working and living areas. The State MSFW Monitor Advocate shall 
review findings from these reviews.
    (o) The State MSFW Monitor Advocate shall review and assess the 
adequacy of the annual State affirmative action plan for MSFWs, and 
shall report such findings to the State Administrator.
    (p) The State MSFW Monitor Advocate shall ensure that JS outreach 
activities are reviewed periodically at

[[Page 447]]

day-haul sites at which these activities are conducted. Complete records 
of such visits shall be kept. The State MSFW Monitor Advocate shall 
ensure that local offices and the State Administrator are advised of any 
deficiencies.
    (q) The State MSFW Monitor Advocate shall review on at least a 
quarterly basis all statistical and other MSFW-related data reported by 
significant MSFW local offices in order (1) to determine the extent to 
which the State agency has complied with regulations at Sec. 653.100 et 
seq., and (2) to identify the areas of inadequate compliance.
    (r) The State MSFW Monitor Advocate shall have full access to all 
statistical and other MSFW-related information gathered by State 
agencies and local offices and may interview State and local office 
staffs with respect to reporting methods. Subsequent to each review, the 
State MSFW Monitor Advocate shall consult, as necessary, with State and 
local offices and provide technical assistance to ensure accurate 
reporting.
    (s) The State MSFW Monitor Advocate shall review and comment on 
proposed State JS directives, manuals, and operating instructions 
relating to MSFWs and shall ensure (1) that they accurately reflect the 
requirements of the regulations, and (2) that they are clear and 
workable. The State MSFW Monitor Advocate also shall explain and make 
available at the requestor's cost, pertinent directives and procedures 
to employers, employer organizations, farmworkers, farmworker 
organizations and other parties expressing an interest in a readily 
identifiable directive or procedure issued and receive suggestions on 
how these documents can be improved.
    (t) The State MSFW Monitor Advocate shall prepare for the State 
Administrator an annual summary of JS services to MSFWs within his/her 
State based on statistical data and his/her reviews and activities set 
forth in these regulations. The summary shall include an assessment of 
the State agency's activities related to MSFWs such as those covered in 
the State agency's PBP, outreach plan, and affirmative action plan, and 
the other matters with respect to which the State MSFW Monitor Advocate 
has responsibilities under these regulations. A copy of this summary 
shall be forwarded to the Regional Administrator by the State 
Administrator.

(Approved by the Office of Management and Budget under control number 
1205-0039)

(Pub. L. No. 96-511, 94 Stat. 2812 (44 U.S.C. 3501 et seq.))

[45 FR 39459, June 10, 1980, as amended at 47 FR 145, Jan. 5, 1982]



Sec. 653.109  Data collection.

    State agencies shall: (a) Collect data on MSFWs, including data on 
the number (1) contacted through outreach activities, (2) registering 
for service, (3) referred to agricultural jobs, (4) referred to non-
agricultural jobs, (5) placed in agricultural jobs, (6) placed in non-
agricultural jobs, (7) referred to training, (8) receiving counseling, 
(9) receiving job development, (10) receiving testing, (11) referred to 
supportive service, (12) receiving some service, (13) placed according 
to wage rates, and (14) placed according to duration. The State agencies 
also shall collect data on agricultural clearance orders (including 
field checks), MSFW complaints, and monitoring activities, as directed 
by ETA. These data shall be collected in accordance with the ESARS 
Handbook and applicable ETA Reports and Anlaysis Letters.
    (b) Collect data on the number of MSFWs who were served as to 
whether they were male, female, black, Hispanic, American Indian, Asian, 
or Pacific Islander.
    (c) Provide necessary training to State agency, including local 
office personnel, to assure accurate reporting of data;
    (d) Collect and submit to ETA as directed by ETA, data on MSFWs 
required by the PBP, and
    (e) Periodically collect and verify data required under this 
subsection, take necessary steps to ensure its validity, and collect and 
submit data for verification to ETA, as directed by ETA; and

[[Page 448]]

    (f) Submit additional reports to the ETA at such times and 
containing such items as ETA directs.

(Approved by the Office of Management and Budget under control number 
1205-0039)

(Pub. L. No. 96-511, 94 Stat. 2812 (44 U.S.C. 3501 et seq.))

[45 FR 39459, June 10, 1980, as amended at 47 FR 145, Jan. 5, 1982]



Sec. 653.110  Disclosure of data.

    (a) State agencies shall disclose to the public, on written request, 
in conformance with applicable State and Federal law, the data collected 
by State and local offices pursuant to Sec. 653.109, if possible within 
10 working days after receipt of the request.
    (b) If a request for data held by a State agency is made to the ETA 
national or regional office, the ETA shall forward the request to the 
State agency for response.
    (c) If the requested data cannot be supplied within 10 working days 
of receipt by the State agency of the request, the State agency shall 
respond to the requestor in writing, giving the reason for the delay and 
specifying the date by which it expects to be able to comply.
    (d) State agency intra-agency memoranda and reports (or parts 
thereof) and memoranda and reports (or parts thereof) between the State 
agency and the ETA, however, to the extent that they contain statements 
of opinion rather than facts, may be withheld from public disclosure 
provided this reason for withholding is given to the requestor in 
writing. Similarly, documents or parts thereof, which, if disclosed, 
would constitute an unwarranted invasion of personal or employer 
privacy, may also be withheld provided the reason is given to the 
requestor in writing.



Sec. 653.111  State agency staffing requirements.

    (a) On a statewide basis, staff representative of the racial and 
ethnic characteristics in the work force shall be distributed in 
substantially the same proportion among (1) all ``job groups'' (as that 
term is defined by the Office of Federal Contract Compliance Programs), 
and (2) all offices in the plan(s).
    (b)(1) As part of the PBP, each State agency shall develop and 
submit to the Regional Administrator affirmative action plans for all 
significant local offices within its jurisdiction (which, for the 
purposes of this provision, means those local offices representing the 
top 20 per cent of MSFW activity nationally). These affirmative action 
plans shall include goals and timetables and shall ensure that 
sufficient numbers of qualified, permanent minority staff are hired. 
Where qualified minority applicants are not available to be hired as 
permanent staff, qualified minority part-time, provisional, or temporary 
staff shall be hired in accordance with State merit system procedures, 
where applicable. These affirmative action plans shall be prepared on an 
individual office basis.
    (2) The affirmative action plans shall include an analysis of the 
racial and ethnic characteristics of the work force in the local office 
service area. To determine the ``work force'' for the purpose of this 
paragraph, the State agency shall include the racial and ethnic 
characteristics of any MSFW population which is not a part of the 
permanent work force by computing an estimate of the total work years 
MSFWs collectively spend in the area and including a number of workers 
equivalent to this estimate as part of the permanent work force. This 
computation shall be made by calculating the average length of time, as 
a fractional part of a year, MSFWs stay in the area and then multiplying 
this figure by the total estimated MSFW population in the area during 
the previous year.
    (3) The affirmative action plan also shall include an analysis of 
the local office staffing characteristics. The plan shall provide a 
comparison between the characteristics of the staff and the work force 
and determine if the composition of the local office staff(s) is 
representative of the racial and ethnic characteristics of the work 
force in the local office service area(s).
    (4) If the staff under-represents any of these characteristics, the 
State agency shall establish a staffing goal at a level equivalent to 
the percentage of the characteristics in the work force

[[Page 449]]

in the local office service areas. The State agency also shall establish 
a reasonable timetable for achieving the staffing goal by hiring or 
promoting available, qualified staff in the under-represented 
categories. In establishing timetables, the State agency shall consider 
the vacancies anticipated through expansion, contraction, and turnover 
in the office(s) and available funds, and all affirmative action plans 
shall establish timetables that are designed to achieve the staffing 
goal no later than December 31, 1983.
    (c) In addition, each State agency which has significant local 
offices, shall undertake special efforts to recruit MSFWs and persons 
from MSFW back-grounds for its staff, shall document achievements, and 
shall include in the affirmative action plan(s) a complete description 
of specific actions which the agency will take and time frames within 
which these actions will be taken.
    (d) In developing the affirmative action plan for significant local 
offices, the State agency shall solicit from CETA 303 and other 
appropriate MSFW groups, employer organizations and other interested 
organizations, estimates of the total MSFW population in each local 
office service area, and the average length of time the MSFWs stay in 
the area. In addition, State agencies shall solicit, consider, 
incorporate as appropriate, respond to and include copies of comments 
from CETA 303, other appropriate MSFW groups, employer organizations, 
and other interested organizations, following procedures set forth for 
the annual outreach plan at Sec. 653.107(d).
    (e) As part of the annual Program and Budget Plan (PBP) process, the 
funding of State agencies which are required to develop and implement 
affirmative action plans for significant local offices shall be 
contingent upon the timely submittal of adequate affirmative action 
plans and the substantial and timely attainment of the goals and 
timetables contained in those plans. However, if the Regional 
Administrator makes a finding of good faith efforts, he/she may fund a 
State agency even though it did not achieve substantial and timely 
compliance.
    (f) All State Employment Security Agencies (SESAs) required to 
develop affirmative action plans for significant local offices shall 
keep accurate records of their employment practices for those offices, 
including information on all applications. These records shall be 
maintained in accordance with the recordkeeping requirements concerning 
affirmative action which are established by ETA and distributed to the 
SESAs. All records shall be made available to the State MSFW Monitor 
Advocate, EEO staff and Federal On-Site Review Teams.
    (g) Affirmative action plans shall contain a description of specific 
steps to be taken for the adequate recruitment of MSFWs for all vacant 
positions in significant local offices and the central office. These 
steps shall include advertisements in newspapers, radio or other media, 
in a manner calculated to best reach the MSFW population, and contacts 
by outreach workers and the State MSFW Monitor Advocate with groups 
serving the MSFW population.
    (h) State EEO staff shall have the responsibility for developing 
affirmative action plans. The State MSFW Monitor Advocate(s) shall 
comment on the plan to the State Administrator. Upon submission of the 
affirmative action plan as part of the State agency's PBP submittal, the 
Regional MSFW Monitor Advocate shall review the affirmative action 
plan(s) as it pertains to MSFWs and comment to the Regional 
Administrator. As part of his/her regular reviews of State agency 
compliance, the Regional MSFW Monitor Advocate shall monitor the extent 
to which the State has complied with its affirmative action plan(s) as 
it pertains to MSFWs. The Regional MSFW Monitor Advocate's finding as to 
the adequacy of the plan(s) and as to the State's compliance with the 
plan(s) shall be considered in PBP decisions involving future funding of 
the State agency.

(Approved by the Office of Management and Budget under control number 
1205-0039)

(Pub. L. No. 96-511, 94 Stat. 2812 (44 U.S.C. 3501 et seq.))

[45 FR 39459, June 10, 1980, as amended at 47 FR 145, Jan. 5, 1982]

[[Page 450]]



Sec. 653.112  State agency program budget plans.

    (a) Each State agency, in its annual program budget plan, shall 
describe its plan to carry out the requirements of this subpart in the 
following year. The plan shall include, where applicable, the outreach 
and affirmative action plans required by Sec. Sec. 653.107 and 653.111, 
respectively. For significant MSFW States, ETA shall establish program 
performance indicators reflecting equity indicators and indicators 
measuring minimum levels of service to MSFWs which the significant MSFW 
State agencies will be required to meet. These program performance 
indicator requirements shall be contained in the PBP Guidelines which 
ETA promulgates on an annual basis.
    (b) Equity indicators shall address JS controllable services and 
shall include, at a minimum, individuals referred to a job; receiving 
counselling; receiving job development; receiving some service; and 
referred to supportive service.
    (c) Minimum level of service indicators shall address other services 
to MSFWs and shall include, at a minimum, individuals placed in a job; 
placed in a job with a wage exceeding the Federal minimum wage by at 
least 50 cents/hour; placed long-term (150 days or more) in a non-
agricultural job; review of significant MSFW local offices; field checks 
on agricultural clearance orders; outreach contacts per staff day; and 
processing of complaints. The determination of the minimum service 
levels required of significant MSFW States for each year shall be based 
on the following:
    (1) Past State agency performance in serving MSFWs, as reflected in 
on-site reviews and data collected under Sec. 653.109;
    (2) The need for services to MSFWs in the following year, comparing 
prior and projected levels of MSFW activity;
    (3) The ETA program priorities for the following year; and
    (4) Special circumstances and external factors existing in the 
particular State.
    (d) The Regional Administrator shall review this portion of the PBP, 
and approve it upon making a written determination that it is acceptable 
in light of the requirements of this subpart. The Regional 
Administrator's written determination shall be available to the public 
upon request.

(Approved by the Office of Management and Budget under control number 
1205-0039)

(Pub. L. No. 96-511, 94 Stat. 2812 (44 U.S.C. 3501 et seq.))

[45 FR 39459, June 10, 1980, as amended at 47 FR 145, Jan. 5, 1982]



Sec. 653.113  Processing apparent violations.

    (a) If a State agency employee observes, has reason to believe, or 
is in receipt of information regarding a suspected violation of 
employment related laws or JS regulations by an employer, except as 
provided at Sec. 653.503 (field checks) or Sec. 658.400 of this 
chapter (complaints), the employee shall document the suspected 
violation and refer this information to the local office manager.
    (b) If the employer has filed a job order with the JS office within 
the past 12 months, the local office shall attempt informal resolution. 
If the employer does not remedy the suspected violation within 5 working 
days, procedures at part 658, subpart F of this chapter shall be 
initiated and, if a violation of an employment related law is involved, 
the violation shall be referred to the appropriate enforcement agency in 
writing.
    (c) If the employer has not filed a job order with the local office 
during the past 12 months, the suspected violation of an employment 
related law shall be referred to the appropriate enforcement agency in 
writing.

Subpart C--Services for Veterans [Reserved]

Subpart D--Services to the Handicapped [Reserved]

Subpart E--Support Services [Reserved]



             Subpart F_Agricultural Clearance Order Activity

    Source: 45 FR 39466, June 10, 1980, unless otherwise noted.

[[Page 451]]



Sec. 653.500  Purpose and scope of subpart.

    This section contains the requirements for acceptance and handling 
of intrastate and interstate job clearance orders seeking workers to 
perform agricultural or food processing work on a less than year round 
basis. Orders seeking workers to perform agricultural or food processing 
work on a year round basis which involves permanent relocation are not 
subject to the requirements of this subpart. This section, therefore, 
contains requirements which affect not only applicants who are 
categorized as MSFWs based on their past employment, but all workers who 
are recruited through the JS intrastate and interstate clearance systems 
for less than year round agricultural or food processing work.



Sec. 653.501  Requirements for accepting and processing clearance orders.

    (a) In view of the statutorily established basic function of the job 
service as a no-fee labor exchange, that is, as a forum for bringing 
together employers and job seekers, neither the ETA nor the State 
agencies are guarantors of the accuracy or truthfulness of information 
contained on job orders submitted by employers. Nor does any job order 
accepted or recruited upon by the JS constitute a contractual job offer 
to which the ETA or a State agency is in any way a party. Nevertheless, 
if the ETA or a State agency discovers that an employer's job order 
contains a material misrepresentation, the procedures of subpart F of 
part 658 of this chapter shall be followed.
    (b) Intrastate and interstate job orders shall include the language 
of the first two sentences of paragraph (a) of this section.
    (c) No local office or State agency shall place into intrastate or 
interstate clearance any job order seeking workers to perform 
agricultural or food processing work before reviewing it pursuant to 
paragraphs (d) or (e) of this section, as applicable.
    (d) No local office shall place a job order seeking workers to 
perform agricultural or food processing work into intrastate clearance 
unless:
    (1) The job order does not contain an unlawful discriminatory 
specification by race, color, religion, national origin, age, sex, or 
mental or physical status unrelated to job performance (handicap);
    (2) The employer has signed the job order and the job order states 
all the material terms and conditions of the employment, including:
    (i) The crop;
    (ii) The nature of the work;
    (iii) The anticipated period and hours of employment;
    (iv) The anticipated starting and ending date of employment and the 
anticipated number of days and hours per week for which work will be 
available;
    (v) An assurance that:
    (A) The employer will provide to workers referred through the 
clearance system the number of hours of work cited in paragraph 
(d)(2)(iv) of this section for the week beginning with the anticipated 
date of need, unless the employer has amended the date of need at least 
10 working days prior to the original date of need (pursuant to 
paragraph (d)(2)(xiii) of this section) by so notifying the order-
holding office. The State agency shall make a record of this 
notification and shall attempt to inform referred migrant workers of the 
change in accordance with the following procedure:
    (B) All workers referred through the clearance system, farm labor 
contractors on behalf of migrant workers or family heads on behalf of 
migrant family members referred through the clearance system shall be 
notified to contact a local job service office, preferably the order-
holding office, to verify the date of need cited no sooner than 9 
working days and no later than 5 working days prior to the original date 
of need cited on the job order; and that failure to do so will 
disqualify the referred migrant worker from the assurance provided in 
paragraphs (a) and (d) of this section.
    (C) If the worker referred through the clearance system contacts a 
local office (in any State) other than the order holding office, that 
local office shall assist the referred worker in contacting the order 
holding office on a timely basis. Such assistance shall include, if 
necessary, contacting the order holding office by telephone or other 
timely means on behalf of the

[[Page 452]]

worker referred through the clearance system.
    (D) If the employer fails to notify the order-holding office at 
least 10 working days prior to the original date of need the employer 
shall pay eligible (pursuant to paragraph (b) of this section) workers 
referred through the clearance system the specified hourly rate of pay, 
or in the absence of a specified hourly rate of pay, the higher of the 
Federal or State minimum wage for the first week starting with the 
originally anticipated date of need.
    (E) Employers may require workers to perform alternative work if the 
guarantee in this section is invoked and if such alternative work is 
stated on the job order.
    (F) For the purposes of this assurance, ``working days'' shall mean 
those days that the order-holding local office is open for public 
business.
    (vi) The hourly wage rate or the piece rate estimated in hourly wage 
rate equivalents for each activity and unit size;
    (vii) Any deductions to be made from wages;
    (viii) A specification of any non-monetary benefits to be provided 
by the employer;
    (ix) Any hours, days or weeks for which work is guaranteed, and, for 
each guaranteed week of work except as provided in paragraph (d)(2)(v) 
of this section, the exclusive manner in which the grarantee may be 
abated due to weather conditions or other acts of God beyond the 
employer's control;
    (x) Any bonus or work incentive payments or other expenses which 
will be paid by the employer in addition to the basic wage rate, 
including the anticipated time period(s) within which such payments will 
be made. No such payments, however, shall be made contingent upon the 
worker continuing employment beyond the period of employment specified 
in the job order or, in the case of any worker with children, beyond the 
time needed to return home for the beginning of the school year;
    (xi) An assurance that no extension of employment beyond the period 
of employment specified in the job order shall relieve the employer from 
paying the wages already earned, or if specified in the job order as a 
term of employment, providing transportation or paying transportation 
expenses to the worker's home;
    (xii) Assurances that the working conditions comply with applicable 
Federal and State minimum wage, child labor, social security, health and 
safety, farm labor contractor registration and other employment-related 
laws;
    (xiii) An assurance that the employer will expeditiously notify the 
order-holding local office or State agency by telephone immediately upon 
learning that a crop is maturing earlier or later, or that weather 
conditions, over-recruitment or other factors have changed the terms and 
conditions of employment. For orders submitted in conjunction with 
requests for foreign workers, an assurance that the employer will 
follow-up the telephone notification in writing.
    (xiv) An assurance that the employer, if acting as a farm labor 
contractor (``FLC'') or farm labor contractor employee (``FLCE'') on the 
order, has a valid FLC certificate or FLCE identification card; and
    (xv) An assurance of the availability of no cost or public housing 
which meets the Federal standards and which is sufficient to house the 
specified number of workers requested through the clearance system. This 
assurance shall cover the availability of housing for only those 
workers, and, when applicable, family members who are unable to return 
to their residence in the same day.
    (xvi) An assurance that outreach workers shall have reasonable 
access to the workers in the conduct of outreach activities pursuant to 
Sec. 653.107.
    (3) The job order contains all the material terms and conditions of 
the job, and the employer assures that all items therein are actual 
conditions of the job by signing the following statement: ``This job 
order describes the actual terms and conditions of the employment being 
offered by me and contains all the material terms and conditions of the 
job'';
    (4) The wages and working conditions offered are not less than the 
prevailing wages and working conditions among similarly employed 
agricultural workers in the area of intended employment

[[Page 453]]

or the applicable Federal or State minimum wage, whichever is higher. If 
the wages offered are expressed as piece rates or as base rates and 
bonuses, the employer shall make the method of calculating the wage and 
supporting materials available to JS staff who shall check if the 
employer's calculation of the estimated hourly wage rate is reasonably 
accurate and is not less than the prevailing wage rate or applicable 
Federal or State minimum wage, whichever is higher;
    (5) The employer has agreed to provide or pay for the transportation 
of the workers and their families on at least the same terms as 
transportation is commonly provided by employers in the area of intended 
employment to agricultural workers and their families recruited from the 
same area of supply;
    (6) JS staff have determined, through a preoccupancy housing 
inspection performed by JS staff or other appropriate public agencies, 
that the housing assured by the employer is in fact available, and meets 
the full set of standards set forth at 20 CFR part 654, subpart E which 
details applicable housing standards and contains provisions for 
conditional access to the clearance system; except that mobile range 
housing for sheepherders shall meet existing Departmental guidelines; 
and
    (7) The local office and employer have attempted and have not been 
able to obtain sufficient workers within the local labor market area, or 
the local office anticipates a shortage of local workers.
    (e) No state agency shall place a job order seeking workers to 
perform agricultural or food processing work with interstate clearance 
unless:
    (1) The job order meets the requirements set forth at paragraphs 
(d)(1) through (d)(6) of this section;
    (2) The State agency and the employer have attempted and have not 
been able to locate sufficient workers within the state, or the State 
agency anticipates a shortage of workers within the State; and
    (3) The order has been reviewed and approved by the ETA regional 
office within 10 working days after receipt from the State agency, and 
the Regional Administrator has approved the areas of supply to which the 
order shall be extended. Any denial by the Regional Administrator shall 
be in writing and set forth the reasons for the denial.
    (f) (1) The local office shall use the agricultural clearance form 
prescribed by ETA, and shall see that all necessary items on the form 
are completed, including items on attachments to the form prescribed by 
ETA.
    (2) (i) The original of an interstate agricultural clearance form 
shall be retained for the order-holding local office files. If the 
clearance order is submitted in conjunction with a request for 
certification of temporary alien agricultural workers, the procedures at 
20 CFR 655.204(a) shall be followed. For other clearance orders, the 
order-holding local office shall transmit a complete copy to the State 
office. The State office shall distribute additional copies of the form 
with all attachments except that the State agency may, at its 
discretion, delegate this distribution to the local office, as follows:
    (A) At least one clear copy to each of the State agencies selected 
for recruitment (areas of supply);
    (B) One copy to each applicant-holding ETA regional office;
    (C) One copy to the order-holding ETA regional office; and
    (D) One copy to the Regional Farm Labor Coordinated Enforcement 
Committee in the area of employment, Attn: ESA Regional Administrator.
    (ii) Applicant-holding offices shall provide workers referred on 
clearance orders with a checklist summarizing wages, working conditions 
and other material specifications on the job order. Such checklists, 
where necessary, shall be in English and Spanish. The checklist shall 
include language notifying the worker that a copy of the complete order 
is available for inspection. One copy of the form with all attachments 
shall be available for inspection in the applicant-holding office and 
the order-holding office. State agencies shall use a standard checklist 
format provided by ETA unless a variance has been approved by the 
Regional Administrator.
    (iii) The applicant-holding office shall give each referred worker a 
copy

[[Page 454]]

of a description of worker's rights developed by the National Farm Labor 
Coordinated Enforcement Committee.
    (g) The local office may place an intrastate or interstate order 
seeking workers to perform agricultural or food processing work for a 
specific farm labor contractor or worker preferred by the employer 
provided the order meets JS nondiscrimination criteria. The order would 
not meet such criteria, for example, if it requested a ``white male crew 
leader'' or ``any white male crew leader.''
    (h) In local offices which have been designated significant MSFW 
bilingual offices by ETA, and in any other local office with bilingual 
staff, bilingual (English-Spanish) staff shall assist all agricultural 
workers, upon request, to understand the terms and conditions of 
employment set forth in intrastate and interstate job orders and shall 
provide such workers with checklists in Spanish showing wage payment 
schedules, working conditions and other material specifications of the 
job order.
    (i) No agricultural or food processing order shall be included in 
job bank listings available outside the local office commuting area 
unless the order has been processed according to requirements for 
intrastate or interstate clearance contained in this subpart. If the job 
bank for the local office area incorporates offices beyond the local 
office commuting area, the order may be included in the listing but must 
be clearly designated as prohibiting referral from outside the community 
area, unless the requirements of this subpart are met.
    (j) If the labor supply State agency accepts a clearance order, the 
State agency shall actively recruit workers for referral. In the event a 
potential labor supply State agency rejects a clearance order, the 
reasons for rejection shall be documented and submitted to the Regional 
Administrator having jurisdiction over the State agency. The Regional 
Administrator will examine the reasons for rejection, and, if the 
Regional Administrator agrees, will inform the Regional Administrator 
with jurisdiction over the order-holding State agency of the rejection 
and the justifiable reasons. If the Regional Administrator who receives 
the notification of rejection does not concur with the reasons for 
rejection, that Regional Administrator will so inform the USES 
Administrator, who will make a final determination on the acceptance or 
rejection of the order.

(Approved by the Office of Management and Budget under control number 
1205-0039)

(Pub. L. No. 96-511, 94 Stat. 2812 (44 U.S.C. 3501 et seq.))

[45 FR 39466, June 10, 1980, as amended at 47 FR 145, Jan. 5, 1982]



Sec. 653.502  Changes in crop and recruitment situations.

    (a) If a labor demand State agency learns that a crop is maturing 
earlier than expected or that other material factors, including weather 
conditions and recruitment levels, have changed, the agency shall 
immediately contact the labor supply State agency, who shall in turn 
immediately inform crews and families scheduled through the JS clearance 
system of the changed circumstances and adjust arrangements on behalf of 
such crews of families.
    (b) When there is a delay in the date of need, procedures required 
of employers and workers at Sec. 653.501(d)(2)(v) shall be followed. 
State agencies shall document notifications by employers and contacts by 
individual migrant workers or crew leaders on behalf of migrant workers 
or family heads on behalf of migrant family members to verify the date 
of need.
    (c) In addition, if weather conditions, overrecruitment or other 
conditions have eliminated the scheduled job opportunities, the State 
agencies involved shall make every effort to place the workers in 
alternate job opportunities as soon as possible, especially if the 
worker(s) is already enroute or at the job site. JS staff shall keep 
records of actions under this section.



Sec. 653.503  Field checks.

    (a) The State agency, through its local offices or otherwise, shall 
conduct random, unannounced field checks at a significant number of 
agricultural worksites to which JS placements have been made through the 
intrastate or interstate clearance system. These field checks shall 
include visit(s) to the

[[Page 455]]

worksite at a time when workers are there. Both the employees and the 
employer shall be consulted, and JS shall determine and document whether 
wages, hours, working and housing conditions are as specified in job 
orders. JS staff shall keep records of all field checks. If State agency 
personnel observe or receive information, or otherwise have reason to 
believe that conditions are not as stated on the job order or that an 
employer is violating an employment related law, the State agency shall 
document the finding and attempt informal resolution. If the matter has 
not been resolved within 5 working days, the State agency shall follow 
the procedures set forth at subpart F of part 658 of this chapter. 
Violations of employment related laws shall be referred to appropriate 
enforcement agencies in writing.
    (b) State agencies, to the maximum extent possible, shall make 
formal or informal arrangements with appropriate State and Federal 
enforcement agencies pursuant to which such agencies will agree to 
conduct compliance reviews in their areas of enforcement responsibility 
at agricultural worksites where the State agency has placed workers 
through the agricultural clearance system and to inform the State agency 
if violations are found. An enforcement agency compliance review shall 
satisfy the requirement for State agency field checks where all aspects 
of wages, hours, working and housing conditions have been reviewed by 
the enforcement agency reviews. The State agency shall supplement 
enforcement agency efforts with field checks focusing on areas not 
addressed by enforcement agencies. State agencies shall report 
difficulties in making such formal or informal arrangements with State 
enforcement agencies as well as deficiencies in State enforcement agency 
activities to the Regional Farm Labor Coordinated Enforcement Committee.

(Approved by the Office of Management and Budget under control number 
1205-0039)

(Pub. L. No. 96-511, 94 Stat. 2812 (44 U.S.C. 3501 et seq.))

[46 FR 39466, June 10, 1980, as amended at 47 FR 145, Jan. 5, 1982]



PART 654_SPECIAL RESPONSIBILITIES OF THE EMPLOYMENT SERVICE SYSTEM
--Table of Contents




         Subpart A_Responsibilities Under Executive Order 12073

Sec.
654.1 Purpose of subpart.
654.3 Description of Executive Order 12073.
654.4 Definitions.
654.5 Classification of labor surplus areas.
654.6 Termination of classification.
654.7 Publication of area classifications.
654.8 Services to firms and individuals in labor surplus areas.
654.9 Filing of complaints.
654.10 Transition provisions.

         Subpart B_Responsibilities Under Executive Order 10582

654.11 Purpose of subpart.
654.12 Description of Executive Order 10582.
654.13 Determination of areas of substantial unemployment.
654.14 Filing of complaints.

Subparts C-D [Reserved]

               Subpart E_Housing for Agricultural Workers

                        Purpose and Applicability

654.400 Scope and purpose.
654.401 Applicability; transitional provisions.
654.402 Variances.
654.403 Conditional access to the intrastate or interstate clearance 
          system.

                            Housing Standards

654.404 Housing site.
654.405 Water supply.
654.406 Excreta and liquid waste disposal.
654.407 Housing.
654.408 Screening.
654.409 Heating.
654.410 Electricity and lighting.
654.411 Toilets.
654.412 Bathing, laundry, and handwashing.
654.413 Cooking and eating facilities.
654.414 Garbage and other refuse.
654.415 Insect and rodent control.
654.416 Sleeping facilities.
654.417 Fire, safety, and first aid.

    Source: 44 FR 1689, Jan. 5, 1979, unless otherwise noted.

[[Page 456]]



         Subpart A_Responsibilities Under Executive Order 12073

    Authority: 41 U.S.C. 10a et seq; 29 U.S.C. 49 et seq; 15 U.S.C. 
644(n); E.O. 12073; 10582, as amended by E.O. 11051 and 12148.



Sec. 654.1  Purpose of subpart.

    This subpart implements the responsibilities of the Secretary of 
Labor in classifying labor surplus areas in accordance with Executive 
Order 12073 (Federal Procurement in Labor Surplus Areas). The Secretary 
of Labor has delegated responsibilities to the Assistant Secretary, 
Employment and Training Administration.

[44 FR 1689, Jan. 5, 1979, as amended at 48 FR 15616, Apr. 12, 1983]



Sec. 654.3  Description of Executive Order 12073.

    Executive Order 12073 requires executive agencies to emphasize 
procurement set-asides in labor surplus areas. The Secretary of Labor is 
responsible under this order for classifying and designating labor 
surplus areas.

[44 FR 1689, Jan. 5, 1979, as amended at 48 FR 15616, Apr. 12, 1983]



Sec. 654.4  Definitions.

    (a) Assistant Secretary shall mean Assistant Secretary for 
Employment and Training, U.S. Department of Labor.
    (b) Civil jurisdiction shall mean:
    (1) Cities of 25,000 or more population on the basis of the most 
recently available Bureau of the Census estimates; or
    (2) Towns and townships in the States of New Jersey, New York, 
Michigan, and Pennsylvania of 25,000 or more population and which 
possess powers and functions similar to cities; or
    (3) All counties, except those counties which contain any of the 
types of political jurisdictions defined in paragraphs (b) (1) and (2) 
of this section; or
    (4) All other counties are defined as ``balance of county'' (i.e., 
total county less component cities and townships identified in 
paragraphs (b) (1) and (2) of this section); or
    (5) County equivalents which are towns in the States of 
Massachusetts, Rhode Island and Connecticut.
    (c) Labor surplus area shall mean a civil jurisdiction that, in 
accordance with the criteria specified in Sec. 654.5, has been 
classified as a labor surplus area.
    (d) Reference period shall mean the two year period ending December 
31 of the year prior to the October 1 annual date of eligibility 
determination.

[44 FR 1689, Jan. 5, 1979, as amended at 44 FR 26071, May 5, 1979; 48 FR 
15616, Apr. 12, 1983; 53 FR 23347, June 21, 1988]



Sec. 654.5  Classification of labor surplus areas.

    (a) Basic criteria. The Assistant Secretary shall classify a civil 
jurisdiction as a labor surplus area whenever, as determined by the 
Bureau of Labor Statistics, the average unemployment rate for all 
civilian workers in the civil jurisdiction for the reference period is 
(1) 120 percent of the national average unemployment rate for civilian 
workers or higher for the reference period as determined by the Bureau 
of Labor Statistics, or (2) 10 percent or higher. No civil jurisdiction 
shall be classified as a labor surplus area if the average unemployment 
rate for all civilian workers for the reference period is less than 6.0 
percent.
    (b) Criteria for exceptional circumstances. The Assistant Secretary, 
upon petition submitted by the appropriate State employment security 
agency, may classify a civil jurisdiction, a Metropolitan Statistical 
Area, or a Primary Metropolitan Statistical Area as a labor surplus area 
whenever such an area meets or is expected to meet the unemployment 
tests established under Sec. 654.5(a) as a result of exceptional 
circumstances. For purposes of this paragraph ``exceptional 
circumstances'' shall mean catastrophic events, such as natural 
disasters, plant closings, and contract cancellations expected to have a 
long-term impact on labor market area conditions, discounting temporary 
or seasonal factors. For purposes of this paragraph, ``Metropolitan 
Statistical Area'' and ``Primary Metropolitan Statistical Area'' shall 
mean the areas officially

[[Page 457]]

defined and designated as such by the Office of Management and Budget.

(Approved by OMB under control number 1205-0207)

[48 FR 15616, Apr. 12, 1983, as amended at 53 FR 23347, June 21, 1988]



Sec. 654.6  Termination of classification.

    (a) Basic procedure. The Assistant Secretary shall terminate the 
classification of a civil jurisdiction as a labor surplus area after any 
year in which the Assistant Secretary determines that the criteria 
established under Sec. 654.5 (a) are no longer met.
    (b) Procedure for exceptional circumstances. The Assistant Secretary 
shall terminate the classification of a civil jurisdiction classified as 
a labor surplus area pursuant to the provisions of Sec. 654.5(b) after 
any year in which the Assistant Secretary determines that the 
exceptional circumstances criteria of that paragraph are no longer met.

[44 FR 1689, Jan. 5, 1979, as amended at 48 FR 15616, Apr. 12, 1983]



Sec. 654.7  Publication of area classifications.

    The Assistant Secretary shall publish annually a list of labor 
surplus areas together with geographic descriptions thereof. The 
Assistant Secretary periodically may cause these lists to be published 
in the Federal Register.

[44 FR 1689, Jan. 5, 1979, as amended at 48 FR 15616, Apr. 12, 1983]



Sec. 654.8  Services to firms and individuals in labor surplus areas.

    To carry out the purposes and policy objectives of Executive Order 
12073 and Executive Order 10582, the Assistant Secretary shall cooperate 
with and assist the State employment service agencies and the Secretary 
of Commerce, as appropriate, to:
    (a) Provide relevant labor market data and related economic 
information to assist in the initiation of industrial expansion programs 
in labor surplus areas;
    (b) Identify upon request the skills and numbers of unemployed 
persons available for work in labor surplus areas, providing such 
information to firms interested in establishing new plants and 
facilities or expanding existing plants and facilities in such areas;
    (c) Identify the occupational composition and skill requirements of 
industries contemplating locating in labor surplus areas and make such 
information available to training and apprenticeship agencies and 
resources in the community for purposes of appropriate training and 
skill development;
    (d) Identify unemployed individuals in need of, and having the 
potential for, training in occupations and skills required by new or 
expanding industries and refer such individuals to appropriate training 
opportunities;
    (e) Receive job openings on a voluntary basis and/or under the 
mandatory listing program provided by 38 U.S.C. 2012 and Executive Order 
11701 and refer qualified unemployed workers to such openings, making 
appropriate efforts to refer to such openings qualified individuals who 
reside in the labor surplus area.

[44 FR 1689, Jan. 5, 1979, as amended at 48 FR 15616, Apr. 12, 1983]



Sec. 654.9  Filing of complaints.

    Complaints alleging that the Department of Labor has violated the 
labor surplus area regulations should be mailed to the Assistant 
Secretary for Employment and Training, U.S. Department of Labor, 
Washington, DC 20210. Such complaints should include: (a) The 
allegations of wrongdoing; (b) the date of the incident; and (c) any 
other relevant information available to the complainant. The Assistant 
Secretary shall make a determination and respond to the complainant 
after investigation of the incident. If the complaint is not resolved 
following this investigation, the Assistant Secretary, at his 
discretion, may offer, in writing by certified mail, the complainant a 
hearing before a Department of Labor Administrative Law Judge, provided 
that the complainant requests such a hearing from the Assistant 
Secretary within 20 working days of the certified date of receipt of the 
Assistant Secretary's offer of a hearing.

[48 FR 15616, Apr. 12, 1983]

[[Page 458]]



Sec. 654.10  Transition provisions.

    The annual list of labor surplus areas for the period June 1, 1982, 
through May 31, 1983, shall be extended through September 30, 1983.

[48 FR 15616, Apr. 12, 1983]



         Subpart B_Responsibilities Under Executive Order 10582

    Authority: 41 U.S.C. 10a et seq.; 29 U.S.C. 49 et seq.; 15 U.S.C. 
644(n); E.O. 12073, E.O. 10582 as amended by E.O. 11051 and 12148.



Sec. 654.11  Purpose of subpart.

    This subpart implements the responsibilities of the Secretary of 
Labor in determining areas of substantial unemployment in accordance 
with Executive Order 10582 issued pursuant to the Buy American Act, 41 
U.S.C. 10a et seq.



Sec. 654.12  Description of Executive Order 10582.

    (a) Under the Buy American Act, heads of executive agencies are 
required to determine, as a condition precedent to the purchase by their 
agencies of materials of foreign origin for public use within the United 
States, (1) that the price of like materials of domestic origin is 
unreasonable, or (2) that the purchase of like materials of domestic 
origin is inconsistent with the public interest.
    (b) Section 3(c) of Executive Order 10582 issued pursuant to the Buy 
American Act permits executive agencies to reject a bid or offer to 
furnish materials of foreign origin in any situation in which the 
domestic supplier, offering the lowest price for furnishing the desired 
materials, undertakes to produce substantially all of the materials in 
areas of substantial unemployment, as determined by the Secretary of 
Labor.



Sec. 654.13  Determination of areas of substantial unemployment.

    An area of substantial unemployment, for purposes of Executive Order 
10582, shall be any area classified as a labor surplus area at Sec. 
654.5 of this part pursuant to the procedures set forth at subpart A of 
this part.



Sec. 654.14  Filing of complaints.

    Complaints arising under subpart B of this part alleging that the 
Department of Labor has violated the labor surplus area regulations 
shall be made pursuant to the procedures set forth at Sec. 654.9 of 
this part.

[48 FR 15616, Apr. 12, 1983]

Subparts C-D [Reserved]



               Subpart E_Housing for Agricultural Workers

    Authority: 29 U.S.C. 49k; 8 U.S.C. 1188(c)(4); 41 Op.A.G. 406 
(1959).

    Source: 45 FR 14182, Mar. 4, 1980, unless otherwise noted.

                        Purpose and Applicability



Sec. 654.400  Scope and purpose.

    (a) This subpart sets forth the Employment and Training 
Administration standards for agricultural housing. Local Job Service 
offices, as part of the State employment service agencies and in 
cooperation with the United States Employment Service, assist employers 
in recruiting agricultural workers from places outside the area of 
intended employment. The experiences of the employment service indicate 
that employees so referred have on many occasions been provided with 
inadequate, unsafe, and unsanitary housing conditions. To discourage 
this practice, it is the policy of the Federal-State employment service 
system, as set forth in Sec. 653.108 of this chapter, to deny its 
intrastate and interstate recruitment services to employers until the 
State employment service agency has ascertained that the employer's 
housing meets certain standards.
    (b) To implement this policy, Sec. 653.108 of this chapter provides 
that recruitment services shall be denied unless the employer has signed 
an assurance, a preoccupancy inspection has been conducted and the ES 
staff has ascertained that, with respect to intrastate clearance, if the 
workers are to be housed, the employer's housing meets or, with respect 
to interstate clearance, that the employer will provide housing for the 
workers which meets either the full set of standards

[[Page 459]]

set forth at 29 CFR 1910.142 or the full set of standards set forth in 
this subpart. Whichever is applicable under the criteria set forth in 
Sec. 654.401; except that for mobile range housing for sheepherders, 
the housing shall meet existing Departmental guidelines.

[45 FR 14182, Mar. 4, 1980; 45 FR 22901, Apr. 4, 1980]



Sec. 654.401  Applicability; transitional provisions.

    (a) Employers whose housing was constructed in accordance with the 
ETA housing standards may continue to follow the full set of ETA 
standards set forth in this subpart only where prior to April 3, 1980 
the housing was completed or under construction, or where prior to March 
4, 1980 a contract for the construction of the specific housing was 
signed.
    (b) To effectuate these transitional provisions, agricultural 
housing to which this subpart applies and which complies with the full 
set of standards set forth in this subpart shall be considered to be in 
compliance with the Occupational Safety and Health Administration 
temporary labor camp standards at 29 CFR 1910.142.



Sec. 654.402  Variances.

    (a) An employer may apply for a permanent, structural variance from 
a specific standard(s) in this subpart by filing a written application 
for such a variance with the local Job Service office serving the area 
in which the housing is located. This application must be filed by June 
2, 1980 and must:
    (1) Clearly specify the standard(s) from which the variance is 
desired;
    (2) Provide adequate justification that the variance is necessary to 
obtain a beneficial use of an existing facility, and to prevent a 
practical difficulty or unnecessary hardship; and
    (3) Clearly set forth the specific alternative measures which the 
employer has taken to protect the health and safety of workers and 
adequately show that such alternative measures have achieved the same 
result as the standard(s) from which the employer desires the variance.
    (b) Upon receipt of a written request for a variance under paragraph 
(a) of this section, the local Job Service office shall send the request 
to the State office which, in turn, shall forward it to the Regional 
Administrator, Employment and Training Administration (RA). The RA shall 
review the matter and, after consultation with OSHA, shall either grant 
or deny the request for a variance.
    (c) The variance granted by the RA shall be in writing, shall state 
the particular standard(s) involved, and shall state as conditions of 
the variance the specific alternative measures which have been taken to 
protect the health and safety of the workers. The RA shall send the 
approved variance to the employer and shall send copies to the Regional 
Administrator of the Occupational Safety and Health Administration, the 
Regional Administrator of the Employment Standards Administration, and 
the appropriate State agency and the local Job Service office. The 
employer shall submit and the local Job Service office shall attach 
copies of the approved variance to each of the employer's job orders 
which is placed into intrastate or interstate clearance.
    (d) If the RA denies the request for a variance, the RA shall 
provide written notice stating the reasons for the denial to the 
employer, the appropriate State agency and the local Job Service office. 
The notice shall also offer the employer an opportunity to request a 
hearing before a DOL Hearing Officer, provided the employer requests 
such a hearing from the RA within 30 calendar days of the date of the 
notice. The request for a hearing shall be handled in accordance with 
the employment service complaint procedures set forth at Sec. Sec. 
658.421 (i) and (j), 658.422 and 658.423 of this chapter.
    (e) The procedures of paragraphs (a) through (d) of this section 
shall only apply to an employer who has chosen, as evidenced by its 
written request for a variance, to comply with the ETA housing standards 
at Sec. Sec. 654.404--654.417 of this subpart.



Sec. 654.403  Conditional access to the intrastate or interstate 
clearance system.

    (a) Filing requests for conditional access--(1) ``Noncriteria'' 
employers. Except as provided in paragraph (a)(2) of this section, an 
employer whose housing

[[Page 460]]

does not meet applicable standards may file with the local Job Service 
office serving the area in which its housing is located, a written 
request that its job orders be conditionally allowed into the intrastate 
or interstate clearance system, provided that the employer's request 
assures that its housing will be in full compliance with the 
requirements of the applicable housing standards at least 20 calendar 
days (giving the specific date) before the housing is to be occupied.
    (2) ``Criteria'' employers. If the request for conditional access 
described in paragraph (a)(1) of this section is from an employer filing 
a job order pursuant to an application for temporary alien agricultural 
labor certification for H-2A alien agricultural workers or H-2 alien 
workers under subpart B or subpart C, respectively, of part 655 of this 
chapter, the request shall be filed with the RA as an attachment to the 
application for temporary alien agricultural labor certification.
    (3) Assurance. The employer's request pursuant to paragraphs (a)(1) 
or (a)(2) of this section shall contain an assurance that the housing 
will be in full compliance with the applicable housing standards at 
least 20 calendar days (stating the specific date) before the housing is 
to be occupied.
    (b) Processing requests--(1) State agency processing. Upon receipt 
of a written request for conditional access to the intrastate or 
interstate clearance system under paragraph (a)(1) of this section, the 
local Job Service office shall send the request to the State office, 
which, in turn, shall forward it to the Regional Administrator, 
Employment and Training Administration, (RA).
    (2) Reqional office processing and determination. Upon receipt of a 
request for conditional access pursuant to paragraph (a)(2) or paragraph 
(b)(1) of this section, the RA shall review the matter and, as 
appropriate, shall either grant or deny the request.
    (c) Authorization. The authorization for conditional access to the 
intrastate or interstate clearance system shall be in writing, and shall 
state that although the housing does not comply with the applicable 
standards, the employer's job order may be placed into intrastate or 
interstate clearance until a specified date. The RA shall send the 
authorization to the employer and shall send copies to the appropriate 
State agency and local Job Service office. The employer shall submit and 
the local Job Service shall attach copies of the authorization to each 
of the employer's job orders which is placed into intrastate or 
interstate clearance.
    (d) Notice of denial. If the RA denies the request for conditional 
access to the intrastate or interstate clearance system, the RA shall 
provide written notice to the employer, the appropriate State agency, 
and the local Job Service office, stating the reasons for the denial.
    (e) Inspection. (1) The local Job Service office serving the area 
containing the housing of any employer granted conditional access to the 
intrastate or interstate clearance system shall assure that the housing 
is inspected no later than the date by which the employer has promised 
to have its housing in compliance with the requirements of this subpart. 
An employer, however, may request an earlier preliminary inspection. If, 
on the date set forth in the authorization, the housing is not in full 
compliance with the applicable housing standards as assured in the 
request for conditional access, the local Job Service office shall 
afford the employer five calendar days to bring the housing into full 
compliance. After the five-calendar-day period, if the housing is not in 
full compliance with the applicable housing standards as assured in the 
request for conditional access, the local Job Service office 
immediately:
    (i) Shall notify the RA;
    (ii) Shall remove the employer's job orders from intrastate and 
interstate clearance; and
    (iii) Shall, if workers have been recruited against these orders, in 
cooperation with the employment service agencies in other States, make 
every reasonable attempt to locate and notify the appropriate crew 
leaders or workers, and to find alternative and comparable employment 
for the workers.

[52 FR 20506, June 1, 1987, as amended at 64 FR 34965, June 29, 1999]

[[Page 461]]

                            Housing Standards



Sec. 654.404  Housing site.

    (a) Housing sites shall be well drained and free from depressions in 
which water may stagnate. They shall be located where the disposal of 
sewage is provided in a manner which neither creates nor is likely to 
create a nuisance, or a hazard to health.
    (b) Housing shall not be subject to, or in proximity to conditions 
that create or are likely to create offensive odors, flies, noise, 
traffic, or any similar hazards.
    (c) Grounds within the housing site shall be free from debris, 
noxious plants (poison ivy, etc.) and uncontrolled weeds or brush.
    (d) The housing site shall provide a space for recreation reasonably 
related to the size of the facility and the type of occupancy.



Sec. 654.405  Water supply.

    (a) An adequate and convenient supply of water that meets the 
standards of the State health authority shall be provided.
    (b) A cold water tap shall be available within 100 feet of each 
individual living unit when water is not provided in the unit. Adequate 
drainage facilities shall be provided for overflow and spillage.
    (c) Common drinking cups shall not be permitted.



Sec. 654.406  Excreta and liquid waste disposal.

    (a) Facilities shall be provided and maintained for effective 
disposal of excreta and liquid waste. Raw or treated liquid waste shall 
not be discharged or allowed to accumulate on the ground surface.
    (b) Where public sewer systems are available, all facilities for 
disposal of excreta and liquid wastes shall be connected thereto.
    (c) Where public sewers are not available, a subsurface septic tank-
seepage system or other type of liquid waste treatment and disposal 
system, privies or portable toilets shall be provided. Any requirements 
of the State health authority shall be complied with.



Sec. 654.407  Housing.

    (a) Housing shall be structurally sound, in good repair, in a 
sanitary condition and shall provide protection to the occupants against 
the elements.
    (b) Housing shall have flooring constructed of rigid materials, 
smooth finished, readily cleanable, and so located as to prevent the 
entrance of ground and surface water.
    (c) The following space requirements shall be provided:
    (1) For sleeping purposes only in family units and in dormitory 
accommodations using single beds, not less than 50 square feet of floor 
space per occupant;
    (2) For sleeping purposes in dormitory accommodations using double 
bunk beds only, not less than 40 square feet per occupant;
    (3) For combined cooking, eating, and sleeping purposes not less 
than 60 square feet of floor space per occupant.
    (d) Housing used for families with one or more children over 6 years 
of age shall have a room or partitioned sleeping area for the husband 
and wife. The partition shall be of rigid materials and installed so as 
to provide reasonable privacy.
    (e) Separate sleeping accommodations shall be provided for each sex 
or each family.
    (f) Adequate and separate arrangements for hanging clothing and 
storing personal effects for each person or family shall be provided.
    (g) At least one-half of the floor area in each living unit shall 
have a minimum ceiling height of 7 feet. No floor space shall be counted 
toward minimum requirements where the ceiling height is less than 5 
feet.
    (h) Each habitable room (not including partitioned areas) shall have 
at least one windown or skylight opening directly to the out-of-doors. 
The minimum total window or skylight area, including windows in doors, 
shall equal at least 10 percent of the usable floor area. The total 
openable area shall equal at least 45 percent of the minimum window or 
skylight area required, except where comparably adequate ventilation is 
supplied by mechanical or some other method.

[[Page 462]]



Sec. 654.408  Screening.

    (a) All outside openings shall be protected with screening of not 
less than 16 mesh.
    (b) All screen doors shall be tight fitting, in good repair, and 
equipped with self-closing devices.



Sec. 654.409  Heating.

    (a) All living quarters and service rooms shall be provided with 
properly installed, operable heating equipment capable of maintaining a 
temperature of at least 68[deg] F. if during the period of normal 
occupancy the temperature in such quarters falls below 68[deg].
    (b) Any stoves or other sources of heat utilizing combustible fuel 
shall be installed and vented in such a manner as to prevent fire 
hazards and a dangerous concentration of gases. No portable heaters 
other than those operated by electricity shall be provided. If a solid 
or liquid fuel stove is used in a room with wooden or other combustible 
flooring, there shall be a concrete slab, insulated metal sheet, or 
other fireproof material on the floor under each stove, extending at 
least 18 inches beyond the perimeter of the base of the stove.
    (c) Any wall or ceiling within 18 inches of a solid or liquid fuel 
stove or a stovepipe shall be of fireproof material. A vented metal 
collar shall be installed around a stovepipe, or vent passing through a 
wall, ceiling, floor or roof.
    (d) When a heating system has automatic controls, the controls shall 
be of the type which cut off the fuel supply upon the failure or 
interruption of the flame or ignition, or whenever a predetermined safe 
temperature or pressure is exceeded.

[45 FR 14182, Mar. 4, 1980; 45 FR 22901, Apr. 4, 1980]



Sec. 654.410  Electricity and lighting.

    (a) All housing sites shall be provided with electric service.
    (b) Each habitable room and all common use rooms, and areas such as: 
Laundry rooms, toilets, privies, hallways, stairways, etc., shall 
contain adequate ceiling or wall-type light fixtures. At least one wall-
type electrical convenience outlet shall be provided in each individual 
living room.
    (c) Adequate lighting shall be provided for the yard area, and 
pathways to common use facilities.
    (d) All wiring and lighting fixtures shall be installed and 
maintained in a safe condition.



Sec. 654.411  Toilets.

    (a) Toilets shall be constructed, located and maintained so as to 
prevent any nuisance or public health hazard.
    (b) Water closets or privy seats for each sex shall be in the ratio 
of not less than one such unit for each 15 occupants, with a minimum of 
one unit for each sex in common use facilities.
    (c) Urinals, constructed of nonabsorbent materials, may be 
substituted for men's toilet seats on the basis of one urinal or 24 
inches of trough-type urinal for one toilet seat up to a maximum of one-
third of the required toilet seats.
    (d) Except in individual family units, separate toilet 
accommodations for men and women shall be provided. If toilet facilities 
for men and women are in the same building, they shall be separated by a 
solid wall from floor to roof or ceiling. Toilets shall be distinctly 
marked ``men'' and ``women'' in English and in the native language of 
the persons expected to occupy the housing.
    (e) Where common use toilet facilities are provided, an adequate and 
accessible supply of toilet tissue, with holders, shall be furnished.
    (f) Common use toilets and privies shall be well lighted and 
ventilated and shall be clean and sanitary.
    (g) Toilet facilities shall be located within 200 feet of each 
living unit.
    (h) Privies shall not be located closer than 50 feet from any living 
unit or any facility where food is prepared or served.
    (i) Privy structures and pits shall be fly tight. Privy pits shall 
have adequate capacity for the required seats.



Sec. 654.412  Bathing, laundry, and handwashing.

    (a) Bathing and handwashing facilities, supplied with hot and cold 
water under pressure, shall be provided for

[[Page 463]]

the use of all occupants. These facilities shall be clean and sanitary 
and located within 200 feet of each living unit.
    (b) There shall be a minimum of 1 showerhead per 15 persons. 
Showerheads shall be spaced at least 3 feet apart, with a minimum of 9 
square feet of floor space per unit. Adequate, dry dressing space shall 
be provided in common use facilities. Shower floors shall be constructed 
of nonabsorbent nonskid materials and sloped to properly constructed 
floor drains. Except in individual family units, separate shower 
facilities shall be provided each sex. When common use shower facilities 
for both sexes are in the same building they shall be separated by a 
solid nonabsorbent wall extending from the floor to ceiling, or roof, 
and shall be plainly designated ``men'' or ``women'' in English and in 
the native language of the persons expected to occupy the housing.
    (c) Lavatories or equivalent units shall be provided in a ratio of 1 
per 15 persons.
    (d) Laundry facilities, supplied with hot and cold water under 
pressure, shall be provided for the use of all occupants. Laundry trays 
or tubs shall be provided in the ratio of 1 per 25 persons. Mechanical 
washers may be provided in the ratio of 1 per 50 persons in lieu of 
laundry trays, although a minimum of 1 laundry tray per 100 persons 
shall be provided in addition to the mechanical washers.



Sec. 654.413  Cooking and eating facilities.

    (a) When workers or their families are permitted or required to cook 
in their individual unit, a space shall be provided and equipped for 
cooking and eating. Such space shall be provided with:
    (1) A cookstove or hot plate with a minimum of two burners; and (2) 
adequate food storage shelves and a counter for food preparation; and 
(3) provisions for mechanical refrigeration of food at a temperature of 
not more than 45[deg] F.; and (4) a table and chairs or equivalent 
seating and eating arrangements, all commensurate with the capacity of 
the unit; and (5) adequate lighting and ventilation.
    (b) When workers or their families are permitted or required to cook 
and eat in a common facility, a room or building separate from the 
sleeping facilities shall be provided for cooking and eating. Such room 
or building shall be provided with:
    (1) Stoves or hot plates, with a minimum equivalent of two burners, 
in a ratio of 1 stove or hot plate to 10 persons, or 1 stove or hot 
plate to 2 families; and (2) adequate food storage shelves and a counter 
for food preparation; and (3) mechanical refrigeration for food at a 
temperature of not more than 45[deg] F.; and (4) tables and chairs or 
equivalent seating adequate for the intended use of the facility; and 
(5) adequate sinks with hot and cold water under pressure; and (6) 
adequate lighting and ventilation; and (7) floors shall be of 
nonabsorbent, easily cleaned materials.
    (c) When central mess facilities are provided, the kitchen and mess 
hall shall be in proper proportion to the capacity of the housing and 
shall be separate from the sleeping quarters. The physical facilities, 
equipment and operation shall be in accordance with provisions of 
applicable State codes.
    (d) Wall surface adjacent to all food preparation and cooking areas 
shall be of nonabsorbent, easily cleaned material. In addition, the wall 
surface adjacent to cooking areas shall be of fire-resistant material.



Sec. 654.414  Garbage and other refuse.

    (a) Durable, fly-tight, clean containers in good condition of a 
minimum capacity of 20 gallons, shall be provided adjacent to each 
housing unit for the storage of garbage and other refuse. Such 
containers shall be provided in a minimum ratio of 1 per 15 persons.
    (b) Provisions shall be made for collection of refuse at least twice 
a week, or more often if necessary. The disposal of refuse, which 
includes garbage, shall be in accordance with State and local law.



Sec. 654.415  Insect and rodent control.

    Housing and facilities shall be free of insects, rodents, and other 
vermin.

[[Page 464]]



Sec. 654.416  Sleeping facilities.

    (a) Sleeping facilities shall be provided for each person. Such 
facilities shall consist of comfortable beds, cots, or bunks, provided 
with clean mattresses.
    (b) Any bedding provided by the housing operator shall be clean and 
sanitary.
    (c) Triple deck bunks shall not be provided.
    (d) The clear space above the top of the lower mattress of a double 
deck bunk and the bottom of the upper bunk shall be a minimum of 27 
inches. The distance from the top of the upper mattress to the ceiling 
shall be a minimum of 36 inches.
    (e) Beds used for double occupancy may be provided only in family 
accommodations.



Sec. 654.417  Fire, safety, and first aid.

    (a) All buildings in which people sleep or eat shall be constructed 
and maintained in accordance with applicable State or local fire and 
safety laws.
    (b) In family housing and housing units for less than 10 persons, of 
one story construction, two means of escape shall be provided. One of 
the two required means of escape may be a readily accessible window with 
an openable space of not less than 24x24 inches.
    (c) All sleeping quarters intended for use by 10 or more persons, 
central dining facilities, and common assembly rooms shall have at least 
two doors remotely separated so as to provide alternate means of escape 
to the outside or to an interior hall.
    (d) Sleeping quarters and common assembly rooms on the second story 
shall have a stairway, and a permanent, affixed exterior ladder or a 
second stairway.
    (e) Sleeping and common assembly rooms located above the second 
story shall comply with the State and local fire and building codes 
relative to multiple story dwellings.
    (f) Fire extinguishing equipment shall be provided in a readily 
accessible place located not more than 100 feet from each housing unit. 
Such equipment shall provide protection equal to a 2\1/2\ gallon stored 
pressure or 5-gallon pump-type water extinguisher.
    (g) First aid facilities shall be provided and readily accessible 
for use at all time. Such facilities shall be equivalent to the 16 unit 
first aid kit recommended by the American Red Cross, and provided in a 
ratio of 1 per 50 persons.
    (h) No flammable or volatile liquids or materials shall be stored in 
or adjacent to rooms used for living purposes, except for those needed 
for current household use.
    (i) Agricultural pesticides and toxic chemicals shall not be stored 
in the housing area.



PART 655_TEMPORARY EMPLOYMENT OF ALIENS IN THE UNITED STATES--Table 
of Contents




Sec.
655.0 Scope and purpose of part.
655.00 Authority of the Regional Administrator under subparts A, B, and 
          C.

   Subpart A_Labor Certification Process for Temporary Employment in 
 Occupations Other Than Agriculture, Logging, or Registered Nursing in 
                    the United States (H-2B Workers)

655.1 Scope and purpose of subpart A.
655.2 Applications.
655.3 Determinations.
655.4 Territory of Guam.

    Subpart B_Labor Certification Process for Temporary Agricultural 
             Employment in the United States (H-2A Workers)

655.90 Scope and purpose of subpart B.
655.92 Authority of the Regional Administrator.
655.93 Special circumstances.
655.100 Overview of subpart and definition of terms.
655.101 Temporary alien agricultural labor certification applications.
655.102 Contents of job offers.
655.103 Assurances.
655.104 Determinations based on acceptability of H-2A applications.
655.105 Recruitment period.
655.106 Referral of U.S. workers; determinations based on U.S. worker 
          availability and adverse effect; activities after receipt of 
          the temporary alien agricultural labor certification.
655.107 Adverse effect wage rates (AEWRs).
655.108 H-2A applications involving fraud or willful misrepresentation.

[[Page 465]]

655.110 Employer penalties for noncompliance with terms and conditions 
          of temporary alien agricultural labor certifications.
655.111 Petition for higher meal charges.
655.112 Administrative review and de novo hearing before an 
          administrative law judge.
655.113 Job Service Complaint System; enforcement of work contracts.

 Subpart C_Labor Certification Process for Logging Employment and Non-H-
                       2A Agricultural Employment

655.200 General description of this subpart and definition of terms.
655.201 Temporary labor certification applications.
655.202 Contents of job offers.
655.203 Assurances.
655.204 Determinations based on temporary labor certification 
          applications.
655.205 Recruitment period.
655.206 Determinations of U.S. worker availability and adverse effect on 
          U.S. workers.
655.207 Adverse effect rates.
655.208 Temporary labor certification applications involving fraud or 
          willful misrepresentation.
655.209 Invalidation of temporary labor certifications.
655.210 Failure of employers to comply with the terms of a temporary 
          labor certification.
655.211 Petitions for higher meal charges.
655.212 Administrative-judicial reviews.
655.215 Territory of Guam.

   Subpart D_Attestations by Facilities Using Nonimmigrant Aliens as 
                            Registered Nurses

655.300 Purpose and scope of subparts D and E.
655.301 Overview of process.
655.302 Definitions.
655.310 Attestations.
655.315 State plans.
655.320 Appeals of acceptance and rejection of attestations submitted 
          for filing and of State plans.
655.350 Public access.

               Subpart E_Enforcement of H-1A Attestations

655.400 Enforcement authority of Administrator, Wage and Hour Division.
655.405 Complaints and investigative procedures.
655.410 Civil money penalties and other remedies.
655.415 Written notice and service of Administrator's determination.
655.420 Request for hearing.
655.425 Rules of practice for administrative law judge proceedings.
655.430 Service and computation of time.
655.435 Administrative law judge proceedings.
655.440 Decision and order of administrative law judge.
655.445 Secretary's review of administrative law judge's decision.
655.450 Administrative record.
655.455 Notice to the Attorney General and the Employment and Training 
          Administration.
655.460 Non-applicability of the Equal Access to Justice Act.

    Subpart F_Attestations by Employers Using Alien Crewmembers for 
                   Longshore Activities in U.S. Ports

                           General Provisions

655.500 Purpose, procedure and applicability of subparts F and G of this 
          part.
655.501 Overview of responsibilities.
655.502 Definitions.
655.510 Employer attestations.
655.520 Special provisions regarding automated vessels.

                            Alaska Exception

655.530 Special provisions regarding the performance of longshore 
          activities at locations in the State of Alaska.
655.531 Who may submit attestations for locations in Alaska?
655.532 Where and when should attestations be submitted for locations in 
          Alaska?
655.533 What should be submitted for locations in Alaska?
655.534 The first attestation element for locations in Alaska: Bona fide 
          request for dispatch of United States longshore workers.
655.535 The second attestation element for locations in Alaska: 
          Employment of United States longshore workers.
655.536 The third attestation element for locations in Alaska: No 
          intention or design to influence bargaining representative 
          election.
655.537 The fourth attestation element for locations in Alaska: Notice 
          of filing.
655.538 Actions on attestations submitted for filing for locations in 
          Alaska.
655.539 Effective date and validity of filed attestations for locations 
          in Alaska.
655.540 Suspension or invalidation of filed attestations for locations 
          in Alaska.
655.541 Withdrawal of accepted attestations for locations in Alaska.

                              Public Access

655.550 Public access.

[[Page 466]]


Appendix A to Subpart F--U.S. Seaports

  Subpart G_Enforcement of the Limitations Imposed on Employers Using 
        Alien Crewmembers for Longshore Activities in U.S. Ports

655.600 Enforcement authority of Administrator, Wage and Hour Division.
655.605 Complaints and investigative procedures.
655.610 Automated vessel exception to prohibition on utilization of 
          alien crewmember(s) to perform longshore activity(ies) at a 
          U.S. port.
655.615 Cease and desist order.
655.620 Civil money penalties and other remedies.
655.625 Written notice, service and Federal Register publication of 
          Administrator's determination.
655.630 Request for hearing.
655.635 Rules of practice for administrative law judge proceedings.
655.640 Service and computation of time.
655.645 Administrative law judge proceedings.
655.650 Decision and order of administrative law judge.
655.655 Secretary's review of administrative law judge's decision.
655.660 Administrative record.
655.665 Notice to the Attorney General and the Employment and Training 
          Administration.
655.670 Federal Register notice of determination of prevailing practice.
655.675 Non-applicability of the Equal Access to Justice Act.

 Subpart H_Labor Condition Applications and Requirements for Employers 
   Using Nonimmigrants on H-1B Visas in Specialty Occupations and as 
 Fashion Models, and Labor Attestation Requirements for Employers Using 
          Nonimmigrants on H-1B1 Visas in Specialty Occupations

655.700 What statutory provisions govern the employment of H-1B and H-
          1B1 nonimmigrants and how do employers apply for an H-1B or H-
          1B1 visa?
655.705 What Federal agencies are involved in the H-1B and H-1B1 
          programs, and what are the responsibilities of those agencies 
          and of employers?
655.710 What is the procedure for filing a complaint?
655.715 Definitions
655.720 Where are labor condition applications (LCAs) to be filed and 
          processed?
655.721 [Reserved]
655.730 What is the process for filing a labor condition application?
655.731 What is the first LCA requirement, regarding wages?
655.732 What is the second LCA requirement, regarding working 
          conditions?
655.733 What is the third LCA requirement, regarding strikes and 
          lockouts?
655.734 What is the fourth LCA requirement, regarding notice?
655.735 What are the special provisions for short-term placement of H-1B 
          nonimmigrants at place(s) of employment outside the area(s) of 
          intended employment listed on the LCA?
655.736 What are H-1B-dependent employers and willful violators?
655.737 What are ``exempt'' H-1B nonimmigrants, and how does their 
          employment affect the additional attestation obligations of H-
          1B-dependent employers and willful violator employers?
655.738 What are the ``non-displacement of U.S. workers'' obligations 
          that apply to H-1B-dependent employers and willful violators, 
          and how do they operate?
655.739 What is the ``recruitment of U.S. workers'' obligation that 
          applies to H-1B-dependent employers and willful violators, and 
          how does it operate?
655.740 What actions are taken on labor condition applications?
655.750 What is the validity period of the labor condition application?
655.760 What records are to be made available to the public, and what 
          records are to be retained?

  Subpart I_Enforcement of H-1B Labor Condition Applications and H-1B1 
                           Labor Attestations

655.800 Who will enforce the LCAs and how will they be enforced?
655.801 What protection do employees have from retaliation?
655.805 What violations may the Administrator investigate?
655.806 Who may file a complaint and how is it processed?
655.807 How may someone who is not an ``aggrieved party'' allege 
          violations, and how will those allegations be processed?
655.808 Under what circumstances may random investigations be conducted?
655.810 What remedies may be ordered if violations are found?
655.815 What are the requirements for the Administrator's determination?
655.820 How is a hearing requested?
655.825 What rules of practice apply to the hearing?
655.830 What rules apply to service of pleadings?
655.835 How will the administrative law judge conduct the proceeding?
655.840 What are the requirements for a decision and order of the 
          administrative law judge?
655.845 What rules apply to appeal of the decision of the administrative 
          law judge?

[[Page 467]]

655.850 Who has custody of the administrative record?
655.855 What notice shall be given to the Employment and Training 
          Administration and the Attorney General of the decision 
          regarding violations?

  Subpart J_Attestations by Employers Using F-1 Students in Off-Campus 
                                  Work

655.900 Purpose, procedure and applicability of subparts J and K of this 
          part.
655.910 Overview of process.
655.920 Definitions.
655.930 Addresses of Department of Labor regional offices.
655.940 Employer attestations.
655.950 Public access.

Appendix A to Subpart J to Part 655--Documentation in Support of 
          Attestations Made by Employers

Subpart K_Enforcement of the Attestation Process for Attestations Filed 
         by Employers Utilizing F-1 Students in Off-campus Work

655.1000 Enforcement authority of Administrator, Wage and Hour Division.
655.1005 Complaints and investigative procedures.
655.1010 Remedies.
655.1015 Written notice and service of Administrator's determination.
655.1020 Request for hearing.
655.1025 Rules of practice for administrative law judge proceedings.
655.1030 Service and computation of time.
655.1035 Administrative law judge proceedings.
655.1040 Decision and order of administrative law judge.
655.1045 Secretary's review of administrative law judge's decision.
655.1050 Administrative record.
655.1055 Notice to the Employment and Training Administration (ETA) and 
          the Attorney General (AG).
655.1060 Non-applicability of the Equal Access to Justice Act.

    Subpart L_What requirements must a facility meet to employ H-1C 
               nonimmigrant workers as registered nurses?

655.1100 What are the purposes, procedures and applicability of the 
          regulations in subparts L and M of this part?
655.1101 What are the responsibilities of the government agencies and 
          the facilities that participate in the H-1C program?
655.1102 What are the definitions of terms that are used in these 
          regulations?
655.1110 What requirements does the NRDAA impose in the filing of an 
          Attestation?
655.1111 Element I--What hospitals are eligible to participate in the H-
          1C program?
655.1112 Element II--What does ``no adverse effect on wages and working 
          conditions'' mean?
655.1113 Element III--What does ``facility wage rate'' mean?
655.1114 Element IV--What are the timely and significant steps an H-1C 
          employer must take to recruit and retain U.S. nurses?
655.1115 Element V--What does ``no strike/lockout or layoff'' mean?
655.1116 Element VI--What notification must facilities provide to 
          registered nurses?
655.1117 Element VII--What are the limitations as to the number of H-1C 
          nonimmigrants that a facility may employ?
655.1118 Element VIII--What are the limitations as to where the H-1C 
          nonimmigrant may be employed?
655.1130 What criteria does the Department use to determine whether or 
          not to certify an Attestation?
655.1132 When will the Department suspend or invalidate an already-
          approved Attestation?
655.1135 What appeals procedures are available concerning ETA's actions 
          on a facility's Attestation?
655.1150 What materials must be available to the public?

Subpart M_What are the Department's enforcement obligations with respect 
                          to H-1C Attestations?

655.1200 What enforcement authority does the Department have with 
          respect to a facility's H-1C Attestation?
655.1205 What is the Administrator's responsibility with respect to 
          complaints and investigations?
655.1210 What penalties and other remedies may the Administrator impose?
655.1215 How are the Administrator's investigation findings issued?
655.1220 Who can appeal the Administrator's findings and what is the 
          process?
655.1225 What are the rules of practice before an ALJ?
655.1230 What time limits are imposed in ALJ proceedings?
655.1235 What are the ALJ proceedings?
655.1240 When and how does an ALJ issue a decision?
655.1245 Who can appeal the ALJ's decision and what is the process?
655.1250 Who is the official record keeper for these administrative 
          appeals?
655.1255 What are the procedures for the debarment of a facility based 
          on a finding of violation?
655.1260 Can Equal Access to Justice Act attorney fees be awarded?


[[Page 468]]


    Authority: Section 655.0 issued under 8 U.S.C. 1101(a)(15)(H)(i) and 
(ii), 1182(m), (n), and (t), 1184, 1188, and 1288(c) and (d); 29 U.S.C. 
49 et seq.; sec. 3(c)(1), Pub. L. 101-238, 103 Stat. 2099, 2102 (8 
U.S.C. 1182 note); sec. 221(a), Pub. L. 101-649, 104 Stat. 4978, 5027 (8 
U.S.C. 1184 note); sec. 323, Pub. L. 103-206, 107 Stat. 2149; Title IV, 
Pub. L. 105-277, 112 Stat. 2681; Pub. L. 106-95, 113 Stat. 1312 (8 
U.S.C. 1182 note); and 8 CFR 213.2(h)(4)(i).
    Section 655.00 issued under 8 U.S.C. 1101(a)(15)(H)(ii), 1184, and 
1188; 29 U.S.C. 49 et seq.; and 8 CFR 214.2(h)(4)(i).
    Subparts A and C issued under 8 U.S.C. 1101(a)(15)(H)(ii)(b) and 
1184; 29 U.S.C. 49 et seq.; and 8 CFR 214.2(h)(4)(i).
    Subpart B issued under 8 U.S.C. 1101(a)(15)(H)(ii)(a), 1184, and 
1188; and 29 U.S.C. 49 et seq.
    Subparts D and E issued under 8 U.S.C. 1101(a)(15)(H)(i)(a), 
1182(m), and 1184; 29 U.S.C. 49 et seq.; and sec. 3(c)(1), Pub. L. 101-
238, 103 Stat. 2099, 2103 (8 U.S.C. 1182 note).
    Subparts F and G issued under 8 U.S.C. 1184 and 1288(c); and 29 
U.S.C. 49 et seq.
    Subparts H and I issued under 8 U.S.C. 1101(a)(15)(H)(i)(b) and 
(b1), 1182(n), 1182(t), and 1184; 29 U.S.C. 49 et seq.; sec 303(a)(8), 
Pub. L. 102-232, 105 Stat. 1733, 1748 (8 U.S.C. 1182 note); and Title 
IV, Pub. L. 105-277, 112 Stat. 2681.
    Subparts J and K issued under 29 U.S.C. 49 et seq.; and sec. 221(a), 
Pub. L. 101-649, 104 Stat. 4978, 5027 (8 U.S.C. 1184 note).
    Subparts L and M issued under 8 U.S.C. 1101(a)(15)(H)(i)(c), 
1182(m), and 1184; and 29 U.S.C. 49 et seq.

    Source: 42 FR 45899, Sept. 13, 1977, unless otherwise noted.



Sec. 655.0  Scope and purpose of part.

    (a) Subparts A, B, and C--(1) General. Subparts A, B, and C of this 
part set out the procedures adopted by the Secretary to secure 
information sufficient to make factual determinations of: (i) Whether 
U.S. workers are available to perform temporary employment in the United 
States, for which an employer desires to employ nonimmigrant foreign 
workers, and (ii) whether the employment of aliens for such temporary 
work will adversely affect the wages or working conditions of similarly 
employed U.S. workers. These factual determinations (or a determination 
that there are not sufficient facts to make one or both of these 
determinations) are required to carry out the policies of the 
Immigration and Nationality Act (INA), that a nonimmigrant alien worker 
not be admitted to fill a particular temporary job opportunity unless no 
qualifed U.S. worker is available to fill the job opportunity, and 
unless the employment of the foreign worker in the job opportunity will 
not adversely affect the wages or working conditions of similarly 
employed U.S. workers.
    (2) The Secretary's determinations. Before any factual determination 
can be made concerning the availability of U.S. workers to perform 
particular job opportunities, two steps must be taken. First, the 
minimum level of wages, terms, benefits, and conditions for the 
particular job opportunities, below which similarly employed U.S. 
workers would be adversely affected, must be established. (The 
regulations in this part establish such minimum levels for wages, terms, 
benefits, and conditions of employment.) Second, the wages, terms, 
benefits, and conditions offered and afforded to the aliens must be 
compared to the established minimum levels. If it is concluded that 
adverse effect would result, the ultimate determination of availability 
within the meaning of the INA cannot be made since U.S. workers cannot 
be expected to accept employment under conditions below the established 
minimum levels. Florida Sugar Cane League, Inc. v. Usery, 531 F. 2d 299 
(5th Cir. 1976).

Once a determination of no adverse effect has been made, the 
availability of U.S. workers can be tested only if U.S. workers are 
actively recruited through the offer of wages, terms, benefits, and 
conditions at least at the minimum level or the level offered to the 
aliens, whichever is higher. The regulations in this part set forth 
requirements for recruiting U.S. workers in accordance with this 
principle.
    (3) Construction. This part and its subparts shall be construed to 
effectuate the purpose of the INA that U.S. workers rather than aliens 
be employed wherever possible. Elton Orchards, Inc. v. Brennan, 508 F. 
2d 493, 500 (1st Cir. 1974), Flecha v. Quiros, 567 F. 2d 1154 (1st Cir. 
1977). Where temporary alien workers are admitted, the terms and 
conditions of their employment must not result in a lowering of the 
terms and conditions of domestic workers similarly employed, Williams v.

[[Page 469]]

Usery, 531 F. 2d 305 (5th Cir. 1976); Florida Sugar Cane League, Inc. v. 
Usery, 531 F. 2d 299 (5th Cir. 1976), and the job benefits extended to 
any U.S. workers shall be at least those extended to the alien workers.
    (b) Subparts D and E. Subparts D and E of this part set forth the 
process by which health care facilities can file attestations with the 
Department of Labor for the purpose of employing or otherwise using 
nonimmigrant registered nurses under H-1A visas.
    (c) Subparts F and G. Subparts F and G of this part set forth the 
process by which employers can file attestations with the Department of 
Labor for the purpose of employing alien crewmembers in longshore work 
under D-visas and enforcement provisions relating thereto.
    (d) Subparts H and I of this part. Subparts H and I of this part set 
forth the process by which employers can file with, and the requirements 
for obtaining approval from, the Department of Labor of labor condition 
applications necessary for the purpose of petitioning the United States 
Citizenship and Immigration Services (USCIS) of the Department of 
Homeland Security (formerly the Immigration and Naturalization Service 
or INS) for H-1B visas for aliens to be employed in specialty 
occupations or as fashion models of distinguished merit and ability, and 
the enforcement provisions relating thereto. With respect to H-1B1 visas 
for the temporary employment in specialty occupations of nonimmigrant 
professionals from countries with which the U.S. has entered into 
certain agreements identified in section 214(g)(8)(A) of the INA, 
subparts H and I set forth the process for an employer to file a labor 
attestation with the Department of Labor, the Department's approval 
procedures regarding these attestations, and enforcement positions 
related thereto.
    (e) Subparts J and K of this part. Subparts J and K of this part set 
forth the process by which employers can file attestations with the 
Department of Labor for the purpose of employing nonimmigrant alien 
students on F-visas in off-campus employment and enforcement provisions 
relating thereto.

[43 FR 10312, Mar. 10, 1978, as amended at 52 FR 20507, June 1, 1987; 55 
FR 50510, Dec. 6, 1990; 56 FR 24667, May 30, 1991; 56 FR 54738, Oct. 22, 
1991; 56 FR 56875, Nov. 6, 1991; 57 FR 1337, Jan. 13, 1992; 57 FR 40989, 
Sept. 8, 1992; 69 FR 68226, Nov. 23, 2004]



Sec. 655.00  Authority of the Regional Administrator under subparts 
A, B, and C.

    Pursuant to the regulations under this part, temporary labor 
certification determinations under subparts A, B, and C of this part are 
ordinarily made by the Regional Administrator of an Employment and 
Training Administration region. The Director, however, may direct that 
certain types of applications or certain applications shall be handled 
by, and the determinations made by, the United States Employment Service 
(USES) in Washington, DC. In those cases the Regional Administrator will 
informally advise the employer or agent of the name of the official who 
will make determinations with respect to the application.

[43 FR 10313, Mar. 10, 1978, as amended at 52 FR 20507, June 1, 1987; 55 
FR 50510, Dec. 6, 1990]



   Subpart A_Labor Certification Process for Temporary Employment in 
 Occupations Other Than Agriculture, Logging, or Registered Nursing in 
                    the United States (H-2B Workers)



Sec. 655.1  Scope and purpose of subpart A.

    This subpart sets forth the procedures governing the labor 
certification process for the temporary employment of nonimmigrant 
aliens in the United States in occupations other than agriculture, 
logging, or registered nursing.

[55 FR 50510, Dec. 6, 1990]



Sec. 655.2  Applications.

    Application forms for certification of temporary employment of 
nonimmigrant aliens may be obtained from and should be filed in 
duplicate

[[Page 470]]

with the local office of the State employment service serving the area 
of proposed employment.

(Approved by the Office of Management and Budget under control number 
1205-0015)

(Pub. L. No. 96-511)

[33 FR 7570, May 22, 1968, as amended at 49 FR 18295, Apr. 30, 1984. 
Redesignated and amended at 55 FR 50510, Dec. 6, 1990]



Sec. 655.3  Determinations.

    (a) When received, applications for certification shall be forwarded 
by the local office of the State employment service to the appropriate 
Regional Administrator, Employment and Training Administration, who will 
issue them if he or she finds that qualified persons in the United 
States are not available and that the terms of employment will not 
adversely affect the wages and working conditions of workers in the 
United States similarly employed.
    (b) In making this finding, such matter as the employer's attempts 
to recruit workers and the appropriateness of the wages and working 
conditions offered, will be considered. The policies of the United 
States Employment Service set forth in part 652 of this chapter and 
subparts B and C of this part shall be followed in making the findings.
    (c) In any case in which the Regional Administrator, Employment and 
Training Administration, determines after examination of all the 
pertinent facts before him or her that certification should not be 
issued, he or she shall promptly so notify the employer requesting the 
certification. Such notification shall contain a statement of the 
reasons on which the refusal to issue a certification is based.
    (d) The certification or notice of denial thereof is to be used by 
the employer to support its visa petition, filed with the District 
Director of the Immigration and Naturalization Service.

[33 FR 7570, May 22, 1968, as amended at 43 FR 10311, Mar. 10, 1978. 
Redesignated and amended at 55 FR 50510, Dec. 6, 1990]



Sec. 655.4  Territory of Guam.

    Subpart A of this part does not apply to temporary employment in the 
Territory of Guam, and the Department of Labor does not certify to the 
Immigration and Naturalization Service (INS) the temporary employment of 
nonimmigrant aliens under H-2B visas in the Territory of Guam. Pursuant 
to INS regulations, that function is performed by the Governor of Guam, 
or the Governor's designated representative within the Territorial 
Government.

[56 FR 56875, Nov. 6, 1991]



    Subpart B_Labor Certification Process for Temporary Agricultural 
             Employment in the United States (H-2A Workers)

    Source: 52 FR 20507, June 1, 1987, unless otherwise noted.



Sec. 655.90  Scope and purpose of subpart B.

    (a) General. This subpart sets out the procedures established by the 
Secretary of Labor to acquire information sufficient to make factual 
determinations of: (1) Whether there are sufficient able, willing, and 
qualified U.S. workers available to perform the temporary and seasonal 
agricultural employment for which an employer desires to import 
nonimmigrant foreign workers (H-2A workers); and (2) whether the 
employment of H-2A workers will adversely effect the wages and working 
conditions of workers in the U.S. similarly employed. Under the 
authority of the INA, the Secretary of Labor has promulgated the 
regulations in this subpart. This subpart sets forth the requirements 
and procedures applicable to requests for certification by employers 
seeking the services of temporary foreign workers in agriculture. This 
subpart provides the Secretary's methodology for the two-fold 
determination of availability of domestic workers and of any adverse 
effect which would be occasioned by the use of foreign workers, for 
particular temporary and seasonal agricultural jobs in the United 
States.
    (b) The statutory standard. (1) A petitioner for H-2A workers must 
apply to the Secretary of Labor for a certification that, as stated in 
the INA:

    (A) There are not sufficient workers who are able, willing, and 
qualified, and who will be available at the time and place needed, to

[[Page 471]]

perform the labor or services involved in the petition, and
    (B) The employment of the alien in such labor or services will not 
adversely affect the wages and working conditions of workers in the 
United States similarly employed.

    (2) Section 216(b) of the INA further requires that the Secretary 
may not issue a certification if the conditions regarding U.S. worker 
availability and adverse effect are not met, and may not issue a 
certification if, as stated in the INA:

    (1) There is a strike or lockout in the course of a labor dispute 
which, under the regulations, precludes such certification.
    (2)(A) The employer during the previous two-year period employed H-
2A workers and the Secretary has determined, after notice and 
opportunity for a hearing, that the employer at any time during that 
period substantially violated a material term or condition of the labor 
certification with respect to the employment of domestic or non-
immigrant workers.
    (B) No employer may be denied certification under subparagraph (A) 
for more than three years for any violation described in such 
subparagraph.
    (3) The employer has not provided the Secretary with satisfactory 
assurances that if the employment for which the certification is sought 
is not covered by State workers' compensation law, the employer will 
provide, at no cost to the worker, insurance covering injury and disease 
arising out of and in the course of the worker's employment which will 
provide benefits at least equal to those provided under the State 
workers' compensation law for comparable employment.
    (4) The Secretary determines that the employer has not made positive 
recruitment efforts within a multistate region of traditional or 
expected labor supply where the Secretary finds that there are a 
significant number of qualified United States workers who, if recruited, 
would be willing to make themselves available for work at the time and 
place needed. Positive recruitment under this paragraph is in addition 
to, and shall be conducted within the same time period as, the 
circulation through the interstate employment service system of the 
employer's job offer. The obligation to engage in positive recruitment . 
. . shall terminate on the date the H-2A workers depart for the 
employer's place of employment.

    (3) Regarding the labor certification determination itself, section 
216(c)(3) of the INA, as quoted in the following, specifically directs 
the Secretary to make the certification if:

    (i) The employer has complied with the criteria for certification 
(including criteria for the recruitment of eligible individuals as 
prescribed by the Secretary), and
    (ii) The employer does not actually have, or has not been provided 
with referrals of, qualified individuals who have indicated their 
availability to perform such labor or services on the terms and 
conditions of a job offer which meets the requirements of the Secretary.

    (c) The Secretary's determinations. Before any factual determination 
can be made concerning the availability of U.S. workers to perform 
particular job opportunities, two steps must be taken. First, the 
minimum level of wages, terms, benefits, and conditions for the 
particular job opportunities below which similarly employed U.S. workers 
would be adversely affected must be established. (The regulations in 
this subpart establish such minimum levels for wages, terms, benefits, 
and conditions of employment). Second, the wages, terms, benefits, and 
conditions offered and afforded to the aliens must be compared to the 
established minimum levels. If it is concluded that adverse effect would 
result, the ultimate determination of availability within the meaning of 
the INA cannot be made since U.S. workers cannot be expected to accept 
employment under conditions below the established minimum levels. 
Florida Sugar Cane League, Inc. v. Usery, 531 F. 2d 299 (5th Cir. 1976). 
Once a determination of no adverse effect has been made, the 
availability of U.S. workers can be tested only if U.S. workers are 
actively recruited through the offer of wages, terms, benefits, and 
conditions at least at the minimum level or the level offered to the 
aliens, whichever is higher. The regulations in this subpart set forth 
requirements for recruiting U.S. workers in accordance with this 
principle.
    (d) Construction. This subpart shall be construed to effectuate the 
purpose of the INA that U.S. workers rather than aliens be employed 
wherever possible. Elton Orchards, Inc. v. Brennan, 508 F. 2d 493, 500 
(1st Cir. 1974); Flecha v. Quiros, 567 F.2d 1154, 1156 (1st Cir. 1977). 
Where temporary alien workers are admitted, the terms and conditions of 
their employment must not result in a

[[Page 472]]

lowering of the wages, terms, and conditions of domestic workers 
similarly employed. Williams v. Usery, 531 F. 2d 305, 306 (5th Cir. 
1976), cert. denied, 429 U.S. 1000, and the job benefits extended to any 
U.S. workers shall be at least those extended to the alien workers.



Sec. 655.92  Authority of the Regional Administrator.

    Under this subpart, the accepting for consideration and the making 
of temporary alien agricultural labor certification determinations are 
ordinarily performed by the Regional Administrator (RA) of an Employment 
and Training Administration region, who, in turn, may delegate this 
responsibility to a designated staff member. The Director of the United 
States Employment Service, however, may direct that certain types of 
applications or certain applications shall be handled by, and the 
determinations made by USES in Washington, DC. In those cases, the RA 
will informally advise the employer or agent of the name of the official 
who will make determinations with respect to the application.



Sec. 655.93  Special circumstances.

    (a) Systematic process. The regulations under this subpart are 
designed to provide a systematic process for handling applications from 
the kinds of employers who have historically utilized nonimmigrant alien 
workers in agriculture, usually in relation to the production or 
harvesting of a particular agricultural crop for market, and which 
normally share such characteristics as:
    (1) A fixed-site farm, ranch, or similar establishment;
    (2) A need for workers to come to their establishment from other 
areas to perform services or labor in and around their establishment;
    (3) Labor needs which will normally be controlled by environmental 
conditions, particularly weather and sunshine; and
    (4) A reasonably regular workday or workweek.
    (b) Establishment of special procedures. In order to provide for a 
limited degree of flexibility in carrying out the Secretary's 
responsibilities under the INA, while not deviating from the statutory 
requirements to determine U.S. worker availability and make a 
determination as to adverse effect, the Director has the authority to 
establish special procedures for processing H-2A applications when 
employers can demonstrate upon written application to and consultation 
with the Director that special procedures are necessary. In a like 
manner, for work in occupations characterized by other than a reasonably 
regular workday or workweek, such as the range production of sheep or 
other livestock, the Director has the authority to establish monthly, 
weekly, or bi-weekly adverse effect wage rates for those occupations, 
for a Statewide or other geographical area, other than the rates 
established pursuant to Sec. 655.107 of this part, provided that the 
Director uses a methodology to establish such adverse effect wage rates 
which is consistent with the methodology in Sec. 655.107(a). Prior to 
making determinations under this paragraph (b), the Director may consult 
with employer representatives, appropriate RAs, and worker 
representatives.
    (c) Construction. This subpart shall be construed to permit the 
Director to continue and, where the Director deems appropriate, to 
revise the special procedures previously in effect for the handling of 
applications for sheepherders in the Western States (and to adapt such 
procedures to occupations in the range production of other livestock) 
and for custom combine crews.



Sec. 655.100  Overview of this subpart and definition of terms.

    (a) Overview--(1) Filing applications. This subpart provides 
guidance to an employer who desires to apply for temporary alien 
agricultural labor certification for the employment of H-2A workers to 
perform agricultural employment of a temporary or seasonal nature. The 
regulations in this subpart provide that such employer shall file an H-
2A application, including a job offer, on forms prescribed by the 
Employment and Training Administration (ETA), which describes the 
material terms and conditions of employment to be offered and afforded 
to U.S. workers and H-2A workers, with the Regional Administrator (RA) 
having jurisdiction over the geographical area in which the

[[Page 473]]

work will be performed. The entire application shall be filed with the 
RA no less than 45 calendar days before the first date of need for 
workers, and a copy of the job offer shall be submitted at the same time 
to the local office of the State employment service agency which serves 
the area of intended employment. Under the regulations, the RA will 
promptly review the application and notify the applicant in writing if 
there are deficiencies which render the application not acceptable for 
consideration, and afford the applicant a five-calendar-day period for 
resubmittal of an amended application or an appeal of the RA's refusal 
to approve the application as acceptable for consideration. Employers 
are encouraged to file their applications in advance of the 45-calendar-
day period mentioned above in this paragraph (a)(1). Sufficient time 
should be allowed for delays that might arise due to the need for 
amendments in order to make the application acceptable for 
consideration.
    (2) Amendment of applications. This subpart provides for the 
amendment of applications, at any time prior to the RA's certification 
determination, to increase the number of workers requested in the 
initial application; without requiring, under certain circumstances, an 
additional recruitment period for U.S. workers.
    (3) Untimely applications. If an H-2A application does not satisfy 
the specified time requirements, this subpart provides for the RA's 
advice to the employer in writing that the certification cannot be 
granted because there is not sufficient time to test the availability of 
U.S. workers; and provides for the employer's right to an administrative 
review or a de novo hearing before an administrative law judge. 
Emergency situations are provided for, wherein the RA may waive the 
specified time periods.
    (4) Recruitment of U.S. workers; determinations--(i) Recruitment. 
This subpart provides that, where the application is accepted for 
consideration and meets the regulatory standards, the State agency and 
the employer begin to recruit U.S. workers. If the employer has complied 
with the criteria for certification, including recruitment of U.S. 
workers, by 20 calendar days before the date of need specified in the 
application (except as provided in certain cases), the RA makes a 
determination to grant or deny, in whole or in part, the application for 
certification.
    (ii) Granted applications. This subpart provides that the 
application for temporary alien agricultural labor certification is 
granted if the RA finds that the employer has not offered foreign 
workers higher wages or better working conditions (or has imposed less 
restrictions on foreign workers) than those offered and afforded to U.S. 
workers; that sufficient U.S. workers who are able, willing, and 
qualified will not be available at the time and place needed to perform 
the work for which H-2A workers are being requested; and that the 
employment of such aliens will not adversely affect the wages and 
working conditions of similarly employed U.S. workers.
    (iii) Fees--(A) Amount. This subpart provides that each employer 
(except joint employer associations) of H-2A workers shall pay to the RA 
fees for each temporary alien agricultural labor certification received. 
The fee for each employer receiving a temporary alien agricultural labor 
certification is $100 plus $10 for each job opportunity for H-2A workers 
certified, provided that the fee to an employer for each temporary alien 
agricultural labor certification received shall be no greater than 
$1,000. In the case of a joint employer association receiving a 
temporary alien agricultural labor certification, each employer-member 
receiving a temporary alien agricultural labor certification shall pay a 
fee of $100 plus $10 for each job opportunity for H-2A workers 
certified, provided that the fee to an employer for each temporary alien 
agricultural labor certification received shall be no greater than 
$1,000. The joint employer association will not be charged a separate 
fee.
    (B) Timeliness of payment. The fee must be received by the RA no 
later than 30 calendar days after the granting a each temporary alien 
agricultural labor certification. Fees received any later are untimely. 
Failure to pay fees in a timely manner is a substantial violation which 
may result in the denial of future temporary alien agricultural labor 
certifications.

[[Page 474]]

    (iv) Denied applications. This subpart provides that if the 
application for temporary alien agricultural labor certification is 
denied, in whole or in part, the employer may seek review of the denial, 
or a de novo hearing, by an administrative law judge as provided in this 
subpart.
    (b) Definitions of terms used in this subpart. For the purposes of 
this subpart:
    Accept for consideration means, with respect to an application for 
temporary alien agricultural labor certification, the action by the RA 
to notify the employer that a filed temporary alien agricultural labor 
certification application meets the adverse effect criteria necessary 
for processing. An application accepted for consideration ultimately 
will be approved or denied in a temporary alien agricultural labor 
certification determination.
    Administrative law judge means a person within the Department of 
Labor Office of Administrative Law Judges appointed pursuant to 5 U.S.C. 
3105; or a panel of such persons designated by the Chief Administrative 
Law Judge from the Board of Alien Labor Certification Appeals 
established by part 656 of this chapter, but which shall hear and decide 
appeals as set forth in Sec. 655.112 of this part. ``Chief 
Administrative Law Judge'' means the chief official of the Department of 
Labor Office of Administrative Law Judges or the Chief Administrative 
Law Judge's designee.
    Adverse effect wage rate (AEWR) means the wage rate which the 
Director has determined must be offered and paid, as a minimum, to every 
H-2A worker and every U.S. worker for a particular occupation and/or 
area in which an employer employs or seeks to employ an H-2A worker so 
that the wages of similarly employed U.S. workers will not be adversely 
affected.
    Agent means a legal entity or person, such as an association of 
agricultural employers, or an attorney for an association, which (1) is 
authorized to act on behalf of the employer for temporary alien 
agricultural labor certification purposes, and (2) is not itself an 
employer, or a joint employer, as defined in this paragraph (b).
    Director means the chief official of the United States Employment 
Service (USES) or the Director's designee.
    DOL means the United States Department of Labor.
    Eligible worker means a U.S. worker, as defined in this section.
    Employer means a person, firm, corporation or other association or 
organization which suffers or permits a person to work and (1) which has 
a location within the United States to which U.S. workers may be 
referred for employment, and which proposes to employ workers at a place 
within the United States and (2) which has an employer relationship with 
respect to employees under this subpart as indicated by the fact that it 
may hire, pay, fire, supervise or otherwise control the work of any such 
employee. An association of employers shall be considered the sole 
employer if it has the indicia of an employer set forth in this 
definition. Such an association, however, shall be considered as a joint 
employer with an employer member if it shares with the employer member 
one or more of the definitional indicia.
    Employment Service (ES) and Employment Service (ES) System mean, 
collectively, the USES, the State agencies, the local offices, and the 
ETA regional offices.
    Employment Standards Administration means the agency within the 
Department of Labor (DOL), which includes the Wage and Hour Division, 
and which is charged with the carrying out of certain functions of the 
Secretary under the INA.
    Employment and Training Administration (ETA) means the agency within 
the Department of Labor (DOL) which includes the United States 
Employment Service (USES).
    Federal holiday means a legal public holiday as defined at 5 U.S.C. 
6103.
    H-2A worker means any nonimmigrant alien admitted to the United 
States for agricultural labor or services of a temporary or seasonal 
nature under section 101(a)(15)(H)(ii)(a) of the INA (8 U.S.C. 
1101(a)(15)(H)(ii)(a)).
    Immigration and Naturalization Service (INS) means the component of 
the U.S. Department of Justice which makes the determination under the 
INA on whether or not to grant visa petitions

[[Page 475]]

to employers seeking H-2A workers to perform temporary agricultural work 
in the United States.
    INA means the Immigration and Nationality Act, as amended (8 U.S.C. 
1101 et seq.).
    Job offer means the offer made by an employer or potential employer 
of H-2A workers to both U.S. and H-2A workers describing all the 
material terms and conditions of employment, including those relating to 
wages, working conditions, and other benefits.
    Job opportunity means a job opening for temporary, full-time 
employment at a place in the United States to which U.S. workers can be 
referred.
    Local office means the State agency's office which serves a 
particular geographic area within a State.
    Positive recruitment means the active participation of an employer 
or its authorized hiring agent in locating and interviewing applicants 
in other potential labor supply areas and in the area where the 
employer's establishment is located in an effort to fill specific job 
openings with U.S. workers.
    Prevailing means, with respect to certain benefits other than wages 
provided by employers and certain practices engaged in by employers, 
that:
    (i) Fifty percent or more of employers in an area and for an 
occupation engage in the practice or offer the benefit; and
    (ii) This 50 percent or more of employers also employs 50 percent or 
more of U.S. workers in the occupation and area (including H-2A and non-
H-2A employers for purposes of determinations concerning the provision 
of family housing, frequency of wage payments, and workers supplying 
their own bedding, but non-H-2A employers only for determinations 
concerning the provision of advance transportation and the utilization 
of farm labor contractors).
    Regional Administrator, Employment and Training Administration (RA) 
means the chief ETA official of a DOL regional offfice or the RA's 
designee.
    Secretary means the Secretary of Labor or the Secretary's designee.
    Solicitor of Labor means the Solicitor, United States Department of 
Labor, and includes employees of the Office of the Solicitor of Labor 
designated by the Solicitor to perform functions of the Solicitor under 
this subpart.
    State agency means the State employment service agency designated 
under Sec. 4 of the Wagner-Peyser Act to cooperate with the USES in the 
operation of the ES System.
    Temporary alien agricultural labor certification means the 
certification made by the Secretary of Labor with respect to an employer 
seeking to file with INS a visa petition to import an alien as an H-2A 
worker, pursuant to sections 101(a)(15)(H)(ii)(a), 214(a) and (c), and 
216 of the INA that (1) there are not sufficient workers who are able, 
willing, and qualified, and who will be available at the time and place 
needed, to perform the agricultural labor or services involved in the 
petition, and (2) the employment of the alien in such agricultural labor 
or services will not adversely affect the wages and working conditions 
of workers in the United States similarly employed (8 U.S.C. 
1101(a)(15)(H)(ii)(a), 1184 (a) and (c), and 1186).
    Temporary alien agricultural labor certification determination means 
the written determination made by the RA to approve or deny, in whole or 
in part, an application for temporary alien agricultural labor 
certification.
    United States Employment Service (USES) means the agency of the U.S. 
Department of Labor, established under the Wagner-Peyser Act, which is 
charged with administering the national system of public employment 
offices and carrying out certain functions of the Secretary under the 
INA.
    United States (U.S.) worker means any worker who, whether a U.S. 
national, a U.S. citizen, or an alien, is legally permitted to work in 
the job opportunity within the United States (as defined at Sec. 
101(a)(38) of the INA (8 U.S.C. 1101(a)(38)).
    Wages means all forms of cash remuneration to a worker by an 
employer in payment for personal services.
    (c) Definition of agricultural labor or services of a temporary or 
seasonal nature. For the purposes of this subpart, ``agricultural labor 
or services of a temporary or seasonal nature'' means the following:
    (1) ``Agricultural labor or services''. Pursuant to section 
101(a)(15)(H)(ii)(a)

[[Page 476]]

of the INA (8 U.S.C. 1101(a)(15)(H)(ii)(a)), ``agricultural labor or 
services'' is defined for the purposes of this subpart as either 
``agricultural labor'' as defined and applied in section 3121(g) of the 
Internal Revenue Code of 1954 (26 U.S.C. 3121(g)) or ``agriculture'' as 
defined and applied in section 3(f) of the Fair Labor Standards Act of 
1938 (29 U.S.C. 203(f)). An occupation included in either statutory 
definition shall be ``agricultural labor or services'', notwithstanding 
the exclusion of that occupation from the other statutory definition. 
For informational purposes, the statutory provisions are quoted below:
    (i) ``Agricultural labor''. Section 3121(g) of the Internal Revenue 
Code of 1954 (26 U.S.C. 3121(g)), quoted as follows, defines the term 
``agricultural labor'' to include all service performed:

    (1) On a farm, in the employ of any person, in connection with 
cultivating the soil, or in connection with raising or harvesting any 
agricultural or horticultural commodity, including the raising, 
shearing, feeding, caring for, training, and management of livestock, 
bees, poultry, and furbearing animals and wildlife;
    (2) Services performed in the employ of the owner or tenant or other 
operator of a farm, in connection with the operation, or maintenance of 
such farm and its tools and equipment, or in salvaging timber or 
clearing land of brush and other debris left by a hurricane, if the 
major part of such service is performed on a farm;
    (3) In connection with the production or harvesting of any commodity 
defined as an agricultural commodity in section 15(g) of the 
Agricultural Marketing Act, as amended (12 U.S.C. 1141j), or in 
connection with the ginning of cotton, or in connection with the 
operation or maintenance of ditches, canals, reservoirs, or waterways, 
not owned or operated for profit, used exclusively for supplying and 
storing water for farming purposes;
    (4)(A) In the employ of the operator of a farm in handling, 
planting, drying, packing, packaging, processing, freezing, grading, 
storing, or delivering to storage or to market or to a carrier for 
transportation to market, in its unmanufactured state, any agricultural 
or horticultural commodity; but only if such operator produced more than 
one-half of the commodity with respect to which such service is 
performed;
    (B) In the employ of a group of operators of farms (other than a 
cooperative organization) in the performance of service described in 
subparagraph (A), but only if such operators produced all of the 
commodity with respect to which such service is performed. For purposes 
of this subparagraph, any unincorporated group of operators shall be 
deemed a cooperative organization if the number of operators comprising 
such group is more than 20 at any time during the calendar quarter in 
which such service is performed;
    (C) The provisions of subparagraphs (A) and (B) shall not be deemed 
to be applicable with respect to service performed in connection with 
commercial canning or commercial freezing or in connection with any 
agricultural or horticultural commodity after its delivery to a terminal 
market for distribution for consumption; or
    (5) On a farm operated for profit if such service is not in the 
course of the employer's trade or business or is domestic service in a 
private home of the employer.
    As used in this subsection, the term ``farm'' includes stock, dairy, 
poultry, fruit, fur-bearing animal, and truck farms, plantations, 
ranches, nurseries, ranges, greenhouses or other similar structures used 
primarily for the raising of agricultural or horticultural commodities, 
and orchards.

    (ii) ``Agriculture'' Section 203(f) of title 29, United States Code, 
(section 3(f) of the Fair Labor Standards Act of 1938, as codified), 
quoted as follows, defines ``agriculture'' to include:

    (f) * * * farming in all its branches and among other things 
includes the cultivation and tillage of the soil, dairying, the 
production, cultivation, growing, and harvesting of any agricultural or 
horticultural commodities (including commodities as defined as 
agricultural commodities in section 1141j(g) of Title 12), the raising 
of livestock, bees, fur-bearing animals, or poultry, and any practices 
(including any forestry or lumbering operations) performed by a farmer 
or on a farm as an incident to or in conjunction with such farming 
operations, including preparation for market, delivery to storage or to 
market or to carriers for transportation to market.

    (iii) ``Agricultural commodity''. Section 1141j(g) of title 12, 
United States Code, (section 15(g) of the Agricultural Marketing Act, as 
amended), quoted as follows, defines ``agricultural commodity'' to 
include:

    (g) * * * in addition to other agricultural commodities, crude gum 
(oleoresin) from a living tree, and the following products as processed 
by the original producer of the crude gum (oleoresin) from which 
derived: Gum spirits of turpentine, and gum rosin, as defined in section 
92 of Title 7.


[[Page 477]]


    (iv) ``Gum rosin''. Section 92 of title 7, United States Code, 
quoted as follows, defines ``gum spirits of turpentine'' and ``gum 
rosin'' as--

    (c) ``Gum spirits of turpentine'' means spirits of turpentine made 
from gum (oleoresin) from a living tree.

                                * * * * *

    (h) ``Gum rosin'' means rosin remaining after the distillation of 
gum spirits of turpentine.

    (2) ``Of a temporary or seasonal nature''--(i) ``On a seasonal or 
other temporary basis''. For the purposes of this subpart, ``of a 
temporary or seasonal nature'' means ``on a seasonal or other temporary 
basis'', as defined in the Employment Standards Administration's Wage 
and Hour Division's regulation at 29 CFR 500.20 under the Migrant and 
Seasonal Agricultural Worker Protection Act (MSPA).
    (ii) MSPA definition. For informational purposes, the definition of 
``on a seasonal or other temporary basis'', as set forth at 29 CFR 
500.20, is provided below:

    ``On a seasonal or other temporary basis'' means:

                                * * * * *

    Labor is performed on a seasonal basis, where, ordinarily, the 
employment pertains to or is of the kind exclusively performed at 
certain seasons or periods of the year and which, from its nature, may 
not be continuous or carried on throughout the year. A worker who moves 
from one seasonal activity to another, while employed in agriculture or 
performing agricultural labor, is employed on a seasonal basis even 
though he may continue to be employed during a major portion of the 
year.

                                * * * * *

    A worker is employed on ``other temporary basis'' where he is 
employed for a limited time only or his performance is contemplated for 
a particular piece of work, usually of short duration. Generally, 
employment, which is contemplated to continue indefinitely, is not 
temporary.

                                * * * * *

    ``On a seasonal or other temporary basis'' does not include the 
employment of any foreman or other supervisory employee who is employed 
by a specific agricultural employer or agricultural association 
essentially on a year round basis.

                                * * * * *

    ``On a seasonal or other temporary basis'' does not include the 
employment of any worker who is living at his permanent place of 
residence, when that worker is employed by a specific agricultural 
employer or agricultural association on essentially a year round basis 
to perform a variety of tasks for his employer and is not primarily 
employed to do field work.

    (iii) ``Temporary''. For the purposes of this subpart, the 
definition of ``temporary'' in paragraph (c)(2)(ii) of this section 
refers to any job opportunity covered by this subpart where the employer 
needs a worker for a position, either temporary or permanent, for a 
limited period of time, which shall be for less than one year, unless 
the original temporary alien agricultural labor certification is 
extended based on unforeseen circumstances, pursuant to Sec. 
655.106(c)(3) of this part.

[52 FR 20507, June 1, 1987, as amended at 57 FR 43123, Sept. 17, 1992; 
64 FR 34966, June 29, 1999]



Sec. 655.101  Temporary alien agricultural labor certification 
applications.

    (a) General--(1) Filing of application. An employer who anticipates 
a shortage of U.S. workers needed to perform agricultural labor or 
services of a temporary or seasonal nature may apply to the RA in whose 
region the area of intended employment is located, for a temporary alien 
agricultural labor certification for temporary foreign workers (H-2A 
workers). A signed application for temporary alien agricultural worker 
certification shall be filed by the employer, or by an agent of the 
employer, with the RA. At the same time, a duplicate application shall 
be submitted to the local office serving the area of intended 
employment.
    (2) Applications filed by agents. If the temporary alien 
agricultural labor certification application is filed by an agent on 
behalf of an employer, the agent may sign the application if the 
application is accompanied by a signed

[[Page 478]]

statement from the employer which authorizes the agent to act on the 
employer's behalf. The employer may authorize the agent to accept for 
interview workers being referred to the job and to make hiring 
commitments on behalf of the employer. The statement shall specify that 
the employer assumes full responsibility for the accuracy of the 
application, for all representations made by the agent on the employer's 
behalf, and for compliance with all regulatory and other legal 
requirements.
    (3) Applications filed by associations. If an association of 
agricultural producers which uses agricultural labor or services files 
the application, the association shall identify whether it is: (i) The 
sole employer; (ii) a joint employer with its employer-member employers; 
or (iii) the agent of its employer-members. The association shall submit 
documentation sufficient to enable the RA to verify the employer or 
agency status of the association; and shall identify by name and address 
each member which will be an employer of H-2A workers.
    (b) Application form. Each H-2A application shall be on a form or 
forms prescribed by ETA. The application shall state the total number of 
workers the employer anticipates employing in the agricultural labor or 
service activity during the covered period of employment. The 
application shall include:
    (1) A copy of the job offer which will be used by each employer for 
the recruitment of U.S. and H-2A workers. The job offer shall state the 
number of workers needed by the employer, based upon the employer's 
anticipation of a shortage of U.S. workers needed to perform the 
agricultural labor or services, and the specific estimated date on which 
the workers are needed. The job offer shall comply with the requirements 
of Sec. Sec. 655.102 and 653.501 of this chapter, and shall be signed 
by the employer or the employer's agent on behalf of the employer; and
    (2) An agreement to abide by the assurances required by Sec. 
655.103 of this part.
    (c) Timeliness. Applications for temporary alien agricultural labor 
certification are not required to be filed more than 45 calendar days 
before the first day of need. The employer shall be notified by the RA 
in writing within seven calendar days of filing the application if the 
application is not approved as acceptable for consideration. The RA's 
temporary alien agricultural labor certification determination on the 
approved application shall be made no later than 20 calendar days before 
the date of need if the employer has complied with the criteria for 
certification. To allow for the availability of U.S. workers to be 
tested, the following process applies:
    (1) Application filing date. The entire H-2A application, including 
the job offer, shall be filed with the RA, in duplicate, no less than 45 
calendar days before the first date on which the employer estimates that 
the workers are needed. Applications may be filed in person; may be 
mailed to the RA (Attention: H-2A Certifying Officer) by certified mail, 
return receipt requested; or delivered by guaranteed commercial delivery 
which will ensure delivery to the RA and provide the employer with a 
documented acknowledgment of receipt of the application by the RA. Any 
application received 45 calendar days before the date of need will have 
met the minimum timeliness of filing requirement as long as the 
application is eventually approved by the RA as being acceptable for 
processing.
    (2) Review of application; recruitment; certification determination 
period. Section 655.104 of this part requires the RA to promptly review 
the application, and to notify the applicant in writing within seven 
calendar days of any deficiencies which render the application not 
acceptable for consideration and to afford an opportunity for 
resubmittal of an amended application. The employer shall have five 
calendar days in which to file an amended application. Section 655.106 
of this part requires the RA to grant or deny the temporary alien 
agricultural labor certification application no later than 20 calendar 
days before the date on which the workers are needed, provided that the 
employer has complied with the criteria for certification, including 
recruitment of eligible individuals. Such recruitment, for the employer, 
the State agencies, and DOL to attempt to locate U.S. workers locally 
and

[[Page 479]]

through the circulation of intrastate and interstate agricultural 
clearance job orders acceptable under Sec. 653.501 of this chapter and 
under this subpart, shall begin on the date that an acceptable 
application is filed, except that the local office shall begin to 
recruit workers locally beginning on the date it first receives the 
application. The time needed to obtain an application acceptable for 
consideration (including the job offer) after the five-calendar-day 
period allowed for an amended application will postpone day-for-day the 
certification determination beyond the 20 calendar days before the date 
of need, provided that the RA notifies the applicant of any deficiencies 
within seven calendar days after receipt of the application. Delays in 
obtaining an application acceptable for consideration which are directly 
attributable to the RA will not postpone the certification determination 
beyond the 20 calendar days before the date of need. When an employer 
resubmits to the RA (with a copy to the local office) an application 
with modifications required by the RA, and the RA approves the modified 
application as meeting necessary adverse effect standards, the modified 
application will not be rejected solely because it now does not meet the 
45-calendar-day filing requirement. If an application is approved as 
being acceptable for processing without need for any amendment within 
the seven-calendar-day review period after initial filing, recruitment 
of U.S. workers will be considered to have begun on the date the 
application was received by the RA; and the RA shall make the temporary 
alien agricultural labor certification determination required by Sec. 
655.106 of this part no later than 20 calendar days before the date of 
need provided that other regulatory conditions are met.
    (3) Early filing. Employers are encouraged, but not required, to 
file their applications in advance of the 45-calendar-day minimum period 
specified in paragraph (c)(1) of this section, to afford more time for 
review and discussion of the applications and to consider amendments, 
should they be necessary. This is particularly true for employers 
submitting H-2A applications for the first time who may not be familiar 
with the Secretary's requirements for an acceptable application or U.S. 
worker recruitment. Such employers particularly are encouraged to 
consult with DOL and local office staff for guidance and assistance well 
in advance of the minimum 45-calendar-day filing period.
    (4) Local recruitment; preparation of clearance orders. At the same 
time the employer files the H-2A application with the RA, a copy of the 
application shall be submitted to the local office which will use the 
job offer portion--of the application to prepare a local job order and 
begin to recruit U.S. workers in the area of intended employment. The 
local office also shall begin preparing an agricultural clearance order, 
but such order will not be used to recruit workers in other geographical 
areas until the employer's H-2A application is accepted for 
consideration and the clearance order is approved by the RA and the 
local office is so notified by the RA.
    (5) First-time employers of H-2A workers. With respect only to those 
applications filed on or before May 31, 1989, and notwithstanding the 
time requirements in paragraphs (c)(1) through (c)(4) of this section, 
under the following circumstances the RA shall make the certification 
determination required by Sec. 655.106 of this part no later than 10 
calendar days before the date of need:
    (i) The employer would be a first-time employer of H-2A workers 
(and, prior to June 1, 1987, did not use or apply for certification to 
use H-2 agricultural workers under the INA as then in effect) and has 
not previously applied for a temporary alien agricultural labor 
certification to use H-2A workers;
    (ii) The RA, the employer, and the ES System have had a reasonable 
opportunity to test the availability of U.S. workers under the 
conditions of a job offer which has been determined to be acceptable by 
the RA in accordance with the provisions of Sec. Sec. 655.102 and 
655.103 of this part at least 30 calendar days before the date of need; 
and
    (iii) The RA has determined that the employer has otherwise made 
good faith efforts to comply with the requirements of this subpart.

[[Page 480]]

    (d) Amendments to application to increase number of workers. 
Applications may be amended at any time, prior to an RA certification 
determination, to increase the number of workers requested in the 
initial application by not more than 20 percent (50 percent for 
employers of less than ten workers) without requiring an additional 
recruitment period for U.S. workers. Requests for increases above the 
percent prescribed, without additional recruitment, may be approved only 
when the need for additional workers could not have been foreseen, and 
that crops or commodities will be in jeopardy prior to the expiration of 
an additional recruitment period.
    (e) Minor amendments to applications. Minor technical amendments may 
be requested by the employer and made to the application and job offer 
prior to the certification determination if the RA determines they are 
justified and will have no significant effect upon the RA's ability to 
make the labor certification determination required by Sec. 655.106 of 
this part. Amendments described at paragraph (d) of this section are not 
``minor technical amendments''.
    (f) Untimely applications--(1) Notices of denial. If an H-2A 
application, or any part thereof, does not satisfy the time requirements 
specified in paragraph (c) of this section, and if the exception in 
paragraph (d) of this section does not apply, the RA may then advise the 
employer in writing that the certification cannot be granted because, 
pursuant to paragraph (c) of this section, there is not sufficient time 
to test the availability of U.S. workers. The notice of denial shall 
inform the employer of its right to an administrative review or de novo 
hearing before an administrative law judge.
    (2) Emergency situations. Notwithstanding paragraph (f)(1) of this 
section, in emergency situations the RA may waive the time period 
specified in this section on behalf of employers who have not made use 
of temporary alien agricultural workers (H-2 or H-2A) for the prior 
year's agricultural season or for any employer which has other good and 
substantial cause (which may include unforeseen changes in market 
conditions), provided that the RA has an opportunity to obtain 
sufficient labor market information on an expedited basis to make the 
labor certification determination required by Sec. 216 of the INA (8 
U.S.C. 1186). In making this determination, the RA will accept 
information offered by and may consult with representatives of the U.S. 
Department of Agriculture.
    (g) Length of job opportunity. The employer shall set forth on the 
application sufficient information concerning the job opportunity to 
demonstrate to the RA that the need for the worker is ``of a temporary 
or seasonal nature'', as defined at Sec. 655.100(c)(2) of this part. 
Job opportunities of 12 months or more are presumed to be permanent in 
nature. Therefore, the RA shall not grant a temporary alien agricultural 
labor certification where the job opportunity has been or would be 
filled by an H-2A worker for a cumulative period, including temporary 
alien agricultural labor certifications and extensions, of 12 months or 
more, except in extraordinary circumstances.

[52 FR 20507, June 1, 1987, as amended at 64 FR 34966, June 29, 1999]



Sec. 655.102  Contents of job offers.

    (a) Preferential treatment of aliens prohibited. The employer's job 
offer to U.S. workers shall offer the U.S. workers no less than the same 
benefits, wages, and working conditions which the employer is offering, 
intends to offer, or will provide to H-2A workers. Conversely, no job 
offer may impose on U.S. workers any restrictions or obligations which 
will not be imposed on the employer's H-2A workers. This does not 
relieve the employer from providing to H-2A workers at least the same 
level of minimum benefits, wages, and working conditions which must be 
offered to U.S. workers consistent with this section.
    (b) Minimum benefits, wages, and working conditions. Except when 
higher benefits, wages or working conditions are required by the 
provisions of paragraph (a) of this section, DOL has determined that in 
order to protect similarly employed U.S. workers from adverse effect 
with respect to benefits, wages, and working conditions, every job offer 
which must accompany an H-2A application always shall include each of 
the

[[Page 481]]

following minimum benefit, wage, and working condition provisions:
    (1) Housing. The employer shall provide to those workers who are not 
reasonably able to return to their residence within the same day 
housing, without charge to the worker, which may be, at the employer's 
option, rental or public accommodation type housing.
    (i) Standards for employer-provided housing. Housing provided by the 
employer shall meet the full set of DOL Occupational Safety and Health 
Administration standards set forth at 29 CFR 1910.142, or the full set 
of standards at Sec. Sec. 654.404-654.417 of this chapter, whichever 
are applicable, except as provided for under paragraph (b)(1)(iii) of 
this section. Requests by employers, whose housing does not meet the 
applicable standards, for conditional access to the intrastate or 
interstate clearance system, shall be processed under the procedures set 
forth at Sec. 654.403 of this chapter.
    (ii) Standards for range housing. Housing for workers principally 
engaged in the range production of livestock shall meet standards of the 
DOL Occupational Safety and Health Administration for such housing. In 
the absence of such standards, range housing for sheepherders and other 
workers engaged in the range production of livestock shall meet 
guidelines issued by ETA.
    (iii) Standards for other habitation. Rental, public accomodation, 
or other substantially similar class of habitation must meet local 
standards for such housing. In the absence of applicable local 
standards, State standards shall apply. In the absence of applicable 
local or State standards, Occupational Safety and Health Administration 
standards at 29 CFR 1910.142 shall apply. Any charges for rental housing 
shall be paid directly by the employer to the owner or operator of the 
housing. When such housing is to be supplied by an employer, the 
employer shall document to the satisfaction of the RA that the housing 
complies with the local, State, or federal housing standards applicable 
under this paragraph (b)(1)(iii).
    (iv) Charges for public housing. If public housing provided for 
migrant agricultural workers under the auspices of a local, county, or 
State government is secured by an employer, and use of the public 
housing unit normally requires charges from migrant workers, such 
charges shall be paid by the employer directly to the appropriate 
individual or entity affiliated with the housing's management.
    (v) Deposit charges. Charges in the form of deposits for bedding or 
other similar incidentals related to housing shall not be levied upon 
workers by employers who provide housing for their workers. However, 
employers may require workers to reimburse them for damage caused to 
housing by the individual workers found to have been responsible for 
damage which is not the result of normal wear and tear related to 
habitation.
    (vi) Family housing. When it is the prevailing practice in the area 
of intended employment and the occupation to provide family housing, 
family housing shall be provided to workers with families who request 
it.
    (2) Workers' compensation. The employer shall provide, at no cost to 
the worker, insurance, under a State workers' compensation law or 
otherwise, covering injury and disease arising out of and in the course 
of the worker's employment which will provide benefits at least equal to 
those provided under the State workers' compensation law, if any, for 
comparable employment. The employer shall furnish the name of the 
insurance carrier and the insurance policy number, or, if appropriate, 
proof of State law coverage, to the RA prior to the issuance of a labor 
certification.
    (3) Employer-provided items. Except as provided below, the employer 
shall provide, without charge including deposit charge, to the worker 
all tools, supplies, and equipment required to perform the duties 
assigned; the employer may charge the worker for reasonable costs 
related to the worker's refusal or negligent failure to return any 
property furnished by the employer or due to such worker's willful 
damage or destruction of such property. Where it is a common practice in 
the particular area, crop activity and occupation for

[[Page 482]]

workers to provide tools and equipment, with or without the employer 
reimbursing the workers for the cost of providing them, such an 
arrangement is permissible if approved in advance by the RA.
    (4) Meals. Where the employer has centralized cooking and eating 
facilities designed to feed workers, the employer shall provide each 
worker with three meals a day. When such facilities are not available, 
the employer either shall provide each worker with three meals a day or 
shall furnish free and convenient cooking and kitchen facilities to the 
workers which will enable the workers to prepare their own meals. Where 
the employer provides the meals, the job offer shall state the charge, 
if any, to the worker for such meals. Until a new amount is set pursuant 
to this paragraph (b)(4), the charge shall not be more than $5.26 per 
day unless the RA has approved a higher charge pursuant to Sec. 655.111 
of this part. Each year the charge allowed by this paragraph (b)(4) will 
be changed by the same percentage as the 12-month percent change in the 
Consumer Price Index for All Urban Consumers for Food between December 
of the year just concluded and December of the year prior to that. The 
annual adjustments shall be effective on the date of their publication 
by the Director as a notice in the Federal Register.
    (5) Transportation; daily subsistence--(i) Transportation to place 
of employment. The employer shall advance transportation and subsistence 
costs (or otherwise provide them) to workers when it is the prevailing 
practice of non-H-2A agricultural employers in the occupation in the 
area to do so, or when such benefits are extended to H-2A workers. The 
amount of the transportation payment shall be no less (and shall not be 
required to be more) than the most economical and reasonable similar 
common carrier transportation charges for the distances involved. If the 
employer has not previously advanced such transportation and subsistence 
costs to the worker or otherwise provided such transportation or 
subsistence directly to the worker by other means and if the worker 
completes 50 percent of the work contract period, the employer shall pay 
the worker for costs incurred by the worker for transportation and daily 
subsistence from the place from which the worker has come to work for 
the employer to the place of employment. The amount of the daily 
subsistence payment shall be at least as much as the employer will 
charge the worker for providing the worker with three meals a day during 
employment. If no charges will be made for meals and free and convenient 
cooking and kitchen facilities will be provided, the amount of the 
subsistence payment shall be no less than the amount permitted under 
paragraph (b)(4) of this section.
    (ii) Transportation from place of employment. If the worker 
completes the work contract period, the employer shall provide or pay 
for the worker's transportation and daily subsistence from the place of 
employment to the place from which the worker, disregarding intervening 
employment, came to work for the employer, or, if the worker has 
contracted with a subsequent employer who has not agreed in that 
contract to provide or pay for the worker's transportation and daily 
subsistence expenses from the employer's worksite to such subsequent 
employer's worksite, the employer shall provide or pay for such 
expenses; except that, if the worker has contracted for employment with 
a subsequent employer who, in that contract, has agreed to pay for the 
worker's transportation and daily subsistence expenses from the 
employer's worksite to such subsequent employer's worksite, the employer 
is not required to provide or pay for such expenses.
    (iii) Transportation between living quarters and worksite. The 
employer shall provide transportation between the worker's living 
quarters (i.e., housing provided by the employer pursuant to paragraph 
(b)(1) of this section) and the employer's worksite without cost to the 
worker, and such transportation will be in accordance with applicable 
laws and regulations. This paragraph (b)(5)(iii) is applicable to the 
transportation of workers eligible for housing, pursuant to paragraph 
(b)(1) of this section.
    (6) Three-fourths guarantee--(i) Offer to worker. The employer shall 
guarantee to offer the worker employment

[[Page 483]]

for at least three-fourths of the workdays of the total periods during 
which the work contract and all extensions thereof are in effect, 
beginning with the first workday after the arrival of the worker at the 
place of employment and ending on the expiration date specified in the 
work contract or in its extensions, if any. If the employer affords the 
U.S. or H-2A worker during the total work contract period less 
employment than that required under this paragraph (b)(6), the employer 
shall pay such worker the amount which the worker would have earned had 
the worker, in fact, worked for the guaranteed number of days. For 
purposes of this paragraph (b)(6), a workday shall mean the number of 
hours in a workday as stated in the job order and shall exclude the 
worker's Sabbath and federal holidays. An employer shall not be 
considered to have met the work guarantee if the employer has merely 
offered work on three-fourths of the workdays if each workday did not 
consist of a full number of hours of work time specified in the job 
order. The work shall be offered for at least three-fourths of the 
workdays (that is, 3/4 x (number of days) x (specified hours)). 
Therefore, if, for example, the contract contains 20 eight-hour 
workdays, the worker shall be offered employment for 120 hours during 
the 20 workdays. A worker may be offered more than the specified hours 
of work on a single workday. For purposes of meeting the guarantee, 
however, the worker shall not be required to work for more than the 
number hours specified in the job order for a workday, or on the 
worker's Sabbath or Federal holidays.
    (ii) Guarantee for piece-rate-paid worker. If the worker will be 
paid on a piece rate basis, the employer shall use the worker's average 
hourly piece rate earnings or the AEWR, whichever is higher, to 
calculate the amount due under the guarantee.
    (iii) Failure to work. Any hours which the worker fails to work, up 
to a maximum of the number of hours specified in the job order for a 
workday, when the worker has been offered an opportunity to do so 
pursuant to paragraph (b)(6)(i) of this section and all hours of work 
actually performed (including voluntary work over 8 hours in a workday 
or on the worker's Sabbath or federal holidays) may be counted by the 
employer in calculating whether the period of guaranteed employment has 
been met.
    (iv) Displaced H-2A worker. The employer shall not be liable for 
payment under this paragraph (b)(6) with respect to an H-2A worker whom 
the RA certifies is displaced because of the employer's compliance with 
Sec. 655.103(e) of this part.
    (7) Records. (i) The employer shall keep accurate and adequate 
records with respect to the workers' earnings including field tally 
records, supporting summary payroll records and records showing the 
nature and amount of the work performed; the number of hours of work 
offered each day by the employer (broken out by hours offered both in 
accordance with and over and above the three-fourths guarantee at 
paragraph (b)(6) of this section); the hours actually worked each day by 
the worker; the time the worker began and ended each workday; the rate 
of pay (both piece rate and hourly, if applicable); the worker's 
earnings per pay period; the worker's home address; and the amount of 
and reasons for any and all deductions made from the worker's wages;
    (ii) If the number of hours worked by the worker is less than the 
number offered in accordance with the three-fourths guarantee at 
paragraph (b)(6) of this section, the records shall state the reason or 
reasons therefore.
    (iii) Upon reasonable notice, the employer shall make available the 
records, including field tally records and supporting summary payroll 
records for inspection and copying by representatives of the Secretary 
of Labor, and by the worker and representatives designated by the 
worker; and
    (iv) The employer shall retain the records for not less than three 
years after the completion of the work contract.
    (8) Hours and earnings statements. The employer shall furnish to the 
worker on or before each payday in one or more written statements the 
following information:
    (i) The worker's total earnings for the pay period;

[[Page 484]]

    (ii) The worker's hourly rate and/or piece rate of pay;
    (iii) The hours of employment which have been offered to the worker 
(broken out by offers in accordance with and over and above the 
guarantee);
    (iv) The hours actually worked by the worker;
    (v) An itemization of all deductions made from the worker's wages; 
and
    (vi) If piece rates are used, the units produced daily.
    (9) Rates of pay. (i) If the worker will be paid by the hour, the 
employer shall pay the worker at least the adverse effect wage rate in 
effect at the time the work is performed, the prevailing hourly wage 
rate, or the legal federal or State minimum wage rate, whichever is 
highest, for every hour or portion thereof worked during a pay period; 
or
    (ii)(A) If the worker will be paid on a piece rate basis and the 
piece rate does not result at the end of the pay period in average 
hourly piece rate earnings during the pay period at least equal to the 
amount the worker would have earned had the worker been paid at the 
appropriate hourly rate, the worker's pay shall be supplemented at that 
time so that the worker's earnings are at least as much as the worker 
would have earned during the pay period if the worker had been paid at 
the appropriate hourly wage rate for each hour worked; and the piece 
rate shall be no less than the piece rate prevailing for the activity in 
the area of intended employment; and
    (B) If the employer who pays by the piece rate requires one or more 
minimum productivity standards of workers as a condition of job 
retention,
    (1) Such standards shall be specified in the job offer and be no 
more than those required by the employer in 1977, unless the RA approves 
a higher minimum; or
    (2) If the employer first applied for H-2 agricultural or H-2A 
temporary alien agricultural labor certification after 1977, such 
standards shall be no more than those normally required (at the time of 
the first application) by other employers for the activity in the area 
of intended employment, unless the RA approves a higher minimum.
    (10) Frequency of pay. The employer shall state the frequency with 
which the worker will be paid (in accordance with the prevailing 
practice in the area of intended employment, or at least twice monthly 
whichever is more frequent).
    (11) Abandonment of employment; or termination for cause. If the 
worker voluntarily abandons employment before the end of the contract 
period, or is terminated for cause, and the employer notifies the local 
office of such abandonment or termination, the employer will not be 
responsible for providing or paying for the subsequent transportation 
and subsistence expenses of any worker for whom the employer would have 
otherwise been required to pay such expenses under paragraph (b)(5)(ii) 
of this section, and that worker is not entitled to the ``three-fourths 
guarantee'' (see paragraph (b)(6) of this section).
    (12) Contract impossibility. If, before the expiration date 
specified in the work contract, the services of the worker are no longer 
required for reasons beyond the control of the employer due to fire, 
hurricane, or other Act of God which makes the fulfillment of the 
contract impossible the employer may terminate the work contract. In the 
event of such termination of a contract, the employer shall fulfill the 
three-fourths guarantee at paragraph (b)(6) of this section for the time 
that has elapsed from the start of the work contract to its termination. 
In such cases the employer will make efforts to transfer the worker to 
other comparable employment acceptable to the worker. If such transfer 
is not effected, the employer shall:
    (i) Offer to return the worker, at the employer's expense, to the 
place from which the worker disregarding intervening employment came to 
work for the employer,
    (ii) Reimburse the worker the full amount of any deductions made 
from the worker's pay by the employer for transportation and subsistence 
expenses to the place of employment, and
    (iii) Notwithstanding whether the employment has been terminated 
prior to completion of 50 percent of the work contract period originally 
offered by the employer, pay the worker for costs incurred by the worker 
for transportation and daily subsistence from the

[[Page 485]]

place from which the worker, without intervening employment, has come to 
work for the employer to the place of employment. Daily subsistence 
shall be computed as set forth in paragraph (b)(5)(i) of this section. 
The amount of the transportation payment shall be no less (and shall not 
be required to be more) than the most economical and reasonable similar 
common carrier transportation charges for the distances involved.
    (13) Deductions. The employer shall make those deductions from the 
worker's paycheck which are required by law. The job offer shall specify 
all deductions not required by law which the employer will make from the 
worker's paycheck. All deductions shall be reasonable. The employer may 
deduct the cost of the worker's transportation and daily subsistence 
expenses to the place of employment which were borne directly by the 
employer. In such cases, the job offer shall state that the worker will 
be reimbursed the full amount of such deductions upon the worker's 
completion of 50 percent of the worker's contract period. However, an 
employer subject to the Fair Labor Standards Act (FLSA) may not make 
deductions which will result in payments to workers of less than the 
federal minimum wage permitted by the FLSA as determined by the 
Secretary at 29 CFR part 531.
    (14) Copy of work contract. The employer shall provide to the 
worker, no later than on the day the work commences, a copy of the work 
contract between the employer and the worker. The work contract shall 
contain all of the provisions required by paragraphs (a) and (b) of this 
section. In the absence of a separate, written work contract entered 
into between the employer and the worker, the required terms of the job 
order and application for temporary alien agricultural labor 
certification shall be the work contract.
    (c) Appropriateness of required qualifications. Bona fide 
occupational qualifications specified by an employer in a job offer 
shall be consistent with the normal and accepted qualifications required 
by non-H-2A employers in the same or comparable occupations and crops, 
and shall be reviewed by the RA for their appropriateness. The RA may 
require the employer to submit documentation to substantiate the 
appropriateness of the qualification specified in the job offer; and 
shall consider information offered by and may consult with 
representatives of the U.S. Department of Agriculture.
    (d) Positive recruitment plan. The employer shall submit in writing, 
as a part of the application, the employer's plan for conducting 
independent, positive recruitment of U.S. workers as required by 
Sec. Sec. 655.103 and 655.105(a) of this part. Such a plan shall 
include a description of recruitment efforts (if any) made prior to the 
actual submittal of the application. The plan shall describe how the 
employer will engage in positive recruitment of U.S. workers to an 
extent (with respect to both effort and location(s)) no less than that 
of non-H-2A agricultural employers of comparable or smaller size in the 
area of employment. When it is the prevailing practice in the area of 
employment and for the occupation for non-H-2A agricultural employers to 
secure U.S. workers through farm labor contractors and to compensate 
farm labor contractors with an override for their services, the employer 
shall describe how it will make the same level of effort as non-H-2A 
agricultural employers and provide an override which is no less than 
that being provided by non-H-2A agricultural employers.



Sec. 655.103  Assurances.

    As part of the temporary alien agricultural labor certification 
application, the employer shall include in the job offer a statement 
agreeing to abide by the conditions of this subpart. By so doing, the 
employer makes each of the following assurances:
    (a) Labor disputes. The specific job opportunity for which the 
employer is requesting H-2A certification is not vacant because the 
former occupant is on strike or being locked out in the course of a 
labor dispute.
    (b) Employment-related laws. During the period for which the 
temporary alien agricultural labor certification is granted, the 
employer shall comply with applicable federal, State, and

[[Page 486]]

local employment-related laws and regulations, including employment-
related health and safety laws.
    (c) Rejections and terminations of U.S. workers. No U.S. worker will 
be rejected for or terminated from employment for other than a lawful 
job-related reason, and notification of all rejections or terminations 
shall be made to the local office.
    (d) Recruitment of U.S. workers. The employer shall independently 
engage in positive recruitment until the foreign workers have departed 
for the employer's place of employment and shall cooperate with the ES 
System in the active recruitment of U.S. workers by:
    (1) Assisting the ES System to prepare local, intrastate, and 
interstate job orders using the information supplied on the employer's 
job offer;
    (2) Placing advertisements (in a language other than English, where 
the RA determines appropriate) for the job opportunities in newspapers 
of general circulation and/or on the radio, as required by the RA:
    (i) Each such advertisement shall describe the nature and 
anticipated duration of the job opportunity; offer at least the adverse 
effect wage rate; give the \3/4\ guarantee; state that work tools, 
supplies and equipment will be provided by the employer; state that 
housing will also be provided, and that transportation and subsistence 
expenses to the worksite will be provided or paid by the employer upon 
completion of 50% of the work contract, or earlier, if appropriate; and
    (ii) Each such advertisement shall direct interested workers to 
apply for the job opportunity at a local employment service office in 
their area;
    (3) Cooperating with the ES System and independently contacting farm 
labor contractors, migrant workers and other potential workers in other 
areas of the State and/or Nation by letter and/or telephone; and
    (4) Cooperating with the ES System in contacting schools, business 
and labor organizations, fraternal and veterans' organizations, and 
nonprofit organizations and public agencies such as sponsors of programs 
under the Job Training Partnership Act throughout the area of intended 
employment and in other potential labor supply areas in order to enlist 
them in helping to find U.S. workers.
    (e) Fifty-percent rule. From the time the foreign workers depart for 
the employer's place of employment, the employer, except as provided for 
by Sec. 655.106(e)(1) of this part, shall provide employment to any 
qualified, eligible U.S. worker who applies to the employer until 50% of 
the period of the work contract, under which the foreign worker who is 
in the job was hired, has elapsed. In addition, the employer shall offer 
to provide housing and the other benefits, wages, and working conditions 
required by Sec. 655.102 of this part to any such U.S. worker and shall 
not treat less favorably than H-2A workers any U.S. worker referred or 
transferred pursuant to this assurance.
    (f) Other recruitment. The employer shall perform the other specific 
recruitment and reporting activities specified in the notice from the RA 
required by Sec. 655.105(a) of this part, and shall engage in positive 
recruitment of U.S. workers to an extent (with respect to both effort 
and location) no less than that of non-H-2A agricultural employers of 
comparable or smaller size in the area of employment. When it is the 
prevailing practice in the area of employment and for the occupation for 
non-H-2A agricultural employers to secure U.S. workers through farm 
labor contractors and to compensate farm labor contractors with an 
override for their services, the employer shall make the same level of 
effort as non-H-2A agricultural employers and shall provide an override 
which is no less than that being provided by non-H-2A agricultural 
employers. Where the employer has centralized cooking and eating 
facilities designed to feed workers, the employer shall not be required 
to provide meals through an override. The employer shall not be required 
to provide for housing through an override.
    (g) Retaliation prohibited. The employer shall not intimidate, 
threaten, restrain, coerce, blacklist, discharge, or in any manner 
discriminate against, and shall not cause any person to intimidate, 
threaten, restrain, coerce, blacklist, discharge, or in any manner 
discriminate against, any person who has with just cause:

[[Page 487]]

    (1) Filed a complaint under or related to Sec. 216 of the INA (8 
U.S.C. 1186), or this subpart or any other DOL regulation promulgated 
pursuant to Sec. 216 of the INA;
    (2) Instituted or caused to be instituted any proceeding under or 
related to Sec. 216 of the INA, or this subpart or any other DOL 
regulation promulgated pursuant to Sec. 216 of the INA (8 U.S.C. 1186);
    (3) Testified or is about to testify in any proceeding under or 
related to Sec. 216 of the INA (8 U.S.C. 1186), or this subpart or any 
other DOL regulation promulgated pursuant to Sec. 216 of the INA;
    (4) Consulted with an employee of a legal assistance program or an 
attorney on matters related to Sec. 216 of the INA (8 U.S.C. 1186), or 
this subpart or any other DOL regulation promulgated pursuant to Sec. 
216 of the INA; or
    (5) Exercised or asserted on behalf of himself/herself or others any 
right or protection afforded by Sec. 216 of the INA (8 U.S.C. 1186), or 
this subpart or any other DOL regulation promulgated pursuant to Sec. 
216 of the INA.
    (h) Fees. The application shall include the assurance that fees will 
be paid in a timely manner, as follows:
    (1) Amount. The fee for each employer receiving a temporary alien 
agricultural labor certification is $100 plus $10 for each job 
opportunity for H-2A workers certified, provided that the fee for an 
employer for each temporary alien agricultural labor certification 
received shall be no greater than $1,000. In the case of a joint 
employer association receiving a temporary alien agricultural labor 
certification, the fee for each employer-member receiving a temporary 
alien agricultural labor certification shall be $100 plus $10 for each 
job opportunity for H-2A workers certified, provided that the fee for an 
employer for each temporary alien agricultural labor certification 
received shall be no greater than $1,000. The joint employer association 
will not be charged a separate fee. Fees shall be paid by a check or 
money order made payable to ``Department of Labor'', and are 
nonrefundable. In the case of employers of H-2A workers which are 
members of a joint employer association applying on their behalf, the 
aggregate fees for all employers of H-2A workers under the application 
may be paid by one check or money order.
    (2) Timeliness. Fees received by the RA within 30 calendar days 
after the date of the temporary alien agricultural labor certification 
determination are timely.

[52 FR 20507, June 1, 1987, as amended by 55 FR 29358, July 19, 1990]



Sec. 655.104  Determinations based on acceptability of H-2A applications.

    (a) Local office activities. The local office, using the job offer 
portion of the H-2A application, shall promptly prepare a local job 
order and shall begin to recruit U.S. workers in the area of intended 
employment. The RA should notify the State or local office by telephone 
no later than seven calendar days after the application was received by 
the RA if the application has been accepted for consideration. Upon 
receiving such notice or seven calendar days after the application is 
received by the local office, whichever is earlier, the local office 
shall promptly prepare an agricultural clearance order which will permit 
the recruitment of U.S. workers by the Employment Service System on an 
intrastate and interstate basis.
    (b) Regional office activities. The RA, upon receipt of the H-2A 
application, shall promptly review the application to determine whether 
it is acceptable for consideration under the timeliness and adverse 
effect criteria of Sec. Sec. 655.101-655.103 of this part. If the RA 
determines that the application does not meet the requirements of 
Sec. Sec. 655.101-655.103, the RA shall not accept the application for 
consideration on the grounds that the availability of U.S. workers 
cannot be adequately tested because the benefits, wages and working 
conditions do not meet the adverse effect criteria; however, if the RA 
determines that the application is not timely in accordance with Sec. 
655.101 of this part and that neither the first-year employer provisions 
of Sec. 655.101(c)(5) nor the emergency provisions of Sec. 655.101(f) 
apply, the RA may determine not to accept the application for 
consideration because there is not sufficient time to test the 
availability of U.S. workers.

[[Page 488]]

    (c) Rejected applications. If the application is not accepted for 
consideration, the RA shall notify the applicant in writing (by means 
normally assuring next-day delivery) within seven calendar days of the 
date the application was received by the RA with a copy to the local 
office. The notice shall:
    (1) State all the reasons the application is not accepted for 
consideration, citing the relevant regulatory standards;
    (2) Offer the applicant an opportunity for the resubmission within 
five calendar days of a modified application, stating the modifications 
needed in order for the RA to accept the application for consideration;
    (3) Offer the applicant an opportunity to request an expedited 
administrative review of or a de novo administrative hearing before an 
administrative law judge of the nonacceptance; the notice shall state 
that in order to obtain such a review or hearing, the employer, within 
seven calendar days of the date of the notice, shall file by facsimile 
(fax), telegram, or other means normally assuring next day delivery a 
written request to the Chief Administrative Law Judge of the Department 
of Labor (giving the address) and simultaneously serve a copy on the RA; 
the notice shall also state that the employer may submit any legal 
arguments which the employer believes will rebut the basis of the RA's 
action; and
    (4) State that if the employer does not request an expedited 
administrative-judicial review or a de novo hearing before an 
administrative law judge within the seven calendar days no further 
consideration of the employer's application for temporary alien 
agricultural labor certification will be made by any DOL official.
    (d) Appeal procedures. If the employer timely requests an expedited 
administrative review or de novo hearing before an administrative law 
judge pursuant to paragraph (c)(3) of this section, the procedures at 
Sec. 655.112 of this part shall be followed.
    (e) Required modifications. If the application is not accepted for 
consideration by the RA, but the RA's written notification to the 
applicant is not timely as required by Sec. 655.101 of this part, the 
certification determination will not be extended beyond 20 calendar days 
before the date of need. The notice will specify that the RA's temporary 
alien agricultural labor certification determination will be made no 
later than 20 calendar days before the date of need, provided that the 
applicant submits the modifications to the application which are 
required by the RA within five calendar days and in a manner specified 
by the RA which will enable the test of U.S. worker availability to be 
made as required by Sec. 655.101 of this part within the time available 
for such purposes.

[42 FR 45899, Sept. 13, 1977, as amended at 59 FR 41875, Aug. 15, 1994]



Sec. 655.105  Recruitment period.

    (a) Notice of acceptance of application for consideration; required 
recruitment. If the RA determines that the H-2A application meets the 
requirements of Sec. Sec. 655.101-655.103 of this part, the RA shall 
promptly notify the employer (by means normally assuring next-day 
delivery) in writing with copies to the State agency. The notice shall 
inform the employer and the State agency of the specific efforts which 
will be expected from them during the following weeks to carry out the 
assurances contained in Sec. 655.103 with respect to the recruitment of 
U.S. workers. The notice shall require that the job order be laced into 
intrastate clearance and into interstate clearance to such States as the 
RA shall determine to be potential sources of U.S. workers. The notice 
may require the employer to engage in positive recruitment efforts 
within a multi-State region of traditional or expected labor supply 
where the RA finds, based on current information provided by a State 
agency and such information as may be offered and provided by other 
sources, that there are a significant number of able and qualified U.S. 
workers who, if recruited, would likely be willing to make themselves 
available for work at the time and place needed. In making such a 
finding, the RA shall take into account other recent recruiting efforts 
in those areas and will attempt to avoid requiring employers to futilely

[[Page 489]]

recruit in areas where there are a significant number of local employers 
recruiting for U.S. workers for the same types of occupations. Positive 
recruitment is in addition to, and shall be conducted within the same 
time period as, the circulation through the interstate clearance system 
of an agricultural clearance order. The obligation to engage in such 
positive recruitment shall terminate on the date H-2A workers depart for 
the employer's place of work. In determining what positive recruitment 
shall be required, the RA will ascertain the normal recruitment 
practices of non-H-2A agricultural employers in the area and the kind 
and degree of recruitment efforts which the potential H-2A employer made 
to obtain H-2A workers. The RA shall ensure that the effort, including 
the location(s) of the positive recruitment required of the potential H-
2A employer, during the period after filing the application and before 
the date the H-2A workers depart their prior location to come to the 
place of employment, shall be no less than: (1) The recruitment efforts 
of non-H-2A agricultural employers of comparable or smaller size in the 
area of employment; and (2) the kind and degree of recruitment efforts 
which the potential H-2A employer made to obtain H-2A workers.
    (b) Recruitment of U.S. workers. After an application for temporary 
alien agricultural labor certification is accepted for processing 
pursuant to paragraph (a) of this section, the RA, under the direction 
of the ETA national office and with the assistance of other RAs with 
respect to areas outside the region, shall provide overall direction to 
the employer and the State agency with respect to the recruitment of 
U.S. workers.
    (c) Modifications. At any time during the recruitment effort, the 
RA, with the Director's concurrence, may require modifications to a job 
offer when the RA determines that the job offer does not contain all the 
provisions relating to minimum benefits, wages, and working conditions, 
required by Sec. 655.102(b) of this part. If any such modifications are 
required after an application has been accepted for consideration by the 
RA, the modifications must be made; however, the certification 
determination shall not be delayed beyond the 20 calendar days prior to 
the date of need as a result of such modification.
    (d) Final determination. By 20 calendar days before the date of need 
specified in the application, except as provided for under Sec. Sec. 
655.101(c)(2) and 655.104(e) of this part for untimely modified 
applications, the RA, when making a determination of the availability of 
U.S. workers, shall also make a determination as to whether the employer 
has satisfied the recruitment assurances in Sec. 655.103 of this part. 
If the RA concludes that the employer has not satisfied the requirements 
for recruitment of U.S. workers, the RA shall deny the temporary alien 
agricultural labor certification, and shall immediately notify the 
employer in writing with a copy to the State agency and local office. 
The notice shall contain the statements specified in Sec. 655.104(d) of 
this part.
    (e) Appeal procedure. With respect to determinations by the RA 
pursuant to this section, if the employer timely requests an expedited 
administrative review or a de novo hearing before an administrative law 
judge, the procedures in Sec. 655.112 of this part shall be followed.



Sec. 655.106  Referral of U.S. workers; determinations based on U.S. 
worker availability and adverse effect; activities after receipt of 
the temporary alien agricultural labor certification.

    (a) Referral of able, willing, and qualified eligible U.S. workers. 
With respect to the referral of U.S. workers to job openings listed on a 
job order accompanying an application for temporary alien agricultural 
labor certification, no U.S. worker-applicant shall be referred unless 
such U.S. worker has been made aware of the terms and conditions of and 
qualifications for the job, and has indicated, by accepting referral to 
the job, that she or he meets the qualifications required and is able, 
willing, and eligible to take such a job.
    (b) (1) Determinations. If the RA, in accordance with Sec. 655.105 
of this part, has determined that the employer has complied with the 
recruitment assurances and the adverse effect criteria of

[[Page 490]]

Sec. 655.102 of this part, by the date specified pursuant to Sec. 
655.101(c)(2) of this part for untimely modified applications or 20 
calendar days before the date of need specified in the application, 
whichever is applicable, the RA shall grant the temporary alien 
agricultural labor certification request for enough H-2A workers to fill 
the employer's job opportunities for which U.S. workers are not 
available. In making the temporary alien agricultural labor 
certification determination, the RA shall consider as available any U.S. 
worker who has made a firm commitment to work for the employer, 
including those workers committed by other authorized persons such as 
farm labor contractors and family heads. Such a firm commitment shall be 
considered to have been made not only by workers who have signed work 
contracts with the employer, but also by those whom the RA determines 
are likely to sign a work contract. The RA shall count as available any 
U.S. worker who has applied to the employer (or on whose behalf an 
application has been made), but who was rejected by the employer for 
other than lawful job-related reasons or who has not been provided with 
a lawful job-related reason for rejection by the employer, as determined 
by the RA. The RA shall not grant a temporary alien agricultural labor 
certification request for any H-2A workers if the RA determines that:
    (i) Enough able, willing, and qualified U.S. workers have been 
identified as being available to fill all the employer's job 
opportunities;
    (ii) The employer, since the time the application was accepted for 
consideration under Sec. 655.104 of this part, has adversely affected 
U.S. workers by offering to, or agreeing to provide to, H-2A workers 
better wages, working conditions or benefits (or by offering to, or 
agreeing to impose on alien workers less obligations and restrictions) 
than those offered to U.S. workers;
    (iii) The employer during the previous two-year period employed H-2A 
workers and the RA has determined, after notice and opportunity for a 
hearing, that the employer at any time during that period substantially 
violated a material term or condition of a temporary alien agricultural 
labor certification with respect to the employment of U.S. or H-2A 
workers;
    (iv) The employer has not complied with the workers' compensation 
requirements at Sec. 655.102(b)(2) of this part; or
    (v) The employer has not satisfactorily complied with the positive 
recruitment requirements specified by this subpart.

Further, the RA, in making the temporary alien agricultural labor 
certification determination, will subtract from any temporary alien 
agricultural labor certification the specific verified number of job 
opportunities involved which are vacant because of a strike or other 
labor dispute involving a work stoppage, or a lockout, in the occupation 
at the place of employment (and for which H-2A workers have been 
requested). Upon receipt by the RA of such labor dispute information 
from any source, the RA shall verify the existence of the strike, labor 
dispute, or lockout and the vacancies directly attributable through the 
receipt by the RA of a written report from the State agency written 
following an investigation by the State agency (made under the oversight 
of the RA) of the situation and after the RA has consulted with the 
Director prior to making such a determination.
    (2) Fees. A temporary alien agricultural labor certification 
determination granting an application shall include a bill for the 
required fees. Each employer (except joint employer associations) of H-
2A workers under the application for temporary alien agricultural labor 
certification shall pay in a timely manner a nonrefundable fee upon 
issuance of the temporary alien agricultural labor certification 
granting the application (in whole or in part), as follows:
    (i) Amount. The fee for each employer receiving a temporary alien 
agricultural labor certification is $100 plus $10 for each job 
opportunity for H-2A workers certified, provided that the fee to an 
employer for each temporary alien agricultural labor certification 
received shall be no greater than $1,000. In the case of a joint 
employer association receiving a temporary alien agricultural labor 
certification, each employer-member receiving a temporary

[[Page 491]]

alien agricultural labor certification shall pay a fee of $100 plus $10 
for each job opportunity for H-2A workers certified, provided that the 
fee to an employer for each temporary alien agricultural labor 
certification received shall be no greater than $1,000. The joint 
employer association will not be charged a separate fee. The fees shall 
be paid by check or money order made payable to ``Department of Labor''. 
In the case of employers of H-2A workers which are members of a joint 
employer association applying on their behalf, the aggregate fees for 
all employers of H-2A workers under the application may be paid by one 
check or money order.
    (ii) Timeliness. Fees received by the RA no more than 30 calendar 
days after the date of the temporary alien agricultural labor 
certification determination are timely.
    (c) Changes to temporary alien agricultural labor certifications; 
temporary alien agricultural labor certifications involving employer 
associations--(1) Changes. Temporary alien agricultural labor 
certifications are subject to the conditions and assurances made during 
the application process. Any changes in the level of benefits, wages, 
and working conditions an employer may wish to make at any time during 
the work contract period must be approved by the RA after written 
application by the employer, even if such changes have been agreed to by 
an employee. Temporary alien agricultural labor certifications shall be 
for the specific period of time specified in the employer's job offer, 
which shall be less than twelve months; shall be limited to the 
employer's specific job opportunities; and may not be transferred from 
one employer to another, except as provided for by paragraph (c)(2) of 
this section.
    (2) Associations--(i) Applications. If an association is requesting 
a temporary alien agricultural labor certification as a joint employer, 
the temporary alien agricultural labor certification granted under this 
section shall be made jointly to the association and to its employer 
members. Except as provided in paragraph (c)(2)(iii) of this section, 
such workers may be transferred among its producer members to perform 
work for which the temporary alien agricultural labor certification was 
granted, provided the association controls the assignment of such 
workers and maintains a record of such assignments. All temporary alien 
agricultural labor certifications to associations may be used for the 
certified job opportunities of any of its members. If an association is 
requesting a temporary alien agricultural labor certification as a sole 
employer, the temporary alien agricultural labor certification granted 
pursuant to this section shall be made to the association only.
    (ii) Referrals and transfers. For the purposes of complying with the 
``fifty-percent rule'' at Sec. 655.103(e) of this part, any association 
shall be allowed to refer or transfer workers among its members (except 
as provided in paragraph (c)(2)(iii) of this section), and an 
association acting as an agent for its members shall not be considered a 
joint employer merely because of such referral or transfer.
    (iii) Ineligible employer-members. Workers shall not be transferred 
or referred to an association's member, if that member is ineligible to 
obtain any or any additional workers, pursuant to Sec. 655.110 of this 
part.
    (3) Extension of temporary alien agricultural labor certification--
(i) Short-term extension. An employer who seeks an extension of two 
weeks or less of the temporary alien agricultural labor certification 
shall apply for such extension to INS. If INS grants such an extension, 
the temporary alien agricultural labor certification shall be deemed 
extended for such period as is approved by INS. No extension granted 
under this paragraph (c)(3)(i) shall be for a period longer than the 
original work contract period of the temporary alien agricultural labor 
certification.
    (ii) Long-term extension. For extensions beyond the period which may 
be granted by INS pursuant to paragraph (c)(3)(i) of this section, an 
employer, after 50 percent of the work contract period has elapsed, may 
apply to the RA for an extension of the period of the temporary alien 
agricultural labor certification, for reasons related to weather 
conditions or other external factors beyond the control of the employer 
(which may include unforeseen changes in market conditions), provided 
that

[[Page 492]]

the employer's need for an extension is supported in writing by the 
employer, with documentation showing that the extension is needed and 
could not have been reasonably foreseen by the employer. The RA shall 
grant or deny the request for extension of the temporary alien 
agricultural labor certification based on available information, and 
shall notify the employer of the decision on the request in writing. The 
RA shall not grant an extension where the total work contract period, 
including past temporary alien labor certifications for the job 
opportunity and extensions, would be 12 months or more, except in 
extraordinary circumstances. The RA shall not grant an extension where 
the temporary alien agricultural labor certification has already been 
extended by INS pursuant to paragraph (c)(3)(i) of this section.
    (d) Denials of applications. If the RA does not grant the temporary 
alien agricultural labor certification (in whole or in part) the RA 
shall notify the employer by means reasonably calculated to assure next-
day delivery. The notification shall contain all the statements required 
in Sec. 655.104(c) of this part. If a timely request is made for an 
administrative-judicial review or a de novo hearing by an administrative 
law judge, the procedures of Sec. 655.112 of this part shall be 
followed.
    (e) Approvals of applications--(1) Continued recruitment of U.S. 
workers. After a temporary agricultural labor certification has been 
granted, the employer shall continue its efforts to recruit U.S. workers 
until the actual date the H-2A workers depart for the employer's place 
of employment.
    (i) Unless the local employment office is informed in writing of a 
different date, the local office shall deem the third day immediately 
preceding the employer's first date of need to be the date the H-2A 
workers depart for the employer's place of employment. The employer may 
notify the local office in writing if the workers depart prior to that 
date.
    (ii)(A) If the H-2A workers do not depart for the place of 
employment on or before the first date of need (or by the stated date of 
departure, if the local office has been advised of a different date), 
the employer shall notify the local employment office in writing (or 
orally, confirmed in writing) as soon as the employer knows that the 
workers will not depart by the first date of need, and in no event later 
than such date of need. At the same time, the employer shall notify the 
local office of the workers' expected departure date, if known. No 
further notice is necessary if the workers depart by the stated date of 
departure.
    (B) If the employer did not notify the local office of the expected 
departure date pursuant to paragraph (e)(1)(ii)(A) of this section, or 
if the H-2A workers do not leave for the place of employment on or 
before the stated date of departure, the employer shall notify the local 
employment office in writing (or orally, confirmed in writing) as soon 
as the employer becomes aware of the expected departure date, or that 
the workers did not depart by the stated date and the new expected 
departure date, as appropriate.
    (2) Requirement for Active Job Order. The employer shall keep an 
active job order on file until the ``50-percent rule'' assurance at 
Sec. 655.103(e) of this part is met, except as provided by paragraph 
(f) of this section.
    (3) Referrals by ES System. The ES system shall continue to refer to 
the employer U.S. workers who apply as long as there is an active job 
order on file.
    (f) Exceptions--(1) ``Fifty-percent rule'' inapplicable to small 
employers. The assurance requirement at Sec. 655.103(e) of this part 
does not apply to any employer who:
    (i) Did not, during any calendar quarter during the preceding 
calendar year, use more than 500 ``man-days'' of agricultural labor, as 
defined in section 3(u) of the Fair Labor Standards Act of 1938 (29 
U.S.C. 203(u)), and so certifies to the RA in the H-2A application; and
    (ii) Is not a member of an association which has applied for a 
temporary alien agricultural labor certification under this subpart for 
its members; and
    (iii) Has not otherwise ``associated'' with other employers who are 
applying for H-2A workers under this subpart, and so certifies to the 
RA.
    (2) Displaced H-2A workers. An employer shall not be liable for 
payment under Sec. 655.102(b)(6) of this part with respect to an H-2A 
worker whom the RA

[[Page 493]]

certifies is displaced due to compliance with Sec. 655.103(e) of this 
part.
    (g) Withholding of U.S. workers prohibited--(1) Complaints. Any 
employer who has reason to believe that a person or entity has willfully 
and knowingly withheld U.S. workers prior to the arrival at the job site 
of H-2A workers in order to force the hiring of U.S. workers under Sec. 
655.103(e) of this part may submit a written complaint to the local 
office. The complaint shall clearly identify the person or entity whom 
the employer believes has withheld the U.S. workers, and shall specify 
sufficient facts to support the allegation (e.g., dates, places, numbers 
and names of U.S. workers) which will permit an investigation to be 
conducted by the local office.
    (2) Investigations. The local office shall inform the RA by 
telephone that a complaint under the provisions of paragraph (g) of this 
section has been filed and shall immediately investigate the complaint. 
Such investigation shall include interviews with the employer who has 
submitted the complaint, the person or entity named as responsible for 
withholding the U.S. workers, and the individual U.S. workers whose 
availability has purportedly been withheld. In the event the local 
office fails to conduct such interviews, the RA shall do so.
    (3) Reports of findings. Within five working days after receipt of 
the complaint, the local office shall prepare a report of its findings, 
and shall submit such report (including recommendations) and the 
original copy of the employer's complaint to the RA.
    (4) Written findings. The RA shall immediately review the employer's 
complaint and the report of findings submitted by the local office, and 
shall conduct any additional investigation the RA deems appropriate. No 
later than 36 working hours after receipt of the employer's complaint 
and the local office's report, the RA shall issue written findings to 
the local office and the employer. Where the RA determines that the 
employer's complaint is valid and justified, the RA shall immediately 
suspend the application of Sec. 655.103(e) of this part to the 
employer. Such suspension of Sec. 655.103(e) of this part under these 
circumstances shall not take place, however, until the interviews 
required by paragraph (g)(2) of this section have been conducted. The 
RA's determination under the provisions of this paragraph (g)(4) shall 
be the final decision of the Secretary, and no further review by any DOL 
official shall be given to it.
    (h) Requests for new temporary alien agricultural labor 
certification determinations based on nonavailability of able, willing, 
and qualified U.S. workers--(1) Standards for requests. If a temporary 
alien agricultural labor certification application has been denied (in 
whole or in part) based on the RA's determination of the availability of 
able, willing, and qualified U.S. workers, and, on or after 20 calendar 
days before the date of need specified in the temporary alien 
agricultural labor certification determination, such U.S. workers 
identified as being able, willing, qualified, and available are, in 
fact, not able, willing, qualified, or available at the time and place 
needed, the employer may request a new temporary alien agricultural 
labor certification determination from the RA. The RA shall 
expeditiously, but in no case later than 72 hours after the time a 
request is received, make a determination on the request.
    (2) Filing requests. The employer's request for a new determination 
shall be made directly to the RA. The request may be made to the RA by 
telephone, but shall be confirmed by the employer in writing as required 
by paragraphs (h)(2)(i) or (ii) of this section.
    (i) Workers not able, willing, qualified, or eligible. If the 
employer asserts that any worker who has been referred by the ES System 
or by any other person or entity is not an eligible worker or is not 
able, willing, or qualified for the job opportunity for which the 
employer has requested H-2A workers, the burden of proof is on the 
employer to establish that the individual referred is not able, willing, 
qualified, or eligible because of lawful job-related reasons. The 
employer's burden of proof shall be met by the employer's submission to 
the RA, within 72 hours of the RA's receipt of the request for a new 
determination, of a signed statement of the employer's assertions, which 
shall identify each rejected worker by name

[[Page 494]]

and shall state each lawful job-related reason for rejecting that 
worker.
    (ii) U.S. workers not available. If the employer telephonically 
requests the new determination, asserting solely that U.S. workers are 
not available, the employer shall submit to the RA a signed statement 
confirming such assertion. If such signed statement is not received by 
the RA within 72 hours of the RA's receipt of the telephonic request for 
a new determination, the RA may make the determination based solely on 
the information provided telephonically and the information (if any) 
from the local office.
    (3) Regional office review--(i) Expeditious review. The RA 
expeditiously shall review the request for a new determination. The RA 
may request a signed statement from the local office in support of the 
employer's assertion of U.S. worker nonavailability or referred U.S. 
workers not being able, willing, or qualified because of lawful job-
related reasons.
    (ii) New determination. If the RA determines that the employer's 
assertion of nonavailability is accurate and that no able, willing, or 
qualified U.S. worker has been refused or is being refused employment 
for other than lawful job-related reasons, the RA shall, within 72 hours 
after receipt of the employer's request, render a new determination. 
Prior to making a new determination, the RA promptly shall ascertain 
(which may be through the ES System or other sources of information on 
U.S. worker availability) whether able, willing, and qualified 
replacement U.S. workers are available or can be reasonably expected to 
be present at the employer's establishment within 72 hours from the date 
the employer's request was received.
    (iii) Notification of new determination. If the RA cannot identify 
sufficient able, willing, and qualified U.S. workers who are or who are 
likely to be available, the RA shall grant the employer's new 
determination request (in whole or in part) based on available 
information as to replacement U.S. worker availability. The RA's 
notification to the employer on the new determination shall be in 
writing (by means normally assuring next-day delivery), and the RA's 
determination under the provisions of this paragraph (h)(3) shall be the 
final decision of the Secretary, and no further review shall be given to 
an employer's request for a new H-2A determination by any DOL official. 
However, this does not preclude an employer from submitting subsequent 
requests for new determinations, if warranted, based on subsequent facts 
concerning purported nonavailability of U.S. workers or referred workers 
not being eligible workers or not able, willing, or qualified because of 
lawful job-related reasons.

[52 FR 20507, June 1, 1987, as amended at 55 FR 29358, July 19, 1990; 64 
FR 34966, June 29, 1999]



Sec. 655.107  Adverse effect wage rates (AEWRs).

    (a) Computation and publication of AEWRs. Except as otherwise 
provided in this section, the AEWRs for all agricultural employment 
(except for those occupations deemed inappropriate under the special 
circumstances provisions of Sec. 655.93 of this part) for which 
temporary alien agricultural labor certification is being sought shall 
be equal to the annual weighted average hourly wage rate for field and 
livestock workers (combined) for the region as published annually by the 
U.S. Department of Agriculture (USDA) based on the USDA quarterly wage 
survey. The Director shall publish, at least once in each calendar year, 
on a date or dates to be determined by the Director, AEWRs for each 
State (for which USDA publishes regional data), calculated pursuant to 
this paragraph (a) as a notice or notices in the Federal Register.
    (b) Higher prevailing wage rates. If, as the result of a State 
agency prevailing wage survey determination, the prevailing wage rate in 
an area and agricultural activity (as determined by the State agency 
survey and verified by the Director) is found to be higher that the AEWR 
computed pursuant to paragraph (a) of this section, the higher 
prevailing wage rate shall be offered and paid to all workers by 
employers seeking temporary alien agricultural labor certification for 
that agricultural activity and area.

[[Page 495]]

    (c) Federal minimum wage rate. In no event shall an AEWR computed 
pursuant to this section be lower than the hourly wage rate published in 
29 U.S.C. 206(a)(1) and currently in effect.

[52 FR 20507, June 1, 1987, as amended at 54 FR 28046, July 5, 1989]



Sec. 655.108  H-2A applications involving fraud or willful 
misrepresentation.

    (a) Referral for investigation. If possible fraud or willful 
misrepresentation involving a temporary alien agricultural labor 
certification application is discovered prior to a final temporary alien 
agricultural labor certification determination or if it is learned that 
the employer or agent (with respect to an application) is the subject of 
a criminal indictment or information filed in a court, the RA shall 
refer the matter to the INS and DOL Office of the Inspector General for 
investigation. The RA shall continue to process the application and may 
issue a temporary alien agricultural labor certification.
    (b) Continued processing. If a court finds an employer or agent not 
guilty of fraud or willful misrepresentation, or if the Department of 
Justice decides not to prosecute an employer or agent, the RA shall not 
deny the temporary alien agricultural labor certification application on 
the grounds of fraud or willful misrepresentation. The application, of 
course, may be denied for other reasons pursuant to this subpart.
    (c) Terminated processing. If a court or the INS determines that 
there was fraud or willful misrepresentation involving a temporary alien 
agricultural labor certification application, the application is 
thereafter invalid, consideration of the application shall be terminated 
and the RA shall return the application to the employer or agent with 
the reasons therefor stated in writing.



Sec. 655.110  Employer penalties for noncompliance with terms and 
conditions of temporary alien agricultural labor certifications.

    (a) Investigation of violations. If, during the period of two years 
after a temporary alien agricultural labor certification has been 
granted (in whole or in part), the RA has reason to believe that an 
employer violated a material term or condition of the temporary alien 
agricultural labor certification, the RA shall, except as provided in 
paragraph (b) of this section, investigate the matter. If, after the 
investigation, the RA determines that a substantial violation has 
occurred, the RA, after consultation with the Director, shall notify the 
employer that a temporary alien agricultural certification request will 
not be granted for the next period of time in a calendar year during 
which the employer would normally be expected to request a temporary 
alien agricultural labor certification, and any application subsequently 
submitted by the employer for that time period will not be accepted by 
the RA. If multiple or repeated substantial violations are involved, the 
RA's notice to the employer shall specify that the prospective denial of 
the temporary alien agricultural labor certification will apply not only 
to the next anticipated period for which a temporary alien agricultural 
labor certification would normally be requested, but also to any periods 
within the coming two or three years; two years for two violations, or 
repetitions of the same violations, and three years for three or more 
violations, or repetitions thereof. The RA's notice shall be in writing, 
shall state the reasons for the determinations, and shall offer the 
employer an opportunity to request an expedited administrative review or 
a de novo hearing before an administrative law judge of the 
determination within seven calendar days of the date of the notice. If 
the employer requests an expedited administrative review or a de novo 
hearing before an administrative law judge, the procedures in Sec. 
655.112 of this part shall be followed.
    (b) Employment Standards Administration investigations. The RA may 
make the determination described in paragraph (a) of this section based 
on information and recommendations provided by the Employment Standards 
Administration, after an Employment Standards Administration 
investigation has been conducted in accordance with the Employment 
Standards Administration procedures, that an employer has not complied 
with the terms and conditions of employment prescribed as a

[[Page 496]]

condition for a temporary alien agricultural labor certification. In 
such instances, the RA need not conduct any investigation of his/her 
own, and the subsequent notification to the employer and other 
procedures contained in paragraph (a) of this section will apply. 
Penalties invoked by the Employment Standards Administration for 
violations of temporary alien agricultural labor certification terms and 
conditions shall be treated and handled separately from sanctions 
available to the RA, and an employer's obligations for compliance with 
the Employment Standards Administration's enforcement penalties shall 
not absolve an employer from sanctions applied by ETA under this section 
(except as noted in paragraph (a) of this section).
    (c) Less than substantial violations--(1) Requirement of special 
procedures. If, after investigation as provided for under paragraph (a) 
of this section, or an Employment Standards Administration notification 
as provided under paragraph (b) of this section, the RA determines that 
a less than substantial violation has occurred, but the RA has reason to 
believe that past actions on the part of the employer may have had and 
may continue to have a chilling or otherwise negative effect on the 
recruitment, employment, and retention of U.S. workers, the RA may 
require the employer to conform to special procedures before and after 
the temporary alien labor certification determination (including special 
on-site positive recruitment and streamlined interviewing and referral 
techniques) designed to enhance U.S. worker recruitment and retention in 
the next year as a condition for receiving a temporary alien 
agricultural labor certification. Such requirements shall be reasonable, 
and shall not require the employer to offer better wages, working 
conditions and benefits than those specified in Sec. 655.102 of this 
part, and shall be no more than deemed necessary to assure employer 
compliance with the test of U.S. worker availability and adverse effect 
criteria of this subpart. The RA shall notify the employer in writing of 
the special procedures which will be required in the coming year. The 
notification shall state the reasons for the imposition of the 
requirements, state that the employer's agreement to accept the 
conditions will constitute inclusion of them as bona fide conditions and 
terms of a temporary alien agricultural labor certification, and shall 
offer the employer an opportunity to request an administrative review or 
a de novo hearing before an administrative law judge. If an 
administrative review or de novo hearing is requested, the procedures 
prescribed in Sec. 655.112 of this part shall apply.
    (2) Failure to comply with special procedures. If the RA determines 
that the employer has failed to comply with special procedures required 
pursuant to paragraph (c)(1) of this section, the RA shall send a 
written notice to the employer, stating that the employer's otherwise 
affirmative temporary alien agricultural labor certification 
determination will be reduced by twenty-five percent of the total number 
of H-2A aliens requested (which cannot be more than those requested in 
the previous year) for a period of one year. Notice of such a reduction 
in the number of workers requested shall be conveyed to the employer by 
the RA in the RA's written temporary alien agricultural labor 
certification determination required by Sec. 655.101 of this part (with 
the concurrence of the Director). The notice shall offer the employer an 
opportunity to request an administrative review or a de novo hearing 
before an administrative law judge. If an administrative review or de 
novo hearing is requested, the procedures prescribed in Sec. 655.112 of 
this part shall apply, provided that if the administrative law judge 
affirms the RA's determination that the employer has failed to comply 
with special procedures required by paragraph (c)(1) of this section, 
the reduction in the number of workers requested shall be twenty-five 
percent of the total number of H-2A aliens requested (which cannot be 
more than those requested in the previous year) for a period of one 
year.
    (d) Penalties involving members of associations. If, after 
investigation as provided for under paragraph (a) of this section, or 
notification from the Employment Standards Administration under 
paragraph (b) of this section, the

[[Page 497]]

RA determines that a substantial violation has occurred, and if an 
individual producer member of a joint employer association is determined 
to have committed the violation, the denial of temporary alien 
agricultural labor certification penalty prescribed in paragraph (a) 
shall apply only to that member of the association unless the RA 
determines that the association or other association member participated 
in, had knowledge of, or had reason to know of the violation, in which 
case the penalty shall be invoked against the association or other 
association member as well.
    (e) Penalties involving associations acting as joint employers. If, 
after investigation as provided for under paragraph (a) of this section, 
or notification from the Employment Standards Administration under 
paragraph (b) of this section, the RA determines that a substantial 
violation has occurred, and if an association acting as a joint employer 
with its members is determined to have committed the violation, the 
denial of temporary alien agricultural labor certification penalty 
prescribed in paragraph (a) of this section shall apply only to the 
association, and shall not be applied to any individual producer member 
of the association unless the RA determines that the member participated 
in, had knowledge of, or reason to know of the violation, in which case 
the penalty shall be invoked against the association member as well.
    (f) Penalties involving associations acting as sole employers. If, 
after investigation as provided for under paragraph (a) of this section, 
or notification from the Employment Standards Administration under 
paragraph (b) of this section, the RA determines that a substantial 
violation has occurred, and if an association acting as a sole employer 
is determined to have committed the violation, no individual producer 
member of the association shall be permitted to employ certified H-2A 
workers in the crop and occupation for which the H-2A workers had been 
previously certified for the sole employer association unless the 
producer member applies for temporary alien agricultural labor 
certification under the provisions of this subpart in the capacity of an 
individual employer/applicant or as a member of a joint employer 
association, and is granted temporary alien agricultural labor 
certification by the RA.
    (g) Types of violations--(1) Substantial violation. For the purposes 
of this subpart, a substantial violation is one or more actions of 
commission or omission on the part of the employer or the employer's 
agent, with respect to which the RA determines:
    (i)(A) That the action(s) is/are significantly injurious to the 
wages, benefits, or working conditions of 10 percent or more of an 
employer's U.S. and/or H-2A workforce; and that:
    (1) With respect to the action(s), the employer has failed to comply 
with one or more penalties imposed by the Employment Standards 
Administration for violation(s) of contractual obligations found by that 
agency (if applicable), or with one or more decisions or orders of the 
Secretary or a court pursuant to Sec. 216 of the INA (8 U.S.C. 1186), 
this subpart, or 29 CFR part 501 (Employment Standards Administration 
enforcement of contractual obligations); or
    (2) The employer has engaged in a pattern or practice of actions 
which are significantly injurious to the wages, benefits, or working 
conditions of 10 percent or more of an employer's U.S. and/or H-2A 
workforce;
    (B) That the action(s) involve(s) impeding an investigation of an 
employer pursuant to Sec. 216 of the INA (8 U.S.C. 1186), this subpart, 
or 29 CFR part 501 (Employment Standards Administration enforcement of 
contractual obligations);
    (C) That the employer has not paid the necessary fee in a timely 
manner;
    (D) That the employer is not currently eligible to apply for a 
temporary alien agricultural labor certification pursuant to Sec. 
655.210 of this part (failure of an employer to comply with the terms of 
a temporary alien agricultural labor certification in which the 
application was filed under subpart C of this part prior to June 1, 
1987); or
    (E) That there was fraud involving the application for temporary 
alien agricultural labor certification of that

[[Page 498]]

the employer made a material misrepresentation of fact during the 
application process; and
    (ii) That there are no extenuating circumstances involved with the 
action(s) described in paragraph (g)(1)(i) of this section (as 
determined by the RA).
    (2) Less than substantial violation. For the purposes of this 
subpart, a less than substantial violation is an action of commission or 
omission on the part of the employer or the employer's agent which 
violates a requirement of this subpart, but is not a substantial 
violation.



Sec. 655.111  Petition for higher meal charges.

    (a) Filing petitions. Until a new amount is set pursuant to this 
paragraph (a), the RA may permit an employer to charge workers up to 
$6.58 for providing them with three meals per day, if the employer 
justifies the charge and submits to the RA the documentation required by 
paragraph (b) of this section. In the event the employer's petition for 
a higher meal charge is denied in whole or in part, the employer may 
appeal such denial. Such appeals shall be filed with the Chief 
Administrative Law Judge. Administrative law judges shall hear such 
appeals according to the procedures in 29 CFR part 18, except that the 
appeal shall not be considered as a complaint to which an answer is 
required. The decision of the administrative law judge shall be the 
final decision of the Secretary. Each year the maximum charge allowed by 
this paragraph (a) will be changed by the same percentage as the twelve-
month percent change for the Consumer Price Index for all Urban 
Consumers for Food between December of the year just concluded and 
December of the year prior to that. The annual adjustments shall be 
effective on the date of their publication by the Director as a notice 
in the Federal Register. However, an employer may not impose such a 
charge on a worker prior to the effective date contained in the RA's 
written confirmation of the amount to be charged.
    (b) Required documentation. Documentation submitted shall include 
the cost of goods and services directly related to the preparation and 
serving of meals, the number of workers fed, the number of meals served 
and the number of days meals were provided. The cost of the following 
items may be included: Food; kitchen supplies other than food, such as 
lunch bags and soap; labor costs which have a direct relation to food 
service operations, such as wages of cooks and restaurant supervisors; 
fuel, water, electricity, and other utilities used for the food service 
operation; and other costs directly related to the food service 
operation. Charges for transportation, depreciation, overhead and 
similar charges may not be included. Receipts and other cost records for 
a representative pay period shall be available for inspection by the RA 
for a period of one year.



Sec. 655.112  Administrative review and de novo hearing before an 
administrative law judge.

    (a) Administrative review--(1) Consideration. Whenever an employer 
has requested an administrative review before an administrative law 
judge of a decision not to accept for consideration a temporary alien 
agricultural labor certification application, of the denial of a 
temporary alien agricultural labor certification, or of a penalty under 
Sec. 655.110 of this part, the RA shall send a certified copy of the 
ETA case file to the Chief Administrative Law Judge by means normally 
assuring next-day delivery. The Chief Administrative Law Judge shall 
immediately assign an administrative law judge (which may be a panel of 
such persons designated by the Chief Administrative Law Judge from the 
Board of Alien Labor Certification Appeals established by part 656 of 
this chapter, but which shall hear and decide the appeal as set forth in 
this section) to review the record for legal sufficiency. The 
administrative law judge shall not remand the case and shall not receive 
additional evidence.
    (2) Decision. Within five working days after receipt of the case 
file the administrative law judge shall, on the basis of the written 
record and after due consideration of any written submissions submitted 
from the parties involved or amici curiae, either affirm, reverse, or

[[Page 499]]

modify the RA's denial by written decision. The decision of the 
administrative law judge shall specify the reasons for the action taken 
and shall be immediately provided to the employer, RA, the Director, and 
INS by means normally assuring next-day delivery. The administrative law 
judge's decision shall be the final decision of the Secretary and no 
further review shall be given to the temporary alien agricultural labor 
certification application or the temporary alien agricultural labor 
certification determination by any DOL official.
    (b) De novo hearing--(1) Request for hearing; conduct of hearing. 
Whenever an employer has requested a de novo hearing before an 
administrative law judge of a decision not to accept for consideration a 
temporary alien agricultural labor certification application, of the 
denial of a temporary alien agricultural labor certification, or of a 
penalty under Sec. 655.110 of this part, the RA shall send a certified 
copy of the case file to the Chief Administrative Law Judge by means 
normally assuring next-day delivery. The Chief Administrative Law Judge 
shall immediately assign an administrative law judge (which may be a 
panel of such persons designated by the Chief Administrative Law Judge 
from the Board of Alien Labor Certification Appeals established by part 
656 of this chapter, but which shall hear and decide the appeal as set 
forth in this section) to conduct the de novo hearing. The procedures 
contained in 29 CFR part 18 shall apply to such hearings, except that:
    (i) The appeal shall not be considered to be a complaint to which an 
answer is required,
    (ii) The administrative law judge shall ensure that, at the request 
of the employer, the hearing is scheduled to take place within five 
working days after the administrative law judge's receipt of the case 
file, and
    (iii) The administrative law judge's decision shall be rendered 
within ten working days after the hearing.
    (2) Decision. After a de novo hearing, the administrative law judge 
shall either affirm, reverse, or modify the RA's determination, and the 
administrative law judge's decision shall be provided immediately to the 
employer, RA, Director, and INS by means normally assuring next-day 
delivery. The administrative law judge's decision shall be the final 
decision of the Secretary, and no further review shall be given to the 
temporary alien agricultural labor certification application or the 
temporary alien agricultural labor certification determination by any 
DOL official.

[52 FR 20507, June 1, 1987, as amended at 59 FR 41876, Aug. 15, 1994]



Sec. 655.113  Job Service Complaint System; enforcement of work 
contracts.

    Complaints arising under this subpart may be filed through the Job 
Service Complaint System, as described in 20 CFR part 658, subpart E. 
Complaints which involve worker contracts shall be referred by the local 
office to the Employment Standards Administration for appropriate 
handling and resolution. See 29 CFR part 501. As part of this process, 
the Employment Standards Administration may report the results of its 
investigation to ETA for consideration of employer penalties under Sec. 
655.110 of this part or such other action as may be appropriate.



 Subpart C_Labor Certification Process for Logging Employment and Non-H-
                       2A Agricultural Employment

    Source: 43 FR 10313, Mar. 10, 1978, unless otherwise noted.



Sec. 655.200  General description of this subpart and definition of 
terms.

    (a) This subpart applies to applications for temporary alien 
agricultural labor certification filed before June 1, 1987, and to 
applications for temporary alien labor certification for logging 
employment.
    (b) An employer who desires to use foreign workers for temporary 
employment must file a temporary labor certification application 
including a job offer for U.S. workers with a local office of a State 
employment service agency. The employer should file an application a 
minimum of 80 days before the estimated date of need for the workers. If 
filed 80 days before need, sufficient time is allowed for the 60-day

[[Page 500]]

recruitment period required by the regulations and a determination by 
the Regional Administrator (RA) as to the availability of U.S. workers 
20 days before the date of need. Shortly after the application has been 
filed, the RA makes a determination as to whether or not the application 
has been filed in enough time to recruit U.S. workers and whether or not 
the job offer for U.S. workers offers wages and working conditions which 
will not adversely affect the wages and working conditions of similarly 
employed U.S. workers, as prescribed in the regulations in this subpart. 
If the application does not meet the regulatory wage and working 
condition standards, the RA shall deny the temporary labor certification 
application and offer the employer an administrative-judicial review of 
the denial by a Department of Labor Hearing Officer. If the application 
is not timely, the RA has discretion, as set forth in these regulations, 
to either deny the application or permit the process to proceed 
reasonably with the employer recruiting U.S. workers upon such terms as 
will accomplish the purposes of the INA and the INS regulations. Where 
the application is timely and meets the regulatory standards, the State 
employment service agency, the employer, and the Department of Labor 
recruit U.S. workers for 60 days. At the end of the 60 days, the RA 
grants the temporary labor certification if the RA finds that (1) the 
employer has not offered foreign workers higher wages or better working 
conditions (or less restrictions) than that offered to U.S. workers, and 
(2) U.S. workers are not available for the employer's job opportunities. 
If the temporary labor certification is denied, the employer may seek an 
administrative-judicial review of the denial by a Department of Labor 
Hearing Officer as provided in these regulations. The Department of 
Labor thereafter advises the Immigration and Naturalization Service 
(INS) of approvals and denials of temporary labor certifications. The 
INS may accept or reject this advice. 8 CFR 214.2(h)(3). The INS makes 
the final decision as to whether or not to grant visas to the foreign 
workers. 8 U.S.C. 1184(a).
    (c) Definitions for terms used in this subpart. Administrator means 
the chief official of the United States Employment Service or the 
Administrator's designee.
    Adverse effect rate means the wage rate which the Administrator has 
determined must be offered and paid to foreign and U.S. workers for a 
particular occupation and/or area so that the wages of similarly 
employed U.S. workers will not be adversely affected. The Administrator 
may determine that the prevailing wage rate in the area and/or 
occupation is the adverse effect rate, if the use (or non-use) of aliens 
has not depressed the wages of similarly employed U.S. workers. The 
Administrator may determine that a wage rate higher than the prevailing 
wage rate is the adverse effect rate if the Administrator determines 
that the use of aliens has depressed the wages of similarly employed 
U.S. workers.
    Agent means a legal person, such as an association of employers, 
which (1) is authorized to act as an agent of the employer for temporary 
labor certification purposes, and (2) which is not itself an employer, 
or a joint employer, as defined in this section.
    Area of intended employment means the area within normal commuting 
distance of the place (address) of intended employment. If the place of 
intended employment is within a Standard Metropolitan Statistical Area 
(SMSA), any place within the SMSA is deemed to be within normal 
commuting distance of the place of intended employment.
    Employer means a person, firm, corporation or other association or 
organization (1) which currently has a location within the United States 
to which U.S. workers may be referred for employment, and which proposes 
to employ a worker at a place within the United States and (2) which has 
an employer relationship with respect to employees under this subpart as 
indicated by the fact that it hires, pays, fires, supervises and 
otherwise controls the work of such employees. An association of 
employers shall be considered an employer if it has all of the indicia 
of an employer set forth in this definition. Such an association, 
however, shall be considered as a joint employer with the employer 
member if it shares

[[Page 501]]

with the employer member one or more of the definitional indicia.
    Employment and Training Administration (ETA) means the agency within 
the Department of Labor (DOL) which includes the United States 
Employment Service (USES).
    Hearing Officer means a Department of Labor official, whether 
Administrative Law Judge or Hearing Officer, who is authorized to 
conduct administrative hearings.
    Immigration and Naturalization Service (INS) means the component of 
the U.S. Department of Justice which makes the determination under the 
Immigration and Nationality Act (INA) on whether or not to grant a visa 
to an alien seeking to perform temporary agricultural or logging work in 
the United States.
    Job opportunity means a job opening for temporary, full-time 
employment at a place in the United States to which U.S. workers can be 
referred.
    Local office means an office of a State employment service agency 
which serves a particular geographic area within a State.
    Regional Administrator, Employment and Training Administration (RA) 
means the chief official of the Employment and Training Administration 
(ETA) in a Department of Labor (DOL) regional office.
    Secretary means the Secretary of Labor or the Secretary's designee.
    State agency means the State employment service agency.
    Temporary labor certification means the advice given by the 
Secretary of Labor to the Immigration and Naturalization Service, 
pursuant to the regulations of that agency at 8 CFR 214.2(h)(3)(i), that 
(1) there are not sufficient U.S. workers who are qualified and 
available to perform the work and (2) the employment of the alien will 
not adversely affect the wages and working conditions of similarly 
employed U.S. workers.
    United States Employment Service (USES) means the agency of the U.S. 
Department of Labor, established under the Wagner-Peyser Act of 1933, 
which is charged with administering the national system of public 
employment offices and carrying out the functions of the Secretary under 
the Immigration and Nationality Act.
    United States workers means any worker who, whether U.S. national, 
citizen or alien, is legally permitted to work permanently within the 
United States.

(Approved by the Office of Management and Budget under control number 
1205-0015)

[43 FR 10313, Mar. 10, 1978, as amended at 49 FR 18295, Apr. 30, 1984; 
52 FR 20524, June 1, 1987]



Sec. 655.201  Temporary labor certification applications.

    (a) (1) An employer who anticipates a labor shortage of workers for 
agricultural or logging employment may request a temporary labor 
certification for temporary foreign workers by filing, or by having an 
agent file, in duplicate, a temporary labor certification application, 
signed by the employer, with a local office in the area of intended 
employment.
    (2) If the temporary labor certification application is filed by an 
agent, however, the agent may sign the application if the application is 
accompanied by a letter from each employer the agent represents, signed 
by the employer, which authorizes the agent to act on the employer's 
behalf and which states that the employer assumes full responsibility 
for the accuracy of the application, for all representations made by the 
agent on the employer's behalf, and for the fulfillment of all legal 
requirements arising under this subpart.
    (3) If an association of employers files the application, the 
association shall identify and submit documents to verify whether, in 
accordance with the definitions at Sec. 655.200, it is: (i) The 
employer, (ii) a joint employer with its member employers, or (iii) the 
agent of its employer members.
    (b) Every temporary labor certification application shall include:
    (1) A copy of the job offer which will be used by the employer (or 
each employer) for the recruitment of both U.S. and foreign workers. The 
job offer for each employer shall state the number of workers needed by 
the employer, and shall be signed by the employer.

[[Page 502]]

The job offer shall comply with the requirements of Sec. Sec. 655.202 
and 653.108 of this chapter;
    (2) The assurances required by Sec. 655.203; and
    (3) The specific estimated date of need of workers.
    (c) The entire temporary labor certification application shall be 
filed with the local office in duplicate and in sufficient time to allow 
the State agency to attempt to recruit U.S. workers locally and through 
the Employment Service intrastate and interstate clearance system for 60 
calendar days prior to the estimated date of need. Section 655.206 
requires the RA to grant or deny the temporary labor certification 
application by the end of the 60 calendar days, or 20 days from the 
estimated date of need, whichever is later. That section also requires 
the RA to offer employers an expedited administrative-judicial review in 
cases of denials of the temporary labor certification applications. 
Following an administrative-judicial review, the employer has a right to 
contest any denial before the INS pursuant to 8 CFR 214.2(h)(3)(i). 
Finally, employers need time, after the temporary labor certification 
determination, to complete the process for bringing foreign workers into 
the United States, or to bring an appeal of a denial of an application 
for the labor certification. Therefore, employers should file their 
temporary labor certification applications at least 80 days before the 
estimated date of need specified in the application.
    (d) Applications may be amended at any time prior to RA 
determination to increase the number of workers requested in the 
original application for labor certification by not more than 15 percent 
without requiring an additional recruitment period for U.S. workers. 
Requests for increases beyond 15 percent may be approved only when it is 
determined that, based on past experience, the need for additional 
workers could not be foreseen and that a critical need for the workers 
would exist prior to the expiration of an additional recruitment period.
    (e) If a temporary labor certification application, or any part 
thereof, does not satisfy the time requirements specified in paragraph 
(c) of this section, and if the exception in paragraph (d) of this 
section does not apply, the local office shall immediately send both 
copies directly to the appropriate Regional Administrator (RA). The RA 
may then advise the employer and the INS in writing that the temporary 
labor certification cannot be granted because, pursuant to the 
regulations at paragraph (c) of this section, there is not sufficient 
time to test the availability of U.S. workers. The notice of denial to 
the employer shall inform the employer of the right to administrative-
judicial review and to ultimately petition INS for the admission of the 
aliens. In emergency situations, however, the RA may waive the time 
period specified in this section on behalf of employers who have not 
made use of temporary alien workers for the prior year's harvest or for 
other good and substantial cause, provided the RA has sufficient labor 
market information to make the labor certification determinations 
required by 8 CFR 214.2(h)(3)(i).

(Approved by the Office of Management and Budget under control number 
1205-0015)

[43 FR 10313, Mar. 10, 1978, as amended at 49 FR 18295, Apr. 30, 1984]



Sec. 655.202  Contents of job offers.

    (a) So that the employment of aliens will not adversely affect the 
wages and working conditions of similarly employed U.S. workers, each 
employer's job offer to U.S. workers must offer U.S. workers at least 
the same benefits which the employer is offering, intends to offer, or 
will afford, to temporary foreign workers. Conversely, no job offer may 
impose on U.S. workers any restrictions or obligations which will not be 
imposed on the employer's foreign workers. For example, if the employer 
intends to advance transportation costs to foreign workers either 
directly or indirectly (by having them paid by the foreign government 
involved), the employer must offer to advance the transportation costs 
of U.S. workers.
    (b) Except when higher benefits, wages or working conditions are 
required by the provisions of paragraph (a) of this section, the 
Administrator has determined that, in order to protect similarly 
employed U.S. workers

[[Page 503]]

from adverse effect with respect to wages and working conditions, every 
job offer for U.S. workers must always include the following minimal 
benefit, wage, and working condition provisions:
    (1) The employer will provide the worker with housing without charge 
to the worker. The housing will meet the full set of standards set forth 
at 29 CFR 1910.142 or the full set of standards set forth at part 654, 
subpart E of this chapter, whichever is applicable under the criteria of 
20 CFR 654.401; except that, for mobile range housing for sheepherders, 
the housing shall meet existing Departmental guidelines. When it is the 
prevailing practice in the area of intended employment to provide family 
housing, the employer will provide such housing to such workers.
    (2) (i) If the job opportunity is covered by the State workers' 
compensation law, the worker will be eligible for workers' compensation 
for injury and disease arising out of and in the course of worker's 
employment; or
    (ii) If the job opportunity is not covered by the State workers' 
compensation law, the employer will provide at no cost to the worker, 
insurance covering injury and disease arising out of and in the course 
of the worker's employment which will provide benefits at least equal to 
those provided under the State workers' compensation law for comparable 
employment;
    (3) The employer will provide without cost to the worker all tools, 
supplies and equipment required to perform the duties assigned and, if 
any of these items are provided by the worker, the employer will 
reimburse the worker for the cost of those so provided;
    (4) The employer will provide the worker with three meals a day, 
except that where under prevailing practice or longstanding arrangement 
at the establishment workers prepare their meals, employers need furnish 
only free and convenient cooking and kitchen facilities. Where the 
employer provides the meals, the job offer shall state the cost to the 
worker for such meals. Until a new amount is set pursuant to this 
paragraph (b)(4), the cost shall not be more than $4.94 per day unless 
the RA has approved a higher cost pursuant to Sec. 655.211 of this 
part. Each year the charge allowed by this paragraph (b)(4) will be 
changed by the 12-month percent change for the Consumer Price Index for 
All Urban Consumers for Food between December of the year just concluded 
and December of the year prior to that. The annual adjustments shall be 
effective on their publication by the Administrator in the Federal 
Register.
    (5) (i) The employer will provide or pay for the worker's 
transportation and daily subsistence from the place, from which the 
worker, without intervening employment, will come to work for the 
employer, to the place of employment, subject to the deductions allowed 
by paragraph (b)(13) of this section. The amount of the daily 
subsistence payment shall be at least as much as the amount the employer 
willl charge the worker for providing the worker with three meals a day 
during employment;
    (ii) If the worker completes the work contract period, the employer 
will provide or pay for the worker's transportation and daily 
subsistence from the place of employment to the place, from which the 
worker, without intervening employment, came to work for the employer, 
unless the worker has contracted for employment with a subsequent 
employer who, in that contract, has agreed to pay for the worker's 
transportation and daily subsistence expenses from the employer's 
worksite to such subsequent employer's worksite; and
    (iii) The employer will provide transportation between the worker's 
living quarters and the employer's worksite without cost to the worker, 
and such transportation will be in accordance with applicable laws and 
regulations;
    (6) (i) The employer guarantees to offer the worker employment for 
at least three-fourths of the workdays of the total period during which 
the work contract and all extensions thereof are in effect, beginning 
with the first workday after the arrival of the worker at the place of 
employment and ending on the termination date specified in the work 
contract, or in its extensions if any. For purposes of this paragraph,

[[Page 504]]

a workday shall mean any period consisting of 8 hours of work time. An 
employer shall not be considered to have met the work guarantee if the 
employer has merely offered work on three-fourths of the workdays. The 
work must be offered for at least three-fourths of the 8 hour workdays. 
(That is, \3/4\ x (number of days x 8 hours.)) Therefore, if, for 
example, the contract contains 20 workdays, the worker must be offered 
employment for 120 hours during the 20 workdays. A worker may be offered 
more than 8 hours of work on a single workday. For purposes of meeting 
the guarantee, however, the worker may not be required to work for more 
than 8 hours per workday, or on the worker's Sabbath or Federal 
holidays;
    (ii) If the worker will be paid on a piece rate basis, the employer 
will use the worker's average hourly earnings to calculate the amount 
due under the guarantee; and
    (iii) Any hours which the worker fails to work when the worker has 
been offered an opportunity to do so pursuant to paragraph (b)(6)(i) of 
this section, and all hours of work actually performed (including 
voluntary work over 8 hours in a workday, or on the worker's Sabbath or 
Federal holidays) may be counted by the employer in calculating whether 
the period of guaranteed employment has been met;
    (7) (i) The employer will keep accurate and adequate records with 
respect to the workers' earnings, including field tally records, 
supporting summary payroll records, and records showing: The nature and 
amount of the work performed; the number of hours of work offered each 
day by the employer (broken out by hours offered both in accordance 
with, and over and above, the guarantee); the hours actually worked each 
day by the worker; the time the worker began and ended each workday; the 
rate of pay; the worker's earnings per pay period; and the amount of and 
reasons for any and all deductions made from the worker's wages;
    (ii) If the number of hours worked by the worker is less than the 
number offered in accordance with the guarantee, the records will state 
the reason or reasons therefor;
    (iii) The records, including field tally records and supporting 
summary payroll records, will be made available for inspection and 
copying by representatives of the Secretary of Labor, and by the worker 
and the worker's representatives; and
    (iv) The employer will retain the records for not less than three 
years after the completion of the contract;
    (8) The employer will furnish to the worker at or before each 
payday, in one or more written statements:
    (i) The worker's total earnings for the pay period;
    (ii) The worker's hourly rate or piece rate of pay;
    (iii) The hours of employment which have been offered to the worker 
(broken out by offers in accordance with, and over and above, the 
guarantee);
    (iv) The hours actually worked by the worker;
    (v) An itemization of all deductions made from the worker's wages; 
and
    (vi) If piece rates are used, the units produced daily;
    (9) (i) If the worker will be paid by the hour, the employer will 
pay the worker at least the adverse effect rate; or
    (ii)(A) If the worker will be paid on a piece rate basis, and the 
piece rate does not result at the end of the pay period in average 
hourly earnings during the pay period at least equal to the amount the 
worker would have earned had the worker been paid at the adverse effect 
rate, the worker's pay will be supplemented at that time so that the 
worker's earnings are at least as much as the worker would have earned 
during the pay period if the worker had been paid at the adverse effect 
rate.
    (B) If the employer who pays on a piece rate basis requires one or 
more minimum productivity standards of workers as a condition of job 
retention, (1) such standards shall be no more than those applied by the 
employer in 1977, unless the RA approves a higher minimum; or (2) if the 
employer first applied for temporary labor certification after 1977, 
such standards shall

[[Page 505]]

be no more than those normally required (at the time of that first 
application) by other employers for the activity in the area of intended 
employment, unless the RA approves a higher minimum.
    (10) The frequency with which the worker will be paid (in accordance 
with the prevailing practice in the area of intended employment, or at 
least biweekly whichever is more frequent);
    (11) If the worker voluntarily abandons employment before the end of 
the contract period, or is terminated for cause, the employer will not 
be responsible for providing or paying for the subsequent transportation 
and subsistence expenses of any worker for whom the employer would have 
otherwise been required to pay such expenses under paragraph (b)(5)(ii) 
of this section;
    (12) If, before the expiration date specified in the work contract, 
the services of the worker are no longer required for reasons beyond the 
control of the employer due to fire or other Act of God which makes the 
fulfillment of the contract impossible, and the RA so certifies, the 
employer may terminate the work contract. In such cases the employer 
will make efforts to transfer the worker to other comparable employment 
acceptable to the worker. If such transfer is not effected, the worker 
(i) will be returned to the place from which the worker, without 
intervening employment, came to work for the employer at the employer's 
expense; and
    (ii) Will be reimbursed the full amount of any deductions made from 
the worker's pay by the employer for transportation and subsistence 
expenses to the place of employment borne directly or indirectly by the 
employer;
    (13) The employer will make those deductions from the worker's 
paycheck which are required by law. The job offer shall specify all 
deductions, not required by law, which the employer will make from the 
worker's paycheck. All deductions shall be reasonable. The employer may 
deduct the cost of the worker's transportation and daily subsistence 
expenses to the place of employment which were borne directly by the 
employer; in such cases, however, the job offer shall state that the 
worker will be reimbursed the full amount of such deductions upon the 
worker's completion of 50 percent of the worker's contract period; and
    (14) The employer will provide the worker a copy of the work 
contract between the employer and the worker. The work contract shall 
contain all of the provisions required by paragraphs (a) and (b) of this 
section.

(Approved by the Office of Management and Budget under control number 
1205-0015)

[43 FR 10313, Mar. 10, 1978, as amended at 45 FR 14185, Mar. 4, 1980; 49 
FR 18295, Apr. 30, 1984; 51 FR 30351, Aug. 26, 1986; 52 FR 11466, Apr. 
9, 1987]



Sec. 655.203  Assurances.

    As part of the temporary labor certification application, the 
employer shall include assurances, signed by the employer, that:
    (a) The job opportunity is not:
    (1) Vacant because the former occupant is on strike or being locked 
out in the course of a labor dispute; or
    (2) At issue in a labor dispute involving a work stoppage;
    (b) During the period for which the temporary labor certification is 
granted, the employer will comply with applicable Federal, State and 
local employment-related laws, including employment related health and 
safety laws;
    (c) The job opportunity is open to all qualified U.S. workers 
without regard to race, color, national origin, sex, or religion, and is 
open to U.S. workers with handicaps who are qualified to perform the 
work. No U.S. worker will be rejected for employment for other than a 
lawful job related reason;
    (d) The employer will cooperate with the employment service system 
in the active recruitment of U.S. workers until the foreign workers have 
departed for the employer's place of employment by;
    (1) Allowing the employment service system to prepare local, 
intrastate and interstate job orders using the information supplied on 
the employer's job offer;
    (2) Placing at least two advertisements for the job opportunities in 
local newspapers of general circulation.

[[Page 506]]

    (i) Each such advertisement shall describe the nature and 
anticipated duration of the job opportunity; offer at least the adverse 
effect wage rate; give the \3/4\ guarantee; state that work tools, 
supplies and equipment will be provided by the employer; state that 
housing will also be provided, and that transportation and subsistence 
expenses to the worksite will be provided or paid for by the employer;
    (ii) Each advertisement shall direct interested workers to apply for 
the job opportunity at a local employment service office in their area;
    (3) Cooperating with the employment service system in contacting 
farm labor contractors, migrant workers and other potential workers in 
other areas of the State and/or Nation by letter and/or telephone;
    (4) Cooperating with the employment service system in contacting 
schools, business and labor organizations, fraternal and veterans 
organizations, and non-profit organizations and public agencies such as 
sponsors of programs under the Comprehensive Employment and Training 
Act, throughout the area of intended employment, in order to enlist them 
in helping to find U.S. workers; and
    (5) If the employer, or an association of employers of which the 
employer is a member, intends to negotiate and/or contract with the 
Government of a foreign nation or any foreign association, corporation 
or organization in order to secure foreign workers, making the same kind 
and degree of efforts to secure U.S. workers;
    (e) From the time the foreign workers depart for the employer's 
place of employment, the employer will provide employment to any 
qualified U.S. worker who applies to the employer until fifty percent of 
the period of the work contract, under which the foreign worker who is 
in the job was hired, has elapsed. In addition, the employer will offer 
to provide housing, and the other benefits, wages, and working 
conditions required by Sec. 655.202, to any such U.S. worker; and
    (f) Performing the other specific recruitment activities specified 
in the notice from the RA required by Sec. 655.205(a).



Sec. 655.204  Determinations based on temporary labor certification 
applications.

    (a) Within two working days after the temporary labor certification 
application has been filed with it, the local office shall mail the 
duplicate application directly to the appropriate RA.
    (b) The local office, using the job offer portion of its copy of the 
temporary labor certification application, shall promptly prepare a 
local job order and shall begin to recruit U.S. workers in the area of 
intended employment.
    (c) The RA, upon receipt of the duplicate temporary labor 
certification application, shall promptly review the application to 
determine whether it meets the requirements of Sec. Sec. 655.201-
655.203 in order to determine whether the employer's application is (1) 
timely, and (2) contains offers of wages, benefits, and working 
conditions required to ensure that similarly employed U.S. workers will 
not be adversely affected. If the RA determines that the temporary labor 
certification application is not timely in accordance with Sec. 655.201 
of this subpart, the RA may promptly deny the temporary labor 
certification on the grounds that, in accordance with that regulation, 
there is not sufficient time to adequately test the availability of U.S. 
workers. If the RA determines that the application does not meet the 
requirements of Sec. Sec. 655.202-655.203 because the wages, working 
conditions, benefits, assurances, job offer, etc. are not as required, 
the RA shall deny the certification on the grounds that the availability 
of U.S. workers cannot be adequately tested because the wages or 
benefits, etc. do not meet the adverse effect criteria.
    (d) If the certification is denied, the RA shall notify the employer 
in writing of the determination, with a copy to the local office and the 
Administrator. The notice shall:
    (1) State the reasons for the denial, citing the relevant 
regulations; and
    (2) Offer the employer an opportunity to request an expedited 
administrative-judicial review of the denial by a Department of Labor 
(DOL) Hearing Officer. The notice shall state that in order

[[Page 507]]

to obtain such a review, the employer must, within five calendar days of 
the date of the notice, file by facsimile (fax), telegram, or other 
means normally assuring next day delivery a written request for such a 
review to the Chief Administrative Law Judge of the Department of Labor 
(giving the address) and simultaneously serve a copy on the Regional 
Administrator. The notice shall also state that the employer's request 
for review should contain any legal arguments which the employer 
believes will rebut the basis of the RA's denial of certification; and
    (3) State that, if the employer does not request an expedited 
administrative-judicial review before a DOL Hearing Officer within the 
five days:
    (i) The RA will advise the INS that the certification cannot be 
granted, giving the reasons therefor, and that an administrative-
judicial review of the denial was offered to the employer but not 
accepted, and enclosing, for INS review, the entire temporary labor 
certification application file; and
    (ii) The employer has the opportunity to submit evidence to the INS 
to rebut the bases of the RA's determination in accordance with the INS 
regulation at 8 CFR 214.2(h)(3)(i) but that no further review of the 
employer's application for temporary labor certification may be made by 
any Department of Labor official.
    (e) If the employer timely requests an expedited administrative-
judicial review pursuant to paragraph (d)(2) of this section, the 
procedures of Sec. 655.212 shall be followed.

[43 FR 10313, Mar. 10, 1978, as amended at 59 FR 41876, Aug. 15, 1994]



Sec. 655.205  Recruitment period.

    (a) If the RA determines that the temporary labor certification 
application meets the requirements of Sec. Sec. 655.201 through 
655.203, the RA shall promptly notify the employer in writing, with 
copies to the State agency and local office. The notice shall inform the 
employer and the State agency of the specific efforts which will be 
expected from them during the following weeks to carry out the 
assurances contained in Sec. 655.203 with respect to the recruitment of 
U.S. workers. The notice shall require that the job order be placed both 
into intrastate clearance and into interstate clearance to such States 
as the RA shall determine to be potential sources of U.S. workers.
    (b) Thereafter, the RA, under the direction of the ETA national 
office and with the assistance of other RAs with respect to areas 
outside the region, shall provide overall direction to the employer and 
the State agency with respect to the recruitment of U.S. workers.
    (c) By the 60th day of the recruitment period, or 20 days before the 
date of need specified in the application, whichever is later, the RA, 
when making a determination of the availability of U.S. workers, shall 
also make a determination as to whether the employer has satisfied the 
recruitment assurances in Sec. 655.203. If the RA concludes that the 
employer has not satisfied the requirement for recruitment of U.S. 
workers, the RA shall deny the temporary labor certification, and shall 
immediately notify the employer in writing with a copy to the State 
agency and local office. The notice shall contain the statements 
specified in Sec. 655.204(d).
    (d) If the employer timely requests an expedited administrative-
judicial review before a DOL Hearing Officer, the procedures in Sec. 
655.212 shall be followed.



Sec. 655.206  Determinations of U.S. worker availability and adverse 
effect on U.S. workers.

    (a) If the RA, in accordance with Sec. 655.205 has determined that 
the employer has complied with the recruitment assurances, the RA, by 
60th day of the recruitment period, or 20 days before the date of need 
specified in the application, whichever is later, shall grant the 
temporary labor certification for enough aliens to fill the employer's 
job opportunities for which U.S. workers are not available. In making 
this determination the RA shall consider as available for a job 
opportunity any U.S. worker who has made a firm commitment to work for 
the employer, including those workers committed by other authorized 
persons such as farm labor contractors and family heads;

[[Page 508]]

such a firm commitment shall be considered to have been made not only by 
workers who have signed work contracts with the employer, but also by 
those whom the RA determines are very likely to sign such a work 
contract. The RA shall also count as available any U.S. worker who has 
applied to the employer (or on whose behalf an application has been 
made), but who was rejected by the employer for other than lawful job-
related related reasons unless the RA determines that:
    (1) Enough qualified U.S. workers have been found to fill all the 
employer's job opportunities; or
    (2) The employer, since the time of the initial determination under 
Sec. 655.204, has adversely affected U.S. workers by offering to, or 
agreeing to provide to, alien workers better wages, working conditions, 
or benefits (or by offering or agreeing to impose on alien workers less 
obligations and restrictions) than that offered to U.S. workers.
    (b) (1) Temporary labor certifications shall be considered subject 
to the conditions and assurances made during the application process. 
Temporary labor certifications shall be for a limited duration such as 
for ``the 1978 apple harvest season'' or ``until November 1, 1978'', and 
they shall never be for more than eleven months. They shall be limited 
to the employer's specific job opportunities; therefore, they may not be 
transferred from one employer to another.
    (2) If an association of employers is itself the employer, as 
defined in Sec. 655.200, certifications shall be made to the 
association and may be used for any of the job opportunities of its 
employer members and workers may be transferred among employer members.
    (3) If an association of employers is a joint employer with its 
employer members, as defined in Sec. 655.200, the certification shall 
be made jointly to the association and the employer members. In such 
cases workers may be transferred among the employer members provided the 
employer members and the association agree in writing to be jointly and 
severally liable for compliance with the temporary labor certification 
obligations set forth in this subpart.
    (c) If the RA denies the temporary labor certification in whole or 
part, the RA shall notify the employer in writing by means normally 
assuring next-day delivery. The notice shall contain all of the 
statements required in Sec. 655.204(d). If a timely request is made for 
an administrative-judicial review by a DOL Hearing Officer, the 
procedures of Sec. 655.212 shall be followed.
    (d) (1) After a temporary labor certification has been granted, the 
employer shall continue its efforts to actively recruit U.S. workers 
until the foreign workers have departed for the employer's place of 
employment. The employer, however, must keep an active job order on file 
until the assurance at Sec. 655.203(e) is met.
    (2) The ES system shall continue to actively recruit and refer U.S. 
workers as long as there is an active job order on file.

[43 FR 10313, Mar. 10, 1978, as amended at 59 FR 41876, Aug. 15, 1995]



Sec. 655.207  Adverse effect rates.

    (a) Except as otherwise provided in this section, the adverse effect 
rates for all agricultural and logging employment shall be the 
prevailing wage rates in the area of intended employment.
    (b)(1) For agricultural employment (except sheepherding) in the 
States listed in paragraph (b)(2) of this section, and for Florida 
sugarcane work, the adverse effect rate for each year shall be computed 
by adjusting the prior year's adverse effect rate by the percentage 
change (from the second year previous to the prior year) in the U.S. 
Department of Agriculture's (USDA's) average hourly wage rates for field 
and livestock workers (combined) based on the USDA Quarterly Wage 
Survey. The Administrator shall publish, at least once in each calendar 
year, on a date or dates he shall determine, adverse effect rates 
calculated pursuant to this paragraph (b) as a notice or notices in the 
Federal Register.
    (2) List of States. Arizona, Colorado, Connecticut, Florida (other 
than sugar cane work), Maine, Maryland, Massachusetts, New Hamsphire, 
New York,

[[Page 509]]

Rhode Island, Texas, Vermont, Virginia, and West Virginia. Other States 
may be added as appropriate.
    (3) Transition. Notwithstanding paragraphs (b) (1) and (2) of this 
section, the 1986 adverse effect rate for agricultural employment 
(except sheepherding) in the following States, and for Florida sugarcane 
work, shall be computed by adjusting the 1981 adverse effect rate 
(computed pursuant to 20 CFR 655.207(b)(1), 43 FR 10317; March 10, 1978) 
by the percentage change between 1980 and 1985 in the U.S. Department of 
Agriculture annual average hourly wage rates for field and livestock 
workers (combined) based on the USDA Quarterly survey: The States listed 
at 20 CFR 655.207(b)(2) (1985).
    (c) In no event shall an adverse effect rate for any year be lower 
than the hourly wage rate published in 29 U.S.C. 206(a)(1) and currently 
in effect.

[43 FR 10313, Mar. 10, 1978, as amended at 44 FR 32212, June 5, 1979; 48 
FR 40175, Sept. 2, 1983; 50 FR 25708, June 21, 1985; 51 FR 24141, July 
2, 1986; 52 FR 11466, Apr. 9, 1987]



Sec. 655.208  Temporary labor certification applications involving fraud 
or willful misrepresentation.

    (a) If possible fraud or willful misrepresentation involving a 
temporary labor certification application is discovered prior to a final 
temporary labor certification determination, or if it is learned that 
the employer or agent (with respect to an application) is the subject of 
a criminal indictment or information filed in a court, the RA shall 
refer the matter to the INS for investigation and shall notify the 
employer or agent in writing of this referral. The RA shall continue to 
process the application and may issue a qualified temporary labor 
certification.
    (b) If a court finds an employer or agent innocent of fraud or 
willful misrepresentation, or if the Department of Justice decides not 
to prosecute an employer or agent, the RA shall not deny the temporary 
labor certification application on the grounds of fraud or willful 
misrepresentation. The application, of course, may be denied for other 
reasons pursuant to this subpart.
    (c) If a court or the INS determines that there was fraud or willful 
misrepresentation involving a temporary labor certification application, 
the application shall be deemed invalidated, processing shall be 
terminated, and the application shall be returned to the employer or 
agent with the reasons therefor stated in writing.



Sec. 655.209  Invalidation of temporary labor certifications.

    After issuance, temporary labor certifications are subject to 
invalidation by the INS upon a determination, made in accordance with 
that agency's procedures or by a Court, of fraud or willful 
misrepresentation of a material fact involving the temporary labor 
certification application. If evidence of such fraud or willful 
misrepresentation becomes known to a Regional Administrator, Employment 
and Training Administration or to the Administrator, the Regional 
Administrator or Administrator as appropriate, shall notify the INS in 
writing.



Sec. 655.210  Failure of employers to comply with the terms of a 
temporary labor certification.

    (a) If, after the granting of a temporary labor certification, the 
RA has probable cause to believe that an employer has not lived up to 
the terms of the temporary labor certification, the RA shall investigate 
the matter. If the RA concludes that the employer has not complied with 
the terms of the labor certification, the RA may notify the employer 
that it will not be eligible to apply for a temporary labor 
certification in the coming year. The notice shall be in writing, shall 
state the reasons for the determination, and shall offer the employer an 
opportunity to request a hearing within 30 days of the date of the 
notice. If the employer requests a hearing within the 30-day period, the 
RA shall follow the procedures set forth at Sec. 658.421(i) (1), (2) 
and (3) of this chapter. The procedures contained in Sec. Sec. 
658.421(j), 658.422 and 658.423 of this chapter shall apply to such 
hearings.
    (b) No other penalty shall be imposed by the employment service on 
such an employer other than as set forth in paragraph (a) of this 
section.

[[Page 510]]



Sec. 655.211  Petition for higher meal charges.

    (a) Until a new amount is set pursuant to this paragraph (a), the RA 
may permit an employer to charge workers up to $6.17 for providing them 
with three meals per day, if the employer justifies the charge and 
submits to the RA the documentary evidence required by paragraph (b) of 
this section. A denial in whole or in part shall be reviewable as 
provided in Sec. 655.212 of this part. Each year the maximum charge 
allowed by this paragraph (a) will be changed by the 12-month percent 
change for the Consumer Price Index for All Urban Consumers for Food 
between December of the year just concluded and December of the year 
prior to that. The annual adjustments shall be effective on their 
publication by the Administrator in the Federal Register.
    (b) Evidence submitted shall include the cost of goods and services 
directly related to the preparation and serving of meals, the number of 
workers fed, the number of meals served and the number of days meals 
were provided. The cost of the following items may be included: Food; 
kitchen supplies other than food, such as lunch bags and soap; labor 
costs which have a direct relation to food service operations, such as 
wages of cooks and restaurant supervisors; fuel, water, electricity, and 
other utilities used for the food service operations; other costs 
directly related to the food service operation. Charges for 
transportation, depreciation, overhead, and similar charges may not be 
included. Receipts and other cost records for a representative pay 
period shall be available for inspection by the Secretary's 
representatives for a period of one year.

(Approved by the Office of Management and Budget under control number 
1205-0015)

[43 FR 10313, Mar. 10, 1978, as amended at 49 FR 18295, Apr. 30, 1984; 
51 FR 30351, Aug. 26, 1986]



Sec. 655.212  Administrative-judicial reviews.

    (a) Whenever an employer has requested an administrative-judicial 
review of a denial of an application or a petition in accordance with 
Sec. Sec. 655.204(d), 655.205(d), 655.206(c), or 655.211, the Chief 
Administrative Law Judge shall immediately assign a Hearing Officer to 
review the record for legal sufficiency, and the Regional Administrator 
shall send a certified copy of the case file to the Chief Administrative 
Law Judge by means normally assuring next day delivery. The Hearing 
Officer shall not have authority to remand the case and shall not 
receive additional evidence. Any countervailing evidence advanced after 
decision by the Regional Administrator shall be subject to provisions of 
8 CFR 214.2(h)(3)(i).
    (b) The Hearing Officer, within five working days after receipt of 
the case file shall, on the basis of the written record and due 
consideration of any written memorandums of law submitted, either 
affirm, reverse or modify the RA's denial by written decision. The 
decision of the Hearing Officer shall specify the reasons for the action 
taken and shall be immediately provided to the employer, RA, 
Administrator, and INS by means normally assuring next-day delivery. The 
Hearing Officer's decision shall be the final decision of the Department 
of Labor and no further review shall be given to the temporary labor 
certification determination by any Department of Labor official.

[59 FR 41876, Aug. 15, 1994]



Sec. 655.215  Territory of Guam.

    Subpart C of this part does not apply to temporary employment in the 
Territory of Guam, and the Department of Labor does not certify to the 
Immigration and Naturalization Service (INS) the temporary employment of 
nonimmigrant aliens under H-2B visas in the Territory of Guam. Pursuant 
to INS regulations, that function is performed by the Governor of Guam, 
or the Governor's designated representative within the Territorial 
Government.

[56 FR 56876, Nov. 6, 1991]

[[Page 511]]



   Subpart D_Attestations by Facilities Using Nonimmigrant Aliens as 
                            Registered Nurses

    Source: 59 FR 882, 897, Jan. 6, 1994, unless otherwise noted.



Sec. 655.300  Purpose and scope of subparts D and E.

    (a) Purpose. The Immigration and Nationality Act (INA) establishes 
the H-1A program to provide relief for the nursing shortage crisis. 
Subpart D of this part sets forth the procedure by which health care 
facilities seeking to use nonimmigrant registered nurses may submit 
attestations to the Department of Labor relating to the effects of the 
nursing shortage on their operations, their efforts to recruit and 
retain United States workers as registered nurses and certain 
information on wages and working conditions for nurses at the facility. 
Subpart E of this part sets forth complaint, investigation, and penalty 
provisions with respect to such attestations.
    (b) Procedure. The INA establishes a procedure for health care 
facilities to follow in seeking admission to the United States for, or 
use of, nonimmigrant nurses under H-1A visas. The procedure is designed 
to reduce reliance on nonimmigrant nurses in the future, and calls of 
the health care facility to attest, and be able to demonstrate, that, 
e.g., there would be substantial disruption to health services without 
the nonimmigrant nurses and that it is taking timely and significant 
steps to develop, recruit, and retain U.S. nurses. Subparts D and E of 
this part set forth the specific requirements for those procedures.
    (c) Applicability. (1) Subparts D and E of this part apply to all 
facilities that seek the temporary admission or use of nonimmigrants as 
registered nurses.
    (2) During the period that the provisions of appendix 1603.D.4 of 
Annex 1603 of the North American Free Trade Agreement (NAFTA) apply, 
subparts D and E of this part shall apply to the entry of a nonimmigrant 
who is a citizen of Mexico under and pursuant to the provisions of 
section D of Annex 1603 of NAFTA.



Sec. 655.301  Overview of process.

    This section provides a context for the attestation process, to 
facilitate understanding by health care facilities that may seek 
nonimmigrant nurses under H-1A visas.
    (a) Federal agencies' responsibilities. The United States Department 
of Labor (DOL), Department of Justice, and Department of State are 
involved in the H-1A visa process. Within DOL, the Employment and 
Training Administration (ETA) and the Employment Standards 
Administration (ESA) have responsibility for different aspects of the 
process.
    (b) Health care facility's attestation responsibilities. Each health 
care facility seeking one or more H-1A nurses shall, as the first step, 
submit an attestation on Form ETA 9029, as described in Sec. 655.310 of 
this part, to the designated regional office of the Employment and 
Training Administration (ETA) of DOL. If the attestation is found to 
meet the requirements set at Sec. 655.310 (a) through (k) of this part, 
ETA shall accept the attestation for filing, shall return the cover form 
of the accepted attestation to the health care facility, and shall 
notify the Immigration and Naturalization Service (INS) of the 
Department of Justice of the filing. As discussed in Sec. 655.310 of 
this part, if the facility proposes to utilize alternative methods to 
comply with Attestation Elements I and/or IV, or asserts that taking a 
second timely and significant step under Element IV would be 
unreasonable, or claims a bona fide medical emergency exemption from 
Element IV as a worksite using one or more H-1A nurses through a nursing 
contractor only, additional supporting information and ETA review shall 
be required.
    (c) Visa petitions. Upon ETA's acceptance of the filing, the health 
care facility may then file with INS H-1A visa petitions for the 
admission of H-1A nurses, or to extend the stay of alien nurses 
currently working at the facility. the facility shall attach a copy of 
the accepted attestation form (Form ETA 9029) to the visa petition filed 
with INS. At the same time that the facility files a visa petition with 
INS, it shall also send a copy of the visa petition with INS, it shall 
also send a copy of the visa petition to the Chief,

[[Page 512]]

Division of Foreign Labor Certifications, U.S. Employment Service, 
Employment and Training Administration, Department of Labor, 200 
Constitution Avenue, NW., room N-4456, Washington, DC 20210.
    (d) Visa issuance. INS assures that the nonimmigrants possess the 
required qualifications and credentials to be employed as nurses. See 8 
U.S.C. 1182(m)(1)). The Department of State is responsible for issuing 
the visa.
    (e) Board of Alien Labor Certification Appeals (BALCA) review of 
attestations accepted and not accepted for filing. The decision whether 
or not to accept for filing an attestation which ETA has reviewed, that 
is: an attestation where the facility is attesting to alternative 
methods of compliance with Element I and/or Element IV; an attestation 
where the facility is claiming that taking a second timely and 
significant step would not be reasonable; and/or an attestation where a 
facility that is not an employer of H-1A nurses is claiming a bond fide 
medical emergency as the basis for requesting a waiver of Element IV; 
may be appealed by any interested party to the BALCA.
    (f) Complaints. Complaints concerning misrepresentation in the 
attestation or failure of the health care facility to carry out the 
terms of the attestation may be filed with the Wage and Hour Division 
(Division), Employment Standards Administration (ESA) of DOL, according 
to the procedures set forth in subpart E of this part. Complaints of 
``misrepresentation'' may include assertions that a facility's 
attestations of compliance failed to meet the regulatory standards for 
attestation elements under which the attestation was accepted by ETA for 
filing without ETA review. The Division shall then investigate, and, 
where appropriate, after an opportunity for a hearing, assess sanctions 
and penalties. Subpart E of this part also provides that interested 
parties may obtain an administrative law judge hearing and may seek the 
Secretary's review of the administrative law judge's decision.



Sec. 655.302  Definitions.

    For the purposes of subparts D and E of this part:
    Accepted for filing means that the attestation and supporting 
documentation submitted by the health care facility have been received 
by the Employment and Training Administration of the Department of Labor 
(DOL) and have been found to be in compliance with the attestation 
requirements in Sec. 655.310 of this part.
    Act and INA mean the Immigration and Nationality Act, as amended, 8 
U.S.C. 1101 et seq.
    Administrative law judge means an official appointed pursuant to 5 
U.S.C. 3105.
    Administrator means the Administrator of the Wage and Hour Division, 
Employment Standards Administration, Department of Labor, and such 
authorized representatives as may be designated to perform any of the 
functions of the Administrator under subparts D and E of this part.
    Attorney General means the chief official of the U.S. Department of 
Justice or the Attorney General's designee.
    Board of Alien Labor Certification Appeals (BALCA) means a panel of 
one or more administrative law judges who serve on the permanent Board 
of Alien Labor Certification Appeals established by 20 CFR Part 656. 
BALCA consists of administrative law judges assigned to the Department 
of Labor and designated by the Chief Administrative Law Judge to be 
members of the Board of Alien Labor Certification Appeals.
    Bona fide medical emergency means a situation in which the services 
of one or more H-1A contract nurses are necessary at a worksite facility 
(which itself does not employ an H-1A nurse) to prevent death or serious 
impairment of health, and, because of the danger to life or health, 
nursing services for such situation are not elsewhere available in the 
geographic area.
    Certifying Officer means a Department of Labor official, or such 
official's designee, who makes determinations about whether or not H-1A 
attestations are acceptable for filing.
    Chief Administrative Law Judge means the chief official of the 
Office of the Administrative Law Judges of the Department of Labor or 
the Chief Administrative Law Judge's designee.
    Chief, Division of Foreign Labor Certifications, USES means the 
chief official

[[Page 513]]

of the Division of Foreign Labor Certifications within the United States 
Employment Service, Employment and Training Administration, Department 
of Labor, or the designee of the Chief, Division of Foreign Labor 
Certifications, USES.
    Date of filing means the date an attestation is ``accepted for 
filing'' by ETA.
    Department and DOL mean the United States Department of Labor.
    Director means the chief official of the United States Employment 
Service (USES), Employment and Training Administration, Department of 
Labor, or the Director's designee.
    Division means the Wage and Hour Division of the Employment 
Standards Administration, DOL.
    Employer means a person, firm, corporation, or other association or 
organization involved in the direct provision of health care services, 
which:
    (1) Suffers or permits a person to work;
    (2) Has a location within the United States to which U.S. workers 
may be referred for employment;
    (3) Proposes to employ workers at a place within the United States; 
and
    (4) Has an employer-employee relationship with respect to employees 
under subpart D and E of this part, as indicated by the fact that it may 
hire, pay, fire, supervise or otherwise control the work of such 
employee.
    Employment means full-time work by an employee for an employer/
health care facility other than oneself. ``Full-time work'' means work 
where the nurse is regularly scheduled to work 40 hours or more per 
week, unless the facility documents as part of its attestation that it 
is common practice for the occupation at the facility or for the 
occupation in the geographic area for nurses to work fewer hours per 
week.
    Employment and Training Administration (ETA) means the agency within 
the Department of Labor (DOL) which includes the United States 
Employment Service (USES).
    Employment Standards Administration (ESA) means the agency within 
the Department of Labor (DOL) which includes the Wage and Hour Division.
    Facility means a user of nursing services with either a single site 
or a group of contiguous locations at which it provides health care 
services. ``Facility'' includes an employer of registered nurses which 
provides health care services in a home or other setting, such as a 
hospital, nursing home, or other site of employment, not owned or 
operated by the employer (e.g., a visiting nurse association or a 
nursing contractor). ``Facility'' also includes a private household 
which employs or seeks to employ one or more H-1A nurses, but does not 
include a private household which uses H-1A nurses only through a 
nursing contractor. Groups of structures which form a campus or separate 
buildings across the street from one another are a single facility. 
However, separate buildings or areas which are not physically connected 
or in immediate proximity are a single health care facility if they are 
in reasonable geographic proximity, used for the same purpose, and share 
the same nursing staff and equipment. An example is an entity which 
manages a nursing home and a hospital in the same area and which 
regularly shifts or rotates the nurses between the two. Non-contiguous 
sites, even within the same geographic area, which do not share the same 
nursing staff and operational purposes are not a single facility. For 
example, hospitals which are located on opposite sides of a 
municipality, but which are managed or owned by a single entity, are 
separate facilities if they do not regularly share nursing staff and 
operational purpose.
    Geographic area means the area within normal commuting distance of 
the place (address) of the intended worksite. If the geographic area 
does not include a sufficient number of facilities to make a prevailing 
wage determination, the term ``geographic area'' shall be expanded (by 
the State employment service, unless directed not to do so by the 
Director) with respect to the attesting facility to include a sufficient 
number of facilities to permit a prevailing wage determination to be 
made. If the place of the intended worksite is within a Metropolitan 
Statistical Area (MSA), any place within the MSA may be deemed to be 
within normal commuting distance of the place of intended employment.

[[Page 514]]

    Governor means the chief elected official of a State or the 
Governor's designee.
    H-1A nurse means any nonimmigrant alien admitted to the United 
States to perform services as a nurse under section 101(a)(15)(H)(i)(a) 
of the Act (8 U.S.C. 1101(a)(15)(H)(i)(a)).
    Immigration and Naturalization Service (INS) means the component of 
the Department of Justice which makes the determination under the Act on 
whether to grant visa petitions to petitioners seeking the admission of 
nonimmigrant nurses under H-1A visas.
    Layoff means any involuntary separation of one or more staff nurses 
without cause/prejudice. If a staff nurse is separated from one 
specialized activity and is offered retraining and retention at the same 
facility in another activity involving direct patient care at the same 
wage and status, but refuses such training and retention, such 
separation shall not constitute a layoff. The layoff provision applies 
to staff nurses only, not to other health occupations. If the position 
occupied by the staff nurse is covered by a collective bargaining 
agreement, the collective bargaining agreement definition of ``layoff'' 
(if any) shall apply to that position.
    Lockout means a labor dispute involving a work stoppage, wherein an 
employer withholds work from its employees in order to gain a concession 
from them.
    Nurse means a person who is or will be authorized by a State Board 
of Nursing to engage in registered nursing practice in a State or U.S. 
territory or possession at a facility which provides health care 
services. A staff nurse means a nurse who provides nursing care directly 
to patients. In order to qualify under this definition of ``nurse'' the 
alien shall:
    (1) Have obtained a full and unrestricted license to practice 
nursing in the country where the alien obtained nursing education, or 
have received nursing education in the United States or Canada;
    (2) Have passed the examination given by the Commission on Graduates 
for Foreign Nursing Schools (CGFNS), or have obtained a full and 
unrestricted (permanent) license to practice as a registered nurse in 
the state of intended employment, or have obtained a full and 
unrestricted (permanent) license in any state or territory of the United 
States and received temporary authorization to practice as a registered 
nurse in the state of intended employment; and,
    (3) Be fully qualified and eligible under the laws (including such 
temporary or interim licensing requirements which authorize the nurse to 
be employed) governing the place of intended employment to practice as a 
registered nurse immediately upon admission to the United States, and be 
authorized under such laws to be employed by the employer. For purposes 
of this paragraph, the temporary or interim licensing may be obtained 
immediately after the alien enters the United States and registers to 
take the first available examination for permanent licensure.
    Nursing contractor means an entity that employs registered nurses 
and supplies these nurses, on a temporary basis and for a fee, to health 
care facilities or private homes.
    Prevailing wage means the average wage paid to similarly employed 
registered nurses within the geographic area.
    Secretary means the Secretary of Labor or the Secretary's designee.
    Similarly employed means employed by the same type of facility 
(acute care or long-term care) and working under like conditions, such 
as the same shift, on the same days of the week, and in the same 
specialty area.
    State means one of the 50 States, the District of Columbia, Puerto 
Rico, the U.S. Virgin Islands, and Guam.
    State employment security agency (SESA) means the State agency 
designated under section 4 of the Wagner-Peyser Act to cooperate with 
USES in the operation of the national system of public employment 
offices.
    Strike means a labor dispute wherein employees engage in a concerted 
stoppage or work (including stoppage by reason of the expiration of a 
collective-bargaining agreement) or engage in any concerted slowdown or 
other concerted interruption of operations.
    United States Employment Service (USES) means the agency of the 
Department of Labor, established under

[[Page 515]]

the Wagner-Peyser Act, which is charged with administering the national 
system of public employment offices.
    United States (U.S.) nurse means any nurse who is a U.S. citizen; is 
a U.S. national; is lawfully admitted for permanent residence; is 
granted the status of an alien admitted for temporary residence under 8 
U.S.C. 1160(a), 1161(a), or 1255a(a)(1); is admitted as a refugee under 
8 U.S.C. 1157; or is granted asylum under 8 U.S.C. 1158.
    United States (U.S.) worker means any worker who is a U.S. citizen; 
is a U.S. national; is lawfully admitted for permanent residence; is 
granted the status of an alien lawfully admitted for temporary residence 
under 8 U.S.C. 1160(a), 1161(a), or 1255(a)(1); is admitted as a refugee 
under 8 U.S.C. 1157; or is granted asylum under 8 U.S.C. 1158.
    United States is defined at 8 U.S.C. 1101(a)(38).
    Worksite means the health care facility or home where the nurse is 
involved in the practice of nursing. It is possible, in the case of 
nursing contractors, that the employer's physical location and the 
worksite facility's physical location will differ.



Sec. 655.310  Attestations.

    (a) Who may submit attestations? Any entity meeting the definition 
of ``facility'' in Sec. 655.302, may submit an attestation. The 
attestation shall include: a completed Form ETA 9029, which shall be 
signed by the chief executive officer of the facility (or the chief 
executive officer's designee); and explanatory statements prescribed in 
paragraphs (c) through (k) of this section. A nursing contractor that 
seeks to employ nonimmigrant nurses shall file its own attestation 
(including Form ETA 9029 and explanatory statements) as prescribed by 
this section, and, as part of its own attestation, shall attest that it 
shall refer H-1A nurses only to facilities that, with the exception of 
private households which themselves do not employ H-1A nurses, have 
current and valid attestations on file with ETA. Subparts D and E of 
this part shall apply both to the nursing contractor and to the worksite 
facility.
    (b) Where should attestations be submitted? Attestations shall be 
submitted, by U.S. mail or private carrier, to the U.S. Department of 
Labor ETA Regional Office which has jurisdiction over the geographic 
area where the H-1A nurse will be employed, as designated by the Chief, 
Division of Foreign Labor Certifications, USES. The addresses of the 
Certifying Officers are set forth in the instructions to Form ETA 9029.
    (c) What should be submitted?--(1) Form ETA 9029 and explanatory 
statements.
    (i) A completed and dated original Form ETA 9029, containing the 
required attestation elements and the original signature of the chief 
executive officer of the facility, shall be submitted, along with two 
copies of the completed, (signed, and dated) Form ETA 9029. (Copies of 
Form ETA 9029 are available at the address listed in paragraph (b) of 
this section.) In addition, explanations, where required, for the 
required attestation elements as to what documentation is available at 
the facility and how such documentation indicates compliance with the 
regulatory standards as prescribed in paragraphs (d) through (i) of this 
section. In addition,
    (A) If the facility is a nursing contractor, the special attestation 
element in paragraph (j) of this section; or
    (B) If the facility is a worksite (other than a private household 
which itself does not employ, seek to employ, or file a visa petition on 
behalf of an H-1A nurse), which will use H-1A nurses only through a 
nursing contractor, the special attestation element in paragraph (k) of 
this section, shall be submitted in triplicate with the Form ETA 9029.
    (ii) If the facility is proposing to meet alternative standards for 
substantial disruption (Element I) and/or the taking of timely and 
significant steps (Element IV), an explanation of the standards being 
proposed and an explanation of how these proposed standards are of 
comparable significance to those set forth in the statute shall be 
submitted in triplicate. If the facility is attesting that it can only 
take one timely and significant step (Element IV), it shall submit an 
explanation, in triplicate, demonstrating that taking a second step is 
unreasonable. If the facility uses H-1A nurses only through a nursing 
contractor, but claims a bona

[[Page 516]]

fide medical emergency exemption from Element IV, it shall submit a 
written explanation, in triplicate, demonstrating the existence of such 
an emergency. DOL may request additional explanation and/or 
documentation from a facility in the process of determining 
acceptability in cases described in this paragraph (c)(1)(ii).
    (2) Attestation elements. The attestation elements referenced in 
paragraph (c)(1) of this section are mandated by section 212(m)(2)(A) of 
the Act (8 U.S.C. 1182(m)(2)(A)). Section 212(m)(2)(A) of the Act 
requires covered facilities to attest as follows:
    (i) The attestation referred to in section 101(a)(15)(H)(i)(a) of 
the Act, with respect to a facility for which an alien will perform 
services, is an attestation as to the following:
    (A) There would be a substantial disruption through no fault of the 
facility in the delivery of health care services of the facility without 
the services of such an alien or aliens.
    (B) The employment of the aliens will not adversely affect the wages 
and working conditions of registered nurses similarly employed.
    (C) The aliens employed by the facility will be paid the wage rate 
for registered nurses similarly employed by the facility.
    (D) Either--(1) The facility has taken and is taking timely and 
significant steps designed to recruit and retain sufficient registered 
nurses who are United States citizens or immigrants who are authorized 
to perform nursing services, in order to remove as quickly as reasonably 
possible the dependence of the facility on nonimmigrant registered 
nurses, or
    (2) The facility is subject to an approved State plan for the 
recruitment and retention of nurses (described in section 212(m)(3) of 
the Act; 8 U.S.C. 1182(m)(3)).
    (E) There is not a strike or lockout in the course of a labor 
dispute, and the employment of such an alien is not intended or designed 
to influence an election for a bargaining representative for registered 
nurses of the facility.
    (F) At the time of the filing of the petition for registered nurses 
under section 101(a)(15)(H)(i)(a) of the Act, notice of the filing has 
been provided by the facility to the bargaining representative of the 
registered nurses at the facility or, where there is no such bargaining 
representative, notice of the filing has been provided to registered 
nurses at the facility through posting in conspicuous locations.
    (ii) A facility is considered not to meet paragraph (c)(2)(i)(A) of 
this section (relating to an attestation of a substantial disruption in 
delivery of health care services) if the facility, within the previous 
year, has laid off registered nurses. A facility which lays off a 
registered nurse other than a staff nurse still meets the ``no layoff' 
requirement if, in its attestation, it attests that it will not replace 
the nurse with an H-1A nurse (either through promotion or otherwise) for 
a period of 1 year after the date of the layoff. Nothing in paragraph 
(c)(2)(i)(D) of this section shall be construed as requiring a facility 
to have taken significant steps described in such paragraph before 
December 18, 1989 (i.e., the date of enactment of the Immigration 
Nursing Relief Act of 1989).
    (d) The first attestation element: substantial disruption. The 
facility shall attest that ``there would be substantial disruption 
through no fault of the facility in the delivery of health care services 
of the facility without the services of such an alien or aliens.'' This 
element shall be met if the facility provides the following information:
    (1) Layoffs. The facility shall attest that it has not laid off 
nurses during the 12-month period prior to submitting the attestation. A 
facility which lays off a registered nurse other than a staff nurse 
still meets the ``no layoff'' requirement if, in its attestation it 
attests that it will not replace the nurse with an H-1A nurse (either 
through promotion or otherwise) for a period of 1 year after the date of 
the layoff.
    (2) Nursing shortage. (i) The facility shall attest to one of the 
following:
    (A) It has a current nurse vacancy rate of 7 percent or more. An 
explanatory statement does not have to be submitted for this attestation 
element, but documentation to support this attestation shall be 
maintained at the facility and shall be available for review in 
accordance with Sec. 655.350(b).

[[Page 517]]

    (B) It is unable to utilize 7 percent or more of its total beds due 
to a shortage of nurses. An explanatory statement does not have to be 
submitted for this attestation element, but supporting documentation for 
this attestation shall be maintained at the facility and shall be 
available for review in accordance with Sec. 655.350(b).
    (C) It has had to eliminate or curtail the delivery of essential 
health care services due to a shortage of nurses, and provide brief 
explanatory information about the essential services eliminated or 
curtailed by the facility due to a nursing shortage, what documentation 
is available at the facility to substantiate this attestation, where 
this documentation is located and can be reviewed, and the applicable 
time period of the documentation.
    (D) It has been unable to effect established plans to provide needed 
new health care services in the community due to a shortage of nurses, 
and provide brief explanatory information about needed new services that 
have not been implemented by the facility due to a nursing shortage and 
which will be implemented with the availability of H-1A nurses, what 
documentation is available at the facility to substantiate this 
attestation, where this documentation is located and can be reviewed, 
and the applicable time period of the documentation.
    (ii) Other substantial disruption. When an attesting facility finds 
that the indicators in paragraphs (d)(2)(i) (A) through (D) of this 
section cannot be demonstrated, or that such indicators are 
inappropriate to that facility, but that without the services of H-1A 
nurses, substantial disruption in the delivery of health care services 
of the facility still would occur due to a shortage or nurses, the 
facility shall provide an explanation of how a shortage of nurses has 
caused a ``substantial disruption'' in the delivery of its health care 
services. Such explanation shall be sufficient to provide a clear 
showing of ``substantial disruption'' in the delivery of specific health 
care services due to a shortage of nurses, and shall clearly explain why 
the indicators in paragraphs (d)(2)(i) (A) through (D) of this section 
cannot be met by or are inappropriate to that facility. In addition to 
the documentation required to be maintained by attesting facilities 
described in paragraph (d)(3) of this section, facilities attesting 
under this paragraph also shall maintain and make available for 
inspection (as described elsewhere in this section) such additional 
documentation as is necessary to substantiate such claim of substantial 
disruption.
    (3) Documentation of facility's nursing positions. The attesting 
facility shall maintain and make available for inspection (as described 
in Sec. 655.350(b)) documentation substantiating:
    (i) The total number of nursing positions at the facility;
    (ii) The number of nursing vacancies at the facility during a 12-
month period ending no later than 3 months prior to submittal of the 
attestation;
    (iii) The number of nurses who left the facility during the same 12-
month period;
    (iv) The number of nurses hired by the facility during the same 12-
month period;
    (v) The overall staffing pattern for nursing positions at the 
facility; and
    (vi) A description of the facility's efforts to recruit U.S. nurses 
during the same 12-month period. The documentation on numbers of nurses, 
maintained for the purposes of this paragraph (d)(3), shall be broken 
out by numbers of U.S. nurses, nurses admitted under H-1 visas, nurses 
admitted under H-1A visas, nurses admitted under other nonimmigrant 
visas, and other nurses.
    (e) The second attestation element: no adverse effect. The facility 
shall attest that ``the employment of the alien will not adversely 
affect the wages and working conditions of registered nurses similarly 
employed.''
    (1) Wages. To meet the requirement of no adverse effect on wages, 
the facility shall attest that it shall pay each nurse of the facility 
at least the prevailing wage for the occupation in the geographic area. 
The facility shall pay the higher of the wage required pursuant to this 
paragraph (e) or the wage required pursuant to paragraph (f) of this 
section (i.e., the third attestation element: facility wage).

[[Page 518]]

    (i) State employment security determination. The facility does not 
independently determine the prevailing wage. The State employment 
security agency (SESA) shall determine the prevailing wage for similarly 
employed nurses in the geographic area in accordance with administrative 
guidelines or regulations issued by ETA. The facility shall request the 
appropriate prevailing wage from the SESA not more than 90 days prior to 
the date the attestation is submitted to ETA. Once a facility obtains a 
prevailing wage determination from the SESA and files an attestation 
supported by that prevailing wage determination, the facility shall be 
deemed to have accepted the prevailing wage determination as accurate 
and appropriate (both to the occupational classification and wage) and 
thereafter shall not contest the legitimacy of the prevailing wage 
determination in an investigation or enforcement action. A facility may 
challenge a SESA prevailing wage determination through the Employment 
Service complaint system. See 20 CFR part 658, Subpart E. A facility 
which challenges a SESA prevailing wage determination shall obtain in 
final ruling from the Employment Service prior to filing an attestation. 
Any such challenge shall not require the SESA to divulge any employer 
wage data which was collected under the promise of confidentiality.
    (ii) Collectively bargained wage rates. Where wage rates for nurses 
at a facility are the result of arms-length collective bargaining, those 
rates shall be considered ``prevailing'' for that facility for the 
purposes of this subpart.
    (iii) Total compensation package. The prevailing wage finding under 
this paragraph (e)(1) relates to wages only. However, each item in the 
total compensation package for U.S., H-1A, and other nurses employed by 
the facility shall be the same within a given facility, including such 
items as housing assistance and other perquisites.
    (iv) Documentation of pay and total compensation. The facility shall 
maintain documentation summarizing its pay schedule and compensation 
package for nurses. See Sec. 655.350(b). The summary shall cover each 
category of nursing position in which H-1A nurses are or will be hired 
or promoted into and each category of nursing position in which H-1A 
nurses (or nurses admitted on H-1 visas) have been hired or promoted 
into. Categories of nursing positions not covered by the documentation 
shall not be covered by the attestation, and, therefore, such positions 
shall not be filled or held by H-1A nurses.
    (2) Working conditions. To meet the requirement of no adverse effect 
on working conditions, the facility shall attest that it shall afford 
equal treatment to U.S. and H-1A nurses with the same seniority, with 
respect to such working conditions as the number and scheduling of hours 
worked (including shifts, straight days, weekends); vacations; wards and 
clinical rotations; and overall staffing-patient patterns.
    (f) The third attestation element: facility/employer wage. The 
facility employing or seeking to employ the alien shall attest that 
``the alien employed by the facility will be paid the wage rate for 
registered nurses similarly employed by the facility.'' The facility 
shall maintain documentation substantiating compliance with this 
attestation which shall include a description of the factors taken into 
consideration by the facility in making compensation decisions for 
nurses and the facility pay schedule for nurses maintained pursuant to 
paragraph (e)(1) of this section. See Sec. 655.350(b). The facility 
shall pay the higher of the wage required pursuant to this paragraph (f) 
or the wage required pursuant to paragraph (e) of this section (i.e., 
the second attestation element: no adverse effect).
    (g) The fourth attestation element: timely and significant steps; or 
State plan. The facility may satisfy the fourth attestation element by 
satisfying Alternative I in paragraph (g)(1) of this section or by 
satisfying Alternative II in paragraph (g)(2) of this section.
    (1) Alternative I: Timely and significant steps. The facility shall 
attest that it ``has taken and is taking timely and significant steps 
designed to recruit and retain sufficient registered nurses who are 
United States citizens or immigrants who are authorized to perform 
nursing services, in order to remove as quickly as reasonably possible

[[Page 519]]

the dependence of the facility on nonimmigrant registered nurses.'' The 
facility shall take at least two such steps, unless it demonstrates that 
taking a second step is not reasonable. The steps described in this 
paragraph (g)(1) shall not be considered to be an exclusive list of the 
significant steps that may be taken to meet the conditions of this 
paragraph (g)(1). Nothing in this subpart or subpart E of this part 
shall require a facility to take more than one step, if the facility can 
demonstrate that taking a second step is not reasonable. The facility is 
not required to have taken any of these steps prior to December 18, 
1989. A facility choosing to take timely and significant steps other 
than those specifically described in paragraph (g)(1)(i)(A) of this 
section shall submit with its attestation a description of the steps it 
is proposing to take and an explanation of how the proposed steps are of 
comparable timeliness and significance to those described in paragraph 
(g)(1)(i)(A) of this section. A facility claiming that a second step is 
unreasonable shall submit an explanation of why such second step would 
be unreasonable.
    (i) Descriptions of steps--(A) Statutory steps. Each of the actions 
described in this paragraph (g)(1)(i)(A) shall be considered a 
significant step reasonably designed to recruit and retain U.S. nurses. 
A facility choosing any one of the following steps shall attest that its 
program(s) meets the regulatory requirements set forth for each and 
provide an explanation of how the requirements are satisfied by the 
program(s). In addition, the attesting facility shall maintain and make 
available for inspection (as described in Sec. 655.350(b) of this part) 
documentation specified in the particular step selected and/or 
documentation which provides a complete description of the nature and 
operation of its program(s) sufficient to substantiate its attestation 
and full compliance with the requirements for the particular step 
selected. Section 212(m)(2)(E) of the INA provides that a violation 
shall be found if a facility fails to meet a condition attested to. 
Thus, a facility shall be held responsible for all timely and 
significant steps to which it attests.
    (1) Step One: ``Operating a training program for registered nurses 
at the facility or financing (or providing participation in) a training 
program for registered nurses elsewhere.'' Training programs may include 
either courses leading to a higher degree (i.e., beyond an associate or 
a baccalaureate degree), or continuing education courses. If the program 
includes courses leading to a higher degree, they shall be courses which 
are part of a program accepted for degree credit by a college or 
university and accredited by a State Board of Nursing or a State Board 
of Higher Education (or its equivalent), as appropriate. If the program 
includes continuing education courses, they shall be courses which meet 
criteria established to qualify the nurses taking the courses to earn 
continuing education units accepted by a State Board of Nursing (or its 
equivalent). In either type of program, financing by the facility, 
either directly or arranged through a third party, shall cover the total 
tuition costs of such training. The number of U.S. nurses for whom such 
training actually is provided shall be no less than half of the number 
of nurses who left the facility during the 12-month period prior to 
submission of the attestation. (U.S. nurses to whom such training was 
offered, but who rejected such training, may be counted towards those 
provided training, but the facility, in such case, shall maintain 
documentation of such offer and rejection). See Sec. 655.350(b).
    (2) Step Two: ``Providing career development programs and other 
methods of facilitating health care workers to become registered 
nurses.'' This may include programs leading directly to a degree in 
nursing, or career ladder/career path programs which could ultimately 
lead to a degree in nursing. A facility choosing this step shall 
maintain as documentation a description of the content and eligibility 
requirements for both types of programs and an explanation of how the 
requirements of this paragraph (g)(1)(i)(A)(2) are satisfied by each 
program. Any such degree program shall be, at a minimum, either through 
an accredited community college (leading to an associate's degree), 4-
year college (a bachelor's degree), or diploma school, and the course of 
study

[[Page 520]]

shall be one accredited by a State Board of Nursing (or its equivalent). 
For career ladder or career path programs, the facility shall maintain 
documentation that the programs are normally part of a course of study 
or training which prepares a U.S. worker for enrolling in formal direct 
training leading to a degree in nursing, either through an accredited 
community college, a 4-year college, or a diploma school. See Sec. 
655.350(b) of this part. Financing by the facility, either directly or 
arranged through a third party, shall cover the total costs of such 
programs. U.S. workers participating in such programs shall be working 
or have worked in health care occupations or health care facilities. The 
number of U.S. workers for whom such training is provided shall be equal 
to no less than half the average number of vacancies for nurses during 
the 12-month period prior to the submission of the attestation.
    (3) Step Three: ``Paying registered nurses wages at a rate higher 
than currently being paid to registered nurses similarly employed in the 
geographic area.'' A facility choosing this step shall maintain 
documentation showing that its entire schedule of wages for nurses is at 
least 5 percent higher than the prevailing wages as determined by the 
SESA pursuant to paragraph (e)(1)(i) of this section, and it shall 
attest that such differentials shall be maintained throughout the period 
of the attestation's effectiveness.
    (4) Step Four: ``Providing adequate support services to free 
registered nurses from administrative and other non-nursing duties.'' 
Non-nursing duties include such activities as housekeeping duties; food 
preparation and delivery; transporting patients; providing occupational 
and respiratory therapy; answering telephones; running errands for 
patients; and clerical tasks. A facility choosing this step shall not 
require nurses at the facility to perform non-nursing duties. However, 
it is understood that on an infrequent non-recurring basis, nurses at 
the facility may perform one or more of the tasks encompassed by the 
duties listed above in this paragraph (g)(1)(i)(A)(4) or other non-
nursing duties. Facilities choosing this step shall maintain 
documentation showing what steps they have taken to ensure that nursing 
jobs do not include any of these duties and that such activity by nurses 
at the facility occurs without regularity and infrequently. Such a 
facility also shall maintain documentation with respect to any other 
steps being taken to relieve nurses from non-nursing duties, or to 
enhance the nursing function, such as computerizing certain writing and 
routine functions performed by nurses.
    (5) Step Five: ``Providing reasonable opportunities for meaningful 
salary advancement by registered nurses.'' Documentation for this step 
shall include documentation of systems for salary advancement based on 
factors such as merit, education, and specialty, and/or salary 
advancement based on length of service with other bases for wage 
differentials remaining constant.
    (i) Merit, education, and specialty. For salary advancement based on 
factors such as merit, education, and specialty, the facility shall 
maintain and make available for inspection documentation that it 
provides opportunities for professional development of its nurses which 
lead to salary advancement, e.g., opportunities for continuing 
education; in-house educational instruction; special committees, task 
forces, or projects considered of a professional development nature; 
participation in professional organizations; and writing for 
professional publications. Such opportunities shall be available to all 
the facility's nurses.
    (ii) Length of service. For salary advancement based on length of 
service, the facility shall maintain and make available for inspection 
documentation that it has clinical ladders in place which provide, 
annually, salary increases of 3 percent or more for a period of no less 
than 10 years, over and above the costs of living and merit, education, 
and specialty increases and differentials.
    (B) Other possible steps. The Act indicates that the five steps 
described in paragraphs (g)(1)(i)(A) (1) through (5) of this section are 
not an exclusive list of timely and significant steps which might 
qualify. Facilities are encouraged to be innovative in devising other 
timely and significant steps, but these shall be of timeliness and 
significance

[[Page 521]]

comparable to those in paragraphs (g)(1)(i)(A) (1) through (5) of this 
section to qualify. A facility may attest that it has taken and is 
taking other such steps and explain in its attestation what these steps 
are, their nature and scope, how they are effected and how they meet the 
statutory test of timeliness and significance comparable to those Steps 
One through Five described above. A facility choosing alternative steps 
shall attest that its program(s) meet(s) the statutory requirements of 
timeliness and significance in promoting the development, recruitment 
and retention of U.S. nurses, explaining how these requirements are 
satisfied by such program(s). In addition, the attesting facility shall 
maintain and make available for inspection (as described in Sec. 
655.350(b)) documentation which provides a complete description of the 
nature and operation of its program(s) sufficient to substantiate its 
attestation and full compliance with the requirements of this paragraph 
(g)(1)(i)(B). Examples of such steps which--depending on the 
circumstances, the size and nature of the attesting facility, the nature 
and scope of the step(s) described, the number of persons affected, and 
other such factors--may meet these requirements are:
    (1) Monetary incentives--providing monetary incentives to nurses, 
through bonuses and merit pay plans not included in the base 
compensation package, for additional education, and for efforts leading 
to increased recruitment and retention of U.S. nurses. Such monetary 
incentives can be based on actions by nurses such as: Innovations to 
achieve better patient care, increased productivity, reduced waste, 
better safety; obtaining additional certification in a nursing 
specialty; unused sick leave; recruiting other U.S. nurses; staying with 
the facility for a given number of years; taking less desirable 
assignments (other than shift differential); participating in 
professional organizations, on task forces and on special committees; or 
contributing to professional publications. Facilities attesting to this 
step shall have a documented system for providing significant financial 
rewards in the form of bonuses or salary advancement to nurses 
participating in the activities described in this paragraph.
    (2) Special perquisites--providing nurses with special perquisites 
for dependent care or housing assistance of a nature and/or extent that 
constitute a ``significant'' factor in inducing employment and retention 
of U.S. nurses.
    (3) Work schedule options--providng nurses with non-mandatory work 
schedule options for part-time work, job-sharing, compressed work week 
or non-rotating shifts (provided, however, that H-1A nurses are employed 
only in full-time work) of a nature and/or extent that constitute a 
``significant'' factor in inducing employment and retention of U.S. 
nurses.
    (4) Other training options--providing training opportunities to 
become registered nurses to U.S. workers not currently in health care 
occupations by means of financial assistance (e.g., scholarship, loan or 
pay-back programs) to such persons.
    (ii) Unreasonableness of second step. The steps described in this 
paragraph (g)(1) shall not be considered to be an exclusive list of the 
significant steps that may be taken to meet the conditions of this 
paragraph (g)(1). Nothing in this subpart or subpart E of this part 
shall require a facility to take more than one step, if the facility can 
demonstrate that taking a second step is not reasonable. However, a 
facility shall make every effort to take at least two steps. A facility 
taking only one step shall provide an explanation with its attestation, 
and maintain documentation at the facility, relating to why taking a 
second step is not reasonable. The taking of a second step may be 
considered unreasonable if it would result in the facility's financial 
inability to continue providing the same quality and quantity of health 
care or if the provision of nursing services would otherwise be 
jeopardized by the taking of such a step. If the single step which is 
taken is one of the statutorily defined steps described in paragraphs 
(g)(1)(i)(A)(1) through (g)(1)(i)(A)(5) of this section, the facility 
shall explain with its attestation, and maintain documentation at the 
facility, with respect to each of the four statutory steps (described in 
paragraphs (g)(1)(i)(A)(1) through (g)(1)(i)(A)(5) of

[[Page 522]]

this section) not taken, relating to why it would be unreasonable for 
the facility to take such step and also shall explain with its 
attestation, and shall maintain and make available for inspection (as 
described in Sec. 655.350(b)) documentation demonstrating why it would 
be unreasonable for the facility to take any other steps designed to 
recruit, develop and retain sufficient U.S. nurses to meet its staffing 
needs. If the single step which is taken is not one of the five 
statutory steps described in paragraphs (g)(1)(i)(A)(1) through 
(g)(1)(i)(A)(5) of this section, the facility shall, with respect to 
each of the five statutory steps not taken, explain with its 
attestation, and maintain documentation and make available for 
inspection (as described in Sec. 655.350(b)) documentation, 
demonstrating why it would be unreasonable for the facility to take such 
step; the facility also shall explain with its attestation, and make 
available for inspection (as described in Sec. 655.350(b)) 
documentation demonstrating why it would be unreasonable for the 
facility to take any other steps designed to recruit and retain 
sufficient U.S. nurses to meet its staffing needs. On the basis of the 
explanation submitted by the facility, the Certifying Officer shall 
determine whether the requirements of this paragraph (g)(1)(ii) have 
been met. See paragraph (m) of this section regarding such 
determinations and administrative appeals therefrom.
    (iii) Alternative to criteria for each specific step. Instead of 
complying with the specific criteria for each of the steps in the second 
and succeeding years, a facility may include in its prior year's 
attestation, in addition to the actions taken under Steps One through 
Five, that it shall reduce the number of alien (H-1 and H-1A 
visaholders) nurses it utilizes within 1 year from the date of 
attestation by at least 10 percent, without reducing the quality or 
quantity of services provided. If this goal is achieved (as demonstrated 
by documentation maintained by the facility and made available for 
inspection, and indicated in its subsequent year's attestation), the 
facility's subsequent year's attestation may simply include the Form ETA 
9029, an explanation demonstrating that this goal has been achieved and 
an attestation that it shall again reduce the number of alien nurses it 
utilizes within 1 year from the date of attestation by at least 10 
percent. This alternative is designed to permit a facility to achieve 
the objectives of the Act, without subjecting the facility to detailed 
requirements and criteria as to the specific means of achieving that 
objective. The first, second, and succeeding years shall be consecutive.
    (2) Alternative II: subject to approved annual State plan. As an 
alternative to attesting to the timely and significant steps set forth 
in paragraph (g)(1) of this section, the facility may attest that it 
``is subject to an approved State plan for the recruitment and retention 
of nurses.'' The contents of the annual State plan are described in more 
detail in Sec. 655.315. For an individual facility to meet the 
requirements of this paragraph (g)(2), the annual State plan shall 
provide for the taking of timely and significant steps by that facility, 
and the facility shall maintain appropriate documentation with respect 
to those steps. See Sec. 655.350(b). To qualify for this Alternative 
II, the annual State plan shall have been approved prior to the date the 
facility submits its attestation to ETA for filing.
    (h) The fifth attestation element: No strike or lockout; no 
intention or design to influence bargaining representative election. The 
facility shall attest that ``there is not a strike or lockout in the 
course of a labor dispute, and the employment of such an alien is not 
intended or designated to influence an election for a bargaining 
representative for registered nurses of the facility.'' Labor disputes 
for purposes for this attestation element relate only to those involving 
nurses providing nursing services; other health service occupations are 
not included. This attestation element applies to strikes and lockouts 
and elections of bargaining representatives at both the facility 
employing the nurse and, in the case of nursing contractors, at the 
worksite facility.
    (1) Notice of strike or lockout. In order to remain in compliance 
with the no strike or lockout portion of this attestation element, if a 
strike or lockout of nurses at the facility occurs during the

[[Page 523]]

1 year's validity of the attestation, the facility, within 3 days of the 
occurrence of the strike or lockout, shall submit to the ETA National 
Office, by U.S. mail or private carrier, written notice of the strike or 
lockout.
    (2) ETA notice to INS. Upon receiving from a facility a notice 
described in paragraph (h)(1) of this section, ETA shall examine the 
documentation, and may consult with the union at the facility or other 
appropriate entities. If ETA determines that the strike or lockout is 
covered under 8 CFR 214.2(h)(17), INS's Effect of strike regulation for 
``H'' visaholders, ETA shall certify to INS, in the manner set forth in 
that regulation, that a strike or other labor dispute involving a work 
stoppage of nurses is in progress at the facility.
    (i) The sixth attestation element: notice of filing. The facility 
shall attest that at the time of filing of the petition for registered 
nurses under section 101(a)(15)(H)(i)(a) of the Act, notice of filing 
has been provided by the facility to the bargaining representative of 
the registered nurses at the facility or, where there is no such 
bargaining representative, notice of the filing has been provided to 
registered nurses at the facility through posting in conspicuous 
locations. The requirement applies to providing notice of filing both 
for attestations submitted to ETA and for visa petitions filed with INS.
    (1) Notification of bargaining representative. No later than the 
date the attestation is mailed to DOL to be considered for filing, the 
facility shall notify the bargaining representative (if any) for nurses 
at the facility that the attestation is being submitted to DOL, and 
shall state in that notice that the attestation is available at the 
facility (explaining how it can be inspected or obtained) and at the 
national office of ETA for review by interested parties. No later than 
the date the facility transmits a visa petition for H-1A nurses to INS, 
the facility shall notify the bargaining representative (if any) for 
nurses at the facility that the visa petition is being submitted to INS, 
and shall state in that notice that the attestation and visa petition 
are available at the facility (explaining how they can be inspected or 
obtained) and at the national office of ETA for review by interested 
parties. Notices under this paragraph (i)(1) shall include the following 
statement: ``Complaints alleging misrepresentation of material facts in 
the attestation or failure to comply with the terms of the attestation 
may be filed with any office of the Wage and Hour Division of the United 
States Department of Labor.''
    (2) Posting notice. If there is no bargaining representative for 
nurses at the facility, when the facility submits and attestation to 
ETA, and each time the facility files an H-1A visa petition with INS, 
the facility shall post a written notice at the facility (and, in 
addition, at the worksite facility, if at a different location, such as 
in the case of nursing contractors), stating that the attestation and/or 
visa petition(s) have been filed and are available at the facility 
(explaining how these documents can be inspected or obtained) and at the 
national office of ETA for review by interested parties. In order for 
the facility to remain in compliance with this paragraph (i)(2), all 
such notices shall remain posted during the validity period of the 
attestation and the attestations and petitions shall be available for 
examination at the facility throughout this period of time. The notice 
of posting shall provide information concerning the availability of 
these documents for examination at the facility and at the national 
office of ETA, and shall include the following statement: ``Complaints 
alleging misrepresentation of material facts in the attestation or 
failure to comply with the terms of the attestation may be filed with 
any office the Wage and Hour Division of the United States Department of 
Labor.'' Such posted notices shall be clearly visible and unobstructed 
while posted, shall be posted in conspicuous places, where the 
facility's U.S. nurses readily can read the posted notice on the way to 
or from their duties. Appropriate locations for posting such notices 
include locations in the immediate proximity of mandatory Fair Labor 
Standards Act wage and hour notices and Occupational Safety and Health 
Act occupational safety and health notices.

[[Page 524]]

    (j) Special provisions for nursing contractors. A nursing contractor 
submitting an attestation for filing as a facility shall attest, in 
addition to the first through sixth attestation elements, that it will 
refer H-1A nurses only to facilities that (with the exception of private 
households which themselves do not employ H-1A nurses) have valid 
attestations on file with ETA. The nursing contractor shall obtain from 
each such worksite facility a copy of that facility's Form ETA 9029, 
accepted for filing by ETA and then currently on file with ETA. The 
nursing contractor shall maintain a copy of such worksite facility's 
accepted attestation on file at the nursing contractor's principal 
office during the validity period of the nursing contractor's 
attestation or the period of time that any H-1A nurse in its employ is 
providing nursing services at the worksite facility, whichever is 
longer.
    (k) Special provisions for worksite facilities which are not 
employers of H-1A nurses and are not controlled by employers of H-1A 
nurses. A facility (other than a private household) which obtains the 
services of an H-1A nurse by contracting with a nursing contractor, but 
which is itself neither the employer of any H-1A nurse nor controlled by 
the employer of any H-1A nurse (see paragraph (k)(1) of this section), 
shall file an attestation with ETA pursuant to this subpart. Such a 
worksite facility may request from ETA a waiver of specific elements of 
the attestation to avoid duplicative attestations, in cases of 
temporary, emergency circumstances, with respect to information not 
within the knowledge of the attestor, or for other good cause. The 
attesting worksite facility shall be to ably demonstrate the existence 
of the circumstances or good cause which are asserted as the basis(es) 
for the request for a waiver of a particular element of the attestation, 
but need not submit such evidence with its request for waiver, except 
evidence with respect to a bona fide medical emergency (see paragraph 
(k)(3)(iii) of this section).
    (1) Worksites employing, seeking to employ, or filing visa petitions 
on behalf of H-1A nurses. An attestation with respect to which waiver is 
requested or granted pursuant to this paragraph (k) is not valid (i.e., 
is not ``on file and in effect'') for a worksite facility employing, 
seeking to employ, or filing a visa petition on behalf of H-1A nurses. 
Only an attestation meeting the requirements of paragraphs (a) through 
(i) of this section (and paragraph (j) of this section, in the case of a 
nursing contractor) can serve as the basis for a petition for an H-1A 
visa. A worksite facility which uses H-1A nurses only through a nursing 
contractor and, as part of its attestation, requests waiver of one or 
more attestation elements nevertheless shall file a complete attestation 
in order to be able to use such attestation as a basis for itself filing 
a visa petition for an H-1A nurse. Thus, a worksite facility should 
consider its future needs for H-1A nurses in filing attestations and 
requests for waiver pursuant to this paragraph (k).
    (2) Inapplicability of third attestation element: facility/employer 
wage. If a worksite facility uses H-1A nurses only through a nursing 
contractor, the third attestation element (facility/employer wage; see 
paragraph (f) of this section) is not applicable to that facility, since 
the worksite facility is not the employer of the H-1A nurse and does not 
guarantee the H-1A nurse's wage. The third attestation element is 
required only for the employer of the H-1A nurse(s), i.e., the third 
attestation element shall be included in the attestation of and met by 
the H-1A nurse's employer (i.e., the nursing contractor).
    (3) Waiver of attestation elements. ETA may consider, pursuant to 
this paragraph (k)(3) requests for waiver of certain attestation 
elements by a worksite facility which uses or will use an H-1A nurse 
provided by a nursing contractor (i.e., an ``H-1A contract nurse''), but 
which worksite facility itself does not employ, seek to employ, or file 
a visa petition on behalf of an H-1A nurse. Paragraphs (k)(3) (i) 
through (iii) of this section set forth different conditions for waiver 
depending on the number of workdays of H-1A contract nurse services the 
worksite facility will use. For the purposes of this paragraph (k)(3), a 
``workday'' shall consist of one H-1A contract nurse working for one 
normal shift in a day. Thus, for example, three normal shifts worked by

[[Page 525]]

each of a group of five H-1A contract nurses totals 15 workdays.
    (i) Minimal use of H-1A contract nurses by a worksite. Where the 
attesting worksite facility attests in its request for waiver pursuant 
to this paragraph (k)(3) that it will use no more than a total of 15 
workdays of H-1A contract nurse services in any 3-month period of the 
attestation's 1-year period of validity to meet emergency needs on a 
temporary basis, ETA may waive the first (substantial disruption), 
second (adverse effect), and fourth (timely and significant steps or 
State plan) elements of the attesting worksite facility's attestation. 
See paragraphs (d), (e), and (g) of this section; see also paragraphs 
(f) and (k)(2) of this section, with respect to the inapplicability of 
third attestation element (facility/employer wage). ETA shall not waive 
pursuant to this paragraph (k)(3)(i) the fifth attestation element 
(strike, lockout, or intent or design to influence bargaining 
representative election) or the sixth attestation element (notice). See 
paragraphs (h) and (i) of this section.
    (ii) Short-term use of H-1A contract nurses. Where the attesting 
worksite facility attests in its request for waiver pursuant to this 
paragraph (k)(3) that it will use no more than a total of 60 workdays of 
H-1A contract nurse services in any 3-month period of the attestation's 
1-year period of validity to meet temporary needs, ETA may waive the 
nursing shortage component of the first element (substantial disruption; 
see paragraphs (d)(2) and (d)(3) of this section) and may waive the 
fourth (timely and significant steps or State plan; see paragraph (g) of 
this section) element of the attesting worksite facility's attestation. 
See also paragraphs (f) and (k)(2) of this section, with respect to the 
inapplicability of third attestation element (facility/employer wage). 
ETA shall not waive pursuant to this paragraph (k)(3)(ii) the no-layoff 
component of the first attestation element (substantial disruption; see 
paragraph (d)(1) of this section); the second attestation element 
(adverse effect); the fifth attestation element (strike, lockout, or 
intent to influence a bargaining representative election); or the sixth 
attestation element (notice). See paragraphs (d), (e), (h), and (i) of 
this section.
    (iii) Long-term use of H-1A contract nurse services. Where the 
attesting worksite facility attests in its request for waiver pursuant 
to this paragraph (k)(3) that it will use more than 60 workdays of H-1A 
contract nurse services in any 3-month period of the attestation's 1-
year period of validity, ETA shall not waive any attestation element, 
except that, if the attestor documents a bona fide medical emergency 
warranting a waiver of the fourth attestation element (timely and 
significant steps or State plan) ETA may waive such element. See 
paragraph (g) of this section.
    (l) Agents of worksite facilities. A worksite facility (including a 
worksite facility which itself employs or seeks to employ an H-1A nurse) 
may authorize a nursing contractor to act as its agent in preparing and 
filing the worksite facility's attestation; however, a worksite facility 
using an agent for preparation and filing of the attestation is 
responsible for the contents of such attestation and remains liable for 
any violations which may be disclosed in any investigation under Subpart 
E of this Part, and the chief executive officer of the worksite facility 
shall sign the original attestation, as required by paragraph (c)(1)(i) 
of this section.
    (m) Actions on attestations submitted for filing. An attestation 
which meets the established criteria set forth in this Sec. 655.310 
shall be accepted for filing by ETA on the date it is signed by the 
Certifying Officer. ETA shall then follow the procedures set forth in 
paragraph (m)(1) of this section. An attestation submitted by a facility 
proposing alternative criteria or steps for the first and/or the fourth 
attestation elements, and/or proposing to take only one timely and 
significant step, and/or claiming a bona fide medical emergency 
exemption from the fourth attestation element shall be reviewed by ETA, 
and a determination shall be made by the Certifying Officer whether to 
accept or reject the attestation for filing. See paragraphs (d)(2)(ii), 
(g)(1)(i)(B), (g)(1)(ii), and (k)(3)(iii) of this section. The 
Certifying Officer may request additional explanation and/or 
documentation from the facility

[[Page 526]]

in making this determination. If the Certifying Officer does not contact 
the facility for such information or make any determination within 30 
days of receiving the attestation, the attestation shall become accepted 
for filing. Upon the facility's submitting the attestation to ETA and 
providing the notice required by the sixth attestation element (see 
Sec. 655.310(i)), the attestation shall be available for public 
examination at the health care facility itself. When ETA accepts the 
attestation for filing, the Certifying Officer shall forward the 
attestation to the ETA National Office, where it shall be available for 
public examination. Information contesting an attestation received by 
ETA prior to the determination to accept or reject the attestation for 
filing shall not be made part of ETA's administrative record on the 
attestation, but shall be referred to ESA to be processed as a complaint 
pursuant to Subpart E of this part, and, if such attestation 
nevertheless is accepted by ETA for filing, the complaint will be 
handled by ESA under that subpart.
    (1) Acceptance. (i) If the attestation (and any explanatory 
statements that may be required) meet the requirements of this subpart, 
ETA shall accept the attestation for filing, shall, in the case of a 
facility intending to file a visa petition as the employer of an H-1A 
nurse, notify INS in writing of the filing, shall return to the facility 
one copy of the attestation form submitted by the facility, with ETA's 
acceptance indicated thereon, and shall forward one copy of the 
attestation with ETA's acceptance indicated thereon to the ETA National 
Office. The facility may then file a visa petition with INS for alien 
nurses in accordance with INS regulations.
    (ii) DOL is not the guarantor of the accuracy, truthfulness or 
adequacy of an attestation accepted for filing.
    (2) Appeals of acceptances. If an attestation which is subject to a 
determination under paragraph (d)(2)(ii), (g)(1)(i)(B), (g)(1)(ii), or 
(k)(3)(iii) of this section is accepted for filing, any interested party 
may appeal ETA's determination(s) on the element(s) that have been 
reviewed. Appeals of acceptances shall be filed with the BALCA, no later 
than 30 days after the date of acceptance, and will be considered under 
the procedures set forth at Sec. 655.320.
    (3) Appeals of rejections. If the attestation is not accepted for 
filing, which may occur as a result of a determination under paragraph 
(d)(2)(ii), (g)(1)(i)(B), (g)(1)(ii), or (k)(3)(iii) of this section, 
ETA shall notify the facility in writing, specifying the reasons for 
rejection and quoting the language of Sec. 655.320(a)(1). Any 
interested party may appeal such rejection to the BALCA, no later than 
30 days after the date of rejection. Appeals of rejections shall be 
filed and considered under the procedures set forth at Sec. 655.320.
    (n) Effective date and validity of filed attestations. An 
attestation becomes filed and effective as of the date it is accepted 
and signed by the Certifying Officer and accepted thereby for filing. 
Such attestation is valid for the 12-month period beginning on the date 
of acceptance for filing, unless suspended or invalidated pursuant to 
Sec. 655.320 or subpart E. The filed attestation expires at the end of 
the 12-month period of validity.
    (o) Suspension or invalidation of filed attestation. Suspension or 
invalidation of an attestation may result from a BALCA decision 
reversing an ETA acceptance for filing; from investigations by the 
Administrator, Wage and Hour Division, of the facility's 
misrepresentation in or failure to carry out its attestation; or from a 
discovery by ETA that it made an error in its review of the attestation 
(in those cases where ETA performs such review pursuant to paragraph 
(d)(2)(ii), (g)(1)(i)(B), (g)(1)(ii), (k)(3)(iii) of this section) and 
that the explanation and documentation provided and maintained by the 
facility does not or did not meet the criteria set forth at Sec. 
655.310 (a) through (k). If an attestation is suspended or invalidated, 
DOL shall notify INS.
    (1) Result of BALCA or Wage and Hour Division action. If an 
attestation is suspended or invalidated as a result of a BALCA decision 
overruling an acceptance of the attestation for filing, or is suspended 
or invalidated as a result of a Wage and Hour Division action pursuant 
to subpart E, such suspension or

[[Page 527]]

invalidation may not be separately appealed, but shall be merged with 
appeals of BALCA's or the Wage and Hour Division's determination on the 
underlying violation.
    (2) Result of ETA action. If, after accepting an attestation for 
filing, ETA discovers that it erroneously accepted that attestation for 
filing, and, as a result, ETA suspends or invalidates that acceptance, 
the facility may appeal such suspension or invalidation pursuant to 
Sec. 655.320 as if that suspension or invalidation were a decision to 
reject the attestation for filing.
    (p) Facility's responsibilities during suspension and after 
invalidation or expiration of filed attestation. A facility shall comply 
with the terms of its attestation, even if such attestation is 
suspended, invalidated, or expired, as long as any H-1A nurse is at the 
facility, unless the attestation is superseded by a subsequent 
attestation accepted for filing by ETA.
    (q) Facilities subject to penalties. No attestation shall be 
accepted for filing from a nursing contractor or other facility which 
has failed to comply with any penalty, sanction, or other remedy 
assessed in a final agency action following an investigation by the Wage 
and Hour Division pursuant to subpart E.

(Approved by the Office of Management and Budget under control number 
1205-0305)

[59 FR 882, 897, Jan. 6, 1994, as amended at 59 FR 5487, Feb. 4, 1994]



Sec. 655.315  State plans.

    A State may submit an annual plan for the recruitment and retention 
of U.S. citizens and permanent resident aliens who are authorized to 
perform nursing services in the State.
    (a) Who should prepare and file the annual plan? The Governor of 
each State that chooses to submit an annual State plan shall be 
responsible for the preparation and filing of the annual plan. The 
Governor may designate any public and/or private organization(s) to 
assist the Governor in the development of the annual plan.
    (b) When and where should the annual plan be filed? If a State 
determines to file an annual State plan, the Governor shall submit the 
original plan, signed by the Governor, by U.S. mail or private carrier, 
to ETA at the following address: Director, U.S. Employment Service, 
Employment and Training Administration, Department of Labor, 200 
Constitution Avenue, NW., room N-4456, Washington, DC 20210. An annual 
State plan may be filed with ETA at any time. However, for an individual 
facility legitimately to attest to being subject to an annual State plan 
for the purposes of the fourth attestation element, Alternative II (see 
Sec. 655.310(g)(2)), such annual State plan shall have been approved 
prior to the date the attestation was submitted to ETA for filing and be 
in current effect. Therefore, if the Governor is aware that a facility 
within the State plans to submit an attestation for filing with ETA, the 
annual State plan should be mailed to ETA at least 35 days prior to the 
facility's submission of its attestation to ETA.
    (c) What overall issues shall the annual State plan address? The 
annual State plan shall address the overall issue of supply of and 
demand for nurses within the State, with particular emphasis on measures 
to develop a sufficient supply of U.S. nurses to meet projected demand. 
The State, as opposed to individual facilities, is in a position to--and 
may be expected to--address broad issues and perform such functions as 
conducting a Statewide needs assessment; overall management, 
facilitation and coordination among various interested entities within 
the State; and undertaking more regionally based approaches. The State 
is also in a position to devote resources which individual facilities 
may be lacking.
    (d) How should the annual State plan address the timely and 
significant steps? The annual State plan shall address all of the timely 
and significant steps in Sec. 655.310(g)(1)(i)(A)(1) through 
(g)(1)(i)(A)(5) generically, without regard to the specific criteria 
therein, on a Statewide basis. However, for the annual State plan to 
satisfy Alternative II of the fourth attestation requirement for an 
individual facility (see Sec. 655.310(g)(2)), the annual State plan 
shall indicate which of those timely and significant steps relate to 
individual facilities, and that each individual facility shall take such 
a step

[[Page 528]]

(either one step or more, as appropriate) to meet the appropriate 
specific criteria as set forth in Sec. 655.310(g)(1).
    (e) What other components may the annual State plan include? An 
annual State plan may include the following components:
    (1) The cooperation of high schools and colleges may be enlisted in 
counseling health workers and other individuals to enter the nursing 
profession.
    (2) Geographic and salary data may be made available to assist in 
linking nurses to facilities.
    (3) Publications of vacancies and programs may be made in industry 
and State newsletters.
    (4) Training films and videotapes, as well as information on housing 
and relocation services, may be developed and distributed.
    (5) Measures may be taken to encourage other health professionals to 
become nurses, such as: setting up home study programs with State 
licensing boards to allow work credits for purposes of meeting 
educational or State clinical requirements; entering into cooperative 
agreements for providing health care insurance and other job-related 
elements which would allow greater flexibility for those attempting to 
combine careers and school; providing monetary grants or long-term loans 
to persons preparing to become nurses.
    (6) Steps may be taken to encourage nurses who have left the nursing 
field to return to nursing, by providing such inducements as child care, 
holiday schedule adjustments, and substantial salary increases.
    (7) The State may profile and publicize those facilities with 
special model programs.
    (8) The annual State plan may place demands on facilities for 
comprehensive plans to reduce reliance on foreign nurses.
    (f) Approval and disapproval of annual State plans. Determinations 
of approval and disapproval of annual State plans shall be made by the 
Director, USES. The annual State plan shall be reviewed by ETA, in 
consultation with the Department of Health and Human Services, and a 
determination to approve or disapprove the annual State plan made within 
30 calendar days of ETA's receipt of the plan.
    (1) If the annual State plan is approved, the Director shall notify 
the Governor in writing.
    (2) If the annual State plan is disapproved, the Director shall 
notify the Governor in writing, specifying the reason(s) for 
disapproval. The notice shall state that within 30 calendar days of the 
date of the notice of disapproval, the Governor may correct the 
deficiencies noted in the disapproval and resubmit the annual State plan 
to ETA; and shall inform the state of its right to an appeal, by quoting 
the language of Sec. 655.320(a).
    (g) An approved annual State plan shall be valid for 12-month period 
beginning on the date of its approval by DOL.

(Approved by the Office of Management and Budget under control number 
1205-0305)



Sec. 655.320  Appeals of acceptance and rejection of attestations 
submitted for filing and of State plans.

    (a) Appeal right--(1) Attestations; when to file appeals from 
acceptances and rejections. On the basis that the explanation and 
documentation provided and maintained by the facility does not or did 
not meet the criteria set forth at Sec. 655.310(d)(2)(ii), 
(g)(1)(i)(B)(5), (g)(1)(ii), or (k)(3)(iii), an interested party may 
appeal an acceptance or rejection by ETA of an attestation submitted by 
a facility for filing in those cases where DOL performed an attestation 
review function under those provisions. The appeal shall be limited to 
ETA's determinations on the element(s) reviewed and shall not be an 
appeal as to any other element(s) in the attestation. An interested 
party may also appeal ETA's invalidation or suspension of a filed 
attestation due to a discovery by ETA that it made an error in its 
reviewing of the attestation (see Sec. 655.310(o). In the case of an 
appeal of an acceptance, the facility shall be a party to the appeal; in 
the case of the appeal of a rejection, invalidation, or suspension, the 
collective bargaining representative (if any) representing nurses at the 
facility shall be a party to the appeal. Appeals shall be in writing; 
shall set forth the grounds for the appeal; shall state if de novo 
consideration by

[[Page 529]]

BALCA is requested; and shall be mailed by certified mail within 30 
calendar days of the date of the action from which the appeal is taken 
(i.e., the acceptance, rejection, suspension or invalidation of the 
attestation).
    (2) Annual State plans; when to file appeals from disapprovals. A 
Governor of a State may appeal ETA's disapproval of an annual State 
plan. Individual facilities in the State may file briefs as amici 
curiae. Appeals shall be in writing and shall be mailed by certified 
mail within 30 calendar days of the disapproval of the annual State 
plan.
    (3) Where to file appeals. Appeals made pursuant to this section 
shall be in writing and shall be mailed by certified mail to: Director, 
U.S. Employment Service, Employment and Training Administration, 
Department of Labor, 200 Constitution Avenue, NW., Room N-4456, 
Washington, DC 20210.
    (4) Complaints. Appeals under this paragraph (a) shall not encompass 
questions of misrepresentation by a health care facility or 
nonperformance by such a facility of its attestation. Such complaints 
shall be filed with an office of the Wage and Hour Division, United 
States Department of Labor.
    (b) Transmittal to BALCA; case file. Upon receipt of an appeal 
pursuant to this section, the Certifying Officer (or, in the case of 
State plans, the Director, USES), shall send to BALCA a certified copy 
of the ETA case file, containing the attestation and supporting 
documentation and any other information or data considered by ETA in 
taking the action being appealed. The administrative law judge chairing 
BALCA shall assign a panel of one or more administrative law judges who 
serve on BALCA to review the record for legal sufficiency and to 
consider and rule on the appeal.
    (c) Consideration on the record; de novo hearings--(1) General. 
BALCA shall not remand, dismiss, or stay the case, except as provided in 
paragraph (c)(2) of this section, but may otherwise consider the appeal 
on the record or in a de novo hearing (on its own motion or on a party's 
request). Interested parties and amici curiae may submit briefs in 
accordance with a schedule set by BALCA. The ETA official making the 
determination from which the appeal was taken shall be represented by 
the Associate Solicitor for Employment and Training Legal Services, 
Office of the Solicitor, Department of Labor, or the Associate 
Solicitor's designee. If BALCA determines to hear the appeal on the 
record without a de novo hearing, BALCA shall render a decision within 
30 calendar days after BALCA's receipt of the case file. If BALCA 
determines to hear the appeal through a de novo hearing, the procedures 
contained in 29 CFR part 18 shall apply to such hearings, except that:
    (i) The appeal shall not be considered to be a complaint to which an 
answer is required;
    (ii) BALCA shall ensure that, at the request of the appellant, the 
hearing is scheduled to take place within a reasonable period after 
BALCA's receipt of the case file (see also the time period described in 
paragraph (c)(1)(iv) of this section);
    (iii) Technical rules of evidence, such as the Federal Rules of 
Evidence and subpart B of the Rules of Practice and Procedure for 
Administrative Hearings Before the Office of Administrative Law Judges 
(29 CFR part 18, subpart B), shall not apply to any hearing conducted 
pursuant to this subpart, but rules or principles designed to assure 
production of the most credible evidence available and to subject 
testimony to test by cross-examination shall be applied where reasonably 
necessary by BALCA in conducting the hearing; BALCA may exclude 
irrelevant, immaterial, or unduly repetitious evidence; the certified 
copy of the case file transmitted to BALCA by the Certifying Officer 
(or, in the case of State plans, the Director, USES), shall be part of 
the evidentiary record of the case and need not be removed into 
evidence; and
    (iv) BALCA's decision shall be rendered within 120 calendar days 
after BALCA's receipt of the case file.
    (2) Dismissals and stays. If the BALCA determines that the appeal is 
solely a question of misrepresentation by the facility or is solely a 
complaint of the facility's nonperformance of the attestation, BALCA 
shall dismiss the case

[[Page 530]]

and refer the matter to the Administrator, Wage and Hour Division, for 
action under subpart E. If the BALCA determines that the appeal is 
partially a question of misrepresentation by the facility or is 
partially a complaint of the facility's nonperformance of the 
attestation, BALCA shall refer the matter to the Administrator, Wage and 
Hour Division, for action under Subpart E of this part and shall stay 
BALCA consideration of the case pending final agency action on such 
referral. During such stay, the 120-day period described in paragraph 
(c)(1)(iv) of this section shall be suspended.
    (d) BALCA's decision. After consideration on the record or a de novo 
hearing, BALCA shall either affirm or reverse ETA's decision, and shall 
so notify the appellant; the Director, if the affirmation or denial 
involves a State plan; Certifying Officer; Chief, Division of Foreign 
Labor Certifications; and any other parties. See Sec. 655.450 custody 
of the record of the appeal.
    (e) Decisions on attestations. With respect to an appeal of the 
acceptance, rejection, suspension or invalidation of an attestation, the 
decision of BALCA shall be the final decision of the Secretary, and no 
further review shall be given to the matter by any DOL official.
    (f) Decisions on annual State plans. With respect to an appeal of 
the disapproval of an annual State plan, the decision of BALCA shall be 
the final decision by the Secretary, unless a petition for review of the 
BALCA decision is filed with the Secretary and the Secretary determines 
to review the decision.
    (1) Filing of petition for review. The Director or the State 
desiring review of the decision and order of BALCA may petition the 
Secretary to review the decision and order. To be effective, such 
petition shall be received by the Secretary within 30 days of the date 
of the decision and order. Copies of the petition shall be served on all 
parties and on BALCA.
    (2) Form of petition for review. No particular form is prescribed 
for any petition for Secretary's review permitted by this paragraph (f). 
However, any such petition shall:
    (i) Be dated;
    (ii) Be typewritten or legibly written;
    (iii) Specify the issue or issues stated in the BALCA decision and 
order giving rise to such petition;
    (iv) State the specific reason or reasons why the party petitioning 
for review believes such decision and order are in error;
    (v) Be signed by the party filing the petition or by an authorized 
representative of such party;
    (vi) Include the address at which such party or authorized 
representative desires to receive further communications relating 
thereto; and
    (vii) Attach copies of BALCA's decision and order, and any other 
record documents which would assist the Secretary in determining whether 
review is warranted.
    (3) Notice of determination to review. Whenever the Secretary 
determines to review the decision and order of BALCA on an annual State 
plan, a notice of the Secretary's determination to do so shall be served 
upon BALCA and upon all parties to the proceeding within 30 days after 
the Secretary's receipt of the petition for review.
    (4) Hearing record. Upon receipt of the Secretary's notice, BALCA 
shall within 15 days forward the complete hearing record to the 
Secretary.
    (5) Contents of Secretary's notice. The Secretary's notice shall 
specify:
    (i) The issue or issues to be reviewed;
    (ii) The form in which submissions shall be made by the parties; and
    (iii) The time within which such submissions shall be made.
    (6) Filing of documents. All documents submitted to the Secretary 
pursuant to this paragraph (f) shall be filed with the Secretary of 
Labor, U.S. Department of Labor, Washington, DC 20210, Attention: 
Executive Director, Office of Administrative Appeals, Room S-4309. An 
original and two copies of all documents shall be filed. Documents are 
not deemed filed with the Secretary until actually received by the 
Secretary. All documents, including documents filed by mail, shall be 
received by the Secretary either on or before the due date.
    (7) Service of documents. Copies of all documents filed with the 
Secretary pursuant to this paragraph (f) shall be served simultaneously 
upon all other

[[Page 531]]

parties involved in the proceeding. Service upon the Director shall be 
in accordance with paragraph (a)(3) of this section.
    (8) Secretary's decision. The Secretary's final decision pursuant to 
this paragraph (f) shall be issued within 180 days from the date of the 
notice of intent to review. The Secretary's decision shall be served 
upon all parties and BALCA.
    (9) Transmittal of record. Upon issuance of the Secretary's decision 
under this paragraph (f), the Secretary shall transmit the entire record 
to the Chief Administrative Law Judge for custody pursuant to Sec. 
655.450.



Sec. 655.350  Public access.

    (a) Public examination at ETA. ETA shall make available for public 
examination in Washington, DC, a list of facilities which have filed 
attestations, and such facilities' visa petitions (if any) for H-1A 
nurses, and for each such facility, a copy of the facility's attestation 
and any explanatory statements it has received; the annual State plan 
(if any) which relates to the facility's attestation; and a copy of each 
of the facility's H-1A visa petitions (if any) to INS. A copy of the 
latter shall be transmitted to ETA by the facility at the same time it 
is submitted to INS. The facility shall also forward to ETA a copy of 
the INS visa petition approval notice within 5 days after it is received 
from INS.
    (b) Public examination at facility. For the duration of the 
attestation's validity and thereafter for so long as the facility uses 
any H-1 or H-1A nurse under the attestation, the facility shall maintain 
a separate file containing the attestation and required documentation, 
and shall make this file available to any interested parties within 72 
hours upon written or oral request. If a party requests a copy of the 
file, the facility shall provide it and any charge for such copy shall 
not exceed the cost of reproduction.
    (c) Notice to public. ETA periodically shall publish a notice in the 
Federal Register announcing the names and addresses of facilities which 
have submitted attestations; facilities which have attestations on file; 
facilities which have submitted attestations which have been rejected 
for filing; facilities which have had attestations suspended; States 
which have submitted annual State plans; States which have approved 
annual State plans; and States which have submitted annual State plans 
which were disapproved.

(Approved by the Office of Management and Budget under control number 
1205-0305)

[59 FR 882, 897, Jan. 6, 1994, as amended at 59 FR 5487, Feb. 4, 1994]



               Subpart E_Enforcement of H-1A Attestations

    Source: 59 FR 882, 897, Jan. 6, 1994, unless otherwise noted.



Sec. 655.400  Enforcement authority of Administrator, Wage and Hour 
Division.

    (a) The Administrator shall perform all the Secretary's 
investigative and enforcement functions under 8 U.S.C. 1182(m) and 
subparts D and E of this part.
    (b) The Administrator, either pursuant to a complaint or otherwise, 
shall conduct such investigations as may be appropriate and, in 
connection therewith, enter and inspect such places and such records 
(and make transcriptions thereof), question such persons and gather such 
information as deemed necessary by the Administrator to determine 
compliance regarding the matters to which a health care facility has 
attested under section 212(m) of the INA (8 U.S.C. 1182(m)) and subparts 
D and E of this part.
    (c) A facility being investigated shall make available to the 
Administrator such records, information, persons, and places as the 
Administrator deems appropriate to copy, transcribe, question, or 
inspect. No facility shall interfere with any official of the Department 
of Labor performing an investigation, inspection or law enforcement 
function pursuant to 8 U.S.C. 1182(m) or subparts D or E of this part. 
In the event of such interference, the Administrator may deem the 
interference to be a violation and take such further actions as the 
Administrator considers appropriate. (Note: Federal criminal statutes 
prohibit certain interference with a

[[Page 532]]

Federal officer in the performance of official duties. 18 U.S.C. 111 and 
1114.)
    (d) A facility subject to subparts D and E of this part shall at all 
times cooperate in administrative and enforcement proceedings. No 
facility shall intimidate, threaten, restrain, coerce, blacklist, 
discharge, or in any manner discriminate against any person because such 
person has:
    (1) Filed a complaint or appeal under or related to section 212(m) 
of the INA (8 U.S.C. 1182(m)) or subpart D or E of this part;
    (2) Testified or is about to testify in any proceeding under or 
related to section 212(m) of the INA (8 U.S.C. 1182(m)) or subpart D or 
E of this part;
    (3) Exercised or asserted on behalf of himself/herself or others any 
right or protection afforded by section 212(m) of the INA (8 U.S.C. 
1182(m)) or subpart D or E of this part.
    (4) Consulted with an employee of a legal assistance program or an 
attorney on matters related to the Act or to subparts D or E of this 
part or any other DOL regulation promulgated pursuant to 8 U.S.C. 
1182(m).

In the event of such intimidation or restraint as are described in 
paragraph (d)(1), (2), (3), or (4) of this section, the Administrator 
may deem the conduct to be a violation and take such further actions as 
the Administrator considers appropriate.
    (e) A facility subject to subpart D and E of this part shall 
maintain a separate file containing its attestation and required 
documentation, and shall make that file or copies thereof available to 
interested parties, as required by Sec. 655.350(b). In the event of a 
facility's failure to maintain the file, to provide access, or to 
provide copies, the Administrator may deem the conduct to be a violation 
and take such further actions as the Administrator considers 
appropriate.
    (f) No health care facility shall seek to have an H-1A nurse, or any 
other nurse similarly employed by the employer, or any other employee 
waive rights conferred under the Act or under subpart D or E of this 
part. In the event of such waiver, the Administrator may deem the 
conduct to be a violation and take such further actions as the 
Administrator considers appropriate. Any agreement by an employee 
purporting to waive or modify any rights inuring to said person under 
the Act or subpart D or E of this part may be void as contrary to public 
policy, except that a waiver or modification of rights or obligations 
hereunder in favor of the Secretary shall be valid for purposes of 
enforcement of the provisions of the Act or subpart D and E of this 
part. This prohibition of waivers does not prevent agreements to settle 
litigation among private parties.
    (g) The Administrator shall, to the extent possible under existing 
law, protect the confidentiality of any complainant or other person who 
provides information to the Department.



Sec. 655.405  Complaints and investigative procedures.

    (a) The Administrator, through investigation, shall determine 
whether a facility has failed to perform any attested conditions, 
misrepresented any material facts in an attestation (including 
misrepresentation as to compliance with regulatory standards), or 
otherwise violated the Act or subpart D or E of this part.
    (Note: Federal criminal statutes provide penalties of up to $10,000 
and/or imprisonment of up to 5 years for knowing and willful submission 
of false statements to the Federal Government. 18 U.S.C. 1001; see also 
18 U.S.C. 1546).
    (b) Any aggrieved person or organization may file a complaint of a 
violation of the provisions of section 212(m) of the INA (8 U.S.C. 
1182(m)) or subpart D or E of this part. No particular form of complaint 
is required, except that the complaint shall be written or, if oral, 
shall be reduced to writing by the Wage and Hour Division official who 
receives the complaint. The complaint shall set forth sufficient facts 
for the Administrator to determine what part or parts of the attestation 
or regulations have allegedly been violated. Upon the request of the 
complainant, the Administrator shall, to the extent possible under 
existing law, maintain confidentiality regarding the complainant's 
identity; if the complainant wishes to be a party to the administrative 
hearing proceedings under this subpart, the

[[Page 533]]

complainant shall then waive confidentiality. The complaint may be 
submitted to any local Wage and Hour Division office; the addresses of 
such offices are found in local telephone directories. Inquiries 
concerning the enforcement program and requests for technical assistance 
regarding compliance may also be submitted to the local Wage and Hour 
Division office.
    (c) The Administrator shall determine whether there is reasonable 
cause to believe that the complaint warrants investigation and, if so, 
shall conduct an investigation, within 180 days of the receipt of a 
complaint. If the Administrator determines that the complaint fails to 
present reasonable cause for an investigation, the Administrator shall 
so notify the complainant, who may submit a new complaint, with such 
additional information as may be necessary.
    (d) When an investigation has been conducted, the Administrator 
shall, within 180 days of the receipt of a complaint, issue a written 
determination, stating whether a basis exists to make a finding that the 
facility failed to meet a condition of its attestation, or made a 
misrepresentation of a material fact therein, or otherwise violated the 
Act or subpart D or E. The determination shall specify any sanctions 
imposed due to violations. The Administrator shall provide a notice of 
such determination to the interested parties and shall inform them of 
the opportunity for a hearing pursuant to Sec. 655.420.



Sec. 655.410  Civil money penalties and other remedies.

    (a) The Administrator may assess a civil money penalty not to exceed 
$1,000 for each affected person with respect to whom there has been a 
violation of the attestation or subpart D or E of this part of and with 
respect to each instance in which such violation occurred. The 
Administrator also shall impose appropriate remedies, including the 
payment of back wages and the performance of attested obligations such 
as providing training.
    (b) In determining the amount of civil money penalty to be assessed 
for any violation, the Administrator shall consider the type of 
violation committed and other relevant factors. The matters which may be 
considered include, but are not limited to, the following:
    (1) Previous history of violation, or violations, by the facility 
under the Act and subpart D or E of this part;
    (2) The number of workers affected by the violation or violations;
    (3) The gravity of the violation or violations;
    (4) Efforts made by the violator in good faith to comply with the 
attestation or the State plan as provided in the Act and Subparts D and 
E of this part;
    (5) The violator's explanation of the violation or violations;
    (6) The violator's commitment to future compliance, taking into 
account the public health, interest or safety; and
    (7) The extent to which the violator achieved a financial gain due 
to the violation, or the potential financial loss or potential injury or 
adverse effect upon the workers.
    (c) The civil money penalty, back wages, and any other remedy 
determined by the Administrator to be appropriate, are immediately due 
for payment or performance upon the assessment by the Administrator, or 
the decision by an administrative law judge where a hearing is 
requested, or the decision by the Secretary where review is granted. The 
facility shall remit the amount of the civil money penalty, by certified 
check or money order made payable to the order of ``Wage and Hour 
Division, Labor.'' The remittance shall be delivered or mailed to the 
Wage and Hour Division Regional Office for the area in which the 
violations occurred. The payment of back wages, monetary relief, and/or 
the performance or any other remedy prescribed by the Administrator 
shall follow procedures established by the Administrator. The facility's 
failure to pay the civil money penalty, back wages, or other monetary 
relief, or to perform any other assessed remedy, shall result in the 
rejection by ETA of any future attestation submitted by the facility, 
until such payment or performance is accomplished.

[[Page 534]]



Sec. 655.415  Written notice and service of Administrator's 
determination.

    (a) The Administrator's determination, issued pursuant to Sec. 
655.405(d), shall be served on the complainant, the facility, and other 
interested parties by personal service or by certified mail at the 
parties' last known addresses. Where service by certified mail is not 
accepted by the party, the Administrator may exercise discretion to 
serve the determination by regular mail. Where the complainant has 
requested confidentiality, the Administrator shall serve the 
determination in a manner which will not breach that confidentiality.
    (b) The Administrator shall file with the Chief Administrative Law 
Judge, U.S. Department of Labor, a copy of the complaint and the 
Administrator's determination.
    (c) The Administrator's written determination required by Sec. 
655.405(c) shall:
    (1) Set forth the determination of the Administrator and the reason 
or reasons therefor; prescribe any remedies or penalties including the 
amount of any unpaid wages due, the actions required for compliance with 
the facility attestation and/or State plan, and the amount of any civil 
money penalty assessment and the reason or reasons therefor.
    (2) Inform the interested parties that they may request a hearing 
pursuant to Sec. 655.420.
    (3) Inform the interested parties that in the absence of a timely 
request for a hearing, received by the Chief Administrative Law Judge 
within 10 days of the date of the determination, the determination of 
the Administrator shall become final and not appealable.
    (4) Set forth the procedure for requesting a hearing, and give the 
address of the Chief Administrative Law Judge.
    (5) Inform the parties that, pursuant to Sec. 655.455, the 
Administrator shall notify the Attorney General and ETA of the 
occurrence of a violation by the employer.



Sec. 655.420  Request for hearing.

    (a) Any interested party desiring to request an administrative 
hearing on a determination issued pursuant to Sec. 655.405(d) shall 
make such request in writing to the Chief Administrative Law Judge at 
the address stated in the notice of determination.
    (b) An interested party may request a hearing in the following 
circumstances:
    (1) Where the Administrator determines that there is no basis for a 
finding of violation, the complainant or other interested party may 
request a hearing. In such a proceeding, the party requesting the 
hearing shall be the prosecuting party and the facility shall be the 
respondent; the Administrator may intervene as a party or appear as 
amicus curiae at any time in the proceeding, at the Administrator's 
discretion.
    (2) Where the Administrator determines that there is a basis for a 
finding of violation, the facility or other interested party may request 
a hearing. In such a proceeding, the Administrator shall be the 
prosecuting party and the facility shall be the respondent.
    (c) No particular form is prescribed for any request for hearing 
permitted by this part. However, any such request shall:
    (1) Be dated;
    (2) Be typewritten or legibly written;
    (3) Specify the issue or issues stated in the notice of 
determination given rise to such request;
    (4) State the specific reason or reasons why the party requesting 
the hearing believes such determination is in error;
    (5) Be signed by the party making the request or by an authorized 
representative of such party; and
    (6) Include the address at which such party or authorized 
representative desires to receive further communications relating 
thereto.
    (d) The request for such hearing shall be received by the Chief 
Administrative Law Judge, at the address stated in the Administrator's 
notice of determination, no later than 10 days after the date of the 
determination. An interested party which fails to meet this 10-day 
deadline for requesting a hearing may thereafter participate in the 
proceedings only by consent of the administrative law judge, either 
through intervention as a party pursuant to 29 CFR 18.10 (b) through (d) 
or through

[[Page 535]]

participation as an amicus curiae pursuant to 29 CFR 18.12.
    (e) The request may be filed in person, by facsimile transmission, 
by certified or regular mail, or by courier service. For the requesting 
party's protection, if the request is filed by mail, it should be 
certified mail. If the request is filed by facsimile transmission, the 
original of the request, signed by the requestor or authorized 
representative, shall be filed within 10 days of the date of the 
Administrator's notice of determination.
    (f) Copies of the request for a hearing shall be sent by the 
requestor to the Wage and Hour Division official who issued the 
Administrator's notice of determination, to the representative(s) of the 
Solicitor of Labor identified in the notice of determination, and to all 
known interested parties.



Sec. 655.425  Rules of practice for administrative law judge proceedings.

    (a) Except as specifically provided in this subpart, and to the 
extent they do not conflict with the provisions of this subpart, the 
``Rules of Practice and Procedure for Administrative Hearings Before the 
Office of Administrative Law Judges'' established by the Secretary at 29 
CFR part 18 shall apply to administrative proceedings under this 
subpart.
    (b) As provided in the Administrative Procedure Act, 5 U.S.C. 556, 
any oral or documentary evidence may be received in proceedings under 
this part. The Federal Rules of Evidence and subpart B of the Rules of 
Practice and Procedure for Administrative Hearings Before the Office of 
Administrative Law Judges (29 CFR part 18, subpart B) shall not apply, 
but principles designed to ensure production of relevant and probative 
evidence shall guide the admission of evidence. The administrative law 
judge may exclude evidence which is inmaterial, irrelevant, or unduly 
repetitive.



Sec. 655.430  Service and computation of time.

    (a) Under this subpart, a party may serve any pleading or document 
by regular mail. Service is complete upon mailing to the last known 
address. No additional time for filing or response is authorized where 
service is by mail. In the interest of expeditious proceedings, the 
administrative law judge may direct the parties to serve pleadings or 
documents by a method other than regular mail.
    (b) Two (2) copies of all pleadings and other documents in any 
administrative law judge proceeding shall be served on the attorneys for 
the Administrator. One copy shall be served on the Associate Solicitor, 
Division of Fair Labor Standards, Office of the Solicitor, U.S. 
Department of Labor, 200 Constitution Avenue NW., Washington, DC 20210, 
and one copy on the attorney representing the Administrator in the 
proceeding.
    (c) Time will be computed beginning with the day following the 
action and includes the last day of the period unless it is a Saturday, 
Sunday, or federally-observed holiday, in which case the time period 
includes the next business day.



Sec. 655.435  Administrative law judge proceedings.

    (a) Upon receipt of a timely request for a hearing filed pursuant to 
and in accordance with Sec. 655.420, the Chief Administrative Law Judge 
shall appoint an administrative law judge to hear the case.
    (b) Within 7 days following the assignment of the case, the 
administrative law judge shall notify all interested parties of the 
date, time and place of the hearing. All parties shall be given at least 
5 days notice of such hearing.
    (c) The date of the hearing shall be not more than 60 days from the 
date of the Administrator's determination. Because of the time 
constraints imposed by the Act, no requests for postponement shall be 
granted except for compelling reasons and by consent of all the parties 
to the proceeding.
    (d) The administrative law judge may prescribe a schedule by which 
the parties are permitted to file a prehearing brief or other written 
statement of fact or law. Any such brief or statement shall be served 
upon each other party in accordance with Sec. 655.430. Posthearing 
briefs will not be permitted except at the request of the administrative 
law judge. When permitted, any such brief shall be limited

[[Page 536]]

to the issue or issues specified by the administrative law judge, shall 
be due within the time prescribed by the administrative law judge, and 
shall be served on each other party in accordance with Sec. 655.430.



Sec. 655.440  Decision and order of administrative law judge.

    (a) Within 90 days after receipt of the transcript of the hearing, 
the administrative law judge shall issue a decision.
    (b) The decision of the administrative law judge shall include a 
statement of findings and conclusions, with reasons and basis therefore, 
upon each material issue presented on the record. The decision shall 
also include an appropriate order which may affirm, deny, reverse, or 
modify, in whole or in part, the determination of the Administrator; the 
reason or reasons for such order shall be stated in the decision. The 
administrative law judge shall not render determinations as to the 
legality of a regulatory provision or the constitutionality of a 
statutory provision.
    (c) The decision shall be served on all parties in person or by 
certified or regular mail.



Sec. 655.445  Secretary's review of administrative law judge's decision.

    (a) The Administrator or any interested party desiring review of the 
decision and order of an administrative law judge shall petition the 
Secretary to review the decision and order. To be effective, such 
petition shall be received by the Secretary within 30 days of the date 
of the decision and order. Copies of the petition shall be served on all 
parties and on the administrative law judge.
    (b) No particular form is prescribed for any petition for 
Secretary's review permitted by this subpart. However, any such petition 
shall:
    (1) Be dated;
    (2) Be typewritten or legibly written;
    (3) Specify the issue or issues stated in the administrative law 
judge decision and order giving rise to such petition;
    (4) State the specific reason or reasons why the party petitioning 
for review believes such decision and order are in error;
    (5) Be signed by the party filing the petition or by an authorized 
representative of such party;
    (6) Include the address at which such party or authorized 
representative desires to receive further communications relating 
thereto; and
    (7) Attach copies of the administrative law judge's decision and 
order, and any other record documents which would assist the Secretary 
in determining whether review is warranted.
    (c) Whenever the Secretary determines to review the decision and 
order of an administrative law judge, a notice of the Secretary's 
determination shall be served upon the administrative law judge and upon 
all parties to the proceeding within 30 days after the Secretary's 
receipt of the petition for review.
    (d) Upon receipt of the Secretary's notice, the Office of 
Administrative Law Judges shall within 15 days forward the complete 
hearing record to the Secretary.
    (e) The Secretary's notice shall specify:
    (1) The issue or issues to be reviewed;
    (2) The form in which submissions shall be made by the parties 
(e.g., briefs, oral argument);
    (3) The time within which such submissions shall be made.
    (f) All documents submitted to the Secretary shall be filed with the 
Secretary of Labor, U.S. Department of Labor, Washington, DC 20210, 
Attention: Executive Director, Office of Administrative Appeals, room S-
4309. An original and two copies of all documents shall be filed. 
Documents are not deemed filed with the Secretary until actually 
received by the Secretary. All documents, including documents filed by 
mail, shall be received by the Secretary either on or before the due 
date.
    (g) Copies of all documents filed with the Secretary shall be served 
upon all other parties involved in the proceeding. Service upon the 
Administrator shall be in accordance with Sec. 655.430(b).
    (h) The Secretary's final decision shall be issued within 180 days 
from the date of the notice of intent to review. The Secretary's 
decision shall be

[[Page 537]]

served upon all parties and the administrative law judge.
    (i) Upon issuance of the Secretary's decision, the Secretary shall 
transmit the entire record to the Chief Administrative Law Judge for 
custody pursuant to Sec. 655.450.



Sec. 655.450  Administrative record.

    The official record of every completed administrative hearing 
procedure provided by subparts D and E of this part shall be maintained 
and filed under the custody and control of the Chief Administrative Law 
Judge. Upon receipt of a complaint seeking review of the final agency 
action in a United States District Court, the Chief Administrative Law 
Judge shall certify the official record and shall transmit such record 
to the clerk of the court.



Sec. 655.455  Notice to the Attorney General and the Employment and 
Training Administration.

    (a) The Administrator shall promptly notify the Attorney General and 
ETA of the final determination of a violation by an employer upon the 
earliest of the following events:
    (1) Where the Administrator determines that there is a basis for a 
finding of violation by an employer, and no timely request for hearing 
is made pursuant to Sec. 655.420; or
    (2) Where, after a hearing, the administrative law judge issues a 
decision and order finding a violation by an employer; or
    (3) Where the administrative law judge finds that there was no 
violation, and the Secretary, upon review, issues a decision pursuant to 
Sec. 655.445, holding that a violation was committed by an employer.
    (b) The Attorney General, upon receipt of the Administrator's notice 
pursuant to paragraph (a) of this section, shall not approve petitions 
filed with respect to that employer under section 212(m) of the INA (8 
U.S.C. 1182(m)) during a period of at least 12 months from the date of 
receipt of the Administrator's notification.
    (c) ETA, upon receipt of the Administrator's notice pursuant to 
paragraph (a) of this section, shall suspend the employer's attestation 
under subparts D and E of this part, and shall not accept for filing any 
attestation submitted by the employer under subparts D and E of this 
part, for a period of 12 months from the date of receipt of the 
Administrator's notification or for a longer period if such is specified 
by the Attorney General for visa petitions filed by that employer under 
section 212(m) of the INA.



Sec. 655.460  Non-applicability of the Equal Access to Justice Act.

    A proceeding under subpart D or E of this part is not subject to the 
Equal Access to Justice Act, as amended, 5 U.S.C. 504. In such a 
proceeding, the administrative law judge shall have no authority to 
award attorney fees and/or other litigation expenses pursuant to the 
provisions of the Equal Access to Justice Act.



    Subpart F_Attestations by Employers Using Alien Crewmembers for 
                   Longshore Activities in U.S. Ports

    Source: 60 FR 3956, 3976, Jan. 19, 1995, unless otherwise noted.

                           General Provisions



Sec. 655.500  Purpose, procedure and applicability of subparts F and 
G of this part.

    (a) Purpose. (1) Section 258 of the Immigration and Nationality Act 
(``Act'') prohibits nonimmigrant alien crewmembers admitted to the 
United States on D-visas from performing longshore work at U.S. ports 
except in five specific instances:
    (i) Where the vessel's country of registration does not prohibit 
U.S. crewmembers from performing longshore work in that country's ports 
and nationals of a country (or countries) which does not prohibit U.S. 
crewmembers from performing longshore work in that country's ports hold 
a majority of the ownership interest in the vessel, as determined by the 
Secretary of State (henceforth referred to as the ``reciprocity 
exception'');
    (ii) Where there is in effect in a local port one or more collective 
bargaining agreement(s), each covering at least thirty percent of the 
longshore workers, and each permitting the activity

[[Page 538]]

to be performed under the terms of such agreement(s);
    (iii) Where there is no collective bargaining agreement covering at 
least thirty percent of the longshore workers at the particular port and 
an attestation with accompanying documentation has been filed with the 
Department of Labor attesting that, among other things, the use of alien 
crewmembers to perform a particular activity of longshore work is 
permitted under the prevailing practice of the particular port 
(henceforth referred to as the ``prevailing practice exception'');
    (iv) Where the longshore work is to be performed at a particular 
location in the State of Alaska and an attestation with accompanying 
documentation has been filed with the Department of Labor attesting 
that, among other things, before using alien crewmembers to perform the 
activity specified in the attestation, the employer will make a bona 
fide request for and employ United States longshore workers who are 
qualified and available in sufficient numbers from contract stevedoring 
companies, labor organizations recognized as exclusive bargaining 
representatives of United States longshore workers, and private dock 
operators (henceforth referred to as the ``Alaska exception''); or
    (v) Where the longshore work involves an automated self-unloading 
conveyor belt or vacuum-actuated system on a vessel and the 
Administrator has not previously determined that an attestation must be 
filed pursuant to this part as a basis for performing those functions 
(henceforth referred to as the ``automated vessel exception'').
    (2) The term ``longshore work'' does not include the loading or 
unloading of hazardous cargo, as determined by the Secretary of 
Transportation, for safety and environmental protection. The Department 
of Justice, through the Immigration and Naturalization Service (INS), 
determines whether an employer may use alien crewmembers for longshore 
work at U.S. ports. In those cases where an employer must file an 
attestation in order to perform such work, the Department of Labor shall 
be responsible for accepting the filing of such attestations. Subpart F 
of this part sets forth the procedure for filing attestations with the 
Department of Labor for employers proposing to use alien crewmembers for 
longshore work at U.S. ports under the prevailing practice exception, 
the Alaska exception, and where it has been determined that an 
attestation is required under the automated vessel exception listed in 
paragraph (a)(1)(iv) of this section. Subpart G of this part sets forth 
complaint, investigation, and penalty provisions with respect to such 
attestations.
    (b) Procedure. (1) Under the prevailing practice exception in sec. 
258(c) of the Act, and in those cases where it has been determined that 
an attestation is required under the automated vessel exception for 
longshore work to be performed at locations other than in the State of 
Alaska, the procedure involves filing an attestation with the Department 
of Labor attesting that:
    (i) The use of alien crewmembers for a particular activity of 
longshore work is the prevailing practice at the particular port;
    (ii) The use of alien crewmembers is not during a strike or lockout 
nor designed to influence the election of a collective bargaining 
representative; and
    (iii) Notice of the attestation has been provided to the bargaining 
representative of longshore workers in the local port, or, where there 
is none, notice has been provided to longshore workers employed at the 
local port.
    (2) Under the automated vessel exception in sec. 258(c) of the Act, 
no attestation is required in cases where longshore activity consists of 
the use of an automated self-unloading conveyor belt or vacuum-actuated 
system on a vessel. The legislation creates a rebuttable presumption 
that the use of alien crewmembers for the operation of such automated 
systems is the prevailing practice. In order to overcome such 
presumption, it must be shown by the preponderance of the evidence 
submitted by any interested party, that the use of alien crewmembers for 
such activity is not the prevailing practice at the particular port, 
that it is during

[[Page 539]]

a strike or lockout, or that it is intended or designed to influence an 
election of a bargaining representative for workers in the local port.
    (3) Under the Alaska exception in sec. 258(d) of the Act, and in 
those cases where it has been determined that an attestation is required 
under the automated vessel exception consisting of the use of such 
equipment for longshore work to be performed in the State of Alaska, the 
procedure involves filing an attestation with the Department of Labor 
attesting that:
    (i) The employer will make a bona fide request for United States 
longshore workers who are qualified and available in sufficient numbers 
to perform the activity at the particular time and location from the 
parties to whom notice has been provided under paragraph (b)(3)(iv) (B) 
and (C) of this section, except that:
    (A) Wherever two or more contract stevedoring companies which meet 
the requirements of section 32 of the Longshore and Harbor Workers' 
Compensation Act (33 U.S.C. 932) have signed a joint collective 
bargaining agreement with a single labor organization recognized as an 
exclusive bargaining representative of United States longshore workers 
within the meaning of the National Labor Relations Act (29 U.S.C. 141 et 
seq.), the employer may request longshore workers from only one such 
contract stevedoring company, and
    (B) A request for longshore workers to an operator of a private dock 
may be made only for longshore work to be performed at that dock and 
only if the operator meets the requirements of section 32 of the 
Longshore and Harbor Workers' Compensation Act (33 U.S.C. 932);
    (ii) The employer will employ all United States longshore workers 
made available in response to the request made pursuant to paragraph 
(b)(3)(i) of this section who are qualified and available in sufficient 
numbers and who are needed to perform the longshore activity at the 
particular time and location attested to;
    (iii) The use of alien crewmembers for such activity is not intended 
or designed to influence and election of a bargaining representative for 
workers in the State of Alaska; and
    (iv) Notice of the attestation has been provided to:
    (A) Labor organizations which have been recognized as exclusive 
bargaining representatives of United States longshore workers within the 
meaning of the National Labor Relations Act (29 U.S.C. 141 et seq.) and 
which make available or intend to make available workers to the 
particular location where the longshore work is to be performed;
    (B) Contract stevedoring companies which employ or intend to employ 
United States longshore workers at that location; and
    (C) Operators of private docks at which the employer will use 
longshore workers.
    (c) Applicability. Subparts F and G of this part apply to all 
employers who seek to employ alien crewmembers for longshore work at 
U.S. ports under the prevailing practice exception, to all employers who 
seek to employ alien crewmembers for longshore work at locations in the 
State of Alaska under the Alaska exception, to all employers claiming 
the automated vessel exception, and to those cases where it has been 
determined that an attestation is required under the automated vessel 
exception.



Sec. 655.501  Overview of responsibilities.

    This section provides a context for the attestation process, to 
facilitate understanding by employers that may seek to employ alien 
crewmembers for longshore work under the prevailing practice exception, 
under the Alaska exception, and in those cases where an attestation is 
necessary under the automated vessel exception.
    (a) Department of Labor's responsibilities. The United States 
Department of Labor (DOL) administers the attestation process. Within 
DOL, the Employment and Training Administration (ETA) shall have 
responsibility for setting up and operating the attestation process; the 
Employment Standards Administration's Wage and Hour Division shall be 
responsible for investigating and resolving any complaints filed 
concerning such attestations.

[[Page 540]]

    (b) Employer attestation responsibilities. (1) Each employer seeking 
to use alien crewmembers for longshore work at a local U.S. port 
pursuant to the prevailing practice exception or where an attestation is 
required under the automated vessel exception for longshore work to be 
performed at locations other than in the State of Alaska shall, as the 
first step, submit an attestation on Form ETA 9033, as described in 
Sec. 655.510 of this part, to ETA at the address set forth at Sec. 
655.510(b) of this part. If ETA accepts the attestation for filing, 
pursuant to Sec. 655.510 of this part, ETA shall return the cover form 
of the accepted attestation to the employer, and, at the same time, 
shall provide notice of the filing to the Immigration and Naturalization 
Service (INS) office having jurisdiction over the port where longshore 
work will be performed.
    (2) Each employer seeking to use alien crewmembers for longshore 
work at a particular location in the State of Alaska pursuant to the 
Alaska exception or where an attestation is required under the automated 
vessel exception for longshore work to be performed at a particular 
location in Alaska shall submit, as a first step, an attestation on Form 
ETA 9033-A, as described in Sec. 655.533 of this part, to ETA at the 
address of the Seattle regional office as set forth at Sec. 655.532 of 
this part. The address appears in the instructions to Form ETA 9033-A. 
ETA shall return the cover form of the accepted attestation to the 
employer, and, at the same time, shall provide notice of the filing to 
the INS office having jurisdiction over the location where longshore 
work will be performed.
    (c) Complaints. Complaints concerning misrepresentation in the 
attestation, failure of the employer to carry out the terms of the 
attestation, or complaints that an employer is required to file an 
attestation under the automated vessel exception, may be filed with the 
Wage and Hour Division, according to the procedures set forth in subpart 
G of this part. Complaints of ``misrepresentation'' may include 
assertions that an employer has attested to the use of alien crewmembers 
only for a particular activity of longshore work and has thereafter used 
such alien crewmembers for another activity of longshore work. If the 
Division determines that the complaint presents reasonable cause to 
warrant an investigation, the Division shall then investigate, and, 
where appropriate, after an opportunity for a hearing, assess sanctions 
and penalties. Subpart G of this part further provides that interested 
parties may obtain an administrative law judge hearing on the Division's 
determination after an investigation and may seek the Secretary's review 
of the administrative law judge's decision. Subpart G of this part also 
provides that a complainant may request that the Wage and Hour 
Administrator issue a cease and desist order in the case of either 
alleged violation(s) of an attestation or longshore work by alien 
crewmember(s) employed by an employer allegedly not qualified for the 
claimed automated vessel exception. Upon the receipt of such a request, 
the Division shall notify the employer, provide an opportunity for a 
response and an informal meeting, and then rule on the request, which 
shall be granted if the preponderance of the evidence submitted supports 
the complainant's position.



Sec. 655.502  Definitions.

    For the purposes of subparts F and G of this part:
    Accepted for filing means that a properly completed attestation on 
Form ETA 9033, including accompanying documentation for each of the 
requirements in Sec. 655.510 (d) through (f) of this part, or a 
properly completed attestation on Form ETA 9033-A, including 
accompanying documentation for the requirement in Sec. 655.537 of this 
part in the case of an attestation under the Alaska exception, submitted 
by the employer or its designated agent or representative has been 
received and filed by the Employment and Training Administration of the 
Department of Labor (DOL). (Unacceptable attestations under the 
prevailing practice exception are described at Sec. 655.510(g)(2) of 
this part. Unacceptable attestations under the Alaska exception are 
described at Sec. 655.538(b) of this part.)
    Act and INA mean the Immigration and Nationality Act, as amended, 8 
U.S.C. 1101 et seq.

[[Page 541]]

    Activity means any activity relating to loading cargo; unloading 
cargo; operation of cargo-related equipment; or handling of mooring 
lines on the dock when a vessel is made fast or let go.
    Administrative law judge means an official appointed pursuant to 5 
U.S.C. 3105.
    Administrator means the Administrator of the Wage and Hour Division, 
Employment Standards Administration, Department of Labor, or such 
authorized representatives as may be designated to perform any of the 
functions of the Administrator under subparts F and G of this part.
    Attestation means documents submitted by an employer attesting to 
and providing accompanying documentation to show that, under the 
prevailing practice exception, the use of alien crewmembers for a 
particular activity of longshore work at a particular U.S. port is the 
prevailing practice, and is not during a strike or lockout nor intended 
to influence an election of a bargaining representative for workers; and 
that notice of the attestation has been provided to the bargaining 
representative, or, where there is none, to the longshore workers at the 
local port. Under the Alaska exception, such documents shall show that, 
before using alien crewmen to perform longshore work, the employer will 
make bona fide requests for dispatch of United States longshore workers 
who are qualified and available in sufficient numbers and that the 
employer will employ all such United States longshore workers in 
response to such a request for dispatch; that the use of alien 
crewmembers is not intended or designed to influence an election of a 
bargaining representative for workers in the State of Alaska; and that 
notice of the attestation has been provided to labor organizations 
recognized as exclusive bargaining representatives of United States 
longshore workers, contract stevedoring companies, and operators of 
private docks at which the employer will use longshore workers.
    Attesting employer means an employer who has filed an attestation.
    Attorney General means the chief official of the U.S. Department of 
Justice or the Attorney General's designee.
    Automated vessel means a vessel equipped with an automated self-
unloading conveyor belt or vacuum-actuated system which is utilized for 
loading or unloading cargo between the vessel and the dock.
    Certifying Officer means a Department of Labor official who makes 
determinations about whether or not to accept attestations:
    (1) A regional Certifying Officer designated by a Regional 
Administrator, Employment and Training Administration (RA) makes such 
determinations in a regional office of the Department;
    (2) A national Certifying Officer makes such determinations in the 
national office of the USES.
    Chief, Division of Foreign Labor Certifications, USES means the 
chief official of the Division of Foreign Labor Certifications within 
the United States Employment Service, Employment and Training 
Administration, Department of Labor, or the designee of the Chief, 
Division of Foreign Labor Certifications, USES.
    Chief Administrative Law Judge means the chief official of the 
Office of the Administrative Law Judges of the Department of Labor or 
the Chief Administrative Law Judge's designee.
    Contract stevedoring company means a stevedoring company which is 
licensed to do business in the State of Alaska and which meets the 
requirements of section 32 of the Longshore and Harbor Workers' 
Compensation Act (33 U.S.C. 932).
    Crewmember means any nonimmigrant alien admitted to the United 
States to perform services under sec. 101(a)(15)(D)(i) of the Act (8 
U.S.C. 1101(a)(15)(D)(i)).
    Date of filing means the date an attestation is accepted for filing 
by ETA.
    Department and DOL mean the United States Department of Labor.
    Director means the chief official of the United States Employment 
Service (USES), Employment and Training Administration, Department of 
Labor, or the Director's designee.
    Division means the Wage and Hour Division of the Employment 
Standards Administration, DOL.
    Employer means a person, firm, corporation, or other association or 
organization, which suffers or permits, or

[[Page 542]]

proposes to suffer or permit, alien crewmembers to perform longshore 
work at a port within the U.S. For purposes of Sec. Sec. 655.530 
through 655.541, which govern the performance of longshore activities by 
alien crewmembers under the Alaska exception, ``employer'' includes any 
agent or representative designated by the employer.
    Employment and Training Administration (ETA) means the agency within 
the Department of Labor (DOL) which includes the United States 
Employment Service (USES).
    Employment Standards Administration (ESA) means the agency within 
the Department of Labor (DOL) which includes the Wage and Hour Division.
    Immigration and Naturalization Service (INS) means the component of 
the Department of Justice which makes the determination under the Act on 
whether an employer of alien crewmembers may use such crewmembers for 
longshore work at a U.S. port.
    Lockout means a labor dispute involving a work stoppage, wherein an 
employer withholds work from its employees in order to gain a concession 
from them.
    Longshore work means any activity (except safety and environmental 
protection work as described in sec. 258(b)(2) of the Act) relating to 
the loading or unloading of cargo, the operation of cargo related 
equipment (whether or not integral to the vessel), or the handling of 
mooring lines on the dock when the vessel is made fast or let go, in the 
United States or the coastal waters thereof.
    Longshore worker means a U.S. worker who performs longshore work.
    Port means a geographic area, either on a seacoast, lake, river or 
any other navigable body of water, which contains one or more publicly 
or privately owned terminals, piers, docks, or maritime facilities, 
which is commonly thought of as a port by other government maritime-
related agencies, such as the Maritime Administration. U.S. ports 
include, but are not limited to, those listed in Appendix A to this 
subpart.
    Qualified and available in sufficient numbers means the full 
complement of qualified longshore workers needed to perform the 
longshore activity, as determined by industry standards in the State of 
Alaska, including safety considerations.
    Regional Administrator, Employment and Training Administration (RA) 
means the chief official of the Employment and Training Administration 
(ETA) in a Department of Labor (DOL) regional office.
    Secretary means the Secretary of Labor or the Secretary's designee.
    Strike means a labor dispute wherein employees engage in a concerted 
stoppage of work (including stoppage by reason of the expiration of a 
collective-bargaining agreement) or engage in any concerted slowdown or 
other concerted interruption of operations.
    Unanticipated emergency means an unexpected and unavoidable 
situation, such as one involving severe weather conditions, natural 
disaster, or mechanical breakdown, where cargo must be immediately 
loaded on, or unloaded from, a vessel.
    United States is defined at 8 U.S.C. 1101(a)(38).
    United States Employment Service (USES) means the agency of the 
Department of Labor, established under the Wagner-Peyser Act, which is 
charged with administering the national system of public employment 
offices.
    United States (U.S.) worker means a worker who is a U.S. citizen, a 
U.S. national, a permanent resident alien, or any other worker legally 
permitted to work indefinitely in the United States.



Sec. 655.510  Employer attestations.

    (a) Who may submit attestations? An employer (or the employer's 
designated U.S. agent or representative) seeking to employ alien 
crewmembers for a particular activity of longshore work under the 
prevailing practice exception shall submit an attestation, provided 
there is not in effect in the local port any collective bargaining 
agreement covering at least 30 percent of the longshore workers. An 
attestation is required for each port at which the employer intends to 
use alien crewmembers for longshore work. The attestation shall include: 
A completed Form ETA 9033, which shall be signed by the employer (or the 
employer's designated agent or representative); and

[[Page 543]]

facts and evidence prescribed in paragraphs (d) through (f) of this 
section. This Sec. 655.510 shall not apply in the case of longshore 
work performed at a particular location in the State of Alaska. The 
procedures governing the filing of attestations under the Alaska 
exception are set forth at Sec. Sec. 655.530 through 655.541.
    (b) Where and when should attestations be submitted? (1) 
Attestations must be submitted, by U.S. mail, private carrier, or 
facsimile transmission to the U.S. Department of Labor ETA Regional 
Office(s) which are designated by the Chief, Division of Foreign Labor 
Certifications, USES. Attestations must be received and date-stamped by 
DOL at least 14 calendar days prior to the date of the first performance 
of the intended longshore activity, and shall be accepted for filing or 
returned by ETA in accordance with paragraph (g) of this section within 
14 calendar days of the date received by ETA. An attestation which is 
accepted by ETA solely because it was not reviewed within 14 days is 
subject to subsequent invalidation pursuant to paragraph (i) of this 
section. Every employer filing an attestation shall have an agent or 
representative with a United States address. Such address shall be 
clearly indicated on the Form ETA 9033. In order to ensure that an 
attestation has been accepted for filing prior to the date of the 
performance of the longshore activity, employers are advised to take 
mailing time into account to make sure that ETA receives the attestation 
at least 14 days prior to the first performance of the longshore 
activity.
    (2) Unanticipated Emergencies. ETA may accept for filing 
attestations received after the 14-day deadline when due to an 
unanticipated emergency, as defined in Sec. 655.502 of this part. When 
an employer is claiming an unanticipated emergency, it shall submit 
documentation to support such a claim. ETA shall then make a 
determination on the validity of the claim, and shall accept the 
attestation for filing or return it in accordance with paragraph (g) of 
this section. ETA shall in no case accept an attestation received later 
than the date of the first performance of the activity.
    (c) What should be submitted?--(1) Form ETA 9033 with accompanying 
documentation. For each port, a completed and dated original Form ETA 
9033, or facsimile transmission thereof, containing the required 
attestation elements and the original signature of the employer (or the 
employer's designated agent or representative) shall be submitted, along 
with two copies of the completed, signed, and dated Form ETA 9033. (If 
the attestation is submitted by facsimile transmission, the attestation 
containing the original signature shall be maintained at the U.S. 
business address of the employer's designated agent or representative). 
Copies of Form ETA 9033 are available at all Department of Labor ETA 
Regional Offices and at the National Office. In addition, the employer 
shall submit two sets of all facts and evidence to show compliance with 
each of the attestation elements as prescribed by the regulatory 
standards in paragraphs (d) through (f) of this section. In the case of 
an investigation pursuant to subpart G of this part, the employer shall 
have the burden of proof to establish the validity of each attestation. 
The employer shall maintain in its records at the office of its U.S. 
agent, for a period of at least 3 years from the date of filing, 
sufficient documentation to meet its burden of proof, which shall at a 
minimum include the documentation described in this Sec. 655.510, and 
shall make the documents available to Department of Labor officials upon 
request.
    Whenever any document is submitted to a Federal agency or retained 
in the employer's records pursuant to this part, the document either 
shall be in the English language or shall be accompanied by a written 
translation into the English language certified by the translator as to 
the accuracy of the translation and his/her competency to translate.
    (2) Statutory precondition regarding collective bargaining 
agreements. (i) The employer may file an attestation only when there is 
no collective bargaining agreement in effect in the port covering 30 
percent or more of the longshore workers in the port. The employer shall 
attest on the Form ETA 9033 that no such collective bargaining agreement 
exists at the port at the time that the attestation is filed.

[[Page 544]]

    (ii) The employer is not required to submit with the Form ETA 9033 
documentation substantiating that there is no collective bargaining 
agreement in effect in the port covering 30 percent or more of the 
longshore workers. If a complaint is filed which presents reasonable 
cause to believe that such an agreement exists, the Department shall 
conduct an investigation. In such an investigation, the employer shall 
have the burden of proving that no such collective bargaining agreement 
exists.
    (3) Ports for which attestations may be filed. Employers may file an 
attestation for a port which is listed in appendix A (U.S. Seaports) to 
this subpart. Employers may also file an attestation for a particular 
location not in appendix A to this subpart if additional facts and 
evidence are submitted with the attestation to demonstrate that the 
location is a port, meeting all of the criteria as defined by Sec. 
655.502 of this part.
    (4) Attestation elements. The attestation elements referenced in 
paragraph (c)(1) of this section are mandated by sec. 258(c)(1)(B) of 
the Act (8 U.S.C. 1288(c)(1)(B)). Section 258(c)(1)(B) of the Act 
requires employers who seek to have alien crewmembers engage in a 
longshore activity to attest as follows:
    (i) The performance of the activity by alien crewmembers is 
permitted under the prevailing practice of the particular port as of the 
date of filing of the attestation;
    (ii) The use of the alien crewmembers for such activity is not 
during a strike or lockout in the course of a labor dispute, and is not 
intended or designed to influence an election of a bargaining 
representative for workers in the local port; and
    (iii) Notice of the attestation has been provided by the owner, 
agent, consignee, master, or commanding officer to the bargaining 
representative of longshore workers in the local port, or, where there 
is no such bargaining representative, notice has been provided to 
longshore workers employed at the local port.
    (d) The first attestation element: prevailing practice. For an 
employer to be in compliance with the first attestation element, it is 
required to have been the prevailing practice during the 12-month period 
preceding the filing of the attestation, for a particular activity of 
longshore work at the particular port to be performed by alien 
crewmembers. For each port, a prevailing practice can exist for any of 
four different types of longshore work: loading of cargo, unloading of 
cargo, operation of cargo-related equipment, or handling of mooring 
lines. It is thus possible that at a particular port it is the 
prevailing practice for alien crewmembers to unload vessels but not the 
prevailing practice to load them. An employer shall indicate on the 
attestation form which of the four longshore activities it is claiming 
is the prevailing practice for such work to be performed by alien 
crewmembers.
    (1) Establishing a prevailing practice. (i) In establishing that a 
particular activity of longshore work is the prevailing practice at a 
particular port, an employer shall submit facts and evidence to show 
that in the 12-month period preceding the filing of the attestation, one 
of the following conditions existed:
    (A) Over fifty percent of vessels docking at the port used alien 
crewmembers for the activity; or
    (B) Alien crewmembers made up over fifty percent of the workers in 
the port who engaged in the activity.
    (ii) Prevailing practice after Secretary of State determination of 
non-reciprocity. Section 258(d) of the Act provides a reciprocity 
exception (separate from the prevailing practice exception) to the 
prohibition on performance of longshore work by alien crewmembers in 
U.S. ports. However, this reciprocity exception becomes nonapplicable 
where the Secretary of State determines that, for a particular activity 
of longshore work, a particular country (by law, regulation, or 
practice) prohibits such activity by U.S. crewmembers in its ports. When 
the Secretary of State places a country on the non-reciprocity list 
(which means, for the purposes of this section, Prohibitions on 
longshore work by U.S. nationals; listing by country at 22 CFR 89.1), 
crewmembers on vessels from that country (that is, vessels that are 
registered in that country or vessels whose majority ownership interest 
is held by nationals of that country) are not permitted to perform 
longshore work in U.S. waters, absent

[[Page 545]]

applicability of some exception other than the reciprocity exception. 
The Secretary of State's determination has the following effects in the 
establishment of a prevailing practice for a particular longshore 
activity at a particular U.S. port for purposes of the prevailing 
practice exception.
    (A) An employer from any country, other than the country which is 
placed on the non-reciprocity list, may include the longshore activities 
performed by alien crewmembers on all vessels in establishing the 
prevailing practice for a particular longshore activity in a particular 
port.
    (B) An employer from a country which is placed on the non-
reciprocity list may file an attestation for the prevailing practice 
exception under the standards and requirements established in this 
subpart F (except as provided in paragraph (d)(1)(ii)(C) of this 
section), provided that the attestation is filed at least 12 months 
after the date on which the employer's country is placed on the list.
    (C) An employer from a country which is placed on the non-
reciprocity list may file an attestation pursuant to the prevailing 
practice exception earlier than 12 months from the date on which the 
employer's country is placed on the list, except that the following 
restrictions shall apply to such attestation:
    (1) The employer shall submit facts and evidence to show that, for 
the 12-month period preceding the date of the attestation, the use of 
alien crewmembers to perform a particular activity of longshore work was 
permitted by the prevailing practice in the port (as defined in 
paragraph (d)(1)(i) of this section) without considering or including 
such activity by crewmembers on vessels from the employer's country; or
    (2) The employer shall submit facts and evidence (including data on 
activities performed by crewmembers on vessels from the employer's 
country) to show that the use of alien crewmembers to perform a 
particular activity of longshore work was permitted by the prevailing 
practice in the port (as defined in paragraph (d)(1)(i) of this section) 
for one of two periods--
    (i) For the employer whose country has not previously been on the 
non-reciprocity list, the period is the continuous 12-month period prior 
to May 28, 1991 (the effective date of section 258 of the Act); or
    (ii) For the employer whose country was at some time on the non-
reciprocity list, but was subsequently removed from the non-reciprocity 
list and then restored to the non-reciprocity list (on one or more 
occasions), the period is the last continuous 12-month period during 
which the employer's country was not under the reciprocity exception 
(that is, was listed on the non-reciprocity list).
    (iii) For purposes of this paragraph (d)(1):
    (A) ``Workers in the port engaged in the activity'' means any person 
who performed the activity in any calendar day;
    (B) Vessels shall be counted each time they dock at the particular 
port):
    (C) Vessels exempt from section 258 of the INA for safety and 
environmental protection shall not be included in counting the number of 
vessels which dock at the port (see Department of Transportation 
Regulations); and
    (D) Automated vessels shall not be included in counting the number 
of vessels which dock at the port. For establishing a prevailing 
practice under the automated vessel exception see Sec. 655.520 of this 
part.
    (2) Documentation. In assembling the facts and evidence required by 
paragraph (d)(1) of this section, the employer may consult with the port 
authority which has jurisdiction over the local port, the collective 
bargaining representative(s) of longshore workers at the local port, 
other employers, or any other entity which is familiar with the 
practices at the port. Such documentation shall include a written 
summary of a survey of the experience of shipmasters who entered the 
local port in the previous year; or a letter, affidavit, or other 
written statement from an appropriate local port authority regarding the 
use of alien crewmembers to perform the longshore activity at the port 
in the previous year; or other documentation of comparable weight. 
Written statements from collective bargaining representatives and/or 
shipping agents with direct knowledge of

[[Page 546]]

practices regarding the use of alien crewmembers in the local port may 
also be pertinent. Such documentation shall accompany the Form ETA 9033, 
and any underlying documentation which supports the employer's burden of 
proof shall be maintained in the employer's records at the office of the 
U.S. agent as required by paragraph (c)(1) of this section.
    (e) The second attestation element: no strike or lockout; no 
intention or design to influence bargaining representative election. (1) 
The employer shall attest that, at the time of submitting the 
attestation, there is not a strike or lockout in the course of a labor 
dispute covering the employer's activity, and that it will not use alien 
crewmembers during a strike or lockout after filing the attestation. The 
employer shall also attest that the employment of such aliens is not 
intended or designed to influence an election for a bargaining 
representative for workers in the local port. Labor disputes for 
purposes of this attestation element relate only to those involving 
longshore workers at the port of intended employment. This attestation 
element applies to strikes and lockouts and elections of bargaining 
representatives at the local port where the use of alien crewmembers for 
longshore work is intended.
    (2) Documentation. As documentation to substantiate the requirement 
in paragraph (e)(1) of this section, an employer may submit a statement 
of the good faith efforts made to determine whether there is a strike or 
lockout at the particular port, as, for example, by contacting the port 
authority or the collective bargaining representative for longshore 
workers at the particular port.
    (f) The third attestation element: notice of filing. The employer of 
alien crewmembers shall attest that at the time of filing the 
attestation, notice of filing has been provided to the bargaining 
representative of the longshore workers in the local port, or, where 
there is no such bargaining representative, notice of the filing has 
been provided to longshore workers employed at the local port through 
posting in conspicuous locations and through other appropriate means.
    (1) Notification of bargaining representative. No later than the 
date the attestation is received by DOL to be considered for filing, the 
employer of alien crewmembers shall notify the bargaining representative 
(if any) of longshore workers at the local port that the attestation is 
being submitted to DOL. The notice shall include a copy of the Form ETA 
9033, shall state the activity(ies) for which the attestation is 
submitted, and shall state in that notice that the attestation and 
accompanying documentation are available at the national office of ETA 
for review by interested parties. The employer may have its owner, 
agent, consignee, master, or commanding officer provide such notice. 
Notices under this paragraph (f)(1) shall include the following 
statement: ``Complaints alleging misrepresentation of material facts in 
the attestation and/or failure to comply with the terms of the 
attestation may be filed with any office of the Wage and Hour Division 
of the United States Department of Labor.''
    (2) Posting notice where there is no bargaining representative. If 
there is no bargaining representative of longshore workers at the local 
port when the employer submits an attestation to ETA, the employer shall 
provide written notice to the port authority for distribution to the 
public on request. In addition, the employer shall post one or more 
written notices at the local port, stating that the attestation with 
accompanying documentation has been submitted, the activity(ies) for 
which the attestation has been submitted, and that the attestation and 
accompanying documentation are available at the national office of ETA 
for review by interested parties. Such posted notice shall be clearly 
visible and unobstructed, and shall be posted in conspicuous places 
where the longshore workers readily can read the posted notice on the 
way to or from their duties. Appropriate locations for posting such 
notices include locations in the immediate proximity of mandatory Fair 
Labor Standards Act wage and hour notices and Occupational Safety and 
Health Act occupational safety and health notices. The notice shall 
include a copy of the Form ETA 9033 filed with

[[Page 547]]

DOL, shall provide information concerning the availability of supporting 
documents for examination at the national office of ETA, and shall 
include the following statement: ``Complaints alleging misrepresentation 
of material facts in the attestation and/or failure to comply with the 
terms of the attestation may be filed with any office of the Wage and 
Hour Division of the United States Department of Labor.''
    (3) Documentation. The employer shall provide a statement setting 
forth the name and address of the person to whom the notice was provided 
and where and when the notice was posted and shall attach a copy of the 
notice.
    (g) Actions on attestations submitted for filing. Once an 
attestation has been received from an employer, a determination shall be 
made by the regional Certifying Officer whether to accept the 
attestation for filing or return it. The regional Certifying Officer may 
request additional explanation and/or documentation from the employer in 
making this determination. An attestation which is properly filled out 
and which includes accompanying documentation for each of the 
requirements set forth at Sec. 655.510(d) through (f) shall be accepted 
for filing by ETA on the date it is signed by the regional Certifying 
Officer unless it falls within one of the categories set forth in 
paragraph (g)(2) of this section. Once an attestation is accepted for 
filing, ETA shall then follow the procedures set forth in paragraph 
(g)(1) of this section. Upon acceptance of the employer's attestation by 
ETA, the attestation and accompanying documentation will be forwarded 
and shall be available in a timely manner for public examination at the 
ETA national office. ETA shall not consider information contesting an 
attestation received by ETA prior to the determination to accept or 
return the attestation for filing. Such information shall not be made 
part of ETA's administrative record on the attestation, but shall be 
referred to ESA to be processed as a complaint pursuant to subpart G of 
this part if the attestation is accepted by ETA for filing.
    (1) Acceptance. (i) If the attestation is properly filled out and 
includes accompanying documentation for each of the requirements at 
Sec. 655.510(d) through (f), and does not fall within one of the 
categories set forth at paragraph (g)(2) of this section, ETA shall 
accept the attestation for filing, provide notification to the INS 
office having jurisdiction over the port where longshore work will be 
performed, and return to the employer, or the employer's agent or 
representative at a U.S. address, one copy of the attestation form 
submitted by the employer, with ETA's acceptance indicated thereon. The 
employer may then use alien crewmembers for the particular activity of 
longshore work at the U.S. port cited in the attestation in accordance 
with INS regulations.
    (ii) DOL is not the guarantor of the accuracy, truthfulness or 
adequacy of an attestation accepted for filing.
    (2) Unacceptable attestations. ETA shall not accept an attestation 
for filing and shall return such attestation to the employer, or the 
employer's agent or representative at a U.S. address, when one of the 
following conditions exists:
    (i) When the Form ETA 9033 is not properly filled out. Examples of 
improperly filled out Form ETA 9033's include instances where the 
employer has neglected to check all the necessary boxes, or where the 
employer has failed to include the name of the port where it intends to 
use the alien crewmembers for longshore work, or where the employer has 
named a port that is not listed in appendix A and has failed to submit 
facts and evidence to support a showing that the location is a port as 
defined by Sec. 655.502, or when the employer has failed to sign the 
attestation or to designate an agent in the United States;
    (ii) When the Form ETA 9033 with accompanying documentation is not 
received by ETA at least 14 days prior to the date of performance of the 
first activity indicated on the Form ETA 9033; unless the employer is 
claiming an unanticipated emergency, has included documentation which 
supports such claim, and ETA has found the claim to be valid;
    (iii) When the Form ETA 9033 does not include accompanying 
documentation for each of the requirements set forth at Sec. 655.510 
(d) through (f);

[[Page 548]]

    (iv) When the accompanying documentation required by paragraph (c) 
of this section submitted by the employer, on its face, is inconsistent 
with the requirements set forth at Sec. 655.510 (d) through (f). 
Examples of such a situation include instances where the Form ETA 9033 
pertains to one port and the accompanying documentation to another; 
where the Form ETA 9033 pertains to one activity of longshore work and 
the accompanying documentation obviously refers to another; or where the 
documentation clearly indicates that only thirty percent, instead of the 
required fifty percent, of the activity attested to is performed by 
alien crewmembers;
    (v) When the Administrator, Wage and Hour Division, has notified 
ETA, in writing, after an investigation pursuant to subpart G of this 
part, that the particular activity of longshore work which the employer 
has attested is the prevailing practice at a particular port, is not, in 
fact, the prevailing practice at the particular port;
    (vi) When the Administrator, Wage and Hour Division, has notified 
ETA, in writing, that a cease and desist order has been issued pursuant 
to subpart G of this part, with respect to the attesting employer's 
performance of the particular activity and port, in violation of a 
previously accepted attestation;
    (vii) When the Administrator, Wage and Hour Division, has notified 
ETA, in writing, after an investigation pursuant to subpart G of this 
part, that the particular employer has misrepresented or failed to 
comply with an attestation previously submitted and accepted for filing, 
but in no case for a period of more than one year after the date of the 
Administrator's notice and provided that INS has not advised ETA that 
the prohibition is in effect for a lesser period; or
    (viii) When the Administrator, Wage and Hour Division, has notified 
ETA, in writing, that the employer has failed to comply with any 
penalty, sanction, or other remedy assessed in a final agency action 
following an investigation by the Wage and Hour Division pursuant to 
subpart G of this part.
    (3) Resubmission. If the attestation is not accepted for filing 
pursuant to the categories set forth in paragraph (g)(2) of this 
section, ETA shall return to the employer, or the employer's agent or 
representative, at a U.S. address, the attestation form and accompanying 
documentation submitted by the employer. ETA shall notify the employer, 
in writing, of the reason(s) that the attestation is unacceptable. When 
an attestation is found to be unacceptable pursuant to paragraphs (g)(2) 
(i) through (iv) of this section, the employer may resubmit the 
attestation with the proper documentation. When an attestation is found 
to be unacceptable pursuant to paragraphs (g)(2) (v) through (viii) of 
this section and returned, such action shall be the final decision of 
the Secretary of Labor.
    (h) Effective date and validity of filed attestations. An 
attestation is filed and effective as of the date it is accepted and 
signed by the regional Certifying Officer. Such attestation is valid for 
the 12-month period beginning on the date of acceptance for filing, 
unless suspended or invalidated pursuant to subpart G of this part or 
paragraph (i) of this section. The filed attestation expires at the end 
of the 12-month period of validity.
    (i) Suspension or invalidation of filed attestations. Suspension or 
invalidation of an attestation may result from enforcement action(s) 
under subpart G of this part (i.e., investigation(s) conducted by the 
Administrator or cease and desist order(s) issued by the Administrator 
regarding the employer's misrepresentation in or failure to carry out 
its attestation); or from a discovery by ETA that it made an error in 
accepting the attestation because such attestation falls within one of 
the categories set forth in paragraph (g)(2) of this section.
    (1) Result of Wage and Hour Division action. Upon the determination 
of a violation under subpart G of this part, the Administrator shall, 
pursuant to Sec. 655.660(b), notify the Attorney General of the 
violation and of the Administrator's notice to ETA.
    (2) Result of ETA action. If, after accepting an attestation for 
filing, ETA finds that the attestation is unacceptable because it falls 
within one of the categories set forth at paragraph (g)(2) of this 
section, and as a result, ETA suspends or invalidates the attestation,

[[Page 549]]

ETA shall notify the Attorney General of such suspension or invalidation 
and shall return a copy of the attestation form to the employer, or the 
employer's agent or representative, at a U.S. address. ETA shall notify 
the employer, in writing, of the reason(s) that the attestation is 
suspended or invalidated. When an attestation is found to be suspended 
or invalidated pursuant to paragraphs (g)(2) (i) through (iv) of this 
section, the employer may resubmit the attestation with the proper 
documentation. When an attestation is suspended or invalidated because 
it falls within one of the categories in paragraphs (g)(2) (v) through 
(viii) of this section, such action shall be the final decision of the 
Secretary of Labor, except as set forth in subpart G of this part.
    (j) Withdrawal of accepted attestations. (1) An employer who has 
submitted an attestation which has been accepted for filing may withdraw 
such attestation at any time before the 12-month period of its validity 
terminates, unless the Administrator has found reasonable cause under 
subpart G to commence an investigation of the particular attestation. 
Such withdrawal may be advisable, for example, when the employer learns 
that the particular activity(ies) of longshore work which it has 
attested is the prevailing practice to perform with alien crewmembers 
may not, in fact, have been the prevailing practice at the particular 
port at the time of filing. Requests for such withdrawals shall be in 
writing and shall be directed to the regional Certifying Officer.
    (2) Withdrawal of an attestation shall not affect an employer's 
liability with respect to any failure to meet the conditions attested to 
which took place before the withdrawal, or for misrepresentations in an 
attestation. However, if an employer has not yet performed the 
particular longshore activity(ies) at the port in question, the 
Administrator will not find reasonable cause to investigate unless it is 
alleged, and there is reasonable cause to believe, that the employer has 
made misrepresentations in the attestation or documentation thereof, or 
that the employer has not in fact given the notice attested to.

(Approved by the Office of Management and Budget under Control No. 1205-
0309)



Sec. 655.520  Special provisions regarding automated vessels.

    In general, an attestation is not required in the case of a 
particular activity of longshore work consisting of the use of automated 
self-unloading conveyor belt or vacuum-actuated systems on a vessel. The 
legislation creates a rebuttable presumption that the use of alien 
crewmembers for the operation of such automated systems is the 
prevailing practice. In order to overcome such presumption, it must be 
shown by the preponderance of the evidence submitted by any interested 
party, that the use of alien crewmembers for such activity is not the 
prevailing practice. Longshore work involving the use of such equipment 
shall be exempt from the attestation requirement only if the activity 
consists of using that equipment. If the automated equipment is not used 
in the particular activity of longshore work, an attestation is required 
as described under Sec. 655.510 of this part if it is the prevailing 
practice in the port to use alien crewmembers for this work, except that 
in all cases, where an attestation is required for longshore work to be 
performed at a particular location in the State of Alaska, an employer 
shall file such attestation under the Alaska exception pursuant to 
Sec. Sec. 655.530 through 655.541 on Form ETA 9033-A. When automated 
equipment is used in the particular activity of longshore work, an 
attestation is required only if the Administrator finds, based on a 
preponderance of the evidence which may be submitted by any interested 
party, that the performance of the particular activity of longshore work 
is not the prevailing practice at the port, or was during a strike or 
lockout or intended to influence an election of a bargaining 
representative for workers in the local port, or if the Administrator 
issues a cease and desist order against use of the automated equipment 
without such attestation.
    (a) Procedure when attestation is required. If it is determined 
pursuant to

[[Page 550]]

subpart G of this part that an attestation is required for longshore 
work consisting of the use of automated equipment at a location other 
than in the State of Alaska, the employer shall comply with all the 
requirements set forth at Sec. 655.510 of this part except paragraph 
(d) of Sec. 655.510. In lieu of complying with Sec. 655.510(d) of this 
part, the employer shall comply with paragraph (b) of this section. If 
it is determined pursuant to subpart G of this part that an attestation 
is required for longshore work consisting of the use of automated 
equipment at a particular location in the State of Alaska, the employer 
shall comply with all the requirements set forth at Sec. Sec. 655.530 
through 655.541 of this part.
    (b) The first attestation element: prevailing practice for automated 
vessels. For an employer to be in compliance with the first attestation 
element, it is required to have been the prevailing practice that over 
fifty percent (as described in paragraph (b)(1) of this section) of a 
particular activity of longshore work which was performed through the 
use of automated self-unloading conveyor belt or vacuum-actuated 
equipment at the particular port during the 12-month period preceding 
the filing of the attestation, was performed by alien crewmembers. For 
purposes of this paragraph (b), only automated vessels shall be included 
in counting the number of vessels which dock at the port.
    (1) Establishing a prevailing practice. (i) In establishing that the 
use of alien crewmembers to perform a particular activity of longshore 
work consisting of the use of self-unloading conveyor belt or vacuum-
actuated systems on a vessel is the prevailing practice at a particular 
port, an employer shall submit facts and evidence to show that in the 
12-month period preceding the filing of the attestation, one of the 
following conditions existed:
    (A) Over fifty percent of the automated vessels docking at the port 
used alien crewmembers for the activity (for purposes of this paragraph 
(b)(1), a vessel shall be counted each time it docks at the particular 
port); or
    (B) Alien crewmembers made up over fifty percent of the workers who 
performed the activity with respect to such automated vessels.
    (ii) Prevailing practice after Secretary of State determination of 
non-reciprocity. Section 258(d) of the Act provides a reciprocity 
exception (separate from the prevailing practice exception) to the 
prohibition on performance of longshore work by alien crewmembers in 
U.S. ports. However, this reciprocity exception becomes nonapplicable 
where the Secretary of State determines that, for a particular activity 
of longshore work, a particular country (by law, regulation, or 
practice) prohibits such activity by U.S. crewmembers in its ports. When 
the Secretary of State places a country on the non-reciprocity list 
(which means, for the purposes of this section, Prohibitions on 
longshore work by U.S. nationals; listing by country at 22 CFR 89.1), 
crewmembers on vessels from that country (that is, vessels that are 
registered in that country or vessels whose majority ownership interest 
is held by nationals of that country) are not permitted to perform 
longshore work in U.S. waters, absent applicability of some exception 
other than the reciprocity exception. The Secretary of State's 
determination has the following effects in the establishment of a 
prevailing practice for a particular longshore activity at a particular 
U.S. port for purposes of the prevailing practice exception.
    (A) An employer from any country, other than the country which is 
placed on the non-reciprocity list, may include the longshore activities 
performed by alien crewmembers on all vessels in establishing the 
prevailing practice for a particular longshore activity in a particular 
port.
    (B) An employer from a country which is placed on the non-
reciprocity list may file an attestation for the prevailing practice 
exception under the standards and requirements established in this 
subpart F (except as provided in paragraph (b)(1)(ii)(C) of this 
section), provided that the attestation is filed at least 12 months 
after the date on which the employer's country is placed on the list.
    (C) An employer from a country which is placed on the non-
reciprocity list may file an attestation pursuant to

[[Page 551]]

the prevailing practice exception earlier than 12 months from the date 
on which the employer's country is placed on the list, except that the 
following restrictions shall apply to such attestation:
    (1) The employer shall submit facts and evidence to show that, for 
the 12-month period preceding the date of the attestation, the use of 
alien crewmembers to perform a particular activity of longshore work was 
permitted by the prevailing practice in the port (as defined in 
paragraph (d)(1)(i) of this section) without considering or including 
such activity by crewmembers on vessels from the employer's country; or
    (2) The employer shall submit facts and evidence (including data on 
activities performed by crewmembers on vessels from the employer's 
country) to show that the use of alien crewmembers to perform a 
particular activity of longshore work was permitted by the prevailing 
practice in the port (as defined in paragraph (b)(1)(i) of this section) 
for one of two periods--
    (i) For the employer whose country has not previously been on the 
non-reciprocity list, the period is the continuous 12-month period prior 
to May 28, 1991 (the effective date of section 258 of the Act); or
    (ii) For the employer whose country was at some time on the non-
reciprocity list, but was subsequently removed from the non-reciprocity 
list and then restored to the non-reciprocity list (on one or more 
occasions), the period is the last continuous 12-month period during 
which the employer's country was not under the reciprocity exception 
(that is, was listed on the non-reciprocity list).
    (2) Documentation. In assembling the documentation described in 
paragraph (b)(1) of this section, the employer may consult with the port 
authority which has jurisdiction over the local port, the collective 
bargaining representative(s) of longshore workers at the local port, 
other employers, or any other entity which is familiar with the 
practices at the port. The documentation shall include a written summary 
of a survey of the experience of shipmasters who entered the local port 
in the previous year; or a letter, affidavit, or other written statement 
from an appropriate local port authority regarding the use of alien 
crewmembers to perform the longshore activity at the port in the 
previous year; or other documentation of comparable weight. Written 
statements from collective bargaining representatives and/or shipping 
agents with direct knowledge of practices regarding the use of alien 
crewmembers may also be pertinent. Such documentation shall accompany 
the Form ETA 9033, and any underlying documentation which supports the 
employer's burden of proof shall be maintained in the employer's records 
at the office of the U.S. agent as required under Sec. 655.510(c)(1) of 
this part.

(Approved by the Office of Management and Budget under Control No. 1205-
0309)

                            Alaska Exception



Sec. 655.530  Special provisions regarding the performance of longshore 
activities at locations in the State of Alaska.

    Applicability. Section Sec. 655.510 of this part shall not apply to 
longshore work performed at locations in the State of Alaska. The 
performance of longshore work by alien crewmembers at locations in the 
State of Alaska shall instead be governed by Sec. Sec. 655.530 through 
655.541. The use of alien crewmembers to perform longshore work in 
Alaska consisting of the use of an automated self-unloading conveyor 
belt or vacuum-actuated system on a vessel shall continue to be governed 
by the provisions of Sec. 655.520 of this part, except that, if the 
Administrator finds, based on a preponderance of the evidence which may 
be submitted by any interested party, that an attestation is required 
because the performance of the particular activity of longshore work is 
not the prevailing practice at the location in the State of Alaska, or 
was during a strike or lockout or intended to influence an election of a 
bargaining representative for workers at that location, or if the 
Administrator issues a cease and desist order against use of the 
automated equipment without such an attestation, the required 
attestation shall be filed pursuant to the Alaska exception at 
Sec. Sec. 655.530 through 655.541 and not the prevailing practice 
exception at Sec. 655.510.

[[Page 552]]



Sec. 655.531  Who may submit attestations for locations in Alaska?

    In order to use alien crewmembers to perform longshore activities at 
a particular location in the State of Alaska an employer shall submit an 
attestation on Form ETA 9033-A. As noted at Sec. 655.502, 
``Definitions,'' for purposes of Sec. Sec. 655.530 through 655.541, 
which govern the performance of longshore activities by alien 
crewmembers under the Alaska exception, ``employer'' includes any agent 
or representative designated by the employer. An employer may file a 
single attestation for multiple locations in the State of Alaska.



Sec. 655.532  Where and when should attestations be submitted for 
locations in Alaska?

    (a) Attestations shall be submitted, by U.S. mail, private carrier, 
or facsimile transmission to the U.S. Department of Labor regional 
office of the Employment and Training Administration in Seattle, 
Washington. Except as provided in paragraph (b) of this section, 
attestations shall be received and date-stamped by the Department at 
least 30 calendar days prior to the date of the first performance of the 
longshore activity. The attestation shall be accepted for filing or 
returned by ETA in accordance with Sec. 655.538 within 14 calendar days 
of the date received by ETA. An attestation which is accepted by ETA 
solely because it was not reviewed within 14 days is subject to 
subsequent invalidation pursuant to Sec. 655.540 of this part. An 
employer filing an attestation shall have an agent or representative 
with a United States address. Such address shall be clearly indicated on 
the Form ETA 9033-A. In order to ensure that an attestation has been 
accepted for filing prior to the date of the first performance of the 
longshore activity, employers are advised to take mailing time into 
account to make sure that ETA receives the attestation at least 30 days 
prior to the first performance of the longshore activity.
    (b) Late filings. ETA may accept for filing attestations received 
after the 30-day deadline where the employer could not have reasonably 
anticipated the need to file an attestation for the particular location 
at that time. When an employer states that it could not have reasonably 
anticipated the need to file the attestation at that time, it shall 
submit documentation to ETA to support such a claim. ETA shall then make 
a determination on the validity of the claim and shall accept the 
attestation for filing or return it in accordance with Sec. 655.538 of 
this part. ETA in no case shall accept an attestation received less than 
24 hours prior to the first performance of the activity.



Sec. 655.533  What should be submitted for locations in Alaska?

    (a) Form ETA 9033-A with accompanying documentation. A completed and 
dated original Form ETA 9033-A, or facsimile transmission thereof, 
containing the required attestation elements and the original signature 
of the employer or the employer's agent or designated representative, 
along with two copies of the completed, signed, and dated Form ETA 9033-
A shall be submitted to ETA. (If the attestation is submitted by 
facsimile transmission, the attestation containing the original 
signature shall be maintained at the U.S. business address of the 
employer's designated agent or representative). Copies of Form ETA 9033-
A are available at all Department of Labor Regional offices and at the 
National office. In addition, the employer shall submit two sets of 
facts and evidence to show compliance with the fourth attestation 
element at Sec. 655.537 of this part. In the case of an investigation 
pursuant to subpart G of this part, the employer has the burden of proof 
to establish the validity of each attestation. The employer shall 
maintain in its records at the office of its U.S. agent, for a period of 
at least 3 years from the date of filing, sufficient documentation to 
meet its burden of proof, which shall at a minimum include the 
documentation described in Sec. Sec. 655.530 through 655.541, and shall 
make the documents available to Department of Labor officials upon 
request. Whenever any document is submitted to a Federal agency or 
retained in the employer's records pursuant to this part, the document 
shall either be in the English language or shall be accompanied by a 
written translation into the English language

[[Page 553]]

certified by the translator as to the accuracy of the translation and 
his/her competency to translate.
    (b) Attestation elements. The attestation elements referenced in 
Sec. Sec. 655.534 through 655.537 of this part are mandated by Sec. 
258(d)(1) of the Act (8 U.S.C. 1288(d)(1)). Section 258(d)(1) of the Act 
requires employers who seek to have alien crewmembers engage in 
longshore activity at locations in the State of Alaska to attest as 
follows:
    (1) The employer will make a bona fide request for United States 
longshore workers who are qualified and available in sufficient numbers 
to perform the activity at the particular time and location from the 
parties to whom notice has been provided under Sec. 655.537(a)(1) (ii) 
and (iii), except that:
    (i) Wherever two or more contract stevedoring companies have signed 
a joint collective bargaining agreement with a single labor organization 
recognized as an exclusive bargaining representative of United States 
longshore workers within the meaning of the National Labor Relations Act 
(29 U.S.C. 141 et seq.), the employer may request longshore workers from 
only one such contract stevedoring company, and
    (ii) A request for longshore workers to an operator of a private 
dock may be made only for longshore work to be performed at that dock 
and only if the operator meets the requirements of section 32 of the 
Longshore and Harbor Workers' Compensation Act (33 U.S.C. 932);
    (2) The employer will employ all United States longshore workers 
made available in response to the request made pursuant to Sec. 
655.534(a)(1) who are qualified and available in sufficient numbers and 
who are needed to perform the longshore activity at the particular time 
and location to which the employer has attested;
    (3) The use of alien crewmembers for such activity is not intended 
or designed to influence an election of a bargaining representative for 
workers in the State of Alaska; and
    (4) Notice of the attestation has been provided to:
    (i) Labor organizations which have been recognized as exclusive 
bargaining representatives of United States longshore workers within the 
meaning of the National Labor Relations Act (29 U.S.C. 141 et seq.) and 
which make available or intend to make available workers to the 
particular location where the longshore work is to be performed;
    (ii) Contract stevedoring companies which employ or intend to employ 
United States longshore workers at that location; and
    (iii) Operators of private docks at which the employer will use 
longshore workers.



Sec. 655.534  The first attestation element for locations in Alaska: 
Bona fide request for dispatch of United States longshore workers.

    (a) The first attestation element shall be satisfied when the 
employer signs Form ETA 9033-A, attesting that, before using alien 
crewmembers to perform longshore work during the validity period of the 
attestation, the employer will make a bona fide request for United 
States longshore workers who are qualified and available in sufficient 
numbers to perform the specified longshore activity from the parties to 
whom notice is provided under Sec. 655.537(a)(1) (ii) and (iii). 
Although an employer is required to provide notification of filing to 
labor organizations recognized as exclusive bargaining representatives 
of United States longshore workers pursuant to Sec. 655.537(a)(1)(i) of 
this part, an employer need not request dispatch of United States 
longshore workers directly from such parties. The requests for dispatch 
of United States longshore workers pursuant to this section shall be 
directed to contract stevedoring companies which employ or intend to 
employ United States longshore workers at that location, and to 
operators of private docks at which the employer will use longshore 
workers. An employer is not required to request dispatch of United 
States longshore workers from private dock operators or contract 
stevedoring companies which do not meet the requirements of section 32 
of the Longshore and Harbor Workers' Compensation Act (33 U.S.C. 932) 
or, in the case of contract stevedoring companies, which are not 
licensed to do business in the State of Alaska.

[[Page 554]]

    (1) Wherever two or more contract stevedoring companies have signed 
a joint collective bargaining agreement with a single qualified labor 
organization, the employer may request longshore workers from only one 
of such contract stevedoring companies. A qualified labor organization 
is one which has been recognized as an exclusive bargaining 
representative of United States longshore workers within the meaning of 
the National Labor Relations Act (29 U.S.C. 141 et seq.) and which makes 
available or intends to make available workers to the particular 
location where the longshore work is to be performed.
    (2) A request for longshore workers to an operator of a private dock 
may be made only for longshore work to be performed at that dock.
    (3) An employer shall not be required to request longshore workers 
from a party if that party has notified the employer in writing that it 
does not intend to make available United States longshore workers who 
are qualified and available in sufficient numbers to the time and 
location at which the longshore work is to be performed.
    (4) A party that has provided such written notice to the employer 
under paragraph (a)(3) of this section may subsequently notify the 
employer in writing that it is prepared to make available United States 
longshore workers who are qualified and available in sufficient numbers 
to perform the longshore activity at the time and location where the 
longshore work is to be performed. In that event, the employer's 
obligations to that party under Sec. Sec. 655.534 and 655.535 of this 
part shall recommence 60 days after its receipt of such notice.
    (5) When a party has provided written notice to the employer under 
paragraph (a)(3) of this section that it does not intend to dispatch 
United States longshore workers to perform the longshore work attested 
to by the employer, such notice shall expire upon the earliest of the 
following events:
    (i) When the terms of such notice specify an expiration date at 
which time the employer's obligation to that party under Sec. Sec. 
655.534 and 655.535 of this part shall recommence;
    (ii) When retracted pursuant to paragraph (a)(4) of this section; or
    (iii) Upon the expiration of the validity of the attestation.
    (b) Documentation. To substantiate the requirement in paragraph (a) 
of this section, an employer shall develop and maintain documentation to 
meet the employer's burden of proof under the first attestation element. 
The employer shall retain records of all requests for dispatch of United 
States longshore workers to perform the longshore work attested to. Such 
documentation shall consist of letters, telephone logs, facsimiles or 
other memoranda to show that, before using alien crewmembers to perform 
longshore work, the employer made a bona fide request for United States 
longshore workers who are qualified and available in sufficient numbers 
to perform the longshore activity. At a minimum, such documentation 
shall include the date the request was made, the name and telephone 
number of the particular individual(s) to whom the request for dispatch 
was directed, and the number and composition of full work units 
requested. Further, whenever any party has provided written notice to 
the employer under paragraph (a)(3) of this section, the employer shall 
retain the notice for the period of time specified in Sec. 655.533 of 
this part, and, if appropriate, any subsequent notice by that party that 
it is prepared to make available United States longshore workers at the 
times and locations attested to.



Sec. 655.535  The second attestation element for locations in Alaska: 
Employment of United States longshore workers.

    (a) The second attestation element shall be satisfied when the 
employer signs Form ETA 9033-A, attesting that during the validity 
period of the attestation, the employer will employ all United States 
longshore workers made available in response to the request for dispatch 
who, in compliance with applicable industry standards in the State of 
Alaska, including safety considerations, are qualified and available in 
sufficient numbers and are needed to perform the longshore activity at 
the particular time and location attested to.

[[Page 555]]

    (1) In no case shall an employer filing an attestation be required 
to hire less than a full work unit of United States longshore workers 
needed to perform the longshore activity nor be required to provide 
overnight accommodations for the longshore workers while employed. For 
purposes of this section, ``full work unit'' means the full complement 
of longshore workers needed to perform the longshore activity, as 
determined by industry standards in the State of Alaska, including 
safety considerations. Where the makeup of a full work unit is covered 
by one or more collective bargaining agreements in effect at the time 
and location where longshore work is to be performed, the provisions of 
such agreement(s) shall be deemed to be in conformance with industry 
standards in the State of Alaska.
    (2) In no case shall an employer be required to provide 
transportation to the vessel where the longshore work is to be 
performed, except where:
    (i) Surface transportation is available; for purposes of this 
section, ``surface transportation'' means a tugboat or other vessel 
which is appropriately insured, operated by licensed personnel, and 
capable of safely transporting U.S. longshore workers from shore to a 
vessel on which longshore work is to be performed;
    (ii) Such transportation may be safely accomplished; and
    (iii)(A) Travel time to the vessel does not exceed one-half hour 
each way; and
    (B) Travel distance to the vessel from the point of embarkation does 
not exceed 5 miles; for purposes of this section, ``point of 
embarkation'' means a dock or landing at which U.S. longshore workers 
may be safely boarded for transport from shore to a vessel on which 
longshore work is to be performed; or
    (C) In the cases of Wide Bay, Alaska, and Klawock/Craig, Alaska, 
travel time does not exceed 45 minutes each way and travel distance to 
the vessel from the point of embarkation does not exceed 7.5 miles, 
unless the party responding to the request for dispatch agrees to lesser 
time and distance specifications.
    (3) If a United States longshore worker is capable of getting to and 
from the vessel where longshore work is to be performed when the vessel 
is beyond the time and distance limitations specified in paragraph 
(a)(2)(iii) of this section, and where all of the other criteria 
governing the employment of United States longshore workers under this 
subpart are met (e.g., ``qualified and available in sufficient 
numbers''), the employer is still obligated to employ the worker to 
perform the longshore activity. In such instance, however, the employer 
shall not be required to provide such transportation nor to reimburse 
the longshore worker for the cost incurred in transport to and from the 
vessel.
    (4) Where an employer is required to provide transportation to the 
vessel because it is within the time and distance limitations specified 
in (a)(2)(iii) of this section, the employer also shall be required to 
provide return transportation to the point of embarkation.
    (b) Documentation. To substantiate the requirement in paragraph (a) 
of this section, an employer shall develop and maintain documentation to 
meet the employer's burden of proof. Such documentation shall include 
records of payments to contract stevedoring companies or private dock 
operators, payroll records for United States longshore workers employed, 
or other documentation to show clearly that the employer has met its 
obligation to employ all United States longshore workers made available 
in response to a request for dispatch who are qualified and available in 
sufficient numbers. The documentation shall specify the number of full 
work units employed pursuant to this section, the composition of such 
full work units (i.e., number of workers by job title), and the date(s) 
and location(s) where the longshore work was performed. The employer 
also shall develop and maintain documentation concerning the provision 
of transportation from the point of embarkation to the vessel on which 
longshore work is to be performed. Each time one or more United States 
longshore workers are dispatched in response to the request under Sec. 
655.534, the employer shall retain a written record of whether 
transportation to the vessel was provided

[[Page 556]]

and the time and distance from the point of embarkation to the vessel.



Sec. 655.536  The third attestation element for locations in Alaska: 
No intention or design to influence bargaining representative election.

    (a) The employer shall attest that use of alien crewmembers to 
perform the longshore activity specified on the Form ETA 9033-A is not 
intended or designed to influence an election of a bargaining 
representative for workers in the State of Alaska.
    (b) Documentation. The employer need not develop nor maintain 
documentation to substantiate the statement referenced in paragraph (a) 
of this section. In the case of an investigation, however, the employer 
has the burden of proof to show that the use of alien crewmembers to 
perform the longshore activity specified on the Form ETA 9033-A was not 
intended nor designed to influence an election of a bargaining 
representative for workers in the State of Alaska.



Sec. 655.537  The fourth attestation element for locations in Alaska: 
Notice of filing.

    (a)(1) The employer shall attest that at the time of filing the 
attestation, notice of filing has been provided to:
    (i) Labor organizations which have been recognized as exclusive 
bargaining representatives of United States longshore workers within the 
meaning of the National Labor Relations Act (29 U.S.C. 141 et seq.) and 
which make available or intend to make available workers to the 
particular location where the longshore work is to be performed;
    (ii) Contract stevedoring companies which employ or intend to employ 
United States longshore workers at the location where the longshore work 
is to be performed; and
    (iii) Operators of private docks at which the employer will use 
longshore workers.
    (2) The notices provided under paragraph (a)(1) of this section 
shall include a copy of the Form ETA 9033-A to be submitted to ETA, 
shall provide information concerning the availability of supporting 
documents for public examination at the national office of ETA, and 
shall include the following statement: ``Complaints alleging a 
misrepresentation of material facts in the attestation and/or failure to 
comply with the terms of the attestation may be filed with any office of 
the Wage and Hour Division of the United States Department of Labor.''
    (b) The employer shall request a copy of the Certificate of 
Compliance issued by the district director of the Office of Workers' 
Compensation Programs under section 37 of the Longshore and Harbor 
Workers' Compensation Act (33 U.S.C. 932) from the parties to whom 
notice is provided pursuant to paragraphs (a)(1) (ii) and (iii) of this 
section. An employer's obligation to make a bona fide request for 
dispatch of U.S. longshore workers under Sec. 655.534 of this part 
before using alien crewmembers to perform the longshore work attested to 
shall commence upon receipt of the copy of the Certificate of 
Compliance.
    (c) Documentation. The employer shall develop and maintain 
documentation sufficient to meet its burden of proving the validity of 
the statement referenced in paragraphs (a) and (b) of this section and 
attested to on the Form ETA 9033-A. Such documentation shall include a 
copy of the notices provided, as required by paragraph (a)(1) of this 
section, and shall be submitted to ETA along with the Form ETA 9033-A.



Sec. 655.538  Actions on attestations submitted for filing for locations 
in Alaska.

    Once an attestation has been received from an employer, a 
determination shall be made by the regional certifying officer whether 
to accept the attestation for filing or return it. The regional 
certifying officer may request additional explanation and/or 
documentation from the employer in making this determination. An 
attestation which is properly filled out and which includes accompanying 
documentation for the requirement set forth at Sec. 655.537 of this 
part shall be accepted for filing by ETA on the date it is signed by the 
regional certifying officer unless it falls within one of the categories 
set forth in paragraph (b) of this section. Once an attestation is 
accepted for filing, ETA shall then follow the procedures set forth in 
paragraph

[[Page 557]]

(a)(1) of this section. Upon acceptance of the employer's attestation by 
ETA, the attestation and accompanying documentation shall be forwarded 
to and be available for public examination at the ETA national office in 
a timely manner. ETA shall not consider information contesting an 
attestation received by ETA prior to the determination to accept or 
return the attestation for filing. Such information shall not be made a 
part of ETA's administrative record on the attestation, but shall be 
referred to ESA to be processed as a complaint pursuant to subpart G of 
this part if the attestation is accepted by ETA for filing.
    (a) Acceptance. (1) If the attestation is properly filled out and 
includes accompanying documentation for the requirement set forth at 
Sec. 655.537, and does not fall within one of the categories set forth 
at paragraph (b) of this section, ETA shall accept the attestation for 
filing, provide notification to the INS office having jurisdiction over 
the location where longshore work will be performed, and return to the 
employer, or the employer's agent or representative at a U.S. address, 
one copy of the attestation form submitted by the employer, with ETA's 
acceptance indicated thereon. Before using alien crewmembers to perform 
the longshore work attested to on Form ETA 9033-A, the employer shall 
make a bona fide request for and employ United States longshore workers 
who are qualified and available in sufficient numbers pursuant to 
Sec. Sec. 655.534 and 655.535. Where such a request for dispatch of 
United States longshore workers is unsuccessful, either in whole or in 
part, any use of alien crewmembers to perform longshore activity shall 
be in accordance with INS regulations.
    (2) DOL is not the guarantor of the accuracy, truthfulness or 
adequacy of an attestation accepted for filing.
    (b) Unacceptable attestations. ETA shall not accept an attestation 
for filing and shall return such attestation to the employer, or the 
employer's agent or representative at a U.S. address, when any one of 
the following conditions exists:
    (1) When the Form ETA 9033-A is not properly filled out. Examples of 
improperly filled out Form ETA 9033-A's include instances where the 
employer has neglected to check all the necessary boxes, where the 
employer has failed to include the name of any port, city, or other 
geographical reference point where longshore work is to be performed, or 
where the employer has failed to sign the attestation or to designate an 
agent in the United States.
    (2) When the Form ETA 9033-A with accompanying documentation is not 
received by ETA at least 30 days prior to the first performance of the 
longshore activity, unless the employer is claiming that it could not 
have reasonably anticipated the need to file the attestation for that 
location at that time, and has included documentation which supports 
this contention, and ETA has found the claim to be valid.
    (3) When the Form ETA 9033-A does not include accompanying 
documentation for the requirement set forth at Sec. 655.537.
    (4) When the accompanying documentation submitted by the employer 
and required by Sec. 655.537, on its face, is inconsistent with that 
section. Examples of such a situation include an instance where the Form 
ETA 9033-A indicates that the longshore work will be performed at a 
particular private dock and the documentation required under the notice 
attestation element indicates that notice was provided to an operator of 
a different private dock, or where the longshore work is to be performed 
at a particular time and location in the State of Alaska and the notice 
of filing provided to qualified labor organizations and contract 
stevedoring companies indicates that the longshore work is to be 
performed at a different time and/or location.
    (5) When the Administrator, Wage and Hour Division, has notified 
ETA, in writing, after an investigation pursuant to subpart G of this 
part, that a cease and desist order has been issued pursuant to subpart 
G of this part, with respect to the attesting employer's performance of 
longshore work at a particular location in the State of Alaska, in 
violation of a previously accepted attestation.
    (6) When the Administrator, Wage and Hour Division, has notified 
ETA, in writing, after an investigation pursuant to subpart G of this 
part, that the

[[Page 558]]

particular employer has misrepresented or failed to comply with an 
attestation previously submitted and accepted for filing, but in no case 
for a period of more than one year after the date of the Administrator's 
notice and provided that INS has not advised ETA that the prohibition is 
in effect for a lesser period.
    (7) When the Administrator, Wage and Hour Division, has notified 
ETA, in writing, that the employer has failed to comply with any 
penalty, sanction, or other remedy assessed in a final agency action 
following an investigation by the Wage and Hour Division pursuant to 
subpart G of this part.
    (c) Resubmission. If the attestation is not accepted for filing 
pursuant to paragraph (b) of this section, ETA shall return to the 
employer, or the employer's agent or representative, at a U.S. address, 
the attestation form and accompanying documentation submitted by the 
employer. ETA shall notify the employer, in writing, of the reason(s) 
that the attestation is unacceptable. When an attestation is found to be 
unacceptable pursuant to paragraph (b) (1), (2), (3), or (4) of this 
section, the employer may resubmit the corrected attestation with the 
proper documentation. When an attestation is found to be unacceptable 
pursuant to paragraph (b) (5), (6), or (7) of this section and returned, 
such action shall be the final decision of the Secretary of Labor.



Sec. 655.539  Effective date and validity of filed attestations for 
locations in Alaska.

    An attestation is filed and effective as of the date it is accepted 
and signed by the regional certifying officer. Such attestation is valid 
for the 12-month period beginning on the date of acceptance for filing, 
unless suspended or invalidated pursuant to Sec. 655.540 of this part. 
The filed attestation expires at the end of the 12-month period of 
validity.



Sec. 655.540  Suspension or invalidation of filed attestations for 
locations in Alaska.

    Suspension or invalidation of an attestation may result from 
enforcement action(s) under subpart G of this part (i.e., 
investigation(s) conducted by the Administrator or cease and desist 
order(s) issued by the Administrator regarding the employer's 
misrepresentation in or failure to carry out its attestation); or from a 
discovery by ETA that it made an error in accepting the attestation 
because such attestation falls within one of the categories set forth in 
Sec. 655.538(b).
    (a) Result of Wage and Hour Division action. Upon the determination 
of a violation under subpart G of this part, the Administrator shall, 
pursuant to Sec. 655.665(b), notify the Attorney General of the 
violation and of the Administrator's notice to ETA.
    (b) Result of ETA action. If, after accepting an attestation for 
filing, ETA finds that the attestation is unacceptable because it falls 
within one of the categories set forth at Sec. 655.538(b) and, as a 
result, ETA suspends or invalidates the attestation, ETA shall notify 
the Attorney General of such suspension or invalidation and shall return 
a copy of the attestation form to the employer, or the employer's agent 
or representative at a U.S. address. ETA shall notify the employer, in 
writing, of the reason(s) that the attestation is suspended or 
invalidated.



Sec. 655.541  Withdrawal of accepted attestations for locations in 
Alaska.

    (a) An employer who has submitted an attestation which has been 
accepted for filing may withdraw such attestation at any time before the 
12-month period of its validity terminates, unless the Administrator has 
found reasonable cause under subpart G to commence an investigation of 
the particular attestation. Such withdrawal may be advisable, for 
example, when the employer learns that the country in which the vessel 
is registered and of which nationals of such country hold a majority of 
the ownership interest in the vessel has been removed from the non-
reciprocity list (which means, for purposes of this section, 
Prohibitions on longshore work by U.S. nationals; listing by country at 
22 CFR 89.1). In that event, an attestation would no longer be required 
under subpart F of this part, since upon being removed from

[[Page 559]]

the non-reciprocity list the performance of longshore work by alien 
crewmembers would be permitted under the reciprocity exception at sec. 
258(e) of the Act (8 U.S.C. 1288(e)). Requests for withdrawals shall be 
in writing and shall be directed to the regional certifying officer.
    (b) Withdrawal of an attestation shall not affect an employer's 
liability with respect to any failure to meet the conditions attested to 
which took place before the withdrawal, or for misrepresentations in an 
attestation. However, if an employer has not yet performed the longshore 
activities at the location(s) in question, the Administrator shall not 
find reasonable cause to investigate unless it is alleged, and there is 
reasonable cause to believe, that the employer has made 
misrepresentations in the attestation or documentation thereof, or that 
the employer has not in fact given the notice attested to.

                              Public Access



Sec. 655.550  Public access.

    (a) Public examination at ETA. ETA shall make available for public 
examination in Washington, DC, a list of employers which have filed 
attestations under this subpart, and for each such employer, a copy of 
the employer's attestation and accompanying documentation it has 
received.
    (b) Notice to public. ETA periodically shall publish a list in the 
Federal Register identifying under this subpart employers which have 
submitted attestations; employers which have attestations on file; and 
employers which have submitted attestations which have been found 
unacceptable for filing.

(Approved by the Office of Management and Budget under Control No. 1205-
0309)

           Appendix A to Subpart F of Part 655--U.S. Seaports

    The list of 224 seaports includes all major and most smaller ports 
serving ocean and Great Lakes commerce.

                          North Atlantic Range

Bucksport, ME
Eastport, ME
Portland, ME
Searsport, ME
Portsmouth, NH
Boston, MA
Fall River, MA
New Bedford, MA
Providence, RI
Bridgeport, CT
New Haven, CT
New London, CT
Albany, NY
New York, NY/NJ
Camden, NJ
Gloucester City, NJ
Paulsboro, NJ
Chester, PA
Marcus Hook, PA
Philadelphia, PA
Delaware City, DE
Wilmington, DE
Baltimore, MD
Cambridge, MD
Alexandria, VA
Chesapeake, VA
Hopewell, VA
Newport News, VA
Norfolk, VA
Portsmouth, VA
Richmond, VA

                          South Atlantic Range

Morehead City, NC
Southport, NC
Wilmington, NC
Charleston, SC
Georgetown, SC
Port Royal, SC
Brunswick, GA
Savannah, GA
St. Mary, GA
Cocoa, FL
Fernandina Beach, FL
Fort Lauderdale, FL
Fort Pierce, FL
Jacksonville, FL
Miami, FL
Palm Beach, FL
Port Canaveral, FL
Port Everglades, FL
Riviera, FL
Aguadilla, PR
Ceiba, PR
Guanica, PR
Guayanilla, PR
Humacao, PR
Jobos, PR
Mayaguez, PR
Ponce, PR
San Juan, PR
Vieques, PR
Yabucoa, PR
Alucroix, VI
Charlotte Amalie, VI
Christiansted, VI
Frederiksted, VI
Limetree Bay, VI

                           North Pacific Range

Astoria, OR

[[Page 560]]

Bandon, OR
Columbia City, OR
Coos Bay, OR
Mapleton, OR
Newport, OR
Portland, OR
Rainier, OR
Reedsport, OR
St. Helens, OR
Toledo, OR
Anacortes, WA
Bellingham, WA
Edmonds (Edwards Point), WA
Everett, WA
Ferndale, WA
Friday Harbor, WA
Grays Harbor, WA
Kalama, WA
Longview, WA
Olympia, WA
Point Wells, WA
Portage, WA
Port Angeles, WA
Port Gamble, WA
Port Townsend, WA
Raymond, WA
Seattle, WA
Tacoma, WA
Vancouver, WA
Willapa Harbor, WA
Winslow, WA

                            Great Lakes Range

Duluth, MN
Silver Bay, MN
Green Bay, WI
Kenosha, WI
Manitowoc, WI
Milwaukee, WI
Sheboygan, WI
Superior, WI
Alpena, MI
Bay City, MI
Detroit, MI
De Tour Village, MI
Essexville, MI
Ferrysburg, MI
Grand Haven, MI
Marine City, MI
Muskegon, MI
Port Huron, MI
Presque Isle, MI
Rogers City, MI
Saginaw, MI
Sault Ste Marie, MI
Chicago, IL
Ashtabula, OH
Cincinnati, OH
Cleveland, OH
Conneaut, OH
Fairport, OH
Huron, OH
Lorain, OH
Sandusky, OH
Toledo, OH
Erie, PA
Buffalo, NY
Odgensburg, NY
Oswego, NY
Rochester, NY
Burns Harbor, IN
E. Chicago, IN
Gary, IN

                            Gulf Coast Range

Panama City, FL
Pensacola, FL
Port Manatee, FL
Port St. Joe, FL
Tampa, FL
Mobile, AL
Gulfport, MS
Pascagoula, MS
Baton Rouge, LA
Gretna, LA
Lake Charles, LA
Louisiana Offshore Oil Port, LA
New Orleans, LA
Beaumont, TX
Brownsville, TX
Corpus Christi, TX
Freeport, TX
Galveston, TX
Harbor Island, TX
Houston, TX
Orange, TX
Port Arthur, TX
Port Isabel, TX
Port Lavaca, TX
Port Neches, TX
Sabine, TX
Texas City, TX

                           South Pacific Range

Alameda, CA
Antioch, CA
Benicia, CA
Carlsbad, CA
Carpinteria, CA
Crockett, CA
El Segundo, CA
Eureka, CA
Estero Bay, CA
Gaviota, CA
Huntington Beach, CA
Long Beach, CA
Los Angeles, CA
Mandalay Beach, CA
Martinez, CA
Moss Landing, CA
Oakland, CA
Pittsburg, CA
Port Costa, CA
Port Hueneme, CA
Port San Luis, CA
Redwood City, CA
Richmond, CA
Sacramento, CA
San Diego, CA
San Francisco, CA
Selby, CA
Stockton, CA
Vallejo, CA

[[Page 561]]

Ventura, CA
Barbers Point, HI
Hilo, HI
Honolulu, HI
Kahului, HI
Kaunakakai, HI
Kawaihae, HI
Nawiliwili, HI
Port Allen, HI



  Subpart G_Enforcement of the Limitations Imposed on Employers Using 
        Alien Crewmembers for Longshore Activities in U.S. Ports

    Source: 60 FR 3969, 3977, Jan. 19, 1995, unless otherwise noted.



Sec. 655.600  Enforcement authority of Administrator, Wage and 
Hour Division.

    (a) The Administrator shall perform all the Secretary's 
investigative and enforcement functions under section 258 of the INA (8 
U.S.C. 1288) and subparts F and G of this part.
    (b) The Administrator, pursuant to a complaint, shall conduct such 
investigations as may be appropriate and, in connection therewith, enter 
and inspect such places and such records (and make transcriptions or 
copies thereof), question such persons and gather such information as 
deemed necessary by the Administrator to determine compliance regarding 
the matters which are the subject of the investigation.
    (c) An employer being investigated shall make available to the 
Administrator such records, information, persons, and places as the 
Administrator deems appropriate to copy, transcribe, question, or 
inspect. No employer subject to the provisions of section 258 of the INA 
(8 U.S.C. 1288) and subparts F and G of this part shall interfere with 
any official of the Department of Labor performing an investigation, 
inspection or law enforcement function pursuant to 8 U.S.C. 1288 or 
subpart F or G of this part. Any such interference shall be a violation 
of the attestation and subparts F and G of this part, and the 
Administrator may take such further actions as the Administrator 
considers appropriate. (Note: Federal criminal statutes prohibit certain 
interference with a Federal officer in the performance of official 
duties. 18 U.S.C. 111 and 18 U.S.C. 1114.)
    (d)(1) An employer subject to subparts F and G of this part shall at 
all times cooperate in administrative and enforcement proceedings. No 
employer shall intimidate, threaten, restrain, coerce, blacklist, 
discharge, retaliate, or in any manner discriminate against any person 
because such person has:
    (i) Filed a complaint or appeal under or related to section 258 of 
the INA (8 U.S.C. 1288) or subpart F or G of this part;
    (ii) Testified or is about to testify in any proceeding under or 
related to section 258 of the INA (8 U.S.C. 1288) or subpart F or G of 
this part;
    (iii) Exercised or asserted on behalf of himself or herself or 
others any right or protection afforded by section 258 of the INA (8 
U.S.C. 1288) or subpart F or G of this part.
    (iv) Consulted with an employee of a legal assistance program or an 
attorney on matters related to section 258 of the Act or to subpart F or 
G of this part or any other DOL regulation promulgated pursuant to 8 
U.S.C. 1288.
    (2) In the event of such intimidation or restraint as are described 
in paragraph (d)(1) of this section, the conduct shall be a violation of 
the attestation and subparts F and G of this part, and the Administrator 
may take such further actions as the Administrator considers 
appropriate.
    (e) The Administrator shall, to the extent possible under existing 
law, protect the confidentiality of any person who provides information 
to the Department in confidence in the course of an investigation or 
otherwise under subpart F or G of this part. However, confidentiality 
will not be afforded to the complainant or to information provided by 
the complainant.



Sec. 655.605  Complaints and investigative procedures.

    (a) The Administrator, through an investigation, shall determine 
whether a basis exists to make a finding that:
    (1) An attesting employer has--
    (i) Failed to meet conditions attested to; or
    (ii) Misrepresented a material fact in an attestation.

[[Page 562]]

    (Note: Federal criminal statutes provide penalties of up to $10,000 
and/or imprisonment of up to 5 years for knowing and willful submission 
of false statements to the Federal Government. 18 U.S.C. 1001; see also 
18 U.S.C. 1546.); or
    (2) In the case of an employer operating under the automated vessel 
exception to the prohibition on utilizing alien crewmembers to perform 
longshore activity(ies) at a U.S. port, the employer--
    (i) Is utilizing alien crewmember(s) to perform longshore 
activity(ies) at a port where the prevailing practice has not been to 
use such workers for such activity(ies); or
    (ii) Is utilizing alien crewmember(s) to perform longshore 
activities:
    (A) During a strike or lockout in the course of a labor dispute at 
the U.S. port; and/or
    (B) With intent or design to influence an election of a bargaining 
representative for workers at the U.S. port; or
    (3) An employer failed to comply in any other manner with the 
provisions of subpart F or G of this part.
    (b) Any aggrieved person or organization may file a complaint of a 
violation of the provisions of subpart F or G of this part.
    (1) No particular form of complaint is required, except that the 
complaint shall be written or, if oral, shall be reduced to writing by 
the Wage and Hour Division official who receives the complaint.
    (2) The complaint shall set forth sufficient facts for the 
Administrator to determine--
    (i) Whether, in the case of an attesting employer, there is 
reasonable cause to believe that particular part or parts of the 
attestation or regulations have been violated; or
    (ii) Whether, in the case of an employer claiming the automated 
vessel exception, the preponderance of the evidence submitted by any 
interested party shows that conditions exist that would require the 
employer to file an attestation.
    (3) The complaint may be submitted to any local Wage and Hour 
Division office; the addresses of such offices are found in local 
telephone directories. The office or person receiving such a complaint 
shall refer it to the office of the Wage and Hour Division administering 
the area in which the reported violation is alleged to have occurred.
    (c) The Administrator shall determine whether there is reasonable 
cause to believe that the complaint warrants investigation. If the 
Administrator determines that the complaint fails to present reasonable 
cause for an investigation, the Administrator shall so notify the 
complainant, who may submit a new complaint, with such additional 
information as may be necessary. There shall be no hearing pursuant to 
Sec. 655.625 for the Administrator's determination not to conduct an 
investigation. If the Administrator determines that an investigation on 
the complaint is warranted, the investigation shall be conducted and a 
determination issued within 180 calendar days of the Administrator's 
receipt of the complaint, or later for good cause shown.
    (d) In conducting an investigation, the Administrator may consider 
and make part of the investigation file any evidence or materials that 
have been compiled in any previous investigation regarding the same or a 
closely related matter.
    (e) In conducting an investigation under an attestation, the 
Administrator shall take into consideration the employer's burden to 
provide facts and evidence to establish the matters asserted. In 
conducting an investigation regarding an employer's eligibility for the 
automated vessel exception, the Administrator shall not impose the 
burden of proof on the employer, but shall consider all evidence from 
any interested party in determining whether the employer is not eligible 
for the exception.
    (f) In an investigation regarding the use of alien crewmembers to 
perform longshore activity(ies) in a U.S. port (whether by an attesting 
employer or by an employer claiming the automated vessel exception), the 
Administrator shall accept as conclusive proof a previous Departmental 
determination, published in the Federal Register pursuant to Sec. 
655.670, establishing that such use of alien crewmembers is not the 
prevailing practice for the activity(ies) and U.S. port at issue. The 
Administrator shall give appropriate

[[Page 563]]

weight to a previous Departmental determination published in the Federal 
Register pursuant to Sec. 655.670, establishing that at the time of 
such determination, such use of alien crewmembers was the prevailing 
practice for the activity(ies) and U.S. port at issue.
    (g) When an investigation has been conducted, the Administrator 
shall, within the time period specified in paragraph (c) of this 
section, issue a written determination as to whether a basis exists to 
make a finding stated in paragraph (a) of this section. The 
determination shall be issued and an opportunity for a hearing shall be 
afforded in accordance with the procedures specified in Sec. 655.625(d) 
of this part.



Sec. 655.610  Automated vessel exception to prohibition on utilization 
of alien crewmember(s) to perform longshore activity(ies) at a U.S. port.

    (a) The Act establishes a rebuttable presumption that the prevailing 
practice in U.S. ports is for automated vessels (i.e., vessels equipped 
with automated self- unloading conveyor belts or vacuum-actuated 
systems) to use alien crewmembers to perform longshore activity(ies) 
through the use of the self-unloading equipment. An employer claiming 
the automated vessel exception does not have the burden of establishing 
eligibility for the exception.
    (b) In the event of a complaint asserting that an employer claiming 
the automated vessel exception is not eligible for such exception, the 
Administrator shall determine whether the preponderance of the evidence 
submitted by any interested party shows that:
    (1) It is not the prevailing practice at the U.S. port to use alien 
crewmember(s) to perform the longshore activity(ies) through the use of 
the self-unloading equipment; or
    (2) The employer is using alien crewmembers to perform longshore 
activity(ies)--
    (i) During a strike or lockout in the course of a labor dispute at 
the U.S. port; and/or
    (ii) With intent or design to influence an election of a bargaining 
representative for workers at the U.S. port.
    (c) In making the prevailing practice determination required by 
paragraph (b)(1) of this section, the Administrator shall determine 
whether, in the 12-month period preceding the date of the 
Administrator's receipt of the complaint, one of the following 
conditions existed:
    (1) Over fifty percent of the automated vessels docking at the port 
used alien crewmembers for the activity (for purposes of this paragraph 
(c)(1) of this section, a vessel shall be counted each time it docks at 
the particular port); or
    (2) Alien crewmembers made up over fifty percent of the workers who 
performed the activity with respect to such automated vessels.
    (d) An interested party, complaining that the automated vessel 
exception is not applicable to a particular employer, shall provide to 
the Administrator evidence such as:
    (1) A written summary of a survey of the experience of masters of 
automated vessels which entered the local port in the previous year, 
describing the practice in the port as to the use of alien crewmembers;
    (2) A letter, affidavit, or other written statement from an 
appropriate local port authority regarding the use of alien crewmembers 
to perform the longshore activity at the port in the previous year;
    (3) Written statements from collective bargaining representatives 
and/or shipping agents with direct knowledge of practices regarding the 
use of alien crewmembers at the port in the previous year.



Sec. 655.615  Cease and desist order.

    (a) If the Administrator determines that reasonable cause exists to 
conduct an investigation with respect to an attestation, the complainant 
may request that the Administrator enter a cease and desist order 
against the employer against whom the complaint is lodged.
    (1) The request for a cease and desist order may be filed along with 
the complaint, or may be filed subsequently. The request, including all 
accompanying documents, shall be filed in duplicate with the same Wage 
and Hour Division office that received the complaint.

[[Page 564]]

    (2) No particular form is prescribed for a request for a cease and 
desist order pursuant to this paragraph (a). However, any such request 
shall:
    (i) Be dated;
    (ii) Be typewritten or legibly written;
    (iii) Specify the attestation provision(s) with respect to which the 
employer allegedly failed to comply and/or submitted 
misrepresentation(s) of material fact(s);
    (iv) Be accompanied by evidence to substantiate the allegation(s) of 
noncompliance and/or misrepresentation;
    (v) Be signed by the complaining party making the request or by the 
authorized representative of such party;
    (vi) Include the address at which such complaining party or 
authorized representative desires to receive further communications 
relating thereto.
    (3) Upon receipt of a request for a cease and desist order, the 
Administrator shall promptly notify the employer of the request. The 
Administrator's notice shall:
    (i) Inform the employer that it may respond to the request and meet 
with a Wage and Hour Division official within 14 calendar days of the 
date of the notice;
    (ii) Be served upon the employer by facsimile transmission, in 
person, or by certified or regular mail, at the address of the U.S. 
agent stated on the employer's attestation;
    (iii) Be accompanied by copies of the complaint, the request for a 
cease and desist order, the evidence submitted by the complainant, and 
any evidence from other investigation(s) of the same or a closely 
related matter which the Administrator may incorporate into the record. 
(Any such evidence from other investigation(s) shall also be made 
available for examination by the complaining party at the Wage and Hour 
Division office which issued the notice.)
    (4) No particular form is prescribed for the employer's response to 
the complaining party's request for a cease and desist order under this 
paragraph (a), however, any such response shall:
    (i) Be dated;
    (ii) Be submitted by facsimile transmission, in person, by certified 
or regular mail, or by courier service to the Wage and Hour Division 
office which issued the notice of the request;
    (iii) Be received by the appropriate Wage and Hour Division office 
no later than 14 calendar days from the date of the notice of the 
request;
    (iv) Be typewritten or legibly written;
    (v) Explain, in any detail desired by the employer, the employer's 
grounds or reasons as to why the Administrator should deny the requested 
cease and desist order;
    (vi) Be accompanied by evidence to substantiate the employer's 
grounds or reasons as to why the Administrator should deny the requested 
cease and desist order;
    (vii) Specify whether the employer desires an informal meeting with 
a Wage and Hour Division official;
    (viii) Be signed by the employer or its authorized representative; 
and
    (ix) Include the address at which the employer or its authorized 
representative desires to receive further communications relating 
thereto, if such address is different from the address of the U.S. agent 
stated on the attestation.
    (5) In the event the employer requests a meeting with a Wage and 
Hour Division official, the Administrator shall provide the employer and 
the complaining party, or their authorized representatives, an 
opportunity for such a meeting to present their views regarding the 
evidence and arguments submitted by the parties. This shall be an 
informal meeting, not subject to any procedural rules. The meeting shall 
be held within the 14 calendar days permitted for the employer's 
response to the request for the cease and desist order, and shall be 
held at a time and place set by the Wage and Hour Division official, who 
shall notify the parties.
    (6) After receipt of the employer's timely response and after any 
informal meeting which may have been held with the parties, the 
Administrator shall promptly issue a written determination, either 
denying the request or issuing a cease and desist order. In making the 
determination, the Administrator shall consider all the evidence 
submitted, including any evidence

[[Page 565]]

from the same or a closely related matter which the Administrator has 
incorporated into the record and provided to the employer. If the 
Administrator determines that the complaining party's position is 
supported by a preponderance of the evidence submitted, the 
Administrator shall order that the employer cease the activities 
specified in the determination, until the completion of the 
Administrator's investigation and any subsequent proceedings pursuant to 
Sec. 655.625 of this part, unless the prohibition is lifted by 
subsequent order of the Administrator because it is later determined 
that the employer's position was correct. While the cease and desist 
order is in effect, ETA shall suspend the subject attestation, either in 
whole or in part, and shall not accept any subsequent attestation from 
the employer for the activity(ies) and U.S. port or location in the 
State of Alaska at issue.
    (7) The Administrator's cease and desist order shall be served on 
the employer at the address of its designated U.S. based representative 
or at the address specified in the employer's response, by facsimile 
transmission, personal service, or certified mail.
    (b) If the Administrator determines that reasonable cause exists to 
conduct an investigation with respect to a complaint that a non-
attesting employer is not entitled to the automated vessel exception to 
the requirement for the filing of an attestation, a complaining party 
may request that the Administrator enter a cease and desist order 
against the employer against whom the complaint is lodged.
    (1) The request for a cease and desist order may be filed along with 
the complaint, or may be filed subsequently. The request, including all 
accompanying documents, shall be filed in duplicate with the same Wage 
and Hour Division office that received the complaint.
    (2) No particular form is prescribed for a request for a cease and 
desist order pursuant to this paragraph. However, any such request 
shall:
    (i) Be dated;
    (ii) Be typewritten or legibly written;
    (iii) Specify the circumstances which allegedly require that the 
employer be denied the use of the automated vessel exception;
    (iv) Be accompanied by evidence to substantiate the allegation(s);
    (v) Be signed by the complaining party making the request or by the 
authorized representative of such party; and
    (vi) Include the address at which such complaining party or 
authorized representative desires to receive further communications 
relating thereto.
    (3) Upon receipt of a request for a cease and desist order, the 
Administrator shall notify the employer of the request. The 
Administrator's notice shall:
    (i) Inform the employer that it may respond to the request and meet 
with a Wage and Hour Division official within 14 calendar days of the 
date of the notice;
    (ii) Be served upon the employer by facsimile transmission, in 
person, or by certified or regular mail, at the employer's last known 
address; and
    (iii) Be accompanied by copies of the complaint, the request for a 
cease and desist order, the evidence submitted by the complainant, and 
any evidence from other investigation(s) of the same or a closely 
related matter which the Administrator may incorporate into the record. 
(Any such evidence from other investigation(s) shall also be made 
available for examination by the complaining party at the Wage and Hour 
Division office which issued the notice.)
    (4) No particular form is prescribed for the employer's response to 
the complaining party's request for a cease and desist order under this 
paragraph (b). However, any such response shall:
    (i) Be dated;
    (ii) Be submitted by facsimile transmission, in person, by certified 
or regular mail, or by courier service to the Wage and Hour Division 
office which issued the notice of the request;
    (iii) Be received by the appropriate Wage and Hour Division office 
no later than 14 calendar days from the date of the notice of the 
request;
    (iv) Be typewritten or legibly written;
    (v) Explain, in any detail desired by the employer, the employer's 
grounds or reasons as to why the Administrator

[[Page 566]]

should deny the requested cease and desist order;
    (vi) Be accompanied by evidence to substantiate the employer's 
grounds or reasons as to why the Administrator should deny the requested 
cease and desist order;
    (vii) Specify whether the employer desires an informal meeting with 
a Wage and Hour Division official;
    (viii) Be signed by the employer or its authorized representative; 
and
    (ix) Include the address at which the employer or its authorized 
representative desires to receive further communications relating 
thereto.
    (5) In the event the employer requests a meeting with a Wage and 
Hour Division official, the Administrator shall provide the employer and 
the complaining party, or their authorized representatives, an 
opportunity for such a meeting to present their views regarding the 
evidence and arguments submitted by the parties. This shall be an 
informal meeting, not subject to any procedural rules. The meeting shall 
be held within the 14 calendar days permitted for the employer's 
response to the request for the cease and desist order, and shall be 
held at a time and place set by the Wage and Hour Division official, who 
shall notify the parties.
    (6) After receipt of the employer's timely response and after any 
informal meeting which may have been held with the parties, the 
Administrator shall promptly issue a written determination, either 
denying the request or issuing a cease and desist order. If the 
Administrator determines that the complaining party's position is 
supported by a preponderance of the evidence submitted, the 
Administrator shall order that the employer cease the use of alien 
crewmembers to perform the longshore activity(ies) specified in the 
order. In making the determination, the Administrator shall consider all 
the evidence submitted, including any evidence from the same or a 
closely related matter which the Administrator has incorporated into the 
record and provided to the employer. The order shall remain in effect 
until the completion of the investigation and any subsequent hearing 
proceedings pursuant to Sec. 655.625 of this part, unless the employer 
files and maintains on file with ETA an attestation pursuant to Sec. 
655.520 of this part or unless the prohibition is lifted by subsequent 
order of the Administrator because it is later determined that the 
employer's position was correct.
    (7) The Administrator's cease and desist order shall be served on 
the employer or its designated representative by facsimile transmission, 
personal service, or by certified mail at the address specified in the 
employer's response or, if no such address was specified, at the 
employer's last known address.



Sec. 655.620  Civil money penalties and other remedies.

    (a) The Administrator may assess a civil money penalty not to exceed 
$5,000 for each alien crewmember with respect to whom there has been a 
violation of the attestation or subpart F or G of this part. The 
Administrator may also impose appropriate remedy(ies).
    (b) In determining the amount of civil money penalty to be assessed, 
the Administrator shall consider the type of violation committed and 
other relevant factors. The factors which may be considered include, but 
are not limited to, the following:
    (1) Previous history of violation, or violations, by the employer 
under the Act and subpart F or G of this part;
    (2) The number of workers affected by the violation or violations;
    (3) The gravity of the violation or violations;
    (4) Efforts made by the violator in good faith to comply with the 
provisions of 8 U.S.C. 1288(c) and subparts F and G of this part;
    (5) The violator's explanation of the violation or violations;
    (6) The violator's commitment to future compliance; and/or
    (7) The extent to which the violator achieved a financial gain due 
to the violation, or the potential financial loss, potential injury or 
adverse effect with respect to other parties.

[[Page 567]]

    (c) The civil money penalty, and any other remedy determined by the 
Administrator to be appropriate, are immediately due for payment or 
performance upon the assessment by the Administrator, or the decision by 
an administrative law judge where a hearing is requested, or the 
decision by the Secretary where review is granted. The employer shall 
remit the amount of the civil money penalty, by certified check or money 
order made payable to the order of ``Wage and Hour Division, Labor.'' 
The remittance shall be delivered or mailed to the Wage and Hour 
Division office for the area in which the violations occurred. The 
performance of any other remedy prescribed by the Administrator shall 
follow procedures established by the Administrator. The employer's 
failure to pay the civil money penalty, or to perform any other remedy 
prescribed by the Administrator, shall result in the rejection by ETA of 
any future attestation submitted by the employer, until such payment or 
performance is accomplished.



Sec. 655.625  Written notice, service and Federal Register publication 
of Administrator's determination.

    (a) The Administrator's determination, issued pursuant to Sec. 
655.605 of this part, shall be served on the complainant, the employer, 
and other known interested parties by personal service or by certified 
mail at the parties' last known addresses. Where service by certified 
mail is not accepted by the party, the Administrator may exercise 
discretion to serve the determination by regular mail.
    (b) Where the Administrator determines the prevailing practice 
regarding the use of alien crewmember(s) to perform longshore 
activity(ies) in a U.S. port (whether the Administrator's investigation 
involves an employer operating under an attestation, or under the 
automated vessel exception), the Administrator shall, simultaneously 
with issuance of the determination, publish in the Federal Register a 
notice of the determination. The notice shall identify the 
activity(ies), the U.S. port, and the prevailing practice regarding the 
use of alien crewmembers. The notice shall also inform interested 
parties that they may request a hearing pursuant to Sec. 655.630 of 
this part, within 15 days of the date of the determination.
    (c) The Administrator shall file with the Chief Administrative Law 
Judge, U.S. Department of Labor, a copy of the complaint and the 
Administrator's determination.
    (d) The Administrator's written determination required by Sec. 
655.605 of this part shall:
    (1) Set forth the determination of the Administrator and the reason 
or reasons therefor, and in the case of a finding of violation(s) by an 
attesting employer, prescribe any remedies, including the amount of any 
civil money penalties assessed and the reason therefor, and/or any other 
remedies required for compliance with the employer's attestation.
    (2) Inform the interested parties that they may request a hearing 
pursuant to Sec. 655.625 of this part.
    (3) Inform the interested parties that in the absence of a timely 
request for a hearing, received by the Chief Administrative Law Judge 
within 15 calendar days of the date of the determination, the 
determination of the Administrator shall become final and not 
appealable.
    (4) Set forth the procedure for requesting a hearing, and give the 
address of the Chief Administrative Law Judge (with whom the request 
must be filed) and the representative(s) of the Solicitor of Labor (upon 
whom copies of the request must be served).
    (5) Inform the parties that, pursuant to Sec. 655.665, the 
Administrator shall notify ETA and the Attorney General of the 
occurrence of a violation by the attesting employer or of the non-
attesting employer's ineligibility for the automated vessel exception.



Sec. 655.630  Request for hearing.

    (a) Any interested party desiring to request an administrative 
hearing on a determination issued pursuant to Sec. Sec. 655.605 and 
655.625 of this part shall make such request in writing to the Chief 
Administrative Law Judge at the address stated in the notice of 
determination.

[[Page 568]]

    (b) Interested parties may request a hearing in the following 
circumstances:
    (1) The complainant or any other interested party may request a 
hearing where the Administrator determines, after investigation, that 
there is no basis for a finding that an attesting employer has committed 
violation(s) or that the employer is eligible for the automated vessel 
exception. In such a proceeding, the requesting party and the employer 
shall be parties; the Administrator may intervene as a party or appear 
as amicus curiae at any time in the proceeding, at the Administrator's 
discretion.
    (2) The employer or any other interested party may request a hearing 
where the Administrator determines, after investigation, that there is a 
basis for a finding that an attesting employer has committed 
violation(s) or that a non- attesting employer is not eligible for the 
automated vessel exception. In such a proceeding, the Administrator and 
the employer shall be parties.
    (c) No particular form is prescribed for any request for hearing 
permitted by this section. However, any such request shall:
    (1) Be dated;
    (2) Be typewritten or legibly written;
    (3) Specify the issue or issues stated in the notice of 
determination giving rise to such request;
    (4) State the specific reason or reasons why the party requesting 
the hearing believes such determination is in error;
    (5) Be signed by the party making the request or by an authorized 
representative of such party; and
    (6) Include the address at which such party or authorized 
representative desires to receive further communications relating 
thereto.
    (d) The request for such hearing must be received by the Chief 
Administrative Law Judge, at the address stated in the Administrator's 
notice of determination, no later than 15 calendar days after the date 
of the determination. An interested party that fails to meet this 15-day 
deadline for requesting a hearing may thereafter participate in the 
proceedings only by consent of the administrative law judge, either 
through intervention as a party pursuant to 29 CFR 18.10 (b) through (d) 
or through participation as an amicus curiae pursuant to 18 CFR 18.12.
    (e) The request may be filed in person, by facsimile transmission, 
by certified or regular mail, or by courier service. For the requesting 
party's protection, if the request is filed by mail, it should be by 
certified mail. If the request is filed by facsimile transmission, the 
original of the request, signed by the requestor or authorized 
representative, shall be filed within ten days.
    (f) Copies of the request for a hearing shall be sent by the 
requestor to the Wage and Hour Division official who issued the 
Administrator's notice of determination, to the representative(s) of the 
Solicitor of Labor identified in the notice of determination, and to all 
known interested parties.



Sec. 655.635  Rules of practice for administrative law judge proceedings.

    (a) Except as specifically provided in this subpart, and to the 
extent they do not conflict with the provisions of this subpart, the 
``Rules of Practice and Procedure for Administrative Hearings Before the 
Office of Administrative Law Judges'' established by the Secretary at 29 
CFR part 18 shall apply to administrative proceedings under this 
subpart.
    (b) As provided in the Administrative Procedure Act, 5 U.S.C. 556, 
any oral or documentary evidence may be received in proceedings under 
this part. The Federal Rules of Evidence and subpart B of the Rules of 
Practice and Procedure for Administrative Hearings Before the Office of 
Administrative Law Judges (29 CFR part 18, subpart B) shall not apply, 
but principles designed to ensure production of relevant and probative 
evidence shall guide the admission of evidence. The administrative law 
judge may exclude evidence which is immaterial, irrelevant, or unduly 
repetitive.



Sec. 655.640  Service and computation of time.

    (a) Under this subpart, a party may serve any pleading or document 
by regular mail. Service on a party is complete upon mailing to the last 
known

[[Page 569]]

address or, in the case of the attesting employer, to the employer's 
designated representative in the U.S. No additional time for filing or 
response is authorized where service is by mail. In the interest of 
expeditious proceedings, the administrative law judge may direct the 
parties to serve pleadings or documents by a method other than regular 
mail.
    (b) Two (2) copies of all pleadings and other documents in any 
administrative law judge proceeding shall be served on the attorneys for 
the Administrator. One copy shall be served on the Associate Solicitor, 
Division of Fair Labor Standards, Office of the Solicitor, U.S. 
Department of Labor, 200 Constitution Avenue NW., Washington, DC 20210, 
and one copy on the attorney representing the Administrator in the 
proceeding.
    (c) Time will be computed beginning with the day following the 
action and includes the last day of the period unless it is a Saturday, 
Sunday, or federally-observed holiday, in which case the time period 
includes the next business day.



Sec. 655.645  Administrative law judge proceedings.

    (a) Upon receipt of a timely request for a hearing filed pursuant to 
and in accordance with Sec. 655.630 of this part, the Chief 
Administrative Law Judge shall promptly appoint an administrative law 
judge to hear the case.
    (b) Within seven calendar days following the assignment of the case, 
the administrative law judge shall notify all interested parties of the 
date, time and place of the hearing. All parties shall be given at least 
fourteen calendar days' notice of such hearing.
    (c) The date of the hearing shall be not more than 60 calendar days 
from the date of the Administrator's determination. Because of the time 
constraints imposed by the Act, no requests for postponement shall be 
granted except for compelling reasons. Even if such reasons are shown, 
no extension of the hearing date beyond 60 days from the date of the 
Administrator's determination shall be granted except by consent of all 
the parties to the proceeding.
    (d) The administrative law judge may prescribe a schedule by which 
the parties are permitted to file a prehearing brief or other written 
statement of fact or law. Any such brief or statement shall be served 
upon each other party in accordance with Sec. 655.640 of this part. 
Posthearing briefs will not be permitted except at the request of the 
administrative law judge. When permitted, any such brief shall be 
limited to the issue or issues specified by the administrative law 
judge, shall be due within the time prescribed by the administrative law 
judge, and shall be served on each other party in accordance with Sec. 
655.640 of this part.
    (e) In reaching a decision, the administrative law judge shall, in 
accordance with the Act, impose the following burden of proof--
    (1) The attesting employer shall have the burden of producing facts 
and evidence to establish the matters required by the attestation at 
issue;
    (2) The burden of proof as to the applicability of the automated 
vessel exception shall be on the party to the hearing who is asserting 
that the employer is not eligible for the exception.
    (f) The administrative law judge proceeding shall not be an appeal 
or review of the Administrator's ruling on a request for a cease and 
desist order pursuant to Sec. 655.615.



Sec. 655.650  Decision and order of administrative law judge.

    (a) Within 90 calendar days after receipt of the transcript of the 
hearing, the administrative law judge shall issue a decision. If any 
party desires review of the decision, including judicial review, a 
petition for Secretary's review thereof shall be filed as provided in 
Sec. 655.655 of this subpart. If a petition for review is filed, the 
decision of the administrative law judge shall be inoperative unless and 
until the Secretary issues an order affirming the decision, or, unless 
and until 30 calendar days have passed after the Secretary's receipt of 
the petition for review and the Secretary has not issued notice to the 
parties that the Secretary will review the administrative law judge's 
decision.
    (b) The decision of the administrative law judge shall include a 
statement of findings and conclusions, with reasons and basis therefor, 
upon each

[[Page 570]]

material issue presented on the record. The decision shall also include 
an appropriate order which may affirm, deny, reverse, or modify, in 
whole or in part, the determination of the Administrator; the reason or 
reasons for such order shall be stated in the decision. The 
administrative law judge shall not render determinations as to the 
legality of a regulatory provision or the constitutionality of a 
statutory provision.
    (c) The decision shall be served on all parties in person or by 
certified or regular mail.



Sec. 655.655  Secretary's review of administrative law judge's decision.

    (a) The Administrator or any interested party desiring review of the 
decision and order of an administrative law judge shall petition the 
Secretary to review the decision and order. To be effective, such 
petition shall be received by the Secretary within 30 calendar days of 
the date of the decision and order. Copies of the petition shall be 
served on all parties and on the administrative law judge.
    (b) No particular form is prescribed for any petition for 
Secretary's review permitted by this subpart. However, any such petition 
shall:
    (1) Be dated;
    (2) Be typewritten or legibly written;
    (3) Specify the issue or issues stated in the administrative law 
judge decision and order giving rise to such petition;
    (4) State the specific reason or reasons why the party petitioning 
for review believes such decision and order are in error;
    (5) Be signed by the party filing the petition or by an authorized 
representative of such party;
    (6) Include the address at which such party or authorized 
representative desires to receive further communications relating 
thereto; and
    (7) Attach copies of the administrative law judge's decision and 
order, and any other record documents which would assist the Secretary 
in determining whether review is warranted.
    (c) Whenever the Secretary determines to review the decision and 
order of an administrative law judge, a notice of the Secretary's 
determination shall be served upon the administrative law judge and upon 
all parties to the proceeding within 30 calendar days after the 
Secretary's receipt of the petition for review.
    (d) Upon receipt of the Secretary's notice, the Office of 
Administrative Law Judges shall within fifteen calendar days forward the 
complete hearing record to the Secretary.
    (e) The Secretary's notice may specify:
    (1) The issue or issues to be reviewed;
    (2) The form in which submissions shall be made by the parties 
(e.g., briefs); and
    (3) The time within which such submissions shall be made.
    (f) All documents submitted to the Secretary shall be filed with the 
Secretary of Labor, U.S. Department of Labor, Washington, DC 20210, 
Attention: Executive Director, Office of Administrative Appeals, room S-
4309. An original and two copies of all documents shall be filed. 
Documents are not deemed filed with the Secretary until actually 
received by the Secretary. All documents, including documents filed by 
mail, shall be received by the Secretary either on or before the due 
date.
    (g) Copies of all documents filed with the Secretary shall be served 
upon all other parties involved in the proceeding. Service upon the 
Administrator shall be in accordance with Sec. 655.640(b) of this part.
    (h) The Secretary's final decision shall be issued within 180 
calendar days from the date of the notice of intent to review. The 
Secretary's decision shall be served upon all parties and the 
administrative law judge.
    (i) Upon issuance of the Secretary's decision, the Secretary shall 
transmit the entire record to the Chief Administrative Law Judge for 
custody pursuant to Sec. 655.660 of this part.



Sec. 655.660  Administrative record.

    The official record of every completed administrative hearing 
procedure provided by subparts F and G of this part shall be maintained 
and filed under the custody and control of the Chief Administrative Law 
Judge. Upon receipt of a complaint seeking review of the final agency 
action in a United

[[Page 571]]

States District Court, the Chief Administrative Law Judge shall certify 
the official record and shall transmit such record to the clerk of the 
court.



Sec. 655.665  Notice to the Attorney General and the Employment and 
Training Administration.

    (a) The Administrator shall promptly notify the Attorney General and 
ETA of the entry of a cease and desist order pursuant to Sec. 655.615 
of this part. The order shall remain in effect until the completion of 
the Administrator's investigation and any subsequent proceedings 
pursuant to Sec. 655.630 of this part, unless the Administrator 
notifies the Attorney General and ETA of the entry of a subsequent order 
lifting the prohibition.
    (1) The Attorney General, upon receipt of notification from the 
Administrator that a cease and desist order has been entered against an 
employer:
    (i) Shall not permit the vessels owned or chartered by the attesting 
employer to use alien crewmembers to perform the longshore activity(ies) 
at the port or location in the State of Alaska specified in the cease 
and desist order; and
    (ii) Shall, in the case of an employer seeking to utilize the 
automated vessel exception, require that such employer not use alien 
crewmembers to perform the longshore activity(ies) at the port or 
location in the State of Alaska specified in the cease and desist order, 
without having on file with ETA an attestation pursuant to Sec. 655.520 
of this part.
    (2) ETA, upon receipt of the Administrator's notice shall, in the 
case of an attesting employer, suspend the employer's attestation, 
either in whole or in part, for the activity(ies) and port or location 
in the State of Alaska specified in the cease and desist order.
    (b) The Administrator shall notify the Attorney General and ETA of 
the final determination of a violation by an attesting employer or of 
the ineligibility of an employer for the automated vessel exception, 
upon the earliest of the following events:
    (1) Where the Administrator determines that there is a basis for a 
finding of violation by an attesting employer or a finding of 
nonapplicability of the automated vessel exception, and no timely 
request for hearing is made pursuant to Sec. 655.630 of this part;
    (2) Where, after a hearing, the administrative law judge issues a 
decision and order finding a violation by an attesting employer or 
finding inapplicable the automated vessel exception, and no timely 
petition for review to the Secretary is made pursuant to Sec. 655.655 
of this part; or
    (3) Where a petition for review is taken from an administrative law 
judge's decision finding a violation or finding inapplicable the 
automated vessel exception, and the Secretary either declines within 
thirty days to entertain the appeal, pursuant to Sec. 655.655(c) of 
this part, or the Secretary affirms the administrative law judge's 
determination; or
    (4) Where the administrative law judge finds that there was no 
violation by an attesting employer or that the automated vessel 
exception does apply, and the Secretary, upon review, issues a decision 
pursuant to Sec. 655.655 of this part, holding that a violation was 
committed by an attesting employer or holding that the automated vessel 
exception does not apply.
    (c) The Attorney General, upon receipt of notification from the 
Administrator pursuant to paragraph (b) of this section:
    (1) Shall not permit the vessels owned or chartered by the attesting 
employer to enter any port of the U.S. for a period of up to one year;
    (2) Shall, in the case of an employer determined to be ineligible 
for the automated vessel exception, thereafter require that such 
employer not use alien crewmembers(s) to perform the longshore 
activity(ies) at the specified port or location in the State of Alaska 
without having on file with ETA an attestation pursuant to Sec. 655.520 
of this part; and
    (3) Shall, in the event that the Administrator's notice constitutes 
a conclusive determination (pursuant to Sec. 655.670) that the 
prevailing practice at a particular U.S. port does not permit the use of 
nonimmigrant alien crewmembers for particular longshore activity(ies), 
thereafter permit no employer to use alien crewmembers for the 
particular longshore activity(ies) at that port.

[[Page 572]]

    (d) ETA, upon receipt of the Administrator's notice pursuant to 
paragraph (b) of this section:
    (1) Shall, in the case of an attesting employer, suspend the 
employer's attestation, either in whole or in part, for the port or 
location at issue and for any other U.S. port, and shall not accept for 
filing any attestation submitted by the employer for a period of 12 
months or for a shorter period if such is specified for that employer by 
the Attorney General; and
    (2) Shall, if the Administrator's notice constitutes a conclusive 
determination (pursuant to Sec. 655.670) that the prevailing practice 
at a particular U.S. port does not permit the use of alien crewmembers 
for the longshore activity(ies), thereafter accept no attestation under 
the prevailing practice exception on Form ETA 9033 from any employer for 
the performance of the activity(ies) at that port, and shall invalidate 
any current attestation under the prevailing practice exception on Form 
ETA 9033 for any employer for the performance of the activity(ies) at 
that port.



Sec. 655.670  Federal Register notice of determination of prevailing 
practice.

    (a) Pursuant to Sec. 655.625(b), the Administrator shall publish in 
the Federal Register a notice of the Administrator's determination of 
any investigation regarding the prevailing practice for the use of alien 
crewmembers for particular longshore activity(ies) in a particular U.S. 
port (whether under an attestation or under the automated vessel 
exception). Where the Administrator has determined that the prevailing 
practice in that U.S. port does not permit such use of alien 
crewmembers, and no timely request for a hearing is filed pursuant to 
Sec. 655.630, the Administrator's determination shall be the conclusive 
determination for purposes of the Act and subparts F and G of this part; 
the Attorney General and ETA shall, upon notice from the Administrator, 
take the actions specified in Sec. 655.665. Where the Administrator has 
determined that the prevailing practice in that U.S. port at the time of 
the investigation permits such use of alien crewmembers, the 
Administrator shall, in any subsequent investigation, give that 
determination appropriate weight, unless the determination is reversed 
in proceedings under Sec. 655.630 or Sec. 655.655.
    (b) Where an interested party, pursuant to Sec. 655.630, requests a 
hearing on the Administrator's determination, the Administrator shall, 
upon the issuance of the decision of the administrative law judge, 
publish in the Federal Register a notice of the judge's decision as to 
the prevailing practice for the longshore activity(ies) and U.S. port at 
issue, if the administrative law judge:
    (1) Reversed the determination of the Administrator published in the 
Federal Register pursuant to paragraph (a) of this section; or
    (2) Determines that the prevailing practice for the particular 
activity in the port does not permit the use of alien crewmembers.
    (c) If the administrative law judge determines that the prevailing 
practice in that port does not permit such use of alien crewmembers, the 
judge's decision shall be the conclusive determination for purposes of 
the Act and subparts F and G of this part (unless and until reversed by 
the Secretary on discretionary review pursuant to Sec. 655.655). The 
Attorney General and ETA shall upon notice from the Administrator, take 
the actions specified in Sec. 655.665.
    (d) In the event that the Secretary, upon discretionary review 
pursuant to Sec. 655.655, issues a decision that reverses the 
administrative law judge on a matter on which the Administrator has 
published notices in the Federal Register pursuant to paragraphs (a) and 
(b) of this section, the Administrator shall publish in the Federal 
Register a notice of the Secretary's decision and shall notify the 
Attorney General and ETA.
    (1) Where the Secretary reverses the administrative law judge and 
determines that, contrary to the judge's decision, the prevailing 
practice for the longshore activity(ies) in the U.S. port at issue does 
not permit the use of alien crewmembers, the Secretary's decision shall 
be the conclusive determination for purposes of the Act and subparts F 
and G of this part. Upon notice from the Administrator, the Attorney 
General and ETA shall take the actions specified in Sec. 655.665.

[[Page 573]]

    (2) Where the Secretary reverses the administrative law judge and 
determines that, contrary to the judge's decision, the use of alien 
crewmembers is permitted by the prevailing practice for the longshore 
activity(ies) in the U.S. port at issue, the judge's decision shall no 
longer have the conclusive effect specified in paragraph (b) of this 
section. Upon notice from the Administrator, the Attorney General and 
ETA shall cease the actions specified in Sec. 655.665.



Sec. 655.675  Non-applicability of the Equal Access to Justice Act.

    A proceeding under subpart G of this part is not subject to the 
Equal Access to Justice Act, as amended, 5 U.S.C. 504. In such a 
proceeding, the administrative law judge shall have no authority to 
award attorney fees and/or other litigation expenses pursuant to the 
provisions of the Equal Access to Justice Act.



 Subpart H_Labor Condition Applications and Requirements for Employers 

   Using Nonimmigrants on H-1B Visas in Specialty Occupations and as 
 Fashion Models, and Labor Attestation Requirements for Employers Using 
          Nonimmigrants on H-1B1 Visas in Specialty Occupations

    Source: 59 FR 65659, 65676, Dec. 20, 1994, unless otherwise noted.



Sec. 655.700  What statutory provisions govern the employment of H-1B 
and H-1B1 nonimmigrants and how do employers apply for an H-1B or H-1B1 
visa?

    Under the H-1B1 visa, the Immigration and Nationality Act (INA), as 
amended, permits nonimmigrant professionals in specialty occupations 
from countries with which the U.S. has entered into certain agreements 
that are identified in section 214(g)(8)(A) of the INA to temporarily 
enter the U.S. for professional employment. Employers seeking to 
temporarily employ H-1B1 professionals must file a labor attestation 
with the Department of Labor in accordance with this subpart as set out 
in Sec. 655.700(c)(3) and (d), which identify the sections of this 
subpart H and of subpart I of this part that apply to the H-1B1 program, 
sections and subsections applicable only to the H-1B program, and how 
terminology is to be applied. Steps for receiving an H-1B1 visa and 
entering the U.S. on an H-1B1 visa after the attestation process is 
completed with the Department of Labor, which differ in some respects 
from the steps for H-1B visas, are the responsibility of the Department 
of State and the United States Citizenship and Immigration Services 
(USCIS) of the Department of Homeland Security (formerly the Immigration 
and Naturalization Service or INS) and are identified in regulations and 
procedures of those agencies. Consult the Department of State (http://
www.state.gov/) and USCIS (http://uscis.gov/) websites and regulations 
for specific instructions regarding H-1B1 visas. Procedures described in 
this subpart H for obtaining a visa and entering the U.S. after the 
Department of Labor attestation process, including procedures in this 
section and Sec. 655.705, apply only to H-1B nonimmigrants, not to H-
1B1 nonimmigrants.
    (a) Statutory provisions regarding H-1B visas. With respect to 
nonimmigrant workers entering the U.S. on H-1B visas, which are 
available to nonimmigrant aliens in specialty occupations or certain 
fashion models from any country, the INA, as amended, provides as 
follows:
    (1) Establishes an annual ceiling (exclusive of spouses and 
children) on the number of foreign workers who may be issued H-1B 
visas--
    (i) 195,000 in fiscal year 2001;
    (ii) 195,000 in fiscal year 2002;
    (iii) 195,000 in fiscal year 2003; and
    (iv) 65,000 in each succeeding fiscal year;
    (2) Defines the scope of eligible occupations for which 
nonimmigrants may be issued H-1B visas and specifies the qualifications 
that are required for entry as an H-1B nonimmigrant ;
    (3) Requires an employer seeking to employ H-1B nonimmigrants to 
file a labor condition application (LCA) agreeing to various attestation 
requirements and have it certified by the Department of Labor (DOL) 
before a

[[Page 574]]

nonimmigrant may be provided H-1B status by the Immigration and 
Naturalization Service (INS); and
    (4) Establishes an enforcement system under which DOL is authorized 
to determine whether an employer has engaged in misrepresentation or 
failed to meet a condition of the LCA, and is authorized to impose fines 
and penalties.
    (b) Procedure for obtaining an H-1B visa classification. Before a 
nonimmigrant may be admitted to work in a ``specialty occupation'' or as 
a fashion model of distinguished merit and ability in the United States 
under the H-1B visa classification, there are certain steps which must 
be followed:
    (1) First, an employer shall submit to the Department of Labor 
(DOL), and obtain DOL certification of, a labor condition application 
(LCA). The requirements for obtaining a certified LCA are provided in 
this subpart. The electronic LCA (Form ETA 9035E) is available at http:/
/www.lca.doleta.gov. The paper-version LCA (Form ETA 9035) and the LCA 
cover pages (Form ETA 9035CP), which contain the full attestation 
statements incorporated by reference into Form ETA 9035 and Form ETA 
9035E, may be obtained from http://ows.doleta.gov and from the 
Employment and Training Administration (ETA) National Office. Employers 
must file LCAs in the manner prescribed in Sec. 655.720.
    (2) After obtaining DOL certification of an LCA, the employer may 
submit a nonimmigrant visa petition (INS Form I-129), together with the 
certified LCA, to INS, requesting H-1B classification for the foreign 
worker. The requirements concerning the submission of a petition to, and 
its processing by, INS are set forth in INS regulations. The INS 
petition (Form I-129) may be obtained from an INS district or area 
office.
    (3) If INS approves the H-1B classification, the nonimmigrant then 
may apply for an H-1B visa abroad at a consular office of the Department 
of State. If the nonimmigrant is already in the United States in a 
status other than H-1B, he/she may apply to the INS for a change of visa 
status.
    (c) Applicability. (1) This subpart H and subpart I of this part 
apply to all employers seeking to employ foreign workers under the H-1B 
visa classification in specialty occupations or as fashion models of 
distinguished merit and ability.
    (2) During the period that the provisions of Appendix 1603.D.4 of 
Annex 1603 of the North American Free Trade Agreement (NAFTA) apply, 
this subpart H and subpart I of this part shall apply (except for the 
provisions relating to the recruitment and displacement of U.S. workers 
(see Sec. Sec. 655.738 and 655.739)) to the entry and employment of a 
nonimmigrant who is a citizen of Mexico under and pursuant to the 
provisions of section D or Annex 1603 of NAFTA in the case of all 
professions set out in Appendix 1603.D.1 of Annex 1603 of NAFTA other 
than registered nurses. Therefore, the references in this part to ``H-1B 
nonimmigrant'' apply to any Mexican citizen nonimmigrant who is 
classified by INS as ``TN.'' In the case of a registered nurse, the 
following provisions shall apply: subparts D and E of this part or the 
Nursing Relief for Disadvantaged Areas Act of 1999 (Public Law 106-95) 
and the regulations issued thereunder, 20 CFR part 655, subparts L and 
M.
    (3) Subject to paragraph (d) of this section, this subpart H and 
subpart I of this part apply to all employers seeking to employ foreign 
workers under the H-1B1 visa classification in specialty occupations in 
accordance with INA section 101(a)(15)(H)(i)(b1) (8 U.S.C. 
1101(a)(15)(H)(i)(b1)), under an agreement listed in INA section 
214(g)(8)(A) (8 U.S.C. 1184(g)(8)(A)), and during the period that the 
listed agreement is in effect. This paragraph is applicable to H-1B1 
attestations filed on or after November 23, 2004; H-1B1 attestations 
filed prior to that date but on or after January 1, 2004, the 
commencement of the H-1B1 program, will be handled in accordance with 
the H-1B1 statutory terms and the H-1B1 processing procedures the 
Department posted on its website in advance of January 1, 2004.
    (d) Nonimmigrants on H-1B1 visas--(1) Exclusions. The following 
sections and portions of sections in this subpart and in subpart I of 
this part do not apply to H-1B1 nonimmigrants but apply only to H-1B 
nonimmigrants: Sections 655.700(a), (b), (c)(1) and (c)(2); 655.705(b) 
and (c); 655.710(b); 655.730(d)(5) and

[[Page 575]]

(e)(3); 655.736; 655.737; 655.738; 655.739; 655.760(a)(8), (9) and (10); 
and 655.805(a)(7), (8) and (9). Additionally, the definition of the 
Immigration and Naturalization Service in Sec. 655.715 is inapplicable 
to the H-1B1 program. Further, any of the following references in this 
subpart H or in subpart I of this part, whether in the excluded sections 
listed above or elsewhere, do not apply to H-1B1 nonimmigrants but apply 
only to H-1B nonimmigrants: References to fashion models of 
distinguished merit and ability (H-1B but not H-1B1 visas are available 
to such fashion models); references to a petition process before the INS 
(now USCIS) (the petition process applies only to H-1B not H-1B1 visas); 
references to H-1B-dependent employers and employers found to have 
willfully violated the H-1B program requirements (these provisions do 
not apply to the H-1B1 program); and reference in Sec. 655.750(a) or 
elsewhere in this part to the provision in INA section 214(n) (formerly 
INA section 214(m)) regarding increased portability of H-1B status (by 
the statutory terms, the portability provision is inapplicable to H-1B1 
nonimmigrants).
    (2) Terminology. For purposes of this subpart H and subpart I of 
this part, except in those sections identified in paragraph (d)(1) of 
this section as inapplicable to H-1B1 nonimmigrants and as otherwise 
excluded:
    (i) The term ``H-1B'' shall include ``H-1B1'' (INA section 
101(a)(15)(H)(i)(b1)); and
    (ii) The term ``labor condition application'' or ``LCA'' shall 
include a labor attestation pursuant to the provisions of INA section 
212(t)(1) with respect to an H-1B1 nonimmigrant professional under INA 
section 101(a)(15)(H)(i)(b1).
    (3) Filing procedures for H-1B1 labor attestations. Employers 
seeking to employ an H-1B1 nonimmigrant must submit to DOL a completed 
ETA Form 9035 or ETA Form 9035E (electronic) in the manner prescribed in 
Sec. Sec. 655.720 and 655.730. Employers must indicate on the form 
whether the labor attestation is for an ``H-1B1 Chile'' or ``H-1B1 
Singapore'' nonimmigrant. Changes in the procedures and instructions for 
submission of the H-1B1 labor attestation will be provided in a notice 
published in the Federal Register and posted at the ETA web site at 
http://atlas.doleta.gov/foreign/.
    (4) Employer's responsibilities regarding H-1B1 labor attestation. 
Each employer seeking an H-1B1 nonimmigrant in a specialty occupation 
has several responsibilities, as described more fully in this subpart 
and subpart I of this part, including:
    (i) By completing and submitting the LCA, and in addition by signing 
the LCA, the employer makes certain representations and agrees to 
several attestations regarding the employer's responsibilities, 
including the wages, working conditions, and benefits to be provided to 
the H-1B1 nonimmigrant (8 U.S.C. 1182(t)(1)). These attestations are 
specifically identified and incorporated in the LCA, as well as being 
set forth in full on Form ETA 9035CP.
    (ii) The employer reaffirms its acceptance of all of the attestation 
obligations by transmitting the certified labor attestation to the 
nonimmigrant, the Department of State, and/or the USCIS in accordance 
with the further procedures of those agencies necessary for the 
nonimmigrant to obtain an H-1B1 visa and enter or remain in the U.S.
    (iii) The employer shall maintain the original signed and certified 
LCA in its files, and shall make a copy of the filed LCA, as well as 
necessary supporting documentation (as identified under this subpart), 
available for public examination in a public access file at the 
employer's principal place of business in the U.S. or at the place of 
employment within one working day after the date on which the LCA is 
filed with ETA.
    (iv) The employer shall develop sufficient documentation to meet its 
burden of proof, in the event that such statement or information is 
challenged, with respect to the validity of the statements made in its 
LCA and the accuracy of information provided. The employer shall also 
maintain such documentation at its principal place of business in the 
U.S. and shall make such documentation available to DOL for inspection 
and copying upon request.
    (5) Application to Chile. During the period that the provisions of 
Chapter 14 and Section D of Annex 14.3 of the

[[Page 576]]

United States-Chile Free Trade Agreement (Chile FTA) are in effect, this 
subpart H and subpart I of this part shall apply (except for the 
provisions excluded under paragraph (d)(1) of this section) to the 
temporary entry and employment of a nonimmigrant who is a national of 
Chile under the provisions of Article 14.9 and Annex 2.1 of the Chile 
FTA and who is a professional under the provisions of Annex 14.3(D) of 
the Chile FTA.
    (6) Application to Singapore. During the period that the provisions 
of Section IV of Annex 11A of the United States-Singapore Free Trade 
Agreement (Singapore FTA) are in effect, this subpart H and subpart I of 
this part shall apply (except for the provisions excluded under 
paragraph (d)(1) of this section) to the temporary entry and employment 
of a nonimmigrant who is a national of Singapore under the provisions of 
Chapter 11 and Section IV of Annex 11A of the Singapore FTA and who is a 
professional under the provisions of Annex 11A(IV) of the Singapore FTA.

[65 FR 80209, Dec. 20, 2000, as amended at 66 FR 63300, Dec. 5, 2001; 69 
FR 68226, Nov. 23, 2004; 70 FR 72560, Dec. 5, 2005]



Sec. 655.705  What Federal agencies are involved in the H-1B and H-1B1 
programs, and what are the responsibilities of those agencies and of 
employers?

    Three federal agencies (Department of Labor, Department of State, 
and Department of Justice) are involved in the process relating to H-1B 
nonimmigrant classification and employment. The employer also has 
continuing responsibilities under the process. This section briefly 
describes the responsibilities of each of these entities.
    (a) Department of Labor (DOL) responsibilities. DOL administers the 
labor condition application process and enforcement provisions 
(exclusive of complaints regarding non-selection of U.S. workers, as 
described in 8 U.S.C. 1182(n)(1)(G)(i)(II) and 1182(n)(5)). Two DOL 
agencies have responsibilities:
    (1) The Employment and Training Administration (ETA) is responsible 
for receiving and certifying labor condition applications (LCAs) in 
accordance with this subpart H. ETA is also responsible for compiling 
and maintaining a list of LCAs and makes such list available for public 
examination at the Department of Labor, 200 Constitution Avenue, NW., 
Room C-4318, Washington, DC 20210.
    (2) The Wage and Hour Division of the Employment Standards 
Administration (ESA) is responsible, in accordance with subpart I of 
this part, for investigating and determining an employer's 
misrepresentation in or failure to comply with LCAs in the employment of 
H-1B nonimmigrants.
    (b) Department of Justice (DOJ) and Department of State (DOS) 
responsibilities. The Department of State, through U.S. Embassies and 
Consulates, is responsible for issuing H-1B visas. The Department of 
Justice, through the Immigration and Naturalization Service (INS), 
accepts the employer's petition (INS Form I-129) with the DOL-certified 
LCA attached. INS is responsible for approving the nonimmigrant's H-1B 
visa classification. In doing so, the INS determines whether the 
petition is supported by an LCA which corresponds with the petition, 
whether the occupation named in the labor condition application is a 
specialty occupation or whether the individual is a fashion model of 
distinguished merit and ability, and whether the qualifications of the 
nonimmigrant meet the statutory requirements for H-1B visa 
classification. If the petition is approved, INS will notify the U.S. 
Consulate where the nonimmigrant intends to apply for the visa unless 
the nonimmigrant is in the U.S. and eligible to adjust status without 
leaving this country. See 8 U.S.C. 1255(h)(2)(B)(i). The Department of 
Justice administers the system for the enforcement and disposition of 
complaints regarding an H-1B-dependent employer's or willful violator 
employer's failure to offer a position filled by an H-1B nonimmigrant to 
an equally or better qualified United States worker (8 U.S.C. 
1182(n)(1)(E), 1182(n)(5)), or such employer's willful misrepresentation 
of material facts relating to this obligation. The Department of 
Justice, through the INS, is responsible for disapproving H-1B and other 
petitions

[[Page 577]]

filed by an employer found to have engaged in misrepresentation or 
failed to meet certain conditions of the labor condition application (8 
U.S.C. 1182(n)(2)(C)(i)-(iii); 1182(n)(5)(E)).
    (c) Employer's responsibilities. This paragraph applies only to the 
H-1B program; employer responsibilities under the H-1B1 program are 
found at Sec. 655.700(d)(4). Each employer seeking an H-1B nonimmigrant 
in a specialty occupation or as a fashion model of distinguished merit 
and ability has several responsibilities, as described more fully in 
this subpart and subpart I of this part, including:
    (1) The employer shall submit a completed labor condition 
application (LCA) on Form ETA 9035E or Form ETA 9035 in the manner 
prescribed in Sec. 655.720. By completing and submitting the LCA, and 
by signing the LCA, the employer makes certain representations and 
agrees to several attestations regarding its responsibilities, including 
the wages, working conditions, and benefits to be provided to the H-1B 
nonimmigrants (8 U.S.C. 1182(n)(1)); these attestations are specifically 
identified and incorporated by reference in the LCA, as well as being 
set forth in full on Form ETA 9035CP. The LCA contains additional 
attestations for certain H-1B-dependent employers and employers found to 
have willfully violated the H-1B program requirements; these 
attestations impose certain obligations to recruit U.S. workers, to 
offer the job to U.S. applicants who are equally or better qualified 
than the H-1B nonimmigrant(s) sought for the job, and to avoid the 
displacement of U.S. workers (either in the employer's workforce, or in 
the workforce of a second employer with whom the H-1B nonimmigrant(s) is 
placed, where there are indicia of employment with a second employer (8 
U.S.C. 1182(n)(1)(E)-(G)). These additional attestations are 
specifically identified and incorporated by reference in the LCA, as 
well as being set forth in full on Form ETA 9035CP. If ETA certifies the 
LCA, notice of the certification will be sent to the employer by the 
same means the employer used to submit the LCA (that is, electronically 
where the Form ETA 9035E was submitted electronically, and by U.S. Mail 
where the Form ETA 9035 was submitted by U.S. Mail). The employer 
reaffirms its acceptance of all of the attestation obligations by 
submitting the LCA to the U.S. Citizenship and Immigration Services 
(formerly the Immigration and Naturalization Service or INS) in support 
of the Petition for Nonimmigrant Worker, Form I-129, for an H-1B 
nonimmigrant. See 8 CFR 214.2(h)(4)(iii)(B)(2), which specifies the 
employer will comply with the terms of the LCA for the duration of the 
H-1B nonimmigrant's authorized period of stay.
    (2) The employer shall maintain the original signed and certified 
LCA in its files, and shall make a copy of the LCA, as well as necessary 
supporting documentation (as identified under this subpart), available 
for public examination in a public access file at the employer's 
principal place of business in the U.S. or at the place of employment 
within one working day after the date on which the LCA is filed with 
ETA.
    (3) The employer then may submit a copy of the certified, signed LCA 
to INS with a completed petition (Form I-129) requesting H-1B 
classification.
    (4) The employer shall not allow the nonimmigrant worker to begin 
work until INS grants the alien authorization to work in the United 
States for that employer or, in the case of a nonimmigrant previously 
afforded H-1B status who is undertaking employment with a new H-1B 
employer, until the new employer files a nonfrivolous petition (Form I-
129) in accordance with INS requirements.
    (5) The employer shall develop sufficient documentation to meet its 
burden of proof with respect to the validity of the statements made in 
its LCA and the accuracy of information provided, in the event that such 
statement or information is challenged. The employer shall also maintain 
such documentation at its principal place of business in the U.S. and 
shall make such documentation available to DOL for inspection and 
copying upon request.

[65 FR 80210, Dec. 20, 2000, as amended at 66 FR 63300, Dec. 5, 2001; 70 
FR 72560, Dec. 5, 2005]

[[Page 578]]



Sec. 655.710  What is the procedure for filing a complaint?

    (a) Except as provided in paragraph (b) of this section, complaints 
concerning misrepresentation in the labor condition application or 
failure of the employer to meet a condition specified in the application 
shall be filed with the Administrator, Wage and Hour Division 
(Administrator), ESA, according to the procedures set forth in subpart I 
of this part. The Administrator shall investigate where appropriate, and 
after an opportunity for a hearing, assess appropriate sanctions and 
penalties, as described in subpart I of this part.
    (b) Complaints arising under section 212(n)(1)(G)(i)(II) of the INA, 
8 U.S.C. 1182(n)(1)(G)(i)(II), alleging failure of the employer to offer 
employment to an equally or better qualified U.S. applicant, or an 
employer's misrepresentation regarding such offer(s) of employment, may 
be filed with the Department of Justice, Civil Rights Division, Office 
of Special Counsel for Immigration-Related Unfair Employment Practices, 
950 Pennsylvania Avenue, NW., Washington, DC 20530, Telephone: 1-800-
255-8155 (employers), 1-800-255-7688 (employees); Web address: http://
www.usdoj.gov/crt/osc. The Department of Justice shall investigate where 
appropriate, and take action as appropriate under that Department's 
regulations and procedures.

[65 FR 80210, Dec. 20, 2000, as amended at 70 FR 72561, Dec. 5, 2005]



Sec. 655.715  Definitions.

    For the purposes of subparts H and I of this part:
    Actual wage means the wage rate paid by the employer to all 
individuals with experience and qualifications similar to the H-1B 
nonimmigant's experience and qualifications for the specific employment 
in question at the place of employment. The actual wage established by 
the employer is not an average of the wage rates paid to all workers 
employed in the occupation.
    Administrative Law Judge (ALJ) means an official appointed pursuant 
to 5 U.S.C. 3105.
    Administrator means the Administrator of the Wage and Hour Division, 
Employment Standards Administration, Department of Labor, and such 
authorized representatives as may be designated to perform any of the 
functions of the Administrator under subpart H or I of this part.
    Aggrieved party means a person or entity whose operations or 
interests are adversely affected by the employer's alleged non-
compliance with the labor condition application and includes, but is not 
limited to:
    (1) A worker whose job, wages, or working conditions are adversely 
affected by the employer's alleged non-compliance with the labor 
condition application;
    (2) A bargaining representative for workers whose jobs, wages, or 
working conditions are adversely affected by the employer's alleged non-
compliance with the labor condition application;
    (3) A competitor adversely affected by the employer's alleged non-
compliance with the labor condition application; and
    (4) A government agency which has a program that is impacted by the 
employer's alleged non-compliance with the labor condition application.
    Area of intended employment means the area within normal commuting 
distance of the place (address) of employment where the H-1B 
nonimmigrant is or will be employed. There is no rigid measure of 
distance which constitutes a normal commuting distance or normal 
commuting area, because there may be widely varying factual 
circumstances among different areas (e.g., normal commuting distances 
might be 20, 30, or 50 miles). If the place of employment is within a 
Metropolitan Statistical Area (MSA) or a Primary Metropolitan 
Statistical Area (PMSA), any place within the MSA or PMSA is deemed to 
be within normal commuting distance of the place of employment; however, 
all locations within a Consolidated Metropolitan Statistical Area (CMSA) 
will not automatically be deemed to be within normal commuting distance. 
The borders of MSAs and PMSAs are not controlling with regard to the 
identification of the normal commuting area; a location outside of an 
MSA or PMSA (or a CMSA) may be within normal commuting distance of a 
location that is

[[Page 579]]

inside (e.g., near the border of) the MSA or PMSA (or CMSA).
    Attorney General means the chief official of the U.S. Department of 
Justice or the Attorney General's designee.
    Authorized agent and authorized representative mean an official of 
the employer who has the legal authority to commit the employer to the 
statements in the labor condition application.
    Certification means the determination by a certifying officer that a 
labor condition application is not incomplete and does not contain 
obvious inaccuracies.
    Certify means the act of making a certification.
    Certifying Officer means a Department of Labor official, or such 
official's designee, who makes determinations about whether or not to 
certify labor condition applications.
    Chief Administrative Law Judge (Chief ALJ) means the chief official 
of the Office of the Administrative Law Judges of the Department of 
Labor or the Chief Administrative Law Judge's designee.
    Department and DOL mean the United States Department of Labor.
    Division means the Wage and Hour Division of the Employment 
Standards Administration, DOL.
    Employed, employed by the employer, or employment relationship means 
the employment relationship as determined under the common law, under 
which the key determinant is the putative employer's right to control 
the means and manner in which the work is performed. Under the common 
law, ``no shorthand formula or magic phrase * * * can be applied to find 
the answer * * *. [A]ll of the incidents of the relationship must be 
assessed and weighed with no one factor being decisive.'' NLRB v. United 
Ins. Co. of America, 390 U.S. 254, 258 (1968).
    Employer means a person, firm, corporation, contractor, or other 
association or organization in the United States that has an employment 
relationship with H-1B or H-1B1 nonimmigrants and/or U.S. worker(s). In 
the case of an H-1B nonimmigrant (not including an H-1B1 nonimmigrant), 
the person, firm, contractor, or other association or organization in 
the United States that files a petition with the United States 
Citizenship and Immigration Services (USCIS) of the Department of 
Homeland Security (formerly the Immigration and Naturalization Service 
or INS), on behalf of the nonimmigrant is deemed to be the employer of 
that nonimmigrant. In the case of an H-1B1 nonimmigrant, the person, 
firm, contractor, or other association or organization in the United 
States that files an LCA with the Department of Labor on behalf of the 
nonimmigrant is deemed to be the employer of that nonimmigrant.
    Employment and Training Administration (ETA) means the agency within 
the Department which includes the Office of Workforce Security (OWS).
    Employment Standards Administration (ESA) means the agency within 
the Department which includes the Wage and Hour Division.
    Immigration and Naturalization Service (INS), now known as United 
States Citizenship and Immigration Services (USCIS) of the Department of 
Homeland Security, means the Federal entity that makes the determination 
under the INA on whether to grant visa petitions of employers seeking 
the admission of nonimmigrants under H-1B visas for the purpose of 
employment.
    INA means the Immigration and Nationality Act, as amended, 8 U.S.C. 
1101 et seq.
    Independent authoritative source means a professional, business, 
trade, educational or governmental association, organization, or other 
similar entity, not owned or controlled by the employer, which has 
recognized expertise in an occupational field.
    Independent authoritative source survey means a survey of wages 
conducted by an independent authoritative source and published in a 
book, newspaper, periodical, loose-leaf service, newsletter, or other 
similar medium, within the 24-month period immediately preceding the 
filing of the employer's application. Such survey shall:
    (1) Reflect the average wage paid to workers similarly employed in 
the area of intended employment;
    (2) Be based upon recently collected data--e.g., within the 24-month 
period immediately preceding the date of publication of the survey; and

[[Page 580]]

    (3) Represent the latest published prevailing wage finding by the 
authoritative source for the occupation in the area of intended 
employment.
    Interested party means a person or entity who or which may be 
affected by the actions of an H-1B employer or by the outcome of a 
particular investigation and includes any person, organization, or 
entity who or which has notified the Department of his/her/its interest 
or concern in the Administrator's determination.
    Lockout means a labor dispute involving a work stoppage, wherein an 
employer withholds work from its employees in order to gain a concession 
from them.
    Occupation means the occupational or job classification in which the 
H-1B nonimmigrant is to be employed.
    Office of Workforce Security (OWS) means the agency of the 
Department which is charged with administering the national system of 
public employment offices.
    Period of intended employment means the time period between the 
starting and ending dates inclusive of the H-1B nonimmigrant's intended 
period of employment in the occupational classification at the place of 
employment as set forth in the labor condition application.
    Place of employment means the worksite or physical location where 
the work actually is performed.
    (1) The term does not include any location where either of the 
following criteria--paragraph (1)(i) or (ii)--is satisfied:
    (i) Employee developmental activity. An H-1B worker who is stationed 
and regularly works at one location may temporarily be at another 
location for a particular individual or employer-required developmental 
activity such as a management conference, a staff seminar, or a formal 
training course (other than ``on-the-job-training'' at a location where 
the employee is stationed and regularly works). For the H-1B worker 
participating in such activities, the location of the activity would not 
be considered a ``place of employment'' or ``worksite,'' and that 
worker's presence at such location--whether owned or controlled by the 
employer or by a third party--would not invoke H-1B program requirements 
with regard to that employee at that location. However, if the employer 
uses H-1B nonimmigrants as instructors or resource or support staff who 
continuously or regularly perform their duties at such locations, the 
locations would be ``places of employment'' or ``worksites'' for any 
such employees and, thus, would be subject to H-1B program requirements 
with regard to those employees.
    (ii) Particular worker's job functions. The nature and duration of 
an H-1B nonimmigrant's job functions may necessitate frequent changes of 
location with little time spent at any one location. For such a worker, 
a location would not be considered a ``place of employment'' or 
``worksite'' if the following three requirements (i.e., paragraphs 
(1)(ii)(A) through (C)) are all met--
    (A) The nature and duration of the H-1B worker's job functions 
mandates his/her short-time presence at the location. For this purpose, 
either:
    (1) The H-1B nonimmigrant's job must be peripatetic in nature, in 
that the normal duties of the worker's occupation (rather than the 
nature of the employer's business) requires frequent travel (local or 
non-local) from location to location; or
    (2) The H-1B worker's duties must require that he/she spend most 
work time at one location but occasionally travel for short periods to 
work at other locations; and
    (B) The H-1B worker's presence at the locations to which he/she 
travels from the ``home'' worksite is on a casual, short-term basis, 
which can be recurring but not excessive (i.e., not exceeding five 
consecutive workdays for any one visit by a peripatetic worker, or 10 
consecutive workdays for any one visit by a worker who spends most work 
time at one location and travels occasionally to other locations); and
    (C) The H-1B nonimmigrant is not at the location as a 
``strikebreaker'' (i.e., the H-1B nonimmigrant is not performing work in 
an occupation in which workers are on strike or lockout).
    (2) Examples of ``non-worksite'' locations based on worker's job 
functions:

[[Page 581]]

A computer engineer sent out to customer locations to ``troubleshoot'' 
complaints regarding software malfunctions; a sales representative 
making calls on prospective customers or established customers within a 
``home office'' sales territory; a manager monitoring the performance of 
out-stationed employees; an auditor providing advice or conducting 
reviews at customer facilities; a physical therapist providing services 
to patients in their homes within an area of employment; an individual 
making a court appearance; an individual lunching with a customer 
representative at a restaurant; or an individual conducting research at 
a library.
    (3) Examples of ``worksite'' locations based on worker's job 
functions: A computer engineer who works on projects or accounts at 
different locations for weeks or months at a time; a sales 
representative assigned on a continuing basis in an area away from his/
her ``home office;'' an auditor who works for extended periods at the 
customer's offices; a physical therapist who ``fills in'' for full-time 
employees of health care facilities for extended periods; or a physical 
therapist who works for a contractor whose business is to provide 
staffing on an ``as needed'' basis at hospitals, nursing homes, or 
clinics.
    (4) Whenever an H-1B worker performs work at a location which is not 
a ``worksite'' (under the criterion in paragraph (1)(i) or (1)(ii) of 
this definition), that worker's ``place of employment'' or ``worksite'' 
for purposes of H-1B obligations is the worker's home station or regular 
work location. The employer's obligations regarding notice, prevailing 
wage and working conditions are focused on the home station ``place of 
employment'' rather than on the above-described location(s) which do not 
constitute worksite(s) for these purposes. However, whether or not a 
location is considered to be a ``worksite''/''place of employment'' for 
an H-1B nonimmigrant, the employer is required to provide reimbursement 
to the H-1B nonimmigrant for expenses incurred in traveling to that 
location on the employer's business, since such expenses are considered 
to be ordinary business expenses of employers (Sec. Sec. 
655.731(c)(7)(iii)(C); 655.731(c)(9)). In determining the worker's 
``place of employment'' or ``worksite,'' the Department will look 
carefully at situations which appear to be contrived or abusive; the 
Department would seriously question any situation where the H-1B 
nonimmigrant's purported ``place of employment'' is a location other 
than where the worker spends most of his/her work time, or where the 
purported ``area of employment'' does not include the location(s) where 
the worker spends most of his/her work time.
    Required wage rate means the rate of pay which is the higher of:
    (1) The actual wage for the specific employment in question; or
    (2) The prevailing wage rate (determined as of the time of filing 
the application) for the occupation in which the H-1B nonimmigrant is to 
be employed in the geographic area of intended employment. The 
prevailing wage rate must be no less than the minimum wage required by 
Federal, State, or local law.
    Secretary means the Secretary of Labor or the Secretary's designee.
    Specialty occupation:
    (1) For purposes of the H-1B (not including H-1B1) program, 
specialty occupation means an occupation that requires theoretical and 
practical application of a body of highly specialized knowledge, and 
attainment of a bachelor's or higher degree (or its equivalent) in the 
specific specialty as a minimum for entry into the occupation in the 
United States. The nonimmigrant in a specialty occupation shall possess 
the following qualifications:
    (i) Full state licensure to practice in the occupation, if licensure 
is required for the occupation;
    (ii) Completion of the required degree; or
    (iii) Experience in the specialty equivalent to the completion of 
such degree and recognition of expertise in the specialty through 
progressively responsible positions relating to the specialty. INA, 8 
U.S.C. 1184(i)(1) and (2).
    (2) For purposes of the H-1B1 program, specialty occupation means an 
occupation that requires theoretical and practical application of a body 
of specialized knowledge, and attainment of a bachelor's or higher 
degree (or its

[[Page 582]]

equivalent) in the specific specialty as a minimum for entry into the 
occupation in the United States. INA, 8 U.S.C. 1184(i)(3). For H-1B1 
nonimmigrants from Chile, additional occupations that qualify as 
specialty occupations are Disaster Relief Claims Adjuster, Management 
Consultant, Agricultural Manager, and Physical Therapist, as defined in 
Appendix 14.3(D)(2) of the United States-Chile Free Trade Agreement. For 
H-1B1 nonimmigrants from Singapore, additional occupations that qualify 
as specialty occupations are Disaster Relief Claims Adjuster and 
Management Consultant, as defined in Appendix 11A.2 of the United 
States-Singapore Free Trade Agreement.
    (3) Determinations of specialty occupation and of nonimmigrant 
qualifications for the H-1B and H-1B1 programs are not made by the 
Department of Labor, but by the Department of State and/or United States 
Citizenship and Immigration Services (USCIS) of the Department of 
Homeland Security (formerly the Immigration and Naturalization Service 
or INS) in accordance with the procedures of those agencies for 
processing visas, petitions, extensions of stay, or requests for change 
of nonimmigrant status for H-1B or H-1B1 nonimmigrants.
    Specific employment in question means the set of duties and 
responsibilities performed or to be performed by the H-1B nonimmigrant 
at the place of employment.
    State means one of the 50 States, the District of Columbia, Guam, 
Puerto Rico, and the U.S. Virgin Islands.
    State Employment Security Agency (SESA), now known as a State 
Workforce Agency (SWA), means the state agency designated under section 
4 of the Wagner-Peyser Act to cooperate with the Employment and Training 
Administration of the Department of Labor in the operation of the 
national public workforce system.
    Strike means a labor dispute wherein employees engage in a concerted 
stoppage of work (including stoppage by reason of the expiration of a 
collective-bargaining agreement) or engage in any concerted slowdown or 
other concerted interruption of operation.
    United States worker (``U.S. worker'') means an employee who is 
either
    (1) A citizen or national of the United States, or
    (2) An alien who is lawfully admitted for permanent residence in the 
United States, is admitted as a refugee under section 207 of the INA, is 
granted asylum under section 208 of the INA, or is an immigrant 
otherwise authorized (by the INA or by the Attorney General) to be 
employed in the United States.
    Wage rate means the remuneration (exclusive of fringe benefits) to 
be paid, stated in terms of amount per hour, day, month or year (see 
definition of ``Required Wage Rate'').

[59 FR 65659, 65676, Dec. 20, 1994, as amended at 65 FR 80211, Dec. 20, 
2000; 69 FR 68228, Nov. 23, 2004; 70 FR 72561, Dec. 5, 2005]



Sec. 655.720  Where are labor condition applications (LCAs) to be filed 
and processed?

    (a) Employers must file all LCAs regarding H-1B and H-1B1 
nonimmigrants through the electronic submission procedure identified in 
paragraph (b) of this section except as provided in the next sentence. 
If a physical disability or lack of access to the Internet prevents an 
employer from using the electronic filing system, an LCA may be filed by 
U.S. Mail in accordance with paragraphs (c) and (d) of this section. 
Requirements for signing, providing public access to, and use of 
certified LCAs are identified in Sec. 655.730(c). If the LCA is 
certified by DOL, notice of the certification will be sent to the 
employer by the same means that the employer used to submit the LCA, 
that is, electronically where the Form ETA 9035E was submitted 
electronically, and by U.S. Mail where the Form ETA 9035 was submitted 
by U.S. Mail.
    (b) Electronic submission. Employers must file the electronic LCA, 
Form ETA 9035E, through the Department of Labor's Web site at http://
www.lca.doleta.gov. The employer must follow instructions for electronic 
submission posted on the Web site. In the event ETA implements the 
Government Paperwork Elimination Act (44 U.S.C.A. 3504 n.) and/or the 
Electronic Records and Signatures in Global and National Commerce Act 
(E-SIGN) (15 U.S.C. 7001-7006) for the submission and certification of 
the Form ETA 9035E,

[[Page 583]]

instructions will be provided (by public notice(s) and by instructions 
on the Department's Web site) to employers as to how the requirements of 
these statutes will be met in the Form ETA 9035E procedures.
    (c) Approval to file LCAs by U.S. Mail. (1) Employers with physical 
disabilities or lacking Internet access and wishing to file LCAs by U.S. 
Mail may submit a written request to the Chief, Division of Foreign 
Labor Certification in accordance with paragraphs (c)(2) through (c)(4) 
of this section. The ETA shall identify the address to which such 
written request shall be mailed in a Notice in the Federal Register and 
on the Department's Web site at http://www.lca.doleta.gov.
    (2) The written request must establish the employer's need to file 
by U.S. Mail, including providing an explanation of how physical 
disability or lack of access to the Internet prevents the employer from 
using the electronic filing system. No particular form or format is 
required for this request.
    (3) ETA will review the submitted justification, and may require the 
employer to submit supporting documentation. In the case of employers 
asserting a lack of Internet access, supporting documentation could, for 
example, consist of documentation that the Internet cannot be accessed 
from the employer's worksite or physical location (for example because 
no Internet service provider serves the site), and there is no publicly 
available Internet access, at public libraries or elsewhere, within a 
reasonable distance of the employer. In the case of employers with 
physical disabilities supporting documentation could, for example, 
consist of physicians' statements or invoices for medical devices or 
aids relevant to the employer's disability.
    (4) ETA may approve or deny employers' requests to submit LCAs by 
U.S. Mail. Approvals shall be valid for 1 year from the date of 
approval.
    (d) U.S. Mail. If an employer has a valid approval to file by U.S. 
Mail in accordance with paragraph (c) of this section, the employer may 
use Form ETA 9035 and send it by U.S. Mail to ETA. ETA shall publish a 
Notice in the Federal Register identifying the address, and any future 
address changes, to which paper LCAs must be mailed, and shall also post 
these addresses on the DOL Internet Web site at http://
www.lca.doleta.gov. When Form ETA 9035 is submitted by U.S. Mail, the 
form must bear the original signature of the employer (or that of the 
employer's authorized agent or representative) at the time it is 
submitted to ETA.
    (e) The ETA National Office is responsible for policy questions and 
other issues regarding LCAs. Prevailing wage challenges are handled in 
accordance with the procedures identified in Sec. 655.731(a)(2).

[70 FR 72561, Dec. 5, 2005]



Sec. 655.721  [Reserved]



Sec. 655.730  What is the process for filing a labor condition 
application?

    This section applies to the filing of labor condition applications 
for both H-1B nonimmigrants and H-1B1 nonimmigrants.
    (a) Who must submit labor condition applications? An employer, or 
the employer's authorized agent or representative, which meets the 
definition of ``employer'' set forth in Sec. 655.715 and intends to 
employ an H-1B nonimmigrant in a specialty occupation or as a fashion 
model of distinguished merit and ability shall submit an LCA to the 
Department.
    (b) Where and when is an LCA to be submitted? An LCA shall be 
submitted by the employer to ETA in accordance with the procedure 
prescribed in Sec. 655.720 no earlier than six months before the 
beginning date of the period of intended employment shown on the LCA. It 
is the employer's responsibility to ensure ETA receives a complete and 
accurate LCA. Incomplete or obviously inaccurate LCAs will not be 
certified by ETA. ETA will process all LCAs sequentially and will 
usually make a determination to certify or not certify an LCA within 
seven working days of the date ETA receives the LCA. LCAs filed by U.S. 
Mail may not be processed as quickly as those filed electronically.
    (c) What is to be submitted and what are its contents? Form ETA 9035 
or ETA 9035E.

[[Page 584]]

    (1) General. The employer (or the employer's authorized agent or 
representative) must submit to ETA one completed and dated LCA as 
prescribed in Sec. 655.720. The electronic LCA, Form ETA 9035E, is 
found on the DOL Web site where the electronic submission is made, at 
http://www.lca.doleta.gov. Copies of the paper form, Form ETA 9035, and 
cover pages Form ETA 9035CP are available on the DOL Web site at http://
www.ows.doleta.gov and from the ETA National Office, and may be used by 
employers with approval under Sec. 655.720 to file by U.S. Mail during 
the approval's validity period.
    (2) Undertaking of the Employer. In submitting the LCA, and by 
affixing the signature of the employer or its authorized agent or 
representative on Form ETA 9035E or Form ETA 9035, the employer (or its 
authorized agent or representative on behalf of the employer) attests 
the statements in the LCA are true and promises to comply with the labor 
condition statements (attestations) specifically identified in Forms ETA 
9035E and ETA 9035, as well as set forth in full in the Form ETA 9035CP. 
The labor condition statements (attestations) are described in detail in 
Sec. Sec. 655.731 through 655.734, and the additional attestations for 
LCAs filed by certain H-1B-dependent employers and employers found to 
have willfully violated the H-1B program requirements are described in 
Sec. Sec. 655.736 through 655.739.
    (3) Signed Originals, Public Access, and Use of Certified LCAs. In 
accordance with Sec. 655.760(a) and (a)(1), the employer must maintain 
in its files and make available for public examination the LCA as 
submitted to ETA and as certified by ETA. When Form ETA 9035E is 
submitted electronically, a signed original is created by the employer 
(or by the employer's authorized agent or representative) printing out 
and signing the form immediately upon certification by ETA. When Form 
ETA 9035 is submitted by U.S. Mail as permitted by Sec. 655.720(a), the 
form must bear the original signature of the employer (or of the 
employer's authorized agent or representative) when submitted to ETA. 
For H-1B visas only, the employer must submit a copy of the signed, 
certified Form ETA 9035 or ETA 9035E to the U.S. Citizenship and 
Immigration Services (USCIS, formerly INS) in support of the Form I-129 
petition, thereby reaffirming the employer's acceptance of all of the 
attestation obligations in accordance with 8 CFR 214.2(h)(4)(iii)(B)(2).
    (4) Contents of LCA. Each LCA shall identify the occupational 
classification for which the LCA is being submitted and shall state:
    (i) The occupation, by Dictionary of Occupational Titles (DOT) 
Three-Digit Occupational Groups code and by the employer's own title for 
the job;
    (ii) The number of nonimmigrants sought;
    (iii) The gross wage rate to be paid to each nonimmigrant, expressed 
on an hourly, weekly, biweekly, monthly, or annual basis;
    (iv) The starting and ending dates of the nonimmigrants' employment;
    (v) The place(s) of intended employment;
    (vi) The prevailing wage for the occupation in the area of intended 
employment and the specific source (e.g., name of published survey) 
relied upon by the employer to determine the wage. If the wage is 
obtained from a SESA, now known as a State Workforce Agency (SWA), the 
appropriate box must be checked and the wage must be stated; the source 
for a wage obtained from a source other than a SWA must be identified 
along with the wage; and
    (vii) For applications filed regarding H-1B nonimmigrants only (and 
not applications regarding H-1B1 nonimmigrants), the employer's status 
as to whether or not the employer is H-1B-dependent and/or a willful 
violator, and, if the employer is H-1B-dependent and/or a willful 
violator, whether the employer will use the application only in support 
of petitions for exempt H-1B nonimmigrants.
    (5) Multiple positions and/or places of employment. The employer 
shall file a separate LCA for each occupation in which the employer 
intends to employ one or more nonimmigrants, but the LCA may cover more 
than one intended position (employment opportunity) within that 
occupation. All intended places of employment shall be identified on the 
LCA; the employer

[[Page 585]]

may file one or more additional LCAs to identify additional places of 
employment. Separate LCAs must be filed for H-1B and H-1B1 
nonimmigrants.
    (6) Full-time and part-time jobs. The position(s) covered by the LCA 
may be either full-time or part-time; full-time and part-time positions 
can not be combined on a single LCA.
    (d) What attestations does the LCA contain? An employer's LCA shall 
contain the labor condition statements referenced in Sec. Sec. 655.731 
through 655.734, and Sec. 655.736 through 655.739 (if applicable), 
which provide that no individual may be admitted or provided status as 
an H-1B nonimmigrant in an occupational classification unless the 
employer has filed with the Secretary an application stating that:
    (1) The employer is offering and will offer during the period of 
authorized employment to H-1B nonimmigrants no less than the greater of 
the following wages (such offer to include benefits and eligibility for 
benefits provided as compensation for services, which are to be offered 
to the nonimmigrants on the same basis and in accordance with the same 
criteria as the employer offers such benefits to U.S. workers):
    (i) The actual wage paid to the employer's other employees at the 
worksite with similar experience and qualifications for the specific 
employment in question; or
    (ii) The prevailing wage level for the occupational classification 
in the area of intended employment;
    (2) The employer will provide working conditions for such 
nonimmigrants that will not adversely affect the working conditions of 
workers similarly employed (including benefits in the nature of working 
conditions, which are to be offered to the nonimmigrants on the same 
basis and in accordance with the same criteria as the employer offers 
such benefits to U.S. workers);
    (3) There is not a strike or lockout in the course of a labor 
dispute in the occupational classification at the place of employment;
    (4) The employer has provided and will provide notice of the filing 
of the labor condition application to:
    (i)(A) The bargaining representative of the employer's employees in 
the occupational classification in the area of intended employment for 
which the H-1B nonimmigrants are sought, in the manner described in 
Sec. 655.734(a)(1)(i); or
    (B) If there is no such bargaining representative, affected workers 
by providing electronic notice of the filing of the LCA or by posting 
notice in conspicuous locations at the place(s) of employment, in the 
manner described in Sec. 655.734(a)(1)(ii); and
    (ii) H-1B nonimmigrants by providing a copy of the LCA to each H-1B 
nonimmigrant at the time that such nonimmigrant actually reports to 
work, in the manner described in Sec. 655.734(a)(2).
    (5) For applications filed regarding H-1B nonimmigrants only (and 
not regarding H-1B1 nonimmigrants), the employer has determined its 
status concerning H-1B-dependency and/or willful violator (as described 
in Sec. 655.736), has indicated such status, and if either such status 
is applicable to the employer, has indicated whether the LCA will be 
used only for exempt H-1B nonimmigrant(s), as described in Sec. 
655.737.
    (6) The employer has provided the information about the occupation 
required in paragraph (c) of this section.
    (e) Change in employer's corporate structure or identity. (1) Where 
an employer corporation changes its corporate structure as the result of 
an acquisition, merger, ``spin-off,'' or other such action, the new 
employing entity is not required to file new LCAs and H-1B petitions 
with respect to the H-1B nonimmigrants transferred to the employ of the 
new employing entity (regardless of whether there is a change in the 
Employer Identification Number (EIN)), provided that the new employing 
entity maintains in its records a list of the H-1B nonimmigrants 
transferred to the employ of the new employing entity, and maintains in 
the public access file(s) (see Sec. 655.760) a document containing all 
of the following:
    (i) Each affected LCA number and its date of certification;
    (ii) A description of the new employing entity's actual wage system 
applicable to H-1B nonimmigrant(s) who become employees of the new 
employing entity;

[[Page 586]]

    (iii) The employer identification number (EIN) of the new employing 
entity (whether or not different from that of the predecessor entity); 
and
    (iv) A sworn statement by an authorized representative of the new 
employing entity expressly acknowledging such entity's assumption of all 
obligations, liabilities and undertakings arising from or under 
attestations made in each certified and still effective LCA filed by the 
predecessor entity. Unless such statement is executed and made available 
in accordance with this paragraph, the new employing entity shall not 
employ any of the predecessor entity's H-1B nonimmigrants without filing 
new LCAs and petitions for such nonimmigrants. The new employing 
entity's statement shall include such entity's explicit agreement to:
    (A) Abide by the DOL's H-1B regulations applicable to the LCAs;
    (B) Maintain a copy of the statement in the public access file (see 
Sec. 655.760); and
    (C) Make the document available to any member of the public or the 
Department upon request.
    (2) Notwithstanding the provisions of paragraph (e)(1) of this 
section, the new employing entity must file new LCA(s) and H-1B 
petition(s) when it hires any new H-1B nonimmigrant(s) or seeks 
extension(s) of H-1B status for existing H-1B nonimmigrant(s). In other 
words, the new employing entity may not utilize the predecessor entity's 
LCA(s) to support the hiring or extension of any H-1B nonimmigrant after 
the change in corporate structure.
    (3) A change in an employer's H-1B-dependency status which results 
from the change in the corporate structure has no effect on the 
employer's obligations with respect to its current H-1B nonimmigrant 
employees. However, the new employing entity shall comply with Sec. 
655.736 concerning H-1B-dependency and/or willful-violator status and 
Sec. 655.737 concerning exempt H-1B nonimmigrants, in the event that 
such entity seeks to hire new H-1B nonimmigrant(s) or to extend the H-1B 
status of existing H-1B nonimmigrants. (See Sec. 655.736(d)(6).)

[65 FR 80212, Dec. 20, 2000, as amended at 66 FR 63301, Dec. 5, 2001; 69 
FR 68228, Nov. 23, 2004; 70 FR 72562, Dec. 5, 2005]



Sec. 655.731  What is the first LCA requirement, regarding wages?

    An employer seeking to employ H-1B nonimmigrants in a specialty 
occupation or as a fashion model of distinguished merit and ability 
shall state on Form ETA 9035 or 9035E that it will pay the H-1B 
nonimmigrant the required wage rate.
    (a) Establishing the wage requirement. The first LCA requirement 
shall be satisfied when the employer signs Form ETA 9035 or 9035E 
attesting that, for the entire period of authorized employment, the 
required wage rate will be paid to the H-1B nonimmigrant(s); that is, 
that the wage shall be the greater of the actual wage rate (as specified 
in paragraph (a)(1) of this section) or the prevailing wage (as 
specified in paragraph (a)(2) of this section). The wage requirement 
includes the employer's obligation to offer benefits and eligibility for 
benefits provided as compensation for services to H-1B nonimmigrants on 
the same basis, and in accordance with the same criteria, as the 
employer offers to U.S. workers.
    (1) The actual wage is the wage rate paid by the employer to all 
other individuals with similar experience and qualifications for the 
specific employment in question. In determining such wage level, the 
following factors may be considered: Experience, qualifications, 
education, job responsibility and function, specialized knowledge, and 
other legitimate business factors. ``Legitimate business factors,'' for 
purposes of this section, means those that it is reasonable to conclude 
are necessary because they conform to recognized principles or can be 
demonstrated by accepted rules and standards. Where there are other 
employees with substantially similar experience and qualifications in 
the specific employment in question--i.e., they have substantially the 
same duties and responsibilities as the H-1B nonimmigrant--the actual 
wage shall be the amount paid to these other employees. Where no such 
other employees exist at the place of employment, the actual wage shall 
be the wage paid to the H-1B nonimmigrant by the employer. Where the 
employer's pay system or scale provides for adjustments during the 
period of the LCA--e.g., cost of living increases or other

[[Page 587]]

periodic adjustments, or the employee moves to a more advanced level in 
the same occupation--such adjustments shall be provided to similarly 
employed H-1B nonimmigrants (unless the prevailing wage is higher than 
the actual wage).
    (2) The prevailing wage for the occupational classification in the 
area of intended employment must be determined as of the time of filing 
the application. The employer shall base the prevailing wage on the best 
information available as of the time of filing the application. Except 
as provided in this section, the employer is not required to use any 
specific methodology to determine the prevailing wage and may utilize a 
State Employment Security Agency (SESA) (now known as State Workforce 
Agency or SWA), an independent authoritative source, or other legitimate 
sources of wage data. One of the following sources shall be used to 
establish the prevailing wage:
    (i) A collective bargaining agreement which was negotiated at arms-
length between a union and the employer which contains a wage rate 
applicable to the occupation;
    (ii) If the job opportunity is in an occupation which is not covered 
by paragraph (a)(2)(i) of this section, the prevailing wage shall be the 
arithmetic mean of the wages of workers similarly employed, except that 
the prevailing wage shall be the median when provided by paragraphs 
(a)(2)(ii)(A), (b)(3)(iii)(B)(2), and (b)(3)(iii)(C)(2) of this section. 
The prevailing wage rate shall be based on the best information 
available. The Department believes the following prevailing wage sources 
are, in order of priority, the most accurate and reliable:
    (A) SESA (now known as State Workforce Agency or SWA) determination. 
Upon receipt of a written request for a prevailing wage determination, 
the SESA will determine whether the occupation is covered by a 
collective bargaining agreement which was negotiated at arms length, 
and, if not, determine the arithmetic mean of wages of workers similarly 
employed in the area of intended employment. The wage component of the 
Bureau of Labor Statistics Occupational Employment Statistics survey 
shall be used to determine the arithmetic mean, unless the employer 
provides an acceptable survey. If an acceptable employer-provided wage 
survey provides a median and does not provide an arithmetic mean, the 
median shall be the prevailing wage applicable to the employer's job 
opportunity. In making a prevailing wage determination, the SESA will 
follow Sec. 656.40 of this chapter and other administrative guidelines 
or regulations issued by ETA. The SESA shall specify the validity period 
of the prevailing wage determination which in no event shall be for less 
than 90 days or more than 1 year from the date of the determination.
    (1) An employer who chooses to utilize a SESA prevailing wage 
determination shall file the labor condition application within the 
validity period of the prevailing wage as specified in the state's 
prevailing wage determination. Any employer desiring review of a SESA 
prevailing wage determination, including judicial review, shall follow 
the appeal procedures at Sec. 656.41 of this chapter. Employers which 
challenge a SESA prevailing wage determination under Sec. 656.41 must 
obtain a ruling prior to filing an LCA. In any challenge, the Department 
and the SESA shall not divulge any employer wage data which were 
collected under the promise of confidentiality. Once an employer obtains 
a prevailing wage determination from the SESA and files an LCA supported 
by that prevailing wage determination, the employer is deemed to have 
accepted the prevailing wage determination (as to the amount of the 
wage) and thereafter may not contest the legitimacy of the prevailing 
wage determination by filing an appeal with the CO (see Sec. 656.41 of 
this chapter) or in an investigation or enforcement action.
    (2) If the employer is unable to wait for the SESA to produce the 
requested prevailing wage for the occupation in question, or for the CO 
and/or the Board of Alien Labor Certification Appeals to issue a 
decision, the employer may rely on other legitimate sources of available 
wage information as set forth in paragraphs (a)(2)(ii)(B) and (C) of 
this section. If the employer later discovers, upon receipt of the 
prevailing wage determination from the SESA,

[[Page 588]]

that the information relied upon produced a wage below the prevailing 
wage for the occupation in the area of intended employment and the 
employer was paying below the SESA-determined wage, no wage violation 
will be found if the employer retroactively compensates the H-1B 
nonimmigrant(s) for the difference between wage paid and the prevailing 
wage, within 30 days of the employer's receipt of the prevailing wage 
determination.
    (3) In all situations where the employer obtains the prevailing wage 
determination from the SESA, the Department will accept that prevailing 
wage determination as correct (as to the amount of the wage) and will 
not question its validity where the employer has maintained a copy of 
the SESA prevailing wage determination. A complaint alleging inaccuracy 
of a SESA prevailing wage determination, in such cases, will not be 
investigated.
    (B) An independent authoritative source. The employer may use an 
independent authoritative wage source in lieu of a SESA prevailing wage 
determination. The independent authoritative source survey must meet all 
the criteria set forth in paragraph (b)(3)(iii)(B) of this section.
    (C) Another legitimate source of wage information. The employer may 
rely on other legitimate sources of wage data to obtain the prevailing 
wage. The other legitimate source survey must meet all the criteria set 
forth in paragraph (b)(3)(iii)(C) of this section. The employer will be 
required to demonstrate the legitimacy of the wage in the event of an 
investigation.
    (iii) For purposes of this section, ``similarly employed'' means 
``having substantially comparable jobs in the occupational 
classification in the area of intended employment,'' except that if a 
representative sample of workers in the occupational category can not be 
obtained in the area of intended employment, ``similarly employed'' 
means:
    (A) Having jobs requiring a substantially similar level of skills 
within the area of intended employment; or
    (B) If there are no substantially comparable jobs in the area of 
intended employment, having substantially comparable jobs with employers 
outside of the area of intended employment.
    (iv) A prevailing wage determination for LCA purposes made pursuant 
to this section shall not permit an employer to pay a wage lower than 
required under any other applicable Federal, state or local law.
    (v) Where a range of wages is paid by the employer to individuals in 
an occupational classification or among individuals with similar 
experience and qualifications for the specific employment in question, a 
range is considered to meet the prevailing wage requirement so long as 
the bottom of the wage range is at least the prevailing wage rate.
    (vi) The employer shall enter the prevailing wage on the LCA in the 
form in which the employer will pay the wage (e.g., an annual salary or 
an hourly rate), except that in all cases the prevailing wage must be 
expressed as an hourly wage if the H-1B nonimmigrant will be employed 
part-time. Where an employer obtains a prevailing wage determination 
(from any of the sources identified in paragraphs (a)(2)(i) and (ii) of 
this section) that is expressed as an hourly rate, the employer may 
convert this determination to a yearly salary by multiplying the hourly 
rate by 2080. Conversely, where an employer obtains a prevailing wage 
(from any of these sources) that is expressed as a yearly salary, the 
employer may convert this determination to an hourly rate by dividing 
the salary by 2080.
    (vii) In computing the prevailing wage for a job opportunity in an 
occupational classification in an area of intended employment in the 
case of an employee of an institution of higher education or an 
affiliated or related nonprofit entity, a nonprofit research 
organization, or a Governmental research organization as these terms are 
defined in 20 CFR 656.40(e), the prevailing wage level shall only take 
into account employees at such institutions and organizations in the 
area of intended employment.
    (viii) An employer may file more than one LCA for the same 
occupational classification in the same area of employment and, in such 
circumstances, the employer could have

[[Page 589]]

H-1B employees in the same occupational classification in the same area 
of employment, brought into the U.S. (or accorded H-1B status) based on 
petitions approved pursuant to different LCAs (filed at different times) 
with different prevailing wage determinations. Employers are advised 
that the prevailing wage rate as to any particular H-1B nonimmigrant is 
prescribed by the LCA which supports that nonimmigrant's H-1B petition. 
The employer is required to obtain the prevailing wage at the time that 
the LCA is filed (see paragraph (a)(2) of this section). The LCA is 
valid for the period certified by ETA, and the employer must satisfy all 
the LCA's requirements (including the required wage which encompasses 
both prevailing and actual wage rates) for as long as any H-1B 
nonimmigrants are employed pursuant to that LCA (Sec. 655.750). Where 
new nonimmigrants are employed pursuant to a new LCA, that new LCA 
prescribes the employer's obligations as to those new nonimmigrants. The 
prevailing wage determination on the later/subsequent LCA does not 
``relate back'' to operate as an ``update'' of the prevailing wage for 
the previously-filed LCA for the same occupational classification in the 
same area of employment. However, employers are cautioned that the 
actual wage component to the required wage may, as a practical matter, 
eliminate any wage-payment differentiation among H-1B employees based on 
different prevailing wage rates stated in applicable LCAs. Every H-1B 
nonimmigrant is to be paid in accordance with the employer's actual wage 
system, and thus is to receive any pay increases which that system 
provides.
    (3) Once the prevailing wage rate is established, the H-1B employer 
then shall compare this wage with the actual wage rate for the specific 
employment in question at the place of employment and must pay the H-1B 
nonimmigrant at least the higher of the two wages.
    (b) Documentation of the wage statement. (1) The employer shall 
develop and maintain documentation sufficient to meet its burden of 
proving the validity of the wage statement required in paragraph (a) of 
this section and attested to on Form ETA 9035 or 9035E. The 
documentation shall be made available to DOL upon request. Documentation 
shall also be made available for public examination to the extent 
required by Sec. 655.760. The employer shall also document that the 
wage rate(s) paid to H-1B nonimmigrant(s) is(are) no less than the 
required wage rate(s). The documentation shall include information about 
the employer's wage rate(s) for all other employees for the specific 
employment in question at the place of employment, beginning with the 
date the labor condition application was submitted and continuing 
throughout the period of employment. The records shall be retained for 
the period of time specified in Sec. 655.760. The payroll records for 
each such employee shall include:
    (i) Employee's full name;
    (ii) Employee's home address;
    (iii) Employee's occupation;
    (iv) Employee's rate of pay;
    (v) Hours worked each day and each week by the employee if:
    (A) The employee is paid on other than a salary basis (e.g., hourly, 
piece-rate; commission); or
    (B) With respect only to H-1B nonimmigrants, the worker is a part-
time employee (whether paid a salary or an hourly rate).
    (vi) Total additions to or deductions from pay each pay period, by 
employee; and
    (vii) Total wages paid each pay period, date of pay and pay period 
covered by the payment, by employee.
    (viii) Documentation of offer of benefits and eligibility for 
benefits provided as compensation for services on the same basis, and in 
accordance with the same criteria, as the employer offers to U.S. 
workers (see paragraph (c)(3) of this section):
    (A) A copy of any document(s) provided to employees describing the 
benefits that are offered to employees, the eligibility and 
participation rules, how costs are shared, etc. (e.g., summary plan 
descriptions, employee handbooks, any special or employee-specific 
notices that might be sent);
    (B) A copy of all benefit plans or other documentation describing 
benefit plans and any rules the employer may

[[Page 590]]

have for differentiating benefits among groups of workers;
    (C) Evidence as to what benefits are actually provided to U.S. 
workers and H-1B nonimmigrants, including evidence of the benefits 
selected or declined by employees where employees are given a choice of 
benefits;
    (D) For multinational employers who choose to provide H-1B 
nonimmigrants with ``home country'' benefits, evidence of the benefits 
provided to the nonimmigrant before and after he/she went to the United 
States. See paragraph (c)(3)(iii)(C) of this section.
    (2) Actual wage. In addition to payroll data required by paragraph 
(b)(1) of this section (and also by the Fair Labor Standards Act), the 
employer shall retain documentation specifying the basis it used to 
establish the actual wage. The employer shall show how the wage set for 
the H-1B nonimmigrant relates to the wages paid by the employer to all 
other individuals with similar experience and qualifications for the 
specific employment in question at the place of employment. Where 
adjustments are made in the employer's pay system or scale during the 
validity period of the LCA, the employer shall retain documentation 
explaining the change and clearly showing that, after such adjustments, 
the wages paid to the H-1B nonimmigrant are at least the greater of the 
adjusted actual wage or the prevailing wage for the occupation and area 
of intended employment.
    (3) Prevailing wage. The employer also shall retain documentation 
regarding its determination of the prevailing wage. This source 
documentation shall not be submitted to ETA with the labor condition 
application, but shall be retained at the employer's place of business 
for the length of time required in Sec. 655.760(c). Such documentation 
shall consist of the documentation described in paragraph (b)(3)(i), 
(ii), or (iii) of this section and the documentation described in 
paragraph (b)(1) of this section.
    (i) If the employer used a wage determination issued pursuant to the 
provisions of the Davis-Bacon Act, 40 U.S.C. 276a et seq. (see 29 CFR 
part 1), or the McNamara-O'Hara Service Contract Act, 41 U.S.C. 351 et 
seq. (see 29 CFR part 4), the documentation shall include a copy of the 
determination showing the wage rate for the occupation in the area of 
intended employment.
    (ii) If the employer used an applicable wage rate from a union 
contract which was negotiated at arms-length between a union and the 
employer, the documentation shall include an excerpt from the union 
contract showing the wage rate(s) for the occupation.
    (iii) If the employer did not use a wage covered by the provisions 
of paragraph (b)(3)(i) or (b)(3)(ii) of this section, the employer's 
documentation shall consist of:
    (A) A copy of the prevailing wage finding from the SESA for the 
occupation within the area of intended employment; or
    (B) A copy of the prevailing wage survey for the occupation within 
the area of intended employment published by an independent 
authoritative source. For purposes of this paragraph (b)(3)(iii)(B), a 
prevailing wage survey for the occupation in the area of intended 
employment published by an independent authoritative source shall mean a 
survey of wages published in a book, newspaper, periodical, loose-leaf 
service, newsletter, or other similar medium, within the 24-month period 
immediately preceding the filing of the employer's application. Such 
survey shall:
    (1) Reflect the weighted average wage paid to workers similarly 
employed in the area of intended employment;
    (2) Reflect the median wage of workers similarly employed in the 
area of intended employment if the survey provides such a median and 
does not provide a weighted average wage of workers similarly employed 
in the area of intended employment;
    (3) Be based upon recently collected data--e.g., within the 24-month 
period immediately preceding the date of publication of the survey; and
    (4) Represent the latest published prevailing wage finding by the 
independent authoritative source for the occupation in the area of 
intended employment; or
    (C) A copy of the prevailing wage survey or other source data 
acquired from

[[Page 591]]

another legitimate source of wage information that was used to make the 
prevailing wage determination. For purposes of this paragraph 
(b)(3)(iii)(C), a prevailing wage provided by another legitimate source 
of such wage information shall be one which:
    (1) Reflects the weighted average wage paid to workers similarly 
employed in the area of intended employment;
    (2) Reflect the median wage of workers similarly employed in the 
area of intended employment if the survey provides such a median and 
does not provide a weighted average wage of workers similarly employed 
in the area of intended employment;
    (3) Is based on the most recent and accurate information available; 
and
    (4) Is reasonable and consistent with recognized standards and 
principles in producing a prevailing wage.
    (c) Satisfaction of required wage obligation. (1) The required wage 
must be paid to the employee, cash in hand, free and clear, when due, 
except that deductions made in accordance with paragraph (c)(9) of this 
section may reduce the cash wage below the level of the required wage. 
Benefits and eligibility for benefits provided as compensation for 
services must be offered in accordance with paragraph (c)(3) of this 
section.
    (2) ``Cash wages paid,'' for purposes of satisfying the H-1B 
required wage, shall consist only of those payments that meet all the 
following criteria:
    (i) Payments shown in the employer's payroll records as earnings for 
the employee, and disbursed to the employee, cash in hand, free and 
clear, when due, except for deductions authorized by paragraph (c)(9) of 
this section;
    (ii) Payments reported to the Internal Revenue Service (IRS) as the 
employee's earnings, with appropriate withholding for the employee's tax 
paid to the IRS (in accordance with the Internal Revenue Code of 1986, 
26 U.S.C. 1, et seq.);
    (iii) Payments of the tax reported and paid to the IRS as required 
by the Federal Insurance Contributions Act, 26 U.S.C. 3101, et seq. 
(FICA). The employer must be able to document that the payments have 
been so reported to the IRS and that both the employer's and employee's 
taxes have been paid except that when the H-1B nonimmigrant is a citizen 
of a foreign country with which the President of the United States has 
entered into an agreement as authorized by section 233 of the Social 
Security Act, 42 U.S.C. 433 (i.e., an agreement establishing a 
totalization arrangement between the social security system of the 
United States and that of the foreign country), the employer's 
documentation shall show that all appropriate reports have been filed 
and taxes have been paid in the employee's home country.
    (iv) Payments reported, and so documented by the employer, as the 
employee's earnings, with appropriate employer and employee taxes paid 
to all other appropriate Federal, State, and local governments in 
accordance with any other applicable law.
    (v) Future bonuses and similar compensation (i.e., unpaid but to-be-
paid) may be credited toward satisfaction of the required wage 
obligation if their payment is assured (i.e., they are not conditional 
or contingent on some event such as the employer's annual profits). Once 
the bonuses or similar compensation are paid to the employee, they must 
meet the requirements of paragraphs (c)(2)(i) through (iv) of this 
section (i.e., recorded and reported as ``earnings'' with appropriate 
taxes and FICA contributions withheld and paid).
    (3) Benefits and eligibility for benefits provided as compensation 
for services (e.g., cash bonuses; stock options; paid vacations and 
holidays; health, life, disability and other insurance plans; retirement 
and savings plans) shall be offered to the H-1B nonimmigrant(s) on the 
same basis, and in accordance with the same criteria, as the employer 
offers to U.S. workers.
    (i) For purposes of this section, the offer of benefits ``on the 
same basis, and in accordance with the same criteria'' means that the 
employer shall offer H-1B nonimmigrants the same benefit package as it 
offers to U.S. workers, and may not provide more strict eligibility or 
participation requirements for the H-1B nonimmigrant(s) than for 
similarly employed U.S. workers(s) (e.g., full-time

[[Page 592]]

workers compared to full-time workers; professional staff compared to 
professional staff). H-1B nonimmigrants are not to be denied benefits on 
the basis that they are ``temporary employees'' by virtue of their 
nonimmigrant status. An employer may offer greater or additional 
benefits to the H-1B nonimmigrant(s) than are offered to similarly 
employed U.S. worker(s), provided that such differing treatment is 
consistent with the requirements of all applicable nondiscrimination 
laws (e.g., Title VII of the 1964 Civil Rights Act, 42 U.S.C. 2000e-
2000e17). Offers of benefits by employers shall be made in good faith 
and shall result in the H-1B nonimmigrant(s)'s actual receipt of the 
benefits that are offered by the employer and elected by the H-1B 
nonimmigrant(s).
    (ii) The benefits received by the H-1B nonimmigrant(s) need not be 
identical to the benefits received by similarly employed U.S. 
workers(s), provided that the H-1B nonimmigrant is offered the same 
benefits package as those workers but voluntarily chooses to receive 
different benefits (e.g., elects to receive cash payment rather than 
stock option, elects not to receive health insurance because of required 
employee contributions, or elects to receive different benefits among an 
array of benefits) or, in those instances where the employer is part of 
a multinational corporate operation, the benefits received by the H-1B 
nonimmigrant are provided in accordance with an employer's practice that 
satisfies the requirements of paragraph (c)(3)(iii)(B) or (C) of this 
section. In all cases, however, an employer's practice must comply with 
the requirements of any applicable nondiscrimination laws (e.g., Title 
VII of the 1964 Civil Rights Act, 42 U.S.C. 2000e-2000e17).
    (iii) If the employer is part of a multinational corporate operation 
(i.e., operates in affiliation with business entities in other 
countries, whether as subsidiaries or in some other arrangement), the 
following three options (i.e., (A), (B) or (C)) are available to the 
employer with respect to H-1B nonimmigrants who remain on the ``home 
country'' payroll.
    (A) The employer may offer the H-1B nonimmigrant(s) benefits in 
accordance with paragraphs (c)(3)(i) and (ii) of this section.
    (B) Where an H-1B nonimmigrant is in the U.S. for no more than 90 
consecutive calendar days, the employer during that period may maintain 
the H-1B nonimmigrant on the benefits provided to the nonimmigrant in 
his/her permanent work station (ordinarily the home country), and not 
offer the nonimmigrant the benefits that are offered to similarly 
employed U.S. workers, provided that the employer affords reciprocal 
benefits treatment for any U.S. workers (i.e., allows its U.S. 
employees, while working out of the country on a temporary basis away 
from their permanent work stations in the United States, or while 
working in the United States on a temporary basis away from their 
permanent work stations in another country, to continue to receive the 
benefits provided them at their permanent work stations). Employers are 
cautioned that this provision is available only if the employer's 
practices do not constitute an evasion of the benefit requirements, such 
as where the H-1B nonimmigrant remains in the United States for most of 
the year, but briefly returns to the ``home country'' before any 90-day 
period would expire.
    (C) Where an H-1B nonimmigrant is in the U.S. for more than 90 
consecutive calendar days (or from the point where the worker is 
transferred to the U.S. or it is anticipated that the worker will likely 
remain in the U.S. more than 90 consecutive days), the employer may 
maintain the H-1B nonimmigrant on the benefits provided in his/her home 
country (i.e., ``home country benefits'') (and not offer the 
nonimmigrant the benefits that are offered to similarly employed U.S. 
workers) provided that all of the following criteria are satisfied:
    (1) The H-1B nonimmigrant continues to be employed in his/her home 
country (either with the H-1B employer or with a corporate affiliate of 
the employer);
    (2) The H-1B nonimmigrant is enrolled in benefits in his/her home 
country (in accordance with any applicable eligibility standards for 
such benefits);

[[Page 593]]

    (3) The benefits provided in his/her home country are equivalent to, 
or equitably comparable to, the benefits offered to similarly employed 
U.S. workers (i.e., are no less advantageous to the nonimmigrant);
    (4) The employer affords reciprocal benefits treatment for any U.S. 
workers while they are working out of the country, away from their 
permanent work stations (whether in the United States or abroad), on a 
temporary basis (i.e., maintains such U.S. workers on the benefits they 
received at their permanent work stations);
    (5) If the employer offers health benefits to its U.S. workers, the 
employer offers the same plan on the same basis to its H-1B 
nonimmigrants in the United States where the employer does not provide 
the H-1B nonimmigrant with health benefits in the home country, or the 
employer's home-country health plan does not provide full coverage 
(i.e., coverage comparable to what he/she would receive at the home work 
station) for medical treatment in the United States; and
    (6) the employer offers H-1B nonimmigrants who are in the United 
States more than 90 continuous days those U.S. benefits which are paid 
directly to the worker (e.g., paid vacation, paid holidays, and 
bonuses).
    (iv) Benefits provided as compensation for services may be credited 
toward the satisfaction of the employer's required wage obligation only 
if the requirements of paragraph (c)(2) of this section are met (e.g., 
recorded and reported as ``earnings'' with appropriate taxes and FICA 
contributions withheld and paid).
    (4) For salaried employees, wages will be due in prorated 
installments (e.g., annual salary divided into 26 bi-weekly pay periods, 
where employer pays bi-weekly) paid no less often than monthly except 
that, in the event that the employer intends to use some other form of 
nondiscretionary payment to supplement the employee's regular/pro-rata 
pay in order to meet the required wage obligation (e.g., a quarterly 
production bonus), the employer's documentation of wage payments 
(including such supplemental payments) must show the employer's 
commitment to make such payment and the method of determining the amount 
thereof, and must show unequivocally that the required wage obligation 
was met for prior pay periods and, upon payment and distribution of such 
other payments that are pending, will be met for each current or future 
pay period. An employer that is a school or other educational 
institution may apply an established salary practice under which the 
employer pays to H-1B nonimmigrants and U.S. workers in the same 
occupational classification an annual salary in disbursements over fewer 
than 12 months, provided that the nonimmigrant agrees to the compressed 
annual salary payments prior to the commencement of the employment and 
the application of the salary practice to the nonimmigrant does not 
otherwise cause him/her to violate any condition of his/her 
authorization under the INA to remain in the U.S.
    (5) For hourly-wage employees, the required wages will be due for 
all hours worked and/or for any nonproductive time (as specified in 
paragraph (c)(7) of this section) at the end of the employee's ordinary 
pay period (e.g., weekly) but in no event less frequently than monthly.
    (6) Subject to the standards specified in paragraph (c)(7) of this 
section (regarding nonproductive status), an H-1B nonimmigrant shall 
receive the required pay beginning on the date when the nonimmigrant 
``enters into employment'' with the employer.
    (i) For purposes of this paragraph (c)(6), the H-1B nonimmigrant is 
considered to ``enter into employment'' when he/she first makes him/
herself available for work or otherwise comes under the control of the 
employer, such as by waiting for an assignment, reporting for 
orientation or training, going to an interview or meeting with a 
customer, or studying for a licensing examination, and includes all 
activities thereafter.
    (ii) Even if the H-1B nonimmigrant has not yet ``entered into 
employment'' with the employer (as described in paragraph (c)(6)(i) of 
this section), the employer that has had an LCA certified and an H-1B 
petition approved for the H-1B nonimmigrant shall pay the nonimmigrant 
the required wage beginning 30 days after the date the

[[Page 594]]

nonimmigrant first is admitted into the U.S. pursuant to the petition, 
or, if the nonimmigrant is present in the United States on the date of 
the approval of the petition, beginning 60 days after the date the 
nonimmigrant becomes eligible to work for the employer. For purposes of 
this latter requirement, the H-1B nonimmigrant is considered to be 
eligible to work for the employer upon the date of need set forth on the 
approved H-1B petition filed by the employer, or the date of adjustment 
of the nonimmigrant's status by INS, whichever is later. Matters such as 
the worker's obtaining a State license would not be relevant to this 
determination.
    (7) Wage obligation(s) for H-1B nonimmigrant in nonproductive 
status--(i) Circumstances where wages must be paid. If the H-1B 
nonimmigrant is not performing work and is in a nonproductive status due 
to a decision by the employer (e.g., because of lack of assigned work), 
lack of a permit or license, or any other reason except as specified in 
paragraph (c)(7)(ii) of this section, the employer is required to pay 
the salaried employee the full pro-rata amount due, or to pay the 
hourly-wage employee for a full-time week (40 hours or such other number 
of hours as the employer can demonstrate to be full-time employment for 
hourly employees, or the full amount of the weekly salary for salaried 
employees) at the required wage for the occupation listed on the LCA. If 
the employer's LCA carries a designation of ``part-time employment,'' 
the employer is required to pay the nonproductive employee for at least 
the number of hours indicated on the I-129 petition filed by the 
employer with the INS and incorporated by reference on the LCA. If the 
I-129 indicates a range of hours for part-time employment, the employer 
is required to pay the nonproductive employee for at least the average 
number of hours normally worked by the H-1B nonimmigrant, provided that 
such average is within the range indicated; in no event shall the 
employee be paid for fewer than the minimum number of hours indicated 
for the range of part-time employment. In all cases the H-1B 
nonimmigrant must be paid the required wage for all hours performing 
work within the meaning of the Fair Labor Standards Act, 29 U.S.C. 201 
et seq.
    (ii) Circumstances where wages need not be paid. If an H-1B 
nonimmigrant experiences a period of nonproductive status due to 
conditions unrelated to employment which take the nonimmigrant away from 
his/her duties at his/her voluntary request and convenience (e.g., 
touring the U.S., caring for ill relative) or render the nonimmigrant 
unable to work (e.g., maternity leave, automobile accident which 
temporarily incapacitates the nonimmigrant), then the employer shall not 
be obligated to pay the required wage rate during that period, provided 
that such period is not subject to payment under the employer's benefit 
plan or other statutes such as the Family and Medical Leave Act (29 
U.S.C. 2601 et seq.) or the Americans with Disabilities Act (42 U.S.C. 
12101 et seq.). Payment need not be made if there has been a bona fide 
termination of the employment relationship. INS regulations require the 
employer to notify the INS that the employment relationship has been 
terminated so that the petition is canceled (8 CFR 214.2(h)(11)), and 
require the employer to provide the employee with payment for 
transportation home under certain circumstances (8 CFR 
214.2(h)(4)(iii)(E)).
    (8) If the employee works in an occupation other than that 
identified on the employer's LCA, the employer's required wage 
obligation is based on the occupation identified on the LCA, and not on 
whatever wage standards may be applicable in the occupation in which the 
employee may be working.
    (9) ``Authorized deductions,'' for purposes of the employer's 
satisfaction of the H-1B required wage obligation, means a deduction 
from wages in complete compliance with one of the following three sets 
of criteria (i.e., paragraph (c)(9)(i), (ii), or (iii))--
    (i) Deduction which is required by law (e.g., income tax; FICA); or
    (ii) Deduction which is authorized by a collective bargaining 
agreement, or is reasonable and customary in the occupation and/or area 
of employment

[[Page 595]]

(e.g., union dues; contribution to premium for health insurance policy 
covering all employees; savings or retirement fund contribution for 
plan(s) in compliance with the Employee Retirement Income Security Act, 
29 U.S.C. 1001, et seq.), except that the deduction may not recoup a 
business expense(s) of the employer (including attorney fees and other 
costs connected to the performance of H-1B program functions which are 
required to be performed by the employer, e.g., preparation and filing 
of LCA and H-1B petition); the deduction must have been revealed to the 
worker prior to the commencement of employment and, if the deduction was 
a condition of employment, had been clearly identified as such; and the 
deduction must be made against wages of U.S. workers as well as H-1B 
nonimmigrants (where there are U.S. workers); or
    (iii) Deduction which meets the following requirements:
    (A) Is made in accordance with a voluntary, written authorization by 
the employee (Note to paragraph (c)(9)(iii)(A): an employee's mere 
acceptance of a job which carries a deduction as a condition of 
employment does not constitute voluntary authorization, even if such 
condition were stated in writing);
    (B) Is for a matter principally for the benefit of the employee 
(Note to paragraph (c)(9)(iii)(B): housing and food allowances would be 
considered to meet this ``benefit of employee'' standard, unless the 
employee is in travel status, or unless the circumstances indicate that 
the arrangements for the employee's housing or food are principally for 
the convenience or benefit of the employer (e.g., employee living at 
worksite in ``on call'' status));
    (C) Is not a recoupment of the employer's business expense (e.g., 
tools and equipment; transportation costs where such transportation is 
an incident of, and necessary to, the employment; living expenses when 
the employee is traveling on the employer's business; attorney fees and 
other costs connected to the performance of H-1B program functions which 
are required to be performed by the employer (e.g., preparation and 
filing of LCA and H-1B petition)). (For purposes of this section, 
initial transportation from, and end-of-employment travel, to the 
worker's home country shall not be considered a business expense.);
    (D) Is an amount that does not exceed the fair market value or the 
actual cost (whichever is lower) of the matter covered (Note to 
paragraph (c)(9)(iii)(D): The employer must document the cost and 
value); and
    (E) Is an amount that does not exceed the limits set for garnishment 
of wages in the Consumer Credit Protection Act, 15 U.S.C. 1673, and the 
regulations of the Secretary pursuant to that Act, 29 CFR part 870, 
under which garnishment(s) may not exceed 25 percent of an employee's 
disposable earnings for a workweek.
    (10) A deduction from or reduction in the payment of the required 
wage is not authorized (and is therefore prohibited) for the following 
purposes (i.e., paragraphs (c)(10) (i) and (ii)):
    (i) A penalty paid by the H-1B nonimmigrant for ceasing employment 
with the employer prior to a date agreed to by the nonimmigrant and the 
employer.
    (A) The employer is not permitted to require (directly or 
indirectly) that the nonimmigrant pay a penalty for ceasing employment 
with the employer prior to an agreed date. Therefore, the employer shall 
not make any deduction from or reduction in the payment of the required 
wage to collect such a penalty.
    (B) The employer is permitted to receive bona fide liquidated 
damages from the H-1B nonimmigrant who ceases employment with the 
employer prior to an agreed date. However, the requirements of paragraph 
(c)(9)(iii) of this section must be fully satisfied, if such damages are 
to be received by the employer via deduction from or reduction in the 
payment of the required wage.
    (C) The distinction between liquidated damages (which are 
permissible) and a penalty (which is prohibited) is to be made on the 
basis of the applicable State law. In general, the laws of the various 
States recognize that liquidated damages are amounts which are fixed or 
stipulated by the

[[Page 596]]

parties at the inception of the contract, and which are reasonable 
approximations or estimates of the anticipated or actual damage caused 
to one party by the other party's breach of the contract. On the other 
hand, the laws of the various States, in general, consider that 
penalties are amounts which (although fixed or stipulated in the 
contract by the parties) are not reasonable approximations or estimates 
of such damage. The laws of the various States, in general, require that 
the relation or circumstances of the parties, and the purpose(s) of the 
agreement, are to be taken into account, so that, for example, an 
agreement to a payment would be considered to be a prohibited penalty 
where it is the result of fraud or where it cloaks oppression. 
Furthermore, as a general matter, the sum stipulated must take into 
account whether the contract breach is total or partial (i.e., the 
percentage of the employment contract completed). (See, e.g., Vanderbilt 
University v. DiNardo, 174 F.3d 751 (6th Cir. 1999) (applying Tennessee 
law); Overholt Crop Insurance Service Co. v. Travis, 941 F.2d 1361 (8th 
Cir. 1991) (applying Minnesota and South Dakota law); BDO Seidman v. 
Hirshberg, 712 N.E.2d 1220 (N.Y. 1999); Guiliano v. Cleo, Inc., 995 
S.W.2d 88 (Tenn. 1999); Wojtowicz v. Greeley Anesthesia Services, P.C., 
961 P.2d 520 (Colo.Ct.App. 1998); see generally, Restatement (Second) 
Contracts Sec. 356 (comment b); 22 Am.Jur.2d Damages Sec. Sec. 683, 
686, 690, 693, 703). In an enforcement proceeding under subpart I of 
this part, the Administrator shall determine, applying relevant State 
law (including consideration where appropriate to actions by the 
employer, if any, contributing to the early cessation, such as the 
employer's constructive discharge of the nonimmigrant or non-compliance 
with its obligations under the INA and its regulations) whether the 
payment in question constitutes liquidated damages or a penalty. (Note 
to paragraph (c)(10)(i)(C): The $500/$1,000 filing fee, if any, under 
section 214(c) of the INA can never be included in any liquidated 
damages received by the employer. See paragraph (c)(10)(ii), which 
follows.)
    (ii) A rebate of the $500/$1,000 filing fee paid by the employer, if 
any, under section 214(c) of the INA. The employer may not receive, and 
the H-1B nonimmigrant may not pay, any part of the $500 additional 
filing fee (for a petition filed prior to December 18, 2000) or $1,000 
additional filing fee (for a petition filed on or subsequent to December 
18, 2000), whether directly or indirectly, voluntarily or involuntarily. 
Thus, no deduction from or reduction in wages for purposes of a rebate 
of any part of this fee is permitted. Further, if liquidated damages are 
received by the employer from the H-1B nonimmigrant upon the 
nonimmigrant's ceasing employment with the employer prior to a date 
agreed to by the nonimmigrant and the employer, such liquidated damages 
shall not include any part of the $500/$1,000 filing fee (see paragraph 
(c)(10)(i) of this section). If the filing fee is paid by a third party 
and the H-1B nonimmigrant reimburses all or part of the fee to such 
third party, the employer shall be considered to be in violation of this 
prohibition since the employer would in such circumstances have been 
spared the expense of the fee which the H-1B nonimmigrant paid.
    (11) Any unauthorized deduction taken from wages is considered by 
the Department to be non-payment of that amount of wages, and in the 
event of an investigation, will result in back wage assessment (plus 
civil money penalties and/or disqualification from H-1B and other 
immigration programs, if willful).
    (12) Where the employer depresses the employee's wages below the 
required wage by imposing on the employee any of the employer's business 
expenses(s), the Department will consider the amount to be an 
unauthorized deduction from wages even if the matter is not shown in the 
employer's payroll records as a deduction.
    (13) Where the employer makes deduction(s) for repayment of loan(s) 
or wage advance(s) made to the employee, the Department, in the event of 
an investigation, will require the employer to establish the legitimacy 
and purpose(s) of the loan(s) or wage advance(s), with reference to the 
standards set out in paragraph (c)(9)(iii) of this section.

[[Page 597]]

    (d) Enforcement actions. (1) In the event that a complaint is filed 
pursuant to subpart I of this part, alleging a failure to meet the 
``prevailing wage'' condition or a material misrepresentation by the 
employer regarding the payment of the required wage, or pursuant to such 
other basis for investigation as the Administrator may find, the 
Administrator shall determine whether the employer has the documentation 
required in paragraph (b)(3)of this section, and whether the 
documentation supports the employer's wage attestation. Where the 
documentation is either nonexistent or is insufficient to determine the 
prevailing wage (e.g., does not meet the criteria specified in this 
section, in which case the Administrator may find a violation of 
paragraph (b)(1), (2), or (3), of this section); or where, based on 
significant evidence regarding wages paid for the occupation in the area 
of intended employment, the Administrator has reason to believe that the 
prevailing wage finding obtained from an independent authoritative 
source or another legitimate source varies substantially from the wage 
prevailing for the occupation in the area of intended employment; or 
where the employer has been unable to demonstrate that the prevailing 
wage determined by another legitimate source is in accordance with the 
regulatory criteria, the Administrator may contact ETA, which shall 
provide the Administrator with a prevailing wage determination, which 
the Administrator shall use as the basis for determining violations and 
for computing back wages, if such wages are found to be owed. The 30-day 
investigatory period shall be suspended while ETA makes the prevailing 
wage determination and, in the event that the employer timely challenges 
the determination (see Sec. 655.731(d)(2)), shall be suspended until 
the challenge process is completed and the Administrator's investigation 
can be resumed.
    (2) In the event the Administrator obtains a prevailing wage from 
ETA pursuant to paragraph (d)(1) of this section, and the employer 
desires review, including judicial review, the employer shall challenge 
the ETA prevailing wage only by filing a request for review under Sec. 
656.41 of this chapter within 30 days of the employer's receipt of the 
prevailing wage determination from the Administrator. If the request is 
timely filed, the decision of ETA is suspended until the CO issues a 
determination on the employer's appeal. If the employer desires review, 
including judicial review, of the decision of the CO, the employer shall 
make a request for review of the determination by the Board of Alien 
Labor Certification Appeals (BALCA) under Sec. 656.41(e) of this 
chapter within 30 days of the receipt of the decision of the CO. If a 
request for review is timely filed with the BALCA, the determination by 
the CO is suspended until the BALCA issues a determination on the 
employer's appeal. In any challenge to the wage determination, neither 
ETA nor the SESA shall divulge any employer wage data which was 
collected under the promise of confidentiality.
    (i) Where an employer timely challenge an ETA prevailing wage 
determination obtained by the Administrator, the 30-day investigative 
period shall be suspended until the employer obtains a final ruling. 
Upon such a final ruling, the investigation and any subsequent 
enforcement proceeding shall continue, with ETA's prevailing wage 
determination serving as the conclusive determination for all purposes.
    (ii) Where the employer does not challenge ETA's prevailing wage 
determination obtained by the Administrator, such determination shall be 
deemed to have been accepted by the employer as accurate and appropriate 
(as to the amount of the wage) and thereafter shall not be subject to 
challenge in a hearing pursuant to Sec. 655.835.
    (3) For purposes of this paragraph (d), ETA may consult with the 
appropriate SESA to ascertain the prevailing wage applicable under the 
circumstances of the particular complaint.

[65 FR 80214, Dec. 20, 2000, as amended at 66 FR 63302, Dec. 5, 2001; 69 
FR 68228, Nov. 23, 2004; 69 FR 77384, Dec. 27, 2004]



Sec. 655.732  What is the second LCA requirement, regarding working 
conditions?

    An employer seeking to employ H-1B nonimmigrants in specialty 
occupations or as fashion models of distinguished merit and ability 
shall state on

[[Page 598]]

Form ETA 9035 or 9035E that the employment of H-1B nonimmigrants will 
not adversely affect the working conditions of workers similarly 
employed in the area of intended employment.
    (a) Establishing the working conditions requirement. The second LCA 
requirement shall be satisfied when the employer affords working 
conditions to its H-1B nonimmigrant employees on the same basis and in 
accordance with the same criteria as it affords to its U.S. worker 
employees who are similarly employed, and without adverse effect upon 
the working conditions of such U.S. worker employees. Working conditions 
include matters such as hours, shifts, vacation periods, and benefits 
such as seniority-based preferences for training programs and work 
schedules. The employer's obligation regarding working conditions shall 
extend for the longer of two periods: the validity period of the 
certified LCA, or the period during which the H-1B nonimmigrant(s) 
is(are) employed by the employer.
    (b) Documentation of the working condition statement. In the event 
of an enforcement action pursuant to subpart I of this part, the 
employer shall produce documentation to show that it has afforded its H-
1B nonimmigrant employees working conditions on the same basis and in 
accordance with the same criteria as it affords its U.S. worker 
employees who are similarly employed.

[65 FR 80221, Dec. 20, 2000, as amended at 66 FR 63302, Dec. 5, 2001]



Sec. 655.733  What is the third LCA requirement, regarding strikes and 
lockouts?

    An employer seeking to employ H-1B nonimmigrants shall state on Form 
ETA 9035 or 9035E that there is not at that time a strike or lockout in 
the course of a labor dispute in the occupational classification at the 
place of employment. A strike or lockout which occurs after the labor 
condition application is filed by the employer with DOL is covered by 
INS regulations at 8 CFR 214.2(h)(17).
    (a) Establishing the no strike or lockout requirement. The third 
labor condition application requirement shall be satisfied when the 
employer signs the labor condition application attesting that, as of the 
date the application is filed, the employer is not involved in a strike, 
lockout, or work stoppage in the course of a labor dispute in the 
occupational classification in the area of intended employment. Labor 
disputes for the purpose of this section relate only to those disputes 
involving employees of the employer working at the place of employment 
in the occupational classification named in the labor condition 
application. See also INS regulations at 8 CFR 214.2(h)(17) for effects 
of strikes or lockouts in general on the H-1B nonimmigrant's employment.
    (1) Strike or lockout subsequent to certification of labor condition 
application. In order to remain in compliance with the no strike or 
lockout labor condition statement, if a strike or lockout of workers in 
the same occupational classification as the H-1B nonimmigrant occurs at 
the place of employment during the validity of the labor condition 
application, the employer, within three days of the occurrence of the 
strike or lockout, shall submit to ETA, by U.S. mail, facsimile (FAX), 
or private carrier, written notice of the strike or lockout. Further, 
the employer shall not place, assign, lease, or otherwise contract out 
an H-1B nonimmigrant, during the entire period of the labor condition 
application's validity, to any place of employment where there is a 
strike or lockout in the course of a labor dispute in the same 
occupational classification as the H-1B nonimmigrant. Finally, the 
employer shall not use the labor condition application in support of any 
petition filings for H-1B nonimmigrants to work in such occupational 
classification at such place of employment until ETA determines that the 
strike or lockout has ended.
    (2) ETA notice to INS. Upon receiving from an employer a notice 
described in paragraph (a)(1) of this section, ETA shall examine the 
documentation, and may consult with the union at the employer's place of 
business or other appropriate entities. If ETA determines that the 
strike or lockout is covered under INS's ``Effect of strike'' regulation 
for ``H'' visa holders, ETA shall certify to INS, in the manner set 
forth in that regulation, that a strike or other labor dispute involving 
a work stoppage of

[[Page 599]]

workers in the same occupational classification as the H-1B nonimmigrant 
is in progress at the place of employment. See 8 CFR 214.2(h)(17).
    (b) Documentation of the third labor condition statement. The 
employer need not develop nor maintain documentation to substantiate the 
statement referenced in paragraph (a) of this section. In the case of an 
investigation, however, the employer has the burden of proof to show 
that there was no strike or lockout in the course of a labor dispute for 
the occupational classification in which an H-1B nonimmigrant is 
employed, either at the time the application was filed or during the 
validity period of the LCA.

[59 FR 65659, 65676, Dec. 20, 1994 as amended at 66 FR 63302, Dec. 5, 
2001]



Sec. 655.734  What is the fourth LCA requirement, regarding notice?

    An employer seeking to employ H-1B nonimmigrants shall state on Form 
ETA 9035 or 9035E that the employer has provided notice of the filing of 
the labor condition application to the bargaining representative of the 
employer's employees in the occupational classification in which the H-
1B nonimmigrants will be employed or are intended to be employed in the 
area of intended employment, or, if there is no such bargaining 
representative, has posted notice of filing in conspicuous locations in 
the employer's establishment(s) in the area of intended employment, in 
the manner described in this section.
    (a) Establishing the notice requirement. The fourth labor condition 
application requirement shall be established when the conditions of 
paragraphs (a)(1) and (a)(2) of this section are met.
    (1)(i) Where there is a collective bargaining representative for the 
occupational classification in which the H-1B nonimmigrants will be 
employed, on or within 30 days before the date the labor condition 
application is filed with ETA, the employer shall provide notice to the 
bargaining representative that a labor condition application is being, 
or will be, filed with ETA. The notice shall identify the number of H-1B 
nonimmigrants the employer is seeking to employ; the occupational 
classification in which the H-1B nonimmigrants will be employed; the 
wages offered; the period of employment; and the location(s) at which 
the H-1B nonimmigrants will be employed. Notice under this paragraph 
(a)(1)(i) shall include the following statement: ``Complaints alleging 
misrepresentation of material facts in the labor condition application 
and/or failure to comply with the terms of the labor condition 
application may be filed with any office of the Wage and Hour Division 
of the United States Department of Labor.''
    (ii) Where there is no collective bargaining representative, the 
employer shall, on or within 30 days before the date the LCA is filed 
with ETA, provide a notice of the filing of the LCA. The notice shall 
indicate that H-1B nonimmigrants are sought; the number of such 
nonimmigrants the employer is seeking; the occupational classification; 
the wages offered; the period of employment; the location(s) at which 
the H-1B nonimmigrants will be employed; and that the LCA is available 
for public inspection at the H-1B employer's principal place of business 
in the U.S. or at the worksite. The notice shall also include the 
statement: ``Complaints alleging misrepresentation of material facts in 
the labor condition application and/or failure to comply with the terms 
of the labor condition application may be filed with any office of the 
Wage and Hour Division of the United States Department of Labor.'' If 
the employer is an H-1B-dependent employer or a willful violator, and 
the LCA is not being used only for exempt H-1B nonimmigrants, the notice 
shall also set forth the nondisplacement and recruitment obligations to 
which the employer has attested, and shall include the following 
additional statement: ``Complaints alleging failure to offer employment 
to an equally or better qualified U.S. applicant or an employer's 
misrepresentation regarding such offers of employment may be filed with 
the Department of Justice, Civil Rights Division, Office of Special 
Counsel for Immigration-Related Unfair Employment Practices, 950 
Pennsylvania Avenue, NW., Washington, DC 20530, Telephone: 1 (800) 255-
8155 (employers), 1 (800) 255-7688 (employees); Web address: http://

[[Page 600]]

www.usdoj.gov/crt/osc.'' The notice shall be provided in one of the two 
following manners:
    (A) Hard copy notice, by posting a notice in at least two 
conspicuous locations at each place of employment where any H-1B 
nonimmigrant will be employed (whether such place of employment is owned 
or operated by the employer or by some other person or entity).
    (1) The notice shall be of sufficient size and visibility, and shall 
be posted in two or more conspicuous places so that workers in the 
occupational classification at the place(s) of employment can easily see 
and read the posted notice(s).
    (2) Appropriate locations for posting the notices include, but are 
not limited to, locations in the immediate proximity of wage and hour 
notices required by 29 CFR 516.4 or occupational safety and health 
notices required by 29 CFR 1903.2(a).
    (3) The notices shall be posted on or within 30 days before the date 
the labor condition application is filed and shall remain posted for a 
total of 10 days.
    (B) Electronic notice, by providing electronic notification to 
employees in the occupational classification (including both employees 
of the H-1B employer and employees of another person or entity which 
owns or operates the place of employment) for which H-1B nonimmigrants 
are sought, at each place of employment where any H-1B nonimmigrant will 
be employed. Such notification shall be given on or within 30 days 
before the date the labor condition application is filed, and shall be 
available to the affected employees for a total of 10 days, except that 
if employees are provided individual, direct notice (as by e-mail), 
notification only need be given once during the required time period. 
Notification shall be readily available to the affected employees. An 
employer may accomplish this by any means it ordinarily uses to 
communicate with its workers about job vacancies or promotion 
opportunities, including through its ``home page'' or ``electronic 
bulletin board'' to employees who have, as a practical matter, direct 
access to these resources; or through e-mail or an actively circulated 
electronic message such as the employer's newsletter. Where affected 
employees at the place of employment are not on the ``intranet'' which 
provides direct access to the home page or other electronic site but do 
have computer access readily available, the employer may provide notice 
to such workers by direct electronic communication such as e-mail (i.e., 
a single, personal e-mail message to each such employee) or by arranging 
to have the notice appear for 10 days on an intranet which includes the 
affected employees (e.g., contractor arranges to have notice on 
customer's intranet accessible to affected employees). Where employees 
lack practical computer access, a hard copy must be posted in accordance 
with paragraph (a)(1)(ii)(A) of this section, or the employer may 
provide employees individual copies of the notice.
    (2) Where the employer places any H-1B nonimmigrant(s) at one or 
more worksites not contemplated at the time of filing the application, 
but which are within the area of intended employment listed on the LCA, 
the employer is required to post electronic or hard-copy notice(s) at 
such worksite(s), in the manner described in paragraph (a)(1) of this 
section, on or before the date any H-1B nonimmigrant begins work.
    (3) The employer shall, no later than the date the H-1B nonimmigrant 
reports to work at the place of employment, provide the H-1B 
nonimmigrant with a copy of the LCA (Form ETA 9035, or Form ETA 9035E) 
certified by ETA and signed by the employer (or by the employer's 
authorized agent or representative). Upon request, the employer shall 
provide the H-1B nonimmigrant with a copy of the cover pages, Form ETA 
9035CP.
    (b) Documentation of the fourth labor condition statement. The 
employer shall develop and maintain documentation sufficient to meet its 
burden of proving the validity of the statement referenced in paragraph 
(a) of this section and attested to on Form ETA 9035 or 9035E. Such 
documentation shall include a copy of the dated notice and the name and 
address of the collective bargaining representative to whom the notice 
was provided. Where there is no collective bargaining representative,

[[Page 601]]

the employer shall note and retain the dates when, and locations where, 
the notice was posted and shall retain a copy of the posted notice.
    (c) Records retention; records availability. The employer's 
documentation shall not be submitted to ETA with the labor condition 
application, but shall be retained for the period of time specified in 
Sec. 655.760(c) of this part. The documentation shall be made available 
for public examination as required in Sec. 655.760(a) of this part, and 
shall be made available to DOL upon request.

[65 FR 65659, 65676, Dec. 20, 1994, as amended at 65 FR 80221, Dec. 20, 
2000; 66 FR 63302, Dec. 5, 2001; 70 FR 72563, Dec. 5, 2005]



Sec. 655.735  What are the special provisions for short-term placement 
of H-1B nonimmigrants at place(s) of employment outside the area(s) of 
intended employment listed on the LCA?

    (a) Subject to the conditions specified in this section, an employer 
may make short-term placements or assignments of H-1B nonimmigrant(s) at 
worksite(s) (place(s) of employment) in areas not listed on the 
employer's approved LCA(s) without filing new labor condition 
application(s) for such area(s).
    (b) The following conditions must be fully satisfied by an employer 
during all short-term placement(s) or assignment(s) of H-1B 
nonimmigrant(s) at worksite(s) (place(s) of employment) in areas not 
listed on the employer's approved LCA(s):
    (1) The employer has fully satisfied the requirements of Sec. Sec. 
655.730 through 655.734 with regard to worksite(s) located within the 
area(s) of intended employment listed on the employer's LCA(s).
    (2) The employer shall not place, assign, lease, or otherwise 
contract out any H-1B nonimmigrant(s) to any worksite where there is a 
strike or lockout in the course of a labor dispute in the same 
occupational classification(s) as that of the H-1B nonimmigrant(s).
    (3) For every day the H-1B nonimmigrant(s) is placed or assigned 
outside the area(s) of employment listed on the approved LCA(s) for such 
worker(s), the employer shall:
    (i) Continue to pay such worker(s) the required wage (based on the 
prevailing wage at such worker's(s') permanent worksite, or the 
employer's actual wage, whichever is higher);
    (ii) Pay such worker(s) the actual cost of lodging (for both 
workdays and non-workdays); and
    (iii) Pay such worker(s) the actual cost of travel, meals and 
incidental or miscellaneous expenses (for both workdays and non-
workdays).
    (c) An employer's short-term placement(s) or assignment(s) of H-1B 
nonimmigrant(s) at any worksite(s) in an area of employment not listed 
on the employer's approved LCA(s) shall not exceed a total of 30 
workdays in a one-year period for any H-1B nonimmigrant at any worksite 
or combination of worksites in the area, except that such placement or 
assignment of an H-1B nonimmigrant may be for longer than 30 workdays 
but for no more than a total of 60 workdays in a one-year period where 
the employer is able to show the following:
    (1) The H-1B nonimmigrant continues to maintain an office or work 
station at his/her permanent worksite (e.g., the worker has a dedicated 
workstation and telephone line(s) at the permanent worksite);
    (2) The H-1B nonimmigrant spends a substantial amount of time at the 
permanent worksite in a one-year period; and
    (3) The H-1B nonimmigrant's U.S. residence or place of abode is 
located in the area of the permanent worksite and not in the area of the 
short-term worksite(s) (e.g., the worker's personal mailing address; the 
worker's lease for an apartment or other home; the worker's bank 
accounts; the worker's automobile driver's license; the residence of the 
worker's dependents).
    (d) For purposes of this section, the term workday shall mean any 
day on which an H-1B nonimmigrant performs any work at any worksite(s) 
within the area of short-term placement or assignment. For example, 
three workdays would be counted where a nonimmigrant works three non-
consecutive days at three different worksites (whether or not the 
employer owns or controls such worksite(s)), within the same area of 
employment. Further, for

[[Page 602]]

purposes of this section, the term one-year period shall mean the 
calendar year (i.e., January 1 through December 31) or the employer's 
fiscal year, whichever the employer chooses.
    (e) The employer may not make short-term placement(s) or 
assignment(s) of H-1B nonimmigrant(s) under this section at worksite(s) 
in any area of employment for which the employer has a certified LCA for 
the occupational classification. Further, an H-1B nonimmigrant entering 
the U.S. is required to be placed at a worksite in accordance with the 
approved petition and supporting LCA; thus, the nonimmigrant's initial 
placement or assignment cannot be a short-term placement under this 
section. In addition, the employer may not continuously rotate H-1B 
nonimmigrants on short-term placement or assignment to an area of 
employment in a manner that would defeat the purpose of the short-term 
placement option, which is to provide the employer with flexibility in 
assignments to afford enough time to obtain an approved LCA for an area 
where it intends to have a continuing presence (e.g., an employer may 
not rotate H-1B nonimmigrants to an area of employment for 20-day 
periods, with the result that nonimmigrants are continuously or 
virtually continuously employed in the area of employment, in order to 
avoid filing an LCA; such an employer would violate the short-term 
placement provisions).
    (f) Once any H-1B nonimmigrant's short-term placement or assignment 
has reached the workday limit specified in paragraph (c) of this section 
in an area of employment, the employer shall take one of the following 
actions:
    (1) File an LCA and obtain ETA certification, and thereafter place 
any H-1B nonimmigrant(s) in that occupational classification at 
worksite(s) in that area pursuant to the LCA (i.e., the employer shall 
perform all actions required in connection with such LCA, including 
determination of the prevailing wage and notice to workers); or
    (2) Immediately terminate the placement of any H-1B nonimmigrant(s) 
who reaches the workday limit in an area of employment. No worker may 
exceed the workday limit within the one-year period specified in 
paragraph (d) of this section, unless the employer first files an LCA 
for the occupational classification for the area of employment. 
Employers are cautioned that if any worker exceeds the workday limit 
within the one-year period, then the employer has violated the terms of 
its LCA(s) and the regulations in the subpart, and thereafter the short-
term placement option cannot be used by the employer for H-1B 
nonimmigrants in that occupational classification in that area of 
employment.
    (g) An employer is not required to use the short-term placement 
option provided by this section, but may choose to make each placement 
or assignment of an H-1B nonimmigrant at worksite(s) in a new area of 
employment pursuant to a new LCA for such area. Further, an employer 
which uses the short-term placement option is not required to continue 
to use the option. Such an employer may, at any time during the period 
identified in paragraphs (c) and (d) of this section, file an LCA for 
the new area of employment (performing all actions required in 
connection with such LCA); upon certification of such LCA, the 
employer's obligation to comply with this section concerning short-term 
placement shall terminate. (However, see Sec. 655.731(c)(9)(iii)(C) 
regarding payment of business expenses for employee's travel on 
employer's business.)

[65 FR 80222, Dec. 20, 2000]



Sec. 655.736  What are H-1B-dependent employers and willful violators?

    Two attestation obligations apply only to two types of employers: H-
1B-dependent employers (as described in paragraphs (a) through (e) of 
this section) and employers found to have willfully violated their H-1B 
obligations within a certain five-year period (as described in paragraph 
(f) of this section). These obligations apply only to certain labor 
condition applications filed by such employers (as described in 
paragraph (g) of this section), and do not apply to LCAs filed by such 
employers solely for the employment of ``exempt'' H-1B nonimmigrants (as 
described in paragraph (g) of this section and Sec. 655.737). These 
obligations require that such employers not displace U.S. workers from 
jobs (as described in

[[Page 603]]

Sec. 655.738) and that such employers recruit U.S. workers before 
hiring H-1B nonimmigrants (as described in Sec. 655.739).
    (a) What constitutes an ``H-1B-dependent'' employer?
    (1) ``H-1B-dependent employer,'' for purposes of THIS subpart H and 
subpart I of this part, means an employer that meets one of the three 
following standards, which are based on the ratio between the employer's 
total work force employed in the U.S. (including both U.S. workers and 
H-1B nonimmigrants, and measured according to full-time equivalent 
employees) and the employer's H-1B nonimmigrant employees (a ``head 
count'' including both full-time and part-time H-1B employees)--
    (i)(A) The employer has 25 or fewer full-time equivalent employees 
who are employed in the U.S.; and
    (B) Employs more than seven H-1B nonimmigrants;
    (ii)(A) The employer has at least 26 but not more than 50 full-time 
equivalent employees who are employed in the U.S.; and
    (B) Employs more than 12 H-1B nonimmigrant; or
    (iii)(A) The employer has at least 51 full-time equivalent employees 
who are employed in the U.S.; and
    (B) Employs H-1B nonimmigrants in a number that is equal to at least 
15 percent of the number of such full-time equivalent employees.
    (2) ``Full-time equivalent employees'' (FTEs), for purposes of 
paragraph (a) of this section are to be determined according to the 
following standards:
    (i) The determination of FTEs is to include only persons employed by 
the employer (as defined in Sec. 655.715), and does not include bona 
fide consultants and independent contractors. For purposes of this 
section, the Department will accept the employer's designation of 
persons as ``employees,'' provided that such persons are consistently 
treated as ``employees'' for all purposes including FICA, FLSA, etc.
    (ii) The determination of FTEs is to be based on the following 
records:
    (A) To determine the number of employees, the employer's quarterly 
tax statement (or similar document) is to be used (assuming there is no 
issue as to whether all employees are listed on the tax statement); and
    (B) To determine the number of hours of work by part-time employees, 
for purposes of aggregating such employees to FTEs, the last payroll (or 
the payrolls over the previous quarter, if the last payroll is not 
representative) is to be used, or where hours of work records are not 
maintained, other available information is to be used to make a 
reasonable approximation of hours of work (such as a standard work 
schedule). (But see paragraph (a)(2)(iii)(B)(1) of this section 
regarding the determination of FTEs for part-time employees without a 
computation of the hours worked by such employees.)
    (iii) The FTEs employed by the employer means the total of the two 
numbers yielded by paragraphs (a)(2)(iii)(A) and (B), which follow:
    (A) The number of full-time employees. A full-time employee is one 
who works 40 or more hours per week, unless the employer can show that 
less than 40 hours per week is full-time employment in its regular 
course of business (however, in no event would less than 35 hours per 
week be considered to be full-time employment). Each full-time employee 
equals one FTE (e.g., 50 full-time employees would yield 50 FTEs). (Note 
to paragraph (a)(2)(iii)(A): An employee who commonly works more than 
the number of hours constituting full-time employment cannot be counted 
as more than one FTE.); plus
    (B) The part-time employees aggregated to a number of full-time 
equivalents, if the employer has part-time employees. For purposes of 
this determination, a part-time employee is one who regularly works 
fewer than the number of hours per week which constitutes full-time 
employment (e.g., employee regularly works 20 hours, where full-time 
employment is 35 hours per week). The aggregation of part-time employees 
to FTEs may be performed by either of the following methods (i.e., 
paragraphs (a)(2)(iii)(B)(1) or (2)):
    (1) Each employee working fewer than full-time hours counted as one-
half of an FTE, with the total rounded to the next higher whole number 
(e.g., three employees working fewer than 35

[[Page 604]]

hours per week, where full-time employment is 35 hours, would yield two 
FTEs (i.e., 1.5 rounded to 2)); or
    (2) The total number of hours worked by all part-time employees in 
the representative pay period, divided by the number of hours per week 
that constitute full-time employment, with the quotient rounded to the 
nearest whole number (e.g., 72 total hours of work by three part-time 
employees, divided by 40 (hours per week constituting full-time 
employment), would yield two FTEs (i.e., 1.8 rounded to 2)).
    (iv) Examples of determinations of FTEs: Employer A has 100 
employees, 70 of whom are full-time (with full-time employment shown to 
be 44 hours of work per week) and 30 of whom are part-time (with a total 
of 1004 hours of work by all 30 part-time employees during the 
representative pay period). Utilizing the method in paragraph 
(a)(2)(iii)(B)(1) of this section, this employer would have 85 FTEs: 70 
FTEs for full-time employees, plus 15 FTEs for part-time employees 
(i.e., each of the 30 part-time employees counted as one-half of a full-
time employee, as described in paragraph (a)(2)(iii)(B)(1) of this 
section). (This employer would have 23 FTEs for part-time employees, if 
these FTEs were computed as described in paragraph (a)(2)(iii)(B)(2) of 
this section: 1004 total hours of work by part-time employees, divided 
by 44 (full-time employment), yielding 22.8, rounded to 23)). Employer B 
has 100 employees, 80 of whom are full-time (with full-time employment 
shown to be 40 hours of work per week) and 20 of whom are part-time 
(with a total of 630 hours of work by all 30 part-time employees during 
the representative pay period). This employer would have 90 FTEs: 80 
FTEs for full-time employees, plus 10 FTEs for part-time employees 
(i.e., each of the 20 part-time employees counted as one-half of a full-
time employee, as described in paragraph (a)(2)(iii)(B)(1) of this 
section) (This employer would have 16 FTEs for part-time employees, if 
these FTEs were computed as described in paragraph (a)(2)(iii)(B)(2) of 
this section: 630 total hours of work by part-time employees, divided by 
40 (full-time employment), yielding 15.7, rounded to 16)).
    (b) What constitutes an ``employer'' for purposes of determining H-
1B-dependency status? Any group treated as a single employer under the 
Internal Revenue Code (IRC) at 26 U.S.C. 414(b), (c), (m) or (o) shall 
be treated as a single employer for purposes of the determination of H-
1B-dependency. Therefore, if an employer satisfies the requirements of 
the IRC and relevant regulations with respect to the following groups of 
employees, those employees will be treated as employees of a single 
employer for purposes of determining whether that employer is an H-1B-
dependent employer.
    (1) Pursuant to section 414(b) of the IRC and related regulations, 
all employees ``within a controlled group of corporations'' (within the 
meaning of section 1563(a) of the IRC, determined without regard to 
section 1563(a)(4) and (e)(3)(C)), will be treated as employees of a 
single employer. A controlled group of corporations is a parent-
subsidiary-controlled group, a brother-sister-controlled group, or a 
combined group. 26 U.S.C. 1563(a), 26 CFR 1.414(b)-1(a).
    (i) A parent-subsidiary-controlled group is one or more chains of 
corporations connected through stock ownership with a common parent 
corporation where at least 80 percent of the stock (by voting rights or 
value) of each subsidiary corporation is owned by one or more of the 
other corporations (either another subsidiary or the parent 
corporation), and the common parent corporation owns at least 80 percent 
of the stock of at least one subsidiary.
    (ii) A brother-sister-controlled group is a group of corporations in 
which five or fewer persons (individuals, estates, or trusts) own 80 
percent or more of the stock of the corporations and certain other 
ownership criteria are satisfied.
    (iii) A combined group is a group of three or more corporations, 
each of which is a member of a parent-subsidiary controlled group or a 
brother-sister-controlled group and one of which is a common parent 
corporation of a parent-subsidiary-controlled group and is also included 
in a brother-sister-controlled group.
    (2) Pursuant to section 414(c) of the IRC and related regulations, 
all employees of trades or businesses (whether or not incorporated) that 
are under

[[Page 605]]

common control are treated as employees of a single employer. 26 U.S.C. 
414(c), 26 CFR 1.414(c)-2.
    (i) Trades or businesses are under common control if they are 
included in:
    (A) A parent-subsidiary group of trades or businesses;
    (B) A brother-sister group of trades or businesses; or
    (C) A combined group of trades or businesses.
    (ii) Trades or businesses include sole proprietorships, 
partnerships, estates, trusts or corporations.
    (iii) The standards for determining whether trades or businesses are 
under common control are similar to standards that apply to controlled 
groups of corporations. However, pursuant to 26 CFR 1.414(c)-2(b)(2), 
ownership of at least an 80 percent interest in the profits or capital 
interest of a partnership or the actuarial value of a trust or estate 
constitutes a controlling interest in a trade or business.
    (3) Pursuant to section 414(m) of the IRC and related regulations, 
all employees of the members of an affiliated service group are treated 
as employees of a single employer. 26 U.S.C. 414(m).
    (i) An affiliated service group is, generally, a group consisting of 
a service organization (the ``first organization''), such as a health 
care organization, a law firm or an accounting firm, and one or more of 
the following:
    (A) A second service organization that is a shareholder or partner 
in the first organization and that regularly performs services for the 
first organization (or is regularly associated with the first 
organization in performing services for third persons); or
    (B) Any other organization if :
    (1) A significant portion of the second organization's business is 
the performance of services for the first organization (or an 
organization described in paragraph (b)(3)(i) of this section or for 
both) of a type historically performed in such service field by 
employees, and
    (2) Ten percent or more of the interest in the second organization 
is held by persons who are highly compensated employees of the first 
organization (or an organization described in paragraph (b)(3)(i) of 
this section).
    (ii) [Reserved]
    (4) Section 414(o) of the IRC provides that the Department of the 
Treasury may issue regulations addressing other business arrangements, 
including employee leasing, in which a group of employees are treated as 
employed by the same employer. However, the Department of the Treasury 
has not issued any regulations under this provision. Therefore, that 
section of the IRC will not be taken into account in determining what 
groups of employees are considered employees of a single employer for 
purposes of H-1B dependency determinations, unless regulations are 
issued by the Treasury Department during the period the dependency 
provisions of the ACWIA are effective.
    (5) The definitions of ``single employer'' set forth in paragraphs 
(b)(1) through (b)(3) of this section are established by the Internal 
Revenue Service (IRS) in regulations located at 26 CFR 1.414(b)-1(a), 
(c)-2 and (m)-5. Guidance on these definitions should be sought from 
those regulations or from the IRS.
    (c) Which employers are required to make determinations of H-1B-
dependency status? Every employer that intends to file an LCA regarding 
H-1B nonimmigrants or to file H-1B petition(s) or request(s) for 
extension(s) of H-1B status from January 19, 2001 through September 30, 
2003, and after March 7, 2005, is required to determine whether it is an 
H-1B-dependent employer or a willful violator which, except as provided 
in Sec. 655.737, will be subject to the additional obligations for H-
1B-dependent employers (see paragraph (g) of this section). No H-1B-
dependent employer or willful violator may use an LCA filed before 
January 19, 2001, and during the period of October 1, 2003 through March 
7, 2005, to support a new H-1B petition or request for an extension of 
status. Furthermore, on all H-1B LCAs filed from January 19, 2001 
through September 30, 2003, and on or after March 8, 2005, an employer 
will be required to attest whether it is an H-1B-dependent employer or 
willful violator. An employer that attests it is non-H-1B-dependent but 
does not meet the ``snap shot'' test set forth in paragraph (c)(2) of 
this section shall make and

[[Page 606]]

document a full calculation of its status. However, as explained in 
paragraphs (c)(1) and (2) of this section, which follow, most employers 
would not be required to make any calculations or to create any 
documentation as to the determination of their H-1B status.
    (1) Employers with readily apparent status concerning H-1B-
dependency need not calculate that status. For most employers, 
regardless of their size, H-1B-dependency status (i.e., H-1B-dependent 
or non-H-1B-dependent) is readily apparent and would require no 
calculations, in that the ratio of H-1B employees to the total workforce 
is obvious and can easily be compared to the definition of ``H-1B-
dependency'' (see definition set out in paragraph (a)(1) of this 
section).

    For example: Employer A with 20 employees, only one of whom is an H-
1B non-immigrant, would obviously not be H-1B-dependent and would not 
need to make calculations to confirm that status. Employer B with 45 
employees, 30 of whom are H-1B nonimmigrants, would obviously be H-1B-
dependent and would not need to make calculations. Employer C with 500 
employees, only 30 of whom are H-1B nonimmigrants, would obviously not 
be H-1B-dependent and would not need to make calculations. Employer D 
with 1,000 employees, 850 of whom are H-1B nonimmigrants, would 
obviously be H-1B-dependent and would not have to make calculations.

    (2) Employers with borderline H-1B-dependency status may use a 
``snap-shot'' test to determine whether calculation of that status is 
necessary. Where an employer's H-1B-dependency status (i.e., H-1B-
dependent or non-H-1B-dependent) is not readily apparent, the employer 
may use one of the following tests to determine whether a full 
calculation of the status is needed:
    (i) Small employer (50 or fewer employees). If the employer has 50 
or fewer employees (both full-time and part-time, including H-1B 
nonimmigrants and U.S. workers), then the employer may compare the 
number of its H-1B nonimmigrant employees (both full-time and part-time) 
to the numbers specified in the definition set out in paragraph (a)(1) 
of this section, and shall fully calculate its H-1B-dependency status 
(i.e., calculate FTEs) where the number of its H-1B nonimmigrant 
employees is above the number specified in the definition. In other 
words, if the employer has 25 or fewer employees, and more than seven of 
them are H-1B nonimmigrants, then the employer shall fully calculate its 
status; if the employer has at least 26 but no more than 50 employees, 
and more than 12 of them are H-1B nonimmigrants, then the employer shall 
fully calculate its status.
    (ii) Large employer (51 or more employees). If the number of H-1B 
nonimmigrant employees (both full-time and part-time), divided by the 
number of full-time employees (including H-1B nonimmigrants and U.S. 
workers), is 0.15 or more, then an employer which believes itself to be 
non-H-1B-dependent shall fully calculate its H-1B-dependency status 
(including the calculation of FTEs). In other words, if the number of 
full-time employees (including H-1B nonimmigrants and U.S. workers) 
multiplied by 0.15 yields a number that is equal to or less than the 
number of H-1B nonimmigrant employees (both full-time and part-time), 
then the employer shall attest that it is H-1B-dependent or shall fully 
calculate its H-1B dependency status (including the calculation of 
FTEs).
    (d) What documentation is the employer required to make or maintain, 
concerning its determination of H-1B-dependency status? All employers 
are required to retain copies of H-1B petitions and requests for 
extensions of H-1B status filed with the INS, as well as the payroll 
records described in Sec. 655.731(b)(1). The nature of any additional 
documentation would depend upon the general characteristics of the 
employer's workforce, as described in paragraphs (d)(1) through (4), 
which follow.
    (1) Employer with readily apparent status concerning H-1B-
dependency. If an employer's H-1B-dependency status (i.e., H-1B-
dependent or non-H-1B-dependent) is readily apparent (as described in 
paragraph (c)(1) of this section), then that status must be reflected on 
the employer's LCA but the employer is not required to make or maintain 
any particular documentation. The public access file maintained in 
accordance with Sec. 655.760 would show the H-1B-dependency status, by 
means of copy(ies) of the LCA(s). In the event

[[Page 607]]

of an enforcement action pursuant to subpart I of this part, the 
employer's readily apparent status could be verified through records to 
be made available to the Administrator (e.g., copies of H-1B petitions; 
payroll records described in Sec. 655.731(b)(1)).
    (2) Employer with borderline H-1B-dependency status. An employer 
which uses a ``snap-shot'' test to determine whether it should undertake 
a calculation of its H-1B-dependency status (as described in paragraph 
(c)(2) of this section) is not required to make or maintain any 
documentation of that ``snap-shot'' test. The employer's status must be 
reflected on the LCA(s), which would be available in the public access 
file. In the event of an enforcement action pursuant to subpart I of 
this part, the employer's records to be made available to the 
Administrator would enable the employer to show and the Administrator to 
verify the ``snap-shot'' test (e.g., copies of H-1B petitions; payroll 
records described in Sec. 655.731(b)(1)) .
    (3) Employer with H-1B-dependent status. An employer which attests 
that it is H-1B-dependent--whether that status is readily apparent or is 
determined through calculations--is not required to make or maintain any 
documentation of the calculation. The employer's status must be 
reflected on the LCA(s), which would be available in the public access 
file. In the event of an enforcement action pursuant to subpart I of 
this part, the employer's designation of H-1B-dependent status on the 
LCA(s) would be conclusive and sufficient documentation of that status 
(except where the employer's status had altered to non-H-1B-dependent 
and had been appropriately documented, as described in paragraph 
(d)(5)(ii) of this section).
    (4) Employer with non-H-1B-dependent status who is required to 
perform full calculation. An employer which attests that it is non-H-1B-
dependent and does not meet the ``snap shot'' test set forth in 
paragraph (c)(2) of this section shall retain in its records a dated 
copy of its calculation that it is not H-1B-dependent. In the event of 
an enforcement action pursuant to subpart I of this part, the employer's 
records to be made available to the Administrator would enable the 
employer to show and the Administrator to verify the employer's 
determination (e.g., copies of H-1B petitions; payroll records described 
in Sec. 655.731(b)(1)).
    (5) Employer which changes its H-1B-dependency status due to changes 
in workforce. An employer may experience a change in its H-1B-dependency 
status, due to changes in the ratio of H-1B nonimmigrant to U.S. workers 
in its workforce. Thus it is important that employers who wish to file a 
new LCA or a new H-1B petition or request for extension of status remain 
cognizant of their dependency status and do a recheck of such status if 
the make-up of their workforce changes sufficiently that their 
dependency status might possibly change. In the event of such a change 
of status, the following standards will apply:
    (i) Change from non-H-1B-dependent to H-1B-dependent. An employer 
which experiences this change in its workforce is not required to make 
or maintain any record of its determination of the change of its H-1B-
dependency status. The employer is not required to file new LCA(s) 
(which would accurately state its H-1B-dependent status), unless it 
seeks to hire new H-1B nonimmigrants or extend the status of existing H-
1B nonimmigrants (see paragraph (g) of this section).
    (ii) Change from H-1B-dependent to non-H-1B-dependent. An employer 
which experiences this change in its workforce is required to perform a 
full calculation of its status (as described in paragraph (c) of this 
section) and to retain a copy of such calculation in its records. If the 
employer seeks to hire new H-1B nonimmigrants or extend the status of 
existing H-1B nonimmigrants (see paragraph (g) of this section), the 
employer shall either file new LCAs reflecting its non-H-1B-dependent 
status or use its existing certified LCAs reflecting an H-1B-dependency 
status, in which case it shall continue to be bound by the dependent-
employer attestations on such LCAs. In the event of an enforcement 
action pursuant to subpart I of this part, the employer's records to be 
made available to the Administrator would enable the employer to show 
and the Administrator to verify the employer's determination

[[Page 608]]

(e.g., copies of H-1B petitions; payroll records described in Sec. 
655.731(b)(1)).
    (6) Change in corporate structure or identity of employer. If an 
employer which experiences a change in its corporate structure as the 
result of an acquisition, merger, ``spin-off,'' or other such action 
wishes to file a new LCA or a new H-1B petition or request for extension 
of status, the new employing entity shall redetermine its H-1B-
dependency status in accordance with paragraphs (a) and (c) of this 
section (see paragraph (g) of this section). (See Sec. 655.730(e), 
regarding change in corporate structure or identity of employer.) In the 
event of an enforcement action pursuant to subpart I of this part, the 
employer's calculations where required under paragraph (c) of this 
section and its records to be made available to the Administrator would 
enable the employer to show and the Administrator to verify the 
employer's determination (e.g., copies of H-1B petitions; payroll 
records described in Sec. 655.731(b)(1)).
    (7) ``Single employer'' under IRC test. If an employer utilizes the 
IRC single-employer definition and concludes that it is non-H-1B-
dependent, the employer shall perform the ``snap-shot'' test set forth 
in paragraph (c)(2) of this section, and if it fails to meet that test, 
shall attest that it is H-1B-dependent or shall perform the full 
calculation of dependency status in accordance with paragraph (a) of 
this section. The employer shall place a list of the entities included 
as a ``single employer'' in the public access file maintained in 
accordance with Sec. 766.760. In addition, the employer shall retain in 
its records the ``snap-shot'' or full calculation of its status, as 
appropriate (showing the number of employees of each entity who are 
included in the numerator and denominator of the equation, whether the 
employer utilizes the ``snap shot'' test or a complete calculation as 
described in paragraph (c) of this section). In the event of an 
enforcement action pursuant to subpart I of this part, the employer's 
records to be made available to the Administrator would enable the 
employer to show and the Administrator to verify the employer's 
determination (e.g., copies of H-1B petitions; payroll records described 
in Sec. 655.731(b)(1)).
    (e) How is an employer's H-1B-dependency status to be shown on the 
LCA? The employer is required to designate its status by marking the 
appropriate box on the Form ETA-9035 or 9035E (i.e., either H-1B-
dependent or non-H-1B-dependent). An employer which marks the 
designation of ``H-1B-dependent'' may also mark the designation of its 
intention to seek only ``exempt'' H-1B nonimmigrants on the LCA (see 
paragraph (g) of this section, and Sec. 655.737). In the event that an 
employer has filed an LCA designating its H-1B-dependency status (either 
H-1B-dependent or non-H-1B-dependent) and thereafter experiences a 
change of status, the employer cannot use that LCA to support H-1B 
petitions for new nonimmigrants or requests for extension of H-1B status 
for existing nonimmigrants. Similarly, an employer that is or becomes H-
1B-dependent cannot continue to use an LCA filed before January 19, 2001 
to support new H-1B petitions or requests for extension of status. In 
such circumstances, the employer shall file a new LCA accurately 
designating its status and shall use that new LCA to support new 
petitions or requests for extensions of status.
    (f) What constitutes a ``willful violator'' employer and what are 
its special obligations?
    (1) ``Willful violator'' or ``willful violator employer,'' for 
purposes of this subpart H and subpart I of this part means an employer 
that meets all of the following standards (i.e., paragraphs (f)(1)(i) 
through (iii))--
    (i) A finding of violation by the employer (as described in 
paragraph (f)(1) (ii)) is entered in either of the following two types 
of enforcement proceeding:
    (A) A Department of Labor proceeding under section 212(n)(2) of the 
Act (8 U.S.C. 1182(n)(2)(C) and subpart I of this part; or
    (B) A Department of Justice proceeding under section 212(n)(5) of 
the Act (8 U.S.C. 1182(n)(5).
    (ii) The agency finds that the employer has committed either a 
willful failure or a misrepresentation of a material fact during the 
five-year period preceding the filing of the LCA; and

[[Page 609]]

    (iii) The agency's finding is entered on or after October 21, 1998.
    (2) For purposes of this paragraph, ``willful failure'' means a 
violation which is a ``willful failure'' as defined in Sec. 655.805(c).
    (g) What LCAs are subject to the additional attestation obligations?
    (1) An employer that is ``H-1B-dependent'' (under the standards 
described in paragraphs (a) through (e) of this section) or is a 
``willful violator'' (under the standards described in paragraph (f) of 
this section) is subject to the attestation obligations regarding 
displacement of U.S. workers and recruitment of U.S. workers (under the 
standards described in Sec. Sec. 655.738 and 655.739, respectively) for 
all LCAs that are filed during the time period specified in paragraph 
(g)(2) of this section, to be used to support any petitions for new H-1B 
nonimmigrants or any requests for extensions of status for existing H-1B 
nonimmigrants. An LCA which does not accurately indicate the employer's 
H-1B-dependency status or willful violator status shall not be used to 
support H-1B petitions or requests for extensions. Further, an employer 
which falsely attests to non-H-1B-dependency status, or which 
experiences a change of status to H-1B-dependency but continues to use 
the LCA to support new H-1B petitions or requests for extension of 
status shall--despite the LCA designation of non-H-1B-dependency--be 
held to its obligations to comply with the attestation requirements 
concerning nondisplacement of U.S. workers and recruitment of U.S. 
workers (as described in Sec. Sec. 655.738 and 655.739, respectively), 
as explicitly acknowledged and agreed on the LCA.
    (2) During the period between January 19, 2001 through September 30, 
2003, and on or after March 8, 2005, any employer that is ``H-1B-
dependent'' (under the standards described in paragraphs (a) through (e) 
of this section) or is a ``willful violator'' (under the standards 
described in paragraph (f) of this section) shall file a new LCA 
accurately indicating that status in order to be able to file 
petition(s) for new H-1B nonimmigrant(s) or request(s) for extension(s) 
of status for existing H-1B nonimmigrant(s). An LCA filed during a 
period when the special attestation obligations for H-1B dependent 
employers and willful violators were not in effect (that is before 
January 19, 2001, and from October 1, 2003 through March 7, 2005) may 
not be used by an H-1B dependent employer or willful violator to support 
petition(s) for new H-1B nonimmigrant(s) or request(s) for extension(s) 
of status for existing H-1B nonimmigrants.
    (3) An employer that files an LCA indicating ``H-1B-dependent'' and/
or ``willful violator'' status may also indicate on the LCA that all the 
H-1B nonimmigrants to be employed pursuant to that LCA will be ``exempt 
H-1B nonimmigrants'' as described in Sec. 655.737. Such an LCA is not 
subject to the additional LCA attestation obligations, provided that all 
H-1B nonimmigrants employed under it are, in fact, exempt. An LCA which 
indicates that it will be used only for exempt H-1B nonimmigrants shall 
not be used to support H-1B petitions or requests for extensions of 
status for H-1B nonimmigrants who are not, in fact, exempt. Further, an 
employer which attests that the LCA will be used only for exempt H-1B 
nonimmigrants but uses the LCA to employ non-exempt H-1B nonimmigrants 
(through petitions and/or extensions of status) shall--despite the LCA 
designation of exempt H-1B nonimmigrants--be held to its obligations to 
comply with the attestation requirements concerning nondisplacement of 
U.S. workers and recruitment of U.S. workers (as described in Sec. Sec. 
655.738 and 655.739, respectively), as explicitly acknowledged and 
agreed on the LCA.
    (4) The special provisions for H-1B-dependent employers and willful 
violator employers do not apply to LCAs filed from October 1, 2003 
through March 7, 2005, or before January 19, 2001. However, all LCAs 
filed before October 1, 2003, and containing the additional attestation 
obligations described in this section and Sec. Sec. 655.737 through 
655.739, will remain in effect with regard to those obligations, for so 
long as any H-1B nonimmigrant(s) employed pursuant to the LCA(s) remain 
employed by the employer.

[65 FR 80223, Dec. 20, 2000; 66 FR 1375, Jan. 8, 2001, as amended at 66 
FR 63302, Dec. 5, 2001; 70 FR 72563, Dec. 5, 2005]

[[Page 610]]



Sec. 655.737  What are ``exempt'' H-1B nonimmigrants, and how does their 
employment affect the additional attestation obligations of H-1B-dependent 
employers and willful violator employers?

    (a) An employer that is H-1B-dependent or a willful violator of the 
H-1B program requirements (as described in Sec. 655.736) is subject to 
the attestation obligations regarding displacement of U.S. workers and 
recruitment of U.S. workers (as described in Sec. Sec. 655.738 and 
655.739, respectively) for all LCAs that are filed during the time 
period specified in Sec. 655.736(g). However, these additional 
obligations do not apply to an LCA filed by such an employer if the LCA 
is used only for the employment of ``exempt'' H-1B nonimmigrants 
(through petitions and/or extensions of status) as described in this 
section.
    (b) What is the test or standard for determining an H-1B 
nonimmigrant's ``exempt'' status? An H-1B nonimmigrant is ``exempt'' for 
purposes of this section if the nonimmigrant meets either of the two 
following criteria:
    (1) Receives wages (including cash bonuses and similar compensation) 
at an annual rate equal to at least $60,000; or
    (2) Has attained a master's or higher degree (or its equivalent) in 
a specialty related to the intended employment.
    (c) How is the $60,000 annual wage to be determined? The H-1B 
nonimmigrant can be considered to be an ``exempt'' worker, for purposes 
of this section, if the nonimmigrant actually receives hourly wages or 
annual salary totaling at least $60,000 in the calendar year. The 
standards applicable to the employer's satisfaction of the required wage 
obligation are applicable to the determination of whether the $60,000 
wages or salary are received (see Sec. 655.731(c)(2) and (3)). Thus, 
employer contributions or costs for benefits such as health insurance, 
life insurance, and pension plans cannot be counted toward this $60,000. 
The compensation to be counted or credited for these purposes could 
include cash bonuses and similar payments, provided that such 
compensation is paid to the worker ``cash in hand, free and clear, when 
due'' (Sec. 655.731(c)(1)), meaning that the compensation has readily 
determinable market value, is readily convertible to cash tender, and is 
actually received by the employee when due (which must be within the 
year for which the employer seeks to count or credit the compensation 
toward the employee's $60,000 earnings to qualify for exempt status). 
Cash bonuses and similar compensation can be counted or credited toward 
the $60,000 for ``exempt'' status only if payment is assured (i.e., if 
the payment is contingent or conditional on some event such as the 
employer's annual profits, the employer must guarantee payment even if 
the contingency is not met). The full $60,000 annual wages or salary 
must be received by the employee in order for the employee to have 
``exempt'' status. The wages or salary required for ``exempt'' status 
cannot be decreased or pro rated based on the employee's part-time work 
schedule; an H-1B nonimmigrant working part-time, whose actual annual 
compensation is less than $60,000, would not qualify as exempt on the 
basis of wages, even if the worker's earnings, if projected to a full-
time work schedule, would theoretically exceed $60,000 in a year. Where 
an employee works for less than a full year, the employee must receive 
at least the appropriate pro rata share of the $60,000 in order to be 
``exempt'' (e.g., an employee who resigns after three months must be 
paid at least $15,000). In the event of an investigation pursuant to 
subpart I of this part, the Administrator will determine whether the 
employee has received the required $60,000 per year, using the 
employee's anniversary date to determine the one-year period; for an 
employee who had worked for less than a full year (either at the 
beginning of employment, or after his/her last anniversary date), the 
determination as to the $60,000 annual wages will be on a pro rata basis 
(i.e., whether the employee had been paid at a rate of $60,000 per year 
(or $5,000 per month) including any unpaid, guaranteed bonuses or 
similar compensation).
    (d) How is the ``master's or higher degree (or its equivalent) in a 
specialty related to the intended employment'' to be determined? (1) 
``Master's or higher degree (or its equivalent),'' for purposes of this 
section means a foreign academic degree from an institution which

[[Page 611]]

is accredited or recognized under the law of the country where the 
degree was obtained, and which is equivalent to a master's or higher 
degree issued by a U.S. academic institution. The equivalence to a U.S. 
academic degree cannot be established through experience or through 
demonstration of expertise in the academic specialty (i.e., no ``time 
equivalency'' or ``performance equivalency'' will be recognized as 
substituting for a degree issued by an academic institution). The INS 
and the Department will consult appropriate sources of expertise in 
making the determination of equivalency between foreign and U.S. 
academic degrees. Upon the request of the INS or the Department, the 
employer shall provide evidence to establish that the H-1B nonimmigrant 
has received the degree, that the degree was earned in the asserted 
field of study, including an academic transcript of courses, and that 
the institution from which the degree was obtained was accredited or 
recognized.
    (2) ``Specialty related to the intended employment,'' for purposes 
of this section, means that the academic degree is in a specialty which 
is generally accepted in the industry or occupation as an appropriate or 
necessary credential or skill for the person who undertakes the 
employment in question. A ``specialty'' which is not generally accepted 
as appropriate or necessary to the employment would not be considered to 
be sufficiently ``related' to afford the H-1B nonimmigrant status as an 
``exempt H-1B nonimmigrant.''
    (e) When and how is the determination of the H-1B nonimmigrant's 
``exempt'' status to be made? An employer that is H-1B-dependent or a 
willful violator (as described in Sec. 655.736) may designate on the 
LCA that the LCA will be used only to support H-1B petition(s) and/or 
request(s) for extension of status for ``exempt'' H-1B nonimmigrants.
    (1) If the employer makes the designation of ``exempt'' H-1B 
nonimmigrant(s) on the LCA, then the INS--as part of the adjudication of 
the H-1B petition or request for extension of status--will determine the 
worker's ``exempt'' status, since an H-1B petition must be supported by 
an LCA consistent with the petition (i.e., occupation, area of intended 
employment, exempt status). The employer shall maintain, in the public 
access file maintained in accordance with Sec. 755.760, a list of the 
H-1B nonimmigrant(s) whose petition(s) and/or request(s) are supported 
by LCA(s) which the employer has attested will be used only for exempt 
H-1B nonimmigrants. In the event of an investigation under subpart I of 
this part, the Administrator will give conclusive effect to an INS 
determination of ``exempt'' status based on the nonimmigrant's 
educational attainments (i.e., master's or higher degree (or its 
equivalent) in a specialty related to the intended employment) unless 
the determination was based on false information. If the INS 
determination of ``exempt'' status was based on the assertion that the 
nonimmigrant would receive wages (including cash bonuses and similar 
compensation) at an annual rate equal to at least $60,000, the employer 
shall provide evidence to show that such wages actually were received by 
the nonimmigrant (consistent with paragraph (c) of this section and the 
regulatory standards for satisfaction or payment of the required wages 
as described in Sec. 655.731(c)(3)).
    (2) If the employer makes the designation of ``exempt'' H-1B 
nonimmigrants on the LCA, but is found in an enforcement action under 
subpart I of this part to have used the LCA to employ nonimmigrants who 
are, in fact, not exempt, then the employer will be subject to a finding 
that it failed to comply with the nondisplacement and recruitment 
obligations (as described in Sec. Sec. 655.738 and 655.739, 
respectively) and may be assessed appropriate penalties and remedies.
    (3) If the employer does not make the designation of ``exempt'' H-1B 
nonimmigrants on the LCA, then the employer has waived the option of not 
being subject to the additional LCA attestation obligations on the basis 
of employing only exempt H-1B nonimmigrants under the LCA. In the event 
of an investigation under subpart I of this part, the Administrator will 
not consider the question of the nonimmigrant(s)'s ``exempt'' status in 
determining whether an H-1B-dependent employer or willful violator 
employer

[[Page 612]]

has complied with such additional LCA attestation obligations.

[65 FR 80227, Dec. 20, 2000]



Sec. 655.738  What are the ``non-displacement of U.S. workers'' 
obligations that apply to H-1B-dependent employers and willful 
violators, and how do they operate?

    An employer that is subject to these additional attestation 
obligations (under the standards described in Sec. 655.736) is 
prohibited from displacement of any U.S. worker(s)--whether directly (in 
its own workforce) or secondarily (at a worksite of a second employer)--
under the standards set out in this section.
    (a) United States worker (U.S. worker) is defined in Sec. 655.715.
    (b) Displacement, for purposes of this section, has two components: 
``lay off'' of U.S. worker(s), and ``essentially equivalent jobs'' held 
by U.S. worker(s) and H-1B nonimmigrant(s).
    (1) Lay off of a U.S. worker means that the employer has caused the 
worker's loss of employment, other than through--
    (i) Discharge of a U.S. worker for inadequate performance, violation 
of workplace rules, or other cause related to the worker's performance 
or behavior on the job;
    (ii) A U.S. worker's voluntary departure or voluntary retirement (to 
be assessed in light of the totality of the circumstances, under 
established principles concerning ``constructive discharge'' of workers 
who are pressured to leave employment);
    (iii) Expiration of a grant or contract under which a U.S. worker is 
employed, other than a temporary employment contract entered into in 
order to evade the employer's non-displacement obligation. The question 
is whether the loss of the contract or grant has caused the worker's 
loss of employment. It would not be a layoff where the job loss results 
from the expiration of a grant or contract without which there is no 
alternative funding or need for the U.S. worker's position on that or 
any other grant or contract (e.g., the expiration of a research grant 
that funded a project on which the worker was employed at an academic or 
research institution; the expiration of a staffing firm's contract with 
a customer where the U.S. worker was hired expressly to work pursuant to 
that contract and the employer has no practice of moving workers to 
other customers or projects upon the expiration of contract(s)). On the 
other hand, it would be a layoff where the employer's normal practice is 
to move the U.S. worker from one contract to another when a contract 
expires, and work on another contract for which the worker is qualified 
is available (e.g., staffing firm's contract with one customer ends and 
another contract with a different customer begins); or
    (iv) A U.S. worker who loses employment is offered, as an 
alternative to such loss, a similar employment opportunity with the same 
employer (or, in the case of secondary displacement at a worksite of a 
second employer, as described in paragraph (d) of this section, a 
similar employment opportunity with either employer) at equivalent or 
higher compensation and benefits than the position from which the U.S. 
worker was discharged, regardless of whether or not the U.S. worker 
accepts the offer. The validity of the offer of a similar employment 
opportunity will be assessed in light of the following factors:
    (A) The offer is a bona fide offer, rather than an offer designed to 
induce the U.S. worker to refuse or an offer made with the expectation 
that the worker will refuse;
    (B) The offered job provides the U.S. worker an opportunity similar 
to that provided in the job from which he/she is discharged, in terms 
such as a similar level of authority, discretion, and responsibility, a 
similar opportunity for advancement within the organization, and similar 
tenure and work scheduling;
    (C) The offered job provides the U.S. worker equivalent or higher 
compensation and benefits to those provided in the job from which he/she 
is discharged. The comparison of compensation and benefits includes all 
forms of remuneration for employment, whether or not called wages and 
irrespective of the time of payment (e.g., salary or hourly wage rate; 
profit sharing; retirement plan; expense account; use of

[[Page 613]]

company car). The comparison also includes such matters as cost of 
living differentials and relocation expenses (e.g., a New York City 
``opportunity'' at equivalent or higher compensation and benefits 
offered to a worker discharged from a job in Kansas City would provide a 
wage adjustment from the Kansas City pay scale and would include 
relocation costs).
    (2) Essentially equivalent jobs. For purposes of the displacement 
prohibition, the job from which the U.S. worker is laid off must be 
essentially equivalent to the job for which an H-1B nonimmigrant is 
sought. To determine whether the jobs of the laid off U.S. worker(s) and 
the H-1B nonimmigrant(s) are essentially equivalent, the comparison(s) 
shall be on a one-to-one basis where appropriate (i.e., one U.S. worker 
left employment and one H-1B nonimmigrant joined the workforce) but 
shall be broader in focus where appropriate (e.g., an employer, through 
reorganization, eliminates an entire department with several U.S. 
workers and then staffs this department's function(s) with H-1B 
nonimmigrants). The following comparisons are to be made:
    (i) Job responsibilities. The job of the H-1B nonimmigrant must 
involve essentially the same duties and responsibilities as the job from 
which the U.S. worker was laid off. The comparison focuses on the core 
elements of and competencies for the job, such as supervisory duties, or 
design and engineering functions, or budget and financial 
accountability. Peripheral, non-essential duties that could be tailored 
to the particular abilities of the individual workers would not be 
determinative in this comparison. The job responsibilities must be 
similar and both workers capable of performing those duties.
    (ii) Qualifications and experience of the workers. The 
qualifications of the laid off U.S. worker must be substantially 
equivalent to the qualifications of the H-1B nonimmigrant. The 
comparison is to be confined to the experience and qualifications (e.g., 
training, education, ability) of the workers which are directly relevant 
to the actual performance requirements of the job, including the 
experience and qualifications that would materially affect a worker's 
relative ability to perform the job better or more efficiently. While it 
would be appropriate to compare whether the workers in question have 
``substantially equivalent'' qualifications and experience, the workers 
need not have identical qualifications and experience (e.g., a 
bachelor's degree from one accredited university would be considered to 
be substantially equivalent to a bachelor's degree from another 
accredited university; 15 years experience in an occupation would be 
substantially equivalent to 10 years experience in that occupation). It 
would not be appropriate to compare the workers' relative ages, their 
sexes, or their ethnic or religious identities.
    (iii) Area of employment. The job of the H-1B nonimmigrant must be 
located in the same area of employment as the job from which the U.S. 
worker was laid off. The comparison of the locations of the jobs is 
confined to the area within normal commuting distance of the worksite or 
physical location where the work of the H-1B nonimmigrant is or will be 
performed. For purposes of this comparison, if both such worksites or 
locations are within a Metropolitan Statistical Area or a Primary 
Metropolitan Statistical Area, they will be deemed to be within the same 
area of employment.
    (3) The worker's rights under a collective bargaining agreement or 
other employment contract are not affected by the employer's LCA 
obligations as to non-displacement of such worker.
    (c) Direct displacement. An H-1B-dependent or willful-violator 
employer (as described in Sec. 655.736) is prohibited from displacing a 
U.S. worker in its own workforce (i.e., a U.S. worker ``employed by the 
employer'') within the period beginning 90 days before and ending 90 
days after the filing date of an H-1B petition supported by an LCA 
described in Sec. 655.736(g). The following standards and guidance 
apply under the direct displacement prohibition:
    (1) Which U.S. workers are protected against ``direct 
displacement''? This prohibition covers the H-1B employer's own 
workforce--U.S. workers ``employed by the employer''--who are employed 
in jobs that are essentially equivalent to the jobs for which the H-

[[Page 614]]

1B nonimmigrant(s) are sought (as described in paragraph (b)(2) of this 
section). The term ``employed by the employer'' is defined in Sec. 
655.715.
    (2) When does the ``direct displacement'' prohibition apply? The H-
1B employer is prohibited from displacing a U.S. worker during a 
specific period of time before and after the date on which the employer 
files any H-1B petition supported by the LCA which is subject to the 
non-displacement obligation (as described in Sec. 655.736(g)). This 
protected period is from 90 days before until 90 days after the petition 
filing date.
    (3) What constitutes displacement of a U.S. worker? The H-1B 
employer is prohibited from laying off a U.S. worker from a job that is 
essentially the equivalent of the job for which an H-1B nonimmigrant is 
sought (as described in paragraph (b)(1) of this section).
    (d) Secondary displacement. An H-1B-dependent or willful-violator 
employer (as described in Sec. 655.736) is prohibited from placing 
certain H-1B nonimmigrant(s) with another employer where there are 
indicia of an employment relationship between the nonimmigrant and that 
other employer (thus possibly affecting the jobs of U.S. workers 
employed by that other employer), unless and until the H-1B employer 
makes certain inquiries and/or has certain information concerning that 
other employer's displacement of similarly employed U.S. workers in its 
workforce. Employers are cautioned that even if the required inquiry of 
the secondary employer is made, the H-1B-dependent or willful violator 
employer shall be subject to a finding of a violation of the secondary 
displacement prohibition if the secondary employer, in fact, displaces 
any U.S. worker(s) during the applicable time period (see Sec. 
655.810(d)). The following standards and guidance apply under the 
secondary displacement prohibition:
    (1) Which U.S. workers are protected against ``secondary 
displacement''? This provision applies to U.S. workers employed by the 
other or ``secondary'' employer (not those employed by the H-1B 
employer) in jobs that are essentially equivalent to the jobs for which 
certain H-1B nonimmigrants are placed with the other/secondary employer 
(as described in paragraph (b)(2) of this section). The term ``employed 
by the employer'' is defined in Sec. 655.715.
    (2) Which H-1B nonimmigrants activate the secondary displacement 
prohibition? Not every placement of an H-1B nonimmigrant with another 
employer will activate the prohibition and--depending upon the 
particular facts--an H-1B employer (such as a service provider) may be 
able to place H-1B nonimmigrant(s) at a client or customer's worksite 
without being subject to the prohibition. The prohibition applies to the 
placement of an H-1B nonimmigrant whose H-1B petition is supported by an 
LCA described in Sec. 655.736(g) and whose placement with the other/
secondary employer meets both of the following criteria:
    (i) The nonimmigrant performs duties in whole or in part at one or 
more worksites owned, operated, or controlled by the other/secondary 
employer; and
    (ii) There are indicia of an employment relationship between the 
nonimmigrant and the other/secondary employer. The relationship between 
the H-1B-nonimmigrant and the other/secondary need not constitute an 
``employment'' relationship (as defined in Sec. 655.715), and the 
applicability of the secondary displacement provision does not establish 
such a relationship. Relevant indicia of an employment relationship 
include:
    (A) The other/secondary employer has the right to control when, 
where, and how the nonimmigrant performs the job (the presence of this 
indicia would suggest that the relationship between the nonimmigrant and 
the other/secondary employer approaches the relationship which triggers 
the secondary displacement provision);
    (B) The other/secondary employer furnishes the tools, materials, and 
equipment;
    (C) The work is performed on the premises of the other/secondary 
employer (this indicia alone would not trigger the secondary 
displacement provision);
    (D) There is a continuing relationship between the nonimmigrant and 
the other/secondary employer;
    (E) The other/secondary employer has the right to assign additional 
projects to the nonimmigrant;

[[Page 615]]

    (F) The other/secondary employer sets the hours of work and the 
duration of the job;
    (G) The work performed by the nonimmigrant is part of the regular 
business (including governmental, educational, and non-profit 
operations) of the other/secondary employer;
    (H) The other/secondary employer is itself in business; and
    (I) The other/secondary employer can discharge the nonimmigrant from 
providing services.
    (3) What other/secondary employers are included in the prohibition 
on secondary displacement of U.S. workers by the H-1B employer? The 
other/secondary employer who accepts the placement and/or services of 
the H-1B employer's nonimmigrant employee(s) need not be an H-1B 
employer. The other/secondary employer would often be (but is not 
limited to) the client or customer of an H-1B employer that is a 
staffing firm or a service provider which offers the services of H-1B 
nonimmigrants under a contract (e.g., a medical staffing firm under 
contract with a nursing home provides H-1B nonimmigrant physical 
therapists; an information technology staffing firm under contract with 
a bank provides H-1B nonimmigrant computer engineers). Only the H-1B 
employer placing the nonimmigrant with the secondary employer is subject 
to the non-displacement obligation on the LCA, and only that employer is 
liable in an enforcement action pursuant to subpart I of this part if 
the other/secondary employer, in fact, displaces any of its U.S. 
worker(s) during the applicable time period. The other/secondary 
employer will not be subject to sanctions in an enforcement action 
pursuant to subpart I of this part (except in circumstances where such 
other/secondary employer is, in fact, an H-1B employer and is found to 
have failed to comply with its own obligations). (Note to paragraph 
(d)(3): Where the other/secondary employer's relationship to the H-1B 
nonimmigrant constitutes ``employment'' for purposes of a statute other 
than the H-1B provision of the INA, such as the Fair Labor Standards Act 
(29 U.S.C. 201 et seq.), the other/secondary employer would be subject 
to all obligations of an employer of the nonimmigrant under such other 
statute.)
    (4) When does the ``secondary displacement'' prohibition apply? The 
H-1B employer's obligation of inquiry concerns the actions of the other/
secondary employer during the specific period beginning 90 days before 
and ending 90 days after the date of the placement of the H-1B 
nonimmigrant(s) with such other/secondary employer.
    (5) What are the H-1B employer's obligations concerning inquiry and/
or information as to the other/secondary employer's displacement of U.S. 
workers? The H-1B employer is prohibited from placing the H-1B 
nonimmigrant with another employer, unless the H-1B employer has 
inquired of the other/secondary employer as to whether, and has no 
knowledge that, within the period beginning 90 days before and ending 90 
days after the date of such placement, the other/secondary employer has 
displaced or intends to displace a similarly-employed U.S. worker 
employed by such other/secondary employer. The following standards and 
guidance apply to the H-1B employer's obligation:
    (i) The H-1B employer is required to exercise due diligence and to 
make a reasonable effort to enquire about potential secondary 
displacement, through methods which may include (but are not limited 
to)--
    (A) Securing and retaining a written assurance from the other/
secondary employer that it has not and does not intend to displace a 
similarly-employed U.S. worker within the prescribed period;
    (B) Preparing and retaining a memorandum to the file, prepared at 
the same time or promptly after receiving the other/secondary employer's 
oral statement that it has not and does not intend to displace a 
similarly-employed U.S. worker within the prescribed period (such 
memorandum shall include the substance of the conversation, the date of 
the communication, and the names of the individuals who participated in 
the conversation, including the person(s) who made the inquiry on behalf 
of the H-1B employer and made the statement on behalf of the other/
secondary employer); or
    (C) including a secondary displacement clause in the contract 
between

[[Page 616]]

the H-1B employer and the other/secondary employer, whereby the other/
secondary employer would agree that it has not and will not displace 
similarly-employed U.S. workers within the prescribed period.
    (ii) The employer's exercise of due diligence may require further, 
more particularized inquiry of the other/secondary employer in 
circumstances where there is information which indicates that U.S. 
worker(s) have been or will be displaced (e.g., where the H-1B 
nonimmigrants will be performing functions that the other/secondary 
employer performed with its own workforce in the past). The employer is 
not permitted to disregard information which would provide knowledge 
about potential secondary displacement (e.g., newspaper reports of 
relevant lay-offs by the other/secondary employer) if such information 
becomes available before the H-1B employer's placement of H-1B 
nonimmigrants with such employer. Under such circumstances, the H-1B 
employer would be expected to recontact the other/secondary employer and 
receive credible assurances that no lay-offs of similarly-employed U.S. 
workers are planned or have occurred within the prescribed period.
    (e) What documentation is required of H-1B employers concerning the 
non-displacement obligation? The H-1B employer is responsible for 
demonstrating its compliance with the non-displacement obligation 
(whether direct or indirect), if applicable.
    (1) Concerning direct displacement (as described in paragraph (c) of 
this section), the employer is required to retain all records the 
employer creates or receives concerning the circumstances under which 
each U.S. worker, in the same locality and same occupation as any H-1B 
nonimmigrant(s) hired, left its employ in the period from 90 days before 
to 90 days after the filing date of the employer's petition for the H-1B 
nonimmigrant(s), and for any such U.S. worker(s) for whom the employer 
has taken any action during the period from 90 days before to 90 days 
after the filing date of the H-1B petition to cause the U.S. worker's 
termination (e.g., a notice of future termination of the employee's 
job). For all such employees, the H-1B employer shall retain at least 
the following documents: the employee's name, last-known mailing 
address, occupational title and job description; any documentation 
concerning the employee's experience and qualifications, and principal 
assignments; all documents concerning the departure of such employees, 
such as notification by the employer of termination of employment 
prepared by the employer or the employee and any responses thereto, and 
evaluations of the employee's job performance. Finally, the employer is 
required to maintain a record of the terms of any offers of similar 
employment to such U.S. workers and the employee's response thereto.
    (2) Concerning secondary displacement (as described in paragraph (d) 
of this section), the H-1B employer is required to maintain 
documentation to show the manner in which it satisfied its obligation to 
make inquiries as to the displacement of U.S. workers by the other/
secondary employer with which the H-1B employer places any H-1B 
nonimmigrants (as described in paragraph (d)(5) of this section).

[65 FR 80228, Dec. 20, 2000]



Sec. 655.739  What is the ``recruitment of U.S. workers'' obligation 
that applies to H-1B-dependent employers and willful violators, and how 
does it operate?

    An employer that is subject to this additional attestation 
obligation (under the standards described in Sec. 655.736) is 
required--prior to filing the LCA or any petition or request for 
extension of status supported by the LCA--to take good faith steps to 
recruit U. S. workers in the United States for the job(s) in the United 
States for which the H-1B nonimmigrant(s) is/are sought. The recruitment 
shall use procedures that meet industry-wide standards and offer 
compensation that is at least as great as the required wage to be paid 
to H-1B nonimmigrants pursuant to Sec. 655.731(a) (i.e., the higher of 
the local prevailing wage or the employer's actual wage). The employer 
may use legitimate selection criteria relevant to the job that are 
normal or customary to the type of job involved, so long as such 
criteria are not applied in a discriminatory

[[Page 617]]

manner. This section provides guidance for the employer's compliance 
with the recruitment obligation.
    (a) ``United States worker'' (``U.S. worker'') is defined in Sec. 
655.715.
    (b) ``Industry,'' for purposes of this section, means the set of 
employers which primarily compete for the same types of workers as those 
who are the subjects of the H-1B petitions to be filed pursuant to the 
LCA. Thus, a hospital, university, or computer software development firm 
is to use the recruitment standards utilized by the health care, 
academic, or information technology industries, respectively, in hiring 
workers in the occupations in question. Similarly, a staffing firm, 
which places its workers at job sites of other employers, is to use the 
recruitment standards of the industry which primarily employs such 
workers (e.g., the health care industry, if the staffing firm is placing 
physical therapists (whether in hospitals, nursing homes, or private 
homes); the information technology industry, if the staffing firm is 
placing computer programmers, software engineers, or other such 
workers).
    (c) ``Recruitment,'' for purposes of this section, means the process 
by which an employer seeks to contact or to attract the attention of 
person(s) who may apply for employment, solicits applications from 
person(s) for employment, receives applications, and reviews and 
considers applications so as to present the appropriate candidates to 
the official(s) who make(s) the hiring decision(s) (i.e., pre-selection 
treatment of applications and applicants).
    (d) ``Solicitation methods,'' for purposes of this section, means 
the techniques by which an employer seeks to contact or to attract the 
attention of potential applicants for employment, and to solicit 
applications from person(s) for employment.
    (1) Solicitation methods may be either external or internal to the 
employer's workforce (with internal solicitation to include current and 
former employees).
    (2) Solicitation methods may be either active (where an employer 
takes positive, proactive steps to identify potential applicants and to 
get information about its job openings into the hands of such person(s)) 
or passive (where potential applicants find their way to an employer's 
job announcements).
    (i) Active solicitation methods include direct communication to 
incumbent workers in the employer's operation and to workers previously 
employed in the employer's operation and elsewhere in the industry; 
providing training to incumbent workers in the employer's organization; 
contact and outreach through collective bargaining organizations, trade 
associations and professional associations; participation in job fairs 
(including at minority-serving institutions, community/junior colleges, 
and vocational/technical colleges); use of placement services of 
colleges, universities, community/junior colleges, and business/trade 
schools; use of public and/or private employment agencies, referral 
agencies, or recruitment agencies (``headhunters'').
    (ii) Passive solicitation methods include advertising in general 
distribution publications, trade or professional journals, or special 
interest publications (e.g., student-oriented; targeted to 
underrepresented groups, including minorities, persons with 
disabilities, and residents of rural areas); America's Job Bank or other 
Internet sites advertising job vacancies; notices at the employer's 
worksite(s) and/or on the employer's Internet ``home page.''
    (e) How are ``industry-wide standards for recruitment'' to be 
identified? An employer is not required to utilize any particular number 
or type of recruitment methods, and may make a determination of the 
standards for the industry through methods such as trade organization 
surveys, studies by consultative groups, or reports/statements from 
trade organizations. An employer which makes such a determination should 
be prepared to demonstrate the industry-wide standards in the event of 
an enforcement action pursuant to subpart I of this part. An employer's 
recruitment shall be at a level and through methods and media which are 
normal, common or prevailing in the industry, including those strategies 
that have been shown to be successfully used by employers in the 
industry to recruit U.S. workers. An employer

[[Page 618]]

may not utilize only the lowest common denominator of recruitment 
methods used in the industry, or only methods which could reasonably be 
expected to be likely to yield few or no U.S. worker applicants, even if 
such unsuccessful recruitment methods are commonly used by employers in 
the industry. An employer's recruitment methods shall include, at a 
minimum, the following:
    (1) Both internal and external recruitment (i.e., both within the 
employer's workforce (former as well as current workers) and among U.S. 
workers elsewhere in the economy); and
    (2) At least some active recruitment, whether internal (e.g., 
training the employer's U.S. worker(s) for the position(s)) or external 
(e.g., use of recruitment agencies or college placement services).
    (f) How are ``legitimate selection criteria relevant to the job that 
are normal or customary to the type of job involved'' to be identified? 
In conducting recruitment of U.S. workers (i.e., in soliciting 
applications and in pre-selection screening or considering of 
applicants), an employer shall apply selection criteria which satisfy 
all of the following three standards (i.e., paragraph (b) (1) through 
(3)). Under these standards, an employer would not apply spurious 
criteria that discriminate against U.S. worker applicants in favor of H-
1B nonimmigrants. An employer that uses criteria which fail to meet 
these standards would be considered to have failed to conduct its 
recruitment of U.S. workers in good faith.
    (1) Legitimate criteria, meaning criteria which are legally 
cognizable and not violative of any applicable laws (e.g., employer may 
not use age, sex, race or national origin as selection criteria);.
    (2) Relevant to the job, meaning criteria which have a nexus to the 
job's duties and responsibilities; and
    (3) Normal and customary to the type of job involved, meaning 
criteria which would be necessary or appropriate based on the practices 
and expectations of the industry, rather than on the preferences of the 
particular employer.
    (g) What actions would constitute a prohibited ``discriminatory 
manner'' of recruitment? The employer shall not apply otherwise-
legitimate screening criteria in a manner which would skew the 
recruitment process in favor of H-1B nonimmigrants. In other words, the 
employer's application of its screening criteria shall provide full and 
fair solicitation and consideration of U.S. applicants. The recruitment 
would be considered to be conducted in a discriminatory manner if the 
employer applied its screening criteria in a disparate manner (whether 
between H-1B and U.S. workers, or between jobs where H-1B nonimmigrants 
are involved and jobs where such workers are not involved). The employer 
would also be considered to be recruiting in a discriminatory manner if 
it used screening criteria that are prohibited by any applicable 
discrimination law (e.g., sex, race, age, national origin). The employer 
that conducts recruitment in a discriminatory manner would be considered 
to have failed to conduct its recruitment of U.S. workers in good faith.
    (h) What constitute ``good faith steps'' in recruitment of U.S. 
workers? The employer shall perform its recruitment, as described in 
paragraphs (d) through (g) of this section, so as to offer fair 
opportunities for employment to U.S. workers, without skewing the 
recruitment process against U.S. workers or in favor of H-1B 
nonimmigrants. No specific regimen is required for solicitation methods 
seeking applicants or for pre-selection treatment screening applicants. 
The employer's recruitment process, including pre-selection treatment, 
must assure that U.S. workers are given a fair chance for consideration 
for a job, rather than being ignored or rejected through a process that 
serves the employer's preferences with respect to the make up of its 
workforce (e.g., the Department would look with disfavor on a practice 
of interviewing H-1B applicants but not U.S. applicants, or a practice 
of screening the applications of H-1B nonimmigrants differently from the 
applications of U.S. workers). The employer shall not exercise a 
preference for its incumbent nonimmigrant workers who do not yet have H-
1B status (e.g., workers on student visas). The employer shall recruit 
in the United States, seeking U.S. worker(s), for the

[[Page 619]]

job(s) in the United States for which H-1B nonimmigrant(s) are or will 
be sought.
    (i) What documentation is the employer required to make or maintain, 
concerning its recruitment of U.S. workers?
    (1) The employer shall maintain documentation of the recruiting 
methods used, including the places and dates of the advertisements and 
postings or other recruitment methods used, the content of the 
advertisements and postings, and the compensation terms (if such are not 
included in the content of the advertisements and postings). The 
documentation may be in any form, including copies of advertisements or 
proofs from the publisher, the order or confirmation from the publisher, 
an electronic or printed copy of the Internet posting, or a memorandum 
to the file.
    (2) The employer shall retain any documentation it has received or 
prepared concerning the treatment of applicants, such as copies of 
applications and/or related documents, test papers, rating forms, 
records regarding interviews, and records of job offers and applicants' 
responses. To comply with this requirement, the employer is not required 
to create any documentation it would not otherwise create.
    (3) The documentation maintained by the employer shall be made 
available to the Administrator in the event of an enforcement action 
pursuant to subpart I of this part. The documentation shall be 
maintained for the period of time specified in Sec. 655.760.
    (4) The employer's public access file maintained in accordance with 
Sec. 655.760 shall contain information summarizing the principal 
recruitment methods used and the time frame(s) in which such recruitment 
methods were used. This may be accomplished either through a memorandum 
or through copies of pertinent documents.
    (j) In addition to conducting good faith recruitment of U.S. workers 
(as described in paragraphs (a) through (h) of this section), the 
employer is required to have offered the job to any U.S. worker who 
applies and is equally or better qualified for the job than the H-1B 
nonimmigrant (see 8 U.S.C. 1182(n)(1)(G)(i)(II)); this requirement is 
enforced by the Department of Justice (see 8 U.S.C. 1182(n)(5); 20 CFR 
655.705(c)).

[65 FR 80231, Dec. 20, 2000]



Sec. 655.740  What actions are taken on labor condition applications?

    (a) Actions on labor condition applications submitted for filing. 
Once a labor condition application has been received from an employer, a 
determination shall be made by the ETA Certifying Officer whether to 
certify the labor condition application or return it to the employer not 
certified.
    (1) Certification of labor condition application. Where all items on 
Form ETA 9035 or Form ETA 9035E have been completed, the form is not 
obviously inaccurate, and in the case of Form ETA 9035, it contains the 
signature of the employer or its authorized agent or representative, the 
Certifying Officer shall certify the labor condition application unless 
it falls within one of the categories set forth in paragraph (a)(2) of 
this section. The Certifying Officer shall make a determination to 
certify or not certify the labor condition application within 7 working 
days of the date the application is received and date-stamped by the 
Department. If the labor condition application is certified, the 
Certifying Officer shall return a certified copy of the labor condition 
application to the employer or the employer's authorized agent or 
representative. The employer shall file the certified labor condition 
application with the appropriate INS office in the manner prescribed by 
INS. The INS shall determine whether each occupational classification 
named in the certified labor condition application is a specialty 
occupation or is a fashion model of distinguished merit and ability.
    (2) Determinations not to certify labor condition applications. ETA 
shall not certify a labor condition application and shall return such 
application to the employer or the employer's authorized agent or 
representative, when either or both of the following two conditions 
exists:
    (i) When the Form ETA 9035 or 9035E is not properly completed. 
Examples of a Form ETA 9035 or 9035E which is not properly completed 
include instances

[[Page 620]]

where the employer has failed to check all the necessary boxes; or where 
the employer has failed to state the occupational classification, number 
of nonimmigrants sought, wage rate, period of intended employment, place 
of intended employment, or prevailing wage and its source; or, in the 
case of Form ETA 9035, where the application does not contain the 
signature of the employer or the employer's authorized representative.
    (ii) When the Form ETA 9035 or ETA 9035E contains obvious 
inaccuracies. An obvious inaccuracy will be found if the employer files 
an application in error--e.g., where the Administrator, Wage and Hour 
Division, after notice and opportunity for a hearing pursuant to subpart 
I of this part, has notified ETA in writing that the employer has been 
disqualified from employing H-1B nonimmigrants under section 212(n)(2) 
of the INA or from employing H-1B1 nonimmigrants under 212(t)(3) of the 
INA. Examples of other obvious inaccuracies include stating a wage rate 
below the FLSA minimum wage, submitting an LCA earlier than six months 
before the beginning date of the period of intended employment, 
identifying multiple occupations on a single LCA, identifying a wage 
which is below the prevailing wage listed on the LCA, or identifying a 
wage range where the bottom of such wage range is lower than the 
prevailing wage listed on the LCA.
    (3) Correction and resubmission of labor condition application. If 
the labor condition application is not certified pursuant to paragraph 
(a)(2) (i) or (ii) of this section, ETA shall return it to the employer, 
or the employer's authorized agent or representative, explaining the 
reasons for such return without certification. The employer may 
immediately submit a corrected application to ETA. A ``resubmitted'' or 
``corrected'' labor condition application shall be treated as a new 
application by ETA (i.e., on a ``first come, first served'' basis) 
except that if the labor condition application is not certified pursuant 
to paragraph (a)(2)(ii) of this section because of notification by the 
Administrator of the employer's disqualification, such action shall be 
the final decision of the Secretary and no application shall be 
resubmitted by the employer.
    (b) Challenges to labor condition applications. ETA shall not 
consider information contesting a labor condition application received 
by ETA prior to the determination on the application. Such information 
shall not be made part of ETA's administrative record on the 
application, but shall be referred to ESA to be processed as a complaint 
pursuant to subpart I of this part, and, if such application is 
certified by ETA, the complaint will be handled by ESA under subpart I 
of this part.
    (c) Truthfulness and adequacy of information. DOL is not the 
guarantor of the accuracy, truthfulness or adequacy of a certified labor 
condition application. The burden of proof is on the employer to 
establish the truthfulness of the information contained on the labor 
condition application.

[59 FR 65659, 65676, Dec. 20, 1994, as amended at 65 FR 80232, Dec. 20, 
2000; 66 FR 63302, Dec. 5, 2001; 69 FR 68228, Nov. 23, 2004; 70 FR 
72563, Dec. 5, 2005]



Sec. 655.750  What is the validity period of the labor condition 
application?

    (a) Validity of certified labor condition applications. A labor 
condition application certified pursuant to the provisions of Sec. 
655.740 is valid for the period of employment indicated on Form ETA 
9035E or ETA 9035 by the authorized DOL official. The validity period of 
a labor condition application will not begin before the application is 
certified and the period of authorized employment shall not exceed three 
years. However, in the event employment pursuant to section 214(n) of 
the INA (formerly section 214(m), addressing increased portability of H-
1B status) commences prior to certification of the labor condition 
application, the attestation requirements of the subsequently certified 
application shall apply back to the first date of employment. Where the 
labor condition application contains multiple periods of intended 
employment, the validity period shall extend to the latest date 
indicated or three years, whichever comes first.
    (b) Withdrawal of certified labor condition applications. (1) An 
employer who has filed a labor condition application

[[Page 621]]

which has been certified pursuant to Sec. 655.740 of this part may 
withdraw such labor condition application at any time before the 
expiration of the validity period of the application, provided that:
    (i) H-1B nonimmigrants are not employed at the place of employment 
pursuant to the labor condition application; and
    (ii) The Administrator has not commenced an investigation of the 
particular application. Any such request for withdrawal shall be null 
and void; and the employer shall remain bound by the labor condition 
application until the enforcement proceeding is completed, at which time 
the application may be withdrawn.
    (2) Requests for withdrawals shall be in writing and shall be sent 
to ETA, Division of Foreign Labor Certification. ETA shall publish a 
Notice in the Federal Register identifying the address, and any future 
address changes, to which requests for withdrawals shall be mailed, and 
shall also post these addresses on the DOL Web site at http://
www.lca.doleta.gov.
    (3) An employer shall comply with the ``required wage rate'' and 
``prevailing working conditions'' statements of its labor condition 
application required under Sec. Sec. 655.731 and 655.732 of this part, 
respectively, even if such application is withdrawn, at any time H-1B 
nonimmigrants are employed pursuant to the application, unless the 
application is superseded by a subsequent application which is certified 
by ETA.
    (4) An employer's obligation to comply with the ``no strike or 
lockout'' and ``notice'' statements of its labor condition application 
(required under Sec. Sec. 655.733 and 655.734 of this part, 
respectively), shall remain in effect and the employer shall remain 
subject to investigation and sanctions for misrepresentation on these 
statements even if such application is withdrawn, regardless of whether 
H-1B nonimmigrants are actually employed, unless the application is 
superseded by a subsequent application which is certified by ETA.
    (5) Only for the purpose of assuring the labor standards protections 
afforded under the H-1B program, where an employer files a petition with 
INS under the H-1B classification pursuant to a certified LCA that had 
been withdrawn by the employer, such petition filing binds the employer 
to all obligations under the withdrawn LCA immediately upon receipt of 
such petition by INS.
    (c) Invalidation or suspension of a labor condition application. (1) 
Invalidation of a labor condition application shall result from 
enforcement action(s) by the Administrator, Wage and Hour Division, 
under subpart I of this part--e.g., a final determination finding the 
employer's failure to meet the application's condition regarding strike 
or lockout; or the employer's willful failure to meet the wage and 
working conditions provisions of the application; or the employer's 
substantial failure to meet the notice of specification requirements of 
the application; see Sec. Sec. 655.734 and 655.760 of this part; or the 
misrepresentation of a material fact in an application. Upon notice by 
the Administrator of the employer's disqualification, ETA shall 
invalidate the application and notify the employer, or the employer's 
authorized agent or representative. ETA shall notify the employer in 
writing of the reason(s) that the application is invalidated. When a 
labor condition application is invalidated, such action shall be the 
final decision of the Secretary.
    (2) Suspension of a labor condition application may result from a 
discovery by ETA that it made an error in certifying the application 
because such application is incomplete, contains one or more obvious 
inaccuracies, or has not been signed. In such event, ETA shall 
immediately notify INS and the employer. When an application is 
suspended, the employer may immediately submit to the certifying officer 
a corrected or completed application. If ETA does not receive a 
corrected application within 30 days of the suspension, or if the 
employer was disqualified by the Administrator, the application shall be 
immediately invalidated as described in paragraph (c) of this section.
    (3) An employer shall comply with the ``required wages rate'' and 
``prevailing working conditions'' statements of its labor condition 
application required under Sec. Sec. 655.731 and 655.732 of this part, 
respectively, even if such application is suspended or invalidated, at 
any time H-1B nonimmigrants are

[[Page 622]]

employed pursuant to the application, unless the application is 
superseded by a subsequent application which is certified by ETA.
    (4) An employer's obligation to comply with the ``no strike or 
lockout'' and ``notice'' statements of its labor condition application 
(required under Sec. Sec. 655.733 and 655.734 of this part, 
respectively), shall remain in effect and the employer shall remain 
subject to investigation and sanctions for misrepresentation on these 
statements even if such application is suspended or invalidated, 
regardless of whether H-1B nonimmigrants are actually employed, unless 
the application is superseded by a subsequent application which is 
certified by ETA.
    (d) Employers subject to disqualification. No labor condition 
application shall be certified for an employer which has been found to 
be disqualified from participation, in the H-1B program as determined in 
a final agency action following an investigation by the Wage and Hour 
Division pursuant to subpart I of this part.

[59 FR 65659, 65676, Dec. 20, 1994, as amended at 65 FR 80232, Dec. 20, 
2000; 66 FR 63302, Dec. 5, 2001; 70 FR 72563, Dec. 5, 2005]



Sec. 655.760  What records are to be made available to the public, and 
what records are to be retained?

    (a) Public examination. The employer shall make a filed labor 
condition application and necessary supporting documentation available 
for public examination at the employer's principal place of business in 
the U.S. or at the place of employment within one working day after the 
date on which the labor condition application is filed with DOL. The 
following documentation shall be necessary:
    (1) A copy of the certified labor condition application (Form ETA 
9035E or Form ETA 9035) and cover pages (Form ETA 9035CP). If the Form 
ETA 9035E is submitted electronically, a printout of the certified 
application shall be signed by the employer and maintained in its files 
and included in the public examination file.
    (2) Documentation which provides the wage rate to be paid the H-1B 
nonimmigrant;
    (3) A full, clear explanation of the system that the employer used 
to set the ``actual wage'' the employer has paid or will pay workers in 
the occupation for which the H-1B nonimmigrant is sought, including any 
periodic increases which the system may provide--e.g., memorandum 
summarizing the system or a copy of the employer's pay system or scale 
(payroll records are not required, although they shall be made available 
to the Department in an enforcement action).
    (4) A copy of the documentation the employer used to establish the 
``prevailing wage'' for the occupation for which the H-1B nonimmigrant 
is sought (a general description of the source and methodology is all 
that is required to be made available for public examination; the 
underlying individual wage data relied upon to determine the prevailing 
wage is not a public record, although it shall be made available to the 
Department in an enforcement action); and
    (5) A copy of the document(s) with which the employer has satisfied 
the union/employee notification requirements of Sec. 655.734 of this 
part.
    (6) A summary of the benefits offered to U.S. workers in the same 
occupational classifications as H-1B nonimmigrants, a statement as to 
how any differentiation in benefits is made where not all employees are 
offered or receive the same benefits (such summary need not include 
proprietary information such as the costs of the benefits to the 
employer, or the details of stock options or incentive distributions), 
and/or, where applicable, a statement that some/all H-1B nonimmigrants 
are receiving ``home country'' benefits (see Sec. 655.731(c)(3));
    (7) Where the employer undergoes a change in corporate structure, a 
sworn statement by a responsible official of the new employing entity 
that it accepts all obligations, liabilities and undertakings under the 
LCAs filed by the predecessor employing entity, together with a list of 
each affected LCA and its date of certification, and a description of 
the actual wage system and EIN of the new employing entity (see Sec. 
655.730(e)(1)).
    (8) Where the employer utilizes the definition of ``single 
employer''in the

[[Page 623]]

IRC, a list of any entities included as part of the single employer in 
making the determination as to its H-1B-dependency status (see Sec. 
655.736(d)(7));
    (9) Where the employer is H-1B-dependent and/or a willful violator, 
and indicates on the LCA(s) that only ``exempt'' H-1B nonimmigrants will 
be employed, a list of such ``exempt'' H-1B nonimmigrants (see Sec. 
655.737(e)(1));
    (10) Where the employer is H-1B-dependent or a willful violator, a 
summary of the recruitment methods used and the time frames of 
recruitment of U.S. workers (or copies of pertinent documents showing 
this information) (see Sec. 655.739(i)(4).
    (b) National lists of applications and attestations. ETA shall 
compile and maintain on a current basis a list of the labor condition 
applications filed under INA section 212(n) regarding H-1B nonimmigrants 
and a list of labor attestations filed under INA section 212(t) 
regarding H-1B1 nonimmigrants. Each list shall be by employer, showing 
the occupational classification, wage rate(s), number of nonimmigrants 
sought, period(s) of intended employment, and date(s) of need for each 
employer's application. The list shall be available for public 
examination at the Division of Foreign Labor Certification, Department 
of Labor, 200 Constitution Avenue, NW., Room C-4312, Washington, DC 
20210.
    (c) Retention of records. Either at the employer's principal place 
of business in the U.S. or at the place of employment, the employer 
shall retain copies of the records required by this subpart for a period 
of one year beyond the last date on which any H-1B nonimmigrant is 
employed under the labor condition application or, if no nonimmigrants 
were employed under the labor condition application, one year from the 
date the labor condition application expired or was withdrawn. Required 
payroll records for the H-1B employees and other employees in the 
occupational classification shall be retained at the employer's 
principal place of business in the U.S. or at the place of employment 
for a period of three years from the date(s) of the creation of the 
record(s), except that if an enforcement action is commenced, all 
payroll records shall be retained until the enforcement proceeding is 
completed through the procedures set forth in subpart I of this part.

(Approved by the Office of Management and Budget under control number 
1205-0310)

[59 FR 65659, 65676, Dec. 20, 1994, as amended at 60 FR 4029, Jan. 19, 
1995; 65 FR 80232, Dec. 20, 2000; 66 FR 63302, Dec. 5, 2001; 69 FR 
68228, Nov. 23, 2004; 70 FR 72563, Dec. 5, 2005]



  Subpart I_Enforcement of H-1B Labor Condition Applications and H-1B1 
                           Labor Attestations

    Source: 59 FR 65672, 65676, Dec. 20, 1994, unless otherwise noted.



Sec. 655.800  Who will enforce the LCAs and how will they be enforced?

    (a) Authority of Administrator. Except as provided in Sec. 655.807, 
the Administrator shall perform all the Secretary's investigative and 
enforcement functions under sections 212(n) and (t) of the INA (8 U.S.C. 
1182(n) and (t)) and this subpart I and subpart H of this part.
    (b) Conduct of investigations. The Administrator, either pursuant to 
a complaint or otherwise, shall conduct such investigations as may be 
appropriate and, in connection therewith, enter and inspect such places 
and such records (and make transcriptions or copies thereof), question 
such persons and gather such information as deemed necessary by the 
Administrator to determine compliance regarding the matters which are 
the subject of the investigation.
    (c) Employer cooperation/availability of records. An employer shall 
at all times cooperate in administrative and enforcement proceedings. An 
employer being investigated shall make available to the Administrator 
such records, information, persons, and places as the Administrator 
deems appropriate to copy, transcribe, question, or inspect. No employer 
subject to the provisions of sections 212(n) or (t) of the INA and/or 
this subpart I or subpart H of this part shall interfere with any 
official of the Department of Labor performing an investigation, 
inspection or law enforcement function pursuant to 8 U.S.C. 1182(n) or 
(t) or this subpart I or

[[Page 624]]

subpart H of this part. Any such interference shall be a violation of 
the labor condition application and this subpart I and subpart H of this 
part, and the Administrator may take such further actions as the 
Administrator considers appropriate. (Federal criminal statutes prohibit 
certain interference with a Federal officer in the performance of 
official duties. 18 U.S.C. 111 and 18 U.S.C. 1114.)
    (d) Confidentiality. The Administrator shall, to the extent possible 
under existing law, protect the confidentiality of any person who 
provides information to the Department in confidence in the course of an 
investigation or otherwise under this subpart I or subpart H of this 
part.

[65 FR 80233, Dec. 20, 2000, as amended at 69 FR 68228, Nov. 23, 2004]



Sec. 655.801  What protection do employees have from retaliation?

    (a) No employer subject to this subpart I or subpart H of this part 
shall intimidate, threaten, restrain, coerce, blacklist, discharge or in 
any other manner discriminate against an employee (which term includes a 
former employee or an applicant for employment) because the employee 
has--
    (1) Disclosed information to the employer, or to any other person, 
that the employee reasonably believes evidences a violation of sections 
212(n) or (t) of the INA or any regulation relating to sections 212(n) 
or (t), including this subpart I and subpart H of this part and any 
pertinent regulations of INS or the Department of Justice; or
    (2) Cooperated or sought to cooperate in an investigation or other 
proceeding concerning the employer's compliance with the requirements of 
sections 212(n) or (t) of the INA or any regulation relating to sections 
212(n) or (t).
    (b) It shall be a violation of this section for any employer to 
engage in the conduct described in paragraph (a) of this section. Such 
conduct shall be subject to the penalties prescribed by sections 
212(n)(2)(C)(ii) or (t)(3)(C)(ii) of the INA and Sec. 655.810(b)(2), 
i.e., a fine of up to $5,000, disqualification from filing petitions 
under section 204 or section 214(c) of the INA for at least two years, 
and such further administrative remedies as the Administrator considers 
appropriate.
    (c) Pursuant to sections 212(n)(2)(C)(v) and (t)(3)(C)(v) of the 
INA, an H-1B nonimmigrant who has filed a complaint alleging that an 
employer has discriminated against the employee in violation of 
paragraph (a)(1) of this section may be allowed to seek other 
appropriate employment in the United States, provided the employee is 
otherwise eligible to remain and work in the United States. Such 
employment may not exceed the maximum period of stay authorized for a 
nonimmigrant classified under sections 212(n) or (t) of the INA, as 
applicable. Further information concerning this provision should be 
sought from the Immigration and Naturalization Service.

[65 FR 80233, Dec. 20, 2000, as amended at 69 FR 68229, Nov. 23, 2004]



Sec. 655.805  What violations may the Administrator investigate?

    (a) The Administrator, through investigation, shall determine 
whether an H-1B employer has--
    (1) Filed a labor condition application with ETA which misrepresents 
a material fact (Note to paragraph (a)(1): Federal criminal statutes 
provide penalties of up to $10,000 and/or imprisonment of up to five 
years for knowing and willful submission of false statements to the 
Federal Government. 18 U.S.C. 1001; see also 18 U.S.C. 1546);
    (2) Failed to pay wages (including benefits provided as compensation 
for services), as required under Sec. 655.731 (including payment of 
wages for certain nonproductive time);
    (3) Failed to provide working conditions as required under Sec. 
655.732;
    (4) Filed a labor condition application for H-1B nonimmigrants 
during a strike or lockout in the course of a labor dispute in the 
occupational classification at the place of employment, as prohibited by 
Sec. 655.733;
    (5) Failed to provide notice of the filing of the labor condition 
application, as required in Sec. 655.734;
    (6) Failed to specify accurately on the labor condition application 
the number of workers sought, the occupational classification in which 
the H-1B nonimmigrant(s) will be employed, or

[[Page 625]]

the wage rate and conditions under which the H-1B nonimmigrant(s) will 
be employed;
    (7) Displaced a U.S. worker (including displacement of a U.S. worker 
employed by a secondary employer at the worksite where an H-1B worker is 
placed), as prohibited by Sec. 655.738 (if applicable);
    (8) Failed to make the required displacement inquiry of another 
employer at a worksite where H-1B nonimmigrant(s) were placed, as set 
forth in Sec. 655.738 (if applicable);
    (9) Failed to recruit in good faith, as required by Sec. 655.739 
(if applicable);
    (10) Displaced a U.S. worker in the course of committing a willful 
violation of any of the conditions in paragraphs (a)(2) through (9) of 
this section, or willful misrepresentation of a material fact on a labor 
condition application;
    (11) Required or accepted from an H-1B nonimmigrant payment or 
remittance of the additional $500/$1,000 fee incurred in filing an H-1B 
petition with the INS, as prohibited by Sec. 655.731(c)(10)(ii);
    (12) Required or attempted to require an H-1B nonimmigrant to pay a 
penalty for ceasing employment prior to an agreed upon date, as 
prohibited by Sec. 655.731(c)(10)(i);
    (13) Discriminated against an employee for protected conduct, as 
prohibited by Sec. 655.801;
    (14) Failed to make available for public examination the application 
and necessary document(s) at the employer's principal place of business 
or worksite, as required by Sec. 655.760(a);
    (15) Failed to maintain documentation, as required by this part; and
    (16) Failed otherwise to comply in any other manner with the 
provisions of this subpart I or subpart H of this part.
    (b) The determination letter setting forth the investigation 
findings (see Sec. 655.815) shall specify if the violations were found 
to be substantial or willful. Penalties may be assessed and 
disqualification ordered for violation of the provisions in paragraphs 
(a)(5), (6), or (9) of this section only if the violation was found to 
be substantial or willful. The penalties may be assessed and 
disqualification ordered for violation of the provisions in paragraphs 
(a)(2) or (3) of this section only if the violation was found to be 
willful, but the Secretary may order payment of back wages (including 
benefits) due for such violation whether or not the violation was 
willful.
    (c) For purposes of this part, ``willful failure'' means a knowing 
failure or a reckless disregard with respect to whether the conduct was 
contrary to sections 212(n)(1)(A)(i) or (ii), or 212(t)(1)(A)(i) or (ii) 
of the INA, or Sec. Sec. 655.731 or 655.732. See McLaughlin v. Richland 
Shoe Co., 486 U.S. 128 (1988); see also Trans World Airlines v. 
Thurston, 469 U.S. 111 (1985).
    (d) The provisions of this part become applicable upon the date that 
the employer's LCA is certified pursuant to Sec. Sec. 655.740 and 
655.750, or upon the date employment commences pursuant to section 
214(m) of the INA, whichever is earlier. The employer's submission and 
signature on the LCA (whether Form ETA 9035 or Form ETA 9035E) each 
constitutes the employer's representation that the statements on the LCA 
are accurate and its acknowledgment and acceptance of the obligations of 
the program. The employer's acceptance of these obligations is re-
affirmed by the employer's submission of the petition (Form I-129) to 
the INS, supported by the LCA. See 8 CFR 214.2(h)(4)(iii)(B)(2), which 
specifies that the employer will comply with the terms of the LCA for 
the duration of the H-1B nonimmigrant's authorized period of stay. If 
the period of employment specified in the LCA expires or the employer 
withdraws the application in accordance with Sec. 655.750(b), the 
provisions of this part will no longer apply with respect to such 
application, except as provided in Sec. 655.750(b)(3) and (4).

[65 FR 80233, Dec. 20, 2000, as amended at 66 FR 63302, Dec. 5, 2001; 69 
FR 68229, Nov. 23, 2004]



Sec. 655.806  Who may file a complaint and how is it processed?

    (a) Any aggrieved party, as defined in Sec. 655.715, may file a 
complaint alleging a violation described in Sec. 655.805(a). The 
procedures for filing a complaint by an aggrieved party and its 
processing by the Administrator are set forth in this

[[Page 626]]

section. The procedures for filing and processing information alleging 
violations from persons or organizations that are not aggrieved parties 
are set forth in Sec. 655.807. With regard to complaints filed by any 
aggrieved person or organization--
    (1) No particular form of complaint is required, except that the 
complaint shall be written or, if oral, shall be reduced to writing by 
the Wage and Hour Division official who receives the complaint.
    (2) The complaint shall set forth sufficient facts for the 
Administrator to determine whether there is reasonable cause to believe 
that a violation as described in Sec. 655.805 has been committed, and 
therefore that an investigation is warranted. This determination shall 
be made within 10 days of the date that the complaint is received by a 
Wage and Hour Division official. If the Administrator determines that 
the complaint fails to present reasonable cause for an investigation, 
the Administrator shall so notify the complainant, who may submit a new 
complaint, with such additional information as may be necessary. No 
hearing or appeal pursuant to this subpart shall be available where the 
Administrator determines that an investigation on a complaint is not 
warranted.
    (3) If the Administrator determines that an investigation on a 
complaint is warranted, the complaint shall be accepted for filing; an 
investigation shall be conducted and a determination issued within 30 
calendar days of the date of filing. The time for the investigation may 
be increased with the consent of the employer and the complainant, or 
if, for reasons outside of the control of the Administrator, the 
Administrator needs additional time to obtain information needed from 
the employer or other sources to determine whether a violation has 
occurred. No hearing or appeal pursuant to this subpart shall be 
available regarding the Administrator's determination that an 
investigation on a complaint is warranted.
    (4) In the event that the Administrator seeks a prevailing wage 
determination from ETA pursuant to Sec. 655.731(d), or advice as to 
prevailing working conditions from ETA pursuant to Sec. 655.732(c)(2), 
the 30-day investigation period shall be suspended from the date of the 
Administrator's request to the date of the Administrator's receipt of 
the wage determination (or, in the event that the employer challenges 
the wage determination through the Employment Service complaint system, 
to the date of the completion of such complaint process).
    (5) A complaint must be filed not later than 12 months after the 
latest date on which the alleged violation(s) were committed, which 
would be the date on which the employer allegedly failed to perform an 
action or fulfill a condition specified in the LCA, or the date on which 
the employer, through its action or inaction, allegedly demonstrated a 
misrepresentation of a material fact in the LCA. This jurisdictional bar 
does not affect the scope of the remedies which may be assessed by the 
Administrator. Where, for example, a complaint is timely filed, back 
wages may be assessed for a period prior to one year before the filing 
of a complaint.
    (6) A complaint may be submitted to any local Wage and Hour Division 
office. The addresses of such offices are found in local telephone 
directories, and on the Department's informational site on the Internet 
at http://www.dol.gov/dol/esa/public/contacts/whd/america2.htm. The 
office or person receiving such a complaint shall refer it to the office 
of the Wage and Hour Division administering the area in which the 
reported violation is alleged to have occurred.
    (b) When an investigation has been conducted, the Administrator 
shall, pursuant to Sec. 655.815, issue a written determination as 
described in Sec. 655.805(a).

[65 FR 80234, Dec. 20, 2000]



Sec. 655.807  How may someone who is not an ``aggrieved party'' allege 
violations, and how will those allegations be processed?

    (a) Persons who are not aggrieved parties may submit information 
concerning possible violations of the provisions described in Sec. 
655.805(a)(1) through (4) and (a)(7) through (9). No particular form is 
required to submit the information, except that the information shall be 
submitted in writing

[[Page 627]]

or, if oral, shall be reduced to writing by the Wage and Hour Division 
official who receives the information. An optional form shall be 
available to be used in setting forth the information. The information 
provided shall include:
    (1) The identity of the person submitting the information and the 
person's relationship, if any, to the employer or other information 
concerning the person's basis for having knowledge of the employer's 
employment practices or its compliance with the requirements of this 
subpart I and subpart H of this part; and
    (2) A description of the possible violation, including a description 
of the facts known to the person submitting the information, in 
sufficient detail for the Secretary to determine if there is reasonable 
cause to believe that the employer has committed a willful violation of 
the provisions described in Sec. 655.805(a)(1), (2), (3), (4), (7), 
(8), or (9).
    (b) The Administrator may interview the person submitting the 
information as appropriate to obtain further information to determine 
whether the requirements of this section are met. In addition, the 
person submitting information under this section shall be informed that 
his or her identity will not be disclosed to the employer without his or 
her permission.
    (c) Information concerning possible violations must be submitted not 
later than 12 months after the latest date on which the alleged 
violation(s) were committed. The 12-month period shall be applied in the 
manner described in Sec. 655.806(a)(5).
    (d) Upon receipt of the information, the Administrator shall 
promptly review the information submitted and determine:
    (1) Does the source likely possess knowledge of the employer's 
practices or employment conditions or the employer's compliance with the 
requirements of subpart H of this part?
    (2) Has the source provided specific credible information alleging a 
violation of the requirements of the conditions described in Sec. 
655.805(a)(1), (2), (3), (4), (7), (8), or (9)?
    (3) Does the information in support of the allegations appear to 
provide reasonable cause to believe that the employer has committed a 
violation of the provisions described in Sec. 655.805(a)(1), (2), (3), 
(4), (7), (8), or (9), and that
    (i) The alleged violation is willful?
    (ii) The employer has engaged in a pattern or practice of 
violations? or
    (iii) The employer has committed substantial violations, affecting 
multiple employees?
    (e) ``Information'' within the meaning of this section does not 
include information from an officer or employee of the Department of 
Labor unless it was obtained in the course of a lawful investigation, 
and does not include information submitted by the employer to the 
Attorney General or the Secretary in securing the employment of an H-1B 
nonimmigrant.
    (f)(1) Except as provided in paragraph (f)(2) of this section, where 
the Administrator has received information from a source other than an 
aggrieved party which satisfies all of the requirements of paragraphs 
(a) through (d) of this section, or where the Administrator or another 
agency of the Department obtains such information in a lawful 
investigation under this or any other section of the INA or any other 
Act, the Administrator (by mail or facsimile transmission) shall 
promptly notify the employer that the information has been received, 
describe the nature of the allegation in sufficient detail to permit the 
employer to respond, and request that the employer respond to the 
allegation within 10 days of its receipt of the notification. The 
Administrator shall not identify the source or information which would 
reveal the identity of the source without his or her permission.
    (2) The Administrator may dispense with notification to the employer 
of the alleged violations if the Administrator determines that such 
notification might interfere with an effort to secure the employer's 
compliance. This determination shall not be subject to review in any 
administrative proceeding and shall not be subject to judicial review.

[[Page 628]]

    (g) After receipt of any response to the allegations provided by the 
employer, the Administrator will promptly review all of the information 
received and determine whether the allegations should be referred to the 
Secretary for a determination whether an investigation should be 
commenced by the Administrator.
    (h) If the Administrator refers the allegations to the Secretary, 
the Secretary shall make a determination as to whether to authorize an 
investigation under this section.
    (1) No investigation shall be commenced unless the Secretary (or the 
Deputy Secretary or other Acting Secretary in the absence or disability) 
personally authorizes the investigation and certifies--
    (i) That the information provided under paragraph (a) of this 
section or obtained pursuant to a lawful investigation by the Department 
of Labor provides reasonable cause to believe that the employer has 
committed a violation of the provisions described in Sec. 
655.805(a)(1), (2), (3), (4), (7), (8), or (9);
    (ii) That there is reasonable cause to believe the alleged 
violations are willful, that the employer has engaged in a pattern or 
practice of such violations, or that the employer has committed 
substantial violations, affecting multiple employees; and
    (iii) That the other requirements of paragraphs (a) through (d) of 
this section have been met.
    (2) No hearing shall be available from a decision by the 
Administrator declining to refer allegations addressed by this section 
to the Secretary, and none shall be available from a decision by the 
Secretary certifying or declining to certify that an investigation is 
warranted.
    (i) If the Secretary issues a certification, an investigation shall 
be conducted and a determination issued within 30 days after the 
certification is received by the local Wage and Hour office undertaking 
the investigation. The time for the investigation may be increased upon 
the agreement of the employer and the Administrator or, if for reasons 
outside of the control of the Administrator, additional time is 
necessary to obtain information needed from the employer or other 
sources to determine whether a violation has occurred.
    (j) In the event that the Administrator seeks a prevailing wage 
determination from ETA pursuant to Sec. 655.731(d), or advice as to 
prevailing working conditions from ETA pursuant to Sec. 655.732(c)(2), 
the 30-day investigation period shall be suspended from the date of the 
Administrator's request to the date of the Administrator's receipt of 
the wage determination (or, in the event that the employer challenges 
the wage determination through the Employment Service complaint system, 
to the date of the completion of such complaint process).
    (k) Following the investigation, the Administrator shall issue a 
determination in accordance with to Sec. 655.815.
    (l) This section shall expire on September 30, 2003 unless section 
212(n)(2)(G) of the INA is extended by future legislative action. Absent 
such extension, no investigation shall be certified by the Secretary 
under this section after that date; however, any investigation certified 
on or before September 30, 2003 may be completed.

[65 FR 80234, Dec. 20, 2000]



Sec. 655.808  Under what circumstances may random investigations 
be conducted?

    (a) The Administrator may conduct random investigations of an 
employer during a five-year period beginning with the date of any of the 
following findings, provided such date is on or after October 21, 1998:
    (1) A finding by the Secretary that the employer willfully violated
    any of the provisions described in Sec. 655.805(a)(1) through (9);
    (2) A finding by the Secretary that the employer willfully 
misrepresented material fact(s) in a labor condition application filed 
pursuant to Sec. 655.730; or
    (3) A finding by the Attorney General that the employer willfully 
failed to meet the condition of section 212(n)(1)(G)(i)(II) of the INA 
(pertaining to an offer of employment to an equally or better qualified 
U.S. worker).
    (b) A finding within the meaning of this section is a final, 
unappealed decision of the agency. See Sec. Sec. 655.520(a), 
655.845(c), and 655.855(b).

[[Page 629]]

    (c) An investigation pursuant to this section may be made at any 
time the Administrator, in the exercise of discretion, considers 
appropriate, without regard to whether the Administrator has reason to 
believe a violation of the provisions of this subpart I and subpart H of 
this part has been committed. Following an investigation, the 
Administrator shall issue a determination in accordance with Sec. 
655.815.

[65 FR 80236, Dec. 20, 2000]



Sec. 655.810  What remedies may be ordered if violations are found?

    (a) Upon determining that an employer has failed to pay wages or 
provide fringe benefits as required by Sec. 655.731 and Sec. 655.732, 
the Administrator shall assess and oversee the payment of back wages or 
fringe benefits to any H-1B nonimmigrant who has not been paid or 
provided fringe benefits as required. The back wages or fringe benefits 
shall be equal to the difference between the amount that should have 
been paid and the amount that actually was paid to (or with respect to) 
such nonimmigrant(s).
    (b) Civil money penalties. The Administrator may assess civil money 
penalties for violations as follows:
    (1) An amount not to exceed $1,000 per violation for:
    (i) A violation pertaining to strike/lockout (Sec. 655.733) or 
displacement of U.S. workers (Sec. 655.738);
    (ii) A substantial violation pertaining to notification (Sec. 
655.734), labor condition application specificity (Sec. 655.730), or 
recruitment of U.S. workers (Sec. 655.739);
    (iii) A misrepresentation of material fact on the labor condition 
application;
    (iv) An early-termination penalty paid by the employee (Sec. 
655.731(c)(10)(i));
    (v) Payment by the employee of the additional $500/$1,000 filing fee 
(Sec. 655.731(c)(10)(ii)); or
    (vi) Violation of the requirements of the regulations in this 
subpart I and subpart H of this part or the provisions regarding public 
access (Sec. 655.760) where the violation impedes the ability of the 
Administrator to determine whether a violation of sections 212(n) or (t) 
of the INA has occurred or the ability of members of the public to have 
information needed to file a complaint or information regarding alleged 
violations of sections 212(n) or (t) of the INA;
    (2) An amount not to exceed $5,000 per violation for:
    (i) A willful failure pertaining to wages/working conditions 
(Sec. Sec. 655.731, 655.732), strike/lockout, notification, labor 
condition application specificity, displacement (including placement of 
an H-1B nonimmigrant at a worksite where the other/secondary employer 
displaces a U.S. worker), or recruitment;
    (ii) A willful misrepresentation of a material fact on the labor 
condition application; or
    (iii) Discrimination against an employee (Sec. 655.801(a)); or
    (3) An amount not to exceed $35,000 per violation where an employer 
(whether or not the employer is an H-1B-dependent employer or willful 
violator) displaced a U.S. worker employed by the employer in the period 
beginning 90 days before and ending 90 days after the filing of an H-1B 
petition in conjunction with any of the following violations:
    (i) A willful violation of any of the provisions described in Sec. 
655.805(a)(2) through (9) pertaining to wages/working condition, strike/
lockout, notification, labor condition application specificity, 
displacement, or recruitment; or
    (ii) A willful misrepresentation of a material fact on the labor 
condition application (Sec. 655.805(a)(1)).
    (c) In determining the amount of the civil money penalty to be 
assessed, the Administrator shall consider the type of violation 
committed and other relevant factors. The factors which may be 
considered include, but are not limited to, the following:
    (1) Previous history of violation, or violations, by the employer 
under the INA and this subpart I or subpart H of this part;
    (2) The number of workers affected by the violation or violations;
    (3) The gravity of the violation or violations;
    (4) Efforts made by the employer in good faith to comply with the 
provisions of 8 U.S.C. 1182(n) or (t) and this subparts H and I of this 
part;
    (5) The employer's explanation of the violation or violations;

[[Page 630]]

    (6) The employer's commitment to future compliance; and
    (7) The extent to which the employer achieved a financial gain due 
to the violation, or the potential financial loss, potential injury or 
adverse effect with respect to other parties.
    (d) Disqualification from approval of petitions. The Administrator 
shall notify the Attorney General pursuant to Sec. 655.855 that the 
employer shall be disqualified from approval of any petitions filed by, 
or on behalf of, the employer pursuant to section 204 or section 214(c) 
of the INA for the following periods:
    (1) At least one year for violation(s) of any of the provisions 
specified in paragraph (b)(1)(i) through (iii) of this section;
    (2) At least two years for violation(s) of any of the provisions 
specified in paragraph (b)(2) of this section; or
    (3) At least three years, for violation(s) specified in paragraph 
(b)(3) of this section.
    (e) Other administrative remedies. (1) If the Administrator finds a 
violation of the provisions specified in paragraph (b)(1)(iv) or (v) of 
this section, the Administrator may issue an order requiring the 
employer to return to the employee (or pay to the U.S. Treasury if the 
employee cannot be located) any money paid by the employee in violation 
of those provisions.
    (2) If the Administrator finds a violation of the provisions 
specified in paragraph (b)(1)(i) through (iii), (b)(2), or (b)(3) of 
this section, the Administrator may impose such other administrative 
remedies as the Administrator determines to be appropriate, including 
but not limited to reinstatement of workers who were discriminated 
against in violation of Sec. 655.805(a), reinstatement of displaced 
U.S. workers, back wages to workers who have been displaced or whose 
employment has been terminated in violation of these provisions, or 
other appropriate legal or equitable remedies.
    (f) The civil money penalties, back wages, and/or any other 
remedy(ies) determined by the Administrator to be appropriate are 
immediately due for payment or performance upon the assessment by the 
Administrator, or upon the decision by an administrative law judge where 
a hearing is timely requested, or upon the decision by the Secretary 
where review is granted. The employer shall remit the amount of the 
civil money penalty by certified check or money order made payable to 
the order of ``Wage and Hour Division, Labor.'' The remittance shall be 
delivered or mailed to the Wage and Hour Division office in the manner 
directed in the Administrator's notice of determination. The payment or 
performance of any other remedy prescribed by the Administrator shall 
follow procedures established by the Administrator. Distribution of back 
wages shall be administered in accordance with existing procedures 
established by the Administrator.
    (g) The Federal Civil Penalties Inflation Adjustment Act of 1990, as 
amended (28 U.S.C. 2461 note), requires that inflationary adjustments to 
civil money penalties in accordance with a specified cost-of-living 
formula be made, by regulation, at least every four years. The 
adjustments are to be based on changes in the Consumer Price Index for 
all Urban Consumers (CPI-U) for the U.S. City Average for All Items. The 
adjusted amounts will be published in the Federal Register. The amount 
of the penalty in a particular case will be based on the amount of the 
penalty in effect at the time the violation occurs.

[65 FR 80236, Dec. 20, 2000, as amended at 69 FR 68229, Nov. 23, 2004]



Sec. 655.815  What are the requirements for the Administrator's 
determination?

    (a) The Administrator's determination, issued pursuant to Sec. 
655.806, 655.807, or 655.808, shall be served on the complainant, the 
employer, and other known interested parties by personal service or by 
certified mail at the parties' last known addresses. Where service by 
certified mail is not accepted by the party, the Administrator may 
exercise discretion to serve the determination by regular mail.
    (b) The Administrator shall file with the Chief Administrative Law 
Judge, U.S. Department of Labor, a copy of the complaint and the 
Administrator's determination.

[[Page 631]]

    (c) The Administrator's written determination required by Sec. 
655.805 of this part shall:
    (1) Set forth the determination of the Administrator and the reason 
or reasons therefor, and in the case of a finding of violation(s) by an 
employer, prescribe any remedies, including the amount of any back wages 
assessed, the amount of any civil money penalties assessed and the 
reason therefor, and/or any other remedies assessed.
    (2) Inform the interested parties that they may request a hearing 
pursuant to Sec. 655.820 of this part.
    (3) Inform the interested parties that in the absence of a timely 
request for a hearing, received by the Chief Administrative Law Judge 
within 15 calendar days of the date of the determination, the 
determination of the Administrator shall become final and not 
appealable.
    (4) Set forth the procedure for requesting a hearing, give the 
addresses of the Chief Administrative Law Judge (with whom the request 
must be filed) and the representative(s) of the Solicitor of labor (upon 
whom copies of the request must be served).
    (5) Where appropriate, inform the parties that, pursuant to Sec. 
655.855, the Administrator shall notify ETA and the Attorney General of 
the occurrence of a violation by the employer.

[59 FR 65672, 65676, Dec. 20, 1994, as amended at 65 FR 80237, Dec. 20, 
2000]



Sec. 655.820  How is a hearing requested?

    (a) Any interested party desiring review of a determination issued 
under Sec. Sec. 655.805 and 655.815, including judicial review, shall 
make a request for such an administrative hearing in writing to the 
Chief Administrative Law Judge at the address stated in the notice of 
determination. If such a request for an administrative hearing is timely 
filed, the Administrator's determination shall be inoperative unless and 
until the case is dismissed or the Administrative Law Judge issues an 
order affirming the decision.
    (b) Interested parties may request a hearing in the following 
circumstances:
    (1) The complainant or any other interested party may request a 
hearing where the Administrator determines, after investigation, that 
there is no basis for a finding that an employer has committed 
violation(s). In such a proceeding, the party requesting the hearing 
shall be the prosecuting party and the employer shall be the respondent; 
the Administrator may intervene as a party or appear as amicus curiae at 
any time in the proceeding, at the Administrator's discretion.
    (2) The employer or any other interested party may request a hearing 
where the Administrator determines, after investigation, that the 
employer has committed violation(s). In such a proceeding, the 
Administrator shall be the prosecuting party and the employer shall be 
the respondent.
    (c) No particular form is prescribed for any request for hearing 
permitted by this section. However, any such request shall:
    (1) Be dated;
    (2) Be typewritten or legibly written;
    (3) Specify the issue or issues stated in the notice of 
determination giving rise to such request;
    (4) State the specific reason or reasons why the party requesting 
the hearing believes such determination is in error;
    (5) Be signed by the party making the request or by an authorized 
representative of such party; and
    (6) Include the address at which such party or authorized 
representative desires to receive further communications relating 
thereto.
    (d) The request for such hearing shall be received by the Chief 
Administrative Law Judge, at the address stated in the Administrator's 
notice of determination, no later than 15 calendar days after the date 
of the determination. An interested party which fails to meet this 15-
day deadline for requesting a hearing may thereafter participate in the 
proceedings only by consent of the administrative law judge, either 
through intervention as a party pursuant to 29 CFR 18.10 (b) through (d) 
or through participation as an amicus curiae pursuant to 29 CFR 18.12.
    (e) The request may be filed in person, by facsimile transmission, 
by certified or regular mail, or by courier service. For the requesting 
party's protection, if the request is by mail, it

[[Page 632]]

should be by certified mail. If the request is by facsimile 
transmission, the original of the request, signed by the requestor or 
authorized representative, shall be filed within ten days.
    (f) Copies of the request for a hearing shall be sent by the 
requestor to the Wage and Hour Division official who issued the 
Administrator's notice of determination, to the representative(s) of the 
Solicitor of Labor identified in the notice of determination, and to all 
known interested parties.

[59 FR 65672, 65676, Dec. 20, 1994, as amended at 65 FR 80237, Dec. 20, 
2000]



Sec. 655.825  What rules of practice apply to the hearing?

    (a) Except as specifically provided in this subpart, and to the 
extent they do not conflict with the provisions of this subpart, the 
``Rules of Practice and Procedure for Administrative Hearings Before the 
Office of Administrative Law Judges'' established by the Secretary at 29 
CFR part 18 shall apply to administrative proceedings under this 
subpart.
    (b) As provided in the Administrative Procedure Act, 5 U.S.C. 556, 
any oral or documentary evidence may be received in proceedings under 
this part. The Federal Rules of Evidence and subpart B of the Rules of 
Practice and Procedure for Administrative Hearings Before the Office of 
Administrative Law Judges (29 CFR part 18, subpart B) shall not apply, 
but principles designed to ensure production of relevant and probative 
evidence shall guide the admission of evidence. The administrative law 
judge may exclude evidence which is immaterial, irrelevant, or unduly 
repetitive.



Sec. 655.830  What rules apply to service of pleadings?

    (a) Under this subpart, a party may serve any pleading or document 
by regular mail. Service on a party is complete upon mailing to the last 
known address. No additional time for filing or response is authorized 
where service is by mail. In the interest of expeditious proceedings, 
the administrative law judge may direct the parties to serve pleadings 
or documents by a method other than regular mail.
    (b) Two (2) copies of all pleadings and other documents in any 
administrative law judge proceeding shall be served on the attorneys for 
the Administrator. One copy shall be served on the Associate Solicitor, 
Division of Fair Labor Standards, Office of the Solicitor, U.S. 
Department of Labor, 200 Constitution Avenue NW., Room N-2716, 
Washington, DC 20210, and one copy shall be served on the attorney 
representing the Administrator in the proceeding.
    (c) Time will be computed beginning with the day following the 
action and includes the last day of the period unless it is a Saturday, 
Sunday, or federally-observed holiday, in which case the time period 
includes the next business day.



Sec. 655.835  How will the administrative law judge conduct the 
proceeding?

    (a) Upon receipt of a timely request for a hearing filed pursuant to 
and in accordance with Sec. 655.820 of this part, the Chief 
Administrative Law Judge shall promptly appoint an administrative law 
judge to hear the case.
    (b) Within 7 calendar days following the assignment of the case, the 
administrative law judge shall notify all interested parties of the 
date, time and place of the hearing. All parties shall be given at least 
fourteen calendar days notice of such hearing.
    (c) The date of the hearing shall be not more than 60 calendar days 
from the date of the Administrator's determination. Because of the time 
constraints imposed by the INA, no request for postponement shall be 
granted except for compelling reasons. Even where such reasons are 
shown, no request for postponement of the hearing beyond the 60-day 
deadline shall be granted except by consent of all the parties to the 
proceeding.
    (d) The administrative law judge may prescribe a schedule by which 
the parties are permitted to file a prehearing brief or other written 
statement of fact or law. Any such brief or statement shall be served 
upon each other party in accordance with Sec. 655.830 of this part. 
Posthearing briefs will not be permitted except at the request of the 
administrative law judge. When permitted, any such brief shall be 
limited to the issue or issues specified by the

[[Page 633]]

administrative law judge, shall be due within the time prescribed by the 
administrative law judge, and shall be served on each other party in 
accordance with Sec. 655.830 of this part.



Sec. 655.840  What are the requirements for a decision and order of 
the administrative law judge?

    (a) Within 60 calendar days after the date of the hearing, the 
administrative law judge shall issue a decision. If any party desires 
review of the decision, including judicial review, a petition for 
Secretary's review thereof shall be filed as provided in Sec. 655.845 
of this subpart. If a petition for review is filed, the decision of the 
administrative law judge shall be inoperative unless and until the 
Secretary issues an order affirming the decision, or, unless and until 
30 calendar days have passed after the Secretary's receipt of the 
petition for review and the Secretary has not issued notice to the 
parties that the Secretary will review the administrative law judge's 
decision.
    (b) The decision of the administrative law judge shall include a 
statement of findings and conclusions, with reasons and basis therefor, 
upon each material issue presented on the record. The decision shall 
also include an appropriate order which may affirm, deny, reverse, or 
modify, in whole or in part, the determination of the Administrator; the 
reason or reasons for such order shall be stated in the decision.
    (c) In the event that the Administrator's determination of wage 
violation(s) and computation of back wages are based upon a wage 
determination obtained by the Administrator from ETA during the 
investigation (pursuant to Sec. 655.731(d)) and the administrative law 
judge determines that the Administrator's request was not warranted 
(under the standards in Sec. 655.731(d)), the administrative law judge 
shall remand the matter to the Administrator for further proceedings on 
the existence of wage violations and/or the amount(s) of back wages 
owed. If there is no such determination and remand by the administrative 
law judge, the administrative law judge shall accept as final and 
accurate the wage determination obtained from ETA or, in the event 
either the employer or another interested party filed a timely complaint 
through the Employment Service complaint system, the final wage 
determination resulting from that process. See Sec. 655.731; see also 
20 CFR 658.420 through 658.426. Under no circumstances shall the 
administrative law judge determine the validity of the wage 
determination or require submission into evidence or disclosure of 
source data or the names of establishments contacted in developing the 
survey which is the basis for the prevailing wage determination.
    (d) The administrative law judge shall not render determinations as 
to the legality of a regulatory provision or the constitutionality of a 
statutory provision.
    (e) The decision shall be served on all parties in person or by 
certified or regular mail.

[59 FR 65672, 65676, Dec. 20, 1994, as amended at 65 FR 80237, Dec. 20, 
2000]



Sec. 655.845  What rules apply to appeal of the decision of the 
administrative law judge?

    (a) The Administrator or any interested party desiring review of the 
decision and order of an administrative law judge, including judicial 
review, shall petition the Department's Administrative Review Board 
(Board) to review the decision and order. To be effective, such petition 
shall be received by the Board within 30 calendar days of the date of 
the decision and order. Copies of the petition shall be served on all 
parties and on the administrative law judge.
    (b) No particular form is prescribed for any petition for the 
Board's review permitted by this subpart. However, any such petition 
shall:
    (1) Be dated;
    (2) Be typewritten or legibly written;
    (3) Specify the issue or issues stated in the administrative law 
judge decision and order giving rise to such petition;
    (4) State the specific reason or reasons why the party petitioning 
for review believes such decision and order are in error;
    (5) Be signed by the party filing the petition or by an authorized 
representative of such party;

[[Page 634]]

    (6) Include the address at which such party or authorized 
representative desires to receive further communications relating 
thereto; and
    (7) Attach copies of the administrative law judge's's decision and 
order, and any other record documents which would assist the Board in 
determining whether review is warranted.
    (c) Whenever the Board determines to review the decision and order 
of an administrative law judge, a notice of the Board's determination 
shall be served upon the administrative law judge, upon the Office of 
Administrative Law Judges, and upon all parties to the proceeding within 
30 calendar days after the Board's receipt of the petition for review. 
If the Board determines that it will review the decision and order, the 
order shall be inoperative unless and until the Board issues an order 
affirming the decision and order.
    (d) Upon receipt of the Board's notice, the Office of Administrative 
Law Judges shall within 15 calendar days forward the complete hearing 
record to the Board.
    (e) The Board's notice shall specify:
    (1) The issue or issues to be reviewed;
    (2) The form in which submissions shall be made by the parties 
(e.g., briefs);
    (3) The time within which such submissions shall be made.
    (f) All documents submitted to the Board shall be filed with the 
Administrative Review Board, Room S-4309, U.S. Department of Labor, 
Washington, DC 20210. An original and two copies of all documents shall 
be filed. Documents are not deemed filed with the Board until actually 
received by the Board. All documents, including documents filed by mail, 
shall be received by the Board either on or before the due date.
    (g) Copies of all documents filed with the Board shall be served 
upon all other parties involved in the proceeding. Service upon the 
Administrator shall be in accordance with Sec. 655.830(b).
    (h) The Board's final decision shall be issued within 180 calendar 
days from the date of the notice of intent to review. The Board's 
decision shall be served upon all parties and the administrative law 
judge.
    (i) Upon issuance of the Board's decision, the Board shall transmit 
the entire record to the Chief Administrative Law Judge for custody 
pursuant to Sec. 655.850.

[65 FR 80237, Dec. 20, 2000]



Sec. 655.850  Who has custody of the administrative record?

    The official record of every completed administrative hearing 
procedure provided by subparts H and I of this part shall be maintained 
and filed under the custody and control of the Chief Administrative Law 
Judge. Upon receipt of a complaint seeking review of the final agency 
action in a United States District Court, the Chief Administrative Law 
Judge shall certify the official record and shall transmit such record 
to the clerk of the court.



Sec. 655.855  What notice shall be given to the Employment and Training 
Administration and the Attorney General of the decision regarding 
violations?

    (a) The Administrator shall notify the Attorney General and ETA of 
the final determination of any violation requiring that the Attorney 
General not approve petitions filed by an employer. The Administrator's 
notification will address the type of violation committed by the 
employer and the appropriate statutory period for disqualification of 
the employer from approval of petitions. Violations requiring 
notification to the Attorney General are identified in Sec. 655.810(f).
    (b) The Administrator shall notify the Attorney General and ETA upon 
the earliest of the following events:
    (1) Where the Administrator determines that there is a basis for a 
finding of violation by an employer, and no timely request for hearing 
is made pursuant to Sec. 655.820; or
    (2) Where, after a hearing, the administrative law judge issues a 
decision and order finding a violation by an employer, and no timely 
petition for review is filed with the Department's Administrative Review 
Board (Board) pursuant to Sec. 655.845; or
    (3) Where a timely petition for review is filed from an 
administrative law judge's decision finding a violation and the Board 
either declines within 30

[[Page 635]]

days to entertain the appeal, pursuant to Sec. 655.845(c), or the Board 
reviews and affirms the administrative law judge's determination; or
    (4) Where the administrative law judge finds that there was no 
violation by an employer, and the Board, upon review, issues a decision 
pursuant to Sec. 655.845, holding that a violation was committed by an 
employer.
    (c) The Attorney General, upon receipt of notification from the 
Administrator pursuant to paragraph (a) of this section, shall not 
approve petitions filed with respect to that employer under sections 204 
or 214(c) of the INA (8 U.S.C. 1154 and 1184(c)) for nonimmigrants to be 
employed by the employer, for the period of time provided by the Act and 
described in Sec. 655.810(f).
    (d) ETA, upon receipt of the Administrator's notice pursuant to 
paragraph (a) of this section, shall invalidate the employer's labor 
condition application(s) under this subpart I and subpart H of this 
part, and shall not accept for filing any application or attestation 
submitted by the employer under 20 CFR part 656 or subparts A, B, C, D, 
E, H, or I of this part, for the same calendar period as specified by 
the Attorney General.

[65 FR 80238, Dec. 20, 2000]



  Subpart J_Attestations by Employers Using F-1 Students in Off-Campus 
                                  Work

    Source: 56 FR 56865, 56876, Nov. 6, 1991, unless otherwise noted.



Sec. 655.900  Purpose, procedure and applicability of subparts J and 
K of this part.

    (a) Purpose. The Immigration Act of 1990 (Act) at section 221 
creates a three-year work authorization program beginning October 1, 
1991, for aliens admitted as F-1 students described in subparagraph (F) 
of section 101 (a)(15) of the Immigration and Nationality Act. 8 U.S.C. 
1101(a)(15)(F). The Act specifies that the Attorney General shall grant 
an alien authorization to be employed in a position unrelated to the 
alien's field of study (i.e., a position not involving curricular or 
post-graduate practical training) and off-campus if:
    (1) The alien has completed one year of school as an F-1 student and 
is maintaining good academic standing at the educational institution;
    (2) The employer provides the educational institution and the 
Secretary of Labor with an attestation regarding recruitment and rate of 
pay specified in paragraph (b) of this section; and
    (3) The alien will not be employed more than 20 hours each week 
during the academic term (but may be employed on a full-time basis 
during vacation periods and between academic terms).

Subpart J of this part sets forth the procedure for filing attestations 
with the Department of Labor (the Department or DOL) for employers who 
seek to use F-1 students for off-campus work. Subpart K of this part 
sets forth complaint, investigation, and disqualification provisions 
with respect to such attestations.
    (b) Procedure. (1) An employer must comply with the following 
procedure in order to hire F-1 students for off-campus employment:
    (i) Recruit for 60 days before filing an attestation;
    (ii) File the attestation with the DOL and the Designated School 
Official (DSO) of the educational institution before hiring any F-1 
student(s);
    (iii) Hire F-1 student(s) during the 90-day period following the 
last day of the recruitment period; and
    (iv) Initiate a new 60-day recruitment effort in order to hire any 
F-1 student(s), under the valid attestation, after the 90-day hiring 
period. (A job order placed with the SESA as part of the employer's 
initial recruitment which remains ``open'' with the SESA shall satisfy 
the requirement regarding a new 60-day recruitment effort.)
    (2) The employer's attestation shall state that the employer:
    (i) Has recruited unsuccessfully for at least 60 days for the 
position and will recruit for 60 days for each position in which an F-1 
student is hired under that attestation until September 30, 1996; and
    (ii) Will provide for payment to the alien and to other similarly 
situated

[[Page 636]]

workers at a rate not less than the actual wage for the occupation at 
the place of employment, or if greater, the prevailing wage for the 
occupation in the area of intended employment.
    (3) The employer shall file the attestation with the Designated 
School Official (DSO) of each educational institution from which it 
seeks to hire F-1 students. In fulfilling this requirement, the employer 
may file the attestation initially:
    (i) With the appropriate Regional Office of ETA only; or
    (ii) Simultaneously with the DSO and the appropriate Regional Office 
of ETA.

In either instance, under paragraph (b)(3) of this section, ETA will 
return to the employer a copy of the attestation with ETA's acceptance 
indicated thereon. The employer must then send a copy of each accepted 
attestation to the DSO. Where the employer has chosen to file the 
attestation simultaneously with DOL and the DSO, as described in 
paragraph (b)(3)(ii) of this section, the employer shall provide a copy 
of the accepted attestation to the DSO within 15 days after receiving 
the accepted attestation from DOL. The employer shall also retain the 
accepted attestation and produce it in the event the Department conducts 
an investigation to determine if the employer has made an attestation 
that is materially false or has failed to pay wages in accordance with 
the attestation. In no case may an employer hire an F-1 student for off-
campus employment without first filing an attestation with DOL and the 
DSO. The employer may not file the attestation with the DSO before it is 
filed with DOL or in the absence of filing the attestation with DOL. The 
DSO may treat an attestation as accepted for filing by DOL for the 
purpose of authorizing F-1 student employment upon its receipt by the 
school.
    (4) The employer may file an attestation for one or more openings in 
the same occupation, or one or more positions in more than one 
occupation, provided that all occupations are listed on the attestation 
and all positions are located within the same geographic area of 
intended employment.
    (5) The attestation shall be deemed ``accepted for filing'' on the 
date it is received by DOL. Where the attestation is not completed as 
set forth at Sec. 655.940(f)(1) of this part, it shall be returned to 
the employer which will have 15 days to correct the deficiency or it 
will be rejected. If the attestation is rejected, DOL will notify INS. 
Attestations deemed unacceptable under Sec. 655.940(f)(2) of this part 
may not be resubmitted.
    (c) Applicability. Subparts J and K of this part apply to all 
employers who seek to employ F-1 students in off-campus work in 
positions unrelated to their field(s) of study.
    (d) Final date. ETA will not accept attestations under this program 
after September 30, 1996.
    (e) Revalidation of employer attestations in effect on November 30, 
1995. Any employer's attestation which was valid on November 30, 1995, 
is revalidated effective on November 30, 1995, and shall remain valid 
through September 30, 1996, unless withdrawn or invalidated.

[56 FR 56865, 56876, Nov. 6, 1991, as amended at 59 FR 64776, 64777, 
Dec. 15, 1994; 60 FR 61210, 61211, Nov. 29, 1995]



Sec. 655.910  Overview of process.

    This section provides a context for the attestation process to 
facilitate understanding by employers that seek to employ F-1 students 
in off-campus work.
    (a) Department of Labor's responsibilities. The Department of Labor 
(DOL) administers the attestation process. Within DOL, the Employment 
and Training Administration (ETA) shall have responsibility for 
accepting and filing employer attestations on behalf of F-1 students; 
the Employment Standards Administration (ESA) shall be responsible for 
conducting any investigations concerning such attestations.
    (b) Employer attestation responsibilities. Prior to hiring any F-1 
student(s) for off-campus employment, an employer must submit an 
attestation on Form ETA-9034, as described in Sec. 655.940 of this 
part, to the Employment and Training Administration (ETA) of DOL at the 
address set forth at Sec. 655.930 of this part.

[[Page 637]]

    (1) The attesting employer shall file the attestation with the 
Designated School Official (DSO) of each educational institution from 
which it seeks to hire F-1 students. If the employer is filing the 
attestation with the DSO simultaneously to filing it with DOL, or prior 
to DOL's accepting it, the employer must provide the DSO with a copy of 
the accepted attestation within 15 days after receiving the attestation 
from DOL.
    (2)(i) Each attestation shall be valid through September 30, 1996. 
Throughout the validity period of the attestation, the employer may hire 
F-1 students as needed, during the 90-day period immediately following 
each 60-day recruitment period, for the positions specified on Form ETA-
9034, at the required wage rate, from any educational institution in the 
geographic area of intended employment. In order to employ F-1 students 
in any occupation(s) different from the occupation(s) specified in the 
attestation, the employer shall file a new attestation with ETA.
    (ii) The employer shall have the burden of proving the truthfulness 
and accuracy of each attestation element in the event that such 
attestation element is challenged in an investigation.
    (iii) Substantiating documentation in support of each attestation 
element must be maintained by the employer and shall be made available 
to DOL for inspection and copying upon request. If the employer 
maintains the specific documentation recommended in appendix A of this 
subpart, and the documentation is found to be truthful, accurate, and 
substantiates compliance, it shall meet the burden of proof. If the 
employer chooses to support its attestation in a manner other than in 
accordance with appendix A of this subpart, the employer's documentation 
must be of equal probative value to that shown in appendix A of this 
subpart in the event of an investigation.
    (c) Designated School Official (DSO) responsibilities. The 
Department notes that the basic responsibilities of the DSO are outlined 
in INS regulations at 8 CFR 214.2(f).
    (1) DOL understands INS regulations to mean that the DSO at the 
educational institution is expected to assure that, prior to authorizing 
the off-campus employment of any F-1 student(s):
    (i) It has received an attestation from the prospective employer;
    (ii) The prospective employer has not been disqualified from 
participation in the F-1 student work authorization program (Employers 
disqualified from participation in the program are listed in the Federal 
Register. See Sec. 655.950(b) of this part); and
    (iii) The F-1 student(s) has completed one year of study and is 
maintaining good academic standing at the institution.
    (2) It is also understood that the DSO will not authorize F-1 
student(s) to work in excess of 20 hours per week during the academic 
term, and that the DSO shall notify ETA when the employer of F-1 
student(s) has not provided the educational institution with an accepted 
copy of the attestation within 90 days of its receipt of the attestation 
from the employer.
    (d) Complaints. (1) Complaints alleging that an attestation is 
materially false or that wages were not paid in accordance with the 
attestation may be filed by any aggrieved party with the Wage and Hour 
Division (Administrator), of the Employment Standards Administration, 
DOL, according to the procedures set forth in subpart K of this part.
    (i) Examples of violations that may be alleged in a complaint 
include:
    (A) The employer failed to pay an F-1 student the prevailing wage 
for the occupation in the area of intended employment;
    (B) The employer failed to pay the actual wage for the position(s) 
at the employer's place of business; or
    (C) The employer's recruitment efforts demonstrated that qualified 
U.S. workers were available for the position(s) filled by F-1 students.
    (ii) The Administrator shall review the allegations contained in the 
complaint to determine if there are reasonable grounds to conduct an 
investigation. If, after investigation, the Administrator finds a 
violation, the Administrator shall disqualify the employer (after notice 
and opportunity for a hearing) from employing F-1 students and shall so 
notify INS.

[[Page 638]]

    (2) Complaints alleging that an F-1 student is not maintaining the 
required academic standing or is working in excess of the authorized 
number of hours of employment per week shall be filed with the INS.
    (e) Termination of program. The pilot F-1 student visa program of 
section 221 of the Immigration Act of 1990 expires after September 30, 
1996, and the Department of Labor will not accept any further employer 
attestations after that date. 8 U.S.C. 1184 note. However, complaints 
and appeals arising out of actions occurring prior to September 30, 
1996, will continue to be received, investigated, and processed under 
the standards and procedures of subparts J and K of this part. 
Therefore, subparts J and K of this part remain in effect through the 
completion of such enforcement.

[56 FR 56865, 56876, Nov. 6, 1991, as amended at 59 FR 64777, Dec. 15, 
1994; 60 FR 61210, 61211, Nov. 29, 1995]



Sec. 655.920  Definitions.

    For the purposes of subparts J and K of this part:
    Accepted for filing means that an attestation submitted by the 
employer or his designated agent or representative has been received and 
filed by the Employment and Training Administration of the Department of 
Labor.
    Act means the Immigration Act of 1990, as amended.
    Actual wage means the wage rate paid by the attesting employer to 
all similarly situated employees in the occupation at the worksite at 
the time of employment.
    Administrative Law Judge means an official appointed pursuant to 5 
U.S.C. 3105.
    Administrator means the Administrator of the Wage and Hour Division, 
Employment Standards Administration, Department of Labor, or such 
authorized representatives as may be designated to perform any of the 
functions of the Administrator under subparts J and K of this part.
    Area of intended employment means the geographic area within normal 
commuting distance of the place (address) of intended employment. If the 
place of intended employment is within a Metropolitan Statistical Area 
(MSA), any place within the MSA is deemed to be within normal commuting 
distance of the place of intended employment.
    Attestation means a properly completed Form ETA-9034.
    Attesting employer means any employer who has filed an attestation 
required by section 221 of the Act.
    Attorney General means the chief official of the U.S. Department of 
Justice or the Attorney General's designee.
    Chief Administrative Law Judge means the chief official of the 
Office of the Administrative Law Judges of the Department of Labor or 
the Chief Administrative Law Judge's designee.
    Date of filing means the date an attestation is received by ETA as 
indicated by the date stamped on the attestation.
    Department and DOL mean the United States Department of Labor.
    Designated School Official (DSO) means the official of the 
educational institution who has authority to authorize off-campus 
employment of F-1 students pursuant to Immigration and Naturalization 
Service regulations at 8 CFR parts 214 and 274a.
    Educational institution means the educational institution at which 
an alien admitted to the United States as an F-1 student is enrolled in 
a full course of study.
    Employer means a person, firm, corporation, or other association or 
organization, which suffers or permits a person to work; and
    (1) Which has a location within the United States to which U.S. 
workers may be referred for employment, and which proposes to employ 
workers at a place within the United States; and
    (2) Which has an employer-employee relationship with respect to 
employees under subparts J and K of this part, as indicated by the fact 
that it may hire, fire, supervise or otherwise control the work of any 
such employee.
    Employment and Training Administration (ETA) means the agency within 
the Department which includes the United States Employment Service 
(USES).
    Employment Standards Administration (ESA) means the agency within 
the Department which includes the Wage and Hour Division.
    F-1 nonimmigrant student (F-1 student) means an alien who has an F-1 
visa.

[[Page 639]]

See 8 U.S.C. 1101(A)(15)(F)(i). lNS grants such a visa to an alien who 
has a residence in a foreign country which he/she has no intention of 
abandoning, who is a bona fide student qualified to pursue a full course 
of study and who entered the United States temporarily and solely for 
the purpose of pursuing such a course of study at an established 
institution of learning or other recognized place of study in the United 
States, particularly designated by him/her and approved by the Attorney 
General after consultation with the Department of Education of the 
United States. For purposes of subparts J and K, the term ``F-1 
student'' shall refer to F-1 student(s) who will be employed in off-
campus employment unrelated to their field(s) of study.
    Immigration and Naturalization Service (lNS) means the component of 
the Department of Justice which administers the Department of Justice's 
principal functions under the Act.
    INA means the Immigration and Nationality Act, as amended, 8 U.S.C. 
1101 et seq.
    Independent authoritative source means a professional, business, 
trade, educational or governmental association, organization, or other 
similar entity, not owned or controlled by the employer, which has a 
recognized expertise in the occupational field.
    Independent authoritative source survey means a survey of wages 
conducted by an independent authoritative source and published in a 
book, newspaper, periodical, looseleaf service, newsletter, or other 
similar medium, within the 24-month period immediately preceding the 
filing of the employer's attestation and each succeeding annual 
prevailing wage update. Such survey shall:
    (1) Reflect the average wage paid to workers similarly employed in 
the area of intended employment;
    (2) Be based upon recently collected data--e.g., within the 24-month 
period immediately preceding the date of publication of the survey; and
    (3) Represent the latest published prevailing wage finding by the 
authoritative source for the occupation in the area of intended 
employment.
    Position means a single job opening in an occupation for which the 
attesting employer has recruited and either proposes to fill or has 
filled with an F-1 student.
    Regional Certifying Officer means the official in the Employment and 
Training Administration in a Department of Labor regional office (or 
his/her designee) who is authorized to act on labor certifications and 
employment attestations on behalf of the Secretary of Labor.
    Required wage rate means the rate of pay which is the higher of:
    (1) The actual establishment wage rate for the occupation in which 
the F-1 student is to be (or is) employed; or
    (2) The prevailing wage rate (adjusted on an annual basis) for the 
occupation in which the F-1 student is to be (or is) employed in the 
geographic area of intended employment.
    Secretary means the Secretary of Labor or the Secretary's designee.
    United States is defined at 8 U.S.C. 1101(a)(38).
    United States (U.S.) worker means any U.S. citizen or alien who is 
legally permitted to work indefinitely within the United States.



Sec. 655.930  Addresses of Department of Labor regional offices.

Region I (Connecticut, Maine, Massachusetts, New Hampshire, Rhode 
Island, and Vermont): One Congress Street 10th Floor, Boston, MA 02114-
2021. Telephone: 617-565-4446.
Region II (New York, New Jersey, Puerto Rico, and the Virgin Islands): 
201 Varick Street, room 755, New York, NY 10014. Telephone: 212-660-
2185.
Region III (Delaware, District of Columbia, Maryland, Pennsylvania, 
Virginia, and West Virginia): Post Office Box 8796, Philadelphia, PA 
19101. Telephone: 215-596-6363.
Region IV (Alabama, Florida, Georgia, Kentucky, Mississippi, North 
Carolina, South Carolina, and Tennessee): 1371 Peachtree Street, NE., 
Atlanta, GA 30309. Telephone: 404-347-3938.
Region V (Illinois, Indiana, Michigan, Minnesota, Ohio, and Wisconsin): 
230 South Dearborn Street, room 605, Chicago, IL 60604. Telephone: 312-
353-1550.
Region VI (Arkansas, Louisiana, New Mexico, Oklahoma, and Texas): 525 
Griffin Street, room 314, Dallas, TX 75202. Telephone: 214-767-4989.
Region VII (Iowa, Kansas, Missouri, and Nebraska) 911 Walnut Street, 
Kansas City, MO 64106. Telephone: 816-426-3796.
Region VIII (Colorado, Montana, North Dakota, South Dakota, Utah, and 
Wyoming)

[[Page 640]]

1961 Stout Street, 16th Floor, Denver, CO 80294. Telephone: 303-844-
4613.
Region IX (Arizona, California, Guam, Hawaii, and Nevada) 71 Stevenson 
Street, room 830, San Francisco, CA 94119. Telephone: 415-744-6647.
Region X (Alaska, Idaho, Oregon, and Washington) 1111 Third Avenue, room 
900, Seattle, WA 98101. Telephone: 206-553-5297.

    The telephone numbers set forth in this section are not toll-free.



Sec. 655.940  Employer attestations.

    (a) Who may submit attestations? An employer (or the employer's 
designated agent or representative) seeking to employ F-1 student(s) for 
off-campus work shall submit an attestation on Form ETA-9034. The 
attestation shall be signed by the employer (or the employer's 
designated agent or representative). For this purpose, the employer's 
authorized agent or representative shall mean an official of the 
employer who has the legal authority to commit the employer to the terms 
and conditions of F-1 student attestations.
    (b) Where and when should attestations be submitted? (1) 
Attestations shall be submitted, by U.S. mail, private carrier, or 
facsimile transmission, to the appropriate ETA Regional office, as 
defined in Sec. 655.920 of this part, not later than 60 days after the 
employer's recruitment period (see paragraph (d) of this section) has 
ended and shall be accepted for filing, returned, or rejected by ETA in 
accordance with paragraph (f) of this section.
    (2) Attestations shall also be submitted to the Designated School 
Official (DSO) at each educational institution from which the employer 
seeks to hire any F-1 student(s). Attestations may be filed 
simultaneously with ETA and the DSO, or the employer may file the 
approved attestation with the DSO. However, in no case shall the 
employer file the attestation with the DSO before filing the attestation 
with ETA or in the absence of filing the attestation with ETA.
    (3) If the attestation is submitted simultaneously with ETA and the 
DSO, and ETA does not receive its copy of the attestation, the 
Administrator, for purposes of enforcement proceedings under subpart K 
of this part, shall consider that the attestation was accepted for 
filing by ETA as of the date the attestation is received by the DSO.
    (c) What should be submitted? (1) Form ETA-9034. One completed and 
dated original Form ETA-9034 (or a facsimile), containing the 
attestation elements referenced in paragraphs (d) and (e) of this 
section, and the original signature (or a facsimile of the original 
signature) of the employer (or the employer's authorized agent or 
representative) and one copy of Form ETA-9034 shall be submitted to ETA. 
Each attestation form shall identify the position(s) for which the 
attestation is provided, state the occupational division in which the 
position is located, by Dictionary of Occupational Titles (DOT) Two-
Digit Occupational Divisions code, and shall state the rate(s) of pay 
for the position(s). The DOT Two-Digit Occupational Division code is 
required for DOL recordkeeping and reporting purposes only and should 
not be used by the employer to determine the prevailing wage, as it is 
too general for this purpose. (Copies of Form ETA-9034 are available at 
the addresses listed in Sec. 655.930 of this part). When an employer 
has filed an attestation by facsimile transmission, the employer shall 
retain in its files the original of the attestation which contains the 
employer's original signature.
    (2) The employer may file an attestation for a single position or 
for multiple positions in the same occupation, or in multiple 
occupations, provided that all positions are located within the same 
geographic area of intended employment.
    (3) If the employer files the attestation simultaneously with ETA 
and the DSO, or files the attestation first with ETA and subsequently 
files with the DSO before an accepted copy is returned from ETA to the 
employer, the employer shall, within fifteen days of receipt of ETA's 
notification of acceptance of the attestation for filing, provide an 
exact copy of the accepted attestation to the DSO at each educational 
institution from which the employer seeks to employ an F-1 student. The 
DSO shall notify ETA if the educational institution has not been 
provided with a copy of the attestation indicating that it was accepted 
for filing by ETA within 90 days from the

[[Page 641]]

date that the attestation was filed with the DSO.
    (4) Attestation Elements. The attestation elements referenced in 
Sec. 655.940 (d) and (e) of this section are mandated by section 
221(a)(2) of the Act (8 U.S.C. 1184 note). Section 221(a)(2) of the Act 
provides that one of the conditions for the Attorney General to grant F-
1 students work authorization, as described in INA section 
101(a)(15)(F), to be employed off-campus in positions unrelated to their 
field of study, is that the employer provides the educational 
institution and the Secretary with an attestation that the employer:
    (i) Has recruited for at least 60 days for the position; and
    (ii) Will pay the F-1 student and all other similarly situated 
workers at a rate not less than the ``required wage rate'' (see Sec. 
655.920 of this part).
    (d) The first attestation element: 60-day recruitment. An employer 
seeking to employ an F-1 student shall attest on Form ETA-9034 that it 
has recruited for at least 60 days for the position(s) and that a 
sufficient number of U.S. workers were not able, qualified, and 
available for the position(s).
    (1) Establishing the 60-day recruitment requirement. (i) The first 
attestation element is demonstrated if the employer attests that:
    (A) It has recruited unsuccessfully for U.S. workers for at least 60 
days for the position prior to filing the attestation; and
    (B) It will conduct at least 60 days of unsuccessful recruitment for 
U.S. workers for each position in which, and at each time at which 
(until September 30, 1996), an F-1 student is subsequently employed.
    (ii) To satisfy paragraph (d)(1)(i)(A) of this section, the employer 
shall recruit for the position for 60 consecutive days by posting the 
job vacancy (or help wanted) notice at the worksite and by placing a job 
order with the State Employment Service agency (SESA) local office which 
services the worksite.
    (iii) To satisfy paragraph (d)(1)(i)(B) of this section, the 
employer shall either:
    (A) Recruit for each position vacancy in the manner required by 
paragraph (d)(1)(ii) of this section; or
    (B) File an ``open job order'' with the SESA local office which 
services the worksite. The employer shall accept referrals from the SESA 
local office on the ``open job order''.
    (2) Documenting the first attestation element. In the event of an 
investigation, the employer shall have the burden of proving that it has 
complied with the elements described in paragraph (d)(1) of this section 
and attested to on ETA Form 9034. Documentation that is truthful, 
accurate and substantiates compliance as identified in Appendix A to 
this subpart shall be sufficient to meet the employer's burden of proof. 
The employer retains the right to meet its burden of proof in proving 
its attestation through other sufficient means.
    (i) Documentation shall not be submitted to ETA or to the DSO with 
the attestation, but employers must be able to produce sufficient 
documentary evidence to substantiate the attestation in the event of an 
investigation. Such documentation shall be made available to DOL as 
described in Sec. Sec. 655.900(b)(3) and 655.1000(c) of this part.
    (ii) Because complaints may be filed and enforcement proceedings may 
be conducted during a considerable period after the recruitment, the 
employer should be able to produce such substantiating documentary 
evidence for a period of no less than 18 months after the close of the 
recruitment period or, in the event of an investigation, for the period 
of the enforcement proceeding under subpart K of this part.
    (e) The second attestation element: wages. An employer seeking to 
employ F-1 students shall state on Form ETA-9034 that it will pay the F-
1 student(s) and other similarly employed worker(s) the ``required wage 
rate'' as defined in Sec. 655.920 of this part. For purposes of this 
paragraph ``similarly employed'' shall mean employees of the employer 
working in the same positions under like conditions, such as the same 
shift on the same days of the week. Neither the actual wage rate nor a 
prevailing wage determination for attestation purposes made pursuant to 
this section shall permit an employer to pay a wage lower than that 
required

[[Page 642]]

under any other Federal, State, or local law.
    (1) Establishing the wage requirement. The second attestation 
element shall be satisfied when the employer signs Form ETA-9034, 
attesting that for the validity period of the attestation the ``required 
wage rate'' will be paid to the F-1 student(s) and other similarly 
situated workers; that is, that the wage will be no less than the actual 
wage rate paid to workers similarly employed at the worksite, or the 
prevailing wage (adjusted on an annual basis) for the occupation in the 
area of intended employment, whichever is higher. The employer's 
obligation to pay the ``required wage rate'' for the position(s) named 
in the attestation shall continue throughout the validity period of the 
attestation; the employer's determination of the prevailing wage shall 
be updated annually, beginning with the date of the attestation. The 
prevailing wage rate for a position(s) named in the attestation, unless 
the subject of a Davis-Bacon Act or McNamara-O'Hara Service Contract Act 
wage determination described in paragraph (b)(4)(i) of appendix A of 
this subpart or a union contract as described in paragraph (b)(4)(ii) of 
appendix A of this subpart, shall be: The average rate of wages paid to 
workers similarly employed in the area of intended employment. Since it 
is not always feasible to determine such an average rate of wages with 
exact precision, the wage set forth in the application shall be 
considered as meeting the prevailing wage standard if it is within 5 
percent of the average rate of wages. For purposes of this section, 
``similarly employed'' means having substantially comparable jobs in the 
occupational category in the area of intended employment, except that if 
no such workers are employed by employers other than the employer 
applicant in the area of intended employment ``similarly employed'' 
shall mean:
    (i) Having jobs requiring a substantially similar level of skills 
within the area of intended employment; or
    (ii) If there are no substantially comparable jobs in the area of 
intended employment, having substantially comparable jobs with employers 
outside of the area of intended employment.
    (2) Documentation of the second attestation element. In the event of 
a complaint and investigation, the employer shall have the burden of 
proving the validity of and compliance with the attestation element 
referenced in paragraph (e)(1) of this section and attested to on ETA 
Form 9034. Documentation that the Department finds to be truthful, 
accurate and substantiates compliance as identified in appendix A of 
this subpart should be sufficient to meet the employer's burden of 
proof. The employer retains the right to meet its burden of proof in 
proving its attestation through other sufficient means.
    (i) Documentation shall not be submitted to ETA or to the DSO with 
the attestation, but the employer must substantiate its attestation with 
appropriate documentation in the event of an investigation. Such 
documentation shall be made available to DOL as described in Sec. Sec. 
655.900(b)(3) and 655.1000(c) of this part.
    (ii) Because complaints may be filed and enforcement proceedings may 
be conducted during a considerable period after the determination the 
employer should be able to produce documentation substantiating its 
attestation for a period of no less than 18 months after the 
determination or update, or in the event of an investigation, for the 
period of the enforcement proceedings under subpart K of this part.
    (f) Actions on attestations submitted for filing. Upon receipt of an 
attestation pursuant to this subpart, the Regional Certifying Officer 
shall determine whether the attestation is properly completed and 
whether there is cause to return the attestation to the employer as 
unacceptable.
    (1) Acceptable Attestations. (i) Where all items on Form ETA-9034 
have been completed and the attestation contains the signature of the 
employer or its authorized representative, the Regional Certifying 
Officer, except as provided in paragraph (f)(2)(ii) of this section, 
shall accept the attestation for filing. The Regional Certifying Officer 
shall return a copy of the accepted attestation to the employer or the 
employer's designated agent or representative, with ETA's acceptance 
indicated thereon. An attestation which is properly

[[Page 643]]

filled out in accordance with this section shall be deemed accepted for 
filing as of the date it is received by ETA as indicated by the date 
stamped thereon.
    (ii) The employer shall file a copy of the accepted attestation with 
the DSO at the educational institution pursuant to Sec. 655.940(c)(3) 
of this part.
    (2) Unacceptable Attestations. ETA shall not accept an attestation 
for filing and shall return such attestation as unaccepted to the 
employer or the employer's designated agent or representative, when any 
one of the following conditions exists:
    (i) Form ETA-9034 is not properly completed. Examples of Form ETA-
9034 which is not properly completed include: instances where the 
employer has failed to complete all of the necessary items; or where the 
employer has failed to identify the position(s) or state the rate(s) of 
pay; or where the attestation does not contain the original signature 
(or facsimile of the signature when the attestation is submitted by 
facsimile transmission) of the employer or its authorized 
representative.
    (ii) The Administrator, Wage and Hour Division, after notice and 
opportunity for a hearing pursuant to subpart K of this part, has 
notified ETA in writing that the employer has been disqualified from 
employing F-1 students under section 221 of the Immigration Act.
    (3) If the attestation is not accepted for filing pursuant to 
paragraph (f)(2)(i) of this section, ETA shall return it to the employer 
or the employer's agent or representative with written and dated 
notification of the reason(s) that the attestation is unacceptable. If 
the employer does not complete and return the attestation within 15 days 
of the date of such notification (as stated in paragraph (f)(4) of this 
section), ETA shall invalidate the attestation and shall notify the 
Attorney General of such invalidation. The Attorney General may then use 
such notification in its enforcement responsibilities. Employers shall 
not employ F-1 students without a valid attestation.
    (4) Resubmission. When the attestation is determined to be 
unacceptable and is returned to the employer for completion pursuant to 
paragraph (f)(2)(i) of this section, the employer may resubmit the 
attestation. The employer shall resubmit the attestation within 15 days 
of the date of nonacceptance to avoid the invalidation of its 
attestation and ETA's notice to the Attorney General. Upon resubmission, 
if the attestation is determined to be acceptable pursuant to paragraph 
(f)(1) of this section, the Regional Certifying Officer shall accept the 
attestation for filing as of the original date of receipt by ETA, and 
shall return a copy of the attestation to the employer with ETA's 
acceptance indicated thereon.
    (g) Challenges to Attestations. (1) ETA will not consider, prior to 
the acceptance or return of the attestation, information contesting an 
attestation received by ETA. Such information shall not be made part of 
ETA's administrative record on the attestation, but shall be referred to 
the Administrator to be processed as a complaint pursuant to subpart K 
of this part, and, if such attestation is accepted for filing by ETA, 
the complaint shall be handled by ESA under subpart K of this part.
    (2) DOL is not the guarantor of the accuracy, truthfulness or 
adequacy of an attestation accepted for filing pursuant to this subpart.
    (h) Effective date and validity of filed attestations. (1) A 
properly completed attestation accepted pursuant to paragraph (f)(1) of 
this section shall be deemed accepted for filing as of the date it is 
received and date stamped by the Regional Certifying Officer and shall 
be valid for the duration of the F-1 student work authorization program 
which expires on September 30, 1996, unless withdrawn pursuant to 
paragraph (i) of this section or invalidated pursuant to paragraph (j) 
of this section or subpart K of this part.
    (2) During the validity period of an attestation which has been 
accepted for filing as described in paragraph (f)(1) of this section, 
the attesting employer may hire, during the 90-day period following the 
last day of its 60-day recruitment period, or at any time if the 
employer has placed an ``open job order'' with the SESA as part of their 
recruitment effort, F-1 students as needed from as many educational 
institutions as it deems necessary to fill the positions described in 
the attestation,

[[Page 644]]

at the location(s) specified in the attestation, and at the ``required 
wage rate.'' The employer shall provide a copy of the accepted 
attestation to the DSO at each educational institution from which it 
hires any F-1 student(s).
    (3) The DSO may grant work authorization for an F-1 student to be 
employed by a particular attesting employer for the duration of the F-1 
student's course of study or until September 30, 1996, whichever period 
is shorter, provided the F-1 student continues to be employed by the 
attesting employer and is otherwise eligible for F-1 student work 
authorization as determined by the Attorney General.
    (i) Withdrawal of accepted attestations. (1) An employer who has 
submitted an attestation which has been accepted for filing may withdraw 
such attestation at any time before the expiration of the validity 
period of the attestation, unless the Administrator has found reasonable 
cause to commence an investigation of the attestation under subpart K of 
this part. Requests for such withdrawals shall be in writing and shall 
be directed to the Regional Certifying Officer with whom the attestation 
was filed.
    (2) Upon the Regional Certifying Officer's receipt of an employer's 
written request to withdraw an attestation, it shall be the employer's 
responsibility to promptly notify the DSO at each school where F-1 
students it employs are enrolled.
    (3) Withdrawal of an attestation shall not affect an employer's 
liability with respect to any failure to meet the conditions attested to 
which took place before the withdrawal, or for material 
misrepresentations in an attestation. However, if an employer has not 
yet employed any F-1 student(s) pursuant to the attestation, the 
Administrator shall not find reasonable cause to investigate unless it 
is alleged, and there is reasonable cause to believe, that the employer 
has made material misrepresentations in the attestation.
    (j) Invalidation of filed attestation. Invalidation of an 
attestation may result from enforcement action(s) by the Administrator, 
Wage and Hour Division, under subpart K of this part (i.e., 
investigation(s) conducted by the Administrator regarding the employer's 
material misrepresentation of an attestation element or failure to pay 
wages in accordance with attestation). Invalidation of an attestation 
may also result where ETA determines that the attestation is 
unacceptable and the employer fails to resubmit the attestation to ETA 
within 15 days.
    (1) Result of Wage and Hour Division action. Upon a determination of 
a violation under subpart K of this part, the Administrator shall notify 
ETA and shall notify the Attorney General of the violation and of the 
Administrator's notice to ETA.
    (2) Result of ETA action. If, after accepting an attestation for 
filing, ETA finds that it is unacceptable because it falls within one of 
the categories set forth at paragraph (f)(2)(i) of this section, ETA 
shall return the attestation to the employer for correction and 
resubmission within 15 days. If the employer fails to resubmit the 
attestation within 15 days of the date of the notification, ETA shall 
invalidate the attestation. ETA shall notify the Attorney General of 
such invalidation. Where the attestation has been invalidated, ETA shall 
return a copy of the attestation form to the employer, or the employer's 
agent or representative, and shall notify the employer in writing of the 
reason(s) that the attestation is invalidated. When an attestation is 
invalidated pursuant to paragraph (f)(2)(ii) of this section, ETA shall 
invalidate all attestations filed by the employer. Such action shall be 
the final decision of the Secretary of Labor and is not subject to 
appeal.
    (k) Employers subject to disqualification. No attestation shall be 
accepted for filing from an employer which has been found to be 
disqualified from participation in the F-1 student work authorization 
program as determined in a final agency action following an 
investigation by the Administrator pursuant to subpart K of this part.

(Approved by the Office of Management and Budget under control number 
1205-0315)

[56 FR 56865, 56876, Nov. 6, 1991, as amended at 59 FR 64777, Dec. 15, 
1994; 60 FR 61210, 61211, Nov. 29, 1995]



Sec. 655.950  Public access.

    (a) Public examination at ETA. ETA shall compile and maintain a list 
of

[[Page 645]]

employers who filed attestations specifying the occupation(s), 
geographical location, and wage rate(s) attested to. The list shall be 
available for public inspection at the ETA office at which the 
attestation was filed and such list shall be updated monthly.
    (b) Notice to Public. ETA shall publish semiannually a list in the 
Federal Register of employers which have been disqualified from 
participating in the F-1 student work authorization program pursuant to 
Sec. 655.940(k) of this part.

    Appendix A to Subpart J to Part 655--Documentation in Support of 
                     Attestations Made by Employers

    This appendix sets forth the documentation that the Department of 
Labor considers to be sufficient to satisfy the employer's burden of 
proof regarding substantiate attestations made on Form ETA-9034, 
pursuant to subpart J of this part, provided the documentation is found 
to be truthful, accurate, and substantiates compliance. The employer 
retains the right to meet its burden of proof in proving its 
attestations through other sufficient means. The employer's failure to 
substantiate its attestation in the event of an investigation shall be 
found to be a violation.
    (a) Documenting the first attestation element. The employer shall 
have the burden of proving that it has complied with the recruitment 
requirements described in regulations at Sec. 655.940(d)(1) of this 
part and attested to on ETA Form-9034. The employer's failure to satisfy 
the burden of proof through the production of adequate documentation 
shall be found to be a violation.
    (1) Documentation shall not be submitted to ETA or to the DSO with 
the attestation, but shall be made available to DOL as described in 
Sec. Sec. 655.900(b)(3) and 655.1000(c) of this part. To be effective 
in satisfying the burden of proof, the documentation should be 
contemporaneous with the recruitment, not created after the fact and 
particularly not after the commencement of an investigation under 
subpart K of this part.
    (2) Because complaints may be filed and enforcement proceedings may 
be conducted during a considerable period after the recruitment, the 
employer should maintain the documentation for a period of no less than 
18 months after the close of the recruitment period or, in the event of 
an investigation, for the period of the enforcement proceeding under 
subpart K of this part.
    (3) The employer should be able to produce the following 
documentation:
    (i) Evidence that a job order for the position was on file with the 
SESA local office within the area of intended employment for at least 60 
consecutive days. Such evidence of a job order should include the 
employer's contemporaneous written statement setting forth the name and 
address of the SESA office with which the job order was placed; the name 
of the SESA employee with whom the job order was placed; the date on 
which the order was placed; and the dates on which the job order was on 
file with the SESA office.
    (ii) Evidence that a vacancy notice announcing the position was 
posted for 60 consecutive days at the worksite. Evidence should include 
a copy of the notice that was posted at the worksite, the dates when the 
notice was posted, and a description of the specific location at the 
worksite at which the notice was posted.
    (iii) Evidence that a job order for the position was continuously on 
file and ``open'' with the SESA local office within the area of intended 
employment, throughout the validity period of the attestation. Such 
evidence should include the employer's contemporaneous written statement 
setting forth the name and address of the SESA office with which the job 
order was placed; the name of the SESA employee with whom the job order 
was placed; the date on which the order was placed; and the dates on 
which the job order was on file with the SESA office.
    (iv) Evidence that the employer was unsuccessful in recruiting a 
sufficient number of U.S. workers who are able, qualified, and available 
for the position(s) through the SESA job order and the worksite posting 
notice. Such evidence should include a contemporaneous written summary 
of the results of recruitment for each position for which an attestation 
was filed by the employer. Such summary should include:
    (A) The number of job openings in each occupation included in the 
occupation;
    (B) The number of U.S. workers and F-1 students that applied for 
each position;
    (C) The number of U.S. workers that were hired;
    (D) The number of F-1 students that were hired;
    (E) The number of U.S. workers that were not hired; and
    (F) The lawful job-related reason(s) for which each U.S. worker was 
not hired. An example of a job-related reason for which a U.S. worker 
can be rejected for a job opportunity is that the U.S. worker does not 
have the training and experience required for the position.
    (4) Investigations. In the event that an investigation is conducted 
pursuant to regulations at subpart K of this part, concerning whether 
the employer failed to satisfy its recruitment requirement, in that it 
failed to conduct recruitment or to hire qualified U.S.

[[Page 646]]

worker(s) for a position for which an F-1 student(s) was hired, the 
Administrator shall determine whether the employer has produced 
documentation sufficient to prove the employer's compliance with the 
attestation requirements.
    (i) Where the focus of the investigation is upon whether recruitment 
was conducted, the employer shall have satisfied its burden of proof if 
the documentation described in paragraphs (a)(3) (i), (ii), and (iii) of 
this appendix is produced, provided the documentation is found to be 
truthful, accurate and substantiates compliance.
    (ii) Where the focus of the investigation is upon whether the 
employer's recruitment of U.S. workers was unsuccessful because the 
employer declined to hire U.S. worker(s) without lawful reason(s) for 
such action, the employer shall have satisfied the burden of proof if 
the documentation described in paragraph (a)(3)(iv) of this appendix is 
produced, provided that the Administrator has no significant evidence 
which reasonably shows that the employer's recruitment or hiring was 
deficient. In determining whether the employer has demonstrated that 
U.S. workers were rejected for lawful job-related reasons, the 
Administrator may contact ETA which shall provide the Administrator with 
advice as to whether U.S. workers were properly rejected.
    (b) Documentation of the second attestation element. The employer 
shall have the burden of proving the validity of and compliance with the 
attestation element referenced in Sec. 655.940(e) of this part and 
attested to on Form ETA-9034.
    (1) The employer shall be prepared to produce documentation 
sufficient to satisfy this requirement. Documentation shall not be 
submitted to ETA or to the DSO with the attestation, but shall be made 
available to DOL as described in Sec. Sec. 655.900(b)(3) and Sec. 
655.1000(c) of this part. The documentation specified in paragraphs (b) 
(4) and (5) of this appendix will be sufficient to satisfy the 
employer's burden of proof, provided the documentation is found to be 
truthful, accurate and substantiates compliance upon investigation. The 
employer's failure to satisfy the burden of proof through the production 
of adequate documentation shall be found to be a violation.
    (2) To be effective in satisfying the employer's burden of proof 
regarding the determination of the prevailing wage, the employer's 
documentation should be contemporaneous with the determination or the 
annual update of the prevailing wage, not created after the fact and 
particularly not after the commencement of an investigation under 
subpart K of this part.
    (3) Because complaints may be filed and enforcement proceedings may 
be conducted during a considerable period after the determination or the 
annual update, the employer should be prepared to produce documentation 
for a period of no less than 18 months after the determination or 
update, or in the event of an investigation, for the period of the 
enforcement proceedings under subpart K of this part.
    (4) Documentation described in paragraphs (b) (1) through (3) of 
this appendix should consist of the following:
    (i) If the position is in an occupation which is the subject of a 
wage determination in the area under the provisions of the Davis-Bacon 
Act, 40 U.S.C. 276a et seq., (see 29 CFR part 1) or the McNamara-O'Hara 
Service Contract Act, 41 U.S.C. 351 et seq., (see 29 CFR part 4), an 
excerpt from the wage determination showing the wage rate for the 
occupation in the area of intended employment; or
    (ii) If the position is covered by a union contract which was 
negotiated at arms-length between a union and the employer, an excerpt 
from the union contract showing the wage rate(s) for the occupation(s) 
set forth in the union contract.
    (iii) If position is not covered by the provisions of paragraph 
(b)(4) (i) or (ii) of this appendix, the employers's documentation shall 
consist of:
    (A) A prevailing wage finding from the SESA for the occupation 
within the area of employment; or
    (B) A prevailing wage survey for the occupation in the area of 
intended employment published by an independent authoritative source as 
defined in Sec. 655.920 of this part. For purposes of this paragraph 
(b)(4)(iii)(B) ``prevailing wage survey'' means a survey of wages 
published in a book, newspaper, periodical, looseleaf service, 
newsletter, or other similar medium, within the 24-month period 
immediately preceding the filing of the employer's attestation and each 
succeeding annual prevailing wage update. Such survey shall:
    (1) Reflect the average wage paid to workers similarly employed in 
the area of intended employment;
    (2) Be based upon recently collected data, e.g., within the 24-month 
period immediately preceding the date of publication of the survey; and
    (3) Represent the latest published prevailing wage finding by the 
authoritative source for the occupation in the area of intended 
employment.
    (5) The employer should be prepared to produce documentation to 
prove the payment of the required wage, including payroll records, 
commencing on the date on which the employer first employs the F-1 
student, showing the wages paid to employees in the occupation(s) named 
in the attestation at the worksite. Such payroll records maintained in 
accordance with regulations under the Fair Labor Standards Act (see 29 
CFR part 516) would include for each employee in the occupation:

[[Page 647]]

    (i) The rate(s) of pay, including shift differentials, if any;
    (ii) The employee's earnings per pay period;
    (iii) The number of hours worked per week by the employee; and
    (iv) The amount of and reasons for any and all deductions made from 
the employee's wages.
    (6) Investigations. In the event that an investigation is conducted 
pursuant to subpart K of this part, concerning whether the employer made 
a material misrepresentation regarding the required wage or failed to 
pay the required wage, the Administrator shall determine whether the 
employer has produced documentation sufficient to satisfy the burden of 
proof.
    (i) The employer's documentation of the prevailing wage 
determination shall be found to be sufficient where the determination is 
pursuant to the Davis-Bacon Act or Service Contract Act wage 
determination or a SESA determination.
    (ii) Where the employer's prevailing wage determination is based on 
a survey by an independent authoritative source, the Administrator shall 
consider the employer's documentation to be sufficient, provided that it 
satisfies the standards for independent authoritative source surveys and 
is properly applied, and provided further that the Administrator has no 
significant evidence which reasonably shows that the prevailing wage 
finding obtained by the employer from an independent authoritative 
source varies substantially from the wage prevailing for the occupation 
in the area of intended employment. In the event such significant 
evidence shows a substantial variance, the Administrator may contact 
ETA, which shall provide the Administrator with a prevailing wage 
determination, which the Administrator shall use as the basis for the 
determination as to violations. ETA may consult with the appropriate 
SESA to ascertain the prevailing wage applicable to the occupation under 
investigation.

(Approved by the Office of Management and Budget under control number 
1205-0315)



Subpart K_Enforcement of the Attestation Process for Attestations Filed 
         by Employers Utilizing F-1 Students in Off-Campus Work

    Source: 56 FR 56872, 56876, Nov. 6, 1991, unless otherwise noted.



Sec. 655.1000  Enforcement authority of Administrator, Wage and Hour 
Division.

    (a) The Administrator shall perform all the Secretary's 
investigative and enforcement functions under section 221 of the Act and 
subparts J and K of this part.
    (b) The Administrator shall conduct such investigations as may be 
appropriate and, in connection therewith, enter and inspect such places 
and such records (and make transcriptions or copies thereof), question 
such persons and gather such information as deemed necessary to 
determine compliance with section 221(a) of the Act and subparts J and K 
of this part.
    (c) An employer being investigated pursuant to this subpart shall 
have the burden of proof as to compliance with section 221(a) of the Act 
and the validity of its attestation, and in this regard shall make 
available to the Administrator such records, information, persons, and 
places as the Administrator deems appropriate to copy, transcribe, 
question, or inspect. No employer subject to the provisions of section 
221 of the Act and subparts J and K of this part shall interfere with 
any official of the Department of Labor performing an investigation, 
inspection or law enforcement function pursuant to section 221 of the 
Act or subpart J or K of this part. Any such interference shall be a 
violation of the attestation and subparts J and K of this part, and the 
Administrator may take such further actions as the Administrator deems 
appropriate.
    Note: Federal criminal statutes prohibit certain interference with a 
Federal officer in the performance of official duties. 18 U.S.C. 111 and 
18 U.S.C. 1114.)
    (d) An employer subject to subparts J and K of this part shall at 
all times cooperate in administrative and enforcement proceedings. No 
employer shall intimidate, threaten, restrain, coerce, blacklist, 
discharge, or in any manner discriminate against any person because such 
person has:
    (1) Filed a complaint or appeal under or related to section 221 of 
the Act or subparts J or K of this part;

[[Page 648]]

    (2) Testified or is about to testify in any proceeding under or 
related to section 221 of the Act or subpart J or K of this part;
    (3) Exercised or asserted on behalf of himself or herself or others 
any right or protection afforded by section 221 of the Act or subpart J 
or K of this part.
    (4) Consulted with an employee of a legal assistance program or an 
attorney on matters related to section 221 of the Act or to subpart J or 
K of this part or any other DOL regulation promulgated pursuant to 
section 221 of the Act. In the event of any intimidation or restraint as 
described in this section, the conduct shall be a violation of the 
attestation and these regulations, and the Administrator may take such 
further actions as the Administrator considers appropriate.
    (e) The Administrator shall, to the extent possible under existing 
law, protect the confidentiality of any person, including any 
complainant, who provides information to the Department in confidence 
during the course of an investigation or otherwise under subpart J or K 
of this part.



Sec. 655.1005  Complaints and investigative procedures.

    (a) The Administrator, through an investigation, shall determine 
whether an employer of F-1 students has:
    (1) Provided an attestation which is materially false
    Note: Federal criminal statutes provide penalties of up to $10,000 
and/or imprisonment of up to 5 years for knowing and willful submission 
of false statements to the Federal Government. 18 U.S.C. 1001; see also 
18 U.S.C. 1546.
    (2) Failed to pay the appropriate wage rate as required under Sec. 
655.940(e) of this part; or
    (3) Failed to comply with the provisions of subpart J or K of this 
part.
    (b) Any aggrieved person or organization may file a complaint 
alleging a violation of the provisions of subpart J or K of this part. 
No particular form is required, except that the complaint shall be 
written or, if oral, shall be reduced to writing by the Wage and Hour 
Division official who receives the complaint. The complaint shall set 
forth sufficient facts for the Administrator to determine whether there 
is reasonable cause to believe that a particular part or parts of the 
attestation or regulations may have been violated. The complaint may be 
submitted to any local Wage and Hour Division office, the addresses of 
which can be found in local telephone directories. The office or person 
receiving such a complaint shall refer it to the office of the Wage and 
Hour Division administering the area in which the reported violation is 
alleged to have occurred.
    (c) The Administrator shall determine whether there is reasonable 
cause to believe that a complaint warrants investigation. If it is 
determined that a complaint fails to present reasonable cause, the 
Administrator shall so notify the complainant, who may submit a new 
complaint with such additional information as may be available. If the 
Administrator determines that reasonable cause exists, an investigation 
will be conducted.
    (d) In the event that the Administrator, after an investigation, 
determines that the employer has committed any violation(s) described in 
paragraph (a) of this section, the Administrator shall issue a written 
determination to the employer in accordance with Sec. 655.1015 of this 
part and an opportunity for a hearing shall be afforded in accordance 
with the procedures specified in Sec. 655.1020 of this part.



Sec. 655.1010  Remedies.

    Where the Administrator, after notice and opportunity for a hearing, 
determines that an employer has committed a violation identified in 
Sec. 655.1005(a) of this part, the employer shall be disqualified from 
employing F-1 student(s) under section 221 of the Act. The Administrator 
shall so notify the Attorney General and ETA pursuant to Sec. 655.1055 
of this part. Upon receipt of the Administrator's notice, the Attorney 
General and ETA shall take the action specified in Sec. 655.1055 of 
this part, i.e., cancel any existing attestation(s) or work 
authorizations, and shall not accept future attestation(s) or grant new 
work authorization(s) with respect to that employer.



Sec. 655.1015  Written notice and service of Administrator's 
determination.

    (a) The Administrator's written determination, issued pursuant to

[[Page 649]]

Sec. Sec. 655.1005 and 655.1010 of this part, shall be served on the 
employer by personal service or by certified mail at the address of the 
employer or the employer's agent shown on the attestation. Where service 
by certified mail is not accepted by the employer, the Administrator may 
exercise discretion to serve the determination by regular mail.
    (b) The Administrator's written determination, issued pursuant to 
Sec. Sec. 655.1005 and 655.1010 of this part, shall:
    (1) Set forth the Administrator's determination of the violation(s) 
and the Administrator's reason or reasons therefor.
    (2) Inform the employer that it may request a hearing pursuant to 
Sec. 655.1020 of this part.
    (3) Inform the employer that in the absence of a timely request for 
a hearing, received by the Chief Administrative Law Judge within 15 
calendar days of the date of the determination, the determination of the 
Administrator shall become final and not appealable.
    (4) Set forth the procedure for requesting a hearing, and give the 
addresses of the Chief Administrative Law Judge (with whom the request 
must be filed) and the representative of the Solicitor of Labor (who 
must be served with a copy of the request).
    (5) Inform the employer that, if no timely request for a hearing is 
filed pursuant to Sec. 655.1020 of this part, the employer shall be 
disqualified from employing F-1 students, effective upon the expiration 
of the period for filing a request for a hearing. In such event, the 
Administrator shall, pursuant to Sec. 655.1055 of this part, notify ETA 
and the Attorney General of the occurrence of a violation by the 
employer, and that the employer has been disqualified from employing F-1 
students.



Sec. 655.1020  Request for hearing.

    (a) An employer desiring to request an administrative hearing on a 
determination issued pursuant to Sec. 655.1015 of this part shall make 
such request in writing to the Chief Administrative Law Judge at the 
address stated in the notice of determination. Copies of the request 
shall be served upon the Wage and Hour Division official who issued the 
notice of determination and upon the representative of the Solicitor of 
Labor identified in the notice of determination.
    (b) No particular form is prescribed for any request for hearing 
permitted by this section. However, any such request shall:
    (1) Be dated;
    (2) Be typewritten or legibly written;
    (3) Specify the issue or issues stated in the notice of 
determination giving rise to such request;
    (4) State the specific reason or reasons why the employer believes 
such determination is in error;
    (5) Be signed by the employer making the request or by an authorized 
representative of the employer; and
    (6) Include the address at which the employer or authorized 
representative desires to receive further communications relating 
thereto.
    (c) The request for such hearing must be received by the Chief 
Administrative Law Judge, at the address stated in the Administrator's 
notice of determination, no later than 15 calendar days after the date 
of the determination.
    (d) The request may be filed in person, by facsimile transmission, 
by certified or regular mail, or by courier service. For the requesting 
party's protection, if the request is by mail, it should be by certified 
mail. If the request is by facsimile transmission, the original of the 
request, signed by the employer or authorized representative, shall be 
filed within ten days thereafter.
    (e) A copy of the request for a hearing shall be sent by the 
requestor to the Administrator at the address shown on the 
Administrator's notice of determination.



Sec. 655.1025  Rules of practice for administrative law judge 
proceedings.

    (a) Except as specifically provided in this subpart, and to the 
extent they do not conflict with the provisions of this subpart, the 
``Rules of Practice and Procedure for Administrative Hearings Before the 
Office of Administrative Law Judges'' established by the Secretary at 29 
CFR part 18 shall apply to administrative proceedings under this
    (b) As provided in the Administrative Procedure Act, 5 U.S.C. 556, 
any oral or

[[Page 650]]

documentary evidence may be received in proceedings under this part. The 
Federal Rules of Evidence and subpart B of the Rules of Practice and 
Procedure for Administrative Hearings Before the Office of 
Administrative Law Judges (29 CFR part 18, subpart B) shall not apply, 
but principles designed to ensure production of relevant and probative 
evidence shall guide the admission of evidence. The administrative law 
judge may exclude evidence which is immaterial, irrelevant, or unduly 
repetitive.



Sec. 655.1030  Service and computation of time.

    (a) Under this subpart, a party may serve any pleading or document 
by regular mail. Service on a party is complete upon mailing to the last 
known address. No additional time for filing or response is authorized 
where service is by mail. In the interest of expeditious proceedings, 
the administrative law judge may direct the parties to serve pleadings 
or documents by a method other than regular mail.
    (b) Two (2) copies of all pleadings and other documents in any 
administrative law judge proceeding shall be served on the attorneys for 
the Administrator. One copy shall be served on the Associate Solicitor, 
Division of Fair Labor Standards, Office of the Solicitor, U.S. 
Department of Labor, 200 Constitution Avenue NW., room N-2716, 
Washington, DC 20210, and one copy on the attorney representing the 
Administrator in the proceeding.
    (c) Time under this subpart shall be computed beginning with the day 
following the action and includes the last day of the period unless it 
is a Saturday, Sunday, or federally-observed holiday, in which case the 
time period includes the next business day.



Sec. 655.1035  Administrative law judge proceedings.

    (a) Upon receipt of a timely request for a hearing filed pursuant to 
and in accordance with Sec. 655.1020 of this part, the Chief 
Administrative Law Judge shall promptly appoint an administrative law 
judge to hear the case.
    (b) The date of the hearing shall be not more than 60 calendar days 
from the date of the Chief Administrative Law Judge's receipt of the 
request for hearing.
    (c) The administrative law judge may prescribe a schedule by which 
the parties are permitted to file a prehearing brief or other written 
statement of fact or law. Any such brief or statement shall be served 
upon each other party in accordance with Sec. 655.1030 of this part. 
Posthearing briefs shall not be permitted except at the request of the 
administrative law judge. When permitted, any such brief shall be 
limited to the issue or issues specified by the administrative law 
judge, shall be due within the time prescribed by the administrative law 
judge, and shall be served in accordance with Sec. 655.1030 of this 
part.
    (d) Amicus curiae participation or intervention by interested 
parties may be permitted by the administrative law judge in his/her 
discretion pursuant to 29 CFR 18.10. If such participation is granted, 
the amicus curiae and/or intervenor shall serve all documents and be 
served by the parties in accordance with Sec. 655.1030 of this part. In 
no event, however, shall such participation be permitted to delay the 
proceedings beyond the deadline specified in paragraphs (b) and (c) of 
this section.



Sec. 655.1040  Decision and order of administrative law judge.

    (a) Within 90 calendar days after receipt of the transcript of the 
hearing, the administrative law judge shall issue a decision.
    (b) The decision of the administrative law judge shall include a 
statement of findings and conclusions, with reasons and basis therefore, 
upon each material issue presented on the record. The decision shall 
also include an appropriate order which may affirm, deny, reverse, or 
modify, in whole or in part, the determination of the Administrator; the 
reason or reasons for such order shall be stated in the decision.
    (c) The administrative law judge, in accordance with Sec. 655.940 
(d) and (e) of this part, shall impose upon the employer the burden of 
proving the validity of and compliance with the attestation.
    (d) If the administrative law judge finds that the employer has 
failed to

[[Page 651]]

pay the required wage rate or has provided an attestation which is 
materially false, the judge shall order that the employer be 
disqualified from employing F-1 students.
    (e) In the event that the Administrator's determination(s) of wage 
violation(s) is based upon a wage determination obtained by the 
Administrator from ETA during the investigation (paragraph (b)(6) of 
appendix A of subpart J of this part), the administrative law judge 
shall not determine the prevailing wage rate de novo, but shall, based 
on the evidence (including the ETA administrative record), either accept 
the wage determination or vacate the wage determination. If the wage 
determination is vacated, the administrative law judge shall remand the 
case to the Administrator, who may then refer the matter to ETA and, 
upon the issuance of a new wage determination by ETA, resubmit the case 
to the administrative law judge. Under no circumstances shall source 
data obtained in confidence by ETA, or the names of establishments 
contacted by ETA, be submitted into evidence or otherwise disclosed.
    (f) The administrative law judge shall not render determinations as 
to the legality of a regulatory provision or the constitutionality of a 
statutory provision.
    (g) The decision shall be served on all parties in person or by 
certified or regular mail.



Sec. 655.1045  Secretary's review of administrative law judge's decision.

    (a) Any party desiring review of the decision and order of an 
administrative law judge shall petition the Secretary to review the 
decision and order. To be effective, such petition must be received by 
the Secretary within 30 calendar days of the date of the decision and 
order. Copies of the petition shall be served on all parties and the 
administrative law judge.
    (b) No particular form is prescribed for any petition for the 
Secretary's review permitted by this subpart. However, any such petition 
shall:
    (1) Be dated;
    (2) Be typewritten or legibly written;
    (3) Specify the issue or issues stated in the administrative law 
judge decision and order giving rise to such petition;
    (4) State the specific reason or reasons why the party petitioning 
for review believes such decision and order are in error;
    (5) Be signed by the party filing the petition or by an authorized 
representative of such party;
    (6) Include the address at which such party or authorized 
representative desires to receive further communications relating 
thereto; and
    (7) Attach copies of the administrative law judge's decision and 
order, and any other record documents which would assist the Secretary 
in determining whether review is warranted.
    (c) Whenever the Secretary determines to review the decision and 
order of an administrative law judge, a notice of the Secretary's 
determination shall be served upon the administrative law judge and all 
parties within 30 calendar days after the Secretary's receipt of the 
petition for review.
    (d) Upon receipt of the Secretary's notice, the Office of 
Administrative Law Judges shall within 15 calendar days forward the 
complete hearing record to the Secretary.
    (e) The Secretary's notice may specify:
    (1) The issue or issues to be reviewed;
    (2) The form in which submissions shall be made by the parties 
(e.g., briefs);
    (3) The time within which such submissions shall be made.
    (f) All documents submitted to the Secretary shall be filed with the 
Secretary of Labor, U.S. Department of Labor, Washington, DC 20210, 
Attention: Executive Director, Office of Administrative Appeals, room S-
4309. An original and two copies of all documents shall be filed. 
Documents are not deemed filed with the Secretary until actually 
received by the Secretary. All documents, including documents filed by 
mail, must be received by the Secretary either on or before the due 
date.
    (g) Copies of all documents filed with the Secretary shall be served 
upon all other parties involved in the proceeding. Service upon the 
Administrator shall be in accordance with Sec. 655.1030(b) of this 
part.

[[Page 652]]

    (h) The Secretary's final decision shall be issued within 180 
calendar days from the date of the notice of intent to review. The 
Secretary's decision shall be served upon all parties and the 
administrative law judge.
    (i) Upon issuance of the Secretary's decision, the Secretary shall 
transmit the entire record to the Chief Administrative Law Judge for 
custody pursuant to Sec. 655.1050 of this part.



Sec. 655.1050  Administrative record.

    The official record of every completed administrative hearing 
procedure provided by subpart K of this part shall be maintained and 
filed under the custody and control of the Chief Administrative Law 
Judge. Upon receipt of a complaint seeking review of the final agency 
action in a United States District Court, the Chief Administrative Law 
Judge shall certify the official record and shall transmit such record 
to the clerk of the court.



Sec. 655.1055  Notice to the Employment and Training Administration 
(ETA) and the Attorney General (AG).

    (a) The Administrator shall notify the Attorney General and ETA of 
the final determination of a violation by an employer, and of the 
disqualification of the employer from employing F-1 students, upon the 
earliest of the following events:
    (1) When the Administrator issues a written determination that the 
employer has committed a violation, and no timely request for hearing is 
made by the employer pursuant to Sec. 655.1020 of this part; or
    (2) When, after a hearing on a timely request pursuant to Sec. 
655.1020 of this part, the administrative law judge issues a decision 
and order finding a violation by the employer; or
    (3) When, although the administrative law judge found that there was 
no violation by the employer, the Secretary, upon subsequent review upon 
a timely request pursuant to Sec. 655.1045 of this part, issues a 
decision finding that a violation was committed by the employer.
    (b) The Attorney General, upon receipt of notification from the 
Administrator pursuant to paragraph (a) of this section, shall take 
appropriate action to cancel work authorization to F-1 students for 
employment with that employer, and to prevent issuance of new work 
authorization with respect to that employer.
    (1) The Administrator's notice to the Attorney General shall, to the 
extent known from the investigation, specify the school(s) which issued 
work authorization for the F-1 students who were employed by the 
employer. The Attorney General shall inform the appropriate authority at 
each of the specified school(s) that any work authorization(s) issued 
for F-1 student(s) to be employed by that employer shall immediately be 
revoked, and that no new work authorization shall be issued for 
employment of F-1 student(s) by that employer. The Attorney General 
shall, in addition, take any other appropriate action to effectuate the 
disqualification of that employer through revocation of work 
authorization(s) at any other school(s) that may authorize employment 
with the disqualified employer.
    (2) A copy of the Administrator's notice to the Attorney General may 
also be sent by the Administrator to each school identified in the 
notice as a school from which F-1 students have been employed by the 
disqualified employer. Such copy of the Administrator's notice, upon 
receipt by the school, shall constitute sufficient notice for the DSO to 
revoke work authorization(s) and to refuse to issue new work 
authorization(s) for employment of F-1 students by that employer. Any 
school which issued or may issue work authorization(s) for employment of 
any F-1 student(s) by the employer, but which was not known by the 
Administrator to have done so, or notified by copy of the 
Administrator's decision, shall comply with any instructions from the 
Attorney General regarding revocation and nonissuance of work 
authorization for employment of any F-1 student(s) by the employer. In 
addition, any school (whether or not it received a copy of the 
Administrator's notice to the Attorney General regarding the employer) 
shall revoke F-1 work authorization(s) and refuse to issue new F-1 work 
authorization(s) for any employer which is identified as a

[[Page 653]]

disqualified employer on the list published periodically in the Federal 
Register by ETA.
    (3) Continued or new employment of any F-1 student by the employer 
shall constitute a violation of the INA's employer sanctions provisions, 
irrespective of whether the F-1 student's work authorization has been 
formally revoked by the DSO or INS.
    (c) ETA, upon receipt of the Administrator's notice pursuant to 
paragraph (a) of this section, shall cancel any F-1 attestation filed by 
the employer under subpart J of this part, shall not accept for filing 
any attestation submitted by the employer, and shall so notify the 
employer.



Sec. 655.1060  Non-applicability of the Equal Access to Justice Act.

    A proceeding under subpart K of this part is not subject to the 
Equal Access to Justice Act, as amended, 5 U.S.C. 504. In such a 
proceeding, the administrative law judge shall have no authority to 
award attorney fees and/or other litigation expenses pursuant to the 
provisions of the Equal Access to Justice Act.



    Subpart L_What Requirements Must a Facility Meet to Employ H-1C 
               Nonimmigrant Workers as Registered Nurses?

    Source: 65 FR 51149, Aug. 22, 2000, unless otherwise noted.



Sec. 655.1100  What are the purposes, procedures and applicability 
of these regulations in subparts L and M of this part?

    (a) Purpose. The Immigration and Nationality Act (INA), as amended 
by the Nursing Relief for Disadvantaged Areas Act of 1999, establishes 
the H-1C nonimmigrant visa program to provide qualified nursing 
professionals for narrowly defined health professional shortage areas. 
Subpart L of this part sets forth the procedure by which facilities 
seeking to use nonimmigrant registered nurses must submit attestations 
to the Department of Labor demonstrating their eligibility to 
participate as facilities, their wages and working conditions for 
nurses, their efforts to recruit and retain United States workers as 
registered nurses, the absence of a strike/lockout or layoff, 
notification of nurses, and the numbers of and worksites where H-1C 
nurses will be employed. Subpart M of this part sets forth complaint, 
investigation, and penalty provisions with respect to such attestations.
    (b) Procedure. The INA establishes a procedure for facilities to 
follow in seeking admission to the United States for, or use of, 
nonimmigrant nurses under H-1C visas. The procedure is designed to 
reduce reliance on nonimmigrant nurses in the future, and calls for the 
facility to attest, and be able to demonstrate in the course of an 
investigation, that it is taking timely and significant steps to 
develop, recruit, and retain U.S. nurses. Subparts L and M of this part 
set forth the specific requirements of those procedures.
    (c) Applicability. (1) Subparts L and M of this part apply to all 
facilities that seek the temporary admission or use of H-1C 
nonimmigrants as registered nurses.
    (2) During the period that the provisions of Appendix 1603.D.4 of 
Annex 1603 of the North American Free Trade Agreement (NAFTA) apply, 
subparts L and M of this part shall apply to the entry of a nonimmigrant 
who is a citizen of Mexico under the provisions of section D of Annex 
1603 of NAFTA. Therefore, the references in this part to ``H-1C nurse'' 
apply to such nonimmigrants who are classified by INS as ``TN.''



Sec. 655.1101  What are the responsibilities of the government agencies 
and the facilities that participate in the H-1C program?

    (a) Federal agencies' responsibilities. The United States Department 
of Labor (DOL), Department of Justice, and Department of State are 
involved in the H-1C visa process. Within DOL, the Employment and 
Training Administration (ETA) and the Wage and Hour Division of the 
Employment Standards Administration (ESA) have responsibility for 
different aspects of the process.
    (b) Facility's attestation responsibilities. Each facility seeking 
one or more H-1C nurse(s) must, as the first step, submit

[[Page 654]]

an Attestation on Form ETA 9081, as described in Sec. 655.1110 of this 
part, to the Employment and Training Administration, Director, Office of 
Workforce Security, 200 Constitution Ave. NW., Room C-4318, Washington, 
DC 20210. If the Attestation satisfies the criteria stated in Sec. 
655.1130 and includes the supporting information required by Sec. 
655.1110 and by Sec. 655.1114, ETA shall accept the Attestation for 
filing, and return the accepted Attestation to the facility.
    (c) H-1C petitions. Upon ETA's acceptance of the Attestation, the 
facility may then file petitions with INS for the admission or for the 
adjustment or extension of status of H-1C nurses. The facility must 
attach a copy of the accepted Attestation (Form ETA 9081) to the 
petition or the request for adjustment or extension of status, filed 
with INS. At the same time that the facility files an H-1C petition with 
INS, it must also send a copy of the petition to the Employment and 
Training Administration, Administrator, Office of Workforce Security, 
200 Constitution Avenue, NW., Room C-4318, Washington, DC 20210. The 
facility must also send to this same ETA address a copy of the INS 
petition approval notice within 5 days after it is received from INS.
    (d) Visa issuance. INS assures that the alien possesses the required 
qualifications and credentials to be employed as an H-1C nurse. The 
Department of State is responsible for issuing the visa.
    (e) Board of Alien Labor Certification Appeals (BALCA) review of 
Attestations accepted and not accepted for filing. Any interested party 
may seek review by the BALCA of an Attestation accepted or not accepted 
for filing by ETA. However, such appeals are limited to ETA actions on 
the three Attestation matters on which ETA conducts a substantive review 
(i.e., the employer's eligibility as a ``facility;'' the facility's 
attestation to alternative ``timely and significant steps;'' and the 
facility's assertion that taking a second ``timely and significant 
step'' would not be reasonable).
    (f) Complaints. Complaints concerning misrepresentation of material 
fact(s) in the Attestation or failure of the facility to carry out the 
terms of the Attestation may be filed with the Wage and Hour Division, 
Employment Standards Administration (ESA) of DOL, according to the 
procedures set forth in subpart M of this part. The Wage and Hour 
Administrator shall investigate and, where appropriate, after an 
opportunity for a hearing, assess remedies and penalties. Subpart M of 
this part also provides that interested parties may obtain an 
administrative law judge hearing and may seek review of the 
administrative law judge's decision at the Department's Administrative 
Review Board.



Sec. 655.1102  What are the definitions of terms that are used in 
these regulations?

    For the purposes of subparts L and M of this part:
    Accepted for filing means that the Attestation and any supporting 
documentation submitted by the facility have been received by the 
Employment and Training Administration of the Department of Labor and 
have been found to be complete and acceptable for purposes of 
Attestation requirements in Sec. Sec. 655.1110 through 655.1118.
    Administrative Law Judge means an official appointed under 5 U.S.C. 
3105.
    Administrator means the Administrator of the Wage and Hour Division, 
Employment Standards Administration, Department of Labor, and such 
authorized representatives as may be designated to perform any of the 
functions of the Administrator under subparts L and M of this part.
    Administrator, OWS means the Administrator of the Office of 
Workforce Security, Employment Training Administration, Department of 
Labor, and such authorized representatives as may be designated to 
perform any of the functions of the Administrator, OWS under subpart L 
of this part.
    Aggrieved party means a person or entity whose operations or 
interests are adversely affected by the employer's alleged 
misrepresentation of material fact(s) or non-compliance with the 
Attestation and includes, but is not limited to:

[[Page 655]]

    (1) A worker whose job, wages, or working conditions are adversely 
affected by the facility's alleged misrepresentation of material fact(s) 
or non-compliance with the attestation;
    (2) A bargaining representative for workers whose jobs, wages, or 
working conditions are adversely affected by the facility's alleged 
misrepresentation of material fact(s) or non-compliance with the 
attestation;
    (3) A competitor adversely affected by the facility's alleged 
misrepresentation of material fact(s) or non-compliance with the 
attestation; and
    (4) A government agency which has a program that is impacted by the 
facility's alleged misrepresentation of material fact(s) or non-
compliance with the attestation.
    Attorney General means the chief official of the U.S. Department of 
Justice or the Attorney General's designee.
    Board of Alien Labor Certification Appeals (BALCA) means a panel of 
one or more administrative law judges who serve on the permanent Board 
of Alien Labor Certification Appeals established by 20 CFR part 656. 
BALCA consists of administrative law judges assigned to the Department 
of Labor and designated by the Chief Administrative Law Judge to be 
members of the Board of Alien Labor Certification Appeals.
    Certifying Officer means a Department of Labor official, or such 
official's designee, who makes determinations about whether or not H-1C 
attestations are acceptable for certification.
    Chief Administrative Law Judge means the chief official of the 
Office of the Administrative Law Judges of the Department of Labor or 
the Chief Administrative Law Judge's designee.
    Date of filing means the date an Attestation is ``accepted for 
filing'' by ETA.
    Department and DOL mean the United States Department of Labor.
    Division means the Wage and Hour Division of the Employment
    Standards Administration, DOL.
    Employed or employment means the employment relationship as 
determined under the common law, except that a facility which files a 
petition on behalf of an H-1C nonimmigrant is deemed to be the employer 
of that H-1C nonimmigrant without the necessity of the application of 
the common law test. Under the common law, the key determinant is the 
putative employer's right to control the means and manner in which the 
work is performed. Under the common law, ``no shorthand formula or magic 
phrase * * * can be applied to find the answer * * *. [A]ll of the 
incidents of the relationship must be assessed and weighed with no one 
factor being decisive.'' NLRB v. United Ins. Co. of America, 390 U.S. 
254, 258 (1968). The determination should consider the following factors 
and any other relevant factors that would indicate the existence of an 
employment relationship:
    (1) The firm has the right to control when, where, and how the 
worker performs the job;
    (2) The work does not require a high level of skill or expertise;
    (3) The firm rather than the worker furnishes the tools, materials, 
and equipment;
    (4) The work is performed on the premises of the firm or the client;
    (5) There is a continuing relationship between the worker and the 
firm;
    (6) The firm has the right to assign additional projects to the 
worker;
    (7) The firm sets the hours of work and the duration of the job;
    (8) The worker is paid by the hour, week, month or an annual salary, 
rather than for the agreed cost of performing a particular job;
    (9) The worker does not hire or pay assistants;
    (10) The work performed by the worker is part of the regular 
business (including governmental, educational and nonprofit operations) 
of the firm;
    (11) The firm is itself in business;
    (12) The worker is not engaged in his or her own distinct occupation 
or business;
    (13) The firm provides the worker with benefits such as insurance, 
leave, or workers' compensation;
    (14) The worker is considered an employee of the firm for tax 
purposes (i.e., the entity withholds federal, state, and Social Security 
taxes);
    (15) The firm can discharge the worker; and
    (16) The worker and the firm believe that they are creating an 
employer-employee relationship.

[[Page 656]]

    Employment and Training Administration (ETA) means the agency within 
the Department of Labor (DOL) which includes the Office of Workforce 
Security (OWS).
    Employment Standards Administration (ESA) means the agency within 
the Department of Labor (DOL) which includes the Wage and Hour Division.
    Facility means a ``subsection (d) hospital'' (as defined in section 
1886(d)(1)(B) of the Social Security Act (42 U.S.C. 1395ww(d)(1)(B)) 
that meets the following requirements:
    (1) As of March 31, 1997, the hospital was located in a health 
professional shortage area (as defined in section 332 of the Public 
Health Service Act (42 U.S.C. 245e)); and
    (2) Based on its settled cost report filed under title XVIII of the 
Social Security Act (42 U.S.C. 1395 et seq.) for its cost reporting 
period beginning during fiscal year 1994--
    (i) The hospital has not less than 190 licensed acute care beds;
    (ii) The number of the hospital's inpatient days for such period 
which were made up of patients who (for such days) were entitled to 
benefits under part A of such title is not less than 35% of the total 
number of such hospital's acute care inpatient days for such period; and
    (iii) The number of the hospital's inpatient days for such period 
which were made up of patients who (for such days) were eligible for 
medical assistance under a State plan approved under title XIX of the 
Social Security Act, is not less than 28% of the total number of such 
hospital's acute care inpatient days for such period.
    Full-time employment means work where the nurse is regularly 
scheduled to work 40 hours or more per week, unless the facility 
documents that it is common practice for the occupation at the facility 
or for the occupation in the geographic area for full-time nurses to 
work fewer hours per week.
    Geographic area means the area within normal commuting distance of 
the place (address) of the intended worksite. If the geographic area 
does not include a sufficient number of facilities to make a prevailing 
wage determination, the term ``geographic area'' shall be expanded with 
respect to the attesting facility to include a sufficient number of 
facilities to permit a prevailing wage determination to be made. If the 
place of the intended worksite is within a Metropolitan Statistical Area 
(MSA) or Primary Metropolitan Statistical Area (PMSA), any place within 
the MSA or PMSA will be deemed to be within normal commuting distance of 
the place of intended employment.
    H-1C nurse means any nonimmigrant alien admitted to the United 
States to perform services as a nurse under section 101(a)(15)(H)(i)(c) 
of the Act (8 U.S.C. 1101(a)(15)(H)(i)(c)).
    Immigration and Naturalization Service (INS) means the component of 
the Department of Justice which makes the determination under the Act on 
whether to grant H-1C visas to petitioners seeking the admission of 
nonimmigrant nurses under H-1C visas.
    INA means the Immigration and Nationality Act, as amended, 8
    U.S.C. 1101 et seq.
    Lockout means a labor dispute involving a work stoppage in which an 
employer withholds work from its employees in order to gain a concession 
from them.
    Nurse means a person who is or will be authorized by a State Board 
of Nursing to engage in registered nursing practice in a State or U.S. 
territory or possession at a facility which provides health care 
services. A staff nurse means a nurse who provides nursing care directly 
to patients. In order to qualify under this definition of ``nurse'' the 
alien must:
    (1) Have obtained a full and unrestricted license to practice 
nursing in the country where the alien obtained nursing education, or 
have received nursing education in the United States;
    (2) Have passed the examination given by the Commission on Graduates 
for Foreign Nursing Schools (CGFNS), or have obtained a full and 
unrestricted (permanent) license to practice as a registered nurse in 
the state of intended employment, or have obtained a full and 
unrestricted (permanent) license in any state or territory of the United 
States and received temporary authorization to practice as a registered 
nurse in the state of intended employment; and,

[[Page 657]]

    (3) Be fully qualified and eligible under the laws (including such 
temporary or interim licensing requirements which authorize the nurse to 
be employed) governing the place of intended employment to practice as a 
registered nurse immediately upon admission to the United States, and be 
authorized under such laws to be employed by the employer. For purposes 
of this paragraph, the temporary or interim licensing may be obtained 
immediately after the alien enters the United States and registers to 
take the first available examination for permanent licensure.
    Office of Workforce Security (OWS) means the agency of the 
Department of Labor's Employment and Training Administration which is 
charged with administering the national system of public employment 
offices.
    Prevailing wage means the weighted average wage paid to similarly 
employed registered nurses within the geographic area.
    Secretary means the Secretary of Labor or the Secretary's designee.
    Similarly employed means employed by the same type of facility 
(acute care or long-term care) and working under like conditions, such 
as the same shift, on the same days of the week, and in the same 
specialty area.
    State means one of the 50 States, the District of Columbia, Puerto 
Rico, the U.S. Virgin Islands, and Guam.
    State employment security agency (SESA) means the State agency 
designated under section 4 of the Wagner-Peyser Act to cooperate with 
OWS in the operation of the national system of public employment 
offices.
    Strike means a labor dispute in which employees engage in a 
concerted stoppage of work (including stoppage by reason of the 
expiration of a collective-bargaining agreement) or engage in any 
concerted slowdown or other concerted interruption of operations.
    United States is defined at 8 U.S.C. 1101(a)(38).
    United States (U.S.) nurse means any nurse who is a U.S. citizen; is 
a U.S. national; is lawfully admitted for permanent residence; is 
granted the status of an alien admitted for temporary residence under 8 
U.S.C. 1160(a), 1161(a), or 1255a(a)(1); is admitted as a refugee under 
8 U.S.C. 1157; or is granted asylum under 8 U.S.C. 1158.
    Worksite means the location where the nurse is involved in the 
practice of nursing.



Sec. 655.1110  What requirements does the NRDAA impose in the filing 
of an Attestation?

    (a) Who may file Attestations? (1) Any hospital which meets the 
definition of ``facility'' in Sec. Sec. 655.1102 and 655.1111 may file 
an Attestation.
    (2) ETA shall determine the hospital's eligibility as a ``facility'' 
through a review of this attestation element on the first Attestation 
filed by the hospital. ETA's determination on this point is subject to a 
hearing before the BALCA upon the request of any interested party. The 
BALCA proceeding shall be limited to this point.
    (3) Upon the hospital's filing of a second or subsequent 
Attestation, its eligibility as a ``facility'' shall be controlled by 
the determination made on this point in the ETA review (and BALCA 
proceeding, if any) of the hospital's first Attestation.
    (b) Where and when should Attestations be submitted? Attestations 
shall be submitted, by U.S. mail or private carrier, to ETA at the 
following address: Chief, Division of Foreign Labor Certifications, 
Office of Workforce Security, Employment and Training Administration, 
Department of Labor, 200 Constitution Avenue NW, Room C-4318, 
Washington, DC 20210. Attestations shall be reviewed and accepted for 
filing or rejected by ETA within thirty calendar days of the date they 
are received by ETA. Therefore, it is recommended that Attestations be 
submitted to ETA at least thirty-five calendar days prior to the planned 
date for filing an H-1C visa petition with the Immigration and 
Naturalization Service.
    (c) What shall be submitted?
    (1) Form ETA 9081 and required supporting documentation, as 
described in paragraphs (c)(1)(i) through (iv) of this section.
    (i) A completed and dated original Form ETA 9081, containing the 
required attestation elements and the

[[Page 658]]

original signature of the chief executive officer of the facility, shall 
be submitted, along with one copy of the completed, signed, and dated 
Form ETA 9081. Copies of the form and instructions are available at the 
address listed in paragraph (b) of this section.
    (ii) If the Attestation is the first filed by the hospital, it shall 
be accompanied by copies of pages from the hospital's Form HCFA 2552 
filed with the Department of Health and Human Services (pursuant to 
title XVIII of the Social Security Act) for its 1994 cost reporting 
period, showing the number of its acute care beds and the percentages of 
Medicaid and Medicare reimbursed acute care inpatient days (i.e., Form 
HCFA-2552-92, Worksheet S-3, Part I; Worksheet S, Parts I and II).
    (iii) If the facility attests that it will take one or more ``timely 
and significant steps'' other than the steps identified on Form ETA 
9081, then the facility must submit (in duplicate) an explanation of the 
proposed ``step(s)'' and an explanation of how the proposed ``step(s)'' 
is/are of comparable significance to those set forth on the Form and in 
Sec. 655.1114. (See Sec. 655.1114(b)(2)(v).)
    (iv) If the facility attests that taking more than one ``timely and 
significant step'' is unreasonable, then the facility must submit (in 
duplicate) an explanation of this attestation. (See Sec. 655.1114(c).)
    (2) Filing fee of $250 per Attestation. Payment must be in the form 
of a check or money order, payable to the ``U.S. Department of Labor.'' 
Remittances must be drawn on a bank or other financial institution 
located in the U.S. and be payable in U.S. currency.
    (3) Copies of H-1C petitions and INS approval notices. After ETA has 
approved the Attestation used by the facility to support any H-1C 
petition, the facility must send to ETA (at the address specified in 
paragraph (b) of this section) copies of each H-1C petition and INS 
approval notice on such petition.
    (d) Attestation elements. The attestation elements referenced in 
paragraph (c)(1) of this section are mandated by section 212(m)(2)(A) of 
the INA (8 U.S.C. 1182(m)(2)(A)). Section 212(m)(2)(A) requires a 
prospective employer of H-1C nurses to attest to the following:
    (1) That it qualifies as a ``facility'' (See Sec. 655.1111);
    (2) That employment of H-1C nurses will not adversely affect the 
wages or working conditions of similarly employed nurses (See Sec. 
655.1112);
    (3) That the facility will pay the H-1C nurse the facility wage rate 
(See Sec. 655.1113);
    (4) That the facility has taken, and is taking, timely and 
significant steps to recruit and retain U.S. nurses (See Sec. 
655.1114);
    (5) That there is not a strike or lockout at the facility, that the 
employment of H-1C nurses is not intended or designed to influence an 
election for a bargaining representative for RNs at the facility, and 
that the facility did not lay off and will not lay off a registered 
nurse employed by the facility 90 days before and after the date of 
filing a visa petition (See Sec. 655.1115);
    (6) That the facility will notify its workers and give a copy of the 
Attestation to every nurse employed at the facility (See Sec. 
655.1116);
    (7) That no more than 33% of nurses employed by the facility will be 
H-1C nonimmigrants (See Sec. 655.1117);
    (8) That the facility will not authorize H-1C nonimmigrants to work 
at a worksite not under its control, and will not transfer an H-1C 
nonimmigrant from one worksite to another (See Sec. 655.1118).



Sec. 655.1111  Element I--What hospitals are eligible to participate 
in the H-1C program?

    (a) The first attestation element requires that the employer be a 
``facility'' for purposes of the H-1C program, as defined in INA Section 
212(m)(6), 8 U.S.C. 1182 (2)(m)(6).
    (b) A qualifying facility under that section is a ``subpart (d) 
hospital,'' as defined in Section 1886(d)(1)(B) of the Social Security 
Act, 42 U.S.C. 1395ww(d)(1)(B), which:
    (1) Was located in a health professional shortage area (HPSA), as 
determined by the Department of Health and Human Services, on March 31, 
1997. A list of HPSAs, as of March 31, 1997, was published in the 
Federal Register on May 30, 1997 (62 FR 29395);

[[Page 659]]

    (2) Had at least 190 acute care beds, as determined by its settled 
cost report, filed under Title XVIII of the Social Security Act, (42 
U.S.C. 1395 et seq.), for its fiscal year 1994 cost reporting period 
(i.e., Form HCFA-2552-92, Worksheet S-3, Part I, column 1, line 8);
    (3) Had at least 35% of its acute care inpatient days reimbursed by 
Medicare, as determined by its settled cost report, filed under Title 
XVIII of the Social Security Act, for its fiscal year 1994 cost 
reporting period (i.e., Form HCFA-2552-92, Worksheet S-3, Part I, column 
4, line 8 as a percentage of column 6, line 8); and
    (4) Had at least 28% of its acute care inpatient days reimbursed by 
Medicaid, as determined by its settled cost report, filed under Title 
XVIII of the Social Security Act, for its fiscal year 1994 cost 
reporting period (i.e., Form HCFA-2552-92, Worksheet S-3, Part I, column 
5, line 8 as a percentage of column 6, line 8).
    (c) The Federal Register notice containing the controlling list of 
HPSAs (62 FR 29395), can be found in federal depository libraries and on 
the Government Printing Office Internet website at http://
www.access.gpo.gov.
    (d) To make a determination about information in the settled cost 
report, the employer shall examine its own Worksheet S-3, Part I, 
Hospital and Hospital Health Care Complex Statistical Data, in the 
Hospital and Hospital Health Care Complex Cost Report, Form HCFA 2552, 
filed for the fiscal year 1994 cost reporting period.
    (e) The facility must maintain a copy of the portions of Worksheet 
S-3, Part I and Worksheet S, Parts I and II of HCFA Form 2552 which 
substantiate the attestation of eligibility as a ``facility.'' One set 
of copies of this document must be kept in the facility's public access 
file. The full Form 2552 for fiscal year 1994 must be made available to 
the Department upon request.



Sec. 655.1112  Element II--What does ``no adverse effect on wages and 
working conditions'' mean?

    (a) The second attestation element requires that the facility attest 
that ``the employment of the alien will not adversely affect the wages 
and working conditions of registered nurses similarly employed.''
    (b) For purposes of this program, ``employment'' is full-time 
employment as defined in Sec. 655.1102; part-time employment of H-1C 
nurses is not authorized.
    (c) Wages. To meet the requirement of no adverse effect on wages, 
the facility must attest that it will pay each nurse employed by the 
facility at least the prevailing wage for the occupation in the 
geographic area. The facility must pay the higher of the wage required 
under this paragraph or the wage required under Sec. 655.1113 (i.e., 
the third attestation element: facility wage).
    (1) Collectively bargained wage rates. Where wage rates for nurses 
at a facility are the result of arms-length collective bargaining, those 
rates shall be considered ``prevailing'' for that facility for the 
purposes of this subpart.
    (2) State employment security determination. In the absence of 
collectively bargained wage rates, the facility may not independently 
determine the prevailing wage. The State employment security agency 
(SESA) shall determine the prevailing wage for similarly employed nurses 
in the geographic area in accordance with administrative guidelines or 
regulations issued by ETA. The facility shall request the appropriate 
prevailing wage from the SESA not more than 90 days prior to the date 
the Attestation is submitted to ETA. Once a facility obtains a 
prevailing wage determination from the SESA and files an Attestation 
supported by that prevailing wage determination, the facility shall be 
deemed to have accepted the prevailing wage determination as accurate 
and appropriate (as to both the occupational classification and the wage 
rate) and thereafter shall not contest the legitimacy of the prevailing 
wage determination in an investigation or enforcement action pursuant to 
subpart M. A facility may challenge a SESA prevailing wage determination 
through the Employment Service complaint system. See 20 CFR part 658, 
subpart M. A facility which challenges a SESA prevailing wage 
determination must

[[Page 660]]

obtain a final ruling from the Employment Service prior to filing an 
Attestation. Any such challenge shall not require the SESA to divulge 
any employer wage data which was collected under the promise of 
confidentiality.
    (3) Total compensation package. The prevailing wage under this 
paragraph relates to wages only. Employers are cautioned that each item 
in the total compensation package for U.S. nurses, H-1C, and other 
nurses employed by the facility must be the same within a given 
facility, including such items as housing assistance and fringe 
benefits.
    (4) Documentation of pay and total compensation. The facility must 
maintain in its public access file a copy of the prevailing wage, which 
shall be either the collective bargaining agreement or the determination 
that was obtained from the SESA. The facility must maintain payroll 
records, as specified in Sec. 655.1113, and make such records available 
to the Administrator in the event of an enforcement action pursuant to 
subpart M.
    (d) Working conditions. To meet the requirement of no adverse effect 
on working conditions, the facility must attest that it will afford 
equal treatment to U.S. and H-1C nurses with the same seniority, with 
respect to such working conditions as the number and scheduling of hours 
worked (including shifts, straight days, weekends); vacations; wards and 
clinical rotations; and overall staffing-patient patterns. In the event 
of an enforcement action pursuant to subpart M, the facility must 
provide evidence substantiating compliance with this attestation.



Sec. 655.1113  Element III--What does ``facility wage rate'' mean?

    (a) The third attestation element requires that the facility 
employing or seeking to employ the alien must attest that ``the alien 
employed by the facility will be paid the wage rate for registered 
nurses similarly employed by the facility.''
    (b) The facility must pay the higher of the wage required in this 
section (i.e. facility wage), or the wage required in Sec. 655.1112 
(i.e., prevailing wage).
    (c) Wage obligations for H-1C nurses in nonproductive status--(1) 
Circumstances where wages must be paid. If the H-1C nurse is not 
performing work and is in a nonproductive status due to a decision by 
the facility (e.g., because of lack of assigned work), because the nurse 
has not yet received a license to work as a registered nurse, or any 
other reason except as specified in paragraph (c)(2) of this section, 
the facility is required to pay the salaried H-1C nurse the full amount 
of the weekly salary, or to pay the hourly-wage H-1C nurse for a full-
time week (40 hours or such other number of hours as the facility can 
demonstrate to be full-time employment) at the applicable wage rate.
    (2) Circumstances where wages need not be paid. If an H-1C nurse 
experiences a period of nonproductive status due to conditions unrelated 
to employment which take the nurse away from his/her duties at his/her 
voluntary request and convenience (e.g., touring the U.S., caring for 
ill relative) or render the nonimmigrant unable to work (e.g., maternity 
leave, automobile accident which temporarily incapacitates the 
nonimmigrant), then the facility is not obligated to pay the required 
wage rate during that period, provided that such period is not subject 
to payment under the facility's benefit plan. Payment need not be made 
if there has been a bona fide termination of the employment 
relationship, as demonstrated by notification to INS that the employment 
relationship has been terminated and the petition should be canceled.
    (d) Documentation. The facility must maintain documentation 
substantiating compliance with this attestation element. The public 
access file shall contain the facility pay schedule for nurses or a 
description of the factors taken into consideration by the facility in 
making compensation decisions for nurses, if either of these documents 
exists. Categories of nursing positions not covered by the public access 
file documentation shall not be covered by the Attestation, and, 
therefore, such positions shall not be filled or held by H-1C nurses. 
The facility must maintain the payroll records, as required under the 
Fair Labor Standards Act at 29 CFR part 516, and make such records 
available to the Administrator in the event of an enforcement action 
pursuant to subpart M of this part.

[[Page 661]]



Sec. 655.1114  Element IV--What are the timely and significant steps 
an H-1C employer must take to recruit and retain U.S. nurses?

    (a) The fourth attestation element requires that the facility attest 
that it ``has taken and is taking timely and significant steps designed 
to recruit and retain sufficient registered nurses who are United States 
citizens or immigrants who are authorized to perform nursing services, 
in order to remove as quickly as reasonably possible the dependence of 
the facility on nonimmigrant registered nurses.'' The facility must take 
at least two such steps, unless it demonstrates that taking a second 
step is not reasonable. The steps described in this section shall not be 
considered to be an exclusive list of the significant steps that may be 
taken to meet the conditions of this section. Nothing in this subpart or 
subpart M of this part shall require a facility to take more than one 
step, if the facility can demonstrate that taking a second step is not 
reasonable. A facility choosing to take timely and significant steps 
other than those specifically described in this section must submit with 
its Attestation a description of the step(s) it is proposing to take and 
an explanation of how the proposed step(s) are of comparable timeliness 
and significance to those described in this section (See Sec. 
655.1110(c)(1)(iii)). A facility claiming that a second step is 
unreasonable must submit an explanation of why such second step would be 
unreasonable (See Sec. 655.1110(c)(1)(iv)).
    (b) Descriptions of steps. Each of the actions described in this 
section shall be considered a significant step reasonably designed to 
recruit and retain U.S. nurses. A facility choosing any of these steps 
shall designate such step on Form ETA 9081, thereby attesting that its 
program(s) meets the regulatory requirements set forth for such step. 
Section 212(m)(2)(E)(ii) of the INA provides that a violation shall be 
found if a facility fails to meet a condition attested to. Thus, a 
facility shall be held responsible for all timely and significant steps 
to which it attests.
    (1) Statutory steps--(i) Operating a training program for registered 
nurses at the facility or financing (or providing participation in) a 
training program for registered nurses elsewhere. Training programs may 
include either courses leading to a higher degree (i.e., beyond an 
associate or a baccalaureate degree), or continuing education courses. 
If the program includes courses leading to a higher degree, they must be 
courses which are part of a program accepted for degree credit by a 
college or university and accredited by a State Board of Nursing or a 
State Board of Higher Education (or its equivalent), as appropriate. If 
the program includes continuing education courses, they must be courses 
which meet criteria established to qualify the nurses taking the courses 
to earn continuing education units accepted by a State Board of Nursing 
(or its equivalent). In either type of program, financing by the 
facility (either directly or arranged through a third party) shall cover 
the total costs of such training. The number of U.S. nurses for whom 
such training actually is provided shall be no less than half of the 
number of nurses who left the facility during the 12-month period prior 
to submission of the Attestation. U.S. nurses to whom such training was 
offered, but who rejected such training, may be counted towards those 
provided training.
    (ii) Providing career development programs and other methods of 
facilitating health care workers to become registered nurses. This may 
include programs leading directly to a degree in nursing, or career 
ladder/career path programs which could ultimately lead to a degree in 
nursing. Any such degree program shall be, at a minimum, through an 
accredited community college (leading to an associate's degree), 4-year 
college (a bachelor's degree), or diploma school, and the course of 
study must be one accredited by a State Board of Nursing (or its 
equivalent). The facility (either directly or arranged through a third 
party) must cover the total costs of such programs. U.S. workers 
participating in such programs must be working or have worked in health 
care occupations or facilities. The number of U.S. workers for whom such 
training is provided must be equal to no less than half the average 
number of vacancies for nurses during the 12-month period prior to the 
submission of the Attestation. U.S. nurses to

[[Page 662]]

whom such training was offered, but who rejected such training, may be 
counted towards those provided training.
    (iii) Paying registered nurses wages at a rate higher than currently 
being paid to registered nurses similarly employed in the geographic 
area. The facility's entire schedule of wages for nurses shall be at 
least 5 percent higher than the prevailing wage as determined by the 
SESA, and such differentials shall be maintained throughout the period 
of the Attestation's effectiveness.
    (iv) Providing reasonable opportunities for meaningful salary 
advancement by registered nurses. This may include salary advancement 
based on factors such as merit, education, and specialty, and/or salary 
advancement based on length of service, with other bases for wage 
differentials remaining constant.
    (A) Merit, education, and specialty. Salary advancement may be based 
on factors such as merit, education, and specialty, or the facility may 
provide opportunities for professional development of its nurses which 
lead to salary advancement (e.g., participation in continuing education 
or in-house educational instruction; service on special committees, task 
forces, or projects considered of a professional development nature; 
participation in professional organizations; and writing for 
professional publications). Such opportunities must be available to all 
the facility's nurses.
    (B) Length of service. Salary advancement may be based on length of 
service using clinical ladders which provide, annually, salary increases 
of 3 percent or more for a period of no less than 10 years, over and 
above the costs of living and merit, education, and specialty increases 
and differentials.
    (2) Other possible steps. The Act indicates that the four steps 
described in the statute (and set out in paragraph (b)(1) of this 
section) are not an exclusive list of timely and significant steps which 
might qualify. The actions described in paragraphs (b)(2)(i) through 
(iv) of this section, are also deemed to be qualified; in paragraph 
(b)(2)(v) of this section, the facility is afforded the opportunity to 
identify a timely and significant step of its own devising.
    (i) Monetary incentives. The facility provides monetary incentives 
to nurses, through bonuses and merit pay plans not included in the base 
compensation package, for additional education, and for efforts by the 
nurses leading to increased recruitment and retention of U.S. nurses. 
Such monetary incentives may be based on actions by nurses such as: 
Instituting innovations to achieve better patient care, increased 
productivity, reduced waste, and/or improved workplace safety; obtaining 
additional certification in a nursing specialty; accruing unused sick 
leave; recruiting other U.S. nurses; staying with the facility for a 
given number of years; taking less desirable assignments (other than 
shift differential); participating in professional organizations; 
serving on task forces and on special committees; or contributing to 
professional publications.
    (ii) Special perquisites. The facility provides nurses with special 
perquisites for dependent care or housing assistance of a nature and/or 
extent that constitute a ``significant'' factor in inducing employment 
and retention of U.S. nurses.
    (iii) Work schedule options. The facility provides nurses with non-
mandatory work schedule options for part-time work, job-sharing, 
compressed work week or non-rotating shifts (provided, however, that H-
1C nurses are employed only in full-time work) of a nature and/or extent 
that constitute a ``significant'' factor in inducing employment and 
retention of U.S. nurses.
    (iv) Other training options. The facility provides training 
opportunities to U.S. workers not currently in health care occupations 
to become registered nurses by means of financial assistance (e.g., 
scholarship, loan or pay-back programs) to such persons.
    (v) Alternative but significant steps. Facilities are encouraged to 
be innovative in devising timely and significant steps other than those 
described in paragraphs (b)(1) and (b)(2)(i) through (iv) of this 
section. To qualify, an alternative step must be of a timeliness and 
significance comparable to those in this section. A facility may 
designate on Form ETA 9081 that it has taken and is taking such 
alternate step(s),

[[Page 663]]

thereby attesting that the step(s) meet the statutory test of timeliness 
and significance comparable to those described in paragraphs (b)(1) and 
(b)(2)(i) through (iv) in promoting the development, recruitment, and 
retention of U.S. nurses. If such a designation is made on Form ETA 
9081, the submission of the Attestation to ETA must include an 
explanation and appropriate documentation of the alternate step(s), and 
of the manner in which they satisfy the statutory test in comparison to 
the steps described in paragraphs (b)(1) and (b)(2)(i) through (iv). ETA 
will review the explanation and documentation and determine whether the 
alternate step(s) qualify under this subsection. The ETA determination 
is subject to review by the BALCA, upon the request of an interested 
party; such review shall be limited to this matter.
    (c) Unreasonableness of second step. Nothing in this subpart or 
subpart M of this part requires a facility to take more than one step, 
if the facility can demonstrate that taking a second step is not 
reasonable. However, a facility shall make every effort to take at least 
two steps. The taking of a second step may be considered unreasonable if 
it would result in the facility's financial inability to continue 
providing the same quality and quantity of health care or if the 
provision of nursing services would otherwise be jeopardized by the 
taking of such a step.
    (1) A facility may designate on Form ETA 9081 that the taking of a 
second step is not reasonable. If such a designation is made on Form ETA 
9081, the submission of the Attestation to ETA shall include an 
explanation and appropriate documentation with respect to each of the 
steps described in paragraph (b) of this section (other than the step 
designated as being taken by the facility), showing why it would be 
unreasonable for the facility to take each such step and why it would be 
unreasonable for the facility to take any other step designed to 
recruit, develop and retain sufficient U.S. nurses to meet its staffing 
needs.
    (2) ETA will review the explanation and documentation, and will 
determine whether the taking of a second step would not be reasonable. 
The ETA determination is subject to review by the BALCA, upon the 
request of an interested party; such review shall be limited to this 
matter.
    (d) Performance-based alternative to criteria for specific steps. 
Instead of complying with the specific criteria for one or more of the 
steps in the second and/or succeeding years of participation in the H-1C 
program, a facility may include in its prior year's Attestation, in 
addition to the actions taken under specifically attested steps, that it 
will reduce the number of H-1C nurses it utilizes within one year from 
the date of the Attestation by at least 10 percent, without reducing the 
quality or quantity of services provided. If this goal is achieved, the 
facility shall so indicate on its subsequent year's Attestation. 
Further, the facility need not attest to any ``timely and significant 
step'' on that subsequent attestation, if it again indicates that it 
shall again reduce the number of H-1C nurses it utilizes within one year 
from the date of the Attestation by at least 10 percent. This 
performance-based alternative is designed to permit a facility to 
achieve the objectives of the Act, without subjecting the facility to 
detailed requirements and criteria as to the specific means of achieving 
that objective.
    (e) Documentation. The facility must include in the public access 
file a description of the activities which constitute its compliance 
with each timely and significant step which is attested on Form ETA 9081 
(e.g., summary of a training program for registered nurses; description 
of a career ladder showing meaningful opportunities for pay advancements 
for nurses). If the facility has attested that it will take an 
alternative step or that taking a second step is unreasonable, then the 
public access file must include the documentation which was submitted to 
ETA under paragraph (c) of this section. The facility must maintain in 
its non-public files, and must make available to the Administrator in 
the event of an enforcement action pursuant to subpart M of this part, 
documentation which provides a complete description of the nature and 
operation of its program(s) sufficient to substantiate its full 
compliance with the requirements of each timely and significant step

[[Page 664]]

which is attested to on Form ETA 9081. This documentation should include 
information relating to all of the requirements for the step in 
question.



Sec. 655.1115  Element V--What does ``no strike/lockout or layoff'' mean?

    (a) The fifth attestation element requires that the facility attest 
that ``there is not a strike or lockout in the course of a labor 
dispute, the facility did not lay off and will not lay off a registered 
nurse employed by the facility within the period beginning 90 days 
before and ending 90 days after the date of filing of any visa petition, 
and the employment of such an alien is not intended or designated to 
influence an election for a bargaining representative for registered 
nurses of the facility.'' Labor disputes for purposes of this 
attestation element relate only to those involving nurses providing 
nursing services; other health service occupations are not included. A 
facility which has filed a petition for H-1C nurses is also prohibited 
from interfering with the right of the nonimmigrant to join or organize 
a union.
    (b) Notice of strike or lockout. In order to remain in compliance 
with the no strike or lockout portion of this attestation element, the 
facility must notify ETA if a strike or lockout of nurses at the 
facility occurs during the one year validity of the Attestation. Within 
three days of the occurrence of such strike or lockout, the facility 
must submit to the Chief, Division of Foreign Labor Certifications, 
Office of Workforce Security, Employment and Training Administration, 
Department of Labor, 200 Constitution Avenue N.W., Room C-4318, 
Washington, D.C. 20210, by U.S. mail or private carrier, written notice 
of the strike or lockout. Upon receiving a notice described in this 
section from a facility, ETA will examine the documentation, and may 
consult with the union at the facility or other appropriate entities. If 
ETA determines that the strike or lockout is covered under 8 CFR 
214.2(h)(17), INS's Effect of strike regulation for ``H'' visa holders, 
ETA must certify to INS, in the manner set forth in that regulation, 
that a strike or other labor dispute involving a work stoppage of nurses 
is in progress at the facility.
    (c) Lay off of a U.S. nurse means that the employer has caused the 
nurse's loss of employment in circumstances other than where--
    (1) A U.S. nurse has been discharged for inadequate performance, 
violation of workplace rules, or other reasonable work-related cause;
    (2) A U.S. nurse's departure or retirement is voluntary (to be 
assessed in light of the totality of the circumstances, under 
established principles concerning ``constructive discharge'' of workers 
who are pressured to leave employment);
    (3) The grant or contract under which the work performed by the U.S. 
nurse is required and funded has expired, and without such grant or 
contract the nurse would not continue to be employed because there is no 
alternative funding or need for the position; or
    (4) A U.S. nurse who loses employment is offered, as an alternative 
to such loss, a similar employment opportunity with the same employer. 
The validity of the offer of a similar employment opportunity will be 
assessed in light of the following factors:
    (i) The offer is a bona fide offer, rather than an offer designed to 
induce the U.S. nurse to refuse or an offer made with the expectation 
that the worker will refuse;
    (ii) The offered job provides the U.S. nurse an opportunity similar 
to that provided in the job from which he/she is discharged, in terms 
such as a similar level of authority, discretion, and responsibility, a 
similar opportunity for advancement within the organization, and similar 
tenure and work scheduling;
    (iii) The offered job provides the U.S. nurse equivalent or higher 
compensation and benefits to those provided in the job from which he/she 
is discharged.
    (d) Documentation. The facility must include in its public access 
file, copies of all notices of strikes or other labor disputes involving 
a work stoppage of nurses at the facility (submitted to ETA under 
paragraph (b) of this section). The facility must retain in its non-
public files, and make available in the event of an enforcement action 
pursuant to subpart M of this part, any existing documentation with 
respect to

[[Page 665]]

the departure of each U.S. nurse who left his/her employment with the 
facility in the period from 90 days before until 90 days after the 
facility's petition for H-1C nurse(s). The facility is also required to 
have a record of the terms of any offer of alternative employment to 
such a U.S. nurse and the nurse's response to the offer (which may be a 
note to the file or other record of the nurse's response), and to make 
such record available in the event of an enforcement action pursuant to 
subpart M.



Sec. 655.1116  Element VI--What notification must facilities provide 
to registered nurses?

    (a) The sixth attestation element requires the facility to attest 
that at the time of filing of the petition for registered nurses under 
section 101(a)(15)(H)(i)(c) of the INA, notice of filing has been 
provided by the facility to the bargaining representative of the 
registered nurses at the facility or, where there is no such bargaining 
representative, notice of the filing has been provided to registered 
nurses at the facility through posting in conspicuous locations, and 
individual copies of the Attestation have been provided to registered 
nurses employed at the facility.
    (b) Notification of bargaining representative. At a time no later 
than the date the Attestation is transmitted to ETA, the facility must 
notify the bargaining representative (if any) for nurses at the facility 
that the Attestation is being submitted. No later than the date the 
facility transmits a petition for H-1C nurses to INS, the facility must 
notify the bargaining representative (if any) for nurses at the facility 
that the H-1C petition is being submitted. This notice may be either a 
copy of the Attestation or petition, or a document stating that the 
Attestation and H-1C petition are available for review by interested 
parties at the facility (explaining how they can be inspected or 
obtained) and at the Division of Foreign Labor Certifications, Office of 
Workforce Security, Employment and Training Administration, Department 
of Labor, 200 Constitution Avenue NW., Room C-4318, Washington, DC 
20210. The notice must include the following statement: ``Complaints 
alleging misrepresentation of material facts in the Attestation or 
failure to comply with the terms of the Attestation may be filed with 
any office of the Wage and Hour Division of the United States Department 
of Labor.''
    (c) Posting notice. If there is no bargaining representative for 
nurses at the facility, the facility must post a written notice in two 
or more conspicuous locations at the facility. Such notices shall be 
clearly visible and unobstructed while posted, and shall be posted in 
conspicuous places where nurses can easily read the notices on their way 
to or from their duties. Appropriate locations for posting hard copy 
notices include locations in the immediate proximity of mandatory Fair 
Labor Standards Act wage and hour notices and Occupational Safety and 
Health Act occupational safety and health notices. In the alternative, 
the facility may use electronic means it ordinarily uses to communicate 
with its nurses about job vacancies or promotion opportunities, 
including through its ``home page'' or ``electronic bulletin board,'' 
provided that the nurses have, as a practical matter, direct access to 
those sites; or, where the nurses have individual e-mail accounts, the 
facility may use e-mail. This must be accomplished no later than the 
date when the facility transmits an Attestation to ETA and the date when 
the facility transmits an H-1C petition to the INS. The notice may be 
either a copy of the Attestation or petition, or a document stating that 
the Attestation or petition has been filed and is available for review 
by interested parties at the facility (explaining how these documents 
can be inspected or obtained) and at the national office of ETA. The 
notice shall include the following statement: ``Complaints alleging 
misrepresentation of material facts in the Attestation or failure to 
comply with the terms of the Attestation may be filed with any office of 
the Wage and Hour Division of the United States Department of Labor.'' 
Unless it is sent to an individual e-mail address, the Attestation 
notice shall remain posted during the validity period of the 
Attestation; the petition notice shall remain

[[Page 666]]

posted for ten days. Copies of all notices shall be available for 
examination in the facility's public access file.
    (d) Individual notice to RNs. In addition to notifying the 
bargaining representative or posting notice as described in paragraphs 
(b) and (c) of this section, the facility must provide a copy of the 
Attestation, within 30 days of the date of filing, to every registered 
nurse employed at the facility. This requirement may be satisfied by 
electronic means if an individual e-mail message, with the Attestation 
as an attachment, is sent to every RN at the facility. This notification 
includes not only the RNs employed by the facility, but also includes 
any RN who is providing service at the facility as an employee of 
another entity, such as a nursing contractor.
    (e) Where RNs lack practical computer access, a hard copy must be 
posted in accordance with paragraph (c) of this section and a hard copy 
of the Attestation delivered, within 30 days of the date of filing, to 
every RN employed at the facility in accordance with paragraph (d) of 
this section.
    (f) The facility must maintain, in its public access file, copies of 
the notices required by this section. The facility must make such 
documentation available to the Administrator in the event of an 
enforcement action pursuant to subpart M of this part.



Sec. 655.1117  Element VII--What are the limitations as to the number 
of H-1C nonimmigrants that a facility may employ?

    (a) The seventh attestation element requires that the facility 
attest that it will not, at any time, employ a number of H-1C nurses 
that exceeds 33% of the total number of registered nurses employed by 
the facility. The calculation of the population of nurses for purposes 
of this attestation includes only nurses who have an employer-employee 
relationship with the facility (as defined in Sec. 655.1102).
    (b) The facility must maintain documentation (e.g., payroll records, 
copies of H-1C petitions) that demonstrates its compliance with this 
attestation. The facility must make such documentation available to the 
Administrator in the event of an enforcement action pursuant to subpart 
M of this part.



Sec. 655.1118  Element VIII--What are the limitations as to where the 
H-1C nonimmigrant may be employed?

    The eighth attestation element requires that the facility attest 
that it will not authorize any H-1C nurse to perform services at any 
worksite not controlled by the facility or transfer any H-1C nurse from 
one worksite to another worksite, even if all of the worksites are 
controlled by the facility.



Sec. 655.1130  What criteria does the Department use to determine 
whether or not to certify an Attestation?

    (a) An Attestation form which is complete and has no obvious 
inaccuracies will be accepted for filing by ETA without substantive 
review, except that ETA will conduct a substantive review on particular 
attestation elements in the following limited circumstances:
    (1) Determination of whether the hospital submitting the Attestation 
is a qualifying ``facility'' (see Sec. 655.1110(c)(ii), regarding the 
documentation required, and the process for review);
    (2) Where the facility attests that it is taking or will take a 
``timely and significant step'' other than those identified on the Form 
ETA 9081 (see Sec. 655.1114(b)(2)(v), regarding the documentation 
required, and the process for review);
    (3) Where the facility asserts that taking a second ``timely and 
significant step'' is unreasonable (see Sec. 655.1114(c), regarding the 
documentation required, and the process for review).
    (b) The certifying officer will act on the Attestation in a timely 
manner. If the officer does not contact the facility for information or 
make any determination within 30 days of receiving the Attestation, the 
Attestation shall be accepted for filing. If ETA receives information 
contesting the truth of the statements attested to or compliance with an 
Attestation prior to the determination to accept or reject the 
Attestation for filing, such information shall not be made part of ETA's 
administrative record on the Attestation but shall

[[Page 667]]

be referred to the Administrator to be processed as a complaint pursuant 
to subpart M of this part if such Attestation is accepted by ETA for 
filing.
    (c) Upon the facility's submitting the Attestation to ETA and 
providing the notice required by Sec. 655.1116, the Attestation shall 
be available for public examination at the facility. When ETA accepts 
the Attestation for filing, the Attestation will be made available for 
public examination in the Office of Workforce Security, Employment 
Training Administration, U.S. Department of Labor, Room C-4318, 200 
Constitution Avenue, NW., Washington, DC 20210.
    (d) Standards for acceptance of Attestation. ETA will accept the 
Attestation for filing under the following standards:
    (1) The Attestation is complete and contains no obvious 
inaccuracies.
    (2) The facility's explanation and documentation are sufficient to 
satisfy the requirements for the Attestation elements on which 
substantive review is conducted (as described in paragraph (a) of this 
section).
    (3) The facility has no outstanding ``insufficient funds'' check(s) 
in connection with filing fee(s) for prior Attestation(s).
    (4) The facility has no outstanding civil money penalties and/or has 
not failed to satisfy a remedy assessed by the Wage and Hour 
Administrator, under subpart M of this part, where that penalty or 
remedy assessment has become the final agency action.
    (5) The facility has not been disqualified from approval of any 
petitions filed by, or on behalf of, the facility under section 204 or 
section 212(m) of the INA.
    (e) DOL not the guarantor. DOL is not the guarantor of the accuracy, 
truthfulness or adequacy of an Attestation accepted for filing.
    (f) Attestation Effective and Expiration Dates. An Attestation 
becomes filed and effective as of the date it is accepted and signed by 
the ETA certifying officer. Such Attestation is valid until the date 
that is the later of the end of the 12-month period beginning on the 
date of acceptance for filing with the Secretary, or the end of the 
period of admission (under INA section 101(a)(15)(H)(i)(c)) of the last 
alien with respect to whose admission the Attestation was applied, 
unless the Attestation is suspended or invalidated earlier than such 
date pursuant to Sec. 655.1132.



Sec. 655.1132  When will the Department suspend or invalidate an 
approved Attestation?

    (a) Suspension or invalidation of an Attestation may result where: 
the facility's check for the filing fee is not honored by a financial 
institution; a Board of Alien Labor Certification Appeals (BALCA) 
decision reverses an ETA certification of the Attestation; ETA finds 
that it made an error in its review and certification of the 
Attestation; an enforcement proceeding has finally determined that the 
facility failed to meet a condition attested to, or that there was a 
misrepresentation of material fact in an Attestation; the facility has 
failed to pay civil money penalties and/or failed to satisfy a remedy 
assessed by the Wage and Hour Administrator, where that penalty or 
remedy assessment has become the final agency action. If an Attestation 
is suspended or invalidated, ETA will notify INS.
    (b) BALCA decision or final agency action in an enforcement 
proceeding. If an Attestation is suspended or invalidated as a result of 
a BALCA decision overruling an ETA acceptance of the Attestation for 
filing, or is suspended or invalidated as a result of an enforcement 
action by the Administrator under subpart M of this part, such 
suspension or invalidation may not be separately appealed, but shall be 
merged with appeals on the underlying matter.
    (c) ETA action. If, after accepting an Attestation for filing, ETA 
discovers that it erroneously accepted that Attestation for filing and, 
as a result, ETA suspends or invalidates that acceptance, the facility 
may appeal such suspension or invalidation under Sec. 655.1135 as if 
that suspension or invalidation were a decision to reject the 
Attestation for filing.
    (d) A facility must comply with the terms of its Attestation, even 
if such Attestation is suspended, invalidated or expired, as long as any 
H-1C nurse is at the facility, unless the Attestation

[[Page 668]]

is superseded by a subsequent Attestation accepted for filing by ETA.



Sec. 655.1135  What appeals procedures are available concerning ETA's 
actions on a facility's Attestation?

    (a) Appeals of acceptances or rejections. Any interested party may 
appeal ETA's acceptance or rejection of an Attestation submitted by a 
facility for filing. However, such an appeal shall be limited to ETA's 
determination on one or more of the attestation elements for which ETA 
conducts a substantive review (as described in Sec. 655.1130(a)). Such 
appeal must be filed no later than 30 days after the date of the 
acceptance or rejection, and will be considered under the procedures set 
forth at paragraphs (d) and (f) of this section.
    (b) Appeal of invalidation or suspension. An interested party may 
appeal ETA's invalidation or suspension of a filed Attestation due to a 
discovery by ETA that it made an error in its review of the Attestation, 
as described in Sec. 655.1132.
    (c) Parties to the appeal. In the case of an appeal of an 
acceptance, the facility will be a party to the appeal; in the case of 
the appeal of a rejection, invalidation, or suspension, the collective 
bargaining representative (if any) representing nurses at the facility 
shall be a party to the appeal. Appeals shall be in writing; shall set 
forth the grounds for the appeal; shall state if de novo consideration 
by BALCA is requested; and shall be mailed by certified mail within 30 
calendar days of the date of the action from which the appeal is taken 
(i.e., the acceptance, rejection, suspension or invalidation of the 
Attestation).
    (d) Where to file appeals. Appeals made under this section must be 
in writing and must be mailed by certified mail to: Director, Office of 
Workforce Security, Employment Training Administration, U.S. Department 
of Labor, Room C-4318, 200 Constitution Avenue, NW., Washington, DC 
20210.
    (e) Transmittal of the case file to BALCA. Upon receipt of an appeal 
under this section, the Certifying Office shall send to BALCA a 
certified copy of the ETA case file, containing the Attestation and 
supporting documentation and any other information or data considered by 
ETA in taking the action being appealed. The administrative law judge 
chairing BALCA shall assign a panel of one or more administrative law 
judges who serve on BALCA to review the record for legal sufficiency and 
to consider and rule on the appeal.
    (f) Consideration on the record; de novo hearings. BALCA may not 
remand, dismiss, or stay the case, except as provided in paragraph (h) 
of this section, but may otherwise consider the appeal on the record or 
in a de novo hearing (on its own motion or on a party's request). 
Interested parties and amici curiae may submit briefs in accordance with 
a schedule set by BALCA. The ETA official who made the determination 
which was appealed will be represented by the Associate Solicitor for 
Employment and Training Legal Services, Office of the Solicitor, 
Department of Labor, or the Associate Solicitor's designee. If BALCA 
determines to hear the appeal on the record without a de novo hearing, 
BALCA shall render a decision within 30 calendar days after BALCA's 
receipt of the case file. If BALCA determines to hear the appeal through 
a de novo hearing, the procedures contained in 29 CFR part 18 will apply 
to such hearings, except that:
    (1) The appeal will not be considered to be a complaint to which an 
answer is required.
    (2) BALCA shall ensure that, at the request of the appellant, the 
hearing is scheduled to take place within a reasonable period after 
BALCA's receipt of the case file (see also the time period described in 
paragraph (f)(4) of this section).
    (3) Technical rules of evidence, such as the Federal Rules of 
Evidence and subpart B of the Rules of Practice and Procedure for 
Administrative Hearings Before the Office of Administrative Law Judges 
(29 CFR part 18, subpart B), will not apply to any hearing conducted 
pursuant to this subpart, but rules or principles designed to assure 
production of the most credible evidence available, and to subject 
testimony to test by cross-examination, shall be applied where 
reasonably necessary by BALCA in conducting the hearing. BALCA may 
exclude irrelevant, immaterial, or unduly repetitious

[[Page 669]]

evidence. The certified copy of the case file transmitted to BALCA by 
the Certifying Officer must be made part of the evidentiary record of 
the case and need not be moved into evidence.
    (4) BALCA's decision shall be rendered within 120 calendar days 
after BALCA's receipt of the case file.
    (g) Dismissals and stays. If BALCA determines that the appeal is 
solely a question of misrepresentation by the facility or is solely a 
complaint of the facility's nonperformance of the Attestation, BALCA 
shall dismiss the case and refer the matter to the Administrator, Wage 
and Hour Division, for action under subpart M. If BALCA determines that 
the appeal is partially a question of misrepresentation by the facility, 
or is partially a complaint of the facility's nonperformance of the 
Attestation, BALCA shall refer the matter to the Administrator, Wage and 
Hour Division, for action under subpart M of this part and shall stay 
BALCA consideration of the case pending final agency action on such 
referral. During such stay, the 120-day period described in paragraph 
(f)(1)(iv) of this section shall be suspended.
    (h) BALCA's decision. After consideration on the record or a de novo 
hearing, BALCA shall either affirm or reverse ETA's decision, and shall 
so notify the appellant; and any other parties.
    (i) Decisions on Attestations. With respect to an appeal of the 
acceptance, rejection, suspension or invalidation of an Attestation, the 
decision of BALCA shall be the final decision of the Secretary, and no 
further review shall be given to the matter by any DOL official.



Sec. 655.1150  What materials must be available to the public?

    (a) Public examination at ETA. ETA will make available for public 
examination at the Office of Workforce Security, Employment Training 
Administration, U.S. Department of Labor, Room C-4318, 200 Constitution 
Avenue, NW., Washington, DC 20210, a list of facilities which have filed 
Attestations; a copy of the facility's Attestation(s) and any supporting 
documentation; and a copy of each of the facility's H-1C petitions (if 
any) to INS along with the INS approval notices (if any).
    (b) Public examination at facility. For the duration of the 
Attestation's validity and thereafter for so long as the facility 
employs any H-1C nurse under the Attestation, the facility must maintain 
a separate file containing a copy of the Attestation, a copy of the 
prevailing wage determination, a description of the facility pay system 
or a copy of the facility's pay schedule if either document exists, 
copies of the notices provided under Sec. 655.1115 and Sec. 655.1116, 
a description of the ``timely and significant steps'' as described in 
Sec. 655.1114, and any other documentation required by this part to be 
contained in the public access file. The facility must make this file 
available to any interested parties within 72 hours upon written or oral 
request. If a party requests a copy of the file, the facility shall 
provide it and any charge for such copy shall not exceed the cost of 
reproduction.
    (c) ETA Notice to public. ETA will periodically publish a notice in 
the Federal Register announcing the names and addresses of facilities 
which have submitted Attestations; facilities which have Attestations on 
file; facilities which have submitted Attestations which have been 
rejected for filing; and facilities which have had Attestations 
suspended.



Subpart M_What are the Department's enforcement obligations with respect 
                          to H-1C Attestations?

    Source: 65 FR 51149, Aug. 22, 2000, unless otherwise noted.



Sec. 655.1200  What enforcement authority does the Department have 
with respect to a facility's H-1C Attestations?

    (a) The Administrator shall perform all the Secretary's 
investigative and enforcement functions under 8 U.S.C. 1182(m) and 
subparts L and M of this part.
    (b) The Administrator, either because of a complaint or otherwise, 
shall conduct such investigations as may be appropriate and, in 
connection therewith, enter and inspect such places and such

[[Page 670]]

records (and make transcriptions thereof), question such persons and 
gather such information as deemed necessary by the Administrator to 
determine compliance with the matters to which a facility has attested 
under section 212(m) of the INA (8 U.S.C. 1182(m)) and subparts L and M 
of this part.
    (c) A facility being investigated must make available to the 
Administrator such records, information, persons, and places as the 
Administrator deems appropriate to copy, transcribe, question, or 
inspect. A facility must fully cooperate with any official of the 
Department of Labor performing an investigation, inspection, or law 
enforcement function under 8 U.S.C. 1182(m) or subparts L or M of this 
part. Such cooperation shall include producing documentation upon 
request. The Administrator may deem the failure to cooperate to be a 
violation, and take such further actions as the Administrator considers 
appropriate.

    (Note: Federal criminal statutes prohibit certain interference with 
a Federal officer in the performance of official duties. 18 U.S.C. 111 
and 1114.)

    (d) No facility may intimidate, threaten, restrain, coerce, 
blacklist, discharge, or in any manner discriminate against any person 
because such person has:
    (1) Filed a complaint or appeal under or related to section 212(m) 
of the INA (8 U.S.C. 1182(m)) or subpart L or M of this part;
    (2) Testified or is about to testify in any proceeding under or 
related to section 212(m) of the INA (8 U.S.C. 1182(m)) or subpart L or 
M of this part.
    (3) Exercised or asserted on behalf of himself/herself or others any 
right or protection afforded by section 212(m) of the INA (8 U.S.C. 
1182(m)) or subpart L or M of this part.
    (4) Consulted with an employee of a legal assistance program or an 
attorney on matters related to the Act or to subparts L or M of this 
part or any other DOL regulation promulgated under 8 U.S.C. 1182(m).
    (5) In the event of such intimidation or restraint as are described 
in this paragraph, the Administrator may deem the conduct to be a 
violation and take such further actions as the Administrator considers 
appropriate.
    (e) A facility subject to subparts L and M of this part must 
maintain a separate file containing its Attestation and required 
documentation, and must make that file or copies thereof available to 
interested parties, as required by Sec. 655.1150. In the event of a 
facility's failure to maintain the file, to provide access, or to 
provide copies, the Administrator may deem the conduct to be a violation 
and take such further actions as the Administrator considers 
appropriate.
    (f) No facility may seek to have an H-1C nurse, or any other nurse 
similarly employed by the employer, or any other employee waive rights 
conferred under the Act or under subpart L or M of this part. In the 
event of such waiver, the Administrator may deem the conduct to be a 
violation and take such further actions as the Administrator considers 
appropriate. This prohibition of waivers does not prevent agreements to 
settle litigation among private parties, and a waiver or modification of 
rights or obligations in favor of the Secretary shall be valid for 
purposes of enforcement of the provisions of the Act or subpart L and M 
of this part.
    (g) The Administrator shall, to the extent possible under existing 
law, protect the confidentiality of any complainant or other person who 
provides information to the Department.



Sec. 655.1205  What is the Administrator's responsibility with respect 
to complaints and investigations?

    (a) The Administrator, through investigation, shall determine 
whether a facility has failed to perform any attested conditions, 
misrepresented any material facts in an Attestation (including 
misrepresentation as to compliance with regulatory standards), or 
otherwise violated the Act or subpart L or M of this part. The 
Administrator's authority applies whether an Attestation is expired or 
unexpired at the time a complaint is filed. (Note: Federal criminal 
statutes provide for fines and/or imprisonment for knowing and willful 
submission of false statements to the Federal Government. 18 U.S.C. 
1001; see also 18 U.S.C. 1546.)

[[Page 671]]

    (b) Any aggrieved person or organization may file a complaint of a 
violation of the provisions of section 212(m) of the INA (8 U.S.C. 
1182(m)) or subpart L or M of this part. No particular form of complaint 
is required, except that the complaint shall be written or, if oral, 
shall be reduced to writing by the Wage and Hour Division official who 
receives the complaint. The complaint must set forth sufficient facts 
for the Administrator to determine what part or parts of the Attestation 
or regulations have allegedly been violated. Upon the request of the 
complainant, the Administrator shall, to the extent possible under 
existing law, maintain confidentiality about the complainant's identity; 
if the complainant wishes to be a party to the administrative hearing 
proceedings under this subpart, the complainant shall then waive 
confidentiality. The complaint may be submitted to any local Wage and 
Hour Division office; the addresses of such offices are found in local 
telephone directories. Inquiries concerning the enforcement program and 
requests for technical assistance regarding compliance may also be 
submitted to the local Wage and Hour Division office.
    (c) The Administrator shall determine whether there is reasonable 
cause to believe that the complaint warrants investigation and, if so, 
shall conduct an investigation, within 180 days of the receipt of a 
complaint. If the Administrator determines that the complaint fails to 
present reasonable cause for an investigation, the Administrator shall 
so notify the complainant, who may submit a new complaint, with such 
additional information as may be necessary.
    (d) When an investigation has been conducted, the Administrator 
shall, within 180 days of the receipt of a complaint, issue a written 
determination, stating whether a basis exists to make a finding that the 
facility failed to meet a condition of its Attestation, made a 
misrepresentation of a material fact therein, or otherwise violated the 
Act or subpart L or M. The determination shall specify any sanctions 
imposed due to violations. The Administrator shall provide a notice of 
such determination to the interested parties and shall inform them of 
the opportunity for a hearing pursuant to Sec. 655.1220.



Sec. 655.1210  What penalties and other remedies may the Administrator 
impose?

    (a) The Administrator may assess a civil money penalty not to exceed 
$1,000 per nurse per violation, with the total penalty not to exceed 
$10,000 per violation. The Administrator also may impose appropriate 
remedies, including the payment of back wages, the performance of 
attested obligations such as providing training, and reinstatement and/
or wages for laid off U.S. nurses.
    (b) In determining the amount of civil money penalty to be assessed 
for any violation, the Administrator will consider the type of violation 
committed and other relevant factors. The matters which may be 
considered include, but are not limited to, the following:
    (1) Previous history of violation, or violations, by the facility 
under the Act and subpart L or M of this part;
    (2) The number of workers affected by the violation or violations;
    (3) The gravity of the violation or violations;
    (4) Efforts made by the violator in good faith to comply with the 
Attestation as provided in the Act and subparts L and M of this part;
    (5) The violator's explanation of the violation or violations;
    (6) The violator's commitment to future compliance, taking into 
account the public health, interest, or safety; and
    (7) The extent to which the violator achieved a financial gain due 
to the violation, or the potential financial loss or potential injury or 
adverse effect upon the workers.
    (c) The civil money penalty, back wages, and any other remedy 
determined by the Administrator to be appropriate, are immediately due 
for payment or performance upon the assessment by the Administrator, or 
the decision by an administrative law judge where a hearing is 
requested, or the decision by the Secretary where review is granted. The 
facility must remit the amount of the civil money penalty, by certified 
check or money order made

[[Page 672]]

payable to the order of ``Wage and Hour Division, Labor.'' The 
remittance must be delivered or mailed to the Wage and Hour Division 
Regional Office for the area in which the violation(s) occurred. The 
payment of back wages, monetary relief, and/or the performance or any 
other remedy prescribed by the Administrator will follow procedures 
established by the Administrator. The facility's failure to pay the 
civil money penalty, back wages, or other monetary relief, or to perform 
any other assessed remedy, will result in the rejection by ETA of any 
future Attestation submitted by the facility until such payment or 
performance is accomplished.
    (d) The Federal Civil Penalties Inflation Adjustment Act of 1990, as 
amended (28 U.S.C. 2461 note), requires that inflationary adjustments to 
civil money penalties in accordance with a specified cost-of-living 
formula be made, by regulation, at least every four years. The 
adjustments are to be based on changes in the Consumer Price Index for 
all Urban Consumers (CPI-U) for the U.S. City Average for All Items. The 
adjusted amounts will be published in the Federal Register. The amount 
of the penalty in a particular case will be based on the amount of the 
penalty in effect at the time the violation occurs.



Sec. 655.1215  How are the Administrator's investigation findings issued?

    (a) The Administrator's determination, issued under Sec. 
655.1205(d), shall be served on the complainant, the facility, and other 
interested parties by personal service or by certified mail at the 
parties' last known addresses. Where service by certified mail is not 
accepted by the party, the Administrator may exercise discretion to 
serve the determination by regular mail. Where the complainant has 
requested confidentiality, the Administrator shall serve the 
determination in a manner which will not breach that confidentiality.
    (b) The Administrator's written determination required by Sec. 
655.1205(c) shall:
    (1) Set forth the determination of the Administrator and the reason 
or reasons therefor; prescribe any remedies or penalties including the 
amount of any unpaid wages due, the actions required for compliance with 
the facility Attestation, and the amount of any civil money penalty 
assessment and the reason or reasons therefor.
    (2) Inform the interested parties that they may request a hearing 
under Sec. 655.1220.
    (3) Inform the interested parties that if a request for a hearing is 
not received by the Chief Administrative Law Judge within 10 days of the 
date of the determination, the determination of the Administrator shall 
become final and not appealable.
    (4) Set forth the procedure for requesting a hearing, and give the 
address of the Chief Administrative Law Judge.
    (5) Inform the parties that, under Sec. 655.1255, the Administrator 
shall notify the Attorney General and ETA of the occurrence of a 
violation by the employer.



Sec. 655.1220  Who can appeal the Administrator's findings and what 
is the process?

    (a) Any interested party desiring review of a determination issued 
under Sec. 655.1205(d), including judicial review, must make a request 
for an administrative hearing in writing to the Chief Administrative Law 
Judge at the address stated in the notice of determination. If such a 
request for an administrative hearing is timely filed, the 
Administrator's determination shall be inoperative unless and until the 
case is dismissed or the Administrative Law Judge issues an order 
affirming the decision.
    (b) An interested party may request a hearing in the following 
circumstances:
    (1) Where the Administrator determines that there is no basis for a 
finding of violation, the complainant or other interested party may 
request a hearing. In such a proceeding, the party requesting the 
hearing shall be the prosecuting party and the facility shall be the 
respondent; the Administrator may intervene as a party or appear as 
amicus curiae at any time in the proceeding, at the Administrator's 
discretion.

[[Page 673]]

    (2) Where the Administrator determines that there is a basis for a 
finding of violation, the facility or other interested party may request 
a hearing. In such a proceeding, the Administrator shall be the 
prosecuting party and the facility shall be the respondent.
    (c) No particular form is prescribed for any request for hearing 
permitted by this part. However, any such request shall:
    (1) Be dated;
    (2) Be typewritten or legibly written;
    (3) Specify the issue or issues stated in the notice of 
determination giving rise to such request;
    (4) State the specific reason or reasons why the party requesting 
the hearing believes such determination is in error;
    (5) Be signed by the party making the request or by an authorized 
representative of such party; and
    (6) Include the address at which such party or authorized 
representative desires to receive further communications relating 
thereto.
    (d) The request for such hearing must be received by the Chief 
Administrative Law Judge, at the address stated in the Administrator's 
notice of determination, no later than 10 days after the date of the 
determination. An interested party which fails to meet this 10-day 
deadline for requesting a hearing may thereafter participate in the 
proceedings only by consent of the administrative law judge, either 
through intervention as a party under 29 CFR 18.10 (b) through (d) or 
through participation as an amicus curiae under 29 CFR 18.12.
    (e) The request may be filed in person, by facsimile transmission, 
by certified or regular mail, or by courier service. For the requesting 
party's protection, if the request is filed by mail, it should be 
certified mail. If the request is filed by facsimile transmission, the 
original of the request, signed by the requestor or authorized 
representative, must be filed within 10 days of the date of the 
Administrator's notice of determination.
    (f) Copies of the request for a hearing must be sent by the 
requestor to the Wage and Hour Division official who issued the 
Administrator's notice of determination, to the representative(s) of the 
Solicitor of Labor identified in the notice of determination, and to all 
known interested parties.



Sec. 655.1225  What are the rules of practice before an ALJ?

    (a) Except as specifically provided in this subpart, and to the 
extent they do not conflict with the provisions of this subpart, the 
``Rules of Practice and Procedure for Administrative Hearings Before the 
Office of Administrative Law Judges'' established by the Secretary at 29 
CFR part 18 shall apply to administrative proceedings under this 
subpart.
    (b) As provided in the Administrative Procedure Act, 5 U.S.C. 556, 
any oral or documentary evidence may be received in proceedings under 
this part. The Federal Rules of Evidence and subpart B of the Rules of 
Practice and Procedure for Administrative Hearings Before the Office of 
Administrative Law Judges (29 CFR part 18, subpart B) do not apply, but 
principles designed to ensure production of relevant and probative 
evidence shall guide the admission of evidence. The administrative law 
judge may exclude evidence which is immaterial, irrelevant, or unduly 
repetitive.



Sec. 655.1230  What time limits are imposed in ALJ proceedings?

    (a) Under this subpart, a party may serve any pleading or document 
by regular mail. Service is complete upon mailing to the last known 
address. No additional time for filing or response is authorized where 
service is by mail. In the interest of expeditious proceedings, the 
administrative law judge may direct the parties to serve pleadings or 
documents by a method other than regular mail.
    (b) Two (2) copies of all pleadings and other documents in any 
administrative law judge proceeding shall be served on the attorneys for 
the Administrator. One copy must be served on the Associate Solicitor, 
Division of Fair Labor Standards, Office of the Solicitor, U.S. 
Department of Labor, 200 Constitution Avenue N.W., Washington, D.C. 
20210, and one copy on the attorney representing the Administrator in 
the proceeding.

[[Page 674]]

    (c) Time will be computed beginning with the day following the 
action and includes the last day of the period unless it is a Saturday, 
Sunday, or Federally-observed holiday, in which case the time period 
includes the next business day.



Sec. 655.1235  What are the ALJ proceedings?

    (a) Upon receipt of a timely request for a hearing filed in 
accordance with Sec. 655.1220, the Chief Administrative Law Judge shall 
appoint an administrative law judge to hear the case.
    (b) Within seven (7) days following the assignment of the case, the 
administrative law judge shall notify all interested parties of the 
date, time, and place of the hearing. All parties shall be given at 
least five (5) days notice of such hearing.
    (c) The date of the hearing shall be not more than 60 days from the 
date of the Administrator's determination. Because of the time 
constraints imposed by the Act, no requests for postponement shall be 
granted except for compelling reasons and by consent of all the parties 
to the proceeding.
    (d) The administrative law judge may prescribe a schedule by which 
the parties are permitted to file a pre-hearing brief or other written 
statement of fact or law. Any such brief or statement shall be served 
upon each other party in accordance with Sec. 655.1230. Posthearing 
briefs will not be permitted except at the request of the administrative 
law judge. When permitted, any such brief shall be limited to the issue 
or issues specified by the administrative law judge, shall be due within 
the time prescribed by the administrative law judge, and shall be served 
on each other party in accordance with Sec. 655.1230.



Sec. 655.1240  When and how does an ALJ issue a decision?

    (a) Within 90 days after receipt of the transcript of the hearing, 
the administrative law judge shall issue a decision.
    (b) The decision of the administrative law judge shall include a 
statement of findings and conclusions, with reasons and basis therefore, 
upon each material issue presented on the record. The decision shall 
also include an appropriate order which may affirm, deny, reverse, or 
modify, in whole or in part, the determination of the Administrator; the 
reason or reasons for such order shall be stated in the decision. The 
administrative law judge shall not render determinations as to the 
legality of a regulatory provision or the constitutionality of a 
statutory provision.
    (c) The decision shall be served on all parties in person or by 
certified or regular mail.



Sec. 655.1245  Who can appeal the ALJ's decision and what is the process?

    (a) The Administrator or any interested party desiring review of the 
decision and order of an administrative law judge, including judicial 
review, must petition the Department's Administrative Review Board 
(Board) to review the ALJ's decision and order. To be effective, such 
petition must be received by the Board within 30 days of the date of the 
decision and order. Copies of the petition must be served on all parties 
and on the administrative law judge.
    (b) No particular form is prescribed for any petition for the 
Board's review permitted by this subpart. However, any such petition 
must:
    (1) Be dated;
    (2) Be typewritten or legibly written;
    (3) Specify the issue or issues stated in the administrative law 
judge's decision and order giving rise to such petition;
    (4) State the specific reason or reasons why the party petitioning 
for review believes such decision and order are in error;
    (5) Be signed by the party filing the petition or by an authorized 
representative of such party;
    (6) Include the address at which such party or authorized 
representative desires to receive further communications relating 
thereto; and
    (7) Attach copies of the administrative law judge's decision and 
order, and any other record documents which would assist the Board in 
determining whether review is warranted.
    (c) Whenever the Board determines to review the decision and order 
of an administrative law judge, a notice of the Board's determination 
must be served upon the administrative law judge and

[[Page 675]]

upon all parties to the proceeding within 30 days after the Board's 
receipt of the petition for review. If the Board determines that it will 
review the decision and order, the order shall be inoperative unless and 
until the Board issues an order affirming the decision and order.
    (d) Within 15 days of receipt of the Board's notice, the Office of 
Administrative Law Judges shall forward the complete hearing record to 
the Board.
    (e) The Board's notice shall specify:
    (1) The issue or issues to be reviewed;
    (2) The form in which submissions must be made by the parties (e.g., 
briefs, oral argument);
    (3) The time within which such submissions must be made.
    (f) All documents submitted to the Board must be filed with the 
Administrative Review Board, Room S-4309, U.S. Department of Labor, 
Washington, D.C. 20210. An original and two copies of all documents must 
be filed. Documents are not deemed filed with the Board until actually 
received by the Board. All documents, including documents filed by mail, 
must be received by the Board either on or before the due date.
    (g) Copies of all documents filed with the Board must be served upon 
all other parties involved in the proceeding. Service upon the 
Administrator must be in accordance with Sec. 655.1230(b).
    (h) The Board's final decision shall be issued within 180 days from 
the date of the notice of intent to review. The Board's decision shall 
be served upon all parties and the administrative law judge.
    (i) Upon issuance of the Board's decision, the Board shall transmit 
the entire record to the Chief Administrative Law Judge for custody in 
accordance with Sec. 655.1250.



Sec. 655.1250  Who is the official record keeper for these 
administrative appeals?

    The official record of every completed administrative hearing 
procedure provided by subparts L and M of this part shall be maintained 
and filed under the custody and control of the Chief Administrative Law 
Judge. Upon receipt of a complaint seeking review of the final agency 
action in a United States District Court, the Chief Administrative Law 
Judge shall certify the official record and shall transmit such record 
to the clerk of the court.



Sec. 655.1255  What are the procedures for debarment of a facility 
based on a finding of violation?

    (a) The Administrator shall notify the Attorney General and ETA of 
the final determination of a violation by a facility upon the earliest 
of the following events:
    (1) Where the Administrator determines that there is a basis for a 
finding of violation by a facility, and no timely request for hearing is 
made under Sec. 655.1220; or
    (2) Where, after a hearing, the administrative law judge issues a 
decision and order finding a violation by a facility, and no timely 
petition for review to the Board is made under Sec. Sec. 655.1245; or
    (3) Where a petition for review is taken from an administrative law 
judge's decision and the Board either declines within 30 days to 
entertain the appeal, under Sec. 655.1245(c), or the Board affirms the 
administrative law judge's determination; or
    (4) Where the administrative law judge finds that there was no 
violation by a facility, and the Board, upon review, issues a decision 
under Sec. 655.1245(h), holding that a violation was committed by a 
facility.
    (b) The Attorney General, upon receipt of the Administrator's notice 
under paragraph (a) of this section, shall not approve petitions filed 
with respect to that employer under section 212(m) of the INA (8 U.S.C. 
1182(m)) during a period of at least 12 months from the date of receipt 
of the Administrator's notification.
    (c) ETA, upon receipt of the Administrator's notice under paragraph 
(a) of this section, shall suspend the employer's Attestation(s) under 
subparts L and M of this part, and shall not accept for filing any 
Attestation submitted by the employer under subparts L and M of this 
part, for a period of 12 months from the date of receipt of the 
Administrator's notification or for a longer period if one is specified 
by the Attorney General for visa petitions filed by

[[Page 676]]

that employer under section 212(m) of the INA.



Sec. 655.1260  Can Equal Access to Justice Act attorney fees be awarded?

    A proceeding under subpart L or M of this part is not subject to the 
Equal Access to Justice Act, as amended, 5 U.S.C. 504. In such a 
proceeding, the administrative law judge shall have no authority to 
award attorney fees and/or other litigation expenses under the 
provisions of the Equal Access to Justice Act.



PART 656_LABOR CERTIFICATION PROCESS FOR PERMANENT EMPLOYMENT OF ALIENS 
IN THE UNITED STATES--Table of Contents




                 Subpart A_Purpose and Scope of Part 656

Sec.
656.1 Purpose and scope of part 656.
656.2 Description of the Immigration and Nationality Act and of the 
          Department of Labor's role thereunder.
656.3 Definitions, for purposes of this part, of terms used in this 
          part.

        Subpart B_Occupational Labor Certification Determinations

656.5 Schedule A.

                  Subpart C_Labor Certification Process

656.10 General instructions.
656.15 Applications for labor certification for Schedule A occupations.
656.16 Labor certification applications for sheepherders.
656.17 Basic labor certification process.
656.18 Optional special recruitment and documentation procedures for 
          college and university teachers.
656.19 Live-in household domestic service workers.
656.20 Audit procedures.
656.21 Supervised recruitment.
656.24 Labor certification determinations.
656.26 Board of Alien Labor Certification Appeals review of denials of 
          labor certification.
656.27 Consideration by and decisions of the Board of Alien Labor 
          Certification Appeals.
656.30 Validity and invalidation of labor certifications.
656.31 Labor certification applications involving fraud or willful 
          misrepresentation.
656.32 Revocation of approved labor certifications.

               Subpart D_Determination of Prevailing Wage

656.40 Determination of prevailing wage for labor certification 
          purposes.
656.41 Certifying Officer review of prevailing wage determinations.

    Authority: The Authority citation for part 656 is revised to read as 
follows: 8 U.S.C. 1182(a)(5)(A), 1189(p)(1); 29 U.S.C. 49 et seq.; 
section 122, Pub. L. 101-649, 109 Stat. 4978; and Title IV, Pub. L. 105-
277, 112 Stat. 2681.

    Source: 69 FR 77386, Dec. 27, 2004, unless otherwise noted.



                 Subpart A_Purpose and Scope of Part 656



Sec. 656.1  Purpose and scope of part 656.

    (a) Under section 212(a)(5)(A) of the Immigration and Nationality 
Act (INA or Act) (8 U.S.C. 1182(a)(5)(A)), certain aliens may not obtain 
immigrant visas for entrance into the United States in order to engage 
in permanent employment unless the Secretary of Labor has first 
certified to the Secretary of State and to the Secretary of Homeland 
Security that:
    (1) There are not sufficient United States workers who are able, 
willing, qualified and available at the time of application for a visa 
and admission into the United States and at the place where the alien is 
to perform the work; and
    (2) The employment of the alien will not adversely affect the wages 
and working conditions of United States workers similarly employed.
    (b) The regulations under this part set forth the procedures through 
which such immigrant labor certifications may be applied for, and 
granted or denied.
    (c) Correspondence and questions about the regulations in this part 
should be addressed to: Division of Foreign Labor Certification, 
Employment and Training Administration, 200 Constitution Avenue, NW., 
Room C-4312, Washington, DC 20210.



Sec. 656.2  Description of the Immigration and Nationality Act and 
of the Department of Labor's role thereunder.

    (a) Description of the Act. The Act (8 U.S.C. 1101 et seq.) 
regulates the admission of aliens into the United States.

[[Page 677]]

The Act designates the Secretary of Homeland Security and the Secretary 
of State as the principal administrators of its provisions.
    (b) Burden of proof under the Act. Section 291 of the Act (8 U.S.C. 
1361) provides, in pertinent part, that:

    Whenever any person makes application for a visa or any other 
documentation required for entry, or makes application for admission, or 
otherwise attempts to enter the United States, the burden of proof shall 
be upon such person to establish that he is eligible to receive such 
visa or such document, or is not subject to exclusion under any 
provision of this Act * * *.

    (c)(1) Role of the Department of Labor. The permanent labor 
certification role of the Department of Labor under the Act derives from 
section 212(a)(5)(A) (8 U.S.C. 1182(a)(5)(A)), which provides that any 
alien who seeks admission or status as an immigrant for the purpose of 
employment under paragraph (2) or (3) of section 203(b) of the Act may 
not be admitted unless the Secretary of Labor has first certified to the 
Secretary of State and to the Secretary of Homeland Security that:
    (i) There are not sufficient United States workers who are able, 
willing, qualified, and available at the time of application for a visa 
and admission to the United States and at the place where the alien is 
to perform such skilled or unskilled labor; and
    (ii) The employment of such alien will not adversely affect the 
wages and working conditions of workers in the United States similarly 
employed.
    (2) This certification is referred to in this part 656 as a ``labor 
certification.''
    (3) We certify the employment of aliens in several instances: For 
the permanent employment of aliens under this part; and for temporary 
employment of aliens for agricultural and nonagricultural employment in 
the United States classified under 8 U.S.C. 1101(a)(15)(H)(ii), under 
the DHS regulation at 8 CFR 214.2(h)(5) and (6) and sections 
101(a)(15)(H)(ii), 214, and 218 of the Act. See 8 U.S.C. 
1101(a)(15)(H)(ii), 1184, and 1188. We also administer labor attestation 
and labor condition application programs for the admission and/or work 
authorization of the following nonimmigrants: Specialty occupations and 
fashion models (H-1B visas), specialty occupations from countries with 
which the U.S. has entered agreements listed in the INA (H-1B1 visas), 
registered nurses (H-1C visas), and crewmembers performing longshore 
work (D visas), classified under 8 U.S.C. 1101(a)(15)(H)(i)(b), 
1101(a)(15)(H)(i)(b1), 1101(a)(15)(H)(i)(c), and 1101(a)(15)(D), 
respectively. See also 8 U.S.C. 1184(c), (m), and (n), and 1288.



Sec. 656.3  Definitions, for purposes of this part, of terms used 
in this part.

    Act means the Immigration and Nationality Act, as amended, 8 U.S.C. 
1101 et seq.
    Agent means a person who is not an employee of an employer, and who 
has been designated in writing to act on behalf of an alien or employer 
in connection with an application for labor certification.
    Applicant means a U.S. worker (see definition of U.S. worker below) 
who is applying for a job opportunity for which an employer has filed an 
Application for Permanent Employment Certification (ETA Form 9089).
    Application means an Application for Permanent Employment 
Certification submitted by an employer (or its agent or attorney) in 
applying for a labor certification under this part.
    Area of intended employment means the area within normal commuting 
distance of the place (address) of intended employment. There is no 
rigid measure of distance which constitutes a normal commuting distance 
or normal commuting area, because there may be widely varying factual 
circumstances among different areas (e.g., normal commuting distances 
might be 20, 30, or 50 miles). If the place of intended employment is 
within a Metropolitan Statistical Area (MSA) or a Primary Metropolitan 
Statistical Area (PMSA), any place within the MSA or PMSA is deemed to 
be within normal commuting distance of the place of intended employment; 
however, not all locations within a Consolidated Metropolitan 
Statistical Area (CMSA) will be deemed automatically to be within normal 
commuting distance. The borders of MSA's and PMSA's are not controlling 
in the identification of the normal commuting area; a location outside 
of an MSA or PMSA (or a

[[Page 678]]

CMSA) may be within normal commuting distance of a location that is 
inside (e.g., near the border of) the MSA or PMSA (or CMSA). The 
terminology CMSAs and PMSAs are being replaced by the Office of 
Management and Budget (OMB). However, ETA will continue to recognize the 
use of these area concepts as well as their replacements.
    Attorney means any person who is a member in good standing of the 
bar of the highest court of any state, possession, territory, or 
commonwealth of the United States, or the District of Columbia, and who 
is not under suspension or disbarment from practice before any court or 
before DHS or the United States Department of Justice's Executive Office 
for Immigration Review. Such a person is permitted to act as an agent, 
representative, or attorney for an employer and/or alien under this 
part.
    Board of Alien Labor Certification Appeals (BALCA or Board) means 
the permanent Board established by this part, chaired by the Chief 
Administrative Law Judge, and consisting of Administrative Law Judges 
assigned to the Department of Labor and designated by the Chief 
Administrative Law Judge to be members of the Board of Alien Labor 
Certification Appeals. The Board of Alien Labor Certification Appeals is 
located in Washington, DC, and reviews and decides appeals in 
Washington, DC.
    Certifying Officer (CO) means a Department of Labor official who 
makes determinations about whether or not to grant applications for 
labor certifications.
    Closely-held Corporation means a corporation that typically has 
relatively few shareholders and whose shares are not generally traded in 
the securities market.
    Division of Foreign Labor Certification means the organizational 
component within the Employment and Training Administration that 
provides national leadership and policy guidance and develops 
regulations and procedures to carry out the responsibilities of the 
Secretary of Labor under the Immigration and Nationality Act, as 
amended, concerning alien workers seeking admission to the United States 
in order to work under section 212(a)(5)(A) of the Immigration and 
Nationality Act, as amended.
    Employer means:
    (1) A person, association, firm, or a corporation that currently has 
a location within the United States to which U.S. workers may be 
referred for employment and that proposes to employ a full-time employee 
at a place within the United States, or the authorized representative of 
such a person, association, firm, or corporation. An employer must 
possess a valid Federal Employer Identification Number (FEIN). For 
purposes of this definition, an ``authorized representative'' means an 
employee of the employer whose position or legal status authorizes the 
employee to act for the employer in labor certification matters. A labor 
certification can not be granted for an Application for Permanent 
Employment Certification filed on behalf of an independent contractor.
    (2) Persons who are temporarily in the United States, including but 
not limited to, foreign diplomats, intra-company transferees, students, 
and exchange visitors, visitors for business or pleasure, and 
representatives of foreign information media can not be employers for 
the purpose of obtaining a labor certification for permanent employment.
    Employment means:
    (1) Permanent, full-time work by an employee for an employer other 
than oneself. For purposes of this definition, an investor is not an 
employee. In the event of an audit, the employer must be prepared to 
document the permanent and full-time nature of the position by 
furnishing position descriptions and payroll records for the job 
opportunity involved in the Application for Permanent Employment 
Certification.
    (2) Job opportunities consisting solely of job duties that will be 
performed totally outside the United States, its territories, 
possessions, or commonwealths can not be the subject of an Application 
for Permanent Employment Certification.
    Employment and Training Administration (ETA) means the agency within 
the Department of Labor (DOL) that includes the Division of Foreign 
Labor Certification.

[[Page 679]]

    Immigration Officer means an official of the Department of Homeland 
Security, United States Citizenship and Immigration Services (USCIS) who 
handles applications for labor certifications under this part.
    Job opportunity means a job opening for employment at a place in the 
United States to which U.S. workers can be referred.
    Nonprofessional occupation means any occupation for which the 
attainment of a bachelor's or higher degree is not a usual requirement 
for the occupation.
    Non-profit or tax-exempt organization for the purposes of Sec. 
656.40 means an organization that:
    (1) Is defined as a tax exempt organization under the Internal 
Revenue Code of 1986, section 501(c)(3), (c)(4), or (c)(6) (26 U.S.C. 
501(c)(3), (c)(4) or (c)(6)); and
    (2) Has been approved as a tax-exempt organization for research or 
educational purposes by the Internal Revenue Service.
    O*NET means the system developed by the Department of Labor, 
Employment and Training Administration, to provide to the general public 
information on skills, abilities, knowledge, work activities, interests 
and specific vocational preparation levels associated with occupations. 
O*NET is based on the Standard Occupational Classification system. 
Further information about O*NET can be found at http://
www.onetcenter.org.
    Prevailing wage determination (PWD) means the prevailing wage 
provided by the State Workforce Agency.
    Professional occupation means an occupation for which the attainment 
of a bachelor's or higher degree is a usual education requirement. A 
beneficiary of an application for permanent alien employment 
certification involving a professional occupation need not have a 
bachelor's or higher degree to qualify for the professional occupation. 
However, if the employer is willing to accept work experience in lieu of 
a baccalaureate or higher degree, such work experience must be 
attainable in the U.S. labor market and must be stated on the 
application form. If the employer is willing to accept an equivalent 
foreign degree, it must be clearly stated on the Application for 
Permanent Employment Certification form.
    Secretary means the Secretary of Labor, the chief official of the 
U.S. Department of Labor, or the Secretary's designee.
    Secretary of Homeland Security means the chief official of the U.S. 
Department of Homeland Security or the Secretary of Homeland Security's 
designee.
    Secretary of State means the chief official of the U.S. Department 
of State or the Secretary of State's designee.
    Specific vocational preparation (SVP) means the amount of lapsed 
time required by a typical worker to learn the techniques, acquire the 
information, and develop the facility needed for average performance in 
a specific job-worker situation. Lapsed time is not the same as work 
time. For example, 30 days is approximately 1 month of lapsed time and 
not six 5-day work weeks, and 3 months refers to 3 calendar months and 
not 90 work days. The various levels of specific vocational preparation 
are provided below.

------------------------------------------------------------------------
              Level                                Time
------------------------------------------------------------------------
1...............................  Short demonstration.
2...............................  Anything beyond short demonstration up
                                   to and including 30 days.
3...............................  Over 30 days up to and including 3
                                   months.
4...............................  Over 3 months up to and including 6
                                   months.
5...............................  Over 6 months up to and including 1
                                   year.
6...............................  Over 1 year up to and including 2
                                   years.
7...............................  Over 2 years up to and including 4
                                   years.
8...............................  Over 4 years up to and including 10
                                   years.
9...............................  Over 10 years.
------------------------------------------------------------------------

    State Workforce Agency (SWA), formerly known as State Employment 
Security Agency (SESA), means the state agency that receives funds under 
the Wagner-Peyser Act to provide prevailing wage determinations to 
employers, and/or administers the public labor exchange delivered 
through the state's one-stop delivery system in accordance with the 
Wagner-Peyser Act.
    United States, when used in a geographic sense, means the 50 states, 
the District of Columbia, Puerto Rico, the U.S. Virgin Islands, and 
Guam.
    United States worker means any worker who is:
    (1) A U.S. citizen;
    (2) A U.S. national;
    (3) Lawfully admitted for permanent residence;

[[Page 680]]

    (4) Granted the status of an alien lawfully admitted for temporary 
residence under 8 U.S.C. 1160(a), 1161(a), or 1255a(a)(1);
    (5) Admitted as a refugee under 8 U.S.C. 1157; or
    (6) Granted asylum under 8 U.S.C. 1158.



        Subpart B_Occupational Labor Certification Determinations



Sec. 656.5  Schedule A.

    We have determined there are not sufficient United States workers 
who are able, willing, qualified, and available for the occupations 
listed below on Schedule A and the wages and working conditions of 
United States workers similarly employed will not be adversely affected 
by the employment of aliens in Schedule A occupations. An employer 
seeking a labor certification for an occupation listed on Schedule A may 
apply for that labor certification under Sec. 656.15.

                               Schedule A

    (a) Group I:
    (1) Persons who will be employed as physical therapists, and who 
possess all the qualifications necessary to take the physical therapist 
licensing examination in the state in which they propose to practice 
physical therapy.
    (2) Aliens who will be employed as professional nurses; and
    (i) Who have received a Certificate from the Commission on Graduates 
of Foreign Nursing Schools (CGFNS);
    (ii) Who hold a permanent, full and unrestricted license to practice 
professional nursing in the state of intended employment; or
    (iii) Who have passed the National Council Licensure Examination for 
Registered Nurses (NCLEX-RN), administered by the National Council of 
State Boards of Nursing.
    (3) Definitions of Group I occupations:
    (i) Physical therapist means a person who applies the art and 
science of physical therapy to the treatment of patients with 
disabilities, disorders and injuries to relieve pain, develop or restore 
function, and maintain performance, using physical means, such as 
exercise, massage, heat, water, light, and electricity, as prescribed by 
a physician (or a surgeon).
    (ii) Professional nurse means a person who applies the art and 
science of nursing which reflects comprehension of principles derived 
from the physical, biological and behavioral sciences. Professional 
nursing generally includes making clinical judgments involving the 
observation, care and counsel of persons requiring nursing care; 
administering of medicines and treatments prescribed by the physician or 
dentist; and participation in the activities for the promotion of health 
and prevention of illness in others. A program of study for professional 
nurses generally includes theory and practice in clinical areas such as 
obstetrics, surgery, pediatrics, psychiatry, and medicine.
    (b) Group II:
    (1) Sciences or arts (except performing arts). Aliens (except for 
aliens in the performing arts) of exceptional ability in the sciences or 
arts including college and university teachers of exceptional ability 
who have been practicing their science or art during the year prior to 
application and who intend to practice the same science or art in the 
United States. For purposes of this group, the term ``science or art'' 
means any field of knowledge and/or skill with respect to which colleges 
and universities commonly offer specialized courses leading to a degree 
in the knowledge and/or skill. An alien, however, need not have studied 
at a college or university in order to qualify for the Group II 
occupation.
    (2) Performing arts. Aliens of exceptional ability in the performing 
arts whose work during the past 12 months did require, and whose 
intended work in the United States will require, exceptional ability.



                  Subpart C_Labor Certification Process



Sec. 656.10  General instructions.

    (a) Filing of applications. A request for a labor certification on 
behalf of any alien who is required by the Act to be a beneficiary of a 
labor certification in order to obtain permanent resident status in the 
United States may be filed as follows:

[[Page 681]]

    (1) Except as provided in paragraphs (a)(2), (3), and (4) of this 
section, an employer seeking a labor certification must file under this 
section and Sec. 656.17.
    (2) An employer seeking a labor certification for a college or 
university teacher must apply for a labor certification under this 
section and must also file under either Sec. 656.17 or Sec. 656.18.
    (3) An employer seeking labor certification for an occupation listed 
on Schedule A must apply for a labor certification under this section 
and Sec. 656.15.
    (4) An employer seeking labor certification for a sheepherder must 
apply for a labor certification under this section and must also choose 
to file under either Sec. 656.16 or Sec. 656.17.
    (b) Representation. (1) Employers may have agents or attorneys 
represent them throughout the labor certification process. If an 
employer intends to be represented by an agent or attorney, the employer 
must sign the statement set forth on the Application for Permanent 
Employment Certification form: That the attorney or agent is 
representing the employer and the employer takes full responsibility for 
the accuracy of any representations made by the attorney or agent. 
Whenever, under this part, any notice or other document is required to 
be sent to the employer, the document will be sent to the attorney or 
agent who has been authorized to represent the employer on the 
Application for Permanent Employment Certification form.
    (2)(i) It is contrary to the best interests of U.S. workers to have 
the alien and/or agents or attorneys for either the employer or the 
alien participate in interviewing or considering U.S. workers for the 
job offered the alien. As the beneficiary of a labor certification 
application, the alien can not represent the best interests of U.S. 
workers in the job opportunity. The alien's agent and/or attorney can 
not represent the alien effectively and at the same time truly be 
seeking U.S. workers for the job opportunity. Therefore, the alien and/
or the alien's agent and/or attorney may not interview or consider U.S. 
workers for the job offered to the alien, unless the agent and/or 
attorney is the employer's representative, as described in paragraph 
(b)(2)(ii) of this section.
    (ii) The employer's representative who interviews or considers U.S. 
workers for the job offered to the alien must be the person who normally 
interviews or considers, on behalf of the employer, applicants for job 
opportunities such as that offered the alien, but which do not involve 
labor certifications.
    (3) No person under suspension or disbarment from practice before 
any court or before the DHS or the United States Department of Justice's 
Executive Office for Immigration Review is permitted to act as an agent, 
representative, or attorney for an employer and/or alien under this 
part.
    (c) Attestations. The employer must certify to the conditions of 
employment listed below on the Application for Permanent Employment 
Certification under penalty of perjury under 18 U.S.C. 1621 (2). Failure 
to attest to any of the conditions listed below results in a denial of 
the application.
    (1) The offered wage equals or exceeds the prevailing wage 
determined pursuant to Sec. 656.40 and Sec. 656.41, and the wage the 
employer will pay to the alien to begin work will equal or exceed the 
prevailing wage that is applicable at the time the alien begins work or 
from the time the alien is admitted to take up the certified employment;
    (2) The wage offered is not based on commissions, bonuses or other 
incentives, unless the employer guarantees a prevailing wage paid on a 
weekly, bi-weekly, or monthly basis that equals or exceeds the 
prevailing wage;
    (3) The employer has enough funds available to pay the wage or 
salary offered the alien;
    (4) The employer will be able to place the alien on the payroll on 
or before the date of the alien's proposed entrance into the United 
States;
    (5) The job opportunity does not involve unlawful discrimination by 
race, creed, color, national origin, age, sex, religion, handicap, or 
citizenship;
    (6) The employer's job opportunity is not:
    (i) Vacant because the former occupant is on strike or locked out in 
the course of a labor dispute involving a work stoppage;

[[Page 682]]

    (ii) At issue in a labor dispute involving a work stoppage.
    (7) The job opportunity's terms, conditions and occupational 
environment are not contrary to Federal, state or local law;
    (8) The job opportunity has been and is clearly open to any U.S. 
worker;
    (9) The U.S. workers who applied for the job opportunity were 
rejected for lawful job-related reasons;
    (10) The job opportunity is for full-time, permanent employment for 
an employer other than the alien.
    (d) Notice. (1) In applications filed under Sec. Sec. 656.15 
(Schedule A), 656.16 (Sheepherders), 656.17 (Basic Process), 656.18 
(College and University Teachers), and 656.21 (Supervised Recruitment), 
the employer must give notice of the filing of the Application for 
Permanent Employment Certification and be able to document that notice 
was provided, if requested by the Certifying Officer, as follows:
    (i) To the bargaining representative(s) (if any) of the employer's 
employees in the occupational classification for which certification of 
the job opportunity is sought in the employer's location(s) in the area 
of intended employment. Documentation may consist of a copy of the 
letter and a copy of the Application for Permanent Employment 
Certification form that was sent to the bargaining representative.
    (ii) If there is no such bargaining representative, by posted notice 
to the employer's employees at the facility or location of the 
employment. The notice must be posted for at least 10 consecutive 
business days. The notice must be clearly visible and unobstructed while 
posted and must be posted in conspicuous places where the employer's 
U.S. workers can readily read the posted notice on their way to or from 
their place of employment. Appropriate locations for posting notices of 
the job opportunity include locations in the immediate vicinity of the 
wage and hour notices required by 29 CFR 516.4 or occupational safety 
and health notices required by 29 CFR 1903.2(a). In addition, the 
employer must publish the notice in any and all in-house media, whether 
electronic or printed, in accordance with the normal procedures used for 
the recruitment of similar positions in the employer's organization. The 
documentation requirement may be satisfied by providing a copy of the 
posted notice and stating where it was posted, and by providing copies 
of all the in-house media, whether electronic or print, that were used 
to distribute notice of the application in accordance with the 
procedures used for similar positions within the employer's 
organization.
    (2) In the case of a private household, notice is required under 
this paragraph (d) only if the household employs one or more U.S. 
workers at the time the application for labor certification is filed. 
The documentation requirement may be satisfied by providing a copy of 
the posted notice to the Certifying Officer.
    (3) The notice of the filing of an Application for Permanent 
Employment Certification must:
    (i) State the notice is being provided as a result of the filing of 
an application for permanent alien labor certification for the relevant 
job opportunity;
    (ii) State any person may provide documentary evidence bearing on 
the application to the Certifying Officer of the Department of Labor;
    (iii) Provide the address of the appropriate Certifying Officer; and
    (iv) Be provided between 30 and 180 days before filing the 
application.
    (4) If an application is filed under Sec. 656.17, the notice must 
contain the information required for advertisements by Sec. 656.17(f), 
must state the rate of pay (which must equal or exceed the prevailing 
wage entered by the SWA on the prevailing wage request form), and must 
contain the information required by paragraph (d)(3) of this section.
    (5) If an application is filed on behalf of a college and university 
teacher selected in a competitive selection and recruitment process, as 
provided by Sec. 656.18, the notice must include the information 
required for advertisements by Sec. 656.18(b)(2), and must include the 
information required by paragraph (d)(3) of this section.
    (6) If an application is filed under the Schedule A procedures at 
Sec. 656.15, or the procedures for sheepherders at Sec. 656.16, the 
notice must contain a description of the job and rate of pay, and must 
meet the requirements of this section.

[[Page 683]]

    (e)(1)(i) Submission of evidence. Any person may submit to the 
Certifying Officer documentary evidence bearing on an application for 
permanent alien labor certification filed under the basic labor 
certification process at Sec. 656.17 or an application involving a 
college and university teacher selected in a competitive recruitment and 
selection process under Sec. 656.18.
    (ii) Documentary evidence submitted under paragraph (e)(1)(i) of 
this section may include information on available workers, information 
on wages and working conditions, and information on the employer's 
failure to meet the terms and conditions for the employment of alien 
workers and co-workers. The Certifying Officer must consider this 
information in making his or her determination.
    (2)(i) Any person may submit to the appropriate DHS office 
documentary evidence of fraud or willful misrepresentation in a Schedule 
A application filed under Sec. 656.15 or a sheepherder application 
filed under Sec. 656.16.
    (ii) Documentary evidence submitted under paragraph (e)(2) of this 
section is limited to information relating to possible fraud or willful 
misrepresentation. The DHS may consider this information under Sec. 
656.31.
    (f) Retention of documents. Copies of applications for permanent 
employment certification filed with the Department of Labor and all 
supporting documentation must be retained by the employer for 5 years 
from the date of filing the Application for Permanent Employment 
Certification.



Sec. 656.15  Applications for labor certification for Schedule A 
occupations.

    (a) Filing application. An employer must apply for a labor 
certification for a Schedule A occupation by filing an application in 
duplicate with the appropriate DHS office, and not with an ETA 
application processing center.
    (b) General documentation requirements. A Schedule A application 
must include:
    (1) An Application for Permanent Employment Certification form, 
which includes a prevailing wage determination in accordance with Sec. 
656.40 and Sec. 656.41.
    (2) Evidence that notice of filing the Application for Permanent 
Employment Certification was provided to the bargaining representative 
or the employer's employees as prescribed in Sec. 656.10(d).
    (c) Group I documentation. An employer seeking labor certification 
under Group I of Schedule A must file with DHS, as part of its labor 
certification application, documentary evidence of the following:
    (1) An employer seeking Schedule A labor certification for an alien 
to be employed as a physical therapist (Sec. 656.5(a)(1)) must file as 
part of its labor certification application a letter or statement, 
signed by an authorized state physical therapy licensing official in the 
state of intended employment, stating the alien is qualified to take 
that state's written licensing examination for physical therapists. 
Application for certification of permanent employment as a physical 
therapist may be made only under this Sec. 656.15 and not under Sec. 
656.17.
    (2) An employer seeking a Schedule A labor certification for an 
alien to be employed as a professional nurse (Sec. 656.5(a)(2)) must 
file as part of its labor certification application documentation that 
the alien has received a Certificate from the Commission on Graduates of 
Foreign Nursing Schools (CGFNS); that the alien holds a full and 
unrestricted (permanent) license to practice nursing in the state of 
intended employment; or that the alien has passed the National Council 
Licensure Examination for Registered Nurses (NCLEX-RN). Application for 
certification of employment as a professional nurse may be made only 
under this Sec. 656.15(c) and not under Sec. 656.17.
    (d) Group II documentation. An employer seeking a Schedule A labor 
certification under Group II of Schedule A must file with DHS, as part 
of its labor certification application, documentary evidence of the 
following:
    (1) An employer seeking labor certification on behalf of an alien to 
be employed as an alien of exceptional ability in the sciences or arts 
(excluding those in the performing arts) must file documentary evidence 
showing the widespread acclaim and international recognition accorded 
the alien by recognized experts in the alien's field; and

[[Page 684]]

documentation showing the alien's work in that field during the past 
year did, and the alien's intended work in the United States will, 
require exceptional ability. In addition, the employer must file 
documentation about the alien from at least two of the following seven 
groups:
    (i) Documentation of the alien's receipt of internationally 
recognized prizes or awards for excellence in the field for which 
certification is sought;
    (ii) Documentation of the alien's membership in international 
associations, in the field for which certification is sought, which 
require outstanding achievement of their members, as judged by 
recognized international experts in their disciplines or fields;
    (iii) Published material in professional publications about the 
alien, about the alien's work in the field for which certification is 
sought, which shall include the title, date, and author of such 
published material;
    (iv) Evidence of the alien's participation on a panel, or 
individually, as a judge of the work of others in the same or in an 
allied field of specialization to that for which certification is 
sought;
    (v) Evidence of the alien's original scientific or scholarly 
research contributions of major significance in the field for which 
certification is sought;
    (vi) Evidence of the alien's authorship of published scientific or 
scholarly articles in the field for which certification is sought, in 
international professional journals or professional journals with an 
international circulation;
    (vii) Evidence of the display of the alien's work, in the field for 
which certification is sought, at artistic exhibitions in more than one 
country.
    (2) An employer seeking labor certification on behalf of an alien of 
exceptional ability in the performing arts must file documentary 
evidence that the alien's work experience during the past twelve months 
did require, and the alien's intended work in the United States will 
require, exceptional ability; and must submit documentation to show this 
exceptional ability, such as:
    (i) Documentation attesting to the current widespread acclaim and 
international recognition accorded to the alien, and receipt of 
internationally recognized prizes or awards for excellence;
    (ii) Published material by or about the alien, such as critical 
reviews or articles in major newspapers, periodicals, and/or trade 
journals (the title, date, and author of such material shall be 
indicated);
    (iii) Documentary evidence of earnings commensurate with the claimed 
level of ability;
    (iv) Playbills and star billings;
    (v) Documents attesting to the outstanding reputation of theaters, 
concert halls, night clubs, and other establishments in which the alien 
has appeared or is scheduled to appear; and/or
    (vi) Documents attesting to the outstanding reputation of theaters 
or repertory companies, ballet troupes, orchestras, or other 
organizations in which or with which the alien has performed during the 
past year in a leading or starring capacity.
    (e) Determination. An Immigration Officer determines whether the 
employer and alien have met the applicable requirements of Sec. 656.10 
and of Schedule A (Sec. 656.5); reviews the application; and determines 
whether or not the alien is qualified for and intends to pursue the 
Schedule A occupation. The Schedule A determination of DHS is conclusive 
and final. The employer, therefore, may not appeal from any such 
determination under the review procedures at Sec. 656.26.
    (f) Department of Labor copy. If the alien qualifies for the 
occupation, the Immigration Officer must indicate the occupation on the 
Application for Permanent Employment Certification form. The Immigration 
Officer then must promptly forward a copy of the Application for 
Permanent Employment Certification form, without attachments, to the 
Chief, Division of Foreign Labor Certification, indicating thereon the 
occupation, the Immigration Officer who made the Schedule A 
determination, and the date of the determination (see Sec. 656.30 for 
the significance of this date).
    (g) Refiling after denial. If an application for a Schedule A 
occupation is denied, the employer, except where the occupation is as a 
physical therapist or a professional nurse, may at any time file for a 
labor certification on the alien beneficiary's behalf under Sec. 
656.17.

[[Page 685]]

Labor certifications for professional nurses and for physical therapists 
shall not be considered under Sec. 656.17.



Sec. 656.16  Labor certification applications for sheepherders.

    (a) Filing requirements and required documentation. (1) An employer 
may apply for a labor certification to employ an alien (who has been 
employed legally as a nonimmigrant sheepherder in the United States for 
at least 33 of the preceding 36 months) as a sheepherder by filing an 
Application for Permanent Employment Certification form directly with 
DHS, not with an office of DOL.
    (2) A signed letter or letters from each U.S. employer who has 
employed the alien as a sheepherder during the immediately preceding 36 
months, attesting the alien has been employed in the United States 
lawfully and continuously as a sheepherder for at least 33 of the 
immediately preceding 36 months, must be filed with the application.
    (b) Determination. An Immigration Officer reviews the application 
and the letters attesting to the alien's previous employment as a 
sheepherder in the United States, and determines whether or not the 
alien and the employer(s) have met the requirements of this section.
    (1) The determination of the Immigration Officer under this 
paragraph (b) is conclusive and final. The employer(s) and the alien, 
therefore, may not make use of the review procedures set forth at 
Sec. Sec. 656.26 and 656.27 to appeal such a determination.
    (2) If the alien and the employer(s) have met the requirements of 
this section, the Immigration Officer must indicate on the Application 
for Permanent Employment Certification form the occupation, the 
immigration office that made the determination, and the date of the 
determination (see Sec. 656.30 for the significance of this date). The 
Immigration Officer must then promptly forward a copy of the Application 
for Permanent Employment Certification form, without attachments, to the 
Chief, Division of Foreign Labor Certification.
    (c) Alternative filing. If an application for a sheepherder does not 
meet the requirements of this section, the application may be filed 
under Sec. 656.17.



Sec. 656.17  Basic labor certification process.

    (a) Filing applications. (1) Except as otherwise provided by 
Sec. Sec. 656.15, 656.16, and 656.18, an employer who desires to apply 
for a labor certification on behalf of an alien must file a completed 
Department of Labor Application for Permanent Employment Certification 
form (ETA Form 9089). The application must be filed with an ETA 
application processing center. Incomplete applications will be denied. 
Applications filed and certified electronically must, upon receipt of 
the labor certification, be signed immediately by the employer in order 
to be valid. Applications submitted by mail must contain the original 
signature of the employer, alien, attorney, and/or agent when they are 
received by the application processing center. DHS will not process 
petitions unless they are supported by an original certified ETA Form 
9089 that has been signed by the employer, alien, attorney and/or agent.
    (2) The Department of Labor may issue or require the use of certain 
identifying information, including user identifiers, passwords, or 
personal identification numbers (PINS). The purpose of these personal 
identifiers is to allow the Department of Labor to associate a given 
electronic submission with a single, specific individual. Personal 
identifiers can not be issued to a company or business. Rather, a 
personal identifier can only be issued to specific individual. Any 
personal identifiers must be used solely by the individual to whom they 
are assigned and can not be used or transferred to any other individual. 
An individual assigned a personal identifier must take all reasonable 
steps to ensure that his or her personal identifier can not be 
compromised. If an individual assigned a personal identifier suspects, 
or becomes aware, that his or her personal identifier has been 
compromised or is being used by someone else, then the individual must 
notify the Department of Labor immediately of the incident and cease the 
electronic transmission of any further submissions under that personal 
identifier until such time as a

[[Page 686]]

new personal identifier is provided. Any electronic transmissions 
submitted with a personal identifier will be presumed to be a submission 
by the individual assigned that personal identifier. The Department of 
Labor's system will notify those making submissions of these 
requirements at the time of each submission.
    (3) Documentation supporting the application for labor certification 
should not be filed with the application, however in the event the 
Certifying Officer notifies the employer that its application is to be 
audited, the employer must furnish required supporting documentation 
prior to a final determination.
    (b) Processing. (1) Applications are screened and are certified, are 
denied, or are selected for audit.
    (2) Employers will be notified if their applications have been 
selected for audit by the issuance of an audit letter under Sec. 
656.20.
    (3) Applications may be selected for audit in accordance with 
selection criteria or may be randomly selected.
    (c) Filing date. Non-electronically filed applications accepted for 
processing shall be date stamped. Electronically filed applications will 
be considered filed when submitted.
    (d) Refiling procedures. (1) Employers that filed applications under 
the regulations in effect prior to March 28, 2005, may, if a job order 
has not been placed pursuant to those regulations, refile such 
applications under this part without loss of the original filing date 
by:
    (i) Submitting an application for an identical job opportunity after 
complying with all of the filing and recruiting requirements of this 
part 656; and
    (ii) Withdrawing the original application in accordance with ETA 
procedures. Filing an application under this part stating the employer's 
desire to use the original filing date will be deemed to be a withdrawal 
of the original application. The original application will be deemed 
withdrawn regardless of whether the employer's request to use the 
original filing date is approved.
    (2) Refilings under this paragraph must be made within 210 days of 
the withdrawal of the prior application.
    (3) A copy of the original application, including amendments, must 
be sent to the appropriate ETA application processing center when 
requested by the CO under Sec. 656.20.
    (4) For purposes of paragraph (d)(1)(i) of this section, a job 
opportunity shall be considered identical if the employer, alien, job 
title, job location, job requirements, and job description are the same 
as those stated in the original application filed under the regulations 
in effect prior to March 28, 2005. For purposes of determining identical 
job opportunity, the original application includes all accepted 
amendments up to the time the application was withdrawn, including 
amendments in response to an assessment notice from a SWA pursuant to 
Sec. 656.21(h) of the regulations in effect prior to March 28, 2005.
    (e) Required pre-filing recruitment. Except for labor certification 
applications involving college or university teachers selected pursuant 
to a competitive recruitment and selection process (Sec. 656.18), 
Schedule A occupations (Sec. Sec. 656.5 and 656.15), and sheepherders 
(Sec. 656.16), an employer must attest to having conducted the 
following recruitment prior to filing the application:
    (1) Professional occupations. If the application is for a 
professional occupation, the employer must conduct the recruitment steps 
within 6 months of filing the application for alien employment 
certification. The employer must maintain documentation of the 
recruitment and be prepared to submit this documentation in the event of 
an audit or in response to a request from the Certifying Officer prior 
to rendering a final determination.
    (i) Mandatory steps. Two of the steps, a job order and two print 
advertisements, are mandatory for all applications involving 
professional occupations, except applications for college or university 
teachers selected in a competitive selection and recruitment process as 
provided in Sec. 656.18. The mandatory recruitment steps must be 
conducted at least 30 days, but no more than 180 days, before the filing 
of the application.
    (A) Job order. Placement of a job order with the SWA serving the 
area of intended employment for a period of 30

[[Page 687]]

days. The start and end dates of the job order entered on the 
application shall serve as documentation of this step.
    (B) Advertisements in newspaper or professional journals. (1) 
Placing an advertisement on two different Sundays in the newspaper of 
general circulation in the area of intended employment most appropriate 
to the occupation and the workers likely to apply for the job 
opportunity and most likely to bring responses from able, willing, 
qualified, and available U.S. workers.
    (2) If the job opportunity is located in a rural area of intended 
employment that does not have a newspaper with a Sunday edition, the 
employer may use the edition with the widest circulation in the area of 
intended employment.
    (3) The advertisements must satisfy the requirements of paragraph 
(f) of this section. Documentation of this step can be satisfied by 
furnishing copies of the newspaper pages in which the advertisements 
appeared or proof of publication furnished by the newspaper.
    (4) If the job involved in the application requires experience and 
an advanced degree, and a professional journal normally would be used to 
advertise the job opportunity, the employer may, in lieu of one of the 
Sunday advertisements, place an advertisement in the professional 
journal most likely to bring responses from able, willing, qualified, 
and available U.S. workers. Documentation of this step can be satisfied 
by providing a copy of the page in which the advertisement appeared.
    (ii) Additional recruitment steps. The employer must select three 
additional recruitment steps from the alternatives listed in paragraphs 
(e)(1)(ii)(A)-(J) of this section. Only one of the additional steps may 
consist solely of activity that took place within 30 days of the filing 
of the application. None of the steps may have taken place more than 180 
days prior to filing the application.
    (A) Job fairs. Recruitment at job fairs for the occupation involved 
in the application, which can be documented by brochures advertising the 
fair and newspaper advertisements in which the employer is named as a 
participant in the job fair.
    (B) Employer's Web site. The use of the employer's Web site as a 
recruitment medium can be documented by providing dated copies of pages 
from the site that advertise the occupation involved in the application.
    (C) Job search Web site other than the employer's. The use of a job 
search Web site other than the employer's can be documented by providing 
dated copies of pages from one or more website(s) that advertise the 
occupation involved in the application. Copies of web pages generated in 
conjunction with the newspaper advertisements required by paragraph 
(e)(1)(i)(B) of this section can serve as documentation of the use of a 
Web site other than the employer's.
    (D) On-campus recruiting. The employer's on-campus recruiting can be 
documented by providing copies of the notification issued or posted by 
the college's or university's placement office naming the employer and 
the date it conducted interviews for employment in the occupation.
    (E) Trade or professional organizations. The use of professional or 
trade organizations as a recruitment source can be documented by 
providing copies of pages of newsletters or trade journals containing 
advertisements for the occupation involved in the application for alien 
employment certification.
    (F) Private employment firms. The use of private employment firms or 
placement agencies can be documented by providing documentation 
sufficient to demonstrate that recruitment has been conducted by a 
private firm for the occupation for which certification is sought. For 
example, documentation might consist of copies of contracts between the 
employer and the private employment firm and copies of advertisements 
placed by the private employment firm for the occupation involved in the 
application.
    (G) Employee referral program with incentives. The use of an 
employee referral program with incentives can be documented by providing 
dated copies of employer notices or memoranda advertising the program 
and specifying the incentives offered.
    (H) Campus placement offices. The use of a campus placement office 
can be documented by providing a copy of the

[[Page 688]]

employer's notice of the job opportunity provided to the campus 
placement office.
    (I) Local and ethnic newspapers. The use of local and ethnic 
newspapers can be documented by providing a copy of the page in the 
newspaper that contains the employer's advertisement.
    (J) Radio and television advertisements. The use of radio and 
television advertisements can be documented by providing a copy of the 
employer's text of the employer's advertisement along with a written 
confirmation from the radio or television station stating when the 
advertisement was aired.
    (2) Nonprofessional occupations. If the application is for a 
nonprofessional occupation, the employer must at a minimum, place a job 
order and two newspaper advertisements within 6 months of filing the 
application. The steps must be conducted at least 30 days but no more 
that 180 days before the filing of the application.
    (i) Job order. Placing a job order with the SWA serving the area of 
intended employment for a period of 30 days. The start and end dates of 
the job order entered on the application serve as documentation of this 
step.
    (ii) Newspaper advertisements. (A) Placing an advertisement on two 
different Sundays in the newspaper of general circulation in the area of 
intended employment most appropriate to the occupation and the workers 
likely to apply for the job opportunity.
    (B) If the job opportunity is located in a rural area of intended 
employment that does not have a newspaper that publishes a Sunday 
edition, the employer may use the newspaper edition with the widest 
circulation in the area of intended employment.
    (C) Placement of the newspaper advertisements can be documented in 
the same way as provided in paragraph (e)(1)(i)(B)(3) of this section 
for professional occupations.
    (D) The advertisements must satisfy the requirements of paragraph 
(f) of this section.
    (f) Advertising requirements. Advertisements placed in newspapers of 
general circulation or in professional journals before filing the 
Application for Permanent Employment Certification must:
    (1) Name the employer;
    (2) Direct applicants to report or send resumes, as appropriate for 
the occupation, to the employer;
    (3) Provide a description of the vacancy specific enough to apprise 
the U.S. workers of the job opportunity for which certification is 
sought;
    (4) Indicate the geographic area of employment with enough 
specificity to apprise applicants of any travel requirements and where 
applicants will likely have to reside to perform the job opportunity;
    (5) Not contain a wage rate lower than the prevailing wage rate;
    (6) Not contain any job requirements or duties which exceed the job 
requirements or duties listed on the ETA Form 9089; and
    (7) Not contain wages or terms and conditions of employment that are 
less favorable than those offered to the alien.
    (g) Recruitment report. (1) The employer must prepare a recruitment 
report signed by the employer or the employer's representative noted in 
Sec. 656.10(b)(2)(ii) describing the recruitment steps undertaken and 
the results achieved, the number of hires, and, if applicable, the 
number of U.S. workers rejected, categorized by the lawful job related 
reasons for such rejections. The Certifying Officer, after reviewing the 
employer's recruitment report, may request the U.S. workers' resumes or 
applications, sorted by the reasons the workers were rejected.
    (2) A U.S. worker is able and qualified for the job opportunity if 
the worker can acquire the skills necessary to perform the duties 
involved in the occupation during a reasonable period of on-the-job 
training. Rejecting U.S. workers for lacking skills necessary to perform 
the duties involved in the occupation, where the U.S. workers are 
capable of acquiring the skills during a reasonable period of on-the-job 
training is not a lawful job-related reason for rejection of the U.S. 
workers.
    (h) Job duties and requirements. (1) The job opportunity's 
requirements, unless adequately documented as arising from business 
necessity, must be those normally required for the occupation and must 
not exceed the Specific Vocational Preparation level assigned to the 
occupation as shown in the O*NET

[[Page 689]]

Job Zones. To establish a business necessity, an employer must 
demonstrate the job duties and requirements bear a reasonable 
relationship to the occupation in the context of the employer's business 
and are essential to perform the job in a reasonable manner.
    (2) A foreign language requirement can not be included, unless it is 
justified by business necessity. Demonstrating business necessity for a 
foreign language requirement may be based upon the following:
    (i) The nature of the occupation, e.g., translator; or
    (ii) The need to communicate with a large majority of the employer's 
customers, contractors, or employees who can not communicate effectively 
in English, as documented by:
    (A) The employer furnishing the number and proportion of its 
clients, contractors, or employees who can not communicate in English, 
and/or a detailed plan to market products or services in a foreign 
country; and
    (B) A detailed explanation of why the duties of the position for 
which certification is sought requires frequent contact and 
communication with customers, employees or contractors who can not 
communicate in English and why it is reasonable to believe the allegedly 
foreign-language-speaking customers, employees, and contractors can not 
communicate in English.
    (3) If the job opportunity involves a combination of occupations, 
the employer must document that it has normally employed persons for 
that combination of occupations, and/or workers customarily perform the 
combination of occupations in the area of intended employment, and/or 
the combination job opportunity is based on a business necessity. 
Combination occupations can be documented by position descriptions and 
relevant payroll records, and/or letters from other employers stating 
their workers normally perform the combination of occupations in the 
area of intended employment, and/or documentation that the combination 
occupation arises from a business necessity.
    (4)(i) Alternative experience requirements must be substantially 
equivalent to the primary requirements of the job opportunity for which 
certification is sought; and
    (ii) If the alien beneficiary already is employed by the employer, 
and the alien does not meet the primary job requirements and only 
potentially qualifies for the job by virtue of the employer's 
alternative requirements, certification will be denied unless the 
application states that any suitable combination of education, training, 
or experience is acceptable.
    (i) Actual minimum requirements. DOL will evaluate the employer's 
actual minimum requirements in accordance with this paragraph (i).
    (1) The job requirements, as described, must represent the 
employer's actual minimum requirements for the job opportunity.
    (2) The employer must not have hired workers with less training or 
experience for jobs substantially comparable to that involved in the job 
opportunity.
    (3) If the alien beneficiary already is employed by the employer, in 
considering whether the job requirements represent the employer's actual 
minimums, DOL will review the training and experience possessed by the 
alien beneficiary at the time of hiring by the employer, including as a 
contract employee. The employer can not require domestic worker 
applicants to possess training and/or experience beyond what the alien 
possessed at the time of hire unless:
    (i) The alien gained the experience while working for the employer, 
including as a contract employee, in a position not substantially 
comparable to the position for which certification is being sought, or
    (ii) The employer can demonstrate that it is no longer feasible to 
train a worker to qualify for the position.
    (4) In evaluating whether the alien beneficiary satisfies the 
employer's actual minimum requirements, DOL will not consider any 
education or training obtained by the alien beneficiary at the 
employer's expense unless the employer offers similar training to 
domestic worker applicants.
    (5) For purposes of this paragraph (i):
    (i) The term ``employer'' means an entity with the same Federal 
Employer Identification Number (FEIN), provided it meets the definition 
of an employer at Sec. 656.3.

[[Page 690]]

    (ii) A ``substantially comparable'' job or position means a job or 
position requiring performance of the same job duties more than 50 
percent of the time. This requirement can be documented by furnishing 
position descriptions, the percentage of time spent on the various 
duties, organization charts, and payroll records.
    (j) Conditions of employment. (1) Working conditions must be normal 
to the occupation in the area and industry.
    (2) Live-in requirements are acceptable for household domestic 
service workers only if the employer can demonstrate the requirement is 
essential to perform, in a reasonable manner, the job duties as 
described by the employer and there are not cost-effective alternatives 
to a live-in household requirement. Mere employer assertions do not 
constitute acceptable documentation. For example, a live-in requirement 
could be supported by documenting two working parents and young children 
in the household, and/or the existence of erratic work schedules 
requiring frequent travel and a need to entertain business associates 
and clients on short notice. Depending upon the situation, acceptable 
documentation could consist of travel vouchers, written estimates of 
costs of alternatives such as babysitters, or a detailed listing of the 
frequency and length of absences of the employer from the home.
    (k) Layoffs. (1) If there has been a layoff by the employer 
applicant in the area of intended employment within 6 months of filing 
an application involving the occupation for which certification is 
sought or in a related occupation, the employer must document it has 
notified and considered all potentially qualified laid off (employer 
applicant) U.S. workers of the job opportunity involved in the 
application and the results of the notification and consideration. A 
layoff shall be considered any involuntary separation of one or more 
employees without cause or prejudice.
    (2) For the purposes of paragraph (k)(1) of this section, a related 
occupation is any occupation that requires workers to perform a majority 
of the essential duties involved in the occupation for which 
certification is sought.
    (l) Alien influence and control over job opportunity. If the 
employer is a closely held corporation or partnership in which the alien 
has an ownership interest, or if there is a familial relationship 
between the stockholders, corporate officers, incorporators, or 
partners, and the alien, or if the alien is one of a small number of 
employees, the employer in the event of an audit must be able to 
demonstrate the existence of a bona fide job opportunity, i.e., the job 
is available to all U.S. workers, and must provide to the Certifying 
Officer, the following supporting documentation:
    (1) A copy of the articles of incorporation, partnership agreement, 
business license or similar documents that establish the business 
entity;
    (2) A list of all corporate/company officers and shareholders/
partners of the corporation/firm/business, their titles and positions in 
the business' structure, and a description of the relationships to each 
other and to the alien beneficiary;
    (3) The financial history of the corporation/company/partnership, 
including the total investment in the business entity and the amount of 
investment of each officer, incorporator/partner and the alien 
beneficiary; and
    (4) The name of the business' official with primary responsibility 
for interviewing and hiring applicants for positions within the 
organization and the name(s) of the business' official(s) having control 
or influence over hiring decisions involving the position for which 
labor certification is sought.
    (5) If the alien is one of 10 or fewer employees, the employer must 
document any family relationship between the employees and the alien.



Sec. 656.18  Optional special recruitment and documentation procedures 
for college and university teachers.

    (a) Filing requirements. Applications for certification of 
employment of college and university teachers must be filed by 
submitting a completed Application for Permanent Employment 
Certification form to the appropriate ETA application processing center.
    (b) Recruitment. The employer may recruit for college and university 
teachers under Sec. 656.17 or must be able

[[Page 691]]

to document the alien was selected for the job opportunity in a 
competitive recruitment and selection process through which the alien 
was found to be more qualified than any of the United States workers who 
applied for the job. For purposes of this paragraph (b), documentation 
of the ``competitive recruitment and selection process'' must include:
    (1) A statement, signed by an official who has actual hiring 
authority from the employer outlining in detail the complete recruitment 
procedures undertaken; and which must set forth:
    (i) The total number of applicants for the job opportunity;
    (ii) The specific lawful job-related reasons why the alien is more 
qualified than each U.S. worker who applied for the job; and
    (2) A final report of the faculty, student, and/or administrative 
body making the recommendation or selection of the alien, at the 
completion of the competitive recruitment and selection process;
    (3) A copy of at least one advertisement for the job opportunity 
placed in a national professional journal, giving the name and the 
date(s) of publication; and which states the job title, duties, and 
requirements;
    (4) Evidence of all other recruitment sources utilized; and
    (5) A written statement attesting to the degree of the alien's 
educational or professional qualifications and academic achievements.
    (c) Time limit for filing. Applications for permanent alien labor 
certification for job opportunities as college and university teachers 
must be filed within 18 months after a selection is made pursuant to a 
competitive recruitment and selection process.
    (d) Alternative procedure. An employer that can not or does not 
choose to satisfy the special recruitment procedures for a college or 
university teacher under this section may avail itself of the basic 
process at Sec. 656.17. An employer that files for certification of 
employment of college and university teachers under Sec. 656.17 or this 
section must be able to document, if requested by the Certifying 
Officer, in accordance with Sec. 656.24(a)(2)(ii), the alien was found 
to be more qualified than each U.S. worker who applied for the job 
opportunity.



Sec. 656.19  Live-in household domestic service workers.

    (a) Processing. Applications on behalf of live-in household domestic 
service occupations are processed pursuant to the requirements of the 
basic process at Sec. 656.17.
    (b) Required documentation. Employers filing applications on behalf 
of live-in household domestic service workers must provide, in event of 
an audit, the following documentation:
    (1) A statement describing the household living accommodations, 
including the following:
    (i) Whether the residence is a house or apartment;
    (ii) The number of rooms in the residence;
    (iii) The number of adults and children, and ages of the children, 
residing in the household; and
    (iv) That free board and a private room not shared with any other 
person will be provided to the alien.
    (2) Two copies of the employment contract, each signed and dated 
prior to the filing of the application by both the employer and the 
alien (not by their attorneys or agents). The contract must clearly 
state:
    (i) The wages to be paid on an hourly and weekly basis;
    (ii) Total hours of employment per week, and exact hours of daily 
employment;
    (iii) That the alien is free to leave the employer's premises during 
all non-work hours except the alien may work overtime if paid for the 
overtime at no less than the legally required hourly rate;
    (iv) That the alien will reside on the employer's premises;
    (v) Complete details of the duties to be performed by the alien;
    (vi) The total amount of any money to be advanced by the employer 
with details of specific items, and the terms of repayment by the alien 
of any such advance by the employer;
    (vii) That in no event may the alien be required to give more than 
two weeks' notice of intent to leave the employment contracted for and 
the employer must give the alien at least two

[[Page 692]]

weeks' notice before terminating employment;
    (viii) That a duplicate contract has been furnished to the alien;
    (ix) That a private room and board will be provided at no cost to 
the worker; and
    (x) Any other agreement or conditions not specified on the 
Application for Permanent Employment Certification form.
    (3) Documentation of the alien's paid experience in the form of 
statements from past or present employers setting forth the dates (month 
and year) employment started and ended, hours of work per day, number of 
days worked per week, place where the alien worked, detailed statement 
of duties performed on the job, equipment and appliances used, and the 
amount of wages paid per week or month. The total paid experience must 
be equal to one full year's employment on a full-time basis. For 
example, two year's experience working half-days is the equivalent of 
one year's full time experience. Time spent in a household domestic 
service training course can not be included in the required one year of 
paid experience. Each statement must contain the name and address of the 
person who signed it and show the date on which the statement was 
signed. A statement not in English shall be accompanied by a written 
translation into English certified by the translator as to the accuracy 
of the translation, and as to the translator's competency to translate.



Sec. 656.20  Audit procedures.

    (a) Review of the labor certification application may lead to an 
audit of the application. Additionally, certain applications may be 
selected randomly for audit and quality control purposes. If an 
application is selected for audit, the Certifying Officer shall issue an 
audit letter. The audit letter will:
    (1) State the documentation that must be submitted by the employer;
    (2) Specify a date, 30 days from the date of the audit letter, by 
which the required documentation must be submitted; and
    (3) Advise that if the required documentation has not been sent by 
the date specified the application will be denied.
    (i) Failure to provide documentation in a timely manner constitutes 
a refusal to exhaust available administrative remedies; and
    (ii) The administrative-judicial review procedure provided in Sec. 
656.26 is not available.
    (b) A substantial failure by the employer to provide required 
documentation will result in that application being denied Sec. 656.24 
under and may result in a determination by the Certifying Officer 
pursuant to Sec. 656.24 to require the employer to conduct supervised 
recruitment under Sec. 656.21 in future filings of labor certification 
applications for up to 2 years.
    (c) The Certifying Officer may in his or her discretion provide one 
extension, of up to 30 days, to the 30 days specified in paragraph 
(a)(2) of this section.
    (d) Before making a final determination in accordance with the 
standards in Sec. 656.24, whether in course of an audit or otherwise, 
the Certifying Officer may:
    (1) Request supplemental information and/or documentation; or
    (2) Require the employer to conduct supervised recruitment under 
Sec. 656.21.



Sec. 656.21  Supervised recruitment.

    (a) Supervised recruitment. Where the Certifying Officer determines 
it appropriate, post-filing supervised recruitment may be required of 
the employer for the pending application or future applications pursuant 
to Sec. 656.20(b).
    (b) Requirements. Supervised recruitment shall consist of 
advertising for the job opportunity by placing an advertisement in a 
newspaper of general circulation or in a professional, trade, or ethnic 
publication, and any other measures required by the CO. If placed in a 
newspaper of general circulation, the advertisement must be published 
for 3 consecutive days, one of which must be a Sunday; or, if placed in 
a professional, trade, or ethnic publication, the advertisement must be 
published in the next available published edition. The advertisement 
must be approved by the Certifying Officer before publication, and the 
CO will direct where the advertisement is to be placed.

[[Page 693]]

    (1) The employer must supply a draft advertisement to the CO for 
review and approval within 30 days of being notified that supervised 
recruitment is required.
    (2) The advertisement must:
    (i) Direct applicants to send resumes or applications for the job 
opportunity to the CO for referral to the employer;
    (ii) Include an identification number and an address designated by 
the Certifying Officer;
    (iii) Describe the job opportunity;
    (iv) Not contain a wage rate lower than the prevailing wage rate;
    (v) Summarize the employer's minimum job requirements, which can not 
exceed any of the requirements entered on the application form by the 
employer;
    (vi) Offer training if the job opportunity is the type for which 
employers normally provide training; and
    (vii) Offer wages, terms and conditions of employment no less 
favorable than those offered to the alien.
    (c) Timing of advertisement. (1) The advertisement shall be placed 
in accordance with the guidance provided by the CO.
    (2) The employer will notify the CO when the advertisement will be 
placed.
    (d) Additional or substitute recruitment. The Certifying Officer may 
designate other appropriate sources of workers from which the employer 
must recruit for U.S. workers in addition to the advertising described 
in paragraph (b) of this section.
    (e) Recruitment report. The employer must provide to the Certifying 
Officer a signed, detailed written report of the employer's supervised 
recruitment, signed by the employer or the employer's representative 
described in Sec. 656.10(b)(2)(ii), within 30 days of the Certifying 
Officer's request for such a report. The recruitment report must:
    (1) Identify each recruitment source by name and document that each 
recruitment source named was contacted. This can include, for example, 
copies of letters to recruitment sources such as unions, trade 
associations, colleges and universities and any responses received to 
the employer's inquiries. Advertisements placed in newspapers, 
professional, trade, or ethnic publications can be documented by 
furnishing copies of the tear sheets of the pages of the publication in 
which the advertisements appeared, proof of publication furnished by the 
publication, or dated copies of the web pages if the advertisement 
appeared on the web as well as in the publication in which the 
advertisement appeared.
    (2) State the number of U.S. workers who responded to the employer's 
recruitment.
    (3) State the names, addresses, and provide resumes (other than 
those sent to the employer by the CO) of the U.S. workers who applied 
for the job opportunity, the number of workers interviewed, and the job 
title of the person who interviewed the workers.
    (4) Explain, with specificity, the lawful job-related reason(s) for 
not hiring each U.S. worker who applied. Rejection of one or more U.S. 
workers for lacking skills necessary to perform the duties involved in 
the occupation, where the U.S. workers are capable of acquiring the 
skills during a reasonable period of on-the-job training, is not a 
lawful job-related reason for rejecting the U.S. workers. For the 
purpose of this paragraph (e)(4), a U.S. worker is able and qualified 
for the job opportunity if the worker can acquire the skills necessary 
to perform the duties involved in the occupation during a reasonable 
period of on-the-job training.
    (f) The employer shall supply the CO with the required documentation 
or information within 30 days of the date of the request. If the 
employer does not do so, the CO shall deny the application.
    (g) The Certifying Officer in his or her discretion, for good cause 
shown, may provide one extension to any request for documentation or 
information.



Sec. 656.24  Labor certification determinations.

    (a)(1) The Chief, Division of Foreign Labor Certification is the 
National Certifying Officer. The Chief and the certifying officers in 
the ETA application processing centers have the authority to certify or 
deny labor certification applications.

[[Page 694]]

    (2) If the labor certification presents a special or unique problem, 
the Director of an ETA application processing center may refer the 
matter to the Chief, Division of Foreign Labor Certification. If the 
Chief, Division of Foreign Labor Certification, has directed that 
certain types of applications or specific applications be handled in the 
ETA national office, the Directors of the ETA application processing 
centers shall refer such applications to the Chief, Division of Foreign 
Labor Certification.
    (b) The Certifying Officer makes a determination either to grant or 
deny the labor certification on the basis of whether or not:
    (1) The employer has met the requirements of this part.
    (2) There is in the United States a worker who is able, willing, 
qualified, and available for and at the place of the job opportunity.
    (i) The Certifying Officer must consider a U.S. worker able and 
qualified for the job opportunity if the worker, by education, training, 
experience, or a combination thereof, is able to perform in the normally 
accepted manner the duties involved in the occupation as customarily 
performed by other U.S. workers similarly employed. For the purposes of 
this paragraph (b)(2)(i), a U.S. worker is able and qualified for the 
job opportunity if the worker can acquire the skills necessary to 
perform the duties involved in the occupation during a reasonable period 
of on-the-job training.
    (ii) If the job involves a job opportunity as a college or 
university teacher, the U.S. worker must be at least as qualified as the 
alien.
    (3) The employment of the alien will not have an adverse effect upon 
the wages and working conditions of U.S. workers similarly employed. In 
making this determination, the Certifying Officer considers such things 
as: labor market information, the special circumstances of the industry, 
organization, and/or occupation, the prevailing wage in the area of 
intended employment, and prevailing working conditions, such as hours, 
in the occupation.
    (c) The Certifying Officer shall notify the employer in writing 
(either electronically or by mail) of the labor certification 
determination.
    (d) If a labor certification is granted, except for a labor 
certification for an occupation on Schedule A (Sec. 656.5) or for 
employment as a sheepherder under Sec. 656.16, the Certifying Officer 
must send the certified application and complete Final Determination 
form to the employer, or, if appropriate, to the employer's agent or 
attorney, indicating the employer may file all the documents with the 
appropriate DHS office.
    (e) If the labor certification is denied, the Final Determination 
form will:
    (1) State the reasons for the determination;
    (2) Quote the request for review procedures at Sec. 656.26 (a) and 
(b);
    (3) Advise that failure to request review within 30 days of the date 
of the determination, as specified in Sec. 656.26(a), constitutes a 
failure to exhaust administrative remedies;
    (4) Advise that, if a request for review is not made within 30 days 
of the date of the determination, the denial shall become the final 
determination of the Secretary;
    (5) Advise that if an application for a labor certification is 
denied, and a request for review is not made in accordance with the 
procedures at Sec. 656.26(a) and (b), a new application may be filed at 
any time; and
    (6) Advise that a new application in the same occupation for the 
same alien can not be filed while a request for review is pending with 
the Board of Alien Labor Certification Appeals.
    (f) If the Certifying Officer determines the employer substantially 
failed to produce required documentation, or the documentation was 
inadequate, or determines a material misrepresentation was made with 
respect to the application, or if the Certifying Officer determines it 
is appropriate for other reasons, the employer may be required to 
conduct supervised recruitment pursuant to Sec. 656.21 in future 
filings of labor certification applications for up to two years from the 
date of the Final Determination.
    (g)(1) The employer may request reconsideration within 30 days from 
the date of issuance of the denial.

[[Page 695]]

    (2) The request for reconsideration may not include evidence not 
previously submitted.
    (3) The Certifying Officer may, in his or her discretion, reconsider 
the determination or treat it as a request for review under Sec. 
656.26(a).



Sec. 656.26  Board of Alien Labor Certification Appeals review of 
denials of labor certification.

    (a) Request for review. (1) If a labor certification is denied, or 
revoked pursuant to Sec. 656.32, a request for review of the denial or 
revocation may be made to the Board of Alien Labor Certification Appeals 
by the employer by making a request for such an administrative review in 
accordance with the procedures provided in this paragraph (a). The 
request for review:
    (i) Must be sent to the Certifying Officer who denied the 
application within 30 days of the date of the determination;
    (ii) Must clearly identify the particular labor certification 
determination for which review is sought;
    (iii) Must set forth the particular grounds for the request; and
    (iv) Must include the Final Determination.
    (2) The request for review, statements, briefs, and other 
submissions of the parties and amicus curiae must contain only legal 
argument and only such evidence that was within the record upon which 
the denial of labor certification was based.
    (b) Upon the receipt of a request for review, the Certifying Officer 
immediately must assemble an indexed Appeal File:
    (1) The Appeal File must be in chronological order, must have the 
index on top followed by the most recent document, and must have 
consecutively numbered pages. The Appeal File must contain the request 
for review, the complete application file, and copies of all the written 
material, such as pertinent parts and pages of surveys and/or reports 
upon which the denial was based.
    (2) The Certifying Officer must send the Appeal File to the Board of 
Alien Labor Certification Appeals, Office of Administrative Law Judges, 
800 K Street, NW., Suite 400-N, Washington, DC 20001-8002.
    (3) The Certifying Officer must send a copy of the Appeal File to 
the employer. The employer may furnish or suggest directly to the Board 
of Alien Labor Certification Appeals the addition of any documentation 
that is not in the Appeal File, but that was submitted to DOL before the 
issuance of the Final Determination. The employer must submit such 
documentation in writing, and must send a copy to the Associate 
Solicitor for Employment and Training Legal Services, Office of the 
Solicitor, U.S. Department of Labor, Washington, DC 20210.



Sec. 656.27  Consideration by and decisions of the Board of Alien 
Labor Certification Appeals.

    (a) Panel designations. In considering requests for review before 
it, the Board of Alien Labor Certification Appeals may sit in panels of 
three members. The Chief Administrative Law Judge may designate any 
Board of Alien Labor Certification Appeals member to submit proposed 
findings and recommendations to the Board of Alien Labor Certification 
Appeals or to any duly designated panel thereof to consider a particular 
case.
    (b) Briefs and Statements of Position. In considering the requests 
for review before it, the Board of Alien Labor Certification Appeals 
must afford all parties 30 days to submit or decline to submit any 
appropriate Statement of Position or legal brief. The Certifying Officer 
is to be represented solely by the Solicitor of Labor or the Solicitor's 
designated representative.
    (c) Review on the record. The Board of Alien Labor Certification 
Appeals must review a denial of labor certification under Sec. 656.24, 
a revocation of a certification under Sec. 656.32, or an affirmation of 
a prevailing wage determination under Sec. 656.41 on the basis of the 
record upon which the decision was made, the request for review, and any 
Statements of Position or legal briefs submitted and must:
    (1) Affirm the denial of the labor certification, the revocation of 
certification, or the affirmation of the PWD; or

[[Page 696]]

    (2) Direct the Certifying Officer to grant the certification, 
overrule the revocation of certification, or overrule the affirmation of 
the PWD; or
    (3) Direct that a hearing on the case be held under paragraph (e) of 
this section.
    (d) Notifications of decisions. The Board of Alien Labor 
Certification Appeals must notify the employer, the Certifying Officer, 
and the Solicitor of Labor of its decision, and must return the record 
to the Certifying Officer unless the case has been set for hearing under 
paragraph (e) of this section.
    (e) Hearings--(1) Notification of hearing. If the case has been set 
for a hearing, the Board of Alien Labor Certification Appeals must 
notify the employer, the alien, the Certifying Officer, and the 
Solicitor of Labor of the date, time, and place of the hearing, and that 
the hearing may be rescheduled upon written request and for good cause 
shown.
    (2) Hearing procedure. (i) The ``Rules of Practice and Procedure For 
Administrative Hearings Before the Office of Administrative Law 
Judges,'' at 29 CFR part 18, apply to hearings under this paragraph (e).
    (ii) For the purposes of this paragraph (e)(2), references in 29 CFR 
part 18 to: ``administrative law judge'' mean the Board of Alien Labor 
Certification Appeals member or the Board of Alien Labor Certification 
Appeals panel duly designated under Sec. 656.27(a); ``Office of 
Administrative Law Judges'' means the Board of Alien Labor Certification 
Appeals; and ``Chief Administrative Law Judge'' means the Chief 
Administrative Law Judge in that official's function of chairing the 
Board of Alien Labor Certification Appeals.



Sec. 656.30  Validity of and invalidation of labor certifications.

    (a) Validity of labor certifications. Except as provided in 
paragraph (d) of this section, a labor certification is valid 
indefinitely.
    (b) Validation date. (1) A labor certification involving a job offer 
is validated as of the date the ETA application processing center date-
stamped the application or the date an electronically filed application 
was submitted; and
    (2) A labor certification for a Schedule A occupation is validated 
as of the date the application was dated by the Immigration Officer.
    (c) Scope of validity. (1) A labor certification for a Schedule A 
occupation is valid only for the occupation set forth on the Application 
for Permanent Employment Certification form and throughout the United 
States unless the certification contains a geographic limitation.
    (2) A labor certification involving a specific job offer is valid 
only for the particular job opportunity and for the area of intended 
employment stated on the Application for Permanent Employment 
Certification form.
    (d) Invalidation of labor certifications. After issuance, a labor 
certification may be revoked by ETA using the procedures described in 
Sec. 656.32. Additionally, after issuance, a labor certification is 
subject to invalidation by the DHS or by a Consul of the Department of 
State upon a determination, made in accordance with those agencies' 
procedures or by a court, of fraud or willful misrepresentation of a 
material fact involving the labor certification application. If evidence 
of such fraud or willful misrepresentation becomes known to the CO or to 
the Chief, Division of Foreign Labor Certification, the CO, or the Chief 
of the Division of Foreign Labor Certification, as appropriate, shall 
notify in writing the DHS or Department of State, as appropriate. A copy 
of the notification must be sent to the regional or national office, as 
appropriate, of the Department of Labor's Office of Inspector General.
    (e) Duplicate labor certifications. (1) The Certifying Officer shall 
issue a duplicate labor certification at the written request of a 
Consular or Immigration Officer. The Certifying Officer shall issue such 
duplicate labor certifications only to the Consular or Immigration 
Officer who initiated the request.
    (2) The Certifying Officer shall issue a duplicate labor 
certification to a Consular or Immigration Officer at the written 
request of an alien, employer, or an alien's or employer's attorney/
agent. Such request for a duplicate labor certification must be 
addressed to the Certifying Officer who issued the

[[Page 697]]

labor certification; must include documentary evidence from a Consular 
or Immigration Officer that a visa application or visa petition, as 
appropriate, has been filed; and must include a Consular Office or DHS 
tracking number.



Sec. 656.31  Labor certification applications involving fraud or willful 
misrepresentation.

    (a) Possible fraud or willful misrepresentation. If possible fraud 
or willful misrepresentation involving a labor certification is 
discovered before a final labor certification determination; the 
Certifying Officer will refer the matter to the DHS for investigation, 
and must send a copy of the referral to the Department of Labor's Office 
of Inspector General. If 90 days pass without the filing of a criminal 
indictment or information, or receipt of a notification from DHS, DOL 
OIG, or other appropriate authority that an investigation is being 
conducted, the Certifying Officer may continue to process the 
application.
    (b) Criminal indictment or information. If the DOL learns an 
application is the subject of a criminal indictment or information filed 
in a court, the processing of the application must be halted until the 
judicial process is completed. The Certifying Officer must notify the 
employer of this fact in writing and must send a copy of the 
notification to the alien, and to the Department of Labor's Office of 
Inspector General.
    (c) Finding of no fraud or willful misrepresentation. If a court 
finds there was no fraud or willful misrepresentation, or if the 
Department of Justice decides not to prosecute, the Certifying Officer 
shall decide the case on the merits of the application.
    (d) Finding of fraud or willful misrepresentation. If as referenced 
in Sec. 656.30(d), a court, the DHS or the Department of State 
determines there was fraud or willful misrepresentation involving a 
labor certification application, the application will be considered to 
be invalidated, processing is terminated, a notice of the termination 
and the reason therefore is sent by the Certifying Officer to the 
employer, attorney/agent, as appropriate, and a copy of the notification 
is sent by the Certifying Officer to the alien and to the Department of 
Labor's Office of Inspector General.



Sec. 656.32  Revocation of approved labor certifications.

    (a) Basis for DOL revocation. The Certifying Officer in consultation 
with the Chief, Division of Foreign Labor Certification may take steps 
to revoke an approved labor certification, if he/she finds the 
certification was not justified. A labor certification may also be 
invalidated by DHS or the Department of State as set forth in Sec. 
656.30(d).
    (b) Department of Labor procedures for revocation. (1) The 
Certifying Officer sends to the employer a Notice of Intent to Revoke an 
approved labor certification which contains a detailed statement of the 
grounds for the revocation and the time period allowed for the 
employer's rebuttal. The employer may submit evidence in rebuttal within 
30 days of receipt of the notice. The Certifying Officer must consider 
all relevant evidence presented in deciding whether to revoke the labor 
certification.
    (2) If rebuttal evidence is not filed by the employer, the Notice of 
Intent to Revoke becomes the final decision of the Secretary.
    (3) If the employer files rebuttal evidence and the Certifying 
Officer determines the certification should be revoked, the employer may 
file an appeal under Sec. 656.26.
    (4) The Certifying Officer will inform the employer within 30 days 
of receiving any rebuttal evidence whether or not the labor 
certification will be revoked.
    (5) If the labor certification is revoked, the Certifying Officer 
will also send a copy of the notification to the DHS and the Department 
of State.



               Subpart D_Determination of Prevailing Wage



Sec. 656.40  Determination of prevailing wage for labor certification 
purposes.

    (a) Application process. The employer must request a prevailing wage 
determination from the SWA having jurisdiction over the proposed area of 
intended employment. The SWA must enter its wage determination on the

[[Page 698]]

form it uses and return the form with its endorsement to the employer. 
Unless the employer chooses to appeal the SWA's prevailing wage 
determination under Sec. 656.41(a), it files the Application for 
Permanent Employment Certification either electronically or by mail with 
an ETA application processing center and maintains the SWA PWD in its 
files. The determination shall be submitted to an ETA application 
processing center in the event it is requested in the course of an 
audit.
    (b) Determinations. The SWA determines the prevailing wage as 
follows:
    (1) Except as provided in paragraphs (e) and (f) of this section, if 
the job opportunity is covered by a collective bargaining agreement 
(CBA) that was negotiated at arms-length between the union and the 
employer, the wage rate set forth in the CBA agreement is considered as 
not adversely affecting the wages of U.S. workers similarly employed, 
that is, it is considered the ``prevailing wage'' for labor 
certification purposes.
    (2) If the job opportunity is not covered by a CBA, the prevailing 
wage for labor certification purposes shall be the arithmetic mean, 
except as provided in paragraph (b)(3) of this section, of the wages of 
workers similarly employed in the area of intended employment. The wage 
component of the DOL Occupational Employment Statistics Survey shall be 
used to determine the arithmetic mean, unless the employer provides an 
acceptable survey under paragraph (g) of this section.
    (3) If the employer provides a survey acceptable under paragraph (g) 
of this section that provides a median and does not provide an 
arithmetic mean, the prevailing wage applicable to the employer's job 
opportunity shall be the median of the wages of workers similarly 
employed in the area of intended employment.
    (4) The employer may utilize a current wage determination in the 
area under the Davis-Bacon Act, 40 U.S.C. 276a et seq., 29 CFR part 1, 
or the McNamara-O'Hara Service Contract Act, 41 U.S.C. 351 et seq.
    (c) Validity period. The SWA must specify the validity period of the 
prevailing wage, which in no event may be less than 90 days or more than 
1 year from the determination date. To use a SWA PWD, employers must 
file their applications or begin the recruitment required by Sec. Sec. 
656.17(d) or 656.21 within the validity period specified by the SWA.
    (d) Similarly employed. For purposes of this section, similarly 
employed means having substantially comparable jobs in the occupational 
category in the area of intended employment, except that, if a 
representative sample of workers in the occupational category can not be 
obtained in the area of intended employment, similarly employed means:
    (1) Having jobs requiring a substantially similar level of skills 
within the area of intended employment; or
    (2) If there are no substantially comparable jobs in the area of 
intended employment, having substantially comparable jobs with employers 
outside of the area of intended employment.
    (e) Institutions of higher education and research entities. In 
computing the prevailing wage for a job opportunity in an occupational 
classification in an area of intended employment for an employee of an 
institution of higher education, or an affiliated or related nonprofit 
entity, a nonprofit research organization, or a Governmental research 
organization, the prevailing wage level takes into account the wage 
levels of employees only at such institutions and organizations in the 
area of intended employment.
    (1) The organizations listed in this paragraph (e) are defined as 
follows:
    (i) Institution of higher education means an institution of higher 
education as defined in section 101(a) of the Higher Education Act of 
1965. Section 101(a) of that Act, 20 U.S.C. 1001(a)(2000), provides an 
institution of higher education is an educational institution in any 
state that:
    (A) Admits as regular students only persons having a certificate of 
graduation from a school providing secondary education, or the 
recognized equivalent of such a certificate;
    (B) Is legally authorized within such state to provide a program of 
education beyond secondary education;
    (C) Provides an educational program for which the institution awards 
a bachelor's degree or provides not less

[[Page 699]]

than a two-year program that is acceptable for full credit toward such a 
degree;
    (D) Is a public or other nonprofit institution; and
    (E) Is accredited by a nationally recognized accrediting agency or 
association or, if not so accredited, is an institution that has been 
granted preaccreditation status by such an agency or association that 
has been recognized by the Secretary of Education for the granting of 
preaccreditation status, and the Secretary of Education has determined 
there is satisfactory assurance the institution will meet the 
accreditation standards of such an agency or association within a 
reasonable time.
    (ii) Affiliated or related nonprofit entity means a nonprofit entity 
(including but not limited to a hospital and a medical or research 
institution) connected or associated with an institution of higher 
education, through shared ownership or control by the same board or 
federation, operated by an institution of higher education, or attached 
to an institution of higher education as a member, branch, cooperative, 
or subsidiary.
    (iii) Nonprofit research organization or Governmental research 
organization means a research organization that is either a nonprofit 
organization or entity primarily engaged in basic research and/or 
applied research, or a United States Government entity whose primary 
mission is the performance or promotion of basic research and/or applied 
research. Basic research is general research to gain more comprehensive 
knowledge or understanding of the subject under study, without specific 
applications in mind. Basic research is also research that advances 
scientific knowledge, but does not have specific immediate commercial 
objectives although it may be in fields of present or commercial 
interest. It may include research and investigation in the sciences, 
social sciences, or humanities. Applied research is research to gain 
knowledge or understanding to determine the means by which a specific, 
recognized need may be met. Applied research includes investigations 
oriented to discovering new scientific knowledge that has specific 
commercial objectives with respect to products, processes, or services. 
It may include research and investigation in the sciences, social 
sciences, or humanities.
    (2) Nonprofit organization or entity, for the purpose of this 
paragraph (e), means an organization qualified as a tax exempt 
organization under the Internal Revenue Code of 1986, section 501(c)(3), 
(c)(4), or (c)(6) (26 U.S.C. 501(c)(3), (c)(4) or (c)(6)), and which has 
received approval as a tax exempt organization from the Internal Revenue 
Service, as it relates to research or educational purposes.
    (f) Professional athletes. In computing the prevailing wage for a 
professional athlete (defined in Section 212(a)(5)(A)(iii)(II) of the 
Act) when the job opportunity is covered by professional sports league 
rules or regulations, the wage set forth in those rules or regulations 
is considered the prevailing wage (see Section 212(p)(2) of the Act). 
INA Section 212(a)(5)(A)(iii)(II), 8 U.S.C. 1182(a)(5)(A)(iii)(II) 
(1999), defines ``professional athlete'' as an individual who is 
employed as an athlete by--
    (1) A team that is a member of an association of six or more 
professional sports teams whose total combined revenues exceed 
$10,000,000 per year, if the association governs the conduct of its 
members and regulates the contests and exhibitions in which its member 
teams regularly engage; or
    (2) Any minor league team that is affiliated with such an 
association.
    (g) Employer-provided wage information. (1) If the job opportunity 
is not covered by a CBA, or by a professional sports league's rules or 
regulations, the SWA must consider wage information provided by the 
employer in making a prevailing wage determination. An employer survey 
can be submitted either initially or after SWA issuance of a prevailing 
wage determination derived from the OES survey. In the latter situation, 
the new employer survey submission will be deemed a new prevailing wage 
determination request.
    (2) In each case where the employer submits a survey or other wage 
data for which it seeks acceptance, the employer must provide the SWA 
with enough information about the survey

[[Page 700]]

methodology, including such items as sample size and source, sample 
selection procedures, and survey job descriptions, to allow the SWA to 
make a determination about the adequacy of the data provided and 
validity of the statistical methodology used in conducting the survey in 
accordance with guidance issued by the ETA national office.
    (3) The survey submitted to the SWA must be based upon recently 
collected data:
    (i) A published survey must have been published within 24 months of 
the date of submission to the SWA, must be the most current edition of 
the survey, and the data upon which the survey is based must have been 
collected within 24 months of the publication date of the survey.
    (ii) A survey conducted by the employer must be based on data 
collected within 24 months of the date it is submitted to the SWA.
    (4) If the employer-provided survey is found not to be acceptable, 
the SWA must inform the employer in writing of the reasons the survey 
was not accepted.
    (5) The employer, after receiving notification that the survey it 
provided for the SWA's consideration is not acceptable, may file 
supplemental information as provided in paragraph (h) of this section, 
file a new request for a prevailing wage determination, or appeal under 
Sec. 656.41.
    (h) Submittal of supplemental information by employer. (1) If the 
employer disagrees with the skill level assigned to its job opportunity, 
or if the SWA informs the employer its survey is not acceptable, or if 
there are other legitimate bases for such a review, the employer may 
submit supplemental information to the SWA.
    (2) The SWA must consider one supplemental submission about the 
employer's survey or the skill level the SWA assigned to the job 
opportunity or any other legitimate basis for the employer to request 
such a review. If the SWA does not accept the employer's survey after 
considering the supplemental information, or affirms its determination 
concerning the skill level, it must inform the employer of the reasons 
for its decision.
    (3) The employer may then apply for a new wage determination or 
appeal under Sec. 656.41.
    (i) Wage can not be lower than required by any other law. No 
prevailing wage determination for labor certification purposes made 
under this section permits an employer to pay a wage lower than the 
highest wage required by any applicable Federal, state, or local law.
    (j) Fees prohibited. No SWA or SWA employee may charge a fee in 
connection with the filing of a request for a PWD, responding to such a 
request, or responding to a request for a review of a SWA prevailing 
wage determination under Sec. 656.41.



Sec. 656.41  Certifying Officer review of prevailing wage determinations.

    (a) Review of SWA prevailing wage determinations. Any employer 
desiring review of a SWA PWD must make a request for such review within 
30 days of the date from when the PWD was issued by the SWA. The request 
for review must be sent to the SWA that issued the PWD within 30 days of 
the date of the PWD; clearly identify the PWD from which review is 
sought; set forth the particular grounds for the request; and include 
all the materials pertaining to the PWD submitted to the SWA up to the 
date of the PWD received from the SWA.
    (b) Transmission of request to processing center. (1) Upon the 
receipt of a request for review, the SWA must review the employer's 
request and accompanying documentation, and add any material that may 
have been omitted by the employer, including any material sent to the 
employer by the SWA up to the date of the PWD.
    (2) The SWA must send a copy of the employer's appeal, including any 
material added under paragraph (b)(1) of this section, to the 
appropriate ETA application processing center.
    (3) The SWA must send a copy of any material added by the SWA under 
paragraph (b)(1) of this section to the employer.
    (c) Designations. The director(s) of the ETA application processing 
center(s) will determine which CO will review the employer's appeal.
    (d) Review on the record. The CO reviews the SWA PWD solely on the 
basis

[[Page 701]]

upon which the PWD was made and, upon the request for review, may:
    (1) Affirm the prevailing wage determination issued by the SWA;
    (2) Modify the prevailing wage determination; or
    (3) Remand the matter to the SWA for further action.
    (e) Request for review by BALCA. Any employer desiring review of a 
CO prevailing wage determination must make a request for review of the 
determination by the Board of Alien Labor Certification Appeals within 
30 days of the date of the decision of the CO.
    (1) The request for review, statements, briefs, and other 
submissions of the parties and amicus curiae must contain only legal 
arguments and only such evidence that was within the record upon which 
the affirmation of the PWD by the SWA was based.
    (2) The request for review must be in writing and addressed to the 
CO who made the determination. Upon receipt of a request for a review, 
the CO must immediately assemble an indexed appeal file in reverse 
chronological order, with the index on top followed by the most recent 
document.
    (3) The CO must send the Appeal File to the Office of Administrative 
Law Judges, Board of Alien Labor Certification Appeals, 800 K Street, 
Suite 400-N, Washington, DC 20001-8002.
    (4) The BALCA handles the appeals in accordance with Sec. 656.26 
and Sec. 656.27 of this part.

 PART 657_PROVISIONS GOVERNING GRANTS TO STATE AGENCIES FOR EMPLOYMENT 
                     SERVICES ACTIVITIES [RESERVED]



PART 658_ADMINISTRATIVE PROVISIONS GOVERNING THE JOB SERVICE SYSTEM
--Table of Contents




Subparts A-D [Reserved]

                 Subpart E_Job Service Complaint System

Sec.
658.400 Purpose and scope of subpart.
658.401 Types of complaints handled by the JS complaint system.

                    State Agency JS Complaint System

658.410 Establishment of State agency JS complaint system.
658.411 Filing and assignment of JS-related complaints.
658.412 Complaint resolution.
658.413 Initial handling of complaints by the State or local office.
658.414 Referral of non-JS-related complaints.
658.415 Transferring complaints to proper JS office.
658.416 Action on JS-related complaints.
658.417 Hearings.
658.418 Decision of the State hearing official.

                       Federal JS Complaint System

658.420 Establishment of JS complaint system at the ETA regional office.
658.421 Handling of JS-related complaints.
658.422 Handling of non-JS-related complaints by the Regional 
          Administrator.
658.423 Handling of other complaints by the Regional Administrator.
658.424 Federal hearings.
658.425 Decision of DOL Administrative Law Judge.
658.426 Complaints against USES.

  Subpart F_Discontinuance of Services to Employers by the Job Service 
                                 System

658.500 Scope and purpose of subpart.
658.501 Basis for discontinuation of services.
658.502 Notification to employers.
658.503 Discontinuation of services.
658.504 Reinstatement of services.

  Subpart G_Review and Assessment of State Agency Compliance with Job 
                           Service Regulations

658.600 Scope and purpose of subpart.
658.601 State agency responsibility.
658.602 ETA national office responsibility.
658.603 ETA regional office responsibility.
658.604 Assessment and evaluation of program performance data.
658.605 Communication of findings to State agencies.

   Subpart H_Federal Application of Remedial Action to State Agencies

658.700 Scope and purpose of subpart.
658.701 Statements of policy.
658.702 Initial action by the Regional Administrator.
658.703 Emergency corrective action.
658.704 Remedial actions.
658.705 Decision to decertify.
658.706 Notice of decertification.
658.707 Requests for hearings.
658.708 Hearings.
658.709 Conduct of hearings.
658.710 Decision of the Administrative Law Judge.
658.711 Decision of the Administrative Review Board.


[[Page 702]]


    Authority: Wagner-Peyser Act of 1933, as amended, 29 U.S.C. 49 et 
seq.; 38 U.S.C. chapters 41 and 42; 5 U.S.C. 301 et seq.; sections 
658.410, 658.411 and 658.413 also issued under 44 U.S.C. 3501 et seq.

    Source: 45 FR 39468, June 10, 1980, unless otherwise noted.

Subparts A-D [Reserved]



                 Subpart E_Job Service Complaint System



Sec. 658.400  Purpose and scope of subpart.

    This subpart sets forth the regulations governing the Job Service 
complaint system at both the State and Federal levels.



Sec. 658.401  Types of complaints handled by the JS complaint system.

    (a) (1) The types of complaints (JS related complaints) which shall 
be handled to resolution by the JS complaint system are as follows: (i) 
Complaints against an employer about the specific job to which the 
applicant was referred by the JS involving violations of the terms and 
conditions of the job order or employment-related law (employer-related 
complaint) and (ii) complaints about Job Service actions or omissions 
under JS regulations (agency-related complaints). These complaint 
procedures are not applicable to UI, WIN or CETA complaints. Complaints 
alleging violations of UI, WIN or CETA regulations should be handled 
within the procedures set forth in the respective regulations.
    (2) A complaint shall be handled to resolution by these regulations 
only if it is made within one year of the alleged occurrence.
    (b) Complaints by veterans alleging employer violations of the 
mandatory listing requirements under 38 U.S.C. 2012 shall not be handled 
under this subpart. The State agency shall handle such complaints under 
the Department's regulations at 41 CFR part 60-250.
    (c) Complaints from MSFWs alleging violations of employment-related 
laws enforced by ESA or OSHA shall be taken in writing by the State 
agency and the ETA regional office and referred to ESA or OSHA pursuant 
to the procedures set forth in Sec. Sec. 658.414 and 658.422. All other 
complaints alleging violations of employment-related Federal, State or 
local laws other than JS regulations by employers, their agents, or DOL 
subagencies other than JS (non-JS related complaints) shall be logged by 
the State agency and the ETA regional office and the complainant shall 
be referred to the appropriate agency pursuant to procedures set forth 
in Sec. Sec. 658.414 and 658.422.
    (d) Certain types of complaints, such as, but not limited to, 
complaints by MSFWs, and complaints alleging unlawful discrimination, 
shall, as set forth in this subpart, be handled by specified officials 
of the State agency or of ETA.

                    State Agency JS Complaint System



Sec. 658.410  Establishment of State agency JS complaint system.

    (a) Each State agency shall establish and maintain a Job Service 
complaint system pursuant to this subpart.
    (b) The State Administrator shall have overall responsibility for 
the operation of the State agency JS complaint system. At the local 
office level, the local office manager shall be responsible for the 
management of the JS complaint system.
    (c) (1) State agencies shall ensure that centralized control 
procedures are established for the handling of complaints and files 
relating to the handling of complaints. The Manager or Administrator of 
the local or State office taking the complaint shall ensure that a 
central complaint log is maintained, listing all complaints received, 
and specifying for each complaint:
    (i) The name of the complainant,
    (ii) The name of the respondent (employer or State agency),
    (iii) The date the complaint is filed,
    (iv) Whether the complaint is by or on behalf of an MSFW,
    (v) Whether the complaint is JS-related,
    (vi) If the complaint is JS-related, whether it is employer-related 
or agency-related,
    (vii) If the complaint is non-JS-related, the information required 
by Sec. 658.414(c), and

[[Page 703]]

    (viii) The action taken, including for JS-related complaints, 
whether the complaint has been resolved.
    (2) Within one month after the end of the calendar quarter during 
which a local office receives an MSFW complaint (JS or non-JS related), 
the local office manager shall transmit a copy of that portion of the 
log containing the information on the MSFW complaint(s) or a separate 
listing of the relevant information from the log for each MSFW complaint 
to the State Administrator. Within two months after the end of each 
calendar quarter the State Administrator shall transmit copies of all 
local and State office complaint logs received for that quarter to the 
Regional Administrator.
    (3) State agencies shall ensure that any action taken by the 
responsible official, including referral, on a JS-related or non-JS 
related complaint from an MSFW alleging a violation of employment 
related laws enforced by ESA or OSHA is fully documented in a file 
containing all relevant information, including a copy of the original 
complaint form, a copy of any JS reports, any related correspondence, a 
list of actions taken, and a record of related telephone calls.
    (4) At the State office level, the State Administrator shall ensure 
that all JS-related complaints referred from local offices, and all 
correspondence relating thereto are logged with a notation of the nature 
of each item.
    (d) State agencies shall ensure that information pertaining to the 
use of the JS complaint system is publicized. This shall include the 
prominent display of an ETA-approved JS complaint system poster in each 
local office, satellite or district office, and at each State agency 
operated day-haul facility.

(Approved by the Office of Management and Budget under control number 
1205-0039)

(Pub. L. No. 96-511, 94 Stat. 2812 (44 U.S.C. 3501 et seq.))

[45 FR 39468, June 10, 1980, as amended at 47 FR 145, Jan. 5, 1982]



Sec. 658.411  Filing and assignment of JS-related complaints.

    (a) JS-related complaints may be filed in any office of the State 
job service agency.
    (b) Assignment of complaints to local office personnel shall be as 
follows:
    (1) All JS-related complaints filed with a local office, and 
alleging unlawful discrimination by race, color, religion, national 
origin, sex, age, or physical or mental status unrelated to job 
performance (handicap) shall be assigned to a local office Equal 
Opportunity (EO) representative if the local office has a trained and 
designated EO representative, or, if the local office does not have such 
a representative, shall be sent immediately to the State agency for 
logging and assignment to the EO representative or, where appropriate, 
handled in accordance with the procedures set forth at 29 CFR part 31. 
The EO representative shall refer complaints alleging discrimination by 
employers to the Equal Employment Opportunity Commission or other 
appropriate enforcement agency. Complaints retained by an EO 
representative shall be subject to the hearing and appeal rights as are 
normally provided in accordance with this subpart. The State agency 
complaint specialist shall follow-up with the EO representative or with 
other responsible enforcement agency monthly regarding MSFW complaints 
and quarterly regarding non-MSFW complaints, and shall inform the 
complainants of the status of the complaint periodically.
    (2) All JS-related and non-JS related complaints other than those 
described in paragraph (b)(1) of this section shall be handled by the 
local office manager or assigned by the local office manager to a local 
office employee trained in JS complaint procedures.
    (c) Assignment of complaints to State office personnel shall be as 
follows:
    (1) The handling of all JS-related complaints received by the State 
office alleging unlawful discrimination by race, color, religion, 
national origin, sex, age, physical or mental status unrelated to job 
performance (handicap) status shall be assigned to a State EO 
representative and, where appropriate,

[[Page 704]]

handled in accordance with procedures set forth at 29 CFR part 31.
    (2) The handling of all other JS-related complaints and all non-JS-
related complaints received by the State office shall be assigned to a 
State agency official designated by the State Administrator, provided 
that the State agency official designated to handle MSFW complaints 
shall be the State MSFW Monitor Advocate.



Sec. 658.412  Complaint resolution.

    (a) A JS-related complaint is resolved when:
    (1) The complainant indicates satisfaction with the outcome, or
    (2) The complainant chooses not to elevate the complaint to the next 
level of review, or
    (3) The complainant or the complainant's authorized representative 
fails to respond within 20 working days or in cases where the 
complainant is an MSFW, 40 working days of a written request by the 
appropriate local or State office, or
    (4) The complainant exhausts the final level of review, or
    (5) A final determination has been made by the enforcement agency to 
which the complaint was referred.



Sec. 658.413  Initial handling of complaints by the State or local 
office.

    (a) There shall be an appropriate official available during regular 
office hours to take complaints in each local office.
    (b) Whenever an individual indicates an interest in making any 
complaint to a State agency office, the appropriate JS official shall 
offer to explain the operation of the JS complaint system. The 
appropriate JS official shall offer to take the complaint in writing if 
it is JS related, or if non-JS related, it alleges violations of 
employment related laws enforced by ESA or OSHA and is filed by or on 
behalf of an MSFW. The official shall require that the complainant put 
the complaint on the JS Complaint/Referral Form prescribed or approved 
by the ETA. The JS Complaint/Referral Form shall be used for all 
complaints taken by a State agency, including complaints about unlawful 
discrimination, except as provided in paragraph (c) of this section. The 
State agency official shall offer to assist the complainant in filling 
out the form and shall do so if the complainant desires such assistance. 
If the complainant also represents several other complainants, all such 
complainants shall be named on the JS Complaint/Referral Form. The 
complainant shall sign the completed form. The identity of the 
complainant(s) and any persons who furnish information relating to, or 
assisting in, an investigation of a complaint shall be kept confidential 
to the maximum extent possible, consistent with applicable law and a 
fair determination of the complaint. A copy of the completed JS 
Complaint/Referral Form shall be given to the complainant(s), and the 
complaint form shall be given to the appropriate JS official.
    (c) If a JS official receives a complaint in any form (e.g., a 
letter) which is signed by the complainant and includes sufficient 
information for the JS official to initiate an investigation, the 
document shall be treated as if it were a properly completed JS 
Complaint/Referral Form filed in person by the complainant. The JS 
official shall send a confirming letter to this effect to the 
complainant and shall give the document to the appropriate JS official. 
If the complainant has not provided sufficient information to 
investigate the matter expeditiously, the JS official shall request 
additional information from the complainant.
    (d) If the appropriate JS official determines that the complaint is 
not JS-related, the official shall follow the procedures set forth in 
Sec. 658.414.
    (e) If the appropriate JS official determines that the complaint is 
JS-related, the official shall ensure that the complaint is handled in 
accordance with this subpart E.
    (f) During the initial discussion with the complainant, the JS 
official receiving the complaint shall:
    (1) Make every effort to obtain all the information he/she perceives 
to be necessary to investigate the complaint;
    (2) Request that the complainant indicate all of the addresses 
through which he or she might be contacted during the investigation of 
the complaint;
    (3) Request that the complainant contact the JS before leaving the 
area

[[Page 705]]

if possible, and explain the need to maintain contact during the 
complaint investigation.

(Approved by the Office of Management and Budget under control number 
1205-0039)

(Pub. L. No. 96-511, 94 Stat. 2812 (44 U.S.C. 3501 et seq.))

[45 FR 39468, June 10, 1980, as amended at 47 FR 145, Jan. 5, 1982]



Sec. 658.414  Referral of non-JS-related complaints.

    (a) To facilitate the operation of the coordinated enforcement 
procedures established at 29 CFR part 42, the State agency shall take 
from MSFWs in writing non-JS related complaints which allege violations 
of employment related laws enforced by ESA or OSHA. The official shall 
immediately refer the complaint to ESA or OSHA for prompt action. The JS 
official shall inform the MSFW of the enforcement agency (and the 
individual if known) to which the complaint will be referred and refer 
the complainant to other agencies, attorney, consumer advocate and/or 
other assistance where appropriate.
    (b) Upon receipt of all other non-JS related complaints, the JS 
official shall refer the complainant to the appropriate enforcement 
agency, another public agency, an attorney, a consumer advocate and/or 
other appropriate assistance.
    (c) For all non-JS-related complaints received pursuant to 
paragraphs (a) and (b) of this section, the appropriate JS official 
shall record the referral of the complainant and the complaint where 
paragraph (a) is applicable, and the agency or agencies (and 
individual(s), if known) to which the complainant and the complaint 
where paragraph (a) is applicable, were referred on the complaint log 
specified in Sec. 658.410(c)(1). The JS official shall also prepare and 
keep the file specified in Sec. 658.410(c)(3) for the complaints filed 
pursuant to paragraph (a) of this section.



Sec. 658.415  Transferring complaints to proper JS office.

    (a) Where a JS-related complaint deals with an employer, the proper 
office to handle the complaint initially is ordinarily the local office 
serving the area in which the employer is located. Where a JS-related 
complaint deals with an office of a State agency, the proper office to 
handle the complaint initially is the local office serving the area in 
which the alleged violation of the JS regulations occurred. Where an 
agency-related complaint deals with more than one office of a State 
agency, with an alleged agency-wide violation, or with the State office, 
the appropriate State agency official may direct that the State office 
of that agency handle the complaint initially.
    (b) The State Administrator shall establish a system whereby the 
office in which an JS-related complaint is filed, alleging a violation 
in that same State, ensures that the JS Complaint/Referral Form is 
adequately completed and then sent to the proper State or local office 
of that agency. A copy of the referral letter shall be sent to the 
complainant.
    (c) Whenever a JS-related complaint deals with an employer in 
another State or another State agency, the State JS agency shall send, 
after ensuring that the JS Complaint/Referral Form is adequately 
completed, a copy of the JS Complaint/Referral Form and copies of any 
relevant documents to the State agency in the other State. Copies of the 
referral letter shall be sent to the complainant, and copies of the 
complaint and referral letter shall be sent to the ETA Regional 
Office(s) with jurisdiction over the transferring and receiving State 
agencies.
    (d) The State agency receiving the complaint after an interstate 
transferral under paragraph (c) of this section shall handle the 
complaint as if it had been initially filed with that office.
    (e) The ETA regional office with jurisdiction over the receiving 
State shall follow-up with the receiving State agency to ensure the 
complaint is handled in accordance with these regulations.
    (f) If the JS complaint is against more than one State JS agency, 
the complaint shall so clearly state. The complaint shall be handled as 
separate complaints and shall be handled according to procedures at 
Sec. 658.416(c) and paragraph (c) of this section.

[[Page 706]]



Sec. 658.416  Action on JS-related complaints.

    (a) The appropriate State agency official handling an JS-related 
complaint shall offer to assist the complainant through the provision of 
appropriate JS services. For complaints against employers, this may 
include such services as referring a worker-complainant to another job.
    (b) (1) If the JS-related complaint concerns violations of an 
employment-related law, the local or State office official shall refer 
the complaint to the appropriate enforcement agency and notify the 
complainant in writing of the referral. The agency shall follow-up with 
the enforcement agency monthly regarding MSFW complaints and quarterly 
regarding non-MSFW complaints, and shall inform the complainant of the 
status of the complaint periodically.
    (2) If the enforcement agency makes a final determination that the 
employer violated an employment related law, the State JS agency shall 
initiate procedures for discontinuation of services immediately in 
accordance with subpart F. The State agency shall notify the complainant 
and the employer of this action.
    (c) If the complaint is filed initially in a local office, and is 
not referred under paragraph (b), the appropriate local office official 
shall investigate and attempt to resolve the complaint immediately upon 
receipt. If resolution has not been achieved to the satisfaction of the 
complainant within 15 working days after receipt of the complaint, or 5 
working days with respect to complaints filed by or on behalf of MSFWs, 
the local office official shall send the complaint to the State office 
for resolution or further action except that if the local office has 
made a written request for information pursuant to Sec. 658.412(a)(3), 
these time periods shall not apply until the complainant's response is 
received in accordance with Sec. 658.412(a)(3). The local office shall 
notify the complainant and the respondent, in writing, of the results of 
its investigation pursuant to this paragraph, and of the referral to the 
State office.
    (d) If the complaint is filed initially with the State office, and 
is not transferred to a local office under Sec. 658.415(a), or not 
referred to an enforcement agency under paragraph (b) of this section, 
the appropriate State office official shall investigate and attempt to 
resolve the complaint immediately upon receipt. If the State office 
receives the complaint on referral from a local office, the State 
official shall attempt to resolve the complaint immediately and may, if 
necessary, conduct a further investigation. If resolution at the State 
office level has not been accomplished within 30 working days (20 
working days with respect to complaints by MSFWs) after the complaint 
was received by the State office (whether the complaint was received 
directly or from a local office pursuant to paragraph (c) of this 
section), the State office shall make a written determination regarding 
the complaint and shall send copies to the complainant and the 
respondent except that if the State office has made a written request 
for information pursuant to Sec. 658.412 (a)(3) these time periods 
shall not apply until the complainant's response is received in 
accordance with Sec. 658.412(a)(3). The determination must be sent by 
certified mail. The determination shall include all of the following:
    (1) The results of any State office investigation pursuant to this 
paragraph.
    (2) Conclusions reached on the allegations of the complaint.
    (3) An explanation of why the complaint was not resolved.
    (4) If the complaint is against an employer, and the State office 
has found that the employer has violated JS regulations, the 
determination shall state that the State will initiate procedures for 
discontinuation of services to the employer in accordance with subpart 
F.
    (5) If the complaint is against an employer and has not been 
referred to an enforcement agency pursuant to paragraph (b)(1) of this 
section, and the State office has found that the employer has not 
violated JS regulations, an offer to the complainant of the opportunity 
to request a hearing within 20 working days after the certified date of 
receipt of the notification.
    (6) If the complaint is against the State agency, an offer to the 
complainant of the opportunity to request in

[[Page 707]]

writing a hearing within 20 working days after the certified date of 
receipt of the notification.
    (e) If the State office, within 20 working days from the certified 
date of receipt of the notification provided for in paragraph (d) of 
this section, receives a written request for a hearing in response 
thereto, the State office shall refer the complaint to a State hearing 
official for hearing. The parties to whom the determination was sent 
(the State agency may also be a party) shall then be notified in writing 
by the State office that:
    (1) The parties will be notified of the date, time and place of the 
hearing;
    (2) The parties may be represented at the hearing by an attorney or 
other representative;
    (3) The parties may bring witnesses and/or documentary evidence to 
the hearing;
    (4) The parties may cross-examine opposing witnesses at the hearing;
    (5) The decision on the complaint will be based on the evidence 
presented at the hearing;
    (6) The State hearing official may reschedule the hearing at the 
request of a party or its representative; and
    (7) With the consent of the State agency's representative and of the 
State hearing official, the party who requested the hearing may withdraw 
the request for hearing in writing before the hearing.



Sec. 658.417  Hearings.

    (a) Hearings shall be held by State hearing officials. A State 
hearing official may be any State official authorized to hold hearings 
under State law. They may be, for example, the same referees who hold 
hearings under the State unemployment compensation law and/or the Work 
Incentive Program or any official of the State agency, authorized by 
State law to preside at State administrative hearings.
    (b) The State hearing official may decide to conduct hearings on 
more than one complaint concurrently if he/she determines that the 
issues are related or that the complaints will be handled more 
expeditiously in this fashion.
    (c) The State hearing official, upon the referral of a case for a 
hearing, shall:
    (1) Notify all involved parties of the date, time and place of the 
hearing; and
    (2) Re-schedule the hearing, as appropriate.
    (d) In conducting a hearing the State hearing official shall:
    (1) Regulate the course of the hearing;
    (2) Issue subpoenas, if empowered to do so under State law, if 
necessary;
    (3) Assure that all relevant issues are considered;
    (4) Rule on the introduction of evidence and testimony; and
    (5) Take any other action which is necessary to insure an orderly 
hearing.
    (e) The testimony at the hearing shall be recorded and may be 
transcribed when appropriate.
    (f) The parties shall be afforded the opportunity to present, 
examine, and cross-examine witnesses.
    (g) The State hearing official may elicit testimony from witnesses, 
but shall not act as advocate for any party.
    (h) The State hearing official shall receive and include in the 
record, documentary evidence offered by any party and accepted at the 
hearing. Copies thereof shall be made available by the party submitting 
the document to other parties to the hearing upon request.
    (i) Technical rules of evidence shall not apply to hearings 
conducted pursuant to this section, but rules or principles designed to 
assure production of the most credible evidence available and to subject 
testimony to test by cross-examination, shall be applied where 
reasonably necessary by the State hearing official. The State hearing 
official may exclude irrelevant, immaterial, or unduly repetitious 
evidence.
    (j) The case record, or any portion thereof, shall be available for 
inspection and copying by any party at, prior to, or subsequent to the 
hearing upon request. Special procedures may be used for disclosure of 
medical and psychological records such as disclosure to a physician 
designated by the individual.
    (k) The State hearing official shall, if feasible, resolve the 
dispute by conciliation at any time prior to the conclusion of the 
hearing.

[[Page 708]]

    (l) At the State hearing official's discretion, other appropriate 
individuals, organizations, or associations may be permitted to 
participate in the hearing as amicus curiae (friends of the court) with 
respect to specific legal or factual issues relevant to the complaint. 
Any documents submitted by the amicus curiae shall be included in the 
record.
    (m) The following standards shall apply to the location of hearings 
involving parties in more than one State or in locations within a State 
but which are separated geographically so that access to the hearing 
location is extremely inconvenient for one or more parties as determined 
by the State hearing official.
    (1) Whenever possible, the State hearing official shall hold a 
single hearing, at a location convenient to all parties or their 
representatives wishing to appear and present evidence, and with all 
such parties and/or their representatives present.
    (2) If a hearing location cannot be established by the State hearing 
official pursuant to paragraph (m)(1) of this section, the State hearing 
official may conduct, with the consent of the parties, the hearing by a 
telephone conference call from a State agency office with all parties 
and their representatives not choosing to be present at that location 
permitted to participate in the hearing from their distant locations.
    (3) Where the State agency does not have the facilities to conduct 
hearings by telephone pursuant to paragraph (m)(1) or (m)(2) of this 
section, the State agencies in the States where the parties are located 
shall take evidence and hold the hearing in the same manner as used for 
appealed interstate unemployment claims in those States, to the extent 
that such procedures are consistent with Sec. 658.416.



Sec. 658.418  Decision of the State hearing official.

    (a) The State hearing official may:
    (1) Rule that the case is improperly before it, that is, that there 
is a lack of jurisdiction over the case;
    (2) Rule that the complaint has been withdrawn properly and in 
writing;
    (3) Rule that reasonable cause exists to believe that the request 
has been abandoned or that repeated requests for re-scheduling are 
arbitrary and for the purpose of unduly delaying or avoiding a hearing;
    (4) Render such other rulings as are appropriate to the issues in 
question. However, the State hearing official shall not have 
jurisdiction to consider the validity or constitutionality of JS 
regulations or of the Federal statutes under which they are promulgated.
    (b) Based on the entire record, including the investigations and 
determinations of the local and State offices and any evidence provided 
at the hearing, the Sate hearing official shall prepare a written 
decision. The State hearing official shall send a copy of the decision 
stating the findings and conclusions of law and fact and the reasons 
therefor to the complainant, the respondent, entities serving as amicus 
capacity (if any), the State office, the Regional Administrator, and the 
Solicitor of Labor, Attn: Associate Solicitor for Employment and 
Training Legal Services, Department of Labor, room N2101, 200 
Constitution Avenue, NW., Washington, DC, 20210. The notification to the 
complainant and respondent must be sent certified mail.
    (c) All decisions of a State hearing official shall be accompanied 
by a written notice informing the parties (not including the Regional 
Administrator, the Solicitor of Labor, or entities serving in an amicus 
capacity) that, if they are not satisfied, they may, within 20 working 
days of the certified date of receipt of the decision, file an appeal in 
writing with the Regional Administrator. The notice shall give the 
address of the Regional Administrator.

                       Federal JS Complaint System



Sec. 658.420  Establishment of JS complaint system at the ETA regional 
office.

    (a) Each Regional Administrator shall establish and maintain a JS 
complaint system at the DOL regional office level.
    (b) The Regional Administrator shall designate DOL officials to 
handle JS-related complaints as follows:
    (1) The handling of all JS-related complaints alleging 
discrimination by race, color, religion, national origin, sex, age, or 
physical or mental status

[[Page 709]]

unrelated to job performance (handicap), shall be assigned to a Regional 
Director for Equal Opportunity and Special Review (RDEOSR) and, where 
appropriate, handled in accordance with procedures at 29 CFR part 31.
    (2) The handling of all JS-related complaints other than those 
described in paragraphs (b)(1) of this section, shall be assigned to a 
regional office official designated by the Regional Administrator, 
provided that the regional office official designated to handle MSFW 
complaints shall be the Regional MSFW Monitor Advocate.
    (c) The Regional Administrator shall designate DOL officials to 
handle non-JS-related complaints in accordance with Sec. 658.422: 
Provided, That the regional official designated to handle MSFW non-JS-
related complaints shall be the Regional MSFW Monitor Advocate.
    (d) The Regional Administrator shall assure that all JS-related 
complaints and all correspondence relating thereto are logged, with a 
notation of the nature of each item.



Sec. 658.421  Handling of JS-related complaints.

    (a) No JS-related complaint shall be handled at the ETA regional 
office level until the complainant has exhausted the State agency 
administrative remedies set forth at Sec. Sec. 658.410 through 658.418. 
Therefore, if the Regional Administrator determines that any 
complainant, who has filed a JS-related complaint with the regional 
office, has not yet exhausted the administrative remedies at the State 
agency level, the Regional Administrator shall inform the complainant 
within 10 working days in writing that the complainant must first 
exhaust those remedies before the complaint may be filed in the regional 
office. A copy of this letter shall be sent to the State Administrator. 
However, nothing in this provision shall prevent an ETA regional office 
from accepting and handling to resolution a JS-related complaint 
pursuant to Sec. 658.423 or Sec. 658.702(c).
    (b) The ETA regional office shall be responsible for handling 
appeals of determinations made on complaints at the State level. An 
``appeal'' shall include any letter or other writing requesting review 
if it is received by the regional office and signed by a party to the 
complaint. Upon receipt of an appeal by the Regional Administrator after 
the exhaustion of State agency administrative remedies, the Regional 
Administrator immediately shall send for the complete State agency file, 
including the original JS Complaint/Referral Form.
    (c) The Regional Administrator shall review the file in the case and 
shall determine within ten (10) days whether any further investigation 
or action is appropriate, provided however that the Regional 
Administrator shall have twenty (20) working days to make this 
determination if legal advice is necessary.
    (d) If the Regional Administrator determines that no further action 
is warranted, the Regional Administrator shall send this determination 
in writing by certified mail to the appellant within five (5) days of 
his/her determination and may, in the Regional Administrator's 
discretion, offer the appellant a hearing before a DOL Administrative 
Law Judge, provided the appellant requests such a hearing in writing 
from the Regional Administrator within 20 working days of the certified 
date of receipt of the Regional Administrator's offer of hearing.
    (e) If the Regional Administrator determines that further 
investigation or other action is warranted, the Regional Administrator 
immediately shall undertake such an investigation, informal resolution 
or other action.
    (f) If the Regional Administrator determines to reverse or modify 
the decision of the State hearing official or the State Administrator, 
the Regional Administrator shall offer in writing by certified mail each 
party to the State hearing official's hearing or to whom the State 
office determination was sent, the opportunity for a hearing before a 
DOL Administrative Law Judge, provided the party requests such a hearing 
in writing within 20 working days of the certified date of the Regional 
Administrator's offer of hearing.
    (g) If the Regional Administrator finds reason to believe that a 
State agency or one of its local offices has violated JS regulations, 
the Regional

[[Page 710]]

Administrator shall follow the procedures set forth at subpart H of this 
part.
    (h) If the appeal is not resolved, pursuant to paragraph (e) of this 
section, to the appellant's satisfaction, the Regional Administrator 
may, in the Regional Administrator's discretion, offer the appellant in 
writing by certified mail a hearing before a DOL Administrative Law 
Judge provided the appellant requests such a hearing in writing from the 
Regional Administrator within 20 working days of the certified date of 
receipt of the Regional Administrator's offer of hearing.



Sec. 658.422  Handling of non-JS-related complaints by the Regional 
Administrator.

    (a) Each non-JS-related complaint filed by an MSFW alleging 
violations of employment related laws enforced by ESA or OSHA shall be 
taken in writing, and referrred to ESA or OSHA for prompt action 
pursuant to 29 CFR part 42.
    (b) Upon referring the complaint in accordance with paragraph (a) of 
this section, the regional official shall inform the complainant of the 
enforcement agency (and individual, if known) to which the complaint was 
referred and shall also refer the complainant to the enforcement agency, 
another public agency, an attorney, a consumer advocate and/or other 
appropriate assistance.
    (c) All other non-JS-related complaints alleging violations of 
employment related laws shall be logged. The complainant shall be 
referred to the appropriate agency for assistance.
    (d) For all non-JS-related complaints received and/or referred, the 
appropriate regional official shall record the referral of the 
complainant (or complaint filed on behalf of an MSFW), and the agency or 
agencies (and individual(s) if known) to which the complainant (or 
complaint) was referred on a complaint log, similar to the one described 
in Sec. 658.410(c)(1). The appropriate regional official shall also 
prepare and keep the file specified in Sec. 658.410(c)(3).



Sec. 658.423  Handling of other complaints by the Regional Administrator.

    Whenever the regional office receives a JS-related complaint and the 
appropriate official determines that the nature and scope of the 
complaint are such that the time required to exhaust the administrative 
procedures at the State level would adversely affect a significant 
number of applicants, he/she shall take the complaint and follow up on 
the complaint as follows: for a complaint against an employer, the 
regional office shall handle the complaint in a manner consistent with 
the requirements imposed upon State agencies by Sec. Sec. 658.413 and 
658.416 of this part. A hearing shall be offered to the parties once the 
Regional Administrator makes a determination on the complaint. For a 
complaint against a State agency, the regional office shall follow 
procedures established at Sec. 658.702(c).



Sec. 658.424  Federal hearings.

    (a) If a party requests a hearing pursuant to Sec. 658.421 (d), 
(f), or (h) or Sec. 658.423, the Regional Administrator shall:
    (1) Send the party requesting the hearing and all other parties to 
the prior State agency hearing, a written notice containing the 
statements set forth at Sec. 658.416(e);
    (2) Compile four hearing files containing copies of all documents 
relevant to the case, indexed and compiled chronologically;
    (3) Send simultaneously one hearing file to the DOL Chief 
Administrative Law Judge, 800 K Street, NW., suite 400, Washington, DC 
20001-8002, one hearing file to the Administrator, and one hearing file 
to the Solicitor of Labor, Attn: Associate Solicitor for Employment and 
Training Legal Services, and retain one hearing file.
    (b) Upon the receipt of a hearing file, the DOL Administrative Law 
Judge designated by the Chief Administrative Law Judge shall notify the 
party requesting the hearing, all parties to the prior State hearing 
official hearing (if any), the State agency, the Regional Administrator, 
the Administrator, and the Solicitor of the receipt of the case. The DOL 
Administrative Law Judge shall afford the non-Federal parties 20

[[Page 711]]

working days to submit legal arguments and supporting documentation, if 
any, in the case. The DOL Administrative Law Judge shall afford the 
Solicitor 20 working days to submit legal arguments and supporting 
documentation, if any, in the case on behalf of the Federal parties. 
After the 20 working days elapse, the Hearing Officer shall decide 
whether to schedule a hearing, or make a determination on the record.
    (c) The DOL Administrative Law Judge may decide to conduct hearings 
on more than one complaint concurrently if he/she determines that the 
issues are related or that the complaints will be handled more 
expeditiously in this fashion.
    (d) At the DOL Administrative Law Judge's discretion, other 
appropriate individuals, organizations, or associations may be permitted 
to participate in the hearing as amicus curiae with respect to specific 
legal or factual issues relevant to the complaint. Any documents 
submitted by the amicus curiae shall be included in the record.
    (e) The following standards shall apply to the location of hearings 
involving parties in more than one State or in locations which are 
within a State but which are separated geographically so that access to 
the hearing location is extremely inconvenient for one or more parties 
as determined by the Administrative Law Judge.
    (1) Whenever possible, the Administrative Law Judge shall hold a 
single hearing, at a location convenient to all parties or their 
representatives wishing to appear and present evidence, and with all 
such parties and/or their representatives present.
    (2) If a hearing location cannot be established by the 
Administrative Law Judge at a location pursuant to paragraph (e)(1) of 
this section, the Administrative Law Judge may conduct, with the consent 
of the parties, the hearing by a telephone conference call from an 
office with all parties and their representatives not choosing to be 
present at that location permitted to participate in the hearing from 
their distant locations.
    (3) Where the Administrative Law Judge is unable to locate 
facilities to conduct hearings by telephone pursuant to paragraph (e)(1) 
or (e)(2) of this section, the Administrative Law Judge shall take 
evidence in the States where the parties are located and hold the 
hearing in the same manner as used for appealed interstate unemployment 
claims in those States, to the extent that such procedures are 
consistent with Sec. 658.416.
    (f) The DOL Administrative Law Judge shall:
    (1) Notify all involved parties of the date, time and place of the 
hearing; and
    (2) Re-schedule the hearing, as appropriate.
    (g) In conducting a hearing the DOL Administrative Law Judge shall:
    (1) Regulate the course of the hearing;
    (2) Issue subpoenas if necessary;
    (3) Consider all relevant issues which are raised;
    (4) Rule on the introduction of evidence and testimony;
    (5) Take any other action which is necessary to insure an orderly 
hearing.
    (h) The testimony at the hearing shall be recorded, and shall be 
transcribed if appropriate.
    (i) The parties to the hearing shall be afforded the opportunity to 
present, examine, and cross-examine witnesses. The DOL Administrative 
Law Judge may elicit testimony from witnesses, but shall not act as 
advocate for any party.
    (j) The DOL Administrative Law Judge shall receive, and make part of 
the record, documentary evidence offered by any party and accepted at 
the hearing. Copies thereof shall be made available by the party 
submitting the documentary evidence, to any part to the hearing upon 
request.
    (k) Technical rules of evidence shall not apply to hearings 
conducted pursuant to this part, but rules or principles designed to 
assure production of the most credible evidence available and to subject 
testimony to test by cross-examination shall be applied where reasonably 
necessary by the Administrative Law Judge conducting the hearing. The 
Administrative Law Judge may exclude irrelevant, immaterial, or unduly 
repetitious evidence.
    (l) The case record, or any portion thereof, shall be available for 
inspection and copying by any party to the

[[Page 712]]

hearing at, prior to, or subsequent to the hearing upon request. Special 
procedures may be used for disclosure of medical and psychological 
records such as disclosure to a physician designated by the individual 
concerned.
    (m) The DOL Administrative Law Judge shall, if feasible, encourage 
resolution of the dispute by conciliation at any time prior to the 
conclusion of the hearing.

[45 FR 39468, June 10, 1980, as amended at 56 FR 54708, Oct. 22, 1991]



Sec. 658.425  Decision of DOL Administrative Law Judge.

    (a) The DOL Administrative Law Judge may:
    (1) Rule that there is a lack of jurisdiction over the case;
    (2) Rule that the appeal has been withdrawn properly and in writing, 
with the written consent of all the parties;
    (3) Rule that reasonable cause exists to believe that the appeal has 
been abandoned or that repeated requests for re-scheduling are arbitrary 
and for the purpose of unduly delaying or avoiding a hearing; or
    (4) Render such other rulings as are appropriate to the issues in 
question. However, the DOL Administrative Law Judge shall not have 
jursidiction to consider the validity or constitutionality of JS 
regulations or of the Federal statutes under which they are promulgated.
    (b) Based on the entire record, including any legal briefs, the 
record before the State agency, the investigation (if any) and 
determination of the Regional Administrator, and evidence provided at 
the hearing, the DOL Administrative Law Judge shall prepare a written 
decision. The DOL Administrative Law Judge shall send a copy of the 
decision stating the findings and conclusions of law and fact and the 
reasons therefor to the parties to the hearing, including the State 
agency, the Regional Administrator, the Administrator, and the 
Solicitor, and to entities filing amicus briefs (if any).
    (c) The decision of the DOL Administrative Law Judge shall be the 
final decision of the Secretary.



Sec. 658.426  Complaints against USES.

    Complaints alleging that an ETA regional office or the national 
office of USES has violated JS regulations should be mailed to the 
Assistant Secretary for Employment and Training, U.S. Department of 
Labor, Washington, DC 20210. Such complaints should include:
    (a) The allegations of wrong-doing, (b) the date of the incident, 
(c) location of the incident, (d) who the complaint is against, and (e) 
any other relevant information available to the complainant. The 
Assistant Secretary or the Regional Administrator as designated shall 
make a determination and respond to the complainant after investigation 
of the complaint.



 Subpart F_Discontinuation of Services to Employers by the Job Service 
                                 System



Sec. 658.500  Scope and purpose of subpart.

    This subpart contains the regulations governing the discontinuation 
of services provided pursuant to 20 CFR part 653 to employers by the 
USES, including State agencies.



Sec. 658.501  Basis for discontinuation of services.

    (a) The State agency shall initiate procedures for discontinuation 
of services to employers who:
    (1) Submit and refuse to alter or withdraw job orders containing 
specifications which are contrary to employment-related laws;
    (2) Submit job orders and refuse to provide assurances, in 
accordance with paragraph (d) above, that the jobs offered are in 
compliance with employment-related laws, or to withdraw such job orders;
    (3) Are found through field checks or otherwise to have either 
misrepresented the terms or conditions of employment specified on job 
orders or failed to comply fully with assurances made on job orders;
    (4) Are found by a final determination by an appropriate enforcement 
agency to have violated any employment-related laws and notification of

[[Page 713]]

this final determination has been provided to the JS by that enforcement 
agency;
    (5) Are found to have violated JS regulations pursuant to Sec. 
658.416(d)(4);
    (6) Refuse to accept qualified workers referred through the 
clearance system;
    (7) Refuse to cooperate in the conduct of field checks conducted 
pursuant to Sec. 653.503; or
    (8) Repeatedly cause the initiation of the procedures for 
discontinuation of services pursuant to paragraphs (a)(1) through (6) of 
this section.
    (b) The State agency may discontinue services immediately if, in the 
judgment of the State Administrator, exhaustion of the administrative 
procedures set forth in this subpart at Sec. Sec. 658.501 through 
658.502 would cause substantial harm to a significant number of workers. 
In such instances, procedures at Sec. 658.503 (b) et seq. shall be 
followed.
    (c) For employers who are alleged to have not complied with the 
terms of the temporary labor certification, State agencies shall notify 
the Regional Adminstrator of the alleged non-compliance for 
investigation and pursuant to Sec. 655.210 consideration of 
ineligibility for subsequent temporary labor certification.



Sec. 658.502  Notification to employers.

    (a) The State agency shall notify the employer in writing that it 
intends to discontinue the provision of JS services pursuant to 20 CFR 
part 653 and the reason therefore:
    (1) Where the decision is based on submittal and refusal to alter or 
to withdraw job orders containing specifications contrary to employment-
related laws, the State agency shall specify the date the order was 
submitted, the job order involved, the specifications contrary to 
employment-related laws and the laws involved. The employer shall be 
notified in writing that all JS services will be terminated in 20 
working days unless the employer within that time:
    (i) Provides adequate evidence that the specifications are not 
contrary to employment-related laws, or
    (ii) Withdraws the specifications and resubmits the job order in 
compliance with all employment-related laws, or
    (iii) If the job is no longer available makes assurances that all 
future job orders submitted will be in compliance with all employment-
related laws, or
    (iv) Requests a hearing from the State agency pursuant to Sec. 
658.417.
    (2) Where the decision is based on the employer's submittal of an 
order and refusal to provide assurances that the job is in compliance 
with employment-related laws or to withdraw the order, the State agency 
shall specify the date the order was submitted, the job order involved 
and the assurances involved. The employer shall be notified that all JS 
services will be terminated within 20 working days unless the employer 
within that time:
    (i) Resubmits the order with the appropriate assurances,
    (ii) If the job is no longer available, make assurances that all 
future job orders submitted will contain all necessary assurances that 
the job offered is in compliance with employment-related laws, or
    (iii) Requests a hearing from the State agency pursuant to Sec. 
658.417.
    (3) Where the decision is based on a finding that the employer has 
misrepresented the terms or conditions of employment specified on job 
orders or failed to comply fully with assurances made on job orders, the 
State agency shall specify the basis for that determination. The 
employer shall be notified that all JS services will be terminated in 20 
working days unless the employer within that time:
    (i) Provides adequate evidence that terms and conditions of 
employment were not misrepresented, or
    (ii) Provides adequate evidence that there was full compliance with 
the assurances made on the job orders, or
    (iii) Provides resolution of a complaint which is satisfactory to a 
complainant referred by the JS, and
    (iv) Provides adequate assurance that specifications on future 
orders will accurately represent the terms and conditions of employment 
and that there will be full compliance with all job order assurances, or
    (v) Requests a hearing from the State agency pursuant to Sec. 
658.417.
    (4) Where the decision is based on a final determination by an 
enforcement agency that the employer-related laws,

[[Page 714]]

the State agency shall specify the determination. The employer shall be 
notified that all JS services will be terminated in 20 working days 
unless the employer within that time:
    (i) Provides adequate evidence that the enforcement agency has 
reversed its ruling and that the employer did not violate employment-
related laws, or
    (ii) Provides adequate evidence that the appropriate fines have been 
paid and/or appropriate restitution has been made, and
    (iii) Provides assurances that any policies, procedures, or 
conditions responsible for the violation have been corrected and the 
same or similar violations are not likely to occur in the future.
    (5) Where the decision is based on a finding of a violation of JS 
regulations under Sec. 658.416(d)(4), the State agency shall specify 
the finding. The employer shall be notified that all JS services will be 
terminated in 20 working days unless the employer within that time:
    (i) Provides adequate evidence that the employer did not violate JS 
regulations, or
    (ii) Provides adequate evidence that appropriate restitution has 
been made or remedial action taken, and
    (iii) Provides assurances that any policies, procedures, or 
conditions responsible for the violation have been corrected and the 
same or similar violations are not likely to occur in the future, or
    (iv) Requests a hearing from the State agency pursuant to Sec. 
658.417.
    (6) Where the decision is based on an employer's failure to accept 
qualified workers referred through the clearance system, the State 
agency shall specify the workers referred and not accepted. The employer 
shall be notified that all JS services will be terminated in 20 working 
days unless the employer within that time:
    (i) Provides adequate evidence that the workers were accepted, or
    (ii) Provides adequate evidence that the workers were not available 
to accept the job, or
    (iii) Provides adequate evidence that the workers were not 
qualified, and
    (iv) Provides adequate assurances that qualified workers referred in 
the future will be accepted; or
    (v) Requests a hearing from the State agency pursuant to Sec. 
658.417.
    (7) Where the decision is based on lack of cooperation in the 
conduct of field checks, the State agency shall specify the lack of 
cooperation, the employer shall be notified that all JS services will be 
terminated in 20 working days unless the employer within that time:
    (i) Provides adequate evidence that he did cooperate, or
    (ii) Cooperates immediately in the conduct of field checks, and
    (iii) Provides assurances that he/she will cooperate in future field 
checks in further activity, or
    (iv) Requests a hearing from the State agency pursuant to Sec. 
658.417.
    (b) If the employer chooses to respond pursuant to this section by 
providing documentary evidence or assurances, he/she must at the same 
time request a hearing if such hearing is desired in the event that the 
State agency does not accept the documentary evidence or assurances as 
adequate.
    (c) Where the decision is based on repeated initiation of procedures 
for discontinuation of services, the employer shall be notified that 
services have been terminated.
    (d) If the employer makes a timely request for a hearing, in 
accordance with this section, the State agency shall follow procedures 
set forth at Sec. 658.417 and notify the complainant whenever the 
discontinuation of services is based on a complaint pursuant to Sec. 
658.501(a)(5).



Sec. 658.503  Discontinuation of services.

    (a) If the employer does not provide a satisfactory response in 
accordance with Sec. 658.502, within 20 working days, or has not 
requested a hearing, the State agency shall immediately terminate 
services to the employer.
    (b) If services are discontinued to an employer subject to Federal 
Contractor Job Listing Requirements, the State agency shall notify the 
ETA regional office immediately.

[[Page 715]]



Sec. 658.504  Reinstatement of services.

    (a) Services may be reinstated to an employer after discontinuation 
under Sec. 658.503, if:
    (1) The State is ordered to do so by a Federal Administrative Law 
Judge or Regional Administrator, or
    (2) (i) The employer provides adequate evidence that any policies, 
procedures or conditions responsible for the previous discontinuation of 
services have been corrected and that the same or similar difficulties 
are not likely to occur in the future, and
    (ii) The employer provides adequate evidence that the employer has 
responded adequately to any findings of an enforcement agency, State JS 
agency, or USES, including restitution to the complainant and the 
payment of any fines, which were the basis of the discontinuation of 
services.
    (b) The State agency shall notify, within 20 working days, the 
employer requesting reinstatement whether his request has been granted. 
If the State denies the request for reinstatement, the basis for the 
denial shall be specified and the employer shall be notified that he/she 
may request a hearing within 20 working days.
    (c) If the employer makes a timely request for a hearing, the State 
agency shall follow the procedures set forth at Sec. 658.417.
    (d) The State agency shall reinstate services to an employer if 
ordered to do so by a State hearing officer, Regional Administrator, or 
Federal Administrative Law Judge as a result of a hearing offered 
pursuant to paragraph (c) of this section.



  Subpart G_Review and Assessment of State Agency Compliance With Job 
                           Service Regulations

    Authority: Wagner-Peyser Act of 1933, as amended, 29 U.S.C. 49 et 
seq. 5 U.S.C. 301 et seq.



Sec. 658.600  Scope and purpose of subpart.

    This subpart sets forth the regulations governing review and 
assessment of State agency compliance with the Job Service regulations 
at 20 CFR parts 601, 602, 603, 604, 620, 621, 651-658 and 29 CFR part 8. 
All recordkeeping and reporting requirements contained in parts 653 and 
658 have been approved by the Office of Management and Budget as 
required by the Federal Reports Act of 1942.



Sec. 658.601  State agency responsibility.

    (a) Each State agency shall establish and maintain a self-appraisal 
system for job service operations to determine success in reaching goals 
and to correct deficiencies in performance. The self-appraisal system 
shall include numerical (quantitative) appraisal and non-numerical 
(qualitative) appraisal.
    (1) Numerical appraisal at the local office level shall be conducted 
as follows:
    (i) Performance shall be measured on a quarterly-basis against 
planned service levels as stated in the State Program and Budget Plan 
(PBP). The State plan shall be consistent with numerical goals contained 
in local office plans.
    (ii) To appraise numerical activities/indicators, actual results as 
shown on the Employment Security Automated Reporting System (ESARS) 
tables and Cost Accounting Reports shall be compared to planned levels. 
Variances between achievement and plan shall be identified.
    (iii) When the numerical appraisal of required activities/indicators 
identifies significant variances from planned levels, additional 
analysis shall be conducted to isolate possible contributing factors. 
This data analysis shall include, as appropriate, comparisons to past 
performance, attainment of PBP goals and consideration of pertinent non-
numerical factors.
    (iv) Results of local office numerical reviews shall be documented 
and significant deficiencies identified. A corrective action plan as 
described in paragraph (a)(6) shall be developed to address these 
deficiencies.
    (v) The result of local office appraisal, including corrective 
action plans, shall be communicated in writing to the next higher level 
of authority for review. This review shall cover adequacy of analysis, 
appropriateness of corrective actions, and need for

[[Page 716]]

higher level involvement. When this review is conducted at an area or 
district office, a report describing local office performance within the 
area or district jurisdiction shall be communicated to the central 
office on a quarterly basis.
    (2) Numerical appraisal at the central office level shall be 
conducted as follows:
    (i) Performance shall be measured on a quarterly basis against 
planned service levels as stated in the State Program and Budget Plan 
(PBP). The State plan shall be consistent with numerical goals contained 
in local office plans.
    (ii) To appraise these key numerical activities/indicators, actual 
results as shown on the Employment Security Automated Reporting System 
(ESARS) tables and Cost Accounting Reports shall be compared to planned 
levels. Variances between achievement and plan shall be identified.
    (iii) The central office shall review Statewide data, and 
performance against planned service levels as stated in the State 
Program and Budget Plan (PBP) on at least a quarterly basis to identify 
significant Statewide deficiencies and to determine the need for 
additional analysis, including identification of trends, comparisons to 
past performance, and attainment of PBP goals.
    (iv) Results of numerical reviews shall be documented and 
significant deficiencies identified. A corrective action plan as 
described in paragraph (a)(5) of this section shall be developed to 
address these deficiencies. These plans shall be submitted to the ETA 
Regional Office as part of the periodic performance process described at 
20 CFR 658.603(d)(2).
    (3) Nonnumerical (qualitative) appraisal of local office job service 
title III activities shall be conducted at least annually as follows:
    (i) Each local office shall assess the quality of its services to 
applicants, employers, and the community and its compliance with Federal 
regulations.
    (ii) At a minimum, nonnumerical review shall include an assessment 
of the following factors:
    (A) Appropriateness of services provided to applicants and 
employers;
    (B) Timely delivery of services to applicants and employers;
    (C) Staff responsiveness to individual applicant and employer needs;
    (D) Thoroughness and accuracy of documents prepared in the course of 
service delivery; and
    (E) Effectiveness of JS interface with external organizations, i.e., 
other ETA funded programs, community groups, etc.
    (iii) Nonnumerical review methods shall include:
    (A) Observation of processes;
    (B) Review of documents used in service provisions; and
    (C) Solicitation of input from applicants, employers, and the 
community.
    (iv) The result of nonnumerical reviews shall be documented and 
deficiencies identified. A corrective action plan that addresses these 
deficiencies as described in paragraph (a)(6) of this section shall be 
developed.
    (v) The result of local office nonnumerical appraisal, including 
corrective actions, shall be communicated in writing to the next higher 
level of authority for review. This review shall cover thoroughness and 
adequacy of local office appraisal, appropriateness of corrective 
actions, and need for higher level involvement. When this review is 
conducted at an area or district level, a report summarizing local 
office performance within that jurisdiction shall be communicated to the 
central office on an annual basis.
    (4) As part of its oversight responsibilities, the central office 
shall conduct onsite reviews in those local offices which show 
continuing internal problems or deficiencies in performance as indicated 
by such sources as data analysis, nonnumerical appraisal, or other 
sources of information.
    (5) Nonnumerical (qualitative) review of central office job service 
activities shall be conducted as follows:
    (i) Central office operations shall be assessed annually to 
determine compliance with Federal regulations and to assess progress 
made on annually established work plans established for central office 
staff.
    (ii) Results of nonnumerical reviews shall be documented and 
deficiencies identified. A corrective action plan

[[Page 717]]

that addresses these deficiencies shall be developed.
    (6) Corrective action plans developed to address deficiencies 
uncovered at any administrative level within the State as a result of 
the self-appraisal process shall include:
    (i) Specific descriptions of the type of action to be taken, the 
time frame involved and the assignment of responsibility.
    (ii) Provision for the delivery of technical assistance as needed.
    (iii) A plan to conduct follow-up on a timely basis to determine if 
action taken to correct the deficiencies has been effective.
    (7) (a) The provisions of the JS regulations which require numerical 
and nonnumerical assessment of service to special applicant groups, 
e.g., services to veterans at 20 CFR 653.221 through 653.230 and 
services to MSFWs at 20 CFR 653.108, are supplementary to the provisions 
of this section.
    (b) Each State Administrator and local office manager shall assure 
that their staffs know and carry out JS regulations, including 
regulations on performance standards and program emphases, and any 
corrective action plans imposed by the State agency or by the ETA.
    (c) Each State Administrator shall assure that the State agency 
complies with its approved program budget plan.
    (d) Each State Administrator shall assure to the maximum extent 
feasible the accuracy of data entered by the State agency into ETA 
required management information systems. Each State agency shall 
establish and maintain a data validation system pursuant to ETA 
instructions. The system shall review every local office at least once 
every four years. The system shall include the validation of time 
distribution reports and the review of data gathering procedures.



Sec. 658.602  ETA national office responsibility.

    The ETA national office shall:
    (a) Monitor ETA regional offices' carrying out of JS regulations;
    (b) From time to time, conduct such special reviews and audits as 
necessary to monitor ETA regional office and State agency compliance 
with JS regulations;
    (c) Offer technical assistance to the ETA regional offices and State 
agencies in carrying out JS regulations and programs;
    (d) Have report validation surveys conducted in support of resource 
allocations;
    (e) Develop tools and techniques for reviewing and assessing State 
agency performance and compliance with JS regulations.
    (f) ETA shall appoint a National MSFW Monitor Advocate, who shall 
devote full time to the duties set forth in this subpart. The National 
MSFW Monitor Advocate shall:
    (i) Review the effective functioning of the Regional and State MSFW 
Monitor Advocates;
    (ii) Review the performance of State agencies in providing the full 
range of JS services to MSFWs;
    (iii) Take steps to resolve or refer JS-related problems of MSFWs 
which come to his/her attention;
    (iv) Take steps to refer non JS-related problems of MSFWs which come 
to his/her attention;
    (v) Recommend to the Administrator changes in policy toward MSFWs; 
and
    (vi) Serve as an advocate to improve services for MSFWs within JS. 
The National MSFW Monitor Advocate shall be a member of the National 
Farm Labor Coordinated Enforcement Staff Level Working Committee.
    (1) The National MSFW Monitor Advocate shall be appointed by the 
Administrator after informing farmworker organizations and other 
organizations with expertise concerning MSFWs of the openings and 
encouraging them to refer qualified applicants to apply through the 
federal merit system. Among qualified candidates, determined through 
merit systems procedures, individuals shall be sought who meet the 
criteria used in the selection of the State MSFW Monitor Advocates, as 
provided in Sec. 653.108(b).
    (2) The National MSFW Monitor Advocate shall be assigned staff 
necessary to fulfill effectively all the responsibilities set forth in 
this subpart.
    (3) The National MSFW Monitor Advocate shall submit an annual report

[[Page 718]]

(``Annual Report'') to the Administrator, the ETA Assistant Secretary, 
and the National Farm Labor Coordinating Committee covering the matters 
set forth in this subpart.
    (4) The National MSFW Monitor Advocate shall monitor and assess 
State agency compliance with JS regulations affecting MSFWs on a 
continuing basis. His/her assessment shall consider
    (i) Information from Regional and State MSFW Monitor Advocates;
    (ii) Program performance data, including the service indicators;
    (iii) Periodic reports from regional offices;
    (iv) All federal on-site reviews;
    (v) Selected State on-site reviews;
    (vi) Other relevant reports prepared by USES;
    (vii) Information received from farmworker organizations and 
employers; and
    (viii) His/her personal observations from visits to State JS 
offices, agricultural work sites and migrant camps. In the Annual 
Report, the National MSFW Monitor Advocate shall include both a 
quantitative and qualitative analysis of his/her findings and the 
implementation of his/her recommendations by State and federal 
officials, and shall address the information obtained from all of the 
foregoing sources.
    (5) The National MSFW Monitor Advocate shall review the activities 
of the State/federal monitoring system as it applies to services to 
MSFWs and the JS complaint system including the effectiveness of the 
regional monitoring function in each region and shall recommend any 
appropriate changes in the operation of the system. The National MSFW 
Monitor Advocate's findings and recommendations shall be fully set forth 
in the Annual Report.
    (6) If the National MSFW Monitor Advocate finds that the 
effectiveness of any Regional MSFW Monitor Advocate has been 
substantially impeded by the Regional Administrator or other Regional 
Office official, he/she shall, if unable to resolve such problems 
informally, report and recommend appropriate actions directly to the 
Administrator. If the National MSFW Monitor Advocate receives 
information that the effectiveness of any State Monitor Advocate has 
been substantially impeded by the State Administrator or other State or 
federal JS official, he/she shall, in the absence of a satisfactory 
informal resolution at the regional level, report and recommend 
appropriate actions directly to the Administrator.
    (7) The National MSFW Monitor Advocate shall be informed of all 
proposed changes in policy and practice within USES, including JS 
regulations, which may affect the delivery of services to MSFWs. The 
National MSFW Monitor Advocate shall advise the Administrator concerning 
all such proposed changes which may adversely affect MSFWs. The National 
MSFW Monitor Advocate shall propose directly to the Administrator 
changes in JS policy and administration which may substantially improve 
the delivery of services to MSFWs. He/she shall also recommend changes 
in the funding of state agencies and/or adjustment or reallocation of 
the discretionary portions of funding formulae.
    (8) The National MSFW Monitor Advocate shall participate in the 
review and assessment activities required in this section and Sec. 
658.700 et seq. As part of such participation, the National MSFW Monitor 
Advocate, or if he/she is unable to participate a Regional MSFW Monitor 
Advocate, shall accompany the National Office review team on National 
Office on-site reviews. The National MSFW Monitor Advocate shall engage 
in the following activities in the course of each State on-site review:
    (i) He/she shall accompany selected outreach workers on their field 
visits.
    (ii) He/she shall participate in a random field check[s] of migrant 
camps or work site[s] where MSFWs have been placed on inter or intra 
state clearance orders.
    (iii) He/she shall contact local CETA 303 groups or other farmworker 
organizations as part of the on-site review, and, conduct an interview 
with representatives of the organizations.
    (iv) He/she shall meet with the State MSFW Monitor Advocate and 
discuss the full range of the JS services to MSFWs, including the 
monitoring and complaint systems.
    (9) In addition to the duties specified in paragraph (f)(8) of this 
section, the

[[Page 719]]

National MSFW Monitor Advocate each year during the harvest season shall 
visit the four states with the highest level of MSFW activity during the 
prior fiscal year, if they are not scheduled for a National Office on-
site review during the current fiscal year, and shall:
    (i) Meet with the State MSFW Monitor Advocate and other central 
office staff to discuss MSFW service delivery, and (ii) contact 
representatives of MSFW organizations and interested employer 
organizations to obtain information concerning JS service delivery and 
coordination with other agencies.
    (10) The National MSFE Monitor Advocate shall perform the duties 
specified in Sec. 658.700. As part of this function, he/she shall 
monitor the performance of regional offices in imposing corrective 
action. The National MSFW Monitor Advocate shall report any deficiencies 
in performance to the Administrator.
    (11) The National MSFW Monitor Advocate shall establish routine and 
regular contacts with CETA 303 groups, other farmworker organizations 
and agricultural employers and/or employer organizations. He/she shall 
attend conferences or meetings of these groups wherever possible and 
shall report to the Administrator and the National Farm Labor 
Coordinated Enforcement Committee on these contacts when appropriate. 
The National MSFW Monitor Advocate shall include in the Annual Report 
recommendations as to how DOL might better coordinate JS and CETA 303 
services as they pertain to MSFWs.
    (12) In the event that any State or Regional MSFW Monitor Advocate, 
enforcement agency or MSFW group refers a matter to the National MSFW 
Monitor Advocate which requires emergency action, he/she shall assist 
them in obtaining action by appropriate agencies and staff, inform the 
originating party of the action taken, and, upon request, provide 
written conformation.
    (13) Through all the mechanisms provided in this subpart, the 
National MSFW Monitor Advocate shall aggressively seek to ascertain and 
remedy, if possible, systemic deficiencies in the provisions of JS 
services and protections afforded by these regulations to MSFWs. The 
National MSFW Monitor Advocate shall:
    (i) Use the regular reports on complaints submitted by State 
agencies and ETA regional offices to assess the adequacy of these 
systems and to determine the existence of systemic deficiencies.
    (ii) Provide technical assistance to ETA regional office and State 
agency staffs for administering the JS complaint system.
    (iii) Recommend to the Administrator specific instructions for 
action by regional office staff to correct any JS-related systemic 
deficiencies. Prior to any ETA review of regional office operations 
concerning JS services to MSFWs, the National MSFW Monitor Advocate 
shall provide to the Administrator a brief summary of JS-related 
services to MSFWs in that region and his/her recommendations for 
incorporation in the regional review materials as the Administrator and 
ETA reviewing organization deem appropriate.
    (iv) Recommend to the National Farm Labor Coordinated Enforcement 
Committee specific instructions for action by ESA and OSHA regional 
office staff to correct any non-JS-related systemic deficiencies of 
which he/she is aware.



Sec. 658.603  ETA regional office responsibility.

    (a) The Regional Administrator shall have responsibility for the 
regular review and assessment of State agency performance and compliance 
with JS regulations.
    (b) The Regional Administrator shall review and approve annual 
program budget plans for the State agencies within the region. In 
reviewing the program budget plans the Regional Administrator shall 
consider relevant factors including the following:
    (1) State agency compliance with JS regulations;
    (2) State agency performance against the goals and objectives 
established in the previous year's program budget plan;

[[Page 720]]

    (3) The effect which economic conditions and other external factors 
considered by the ETA in the resource allocation process may have had or 
are expected to have on State agency performance;
    (4) State agency adherence to national program emphasis; and
    (5) The adequacy and appropriateness of the program budget plan for 
carrying out JS programs.
    (c) The Regional Administrator shall assess the overall performance 
of State agencies on an ongoing basis through desk reviews and the use 
of required reporting systems and other available information.
    (d) As appropriate, Regional Administrators shall conduct or have 
conducted:
    (1) Comprehensive on-site reviews of State agencies and their 
offices to review State agency organization, management, and program 
operations;
    (2) Periodic performance reviews of State agency operation of JS 
programs to measure actual performance against the program budget plan, 
past performance, the performance of other State agencies, etc.;
    (3) Audits of State agency programs to review State agency program 
activity and to assess whether the expenditure of grant funds has been 
in accordance with the approved budget. Regional Administrators may also 
conduct audits through other agencies or organizations or may require 
the State agency to have audits conducted;
    (4) Validations of data entered into management information systems 
to assess:
    (i) The accuracy of data entered by the State agencies into 
management information system;
    (ii) Whether the State agencies' data validating and reviewing 
procedures conform to ETA instructions; and
    (iii) Whether State agencies have implemented any corrective action 
plans required by the ETA to remedy deficiencies in their validation 
programs;
    (5) Technical assistance programs to assist State agencies in 
carrying out JS regulations and programs;
    (6) Reviews to assess whether the State agency has complied with 
corrective action plans imposed by the ETA or by the State agency 
itself; and
    (7) Random, unannounced field checks of a sample of agricultural 
work sites to which JS placements have been made through the clearance 
system to determine and document whether wages, hours, working and 
housing conditions are as specified on the job order. If regional office 
staff find reason to believe that conditions vary from job order 
specifications, findings should be documented on the JS Complaint 
Referral Form and provided to the State agency to be handled as a 
complaint under Sec. 658.411(b).
    (e) The Regional Administrator shall provide technical assistance to 
State agencies to assist them in carrying out JS regulations and 
programs.
    (f) The Regional Administrator shall appoint a Regional MSFW Monitor 
Advocate who shall devote full time to the duties set forth in this 
subpart. The Regional MSFW Monitor Advocate shall:
    (i) Review the effective functioning of the State MSFW Monitor 
Advocates in his/her region;
    (ii) Review the performance of State agencies in providing the full 
range of JS services to MSFWs;
    (iii) Take steps to resolve JS-related problems of MSFWs which come 
to his/her attention;
    (iv) Recommend to the Regional Administrator changes in policy 
towards MSFWs;
    (v) Review the operation of the JS complaint system; and
    (vi) Serve as an advocate to improve service for MSFWs within JS. 
The Regional MSFW Monitor Advocate shall be a member of the Regional 
Farm Labor Coordinated Enforcement Committee.
    (1) The Regional MSFW Monitor Advocate shall be appointed by the 
Regional Administrator after informing farmworker organizations and 
other organizations in the region with expertise concerning MSFWs of the 
opening and encouraging them to refer qualified applicants to apply 
through the federal merit system. The Regional MSFW Monitor Advocate 
shall have direct personal access to the Regional Administrator wherever 
he/she finds it necessary. Among qualified candidates, individuals shall 
be sought who meet the criteria used in the selection of the

[[Page 721]]

State MSFW Monitor Advocates, as provided in Sec. 653.108(b).
    (2) The Regional Administrator shall ensure that staff necessary to 
fulfill effectively all the regional office responsibilities set forth 
in this subsection are assigned. The Regional MSFW Monitor Advocate 
shall notify the Regional Administrator of any staffing deficiencies and 
the Regional Administrator shall take appropriate action.
    (3) The Regional MSFW Monitor Advocate within the first three months 
of their tenure shall participate in a training session(s) approved by 
the National office.
    (4) At the regional level, the Regional MSFW Monitor Advocate shall 
have primary responsibility for (i) monitoring the effectiveness of the 
JS complaint system set forth at subpart E of this part; (ii) apprising 
appropriate State and ETA officials of deficiencies in the complaint 
system; and (iii) providing technical assistance to State MSFW Monitor 
Advocates in the region.
    (5) At the ETA regional level, the Regional MSFW Monitor Advocate 
shall have primary responsibility for ensuring that State agency 
compliance with JS regulations as they pertain to services to MSFWs is 
monitored by the regional office. He/she shall independently assess on a 
continuing basis the provision of JS services to MSFWs, seeking out and 
using:
    (i) Information from State MSWF Monitor Advocates, including all 
reports and other documents; (ii) program performance data; (iii) the 
periodic and other required reports from State JS offices; (iv) federal 
on-site reviews; (v) other reports prepared by the National office; (vi) 
information received from farmworker organizations and employers; and 
(vii) any other pertinent information which comes to his/her attention 
from any possible source. In addition, the Regional MSFW Monitor 
Advocate shall consider his/her personal observations from visits to JS 
offices, agricultural work sites and migrant camps. The Regional MSFW 
Monitor Advocate shall assist the Regional Administrator and other 
appropriate line officials in applying appropriate corrective and 
remedial actions to State agencies.
    (6) The Regional Administrator's quarterly report to the National 
office shall include the Regional MSFW Monitor Advocate's summary of 
his/her independent assessment as required in paragraph (f)(5) of this 
section. The fourth quarter summary shall include an annual summary from 
the region. The summary also shall include both a quantitative and a 
qualitative analysis of his/her reviews and shall address all the 
matters with respect to which he/she has responsibilities under these 
regulations.
    (7) The Regional MSFW Monitor Advocate shall review the activities 
and performance of the State MSFW Monitor Advocates and the State 
monitoring system in the region, and shall recommend any appropriate 
changes in the operation of the system to the Regional Administrator. 
The Regional MSFW Monitor Advocate's review shall include a 
determination whether the State MSFW Monitor Advocate (i) does not have 
adequate access to information, (ii) is being impeded in fulfilling his/
her duties, or (iii) is making recommendations which are being 
consistently ignored by State agency officials. If the Regional MSFW 
Monitor Advocate believes that the effectiveness of any State MSFW 
Monitor Advocate has been substantially impeded by the State 
Administrator, other State office officials, or any Federal officials, 
he/she shall report and recommend appropriate actions to the Regional 
Administrator. Information copies of the recommendations shall be 
provided the National MSFW Monitor Advocate.
    (8) The Regional MSFW Monitor Advocate shall be informed of all 
proposed changes in policy and practice within USES, including JS 
regulations, which may affect the delivery of services to MSFWs. He/she 
shall advise the Regional Administrator on all such proposed changes 
which, in his/her opinion, may adversely affect MSFWs or which may 
substantially improve the delivery of services to MSFWs. The Regional 
MSFW Monitor Advocate may also recommend changes in JS policy or 
regulations, as well as changes in the funding of State agencies and/or 
adjustments of reallocation of the discretionary portions of funding 
formulae as they pertain to MSFWs.

[[Page 722]]

    (9) The Regional MSFW Monitor Advocate shall participate in the 
review and assessment activities required in this section and Sec. 
658.700 et seq. He/she, an Assistant, or another Regional MSFW Monitor 
Advocate, shall participate in national office and regional office on-
site statewide reviews of JS services to MSFWs in States in the region. 
The Regional MSFW Monitor Advocate shall engage in the following 
activities in the course of participating in an on-site State agency 
review:
    (i) He/she shall accompany selected outreach workers on their field 
visits;
    (ii) He/she shall participate in a random field check of migrant 
camps or work sites where MSFWs have been placed on inter or intrastate 
clearance orders;
    (iii) He/she shall contact local CETA 303 groups or other farmworker 
organizations as part of the on-site review, and shall conduct 
interviews with representatives of the organizations; and
    (iv) He/she shall meet with the State MSFW Monitor Advocate and 
discuss the full range of the JS services to MSFWs, including the 
monitoring and complaint system.
    (10) During the calendar quarter preceding the time of peak MSFW 
activity in each State, the Regional MSFW Monitor Advocate shall meet 
with the State MSFW Monitor Advocate and shall review in detail the 
State agency's capability for providing full services to MSFWs as 
required by JS regulations, during the upcoming harvest season. The 
Regional MSFW Monitor Advocate shall offer technical assistance and 
recommend to the State agency and/or the Regional Administrator any 
changes in State policy or practice that he/she finds necessary.
    (11) The Regional MSFW Monitor Advocate each year during the peak 
harvest season shall visit each state in the region not scheduled for an 
on-site review during that fiscal year and shall:
    (i) Meet with the State MSFW Monitor Advocate and other central 
office staff to discuss MSFW service delivery, and (ii) contact 
representatives of MSFW organizations to obtain information concerning 
JS service delivery and coordination with other agencies and interested 
employer organizations.
    (12) The Regional MSFW Monitor Advocate shall initiate and maintain 
regular and personal contacts, including informal contacts in addition 
to those specifically required by these regulations, with State MSFW 
Monitor Advocates in the region. In addition, the Regional MSFW Monitor 
Advocate shall have personal and regular contact with the National MSFW 
Monitor Advocate. The Regional MSFW Monitor Advocate shall also 
establish routine and regular contacts with CETA 303 groups, other 
farmworker organizations and agricultural employers and/or employer 
organizations in his/her region. He/she shall attend conferences or 
meetings of these groups wherever possible and shall report to the 
Regional Administrator and the Regional Farm Labor Coordinated 
Enforcement Committee on these contacts when appropriate. He/she shall 
also make recommendations as to how DOL might better coordinate JS and 
CETA 303 services to MSFWs.
    (13) The Regional MSFW Monitor Advocate shall attend MSFW-related 
public meeting(s) conducted in the region, pursuant to 29 CFR 42.20. 
Following such meetings or hearings, the Regional MSFW Monitor Advocate 
shall take such steps or make such recommendations to the Regional 
Administrator, as he/she deems necessary to remedy problem(s) or 
condition(s) identified or described therein.
    (14) The Regional MSFW Monitor Advocate shall attempt to achieve 
regional solutions to any problems, deficiencies or improper practices 
concerning services to MSFWs which are regional in scope. Further, he/
she shall recommend policies, offer technical assistance or take any 
other necessary steps as he/she deems desirable or appropriate on a 
regional, rather than state-by-state basis, to promote region-wide 
improvement in JS services to MSFWs. He/she shall facilitate region-wide 
coordination and communication regarding provision of JS services to 
MSFWs among State MSFW Monitor Advocates, State Administrators and 
federal ETA officials to the greatest extent possible. In the event that 
any State or other Regional MSFW Monitor Advocate, enforcement agency, 
or MSFW group refers a matter to the Regional MSFW Monitor Advocate 
which

[[Page 723]]

requires emergency action, he/she shall assist them in obtaining action 
by appropriate agencies and staff, inform the originating party of the 
action taken, and, upon request, provide written confirmation.
    (15) The Regional MSFW Monitor Advocate shall initiate and maintain 
such contacts as he/she deems necessary with Regional MSFW Monitor 
Advocates in other regions to seek to resolve problems concerning MSFWs 
who work, live or travel through the region. He/she shall recommend to 
the Regional Administrator and/or the National office inter-regional 
cooperation on any particular matter, problem, or policy with respect to 
which inter-regional action is desirable.
    (16) The Regional MSFW Monitor Advocate shall establish regular 
contacts with the ESA and OSHA farmworker specialists in the region and, 
to the extent necessary, shall establish contacts with the staff of 
other DOL agencies represented on the Regional Farm Labor Coordinated 
Enforcement Committee. The Regional MSFW Monitor Advocate shall 
coordinate his/her efforts with specialists in the region to ensure that 
the policy specified in 29 CFR 42.20(c)(3) is followed.
    (17) The Regional MSFW Monitor Advocate shall participate in the 
regional reviews of State agency Program Budget Plans, and shall comment 
to the Regional Administrator as to the adequacy of the affirmative 
action plans, the outreach plans, and other specific plans included 
therein.



Sec. 658.604  Assessment and evaluation of program performance data.

    (a) State agencies shall compile program performance data required 
by ETA, including statistical information on program operations.
    (b) The ETA shall use the program performance data in assessing and 
evaluating whether the State agencies have complied with JS regulations 
and their State agency program budget plans.
    (c) In assessing and evaluating program performance data, the ETA 
shall act in accordance with the following general principles:
    (1) The fact that the program performance data from a State agency, 
whether overall or relative to a particular program activity, indicate 
poor program performance does not by itself constitute a violation of JS 
regulations or of the State agency's responsibilities under its State 
agency program budget plan;
    (2) Program performance data, however, may so strongly indicate that 
a State agency's performance is poor that the data may raise a 
presumption (prima facie case) that a State agency is violating JS 
regulations or the State agency program budget plan. A State agency's 
failure to meet the operational objectives set forth in the PBP shall 
raise a presumption that the agency is violating JS regulations and/or 
its PBP. In such cases the ETA shall afford the State agency an 
opportunity to rebut the presumption of a violation pursuant to the 
procedures at subpart H of this part.
    (3) The ETA shall take into account that certain program performance 
data may measure items over which State agencies have direct or 
substantial control while other data may measure items over which the 
State agency has indirect or minimal control.
    (i) Generally, for example, a State agency has direct and 
substantial control over the delivery of job services such as referrals 
to jobs, job development contacts, applicant counseling, referrals to 
supportive services and the conduct of field checks.
    (ii) State agencies, however, have only indirect control over the 
outcome of services. State agencies, for example, cannot guarantee that 
an employer will hire a referred applicant, nor can they guarantee that 
the terms and conditions of employment will be as stated on a job order.
    (iii) Outside forces, moreover, such as a sudden heavy increase in 
unemployment rates, a strike by State agency employees, or a severe 
drought or flood may skew the results measured by program performance 
data;
    (4) The ETA shall consider a State agency's failure to keep accurate 
and complete program performance data required by JS regulations as a 
violation of the JS regulations.

[[Page 724]]



Sec. 658.605  Communication of findings to State agencies.

    (a) The Regional Administrator shall inform State agencies in 
writing of the results of review and assessment activities and, as 
appropriate, shall discuss with the State Administrator the impact or 
action required by ETA as a result of review and assessment activities.
    (b) The ETA national office shall transmit the results of any review 
and assessment activities conducted by it to the Regional Administrator 
who shall send the information to the State agency.
    (c) Whenever the review and assessment indicates a State agency 
violation of JS regulations or its State agency program budget plan, the 
Regional Administrator shall follow the procedures set forth at subpart 
H of this part.
    (d) Regional Administrators shall follow-up any corrective action 
plan imposed on a State agency under subpart H of this part by further 
review and assessment of the State agency pursuant to this subpart.



   Subpart H_Federal Application of Remedial Action to State Agencies

    Authority: Wagner-Peyser Act of 1933, as amended, 29 U.S.C. 49 et 
seq.; 5 U.S.C. 301 et seq.



Sec. 658.700  Scope and purpose of subpart.

    This subpart sets forth the procedures which ETA shall follow upon 
either discovering independently or receiving from other(s) information 
indicating that State agencies may not be adhering to JS regulations.



Sec. 658.701  Statements of policy.

    (a) It is the policy of the Employment and Training Administration 
(ETA) to take all necessary action, including the imposition of the full 
range of sanctions set forth in this subpart, to ensure that State 
agencies comply with all requirements established by JS regulations.
    (b) It is the policy of ETA to initiate decertification procedures 
against State agencies in instances of serious or continual violations 
of JS regulations if less stringent remedial actions taken in accordance 
with this subpart fail to resolve noncompliance.
    (c) It is the policy of the ETA to act on information concerning 
alleged violations by State agencies of the JS regulations received from 
any person or organization.



Sec. 658.702  Initial action by the Regional Administrator.

    (a) The ETA Regional Administrator shall be responsible for ensuring 
that all State agencies in his/her region are in compliance with JS 
regulations.
    (b) Wherever a Regional Administrator discovers or is apprised of 
possible State agency violations of JS regulations by the review and 
assessment activities under subpart G of this part, or through required 
reports or written complaints from individuals, organizations or 
employers which are elevated to ETA after the exhaustion of State agency 
administrative remedies, the Regional Administrator shall conduct an 
investigation. Within 10 days after receipt of the report or other 
information, the Regional Administrator shall make a determination 
whether there is probable cause to believe that a State agency has 
violated JS regulations.
    (c) The Regional Administrator shall accept complaints regarding 
possible State agency violations of JS regulations from employee 
organizations, employers or other groups, without exhaustion of the 
complaint process described at subpart E, if the Regional Administrator 
determines that the nature and scope of the complaint are such that the 
time required to exhaust the administrative procedures at the State 
level would adversely affect a significant number of applicants. In such 
cases, the Regional Administrator shall investigate the matter within 10 
working days, may provide the State agency 10 working days for comment, 
and shall make a determination within an additional 10 working days 
whether there is probable cause to believe that the State agency has 
violated JS regulations.
    (d) If the Regional Administrator determines that there is no 
probable cause to believe that a State agency

[[Page 725]]

has violated JS regulations, he/she shall retain all reports and 
supporting information in ETA files. In all cases where the Regional 
Administrator has insufficient information to make a probable cause 
determination, he/she shall so notify the Administrator in writing and 
the time for the investigation shall be extended 20 additional working 
days.
    (e) If the Regional Administrator determines that there is probable 
cause to believe that a State agency has violated JS regulations, he/she 
shall issue a Notice of Initial Findings of Non-compliance by registered 
mail to the offending State agency. The Notice will specify the nature 
of the violation, cite the regulations involved, and indicate corrective 
action which may be imposed in accordance with paragraphs (g) and (h) of 
this section. If the non-compliance involves services to MSFWs or the JS 
complaint system, a copy of said notice shall be sent to the National 
MSFW Monitor Advocate.
    (f)(1) The State agency shall have 20 working days to comment on the 
findings, or a longer period, up to 20 additional days, if the Regional 
Administrator determines that such a longer period is appropriate. The 
State agency's comments shall include agreement or disagreement with the 
findings and suggested corrective actions, where appropriate.
    (2) After the period elapses, the Regional Administrator shall 
prepare within 20 working days, written final findings which specify 
whether or not the State agency has violated JS regulations. If in the 
final findings the Regional Administrator determines that the State 
agency has not violated JS regulations, the Regional Administrator shall 
notify the State Administrator of this finding and retain supporting 
documents in his/her files. If the final finding involves services to 
MSFWs or the JS complaint system, the Regional Administrator shall also 
notify the National Monitor Advocate. If the Regional Administrator 
determines that a State agency has violated JS regulations, the Regional 
Administrator shall prepare a Final Notice of Noncompliance which shall 
specify the violation(s) and cite the regulations involved. The Final 
Notice of Noncompliance shall be sent to the State agency by registered 
mail. If the noncompliance involves services to MSFWs or the JS 
complaint system, a copy of the Final Notice shall be sent to the 
National MSFW Monitor Advocate.
    (g) If the violation involves the misspending of grant funds, the 
Regional Administrator may order in the Final Notice of Noncompliance a 
disallowance of the expenditure and may either demand repayment or 
withhold future funds in the amount in question. If the Regional 
Administrator disallows costs, the Regional Administrator shall give the 
reasons for the disallowance, inform the State agency that the 
disallowance is effective immediately and that no more funds may be 
spent in the unallowed manner, and offer the State agency the 
opportunity to request a hearing pursuant to Sec. 658.707. The offer, 
or the acceptance of an offer of a hearing, however, shall not stay the 
effectiveness of the disallowance. The Regional Administrator shall keep 
complete records of the disallowance.
    (h) If the violation does not involve misspending of grant funds or 
the Regional Administrator determines that the circumstances warrant 
other action:
    (1) The Final Notice of Noncompliance shall direct the State agency 
to implement a specific corrective action plan to correct all 
violations. If the State agency's comment demonstrates with supporting 
evidence (except where inappropriate) that all violations have already 
been corrected, the Regional Administrator need not impose a corrective 
action plan and instead may cite the violations and accept their 
resolution, subject to follow-up review, if necessary. If the Regional 
Administrator determines that the violation(s) cited had been found 
previously and that the corrective action(s) taken had not corrected the 
violation(s) contrary to the findings of previous follow-up reviews, the 
Regional Administrator shall apply remedial actions to the State agency 
pursuant to Sec. 658.704.
    (2) The Final Notice of Noncompliance shall specify the time by 
which each corrective action must be taken. This period shall not exceed 
40 working

[[Page 726]]

days unless the Regional Administrator determines that exceptional 
circumstances necessitate corrective actions requiring a longer time 
period. In such cases, and if the violations involve services to MSFWs 
or the JS complaint system, the Regional Administrator shall notify the 
Administrator in writing of the exceptional circumstances which 
necessitate a longer time period, and shall specify that time period. 
The specified time period shall commence with the date of signature on 
the registered mail receipt.
    (3) When the time period provided for in paragraph (h)(2) of this 
section elapses, ETA staff shall review the State agency's efforts as 
documented by the State agency to determine if the corrective action(s) 
has been taken and if the State agency has achieved compliance with JS 
regulations. If necessary, ETA staff shall conduct a follow-up visit as 
part of this review.
    (4) If, as a result of this review, the Regional Administrator 
determines that the State agency has corrected the violation(s), the 
Regional Administrator shall record the basis for this determination, 
notify the State agency, send a copy to the Administrator, and retain a 
copy in ETA files.
    (5) If, as a result of this review, the Regional Administrator 
determines that the State has taken corrective action but is unable to 
determine if the violation has been corrected due to seasonality or 
other factors, the Regional Administrator shall notify in writing the 
State agency and the Administrator of his/her findings. The Regional 
Administrator shall conduct further follow-up at an appropriate time to 
make a final determination if the violation has been corrected. If the 
Regional Administrator's further follow-up reveals that violations have 
not been corrected, the Regional Administrator shall apply remedial 
actions to the State agency pursuant to Sec. 658.704.
    (6) If, as a result of the review the Regional Administrator 
determines that the State agency has not corrected the violations and 
has not made good faith efforts and adequate progress toward the 
correction of the violations, the Regional Administrator shall apply 
remedial actions to the State agency pursuant to Sec. 658.704.
    (7) If, as a result of the review, the Regional Administrator 
determines that the State agency has made good faith efforts and 
adequate progress toward the correction of the violation and it appears 
that the violation will be fully corrected within a reasonable time 
period, the State agency shall be advised by registered mail (with a 
copy sent to the Administrator) of this conclusion, of remaining 
differences, of further needed corrective action, and that all 
deficiencies must be corrected within a specified time period. This 
period shall not exceed 40 working days unless the Regional 
Administrator determines that exceptional circumstances necessitate 
corrective action requiring a longer time period. In such cases, the 
Regional Administrator shall notify the Administrator in writing of the 
exceptional circumstances which necessitate a longer time period, and 
shall specify that time period. The specified time period shall commence 
with the date of signature on the registered mail receipt.
    (8) (i) If the State agency has been given an additional time period 
pursuant to paragraph (b)(7) of this section, ETA staff shall review the 
State agency's efforts as documented by the State agency at the end of 
the time period. If necessary, ETA shall conduct a follow-up visit as 
part of this review.
    (ii) If the State agency has corrected the violation(s), the 
Regional Administrator shall document that finding, notify in writing 
the State agency and the Administrator, and retain supporting documents 
in ETA files. If the State agency has not corrected the violation(s), 
the Regional Administrator shall apply remedial actions pursuant to 
Sec. 658.704.



Sec. 658.703  Emergency corrective action.

    In critical situations as determined by the Regional Administrator, 
where it is necessary to protect the integrity of the funds, or insure 
the proper operation of the program, the Regional Administrator may 
impose immediate corrective action. Where immediate corrective action is 
imposed, the Regional Administrator shall notify the

[[Page 727]]

State agency of the reason for imposing the corrective action prior to 
providing the State agency an opportunity to comment.



Sec. 658.704  Remedial actions.

    (a) If a State agency fails to correct violations as determined 
pursuant to Sec. 658.702, the Regional Administrator shall apply one or 
more of the following remedial actions to the State agency:
    (1) Imposition of special reporting requirements for a specified 
period of time;
    (2) Restrictions of obligational authority within one or more 
expense classifications;
    (3) Implementation of specific operating systems or procedures for a 
specified time;
    (4) Requirement of special training for State agency personnel;
    (5) With the approval of the Assistant Secretary and after affording 
the State Administrator the opportunity to request a conference with the 
Assistant Secretary, the elevation of specific decision-making functions 
from the State Administrator to the Regional Administrator;
    (6) With the approval of the Assistant Secretary and after affording 
the State Administrator the opportunity to request a conference with the 
Assistant Secretary, the imposition of Federal staff in key State agency 
positions;
    (7) With the approval of the Assistant Secretary and after affording 
the State Administrator the opportunity to request a conference with the 
Assistant Secretary, funding of the State agency on a short-term basis 
or partial withholding of funds for a specific function or for a 
specific geographical area;
    (8) Holding of public hearings in the State on the State agency's 
deficiencies;
    (9) Disallowance of funds pursuant to Sec. 658.702(g); or
    (10) If the matter involves a serious or continual violation, the 
initiation of decertification procedures against the State agency, as 
set forth in paragraph (e) of this section.
    (b) The Regional Administrator shall send, by registered mail, a 
Notice of Remedial Action to the State agency. The Notice of Remedial 
Action shall set forth the reasons for the remedial action. When such a 
notice is the result of violations of regulations governing services to 
MSFWs (20 CFR 653.100 et seq.) or the JS complaint system (20 CFR 
658.400 et seq.), a copy of said notice shall be sent to the USES 
Administrator, who shall publish the notice promptly in the Federal 
Register.
    (c) If the remedial action is other than decertification, the notice 
shall state that the remedial action shall take effect immediately. The 
notice shall also state that the State agency may request a hearing 
pursuant to Sec. 658.707 by filing a request in writing with the 
Regional Administrator pursuant to Sec. 658.707 within 20 working days 
of the State agency's receipt of the notice. The offer of hearing, or 
the acceptance thereof, however, shall not stay the implementation of 
remedial action.
    (d) Within 60 working days after the initial application of remedial 
action, the Regional Administrator shall conduct a review of the State 
agency's compliance with JS regulations unless the Regional 
Administrator determines that a longer time period is necessary. In such 
cases, the Regional Administrator shall notify the USES Administrator in 
writing of the circumstances which necessitate a longer time period, and 
specify that time period. If necessary, ETA staff shall conduct a 
follow-up visit as part of this review. If the State agency is in 
compliance with the JS regulations, the Regional Administrator shall 
fully document these facts and shall terminate the remedial actions. The 
Regional Administrator shall notify the State agency of his/her 
findings. When the case involves violations of regulations governing 
services to MSFWs or the JS complaint system, a copy of said notice 
shall be sent to the USES Administrator, who shall promptly publish the 
notice in the Federal Register. The Regional Administrator shall 
conduct, within a reasonable time after terminating the remedial 
actions, a review of the State agency's compliance to determine whether 
any remedial actions should be reapplied.
    (e) If, upon conducting the on-site review referred to in paragraph 
(c) of this section, the Regional Administrator

[[Page 728]]

finds that the State agency remains in noncompliance, the Regional 
Administrator shall continue the remedial action and/or impose different 
additional remedial actions. The Regional Administrator shall fully 
document all such decisions and, when the case involves violations of 
regulations governing services to MSFWs or the JS complaint system, 
shall send copies to the USES Administrator, who shall promptly publish 
the notice in the Federal Register.
    (f) (1) If the State agency has not brought itself into compliance 
with JS regulations within 120 working days of the initial application 
of remedial action, the Regional Administrator shall initiate 
decertification unless the Regional Administrator determines that 
circumstances necessitate continuing remedial action for a longer period 
of time. In such cases, the Regional Administrator shall notify the USES 
Administrator in writing of the circumstances which necessitate the 
longer time period, and specify the time period.
    (2) The Regional Administrator shall notify the State agency by 
registered mail of the decertification proceedings, and shall state the 
reasons therefor. Whenever such a notice is sent to a State agency, the 
Regional Administrator shall prepare five indexed copies containing, in 
chronological order, all the documents pertinent to the case along with 
a request for decertification stating the grounds therefor. One copy 
shall be retained. Two shall be sent to the ETA national office, one 
shall be sent to the Solicitor of Labor, Attention: Associate Solicitor 
for Employment and Training, and, if the case involves violations of 
regulations governing services to MSFWs or the complaint system, one 
copy shall be sent to the National MSFW Monitor Advocate. The notice 
sent by the Regional Administrator shall be published promptly in the 
Federal Register.



Sec. 658.705  Decision to decertify.

    (a) Within 30 working days of receiving a request for 
decertification, the Assistant Secretary for ETA shall review the case 
and shall decide whether to proceed with decertification.
    (b) The Assistant Secretary shall grant the request for 
decertification unless he/she makes a finding that (1) the violations of 
JS regulations are neither serious nor continual; (2) the State agency 
is in compliance; or (3) the Assistant Secretary has reason to believe 
that the State agency will achieve compliance within 80 working days 
unless exceptional circumstances necessitate a longer time period, 
pursuant to the remedial action already applied or to be applied. (In 
the event the Assistant Secretary does not have sufficient information 
to act upon the request, he/she may postpone the determination for up to 
an additional 20 working days in order to obtain any available 
additional information.) In making a determination of whether violations 
are ``serious'' or ``continual,'' as required by this subsection, the 
Assistant Secretary shall consider:
    (i) Statewide or multiple deficiencies as shown by performance data 
and/or on-site reviews;
    (ii) Recurrent violations, even if they do not persist over 
consecutive reporting periods, and
    (iii) The good faith efforts of the State to achieve full compliance 
with JS regulations as shown by the record.
    (c) If the Assistant Secretary denies a request for decertification, 
he/she shall write a complete report documenting his/her findings and, 
if appropriate, instructing that an alternate remedial action or actions 
be applied. Copies of the report shall be sent to the Regional 
Administrator. Notice of the Assistant Secretary's decision shall be 
published promptly in the Federal Register, and the report of the 
Assistant Secretary shall be made available for public inspection and 
copying.
    (d) If the Assistant Secretary decides that decertification is 
appropriate, he/she shall submit the case to the Secretary providing 
written explanation for his/her recommendation of decertification.
    (e) Within 30 working days after receiving the report of the 
Assistant Secretary, the Secretary shall determine whether to decertify 
the State agency. The Secretary shall grant the request for 
decertification unless he/she makes one of the three findings set forth 
in Sec. 658.705(b). If the Secretary decides not

[[Page 729]]

to decertify, he/she shall then instruct that remedial action be 
continued or that alternate actions be applied. The Secretary shall 
write a report explaining his/her reasons for not decertifying the State 
agency and copies will be sent to the State agency. Notice of the 
Secretary's decision shall be published promptly in the Federal 
Register, and the report of the Secretary shall be made available for 
public inspection and copy.
    (f) Where either the Assistant Secretary or the Secretary denies a 
request for decertification and order further remedial action, the 
Regional Administrator shall continue to monitor the State agency's 
compliance. If the agency achieves compliance within the time period 
established pursuant to Sec. 658.705(b), the Regional Administrator 
shall terminate the remedial actions. If the State agency fails to 
achieve full compliance within that time period after the Secretary's 
decision not to decertify, the Regional Administrator shall submit a 
report of his/her findings to the Assistant Secretary who shall 
reconsider the request for decertification pursuant to the requirements 
of Sec. 658.705(b).



Sec. 658.706  Notice of decertification.

    If the Secretary decides to decertify a State agency, he/she shall 
send a Notice of Decertification to the State agency stating the reasons 
for this action and providing a 10 working day period during which the 
State agency may request an administrative hearing in writing to the 
Secretary. The notice shall be published promptly in the Federal 
Register.



Sec. 658.707  Requests for hearings.

    (a) Any State agency which received a Notice of Decertification 
under Sec. 658.706 or a notice of disallowance under Sec. 658.702 may 
request a hearing on the issue by filing a written request for hearing 
with the Secretary within 10 working days of receipt of the notice. This 
request shall state the reasons the State agency believes the basis of 
the decision to be wrong, and it must be signed by the State 
Administrator.
    (b) When the Secretary receives a request for a hearing from a State 
agency, he/she shall send copies of a file containing all materials and 
correspondence relevant to the case to the Assistant Secretary, the 
Regional Administrator, the Solicitor of Labor, and the Chief 
Administrative Law Judge of the DOL. When the case involves violations 
of regulations governing services to MSFWs or the ES complaint system, a 
copy shall be sent to the National MSFW Monitor Advocate.
    (c) The Secretary shall publish notice of hearing in the Federal 
Register. This notice shall invite all interested parties to attend and 
to present evidence at the hearing. All interested parties who make 
written request to participate shall thereafter receive copies of all 
documents filed in said proceedings.



Sec. 658.708  Hearings.

    (a) Upon receipt of a hearing file by the Chief Administrative Law 
Judge, the case shall be docketed and notice sent by registered mail, 
return receipt requested, to the Solicitor of Labor, Attention: 
Associate Solicitor for Employment and Training, the Administrator, the 
Regional Administrator and the State Administrator. The notice shall set 
a time, place, and date for a hearing on the matter and shall advise the 
parties that:
    (1) They may be represented at the hearing;
    (2) They may present oral and documentary evidence at the hearing;
    (3) They may cross-examine opposing witnesses at the hearing; and
    (4) They may request rescheduling of the hearing if the time, place, 
or date set are inconvenient.
    (b) The Solicitor of Labor or the Solicitor's designee shall 
represent the Department at the hearing.



Sec. 658.709  Conduct of hearings.

    (a) Hearings shall be conducted in accordance with sections 5-8 of 
the Administrative Procedure Act, 5 U.S.C. 553 et seq.
    (b) Technical rules of evidence shall not apply, but rules or 
principles designed to assure production of the most credible evidence 
available and to subject testimony to test by cross-examination, shall 
be applied if necessary by

[[Page 730]]

the Administrative Law Judge conducting the hearing. The Administrative 
Law Judge may exclude irrelevant, immaterial or unduly repetitious 
evidence. All documents and other evidence offered or taken for the 
record shall be open to examination by the parties. Opportunity shall be 
given to refute facts and arguments advanced on either side of the 
issue. A transcript shall be made of the oral evidence except to the 
extent the substance thereof is stipulated for the record.
    (c) The general provisions governing discovery as provided in the 
Rules of Civil Procedure for the United States District Court, title V, 
28 U.S.C., rules 26 through 37, may be made applicable to the extent 
that the Administrative Law Judge concludes that their use would promote 
the proper advancement of the hearing.
    (d) When a public officer is a respondent in a hearing in an 
official capacity and during its pendency dies, resigns, or otherwise 
ceases to hold office, the proceeding does not abate and the officer's 
successor is automatically substituted as a party. Proceedings following 
the substitution shall be in the name of the substituted party, but any 
misnomer not affecting the substantive rights of the parties shall be 
disregarded. An order of substitution may be entered at any time, but 
the omission to enter such an order shall not affect the substitution.



Sec. 658.710  Decision of the Administrative Law Judge.

    (a) The Administrative Law Judge shall have jurisdiction to decide 
all issues of fact and related issues of law and to grant or deny 
appropriate motions, but shall not have jurisdiction to decide upon the 
validity of Federal statutes or regulations.
    (b) The decision of the Administrative Law Judge shall be based on 
the hearing record, shall be in writing and shall state the factual and 
legal basis of the decision. Notice of the decision shall be published 
in the Federal Register and the Administrative Law Judge's decision 
shall be available for public inspection and copying.
    (c) Except when the case involves the decertification of a State 
agency, the decision of the Administrative Law Judge shall be the final 
decision of the Secretary.
    (d) If the case involves the decertification of an appeal to the 
State agency, the decision of the Administrative Law Judge shall contain 
a notice stating that, within 30 calendar days of the decision, the 
State agency or the Administrator may appeal to the Administrative 
Review Board, United States Department of Labor, by sending by 
registered mail, return receipt requested, a written appeal to the 
Administrative Review Board, in care of the Administrative Law Judge who 
made the decision.

[45 FR 39468, June 10, 1980, as amended at 61 FR 19983, May 3, 1996]



Sec. 658.711  Decision of the Administrative Review Board.

    (a) Upon the receipt of an appeal to the Administrative Review 
Board, United States Department of Labor, the Administrative Law Judge 
shall certify the record in the case to the Administrative Review Board, 
which shall make a decision to decertify or not on the basis of the 
hearing record.
    (b) The decision of the Administrative Review Board shall be final, 
shall be in writing, and shall set forth the factual and legal basis for 
the decision. Notice of the Administrative Review Board's decision shall 
be published in the Federal Register, and copies shall be made available 
for public inspection and copying.

[61 FR 19983, May 3, 1996]



PART 660_INTRODUCTION TO THE REGULATIONS FOR WORKFORCE INVESTMENT 
SYSTEMS UNDER TITLE I OF THE WORKFORCE INVESTMENT ACT--Table of 
Contents




Sec.
660.100 What is the purpose of title I of the Workforce Investment Act 
          of 1998?
660.200 What do the regulations for workforce investment systems under 
          title I of the Workforce Investment Act cover?
660.300 What definitions apply to the regulations for workforce 
          investment systems under title I of WIA?

    Authority: Sec. 506(c), Pub. L. 105-220; 20 U.S.C. 9276(c).

[[Page 731]]


    Source: 65 FR 49388, Aug. 11, 2000, unless otherwise noted.



Sec. 660.100  What is the purpose of title I of the Workforce 
Investment Act of 1998?

    The purpose of title I of the Workforce Investment Act of 1998 (WIA) 
is to provide workforce investment activities that increase the 
employment, retention and earnings of participants, and increase 
occupational skill attainment by participants, which will improve the 
quality of the workforce, reduce welfare dependency, and enhance the 
productivity and competitiveness of the Nation's economy. These goals 
are achieved through the workforce investment system. (WIA sec. 106.)



Sec. 660.200  What do the regulations for workforce investment systems 
under title I of the Workforce Investment Act cover?

    The regulations found in 20 CFR parts 660 through 671 set forth the 
regulatory requirements that are applicable to programs operated with 
funds provided under title I of WIA. This part 660 describes the purpose 
of that Act, explains the format of these regulations and sets forth 
definitions for terms that apply to each part. Part 661 contains 
regulations relating to Statewide and local governance of the workforce 
investment system. Part 662 describes the One-Stop system and the roles 
of One-Stop partners. Part 663 sets forth requirements applicable to WIA 
title I programs serving adults and dislocated workers. Part 664 sets 
forth requirements applicable to WIA title I programs serving youth. 
Part 665 contains regulations relating to Statewide activities. Part 666 
describes the WIA title I performance accountability system. Part 667 
sets forth the administrative requirements applicable to programs funded 
under WIA title I. Parts 668 and 669 contain the particular requirements 
applicable to programs serving Indians and Native Americans and Migrant 
and Seasonal Farmworkers, respectively. Parts 670 and 671 describe the 
particular requirements applicable to the Job Corps and other national 
programs, respectively. In addition, part 652 describes the 
establishment and functioning of State Employment Services under the 
Wagner-Peyser Act, and 29 CFR part 37 contains the Department's 
nondiscrimination regulations implementing WIA section 188.



Sec. 660.300  What definitions apply to the regulations for workforce 
investment systems under title I of WIA?

    In addition to the definitions set forth at WIA section 101, the 
following definitions apply to the regulations in 20 CFR parts 660 
through 671:
    Department or DOL means the U.S. Department of Labor, including its 
agencies and organizational units.
    Designated region means a combination of local areas that are partly 
or completely in a single labor market area, economic development 
region, or other appropriate contiguous subarea of a State, that is 
designated by the State under WIA section 116(c), or a similar 
interstate region that is designated by two or more States under WIA 
section 116(c)(4).
    Employment and training activity means a workforce investment 
activity that is carried out for an adult or dislocated worker.
    EO data means data on race and ethnicity, age, sex, and disability 
required by 29 CFR part 37 of the DOL regulations implementing section 
188 of WIA, governing nondiscrimination.
    ETA means the Employment and Training Administration of the U.S. 
Department of Labor.
    Grant means an award of WIA financial assistance by the U.S. 
Department of Labor to an eligible WIA recipient.
    Grantee means the direct recipient of grant funds from the 
Department of Labor. A grantee may also be referred to as a recipient.
    Individual with a disability means an individual with any disability 
(as defined in section 3 of the Americans with Disabilities Act of 1990 
(42 U.S.C. 12102)). For purposes of WIA section 188, this term is 
defined at 29 CFR 37.4.
    Labor Federation means an alliance of two or more organized labor 
unions for the purpose of mutual support and action.
    Literacy means an individual's ability to read, write, and speak in 
English, and to compute, and solve problems, at

[[Page 732]]

levels of proficiency necessary to function on the job, in the family of 
the individual, and in society.
    Local Board means a Local Workforce Investment Board established 
under WIA section 117, to set policy for the local workforce investment 
system.
    Obligations means the amounts of orders placed, contracts and 
subgrants awarded, goods and services received, and similar transactions 
during a funding period that will require payment by the recipient or 
subrecipient during the same or a future period. For purposes of the 
reallotment process described at 20 CFR 667.150, the Secretary also 
treats as State obligations any amounts allocated by the State under WIA 
sections 128(b) and 133(b) to a single area State or to a balance of 
State local area administered by a unit of the State government, and 
inter-agency transfers and other actions treated by the State as 
encumbrances against amounts reserved by the State under WIA sections 
128(a) and 133(a) for Statewide workforce investment activities.
    Outlying area means the United States Virgin Islands, Guam, American 
Samoa, the Commonwealth of the Northern Mariana Islands, the Republic of 
the Marshall Islands, the Federated States of Micronesia, and the 
Republic of Palau.
    Participant means an individual who has registered under 20 CFR 
663.105 or 664.215 and has been determined to be eligible to participate 
in and who is receiving services (except for follow up services) under a 
program authorized by WIA title I. Participation commences on the first 
day, following determination of eligibility, on which the individual 
begins receiving core, intensive, training or other services provided 
under WIA title I.
    Recipient means an entity to which a WIA grant is awarded directly 
from the Department of Labor to carry out a program under title I of 
WIA. The State is the recipient of funds awarded under WIA sections 
127(b)(1)(C)(I)(II), 132(b)(1)(B) and 132(b)(2)(B). The recipient is the 
entire legal entity that received the award and is legally responsible 
for carrying out the WIA program, even if only a particular component of 
the entity is designated in the grant award document.
    Register means the process for collecting information to determine 
an individual's eligibility for services under WIA title I. Individuals 
may be registered in a variety ways, as described in 20 CFR 663.105 and 
20 CFR 664.215.
    Secretary means the Secretary of the U.S. Department of Labor.
    Self certification means an individual's signed attestation that the 
information he/she submits to demonstrate eligibility for a program 
under title I of WIA is true and accurate.
    State means each of the several States of the United States, the 
District of Columbia and the Commonwealth of Puerto Rico. The term 
``State'' does not include outlying areas.
    State Board means a State Workforce Investment Board established 
under WIA section 111.
    Subgrant means an award of financial assistance in the form of 
money, or property in lieu of money made under a grant by a grantee to 
an eligible subrecipient. The term includes financial assistance when 
provided by contractual legal agreement, but does not include 
procurement purchases, nor does it include any form of assistance which 
is excluded from the definition of Grant in this part.
    Subrecipient means an entity to which a subgrant is awarded and 
which is accountable to the recipient (or higher tier subrecipient) for 
the use of the funds provided. DOL's audit requirements for States, 
local governments, and non-profit organizations provides guidance on 
distinguishing between a subrecipient and a vendor at 29 CFR 99.210.
    Unobligated balance means the portion of funds authorized by the 
Federal agency that has not been obligated by the grantee and is 
determined by deducting the cumulative obligations from the cumulative 
funds authorized.
    Vendor means an entity responsible for providing generally required 
goods or services to be used in the WIA program. These goods or services 
may be for the recipient's or subrecipient's own use or for the use of 
participants in the program. DOL's audit requirements for States, local 
governments,

[[Page 733]]

and non-profit organizations provides guidance on distinguishing between 
a subrecipient and a vendor at 29 CFR 99.210.
    Wagner-Peyser Act means the Act of June 6, 1933, as amended, 
codified at 29 U.S.C. 49 et seq.
    WIA regulations mean the regulations in 20 CFR parts 660 through 
671, the Wagner-Peyser Act regulations in 20 CFR part 652, subpart C, 
and the regulations implementing WIA section 188 in 29 CFR part 37.
    Workforce investment activities mean the array of activities 
permitted under title I of WIA, which include employment and training 
activities for adults and dislocated workers, as described in WIA 
section 134, and youth activities, as described in WIA section 129.
    Youth activity means a workforce investment activity that is carried 
out for youth.



PART 661_STATEWIDE AND LOCAL GOVERNANCE OF THE WORKFORCE INVESTMENT 
SYSTEM UNDER TITLE I OF THE WORKFORCE INVESTMENT ACT--Table of Contents




                 Subpart A_General Governance Provisions

Sec.
661.100 What is the workforce investment system?
661.110 What is the role of the Department of Labor as the Federal 
          governmental partner in the governance of the workforce 
          investment system?
661.120 What are the roles of the local and State governmental partner 
          in the governance of the workforce investment system?

                  Subpart B_State Governance Provisions

661.200 What is the State Workforce Investment Board?
661.203 What is meant by the terms ``optimum policy making authority'' 
          and ``expertise relating to [a] program, service or 
          activity''?
661.205 What is the role of the State Board?
661.207 How does the State Board meet its requirement to conduct 
          business in an open manner under the ``sunshine provision'' of 
          WIA section 111(g)?
661.210 Under what circumstances may the Governor select an alternative 
          entity in place of the State Workforce Investment Board?
661.220 What are the requirements for the submission of the State 
          Workforce Investment Plan?
661.230 What are the requirements for modification of the State 
          Workforce Investment Plan?
661.240 How do the unified planning requirements apply to the five-year 
          strategic WIA and Wagner-Peyser plan and to other Department 
          of Labor plans?
661.250 What are the requirements for designation of local workforce 
          investment areas?
661.260 What are the requirements for automatic designation of workforce 
          investment areas relating to units of local government with a 
          population of 500,000 or more?
661.270 What are the requirements for temporary and subsequent 
          designation of workforce investment areas relating to areas 
          that had been designated as service delivery areas under JTPA?
661.280 What right does an entity have to appeal the Governor's decision 
          rejecting a request for designation as a workforce investment 
          area?
661.290 Under what circumstances may States require Local Boards to take 
          part in regional planning activities?

                  Subpart C_Local Governance Provisions

661.300 What is the Local Workforce Investment Board?
661.305 What is the role of the Local Workforce Investment Board?
661.307 How does the Local Board meet its requirement to conduct 
          business in an open manner under the ``sunshine provision'' of 
          WIA section 117(e)?
661.310 Under what limited conditions may a Local Board directly be a 
          provider of core services, intensive services, or training 
          services, or act as a One-Stop Operator?
661.315 Who are the required members of the Local Workforce Investment 
          Boards?
661.317 Who may be selected to represent a particular One-Stop partner 
          program on the Local Board when there is more than one partner 
          program entity in the local area?
661.320 Who must chair a Local Board?
661.325 What criteria will be used to establish the membership of the 
          Local Board?
661.330 Under what circumstances may the State use an alternative entity 
          as the Local Workforce Investment Board?
661.335 What is a youth council, and what is its relationship to the 
          Local Board?
661.340 What are the responsibilities of the youth council?
661.345 What are the requirements for the submission of the local 
          workforce investment plan?

[[Page 734]]

661.350 What are the contents of the local workforce investment plan?
661.355 When must a local plan be modified?

                 Subpart D_Waivers and Work-Flex Waivers

661.400 What is the purpose of the General Statutory and Regulatory 
          Waiver Authority provided at section 189(i)(4) of the 
          Workforce Investment Act?
661.410 What provisions of WIA and the Wagner-Peyser Act may be waived, 
          and what provisions may not be waived?
661.420 Under what conditions may a Governor request, and the Secretary 
          approve, a general waiver of statutory or regulatory 
          requirements under WIA section189(i)(4)?
661.430 Under what conditions may the Governor submit a Workforce 
          Flexibility Plan?
661.440 What limitations apply to the State's Workforce Flexibility Plan 
          authority under WIA?

    Authority: Sec. 506(c), Pub. L. 105-220; 20 U.S.C. 9276(c).

    Source: 65 FR 49390, Aug. 11, 2000, unless otherwise noted.



                 Subpart A_General Governance Provisions



Sec. 661.100  What is the workforce investment system?

    Under title I of WIA, the workforce investment system provides the 
framework for delivery of workforce investment activities at the State 
and local levels to individuals who need those services, including job 
seekers, dislocated workers, youth, incumbent workers, new entrants to 
the workforce, veterans, persons with disabilities, and employers. Each 
State's Governor is required, in accordance with the requirements of 
this part, to establish a State Board; to designate local workforce 
investment areas; and to oversee the creation of Local Boards and One-
Stop service delivery systems in the State.



Sec. 661.110  What is the role of the Department of Labor as the Federal 
governmental partner in the governance of the workforce investment system?

    (a) Successful governance of the workforce investment system will be 
achieved through cooperation and coordination of Federal, State and 
local governments.
    (b) The Department of Labor sees as one of its primary roles 
providing leadership and guidance to support a system that meets the 
objectives of title I of WIA, and in which State and local partners have 
flexibility to design systems and deliver services in a manner designed 
to best achieve the goals of WIA based on their particular needs. The 
WIA regulations provide the framework in which State and local officials 
can exercise such flexibility within the confines of the statutory 
requirements. Wherever possible, system features such as design options 
and categories of services are broadly defined, and are subject to State 
and local interpretation.
    (c) The Secretary, in consultation with other Federal Agencies, as 
appropriate, may publish guidance on interpretations of statutory and 
regulatory provisions. State and local policies, interpretations, 
guidelines and definitions that are consistent with interpretations 
contained in such guidance will be considered to be consistent with the 
Act for purposes of Sec. 661.120.



Sec. 661.120  What are the roles of the local and State governmental 
partner in the governance of the workforce investment system?

    (a) Local areas should establish policies, interpretations, 
guidelines and definitions to implement provisions of title I of WIA to 
the extent that such policies, interpretations, guidelines and 
definitions are not inconsistent with the Act and the regulations issued 
under the Act, Federal statutes and regulations governing One-Stop 
partner programs, and with State policies.
    (b) States should establish policies, interpretations, guidelines 
and definitions to implement provisions of title I of WIA to the extent 
that such policies, interpretations, guidelines and definitions are not 
inconsistent with the Act and the regulations issued under the Act, as 
well as Federal statutes and regulations governing One-Stop partner 
programs.

[[Page 735]]



                  Subpart B_State Governance Provisions



Sec. 661.200  What is the State Workforce Investment Board?

    (a) The State Board is a board established by the Governor in 
accordance with the requirements of WIA section 111 and this section.
    (b) The membership of the State Board must meet the requirements of 
WIA section 111(b). The State Board must contain two or more members 
representing the categories described in WIA section 111(b)(1)(C)(iii)-
(v), and special consideration must be given to chief executive officers 
of community colleges and community based organizations in the selection 
of members representing the entities identified in WIA section 
111(b)(1)(C)(v).
    (c) The Governor may appoint any other representatives or agency 
officials, such as agency officials responsible for economic 
development, child support and juvenile justice programs in the State.
    (d) Members who represent organizations, agencies or other entities 
must be individuals with optimum policy making authority within the 
entities they represent.
    (e) A majority of members of the State Board must be representatives 
of business. Members who represent business must be individuals who are 
owners, chief executive officers, chief operating officers, or other 
individuals with optimum policy making or hiring authority, including 
members of Local Boards.
    (f) The Governor must appoint the business representatives from 
among individuals who are nominated by State business organizations and 
business trade associations. The Governor must appoint the labor 
representatives from among individuals who are nominated by State labor 
federations.
    (g) The Governor must select a chairperson of the State Board from 
the business representatives on the board.
    (h) The Governor may establish terms of appointment or other 
conditions governing appointment or membership on the State Board.
    (i) For the programs and activities carried out by One-Stop 
partners, as described in WIA section 121(b) and 20 CFR 662.200 and 
662.210, the State Board must include:
    (1) The lead State agency officials with responsibility for such 
program, or
    (2) In any case in which no lead State agency official has 
responsibility for such a program service, a representative in the State 
with expertise relating to such program, service or activity.
    (3) If the director of the designated State unit, as defined in 
section 7(8)(B) of the Rehabilitation Act, does not represent the State 
Vocational Rehabilitation Services program (VR program) on the State 
Board, then the State must describe in its State plan how the member of 
the State Board representing the VR program will effectively represent 
the interests, needs, and priorities of the VR program and how the 
employment needs of individuals with disabilities in the State will be 
addressed.
    (j) An individual may be appointed as a representative of more than 
one entity if the individual meets all the criteria for representation, 
including the criteria described in paragraphs (d) through (f) of this 
section, for each entity. (WIA sec. 111)



Sec. 661.203  What is meant by the terms ``optimum policy making 
authority'' and ``expertise relating to [a] program, service or activity''?

    For purposes of selecting representatives to State and local 
workforce investment boards:
    (a) A representative with ``optimum policy making authority'' is an 
individual who can reasonably be expected to speak affirmatively on 
behalf of the entity he or she represents and to commit that entity to a 
chosen course of action.
    (b) A representative with ``expertise relating to [a] program, 
service or activity'' includes a person who is an official with a One-
stop partner program and a person with documented expertise relating to 
the One-stop partner program.



Sec. 661.205  What is the role of the State Board?

    The State Board must assist the Governor in the:

[[Page 736]]

    (a) Development of the State Plan;
    (b) Development and continuous improvement of a Statewide system of 
activities that are funded under subtitle B of title I of WIA, or 
carried out through the One-Stop delivery system, including--
    (1) Development of linkages in order to assure coordination and 
nonduplication among the programs and activities carried out by One-Stop 
partners, including, as necessary, addressing any impasse situations in 
the development of the local Memorandum of Understanding; and
    (2) Review of local plans;
    (c) Commenting at least once annually on the measures taken under 
section 113(b)(14) of the Carl D. Perkins Vocational and Technical 
Education Act;
    (d) Designation of local workforce investment areas,
    (e) Development of allocation formulas for the distribution of funds 
for adult employment and training activities and youth activities to 
local areas, as permitted under WIA sections 128(b)(3)(B) and 
133(b)(3)(B);
    (f) Development and continuous improvement of comprehensive State 
performance measures, including State adjusted levels of performance, to 
assess the effectiveness of the workforce investment activities in the 
State, as required under WIA section 136(b);
    (g) Preparation of the annual report to the Secretary described in 
WIA section 136(d);
    (h) Development of the Statewide employment statistics system 
described in section 15(e) of the Wagner-Peyser Act; and
    (i) Development of an application for an incentive grant under WIA 
section 503. (WIA sec. 111(d).)



Sec. 661.207  How does the State Board meet its requirement to conduct 
business in an open manner under the ``sunshine provision'' of WIA 
section 111(g)?

    The State Board must conduct its business in an open manner as 
required by WIA section 111(g), by making available to the public, on a 
regular basis through open meetings, information about the activities of 
the State Board. This includes information about the State Plan prior to 
submission of the plan; information about membership; the development of 
significant policies, interpretations, guidelines and definitions; and, 
on request, minutes of formal meetings of the State Board.



Sec. 661.210  Under what circumstances may the Governor select an 
alternative entity in place of the State Workforce Investment Board?

    (a) The State may use any State entity that meets the requirements 
of WIA section 111(e) to perform the functions of the State Board.
    (b) If the State uses an alternative entity, the State workforce 
investment plan must demonstrate that the alternative entity meets all 
three of the requirements of WIA section 111(e). Section 111(e) requires 
that such entity:
    (1) Was in existence on December 31, 1997;
    (2)(i) Was established under section 122 (relating to State Job 
Training Coordinating Councils) or title VII (relating to State Human 
Resource Investment Councils) of the Job Training Partnership Act (29 
U.S.C.1501 et seq.), as in effect on December 31, 1997, or
    (ii) Is substantially similar to the State Board described in WIA 
section 111(a), (b), and (c) and Sec. 661.200; and
    (3) Includes, at a minimum, two or more representatives of business 
in the State and two or more representatives of labor organizations in 
the State.
    (c) If the alternative entity does not provide for representative 
membership of each of the categories of required State Board membership 
under WIA section 111(b), the State Plan must explain the manner in 
which the State will ensure an ongoing role for any unrepresented 
membership group in the workforce investment system. The State Board may 
maintain an ongoing role for an unrepresented membership group, 
including entities carrying out One-stop partner programs, by means such 
as regularly scheduled consultations with entities within the 
unrepresented membership groups, by providing an opportunity for input 
into the State Plan or other policy development by unrepresented 
membership groups, or by establishing an advisory committee of 
unrepresented membership groups.

[[Page 737]]

    (d) If the membership structure of the alternative entity is 
significantly changed after December 31, 1997, the entity will no longer 
be eligible to perform the functions of the State Board. In such case, 
the Governor must establish a new State Board which meets all of the 
criteria of WIA section 111(b).
    (e) A significant change in the membership structure includes any 
significant change in the organization of the alternative entity or in 
the categories of entities represented on the alternative entity which 
requires a change to the alternative entity's charter or a similar 
document that defines the formal organization of the alternative entity, 
regardless of whether the required change to the document has or has not 
been made. A significant change in the membership structure is 
considered to have occurred when members are added to represent groups 
not previously represented on the entity. A significant change in the 
membership structure is not considered to have occurred when additional 
members are added to an existing membership category, when non-voting 
members are added, or when a member is added to fill a vacancy created 
in an existing membership category.
    (f) In 20 CFR parts 660 through 671, all references to the State 
Board also apply to an alternative entity used by a State.



Sec. 661.220  What are the requirements for the submission of the 
State Workforce Investment Plan?

    (a) The Governor of each State must submit a State Workforce 
Investment Plan (State Plan) in order to be eligible to receive funding 
under title I of WIA and the Wagner-Peyser Act. The State Plan must 
outline the State's five year strategy for the workforce investment 
system.
    (b) The State Plan must be submitted in accordance with planning 
guidelines issued by the Secretary of Labor. The planning guidelines set 
forth the information necessary to document the State's vision, goals, 
strategies, policies and measures for the workforce investment system 
(that were arrived at through the collaboration of the Governor, chief 
elected officials, business and other parties), as well as the 
information required to demonstrate compliance with WIA, and the 
information detailed by WIA and the WIA regulations, including 29 CFR 
part 37, and the Wagner-Peyser Act and the Wagner-Peyser regulations at 
20 CFR part 652:
    (c) The State Plan must contain a description of the State's 
performance accountability system, and the State performance measures in 
accordance with the requirements of WIA section 136 and 20 CFR part 666.
    (d) The State must provide an opportunity for public comment on and 
input into the development of the State Plan prior to its submission. 
The opportunity for public comment must include an opportunity for 
comment by representatives of business, representatives of labor 
organizations, and chief elected official(s) and must be consistent with 
the requirement, at WIA section 111(g), that the State Board makes 
information regarding the State Plan and other State Board activities 
available to the public through regular open meetings. The State Plan 
must describe the State's process and timeline for ensuring a meaningful 
opportunity for public comment.
    (e) The Secretary reviews completed plans and must approve all plans 
within ninety days of their submission, unless the Secretary determines 
in writing that:
    (1) The plan is inconsistent with the provisions of title I of WIA 
or the WIA regulations, including 29 CFR part 37. For example, a finding 
of inconsistency would be made if the Secretary and the Governor have 
not reached agreement on the adjusted levels of performance under WIA 
section 136(b)(3)(A), or there is not an effective strategy in place to 
ensure development of a fully operational One-Stop delivery system in 
the State; or
    (2) The portion of the plan describing the detailed Wagner-Peyser 
plan does not satisfy the criteria for approval of such plans as 
provided in section 8(d) of the Wagner-Peyser Act or the Wagner-Peyser 
regulations at 20 CFR part 652.
    (3) A plan which is incomplete, or which does not contain sufficient 
information to determine whether it is consistent with the statutory or 
regulatory requirements of title I of WIA or of section 8(d) of the 
Wagner-Peyser

[[Page 738]]

Act, will be considered to be inconsistent with those requirements.



Sec. 661.230  What are the requirements for modification of the State 
Workforce Investment Plan?

    (a) The State may submit a modification of its workforce investment 
plan at any time during the five-year life of the plan.
    (b) Modifications are required when:
    (1) Changes in Federal or State law or policy substantially change 
the assumptions upon which the plan is based.
    (2) There are changes in the Statewide vision, strategies, policies, 
performance indicators, the methodology used to determine local 
allocation of funds, reorganizations which change the working 
relationship with system employees, changes in organizational 
responsibilities, changes to the membership structure of the State Board 
or alternative entity and similar substantial changes to the State's 
workforce investment system.
    (3) The State has failed to meet performance goals, and must adjust 
service strategies.
    (c) Modifications are required in accordance with the Wagner-Peyser 
provisions at 20 CFR 652.212.
    (d) Modifications to the State Plan are subject to the same public 
review and comment requirements that apply to the development of the 
original State Plan.
    (e) State Plan modifications will be approved by the Secretary based 
on the approval standard applicable to the original State Plan under 
Sec. 661.220(e).



Sec. 661.240  How do the unified planning requirements apply to the 
five-year strategic WIA and Wagner-Peyser plan and to other Department 
of Labor plans?

    (a) A State may submit to the Secretary a unified plan for any of 
the programs or activities described in WIA section 501(b)(2). This 
includes the following DOL programs and activities:
    (1) The five-year strategic WIA and Wagner-Peyser plan;
    (2) Trade adjustment assistance activities and NAFTA-TAA;
    (3) Veterans' programs under 38 U.S.C. Chapter 41;
    (4) Programs authorized under State unemployment compensation laws;
    (5) Welfare-to-Work (WtW) programs; and
    (6) Senior Community Service Employment Programs under title V of 
the Older Americans Act.
    (b) For purposes of paragraph (a) of this section:
    (1) A State may submit, as part of the unified plan, any plan, 
application form or any other similar document, that is required as a 
condition for the approval of Federal funding under the applicable 
program. These plans include such things as the WIA plan, or the WtW 
plan. They do not include jointly executed funding instruments, such as 
grant agreements, or Governor/Secretary Agreements or items such as 
corrective actions plans.
    (2) A state may submit a unified plan meeting the requirements of 
the Interagency guidance entitled State Unified Plan, Planning Guidance 
for State Unified Plans Under Section 501 of the Workforce Investment 
Act of 1998, in lieu of completing the individual State planning 
guidelines of the programs covered by the unified plan.
    (c) A State which submits a unified plan covering an activity or 
program described in subsection 501(b) of WIA that is approved under 
subsection 501(d) of the Act will not be required to submit any other 
plan or application in order to receive Federal funds to carry out the 
activity or program.
    (d) Each portion of a unified plan submitted under paragraph (a) of 
this section is subject to the particular requirements of Federal law 
authorizing the program. All grantees are still subject to such things 
as reporting and record-keeping requirements, corrective action plan 
requirements and other generally applicable requirements.
    (e) A unified plan must contain the information required by WIA 
section 501(c) and will be approved in accordance with the requirements 
of WIA section 501(d).



Sec. 661.250  What are the requirements for designation of local 
workforce investment areas?

    (a) The Governor must designate local workforce investment areas in

[[Page 739]]

order for the State to receive funding under title I of WIA.
    (b) The Governor must take into consideration the factors described 
in WIA section 116(a)(1)(B) in making designations of local areas. Such 
designation must be made in consultation with the State Board, and after 
consultation with chief elected officials. The Governor must also 
consider comments received through the public comment process described 
in the State workforce investment plan under Sec. 661.220(d).
    (c) The Governor may approve a request for designation as a 
workforce investment area from any unit of general local government, 
including a combination of such units, if the State Board determines 
that the area meets the requirements of WIA section 116(a)(1)(B) and 
recommends designation.
    (d) The Governor of any State that was a single service delivery 
area State under the Job Training Partnership Act as of July 1, 1998, 
and only those States, may designate the State as a single local 
workforce investment area State. (WIA sec.116.)



Sec. 661.260  What are the requirements for automatic designation of 
workforce investment areas relating to units of local government with 
a population of 500,000 or more?

    The requirements for automatic designation relating to units of 
local government with a population of 500,000 or more and to rural 
concentrated employment programs are contained in WIA section 116(a)(2). 
The Governor has authority to determine the source of population data to 
use in making these designations.



Sec. 661.270  What are the requirements for temporary and subsequent 
designation of workforce investment areas relating to areas that had 
been designated as service delivery areas under JTPA?

    The requirements for temporary and subsequent designation relating 
to areas that had been designated as service delivery areas under JTPA 
are contained in WIA section 116(a)(3).



Sec. 661.280  What right does an entity have to appeal the Governor's 
decision rejecting a request for designation as a workforce investment area?

    (a) A unit of local government (or combination of units) or a rural 
concentrated employment program grant recipient (as described at WIA 
section 116(a)(2)(B), which has requested but has been denied its 
request for designation as a workforce investment area under Sec. Sec. 
661.260 through 661.270, may appeal the decision to the State Board, in 
accordance with appeal procedures established in the State Plan.
    (b) If a decision on the appeal is not rendered in a timely manner 
or if the appeal to the State Board does not result in designation, the 
entity may request review by the Secretary of Labor, under the 
procedures set forth at 20 CFR 667.640(a).
    (c) The Secretary may require that the area be designated as a 
workforce investment area, if the Secretary determines that:
    (1) The entity was not accorded procedural rights under the State 
appeals process; or
    (2) The area meets the automatic designation requirements at WIA 
section 116(a)(2) or the temporary and subsequent designation 
requirements at WIA section 116(a)(3), as appropriate.



Sec. 661.290  Under what circumstances may States require Local Boards 
to take part in regional planning activities?

    (a) The State may require Local Boards within a designated region 
(as defined at 20 CFR 660.300) to:
    (1) Participate in a regional planning process that results in 
regional performance measures for workforce investment activities under 
title I of WIA. Regions that meet or exceed the regional performance 
measures may receive regional incentive grants;
    (2) Share, where feasible, employment and other types of information 
that will assist in improving the performance of all local areas in the 
designated region on local performance measures; and
    (3) Coordinate the provision of WIA title I services, including 
supportive services such as transportation, across

[[Page 740]]

the boundaries of local areas within the designated region.
    (b) Two or more States may designate a labor market area, economic 
development region, or other appropriate contiguous subarea of the 
States as an interstate region. In such cases, the States may jointly 
exercise the State's functions described in this section.
    (c) Designation of intrastate regions and interstate regions and 
their corresponding performance measures must be described in the 
respective State Plan(s). For interstate regions, the roles of the 
respective Governors, State Boards and Local Boards must be described in 
the respective State Plans.
    (d) Unless agreed to by all affected chief elected officials and the 
Governor, these regional planning activities may not substitute for or 
replace the requirements applicable to each local area under other 
provisions of the WIA. (WIA sec. 116(a).)



                  Subpart C_Local Governance Provisions



Sec. 661.300  What is the Local Workforce Investment Board?

    (a) The Local Workforce Investment Board (Local Board) is appointed 
by the chief elected official in each local area in accordance with 
State criteria established under WIA section 117(b), and is certified by 
the Governor every two years, in accordance with WIA section 117(c)(2).
    (b) In partnership with the chief elected official(s), the Local 
Board sets policy for the portion of the Statewide workforce investment 
system within the local area.
    (c) The Local Board and the chief elected official(s) may enter into 
an agreement that describes the respective roles and responsibilities of 
the parties.
    (d) The Local Board, in partnership with the chief elected official, 
develops the local workforce investment plan and performs the functions 
described in WIA section 117(d). (WIA sec.117 (d).)
    (e) If a local area includes more than one unit of general local 
government in accordance with WIA section 117 (c)(1)(B), the chief 
elected officials of such units may execute an agreement to describe 
their responsibilities for carrying out the roles and responsibilities. 
If, after a reasonable effort, the chief elected officials are unable to 
reach agreement, the Governor may appoint the members of the local board 
from individuals nominated or recommended as specified in WIA section 
117(b).
    (f) If the State Plan indicates that the State will be treated as a 
local area under WIA title I, the Governor may designate the State Board 
to carry out any of the roles of the Local Board.



Sec. 661.305  What is the role of the Local Workforce Investment Board?

    (a) WIA section 117(d) specifies that the Local Board is responsible 
for:
    (1) Developing the five-year local workforce investment plan (Local 
Plan) and conducting oversight of the One-Stop system, youth activities 
and employment and training activities under title I of WIA, in 
partnership with the chief elected official;
    (2) Selecting One-Stop operators with the agreement of the chief 
elected official;
    (3) Selecting eligible youth service providers based on the 
recommendations of the youth council, and identifying eligible providers 
of adult and dislocated worker intensive services and training services, 
and maintaining a list of eligible providers with performance and cost 
information, as required in 20 CFR part 663, subpart E;
    (4) Developing a budget for the purpose of carrying out the duties 
of the Local Board, subject to the approval of the chief elected 
official;
    (5) Negotiating and reaching agreement on local performance measures 
with the chief elected official and the Governor;
    (6) Assisting the Governor in developing the Statewide employment 
statistics system under the Wagner-Peyser Act;
    (7) Coordinating workforce investment activities with economic 
development strategies and developing employer linkages; and
    (8) Promoting private sector involvement in the Statewide workforce 
investment system through effective connecting, brokering, and coaching 
activities through intermediaries such

[[Page 741]]

as the One-Stop operator in the local area or through other 
organizations, to assist employers in meeting hiring needs.
    (b) The Local Board, in cooperation with the chief elected official, 
appoints a youth council as a subgroup of the Local Board and 
coordinates workforce and youth plans and activities with the youth 
council, in accordance with WIA section 117(h) and Sec. 661.335.
    (c) Local Boards which are part of a State designated region for 
regional planning must carry out the regional planning responsibilities 
required by the State in accordance with WIA section 116(c) and Sec. 
661.290. (WIA sec. 117.)



Sec. 661.307  How does the Local Board meet its requirement to conduct 
business in an open manner under the ``sunshine provision'' of WIA 
section 117(e)?

    The Local Board must conduct its business in an open manner as 
required by WIA section 117(e), by making available to the public, on a 
regular basis through open meetings, information about the activities of 
the Local Board. This includes information about the Local Plan prior to 
submission of the plan; information about membership; the development of 
significant policies, interpretations, guidelines and definitions; and, 
on request, minutes of formal meetings of the Local Board.



Sec. 661.310  Under what limited conditions may a Local Board directly 
be a provider of core services, intensive services, or training services, 
or act as a One-Stop Operator?

    (a) A Local Board may not directly provide core services, or 
intensive services, or be designated or certified as a One-Stop 
operator, unless agreed to by the chief elected official and the 
Governor.
    (b) A Local Board is prohibited from providing training services, 
unless the Governor grants a waiver in accordance with the provisions in 
WIA section 117(f)(1). The waiver shall apply for not more than one 
year. The waiver may be renewed for additional periods, but for not more 
than one additional year at a time.
    (c) The restrictions on the provision of core, intensive, and 
training services by the Local Board, and designation or certification 
as One-Stop operator, also apply to staff of the Local Board. (WIA sec. 
117(f)(1) and (f)(2).)



Sec. 661.315  Who are the required members of the Local Workforce 
Investment Boards?

    (a) The membership of Local Board must be selected in accordance 
with criteria established under WIA section 117(b)(1) and must meet the 
requirements of WIA section 117(b)(2). The Local Board must contain two 
or more members representing the categories described in WIA section 
117(b)(2)(A)(ii)--(v), and special consideration must be given to the 
entities identified in WIA section 117(b)(2)(A)(ii), (iv) and (v) in the 
selection of members representing those categories. The Local Board must 
contain at least one member representing each One-Stop partner.
    (b) The membership of Local Boards may include individuals or 
representatives of other appropriate entities, including entities 
representing individuals with multiple barriers to employment and other 
special populations, as determined by the chief elected official.
    (c) Members who represent organizations, agencies or other entities 
must be individuals with optimum policy making authority within the 
entities they represent.
    (d) A majority of the members of the Local Board must be 
representatives of business in the local area. Members representing 
business must be individuals who are owners, chief executive officers, 
chief operating officers, or other individuals with optimum policymaking 
or hiring authority. Business representatives serving on Local Boards 
may also serve on the State Board.
    (e) Chief elected officials must appoint the business 
representatives from among individuals who are nominated by local 
business organizations and business trade associations. Chief elected 
officials must appoint the labor representatives from among individuals 
who are nominated by local labor federations (or, for a local area in 
which no employees are represented by such organizations, other 
representatives of employees). (WIA sec. 117(b).)

[[Page 742]]

    (f) An individual may be appointed as a representative of more than 
one entity if the individual meets all the criteria for representation, 
including the criteria described in paragraphs (c) through (e) of this 
section, for each entity.



Sec. 661.317  Who may be selected to represent a particular One-Stop 
partner program on the Local Board when there is more than one partner 
program entity in the local area?

    When there is more than one grant recipient, administrative entity 
or organization responsible for administration of funds of a particular 
One-stop partner program in the local area, the chief elected official 
may appoint one or more members to represent all of those particular 
partner program entities. In making such appointments, the local elected 
official may solicit nominations from the partner program entities.



Sec. 661.320  Who must chair a Local Board?

    The Local Board must elect a chairperson from among the business 
representatives on the board. (WIA sec. 117(b)(5).)



Sec. 661.325  What criteria will be used to establish the membership 
of the Local Board?

    The Local Board is appointed by the chief elected official(s) in the 
local area in accordance with State criteria established under WIA 
section 117(b), and is certified by the Governor every two years, in 
accordance with WIA section 117(c)(2). The criteria for certification 
must be described in the State Plan. (WIA sec. 117(c).)



Sec. 661.330  Under what circumstances may the State use an alternative 
entity as the Local Workforce Investment Board?

    (a) The State may use any local entity that meets the requirements 
of WIA section 117(i) to perform the functions of the Local Board. WIA 
section 117(i) requires that such entity:
    (1) Was established to serve the local area (or the service delivery 
area that most closely corresponds to the local area);
    (2) Was in existence on December 31, 1997;
    (3)(i) Is a Private Industry Council established under section 102 
of the Job Training Partnership Act, as in effect on December 31, 1997; 
or
    (ii) Is substantially similar to the Local Board described in WIA 
section 117 (a), (b), and (c) and (h)(1) and (2); and,
    (4) Includes, at a minimum, two or more representatives of business 
in the local area and two or more representatives of labor organizations 
nominated by local labor federations or employees in the local area.
    (b)(1) If the Governor certifies an alternative entity to perform 
the functions of the Local Board; the State workforce investment plan 
must demonstrate that the alternative entity meets the requirements of 
WIA section 117(i), set forth in paragraph (a) of this section.
    (2) If the alternative entity does not provide for representative 
membership of each of the categories of required Local Board membership 
under WIA section 117(b), including all of the One-stop partner 
programs, the local workforce investment plan must explain the manner in 
which the Local Board will ensure an ongoing role for the unrepresented 
membership group in the local workforce investment system.
    (3) The Local Board may provide an ongoing role for an unrepresented 
membership group, including entities carrying out One-stop partner 
programs, by means such as regularly scheduled consultations with 
entities within the unrepresented membership groups, by providing an 
opportunity for input into the local plan or other policy development by 
unrepresented membership groups, or by establishing an advisory 
committee of unrepresented membership groups. The Local Board must enter 
into good faith negotiations over the terms of the MOU with all entities 
carrying out One-stop partner programs, including programs not 
represented on the alternative entity.
    (c) If the membership structure of an alternative entity is 
significantly changed after December 31, 1997, the entity will no longer 
be eligible to perform the functions of the Local Board.

[[Page 743]]

In such case, the chief elected official(s) must establish a new Local 
Board which meets all of the criteria of WIA section 117(a), (b), and 
(c) and (h)(1) and (2).
    (d) A significant change in the membership structure includes any 
significant change in the organization of the alternative entity or in 
the categories of entities represented on the alternative entity which 
requires a change to the alternative entity's charter or a similar 
document that defines the formal organization of the alternative entity, 
regardless of whether the required change to the document has or has not 
been made. A significant change in the membership structure is 
considered to have occurred when members are added to represent groups 
not previously represented on the entity. A significant change in the 
membership structure is not considered to have occurred when additional 
members are added to an existing membership category, when non-voting 
members (including a Youth Council) are added, or when a member is added 
to fill a vacancy created in an existing membership category.
    (e) In 20 CFR parts 660 through 671, all references to the Local 
Board must be deemed to also apply to an alternative entity used by a 
local area. (WIA sec. 117(i).)



Sec. 661.335  What is a youth council, and what is its relationship 
to the Local Board?

    (a) A youth council must be established as a subgroup within each 
Local Board.
    (b) The membership of each youth council must include:
    (1) Members of the Local Board, such as educators, which may include 
special education personnel, employers, and representatives of human 
service agencies, who have special interest or expertise in youth 
policy;
    (2) Members who represent service agencies, such as juvenile justice 
and local law enforcement agencies;
    (3) Members who represent local public housing authorities;
    (4) Parents of eligible youth seeking assistance under subtitle B of 
title I of WIA;
    (5) Individuals, including former participants, and members who 
represent organizations, that have experience relating to youth 
activities; and
    (6) Members who represent the Job Corps, if a Job Corps Center is 
located in the local area represented by the council.
    (c) Youth councils may include other individuals, who the chair of 
the Local Board, in cooperation with the chief elected official, 
determines to be appropriate.
    (d) Members of the youth council who are not members of the Local 
Board must be voting members of the youth council and nonvoting members 
of the Local Board.



Sec. 661.340  What are the responsibilities of the youth council?

    The youth council is responsible for:
    (a) Coordinating youth activities in a local area;
    (b) Developing portions of the local plan related to eligible youth, 
as determined by the chairperson of the Local Board;
    (c) Recommending eligible youth service providers in accordance with 
WIA section 123, subject to the approval of the Local Board;
    (d) Conducting oversight with respect to eligible providers of youth 
activities in the local area, subject to the approval of the Local 
Board; and
    (e) Carrying out other duties, as authorized by the chairperson of 
the Local Board, such as establishing linkages with educational agencies 
and other youth entities.



Sec. 661.345  What are the requirements for the submission of the 
local workforce investment plan?

    (a) WIA section 118 requires that each Local Board, in partnership 
with the appropriate chief elected officials, develops and submits a 
comprehensive five-year plan to the Governor which identifies and 
describes certain policies, procedures and local activities that are 
carried out in the local area, and that is consistent with the State 
Plan.
    (b) The Local Board must provide an opportunity for public comment 
on and input into the development of the local workforce investment plan 
prior to its submission, and the opportunity for

[[Page 744]]

public comment on the local plan must:
    (1) Make copies of the proposed local plan available to the public 
(through such means as public hearings and local news media);
    (2) Include an opportunity for comment by members of the Local Board 
and members of the public, including representatives of business and 
labor organizations;
    (3) Provide at least a thirty (30) day period for comment, beginning 
on the date on which the proposed plan is made available, prior to its 
submission to the Governor; and
    (4) Be consistent with the requirement, in WIA section 117(e), that 
the Local Board make information about the plan available to the public 
on a regular basis through open meetings.
    (c) The Local Board must submit any comments that express 
disagreement with the plan to the Governor along with the plan.



Sec. 661.350  What are the contents of the local workforce investment 
plan?

    (a) The local workforce investment plan must meet the requirements 
of WIA section 118(b). The plan must include:
    (1) An identification of the workforce investment needs of 
businesses, job-seekers, and workers in the local area;
    (2) An identification of current and projected employment 
opportunities and job skills necessary to obtain such opportunities;
    (3) A description of the One-Stop delivery system to be established 
or designated in the local area, including:
    (i) How the Local Board will ensure continuous improvement of 
eligible providers of services and ensure that such providers meet the 
employment needs of local employers and participants; and
    (ii) A copy of the local Memorandum(s) of Understanding between the 
Local Board and each of the One-Stop partners concerning the operation 
of the local One-Stop delivery system;
    (4) A description of the local levels of performance negotiated with 
the Governor and the chief elected official(s) to be used by the Local 
Board for measuring the performance of the local fiscal agent (where 
appropriate), eligible providers, and the local One-Stop delivery 
system;
    (5) A description and assessment of the type and availability of 
adult and dislocated worker employment and training activities in the 
local area, including a description of the local ITA system and the 
procedures for ensuring that exceptions to the use of ITA's, if any, are 
justified under WIA section 134(d)(4)(G)(ii) and 20 CFR 663.430;
    (6) A description of how the Local Board will coordinate local 
activities with Statewide rapid response activities;
    (7) A description and assessment of the type and availability of 
youth activities in the local area, including an identification of 
successful providers of such activities;
    (8) A description of the process used by the Local Board to provide 
opportunity for public comment, including comment by representatives of 
business and labor organizations, and input into the development of the 
local plan, prior to the submission of the plan;
    (9) An identification of the fiscal agent, or entity responsible for 
the disbursal of grant funds;
    (10) A description of the competitive process to be used to award 
grants and contracts for activities carried out under this subtitle I of 
WIA, including the process to be used to procure training services that 
are made as exceptions to the Individual Training Account process (WIA 
section 134(d)(4)(G)),
    (11) A description of the criteria to be used by the Governor and 
the Local Board, under 20 CFR 663.600, to determine whether funds 
allocated to a local area for adult employment and training activities 
under WIA sections 133(b)(2)(A) or (3) are limited, and the process by 
which any priority will be applied by the One-Stop operator;
    (12) In cases where an alternate entity functions as the Local 
Board, the information required at Sec. 661.330(b), and
    (13) Such other information as the Governor may require.
    (b) The Governor must review completed plans and must approve all 
such plans within ninety days of their submission, unless the Governor 
determines in writing that:

[[Page 745]]

    (1) There are deficiencies identified in local workforce investment 
activities carried out under this subtitle that have not been 
sufficiently addressed; or
    (2) The plan does not comply with title I of WIA and the WIA 
regulations, including the required consultations, the public comment 
provisions, and the nondiscrimination requirements of 29 CFR part 37.
    (c) In cases where the State is a single local area:
    (1) The Secretary performs the roles assigned to the Governor as 
they relate to local planning activities.
    (2) The Secretary issues planning guidance for such States.
    (3) The requirements found in WIA and in the WIA regulations for 
consultation with chief elected officials apply to the development of 
State and local plans and to the development and operation of the One-
Stop delivery system.
    (d) During program year 2000, if a local plan does not contain all 
of the elements described in paragraph (a) of this section, the Governor 
may approve a local plan on a transitional basis. A transitional 
approval under this paragraph is considered to be a written 
determination that the local plan is not approved under paragraph (b) of 
this section.



Sec. 661.355  When must a local plan be modified?

    The Governor must establish procedures governing the modification of 
local plans. Situations in which modifications may be required by the 
Governor include significant changes in local economic conditions, 
changes in the financing available to support WIA title I and partner-
provided WIA services, changes to the Local Board structure, or a need 
to revise strategies to meet performance goals.



                 Subpart D_Waivers and Work-Flex Waivers



Sec. 661.400  What is the purpose of the General Statutory and 
Regulatory Waiver Authority provided at section 189(i)(4) of the 
Workforce Investment Act?

    (a) The purpose of the general statutory and regulatory waiver 
authority is to provide flexibility to States and local areas and 
enhance their ability to improve the statewide workforce investment 
system.
    (b) A waiver may be requested to address impediments to the 
implementation of a strategic plan, including the continuous improvement 
strategy, consistent with the key reform principles of WIA. These key 
reform principles include:
    (1) Streamlining services and information to participants through a 
One-Stop delivery system;
    (2) Empowering individuals to obtain needed services and information 
to enhance their employment opportunities;
    (3) Ensuring universal access to core employment-related services;
    (4) Increasing accountability of States, localities and training 
providers for performance outcomes;
    (5) Establishing a stronger role for Local Boards and the private 
sector;
    (6) Providing increased State and local flexibility to implement 
innovative and comprehensive workforce investment systems; and
    (7) Improving youth programs through services which emphasize 
academic and occupational learning.



Sec. 661.410  What provisions of WIA and the Wagner-Peyser Act may 
be waived, and what provisions may not be waived?

    (a) The Secretary may waive any of the statutory or regulatory 
requirements of subtitles B and E of title I of WIA, except for 
requirements relating to:
    (1) Wage and labor standards;
    (2) Non-displacement protections;
    (3) Worker rights;
    (4) Participation and protection of workers and participants;
    (5) Grievance procedures and judicial review;
    (6) Nondiscrimination;
    (7) Allocation of funds to local areas;
    (8) Eligibility of providers or participants;
    (9) The establishment and functions of local areas and local boards;
    (10) Procedures for review and approval of State and Local plans; 
and
    (b) The Secretary may waive any of the statutory or regulatory 
requirements of sections 8 through 10 of the

[[Page 746]]

Wagner-Peyser Act (29 U.S.C. 49g-49i) except for requirements relating 
to:
    (1) The provision of services to unemployment insurance claimants 
and veterans; and
    (2) Universal access to the basic labor exchange services without 
cost to job seekers.
    (c) The Secretary does not intend to waive any of the statutory or 
regulatory provisions essential to the key reform principles embodied in 
the Workforce Investment Act, described in Sec. 661.400, except in 
extremely unusual circumstances where the provision can be demonstrated 
as impeding reform. (WIA sec. 189(i).)



Sec. 661.420  Under what conditions may a Governor request, and the 
Secretary approve, a general waiver of statutory or regulatory 
requirements under WIA section 189(i)(4)?

    (a) A Governor may request a general waiver in consultation with 
appropriate chief elected officials:
    (1) By submitting a waiver plan which may accompany the State's WIA 
5-year strategic Plan; or
    (2) After a State's WIA Plan is approved, by directly submitting a 
waiver plan.
    (b) A Governor's waiver request may seek waivers for the entire 
State or for one or more local areas.
    (c) A Governor requesting a general waiver must submit to the 
Secretary a plan to improve the Statewide workforce investment system 
that:
    (1) Identifies the statutory or regulatory requirements for which a 
waiver is requested and the goals that the State or local area, as 
appropriate, intends to achieve as a result of the waiver and how those 
goals relate to the Strategic Plan goals;
    (2) Describes the actions that the State or local area, as 
appropriate, has undertaken to remove State or local statutory or 
regulatory barriers;
    (3) Describes the goals of the waiver and the expected programmatic 
outcomes if the request is granted;
    (4) Describes the individuals affected by the waiver; and
    (5) Describes the processes used to:
    (i) Monitor the progress in implementing the waiver;
    (ii) Provide notice to any Local Board affected by the waiver;
    (iii) Provide any Local Board affected by the waiver an opportunity 
to comment on the request; and
    (iv) Ensure meaningful public comment, including comment by business 
and organized labor, on the waiver.
    (d) The Secretary issues a decision on a waiver request within 90 
days after the receipt of the original waiver request.
    (e) The Secretary will approve a waiver request if and only to the 
extent that:
    (1) The Secretary determines that the requirements for which a 
waiver is requested impede the ability of either the State or local area 
to implement the State's plan to improve the Statewide workforce 
investment system;
    (2) The Secretary determines that the waiver plan meets all of the 
requirements of WIA section 189(i)(4) and Sec. Sec. 661.400 through 
661.420; and
    (3) The State has executed a Memorandum of Understanding with the 
Secretary requiring the State to meet, or ensure that the local area 
meets, agreed-upon outcomes and to implement other appropriate measures 
to ensure accountability.
    (f) The Secretary will issue guidelines under which the States may 
request general waivers of WIA and Wagner-Peyser requirements. (WIA sec. 
189(i).)



Sec. 661.430  Under what conditions may the Governor submit a Workforce 
Flexibility Plan?

    (a) A State may submit to the Secretary, and the Secretary may 
approve, a workforce flexibility (work-flex) plan under which the State 
is authorized to waive, in accordance with the plan:
    (1) Any of the statutory or regulatory requirements under title I of 
WIA applicable to local areas, if the local area requests the waiver in 
a waiver application, except for:
    (i) Requirements relating to the basic purposes of title I of WIA;
    (ii) Wage and labor standards;
    (iii) Grievance procedures and judicial review;
    (iv) Nondiscrimination;
    (v) Eligibility of participants;
    (vi) Allocation of funds to local areas;

[[Page 747]]

    (vii) Establishment and functions of local areas and local boards;
    (viii) Review and approval of local plans;
    (ix) Worker rights, participation, and protection; and
    (x) Any of the statutory provisions essential to the key reform 
principles embodied in the Workforce Investment Act, described in Sec. 
661.400.
    (2) Any of the statutory or regulatory requirements applicable to 
the State under section 8 through 10 of the Wagner-Peyser Act (29 U.S.C. 
49g-49i), except for requirements relating to:
    (i) The provision of services to unemployment insurance claimants 
and veterans; and
    (ii) Universal access to basic labor exchange services without cost 
to job seekers; and
    (3) Any of the statutory or regulatory requirements under the Older 
Americans Act of 1965 (OAA) (42 U.S.C. 3001 et seq.), applicable to 
State agencies on aging with respect to activities carried out using 
funds allotted under OAA section 506(a)(3) (42 U.S.C. 3056d(a)(3)), 
except for requirements relating to:
    (i) The basic purposes of OAA;
    (ii) Wage and labor standards;
    (iii) Eligibility of participants in the activities; and
    (iv) Standards for agreements.
    (b) A State's workforce flexibility plan may accompany the State's 
five-year Strategic Plan or may be submitted separately. If it is 
submitted separately, the workforce flexibility plan must identify 
related provisions in the State's five-year Strategic Plan.
    (c) A workforce flexibility plan submitted under paragraph (a) of 
this section must include descriptions of:
    (1) The process by which local areas in the State may submit and 
obtain State approval of applications for waivers;
    (2) The statutory and regulatory requirements of title I of WIA that 
are likely to be waived by the State under the workforce flexibility 
plan;
    (3) The statutory and regulatory requirements of sections 8 through 
10 of the Wagner-Peyser Act that are proposed for waiver, if any;
    (4) The statutory and regulatory requirements of the Older Americans 
Act of 1965 that are proposed for waiver, if any;
    (5) The outcomes to be achieved by the waivers described in 
paragraphs (c)(1) to (4) of this section including, where appropriate, 
revisions to adjusted levels of performance included in the State or 
local plan under title I of WIA; and
    (6) The measures to be taken to ensure appropriate accountability 
for Federal funds in connection with the waivers.
    (d) The Secretary may approve a workforce flexibility plan for a 
period of up to five years.
    (e) Before submitting a workforce flexibility plan to the Secretary 
for approval, the State must provide adequate notice and a reasonable 
opportunity for comment on the proposed waiver requests under the 
workforce flexibility plan to all interested parties and to the general 
public.
    (f) The Secretary will issue guidelines under which States may 
request designation as a work-flex State.



Sec. 661.440  What limitations apply to the State's Workforce 
Flexibility Plan authority under WIA?

    (a)(1) Under work-flex waiver authority a State must not waive the 
WIA, Wagner-Peyser or Older Americans Act requirements which are 
excepted from the work-flex waiver authority and described in Sec. 
661.430(a).
    (2) Requests to waive statutory and regulatory requirements of title 
I of WIA applicable at the State level may not be granted under work-
flex waiver authority granted to a State. Such requests may only be 
granted by the Secretary under the general waiver authority described at 
Sec. Sec. 661.410 through 661.420.
    (b) As required in Sec. 661.430(c)(5), States must address the 
outcomes to result from work-flex waivers as part of its workforce 
flexibility plan. Once approved, a State's work-flex designation is 
conditioned on the State demonstrating it has met the agreed-upon 
outcomes contained in its workforce flexibility plan.

[[Page 748]]



PART 662_DESCRIPTION OF THE ONE-STOP SYSTEM UNDER TITLE I OF THE 
WORKFORCE INVESTMENT ACT--Table of Contents




      Subpart A_General Description of the One-Stop Delivery System

Sec.
662.100 What is the One-Stop delivery system?

    Subpart B_One-Stop Partners and the Responsibilities of Partners

662.200 Who are the required One-Stop partners?
662.210 What other entities may serve as One-Stop partners?
662.220 What entity serves as the One-Stop partner for a particular 
          program in the local area?
662.230 What are the responsibilities of the required One-Stop partners?
662.240 What are a program's applicable core services?
662.250 Where and to what extent must required One-Stop partners make 
          core services available?
662.260 What services, in addition to the applicable core services, are 
          to be provided by One-Stop partners through the One-Stop 
          delivery system?
662.270 How are the costs of providing services through the One-Stop 
          delivery system and the operating costs of the system to be 
          funded?
662.280 Does title I require One-Stop partners to use their funds for 
          individuals who are not eligible for the partner's program or 
          for services that are not authorized under the partner's 
          program?

 Subpart C_Memorandum of Understanding for the One-Stop Delivery System

662.300 What is the Memorandum of Understanding (MOU)?
662.310 Is there a single MOU for the local area or are there to be 
          separate MOU's between the Local Board and each partner?

                      Subpart D_One-Stop Operators

662.400 Who is the One-Stop operator?
662.410 How is the One-Stop operator selected?
662.420 Under what limited conditions may the Local Board be designated 
          or certified as the One-Stop operator?
662.430 Under what conditions may One-Stop operators designated to 
          operate in a One-Stop delivery system established prior to the 
          enactment of WIA be designated to continue to act as a One-
          Stop operator under WIA without meeting the requirements of 
          Sec. 662.410(b)?

    Authority: Section 506(c), Pub. L. 105-220; 20 U.S.C. 9276(c).

    Source: 65 FR 49398, Aug. 11, 2000, unless otherwise noted.



      Subpart A_General Description of the One-Stop Delivery System



Sec. 662.100  What is the One-Stop delivery system?

    (a) In general, the One-Stop delivery system is a system under which 
entities responsible for administering separate workforce investment, 
educational, and other human resource programs and funding streams 
(referred to as One-Stop partners) collaborate to create a seamless 
system of service delivery that will enhance access to the programs' 
services and improve long-term employment outcomes for individuals 
receiving assistance.
    (b) Title I of WIA assigns responsibilities at the local, State and 
Federal level to ensure the creation and maintenance of a One-Stop 
delivery system that enhances the range and quality of workforce 
development services that are accessible to individuals seeking 
assistance.
    (c) The system must include at least one comprehensive physical 
center in each local area that must provide the core services specified 
in WIA section 134(d)(2), and must provide access to other programs and 
activities carried out by the One-Stop partners.
    (d) While each local area must have at least one comprehensive 
center (and may have additional comprehensive centers), WIA section 
134(c) allows for arrangements to supplement the center. These 
arrangements may include:
    (1) A network of affiliated sites that can provide one or more 
partners' programs, services and activities at each site;
    (2) A network of One-Stop partners through which each partner 
provides services that are linked, physically or technologically, to an 
affiliated site that assures individuals are provided information on the 
availability of core services in the local area; and

[[Page 749]]

    (3) Specialized centers that address specific needs, such as those 
of dislocated workers.
    (e) The design of the local area's One-Stop delivery system, 
including the number of comprehensive centers and the supplementary 
arrangements, must be described in the local plan and be consistent with 
the Memorandum of Understanding executed with the One-Stop partners.



    Subpart B_One-Stop Partners and the Responsibilities of Partners



Sec. 662.200  Who are the required One-Stop partners?

    (a) WIA section 121(b)(1) identifies the entities that are required 
partners in the local One-Stop systems.
    (b) The required partners are the entities that are responsible for 
administering the following programs and activities in the local area:
    (1) Programs authorized under title I of WIA, serving:
    (i) Adults;
    (ii) Dislocated workers;
    (iii) Youth;
    (iv) Job Corps;
    (v) Native American programs;
    (vi) Migrant and seasonal farmworker programs; and
    (vii) Veterans' workforce programs; (WIA sec. 121(b)(1)(B)(i));
    (2) Programs authorized under the Wagner-Peyser Act (29 U.S.C. 49 et 
seq.); (WIA sec. 121(b)(1)(B)(ii));
    (3) Adult education and literacy activities authorized under title 
II of WIA; (WIA sec. 121(b)(1)(B)(iii));
    (4) Programs authorized under parts A and B of title I of the 
Rehabilitation Act (29 U.S.C. 720 et seq.); (WIA sec. 121(b)(1)(B)(iv));
    (5) Welfare-to-work programs authorized under sec. 403(a)(5) of the 
Social Security Act (42 U.S.C. 603(a)(5) et seq.); (WIA sec. 
121(b)(1)(B)(v));
    (6) Senior community service employment activities authorized under 
title V of the Older Americans Act of 1965 (42 U.S.C. 3056 et seq.); 
(WIA sec. 121(b)(1)(B)(vi));
    (7) Postsecondary vocational education activities under the Carl D. 
Perkins Vocational and Applied Technology Education Act (20 U.S.C. 2301 
et seq.); (WIA sec. 121(b)(1)(B)(vii));
    (8) Trade Adjustment Assistance and NAFTA Transitional Adjustment 
Assistance activities authorized under chapter 2 of title II of the 
Trade Act of 1974 (19 U.S.C. 2271 et seq.); (WIA sec. 
121(b)(1)(B)(viii));
    (9) Activities authorized under chapter 41 of title 38, U.S.C. 
(local veterans' employment representatives and disabled veterans 
outreach programs); (WIA sec. 121(b)(1)(B)(ix));
    (10) Employment and training activities carried out under the 
Community Services Block Grant (42 U.S.C. 9901 et seq.); (WIA sec. 
121(b)(1)(B)(x));
    (11) Employment and training activities carried out by the 
Department of Housing and Urban Development; (WIA sec. 
121(b)(1)(B)(xi)); and
    (12) Programs authorized under State unemployment compensation laws 
(in accordance with applicable Federal law); (WIA sec. 
121(b)(1)(B)(xii).)



Sec. 662.210  What other entities may serve as One-Stop partners?

    (a) WIA provides that other entities that carry out a human resource 
program, including Federal, State, or local programs and programs in the 
private sector may serve as additional partners in the One-Stop system 
if the Local Board and chief elected official(s) approve the entity's 
participation.
    (b) Additional partners may include:
    (1) TANF programs authorized under part A of title IV of the Social 
Security Act (42 U.S.C. 601 et seq.);
    (2) Employment and training programs authorized under section 
6(d)(4) of the Food Stamp Act of 1977 (7 U.S.C. 2015(d)(4));
    (3) Work programs authorized under section 6(o) of the Food Stamp 
Act of 1977 (7 U.S.C. 2015(o));
    (4) Programs authorized under the National and Community Service Act 
of 1990 (42 U.S.C. 12501 et seq.); and
    (5) Other appropriate Federal, State or local programs, including 
programs related to transportation and housing and programs in the 
private sector. (WIA sec. 121(b)(2).)
    (c) The State may require that one or more of the programs 
identified in paragraph (b) of this section be included as a partner in 
all of the local

[[Page 750]]

One-Stop delivery systems in the State.



Sec. 662.220  What entity serves as the One-Stop partner for a 
particular program in the local area?

    (a) The ``entity'' that carries out the program and activities 
listed in Sec. Sec. 662.200 and 662.210 and, therefore, serves as the 
One-Stop partner is the grant recipient, administrative entity or 
organization responsible for administering the funds of the specified 
program in the local area. The term ``entity'' does not include the 
service providers that contract with or are subrecipients of the local 
administrative entity. For programs that do not include local 
administrative entities, the responsible State Agency should be the 
partner. Specific entities for particular programs are identified in 
paragraph (b) of this section. If a program or activity listed in Sec. 
662.200 is not carried out in a local area, the requirements relating to 
a required One-Stop partner are not applicable to such program or 
activity in that local One-Stop system.
    (b)(1) For title II of WIA, the entity that carries out the program 
for the purposes of paragraph (a) is the State eligible entity. The 
State eligible entity may designate an eligible provider, or a 
consortium of eligible providers, as the ``entity'' for this purpose;
    (2) For title I, Part A, of the Rehabilitation Act, the entity that 
carries out the program for the purposes of paragraph (a) of this 
section is the designated State agency or designated unit specified 
under section 101(a)(2) that is primarily concerned with vocational 
rehabilitation, or vocational and other rehabilitation, of individuals 
with disabilities; and
    (3) Under WIA, the national programs, including Job Corps, the WIA 
Indian and Native American program, the Migrant and Seasonal Farmworkers 
program, and the Veterans' Workforce Investment program, are required 
One-Stop partners. Local Boards must include them in the One-Stop 
delivery system where they are present in their local area. In local 
areas where the national programs are not present, States and Local 
Boards should take steps to ensure that customer groups served by these 
programs have access to services through the One-Stop delivery system.



Sec. 662.230  What are the responsibilities of the required One-Stop 
partners?

    All required partners must:
    (a) Make available to participants through the One-Stop delivery 
system the core services that are applicable to the partner's programs; 
(WIA sec. 121(b)(1)(A).)
    (b) Use a portion of funds made available to the partner's program, 
to the extent not inconsistent with the Federal law authorizing the 
partner's program, to:
    (1) Create and maintain the One-Stop delivery system; and
    (2) Provide core services; (WIA sec. 134(d)(1)(B).)
    (c) Enter into a memorandum of understanding (MOU) with the Local 
Board relating to the operation of the One-Stop system that meets the 
requirements of Sec. 662.300, including a description of services, how 
the cost of the identified services and operating costs of the system 
will be funded, and methods for referrals (WIA sec. 121(c));
    (d) Participate in the operation of the One-Stop system consistent 
with the terms of the MOU and requirements of authorizing laws; (WIA 
sec. 121(b)(1)(B).) and
    (e) Provide representation on the Local Workforce Investment Board. 
(WIA sec. 117(b)(2)(A)(vi).)



Sec. 662.240  What are a program's applicable core services?

    (a) The core services applicable to any One-Stop partner program are 
those services described in paragraph (b) of this section, that are 
authorized and provided under the partner's program.
    (b) The core services identified in section 134(d)(2) of the WIA 
are:
    (1) Determinations of whether the individuals are eligible to 
receive assistance under subtitle B of title I of WIA;
    (2) Outreach, intake (which may include worker profiling), and 
orientation to the information and other services available through the 
One-Stop delivery system;
    (3) Initial assessment of skill levels, aptitudes, abilities, and 
supportive service needs;

[[Page 751]]

    (4) Job search and placement assistance, and where appropriate, 
career counseling;
    (5) Provision of employment statistics information, including the 
provision of accurate information relating to local, regional, and 
national labor market areas, including--
    (i) Job vacancy listings in such labor market areas;
    (ii) Information on job skills necessary to obtain the listed jobs; 
and
    (iii) Information relating to local occupations in demand and the 
earnings and skill requirements for such occupations;
    (6) Provision of program performance information and program cost 
information on:
    (i) Eligible providers of training services described in WIA section 
122;
    (ii) Eligible providers of youth activities described in WIA section 
123;
    (iii) Providers of adult education described in title II;
    (iv) Providers of postsecondary vocational education activities and 
vocational education activities available to school dropouts under the 
Carl D. Perkins Vocational and Applied Technology Education Act (20 
U.S.C. 2301 et seq.); and
    (v) Providers of vocational rehabilitation program activities 
described in title I of the Rehabilitation Act of 1973 (29 U.S.C. 720 et 
seq.);
    (7) Provision of information on how the local area is performing on 
the local performance measures and any additional performance 
information with respect to the One-Stop delivery system in the local 
area;
    (8) Provision of accurate information relating to the availability 
of supportive services, including, at a minimum, child care and 
transportation, available in the local area, and referral to such 
services, as appropriate;
    (9) Provision of information regarding filing claims for 
unemployment compensation;
    (10) Assistance in establishing eligibility for--
    (i) Welfare-to-work activities authorized under section 403(a)(5) of 
the Social Security Act (42 U.S.C. 603(a)(5)) available in the local 
area; and
    (ii) Programs of financial aid assistance for training and education 
programs that are not funded under this Act and are available in the 
local area; and
    (11) Followup services, including counseling regarding the 
workplace, for participants in workforce investment activities 
authorized under subtitle (B) of title I of WIA who are placed in 
unsubsidized employment, for not less than 12 months after the first day 
of the employment, as appropriate.



Sec. 662.250  Where and to what extent must required One-Stop partners 
make core services available?

    (a) At a minimum, the core services that are applicable to the 
program of the partner under Sec. 662.220, and that are in addition to 
the basic labor exchange services traditionally provided in the local 
area under the Wagner-Peyser program, must be made available at the 
comprehensive One-Stop center. These services must be made available to 
individuals attributable to the partner's program who seek assistance at 
the center. The adult and dislocated worker program partners are 
required to make all of the core services listed in Sec. 662.240 
available at the center in accordance with 20 CFR 663.100(b)(1).
    (b) The applicable core services may be made available by the 
provision of appropriate technology at the comprehensive One-Stop 
center, by co-locating personnel at the center, cross-training of staff, 
or through a cost reimbursement or other agreement between service 
providers at the comprehensive One-Stop center and the partner, as 
described in the MOU.
    (c) The responsibility of the partner for the provision of core 
services must be proportionate to the use of the services at the 
comprehensive One-Stop center by the individuals attributable to the 
partner's program. The specific method of determining each partner's 
proportionate responsibility must be described in the MOU.
    (d) For purposes of this part, individuals attributable to the 
partner's program may include individuals who are referred through the 
comprehensive One-Stop center and enrolled in the partner's program 
after the receipt of core services, who have been enrolled in the 
partner's program prior to receipt of the applicable core services at

[[Page 752]]

the center, who meet the eligibility criteria for the partner's program 
and who receive an applicable core service, or who meet an alternative 
definition described in the MOU.
    (e) Under the MOU, the provision of applicable core services at the 
center by the One-Stop partner may be supplemented by the provision of 
such services through the networks of affiliated sites and networks of 
One-Stop partners described in WIA section 134(c)(2).



Sec. 662.260  What services, in addition to the applicable core 
services, are to be provided by One-Stop partners through the One-Stop 
delivery system?

    In addition to the provision of core services, One-Stop partners 
must provide access to the other activities and programs carried out 
under the partner's authorizing laws. The access to these services must 
be described in the local MOU. 20 CFR part 663 describes the specific 
requirements relating to the provision of core, intensive, and training 
services through the One-Stop system that apply to the adult and the 
dislocated worker programs authorized under title I of WIA. Additional 
requirements apply to the provision of all labor exchange services under 
the Wagner-Peyser Act. (WIA sec. 134(c)(1)(D).)



Sec. 662.270  How are the costs of providing services through the 
One-Stop delivery system and the operating costs of the system to 
be funded?

    The MOU must describe the particular funding arrangements for 
services and operating costs of the One-Stop delivery system. Each 
partner must contribute a fair share of the operating costs of the One-
Stop delivery system proportionate to the use of the system by 
individuals attributable to the partner's program. There are a number of 
methods, consistent with the equirements of the relevant OMB circulars, 
that may be used for allocating costs among the partners. Some of these 
methodologies include allocations based on direct charges, cost pooling, 
indirect cost rates and activity-based cost allocation plans. Additional 
guidance relating to cost allocation methods may be issued by the 
Department in consultation with the other appropriate Federal agencies.



Sec. 662.280  Does title I require One-Stop partners to use their funds 
for individuals who are not eligible for the partner's program or for 
services that are not authorized under the partner's program?

    No, the requirements of the partner's program continue to apply. The 
Act intends to create a seamless service delivery system for individuals 
seeking workforce development services by linking the One-Stop partners 
in the One-Stop delivery system. While the overall effect is to provide 
universal access to core services, the resources of each partner may 
only be used to provide services that are authorized and provided under 
the partner's program to individuals who are eligible under such 
program. (WIA sec. 121(b)(1).)



 Subpart C_Memorandum of Understanding for the One-Stop Delivery System



Sec. 662.300  What is the Memorandum of Understanding (MOU)?

    (a) The Memorandum of Understanding (MOU) is an agreement developed 
and executed between the Local Board, with the agreement of the chief 
elected official, and the One-Stop partners relating to the operation of 
the One-Stop delivery system in the local area.
    (b) The MOU must contain the provisions required by WIA section 
121(c)(2). These provisions cover services to be provided through the 
One-Stop delivery system; the funding of the services and operating 
costs of the system; and methods for referring individuals between the 
One-Stop operators and partners. The MOU's provisions also must 
determine the duration and procedures for amending the MOU, and may 
contain any other provisions that are consistent with WIA title I and 
the WIA regulations agreed to by the parties. (WIA sec. 121(c).)

[[Page 753]]



Sec. 662.310  Is there a single MOU for the local area or are there 
to be separate MOU's between the Local Board and each partner?

    (a) A single ``umbrella'' MOU may be developed that addresses the 
issues relating to the local One-Stop delivery system for the Local 
Board, chief elected official and all partners, or the Local Board, 
chief elected official and the partners may decide to enter into 
separate agreements between the Local Board (with the agreement of the 
chief elected official) and one or more partners. Under either approach, 
the requirements described in this subpart apply. Since funds are 
generally appropriated annually, financial agreements may be negotiated 
with each partner annually to clarify funding of services and operating 
costs of the system under the MOU.
    (b) WIA emphasizes full and effective partnerships between Local 
Boards, chief elected officials and One-Stop partners. Local Boards and 
partners must enter into good-faith negotiations. Local Boards, chief 
elected officials and partners may request assistance from a State 
agency responsible for administering the partner program, the Governor, 
State Board, or other appropriate parties. The State agencies, the State 
Board, and the Governor may also consult with the appropriate Federal 
agencies to address impasse situations after exhausting other 
alternatives. The Local Board and partners must document the 
negotiations and efforts that have taken place. Any failure to execute 
an MOU between a Local Board and a required partner must be reported by 
the Local Board and the required partner to the Governor or State Board, 
and the State agency responsible for administering the partner's 
program, and by the Governor or the State Board and the responsible 
State agency to the Secretary of Labor and to the head of any other 
Federal agency with responsibility for oversight of a partner's program. 
(WIA sec. 121(c).)
    (c) If an impasse has not been resolved through the alternatives 
available under this section any partner that fails to execute an MOU 
may not be permitted to serve on the Local Board. In addition, any local 
area in which a Local Board has failed to execute an MOU with all of the 
required partners is not eligible for State incentive grants awarded on 
the basis of local coordination of activities under 20 CFR 
665.200(d)(2). These sanctions are in addition to, not in lieu of, any 
other remedies that may be applicable to the Local Board or to each 
partner for failure to comply with the statutory requirement.



                      Subpart D_One-Stop Operators



Sec. 662.400  Who is the One-Stop operator?

    (a) The One-Stop operator is the entity that performs the role 
described in paragraph (c) of this section. The types of entities that 
may be selected to be the One-Stop operator include:
    (1) A postsecondary educational institution;
    (2) An Employment Service agency established under the Wagner-Peyser 
Act on behalf of the local office of the agency;
    (3) A private, nonprofit organization (including a community-based 
organization);
    (4) A private for-profit entity;
    (5) A government agency; and
    (6) Another interested organization or entity.
    (b) One-Stop operators may be a single entity or a consortium of 
entities and may operate one or more One-Stop centers. In addition, 
there may be more than one One-Stop operator in a local area.
    (c) The agreement between the Local Board and the One-Stop operator 
shall specify the operator's role. That role may range between simply 
coordinating service providers within the center, to being the primary 
provider of services within the center, to coordinating activities 
throughout the One-Stop system. (WIA sec. 121(d).)



Sec. 662.410  How is the One-Stop operator selected?

    (a) The Local Board, with the agreement of the chief elected 
official, must designate and certify One-Stop operators in each local 
area.
    (b) The One-Stop operator is designated or certified:
    (1) Through a competitive process,

[[Page 754]]

    (2) Under an agreement between the Local Board and a consortium of 
entities that includes at least three or more of the required One-Stop 
partners.identified at Sec. 662.200, or
    (3) Under the conditions described in Sec. Sec. 662.420 or 662.430. 
(WIA sec.121(d), 121(e) and 117(f)(2))
    (c) The designation or certification of the One-Stop operator must 
be carried out in accordance with the ``sunshine provision'' at 20 CFR 
661.307.



Sec. 662.420  Under what limited conditions may the Local Board be 
designated or certified as the One-Stop operator?

    (a) The Local Board may be designated or certified as the One-Stop 
operator only with the agreement of the chief elected official and the 
Governor.
    (b) The designation or certification must be reviewed whenever the 
biennial certification of the Local Board is made under 20 CFR 
663.300(a). (WIA sec. 117(f)(2).)



Sec. 662.430  Under what conditions may One-Stop operators designated 

to operate in a One-Stop delivery system established prior to the 
enactment of WIA be designated to continue as a One-Stop operator under 
WIA without meeting the requirements of Sec. 662.410(b)?

    Under WIA section 121(e), the Local Board, the chief elected 
official and the Governor may agree to certify an entity that has been 
serving as a One-Stop operator in a One-Stop delivery system established 
prior to the enactment of WIA (August 7, 1998) to continue to serve as a 
One-Stop operator without meeting the requirements for designation under 
Sec. 662.410(b) if the local One-Stop delivery system is modified, as 
necessary, to meet the other requirements of this part, including the 
requirements relating to the inclusion of One-Stop partners, the 
execution of the MOU, and the provision of services.(WIA sec. 121(e).)



PART 663_ADULT AND DISLOCATED WORKER ACTIVITIES UNDER TITLE I OF THE 
WORKFORCE INVESTMENT ACT--Table of Contents




 Subpart A_Delivery of Adult and Dislocated Worker Services Through the 
                        One-Stop Delivery System

Sec.
663.100 What is the role of the adult and dislocated worker programs in 
          the One-Stop delivery system?
663.105 When must adults and dislocated workers be registered?
663.110 What are the eligibility criteria for core services for adults 
          in the adult and dislocated worker programs?
663.115 What are the eligibility criteria for core services for 
          dislocated workers in the adult and dislocated worker 
          programs?
663.120 Are displaced homemakers eligible for dislocated worker 
          activities under WIA?
663.145 What services are WIA title I adult and dislocated workers 
          formula funds used to provide?
663.150 What core services must be provided to adults and dislocated 
          workers?
663.155 How are core services delivered?
663.160 Are there particular core services an individual must receive 
          before receiving intensive services under WIA section 
          134(d)(3)?
663.165 How long must an individual be in core services in order to be 
          eligible for intensive services?

                      Subpart B_Intensive Services

663.200 What are intensive services for adults and dislocated workers?
663.210 How are intensive services delivered?
663.220 Who may receive intensive services?
663.230 What criteria must be used to determine whether an employed 
          worker needs intensive services to obtain or retain employment 
          leading to ``self-sufficiency''?
663.240 Are there particular intensive services an individual must 
          receive before receiving training services under WIA section 
          134(d)(4)(A)(i)?
663.245 What is the individual employment plan?
663.250 How long must an individual participant be in intensive services 
          to be eligible for training services?

                       Subpart C_Training Services

663.300 What are training services for adults and dislocated workers?
663.310 Who may receive training services?

[[Page 755]]

663.320 What are the requirements for coordination of WIA training funds 
          and other grant assistance?

                 Subpart D_Individual Training Accounts

663.400 How are training services provided?
663.410 What is an Individual Training Account (ITA)?
663.420 Can the duration and amount of ITA's be limited?
663.430 Under what circumstances may mechanisms other than ITA's be used 
          to provide training services?
663.440 What are the requirements for consumer choice?

                  Subpart E_Eligible Training Providers

663.500 What is the purpose of this subpart?
663.505 What are eligible providers of training services?
663.508 What is a ``program of training services''?
663.510 Who is responsible for managing the eligible provider process?
663.515 What is the process for initial determination of provider 
          eligibility?
663.530 Is there a time limit on the period of initial eligibility for 
          training providers?
663.535 What is the process for determining the subsequent eligibility 
          of a provider?
663.540 What kind of performance and cost information is required for 
          determinations of subsequent eligibility?
663.550 How is eligible provider information developed and maintained?
663.555 How is the State list disseminated?
663.565 May an eligible training provider lose its eligibility?
663.570 What is the consumer reports system?
663.575 In what ways can a Local Board supplement the information 
          available from the State list?
663.585 May individuals choose training providers located outside of the 
          local area?
663.590 May a community-based organization (CBO) be included on an 
          eligible provider list?
663.595 What requirements apply to providers of OJT and customized 
          training?

               Subpart F_Priority and Special Populations

663.600 What priority must be given to low-income adults and public 
          assistance recipients served with adult funds under title I?
663.610 Does the statutory priority for use of adult funds also apply to 
          dislocated worker funds?
663.620 How do the Welfare-to-Work program and the TANF program relate 
          to the One-Stop delivery system?
663.630 How does a displaced homemaker qualify for services under title 
          I?
663.640 May an individual with a disability whose family does not meet 
          income eligibility criteria under the Act be eligible for 
          priority as a low-income adult?

       Subpart G_On-the-Job Training (OJT) and Customized Training

663.700 What are the requirements for on-the-job training (OJT)?
663.705 What are the requirements for OJT contracts for employed 
          workers?
663.710 What conditions govern OJT payments to employers?
663.715 What is customized training?
663.720 What are the requirements for customized training for employed 
          workers?
663.730 May funds provided to employers for OJT of customized training 
          be used to assist, promote, or deter union organizing?

                      Subpart H_Supportive Services

663.800 What are supportive services for adults and dislocated workers?
663.805 When may supportive services be provided to participants?
663.810 Are there limits on the amounts or duration of funds for 
          supportive services?
663.815 What are needs-related payments?
663.820 What are the eligibility requirements for adults to receive 
          needs-related payments?
663.825 What are the eligibility requirements for dislocated workers to 
          receive needs-related payments?
663.830 May needs-related payments be paid while a participant is 
          waiting to start training classes?
663.840 How is the level of needs-related payments determined?

    Authority: Section 506(c), Pub. L. 105-220; 20 U.S.C. 9276(c).

    Source: 65 FR 49402, Aug. 11, 2000, unless otherwise noted.



 Subpart A_Delivery of Adult and Dislocated Worker Services Through the 
                        One-Stop Delivery System



Sec. 663.100  What is the role of the adult and dislocated worker 
programs in the One-Stop delivery system?

    (a) The One-Stop system is the basic delivery system for adult and 
dislocated worker services. Through this system, adults and dislocated 
workers can access a continuum of services. The services are organized 
into three levels: core, intensive, and training.

[[Page 756]]

    (b) The chief elected official or his/her designee(s), as the local 
grant recipient(s) for the adult and dislocated worker programs, is a 
required One-Stop partner and is subject to the provisions relating to 
such partners described in 20 CFR part 662. Consistent with those 
provisions:
    (1) Core services for adults and dislocated workers must be made 
available in at least one comprehensive One-Stop center in each local 
workforce investment area. Services may also be available elsewhere, 
either at affiliated sites or at specialized centers. For example, 
specialized centers may be established to serve workers being dislocated 
from a particular employer or industry, or to serve residents of public 
housing.
    (2) The One-Stop centers also make intensive services available to 
adults and dislocated workers, as needed, either by the One-Stop 
operator directly or through contracts with service providers that are 
approved by the Local Board.
    (3) Through the One-Stop system, adults and dislocated workers 
needing training are provided Individual Training Accounts (ITA's) and 
access to lists of eligible providers and programs of training. These 
lists contain quality consumer information, including cost and 
performance information for each of the providers' programs, so that 
participants can make informed choices on where to use their ITA's. 
(ITA's are more fully discussed in subpart D of this part.)



Sec. 663.105  When must adults and dislocated workers be registered?

    (a) Registration is the process for collecting information to 
support a determination of eligibility. This information may be 
collected through methods that include electronic data transfer, 
personal interview, or an individual's application.
    (b) Adults and dislocated workers who receive services funded under 
title I other than self-service or informational activities must be 
registered and determined eligible.
    (c) EO data must be collected on every individual who is interested 
in being considered for WIA title I financially assisted aid, benefits, 
services, or training by a recipient, and who has signified that 
interest by submitting personal information in response to a request 
from the recipient.



Sec. 663.110  What are the eligibility criteria for core services 
for adults in the adult and dislocated worker programs?

    To be eligible to receive core services as an adult in the adult and 
dislocated worker programs, an individual must be 18 years of age or 
older. To be eligible for the dislocated worker programs, an eligible 
adult must meet the criteria of Sec. 663.115. Eligibility criteria for 
intensive and training services are found at Sec. Sec. 663.220 and 
663.310.



Sec. 663.115  What are the eligibility criteria for core services for 
dislocated workers in the adult and dislocated worker programs?

    (a) To be eligible to receive core services as a dislocated worker 
in the adult and dislocated worker programs, an individual must meet the 
definition of ``dislocated worker'' at WIA section 101(9). Eligibility 
criteria for intensive and training services are found at Sec. Sec. 
663.220 and 663.310.
    (b) Governors and Local Boards may establish policies and procedures 
for One-Stop operators to use in determining an individual's eligibility 
as a dislocated worker, consistent with the definition at WIA section 
101(9). These policies and procedures may address such conditions as:
    (1) What constitutes a ``general announcement'' of plant closing 
under WIA section 101(9)(B)(ii) or (iii); and
    (2) What constitutes ``unemployed as a result of general economic 
conditions in the community in which the individual resides or because 
of natural disasters'' for determining the eligibility of self-employed 
individuals, including family members and farm or ranch hands, under WIA 
section 101(9)(C).



Sec. 663.120  Are displaced homemakers eligible for dislocated worker 
activities under WIA?

    (a) Yes, there are two significant differences from the eligibility 
requirements under the Job Training Partnership Act.
    (b) Under the dislocated worker program in JTPA, displaced 
homemakers

[[Page 757]]

are defined as ``additional dislocated workers'' and are only eligible 
to receive services if the Governor determines that providing such 
services would not adversely affect the delivery of services to the 
other eligible dislocated workers. Under WIA section 101(9), displaced 
homemakers who meet the definition at WIA section 101(10) are eligible 
dislocated workers without any additional determination.
    (c) The definition of displaced homemaker under JTPA included 
individuals who had been dependent upon public assistance under Aid for 
Families with Dependent Children (AFDC) as well as those who had been 
dependent on the income of another family member. The definition in WIA 
section 101(10) includes only those individuals who were dependent on a 
family member's income. Those individuals who have been dependent on 
public assistance may be served in the adult program.



Sec. 663.145  What services are WIA title I adult and dislocated workers 
formula funds used to provide?

    (a) WIA title I formula funds allocated to local areas for adults 
and dislocated workers must be used to provide core, intensive and 
training services through the One-Stop delivery system. Local Boards 
determine the most appropriate mix of these services, but all three 
types must be available for both adults and dislocated workers. There 
are different eligibility criteria for each of these types of services, 
which are described at Sec. Sec. 663.110, 663.115, 663.220 and 663.310.
    (b) WIA title I funds may also be used to provide the other services 
described in WIA section 134(e):
    (1) Discretionary One-Stop delivery activities, including:
    (i) Customized screening and referral of qualified participants in 
training services to employment; and
    (ii) Customized employment-related services to employers on a fee-
for-service basis that are in addition to labor exchange services 
available to employers under the Wagner-Peyser Act.
    (2) Supportive services, including needs-related payments, as 
described in subpart H of this part.



Sec. 663.150  What core services must be provided to adults and 
dislocated workers?

    (a) At a minimum, all of the core services described in WIA section 
134(d)(2) and 20 CFR 662.240 must be provided in each local area through 
the One-Stop delivery system.
    (b) Followup services must be made available, as appropriate, for a 
minimum of 12 months following the first day of employment, to 
registered participants who are placed in unsubsidized employment.



Sec. 663.155  How are core services delivered?

    Core services must be provided through the One-Stop delivery system. 
Core services may be provided directly by the One-Stop operator or 
through contracts with service providers that are approved by the Local 
Board. The Local Board may only be a provider of core services when 
approved by the chief elected official and the Governor in accordance 
with the requirements of WIA section 117(f)(2) and 20 CFR 661.310.



Sec. 663.160  Are there particular core services an individual must 
receive before receiving intensive services under WIA section 134(d)(3)?

    (a) Yes, at a minimum, an individual must receive at least one core 
service, such as an initial assessment or job search and placement 
assistance, before receiving intensive services. The initial assessment 
provides preliminary information about the individual's skill levels, 
aptitudes, interests, and supportive services needs. The job search and 
placement assistance helps the individual determine whether he or she is 
unable to obtain employment, and thus requires more intensive services 
to obtain employment. The decision on which core services to provide, 
and the timing of their delivery, may be made on a case-by-case basis at 
the local level depending upon the needs of the participant.
    (b) A determination of the need for intensive services under Sec. 
663.220, as established by the initial assessment or the individual's 
inability to obtain employment through the core services provided, must 
be contained in the participant's case file.

[[Page 758]]



Sec. 663.165  How long must an individual be in core services in order 
to be eligible for intensive services?

    There is no Federally-required minimum time period for participation 
in core services before receiving intensive services. (WIA sec. 
134(d)(3).)



                      Subpart B_Intensive Services



Sec. 663.200  What are intensive services for adults and dislocated 
workers?

    (a) Intensive services are listed in WIA section 134(d)(3)(C). The 
list in the Act is not all-inclusive and other intensive services, such 
as out-of-area job search assistance, literacy activities related to 
basic workforce readiness, relocation assistance, internships, and work 
experience may be provided, based on an assessment or individual 
employment plan.
    (b) For the purposes of paragraph (a) of this section, work 
experience is a planned, structured learning experience that takes place 
in a workplace for a limited period of time. Work experience may be paid 
or unpaid, as appropriate. A work experience workplace may be in the 
private for profit sector, the non-profit sector, or the public sector. 
Labor standards apply in any work experience where an employee/employer 
relationship, as defined by the Fair Labor Standards Act, exists.



Sec. 663.210  How are intensive services delivered?

    (a) Intensive services must be provided through the One-Stop 
delivery system, including specialized One-Stop centers. Intensive 
services may be provided directly by the One-Stop operator or through 
contracts with service providers, which may include contracts with 
public, private for-profit, and private non-profit service providers 
(including specialized service providers), that are approved by the 
Local Board. (WIA secs. 117(d)(2)(D) and 134(d)(3)(B).)
    (b) The Local Board may only be a provider of intensive services 
when approved by the chief elected official and the Governor in 
accordance with WIA section 117(f)(2) and 20 CFR 661.310.



Sec. 663.220  Who may receive intensive services?

    There are two categories of adults and dislocated workers who may 
receive intensive services:
    (a) Adults and dislocated workers who are unemployed, have received 
at least one core service and are unable to obtain employment through 
core services, and are determined by a One-Stop operator to be in need 
of more intensive services to obtain employment; and
    (b) Adults and dislocated workers who are employed, have received at 
least one core service, and are determined by a One-Stop operator to be 
in need of intensive services to obtain or retain employment that leads 
to self-sufficiency, as described in Sec. 663.230.



Sec. 663.230  What criteria must be used to determine whether an 
employed worker needs intensive services to obtain or retain employment 
leading to ``self-sufficiency''?

    State Boards or Local Boards must set the criteria for determining 
whether employment leads to self-sufficiency. At a minimum, such 
criteria must provide that self-sufficiency means employment that pays 
at least the lower living standard income level, as defined in WIA 
section 101(24). Self-sufficiency for a dislocated worker may be defined 
in relation to a percentage of the layoff wage. The special needs of 
individuals with disabilities or other barriers to employment should be 
taken into account when setting criteria to determine self-sufficiency.



Sec. 663.240  Are there particular intensive services an individual 
must receive before receiving training services under WIA section 
134(d)(4)(A)(i)?

    (a) Yes, at a minimum, an individual must receive at least one 
intensive service, such as development of an individual employment plan 
with a case manager or individual counseling and career planning, before 
the individual may receive training services.
    (b) The case file must contain a determination of need for training 
services under Sec. 663.310, as identified in the individual employment 
plan, comprehensive assessment, or through any other intensive service 
received.

[[Page 759]]



Sec. 663.245  What is the individual employment plan?

    The individual employment plan is an ongoing strategy jointly 
developed by the participant and the case manager that identifies the 
participant's employment goals, the appropriate achievement objectives, 
and the appropriate combination of services for the participant to 
achieve the employment goals.



Sec. 663.250  How long must an individual participant be in intensive 
services to be eligible for training services?

    There is no Federally-required minimum time period for participation 
in intensive services before receiving training services. The period of 
time an individual spends in intensive services should be sufficient to 
prepare the individual for training or employment. (WIA sec. 
134(d)(4)(A)(i).)



                       Subpart C_Training Services



Sec. 663.300  What are training services for adults and dislocated 
workers?

    Training services are listed in WIA section 134(d)(4)(D). The list 
in the Act is not all-inclusive and additional training services may be 
provided.



Sec. 663.310  Who may receive training services?

    Training services may be made available to employed and unemployed 
adults and dislocated workers who:
    (a) Have met the eligibility requirements for intensive services, 
have received at least one intensive service under Sec. 663.240, and 
have been determined to be unable to obtain or retain employment through 
such services;
    (b) After an interview, evaluation, or assessment, and case 
management, have been determined by a One-Stop operator or One-Stop 
partner, to be in need of training services and to have the skills and 
qualifications to successfully complete the selected training program;
    (c) Select a program of training services that is directly linked to 
the employment opportunities either in the local area or in another area 
to which the individual is willing to relocate;
    (d) Are unable to obtain grant assistance from other sources to pay 
the costs of such training, including such sources as Welfare-to-Work, 
State-funded training funds, Trade Adjustment Assistance and Federal 
Pell Grants established under title IV of the Higher Education Act of 
1965, or require WIA assistance in addition to other sources of grant 
assistance, including Federal Pell Grants (provisions relating to fund 
coordination are found at Sec. 663.320 and WIA section 134(d)(4)(B)); 
and
    (e) For individuals whose services are provided through the adult 
funding stream, are determined eligible in accordance with the State and 
local priority system, if any, in effect for adults under WIA section 
134(d)(4)(E) and Sec. 663.600. (WIA sec. 134(d)(4)(A).)



Sec. 663.320  What are the requirements for coordination of WIA training 
funds and other grant assistance?

    (a) WIA funding for training is limited to participants who:
    (1) Are unable to obtain grant assistance from other sources to pay 
the costs of their training; or
    (2) Require assistance beyond that available under grant assistance 
from other sources to pay the costs of such training. Program operators 
and training providers must coordinate funds available to pay for 
training as described in paragraphs (b) and (c) of this section.
    (b) Program operators must coordinate training funds available and 
make funding arrangements with One-Stop partners and other entities to 
apply the provisions of paragraph (a) of this section. Training 
providers must consider the availability of other sources of grants to 
pay for training costs such as Welfare-to-Work, State-funded training 
funds, and Federal Pell Grants, so that WIA funds supplement other 
sources of training grants.
    (c) A WIA participant may enroll in WIA-funded training while his/
her application for a Pell Grant is pending as long as the One-Stop 
operator has made arrangements with the training provider and the WIA 
participant regarding allocation of the Pell Grant, if it is 
subsequently awarded. In that case, the training provider must reimburse 
the One-Stop operator the WIA funds used to underwrite the training

[[Page 760]]

for the amount the Pell Grant covers. Reimbursement is not required from 
the portion of Pell Grant assistance disbursed to the WIA participant 
for education-related expenses. (WIA sec. 134(d)(4)(B).)



                 Subpart D_Individual Training Accounts



Sec. 663.400  How are training services provided?

    Except under the three conditions described in WIA section 
134(d)(4)(G)(ii) and Sec. 663.430(a), the Individual Training Account 
(ITA) is established for eligible individuals to finance training 
services. Local Boards may only provide training services under Sec. 
663.430 if they receive a waiver from the Governor and meet the 
requirements of 20 CFR 661.310 and WIA section 117(f)(1). (WIA sec. 
134(d)(4)(G).)



Sec. 663.410  What is an Individual Training Account (ITA)?

    The ITA is established on behalf of a participant. WIA title I adult 
and dislocated workers purchase training services from eligible 
providers they select in consultation with the case manager. Payments 
from ITA's may be made in a variety of ways, including the electronic 
transfer of funds through financial institutions, vouchers, or other 
appropriate methods. Payments may also be made incrementally; through 
payment of a portion of the costs at different points in the training 
course. (WIA sec. 134(d)(4)(G).)



Sec. 663.420  Can the duration and amount of ITA's be limited?

    (a) Yes, the State or Local Board may impose limits on ITA's, such 
as limitations on the dollar amount and/or duration.
    (b) Limits to ITA's may be established in different ways:
    (1) There may be a limit for an individual participant that is based 
on the needs identified in the individual employment plan; or
    (2) There may be a policy decision by the State Board or Local Board 
to establish a range of amounts and/or a maximum amount applicable to 
all ITA's.
    (c) Limitations established by State or Local Board policies must be 
described in the State or Local Plan, respectively, but should not be 
implemented in a manner that undermines the Act's requirement that 
training services are provided in a manner that maximizes customer 
choice in the selection of an eligible training provider. ITA 
limitations may provide for exceptions to the limitations in individual 
cases.
    (d) An individual may select training that costs more than the 
maximum amount available for ITAs under a State or local policy when 
other sources of funds are available to supplement the ITA. These other 
sources may include: Pell Grants; scholarships; severance pay; and other 
sources.



Sec. 663.430  Under what circumstances may mechanisms other than ITA's 
be used to provide training services?

    (a) Contracts for services may be used instead of ITA's only when 
one of the following three exceptions applies:
    (1) When the services provided are on-the-job training (OJT) or 
customized training;
    (2) When the Local Board determines that there are an insufficient 
number of eligible providers in the local area to accomplish the purpose 
of a system of ITA's. The Local Plan must describe the process to be 
used in selecting the providers under a contract for services. This 
process must include a public comment period for interested providers of 
at least 30 days;
    (3) When the Local Board determines that there is a training 
services program of demonstrated effectiveness offered in the area by a 
community-based organization (CBO) or another private organization to 
serve special participant populations that face multiple barriers to 
employment, as described in paragraph (b) in this section. The Local 
Board must develop criteria to be used in determining demonstrated 
effectiveness, particularly as it applies to the special participant 
population to be served. The criteria may include:
    (i) Financial stability of the organization;
    (ii) Demonstrated performance in the delivery of services to hard to 
serve

[[Page 761]]

participant populations through such means as program completion rate; 
attainment of the skills, certificates or degrees the program is 
designed to provide; placement after training in unsubsidized 
employment; and retention in employment; and
    (iii) How the specific program relates to the workforce investment 
needs identified in the local plan.
    (b) Under paragraph (a)(3) of this section, special participant 
populations that face multiple barriers to employment are populations of 
low-income individuals that are included in one or more of the following 
categories:
    (1) Individuals with substantial language or cultural barriers;
    (2) Offenders;
    (3) Homeless individuals; and
    (4) Other hard-to-serve populations as defined by the Governor.



Sec. 663.440  What are the requirements for consumer choice?

    (a) Training services, whether under ITA's or under contract, must 
be provided in a manner that maximizes informed consumer choice in 
selecting an eligible provider.
    (b) Each Local Board, through the One-Stop center, must make 
available to customers the State list of eligible providers required in 
WIA section 122(e). The list includes a description of the programs 
through which the providers may offer the training services, the 
information identifying eligible providers of on-the-job training and 
customized training required under WIA section 122(h) (where 
applicable), and the performance and cost information about eligible 
providers of training services described in WIA sections 122 (e) and 
(h).
    (c) An individual who has been determined eligible for training 
services under Sec. 663.310 may select a provider described in 
paragraph (b) of this section after consultation with a case manager. 
Unless the program has exhausted training funds for the program year, 
the operator must refer the individual to the selected provider, and 
establish an ITA for the individual to pay for training. For purposes of 
this paragraph, a referral may be carried out by providing a voucher or 
certificate to the individual to obtain the training.
    (d) The cost of referral of an individual with an ITA to a training 
provider is paid by the applicable adult or dislocated worker program 
under title I of WIA.



                  Subpart E_Eligible Training Providers



Sec. 663.500  What is the purpose of this subpart?

    The workforce investment system established under WIA emphasizes 
informed customer choice, system performance, and continuous 
improvement. The eligible provider process is part of the strategy for 
achieving these goals. Local Boards, in partnership with the State, 
identify training providers and programs whose performance qualifies 
them to receive WIA funds to train adults and dislocated workers. In 
order to maximize customer choice and assure that all significant 
population groups are served, States and local areas should administer 
the eligible provider process in a manner to assure that significant 
numbers of competent providers, offering a wide variety of training 
programs and occupational choices, are available to customers. After 
receiving core and intensive services and in consultation with case 
managers, eligible participants who need training use the list of these 
eligible providers to make an informed choice. The ability of providers 
to successfully perform, the procedures State and Local Boards use to 
establish eligibility, and the degree to which information, including 
performance information, on those providers is made available to 
customers eligible for training services, are key factors affecting the 
successful implementation of the Statewide workforce investment system. 
This subpart describes the process for determining eligible training 
providers.



Sec. 663.505  What are eligible providers of training services?

    (a) Eligible providers of training services are described in WIA 
section 122. They are those entities eligible to receive WIA title I-B 
funds to provide training services to eligible adult and dislocated 
worker customers.

[[Page 762]]

    (b) In order to provide training services under WIA title I-B, a 
provider must meet the requirements of this subpart and WIA section 122.
    (1) These requirements apply to the use of WIA title I adult and 
dislocated worker funds to provide training:
    (i) To individuals using ITA's to access training through the 
eligible provider list; and
    (ii) To individuals for training provided through the exceptions to 
ITA's described at Sec. 663.430 (a)(2) and (a)(3).
    (2) These requirements apply to all organizations providing training 
to adult and dislocated workers, including:
    (i) Postsecondary educational institutions providing a program 
described in WIA section 122(a)(2)(A)(ii);
    (ii) Entities that carry out programs under the National 
Apprenticeship Act (29 U.S.C. 50 et seq.);
    (iii) Other public or private providers of a program of training 
services described in WIA section 122(a)(2)(C);
    (iv) Local Boards, if they meet the conditions of WIA section 
117(f)(1); and
    (v) Community-based organizations and other private organizations 
providing training under Sec. 663.430.
    (c) Provider eligibility procedures must be established by the 
Governor, as required by this subpart. Different procedures are 
described in WIA for determinations of ``initial'' and ``subsequent'' 
eligibility. Because the processes are different, they are discussed 
separately.



Sec. 663.508  What is a ``program of training services''?

    A program of training services is one or more courses or classes, or 
a structured regimen, that upon successful completion, leads to:
    (a) A certificate, an associate degree, baccalaureate degree, or
    (b) The skills or competencies needed for a specific job or jobs, an 
occupation, occupational group, or generally, for many types of jobs or 
occupations, as recognized by employers and determined prior to 
training.



Sec. 663.510  Who is responsible for managing the eligible provider 
process?

    (a) The State and the Local Boards each have responsibilities for 
managing the eligible provider process.
    (b) The Governor must establish eligibility criteria for certain 
providers to become initially eligible and must set minimum levels of 
performance for all providers to remain subsequently eligible.
    (c) The Governor must designate a State agency (called the 
``designated State agency'') to assist in carrying out WIA section 122. 
The designated State agency is responsible for:
    (1) Developing and maintaining the State list of eligible providers 
and programs, which is comprised of lists submitted by Local Boards;
    (2) Determining if programs meet performance levels, including 
verifying the accuracy of the information on the State list in 
consultation with the Local Boards, removing programs that do not meet 
program performance levels, and taking appropriate enforcement actions, 
against providers in the case of the intentional provision of inaccurate 
information, as described in WIA section 122(f)(1), and in the case of a 
substantial violation of the requirements of WIA, as described in WIA 
section 122(f)(2);
    (3) Disseminating the State list, accompanied by performance and 
cost information relating to each provider, to One-Stop operators 
throughout the State.
    (d) The Local Board must:
    (1) Accept applications for initial eligibility from certain 
postsecondary institutions and entities providing apprenticeship 
training;
    (2) Carry out procedures prescribed by the Governor to assist in 
determining the initial eligibility of other providers;
    (3) Carry out procedures prescribed by the Governor to assist in 
determining the subsequent eligibility of all providers;
    (4) Compile a local list of eligible providers, collect the 
performance and cost information and any other required information 
relating to providers;
    (5) Submit the local list and information to the designated State 
agency;

[[Page 763]]

    (6) Ensure the dissemination and appropriate use of the State list 
through the local One-Stop system;
    (7) Consult with the designated State agency in cases where 
termination of an eligible provider is contemplated because inaccurate 
information has been provided; and
    (8) Work with the designated State agency in cases where the 
termination of an eligible provider is contemplated because of 
violations of the Act.
    (e) The Local Board may:
    (1) Make recommendations to the Governor on the procedures to be 
used in determining initial eligibility of certain providers;
    (2) Increase the levels of performance required by the State for 
local providers to maintain subsequent eligibility;
    (3) Require additional verifiable program-specific information from 
local providers to maintain subsequent eligibility.



Sec. 663.515  What is the process for initial determination of provider 
eligibility?

    (a) To be eligible to receive adult or dislocated worker training 
funds under title I of WIA, all providers must submit applications to 
the Local Boards in the areas in which they wish to provide services. 
The application must describe each program of training services to be 
offered.
    (b) For programs eligible under title IV of the Higher Education Act 
and apprenticeship programs registered under the National Apprenticeship 
Act (NAA), and the providers or such programs, Local Boards determine 
the procedures to use in making an application. The procedures 
established by the Local Board must specify the timing, manner, and 
contents of the required application.
    (c) For programs not eligible under title IV of the HEA or 
registered under the NAA, and for providers not eligible under title IV 
of the HEA or carrying out apprenticeship programs under NAA:
    (1) The Governor must develop a procedure for use by Local Boards 
for determining the eligibility of other providers, after
    (i) Soliciting and taking into consideration recommendations from 
Local Boards and providers of training services within the State;
    (ii) Providing an opportunity for interested members of the public, 
including representatives of business and labor organizations, to submit 
comments on the procedure; and
    (iii) Designating a specific time period for soliciting and 
considering the recommendations of Local Boards and provider, and for 
providing an opportunity for public comment.
    (2) The procedure must be described in the State Plan.
    (3)(i) The procedure must require that the provider must submit an 
application to the Local Board at such time and in such manner as may be 
required, which contains a description of the program of training 
services;
    (ii) If the provider provides a program of training services on the 
date of application, the procedure must require that the application 
include an appropriate portion of the performance information and 
program cost information described in Sec. 663.540, and that the 
program meet appropriate levels of performance;
    (iii) If the provider does not provide a program of training 
services on that date, the procedure must require that the provider meet 
appropriate requirements specified in the procedure. (WIA sec. 
122(b)(2)(D).)
    (d) The Local Board must include providers that meet the 
requirements of paragraphs (b) and (c) of this section on a local list 
and submit the list to the designated State agency. The State agency has 
30 days to determine that the provider or its programs do not meet the 
requirements relating to the providers under paragraph (c) of this 
section. After the agency determines that the provider and its programs 
meet(s) the criteria for initial eligibility, or 30 days have elapsed, 
whichever occurs first, the provider and its programs are initially 
eligible. The programs and providers submitted under paragraph (b) of 
this section are initially eligible without State agency review. (WIA 
sec. 122(e).)

[[Page 764]]



Sec. 663.530  Is there a time limit on the period of initial eligibility 
for training providers?

    Yes, under WIA section 122(c)(5), the Governor must require training 
providers to submit performance information and meet performance levels 
annually in order to remain eligible providers. States may require that 
these performance requirements be met one year from the date that 
initial eligibility was determined, or may require all eligible 
providers to submit performance information by the same date each year. 
If the latter approach is adopted, the Governor may exempt eligible 
providers whose determination of initial eligibility occurs within six 
months of the date of submissions. The effect of this requirement is 
that no training provider may have a period of initial eligibility that 
exceeds eighteen months. In the limited circumstance when insufficient 
data is available, initial eligibility may be extended for a period of 
up to six additional months, if the Governor's procedures provide for 
such an extension.



Sec. 663.535  What is the process for determining the subsequent 
eligibility of a provider?

    (a) The Governor must develop a procedure for the Local Board to use 
in determining the subsequent eligibility of all eligible training 
providers determined initially eligible under Sec. 663.515 (b) and (c), 
after:
    (1) Soliciting and taking into consideration recommendations from 
Local Boards and providers of training services within the State;
    (2) Providing an opportunity for interested members of the public, 
including representatives of business and labor organizations, to submit 
comments on such procedure; and
    (3) Designating a specific time period for soliciting and 
considering the recommendations of Local Boards and providers, and for 
providing an opportunity for public comment.
    (b) The procedure must be described in the State Plan.
    (c) The procedure must require that:
    (1) Providers annually submit performance and cost information as 
described at WIA section 122(d)(1) and (2), for each program of training 
services for which the provider has been determined to be eligible, in a 
time and manner determined by the Local Board;
    (2) Providers and programs annually meet minimum performance levels 
described at WIA section 122(c)(6), as demonstrated utilizing UI 
quarterly wage records where appropriate.
    (d) The program's performance information must meet the minimum 
acceptable levels established under paragraph (c)(2) of this section to 
remain eligible;
    (e) Local Boards may require higher levels of performance for local 
programs than the levels specified in the procedures established by the 
Governor. (WIA sec.122(c)(5) and (c)(6).)
    (f) The State procedure must require Local Boards to take into 
consideration:
    (1) The specific economic, geographic and demographic factors in the 
local areas in which providers seeking eligibility are located, and
    (2) The characteristics of the populations served by programs 
seeking eligibility, including the demonstrated difficulties in serving 
these populations, where applicable.
    (g) The Local Board retains those programs on the local list that 
meet the required performance levels and other elements of the State 
procedures and submits the list, accompanied by the performance and cost 
information, and any additional required information, to the designated 
State agency. If the designated State agency determines within 30 days 
from the receipt of the information that the program does not meet the 
performance levels established under paragraph (c)(2) of this section, 
the program may be removed from the list. A program retained on the 
local list and not removed by the designated State agency is considered 
an eligible program of training services.



Sec. 663.540  What kind of performance and cost information is required 
for determinations of subsequent eligibility?

    (a) Eligible providers of training services must submit, at least 
annually, under procedures established by the Governor under Sec. 
663.535(c):

[[Page 765]]

    (1) Verifiable program-specific performance information, including:
    (i) The information described in WIA section 122(d)(1)(A)(i) for all 
individuals participating in the programs of training services, 
including individuals who are not receiving assistance under WIA section 
134 and individuals who are receiving such assistance; and
    (ii) The information described in WIA section 122(d)(1)(A)(ii) 
relating only to individuals receiving assistance under the WIA adult 
and dislocated worker program who are participating in the applicable 
program of training services; and
    (2) Information on program costs (such as tuition and fees) for WIA 
participants in the program.
    (b) Governors may require any additional verifiable performance 
information (such as the information described at WIA section 122(d)(2)) 
that the Governor determines to be appropriate to obtain subsequent 
eligibility, including information regarding all participating 
individuals as well as individuals receiving assistance under the WIA 
adult and dislocated worker program.
    (c) Governors must establish procedures by which providers can 
demonstrate if the additional information required under paragraph (b) 
of this section imposes extraordinary costs on providers, or if 
providers experience extraordinary costs in the collection of 
information. If, through these procedures, providers demonstrate that 
they experience such extraordinary costs:
    (1) The Governor or Local Board must provide access to cost-
effective methods for the collection of the information; or
    (2) The Governor must provide additional resources to assist 
providers in the collection of the information from funds for Statewide 
workforce investment activities reserved under WIA sections 128(a) and 
133(a)(1).
    (d) The Local Board and the designated State agency may accept 
program-specific performance information consistent with the 
requirements for eligibility under title IV of the Higher Education Act 
of 1965 from a provider for purposes of enabling the provider to fulfill 
the applicable requirements of this section, if the information is 
substantially similar to the information otherwise required under this 
section.



Sec. 663.550  How is eligible provider information developed and 
maintained?

    (a) The designated State agency must maintain a list of all eligible 
training programs and providers in the State (the ``State list'').
    (b) The State list is a compilation of the eligible programs and 
providers identified or retained by local areas and that have not been 
removed under Sec. Sec. 663.535(g) and 663.565.
    (c) The State list must be accompanied by the performance and cost 
information contained in the local lists as required by Sec. 
663.535(e). (WIA sec. 122(e)(4)(A).)



Sec. 663.555  How is the State list disseminated?

    (a) The designated State agency must disseminate the State list and 
accompanying performance and cost information to the One-Stop delivery 
systems within the State.
    (b) The State list and information must be updated at least 
annually.
    (c) The State list and accompanying information form the primary 
basis of the One-Stop consumer reports system that provides for informed 
customer choice. The list and information must be widely available, 
through the One-Stop delivery system, to customers seeking information 
on training outcomes, as well as participants in employment and training 
activities funded under WIA and other programs.
    (1) The State list must be made available to individuals who have 
been determined eligible for training services under Sec. 663.310.
    (2) The State list must also be made available to customers whose 
training is supported by other One-Stop partners.



Sec. 663.565  May an eligible training provider lose its eligibility?

    (a) Yes. A training provider must deliver results and provide 
accurate information in order to retain its status as an eligible 
training provider.

[[Page 766]]

    (b) If the provider's programs do not meet the established 
performance levels, the programs will be removed from the eligible 
provider list.
    (1) A Local Board must determine, during the subsequent eligibility 
determination process, whether a provider's programs meet performance 
levels. If the program fails to meet such levels, the program must be 
removed from the local list. If all of the provider's programs fail to 
meet such levels, the provider must be removed from the local list.
    (2) The designated State agency upon receipt of the performance 
information accompanying the local list, may remove programs from the 
State list if the agency determines the program failed to meet the 
levels of performance prescribed under Sec. 663.535(c). If all of the 
provider's programs are determined to have failed to meet the levels, 
the designated State agency may remove the provider from the State list.
    (3) Providers determined to have intentionally supplied inaccurate 
information or to have subsequently violated any provision of title I of 
WIA or the WIA regulations, including 29 CFR part 37, may be removed 
from the list in accordance with the enforcement provisions of WIA 
section 122(f). A provider whose eligibility is terminated under these 
conditions is liable to repay all adult and dislocated worker training 
funds it received during the period of noncompliance.
    (4) The Governor must establish appeal procedures for providers of 
training to appeal a denial of eligibility under this subpart according 
to the requirements of 20 CFR 667.640(b).



Sec. 663.570  What is the consumer reports system?

    The consumer reports system, referred to in WIA as performance 
information, is the vehicle for informing the customers of the One-Stop 
delivery system about the performance of training providers and programs 
in the local area. It is built upon the State list of eligible providers 
and programs developed through the procedures described in WIA section 
122 and this subpart. The consumer reports system must contain the 
information necessary for an adult or dislocated worker customer to 
fully understand the options available to him or her in choosing a 
program of training services. Such program-specific factors may include 
overall performance, performance for significant customer groups 
(including wage replacement rates for dislocated workers), performance 
of specific provider sites, current information on employment and wage 
trends and projections, and duration of training programs.



Sec. 663.575  In what ways can a Local Board supplement the information 
available from the State list?

    (a) Local Boards may supplement the information available from the 
State list by providing customers with additional information to assist 
in supporting informed customer choice and the achievement of local 
performance measures (as described in WIA section 136).
    (b) This additional information may include:
    (1) Information on programs of training services that are linked to 
occupations in demand in the local area;
    (2) Performance and cost information, including program-specific 
performance and cost information, for the local outlet(s) of multi-site 
eligible providers; and
    (3) Other appropriate information related to the objectives of WIA, 
which may include the information described in Sec. 663.570.



Sec. 663.585  May individuals choose training providers located outside 
of the local area?

    Yes, individuals may choose any of the eligible providers and 
programs on the State list. A State may also establish a reciprocal 
agreement with another State(s) to permit providers of eligible training 
programs in each State to accept individual training accounts provided 
by the other State. (WIA secs. 122(e)(4) and (e)(5).)



Sec. 663.590  May a community-based organization (CBO) be included on 
an eligible provider list?

    Yes, CBO's may apply and they and their programs may be determined 
eligible providers of training services, under WIA section 122 and this 
subpart. As eligible providers, CBO's provide

[[Page 767]]

training through ITA's and may also receive contracts for training 
special participant populations when the requirements of Sec. 663.430 
are met.



Sec. 663.595  What requirements apply to providers of OJT and customized 
training?

    For OJT and customized training providers, One-Stop operators in a 
local area must collect such performance information as the Governor may 
require, determine whether the providers meet such performance criteria 
as the Governor may require, and disseminate a list of providers that 
have met such criteria, along with the relevant performance information 
about them, through the One-Stop delivery system. Providers determined 
to meet the criteria are considered to be identified as eligible 
providers of training services. These providers are not subject to the 
other requirements of WIA section 122 or this subpart.



               Subpart F_Priority and Special Populations



Sec. 663.600  What priority must be given to low-income adults and 
public assistance recipients served with adult funds under title I?

    (a) WIA states, in section 134(d)(4)(E), that in the event that 
funds allocated to a local area for adult employment and training 
activities are limited, priority for intensive and training services 
funded with title I adult funds must be given to recipients of public 
assistance and other low-income individuals in the local area.
    (b) Since funding is generally limited, States and local areas must 
establish criteria by which local areas can determine the availability 
of funds and the process by which any priority will be applied under WIA 
section 134(d)(2)(E). Such criteria may include the availability of 
other funds for providing employment and training-related services in 
the local area, the needs of the specific groups within the local area, 
and other appropriate factors.
    (c) States and local areas must give priority for adult intensive 
and training services to recipients of public assistance and other low-
income individuals, unless the local area has determined that funds are 
not limited under the criteria established under paragraph (b) of this 
section.
    (d) The process for determining whether to apply the priority 
established under paragraph (b) of this section does not necessarily 
mean that only the recipients of public assistance and other low income 
individuals may receive WIA adult funded intensive and training services 
when funds are determined to be limited in a local area. The Local Board 
and the Governor may establish a process that gives priority for 
services to the recipients of public assistance and other low income 
individuals and that also serves other individuals meeting eligibility 
requirements.



Sec. 663.610  Does the statutory priority for use of adult funds also 
apply to dislocated worker funds?

    No, the statutory priority applies to adult funds for intensive and 
training services only. Funds allocated for dislocated workers are not 
subject to this requirement.



Sec. 663.620  How do the Welfare-to-Work program and the TANF program 
relate to the One-Stop delivery system?

    (a) The local Welfare-to-Work (WtW) program operator is a required 
partner in the One-Stop delivery system. 20 CFR part 662 describes the 
roles of such partners in the One-Stop delivery system and applies to 
the Welfare-to-Work program operator. WtW programs serve individuals who 
may also be served by the WIA programs and, through appropriate linkages 
and referrals, these customers will have access to a broader range of 
services through the cooperation of the WtW program in the One-Stop 
system. WtW participants, who are determined to be WIA eligible, and who 
need occupational skills training may be referred through the One-Stop 
system to receive WIA training, when WtW grant and other grant funds are 
not available in accordance with Sec. 663.320(a). WIA participants who 
are also determined WtW eligible, may be referred to the WtW operator 
for job placement and other WtW assistance.
    (b) The local TANF agency is specifically suggested under WIA as an 
additional partner in the One-Stop system.

[[Page 768]]

TANF recipients will have access to more information about employment 
opportunities and services when the TANF agency participates in the One-
Stop delivery system. The Governor and Local Board should encourage the 
TANF agency to become a One-Stop partner to improve the quality of 
services to the WtW and TANF-eligible populations. In addition, becoming 
a One-Stop partner will ensure that the TANF agency is represented on 
the Local Board and participates in developing workforce investment 
strategies that help cash assistance recipients secure lasting 
employment.



Sec. 663.630  How does a displaced homemaker qualify for services under 
title I?

    Displaced homemakers may be eligible to receive assistance under 
title I in a variety of ways, including:
    (a) Core services provided by the One-Stop partners through the One-
Stop delivery system;
    (b) Intensive or training services for which an individual qualifies 
as a dislocated worker/displaced homemaker if the requirements of this 
part are met;
    (c) Intensive or training services for which an individual is 
eligible if the requirements of this part are met;
    (d) Statewide employment and training projects conducted with 
reserve funds for innovative programs for displaced homemakers, as 
described in 20 CFR 665.210(f).



Sec. 663.640  May an individual with a disability whose family does 
not meet income eligibility criteria under the Act be eligible for 
priority as a low-income adult?

    Yes, even if the family of an individual with a disability does not 
meet the income eligibility criteria, the individual with a disability 
is to be considered a low-income individual if the individual's own 
income:
    (a) Meets the income criteria established in WIA section 101(25)(B); 
or
    (b) Meets the income eligibility criteria for cash payments under 
any Federal, State or local public assistance program. (WIA sec. 
101(25)(F).)



       Subpart G_On-the-Job Training (OJT) and Customized Training



Sec. 663.700  What are the requirements for on-the-job training (OJT)?

    (a) On-the-job training (OJT) is defined at WIA section 101(31). OJT 
is provided under a contract with an employer in the public, private 
non-profit, or private sector. Through the OJT contract, occupational 
training is provided for the WIA participant in exchange for the 
reimbursement of up to 50 percent of the wage rate to compensate for the 
employer's extraordinary costs. (WIA sec. 101(31)(B).)
    (b) The local program must not contract with an employer who has 
previously exhibited a pattern of failing to provide OJT participants 
with continued long-term employment with wages, benefits, and working 
conditions that are equal to those provided to regular employees who 
have worked a similar length of time and are doing the same type of 
work. (WIA sec. 195(4).)
    (c) An OJT contract must be limited to the period of time required 
for a participant to become proficient in the occupation for which the 
training is being provided. In determining the appropriate length of the 
contract, consideration should be given to the skill requirements of the 
occupation, the academic and occupational skill level of the 
participant, prior work experience, and the participant's individual 
employment plan. (WIA sec. 101(31)(C).)



Sec. 663.705  What are the requirements for OJT contracts for employed 
workers?

    OJT contracts may be written for eligible employed workers when:
    (a) The employee is not earning a self-sufficient wage as determined 
by Local Board policy;
    (b) The requirements in Sec. 663.700 are met; and
    (c) The OJT relates to the introduction of new technologies, 
introduction to new production or service procedures, upgrading to new 
jobs that require additional skills, workplace literacy, or other 
appropriate purposes identified by the Local Board.

[[Page 769]]



Sec. 663.710  What conditions govern OJT payments to employers?

    (a) On-the-job training payments to employers are deemed to be 
compensation for the extraordinary costs associated with training 
participants and the costs associated with the lower productivity of the 
participants.
    (b) Employers may be reimbursed up to 50 percent of the wage rate of 
an OJT participant for the extraordinary costs of providing the training 
and additional supervision related to the OJT. (WIA sec. 101(31)(B).)
    (c) Employers are not required to document such extraordinary costs.



Sec. 663.715  What is customized training?

    Customized training is training:
    (a) That is designed to meet the special requirements of an employer 
(including a group of employers);
    (b) That is conducted with a commitment by the employer to employ, 
or in the case of incumbent workers, continue to employ, an individual 
on successful completion of the training; and
    (c) For which the employer pays for not less than 50 percent of the 
cost of the training. (WIA sec. 101(8).)



Sec. 663.720  What are the requirements for customized training for 
employed workers?

    Customized training of an eligible employed individual may be 
provided for an employer or a group of employers when:
    (a) The employee is not earning a self-sufficient wage as determined 
by Local Board policy;
    (b) The requirements in Sec. 663.715 are met; and
    (c) The customized training relates to the purposes described in 
Sec. 663.705(c) or other appropriate purposes identified by the Local 
Board.



Sec. 663.730  May funds provided to employers for OJT of customized 
training be used to assist, promote, or deter union organizing?

    No, funds provided to employers for OJT or customized training must 
not be used to directly or indirectly assist, promote or deter union 
organizing.



                      Subpart H_Supportive Services



Sec. 663.800  What are supportive services for adults and dislocated 
workers?

    Supportive services for adults and dislocated workers are defined at 
WIA sections 101(46) and 134(e)(2) and (3). They include services such 
as transportation, child care, dependent care, housing, and needs-
related payments, that are necessary to enable an individual to 
participate in activities authorized under WIA title I. Local Boards, in 
consultation with the One-Stop partners and other community service 
providers, must develop a policy on supportive services that ensures 
resource and service coordination in the local area. Such policy should 
address procedures for referral to such services, including how such 
services will be funded when they are not otherwise available from other 
sources. The provision of accurate information about the availability of 
supportive services in the local area, as well as referral to such 
activities, is one of the core services that must be available to adults 
and dislocated workers through the One-Stop delivery system. (WIA sec. 
134(d)(2)(H).)



Sec. 663.805  When may supportive services be provided to participants?

    (a) Supportive services may only be provided to individuals who are:
    (1) Participating in core, intensive or training services; and
    (2) Unable to obtain supportive services through other programs 
providing such services. (WIA sec. 134(e)(2)(A) and (B).)
    (b) Supportive services may only be provided when they are necessary 
to enable individuals to participate in title I activities. (WIA sec. 
101(46).)



Sec. 663.810  Are there limits on the amounts or duration of funds for 
supportive services?

    (a) Local Boards may establish limits on the provision of supportive 
services or provide the One-Stop operator with the authority to 
establish such limits, including a maximum amount of funding and maximum 
length of time for supportive services to be available to participants.

[[Page 770]]

    (b) Procedures may also be established to allow One-Stop operators 
to grant exceptions to the limits established under paragraph (a) of 
this section.



Sec. 663.815  What are needs-related payments?

    Needs-related payments provide financial assistance to participants 
for the purpose of enabling individuals to participate in training and 
are one of the supportive services authorized by WIA section 134(e)(3).



Sec. 663.820  What are the eligibility requirements for adults to 
receive needs-related payments?

    Adults must:
    (a) Be unemployed,
    (b) Not qualify for, or have ceased qualifying for, unemployment 
compensation; and
    (c) Be enrolled in a program of training services under WIA section 
134(d)(4).



Sec. 663.825  What are the eligibility requirements for dislocated 
workers to receive needs-related payments?

    To receive needs related payments, a dislocated worker must:
    (a) Be unemployed, and:
    (1) Have ceased to qualify for unemployment compensation or trade 
readjustment allowance under TAA or NAFTA-TAA; and
    (2) Be enrolled in a program of training services under WIA section 
134(d)(4) by the end of the 13th week after the most recent layoff that 
resulted in a determination of the worker's eligibility as a dislocated 
worker, or, if later, by the end of the 8th week after the worker is 
informed that a short-term layoff will exceed 6 months; or
    (b) Be unemployed and did not qualify for unemployment compensation 
or trade readjustment assistance under TAA or NAFTA-TAA.



Sec. 663.830  May needs-related payments be paid while a participant 
is waiting to start training classes?

    Yes, payments may be provided if the participant has been accepted 
in a training program that will begin within 30 calender days. The 
Governor may authorize local areas to extend the 30 day period to 
address appropriate circumstances.



Sec. 663.840  How is the level of needs-related payments determined?

    (a) The payment level for adults must be established by the Local 
Board.
    (b) For dislocated workers, payments must not exceed the greater of 
either of the following levels:
    (1) For participants who were eligible for unemployment compensation 
as a result of the qualifying dislocation, the payment may not exceed 
the applicable weekly level of the unemployment compensation benefit; or
    (2) For participants who did not qualify for unemployment 
compensation as a result of the qualifying layoff, the weekly payment 
may not exceed the poverty level for an equivalent period. The weekly 
payment level must be adjusted to reflect changes in total family income 
as determined by Local Board policies. (WIA sec. 134(e)(3)(C).)



PART 664_YOUTH ACTIVITIES UNDER TITLE I OF THE WORKFORCE INVESTMENT ACT
--Table of Contents




                        Subpart A_Youth Councils

Sec.
664.100 What is the youth council?
664.110 Who is responsible for oversight of youth programs in the local 
          area?

                Subpart B_Eligibility for Youth Services

664.200 Who is eligible for youth services?
664.205 How is the ``deficient in basic literacy skills'' criterion in 
          Sec. 664.200(c)(1) defined and documented?
664.210 How is the ``requires additional assistance to complete an 
          educational program, or to secure and hold employment'' 
          criterion in Sec. 664.200(c)(6) defined and documented?
664.215 Must youth participants be registered to participate in the 
          youth program?
664.220 Is there an exception to permit youth who are not low-income 
          individuals to receive youth services?
664.230 Are the eligibility barriers for eligible youth the same as the 
          eligibility barriers for the five percent of youth 
          participants who do not have to meet income eligibility 
          requirements?
664.240 May a local program use eligibility for free lunches under the 
          National School Lunch Program as a substitute

[[Page 771]]

          for the income eligibility criteria under title I of WIA?
664.250 May a disabled youth whose family does not meet income 
          eligibility criteria under the Act be eligible for youth 
          services?

                      Subpart C_Out-of-School Youth

664.300 Who is an ``out-of-school youth''?
664.310 When is dropout status determined, particularly for youth 
          attending alternative schools?
664.320 Does the requirement that at least 30 percent of youth funds be 
          used to provide activities to out-of-school youth apply to all 
          youth funds?

        Subpart D_Youth Program Design, Elements, and Parameters

664.400 What is a local youth program?
664.405 How must local youth programs be designed?
664.410 Must local programs include each of the ten program elements 
          listed in WIA section 129(c)(2) as options available to youth 
          participants?
664.420 What are leadership development opportunities?
664.430 What are positive social behaviors?
664.440 What are supportive services for youth?
664.450 What are follow-up services for youth?
664.460 What are work experiences for youth?
664.470 Are paid work experiences allowable activities?

                     Subpart E_Concurrent Enrollment

664.500 May youth participate in both youth and adult/dislocated worker 
          programs concurrently?
664.510 Are Individual Training Accounts allowed for youth participants?

                Subpart F_Summer Employment Opportunities

664.600 Are Local Boards required to offer summer employment 
          opportunities in the local youth program?
664.610 How is the summer employment opportunities element administered?
664.620 Do the core indicators described in 20 CFR 666.100(a)(3) apply 
          to participation in summer employment activities?

                  Subpart G_One-Stop Services to Youth

664.700 What is the connection between the youth program and the One-
          Stop service delivery system?
664.710 Do Local Boards have the flexibility to offer services to area 
          youth who are not eligible under the youth program through the 
          One-Stop centers?

                   Subpart H_Youth Opportunity Grants

664.800 How are the recipients of Youth Opportunity Grants selected?
664.810 How does a Local Board or other entity become eligible to 
          receive a Youth Opportunity Grant?
664.820 Who is eligible to receive services under Youth Opportunity 
          Grants?
664.830 How are performance measures for Youth Opportunity Grants 
          determined?

    Authority: Sec. 506(c), Pub. L. 105-220; 20 U.S.C. 9276(c).

    Source: 65 FR 49411, Aug. 11, 2000, unless otherwise noted.



                        Subpart A_Youth Councils



Sec. 664.100  What is the youth council?

    (a) The duties and membership requirements of the youth council are 
described in WIA section 117(h) and 20 CFR 661.335 and 661.340.
    (b) The purpose of the youth council is to provide expertise in 
youth policy and to assist the Local Board in:
    (1) Developing and recommending local youth employment and training 
policy and practice;
    (2) Broadening the youth employment and training focus in the 
community to incorporate a youth development perspective;
    (3) Establishing linkages with other organizations serving youth in 
the local area; and
    (4) Taking into account a range of issues that can have an impact on 
the success of youth in the labor market. (WIA sec. 117(h).)



Sec. 664.110  Who is responsible for oversight of youth programs in 
the local area?

    (a) The Local Board, working with the youth council, is responsible 
for conducting oversight of local youth programs operated under the Act, 
to ensure both fiscal and programmatic accountability.
    (b) Local program oversight is conducted in consultation with the 
local area's chief elected official.
    (c) The Local Board may, after consultation with the CEO, delegate 
its responsibility for oversight of eligible youth providers, as well as 
other youth

[[Page 772]]

program oversight responsibilities, to the youth council, recognizing 
the advantage of delegating such responsibilities to the youth council 
whose members have expertise in youth issues. (WIA sec. 117(d); 
117(h)(4).)



                Subpart B_Eligibility for Youth Services



Sec. 664.200  Who is eligible for youth services?

    An eligible youth is defined, under WIA sec. 101(13), as an 
individual who:
    (a) Is age 14 through 21;
    (b) Is a low income individual, as defined in the WIA section 
101(25); and
    (c) Is within one or more of the following categories:
    (1) Deficient in basic literacy skills;
    (2) School dropout;
    (3) Homeless, runaway, or foster child;
    (4) Pregnant or parenting;
    (5) Offender; or
    (6) Is an individual (including a youth with a disability) who 
requires additional assistance to complete an educational program, or to 
secure and hold employment. (WIA sec. 101(13).)



Sec. 664.205  How is the ``deficient in basic literacy skills'' 
criterion in Sec. 664.200(c)(1) defined and documented?

    (a) Definitions and eligibility documentation requirements regarding 
the ``deficient in basic literacy skills'' criterion in Sec. 
664.200(c)(1) may be established at the State or local level. These 
definitions may establish such criteria as are needed to address State 
or local concerns, and must include a determination that an individual:
    (1) Computes or solves problems, reads, writes, or speaks English at 
or below the 8th grade level on a generally accepted standardized test 
or a comparable score on a criterion-referenced test; or
    (2) Is unable to compute or solve problems, read, write, or speak 
English at a level necessary to function on the job, in the individual's 
family or in society. (WIA secs. 101(19), 203(12).)
    (b) In cases where the State Board establishes State policy on this 
criterion, the policy must be included in the State plan. (WIA secs. 
101(13)(C)(i), 101(19).)



Sec. 664.210  How is the ``requires additional assistance to complete 
an educational program, or to secure and hold employment'' criterion in 
Sec. 664.200(c)(6) defined and documented?

    Definitions and eligibility documentation requirements regarding the 
``requires additional assistance to complete an educational program, or 
to secure and hold employment'' criterion of Sec. 664.200(c)(6) may be 
established at the State or local level. In cases where the State Board 
establishes State policy on this criterion, the policy must be included 
in the State Plan. (WIA sec. 101(13)(C)(iv).)



Sec. 664.215  Must youth participants be registered to participate in 
the youth program?

    (a) Yes, all youth participants must be registered.
    (b) Registration is the process of collecting information to support 
a determination of eligibility.
    (c) Equal opportunity data must be collected during the registration 
process on any individual who has submitted personal information in 
response to a request by the recipient for such information.



Sec. 664.220  Is there an exception to permit youth who are not 
low-income individuals to receive youth services?

    Yes, up to five percent of youth participants served by youth 
programs in a local area may be individuals who do not meet the income 
criterion for eligible youth, provided that they are within one or more 
of the following categories:
    (a) School dropout;
    (b) Basic skills deficient, as defined in WIA section 101(4);
    (c) Are one or more grade levels below the grade level appropriate 
to the individual's age;
    (d) Pregnant or parenting;
    (e) Possess one or more disabilities, including learning 
disabilities;
    (f) Homeless or runaway;
    (g) Offender; or

[[Page 773]]

    (h) Face serious barriers to employment as identified by the Local 
Board. (WIA sec. 129(c)(5).)



Sec. 664.230  Are the eligibility barriers for eligible youth the same 
as the eligibility barriers for the five percent of youth participants 
who do not have to meet income eligibility requirements?

    No, the barriers listed in Sec. Sec. 664.200 and 664.220 are not 
the same. Both lists of eligibility barriers include school dropout, 
homeless or runaway, pregnant or parenting, and offender, but each list 
contains barriers not included on the other list.



Sec. 664.240  May a local program use eligibility for free lunches under 
the National School Lunch Program as a substitute for the income 
eligibility criteria under title I of WIA?

    No, the criteria for income eligibility under the National School 
Lunch Program are not the same as the Act's income eligibility criteria. 
Therefore, the school lunch list may not be used as a substitute for 
income eligibility to determine who is eligible for services under the 
Act.



Sec. 664.250  May a disabled youth whose family does not meet income 
eligibility criteria under the Act be eligible for youth services?

    Yes, even if the family of a disabled youth does not meet the income 
eligibility criteria, the disabled youth may be considered a low-income 
individual if the youth's own income:
    (a) Meets the income criteria established in WIA section 101(25)(B); 
or
    (b) Meets the income eligibility criteria for cash payments under 
any Federal, State or local public assistance program. (WIA sec. 
101(25)(F).)



                      Subpart C_Out-of-School Youth



Sec. 664.300  Who is an ``out-of-school youth''?

    An out-of-school youth is an individual who:
    (a) Is an eligible youth who is a school dropout; or
    (b) Is an eligible youth who has either graduated from high school 
or holds a GED, but is basic skills deficient, unemployed, or 
underemployed. (WIA sec. 101(33).)



Sec. 664.310  When is dropout status determined, particularly for youth 
attending alternative schools?

    A school dropout is defined as an individual who is no longer 
attending any school and who has not received a secondary school diploma 
or its recognized equivalent. A youth's dropout status is determined at 
the time of registration. A youth attending an alternative school at the 
time of registration is not a dropout. An individual who is out-of 
school at the time of registration and subsequently placed in an 
alternative school, may be considered an out-of-school youth for the 
purposes of the 30 percent expenditure requirement for out-of-school 
youth. (WIA sec. 101(39).)



Sec. 664.320  Does the requirement that at least 30 percent of youth 
funds be used to provide activities to out-of-school youth apply to 
all youth funds?

    (a) Yes, the 30 percent requirement applies to the total amount of 
all funds allocated to a local area under WIA section 128(b)(2)(A) or 
(b)(3), except for local area expenditures for administrative purposes 
under 20 CFR 667.210(a)(2).
    (b) Although it is not necessary to ensure that 30 percent of such 
funds spent on summer employment opportunities (or any other particular 
element of the youth program) are spent on out-of-school youth, the 
funds spent on these activities are included in the total to which the 
30 percent requirement applies.
    (c) There is a limited exception, at WIA section 129(c)(4)(B), under 
which certain small States may apply to the Secretary to reduce the 
minimum amount that must be spent on out-of-school youth. (WIA sec. 
129(c)(4).)



        Subpart D_Youth Program Design, Elements, and Parameters



Sec. 664.400  What is a local youth program?

    A local youth program is defined as those youth activities offered 
by a Local Workforce Investment Board for

[[Page 774]]

a designated local workforce investment area, as specified in 20 CFR 
part 661.



Sec. 664.405  How must local youth programs be designed?

    (a) The design framework of local youth programs must:
    (1) Provide an objective assessment of each youth participant, that 
meets the requirements of WIA section 129(c)(1)(A), and includes a 
review of the academic and occupational skill levels, as well as the 
service needs, of each youth;
    (2) Develop an individual service strategy for each youth 
participant that meets the requirements of WIA section 129(c)(1)(B), 
including identifying an age-appropriate career goal and consideration 
of the assessment results for each youth; and
    (3) Provide preparation for postsecondary educational opportunities, 
provide linkages between academic and occupational learning, provide 
preparation for employment, and provide effective connections to 
intermediary organizations that provide strong links to the job market 
and employers.
    (4) The requirement in WIA section 123 that eligible providers of 
youth services be selected by awarding a grant or contract on a 
competitive basis does not apply to the design framework component, such 
as services for intake, objective assessment and the development of 
individual service strategy, when these services are provided by the 
grant recipient/fiscal agent.
    (b) The local plan must describe the design framework for youth 
program design in the local area, and how the ten program elements 
required in Sec. 664.410 are provided within that framework.
    (c) Local Boards must ensure appropriate links to entities that will 
foster the participation of eligible local area youth. Such links may 
include connections to:
    (1) Local area justice and law enforcement officials;
    (2) Local public housing authorities;
    (3) Local education agencies;
    (4) Job Corps representatives; and
    (5) Representatives of other area youth initiatives, including those 
that serve homeless youth and other public and private youth 
initiatives.
    (d) Local Boards must ensure that the referral requirements in WIA 
section 129(c)(3) for youth who meet the income eligibility criteria are 
met, including:
    (1) Providing these youth with information regarding the full array 
of applicable or appropriate services available through the Local Board 
or other eligible providers, or One-Stop partners; and
    (2) Referring these youth to appropriate training and educational 
programs that have the capacity to serve them either on a sequential or 
concurrent basis.
    (e) In order to meet the basic skills and training needs of eligible 
applicants who do not meet the enrollment requirements of a particular 
program or who cannot be served by the program, each eligible youth 
provider must ensure that these youth are referred:
    (1) For further assessment, as necessary, and
    (2) To appropriate programs, in accordance with paragraph (d)(2) of 
this section.
    (f) Local Boards must ensure that parents, youth participants, and 
other members of the community with experience relating to youth 
programs are involved in both the design and implementation of its youth 
programs.
    (g) The objective assessment required under paragraph (a)(1) of this 
section or the individual service strategy required under paragraph 
(a)(2) of this section is not required if the program provider 
determines that it is appropriate to use a recent objective assessment 
or individual service strategy that was developed under another 
education or training program. (WIA section 129(c)(1).)



Sec. 664.410  Must local programs include each of the ten program 
elements listed in WIA section 129(c)(2) as options available to youth 
participants?

    (a) Yes, local programs must make the following services available 
to youth participants:
    (1) Tutoring, study skills training, and instruction leading to 
secondary

[[Page 775]]

school completion, including dropout prevention strategies;
    (2) Alternative secondary school offerings;
    (3) Summer employment opportunities directly linked to academic and 
occupational learning;
    (4) Paid and unpaid work experiences, including internships and job 
shadowing, as provided in Sec. Sec. 664.460 and 664.470;
    (5) Occupational skill training;
    (6) Leadership development opportunities, which include community 
service and peer-centered activities encouraging responsibility and 
other positive social behaviors;
    (7) Supportive services, which may include the services listed in 
Sec. 664.440;
    (8) Adult mentoring for a duration of at least twelve (12) months, 
that may occur both during and after program participation;
    (9) Followup services, as provided in Sec. 664.450; and
    (10) Comprehensive guidance and counseling, including drug and 
alcohol abuse counseling, as well as referrals to counseling, as 
appropriate to the needs of the individual youth.
    (b) Local programs have the discretion to determine what specific 
program services will be provided to a youth participant, based on each 
participant's objective assessment and individual service strategy. (WIA 
sec. 129(c)(2).)



Sec. 664.420  What are leadership development opportunities?

    Leadership development opportunities are opportunities that 
encourage responsibility, employability, and other positive social 
behaviors such as:
    (a) Exposure to postsecondary educational opportunities;
    (b) Community and service learning projects;
    (c) Peer-centered activities, including peer mentoring and tutoring;
    (d) Organizational and team work training, including team leadership 
training;
    (e) Training in decision-making, including determining priorities; 
and
    (f) Citizenship training, including life skills training such as 
parenting, work behavior training, and budgeting of resources. (WIA sec. 
129(c)(2)(F).)



Sec. 664.430  What are positive social behaviors?

    Positive social behaviors are outcomes of leadership opportunities, 
often referred to as soft skills, which are incorporated by many local 
programs as part of their menu of services. Positive social behaviors 
focus on areas that may include the following:
    (a) Positive attitudinal development;
    (b) Self esteem building;
    (c) Openness to working with individuals from diverse racial and 
ethnic backgrounds;
    (d) Maintaining healthy lifestyles, including being alcohol and drug 
free;
    (e) Maintaining positive relationships with responsible adults and 
peers, and contributing to the well being of one's community, including 
voting;
    (f) Maintaining a commitment to learning and academic success;
    (g) Avoiding delinquency;
    (h) Postponed and responsible parenting; and
    (i) Positive job attitudes and work skills. (WIA sec. 129(c)(2)(F).)



Sec. 664.440  What are supportive services for youth?

    Supportive services for youth, as defined in WIA section 101(46), 
may include the following:
    (a) Linkages to community services;
    (b) Assistance with transportation;
    (c) Assistance with child care and dependent care;
    (d) Assistance with housing;
    (e) Referrals to medical services; and
    (f) Assistance with uniforms or other appropriate work attire and 
work-related tools, including such items as eye glasses and protective 
eye gear. (WIA sec. 129(c)(2)(G).)



Sec. 664.450  What are follow-up services for youth?

    (a) Follow-up services for youth may include:
    (1) The leadership development and supportive service activities 
listed in Sec. Sec. 664.420 and 664.440;
    (2) Regular contact with a youth participant's employer, including 
assistance in addressing work-related problems that arise;
    (3) Assistance in securing better paying jobs, career development 
and further education;

[[Page 776]]

    (4) Work-related peer support groups;
    (5) Adult mentoring; and
    (6) Tracking the progress of youth in employment after training.
    (b) All youth participants must receive some form of follow-up 
services for a minimum duration of 12 months. Follow-up services may be 
provided beyond twelve (12) months at the State or Local Board's 
discretion. The types of services provided and the duration of services 
must be determined based on the needs of the individual. The scope of 
these follow-up services may be less intensive for youth who have only 
participated in summer youth employment opportunities. (WIA sec. 
129(c)(2)(I).)



Sec. 664.460  What are work experiences for youth?

    (a) Work experiences are planned, structured learning experiences 
that take place in a workplace for a limited period of time. As provided 
in WIA section 129(c)(2)(D) and Sec. 664.470, work experiences may be 
paid or unpaid.
    (b) Work experience workplaces may be in the private, for-profit 
sector; the non-profit sector; or the public sector.
    (c) Work experiences are designed to enable youth to gain exposure 
to the working world and its requirements. Work experiences are 
appropriate and desirable activities for many youth throughout the year. 
Work experiences should help youth acquire the personal attributes, 
knowledge, and skills needed to obtain a job and advance in employment. 
The purpose is to provide the youth participant with the opportunities 
for career exploration and skill development and is not to benefit the 
employer, although the employer may, in fact, benefit from the 
activities performed by the youth. Work experiences may be subsidized or 
unsubsidized and may include the following elements:
    (1) Instruction in employability skills or generic workplace skills 
such as those identified by the Secretary's Commission on Achieving 
Necessary Skills (SCANS);
    (2) Exposure to various aspects of an industry;
    (3) Progressively more complex tasks;
    (4) Internships and job shadowing;
    (5) The integration of basic academic skills into work activities;
    (6) Supported work, work adjustment, and other transition 
activities;
    (7) Entrepreneurship;
    (8) Service learning;
    (9) Paid and unpaid community service; and
    (10) Other elements designed to achieve the goals of work 
experiences.
    (d) In most cases, on-the-job training is not an appropriate work 
experiences activity for youth participants under age 18. Local program 
operators may choose, however, to use this service strategy for eligible 
youth when it is appropriate based on the needs identified by the 
objective assessment of an individual youth participant. (WIA sec. 
129(c)(2)(D).)



Sec. 664.470  Are paid work experiences allowable activities?

    Funds under the Act may be used to pay wages and related benefits 
for work experiences in the public; private, for-profit or non-profit 
sectors where the objective assessment and individual service strategy 
indicate that work experiences are appropriate. (WIA sec. 129(c)(2)(D).)



                     Subpart E_Concurrent Enrollment



Sec. 664.500  May youth participate in both youth and adult/dislocated 
worker programs concurrently?

    (a) Yes, under the Act, eligible youth are 14 through 21 years of 
age. Adults are defined in the Act as individuals age 18 and older. 
Thus, individuals ages 18 through 21 may be eligible for both adult and 
youth programs. There is no specified age for the dislocated worker 
program.
    (b) Individuals who meet the respective eligibility requirements may 
participate in adult and youth programs concurrently. Concurrent 
enrollment is allowable for youth served in programs under WIA titles I 
or II. Such individuals must be eligible under the youth or adult/
dislocated worker eligibility criteria applicable to the services 
received. Local program operators may determine, for individuals in this 
age group, the appropriate level and balance of services under the 
youth, adult, dislocated worker, or other services.

[[Page 777]]

    (c) Local program operators must identify and track the funding 
streams which pay the costs of services provided to individuals who are 
participating in youth and adult/dislocated worker programs 
concurrently, and ensure that services are not duplicated.



Sec. 664.510  Are Individual Training Accounts allowed for youth 
participants?

    No, however, individuals age 18 and above, who are eligible for 
training services under the adult and dislocated worker programs, may 
receive Individual Training Accounts through those programs. 
Requirements for concurrent participation requirements are set forth in 
Sec. 664.500. To the extent possible, in order to enhance youth 
participant choice, youth participants should be involved in the 
selection of educational and training activities.



                Subpart F_Summer Employment Opportunities



Sec. 664.600  Are Local Boards required to offer summer employment 
opportunities in the local youth program?

    (a) Yes, Local Boards are required to offer summer youth employment 
opportunities that link academic and occupational learning as part of 
the menu of services required in Sec. 664.410(a).
    (b) Summer youth employment must provide direct linkages to academic 
and occupational learning, and may provide other elements and strategies 
as appropriate to serve the needs and goals of the participants.
    (c) Local Boards may determine how much of available youth funds 
will be used for summer and for year-round youth activities.
    (d) The summer youth employment opportunities element is not 
intended to be a stand-alone program. Local programs should integrate a 
youth's participation in that element into a comprehensive strategy for 
addressing the youth's employment and training needs. Youths who 
participate in summer employment opportunities must be provided with a 
minimum of twelve months of followup services, as required in Sec. 
664.450. (WIA sec. 129(c)(2)(C).)



Sec. 664.610  How is the summer employment opportunities element 
administered?

    Chief elected officials and Local Boards are responsible for 
ensuring that the local youth program provides summer employment 
opportunities to youth. The chief elected officials (which may include 
local government units operating as a consortium) are the grant 
recipients for local youth funds, unless another entity is chosen to be 
grant recipient or fiscal agent under WIA section 117(d)(3)(B). If, in 
the administration of the summer employment opportunities element of the 
local youth program, providers other than the grant recipient/fiscal 
agent, are used to provide summer youth employment opportunities, these 
providers must be selected by awarding a grant or contract on a 
competitive basis, based on the recommendation of the youth council and 
on criteria contained in the State Plan. However, the selection of 
employers who are providing unsubsidized employment opportunities may be 
excluded from the competitive process. (WIA sec. 129(c)(2)(C).)



Sec. 664.620  Do the core indicators described in 20 CFR 666.100(a)(3) 
apply to participation in summer employment activities?

    Yes, the summer employment opportunities element is one of a number 
of activities authorized by the WIA youth program. WIA section 136(b)(2) 
(A)(ii) and(B) provides specific core indicators of performance for 
youth, and requires that all participating youth be included in the 
determination of whether the local levels of performance are met. 
Program operators can help ensure positive outcomes for youth 
participants by providing them with continuity of services.



                  Subpart G_One-Stop Services to Youth



Sec. 664.700  What is the connection between the youth program and the 
One-Stop service delivery system?

    (a) The chief elected official (or designee, under WIA section 
117(d)(3)(B)), as the local grant recipient for the youth program is a 
required One-Stop

[[Page 778]]

partner and is subject to the requirements that apply to such partners, 
described in 20 CFR part 662.
    (b) In addition to the provisions of 20 CFR part 662, connections 
between the youth program and the One-Stop system may include those that 
facilitate:
    (1) The coordination and provision of youth activities;
    (2) Linkages to the job market and employers;
    (3) Access for eligible youth to the information and services 
required in Sec. Sec. 664.400 and 664.410; and
    (4) Other activities designed to achieve the purposes of the youth 
program and youth activities as described in WIA section 129(a). (WIA 
secs. 121(b)(1)(B)(i); 129.)



Sec. 664.710  Do Local Boards have the flexibility to offer services to 
area youth who are not eligible under the youth program through the One-Stop 
centers?

    Yes, however, One-Stop services for non-eligible youth must be 
funded by programs that are authorized to provide services to such 
youth. For example, basic labor exchange services under the Wagner-
Peyser Act may be provided to any youth.



                   Subpart H_Youth Opportunity Grants



Sec. 664.800  How are the recipients of Youth Opportunity Grants 
selected?

    (a) Youth Opportunity Grants are awarded through a competitive 
selection process. The Secretary establishes appropriate application 
procedures, selection criteria, and an approval process for awarding 
Youth Opportunity Grants to applicants which can accomplish the purpose 
of the Act and use available funds in an effective manner in the 
Solicitation for Grant Applications announcing the competition.
    (b) The Secretary distributes grants equitably among urban and rural 
areas by taking into consideration such factors as the following:
    (1) The poverty rate in urban and rural communities;
    (2) The number of people in poverty in urban and rural communities; 
and
    (3) The quality of proposals received. (WIA sec.169(a) and (e).)



Sec. 664.810  How does a Local Board or other entity become eligible 
to receive a Youth Opportunity Grant?

    (a) A Local Board is eligible to receive a Youth Opportunity Grant 
if it serves a community that:
    (1) Has been designated as an empowerment zone (EZ) or enterprise 
community (EC) under section 1391 of the Internal Revenue Code of 1986;
    (2) Is located in a State that does not have an EZ or an EC and that 
has been designated by its Governor as a high poverty area; or
    (3) Is one of two areas in a State that has been designated by the 
Governor as an area for which a local board may apply for a Youth 
Opportunity Grant, and that meets the poverty rate criteria in section 
1392 (a)(4), (b), and (d) of the Internal Revenue Code of 1986.
    (b) An entity other than a Local Board is eligible to receive a 
grant if that entity:
    (1) Is a WIA Indian and Native American grant recipient under WIA 
section 166; and
    (2) Serves a community that:
    (i) Meets the poverty rate criteria in section 1392(a)(4), (b), and 
(d) of the Internal Revenue Code of 1986; and
    (ii) Is located on an Indian reservation or serves Oklahoma Indians 
or Alaska Native villages or Native groups, as provided in WIA section 
169 (d)(2)(B). (WIA sec. 169(c) and (d).)



Sec. 664.820  Who is eligible to receive services under Youth 
Opportunity Grants?

    All individuals ages 14 through 21 who reside in the community 
identified in the grant are eligible to receive services under the 
grant. (WIA sec. 169(a).)



Sec. 664.830  How are performance measures for Youth Opportunity Grants 
determined?

    (a) The Secretary negotiates performance measures, including 
appropriate performance levels for each indicator, with each selected 
grantee, based on information contained in the application.
    (b) Performance indicators for the measures negotiated under Youth 
Opportunity Grants are the indicators of

[[Page 779]]

performance provided in WIA sections 136(b)(2)(A) and (B). (WIA sec. 
169(f).).



PART 665_STATEWIDE WORKFORCE INVESTMENT ACTIVITIES UNDER TITLE I OF 
THE WORKFORCE INVESTMENT ACT--Table of Contents




                      Subpart A_General Description

Sec.
665.100 What are the Statewide workforce investment activities under 
          title I of WIA?
665.110 How are Statewide workforce investment activities funded?

    Subpart B_Required and Allowable Statewide Workforce Investment 
                               Activities

665.200 What are required Statewide workforce investment activities?
665.210 What are allowable Statewide workforce investment activities?
665.220 Who is an ``incumbent worker'' for purposes of Statewide 
          workforce investment activities?

                   Subpart C_Rapid Response Activities

665.300 What are rapid response activities and who is responsible for 
          providing them?
665.310 What rapid response activities are required?
665.320 May other activities be undertaken as part of rapid response?
665.330 Are the NAFTA-TAA program requirements for rapid response also 
          required activities?
665.340 What is meant by ``provision of additional assistance'' in WIA 
          section 134(a)(2)(A)(ii)?

    Authority: Section 506(c), Pub. L. 105-220; 20 U.S.C. 9276(c).

    Source: 65 FR 49415, Aug. 11, 2000, unless otherwise noted.



                      Subpart A_General Description



Sec. 665.100  What are the Statewide workforce investment activities 
under title I of WIA?

    Statewide workforce investment activities include Statewide 
employment and training activities for adults and dislocated workers, as 
described in WIA section 134(a), and Statewide youth activities, as 
described in WIA section 129(b). They include both required and 
allowable activities. In accordance with the requirements of this 
subpart, the State may develop policies and strategies for use of 
Statewide workforce investment funds. Descriptions of these policies and 
strategies must be included in the State Plan. (WIA secs. 129(b), 
134(a).)



Sec. 665.110  How are Statewide workforce investment activities funded?

    (a) Except for the Statewide rapid response activities described in 
paragraph (c) of this section, Statewide workforce investment activities 
are supported by funds reserved by the Governor under WIA section 
128(a).
    (b) Funds reserved by the Governor for Statewide workforce 
investment activities may be combined and used for any of the activities 
authorized in WIA sections 129(b), 134(a)(2)(B) or 134(a)(3)(A) (which 
are described in Sec. Sec. 665.200 and 665.210), regardless of whether 
the funds were allotted through the youth, adult, or dislocated worker 
funding streams.
    (c) Funds for Statewide rapid response activities are reserved under 
WIA section 133(a)(2) and may be used to provide the activities 
authorized at section 134(a)(2)(A) (which are described in Sec. Sec. 
665.310 through 665.330). (WIA secs. 129(b), 133(a)(2), 134(a)(2)(B), 
and 134(a)(3)(A).)



    Subpart B_Required and Allowable Statewide Workforce Investment 
                               Activities



Sec. 665.200  What are required Statewide workforce investment 
activities?

    Required Statewide workforce investment activities are:
    (a) Required rapid response activities, as described in Sec. 
665.310;
    (b) Disseminating:
    (1) The State list of eligible providers of training services 
(including those providing non-traditional training services), for 
adults and dislocated workers;
    (2) Information identifying eligible providers of on-the-job 
training (OJT) and customized training;
    (3) Performance and program cost information about these providers, 
as described in 20 CFR 663.540; and
    (4) A list of eligible providers of youth activities as described in 
WIA section 123;

[[Page 780]]

    (c) States must assure that the information listed in paragraphs 
(b)(1) through (4) of this section is widely available.
    (d) Conducting evaluations, under WIA section 136(e), of workforce 
investment activities for adults, dislocated workers and youth, in order 
to establish and promote methods for continuously improving such 
activities to achieve high-level performance within, and high-level 
outcomes from, the Statewide workforce investment system. Such 
evaluations must be designed and conducted in conjunction with the State 
and Local Boards, and must include analysis of customer feedback, 
outcome and process measures in the workforce investment system. To the 
maximum extent practicable, these evaluations should be conducted in 
coordination with Federal evaluations carried out under WIA section 172.
    (e) Providing incentive grants:
    (1) To local areas for regional cooperation among Local Boards 
(including Local Boards for a designated region, as described in 20 CFR 
661.290);
    (2) For local coordination of activities carried out under WIA; and
    (3) For exemplary performance by local areas on the performance 
measures.
    (f) Providing technical assistance to local areas that fail to meet 
local performance measures.
    (g) Assisting in the establishment and operation of One-Stop 
delivery systems, in accordance with the strategy described in the State 
workforce investment plan. (WIA sec. 112(b)(14).)
    (h) Providing additional assistance to local areas that have high 
concentrations of eligible youth.
    (i) Operating a fiscal and management accountability information 
system, based on guidelines established by the Secretary after 
consultation with the Governors, chief elected officials, and One-Stop 
partners, as required by WIA section 136(f). (WIA secs. 129(b)(2), 
134(a)(2), and 136(e)(2).)



Sec. 665.210  What are allowable Statewide workforce investment 
activities?

    Allowable Statewide workforce investment activities include:
    (a) State administration of the adult, dislocated worker and youth 
workforce investment activities, consistent with the five percent 
administrative cost limitation at 20 CFR 667.210(a)(1).
    (b) Providing capacity building and technical assistance to local 
areas, including Local Boards, One-Stop operators, One-Stop partners, 
and eligible providers, which may include:
    (1) Staff development and training; and
    (2) The development of exemplary program activities.
    (c) Conducting research and demonstrations.
    (d) Establishing and implementing:
    (1) Innovative incumbent worker training programs, which may include 
an employer loan program to assist in skills upgrading; and
    (2) Programs targeted to Empowerment Zones and Enterprise 
Communities.
    (e) Providing support to local areas for the identification of 
eligible training providers.
    (f) Implementing innovative programs for displaced homemakers, and 
programs to increase the number of individuals trained for and placed in 
non-traditional employment.
    (g) Carrying out such adult and dislocated worker employment and 
training activities as the State determines are necessary to assist 
local areas in carrying out local employment and training activities.
    (h) Carrying out youth activities Statewide.
    (i) Preparation and submission to the Secretary of the annual 
performance progress report as described in 20 CFR 667.300(e). (WIA 
secs. 129(b)(3) and 134(a)(3).)



Sec. 665.220  Who is an ``incumbent worker'' for purposes of Statewide 
workforce investment activities?

    States may establish policies and definitions to determine which 
workers, or groups of workers, are eligible for incumbent worker 
services under this subpart. An incumbent worker is an individual who is 
employed, but an incumbent worker does not necessarily have to meet the 
eligibility requirements for intensive and training services for 
employed adults and dislocated

[[Page 781]]

workers at 20 CFR 663.220(b) and 663.310. (WIA sec. 
134(a)(3)(A)(iv)(I).)



                   Subpart C_Rapid Response Activities



Sec. 665.300  What are rapid response activities and who is responsible 
for providing them?

    (a) Rapid response activities are described in Sec. Sec. 665.310 
through 665.330. They encompass the activities necessary to plan and 
deliver services to enable dislocated workers to transition to new 
employment as quickly as possible, following either a permanent closure 
or mass layoff, or a natural or other disaster resulting in a mass job 
dislocation.
    (b) The State is responsible for providing rapid response 
activities. Rapid response is a required activity carried out in local 
areas by the State, or an entity designated by the State, in conjunction 
with the Local Board and chief elected officials. The State must 
establish methods by which to provide additional assistance to local 
areas that experience disasters, mass layoffs, plant closings, or other 
dislocation events when such events substantially increase the number of 
unemployed individuals.
    (c) States must establish a rapid response dislocated worker unit to 
carry out Statewide rapid response activities. (WIA secs. 101(38), 
112(b)(17)(A)(ii) and 134(a)(2)(A).)



Sec. 665.310  What rapid response activities are required?

    Rapid response activities must include:
    (a) Immediate and on-site contact with the employer, representatives 
of the affected workers, and the local community, which may include an 
assessment of the:
    (1) Layoff plans and schedule of the employer;
    (2) Potential for averting the layoff(s) in consultation with State 
or local economic development agencies, including private sector 
economic development entities;
    (3) Background and probable assistance needs of the affected 
workers;
    (4) Reemployment prospects for workers in the local community; and
    (5) Available resources to meet the short and long-term assistance 
needs of the affected workers.
    (b) The provision of information and access to unemployment 
compensation benefits, comprehensive One-Stop system services, and 
employment and training activities, including information on the Trade 
Adjustment Assistance (TAA) program and the NAFTA-TAA program (19 U.S.C. 
2271 et seq.);
    (c) The provision of guidance and/or financial assistance in 
establishing a labor-management committee voluntarily agreed to by labor 
and management, or a workforce transition committee comprised of 
representatives of the employer, the affected workers and the local 
community. The committee may devise and oversee an implementation 
strategy that responds to the reemployment needs of the workers. The 
assistance to this committee may include:
    (1) The provision of training and technical assistance to members of 
the committee;
    (2) Funding the operating costs of a committee to enable it to 
provide advice and assistance in carrying out rapid response activities 
and in the design and delivery of WIA-authorized services to affected 
workers. Typically, such support will last no longer than six months; 
and
    (3) Providing a list of potential candidates to serve as a neutral 
chairperson of the committee.
    (d) The provision of emergency assistance adapted to the particular 
closing, layoff or disaster.
    (e) The provision of assistance to the local board and chief elected 
official(s) to develop a coordinated response to the dislocation event 
and, as needed, obtain access to State economic development assistance. 
Such coordinated response may include the development of an application 
for National Emergency Grant under 20 CFR part 671. (WIA secs. 101(38) 
and 134(a)(2)(A).)



Sec. 665.320  May other activities be undertaken as part of rapid 
response?

    Yes, a State or designated entity may provide rapid response 
activities in addition to the activities required to be provided under 
Sec. 665.310. In order to provide effective rapid response upon

[[Page 782]]

notification of a permanent closure or mass layoff, or a natural or 
other disaster resulting in a mass job dislocation, the State or 
designated entity may:
    (a) In conjunction, with other appropriate Federal, State and Local 
agencies and officials, employer associations, technical councils or 
other industry business councils, and labor organizations:
    (1) Develop prospective strategies for addressing dislocation 
events, that ensure rapid access to the broad range of allowable 
assistance;
    (2) Identify strategies for the aversion of layoffs; and
    (3) Develop and maintain mechanisms for the regular exchange of 
information relating to potential dislocations, available adjustment 
assistance, and the effectiveness of rapid response strategies.
    (b) In collaboration with the appropriate State agency(ies), collect 
and analyze information related to economic dislocations, including 
potential closings and layoffs, and all available resources in the State 
for dislocated workers in order to provide an adequate basis for 
effective program management, review and evaluation of rapid response 
and layoff aversion efforts in the State.
    (c) Participate in capacity building activities, including providing 
information about innovative and successful strategies for serving 
dislocated workers, with local areas serving smaller layoffs.
    (d) Assist in devising and overseeing strategies for:
    (1) Layoff aversion, such as prefeasibility studies of avoiding a 
plant closure through an option for a company or group, including the 
workers, to purchase the plant or company and continue it in operation;
    (2) Incumbent worker training, including employer loan programs for 
employee skill upgrading; and
    (3) Linkages with economic development activities at the Federal, 
State and local levels, including Federal Department of Commerce 
programs and available State and local business retention and 
recruitment activities.



Sec. 665.330  Are the NAFTA-TAA program requirements for rapid response 
also required activities?

    The Governor must ensure that rapid response activities under WIA 
are made available to workers who, under the NAFTA Implementation Act 
(Public Law 103-182), are members of a group of workers (including those 
in any agricultural firm or subdivision of an agricultural firm) for 
which the Governor has made a preliminary finding that:
    (a) A significant number or proportion of the workers in such firm 
or an appropriate subdivision of the firm have become totally or 
partially separated, or are threatened to become totally or partially 
separated; and
    (b) Either:
    (1) The sales or production, or both, of such firm or subdivision 
have decreased absolutely; and
    (2) Imports from Mexico or Canada of articles like or directly 
competitive with those produced by such firm or subdivision have 
increased; or
    (c) There has been a shift in production by such workers' firm or 
subdivision to Mexico or Canada of articles which are produced by the 
firm or subdivision.



Sec. 665.340  What is meant by ``provision of additional assistance'' 
in WIA section 134(a)(2)(A)(ii)?

    Up to 25 percent of dislocated worker funds may be reserved for 
rapid response activities. Once the State has reserved adequate funds 
for rapid response activities, such as those described in Sec. Sec. 
665.310 and 665.320, the remainder of the funds may be used by the State 
to provide funds to local areas, that experience increased numbers of 
unemployed individuals due to natural disasters, plant closings, mass 
layoffs or other events, for provision of direct services to 
participants (such as intensive, training, and other services) if there 
are not adequate local funds available to assist the dislocated workers.

[[Page 783]]



PART 666_PERFORMANCE ACCOUNTABILITY UNDER TITLE I OF THE WORKFORCE 
INVESTMENT ACT--Table of Contents




                 Subpart A_State Measures of Performance

Sec.
666.100 What performance indicators must be included in a State's plan?
666.110 May a Governor require additional indicators of performance?
666.120 What are the procedures for negotiating annual levels of 
          performance?
666.130 Under what conditions may a State or DOL request revisions to 
          the State negotiated levels of performance?
666.140 Which individuals receiving services are included in the core 
          indicators of performance?
666.150 What responsibility do States have to use quarterly wage record 
          information for performance accountability?

        Subpart B_Incentives and Sanctions for State Performance

666.200 Under what circumstances is a State eligible for an Incentive 
          Grant?
666.205 What are the time frames under which States submit performance 
          progress reports and apply for incentive grants?
666.210 How may Incentive Grant funds be used?
666.220 What information must be included in a State Board's application 
          for an Incentive Grant?
666.230 How does the Department determine the amounts for Incentive 
          Grant awards?
666.240 Under what circumstances may a sanction be applied to a State 
          that fails to achieve negotiated levels of performance for 
          title I?

                 Subpart C_Local Measures of Performance

666.300 What performance indicators apply to local areas?
666.310 What levels of performance apply to the indicators of 
          performance in local areas?

        Subpart D_Incentives and Sanctions for Local Performance

666.400 Under what circumstances are local areas eligible for State 
          Incentive Grants?
666.410 How may local incentive awards be used?
666.420 Under what circumstances may a sanction be applied to local 
          areas for poor performance?

    Authority: Sec. 506(c), Pub. L. 105-220; 20 U.S.C. 9276(c).

    Source: 65 FR 49402, Aug. 11, 2000, unless otherwise noted.



                 Subpart A_State Measures of Performance



Sec. 666.100  What performance indicators must be included in a State's 
plan?

    (a) All States submitting a State Plan under WIA title I, subtitle B 
must propose expected levels of performance for each of the core 
indicators of performance for the adult, dislocated worker and youth 
programs, respectively and the two customer satisfaction indicators.
    (1) For the Adult program, these indicators are:
    (i) Entry into unsubsidized employment;
    (ii) Retention in unsubsidized employment six months after entry 
into the employment;
    (iii) Earnings received in unsubsidized employment six months after 
entry into the employment; and
    (iv) Attainment of a recognized credential related to achievement of 
educational skills (such as a secondary school diploma or its recognized 
equivalent), or occupational skills, by participants who enter 
unsubsidized employment.
    (2) For the Dislocated Worker program, these indicators are:
    (i) Entry into unsubsidized employment;
    (ii) Retention in unsubsidized employment six months after entry 
into the employment;
    (iii) Earnings received in unsubsidized employment six months after 
entry into the employment; and
    (iv) Attainment of a recognized credential related to achievement of 
educational skills (such as a secondary school diploma or its recognized 
equivalent), or occupational skills, by participants who enter 
unsubsidized employment.
    (3) For the Youth program, these indicators are:
    (i) For eligible youth aged 14 through 18:
    (A) Attainment of basic skills goals, and, as appropriate, work 
readiness or occupational skills goals, up to a maximum of three goals 
per year;

[[Page 784]]

    (B) Attainment of secondary school diplomas and their recognized 
equivalents; and
    (C) Placement and retention in postsecondary education, advanced 
training, military service, employment, or qualified apprenticeships.
    (ii) For eligible youth aged 19 through 21:
    (A) Entry into unsubsidized employment;
    (B) Retention in unsubsidized employment six months after entry into 
the employment;
    (C) Earnings received in unsubsidized employment six months after 
entry into the employment; and
    (D) Attainment of a recognized credential related to achievement of 
educational skills (such as a secondary school diploma or its recognized 
equivalent), or occupational skills, by participants who enter post-
secondary education, advanced training, or unsubsidized employment.
    (4) A single customer satisfaction measure for employers and a 
single customer satisfaction indicator for participants must be used for 
the WIA title I, subtitle B programs for adults, dislocated workers and 
youth. (WIA sec. 136(b)(2).)
    (b) After consultation with the representatives identified in WIA 
sections 136(i) and 502(b), the Departments of Labor and Education will 
issue definitions for the performance indicators established under title 
I and title II of WIA. (WIA sec. 136 (b), (f) and (i).)



Sec. 666.110  May a Governor require additional indicators of 
performance?

    Yes, Governors may develop additional indicators of performance for 
adults, youth and dislocated worker activities. These indicators must be 
included in the State Plan. (WIA sec. 136(b)(2)(C).)



Sec. 666.120  What are the procedures for negotiating annual levels 
of performance?

    (a) We issue instructions on the specific information that must 
accompany the State Plan and that is used to review the State's expected 
levels of performance. The instructions may require that levels of 
performance for years two and three be expressed as a percentage 
improvement over the immediately preceding year's performance, 
consistent with the objective of continuous improvement.
    (b) States must submit expected levels of performance for the 
required indicators for each of the first three program years covered by 
the Plan.
    (c) The Secretary and the Governor must reach agreement on levels of 
performance for each core indicator and the customer satisfaction 
indicators. In negotiating these levels, the following must be taken 
into account:
    (1) The expected levels of performance identified in the State Plan;
    (2) The extent to which the levels of performance for each core 
indicator assist in achieving high customer satisfaction;
    (3) The extent to which the levels of performance promote continuous 
improvement and ensure optimal return on the investment of Federal 
funds; and
    (4) How the levels compare with those of other States, taking into 
account factors including differences in economic conditions, 
participant characteristics, and the proposed service mix and 
strategies.
    (d) The levels of performance agreed to under paragraph (c) of this 
section will be the State's negotiated levels of performance for the 
first three years of the State Plan. These levels will be used to 
determine whether sanctions will be applied or incentive grant funds 
will be awarded.
    (e) Before the fourth year of the State Plan, the Secretary and the 
Governor must reach agreement on levels of performance for each core 
indicator and the customer satisfaction indicators for the fourth and 
fifth years covered by the plan. In negotiating these levels, the 
factors listed in paragraph (c) of this section must be taken into 
account.
    (f) The levels of performance agreed to under paragraph (e) of this 
section will be the State negotiated levels of performance for the 
fourth and fifth years of the plan and must be incorporated into the 
State Plan.
    (g) Levels of performance for the additional indicators developed by 
the

[[Page 785]]

Governor, including additional indicators to demonstrate and measure 
continuous improvement toward goals identified by the State, are not 
part of the negotiations described in paragraphs (c) and (e) of this 
section. (WIA sec. 136(b)(3).)
    (h) State negotiated levels of performance may be revised in 
accordance with Sec. 666.130.



Sec. 666.130  Under what conditions may a State or DOL request revisions 
to the State negotiated levels of performance?

    (a) The DOL guidelines describe when and under what circumstances a 
Governor may request revisions to negotiated levels. These circumstances 
include significant changes in economic conditions, in the 
characteristics of participants entering the program, or in the services 
to be provided from when the initial plan was submitted and approved. 
(WIA sec. 136(b)(3)(A)(vi).)
    (b) The guidelines will establish the circumstances under which a 
State will be required to submit revisions under specified 
circumstances.



Sec. 666.140  Which individuals receiving services are included in the 
core indicators of performance?

    (a)(1) The core indicators of performance apply to all individuals 
who are registered under 20 CFR 663.105 and 664.215 for the adult, 
dislocated worker and youth programs, except for those adults and 
dislocated workers who participate exclusively in self-service or 
informational activities. (WIA sec. 136(b)(2)(A).)
    (2) Self-service and informational activities are those core 
services that are made available and accessible to the general public, 
that are designed to inform and educate individuals about the labor 
market and their employment strengths, weaknesses, and the range of 
services appropriate to their situation, and that do not require 
significant staff involvement with the individual in terms of resources 
or time.
    (b) For registered participants, a standardized record that includes 
appropriate performance information must be maintained in accordance 
with WIA section 185(a)(3).
    (c) Performance will be measured on the basis of results achieved by 
registered participants, and will reflect services provided under WIA 
title I, subtitle B programs for adults, dislocated workers and youth. 
Performance may also take into account services provided to participants 
by other One-Stop partner programs and activities, to the extent that 
the local MOU provides for the sharing of participant information.



Sec. 666.150  What responsibility do States have to use quarterly wage 
record information for performance accountability?

    (a) States must, consistent with State laws, use quarterly wage 
record information in measuring the progress on State and local 
performance measures. In order to meet this requirement the use of 
social security numbers from registered participants and such other 
information as is necessary to measure the progress of those 
participants through quarterly wage record information is authorized.
    (b) The State must include in the State Plan a description of the 
State's performance accountability system, and a description of the 
State's strategy for using quarterly wage record information to measure 
the progress on State and local performance measures. The description 
must identify the entities that may have access to quarterly wage record 
information for this purpose.
    (c) ``Quarterly wage record information'' means information 
regarding wages paid to an individual, the social security account 
number (or numbers, if more than one) of the individual and the name, 
address, State, and (when known) the Federal employer identification 
number of the employer paying the wages to the individual. (WIA sec. 
136(f)(2).)



        Subpart B_Incentives and Sanctions for State Performance



Sec. 666.200  Under what circumstances is a State eligible for an 
Incentive Grant?

    A State is eligible to apply for an Incentive Grant if its 
performance for the immediately preceding year exceeds:

[[Page 786]]

    (a) The State's negotiated levels of performance for the required 
core indicators for the adult, dislocated worker and youth programs 
under title I of WIA as well as the customer satisfaction indicators for 
WIA title I programs;
    (b) The adjusted levels of performance for title II Adult Education 
and Family Literacy programs; and
    (c) The adjusted levels of performance under section 113 of the Carl 
D. Perkins Vocational and Technical Education Act (20 U.S.C. 2301 et 
seq.). (WIA sec. 503.)



Sec. 666.205  What are the time frames under which States submit 
performance progress reports and apply for incentive grants?

    (a) State performance progress reports must be filed by the due date 
established in reporting instructions issued by the Department.
    (b) Based upon the reports filed under paragraph (a) of this 
section, we will determine the amount of funds available, under WIA 
title I, to each eligible State for incentive grants, in accordance with 
the criteria of Sec. 666.230. We will publish the award amounts for 
each eligible State, after consultation with the Secretary of Education, 
within ninety (90) days after the due date for performance progress 
reports established under paragraph (a) of this section.
    (c) Within forty-five (45) days of the publication of award amounts 
under paragraph (b) of this section, States may apply for incentive 
grants in accordance with the requirements of Sec. 666.220.



Sec. 666.210  How may Incentive Grant funds be used?

    Incentive grant funds are awarded to States to carry out any one or 
more innovative programs under titles I or II of WIA or the Carl D. 
Perkins Vocational and Technical Education Act, regardless of which Act 
is the source of the incentive funds. (WIA sec. 503(a).)



Sec. 666.220  What information must be included in a State Board's 
application for an Incentive Grant?

    (a) After consultation with the Secretary of Education, we will 
issue instructions annually which will include the amount of funds 
available to be awarded for each State and provide instructions for 
submitting applications for an Incentive Grant.
    (b) Each State desiring an incentive grant must submit to the 
Secretary an application, developed by the State Board, containing the 
following assurances:
    (1) The State legislature was consulted regarding the development of 
the application.
    (2) The application was approved by the Governor, the eligible 
agency (as defined in WIA section 203), and the State agency responsible 
for vocational and technical programs under the Carl D. Perkins 
Vocational and Technical Education Act.
    (3) The State exceeded the State negotiated levels of performance 
for title I, the levels of performance under title II and the levels for 
vocational and technical programs under the Carl D. Perkins Vocational 
and Technical Education Act. (WIA sec. 503(b).)



Sec. 666.230  How does the Department determine the amounts for 
Incentive Grant awards?

    (a) We determine the total amount to be allocated from funds 
available under WIA section 174(b) for Incentive Grants taking into 
consideration such factors as:
    (1) The availability of funds under section 174(b) for technical 
assistance, demonstration and pilot projects, evaluations, and Incentive 
Grants and the needs for these activities;
    (2) The number of States that are eligible for Incentive Grants and 
their relative program formula allocations under title I;
    (3) The availability of funds under WIA section 136(g)(2) resulting 
from funds withheld for poor performance by States; and
    (4) The range of awards established in WIA section 503(c).
    (b) We will publish the award amount for eligible States, after 
consultation with the Secretary of Education, within 90 days after the 
due date, established under Sec. 666.205(a), for the latest State 
performance progress report providing the annual information needed to 
determine State eligibility.

[[Page 787]]

    (c) In determining the amount available to an eligible State, the 
Secretary, with the Secretary of Education, may consider such factors 
as:
    (1) The relative allocations of the eligible State compared to other 
States;
    (2) The extent to which the negotiated levels of performance were 
exceeded;
    (3) Performance improvement relative to previous years;
    (4) Changes in economic conditions, participant characteristics and 
proposed service design since the negotiated levels of performance were 
agreed to;
    (5) The eligible State's relative performance for each of the 
indicators compared to other States; and
    (6) The performance on those indicators considered most important in 
terms of accomplishing national goals established by each of the 
respective Secretaries.



Sec. 666.240  Under what circumstances may a sanction be applied to a 
State that fails to achieve negotiated levels of performance for title I?

    (a) If a State fails to meet the negotiated levels of performance 
agreed to under Sec. 666.120 for core indicators of performance or 
customer satisfaction indicators for the adult, dislocated worker or 
youth programs under title I of WIA, the Secretary must, upon request, 
provide technical assistance, as authorized under WIA sections 136(g) 
and 170.
    (b) If a State fails to meet the negotiated levels of performance 
for core indicators of performance or customer satisfaction indicators 
for the same program in two successive years, the amount of the 
succeeding year's allocation for the applicable program may be reduced 
by up to five percent.
    (c) The exact amount of any allocation reduction will be based upon 
the degree of failure to meet the negotiated levels of performance for 
core indicators. In making a determination of the amount, if any, of 
such a sanction, we may consider factors such as:
    (1) The State's performance relative to other States;
    (2) Improvement efforts underway;
    (3) Incremental improvement on the performance measures;
    (4) Technical assistance previously provided;
    (5) Changes in economic conditions and program design;
    (6) The characteristics of participants served compared to the 
participant characteristics described in the State Plan; and
    (7) Performance on other core indicators of performance and customer 
satisfaction indicators for that program. (WIA sec. 136(g).)
    (d) Only performance that is less than 80 percent of the negotiated 
levels will be deemed to be a failure to achieve negotiated levels of 
performance.
    (e) In accordance with 20 CFR 667.300(e), a State grant may be 
reduced for failure to submit an annual performance progress report.
    (f) A State may request review of a sanction we impose in accordance 
with the provisions of 20 CFR 667.800.



                 Subpart C_Local Measures of Performance



Sec. 666.300  What performance indicators apply to local areas?

    (a) Each local workforce investment area in a State is subject to 
the same core indicators of performance and the customer satisfaction 
indicators that apply to the State under Sec. 666.100(a).
    (b) In addition to the indicators described in paragraph (a) of this 
section, under Sec. 666.110, the Governor may apply additional 
indicators of performance to local areas in the State. (WIA sec. 
136(c)(1).)



Sec. 666.310  What levels of performance apply to the indicators of 
performance in local areas?

    (a) The Local Board and the chief elected official must negotiate 
with the Governor and reach agreement on the local levels of performance 
for each indicator identified under Sec. 666.300. The levels must be 
based on the State negotiated levels of performance established under 
Sec. 666.120 and take into account the factors described in paragraph 
(b) of this section.
    (b) In determining the appropriate local levels of performance, the 
Governor, Local Board and chief elected official must take into account 
specific

[[Page 788]]

economic, demographic and other characteristics of the populations to be 
served in the local area.
    (c) The performance levels agreed to under paragraph (a) of this 
section must be incorporated in the local plan. (WIA secs. 118(b)(3) and 
136(c).)



        Subpart D_Incentives and Sanctions for Local Performance



Sec. 666.400  Under what circumstances are local areas eligible for 
State Incentive Grants?

    (a) States must use a portion of the funds reserved for Statewide 
workforce investment activities under WIA sections 128(a) and 133(a)(1) 
to provide Incentive Grants to local areas for regional cooperation 
among local boards (including local boards for a designated region, as 
described in WIA section 116(c)), for local coordination of activities 
carried out under this Act, and for exemplary performance on the local 
performance measures established under subpart C of this part.
    (b) The amount of funds used for Incentive Grants under paragraph 
(a) of this section and the criteria used for determining exemplary 
local performance levels to qualify for the incentive grants are 
determined by the Governor. (WIA sec. 134(a)(2)(B)(iii).)



Sec. 666.410  How may local incentive awards be used?

    The local incentive grant funds may be used for any activities 
allowed under WIA title I-B.



Sec. 666.420  Under what circumstances may a sanction be applied to 
local areas for poor performance?

    (a) If a local area fails to meet the levels of performance agreed 
to under Sec. 666.310 for the core indicators of performance or 
customer satisfaction indicators for a program in any program year, 
technical assistance must be provided. The technical assistance must be 
provided by the Governor with funds reserved for Statewide workforce 
investment activities under WIA sections 128(a) and 133(a)(1), or, upon 
the Governor's request, by the Secretary. The technical assistance may 
include the development of a performance improvement plan, a modified 
local plan, or other actions designed to assist the local area in 
improving performance.
    (b) If a local area fails to meet the levels of performance agreed 
to under Sec. 666.310 for the core indicators of performance or 
customer satisfaction indicators for a program for two consecutive 
program years, the Governor must take corrective actions. The corrective 
actions may include the development of a reorganization plan under which 
the Governor:
    (1) Requires the appointment and certification of a new Local Board;
    (2) Prohibits the use of particular service providers or One-Stop 
partners that have been identified as achieving poor levels of 
performance; or
    (3) Requires other appropriate measures designed to improve the 
performance of the local area.
    (c) A local area may appeal to the Governor to rescind or revise a 
reorganization plan imposed under paragraph (b) of this section not 
later than thirty (30) days after receiving notice of the plan. The 
Governor must make a final decision within 30 days after receipt of the 
appeal. The Governor's final decision may be appealed by the Local Board 
to the Secretary under 20 CFR 667.650(b) not later than thirty (30) days 
after the local area receives the decision. The decision by the Governor 
to impose a reorganization plan becomes effective at the time it is 
issued, and remains effective unless the Secretary rescinds or revises 
the reorganization plan. Upon receipt of the appeal from the local area, 
the Secretary must make a final decision within thirty (30) days. (WIA 
sec. 136(h).)



PART 667_ADMINISTRATIVE PROVISIONS UNDER TITLE I OF THE WORKFORCE 
INVESTMENT ACT--Table of Contents




                            Subpart A_Funding

Sec.
667.100 When do Workforce Investment Act grant funds become available?
667.105 What award document authorizes the expenditure of Workforce 
          Investment Act funds under title I of the Act?
667.107 What is the period of availability for expenditure of WIA funds?
667.110 What is the Governor/Secretary Agreement?

[[Page 789]]

667.120 What planning information must a State submit in order to 
          receive a formula grant?
667.130 How are WIA title I formula funds allocated to local workforce 
          investment areas?
667.135 What ``hold harmless'' provisions apply to WIA adult and youth 
          allocations?
667.140 Does a Local Board have the authority to transfer funds between 
          programs?
667.150 What reallotment procedures does the Secretary use?
667.160 What reallocation procedures must the Governors use?
667.170 What responsibility review does the Department conduct for 
          awards made under WIA title I, subtitle D?

          Subpart B_Administrative Rules, Costs and Limitations

667.200 What general fiscal and administrative rules apply to the use of 
          WIA title I funds?
667.210 What administrative cost limits apply to Workforce Investment 
          Act title I grants?
667.220 What Workforce Investment Act title I functions and activities 
          constitute the costs of administration subject to the 
          administrative cost limit?
667.250 What requirements relate to the enforcement of the Military 
          Selective Service Act?
667.255 Are there special rules that apply to veterans when income is a 
          factor in eligibility determinations?
667.260 May WIA title I funds be spent for construction?
667.262 Are employment generating activities, or similar activities, 
          allowable under WIA title I?
667.264 What other activities are prohibited under title I of WIA?
667.266 What are the limitations related to religious activities?
667.268 What prohibitions apply to the use of WIA title I funds to 
          encourage business relocation?
667.269 What procedures and sanctions apply to violations of Sec. Sec. 
          667.260 through 667.268?
667.270 What safeguards are there to ensure that participants in 
          Workforce Investment Act employment and training activities do 
          not displace other employees?
667.272 What wage and labor standards apply to participants in 
          activities under title I of WIA?
667.274 What health and safety standards apply to the working conditions 
          of participants in activities under title I of WIA?
667.275 What are a recipient's obligations to ensure nondiscrimination 
          and equal opportunity, and what are a recipient's obligations 
          with respect to religious activities?

                    Subpart C_Reporting Requirements

667.300 What are the reporting requirements for Workforce Investment Act 
          programs?

                   Subpart D_Oversight and Monitoring

667.400 Who is responsible for oversight and monitoring of WIA title I 
          grants?
667.410 What are the oversight roles and responsibilities of recipients 
          and subrecipients?

 Subpart E_Resolution of Findings From Monitoring and Oversight Reviews

667.500 What procedures apply to the resolution of findings arising from 
          audits, investigations, monitoring and oversight reviews?
667.505 How do we resolve investigative and monitoring findings?
667.510 What is the Grant Officer resolution process?

 Subpart F_Grievance Procedures, Complaints, and State Appeals Processes

667.600 What local area, State and direct recipient grievance procedures 
          must be established?
667.610 What processes do we use to review State and local grievances 
          and complaints?
667.630 How are complaints and reports of criminal fraud and abuse 
          addressed under WIA?
667.640 What additional appeal processes or systems must a State have 
          for the WIA program?
667.645 What procedures apply to the appeals of non-designation of local 
          areas?
667.650 What procedures apply to the appeals of the Governor's 
          imposition of sanctions for substantial violations or 
          performance failures by a local area?

    Subpart G_Sanctions, Corrective Actions, and Waiver of Liability

667.700 What procedure do we use to impose sanctions and corrective 
          actions on recipients and subrecipients of WIA grant funds?
667.705 Who is responsible for funds provided under title I of WIA?
667.710 What actions are required to address the failure of a local area 
          to comply with the applicable uniform administrative 
          provisions?
667.720 How do we handle a recipient's request for waiver of liability 
          under WIA section 184(d)(2)?

[[Page 790]]

667.730 What is the procedure to handle a recipient's request for 
          advance approval of contemplated corrective actions?
667.740 What procedure must be used for administering the offset/
          deduction provisions at section 184(c) of the Act?

        Subpart H_Administrative Adjudication and Judicial Review

667.800 What actions of the Department may be appealed to the Office of 
          Administrative Law Judges?
667.810 What rules of procedure apply to hearings conducted under this 
          subpart?
667.820 What authority does the Administrative Law Judge have in 
          ordering relief as an outcome of an administrative hearing?
667.825 What special rules apply to reviews of NFJP and WIA INA grant 
          selections?
667.830 When will the Administrative Law Judge issue a decision?
667.840 Is there an alternative dispute resolution process that may be 
          used in place of an OALJ hearing?
667.850 Is there judicial review of a final order of the Secretary 
          issued under section 186 of the Act?
667.860 Are there other remedies available outside of the Act?

                      Subpart I_Transition Planning

667.900 What special rules apply during the JTPA/WIA transition?
667.910 Are JTPA participants to be grandfathered into WIA?

    Authority: Subtitle C of Title I, Sec. 506(c), Pub. L. 105-220, 112 
Stat. 936 (20 U.S.C. 9276(c)); Executive Order 13198, 66 FR 8497, 3 CFR 
2001 Comp., p. 750; Executive Order 13279, 67 FR 77141, 3 CFR 2002 
Comp., p. 258.

    Source: 65 FR 49421, Aug. 11, 2000, unless otherwise noted.



                            Subpart A_Funding



Sec. 667.100  When do Workforce Investment Act grant funds become 
available?

    (a) Program year. Except as provided in paragraph (b) of this 
section, fiscal year appropriations for programs and activities carried 
out under title I of WIA are available for obligation on the basis of a 
program year. A program year begins on July 1 in the fiscal year for 
which the appropriation is made and ends on June 30 of the following 
year.
    (b) Youth fund availability. Fiscal year appropriations for a 
program year's youth activities, authorized under chapter 4, subtitle B, 
title I of WIA, may be made available for obligation beginning on April 
1 of the fiscal year for which the appropriation is made.



Sec. 667.105  What award document authorizes the expenditure of 
Workforce Investment Act funds under title I of the Act?

    (a) Agreement. All WIA title I funds that are awarded by grant, 
contract or cooperative agreement are issued under an agreement between 
the Grant Officer/Contracting Officer and the recipient. The agreement 
describes the terms and conditions applicable to the award of WIA title 
I funds.
    (b) Grant funds awarded to States. Under the Governor/Secretary 
Agreement described in Sec. 667.110, each program year, the grant 
agreement described in paragraph (a) of this section will be executed 
and signed by the Governor or the Governor's designated representative 
and Secretary or the Grant Officer. The grant agreement and associated 
Notices of Obligation are the basis for Federal obligation of funds 
allotted to the States in accordance with WIA sections 127(b) and 132(b) 
for each program year.
    (c) Indian and Native American Programs. (1) Awards of grants, 
contracts or cooperative agreements for the WIA Indian and Native 
American program will be made to eligible entities on a competitive 
basis every two program years for a two-year period, in accordance with 
the provisions of 20 CFR part 668. An award for the succeeding two-year 
period may be made to the same recipient on a non-competitive basis if 
the recipient:
    (i) Has performed satisfactorily; and
    (ii) Submits a satisfactory two-year program plan for the succeeding 
two-year grant, contract or agreement period.
    (2) A grant, contract or cooperative agreement may be renewed under 
the authority of paragraph (c)(1) of this section no more than once 
during any four-year period for any single recipient.
    (d) National Farmworker Jobs programs. (1) Awards of grants or 
contracts for the National Farmworker Jobs program will be made to 
eligible entities

[[Page 791]]

on a competitive basis every two program years for a two-year period, in 
accordance with the provisions of 20 CFR part 669. An award for the 
succeeding two-year period may be made to the same recipient if the 
recipient:
    (i) Has performed satisfactorily; and
    (ii) Submits a satisfactory two-year program plan for the succeeding 
two-year period.
    (2) A grant or contract may be renewed under the authority of 
paragraph (d)(1) of this section no more than once during any four-year 
period for any single recipient.
    (e) Job Corps. (1) Awards of contracts will be made on a competitive 
basis between the Contracting Officer and eligible entities to operate 
contract centers and provide operational support services.
    (2) The Secretary may enter into interagency agreements with Federal 
agencies for funding, establishment, and operation of Civilian 
Conservation Centers for Job Corps programs.
    (f) Youth Opportunity grants. Awards of grants for Youth Opportunity 
programs will be made to eligible Local Boards and eligible entities for 
a one-year period. The grants may be renewed for each of the four 
succeeding years based on criteria that include successful performance.
    (g) Awards under WIA sections 171 and 172. (1) Awards of grants, 
contracts or cooperative agreements will be made to eligible entities 
for programs or activities authorized under WIA sections 171 or 172. 
These funds are for:
    (i) Demonstration;
    (ii) Pilot;
    (iii) Multi-service;
    (iv) Research;
    (v) Multi-State projects; and
    (vi) Evaluations
    (2) Grants and contracts under paragraphs (g)(1)(i) and (ii) of this 
section will be awarded on a competitive basis, except that a 
noncompetitive award may be made in the case of a project that is funded 
jointly with other public or private entities that provide a portion of 
the funding.
    (3) Contracts and grants under paragraphs (g)(1)(iii), (iv), and (v) 
of this section in amounts that exceed $100,000 will be awarded on a 
competitive basis, except that a noncompetitive award may be made in the 
case of a project that is funded jointly with other public or private 
sector entities that provide a substantial portion of the assistance 
under the grant or contract for the project.
    (4) Grants or contracts for carrying out projects in paragraphs 
(g)(1)(iii), (iv), and (v) of this section may not be awarded to the 
same organization for more than three consecutive years, unless the 
project is competitively reevaluated within that period.
    (5) Entities with nationally recognized expertise in the methods, 
techniques and knowledge of workforce investment activities will be 
provided priority in awarding contracts or grants for the projects under 
paragraphs (g)(1)(iii), (iv), and (v) of this section.
    (6) A peer review process will be used for projects under paragraphs 
(g)(1)(iii), (iv), and (v) of this section for grants that exceed 
$500,000, and to designate exemplary and promising programs.
    (h) Termination. Each grant terminates when the period of fund 
availability has expired. The grant must be closed in accordance with 
the closeout provisions at 29 CFR 95.71 or 97.50, as appropriate.



Sec. 667.107  What is the period of availability for expenditure of 
WIA funds?

    (a) Grant funds expended by States. Funds allotted to States under 
WIA sections 127(b) and 132(b) for any program year are available for 
expenditure by the State receiving the funds only during that program 
year and the two succeeding program years.
    (b) Grant funds expended by local areas. (1) Funds allocated by a 
State to a local area under WIA sections 128(b) and 133(b), for any 
program year are available for expenditure only during that program year 
and the succeeding program year.
    (2) Funds which are not expended by a local area in the two-year 
period described in paragraph (b)(1) of this section, must be returned 
to the State. Funds so returned are available for expenditure by State 
and local recipients and subrecipients only during the third program 
year of availability. These funds may:

[[Page 792]]

    (i) Be used for Statewide projects, or
    (ii) Be distributed to other local areas which had fully expended 
their allocation of funds for the same program year within the two-year 
period.
    (c) Job Corps. Funds obligated for any program year for any Job 
Corps activity carried out under title I, subtitle C, of WIA may be 
expended during that program year and the two succeeding program years.
    (d) Funds awarded under WIA sections 171 and 172. Funds obligated 
for any program year for a program or activity authorized under sections 
171 or 172 of WIA remain available until expended.
    (e) Other programs under title I of WIA. For all other grants, 
contracts and cooperative agreements issued under title I of WIA the 
period of availability for expenditure is set in the terms and 
conditions of the award document.



Sec. 667.110  What is the Governor/Secretary Agreement?

    (a) To establish a continuing relationship under the Act, the 
Governor and the Secretary will enter into a Governor/Secretary 
Agreement. The Agreement will consist of a statement assuring that the 
State will comply with:
    (1) The Workforce Investment Act and all applicable rules and 
regulations, and
    (2) The Wagner-Peyser Act and all applicable rules and regulations.
    (b) The Governor/Secretary Agreement may be modified, revised or 
terminated at any time, upon the agreement of both parties.



Sec. 667.120  What planning information must a State submit in order 
to receive a formula grant?

    Each State seeking financial assistance under WIA sections 127 
(youth) or 132 (adults and dislocated workers) or under the Wagner-
Peyser Act must submit a single State Plan. The requirements for the 
plan content and the plan review process are described in WIA section 
112, Wagner-Peyser Act section 8, and 20 CFR 661.220, 661.240 and 
652.211 through 652.214.



Sec. 667.130  How are WIA title I formula funds allocated to local 
workforce investment areas?

    (a) General. The Governor must allocate WIA formula funds allotted 
for services to youth, adults and dislocated workers in accordance with 
WIA sections 128 and 133, and this section.
    (1) State Boards must assist Governors in the development of any 
discretionary within-State allocation formulas. (WIA sec. 111(d)(5).)
    (2) Within-State allocations must be made:
    (i) In accordance with the allocation formulas contained in WIA 
sections 128(b) and 133(b) and in the State workforce investment plan, 
and
    (ii) After consultation with chief elected officials in each of the 
workforce investment areas.
    (b) State reserve. (1) Of the WIA formula funds allotted for 
services to youth, adults and dislocated workers, the Governor must 
reserve funds from each of these sources for Statewide workforce 
investment activities. In making these reservations, the Governor may 
reserve up to fifteen (15) percent from each of these sources. Funds 
reserved under this paragraph may be combined and spent on Statewide 
employment and training activities, for adults and dislocated workers, 
and Statewide youth activities, as described in 20 CFR 665.200 and 
665.210, without regard to the funding source of the reserved funds.
    (2) The Governor must reserve a portion of the dislocated worker 
funds for Statewide rapid response activities, as described in WIA 
section 134(a)(2)(A) and 20 CFR 665.310 through 665.330. In making this 
reservation, the Governor may reserve up to twenty-five (25) percent of 
the dislocated worker funds.
    (c) Youth allocation formula. (1) Unless the Governor elects to 
distribute funds in accordance with the discretionary allocation formula 
described in paragraph (c)(2) of this section, the remainder of youth 
funds not reserved under paragraph (b)(1) of this section must be 
allocated:
    (i) 33\1/3\ percent on the basis of the relative number of 
unemployed individuals in areas of substantial unemployment in each 
workforce investment area, compared to the total number of

[[Page 793]]

unemployed individuals in all areas of substantial unemployment in the 
State;
    (ii) 33\1/3\ percent on the basis of the relative excess number of 
unemployed individuals in each workforce investment area, compared to 
the total excess number of unemployed individuals in the State; and
    (iii) 33\1/3\ percent on the basis of the relative number of 
disadvantaged youth in each workforce investment area, compared to the 
total number of disadvantaged youth in the State. (WIA sec. 
128(b)(2)(A)(i))
    (2) Discretionary youth allocation formula. In lieu of making the 
formula allocation described in paragraph (c)(1) of this section, the 
State may allocate youth funds under a discretionary formula. Under that 
formula, the State must allocate a minimum of 70 percent of youth funds 
not reserved under paragraph (b)(1) of this section on the basis of the 
formula in paragraph (c)(1) of this section, and may allocate up to 30 
percent on the basis of a formula that:
    (i) Incorporates additional factors (other than the factors 
described in paragraph (c)(1) of this section) relating to:
    (A) Excess youth poverty in urban, rural and suburban local areas; 
and
    (B) Excess unemployment above the State average in urban, rural and 
suburban local areas; and
    (ii) Was developed by the State Board and approved by the Secretary 
of Labor as part of the State workforce investment plan. (WIA sec. 
128(b)(3).)
    (d) Adult allocation formula. (1) Unless the Governor elects to 
distribute funds in accordance with the discretionary allocation formula 
described in paragraph (d)(2) of this section, the remainder of adult 
funds not reserved under paragraph (b)(1) of this section must be 
allocated:
    (i) 33\1/3\ percent on the basis of the relative number of 
unemployed individuals in areas of substantial unemployment in each 
workforce investment area, compared to the total number of unemployed 
individuals in areas of substantial unemployment in the State;
    (ii) 33\1/3\ percent on the basis of the relative excess number of 
unemployed individuals in each workforce investment area, compared to 
the total excess number of unemployed individuals in the State; and
    (iii) 33\1/3\ percent on the basis of the relative number of 
disadvantaged adults in each workforce investment area, compared to the 
total number of disadvantaged adults in the State. (WIA sec. 
133(b)(2)(A)(i))
    (2) Discretionary adult allocation formula. In lieu of making the 
formula allocation described in paragraph (d)(1) of this section, the 
State may allocate adult funds under a discretionary formula. Under that 
formula, the State must allocate a minimum of 70 percent of adult funds 
on the basis of the formula in paragraph (d)(1) of this section, and may 
allocate up to 30 percent on the basis of a formula that:
    (i) Incorporates additional factors (other than the factors 
described in paragraph (d)(1) of this section) relating to:
    (A) Excess poverty in urban, rural and suburban local areas; and
    (B) Excess unemployment above the State average in urban, rural and 
suburban local areas; and
    (ii) Was developed by the State Board and approved by the Secretary 
of Labor as part of the State workforce investment plan. (WIA sec. 
133(b)(3).)
    (e) Dislocated worker allocation formula. (1) The remainder of 
dislocated worker funds not reserved under paragraph (b)(1) or (b)(2) of 
this section must be allocated on the basis of a formula prescribed by 
the Governor that distributes funds in a manner that addresses the 
State's worker readjustment assistance needs. Funds so distributed must 
not be less than 60 percent of the State's formula allotment.
    (2)(i) The Governor's dislocated worker formula must use the most 
appropriate information available to the Governor, including information 
on:
    (A) Insured unemployment data,
    (B) Unemployment concentrations,
    (C) Plant closings and mass layoff data,
    (D) Declining industries data,
    (E) Farmer-rancher economic hardship data, and
    (F) Long-term unemployment data.
    (ii) The State Plan must describe the data used for the formula and 
the weights assigned, and explain the

[[Page 794]]

State's decision to use other information or to omit any of the 
information sources set forth in paragraph (e)(2)(i) of this section.
    (3) The Governor may not amend the dislocated worker formula more 
than once for any program year.
    (4)(i) Dislocated worker funds initially reserved by the Governor 
for Statewide rapid response activities in accordance with paragraph 
(b)(2) of this section may be:
    (A) Distributed to local areas, and
    (B) Used to operate projects in local areas in accordance with the 
requirements of WIA section 134(a)(2)(A) and 20 CFR 665.310 through 
665.330.
    (ii) The State Plan must describe the procedures for any 
distribution to local areas, including the timing and process for 
determining whether a distribution will take place.



Sec. 667.135  What ``hold harmless'' provisions apply to WIA adult and 
youth allocations?

    (a)(1) For the first two fiscal years after the date on which a 
local area is designated under section 116 of WIA, the State may elect 
to apply the ``hold harmless'' provisions specified in paragraph (b) of 
this section to local area allocations of WIA youth funds under Sec. 
667.130(c) and to allocations of WIA adult funds under Sec. 667.130(d).
    (2) Effective at the end of the second full fiscal year after the 
date on which a local area is designated under section 116 of WIA the 
State must apply the ``hold harmless'' specified in paragraph (b) of 
this section to local area allocations of WIA youth funds under Sec. 
667.130(c) and to allocations of WIA adult funds under Sec. 667.130(d).
    (3) There are no ``hold harmless'' provisions that apply to local 
area allocations of WIA dislocated worker funds.
    (b)(1) If a State elects to apply a ``hold-harmless'' under 
paragraph (a)(1) of this section, a local area must not receive an 
allocation amount for a fiscal year that is less than 90 percent of the 
average allocation of the local area for the two preceding fiscal years.
    (2) In applying the ``hold harmless'' under paragraph (a)(2) of this 
section, a local area must not receive an allocation amount for a fiscal 
year that is less than 90 percent of the average allocation of the local 
area for the two preceding fiscal years.
    (3) Amounts necessary to increase allocations to local areas must be 
obtained by ratably reducing the allocations to be made to other local 
areas.
    (4) If the amounts of WIA funds appropriated in a fiscal year are 
not sufficient to provide the amount specified in paragraph (b)(1) of 
this section to all local areas, the amounts allocated to each local 
area mustbe ratably reduced. (WIA secs. 128(b)(2)(A)(ii), 
133(b)(2)(A)(ii), 506.)



Sec. 667.140  Does a Local Board have the authority to transfer funds 
between programs?

    (a) A Local Board may transfer up to 20 percent of a program year 
allocation for adult employment and training activities, and up to 20 
percent of a program year allocation for dislocated worker employment 
and training activities between the two programs.
    (b) Before making any such transfer, a Local Board must obtain the 
Governor's approval.
    (c) Local Boards may not transfer funds to or from the youth 
program.



Sec. 667.150  What reallotment procedures does the Secretary use?

    (a) The first reallotment of funds among States will occur during PY 
2001 based on obligations in PY 2000.
    (b) The Secretary determines, during the first quarter of the 
program year, whether a State has obligated its required level of at 
least 80 percent of the funds allotted under WIA sections 127 and 132 
for programs serving youth, adults, and dislocated workers for the prior 
year, as separately determined for each of the three funding streams. 
Unobligated balances are determined based on allotments adjusted for any 
allowable transfer between the adult and dislocated worker funding 
streams. The amount to be recaptured from each State for reallotment, if 
any, is based on State obligations of the funds allotted to each State 
under WIA sections 127 and 132 for programs serving youth, adults, or 
dislocated workers, less any amount reserved (up to 5 percent at the 
State level and up to 10 percent at the

[[Page 795]]

local level) for the costs of administration. This amount, if any, is 
separately determined for each funding stream.
    (c) The Secretary reallots youth, adult and dislocated worker funds 
among eligible States in accordance with the provisions of WIA sections 
127(c) and 132(c), respectively. To be eligible to receive a reallotment 
of youth, adult, or dislocated worker funds under the reallotment 
procedures, a State must have obligated at least 80 percent of the prior 
program year's allotment, less any amount reserved for the costs of 
administration of youth, adult, or dislocated worker funds. A State's 
eligibility to receive a reallotment is separately determined for each 
funding stream.
    (d) The term ``obligation'' is defined at 20 CFR 660.300. For 
purposes of this section, the Secretary will also treat as State 
obligations:
    (1) Amounts allocated by the State, under WIA sections 128(b) and 
133(b), to the single State local area if the State has been designated 
as a single local area under WIA section 116(b) or to a balance of State 
local area administered by a unit of the State government, and
    (2) Inter-agency transfers and other actions treated by the State as 
encumbrances against amounts reserved by the State under WIA sections 
128(a) and 133(a) for Statewide workforce investment activities.



Sec. 667.160  What reallocation procedures must the Governors use?

    (a) The Governor may reallocate youth, adult, and dislocated worker 
funds among local areas within the State in accordance with the 
provisions of sections 128(c) and 133(c) of the Act. If the Governor 
chooses to reallocate funds, the provisions in paragraphs (b) and (c) of 
this section apply.
    (b) For the youth, adult and dislocated worker programs, the amount 
to be recaptured from each local area for purposes of reallocation, if 
any, must be based on the amount by which the prior year's unobligated 
balance of allocated funds exceeds 20 percent of that year's allocation 
for the program, less any amount reserved (up to 10 percent) for the 
costs of administration. Unobligated balances must be determined based 
on allocations adjusted for any allowable transfer between funding 
streams. This amount, if any, must be separately determined for each 
funding stream.
    (c) To be eligible to receive youth, adult or dislocated worker 
funds under the reallocation procedures, a local area must have 
obligated at least 80 percent of the prior program year's allocation, 
less any amount reserved (up to 10 percent) for the costs of 
administration, for youth, adult, or dislocated worker activities, as 
separately determined. A local area's eligibility to receive a 
reallocation must be separately determined for each funding stream.



Sec. 667.170  What responsibility review does the Department conduct 
for awards made under WIA title I, subtitle D?

    (a) Before final selection as a potential grantee, we conduct a 
review of the available records to assess the organization's overall 
responsibility to administer Federal funds. As part of this review, we 
may consider any information that has come to our attention and will 
consider the organization's history with regard to the management of 
other grants, including DOL grants. The failure to meet any one 
responsibility test, except for those listed in paragraphs (a)(1) and 
(a)(2) of this section, does not establish that the organization is not 
responsible unless the failure is substantial or persistent (for two or 
more consecutive years). The responsibility tests include:
    (1) The organization's efforts to recover debts (for which three 
demand letters have been sent) established by final agency action have 
been unsuccessful, or that there has been failure to comply with an 
approved repayment plan;
    (2) Established fraud or criminal activity of a significant nature 
within the organization.
    (3) Serious administrative deficiencies that we identify, such as 
failure to maintain a financial management system as required by Federal 
regulations;
    (4) Willful obstruction of the audit process;

[[Page 796]]

    (5) Failure to provide services to applicants as agreed to in a 
current or recent grant or to meet applicable performance standards;
    (6) Failure to correct deficiencies brought to the grantee's 
attention in writing as a result of monitoring activities, reviews, 
assessments, or other activities;
    (7) Failure to return a grant closeout package or outstanding 
advances within 90 days of the grant expiration date or receipt of 
closeout package, whichever is later, unless an extension has been 
requested and granted; final billings reflecting serious cost category 
or total budget cost overrun;
    (8) Failure to submit required reports;
    (9) Failure to properly report and dispose of government property as 
instructed by DOL;
    (10) Failure to have maintained effective cash management or cost 
controls resulting in excess cash on hand;
    (11) Failure to ensure that a subrecipient complies with its OMB 
Circular A-133 audit requirements specified at Sec. 667.200(b);
    (12) Failure to audit a subrecipient within the required period;
    (13) Final disallowed costs in excess of five percent of the grant 
or contract award if, in the judgement of the grant officer, the 
disallowances are egregious findings and;
    (14) Failure to establish a mechanism to resolve a subrecipient's 
audit in a timely fashion.
    (b) This responsibility review is independent of the competitive 
process. Applicants which are determined to be not responsible will not 
be selected as potential grantees irrespective of their standing in the 
competition.



          Subpart B_Administrative Rules, Costs and Limitations



Sec. 667.200  What general fiscal and administrative rules apply to 
the use of WIA title I funds?

    (a) Uniform fiscal and administrative requirements. (1) Except as 
provided in paragraphs (a)(3) through (6) of this section, State, local, 
and Indian tribal government organizations that receive grants or 
cooperative agreements under WIA title I must follow the common rule 
``Uniform Administrative Requirements for Grants and Cooperative 
Agreements to State and Local Governments'' which is codified at 29 CFR 
part 97.
    (2) Except as provided in paragraphs (a)(3) through (7) of this 
section, institutions of higher education, hospitals, other non-profit 
organizations, and commercial organizations must the follow the common 
rule implementing OMB Circular A-110 which is codified at 29 CFR part 
95.
    (3) In addition to the requirements at 29 CFR 95.48 or 29 CFR 
97.36(i) (as appropriate), all procurement contracts and other 
transactions between Local Boards and units of State or local 
governments must be conducted only on a cost reimbursement basis. No 
provision for profit is allowed. (WIA sec. 184(a)(3)(B).)
    (4) In addition to the requirements at 29 CFR 95.42 or 29 CFR 
97.36(b)(3) (as appropriate), which address codes of conduct and 
conflict of interest issues related to employees:
    (i) A State Board member or a Local Board member or a Youth Council 
member must neither cast a vote on, nor participate in any decision-
making capacity, on the provision of services by such member (or any 
organization which that member directly represents), nor on any matter 
which would provide any direct financial benefit to that member or a 
member of his immediate family.
    (ii) Neither membership on the State Board, the Local Board, the 
Youth Council nor the receipt of WIA funds to provide training and 
related services, by itself, violates these conflict of interest 
provisions.
    (5) The addition method, described at 29 CFR 95.24 or 29 CFR 
97.25(g)(2) (as appropriate), must be used for the all program income 
earned under WIA title I grants. When the cost of generating program 
income has been charged to the program, the gross amount earned must be 
added to the WIA program. However, the cost of generating program income 
must be subtracted from the amount earned to establish the net amount of 
program income available for use under the grants when these costs have 
not been charged to the WIA program.

[[Page 797]]

    (6) Any excess of revenue over costs incurred for services provided 
by a governmental or non-profit entity must be included in program 
income. (WIA sec. 195(7)(A) and (B).)
    (7) Interest income earned on funds received under WIA title I must 
be included in program income. (WIA sec. 195(7)(B)(iii).)
    (8) On a fee-for-service basis, employers may use local area 
services, facilities, or equipment funded under title I of WIA to 
provide employment and training activities to incumbent workers:
    (i) When the services, facilities, or equipment are not being used 
by eligible participants;
    (ii) If their use does not affect the ability of eligible 
participants to use the services, facilities, or equipment; and
    (iii) If the income generated from such fees is used to carry out 
programs authorized under this title.
    (b) Audit requirements. (1) All governmental and non-profit 
organizations must follow the audit requirements of OMB Circular A-133. 
These requirements are found at 29 CFR 97.26 for governmental 
organizations and at 29 CFR 95.26 for institutions of higher education, 
hospitals, and other non-profit organizations.
    (2)(i) We are responsible for audits of commercial organizations 
which are direct recipients of Federal financial assistance under WIA 
title I.
    (ii) Commercial organizations which are subrecipients under WIA 
title I and which expend more than the minimum level specified in OMB 
Circular A-133 ($300,000 as of August 11, 2000) must have either an 
organization-wide audit conducted in accordance with A-133 or a program 
specific financial and compliance audit.
    (c) Allowable costs/cost principles. All recipients and 
subrecipients must follow the Federal allowable cost principles that 
apply to their kind of organizations. The DOL regulations at 29 CFR 
95.27 and 29 CFR 97.22 identify the Federal principles for determining 
allowable costs which each kind of recipient and subrecipient must 
follow. The applicable Federal principles for each kind of recipient are 
described in paragraphs (c)(1) through (5) of this section; all 
recipients must comply with paragraphs (c)(6) and (c)(7) of this 
section. For those selected items of cost requiring prior approval, the 
authority to grant or deny approval is delegated to the Governor for 
programs funded under sections 127 or 132 of the Act.
    (1) Allowable costs for State, local, and Indian tribal government 
organizations must be determined under OMB Circular A-87, ``Cost 
Principles for State, Local and Indian Tribal Governments.''
    (2) Allowable costs for non-profit organizations must be determined 
under OMB Circular A-122, ``Cost Principles for Non-Profit 
Organizations.''
    (3) Allowable costs for institutions of higher education must be 
determined under OMB Circular A-21, ``Cost Principles for Educational 
Institutions.''
    (4) Allowable costs for hospitals must be determined in accordance 
under appendix E of 45 CFR part 74, ``Principles for Determining Costs 
Applicable to Research and Development Under Grants and Contracts with 
Hospitals.''
    (5) Allowable costs for commercial organizations and those non-
profit organizations listed in Attachment C to OMB Circular A-122 must 
be determined under the provisions of the Federal Acquisition Regulation 
(FAR), at 48 CFR part 31.
    (6) For all types of entities, legal expenses for the prosecution of 
claims against the Federal Government, including appeals to an 
Administrative Law Judge, are unallowable.
    (7) In addition to the allowable cost provisions identified in 
paragraphs (c)(1) through (6) of this section, the cost of information 
technology--computer hardware and software--will only be allowable under 
WIA title I grants when such computer technology is ``Year 2000 
compliant.'' To meet this requirement, information technology must be 
able to accurately process date/time (including, but not limited to, 
calculating, comparing and sequencing) from, into and between the 
twentieth and twenty-first centuries, and the years 1999 and 2000. The 
information technology must also be able to

[[Page 798]]

make leap year calculations. Furthermore, ``Year 2000 compliant'' 
information technology, when used in combination with other information 
technology, must accurately process date/time data if the other 
information technology properly exchanges date/time with it.
    (d) Government-wide debarment and suspension, and government-wide 
drug-free workplace requirements. All WIA title I grant recipients and 
subrecipients must comply with the government-wide requirements for 
debarment and suspension, and the government-wide requirements for a 
drug-free workplace, codified at 29 CFR part 98.
    (e) Restrictions on lobbying. All WIA title I grant recipients and 
subrecipients must comply with the restrictions on lobbying which are 
codified in the DOL regulations at 29 CFR part 93.
    (f) Nondiscrimination. All WIA title I recipients, as the term is 
defined in 29 CFR 37.4, must comply with the nondiscrimination and equal 
opportunity provisions of WIA section 188 and its implementing 
regulations found at 29 CFR part 37. Information on the handling of 
discrimination complaints by participants and other interested parties 
may be found in 29 CFR 37.70 through 37.80, and in Sec. 667.600(g).
    (g) Nepotism. (1) No individual may be placed in a WIA employment 
activity if a member of that person's immediate family is directly 
supervised by or directly supervises that individual.
    (2) To the extent that an applicable State or local legal 
requirement regarding nepotism is more restrictive than this provision, 
such State or local requirement must be followed.



Sec. 667.210  What administrative cost limits apply to Workforce 
Investment Act title I grants?

    (a) Formula grants to States:
    (1) As part of the 15 percent that a State may reserve for Statewide 
activities, the State may spend up to five percent (5%) of the amount 
allotted under sections 127(b)(1), 132(b)(1) and 132(b)(2) of the Act 
for the administrative costs of Statewide workforce investment 
activities.
    (2) Local area expenditures for administrative purposes under WIA 
formula grants are limited to no more than ten percent (10%) of the 
amount allocated to the local area under sections 128(b) and 133(b) of 
the Act.
    (3) Neither the five percent (5%) of the amount allotted that may be 
reserved for Statewide administrative costs nor the ten percent (10%) of 
the amount allotted that may be reserved for local administrative costs 
needs to be allocated back to the individual funding streams.
    (b) Limits on administrative costs for programs operated under 
subtitle D of title I will be identified in the grant or contract award 
document.
    (c) In a One-Stop environment, administrative costs borne by other 
sources of funds, such as the Wagner-Peyser Act, are not included in the 
administrative cost limit calculation. Each program's administrative 
activities area chargeable to its own grant and subject to its own 
administrative cost limitations.



Sec. 667.220  What Workforce Investment Act title I functions and 
activities constitute the costs of administration subject to the 
administrative cost limit?

    (a) The costs of administration are that allocable portion of 
necessary and reasonable allowable costs of State and local workforce 
investment boards, direct recipients, including State grant recipients 
under subtitle B of title I and recipients of awards under subtitle D of 
title I, as well as local grant recipients, local grant subrecipients, 
local fiscal agents and one-stop operators that are associated with 
those specific functions identified in paragraph (b) of this section and 
which are not related to the direct provision of workforce investment 
services, including services to participants and employers. These costs 
can be both personnel and non-personnel and both direct and indirect.
    (b) The costs of administration are the costs associated with 
performing the following functions:
    (1) Performing the following overall general administrative 
functions and coordination of those functions under WIA title I:
    (i) Accounting, budgeting, financial and cash management functions;
    (ii) Procurement and purchasing functions;

[[Page 799]]

    (iii) Property management functions;
    (iv) Personnel management functions;
    (v) Payroll functions;
    (vi) Coordinating the resolution of findings arising from audits, 
reviews, investigations and incident reports;
    (vii) Audit functions;
    (viii) General legal services functions; and
    (ix) Developing systems and procedures, including information 
systems, required for these administrative functions;
    (2) Performing oversight and monitoring responsibilities related to 
WIA administrative functions;
    (3) Costs of goods and services required for administrative 
functions of the program, including goods and services such as rental or 
purchase of equipment, utilities, office supplies, postage, and rental 
and maintenance of office space;
    (4) Travel costs incurred for official business in carrying out 
administrative activities or the overall management of the WIA system; 
and
    (5) Costs of information systems related to administrative functions 
(for example, personnel, procurement, purchasing, property management, 
accounting and payroll systems) including the purchase, systems 
development and operating costs of such systems.
    (c)(1) Awards to subrecipients or vendors that are solely for the 
performance of administrative functions are classified as administrative 
costs.
    (2) Personnel and related non-personnel costs of staff who perform 
both administrative functions specified in paragraph (b) of this section 
and programmatic services or activities must be allocated as 
administrative or program costs to the benefitting cost objectives/
categories based on documented distributions of actual time worked or 
other equitable cost allocation methods.
    (3) Specific costs charged to an overhead or indirect cost pool that 
can be identified directly as a program cost are to be charged as a 
program cost. Documentation of such charges must be maintained.
    (4) Except as provided at paragraph (c)(1), all costs incurred for 
functions and activities of subrecipients and vendors are program costs.
    (5) Costs of the following information systems including the 
purchase, systems development and operating (e.g., data entry) costs are 
charged to the program category:
    (i) Tracking or monitoring of participant and performance 
information;
    (ii) Employment statistics information, including job listing 
information, job skills information, and demand occupation information;
    (iii) Performance and program cost information on eligible providers 
of training services, youth activities, and appropriate education 
activities;
    (iv) Local area performance information; and
    (v) Information relating to supportive services and unemployment 
insurance claims for program participants;
    (6) Continuous improvement activities are charged to administration 
or program category based on the purpose or nature of the activity to be 
improved. Documentation of such charges must be maintained.



Sec. 667.250  What requirements relate to the enforcement of the 
Military Selective Service Act?

    The requirements relating to the enforcement of the Military 
Selective Service Act are found at WIA section 189(h).



Sec. 667.255  Are there special rules that apply to veterans when income 
is a factor in eligibility determinations?

    Yes, under 38 U.S.C. 4213, when past income is an eligibility 
determinant for Federal employment or training programs, any amounts 
received as military pay or allowances by any person who served on 
active duty, and certain other specified benefits must be disregarded. 
This applies when determining if a person is a ``low-income individual'' 
for eligibility purposes, (for example, in the WIA youth, Job Corps, or 
NFJP programs) and applies if income is used as a factor in applying the 
priority provision, under 20 CFR 663.600, when WIA adult funds are 
limited. Questions regarding the application of 38 U.S.C. 4213 should be 
directed

[[Page 800]]

to the Veterans Employment and Training Service.



Sec. 667.260  May WIA title I funds be spent for construction?

    WIA title I funds must not be spent on construction or purchase of 
facilities or buildings except:
    (a) To meet a recipient's, as the term is defined in 29 CFR 37.4, 
obligation to provide physical and programmatic accessibility and 
reasonable accommodation, as required by section 504 of the 
Rehabilitation Act of 1973, as amended, and the Americans with 
Disabilities Act of 1990, as amended;
    (b) To fund repairs, renovations, alterations and capital 
improvements of property, including:
    (1) SESA real property, identified at WIA section 193, using a 
formula that assesses costs proportionate to space utilized;
    (2) JTPA owned property which is transferred to WIA title I 
programs;
    (c) Job Corps facilities, as authorized by WIA section 160(3)(B); 
and
    (d) To fund disaster relief employment on projects for demolition, 
cleaning, repair, renovation, and reconstruction of damaged and 
destroyed structures, facilities, and lands located within a disaster 
area. (WIA sec. 173(d).)



Sec. 667.262  Are employment generating activities, or similar 
activities, allowable under WIA title I?

    (a) Under WIA section 181(e), WIA title I funds may not be spent on 
employment generating activities, economic development, and other 
similar activities, unless they are directly related to training for 
eligible individuals. For purposes of this section, employer outreach 
and job development activities are directly related to training for 
eligible individuals.
    (b) These employer outreach and job development activities include:
    (1) Contacts with potential employers for the purpose of placement 
of WIA participants;
    (2) Participation in business associations (such as chambers of 
commerce); joint labor management committees, labor associations, and 
resource centers;
    (3) WIA staff participation on economic development boards and 
commissions, and work with economic development agencies, to:
    (i) Provide information about WIA programs,
    (ii) Assist in making informed decisions about community job 
training needs, and
    (iii) Promote the use of first source hiring agreements and 
enterprise zone vouchering services,
    (4) Active participation in local business resource centers 
(incubators) to provide technical assistance to small and new business 
to reduce the rate of business failure;
    (5) Subscriptions to relevant publications;
    (6) General dissemination of information on WIA programs and 
activities;
    (7) The conduct of labor market surveys;
    (8) The development of on-the-job training opportunities; and
    (9) Other allowable WIA activities in the private sector. (WIA sec. 
181(e).)



Sec. 667.264  What other activities are prohibited under title I of WIA?

    (a) WIA title I funds must not be spent on:
    (1) The wages of incumbent employees during their participation in 
economic development activities provided through a Statewide workforce 
investment system, (WIA sec. 181(b)(1).);
    (2) Public service employment, except to provide disaster relief 
employment, as specifically authorized in section 173(d) of WIA, (WIA 
sec. 195(10));
    (3) Expenses prohibited under any other Federal, State or local law 
or regulation.
    (b) WIA formula funds available to States and local areas under 
subtitle B, title I of WIA must not be used for foreign travel. (WIA 
sec. 181(e).)



Sec. 667.266  What are the limitations related to religious activities?

    (a) Limitations related to sectarian activities are set forth at WIA 
section 188(a)(3) and 29 CFR 37.6(f).
    (b)(1) 29 CFR part 2, subpart D governs the circumstances under 
which DOL support, including WIA Title I financial assistance, may be 
used to employ or train participants in religious

[[Page 801]]

activities. Under that subpart, such assistance may be used for such 
employment or training only when the assistance is provided indirectly 
within the meaning of the Establishment Clause of the U.S. Constitution, 
and not when the assistance is provided directly. As explained in that 
subpart, assistance provided through an Individual Training Account is 
generally considered indirect, and other mechanisms may also be 
considered indirect. See also 20 CFR 667.275 and 29 CFR 37.6(f)(1). 29 
CFR part 2, subpart D also contains requirements related to equal 
treatment in Department of Labor programs for religious organizations, 
and to protecting the religious liberty of Department of Labor social 
service providers and beneficiaries.
    (2) Limitations on the employment of participants under WIA Title I 
to carry out the construction, operation, or maintenance of any part of 
any facility used or to be used for religious instruction or as a place 
for religious worship are described at 29 CFR 37.6(f)(2).

[65 FR 49421, Aug. 11, 2000, as amended at 69 FR 41891, July 12, 2004]



Sec. 667.268  What prohibitions apply to the use of WIA title I funds 
to encourage business relocation?

    (a) WIA funds may not be used or proposed to be used for:
    (1) The encouragement or inducement of a business, or part of a 
business, to relocate from any location in the United States, if the 
relocation results in any employee losing his or her job at the original 
location;
    (2) Customized training, skill training, or on-the-job training or 
company specific assessments of job applicants or employees of a 
business or a part of a business that has relocated from any location in 
the United States, until the company has operated at that location for 
120 days, if the relocation has resulted in any employee losing his or 
her jobs at the original location.
    (b) Pre-award review. To verify that an establishment which is new 
or expanding is not, in fact, relocating employment from another area, 
standardized pre-award review criteria developed by the State must be 
completed and documented jointly by the local area with the 
establishment as a prerequisite to WIA assistance.
    (1) The review must include names under which the establishment does 
business, including predecessors and successors in interest; the name, 
title, and address of the company official certifying the information, 
and whether WIA assistance is sought in connection with past or 
impending job losses at other facilities, including a review of whether 
WARN notices relating to the employer have been filed.
    (2) The review may include consultations with labor organizations 
and others in the affected local area(s). (WIA sec. 181(d).)



Sec. 667.269  What procedures and sanctions apply to violations of 
Sec. Sec. 667.260 through 667.268?

    (a) We will promptly review and take appropriate action on alleged 
violations of the provisions relating to:
    (1) Employment generating activities (Sec. 667.262);
    (2) Other prohibited activities (Sec. 667.264);
    (3) The limitation related to sectarian activities (Sec. 667.266);
    (4) The use of WIA title I funds to encourage business relocation 
(Sec. 667.268).
    (b) Procedures for the investigation and resolution of the 
violations are provided for under the Grant Officer's resolution process 
at Sec. 667.510. Sanctions and remedies are provided for under WIA 
section 184(c) for violations of the provisions relating to:
    (1) Construction (Sec. 667.260);
    (2) Employment generating activities (Sec. 667.262);
    (3) Other prohibited activities (Sec. 667.264); and
    (4) The limitation related to sectarian activities (Sec. 
667.266(b)(1)).
    (c) Sanctions and remedies are provided for in WIA section 181(d)(3) 
for violations of Sec. 667.268, which addresses business relocation.
    (d) Violations of Sec. 667.266(b)(2) will be handled in accordance 
with the DOL nondiscrimination regulations implementing WIA section 188, 
codified at 29 CFR part 37.

[[Page 802]]



Sec. 667.270  What safeguards are there to ensure that participants 
in Workforce Investment Act employment and training activities do not 
displace other employees?

    (a) A participant in a program or activity authorized under title I 
of WIA must not displace (including a partial displacement, such as a 
reduction in the hours of non-overtime work, wages, or employment 
benefits) any currently employed employee (as of the date of the 
participation).
    (b) A program or activity authorized under title I of WIA must not 
impair existing contracts for services or collective bargaining 
agreements. When a program or activity authorized under title I of WIA 
would be inconsistent with a collective bargaining agreement, the 
appropriate labor organization and employer must provide written 
concurrence before the program or activity begins.
    (c) A participant in a program or activity under title I of WIA may 
not be employed in or assigned to a job if:
    (1) Any other individual is on layoff from the same or any 
substantially equivalent job;
    (2) The employer has terminated the employment of any regular, 
unsubsidized employee or otherwise caused an involuntary reduction in 
its workforce with the intention of filling the vacancy so created with 
the WIA participant; or
    (3) The job is created in a promotional line that infringes in any 
way on the promotional opportunities of currently employed workers.
    (d) Regular employees and program participants alleging displacement 
may file a complaint under the applicable grievance procedures found at 
Sec. 667.600. (WIA sec. 181.)



Sec. 667.272  What wage and labor standards apply to participants in 
activities under title I of WIA?

    (a) Individuals in on-the-job training or individuals employed in 
activities under title I of WIA must be compensated at the same rates, 
including periodic increases, as trainees or employees who are similarly 
situated in similar occupations by the same employer and who have 
similar training, experience and skills. Such rates must be in 
accordance with applicable law, but may not be less than the higher of 
the rate specified in section 6(a)(1) of the Fair Labor Standards Act of 
1938 (29 U.S.C. 206(a)(1)) or the applicable State or local minimum wage 
law.
    (b) Individuals in on-the-job training or individuals employed in 
programs and activities under Title I of WIA must be provided benefits 
and working conditions at the same level and to the same extent as other 
trainees or employees working a similar length of time and doing the 
same type of work.
    (c) Allowances, earnings, and payments to individuals participating 
in programs under Title I of WIA are not considered as income for 
purposes of determining eligibility for and the amount of income 
transfer and in-kind aid furnished under any Federal or Federally 
assisted program based on need other than as provided under the Social 
Security Act (42 U.S.C. 301 et seq.). (WIA sec. 181(a)(2).)



Sec. 667.274  What health and safety standards apply to the working 
conditions of participants in activities under title I of WIA?

    (a) Health and safety standards established under Federal and State 
law otherwise applicable to working conditions of employees are equally 
applicable to working conditions of participants engaged in programs and 
activities under Title I of WIA.
    (b)(1) To the extent that a State workers' compensation law applies, 
workers' compensation must be provided to participants in programs and 
activities under Title I of WIA on the same basis as the compensation is 
provided to other individuals in the State in similar employment.
    (2) If a State workers' compensation law applies to a participant in 
work experience, workers' compensation benefits must be available for 
injuries suffered by the participant in such work experience. If a State 
workers' compensation law does not apply to a participant in work 
experience, insurance coverage must be secured for injuries suffered by 
the participant in the course of such work experience.

[[Page 803]]



Sec. 667.275  What are a recipient's obligations to ensure 
nondiscrimination and equal opportunity, and what are a recipient's 
obligations with respect to religious activities?

    (a)(1) Recipients, as defined in 29 CFR 37.4, must comply with the 
nondiscrimination and equal opportunity provisions of WIA section 188 
and its implementing regulations, codified at 29 CFR part 37. Under that 
definition, the term ``recipients'' includes State and Local Workforce 
Investment Boards, One-Stop operators, service providers, vendors, and 
subrecipients, as well as other types of individuals and entitites.
    (2) Nondiscrimination and equal opportunity requirements and 
procedures, including complaint processing and compliance reviews, are 
governed by the regulations implementing WIA section 188, codified at 29 
CFR part 37, and are administered and enforced by the DOL Civil Rights 
Center.
    (3) As described in Sec. 667.260(a), financial assistance provided 
under WIA title I may be used to meet a recipient's obligation to 
provide physical and programmatic accessibility and reasonable 
accommodation/modification in regard to the WIA program, as required by 
section 504 of the Rehabilitation Act of 1973, as amended, the Americans 
with Disabilities Act of 1990, as amended, section 188 of WIA, and the 
regulations implementing these statutory provisions.
    (b) 29 CFR part 2, subpart D governs the circumstances under which 
recipients may use DOL support, including WIA Title I financial 
assistance, to employ or train participants in religious activities. 
Under that subpart, such assistance may be used for such employment or 
training only when the assistance is provided indirectly within the 
meaning of the Establishment Clause of the U.S. Constitution, and not 
when the assistance is provided directly. As explained in that subpart, 
assistance provided through an Individual Training Account is generally 
considered indirect, and other mechanisms may also be considered 
indirect. See also 20 CFR 667.266 and 29 CFR 37.6(f)(1). 29 CFR part 2, 
subpart D also contains requirements related to equal treatment of 
religious organizations in Department of Labor programs, and to 
protection of religious liberty of Department of Labor social service 
providers and beneficiaries. Limitations on the employment of 
participants under WIA Title I to carry out the construction, operation, 
or maintenance of any part of any facility used or to be used for 
religious instruction or as a place of religious worship are described 
at 29 CFR 37.6(f)(2). See section 188(a)(3) of the Workforce Investment 
Act of 1998, 29 U.S.C. 2938(a)(3).

[65 FR 49421, Aug. 11, 2000, as amended at 69 FR 41891, July 12, 2004]



                    Subpart C_Reporting Requirements



Sec. 667.300  What are the reporting requirements for Workforce 
Investment Act programs?

    (a) General. All States and other direct grant recipients must 
report financial, participant, and performance data in accordance with 
instructions issued by DOL. Required reports must be submitted no more 
frequently than quarterly within a time period specified in the 
reporting instructions.
    (b) Subrecipient reporting. (1) A State or other direct grant 
recipient may impose different forms or formats, shorter due dates, and 
more frequent reporting requirements on subrecipients. However, the 
recipient is required to meet the reporting requirements imposed by DOL.
    (2) If a State intends to impose different reporting requirements, 
it must describe those reporting requirements in its State WIA plan.
    (c) Financial reports. (1) Each grant recipient must submit 
financial reports.
    (2) Reports must include any income or profits earned, including 
such income or profits earned by subrecipients, and any costs incurred 
(such as stand-in costs) that are otherwise allowable except for funding 
limitations. (WIA sec. 185(f)(2))
    (3) Reported expenditures and program income, including any profits 
earned, must be on the accrual basis of accounting and cumulative by 
fiscal year of appropriation. If the recipient's accounting records are 
not normally

[[Page 804]]

kept on the accrual basis of accounting, the recipient must develop 
accrual information through an analysis of the documentation on hand.
    (d) Due date. Financial reports and participant data reports are due 
no later than 45 days after the end of each quarter unless otherwise 
specified in reporting instructions. A final financial report is 
required 90 days after the expiration of a funding period or the 
termination of grant support.
    (e) Annual performance progress report. An annual performance 
progress report for each of the three programs under title I, subpart B 
is required by WIA section 136(d).
    (1) A State failing to submit any of these annual performance 
progress reports within 45 days of the due date may have its grant (for 
that program or all title I, subpart B programs) for the succeeding year 
reduced by as much as five percent, as provided by WIA section 
136(g)(1)(B).
    (2) States submitting annual performance progress reports that 
cannot be validated or verified as accurately counting and reporting 
activities in accordance with the reporting instructions, may be treated 
as failing to submit annual reports, and be subject to sanction. 
Sanctions related to State performance or failure to submit these 
reports timely cannot result in a total grant reduction of more than 
five percent. Any sanction would be in addition to having to repay the 
amount of any incentive funds granted based on the invalid report.



                   Subpart D_Oversight and Monitoring



Sec. 667.400  Who is responsible for oversight and monitoring of WIA 
title I grants?

    (a) The Secretary is authorized to monitor all recipients and 
subrecipients of all grants awarded and funds expended under WIA title I 
to determine compliance with the Act and the WIA regulations, and may 
investigate any matter deemed necessary to determine such compliance. 
Federal oversight will be conducted primarily at the recipient level.
    (b) In each fiscal year, we will also conduct in-depth reviews in 
several States, including financial and performance audits, to assure 
that funds are spent in accordance with the Act. Priority for such in-
depth reviews will be given to States not meeting annual adjusted levels 
of performance.
    (c)(1) Each recipient and subrecipient must continuously monitor 
grant-supported activities in accordance with the uniform administrative 
requirements at 29 CFR parts 95 and 97, as applicable, including the 
applicable cost principles indicated at 29 CFR 97.22(b) or 29 CFR 95.27, 
for all entities receiving WIA title I funds. For governmental units, 
the applicable requirements are at 29 CFR part 97. For non-profit 
organizations, the applicable requirements are at 29 CFR part 95.
    (2) In the case of grants under WIA sections 127 and 132, the 
Governor must develop a State monitoring system that meets the 
requirements of Sec. 667.410(b). The Governor must monitor Local Boards 
annually for compliance with applicable laws and regulations in 
accordance with the State monitoring system. Monitoring must include an 
annual review of each local area's compliance with the uniform 
administrative requirements.



Sec. 667.410  What are the oversight roles and responsibilities of 
recipients and subrecipients?

    (a) Roles and responsibilities for all recipients and subrecipients 
of funds under WIA title I in general. Each recipient and subrecipient 
must conduct regular oversight and monitoring of its WIA activities and 
those of its subrecipients and contractors in order to:
    (1) Determine that expenditures have been made against the cost 
categories and within the cost limitations specified in the Act and the 
regulations in this part;
    (2) Determine whether or not there is compliance with other 
provisions of the Act and the WIA regulations and other applicable laws 
and regulations; and
    (3) Provide technical assistance as necessary and appropriate.
    (b) State roles and responsibilities for grants under WIA sections 
127 and 132. (1) The Governor is responsible for the development of the 
State monitoring system. The Governor must be able to

[[Page 805]]

demonstrate, through a monitoring plan or otherwise, that the State 
monitoring system meets the requirements of paragraph (b)(2) of this 
section.
    (2) The State monitoring system must:
    (i) Provide for annual on-site monitoring reviews of local areas' 
compliance with DOL uniform administrative requirements, as required by 
WIA section 184(a)(4);
    (ii) Ensure that established policies to achieve program quality and 
outcomes meet the objectives of the Act and the WIA regulations, 
including policies relating to: the provision of services by One-Stop 
Centers; eligible providers of training services; and eligible providers 
of youth activities;
    (iii) Enable the Governor to determine if subrecipients and 
contractors have demonstrated substantial compliance with WIA 
requirements; and
    (iv) Enable the Governor to determine whether a local plan will be 
disapproved for failure to make acceptable progress in addressing 
deficiencies, as required in WIA section 118(d)(1).
    (v) Enable the Governor to ensure compliance with the 
nondiscrimination and equal opportunity requirements of WIA section 188 
and 29 CFR part 37. Requirements for these aspects of the monitoring 
system are set forth in 29 CFR 37.54(d)(2)(ii).
    (3) The State must conduct an annual on-site monitoring review of 
each local area's compliance with DOL uniform administrative 
requirements, including the appropriate administrative requirements for 
subrecipients and the applicable cost principles indicated at Sec. 
667.200 for all entities receiving WIA title I funds.
    (4) The Governor must require that prompt corrective action be taken 
if any substantial violation of standards identified in paragraphs (b) 
(2) or (3) of this section is found. (WIA sec. 184(a)(5).)
    (5) The Governor must impose the sanctions provided in WIA section 
184 (b) and (c) in the event of a subrecipient's failure to take 
required corrective action required under paragraph (b)(4) of this 
section.
    (6) The Governor may issue additional requirements and instructions 
to subrecipients on monitoring activities.
    (7) The Governor must certify to the Secretary every two years that:
    (i) The State has implemented uniform administrative requirements;
    (ii) The State has monitored local areas to ensure compliance with 
uniform administrative requirements; and
    (iii) The State has taken appropriate corrective action to secure 
such compliance. (WIA sec. 184(a)(6)(A), (B), and (C).)



 Subpart E_Resolution of Findings From Monitoring and Oversight Reviews



Sec. 667.500  What procedures apply to the resolution of findings 
arising from audits, investigations, monitoring and oversight reviews?

    (a) Resolution of subrecipient-level findings. (1) The Governor is 
responsible for resolving findings that arise from the State's 
monitoring reviews, investigations and audits (including OMB Circular A-
133 audits) of subrecipients.
    (2) A State must utilize the audit resolution, debt collection and 
appeal procedures that it uses for other Federal grant programs.
    (3) If a State does not have such procedures, it must prescribe 
standards and procedures to be used for this grant program.
    (b) Resolution of State and other direct recipient level findings. 
(1) The Secretary is responsible for resolving findings that arise from 
Federal audits, monitoring reviews, investigations, incident reports, 
and recipient level OMB Circular A-133 audits.
    (2) The Secretary uses the DOL audit resolution process, consistent 
with the Single Audit Act of 1996 and OMB Circular A-133, and Grant 
Officer Resolution provisions of Sec. 667.510, as appropriate.
    (3) A final determination issued by a Grant Officer under this 
process may be appealed to the DOL Office of Administrative Law Judges 
under the procedures at Sec. 667.800.
    (c) Resolution of nondiscrimination findings. Findings arising from 
investigations or reviews conducted under nondiscrimination laws will be 
resolved in accordance with WIA section

[[Page 806]]

188 and the Department of Labor nondiscrimination regulations 
implementing WIA section 188, codified at 29 CFR part 37.



Sec. 667.505  How do we resolve investigative and monitoring findings?

    (a) As a result of an investigation, on-site visit or other 
monitoring, we notify the recipient of the findings of the investigation 
and gives the recipient a period of time (not more than 60 days) to 
comment and to take appropriate corrective actions.
    (b) The Grant Officer reviews the complete file of the investigation 
or monitoring report and the recipient's actions under paragraph (a) of 
this section. The Grant Officer's review takes into account the sanction 
provisions of WIA section 184(b) and (c). If the Grant Officer agrees 
with the recipient's handling of the situation, the Grant Officer so 
notifies the recipient. This notification constitutes final agency 
action.
    (c) If the Grant Officer disagrees with the recipient's handling of 
the matter, the Grant Officer proceeds under Sec. 667.510.



Sec. 667.510  What is the Grant Officer resolution process?

    (a) General. When the Grant Officer is dissatisfied with the State's 
disposition of an audit or other resolution of violations (including 
those arising out of incident reports or compliance reviews), or with 
the recipient's response to findings resulting from investigations or 
monitoring report, the initial and final determination process, set 
forth in this section, is used to resolve the matter.
    (b) Initial determination. The Grant Officer makes an initial 
determination on the findings for both those matters where there is 
agreement and those where there is disagreement with the recipient's 
resolution, including the allowability of questioned costs or 
activities. This initial determination is based upon the requirements of 
the Act and regulations, and the terms and conditions of the grants, 
contracts, or other agreements under the Act.
    (c) Informal resolution. Except in an emergency situation, when the 
Secretary invokes the authority described in WIA section 184(e), the 
Grant Officer may not revoke a recipient's grant in whole or in part, 
nor institute corrective actions or sanctions, without first providing 
the recipient with an opportunity to present documentation or arguments 
to resolve informally those matters in controversy contained in the 
initial determination. The initial determination must provide for an 
informal resolution period of at least 60 days from issuance of the 
initial determination. If the matters are resolved informally, the Grant 
Officer must issue a final determination under paragraph (d) of this 
section which notifies the parties in writing of the nature of the 
resolution and may close the file.
    (d) Grant Officer's final determination. (1) If the matter is not 
fully resolved informally, the Grant Officer provides each party with a 
written final determination by certified mail, return receipt requested. 
For audits of recipient-level entities and other recipients which 
receive WIA funds directly from DOL, ordinarily, the final determination 
is issued not later than 180 days from the date that the Office of 
Inspector General (OIG) issues the final approved audit report to the 
Employment and Training Administration. For audits of subrecipients 
conducted by the OIG, ordinarily the final determination is issued not 
later than 360 days from the date the OIG issues the final approved 
audit report to ETA.
    (2) A final determination under this paragraph (d) must:
    (i) Indicate whether efforts to informally resolve matters contained 
in the initial determination have been unsuccessful;
    (ii) List those matters upon which the parties continue to disagree;
    (iii) List any modifications to the factual findings and conclusions 
set forth in the initial determination and the rationale for such 
modifications;
    (iv) Establish a debt, if appropriate;
    (v) Require corrective action, when needed;
    (vi) Determine liability, method of restitution of funds and 
sanctions; and
    (vii) Offer an opportunity for a hearing in accordance with Sec. 
667.800 of this part.

[[Page 807]]

    (3) Unless a hearing is requested, a final determination under this 
paragraph (d) is final agency action and is not subject to further 
review.
    (e) Nothing in this subpart precludes the Grant Officer from issuing 
an initial determination and/or final determination directly to a 
subrecipient, in accordance with section 184(d)(3) of the Act. In such a 
case, the Grant Officer will inform the recipient of this action.



 Subpart F_Grievance Procedures, Complaints, and State Appeals Processes



Sec. 667.600  What local area, State and direct recipient grievance 
procedures must be established?

    (a) Each local area, State and direct recipient of funds under title 
I of WIA, except for Job Corps, must establish and maintain a procedure 
for grievances and complaints according to the requirements of this 
section. The grievance procedure requirements applicable to Job Corps 
are set forth at 20 CFR 670.990.
    (b) Each local area, State, and direct recipient must:
    (1) Provide information about the content of the grievance and 
complaint procedures required by this section to participants and other 
interested parties affected by the local Workforce Investment System, 
including One-Stop partners and service providers;
    (2) Require that every entity to which it awards Title I funds must 
provide the information referred to in paragraph (b)(1) of this section 
to participants receiving Title I-funded services from such entities; 
and
    (3) Must make reasonable efforts to assure that the information 
referred to in paragraph (b)(1) of this section will be understood by 
affected participants and other individuals, including youth and those 
who are limited-English speaking individuals. Such efforts must comply 
with the language requirements of 29 CFR 37.35 regarding the provision 
of services and information in languages other than English.
    (c) Local area procedures must provide:
    (1) A process for dealing with grievances and complaints from 
participants and other interested parties affected by the local 
Workforce Investment System, including One-Stop partners and service 
providers;
    (2) An opportunity for an informal resolution and a hearing to be 
completed within 60 days of the filing of the grievance or complaint;
    (3) A process which allows an individual alleging a labor standards 
violation to submit the grievance to a binding arbitration procedure, if 
a collective bargaining agreement covering the parties to the grievance 
so provides; and
    (4) An opportunity for a local level appeal to a State entity when:
    (i) No decision is reached within 60 days; or
    (ii) Either party is dissatisfied with the local hearing decision.
    (d) State procedures must provide:
    (1) A process for dealing with grievances and complaints from 
participants and other interested parties affected by the Statewide 
Workforce Investment programs;
    (2) A process for resolving appeals made under paragraph (c)(4) of 
this section;
    (3) A process for remanding grievances and complaints related to the 
local Workforce Investment Act programs to the local area grievance 
process; and
    (4) An opportunity for an informal resolution and a hearing to be 
completed within 60 days of the filing of the grievance or complaint.
    (e) Procedures of direct recipients must provide:
    (1) A process for dealing with grievance and complaints from 
participants and other interested parties affected by the recipient's 
Workforce Investment Act programs; and
    (2) An opportunity for an informal resolution and a hearing to be 
completed within 60 days of the filing of the grievance or complaint.
    (f) The remedies that may be imposed under local, State and direct 
recipient grievance procedures are enumerated at WIA section 181(c)(3).
    (g)(1) The provisions of this section on grievance procedures do not 
apply to discrimination complaints brought under WIA section 188 and/or 
29 CFR

[[Page 808]]

part 37. Such complaints must be handled in accordance with the 
procedures set forth in that regulatory part.
    (2) Questions about or complaints alleging a violation of the 
nondiscrimination provisions of WIA section 188 may be directed or 
mailed to the Director, Civil Rights Center, U.S. Department of Labor, 
Room N4123, 200 Constitution Avenue, NW, Washington, D.C. 20210, for 
processing.
    (h) Nothing in this subpart precludes a grievant or complainant from 
pursuing a remedy authorized under another Federal, State or local law.



Sec. 667.610  What processes do we use to review State and local 
grievances and complaints?

    (a) We investigate allegations arising through the grievance 
procedures described in Sec. 667.600 when:
    (1) A decision on a grievance or complaint under Sec. 667.600(d) 
has not been reached within 60 days of receipt of the grievance or 
complaint or within 60 days of receipt of the request for appeal of a 
local level grievance and either party appeals to the Secretary; or
    (2) A decision on a grievance or complaint under Sec. 667.600(d) 
has been reached and the party to which such decision is adverse appeals 
to the Secretary.
    (b) We must make a final decision on an appeal under paragraph (a) 
of this section no later than 120 days after receiving the appeal.
    (c) Appeals made under paragraph (a)(2) of this section must be 
filed within 60 days of the receipt of the decision being appealed. 
Appeals made under paragraph (a)(1) of this section must be filed within 
120 days of the filing of the grievance with the State, or the filing of 
the appeal of a local grievance with the State. All appeals must be 
submitted by certified mail, return receipt requested, to the Secretary, 
U.S. Department of Labor, Washington, DC 20210, Attention: ASET. A copy 
of the appeal must be simultaneously provided to the appropriate ETA 
Regional Administrator and the opposing party.
    (d) Except for complaints arising under WIA section 184(f) or 
section 188, grievances or complaints made directly to the Secretary 
will be referred to the appropriate State or local area for resolution 
in accordance with this section, unless we notify the parties that the 
Department of Labor will investigate the grievance under the procedures 
at Sec. 667.505. Discrimination complaints brought under WIA section 
188 or 29 CFR part 37 will be referred to the Director of the Civil 
Rights Center.



Sec. 667.630  How are complaints and reports of criminal fraud and 
abuse addressed under WIA?

    Information and complaints involving criminal fraud, waste, abuse or 
other criminal activity must be reported immediately through the 
Department's Incident Reporting System to the DOL Office of Inspector 
General, Office of Investigations, Room S5514, 200 Constitution Avenue 
NW., Washington, D.C. 20210, or to the corresponding Regional Inspector 
General for Investigations, with a copy simultaneously provided to the 
Employment and Training Administration. The Hotline number is 1-800-347-
3756. Complaints of a non-criminal nature are handled under the 
procedures set forth in Sec. 667.505 or through the Department's 
Incident Reporting System.



Sec. 667.640  What additional appeal processes or systems must a State 
have for the WIA program?

    (a) Non-designation of local areas: (1) The State must establish, 
and include in its State Plan, due process procedures which provide 
expeditious appeal to the State Board for a unit or combination of units 
of general local government or a rural concentrated employment program 
grant recipient (as described at WIA section 116(a)(2)(B)) that 
requests, but is not granted, automatic or temporary and subsequent 
designation as a local workforce investment area under WIA section 
116(a)(2) or 116(a)(3).
    (2) These procedures must provide an opportunity for a hearing and 
prescribe appropriate time limits to ensure prompt resolution of the 
appeal.
    (3) If the appeal to the State Board does not result in designation, 
the appellant may request review by the Secretary under Sec. 667.645.
    (4) If the Secretary determines that the appellant was not accorded 
procedural rights under the appeal process

[[Page 809]]

established in paragraph (a)(1) of this section, or that the area meets 
the requirements for designation at WIA section 116(a)(2) or 116(a)(3), 
the Secretary may require that the area be designated as a workforce 
investment area.
    (b) Denial or termination of eligibility as a training provider. (1) 
A State must establish procedures which allow providers of training 
services the opportunity to appeal:
    (i) Denial of eligibility by a Local Board or the designated State 
agency under WIA section 122 (b), (c) or (e);
    (ii) Termination of eligibility or other action by a Local Board or 
State agency under WIA section 122(f); or
    (iii) Denial of eligibility as a provider of on-the-job training 
(OJT) or customized training by a One-Stop operator under WIA section 
122(h).
    (2) Such procedures must provide an opportunity for a hearing and 
prescribe appropriate time limits to ensure prompt resolution of the 
appeal.
    (3) A decision under this State appeal process may not be appealed 
to the Secretary.
    (c) Testing and sanctioning for use of controlled substances. (1) A 
State must establish due process procedures which provide expeditious 
appeal for:
    (i) WIA participants subject to testing for use of controlled 
substances, imposed under a State policy established under WIA section 
181(f); and
    (ii) WIA participants who are sanctioned after testing positive for 
the use of controlled substances, under the policy described in 
paragraph (c)(1)(i) of this section.
    (2) A decision under this State appeal process may not be appealed 
to the Secretary.



Sec. 667.645  What procedures apply to the appeals of non-designation 
of local areas?

    (a) A unit or combination of units of general local government or 
rural concentrated employment program grant recipient (as described in 
WIA section 116(a)(2)(B)) whose appeal of the denial of a request for 
automatic or temporary and subsequent designation as a local workforce 
investment area to the State Board has not resulted in designation may 
appeal the denial of local area designation to the Secretary.
    (b) Appeals made under paragraph (a) of this section must be filed 
no later than 30 days after receipt of written notification of the 
denial from the State Board, and must be submitted by certified mail, 
return receipt requested, to the Secretary, U.S. Department of Labor, 
Washington, DC 20210, Attention: ASET. A copy of the appeal must be 
simultaneously provided to the State Board.
    (c) The appellant must establish that it was not accorded procedural 
rights under the appeal process set forth in the State Plan, or 
establish that it meets the requirements for designation in WIA section 
116(a)(2) or (a)(3). The Secretary may consider any comments submitted 
in response by the State Board.
    (d) If the Secretary determines that the appellant has met its 
burden of establishing that it was not accorded procedural rights under 
the appeal process set forth in the State Plan, or that it meets the 
requirements for designation in WIA section 116(a)(2) or (a)(3), the 
Secretary may require that the area be designated as a local workforce 
investment area.
    (e) The Secretary must issue a written decision to the Governor and 
the appellant.



Sec. 667.650  What procedures apply to the appeals of the Governor's 
imposition of sanctions for substantial violations or performance 
failures by a local area?

    (a) A local area which has been found in substantial violation of 
WIA title I, and has received notice from the Governor that either all 
or part of the local plan will be revoked or that a reorganization will 
occur, may appeal such sanctions to the Secretary under WIA section 
184(b). The sanctions do not become effective until:
    (1) The time for appeal has expired; or
    (2) The Secretary has issued a decision.
    (b) A local area which has failed to meet local performance measures 
for two consecutive years, and has received the Governor's notice of 
intent to impose a reorganization plan, may

[[Page 810]]

appeal such sanctions to the Secretary under WIA section 136(h)(1)(B).
    (c) Appeals made under paragraph (a) or (b) of this section must be 
filed no later than 30 days after receipt of written notification of the 
revoked plan or imposed reorganization, and must be submitted by 
certified mail, return receipt requested, to the Secretary, U.S. 
Department of Labor, Washington, DC 20210, Attention: ASET. A copy of 
the appeal must be simultaneously provided to the Governor.
    (d) The Secretary may consider any comments submitted in response by 
the Governor.
    (e) The Secretary will notify the Governor and the appellant in 
writing of the Secretary's decision under paragraph (a) of this section 
within 45 days after receipt of the appeal. The Secretary will notify 
the Governor and the appellant in writing of the Secretary's decision 
under paragraph (b) of this section within 30 days after receipt of the 
appeal.



    Subpart G_Sanctions, Corrective Actions, and Waiver of Liability



Sec. 667.700  What procedure do we use to impose sanctions and 
corrective actions on recipients and subrecipients of WIA grant funds?

    (a)(1) Except for actions under WIA section 188(a) or 29 CFR part 37 
(relating to nondiscrimination requirements), the Grant Officer uses the 
initial and final determination procedures outlined in Sec. 667.510 to 
impose a sanction or corrective action.
    (2) To impose a sanction or corrective action for a violation of WIA 
section 188(a) or 29 CFR part 37, the Department will use the procedures 
set forth in that regulatory part.
    (b) To impose a sanction or corrective action for noncompliance with 
the uniform administrative requirements set forth at section 184(a)(3) 
of WIA, and Sec. 667.200(a), when the Grant Officer determines that the 
Governor has not taken corrective action to remedy the violation as 
required by WIA section 184(a)(5), the Grant Officer, under the 
authority of WIA section 184(a)(7) and Sec. 667.710(c), must require 
the Governor to impose any of the corrective actions set forth at WIA 
section 184(b)(1). If the Governor fails to impose the corrective 
actions required by the Grant Officer, the Secretary may immediately 
suspend or terminate financial assistance in accordance with WIA section 
184(e).
    (c) For substantial violations of WIA statutory and regulatory 
requirements, if the Governor fails to promptly take the actions 
specified in WIA section 184(b)(1), the Grant Officer may impose such 
actions directly against the local area.
    (d) The Grant Officer may also impose a sanction directly against a 
subrecipient, as authorized in section 184(d)(3) of the Act. In such a 
case, the Grant Officer will inform the recipient of the action.



Sec. 667.705  Who is responsible for funds provided under title I of WIA?

    (a) The recipient is responsible for all funds under its grant(s).
    (b) The political jurisdiction(s) of the chief elected official(s) 
in a local workforce investment area is liable for any misuse of the WIA 
grant funds allocated to the local area under WIA sections 128 and 133, 
unless the chief elected official(s) reaches an agreement with the 
Governor to bear such liability.
    (c) When a local workforce area is composed of more than one unit of 
general local government, the liability of the individual jurisdictions 
must be specified in a written agreement between the chief elected 
officials.



Sec. 667.710  What actions are required to address the failure of a 
local area to comply with the applicable uniform administrative 
provisions?

    (a) If, as part of the annual on-site monitoring of local areas, the 
Governor determines that a local area is not in compliance with the 
uniform administrative requirements found at 29 CFR part 95 or part 97, 
as appropriate, the Governor must:
    (1) Require corrective action to secure prompt compliance; and
    (2) Impose the sanctions provided for at section 184(b) if the 
Governor finds that the local area has failed to take timely corrective 
action.
    (b) An action by the recipient to impose a sanction against a local 
area, in accordance with this section, may be

[[Page 811]]

appealed to the Secretary in accordance with Sec. 667.650, and will not 
become effective until:
    (1) The time for appeal has expired; or
    (2) The Secretary has issued a decision.
    (c)(1) If the Secretary finds that the Governor has failed to 
monitor and certify compliance of local areas with the administrative 
requirements, under WIA section 184(a), or that the Governor has failed 
to promptly take the actions required upon a determination under 
paragraph (a) of this section that a local area is not in compliance 
with the uniform administrative requirements, the Secretary will require 
the Governor to take corrective actions against the State recipient or 
the local area, as appropriate to ensure prompt compliance.
    (2) If the Governor fails to take the corrective actions required by 
the Secretary under paragraph (c)(1) of this section, the Secretary may 
immediately suspend or terminate financial assistance under WIA section 
184(e).



Sec. 667.720  How do we handle a recipient's request for waiver of 
liability under WIA section 184(d)(2)?

    (a) A recipient may request a waiver of liability, as described in 
WIA section 184(d)(2), and a Grant Officer may approve such a waiver 
under WIA section 184(d)(3).
    (b)(1) When the debt for which a waiver of liability is desired was 
established in a non-Federal resolution proceeding, the resolution 
report must accompany the waiver request.
    (2) When the waiver request is made during the ETA Grant Officer 
resolution process, the request must be made during the informal 
resolution period described in Sec. 667.510(c).
    (c) A waiver of the recipient's liability shall be considered by the 
Grant Officer only when:
    (1) The misexpenditure of WIA funds occurred at a subrecipient's 
level;
    (2) The misexpenditure was not due to willful disregard of the 
requirements of title I of the Act, gross negligence, failure to observe 
accepted standards of administration, or did not constitute fraud;
    (3) If fraud did exist, it was perpetrated against the recipient/
subrecipients; and
    (i) The recipient/subrecipients discovered, investigated, reported, 
and cooperated in any prosecution of the perpetrator of the fraud; and
    (ii) After aggressive debt collection action, it has been documented 
that further attempts at debt collection from the perpetrator of the 
fraud would be inappropriate or futile;
    (4) The recipient has issued a final determination which disallows 
the misexpenditure, the recipient's appeal process has been exhausted, 
and a debt has been established; and
    (5) The recipient requests such a waiver and provides documentation 
to demonstrate that it has substantially complied with the requirements 
of section 184(d)(2) of the Act, and this section.
    (d) The recipient will not be released from liability for misspent 
funds under the determination required by section 184(d) of the Act 
unless the Grant Officer determines that further collection action, 
either by the recipient or subrecipients, would be inappropriate or 
would prove futile.



Sec. 667.730  What is the procedure to handle a recipient's request for 
advance approval of contemplated corrective actions?

    (a) The recipient may request advance approval from the Grant 
Officer for contemplated corrective actions, including debt collection 
actions, which the recipient plans to initiate or to forego. The 
recipient's request must include a description and an assessment of all 
actions taken by the subrecipients to collect the misspent funds.
    (b) Based on the recipient's request, the Grant Officer may 
determine that the recipient may forego certain collection actions 
against a subrecipient when:
    (1) The subrecipient meets the criteria set forth in section 
184(d)(2) of the Act;
    (2) The misexpenditure of funds:
    (i) Was not made by that subrecipient but by an entity that received 
WIA funds from that subrecipient;

[[Page 812]]

    (ii) Was not a violation of section 184(d)(1) of the Act, and did 
not constitute fraud; or
    (iii) If fraud did exist,
    (A) It was perpetrated against the subrecipient; and:
    (B) The subrecipient discovered, investigated, reported, and 
cooperated in any prosecution of the perpetrator of the fraud; and
    (C) After aggressive debt collection action, it has been documented 
that further attempts at debt collection from the perpetrator of the 
fraud would be inappropriate or futile;
    (3) A final determination which disallows the misexpenditure and 
establishes a debt has been issued at the appropriate level;
    (4) Final action within the recipient's appeal system has been 
completed; and
    (5) Further debt collection action by that subrecipient or the 
recipient would be either inappropriate or futile.



Sec. 667.740  What procedure must be used for administering the 
offset/deduction provisions at section 184(c) of the Act?

    (a)(1) For recipient level misexpenditures, we may determine that a 
debt, or a portion thereof, may be offset against amounts that are 
allotted to the recipient. Recipients must submit a written request for 
an offset to the Grant Officer. Generally, we will apply the offset 
against amounts that are available at the recipient level for 
administrative costs.
    (2) The Grant Officer may approve an offset request, under paragraph 
(a)(1) of this section, if the misexpenditures were not due to willful 
disregard of the requirements of the Act and regulations, gross 
negligence, failure to observe accepted standards of administration or a 
pattern of misexpenditure.
    (b) For subrecipient level misexpenditures that were not due to 
willful disregard of the requirements of the Act and regulations, gross 
negligence, failure to observe accepted standards of administration or a 
pattern of misexpenditure, if we have required the State to repay such 
amount the State may deduct an amount equal to the misexpenditure from 
its subsequent year's allocations to the local area from funds available 
for the administrative costs of the local programs involved.
    (c) If offset is granted, the debt will not be fully satisfied until 
the Grant Officer reduces amounts allotted to the State by the amount of 
the misexpenditure.
    (d) A State may not make a deduction under paragraph (b) of this 
section until the State has taken appropriate corrective action to 
ensure full compliance within the local area with regard to appropriate 
expenditure of WIA funds.



        Subpart H_Administrative Adjudication and Judicial Review



Sec. 667.800  What actions of the Department may be appealed to the 
Office of Administrative Law Judges?

    (a) An applicant for financial assistance under title I of WIA which 
is dissatisfied because we have issued a determination not to award 
financial assistance, in whole or in part, to such applicant; or a 
recipient, subrecipient, or a vendor against which the Grant Officer has 
directly imposed a sanction or corrective action, including a sanction 
against a State under 20 CFR part 666, may appeal to the U.S. Department 
of Labor, Office of Administrative Law Judges (OALJ) within 21 days of 
receipt of the final determination.
    (b) Failure to request a hearing within 21 days of receipt of the 
final determination constitutes a waiver of the right to a hearing.
    (c) A request for a hearing under this subpart must state 
specifically those issues in the final determination upon which review 
is requested. Those provisions of the final determination not specified 
for review, or the entire final determination when no hearing has been 
requested within the 21 days, are considered resolved and not subject to 
further review. Only alleged violations of the Act, its regulations, 
grant or other agreement under the Act fairly raised in the 
determination, and the request for hearing are subject to review.
    (d) A request for a hearing must be transmitted by certified mail, 
return receipt requested, to the Chief Administrative Law Judge, U.S. 
Department of Labor, Suite 400, 800 K Street, NW., Washington, DC 20001, 
with one copy to

[[Page 813]]

the Departmental official who issued the determination.
    (e) The procedures in this subpart apply in the case of a 
complainant who has not had a dispute adjudicated under the alternative 
dispute resolution process set forth in Sec. 667.840 within the 60 
days, except that the request for hearing before the OALJ must be filed 
within 15 days of the conclusion of the 60-day period provided in Sec. 
667.840. In addition to including the final determination upon which 
review is requested, the complainant must include a copy of any 
Stipulation of Facts and a brief summary of proceedings.



Sec. 667.810  What rules of procedure apply to hearings conducted under 
this subpart?

    (a) Rules of practice and procedure. The rules of practice and 
procedure promulgated by the OALJ at subpart A of 29 CFR part 18, govern 
the conduct of hearings under this subpart. However, a request for 
hearing under this subpart is not considered a complaint to which the 
filing of an answer by DOL or a DOL agency or official is required. 
Technical rules of evidence will not apply to hearings conducted 
pursuant to this part. However, rules or principles designed to assure 
production of the most credible evidence available and to subject 
testimony to cross-examination will apply.
    (b) Prehearing procedures. In all cases, the Administrative Law 
Judge (ALJ) should encourage the use of prehearing procedures to 
simplify and clarify facts and issues.
    (c) Subpoenas. Subpoenas necessary to secure the attendance of 
witnesses and the production of documents or other items at hearings 
must be obtained from the ALJ and must be issued under the authority 
contained in section 183(c) of the Act, incorporating 15 U.S.C. 49.
    (d) Timely submission of evidence. The ALJ must not permit the 
introduction at the hearing of any documentation if it has not been made 
available for review by the other parties to the proceeding either at 
the time ordered for any prehearing conference, or, in the absence of 
such an order, at least 3 weeks prior to the hearing date.
    (e) Burden of production. The Grant Officer has the burden of 
production to support her or his decision. To this end, the Grant 
Officer prepares and files an administrative file in support of the 
decision which must be made part of the record. Thereafter, the party or 
parties seeking to overturn the Grant Officer's decision has the burden 
of persuasion.



Sec. 667.820  What authority does the Administrative Law Judge have in 
ordering relief as an outcome of an administrative hearing?

    In ordering relief, the ALJ has the full authority of the Secretary 
under the Act.



Sec. 667.825  What special rules apply to reviews of NFJP and WIA INA 
grant selections?

    (a) An applicant whose application for funding as a WIA INA grantee 
under 20 CFR part 668 or as an NFJP grantee under 20 CFR part 669 is 
denied in whole or in part may request an administrative review under 
Sec. 667.800(a) with to determine whether there is a basis in the 
record to support the decision. This appeal will not in any way 
interfere with the designation and funding of another organization to 
serve the area in question during the appeal period. The available 
remedy in such an appeal is the right to be designated in the future as 
the WIA INA or NFJP grantee for the remainder of the current grant 
cycle. Neither retroactive nor immediately effective selection status 
may be awarded as relief in a non-selection appeal under this section.
    (b) If the ALJ rules that the organization should have been selected 
and the organization continues to meet the requirements of 20 CFR part 
668 or part 669, we will select and fund the organization within 90 days 
of the ALJ's decision unless the end of the 90-day period is within six 
(6) months of the end of the funding period. An applicant so selected is 
not entitled to the full grant amount, but will only receive the funds 
remaining in the grant that have not been expended by the current 
grantee through its operation of the grant and its subsequent closeout.
    (c) Any organization selected and/or funded as a WIA INA or NFJP 
grantee

[[Page 814]]

is subject to being removed as grantee in the event an ALJ decision so 
orders. The Grant Officer provides instructions on transition and close-
out to a grantee which is removed. All parties must agree to the 
provisions of this paragraph as a condition for WIA INA or NFJP funding.
    (d) A successful appellant which has not been awarded relief because 
of the application of paragraph (b) of this section is eligible to 
compete for funds in the immediately subsequent two-year grant cycle. In 
such a situation, we will not issue a waiver of competition and for the 
area and will select a grantee through the normal competitive process.



Sec. 667.830  When will the Administrative Law Judge issue a decision?

    (a) The ALJ should render a written decision not later than 90 days 
after the closing of the record.
    (b) The decision of the ALJ constitutes final agency action unless, 
within 20 days of the decision, a party dissatisfied with the ALJ's 
decision has filed a petition for review with the Administrative Review 
Board (ARB) (established under Secretary's Order No. 2-96), specifically 
identifying the procedure, fact, law or policy to which exception is 
taken. Any exception not specifically urged is deemed to have been 
waived. A copy of the petition for review must be sent to the opposing 
party at that time. Thereafter, the decision of the ALJ constitutes 
final agency action unless the ARB, within 30 days of the filing of the 
petition for review, notifies the parties that the case has been 
accepted for review. Any case accepted by the ARB must be decided within 
180 days of acceptance. If not so decided, the decision of the ALJ 
constitutes final agency action.



Sec. 667.840  Is there an alternative dispute resolution process that 
may be used in place of an OALJ hearing?

    (a) Parties to a complaint which has been filed according to the 
requirements of Sec. 667.800 may choose to waive their rights to an 
administrative hearing before the OALJ. Instead, they may choose to 
transfer the settlement of their dispute to an individual acceptable to 
all parties who will conduct an informal review of the stipulated facts 
and render a decision in accordance with applicable law. A written 
decision must be issued within 60 days after submission of the matter 
for informal review.
    (b) The waiver of the right to request a hearing before the OALJ 
will automatically be revoked if a settlement has not been reached or a 
decision has not been issued within the 60 days provided in paragraph 
(a) of this section.
    (c) The decision rendered under this informal review process will be 
treated as a final decision of an Administrative Law Judge under section 
186(b) of the Act.



Sec. 667.850  Is there judicial review of a final order of the 
Secretary issued under section 186 of the Act?

    (a) Any party to a proceeding which resulted in a Secretary's final 
order under section 186 of the Act may obtain a review in the United 
States Court of Appeals having jurisdiction over the applicant or 
recipient of funds involved, by filing a review petition within 30 days 
of the issuance of the Secretary's final order.
    (b) The court has jurisdiction to make and enter a decree affirming, 
modifying, or setting aside the order of the Secretary, in whole or in 
part.
    (c) No objection to the Secretary's order may be considered by the 
court unless the objection was specifically urged, in a timely manner, 
before the Secretary. The review is limited to questions of law, and the 
findings of fact of the Secretary are conclusive if supported by 
substantial evidence.
    (d) The judgment of the court is final, subject to certiorari review 
by the United States Supreme Court.



Sec. 667.860  Are there other remedies available outside of the Act?

    Nothing contained in this subpart prejudices the separate exercise 
of other legal rights in pursuit of remedies and sanctions available 
outside the Act.

[[Page 815]]



                      Subpart I_Transition Planning



Sec. 667.900  What special rules apply during the JTPA/WIA transition?

    (a)(1) To facilitate planning for the implementation of WIA, a 
Governor may reserve an amount equal to no more than 2 percent of the 
total amount of JTPA formula funds allotted to the State for fiscal 
years 1998 and 1999 for expenditure on transition planning activities. 
The funds may be from any one or more of the JTPA titles and subparts, 
that is, funds do not have to be drawn proportionately from all titles 
and subparts. The Governor must report the expenditure of these funds 
for transition planning separately in accordance with instructions we 
issued, but the expenditure is not required to be allocated to the 
various titles and subparts;
    (2) These reserved transition funds may be excluded from any 
calculation of compliance with JTPA cost limitations.
    (b) Not less than 50 percent of the funds reserved by the Governor 
in paragraph (a) of this section must be made available to local 
entities.
    (c) We will issue such other transition guidance as is necessary and 
appropriate.



Sec. 667.910  Are JTPA participants to be grandfathered into WIA?

    Yes, all JTPA participants who are enrolled in JTPA must be 
grandfathered into WIA. These participants can complete the JTPA 
services specified in their individual service strategy, even if that 
service strategy is not allowable under WIA, or if the participant is 
not eligible to receive these services under WIA.



PART 668_INDIAN AND NATIVE AMERICAN PROGRAMS UNDER TITLE I OF THE 
WORKFORCE INVESTMENT ACT--Table of Contents




                     Subpart A_Purposes and Policies

Sec.
668.100 What is the purpose of the programs established to serve Native 
          American peoples (INA programs) under section166 of the 
          Workforce Investment Act?
668.120 How must INA programs be administered?
668.130 What obligation do we have to consult with the INA grantee 
          community in developing rules, regulations, and standards of 
          accountability for INA programs?
668.140 What WIA regulations apply to the INA program?
668.150 What definitions apply to terms used in the regulations in this 
          part?

  Subpart B_Service Delivery Systems Applicable to Section 166 Programs

668.200 What are the requirements for designation as an ``Indian or 
          Native American (INA) grantee''?
668.210 What priority for designation is given to eligible 
          organizations?
668.220 What is meant by the ``ability to administer funds'' for 
          designation purposes?
668.230 How will we determine an entity's ``ability to administer 
          funds''?
668.240 What is the process for applying for designation as an INA 
          grantee?
668.250 What happens if two or more entities apply for the same area?
668.260 How are INA grantees designated?
668.270 What appeal rights are available to entities that are denied 
          designation?
668.280 Are there any other ways in which an entity may be designated as 
          an INA grantee?
668.290 Can an INA grantee's designation be terminated?
668.292 How does a designated entity become an INA grantee?
668.294 Do we have to designate an INA grantee for every part of the 
          country?
668.296 How are WIA funds allocated to INA grantees?

                     Subpart C_Services to Customers

668.300 Who is eligible to receive services under the INA program?
668.340 What are INA grantee allowable activities?
668.350 Are there any restrictions on allowable activities?
668.360 What is the role of INA grantees in the One-Stop system?
668.370 What policies govern payments to participants, including wages, 
          training allowances or stipends, or direct payments for 
          supportive services?
668.380 What will we do to strengthen the capacity of INA grantees to 
          deliver effective services?

                  Subpart D_Supplemental Youth Services

668.400 What is the purpose of the supplemental youth services program?
668.410 What entities are eligible to receive supplemental youth 
          services funding?
668.420 What are the planning requirements for receiving supplemental 
          youth services funding?

[[Page 816]]

668.430 What individuals are eligible to receive supplemental youth 
          services?
668.440 How is funding for supplemental youth services determined?
668.450 How will supplemental youth services be provided?
668.460 Are there performance measures and standards applicable to the 
          supplemental youth services program?

                    Subpart E_Services to Communities

668.500 What services may INA grantees provide to or for employers under 
          section 166?
668.510 What services may INA grantees provide to the community at large 
          under section 166?
668.520 Must INA grantees give preference to Indian/Native American 
          entities in the selection of contractors or service providers?
668.530 What rules govern the issuance of contracts and/or subgrants?

         Subpart F_Accountability for Services and Expenditures

668.600 To whom is the INA grantee accountable for the provision of 
          services and the expenditure of INA funds?
668.610 How is this accountability documented and fulfilled?
668.620 What performance measures are in place for the INA program?
668.630 What are the requirements for preventing fraud and abuse under 
          section 166?
668.640 What grievance systems must a section 166 program provide?
668.650 Can INA grantees exclude segments of the eligible population?

             Subpart G_Section 166 Planning/Funding Process

668.700 What process must an INA grantee use to plan its employment and 
          training services?
668.710 What planning documents must an INA grantee submit?
668.720 What information must these planning documents contain?
668.730 When must these plans be submitted?
668.740 How will we review and approve such plans?
668.750 Under what circumstances can we or the INA grantee modify the 
          terms of the grantee's plan(s)?

                  Subpart H_Administrative Requirements

668.800 What systems must an INA grantee have in place to administer an 
          INA program?
668.810 What types of costs are allowable expenditures under the INA 
          program?
668.820 What rules apply to administrative costs under the INA program?
668.825 Does the WIA administrative cost limit for States and local 
          areas apply to section 166 grants?
668.830 How should INA program grantees classify costs?
668.840 What cost principles apply to INA funds?
668.850 What audit requirements apply to INA grants?
668.860 What cash management procedures apply to INA grant funds?
668.870 What is ``program income'' and how is it regulated in the INA 
          program?

               Subpart I_Miscellaneous Program Provisions

668.900 Does WIA provide regulatory and/or statutory waiver authority?
668.910 What information is required to document a requested waiver?
668.920 What provisions of law or regulations may not be waived?
668.930 May INA grantees combine or consolidate their employment and 
          training funds?
668.940 What is the role of the Native American Employment and Training 
          Council?

    Authority: Secs. 506(c) and 166(h)(2), Pub. L. 105-220; 20 U.S.C. 
9276(c); 29 U.S.C. 2911(h)(2).

    Source: 65 FR 49435, Aug. 11, 2000, unless otherwise noted.



                     Subpart A_Purposes and Policies



Sec. 668.100  What is the purpose of the programs established to serve 
Native American peoples (INA programs) under section 166 of the Workforce 
Investment Act?

    (a) The purpose of WIA INA programs is to support comprehensive 
employment and training activities for Indian, Alaska Native and Native 
Hawaiian individuals in order to:
    (1) Develop more fully their academic, occupational, and literacy 
skills;
    (2) Make them more competitive in the workforce;
    (3) Promote the economic and social development of Indian, Alaska 
Native, and Native Hawaiian communities according to the goals and 
values of such communities; and
    (4) Help them achieve personal and economic self-sufficiency.
    (b) The principal means of accomplishing these purposes is to enable

[[Page 817]]

tribes and Native American organizations to provide employment and 
training services to Native American peoples and their communities. 
Services should be provided in a culturally appropriate manner, 
consistent with the principles of Indian self-determination. (WIA sec. 
166(a)(1).)



Sec. 668.120  How must INA programs be administered?

    (a) We will administer INA programs to maximize the Federal 
commitment to support the growth and development of Native American 
people and communities as determined by representatives of such 
communities.
    (b) In administering these programs, we will observe the 
Congressional declaration of policy set forth in the Indian Self-
Determination and Education Assistance Act, at 25 U.S.C. section 450a, 
as well as the Department of Labor's ``American Indian and Alaska Native 
Policy,'' dated July 29, 1998.
    (c) The regulations in this part are not intended to abrogate the 
trust responsibilities of the Federal Government to Native American 
bands, tribes, or groups in any way.
    (d) We will administer INA programs through a single organizational 
unit and consistent with the requirements in section 166(h) of the Act. 
We have designated the Division of Indian and Native American Programs 
(DINAP) within the Employment and Training Administration (ETA) as this 
single organizational unit required by WIA section 166(h)(1).
    (e) We will establish and maintain administrative procedures for the 
selection, administration, monitoring, and evaluation of Native American 
employment and training programs authorized under this Act. We will 
utilize staff who have a particular competence in this field to 
administer these programs. (WIA sec. 166(h).)



Sec. 668.130  What obligation do we have to consult with the INA grantee 
community in developing rules, regulations, and standards of 
accountability for INA programs?

    We will consult with the Native American grantee community as a full 
partner in developing policies for the INA programs. We will actively 
seek and consider the views of all INA grantees, and will discuss 
options with the grantee community prior to establishing policies and 
program regulations. The primary consultation vehicle is the Native 
American Employment and Training Council. (WIA sec. 166(h)(2).)



Sec. 668.140  What WIA regulations apply to the INA program?

    (a) The regulations found in this subpart.
    (b) The general administrative requirements found in 20 CFR part 
667, including the regulations concerning Complaints, Investigations and 
Hearings found at 20 CFR part 667, subpart E through subpart H.
    (c) The Department's regulations codifying the common rules 
implementing Office of Management and Budget (OMB) Circulars which 
generally apply to Federal programs carried out by Indian tribal 
governments and nonprofit organizations, at 29 CFR parts 95, 96, 97, and 
99 as applicable.
    (d) The Department's regulations at 29 CFR part 37, which implement 
the nondiscrimination provisions of WIA section 188, apply to recipients 
of financial assistance under WIA section 166.



Sec. 668.150  What definitions apply to terms used in the regulations 
in this part?

    In addition to the definitions found in WIA sections 101 and 166 and 
20 CFR 660.300, the following definitions apply:
    DINAP means the Division of Indian and Native American Programs 
within the Employment and Training Administration of the Department.
    Governing body means a body of representatives who are duly elected, 
appointed by duly elected officials, or selected according to 
traditional tribal means. A governing body must have the authority to 
provide services to and to enter into grants on behalf of the 
organization that selected or designated it.
    Grant Officer means a Department of Labor official authorized to 
obligate Federal funds. Indian or Native American (INA) Grantee means an 
entity which is formally designated under subpart B of this part to 
operate an

[[Page 818]]

INA program and which has a grant agreement under Sec. 668.292.
    NEW means the Native Employment Works Program, the tribal work 
program authorized under section 412(a)(2) of the Social Security Act, 
as amended by the Personal Responsibility and Work Opportunity 
Reconciliation Act (Public Law 104-193).
    Underemployed means an individual who is working part time but 
desires full time employment, or who is working in employment not 
commensurate with the individual's demonstrated level of educational 
and/or skill achievement.



  Subpart B_Service Delivery Systems Applicable to Section 166 Programs



Sec. 668.200  What are the requirements for designation as an ``Indian 
or Native American (INA) grantee''?

    (a) To be designated as an INA grantee, an entity must have:
    (1) A legal status as a government or as an agency of a government, 
private non-profit corporation, or a consortium which contains at least 
one of these entities;
    (2) The ability to administer INA program funds, as defined at Sec. 
668.220; and
    (3) A new (non-incumbent) entity must have a population within the 
designated geographic service area which would provide funding under the 
funding formula found at Sec. 668.296(b) in the amount of at least 
$100,000, including any amounts received for supplemental youth services 
under the funding formula at Sec. 668.440(a). Incumbent grantees which 
do not meet this dollar threshold for Program Year (PY) 2000 and beyond 
will be grandfathered in. We will make an exception for grantees wishing 
to participate in the demonstration program under Public Law 102-477 if 
all resources to be consolidated under the Public Law 102-477 plan total 
at least $100,000, with at least $20,000 derived from section 166 funds 
as determined by the most recent Census data. Exceptions to this $20,000 
limit may be made for those entities which are close to the limit and 
which have demonstrated the capacity to administer Federal funds and 
operate a successful employment and training program.
    (b) To be designated as a Native American grantee, a consortium or 
its members must meet the requirements of paragraph (a) of this section 
and must:
    (1) Be in close proximity to one another, but they may operate in 
more than one State;
    (2) Have an administrative unit legally authorized to run the 
program and to commit the other members to contracts, grants, and other 
legally-binding agreements; and
    (3) Be jointly and individually responsible for the actions and 
obligations of the consortium, including debts.
    (c) Entities potentially eligible for designation under paragraph 
(a)(1) or (b)(1) of this section are:
    (1) Federally-recognized Indian tribes;
    (2) Tribal organizations, as defined in 25 U.S.C. 450b;
    (3) Alaska Native-controlled organizations representing regional or 
village areas, as defined in the Alaska Native Claims Settlement Act;
    (4) Native Hawaiian-controlled entities;
    (5) Native American-controlled organizations serving Indians; and
    (6) Consortia of eligible entities which individually meets the 
legal requirements for a consortium described in paragraph (c) of this 
section.
    (d) Under WIA section 166(d)(2)(B), individuals who were eligible to 
participate under section 401 of JTPA on August 6, 1998, remain eligible 
to participate under section 166 of WIA. State-recognized tribal 
organizations serving such individuals are considered to be ``Native 
American controlled'' for WIA section 166 purposes.



Sec. 668.210  What priority for designation is given to eligible 
organizations?

    (a) Federally-recognized Indian tribes, Alaska Native entities, or 
consortia that include a tribe or entity will have the highest priority 
for designation. To be designated, the organizations must meet the 
requirements in this subpart. These organizations will be designated for 
those geographic areas and/or populations over which

[[Page 819]]

they have legal jurisdiction. (WIA sec. 166(c)(1).)
    (b) If we decide not to designate Indian tribes or Alaska Native 
entities to serve their service areas, we will enter into arrangements 
to provide services with entities which the tribes or Alaska Native 
entities involved approve.
    (c) In geographic areas not served by Indian tribes or Alaska Native 
entities, entities with a Native American-controlled governing body and 
which are representative of the Native American community or communities 
involved will have priority for designation.



Sec. 668.220  What is meant by the ``ability to administer funds'' for 
designation purposes?

    An organization has the ``ability to administer funds'' if it:
    (a) Is in compliance with Departmental debt management procedures, 
if applicable;
    (b) Has not been found guilty of fraud or criminal activity which 
would affect the entity's ability to safeguard Federal funds or deliver 
program services;
    (c) Can demonstrate that it has or can acquire the necessary program 
and financial management personnel to safeguard Federal funds and 
effectively deliver program services; and
    (d) Can demonstrate that it has successfully carried out, or has the 
capacity to successfully carry out activities that will strengthen the 
ability of the individuals served to obtain or retain unsubsidized 
employment.



Sec. 668.230  How will we determine an entity's ``ability to administer 
funds''?

    (a) Before determining which entity to designate for a particular 
service area, we will conduct a review of the entity's ability to 
administer funds.
    (b) The review for an entity that has served as a grantee in either 
of the two designation periods before the one under consideration, also 
will consider the extent of compliance with the WIA regulations or the 
JTPA regulations at 20 CFR part 632. Evidence of the ability to 
administer funds may be established by a satisfactory Federal audit 
record. It may also be established by a recent record showing 
substantial compliance with Federal record keeping, reporting, program 
performance standards, or similar standards imposed on grantees by this 
or other public sector supported programs.
    (c) For other entities, the review includes the experience of the 
entity's management in administering funds for services to Native 
American people. This review also includes an assessment of the 
relationship between the entity and the Native American community or 
communities to be served.



Sec. 668.240  What is the process for applying for designation as 
an INA grantee?

    (a) Every entity seeking designation must submit a Notice of Intent 
(NOI) which complies with the requirements of the Solicitation for Grant 
Application (SGA). An SGA will be issued every two years, covering all 
areas except for those for which competition is waived for the incumbent 
grantee under WIA section 166(c)(2).
    (b) NOI's must be submitted to the Chief of DINAP, bearing a U.S. 
Postal Service postmark indicating its submission no later than October 
1st of the year which precedes the first year of a new designation cycle 
(unless the SGA provides a later date). For NOI's received after October 
1, only a timely official U.S. Postal Service postmark is acceptable as 
proof of timely submission. Dates indicating submission by private 
express delivery services or metered mail are unacceptable as proof of 
the timely submission of designation documents.
    (c) NOI's must include the following:
    (1) Documentation of the legal status of the entity, as described in 
Sec. 668.200(a)(1);
    (2) A Standard Form (SF) 424b;
    (3) The assurances required by 29 CFR 37.20;
    (4) A specific description, by State, county, reservation or similar 
area, or service population, of the geographic area for which the entity 
requests designation;
    (5) A brief summary of the employment and training or human resource 
development programs serving Native Americans that the entity currently 
operates or has operated within the previous two-year period;

[[Page 820]]

    (6) A description of the planning process used by the entity, 
including the involvement of the governing body and local employers;
    (7) Evidence to establish an entity's ability to administer funds 
under Sec. Sec. 668.220 through 668.230.



Sec. 668.250  What happens if two or more entities apply for the same 
area?

    (a) Every two years, unless there has been a waiver of competition 
for the area, we issue a Solicitation for Grant Application (SGA) 
seeking applicants for INA program grants.
    (b) If two or more entities apply for grants for the same service 
area, or for overlapping service areas, and a waiver of competition 
under WIA section 166(c)(2) is not granted to the incumbent grantee, the 
following additional procedures apply:
    (1) The Grant Officer will follow the regulations for priority 
designation at Sec. 668.210.
    (2) If no applicant is entitled to priority designation, DINAP will 
inform each entity which submitted a NOI, including the incumbent 
grantee, in writing, of all the competing Notices of Intent no later 
than November 15 of the year the NOI's are received.
    (3) Each entity will have an opportunity to describe its service 
plan, and may submit additional information addressing the requirements 
of Sec. 668.240(c) or such other information as the applicant 
determines is appropriate. Revised Notices must be received or contain 
an official U.S. Postal Service postmark, no later than January 5th 
(unless a later date is provided in DINAP's information notice).
    (4) The Grant Officer selects the entity that demonstrates the 
ability to produce the best outcomes for its customers.



Sec. 668.260  How are INA grantees designated?

    (a) On March 1 of each designation year, we designate or 
conditionally designate Native American grantees for the coming two 
program years. The Grant Officer informs, in writing, each entity which 
submitted a Notice of Intent that the entity has been:
    (1) Designated;
    (2) Conditionally designated;
    (3) Designated for only a portion of its requested area or 
population; or
    (4) Denied designation.
    (b) Designated Native American entities must ensure and provide 
evidence to DOL that a system is in place to afford all members of the 
eligible population within their service area an equitable opportunity 
to receive employment and training activities and services.



Sec. 668.270  What appeal rights are available to entities that are 
denied designation?

    Any entity that is denied designation in whole or in part for the 
area or population that it requested may appeal the denial to the Office 
of the Administrative Law Judges using the procedures at 20 CFR 667.800 
or the alternative dispute resolution procedures at 20 CFR 667.840. The 
Grant Officer will provide an entity whose request for designation was 
denied, in whole or in part, with a copy of the appeal procedures.



Sec. 668.280  Are there any other ways in which an entity may be 
designated as an INA grantee?

    Yes, for an area which would otherwise go unserved. The Grant 
Officer may designate an entity, which has not submitted an NOI, but 
which meets the qualifications for designation, to serve the particular 
geographic area. Under such circumstances, DINAP will seek the views of 
Native American leaders in the area involved about the decision to 
designate the entity to serve that community. DINAP will inform the 
Grant Officer of their views. The Grant Officer will accommodate their 
views to the extent possible.



Sec. 668.290  Can an INA grantee's designation be terminated?

    (a) Yes, the Grant Officer can terminate a grantee's designation for 
cause, or the Secretary or another DOL official confirmed by the Senate 
can terminate a grantee's designation in emergency circumstances where 
termination is necessary to protect the integrity of Federal funds or 
ensure the proper operation of the program. (WIA sec. 184(e).)

[[Page 821]]

    (b) The Grant Officer may terminate a grantee's designation for 
cause only if there is a substantial or persistent violation of the 
requirements in the Act or the WIA regulations. The grantee must be 
provided with written notice 60 days before termination, stating the 
specific reasons why termination is proposed. The appeal procedures at 
20 CFR 667.800 apply.
    (c) The Secretary must give a grantee terminated in emergency 
circumstances prompt notice of the termination and an opportunity for a 
hearing within 30 days of the termination.



Sec. 668.292  How does a designated entity become an INA grantee?

    A designated entity becomes a grantee on the effective date of an 
executed grant agreement, signed by the authorized official of the 
grantee organization and the Grant Officer. The grant agreement includes 
a set of certifications and assurances that the grantee will comply with 
the terms of the Act, the WIA regulations, and other appropriate 
requirements. Funds are released to the grantee upon approval of the 
required planning documents, as described in Sec. Sec. 668.710 through 
668.740.



Sec. 668.294  Do we have to designate an INA grantee for every part 
of the country?

    No, beginning with the PY 2000 grant awards, if there are no 
entities meeting the requirements for designation in a particular area, 
or willing to serve that area, we will not allocate funds for that 
service area. The funds allocated to that area will be distributed to 
the remaining INA grantees, or used for other program purposes such as 
technical assistance and training (TAT). Unawarded funds used for 
technical assistance and training are in addition to, and not subject to 
the limitations on, amounts reserved under Sec. 668.296(e). Areas which 
are unserved by the INA program may be restored during a subsequent 
designation cycle, when and if a current grantee or other eligible 
entity applies for and is designated to serve that area.



Sec. 668.296  How are WIA funds allocated to INA grantees?

    (a) Except for reserved funds described in paragraph (e) of this 
section and funds used for program purposes under Sec. 668.294, all 
funds available for WIA section 166(d)(2)(A)(i) comprehensive workforce 
investment services program at the beginning of a Program Year will be 
allocated to Native American grantees for their designated geographic 
service areas.
    (b) Each INA grantee will receive the sum of the funds calculated 
under the following formula:
    (1) One-quarter of the funds available will be allocated on the 
basis of the number of unemployed Native American persons in the 
grantee's designated INA service area(s) compared to all such persons in 
all such areas in the United States.
    (2) Three-quarters of the funds available will be allocated on the 
basis of the number of Native American persons in poverty in the 
grantee's designated INA service area(s) as compared to all such persons 
in all such areas in the United States.
    (3) The data and definitions used to implement these formulas is 
provided by the U.S. Bureau of the Census.
    (c) In years immediately following the use of new data in the 
formula described in paragraph (b) of this section, based upon criteria 
to be described in the SGA, we may utilize a hold harmless factor to 
reduce the disruption in grantee services which would otherwise result 
from changes in funding levels. This factor will be determined in 
consultation with the grantee community and the Native American 
Employment and Training Council.
    (d) We may reallocate funds from one INA grantee to another if a 
grantee is unable to serve its area for any reason, such as audit or 
debt problems, criminal activity, internal (political) strife, or lack 
of ability or interest. Funds may also be reallocated if a grantee has 
carry-in excess of 20 percent of the total funds available to it. Carry-
in amounts greater than 20 percent but less than 25 percent of total 
funds available may be allowed under an approved waiver issued by DINAP.
    (e) We may reserve up to one percent (1 percent) of the funds 
appropriated

[[Page 822]]

under WIA section 166(d)(2)(A)(i) for any Program Year for TAT purposes. 
Technical assistance will be provided in consultation with the Native 
American Employment and Training Council.



                     Subpart C_Services to Customers



Sec. 668.300  Who is eligible to receive services under the INA program?

    (a) A person is eligible to receive services under the INA program 
if that person is:
    (1) An Indian, as determined by a policy of the Native American 
grantee. The grantee's definition must at least include anyone who is a 
member of a Federally-recognized tribe; or
    (2) An Alaska Native, as defined in section 3(b) of the Alaska 
Native Claims Settlement Act (ANCSA), 43 U.S.C. 1602(b); or
    (3) A Native Hawaiian, as defined in WIA section 166(b)(3).
    (b) The person must also be any one of the following:
    (1) Unemployed; or
    (2) Underemployed, as defined in Sec. 668.150; or
    (3) A low-income individual, as defined in WIA section 101(25); or
    (4) The recipient of a bona fide lay-off notice which has taken 
effect in the last six months or will take effect in the following six 
month period, who is unlikely to return to a previous industry or 
occupation, and who is in need of retraining for either employment with 
another employer or for job retention with the current employer; or
    (5) An individual who is employed, but is determined by the grantee 
to be in need of employment and training services to obtain or retain 
employment that allows for self-sufficiency.
    (c) If applicable, male applicants must also register or be 
registered for the Selective Service.
    (d) For purposes of determining whether a person is a low-income 
individual under paragraph (b)(3) of this section, we will issue 
guidance for the determination of family income. (WIA sec. 189(h).)



Sec. 668.340  What are INA grantee allowable activities?

    (a) The INA grantee may provide any services consistent with the 
purposes of this section that are necessary to meet the needs of Native 
Americans preparing to enter, reenter, or retain unsubsidized 
employment. (WIA sec. 166(d)(1)(B).) Comprehensive workforce investment 
activities authorized under WIA section 166(d)(2) include:
    (b) Core services, which must be delivered in partnership with the 
One-Stop delivery system, include:
    (1) Outreach;
    (2) Intake;
    (3) Orientation to services available;
    (4) Initial assessment of skill levels, aptitudes, abilities and 
supportive service needs;
    (5) Eligibility certification;
    (6) Job Search and placement assistance;
    (7) Career counseling;
    (8) Provision of employment statistics information and local, 
regional, and national Labor Market Information;
    (9) Provision of information about filing of Unemployment Insurance 
claims;
    (10) Assistance in establishing eligibility for Welfare-to-Work 
programs;
    (11) Assistance in establishing eligibility for financial assistance 
for training;
    (12) Provision of information about supportive services;
    (13) Provision of performance and cost information relating to 
training providers and training services; and
    (14) Follow-up services.
    (c) Allowable intensive services which include:
    (1) Comprehensive and specialized testing and assessment;
    (2) Development of an individual employment plan;
    (3) Group counseling;
    (4) Individual counseling and career planning;
    (5) Case Management for seeking training services;
    (6) Short term pre-vocational services;
    (7) Work experience in the public or private sector;
    (8) Tryout employment;
    (9) Dropout prevention activities;

[[Page 823]]

    (10) Supportive services; and
    (11) Other services identified in the approved Two Year Plan.
    (d) Allowable training services which include:
    (1) Occupational skill training;
    (2) On-the-job training;
    (3) Programs that combine workplace training with related 
instruction, which may include cooperative education programs;
    (4) Training programs operated by the private sector;
    (5) Skill upgrading and retraining;
    (6) Entrepreneurial and small business development technical 
assistance and training;
    (7) Job readiness training;
    (8) Adult basic education, GED attainment, literacy training, and 
English language training, provided alone or in combination with 
training or intensive services described paragraphs (c)(1) through (11) 
and (d)(1) through (10) of this section;
    (9) Customized training conducted with a commitment by an employer 
or group of employers to employ an individual upon successful completion 
of training; and
    (10) Educational and tuition assistance.
    (e) Allowable activities specifically designed for youth are 
identified in section 129 of the Act and include:
    (1) Improving educational and skill competencies;
    (2) Adult mentoring;
    (3) Training opportunities;
    (4) Supportive services, as defined in WIA section 101(46);
    (5) Incentive programs for recognition and achievement;
    (6) Opportunities for leadership development, decision-making, 
citizenship and community service;
    (7) Preparation for postsecondary education, academic and 
occupational learning, unsubsidized employment opportunities, and other 
effective connections to intermediaries with strong links to the job 
market and local and regional employers;
    (8) Tutoring, study skills training, and other drop-out prevention 
strategies;
    (9) Alternative secondary school services;
    (10) Summer employment opportunities that are directly linked to 
academic and occupational learning;
    (11) Paid and unpaid work experiences, including internships and job 
shadowing;
    (12) Occupational skill training;
    (13) Leadership development opportunities, as defined in 20 CFR 
664.420;
    (14) Follow-up services, as defined in 20 CFR 664.450;
    (15) Comprehensive guidance and counseling, which may include drug 
and alcohol abuse counseling and referral; and
    (16) Information and referral.
    (f) In addition, allowable activities include job development and 
employment outreach, including:
    (1) Support of the Tribal Employment Rights Office (TERO) program;
    (2) Negotiation with employers to encourage them to train and hire 
participants;
    (3) Establishment of linkages with other service providers to aid 
program participants;
    (4) Establishment of management training programs to support tribal 
administration or enterprises; and
    (5) Establishment of linkages with remedial education, such as Adult 
Basic Education (ABE), basic literacy training, and English-as-a-second-
language (ESL) training programs, as necessary.
    (g) Participants may be enrolled in more than one activity at a time 
and may be sequentially enrolled in multiple activities.
    (h) INA grantees may provide any services which may be carried out 
by fund recipients under any provisions of the Act. (WIA sec. 166(d).)
    (i) In addition, INA grantees must develop programs which contribute 
to occupational development, upward mobility, development of new 
careers, and opportunities for nontraditional employment. (WIA sec. 
195(1).)



Sec. 668.350  Are there any restrictions on allowable activities?

    (a) All occupational training must be for occupations for which 
there are employment opportunities in the local area or another area to 
which the participant is willing to relocate. (WIA sec. 
134(d)(4)(A)(iii).)

[[Page 824]]

    (b) INA grantees must provide OJT services consistent with the 
definition provided in WIA section 101(31) and other limitations in the 
Act. Individuals in OJT must:
    (1) Be compensated at the same rates, including periodic increases, 
as trainees or employees who are similarly situated in similar 
occupations by the same employer and who have similar training, 
experience, and skills (WIA sec. 181(a)(1)); and
    (2) Be provided benefits and working conditions at the same level 
and to the same extent as other trainees or employees working a similar 
length of time and doing the same type of work. (WIA sec. 181(b)(5).)
    (c) In addition, OJT contracts under this title must not be entered 
into with employers who have:
    (1) Received payments under previous contracts and have exhibited a 
pattern of failing to provide OJT participants with continued, long-term 
employment as regular employees with wages and employment benefits and 
working conditions at the same level and to the same extent as other 
employees working a similar length of time and doing the same work; or
    (2) Who have violated paragraphs (b)(1) and/or (2) of this section. 
(WIA sec. 195(4).)
    (d) INA grantees are prohibited from using funds to encourage the 
relocation of a business, as described in WIA section 181(d) and 20 CFR 
667.268.
    (e) INA grantees must only use WIA funds for activities which are in 
addition to those that would otherwise be available to the Native 
American population in the area in the absence of such funds. (WIA sec. 
195(2).)
    (f) INA grantees must not spend funds on activities that displace 
currently employed individuals, impair existing contracts for services, 
or in any way affect union organizing.
    (g) Under 20 CFR 667.266, sectarian activities involving WIA 
financial assistance or participants are limited in accordance with the 
provisions of 29 CFR 37.6(f). (WIA sec. 181(b).)



Sec. 668.360  What is the role of INA grantees in the One-Stop system?

    (a) In those local workforce investment areas where an INA grantee 
conducts field operations or provides substantial services, the INA 
grantee is a required partner in the local One-Stop delivery system and 
is subject to the provisions relating to such partners described in 20 
CFR part 662. Consistent with those provisions, a Memorandum of 
Understanding (MOU) between the INA grantee and the Local Board over the 
operation of the One-Stop Center(s) in the Local Board's workforce 
investment area also must be executed. Where the Local Board is an 
alternative entity under 20 CFR 661.330, the INA grantee must negotiate 
with the alternative entity on the terms of its MOU and the scope of its 
on-going role in the local workforce investment system, as specified in 
20 CFR 661.310(b)(2). In local areas with a large concentration of 
potentially eligible INA participants, which are in an INA grantee's 
service area but in which the grantee does not conduct operations or 
provide substantial services, the INA grantee should encourage such 
individuals to participate in the One-Stop system in that area in order 
to receive WIA services.
    (b) At a minimum, the MOU must contain provisions related to:
    (1) The services to be provided through the One-Stop Service System;
    (2) The methods for referral of individuals between the One-Stop 
operator and the INA grantee which take into account the services 
provided by the INA grantee and the other One-Stop partners;
    (3) The exchange of information on the services available and 
accessible through the One-Stop system and the INA program;
    (4) As necessary to provide referrals and case management services, 
the exchange of information on Native American participants in the One-
Stop system and the INA program;
    (5) Arrangements for the funding of services provided by the One-
Stop(s), consistent with the requirements at 20 CFR 662.280 that no 
expenditures may be made with INA program funds for individuals who are 
not eligible or for services not authorized under this part.
    (c) The INA grantee's Two Year Plan must describe the efforts the 
grantee

[[Page 825]]

has made to negotiate MOU's consistent with paragraph (b) of this 
section, for each planning cycle during which Local Boards are operating 
under the terms of WIA.



Sec. 668.370  What policies govern payments to participants, including 
wages, training allowances or stipends, or direct payments for supportive 
services?

    (a) INA grantees may pay training allowances or stipends to 
participants for their successful participation in and completion of 
education or training services (except such allowance may not be 
provided to participants in OJT). Allowances or stipends may not exceed 
the Federal or State minimum wage, whichever is higher.
    (b) INA grantees may not pay a participant in a training activity 
when the person fails to participate without good cause.
    (c) If a participant in a WIA-funded activity, including 
participants in OJT, is involved in an employer-employee relationship, 
that participant must be paid wages and fringe benefits at the same 
rates as trainees or employees who have similar training, experience and 
skills and which are not less than the higher of the applicable Federal, 
State or local minimum wage. (WIA sec. 181(a)(1).)
    (d) In accordance with the policy described in the two-year plan, 
INA grantees may pay incentive bonuses to participants who meet or 
exceed individual employability or training goals established in writing 
in the individual employment plan.
    (e) INA grantees must comply with other restrictions listed in WIA 
sections 181 through 199, which apply to all programs funded under title 
I of WIA.
    (f) INA grantees must comply with the provisions on labor standards 
in WIA section 181(b).



Sec. 668.380  What will we do to strengthen the capacity of INA grantees 
to deliver effective services?

    We will provide appropriate TAT, as necessary, to INA grantees. This 
TAT will assist INA grantees to improve program performance and enhance 
services to the target population(s), as resources permit. (WIA sec. 
166(h)(5).)



                  Subpart D_Supplemental Youth Services



Sec. 668.400  What is the purpose of the supplemental youth services 
program?

    The purpose of this program is to provide supplemental employment 
and training and related services to Native American youth on or near 
Indian reservations, or in Oklahoma, Alaska, and Hawaii. (WIA sec. 
166(d)(2)(A)(ii).)



Sec. 668.410  What entities are eligible to receive supplemental 
youth services funding?

    Eligible recipients for supplemental youth services funding are 
limited to those tribal, Alaska Native, Native Hawaiian and Oklahoma 
tribal grantees funded under WIA section 166(d)(2)(A)(i), or other 
grantees serving those areas and/or populations specified in Sec. 
668.400, that received funding under title II-B of the Job Training 
Partnership Act, or that are designated to serve an eligible area as 
specified in WIA section 166(d)(2)(A)(ii).



Sec. 668.420  What are the planning requirements for receiving 
supplemental youth services funding?

    Beginning with PY 2000, eligible INA grantees must describe the 
supplemental youth services which they intend to provide in their Two 
Year Plan (described more fully in Sec. Sec. 668.710 and 668.720). This 
Plan includes the target population the grantee intends to serve, for 
example, drop-outs, juvenile offenders, and/or college students. It also 
includes the performance measures/standards to be utilized to measure 
program progress.



Sec. 668.430  What individuals are eligible to receive supplemental 
youth services?

    (a) Participants in supplemental youth services activities must be 
Native Americans, as determined by the INA grantee according to Sec. 
668.300(a), and must meet the definition of Eligible Youth, as defined 
in WIA section 101(13).
    (b)Youth participants must be low-income individuals, except that 
not more than five percent (5%) who do not meet the minimum income 
criteria,

[[Page 826]]

may be considered eligible youth if they meet one or more of the 
following categories:
    (1) School dropouts;
    (2) Basic skills deficient as defined in WIA section 101(4);
    (3) Have educational attainment that is one or more grade levels 
below the grade level appropriate to their age group;
    (4) Pregnant or parenting;
    (5) Have disabilities, including learning disabilities;
    (6) Homeless or runaway youth;
    (7) Offenders; or
    (8) Other eligible youth who face serious barriers to employment as 
identified by the grantee in its Plan. (WIA sec. 129(c)(5).)



Sec. 668.440  How is funding for supplemental youth services determined?

    (a) Beginning with PY 2000, supplemental youth funding will be 
allocated to eligible INA grantees on the basis of the relative number 
of Native American youth between the ages of 14 and 21, inclusive, in 
the grantee's designated INA service area as compared to the number of 
Native American youth in other eligible INA service areas. We reserve 
the right to redetermine this youth funding stream in future program 
years, in consultation with the Native American Employment and Training 
Council, as program experience warrants and as appropriate data become 
available.
    (b) The data used to implement this formula is provided by the U.S. 
Bureau of the Census.
    (c) The hold harmless factor described in Sec. 668.296(c) also 
applies to supplemental youth services funding. This factor also will be 
determined in consultation with the grantee community and the Native 
American Employment and Training Council.
    (d) The reallocation provisions of Sec. 668.296(d) also apply to 
supplemental youth services funding.
    (e) Any supplemental youth services funds not allotted to a grantee 
or refused by a grantee may be used for the purposes outlined in Sec. 
668.296(e), as described in Sec. 668.294. Any such funds are in 
addition to, and not subject to the limitations on, amounts reserved 
under Sec. 668.296(e).



Sec. 668.450  How will supplemental youth services be provided?

    (a) INA grantees may offer supplemental services to youth throughout 
the school year, during the summer vacation, and/or during other breaks 
during the school year at their discretion;
    (b) We encourage INA grantees to work with Local Educational 
Agencies to provide academic credit for youth activities whenever 
possible;
    (c) INA grantees may provide participating youth with the activities 
listed in 20 CFR 668.340(e).



Sec. 668.460  Are there performance measures and standards applicable 
to the supplemental youth services program?

    Yes, WIA section 166(e)(5) requires that the program plan contain a 
description of the performance measures to be used to assess the 
performance of grantees in carrying out the activities assisted under 
this section. We will develop specific indicators of performance and 
levels of performance for supplemental youth services activities in 
partnership with the Native American Employment and Training Council, 
and will transmit them to INA grantees as an administrative issuance.



                    Subpart E_Services to Communities



Sec. 668.500  What services may INA grantees provide to or for employers 
under section 166?

    (a) INA grantees may provide a variety of services to employers in 
their areas. These services may include:
    (1) Workforce planning which involves the recruitment of current or 
potential program participants, including job restructuring services;
    (2) Recruitment and assessment of potential employees, with priority 
given to potential employees who are or who might become eligible for 
program services;
    (3) Pre-employment training;
    (4) Customized training;
    (5) On-the-Job training (OJT);
    (6) Post-employment services, including training and support 
services to encourage job retention and upgrading;
    (7) Work experience for public or private sector work sites;

[[Page 827]]

    (8) Other innovative forms of worksite training.
    (b) In addition to the services listed in paragraph (a) of this 
section, other grantee-determined services (as described in the 
grantee's Two Year Plan) which are intended to assist eligible 
participants to obtain or retain employment may also be provided to or 
for employers.



Sec. 668.510  What services may INA grantees provide to the community 
at large under section 166?

    (a) INA grantees may provide services to the Native American 
communities in their designated service areas by engaging in program 
development and service delivery activities which:
    (1) Strengthen the capacity of Native American-controlled 
institutions to provide education and work-based learning services to 
Native American youth and adults, whether directly or through other 
Native American institutions such as tribal colleges;
    (2) Increase the community's capacity to deliver supportive 
services, such as child care, transportation, housing, health, and 
similar services needed by clients to obtain and retain employment;
    (3) Use program participants engaged in education, training, work 
experience, or similar activities to further the economic and social 
development of Native American communities in accordance with the goals 
and values of those communities; and
    (4) Engage in other community-building activities described in the 
INA grantee's Two Year Plan.
    (b) INA grantees should develop their Two Year Plan in conjunction 
with, and in support of, strategic tribal planning and community 
development goals.



Sec. 668.520  Must INA grantees give preference to Indian/Native 
American entities in the selection of contractors or service providers?

    Yes, INA grantees must give as much preference as possible to Indian 
organizations and to Indian-owned economic enterprises, as defined in 
section 3 of the Indian Financing Act of 1974 (25 U.S.C. 1452), when 
awarding any contract or subgrant.



Sec. 668.530  What rules govern the issuance of contracts and/or 
subgrants?

    In general, INA grantees must follow the rules of OMB Circulars A-
102 (for tribes) or A-110 (for private non-profits) when awarding 
contracts and/or subgrants under WIA section 166. The common rules 
implementing those circulars are codified for DOL-funded programs at 29 
CFR part 97 (A-102) or 29 CFR part 95 (A-110), and covered in the WIA 
regulations at 20 CFR 667.200. These rules do not apply to OJT contract 
awards.



         Subpart F_Accountability for Services and Expenditures



Sec. 668.600  To whom is the INA grantee accountable for the provision 
of services and the expenditure of INA funds?

    (a) The INA grantee is responsible to the Native American community 
to be served by INA funds.
    (b) The INA grantee is also responsible to the Department of Labor, 
which is charged by law with ensuring that all WIA funds are expended:
    (1) According to applicable laws and regulations;
    (2) For the benefit of the identified Native American client group; 
and
    (3) For the purposes approved in the grantee's plan and signed grant 
document.



Sec. 668.610  How is this accountability documented and fulfilled?

    (a) Each INA grantee must establish its own internal policies and 
procedures to ensure accountability to the INA grantee's governing body, 
as the representative of the Native American community(ies) served by 
the INA program. At a minimum, these policies and procedures must 
provide a system for governing body review and oversight of program 
plans and measures and standards for program performance.
    (b) Accountability to the Department is accomplished in part through 
on-site program reviews (monitoring), which strengthen the INA grantee's 
capability to deliver effective services and protect the integrity of 
Federal funds.

[[Page 828]]

    (c) In addition to audit information, as described at Sec. 668.850 
and program reviews, accountability to the Department is documented and 
fulfilled by the submission of reports. For the purposes of report 
submission, a postmark or date indicating receipt by a private express 
delivery service is acceptable proof of timely submission. These report 
requirements are as follows:
    (1) Each INA grantee must submit an annual report on program 
participants and activities. This report must be received no later than 
90 days after the end of the Program Year, and may be combined with the 
report on program expenditures. The reporting format is developed by 
DINAP, in consultation with the Native American Advisory Council, and 
published in the Federal Register.
    (2) Each INA grantee must submit an annual report on program 
expenditures. This report must be received no later than 90 days after 
the end of the Program Year, and may be combined with the report on 
program participants and activities.
    (3) INA grantees are encouraged, but not required, to submit a 
descriptive narrative with their annual reports describing the barriers 
to successful plan implementation they have encountered. This narrative 
should also discuss program successes and other notable occurrences that 
effected the INA grantee's overall performance that year.
    (4) Each INA grantee may be required to submit interim reports on 
program participants and activities and/or program expenditures during 
the Program Year. Interim reports must be received no later than 45 days 
after the end of the reporting period.



Sec. 668.620  What performance measures are in place for the INA program?

    Indicators of performance measures and levels of performance in use 
for INA program will be those indicators and standards proposed in 
individual grantee plans and approved by us, in accordance with 
guidelines we will develop in consultation with INA grantees under WIA 
section 166(h)(2)(A).



Sec. 668.630  What are the requirements for preventing fraud and abuse 
under section 166?

    (a) Each INA grantee must implement program and financial management 
procedures to prevent fraud and abuse. Such procedures must include a 
process which enables the grantee to take action against contractors or 
subgrantees to prevent any misuse of funds. (WIA sec. 184.)
    (b) Each INA grantee must have rules to prevent conflict of interest 
by its governing body. These conflict of interest rules must include a 
rule prohibiting any member of any governing body or council associated 
with the INA grantee from voting on any matter which would provide a 
direct financial benefit to that member, or to a member of his or her 
immediate family, in accordance with 20 CFR 667.200(a)(4) and 29 CFR 
97.36(b) or 29 CFR 95.42.
    (c) Officers or agents of the INA grantee must not solicit or 
personally accept gratuities, favors, or anything of monetary value from 
any actual or potential contractor, subgrantee, vendor or participant. 
This rule must also apply to officers or agents of the grantee's 
contractors and/or subgrantees. This prohibition does not apply to:
    (1) Any rebate, discount or similar incentive provided by a vendor 
to its customers as a regular feature of its business;
    (2) Items of nominal monetary value distributed consistent with the 
cultural practices of the Native American community served by the 
grantee.
    (d) No person who selects program participants or authorizes the 
services provided to them may select or authorize services to any 
participant who is such a person's husband, wife, father, mother, 
brother, sister, son, or daughter unless:
    (1)(i) The participant involved is a low income individual; or
    (ii) The community in which the participant resides has a population 
of less than 1,000 Native American people; and
    (2) The INA grantee has adopted and implemented the policy described 
in the Two Year Plan to prevent favoritism on behalf of such relatives.
    (e) INA grantees are subject to the provisions of 41 U.S.C. 53 
relating to kickbacks.

[[Page 829]]

    (f) No assistance provided under this Act may involve political 
activities. (WIA sec. 195(6).)
    (g) INA grantees may not use funds under this Act for lobbying, as 
provided in 29 CFR part 93.
    (h) The provisions of 18 U.S.C. 665 and 666 prohibiting embezzlement 
apply to programs under WIA.
    (i) Recipients of financial assistance under WIA section 168 are 
prohibited from discriminatory practices as outlined at WIA section 188, 
and the regulations implementing WIA section 188, at 29 CFR part 37. 
However, this does not affect the legal requirement that all INA 
participants be Native American. Also, INA grantees are not obligated to 
serve populations other than those for which they were designated.



Sec. 668.640  What grievance systems must a section 166 program provide?

    INA grantees must establish grievance procedures consistent with the 
requirements of WIA section 181(c) and 20 CFR 667.600.



Sec. 668.650  Can INA grantees exclude segments of the eligible 
population?

    (a) No, INA grantees cannot exclude segments of the eligible 
population. INA grantees must document in their Two Year Plan that a 
system is in place to afford all members of the eligible population 
within the service area for which the grantee was designated an 
equitable opportunity to receive WIA services and activities.
    (b) Nothing in this section restricts the ability of INA grantees to 
target subgroups of the eligible population (for example, the disabled, 
substance abusers, TANF recipients, or similar categories), as outlined 
in an approved Two Year Plan. However, it is unlawful to target services 
to subgroups on grounds prohibited by WIA section 188 and 29 CFR part 
37, including tribal affilitation (which is considered national origin). 
Outreach efforts, on the other hand, may be targeted to any subgroups.



             Subpart G_Section 166 Planning/Funding Process



Sec. 668.700  What process must an INA grantee use to plan its 
employment and training services?

    (a) An INA grantee may utilize the planning procedures it uses to 
plan other activities and services.
    (b) However, in the process of preparing its Two Year Plan for 
Native American WIA services, the INA grantee must consult with:
    (1) Customers or prospective customers of such services;
    (2) Prospective employers of program participants or their 
representatives;
    (3) Service providers, including local educational agencies, which 
can provide services which support or are complementary to the grantee's 
own services; and
    (4) Tribal or other community officials responsible for the 
development and administration of strategic community development 
efforts.



Sec. 668.710  What planning documents must an INA grantee submit?

    Each grantee receiving funds under WIA section 166 must submit to 
DINAP a comprehensive services plan and a projection of participant 
services and expenditures covering the two-year planning cycle. We will, 
in consultation with the Native American Advisory Council, issue budget 
and planning instructions which grantees must use when preparing their 
plan.



Sec. 668.720  What information must these planning documents contain?

    (a) The comprehensive services plan must cover the two Program Years 
included within a designation cycle. According to planning instructions 
issued by the Department, the comprehensive services plan must describe 
in narrative form:
    (1) The specific goals of the INA grantee's program for the two 
Program Years involved;
    (2) The method the INA grantee will use to target its services to 
specific segments of its service population;
    (3) The array of services which the INA grantee intends to make 
available;
    (4) The system the INA grantee will use to be accountable for the 
results of

[[Page 830]]

its program services. Such results must be judged in terms of the 
outcomes for individual participants and/or the benefits the program 
provides to the Native American community(ies) which the INA grantee 
serves. Plans must include the performance information required by Sec. 
668.620;
    (5) The ways in which the INA grantee will seek to integrate or 
coordinate and ensure nonduplication of its employment and training 
services with:
    (i) The One-Stop delivery system in its local workforce investment 
area, including a description of any MOU's which affect the grantee's 
participation;
    (ii) Other services provided by Local Workforce Investment Boards;
    (iii) Other program operators;
    (iv) Other services available within the grantee organization; and
    (v) Other services which are available to Native Americans in the 
community, including planned participation in the One-Stop system.
    (b) Eligible INA grantees must include in their plan narratives a 
description of activities planned under the supplemental youth program, 
including items described in paragraphs (a)(1) through (5) of this 
section.
    (c) INA grantees must be prepared to justify the amount of proposed 
Administrative Costs, utilizing the definition at 20 CFR 667.220.
    (d) INA grantees' plans must contain a projection of participant 
services and expenditures for each Program Year, consistent with 
guidance issued by the Department.



Sec. 668.730  When must these plans be submitted?

    (a) The two-year plans are due at a date specified by DINAP in the 
year in which the two-year designation cycle begins. We will announce 
exact submission dates in the biennial planning instructions.
    (b) Plans from INA grantees who are eligible for supplemental youth 
services funds must include their supplemental youth plans as part of 
their regular Two Year Plan.
    (c) INA grantees must submit modifications for the second year 
reflecting exact funding amounts, after the individual allotments have 
been determined. We will announce the time for their submission, which 
will be no later than June 1 prior to the beginning of the second year 
of the designation cycle.



Sec. 668.740  How will we review and approve such plans?

    (a) We will approve a grantee's planning documents before the date 
on which funds for the program become available unless:
    (1) The planning documents do not contain the information specified 
in the regulations in this part and Departmental planning guidance; or
    (2) The services which the INA grantee proposes are not permitted 
under WIA or applicable regulations.
    (b) We may approve a portion of the plan, and disapprove other 
portions. The grantee also has the right to appeal the decision to the 
Office of the Administrative Law Judges under the procedures at 20 CFR 
667.800 or 667.840. While the INA grantee exercises its right to appeal, 
the grantee must implement the approved portions of the plan.
    (c) If we disapprove all or part of an INA grantee's plan, and that 
disapproval is sustained in the appeal process, the INA grantee will be 
given the opportunity to amend its plan so that it can be approved.
    (d) If an INA grantee's plan is amended but is still disapproved, 
the grantee will have the right to appeal the decision to the Offices of 
the Administrative Law Judges under the procedures at 20 CFR 667.800 or 
667.840.



Sec. 668.750  Under what circumstances can we or the INA grantee modify 
the terms of the grantee's plan(s)?

    (a) We may unilaterally modify the INA grantee's plan to add funds 
or, if required by Congressional action, to reduce the amount of funds 
available for expenditure.
    (b) The INA grantee may request approval to modify its plan to add, 
expand, delete, or diminish any service allowable under the regulations 
in this part. The INA grantee may modify its plan without our approval, 
unless the modification reduces the total number of participants to be 
served annually

[[Page 831]]

under the grantee's program by a number which exceeds 25 percent of the 
participants previously proposed to be served, or by 25 participants, 
whichever is larger.
    (c) We will act upon any modification within thirty (30) calendar 
days of receipt of the proposed modification. In the event that further 
clarification or modification is required, we may extend the thirty (30) 
day time frame to conclude appropriate negotiations.



                  Subpart H_Administrative Requirements



Sec. 668.800  What systems must an INA grantee have in place to 
administer an INA program?

    (a) Each INA grantee must have a written system describing the 
procedures the grantee uses for:
    (1) The hiring and management of personnel paid with program funds;
    (2) The acquisition and management of property purchased with 
program funds;
    (3) Financial management practices;
    (4) A participant grievance system which meets the requirements in 
section 181(c) of WIA and 20 CFR 667.600; and
    (5) A participant records system.
    (b) Participant records systems must include:
    (1) A written or computerized record containing all the information 
used to determine the person's eligibility to receive program services;
    (2) The participant's signature certifying that all the eligibility 
information he or she provided is true to the best of his/her knowledge; 
and
    (3) The information necessary to comply with all program reporting 
requirements.



Sec. 668.810  What types of costs are allowable expenditures under 
the INA program?

    Rules relating to allowable costs under WIA are covered in 20 CFR 
667.200 through 667.220.



Sec. 668.820  What rules apply to administrative costs under the INA 
program?

    The definition and treatment of administrative costs are covered in 
20 CFR 667.210(b) and 667.220.



Sec. 668.825  Does the WIA administrative cost limit for States and 
local areas apply to section 166 grants?

    No, under 20 CFR 667.210(b), limits on administrative costs for 
section 166 grants will be negotiated with the grantee and identified in 
the grant award document.



Sec. 668.830  How should INA program grantees classify costs?

    Cost classification is covered in the WIA regulations at 20 CFR 
667.200 through 667.220. For purposes of the INA program, program costs 
also include costs associated with other activities such as Tribal 
Employment Rights Office (TERO), and supportive services, as defined in 
WIA section 101(46).



Sec. 668.840  What cost principles apply to INA funds?

    The cost principles described in OMB Circulars A-87 (for tribal 
governments), A-122 (for private non-profits), and A-21 (for educational 
institutions), and the regulations at 20 CFR 667.200(c), apply to INA 
grantees, depending on the nature of the grantee organization.



Sec. 668.850  What audit requirements apply to INA grants?

    The audit requirements established under the Department's 
regulations at 29 CFR part 99, which implement OMB Circular A-133, apply 
to all Native American WIA grants. These regulations, for all of WIA 
title I, are cited at 20 CFR 667.200(b). Audit resolution procedures are 
covered at 20 CFR 667.500 and 667.510.



Sec. 668.860  What cash management procedures apply to INA grant funds?

    INA grantees must draw down funds only as they actually need them. 
The U.S. Department of Treasury regulations which implement the Cash 
Management Improvement Act, found at 31 CFR part 205, apply by law to 
most recipients of Federal funds. Special rules

[[Page 832]]

may apply to those grantees required to keep their funds in interest-
bearing accounts, and to grantees participating in the demonstration 
under Public Law 102-477.



Sec. 668.870  What is ``program income'' and how is it regulated in 
the INA program?

    (a) Program income is defined and regulated by WIA section 195(7), 
20 CFR 667.200(a)(5) and the applicable rules in 29 CFR parts 95 and 97.
    (b) For grants made under this part, program income does not include 
income generated by the work of a work experience participant in an 
enterprise, including an enterprise owned by an Indian tribe or Alaska 
Native entity, whether in the public or private sector.
    (c) Program income does not include income generated by the work of 
an OJT participant in an establishment under paragraph (b) of this 
section.



               Subpart I_Miscellaneous Program Provisions



Sec. 668.900  Does WIA provide regulatory and/or statutory waiver 
authority?

    Yes, WIA section 166(h)(3) permits waivers of any statutory or 
regulatory requirement imposed upon INA grantees (except for the areas 
cited in Sec. 668.920). Such waivers may include those necessary to 
facilitate WIA support of long term community development goals.



Sec. 668.910  What information is required to document a requested 
waiver?

    To request a waiver, an INA grantee must submit a plan indicating 
how the waiver will improve the grantee's WIA program activities. We 
will provide further guidance on the waiver process, consistent with the 
provisions of WIA section 166(h)(3).



Sec. 668.920  What provisions of law or regulations may not be waived?

    Requirements relating to:
    (a) Wage and labor standards;
    (b) Worker rights;
    (c) Participation and protection of workers and participants;
    (d) Grievance procedures;
    (e) Judicial review; and
    (f) Non-discrimination may not be waived. (WIA sec. 166(h)(3)(A).)



Sec. 668.930  May INA grantees combine or consolidate their employment 
and training funds?

    Yes, INA grantees may consolidate their employment and training 
funds under WIA with assistance received from related programs in 
accordance with the provisions of the Indian Employment, Training and 
Related Services Demonstration Act of 1992 (Public Law 102-477) (25 
U.S.C. 3401 et seq.). Also, Federally-recognized tribes that administer 
INA funds and funds provided by more than one State under other sections 
of WIA title I may enter into an agreement with the Governors to 
transfer the State funds to the INA program. (WIA sec. 166(f) and 
(h)(6).)



Sec. 668.940  What is the role of the Native American Employment and 
Training Council?

    The Native American Employment and Training Council is a body 
composed of representatives of the grantee community which advises the 
Secretary on all aspects of Native American employment and training 
program implementation. WIA section 166(h)(4) continues the Council 
essentially as it is currently constituted, with the exception that all 
the Council members no longer have to be Native American. However, the 
nature of the consultative process remains essentially unchanged. We 
continue to support the Council.



PART 669_NATIONAL FARMWORKER JOBS PROGRAM UNDER TITLE I OF THE WORKFORCE 
INVESTMENT ACT--Table of Contents




                    Subpart A_Purpose and Definitions

Sec.
669.100 What is the purpose of the National Farmworker Jobs Program 
          (NFJP) and the other services and activities established under 
          WIA section 167?
669.110 What definitions apply to this program?
669.120 How do we administer the NFJP program?
669.130 What unit within the Department administers the National 
          Farmworker Jobs Program funded under WIA section 167?

[[Page 833]]

669.140 How does the Division of Seasonal and Farmworker Programs (DSFP) 
          assist the MSFW grantee organizations to serve farmworker 
          customers?
669.150 How are regulations established for this program?
669.160 How do we consult with NFJP organizations in developing rules, 
          regulations and standards of accountability, and other policy 
          guidance for the NFJP?
669.170 What WIA regulations apply to the programs funded under WIA 
          section 167?

 Subpart B_The Service Delivery System for the National Farmworker Jobs 
                                 Program

669.200 Who is eligible to receive an NFJP grant?
669.210 How does an eligible entity become an NFJP grantee?
669.220 What is the role of the NFJP grantee in the One-Stop delivery 
          system?
669.230 Can an NFJP grantee's designation be terminated?
669.240 How will we use funds appropriated under WIA section 167 for the 
          NFJP?

 Subpart C_The National Farmworker Jobs Program Customers and Available 
                            Program Services

669.300 What are the general responsibilities of the NFJP grantees?
669.310 What are the basic components of an NFJP service delivery 
          strategy?
669.320 Who is eligible to receive services under the NFJP?
669.330 How are services delivered to the customer?
669.340 What core services are available to eligible MSFW's?
669.350 How are core services delivered to MSFW's?
669.360 May grantees provide emergency assistance to MSFW's?
669.370 What intensive services may be provided to eligible MSFW's?
669.380 What is the objective assessment that is authorized as an 
          intensive service?
669.400 What are the elements of the Individual Employment Plan that is 
          authorized as an intensive service?
669.410 What training services may be provided to eligible MSFW's?
669.420 What must be included in an on-the-job training contract?
669.430 What Related Assistance services may be provided to eligible 
          farmworkers?
669.440 When may farmworkers receive related assistance?

   Subpart D_Performance Accountability, Planning and Waiver Provision

669.500 What performance measures and standards apply to the NFJP?
669.510 What planning documents must an NFJP grantee submit?
669.520 What information is required in the NFJP grant plans?
669.530 What are the submission dates for these plans?
669.540 Under what circumstances are the terms of the grantee's plan 
          modified by the grantee or the Department?
669.550 How are costs classified under the NFJP?
669.555 Do the WIA administrative cost limits for States and local areas 
          apply to NFJP grants?
669.560 Are there regulatory and/or statutory waiver provisions that 
          apply to WIA section 167?
669.570 What information is required to document a requested waiver?

                    Subpart E_The MSFW Youth Program

669.600 What is the purpose of the WIA section 167 MSFW Youth Program?
669.610 What is the relationship between the MSFW youth program and the 
          NFJP authorized at WIA section 167?
669.620 How do the MSFW youth program regulations apply to the NFJP 
          programs authorized under WIA section 167?
669.630 What are the requirements for designation as an ``MSFW youth 
          program grantee''?
669.640 What is the process for applying for designation as an MSFW 
          youth program grantee?
669.650 How are MSFW youth funds allocated to section 167 youth 
          grantees?
669.660 What planning documents and information are required in the 
          application for MSFW youth grants and when must they be filed?
669.670 Who is eligible to receive services under the section 167 MSFW 
          youth program?
669.680 What activities and services may be provided under the MSFW 
          youth program?

    Authority: Section 506(c), Pub. L. 105-220; 20 U.S.C. 9276(c).

    Source: 65 FR 49445, Aug. 11, 2000, unless otherwise noted.



                    Subpart A_Purpose and Definitions



Sec. 669.100  What is the purpose of the National Farmworker Jobs 
Program (NFJP) and the other services and activities established under 
WIA section 167?

    The purpose of the NFJP, and the other services and activities 
established under WIA section 167, is to

[[Page 834]]

strengthen the ability of eligible migrant and seasonal farmworkers and 
their families to achieve economic self-sufficiency. This part provides 
the regulatory requirements applicable to the expenditure of WIA section 
167 funds for such programs, services and activities.



Sec. 669.110  What definitions apply to this program?

    In addition to the definitions found in WIA sections 101 and 167 and 
in 20 CFR 660.300, the following definitions apply to programs under 
this part:
    Allowances means direct payments, which must not exceed the higher 
of the State or Federal minimum wage, made to NFJP participants during 
their enrollment to enable them to participate in intensive or training 
services.
    Capacity enhancement means the technical assistance we provide to 
grantees and grantee staff by the Department to improve the quality of 
the program and the delivery of program services to NFJP participants.
    Dependent means an individual who:
    (1) Was claimed as a dependent on the qualifying farmworker's 
federal income tax return for the previous year; or
    (2) Is the spouse of the qualifying farmworker; or
    (3) If not claimed as a dependent for federal income tax purposes, 
is able to establish:
    (i) A relationship as the farmworker's
    (A) Child, grandchild, great grandchild, including legally adopted 
children;
    (B) Stepchild;
    (C) Brother, sister, half brother, half sister, stepbrother, or 
stepsister;
    (D) Parent, grandparent, or other direct ancestor but not foster 
parent;
    (E) Foster child;
    (F) Stepfather or stepmother;
    (G) Uncle or aunt;
    (H) Niece or nephew;
    (I) Father-in-law, mother-in-law, son-in-law; or
    (J) Daughter-in-law, brother-in-law, or sister-in-law; and
    (ii) The receipt of over half of his/her total support from the 
eligible farmworker's family during the eligibility determination 
period.
    Disadvantaged means a farmworker whose income, for any 12 
consecutive months out of the 24 months immediately before the 
farmworker applies for the program, does not exceed the higher of either 
the poverty line or 70 percent of the lower living standard income 
level, adjusted for the farmworker's family size and including the 
income of all wage earners, except when its inclusion would be unjust 
due to unstable conditions of the family unit.
    DSFP means the Division of Seasonal Farmworker Programs within the 
Employment and Training Administration of the Department, or a successor 
organizational unit.
    Eligibility determination period means any consecutive 12-month 
period within the 24-month period immediately preceding the date of 
application for the NFJP by the applicant farmworker.
    Emergency assistance means assistance that addresses immediate needs 
of farmworkers and their families, provided by NFJP grantees. Except for 
evidence to support legal working status in the United States and 
Selective Service registration, where applicable, the applicant's self-
attestation is accepted as eligibility for emergency assistance.
    Farmwork means those occupations and industries within agricultural 
production and agricultural services that we identify for the National 
Farmworker Jobs Program.
    Housing development assistance within the NFJP, is a type of related 
assistance consisting of an organized program of education and on-site 
demonstrations about the basic elements of family housing and may 
include financing, site selection, permits and construction skills, 
leading towards home ownership.
    MOU means Memorandum of Understanding.
    MSFW means a Migrant or Seasonal Farmworker under WIA section 167.
    MSFW program grantee means an entity to which we directly award a 
WIA grant to carry out the MSFW program in one or more designated States 
or substate areas.
    National Farmworker Jobs Program (NFJP) is the nationally 
administered

[[Page 835]]

workforce investment program for farmworkers established by WIA section 
167 as a required partner of the One-Stop system.
    Related assistance means short-term forms of direct assistance 
designed to assist farmworkers and their families to retain or stabilize 
their agricultural employment or enrollment in the NFJP.
    Self-certification means a farmworker's signed attestation that the 
information he/she submits to demonstrate eligibility for the NFJP is 
true and accurate.
    Service area means the geographical jurisdiction in which a WIA 
section 167 grantee is designated to operate.
    Work experience means a planned, structured learning experience that 
takes place in a workplace for a limited period of time. Work experience 
may be paid or unpaid, as appropriate.



Sec. 669.120  How do we administer the NFJP program?

    This program is centrally administered by the Department of Labor in 
a manner consistent with the requirements of WIA section 167. As 
described in Sec. 669.210, we designate grantees using procedures 
consistent with standard Federal government competitive procedures. We 
award other grants and contracts using similar competitive procedures.



Sec. 669.130  What unit within the Department administers the National 
Farmworker Jobs Program funded under WIA section 167?

    We have designated the Division of Seasonal Farmworker Programs 
(DSFP), or its successor organization, within the Employment and 
Training Administration, as the organizational unit that administers the 
NFJP and other MSFW programs at the Federal level.



Sec. 669.140  How does the Division of Seasonal Farmworker Programs 
(DSFP) assist the MSFW grantee organizations to serve farmworker 
customers?

    We provide technical assistance and training to MSFW grantees for 
the purposes of program implementation and program performance 
management leading to enhancement of services to and continuous 
improvement in the employment outcomes of farmworkers.



Sec. 669.150  How are regulations established for this program?

    In developing regulations for WIA section 167, we consult with the 
Migrant and Seasonal Farmworker Employment and Training Advisory 
Committee. The regulations and program guidance consider the economic 
circumstances and demographics of eligible migrant and seasonal 
farmworkers.



Sec. 669.160  How do we consult with NFJP organizations in developing 
rules, regulations and standards of accountability, and other policy 
guidance for the NFJP?

    (a) We consider the NFJP grantee community as a full partner in the 
development of policies for the NFJPs under the Act.
    (b) We have established and continue to support the Federal MSFW 
Employment and Training Advisory Committee. Through the Advisory 
Committee, we actively seek and consider the views of the grantee 
community before establishing policies and/or program regulations, 
according to the requirements of WIA section 167.



Sec. 669.170  What WIA regulations apply to the programs funded under 
WIA section 167?

    (a) The regulations found in this part;
    (b) The general administrative requirements found in 20 CFR part 
667, including the regulations concerning Complaints, Investigations and 
Hearings found at 20 CFR part 667, subpart E through subpart H, which 
cover programs under WIA section 167;
    (c) The Department's regulations codifying the common rules 
implementing Office of Management and Budget (OMB) Circulars, which 
generally apply to Federal programs carried out by State and local 
governments and nonprofit organizations at 29 CFR parts 95, 96, 97, and 
99, as applicable.
    (d) The regulations on partnership responsibilities contained in 20 
CFR parts 661 (Statewide and Local Governance) and 662 (the One-Stop 
System).
    (e) The Department's regulations at 29 CFR part 37, which implement 
the

[[Page 836]]

nondiscrimination provisions of WIA section 188, apply to recipients of 
financial assistance under WIA section 167.



 Subpart B_The Service Delivery System for the National Farmworker Jobs 
                                 Program



Sec. 669.200  Who is eligible to receive a NFJP grant?

    (a) To be eligible to receive a grant under this section, an entity 
must have:
    (1) An understanding of the problems of eligible migrant and 
seasonal farmworkers and their dependents;
    (2) A familiarity with the agricultural industry and the labor 
market needs of the geographic area to be served;
    (3) The capacity to effectively administer a diversified program of 
workforce investment activities and related assistance for eligible 
migrant and seasonal farmworkers (including farmworker youth) as 
described in paragraph (b) of this section;
    (4) The capacity to work effectively as a One-Stop partner.
    (b) For purposes of paragraph (a)(3) of this section, an entity's 
``capacity to effectively administer'' a program may be demonstrated by:
    (1) Organizational experience; or
    (2) Significant experience of its key staff in administering similar 
programs.
    (c) For purposes of paragraph (a)(4) of this section, an applicant 
may demonstrate its capacity to work effectively as a One-Stop partner 
through its existing relationships with Local Workforce Investment 
Boards and other One-Stop partners, as evidenced through One-Stop system 
participation and successful MOU negotiations.
    (d) As part of the evaluation of the applicant's capacity to work 
effectively as a One-Stop partner under paragraph (a)(4) of this 
section:
    (1) The Grant Officer must determine whether the policies or actions 
of any Local Board established under the authorty of the alternative 
entity provision of WIA section 117(i) and 20 CFR 661.330:
    (i) Preclude One-Stop system participation by the applicant or 
existing NFJP grantee; or
    (ii) For the prior program year, contributed to a failure to reach 
agreement on the terms of the MOU required under Sec. 669.220; and
    (2) If the Grant Officer's determinations under paragraph (d)(1) of 
this section are affirmative, then the Grant Officer may consider this 
fact when weighing the capacity of the competitors.



Sec. 669.210  How does an eligible entity become an NFJP grantee?

    To become an NFJP grantee and receive a grant under this subpart, an 
applicant must respond to a Solicitation for Grant Applications (SGA). 
The SGA may contain additional requirements for the grant application or 
the grantee's two-year plan. Under the SGA, grantees will be selected 
using standard Federal Government competitive procedures. The entity's 
proposal must describe a two-year strategy for meeting the needs of 
eligible migrant and seasonal farmworkers in the geographic area the 
entity seeks to serve.



Sec. 669.220  What is the role of the NFJP grantee in the One-Stop 
delivery system?

    (a) In those local workforce investment areas where the grantee 
operates its NFJP, the grantee is a required partner of the local One-
Stop delivery system and is subject to the provisions relating to such 
partners described in 20 CFR part 662. Consistent with those provisions, 
the grantee and the Local Board must negotiate an MOU which meets the 
requirements of 20 CFR 662.300 and sets forth their respective 
responsibilities for making the full range of services available through 
the One-Stop system available to farmworkers. Where the Local Board is 
an alternative entity under 20 CFR 661.330, the NFJP grantee must 
negotiate with the Board on the terms of its MOU and the scope of its 
on-going role in the local workforce investment system, as specified in 
20 CFR 661.310(b)(2). In local areas where the grantee does not operate 
its NFJP and there is a large concentration of MSFW's, the grantee

[[Page 837]]

may consider the availability of electronic connections and other means 
to participate in the One-stop system in that area, in order to serve 
those individuals.
    (b) The MOU must provide for appropriate and equitable services to 
MSFW's, and may include costs of services to MSFW's incurred by the One-
Stop that extend beyond Wagner-Peyser funded services and activities.



Sec. 669.230  Can an NFJP grantee's designation be terminated?

    Yes, a grantee's designation may be terminated for cause:
    (a) By the Secretary, in emergency circumstances when such action is 
necessary to protect the integrity of Federal funds or ensure the proper 
operation of the program. Any grantee so terminated will be provided 
with written notice and an opportunity for a hearing within 30 days 
after the termination (WIA sec. 184(e)); or
    (b) By the Grant Officer, if there is a substantial or persistent 
violation of the requirements in the Act or the WIA regulations. In such 
a case, the Grant Officer must provide the grantee with 60 days prior 
written notice, stating the reasons why termination is proposed, and the 
applicable appeal procedures.



Sec. 669.240  How do we use funds appropriated under WIA section 167 
for the NFJP?

    (a) At least 94 percent of the funds appropriated each year for WIA 
section 167 activities must be allocated to State service areas, based 
on the distribution of the eligible MSFW population determined under a 
formula which has been published in the Federal Register. Grants are 
awarded under a competitive process for the provision of services to 
eligible farmworkers within each service area.
    (b) The balance, up to 6 percent of the appropriated funds, will be 
used for discretionary purposes, for such activities as grantee 
technical assistance and support of farmworker housing activities.



 Subpart C_The National Farmworker Jobs Program Customers and Available 
                            Program Services



Sec. 669.300  What are the general responsibilities of the NFJP grantees?

    Each grantee is responsible for providing needed services in 
accordance with a service delivery strategy described in its approved 
grant plan. These services must reflect the needs of the MSFW population 
in the service area and include the services and training activities 
that are necessary to achieve each participant's employment goals.



Sec. 669.310  What are the basic components of an NFJP service delivery 
strategy?

    The NFJP service delivery strategy must include:
    (a) A customer-centered case management approach;
    (b) The provision of workforce investment activities, which include 
core services, intensive services, and training services, as described 
in WIA section 134, as appropriate;
    (c) The arrangements under the MOU's with the applicable Local 
Workforce Investment Boards for the delivery of the services available 
through the One-Stop system to MSFW's; and
    (d) Related assistance services.



Sec. 669.320  Who is eligible to receive services under the NFJP?

    Disadvantaged migrant and seasonal farmworkers, as defined in Sec. 
669.110, and their dependents are eligible for services funded by the 
NFJP.



Sec. 669.330  How are services delivered to the customer?

    To ensure that all services are focused on the customer's needs, 
services are provided through a case-management approach and may 
include: Core, intensive and training services; and related assistance, 
which includes emergency assistance and supportive services. The basic 
services and delivery of case-management activities are further 
described at Sec. Sec. 669.340 through 669.410. Consistent with 20 CFR 
part 663, before receiving intensive services, a participant must 
receive at least one core

[[Page 838]]

service, and, prior to receiving training services, a participant must 
receive at least one intensive service.



Sec. 669.340  What core services are available to eligible MSFW's?

    The core services identified in WIA section 134(d)(2) are available 
to eligible MSFW's.



Sec. 669.350  How are core services delivered to MSFW's?

    (a) The full range of core services are available to MSFW's, as well 
as other individuals, at One-Stop Centers, as described in 20 CFR part 
662.
    (b) Core services must be made available through the One-Stop 
delivery system. The delivery of core services to MSFW's, by the NFJP 
grantee and through the One-Stop system, must be discussed in the 
required MOU between the Local Board and the NFJP grantee.



Sec. 669.360  May grantees provide emergency assistance to MSFW's?

    (a) Yes, Emergency Assistance (as defined in Sec. 669.110) is a 
form of the related assistance that is authorized under WIA section 
167(d) and may be provided by a grantee as described in the grant plan.
    (b) In providing emergency assistance, the NFJP grantee may use an 
abbreviated eligibility determination process that accepts the 
applicant's self-attestation as final evidence of eligibility, except 
that self-attestation may not be used to establish the requirements of 
legal working status in the United States, and Selective Service 
registration, where applicable.



Sec. 669.370  What intensive services may be provided to eligible MSFW's?

    (a) Intensive services available to farmworkers include those 
described in WIA section 134(d)(3)(C).
    (b) Intensive services may also include:
    (1) Dropout prevention activities;
    (2) Allowance payments;
    (3) Work experience, which:
    (i) Is designed to promote the development of good work habits and 
basic work skills at the work-site (work experience may be conducted 
with the public and private non-profit sectors and with the private for-
profit sector when the design for this service is described in the 
approved grant plan); and which:
    (ii)(A) May be paid. Paid work experience must compensate 
participants at no less than the higher of the applicable State or 
Federal minimum wage; or
    (B) May be unpaid. Unpaid work experience must provide tangible 
benefits, in lieu of wages, to those who participate in unpaid work 
experience and the strategy for ensuring that tangible benefits are 
received must be described in the approved grant plan. The benefits to 
the participant must be commensurate with the participant's contribution 
to the hosting organization;
    (4) Literacy and English-as-a-Second language; and
    (5) Other services identified in the approved grant plan.



Sec. 669.380  What is the objective assessment that is authorized as 
an intensive service?

    (a) An objective assessment is a procedure designed to 
comprehensively assess the skills, abilities, and interests of each 
employment and training participant through the use of diagnostic 
testing and other assessment tools. The methods used by the grantee in 
conducting the objective assessment may include:
    (1) Structured in-depth interviews;
    (2) Skills and aptitude assessments;
    (3) Performance assessments (for example, skills or work samples, 
including those that measure interest and capability to train in 
nontraditional employment);
    (4) Interest or attitude inventories;
    (5) Career guidance instruments;
    (6) Aptitude tests; and
    (7) Basic skills tests.
    (b) The objective assessment is an ongoing process that requires the 
grantee staff to remain in close consultation with each participant to 
continuously obtain current information about the participant's progress 
that may be relevant to his/her Individual Employment Plan (IEP).



Sec. 669.400  What are the elements of the Individual Employment Plan 
that is authorized as an intensive service?

    The elements of the Individual Employment Plan (IEP) are:

[[Page 839]]

    (a) Joint development: The grantee develops the IEP in partnership 
with the participant;
    (b) Customer focus: The combination of services chosen with the 
participant must be consistent with the results of any objective 
assessment, responsive to the expressed goals of the participant, and 
must include periodic evaluation of planned goals and a record of 
accomplishments in consultation with the participant;
    (c) Length/type of service: The type and duration of intensive or 
training services must be based upon:
    (1) The employment/career goal;
    (2) Referrals to other programs for specified activities; and
    (3) The delivery agents and schedules for intensive services, 
training and training-related supportive services; and
    (d) Privacy: As a customer-centered case management tool, an IEP is 
a personal record and must receive confidential treatment.



Sec. 669.410  What training services may be provided to eligible MSFW's?

    (a) Training services include those described in WIA sections 
134(d)(4)(D) and 167(d), and may be described in the IEP and may 
include:
    (1) On-the-job training activities under a contract between the 
participating employer and the grantee;
    (2) Training-related supportive services; and
    (b) Other training activities identified in the approved grant plan 
such as training in self-employment skills and micro-enterprise 
development.



Sec. 669.420  What must be included in an on-the-job training contract?

    At a minimum, an on-the-job training contract must comply with the 
requirements of WIA sections 195(4) and 101(31) and must include:
    (a) The occupation(s) for which training is to be provided;
    (b) The duration of training;
    (c) The wage rate to be paid to the trainee;
    (d) The rate of reimbursement;
    (e) The maximum amount of reimbursement;
    (f) A training outline that reflects the work skills required for 
the position;
    (g) An outline of any other separate classroom training that may be 
provided by the employer; and
    (h) The employer's agreement to maintain and make available time and 
attendance, payroll and other records to support amounts claimed by the 
employer for reimbursement under the OJT contract.



Sec. 669.430  What Related Assistance services may be provided to 
eligible farmworkers?

    Related Assistance may include such services and activities as:
    (a) Emergency Assistance;
    (b) Workplace safety and farmworker pesticide safety instruction;
    (c) Housing development assistance;
    (d) Other supportive services described in the grant plan; and
    (e) English language classes and basic education classes for 
participants not enrolled in intensive or training services.



Sec. 669.440  When may farmworkers receive related assistance?

    Farmworkers may receive related assistance services when the need 
for the related assistance is documented for any eligible farmworker or 
dependent in a determination made by the grantee or in a statement by 
the farmworker.



   Subpart D_Performance Accountability, Planning and Waiver Provision



Sec. 669.500  What performance measures and standards apply to the NFJP?

    (a) The NFJP will use the core indicators of performance common to 
the adult and youth programs, described in 20 CFR part 666. The levels 
of performance for the farmworker indicators will be established in a 
negotiation between the Department and the grantee. The levels must take 
into account the characteristics of the population to be served and the 
economic conditions in the service area. Proposed levels of performance 
must be included in the grantee plan submission, and the

[[Page 840]]

agreed-upon levels must be included in the approved plan.
    (b) We may develop additional performance indicators with 
appropriate levels of performance for evaluating programs that serve 
farmworkers and which reflect the State service area economy and local 
demographics of eligible MSFW's. The levels of performance for these 
additional indicators must be negotiated with the grantee and included 
in the approved plan.



Sec. 669.510  What planning documents must an NFJP grantee submit?

    Each grantee receiving WIA section 167 program funds must submit to 
DSFP a comprehensive service delivery plan and a projection of 
participant services and expenditures covering the two-year designation 
cycle.



Sec. 669.520  What information is required in the NFJP grant plans?

    An NFJP grantee's biennial plan must describe:
    (a) The employment and education needs of the farmworker population 
to be served;
    (b) The manner in which proposed services to farmworkers and their 
families will strengthen their ability to obtain or retain employment or 
stabilize their agricultural employment;
    (c) The related assistance and supportive services to be provided 
and the manner in which such assistance and services are to be 
coordinated with other available services;
    (d) The performance indicators and proposed levels of performance 
used to assess the performance of such entity, including the specific 
goals of the grantee's program for the two Program Years involved;
    (e) The method the grantee will use to target its services on 
specific segments of the eligible population, as appropriate;
    (f) The array of services which the grantee intends to make 
available, with costs specified on forms we prescribe. These forms will 
indicate how many participants the grantee expects to serve, by 
activity, the results expected under the grantee's plan, and the 
anticipated expenditures by cost category; and
    (g) Its response to any other requirements set forth in the SGA 
issued under Sec. 669.210.



Sec. 669.530  What are the submission dates for these plans?

    We will announce plan submission dates in the SGA issued under Sec. 
669.220.



Sec. 669.540  Under what circumstances are the terms of the grantee's 
plan modified by the grantee or the Department?

    (a) Plans must be modified to reflect the funding level for the 
second year of the designation cycle. We will provide instructions for 
when to submit modifications for second year funding, which will 
generally be no later than June 1 prior to the beginning of the second 
year of the designation cycle.
    (b) We may unilaterally modify the grantee's plan to add funds or, 
if the total amount of funds available for allotment is reduced by 
Congress, to reduce each grantee's grant amount.
    (c) The grantee may modify its plan to add, delete, expand, or 
reduce any part of the program plan or allowable activities. Such 
modifications may be made by the grantee without our approval except 
where the modification reduces the total number of participants to be 
served annually under intensive and/or training services by 15 percent 
or more, in which case the plan may only be modified with Grant Officer 
approval.
    (d) If the grantee is approved for a regulatory waiver under 
Sec. Sec. 669.560 and 669.570, the grantee must submit a modification 
of its service delivery plan to reflect the effect of the waiver.



Sec. 669.550  How are costs classified under the NFJP?

    (a) Costs are classified as follows:
    (1) Administrative costs, as defined in 20 CFR 667.220; and
    (2) Program costs, which are all other costs not defined as 
administrative.
    (b) Program costs must be classified and reported in the following 
categories:
    (1) Related assistance, including emergency assistance and 
supportive services, including allocated staff costs; and
    (2) All other program services, including allocated staff costs.

[[Page 841]]



Sec. 669.555  Do the WIA administrative cost limits for States and 
local areas apply to NFJP grants?

    No, under 20 CFR 667.210(b), limits on administrative costs for NFJP 
grants will be negotiated with the grantee and identified in the grant 
award document.



Sec. 669.560  Are there regulatory and/or statutory waiver provisions 
that apply to WIA section 167?

    (a) The statutory waiver provision at WIA section 189(i) does not 
apply to WIA section 167.
    (b) NFJP grantees may request waiver of any regulatory provisions 
only when such regulatory provisions are:
    (1) Not required by WIA;
    (2) Not related to wage and labor standards, nondisplacement 
protection, worker rights, participation and protection of workers and 
participants, and eligibility of participants, grievance procedures, 
judicial review, nondiscrimination, allocation of funds, procedures for 
review and approval of plans; and
    (3) Not related to the key reform principles embodied in WIA, 
described in 20 CFR 661.400.



Sec. 669.570  What information is required to document a requested 
waiver?

    To request a waiver, a grantee must submit a waiver plan that:
    (a) Describes the goals of the waiver, the expected programmatic 
outcomes, and how the waiver will improve the provision of WIA 
activities;
    (b) Is consistent with guidelines we establish and the waiver 
provisions at 20 CFR 661.400 through 661.420; and
    (c) Includes a modified service delivery plan reflecting the effect 
of requested waiver.



                    Subpart E_The MSFW Youth Program



Sec. 669.600  What is the purpose of the WIA section 167 MSFW Youth 
Program?

    The purpose of the MSFW youth program is to provide an effective and 
comprehensive array of educational opportunities, employment skills, and 
life enhancement activities to at-risk and out-of-school MSFW youth that 
lead to success in school, economic stability and development into 
productive members of society.



Sec. 669.610  What is the relationship between the MSFW youth program 
and the NFJP authorized at WIA section 167?

    The MSFW youth program is funded under WIA section 127(b)(1)(A)(iii) 
to provide farmworker youth activities under the auspices of WIA section 
167. These funds are specifically earmarked for MSFW youth. Funds 
provided for the section 167 program may also be used for youth, but are 
not limited to this age group.



Sec. 669.620  How do the MSFW youth program regulations apply to the 
NFJP program authorized under WIA section 167?

    (a) This subpart applies only to the administration of grants for 
MSFW youth programs funded under WIA section 127(b)(1)(A)(iii).
    (b) The regulations for the NFJP in this part apply to the 
administration of the MSFW youth program, except as modified in this 
subpart.



Sec. 669.630  What are the requirements for designation as an ``MSFW 
youth program grantee''?

    Any entity that meets the requirements described in the SGA may 
apply for designation as an ``MSFW youth program grantee'' consistent 
with requirements described in the SGA. The Department gives special 
consideration to an entity in any service area for which the entity has 
been designated as a WIA section 167 NFJP program grantee.



Sec. 669.640  What is the process for applying for designation as an 
MSFW youth program grantee?

    (a) To apply for designation as an MSFW youth program grantee, 
entities must respond to an SGA by submitting a plan that meets the 
requirements of WIA section 167(c)(2) and describes a two-year strategy 
for meeting the needs of eligible MSFW youth in the service area the 
entity seeks to serve.
    (b) The designation process is conducted competitively (subject to 
Sec. 669.210) through a selection process

[[Page 842]]

distinct from the one used to select WIA section 167 NFJP grantees.



Sec. 669.650  How are MSFW youth funds allocated to section 167 youth 
grantees?

    The allocation of funds among entities designated as WIA section 167 
MSFW Youth Program grantees is based on the comparative merits of the 
applications, in accordance with criteria set forth in the SGA. However, 
we may include criteria in the SGA that promote a geographical 
distribution of funds and that encourages both large- and small-scale 
programs.



Sec. 669.660  What planning documents and information are required in 
the application for MSFW youth grants and when must they be filed?

    The required planning documents and other required information and 
the submission dates for filing are described in the SGA.



Sec. 669.670  Who is eligible to receive services under the section 167 
MSFW youth program?

    Disadvantaged youth, ages 14 through 21, who are individually 
eligible or are members of eligible families under the WIA section 167 
NFJP may receive these services.



Sec. 669.680  What activities and services may be provided under the 
MSFW youth program?

    (a) Based on an evaluation and assessment of the needs of MSFW youth 
participants, grantees may provide activities and services to MSFW youth 
that include:
    (1) Intensive services and training services, as described in 
Sec. Sec. 669.400 and 669.410;
    (2) Life skills activities which may include self and interpersonal 
skills development;
    (3) Community service projects;
    (4) Small business development technical assistance and training in 
conjunction with entrepreneurial training;
    (5) Supportive services including the related assistance services, 
described in Sec. 669.430; and
    (b) Other activities and services that conform to the use of funds 
for youth activities described in 20 CFR part 664.



PART 670_THE JOB CORPS UNDER TITLE I OF THE WORKFORCE INVESTMENT ACT
--Table of Contents




                       Subpart A_Scope and Purpose

Sec.
670.100 What is the scope of this part?
670.110 What is the Job Corps program?
670.120 What definitions apply to this part?
670.130 What is the role of the Job Corps Director?

  Subpart B_Site Selection and Protection and Maintenance of Facilities

670.200 Who decides where Job Corps centers will be located?
670.210 How are center facility improvements and new construction 
          handled?
670.220 Are we responsible for the protection and maintenance of center 
          facilities?

          Subpart C_Funding and Selection of Service Providers

670.300 What entities are eligible to receive funds to operate centers 
          and provide training and operational support services?
670.310 How are entities selected to receive funding?
670.320 What are the requirements for award of contracts and payments to 
          Federal agencies?

Subpart D_Recruitment, Eligibility, Screening, Selection and Assignment, 
                             and Enrollment

670.400 Who is eligible to participate in the Job Corps program?
670.410 Are there additional factors which are considered in selecting 
          an eligible applicant for enrollment?
670.420 Are there any special requirements for enrollment related to the 
          Military Selective Service Act?
670.430 What entities conduct outreach and admissions activities for the 
          Job Corps program?
670.440 What are the responsibilities of outreach and admissions 
          agencies?
670.450 How are applicants who meet eligibility and selection criteria 
          assigned to centers?
670.460 What restrictions are there on the assignment of eligible 
          applicants for nonresidential enrollment in Job Corps?
670.470 May a person who is determined to be ineligible or an individual 
          who is denied enrollment appeal that decision?
670.480 At what point is an applicant considered to be enrolled in Job 
          Corps?
670.490 How long may a student be enrolled in Job Corps?

[[Page 843]]

           Subpart E_Program Activities and Center Operations

670.500 What services must Job Corps centers provide?
670.505 What types of training must Job Corps centers provide?
670.510 Are Job Corps center operators responsible for providing all 
          vocational training?
670.515 What responsibilities do the center operators have in managing 
          work-based learning?
670.520 Are students permitted to hold jobs other than work-based 
          learning opportunities?
670.525 What residential support services must Job Corps center 
          operators provide?
670.530 Are Job Corps centers required to maintain a student 
          accountability system?
670.535 Are Job Corps centers required to establish behavior management 
          systems?
670.540 What is Job Corps' zero tolerance policy?
670.545 How does Job Corps ensure that students receive due process in 
          disciplinary actions?
670.550 What responsibilities do Job Corps centers have in assisting 
          students with child care needs?
670.555 What are the center's responsibilities in ensuring that 
          students' religious rights are respected?
670.560 Is Job Corps authorized to conduct pilot and demonstration 
          projects?

                        Subpart F_Student Support

670.600 Is government-paid transportation provided to Job Corps 
          students?
670.610 When are students authorized to take leaves of absence from 
          their Job Corps centers?
670.620 Are Job Corps students eligible to receive cash allowances and 
          performance bonuses?
670.630 Are student allowances subject to Federal Payroll Taxes?
670.640 Are students provided with clothing?

               Subpart G_Placement and Continued Services

670.700 What are Job Corps centers' responsibilities in preparing 
          students for placement services?
670.710 What placement services are provided for Job Corps students?
670.720 Who provides placement services?
670.730 What are the responsibilities of placement agencies?
670.740 Must continued services be provided for graduates?
670.750 Who may provide continued services for graduates?
670.760 How will Job Corps coordinate with other agencies?

                     Subpart H_Community Connections

670.800 How do Job Corps centers and service providers become involved 
          in their local communities?

           Subpart I_Administrative and Management Provisions

670.900 Are damages caused by students eligible for reimbursement under 
          the Tort Claims Act?
670.905 Are damages that occur to private parties at Job Corps Centers 
          eligible for reimbursement under the Tort Claims Act?
670.910 Are students entitled to Federal Employees Compensation Benefits 
          (FECB)?
670.915 When are residential students considered to be in the 
          performance of duty?
670.920 When are non-resident students considered to be in the 
          performance of duty?
670.925 When are students considered to be not in the performance of 
          duty?
670.930 How are FECA benefits computed?
670.935 How are students protected from unsafe or unhealthy situations?
670.940 What are the requirements for criminal law enforcement 
          jurisdiction on center property?
670.945 Are Job Corps operators and service providers authorized to pay 
          State or local taxes on gross receipts?
670.950 What are the financial management responsibilities of Job Corps 
          center operators and other service providers?
670.955 Are center operators and service providers subject to Federal 
          audits?
670.960 What are the procedures for management of student records?
670.965 What procedures apply to disclosure of information about Job 
          Corps students and program activities?
670.970 What are the reporting requirements for center operators and 
          operational support service providers?
670.975 How is the performance of the Job Corps program assessed?
670.980 What are the indicators of performance for Job Corps?
670.985 What happens if a center operator, screening and admissions 
          contractor or other service provider fails to meet the 
          expected levels of performance?
670.990 What procedures are available to resolve complaints and 
          disputes?
670.991 How does Job Corps ensure that complaints or disputes are 
          resolved in a timely fashion?
670.992 How does Job Corps ensure that centers or other service 
          providers comply with the Act and the WIA regulations?
670.993 How does Job Corps ensure that contract disputes will be 
          resolved?

[[Page 844]]

670.994 How does Job Corps resolve disputes between DOL and other 
          Federal Agencies?
670.995 What DOL equal opportunity and nondiscrimination regulations 
          apply to Job Corps?

    Authority: Subtitle C of title I, sec. 506(c), Pub. L. 105-220, 112 
Stat. 936 (20 U.S.C. 2881 et seq. and 9276(c)); 5 U.S.C. 301; Executive 
Order 13198, 66 FR 8497, 3 CFR 2001 Comp., p. 750; Executive Order 
13279, 67 FR 77141, 3 CFR 2002 Comp., p. 258.

    Source: 65 FR 49450, Aug. 11, 2000, unless otherwise noted.



                       Subpart A_Scope and Purpose



Sec. 670.100  What is the scope of this part?

    The regulations in this part are an outline of the requirements that 
apply to the Job Corps program. More detailed policies and procedures 
are contained in a Policy and Requirements Handbook issued by the 
Secretary. Throughout this part, phrases like ``according to 
instructions (procedures) issued by the Secretary'' refer to the Policy 
and Requirements Handbook and other Job Corps directives.



Sec. 670.110  What is the Job Corps program?

    Job Corps is a national program that operates in partnership with 
States and communities, local Workforce Investment Boards, youth 
councils, One-Stop Centers and partners, and other youth programs to 
provide education and training, primarily in a residential setting, for 
low income young people. The objective of Job Corps is to provide young 
people with the skills they need to obtain and hold a job, enter the 
Armed Forces, or enroll in advanced training or further education.



Sec. 670.120  What definitions apply to this part?

    The following definitions apply to this part:
    Absent Without Official Leave (AWOL) means an adverse enrollment 
status to which a student is assigned based on extended, unapproved 
absence from his/her assigned center or off-center place of duty. 
Students do not earn Job Corps allowances while in AWOL status.
    Applicable local board means a local Workforce Investment Board 
that:
    (1) Works with a Job Corps center and provides information on local 
demand occupations, employment opportunities, and the job skills needed 
to obtain the opportunities, and
    (2) Serves communities in which the graduates of the Job Corps seek 
employment when they leave the program.
    Capital improvement means any modification, addition, restoration or 
other improvement:
    (1) Which increases the usefulness, productivity, or serviceable 
life of an existing site, facility, building, structure, or major item 
of equipment;
    (2) Which is classified for accounting purposes as a ``fixed 
asset;'' and
    (3) The cost of which increases the recorded value of the existing 
building, site, facility, structure, or major item of equipment and is 
subject to depreciation.
    Center means a facility and an organizational entity, including all 
of its parts, providing Job Corps training and designated as a Job Corps 
center.
    Center operator means a Federal, State or local agency, or a 
contractor that runs a center under an agreement or contract with DOL.
    Civilian conservation center (CCC) means a center operated on public 
land under an agreement between DOL and another Federal agency, which 
provides, in addition to other training and assistance, programs of 
work-based learning to conserve, develop, or manage public natural 
resources or public recreational areas or to develop community projects 
in the public interest.
    Contract center means a Job Corps center operated under a contract 
with DOL.
    Contracting officer means the Regional Director or other official 
authorized to enter into contracts or agreements on behalf of DOL.
    Enrollee means an individual who has voluntarily applied for, been 
selected for, and enrolled in the Job Corps program, and remains with 
the program, but has not yet become a graduate. Enrollees are also 
referred to as ``students'' in this part.

[[Page 845]]

    Enrollment means the process by which individual formally becomes a 
student in the Job Corps program.
    Graduate means an enrollee who has:
    (1) Completed the requirements of a vocational training program, or 
received a secondary school diploma or its equivalent as a result of 
participating in the Job Corps program; and
    (2) Achieved job readiness and employment skills as a result of 
participating in the Job Corps program.
    Individual with a disability means an individual with a disability 
as defined in section 3 of the Americans with Disabilities Act of 1990 
(42 U.S.C. 12102).
    Interagency agreement means a formal agreement between DOL and 
another Federal agency administering and operating centers. The 
agreement establishes procedures for the funding, administration, 
operation, and review of those centers as well as the resolution of any 
disputes.
    Job Corps means the agency of the Department established by section 
143 of the Workforce Investment Act of 1998 (WIA) (20 U.S.C. 9201 et 
seq.) to perform those functions of the Secretary of Labor set forth in 
subtitle C of WIA Title I.
    Job Corps Director means the chief official of the Job Corps or a 
person authorized to act for the Job Corps Director.
    Low income individual means an individual who meets the definition 
in WIA section 101(25).
    National Office means the national office of Job Corps.
    National training contractor means a labor union, union-affiliated 
organization, business organization, association or a combination of 
such organizations, which has a contract with the national office to 
provide vocational training, placement, or other services.
    Operational support services means activities or services required 
to support the operation of Job Corps, including:
    (1) Outreach and admissions services;
    (2) Contracted vocational training and off-center training;
    (3) Placement services;
    (4) Continued services for graduates;
    (5) Certain health services; and
    (6) Miscellaneous logistical and technical support.
    Outreach and admissions agency means an organization that performs 
outreach, and screens and enrolls youth under a contract or other 
agreement with Job Corps.
    Placement means student employment, entry into the Armed Forces, or 
enrollment in other training or education programs following separation 
from Job Corps.
    Placement agency means an organization acting under a contract or 
other agreement with Job Corps to provide placement services for 
graduates and, to the extent possible, for former students.
    Regional appeal board means the board designated by the Regional 
Director to consider student appeals of disciplinary discharges.
    Regional Director means the chief Job Corps official of a regional 
office or a person authorized to act for the Regional Director.
    Regional Office means a regional office of Job Corps.
    Regional Solicitor means the chief official of a regional office of 
the DOL Office of the Solicitor, or a person authorized to act for the 
Regional Solicitor.
    Separation means the action by which an individual ceases to be a 
student in the Job Corps program, either voluntarily or involuntarily.
    Student means an individual enrolled in the Job Corps.
    Unauthorized goods means:
    (1) Firearms and ammunition;
    (2) Explosives and incendiaries;
    (3) Knives with blades longer than 2 inches;
    (4) Homemade weapons;
    (5) All other weapons and instruments used primarily to inflict 
personal injury;
    (6) Stolen property;
    (7) Drugs, including alcohol, marijuana, depressants, stimulants, 
hallucinogens, tranquilizers, and drug paraphernalia except for drugs 
and/or paraphernalia that are prescribed for medical reasons; and
    (8) Any other goods prohibited by the center operator in a student 
handbook.

[[Page 846]]



Sec. 670.130  What is the role of the Job Corps Director?

    The Job Corps Director has been delegated the authority to carry out 
the responsibilities of the Secretary under Subtitle I-C of the Act. 
Where the term ``Secretary'' is used in this part 670 to refer to 
establishment or issuance of guidelines and standards directly relating 
to the operation of the Job Corps program, the Job Corps Director has 
that responsibility.



  Subpart B_Site Selection and Protection and Maintenance of Facilities



Sec. 670.200  Who decides where Job Corps centers will be located?

    (a) The Secretary must approve the location and size of all Job 
Corps centers.
    (b) The Secretary establishes procedures for making decisions 
concerning the establishment, relocation, expansion, or closing of 
contract centers.



Sec. 670.210  How are center facility improvements and new construction 
handled?

    The Secretary issues procedures for requesting, approving, and 
initiating capital improvements and new construction on Job Corps 
centers.



Sec. 670.220  Are we responsible for the protection and maintenance 
of center facilities?

    (a) Yes, the Secretary establishes procedures for the protection and 
maintenance of contract center facilities owned or leased by the 
Department of Labor, that are consistent with Federal Property 
Management Regulations at 41 CFR Chapter 101.
    (b) Federal agencies operating civilian conservation centers (CCC's) 
on public land are responsible for protection and maintenance of CCC 
facilities.
    (c) The Secretary issues procedures for conducting periodic facility 
surveys of centers to determine their condition and to identify needs 
such as correction of safety and health deficiencies, rehabilitation, 
and/or new construction.



          Subpart C_Funding and Selection of Service Providers



Sec. 670.300  What entities are eligible to receive funds to operate 
centers and provide training and operational support services?

    (a) Entities eligible to receive funds under this subpart to operate 
centers include:
    (1) Federal, State, and local agencies;
    (2) Private for-profit and non-profit corporations;
    (3) Indian tribes and organizations; and
    (4) Area vocational education or residential vocational schools. 
(WIA sec. 147(a)(1)(A) and (d)).
    (b) Entities eligible to receive funds to provide outreach and 
admissions, placement and other operational support services include:
    (1) One-Stop Centers and partners;
    (2) Community action agencies;
    (3) Business organizations;
    (4) Labor organizations;
    (5) Private for-profit and non-profit corporations; and
    (6) Other agencies, and individuals that have experience and contact 
with youth. (WIA sec. 145(a)(3)).



Sec. 670.310  How are entities selected to receive funding?

    (a) The Secretary selects eligible entities to operate contract 
centers and operational support service providers on a competitive basis 
in accordance with the Federal Property and Administrative Services Act 
of 1949 unless section 303 (c) and (d) of that Act apply. In selecting 
an entity, Job Corps issues requests for proposals (RFP) for the 
operation of all contract centers and for provision of operational 
support services according to Federal Acquisition Regulation (48 CFR 
Chapter 1) and DOL Acquisition Regulation (48 CFR Chapter 29). Job Corps 
develops RFP's for center operators in consultation with the Governor, 
the center industry council (if established), and the Local Board for 
the workforce investment area in which the center is located.
    (b) The RFP for each contract center and each operational support 
service

[[Page 847]]

contract describes uniform specifications and standards, as well as 
specifications and requirements that are unique to the operation of the 
specific center or to the specific required operational support 
services.
    (c) The Contracting Officer selects and funds Job Corps contract 
center operators on the basis of an evaluation of the proposals received 
using criteria established by the Secretary, and set forth in the RFP. 
The criteria include the following:
    (1) The offeror's ability to coordinate the activities carried out 
through the Job Corps center with activities carried out under the 
appropriate State and local workforce investment plans;
    (2) The degree to which the offeror proposes vocational training 
that reflects employment opportunities in the local areas in which most 
of the students intend to seek employment;
    (3) The degree to which the offeror is familiar with the surrounding 
community, including the applicable One-Stop Centers, and the State and 
region in which the center is located; and
    (4) The offeror's past performance.
    (d) The Contracting Officer selects and funds operational support 
service contractors on the basis of an evaluation of the proposals 
received using criteria established by the Secretary and set forth in 
the RFP.
    (e) The Secretary enters into interagency agreements with Federal 
agencies for the funding, establishment, and operation of CCC's which 
include provisions to ensure that the Federal agencies comply with the 
regulations under this part.



Sec. 670.320  What are the requirements for award of contracts and 
payments to Federal agencies?

    (a) The requirements of the Federal Property and Administrative 
Services Act of 1949, as amended; the Federal Grant and Cooperative 
Agreement Act of 1977; the Federal Acquisition Regulation (48 CFR 
Chapter 1); and the DOL Acquisition Regulation (48 CFR Chapter 29) apply 
to the award of contracts and to payments to Federal agencies.
    (b) Job Corps funding of Federal agencies that operate CCC's are 
made by a transfer of obligational authority from DOL to the respective 
operating agency.



Subpart D_Recruitment, Eligibility, Screening, Selection and Assignment, 
                             and Enrollment



Sec. 670.400  Who is eligible to participate in the Job Corps program?

    To be eligible to participate in the Job Corps, an individual must 
be:
    (a) At least 16 and not more than 24 years of age at the time of 
enrollment, except
    (1) There is no upper age limit for an otherwise eligible individual 
with a disability; and
    (2) Not more than 20% of individuals enrolled nationwide may be 
individuals who are aged 22 to 24 years old;
    (b) A low-income individual;
    (c) An individual who is facing one or more of the following 
barriers to education and employement:
    (1) Is basic skills deficient, as defined in WIA sec. 101(4); or
    (2) Is a school dropout; or
    (3) Is homeless, or a runaway, or a foster child; or
    (4) Is a parent; or
    (5) Requires additional education, vocational training, or intensive 
counseling and related assistance in order to participate successfully 
in regular schoolwork or to secure and hold meaningful employment; and
    (d) Meets the requirements of Sec. 670.420, if applicable.



Sec. 670.410  Are there additional factors which are considered in 
selecting an eligible applicant for enrollment?

    Yes, in accordance with procedures issued by the Secretary, an 
eligible applicant may be selected for enrollment, only if:
    (a) A determination is made, based on information relating to the 
background, needs and interests of the applicant, that the applicant's 
educational and vocational needs can best be met through the Job Corps 
program;
    (b) A determination is made that there is a reasonable expectation 
the applicant can participate successfully in group situations and 
activities, and is not likely to engage in actions that would 
potentially:

[[Page 848]]

    (1) Prevent other students from receiving the benefit of the 
program;
    (2) Be incompatible with the maintenance of sound discipline; or
    (3) Impede satisfactory relationships between the center to which 
the student is assigned and surrounding local communities;
    (c) The applicant is made aware of the center's rules and what the 
consequences are for failure to observe the rules, as described in 
procedures issued by the Secretary;
    (d) The applicant passes a background check conducted according to 
procedures established by the Secretary. The background check must find 
that the applicant is not on probation, parole, under a suspended 
sentence or under the supervision of any agency as a result of court 
action or institutionalization, unless the court or appropriate agency 
certifies in writing that it will approve of the applicant's release 
from its supervision and that the applicant's release does not violate 
applicable laws and regulations. No one will be denied enrollment in Job 
Corps solely on the basis of contact with the criminal justice system. 
(WIA secs. 145(b)(1)(C) and 145(b)(2));
    (e) Suitable arrangements are made for the care of any dependent 
children for the proposed period of enrollment.



Sec. 670.420  Are there any special requirements for enrollment related 
to the Military Selective Service Act?

    (a) Yes, each male applicant 18 years of age or older must present 
evidence that he has complied with section 3 of the Military Selective 
Service Act (50 U.S.C. App. 451 et seq.) if required; and
    (b) When a male student turns 18 years of age, he must submit 
evidence to the center that he has complied with the requirements of the 
Military Selective Service Act (50 U.S.C. App. 451 et seq).



Sec. 670.430  What entities conduct outreach and admissions activities 
for the Job Corps program?

    The Regional Director makes arrangements with outreach and 
admissions agencies to perform Job Corps recruitment, screening and 
admissions functions according to standards and procedures issued by the 
Secretary. One-Stop Centers or partners, community action organizations, 
private for-profit and non-profit businesses, labor organizations, or 
other entities that have contact with youth over substantial periods of 
time and are able to offer reliable information about the needs of 
youth, conduct outreach and admissions activities. The Regional Director 
awards contracts for provision of outreach and screening services on a 
competitive basis in accordance with the requirements in Sec. 670.310.



Sec. 670.440  What are the responsibilities of outreach and admissions 
agencies?

    (a) Outreach and admissions agencies are responsible for:
    (1) Developing outreach and referral sources;
    (2) Actively seeking out potential applicants;
    (3) Conducting personal interviews with all applicants to identify 
their needs and eligibility status; and
    (4) Identifying youth who are interested and likely Job Corps 
participants.
    (b) Outreach and admissions agencies are responsible for completing 
all Job Corps application forms and determining whether applicants meet 
the eligibility and selection criteria for participation in Job Corps as 
provided in Sec. Sec. 670.400 and 670.410.
    (c) The Secretary may decide that determinations with regard to one 
or more of the eligibility criteria will be made by the Regional 
Director.



Sec. 670.450  How are applicants who meet eligibility and selection 
criteria assigned to centers?

    (a) Each applicant who meets the application and selection 
requirements of Sec. Sec. 670.400 and 670.410 is assigned to a center 
based on an assignment plan developed by the Secretary. The assignment 
plan identifies a target for the maximum percentage of students at each 
center who come from the State or region nearest the center, and the 
regions surrounding the center. The assignment plan is based on an 
analysis of:

[[Page 849]]

    (1) The number of eligible individuals in the State and region where 
the center is located and the regions surrounding where the center is 
located;
    (2) The demand for enrollment in Job Corps in the State and region 
where the center is located and in surrounding regions; and
    (3) The size and enrollment level of the center.
    (b) Eligible applicants are assigned to centers closest to their 
homes, unless it is determined, based on the special needs of 
applicants, including vocational interests and English literacy needs, 
the unavailability of openings in the closest center, or parent or 
guardian concerns, that another center is more appropriate.
    (c) A student who is under the age of 18 must not be assigned to a 
center other than the center closest to home if a parent or guardian 
objects to the assignment.



Sec. 670.460  What restrictions are there on the assignment of eligible 
applicants for nonresidential enrollment in Job Corps?

    (a) No more than 20 percent of students enrolled in Job Corps 
nationwide may be nonresidential students.
    (b) In enrolling individuals who are to be nonresidential students, 
priority is given to those eligible individuals who are single parents 
with dependent children. (WIA sec 147(b).)



Sec. 670.470  May a person who is determined to be ineligible or an 
individual who is denied enrollment appeal that decision?

    (a) A person who is determined to be ineligible to participate in 
Job Corps under Sec. 670.400 or a person who is not selected for 
enrollment under Sec. 670.410 may appeal the determination to the 
outreach and admissions agency or to the center within 60 days of the 
determination. The appeal will be resolved according to the procedures 
in Sec. Sec. 670.990 and 670.991. If the appeal is denied by the 
outreach/admissions contractor or the center, the person may appeal the 
decision in writing to the Regional Director within 60 days the date of 
the denial. The Regional Director will decide within 60 days whether to 
reverse or approve the appealed decision. The decision by the Regional 
Director is the Department's final decision.
    (b) If an applicant believes that he or she has been determined 
ineligible or not selected for enrollment based upon a factor prohibited 
by WIA section 188, the individual may proceed under the applicable DOL 
nondiscrimination regulations implementing WIA section 188. These 
regulations may be found at 29 CFR part 37.
    (c) An applicant who is determined to be ineligible or a person who 
is denied enrollment must be referred to the appropriate One-Stop Center 
or other local service provider.



Sec. 670.480  At what point is an applicant considered to be enrolled 
in Job Corps?

    (a) To become enrolled as a Job Corps student, an applicant selected 
for enrollment must physically arrive at the assigned Job Corps center 
on the appointed date. However, applicants selected for enrollment who 
arrive at their assigned centers by government furnished transportation 
are considered to be enrolled on their dates of departure by such 
transportation.
    (b) Center operators must document the enrollment of new students 
according to procedures issued by the Secretary.



Sec. 670.490  How long may a student be enrolled in Job Corps?

    (a) Except as provided in paragraph (b) of this section, a student 
may remain enrolled in Job Corps for no more than two years.
    (b)(1) An extension of a student's enrollment may be authorized in 
special cases according to procedures issued by the Secretary; and
    (2) A student's enrollment in an advanced career training program 
may be extended in order to complete the program for a period not to 
exceed one year.



           Subpart E_Program Activities and Center Operations



Sec. 670.500  What services must Job Corps centers provide?

    (a) Job Corps centers must provide:
    (1) Academic, vocational, employability and social skills training;

[[Page 850]]

    (2) Work-based learning; and
    (3) Recreation, counseling and other residential support services.
    (b) In addition, centers must provide students with access to the 
core services described in WIA section 134(d)(2) and the intensive 
services described in WIA section 134(d)(3).



Sec. 670.505  What types of training must Job Corps centers provide?

    (a) Job Corps centers must provide basic education, vocational and 
social skills training. The Secretary provides curriculum standards and 
guidelines.
    (b) Each center must provide students with competency-based or 
individualized training in an occupational area that will best 
contribute to the students' opportunities for permanent long-term 
employment.
    (1) Specific vocational training programs offered by individual 
centers must be approved by the Regional Director according to policies 
issued by the Secretary.
    (2) Center industry councils described in Sec. 670.800 must review 
appropriate labor market information, identify employment opportunities 
in local areas where students will look for employment, determine the 
skills and education necessary for those jobs, and as appropriate, 
recommend changes in the center's vocational training program to the 
Secretary.
    (c) Each center must implement a system to evaluate and track the 
progress and achievements of each student at regular intervals.
    (d) Each center must develop a training plan that must be available 
for review and approval by the appropriate Regional Director.



Sec. 670.510  Are Job Corps center operators responsible for providing 
all vocational training?

    No, in order to facilitate students' entry into the workforce, the 
Secretary may contract with national business, union, or union-
affiliated organizations for vocational training programs at specific 
centers. Contractors providing such vocational training will be selected 
in accordance with the requirements of Sec. 670.310.



Sec. 670.515  What responsibilities do the center operators have in 
managing work-based learning?

    (a) The center operator must emphasize and implement work-based 
learning programs for students through center program activities, 
including vocational skills training, and through arrangements with 
employers. Work-based learning must be under actual working conditions 
and must be designed to enhance the employability, responsibility, and 
confidence of the students. Work-based learning usually occurs in tandem 
with students' vocational training.
    (b) The center operator must ensure that students are assigned only 
to workplaces that meet the safety standards described in Sec. 670.935.



Sec. 670.520  Are students permitted to hold jobs other than work-based 
learning opportunities?

    Yes, a center operator may authorize a student to participate in 
gainful leisure time employment, as long as the employment does not 
interfere with required scheduled activities.



Sec. 670.525  What residential support services must Job Corps center 
operators provide?

    Job Corps center operators must provide the following services 
according to procedures issued by the Secretary:
    (a) A quality living and learning environment that supports the 
overall training program and includes a safe, secure, clean and 
attractive physical and social environment, seven days a week, 24 hours 
a day;
    (b) An ongoing, structured counseling program for students;
    (c) Food service, which includes provision of nutritious meals for 
students;
    (d) Medical services, through provision or coordination of a 
wellness program which includes access to basic medical, dental and 
mental health services, as described in the Policy and Requirements 
Handbook, for all students from the date of enrollment until separation 
from the Job Corps program;
    (e) A recreation/avocational program;
    (f) A student leadership program and an elected student government; 
and

[[Page 851]]

    (g) A student welfare association for the benefit of all students 
that is funded by non-appropriated funds which come from sources such as 
snack bars, vending machines, disciplinary fines, and donations, and is 
run by an elected student government, with the help of a staff advisor.



Sec. 670.530  Are Job Corps centers required to maintain a student 
accountability system?

    Yes, each Job Corps center must establish and operate an effective 
system to account for and document the whereabouts, participation, and 
status of students during their Job Corps enrollment. The system must 
enable center staff to detect and respond to instances of unauthorized 
or unexplained student absence. Each center must operate its student 
accountability system according to requirements and procedures issued by 
the Secretary.



Sec. 670.535  Are Job Corps centers required to establish behavior 
management systems?

    (a) Yes, each Job Corps center must establish and maintain its own 
student incentives system to encourage and reward students' 
accomplishments.
    (b) The Job Corps center must establish and maintain a behavior 
management system, according to procedures established by the Secretary. 
The behavior management system must include a zero tolerance policy for 
violence and drugs policy as described in Sec. 670.540.



Sec. 670.540  What is Job Corps' zero tolerance policy?

    (a) Each Job Corps center must have a zero tolerance policy for:
    (1) An act of violence, as defined in procedures issued by the 
Secretary;
    (2) Use, sale, or possession of a controlled substance, as defined 
at 21 U.S.C. 802;
    (3) Abuse of alcohol;
    (4) Possession of unauthorized goods; or
    (5) Other illegal or disruptive activity.
    (b) As part of this policy, all students must be tested for drugs as 
a condition of enrollment. (WIA sec. 145(a)(1) and 152(b)(2).)
    (c) According to procedures issued by the Secretary, the policy must 
specify the offenses that result in the automatic separation of a 
student from the Job Corps. The center director is responsible for 
determining when there is a violation of a specified offense.



Sec. 670.545  How does Job Corps ensure that students receive due 
process in disciplinary actions?

    The center operator must ensure that all students receive due 
process in disciplinary proceedings according to procedures developed by 
the Secretary. These procedures must include, at a minimum, center fact-
finding and behavior review boards, a code of sanctions under which the 
penalty of separation from Job Corps might be imposed, and procedures 
for students to appeal a center's decision to discharge them 
involuntarily from Job Corps to a regional appeal board.



Sec. 670.550  What responsibilities do Job Corps centers have in 
assisting students with child care needs?

    (a) Job Corps centers are responsible for coordinating with outreach 
and admissions agencies to assist students with making arrangements for 
child care for their dependent children.
    (b) Job Corps centers may operate on center child development 
programs with the approval of the Secretary.



Sec. 670.555  What are the center's responsibilities in ensuring that 
students' religious rights are respected?

    (a) Centers must ensure that a student has the right to worship or 
not worship as he or she chooses.
    (b) Students who believe their religious rights have been violated 
may file complaints under the procedures set forth in 29 CFR part 37.
    (c) Requirements related to equal treatment of religious 
organizations in Department of Labor programs, and to protection of 
religious liberty of Department of Labor social service providers and 
beneficiaries, are found at subpart D of 29 CFR part 2. See also 
Sec. Sec. 667.266 and 667.275 of 20 CFR; 29 CFR part 37.

[65 FR 49450, Aug. 11, 2000, as amended at 69 FR 41891, July 12, 2004]

[[Page 852]]



Sec. 670.560  Is Job Corps authorized to conduct pilot and demonstration 
projects?

    (a) Yes, the Secretary may undertake experimental, research and 
demonstration projects related to the Job Corps program according to WIA 
section 156.
    (b) The Secretary establishes policies and procedures for conducting 
such projects.
    (c) All studies and evaluations produced or developed with Federal 
funds become the property of the United States.



                        Subpart F_Student Support



Sec. 670.600  Is government-paid transportation provided to Job Corps 
students?

    Yes, Job Corps provides for the transportation of students between 
their homes and centers as described in policies and procedures issued 
by the Secretary.



Sec. 670.610  When are students authorized to take leaves of absence 
from their Job Corps centers?

    Job Corps students are eligible for annual leaves, emergency leaves 
and other types of leaves of absence from their assigned centers 
according to criteria and requirements issued by the Secretary. Center 
operators and other service providers must account for student leave 
according to procedures issued by the Secretary.



Sec. 670.620  Are Job Corps students eligible to receive cash allowances 
and performance bonuses?

    (a) Yes, according to criteria and rates established by the 
Secretary, Job Corps students receive cash living allowances, 
performance bonuses, and allotments for care of dependents, and 
graduates receive post-separation readjustment allowances and placement 
bonuses. The Secretary may provide former students with post-separation 
allowances.
    (b) In the event of a student's death, any amount due under this 
section is paid according to the provisions of 5 U.S.C. 5582 governing 
issues such as designation of beneficiary, order of precedence and 
related matters.



Sec. 670.630  Are student allowances subject to Federal Payroll Taxes?

    Yes, Job Corps student allowances are subject to Federal payroll tax 
withholding and social security taxes. Job Corps students are considered 
to be Federal employees for purposes of Federal payroll taxes. (WIA sec. 
157(a)(2).)



Sec. 670.640  Are students provided with clothing?

    Yes, Job Corps students are provided cash clothing allowances and/or 
articles of clothing, including safety clothing, when needed for their 
participation in Job Corps and their successful entry into the work 
force. Center operators and other service providers must issue clothing 
and clothing assistance to students according to rates, criteria, and 
procedures issued by the Secretary.



               Subpart G_Placement and Continued Services



Sec. 670.700  What are Job Corps centers' responsibilities in preparing 
students for placement services?

    Job Corps centers must test and counsel students to assess their 
competencies and capabilities and determine their readiness for 
placement.



Sec. 670.710  What placement services are provided for Job Corps 
students?

    (a) Job Corps placement services focus on placing program graduates 
in:
    (1) Full-time jobs that are related to their vocational training and 
that pay wages that allow for self-sufficiency;
    (2) Higher education; or
    (3) Advanced training programs, including apprenticeship programs.
    (b) Placement service levels for students may vary, depending on 
whether the student is a graduate or a former student.
    (c) Procedures relating to placement service levels are issued by 
the Secretary.



Sec. 670.720  Who provides placement services?

    The One-Stop system must be used to the fullest extent possible in 
placing graduates and former students in jobs. Job Corps placement 
agencies provide placement services under a contract or

[[Page 853]]

other agreement with the Department of Labor.



Sec. 670.730  What are the responsibilities of placement agencies?

    (a) Placement agencies are responsible for:
    (1) Contacting graduates;
    (2) Assisting them in improving skills in resume preparation, 
interviewing techniques and job search strategies;
    (3) Identifying job leads or educational and training opportunities 
through coordination with local Workforce Investment Boards, One-Stop 
operators and partners, employers, unions and industry organizations; 
and
    (4) Placing graduates in jobs, apprenticeship, the Armed Forces, or 
higher education or training, or referring former students for 
additional services in their local communities as appropriate. Placement 
services may be provided for former students according to procedures 
issued by the Secretary.
    (b) Placement agencies must record and submit all Job Corps 
placement information according to procedures established by the 
Secretary.



Sec. 670.740  Must continued services be provided for graduates?

    Yes, according to procedures issued by the Secretary, continued 
services, including transition support and workplace counseling, must be 
provided to program graduates for 12 months after graduation.



Sec. 670.750  Who may provide continued services for graduates?

    Placement agencies, centers or other agencies, including One-Stop 
partners, may provide post-program services under a contract or other 
agreement with the Regional Director. In selecting a provider for 
continued services, priority is given to One-Stop partners. (WIA sec. 
148(d)).



Sec. 670.760  How will Job Corps coordinate with other agencies?

    (a) The Secretary issues guidelines for the National Office, 
Regional Offices, Job Corps centers and operational support providers to 
use in developing and maintaining cooperative relationships with other 
agencies and institutions, including law enforcement, educational 
institutions, communities, and other employment and training programs 
and agencies.
    (b) The Secretary develops polices and requirements to ensure 
linkages with the One-Stop delivery system to the greatest extent 
practicable, as well as with other Federal, State, and local programs, 
and youth programs funded under this title. These linkages enhance 
services to youth who face multiple barriers to employment and must 
include, where appropriate:
    (1) Referrals of applicants and students;
    (2) Participant assessment;
    (3) Pre-employment and work maturity skills training;
    (4) Work-based learning;
    (5) Job search, occupational, and basic skills training; and
    (6) Provision of continued services for graduates.



                     Subpart H_Community Connections



Sec. 670.800  How do Job Corps centers and service providers become 
involved in their local communities?

    (a) Job Corps representatives serve on Youth Councils operating 
under applicable Local Boards wherever geographically feasible.
    (b) Each Job Corps center must have a Business and Community Liaison 
designated by the director of the center to establish relationships with 
local and distant employers, applicable One-Stop centers and local 
boards, and members of the community according to procedures established 
by the Secretary. (WIA sec. 153(a).)
    (c) Each Job Corps center must implement an active community 
relations program.
    (d) Each Job Corps center must establish an industry advisory 
council, according to procedures established by the Secretary. The 
industry advisory council must include:
    (1) Distant and local employers;
    (2) Representatives of labor organizations (where present) and 
employees; and
    (3) Job Corps students and graduates.
    (e) A majority of the council members must be local and distant 
business

[[Page 854]]

owners, chief executives or chief operating officers of nongovernmental 
employers or other private sector employers, who have substantial 
management, hiring or policy responsibility and who represent businesses 
with employment opportunities in the local area and the areas to which 
students will return.
    (f) The council must work with Local Boards and must review labor 
market information to provide recommendations to the Secretary regarding 
the center's vocational training offerings, including identification of 
emerging occupations suitable for training. (WIA sec.154(b)(1).)
    (g) Job Corps is identified as a required One-Stop partner. Wherever 
practicable, Job Corps centers and operational support contractors must 
establish cooperative relationships and partnerships with One-Stop 
centers and other One-Stop partners, Local Boards, and other programs 
for youth.



           Subpart I_Administrative and Management Provisions



Sec. 670.900  Are damages caused by students eligible for reimbursement 
under the Tort Claims Act?

    Yes, Students are considered Federal employees for purposes of the 
Tort Claims Act (28 U.S.C. 2671 et seq.). If a student is alleged to be 
involved in the damage, loss, or destruction of the property of others, 
or in causing personal injury to or the death of another individual(s), 
the injured person(s), or their agent may file a claim with the Center 
Director. The Director must investigate all of the facts, including 
accident and medical reports, and interview witnesses, and submit the 
claim for a decision to the Regional Solicitor's Office. All tort claims 
for $25,000 or more must be sent to the Associate Solicitor for Employee 
Benefits, U.S. Department of Labor, 200 Constitution Avenue, N.W., 
Washington, DC 20210.



Sec. 670.905  Are damages that occur to private parties at Job Corps 
Centers eligible for reimbursement under the Tort Claims Act?

    (a) Whenever there is loss or damage to persons or property, which 
is believed to have resulted from operation of a Job Corps center and to 
be a proper charge against the Federal Government, the owner(s) of the 
property, the injured person(s), or their agent may submit a claim for 
the damage to the Regional Solicitor. Claims must be filed no later than 
two years from the date of loss or damage. The Regional Solicitor will 
determine if the claim is valid under the Tort Claims Act. If the 
Regional Solicitor determines a claim is not valid under the Tort Claims 
Act, the Regional Solicitor must consider the facts and may still settle 
the claim, in an amount not to exceed $1,500.
    (b) The Job Corps may pay students for valid claims under the Tort 
Claims Act for lost, damaged, or stolen property, up to a maximum amount 
set by the Secretary, when the loss is not due to the negligence of the 
student. Students must file claims no later than six months from the 
date of loss. Students are compensated for losses including those that 
result from a natural disaster or those that occur when the student's 
property is in the protective custody of the Job Corps, such as when the 
student is AWOL. Claims must be filed with Job Corps regional offices. 
The regional office will promptly notify the student and the center of 
its determination.



Sec. 670.910  Are students entitled to Federal Employees Compensation 
Benefits (FECB)?

    (a) Job Corps students are considered Federal employees for purposes 
of the Federal Employees Compensation Act (FECA). (WIA sec. 157(a)(3).)
    (b) Job Corps students may be entitled to Federal Employees 
Compensation Benefits as specified in WIA section 157.
    (c) Job Corps students must meet the same eligibility tests for FECA 
payments that apply to all other Federal employees. One of those tests 
is that the injury must occur ``in the performance of duty.'' This test 
is described in Sec. 670.915.



Sec. 670.915  When are residential students considered to be in the 
performance of duty?

    Residential students will be considered to be in the ``performance 
of duty'' at all times while:

[[Page 855]]

    (a) They are on center under the supervision and control of Job 
Corps officials;
    (b) They are engaged in any authorized Job Corps activity;
    (c) They are in authorized travel status; or
    (d) They are engaged in any authorized offsite activity.



Sec. 670.920  When are non-resident students considered to be in the 
performance of duty?

    Non-resident students are considered ``in performance of duty'' as 
Federal employees when they are engaged in any authorized Job Corps 
activity, from the time they arrive at any scheduled center activity 
until they leave the activity. The standard rules governing coverage of 
Federal employees during travel to and from work apply. These rules are 
described in guidance issued by the Secretary.



Sec. 670.925  When are students considered to be not in the performance 
of duty?

    Students are considered to be not in the performance of duty when:
    (a) They are AWOL;
    (b) They are at home, whether on pass or on leave
    (c) They are engaged in an unauthorized offsite activity; or
    (d) They are injured or ill due to their own:
    (1) Willful misconduct;
    (2) Intent to cause injury or death to oneself or another; or
    (3) Intoxication or illegal use of drugs.



Sec. 670.930  How are FECA benefits computed?

    (a) FECA benefits for disability or death are computed using the 
entrance salary for a grade GS-2 as the student's monthly pay.
    (b) The provisions of 5 U.S.C. 8113 (a) and (b), relating to 
compensation for work injuries apply to students. Compensation for 
disability will not begin to accrue until the day following the date on 
which the injured student completes his or her Job Corps separation.
    (c) Whenever a student is injured, develops an occupationally 
related illness, or dies while in the performance of duty, the 
procedures in the DOL Employment Standards Administration regulations, 
at 20 CFR Chapter 1, must be followed. A thorough investigation of the 
circumstances and a medical evaluation must be completed and required 
forms must be timely filed by the center operator with the DOL Office of 
Workers' Compensation Programs.



Sec. 670.935  How are students protected from unsafe or unhealthy 
situations?

    (a) The Secretary establishes procedures to ensure that students are 
not required or permitted to work, be trained, reside in, or receive 
services in buildings or surroundings or under conditions that are 
unsanitary or hazardous. Whenever students are employed or in training 
for jobs, they must be assigned only to jobs or training which observe 
applicable Federal, State and local health and safety standards.
    (b) The Secretary develops procedures to ensure compliance with 
applicable DOL Occupational Safety and Health Administration 
regulations.



Sec. 670.940  What are the requirements for criminal law enforcement 
jurisdiction on center property?

    (a) All Job Corps property which would otherwise be under exclusive 
Federal legislative jurisdiction is considered under concurrent 
jurisdiction with the appropriate State and locality with respect to 
criminal law enforcement. Concurrent jurisdiction extends to all 
portions of the property, including housing and recreational facilities, 
in addition to the portions of the property used for education and 
training activities.
    (b) Centers located on property under concurrent Federal-State 
jurisdiction must establish agreements with Federal, State and local law 
enforcement agencies to enforce criminal laws.
    (c) The Secretary develops procedures to ensure that any searches of 
a student's person, personal area or belongings for unauthorized goods 
follow applicable right-to-privacy laws.

[[Page 856]]



Sec. 670.945  Are Job Corps operators and service providers authorized 
to pay State or local taxes on gross receipts?

    (a) A private for-profit or a nonprofit Job Corps service provider 
is not liable, directly or indirectly, to any State or subdivision for 
any gross receipts taxes, business privilege taxes measured by gross 
receipts, or any similar taxes in connection with any payments made to 
or by such service provider for operating a center or other Job Corps 
program or activity. The service provider is not liable to any State or 
subdivision to collect or pay any sales, excise, use, or similar tax 
imposed upon the sale to or use by such deliverer of any property, 
service, or other item in connection with the operation of a center or 
other Job Corps program or activity. (WIA sec. 158(d).)
    (b) If a State or local authority compels a center operator or other 
service provider to pay such taxes, the center operator or service 
provider may pay the taxes with Federal funds, but must document and 
report the State or local requirement according to procedures issued by 
the Secretary.



Sec. 670.950  What are the financial management responsibilities of 
Job Corps center operators and other service providers?

    (a) Center operators and other service providers must manage Job 
Corps funds using financial management information systems that meet the 
specifications and requirements of the Secretary.
    (b) These financial management systems must:
    (1) Provide accurate, complete, and current disclosures of the costs 
of their Job Corps activities;
    (2) Ensure that expenditures of funds are necessary, reasonable, 
allocable and allowable in accordance with applicable cost principles;
    (3) Use account structures specified by the Secretary;
    (4) Ensure the ability to comply with cost reporting requirements 
and procedures issued by the Secretary; and
    (5) Maintain sufficient cost data for effective planning, 
monitoring, and evaluation of program activities and for determining the 
allowability of reported costs.



Sec. 670.955  Are center operators and service providers subject to 
Federal audits?

    (a) Yes, Center operators and service providers are subject to 
Federal audits.
    (b) The Secretary arranges for the survey, audit, or evaluation of 
each Job Corps center and service provider at least once every three 
years, by Federal auditors or independent public accountants. The 
Secretary may arrange for more frequent audits. (WIA sec. 159(b)(2).)
    (c) Center operators and other service providers are responsible for 
giving full cooperation and access to books, documents, papers and 
records to duly appointed Federal auditors and evaluators. (WIA sec. 
159(b)(1).)



Sec. 670.960  What are the procedures for management of student records?

    The Secretary issues guidelines for a system for maintaining records 
for each student during enrollment and for disposition of such records 
after separation.



Sec. 670.965  What procedures apply to disclosure of information about 
Job Corps students and program activities?

    (a) The Secretary develops procedures to respond to requests for 
information or records or other necessary disclosures pertaining to 
students.
    (b) DOL disclosure of Job Corps information must be handled 
according to the Freedom of Information Act and according to DOL 
regulations at 29 CFR part 70.
    (c) Job Corps contractors are not ``agencies'' for Freedom of 
Information Act purposes. Therefore, their records are not subject to 
disclosure under the Freedom of Information Act or 29 CFR part 70.
    (d) The regulations at 29 CFR part 71 apply to a system of records 
covered by the Privacy Act of 1974 maintained by DOL or to a similar 
system maintained by a contractor, such as a screening agency, contract 
center operator, or placement agency on behalf of the Job Corps.

[[Page 857]]



Sec. 670.970  What are the reporting requirements for center operators 
and operational support service providers?

    The Secretary establishes procedures to ensure the timely and 
complete reporting of necessary financial and program information to 
maintain accountability. Center operators and operational support 
service providers are responsible for the accuracy and integrity of all 
reports and data they provide.



Sec. 670.975  How is the performance of the Job Corps program assessed?

    The performance of the Job Corps program as a whole, and the 
performance of individual program components, is assessed on an ongoing 
basis, in accordance with the regulations in this part and procedures 
and standards, including a national performance measurement system, 
issued by the Secretary. Annual performance assessments are done for 
each center operator and other service providers, including screening 
and admissions and placement agencies.



Sec. 670.980  What are the indicators of performance for Job Corps?

    (a) At a minimum, the performance assessment system established 
under Sec. 670.975 will include expected levels of performance 
established for each of the indicators of performance contained in WIA 
section 159(c). These are:
    (1) The number of graduates and rate of graduation, analyzed by the 
type of vocational training received and the training provider;
    (2) The job placement rate of graduates into unsubsidized 
employment, analyzed by the vocational training received, whether or not 
the job placement is related to the training received, the vocational 
training provider, and whether the placement is made by a local or 
national service provider;
    (3) The average placement wage of graduates in training-related and 
non-training related unsubsidized jobs;
    (4) The average wage of graduates on the first day of employment and 
at 6 and 12 months following placement, analyzed by the type of 
vocational training received;
    (5) The number of and retention rate of graduates in unsubsidized 
employment after 6 and 12 months;
    (6) The number of graduates who entered unsubsidized employment for 
32 hours per week or more, for 20 to 32 hours per week, and for less 
than 20 hours per week.
    (7) The number of graduates placed in higher education or advanced 
training; and
    (8) The number of graduates who attained job readiness and 
employment skills.
    (b) The Secretary issues the expected levels of performance for each 
indicator. To the extent practicable, the levels of performance will be 
continuous and consistent from year to year.



Sec. 670.985  What happens if a center operator, screening and 
admissions contractor or other service provider fails to meet the 
expected levels of performance?

    (a) The Secretary takes appropriate action to address performance 
issues through a specific performance plan.
    (b) The plan may include the following actions:
    (1) Providing technical assistance to a Job Corps center operator or 
support service provider, including a screening and admissions 
contractor;
    (2) Changing the management staff of a center;
    (3) Changing the vocational training offered at a center;
    (4) Contracting out or recompeting the contract for a center or 
operational support service provider;
    (5) Reducing the capacity of a Job Corps center;
    (6) Relocating a Job Corps center; or
    (7) Closing a Job Corps center. (WIA sec. 159 (f).)



Sec. 670.990  What procedures are available to resolve complaints and 
disputes?

    (a) Each Job Corps center operator and service provider must 
establish and maintain a grievance procedure for filing complaints and 
resolving disputes from applicants, students and/or other interested 
parties about its programs and activities. A hearing on each complaint 
or dispute must be conducted within 30 days of the filing of the 
complaint or dispute. A decision on the

[[Page 858]]

complaint must be made by the center operator or service provider, as 
appropriate, within 60 days after the filing of the complaint, and a 
copy of the decision must be immediately served, by first-class mail, on 
the complainant and any other party to the complaint. Except for 
complaints under Sec. 670.470 or complaints alleging fraud or other 
criminal activity, complaints may be filed within one year of the 
occurrence that led to the complaint.
    (b) The procedure established under paragraph (a) of this section 
must include procedures to process complaints alleging violations of WIA 
section 188, consistent with DOL nondiscrimination regulations 
implementing WIA section 188 at 29 CFR part 37 and Sec. 670.995.



Sec. 670.991  How does Job Corps ensure that complaints or disputes 
are resolved in a timely fashion?

    (a) If a complaint is not resolved by the center operator or service 
provider in the time frames described in Sec. 670.990, the person 
making the complaint may request that the Regional Director determine 
whether reasonable cause exists to believe that the Act or regulations 
for this part of the Act have been violated. The request must be filed 
with the Regional Director within 60 days from the date that the center 
operator or service provider should have issued the decision.
    (b) Following the receipt of a request for review under paragraph 
(a) of this section, the Regional Director must determine within 60 days 
whether there has been a violation of the Act or the WIA regulations. If 
the Regional Director determines that there has been a violation of the 
Act or Regulations, (s)he may direct the operator or service provider to 
remedy the violation or direct the service provider to issue a decision 
to resolve the dispute according to the service provider's grievance 
procedures. If the service provider does not comply with the Regional 
Director's decision within 30 days, the Regional Director may impose a 
sanction on the center operator or service provider for violating the 
Act or regulations, and/or for failing to issue a decision. Decisions 
imposing sanctions upon a center operator or service provider may be 
appealed to the DOL Office of Administrative Law Judges under 20 CFR 
667.800 or 667.840.



Sec. 670.992  How does Job Corps ensure that centers or other service 
providers comply with the Act and the WIA regulations?

    (a) If DOL receives a complaint or has reason to believe that a 
center or other service provider is failing to comply with the 
requirements of the Act or regulations, the Regional Director must 
investigate the allegation and determine within 90 days after receiving 
the complaint or otherwise learning of the alleged violation, whether 
such allegation or complaint is true.
    (b) As a result of such a determination, the Regional Director may:
    (1) Direct the center operator or service provider to handle a 
complaint through the grievance procedures established under Sec. 
670.990; or
    (2) Investigate and determine whether the center operator or service 
provider is in compliance with the Act and regulations. If the Regional 
Director determines that the center or service provider is not in 
compliance with the Act or regulations, the Regional Director may take 
action to resolve the complaint under Sec. 670.991(b), or will report 
the incident to the DOL Office of the Inspector General, as described in 
20 CFR 667.630.



Sec. 670.993  How does Job Corps ensure that contract disputes will 
be resolved?

    A dispute between DOL and a Job Corps contractor will be handled 
according to the Contract Disputes Act and applicable regulations.



Sec. 670.994  How does Job Corps resolve disputes between DOL and other 
Federal Agencies?

    Disputes between DOL and a Federal Agency operating a center will be 
handled according to the interagency agreement with the agency which is 
operating the center.



Sec. 670.995  What DOL equal opportunity and nondiscrimination 
regulations apply to Job Corps?

    Nondiscrimination requirements, procedures, complaint processing, 
and compliance reviews are governed by, as

[[Page 859]]

applicable, provisions of the following Department of Labor regulations:
    (a) Regulations implementing WIA section 188 for programs receiving 
Federal financial assistance under WIA found at 29 CFR part 37.
    (b) 29 CFR part 33 for programs conducted by the Department of 
Labor; and
    (c) 41 CFR Chapter 60 for entities that have a Federal government 
contract.



PART 671_NATIONAL EMERGENCY GRANTS FOR DISLOCATED WORKERS--Table of 
Contents




Sec.
671.100 What is the purpose of national emergency grants under WIA 
          section 173?
671.105 What funds are available for national emergency grants?
671.110 What are major economic dislocations or other events which may 
          qualify for a national emergency grant?
671.120 Who is eligible to apply for national emergency grants?
671.125 What are the requirements for submitting applications for 
          national emergency grants?
671.130 When should applications for national emergency grants be 
          submitted to the Department?
671.140 What are the allowable activities and what dislocated workers 
          may be served under national emergency grants?
671.150 How do statutory and workflex waivers apply to national 
          emergency grants?
671.160 What rapid response activities are required before a national 
          emergency grant application is submitted?
671.170 What are the program and administrative requirements that apply 
          to national emergency grants?

    Authority: Sec. 506(c), Pub. L. 105-220; 20 U.S.C. 9276(c).

    Source: 65 FR 49460, Aug. 11, 2000, unless otherwise noted.



Sec. 671.100  What is the purpose of national emergency grants under 
WIA section 173?

    The purpose of national emergency grants is to provide supplemental 
dislocated worker funds to States, Local Boards and other eligible 
entities in order to respond to the needs of dislocated workers and 
communities affected by major economic dislocations and other worker 
dislocation events which cannot be met with formula allotments.



Sec. 671.105  What funds are available for national emergency grants?

    We use funds reserved under WIA section 132(a)(2)(A) to provide 
financial assistance to eligible applicant for grants under WIA section 
173.



Sec. 671.110  What are major economic dislocations or other events 
which may qualify for a national emergency grant?

    These include:
    (a) Plant closures;
    (b) Mass layoffs affecting 50 or more workers at a single site of 
employment;
    (c) Closures and realignments of military installations;
    (d) Multiple layoffs in a single local community that have 
significantly increased the total number of unemployed individuals in a 
community;
    (e) Emergencies or natural disasters, as defined in paragraphs (1) 
and (2) respectively, of section 102 of the Robert T. Stafford Disaster 
Relief and Emergency Assistance Act (42 U.S.C. 5122(1) and (2)) which 
have been declared eligible for public assistance by the Federal 
Emergency Management Agency (FEMA); and
    (f) Other events, as determined by the Secretary.



Sec. 671.120  Who is eligible to apply for national emergency grants?

    (a) For projects within a State. A State, a Local Board or another 
entity determined to be appropriate by the Governor of the State in 
which the project is located may apply for a national emergency grant. 
Also, Indian tribes, tribal organizations, Alaska Native entities, 
Indian-controlled organizations serving Indians, or Native Hawaiian 
organizations which are recipients of funds under section 166 of the Act 
(Indian and Native American Programs) may apply for a national emergency 
grant.
    (b) For inter-State projects. Consortia of States and/or Local 
Boards may apply. Other private entities which can demonstrate, in the 
application for assistance, that they possess unique capabilities to 
effectively respond to the circumstances of the major economic

[[Page 860]]

dislocation(s) covered in the application may apply.
    (c) Other entities. The Secretary may consider applications from 
other entities, to ensure that appropriate assistance is provided in 
response to major economic dislocations.



Sec. 671.125  What are the requirements for submitting applications 
for national emergency grants?

    We publish instructions for submitting applications for National 
Emergency Grants in the Federal Register. The instructions specify 
application procedures, selection criteria and the approval process.



Sec. 671.130  When should applications for national emergency grants 
be submitted to the Department?

    (a) Applications for national emergency grants to respond to mass 
layoffs and plant closures may be submitted to the Department as soon 
as:
    (1) The State receives a notification of a mass layoff or a closure 
as a result of a WARN notice, a general announcement or some other means 
determined by the Governor to be sufficient to respond;
    (2) Rapid response assistance has been initiated; and
    (3) A determination has been made, in collaboration with the 
applicable Local Board(s) and chief elected official(s), that State and 
local formula dislocated worker funds are inadequate to provide the 
level of services needed by the workers being laid off.
    (b) An eligible entity may apply for a national emergency grant at 
any time during the year.
    (c) Applications for national emergency grants to respond to a 
declared emergency or natural disaster as described in Sec. 671.110(e), 
cannot be considered until FEMA has declared that the affected area is 
eligible for disaster-related public assistance.



Sec. 671.140  What are the allowable activities and what dislocated 
workers may be served under national emergency grants?

    (a) National emergency grants may provide adjustment assistance for 
eligible dislocated workers, described at WIA section 173(c)(2) or 
(d)(2).
    (b) Adjustment assistance includes the core, intensive, and training 
services authorized at WIA sections 134(d) and 173. The scope of 
services to be provided in a particular project are negotiated between 
the Department and the grantee, taking into account the needs of the 
target population covered by the grant. The scope of services may be 
changed through grant modifications, if necessary.
    (c) National emergency grants may provide for supportive services to 
help workers who require such assistance to participate in activities 
provided for in the grant. Needs-related payments, in support of other 
employment and training assistance, may be available for the purpose of 
enabling dislocated workers who are eligible for such payments to 
participate in programs of training services. Generally, the terms of a 
grant must be consistent with Local Board policies governing such 
financial assistance with formula funds (including the payment levels 
and duration of payments). However, the terms of the grant agreement may 
diverge from established Local Board policies, in the following 
instances:
    (1) If unemployed dislocated workers served by the project are not 
able to meet the 13 or 8 weeks enrollment in training requirement at WIA 
section 134(e)(3)(B) because of the lack of formula or emergency grant 
funds in the State or local area at the time of dislocation, such 
individuals may be eligible for needs-related payments if they are 
enrolled in training by the end of the 6th week following the date of 
the emergency grant award;
    (2) Trade-impacted workers who are not eligible for trade 
readjustment assistance under NAFTA-TAA may be eligible for needs-
related payments under a national emergency grant if the worker is 
enrolled in training by the end of the 16th week following layoff; and
    (3) Under other circumstances as specified in the national emergency 
grant application guidelines.
    (d) A national emergency grant to respond to a declared emergency or 
natural disaster, as defined at Sec. 671.110(e), may provide short-term 
disaster relief employment for:

[[Page 861]]

    (1) Individuals who are temporarily or permanently laid off as a 
consequence of the disaster;
    (2) Dislocated workers; and
    (3) Long-term unemployed individuals.
    (e) Temporary employment assistance is authorized on disaster 
projects that provide food, clothing, shelter and other humanitarian 
assistance for disaster victims; and on projects that perform 
demolition, cleaning, repair, renovation and reconstruction of damaged 
and destroyed structures, facilities and lands located within the 
disaster area. For such temporary jobs, each eligible worker is limited 
to no more than six months of employment for each single disaster. The 
amounts, duration and other limitations on wages will be negotiated for 
each grant.
    (f) Additional requirements that apply to national emergency grants, 
including natural disaster grants, are contained in the application 
instructions.



Sec. 671.150  How do statutory and workflex waivers apply to national 
emergency grants?

    (a) State and Local Board grantees may request and we may approve 
the application of existing general statutory or regulatory waivers and 
workflex waivers to a National Emergency Grant award. The application 
for grant funds must describe any statutory waivers which the applicant 
wishes to apply to the project that the State and/or Local Board, as 
applicable, have been granted under its waiver plan, or that the State 
has approved for implementation in the applicable local area under 
workflex waivers. We will consider such requests as part of the overall 
application review and decision process.
    (b) If, during the operation of the project, the grantee wishes to 
apply a waiver not identified in the application, the grantee must 
request a modification which includes the provision to be waived, the 
operational barrier to be removed and the effect upon the outcome of the 
project.



Sec. 671.160  What rapid response activities are required before a 
national emergency grant application is submitted?

    (a) Rapid response is a required Statewide activity under WIA 
section 134(a)(2)(A), to be carried out by the State or its designee in 
collaboration with the Local Board(s) and chief elected official(s). 
Under 20 CFR 665.310, rapid response encompasses, among other 
activities, an assessment of the general needs of the affected workers 
and the resources available to them.
    (b) In accordance with national emergency grant application 
guidelines published by the Department, each applicant must demonstrate 
that:
    (1) The rapid response activities described in 20 CFR 665.310 have 
been initiated and carried out, or are in the process of being carried 
out;
    (2) State and local funds, including those made available under 
section 132(b)(2)(B) of the Act, have been used to initiate appropriate 
services to the eligible workers;
    (3) There is a need for additional funds to effectively respond to 
the assistance needs of the workers and, in the case of declared 
emergencies and natural disasters, the community; and
    (4) The application has been developed by or in conjunction with the 
Local Board(s) and chief elected official(s) of the local area(s) in 
which the proposed project is to operate.



Sec. 671.170  What are the program and administrative requirements 
that apply to national emergency grants?

    (a) In general, the program requirements and administrative 
standards set forth at 20 CFR parts 663 and 667 will apply.
    (b) Exceptions include:
    (1) Funds provided in response to a natural disaster may be used for 
temporary job creation in areas declared eligible for public assistance 
by FEMA, subject to the limitations of WIA section 173(d), this part and 
the application guidelines issued by the Department;
    (2) National emergency grant funds may be used to pay an appropriate 
level of administrative costs based on the design and complexity of the

[[Page 862]]

project. We will negotiate administration costs with the applicant as 
part of the application review and grant award and modification 
processes;
    (3) The period of availability for expenditure of funds under a 
national emergency grant is specified in the grant agreement.
    (4) We may establish supplemental reporting, monitoring and 
oversight requirements for national emergency grants. The requirements 
will be identified in the grant application instructions or the grant 
document.
    (5) We may negotiate and fund projects under terms other than those 
specified in this part where it can be clearly demonstrated that such 
adjustments will achieve a greater positive benefit for the workers and/
or communities being assisted.

[[Page 863]]



  CHAPTER VI--EMPLOYMENT STANDARDS ADMINISTRATION, DEPARTMENT OF LABOR




  --------------------------------------------------------------------

 SUBCHAPTER A--LONGSHOREMEN'S AND HARBOR WORKERS' COMPENSATION ACT AND 
                            RELATED STATUTES
Part                                                                Page
701             General; administering agency; definitions 
                    and use of terms........................         865
702             Administration and procedure................         868
703             Insurance regulations.......................         915
704             Special provisions for LHWCA extensions.....         930
   SUBCHAPTER B--FEDERAL COAL MINE HEALTH AND SAFETY ACT OF 1969, AS 
                                 AMENDED
718             Standards for determining coal miner's total 
                    disability or death due to 
                    pneumoconiosis..........................         934
722             Criteria for determining whether State 
                    workmen's compensation laws provide 
                    adequate coverage for pneumoconiosis and 
                    listing of approved State laws..........         961
725             Claims for benefits under Part C of Title IV 
                    of the Federal Mine Safety and Health 
                    Act, as amended.........................         962
726             Black lung benefits; requirements for coal 
                    mine operator's insurance...............        1038

[[Page 865]]



  SUBCHAPTER A_LONGSHOREMEN'S AND HARBOR WORKERS' COMPENSATION ACT AND 
                            RELATED STATUTES





PART 701_GENERAL; ADMINISTERING AGENCY; DEFINITIONS AND USE OF TERMS
--Table of Contents




                        Rules in this Subchapter

Sec.
701.101 Scope of this subchapter and subchapter B.
701.102 Organization of this subchapter.

                Office of Workmen's Compensation Programs

701.201 Office of Workers' Compensation Programs.
701.202 [Reserved]
701.203 [Reserved]

                      Terms Used in this Subchapter

701.301 Definitions and use of terms.

               Coverage Under State Compensation Programs

701.401 Coverage under State compensation programs.

    Authority: 5 U.S.C. 301 and 8171 et seq.; 33 U.S.C. 939; 36 D.C. 
Code 501 et seq.; 42 U.S.C. 1651 et seq.; 43 U.S.C. 1331; Reorganization 
Plan No. 6 of 1950, 15 FR 3174, 3 CFR, 1949-1953 Comp., p. 1004, 64 
Stat. 1263.

    Source: 38 FR 26860, Sept. 26, 1973, unless otherwise noted.

                        Rules in This Subchapter



Sec. 701.101  Scope of this subchapter and subchapter B.

    (a) This subchapter contains the regulations governing the 
administration of the Longshore and Harbor Workers' Compensation Act, as 
amended (LHWCA), 33 U.S.C. 901 et seq., except activities, pursuant to 
33 U.S.C. 941, assigned to the Assistant Secretary of Labor for 
Occupational Safety and Health. It also contains the regulations 
governing the administration of the direct extensions of the LHWCA: the 
Defense Base Act (DBA), 42 U.S.C. 1651 et seq.; the Outer Continental 
Shelf Lands Act (OCSLA), 43 U.S.C. 1331; and the Nonappropriated Fund 
Instrumentalities Act (NFIA), 5 U.S.C. 8171 et seq.
    (b) The regulations in this subchapter also apply to claims filed 
under the District of Columbia Workmen's Compensation Act (DCCA), 36 
D.C. Code 501 et seq. That law applies to all claims for injuries or 
deaths based on employment events that occurred prior to July 26, 1982, 
the effective date of the District of Columbia Workers' Compensation 
Act, as amended (D.C. Code 32-1501 et seq.).
    (c) The regulations governing the administration of the Black Lung 
Benefits Program are in subchapter B of this chapter.

[70 FR 43232, July 26, 2005]



Sec. 701.102  Organization of this subchapter.

    Part 701 provides a general description of the regulations in this 
subchapter; sets forth information regarding the persons and agencies 
within the Department of Labor authorized by the Secretary of Labor to 
administer the Longshore and Harbor Workers' Compensation Act, its 
extensions and the regulations in this subchapter; and defines and 
clarifies use of specific terms in the several parts of this subchapter. 
Part 702 of this subchapter contains the general administrative 
regulations governing claims filed under the LHWCA. Part 703 of this 
subchapter contains the regulations governing insurance carrier 
authorizations, insurance carrier security deposits, self-insurer 
authorizations, and certificates of compliance with the insurance 
regulations, as required by sections 32 and 37 of the LHWCA (33 U.S.C. 
932, 937). Because the extensions of the LHWCA (see Sec. 701.101) 
incorporate by reference nearly all the provisions of the LHWCA, the 
regulations in parts 701, 702 and 703 also apply to the administration 
of the extensions (DBA, DCCA, OCSLA, and NFIA), unless otherwise noted. 
Part 704 of this subchapter contains the exceptions to the general 
applicability of parts 702 and 703 for the DBA, the DCCA, the OCSLA, and 
the NFIA.

[70 FR 43232, July 26, 2005]

[[Page 866]]

                Office of Workers' Compensation Programs



Sec. 701.201  Office of Workers' Compensation Programs.

    The Office of Workers' Compensation Programs (OWCP) is responsible 
for administering the LHWCA and its extensions (see 20 CFR 1.2(e)). The 
regulations in subchapter A of chapter I of this title (20 CFR part 1) 
describe OWCP's establishment within the Employment Standards 
Administration, the functions assigned to it by the Assistant Secretary 
of Labor for Employment Standards, and how those functions were 
performed before OWCP's establishment.

[70 FR 43232, July 26, 2005]



Sec. 701.202  [Reserved]



Sec. 701.203  [Reserved]

                      Terms Used in This Subchapter



Sec. 701.301  Definitions and use of terms.

    (a) As used in this subchapter, except where the context clearly 
indicates otherwise:
    (1) Act or LHWCA means the Longshore and Harbor Workers' 
Compensation Act, as amended (33 U.S.C. 901 et seq.), and includes the 
provisions of any statutory extension of such Act (see Sec. 701.101(a) 
and (b)) pursuant to which compensation on account of an injury is 
sought.
    (2) Secretary means the Secretary of Labor, United States Department 
of Labor, or his authorized representative.
    (3) Employment Standards Administration means the Employment 
Standards Administration in the United States Department of Labor, 
headed by the Assistant Secretary of Labor for Employment Standards.
    (4) [Reserved]
    (5) Office of Workers' Compensation Programs or OWCP or the Office 
means the Office of Workers' Compensation Programs within the Employment 
Standards Administration, referred to in Sec. 701.201 and described 
more fully in part 1 of this title. The term Office of Workmen's 
Compensation Programs shall have the same meaning as Office of Workers' 
Compensation Programs (see 20 CFR 1.6(b)).
    (6) Director means the Director of OWCP, or his or her authorized 
representative.
    (7) District Director means a person appointed as provided in 
sections 39 and 40 of the LHWCA or his or her designee, authorized to 
perform functions with respect to the processing and determination of 
claims for compensation under the LHWCA and its extensions as provided 
therein and under this subchapter. The term District Director is 
substituted for the term Deputy Commissioner used in the statute. This 
substitution is for administrative purposes only and in no way affects 
the power or authority of the position as established in the statute.
    (8) Administrative Law Judge means a person appointed as provided in 
5 U.S.C. 3105 and subpart B of 5 CFR part 930, who is qualified to 
preside at hearings under 5 U.S.C. 557 and is empowered by the Secretary 
to conduct formal hearings whenever necessary in respect of any claim 
for compensation arising under the LHWCA and its extensions.
    (9) Chief Administrative Law Judge means the Chief Judge of the 
Office of Administrative Law Judges, United States Department of Labor, 
whose office is at the location set forth in 29 CFR 18.3(a).
    (10) Board or Benefits Review Board means the Benefits Review Board 
established by section 21 of the LHWCA (33 U.S.C. 921) as amended and 
constituted and functioning pursuant to the provisions of chapter VII of 
this title and Secretary of Labor's Order No. 38-72 (38 FR 90), whose 
office is at the location set forth in 20 CFR 802.204.
    (11) Department means the United States Department of Labor.
    (12)(i) Employee means any person engaged in maritime employment, 
including:
    (A) Any longshore worker or other person engaged in longshoring 
operations;
    (B) Any harbor worker, including a ship repairer, shipbuilder and 
shipbreaker; and

[[Page 867]]

    (C) Any other individual to whom an injury may be the basis for a 
compensation claim under the LHWCA as amended, or any of its extensions;
    (ii) The term does not include:
    (A) A master or member of a crew of any vessel; or
    (B) Any person engaged by a master to load or unload or repair any 
small vessel under eighteen tons net.
    (iii) Nor does this term include the following individuals (whether 
or not the injury occurs over the navigable waters of the United States) 
where it is first determined that they are covered by a state workers' 
compensation act:
    (A) Individuals employed exclusively to perform office clerical, 
secretarial, security, or data processing work (but not longshore cargo 
checkers and cargo clerks);
    (B) Individuals employed by a club (meaning a social or fraternal 
organization whether profit or nonprofit), camp, recreational operation 
(meaning any recreational activity, including but not limited to scuba 
diving, commercial rafting, canoeing or boating activities operated for 
pleasure of owners, members of a club or organization, or renting, 
leasing or chartering equipment to another for the latter's pleasure), 
restaurant, museum or retail outlet;
    (C) Individuals employed by a marina, provided they are not engaged 
in its construction, replacement or expansion, except for routine 
maintenance such as cleaning, painting, trash removal, housekeeping and 
small repairs;
    (D) Employees of suppliers, vendors and transporters temporarily 
doing business on the premises of a covered employer, provided they are 
not performing work normally performed by employees of the covered 
employer;
    (E) Aquaculture workers, meaning those employed by commercial 
enterprises involved in the controlled cultivation and harvest of 
aquatic plants and animals, including the cleaning, processing or 
canning of fish and fish products, the cultivation and harvesting of 
shellfish, and the controlled growing and harvesting of other aquatic 
species; or
    (F) Individuals engaged in the building, repairing or dismantling of 
recreational vessels under 65 feet in length. For purposes of this 
subparagraph recreational vessel means a vessel manufactured or operated 
primarily for pleasure, or rented, leased or chartered by another for 
the latter's pleasure, and length means a straight line measurement of 
the overall length from the foremost part of the vessel to the aftmost 
part of the vessel, measured parallel to the center line. The 
measurement shall be from end to end over the deck, excluding sheer.
    (13) Employer includes any employer who may be obligated as an 
employer under the provisions of the LHWCA as amended or any of its 
extensions to pay and secure compensation as provided therein.
    (14) Carrier means an insurance carrier or self-insurer meeting the 
requirements of section 32 of the LHWCA as amended and of this 
subchapter with respect to authorization to provide insurance fulfilling 
the obligation of an employer to secure the payment of compensation due 
his employees under the LHWCA as amended or a statutory extension 
thereof.
    (15) The terms wages, national average weekly wage, injury, 
disability, death, and compensation shall have the meanings set forth in 
section 2 of the LHWCA.
    (16) Claimant includes any person claiming compensation or benefits 
under the provisions of the LHWCA as amended or a statutory extension 
thereof on account of the injury or death of an employee.
    (b) The definitions contained in paragraph (a) of this section shall 
not be considered to derogate from any definitions or delimitations of 
terms in the LHWCA as amended or any of its statutory extensions in any 
case where such statutory definitions or delimitations would be 
applicable.
    (c) As used in this subchapter, the singular includes plural and the 
masculine includes the feminine.

[38 FR 26860, Sept. 26, 1973, as amended at 42 FR 3848, Jan. 21, 1977; 
50 FR 391, Jan. 3, 1985; 51 FR 4281, Feb. 3, 1986; 55 FR 28606, July 12, 
1990; 70 FR 43233, July 26, 2005]

[[Page 868]]

               Coverage Under State Compensation Programs



Sec. 701.401  Coverage under state compensation programs.

    (a) Exclusions from the definition of ``employee'' under Sec. 
701.301(a)(12), and the employees of small vessel facilities otherwise 
covered which are exempted from coverage under Sec. 702.171, are 
dependent upon coverage under a state workers' compensation program. For 
these purposes, a worker or dependent must first claim compensation 
under the appropriate state program and receive a final decision on the 
merits of the claim, denying coverage, before any claim may be filed 
under this Act.
    (b) The intent of the Act is that state law will apply to those 
categories of employees if it otherwise would. Accordingly, not 
withstanding any contrary state law, claims by any of the categories of 
workers excluded under Sec. 701.301 or 702.171 must be made to and 
processed by the state and a merit decision denying coverage on 
jurisdictional grounds must be made before coverage or benefits under 
the Act may be sought.
    (c) The time for filing notice and claim under the Act (see subpart 
B of part 702) does not begin to run for purposes of claims by those 
workers or dependents described in Sec. 701.301(a)(12) and Sec. 
702.171, until a final adverse decision denying coverage under a state 
compensation act is received.

[50 FR 392, Jan. 3, 1985]



PART 702_ADMINISTRATION AND PROCEDURE--Table of Contents




                      Subpart A_General Provisions

                             Administration

Sec.
702.101 [Reserved]
702.102 Establishment and modification of compensation districts, 
          establishment of suboffices and jurisdictional areas.
702.103 Effect of establishment of suboffices and jurisdictional areas.
702.104 Transfer of individual case file.
702.105 Use of the title District Director in place of Deputy 
          Commissioner.

                                 Records

702.111 Employer's records.
702.112 Records of the OWCP.
702.113 Inspection of records of the OWCP.
702.114 Copying of records of OWCP.

                                  Forms

702.121 Forms.

                             Representation

702.131 Representation of parties in interest.
702.132 Fees for services.
702.133 Unapproved fees; solicitation of claimants; penalties.
702.134 Payment of claimant's attorney's fees in disputed claims.
702.135 Payment of claimant's witness fees and mileage in disputed 
          claims.

                Information and Assistance for Claimants

702.136 Requests for information and assistance.

                Commutation of Payments and Special Fund

702.142 Commutation of payments; aliens not residents or about to become 
          nonresidents.
702.143 Establishment of special fund.
702.144 Purpose of the special fund.
702.145 Use of the special fund.
702.146 Source of the special fund.
702.147 Enforcement of special fund provisions.
702.148 Insurance carriers' and self-insured employers' responsibility.

                          Liens on Compensation

702.161 Liens against assets of insurance carriers and employers.
702.162 Liens on compensation authorized under special circumstances.

                       Certification of Exemption

702.171 Certification of exemption, general.
702.172 Certification; definitions.
702.173 Exemptions; requirements, limitations.
702.174 Exemptions; necessary information.
702.175 Effect of work on excluded vessels; reinstatement of 
          certification.

                       Subpart B_Claims Procedures

                           Employer's Reports

702.201 Reports from employers of employee's injury or death.
702.202 Employer's report; form and contents.
702.203 Employer's report; how given.
702.204 Employer's report; penalty for failure to furnish and or 
          falsifying.
702.205 Employer's report; effect of failure to report upon time 
          limitations.

[[Page 869]]

                                 Notice

702.211 Notice of employee's injury or death; designation of responsible 
          official.
702.212 Notice; when given; when given for certain occupational 
          diseases.
702.213 Notice; by whom given.
702.214 Notice; form and content.
702.215 Notice; how given.
702.216 Effect of failure to give notice.
702.217 Penalty for false statement, misrepresentation.

                                 Claims

702.221 Claims for compensation; time limitations.
702.222 Claims; exceptions to time limitations.
702.223 Claims; time limitations; time to object.
702.224 Claims, notification of employer of filing by employee.
702.225 Withdrawal of a claim.

                         Noncontroverted Claims

702.231 Noncontroverted claims; payment of compensation without an 
          award.
702.232 Payments without an award; when; how paid.
702.233 Penalty for failure to pay without an award.
702.234 Report by employer of commencement and suspension of payments.
702.235 Report by employer of final payment of compensation.
702.236 Penalty for failure to report termination of payments.

                           Agreed Settlements

702.241 Definitions and supplementary information.
702.242 Information necessary for a complete settlement application.
702.243 Settlement application; how submitted, how approved, how 
          disapproved, criteria.

                           Controverted Claims

702.251 Employer's controversion of the right to compensation.
702.252 Action by district director upon receipt of notice of 
          controversion.

                            Contested Claims

702.261 Claimant's contest of actions taken by employer or carrier with 
          respect to the claim.
702.262 Action by district director upon receipt of notice of contest.

                             Discrimination

702.271 Discrimination; against employees who bring proceedings, 
          prohibition and penalty.
702.272 Informal recommendation by district director.
702.273 Adjudication by Office of the Chief Administrative Law Judge.
702.274 Employer's refusal to pay penalty.

                               Third Party

702.281 Third party action.

                           Report of Earnings

702.285 Report of earnings.
702.286 Report of earnings; forfeiture of compensation.

                    Subpart C_Adjudication Procedures

                                 General

702.301 Scope of this subpart.

                      Action By District Directors

702.311 Handling of claims matters by district directors; informal 
          conferences.
702.312 Informal conferences; called by and held before whom.
702.313 Informal conferences; how called; when called.
702.314 Informal conferences; how conducted; where held.
702.315 Conclusion of conference agreement on all matters with respect 
          to the claim.
702.316 Conclusion of conference; no agreement on all matters with 
          respect to the claim.
702.317 Preparation and transfer of the case for hearing.
702.318 The record; what constitutes; nontransferability of the 
          administrative file.
702.319 Obtaining documents from the administrative file for 
          reintroduction at formal hearings.

                              Special Fund

702.321 Procedures for determining applicability of section 8(f) of the 
          Act.

                             Formal Hearings

702.331 Formal hearings; procedure initiating.
702.332 Formal hearings; how conducted.
702.333 Formal hearings; parties.
702.334 Formal hearings; representatives of parties.
702.335 Formal hearings; notice.
702.336 Formal hearings; new issues.
702.337 Formal hearings; change of time or place for hearings; 
          postponements.
702.338 Formal hearings; general procedures.
702.339 Formal hearings; evidence.
702.340 Formal hearings; witnesses.
702.341 Formal hearings; depositions; interrogatories.
702.342 Formal hearings; witness fees.
702.343 Formal hearings; oral argument and written allegations.
702.344 Formal hearings; record of hearing.
702.345 Formal hearings; consolidated issues; consolidated cases.

[[Page 870]]

702.346 Formal hearings; waiver of right to appear.
702.347 Formal hearings; termination.
702.348 Formal hearings; preparation of final decision and order; 
          content.
702.349 Formal hearings; filing and mailing of compensation orders; 
          disposition of transcripts.
702.350 Finality of compensation orders.
702.351 Withdrawal of controversion of issues set for formal hearing; 
          effect.

     Interlocutory Matters, Supplementary Orders, and Modifications

702.371 Interlocutory matters.
702.372 Supplementary compensation orders.
702.373 Modification of awards.

                                 Appeals

702.391 Appeals; where.
702.392 Appeals; what may be appealed.
702.393 Appeals; time limitations.
702.394 Appeals; procedure.

                 Subpart D_Medical Care and Supervision

702.401 Medical care defined.
702.402 Employer's duty to furnish; duration.
702.403 Employee's right to choose physician; limitations.
702.404 Physician defined.
702.405 Selection of physician; emergencies.
702.406 Change of physicians; non-emergencies.
702.407 Supervision of medical care.
702.408 Evaluation of medical questions; impartial specialists.
702.409 Evaluation of medical questions; results disputed.
702.410 Duties of employees with respect to special examinations.
702.411 Special examinations; nature of impartially of specialists.
702.412 Special examinations; costs chargeable to employer or carrier.
702.413 Fees for medical services; prevailing community charges.
702.414 Fees for medical services; unresolved disputes on prevailing 
          charges.
702.415 Fees for medical services; unresolved disputes on charges; 
          procedure.
702.416 Fees for medical services; disputes; hearings; necessary 
          parties.
702.417 Fees for medical services; disputes; effect of adverse decision.

                           Medical Procedures

702.418 Procedure for requesting medical care; employee's duty to notify 
          employer.
702.419 Action by employer upon acquiring knowledge or being given 
          notice of injury.
702.420 Issuance of authorization; binding effect upon insurance 
          carrier.
702.421 Effect of failure to obtain initial authorization.
702.422 Effect of failure to report on medical care after initial 
          authorization.

  Debarment of Physicians and Other Providers of Medical Services and 
                  Suppliers and Claims Representatives

702.431 Grounds for debarment.
702.432 Debarment process.
702.433 Requests for hearing.
702.434 Judicial review.
702.435 Effects of debarment.
702.436 Reinstatement.

                           Hearing Loss Claims

702.441 Claims for loss of hearing.

                   Subpart E_Vocational Rehabilitation

702.501 Vocational rehabilitation; objective.
702.502 Vocational rehabilitation; action by district directors.
702.503 Vocational rehabilitation; action by adviser.
702.504 Vocational rehabilitation; referrals to State Employment 
          Agencies.
702.505 Vocational rehabilitation; referrals to other public and private 
          agencies.
702.506 Vocational rehabilitation; training.
702.507 Vocational rehabilitation; maintenance allowance.
702.508 Vocational rehabilitation; confidentiality of information.

  Subpart F_Occupational Disease Which Does Not Immediately Result in 
                           Death or Disability

702.601 Definitions.
702.602 Notice and claims.
702.603 Determining the payrate for compensating occupational disease 
          claims which become manifest after retirement.
702.604 Determining the amount of compensation for occupational disease 
          claims which become manifest after retirement.

    Authority: 5 U.S.C. 301, 8171 et seq., Reorganization Plan No. 6 of 
1950, 15 FR 3174, 3 CFR 1949-1953, Comp., p. 1004, 64 Stat. 1263; 28 
U.S.C. 2461, 33 U.S.C. 930, 36 D.C. Code 501 et seq., 42 U.S.C. 1651 et 
seq., 43 U.S.C. 1331; Secretary's Order 5-96, 62 FR 107.

    Source: 38 FR 26861, Sept. 26, 1973, unless otherwise noted.

[[Page 871]]



                      Subpart A_General Provisions

                             Administration



Sec. 702.101  [Reserved]



Sec. 702.102  Establishment and modification of compensation districts, 
establishment of suboffices and jurisdictional areas.

    (a) The Director has, pursuant to section 39(b) of the Longshore and 
Harbor Workers' Compensation Act, 33 U.S.C. 939(b), established 
compensation districts as required for improved administration or as 
otherwise determined by the Director (see 51 FR 4282, Feb. 3, 1986). The 
boundaries of the compensation districts may be modified at any time, 
and the Director shall notify all interested parties directly by mail of 
the modifications.
    (b) As administrative exigencies from time to time may require, the 
Director may, by administrative order, establish special areas outside 
the continental United States, Alaska, and Hawaii, or change or modify 
any areas so established, notwithstanding their inclusion within an 
established compensation district. Such areas shall be designated 
``jurisdictional areas.'' The Director shall also designate which of his 
district directors shall be in charge thereof.
    (c) To further aid in the efficient administration of the OWCP, the 
Director may from time to time establish suboffices within compensation 
districts or jurisdictional areas, and shall designate a person to be in 
charge thereof.

[38 FR 26861, Sept. 26, 1973, as amended at 60 FR 51348, Oct. 2, 1995]



Sec. 702.103  Effect of establishment of suboffices and jurisdictional 
areas.

    Whenever the Director establishes a suboffice or jurisdictional 
area, those reports, records, or other documents with respect to 
processing of claims that are required to be filed with the district 
director of the compensation district in which the injury or death 
occurred, may instead be required to be filed at the suboffice, or 
office established for the jurisdictional area.



Sec. 702.104  Transfer of individual case file.

    (a) At any time after a claim is filed, the district director having 
jurisdiction thereof may, with the prior or subsequent approval of the 
Director, transfer such case to the district director in another 
compensation district for the purpose of making an investigation, 
ordering medical examinations, or taking such other action as may be 
necessary or appropriate to further develop the claim. If, after filing 
a claim, the claimant moves to another compensation district, the 
district director may, upon request by the claimant or the employer and 
with the approval of the Director, transfer the case to such other 
compensation district.
    (b) The district director making the transfer may by letter or 
memorandum to the district director to whom the case is transferred give 
advice, comments, suggestions, or directions if appropriate to the 
particular case. The transfer of cases shall be by registered or 
certified mail. All interested parties shall be advised of the transfer.

[42 FR 45301, Sept. 9, 1977]



Sec. 702.105  Use of the title District Director in place of Deputy 
Commissioner.

    Wherever the statute refers to Deputy Commissioner, these 
regulations have substituted the term District Director. The 
substitution is purely an administrative one, and in no way effects the 
authority of or the powers granted and responsibilities imposed by the 
statute on that position.

[55 FR 28606, July 12, 1990]

                                 Records



Sec. 702.111  Employer's records.

    Every employer shall maintain adequate records of injury sustained 
by employees while in his employ, and which shall also contain 
information of disease, other impairments or disabilities, or death 
relating to said injury. Such records shall be available for inspection 
by the OWCP or by any State authority. Records required by this section 
shall be retained by the employer for three years following the

[[Page 872]]

date of injury; this applies to records for lost-time and no-lost-time 
injuries.

(Approved by the Office of Management and Budget under control number 
1215-0160)

(Pub. L. No. 96-511, 94 Stat. 2812 (44 U.S.C. 3501 et seq.))

[38 FR 26861, Sept. 26, 1973, as amended at 47 FR 145, Jan. 5, 1982; 50 
FR 393, Jan. 3, 1985]



Sec. 702.112  Records of the OWCP.

    All reports, records, or other documents filed with the OWCP with 
respect to claims are the records of the OWCP. The Director shall be the 
official custodian of those records maintained by the OWCP at its 
national office, and the district director shall be the official 
custodian of those records maintained at the headquarters office in each 
compensation district.



Sec. 702.113  Inspection of records of the OWCP.

    Any party in interest may be permitted to examine the record of the 
case in which he is interested. The official custodian of the record 
sought to be inspected shall permit or deny inspection in accordance 
with the Department of Labor's regulations pertaining thereto (see 29 
CFR part 70). The original record in any such case shall not be removed 
from the office of the custodian for such inspection. The custodian may, 
in his discretion, deny inspection of any record or part thereof which 
is of a character specified in 5 U.S.C. 552(b) if in his opinion such 
inspection may result in damage, harm, or harassment to the beneficiary 
or to any other person. For special provisions concerning release of 
information regarding injured employees undergoing vocational 
rehabilitation, see Sec. 702.508.



Sec. 702.114  Copying of records of OWCP.

    Any party in interest may request copies of records he has been 
permitted to inspect. Such requests shall be addressed to the official 
custodian of the records sought to be copied. The official custodian 
shall provide the requested copies under the terms and conditions 
specified in the Department of Labor's regulations relating thereto (see 
29 CFR part 70).

                                  Forms



Sec. 702.121  Forms.

    The Director may from time to time prescribe, and require the use 
of, forms for the reporting of any information required to be reported 
by the regulations in this subchapter, or by the Act or any of its 
extensions.

                             Representation



Sec. 702.131  Representation of parties in interest.

    (a) Claimants, employers and insurance carriers may be represented 
in any proceeding under the Act by an attorney or other person 
previously authorized in writing by such claimant, employer or carrier 
to so act.
    (b) The Secretary shall annually publish a list of individuals who 
are disqualified from representing claimants under the Act. Individuals 
on this list are not authorized to represent claimants under the Act 
subject to the provision of section 31(b)(2)(C) of the Act, 33 U.S.C. 
931(b)(2)(C), and they shall not have their representation fee approved 
as provided in section 28(e), 33 U.S.C. 928(e).
    (c) Individuals shall be included on the list mentioned in (b) if 
the Secretary determines, after proceedings under Sec. Sec. 702.432(b) 
through 702.434, that such individual:
    (1) Has been convicted (without regard to pending appeal) of any 
crime in connection with the representation of a claimant under this Act 
or any workers' compensation statute;
    (2) Has engaged in fraud in connection with the presentation of a 
claim under this or any workers' compensation statute, including, but 
not limited to, knowingly making false representations, concealing or 
attempting to conceal material facts with respect to a claim, or 
soliciting or otherwise procuring false testimony;
    (3) Has been prohibited from representing claimants before any other 
workers' compensation agency for reasons of professional misconduct 
which are similar in nature to those which would be grounds for 
disqualification under this section; or
    (4) Has accepted fees for representing claimants under the Act which 
were

[[Page 873]]

not approved, or which were in excess of the amount approved pursuant to 
section 28 of the Act, 33 U.S.C. 928.

[38 FR 26861, Sept. 26, 1973, as amended at 50 FR 394, Jan. 3, 1985]



Sec. 702.132  Fees for services.

    (a) Any person seeking a fee for services performed on behalf of a 
claimant with respect to claims filed under the Act shall make 
application therefor to the district director, administrative law judge, 
Board, or court, as the case may be, before whom the services were 
performed (See 33 U.S.C. 928(c)). The application shall be filed and 
serviced upon the other parties within the time limits specified by such 
district director, administrative law judge, Board, or court. The 
application shall be supported by a complete statement of the extent and 
character of the necessary work done, described with particularity as to 
the professional status (e.g., attorney, paralegal, law clerk, or other 
person assisting an attorney) of each person performing such work, the 
normal billing rate for each such person, and the hours devoted by each 
such person to each category of work. Any fee approved shall be 
reasonably commensurate with the necessary work done and shall take into 
account the quality of the representation, the complexity of the legal 
issues involved, and the amount of benefits awarded, and when the fee is 
to be assessed against the claimant, shall also take into account the 
financial circumstances of the claimant. No contract pertaining to the 
amount of a fee shall be recognized.
    (b) No fee shall be approved for a representative whose name appears 
on the Secretary's list of disqualified representatives under Sec. 
702.131(b).
    (c) Where fees are included in a settlement agreement submitted 
under Sec. 702.241, et seq. approval of that agreement shall be deemed 
approval of attorney fees for purposes of this subsection for work 
performed before the Administrative Law Judge or district director 
approving the settlement.

[50 FR 394, Jan. 3, 1985]



Sec. 702.133  Unapproved fees; solicitation of claimants; penalties.

    Under the provisions of section 28(e) of the Act, 33 U.S.C. 928(e), 
any person who receives any fees, other consideration, or any gratuity 
on account of services rendered as a representative of a claimant, 
unless such consideration or gratuity is approved under Sec. 702.132, 
or who makes it a business to solicit employment for an attorney, or for 
himself in respect of any claim under the Act, shall upon conviction 
thereof, for each offense be punished by a fine of not more than $1,000 
or by imprisonment for not more than 1 year, or by both fine and 
imprisonment.



Sec. 702.134  Payment of claimant's attorney's fees in disputed claims.

    (a) If the employer or carrier declines to pay any compensation on 
or before the 30th day after receiving written notice from the district 
director of a claim for compensation having been filed, on the ground 
that there is no liability for compensation within the provisions of 
this Act, and the person seeking benefits shall thereafter have utilized 
the services of an attorney at law in the successful prosecution of his 
claim, there shall be awarded, in addition to the award of compensation, 
in a compensation order, a reasonable attorney's fee against the 
employer or carrier in an amount approved by the person, administrative 
body or court before whom the service was performed, which shall be paid 
directly by the employer or carrier to the attorney for the claimant in 
a lump sum after the compensation order becomes final (Act, section 
28(a)).
    (b) If the employer or carrier pays or tenders payment of 
compensation without an award pursuant to Sec. 702.231 and section 14 
(a) and (b) of this Act, and thereafter a controversy develops over the 
amount of additional compensation, if any, to which the employee may be 
entitled, the district director, administrative law judge, or Board 
shall set the matter for an informal conference and following such 
conference the district director, administrative law judge, or Board 
shall recommend in writing a disposition of the controversy. If the 
employer or carrier

[[Page 874]]

refuses to accept such written recommendation, within 14 days after its 
receipt by them, they shall pay or tender to the employee in writing the 
additional compensation, if any, to which they believe the employee is 
entitled. If the employee refuses to accept such payment or tender of 
compensation, and thereafter utilizes the services of an attorney at 
law, and if the compensation thereafter awarded is greater than the 
amount paid or tendered by the employer or carrier, a reasonable 
attorney's fee based solely upon the difference between the amount 
awarded and the amount tendered or paid shall be awarded in addition to 
the amount of compensation. The foregoing sentence shall not apply if 
the controversy relates to degree or length of disability, and if the 
employer or carrier offers to submit the case for evaluation by 
physicians employed or selected by the district director, as authorized 
by section 7(e) of the Act and Sec. 702.408, and offers to tender an 
amount of compensation based upon the degree or length of disability 
found by the independent medical report at such time as an evaluation of 
disability can be made. If the claimant is successful in review 
proceedings before the Board or court in any such case an award may be 
made in favor of the claimant and against the employer or carrier for a 
reasonable attorney's fee for claimant's counsel in accord with the 
above provisions. In all other cases any claim for legal services shall 
not be assessed against the employer or carrier (see Act, section 
28(b)).



Sec. 702.135  Payment of claimant's witness fees and mileage in disputed 
claims.

    In cases where an attorney's fee is awarded against an employer or 
carrier there may be further assessed against such employer or carrier 
as costs, fees and mileage for necessary witnesses attending the hearing 
at the instance of claimant. Both the necessity for the witness and the 
reasonableness of the fees of expert witnesses must be approved by the 
hearing officer, the Board, or the court, as the case may be. The 
amounts awarded against an employer or carrier as attorney's fees, 
costs, fees and mileage for witnesses shall not in any respect affect or 
diminish the compensation payable under this Act (see Act, section 28 
(d)).

                Information and Assistance for Claimants



Sec. 702.136  Requests for information and assistance.

    (a) General assistance. The Director shall, upon request, provide 
persons covered by the Act with information and assistance relating to 
the Act's coverage and compensation and the procedures for obtaining 
such compensation including assistance in processing a claim.
    (b) Legal assistance to claimants. The Secretary may, upon request, 
provide a claimant with legal assistance in processing a claim under the 
Act. Such assistance may be made available to a claimant in the 
discretion of the Solicitor of Labor or his designee at any time prior 
to or during which the claim is being processed and shall be furnished 
without charge to the claimant. Legal representation of the claimant in 
adjudicatory proceedings may be furnished in cases in which the 
Secretary's interest in the case is not adverse to that of the claimant.
    (c) Other assistance. The district directors and their staff, as 
designees of the Director, shall promptly and fully comply with the 
request of a claimant receiving compensation for information about, and 
assistance in obtaining, medical, manpower, and vocational 
rehabilitation services (see also subparts D and E of this part).

                Commutation of Payments and Special Fund



Sec. 702.142  Commutation of payments; aliens not residents or about 
to become nonresidents.

    (a) Pursuant to section 9(g) of the Act, 33 U.S.C. 909(g), 
compensation paid to aliens not residents, or about to become 
nonresidents, of the United States or Canada shall be in the same amount 
as provided for residents except that dependents in any foreign country 
shall be limited to surviving spouse and child or children, or if there 
be no surviving spouse or child or children, to surviving father or 
mother

[[Page 875]]

whom the employee has supported, either wholly or in part, for the 
period of 1 year prior to the date of injury, and except that the 
Director, OWCP, may, at his option, or upon the application of the 
insurance carrier he shall, commute all future installments of 
compensation to be paid to such aliens by paying or causing to be paid 
to them one-half of the commuted amount of such future installments of 
compensation as determined by the Director.
    (b) Applications for commutation under this section shall be made in 
writing to the district director having jurisdiction, and forwarded by 
the district director to the Director, for final action.
    (c) Applications for commutations shall be made effective, if 
approved by the Director, on the date received by the district director, 
or on a later date if shown to be appropriate on the application.
    (d) Commutations shall not be made with respect to a person 
journeying abroad for a visit who has previously declared an intention 
to return and has stated a time for returning, nor shall any commutation 
be made except upon the basis of a compensation order fixing the right 
of the beneficiary to compensation.

[50 FR 394, Jan. 3, 1985]



Sec. 702.143  Establishment of special fund.

    Congress, by section 44 of the Act, 33 U.S.C. 944, established in 
the U.S. Treasury a special fund, to be administered by the Secretary. 
The Treasurer of the United States is the custodian of such fund, and 
all monies and securities in such fund shall be held in trust by the 
Treasurer and shall not be money or property of the United States. The 
Treasurer shall make disbursements from such funds only upon the order 
of the Director, OWCP, as delegatee of the Secretary. The Act requires 
that the Treasurer give bond, in an amount to be fixed and with 
securities to be approved by the Secretary of the Treasury and the 
Comptroller General of the United States, conditioned upon the faithful 
performance of his duty as custodian of such fund.



Sec. 702.144  Purpose of the special fund.

    This special fund was established to give effect to a congressional 
policy determination that, under certain circumstances, the employer of 
a particular employee should not be required to bear the entire burden 
of paying for the compensation benefits due that employee under the Act. 
Instead, a substantial portion of such burden should be borne by the 
industry generally. Section 702.145 describes this special circumstance 
under which the particular employer is relieved of some of his burden. 
Section 702.146 describes the manner and circumstances of the input into 
the fund.



Sec. 702.145  Use of the special fund.

    (a) Under section 10 of the Act. This section provides for initial 
and subsequent annual adjustments in compensation and continuing 
payments to beneficiaries in cases of permanent total disability or 
death which commenced or occurred prior to enactment of the 1972 
Amendments to this Act (Pub. L. 92-576, approved Oct. 27, 1972). At the 
discretion of the Director, such payments may be paid directly by him to 
eligible beneficiaries as the obligation accrues, one-half from the 
special fund and one-half from appropriations, or he may require 
insurance carriers or self-insured employers already making payments to 
such beneficiaries to pay such additional compensation as the amended 
Act requires. In the latter case such carriers and self-insurers shall 
be reimbursed by the Director for such additional amounts paid, in the 
proportion of one-half the amount from the special fund and one-half the 
amount from appropriations. To obtain reimbursement, the carriers and 
self-insurers shall submit claims for payments made by them during 
previous periods at intervals of not less than 6 months. A form has been 
prescribed for such purpose and shall be used. No administrative claims 
service expense incurred by the carrier or self-insurer shall be 
included in the claim and no such expense shall be allowed. The amounts 
reimbursed to such carrier or self-insurer shall be limited to amounts 
actually due and previously paid to beneficiaries.

[[Page 876]]

    (b) Under section 8(f) of the Act (Second Injuries). In any case in 
which an employee having an existing permanent partial disability 
suffers injury, the employer shall provide compensation for such 
disability as is found to be attributable to that injury based upon the 
average weekly wages of the employee at the time of injury. If, 
following an injury falling within the provisions of section 8(c)(1)-
(20), the employee with the pre-existing permanent partial disability 
becomes permanently and totally disabled after the second injury, but 
such total disability is found not to be due solely to his second 
injury, the employer (or carrier) shall be liable for compensation as 
provided by the provisions of section 8(c)(1)-(20) of the Act, 33 U.S.C. 
908(c)(1)-(20) or for 104 weeks, whichever is greater. However, if the 
injury is a loss of hearing covered by section 8(c)(13), 33 U.S.C. 
908(c)(13), the liability shall be the lesser of these periods. In all 
other cases of a second injury causing permanent total disability (or 
death), wherein it is found that such disability (or death) is not due 
solely to the second injury, and wherein the employee had a pre-existing 
permanent partial disability, the employer (or carrier) shall first pay 
compensation under section 8(b) or (e) of the Act, 33 U.S.C. 908(b) or 
(e), if any is payable thereunder, and shall then pay 104 weeks 
compensation for such total disability or death, and none otherwise. If 
the second injury results in permanent partial disability, and if such 
disability is compensable under section 8(c)(1)-(20) of the Act, 33 
U.S.C. 908(c)(1)-(20), but the disability so compensable did not result 
solely from such second injury, and the disability so compensable is 
materially and substantially greater than that which would have resulted 
from the second injury alone, then the employer (or carrier) shall only 
be liable for the amount of compensation provided for in section 
8(c)(1)-(20) that is attributable to such second injury, or for 104 
weeks, whichever is greater. However, if the injury is a loss of hearing 
covered by section 8(c)(13), 33 U.S.C. 908(c)(13), the liability shall 
be the lesser of these periods. In all other cases wherein the employee 
is permanently and partially disabled following a second injury, and 
wherein such disability is not attributable solely to that second 
injury, and wherein such disability is materially and substantially 
greater than that which would have resulted from the second injury 
alone, and wherein such disability following the second injury is not 
compensable under section 8(c)(1)-(20) of the Act, then the employer (or 
carrier) shall be liable for such compensation as may be appropriate 
under section 8(b) or (e) of the Act, 33 U.S.C. 908(b) or (e), if any, 
to be followed by a payment of compensation for 104 weeks, and none 
other. The term ``compensation'' herein means money benefits only, and 
does not include medical benefits. The procedure for determining the 
extent of the employer's (or carrier's) liability under this paragraph 
shall be as provided for in the adjudication of claims in subpart C of 
this part 702. Thereafter, upon cessation of payments which the employer 
is required to make under this paragraph, if any additional compensation 
is payable in the case, the district director shall forward such case to 
the Director for consideration of an award to the person or persons 
entitled thereto out of the special fund. Any such award from the 
special fund shall be by order of the Director or Acting Director.
    (c) Under sections 8(g) and 39(c)(2) of the Act. These sections, 33 
U.S.C. 908(g) and 939(c)(2), respectively, provide for vocational 
rehabilitation of disabled employees, and authorize, under appropriate 
circumstances, a maintenance allowance for the employee (not to exceed 
$25 a week) in additional to other compensation benefits otherwise 
payable for his injury-related disability. Awards under these sections 
are made from the special fund upon order of the Director or his 
designee. The district directors may be required to make investigations 
with respect to any case and forward to the Director their 
recommendations as to the propriety and need for such maintenance.
    (d) Under section 39(c)(2) of the Act. In addition to the 
maintenance allowance for the employee discussed in paragraph (c) of 
this section, the Director is further authorized to use the fund in such 
amounts as may be necessary to

[[Page 877]]

procure the vocational training services.
    (e) Under section 7(e) of the Act. This provision, 33 U.S.C. 907(e), 
authorizes payment by the Director from the special fund for special 
medical examinations, i.e., those obtained from impartial specialists to 
resolve disputes, when such special examinations are deemed necessary 
under that statutory provision. The Director has the discretionary 
power, however, to charge the cost of such examination to the insurance 
carrier or self-insured employer.
    (f) Under section 18(b) of the Act. This section, 33 U.S.C. 918(b), 
provides a source for payment of compensation benefits in cases where 
the employer is insolvent, or other circumstances preclude the payment 
of benefits due in any case. In such situations, the district director 
shall forward the case to the Director for consideration of an award 
from the special fund, together with evidence with respect to the 
employer's insolvency or other reasons for nonpayment of benefits due. 
Benefits, as herein used, means medical care or supplies within the 
meaning of section 7 of the Act, 33 U.S.C. 907, and subpart D of this 
part 702, as well as monetary benefits. Upon receipt of the case, the 
Director shall promptly determine whether an award from the special fund 
is appropriate and advisable in the case, having due regard for all 
other current commitments from the special fund. If such an award is 
made, the employer shall be liable for the repayment into the fund of 
the amounts paid therefrom, as provided in 33 U.S.C. 918(b).

(The information collection requirements contained in paragraph (a) were 
approved by the Office of Management and Budget under control number 
1215-0065. The information collection requirements contained in 
paragraph (b) were approved by the Office of Management and Budget under 
control number 1215-0073)

(Pub. L. No. 96-511)

[38 FR 26861, Sept. 26, 1973, as amended at 49 FR 18294, Apr. 30, 1984; 
51 FR 4282, Feb. 3, 1986]



Sec. 702.146  Source of the special fund.

    (a) All amounts collected as fines and penalties under the several 
provisions of the Act shall be paid into the special fund (33 U.S.C. 
44(c)(3)).
    (b) Whenever an employee dies under circumstances creating a 
liability on an employer to pay death benefits to the employee's 
beneficiaries, and whenever there are no such beneficiaries entitled to 
such payments, the employer shall pay $5,000 into the special fund (Act, 
section 44(c)(1)). In such cases, the compensation order entered in the 
case shall specifically find that there is such liability and that there 
are no beneficiaries entitled to death benefits, and shall order payment 
by the employer into the fund. Compensation orders shall be made and 
filed in accordance with the regulations in subpart C of this part 702, 
except that for this purpose the district director settling the case 
under Sec. 702.315 shall formalize the memorandum of conference in a 
compensation order, and shall file such order as provided for in Sec. 
702.349.
    (c) The Director annually shall assess an amount against insurance 
carriers and self-insured employers authorized under the Act and part 
703 of this subchapter to replenish the fund. That total amount to be 
charged all carriers and self-insurers to be assessed shall be based 
upon an estimate of the probable expenses of the fund during the 
calendar year. The assessment against each carrier and self-insurer 
shall be based upon (1) the ratio of the amount each paid during the 
prior calendar year for compensation in relation to the amount all such 
carriers of self-insurers paid during that period for compensation, and 
(2) the ratio of the amount of payments made by the special fund for all 
cases being paid under section 8(f) of the Act, 33 U.S.C. 908(f), during 
the preceding calendar year which are attributable to the carrier or 
self-insurer in relation to the total of such payments during such year 
attributable to all carriers and self-insurers. The resulting sum of the 
percentages from paragraphs (c) (1) and (2) of this section will be 
divided by two, and the resulting percentage multiplied by the probable 
expenses of the fund. The Director may, in his or her discretion, 
condition continuance or renewal of authorization under part 703 upon 
prompt payment of the assessment.

[[Page 878]]

However, no action suspending or revoking such authorization shall be 
taken without affording such carrier or self-insurer a hearing before 
the Director or his/her designee.

[38 FR 26861, Sept. 26, 1973, as amended at 50 FR 395, Jan. 3, 1985; 51 
FR 4282, Feb. 3, 1986]



Sec. 702.147  Enforcement of special fund provisions.

    (a) As provided in section 44(d)(1) of the Act, 33 U.S.C. 944(d)(1), 
for the purpose of making rules, regulations, and determinations under 
the special fund provisions in section 44 and for providing enforcement 
thereof, the Director may investigate and gather appropriate data from 
each carrier and self-insured employer, and may enter and inspect such 
places and records (and make such transcriptions of records), question 
such employees, and investigate such facts, conditions, practices, or 
other matters as he may deem necessary or appropriate. The Director may 
require the employer to have audits performed of claims activity 
relating to this Act. The Director may also require detailed reports of 
payments made under the Act, and of estimated future liabilities under 
the Act, from any or all carriers of self-insurers. The Director may 
require that such reports be certified and verified in whatever manner 
is considered appropriate.
    (b) Pursuant to section 44(d)(3) of the Act, 33 U.S.C. 944(d)(3), 
for the purpose of any hearing or investigation related to 
determinations or the enforcement of the provisions of section 44 with 
respect to the special fund, the provisions of 15 U.S.C. 49 and 50 as 
amended (the Federal Trade Commission Act provisions relating to 
attendance of witnesses and the production of books, papers, and 
documents) are made applicable to the jurisdiction, powers, and duties 
of the Director, OWCP, as the Secretary's delegatee.
    (c) Civil penalties and unpaid assessments shall be collected by 
civil suits brought by and in the name of the Secretary.

(Approved by the Office of Management and Budget under control number 
1215-0160)

[38 FR 26861, Sept. 26, 1973, as amended at 50 FR 395, Jan. 3, 1985]



Sec. 702.148  Insurance carriers' and self-insured employers' 
responsibilities.

    (a) Each carrier and self-insured employer shall make, keep, and 
preserve such records, and make such reports and provide such additional 
information as the Director prescribes or orders, which he considers 
necessary or appropriate to effectively carry out his responsibilities.
    (b) Consistent with their greater direct liability stemming from the 
amended assessment formula, employers and insurance carriers are given 
the authority to monitor their claims in the special fund as outlined in 
paragraph (c) of this section. For purposes of monitoring these claims, 
employers and insurance carriers remain parties in interest to the claim 
and are allowed access to all records relating to the claim. Similarly, 
employers and insurance carriers can initiate proceeding to modify an 
award of compensation after the special fund has assumed the liability 
to pay benefits. It is intended that employers and insurance carriers 
have neither a greater nor a lesser responsibility in this new role that 
they not have with regard to cases that remain their sole liability. 
(See Sec. 702.373(d).)
    (c) An employer or insurance carrier may conduct any reasonable 
investigation regarding cases placed into the special fund by the 
employer or insurance carrier. Such investigation may include, but shall 
not be limited to, a semi-annual request for earnings information 
pursuant to section 8(j) of the Act, 33 U.S.C. 908(j) (See Sec. 
702.285) periodic medical examinations, vocational rehabilitation 
evaluations, and requests for any additional information needed to 
effectively monitor such a case.

(Approved by the Office of Management and Budget under control number 
1215-0118)

(Pub. L. No. 96-511, 94 Stat. 2812 (44 U.S.C. 3501 et seq.))

[38 FR 26861, Sept. 26, 1973, as amended at 47 FR 145, Jan. 5, 1982; 50 
FR 395, Jan. 3, 1985]

[[Page 879]]

                          Liens on Compensation



Sec. 702.161  Liens against assets of insurance carriers and employers.

    Where payments have been made from the special fund pursuant to 
section 18(b) of the Act, 33 U.S.C. 918(b) and Sec. 704.145(f) the 
Secretary of Labor shall, for the benefit of the fund, be subrogated to 
all the rights of the person receiving such payments. The Secretary may 
institute proceedings under either section 18 or 21(d) of the Act, 33 
U.S.C. 918 or 921(d), or both, to recover the amount expended by the 
fund or so much as in the judgement of the Secretary is possible, or the 
Secretary may settle or compromise any such claim.

[50 FR 395, Jan. 3, 1985]



Sec. 702.162  Liens on compensation authorized under special 
circumstances.

    (a) Pursuant to section 17 of the Act, 33 U.S.C. 917, when a trust 
fund which complies with section 302(c) of the Labor-Management 
Relations Act of 1947, 29 U.S.C. 186(c) [LMRA], established pursuant to 
a collective bargaining agreement in effect between an employer and an 
employee entitled to compensation under this Act, has paid disability 
benefits to an employee which the employee is legally obligated to repay 
by reason of his entitlement to compensation under this Act, a lien 
shall be authorized on such compensation in favor of the trust fund for 
the amount of such payments.
    (b) (1) An application for such a lien shall be filed on behalf of 
the trust fund with the district director for the compensation district 
where the claim for compensation has been filed, 20 CFR 702.101. Such 
application shall include a certified statement by an authorized 
official of the trust fund that:
    (i) The trust fund is entitled to a lien in its favor by reason of 
its payment of disability payments to a claimant-employee (including his 
name therein);
    (ii) The trust fund was created pursuant to a collective bargaining 
agreement covering the claimant-employee;
    (iii) The trust fund complies with section 302(c) of the Labor-
Management Relations Act of 1947, 29 U.S.C. 186(c);
    (iv) The trust agreement contains a subrogation provision entitling 
the fund to reimbursement for disability benefits paid to the claimant-
employee who is entitled to compensation under the Longshoremen's Act;
    (2) The statement shall also state the amount paid to the named 
claimant-employee and whether such disability benefit payments are 
continuing to be paid.
    (3) If the claimant has signed a statement acknowledging receipt of 
disability benefits from the trust fund and/or a statement recognizing 
the trust fund's entitlement to a lien against compensation payments 
which may be received under the Longshoremen's and Harbor Worker's 
Compensation Act as a result of his present claim and for which the fund 
is providing disability payments, such statement(s) shall also be 
included with or attached to the application.
    (c) Upon receipt of this application, the district director shall, 
within a reasonable time, notify the claimant, the employer and/or its 
compensation insurance carrier that the request for a lien has been 
filed and each shall be provided with a copy of the application. If the 
claimant disputes the right of the trust fund to the lien or the amount 
stated, if any, he shall, within 30 days after receipt of the 
application or such other longer period as the district director may 
set, notify the district director and he shall be given an opportunity 
to challenge the right of the trust fund to, or the amount of, the 
asserted lien; notice to either the employer or its compensation 
insurance carrier shall constitute notice to both of them.
    (d) If the claim for compensation benefits is resolved without a 
formal hearing and if there is no dispute over the amount of the lien or 
the right of the trust fund to the lien, the district director may order 
and impose the lien and he shall notify all parties of the amount of the 
lien and manner in which it is to be paid.
    (e) If the claimant's claim for compensation cannot be resolved 
informally, the district director shall transfer the case to the Office 
of the Chief Administrative Law Judge for a formal hearing, pursuant to 
section 19(d) of

[[Page 880]]

the Act, 33 U.S.C. 919(d), and 20 CFR 702.317. The district director 
shall also submit therewith the application for the lien and all 
documents relating thereto.
    (f) If the administrative law judge issues a compensation order in 
favor of the claimant, such order shall establish a lien in favor of the 
trust fund if it is determined that the trust fund has satisfied all of 
the requirements of the Act and regulations.
    (g) If the claim for compensation is not in dispute, but there is a 
dispute as to the right of the trust fund to a lien, or the amount of 
the lien, the district director shall transfer the matter together with 
all documents relating thereto to the Office of the Chief Administrative 
Law Judge for a formal hearing pursuant to section 19(d) of the Act, 33 
U.S.C. 919(d), and 20 CFR 702.317.
    (h) In the event that either the district director or the 
administrative law judge is not satisfied that the trust fund qualifies 
for a lien under section 17, the district director or administrative law 
judge may require further evidence including but not limited to the 
production of the collective bargaining agreement, trust agreement or 
portions thereof.
    (i) Before any such lien is approved, if the trust fund has provided 
continued disability payments after the application for a lien has been 
filed, the trust fund shall submit a further certified statement showing 
the total amount paid to the claimant as disability payments. The 
claimant shall likewise be given an opportunity to contest the amount 
alleged in this subsequent statement.
    (j) In approving a lien on compensation, the district director or 
administrative law judge shall not order an initial payment to the trust 
fund in excess of the amount of the past due compensation. The remaining 
amount to which the trust fund is entitled shall thereafter be deducted 
from the affected employee's subsequent compensation payments and paid 
to the trust fund, but any such payment to the trust fund shall not 
exceed 10 percent of the claimant-employee's bi-weekly compensation 
payments.

(Approved by the Office of Management and Budget under control number 
1215-0160)

[42 FR 45301, Sept. 9, 1977, as amended at 50 FR 395, Jan. 3, 1985; 51 
FR 4282, Feb. 3, 1986]

                       Certification of Exemption



Sec. 702.171  Certification of exemption, general.

    An employer may apply to the Director or his/her designee to certify 
a particular facility as one engaged in the building, repairing or 
dismantling of exclusively small vessels, as defined. Once certified, 
injuries sustained at that facility would not be covered under the Act 
except for injuries which occur over the navigable waters of the United 
States including any adjoining pier, wharf, dock, facility over land for 
launching vessels or for hauling, lifting or drydocking vessels. A 
facility otherwise covered under the Act remains covered until 
certification of exemption is issued; a certification will be granted 
only upon submission of a complete application (described in Sec. 
702.174), and only for as long as a facility meets the requirements 
detailed in section 3(d) of the Act, 33 U.S.C. 903(d). This exemption 
from coverage is not intended to be used by employers whose facilities 
from time to time may temporarily meet the criteria for qualification 
but only for facilities which work on exclusively small vessels, as 
defined.

[50 FR 396, Jan. 3, 1985]



Sec. 702.172  Certification; definitions.

    For purposes of Sec. Sec. 702.171 through 702.175 dealing with 
certification of small vessel facilities, the following definitions are 
applicable.
    (a)(1) ``Small vessel'' means only those vessels described in 
section 3(d)(3) of the Act, 33 U.S.C. 903(d)(3), that is:
    (i) A commercial barge which is under 900 lightship displacement 
tons (long); or
    (ii) A commercial tugboat, towboat, crewboat, supply boat, fishing 
vessel or other work vessel which is under 1,600 tons gross.

[[Page 881]]

    (2) For these purposes: (i) One gross ton equals 100 cubic feet, as 
measured by the current formula contained in the Act of May 6, 1894 as 
amended through 1974 (46 U.S.C. 77); (ii) one long ton equals 2,240 lbs; 
and (iii) ``Commercial'' as it applies to ``vessel'' means any vessel 
engaged in commerce but does not include military vessels or Coast Guard 
vessels.
    (b) ``Federal Maritime Subsidy'' means the construction differential 
subsidy (CDS) or operating differential subsidy under the Merchant 
Marine Act of 1936 (46 U.S.C. 1101 et seq.).
    (c) facility means an operation of an employer at a particular 
contiguous geographic location.

[51 FR 4283, Feb. 3, 1986]



Sec. 702.173  Exemptions; requirements, limitations.

    (a) Injuries at a facility otherwise covered by the Act are exempted 
only upon certification that the facility is: (1) Engaged in the 
building, repairing or dismantling of exclusively small commercial 
vessels; and (2) does not receive a Federal maritime subsidy.
    (b) The exemption does not apply to: (1) Injuries at any facility 
which occur over the navigable waters of the United States or upon any 
adjoining pier, wharf, dock, facility over land for launching vessels or 
for hauling, lifting or drydocking vessels; or (2) where the employee at 
such facility is not subject to a State workers' compensation law.

[50 FR 396, Jan. 3, 1985]



Sec. 702.174  Exemptions; necessary information.

    (a) Application. Before any facility is exempt from coverage under 
the Act, the facility must apply for and receive a certificate of 
exemption from the Director or his/her designee. The application must be 
made by the owner of the facility; where the owner is a partnership it 
shall be made by a partner and where a corporation by an officer of the 
corporation or the manager in charge of the facility for which an 
exemption is sought. The information submitted shall include the 
following:
    (1) Name, location, physical description and a site plan or aerial 
photograph of the facility for which an exemption is sought.
    (2) Description of the nature of the business.
    (3) An affidavit (signed by a partner if the facility is owned by a 
partnership or an officer if owned by a corporation) vertifying and/or 
acknowledging that:
    (i) the facility is, as of the date of the application, engaged in 
the business of building, repairing or dismantling exclusively small 
commercial vessels and that it does not then nor foreseeably will it 
engage in the building, repairing or dismantling of other than small 
vessels.
    (ii) The facility does not receive any Federal maritime subsidy.
    (iii) The signator has the duty to immediately inform the district 
director of any change in these or other conditions likely to result in 
a termination of an exemption.
    (iv) the employer has secured appropriate compensation liability 
under a State workers' compensation law.
    (v) Any false, relevant statements relating to the application or 
the failure to notify the district director of any changes in 
circumstances likely to result in termination of the exemption will be 
grounds for revocation of the exemption certificate and will subject the 
employer to all provisions of the Act, including all duties, 
responsibilities and penalties, retroactive to the date of application 
or date of change in circumstances, as appropriate.
    (b) Action by the Director. The Director or his/her designee shall 
review the application within thirty (30) days of its receipt.
    (1) Where the application is complete and shows that all 
requirements under Sec. 702.173 are met, the Director shall promptly 
notify the employer by certified mail, return receipt requested, that 
certification has been approved and will be effective on the date 
specified. The employer is required to post notice of the exemption at a 
conspicuous location.
    (2) Where the application is incomplete or does not substantiate 
that all requirements of section 3(d) of the Act, 33 U.S.C. 903(d), have 
been met, or evidence shows the facility is not eligible for exemption, 
the Director shall issue a letter which details the reasons for

[[Page 882]]

the deficiency or the rejection. The employer/applicant may reapply for 
certification, correcting deficiencies and/or responding to the reasons 
for the Director's denial. The Director or his/her designee shall issue 
a new decision within a reasonable time of reapplication following 
denial. Such action will be the final administrative review and is not 
appealable to the Administrative Law Judge or the Benefits Review Board.
    (c) The Director or another designated individual at any time has 
the right to enter on and inspect any facility seeking exemption for 
purposes of verifying information provided on the application form.
    (d) Action by the employer. Immediately upon receipt of the 
certificate of exemption from coverage under the Act the employer shall 
post:
    (1) A general notice in a conspicuous place that the Act does not 
cover injuries sustained at the facility in question, the basis of the 
exemption, the effective date of the exemption and grounds for 
termination of the exemption.
    (2) A notice, where applicable, at the entrances to all areas to 
which the exemption does not apply.

(Approved by the Office of Management and Budget under control number 
1215-0160)

[50 FR 396, Jan. 3, 1985, as amended at 51 FR 4283, Feb. 3, 1986]



Sec. 702.175  Effect of work on excluded vessels; reinstatement of 
certification.

    (a) When a vessel other than a small commercial vessel, as defined 
in Sec. 702.172, enters a facility which has been certified as exempt 
from coverage, the exemption shall automatically terminate as of the 
date such a vessel enters the facility. The exemption shall also 
terminate on the date a contract for a Federal maritime subsidy is 
entered into, and, in the situation where the facility undertakes to 
build a vessel other than a small vessel, when the construction first 
takes on the characteristics of a vessel, i.e., when the keel is laid. 
All duties, obligations and requirements imposed by the Act, including 
the duty to secure compensation liability as required by sections 4 and 
32 of the Act, 33 U.S.C. 904 and 932, and to keep records and forward 
reports, are effective immediately. The employer shall notify the 
Director or his/her designee immediately where this occurs.
    (b) Where an exemption certification is terminated because of 
circumstances described in (a), the employer may apply for reinstatement 
of the exemption once the event resulting in termination of the 
exemption ends. The reapplication shall consist of a reaffirmation of 
the nature of the business, an explanation of the circumstances leading 
to the termination of exemption, and an affidavit by the appropriate 
person affirming that the circumstances prompting the termination no 
longer exists nor will they reoccur in the forseeable future and that 
the facility is engaged in building, repairing or dismantling 
exclusively small vessels. The Director or the Director's designee shall 
respond to the complete reapplication within ten working days of 
receipt.

[50 FR 397, Jan. 3, 1985, as amended at 51 FR 4283, Feb. 3, 1986]



                       Subpart B_Claims Procedures

                           Employer's Reports



Sec. 702.201  Reports from employers of employee's injury or death.

    (a) Within 10 days from the date of an employee's injury or death, 
or 10 days from the date an employer has knowledge of an employee's 
injury or death, including any disease or death proximately caused by 
the employment, the employer shall furnish a report thereof to the 
district director for the compensation district in which the injury or 
death occurred, and shall thereafter furnish such additional or 
supplemental reports as the district director may request.
    (b) No report shall be filed unless the injury causes the employee 
to lose one or more shifts from work. However, the employer shall keep a 
record containing the information specified in Sec. 702.202. Compliance 
with the current OSHA injury record keeping requirements at 29 CFR part 
1904 will satisfy

[[Page 883]]

the record keeping requirements of this section for no lost time 
injuries.

(Approved by the Office of Management and Budget under control number 
1215-0160)

[38 FR 26861, Sept. 26, 1973, as amended at 50 FR 397, Jan. 3, 1985; 51 
FR 4283, Feb. 3, 1986]



Sec. 702.202  Employer's report; form and contents.

    The employer's report of an employee's injury or death shall be in 
writing and on a form prescribed by the Director for this purpose, and 
shall contain:
    (a) The name, address and business of the employer;
    (b) The name, address, occupation and Social Security Number (SSN) 
of the employee;
    (c) The cause, nature, and other relevant circumstances of the 
injury or death;
    (d) The year, month, day, and hour when, and the particular locality 
where, the injury or death occurred;
    (e) Such other information as the Director may require.

(Approved by the Office of Management and Budget under control numbers 
1215-0031 and 1215-0063)

[58 FR 68032, Dec. 23, 1993]



Sec. 702.203  Employer's report; how given.

    The employer's report, an original and one copy, may be furnished by 
delivering it to the appropriate office of the district director, or by 
mailing it to said office.



Sec. 702.204  Employer's report; penalty for failure to furnish and or 
falsifying.

    Any employer, insurance carrier, or self-insured employer who 
knowingly and willfully fails or refuses to send any report required by 
Sec. 702.201, or who knowingly or willfully makes a false statement or 
misrepresentation in any report, shall be subject to a civil penalty not 
to exceed $10,000.00 for each such failure, refusal, false statement, or 
misrepresentation. Provided, however, that for any violations occurring 
on or after November 17, 1997 the maximum civil penalty may not exceed 
$11,000.00. The district director has the authority and responsibility 
for assessing a civil penalty under this section.

[62 FR 53956, Oct. 17, 1997]



Sec. 702.205  Employer's report; effect of failure to report upon time 
limitations.

    Where the employer, or agent in charge of the business, or carrier 
has been given notice or has knowledge of an employee's injury or death, 
and fails, neglects, or refuses to file a report thereof as required by 
Sec. 702.201, the time limitations provisions with respect to the 
filing of claims for compensation for disability or death (33 U.S.C. 
913(a), and see Sec. 702.221) shall not begin to run until such report 
shall have been furnished as required herein.

[38 FR 26861, Sept. 26, 1973, as amended at 50 FR 397, Jan. 3, 1985]

                                 Notice



Sec. 702.211  Notice of employee's injury or death; designation of 
responsible official.

    (a) In order to claim compensation under the Act, an employee or 
claimant must first give notice of the fact of an injury or death to the 
employer and also may give notice to the district director for the 
compensation district in which the injury or death occurred. Notice to 
the employer must be given to that individual whom the employer has 
designated to receive such notices. If no individual has been so 
designated notice may be given to: (1) The first line supervisor 
(including foreman, hatchboss or timekeeper), local plant manager or 
personnel office official; (2) to any partner if the employer is a 
partnership; or (3) if the employer is a corporation, to any authorized 
agent, to an officer or to the person in charge of the business at the 
place where the injury occurred. In the case of a retired employee, the 
employee/claimant may submit the notice to any of the above persons, 
whether or not the employer has designated an official to receive such 
notice.
    (b) In order to facilitate the filing of notices, each employer 
shall designate at least one individual responsible for receiving 
notices of injury or death;

[[Page 884]]

this requirement applies to all employers. The designation shall be by 
position and the employer shall provide the name and/or position, exact 
location and telephone number of the individual to all employees by the 
appropriate method described below.
    (1) Type of individual. Designees must be a first line supervisor 
(including a foreman, hatchboss or timekeeper), local plant manager, 
personnel office official, company nurse or other individual 
traditionally entrusted with this duty, who is located full-time on the 
premises of the covered facility. The employer must designate at least 
one individual at each place of employment or one individual for each 
work crew where there is no fixed place of employment (in that case, the 
designation should always be the same position for all work crews).
    (2) How designated. The name and/or title, the location and 
telephone number of the individual who is selected by the employer to 
receive all notices shall be given to the district director for the 
compensation district in which the facility is located; posting on the 
worksite in a conspicuous place shall fulfill this requirement. A 
redesignation shall be effected by a change in posting.
    (3) Publication. Every employer shall post the name and/or position, 
the exact location and telephone number of the designated official. The 
posting shall be part of the general posting requirement, done on a form 
prescribed by the Director, and placed in a conspicuous location. 
Posting must be done at each worksite.
    (4) Effect of failure to designate. Where an employer fails to 
properly designate and to properly publish the name and/or position of 
the individual authorized to receive notices of injury or death, such 
failure shall constitute satisfactory reasons for excusing the employee/
claimant's failure to give notice as authorized by section 12(d)(3)(ii) 
of the Act, 33 U.S.C. 912(d)(3)(ii).

(Approved by the Office of Management and Budget under control number 
1215-0160)

[50 FR 397, Jan. 3, 1985, as amended at 51 FR 4283, Feb. 3, 1986]



Sec. 702.212  Notice; when given; when given for certain occupational 
diseases.

    (a) For other than occupational diseases described in (b), the 
employee must give notice within thirty (30) days of the date of the 
injury or death. For this purpose the date of injury or death is:
    (1) The day on which a traumatic injury occurs;
    (2) The date on which the employee or claimant is or by the exercise 
of reasonable diligence or by reason of medical advice, should have been 
aware of a relationship between the injury or death and the employment; 
or
    (3) In the case of claims for loss of hearing, the date the employee 
receives an audiogram, with the accompanying report which indicates the 
employee has suffered a loss of hearing that is related to his or her 
employment. (See Sec. 702.441).
    (b) In the case of an occupational disease which does not 
immediately result in disability or death, notice must be given within 
one year after the employee or claimant becomes aware, or in the 
exercise of reasonable diligence or by reason of medical advice, should 
have been aware, of the relationship between the employment, the disease 
and the death or disability. For purposes of these occupational 
diseases, therefore, the notice period does not begin to run until the 
employee is disabled, or in the case of a retired employee, until a 
permanent impairment exists.
    (c) For purposes of workers whose coverage under this Act is 
dependent on denial of coverage under a State compensation program, as 
described in Sec. 701.401, the time limitations set forth above do not 
begin to run until a final decision denying State coverage is issued 
under the State compensation act.

(Approved by the Office of Management and Budget under control number 
1215-0160)

[50 FR 397, Jan. 3, 1985, as amended at 51 FR 4283, Feb. 3, 1986]



Sec. 702.213  Notice; by whom given.

    Notice shall be given by the injured employee or someone on his 
behalf, or in the case of death, by the deceased

[[Page 885]]

employee's beneficiary or someone on his behalf.

[38 FR 26861, Sept. 26, 1973. Redesignated at 50 FR 397, Jan. 3, 1985]



Sec. 702.214  Notice; form and content.

    Notice shall be in writing on a form prescribed by the Director for 
this purpose; such form shall be made available to the employee or 
beneficiary by the employer. The notice shall be signed by the person 
authorized to give notice, and shall contain the name, address and 
Social Security Number (SSN) of the employee and, in death cases, also 
the SSN of the person seeking survivor benefits, and a statement of the 
time, place, nature and cause of the injury or death.

[58 FR 68032, Dec. 23, 1993]



Sec. 702.215  Notice; how given.

    Notice shall be effected by delivering it--by hand or by mail at the 
address posted by the employer--to the individual designated to receive 
such notices. Notice when given to the district director, may be by hand 
or by mail on a form supplied by the Secretary, or orally in person or 
by telephone.

(Approved by the Office of Management and Budget under control number 
1215-0160)

[50 FR 398, Jan. 3, 1985]



Sec. 702.216  Effect of failure to give notice.

    Failure to give timely notice to the employer's designated official 
shall not bar any claim for compensation if: (a) The employer, carrier, 
or designated official had actual knowledge of the injury or death; or 
(b) the district director or ALJ determines the employer or carrier has 
not been prejudiced: or (c) the district director excuses failure to 
file notice. For purposes of this subsection, actual knowledge shall be 
deemed to exist if the employee's immediate supervisor was aware of the 
injury and/or in the case of a hearing loss, where the employer has 
furnished to the employee an audiogram and report which indicates a loss 
of hearing. Failure to give notice shall be excused by the district 
director if: a) Notice, while not given to the designated official, was 
given to an official of the employer or carrier, and no prejudice 
resulted; or b) for some other satisfactory reason, notice could not be 
given. Failure to properly designate and post the individual so 
designated shall be considered a satisfactory reason. In any event, such 
defense to a claim must be raised by the employer/carrier at the first 
hearing on the claim.

[51 FR 4283, Feb. 3, 1986]



Sec. 702.217  Penalty for false statement, misrepresentation.

    (a) Any claimant or representative of a claimant who knowingly and 
willfully makes a false statement or representation for the purpose of 
obtaining a benefit or payment under this Act shall be guilty of a 
felony, and on conviction thereof shall be punished by a fine not to 
exceed $10,000, by imprisonment not to exceed five years, or by both.
    (b) Any person including, but not limited to, an employer, its duly 
authorized agent or an employee of an insurance carrier, who knowingly 
and willingly makes a false statement or representation for the purpose 
of reducing, denying or terminating benefits to an injured employee, or 
his dependents pursuant to section 9, 33 U.S.C. 909, if the injury 
results in death, shall be punished by a fine not to exceed $10,000, by 
imprisonment not to exceed five years, or both.

[50 FR 398, Jan. 3, 1985]

                                 Claims



Sec. 702.221  Claims for compensation; time limitations.

    (a) Claims for compensation for disability or death shall be in 
writing and filed with the district director for the compensation 
district in which the injury or death occurred. The Social Security 
Number (SSN) of the injured employee and, in cases of death, the SSN of 
the person seeking survivor benefits shall also be set forth on each 
claim. Claims may be filed anytime after the seventh day of disability 
or anytime following the death of the employee. Except as provided 
below, the right to compensation is barred unless a claim is filed 
within one year of the injury or death, or (where payment is made 
without an award) within one

[[Page 886]]

year of the date on which the last compensation payment was made.
    (b) In the case of a hearing loss claim, the time for filing a claim 
does not begin to run until the employee receives an audiogram with the 
accompanying report which indicates the employee has sustained a hearing 
loss that is related to his or her employment. (See Sec. 702.441).

(Approved by the Office of Management and Budget under control number 
1215-0160)

[50 FR 398, Jan. 3, 1985, as amended at 51 FR 4284, Feb. 3, 1986; 58 FR 
68032, Dec. 23, 1993]



Sec. 702.222  Claims; exceptions to time limitations.

    (a) Where a person entitled to compensation under the Act is 
mentally incompetent or a minor, the time limitation provision of Sec. 
702.221 shall not apply to a mentally incompetent person so long as such 
person has no guardian or other authorized representative, but Sec. 
702.221 shall be applicable from the date of appointment of such 
guardian or other representative. In the case of minor who has no 
guardian before he or she becomes of age, time begins to run from the 
date he or she becomes of age.
    (b) Where a person brings a suit at law or in admiralty to recover 
damages in respect of an injury or death, or files a claim under a State 
workers' compensation act because such person is excluded from this 
Act's coverage by reason of section 2(3) or 3(d) of the Act (33 U.S.C. 
902(3) or 903(d)), and recovery is denied because the person was an 
employee and defendant was an employer within the meaning of the Act, 
and such employer had secured compensation to such employee under the 
Act, the time limitation in Sec. 702.221 shall not begin to run until 
the date of termination of such suit or proceeding.
    (c) Notwithstanding the provisions in paragraph (a) of this section, 
where the claim is one based on disability or death due to an 
occupational disease which does not immediately result in death or 
disability, it must be filed within two years after the employee or 
claimant becomes aware, or in the exercise of reasonable diligence or by 
reason of medical advice, should have been aware of the relationship 
between the employment, the disease and the death or disability, or 
within one year of the date of last payment of compensation, whichever 
is later. For purposes of occupational disease, therefore, the time 
limitation for filing a claim does not begin to run until the employee 
is disabled, or in the case of a retired employee, where a permanent 
impairment exists.
    (d) The time limitations set forth above do not apply to claims 
filed under section 49 of the Act, 33 U.S.C. 949.

(Approved by the Office of Management and Budget under control number 
1215-0160)

[50 FR 398, Jan. 3, 1985]



Sec. 702.223  Claims; time limitations; time to object.

    Notwithstanding the requirements of Sec. 702.221, failure to file a 
claim within the period prescribed in such section shall not be a bar to 
such right unless objection to such failure is made at the first hearing 
of such claim in which all parties in interest are given reasonable 
notice and opportunity to be heard.

[38 FR 26861, Sept. 26, 1973. Redesignated and amended at 50 FR 397, 
Jan. 3, 1985]



Sec. 702.224  Claims; notification of employer of filing by employee.

    Within 10 days after the filing of a claim for compensation for 
injury or death under the Act, the district director shall give written 
notice thereof to the employer or carrier, served personally or by mail.

[38 FR 26861, Sept. 26, 1973. Redesignated at 50 FR 397, Jan. 3, 1985, 
as amended at 60 FR 51348, Oct. 2, 1995]



Sec. 702.225  Withdrawal of a claim.

    (a) Before adjudication of claim. A claimant (or an individual who 
is authorized to execute a claim on his behalf) may withdraw his 
previously filed claim: Provided, That:
    (1) He files with the district director with whom the claim was 
filed a written request stating the reasons for withdrawal;
    (2) The claimant is alive at the time his request for withdrawal is 
filed;
    (3) The district director approves the request for withdrawal as 
being for a proper purpose and in the claimant's best interest; and

[[Page 887]]

    (4) The request for withdrawal is filed, on or before the date the 
OWCP makes a determination on the claim.
    (b) After adjudication of claim. A claim for benefits may be 
withdrawn by a written request filed after the date the OWCP makes a 
determination on the claim: Provided, That:
    (1) The conditions enumerated in paragraphs (a) (1) through (3) of 
this section are met; and
    (2) There is repayment of the amount of benefits previously paid 
because of the claim that is being withdrawn or it can be established to 
the satisfaction of the Office that repayment of any such amount is 
assured.
    (c) Effect of withdrawal of claim. Where a request for withdrawal of 
a claim is filed and such request for withdrawal is approved, such 
withdrawal shall be without prejudice to the filing of another claim, 
subject to the time limitation provisions of section 13 of the Act and 
of the regulations in this part.

[38 FR 26861, Sept. 26, 1973. Redesignated at 50 FR 397, Jan. 3, 1985]

                         Noncontroverted Claims



Sec. 702.231  Noncontroverted claims; payment of compensation without 
an award.

    Unless the employer controverts its liability to pay compensation 
under this Act, the employer or insurance carrier shall pay 
periodically, promptly and directly to the person entitled thereto 
benefits prescribed by the Act. For this purpose, where the employer 
furnishes to an employee a copy of an audiogram with a report thereon, 
which indicates the employee has sustained a hearing loss causally 
related to factors of that employment, the employer or insurance carrier 
shall pay appropriate compensation or at that time controvert the 
liability to pay compensation under this Act.

[50 FR 399, Jan. 3, 1985]



Sec. 702.232  Payments without an award; when; how paid.

    The first installment of compensation shall become due by the 
fourteenth (14th) day after the employer has been notified, through the 
designated official or by any other means described in Sec. 702.211 et 
seq., or has actual knowledge of the injury or death. All compensation 
due on that fourteenth (14th) day shall be paid then and appropriate 
compensation due thereafter must be paid in semi-monthly installments, 
unless the district director determines otherwise.

[50 FR 399, Jan. 3, 1985]



Sec. 702.233  Penalty for failure to pay without an award.

    If any installment of compensation payable without an award is not 
paid within 14 days after it becomes due, there shall be added to such 
unpaid installment an amount equal to 10 per centum thereof which shall 
be paid at the same time as, but in addition to, such installment unless 
the employer files notice of controversion in accordance with Sec. 
702.261, or unless such nonpayment is excused by the district director 
after a showing by the employer that owing to conditions over which he 
had no control such installment could not be paid within the period 
prescribed for the payment.



Sec. 702.234  Report by employer of commencement and suspension of 
payments.

    Immediately upon making the first payment of compensation, and upon 
the suspension of payments once begun, the employer shall notify the 
district director having jurisdiction over the place where the injury or 
death occurred of the commencement or suspension of payments, as the 
case may be.



Sec. 702.235  Report by employer of final payment of compensation.

    (a) Within 16 days after the final payment of compensation has been 
made, the employer, the insurance carrier, or where the employer is 
self-insured, the employer shall notify the district director on a form 
prescribed by the Secretary, stating that such final payment has been 
made, the total amount of compensation paid, the name and address of the 
person(s) to whom payments were made, the date of the injury or death 
and the name of the injured or deceased employee, and the inclusive 
dates during which compensation was paid.

[[Page 888]]

    (b) A ``final payment of compensation'' for the purpose of applying 
the penalty provision of Sec. 702.236 shall be deemed any one of the 
following:
    (1) The last payment of compensation made in accordance with a 
compensation order awarding disability or death benefits, issued by 
either a district director or an administrative law judge;
    (2) The payment of an agreed settlement approved under section 8(i) 
(A) or (B), of the Act, 33 U.S.C. 908(i);
    (3) The last payment made pursuant to an agreement reached by the 
parties through informal proceedings;
    (4) Any other payment of compensation which anticipates no further 
payments under the Act.

(Approved by the Office of Management and Budget under control number 
1215-0024)

(Pub. L. No. 96-511)

[42 FR 45302, Sept. 9, 1977, as amended at 49 FR 18294, Apr. 30, 1984; 
50 FR 399, Jan. 3, 1985]



Sec. 702.236  Penalty for failure to report termination of payments.

    Any employer failing to notify the district director that the final 
payment of compensation has been made as required by Sec. 702.235 shall 
be assessed a civil penalty in the amount of $100.00. Provided, however, 
that for any violation occurring on or after November 17, 1997 the civil 
penalty will be $110.00. The district director has the authority and 
responsibility for assessing a civil penalty under this section.

[62 FR 53956, Oct. 17, 1997]

                           Agreed Settlements



Sec. 702.241  Definitions and supplementary information.

    (a) As used hereinafter, the term adjudicator shall mean district 
director or administrative law judge (ALJ).
    (b) If a settlement application is submitted to an adjudicator and 
the case is pending at the Office of Administrative Law Judges, the 
Benefits Review Board, or any Federal circuit court of appeals, the 
parties may request that the case be remanded to the adjudicator for 
consideration of the application. The thirty day period as described in 
paragraph (f) of this section begins when the remanded case is received 
by the adjudicator.
    (c) If a settlement application is first submitted to an ALJ, the 
thirty day period mentioned in paragraph (f) of this section does not 
begin until five days before the date the formal hearing is set. This 
rule does not preclude the parties from submitting the application at 
any other time such as (1) after the case is referred for hearing, (2) 
at the hearing, or (3) after the hearing but before the ALJ issues a 
decision and order. Where a case is pending before the ALJ but not set 
for a hearing, the parties may request the case be remanded to the 
district director for consideration of the settlement.
    (d) A settlement agreement between parties represented by counsel, 
which is deemed approved when not disapproved within thirty days, as 
described in paragraph (f) of this section, shall be considered to have 
been filed in the office of the district director on the thirtieth day 
for purposes of sections 14 and 21 of the Act, 33 U.S.C. 914 and 921.
    (e) A fee for representation which is included in an agreement that 
is approved in the manner described in paragraph (d) of this section, 
shall also be considered approved within the meaning of section 28(e) of 
the Act, 33 U.S.C. 928(e).
    (f) The thirty day period for consideration of a settlement 
agreement shall be calculated from the day after receipt unless the 
parties are advised otherwise by the adjudicator. (See Sec. 
702.243(b)). If the last day of this period is a holiday or occurs 
during a weekend, the next business day shall be considered the 
thirtieth day.
    (g) An agreement among the parties to settle a claim is limited to 
the rights of the parties and to claims then in existence; settlement of 
disability compensation or medical benefits shall not be a settlement of 
survivor benefits nor shall the settlement affect, in any way, the right 
of survivors to file a claim for survivor's benefits.
    (h) For purposes of this section and Sec. 702.243 the term counsel 
means any attorney admitted to the bar of any State, territory or the 
District of Columbia.

[50 FR 399, Jan. 3, 1985, as amended at 51 FR 4284, Feb. 3, 1986]

[[Page 889]]



Sec. 702.242  Information necessary for a complete settlement 
application.

    (a) The settlement application shall be a self-sufficient document 
which can be evaluated without further reference to the administrative 
file. The application shall be in the form of a stipulation signed by 
all parties and shall contain a brief summary of the facts of the case 
to include: a description of the incident, a description of the nature 
of the injury to include the degree of impairment and/or disability, a 
description of the medical care rendered to date of settlement, and a 
summary of compensation paid and the compensation rate or, where 
benefits have not been paid, the claimant's average weekly wage.
    (b) The settlement application shall contain the following:
    (1) A full description of the terms of the settlement which clearly 
indicates, where appropriate, the amounts to be paid for compensation, 
medical benefits, survivor benefits and representative's fees which 
shall be itemized as required by Sec. 702.132.
    (2) The reason for the settlement, and the issues which are in 
dispute, if any.
    (3) The claimant's date of birth and, in death claims, the names and 
birth dates of all dependents.
    (4) Information on whether or not the claimant is working or is 
capable of working. This should include, but not be limited to, a 
description of the claimant's educational background and work history, 
as well as other factors which could impact, either favorably or 
unfavorably, on future employability.
    (5) A current medical report which fully describes any injury 
related impairment as well as any unrelated conditions. This report 
shall indicate whether maximum medical improvement has been reached and 
whether further disability or medical treatment is anticipated. If the 
claimant has already reached maximum medical improvement, a medical 
report prepared at the time the employee's condition stabilized will 
satisfy the requirement for a current medical report. A medical report 
need not be submitted with agreements to settle survivor benefits unless 
the circumstances warrant it.
    (6) A statement explaining how the settlement amount is considered 
adequate.
    (7) If the settlement application covers medical benefits an 
itemization of the amount paid for medical expenses by year for the 
three years prior to the date of the application. An estimate of the 
claimant's need for future medical treatment as well as an estimate of 
the cost of such medical treatment shall also be submitted which 
indicates the inflation factor and/or the discount rate used, if any. 
The adjudicator may waive these requirements for good cause.
    (8) Information on any collateral source available for the payment 
of medical expenses.

(Approved by the Office of Management and Budget under control number 
1215-0160)

[50 FR 399, Jan. 3, 1985, as amended at 51 FR 4284, Feb. 3, 1986]



Sec. 702.243  Settlement application; how submitted, how approved, how 
disapproved, criteria.

    (a) When the parties to a claim for compensation, including survivor 
benefits and medical benefits, agree to a settlement they shall submit a 
complete application to the adjudicator. The application shall contain 
all the information outlined in Sec. 702.242 and shall be sent by 
certified mail, return receipt requested or submitted in person, or by 
any other delivery service with proof of delivery to the adjudicator. 
Failure to submit a complete application shall toll the thirty day 
period mentioned in section 8(i) of the Act, 33 U.S.C. 908(i), until a 
complete application is received.
    (b) The adjudicator shall consider the settlement application within 
thirty days and either approve or disapprove the application. The 
liability of an employer/insurance carrier is not discharged until the 
settlement is specifically approved by a compensation order issued by 
the adjudicator. However, if the parties are represented by counsel, the 
settlement shall be deemed approved unless specifically disapproved 
within thirty days after receipt of a complete application. This thirty 
day period does not begin until all the information described in

[[Page 890]]

Sec. 702.242 has been submitted. The adjudicator shall examine the 
settlement application within thirty days and shall immediately serve on 
all parties notice of any deficiency. This notice shall also indicate 
that the thirty day period will not commence until the deficiency is 
corrected.
    (c) If the adjudicator disapproves a settlement application, the 
adjudicator shall serve on all parties a written statement or order 
containing the reasons for disapproval. This statement shall be served 
by certified mail within thirty days of receipt of a complete 
application (as described in Sec. 702.242.) if the parties are 
represented by counsel. If the disapproval was made by a district 
director, any party to the settlement may request a hearing before an 
ALJ as provided in sections 8 and 19 of the Act, 33 U.S.C. 908 and 919, 
or an amended application may be submitted to the district director. If, 
following the hearing, the ALJ disapproves the settlement, the parties 
may: (1) Submit a new application, (2) file an appeal with the Benefits 
Review Board as provided in section 21 of the Act, 33 U.S.C. 921, or (3) 
proceed with a hearing on the merits of the claim. If the application is 
initially disapproved by an ALJ, the parties may (1) submit a new 
application or (2) proceed with a hearing on the merits of the claim.
    (d) The parties may submit a settlement application solely for 
compensation, or solely for medical benefits or for compensation and 
medical benefits combined.
    (e) If either portion of a combined compensation and medical 
benefits settlement application is disapproved the entire application is 
disapproved unless the parties indicate on the face of the application 
that they agree to settle either portion independently.
    (f) When presented with a settlement, the adjudicator shall review 
the application and determine whether, considering all of the 
circumstances, including, where appropriate, the probability of success 
if the case were formally litigated, the amount is adequate. The 
criteria for determining the adequacy of the settlement application 
shall include, but not be limited to:
    (1) The claimant's age, education and work history;
    (2) The degree of the claimant's disability or impairment;
    (3) The availability of the type of work the claimant can do;
    (4) The cost and necessity of future medical treatment (where the 
settlement includes medical benefits).
    (g) In cases being paid pursuant to a final compensation order, 
where no substantive issues are in dispute, a settlement amount which 
does not equal the present value of future compensation payments 
commuted, computed at the discount rate specified below, shall be 
considered inadequate unless the parties to the settlement show that the 
amount is adequate. The probability of the death of the beneficiary 
before the expiration of the period during which he or she is entitled 
to compensation shall be determined according to the most current United 
States Life Table, as developed by the United States Department of 
Health and Human Services, which shall be updated from time to time. The 
discount rate shall be equal to the coupon issue yield equivalent (as 
determined by the Secretary of the Treasury) of the average accepted 
auction price for the last auction of 52 weeks U.S. Treasury Bills 
settled immediately prior to the date of the submission of the 
settlement application.

[50 FR 399, Jan. 3, 1985, as amended at 51 FR 4284, Feb. 3, 1986; 60 FR 
51348, Oct. 2, 1995]

                           Controverted Claims



Sec. 702.251  Employer's controversion of the right to compensation.

    Where the employer controverts the right to compensation after 
notice or knowledge of the injury or death, or after receipt of a 
written claim, he shall give notice thereof, stating the reasons for 
controverting the right to compensation, using the form prescribed by 
the Director. Such notice, or answer to the claim, shall be filed with 
the district director within 14 days from the date the employer receives 
notice or has knowledge of the injury or death. The original notice 
shall be

[[Page 891]]

sent to the district director having jurisdiction, and a copy thereof 
shall be given or mailed to the claimant.

(Approved by the Office of Management and Budget under control number 
1215-0023)

(Pub. L. No. 96-511)

[38 FR 26861, Sept. 26, 1973, as amended at 49 FR 18294, Apr. 30, 1984]



Sec. 702.252  Action by district director upon receipt of notice of 
controversion.

    Upon receiving the employer's notice of controversion, the district 
director shall forthwith commence proceedings for the adjudication of 
the claim in accordance with the procedures set forth in subpart C of 
this part.

                            Contested Claims



Sec. 702.261  Claimant's contest of actions taken by employer or carrier 
with respect to the claim.

    Where the claimant contests an action by the employer or carrier 
reducing, suspending, or terminating benefits, including medical care, 
he should immediately notify the office of the district director having 
jurisdiction, in person or in writing, and set forth the facts pertinent 
to his complaint.



Sec. 702.262  Action by district director upon receipt of notice of 
contest.

    Upon receipt of the claimant's notice of contest, the district 
director shall forthwith commence proceedings for adjudication of the 
claim in accordance with the procedures set forth in subpart C of this 
part.

                             Discrimination



Sec. 702.271  Discrimination; against employees who bring proceedings, 
prohibition and penalty.

    (a)(1) No employer or its duly authorized agent may discharge or in 
any manner discriminate against an employee as to his/her employment 
because that employee: (i) Has claimed or attempted to claim 
compensation under this Act; or (ii) has testified or is about to 
testify in a proceeding under this Act. To discharge or refuse to employ 
a person who has been adjudicated to have filed a fraudulent claim for 
compensation or otherwise made a false statement or misrepresentation 
under section 31(a)(1) of the Act, 33 U.S.C. 931(a)(1), is not a 
violation of this section.
    (2) Any employer who violates this section shall be liable to a 
penalty of not less that $1,000.00 or more than $5,000.00 to be paid (by 
the employer alone, and not by a carrier) to the district director for 
deposit in the special fund described in section 44 of the Act, 33 
U.S.C. 944; and shall restore the employee to his or her employment 
along with all wages lost due to the discrimination unless the employee 
has ceased to be qualified to perform the duties of employment. Provided 
however, that for any violation occurring on or after November 17, 1997 
the employer shall be liable to a penalty of not less than $1,100.00 or 
more than $5,500.00.
    (b) When a district director receives a complaint from an employee 
alleging discrimination as defined under section 49, he or she shall 
notify the employer, and within five working days, initiate specific 
inquiry to determine all the facts and circumstances pertaining thereto. 
This may be accomplished by interviewing the employee, employer 
representatives and other parties who may have information about the 
matter. Interviews may be conducted by written correspondence, telephone 
or personal interview.
    (c) If circumstances warrant, the district director may also conduct 
an informal conference on the issue as described in Sec. Sec. 702.312 
through 702.314.
    (d) Any employee discriminated against is entitled to be restored to 
his employment and to be compensated by the employer for any loss of 
wages arising out of such discrimination provided that the employee is 
qualified to perform the duties of the employment. If it is determined 
that the employee has been discriminated against, the district director 
shall also determine whether the employee is qualified to perform the 
duties of the employment. The district director may use medical evidence 
submitted by the parties or he may arrange to have the employee examined 
by a physician selected by the district director. The cost of the 
medical examination arranged for by the district director may be charged 
to the

[[Page 892]]

special fund established by section 44, 33 U.S.C. 944.

[42 FR 45302, Sept. 9, 1977, as amended at 50 FR 400, Jan. 3, 1985; 62 
FR 53956, Oct. 17, 1997]



Sec. 702.272  Informal recommendation by district director.

    (a) If the district director determines that the employee has been 
discharged or suffered discrimination and is able to resume his or her 
duties, the district director will recommend that the employer reinstate 
the employee and/or make such restitution as is indicated by the 
circumstances of the case, including compensation for any wage loss 
suffered as the result of the discharge or discrimination. The district 
director may also assess the employer an appropriate penalty, as 
determined under authority vested in the district director by the Act. 
If the district director determines that no violation occurred he shall 
notify the partries of his findings and the reasons for recommending 
that the complaint be denied. If the employer and employee accept the 
district director's recommendation, it will be incorporated in an order 
and mailed to each party within 10 days.
    (b) If the parties do not agree to the recommendation, the district 
director shall, within 10 days after receipt of the rejection, prepare a 
memorandum summarizing the disagreement, mail a copy to all interested 
parties, and shall within 14 days thereafter refer the case to the 
Office of the Chief Administrative Law Judge for hearing pursuant to 
Sec. 702.317.

[42 FR 45302, Sept. 9, 1977]



Sec. 702.273  Adjudication by Office of the Chief Administrative Law 
Judge.

    The Office of Administrative Law Judges is responsible for final 
determinations of all disputed issues connected with the discrimination 
complaint, including the amount of penalty to be assessed, and shall 
proceed with a formal hearing as described in Sec. Sec. 702.331 to 
702.394.

[42 FR 45302, Sept. 9, 1977]



Sec. 702.274  Employer's refusal to pay penalty.

    In the event the employer refuses to pay the penalty assessed, the 
district director shall refer the complete administrative file to the 
Associate Director, Division of Longshore and Harbor Workers' 
Compensation, for subsequent transmittal to the Associate Solicitor for 
Employee Benefits, with the request that appropriate legal action be 
taken to recover the penalty.

[42 FR 45302, Sept. 9, 1977]

                               Third Party



Sec. 702.281  Third party action.

    (a) Every person claiming benefits under this Act (or the 
representative) shall promptly notify the employer and the district 
director when:
    (1) A claim is made that someone other than the employer or person 
or persons in its employ, is liable in damages to the claimant because 
of the injury or death and identify such party by name and address.
    (2) Legal action is instituted by the claimant or the representative 
against some person or party other than the employer or a person or 
persons in his employ, on the ground that such other person is liable in 
damages to the claimant on account of the compensable injury and/or 
death; specify the amount of damages claimed and identify the person or 
party by name and address.
    (3) Any settlement, compromise or any adjudication of such claim has 
been effected and report the terms, conditions and amounts of such 
resolution of claim.
    (b) Where the claim or legal action instituted against a third party 
results in a settlement agreement which is for an amount less than the 
compensation to which a person would be entitled under this Act, the 
person (or the person's representative) must obtain the prior, written 
approval of the settlement from the employer and the employer's carrier 
before the settlement is executed. Failure to do so relieves the 
employer and/or carrier of liability for compensation described in 
section 33(f) of Act, 33 U.S.C. 933(f) and for medical benefits 
otherwise due under section 7 of the Act, 33 U.S.C. 907, regardless of 
whether the employer or carrier has made payments of acknowledged 
entitlement to benefits under the Act. The approval shall be on a form

[[Page 893]]

provided by the Director and filed, within thirty days after the 
settlement is entered into, with the district director who has 
jurisdiction in the district where the injury occurred.

[42 FR 45303, Sept. 9, 1977, as amended at 50 FR 400, Jan. 3, 1985; 51 
FR 4284, Feb. 3, 1986]

                           Report of Earnings



Sec. 702.285  Report of earnings.

    (a) An employer, carrier or the Director (for those cases being paid 
from the Special Fund) may require an employee to whom it is paying 
compensation to submit a report on earnings from employment or self-
employment. This report may not be required any more frequently than 
semi-annually. The report shall be made on a form prescribed by the 
Director and shall include all earnings from employment and self-
employment and the periods for which the earnings apply. The employee 
must return the complete report on earnings even where he or she has no 
earnings to report.
    (b) For these purposes the term ``earnings'' is defined as all 
monies received from any employment and includes but is not limited to 
wages, salaries, tips, sales commissions, fees for services provided, 
piecework and all revenue received from self-employment even if the 
business or enterprise operated at a loss of if the profits were 
reinvested.

(Approved by the Office of Management and Budget under control number 
1215-0160)

[50 FR 400, Jan. 3, 1985]



Sec. 702.286  Report of earnings; forfeiture of compensation.

    (a) Any employee who fails to submit the report on earnings from 
employment or self-employment under Sec. 702.285 or, who knowingly and 
willingly omits or understates any part of such earnings, shall upon a 
determination by the district director forfeit all right to compensation 
with respect to any period during which the employee was required to 
file such a report. The employee must return the completed report on 
earnings (even where he or she reports no earnings) within thirty (30) 
days of the date of receipt; this period may be extended for good cause, 
by the district director, in determining whether a violation of this 
requirement has occurred.
    (b) Any employer or carrier who believes that a violation of 
paragraph (a) of this section has occurred may file a charge with the 
district director. The allegation shall be accompanied by evidence which 
includes a copy of the report, with proof of service requesting the 
information from the employee and clearly stating the dates for which 
the employee was required to report income. Where the employer/carrier 
is alleging an omission or understatement of earnings, it shall, in 
addition, present evidence of earnings by the employee during that 
period, including copies of checks, affidavits from employers who paid 
the employee earnings, receipts of income from self-employment or any 
other evidence showing earnings not reported or underreported for the 
period in question. Where the district director finds the evidence 
sufficient to support the charge he or she shall convene an informal 
conference as described in subpart C and shall issue a compensation 
order affiming or denying the charge and setting forth the amount of 
compensation for the specified period. If there is a conflict over any 
issue relating to this matter any party may request a formal hearing 
before an Administrative Law Judge as described in subpart C.
    (c) Compensation forfeited under paragraph (b) of this section, if 
already paid, shall be recovered by a deduction from the compensation 
payable to the employee if any, on such schedule as determined by the 
district director. The district director's discretion in such cases 
extends only to rescheduling repayment by crediting future compensation 
and not to whether and in what amounts compensation is forfeited. For 
this purpose, the district director shall consider the employee's 
essential expenses for living, income from whatever source, and assets, 
including cash, savings and checking accounts, stocks, bonds, and other 
securities.

[50 FR 400, Jan. 3, 1985]

[[Page 894]]



                    Subpart C_Adjudication Procedures

                                 General



Sec. 702.301  Scope of this subpart.

    The regulations in this subpart govern the adjudication of claims in 
which the employer has filed a notice of controversion under Sec. 
702.251, or the employee has filed notice of contest under Sec. 
702.261. In the vast majority of cases, the problem giving rise to the 
controversy results from misunderstandings, clerical or mechanical 
errors, or mistakes of fact or law. Such problems seldom require 
resolution through formal hearings, with the attendant production of 
expert witnesses. Accordingly, by Sec. 702.311 et seq., the district 
directors are empowered to amicably and promptly resolve such problems 
by informal procedures. Where there is a genuine dispute of fact or law 
which cannot be so disposed of informally, resort must be had to the 
formal hearing procedures as set forth beginning at Sec. 702.331. 
Supplementary compensation orders, modifications, and interlocutory 
matters are governed by regulations beginning with Sec. 702.371. 
Thereafter, appeals from compensation orders are discussed beginning 
with Sec. 702.391 (the regulations of the Benefits Review Board are set 
forth in full in part 802 of this title).

                      Action by District Directors



Sec. 702.311  Handling of claims matters by district directors; 
informal conferences.

    The district director is empowered to resolve disputes with respect 
to claims in a manner designed to protect the rights of the parties and 
also to resolve such disputes at the earliest practicable date. This 
will generally be accomplished by informal discussions by telephone or 
by conferences at the district director's office. Some cases will be 
handled by written correspondence. The regulations governing informal 
conferences at the district director's office with all parties present 
are set forth below. When handling claims by telephone, or at the office 
with only one of the parties, the district director and his staff shall 
make certain that a full written record be made of the matters discussed 
and that such record be placed in the administrative file. When claims 
are handled by correspondence, copies of all communications shall 
constitute the administrative file.



Sec. 702.312  Informal conferences; called by and held before whom.

    Informal conferences shall be called by the district director or his 
designee assigned or reassigned the case and held before that same 
person, unless such person is absent or unavailable. When so assigned, 
the designee shall perform the duties set forth below assigned to the 
district director, except that a compenstion order following an 
agreement shall be issued only by a person so designated by the Director 
to perform such duty.

[42 FR 45303, Sept. 9, 1977]



Sec. 702.313  Informal conferences; how called; when called.

    Informal conferences may be called upon not less than 10 days' 
notice to the parties, unless the parties agree to meet at an earlier 
date. The notice may be given by telephone, but shall be confirmed by 
use of a written notice on a form prescribed by the Director. The notice 
shall indicate the date, time and place of the conference, and shall 
also specify the matters to be discussed. For good cause shown 
conferences may be rescheduled. A copy of such notice shall be placed in 
the administrative file.



Sec. 702.314  Informal conferences; how conducted; where held.

    (a) No stenographic report shall be taken at informal conferences 
and no witnesses shall be called. The district director shall guide the 
discussion toward the achievement of the purpose of such conference, 
recommending courses of action where there are disputed issues, and 
giving the parties the benefit of his experience and specialized 
knowledge in the field of workmen's compensation.
    (b) Conferences generally shall be held at the district director's 
office. However, such conferences may be held at any place which, in the 
opinion of the district director, will be of greater

[[Page 895]]

convenience to the parties or to their representatives.



Sec. 702.315  Conclusion of conference; agreement on all matters with 
respect to the claim.

    (a) Following an informal conference at which agreement is reached 
on all issues, the district director shall (within 10 days after 
conclusion of the conference), embody the agreement in a memorandum or 
within 30 days issue a formal compensation order, to be filed and mailed 
in accordance with Sec. 702.349. If either party requests that a formal 
compensation order be issued the district director shall, within 30 days 
of such request, prepare, file, and serve such order in accordance with 
Sec. 702.349. Where the problem was of such nature that it was resolved 
by telephone discussion or by exchange of written correspondence, the 
parties shall be notified by the same means that agreement was reached 
and the district director shall prepare a memorandum or order setting 
forth the terms agreed upon. In either instance, when the employer or 
carrier has agreed to pay, reinstate or increase monetary compensation 
benefits, or to restore or appropriately change medical care benefits, 
such action shall be commenced immediately upon becoming aware of the 
agreement, and without awaiting receipt of the memorandum or the formal 
compensation order.
    (b) Where there are several conferences or discussions, the 
provisions of paragraph (a) of this section do not apply until the last 
conference. The district director shall, however, prepare and place in 
his administrative file a short, succinct memorandum of each preceding 
conference or discussion.

[38 FR 26861, Sept. 26, 1973, as amended at 42 FR 45303, Sept. 9, 1977]



Sec. 702.316  Conclusion of conference; no agreement on all matters 
with respect to the claim.

    When it becomes apparent during the course of the informal 
conference that agreement on all issues cannot be reached, the district 
director shall bring the conference to a close, shall evaluate all 
evidence available to him or her, and after such evaluation shall 
prepare a memorandum of conference setting forth all outstanding issues, 
such facts or allegations as appear material and his or her 
recommendations and rationale for resolution of such issues. Copies of 
this memorandum shall then be sent to each of the parties or their 
representatives, who shall then have 14 days within which to signify in 
writing to the district director whether they agree or disagree with his 
or her recommendations. If they agree, the district director shall 
proceed as in Sec. 702.315(a). If they disagree (Caution: See Sec. 
702.134), then the district director may schedule such further 
conference or conferences as, in his or her opinion, may bring about 
agreement; if he or she is satisfied that any further conference would 
be unproductive, or if any party has requested a hearing, the district 
director shall prepare the case for transfer to the Office of the Chief 
Administrative Law Judge (See Sec. 702.317, Sec. Sec. 702.331-
702.351).

[42 FR 42551, Aug. 23, 1977, as amended at 60 FR 51348, Oct. 2, 1995]



Sec. 702.317  Preparation and transfer of the case for hearing.

    A case is prepared for transfer in the following manner:
    (a) The district director shall furnish each of the parties or their 
representatives with a copy of a prehearing statement form.
    (b) Each party shall, within 21 days after receipt of such form, 
complete it and return it to the district director and serve copies on 
all other parties. Extensions of time for good cause may be granted by 
the district director.
    (c) Upon receipt of the completed forms, the district director, 
after checking them for completeness and after any further conferences 
that, in his or her opinion, are warranted, shall transmit them to the 
Office of the Chief Administrative Law Judge by letter of transmittal 
together with all available evidence which the parties intend to submit 
at the hearing (exclusive of X-rays, slides and other materials not 
suitable for mailing which may be offered into evidence at the

[[Page 896]]

time of hearing); the materials transmitted shall not include any 
recommendations expressed or memoranda prepared by the district director 
pursuant to Sec. 702.316.
    (d) If the completed pre-hearing statement forms raise new or 
additional issues not previously considered by the district director or 
indicate that material evidence will be submitted that could reasonably 
have been made available to the district director before he or she 
prepared the last memorandum of conference, the district director shall 
transfer the case to the Office of the Chief Administrative Law Judge 
only after having considered such issues or evaluated such evidence or 
both and having issued an additional memorandum of conference in 
conformance with Sec. 702.316.
    (e) If a party fails to complete or return his or her pre-hearing 
statement form within the time allowed, the district director may, at 
his or her discretion, transmit the case without that party's form. 
However, such transmittal shall include a statement from the district 
director setting forth the circumstanes causing the failure to include 
the form, and such party's failure to submit a pre-hearing statement 
form may, subject to rebuttal at the formal hearing, be considered by 
the administrative law judge, to the extent intransigence is relevant, 
in subsequent rulings on motions which may be made in the course of the 
formal hearing.

(Approved by the Office of Management and Budget under control number 
1215-0085)

(Pub. L. No. 96-511)

[42 FR 42551, Aug. 23, 1977, as amended at 49 FR 18295, Apr. 30, 1984]



Sec. 702.318  The record; what constitutes; nontransferability of the 
administrative file.

    For the purpose of any further proceedings under the Act, the formal 
record of proceedings shall consist of the hearing record made before 
the administrative law judge (see Sec. 702.344). When transferring the 
case for hearing pursuant to Sec. 702.317, the district director shall 
not transfer the administrative file under any circumstances.



Sec. 702.319  Obtaining documents from the administrative file for 
reintroduction at formal hearings.

    Whenever any party considers any document in the administrative file 
essential to any further proceedings under the Act, it is the 
responsibility of such party to obtain such document from the district 
director and reintroduce it for the record before the administrative law 
judge. The type of document that may be obtained shall be limited to 
documents previously submitted to the district director, including 
documents or forms with respect to notices, claims, controversions, 
contests, progress reports, medical services or supplies, etc. The work 
products of the district director or his staff shall not be subject to 
retrieval. The procedure for obtaining documents shall be for the 
requesting party to inform the district director in writing of the 
documents he wishes to obtain, specifying them with particularity. Upon 
receipt, the district director shall cause copies of the requested 
documents to be made and then:
    (a) Place the copies in the file together with the letter of 
request, and (b) promptly forward the originals to the requesting party. 
The handling of multiple requests for the same document shall be within 
the discretion of the district director and with the cooperation of the 
requesting parties.

                              Special Fund



Sec. 702.321  Procedures for determining applicability of section 8(f) 
of the Act.

    (a) Application: filing, service, contents. (1) An employer or 
insurance carrier which seeks to invoke the provisions of section 8(f) 
of the Act must request limitation of its liability and file, in 
duplicate, with the district director a fully documented application. A 
fully documented application shall contain the following information: 
(i) A specific description of the pre-existing condition relied upon as 
constituting an existing permanent partial disability; (ii) the reasons 
for believing that the claimant's permanent disability after the injury 
would be less were it not for the pre-existing permanent partial 
disability or that the

[[Page 897]]

death would not have ensued but for that disability. These reasons must 
be supported by medical evidence as specified in paragraph (a)(1)(iv) of 
this section; (iii) the basis for the assertion that the pre-existing 
condition relied upon was manifest in the employer; and (iv) documentary 
medical evidence relied upon in support of the request for section 8(f) 
relief. This medical evidence shall include, but not be limited to, a 
current medical report establishing the extent of all impairments and 
the date of maximum medical improvement. If the claimant has already 
reached maximum medical improvement, a report prepared at that time will 
satisfy the requirement for a current medical report. If the current 
disability is total, the medical report must explain why the disability 
is not due solely to the second injury. If the current disability is 
partial, the medical report must explain why the disability is not due 
solely to the second injury and why the resulting disability is 
materially and substantially greater than that which would have resulted 
from the subsequent injury alone. If the injury is loss of hearing, the 
pre-existing hearing loss must be documented by an audiogram which 
complies with the requirements of Sec. 702.441. If the claim is for 
survivor's benefits, the medical report must establish that the death 
was not due solely to the second injury. Any other evidence considered 
necessary for consideration of the request for section 8(f) relief must 
be submitted when requested by the district director or Director.
    (2) If claim is being paid by the special fund and the claimant 
dies, an employer need not reapply for section 8(f) relief. However, 
survivor benefits will not be paid until it has been established that 
the death was due to the accepted injury and the eligible survivors have 
been identified. The district director will issue a compensation order 
after a claim has been filed and entitlement of the survivors has been 
verified. Since the employer remains a party in interest to the claim, a 
compensation order will not be issued without the agreement of the 
employer.
    (b) Application: Time for filing. (1) A request for section 8(f) 
relief should be made as soon as the permanency of the claimant's 
condition becomes known or is an issue in dispute. This could be when 
benefits are first paid for permanent disability, or at an informal 
conference held to discuss the permanency of the claimant's condition. 
Where the claim is for death benefits, the request should be made as 
soon as possible after the date of death. Along with the request for 
section 8(f) relief, the applicant must also submit all the supporting 
documentation required by this section, described in paragraph (a), of 
this section. Where possible, this documentation should accompany the 
request, but may be submitted separately, in which case the district 
director shall, at the time of the request, fix a date for submission of 
the fully documented application. The date shall be fixed as follows:
    (i) Where notice is given to all parties that permanency shall be an 
issue at an informal conference, the fully documented application must 
be submitted at or before the conference. For these purposes, notice 
shall mean when the issues of permanency is noted on the form LS-141, 
Notice of Informal Conference. All parties are required to list issue 
reasonably anticipated to be discussed at the conference when the 
initial request for a conference is made and to notify all parties of 
additional issues which arise during the period before the conference is 
actually held.
    (ii) Where the issue of permanency is first raised at the informal 
conference and could not have reasonably been anticipated by the parties 
prior to the conference, the district director shall adjourn the 
conference and establish the date by which the fully documented 
application must be submitted and so notify the employer/carrier. The 
date shall be set by the district director after reviewing the 
circumstances of the case.
    (2) At the request of the employer or insurance carrier, and for 
good cause, the district director, at his/her discretion, may grant an 
extension of the date for submission of the fully documented 
application. In fixing the date for submission of the application under 
circumstances other than described above or in considering any request 
for an extension of the date for submitting the application, the 
district director

[[Page 898]]

shall consider all the circumstances of the case, including but not 
limited to: Whether the claimant is being paid compensation and the 
hardship to the claimant of delaying referral of the case to the Office 
of Administrative Law Judges (OALJ); the complexity of the issues and 
the availability of medical and other evidence to the employer; the 
length of time the employer was or should have been aware that 
permanency is an issue; and, the reasons listed in support of the 
request. If the employer/carrier requested a specific date, the reasons 
for selection of that date will also be considered. Neither the date 
selected for submission of the fully documented application nor any 
extension therefrom can go beyond the date the case is referred to the 
OALJ for formal hearing.
    (3) Where the claimant's condition has not reached maximum medical 
improvement and no claim for permanency is raised by the date the case 
is referred to the OALJ, an application need not be submitted to the 
district director to preserve the employer's right to later seek relief 
under section 8(f) of the Act. In all other cases, failure to submit a 
fully documented application by the date established by the district 
director shall be an absolute defense to the liability of the special 
fund. This defense is an affirmative defense which must be raised and 
pleaded by the Director. The absolute defense will not be raised where 
permanency was not an issue before the district director. In all other 
cases, where permanency has been raised, the failure of an employer to 
submit a timely and fully documented application for section 8(f) relief 
shall not prevent the district director, at his/her discretion, from 
considering the claim for compensation and transmitting the case for 
formal hearing. The failure of an employer to present a timely and fully 
documented application for section 8(f) relief may be excused only where 
the employer could not have reasonably anticipated the liability of the 
special fund prior to the consideration of the claim by the district 
director. Relief under section 8(f) is not available to an employer who 
fails to comply with section 32(a) of the Act, 33 U.S.C. 932(a).
    (c) Application: Approval, disapproval. If all the evidence required 
by paragraph (a) was submitted with the application for section 8(f) 
relief and the facts warrant relief under this section, the district 
director shall award such relief after concurrence by the Associate 
Director, DLHWC, or his or her designee. If the district director or the 
Associate Director or his or her designee finds that the facts do not 
warrant relief under section 8(f) the district director shall advise the 
employer of the grounds for the denial. The application for section 8(f) 
relief may then be considered by an administrative law judge. When a 
case is transmitted to the Office of Administrative Law Judges the 
district director shall also attach a copy of the application for 
section 8(f) relief submitted by the employer, and notwithstanding Sec. 
702.317(c), the district director's denial of the application.

(Approved by the Office of Management and Budget under control number 
1215-0160)

[51 FR 4285, Feb. 3, 1986]

                             Formal Hearings



Sec. 702.331  Formal hearings; procedure initiating.

    Formal hearings are initiated by transmitting to the Office of the 
Chief Administrative Law Judge the pre-hearing statement forms, the 
available evidence which the parties intend to submit at the formal 
hearing, and the letter of transmittal from the district director as 
provided in Sec. 702.316 and Sec. 702.317.

[42 FR 42552, Aug. 23, 1977]



Sec. 702.332  Formal hearings; how conducted.

    Formal hearings shall be conducted by the administrative law judge 
assigned the case by the Office of the Chief Administrative Law Judge in 
accordance with the provisions of the Administrative Procedure Act, 5 
U.S.C. 554 et seq. All hearings shall be transcribed.

[[Page 899]]



Sec. 702.333  Formal hearings; parties.

    (a) The necessary parties for a formal hearing are the claimant and 
the employer or insurance carrier, and the administrative law judge 
assigned the case.
    (b) The Solicitor of Labor or his designee may appear and 
participate in any formal hearing held pursuant to these regulations on 
behalf of the Director as an interested party.



Sec. 702.334  Formal hearings; representatives of parties.

    The claimant and the employer or carrier may be represented by 
persons of their choice.



Sec. 702.335  Formal hearings; notice.

    On a form prescribed for this purpose, the Office of the Chief 
Administrative Law Judge shall notify the parties (See Sec. 702.333) of 
the place and time of the formal hearing not less than 30 days in 
advance thereof.

[42 FR 42552, Aug. 23, 1977]



Sec. 702.336  Formal hearings; new issues.

    (a) If, during the course of the formal hearing, the evidence 
presented warrants consideration of an issue or issues not previously 
considered, the hearing may be expanded to include the new issue. If in 
the opinion of the administrative law judge the new issue requires 
additional time for preparation, the parties shall be given a reasonable 
time within which to prepare for it. If the new issue arises from 
evidence that has not been considered by the district director, and such 
evidence is likely to resolve the case without the need for a formal 
hearing, the administrative law judge may remand the case to the 
district director for his or her evaluation and recommendation pursuant 
to, Sec. 702.316.
    (b) At any time prior to the filing of the compensation order in the 
case, the administrative law judge may in his discretion, upon the 
application of a party or upon his own motion, give notice that he will 
consider any new issue. The parties shall be given not less than 10 
days' notice of the hearing on such new issue. The parties may stipulate 
that the issue may be heard at an earlier time and shall proceed to a 
hearing on the new issue in the same manner as on an issue initially 
considered.

[38 FR 26861, Sept. 26, 1973, as amended at 42 FR 42552, Aug. 23, 1977]



Sec. 702.337  Formal hearings; change of time or place for hearings; 
postponements.

    (a) Except for good cause shown, hearings shall be held at 
convenient locations not more than 75 miles from the claimant's 
residence.
    (b) Once a formal hearing has been scheduled, continuances shall not 
be granted except in cases of extreme hardship or where attendance of a 
party or his or her representative is mandated at a previously scheduled 
judicial proceeding. Unless the ground for the request arises 
thereafter, requests for continuances must be received by the Chief 
Administrative Law Judge at least 10 days before the scheduled hearing 
date, must be served upon the other parties and must specify the extreme 
hardship or previously scheduled judicial proceeding claimed.
    (c) The Chief Administrative Law Judge or the administrative law 
judge assigned to the case may change the time and place of the hearing, 
or temporarily adjourn a hearing, on his own motion or for good cause 
shown by a party. The parties shall be given not less than 10 days' 
notice of the new time and place of the hearing, unless they agree to 
such change without notice.

[42 FR 42552, Aug. 23, 1977]



Sec. 702.338  Formal hearings; general procedures.

    All hearings shall be attended by the parties or their 
representatives and such other persons as the administrative law judge 
deems necessary and proper. The administrative law judge shall inquire 
fully into the matters at issue and shall receive in evidence the 
testimony of witnesses and any documents which are relevant and material 
to such matters. If the administrative law judge believes that there is 
relevant and material evidence available which has not been presented at 
the hearing, he may adjourn the hearing or, at any time, prior to the 
filing of the compensation order, reopen the

[[Page 900]]

hearing for the receipt of such evidence. The order in which evidence 
and allegations shall be presented and the procedures at the hearings 
generally, except as these regulations otherwise expressly provide, 
shall be in the discretion of the administrative law judge and of such 
nature as to afford the parties a reasonable opportunity for a fair 
hearing.



Sec. 702.339  Formal hearings; evidence.

    In making an investigation or inquiry or conducting a hearing, the 
administrative law judge shall not be bound by common law or statutory 
rules of evidence or by technical or formal rules of procedure, except 
as provided by 5 U.S.C. 554 and these regulations; but may make such 
investigation or inquiry or conduct such hearing in such a manner as to 
best ascertain the rights of the parties.



Sec. 702.340  Formal hearings; witnesses.

    (a) Witnesses at the hearing shall testify under oath or 
affirmation. The administrative law judge may examine the witnesses and 
shall allow the parties or their representatives to do so.
    (b) No person shall be required to attend as a witness in any 
proceeding before an administrative law judge at a place more than 100 
miles from his place of residence, unless his lawful mileage and fees 
for one day's attendance shall be paid or tendered to him in advance of 
the hearing date.



Sec. 702.341  Formal hearings; depositions; interrogatories.

    The testimony of any witness, including any party represented by 
counsel, may be taken by deposition or interrogatory according to the 
Federal Rules of Civil Procedure as supplemented by local rules of 
practice for the Federal district court for the judicial district in 
which the case is pending. However, such depositions or interrogatories 
must be completed within reasonable times to be fixed by the Chief 
Administrative Law Judge or the administrative law judge assigned to the 
case.

[42 FR 42552, Aug. 23, 1977]



Sec. 702.342  Formal hearings; witness fees.

    Witnesses summoned in a formal hearing before an administrative law 
judge or whose depositions are taken shall receive the same fees and 
mileage as witnesses in courts of the United States (33 U.S.C. 925).



Sec. 702.343  Formal hearings; oral argument and written allegations.

    Any party upon request shall be allowed a reasonable time for 
presentation of oral argument and shall be permitted to file a pre-
hearing brief or other written statement of fact or law. A copy of any 
such pre-hearing brief or other written statement shall be filed with 
the Chief Administrative Law Judge or the administrative law judge 
assigned to the case before or during the proceeding at which evidence 
is submitted to the administrative law judge and shall be served upon 
each other party. Post-hearing briefs will not be permitted except at 
the request of the administrative law judge or upon averment on the 
record of a party that the case presents a specific novel or difficult 
legal or factual issue (or issues) that cannot be adequately addressed 
in oral summation. When permitted, any such brief shall be limited to 
the issue or issues specified by the administrative law judge or by the 
party in his or her averment and shall be due from any party desiring to 
address such issue or issues within 15 days of the conclusion of the 
proceeding at which evidence is submitted to the administrative law 
judge. Enlargement of the time for filing such briefs shall be granted 
only if the administrative law judge is persuaded that the brief will be 
helpful to him or her and that the enlargement granted will not delay 
decision of the case.

[42 FR 42552, Aug. 23, 1977]



Sec. 702.344  Formal hearings; record of hearing.

    All formal hearings shall be open to the public and shall be 
stenographically reported. All evidence upon which the administrative 
law judge relies for his final decision shall be contained in the 
transcript of testimony either directly or by appropriate reference. All

[[Page 901]]

medical reports, exhibits, and any other pertinent document or record, 
in whole or in material part, shall be incorporated into the record 
either by reference or as an appendix.



Sec. 702.345  Formal hearings; consolidated issues; consolidated cases.

    (a) When one or more additional issues are raised by the 
administrative law judge pursuant to Sec. 702.336, such issues may, in 
the discretion of the administrative law judge, be consolidated for 
hearing and decision with other issues pending before him.
    (b) When two or more cases are transferred for formal hearings and 
have common questions of law or which arose out of a common accident, 
the Chief Administrative Law Judge may consolidate such cases for 
hearing.



Sec. 702.346  Formal hearings; waiver of right to appear.

    If all parties waive their right to appear before the administrative 
law judge or to present evidence or argument personally or by 
representative, it shall not be necessary for the administrative law 
judge to give notice of and conduct an oral hearing. A waiver of the 
right to appear and present evidence and allegations as to facts and law 
shall be made in writing and filed with the Chief Administrative Law 
Judge or the administrative law judge. Where such a waiver has been 
filed by all parties, and they do not appear before the administrative 
law judge personally or by representative, the administrative law judge 
shall make a record of the relevant written evidence submitted by the 
parties, together with any pleadings they may submit with respect to the 
issues in the case. Such documents shall be considered as all of the 
evidence in the case and the decision shall be based on them.



Sec. 702.347  Formal hearings; termination.

    (a) Formal hearings are normally terminated upon the conclusion of 
the proceeding at which evidence is submitted to the administrative law 
judge.
    (b) In exceptional cases the Chief Administrative Law Judge or the 
administrative law judge assigned to the case may, in his or her 
discretion, extend the time for official termination of the hearing.

[42 FR 42552, Aug. 23, 1977]



Sec. 702.348  Formal hearings; preparation of final decision and order; 
content.

    Within 20 days after the official termination of the hearing as 
defined by Sec. 702.347, the administrative law judge shall have 
prepared a final decision and order, in the form of a compensation 
order, with respect to the claim, making an award to the claimant or 
rejecting the claim. The compensation order shall contain appropriate 
findings of facts and conclusions of law with respect thereto, and shall 
be concluded with one or more paragraphs containing the order of the 
administrative law judge, his signature, and the date of issuance.



Sec. 702.349  Formal hearings; filing and mailing of compensation 
orders; disposition of transcripts.

    The administrative law judge shall, within 20 days after the 
official termination of the hearing, deliver by mail, or otherwise, to 
the office of the district director having original jurisdiction, the 
transcript of the hearing, other documents or pleadings filed with him 
with respect to the claim, together with his signed compensation order. 
Upon receipt thereof, the district director, being the official 
custodian of all records with respect to such claims within his 
jurisdiction, shall formally date and file the transcript, pleadings, 
and compensation order (original) in his office. Such filing shall be 
accomplished by the close of business on the next succeeding working 
day, and the district director shall, on the same day as the filing was 
accomplished, send by certified mail a copy of the compensation order to 
the parties and to representatives of the parties, if any. Appended to 
each such copy shall be a paragraph entitled ``proof of service'' 
containing the certification of the district director that the copies 
were mailed on the date stated, to each of the parties and their 
representatives, as shown in such paragraph.

[[Page 902]]



Sec. 702.350  Finality of compensation orders.

    Compensation orders shall become effective when filed in the office 
of the district director, and unless proceedings for suspension or 
setting aside of such orders are instituted within 30 days of such 
filing, shall become final at the expiration of the 30th day after such 
filing, as provided in section 21 of the Act 33 U.S.C. 921. If any 
compensation payable under the terms of such order is not paid within 10 
days after it becomes due, section 14(f) of the Act requires that there 
be added to such unpaid compensation an amount equal to 20 percent 
thereof which shall be paid at the same time as, but in addition to, 
such compensation unless review of the compensation order is had as 
provided in such section 21 and an order staying payment has been issued 
by the Benefits Review Board or the reviewing court.



Sec. 702.351  Withdrawal of controversion of issues set for formal 
hearing; effect.

    Whenever a party withdraws his controversion of the issues set for a 
formal hearing, the administrative law judge shall halt the proceedings 
upon receipt from said party of a signed statement to that effect and 
forthwith notify the district director who shall then proceed to dispose 
of the case as provided for in Sec. 702.315.

     Interlocutory Matters, Supplementary Orders, and Modifications



Sec. 702.371  Interlocutory matters.

    Compensation orders shall not be made or filed with respect to 
interlocutory matters of a procedural nature arising during the pendency 
of a compensation case.



Sec. 702.372  Supplementary compensation orders.

    (a) In any case in which the employer or insurance carrier is in 
default in the payment of compensation due under any award of 
compensation, for a period of 30 days after the compensation is due and 
payable, the person to whom such compensation is payable may, within 1 
year after such default, apply in writing to the district director for a 
supplementary compensation order declaring the amount of the default. 
Upon receipt of such application, the district director shall institute 
proceedings with respect to such application as if such application were 
an original claim for compensation, and the matter shall be disposed of 
as provided for in Sec. 702.315, or if agreement on the issue is not 
reached, then as in Sec. 702.316 et seq.
    (b) If, after disposition of the application as provided for in 
paragraph (a) of this section, a supplementary compensation order is 
entered declaring the amount of the default, which amount may be the 
whole of the award notwithstanding that only one or more installments is 
in default, a copy of such supplementary order shall be forthwith sent 
by certified mail to each of the parties and their representatives. 
Thereafter, the applicant may obtain and file with the clerk of the 
Federal district court for the judicial district where the injury 
occurred or the district in which the employed has his principal place 
of business or maintains an office, a certified copy of said order and 
may seek enforcement thereof as provided for by section 18 of the Act, 
33 U.S.C. 918.



Sec. 702.373  Modification of awards.

    (a) Upon his/her own initiative, or upon application of any party in 
interest (including an employer or carrier which has been granted relief 
under section 8(f) of the Act, 33 U.S.C. 908(f)), the district director 
may review any compensation case (including a case under which payments 
are made pursuant to section 44(i) of the Act, 33 U.S.C. 944(i)) in 
accordance with the procedure in subpart C of this part, and after such 
review of the case under Sec. 702.315, or review at formal hearings 
under the regulations governing formal hearings in subpart C of this 
part, file a new compensation order terminating, continuing, 
reinstating, increasing or decreasing such compensation, or awarding 
compensation. Such new order shall not affect any compensation 
previously paid, except that an award increasing the compensation rate 
may be

[[Page 903]]

made retroactive from the date of injury, and if any part of the 
compensation due or to become due is unpaid, an award decreasing the 
compensation rate may be made effective from the date of the injury, and 
any payment made prior thereto in excess of such decreased rate shall be 
deducted from any unpaid compensation, in such manner and by such method 
as may be determined by the district director or the administrative law 
judge. Settlements cannot be modified.
    (b) Review of a compensation case under this section may be made at 
any time prior to 1 year after the date of the last payment of 
compensation, whether or not a compensation order has been issued, or at 
any time prior to 1 year after the rejection of a claim.
    (c) Review of a compensation case may be had only for the reason 
that there is a change in conditions or that there was a mistake in the 
determination of facts.
    (d) If the investigation, described in Sec. 702.148(c), discloses a 
change in conditions and the employer or insurance carrier intends to 
pursue modification of the award of compensation the district director 
and claimant shall be notified through an informal conference. At the 
conclusion of the informal conference the district director shall issue 
a recommendation either for or against the modification. This 
recommendation shall also be sent to the Associate Director, Division of 
Longshoremen's and Harbor Workers' Compensation (DLHWC) for a 
determination on whether or not to participate in the modification 
proceeding on behalf of the special fund. Lack of concurrence of the 
Associate Director, DLHWC or lack of participation by a representative 
of the special fund shall not be a bar to the modification proceeding.

[38 FR 26861, Sept. 26, 1973, as amended at 50 FR 401, Jan. 3, 1985]

                                 Appeals



Sec. 702.391  Appeals; where.

    Appeals may be taken to the Benefits Review Board, U.S. Department 
of Labor, Washington, D.C. 20210, by filing a notice of appeals with the 
office of the district director for the compensation district in which 
the decision or order appealed from was filed and by submitting to the 
Board a petition for review of such decision or order, in accordance 
with the provisions of part 802 of this title 20.



Sec. 702.392  Appeals; what may be appealed.

    An appeal raising a substantial question of law or fact may be taken 
from a decision with respect to a claim under the Act. Such appeals may 
be taken from compensation orders when they have been filed as provided 
for in Sec. 702.349.



Sec. 702.393  Appeals; time limitations.

    The notice of appeal (see Sec. 702.391) shall be filed with the 
district director within 30 days of the filing of the decision or order 
complained of, as defined and described in Sec. Sec. 802.205 and 
802.206 of this title. A petition for review of the decision or order is 
required to be filed within 30 days after receipt of the Board's 
acknowledgment of the notice of appeal, as provided in Sec. 802.210 of 
this title.



Sec. 702.394  Appeals; procedure.

    The procedure for appeals to the Benefits Review Board shall be as 
provided by the Board in its Rules of Practice and Procedure, set forth 
in part 802 of this title.



                 Subpart D_Medical Care and Supervision



Sec. 702.401  Medical care defined.

    (a) Medical care shall include medical, surgical, and other 
attendance or treatment, nursing and hospital services, laboratory, X-
ray and other technical services, medicines, crutches, or other 
apparatus and prosthetic devices, and any other medical service or 
supply, including the reasonable and necessary cost of travel incident 
thereto, which is recognized as appropriate by the medical profession 
for the care and treatment of the injury or disease.
    (b) An employee may rely on treatment by prayer or spiritual means 
alone, in accordance with the tenets and practice of a recognized church 
or religious denomination, by an accredited practitioner of such 
recognized church or religious denomination, and

[[Page 904]]

nursing services rendered in accordance with such tenets and practice 
without loss or diminution of compensation or benefits under the Act. 
For purposes of this section, a recognized church or religious 
denomination shall be any religious organization: (1) That is recognized 
by the Social Security Administration for purposes of reimbursements for 
treatment under Medicare and Medicaid or (2) that is recognized by the 
Internal Revenue Service for purposes of tax exempt status.

[38 FR 26861, Sept. 26, 1973, as amended at 50 FR 402, Jan. 3, 1985]



Sec. 702.402  Employer's duty to furnish; duration.

    It is the duty of the employer to furnish appropriate medical care 
(as defined in Sec. 702.401(a)) for the employee's injury, and for such 
period as the nature of the injury or the process of recovery may 
require.

[50 FR 402, Jan. 3, 1985]



Sec. 702.403  Employee's right to choose physician; limitations.

    The employee shall have the right to choose his/her attending 
physician from among those authorized by the Director, OWCP, to furnish 
such care and treatment, except those physicians included on the 
Secretary's list of debarred physicians. In determining the choice of a 
physician, consideration must be given to availability, the employee's 
condition and the method and means of transportation. Generally 25 miles 
from the place of injury, or the employee's home is a reasonable 
distance to travel, but other pertinent factors must also be taken into 
consideration.

[50 FR 402, Jan. 3, 1985]



Sec. 702.404  Physician defined.

    The term physician includes doctors of medicine (MD), surgeons, 
podiatrists, dentists, clinical psychologists, optometrists, 
chiropractors, and osteopathic practitioners within the scope of their 
practice as defined by State law. The term includes chiropractors only 
to the extent that their reimbursable services are limited to treatment 
consisting of manual manipulation of the spine to correct a subluxation 
shown by X-ray or clinical findings. Physicians defined in this part may 
interpret their own X-rays. All physicians in these categories are 
authorized by the Director to render medical care under the Act. 
Naturopaths, faith healers, and other practitioners of the healing arts 
which are not listed herein are not included within the term 
``physician'' as used in this part.

[42 FR 45303, Sept. 9, 1977]



Sec. 702.405  Selection of physician; emergencies.

    Whenever the nature of the injury is such that immediate medical 
care is required and the injured employee is unable to select a 
physician, the employer shall select a physician. Thereafter the 
employee may change physicians when he is able to make a selection. Such 
changes shall be made upon obtaining written authorization from the 
employer or, if consent is withheld, from the district director. The 
Director will direct reimbursement of medical claims for services 
rendered by physicians or health care providers who are on the list of 
those excluded from providing care under the Act, if such services were 
rendered in an emergency. (See Sec. Sec. 702.417 and 702.435(b)).

[38 FR 26861, Sept. 26, 1973, as amended at 50 FR 402, Jan. 3, 1985]



Sec. 702.406  Change of physicians; non-emergencies.

    (a) Whenever the employee has made his initial, free choice of an 
attending physician, he may not thereafter change physicians without the 
prior written consent of the employer (or carrier) or the district 
director. Such consent shall be given in cases where an employee's 
initial choice was not of a specialist whose services are necessary for, 
and appropriate to, the proper care and treatment of the compensable 
injury or disease. In all other cases, consent may be given upon a 
showing of good cause for change.
    (b) The district director for the appropriate compensation district 
may order a change of physicians or hospitals when such a change is 
found to be necessary or desirable or where the fees charged exceed 
those prevailing

[[Page 905]]

within the community for the same or similar services or exceed the 
provider's customary charges.

[38 FR 26861, Sept. 26, 1973, as amended at 50 FR 402, Jan. 3, 1985]



Sec. 702.407  Supervision of medical care.

    The Director, OWCP, through the district directors and their 
designees, shall actively supervise the medical care of an injured 
employee covered by the Act. Such supervision shall include:
    (a) The requirement that periodic reports on the medical care being 
rendered be filed in the office of the district director, the frequency 
thereof being determined by order of the district director or sound 
judgment of the attending physician as the nature of the injury may 
dictate;
    (b) The determination of the necessity, character and sufficiency of 
any medical care furnished or to be furnished the employee, including 
whether the charges made by any medical care provider exceed those 
permitted under the Act;
    (c) The determination of whether a change of physicians, hospitals 
or other persons or locales providing treatment should be made or is 
necessary;
    (d) The further evaluation of medical questions arising in any case 
under the Act, with respect to the nature and extent of the covered 
injury, and the medical care required therefor.

[38 FR 26861, Sept. 26, 1973, as amended at 50 FR 402, Jan. 3, 1985]



Sec. 702.408  Evaluation of medical questions; impartial specialists.

    In any case in which medical questions arise with respect to the 
appropriate diagnosis, extent, effect of, appropriate treatment, and the 
duration of any such care or treatment, for an injury covered by the 
Act, the Director, OWCP, through the district directors having 
jurisdiction, shall have the power to evaluate such questions by 
appointing one or more especially qualified physicians to examine the 
employee, or in the case of death to make such inquiry as may be 
appropriate to the facts and circumstances of the case. The physician or 
physicians, including appropriate consultants, should report their 
findings with respect to the questions raised as expeditiously as 
possible. Upon receipt of such report, action appropriate therewith 
shall be taken.



Sec. 702.409  Evaluation of medical questions; results disputed.

    Any party who is dissatisfied with such report may request a review 
or reexamination of the employee by one or more different physicians 
employed by or selected by the Director, and such review or 
reexamination shall be granted unless it is found that it is clearly 
unwarranted. Such review shall be completed within 2 weeks from the date 
ordered unless it is impossible to complete the review and render a 
report thereon within such time period. Upon receipt of the report of 
this additional review and reexamination, such action as may be 
appropriate shall forthwith be taken.



Sec. 702.410  Duties of employees with respect to special examinations.

    (a) For any special examination required of an employee by 
Sec. Sec. 702.408 and 702.409, the employee shall submit to such 
examination at such place as is designated in the order to report, but 
the place so selected shall be reasonably convenient for the employee.
    (b) Where an employee fails to submit to an examination required by 
Sec. Sec. 702.408 and 702.409, the district director or administrative 
law judge may order that no compensation otherwise payable shall be paid 
for any period during which the employee refuses to submit to such 
examination unless circumstances justified the refusal.
    (c) Where an employee unreasonably refuses to submit to medical or 
surgical treatment, or to an examination by a physician selected by the 
employer, the district director or administrative law judge may by order 
suspend the payment of further compensation during such time as the 
refusal continues. Except that refusal to submit to medical treatment 
because of adherence to the tenets of a recognized church or religious 
denomination as

[[Page 906]]

described in Sec. 702.401(b) shall not cause the suspension of 
compensation.

[42 FR 45303, Sept. 9, 1977, as amended at 50 FR 402, Jan. 3, 1985; 51 
FR 4286, Feb. 3, 1986]



Sec. 702.411  Special examinations; nature of impartiality of 
specialists.

    (a) The special examinations required by Sec. 702.408 shall be 
accomplished in a manner designed to preclude prejudgment by the 
impartial examiner. No physician previously connected with the case 
shall be present, nor may any other physician selected by the employer, 
carrier, or employee be present. The impartial examiner may be made 
aware, by any party or by the OWCP, of the opinions, reports, or 
conclusions of any prior examining physician with respect to the nature 
and extent of the impairment, its cause, or its effect upon the wage-
earning capacity of the injured employee, if the district director 
determines that, for good cause, such opinions, reports, or conclusions 
shall be made available. Upon request, any party shall be given a copy 
of all materials made available to the impartial examiner.
    (b) The impartiality of the specialists shall not be considered to 
have been compromised if the district director deems it advisable to, 
and does, apprise the specialist by memorandum of those undisputed facts 
pertaining to the nature of the employee's employment, of the nature of 
the injury, of the post-injury employment activity, if any, and of any 
other facts which are not disputed and are deemed pertinent to the type 
of injury and/or the type of examination being conducted.
    (c) No physician selected to perform impartial examinations shall 
be, or shall have been for a period of 2 years prior to the examination, 
an employee of an insurance carrier or self-insured employer, or who has 
accepted or participated in any fee from an insurance carrier or self-
insured employer, unless the parties in interest agree thereto.

[38 FR 26861, Sept. 26, 1973, as amended at 42 FR 45303, Sept. 9, 1977]



Sec. 702.412  Special examinations; costs chargeable to employer or 
carrier.

    (a) The Director or his designee ordering the special examination 
shall have the power, in the exercise of his discretion, to charge the 
cost of the examination or review to the employer, to the insurance 
carrier, or to the special fund established by section 44 of the Act, 33 
U.S.C. 944.
    (b) The Director or his designee may also order the employer or the 
insurance carrier to provide the employee with the services of an 
attendant, where the district director considers such services 
necessary, because the employee is totally blind, has lost the use of 
both hands, or both feet or is paralyzed and unable to walk, or because 
of other disability making the employee so helpless as to require 
constant attendance in the discretion of the district director. Fees 
payable for such services shall be in accord with the provisions of 
Sec. 702.413.

[42 FR 45303, Sept. 9, 1977]



Sec. 702.413  Fees for medical services; prevailing community charges.

    All fees charged by medical care providers for persons covered by 
this Act shall be limited to such charges for the same or similar care 
(including supplies) as prevails in the community in which the medical 
care provider is located and shall not exceed the customary charges of 
the medical care provider for the same or similar services. Where a 
dispute arises concerning the amount of a medical bill, the Director 
shall determine the prevailing community rate using the OWCP Medical Fee 
Schedule (as described in 20 CFR 10.411) to the extent appropriate, and 
where not appropriate, may use other state or federal fee schedules. The 
opinion of the Director that a charge by a medical care provider 
disputed under the provisions of section 702.414 exceeds the charge 
which prevails in the community in which said medical care provider is 
located shall constitute sufficient evidence to warrant further 
proceedings pursuant to section 702.414 and to permit the Director to 
direct the claimant to select another medical provider for care to the 
claimant.

[60 FR 51348, Oct. 2, 1995]

[[Page 907]]



Sec. 702.414  Fees for medical services; unresolved disputes on 
prevailing charges.

    (a) The Director may, upon written complaint of an interested party, 
or upon the Director's own initiative, investigate any medical care 
provider or any fee for medical treatment, services, or supplies that 
appears to exceed prevailing community charges for similar treatment, 
services or supplies or the provider's customary charges. The OWCP 
medical fee schedule (see section 702.413) shall be used by the 
Director, where appropriate, to determine the prevailing community 
charges for a medical procedure by a physician or hospital (to the 
extent such procedure is covered by the OWCP fee schedule). The 
Director's investigation may initially be conducted informally through 
contact of the medical care provider by the district director. If this 
informal investigation is unsuccessful further proceedings may be 
undertaken. These proceedings may include, but not be limited to: an 
informal conference involving all interested parties; agency 
interrogatories to the pertinent medical care provider; and issuance of 
subpoenas duces tecum for documents having a bearing on the dispute.
    (1) A claim by the provider that the OWCP fee schedule does not 
represent the prevailing community rate will be considered only where 
the following circumstances are presented:
    (i) where the actual procedure performed was incorrectly identified 
by medical procedure code;
    (ii) that the presence of a severe or concomitant medical condition 
made treatment especially difficult;
    (iii) the provider possessed unusual qualifications (board 
certification in a specialty is not sufficient evidence in itself of 
unusual qualifications); or
    (iv) the provider or service is not one covered by the OWCP fee 
schedule as described by 20 CFR 10.411(d)(1).
    (2) The circumstances listed in paragraph (a)(1) of this section are 
the only ones which will justify reevaluation of the amount calculated 
under the OWCP fee schedule.
    (b) The failure of any medical care provider to present any evidence 
required by the Director pursuant to this section without good cause 
shall not prevent the Director from making findings of fact.
    (c) After any proceeding under this section the Director shall make 
specific findings on whether the fee exceeded the prevailing community 
charges (as established by the OWCP fee schedule, where appropriate) or 
the provider's customary charges and provide notice of these findings to 
the affected parties.
    (d) The Director may suspend any such proceedings if after receipt 
of the written complaint the affected parties agree to withdraw the 
controversy from agency consideration on the basis that such controversy 
has been resolved by the affected parties. Such suspension, however, 
shall be at the discretion of the Director.

[51 FR 4286, Feb. 3, 1986, as amended at 60 FR 51348, Oct. 2, 1995]



Sec. 702.415  Fees for medical services; unresolved disputes on charges; 
procedure.

    After issuance of specific findings of fact and proposed action by 
the Director as provided in Sec. 702.414 any affected provider employer 
or other interested party has the right to seek a hearing pursuant to 
section 556 of title 5, United States Code. Upon written request for 
such a hearing, the matter shall be referred by the District Director to 
the OALJ for formal hearing in accordance with the procedures in subpart 
C of this part. If no such request for a hearing is filed with the 
district director within thirty (30) days the findings issued pursuant 
to Sec. 702.414 shall be final.

[51 FR 4286, Feb. 3, 1986]



Sec. 702.416  Fees for medical services; disputes; hearings; necessary 
parties.

    At formal hearings held pursuant to Sec. 702.415, the necessary 
parties shall be the person whose fee or cost charge is in question and 
the Director, or their representatives. The employer or carrier may also 
be represented, and other parties, or associations having an interest in 
the proceedings, may be heard, in the discretion of the administrative 
law judge.

[[Page 908]]



Sec. 702.417  Fees for medical services; disputes; effect of adverse 
decision.

    If the final decision and order upholds the finding of the Director 
that the fee or charge in dispute was not in accordance with prevailing 
community charges or the provider's customary charges, the person 
claiming such fee or cost charge shall be given thirty (30) days after 
filing of such decision and order to make the necessary adjustment. If 
such person still refuses to make the required readjustment, such person 
shall not be authorized to conduct any further treatments or 
examinations (if a physician) or to provide any other services or 
supplies (if by other than a physician). Any fee or cost charge 
subsequently incurred for services performed or supplies furnished shall 
not be a reimbursable medical expense under this subpart. This 
prohibition shall apply notwithstanding the fact that the services 
performed or supplies furnished were in all other respects necessary and 
appropriate within the provision of these regulations. However, the 
Director may direct reimbursement of medical claims for services 
rendered if such services were rendered in an emergency (see Sec. 
702.435(b)). At the termination of the proceedings provided for in this 
section the district director shall determine whether further 
proceedings under Sec. 702.432 should be initiated.

[50 FR 403, Jan. 3, 1985]

                           Medical Procedures



Sec. 702.418  Procedure for requesting medical care; employee's duty 
to notify employer.

    (a) As soon as practicable, but within 30 days after occurrence of 
an injury covered by the Act, or within 30 days after an employee 
becomes aware, or in the exercise of reasonable diligence should be 
aware, of the relationship between an injury or disease and his 
employment, the injured employee or someone on his behalf shall give 
written notice thereof to the district director having jurisdiction over 
the place where the injury occurred and to the employer. If a form has 
been prescribed for such purpose it shall be used, if available and 
practicable under the circumstances. Notices filed under subpart B of 
this part, if on the form prescribed by the Director for such purpose, 
satisfy the written notice requirements of this subpart.
    (b) In the case of an occupational disease which does not 
immediately result in a disability or death, such notice shall be given 
within one year after the employee becomes aware, or in the exercise of 
reasonable diligence or by reason of medical advice should have been 
aware, of the relationship between the employment, the disease, and the 
death or disability. Notice shall be given: (1) To the district director 
in the compensation district in which the injury or death occurred, and 
(2) to the employer.

(Approved by the Office of Management and Budget under control number 
1215-0160)

[50 FR 403, Jan. 3, 1985]



Sec. 702.419  Action by employer upon acquiring knowledge or being 
given notice of injury.

    Whenever an employer acquires knowledge of an employee's injury, 
through receipt of a written notice or otherwise, said employer shall 
forthwith authorize, in writing, appropriate medical care. If a form is 
prescribed for this purpose it shall be used whenever practicable. 
Authorization shall also be given in cases where an employee's initial 
choice was not of a specialist whose services are necessary for and 
appropriate to the proper care and treatment of the compensable injury 
or disease. In all other cases, consent may be given upon a showing of 
good cause for change.

[50 FR 403, Jan. 3, 1985]



Sec. 702.420  Issuance of authorization; binding effect upon insurance 
carrier.

    The issuance of an authorization for treatment by the employer shall 
bind his insurance carrier to furnish and pay for such care and 
services.



Sec. 702.421  Effect of failure to obtain initial authorization.

    An employee shall not be entitled to recover for medical services 
and supplies unless:
    (a) The employer shall have refused or neglected a request to 
furnish such

[[Page 909]]

services and the employee has complied with sections 7 (b) and (c) of 
the Act, 33 U.S.C. 907 (b) and (c) and these regulations; or
    (b) The nature of the injury required such treatment and services 
and the employer or his superintendent or foreman having knowledge of 
such injury shall have neglected to provide or authorize same.

[50 FR 403, Jan. 3, 1985]



Sec. 702.422  Effect of failure to report on medical care after initial 
authorization.

    (a) Notwithstanding that medical care is properly obtained in 
accordance with these regulations, a finding by the Director that a 
medical care provider has failed to comply with the reporting 
requirements of the Act shall operate as a mandatory revocation of 
authorization of such medical care provider. The effect of a final 
finding to this effect operates to release the employer/carrier from 
liability of the expenses of such care. In addition to this, when such a 
finding is made by the Director, the claimant receiving treatment will 
be directed by the district director to seek authorization for medical 
care from another source.
    (b) For good cause shown, the Director may excuse the failure to 
comply with the reporting requirements of the Act and further, may make 
an award for the reasonable value of such medical care.

[50 FR 403, Jan. 3, 1985]

  Debarment of Physicians and Other Providers of Medical Services and 
                  Suppliers and Claims Representatives



Sec. 702.431  Grounds for debarment.

    A physician or health care provider shall be debarred if it is 
found, after appropriate investigation as described in Sec. 702.414 and 
proceedings under Sec. Sec. 702.432 and 702.433, that such physician or 
health care provider has:
    (a) Knowingly and willfully made, or caused to be made, any false 
statement or misrepresentation of a material fact for use in a claim for 
compensation or claim for reimbursement of medical expenses under this 
Act;
    (b) Knowingly and willfully submitted, or caused to be submitted, a 
bill or request for payment under this Act containing a charge which the 
Director finds to be substantially in excess of the charge for the 
service, appliance, or supply prevailing within the community or in 
excess of the provider's customary charges, unless the Director finds 
there is good cause for the bill or request containing the charge;
    (c) Knowingly and willfully furnished a service, appliance, or 
supply which is determined by the Director to be substantially in excess 
of the need of the recipient thereof or to be of a quality which 
substantially fails to meet professionally recognized standards;
    (d) Been convicted under any criminal statute, without regard to 
pending appeal thereof, for fraudulent activities in connection with 
federal or state program for which payments are made to physicians or 
providers of similar services, appliances, or supplies; or has otherwise 
been excluded from participation in such program.
    (e) The fact that a physician or health care provider has been 
convicted of a crime previously described in (d), or excluded or 
suspended, or has resigned in lieu of exclusion or suspension, from 
participation in any program as described in (d), shall be a prima facie 
finding of fact for purposes of section 7(j)(2) of the Act, 33 U.S.C. 
907(j)(2).

[50 FR 404, Jan. 3, 1985]



Sec. 702.432  Debarment process.

    (a) Pertaining to health care providers. Upon receipt of information 
indicating that a physician or health care provider has engaged in 
activities enumerated in subparagraphs (a) through (c) of Sec. 702.431, 
the Director, through the Director's designees, may evaluate the 
information (as described in Sec. 702.414) to ascertain whether 
proceedings should be initiated against the physician or health care 
provider to remove authorization to render medical care or service under 
the Longshore and Harbor Workers' Compensation Act.
    (b) Pertaining to health care providers and claims representatives. 
If after appropriate investigation the Director determines that 
proceedings should be

[[Page 910]]

initiated, written notice thereof sent certified mail, return receipt 
requested, shall be provided to the physician, health care provider or 
claims representative containing the following:
    (1) A concise statement of the grounds upon which debarment will be 
based;
    (2) A summary of the information upon which the director has relied 
in reaching an initial decision that debarment proceedings should be 
initiated;
    (3) An invitation to the physician, health care provider or claims 
representative to: (i) Resign voluntarily from participation in the 
program without admitting or denying the allegations presented in the 
written notice; or (ii) request a decision on debarment to be based upon 
the existing agency record and any other information the physician, 
health care provider or claims representative may wish to provide;
    (4) A notice of the physician's, health care provider's or claims 
representative's right, in the event of an adverse ruling by the 
Director, to request a formal hearing before an administrative law 
judge;
    (5) A notice that should the physician, health care provider or 
claims representative fail to provide written answer to the written 
notice described in this section within thirty (30) days of receipt, the 
Director may deem the allegations made therein to be true and may order 
exclusion of the physician, health care provider or claims 
representative without conducting any further proceedings; and
    (6) The name and address of the district director who shall be 
responsible for receiving the answer from the physician, health care 
provider or claims representative.
    (c) Should the physician, health care provider or claims 
representative fail to file a written answer to the notice described in 
this section within thirty (30) days of receipt thereof, the Director 
may deem the allegations made therein to be true and may order debarment 
of the physician, health care provider or claims representative.
    (d) The physician, health care provider or claims representative may 
inspect or request copies of information in the agency records at any 
time prior to the Director's decision.
    (e) The Director shall issue a decision in writing, and shall send a 
copy of the decision to the physician, health care provider or claims 
representative by certified mail, return receipt requested. The decision 
shall advise the physician, health care provider or claims 
representative of the right to request, within thirty (30) days of the 
date of an adverse decision, a formal hearing before an administrative 
law judge under the procedures set forth herein. The filing of such a 
request for hearing within the time specified shall operate to stay the 
effectiveness of the decision to debar.

[50 FR 404, Jan. 3, 1985]



Sec. 702.433  Requests for hearing.

    (a) A request for hearing shall be sent to the district director and 
contain a concise notice of the issues on which the physician, health 
care provider or claims representative desires to give evidence at the 
hearing with identification of witnesses and documents to be submitted 
at the hearing.
    (b) If a request for hearing is timely received by the district 
director, the matter shall be referred to the Chief Administrative Law 
Judge who shall assign it for hearing with the assigned administrative 
law judge issuing a notice of hearing for the conduct of the hearing. A 
copy of the hearing notice shall be served on the physician, health care 
provider or claims representative by certified mail, return receipt 
requested.
    (c) If a request for hearing contains identification of witnesses or 
documents not previously considered by the Director, the Director may 
make application to the assigned administrative law judge for an offer 
of proof from the physician, health care provider or claims 
representative for the purpose of discovery prior to hearing. If the 
offer of proof indicates injection of new issues or new material 
evidence not previously considered by the Director, the Director may 
request a remand order for purposes of reconsideration of the decision 
made pursuant to Sec. 702.432 of these regulations.
    (d) The parties may make application for the issuance of subpoenas 
upon a

[[Page 911]]

showing of good cause therefore to the administrative law judge.
    (e) The administrative law judge shall issue a recommended decision 
after the termination of the hearing. The recommended decision shall 
contain appropriate findings, conclusions and a recommended order and be 
forwarded, together with the record of the hearing, to the 
Administrative Review Board for a final decision. The recommended 
decision shall be served upon all parties to the proceeding.
    (f) Based upon a review of the record and the recommended decision 
of the administrative law judge, the Administrative Review Board shall 
issue a final decision.

[50 FR 404, Jan. 3, 1985, as amended at 55 FR 28606, July 12, 1990; 61 
FR 19984, May 3, 1996]



Sec. 702.434  Judicial review.

    (a) Any physician, health care provider or claims representative, 
after any final decision of the Administrative Review Board made after a 
hearing to which such person was a party, irrespective of the amount of 
controversy, may obtain a review of such decision by a civil action 
commenced within sixty (60) days after the mailing to him or her of 
notice of such decision, but the pendency of such review shall not 
operate as a stay upon the effect of such decision. Such action shall be 
brought in the Court of Appeals of the United States for the judicial 
circuit in which the plaintiff resides or has his or her principal place 
of business, or the Court of Appeals for the District of Columbia 
pursuant to section 7(j)(4) of the Act, 33 U.S.C. 907(j)(4).
    (b) As part of the Administrative Review Board answer, he or she 
shall file a certified copy of the transcript of the record of the 
hearing, including all evidence submitted in connection therewith.
    (c) The findings of fact of the Administrative Review Board, if 
based on substantial evidence in the record as a whole, shall be 
conclusive.

[50 FR 405, Jan. 3, 1985, as amended at 55 FR 28606, July 12, 1990; 61 
FR 19984, May 3, 1996]



Sec. 702.435  Effects of debarment.

    (a) The Director shall give notice of the debarment of a physician, 
hospital, or provider of medical support services or supplies to:
    (1) All OWCP district offices;
    (2) The Health Care Financing Administration;
    (3) The State or Local authority responsible for licensing or 
certifying the debarred party;
    (4) The employers and authorized insurers under the Act by means of 
an annual bulletin sent to them by the Director; and
    (5) The general public by posting in the district office in the 
jurisdiction where the debarred party maintains a place of business.

If a claims representative is debarred, the Director shall give notice 
to those groups listed in paragraphs (a) (1), (3), (4), and (5) of this 
section.
    (b) Notwithstanding any debarment under this subpart, the Director 
shall not refuse a claimant reimbursement for any otherwise reimbursable 
medical expense if the treatment, service or supply was rendered by 
debarred provider in an emergency situation. However, such claimant will 
be directed by the Director to select a duly qualified provider upon the 
earliest opportunity.

[50 FR 405, Jan. 3, 1985]



Sec. 702.436  Reinstatement.

    (a) If a physician or health care provider has been debarred or 
pursuant to Sec. 702.431(d) or if a claims representative has been 
debarred pursuant to Sec. 702.131(c) (1) or (3) the person debarred 
will be automatically reinstated upon notice to the Director that the 
conviction or exclusion has been reversed or withdrawn. However, such 
reinstatement will not preclude the Director from instituting debarment 
proceedings based upon the subject matter involved.
    (b) A physician, health care provider or claims representative 
otherwise debarred by the Director may apply for reinstatement to 
participate in the program by application to the Director after three 
years from the date of entry of the order of exclusion. Such application 
for reinstatement shall be addressed to the Associate Director for

[[Page 912]]

the Longshore program, and shall contain a statement of the basis of the 
application along with any supporting documentation.
    (c) The Director may further investigate the merits of the 
reinstatement application by requiring special reporting procedures from 
the applicant for a probationary period not to exceed six months to be 
monitored by the district office where the provider maintains a place of 
business.
    (d) At the end of aforesaid probationary period, the Director may 
order full reinstatement of the physician, health care provider or 
claims representative if such reinstatement is clearly consistent with 
the program goal to protect itself against fraud and abuse and, further, 
if the physician, health care provider or claims representative has 
given reasonable assurances that the basis for the debarment will not be 
repeated.

[50 FR 405, Jan. 3, 1985]

                           Hearing Loss Claims



Sec. 702.441  Claims for loss of hearing.

    (a) Claims for hearing loss pending on or filed after September 28, 
1984 (the date of enactment of Pub. L. 98-426) shall be adjudicated with 
respect to the determination of the degree of hearing impairment in 
accordance with these regulations.
    (b) An audiogram shall be presumptive evidence of the amount of 
hearing loss on the date administered if the following requirements are 
met:
    (1) The audiogram was administered by a licensed or certified 
audiologist, by a physician certified by the American Board of 
Otolaryngology, or by a technician, under an audiologist's or 
physician's supervision, certified by the Council of Accreditation on 
Occupational Hearing Conservation, or by any other person considered 
qualified by a hearing conservation program authorized pursuant to 29 
CFR 1910.95(g)(3) promulgated under the Occupational Safety and Health 
Act of 1970 (29 U.S.C. 667). Thus, either a professional or trained 
technician may conduct audiometric testing. However, to be acceptable 
under this subsection, a licensed or certified audiologist or 
otolaryngologist, as defined, must ultimately interpret and certify the 
results of the audiogram. The accompanying report must set forth the 
testing standards used and describe the method of evaluating the hearing 
loss as well as providing an evaluation of the reliability of the test 
results.
    (2) The employee was provided the audiogram and a report thereon at 
the time it was administered or within thirty (30) days thereafter.
    (3) No one produces a contrary audiogram of equal probative value 
(meaning one performed using the standards described herein) made at the 
same time. ``Same time'' means within thirty (30) days thereof where 
noise exposure continues or within six (6) months where exposure to 
excessive noise levels does not continue. Audiometric tests performed 
prior to the enactment of Public Law 98-426 will be considered 
presumptively valid if the employer complied with the procedures in this 
section for administering audiograms.
    (c) In determining the amount of pre-employment hearing loss, an 
audiogram must be submitted which was performed prior to employment or 
within thirty (30) days of the date of the first employment-related 
noise exposure. Audiograms performed after December 27, 1984 must comply 
with the standards described in paragraph (d) of this section.
    (d) In determining the loss of hearing under the Act, the evaluators 
shall use the criteria for measuring and calculating hearing impairment 
as published and modified from time-to-time by the American Medical 
Association in the Guides to the Evaluation of Permanent Impairment, 
using the most currently revised edition of this publication. In 
addition, the audiometer used for testing the individual's threshold of 
hearing must be calibrated according to current American National 
Standard Specifications for Audiometers. Audiometer testing procedures 
required by hearing conservation programs pursuant to the Occupational 
Safety and Health Act of 1970 should be followed (as described at 29 CFR 
1910.95 and appendices).

(Approved by the Office of Management and Budget under control number 
1215-0160)

[50 FR 405, Jan. 3, 1985]

[[Page 913]]



                   Subpart E_Vocational Rehabilitation



Sec. 702.501  Vocational rehabilitation; objective.

    The objective of vocational rehabilitation is the return of 
permanently disabled persons to gainful employment commensurate with 
their physical or mental impairments, or both, through a program of 
reevaluation or redirection of their abilities, or retraining in another 
occupation, or selective job placement assistance.



Sec. 702.502  Vocational rehabilitation; action by district directors.

    All injury cases which are likely to result in, or have resulted in, 
permanent disability, and which are of a character likely to require 
review by a vocational rehabilitation adviser on the staff of the 
Director, shall promptly be referred to such adviser by the district 
director or his designee having charge of the case. A form has been 
prescribed for such purpose and shall be used. Medical data and other 
pertinent information shall accompany the referral.

(Approved by the Office of Management and Budget under control number 
1215-0051)

(Pub. L. No. 96-511)

[38 FR 26861, Sept. 26, 1973, as amended at 49 FR 18294, Apr. 30, 1984]



Sec. 702.503  Vocational rehabilitation; action by adviser.

    The vocational rehabilitation adviser, upon receipt of the referral, 
shall promptly consider the feasibility of a vocational referral or 
request for cooperative services from available resources or facilities, 
to include counseling, vocational survey, selective job placement 
assistance, and retraining. Public or private agencies may be utilized 
in arranging necessary vocational rehabilitation services under the 
Federal Vocational Rehabilitation Act, 29 U.S.C. 31 et seq.



Sec. 702.504  Vocational rehabilitation; referrals to State Employment 
Agencies.

    Vocational rehabilitation advisers will arrange referral procedures 
with State Employment Service units within their assigned geographical 
districts for the purpose of securing employment counseling, job 
classification, and selective placement assistance. Referrals shall be 
made to State Employment Offices based upon the following:
    (a) Vocational rehabilitation advisers will screen cases so as to 
refer only those disabled employees who are considered to have 
employment potential;
    (b) Only employees will be referred who have permanent, compensable 
disabilities resulting in a significant vocational handicap and loss of 
wage earning capacity;
    (c) Disabled employees, whose initial referral to former private 
employers did not result in a job reassignment or in a job retention, 
shall be referred for employment counseling and/or selective placement 
unless retraining services consideration is requested;
    (d) The vocational rehabilitation advisers shall arrange for 
employees' referrals if it is ascertained that they may benefit from 
registering with the State Employment Service;
    (e) Referrals will be made to appropriate State Employment Offices 
by letter, including all necessary information and a request for a 
report on the services provided the employee when he registers;
    (f) The injured employee shall be advised of available job 
counseling services and informed that he is being referred for 
employment and selective placement;
    (g) A followup shall be made within 60 days on all referrals to 
assure uniform reporting by State agencies on cases referred for a 
vocational survey.



Sec. 702.505  Vocational rehabilitation; referrals to other public 
and private agencies.

    Referrals to such other public and private agencies providing 
assistance to disabled persons such as public welfare agencies, Public 
Health Services facilities, social services units of the Veterans 
Administration, the Social Security Administration, and other such 
agencies, shall be made by the vocational rehabilitation adviser, where 
appropriate, on an individual basis when requested by disabled 
employees. Such referrals do not provide for a

[[Page 914]]

service cost reimbursement by the Department of Labor.



Sec. 702.506  Vocational rehabilitation; training.

    Vocational rehabilitation training shall be planned in anticipation 
of a short, realistic, attainable vocational objective terminating in 
remunerable employment, and in restoring wage-earning capacity or 
increasing it materially. The following procedures shall apply in 
arranging for or providing training:
    (a) The vocational rehabilitation adviser shall arrange for and 
develop all vocational training programs.
    (b) Training programs shall be developed to meet the varying needs 
of eligible beneficiaries, and may include courses at colleges, 
technical schools, training at rehabilitation centers, on-the-job 
training, or tutorial courses. The courses shall be pertinent to the 
occupation for which the employee is being trained.
    (c) Training may be terminated if the injured employee fails to 
cooperate with the Department of Labor or with the agency supervising 
his course of training. The employee shall be counseled before training 
is terminated.
    (d) Reports shall be required at periodic intervals on all persons 
in approved training programs.



Sec. 702.507  Vocational rehabilitation; maintenance allowance.

    (a) An injured employee who, as a result of injury, is or may be 
expected to be totally or partially incapacitated for a remunerative 
occupation and who, under the direction of the Director is being 
rendered fit to engage in a remunerative occupation, shall be paid 
additional compensation necessary for this maintenance, not exceeding 
$25 a week. The expense shall be paid out of the special fund 
established in section 44 of the Act, 33 U.S.C. 944. The maximum 
maintenance allowance shall not be provided on an automatic basis, but 
shall be based on the recommendation of a State agency that a claimant 
is unable to meet additional costs by reason of being in training.
    (b) When required by reason of personal illness or hardship, limited 
periods of absence from training may be allowed without terminating the 
maintenance allowance. A maintenance allowance shall be terminated when 
it is shown to the satisfaction of the Director that a trainee is not 
complying reasonably with the terms of the training plan or is absenting 
himself without good cause from training so as to materially interfere 
with the accomplishment of the training objective.



Sec. 702.508  Vocational rehabilitation; confidentiality of information.

    The following safeguards will be observed to protect the 
confidential character of information released regarding an individual 
undergoing rehabilitation:
    (a) Information will be released to other agencies from which an 
injured employee has requested services only if such agencies have 
established regulations assuring that such information will be 
considered confidential and will be used only for the purpose for which 
it is provided;
    (b) Interested persons and agencies have been advised that any 
information concerning rehabilitation program employees is to be held 
confidential;
    (c) A rehabilitation employee's written consent is secured for 
release of information regarding disability to a person, agency, or 
establishment seeking the information for purposes other than the 
approved rehabilitation planning with such employee.



  Subpart F_Occupational Disease Which Does Not Immediately Result in 
                           Death or Disability

    Source: 50 FR 406, Jan. 3, 1985, unless otherwise noted.



Sec. 702.601  Definitions.

    (a) Time of injury. For purposes of this subpart and with respect to 
an occupational disease which does not immediately result in death or 
disability, the time of injury shall be deemed to be the date on which 
the employee or claimant becomes aware, or in the exercise of reasonable 
diligence or by reason of medical advice should have been aware, of the 
relationship between the employment, the disease, and the death or 
disability.

[[Page 915]]

    (b) Disability. With regard to an occupational disease for which the 
time of injury, as defined in Sec. 702.601(a), occurs after the 
employee was retired, disability shall mean permanent impairment as 
determined according to the Guides to the Evaluation of Permanent 
Impairment which is prepared and modified from time-to-time by the 
American Medical Association, using the most currently revised edition 
of this publication. If this guide does not evaluate the impairment, 
other professionally recognized standards may be utilized. The 
disability described in this paragraph shall be limited to permanent 
partial disability. For that reason they are not subject to adjustments 
under section 10(f) of the Act, 33 U.S.C. 910(f).
    (c) Retirement. For purposes of this subpart, retirement shall mean 
that the claimant, or decedent in cases involving survivor's benefits, 
has voluntarily withdrawn from the workforce and that there is no 
realistic expectation that such person will return to the workforce.

[50 FR 406, Jan. 3, 1985, as amended at 51 FR 4286, Feb. 3, 1986]



Sec. 702.602  Notice and claims.

    (a) Time for giving notice of injury or death. Refer to Sec. 
702.207.
    (b) Time for filing of claims. Refer to Sec. 702.212.



Sec. 702.603  Determining the payrate for compensating occupational 
disease claims which become manifest after retirement.

    (a) If the time of injury occurs within the first year after the 
employee has retired, the payrate for compensation purposes shall be one 
fifty-second part of the employee's average annual earnings during the 
fifty-two week period preceding retirement.
    (b) If the time of injury occurs more than one year after the 
employee has retired the payrate for compensation purposes shall be the 
national average weekly wage, determined according to section 6(b)(3) of 
the Act, 33 U.S.C. 906(b)(3), at the time of injury.



Sec. 702.604  Determining the amount of compensation for occupational 
disease claims which become manifest after retirement.

    (a) If the claim is for disability benefits and the time of injury 
occurs after the employee has retired, compensation shall be 66\2/3\ 
percent of the payrate, as determined under Sec. 702.603, times the 
disability, as determined according to Sec. 702.601(b).
    (b) If the claim is for death benefits and the time of injury occurs 
after the decedent has retired, compensation shall be the percent 
specified in section 9 of the Act, 33 U.S.C. 909, times the payrate 
determined according to Sec. 702.603. Total weekly death benefits shall 
not exceed one fifty-second part of the decedent's average annual 
earnings during the fifty-two week period preceding retirement, such 
benefits shall be subject to the limitation provided for in section 
6(b)(1) of the Act, 33 U.S.C. 906(b)(1).

[50 FR 406, Jan. 3, 1985, as amended at 51 FR 4286, Feb. 3, 1986]



PART 703_INSURANCE REGULATIONS--Table of Contents




Sec.

                            Subpart A_General

703.1 Scope of part.
703.2 Forms.
703.3 Failure to secure coverage; penalties.

              Subpart B_Authorization of Insurance Carriers

703.101 Types of companies which may be authorized by the OWCP.
703.102 Applications for authority to write insurance; how filed; 
          evidence to be submitted; other requirements.
703.103 Stock companies holding Treasury certificates of authority.
703.104 Applicants currently authorized to write insurance under the 
          extensions of the LHWCA.
703.105 Copies of forms of policies to be submitted with application.
703.106 Certificate of authority to write insurance.
703.108 Period of authority to write insurance.
703.109 Longshoremen's endorsement; see succeeding parts for 
          endorsements for extensions.

[[Page 916]]

703.110 Other forms of endorsements and policies.
703.111 Submission of new forms of policies for approval; other 
          endorsements.
703.112 Terms of policies.
703.113 Marine insurance contracts.
703.114 Notice of cancellation.
703.115 Discharge by the carrier of obligations and duties of employer.
703.116 Report by carrier of issuance of policy or endorsement.
703.117 Report; by whom sent.
703.118 Agreement to be bound by report.
703.119 Report by employer operating temporarily in another compensation 
          district.
703.120 Name of one employer only shall be given in each report.

        Subpart C_Insurance Carrier Security Deposit Requirements

703.201 Deposits of security by insurance carriers.
703.202 Identification of significant gaps in State guaranty fund 
          coverage for LHWCA obligations.
703.203 Application for security deposit determination; information to 
          be submitted; other requirements.
703.204 Decision on insurance carrier's application; minimum amount of 
          deposit.
703.205 Filing of Agreement and Undertaking; deposit of security.
703.206 [Reserved]
703.207 Kinds of negotiable securities that may be deposited; conditions 
          of deposit; acceptance of deposits.
703.208 Deposits of negotiable securities with Federal Reserve banks or 
          the Treasurer of the United States; interest thereon.
703.209 Substitution and withdrawal of indemnity bond, letters of credit 
          or negotiable securities.
703.210 Increase or reduction in security deposit amount.
703.211 Authority to seize security deposit; use and/or return of 
          proceeds.
703.212 Required reports; examination of insurance carrier accounts.
703.213 Failure to comply.

                Subpart D_Authorization of Self-Insurers

703.301 Employers who may be authorized as self-insurers.
703.302 Application for authority to become a self-insurer; how filed; 
          information to be submitted; other requirements.
703.303 Decision on employer's application.
703.304 Filing of Agreement and Undertaking; deposit of security.
703.305 [Reserved]
703.306 Kinds of negotiable securities that may be deposited; conditions 
          of deposit; acceptance of deposits.
703.307 Deposits of negotiable securities with Federal Reserve banks or 
          the Treasurer of the United States; interest thereon.
703.308 Substitution and withdrawal of indemnity bond, letters of credit 
          or negotiable securities.
703.309 Increase or reduction in the amount of indemnity bond, letters 
          of credit or negotiable securities.
703.310 Authority to seize security deposit; use and/or return of 
          proceeds.
703.311 Required reports; examination of self-insurer accounts.
703.312 Period of authorization as self-insurer.
703.313 Revocation of authorization to self-insure.

            Subpart E_Issuance of Certificates of Compliance

703.501 Issuance of certificates of compliance.
703.502 Same; employer operating temporarily in another compensation 
          district.
703.503 Return of certificates of compliance.

    Authority: 5 U.S.C. 301 and 8171 et seq.; 31 U.S.C. 9701; 33 U.S.C. 
932 and 939; 36 D.C. Code 501 et seq.; 42 U.S.C. 1651 et seq.; 43 U.S.C. 
1331; Reorganization Plan No. 6 of 1950, 15 FR 3174, 3 CFR, 1949-1953 
Comp., p. 1004, 64 Stat. 1263; Secretary's Order 4-2001, 66 FR 29656.

    Source: 38 FR 26873, Sept. 26, 1973, unless otherwise noted.



                            Subpart A_General

    Source: 70 FR 43233, July 26, 2005, unless otherwise noted.



Sec. 703.1  Scope of part.

    Part 703 governs insurance carrier authorizations, insurance carrier 
security deposits, self-insurer authorizations, and certificates of 
compliance with the insurance regulations. These provisions are required 
by the LHWCA and apply to the extensions of the LHWCA except as 
otherwise provided in part 704 of this subchapter.



Sec. 703.2  Forms.

    (a) Any information required by the regulations in this part to be 
submitted to OWCP must be submitted on forms the Director authorizes 
from time to time for such purpose. Persons submitting forms may not 
modify the forms or use substitute forms without OWCP's approval.

[[Page 917]]



------------------------------------------------------------------------
              Form No.                               Title
------------------------------------------------------------------------
(1) LS-271..........................  Application for Self-Insurance.
(2) LS-274..........................  Report of Injury Experience.
(3) LS-275 SI.......................  Self-Insurer's Agreement and
                                       Undertaking.
(4) LS-275 IC.......................  Insurance Carrier's Agreement and
                                       Undertaking.
(5) LS-276..........................  Application for Security Deposit
                                       Determination.
(6) LS-405..........................  Indemnity Bond.
(7) LS-570..........................  Card Report of Insurance.
------------------------------------------------------------------------

    (b) Copies of the forms listed in this section are available for 
public inspection at the Office of Workers' Compensation Programs, 
Employment Standards Administration, U.S. Department of Labor, 
Washington, D.C. 20210. They may also be obtained from OWCP district 
offices and on the Internet at http://www.dol.gov/esa/owcp/dlhwc/
lsforms.htm.



Sec. 703.3  Failure to secure coverage; penalties.

    (a) Each employer must secure the payment of compensation under the 
Act either through an authorized insurance carrier or by becoming an 
authorized self-insurer under section 32(a)(1) or (2) of the Act (33 
U.S.C. 932(a)(1) or (2)). An employer who fails to comply with these 
provisions is subject, upon conviction, to a fine of not more than 
$10,000, or by imprisonment for not more than one year, or both. Where 
the employer is a corporation, the president, secretary and treasurer 
each will also be subject to this fine and/or imprisonment, in addition 
to the fine against the corporation, and each is severally personally 
liable, jointly with the corporation, for all compensation or other 
benefits payable under the Act while the corporation fails to secure the 
payment of compensation.
    (b) Any employer who willingly and knowingly transfers, sells, 
encumbers, assigns or in any manner disposes of, conceals, secretes, or 
destroys any property belonging to the employer after an employee 
sustains an injury covered by the Act, with the intent to avoid payment 
of compensation under the Act to that employee or his/her dependents, 
shall be guilty of a misdemeanor and punished, upon conviction, by a 
fine of not more than $10,000 and/or imprisonment for one year. Where 
the employer is a corporation, the president, secretary and treasurer 
are also severally liable to imprisonment and, along with the 
corporation, jointly liable for the fine.



              Subpart B_Authorization of Insurance Carriers



Sec. 703.101  Types of companies which may be authorized by the OWCP.

    The OWCP will consider for the granting of authority to write 
insurance under the Longshoremen's and Harbor Workers' Compensation Act 
and its extensions the application of any stock company, mutual company 
or association, or any other person or fund, while authorized under the 
laws of the United States or for any State to insure workmen's 
compensation. The term ``carrier'' as used in this part means any person 
or fund duly authorized to insure workmen's compensation benefits under 
said Act, or its extensions.



Sec. 703.102  Applications for authority to write insurance; how filed; 
evidence to be submitted; other requirements.

    An application for authority to write insurance under this Act shall 
be made in writing, signed by an officer of the applicant duly 
authorized to make such application, and transmitted to the Office of 
Workmen's Compensation Programs, U.S. Department of Labor, Washington, 
DC 20210. Such application shall be accompanied by full and complete 
information regarding the history and experience of such applicant in 
the writing of workmen's compensation insurance, together with evidence 
that it has authority in its charter or form of organization to write 
such insurance, and evidence that the applicant is currently authorized 
to insure workmen's compensation liability under the laws of the United 
States or of any State. The statements of fact in each application and 
in the supporting evidence shall be verified by the oath of the officer 
of the applicant who signs such application. Each applicant shall state 
in its application the area or areas, in which it intends to do 
business. In connection with any such application the following shall be 
submitted, the Office

[[Page 918]]

reserving the right to call for such additional information as it may 
deem necessary in any particular case:
    (a) A copy of the last annual report made by the applicant to the 
insurance department or other authority of the State in which it is 
incorporated, or the State in which its principal business is done.
    (b) A certified copy from the proper State authorities of the paper 
purporting to show the action taken upon such report, or such other 
evidence as the applicant desires to submit in respect of such report, 
which may obviate delay caused by an inquiry of the OWCP of the State 
authorities relative to the standing and responsibility of the 
applicant.
    (c) A full and complete statement of its financial condition, if not 
otherwise shown, and, if a stock company, shall show specifically its 
capital stock and surplus.
    (d) A copy of its charter or other formal outline of its 
organization, its rules, its bylaws, and other documents, writings, or 
agreements by and under which it does business, and such other evidence 
as it may deem proper to make a full exposition of its affairs and 
financial condition.

[38 FR 26873, Sept. 26, 1973; 50 FR 406, Jan. 3, 1985]



Sec. 703.103  Stock companies holding Treasury certificates of authority.

    A stock company furnishing evidence that it is authorized to write 
workmen's compensation insurance under the laws of the United States or 
of any State, which holds a certificate of authority from the Secretary 
of the Treasury as an acceptable surety on Federal bonds, unless 
requested to do so, need not transmit to the Office with its application 
copies of such financial reports as are on file in the Department of the 
Treasury. The acceptance by that Department of such a company will be 
considered by the Office in conjunction with the application of such 
company, provided there has been compliance with the other requirements 
of the regulations in this part.



Sec. 703.104  Applicants currently authorized to write insurance under 
the extensions of the LHWCA.

    Any applicant currently authorized by the Office to write insurance 
under any extension of the LHWCA need not support its application under 
the LHWCA or any other LHWCA extension with the evidence required by the 
regulations in this part, except the form of policy and endorsement 
which it proposes to use, unless specifically requested by the Office, 
but instead its application may refer to the fact that it has been so 
authorized.



Sec. 703.105  Copies of forms of policies to be submitted with 
application.

    With each application for authority to write insurance there shall 
be submitted for the approval of the Office copies of the forms of 
policies which the applicant proposes to issue in writing insurance 
under the LHWCA, or its extensions, to which shall be attached the 
appropriate endorsement to be used in connection therewith.



Sec. 703.106  Certificate of authority to write insurance.

    No corporation, company, association, person, or fund shall write 
insurance under this Act without first having received from the OWCP a 
certificate of authority to write such insurance. Any such certificate 
issued by the Office, after application therefor in accordance with 
these regulations, may authorize the applicant to write such insurance 
in a limited territory as determined by the Office. Any such certificate 
may be suspended or revoked by the Office prior to its expiration for 
good cause shown, but no suspension or revocation shall affect the 
liability of any carrier already incurred. Good cause shall include, 
without limitation, the failure to maintain in such limited territory a 
regular business office with full authority to act on all matters 
falling within the Act, and the failure to promptly and properly perform 
the carrier's responsibilities under the Act and these regulations, with 
special emphasis upon lack of promptness in making payments when due, 
upon failure to furnish appropriate medical care, and upon attempts to 
offer to, or

[[Page 919]]

urge upon, claimants inequitable settlements. A hearing may be requested 
by the aggrieved party and shall be held before the Director or his 
representative prior to the taking of any adverse action under this 
section.



Sec. 703.108  Period of authority to write insurance.

    Effective with the end of the authorization period July 1, 1983, 
through June 30, 1984, annual reauthorization of authority to write 
insurance coverage under the Act is no longer necessary. Beginning July 
1, 1984, and thereafter, newly issued Certificates of Authority will 
show no expiration date. Certificates of Authority will remain in force 
for so long as the carrier complies with the requirements of the OWCP.

[50 FR 406, Jan. 3, 1985]



Sec. 703.109  Longshoremen's endorsement; see succeeding parts for 
endorsements for extensions.

    (a) The following form of endorsement application to the standard 
workmen's compensation and employer's liability policy, shall be used, 
if required by the OWCP, with the form of policy approved by the Office 
for use by an authorized carrier:

    For attachment to Policy No. ------,
    The obligations of the policy include the Longshoremen's and Harbor 
Workers' Compensation Act, 33 U.S.C. 901 et seq., and all laws 
amendatory thereof or supplementary thereto which may be or become 
effective while this policy is in force.
    The company will be subject to the provisions of 33 U.S.C. 935. 
Insolvency or bankruptcy of the employer and/or discharge therein shall 
not relieve the company from payment of compensation and other benefits 
lawfully due for disability or death sustained by an employee during the 
life of the policy.
    The company agrees to abide by all the provisions of this Act, and 
all lawful rules, regulations, orders, and decisions of the Office of 
Workmen's Compensation Programs, U.S. Department of Labor, unless and 
until set aside, modified, or reversed by appropriate appellate 
authority as provided for by said Act.
    This endorsement shall not be cancelled prior to the date specified 
in this policy for its expiration until at least 30 days have elapsed 
after a notice of cancellation has been sent to the District Director 
and to this employer.
    All terms, conditions, requirements, and obligations, expressed in 
this policy or in any other endorsement attached thereto which are not 
inconsistent with or inapplicable to the provisions of this endorsement 
are hereby made a part of this endorsement as fully and completely as if 
wholly written herein.



Sec. 703.110  Other forms of endorsements and policies.

    Where the form of endorsement prescribed by Sec. 703.109 is not 
appropriate when used in conjunction with a form of policy approved for 
use by the Office no modification thereof shall be used unless 
specifically approved by the Office. Where the form of policy is 
designed to include therein the obligations of the insurer under said 
Act without the use of the appropriate endorsements, the policy shall 
contain the provisions required to be included in any of the 
endorsements. Such a policy, however, shall not be used until expressly 
approved by the Office.



Sec. 703.111  Submission of new forms of policies for approval; other 
endorsements.

    No new forms of policies or modification of existing forms of 
policies shall be used by an insurer authorized by the Office under the 
regulations in this part to write insurance under said Act except after 
submission to and approval by the Office. No endorsement altering any 
provisions of a policy approved by the Office shall be used except after 
submission to and approval by the Office.



Sec. 703.112  Terms of policies.

    A policy or contract of insurance shall be issued for the term of 
not less than 1 year from the date that it becomes effective, but if 
such insurance be not needed except for a particular contract or 
operation, the term of the policy may be limited to the period of such 
contract or operation.



Sec. 703.113  Marine insurance contracts.

    A longshoremen's policy, or the longshoremen's endorsement provided 
for by Sec. 703.109 for attachment to a marine policy, may specify the 
particular vessel or vessels in respect of which the policy applies and 
the address of the employer at the home port thereof. The report of the 
issuance of a policy or endorsement required by Sec. 703.116 to be

[[Page 920]]

made by the carrier shall be made to the district director for the 
compensation district in which the home port of such vessel or vessels 
is located, and such report shall show the name and address of the owner 
as well as the name or names of such vessel or vessels.



Sec. 703.114  Notice of cancellation.

    Cancellation of a contract or policy of insurance issued under 
authority of said Act shall not become effective otherwise than as 
provided by 33 U.S.C. 936(b); and notice of a proposed cancellation 
shall be given to the district director and to the employer in 
accordance with the provisions of 33 U.S.C. 912(c), 30 days before such 
cancellation is intended to be effective.



Sec. 703.115  Discharge by the carrier of obligations and duties of 
employer.

    Every obligation and duty in respect of payment of compensation, the 
providing of medical and other treatment and care, the payment or 
furnishing of any other benefit required by said Act and in respect of 
the carrying out of the administrative procedure required or imposed by 
said Act or the regulations in this part upon an employer shall be 
discharged and carried out by the carrier except that the prescribed 
report of injury or death shall be sent by the employer to the district 
director and to the insurance carrier as required by 33 U.S.C. 930. Such 
carrier shall be jointly responsible with the employer for the 
submission of all reports, notices, forms, and other administrative 
papers required by the district director or the Office in the 
administration of said Act to be submitted by the employer, but any form 
or paper so submitted where required therein shall contain in addition 
to the name and address of the carrier, the full name and address of the 
employer on whose behalf it is submitted. Notice to or knowledge of an 
employer of the occurrence of the injury or death shall be notice to or 
knowledge of such carrier. Jurisdiction of the employer by a district 
director, the Office, or appropriate appellate authority under said Act 
shall be jurisdiction of such carrier. Any requirement under any 
compensation order, finding, or decision shall be binding upon such 
carrier in the same manner and to the same extent as upon the employer.



Sec. 703.116  Report by carrier of issuance of policy or endorsement.

    Each carrier shall report to the district director assigned to a 
compensation district each policy and endorsement issued by it to an 
employer who carries on operations in such compensation district. The 
report shall be made in such manner and on such form as the district or 
the Office may require.



Sec. 703.117  Report; by whom sent.

    The report of issuance of a policy and endorsement provided for in 
Sec. 703.116 shall be sent by the home office of the carrier, except 
that any carrier may authorize its agency or agencies in any 
compensation district to make such reports to the district director, 
provided the carrier shall notify the district director in such district 
of the agencies so duly authorized.



Sec. 703.118  Agreement to be bound by report.

    Every applicant for authority to write insurance under the 
provisions of this Act, shall be deemed to have included in its 
application an agreement that the acceptance by the district director of 
a report of the issuance of a policy of insurance, as provided for by 
Sec. 703.116, shall bind the carrier to full liability for the 
obligations under this Act of the employer named in said report, and 
every certificate of authority to write insurance under this Act shall 
be deemed to have been issued by the Office upon consideration of the 
carrier's agreement to become so bound. It shall be no defense to this 
agreement that the carrier failed or delayed to issue the policy to the 
employer covered by this report.

[50 FR 406, Jan. 3, 1985]



Sec. 703.119  Report by employer operating temporarily in another 
compensation district.

    Where an employer having operations in one compensation district 
contemplates engaging in work subject to the Act in another compensation 
district, his carrier may submit to the

[[Page 921]]

district director of such latter district a report pursuant to Sec. 
703.116 containing the address of the employer in the first mentioned 
district with the additional notation ``No present address in -------- 
compensation district. Certificate requested when address given.''



Sec. 703.120  Name of one employer only shall be given in each report.

    A separate report of the issuance of a policy and endorsement, 
provided for by Sec. 703.116, shall be made for each employer covered 
by a policy. If a policy is issued insuring more than one employer, a 
separate report for each employer so covered shall be sent to the 
district director concerned, with the name of only one employer on each 
such report.



        Subpart C_Insurance Carrier Security Deposit Requirements

    Source: 70 FR 43234, July 26, 2005, unless otherwise noted.



Sec. 703.201  Deposits of security by insurance carriers.

    The regulations in this subpart require certain insurance carriers 
to deposit security in the form of indemnity bonds, letters of credit or 
negotiable securities (chosen at the option of the carrier) of a kind 
and in an amount determined by the Office, and prescribe the conditions 
under which deposits must be made. Security deposits secure the payment 
of compensation and medical benefits when an insurance carrier defaults 
on any of its obligations under the LHWCA, regardless of the date such 
obligations arose. They also secure the payment of compensation and 
medical benefits when a carrier becomes insolvent and such obligations 
are not otherwise fully secured by a State guaranty fund. Any gap in 
State guaranty fund coverage will have a direct effect on the amount of 
security the Office will require a carrier to post. As used in this 
subpart, the terms ``obligations under the Act'' and ``LHWCA 
obligations'' mean a carrier's liability for compensation payments and 
medical benefits arising under the Longshore and Harbor Workers' 
Compensation Act and any of its extensions.



Sec. 703.202  Identification of significant gaps in State guaranty fund 
coverage for LHWCA obligations.

    (a) In determining the amount of a carrier's required security 
deposit, the Office will consider the extent to which a State guaranty 
fund secures the insurance carrier's LHWCA obligations in that State. 
When evaluating State guaranty funds, the Office may consider a number 
of factors including, but not limited to--
    (1) Limits on weekly benefit amounts;
    (2) Limits on aggregate maximum benefit amounts;
    (3) Time limits on coverage;
    (4) Ocean marine exclusions;
    (5) Employer size and viability provisions; and
    (6) Financial strength of the State guaranty fund itself.
    (b) OWCP will identify States without guaranty funds and States with 
guaranty funds that do not fully and immediately secure LHWCA 
obligations and will post its findings on the Internet at http://
www.dol.gov/esa/owcp/dlhwc/lstable.htm. These findings will indicate the 
extent of any partial or total gap in coverage provided by a State 
guaranty fund, and they will be open for inspection and comment by all 
interested parties. If the extent of coverage a particular State 
guaranty fund provides either cannot be determined or is ambiguous, OWCP 
will deem one third (33\1/3\ percent) of a carrier's LHWCA obligations 
in that State to be unsecured. OWCP will revise its findings from time 
to time, in response to substantiated public comments it receives or for 
any other reasons it considers relevant.



Sec. 703.203  Application for security deposit determination; 
information to be submitted; other requirements.

    (a) Each insurance carrier authorized by OWCP to write insurance 
under the LHWCA or any of its extensions, and each insurance carrier 
seeking initial authorization to write such insurance, must apply 
annually, on a schedule set by OWCP, for a determination of the extent 
of its unsecured obligations and

[[Page 922]]

the security deposit required. The application must be addressed to the 
Branch of Financial Management and Insurance (Branch) within OWCP's 
Division of Longshore and Harbor Workers' Compensation, and be made on a 
form provided by OWCP. The application must contain the following:
    (1) Any carrier seeking an exemption from the security deposit 
requirements based on its financial standing (see Sec. 703.204(c)(1)) 
must submit documentation establishing the carrier's current rating and 
its rating for the immediately preceding year from each insurance rating 
service designated by the Branch and posted on the Internet at http://
www.dol.gov/esa/owcp/dlhwc/lstable.htm.
    (2) All other carriers, and any carrier whose exemption request 
under paragraph (a)(1) of this section has been denied, must provide--
    (i) A statement of the carrier's outstanding liabilities under the 
LHWCA or any of its extensions for its LHWCA obligations for each State 
in which the obligations arise; and
    (ii) Any other information the Branch requests to enable it to give 
the application adequate consideration including, but not limited to, 
the reports set forth at Sec. 703.212.
    (b) If the carrier disagrees with any of OWCP's findings regarding 
State guaranty funds made under Sec. 703.202(b) as they exist when it 
submits its application, the carrier may submit a statement of its 
unsecured obligations based on a different conclusion regarding the 
extent of coverage afforded by one or more State guaranty funds. The 
carrier must submit evidence and/or argument with its application 
sufficient to establish that such conclusion is correct.
    (c) The carrier must sign and swear to the application. If the 
carrier is not an individual, the carrier's duly authorized officer must 
sign and swear to the application and list his or her official 
designation. If the carrier is a corporation, the officer must also 
affix the corporate seal.
    (d) At any time after filing an application, the carrier must inform 
the Branch immediately of any material changes that may have rendered 
its application incomplete, inaccurate or misleading.
    (e) By filing an application, the carrier consents to be bound by 
and to comply with the regulations and requirements in this part.



Sec. 703.204  Decision on insurance carrier's application; minimum 
amount of deposit.

    (a) The Branch will issue a decision on the application determining 
the extent of an insurance carrier's unsecured LHWCA obligations and 
fixing the amount of security the carrier must deposit to fully secure 
payment of its unsecured obligations. The Branch will transmit its 
decision to the applicant in a way it considers appropriate.
    (b) The Branch may consider a number of factors in setting the 
security deposit amount including, but not limited to, the--
    (1) Financial strength of the carrier as determined by private 
insurance rating organizations;
    (2) Financial strength of the carrier's insureds in the Longshore 
industry;
    (3) Extent to which State guaranty funds secure the carrier's LHWCA 
obligations in the event the carrier defaults on its obligations or 
becomes insolvent;
    (4) Carrier's longevity in writing LHWCA or other workers' 
compensation coverage;
    (5) Extent of carrier's exposure for LHWCA coverage; and
    (6) Carrier's payment history in satisfying its LHWCA obligations.
    (c) In setting the security deposit amount, the Branch will follow 
these criteria:
    (1) Carriers who hold the highest rating awarded by each of the 
three insurance rating services designated by the Branch and posted on 
the Internet at http://www.dol.gov/esa/owcp/dlhwc/lstable.htm for both 
the current rating year and the immediately preceding year will not be 
required to deposit security.
    (2) Carriers whose LHWCA obligations are fully secured by one or 
more State guaranty funds, as evaluated by OWCP under Sec. 703.202 of 
this subpart, will not be required to deposit security.
    (3) The Branch will require all carriers not meeting the 
requirements of paragraphs (c)(1) or (2) of this section

[[Page 923]]

to deposit security for their LHWCA obligations not secured by a State 
guaranty fund, as evaluated by OWCP under Sec. 703.202 of this subpart. 
For carriers that write only an insignificant or incidental amount of 
LHWCA insurance, the Branch will require a deposit in an amount 
determined by the Branch from time to time. For all other carriers, the 
Branch will require a minimum deposit of one third (33\1/3\ percent) of 
a carrier s outstanding LHWCA obligations not secured by a State 
guaranty fund, but may require a deposit up to an amount equal to the 
carrier's total outstanding LHWCA obligations (100 percent) not secured 
by a State guaranty fund.
    (d) If a carrier believes that a lesser deposit would fully secure 
its LHWCA obligations, the carrier may request a hearing before the 
Director of the Division of Longshore and Harbor Workers' Compensation 
(Longshore Director) or the Longshore Director's representative. 
Requests for hearing must be in writing and sent to the Branch within 10 
days of the date of the Branch's decision. The carrier may submit new 
evidence and/or argument in support of its challenge to the Branch's 
decision and must provide any additional documentation OWCP requests. 
The Longshore Director or his representative will notify the carrier of 
the hearing date within 10 days of receiving the request. The Longshore 
Director or his representative will issue the final agency decision on 
the application within 60 days of the hearing date, or, where evidence 
is submitted after the hearing, within 60 days of the receipt of such 
evidence, but no later than 180 days after receiving the carrier's 
request for a hearing.



Sec. 703.205  Filing of Agreement and Undertaking; deposit of security.

    Within 45 days of the date on which the insurance carrier receives 
the Branch's decision (or, if the carrier requests a hearing, a period 
set by the Longshore Director or the Longshore Director's 
representative) determining the extent of its unsecured LHWCA 
obligations and fixing the required security deposit amount (see Sec. 
703.204), the carrier must:
    (a) Execute and file with the Branch an Agreement and Undertaking, 
in a form prescribed and provided by OWCP, in which the carrier shall 
agree to--
    (1) Deposit with the Branch indemnity bonds or letters of credit in 
the amount fixed by the Office, or deposit negotiable securities under 
Sec. Sec. 703.207 and 703.208 in that amount;
    (2) Authorize the Branch, at its discretion, to bring suit under any 
deposited indemnity bond or to draw upon any deposited letters of 
credit, as appropriate under the terms of the security instrument, or to 
collect the interest and principal as they become due on any deposited 
negotiable securities and to sell or otherwise liquidate such negotiable 
securities or any part thereof when--
    (i) The carrier defaults on any of its LHWCA obligations;
    (ii) The carrier fails to renew any deposited letter of credit or 
substitute a new letter of credit, indemnity bond or acceptable 
negotiable securities in its place;
    (iii) The carrier fails to renew any deposited negotiable securities 
at maturity or substitute a letter of credit, indemnity bond or 
acceptable negotiable securities in their place;
    (iv) State insolvency proceedings are initiated against the carrier; 
or
    (v) The carrier fails to comply with any of the terms of the 
Agreement and Undertaking; and
    (3) Authorize the Branch, at its discretion, to pay such ongoing 
claims of the carrier as it may find to be due and payable from the 
proceeds of the deposited security;
    (b) Give security in the amount fixed in the Office's decision:
    (1) In the form of an indemnity bond with sureties satisfactory to 
the Branch and in such form, and containing such provisions, as the 
Branch may prescribe: Provided, That only surety companies approved by 
the United States Treasury Department under the laws of the United 
States and the rules and regulations governing bonding companies may act 
as sureties on such indemnity bonds (see Department of Treasury's 
Circular-570), and that a surety company that is a corporate subsidiary 
of an insurance carrier may

[[Page 924]]

not act as surety on such carrier's indemnity bond;
    (2) In the form of letters of credit issued by a financial 
institution satisfactory to the Branch and upon which the Branch may 
draw; or
    (3) By a deposit of negotiable securities with a Federal Reserve 
Bank or the Treasurer of the United States in compliance with Sec. Sec. 
703.207 and 703.208.



Sec. 703.206  [Reserved]



Sec. 703.207  Kinds of negotiable securities that may be deposited; 
conditions of deposit; acceptance of deposits.

    An insurance carrier electing to deposit negotiable securities to 
secure its obligations under the Act in the amount fixed by the Office 
under the regulations in this part shall deposit any negotiable 
securities acceptable as security for the deposit of public monies of 
the United States under regulations issued by the Secretary of the 
Treasury. (See 31 CFR part 225.) The approval, valuation, acceptance, 
and custody of such securities is hereby committed to the several 
Federal Reserve Banks and the Treasurer of the United States.



Sec. 703.208  Deposits of negotiable securities with Federal Reserve 
banks or the Treasurer of the United States; interest thereon.

    Deposits of negotiable securities provided for by the regulations in 
this part must be made with any Federal Reserve bank or any branch of a 
Federal Reserve bank designated by the Branch, or the Treasurer of the 
United States, and must be held subject to the order of the Branch. The 
Branch will authorize the insurance carrier to collect interest on the 
securities it deposits unless any of the conditions set forth at Sec. 
703.211(a) occur.



Sec. 703.209  Substitution and withdrawal of indemnity bond, letters 
of credit or negotiable securities.

    (a) A carrier may not substitute other security for any indemnity 
bond or letters of credit deposited under the regulations in this part 
except when authorized by the Branch. A carrier may, however, substitute 
negotiable securities acceptable under the regulations in this part for 
previously-deposited negotiable securities without the Branch's prior 
approval.
    (b) A carrier that has ceased to write insurance under the Act may 
apply to the Branch for withdrawal of its security deposit. The carrier 
must file with its application a sworn statement setting forth--
    (1) A list of all cases in each State in which the carrier is paying 
compensation, together with the names of the employees and other 
beneficiaries, a description of causes of injury or death, and a 
statement of the amount of compensation paid;
    (2) A similar list of all pending cases in which the carrier has not 
yet paid compensation; and
    (3) A similar list of all cases in which injury or death has 
occurred within one year before such application or in which the last 
payment of compensation was made within one year before such 
application.
    (c) The Branch may authorize withdrawal of previously-deposited 
indemnity bonds, letters of credit and negotiable securities that, in 
the opinion of the Branch, are not necessary to provide adequate 
security for the payment of the carrier's outstanding and potential 
LHWCA liabilities. No withdrawals will be authorized unless there has 
been no claim activity involving the carrier for a minimum of five 
years, and the Branch is reasonably certain that no further claims will 
arise.



Sec. 703.210  Increase or reduction in security deposit amount.

    (a) Whenever the Office considers the security deposited by an 
insurance carrier insufficient to fully secure the carrier's LHWCA 
obligations, the carrier must, upon demand by the Branch, deposit 
additional security in accordance with the regulations in this part in 
an amount fixed by the Branch. The Branch will issue its decision 
requiring additional security in accordance with Sec. 703.204, and the 
procedures set forth at Sec. Sec. 703.204(d) and 703.205 for requesting 
a hearing and complying with the Office's decision will apply as 
appropriate.
    (b) The Branch may reduce the required security at any time on its 
own initiative, or upon application of a carrier, when in the Branch's 
opinion the

[[Page 925]]

facts warrant a reduction. A carrier seeking a reduction must furnish 
any information the Office requests regarding its outstanding LHWCA 
obligations for any State in which it does business, its obligations not 
secured by a State guaranty fund in each of these States, and any other 
evidence as the Branch considers necessary.



Sec. 703.211  Authority to seize security deposit; use and/or return 
of proceeds.

    (a) The Office may take any of the actions set forth in paragraph 
(b) of this section when an insurance carrier--
    (1) Defaults on any of its LHWCA obligations;
    (2) Fails to renew any deposited letter of credit or substitute a 
new letter of credit, indemnity bond or acceptable negotiable securities 
in its place;
    (3) Fails to renew any deposited negotiable securities at maturity 
or substitute a letter of credit, indemnity bond or acceptable 
negotiable securities in their place;
    (4) Has State insolvency proceedings initiated against it; or
    (5) Fails to comply with any of the terms of the Agreement and 
Undertaking.
    (b) When any of the conditions set forth in paragraph (a) of this 
section occur, the Office may, within its discretion and as appropriate 
to the security instrument--
    (1) Bring suit under any indemnity bond;
    (2) Draw upon any letters of credit;
    (3) Seize any negotiable securities, collect the interest and 
principal as they may become due, and sell or otherwise liquidate the 
negotiable securities or any part thereof.
    (c) When the Office, within its discretion, determines that it no 
longer needs to collect the interest and principal of any negotiable 
securities seized pursuant to paragraphs (a) and (b) of this section, or 
to retain the proceeds of their sale, it must return any of the 
carrier's negotiable securities still in its possession and any 
remaining proceeds of their sale.



Sec. 703.212  Required reports; examination of insurance carrier 
accounts.

    (a) Upon the Office's request, each insurance carrier must submit 
the following reports:
    (1) A certified financial statement of the carrier's assets and 
liabilities, or a balance sheet.
    (2) A sworn statement showing the extent of the carrier's unsecured 
LHWCA obligations for each State in which it is authorized to write 
insurance under the LHWCA or any of its extensions.
    (3) A sworn statement reporting the carrier's open cases as of the 
date of such report, listing by State all death and injury cases, 
together with a report of the status of all outstanding claims.
    (b) Whenever it considers necessary, the Office may inspect or 
examine a carrier's books of account, records, and other papers to 
verify any financial statement or other information the carrier 
furnished to the Office in any statement or report required by this 
section, or any other section of the regulations in this part. The 
carrier must permit the Office or its duly authorized representative to 
make the inspection or examination. Alternatively, the Office may accept 
an adequate independent audit by a certified public accountant.



Sec. 703.213  Failure to comply.

    The Office may suspend or revoke a carrier's certificate of 
authority to write LHWCA insurance under Sec. 703.106 when the carrier 
fails to comply with any of the requirements of this part.



                Subpart D_Authorization of Self-Insurers

    Source: 70 FR 43234, July 26, 2005, unless otherwise noted.



Sec. 703.301  Employers who may be authorized as self-insurers.

    The regulations in this subpart set forth procedures for authorizing 
employers to self-insure the payment of compensation under the Longshore 
and Harbor Workers' Compensation Act, or its extensions. The Office may 
authorize any employer to self-insure who,

[[Page 926]]

pursuant to the regulations in this part, furnishes to the Office 
satisfactory proof of its ability to pay compensation directly, and who 
agrees to immediately cancel any existing insurance policy covering its 
Longshore obligations (except for excess or catastrophic workers' 
compensation insurance, see Sec. Sec. 703.302(a)(6), 703.304(a)(6)) 
when OWCP approves the employer's application to be self-insured. The 
regulations require self-insurers to deposit security in the form of an 
indemnity bond, letters of credit or negotiable securities (at the 
option of the employer) of a kind and in an amount determined by the 
Office, and prescribe the conditions under which such deposits shall be 
made. The term ``self-insurer'' as used in these regulations means any 
employer securing the payment of compensation under the LHWCA or its 
extensions in accordance with the provisions of 33 U.S.C. 932(a)(2) and 
these regulations.



Sec. 703.302  Application for authority to become a self-insurer; how 
filed; information to be submitted; other requirements.

    (a) Any employer may apply to become an authorized self-insurer. The 
application must be addressed to the Branch of Financial Management and 
Insurance (Branch) within OWCP's Division of Longshore and Harbor 
Workers' Compensation, and be made on a form provided by OWCP. The 
application must contain--
    (1) A statement of the employer's total payroll for the 12 months 
before the application date;
    (2) A statement of the average number of employees engaged in 
employment within the purview of the LHWCA or any of its extensions for 
the 12 months before the application date;
    (3) A statement of the number of injuries to such employees 
resulting in disability of more than 7 days' duration, or in death, 
during each of the 5 years before the application date;
    (4) A certified financial report for each of the three years before 
the application date;
    (5) A description of the facilities maintained or the arrangements 
made for the medical and hospital care of injured employees;
    (6) A statement describing the provisions and maximum amount of any 
excess or catastrophic insurance; and
    (7) Any other information the Branch requests to enable it to give 
the application adequate consideration including, but not limited to, 
the reports set forth at Sec. 703.310.
    (b) The employer must sign and swear to the application. If the 
employer is not an individual, the employer's duly authorized officer 
must sign and swear to the application and list his or her official 
designation. If the employer is a corporation, the officer must also 
affix the corporate seal.
    (c) At any time after filing an application, the employer must 
inform the Branch immediately of any material changes that may have 
rendered its application incomplete, inaccurate or misleading.
    (d) By filing an application, the employer consents to be bound by 
and to comply with the regulations and requirements in this part.



Sec. 703.303  Decision on employer's application.

    (a) The Branch will issue a decision granting or denying the 
employer's application to be an authorized self-insurer. If the Branch 
grants the application, the decision will fix the amount of security the 
employer must deposit. The Branch will transmit its decision to the 
employer in a way it considers appropriate.
    (b) The employer is authorized to self-insure beginning with the 
date of the Branch's decision. Each grant of authority to self-insure is 
conditioned, however, upon the employer's execution and filing of an 
Agreement and Undertaking and deposit of the security fixed in the 
decision in the form and within the time limits required by Sec. 
703.304. In the event the employer fails to comply with the requirements 
set forth in Sec. 703.304, its authorization to self-insure will be 
considered never to have been effective, and the employer will be 
subject to appropriate penalties for failure to secure its LHWCA 
obligations.
    (c) The Branch will require security in the amount it considers 
necessary to fully secure the employer's LHWCA obligations. When fixing 
the amount of

[[Page 927]]

security, the Branch may consider a number of factors including, but not 
limited to, the--
    (1) Employer's overall financial standing;
    (2) Nature of the employer's work;
    (3) Hazard of the work in which the employees are employed;
    (4) Employer's payroll amount for employees engaged in employment 
within the purview of the Act; and
    (5) Employer's accident record as shown in the application and the 
Office's records.
    (d) If an employer believes that the Branch incorrectly denied its 
application to self-insure, or that a lesser security deposit would 
fully secure its LHWCA obligations, the employer may request a hearing 
before the Director of the Division of Longshore and Harbor Workers' 
Compensation (Longshore Director) or the Longshore Director's 
representative. Requests for hearing must be in writing and sent to the 
Branch within ten days of the date of the Branch's decision. The 
employer may submit new evidence and/or argument in support of its 
challenge to the Branch's decision and must provide any additional 
documentation OWCP requests. The Longshore Director or his 
representative will notify the employer of the hearing date within 10 
days of receiving the request. The Longshore Director or his 
representative will issue the final agency decision on the application 
within 60 days of the hearing date, or, where evidence is submitted 
after the hearing, within 60 days of the receipt of such evidence, but 
no later than 180 days after receiving the employer's request for a 
hearing.



Sec. 703.304  Filing of Agreement and Undertaking; deposit of security.

    Within 45 days of the date on which the employer receives the 
Branch's decision (or, if the employer requests a hearing, a period set 
by the Longshore Director or the Longshore Director's representative) 
granting its application to self-insure and fixing the required security 
deposit amount (see Sec. 703.303), the employer must:
    (a) Execute and file with the Branch an Agreement and Undertaking, 
in a form prescribed and provided by OWCP, in which the employer shall 
agree to:
    (1) Pay when due, as required by the provisions of the Act, all 
compensation payable on account of injury or death of any of its 
employees injured within the purview of the Act;
    (2) Furnish medical, surgical, hospital, and other attendance, 
treatment and care as required by the Act;
    (3) Deposit with the Branch indemnity bonds or letters of credit in 
the amount fixed by the Office, or deposit negotiable securities under 
Sec. Sec. 703.306 and 703.307 in that amount;
    (4) Authorize the Branch, at its discretion, to bring suit under any 
deposited indemnity bond or to draw upon any deposited letters of 
credit, as appropriate under the terms of the security instrument, or to 
collect the interest and principal as they become due on any deposited 
negotiable securities and to seize and sell or otherwise liquidate such 
negotiable securities or any part thereof when the employer:
    (i) Defaults on any of its LHWCA obligations;
    (ii) Fails to renew any deposited letter of credit or substitute a 
new letter of credit, indemnity bond or acceptable negotiable securities 
in its place;
    (iii) Fails to renew any deposited negotiable securities at maturity 
or substitute a letter of credit, indemnity bond or acceptable 
negotiable securities in their place; or
    (iv) Fails to comply with any of the terms of the Agreement and 
Undertaking;
    (5) Authorize the Branch, at its discretion, to pay such 
compensation, medical, and other expenses and any accrued penalties 
imposed by law as it may find to be due and payable from the proceeds of 
the deposited security; and
    (6) Obtain and maintain, if required by the Office, excess or 
catastrophic insurance in amounts to be determined by the Office.
    (b) Give security in the amount fixed in the Office's decision:
    (1) In the form of an indemnity bond with sureties satisfactory to 
the Office, and in such form and containing such provisions as the 
Office may prescribe: Provided, That only surety companies

[[Page 928]]

approved by the United States Treasury Department under the laws of the 
United States and the rules and regulations governing bonding companies 
may act as sureties on such indemnity bonds (see Department of 
Treasury's Circular-570);
    (2) In the form of letters of credit issued by a financial 
institution satisfactory to the Branch and upon which the Branch may 
draw; or,
    (3) By a deposit of negotiable securities with a Federal Reserve 
Bank or the Treasurer of the United States in compliance with Sec. Sec. 
703.306 and 703.307.



Sec. 703.305  [Reserved]



Sec. 703.306  Kinds of negotiable securities that may be deposited; 
conditions of deposit; acceptance of deposits.

    A self-insurer or a self-insurer applicant electing to deposit 
negotiable securities to secure its obligations under the Act in the 
amount fixed by the Office under the regulations in this part shall 
deposit any negotiable securities acceptable as security for the deposit 
of public monies of the United States under regulations issued by the 
Secretary of the Treasury. (See 31 CFR part 225.) The approval, 
valuation, acceptance, and custody of such securities is hereby 
committed to the several Federal Reserve Banks and the Treasurer of the 
United States.



Sec. 703.307  Deposits of negotiable securities with Federal Reserve 
banks or the Treasurer of the United States; interest thereon.

    Deposits of negotiable securities provided for by the regulations in 
this part shall be made with any Federal Reserve bank or any branch of a 
Federal Reserve bank designated by the Office, or the Treasurer of the 
United States, and shall be held subject to the order of the Office. The 
Office will authorize the self-insurer to collect interest on the 
securities deposited by it unless any of the conditions set forth at 
Sec. 703.304(a)(4) occur.



Sec. 703.308  Substitution and withdrawal of indemnity bond, letters 
of credit or negotiable securities.

    (a) A self-insurer may not substitute other security for any 
indemnity bond or letters of credit deposited under the regulations in 
this part except when authorized by the Office. A self-insurer may, 
however, substitute negotiable securities acceptable under the 
regulations in this part for previously-deposited negotiable securities 
without the Office's prior approval.
    (b) A self-insurer discontinuing business, discontinuing operations 
within the purview of the Act, or securing the payment of compensation 
by commercial insurance under the provisions of the Act may apply to the 
Office for the withdrawal of the security it provided under the 
regulations in this part. The self-insurer must file with its 
application a sworn statement setting forth--
    (1) A list of all cases in each compensation district in which the 
self-insurer is paying compensation, together with the names of the 
employees and other beneficiaries, a description of causes of injury or 
death, and a statement of the amount of compensation paid;
    (2) A similar list of all pending cases in which the self-insurer 
has not yet paid compensation; and
    (3) A similar list of all cases in which injury or death has 
occurred within one year before such application or in which the last 
payment of compensation was made within one year before such 
application.
    (c) The Office may authorize withdrawal of previously-deposited 
indemnity bonds, letters of credit and negotiable securities that, in 
the opinion of the Office, are not necessary to provide adequate 
security for the payment of the self-insurer's outstanding and potential 
LHWCA obligations. No withdrawals will be authorized unless there has 
been no claim activity involving the self-insurer for a minimum of five 
years, and the Office is reasonably certain no further claims will 
arise.



Sec. 703.309  Increase or reduction in the amount of indemnity bond, 
letters of credit or negotiable securities.

    (a) Whenever the Office considers the principal sum of the indemnity 
bond or letters of credit filed or the amount of the negotiable 
securities deposited by a self-insurer insufficient to fully secure the 
self-insurer's LHWCA obligations, the self-insurer must, upon demand by 
the Office, deposit additional security

[[Page 929]]

in accordance with the regulations in this part in an amount fixed by 
the Branch. The Branch will issue its decision requiring additional 
security in accordance with Sec. 703.303, and the procedures set forth 
at Sec. Sec. 703.303(d) and 703.304 for requesting a hearing and 
complying with the Office's decision will apply as appropriate.
    (b) The Office may reduce the required security at any time on its 
own initiative, or upon application of a self-insurer, when in the 
Office's opinion the facts warrant a reduction. A self-insurer seeking a 
reduction must furnish any information the Office requests regarding its 
current affairs, the nature and hazard of the work of its employees, the 
amount of its payroll for employees engaged in maritime employment 
within the purview of the Act, its financial condition, its accident 
experience, a record of compensation payments it has made, and any other 
evidence the Branch considers necessary.



Sec. 703.310  Authority to seize security deposit; use and/or return 
of proceeds.

    (a) The Office may take any of the actions set forth in paragraph 
(b) of this section when a self-insurer--
    (1) Defaults on any of its LHWCA obligations;
    (2) Fails to renew any deposited letter of credit or substitute a 
new letter of credit, indemnity bond or acceptable negotiable securities 
in its place;
    (3) Fails to renew any deposited negotiable securities at maturity 
or substitute a letter of credit, indemnity bond or acceptable 
negotiable securities in their place; or
    (4) Fails to comply with any of the terms of the Agreement and 
Undertaking.
    (b) When any of the conditions set forth in paragraph (a) of this 
section occur, the Office may, within its discretion and as appropriate 
to the security instrument--
    (1) Bring suit under any indemnity bond;
    (2) Draw upon any letters of credit;
    (3) Seize any negotiable securities, collect the interest and 
principal as they may become due, and sell or otherwise liquidate the 
negotiable securities or any part thereof.
    (c) When the Office, within its discretion, determines that it no 
longer needs to collect the interest and principal of any negotiable 
securities seized pursuant to paragraphs (a) and (b) of this section, or 
to retain the proceeds of their sale, it must return any of the 
employer's negotiable securities still in its possession and any 
remaining proceeds of their sale.



Sec. 703.311  Required reports; examination of self-insurer accounts.

    (a) Upon the Office's request, each self-insurer must submit the 
following reports:
    (1) A certified financial statement of the self-insurer's assets and 
liabilities, or a balance sheet.
    (2) A sworn statement showing by classifications the payroll of 
employees of the self-insurer who are engaged in employment within the 
purview of the LHWCA or any of its extensions.
    (3) A sworn statement covering the six-month period preceding the 
date of such report, listing by compensation districts all death and 
injury cases which have occurred during such period, together with a 
report of the status of all outstanding claims showing the particulars 
of each case.
    (b) Whenever it considers necessary, the Office may inspect or 
examine a self-insurer's books of account, records, and other papers to 
verify any financial statement or other information the self-insurer 
furnished to the Office in any report required by this section, or any 
other section of the regulations in this part. The self-insurer must 
permit the Office or its duly authorized representative to make the 
inspection or examination. Alternatively, the Office may accept an 
adequate report of a certified public accountant.



Sec. 703.312  Period of authorization as self-insurer.

    (a) Self-insurance authorizations will remain in effect for so long 
as the self-insurer complies with the requirements of the Act, the 
regulations in this part, and OWCP.
    (b) A self-insurer who has secured its liability by depositing an 
indemnity bond with the Office will, on or about

[[Page 930]]

May 10 of each year, receive from the Office a form for executing a bond 
that will continue its self-insurance authorization. The submission of 
such bond, duly executed in the amount indicated by the Office, will be 
deemed a condition of the continuing authorization.



Sec. 703.313  Revocation of authorization to self-insure.

    The Office may for good cause shown suspend or revoke the 
authorization of any self-insurer. Failure by a self-insurer to comply 
with any provision or requirement of law or of the regulations in this 
part, or with any lawful order or communication of the Office, or the 
failure or insolvency of the surety on its indemnity bond, or impairment 
of financial responsibility of such self-insurer, shall be deemed good 
cause for suspension or revocation.



            Subpart E_Issuance of Certificates of Compliance



Sec. 703.501  Issuance of certificates of compliance.

    Every employer who has secured the payment of compensation as 
required by 33 U.S.C. 932 and by the regulations in this part may 
request a certificate from the district director in the compensation 
district in which he has operations, and for which a certificate is 
required by 33 U.S.C. 937, showing that such employer has secured the 
payment of compensation. Only one such certificate will be issued to an 
employer in a compensation district, and it will be valid only during 
the period for which such employer has secured such payment. An employer 
so desiring may have photocopies of such a certificate made for use in 
different places within the compensation district. Two forms of such 
certificates have been provided by the Office, one form for use where 
the employer has obtained insurance generally under these regulations, 
and one for use where the employer has been authorized as a self-
insurer.



Sec. 703.502  Same; employer operating temporarily in another 
compensation district.

    A district director receiving a report of the issuance of a policy 
of insurance with the notation authorized by Sec. 703.119, will file 
such report until he receives from the insured employer named therein a 
request for certificate of compliance, giving the address of the 
employer within the compensation district of such district director. 
Upon receipt of such a request the district director will send the 
proper certificate of compliance to such employer at such address.



Sec. 703.503  Return of certificates of compliance.

    Upon the termination by expiration, cancellation or otherwise, of a 
policy of insurance issued under the provisions of law and these 
regulations, or the revocation or termination of the privilege of self-
insurance granted by the Office, all certificates of compliance issued 
on the basis of such insurance or self-insurance shall be void and shall 
be returned by the employer to the district director issuing them with a 
statement of the reason for such return. An employer holding certificate 
of compliance under an insurance policy which has expired, pending 
renewal of such insurance need not return such certificate of compliance 
if such expired insurance is promptly replaced. An employer who has 
secured renewal of insurance upon the expiration of policy under said 
Act or whose self-insurance thereunder is reauthorized without a break 
in the continuity thereof need not return an expired certificate of 
compliance.



PART 704_SPECIAL PROVISIONS FOR LHWCA EXTENSIONS--Table of Contents




Sec.
704.001 Extensions covered by this part.
704.002 Scope of part.

                            Defense Base Act

704.101 Administration; compensation districts.
704.102 Commutation of payments to aliens and nonresidents.
704.103 Removal of certain minimums when computing or paying 
          compensation.
704.151 DBA endorsement.

             District of Columbia Workmen's Compensation Act

704.201 Administration; compensation districts.
704.251 DCCA endorsement.

[[Page 931]]

                    Outer Continental Shelf Lands Act

704.301 Administration; compensation districts.
704.351 OCSLA endorsement.

               Nonappropriated Fund Instrumentalities Act

704.401 Administration; compensation districts.
704.451 NFIA endorsement.

    Authority: 5 U.S.C. 301; Reorg. Plan No. 6 of 1950, 15 FR 3174, 64 
Stat. 1263; 33 U.S.C. 939; 36 D.C. Code 501 et seq.; 42 U.S.C. 1651 et 
seq.; 43 U.S.C. 1331; 5 U.S.C. 6171 et seq.; Secretary's Order 1-89; 
Employment Standards Order No. 90-02.

    Source: 38 FR 26877, Sept. 26, 1973, unless otherwise noted.



Sec. 704.001  Extensions covered by this part.

    (a) Defense Base Act (DBA).
    (b) District of Columbia Workmen's Compensation Act (DCCA).
    (c) Outer Continental Shelf Lands Act (OCSLA).
    (d) Nonappropriated Fund Instrumentalities Act (NFIA).



Sec. 704.002  Scope of part.

    The regulations governing the administration of the LHWCA as set 
forth in parts 702 and 703 of this subchapter govern the administration 
of the LHWCA extensions (see Sec. 704.001) in nearly every respect, and 
are not repeated in this part 704. Such special provisions as are 
necessary to the proper administration of each of the extensions are set 
forth in this part. To the extent of any inconsistency between 
regulations in parts 702 and 703 of this subchapter and those in this 
part, the latter supersedes those in parts 702 and 703 of this 
subchapter.

                            Defense Base Act



Sec. 704.101  Administration; compensation districts.

    For the purpose of administration of this Act areas assigned to the 
compensation districts established for administration of the 
Longshoremen's and Harbor Workers' Compensation Act as set forth in part 
702 of this subchapter shall be extended in the following manner to 
include:
    (a) Canada, east of the 75th degree west longitude, Newfoundland, 
and Greenland are assigned to District No. 1.
    (b) Canada, west of the 75th degree and east of the 110th degree 
west longitude, is assigned to District No. 10.
    (c) Canada, west of the 110th degree west longitude, and all areas 
in the Pacific Ocean north of the 45th degree north latitude are 
assigned to District No. 14.
    (d) All areas west of the continents of North and South America 
(except coastal islands) to the 60th degree east longitude, except for 
Iran, are assigned to District No. 15.
    (e) Mexico, Central and South America (including coastal islands); 
areas east of the continents of North and South America to the 60th 
degree east longitude, including Iran, and any other areas or locations 
not covered under any other district office, are assigned to District 
No. 2.



Sec. 704.102  Commutation of payments to aliens and nonresidents.

    Authority to commute payments to aliens and nonnationals who are not 
residents of the United States and Canada, section 2(b) of the Defense 
Base Act, 42 U.S.C. 1652(b), though separately stated in this Act, is 
identical in language to section 9(g) of the Longshoremen's Act. Thus, 
except for the different statutory citation, the LHWCA regulation at 
Sec. 702.142 of this subchapter shall apply.



Sec. 704.103  Removal of certain minimums when computing or paying 
compensation.

    The minimum limitation on weekly compensation for disability 
established by section 6 of the LHWCA, 33 U.S.C. 906, and the minimum 
limit on the average weekly wages on which death benefits are to be 
computed under section 9 of the LHWCA, 33 U.S.C. 909, shall not apply in 
computing compensation and death benefits under this Act; section 2(a), 
42 U.S.C. 1652(a).



Sec. 704.151  DBA endorsement.

    The following form of endorsement applicable to the standard 
workmen's compensation and employers' liability policy shall be used, if 
required by the

[[Page 932]]

OWCP, with the form of policy approved by the Office for use by an 
authorized carrier:

    For attachment to Policy No. ----,
    The obligations of the policy include the Longshoremen's and Harbor 
Workers' Compensation Act, as extended by the provisions of the Defense 
Base Act, and all laws amendatory thereof or supplementary thereto which 
may be or become effective while this policy is in force.
    The Company will be subject to the provisions of 33 U.S.C. 935. 
Insolvency or bankruptcy of the employer and/or discharge therein shall 
not relieve the Company from payment of compensation and other benefits 
lawfully due for disability or death sustained by an employee during the 
life of the policy.
    The Company agrees to abide by all the provisions of said Acts and 
all lawful rules, regulations, orders, and decisions of the Office of 
Workmen's Compensation Programs, Department of Labor, unless and until 
set aside, modified, or reversed by appropriate appellate authority as 
provided for by said Acts.
    This endorsement shall not be canceled prior to the date specified 
in this policy for its expiration until at least 30 days have elapsed 
after a notice of cancellation has been sent to the District Director 
and to this employer.
    All terms, conditions, requirements, and obligations expressed in 
this policy or in any other endorsement attached thereto which are not 
inconsistent with or inapplicable to the provisions of this endorsement 
are hereby made a part of this endorsement as fully and completely as if 
wholly written herein.

             District of Columbia Workmen's Compensation Act



Sec. 704.201  Administration; compensation districts.

    For the purpose of administration of this Act, the District of 
Columbia shall be the compensation district and is designated as 
District No. 40.



Sec. 704.251  DCCA endorsement.

    The following form of endorsement applicable to the standard 
workmen's compensation and employer's liability policy shall be used, if 
required by the OWCP, with the form of policy approved by the Office for 
use by an authorized carrier:

    For attachment to Policy No. ----,
    The obligations of the policy include the District of Columbia 
Workmen's Compensation Act, and the applicable provisions of the 
Longshoremen's and Harbor Workers' Compensation Act, and all laws 
amendatory of either of said Acts or supplementary thereto which may be 
or become effective while this policy is in force.
    The company will be subject to the provisions of 33 U.S.C. 935. 
Insolvency or bankruptcy of the employer and/or discharge therein shall 
not relieve the company from payment of compensation and other benefits 
lawfully due for disability or death sustained by an employee during the 
life of the policy.
    The company agrees to abide by all the provisions of said District 
of Columbia Workmen's Compensation Act and all lawful rules, 
regulations, orders, and decisions of the Office of Workmen's 
Compensation Programs, Department of Labor, unless and until set aside, 
modified, or reversed by appropriate appellate authority as provided for 
by said Act.
    This endorsement shall not be canceled prior to the date specified 
in this policy for its expiration until at least 30 days have elapsed 
after a notice of cancellation has been sent to the District Director 
for the District of Columbia and to this employer.
    All terms, conditions, requirements, and obligations expressed in 
this policy or in any other endorsement attached thereto which are not 
inconsistent with or inapplicable to the provisions of this endorsement 
are hereby made a part of this endorsement as fully and completely as if 
wholly written herein.

                    Outer Continental Shelf Lands Act



Sec. 704.301  Administration; compensation districts.

    For the purpose of administration of this Act, the compensation 
districts established under the Longshoremen's and Harbor Workers' 
Compensation Act as set forth in part 702 of this subchapter shall 
administer this Act, and their jurisdiction for this purpose is 
extended, where appropriate, to include those parts of the Outer 
Continental Shelf adjacent to the State or States in such districts 
having adjacent shelf areas.



Sec. 704.351  OCSLA endorsement.

    The following form of endorsement applicable to the standard 
workmen's compensation and employer's liability policy shall be used, if 
required by the OWCP, with the form of policy approved by the Office for 
use by an authorized carrier:

    For attachment to Policy No. ----,

[[Page 933]]

    The obligations of the policy include the Longshoremen's and Harbor 
Workers' Compensation Act, as extended by the Outer Continental Shelf 
Lands Act, and all the laws amendatory thereof or supplementary thereto 
which may be or become effective while this policy is in force.
    The company will be subject to the provisions of 33 U.S.C. 935. 
Insolvency or bankruptcy of the employer and/or discharge therein shall 
not relieve the company from payment of compensation and other benefits 
lawfully due for disability or death sustained by an employee during the 
life of the policy.
    The company agrees to abide by all the provisions of said laws and 
all the lawful rules, regulations, orders and decisions of the Office of 
Workmen's Compensation Programs, Department of Labor, until set aside, 
modified, or reversed by appropriate appellate authority as provided for 
by said Acts.
    This endorsement shall not be canceled prior to the date specified 
in this policy for its expiration until at least 30 days have elapsed 
after a notice of cancellation has been sent to the District Director 
and to his employer.
    All terms, conditions, requirements, and obligations expressed in 
this policy or in any other endorsement attached thereto which are not 
inconsistent with or inapplicable to the provisions of this endorsement 
are hereby made a part of this endorsement as fully and completely as if 
wholly written herein.

               Nonappropriated Fund Instrumentalities Act



Sec. 704.401  Administration; compensation districts.

    For the purpose of administration of this Act within the continental 
United States, Hawaii, and Alaska, the compensation districts 
established for administration of the Longshoremen's and Harbor Workers' 
Compensation Act as set forth in part 702 of this subchapter are 
established as the administrative districts under this Act. For the 
purpose of administration of this Act outside the continental United 
States, Alaska, and Hawaii, the compensation districts established for 
such overseas administration of the Defense Base Act as set forth in 
Sec. 704.101 are established as the administrative districts under this 
Act.



Sec. 704.451  NFIA endorsement.

    The following form of endorsement applicable to the standard 
workmen's compensation and employer's liability policy shall be used, if 
required by the OWCP, with the form of policy approved by the Office for 
use by an authorized carrier:

    For attachment to Policy No. ----,
    The obligations of the policy include the Longshoremen's and Harbor 
Workers' Compensation Act, as extended by the Nonappropriated Fund 
Instrumentalities Act, and all of the laws amendatory thereof or 
supplementary thereto which may be or become effective while this policy 
is in force.
    The company will be subject to the provisions of 33 U.S.C 935. 
Insolvency or bankruptcy of the employer and/or discharge therein shall 
not relieve the company from payment of compensation and other benefits 
lawfully due for disability or death sustained by an employee during the 
life of the policy.
    The company agrees to abide by all the provisions of said Acts and 
all the lawful rules, regulations, orders, and decisions of the Office 
of Workmen's Compensation Programs, Department of Labor, unless and 
until set aside, modified, or reversed by appropriate appellate 
authority as provided for by said Acts.
    This endorsement shall not be canceled prior to the date specified 
in this policy for its expiration until at least 30 days have elapsed 
after a notice of cancellation has been sent to the District Director 
and to the within named employer.
    All terms, conditions, requirements, and obligations expressed in 
this policy or in any other endorsement attached thereto which are not 
inconsistent with or inapplicable to the provisions of this endorsement 
are hereby made a part of this endorsement as fully and completely as if 
wholly written herein.

[[Page 934]]



SUBCHAPTER B_FEDERAL COAL MINE HEALTH AND SAFETY ACT OF 1969, AS AMENDED





PART 718_STANDARDS FOR DETERMINING COAL MINERS' TOTAL DISABILITY OR 
DEATH DUE TO PNEUMOCONIOSIS--Table of Contents




                            Subpart A_General

Sec.
718.1 Statutory provisions.
718.2 Applicability of this part.
718.3 Scope and intent of this part.
718.4 Definitions and use of terms.

       Subpart B_Criteria for the Development of Medical Evidence

718.101 General.
718.102 Chest roentgenograms (X-rays).
718.103 Pulmonary function tests.
718.104 Report of physical examinations.
718.105 Arterial blood-gas studies.
718.106 Autopsy; biopsy.
718.107 Other medical evidence.

              Subpart C_Determining Entitlement to Benefits

718.201 Definition of pneumoconiosis.
718.202 Determining the existence of pneumoconiosis.
718.203 Establishing relationship of pneumoconiosis to coal mine 
          employment.
718.204 Total disability and disability causation defined; criteria for 
          determining total disability and total disability due to 
          pneumoconiosis.
718.205 Death due to pneumoconiosis.
718.206 Effect of findings by persons or agencies.

     Subpart D_Presumptions Applicable to Eligibility Determinations

718.301 Establishing length of employment as a miner.
718.302 Relationship of pneumoconiosis to coal mine employment.
718.303 Death from a respirable disease.
718.304 Irrebuttable presumption of total disability or death due to 
          pneumoconiosis.
718.305 Presumption of pneumoconiosis.
718.306 Presumption of entitlement applicable to certain death claims.

Appendix A to Part 718--Standards for Administration and Interpretation 
          of Chest Roentgenograms (X-rays)
Appendix B to Part 718--Standards for Administration and Interpretation 
          of Pulmonary Function Tests. Tables B1, B2, B3, B4, B5, B6
Appendix C to Part 718--Blood-Gas Tables

    Authority: 5 U.S.C. 301, Reorganization Plan No. 6 of 1950, 15 FR 
3174, 30 U.S.C. 901 et seq., 902(f), 925, 932, 934, 936, 945; 33 U.S.C. 
901 et seq., Secretary's Order 7-87, 52 FR 48466, Employment Standards 
Order No. 90-02.

    Source: 45 FR 13678, Feb. 29, 1980, unless otherwise noted.



                            Subpart A_General

    Source: 65 FR 80045, Dec. 20, 2000, unless otherwise noted.



Sec. 718.1  Statutory provisions.

    (a) Under title IV of the Federal Coal Mine Health and Safety Act of 
1969, as amended by the Black Lung Benefits Act of 1972, the Federal 
Mine Safety and Health Amendments Act of 1977, the Black Lung Benefits 
Reform Act of 1977, the Black Lung Benefits Revenue Act of 1977, the 
Black Lung Benefits Amendments of 1981, and the Black Lung Benefits 
Revenue Act of 1981, benefits are provided to miners who are totally 
disabled due to pneumoconiosis and to certain survivors of a miner who 
died due to or while totally or partially disabled by pneumoconiosis. 
However, unless the miner was found entitled to benefits as a result of 
a claim filed prior to January 1, 1982, benefits are payable on 
survivors' claims filed on or after January 1, 1982, only when the 
miner's death was due to pneumoconiosis, except where the survivor's 
entitlement is established pursuant to Sec. 718.306 on a claim filed 
prior to June 30, 1982. Before the enactment of the Black Lung Benefits 
Reform Act of 1977, the authority for establishing standards of 
eligibility for miners and their survivors was placed with the Secretary 
of Health, Education, and Welfare. These standards were set forth by the 
Secretary of Health, Education, and Welfare in subpart D of part 410 of 
this title, and adopted by the Secretary of Labor for application to all 
claims filed with the Secretary of Labor (see 20 CFR 718.2, contained in 
the 20 CFR, Part 500 to end, edition, revised as of April 1, 1979.) 
Amendments made to

[[Page 935]]

section 402(f) of the Act by the Black Lung Benefits Reform Act of 1977 
authorize the Secretary of Labor to establish criteria for determining 
total or partial disability or death due to pneumoconiosis to be applied 
in the processing and adjudication of claims filed under part C of title 
IV of the Act. Section 402(f) of the Act further authorizes the 
Secretary of Labor, in consultation with the National Institute for 
Occupational Safety and Health, to establish criteria for all 
appropriate medical tests administered in connection with a claim for 
benefits. Section 413(b) of the Act authorizes the Secretary of Labor to 
establish criteria for the techniques to be used to take chest 
roentgenograms (X-rays) in connection with a claim for benefits under 
the Act.
    (b) The Black Lung Benefits Reform Act of 1977 provided that with 
respect to a claim filed prior to April 1, 1980, or reviewed under 
section 435 of the Act, the standards to be applied in the adjudication 
of such claim shall not be more restrictive than the criteria applicable 
to a claim filed on June 30, 1973, with the Social Security 
Administration, whether or not the final disposition of the claim occurs 
after March 31, 1980. All such claims shall be reviewed under the 
criteria set forth in part 727 of this title (see 20 CFR 725.4(d)).



Sec. 718.2  Applicability of this part.

    With the exception of the second sentence of Sec. 718.204(a), this 
part is applicable to the adjudication of all claims filed after March 
31, 1980, and considered by the Secretary of Labor under section 422 of 
the Act and part 725 of this subchapter. The second sentence of Sec. 
718.204(a) is applicable to the adjudication of all claims filed after 
January 19, 2001. If a claim subject to the provisions of section 435 of 
the Act and subpart C of part 727 of this subchapter (see 20 CFR 
725.4(d)) cannot be approved under that subpart, such claim may be 
approved, if appropriate, under the provisions contained in this part. 
The provisions of this part shall, to the extent appropriate, be 
construed together in the adjudication of all claims.

[68 FR 69935, Dec. 15, 2003]



Sec. 718.3  Scope and intent of this part.

    (a) This part sets forth the standards to be applied in determining 
whether a coal miner is or was totally, or in the case of a claim 
subject to Sec. 718.306 partially, disabled due to pneumoconiosis or 
died due to pneumoconiosis. It also specifies the procedures and 
requirements to be followed in conducting medical examinations and in 
administering various tests relevant to such determinations.
    (b) This part is designed to interpret the presumptions contained in 
section 411(c) of the Act, evidentiary standards and criteria contained 
in section 413(b) of the Act and definitional requirements and standards 
contained in section 402(f) of the Act within a coherent framework for 
the adjudication of claims. It is intended that these enumerated 
provisions of the Act be construed as provided in this part.



Sec. 718.4  Definitions and use of terms.

    Except as is otherwise provided by this part, the definitions and 
usages of terms contained in Sec. 725.101 of subpart A of part 725 of 
this title shall be applicable to this part.



       Subpart B_Criteria for the Development of Medical Evidence

    Source: 65 FR 80045, Dec. 20, 2000, unless otherwise noted.



Sec. 718.101  General.

    (a) The Office of Workers' Compensation Programs (hereinafter OWCP 
or the Office) shall develop the medical evidence necessary for a 
determination with respect to each claimant's entitlement to benefits. 
Each miner who files a claim for benefits under the Act shall be 
provided an opportunity to substantiate his or her claim by means of a 
complete pulmonary evaluation including, but not limited to, a chest 
roentgenogram (X-ray), physical examination, pulmonary function tests 
and a blood-gas study.
    (b) The standards for the administration of clinical tests and 
examinations contained in this subpart shall apply to all evidence 
developed by any party after January 19, 2001 in connection with a claim 
governed by this part (see

[[Page 936]]

Sec. Sec. 725.406(b), 725.414(a), 725.456(d)). These standards shall 
also apply to claims governed by part 727 (see 20 CFR 725.4(d)), but 
only for clinical tests or examinations conducted after January 19, 
2001. Any clinical test or examination subject to these standards shall 
be in substantial compliance with the applicable standard in order to 
constitute evidence of the fact for which it is proffered. Unless 
otherwise provided, any evidence which is not in substantial compliance 
with the applicable standard is insufficient to establish the fact for 
which it is proffered.



Sec. 718.102  Chest roentgenograms (X-rays).

    (a) A chest roentgenogram (X-ray) shall be of suitable quality for 
proper classification of pneumoconiosis and shall conform to the 
standards for administration and interpretation of chest X-rays as 
described in Appendix A.
    (b) A chest X-ray to establish the existence of pneumoconiosis shall 
be classified as Category 1, 2, 3, A, B, or C, according to the 
International Labour Organization Union Internationale Contra Cancer/
Cincinnati (1971) International Classification of Radiographs of the 
Pneumoconioses (ILO-U/C 1971), or subsequent revisions thereof. This 
document is available from the Division of Coal Mine Workers' 
Compensation in the U.S. Department of Labor, Washington, D.C., 
telephone (202) 693-0046, and from the National Institute for 
Occupational Safety and Health (NIOSH), located in Cincinnati, Ohio, 
telephone (513) 841-4428) and Morgantown, West Virginia, telephone (304) 
285-5749. A chest X-ray classified as Category Z under the ILO 
Classification (1958) or Short Form (1968) shall be reclassified as 
Category 0 or Category 1 as appropriate, and only the latter accepted as 
evidence of pneumoconiosis. A chest X-ray classified under any of the 
foregoing classifications as Category 0, including sub-categories 0--, 
0/0, or 0/1 under the UICC/Cincinnati (1968) Classification or the ILO-
U/C 1971 Classification does not constitute evidence of pneumoconiosis.
    (c) A description and interpretation of the findings in terms of the 
classifications described in paragraph (b) of this section shall be 
submitted by the examining physician along with the film. The report 
shall specify the name and qualifications of the person who took the 
film and the name and qualifications of the physician interpreting the 
film. If the physician interpreting the film is a Board-certified or 
Board-eligible radiologist or a certified ``B'' reader (see Sec. 
718.202), he or she shall so indicate. The report shall further specify 
that the film was interpreted in compliance with this paragraph.
    (d) The original film on which the X-ray report is based shall be 
supplied to the Office, unless prohibited by law, in which event the 
report shall be considered as evidence only if the original film is 
otherwise available to the Office and other parties. Where the chest X-
ray of a deceased miner has been lost, destroyed or is otherwise 
unavailable, a report of a chest X-ray submitted by any party shall be 
considered in connection with the claim.
    (e) Except as provided in this paragraph, no chest X-ray shall 
constitute evidence of the presence or absence of pneumoconiosis unless 
it is conducted and reported in accordance with the requirements of this 
section and Appendix A. In the absence of evidence to the contrary, 
compliance with the requirements of Appendix A shall be presumed. In the 
case of a deceased miner where the only available X-ray does not 
substantially comply with paragraphs (a) through (d), such X-ray may 
form the basis for a finding of the presence or absence of 
pneumoconiosis if it is of sufficient quality for determining the 
presence or absence of pneumoconiosis and such X-ray was interpreted by 
a Board-certified or Board-eligible radiologist or a certified ``B'' 
reader (see Sec. 718.202).



Sec. 718.103  Pulmonary function tests.

    (a) Any report of pulmonary function tests submitted in connection 
with a claim for benefits shall record the results of flow versus volume 
(flow-volume loop). The instrument shall simultaneously provide records 
of volume versus time (spirometric tracing). The report shall provide 
the results of the forced expiratory volume in one second (FEV1) and the 
forced vital capacity (FVC). The report shall also provide

[[Page 937]]

the FEV1/FVC ratio, expressed as a percentage. If the maximum voluntary 
ventilation (MVV) is reported, the results of such test shall be 
obtained independently rather than calculated from the results of the 
FEV1.
    (b) All pulmonary function test results submitted in connection with 
a claim for benefits shall be accompanied by three tracings of the flow 
versus volume and the electronically derived volume versus time 
tracings. If the MVV is reported, two tracings of the MVV whose values 
are within 10% of each other shall be sufficient. Pulmonary function 
test results developed in connection with a claim for benefits shall 
also include a statement signed by the physician or technician 
conducting the test setting forth the following:
    (1) Date and time of test;
    (2) Name, DOL claim number, age, height, and weight of claimant at 
the time of the test;
    (3) Name of technician;
    (4) Name and signature of physician supervising the test;
    (5) Claimant's ability to understand the instructions, ability to 
follow directions and degree of cooperation in performing the tests. If 
the claimant is unable to complete the test, the person executing the 
report shall set forth the reasons for such failure;
    (6) Paper speed of the instrument used;
    (7) Name of the instrument used;
    (8) Whether a bronchodilator was administered. If a bronchodilator 
is administered, the physician's report must detail values obtained both 
before and after administration of the bronchodilator and explain the 
significance of the results obtained; and
    (9) That the requirements of paragraphs (b) and (c) of this section 
have been complied with.
    (c) Except as provided in this paragraph, no results of a pulmonary 
function study shall constitute evidence of the presence or absence of a 
respiratory or pulmonary impairment unless it is conducted and reported 
in accordance with the requirements of this section and Appendix B to 
this part. In the absence of evidence to the contrary, compliance with 
the requirements of Appendix B shall be presumed. In the case of a 
deceased miner, where no pulmonary function tests are in substantial 
compliance with paragraphs (a) and (b) and Appendix B, noncomplying 
tests may form the basis for a finding if, in the opinion of the 
adjudication officer, the tests demonstrate technically valid results 
obtained with good cooperation of the miner.



Sec. 718.104  Report of physical examinations.

    (a) A report of any physical examination conducted in connection 
with a claim shall be prepared on a medical report form supplied by the 
Office or in a manner containing substantially the same information. Any 
such report shall include the following information and test results:
    (1) The miner's medical and employment history;
    (2) All manifestations of chronic respiratory disease;
    (3) Any pertinent findings not specifically listed on the form;
    (4) If heart disease secondary to lung disease is found, all 
symptoms and significant findings;
    (5) The results of a chest X-ray conducted and interpreted as 
required by Sec. 718.102; and
    (6) The results of a pulmonary function test conducted and reported 
as required by Sec. 718.103. If the miner is physically unable to 
perform a pulmonary function test or if the test is medically 
contraindicated, in the absence of evidence establishing total 
disability pursuant to Sec. 718.304, the report must be based on other 
medically acceptable clinical and laboratory diagnostic techniques, such 
as a blood gas study.
    (b) In addition to the requirements of paragraph (a), a report of 
physical examination may be based on any other procedures such as 
electrocardiogram, blood-gas studies conducted and reported as required 
by Sec. 718.105, and other blood analyses which, in the physician's 
opinion, aid in his or her evaluation of the miner.
    (c) In the case of a deceased miner, where no report is in 
substantial compliance with paragraphs (a) and (b), a report prepared by 
a physician who is unavailable may nevertheless form the basis for a 
finding if, in the opinion of

[[Page 938]]

the adjudication officer, it is accompanied by sufficient indicia of 
reliability in light of all relevant evidence.
    (d) Treating physician. In weighing the medical evidence of record 
relevant to whether the miner suffers, or suffered, from pneumoconiosis, 
whether the pneumoconiosis arose out of coal mine employment, and 
whether the miner is, or was, totally disabled by pneumoconiosis or died 
due to pneumoconiosis, the adjudication officer must give consideration 
to the relationship between the miner and any treating physician whose 
report is admitted into the record. Specifically, the adjudication 
officer shall take into consideration the following factors in weighing 
the opinion of the miner's treating physician:
    (1) Nature of relationship. The opinion of a physician who has 
treated the miner for respiratory or pulmonary conditions is entitled to 
more weight than a physician who has treated the miner for non-
respiratory conditions;
    (2) Duration of relationship. The length of the treatment 
relationship demonstrates whether the physician has observed the miner 
long enough to obtain a superior understanding of his or her condition;
    (3) Frequency of treatment. The frequency of physician-patient 
visits demonstrates whether the physician has observed the miner often 
enough to obtain a superior understanding of his or her condition; and
    (4) Extent of treatment. The types of testing and examinations 
conducted during the treatment relationship demonstrate whether the 
physician has obtained superior and relevant information concerning the 
miner's condition.
    (5) In the absence of contrary probative evidence, the adjudication 
officer shall accept the statement of a physician with regard to the 
factors listed in paragraphs (d)(1) through (4) of this section. In 
appropriate cases, the relationship between the miner and his treating 
physician may constitute substantial evidence in support of the 
adjudication officer's decision to give that physician's opinion 
controlling weight, provided that the weight given to the opinion of a 
miner's treating physician shall also be based on the credibility of the 
physician's opinion in light of its reasoning and documentation, other 
relevant evidence and the record as a whole.



Sec. 718.105  Arterial blood-gas studies.

    (a) Blood-gas studies are performed to detect an impairment in the 
process of alveolar gas exchange. This defect will manifest itself 
primarily as a fall in arterial oxygen tension either at rest or during 
exercise. No blood-gas study shall be performed if medically 
contraindicated.
    (b) A blood-gas study shall initially be administered at rest and in 
a sitting position. If the results of the blood-gas test at rest do not 
satisfy the requirements of Appendix C to this part, an exercise blood-
gas test shall be offered to the miner unless medically contraindicated. 
If an exercise blood-gas test is administered, blood shall be drawn 
during exercise.
    (c) Any report of a blood-gas study submitted in connection with a 
claim shall specify:
    (1) Date and time of test;
    (2) Altitude and barometric pressure at which the test was 
conducted;
    (3) Name and DOL claim number of the claimant;
    (4) Name of technician;
    (5) Name and signature of physician supervising the study;
    (6) The recorded values for PC02, P02, and PH, which have been 
collected simultaneously (specify values at rest and, if performed, 
during exercise);
    (7) Duration and type of exercise;
    (8) Pulse rate at the time the blood sample was drawn;
    (9) Time between drawing of sample and analysis of sample; and
    (10) Whether equipment was calibrated before and after each test.
    (d) If one or more blood-gas studies producing results which meet 
the appropriate table in Appendix C is administered during a 
hospitalization which ends in the miner's death, then any such study 
must be accompanied by a physician's report establishing that the test 
results were produced by a chronic respiratory or pulmonary condition. 
Failure to produce such a report will prevent reliance on the blood-gas 
study as evidence that the miner was totally disabled at death. (e) In 
the case of a deceased miner, where no blood gas

[[Page 939]]

tests are in substantial compliance with paragraphs (a), (b), and (c), 
noncomplying tests may form the basis for a finding if, in the opinion 
of the adjudication officer, the only available tests demonstrate 
technically valid results. This provision shall not excuse compliance 
with the requirements in paragraph (d) for any blood gas study 
administered during a hospitalization which ends in the miner's death.



Sec. 718.106  Autopsy; biopsy.

    (a) A report of an autopsy or biopsy submitted in connection with a 
claim shall include a detailed gross macroscopic and microscopic 
description of the lungs or visualized portion of a lung. If a surgical 
procedure has been performed to obtain a portion of a lung, the evidence 
shall include a copy of the surgical note and the pathology report of 
the gross and microscopic examination of the surgical specimen. If an 
autopsy has been performed, a complete copy of the autopsy report shall 
be submitted to the Office.
    (b) In the case of a miner who died prior to March 31, 1980, an 
autopsy or biopsy report shall be considered even when the report does 
not substantially comply with the requirements of this section. A 
noncomplying report concerning a miner who died prior to March 31, 1980, 
shall be accorded the appropriate weight in light of all relevant 
evidence.
    (c) A negative biopsy is not conclusive evidence that the miner does 
not have pneumoconiosis. However, where positive findings are obtained 
on biopsy, the results will constitute evidence of the presence of 
pneumoconiosis.



Sec. 718.107  Other medical evidence.

    (a) The results of any medically acceptable test or procedure 
reported by a physician and not addressed in this subpart, which tends 
to demonstrate the presence or absence of pneumoconiosis, the sequelae 
of pneumoconiosis or a respiratory or pulmonary impairment, may be 
submitted in connection with a claim and shall be given appropriate 
consideration.
    (b) The party submitting the test or procedure pursuant to this 
section bears the burden to demonstrate that the test or procedure is 
medically acceptable and relevant to establishing or refuting a 
claimant's entitlement to benefits.



              Subpart C_Determining Entitlement to Benefits

    Source: 65 FR 80045, Dec. 20, 2000, unless otherwise noted.



Sec. 718.201  Definition of pneumoconiosis.

    (a) For the purpose of the Act, ``pneumoconiosis'' means a chronic 
dust disease of the lung and its sequelae, including respiratory and 
pulmonary impairments, arising out of coal mine employment. This 
definition includes both medical, or ``clinical'', pneumoconiosis and 
statutory, or ``legal'', pneumoconiosis.
    (1) Clinical Pneumoconiosis. ``Clinical pneumoconiosis'' consists of 
those diseases recognized by the medical community as pneumoconioses, 
i.e., the conditions characterized by permanent deposition of 
substantial amounts of particulate matter in the lungs and the fibrotic 
reaction of the lung tissue to that deposition caused by dust exposure 
in coal mine employment. This definition includes, but is not limited 
to, coal workers' pneumoconiosis, anthracosilicosis, anthracosis, 
anthrosilicosis, massive pulmonary fibrosis, silicosis or 
silicotuberculosis, arising out of coal mine employment.
    (2) Legal Pneumoconiosis. ``Legal pneumoconiosis'' includes any 
chronic lung disease or impairment and its sequelae arising out of coal 
mine employment. This definition includes, but is not limited to, any 
chronic restrictive or obstructive pulmonary disease arising out of coal 
mine employment.
    (b) For purposes of this section, a disease ``arising out of coal 
mine employment'' includes any chronic pulmonary disease or respiratory 
or pulmonary impairment significantly related to, or substantially 
aggravated by, dust exposure in coal mine employment.
    (c) For purposes of this definition, ``pneumoconiosis'' is 
recognized as a latent and progressive disease which may first become 
detectable only after the cessation of coal mine dust exposure.

[[Page 940]]



Sec. 718.202  Determining the existence of pneumoconiosis.

    (a) A finding of the existence of pneumoconiosis may be made as 
follows:
    (1) A chest X-ray conducted and classified in accordance with Sec. 
718.102 may form the basis for a finding of the existence of 
pneumoconiosis. Except as otherwise provided in this section, where two 
or more X-ray reports are in conflict, in evaluating such X-ray reports 
consideration shall be given to the radiological qualifications of the 
physicians interpreting such X-rays.
    (i) In all claims filed before January 1, 1982, where there is other 
evidence of pulmonary or respiratory impairment, a Board-certified or 
Board-eligible radiologist's interpretation of a chest X-ray shall be 
accepted by the Office if the X-ray is in compliance with the 
requirements of Sec. 718.102 and if such X-ray has been taken by a 
radiologist or qualified radiologic technologist or technician and there 
is no evidence that the claim has been fraudulently represented. 
However, these limitations shall not apply to any claim filed on or 
after January 1, 1982.
    (ii) The following definitions shall apply when making a finding in 
accordance with this paragraph.
    (A) The term other evidence means medical tests such as blood-gas 
studies, pulmonary function studies or physical examinations or medical 
histories which establish the presence of a chronic pulmonary, 
respiratory or cardio-pulmonary condition, and in the case of a deceased 
miner, in the absence of medical evidence to the contrary, affidavits of 
persons with knowledge of the miner's physical condition.
    (B) Pulmonary or respiratory impairment means inability of the human 
respiratory apparatus to perform in a normal manner one or more of the 
three components of respiration, namely, ventilation, perfusion and 
diffusion.
    (C) Board-certified means certification in radiology or diagnostic 
roentgenology by the American Board of Radiology, Inc. or the American 
Osteopathic Association.
    (D) Board-eligible means the successful completion of a formal 
accredited residency program in radiology or diagnostic roentgenology.
    (E) Certified `B' reader or `B' reader means a physician who has 
demonstrated proficiency in evaluating chest roentgenograms for 
roentgenographic quality and in the use of the ILO-U/C classification 
for interpreting chest roentgenograms for pneumoconiosis and other 
diseases by taking and passing a specially designed proficiency 
examination given on behalf of or by the Appalachian Laboratory for 
Occupational Safety and Health. See 42 CFR 37.51(b)(2).
    (F) Qualified radiologic technologist or technician means an 
individual who is either certified as a registered technologist by the 
American Registry of Radiologic Technologists or licensed as a 
radiologic technologist by a state licensing board.
    (2) A biopsy or autopsy conducted and reported in compliance with 
Sec. 718.106 may be the basis for a finding of the existence of 
pneumoconiosis. A finding in an autopsy or biopsy of anthracotic 
pigmentation, however, shall not be sufficient, by itself, to establish 
the existence of pneumoconiosis. A report of autopsy shall be accepted 
unless there is evidence that the report is not accurate or that the 
claim has been fraudulently represented.
    (3) If the presumptions described in Sec. Sec. 718.304, 718.305 or 
Sec. 718.306 are applicable, it shall be presumed that the miner is or 
was suffering from pneumoconiosis.
    (4) A determination of the existence of pneumoconiosis may also be 
made if a physician, exercising sound medical judgment, notwithstanding 
a negative X-ray, finds that the miner suffers or suffered from 
pneumoconiosis as defined in Sec. 718.201. Any such finding shall be 
based on objective medical evidence such as blood-gas studies, 
electrocardiograms, pulmonary function studies, physical performance 
tests, physical examination, and medical and work histories. Such a 
finding shall be supported by a reasoned medical opinion.
    (b) No claim for benefits shall be denied solely on the basis of a 
negative chest X-ray.
    (c) A determination of the existence of pneumoconiosis shall not be 
made solely on the basis of a living miner's

[[Page 941]]

statements or testimony. Nor shall such a determination be made upon a 
claim involving a deceased miner filed on or after January 1, 1982, 
solely based upon the affidavit(s) (or equivalent sworn testimony) of 
the claimant and/or his or her dependents who would be eligible for 
augmentation of the claimant's benefits if the claim were approved.



Sec. 718.203  Establishing relationship of pneumoconiosis to coal 
mine employment.

    (a) In order for a claimant to be found eligible for benefits under 
the Act, it must be determined that the miner's pneumoconiosis arose at 
least in part out of coal mine employment. The provisions in this 
section set forth the criteria to be applied in making such a 
determination.
    (b) If a miner who is suffering or suffered from pneumoconiosis was 
employed for ten years or more in one or more coal mines, there shall be 
a rebuttable presumption that the pneumoconiosis arose out of such 
employment.
    (c) If a miner who is suffering or suffered from pneumoconiosis was 
employed less than ten years in the nation's coal mines, it shall be 
determined that such pneumoconiosis arose out of that employment only if 
competent evidence establishes such a relationship.



Sec. 718.204  Total disability and disability causation defined; 
criteria for determining total disability and total disability due 
to pneumoconiosis.

    (a) General. Benefits are provided under the Act for or on behalf of 
miners who are totally disabled due to pneumoconiosis, or who were 
totally disabled due to pneumoconiosis at the time of death. For 
purposes of this section, any nonpulmonary or nonrespiratory condition 
or disease, which causes an independent disability unrelated to the 
miner's pulmonary or respiratory disability, shall not be considered in 
determining whether a miner is totally disabled due to pneumoconiosis. 
If, however, a nonpulmonary or nonrespiratory condition or disease 
causes a chronic respiratory or pulmonary impairment, that condition or 
disease shall be considered in determining whether the miner is or was 
totally disabled due to pneumoconiosis.
    (b)(1) Total disability defined. A miner shall be considered totally 
disabled if the irrebuttable presumption described in Sec. 718.304 
applies. If that presumption does not apply, a miner shall be considered 
totally disabled if the miner has a pulmonary or respiratory impairment 
which, standing alone, prevents or prevented the miner:
    (i) From performing his or her usual coal mine work; and
    (ii) From engaging in gainful employment in the immediate area of 
his or her residence requiring the skills or abilities comparable to 
those of any employment in a mine or mines in which he or she previously 
engaged with some regularity over a substantial period of time.
    (2) Medical criteria. In the absence of contrary probative evidence, 
evidence which meets the standards of either paragraphs (b)(2)(i), (ii), 
(iii), or (iv) of this section shall establish a miner's total 
disability:
    (i) Pulmonary function tests showing values equal to or less than 
those listed in Table B1 (Males) or Table B2 (Females) in Appendix B to 
this part for an individual of the miner's age, sex, and height for the 
FEV1 test; if, in addition, such tests also reveal the values specified 
in either paragraph (b)(2)(i)(A) or (B) or (C) of this section:
    (A) Values equal to or less than those listed in Table B3 (Males) or 
Table B4 (Females) in Appendix B of this part, for an individual of the 
miner's age, sex, and height for the FVC test, or
    (B) Values equal to or less than those listed in Table B5 (Males) or 
Table B6 (Females) in Appendix B to this part, for an individual of the 
miner's age, sex, and height for the MVV test, or
    (C) A percentage of 55 or less when the results of the FEV1 test are 
divided by the results of the FVC test (FEV1/FVC equal to or less than 
55%), or
    (ii) Arterial blood-gas tests show the values listed in Appendix C 
to this part, or
    (iii) The miner has pneumoconiosis and has been shown by the medical 
evidence to be suffering from cor pulmonale with right-sided congestive 
heart failure, or

[[Page 942]]

    (iv) Where total disability cannot be shown under paragraphs 
(b)(2)(i), (ii), or (iii) of this section, or where pulmonary function 
tests and/or blood gas studies are medically contraindicated, total 
disability may nevertheless be found if a physician exercising reasoned 
medical judgment, based on medically acceptable clinical and laboratory 
diagnostic techniques, concludes that a miner's respiratory or pulmonary 
condition prevents or prevented the miner from engaging in employment as 
described in paragraph (b)(1) of this section.
    (c)(1) Total disability due to pneumoconiosis defined. A miner shall 
be considered totally disabled due to pneumoconiosis if pneumoconiosis, 
as defined in Sec. 718.201, is a substantially contributing cause of 
the miner's totally disabling respiratory or pulmonary impairment. 
Pneumoconiosis is a ``substantially contributing cause'' of the miner's 
disability if it:
    (i) Has a material adverse effect on the miner's respiratory or 
pulmonary condition; or
    (ii) Materially worsens a totally disabling respiratory or pulmonary 
impairment which is caused by a disease or exposure unrelated to coal 
mine employment.
    (2) Except as provided in Sec. 718.305 and paragraph (b)(2)(iii) of 
this section, proof that the miner suffers or suffered from a totally 
disabling respiratory or pulmonary impairment as defined in paragraphs 
(b)(2)(i), (b)(2)(ii), (b)(2)(iv) and (d) of this section shall not, by 
itself, be sufficient to establish that the miner's impairment is or was 
due to pneumoconiosis. Except as provided in paragraph (d), the cause or 
causes of a miner's total disability shall be established by means of a 
physician's documented and reasoned medical report.
    (d) Lay evidence. In establishing total disability, lay evidence may 
be used in the following cases:
    (1) In a case involving a deceased miner in which the claim was 
filed prior to January 1, 1982, affidavits (or equivalent sworn 
testimony) from persons knowledgeable of the miner's physical condition 
shall be sufficient to establish total (or under Sec. 718.306 partial) 
disability due to pneumoconiosis if no medical or other relevant 
evidence exists which addresses the miner's pulmonary or respiratory 
condition.
    (2) In a case involving a survivor's claim filed on or after January 
1, 1982, but prior to June 30, 1982, which is subject to Sec. 718.306, 
affidavits (or equivalent sworn testimony) from persons knowledgeable of 
the miner's physical condition shall be sufficient to establish total or 
partial disability due to pneumoconiosis if no medical or other relevant 
evidence exists which addresses the miner's pulmonary or respiratory 
condition; however, such a determination shall not be based solely upon 
the affidavits or testimony of the claimant and/or his or her dependents 
who would be eligible for augmentation of the claimant's benefits if the 
claim were approved.
    (3) In a case involving a deceased miner whose claim was filed on or 
after January 1, 1982, affidavits (or equivalent sworn testimony) from 
persons knowledgeable of the miner's physical condition shall be 
sufficient to establish total disability due to pneumoconiosis if no 
medical or other relevant evidence exists which addresses the miner's 
pulmonary or respiratory condition; however, such a determination shall 
not be based solely upon the affidavits or testimony of any person who 
would be eligible for benefits (including augmented benefits) if the 
claim were approved.
    (4) Statements made before death by a deceased miner about his or 
her physical condition are relevant and shall be considered in making a 
determination as to whether the miner was totally disabled at the time 
of death.
    (5) In the case of a living miner's claim, a finding of total 
disability due to pneumoconiosis shall not be made solely on the miner's 
statements or testimony.
    (e) In determining total disability to perform usual coal mine work, 
the following shall apply in evaluating the miner's employment 
activities:
    (1) In the case of a deceased miner, employment in a mine at the 
time of death shall not be conclusive evidence that the miner was not 
totally disabled. To disprove total disability, it must be shown that at 
the time the

[[Page 943]]

miner died, there were no changed circumstances of employment indicative 
of his or her reduced ability to perform his or her usual coal mine 
work.
    (2) In the case of a living miner, proof of current employment in a 
coal mine shall not be conclusive evidence that the miner is not totally 
disabled unless it can be shown that there are no changed circumstances 
of employment indicative of his or her reduced ability to perform his or 
her usual coal mine work.
    (3) Changed circumstances of employment indicative of a miner's 
reduced ability to perform his or her usual coal mine work may include 
but are not limited to:
    (i) The miner's reduced ability to perform his or her customary 
duties without help; or
    (ii) The miner's reduced ability to perform his or her customary 
duties at his or her usual levels of rapidity, continuity or efficiency; 
or
    (iii) The miner's transfer by request or assignment to less vigorous 
duties or to duties in a less dusty part of the mine.



Sec. 718.205  Death due to pneumoconiosis.

    (a) Benefits are provided to eligible survivors of a miner whose 
death was due to pneumoconiosis. In order to receive benefits, the 
claimant must prove that:
    (1) The miner had pneumoconiosis (see Sec. 718.202);
    (2) The miner's pneumoconiosis arose out of coal mine employment 
(see Sec. 718.203); and
    (3) The miner's death was due to pneumoconiosis as provided by this 
section.
    (b) For the purpose of adjudicating survivors' claims filed prior to 
January 1, 1982, death will be considered due to pneumoconiosis if any 
of the following criteria is met:
    (1) Where competent medical evidence established that the miner's 
death was due to pneumoconiosis, or
    (2) Where death was due to multiple causes including pneumoconiosis 
and it is not medically feasible to distinguish which disease caused 
death or the extent to which pneumoconiosis contributed to the cause of 
death, or
    (3) Where the presumption set forth at Sec. 718.304 is applicable, 
or
    (4) Where either of the presumptions set forth at Sec. 718.303 or 
Sec. 718.305 is applicable and has not been rebutted.
    (5) Where the cause of death is significantly related to or 
aggravated by pneumoconiosis.
    (c) For the purpose of adjudicating survivors' claims filed on or 
after January 1, 1982, death will be considered to be due to 
pneumoconiosis if any of the following criteria is met:
    (1) Where competent medical evidence establishes that pneumoconiosis 
was the cause of the miner's death, or
    (2) Where pneumoconiosis was a substantially contributing cause or 
factor leading to the miner's death or where the death was caused by 
complications of pneumoconiosis, or
    (3) Where the presumption set forth at Sec. 718.304 is applicable.
    (4) However, survivors are not eligible for benefits where the 
miner's death was caused by a traumatic injury or the principal cause of 
death was a medical condition not related to pneumoconiosis, unless the 
evidence establishes that pneumoconiosis was a substantially 
contributing cause of death.
    (5) Pneumoconiosis is a ``substantially contributing cause'' of a 
miner's death if it hastens the miner's death.
    (d) To minimize the hardships to potentially entitled survivors due 
to the disruption of benefits upon the miner's death, survivors' claims 
filed on or after January 1, 1982, shall be adjudicated on an expedited 
basis in accordance with the following procedures. The initial burden is 
upon the claimant, with the assistance of the district director, to 
develop evidence which meets the requirements of paragraph (c) of this 
section. Where the initial medical evidence appears to establish that 
death was due to pneumoconiosis, the survivor will receive benefits 
unless the weight of the evidence as subsequently developed by the 
Department or the responsible operator establishes that the miner's 
death was not due to pneumoconiosis as defined in paragraph (c). 
However, no such benefits shall be found payable before the party 
responsible for the payment of such benefits shall have had a reasonable 
opportunity for the development

[[Page 944]]

of rebuttal evidence. See Sec. 725.414 concerning the operator's 
opportunity to develop evidence prior to an initial determination.



Sec. 718.206  Effect of findings by persons or agencies.

    Decisions, statements, reports, opinions, or the like, of agencies, 
organizations, physicians or other individuals, about the existence, 
cause, and extent of a miner's disability, or the cause of a miner's 
death, are admissible. If properly submitted, such evidence shall be 
considered and given the weight to which it is entitled as evidence 
under all the facts before the adjudication officer in the claim.



     Subpart D_Presumptions Applicable to Eligibility Determinations

    Source: 65 FR 80045, Dec. 20, 2000, unless otherwise noted.



Sec. 718.301  Establishing length of employment as a miner.

    The presumptions set forth in Sec. Sec. 718.302, 718.303, 718.305 
and 718.306 apply only if a miner worked in one or more coal mines for 
the number of years required to invoke the presumption. The length of 
the miner's coal mine work history must be computed as provided by 20 
CFR 725.101(a)(32).



Sec. 718.302  Relationship of pneumoconiosis to coal mine employment.

    If a miner who is suffering or suffered from pneumoconiosis was 
employed for ten years or more in one or more coal mines, there shall be 
a rebuttable presumption that the pneumoconiosis arose out of such 
employment. (See Sec. 718.203.)



Sec. 718.303  Death from a respirable disease.

    (a)(1) If a deceased miner was employed for ten or more years in one 
or more coal mines and died from a respirable disease, there shall be a 
rebuttable presumption that his or her death was due to pneumoconiosis.
    (2) Under this presumption, death shall be found due to a respirable 
disease in any case in which the evidence establishes that death was due 
to multiple causes, including a respirable disease, and it is not 
medically feasible to distinguish which disease caused death or the 
extent to which the respirable disease contributed to the cause of 
death.
    (b) The presumption of paragraph (a) of this section may be rebutted 
by a showing that the deceased miner did not have pneumoconiosis, that 
his or her death was not due to pneumoconiosis or that pneumoconiosis 
did not contribute to his or her death.
    (c) This section is not applicable to any claim filed on or after 
January 1, 1982.



Sec. 718.304  Irrebuttable presumption of total disability or death due 
to pneumoconiosis.

    There is an irrebuttable presumption that a miner is totally 
disabled due to pneumoconiosis, that a miner's death was due to 
pneumoconiosis or that a miner was totally disabled due to 
pneumoconiosis at the time of death, if such miner is suffering or 
suffered from a chronic dust disease of the lung which:
    (a) When diagnosed by chest X-ray (see Sec. 718.202 concerning the 
standards for X-rays and the effect of interpretations of X-rays by 
physicians) yields one or more large opacities (greater than 1 
centimeter in diameter) and would be classified in Category A, B, or C 
in:
    (1) The ILO-U/C International Classification of Radiographs of the 
Pneumoconioses, 1971, or subsequent revisions thereto; or
    (2) The International Classification of the Radiographs of the 
Pneumoconioses of the International Labour Office, Extended 
Classification (1968) (which may be referred to as the ``ILO 
Classification (1968)''); or
    (3) The Classification of the Pneumoconioses of the Union 
Internationale Contra Cancer/Cincinnati (1968) (which may be referred to 
as the ``UICC/Cincinnati (1968) Classification''); or
    (b) When diagnosed by biopsy or autopsy, yields massive lesions in 
the lung; or
    (c) When diagnosed by means other than those specified in paragraphs 
(a)

[[Page 945]]

and (b) of this section, would be a condition which could reasonably be 
expected to yield the results described in paragraph (a) or (b) of this 
section had diagnosis been made as therein described: Provided, however, 
That any diagnosis made under this paragraph shall accord with 
acceptable medical procedures.



Sec. 718.305  Presumption of pneumoconiosis.

    (a) If a miner was employed for fifteen years or more in one or more 
underground coal mines, and if there is a chest X-ray submitted in 
connection with such miner's or his or her survivor's claim and it is 
interpreted as negative with respect to the requirements of Sec. 
718.304, and if other evidence demonstrates the existence of a totally 
disabling respiratory or pulmonary impairment, then there shall be a 
rebuttable presumption that such miner is totally disabled due to 
pneumoconiosis, that such miner's death was due to pneumoconiosis, or 
that at the time of death such miner was totally disabled by 
pneumoconiosis. In the case of a living miner's claim, a spouse's 
affidavit or testimony may not be used by itself to establish the 
applicability of the presumption. The Secretary shall not apply all or a 
portion of the requirement of this paragraph that the miner work in an 
underground mine where it is determined that conditions of the miner's 
employment in a coal mine were substantially similar to conditions in an 
underground mine. The presumption may be rebutted only by establishing 
that the miner does not, or did not have pneumoconiosis, or that his or 
her respiratory or pulmonary impairment did not arise out of, or in 
connection with, employment in a coal mine.
    (b) In the case of a deceased miner, where there is no medical or 
other relevant evidence, affidavits of persons having knowledge of the 
miner's condition shall be considered to be sufficient to establish the 
existence of a totally disabling respiratory or pulmonary impairment for 
purposes of this section.
    (c) The determination of the existence of a totally disabling 
respiratory or pulmonary impairment, for purposes of applying the 
presumption described in this section, shall be made in accordance with 
Sec. 718.204.
    (d) Where the cause of death or total disability did not arise in 
whole or in part out of dust exposure in the miner's coal mine 
employment or the evidence establishes that the miner does not or did 
not have pneumoconiosis, the presumption will be considered rebutted. 
However, in no case shall the presumption be considered rebutted on the 
basis of evidence demonstrating the existence of a totally disabling 
obstructive respiratory or pulmonary disease of unknown origin.
    (e) This section is not applicable to any claim filed on or after 
January 1, 1982.



Sec. 718.306  Presumption of entitlement applicable to certain death 
claims.

    (a) In the case of a miner who died on or before March 1, 1978, who 
was employed for 25 or more years in one or more coal mines prior to 
June 30, 1971, the eligible survivors of such miner whose claims have 
been filed prior to June 30, 1982, shall be entitled to the payment of 
benefits, unless it is established that at the time of death such miner 
was not partially or totally disabled due to pneumoconiosis. Eligible 
survivors shall, upon request, furnish such evidence as is available 
with respect to the health of the miner at the time of death, and the 
nature and duration of the miner's coal mine employment.
    (b) For the purpose of this section, a miner will be considered to 
have been ``partially disabled'' if he or she had reduced ability to 
engage in work as defined in Sec. 718.204(b).
    (c) In order to rebut this presumption the evidence must demonstrate 
that the miner's ability to perform work as defined in Sec. 718.204(b) 
was not reduced at the time of his or her death or that the miner did 
not have pneumoconiosis.
    (d) None of the following items, by itself, shall be sufficient to 
rebut the presumption:
    (1) Evidence that a deceased miner was employed in a coal mine at 
the time of death;
    (2) Evidence pertaining to a deceased miner's level of earnings 
prior to death;

[[Page 946]]

    (3) A chest X-ray interpreted as negative for the existence of 
pneumoconiosis;
    (4) A death certificate which makes no mention of pneumoconiosis.

Appendix A to Part 718--Standards for Administration and Interpretation 
                    of Chest Roentgenograms (X-Rays)

    The following standards are established in accordance with sections 
402(f)(1)(D) and 413(b) of the Act. They were developed in consultation 
with the National Institute for Occupational Safety and Health. These 
standards are promulgated for the guidance of physicians and medical 
technicians to insure that uniform procedures are used in administering 
and interpreting X-rays and that the best available medical evidence 
will be submitted in connection with a claim for black lung benefits. If 
it is established that one or more standards have not been met, the 
claims adjudicator may consider such fact in determining the evidentiary 
weight to be assigned to the physician's report of an X-ray.
    (1) Every chest roentgenogram shall be a single postero-anterior 
projection at full inspiration on a 14 by 17 inch film. Additional chest 
films or views shall be obtained if they are necessary for clarification 
and classification. The film and cassette shall be capable of being 
positioned both vertically and horizontally so that the chest 
roentgenogram will include both apices and costophrenic angles. If a 
miner is too large to permit the above requirements, then a projection 
with minimum loss of costophrenic angle shall be made.
    (2) Miners shall be disrobed from the waist up at the time the 
roentgenogram is given. The facility shall provide a dressing area and, 
for those miners who wish to use one, the facility shall provide a clean 
gown. Facilities shall be heated to a comfortable temperature.
    (3) Roentgenograms shall be made only with a diagnostic X-ray 
machine having a rotating anode tube with a maximum of a 2 mm source 
(focal spot).
    (4) Except as provided in paragraph (5), roentgenograms shall be 
made with units having generators which comply with the following: (a) 
the generators of existing roentgenographic units acquired by the 
examining facility prior to July 27, 1973, shall have a minimum rating 
of 200 mA at 100 kVp; (b) generators of units acquired subsequent to 
that date shall have a minimum rating of 300 mA at 125 kVp.
    Note: A generator with a rating of 150 kVp is recommended.
    (5) Roentgenograms made with battery-powered mobile or portable 
equipment shall be made with units having a minimum rating of 100 mA at 
110 kVp at 500 Hz, or 200 mA at 110 kVp at 60 Hz.
    (6) Capacitor discharge, and field emission units may be used.
    (7) Roentgenograms shall be given only with equipment having a beam-
limiting device which does not cause large unexposed boundaries. The use 
of such a device shall be discernible from an examination of the 
roentgenogram.
    (8) To insure high quality chest roentgenograms:
    (i) The maximum exposure time shall not exceed \1/20\ of a second 
except that with single phase units with a rating less than 300 mA at 
125 kVp and subjects with chest over 28 cm postero-anterior, the 
exposure may be increased to not more than \1/10\ of a second;
    (ii) The source or focal spot to film distance shall be at least 6 
feet;
    (iii) Only medium-speed film and medium-speed intensifying screens 
shall be used;
    (iv) Film-screen contact shall be maintained and verified at 6-month 
or shorter intervals;
    (v) Intensifying screens shall be inspected at least once a month 
and cleaned when necessary by the method recommended by the 
manufacturer;
    (vi) All intensifying screens in a cassette shall be of the same 
type and made by the same manufacturer;
    (vii) When using over 90 kV, a suitable grid or other means of 
reducing scattered radiation shall be used;
    (viii) The geometry of the radiographic system shall insure that the 
central axis (ray) of the primary beam is perpendicular to the plane of 
the film surface and impinges on the center of the film.
    (9) Radiographic processing:
    (i) Either automatic or manual film processing is acceptable. A 
constant time-temperature technique shall be meticulously employed for 
manual processing.
    (ii) If mineral or other impurities in the processing water 
introduce difficulty in obtaining a high-quality roentgenogram, a 
suitable filter or purification system shall be used.
    (10) Before the miner is advised that the examination is concluded, 
the roentgenogram shall be processed and inspected and accepted for 
quality by the physician, or if the physician is not available, 
acceptance may be made by the radiologic technologist. In a case of a 
substandard roentgenogram, another shall be made immediately.
    (11) An electric power supply shall be used which complies with the 
voltage, current, and regulation specified by the manufacturer of the 
machine.
    (12) A densitometric test object may be required on each 
roentgenogram for an objective evaluation of film quality at the 
discretion of the Department of Labor.

[[Page 947]]

    (13) Each roentgenogram made under this Appendix shall be 
permanently and legibly marked with the name and address of the facility 
at which it is made, the miner's DOL claim number, the date of the 
roentgenogram, and left and right side of film. No other identifying 
markings shall be recorded on the roentgenogram.

[65 FR 80045, Dec. 20, 2000]

Appendix B to Part 718--Standards for Administration and Interpretation 
       of Pulmonary Function Tests. Tables B1, B2, B3, B4, B5, B6.

    The following standards are established in accordance with section 
402(f)(1)(D) of the Act. They were developed in consultation with the 
National Institute for Occupational Safety and Health (NIOSH). These 
standards are promulgated for the guidance of physicians and medical 
technicians to insure that uniform procedures are used in administering 
and interpreting ventilatory function tests and that the best available 
medical evidence will be submitted in support of a claim for black lung 
benefits. If it is established that one or more standards have not been 
met, the claims adjudicator may consider such fact in determining the 
evidentiary weight to be given to the results of the ventilatory 
function tests.
    (1) Instruments to be used for the administration of pulmonary 
function tests shall be approved by NIOSH and shall conform to the 
following criteria:
    (i) The instrument shall be accurate within 50 
ml or within 3 percent of reading, whichever is 
greater.
    (ii) The instrument shall be capable of measuring vital capacity 
from 0 to 7 liters BTPS.
    (iii) The instrument shall have a low inertia and offer low 
resistance to airflow such that the resistance to airflow at 12 liters 
per second must be less than 1.5 cm H20/liter/sec.
    (iv) The instrument or user of the instrument must have a means of 
correcting volumes to body temperature saturated with water vapor (BTPS) 
under conditions of varying ambient spirometer temperatures and 
barometric pressures.
    (v) The instrument used shall provide a tracing of flow versus 
volume (flow-volume loop) which displays the entire maximum inspiration 
and the entire maximum forced expiration. The instrument shall, in 
addition, provide tracings of the volume versus time tracing (spirogram) 
derived electronically from the flow-volume loop. Tracings are necessary 
to determine whether maximum inspiratory and expiratory efforts have 
been obtained during the FVC maneuver. If maximum voluntary ventilation 
is measured, the tracing shall record the individual breaths volumes 
versus time.
    (vi) The instrument shall be capable of accumulating volume for a 
minimum of 10 seconds after the onset of exhalation.
    (vii) The instrument must be capable of being calibrated in the 
field with respect to the FEV1. The volume calibration shall be 
accomplished with a 3 L calibrating syringe and should agree to within 1 
percent of a 3 L calibrating volume. The linearity of the instrument 
must be documented by a record of volume calibrations at three different 
flow rates of approximately 3 L/6 sec, 3 L/3 sec, and 3 L/sec.
    (viii) For measuring maximum voluntary ventilation (MVV) the 
instrument shall have a response which is flat within 10 percent up to 4 Hz at flow rates up to 12 liters per 
second over the volume range.
    (ix) The spirogram shall be recorded at a speed of at least 20 mm/
sec and a volume excursion of at least 10mm/L. Calculation of the FEVl 
from the flow-volume loop is not acceptable. Original tracings shall be 
submitted.
    (2) The administration of pulmonary function tests shall conform to 
the following criteria:
    (i) Tests shall not be performed during or soon after an acute 
respiratory illness.
    (ii) For the FEV1 and FVC, use of a nose clip is required. The 
procedures shall be explained in simple terms to the patient who shall 
be instructed to loosen any tight clothing and stand in front of the 
apparatus. The subject may sit, or stand, but care should be taken on 
repeat testing that the same position be used. Particular attention 
shall be given to insure that the chin is slightly elevated with the 
neck slightly extended. The subject shall be instructed to expire 
completely, momentarily hold his breath, place the mouthpiece in his 
mouth and close the mouth firmly about the mouthpiece to ensure no air 
leak. The subject will than make a maximum inspiration from the 
instrument and when maximum inspiration has been attained, without 
interruption, blow as hard, fast and completely as possible for at least 
7 seconds or until a plateau has been attained in the volume-time curve 
with no detectable change in the expired volume during the last 2 
seconds of maximal expiratory effort. A minimum of three flow-volume 
loops and derived spirometric tracings shall be carried out. The patient 
shall be observed throughout the study for compliance with instructions. 
Inspiration and expiration shall be checked visually for 
reproducibility. The effort shall be judged unacceptable when the 
patient:
    (A) Has not reached full inspiration preceding the forced 
expiration; or
    (B) Has not used maximal effort during the entire forced expiration; 
or

[[Page 948]]

    (C) Has not continued the expiration for least 7 sec. or until an 
obvious plateau for at least 2 sec. in the volume-time curve has 
occurred; or
    (D) Has coughed or closed his glottis; or
    (E) Has an obstructed mouthpiece or a leak around the mouthpiece 
(obstruction due to tongue being placed in front of mouthpiece, false 
teeth falling in front of mouthpiece, etc.); or
    (F) Has an unsatisfactory start of expiration, one characterized by 
excessive hesitation (or false starts). Peak flow should be attained at 
the start of expiration and the volume-time tracing (spirogram) should 
have a smooth contour revealing gradually decreasing flow throughout 
expiration; or
    (G) Has an excessive variability between the three acceptable 
curves. The variation between the two largest FEV1's of the three 
acceptable tracings should not exceed 5 percent of the largest FEV1 or 
100 ml, whichever is greater. As individuals with obstructive disease or 
rapid decline in lung function will be less likely to achieve this 
degree of reproducibility, tests not meeting this criterion may still be 
submitted for consideration in support of a claim for black lung 
benefits. Failure to meet this standard should be clearly noted in the 
test report by the physician conducting or reviewing the test.
    (iii) For the MVV, the subject shall be instructed before beginning 
the test that he or she will be asked to breathe as deeply and as 
rapidly as possible for approximately 15 seconds. The test shall be 
performed with the subject in the standing position, if possible. Care 
shall be taken on repeat testing that the same position be used. The 
subject shall breathe normally into the mouthpiece of the apparatus for 
10 to 15 seconds to become accustomed to the system. The subject shall 
then be instructed to breathe as deeply and as rapidly as possible, and 
shall be continually encouraged during the remainder of the maneuver. 
Subject shall continue the maneuver for 15 seconds. At least 5 minutes 
of rest shall be allowed between maneuvers. At least three MVV's shall 
be carried out. (But see Sec. 718.103(b).) During the maneuvers the 
patient shall be observed for compliance with instructions. The effort 
shall be judged unacceptable when the patient:
    (A) Has not maintained consistent effort for at least 12 to 15 
seconds; or
    (B) Has coughed or closed his glottis; or
    (C) Has an obstructed mouthpiece or a leak around the mouthpiece 
(obstruction due to tongue being placed in front of mouthpiece, false 
teeth falling in front of mouthpiece, etc.); or
    (D) Has an excessive variability between the three acceptable 
curves. The variation between the two largest MVVs of the three 
satisfactory tracings shall not exceed 10 percent.
    (iv) A calibration check shall be performed on the instrument each 
day before use, using a volume source of at least three liters, accurate 
to within 1 percent of full scale. The volume 
calibration shall be performed in accordance with the method described 
in paragraph (1)(vii) of this Appendix. Accuracy of the time measurement 
used in determining the FEV1 shall be checked using the manufacturer's 
stated procedure and shall be within 3 percent of 
actual. The procedure described in the Appendix shall be performed as 
well as any other procedures suggested by the manufacturer of the 
spirometer being used.
    (v)(A) The first step in evaluating a spirogram for the FVC and FEV1 
shall be to determine whether or not the patient has performed the test 
properly or as described in (2)(ii) of this Appendix. The largest 
recorded FVC and FEV1, corrected to BTPS, shall be used in the analysis.
    (B) Only MVV maneuvers which demonstrate consistent effort for at 
least 12 seconds shall be considered acceptable. The largest accumulated 
volume for a 12 second period corrected to BTPS and multiplied by five 
or the largest accumulated volume for a 15 second period corrected to 
BTPS and multiplied by four is to be reported as the MVV.

[[Page 949]]

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                Appendix C to Part 718--Blood-Gas Tables

    The following tables set forth the values to be applied in 
determining whether total disability may be established in accordance 
with Sec. Sec. 718.204(b)(2)(ii) and 718.305(a), (c). The values 
contained in the tables are indicative of impairment only. They do not 
establish a degree of disability except as provided in Sec. Sec. 
718.204(b)(2)(ii) and 718.305(a), (c) of this subchapter, nor do they 
establish standards for determining normal alveolar gas exchange values 
for any particular individual. Tests shall not be performed during or 
soon after an acute respiratory or cardiac illness. A miner who meets 
the following medical specifications shall be found to be totally 
disabled, in the absence of rebutting evidence, if the values specified 
in one of the following tables are met:

[[Page 961]]

    (1) For arterial blood-gas studies performed at test sites up to 
2,999 feet above sea level:

------------------------------------------------------------------------
                                                           Arterial PO2
                                                            equal to or
                  Arterial PCO2 (mm Hg)                    less than (mm
                                                                Hg)
------------------------------------------------------------------------
25 or below.............................................              75
26......................................................              74
27......................................................              73
28......................................................              72
29......................................................              71
30......................................................              70
31......................................................              69
32......................................................              68
33......................................................              67
34......................................................              66
35......................................................              65
36......................................................              64
37......................................................              63
38......................................................              62
39......................................................              61
40-49...................................................              60
Above 50................................................          (\1\)
------------------------------------------------------------------------
\1\ Any value.

    (2) For arterial blood-gas studies performed at test sites 3,000 to 
5,999 feet above sea level:

------------------------------------------------------------------------
                                                           Arterial PO2
                                                            equal to or
                  Arterial PCO2 (mm Hg)                    less than (mm
                                                                Hg)
------------------------------------------------------------------------
25 or below.............................................              70
26......................................................              69
27......................................................              68
28......................................................              67
29......................................................              66
30......................................................              65
31......................................................              64
32......................................................              63
33......................................................              62
34......................................................              61
35......................................................              60
36......................................................              59
37......................................................              58
38......................................................              57
39......................................................              56
40-49...................................................              55
Above 50................................................          (\2\)
------------------------------------------------------------------------
\2\ Any value.

    (3) For arterial blood-gas studies performed at test sites 6,000 
feet or more above sea level:

------------------------------------------------------------------------
                                                           Arterial PO2
                                                            equal to or
                  Arterial PCO2 (mm Hg)                    less than (mm
                                                                Hg)
------------------------------------------------------------------------
25 or below.............................................              65
26......................................................              64
27......................................................              63
28......................................................              62
29......................................................              61
30......................................................              60
31......................................................              59
32......................................................              58
33......................................................              57
34......................................................              56
35......................................................              55
36......................................................              54
37......................................................              53
38......................................................              52
39......................................................              51
40-49...................................................              50
Above 50................................................          (\3\)
------------------------------------------------------------------------
\3\ Any value.


[65 FR 80045, Dec. 20, 2000]



PART 722_CRITERIA FOR DETERMINING WHETHER STATE WORKERS' COMPENSATION 
LAWS PROVIDE ADEQUATE COVERAGE FOR PNEUMOCONIOSIS AND LISTING OF APPROVED 
STATE LAWS--Table of Contents




Sec.
722.1 Purpose.
722.2 Definitions.
722.3 General criteria; inclusion in and removal from the Secretary's 
          list.
722.4 The Secretary's list.

    Authority: 5 U.S.C. 301, Reorganization Plan No. 6 of 1950, 15 FR 
3174, 30 U.S.C. 901 et seq., 921, 932, 936; 33 U.S.C. 901 et seq., 
Secretary's Order 7-87, 52 FR 48466, Employment Standards Order No. 90-
02.

    Source: 65 FR 80053, Dec. 20, 2000, unless otherwise noted.



Sec. 722.1  Purpose.

    Section 421 of the Black Lung Benefits Act provides that a claim for 
benefits based on the total disability or death of a coal miner due to 
pneumoconiosis must be filed under a State workers' compensation law 
where such law provides adequate coverage for pneumoconiosis. A State 
workers' compensation law may be deemed to provide adequate coverage 
only when it is included on a list of such laws maintained by the 
Secretary. The purpose of this part is to set forth the procedures and 
criteria for inclusion on that list, and to provide that list.



Sec. 722.2  Definitions.

    (a) The definitions and use of terms contained in subpart A of part 
725 of this title shall be applicable to this part.
    (b) For purposes of this part, the following definitions apply:

[[Page 962]]

    (1) State agency means, with respect to any State, the agency, 
department or officer designated by the workers' compensation law of the 
State to administer such law. In any case in which more than one agency 
participates in the administration of a State workers' compensation law, 
the Governor of the State may designate which of the agencies shall be 
the State agency for purposes of this part.
    (2) The Secretary's list means the list published by the Secretary 
of Labor in the Federal Register (see Sec. 722.4) containing the names 
of those States which have in effect a workers' compensation law which 
provides adequate coverage for death or total disability due to 
pneumoconiosis.



Sec. 722.3  General criteria; inclusion in and removal from the 
Secretary's list.

    (a) The Governor of any State or any duly authorized State agency 
may, at any time, request that the Secretary include such State's 
workers' compensation law on his list of those State workers' 
compensation laws providing adequate coverage for total disability or 
death due to pneumoconiosis. Each such request shall include a copy of 
the State workers' compensation law and any other pertinent State laws; 
a copy of any regulations, either proposed or promulgated, implementing 
such laws; and a copy of any relevant administrative or court decision 
interpreting such laws or regulations, or, if such decisions are 
published in a readily available report, a citation to such decision.
    (b) Upon receipt of a request that a State be included on the 
Secretary's list, the Secretary shall include the State on the list if 
he finds that the State's workers' compensation law guarantees the 
payment of monthly and medical benefits to all persons who would be 
entitled to such benefits under the Black Lung Benefits Act at the time 
of the request, at a rate no less than that provided by the Black Lung 
Benefits Act. The criteria used by the Secretary in making such 
determination shall include, but shall not be limited to, the criteria 
set forth in section 421(b)(2) of the Act.
    (c) The Secretary may require each State included on the list to 
submit reports detailing the extent to which the State's workers' 
compensation laws, as reflected by statute, regulation, or 
administrative or court decision, continues to meet the requirements of 
paragraph (b) of this section. If the Secretary concludes that the 
State's workers' compensation law does not provide adequate coverage at 
any time, either because of changes to the State workers' compensation 
law or the Black Lung Benefits Act, he shall remove the State from the 
Secretary's list after providing the State with notice of such removal 
and an opportunity to be heard.



Sec. 722.4  The Secretary's list.

    (a) The Secretary has determined that publication of the Secretary's 
list in the Code of Federal Regulations is appropriate. Accordingly, in 
addition to its publication in the Federal Register as required by 
section 421 of the Black Lung Benefits Act, the list shall also appear 
in paragraph (b) of this section.
    (b) Upon review of all requests filed with the Secretary under 
section 421 of the Black Lung Benefits Act and this part, and 
examination of the workers' compensation laws of the States making such 
requests, the Secretary has determined that the workers' compensation 
law of each of the following listed States, for the period from the date 
shown in the list until such date as the Secretary may make a contrary 
determination, provides adequate coverage for pneumoconiosis.

------------------------------------------------------------------------
                                                                Period
                            State                             commencing
------------------------------------------------------------------------
None........................................................  ..........
------------------------------------------------------------------------



PART 725_CLAIMS FOR BENEFITS UNDER PART C OF TITLE IV OF THE FEDERAL 
MINE SAFETY AND HEALTH ACT, AS AMENDED--Table of Contents




                            Subpart A_General

Sec.
725.1 Statutory provisions.
725.2 Purpose and applicability of this part.
725.3 Contents of this part.
725.4 Applicability of other parts in this title.
725.101 Definitions and use of terms.

[[Page 963]]

725.102 Disclosure of program information.
725.103 Burden of proof.

  Subpart B_Persons Entitled to Benefits, Conditions, and Duration of 
                               Entitlement

725.201 Who is entitled to benefits; contents of this subpart.

              Conditions and Duration of Entitlement: Miner

725.202 Miner defined; conditions of entitlement, miner.
725.203 Duration and cessation of entitlement, miner.

 Conditions and Duration of Entitlement: Miner's Dependents (Augmented 
                                Benefits)

725.204 Determination of relationship; spouse.
725.205 Determination of dependency; spouse.
725.206 Determination of relationship; divorced spouse.
725.207 Determination of dependency; divorced spouse.
725.208 Determination of relationship; child.
725.209 Determination of dependency; child.
725.210 Duration of augmented benefits.
725.211 Time of determination of relationship and dependency of spouse 
          or child for purposes of augmentation of benefits.

        Conditions and Duration of Entitlement: Miner's Survivors

725.212 Conditions of entitlement; surviving spouse or surviving 
          divorced spouse.
725.213 Duration of entitlement; surviving spouse or surviving divorced 
          spouse.
725.214 Determination of relationship; surviving spouse.
725.215 Determination of dependency; surviving spouse.
725.216 Determination of relationship; surviving divorced spouse.
725.217 Determination of dependency; surviving divorced spouse.
725.218 Conditions of entitlement; child.
725.219 Duration of entitlement; child.
725.220 Determination of relationship; child.
725.221 Determination of dependency; child.
725.222 Conditions of entitlement; parent, brother or sister.
725.223 Duration of entitlement; parent, brother or sister.
725.224 Determination of relationship; parent, brother or sister.
725.225 Determination of dependency; parent, brother or sister.
725.226 ``Good cause'' for delayed filing of proof of support.
725.227 Time of determination of relationship and dependency of 
          survivors.
725.228 Effect of conviction of felonious and intentional homicide on 
          entitlement to benefits.

                       Terms Used in this Subpart

725.229 Intestate personal property.
725.230 Legal impediment.
725.231 Domicile.
725.232 Member of the same household--''living with,'' ``living in the 
          same household,'' and ``living in the miner's household,'' 
          defined.
725.233 Support and contributions.

                       Subpart C_Filing of Claims

725.301 Who may file a claim.
725.302 Evidence of authority to file a claim on behalf of another.
725.303 Date and place of filing of claims.
725.304 Forms and initial processing.
725.305 When a written statement is considered a claim.
725.306 Withdrawal of a claim.
725.307 Cancellation of a request for withdrawal.
725.308 Time limits for filing claims.
725.309 Additional claims; effect of a prior denial of benefits.
725.310 Modification of awards and denials.
725.311 Communications with respect to claims; time computations.

      Subpart D_Adjudication Officers; Parties and Representatives

725.350 Who are the adjudication officers?
725.351 Powers of adjudication officers.
725.352 Disqualification of adjudication officer.
725.360 Parties to proceedings
725.361 Party amicus curiae.
725.362 Representation of parties.
725.363 Qualification of representative.
725.364 Authority of representative.
725.365 Approval of representative's fees; lien against benefits.
725.366 Fees for representatives.
725.367 Payment of a claimant's attorney's fee by responsible operator 
          or fund.

        Subpart E_Adjudication of Claims by the District Director

725.401 Claims development--general.
725.402 Approved State workers' compensation law.
725.403 [Reserved]
725.404 Development of evidence--general
725.405 Development of medical evidence; scheduling of medical 
          examinations and tests.
725.406 Medical examinations and tests.
725.407 Identification and notification of responsible operator.
725.408 Operator's response to notification.
725.409 Denial of a claim by reason of abandonment.
725.410 Submission of additional evidence.
725.411 Initial adjudication in Trust Fund cases.

[[Page 964]]

725.412 Operator's response.
725.413 [Reserved]
725.414 Development of evidence.
725.415 Action by the district director after development of evidence.
725.416 Conferences.
725.417 Action at the conclusion of conference.
725.418 Proposed decision and order.
725.419 Response to proposed decision and order.
725.420 Initial determinations.
725.421 Referral of a claim to the Office of Administrative Law Judges.
725.422 Legal assistance.
725.423 Extensions of time.

                           Subpart F_Hearings

725.450 Right to a hearing.
725.451 Request for hearing.
725.452 Type of hearing; parties.
725.453 Notice of hearing.
725.454 Time and place of hearing; transfer of cases.
725.455 Hearing procedures; generally.
725.456 Introduction of documentary evidence.
725.457 Witnesses.
725.458 Depositions; interrogatories.
725.459 Witness fees.
725.460 Consolidated hearings.
725.461 Waiver of right to appear and present evidence.
725.462 Withdrawal of controversion of issues set for formal hearing; 
          effect.
725.463 Issues to be resolved at hearing; new issues.
725.464 Record of hearing.
725.465 Dismissals for cause.
725.466 Order of dismissal.
725.475 Termination of hearings.
725.476 Issuance of decision and order.
725.477 Form and contents of decision and order.
725.478 Filing and service of decision and order.
725.479 Finality of decisions and orders.
725.480 Modification of decisions and orders.
725.481 Right to appeal to the Benefits Review Board.
725.482 Judicial review.
725.483 Costs in proceedings brought without reasonable grounds.

                Subpart G_Responsible Coal Mine Operators

725.490 Statutory provisions and scope.
725.491 Operator defined.
725.492 Successor operator defined.
725.493 Employment relationship defined.
725.494 Potentially liable operators.
725.495 Criteria for determining a responsible operator.
725.496 Special claims transferred to the fund.
725.497 Procedures in special claims transferred to the fund.

                      Subpart H_Payment of Benefits

                           General Provisions

725.501 Payment provisions generally.
725.502 When benefit payments are due; manner of payment.
725.503 Date from which benefits are payable.
725.504 Payments to a claimant employed as a miner.
725.505 Payees.
725.506 Payment on behalf of another; ``legal guardian'' defined.
725.507 Guardian for minor or incompetent.
725.510 Representative payee.
725.511 Use and benefit defined.
725.512 Support of legally dependent spouse, child, or parent.
725.513 Accountability; transfer.
725.514 Certification to dependent of augmentation portion of benefit.
725.515 Assignment and exemption from claims of creditors.

                              Benefit Rates

725.520 Computation of benefits.
725.521 Commutation of payments; lump sum awards.
725.522 Payments prior to final adjudication.

                Special Provisions for Operator Payments

725.530 Operator payments; generally.
725.531 Receipt for payment.
725.532 Suspension, reduction, or termination of payments.

                  Increases and Reductions of Benefits

725.533 Modification of benefit amounts; general.
725.534 Reduction of State benefits.
725.535 Reductions; receipt of State or Federal benefit.
725.536 Reductions; excess earnings.
725.537 Reductions; retroactive effect of an additional claim for 
          benefits.
725.538 Reductions; effect of augmentation of benefits based on 
          subsequent qualification of individual.
725.539 More than one reduction event.

                       Overpayments; Underpayments

725.540 Overpayments.
725.541 Notice of waiver of adjustment or recovery of overpayment.
725.542 When waiver of adjustment or recovery may be applied.
725.543 Standards for waiver of adjustment or recovery.
725.544 Collection and compromise of claims for overpayment.
725.545 Underpayments.

[[Page 965]]

725.546 Relation to provisions for reductions or increases.
725.547 Applicability of overpayment and underpayment provisions to 
          operator or carrier.
725.548 Procedures applicable to overpayments and underpayments

               Subpart I_Enforcement of Liability; Reports

725.601 Enforcement generally.
725.602 Reimbursement of the fund.
725.603 Payments by the fund on behalf of an operator; liens.
725.604 Enforcement of final awards.
725.605 Defaults.
725.606 Security for the payment of benefits.
725.607 Payments in addition to compensation.
725.608 Interest.
725.609 Enforcement against other persons.
725.620 Failure to secure benefits; other penalties.
725.621 Reports.

        Subpart J_Medical Benefits and Vocational Rehabilitation

725.701 Availability of medical benefits.
725.702 Claims for medical benefits only under section 11 of the Reform 
          Act.
725.703 Physician defined.
725.704 Notification of right to medical benefits; authorization of 
          treatment.
725.705 Arrangements for medical care.
725.706 Authorization to provide medical services.
725.707 Reports of physicians and supervision of medical care.
725.708 Disputes concerning medical benefits.
725.710 Objective of vocational rehabilitation.
725.711 Requests for referral to vocational rehabilitation assistance.

    Authority: 5 U.S.C. 301, Reorganization Plan No. 6 of 1950, 15 FR 
3174, 30 U.S.C. 901 et seq., 921, 932, 936; 33 U.S.C. 901 et seq., 42 
U.S.C. 405, Secretary's Order 7-87, 52 FR 48466, Employment Standards 
Order No. 90-02.

    Source: 65 FR 80054, Dec. 20, 2000, unless otherwise noted.



                            Subpart A_General



Sec. 725.1  Statutory provisions.

    (a) General. Title IV of the Federal Mine Safety and Health Act of 
1977, as amended by the Black Lung Benefits Reform Act of 1977, the 
Black Lung Benefits Revenue Act of 1977, the Black Lung Benefits Revenue 
Act of 1981 and the Black Lung Benefits Amendments of 1981, provides for 
the payment of benefits to a coal miner who is totally disabled due to 
pneumoconiosis (black lung disease) and to certain survivors of a miner 
who dies due to pneumoconiosis. For claims filed prior to January 1, 
1982, certain survivors could receive benefits if the miner was totally 
(or for claims filed prior to June 30, 1982, in accordance with section 
411(c)(5) of the Act, partially) disabled due to pneumoconiosis, or if 
the miner died due to pneumoconiosis.
    (b) Part B. Part B of title IV of the Act provided that all claims 
filed between December 30, 1969, and June 30, 1973, are to be filed 
with, processed, and paid by the Secretary of Health, Education, and 
Welfare through the Social Security Administration; claims filed by the 
survivor of a miner before January 1, 1974, or within 6 months of the 
miner's death if death occurred before January 1, 1974, and claims filed 
by the survivor of a miner who was receiving benefits under part B of 
title IV of the Act at the time of death, if filed within 6 months of 
the miner's death, are also adjudicated and paid by the Social Security 
Administration.
    (c) Section 415. Claims filed by a miner between July 1 and December 
31, 1973, are adjudicated and paid under section 415. Section 415 
provides that a claim filed between the appropriate dates shall be filed 
with and adjudicated by the Secretary of Labor under certain 
incorporated provisions of the Longshoremen's and Harbor Workers' 
Compensation Act (33 U.S.C. 901 et seq.). A claim approved under section 
415 is paid under part B of title IV of the Act for periods of 
eligibility occurring between July 1 and December 31, 1973, by the 
Secretary of Labor and for periods of eligibility thereafter, is paid by 
a coal mine operator which is determined liable for the claim or the 
Black Lung Disability Trust Fund if no operator is identified or if the 
miner's last coal mine employment terminated prior to January 1, 1970. 
An operator which may be found liable for a section 415 claim is 
notified of the claim and allowed to participate fully in the 
adjudication of such claim. A claim filed under section 415 is for all 
purposes considered as if it were a part C claim (see paragraph (d) of 
this section) and

[[Page 966]]

the provisions of part C of title IV of the Act are fully applicable to 
a section 415 claim except as is otherwise provided in section 415.
    (d) Part C. Claims filed by a miner or survivor on or after January 
1, 1974, are filed, adjudicated, and paid under the provisions of part C 
of title IV of the Act. Part C requires that a claim filed on or after 
January 1, 1974, shall be filed under an applicable approved State 
workers' compensation law, or if no such law has been approved by the 
Secretary of Labor, the claim may be filed with the Secretary of Labor 
under section 422 of the Act. Claims filed with the Secretary of Labor 
under part C are processed and adjudicated by the Secretary and paid by 
a coal mine operator. If the miner's last coal mine employment 
terminated before January 1, 1970, or if no responsible operator can be 
identified, benefits are paid by the Black Lung Disability Trust Fund. 
Claims adjudicated under part C are subject to certain incorporated 
provisions of the Longshoremen's and Harbor Workers' Compensation Act.
    (e) Section 435. Section 435 of the Act affords each person who 
filed a claim for benefits under part B, section 415, or part C, and 
whose claim had been denied or was still pending as of March 1, 1978, 
the effective date of the Black Lung Benefits Reform Act of 1977, the 
right to have his or her claim reviewed on the basis of the 1977 
amendments to the Act, and under certain circumstances to submit new 
evidence in support of the claim.
    (f) Changes made by the Black Lung Benefits Reform Act of 1977. In 
addition to those changes which are reflected in paragraphs (a) through 
(e) of this section, the Black Lung Benefits Reform Act of 1977 contains 
a number of significant amendments to the Act's standards for 
determining eligibility for benefits. Among these are:
    (1) A provision which clarifies the definition of ``pneumoconiosis'' 
to include any ``chronic dust disease of the lung and its sequelae, 
including respiratory and pulmonary impairments, arising out of coal 
mine employment'';
    (2) A provision which defines ``miner'' to include any person who 
works or has worked in or around a coal mine or coal preparation 
facility, and in coal mine construction or coal transportation under 
certain circumstances;
    (3) A provision which limits the denial of a claim solely on the 
basis of employment in a coal mine;
    (4) A provision which authorizes the Secretary of Labor to establish 
standards and develop criteria for determining total disability or death 
due to pneumoconiosis with respect to a part C claim;
    (5) A new presumption which requires the payment of benefits to the 
survivors of a miner who was employed for 25 or more years in the mines 
under certain conditions;
    (6) Provisions relating to the treatment to be accorded a survivor's 
affidavit, certain X-ray interpretations, and certain autopsy reports in 
the development of a claim; and
    (7) Other clarifying, procedural, and technical amendments.
    (g) Changes made by the Black Lung Benefits Revenue Act of 1977. The 
Black Lung Benefits Revenue Act of 1977 established the Black Lung 
Disability Trust Fund which is financed by a specified tax imposed upon 
each ton of coal (except lignite) produced and sold or used in the 
United States after March 31, 1978. The Secretary of the Treasury is the 
managing trustee of the fund and benefits are paid from the fund upon 
the direction of the Secretary of Labor. The fund was made liable for 
the payment of all claims approved under section 415, part C and section 
435 of the Act for all periods of eligibility occurring on or after 
January 1, 1974, with respect to claims where the miner's last coal mine 
employment terminated before January 1, 1970, or where individual 
liability can not be assessed against a coal mine operator due to 
bankruptcy, insolvency, or the like. The fund was also authorized to pay 
certain claims which a responsible operator has refused to pay within a 
reasonable time, and to seek reimbursement from such operator. The 
purpose of the fund and the Black Lung Benefits Revenue Act of 1977 was 
to insure that coal mine operators, or the coal industry, will fully 
bear the cost of black lung disease for the present time and in the 
future. The Black Lung Benefits Revenue Act of

[[Page 967]]

1977 also contained other provisions relating to the fund and authorized 
a coal mine operator to establish its own trust fund for the payment of 
certain claims.
    (h) Changes made by the Black Lung Benefits Amendments of 1981. In 
addition to the change reflected in paragraph (a) of this section, the 
Black Lung Benefits Amendments of 1981 made a number of significant 
changes in the Act's standards for determining eligibility for benefits 
and concerning the payment of such benefits. The following changes are 
all applicable to claims filed on or after January 1, 1982:
    (1) The Secretary of Labor may re-read any X-ray submitted in 
support of a claim and may rely upon a second opinion concerning such an 
X-ray as a means of auditing the validity of the claim;
    (2) The rebuttable presumption that the death of a miner with ten or 
more years employment in the coal mines, who died of a respirable 
disease, was due to pneumoconiosis is no longer applicable;
    (3) The rebuttable presumption that the total disability of a miner 
with fifteen or more years employment in the coal mines, who has 
demonstrated a totally disabling respiratory or pulmonary impairment, is 
due to pneumoconiosis is no longer applicable;
    (4) In the case of deceased miners, where no medical or other 
relevant evidence is available, only affidavits from persons not 
eligible to receive benefits as a result of the adjudication of the 
claim will be considered sufficient to establish entitlement to 
benefits;
    (5) Unless the miner was found entitled to benefits as a result of a 
claim filed prior to January 1, 1982, benefits are payable on survivors' 
claims filed on and after January 1, 1982, only when the miner's death 
was due to pneumoconiosis;
    (6) Benefits payable under this part are subject to an offset on 
account of excess earnings by the miner; and
    (7) Other technical amendments.
    (i) Changes made by the Black Lung Benefits Revenue Act of 1981. The 
Black Lung Benefits Revenue Act of 1981 temporarily doubles the amount 
of the tax upon coal until the fund shall have repaid all advances 
received from the United States Treasury and the interest on all such 
advances. The fund is also made liable for the payment of certain claims 
previously denied under the 1972 version of the Act and subsequently 
approved under section 435 and for the reimbursement of operators and 
insurers for benefits previously paid by them on such claims. With 
respect to claims filed on or after January 1, 1982, the fund's 
authorization for the payment of interim benefits is limited to the 
payment of prospective benefits only. These changes also define the 
rates of interest to be paid to and by the fund.
    (j) Longshoremen's Act provisions. The adjudication of claims filed 
under sections 415, 422 and 435 of the Act is governed by various 
procedural and other provisions contained in the Longshoremen's and 
Harbor Workers' Compensation Act (LHWCA), as amended from time to time, 
which are incorporated within the Act by sections 415 and 422. The 
incorporated LHWCA provisions are applicable under the Act except as is 
otherwise provided by the Act or as provided by regulations of the 
Secretary. Although occupational disease benefits are also payable under 
the LHWCA, the primary focus of the procedures set forth in that Act is 
upon a time definite of traumatic injury or death. Because of this and 
other significant differences between a black lung and longshore claim, 
it is determined, in accordance with the authority set forth in section 
422 of the Act, that certain of the incorporated procedures prescribed 
by the LHWCA must be altered to fit the circumstances ordinarily 
confronted in the adjudication of a black lung claim. The changes made 
are based upon the Department's experience in processing black lung 
claims since July 1, 1973, and all such changes are specified in this 
part or part 727 of this subchapter (see Sec. 725.4(d)). No other 
departure from the incorporated provisions of the LHWCA is intended.
    (k) Social Security Act provisions. Section 402 of Part A of the Act 
incorporates certain definitional provisions from the Social Security 
Act, 42 U.S.C. 301 et seq. Section 430 provides that the 1972, 1977 and 
1981 amendments to part B of the Act shall also apply to part C

[[Page 968]]

``to the extent appropriate.'' Sections 412 and 413 incorporate various 
provisions of the Social Security Act into part B of the Act. To the 
extent appropriate, therefore, these provisions also apply to part C. In 
certain cases, the Department has varied the terms of the Social 
Security Act provisions to accommodate the unique needs of the black 
lung benefits program. Parts of the Longshore and Harbor Workers' 
Compensation Act are also incorporated into part C. Where the 
incorporated provisions of the two acts are inconsistent, the Department 
has exercised its broad regulatory powers to choose the extent to which 
each incorporation is appropriate. Finally, Section 422(g), contained in 
part C of the Act, incorporates 42 U.S.C. 403(b)-(l).



Sec. 725.2  Purpose and applicability of this part.

    (a) This part sets forth the procedures to be followed and standards 
to be applied in filing, processing, adjudicating, and paying claims 
filed under part C of title IV of the Act.
    (b) This part applies to all claims filed under part C of title IV 
of the Act on or after August 18, 1978 and shall also apply to claims 
that were pending on August 18, 1978.
    (c) The provisions of this part reflect revisions that became 
effective on January 19, 2001. This part applies to all claims filed 
after January 19, 2001 and all benefits payments made on such claims. 
With the exception of the following sections, this part shall also apply 
to the adjudication of claims that were pending on January 19, 2001 and 
all benefits payments made on such claims: Sec. Sec. 725.101(a)(31), 
725.204, 725.212(b), 725.213(c), 725.214(d), 725.219(d), 725.309, 
725.310, 725.351, 725.360, 725.367, 725.406, 725.407, 725.408, 725.409, 
725.410, 725.411, 725.412, 725.414, 725.415, 725.416, 725.417, 725.418, 
725.421(b), 725.423, 725.454, 725.456, 725.457, 725.458, 725.459, 
725.465, 725.491, 725.492, 725.493, 725.494, 725.495, 725.547, 
725.701(e). The version of those sections set forth in 20 CFR, parts 500 
to end, edition revised as of April 1, 1999, apply to the adjudications 
of claims that were pending on January 19, 2001. For purposes of 
construing the provisions of this section, a claim shall be considered 
pending on January 19, 2001 if it was not finally denied more than one 
year prior to that date.

[65 FR 80054, Dec. 20, 2000, as amended at 68 FR 69935, Dec. 15, 2003]



Sec. 725.3  Contents of this part.

    (a) This subpart describes the statutory provisions which relate to 
claims considered under this part, the purpose and scope of this part, 
definitions and usages of terms applicable to this part, and matters 
relating to the availability of information collected by the Department 
of Labor in connection with the processing of claims.
    (b) Subpart B contains criteria for determining who may be found 
entitled to benefits under this part and other provisions relating to 
the conditions and duration of eligibility of a particular individual.
    (c) Subpart C describes the procedures to be followed and action to 
be taken in connection with the filing of a claim under this part.
    (d) Subpart D sets forth the duties and powers of the persons 
designated by the Secretary of Labor to adjudicate claims and provisions 
relating to the rights of parties and representatives of parties.
    (e) Subpart E contains the procedures for developing evidence and 
adjudicating entitlement and liability issues by the district director.
    (f) Subpart F describes the procedures to be followed if a hearing 
before the Office of Administrative Law Judges is required.
    (g) Subpart G contains provisions governing the identification of a 
coal mine operator which may be liable for the payment of a claim.
    (h) Subpart H contains provisions governing the payment of benefits 
with respect to an approved claim.
    (i) Subpart I describes the statutory mechanisms provided for the 
enforcement of a coal mine operator's liability, sets forth the 
penalties which may be applied in the case of a defaulting coal mine 
operator, and describes the obligation of coal operators and their 
insurance carriers to file certain reports.
    (j) Subpart J describes the right of certain beneficiaries to 
receive medical

[[Page 969]]

treatment benefits and vocational rehabilitation under the Act.



Sec. 725.4  Applicability of other parts in this title.

    (a) Part 718. Part 718 of this subchapter, which contains the 
criteria and standards to be applied in determining whether a miner is 
or was totally disabled due to pneumoconiosis, or whether a miner died 
due to pneumoconiosis, shall be applicable to the determination of 
claims under this part. Claims filed after March 31, 1980, are subject 
to part 718 as promulgated by the Secretary in accordance with section 
402(f)(1) of the Act on February 29, 1980 (see Sec. 725.2(c)). The 
criteria contained in subpart C of part 727 of this subchapter are 
applicable in determining claims filed prior to April 1, 1980, under 
this part, and such criteria shall be applicable at all times with 
respect to claims filed under this part and under section 11 of the 
Black Lung Benefits Reform Act of 1977.
    (b) Parts 715, 717, and 720. Pertinent and significant provisions of 
Parts 715, 717, and 720 of this subchapter (formerly contained in 20 
CFR, parts 500 to end, edition revised as of April 1, 1978), which 
established the procedures for the filing, processing, and payment of 
claims filed under section 415 of the Act, are included within this part 
as appropriate.
    (c) Part 726. Part 726 of this subchapter, which sets forth the 
obligations imposed upon a coal operator to insure or self-insure its 
liability for the payment of benefits to certain eligible claimants, is 
applicable to this part as appropriate.
    (d) Part 727. Part 727 of this subchapter, which governs the review, 
adjudication and payment of pending and denied claims under section 435 
of the Act, is applicable with respect to such claims. The criteria 
contained in subpart C of part 727 for determining a claimant's 
eligibility for benefits are applicable under this part with respect to 
all claims filed before April 1, 1980, and to all claims filed under 
this part and under section 11 of the Black Lung Benefits Reform Act of 
1977. Because the part 727 regulations affect an increasingly smaller 
number of claims, however, the Department has discontinued publication 
of the criteria in the Code of Federal Regulations. The part 727 
criteria may be found at 43 FR 36818, Aug. 18, 1978 or 20 CFR, parts 500 
to end, edition revised as of April 1, 1999.
    (e) Part 410. Part 410 of this title, which sets forth provisions 
relating to a claim for black lung benefits under part B of title IV of 
the Act, is inapplicable to this part except as is provided in this 
part, or in part 718 of this subchapter.



Sec. 725.101  Definition and use of terms.

    (a) Definitions. For purposes of this subchapter, except where the 
content clearly indicates otherwise, the following definitions apply:
    (1) The Act means the Federal Coal Mine Health and Safety Act, 
Public Law 91-173, 83 Stat. 742, 30 U.S.C. 801-960, as amended by the 
Black Lung Benefits Act of 1972, the Mine Safety and Health Act of 1977, 
the Black Lung Benefits Reform Act of 1977, the Black Lung Benefits 
Revenue Act of 1977, the Black Lung Benefits Revenue Act of 1981, and 
the Black Lung Benefits Amendments of 1981.
    (2) The Longshoremen's Act or LHWCA means the Longshoremen's and 
Harbor Workers' Compensation Act of March 4, 1927, c. 509, 44 Stat. 
1424, 33 U.S.C. 901-950, as amended from time to time.
    (3) The Social Security Act means the Social Security Act, Act of 
August 14, 1935, c. 531, 49 Stat. 620, 42 U.S.C. 301-431, as amended 
from time to time.
    (4) Administrative law judge means a person qualified under 5 U.S.C. 
3105 to conduct hearings and adjudicate claims for benefits filed 
pursuant to section 415 and part C of the Act. Until March 1, 1979, it 
shall also mean an individual appointed to conduct such hearings and 
adjudicate such claims under Public Law 94-504.
    (5) Beneficiary means a miner or any surviving spouse, divorced 
spouse, child, parent, brother or sister, who is entitled to benefits 
under either section 415 or part C of title IV of the Act.
    (6) Benefits means all money or other benefits paid or payable under 
section 415 or part C of title IV of the Act on account of disability or 
death due to pneumoconiosis, including augmented benefits (see Sec. 
725.520(c)). The term also

[[Page 970]]

includes any expenses related to the medical examination and testing 
authorized by the district director pursuant to Sec. 725.406.
    (7) Benefits Review Board or Board means the Benefits Review Board, 
U.S. Department of Labor, an appellate tribunal appointed by the 
Secretary of Labor pursuant to the provisions of section 21(b)(1) of the 
LHWCA. See parts 801 and 802 of this title.
    (8) Black Lung Disability Trust Fund or the fund means the Black 
Lung Disability Trust Fund established by the Black Lung Benefits 
Revenue Act of 1977, as amended by the Black Lung Benefits Revenue Act 
of 1981, for the payment of certain claims adjudicated under this part 
(see subpart G of this part).
    (9) Chief Administrative Law Judge means the Chief Administrative 
Law Judge of the Office of Administrative Law Judges, U.S. Department of 
Labor, 800 K Street, NW., suite 400, Washington, DC 20001-8002.
    (10) Claim means a written assertion of entitlement to benefits 
under section 415 or part C of title IV of the Act, submitted in a form 
and manner authorized by the provisions of this subchapter.
    (11) Claimant means an individual who files a claim for benefits 
under this part.
    (12) Coal mine means an area of land and all structures, facilities, 
machinery, tools, equipment, shafts, slopes, tunnels, excavations and 
other property, real or personal, placed upon, under or above the 
surface of such land by any person, used in, or to be used in, or 
resulting from, the work of extracting in such area bituminous coal, 
lignite or anthracite from its natural deposits in the earth by any 
means or method, and in the work of preparing the coal so extracted, and 
includes custom coal preparation facilities.
    (13) Coal preparation means the breaking, crushing, sizing, 
cleaning, washing, drying, mixing, storing and loading of bituminous 
coal, lignite or anthracite, and such other work of preparing coal as is 
usually done by the operator of a coal mine.
    (14) Department means the United States Department of Labor.
    (15) Director means the Director, OWCP, or his or her designee.
    (16) District Director means a person appointed as provided in 
sections 39 and 40 of the LHWCA, or his or her designee, who is 
authorized to develop and adjudicate claims as provided in this 
subchapter (see Sec. 725.350). The term District Director is 
substituted for the term Deputy Commissioner wherever that term appears 
in the regulations. This substitution is for administrative purposes 
only and in no way affects the power or authority of the position as 
established in the statute. Any action taken by a person under the 
authority of a district director will be considered the action of a 
deputy commissioner.
    (17) Division or DCMWC means the Division of Coal Mine Workers' 
Compensation in the OWCP, Employment Standards Administration, United 
States Department of Labor.
    (18) Insurer or carrier means any private company, corporation, 
mutual association, reciprocal or interinsurance exchange, or any other 
person or fund, including any State fund, authorized under the laws of a 
State to insure employers' liability under workers' compensation laws. 
The term also includes the Secretary of Labor in the exercise of his or 
her authority under section 433 of the Act.
    (19) Miner or coal miner means any individual who works or has 
worked in or around a coal mine or coal preparation facility in the 
extraction or preparation of coal. The term also includes an individual 
who works or has worked in coal mine construction or transportation in 
or around a coal mine, to the extent such individual was exposed to coal 
mine dust as a result of such employment (see Sec. 725.202). For 
purposes of this definition, the term does not include coke oven 
workers.
    (20) The Nation's coal mines means all coal mines located in any 
State.
    (21) Office or OWCP means the Office of Workers' Compensation 
Programs, United States Department of Labor.
    (22) Office of Administrative Law Judges means the Office of 
Administrative Law Judges, U.S. Department of Labor.

[[Page 971]]

    (23) Operator means any owner, lessee, or other person who operates, 
controls or supervises a coal mine, including a prior or successor 
operator as defined in section 422 of the Act and certain transportation 
and construction employers (see subpart G of this part).
    (24) Person means an individual, partnership, association, 
corporation, firm, subsidiary or parent of a corporation, or other 
organization or business entity.
    (25) Pneumoconiosis means a chronic dust disease of the lung and its 
sequelae, including respiratory and pulmonary impairments, arising out 
of coal mine employment (see part 718 of this subchapter).
    (26) Responsible operator means an operator which has been 
determined to be liable for the payment of benefits to a claimant for 
periods of eligibility after December 31, 1973, with respect to a claim 
filed under section 415 or part C of title IV of the Act or reviewed 
under section 435 of the Act.
    (27) Secretary means the Secretary of Labor, United States 
Department of Labor, or a person, authorized by him or her to perform 
his or her functions under title IV of the Act.
    (28) State includes any state of the United States, the District of 
Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, American 
Samoa, Guam, the Trust Territory of the Pacific Islands, and prior to 
January 3, 1959, and August 21, 1959, respectively, the territories of 
Alaska and Hawaii.
    (29) Total disability and partial disability, for purposes of this 
part, have the meaning given them as provided in part 718 of this 
subchapter.
    (30) Underground coal mine means a coal mine in which the earth and 
other materials which lie above and around the natural deposit of coal 
(i.e., overburden) are not removed in mining; including all land, 
structures, facilities, machinery, tools, equipment, shafts, slopes, 
tunnels, excavations and other property, real or personal, appurtenant 
thereto.
    (31) A workers' compensation law means a law providing for payment 
of benefits to employees, and their dependents and survivors, for 
disability on account of injury, including occupational disease, or 
death, suffered in connection with their employment. A payment funded 
wholly out of general revenues shall not be considered a payment under a 
workers' compensation law.
    (32) Year means a period of one calendar year (365 days, or 366 days 
if one of the days is February 29), or partial periods totaling one 
year, during which the miner worked in or around a coal mine or mines 
for at least 125 ``working days.'' A ``working day'' means any day or 
part of a day for which a miner received pay for work as a miner, but 
shall not include any day for which the miner received pay while on an 
approved absence, such as vacation or sick leave. In determining whether 
a miner worked for one year, any day for which the miner received pay 
while on an approved absence, such as vacation or sick leave, may be 
counted as part of the calendar year and as partial periods totaling one 
year.
    (i) If the evidence establishes that the miner worked in or around 
coal mines at least 125 working days during a calendar year or partial 
periods totaling one year, then the miner has worked one year in coal 
mine employment for all purposes under the Act. If a miner worked fewer 
than 125 working days in a year, he or she has worked a fractional year 
based on the ratio of the actual number of days worked to 125. Proof 
that the miner worked more than 125 working days in a calendar year or 
partial periods totaling a year, shall not establish more than one year.
    (ii) To the extent the evidence permits, the beginning and ending 
dates of all periods of coal mine employment shall be ascertained. The 
dates and length of employment may be established by any credible 
evidence including (but not limited to) company records, pension 
records, earnings statements, coworker affidavits, and sworn testimony. 
If the evidence establishes that the miner's employment lasted for a 
calendar year or partial periods totaling a 365-day period amounting to 
one year, it shall be presumed, in the absence of evidence to the 
contrary, that the miner spent at least 125 working days in such 
employment.
    (iii) If the evidence is insufficient to establish the beginning and 
ending

[[Page 972]]

dates of the miner's coal mine employment, or the miner's employment 
lasted less than a calendar year, then the adjudication officer may use 
the following formula: divide the miner's yearly income from work as a 
miner by the coal mine industry's average daily earnings for that year, 
as reported by the Bureau of Labor Statistics (BLS). A copy of the BLS 
table shall be made a part of the record if the adjudication officer 
uses this method to establish the length of the miner's work history.
    (iv) No periods of coal mine employment occurring outside the United 
States shall be considered in computing the miner's work history.
    (b) Statutory terms. The definitions contained in this section shall 
not be construed in derogation of terms of the Act.
    (c) Dependents and survivors. Dependents and survivors are those 
persons described in subpart B of this part.



Sec. 725.102  Disclosure of program information.

    (a) All reports, records, or other documents filed with the OWCP 
with respect to claims are the records of the OWCP. The Director or his 
or her designee shall be the official custodian of those records 
maintained by the OWCP at its national office. The District Director 
shall be the official custodian of those records maintained at a 
district office.
    (b) The official custodian of any record sought to be inspected 
shall permit or deny inspection in accordance with the Department of 
Labor's regulations pertaining thereto (see 29 CFR Part 70). The 
original record in any such case shall not be removed from the Office of 
the custodian for such inspection. The custodian may, in his or her 
discretion, deny inspection of any record or part thereof which is of a 
character specified in 5 U.S.C. 552(b) if in his or her opinion such 
inspection may result in damage, harm, or harassment to the beneficiary 
or to any other person. For special provisions concerning release of 
information regarding injured employees undergoing vocational 
rehabilitation, see Sec. 702.508 of this chapter.
    (c) Any person may request copies of records he or she has been 
permitted to inspect. Such requests shall be addressed to the official 
custodian of the records sought to be copied. The official custodian 
shall provide the requested copies under the terms and conditions 
specified in the Department of Labor's regulations relating thereto (see 
29 CFR Part 70).
    (d) Any party to a claim (Sec. 725.360) or his or her duly 
authorized representative shall be permitted upon request to inspect the 
file which has been compiled in connection with such claim. Any party to 
a claim or representative of such party shall upon request be provided 
with a copy of any or all material contained in such claim file. A 
request for information by a party or representative made under this 
paragraph shall be answered within a reasonable time after receipt by 
the Office. Internal documents prepared by the district director which 
do not constitute evidence of a fact which must be established in 
connection with a claim shall not be routinely provided or presented for 
inspection in accordance with a request made under this paragraph.



Sec. 725.103  Burden of proof.

    Except as otherwise provided in this part and part 718, the burden 
of proving a fact alleged in connection with any provision shall rest 
with the party making such allegation.



  Subpart B_Persons Entitled to Benefits, Conditions, and Duration of 
                               Entitlement



Sec. 725.201  Who is entitled to benefits; contents of this subpart.

    (a) Section 415 and part C of the Act provide for the payment of 
periodic benefits in accordance with this part to:
    (1) A miner (see Sec. 725.202) who is determined to be totally 
disabled due to pneumoconiosis; or
    (2) The surviving spouse or surviving divorced spouse or, where 
neither exists, the child of a deceased miner, where the deceased miner:
    (i) Was receiving benefits under section 415 or part C of title IV 
of the Act as a result of a claim filed prior to January 1, 1982; or
    (ii) Is determined as a result of a claim filed prior to January 1, 
1982, to

[[Page 973]]

have been totally disabled due to pneumoconiosis at the time of death, 
or to have died due to pneumoconiosis. Survivors of miners whose claims 
are filed on or after January 1, 1982, must establish that the deceased 
miner's death was due to pneumoconiosis in order to establish their 
entitlement to benefits, except where entitlement is established under 
Sec. 718.306 of this subchapter on a survivor's claim filed prior to 
June 30, 1982, or;
    (3) The child of a miner's surviving spouse who was receiving 
benefits under section 415 or part C of title IV of the Act at the time 
of such spouse's death; or
    (4) The surviving dependent parents, where there is no surviving 
spouse or child, or the surviving dependent brothers or sisters, where 
there is no surviving spouse, child, or parent, of a miner, where the 
deceased miner;
    (i) Was receiving benefits under section 415 or part C of title IV 
of the Act as a result of a claim filed prior to January 1, 1982; or
    (ii) Is determined as a result of a claim filed prior to January 1, 
1982, to have been totally disabled due to pneumoconiosis at the time of 
death, or to have died due to pneumoconiosis. Survivors of miners whose 
claims are filed on or after January 1, 1982, must establish that the 
deceased miner's death was due to pneumoconiosis in order to establish 
their entitlement to benefits, except where entitlement is established 
under Sec. 718.306 of this subchapter on a survivor's claim filed prior 
to June 30, 1982.
    (b) Section 411(c)(5) of the Act provides for the payment of 
benefits to the eligible survivors of a miner employed for 25 or more 
years in the mines prior to June 30, 1971, if the miner's death occurred 
on or before March 1, 1978, and if the claim was filed prior to June 30, 
1982, unless it is established that at the time of death, the miner was 
not totally or partially disabled due to pneumoconiosis. For the 
purposes of this part the term ``total disability'' shall mean partial 
disability with respect to a claim for which eligibility is established 
under section 411(c)(5) of the Act. See Sec. 718.306 of this subchapter 
which implements this provision of the Act.
    (c) The provisions contained in this subpart describe the conditions 
of entitlement to benefits applicable to a miner, or a surviving spouse, 
child, parent, brother, or sister, and the events which establish or 
terminate entitlement to benefits.
    (d) In order for an entitled miner or surviving spouse to qualify 
for augmented benefits because of one or more dependents, such 
dependents must meet relationship and dependency requirements with 
respect to such beneficiary prescribed by or pursuant to the Act. Such 
requirements are also set forth in this subpart.

              Conditions and Duration of Entitlement: Miner



Sec. 725.202  Miner defined; condition of entitlement, miner.

    (a) Miner defined. A ``miner'' for the purposes of this part is any 
person who works or has worked in or around a coal mine or coal 
preparation facility in the extraction, preparation, or transportation 
of coal, and any person who works or has worked in coal mine 
construction or maintenance in or around a coal mine or coal preparation 
facility. There shall be a rebuttable presumption that any person 
working in or around a coal mine or coal preparation facility is a 
miner. This presumption may be rebutted by proof that:
    (1) The person was not engaged in the extraction, preparation or 
transportation of coal while working at the mine site, or in maintenance 
or construction of the mine site; or
    (2) The individual was not regularly employed in or around a coal 
mine or coal preparation facility.
    (b) Coal mine construction and transportation workers; special 
provisions. A coal mine construction or transportation worker shall be 
considered a miner to the extent such individual is or was exposed to 
coal mine dust as a result of employment in or around a coal mine or 
coal preparation facility. A transportation worker shall be considered a 
miner to the extent that his or her work is integral to the extraction 
or preparation of coal. A construction worker shall be considered a 
miner

[[Page 974]]

to the extent that his or her work is integral to the building of a coal 
or underground mine (see Sec. 725.101(a)(12), (30)).
    (1) There shall be a rebuttable presumption that such individual was 
exposed to coal mine dust during all periods of such employment 
occurring in or around a coal mine or coal preparation facility for 
purposes of:
    (i) Determining whether such individual is or was a miner;
    (ii) Establishing the applicability of any of the presumptions 
described in section 411(c) of the Act and part 718 of this subchapter; 
and
    (iii) Determining the identity of a coal mine operator liable for 
the payment of benefits in accordance with Sec. 725.495.
    (2) The presumption may be rebutted by evidence which demonstrates 
that:
    (i) The individual was not regularly exposed to coal mine dust 
during his or her work in or around a coal mine or coal preparation 
facility; or
    (ii) The individual did not work regularly in or around a coal mine 
or coal preparation facility.
    (c) A person who is or was a self-employed miner or independent 
contractor, and who otherwise meets the requirements of this paragraph, 
shall be considered a miner for the purposes of this part.
    (d) Conditions of entitlement; miner. An individual is eligible for 
benefits under this subchapter if the individual:
    (1) Is a miner as defined in this section; and
    (2) Has met the requirements for entitlement to benefits by 
establishing that he or she:
    (i) Has pneumoconiosis (see Sec. 718.202), and
    (ii) The pneumoconiosis arose out of coal mine employment (see Sec. 
718.203), and
    (iii) Is totally disabled (see Sec. 718.204(c)), and
    (iv) The pneumoconiosis contributes to the total disability (see 
Sec. 718.204(c)); and
    (3) Has filed a claim for benefits in accordance with the provisions 
of this part.



Sec. 725.203  Duration and cessation of entitlement; miner.

    (a) An individual is entitled to benefits as a miner for each month 
beginning with the first month on or after January 1, 1974, in which the 
miner is totally disabled due to pneumoconiosis arising out of coal mine 
employment.
    (b) The last month for which such individual is entitled to benefits 
is the month before the month during which either of the following 
events first occurs:
    (1) The miner dies; or
    (2) The miner's total disability ceases (see Sec. 725.504).
    (c) An individual who has been finally adjudged to be totally 
disabled due to pneumoconiosis and is receiving benefits under the Act 
shall promptly notify the Office and the responsible coal mine operator, 
if any, if he or she engages in his or her usual coal mine work or 
comparable and gainful work.
    (d) Upon reasonable notice, an individual who has been finally 
adjudged entitled to benefits shall submit to any additional tests or 
examinations the Office deems appropriate, and shall submit medical 
reports and other relevant evidence the Office deems necessary, if an 
issue arises pertaining to the validity of the original award.

 Conditions and Duration of Entitlement: Miner's Dependents (Augmented 
                                Benefits)



Sec. 725.204  Determination of relationship; spouse.

    (a) For the purpose of augmenting benefits, an individual will be 
considered to be the spouse of a miner if:
    (1) The courts of the State in which the miner is domiciled would 
find that such individual and the miner validly married; or
    (2) The courts of the State in which the miner is domiciled would 
find, under the law they would apply in determining the devolution of 
the miner's intestate personal property, that the individual is the 
miner's spouse; or
    (3) Under State law, such individual would have the right of a 
spouse to share in the miner's intestate personal property; or

[[Page 975]]

    (4) Such individual went through a marriage ceremony with the miner 
resulting in a purported marriage between them and which, but for a 
legal impediment, would have been a valid marriage, unless the 
individual entered into the purported marriage with knowledge that it 
was not a valid marriage, or if such individual and the miner were not 
living in the same household in the month in which a request is filed 
that the miner's benefits be augmented because such individual qualifies 
as the miner's spouse.
    (b) The qualification of an individual for augmentation purposes 
under this section shall end with the month before the month in which:
    (1) The individual dies, or
    (2) The individual who previously qualified as a spouse for purposes 
of Sec. 725.520(c), entered into a valid marriage without regard to 
this section, with a person other than the miner.



Sec. 725.205  Determination of dependency; spouse.

    For the purposes of augmenting benefits, an individual who is the 
miner's spouse (see Sec. 725.204) will be determined to be dependent 
upon the miner if:
    (a) The individual is a member of the same household as the miner 
(see Sec. 725.232); or
    (b) The individual is receiving regular contributions from the miner 
for support (see Sec. 725.233(c)); or
    (c) The miner has been ordered by a court to contribute to such 
individual's support (see Sec. 725.233(e)); or
    (d) The individual is the natural parent of the son or daughter of 
the miner; or
    (e) The individual was married to the miner (see Sec. 725.204) for 
a period of not less than 1 year.



Sec. 725.206  Determination of relationship; divorced spouse.

    For the purposes of augmenting benefits with respect to any claim 
considered or reviewed under this part or part 727 of this subchapter 
(see Sec. 725.4(d)), an individual will be considered to be the 
divorced spouse of a miner if the individual's marriage to the miner has 
been terminated by a final divorce on or after the 10th anniversary of 
the marriage unless, if such individual was married to and divorced from 
the miner more than once, such individual was married to the miner in 
each calendar year of the period beginning 10 years immediately before 
the date on which any divorce became final.



Sec. 725.207  Determination of dependency; divorced spouse.

    For the purpose of augmenting benefits, an individual who is the 
miner's divorced spouse (Sec. 725.206) will be determined to be 
dependent upon the miner if:
    (a) The individual is receiving at least one-half of his or her 
support from the miner (see Sec. 725.233(g)); or
    (b) The individual is receiving substantial contributions from the 
miner pursuant to a written agreement (see Sec. 725.233(c) and (f)); or
    (c) A court order requires the miner to furnish substantial 
contributions to the individual's support (see Sec. 725.233(c) and 
(e)).



Sec. 725.208  Determination of relationship; child.

    As used in this section, the term ``beneficiary'' means only a 
surviving spouse entitled to benefits at the time of death (see Sec. 
725.212), or a miner. An individual will be considered to be the child 
of a beneficiary if:
    (a) The courts of the State in which the beneficiary is domiciled 
(see Sec. 725.231) would find, under the law they would apply, that the 
individual is the beneficiary's child; or
    (b) The individual is the legally adopted child of such beneficiary; 
or
    (c) The individual is the stepchild of such beneficiary by reason of 
a valid marriage of the individual's parent or adopting parent to such 
beneficiary; or
    (d) The individual does not bear the relationship of child to such 
beneficiary under paragraph (a), (b), or (c) of this section, but would, 
under State law, have the same right as a child to share in the 
beneficiary's intestate personal property; or
    (e) The individual is the natural son or daughter of a beneficiary 
but is not a child under paragraph (a), (b), or (c) of this section, and 
is not considered to be the child of the beneficiary under paragraph (d) 
of this section if the beneficiary and the mother or the father,

[[Page 976]]

as the case may be, of the individual went through a marriage ceremony 
resulting in a purported marriage between them which but for a legal 
impediment (see Sec. 725.230) would have been a valid marriage; or
    (f) The individual is the natural son or daughter of a beneficiary 
but is not a child under paragraph (a), (b), or (c) of this section, and 
is not considered to be the child of the beneficiary under paragraph (d) 
or (e) of this section, such individual shall nevertheless be considered 
to be the child of the beneficiary if:
    (1) The beneficiary, prior to his or her entitlement to benefits, 
has acknowledged in writing that the individual is his or her son or 
daughter, or has been decreed by a court to be the parent of the 
individual, or has been ordered by a court to contribute to the support 
of the individual (see Sec. 725.233(e)) because the individual is his 
or her son or daughter; or
    (2) Such beneficiary is shown by satisfactory evidence to be the 
father or mother of the individual and was living with or contributing 
to the support of the individual at the time the beneficiary became 
entitled to benefits.



Sec. 725.209  Determination of dependency; child.

    (a) For purposes of augmenting the benefits of a miner or surviving 
spouse, the term ``beneficiary'' as used in this section means only a 
miner or surviving spouse entitled to benefits (see Sec. 725.202 and 
Sec. 725.212). An individual who is the beneficiary's child (Sec. 
725.208) will be determined to be, or to have been, dependent on the 
beneficiary, if the child:
    (1) Is unmarried; and
    (2)(i) Is under 18 years of age; or
    (ii) Is under a disability as defined in section 223(d) of the 
Social Security Act, 42 U.S.C. 423(d); or
    (iii) Is 18 years of age or older and is a student.
    (b)(1) The term ``student'' means a ``full-time student'' as defined 
in section 202(d)(7) of the Social Security Act, 42 U.S.C. 402(d)(7) 
(see Sec. Sec. 404.367--404.369 of this title), or an individual under 
23 years of age who has not completed 4 years of education beyond the 
high school level and who is regularly pursuing a full-time course of 
study or training at an institution which is:
    (i) A school, college, or university operated or directly supported 
by the United States, or by a State or local government or political 
subdivision thereof; or
    (ii) A school, college, or university which has been accredited by a 
State or by a State-recognized or nationally-recognized accrediting 
agency or body; or
    (iii) A school, college, or university not so accredited but whose 
credits are accepted, on transfer, by at least three institutions which 
are so accredited; or
    (iv) A technical, trade, vocational, business, or professional 
school accredited or licensed by the Federal or a State government or 
any political subdivision thereof, providing courses of not less than 3 
months' duration that prepare the student for a livelihood in a trade, 
industry, vocation, or profession.
    (2) A student will be considered to be ``pursuing a full-time course 
of study or training at an institution'' if the student is enrolled in a 
noncorrespondence course of at least 13 weeks duration and is carrying a 
subject load which is considered full-time for day students under the 
institution's standards and practices. A student beginning or ending a 
full-time course of study or training in part of any month will be 
considered to be pursuing such course for the entire month.
    (3) A child is considered not to have ceased to be a student:
    (i) During any interim between school years, if the interim does not 
exceed 4 months and the child shows to the satisfaction of the Office 
that he or she has a bona fide intention of continuing to pursue a full-
time course of study or training; or
    (ii) During periods of reasonable duration in which, in the judgment 
of the Office, the child is prevented by factors beyond the child's 
control from pursuing his or her education.
    (4) A student whose 23rd birthday occurs during a semester or the 
enrollment period in which such student is pursuing a full-time course 
of study or

[[Page 977]]

training shall continue to be considered a student until the end of such 
period, unless eligibility is otherwise terminated.



Sec. 725.210  Duration of augmented benefits.

    Augmented benefits payable on behalf of a spouse or divorced spouse, 
or a child, shall begin with the first month in which the dependent 
satisfies the conditions of relationship and dependency set forth in 
this subpart. Augmentation of benefits on account of a dependent 
continues through the month before the month in which the dependent 
ceases to satisfy these conditions, except in the case of a child who 
qualifies as a dependent because such child is a student. In the latter 
case, benefits continue to be augmented through the month before the 
first month during no part of which such child qualifies as a student.



Sec. 725.211  Time of determination of relationship and dependency 
of spouse or child for purposes of augmentation of benefits.

    With respect to the spouse or child of a miner entitled to benefits, 
and with respect to the child of a surviving spouse entitled to 
benefits, the determination as to whether an individual purporting to be 
a spouse or child is related to or dependent upon such miner or 
surviving spouse shall be based on the facts and circumstances present 
in each case, at the appropriate time.

        Conditions and Duration of Entitlement: Miner's Survivors



Sec. 725.212  Conditions of entitlement; surviving spouse or surviving 
divorced spouse.

    (a) An individual who is the surviving spouse or surviving divorced 
spouse of a miner is eligible for benefits if such individual:
    (1) Is not married;
    (2) Was dependent on the miner at the pertinent time; and
    (3) The deceased miner either:
    (i) Was receiving benefits under section 415 or part C of title IV 
of the Act at the time of death as a result of a claim filed prior to 
January 1, 1982; or
    (ii) Is determined as a result of a claim filed prior to January 1, 
1982, to have been totally disabled due to pneumoconiosis at the time of 
death or to have died due to pneumoconiosis. A surviving spouse or 
surviving divorced spouse of a miner whose claim is filed on or after 
January 1, 1982, must establish that the deceased miner's death was due 
to pneumoconiosis in order to establish entitlement to benefits, except 
where entitlement is established under Sec. 718.306 of part 718 on a 
claim filed prior to June 30, 1982.
    (b) If more than one spouse meets the conditions of entitlement 
prescribed in paragraph (a), then each spouse will be considered a 
beneficiary for purposes of section 412(a)(2) of the Act without regard 
to the existence of any other entitled spouse or spouses.



Sec. 725.213  Duration of entitlement; surviving spouse or surviving 
divorced spouse.

    (a) An individual is entitled to benefits as a surviving spouse, or 
as a surviving divorced spouse, for each month beginning with the first 
month in which all of the conditions of entitlement prescribed in Sec. 
725.212 are satisfied.
    (b) The last month for which such individual is entitled to such 
benefits is the month before the month in which either of the following 
events first occurs:
    (1) The surviving spouse or surviving divorced spouse marries; or
    (2) The surviving spouse or surviving divorced spouse dies.
    (c) A surviving spouse or surviving divorced spouse whose 
entitlement to benefits has been terminated pursuant to Sec. 
725.213(b)(1) may thereafter again become entitled to such benefits upon 
filing application for such reentitlement, beginning with the first 
month after the marriage ends and such individual meets the requirements 
of Sec. 725.212. The individual shall not be required to reestablish 
the miner's entitlement to benefits (Sec. 725.212(a)(3)(i)) or the 
miner's death due to pneumoconiosis (Sec. 725.212(a)(3)(ii)).



Sec. 725.214  Determination of relationship; surviving spouse.

    An individual shall be considered to be the surviving spouse of a 
miner if:

[[Page 978]]

    (a) The courts of the State in which the miner was domiciled (see 
Sec. 725.231) at the time of his or her death would find that the 
individual and the miner were validly married; or
    (b) The courts of the State in which the miner was domiciled (see 
Sec. 725.231) at the time of the miner's death would find that the 
individual was the miner's surviving spouse; or
    (c) Under State law, such individual would have the right of the 
spouse to share in the miner's intestate personal property; or
    (d) Such individual went through a marriage ceremony with the miner, 
resulting in a purported marriage between them which, but for a legal 
impediment (see Sec. 725.230), would have been a valid marriage, unless 
such individual entered into the purported marriage with knowledge that 
it was not a valid marriage, or if such individual and the miner were 
not living in the same household at the time of the miner's death.



Sec. 725.215  Determination of dependency; surviving spouse.

    An individual who is the miner's surviving spouse (see Sec. 
725.214) shall be determined to have been dependent on the miner if, at 
the time of the miner's death:
    (a) The individual was living with the miner (see Sec. 725.232); or
    (b) The individual was dependent upon the miner for support or the 
miner has been ordered by a court to contribute to such individual's 
support (see Sec. 725.233); or
    (c) The individual was living apart from the miner because of the 
miner's desertion or other reasonable cause; or
    (d) The individual is the natural parent of the miner's son or 
daughter; or
    (e) The individual had legally adopted the miner's son or daughter 
while the individual was married to the miner and while such son or 
daughter was under the age of 18; or
    (f) The individual was married to the miner at the time both of them 
legally adopted a child under the age of 18; or
    (g)(1) The individual was married to the miner for a period of not 
less than 9 months immediately before the day on which the miner died, 
unless the miner's death:
    (i) Is accidental (as defined in paragraph (g)(2) of this section), 
or
    (ii) Occurs in line of duty while the miner is a member of a 
uniformed service serving on active duty (as defined in Sec. 404.1019 
of this title), and the surviving spouse was married to the miner for a 
period of not less than 3 months immediately prior to the day on which 
such miner died.
    (2) For purposes of paragraph (g)(1)(i) of this section, the death 
of a miner is accidental if such individual received bodily injuries 
solely through violent, external, and accidental means, and as a direct 
result of the bodily injuries and independently of all other causes, 
dies not later than 3 months after the day on which such miner receives 
such bodily injuries. The term ``accident'' means an event that was 
unpremeditated and unforeseen from the standpoint of the deceased 
individual. To determine whether the death of an individual did, in 
fact, result from an accident the adjudication officer will consider all 
the circumstances surrounding the casualty. An intentional and voluntary 
suicide will not be considered to be death by accident; however, suicide 
by an individual who is so incompetent as to be incapable of acting 
intentionally and voluntarily will be considered to be a death by 
accident. In no event will the death of an individual resulting from 
violent and external causes be considered a suicide unless there is 
direct proof that the fatal injury was self-inflicted.
    (3) The provisions of paragraph (g) shall not apply if the 
adjudication officer determines that at the time of the marriage 
involved, the miner would not reasonably have been expected to live for 
9 months.



Sec. 725.216  Determination of relationship; surviving divorced spouse.

    An individual will be considered to be the surviving divorced spouse 
of a deceased miner in a claim considered under this part or reviewed 
under part 727 of this subchapter (see Sec. 725.4(d)), if such 
individual's marriage to the miner had been terminated by a final 
divorce on or after the 10th anniversary of the marriage unless, if such 
individual was married to and divorced

[[Page 979]]

from the miner more than once, such individual was married to such miner 
in each calendar year of the period beginning 10 years immediately 
before the date on which any divorce became final and ending with the 
year in which the divorce became final.



Sec. 725.217  Determination of dependency; surviving divorced spouse.

    An individual who is the miner's surviving divorced spouse (see 
Sec. 725.216) shall be determined to have been dependent on the miner 
if, for the month before the month in which the miner died:
    (a) The individual was receiving at least one-half of his or her 
support from the miner (see Sec. 725.233(g)); or
    (b) The individual was receiving substantial contributions from the 
miner pursuant to a written agreement (see Sec. 725.233(c) and (f)); or
    (c) A court order required the miner to furnish substantial 
contributions to the individual's support (see Sec. 725.233(c) and 
(e)).



Sec. 725.218  Conditions of entitlement; child.

    (a) An individual is entitled to benefits where he or she meets the 
required standards of relationship and dependency under this subpart 
(see Sec. 725.220 and Sec. 725.221) and is the child of a deceased 
miner who:
    (1) Was receiving benefits under section 415 or part C of title IV 
of the Act as a result of a claim filed prior to January 1, 1982, or
    (2) Is determined as a result of a claim filed prior to January 1, 
1982, to have been totally disabled due to pneumoconiosis at the time of 
death, or to have died due to pneumoconiosis. A surviving dependent 
child of a miner whose claim is filed on or after January 1, 1982, must 
establish that the miner's death was due to pneumoconiosis in order to 
establish entitlement to benefits, except where entitlement is 
established under Sec. 718.306 of this subchapter on a claim filed 
prior to June 30, 1982.
    (b) A child is not entitled to benefits for any month for which a 
miner, or the surviving spouse or surviving divorced spouse of a miner, 
establishes entitlement to benefits.



Sec. 725.219  Duration of entitlement; child.

    (a) An individual is entitled to benefits as a child for each month 
beginning with the first month in which all of the conditions of 
entitlement prescribed in Sec. 725.218 are satisfied.
    (b) The last month for which such individual is entitled to such 
benefits is the month before the month in which any one of the following 
events first occurs:
    (1) The child dies;
    (2) The child marries;
    (3) The child attains age 18; and
    (i) Is not a student (as defined in Sec. 725.209(b)) during any 
part of the month in which the child attains age 18; and
    (ii) Is not under a disability (as defined in Sec. 
725.209(a)(2)(ii)) at that time;
    (4) If the child's entitlement beyond age 18 is based on his or her 
status as a student, the earlier of:
    (i) The first month during no part of which the child is a student; 
or
    (ii) The month in which the child attains age 23 and is not under a 
disability (as defined in Sec. 725.209(a)(2)(ii)) at that time;
    (5) If the child's entitlement beyond age 18 is based on disability, 
the first month in no part of which such individual is under a 
disability.
    (c) A child whose entitlement to benefits terminated with the month 
before the month in which the child attained age 18, or later, may 
thereafter (provided such individual is not married) again become 
entitled to such benefits upon filing application for such 
reentitlement, beginning with the first month after termination of 
benefits in which such individual is a student and has not attained the 
age of 23.
    (d) A child whose entitlement to benefits has been terminated 
pursuant to Sec. 725.219(b)(2) may thereafter again become entitled to 
such benefits upon filing application for such reentitlement, beginning 
with the first month after the marriage ends and such individual meets 
the requirements of Sec. 725.218. The individual shall not be required 
to reestablish the miner's entitlement to benefits (Sec. 725.218(a)(1)) 
or the miner's death due to pneumoconiosis (Sec. 725.212(a)(2)).

[[Page 980]]



Sec. 725.220  Determination of relationship; child.

    For purposes of determining whether an individual may qualify for 
benefits as the child of a deceased miner, the provisions of Sec. 
725.208 shall be applicable. As used in this section, the term 
``beneficiary'' means only a surviving spouse entitled to benefits at 
the time of such surviving spouse's death (see Sec. 725.212), or a 
miner. For purposes of a survivor's claim, an individual will be 
considered to be a child of a beneficiary if:
    (a) The courts of the State in which such beneficiary is domiciled 
(see Sec. 725.231) would find, under the law they would apply in 
determining the devolution of the beneficiary's intestate personal 
property, that the individual is the beneficiary's child; or
    (b) Such individual is the legally adopted child of such 
beneficiary; or
    (c) Such individual is the stepchild of such beneficiary by reason 
of a valid marriage of such individual's parent or adopting parent to 
such beneficiary; or
    (d) Such individual does not bear the relationship of child to such 
beneficiary under paragraph (a), (b), or (c) of this section, but would, 
under State law, have the same right as a child to share in the 
beneficiary's intestate personal property; or
    (e) Such individual is the natural son or daughter of a beneficiary 
but does not bear the relationship of child to such beneficiary under 
paragraph (a), (b), or (c) of this section, and is not considered to be 
the child of the beneficiary under paragraph (d) of this section, such 
individual shall nevertheless be considered to be the child of such 
beneficiary if the beneficiary and the mother or father, as the case may 
be, of such individual went through a marriage ceremony resulting in a 
purported marriage between them which but for a legal impediment (see 
Sec. 725.230) would have been a valid marriage; or
    (f) Such individual is the natural son or daughter of a beneficiary 
but does not have the relationship of child to such beneficiary under 
paragraph (a), (b), or (c) of this section, and is not considered to be 
the child of the beneficiary under paragraph (d) or (e) of this section, 
such individual shall nevertheless be considered to be the child of such 
beneficiary if:
    (1) Such beneficiary, prior to his or her entitlement to benefits, 
has acknowledged in writing that the individual is his or her son or 
daughter, or has been decreed by a court to be the father or mother of 
the individual, or has been ordered by a court to contribute to the 
support of the individual (see Sec. 725.233(a)) because the individual 
is a son or daughter; or
    (2) Such beneficiary is shown by satisfactory evidence to be the 
father or mother of the individual and was living with or contributing 
to the support of the individual at the time such beneficiary became 
entitled to benefits.



Sec. 725.221  Determination of dependency; child.

    For the purposes of determining whether a child was dependent upon a 
deceased miner, the provisions of Sec. 725.209 shall be applicable, 
except that for purposes of determining the eligibility of a child who 
is under a disability as defined in section 223(d) of the Social 
Security Act, such disability must have begun before the child attained 
age 22, or in the case of a student, before the child ceased to be a 
student.



Sec. 725.222  Conditions of entitlement; parent, brother, or sister.

    (a) An individual is eligible for benefits as a surviving parent, 
brother or sister if all of the following requirements are met:
    (1) The individual is the parent, brother, or sister of a deceased 
miner;
    (2) The individual was dependent on the miner at the pertinent time;
    (3) Proof of support is filed within 2 years after the miner's 
death, unless the time is extended for good cause (Sec. 725.226);
    (4) In the case of a brother or sister, such individual also:
    (i) Is under 18 years of age; or
    (ii) Is under a disability as defined in section 223(d) of the 
Social Security Act, 42 U.S.C. 423(d), which began before such 
individual attained age 22, or in the case of a student, before the 
student ceased to be a student; or
    (iii) Is a student (see Sec. 725.209(b)); or

[[Page 981]]

    (iv) Is under a disability as defined in section 223(d) of the 
Social Security Act, 42 U.S.C. 423(d), at the time of the miner's death;
    (5) The deceased miner:
    (i) Was entitled to benefits under section 415 or part C of title IV 
of the Act as a result of a claim filed prior to January 1, 1982; or
    (ii) Is determined as a result of a claim filed prior to January 1, 
1982, to have been totally disabled due to pneumoconiosis at the time of 
death or to have died due to pneumoconiosis. A surviving dependent 
parent, brother or sister of a miner whose claim is filed on or after 
January 1, 1982, must establish that the miner's death was due to 
pneumoconiosis in order to establish entitlement to benefits, except 
where entitlement is established under Sec. 718.306 of part 718 on a 
claim filed prior to June 30, 1982.
    (b)(1) A parent is not entitled to benefits if the deceased miner 
was survived by a spouse or child at the time of such miner's death.
    (2) A brother or sister is not entitled to benefits if the deceased 
miner was survived by a spouse, child, or parent at the time of such 
miner's death.



Sec. 725.223  Duration of entitlement; parent, brother, or sister.

    (a) A parent, sister, or brother is entitled to benefits beginning 
with the month all the conditions of entitlement described in Sec. 
725.222 are met.
    (b) The last month for which such parent is entitled to benefits is 
the month in which the parent dies.
    (c) The last month for which such brother or sister is entitled to 
benefits is the month before the month in which any of the following 
events first occurs:
    (1) The individual dies;
    (2)(i) The individual marries or remarries; or
    (ii) If already married, the individual received support in any 
amount from his or her spouse;
    (3) The individual attains age 18; and
    (i) Is not a student (as defined in Sec. 725.209(b)) during any 
part of the month in which the individual attains age 18; and
    (ii) Is not under a disability (as defined in Sec. 
725.209(a)(2)(ii)) at that time;
    (4) If the individual's entitlement beyond age 18 is based on his or 
her status as a student, the earlier of:
    (i) The first month during no part of which the individual is a 
student; or
    (ii) The month in which the individual attains age 23 and is not 
under a disability (as defined in Sec. 725.209(a)(2)(ii)) at that time;
    (5) If the individual's entitlement beyond age 18 is based on 
disability, the first month in no part of which such individual is under 
a disability.



Sec. 725.224  Determination of relationship; parent, brother, or sister.

    (a) An individual will be considered to be the parent, brother, or 
sister of a miner if the courts of the State in which the miner was 
domiciled (see Sec. 225.231) at the time of death would find, under the 
law they would apply, that the individual is the miner's parent, 
brother, or sister.
    (b) Where, under State law, the individual is not the miner's 
parent, brother, or sister, but would, under State law, have the same 
status (i.e., right to share in the miner's intestate personal property) 
as a parent, brother, or sister, the individual will be considered to be 
the parent, brother, or sister as appropriate.



Sec. 725.225  Determination of dependency; parent, brother, or sister.

    An individual who is the miner's parent, brother, or sister will be 
determined to have been dependent on the miner if, during the 1-year 
period immediately prior to the miner's death:
    (a) The individual and the miner were living in the same household 
(see Sec. 725.232); and
    (b) The individual was totally dependent on the miner for support 
(see Sec. 725.233(h)).



Sec. 725.226  ``Good cause'' for delayed filing of proof of support.

    (a) What constitutes ``good cause.'' ``Good cause'' may be found for 
failure to file timely proof of support where the parent, brother, or 
sister establishes to the satisfaction of the Office that such failure 
to file was due to:
    (1) Circumstances beyond the individual's control, such as extended 
illness,

[[Page 982]]

mental, or physical incapacity, or communication difficulties; or
    (2) Incorrect or incomplete information furnished the individual by 
the Office; or
    (3) Efforts by the individual to secure supporting evidence without 
a realization that such evidence could be submitted after filing proof 
of support.
    (b) What does not constitute ``good cause.'' ``Good cause'' for 
failure to file timely proof of support (see Sec. 725.222(a)(3)) does 
not exist when there is evidence of record in the Office that the 
individual was informed that he or she should file within the prescribed 
period and he or she failed to do so deliberately or through negligence.



Sec. 725.227  Time of determination of relationship and dependency of 
survivors.

    The determination as to whether an individual purporting to be an 
entitled survivor of a miner or beneficiary was related to, or dependent 
upon, the miner is made after such individual files a claim for benefits 
as a survivor. Such determination is based on the facts and 
circumstances with respect to a reasonable period of time ending with 
the miner's death. A prior determination that such individual was, or 
was not, a dependent for the purposes of augmenting the miner's benefits 
for a certain period, is not determinative of the issue of whether the 
individual is a dependent survivor of such miner.



Sec. 725.228  Effect of conviction of felonious and intentional 
homicide on entitlement to benefits.

    An individual who has been convicted of the felonious and 
intentional homicide of a miner or other beneficiary shall not be 
entitled to receive any benefits payable because of the death of such 
miner or other beneficiary, and such person shall be considered 
nonexistent in determining the entitlement to benefits of other 
individuals.

                       Terms Used in This Subpart



Sec. 725.229  Intestate personal property.

    References in this subpart to the ``same right to share in the 
intestate personal property'' of a deceased miner (or surviving spouse) 
refer to the right of an individual to share in such distribution in the 
individual's own right and not the right of representation.



Sec. 725.230  Legal impediment.

    For purposes of this subpart, ``legal impediment'' means an 
impediment resulting from the lack of dissolution of a previous marriage 
or otherwise arising out of such previous marriage or its dissolution or 
resulting from a defect in the procedure followed in connection with the 
purported marriage ceremony--for example, the solemnization of a 
marriage only through a religious ceremony in a country which requires a 
civil ceremony for a valid marriage.



Sec. 725.231  Domicile.

    (a) For purposes of this subpart, the term ``domicile'' means the 
place of an individual's true, fixed, and permanent home.
    (b) The domicile of a deceased miner or surviving spouse is 
determined as of the time of death.
    (c) If an individual was not domiciled in any State at the pertinent 
time, the law of the District of Columbia is applied.



Sec. 725.232  Member of the same household--``living with,'' ``living 
in the same household,'' and ``living in the miner's household,'' defined.

    (a) Defined. (1) The term ``member of the same household'' as used 
in section 402(a)(2) of the Act (with respect to a spouse); the term 
``living with'' as used in section 402(e) of the Act (with respect to a 
surviving spouse); and the term ``living in the same household'' as used 
in this subpart, means that a husband and wife were customarily living 
together as husband and wife in the same place.
    (2) The term ``living in the miner's household'' as used in section 
412(a)(5) of the Act (with respect to a parent, brother, or sister) 
means that the miner and such parent, brother, or sister were sharing 
the same residence.
    (b) Temporary absence. The temporary absence from the same residence 
of either the miner, or the miner's spouse, parent, brother, or sister 
(as the case may be), does not preclude a finding that one was ``living 
with'' the other, or that they were ``members of the same household.'' 
The absence of one

[[Page 983]]

such individual from the residence in which both had customarily lived 
shall, in the absence of evidence to the contrary, be considered 
temporary:
    (1) If such absence was due to service in the Armed Forces of the 
United States; or
    (2) If the period of absence from his or her residence did not 
exceed 6 months and the absence was due to business or employment 
reasons, or because of confinement in a penal institution or in a 
hospital, nursing home, or other curative institution; or
    (3) In any other case, if the evidence establishes that despite such 
absence they nevertheless reasonably expected to resume physically 
living together.
    (c) Relevant period of time. (1) The determination as to whether a 
surviving spouse had been ``living with'' the miner shall be based upon 
the facts and circumstances as of the time of the death of the miner.
    (2) The determination as to whether a spouse is a ``member of the 
same household'' as the miner shall be based upon the facts and 
circumstances with respect to the period or periods of time as to which 
the issue of membership in the same household is material.
    (3) The determination as to whether a parent, brother, or sister was 
``living in the miner's household'' shall take account of the 1-year 
period immediately prior to the miner's death.



Sec. 725.233  Support and contributions.

    (a) Support defined. The term ``support'' includes food, shelter, 
clothing, ordinary medical expenses, and other ordinary and customary 
items for the maintenance of the person supported.
    (b) Contributions defined. The term ``contributions'' refers to 
contributions actually provided by the contributor from such 
individual's property, or the use thereof, or by the use of such 
individual's own credit.
    (c) Regular contributions and substantial contributions defined. The 
terms ``regular contributions'' and ``substantial contributions'' mean 
contributions that are customary and sufficient to constitute a material 
factor in the cost of the individual's support.
    (d) Contributions and community property. When a spouse receives and 
uses for his or her support income from services or property, and such 
income, under applicable State law, is the community property of the 
wife and her husband, no part of such income is a ``contribution'' by 
one spouse to the other's support regardless of the legal interest of 
the donor. However, when a spouse receives and uses for support, income 
from the services and the property of the other spouse and, under 
applicable State law, such income is community property, all of such 
income is considered to be a contribution by the donor to the spouse's 
support.
    (e) Court order for support defined. References to a support order 
in this subpart means any court order, judgment, or decree of a court of 
competent jurisdiction which requires regular contributions that are a 
material factor in the cost of the individual's support and which is in 
effect at the applicable time. If such contributions are required by a 
court order, this condition is met whether or not the contributions were 
actually made.
    (f) Written agreement defined. The term ``written agreement'' in the 
phrase ``substantial contributions pursuant to a written agreement'', as 
used in this subpart means an agreement signed by the miner providing 
for substantial contributions by the miner for the individual's support. 
It must be in effect at the applicable time but it need not be legally 
enforceable.
    (g) One-half support defined. The term ``one-half support'' means 
that the miner made regular contributions, in cash or in kind, to the 
support of a divorced spouse at the specified time or for the specified 
period, and that the amount of such contributions equalled or exceeded 
one-half the total cost of such individual's support at such time or 
during such period.
    (h) Totally dependent for support defined. The term ``totally 
dependent for support'' as used in Sec. 725.225(b) means that the miner 
made regular contributions to the support of the miner's parents, 
brother, or sister, as the case may be, and that the amount of such 
contributions at least equalled the total cost of such individual's 
support.

[[Page 984]]

                       Subpart C--Filing of Claims



Sec. 725.301  Who may file a claim.

    (a) Any person who believes he or she may be entitled to benefits 
under the Act may file a claim in accordance with this subpart.
    (b) A claimant who has attained the age of 18, is mentally competent 
and physically able, may file a claim on his or her own behalf.
    (c) If a claimant is unable to file a claim on his or her behalf 
because of a legal or physical impairment, the following rules shall 
apply:
    (1) A claimant between the ages of 16 and 18 years who is mentally 
competent and not under the legal custody or care of another person, or 
a committee or institution, may upon filing a statement to the effect, 
file a claim on his or her own behalf. In any other case where the 
claimant is under 18 years of age, only a person, or the manager or 
principal officer of an institution having legal custody or care of the 
claimant may file a claim on his or her behalf.
    (2) If a claimant over 18 years of age has a legally appointed 
guardian or committee, only the guardian or committee may file a claim 
on his or her behalf.
    (3) If a claimant over 18 years of age is mentally incompetent or 
physically unable to file a claim and is under the care of another 
person, or an institution, only the person, or the manager or principal 
officer of the institution responsible for the care of the claimant, may 
file a claim on his or her behalf.
    (4) For good cause shown, the Office may accept a claim executed by 
a person other than one described in paragraphs (c)(2) or (3) of this 
section.
    (d) Except as provided in Sec. 725.305, in order for a claim to be 
considered, the claimant must be alive at the time the claim is filed.



Sec. 725.302  Evidence of authority to file a claim on behalf of another.

    A person filing a claim on behalf of a claimant shall submit 
evidence of his or her authority to so act at the time of filing or at a 
reasonable time thereafter in accordance with the following:
    (a) A legally appointed guardian or committee shall provide the 
Office with certification of appointment by a proper official of the 
court.
    (b) Any other person shall provide a statement describing his or her 
relationship to the claimant, the extent to which he or she has care of 
the claimant, or his or her position as an officer of the institution of 
which the claimant is an inmate. The Office may, at any time, require 
additional evidence to establish the authority of any such person.



Sec. 725.303  Date and place of filing of claims.

    (a)(1) Claims for benefits shall be delivered, mailed to, or 
presented at, any of the various district offices of the Social Security 
Administration, or any of the various offices of the Department of Labor 
authorized to accept claims, or, in the case of a claim filed by or on 
behalf of a claimant residing outside the United States, mailed or 
presented to any office maintained by the Foreign Service of the United 
States. A claim shall be considered filed on the day it is received by 
the office in which it is first filed.
    (2) A claim submitted to a Foreign Service Office or any other 
agency or subdivision of the U.S. Government shall be forwarded to the 
Office and considered filed as of the date it was received at the 
Foreign Service Office or other governmental agency or unit.
    (b) A claim submitted by mail shall be considered filed as of the 
date of delivery unless a loss or impairment of benefit rights would 
result, in which case a claim shall be considered filed as of the date 
of its postmark. In the absence of a legible postmark, other evidence 
may be used to establish the mailing date.



Sec. 725.304  Forms and initial processing.

    (a) Claims shall be filed on forms prescribed and approved by the 
Office. The district office at which the claim is filed will assist 
claimants in completing their forms.
    (b) If the place at which a claim is filed is an office of the 
Social Security Administration, such office shall forward the completed 
claim form to an

[[Page 985]]

office of the DCMWC, which is authorized to process the claim.



Sec. 725.305  When a written statement is considered a claim.

    (a) The filing of a statement signed by an individual indicating an 
intention to claim benefits shall be considered to be the filing of a 
claim for the purposes of this part under the following circumstances:
    (1) The claimant or a proper person on his or her behalf (see Sec. 
725.301) executes and files a prescribed claim form with the Office 
during the claimant's lifetime within the period specified in paragraph 
(b) of this section.
    (2) Where the claimant dies within the period specified in paragraph 
(b) of this section without filing a prescribed claim form, and a person 
acting on behalf of the deceased claimant's estate executes and files a 
prescribed claim form within the period specified in paragraph (c) of 
this section.
    (b) Upon receipt of a written statement indicating an intention to 
claim benefits, the Office shall notify the signer in writing that to be 
considered the claim must be executed by the claimant or a proper party 
on his or her behalf on the prescribed form and filed with the Office 
within six months from the date of mailing of the notice.
    (c) If before the notice specified in paragraph (b) of this section 
is sent, or within six months after such notice is sent, the claimant 
dies without having executed and filed a prescribed form, or without 
having had one executed and filed in his or her behalf, the Office shall 
upon receipt of notice of the claimant's death advise his or her estate, 
or those living at his or her last known address, in writing that for 
the claim to be considered, a prescribed claim form must be executed and 
filed by a person authorized to do so on behalf of the claimant's estate 
within six months of the date of the later notice.
    (d) Claims based upon written statements indicating an intention to 
claim benefits not perfected in accordance with this section shall not 
be processed.



Sec. 725.306  Withdrawal of a claim.

    (a) A claimant or an individual authorized to execute a claim on a 
claimant's behalf or on behalf of claimant's estate under Sec. 725.305, 
may withdraw a previously filed claim provided that:
    (1) He or she files a written request with the appropriate 
adjudication officer indicating the reasons for seeking withdrawal of 
the claim;
    (2) The appropriate adjudication officer approves the request for 
withdrawal on the grounds that it is in the best interests of the 
claimant or his or her estate, and;
    (3) Any payments made to the claimant in accordance with Sec. 
725.522 are reimbursed.
    (b) When a claim has been withdrawn under paragraph (a) of this 
section, the claim will be considered not to have been filed.



Sec. 725.307  Cancellation of a request for withdrawal.

    At any time prior to approval, a request for withdrawal may be 
canceled by a written request of the claimant or a person authorized to 
act on the claimant's behalf or on behalf of the claimant's estate.



Sec. 725.308  Time limits for filing claims.

    (a) A claim for benefits filed under this part by, or on behalf of, 
a miner shall be filed within three years after a medical determination 
of total disability due to pneumoconiosis which has been communicated to 
the miner or a person responsible for the care of the miner, or within 
three years after the date of enactment of the Black Lung Benefits 
Reform Act of 1977, whichever is later. There is no time limit on the 
filing of a claim by the survivor of a miner.
    (b) A miner who is receiving benefits under part B of title IV of 
the Act and who is notified by HEW of the right to seek medical benefits 
may file a claim for medical benefits under part C of title IV of the 
Act and this part. The Secretary of Health, Education, and Welfare is 
required to notify each miner receiving benefits under part B of this 
right. Notwithstanding the provisions of paragraph (a) of this section, 
a miner notified of his or her rights under this paragraph may file a 
claim under this part on or before December 31, 1980. Any claim filed 
after that date shall be untimely unless the time for

[[Page 986]]

filing has been enlarged for good cause shown.
    (c) There shall be a rebuttable presumption that every claim for 
benefits is timely filed. However, except as provided in paragraph (b) 
of this section, the time limits in this section are mandatory and may 
not be waived or tolled except upon a showing of extraordinary 
circumstances.



Sec. 725.309  Additional claims; effect of a prior denial of benefits.

    (a) A claimant whose claim for benefits was previously approved 
under part B of title IV of the Act may file a claim for benefits under 
this part as provided in Sec. Sec. 725.308(b) and 725.702.
    (b) If a claimant files a claim under this part while another claim 
filed by the claimant under this part is still pending, the later claim 
shall be merged with the earlier claim for all purposes. For purposes of 
this section, a claim shall be considered pending if it has not yet been 
finally denied.
    (c) If a claimant files a claim under this part within one year 
after the effective date of a final order denying a claim previously 
filed by the claimant under this part (see Sec. 725.502(a)(2)), the 
later claim shall be considered a request for modification of the prior 
denial and shall be processed and adjudicated under Sec. 725.310.
    (d) If a claimant files a claim under this part more than one year 
after the effective date of a final order denying a claim previously 
filed by the claimant under this part (see Sec. 725.502(a)(2)), the 
later claim shall be considered a subsequent claim for benefits. A 
subsequent claim shall be processed and adjudicated in accordance with 
the provisions of subparts E and F of this part, except that the claim 
shall be denied unless the claimant demonstrates that one of the 
applicable conditions of entitlement (see Sec. Sec. 725.202(d) (miner), 
725.212 (spouse), 725.218 (child), and 725.222 (parent, brother, or 
sister)) has changed since the date upon which the order denying the 
prior claim became final. The applicability of this paragraph may be 
waived by the operator or fund, as appropriate. The following additional 
rules shall apply to the adjudication of a subsequent claim:
    (1) Any evidence submitted in connection with any prior claim shall 
be made a part of the record in the subsequent claim, provided that it 
was not excluded in the adjudication of the prior claim.
    (2) For purposes of this section, the applicable conditions of 
entitlement shall be limited to those conditions upon which the prior 
denial was based. For example, if the claim was denied solely on the 
basis that the individual was not a miner, the subsequent claim must be 
denied unless the individual worked as a miner following the prior 
denial. Similarly, if the claim was denied because the miner did not 
meet one or more of the eligibility criteria contained in part 718 of 
this subchapter, the subsequent claim must be denied unless the miner 
meets at least one of the criteria that he or she did not meet 
previously.
    (3) If the applicable condition(s) of entitlement relate to the 
miner's physical condition, the subsequent claim may be approved only if 
new evidence submitted in connection with the subsequent claim 
establishes at least one applicable condition of entitlement. A 
subsequent claim filed by a surviving spouse, child, parent, brother, or 
sister shall be denied unless the applicable conditions of entitlement 
in such claim include at least one condition unrelated to the miner's 
physical condition at the time of his death.
    (4) If the claimant demonstrates a change in one of the applicable 
conditions of entitlement, no findings made in connection with the prior 
claim, except those based on a party's failure to contest an issue (see 
Sec. 725.463), shall be binding on any party in the adjudication of the 
subsequent claim. However, any stipulation made by any party in 
connection with the prior claim shall be binding on that party in the 
adjudication of the subsequent claim.
    (5) In any case in which a subsequent claim is awarded, no benefits 
may be paid for any period prior to the date upon which the order 
denying the prior claim became final.
    (e) Notwithstanding any other provision of this part or part 727 of 
this subchapter (see Sec. 725.4(d)), a person may exercise the right of 
review provided in paragraph (c) of Sec. 727.103 at the same

[[Page 987]]

time such person is pursuing an appeal of a previously denied part B 
claim under the law as it existed prior to March 1, 1978. If the part B 
claim is ultimately approved as a result of the appeal, the claimant 
must immediately notify the Secretary of Labor and, where appropriate, 
the coal mine operator, and all duplicate payments made under part C 
shall be considered an overpayment and arrangements shall be made to 
insure the repayment of such overpayments to the fund or an operator, as 
appropriate.
    (f) In any case involving more than one claim filed by the same 
claimant, under no circumstances are duplicate benefits payable for 
concurrent periods of eligibility. Any duplicate benefits paid shall be 
subject to collection or offset under subpart H of this part.



Sec. 725.310  Modification of awards and denials.

    (a) Upon his or her own initiative, or upon the request of any party 
on grounds of a change in conditions or because of a mistake in a 
determination of fact, the district director may, at any time before one 
year from the date of the last payment of benefits, or at any time 
before one year after the denial of a claim, reconsider the terms of an 
award or denial of benefits.
    (b) Modification proceedings shall be conducted in accordance with 
the provisions of this part as appropriate, except that the claimant and 
the operator, or group of operators or the fund, as appropriate, shall 
each be entitled to submit no more than one additional chest X-ray 
interpretation, one additional pulmonary function test, one additional 
arterial blood gas study, and one additional medical report in support 
of its affirmative case along with such rebuttal evidence and additional 
statements as are authorized by paragraphs (a)(2)(ii) and (a)(3)(ii) of 
Sec. 725.414. Modification proceedings shall not be initiated before an 
administrative law judge or the Benefits Review Board.
    (c) At the conclusion of modification proceedings before the 
district director, the district director may issue a proposed decision 
and order (Sec. 725.418) or, if appropriate, deny the claim by reason 
of abandonment (Sec. 725.409). In any case in which the district 
director has initiated modification proceedings on his own initiative to 
alter the terms of an award or denial of benefits issued by an 
administrative law judge, the district director shall, at the conclusion 
of modification proceedings, forward the claim for a hearing (Sec. 
725.421). In any case forwarded for a hearing, the administrative law 
judge assigned to hear such case shall consider whether any additional 
evidence submitted by the parties demonstrates a change in condition 
and, regardless of whether the parties have submitted new evidence, 
whether the evidence of record demonstrates a mistake in a determination 
of fact.
    (d) An order issued following the conclusion of modification 
proceedings may terminate, continue, reinstate, increase or decrease 
benefit payments or award benefits. Such order shall not affect any 
benefits previously paid, except that an order increasing the amount of 
benefits payable based on a finding of a mistake in a determination of 
fact may be made effective on the date from which benefits were 
determined payable by the terms of an earlier award. In the case of an 
award which is decreased, no payment made in excess of the decreased 
rate prior to the date upon which the party requested reconsideration 
under paragraph (a) of this section shall be subject to collection or 
offset under subpart H of this part, provided the claimant is without 
fault as defined by Sec. 725.543. In the case of an award which is 
decreased following the initiation of modification by the district 
director, no payment made in excess of the decreased rate prior to the 
date upon which the district director initiated modification proceedings 
under paragraph (a) shall be subject to collection or offset under 
subpart H of this part, provided the claimant is without fault as 
defined by Sec. 725.543. In the case of an award which has become final 
and is thereafter terminated, no payment made prior to the date upon 
which the party requested reconsideration under paragraph (a) shall be 
subject to collection or offset under subpart H of this part. In the 
case of an award which has become final and is thereafter terminated 
following the initiation of modification by the district director, no

[[Page 988]]

payment made prior to the date upon which the district director 
initiated modification proceedings under paragraph (a) shall be subject 
to collection or offset under subpart H of this part.



Sec. 725.311  Communications with respect to claims; time computations.

    (a) Unless otherwise specified by this part, all requests, 
responses, notices, decisions, orders, or other communications required 
or permitted by this part shall be in writing.
    (b) If required by this part, any document, brief, or other 
statement submitted in connection with the adjudication of a claim under 
this part shall be sent to each party to the claim by the submitting 
party. If proof of service is required with respect to any 
communication, such proof of service shall be submitted to the 
appropriate adjudication officer and filed as part of the claim record.
    (c) In computing any period of time described in this part, by any 
applicable statute, or by the order of any adjudication officer, the day 
of the act or event from which the designated period of time begins to 
run shall not be included. The last day of the period shall be included 
unless it is a Saturday, Sunday, or legal holiday, in which event the 
period extends until the next day which is not a Saturday, Sunday, or 
legal holiday. ``Legal holiday'' includes New Year's Day, Birthday of 
Martin Luther King, Jr., Washington's Birthday, Memorial Day, 
Independence Day, Labor Day, Columbus Day, Veterans Day, Thanksgiving 
Day, Christmas Day and any other day appointed as a holiday by the 
President or the Congress of the United States.
    (d) In computing any period of time described in this part in which 
the period within which to file a response commences upon receipt of a 
document, it shall be presumed, in the absence of evidence to the 
contrary, that the document was received on the seventh day after it was 
mailed. In any case in which a provision of this part requires a 
document to be sent to a person or party by certified mail, and the 
document is not sent by certified mail, but the person or party actually 
received the document, the document shall be deemed to have been sent in 
compliance with the provisions of this part. In such a case, any time 
period which commences upon the service of the document shall commence 
on the date the document was received.



      Subpart D_Adjudication Officers; Parties and Representatives



Sec. 725.350  Who are the adjudication officers?

    (a) General. The persons authorized by the Secretary of Labor to 
accept evidence and decide claims on the basis of such evidence are 
called ``adjudication officers.'' This section describes the status of 
black lung claims adjudication officers.
    (b) District Director. The district director is that official of the 
DCMWC or his designee who is authorized to perform functions with 
respect to the development, processing, and adjudication of claims in 
accordance with this part.
    (c) Administrative law judge. An administrative law judge is that 
official appointed pursuant to 5 U.S.C. 3105 (or Public Law 94-504) who 
is qualified to preside at hearings under 5 U.S.C. 557 and is empowered 
by the Secretary to conduct formal hearings with respect to, and 
adjudicate, claims in accordance with this part. A person appointed 
under Public Law 94-504 shall not be considered an administrative law 
judge for purposes of this part for any period after March 1, 1979.



Sec. 725.351  Powers of adjudication officers.

    (a) District Director. The district director is authorized to:
    (1) Make determinations with respect to claims as is provided in 
this part;
    (2) Conduct conferences and informal discovery proceedings as 
provided in this part;
    (3) Compel the production of documents by the issuance of a 
subpoena;
    (4) Prepare documents for the signature of parties;
    (5) Issue appropriate orders as provided in this part; and
    (6) Do all other things necessary to enable him or her to discharge 
the duties of the office.
    (b) Administrative Law Judge. An administrative law judge is 
authorized to:

[[Page 989]]

    (1) Conduct formal hearings in accordance with the provisions of 
this part;
    (2) Administer oaths and examine witnesses;
    (3) Compel the production of documents and appearance of witnesses 
by the issuance of subpoenas;
    (4) Issue decisions and orders with respect to claims as provided in 
this part; and
    (5) Do all other things necessary to enable him or her to discharge 
the duties of the office.
    (c) If any person in proceedings before an adjudication officer 
disobeys or resists any lawful order or process, or misbehaves during a 
hearing or so near the place thereof as to obstruct the same, or 
neglects to produce, after having been ordered to do so, any pertinent 
book, paper or document, or refuses to appear after having been 
subpoenaed, or upon appearing refuses to take the oath as a witness, or 
after having taken the oath refuses to be examined according to law, the 
district director, or the administrative law judge responsible for the 
adjudication of the claim, shall certify the facts to the Federal 
district court having jurisdiction in the place in which he or she is 
sitting (or to the U.S. District Court for the District of Columbia if 
he or she is sitting in the District) which shall thereupon in a summary 
manner hear the evidence as to the acts complained of, and, if the 
evidence so warrants, punish such person in the same manner and to the 
same extent as for a contempt committed before the court, or commit such 
person upon the same condition as if the doing of the forbidden act had 
occurred with reference to the process or in the presence of the court.



Sec. 725.352  Disqualification of adjudication officer.

    (a) No adjudication officer shall conduct any proceedings in a claim 
in which he or she is prejudiced or partial, or where he or she has any 
interest in the matter pending for decision. A decision to withdraw from 
the consideration of a claim shall be within the discretion of the 
adjudication officer. If that adjudication officer withdraws, another 
officer shall be designated by the Director or the Chief Administrative 
Law Judge, as the case may be, to complete the adjudication of the 
claim.
    (b) No adjudication officer shall be permitted to appear or act as a 
representative of a party under this part while such individual is 
employed as an adjudication officer. No adjudication officer shall be 
permitted at any time to appear or act as a representative in connection 
with any case or claim in which he or she was personally involved. No 
fee or reimbursement shall be awarded under this part to an individual 
who acts in violation of this paragraph.
    (c) No adjudication officer shall act in any claim involving a party 
which employed such adjudication officer within one year before the 
adjudication of such claim.
    (d) Notwithstanding paragraph (a) of this section, no adjudication 
officer shall be permitted to act in any claim involving a party who is 
related to the adjudication officer by consanguinity or affinity within 
the third degree as determined by the law of the place where such party 
is domiciled. Any action taken by an adjudication officer in knowing 
violation of this paragraph shall be void.



Sec. 725.360  Parties to proceedings.

    (a) Except as provided in Sec. 725.361, no person other than the 
Secretary of Labor and authorized personnel of the Department of Labor 
shall participate at any stage in the adjudication of a claim for 
benefits under this part, unless such person is determined by the 
appropriate adjudication officer to qualify under the provisions of this 
section as a party to the claim. The following persons shall be parties:
    (1) The claimant;
    (2) A person other than a claimant, authorized to execute a claim on 
such claimant's behalf under Sec. 725.301;
    (3) Any coal mine operator notified under Sec. 725.407 of its 
possible liability for the claim;
    (4) Any insurance carrier of such operator; and
    (5) The Director in all proceedings relating to a claim for benefits 
under this part.

[[Page 990]]

    (b) A widow, child, parent, brother, or sister, or the 
representative of a decedent's estate, who makes a showing in writing 
that his or her rights with respect to benefits may be prejudiced by a 
decision of an adjudication officer, may be made a party.
    (c) Any coal mine operator or prior operator or insurance carrier 
which has not been notified under Sec. 725.407 and which makes a 
showing in writing that its rights may be prejudiced by a decision of an 
adjudication officer may be made a party.
    (d) Any other individual may be made a party if that individual's 
rights with respect to benefits may be prejudiced by a decision to be 
made.



Sec. 725.361  Party amicus curiae.

    At the discretion of the Chief Administrative Law Judge or the 
administrative law judge assigned to the case, a person or entity which 
is not a party may be allowed to participate amicus curiae in a formal 
hearing only as to an issue of law. A person may participate amicus 
curiae in a formal hearing upon written request submitted with 
supporting arguments prior to the hearing. If the request is granted, 
the administrative law judge hearing the case will inform the party of 
the extent to which participation will be permitted. The request may, 
however, be denied summarily and without explanation.



Sec. 725.362  Representation of parties.

    (a) Except for the Secretary of Labor, whose interests shall be 
represented by the Solicitor of Labor or his or her designee, each of 
the parties may appoint an individual to represent his or her interest 
in any proceeding for determination of a claim under this part. Such 
appointment shall be made in writing or on the record at the hearing. An 
attorney qualified in accordance with Sec. 725.363(a) shall file a 
written declaration that he or she is authorized to represent a party, 
or declare his or her representation on the record at a formal hearing. 
Any other person (see Sec. 725.363(b)) shall file a written notice of 
appointment signed by the party or his or her legal guardian, or enter 
his or her appearance on the record at a formal hearing if the party he 
or she seeks to represent is present and consents to the representation. 
Any written declaration or notice required by this section shall include 
the OWCP number assigned by the Office and shall be sent to the Office 
or, for representation at a formal hearing, to the Chief Administrative 
Law Judge. In any case, such representative must be qualified under 
Sec. 725.363. No authorization for representation or agreement between 
a claimant and representative as to the amount of a fee, filed with the 
Social Security Administration in connection with a claim under part B 
of title IV of the Act, shall be valid under this part. A claimant who 
has previously authorized a person to represent him or her in connection 
with a claim originally filed under part B of title IV may renew such 
authorization by filing a statement to such effect with the Office or 
appropriate adjudication officer.
    (b) Any party may waive his or her right to be represented in the 
adjudication of a claim. If an adjudication officer determines, after an 
appropriate inquiry has been made, that a claimant who has been informed 
of his or her right to representation does not wish to obtain the 
services of a representative, such adjudication officer shall proceed to 
consider the claim in accordance with this part, unless it is apparent 
that the claimant is, for any reason, unable to continue without the 
help of a representative. However, it shall not be necessary for an 
adjudication officer to inquire as to the ability of a claimant to 
proceed without representation in any adjudication taking place without 
a hearing. The failure of a claimant to obtain representation in an 
adjudication taking place without a hearing shall be considered a waiver 
of the claimant's right to representation. However, at any time during 
the processing or adjudication of a claim, any claimant may revoke such 
waiver and obtain a representative.



Sec. 725.363  Qualification of representative.

    (a) Attorney. Any attorney in good standing who is admitted to 
practice before a court of a State, territory, district, or insular 
possession, or before the Supreme Court of the United

[[Page 991]]

States or other Federal court and is not, pursuant to any provision of 
law, prohibited from acting as a representative, may be appointed as a 
representative.
    (b) Other person. With the approval of the adjudication officer, any 
other person may be appointed as a representative so long as that person 
is not, pursuant to any provision of law, prohibited from acting as a 
representative.



Sec. 725.364  Authority of representative.

    A representative, appointed and qualified as provided in Sec. Sec. 
725.362 and 725.363, may make or give on behalf of the party he or she 
represents, any request or notice relative to any proceeding before an 
adjudication officer, including formal hearing and review, except that 
such representative may not execute a claim for benefits, unless he or 
she is a person designated in Sec. 725.301 as authorized to execute a 
claim. A representative shall be entitled to present or elicit evidence 
and make allegations as to facts and law in any proceeding affecting the 
party represented and to obtain information with respect to the claim of 
such party to the same extent as such party. Notice given to any party 
of any administrative action, determination, or decision, or request to 
any party for the production of evidence shall be sent to the 
representative of such party and such notice or request shall have the 
same force and effect as if it had been sent to the party represented.



Sec. 725.365  Approval of representative's fees; lien against benefits.

    No fee charged for representation services rendered to a claimant 
with respect to any claim under this part shall be valid unless approved 
under this subpart. No contract or prior agreement for a fee shall be 
valid. In cases where the obligation to pay the attorney's fee is upon 
the claimant, the amount of the fee awarded may be made a lien upon the 
benefits due under an award and the adjudication officer shall fix, in 
the award approving the fee, such lien and the manner of payment of the 
fee. Any representative who is not an attorney may be awarded a fee for 
services under this subpart, except that no lien may be imposed with 
respect to such representative's fee.



Sec. 725.366  Fees for representatives.

    (a) A representative seeking a fee for services performed on behalf 
of a claimant shall make application therefor to the district director, 
administrative law judge, or appropriate appellate tribunal, as the case 
may be, before whom the services were performed. The application shall 
be filed and served upon the claimant and all other parties within the 
time limits allowed by the district director, administrative law judge, 
or appropriate appellate tribunal. The application shall be supported by 
a complete statement of the extent and character of the necessary work 
done, and shall indicate the professional status (e.g., attorney, 
paralegal, law clerk, lay representative or clerical) of the person 
performing such work, and the customary billing rate for each such 
person. The application shall also include a listing of reasonable 
unreimbursed expenses, including those for travel, incurred by the 
representative or an employee of a representative in establishing the 
claimant's case. Any fee requested under this paragraph shall also 
contain a description of any fee requested, charged, or received for 
services rendered to the claimant before any State or Federal court or 
agency in connection with a related matter.
    (b) Any fee approved under paragraph (a) of this section shall be 
reasonably commensurate with the necessary work done and shall take into 
account the quality of the representation, the qualifications of the 
representative, the complexity of the legal issues involved, the level 
of proceedings to which the claim was raised, the level at which the 
representative entered the proceedings, and any other information which 
may be relevant to the amount of fee requested. No fee approved shall 
include payment for time spent in preparation of a fee application. No 
fee shall be approved for work done on claims filed between December 30, 
1969, and June 30, 1973, under part B of title IV of the Act, except for 
services rendered on behalf of the claimant in regard to the review of 
the claim under

[[Page 992]]

section 435 of the Act and part 727 of this subchapter (see Sec. 
725.4(d)).
    (c) In awarding a fee, the appropriate adjudication officer shall 
consider, and shall add to the fee, the amount of reasonable and 
unreimbursed expenses incurred in establishing the claimant's case. 
Reimbursement for travel expenses incurred by an attorney shall be 
determined in accordance with the provisions of Sec. 725.459(a). No 
reimbursement shall be permitted for expenses incurred in obtaining 
medical or other evidence which has previously been submitted to the 
Office in connection with the claim.
    (d) Upon receipt of a request for approval of a fee, such request 
shall be reviewed and evaluated by the appropriate adjudication officer 
and a fee award issued. Any party may request reconsideration of a fee 
awarded by the adjudication officer. A revised or modified fee award may 
then be issued, if appropriate.
    (e) Each request for reconsideration or review of a fee award shall 
be in writing and shall contain supporting statements or information 
pertinent to any increase or decrease requested. If a fee awarded by a 
district director is disputed, such award shall be appealable directly 
to the Benefits Review Board. In such a fee dispute case, the record 
before the Board shall consist of the order of the district director 
awarding or denying the fee, the application for a fee, any written 
statement in opposition to the fee and the documentary evidence 
contained in the file which verifies or refutes any item claimed in the 
fee application.



Sec. 725.367  Payment of a claimant's attorney's fee by responsible 
operator or fund.

    (a) An attorney who represents a claimant in the successful 
prosecution of a claim for benefits may be entitled to collect a 
reasonable attorney's fee from the responsible operator that is 
ultimately found liable for the payment of benefits, or, in a case in 
which there is no operator who is liable for the payment of benefits, 
from the fund. Generally, the operator or fund liable for the payment of 
benefits shall be liable for the payment of the claimant's attorney's 
fees where the operator or fund, as appropriate, took action, or 
acquiesced in action, that created an adversarial relationship between 
itself and the claimant. The fees payable under this section shall 
include reasonable fees for necessary services performed prior to the 
creation of the adversarial relationship. Circumstances in which a 
successful attorney's fees shall be payable by the responsible operator 
or the fund include, but are not limited to, the following:
    (1) The responsible operator designated by the district director 
(see Sec. 725.410(a)(3)) fails to accept the claimant's entitlement to 
benefits within the 30-day period provided by Sec. 725.412(b) and is 
ultimately determined to be liable for benefits. The operator shall be 
liable for an attorney's fee with respect to all necessary services 
performed by the claimant's attorney;
    (2) There is no operator that may be held liable for the payment of 
benefits, and the district director issues a schedule for the submission 
of additional evidence under Sec. 725.410. The fund shall be liable for 
an attorney's fee with respect to all necessary services performed by 
the claimant's attorney;
    (3) The claimant submits a bill for medical treatment, and the party 
liable for the payment of benefits declines to pay the bill on the 
grounds that the treatment is unreasonable, or is for a condition that 
is not compensable. The responsible operator or fund, as appropriate, 
shall be liable for an attorney's fee with respect to all necessary 
services performed by the claimant's attorney;
    (4) A beneficiary seeks an increase in the amount of benefits 
payable, and the responsible operator or fund contests the claimant's 
right to that increase. If the beneficiary is successful in securing an 
increase in the amount of benefits payable, the operator or fund shall 
be liable for an attorney's fee with respect to all necessary services 
performed by the beneficiary's attorney;

[[Page 993]]

    (5) The responsible operator or fund seeks a decrease in the amount 
of benefits payable. If the beneficiary is successful in resisting the 
request for a decrease in the amount of benefits payable, the operator 
or fund shall be liable for an attorney's fee with respect to all 
necessary services performed by the beneficiary's attorney. A request 
for information clarifying the amount of benefits payable shall not be 
considered a request to decrease that amount.
    (b) Any fee awarded under this section shall be in addition to the 
award of benefits, and shall be awarded, in an order, by the district 
director, administrative law judge, Board or court, before whom the work 
was performed. The operator or fund shall pay such fee promptly and 
directly to the claimant's attorney in a lump sum after the award of 
benefits becomes final.
    (c) Section 205(a) of the Black Lung Benefits Amendments of 1981, 
Public Law 97-119, amended section 422 of the Act and relieved operators 
and carriers from liability for the payment of benefits on certain 
claims. Payment of benefits on those claims was made the responsibility 
of the fund. The claims subject to this transfer of liability are 
described in Sec. 725.496. On claims subject to the transfer of 
liability described in this paragraph the fund will pay all fees and 
costs which have been or will be awarded to claimant's attorneys which 
were or would have become the liability of an operator or carrier but 
for the enactment of the 1981 Amendments and which have not already been 
paid by such operator or carrier. Section 9501(d)(7) of the Internal 
Revenue Code (26 U.S.C.), which was also enacted as a part of the 1981 
Amendments to the Act, expressly prohibits the fund from reimbursing an 
operator or carrier for any attorney fees or costs which it has paid on 
cases subject to the transfer of liability provisions.



        Subpart E_Adjudication of Claims by the District Director



Sec. 725.401  Claims development--general.

    After a claim has been received by the district director, the 
district director shall take such action as is necessary to develop, 
process, and make determinations with respect to the claim as provided 
in this subpart.



Sec. 725.402  Approved State workers' compensation law.

    If a district director determines that any claim filed under this 
part is one subject to adjudication under a workers' compensation law 
approved under part 722 of this subchapter, he or she shall advise the 
claimant of this determination and of the Act's requirement that the 
claim must be filed under the applicable State workers' compensation 
law. The district director shall then prepare a proposed decision and 
order dismissing the claim for lack of jurisdiction pursuant to Sec. 
725.418 and proceed as appropriate.



Sec. 725.403  [Reserved]



Sec. 725.404  Development of evidence--general.

    (a) Employment history. Each claimant shall furnish the district 
director with a complete and detailed history of the coal miner's 
employment and, upon request, supporting documentation.
    (b) Matters of record. Where it is necessary to obtain proof of age, 
marriage or termination of marriage, death, family relationship, 
dependency (see subpart B of this part), or any other fact which may be 
proven as a matter of public record, the claimant shall furnish such 
proof to the district director upon request.
    (c) Documentary evidence. If a claimant is required to submit 
documents to the district director, the claimant shall submit either the 
original, a certified copy or a clear readable copy thereof. The 
district director or administrative law judge may require the submission 
of an original document or certified copy thereof, if necessary.
    (d) Submission of insufficient evidence. In the event a claimant 
submits insufficient evidence regarding any matter, the district 
director shall inform the claimant of what further evidence is necessary 
and request that such evidence be submitted within a specified 
reasonable time which may, upon request, be extended for good cause.

[[Page 994]]



Sec. 725.405  Development of medical evidence; scheduling of medical 
examinations and tests.

    (a) Upon receipt of a claim, the district director shall ascertain 
whether the claim was filed by or on account of a miner as defined in 
Sec. 725.202, and in the case of a claim filed on account of a deceased 
miner, whether the claim was filed by an eligible survivor of such miner 
as defined in subpart B of this part.
    (b) In the case of a claim filed by or on behalf of a miner, the 
district director shall, where necessary, schedule the miner for a 
medical examination and testing under Sec. 725.406.
    (c) In the case of a claim filed by or on behalf of a survivor of a 
miner, the district director shall obtain whatever medical evidence is 
necessary and available for the development and evaluation of the claim.
    (d) The district director shall, where appropriate, collect other 
evidence necessary to establish:
    (1) The nature and duration of the miner's employment; and
    (2) All other matters relevant to the determination of the claim.
    (e) If at any time during the processing of the claim by the 
district director, the evidence establishes that the claimant is not 
entitled to benefits under the Act, the district director may terminate 
evidentiary development of the claim and proceed as appropriate.



Sec. 725.406  Medical examinations and tests.

    (a) The Act requires the Department to provide each miner who 
applies for benefits with the opportunity to undergo a complete 
pulmonary evaluation at no expense to the miner. A complete pulmonary 
evaluation includes a report of physical examination, a pulmonary 
function study, a chest roentgenogram and, unless medically 
contraindicated, a blood gas study.
    (b) As soon as possible after a miner files an application for 
benefits, the district director will provide the miner with a list of 
medical facilities and physicians in the state of the miner's residence 
and states contiguous to the state of the miner's residence that the 
Office has authorized to perform complete pulmonary evaluations. The 
miner shall select one of the facilities or physicians on the list, 
provided that the miner may not select any physician to whom the miner 
or the miner's spouse is related to the fourth degree of consanguinity, 
and the miner may not select any physician who has examined or provided 
medical treatment to the miner within the twelve months preceding the 
date of the miner's application. The district director will make 
arrangements for the miner to be given a complete pulmonary evaluation 
by that facility or physician. The results of the complete pulmonary 
evaluation shall not be counted as evidence submitted by the miner under 
Sec. 725.414.
    (c) If any medical examination or test conducted under paragraph (a) 
of this section is not administered or reported in substantial 
compliance with the provisions of part 718 of this subchapter, or does 
not provide sufficient information to allow the district director to 
decide whether the miner is eligible for benefits, the district director 
shall schedule the miner for further examination and testing. Where the 
deficiencies in the report are the result of a lack of effort on the 
part of the miner, the miner will be afforded one additional opportunity 
to produce a satisfactory result. In order to determine whether any 
medical examination or test was administered and reported in substantial 
compliance with the provisions of part 718 of this subchapter, the 
district director may have any component of such examination or test 
reviewed by a physician selected by the district director.
    (d) After the physician completes the report authorized by paragraph 
(a), the district director will inform the miner that he may elect to 
have the results of the objective testing sent to his treating physician 
for use in preparing a medical opinion. The district director will also 
inform the claimant that any medical opinion submitted by his treating 
physician will count as one of the two medical opinions that the miner 
may submit under Sec. 725.414 of this part.
    (e) The cost of any medical examination or test authorized under 
this section, including the cost of travel to and from the examination, 
shall be paid by

[[Page 995]]

the fund. No reimbursement for overnight accommodations shall be 
authorized unless the district director determines that an adequate 
testing facility is unavailable within one day's round trip travel by 
automobile from the miner's residence. The fund shall be reimbursed for 
such payments by an operator, if any, found liable for the payment of 
benefits to the claimant. If an operator fails to repay such expenses, 
with interest, upon request of the Office, the entire amount may be 
collected in an action brought under section 424 of the Act and Sec. 
725.603 of this part.



Sec. 725.407  Identification and notification of responsible operator.

    (a) Upon receipt of the miner's employment history, the district 
director shall investigate whether any operator may be held liable for 
the payment of benefits as a responsible operator in accordance with the 
criteria contained in Subpart G of this part.
    (b) The district director may identify one or more operators 
potentially liable for the payment of benefits in accordance with the 
criteria set forth in Sec. 725.495 of this part. The district director 
shall notify each such operator of the existence of the claim. Where the 
records maintained by the Office pursuant to part 726 of this subchapter 
indicate that the operator had obtained a policy of insurance, and the 
claim falls within such policy, the notice provided pursuant to this 
section shall also be sent to the operator's carrier. Any operator or 
carrier notified of the claim shall thereafter be considered a party to 
the claim in accordance with Sec. 725.360 of this part unless it is 
dismissed by an adjudication officer and is not thereafter notified 
again of its potential liability.
    (c) The notification issued pursuant to this section shall include a 
copy of the claimant's application and a copy of all evidence obtained 
by the district director relating to the miner's employment. The 
district director may request the operator to answer specific questions, 
including, but not limited to, questions related to the nature of its 
operations, its relationship with the miner, its financial status, 
including any insurance obtained to secure its obligations under the 
Act, and its relationship with other potentially liable operators. A 
copy of any notification issued pursuant to this section shall be sent 
to the claimant by regular mail.
    (d) If at any time before a case is referred to the Office of 
Administrative Law Judges, the district director determines that an 
operator which may be liable for the payment of benefits has not been 
notified under this section or has been incorrectly dismissed pursuant 
to Sec. 725.410(a)(3), the district director shall give such operator 
notice of its potential liability in accordance with this section. The 
adjudication officer shall then take such further action on the claim as 
may be appropriate. There shall be no time limit applicable to a later 
identification of an operator under this paragraph if the operator 
fraudulently concealed its identity as an employer of the miner. The 
district director may not notify additional operators of their potential 
liability after a case has been referred to the Office of Administrative 
Law Judges, unless the case was referred for a hearing to determine 
whether the claim was properly denied as abandoned pursuant to Sec. 
725.409.



Sec. 725.408  Operator's response to notification.

    (a)(1) An operator which receives notification under Sec. 725.407 
shall, within 30 days of receipt, file a response indicating its intent 
to accept or contest its identification as a potentially liable 
operator. The operator's response shall also be sent to the claimant by 
regular mail.
    (2) If the operator contests its identification, it shall, on a form 
supplied by the district director, state the precise nature of its 
disagreement by admitting or denying each of the following assertions. 
In answering these assertions, the term ``operator'' shall include any 
operator for which the identified operator may be considered a successor 
operator pursuant to Sec. 725.492.
    (i) That the named operator was an operator for any period after 
June 30, 1973;
    (ii) That the operator employed the miner as a miner for a 
cumulative period of not less than one year;

[[Page 996]]

    (iii) That the miner was exposed to coal mine dust while working for 
the operator;
    (iv) That the miner's employment with the operator included at least 
one working day after December 31, 1969; and
    (v) That the operator is capable of assuming liability for the 
payment of benefits.
    (3) An operator which receives notification under Sec. 725.407, and 
which fails to file a response within the time limit provided by this 
section, shall not be allowed to contest its liability for the payment 
of benefits on any of the grounds set forth in paragraph (a)(2).
    (b)(1) Within 90 days of the date on which it receives notification 
under Sec. 725.407, an operator may submit documentary evidence in 
support of its position.
    (2) No documentary evidence relevant to the grounds set forth in 
paragraph (a)(2) may be admitted in any further proceedings unless it is 
submitted within the time limits set forth in this section.



Sec. 725.409  Denial of a claim by reason of abandonment.

    (a) A claim may be denied at any time by the district director by 
reason of abandonment where the claimant fails:
    (1) To undergo a required medical examination without good cause; 
or,
    (2) To submit evidence sufficient to make a determination of the 
claim; or,
    (3) To pursue the claim with reasonable diligence; or,
    (4) To attend an informal conference without good cause.
    (b)(1) If the district director determines that a denial by reason 
of abandonment under paragraphs (a)(1) through (3) of this section is 
appropriate, he or she shall notify the claimant of the reasons for such 
denial and of the action which must be taken to avoid a denial by reason 
of abandonment. If the claimant completes the action requested within 
the time allowed, the claim shall be developed, processed and 
adjudicated as specified in this part. If the claimant does not fully 
comply with the action requested by the district director, the district 
director shall notify the claimant that the claim has been denied by 
reason of abandonment. Such notification shall be served on the claimant 
and all other parties to the claim by certified mail.
    (2) In any case in which a claimant has failed to attend an informal 
conference and has not provided the district director with his reasons 
for failing to attend, the district director shall ask the claimant to 
explain his absence. In considering whether the claimant had good cause 
for his failure to attend the conference, the district director shall 
consider all relevant circumstances, including the age, education, and 
health of the claimant, as well as the distance between the claimant's 
residence and the location of the conference. If the district director 
concludes that the claimant had good cause for failing to attend the 
conference, he may continue processing the claim, including, where 
appropriate under Sec. 725.416, the scheduling of an informal 
conference. If the claimant does not supply the district director with 
his reasons for failing to attend the conference within 30 days of the 
date of the district director's request, or the district director 
concludes that the reasons supplied by the claimant do not establish 
good cause, the district director shall notify the claimant that the 
claim has been denied by reason of abandonment. Such notification shall 
be served on the claimant and all other parties to the claim by 
certified mail.
    (c) The denial of a claim by reason of abandonment shall become 
effective and final unless, within 30 days after the denial is issued, 
the claimant requests a hearing. Following the expiration of the 30-day 
period, a new claim may be filed at any time pursuant to Sec. 725.309. 
For purposes of Sec. 725.309, a denial by reason of abandonment shall 
be deemed a finding that the claimant has not established any applicable 
condition of entitlement. If the claimant timely requests a hearing, the 
district director shall refer the case to the Office of Administrative 
Law Judges in accordance with Sec. 725.421. Except upon the motion or 
written agreement of the Director, the hearing will be limited to the 
issue of whether the claim was properly denied by reason of abandonment. 
If the hearing is limited to the

[[Page 997]]

issue of abandonment and the administrative law judge determines that 
the claim was not properly denied by reason of abandonment, he shall 
remand the claim to the district director for the completion of 
administrative processing.



Sec. 725.410  Submission of additional evidence.

    (a) After the district director completes the development of medical 
evidence under Sec. 725.405 of this part, including the complete 
pulmonary evaluation authorized by Sec. 725.406, and receives the 
responses and evidence submitted pursuant to Sec. 725.408, he shall 
issue a schedule for the submission of additional evidence. The schedule 
shall contain the following information:
    (1) If the claim was filed by, or on behalf of, a miner, the 
schedule shall contain a summary of the complete pulmonary evaluation 
administered pursuant to Sec. 725.406. If the claim was filed by, or on 
behalf of, a survivor, the schedule shall contain a summary of any 
medical evidence developed by the district director pursuant to Sec. 
725.405(c).
    (2) The schedule shall contain the district director's preliminary 
analysis of the medical evidence. If the district director believes that 
the evidence fails to establish any necessary element of entitlement, he 
shall inform the claimant of the element of entitlement not established 
and the reasons for his conclusions and advise the claimant that, unless 
he submits additional evidence, the district director will issue a 
proposed decision and order denying the claim.
    (3) The schedule shall contain the district director's designation 
of a responsible operator liable for the payment of benefits. In the 
event that the district director has designated as the responsible 
operator an employer other than the employer who last employed the 
claimant as a miner, the district director shall include, with the 
schedule, a copy of the statements required by Sec. 725.495(d) of this 
part. The district director may, in his discretion, dismiss as parties 
any of the operators notified of their potential liability pursuant to 
Sec. 725.407. If the district director thereafter determines that the 
participation of a party dismissed pursuant to this section is required, 
he may once again notify the operator in accordance with Sec. 
725.407(d).
    (4) The schedule shall notify the claimant and the designated 
responsible operator that they have the right to obtain further 
adjudication of the claim in accordance with this subpart, and that they 
have the right to submit additional evidence in accordance with this 
subpart. The schedule shall also notify the claimant that he has the 
right to obtain representation, under the terms set forth in subpart D, 
in order to assist him. In a case in which the district director has 
designated a responsible operator pursuant to paragraph (a)(3), the 
schedule shall further notify the claimant that if the operator fails to 
accept the claimant's entitlement to benefits within the time limit 
provided by Sec. 725.412, the cost of obtaining additional medical and 
other necessary evidence, along with a reasonable attorney's fee, shall 
be reimbursed by the responsible operator in the event that the claimant 
establishes his entitlement to benefits payable by that operator. In a 
case in which there is no operator liable for the payment of benefits, 
the schedule shall notify the claimant that the cost of obtaining 
additional medical and other necessary evidence, along with a reasonable 
attorney's fee, shall be reimbursed by the fund.
    (b) The schedule shall allow all parties not less than 60 days 
within which to submit additional evidence, including evidence relevant 
to the claimant's eligibility for benefits and evidence relevant to the 
liability of the designated responsible operator, and shall provide not 
less than an additional 30 days within which the parties may respond to 
evidence submitted by other parties. Any such evidence must meet the 
requirements set forth in Sec. 725.414 in order to be admitted into the 
record.
    (c) The district director shall serve a copy of the schedule, 
together with a copy of all of the evidence developed, on the claimant, 
the designated responsible operator, and all other operators which 
received notification pursuant to Sec. 725.407. The schedule shall be 
served on each party by certified mail.

[[Page 998]]



Sec. 725.411  Initial adjudication in Trust Fund cases.

    Notwithstanding the requirements of Sec. 725.410 of this part, if 
the district director concludes that the results of the complete 
pulmonary evaluation support a finding of eligibility, and that there is 
no operator responsible for the payment of benefits, the district 
director shall issue a proposed decision and order in accordance with 
Sec. 725.418 of this part.



Sec. 725.412  Operator's response.

    (a)(1) Within 30 days after the district director issues a schedule 
pursuant to Sec. 725.410 of this part containing a designation of the 
responsible operator liable for the payment of benefits, that operator 
shall file a response with regard to its liability. The response shall 
specifically indicate whether the operator agrees or disagrees with the 
district director's designation.
    (2) If the responsible operator designated by the district director 
does not file a timely response, it shall be deemed to have accepted the 
district director's designation with respect to its liability, and to 
have waived its right to contest its liability in any further proceeding 
conducted with respect to the claim.
    (b) The responsible operator designated by the district director may 
also file a statement accepting claimant's entitlement to benefits. If 
that operator fails to file a timely response to the district director's 
designation, the district director shall, upon receipt of such a 
statement, issue a proposed decision and order in accordance with Sec. 
725.418 of this part. If the operator fails to file a statement 
accepting the claimant's entitlement to benefits within 30 days after 
the district director issues a schedule pursuant to Sec. 725.410 of 
this part, the operator shall be deemed to have contested the claimant's 
entitlement.



Sec. 725.413  [Reserved]



Sec. 725.414  Development of evidence.

    (a) Medical evidence. (1) For purposes of this section, a medical 
report shall consist of a physician's written assessment of the miner's 
respiratory or pulmonary condition. A medical report may be prepared by 
a physician who examined the miner and/or reviewed the available 
admissible evidence. A physician's written assessment of a single 
objective test, such as a chest X-ray or a pulmonary function test, 
shall not be considered a medical report for purposes of this section.
    (2)(i) The claimant shall be entitled to submit, in support of his 
affirmative case, no more than two chest X-ray interpretations, the 
results of no more than two pulmonary function tests, the results of no 
more than two arterial blood gas studies, no more than one report of an 
autopsy, no more than one report of each biopsy, and no more than two 
medical reports. Any chest X-ray interpretations, pulmonary function 
test results, blood gas studies, autopsy report, biopsy report, and 
physicians' opinions that appear in a medical report must each be 
admissible under this paragraph or paragraph (a)(4) of this section.
    (ii) The claimant shall be entitled to submit, in rebuttal of the 
case presented by the party opposing entitlement, no more than one 
physician's interpretation of each chest X-ray, pulmonary function test, 
arterial blood gas study, autopsy or biopsy submitted by the designated 
responsible operator or the fund, as appropriate, under paragraph 
(a)(3)(i) or (a)(3)(iii) of this section and by the Director pursuant to 
Sec. 725.406. In any case in which the party opposing entitlement has 
submitted the results of other testing pursuant to Sec. 718.107, the 
claimant shall be entitled to submit one physician's assessment of each 
piece of such evidence in rebuttal. In addition, where the responsible 
operator or fund has submitted rebuttal evidence under paragraph 
(a)(3)(ii) or (a)(3)(iii) of this section with respect to medical 
testing submitted by the claimant, the claimant shall be entitled to 
submit an additional statement from the physician who originally 
interpreted the chest X-ray or administered the objective testing. Where 
the rebuttal evidence tends to undermine the conclusion of a physician 
who prepared a medical report submitted by the claimant, the claimant 
shall be entitled to submit an additional statement from the physician 
who prepared

[[Page 999]]

the medical report explaining his conclusion in light of the rebuttal 
evidence.
    (3)(i) The responsible operator designated pursuant to Sec. 725.410 
shall be entitled to obtain and submit, in support of its affirmative 
case, no more than two chest X-ray interpretations, the results of no 
more than two pulmonary function tests, the results of no more than two 
arterial blood gas studies, no more than one report of an autopsy, no 
more than one report of each biopsy, and no more than two medical 
reports. Any chest X-ray interpretations, pulmonary function test 
results, blood gas studies, autopsy report, biopsy report, and 
physicians' opinions that appear in a medical report must each be 
admissible under this paragraph or paragraph (a)(4) of this section. In 
obtaining such evidence, the responsible operator may not require the 
miner to travel more than 100 miles from his or her place of residence, 
or the distance traveled by the miner in obtaining the complete 
pulmonary evaluation provided by Sec. 725.406 of this part, whichever 
is greater, unless a trip of greater distance is authorized in writing 
by the district director. If a miner unreasonably refuses--
    (A) To provide the Office or the designated responsible operator 
with a complete statement of his or her medical history and/or to 
authorize access to his or her medical records, or
    (B) To submit to an evaluation or test requested by the district 
director or the designated responsible operator, the miner's claim may 
be denied by reason of abandonment. (See Sec. 725.409 of this part).
    (ii) The responsible operator shall be entitled to submit, in 
rebuttal of the case presented by the claimant, no more than one 
physician's interpretation of each chest X-ray, pulmonary function test, 
arterial blood gas study, autopsy or biopsy submitted by the claimant 
under paragraph (a)(2)(i) of this section and by the Director pursuant 
to Sec. 725.406. In any case in which the claimant has submitted the 
results of other testing pursuant to Sec. 718.107, the responsible 
operator shall be entitled to submit one physician's assessment of each 
piece of such evidence in rebuttal. In addition, where the claimant has 
submitted rebuttal evidence under paragraph (a)(2)(ii) of this section, 
the responsible operator shall be entitled to submit an additional 
statement from the physician who originally interpreted the chest X-ray 
or administered the objective testing. Where the rebuttal evidence tends 
to undermine the conclusion of a physician who prepared a medical report 
submitted by the responsible operator, the responsible operator shall be 
entitled to submit an additional statement from the physician who 
prepared the medical report explaining his conclusion in light of the 
rebuttal evidence.
    (iii) In a case in which the district director has not identified 
any potentially liable operators, or has dismissed all potentially 
liable operators under Sec. 725.410(a)(3), the district director shall 
be entitled to exercise the rights of a responsible operator under this 
section, except that the evidence obtained in connection with the 
complete pulmonary evaluation performed pursuant to Sec. 725.406 shall 
be considered evidence obtained and submitted by the Director, OWCP, for 
purposes of paragraph (a)(3)(i) of this section. In a case involving a 
dispute concerning medical benefits under Sec. 725.708 of this part, 
the district director shall be entitled to develop medical evidence to 
determine whether the medical bill is compensable under the standard set 
forth in Sec. 725.701 of this part.
    (4) Notwithstanding the limitations in paragraphs (a)(2) and (a)(3) 
of this section, any record of a miner's hospitalization for a 
respiratory or pulmonary or related disease, or medical treatment for a 
respiratory or pulmonary or related disease, may be received into 
evidence.
    (5) A copy of any documentary evidence submitted by a party must be 
served on all other parties to the claim. If the claimant is not 
represented by an attorney, the district director shall mail a copy of 
all documentary evidence submitted by the claimant to all other parties 
to the claim. Following the development and submission of affirmative 
medical evidence, the parties may submit rebuttal evidence in accordance 
with the schedule issued by the district director.

[[Page 1000]]

    (b) Evidence pertaining to liability. (1) Except as provided by 
Sec. 725.408(b)(2), the designated responsible operator may submit 
evidence to demonstrate that it is not the potentially liable operator 
that most recently employed the claimant.
    (2) Any other party may submit evidence regarding the liability of 
the designated responsible operator or any other operator.
    (3) A copy of any documentary evidence submitted under this 
paragraph must be mailed to all other parties to the claim. Following 
the submission of affirmative evidence, the parties may submit rebuttal 
evidence in accordance with the schedule issued by the district 
director.
    (c) Testimony. A physician who prepared a medical report admitted 
under this section may testify with respect to the claim at any formal 
hearing conducted in accordance with subpart F of this part, or by 
deposition. If a party has submitted fewer than two medical reports as 
part of that party's affirmative case under this section, a physician 
who did not prepare a medical report may testify in lieu of such a 
medical report. The testimony of such a physician shall be considered a 
medical report for purposes of the limitations provided by this section. 
A party may offer the testimony of no more than two physicians under the 
provisions of this section unless the adjudication officer finds good 
cause under paragraph (b)(1) of Sec. 725.456 of this part. In 
accordance with the schedule issued by the district director, all 
parties shall notify the district director of the name and current 
address of any potential witness whose testimony pertains to the 
liability of a potentially liable operator or the designated responsible 
operator. Absent such notice, the testimony of a witness relevant to the 
liability of a potentially liable operator or the designated responsible 
operator shall not be admitted in any hearing conducted with respect to 
the claim unless the administrative law judge finds that the lack of 
notice should be excused due to extraordinary circumstances.
    (d) Except to the extent permitted by Sec. 725.456 and Sec. 
725.310(b), the limitations set forth in this section shall apply to all 
proceedings conducted with respect to a claim, and no documentary 
evidence pertaining to liability shall be admitted in any further 
proceeding conducted with respect to a claim unless it is submitted to 
the district director in accordance with this section.



Sec. 725.415  Action by the district director after development of 
evidence.

    (a) At the end of the period permitted under Sec. 725.410(b) for 
the submission of evidence, the district director shall review the claim 
on the basis of all evidence submitted in accordance with Sec. 725.414.
    (b) After review of all evidence submitted, the district director 
may issue another schedule for the submission of additional evidence 
pursuant to Sec. 725.410, identifying another potentially liable 
operator as the responsible operator liable for the payment of benefits. 
In such a case, the district director shall not permit the development 
or submission of any additional medical evidence until after he has made 
a final determination of the identity of the responsible operator liable 
for the payment of benefits. If the operator who is finally determined 
to be the responsible operator has not had the opportunity to submit 
medical evidence pursuant to Sec. 725.410, the district director shall 
allow the designated responsible operator and the claimant not less than 
60 days within which to submit evidence relevant to the claimant's 
eligibility for benefits. The designated responsible operator may elect 
to adopt any medical evidence previously submitted by another operator 
as its own evidence, subject to the limitations of Sec. 725.414. The 
district director may also schedule a conference in accordance with 
Sec. 725.416, issue a proposed decision and order in accordance with 
Sec. 725.418, or take such other action as the district director 
considers appropriate.



Sec. 725.416  Conferences.

    (a) At the conclusion of the period permitted by Sec. 725.410(b) of 
this part for the submission of evidence, the district director may 
conduct an informal conference in any claim where it appears that such 
conference will assist in the voluntary resolution of any issue

[[Page 1001]]

raised with respect to the claim. The conference proceedings shall not 
be stenographically reported and sworn testimony shall not be taken. Any 
conference conducted pursuant to this paragraph shall be held no later 
than 90 days after the conclusion of the period permitted by Sec. 
725.410(b) of this part for the submission of evidence, unless one of 
the parties requests that the time period be extended for good cause 
shown. If the district director is unable to hold the conference within 
the time period permitted by this paragraph, he shall proceed to issue a 
proposed decision and order under Sec. 725.418 of this part.
    (b) The district director shall notify the parties of a definite 
time and place for the conference. The district director shall advise 
the parties that they have a right to representation at the conference, 
by an attorney or a lay representative, and that no conference shall 
take place unless the parties are represented. A coal mine operator 
which is self-insured, or which is covered by a policy of insurance for 
the claim for which a conference is scheduled, shall be deemed to be 
represented. The notification shall set forth the specific reasons why 
the district director believes that a conference will assist in the 
voluntary resolution of any issue raised with respect to the claim. No 
sanction may be imposed under paragraph (c) of this section unless the 
record contains a notification that meets the requirements of this 
section. The district director may in his or her discretion, or on the 
motion of any party, cancel a conference or allow any or all of the 
parties to participate by telephone.
    (c) The unexcused failure of any party to appear at an informal 
conference shall be grounds for the imposition of sanctions. If the 
claimant fails to appear, the district director may take such steps as 
are authorized by Sec. 725.409(b)(2) to deny the claim by reason of 
abandonment. If the responsible operator fails to appear, it shall be 
deemed to have waived its right to contest its potential liability for 
an award of benefits and, in the discretion of the district director, 
its right to contest any issue related to the claimant's eligibility.
    (d) Any representative of an operator, of an operator's insurance 
carrier, or of a claimant, authorized to represent such party in 
accordance with paragraph (b), shall be deemed to have sufficient 
authority to stipulate facts or issues or agree to a final disposition 
of the claim.
    (e) Procedures to be followed at a conference shall be within the 
discretion of the district director.



Sec. 725.417  Action at the conclusion of conference.

    (a) At the conclusion of a conference, the district director shall 
prepare a stipulation of contested and uncontested issues which shall be 
signed by the parties and the district director. If a hearing is 
conducted with respect to the claim, this stipulation shall be submitted 
to the Office of Administrative Law Judges and placed in the claim 
record.
    (b) In appropriate cases, the district director may permit a 
reasonable time for the submission of additional evidence following a 
conference, provided that such evidence does not exceed the limits set 
forth in Sec. 725.414. The district director may also notify additional 
operators of their potential liability pursuant to Sec. 725.407, or 
issue another schedule for the submission of additional evidence 
pursuant to Sec. 725.410, designating another potentially liable 
operator as the responsible operator liable for the payment of benefits, 
in order to allow that operator an opportunity to submit evidence 
relevant to its liability for benefits as well as the claimant's 
eligibility for benefits.
    (c) Within 20 days after the termination of all conference 
proceedings, the district director shall prepare and send to the parties 
a proposed decision and order pursuant to Sec. 725.418 of this part.



Sec. 725.418  Proposed decision and order.

    (a) Within 20 days after the termination of all informal conference 
proceedings, or, if no informal conference is held, at the conclusion of 
the period permitted by Sec. 725.410(b) for the submission of evidence, 
the district director shall issue a proposed decision and order. A 
proposed decision and order is

[[Page 1002]]

a document, issued by the district director after the evidentiary 
development of the claim is completed and all contested issues, if any, 
are joined, which purports to resolve a claim on the basis of the 
evidence submitted to or obtained by the district director. A proposed 
decision and order shall be considered a final adjudication of a claim 
only as provided in Sec. 725.419. A proposed decision and order may be 
issued by the district director at any time during the adjudication of 
any claim if:
    (1) Issuance is authorized or required by this part; or,
    (2) The district director determines that its issuance will expedite 
the adjudication of the claim.
    (b) A proposed decision and order shall contain findings of fact and 
conclusions of law. It shall be served on all parties to the claim by 
certified mail.
    (c) The proposed decision and order shall contain a notice of the 
right of any interested party to request a formal hearing before the 
Office of Administrative Law Judges. If the proposed decision and order 
is a denial of benefits, and the claimant has previously filed a request 
for a hearing, the proposed decision and order shall notify the claimant 
that the case will be referred for a hearing pursuant to the previous 
request unless the claimant notifies the district director that he no 
longer desires a hearing. If the proposed decision and order is an award 
of benefits, and the designated responsible operator has previously 
filed a request for a hearing, the proposed decision and order shall 
notify the operator that the case will be referred for a hearing 
pursuant to the previous request unless the operator notifies the 
district director that it no longer desires a hearing.
    (d) The proposed decision and order shall reflect the district 
director's final designation of the responsible operator liable for the 
payment of benefits. No operator may be finally designated as the 
responsible operator unless it has received notification of its 
potential liability pursuant to Sec. 725.407, and the opportunity to 
submit additional evidence pursuant to Sec. 725.410. The district 
director shall dismiss, as parties to the claim, all other potentially 
liable operators that received notification pursuant to Sec. 725.407 
and that were not previously dismissed pursuant to Sec. 725.410(a)(3).



Sec. 725.419  Response to proposed decision and order.

    (a) Within 30 days after the date of issuance of a proposed decision 
and order, any party may, in writing, request a revision of the proposed 
decision and order or a hearing. If a hearing is requested, the district 
director shall refer the claim to the Office of Administrative Law 
Judges (see Sec. 725.421).
    (b) Any response made by a party to a proposed decision and order 
shall specify the findings and conclusions with which the responding 
party disagrees, and shall be served on the district director and all 
other parties to the claim.
    (c) If a timely request for revision of a proposed decision and 
order is made, the district director may amend the proposed decision and 
order, as circumstances require, and serve the revised proposed decision 
and order on all parties or take such other action as is appropriate. If 
a revised proposed decision and order is issued, each party to the claim 
shall have 30 days from the date of issuance of that revised proposed 
decision and order within which to request a hearing.
    (d) If no response to a proposed decision and order is sent to the 
district director within the period described in paragraph (a) of this 
section, or if no response to a revised proposed decision and order is 
sent to the district director within the period described in paragraph 
(c) of this section, the proposed decision and order shall become a 
final decision and order, which is effective upon the expiration of the 
applicable 30-day period. Once a proposed decision and order or revised 
proposed decision and order becomes final and effective, all rights to 
further proceedings with respect to the claim shall be considered 
waived, except as provided in Sec. 725.310.



Sec. 725.420  Initial determinations.

    (a) Section 9501(d)(1)(A)(1) of the Internal Revenue Code (26 
U.S.C.) provides that the Black Lung Disability Trust Fund shall begin 
the payment of

[[Page 1003]]

benefits on behalf of an operator in any case in which the operator 
liable for such payments has not commenced payment of such benefits 
within 30 days after the date of an initial determination of eligibility 
by the Secretary. For claims filed on or after January 1, 1982, the 
payment of such interim benefits from the fund is limited to benefits 
accruing after the date of such initial determination.
    (b) Except as provided in Sec. 725.415, after the district director 
has determined that a claimant is eligible for benefits, on the basis of 
all evidence submitted by a claimant and operator, and has determined 
that a hearing will be necessary to resolve the claim, the district 
director shall in writing so inform the parties and direct the operator 
to begin the payment of benefits to the claimant in accordance with 
Sec. 725.522. The date on which this writing is sent to the parties 
shall be considered the date of initial determination of the claim.
    (c) If a notified operator refuses to commence payment of a claim 
within 30 days from the date on which an initial determination is made 
under this section, benefits shall be paid by the fund to the claimant 
in accordance with Sec. 725.522, and the operator shall be liable to 
the fund, if such operator is determined liable for the claim, for all 
benefits paid by the fund on behalf of such operator, and, in addition, 
such penalties and interest as are appropriate.



Sec. 725.421  Referral of a claim to the Office of Administrative Law 
Judges.

    (a) In any claim for which a formal hearing is requested or ordered, 
and with respect to which the district director has completed 
evidentiary development and adjudication without having resolved all 
contested issues, the district director shall refer the claim to the 
Office of Administrative Law Judges for a hearing.
    (b) In any case referred to the Office of Administrative Law Judges 
under this section, the district director shall transmit to that office 
the following documents, which shall be placed in the record at the 
hearing subject to the objection of any party:
    (1) Copies of the claim form or forms;
    (2) Any statement, document, or pleading submitted by a party to the 
claim;
    (3) A copy of the notification to an operator of its possible 
liability for the claim, and any schedule for the submission of 
additional evidence issued pursuant to Sec. 725.410 designating a 
potentially liable operator as the responsible operator;
    (4) All medical evidence submitted to the district director under 
this part by the claimant and the potentially liable operator designated 
as the responsible operator in the proposed decision and order issued 
pursuant to Sec. 725.418, or the fund, as appropriate, subject to the 
limitations of Sec. 725.414 of this part; this evidence shall include 
the results of any medical examination or test conducted pursuant to 
Sec. 725.406, and all evidence relevant to the liability of the 
responsible operator submitted to the district director under this part;
    (5) Any written stipulation of law or fact or stipulation of 
contested and uncontested issues entered into by the parties;
    (6) Any pertinent forms submitted to the district director;
    (7) The statement by the district director of contested and 
uncontested issues in the claim; and
    (8) The district director's initial determination of eligibility or 
other documents necessary to establish the right of the fund to 
reimbursement, if appropriate. Copies of the transmittal notice shall 
also be sent to all parties to the claim by regular mail.
    (c) A party may at any time request and obtain from the district 
director copies of documents transmitted to the Office of Administrative 
Law Judges under paragraph (b) of this section. If the party has 
previously been provided with such documents, additional copies may be 
sent to the party upon the payment of a copying fee to be determined by 
the district director.



Sec. 725.422  Legal assistance.

    The Secretary or his or her designee may, upon request, provide a 
claimant with legal assistance in processing a claim under the Act. Such 
assistance may be made available to a claimant in the discretion of the 
Solicitor of Labor or his or her designee at any time prior

[[Page 1004]]

to or during the time in which the claim is being adjudicated and shall 
be furnished without charge to the claimant. Representation of a 
claimant in adjudicatory proceedings shall not be provided by the 
Department of Labor unless it is determined by the Solicitor of Labor 
that such representation is in the best interests of the black lung 
benefits program. In no event shall representation be provided to a 
claimant in a claim with respect to which the claimant's interests are 
adverse to those of the Secretary of Labor or the fund.



Sec. 725.423  Extensions of time.

    Except for the 30-day time limit set forth in Sec. 725.419, any of 
the time periods set forth in this subpart may be extended, for good 
cause shown, by filing a request for an extension with the district 
director prior to the expiration of the time period.



                           Subpart F_Hearings



Sec. 725.450  Right to a hearing.

    Any party to a claim (see Sec. 725.360) shall have a right to a 
hearing concerning any contested issue of fact or law unresolved by the 
district director. There shall be no right to a hearing until the 
processing and adjudication of the claim by the district director has 
been completed. There shall be no right to a hearing in a claim with 
respect to which a determination of the claim made by the district 
director has become final and effective in accordance with this part.



Sec. 725.451  Request for hearing.

    After the completion of proceedings before the district director, or 
as is otherwise indicated in this part, any party may in writing request 
a hearing on any contested issue of fact or law (see Sec. 725.419). A 
district director may on his or her own initiative refer a case for 
hearing. If a hearing is requested, or if a district director determines 
that a hearing is necessary to the resolution of any issue, the claim 
shall be referred to the Chief Administrative Law Judge for a hearing 
under Sec. 725.421.



Sec. 725.452  Type of hearing; parties.

    (a) A hearing held under this part shall be conducted by an 
administrative law judge designated by the Chief Administrative Law 
Judge. Except as otherwise provided by this part, all hearings shall be 
conducted in accordance with the provisions of 5 U.S.C. 554 et seq.
    (b) All parties to a claim shall be permitted to participate fully 
at a hearing held in connection with such claim.
    (c) A full evidentiary hearing need not be conducted if a party 
moves for summary judgment and the administrative law judge determines 
that there is no genuine issue as to any material fact and that the 
moving party is entitled to the relief requested as a matter of law. All 
parties shall be entitled to respond to the motion for summary judgment 
prior to decision thereon.
    (d) If the administrative law judge believes that an oral hearing is 
not necessary (for any reason other than on motion for summary 
judgment), the judge shall notify the parties by written order and allow 
at least 30 days for the parties to respond. The administrative law 
judge shall hold the oral hearing if any party makes a timely request in 
response to the order.



Sec. 725.453  Notice of hearing.

    All parties shall be given at least 30 days written notice of the 
date and place of a hearing and the issues to be resolved at the 
hearing. Such notice shall be sent to each party or representative by 
certified mail.



Sec. 725.454  Time and place of hearing; transfer of cases.

    (a) The Chief Administrative Law Judge shall assign a definite time 
and place for a formal hearing, and shall, where possible, schedule the 
hearing to be held at a place within 75 miles of the claimant's 
residence unless an alternate location is requested by the claimant.
    (b) If the claimant's residence is not in any State, the Chief 
Administrative Law Judge may, in his or her discretion, schedule the 
hearing in the country of the claimant's residence.
    (c) The Chief Administrative Law Judge or the administrative law 
judge

[[Page 1005]]

assigned the case may in his or her discretion direct that a hearing 
with respect to a claim shall begin at one location and then later be 
reconvened at another date and place.
    (d) The Chief Administrative Law Judge or administrative law judge 
assigned the case may change the time and place for a hearing, either on 
his or her own motion or for good cause shown by a party. The 
administrative law judge may adjourn or postpone the hearing for good 
cause shown, at any time prior to the mailing to the parties of the 
decision in the case. Unless otherwise agreed, at least 10 days notice 
shall be given to the parties of any change in the time or place of 
hearing.
    (e) The Chief Administrative Law Judge may for good cause shown 
transfer a case from one administrative law judge to another.



Sec. 725.455  Hearing procedures; generally.

    (a) General. The purpose of any hearing conducted under this subpart 
shall be to resolve contested issues of fact or law. Except as provided 
in Sec. 725.421(b)(8), any findings or determinations made with respect 
to a claim by a district director shall not be considered by the 
administrative law judge.
    (b) Evidence. The administrative law judge shall at the hearing 
inquire fully into all matters at issue, and shall not be bound by 
common law or statutory rules of evidence, or by technical or formal 
rules of procedure, except as provided by 5 U.S.C. 554 and this subpart. 
The administrative law judge shall receive into evidence the testimony 
of the witnesses and parties, the evidence submitted to the Office of 
Administrative Law Judges by the district director under Sec. 725.421, 
and such additional evidence as may be submitted in accordance with the 
provisions of this subpart. The administrative law judge may entertain 
the objections of any party to the evidence submitted under this 
section.
    (c) Procedure. The conduct of the hearing and the order in which 
allegations and evidence shall be presented shall be within the 
discretion of the administrative law judge and shall afford the parties 
an opportunity for a fair hearing.
    (d) Oral argument and written allegations. The parties, upon 
request, may be allowed a reasonable time for the presentation of oral 
argument at the hearing. Briefs or other written statements or 
allegations as to facts or law may be filed by any party with the 
permission of the administrative law judge. Copies of any brief or other 
written statement shall be filed with the administrative law judge and 
served on all parties by the submitting party.



Sec. 725.456  Introduction of documentary evidence.

    (a) All documents transmitted to the Office of Administrative Law 
Judges under Sec. 725.421 shall be placed into evidence by the 
administrative law judge, subject to objection by any party.
    (b)(1) Documentary evidence pertaining to the liability of a 
potentially liable operator and/or the identification of a responsible 
operator which was not submitted to the district director shall not be 
admitted into the hearing record in the absence of extraordinary 
circumstances. Medical evidence in excess of the limitations contained 
in Sec. 725.414 shall not be admitted into the hearing record in the 
absence of good cause.
    (2) Subject to the limitations in paragraph (b)(1) of this section, 
any other documentary material, including medical reports, which was not 
submitted to the district director, may be received in evidence subject 
to the objection of any party, if such evidence is sent to all other 
parties at least 20 days before a hearing is held in connection with the 
claim.
    (3) Documentary evidence, which is not exchanged with the parties in 
accordance with this paragraph, may be admitted at the hearing with the 
written consent of the parties or on the record at the hearing, or upon 
a showing of good cause why such evidence was not exchanged in 
accordance with this paragraph. If documentary evidence is not exchanged 
in accordance with paragraph (b)(2) of this section and the parties do 
not waive the 20-day requirement or good cause is not shown, the 
administrative law judge shall either exclude the late evidence

[[Page 1006]]

from the record or remand the claim to the district director for 
consideration of such evidence.
    (4) A medical report which is not made available to the parties in 
accordance with paragraph (b)(2) of this section shall not be admitted 
into evidence in any case unless the hearing record is kept open for at 
least 30 days after the hearing to permit the parties to take such 
action as each considers appropriate in response to such evidence. If, 
in the opinion of the administrative law judge, evidence is withheld 
from the parties for the purpose of delaying the adjudication of the 
claim, the administrative law judge may exclude such evidence from the 
hearing record and close the record at the conclusion of the hearing.
    (c) Subject to paragraph (b) of this section, documentary evidence 
which the district director excludes from the record, and the objections 
to such evidence, may be submitted by the parties to the administrative 
law judge, who shall independently determine whether the evidence shall 
be admitted.
    (1) If the evidence is admitted, the administrative law judge may, 
in his or her discretion, remand the claim to the district director for 
further consideration.
    (2) If the evidence is admitted, the administrative law judge shall 
afford the opposing party or parties the opportunity to develop such 
additional documentary evidence as is necessary to protect the right of 
cross-examination.
    (d) All medical records and reports submitted by any party shall be 
considered by the administrative law judge in accordance with the 
quality standards contained in part 718 of this subchapter.
    (e) If the administrative law judge concludes that the complete 
pulmonary evaluation provided pursuant to Sec. 725.406, or any part 
thereof, fails to comply with the applicable quality standards, or fails 
to address the relevant conditions of entitlement (see Sec. 
725.202(d)(2)(i) through (iv)) in a manner which permits resolution of 
the claim, the administrative law judge shall, in his or her discretion, 
remand the claim to the district director with instructions to develop 
only such additional evidence as is required, or allow the parties a 
reasonable time to obtain and submit such evidence, before the 
termination of the hearing.



Sec. 725.457  Witnesses.

    (a) Witnesses at the hearing shall testify under oath or 
affirmation. The administrative law judge and the parties may question 
witnesses with respect to any matters relevant and material to any 
contested issue. Any party who intends to present the testimony of an 
expert witness at a hearing, including any physician, regardless of 
whether the physician has previously prepared a medical report, shall so 
notify all other parties to the claim at least 10 days before the 
hearing. The failure to give notice of the appearance of an expert 
witness in accordance with this paragraph, unless notice is waived by 
all parties, shall preclude the presentation of testimony by such expert 
witness.
    (b) No person shall be required to appear as a witness in any 
proceeding before an administrative law judge at a place more than 100 
miles from his or her place of residence, unless the lawful mileage and 
witness fee for 1 day's attendance is paid in advance of the hearing 
date.
    (c) No person shall be permitted to testify as a witness at the 
hearing, or pursuant to deposition or interrogatory under Sec. 725.458, 
unless that person meets the requirements of Sec. 725.414(c).
    (1) In the case of a witness offering testimony relevant to the 
liability of the responsible operator, in the absence of extraordinary 
circumstances, the witness must have been identified as a potential 
hearing witness while the claim was pending before the district 
director.
    (2) In the case of a physician offering testimony relevant to the 
physical condition of the miner, such physician must have prepared a 
medical report. Alternatively, in the absence of a showing of good cause 
under Sec. 725.456(b)(1) of this part, a physician may offer testimony 
relevant to the physical condition of the miner only to the extent that 
the party offering the physician's testimony has submitted fewer medical 
reports than permitted by Sec. 725.414. Such physician's opinion

[[Page 1007]]

shall be considered a medical report subject to the limitations of Sec. 
725.414.
    (d) A physician whose testimony is permitted under this section may 
testify as to any other medical evidence of record, but shall not be 
permitted to testify as to any medical evidence relevant to the miner's 
condition that is not admissible.



Sec. 725.458  Depositions; interrogatories.

    The testimony of any witness or party may be taken by deposition or 
interrogatory according to the rules of practice of the Federal district 
court for the judicial district in which the case is pending (or of the 
U.S. District Court for the District of Columbia if the case is pending 
in the District or outside the United States), except that at least 30 
days prior notice of any deposition shall be given to all parties unless 
such notice is waived. No post-hearing deposition or interrogatory shall 
be permitted unless authorized by the administrative law judge upon the 
motion of a party to the claim. The testimony of any physician which is 
taken by deposition shall be subject to the limitations on the scope of 
the testimony contained in Sec. 725.457(d).



Sec. 725.459  Witness fees.

    (a) A witness testifying at a hearing before an administrative law 
judge, or whose deposition is taken, shall receive the same fees and 
mileage as witnesses in courts of the United States. If the witness is 
an expert, he or she shall be entitled to an expert witness fee. Except 
as provided in paragraphs (b) and (c) of this section, such fees shall 
be paid by the proponent of the witness.
    (b) If the witness' proponent does not intend to call the witness to 
appear at a hearing or deposition, any other party may subpoena the 
witness for cross-examination. The administrative law judge (ALJ) shall 
authorize the least intrusive and expensive means of cross-examination 
as the ALJ deems appropriate and necessary to the full and true 
disclosure of the facts. If such witness is required to attend the 
hearing, give a deposition or respond to interrogatories for cross-
examination purposes, the proponent of the witness shall pay the 
witness' fee. The fund shall remain liable for any costs associated with 
the cross-examination of the physician who performed the complete 
pulmonary evaluation pursuant to Sec. 725.406.
    (c) If a claimant is determined entitled to benefits, there may be 
assessed as costs against a responsible operator, if any, or the fund, 
fees and mileage for necessary witnesses attending the hearing at the 
request of the claimant. Both the necessity for the witness and the 
reasonableness of the fees of any expert witness shall be approved by 
the administrative law judge. The amounts awarded against a responsible 
operator or the fund as attorney's fees, or costs, fees and mileage for 
witnesses, shall not in any respect affect or diminish benefits payable 
under the Act.

[65 FR 80054, Dec. 20, 2000, as amended at 68 FR 69935, Dec. 15, 2003]



Sec. 725.460  Consolidated hearings.

    When two or more hearings are to be held, and the same or 
substantially similar evidence is relevant and material to the matters 
at issue at each such hearing, the Chief Administrative Law Judge may, 
upon motion by any party or on his or her own motion, order that a 
consolidated hearing be conducted. Where consolidated hearings are held, 
a single record of the proceedings shall be made and the evidence 
introduced in one claim may be considered as introduced in the others, 
and a separate or joint decision shall be made, as appropriate.



Sec. 725.461  Waiver of right to appear and present evidence.

    (a) If all parties waive their right to appear before the 
administrative law judge, it shall not be necessary for the 
administrative law judge to give notice of, or conduct, an oral hearing. 
A waiver of the right to appear shall be made in writing and filed with 
the Chief Administrative Law Judge or the administrative law judge 
assigned to hear the case. Such waiver may be withdrawn by a party for 
good cause shown at any time prior to the mailing of the decision in the 
claim. Even though all of the parties have filed a waiver of the right 
to appear, the administrative law judge may, nevertheless, after giving 
notice of the time and place, conduct a hearing if he or she believes 
that the

[[Page 1008]]

personal appearance and testimony of the party or parties would assist 
in ascertaining the facts in issue in the claim. Where a waiver has been 
filed by all parties, and they do not appear before the administrative 
law judge personally or by representative, the administrative law judge 
shall make a record of the relevant documentary evidence submitted in 
accordance with this part and any further written stipulations of the 
parties. Such documents and stipulations shall be considered the 
evidence of record in the case and the decision shall be based upon such 
evidence.
    (b) Except as provided in Sec. 725.456(a), the unexcused failure of 
any party to attend a hearing shall constitute a waiver of such party's 
right to present evidence at the hearing, and may result in a dismissal 
of the claim (see Sec. 725.465).



Sec. 725.462  Withdrawal of controversion of issues set for formal 
hearing; effect.

    A party may, on the record, withdraw his or her controversion of any 
or all issues set for hearing. If a party withdraws his or her 
controversion of all issues, the administrative law judge shall remand 
the case to the district director for the issuance of an appropriate 
order.



Sec. 725.463  Issues to be resolved at hearing; new issues.

    (a) Except as otherwise provided in this section, the hearing shall 
be confined to those contested issues which have been identified by the 
district director (see Sec. 725.421) or any other issue raised in 
writing before the district director.
    (b) An administrative law judge may consider a new issue only if 
such issue was not reasonably ascertainable by the parties at the time 
the claim was before the district director. Such new issue may be raised 
upon application of any party, or upon an administrative law judge's own 
motion, with notice to all parties, at any time after a claim has been 
transmitted by the district director to the Office of Administrative Law 
Judges and prior to decision by an administrative law judge. If a new 
issue is raised, the administrative law judge may, in his or her 
discretion, either remand the case to the district director with 
instructions for further proceedings, hear and resolve the new issue, or 
refuse to consider such new issue.
    (c) If a new issue is to be considered by the administrative law 
judge, a party may, upon request, be granted an appropriate continuance.



Sec. 725.464  Record of hearing.

    All hearings shall be open to the public and shall be mechanically 
or stenographically reported. All evidence upon which the administrative 
law judge relies for decision shall be contained in the transcript of 
testimony, either directly or by appropriate reference. All medical 
reports, exhibits, and any other pertinent document or record, either in 
whole or in material part, introduced as evidence, shall be marked for 
identification and incorporated into the record.



Sec. 725.465  Dismissals for cause.

    (a) The administrative law judge may, at the request of any party, 
or on his or her own motion, dismiss a claim:
    (1) Upon the failure of the claimant or his or her representative to 
attend a hearing without good cause;
    (2) Upon the failure of the claimant to comply with a lawful order 
of the administrative law judge; or
    (3) Where there has been a prior final adjudication of the claim or 
defense to the claim under the provisions of this subchapter and no new 
evidence is submitted (except as provided in part 727 of this 
subchapter; see Sec. 725.4(d)).
    (b) A party who is not a proper party to the claim (see Sec. 
725.360) shall be dismissed by the administrative law judge. The 
administrative law judge shall not dismiss the operator designated as 
the responsible operator by the district director, except upon the 
motion or written agreement of the Director.
    (c) In any case where a dismissal of a claim, defense, or party is 
sought, the administrative law judge shall issue an order to show cause 
why the dismissal should not be granted and afford all parties a 
reasonable time to respond to such order. After the time for response 
has expired, the administrative law

[[Page 1009]]

judge shall take such action as is appropriate to rule on the dismissal, 
which may include an order dismissing the claim, defense or party.
    (d) No claim shall be dismissed in a case with respect to which 
payments prior to final adjudication have been made to the claimant in 
accordance with Sec. 725.522, except upon the motion or written 
agreement of the Director.



Sec. 725.466  Order of dismissal.

    (a) An order dismissing a claim shall be served on the parties in 
accordance with Sec. 725.478. The dismissal of a claim shall have the 
same effect as a decision and order disposing of the claim on its 
merits, except as provided in paragraph (b) of this section. Such order 
shall advise the parties of their right to request review by the 
Benefits Review Board.
    (b) Where the Chief Administrative Law Judge or the presiding 
administrative law judge issues a decision and order dismissing the 
claim after a show cause proceeding, the district director shall 
terminate any payments being made to the claimant under Sec. 725.522, 
and the order of dismissal shall, if appropriate, order the claimant to 
reimburse the fund for all benefits paid to the claimant.



Sec. 725.475  Termination of hearings.

    Hearings are officially terminated when all the evidence has been 
received, witnesses heard, pleadings and briefs submitted to the 
administrative law judge, and the transcript of the proceedings has been 
printed and delivered to the administrative law judge.



Sec. 725.476  Issuance of decision and order.

    Within 20 days after the official termination of the hearing (see 
Sec. 725.475), the administrative law judge shall issue a decision and 
order with respect to the claim making an award to the claimant, 
rejecting the claim, or taking such other action as is appropriate.



Sec. 725.477  Form and contents of decision and order.

    (a) Orders adjudicating claims for benefits shall be designated by 
the term ``decision and order'' or ``supplemental decision and order'' 
as appropriate, followed by a descriptive phrase designating the 
particular type of order, such as ``award of benefits,'' ``rejection of 
claim,'' ``suspension of benefits,'' ``modification of award.''
    (b) A decision and order shall contain a statement of the basis of 
the order, the names of the parties, findings of fact, conclusions of 
law, and an award, rejection or other appropriate paragraph containing 
the action of the administrative law judge, his or her signature and the 
date of issuance. A decision and order shall be based upon the record 
made before the administrative law judge.



Sec. 725.478  Filing and service of decision and order.

    On the date of issuance of a decision and order under Sec. 725.477, 
the administrative law judge shall serve the decision and order on all 
parties to the claim by certified mail. On the same date, the original 
record of the claim shall be sent to the DCMWC in Washington, D.C. Upon 
receipt by the DCMWC, the decision and order shall be considered to be 
filed in the office of the district director, and shall become effective 
on that date.



Sec. 725.479  Finality of decisions and orders.

    (a) A decision and order shall become effective when filed in the 
office of the district director (see Sec. 725.478), and unless 
proceedings for suspension or setting aside of such order are instituted 
within 30 days of such filing, the order shall become final at the 
expiration of the 30th day after such filing (see Sec. 725.481).
    (b) Any party may, within 30 days after the filing of a decision and 
order under Sec. 725.478, request a reconsideration of such decision 
and order by the administrative law judge. The procedures to be followed 
in the reconsideration of a decision and order shall be determined by 
the administrative law judge.
    (c) The time for appeal to the Benefits Review Board shall be 
suspended during the consideration of a request for reconsideration. 
After the administrative law judge has issued and filed a denial of the 
request for reconsideration, or a revised decision and order in

[[Page 1010]]

accordance with this part, any dissatisfied party shall have 30 days 
within which to institute proceedings to set aside the decision and 
order on reconsideration.
    (d) Regardless of any defect in service, actual receipt of the 
decision is sufficient to commence the 30-day period for requesting 
reconsideration or appealing the decision.



Sec. 725.480  Modification of decisions and orders.

    A party who is dissatisfied with a decision and order which has 
become final in accordance with Sec. 725.479 may request a modification 
of the decision and order if the conditions set forth in Sec. 725.310 
are met.



Sec. 725.481  Right to appeal to the Benefits Review Board.

    Any party dissatisfied with a decision and order issued by an 
administrative law judge may, before the decision and order becomes 
final (see Sec. 725.479), appeal the decision and order to the Benefits 
Review Board. A notice of appeal shall be filed with the Board. 
Proceedings before the Board shall be conducted in accordance with part 
802 of this title.



Sec. 725.482  Judicial review.

    (a) Any person adversely affected or aggrieved by a final order of 
the Benefits Review Board may obtain a review of that order in the U.S. 
court of appeals for the circuit in which the injury occurred by filing 
in such court within 60 days following the issuance of such Board order 
a written petition praying that the order be modified or set aside. The 
payment of the amounts required by an award shall not be stayed pending 
final decision in any such proceeding unless ordered by the court. No 
stay shall be issued unless the court finds that irreparable injury 
would otherwise ensue to an operator or carrier.
    (b) The Director, Office of Workers' Compensation Program, as 
designee of the Secretary of Labor responsible for the administration 
and enforcement of the Act, shall be considered the proper party to 
appear and present argument on behalf of the Secretary of Labor in all 
review proceedings conducted pursuant to this part and the Act, either 
as petitioner or respondent.



Sec. 725.483  Costs in proceedings brought without reasonable grounds.

    If a United States court having jurisdiction of proceedings 
regarding any claim or final decision and order, determines that the 
proceedings have been instituted or continued before such court without 
reasonable ground, the costs of such proceedings shall be assessed 
against the party who has so instituted or continued such proceedings.



                Subpart G_Responsible Coal Mine Operators



Sec. 725.490  Statutory provisions and scope.

    (a) One of the major purposes of the black lung benefits amendments 
of 1977 was to provide a more effective means of transferring the 
responsibility for the payment of benefits from the Federal government 
to the coal industry with respect to claims filed under this part. In 
furtherance of this goal, a Black Lung Disability Trust Fund financed by 
the coal industry was established by the Black Lung Benefits Revenue Act 
of 1977. The primary purpose of the Fund is to pay benefits with respect 
to all claims in which the last coal mine employment of the miner on 
whose account the claim was filed occurred before January 1, 1970. With 
respect to most claims in which the miner's last coal mine employment 
occurred after January 1, 1970, individual coal mine operators will be 
liable for the payment of benefits. The 1981 amendments to the Act 
relieved individual coal mine operators from the liability for payment 
of certain special claims involving coal mine employment on or after 
January 1, 1970, where the claim was previously denied and subsequently 
approved under section 435 of the Act. See Sec. 725.496 for a detailed 
description of these special claims. Where no such operator exists or 
the operator determined to be liable is in default in any case, the fund 
shall pay the benefits due and seek reimbursement as is appropriate. See 
also Sec. 725.420 for the fund's role in the payment of interim 
benefits in certain

[[Page 1011]]

contested cases. In addition, the Black Lung Benefits Reform Act of 1977 
amended certain provisions affecting the scope of coverage under the Act 
and describing the effects of particular corporate transactions on the 
liability of operators.
    (b) The provisions of this subpart define the term ``operator'' and 
prescribe the manner in which the identity of an operator which may be 
liable for the payment of benefits--referred to herein as a 
``responsible operator''--will be determined.



Sec. 725.491  Operator defined.

    (a) For purposes of this part, the term ``operator'' shall include:
    (1) Any owner, lessee, or other person who operates, controls, or 
supervises a coal mine, or any independent contractor performing 
services or construction at such mine; or
    (2) Any other person who:
    (i) Employs an individual in the transportation of coal or in coal 
mine construction in or around a coal mine, to the extent such 
individual was exposed to coal mine dust as a result of such employment 
(see Sec. 725.202);
    (ii) In accordance with the provisions of Sec. 725.492, may be 
considered a successor operator; or
    (iii) Paid wages or a salary, or provided other benefits, to an 
individual in exchange for work as a miner (see Sec. 725.202).
    (b) The terms ``owner,'' ``lessee,'' and ``person'' shall include 
any individual, partnership, association, corporation, firm, subsidiary 
of a corporation, or other organization, as appropriate, except that an 
officer of a corporation shall not be considered an ``operator'' for 
purposes of this part. Following the issuance of an order awarding 
benefits against a corporation that has not secured its liability for 
benefits in accordance with section 423 of the Act and Sec. 726.4, such 
order may be enforced against the president, secretary, or treasurer of 
the corporation in accordance with subpart I of this part.
    (c) The term ``independent contractor'' shall include any person who 
contracts to perform services. Such contractor's status as an operator 
shall not be contingent upon the amount or percentage of its work or 
business related to activities in or around a mine, nor upon the number 
or percentage of its employees engaged in such activities.
    (d) For the purposes of determining whether a person is or was an 
operator that may be found liable for the payment of benefits under this 
part, there shall be a rebuttable presumption that during the course of 
an individual's employment with such employer, such individual was 
regularly and continuously exposed to coal mine dust during the course 
of employment. The presumption may be rebutted by a showing that the 
employee was not exposed to coal mine dust for significant periods 
during such employment.
    (e) The operation, control, or supervision referred to in paragraph 
(a)(1) of this section may be exercised directly or indirectly. Thus, 
for example, where a coal mine is leased, and the lease empowers the 
lessor to make decisions with respect to the terms and conditions under 
which coal is to be extracted or prepared, such as, but not limited to, 
the manner of extraction or preparation or the amount of coal to be 
produced, the lessor may be considered an operator. Similarly, any 
parent entity or other controlling business entity may be considered an 
operator for purposes of this part, regardless of the nature of its 
business activities.
    (f) Neither the United States, nor any State, nor any 
instrumentality or agency of the United States or any State, shall be 
considered an operator.



Sec. 725.492  Successor operator defined.

    (a) Any person who, on or after January 1, 1970, acquired a mine or 
mines, or substantially all of the assets thereof, from a prior 
operator, or acquired the coal mining business of such prior operator, 
or substantially all of the assets thereof, shall be considered a 
``successor operator'' with respect to any miners previously employed by 
such prior operator.
    (b) The following transactions shall also be deemed to create 
successor operator liability:
    (1) If an operator ceases to exist by reason of a reorganization 
which involves a change in identity, form, or place of business or 
organization, however effected;

[[Page 1012]]

    (2) If an operator ceases to exist by reason of a liquidation into a 
parent or successor corporation; or
    (3) If an operator ceases to exist by reason of a sale of 
substantially all its assets, or as a result of merger, consolidation, 
or division.
    (c) In any case in which a transaction specified in paragraph (b), 
or substantially similar to a transaction specified in paragraph (b), 
took place, the resulting entity shall be considered a ``successor 
operator'' with respect to any miners previously employed by such prior 
operator.
    (d) This section shall not be construed to relieve a prior operator 
of any liability if such prior operator meets the conditions set forth 
in Sec. 725.494. If the prior operator does not meet the conditions set 
forth in Sec. 725.494, the following provisions shall apply:
    (1) In any case in which a prior operator transferred a mine or 
mines, or substantially all of the assets thereof, to a successor 
operator, or sold its coal mining business or substantially all of the 
assets thereof, to a successor operator, and then ceased to exist within 
the terms of paragraph (b), the successor operator as identified in 
paragraph (a) shall be primarily liable for the payment of benefits to 
any miners previously employed by such prior operator.
    (2) In any case in which a prior operator transferred mines, or 
substantially all of the assets thereof, to more than one successor 
operator, the successor operator that most recently acquired a mine or 
mines or assets from the prior operator shall be primarily liable for 
the payment of benefits to any miners previously employed by such prior 
operator.
    (3) In any case in which a mine or mines, or substantially all the 
assets thereof, have been transferred more than once, the successor 
operator that most recently acquired such mine or mines or assets shall 
be primarily liable for the payment of benefits to any miners previously 
employed by the original prior operator. If the most recent successor 
operator does not meet the criteria for a potentially liable operator 
set forth in Sec. 725.494, the next most recent successor operator 
shall be liable.
    (e) An ``acquisition,'' for purposes of this section, shall include 
any transaction by which title to the mine or mines, or substantially 
all of the assets thereof, or the right to extract or prepare coal at 
such mine or mines, becomes vested in a person other than the prior 
operator.



Sec. 725.493  Employment relationship defined.

    (a)(1) In determining the identity of a responsible operator under 
this part, the terms ``employ'' and ``employment'' shall be construed as 
broadly as possible, and shall include any relationship under which an 
operator retains the right to direct, control, or supervise the work 
performed by a miner, or any other relationship under which an operator 
derives a benefit from the work performed by a miner. Any individuals 
who participate with one or more persons in the mining of coal, such as 
owners, proprietors, partners, and joint venturers, whether they are 
compensated by wages, salaries, piece rates, shares, profits, or by any 
other means, shall be deemed employees. It is the specific intention of 
this paragraph to disregard any financial arrangement or business entity 
devised by the actual owners or operators of a coal mine or coal mine-
related enterprise to avoid the payment of benefits to miners who, based 
upon the economic reality of their relationship to this enterprise, are, 
in fact, employees of the enterprise.
    (2) The payment of wages or salary shall be prima facie evidence of 
the right to direct, control, or supervise an individual's work. The 
Department intends that where the operator who paid a miner's wages or 
salary meets the criteria for a potentially liable operator set forth in 
Sec. 725.494, that operator shall be primarily liable for the payment 
of any benefits due the miner as a result of such employment. The 
absence of such payment, however, will not negate the existence of an 
employment relationship. Thus, the Department also intends that where 
the person who paid a miner's wages may not be considered a potentially 
liable operator, any other operator who retained

[[Page 1013]]

the right to direct, control or supervise the work performed by the 
miner, or who benefitted from such work, may be considered a potentially 
liable operator.
    (b) This paragraph contains examples of relationships that shall be 
considered employment relationships for purposes of this part. The list 
is not intended to be exclusive.
    (1) In any case in which an operator may be considered a successor 
operator, as determined in accordance with Sec. 725.492, any employment 
with a prior operator shall also be deemed to be employment with the 
successor operator. In a case in which the miner was not independently 
employed by the successor operator, the prior operator shall remain 
primarily liable for the payment of any benefits based on the miner's 
employment with the prior operator. In a case in which the miner was 
independently employed by the successor operator after the transaction 
giving rise to successor operator liability, the successor operator 
shall be primarily liable for the payment of any benefits.
    (2) In any case in which the operator which directed, controlled or 
supervised the miner is no longer in business and such operator was a 
subsidiary of a parent company, a member of a joint venture, a partner 
in a partnership, or was substantially owned or controlled by another 
business entity, such parent entity or other member of a joint venture 
or partner or controlling business entity may be considered the employer 
of any employees of such operator.
    (3) In any claim in which the operator which directed, controlled or 
supervised the miner is a lessee, the lessee shall be considered 
primarily liable for the claim. The liability of the lessor may be 
established only after it has been determined that the lessee is unable 
to provide for the payment of benefits to a successful claimant. In any 
case involving the liability of a lessor for a claim arising out of 
employment with a lessee, any determination of lessor liability shall be 
made on the basis of the facts present in the case in accordance with 
the following considerations:
    (i) Where a coal mine is leased, and the lease empowers the lessor 
to make decisions with respect to the terms and conditions under which 
coal is to be extracted or prepared, such as, but not limited to, the 
manner of extraction or preparation or the amount of coal to be 
produced, the lessor shall be considered the employer of any employees 
of the lessee.
    (ii) Where a coal mine is leased to a self-employed operator, the 
lessor shall be considered the employer of such self-employed operator 
and its employees if the lease or agreement is executed or renewed after 
August 18, 1978 and such lease or agreement does not require the lessee 
to guarantee the payment of benefits which may be required under this 
part and part 726 of this subchapter.
    (iii) Where a lessor previously operated a coal mine, it may be 
considered an operator with respect to employees of any lessee of such 
mine, particularly where the leasing arrangement was executed or renewed 
after August 18, 1978 and does not require the lessee to secure benefits 
provided by the Act.
    (4) A self-employed operator, depending upon the facts of the case, 
may be considered an employee of any other operator, person, or business 
entity which substantially controls, supervises, or is financially 
responsible for the activities of the self-employed operator.



Sec. 725.494  Potentially liable operators.

    An operator may be considered a ``potentially liable operator'' with 
respect to a claim for benefits under this part if each of the following 
conditions is met:
    (a) The miner's disability or death arose at least in part out of 
employment in or around a mine or other facility during a period when 
the mine or facility was operated by such operator, or by a person with 
respect to which the operator may be considered a successor operator. 
For purposes of this section, there shall be a rebuttable presumption 
that the miner's disability or death arose in whole or in part out of 
his or her employment with such operator. Unless this presumption is 
rebutted, the responsible operator shall be liable to pay benefits to 
the claimant on account of the disability or death of the miner in 
accordance with this part.

[[Page 1014]]

A miner's pneumoconiosis, or disability or death therefrom, shall be 
considered to have arisen in whole or in part out of work in or around a 
mine if such work caused, contributed to or aggravated the progression 
or advancement of a miner's loss of ability to perform his or her 
regular coal mine employment or comparable employment.
    (b) The operator, or any person with respect to which the operator 
may be considered a successor operator, was an operator for any period 
after June 30, 1973.
    (c) The miner was employed by the operator, or any person with 
respect to which the operator may be considered a successor operator, 
for a cumulative period of not less than one year (Sec. 
725.101(a)(32)).
    (d) The miner's employment with the operator, or any person with 
respect to which the operator may be considered a successor operator, 
included at least one working day (Sec. 725.101(a)(32)) after December 
31, 1969.
    (e) The operator is capable of assuming its liability for the 
payment of continuing benefits under this part. An operator will be 
deemed capable of assuming its liability for a claim if one of the 
following three conditions is met:
    (1) The operator obtained a policy or contract of insurance under 
section 423 of the Act and part 726 of this subchapter that covers the 
claim, except that such policy shall not be considered sufficient to 
establish the operator's capability of assuming liability if the 
insurance company has been declared insolvent and its obligations for 
the claim are not otherwise guaranteed;
    (2) The operator qualified as a self-insurer under section 423 of 
the Act and part 726 of this subchapter during the period in which the 
miner was last employed by the operator, provided that the operator 
still qualifies as a self-insurer or the security given by the operator 
pursuant to Sec. 726.104(b) is sufficient to secure the payment of 
benefits in the event the claim is awarded; or
    (3) The operator possesses sufficient assets to secure the payment 
of benefits in the event the claim is awarded in accordance with Sec. 
725.606.



Sec. 725.495  Criteria for determining a responsible operator.

    (a)(1) The operator responsible for the payment of benefits in a 
claim adjudicated under this part (the ``responsible operator'') shall 
be the potentially liable operator, as determined in accordance with 
Sec. 725.494, that most recently employed the miner.
    (2) If more than one potentially liable operator may be deemed to 
have employed the miner most recently, then the liability for any 
benefits payable as a result of such employment shall be assigned as 
follows:
    (i) First, to the potentially liable operator that directed, 
controlled, or supervised the miner;
    (ii) Second, to any potentially liable operator that may be 
considered a successor operator with respect to miners employed by the 
operator identified in paragraph (a)(2)(i) of this section; and
    (iii) Third, to any other potentially liable operator which may be 
deemed to have been the miner's most recent employer pursuant to Sec. 
725.493.
    (3) If the operator that most recently employed the miner may not be 
considered a potentially liable operator, as determined in accordance 
with Sec. 725.494, the responsible operator shall be the potentially 
liable operator that next most recently employed the miner. Any 
potentially liable operator that employed the miner for at least one day 
after December 31, 1969 may be deemed the responsible operator if no 
more recent employer may be considered a potentially liable operator.
    (4) If the miner's most recent employment by an operator ended while 
the operator was authorized to self-insure its liability under part 726 
of this title, and that operator no longer possesses sufficient assets 
to secure the payment of benefits, the provisions of paragraph (a)(3) 
shall be inapplicable with respect to any operator that employed the 
miner only before he was employed by such self-insured operator. If no 
operator that employed the miner after his employment with the self-
insured operator meets the conditions of Sec. 725.494, the claim of the 
miner or his survivor shall be the responsibility of the Black Lung 
Disability Trust Fund.

[[Page 1015]]

    (b) Except as provided in this section and Sec. 725.408(a)(3), with 
respect to the adjudication of the identity of a responsible operator, 
the Director shall bear the burden of proving that the responsible 
operator initially found liable for the payment of benefits pursuant to 
Sec. 725.410 (the ``designated responsible operator'') is a potentially 
liable operator. It shall be presumed, in the absence of evidence to the 
contrary, that the designated responsible operator is capable of 
assuming liability for the payment of benefits in accordance with Sec. 
725.494(e).
    (c) The designated responsible operator shall bear the burden of 
proving either:
    (1) That it does not possess sufficient assets to secure the payment 
of benefits in accordance with Sec. 725.606; or
    (2) That it is not the potentially liable operator that most 
recently employed the miner. Such proof must include evidence that the 
miner was employed as a miner after he or she stopped working for the 
designated responsible operator and that the person by whom he or she 
was employed is a potentially liable operator within the meaning of 
Sec. 725.494. In order to establish that a more recent employer is a 
potentially liable operator, the designated responsible operator must 
demonstrate that the more recent employer possesses sufficient assets to 
secure the payment of benefits in accordance with Sec. 725.606. The 
designated responsible operator may satisfy its burden by presenting 
evidence that the owner, if the more recent employer is a sole 
proprietorship; the partners, if the more recent employer is a 
partnership; or the president, secretary, and treasurer, if the more 
recent employer is a corporation that failed to secure the payment of 
benefits pursuant to part 726 of this subchapter, possess assets 
sufficient to secure the payment of benefits, provided such assets may 
be reached in a proceeding brought under subpart I of this part.
    (d) In any case referred to the Office of Administrative Law Judges 
pursuant to Sec. 725.421 in which the operator finally designated as 
responsible pursuant to Sec. 725.418(d) is not the operator that most 
recently employed the miner, the record shall contain a statement from 
the district director explaining the reasons for such designation. If 
the reasons include the most recent employer's failure to meet the 
conditions of Sec. 725.494(e), the record shall also contain a 
statement that the Office has searched the files it maintains pursuant 
to part 726, and that the Office has no record of insurance coverage for 
that employer, or of authorization to self-insure, that meets the 
conditions of Sec. 725.494(e)(1) or (e)(2). Such a statement shall be 
prima facie evidence that the most recent employer is not financially 
capable of assuming its liability for a claim. In the absence of such a 
statement, it shall be presumed that the most recent employer is 
financially capable of assuming its liability for a claim.



Sec. 725.496  Special claims transferred to the fund.

    (a) The 1981 amendments to the Act amended section 422 of the Act 
and transferred liability for payment of certain special claims from 
operators and carriers to the fund. These provisions apply to claims 
which were denied before March 1, 1978, and which have been or will be 
approved in accordance with section 435 of the Act.
    (b) Section 402(i) of the Act defines three classes of denied claims 
subject to the transfer provisions:
    (1) Claims filed with and denied by the Social Security 
Administration before March 1, 1978;
    (2) Claims filed with the Department of Labor in which the claimant 
was notified by the Department of an administrative or informal denial 
before March 1, 1977, and in which the claimant did not within one year 
of such notification either:
    (i) Request a hearing; or
    (ii) Present additional evidence; or
    (iii) Indicate an intention to present additional evidence; or
    (iv) Request a modification or reconsideration of the denial on the 
ground of a change in conditions or because of a mistake in a 
determination of fact;
    (3) Claims filed with the Department of Labor and denied under the 
law in effect prior to the enactment of the Black Lung Benefits Reform 
Act of

[[Page 1016]]

1977, that is, before March 1, 1978, following a formal hearing before 
an administrative law judge or administrative review before the Benefits 
Review Board or review before a United States Court of Appeals.
    (c) Where more than one claim was filed with the Social Security 
Administration and/or the Department of Labor prior to March 1, 1978, by 
or on behalf of a miner or a surviving dependent of a miner, unless such 
claims were required to be merged by the agency's regulations, the 
procedural history of each such claim must be considered separately to 
determine whether the claim is subject to the transfer of liability 
provisions.
    (d) For a claim filed with and denied by the Social Security 
Administration prior to March 1, 1978, to come within the transfer 
provisions, such claim must have been or must be approved under the 
provisions of section 435 of the Act. No claim filed with and denied by 
the Social Security Administration is subject to the transfer of 
liability provisions unless a request was made by or on behalf of the 
claimant for review of such denied claim under section 435. Such review 
must have been requested by the filing of a valid election card or other 
equivalent document with the Social Security Administration in 
accordance with section 435(a) and its implementing regulations at 20 
CFR 410.700 through 410.707.
    (e) Where a claim filed with the Department of Labor prior to March 
1, 1977, was subjected to repeated administrative or informal denials, 
the last such denial issued during the pendency of the claim determines 
whether the claim is subject to the transfer of liability provisions.
    (f) Where a miner's claim comes within the transfer of liability 
provisions of the 1981 amendments the fund is also liable for the 
payment of any benefits to which the miner's dependent survivors are 
entitled after the miner's death. However, if the survivor's entitlement 
was established on a separate claim not subject to the transfer of 
liability provisions prior to approval of the miner's claim under 
section 435, the party responsible for the payment of such survivors' 
benefits shall not be relieved of that responsibility because the 
miner's claim was ultimately approved and found subject to the transfer 
of liability provisions.



Sec. 725.497  Procedures in special claims transferred to the fund.

    (a) General. It is the purpose of this section to define procedures 
to expedite the handling and disposition of claims affected by the 
benefit liability transfer provisions of Section 205 of the Black Lung 
Benefits Amendments of 1981.
    (b) Action by the Department. The OWCP shall, in accordance with the 
criteria contained in Sec. 725.496, review each claim which is or may 
be affected by the provisions of Section 205 of the Black Lung Benefits 
Amendments of 1981. Any party to a claim, adjudication officer, or 
adjudicative body may request that such a review be conducted and that 
the record be supplemented with any additional documentation necessary 
for an informed consideration of the transferability of the claim. Where 
the issue of the transferability of the claim can not be resolved by 
agreement of the parties and the evidence of record is not sufficient 
for a resolution of the issue, the hearing record may be reopened or the 
case remanded for the development of the additional evidence concerning 
the procedural history of the claim necessary to such resolution. Such 
determinations shall be made on an expedited basis.
    (c) Dismissal of operators. If it is determined that a coal mine 
operator or insurance carrier which previously participated in the 
consideration or adjudication of any claim, may no longer be found 
liable for the payment of benefits to the claimant by reason of section 
205 of the Black Lung Benefits Amendments of 1981, such operator or 
carrier shall be promptly dismissed as a party to the claim. The 
dismissal of an operator or carrier shall be concluded at the earliest 
possible time and in no event shall an operator or carrier participate 
as a necessary party in any claim for which only the fund may be liable.
    (d) Procedure following dismissal of an operator. After it has been 
determined

[[Page 1017]]

that an operator or carrier must be dismissed as a party in any claim in 
accordance with this section, the Director shall take such action as is 
authorized by the Act to bring about the proper and expeditious 
resolution of the claim in light of all relevant medical and other 
evidence. Action to be taken in this regard by the Director may include, 
but is not limited to, the assignment of the claim to the Black Lung 
Disability Trust Fund for the payment of benefits, the reimbursement of 
benefits previously paid by an operator or carrier if appropriate, the 
defense of the claim on behalf of the fund, or proceedings authorized by 
Sec. 725.310.
    (e) Any claimant whose claim has been subsequently denied in a 
modification proceeding will be entitled to expedited review of the 
modification decision. Where a formal hearing was previously held, the 
claimant may waive his right to a further hearing and ask that a 
decision be made on the record of the prior hearing, as supplemented by 
any additional documentary evidence which the parties wish to introduce 
and briefs of the parties, if desired. In any case in which the claimant 
waives his right to a second hearing, a decision and order must be 
issued within 30 days of the date upon which the parties agree the 
record has been completed.



                      Subpart H_Payment of Benefits

                           General Provisions



Sec. 725.501  Payment provisions generally.

    The provisions of this subpart govern the payment of benefits to 
claimants whose claims are approved for payment under section 415 and 
part C of title IV of the Act or approved after review under section 435 
of the Act and part 727 of this subchapter (see Sec. 725.4(d)).



Sec. 725.502  When benefit payments are due; manner of payment.

    (a)(1) Except with respect to benefits paid by the fund pursuant to 
an initial determination issued in accordance with Sec. 725.418 (see 
Sec. 725.522), benefits under the Act shall be paid when they become 
due. Benefits shall be considered due after the issuance of an effective 
order requiring the payment of benefits by a district director, 
administrative law judge, Benefits Review Board, or court, 
notwithstanding the pendency of a motion for reconsideration before an 
administrative law judge or an appeal to the Board or court, except that 
benefits shall not be considered due where the payment of such benefits 
has been stayed by the Benefits Review Board or appropriate court. An 
effective order shall remain in effect unless it is vacated by an 
administrative law judge on reconsideration, or, upon review under 
section 21 of the LHWCA, by the Benefits Review Board or an appropriate 
court, or is superseded by an effective order issued pursuant to Sec. 
725.310.
    (2) A proposed order issued by a district director pursuant to Sec. 
725.418 becomes effective at the expiration of the thirtieth day 
thereafter if no party timely requests revision of the proposed decision 
and order or a hearing (see Sec. 725.419). An order issued by an 
administrative law judge becomes effective when it is filed in the 
office of the district director (see Sec. 725.479). An order issued by 
the Benefits Review Board shall become effective when it is issued. An 
order issued by a court shall become effective in accordance with the 
rules of the court.
    (b)(1) While an effective order requiring the payment of benefits 
remains in effect, monthly benefits, at the rates set forth in Sec. 
725.520, shall be due on the fifteenth day of the month following the 
month for which the benefits are payable. For example, benefits payable 
for the month of January shall be due on the fifteenth day of February.
    (2) Within 30 days after the issuance of an effective order 
requiring the payment of benefits, the district director shall compute 
the amount of benefits payable for periods prior to the effective date 
of the order, in addition to any interest payable for such periods (see 
Sec. 725.608), and shall so notify the parties. Any computation made by 
the district director under this paragraph shall strictly observe the 
terms of the order. Benefits and interest payable for such periods shall 
be due on the thirtieth day following issuance of the district 
director's computation. A copy of

[[Page 1018]]

the current table of applicable interest rates shall be attached to the 
computation.
    (c) Benefits are payable for monthly periods and shall be paid 
directly to an eligible claimant or his or her representative payee (see 
Sec. 725.510) beginning with the month during which eligibility begins. 
Benefit payments shall terminate with the month before the month during 
which eligibility terminates. If a claimant dies in the first month 
during which all requirements for eligibility are met, benefits shall be 
paid for that month.



Sec. 725.503  Date from which benefits are payable.

    (a) In accordance with the provisions of section 6(a) of the 
Longshore Act as incorporated by section 422(a) of the Act, and except 
as provided in Sec. 725.504, the provisions of this section shall be 
applicable in determining the date from which benefits are payable to an 
eligible claimant for any claim filed after March 31, 1980. Except as 
provided in paragraph (d) of this section, the date from which benefits 
are payable for any claim approved under part 727 shall be determined in 
accordance with Sec. 727.302 (see Sec. 725.4(d)).
    (b) Miner's claim. Benefits are payable to a miner who is entitled 
beginning with the month of onset of total disability due to 
pneumoconiosis arising out of coal mine employment. Where the evidence 
does not establish the month of onset, benefits shall be payable to such 
miner beginning with the month during which the claim was filed. In the 
case of a miner who filed a claim before January 1, 1982, benefits shall 
be payable to the miner's eligible survivor (if any) beginning with the 
month in which the miner died.
    (c) Survivor's claim. Benefits are payable to a survivor who is 
entitled beginning with the month of the miner's death, or January 1, 
1974, whichever is later.
    (d) If a claim is awarded pursuant to section 22 of the Longshore 
Act and Sec. 725.310, then the date from which benefits are payable 
shall be determined as follows:
    (1) Mistake in fact. The provisions of paragraphs (b) or (c) of this 
section, as applicable, shall govern the determination of the date from 
which benefits are payable.
    (2) Change in conditions. Benefits are payable to a miner beginning 
with the month of onset of total disability due to pneumoconiosis 
arising out of coal mine employment, provided that no benefits shall be 
payable for any month prior to the effective date of the most recent 
denial of the claim by a district director or administrative law judge. 
Where the evidence does not establish the month of onset, benefits shall 
be payable to such miner from the month in which the claimant requested 
modification.
    (e) In the case of a claim filed between July 1, 1973, and December 
31, 1973, benefits shall be payable as provided by this section, except 
to the extent prohibited by Sec. 727.303 (see Sec. 725.4(d)).
    (f) No benefits shall be payable with respect to a claim filed after 
December 31, 1973 (a part C claim), for any period of eligibility 
occurring before January 1, 1974.
    (g) Each decision and order awarding benefits shall indicate the 
month from which benefits are payable to the eligible claimant.



Sec. 725.504  Payments to a claimant employed as a miner.

    (a) In the case of a claimant who is employed as a miner (see Sec. 
725.202) at the time of a final determination of such miner's 
eligibility for benefits, no benefits shall be payable unless:
    (1) The miner's eligibility is established under section 411(c)(3) 
of the Act; or
    (2) the miner terminates his or her coal mine employment within 1 
year from the date of the final determination of the claim.
    (b) If the eligibility of a working miner is established under 
section 411(c)(3) of the Act, benefits shall be payable as is otherwise 
provided in this part. If eligibility cannot be established under 
section 411(c)(3), and the miner continues to be employed as a miner in 
any capacity for a period of less than 1 year after a final 
determination of the claim, benefits shall be payable beginning with the 
month during which the miner ends his or her coal mine employment. If 
the miner's

[[Page 1019]]

employment continues for more than 1 year after a final determination of 
eligibility, such determination shall be considered a denial of benefits 
on the basis of the miner's continued employment, and the miner may seek 
benefits only as provided in Sec. 725.310, if applicable, or by filing 
a new claim under this part. The provisions of Subparts E and F of this 
part shall be applicable to claims considered under this section as is 
appropriate.
    (c) In any case where the miner returns to coal mine or comparable 
and gainful work, the payments to such miner shall be suspended and no 
benefits shall be payable (except as provided in section 411(c)(3) of 
the Act) for the period during which the miner continues to work. If the 
miner again terminates employment, the district director may require the 
miner to submit to further medical examination before authorizing the 
payment of benefits.



Sec. 725.505  Payees.

    Benefits may be paid, as appropriate, to a beneficiary, to a 
qualified dependent, or to a representative authorized under this 
subpart to receive payments on behalf of such beneficiary or dependent.



Sec. 725.506  Payment on behalf of another; ``legal guardian'' defined.

    Benefits are paid only to the beneficiary, his or her representative 
payee (see Sec. 725.510) or his or her legal guardian. As used in this 
section, ``legal guardian'' means an individual who has been appointed 
by a court of competent jurisdiction or otherwise appointed pursuant to 
law to assume control of and responsibility for the care of the 
beneficiary, the management of his or her estate, or both.



Sec. 725.507  Guardian for minor or incompetent.

    An adjudication officer may require that a legal guardian or 
representative be appointed to receive benefit payments payable to any 
person who is mentally incompetent or a minor and to exercise the powers 
granted to, or to perform the duties otherwise required of such person 
under the Act.



Sec. 725.510  Representative payee.

    (a) If the district director determines that the best interests of a 
beneficiary are served thereby, the district director may certify the 
payment of such beneficiary's benefits to a representative payee.
    (b) Before any amount shall be certified for payment to any 
representative payee for or on behalf of a beneficiary, such 
representative payee shall submit to the district director such evidence 
as may be required of his or her relationship to, or his or her 
responsibility for the care of, the beneficiary on whose behalf payment 
is to be made, or of his or her authority to receive such a payment. The 
district director may, at any time thereafter, require evidence of the 
continued existence of such relationship, responsibility, or authority. 
If a person requesting representative payee status fails to submit the 
required evidence within a reasonable period of time after it is 
requested, no further payments shall be certified to him or her on 
behalf of the beneficiary unless the required evidence is thereafter 
submitted.
    (c) All benefit payments made to a representative payee shall be 
available only for the use and benefit of the beneficiary, as defined in 
Sec. 725.511.



Sec. 725.511  Use and benefit defined.

    (a) Payments certified to a representative payee shall be considered 
as having been applied for the use and benefit of the beneficiary when 
they are used for the beneficiary's current maintenance--i.e., to 
replace current income lost because of the disability of the 
beneficiary. Where a beneficiary is receiving care in an institution, 
current maintenance shall include the customary charges made by the 
institution and charges made for the current and foreseeable needs of 
the beneficiary which are not met by the institution.
    (b) Payments certified to a representative payee which are not 
needed for the current maintenance of the beneficiary, except as they 
may be used under Sec. 725.512, shall be conserved or invested on the 
beneficiary's behalf. Preferred investments are U.S. savings

[[Page 1020]]

bonds which shall be purchased in accordance with applicable regulations 
of the U.S. Treasury Department (31 CFR part 315). Surplus funds may 
also be invested in accordance with the rules applicable to investment 
of trust estates by trustees. For example, surplus funds may be 
deposited in an interest or dividend bearing account in a bank or trust 
company or in a savings and loan association if the account is either 
federally insured or is otherwise insured in accordance with State law 
requirements. Surplus funds deposited in an interest or dividend bearing 
account in a bank or trust company or in a savings and loan association 
must be in a form of account which clearly shows that the representative 
payee has only a fiduciary, and not a personal, interest in the funds. 
The preferred forms of such accounts are as follows:

Name of beneficiary_____________________________________________________

by (Name of representative payee) representative payee,
or (Name of beneficiary)
by (Name of representative payee) trustee,

    U.S. savings bonds purchased with surplus funds by a representative 
payee for an incapacitated adult beneficiary should be registered as 
follows: (Name of beneficiary) (Social Security No.), for whom (Name of 
payee) is representative payee for black lung benefits.



Sec. 725.512  Support of legally dependent spouse, child, or parent.

    If current maintenance needs of a beneficiary are being reasonably 
met, a relative or other person to whom payments are certified as 
representative payee on behalf of the beneficiary may use part of the 
payments so certified for the support of the legally dependent spouse, a 
legally dependent child, or a legally dependent parent of the 
beneficiary.



Sec. 725.513  Accountability; transfer.

    (a) The district director may require a representative payee to 
submit periodic reports including a full accounting of the use of all 
benefit payments certified to a representative payee. If a requested 
report or accounting is not submitted within the time allowed, the 
district director shall terminate the certification of the 
representative payee and thereafter payments shall be made directly to 
the beneficiary. A certification which is terminated under this section 
may be reinstated for good cause, provided that all required reports are 
supplied to the district director.
    (b) A representative payee who has conserved or invested funds from 
payments under this part shall, upon the direction of the district 
director, transfer any such funds (including interest) to a successor 
payee appointed by the district director or, at the option of the 
district director, shall transfer such funds to the Office for 
recertification to a successor payee or the beneficiary.



Sec. 725.514  Certification to dependent of augmentation portion of 
benefit.

    (a) If the basic benefit of a miner or of a surviving spouse is 
augmented because of one or more dependents, and it appears to the 
district director that the best interests of such dependent would be 
served thereby, or that the augmented benefit is not being used for the 
use and benefit (as defined in this subpart) of the augmentee, the 
district director may certify payment of the amount of such augmentation 
(to the extent attributable to such dependent) to such dependent 
directly, or to a legal guardian or a representative payee for the use 
and benefit of such dependent.
    (b) Any request to the district director to certify separate payment 
of the amount of an augmentation in accordance with paragraph (a) of 
this section shall be in writing on such form and in accordance with 
such instructions as are prescribed by the Office.
    (c) The district director shall specify the terms and conditions of 
any certification authorized under this section and may terminate any 
such certification where appropriate.
    (d) Any payment made under this section, if otherwise valid under 
the Act, is a complete settlement and satisfaction of all claims, 
rights, and interests in and to such payment, except that such payment 
shall not be construed to abridge the rights of any party to recoup any 
overpayment made.

[[Page 1021]]



Sec. 725.515  Assignment and exemption from claims of creditors.

    (a) Except as provided by the Act and this part, no assignment, 
release, or commutation of benefits due or payable under this part by a 
responsible operator shall be valid, and all benefits shall be exempt 
from claims of creditors and from levy, execution, and attachment or 
other remedy or recovery or collection of a debt, which exemption may 
not be waived.
    (b) Notwithstanding any other provision of law, benefits due from, 
or payable by, the Black Lung Disability Trust Fund under the Act and 
this part to a claimant shall be subject to legal process brought for 
the enforcement against the claimant of his or her legal obligations to 
provide child support or make alimony payments to the same extent as if 
the fund was a private person.

                              Benefit Rates



Sec. 725.520  Computation of benefits.

    (a) Basic rate. The amount of benefits payable to a beneficiary for 
a month is determined, in the first instance, by computing the ``basic 
rate.'' The basic rate is equal to 37\1/2\ percent of the monthly pay 
rate for Federal employees in GS-2, step 1. That rate for a month is 
determined by:
    (1) Ascertaining the lowest annual rate of pay (step 1) for Grade 
GS-2 of the General Schedule applicable to such month (see 5 U.S.C. 
5332);
    (2) Ascertaining the monthly rate thereof by dividing the amount 
determined in paragraph (a)(1) of this section by 12; and
    (3) Ascertaining the basic rate under the Act by multiplying the 
amount determined in paragraph (a)(2) of this section by 0.375 (that is, 
by 37\1/2\ percent).
    (b) Basic benefit. When a miner or surviving spouse is entitled to 
benefits for a month for which he or she has no dependents who qualify 
under this part and when a surviving child of a miner or spouse, or a 
parent, brother, or sister of a miner, is entitled to benefits for a 
month for which he or she is the only beneficiary entitled to benefits, 
the amount of benefits to which such beneficiary is entitled is equal to 
the basic rate as computed in accordance with this section (raised, if 
not a multiple of 10 cents, to the next high multiple of 10 cents). This 
amount is referred to as the ``basic benefit.''
    (c) Augmented benefit. (1) When a miner or surviving spouse is 
entitled to benefits for a month for which he or she has one or more 
dependents who qualify under this part, the amount of benefits to which 
such miner or surviving spouse is entitled is increased. This increase 
is referred to as an ``augmentation.''
    (2) The benefits of a miner or surviving spouse are augmented to 
take account of a particular dependent beginning with the first month in 
which such dependent satisfies the conditions set forth in this part, 
and continues to be augmented through the month before the month in 
which such dependent ceases to satisfy the conditions set forth in this 
part, except in the case of a child who qualifies as a dependent because 
he or she is a student. In the latter case, such benefits continue to be 
augmented through the month before the first month during no part of 
which he or she qualifies as a student.
    (3) The basic rate is augmented by 50 percent for one such 
dependent, 75 percent for two such dependents, and 100 percent for three 
or more such dependents.
    (d) Survivor benefits. As used in this section, ``survivor'' means a 
surviving child of a miner or surviving spouse, or a surviving parent, 
brother, or sister of a miner, who establishes entitlement to benefits 
under this part.
    (e) Computation and rounding. (1) Any computation prescribed by this 
section is made to the third decimal place.
    (2) Monthly benefits are payable in multiples of 10 cents. 
Therefore, a monthly payment of amounts derived under paragraph (c)(3) 
of this section which is not a multiple of 10 cents is increased to the 
next higher multiple of 10 cents.
    (3) Since a fraction of a cent is not a multiple of 10 cents, such 
an amount which contains a fraction in the third decimal place is raised 
to the next higher multiple of 10 cents.
    (f) Eligibility based on the coal mine employment of more than one 
miner. Where an individual, for any month, is entitled (and/or qualifies 
as a dependent for

[[Page 1022]]

purposes of augmentation of benefits) based on the disability or death 
due to pneumoconiosis arising out of the coal mine employment of more 
than one miner, the benefit payable to or on behalf of such individual 
shall be at a rate equal to the highest rate of benefits for which 
entitlement is established by reason of eligibility as a beneficiary, or 
by reason of his or her qualification as a dependent for augmentation of 
benefit purposes.



Sec. 725.521  Commutation of payments; lump sum awards.

    (a) Whenever the district director determines that it is in the 
interest of justice, the liability for benefits or any part thereof as 
determined by a final adjudication, may, with the approval of the 
Director, be discharged by the payment of a lump sum equal to the 
present value of future benefit payments commuted, computed at 4 percent 
true discount compounded annually.
    (b) Applications for commutation of future payments of benefits 
shall be made to the district director in the manner prescribed by the 
district director. If the district director determines that an award of 
a lump sum payment of such benefits would be in the interest of justice, 
he or she shall refer such application, together with the reasons in 
support of such determination, to the Director for consideration.
    (c) The Director shall, in his or her discretion, grant or deny the 
application for commutation of payments. Such decision may be appealed 
to the Benefits Review Board.
    (d) The computation of all commutations of such benefits shall be 
made by the OWCP. For this purpose the file shall contain the date of 
birth of the person on whose behalf commutation is sought, as well as 
the date upon which such commutation shall be effective.
    (e) For purposes of determining the amount of any lump sum award, 
the probability of the death of the disabled miner and/or other persons 
entitled to benefits before the expiration of the period during which he 
or she is entitled to benefits, shall be determined in accordance with 
the most current United States Life Tables, as developed by the 
Department of Health, Education, and Welfare, and the probability of the 
remarriage of a surviving spouse shall be determined in accordance with 
the remarriage tables of the Dutch Royal Insurance Institution. The 
probability of the happening of any other contingency affecting the 
amount or duration of the compensation shall be disregarded.
    (f) In the event that an operator or carrier is adjudicated liable 
for the payment of benefits, such operator or carrier shall be notified 
of and given an opportunity to participate in the proceedings to 
determine whether a lump sum award shall be made. Such operator or 
carrier shall, in the event a lump sum award is made, tender full and 
prompt payment of such award to the claimant as though such award were a 
final payment of monthly benefits. Except as provided in paragraph (g) 
of this section, such lump sum award shall forever discharge such 
operator or carrier from its responsibility to make monthly benefit 
payments under the Act to the person who has requested such lump-sum 
award. In the event that an operator or carrier is adjudicated liable 
for the payment of benefits, such operator or carrier shall not be 
liable for any portion of a commuted or lump sum award predicated upon 
benefits due any claimant prior to January 1, 1974.
    (g) In the event a lump-sum award is approved under this section, 
such award shall not operate to discharge an operator carrier, or the 
fund from any responsibility imposed by the Act for the payment of 
medical benefits to an eligible miner.



Sec. 725.522  Payments prior to final adjudication.

    (a) If an operator or carrier fails or refuses to commence the 
payment of benefits within 30 days of issuance of an initial 
determination of eligibility by the district director (see Sec. 
725.420), or fails or refuses to commence the payment of any benefits 
due pursuant to an effective order by a district director, 
administrative law judge, Benefits Review Board, or court, the fund 
shall commence the payment of such benefits and shall continue such 
payments

[[Page 1023]]

as appropriate. In the event that the fund undertakes the payment of 
benefits on behalf of an operator or carrier, the provisions of 
Sec. Sec. 725.601 through 725.609 shall be applicable to such operator 
or carrier.
    (b) If benefit payments are commenced prior to the final 
adjudication of the claim and it is later determined by an 
administrative law judge, the Board, or court that the claimant was 
ineligible to receive such payments, such payments shall be considered 
overpayments pursuant to Sec. 725.540 and may be recovered in 
accordance with the provisions of this subpart.

                Special Provisions for Operator Payments



Sec. 725.530  Operator payments; generally.

    (a) Benefits payable by an operator or carrier pursuant to an 
effective order issued by a district director, administrative law judge, 
Benefits Review Board, or court, or by an operator that has agreed that 
it is liable for the payment of benefits to a claimant, shall be paid by 
the operator or carrier immediately when they become due (see Sec. 
725.502(b)). An operator that fails to pay any benefits that are due, 
with interest, shall be considered in default with respect to those 
benefits, and the provisions of Sec. 725.605 of this part shall be 
applicable. In addition, a claimant who does not receive any benefits 
within 10 days of the date they become due is entitled to additional 
compensation equal to twenty percent of those benefits (see Sec. 
725.607). Arrangements for the payment of medical costs shall be made by 
such operator or carrier in accordance with the provisions of subpart J 
of this part.
    (b) Benefit payments made by an operator or carrier shall be made 
directly to the person entitled thereto or a representative payee if 
authorized by the district director. The payment of a claimant's 
attorney's fee, if any is awarded, shall be made directly to such 
attorney. Reimbursement of the fund, including interest, shall be paid 
directly to the Secretary on behalf of the fund.



Sec. 725.531  Receipt for payment.

    Any individual receiving benefits under the Act in his or her own 
right, or as a representative payee, or as the duly appointed agent for 
the estate of a deceased beneficiary, shall execute receipts for 
benefits paid by any operator which shall be produced by such operator 
for inspection whenever the district director requires. A canceled check 
shall be considered adequate receipt of payment for purposes of this 
section. No operator or carrier shall be required to retain receipts for 
payments made for more than 5 years after the date on which such receipt 
was executed.



Sec. 725.532  Suspension, reduction, or termination of payments.

    (a) No suspension, reduction, or termination in the payment of 
benefits is permitted unless authorized by the district director, 
administrative law judge, Board, or court. No suspension, reduction, or 
termination shall be authorized except upon the occurrence of an event 
which terminates a claimant's eligibility for benefits (see subpart B of 
this part) or as is otherwise provided in subpart C of this part, 
Sec. Sec. 725.306 and 725.310, or this subpart (see also Sec. Sec. 
725.533 through 725.546).
    (b) Any unauthorized suspension in the payment of benefits by an 
operator or carrier shall be treated as provided in subpart I.
    (c) Unless suspension, reduction, or termination of benefits 
payments is required by an administrative law judge, the Benefits Review 
Board or a court, the district director, after receiving notification of 
the occurrence of an event that would require the suspension, reduction, 
or termination of benefits, shall follow the procedures for the 
determination of claims set forth in subparts E and F.

                  Increases and Reductions of Benefits



Sec. 725.533  Modification of benefits amounts; general.

    (a) Under certain circumstances, the amount of monthly benefits as 
computed in Sec. 725.520 or lump-sum award (Sec. 725.521) shall be 
modified to determine the amount actually to be paid to

[[Page 1024]]

a beneficiary. With respect to any benefits payable for all periods of 
eligibility after January 1, 1974, a reduction of the amount of benefits 
payable shall be required on account of:
    (1) Any compensation or benefits received under any State workers' 
compensation law because of death or partial or total disability due to 
pneumoconiosis; or
    (2) Any compensation or benefits received under or pursuant to any 
Federal law including part B of title IV of the Act because of death or 
partial or total disability due to pneumoconiosis; or
    (3) In the case of benefits to a parent, brother, or sister as a 
result of a claim filed at any time or benefits payable on a miner's 
claim which was filed on or after January 1, 1982, the excess earnings 
from wages and from net earnings from self-employment (see Sec. 410.530 
of this title) of such parent, brother, sister, or miner, respectively; 
or
    (4) The fact that a claim for benefits from an additional 
beneficiary is filed, or that such claim is effective for a payment 
during the month of filing, or a dependent qualifies under this part for 
an augmentation portion of a benefit of a miner or widow for a period in 
which another dependent has previously qualified for an augmentation.
    (b) An adjustment in a beneficiary's monthly benefit may be required 
because an overpayment or underpayment has been made to such beneficiary 
(see Sec. Sec. 725.540-725.546).
    (c) A suspension of a beneficiary's monthly benefits may be required 
when the Office has information indicating that reductions on account of 
excess earnings may reasonably be expected.
    (d) Monthly benefit rates are payable in multiples of 10 cents. Any 
monthly benefit rate which, after the applicable computations, 
augmentations, and reductions is not a multiple of 10 cents, is 
increased to the next higher multiple of 10 cents. Since a fraction of a 
cent is not a multiple of 10 cents, a benefit rate which contains such a 
fraction in the third decimal is raised to the next higher multiple of 
10 cents.
    (e) Any individual entitled to a benefit, who is aware of any 
circumstances which could affect entitlement to benefits, eligibility 
for payment, or the amount of benefits, or result in the termination, 
suspension, or reduction of benefits, shall promptly report these 
circumstances to the Office. The Office may at any time require an 
individual receiving, or claiming entitlement to, benefits, either on 
his or her own behalf or on behalf of another, to submit a written 
statement giving pertinent information bearing upon the issue of whether 
or not an event has occurred which would cause such benefit to be 
terminated, or which would subject such benefit to reductions or 
suspension under the provisions of the Act. The failure of an individual 
to submit any such report or statement, properly executed, to the Office 
shall subject such benefit to reductions, suspension, or termination as 
the case may be.



Sec. 725.534  Reduction of State benefits.

    No benefits under section 415 of part B of title IV of the Act shall 
be payable to the residents of a State which, after December 31, 1969, 
reduces the benefits payable to persons eligible to receive benefits 
under section 415 of the Act under State laws applicable to its general 
work force with regard to workers' compensation (including compensation 
for occupational disease), unemployment compensation, or disability 
insurance benefits which are funded in whole or in part out of employer 
contributions.



Sec. 725.535  Reductions; receipt of State or Federal benefit.

    (a) As used in this section the term ``State or Federal benefit'' 
means a payment to an individual on account of total or partial 
disability or death due to pneumoconiosis only under State or Federal 
laws relating to workers' compensation. With respect to a claim for 
which benefits are payable for any month between July 1 and December 31, 
1973, ``State benefit'' means a payment to a beneficiary made on account 
of disability or death due to pneumoconiosis under State laws relating 
to workers' compensation (including compensation for occupational 
disease), unemployment compensation, or disability insurance.
    (b) Benefit payments to a beneficiary for any month are reduced (but 
not below zero) by an amount equal to any

[[Page 1025]]

payments of State or Federal benefits received by such beneficiary for 
such month.
    (c) Where a State or Federal benefit is paid periodically but not 
monthly, or in a lump sum as a commutation of or a substitution for 
periodic benefits, the reduction under this section is made at such time 
or times and in such amounts as the Office determines will approximate 
as nearly as practicable the reduction required under paragraph (b) of 
this section. In making such a determination, a weekly State or Federal 
benefit is multiplied by 4\1/3\ and a biweekly benefit is multiplied by 
2\1/6\ to ascertain the monthly equivalent for reduction purposes.
    (d) Amounts paid or incurred or to be incurred by the individual for 
medical, legal, or related expenses in connection with this claim for 
State or Federal benefits (defined in paragraph (a) of this section) are 
excluded in computing the reduction under paragraph (b) of this section, 
to the extent that they are consistent with State or Federal Law. Such 
medical, legal, or related expenses may be evidenced by the State or 
Federal benefit awards, compromise agreement, or court order in the 
State or Federal benefit proceedings, or by such other evidence as the 
Office may require. Such other evidence may consist of:
    (1) A detailed statement by the individual's attorney, physician, or 
the employer's insurance carrier; or
    (2) Bills, receipts, or canceled checks; or
    (3) Other evidence indicating the amount of such expenses; or
    (4) Any combination of the foregoing evidence from which the amount 
of such expenses may be determinable. Such expenses shall not be 
excluded unless established by evidence as required by the Office.



Sec. 725.536  Reductions; excess earnings.

    In the case of a surviving parent, brother, or sister, whose claim 
was filed at any time, or of a miner whose claim was filed on or after 
January 1, 1982, benefit payments are reduced as appropriate by an 
amount equal to the deduction which would be made with respect to excess 
earnings under the provisions of sections 203 (b), (f), (g), (h), (j), 
and (l) of the Social Security Act (42 U.S.C. 403 (b), (f), (g), (h), 
(j), and (l)), as if such benefit payments were benefits payable under 
section 202 of the Social Security Act (42 U.S.C. 402) (see Sec. Sec. 
404.428 through 404.456 of this title).



Sec. 725.537  Reductions; retroactive effect of an additional claim 
for benefits.

    Except as provided in Sec. 725.212(b), beginning with the month in 
which a person other than a miner files a claim and becomes entitled to 
benefits, the benefits of other persons entitled to benefits with 
respect to the same miner, are adjusted downward, if necessary, so that 
no more than the permissible amount of benefits (the maximum amount for 
the number of beneficiaries involved) will be paid.



Sec. 725.538  Reductions; effect of augmentation of benefits based on 
subsequent qualification of individual.

    (a) Ordinarily, a written request that the benefits of a miner or 
surviving spouse be augmented on account of a qualified dependent is 
made as part of the claim for benefits. However, it may also be made 
thereafter.
    (b) In the latter case, beginning with the month in which such a 
request is filed on account of a particular dependent and in which such 
dependent qualifies for augmentation purposes under this part, the 
augmented benefits attributable to other qualified dependents (with 
respect to the same miner or surviving spouse), if any, are adjusted 
downward, if necessary, so that the permissible amount of augmented 
benefits (the maximum amount for the number of dependents involved) will 
not be exceeded.
    (c) Where, based on the entitlement to benefits of a miner or 
surviving spouse, a dependent would have qualified for augmentation 
purposes for a prior month of such miner's or surviving spouse's 
entitlement had such request been filed in such prior month, such 
request is effective for such prior month. For any month before the 
month of filing such request, however, otherwise correct benefits 
previously certified by the Office may not be changed. Rather the amount 
of the augmented benefit attributable to the

[[Page 1026]]

dependent filing such request in the later month is reduced for each 
month of the retroactive period to the extent that may be necessary. 
This means that for each month of the retroactive period, the amount 
payable to the dependent filing the later augmentation request is the 
difference, if any, between:
    (1) The total amount of augmented benefits certified for payment for 
other dependents for that month, and
    (2) The permissible amount of augmented benefits (the maximum amount 
for the number of dependents involved) payable for the month for all 
dependents, including the dependent filing later.



Sec. 725.539  More than one reduction event.

    If a reduction for receipt of State or Federal benefits and a 
reduction on account of excess earnings are chargeable to the same 
month, the benefit for such month is first reduced (but not below zero) 
by the amount of the State or Federal benefits, and the remainder of the 
benefit for such month, if any, is then reduced (but not below zero) by 
the amount of excess earnings chargeable to such month.

                       Overpayments; Underpayments



Sec. 725.540  Overpayments.

    (a) General. As used in this subpart, the term ``overpayment'' 
includes:
    (1) Payment where no amount is payable under this part;
    (2) Payment in excess of the amount payable under this part;
    (3) A payment under this part which has not been reduced by the 
amounts required by the Act (see Sec. 725.533);
    (4) A payment under this part made to a resident of a State whose 
residents are not entitled to benefits (see Sec. Sec. 725.402 and 
725.403);
    (5) Payment resulting from failure to terminate benefits to an 
individual no longer entitled thereto;
    (6) Duplicate benefits paid to a claimant on account of concurrent 
eligibility under this part and parts 410 or 727 (see Sec. 725.4(d)) of 
this title or as provided in Sec. 725.309.
    (b) Overpaid beneficiary is living. If the beneficiary to whom an 
overpayment was made is living at the time of a determination of such 
overpayment, is entitled to benefits at the time of the overpayment, or 
at any time thereafter becomes so entitled, no benefit for any month is 
payable to such individual, except as provided in paragraph (c) of this 
section, until an amount equal to the amount of the overpayment has been 
withheld or refunded.
    (c) Adjustment by withholding part of a monthly benefit. Adjustment 
under paragraph (b) of this section may be effected by withholding a 
part of the monthly benefit payable to a beneficiary where it is 
determined that:
    (1) Withholding the full amount each month would deprive the 
beneficiary of income required for ordinary and necessary living 
expenses;
    (2) The overpayment was not caused by the beneficiary's 
intentionally false statement or representation, or willful concealment 
of, or deliberate failure to furnish, material information; and
    (3) Recoupment can be effected in an amount of not less than $ 10 a 
month and at a rate which would not unreasonably extend the period of 
adjustment.
    (d) Overpaid beneficiary dies before adjustment. If an overpaid 
beneficiary dies before adjustment is completed under the provisions of 
paragraph (b) of this section, recovery of the overpayment shall be 
effected through repayment by the estate of the deceased overpaid 
beneficiary, or by withholding of amounts due the estate of such 
deceased beneficiary, or both.



Sec. 725.541  Notice of waiver of adjustment or recovery of overpayment.

    Whenever a determination is made that more than the correct amount 
of payment has been made, notice of the provisions of section 204(b) of 
the Social Security Act regarding waiver of adjustment or recovery shall 
be sent to the overpaid individual, to any other individual against whom 
adjustment or recovery of the overpayment is to be effected, and to any 
operator or carrier which may be liable to such overpaid individual.

[[Page 1027]]



Sec. 725.542  When waiver of adjustment or recovery may be applied.

    There shall be no adjustment or recovery of an overpayment in any 
case where an incorrect payment has been made with respect to an 
individual:
    (a) Who is without fault, and where
    (b) Adjustment or recovery would either:
    (1) Defeat the purpose of title IV of the Act, or
    (2) Be against equity and good conscience.



Sec. 725.543  Standards for waiver of adjustment or recovery.

    The standards for determining the applicability of the criteria 
listed in Sec. 725.542 shall be the same as those applied by the Social 
Security Administration under Sec. Sec. 404.506 through 404.512 of this 
title.



Sec. 725.544  Collection and compromise of claims for overpayment.

    (a) General effect of 31 U.S.C. 3711. In accordance with 31 U.S.C. 
3711 and applicable regulations, claims by the Office against an 
individual for recovery of an overpayment under this part not exceeding 
the sum of $100,000, exclusive of interest, may be compromised, or 
collection suspended or terminated, where such individual or his or her 
estate does not have the present or prospective ability to pay the full 
amount of the claim within a reasonable time (see paragraph (c) of this 
section), or the cost of collection is likely to exceed the amount of 
recovery (see paragraph (d) of this section), except as provided under 
paragraph (b) of this section.
    (b) When there will be no compromise, suspension, or termination of 
collection of a claim for overpayment. (1) In any case where the 
overpaid individual is alive, a claim for overpayment will not be 
compromised, nor will there be suspension or termination of collection 
of the claim by the Office, if there is an indication of fraud, the 
filing of a false claim, or misrepresentation on the part of such 
individual or on the part of any other party having any interest in the 
claim.
    (2) In any case where the overpaid individual is deceased:
    (i) A claim for overpayment in excess of $ 5,000 will not be 
compromised, nor will there be suspension or termination of collection 
of the claim by the Office if there is an indication of fraud, the 
filing of a false claim, or misrepresentation on the part of such 
deceased individual; and
    (ii) A claim for overpayment, regardless of the amount, will not be 
compromised, nor will there be suspension or termination of collection 
of the claim by the Office if there is an indication that any person 
other than the deceased overpaid individual had a part in the fraudulent 
action which resulted in the overpayment.
    (c) Inability to pay claim for recovery of overpayment. In 
determining whether the overpaid individual is unable to pay a claim for 
recovery of an overpayment under this part, the Office shall consider 
the individual's age, health, present and potential income (including 
inheritance prospects), assets (e.g., real property, savings account), 
possible concealment or improper transfer of assets, and assets or 
income of such individual which may be available in enforced collection 
proceedings. The Office will also consider exemptions available to such 
individual under the pertinent State or Federal law in such proceedings. 
In the event the overpaid individual is deceased, the Office shall 
consider the available assets of the estate, taking into account any 
liens or superior claims against the estate.
    (d) Cost of collection or litigative probabilities. Where the 
probable costs of recovering an overpayment under this part would not 
justify enforced collection proceedings for the full amount of the 
claim, or where there is doubt concerning the Office's ability to 
establish its claim as well as the time which it will take to effect 
such collection, a compromise or settlement for less than the full 
amount may be considered.
    (e) Amount of compromise. The amount to be accepted in compromise of 
a claim for overpayment under this part shall bear a reasonable 
relationship to the amount which can be recovered by enforced collection 
proceedings, giving due consideration to the exemption available to the 
overpaid individual under State or Federal law and the time which 
collection will take.

[[Page 1028]]

    (f) Payment. Payment of the amount the Office has agreed to accept 
as a compromise in full settlement of a claim for recovery of an 
overpayment under this part shall be made within the time and in the 
manner set by the Office. A claim for the overpayment shall not be 
considered compromised or settled until the full payment of the 
compromised amount has been made within the time and manner set by the 
Office. Failure of the overpaid individual or his or her estate to make 
such payment as provided shall result in reinstatement of the full 
amount of the overpayment less any amounts paid prior to such default.



Sec. 725.545  Underpayments.

    (a) General. As used in this subpart, the term ``underpayment'' 
includes a payment in an amount less than the amount of the benefit due 
for such month, and nonpayment where some amount of such benefits is 
payable.
    (b) Underpaid individual is living. If an individual to whom an 
underpayment was made is living, the deficit represented by such 
underpayment shall be paid to such individual either in a single payment 
(if he or she is not entitled to a monthly benefit or if a single 
payment is requested by the claimant in writing) or by increasing one or 
more monthly benefit payments to which such individual becomes entitled.
    (c) Underpaid individual dies before adjustment of underpayment. If 
an individual to whom an underpayment was made dies before receiving 
payment of the deficit or negotiating the check or checks representing 
payment of the deficit, such payment shall be distributed to the living 
person (or persons) in the highest order of priority as follows:
    (1) The deceased individual's surviving spouse who was either:
    (i) Living in the same household with the deceased individual at the 
time of such individual's death; or
    (ii) In the case of a deceased miner, entitled for the month of 
death to black lung benefits as his or her surviving spouse or surviving 
divorced spouse.
    (2) In the case of a deceased miner or spouse his or her child 
entitled to benefits as the surviving child of such miner or surviving 
spouse for the month in which such miner or spouse died (if more than 
one such child, in equal shares to each such child).
    (3) In the case of a deceased miner, his parent entitled to benefits 
as the surviving parent of such miner for the month in which such miner 
died (if more than one such parent, in equal shares to each such 
parent).
    (4) The surviving spouse of the deceased individual who does not 
qualify under paragraph (c)(1) of this section.
    (5) The child or children of the deceased individual who do not 
qualify under paragraph (c)(2) of this section (if more than one such 
child, in equal shares to each such child).
    (6) The parent or parents of the deceased individual who do not 
qualify under paragraph (c)(3) of this section (if more than one such 
parent, in equal shares to each such parent).
    (7) The legal representative of the estate of the deceased 
individual as defined in paragraph (e) of this section.
    (d) Deceased beneficiary. In the event that a person, who is 
otherwise qualified to receive payments as the result of a deficit 
caused by an underpayment under the provisions of paragraph (c) of this 
section, dies before receiving payment or before negotiating the check 
or checks representing such payment, his or her share of the 
underpayment shall be divided among the remaining living person(s) in 
the same order or priority. In the event that there is (are) no other 
such person(s), the underpayment shall be paid to the living person(s) 
in the next lower order of priority under paragraph (c) of this section.
    (e) Definition of legal representative. The term ``legal 
representative,'' for the purpose of qualifying for receipt of an 
underpayment, generally means the executor or the administrator of the 
estate of the deceased beneficiary. However, it may also include an 
individual, institution or organization acting on behalf of an 
unadministered estate, provided the person can give the Office good 
acquittance (as defined in paragraph (f) of this section). The following 
persons may qualify as legal representative for purposes of this 
section, provided they can give the Office good acquittance:

[[Page 1029]]

    (1) A person who qualifies under a State's ``small estate'' statute; 
or
    (2) A person resident in a foreign country who under the laws and 
customs of that country, has the right to receive assets of the estate; 
or
    (3) A public administrator; or
    (4) A person who has the authority under applicable law to collect 
the assets of the estate of the deceased beneficiary.
    (f) Definition of ``good acquittance.'' A person is considered to 
give the Office ``good acquittance'' when payment to that person will 
release the Office from further liability for such payment.



Sec. 725.546  Relation to provisions for reductions or increases.

    The amount of an overpayment or an underpayment is the difference 
between the amount to which the beneficiary was actually entitled and 
the amount paid. Overpayment and underpayment simultaneously outstanding 
against the same beneficiary shall first be adjusted against one another 
before adjustment pursuant to the other provisions of this subpart.



Sec. 725.547  Applicability of overpayment and underpayment provisions 
to operator or carrier.

    (a) The provisions of this subpart relating to overpayments and 
underpayments shall be applicable to overpayments and underpayments made 
by responsible operators or their insurance carriers, as appropriate.
    (b) No operator or carrier may recover, or make an adjustment of, an 
overpayment without prior application to, and approval by, the Office 
which shall exercise full supervisory authority over the recovery or 
adjustment of all overpayments.



Sec. 725.548  Procedures applicable to overpayments and underpayments.

    (a) In any case involving either overpayments or underpayments, the 
Office may take any necessary action, and district directors may issue 
appropriate orders to protect the rights of the parties.
    (b) Disputes arising out of orders so issued shall be resolved by 
the procedures set out in subpart F of this part.



               Subpart I_Enforcement of Liability; Reports



Sec. 725.601  Enforcement generally.

    (a) The Act, together with certain incorporated provisions from the 
Longshoremen's and Harbor Workers' Compensation Act, contains a number 
of provisions which subject an operator or other employer, claimants and 
others to penalties for failure to comply with certain provisions of the 
Act, or failure to commence and continue prompt periodic payments to a 
beneficiary.
    (b) It is the policy and intent of the Department to vigorously 
enforce the provisions of this part through the use of the remedies 
provided by the Act. Accordingly, if an operator refuses to pay benefits 
with respect to a claim for which the operator has been adjudicated 
liable, the Director shall invoke and execute the lien on the property 
of the operator as described in Sec. 725.603. Enforcement of this lien 
shall be pursued in an appropriate U.S. district court. If the Director 
determines that the remedy provided by Sec. 725.603 may not be 
sufficient to guarantee the continued compliance with the terms of an 
award or awards against the operator, the Director shall in addition 
seek an injunction in the U.S. district court to prohibit future 
noncompliance by the operator and such other relief as the court 
considers appropriate (see Sec. 725.604). If an operator unlawfully 
suspends or terminates the payment of benefits to a claimant, the 
district director shall declare the award in default and proceed in 
accordance with Sec. 725.605. In all cases payments in addition to 
compensation (see Sec. 725.607) and interest (see Sec. 725.608) shall 
be sought by the Director or awarded by the district director.
    (c) In certain instances the remedies provided by the Act are 
concurrent; that is, more than one remedy might be appropriate in any 
given case. In such a case, the Director shall select the remedy or 
remedies appropriate for the enforcement action. In making this 
selection, the Director shall consider the best interests of the 
claimant as well as those of the fund.

[[Page 1030]]



Sec. 725.602  Reimbursement of the fund.

    (a) In any case in which the fund has paid benefits, including 
medical benefits, on behalf of an operator or other employer which is 
determined liable therefore, or liable for a part thereof, such operator 
or other employer shall simultaneously with the first payment of 
benefits made to the beneficiary, reimburse the fund (with interest) for 
the full amount of all benefit payments made by the fund with respect to 
the claim.
    (b) In any case where benefit payments have been made by the fund, 
the fund shall be subrogated to the rights of the beneficiary. The 
Secretary of Labor may, as appropriate, exercise such subrogation 
rights.



Sec. 725.603  Payments by the fund on behalf of an operator; liens.

    (a) If an amount is paid out of the fund to an individual entitled 
to benefits under this part or part 727 of this subchapter (see Sec. 
725.4(d)) on behalf of an operator or other employer which is or was 
required to pay or secure the payment of all or a portion of such amount 
(see Sec. 725.522), the operator or other employer shall be liable to 
the United States for repayment to the fund of the amount of benefits 
properly attributable to such operator or other employer.
    (b) If an operator or other employer liable to the fund refuses to 
pay, after demand, the amount of such liability, there shall be a lien 
in favor of the United States upon all property and rights to property, 
whether real or personal, belonging to such operator or other employer. 
The lien arises on the date on which such liability is finally 
determined, and continues until it is satisfied or becomes unenforceable 
by reason of lapse of time.
    (c)(1) Except as otherwise provided under this section, the priority 
of the lien shall be determined in the same manner as under section 6323 
of the Internal Revenue Code (26 U.S.C.).
    (2) In the case of a bankruptcy or insolvency proceeding, the lien 
imposed under this section shall be treated in the same manner as a lien 
for taxes due and owing to the United States for purposes of the 
Bankruptcy Act or section 3466 of the Revised Statutes (31 U.S.C. 191).
    (3) For purposes of applying section 6323(a) of the Internal Revenue 
Code (26 U.S.C.) to determine the priority between the lien imposed 
under this section and the Federal tax lien, each lien shall be treated 
as a judgment lien arising as of the time notice of such lien is filed.
    (4) For purposes of the section, notice of the lien imposed 
hereunder shall be filed in the same manner as under section 6323(f) 
(disregarding paragraph (4) thereof) and (g) of the Internal Revenue 
Code (26 U.S.C.).
    (5) In any case where there has been a refusal or neglect to pay the 
liability imposed under this section, the Secretary of Labor may bring a 
civil action in a district court of the United States to enforce the 
lien of the United States under this section with respect to such 
liability or to subject any property, of whatever nature, of the 
operator, or in which it has any right, title, or interest, to the 
payment of such liability.
    (6) The liability imposed by this paragraph may be collected at a 
proceeding in court if the proceeding is commenced within 6 years after 
the date upon which the liability was finally determined, or prior to 
the expiration of any period for collection agreed upon in writing by 
the operator and the United States before the expiration of such 6-year 
period. This period of limitation shall be suspended for any period 
during which the assets of the operator are in the custody or control of 
any court of the United States, or of any State, or the District of 
Columbia, and for 6 months thereafter, and for any period during which 
the operator is outside the United States if such period of absence is 
for a continuous period of at least 6 months.



Sec. 725.604  Enforcement of final awards.

    Notwithstanding the provisions of Sec. 725.603, if an operator or 
other employer or its officers or agents fails to comply with an order 
awarding benefits that has become final, any beneficiary of such award 
or the district director may apply for the enforcement of the order to 
the Federal district court for the judicial district in which

[[Page 1031]]

the injury occurred (or to the U.S. District Court for the District of 
Columbia if the injury occurred in the District). If the court 
determines that the order was made and served in accordance with law, 
and that such operator or other employer or its officers or agents have 
failed to comply therewith, the court shall enforce obedience to the 
order by writ of injunction or by other proper process, mandatory or 
otherwise, to enjoin upon such operator or other employer and its 
officers or agents compliance with the order.



Sec. 725.605  Defaults.

    (a) Except as is otherwise provided in this part, no suspension, 
termination or other failure to pay benefits awarded to a claimant is 
permitted. If an employer found liable for the payment of such benefits 
fails to make such payments within 30 days after any date on which such 
benefits are due and payable, the person to whom such benefits are 
payable may, within one year after such default, make application to the 
district director for a supplementary order declaring the amount of the 
default.
    (b) If after investigation, notice and hearing as provided in 
subparts E and F of this part, a default is found, the district director 
or the administrative law judge, if a hearing is requested, shall issue 
a supplementary order declaring the amount of the default, if any. In 
cases where a lump-sum award has been made, if the payment in default is 
an installment, the district director or administrative law judge, may, 
in his or her discretion, declare the whole of the award as the amount 
in default. The applicant may file a certified copy of such 
supplementary order with the clerk of the Federal district court for the 
judicial district in which the operator has its principal place of 
business or maintains an office or for the judicial district in which 
the injury occurred. In case such principal place of business or office 
is in the District of Columbia, a copy of such supplementary order may 
be filed with the clerk of the U.S. District Court for the District of 
Columbia. Such supplementary order shall be final and the court shall, 
upon the filing of the copy, enter judgment for the amount declared in 
default by the supplementary order if such supplementary order is in 
accordance with law. Review of the judgment may be had as in civil suits 
for damages at common law. Final proceedings to execute the judgment may 
be had by writ of execution in the form used by the court in suits at 
common law in actions of assumpsit. No fee shall be required for filing 
the supplementary order nor for entry of judgment thereon, and the 
applicant shall not be liable for costs in a proceeding for review of 
the judgment unless the court shall otherwise direct. The court shall 
modify such judgment to conform to any later benefits order upon 
presentation of a certified copy thereof to the court.
    (c) In cases where judgment cannot be satisfied by reason of the 
employer's insolvency or other circumstances precluding payment, the 
district director shall make payment from the fund, and in addition, 
provide any necessary medical, surgical, and other treatment required by 
subpart J of this part. A defaulting employer shall be liable to the 
fund for payment of the amounts paid by the fund under this section; and 
for the purpose of enforcing this liability, the fund shall be 
subrogated to all the rights of the person receiving such payments or 
benefits.



Sec. 725.606  Security for the payment of benefits.

    (a) Following the issuance of an effective order by a district 
director (see Sec. 725.418), administrative law judge (see Sec. 
725.479), Benefits Review Board, or court that requires the payment of 
benefits by an operator that has failed to secure the payment of 
benefits in accordance with section 423 of the Act and Sec. 726.4 of 
this subchapter, or by a coal mine construction or transportation 
employer, the Director may request that the operator secure the payment 
of all benefits ultimately payable on the claim. Such operator or other 
employer shall thereafter immediately secure the payment of benefits in 
accordance with the provisions of this section, and provide proof of 
such security to the Director. Such security may take the form of an 
indemnity bond, a deposit of cash or negotiable securities in compliance 
with Sec. Sec. 726.106(c) and

[[Page 1032]]

726.107 of this subchapter, or any other form acceptable to the 
Director.
    (b) The amount of security initially required by this section shall 
be determined as follows:
    (1) In a case involving an operator subject to section 423 of the 
Act and Sec. 726.4 of this subchapter, the amount of the security shall 
not be less than $175,000, and may be a higher amount as determined by 
the Director, taking into account the life expectancies of the claimant 
and any dependents using the most recent life expectancy tables 
published by the Social Security Administration; or
    (2) In a case involving a coal mine construction or transportation 
employer, the amount of the security shall be determined by the 
Director, taking into account the life expectancies of the claimant and 
any dependents using the most recent life expectancy tables published by 
the Social Security Administration.
    (c) If the operator or other employer fails to provide proof of such 
security to the Director within 30 days of its receipt of the Director's 
request to secure the payment of benefits issued under paragraph (a) of 
this section, the appropriate adjudication officer shall issue an order 
requiring the operator or other employer to make a deposit of negotiable 
securities with a Federal Reserve Bank in the amount required by 
paragraph (b). Such securities shall comply with the requirements of 
Sec. Sec. 726.106(c) and 726.107 of this subchapter. In a case in which 
the effective order was issued by a district director, the district 
director shall be considered the appropriate adjudication officer. In 
any other case, the administrative law judge who issued the most recent 
decision in the case, or such other administrative law judge as the 
Chief Administrative Law Judge shall designate, shall be considered the 
appropriate adjudication officer, and shall issue an order under this 
paragraph on motion of the Director. The administrative law judge shall 
have jurisdiction to issue an order under this paragraph notwithstanding 
the pendency of an appeal of the award of benefits with the Benefits 
Review Board or court.
    (d) An order issued under this section shall be considered effective 
when issued. Disputes regarding such orders shall be resolved in 
accordance with subpart F of this part.
    (e) Notwithstanding any further review of the order in accordance 
with subpart F of this part, if an operator or other employer subject to 
an order issued under this section fails to comply with such order, the 
appropriate adjudication officer shall certify such non-compliance to 
the appropriate United States district court in accordance with Sec. 
725.351(c).
    (f) Security posted in accordance with this section may be used to 
make payment of benefits that become due with respect to the claim in 
accordance with Sec. 725.502. In the event that either the order 
awarding compensation or the order issued under this section is vacated 
or reversed, the operator or other employer may apply to the appropriate 
adjudication officer for an order authorizing the return of any amounts 
deposited with a Federal Reserve Bank and not yet disbursed, and such 
application shall be granted. If at any time the Director determines 
that additional security is required beyond that initially required by 
paragraph (b) of this section, he may request the operator or other 
employer to increase the amount. Such request shall be treated as if it 
were issued under paragraph (a) of this section.
    (g) If a coal mine construction or transportation employer fails to 
comply with an order issued under paragraph (c), and such employer is a 
corporation, the provisions of Sec. 725.609 shall be applicable to the 
president, secretary, and treasurer of such employer.



Sec. 725.607  Payments in addition to compensation.

    (a) If any benefits payable under the terms of an award by a 
district director (Sec. 725.419(d)), a decision and order filed and 
served by an administrative law judge (Sec. 725.478), or a decision 
filed by the Board or a U.S. court of appeals, are not paid by an 
operator or other employer ordered to make such payments within 10 days 
after such payments become due, there shall be added to such unpaid 
benefits an amount

[[Page 1033]]

equal to 20 percent thereof, which shall be paid to the claimant at the 
same time as, but in addition to, such benefits, unless review of the 
order making such award is sought as provided in section 21 of the LHWCA 
and an order staying payments has been issued.
    (b) If, on account of an operator's or other employer's failure to 
pay benefits as provided in paragraph (a) of this section, benefit 
payments are made by the fund, the eligible claimant shall nevertheless 
be entitled to receive such additional compensation to which he or she 
may be eligible under paragraph (a) of this section, with respect to all 
amounts paid by the fund on behalf of such operator or other employer.
    (c) The fund shall not be liable for payments in addition to 
compensation under any circumstances.



Sec. 725.608  Interest.

    (a)(1) In any case in which an operator fails to pay benefits that 
are due (Sec. 725.502), the beneficiary shall also be entitled to 
simple annual interest, computed from the date on which the benefits 
were due. The interest shall be computed through the date on which the 
operator paid the benefits, except that the beneficiary shall not be 
entitled to interest for any period following the date on which the 
beneficiary received payment of any benefits from the fund pursuant to 
Sec. 725.522.
    (2) In any case in which an operator is liable for the payment of 
retroactive benefits, the beneficiary shall also be entitled to simple 
annual interest on such benefits, computed from 30 days after the date 
of the first determination that such an award should be made. The first 
determination that such an award should be made may be a district 
director's initial determination of entitlement, an award made by an 
administrative law judge or a decision by the Board or a court, 
whichever is the first such determination of entitlement made upon the 
claim.
    (3) In any case in which an operator is liable for the payment of 
additional compensation (Sec. 725.607), the beneficiary shall also be 
entitled to simple annual interest computed from the date upon which the 
beneficiary's right to additional compensation first arose.
    (4) In any case in which an operator is liable for the payment of 
medical benefits, the beneficiary or medical provider to whom such 
benefits are owed shall also be entitled to simple annual interest, 
computed from the date upon which the services were rendered, or from 30 
days after the date of the first determination that the miner is 
generally entitled to medical benefits, whichever is later. The first 
determination that the miner is generally entitled to medical benefits 
may be a district director's initial determination of entitlement, an 
award made by an administrative law judge or a decision by the Board or 
a court, whichever is the first such determination of general 
entitlement made upon the claim. The interest shall be computed through 
the date on which the operator paid the benefits, except that the 
beneficiary or medical provider shall not be entitled to interest for 
any period following the date on which the beneficiary or medical 
provider received payment of any benefits from the fund pursuant to 
Sec. 725.522 or Subpart I of this part.
    (b) If an operator or other employer fails or refuses to pay any or 
all benefits due pursuant to an award of benefits or an initial 
determination of eligibility made by the district director and the fund 
undertakes such payments, such operator or other employer shall be 
liable to the fund for simple annual interest on all payments made by 
the fund for which such operator is determined liable, computed from the 
first date on which such benefits are paid by the fund, in addition to 
such operator's liability to the fund, as is otherwise provided in this 
part. Interest payments owed pursuant to this paragraph shall be paid 
directly to the fund.
    (c) In any case in which an operator is liable for the payment of an 
attorney's fee pursuant to Sec. 725.367, and the attorney's fee is 
payable because the award of benefits has become final, the attorney 
shall also be entitled to simple annual interest, computed from the date 
on which the attorney's fee was awarded. The interest shall be computed 
through the date on which the operator paid the attorney's fee.
    (d) The rates of interest applicable to paragraphs (a), (b), and (c) 
of this section shall be computed as follows:

[[Page 1034]]

    (1) For all amounts outstanding prior to January 1, 1982, the rate 
shall be 6% simple annual interest;
    (2) For all amounts outstanding for any period during calendar year 
1982, the rate shall be 15% simple annual interest; and
    (3) For all amounts outstanding during any period after calendar 
year 1982, the rate shall be simple annual interest at the rate 
established by section 6621 of the Internal Revenue Code (26 U.S.C.) 
which is in effect for such period.
    (e) The fund shall not be liable for the payment of interest under 
any circumstances, other than the payment of interest on advances from 
the United States Treasury as provided by section 9501(c) of the 
Internal Revenue Code (26 U.S.C.).



Sec. 725.609  Enforcement against other persons.

    In any case in which an award of benefits creates obligations on the 
part of an operator or insurer that may be enforced under the provisions 
of this subpart, such obligations may also be enforced, in the 
discretion of the Secretary or district director, as follows:
    (a) In a case in which the operator is a sole proprietorship or 
partnership, against any person who owned, or was a partner in, such 
operator during any period commencing on or after the date on which the 
miner was last employed by the operator;
    (b) In a case in which the operator is a corporation that failed to 
secure its liability for benefits in accordance with section 423 of the 
Act and Sec. 726.4, and the operator has not secured its liability for 
the claim in accordance with Sec. 725.606, against any person who 
served as the president, secretary, or treasurer of such corporation 
during any period commencing on or after the date on which the miner was 
last employed by the operator;
    (c) In a case in which the operator is no longer capable of assuming 
its liability for the payment of benefits (Sec. 725.494(e)), against 
any operator which became a successor operator with respect to the 
liable operator (Sec. 725.492) after the date on which the claim was 
filed, beginning with the most recent such successor operator;
    (d) In a case in which the operator is no longer capable of assuming 
its liability for the payment of benefits (Sec. 725.494(e)), and such 
operator was a subsidiary of a parent company or a product of a joint 
venture, or was substantially owned or controlled by another business 
entity, against such parent entity, any member of such joint venture, or 
such controlling business entity; or
    (e) Against any other person who has assumed or succeeded to the 
obligations of the operator or insurer by operation of any state or 
federal law, or by any other means.



Sec. 725.620  Failure to secure benefits; other penalties.

    (a) If an operator fails to discharge its insurance obligations 
under the Act, the provisions of subpart D of part 726 of this 
subchapter shall apply.
    (b) Any employer who knowingly transfers, sells, encumbers, assigns, 
or in any manner disposes of, conceals, secrets, or destroys any 
property belonging to such employer, after one of its employees has been 
injured within the purview of the Act, and with intent to avoid the 
payment of benefits under the Act to such miner or his or her 
dependents, shall be guilty of a misdemeanor and, upon conviction 
thereof, shall be punished by a fine of not more than $1,000, or by 
imprisonment for not more than one year, or by both. In any case where 
such employer is a corporation, the president, secretary, and treasurer 
thereof shall be also severally liable for such penalty or imprisonment 
as well as jointly liable with such corporation for such fine.
    (c) No agreement by a miner to pay any portion of a premium paid to 
a carrier by such miner's employer or to contribute to a benefit fund or 
department maintained by such employer for the purpose of providing 
benefits or medical services and supplies as required by this part shall 
be valid; and any employer who makes a deduction for such purpose from 
the pay of a miner entitled to benefits under the Act shall be guilty of 
a misdemeanor and upon conviction thereof shall be punished by a fine of 
not more than $1,000.

[[Page 1035]]

    (d) No agreement by a miner to waive his or her right to benefits 
under the Act and the provisions of this part shall be valid.
    (e) This section shall not affect any other liability of the 
employer under this part.



Sec. 725.621  Reports.

    (a) Upon making the first payment of benefits and upon suspension, 
reduction, or increase of payments, the operator or other employer 
responsible for making payments shall immediately notify the district 
director of the action taken, in accordance with a form prescribed by 
the Office.
    (b) Within 16 days after final payment of benefits has been made by 
an employer, such employer shall so notify the district director, in 
accordance with a form prescribed by the Office, stating that such final 
payment, has been made, the total amount of benefits paid, the name of 
the beneficiary, and such other information as the Office deems 
pertinent.
    (c) The Director may from time to time prescribe such additional 
reports to be made by operators, other employers, or carriers as the 
Director may consider necessary for the efficient administration of the 
Act.
    (d) Any employer who fails or refuses to file any report required of 
such employer under this section shall be subject to a civil penalty not 
to exceed $500 for each failure or refusal, which penalty shall be 
determined in accordance with the procedures set forth in subpart D of 
part 726 of this subchapter, as appropriate. The maximum penalty 
applicable to any violation of this paragraph that takes place after 
January 19, 2001 shall be $550.
    (e) No request for information or response to such request shall be 
considered a report for purposes of this section or the Act, unless it 
is so designated by the Director or by this section.



        Subpart J_Medical Benefits and Vocational Rehabilitation



Sec. 725.701  Availability of medical benefits.

    (a) A miner who is determined to be eligible for benefits under this 
part or part 727 of this subchapter (see Sec. 725.4(d)) is entitled to 
medical benefits as set forth in this subpart as of the date of his or 
her claim, but in no event before January 1, 1974. No medical benefits 
shall be provided to the survivor or dependent of a miner under this 
part.
    (b) A responsible operator, other employer, or where there is 
neither, the fund, shall furnish a miner entitled to benefits under this 
part with such medical, surgical, and other attendance and treatment, 
nursing and hospital services, medicine and apparatus, and any other 
medical service or supply, for such periods as the nature of the miner's 
pneumoconiosis and disability requires.
    (c) The medical benefits referred to in paragraphs (a) and (b) of 
this section shall include palliative measures useful only to prevent 
pain or discomfort associated with the miner's pneumoconiosis or 
attendant disability.
    (d) The costs recoverable under this subpart shall include the 
reasonable cost of travel necessary for medical treatment (to be 
determined in accordance with prevailing United States government 
mileage rates) and the reasonable documented cost to the miner or 
medical provider incurred in communicating with the employer, carrier, 
or district director on matters connected with medical benefits.
    (e) If a miner receives a medical service or supply, as described in 
this section, for any pulmonary disorder, there shall be a rebuttable 
presumption that the disorder is caused or aggravated by the miner's 
pneumoconiosis. The party liable for the payment of benefits may rebut 
the presumption by producing credible evidence that the medical service 
or supply provided was for a pulmonary disorder apart from those 
previously associated with the miner's disability, or was beyond that 
necessary to effectively treat a covered disorder, or was not for a 
pulmonary disorder at all.
    (f) Evidence that the miner does not have pneumoconiosis or is not 
totally disabled by pneumoconiosis arising out of coal mine employment 
is insufficient to defeat a request for coverage of any medical service 
or supply under this subpart. In determining whether

[[Page 1036]]

the treatment is compensable, the opinion of the miner's treating 
physician may be entitled to controlling weight pursuant to Sec. 
718.104(d). A finding that a medical service or supply is not covered 
under this subpart shall not otherwise affect the miner's entitlement to 
benefits.



Sec. 725.702  Claims for medical benefits only under section 11 of the 
Reform Act.

    (a) Section 11 of the Reform Act directs the Secretary of Health, 
Education and Welfare to notify each miner receiving benefits under part 
B of title IV of the Act that he or she may file a claim for medical 
treatment benefits described in this subpart. Section 725.308(b) 
provides that a claim for medical treatment benefits shall be filed on 
or before December 31, 1980, unless the period is enlarged for good 
cause shown. This section sets forth the rules governing the processing, 
adjudication, and payment of claims filed under section 11.
    (b)(1) A claim filed pursuant to the notice described in paragraph 
(a) of this section shall be considered a claim for medical benefits 
only, and shall be filed, processed, and adjudicated in accordance with 
the provisions of this part, except as provided in this section. While a 
claim for medical benefits must be treated as any other claim filed 
under part C of title IV of the Act, the Department shall accept the 
Social Security Administration's finding of entitlement as its initial 
determination.
    (2) In the case of a part B beneficiary whose coal mine employment 
terminated before January 1, 1970, the Secretary shall make an immediate 
award of medical benefits. Where the part B beneficiary's coal mine 
employment terminated on or after January 1, 1970, the Secretary shall 
immediately authorize the payment of medical benefits and thereafter 
inform the responsible operator, if any, of the operator's right to 
contest the claimant's entitlement for medical benefits.
    (c) A miner on whose behalf a claim is filed under this section (see 
Sec. 725.301) must have been alive on March 1, 1978, in order for the 
claim to be considered.
    (d) The criteria contained in subpart C of part 727 of this 
subchapter (see Sec. 725.4(d)) are applicable to claims for medical 
benefits filed under this section.
    (e) No determination made with respect to a claim filed under this 
section shall affect any determination previously made by the Social 
Security Administration. The Social Security Administration may, 
however, reopen a previously approved claim if the conditions set forth 
in Sec. 410.672(c) of this chapter are present. These conditions are 
generally limited to fraud or concealment.
    (f) If medical benefits are awarded under this section, such 
benefits shall be payable by a responsible coal mine operator (see 
subpart G of this part), if the miner's last employment occurred on or 
after January 1, 1970, and in all other cases by the fund. An operator 
which may be required to provide medical treatment benefits to a miner 
under this section shall have the right to participate in the 
adjudication of the claim as is otherwise provided in this part.
    (g) Any miner whose coal mine employment terminated after January 1, 
1970, may be required to submit to a medical examination requested by an 
identified operator. The unreasonable refusal to submit to such an 
examination shall have the same consequences as are provided under Sec. 
725.414.
    (h) If a miner is determined eligible for medical benefits in 
accordance with this section, such benefits shall be provided from the 
date of filing, except that such benefits may also include payments for 
any unreimbursed medical treatment costs incurred personally by such 
miner during the period from January 1, 1974, to the date of filing 
which are attributable to medical care required as a result of the 
miner's total disability due to pneumoconiosis. No reimbursement for 
health insurance premiums, taxes attributable to any public health 
insurance coverage, or other deduction or payments made for the purpose 
of securing third party liability for medical care costs is authorized 
by this section. If a miner seeks reimbursement for medical care costs 
personally incurred before the filing of a claim under this section, the

[[Page 1037]]

district director shall require documented proof of the nature of the 
medical service provided, the identity of the medical provider, the cost 
of the service, and the fact that the cost was paid by the miner, before 
reimbursement for such cost may be awarded.



Sec. 725.703  Physician defined.

    The term ``physician'' includes only doctors of medicine (MD) and 
osteopathic practitioners within the scope of their practices as defined 
by State law. No treatment or medical services performed by any other 
practitioner of the healing arts is authorized by this part, unless such 
treatment or service is authorized and supervised both by a physician as 
defined in this section and the district director.



Sec. 725.704  Notification of right to medical benefits; authorization 
of treatment.

    (a) Upon notification to a miner of such miner's entitlement to 
benefits, the Office shall provide the miner with a list of authorized 
treating physicians and medical facilities in the area of the miner's 
residence. The miner may select a physician from this list or may select 
another physician with approval of the Office. Where emergency services 
are necessary and appropriate, authorization by the Office shall not be 
required.
    (b) The Office may, on its own initiative, or at the request of a 
responsible operator, order a change of physicians or facilities, but 
only where it has been determined that the change is desirable or 
necessary in the best interest of the miner. The miner may change 
physicians or facilities subject to the approval of the Office.
    (c) If adequate treatment cannot be obtained in the area of the 
claimant's residence, the Office may authorize the use of physicians or 
medical facilities outside such area as well as reimbursement for travel 
expenses and overnight accommodations.



Sec. 725.705  Arrangements for medical care.

    (a) Operator liability. If an operator has been determined liable 
for the payment of benefits to a miner, the Office shall notify such 
operator or insurer of the names, addresses, and telephone numbers of 
the authorized providers of medical benefits chosen by an entitled 
miner, and shall require the operator or insurer to:
    (1) Notify the miner and the providers chosen that such operator 
will be responsible for the cost of medical services provided to the 
miner on account of the miner's total disability due to pneumoconiosis;
    (2) Designate a person or persons with decisionmaking authority with 
whom the Office, the miner and authorized providers may communicate on 
matters involving medical benefits provided under this subpart and 
notify the Office, miner and providers of such designation;
    (3) Make arrangements for the direct reimbursement of providers for 
their services.
    (b) Fund liability. If there is no operator found liable for the 
payment of benefits, the Office shall make necessary arrangements to 
provide medical care to the miner, notify the miner and medical care 
facility selected of the liability of the fund, designate a person or 
persons with whom the miner or provider may communicate on matters 
relating to medical care, and make arrangements for the direct 
reimbursement of the medical provider.



Sec. 725.706  Authorization to provide medical services.

    (a) Except as provided in paragraph (b) of this section, medical 
services from an authorized provider which are payable under Sec. 
725.701 shall not require prior approval of the Office or the 
responsible operator.
    (b) Except where emergency treatment is required, prior approval of 
the Office or the responsible operator shall be obtained before any 
hospitalization or surgery, or before ordering an apparatus for 
treatment where the purchase price exceeds $300. A request for approval 
of non-emergency hospitalization or surgery shall be acted upon 
expeditiously, and approval or disapproval will be given by telephone if 
a written response cannot be given within 7 days following the request. 
No employee of the Department of Labor, other than a district director 
or the Chief, Branch of Medical Analysis and

[[Page 1038]]

Services, DCMWC, is authorized to approve a request for hospitalization 
or surgery by telephone.
    (c) Payment for medical services, treatment, or an apparatus shall 
be made at no more than the rate prevailing in the community in which 
the providing physician, medical facility or supplier is located.



Sec. 725.707  Reports of physicians and supervision of medical care.

    (a) Within 30 days following the first medical or surgical treatment 
provided under Sec. 725.701, the treating physician or facility shall 
furnish to the Office and the responsible operator, if any, a report of 
such treatment.
    (b) In order to permit continuing supervision of the medical care 
provided to the miner with respect to the necessity, character and 
sufficiency of any medical care furnished or to be furnished, the 
treating physician, facility, employer or carrier shall provide such 
reports in addition to those required by paragraph (a) of this section 
as the Office may from time to time require. Within the discretion of 
the district director, payment may be refused to any medical provider 
who fails to submit any report required by this section.



Sec. 725.708  Disputes concerning medical benefits.

    (a) Whenever a dispute develops concerning medical services under 
this part, the district director shall attempt to informally resolve 
such dispute. In this regard the district director may, on his or her 
own initiative or at the request of the responsible operator order the 
claimant to submit to an examination by a physician selected by the 
district director.
    (b) If no informal resolution is accomplished, the district director 
shall refer the case to the Office of Administrative Law Judges for 
hearing in accordance with this part. Any such hearing shall be 
scheduled at the earliest possible time and shall take precedence over 
all other requests for hearing except for prior requests for hearing 
arising under this section and as provided by Sec. 727.405 of this 
subchapter (see Sec. 725.4(d)). During the pendency of such 
adjudication, the Director may order the payment of medical benefits 
prior to final adjudication under the same conditions applicable to 
benefits awarded under Sec. 725.522.
    (c) In the development or adjudication of a dispute over medical 
benefits, the adjudication officer is authorized to take whatever action 
may be necessary to protect the health of a totally disabled miner.
    (d) Any interested medical provider may, if appropriate, be made a 
party to a dispute over medical benefits.



Sec. 725.710  Objective of vocational rehabilitation.

    The objective of vocational rehabilitation is the return of a miner 
who is totally disabled for work in or around a coal mine and who is 
unable to utilize those skills which were employed in the miner's coal 
mine employment to gainful employment commensurate with such miner's 
physical impairment. This objective may be achieved through a program of 
re-evaluation and redirection of the miner's abilities, or retraining in 
another occupation, and selective job placement assistance.



Sec. 725.711  Requests for referral to vocational rehabilitation 
assistance.

    Each miner who has been determined entitled to receive benefits 
under part C of title IV of the Act shall be informed by the OWCP of the 
availability and advisability of vocational rehabilitation services. If 
such miner chooses to avail himself or herself of vocational 
rehabilitation, his or her request shall be processed and referred by 
OWCP vocational rehabilitation advisors pursuant to the provisions of 
Sec. Sec. 702.501 through 702.508 of this chapter as is appropriate.



PART 726_BLACK LUNG BENEFITS; REQUIREMENTS FOR COAL MINE OPERATOR'S 
INSURANCE--Table of Contents




                            Subpart A_General

Sec.
726.1 Statutory insurance requirements for coal mine operators.
726.2 Purpose and scope of this part.
726.3 Relationship of this part to other parts in this subchapter.
726.4 Who must obtain insurance coverage.
726.5 Effective date of insurance coverage.

[[Page 1039]]

726.6 The Office of Workers' Compensation Programs.
726.7 Forms, submission of information.
726.8 Definitions.

                Subpart B_Authorization of Self-Insurers

726.101 Who may be authorized to self-insure.
726.102 Application for authority to become a self-insurer; how filed; 
          information to be submitted.
726.103 Application for authority to self-insure; effect of regulations 
          contained in this part.
726.104 Action by the Office upon application of operator.
726.105 Fixing the amount of security.
726.106 Type of security.
726.107 Deposits of negotiable securities with Federal Reserve banks or 
          the Treasurer of the United States; authority to sell such 
          securities; interest thereon.
726.108 Withdrawal of negotiable securities.
726.109 Increase or reduction in the amount of security.
726.110 Filing of agreement and undertaking.
726.111 Notice of authorization to self-insure.
726.112 Reports required of self-insurer; examination of accounts of 
          self-insurer.
726.113 Disclosure of confidential information.
726.114 Period of authorization as self-insurer; reauthorization.
726.115 Revocation of authorization to self-insure.

                      Subpart C_Insurance Contracts

726.201 Insurance contracts--generally.
726.202 Who may underwrite an operator's liability.
726.203 Federal Coal Mine Health and Safety Act endorsement.
726.204 Statutory policy provisions.
726.205 Other forms of endorsement and policies.
726.206 Terms of policies.
726.207 Discharge by the carrier of obligations and duties of operator.

                           Reports by Carrier

726.208 Report by carrier of issuance of policy or endorsement.
726.209 Report; by whom sent.
726.210 Agreement to be bound by report.
726.211 Name of one employer only shall be given in each report.
726.212 Notice of cancellation.
726.213 Reports by carriers concerning the payment of benefits.

                     Subpart D_Civil Money Penalties

726.300 Purpose and scope.
726.301 Definitions.
726.302 Determination of penalty.
726.303 Notification; investigation.
726.304 Notice of initial assessment.
726.305 Contents of notice.
726.306 Finality of administrative assessment.
726.307 Form of notice of contest and request for hearing.
726.308 Service and computation of time.
726.309 Referral to the Office of Administrative Law Judges.
726.310 Appointment of Administrative Law Judge and notification of 
          hearing date.
726.311 Evidence.
726.312 Burdens of proof.
726.313 Decision and Order of Administrative Law Judge.
726.314 Review by the Secretary.
726.315 Contents.
726.316 Filing and service.
726.317 Discretionary review.
726.318 Final decision of the Secretary.
726.319 Retention of official record.
726.320 Collection and recovery of penalty.

    Authority: 5 U.S.C. 301, Reorganization Plan No. 6 of 1950, 15 FR 
3174, 30 U.S.C. 901 et seq., 902(f), 925, 932, 933, 934, 936, 945; 33 
U.S.C. 901 et seq., Secretary's Order 7-87, 52 FR 48466, Employment 
Standards Order No. 90-02.

    Source: 65 FR 80097, Dec. 20, 2000, unless otherwise noted.



                            Subpart A_General



Sec. 726.1  Statutory insurance requirements for coal mine operators.

    Section 423 of title IV of the Federal Coal Mine Health and Safety 
Act as amended (hereinafter the Act) requires each coal mine operator 
who is operating or has operated a coal mine in a State which is not 
included in the list published by the Secretary (see part 722 of this 
subchapter) to secure the payment of benefits for which he may be found 
liable under section 422 of the Act and the provisions of this 
subchapter by either:
    (a) Qualifying as a self-insurer, or
    (b) By subscribing to and maintaining in force a commercial 
insurance contract (including a policy or contract procured from a State 
agency).



Sec. 726.2  Purpose and scope of this part.

    (a) This part provides rules directing and controlling the 
circumstances under which a coal mine operator shall fulfill his 
insurance obligations under the Act.

[[Page 1040]]

    (b) This Subpart A sets forth the scope and purpose of this part and 
generally describes the statutory framework within which this part is 
operative.
    (c) Subpart B of this part sets forth the criteria a coal mine 
operator must meet in order to qualify as a self-insurer.
    (d) Subpart C of this part sets forth the rules and regulations of 
the Secretary governing contracts of insurance entered into by coal mine 
operators and commercial insurance sources for the payment of black lung 
benefits under part C of the Act.
    (e) Subpart D of this part sets forth the rules governing the 
imposition of civil money penalties on coal mine operators that fail to 
secure their liability under the Act.



Sec. 726.3  Relationship of this part to other parts in this subchapter.

    (a) This part 726 implements and effectuates responsibilities for 
the payment of black lung benefits placed upon coal mine operators by 
sections 415 and 422 of the Act and the regulations of the Secretary in 
this subchapter, particularly those set forth in part 725 of this 
subchapter. All definitions, usages, procedures, and other rules 
affecting the responsibilities of coal mine operators prescribed in part 
725 of this subchapter are hereby made applicable, as appropriate, to 
this part 726.
    (b) If the provisions of this part appear to conflict with any 
provision of any other part in this subchapter, the apparently 
conflicting provisions should be read harmoniously to the fullest extent 
possible. If a harmonious interpretation is not possible, the provisions 
of this part should be applied to govern the responsibilities and 
obligations of coal mine operators to secure the payment of black lung 
benefits as prescribed by the Act. The provisions of this part do not 
apply to matters falling outside the scope of this part.



Sec. 726.4  Who must obtain insurance coverage.

    (a) Section 423 of part C of title IV of the Act requires each 
operator of a coal mine or former operator in any State which does meet 
the requirements prescribed by the Secretary pursuant to section 411 of 
part C of title IV of the Act to self-insure or obtain a policy or 
contract of insurance to guarantee the payment of benefits for which 
such operator may be adjudicated liable under section 422 of the Act. In 
enacting sections 422 and 423 of the Act Congress has unambiguously 
expressed its intent that coal mine operators bear the cost of providing 
the benefits established by part C of title IV of the Act. Section 3 of 
the Act defines an ``operator'' as any owner, lessee, or other person 
who operates, controls, or supervises a coal mine.
    (b) Section 422(i) of the Act clearly recognizes that any individual 
or business entity who is or was a coal mine operator may be found 
liable for the payment of pneumoconiosis benefits after December 31, 
1973. Within this framework it is clear that the Secretary has wide 
latitude for determining which operator shall be liable for the payment 
of part C benefits. Comprehensive standards have been promulgated in 
subpart G of part 725 of this subchapter for the purpose of guiding the 
Secretary in making such determination. It must be noted that pursuant 
to these standards any parent or subsidiary corporation, any individual 
or corporate partner, or partnership, any lessee or lessor of a coal 
mine, any joint venture or participant in a joint venture, any 
transferee or transferor of a corporation or other business entity, any 
former, current, or future operator or any other form of business entity 
which has had or will have a substantial and reasonably direct interest 
in the operation of a coal mine may be determined liable for the payment 
of pneumoconiosis benefits after December 31, 1973. The failure of any 
such business entity to self-insure or obtain a policy or contract of 
insurance shall in no way relieve such business entity of its obligation 
to pay pneumoconiosis benefits in respect of any case in which such 
business entity's responsibility for such payments has been properly 
adjudicated. Any business entity described in this section shall take 
appropriate steps to insure that any liability imposed by part C of the 
Act on such business entity shall be dischargeable.

[[Page 1041]]



Sec. 726.5  Effective date of insurance coverage.

    Pursuant to section 422(c) of part C of title IV of the Act, no coal 
mine operator shall be responsible for the payment of any benefits 
whatsoever for any period prior to January 1, 1974. However, coal mine 
operators shall be liable as of January 1, 1974, for the payment of 
benefits in respect of claims which were filed under section 415 of part 
B of title IV of the Act after July 1, 1973. Section 415(a)(3) requires 
the Secretary to notify any operator who may be liable for the payment 
of benefits under part C of title IV beginning on January 1, 1974, of 
the pendency of a section 415 claim. Section 415(a)(5) declares that any 
operator who has been notified of the pendency of a section 415 claim 
shall be bound by the determination of the Secretary as to such 
operator's liability and as to the claimant's entitlement to benefits as 
if the claim were filed under part C of title IV of the Act and section 
422 thereof had been applicable to such operator. Therefore, even though 
no benefit payments shall be required of an operator prior to January 1, 
1974, the liability for these payments may be finally adjudicated at any 
time after July 1, 1973. Neither the failure of an operator to exercise 
his right to participate in the adjudication of such a claim nor the 
failure of an operator to obtain insurance coverage in respect of claims 
filed after June 30, 1973, but before January 1, 1974, shall excuse such 
operator from his liability for the payment of benefits to such 
claimants under part C of title IV of the Act.



Sec. 726.6  The Office of Workers' Compensation Programs.

    The Office of Workers' Compensation Programs (hereinafter the Office 
or OWCP) is that subdivision of the Employment Standards Administration 
of the U.S. Department of Labor which has been empowered by the 
Secretary of Labor to carry out his functions under section 415 and part 
C of title IV of the Act. As noted throughout this part 726 the Office 
shall perform a number of functions with respect to the regulation of 
both the self-insurance and commercial insurance programs. All 
correspondence with or submissions to the Office should be addressed as 
follows:

Division of Coal Mine Workers' Compensation, Office of Workers' 
Compensation Programs, Employment Standards Administration, U.S. 
Department of Labor, Washington, D.C. 20210



Sec. 726.7  Forms, submission of information.

    Any information required by this part 726 to be submitted to the 
Office of Workmen's Compensation Programs or any other office or 
official of the Department of Labor, shall be submitted on such forms or 
in such manner as the Secretary deems appropriate and has authorized 
from time to time for such purposes.



Sec. 726.8  Definitions.

    In addition to the definitions provided in part 725 of this 
subchapter, the following definitions apply to this part:
    (a) Director means the Director, Office of Workers' Compensation 
Programs, and includes any official of the Office of Workers' 
Compensation Programs authorized by the Director to perform any of the 
functions of the Director under this part and part 725 of this 
subchapter.
    (b) Person includes any individual, partnership, corporation, 
association, business trust, legal representative, or organized group of 
persons.
    (c) Secretary means the Secretary of Labor or such other official as 
the Secretary shall designate to carry out any responsibility under this 
part.
    (d) The terms employ and employment shall be construed as broadly as 
possible, and shall include any relationship under which an operator 
retains the right to direct, control, or supervise the work performed by 
a miner, or any other relationship under which an operator derives a 
benefit from the work performed by a miner. Any individuals who 
participate with one or more persons in the mining of coal, such as 
owners, proprietors, partners, and joint venturers, whether they are 
compensated by wages, salaries, piece rates, shares, profits, or by any 
other means, shall be deemed employees. It is the specific intention of 
this paragraph to disregard any financial arrangement or business entity 
devised

[[Page 1042]]

by the actual owners or operators of a coal mine or coal mine-related 
enterprise to avoid the payment of benefits to miners who, based upon 
the economic reality of their relationship to this enterprise, are, in 
fact, employees of the enterprise.



                Subpart B_Authorization of Self-Insurers



Sec. 726.101  Who may be authorized to self-insure.

    (a) Pursuant to section 423 of part C of title IV of the Act, 
authorization to self-insure against liability incurred by coal mine 
operators on account of the total disability or death of miners due to 
pneumoconiosis may be granted or denied in the discretion of the 
Secretary. The provisions of this subpart describe the minimum 
requirements established by the Secretary for determining whether any 
particular coal mine operator shall be authorized as a self-insurer.
    (b) The minimum requirements which must be met by any operator 
seeking authorization to self-insure are as follows:
    (1) The operator must, at the time of application, have been in the 
business of mining coal for at least the 3 consecutive years prior to 
such application; and,
    (2) The operator must demonstrate the administrative capacity to 
fully service such claims as may be filed against him; and,
    (3) The operator's average current assets over the preceding 3 years 
(in computing average current assets such operator shall not include the 
amount of any negotiable securities which he may be required to deposit 
to secure his obligations under the Act) must exceed current liabilities 
by the sum of--
    (i) The estimated aggregate amount of black lung benefits (including 
medical benefits) which such operator may expect to be required to pay 
during the ensuing year; and,
    (ii) The annual premium cost for any indemnity bond purchased; and
    (4) Such operator must obtain security, in a form approved by the 
Office (see Sec. 726.104) and in an amount to be determined by the 
Office (see Sec. 726.105); and
    (5) No operator with fewer than 5 full-time employee-miners shall be 
permitted to self-insure.
    (c) No operator who is unable to meet the requirements of this 
section should apply for authorization to self-insure and no application 
for self-insurance shall be approved by the Office until such time as 
the amount prescribed by the Office has been secured in accordance with 
this subpart.



Sec. 726.102  Application for authority to become a self-insurer; how 
filed; information to be submitted.

    (a) How filed. Application for authority to become a self-insurer 
shall be addressed to the Office and be made on a form provided by the 
Office. Such application shall be signed by the applicant over his 
typewritten name and if the applicant is not an individual, by the 
principal officer of the applicant duly authorized to make such 
application over his typewritten name and official designation and shall 
be sworn to by him. If the applicant is a corporation, the corporate 
seal shall be affixed. The application shall be filed with the Office in 
Washington, D.C.
    (b) Information to be submitted. Each application for authority to 
self-insure shall contain:
    (1) A statement of the employer's payroll report for each of the 
preceding 3 years;
    (2) A statement of the average number of employees engaged in 
employment within the purview of the Act for each of the preceding 3 
years;
    (3) A list of the mine or mines to be covered by any particular 
self-insurance agreement. Each such mine or mines listed shall be 
described by name and reference shall be made to the Federal 
Identification Number assigned such mine by the Bureau of Mines, U.S. 
Department of the Interior;
    (4) A certified itemized statement of the gross and net assets and 
liabilities of the operator for each of the 3 preceding years in such 
manner as prescribed by the Office;
    (5) A statement demonstrating the applicant's administrative 
capacity to provide or procure adequate servicing for a claim including 
both medical and dollar claims; and

[[Page 1043]]

    (6) In addition to the aforementioned, the Office may in its 
discretion, require the applicant to submit such further information or 
such evidence as the Office may deem necessary to have in order to 
enable it to give adequate consideration to such application.
    (c) Who may file. An application for authorization to self-insure 
may be filed by any parent or subsidiary corporation, partner or 
partnership, party to a joint venture or joint venture, individual, or 
other business entity which may be determined liable for the payment of 
black lung benefits under part C of title IV of the Act, regardless of 
whether such applicant is directly engaged in the business of mining 
coal. However, in each case for which authorization to self-insure is 
granted, the agreement and undertaking filed pursuant to Sec. 726.110 
and the security deposit shall be respectively filed by and deposited in 
the name of the applicant only.



Sec. 726.103  Application for authority to self-insure; effect of 
regulations contained in this part.

    As appropriate, each of the regulations, interpretations and 
requirements contained in this part 726 including those described in 
subpart C of this part shall be binding upon each applicant under this 
subpart, and the applicant's consent to be bound by all requirements of 
the said regulations shall be deemed to be included in and a part of the 
application, as fully as though written therein.



Sec. 726.104  Action by the Office upon application of operator.

    (a) Upon receipt of a completed application for authorization to 
self-insure, the Office shall, after examination of the information 
contained in the application, either deny the request or determine the 
amount of security which must be given by the applicant to guarantee the 
payment of benefits and the discharge of all other obligations which may 
be required of such applicant under the Act.
    (b) The applicant shall thereafter be notified that he may give 
security in the amount fixed by the Office (see Sec. 726.105):
    (1) In the form of an indemnity bond with sureties satisfactory to 
the Office;
    (2) By a deposit of negotiable securities with a Federal Reserve 
Bank in compliance with Sec. Sec. 726.106(c) and 726.107;
    (3) In the form of a letter of credit issued by a financial 
institution satisfactory to the Office (except that a letter of credit 
shall not be sufficient by itself to satisfy a self-insurer's 
obligations under this part); or
    (4) By funding a trust pursuant to section 501(c)(21) of the 
Internal Revenue Code (26 U.S.C.).
    (c) Any applicant who cannot meet the security deposit requirements 
imposed by the Office should proceed to obtain a commercial policy or 
contract of insurance. Any applicant for authorization to self-insure 
whose application has been rejected or who believes that the security 
deposit requirements imposed by the Office are excessive may, in 
writing, request that the Office review its determination. A request for 
review should contain such information as may be necessary to support 
the request that the amount of security required be reduced.
    (d) Upon receipt of any such request, the Office shall review its 
previous determination in light of any new or additional information 
submitted and inform the applicant whether or not a reduction in the 
amount of security initially required is warranted.



Sec. 726.105  Fixing the amount of security.

    The Office shall require the amount of security which it deems 
necessary and sufficient to secure the performance by the applicant of 
all obligations imposed upon him as an operator by the Act. In 
determining the amount of security required, the factors that the Office 
will consider include, but are not limited to, the operator's net worth, 
the existence of a guarantee by a parent corporation, and the operator's 
existing liability for benefits. The Office shall also consider such 
other factors as it considers relevant to any particular case. The 
amount of security which shall be required may be increased or decreased 
when experience or changed conditions so warrant.

[[Page 1044]]



Sec. 726.106  Type of security.

    (a) The Office shall determine the type or types of security which 
an applicant shall or may procure. (See Sec. 726.104(b).)
    (b) In the event the indemnity bond option is selected, the bond 
shall be in such form and contain such provisions as the Office may 
prescribe: Provided, That only corporations may act as sureties on such 
indemnity bonds. In each case in which the surety on any such bond is a 
surety company, such company must be one approved by the U.S. Treasury 
Department under the laws of the United States and the applicable rules 
and regulations governing bonding companies (see Department of 
Treasury's Circular--570).
    (c) An applicant for authorization to self-insure based on a deposit 
of negotiable securities, in the amount fixed by the Office, shall 
deposit any negotiable securities acceptable as security for the deposit 
of public moneys of the United States under regulations issued by the 
Secretary of the Treasury. (See 31 CFR Part 225.) The approval, 
valuation, acceptance, and custody of such securities is hereby 
committed to the several Federal Reserve Banks and the Treasurer of the 
United States.



Sec. 726.107  Deposits of negotiable securities with Federal Reserve 
banks or the Treasurer of the United States; authority to sell such 
securities; interest thereon.

    Deposits of securities provided for by the regulations in this part 
shall be made with any Federal Reserve bank or any branch of a Federal 
Reserve bank designated by the Office, or the Treasurer of the United 
States, and shall be held subject to the order of the Office with power 
in the Office, in its discretion in the event of default by the said 
self-insurer, to collect the interest as it may become due, to sell the 
securities or any of them as may be required to discharge the 
obligations of the self-insurer under the Act and to apply the proceeds 
to the payment of any benefits or medical expenses for which the self-
insurer may be liable. The Office may, however, whenever it deems it 
unnecessary to resort to such securities for the payment of benefits, 
authorize the self-insurer to collect interest on the securities 
deposited by him.



Sec. 726.108  Withdrawal of negotiable securities.

    No withdrawal of negotiable securities deposited by a self-insurer, 
shall be made except upon authorization by the Office. A self-insurer 
discontinuing business, or discontinuing operations within the purview 
of the Act, or providing security for the payment of benefits by 
commercial insurance under the provisions of the Act may apply to the 
Office for the withdrawal of securities deposited under the regulations 
in this part. With such application shall be filed a sworn statement 
setting forth:
    (a) A list of all outstanding cases in which benefits are being 
paid, with the names of the miners and other beneficiaries, giving a 
statement of the amounts of benefits paid and the periods for which such 
benefits have been paid; and
    (b) A similar list of all pending cases in which no benefits have as 
yet been paid. In such cases withdrawals may be authorized by the Office 
of such securities as in the opinion of the Office may not be necessary 
to provide adequate security for the payment of outstanding and 
potential liabilities of such self-insurer under the Act.



Sec. 726.109  Increase or reduction in the amount of security.

    Whenever in the opinion of the Office the amount of security given 
by the self-insurer is insufficient to afford adequate security for the 
payment of benefits and medical expenses under the Act, the self-insurer 
shall, upon demand by the Office, file such additional security as the 
Office may require. The Office may reduce the amount of security at any 
time on its own initiative, or upon the application of a self-insurer, 
when it believes the facts warrant a reduction. A self-insurer seeking a 
reduction shall furnish such information as the Office may request 
relative to his current affairs, the nature and hazard of the work of 
his employees, the amount of the payroll of his employees engaged in 
coal mine employment within the purview of the Act, his

[[Page 1045]]

financial condition, and such other evidence as may be deemed material, 
including a record of benefit payments he has made.



Sec. 726.110  Filing of agreement and undertaking.

    (a) In addition to the requirement that adequate security be 
procured as set forth in this subpart, the applicant for the 
authorization to self-insure shall, as a condition precedent to 
receiving such authorization, execute and file with the Office an 
agreement and undertaking in a form prescribed and provided by the 
Office in which the applicant shall agree:
    (1) To pay when due, as required by the Act, all benefits payable on 
account of total disability or death of any of its employee-miners;
    (2) To furnish medical, surgical, hospital, and other attendance, 
treatment, and care as required by the Act;
    (3) To provide security in a form approved by the Office (see Sec. 
726.104) and in an amount established by the Office (see Sec. 726.105), 
as elected in the application;
    (4) To authorize the Office to sell any negotiable securities so 
deposited or any part thereof, and to pay from the proceeds thereof such 
benefits, medical, and other expenses and any accrued penalties imposed 
by law as the Office may find to be due and payable.
    (b) When an applicant has provided the requisite security, he shall 
send to the Office in Washington, D.C. a completed agreement and 
undertaking, together with satisfactory proof that his obligations and 
liabilities under the Act have been secured.



Sec. 726.111  Notice of authorization to self-insure.

    Upon receipt of a completed agreement and undertaking and 
satisfactory proof that adequate security has been provided, an 
applicant for authorization to self-insure shall be notified by the 
Office in writing that he is authorized to self-insure to meet the 
obligations imposed upon him by section 415 and part C of title IV of 
the Act.



Sec. 726.112  Reports required of self-insurer; examination of accounts 
of self-insurer.

    (a) Each operator who has been authorized to self-insure under this 
part shall submit to the Office reports containing such information as 
the Office may from time to time require or prescribe.
    (b) Whenever it deems it to be necessary, the Office may inspect or 
examine the books of account, records, and other papers of a self-
insurer for the purpose of verifying any financial statement submitted 
to the Office by the self-insurer or verifying any information furnished 
to the Office in any report required by this section, or any other 
section of the regulations in this part, and such self-insurer shall 
permit the Office or its duly authorized representative to make such an 
inspection or examination as the Office shall require. In lieu of this 
requirement the Office may in its discretion accept an adequate report 
of a certified public accountant.
    (c) Failure to submit or make available any report or information 
requested by the Office from an authorized self-insurer pursuant to this 
section may, in appropriate circumstances result in a revocation of the 
authorization to self-insure.



Sec. 726.113  Disclosure of confidential information.

    Any financial information or records, or other information relating 
to the business of an authorized self-insurer or applicant for the 
authorization of self-insurance obtained by the Office shall be exempt 
from public disclosure to the extent provided in 5 U.S.C. 552(b) and the 
applicable regulations of the Department of Labor promulgated 
thereunder. (See 29 CFR part 70.)



Sec. 726.114  Period of authorization as self-insurer; reauthorization.

    (a) No initial authorization to self-insure shall be granted for a 
period in excess of 18 months. A self-insurer who has made an adequate 
deposit of negotiable securities in compliance with Sec. Sec. 
726.106(c) and 726.107 will be reauthorized for the ensuing fiscal year 
without additional security if the Office finds that his experience as a 
self-insurer

[[Page 1046]]

warrants such action. If the Office determines that such self-insurer's 
experience indicates a need for the deposit of additional security, no 
reauthorization shall be issued for the ensuing fiscal year until the 
Office receives satisfactory proof that the requisite amount of 
additional securities has been deposited. A self-insurer who currently 
has on file an indemnity bond will receive from the Office each year a 
bond form for execution in contemplation of reauthorization, and the 
submission of such bond duly executed in the amount indicated by the 
Office will be deemed and treated as such self-insurer's application for 
reauthorization for the ensuing fiscal year.
    (b) In each case for which there is an approved change in the amount 
of security provided, a new agreement and undertaking shall be executed.
    (c) Each operator authorized to self-insure under this part shall 
apply for reauthorization for any period during which it engages in the 
operation of a coal mine and for additional periods after it ceases 
operating a coal mine. Upon application by the operator, accompanied by 
proof that the security it has posted is sufficient to secure all 
benefits potentially payable to miners formerly employed by the 
operator, the Office shall issue a certification that the operator is 
exempt from the requirements of this part based on its prior operation 
of a coal mine. The provisions of subpart D of this part shall be 
applicable to any operator that fails to apply for reauthorization in 
accordance with the provisions of this section.



Sec. 726.115  Revocation of authorization to self-insure.

    The Office may for good cause shown suspend or revoke the 
authorization of any self-insurer. Failure by a self-insurer to comply 
with any provision or requirement of law or of the regulations in this 
part, or with any lawful order or communication of the Office, or the 
failure or insolvency of the surety on his indemnity bond, or impairment 
of financial responsibility of such self-insurer, may be deemed good 
cause for such suspension or revocation.



                      Subpart C_Insurance Contracts



Sec. 726.201  Insurance contracts--generally.

    Each operator of a coal mine who has not obtained authorization as a 
self-insurer shall purchase a policy or enter into a contract with a 
commercial insurance carrier or State agency. Pursuant to authority 
contained in sections 422(a) and 423(b) and (c) of part C of title IV of 
the Act, this subpart describes a number of provisions which are 
required to be incorporated in a policy or contract of insurance 
obtained by a coal mine operator for the purpose of meeting the 
responsibility imposed upon such operator by the Act in respect of the 
total disability or death of miners due to pneumoconiosis.



Sec. 726.202  Who may underwrite an operator's liability.

    Each coal mine operator who is not authorized to self-insure shall 
insure and keep insured the payment of benefits as required by the Act 
with any stock company or mutual company or association, or with any 
other person, or fund, including any State fund while such company, 
association, person, or fund is authorized under the law of any State to 
insure workmen's compensation.



Sec. 726.203  Federal Coal Mine Health and Safety Act endorsement.

    (a) The following form of endorsement shall be attached and 
applicable to the standard workmen's compensation and employer's 
liability policy prepared by the National Council on Compensation 
Insurance affording coverage under the Federal Coal Mine Health and 
Safety Act of 1969, as amended:

    It is agreed that: (1) With respect to operations in a State 
designated in item 3 of the declarations, the unqualified term 
``workmen's compensation law'' includes part C of title IV of the 
Federal Coal Mine Health and Safety Act of 1969, 30 U.S.C. section 931-
936, and any laws amendatory thereto, or supplementary thereto, which 
may be or become effective while this policy is in force, and definition 
(a) of Insuring Agreement III is amended accordingly; (2) with respect 
to such insurance as is afforded by this endorsement, (a) the States, if 
any, named below, shall be deemed to be designated in item 3 of

[[Page 1047]]

the declaration; (b) Insuring Agreement IV(2) is amended to read ``by 
disease caused or aggravated by exposure of which the last day of the 
last exposure, in the employment of the insured, to conditions causing 
the disease occurs during the policy period, or occurred prior to 
(effective date) and claim based on such disease is first filed against 
the insured during the policy period.''

    (b) The term ``effective date'' as used in paragraph (a) of this 
section shall be construed to mean the effective date of the first 
policy or contract of insurance procured by an operator for purposes of 
meeting the obligations imposed on such operator by section 423 of part 
C of title IV of the Act.
    (c) The Act contains a number of provisions and imposes a number of 
requirements on operators which differ in varying degrees from 
traditional workmen's compensation concepts. To avoid unnecessary 
administrative delays and expense which might be occasioned by the 
drafting of an entirely new standard workmen's compensation policy 
specially tailored to the Act, the Office has determined that the 
existing standard workmen's compensation policy subject to the 
endorsement provisions contained in paragraph (a) of this section shall 
be acceptable for purposes of writing commercial insurance coverage 
under the Act. However, to avoid undue disputes over the meaning of 
certain policy provisions and in accordance with the authority contained 
in section 423(b)(3) of the Act, the Office has determined that the 
following requirements shall be applicable to all commercial insurance 
policies obtained by an operator for the purpose of insuring any 
liability incurred pursuant to the Act:
    (1) Operator liability. (i) Section 415 and part C of title IV of 
the Act provide coverage for total disability or death due to 
pneumoconiosis to all claimants who meet the eligibility requirements 
imposed by the Act. Section 422 of the Act and the regulations duly 
promulgated thereunder (part 725 of this subchapter) set forth the 
conditions under which a coal mine operator may be adjudicated liable 
for the payment of benefits to an eligible claimant for any period 
subsequent to December 31, 1973.
    (ii) Section 422(c) of the Act prescribes that except as provided in 
422(i) (see paragraph (c)(2) of this section) an operator may be 
adjudicated liable for the payment of benefits in any case if the total 
disability or death due to pneumoconiosis upon which the claim is 
predicated arose at least in part out of employment in a mine in any 
period during which it was operated by such operator. The Act does not 
require that such employment which contributed to or caused the total 
disability or death due to pneumoconiosis occur subsequent to any 
particular date in time. The Secretary in establishing a formula for 
determining the operator liable for the payment of benefits (see subpart 
D of part 725 of this subchapter) in respect of any particular claim, 
must therefore, within the framework and intent of title IV of the Act 
find in appropriate cases that an operator is liable for the payment of 
benefits for some period after December 31, 1973, even though the 
employment upon which an operator's liability is based occurred prior to 
July 1, 1973, or prior to the effective date of the Act or the effective 
date of any amendments thereto, or prior to the effective date of any 
policy or contract of insurance obtained by such operator. The 
endorsement provisions contained in paragraph (a) of this section shall 
be construed to incorporate these requirements in any policy or contract 
of insurance obtained by an operator to meet the obligations imposed on 
such operator by section 423 of the Act.
    (2) Successor liability. Section 422(i) of part C of title IV of the 
Act requires that a coal mine operator who after December 30, 1969, 
acquired his mine or substantially all of the assets thereof from a 
person who was an operator of such mine on or after December 30, 1969, 
shall be liable for and shall secure the payment of benefits which would 
have been payable by the prior operator with respect to miners 
previously employed in such mine if the acquisition had not occurred and 
the prior operator had continued to operate such mine. In the case of an 
operator who is determined liable for the payment of benefits under 
section 422(i) of the Act and part 725 of this subchapter, such 
liability shall accrue to such operator regardless of the fact that the 
miner on whose total disability or death the

[[Page 1048]]

claim is predicated was never employed by such operator in any capacity. 
The endorsement provisions contained in paragraph (a) of this section 
shall be construed to incorporate this requirement in any policy or 
contract of insurance obtained by an operator to meet the obligations 
imposed on such operator by section 423 of the Act.
    (3) Medical eligibility. Pursuant to section 422(h) of part C of 
title IV of the Act and the regulations described therein (see subpart D 
of part 410 of this title) benefits shall be paid to eligible claimants 
on account of total disability or death due to pneumoconiosis and in 
cases where the miner on whose death a claim is predicated was totally 
disabled by pneumoconiosis at the time of his death regardless of the 
cause of such death. The endorsement provisions contained in paragraph 
(a) of this section shall be construed to incorporate these requirements 
in any policy or contract of insurance obtained by an operator to meet 
the obligations imposed on such operator by section 423 of the Act.
    (4) Payment of benefits, rates. Section 422(c) of the Act by 
incorporating section 412(a) of the Act requires the payment of benefits 
at a rate equal to 50 per centum of the minimum monthly payment to which 
a Federal employee in grade GS-2, who is totally disabled is entitled at 
the time of payment under Chapter 81 of title 5, United States Code. 
These benefits are augmented on account of eligible dependents as 
appropriate (see section 412(a) of part B of title IV of the Act). Since 
the dollar amount of benefits payable to any beneficiary is required to 
be computed at the time of payment such amounts may be expected to 
increase from time to time as changes in the GS-2 grade are enacted into 
law. The endorsement provisions contained in paragraph (a) of this 
section shall be construed to incorporate in any policy or contract of 
insurance obtained by an operator to meet the obligations imposed on 
such operator by section 423 of the Act, the requirement that the 
payment of benefits to eligible beneficiaries shall be made in such 
dollar amounts as are prescribed by section 412(a) of the Act computed 
at the time of payment.
    (5) Compromise and waiver of benefits. Section 422(a) of part C of 
title IV of the Act by incorporating sections 15(b) and 16 of the 
Longshoremen's and Harbor Workers' Compensation Act (33 U.S.C. 915(b) 
and 916) prohibits the compromise and/or waiver of claims for benefits 
filed or benefits payable under section 415 and part C of title IV of 
the Act. The endorsement provisions contained in paragraph (a) of this 
section shall be construed to incorporate these prohibitions in any 
policy or contract of insurance obtained by an operator to meet the 
obligations imposed on such operator by section 423 of the Act.
    (6) Additional requirements. In addition to the requirements 
described in paragraph (c)(1) through (5) of this section, the 
endorsement provisions contained in paragraph (a) of this section shall, 
to the fullest extent possible, be construed to bring any policy or 
contract of insurance entered into by an operator for the purpose of 
insuring such operator's liability under part C of title IV of the Act 
into conformity with the legal requirements placed upon such operator by 
section 415 and part C of title IV of the Act and parts 720 and 725 of 
this subchapter.
    (d) Nothing in this section shall relieve any operator or carrier of 
the duty to comply with any State workmen's compensation law, except 
insofar as such State law is in conflict with the provisions of this 
section.



Sec. 726.204  Statutory policy provisions.

    Pursuant to section 423(b) of part C of title IV of the Act each 
policy or contract of insurance obtained to comply with the requirements 
of section 423(a) of the Act must contain or shall be construed to 
contain--
    (a) A provision to pay benefits required under section 422 of the 
Act, notwithstanding the provisions of the State workmen's compensation 
law which may provide for lesser payments; and,
    (b) A provision that insolvency or bankruptcy of the operator or 
discharge therein (or both) shall not relieve the carrier from liability 
for such payments.

[[Page 1049]]



Sec. 726.205  Other forms of endorsement and policies.

    Forms of endorsement or policies other than that described in Sec. 
726.203 may be entered into by operators to insure their liability under 
the Act. However, any form of endorsement or policy which materially 
alters or attempts to materially alter an operator's liability for the 
payment of any benefits under the Act shall be deemed insufficient to 
discharge such operator's duties and responsibilities as prescribed in 
part C of title IV of the Act. In any event, the failure of an operator 
to obtain an adequate policy or contract of insurance shall not affect 
such operator's liability for the payment of any benefits for which he 
is determined liable.



Sec. 726.206  Terms of policies.

    A policy or contract of insurance shall be issued for the term of 1 
year from the date that it becomes effective, but if such insurance be 
not needed except for a particular contract or operation, the term of 
the policy may be limited to the period of such contract or operation.



Sec. 726.207  Discharge by the carrier of obligations and duties of 
operator.

    Every obligation and duty in respect of payment of benefits, the 
providing of medical and other treatment and care, the payment or 
furnishing of any other benefit required by the Act and in respect of 
the carrying out of the administrative procedure required or imposed by 
the Act or the regulations in this part or part 725 of this subchapter 
upon an operator shall be discharged and carried out by the carrier as 
appropriate. Notice to or knowledge of an operator of the occurrence of 
total disability or death due to pneumoconiosis shall be notice to or 
knowledge of such carrier. Jurisdiction of the operator by a district 
director, administrative law judge, the Office, or appropriate appellate 
authority under the Act shall be jurisdiction of such carrier. Any 
requirement under any benefits order, finding, or decision shall be 
binding upon such carrier in the same manner and to the same extent as 
upon the operator.

                           Reports by Carrier



Sec. 726.208  Report by carrier of issuance of policy or endorsement.

    Each carrier shall report to the Office each policy and endorsement 
issued, canceled, or renewed by it to an operator. The report shall be 
made in such manner and on such form as the Office may require.



Sec. 726.209  Report; by whom sent.

    The report of issuance, cancellation, or renewal of a policy and 
endorsement provided for in Sec. 726.208 shall be sent by the home 
office of the carrier, except that any carrier may authorize its agency 
or agencies to make such reports to the Office.



Sec. 726.210  Agreement to be bound by report.

    Every carrier seeking to write insurance under the provisions of the 
Act shall be deemed to have agreed that the acceptance by the Office of 
a report of the issuance or renewal of a policy of insurance, as 
provided for by Sec. 726.208 shall bind the carrier to full liability 
for the obligations under the Act of the operator named in said report. 
It shall be no defense to this agreement that the carrier failed or 
delayed to issue, cancel, or renew the policy to the operator covered by 
this report.



Sec. 726.211  Name of one employer only shall be given in each report.

    A separate report of the issuance or renewal of a policy and 
endorsement, provided for by Sec. 726.208, shall be made for each 
operator covered by a policy. If a policy is issued or renewed insuring 
more than one operator, a separate report for each operator so covered 
shall be sent to the Office with the name of only one operator on each 
such report.



Sec. 726.212  Notice of cancellation.

    Cancellation of a contract or policy of insurance issued under 
authority of the Act shall not become effective otherwise than as 
provided by 33 U.S.C. 936(b); and notice of a proposed cancellation 
shall be given to the Office and to the operator in accordance with the 
provisions of 33 U.S.C. 912(c), 30

[[Page 1050]]

days before such cancellation is intended to be effective (see section 
422(a) of part C of title IV of the Act).



Sec. 726.213  Reports by carriers concerning the payment of benefits.

    Pursuant to 33 U.S.C. 914(c) as incorporated by section 422(a) of 
part C of title IV of the Act and Sec. 726.207 each carrier issuing a 
policy or contract of insurance under the Act shall upon making the 
first payment of benefits and upon the suspension of any payment in any 
case, immediately notify the Office in accordance with a form prescribed 
by the Office that payment of benefit has begun or has been suspended as 
the case may be. In addition, each such carrier shall at the request of 
the Office submit to the Office such additional information concerning 
policies or contracts of insurance issued to guarantee the payment of 
benefits under the Act and any benefits paid thereunder, as the Office 
may from time to time require to carry out its responsibilities under 
the Act.



                     Subpart D_Civil Money Penalties



Sec. 726.300  Purpose and scope.

    Any operator which is required to secure the payment of benefits 
under section 423 of the Act and Sec. 726.4 and which fails to secure 
such benefits, shall be subject to a civil penalty of not more than 
$1,000 for each day during which such failure occurs. If the operator is 
a corporation, the president, secretary, and treasurer of the operator 
shall also be severally liable for the penalty based on the operator's 
failure to secure the payment of benefits. This subpart defines those 
terms necessary for administration of the civil money penalty 
provisions, describes the criteria for determining the amount of penalty 
to be assessed, and sets forth applicable procedures for the assessment 
and contest of penalties.



Sec. 726.301  Definitions.

    In addition to the definitions provided in part 725 of this 
subchapter and Sec. 726.8, the following definitions apply to this 
subpart:
    (a) Division Director means the Director, Division of Coal Mine 
Workers' Compensation, Office of Workers' Compensation Programs, 
Employment Standards Administration, or such other official authorized 
by the Division Director to perform any of the functions of the Division 
Director under this subpart.
    (b) President, secretary, or treasurer means the officers of a 
corporation as designated pursuant to the laws and regulations of the 
state in which the corporation is incorporated or, if that state does 
not require the designation of such officers, the employees of a company 
who are performing the work usually performed by such officers in the 
state in which the corporation's principal place of business is located.
    (c) Principal means any person who has an ownership interest in an 
operator that is not a corporation, and shall include, but is not 
limited to, partners, sole proprietors, and any other person who 
exercises control over the operation of a coal mine.



Sec. 726.302  Determination of penalty.

    (a) The following method shall be used for determining the amount of 
any penalty assessed under this subpart.
    (b) The penalty shall be determined by multiplying the daily base 
penalty amount or amounts, determined in accordance with the formula set 
forth in this section, by the number of days in the period during which 
the operator is subject to the security requirements of section 423 of 
the Act and Sec. 726.4, and fails to secure its obligations under the 
Act. The period during which an operator is subject to liability for a 
penalty for failure to secure its obligations shall be deemed to 
commence on the first day on which the operator met the definition of 
the term ``operator'' as set forth in Sec. 725.101 of this subchapter. 
The period shall be deemed to continue even where the operator has 
ceased coal mining and any related activity, unless the operator secured 
its liability for all previous periods through a policy or policies of 
insurance obtained in accordance with subpart C of this part or has 
obtained a certification of exemption in accordance with the provisions 
of Sec. 726.114.
    (c)(1) A daily base penalty amount shall be determined for all 
periods up to and including the 10th day after the

[[Page 1051]]

operator's receipt of the notification sent by the Director pursuant to 
Sec. 726.303, during which the operator failed to secure its 
obligations under section 423 of the Act and Sec. 726.4.
    (2)(i) The daily base penalty amount shall be determined based on 
the number of persons employed in coal mine employment by the operator, 
or engaged in coal mine employment on behalf of the operator, on each 
day of the period defined by this section, and shall be computed as 
follows:

------------------------------------------------------------------------
                                                               Penalty
                         Employees                            (per day)
------------------------------------------------------------------------
Less than 25...............................................         $100
25-50......................................................          200
51-100.....................................................          300
More than 100..............................................          400
------------------------------------------------------------------------

    (ii) For any period after the operator has ceased coal mining and 
any related activity, the daily penalty amount shall be computed based 
on the largest number of persons employed in coal mine employment by the 
operator, or engaged in coal mine employment on behalf of the operator, 
on any day while the operator was engaged in coal mining or any related 
activity. For purposes of this section, it shall be presumed, in the 
absence of evidence to the contrary, that any person employed by an 
operator is employed in coal mine employment.
    (3) In any case in which the operator had prior notice of the 
applicability of the Black Lung Benefits Act to its operations, the 
daily base penalty amounts set forth in paragraph (c)(2)(i) of this 
section shall be doubled. Prior notice may be inferred where the 
operator, or an entity in which the operator or any of its principals 
had an ownership interest, or an entity in which the operator's 
president, secretary, or treasurer were employed:
    (i) Previously complied with section 423 of the Act and Sec. 726.4;
    (ii) Was notified of its obligation to comply with section 423 of 
the Act and Sec. 726.4; or
    (iii) Was notified of its potential liability for a claim filed 
under the Black Lung Benefits Act pursuant to Sec. 725.407 of this 
subchapter.
    (4) Commencing with the 11th day after the operator's receipt of the 
notification sent by the Director pursuant to Sec. 726.303, the daily 
base penalty amounts set forth in paragraph (c)(2)(i) shall be increased 
by $100.
    (5) In any case in which the operator, or any of its principals, or 
an entity in which the operator's president, secretary, or treasurer 
were employed, has been the subject of a previous penalty assessment 
under this part, the daily base penalty amounts shall be increased by 
$300, up to a maximum daily base penalty amount of $1,000. The maximum 
daily base penalty amount applicable to any violation of Sec. 726.4 
that takes place after January 19, 2001 shall be $1,100.
    (d) The penalty shall be subject to reduction for any period during 
which the operator had a reasonable belief that it was not required to 
comply with section 423 of the Act and Sec. 726.4 or a reasonable 
belief that it had obtained insurance coverage to comply with section 
423 of the Act and Sec. 726.4. A notice of contest filed in accordance 
with Sec. 726.307 shall not be sufficient to establish a reasonable 
belief that the operator was not required to comply with the Act and 
regulations.



Sec. 726.303  Notification; investigation.

    (a) If the Director determines that an operator has violated the 
provisions of section 423 of the Act and Sec. 726.4, he or she shall 
notify the operator of its violation and request that the operator 
immediately secure the payment of benefits. Such notice shall be sent by 
certified mail.
    (b) The Director shall also direct the operator to supply 
information relevant to the assessment of a penalty. Such information, 
which shall be supplied within 30 days of the Director's request, may 
include:
    (1) The date on which the operator commenced its operation of a coal 
mine;
    (2) The number of persons employed by the operator since it began 
operating a coal mine and the dates of their employment; and
    (3) The identity and last known address:
    (i) In the case of a corporation, of all persons who served as 
president, secretary, and treasurer of the operator since it began 
operating a coal mine; or

[[Page 1052]]

    (ii) In the case of an operator which is not incorporated, of all 
persons who were principals of the operator since it began operating a 
coal mine;
    (c) In conducting any investigation of an operator under this 
subpart, the Division Director shall have all of the powers of a 
district director, as set forth at Sec. 725.351(a) of this subchapter. 
For purposes of Sec. 725.351(c), the Division Director shall be 
considered to sit in the District of Columbia.



Sec. 726.304  Notice of initial assessment.

    (a) After an operator receives notification under Sec. 726.303 and 
fails to secure its obligations for the period defined in Sec. 
726.302(b), and following the completion of any investigation, the 
Director may issue a notice of initial penalty assessment in accordance 
with the criteria set forth in Sec. 726.302.
    (b)(1) A copy of such notice shall be sent by certified mail to the 
operator. If the operator is a corporation, a copy shall also be sent by 
certified mail to each of the persons who served as president, 
secretary, or treasurer of the operator during any period in which the 
operator was in violation of section 423 of the Act and Sec. 726.4.
    (2) Where service by certified mail is not accepted by any person, 
the notice shall be deemed received by that person on the date of 
attempted delivery. Where service is not accepted, the Director may 
exercise discretion to serve the notice by regular mail.



Sec. 726.305  Contents of notice.

    The notice required by Sec. 726.304 shall:
    (a) Identify the operator against whom the penalty is assessed, as 
well as the name of any other person severally liable for such penalty;
    (b) Set forth the determination of the Director as to the amount of 
the penalty and the reason or reasons therefor;
    (c) Set forth the right of each person identified in paragraph (a) 
of this section to contest the notice and request a hearing before the 
Office of Administrative Law Judges;
    (d) Set forth the method for each person identified in paragraph (a) 
to contest the notice and request a hearing before the Office of 
Administrative Law Judges; and
    (e) Inform any affected person that in the absence of a timely 
contest and request for hearing received within 30 days of the date of 
receipt of the notice, the Director's assessment will become final and 
unappealable as to that person.



Sec. 726.306  Finality of administrative assessment.

    Except as provided in Sec. 726.307(c), if any person identified as 
potentially liable for the assessment does not, within 30 days after 
receipt of notice, contest the assessment, the Director's assessment 
shall be deemed final as to that person, and collection and recovery of 
the penalty may be instituted pursuant to Sec. 726.320.



Sec. 726.307  Form of notice of contest and request for hearing.

    (a) Any person desiring to contest the Director's notice of initial 
assessment shall request an administrative hearing pursuant to this 
part. The notice of contest shall be made in writing to the Director, 
Division of Coal Mine Workers' Compensation, Office of Workers' 
Compensation Programs, Employment Standards Administration, United 
States Department of Labor. The notice of contest must be received no 
later than 30 days after the date of receipt of the notice issued under 
Sec. 726.304. No additional time shall be added where service of the 
notice is made by mail.
    (b) The notice of contest shall:
    (1) Be dated;
    (2) Be typewritten or legibly written;
    (3) State the specific issues to be contested. In particular, the 
person must indicate his agreement or disagreement with:
    (i) The Director's determination that the person against whom the 
penalty is assessed is an operator subject to the requirements of 
section 423 of the Act and Sec. 726.4, or is the president, secretary, 
or treasurer of an operator, if the operator is a corporation.
    (ii) The Director's determination that the operator violated section 
423 of the Act and Sec. 726.4 for the time period in question; and
    (iii) The Director's determination of the amount of penalty owed;

[[Page 1053]]

    (4) Be signed by the person making the request or an authorized 
representative of such person; and
    (5) Include the address at which such person or authorized 
representative desires to receive further communications relating 
thereto.
    (c) A notice of contest filed by the operator shall be deemed a 
notice of contest on behalf of all other persons to the Director's 
determinations that the operator is subject to section 423 of the Act 
and Sec. 726.4 and that the operator violated those provisions for the 
time period in question, and to the Director's determination of the 
amount of penalty owed. An operator may not contest the Director's 
determination that a person against whom the penalty is assessed is the 
president, secretary, or treasurer of the operator.
    (d) Failure to specifically identify an issue as contested pursuant 
to paragraph (b)(3) of this section shall be deemed a waiver of the 
right to contest that issue.



Sec. 726.308  Service and computation of time.

    (a) Service of documents under this part shall be made by delivery 
to the person, an officer of a corporation, or attorney of record, or by 
mailing the document to the last known address of the person, officer, 
or attorney. If service is made by mail, it shall be considered complete 
upon mailing. Unless otherwise provided in this subpart, service need 
not be made by certified mail. If service is made by delivery, it shall 
be considered complete upon actual receipt by the person, officer, or 
attorney; upon leaving it at the person's, officer's or attorney's 
office with a clerk or person in charge; upon leaving it at a 
conspicuous place in the office if no one is in charge; or by leaving it 
at the person's or attorney's residence.
    (b) If a complaint has been filed pursuant to Sec. 726.309, two 
copies of all documents filed in any administrative proceeding under 
this subpart shall be served on the attorneys for the Department of 
Labor. One copy shall be served on the Associate Solicitor, Black Lung 
Benefits Division, Room N-2117, Office of the Solicitor, U.S. Department 
of Labor, 200 Constitution Ave., NW., Washington, DC 20210, and one copy 
on the attorney representing the Department in the proceeding.
    (c) The time allowed a party to file any response under this subpart 
shall be computed beginning with the day following the action requiring 
a response, and shall include the last day of the period, unless it is a 
Saturday, Sunday, or federally-observed holiday, see Sec. 725.311 of 
Part 725 of this subchapter, in which case the time period shall include 
the next business day.



Sec. 726.309  Referral to the Office of Administrative Law Judges.

    (a) Upon receipt of a timely notice of contest filed in accordance 
with Sec. 726.307, the Director, by the Associate Solicitor for Black 
Lung Benefits or the Regional Solicitor for the Region in which the 
violation occurred, may file a complaint with the Office of 
Administrative Law Judges. The Director may, in the complaint, reduce 
the total penalty amount requested. A copy of the notice of initial 
assessment issued by the Director and all notices of contest filed in 
accordance with Sec. 726.307 shall be attached. A notice of contest 
shall be given the effect of an answer to the complaint for purposes of 
the administrative proceeding, subject to any amendment that may be 
permitted under this subpart and 29 CFR part 18.
    (b) A copy of the complaint and attachments thereto shall be served 
by counsel for the Director on the person who filed the notice of 
contest.
    (c) The Director, by counsel, may withdraw a complaint filed under 
this section at any time prior to the date upon which the decision of 
the Department becomes final by filing a motion with the Office of 
Administrative Law Judges or the Secretary, as appropriate. If the 
Director makes such a motion prior to the date on which an 
administrative law judge renders a decision in accordance Sec. 726.313, 
the dismissal shall be without prejudice to further assessment against 
the operator for the period in question.



Sec. 726.310  Appointment of Administrative Law Judge and notification 
of hearing date.

    Upon receipt from the Director of a complaint filed pursuant to 
Sec. 726.309,

[[Page 1054]]

the Chief Administrative Law Judge shall appoint an Administrative Law 
Judge to hear the case. The Administrative Law Judge shall notify all 
interested parties of the time and place of the hearing.



Sec. 726.311  Evidence.

    (a) Except as specifically provided in this subpart, and to the 
extent they do not conflict with the provisions of this subpart, the 
Rules of Practice and Procedure for Administrative Hearings Before the 
Office of Administrative Law Judges established by the Secretary at 29 
CFR part 18 shall apply to administrative proceedings under this 
subpart.
    (b) Notwithstanding 29 CFR 18.1101(b)(2), subpart B of the Rules of 
Practice and Procedure for Administrative Hearings Before the Office of 
Administrative Law Judges shall apply to administrative proceedings 
under this part, except that documents contained in Department of Labor 
files and offered on behalf of the Director shall be admissible in 
proceedings under this subpart without regard to their compliance with 
the Rules of Practice and Procedure.



Sec. 726.312  Burdens of proof.

    (a) The Director shall bear the burden of proving the existence of a 
violation, and the time period for which the violation occurred. To 
prove a violation, the Director must establish:
    (1) That the person against whom the penalty is assessed is an 
operator, or is the president, secretary, or treasurer of an operator, 
if such operator is a corporation.
    (2) That the operator violated section 423 of the Act and Sec. 
726.4. The filing of a complaint shall be considered prima facie 
evidence that the Director has searched the records maintained by OWCP 
and has determined that the operator was not authorized to self-insure 
its liability under the Act for the time period in question, and that no 
insurance carrier reported coverage of the operator for the time period 
in question.
    (b) The Director need not produce further evidence in support of his 
burden of proof with respect to the issues set forth in paragraph (a) if 
no party contested them pursuant to Sec. 726.307(b)(3).
    (c) The Director shall bear the burden of proving the size of the 
operator as required by Sec. 726.302, except that if the Director has 
requested the operator to supply information with respect to its size 
under Sec. 726.303 and the operator has not fully complied with that 
request, it shall be presumed that the operator has more than 100 
employees engaged in coal mine employment. The person or persons liable 
for the assessment shall thereafter bear the burden of proving the 
actual number of employees engaged in coal mine employment.
    (d) The Director shall bear the burden of proving the operator's 
receipt of the notification required by Sec. 726.303, the operator's 
prior notice of the applicability of the Black Lung Benefits Act to its 
operations, and the existence of any previous assessment against the 
operator, the operator's principals, or the operator's officers.
    (e) The person or persons liable for an assessment shall bear the 
burden of proving the applicability of the mitigating factors listed in 
Sec. 726.302(d).



Sec. 726.313  Decision and order of Administrative Law Judge.

    (a) The Administrative Law Judge shall render a decision on the 
issues referred by the Director.
    (b) The decision of the Administrative Law Judge shall be limited to 
determining, where such issues are properly before him or her:
    (1) Whether the operator has violated section 423 of the Act and 
Sec. 726.4;
    (2) Whether other persons identified by the Director as potentially 
severally liable for the penalty were the president, treasurer, or 
secretary of the corporation during the time period in question; and
    (3) The appropriateness of the penalty assessed by the Director in 
light of the factors set forth in Sec. 726.302. The Administrative Law 
Judge shall not render determinations on the legality of a regulatory 
provision or the constitutionality of a statutory provision.
    (c) The decision of the Administrative Law Judge shall include a 
statement of findings and conclusions, with reasons and bases therefor, 
upon each

[[Page 1055]]

material issue presented on the record. The decision shall also include 
an appropriate order which may affirm, reverse, or modify, in whole or 
in part, the determination of the Director.
    (d) The Administrative Law Judge shall serve copies of the decision 
on each of the parties by certified mail.
    (e) The decision of the Administrative Law Judge shall be deemed to 
have been issued on the date that it is rendered, and shall constitute 
the final order of the Secretary unless there is a request for 
reconsideration by the Administrative Law Judge pursuant to paragraph 
(f) of this section or a petition for review filed pursuant to Sec. 
726.314.
    (f) Any party may request that the Administrative Law Judge 
reconsider his or her decision by filing a motion within 30 days of the 
date upon which the decision of the Administrative Law Judge is issued. 
A timely motion for reconsideration shall suspend the running of the 
time for any party to file a petition for review pursuant to Sec. 
726.314.
    (g) Following issuance of the decision and order, the Chief 
Administrative Law Judge shall promptly forward the complete hearing 
record to the Director.



Sec. 726.314  Review by the Secretary.

    (a) The Director or any party aggrieved by a decision of the 
Administrative Law Judge may petition the Secretary for review of the 
decision by filing a petition within 30 days of the date on which the 
decision was issued. Any other party may file a cross-petition for 
review within 15 days of its receipt of a petition for review or within 
30 days of the date on which the decision was issued, whichever is 
later. Copies of any petition or cross-petition shall be served on all 
parties and on the Chief Administrative Law Judge.
    (b) A petition filed by one party shall not affect the finality of 
the decision with respect to other parties.
    (c) If any party files a timely motion for reconsideration, any 
petition for review, whether filed prior to or subsequent to the filing 
of the timely motion for reconsideration, shall be dismissed without 
prejudice as premature. The 30-day time limit for filing a petition for 
review by any party shall commence upon issuance of a decision on 
reconsideration.



Sec. 726.315  Contents.

    Any petition or cross-petition for review shall:
    (a) Be dated;
    (b) Be typewritten or legibly written;
    (c) State the specific reason or reasons why the party petitioning 
for review believes the Administrative Law Judge's decision is in error;
    (d) Be signed by the party filing the petition or an authorized 
representative of such party; and
    (e) Attach copies of the Administrative Law Judge's decision and any 
other documents admitted into the record by the Administrative Law Judge 
which would assist the Secretary in determining whether review is 
warranted.



Sec. 726.316  Filing and service.

    (a) Filing. All documents submitted to the Secretary shall be filed 
with the Secretary of Labor, U.S. Department of Labor, 200 Constitution 
Ave., N.W., Washington, DC 20210.
    (b) Number of copies. An original and four copies of all documents 
shall be filed.
    (c) Computation of time for delivery by mail. Documents are not 
deemed filed with the Secretary until actually received by the Secretary 
either on or before the due date. No additional time shall be added 
where service of a document requiring action within a prescribed time 
was made by mail.
    (d) Manner and proof of service. A copy of each document filed with 
the Secretary shall be served upon all other parties involved in the 
proceeding. Service under this section shall be by personal delivery or 
by mail. Service by mail is deemed effected at the time of mailing to 
the last known address.



Sec. 726.317  Discretionary review.

    (a) Following receipt of a timely petition for review, the Secretary 
shall determine whether the decision warrants review, and shall send a 
notice of such determination to the parties and the Chief Administrative 
Law Judge. If the Secretary declines to review the decision, the 
Administrative Law

[[Page 1056]]

Judge's decision shall be considered the final decision of the agency. 
The Secretary's determination to review a decision by an Administrative 
Law Judge under this subpart is solely within the discretion of the 
Secretary.
    (b) The Secretary's notice shall specify:
    (1) The issue or issues to be reviewed; and
    (2) The schedule for submitting arguments, in the form of briefs or 
such other pleadings as the Secretary deems appropriate.
    (c) Upon receipt of the Secretary's notice, the Director shall 
forward the record to the Secretary.



Sec. 726.318  Final decision of the Secretary.

    The Secretary's review shall be based upon the hearing record. The 
findings of fact in the decision under review shall be conclusive if 
supported by substantial evidence in the record as a whole. The 
Secretary's review of conclusions of law shall be de novo. Upon review 
of the decision, the Secretary may affirm, reverse, modify, or vacate 
the decision, and may remand the case to the Office of Administrative 
Law Judges for further proceedings. The Secretary's final decision shall 
be served upon all parties and the Chief Administrative Law Judge, in 
person or by mail to the last known address.



Sec. 726.319  Retention of official record.

    The official record of every completed administrative hearing held 
pursuant to this part shall be maintained and filed under the custody 
and control of the Director.



Sec. 726.320  Collection and recovery of penalty.

    (a) When the determination of the amount of any civil money penalty 
provided for in this part becomes final, in accordance with the 
administrative assessment thereof, or pursuant to the decision and order 
of an Administrative Law Judge, or following the decision of the 
Secretary, the amount of the penalty as thus determined is immediately 
due and payable to the U.S. Department of Labor on behalf of the Black 
Lung Disability Trust Fund. The person against whom such penalty has 
been assessed or imposed shall promptly remit the amount thereof, as 
finally determined, to the Secretary by certified check or by money 
order, made payable to the order of U.S. Department of Labor, Black Lung 
Program. Such remittance shall be delivered or mailed to the Director.
    (b) If such remittance is not received within 30 days after it 
becomes due and payable, it may be recovered in a civil action brought 
by the Secretary in any court of competent jurisdiction, in which 
litigation the Secretary shall be represented by the Solicitor of Labor.

[[Page 1057]]



         CHAPTER VII--BENEFITS REVIEW BOARD, DEPARTMENT OF LABOR




  --------------------------------------------------------------------
Part                                                                Page
801             Establishment and operation of the Board....        1059
802             Rules of practice and procedure.............        1062

[[Page 1059]]



PART 801_ESTABLISHMENT AND OPERATION OF THE BOARD--Table of Contents




                              Introductory

Sec.
801.1 Purpose and scope of this part.
801.2 Definitions and use of terms.
801.3 Applicability of this part to 20 CFR part 802.

                Establishment and Authority of the Board

801.101 Establishment.
801.102 Review authority.
801.103 Organizational placement.
801.104 Operational rules.

                          Members of the Board

801.201 Composition of the Board.
801.202 Interim appointments.
801.203 Disqualification of Board members.

                           Action by the Board

801.301 Quorum and votes of the permanent Board; panels within the 
          Board.
801.302 Procedural rules.
801.303 Location of Board's proceedings.
801.304 Business hours.

                             Representation

801.401 Representation before the Board.
801.402 Representation of Board in court proceedings.

    Authority: 5 U.S.C. 301; 30 U.S.C. 901 et seq.; 33 U.S.C. 901 et 
seq.; Reorganization Plan No. 6 of 1950, 15 FR 3174; Secretary of 
Labor's Order 38-72, 38 FR 90, January 3, 1973.

    Source: 52 FR 27290, July 20, 1987, unless otherwise noted.

                              Introductory



Sec. 801.1  Purpose and scope of this part.

    This part 801 describes the establishment and the organizational 
structure of the Benefits Review Board of the Department of Labor, sets 
forth the general rules applicable to operation of the Board, and 
defines terms used in this chapter.



Sec. 801.2  Definitions and use of terms.

    (a) For purposes of this chapter, except where the content clearly 
indicates otherwise, the following definitions apply:
    (1) Acts means the several Acts listed in Sec. Sec. 801.102 and 
802.101 of this chapter, as amended and extended, unless otherwise 
specified.
    (2) Board means the Benefits Review Board established by section 21 
of the LHWCA (33 U.S.C. 921) as described in Sec. 801.101, and as 
provided in this part and Secretary of Labor's Order No. 38-72 (38 FR 
90). Mention in these regulations of the ``permanent Board'' refers to 
the five permanent Board members only.
    (3) Chairman or Chairman of the Board means Chairman of the Benefits 
Review Board. The Chairman of the Board is officially entitled Chief 
Administrative Appeals Judge.
    (4) Secretary means the Secretary of Labor.
    (5) Department means the Department of Labor.
    (6) Judge means an administrative law judge appointed as provided in 
5 U.S.C. 3105 and subpart B of 5 CFR part 930, who is qualified to 
preside at hearings under 5 U.S.C. 557 and is empowered by the Secretary 
to conduct formal hearings whenever necessary in respect of any claim 
for benefits or compensation arising under the Acts.
    (7) Chief Administrative Law Judge means the Chief Administrative 
Law Judge of the Department of Labor.
    (8) Director means the Director of the Office of Workers' 
Compensation Programs of the Department of Labor (hereinafter OWCP).
    (9) Deputy commissioner means a person appointed as provided in 
sections 39 and 40 of the LHWCA or his designee, authorized by the 
Director to make decisions and orders in respect to claims arising under 
the Acts.
    (10) Party or Party in Interest means the Secretary or his designee 
and any person or business entity directly affected by the decision or 
order from which an appeal to the Board is taken.
    (11) Day means calendar day.
    (12) Member means a member of the Benefits Review Board. Unless 
specifically stated otherwise, the word ``member'' shall apply to 
permanent, temporary and interim members. Permanent Board members are 
officially entitled Administrative Appeals Judges. Temporary and interim 
Board members are designated as Acting Administrative Appeals Judges.

[[Page 1060]]

    (b) The definitions contained in this part shall not be considered 
to derogate from the definitions of terms in the respective Acts.
    (c) The definitions pertaining to the Acts contained in the several 
parts of chapter VI of this title 20 shall be applicable to this chapter 
as is appropriate.

[52 FR 27290, July 20, 1987, as amended at 52 FR 28640, July 31, 1987]



Sec. 801.3  Applicability of this part to 20 CFR part 802.

    Part 802 of title 20, Code of Federal Regulations, contains the 
rules of practice and procedure of the Board. This part 801, including 
the definitions and usages contained in Sec. 801.2, is applicable to 
part 802 of this chapter as appropriate.

                Establishment and Authority of the Board



Sec. 801.101  Establishment.

    By Pub. L. 92-576, 82 Stat. 1251, in an amendment made to section 21 
of the Longshore and Harbor Workers' Compensation Act (33 U.S.C. 921), 
there was established effective November 26, 1972, a Benefits Review 
Board, which is composed of members appointed by the Secretary of Labor.



Sec. 801.102  Review authority.

    (a) The Board is authorized, as provided in 33 U.S.C. 921(b), as 
amended, to hear and determine appeals raising a substantial question of 
law or fact taken by any party in interest from decisions or orders with 
respect to claims for compensation or benefits arising under the 
following Acts, as amended and extended:
    (1) The Longshore and Harbor Workers' Compensation Act (LHWCA), 33 
U.S.C. 901 et seq.;
    (2) The Defense Base Act (DBA), 42 U.S.C. 1651 et seq.;
    (3) The District of Columbia Workmen's Compensation Act (DCWCA), 36 
D.C. Code 501 et seq. (1973);
    (4) The Outer Continental Shelf Lands Act (OCSLA), 43 U.S.C. 1331 et 
seq.;
    (5) The Nonappropriated Fund Instrumentalities Act (NFIA), 5 U.S.C. 
8171 et seq.;
    (6) Title IV, section 415 and part C of the Federal Mine Safety and 
Health Act of 1977, Public Law 95-164, 91 Stat. 1290 (formerly the 
Federal Coal Mine Health and Safety Act, hereinafter, FCMHSA, of 1969) 
as amended by the Black Lung Benefits Reform Act of 1977, Public Law 92-
239, 92 Stat. 95, the Black Lung Benefits Revenue Act of 1977, Public 
Law 95-227, 92 Stat. 11, and the Black Lung Benefits Amendments of 1981, 
Public Law 97-119, 95 Stat. 1643 (30 U.S.C. 901 et seq.).



Sec. 801.103  Organizational placement.

    As prescribed by the statute, the functions of the Benefits Review 
Board are quasi-judicial in nature and involve review of decisions made 
in the course of the administration of the above statutes by the 
Employment Standards Administration in the Department of Labor. It is 
accordingly found appropriate for organizational purposes to place the 
Board in the Office of the Deputy Secretary and it is hereby established 
in that Office, which shall be responsible for providing necessary 
funds, personnel, supplies, equipment, and records services for the 
Board.



Sec. 801.104  Operational rules.

    The Deputy Secretary of Labor may promulgate such rules and 
regulations as may be necessary or appropriate for effective operation 
of the Benefits Review Board as an independent quasi-judicial body in 
accordance with the provisions of the statute.

                          Members of the Board



Sec. 801.201  Composition of the Board.

    (a) The Board shall be composed of five permanent members appointed 
by the Secretary from among individuals who are especially qualified to 
serve thereon. Each permanent member shall serve an indefinite term 
subject to the discretion of the Secretary.
    (b) The member designated by the Secretary as Chairman of the Board 
shall serve as chief administrative officer of the Board and shall have 
the authority, as delegated by the Secretary, to exercise all 
administrative functions necessary to operate the Board.
    (c) The four remaining members shall be the associate members of the 
Board.

[[Page 1061]]

    (d) Upon application of the Chairman of the Board, the Secretary may 
designate up to four Department of Labor administrative law judges to 
serve as temporary Board members in addition to the five permanent Board 
members. Up to four such temporary members may serve at any one time. 
The term of any temporary Board member shall not exceed 1 year from date 
of appointment.



Sec. 801.202  Interim appointments.

    (a) Acting Chairman. In the event that the Chairman of the Board is 
temporarily disabled or unavailable to perform his or her duties as 
prescribed in this chapter VII, he or she shall designate a permanent 
member to serve as Acting Chairman until such time as the Secretary 
designates an Acting Chairman. In the event that the Chairman is 
physically unable to make such designation, the next senior permanent 
member shall serve as Acting Chairman until such time as the Secretary 
of Labor designates an Acting Chairman.
    (b) Interim members. In the event that a permanent member of the 
Board is temporarily unable to carry out his or her responsibilities 
because of disqualification, illness, or for any other reason, the 
Secretary of Labor may, in his or her discretion, appoint a qualified 
individual to serve in the place of such permanent member for the 
duration of that permanent member's inability to serve.



Sec. 801.203  Disqualification of Board Members.

    (a) During the period in which the Chairman or the other members 
serve on the Board, they shall be subject to the Department's 
regulations governing ethics and conduct set forth at 20 CFR part 0.
    (b) Notice of any objection which a party may have to any Board 
member who will participate in the proceeding shall be made by such 
party at the earliest opportunity. The Board member shall consider such 
objection and shall, in his or her discretion, either proceed with the 
case or withdraw.

                           Action by the Board



Sec. 801.301  Quorum and votes of the permanent Board; panels within 
the Board.

    (a) For the purpose of carrying out its functions under the Acts, 
whenever action is taken by the entire permanent Board sitting en banc, 
three permanent members of the Board shall constitute a quorum, and 
official action of the permanent Board can be taken only on the 
concurring vote of at least three permanent members.
    (b) The Board may delegate any or all of its powers except en banc 
review to panels of three members. Each panel shall consist of at least 
two permanent members. Two members of the panel shall constitute a 
quorum and official panel action can be taken only on the concurring 
vote of two members of the panel.
    (c) A panel decision shall stand unless vacated or modified by the 
concurring vote of at least three permanent members sitting en banc.
    (d) En banc action is not available in cases arising under the 
District of Columbia Workmen's Compensation Act.



Sec. 801.302  Procedural rules.

    Procedural rules for performance by the Board of its review 
functions and for insuring an adequate record for any judicial review of 
its orders, and such amendments to the rules as may be necessary from 
time to time, shall be promulgated by the Deputy Secretary. Such rules 
shall incorporate and implement the procedural requirements of section 
21(b) of the Longshore and Harbor Workers' Compensation Act.



Sec. 801.303  Location of Board's proceedings.

    The Board shall hold its proceedings at 200 Constitution Avenue, 
NW., Room N-5101, Washington, DC 20210, unless for good cause the Board 
orders that proceedings in a particular matter be held in another 
location.

[62 FR 10666, Mar. 7, 1997]



Sec. 801.304  Business hours.

    The office of the Clerk of the Board at Washington, DC shall be open 
from 8:30 a.m.--5:00 p.m. on all days, except

[[Page 1062]]

Saturdays, Sundays, and legal holidays, for the purpose of receiving 
notices of appeal, petitions for review, other pleadings, motions, and 
other papers.

                             Representation



Sec. 801.401  Representation before the Board.

    On any issues requiring representation of the Secretary, the 
Director, Office of Workers' Compensation Programs, a deputy 
commissioner, or an administrative law judge before the Board, such 
representation shall be provided by attorneys designated by the 
Solicitor of Labor. Representation of all other persons before the Board 
shall be as provided by the rules of practice and procedure promulgated 
under Sec. 801.302 (see part 802 of this chapter).



Sec. 801.402  Representation of Board in court proceedings.

    Except in proceedings in the Supreme Court of the United States, any 
representation of the Benefits Review Board in court proceedings shall 
be by attorneys designated by the Solicitor of Labor.



PART 802_RULES OF PRACTICE AND PROCEDURE--Table of Contents




                      Subpart A_General Provisions

                              Introductory

Sec.
802.101 Purpose and scope of this part.
802.102 Applicability of part 801 of this chapter.
802.103 Powers of the Board.
802.104 Consolidation; severance.
802.105 Stay of payment pending appeal.

                     Subpart B_Prereview Procedures

                       Commencing Appeal: Parties

802.201 Who may file an appeal.
802.202 Appearances by attorneys and other authorized persons; denial or 
          authority to appear.
802.203 Fees for services.

                            Notice of Appeal

802.204 Place for filing notice of appeal.
802.205 Time for filing.
802.206 Effect of motion for reconsideration on time for appeal.
802.207 When a notice of appeal is considered to have been filed in the 
          office of the Clerk of the Board.
802.208 Contents of notice of appeal.
802.209 Transmittal of record to the Board.

                           Initial Processing

802.210 Acknowledgment of notice of appeal.
802.211 Petition for review.
802.212 Response to petition for review.
802.213 Reply briefs.
802.214 Intervention.
802.215 Additional briefs.
802.216 Service and form of papers.
802.217 Waiver of time limitations for filing.
802.218 Failure to file papers; order to show cause.
802.219 Motions to the Board; orders.
802.220 Party not represented by an attorney; informal procedure.
802.221 Computation of time.

                     Subpart C_Procedure for Review

                           Action by the Board

802.301 Scope of review.
802.302 Docketing of appeals.

                     Oral Argument Before the Board

802.303 Decision; no oral argument.
802.304 Purpose of oral argument.
802.305 Request for oral argument.
802.306 Action on request for oral argument.
802.307 Notice of oral argument.
802.308 Conduct of oral argument.
802.309 Absence of parties.

                  Subpart D_Completion of Board Review

                               Dismissals

802.401 Dismissal by application of party.
802.402 Dismissal by abandonment.

                          Decision of the Board

802.403 Issuance of decisions; service.
802.404 Scope and content of Board decisions.
802.405 Remand.
802.406 Finality of Board decisions.

                             Reconsideration

802.407 Reconsideration of Board decisions.
802.408 Notice of request for reconsideration.
802.409 Grant or denial of request.

                             Judicial Review

802.410 Judicial review of Board decisions.
802.411 Certification of record for judicial review.

    Authority: 5 U.S.C. 301; 30 U.S.C. 901 et seq.; 33 U.S.C. 901 et 
seq.; Reorganization Plan No. 6 of 1950, 15 FR 3174; Secretary of 
Labor's Order 38-72, 38 FR 90, January 3, 1973.

[[Page 1063]]


    Source: 52 FR 27292, July 20, 1987, unless otherwise noted.



                      Subpart A_General Provisions

                              Introductory



Sec. 802.101  Purpose and scope of this part.

    (a) The purpose of part 802 is to establish the rules of practice 
and procedure governing the operation of the Benefits Review Board.
    (b) Except as otherwise provided, the rules promulgated in this part 
apply to all appeals taken by any party from decisions or orders with 
respect to claims for compensation or benefits under the following Acts:
    (1) The Longshore and Harbor Workers' Compensation Act (LHWCA), 33 
U.S.C. 901 et seq.;
    (2) The Defense Base Act (DBA), 42 U.S.C. 1651 et seq.;
    (3) The District of Columbia Workmen's Compensation Act (DCWCA), 36 
D.C. Code 501 et seq. (1973);
    (4) The Outer Continental Shelf Lands Act (OCSLA), 43 U.S.C. 1331 et 
seq.;
    (5) The Nonappropriated Fund Instrumentalities Act (NFIA), 5 U.S.C. 
8171 et seq.;
    (6) Title IV, section 415 and part C of the Federal Mine Safety and 
Health Act of 1977, Public Law 95-164, 91 Stat. 1290 (formerly the 
FCMHSA of 1969), as amended by the Black Lung Benefits Reform Act of 
1977, Public Law 95-239, 92 Stat. 95, the Black Lung Benefits Revenue 
Act of 1977, Public Law 95-229, 92 Stat. 11, and the Black Lung Benefits 
Amendments of 1981, Public Law 97-119, 95 Stat. 1643 (30 U.S.C. 901 et 
seq.).



Sec. 802.102  Applicability of part 801 of this chapter.

    Part 801 of this chapter VII sets forth rules of general 
applicability covering the composition, authority, and operation of the 
Benefits Review Board and definitions applicable to this chapter. The 
provisions of part 801 of this chapter are fully applicable to this part 
802.



Sec. 802.103  Powers of the Board.

    (a) Conduct of proceedings. Pursuant to section 27(a) of the LHWCA, 
the Board shall have power to preserve and enforce order during any 
proceedings for determination or adjudication of entitlement to 
compensation or benefits or for liability for payment thereof, and to do 
all things in accordance with law which may be necessary to enable the 
Board to effectively discharge its duties.
    (b) Contumacy. Pursuant to section 27(b) of the LHWCA, if any person 
in proceedings before the Board disobeys or resists any lawful order or 
process, or misbehaves during a hearing or so near the place thereof as 
to obstruct the same, the Board shall certify the facts to the Federal 
district court having jurisdiction in the place in which it is sitting 
(or to the U.S. District Court for the District of Columbia if it is 
sitting in the District) which shall thereupon in a summary manner hear 
the evidence as to the acts complained of, and if the evidence so 
warrants, punish such person in the same manner and to the same extent 
as for a contempt committed before the court, or commit such person upon 
the same conditions as if the doing of the forbidden act had occurred 
with reference to the process or in the presence of the court.



Sec. 802.104  Consolidation; severance.

    (a) Cases may, in the sole discretion of the Board, be consolidated 
for purposes of an appeal upon the motion of any party or upon the 
Board's own motion where there exist common parties, common questions of 
law or fact or both, or in such other circumstances as justice and the 
administration of the Acts require.
    (b) Upon its own motion, or upon motion of any party, the Board may, 
for good cause, order any proceeding severed with respect to some or all 
issues or parties.



Sec. 802.105  Stay of payment pending appeal.

    (a) As provided in section 14(f) of the LHWCA and sections 415 and 
422 of the Black Lung Benefits Act, the payment of the amounts required 
by an award of compensation or benefits shall not be stayed or in any 
way delayed beyond ten days after it becomes due pending final decision 
in any proceeding before the Board unless so ordered by the

[[Page 1064]]

Board. No stay shall be issued unless irreparable injury would otherwise 
ensue to the employer, coal mine operator or insurance carrier. Any 
order of the Board permitting any stay shall contain a specific finding, 
based upon evidence submitted to the Board and identified by reference 
thereto, that irreparable injury would result to such employer, operator 
or insurance carrier, and specify the nature and extent of the injury.
    (b) When circumstances require, the Board, in its discretion, may 
issue a temporary order not to exceed 30 days granting a motion for stay 
of payment prior to the expiration of the ten-day period allowed for 
filing responses to motions pursuant to Sec. 802.219(e). Following 
receipt of a response to the motion or expiration of the response time 
provided in Sec. 802.219(e), the Board will issue a subsequent order 
ruling on the motion for stay of payment.

[52 FR 27292, July 20, 1987, as amended at 53 FR 16519, May 9, 1988]



                     Subpart B_Prereview Procedures

                       Commencing Appeal: Parties



Sec. 802.201  Who may file an appeal.

    (a) A party. (1) Any party or party-in-interest adversely affected 
or aggrieved by a decision or order issued pursuant to one of the Acts 
over which the Board has appellate jurisdiction may appeal a decision or 
order of an administrative law judge or deputy commissioner to the Board 
by filing a notice of appeal pursuant to this subpart. (See Sec. 
802.205(b) and (c) for exceptions to this general rule.) A party who 
files a notice of appeal shall be deemed the petitioner. The Director, 
OWCP, when acting as a representative of the Special Fund established 
under the Longshore and Harbor Workers' Compensation Act or the Black 
Lung Disability Trust Fund established by the Black Lung Benefits Act, 
or, when appealing a decision or order which affects the administration 
of one of the Acts, shall be considered a party adversely affected.
    (2) When a decision or order is favorable to a party (i.e., the 
prevailing party), the prevailing party may file a cross-appeal pursuant 
to Sec. 802.205(b) to challenge any adverse findings of fact or 
conclusions of law in the same proceeding.
    (b) Representative parties. In the event that a party has not 
attained the age of 18, is not mentally competent, or is physically 
unable to file and pursue or defend an appeal, the Board may permit any 
legally appointed guardian, committee, or other appropriate 
representative to file and pursue or defend the appeal, or it may in its 
discretion appoint such representative for purposes of the appeal. The 
Board may require any legally appointed representative to submit 
evidence of that person's authority.



Sec. 802.202  Appearances by attorneys and other authorized persons; 
denial or authority to appear.

    (a) Appearances. Any party or intervenor or any representative duly 
authorized pursuant to Sec. 802.201(b) may appear before and/or submit 
written argument to the Board by attorney or any other person, including 
any representative of an employee organization, duly authorized pursuant 
to paragraph (d)(2) of this section.
    (b) Any individual petitioner or respondent or his duly authorized 
representative pursuant to Sec. 802.201(b) or an officer of any 
corporate party or a member of any partnership or joint venture which is 
a party may participate in the appeal on his or her own behalf, or on 
behalf of such business entity.
    (c) For each instance in which appearance before the Board is made 
by an attorney or duly authorized person other than the party or his 
legal guardian, committee, or representative, there shall be filed with 
the Board a notice of appearance. Any attorney or other duly authorized 
person of record who intends to withdraw from representation shall file 
prior written notice of intent to withdraw from representation of a 
party or of substitution of counsel or other representative.
    (d) Qualifications--(1) Attorneys. An attorney at law who is 
admitted to practice before the Federal courts or before the highest 
court of any State, the District of Columbia, or any territory or 
commonwealth of the United States, may practice before the Board

[[Page 1065]]

unless he or she has been disqualified from representing claimants under 
the Act pursuant to 33 U.S.C. 931(b)(2)(C), or unless authority to 
appear has been denied pursuant to Sec. 802.202(e)(1) and (3). An 
attorney's own representation that he or she is in good standing before 
any of such courts shall be sufficient proof thereof, unless otherwise 
ordered by the Board.
    (2) Persons not attorneys. Any person who is not an attorney at law 
may be admitted to appear in a representative capacity unless he or she 
has been disqualified from representing claimants under the Act pursuant 
to 33 U.S.C. 931(b)(2)(C). An application by a person not an attorney at 
law for admission to appear in a proceeding shall be submitted in 
writing to the Board at the time such person's appearance is entered. 
The application shall state such person's name, address, telephone 
number, general education, any special training or experience in claims 
representation, and such person's relationship, if any, to the party 
being represented. The Board may, at any time, make further inquiry as 
to the qualification or ability of such person to render assistance. In 
the event of a failure to make application for admission to appear, the 
Board shall issue an order to show cause why admission to appear should 
not be denied. Admission to appear in a particular case shall not be 
deemed a blanket authorization to appear in other cases.
    (e) Denial of authority to appear--(1) Attorneys. The Board may deny 
the privilege of appearing to any attorney, within applicable statutory 
constraints, e.g., 5 U.S.C. 555, who has been disbarred or suspended 
from the practice of law; who has surrendered his or her license while 
under investigation or under threat of disciplinary action; or who, 
after notice of an opportunity for hearing in the matter is found by the 
Board to have engaged in any conduct which would result in the loss of 
his or her license. No provision hereof shall apply to any attorney who 
appears on his or her own behalf.
    (2) Persons not attorneys. The Board may deny the privilege of 
appearing to any person who, in the Board's judgment, lacks sufficient 
qualification or ability to render assistance. No provision hereof shall 
apply to any person who appears on his or her own behalf.
    (3) Denial of authority to appear may be considered, after notice of 
and opportunity for a hearing, by the panel (constituted pursuant to 
Sec. 801.301) which is assigned to decide the appeal in which the 
attorney or other person has entered an appearance. If such proceeding 
reveals facts suggesting that one of the circumstances described in 33 
U.S.C. 931(b)(2)(C) exists, the Board shall refer that information to 
the Director, OWCP, for further proceedings pursuant to 33 U.S.C. 
931(b)(2)(C) and 907(j). An attorney or other person may appeal a 
panel's decision to deny authority to appear to the entire permanent 
Board sitting en banc.

[52 FR 27292, July 20, 1987, as amended at 53 FR 16519, May 9, 1988]



Sec. 802.203  Fees for services.

    (a) No fee for services rendered on behalf of a claimant in the 
successful pursuit or successful defense of an appeal shall be valid 
unless approved pursuant to 33 U.S.C. 928, as amended.
    (b) All fees for services rendered in the successful pursuit or 
successful defense of an appeal on behalf of a claimant shall be subject 
to the provisions and prohibitions contained in 33 U.S.C. 928, as 
amended.
    (c) Within 60 days of the issuance of a decision or non-
interlocutory order by the Board, counsel or, where appropriate, 
representative for any claimant who has prevailed on appeal before the 
Board may file an application with the Board for a fee. Where the Board 
remands the case and the administrative law judge on remand issues an 
award, a fee petition may be filed within 60 days of the decision on 
remand. In the event that a claimant who was unsuccessful before the 
Board prevails on appeal to the court of appeals, his or her 
representative may within 60 days of issuance of the court's judgment 
file a fee application with the Board for services performed before the 
Board.
    (d) A fee application shall include only time spent on services 
performed while the appeal was pending before the Board and shall be 
complete in all respects, containing all of the following specific 
information:

[[Page 1066]]

    (1) A complete statement of the extent and character of the 
necessary work done;
    (2) The professional status of each person for whom a fee is claimed 
who performed services on behalf of the claimant (if such professional 
status is other than attorney, a definition of the professional status 
of such individual must be included in the fee petition, including a 
statment of that individual's professional training, education and 
experience) and a statement that the attorney was a member in good 
standing of a state bar at the time the services were performed;
    (3) The number of hours, in \1/4\ hour increments, devoted by each 
person who performed services on behalf of the claimant and the dates on 
which such services were performed in each category of work;
    (4) The normal billing rate for each person who performed services 
on behalf of the claimant. The rate awarded by the Board shall be based 
on what is reasonable and customary in the area where the services were 
rendered for a person of that particular professional status.
    (e) Any fee approved shall be reasonably commensurate with the 
necessary work done and shall take into account the quality of the 
representation, the complexity of the legal issues involved, the amount 
of benefits awarded, and, when the fee is to be assessed against the 
claimant, shall also take into account the financial circumstances of 
the claimant. A fee shall not necessarily be computed by multiplying 
time devoted to work by an hourly rate.
    (f) No contract pertaining to the amount of a fee shall be 
recognized.
    (g) A fee application shall be served on all other parties and 
accompanied by a certificate of service. The Board will not take action 
on the fee application until such service is effected. Any party may 
respond to the application within 10 days of receipt of the application. 
The response shall be filed with the Board and served on all other 
parties.

                            Notice of Appeal



Sec. 802.204  Place for filing notice of appeal.

    Any notice of appeal shall be sent by mail to the U.S. Department of 
Labor, Benefits Review Board, P.O. Box 37601, Washington, DC 20013-7601, 
or otherwise presented to the Clerk of the Board at 200 Constitution 
Avenue, NW., Room S-5220, Washington, DC 20210. A copy shall be served 
on the deputy commissioner who filed the decision or order being 
appealed and on all other parties by the party who files a notice of 
appeal. Proof of service of the notice of appeal on the deputy 
commissioner and other parties shall be included with the notice of 
appeal.

[52 FR 27292, July 20, 1987, as amended at 56 FR 54538, Oct. 22, 1991; 
62 FR 10666, Mar. 7, 1997]



Sec. 802.205  Time for filing.

    (a) A notice of appeal, other than a cross-appeal, must be filed 
within 30 days from the date upon which a decision or order has been 
filed in the Office of the Deputy Commissioner pursuant to section 19(e) 
of the LHWCA or in such other office as may be established in the future 
(see Sec. Sec. 702.349 and 725.478 of this title).
    (b) If a timely notice of appeal is filed by a party, any other 
party may initiate a cross-appeal by filing a notice of appeal within 14 
days of the date on which the first notice of appeal was filed, or 
within the time prescribed by paragraph (a) of this section, whichever 
period last expires. In the event that such other party was not properly 
served with the first notice of appeal, such party may initiate a cross-
appeal by filing a notice of appeal within 14 days of the date that 
service is effected.
    (c) Failure to file within the period specified in paragraph (a) or 
(b) of this section (whichever is applicable) shall foreclose all rights 
to review by the Board with respect to the case or matter in question. 
Any untimely appeal will be summarily dismissed by the Board for lack of 
jurisdiction.

[[Page 1067]]



Sec. 802.206  Effect of motion for reconsideration on time for appeal.

    (a) A timely motion for reconsideration of a decision or order of an 
administrative law judge or deputy commissioner shall suspend the 
running of the time for filing a notice of appeal.
    (b)(1) In a case involving a claim filed under the Longshore and 
Harbor Workers' Compensation Act or its extensions (see Sec. 
802.101(b)(1)-(5)), a timely motion for reconsideration for purposes of 
paragraph (a) of this section is one which is filed not later than 10 
days from the date the decision or order was filed in the Office of the 
Deputy Commissioner.
    (2) In a case involving a claim filed under title IV of the Federal 
Mine Safety and Health Act, as amended (see Sec. 802.101(b)(6)), a 
timely motion for reconsideration for purposes of paragraph (a) of this 
section is one which is filed not later than 30 days from the date the 
decision or order was served on all parties by the administrative law 
judge and considered filed in the Office of the Deputy Commissioner (see 
Sec. Sec. 725.478 and 725.479(b), (c) of this title).
    (c) If the motion for reconsideration is sent by mail and the fixing 
of the date of delivery as the date of filing would result in a loss or 
impairment of reconsideration rights, it will be considered to have been 
filed as of the date of mailing. The date appearing on the U.S. Postal 
Service postmark (when available and legible) shall be prima facie 
evidence of the date of mailing. If there is no such postmark or it is 
not legible, other evidence such as, but not limited to, certified mail 
receipts, certificates of service and affidavits may also be used to 
establish the mailing date.
    (d) If a motion for reconsideration is granted, the full time for 
filing an appeal commences on the date the subsequent decision or order 
on reconsideration is filed as provided in Sec. 802.205.
    (e) If a motion for reconsideration is denied, the full time for 
filing an appeal commences on the date the order denying reconsideration 
is filed as provided in Sec. 802.205.
    (f) If a timely motion for reconsideration of a decision or order of 
an administrative law judge or deputy commissioner is filed, any appeal 
to the Board, whether filed prior to or subsequent to the filing of the 
timely motion for reconsideration, shall be dismissed without prejudice 
as premature. Following decision by the administrative law judge or 
deputy commissioner pursuant to either paragraph (d) or (e) of this 
section, a new notice of appeal shall be filed with the Clerk of the 
Board by any party who wishes to appeal. During the pendency of an 
appeal to the Board, any party having knowledge that a motion for 
reconsideration of a decision or order of an administrative law judge or 
deputy commissioner has been filed shall notify the Board of such 
filing.



Sec. 802.207  When a notice of appeal is considered to have been filed 
in the office of the Clerk of the Board.

    (a) Date of receipt. (1) Except as otherwise provided in this 
section, a notice of appeal is considered to have been filed only as of 
the date it is received in the office of the Clerk of the Board.
    (2) Notices of appeal submitted to any other agency or subdivision 
of the Department of Labor or of the U.S. Government or any State 
government shall be promptly forwarded to the office of the Clerk of the 
Board. The notice shall be considered filed with the Clerk of the Board 
as of the date it was received by the other governmental unit if the 
Board finds that it is in the interest of justice to do so.
    (b) Date of mailing. If the notice of appeal is sent by mail and the 
fixing of the date of delivery as the date of filing would result in a 
loss or impairment of appeal rights, it will be considered to have been 
filed as of the date of mailing. The date appearing on the U.S. Postal 
Service postmark (when available and legible) shall be prima facie 
evidence of the date of mailing. If there is no such postmark or it is 
not legible, other evidence, such as, but not limited to, certified mail 
receipts, certificate of service and affidavits, may be used to 
establish the mailing date.



Sec. 802.208  Contents of notice of appeal.

    (a) A notice of appeal shall contain the following information:
    (1) The full name and address of the pettioner;

[[Page 1068]]

    (2) The full name of the injured, disabled, or deceased employee;
    (3) The full names and addresses of all other parties, including, 
among others, beneficiaries, employers, coal mine operators, and 
insurance carriers where appropriate;
    (4) The case file number which appears on the decision or order of 
the administrative law judge;
    (5) The claimant's OWCP file number;
    (6) The date of filing of the decision or order being appealed;
    (7) Whether a motion for reconsideration of the decision or order of 
the administrative law judge has been filed by any party, the date such 
motion was filed, and whether the administrative law judge has acted on 
such motion for reconsideration (see Sec. 802.206);
    (8) The name and address of the attorney or other person, if any, 
who is representing the petitioner.
    (b) Paragraph (a) of this section notwithstanding, any written 
communication which reasonably permits identification of the decision 
from which an appeal is sought and the parties affected or aggrieved 
thereby, shall be sufficient notice for purposes of Sec. 802.205.
    (c) In the event that identification of the case is not possible 
from the information submitted, the Clerk of the Board shall so notify 
the petitioner and shall give the petitioner a reasonable time to 
produce sufficient information to permit identification of the case. For 
purposes of Sec. 802.205, the notice shall be deemed to have been filed 
as of the date the insufficient information was received.



Sec. 802.209  Transmittal of record to the Board.

    Upon receipt of a copy of the notice of appeal or upon request of 
the Board, the deputy commissioner or other office having custody of 
such record shall immediately forward to the Clerk of the Board the 
official record of the case, which record includes the transcript or 
transcripts of all formal proceedings with exhibits, all decisions and 
orders rendered in the case.

                           Initial Processing



Sec. 802.210  Acknowledgment of notice of appeal.

    Upon receipt by the Board of a notice of appeal, the Clerk of the 
Board shall as expeditiously as possible notify the petitioner and all 
other parties and the Solicitor of Labor, in writing, that a notice of 
appeal has been filed.



Sec. 802.211  Petition for review.

    (a) Within 30 days after the receipt of an acknowledgment of a 
notice of appeal issued pursuant to Sec. 802.210, the petitioner shall 
submit a petition for review to the Board which petition lists the 
specific issues to be considered on appeal.
    (b) Each petition for review shall be accompanied by a supporting 
brief, memorandum of law or other statement which: Specifically states 
the issues to be considered by the Board; presents, with appropriate 
headings, an argument with respect to each issue presented with 
references to transcripts, pieces of evidence and other parts of the 
record to which the petitioner wishes the Board to refer; a short 
conclusion stating the precise result the petitioner seeks on each issue 
and any authorities upon which the petition relies to support such 
proposed result. The Longshore Desk Book and Black Lung Desk Book are 
not intended as final legal authorities and should not be cited or 
relied upon as such.
    (c) Copies of the petition for review and accompanying documents 
must be served upon all parties and the Solicitor of Labor.
    (d) Failure to submit a petition for review and brief within the 30-
day period or to comply with any part of this section may, in the 
discretion of the Board, cause the appeal to be deemed abandoned (see 
Sec. 802.402).
    (e) When a party appears pro se the Board may, in its discretion, 
waive formal compliance with the requirements of this section and may, 
depending upon the particular circumstances, prescribe an alternate 
method of furnishing such information as may be necessary for the Board 
to decide the merits of any such appeal.

[[Page 1069]]



Sec. 802.212  Response to petition for review.

    (a) Within 30 days after the receipt of a petition for review, each 
party upon whom it was served may submit to the Board a brief, 
memorandum, or other statement in response to it.
    (b) Arguments in response briefs shall be limited to those which 
respond to arguments raised in petitioner's brief and to those in 
support of the decision below. Other arguments will not be considered by 
the Board (see Sec. 802.205(b)).



Sec. 802.213  Reply briefs.

    (a) Within 20 days after the receipt of a brief, memorandum, or 
statement submitted in response to the petition for review pursuant to 
Sec. 802.212, any party upon whom it was served may file a brief, 
memorandum, or other statement in reply to it.
    (b) Arguments in reply briefs shall be limited to those which reply 
to arguments made in the response brief. Any other arguments in a reply 
brief will not be considered by the Board.



Sec. 802.214  Intervention.

    (a) If a person or legal entity shows in a written petition to 
intervene that his, her, or its rights are affected by any proceeding 
before the Board, the Board may permit that person or legal entity to 
intervene in the proceeding and to participate within limits prescribed 
by the Board.
    (b) The petition to intervene shall state precisely:
    (1) The rights affected, and
    (2) The nature of any argument the person or legal entity intends to 
make.



Sec. 802.215  Additional briefs.

    Additional briefs may be filed or ordered in the discretion of the 
Board and shall be submitted within time limits specified by the Board.



Sec. 802.216  Service and form of papers.

    (a) All papers filed with the Board, including notices of appeal, 
petitions for review, briefs and motions, shall be secured at the top 
and shall have a caption, title, signature of the party (or his attorney 
or other representative), date of signature, and certificate of service.
    (b) For each paper filed with the Board, the original and two 
legible copies shall be submitted.
    (c) A copy of any paper filed with the Board shall be served on each 
party and the Solicitor of Labor, by the party submitting the paper.
    (d) Any paper required to be given or served to or by the Board or 
any party shall be served by mail or otherwise presented. All such 
papers served shall be accompanied by a certificate of service.
    (e) All papers (exclusive of documentary evidence) submitted to the 
Benefits Review Board shall conform to standard letter dimensions 
(8.5x11 inches).



Sec. 802.217  Waiver of time limitations for filing.

    (a) The time periods specified for submitting papers described in 
this part, except that for submitting a notice of appeal, may be 
enlarged for a reasonable period when in the judgment of the Board an 
enlargement is warranted.
    (b) Any request for an enlargement of time pursuant to this section 
shall be directed to the Clerk of the Board and must be received by the 
Clerk on or prior to the date on which the paper is due.
    (c) Any request for an enlargement of time pursuant to this section 
shall be submitted in writing in the form of a motion, shall specify the 
reasons for the request, and shall specify the date to which an 
enlargement of time is requested.
    (d) Absent exceptional circumstances, no more than one enlargement 
of time shall be granted to each party.
    (e) Absent a timely request for an enlargement of time pursuant to 
this section and the Board's granting that request, any paper submitted 
to the Board outside the applicable time period specified in this part 
shall be accompanied by a separate motion stating the reasons therefor 
and requesting that the Board accept the paper although filed out of 
time.

[[Page 1070]]

    (f) When a paper filed out of time is accepted by the Board, the 
time for filing a response shall begin to run from the date of a party's 
receipt of the Board's order disposing of the motion referred to in 
paragraph (e) of this section.



Sec. 802.218  Failure to file papers; order to show cause.

    (a) Failure to file any paper when due pursuant to this part, may, 
in the discretion of the Board, constitute a waiver of the right to 
further participation in the proceedings.
    (b) When a petition for review and brief has not been submitted to 
the Board within the time limitation prescribed by Sec. 802.211, or 
within an enlarged time limitation granted pursuant to Sec. 802.217, 
the petitioner shall be ordered to show cause to the Board why his or 
her appeal should not be dismissed pursuant to Sec. 802.402.



Sec. 802.219  Motions to the Board; orders.

    (a) An application to the Board for an order shall be by motion in 
writing. A motion shall state with particularity the grounds therefor 
and shall set forth the relief or order sought.
    (b) A motion shall be a separate document and shall not be 
incorporated in the text of any other paper filed with the Board, except 
for a statement in support of the motion. If this paragraph is not 
complied with, the Board will not consider and dispose of the motion.
    (c) If there is no objection to a motion in whole or in part by 
another party to the case, the absence of an objection shall be stated 
on the motion.
    (d) The rules applicable to service and form of papers, Sec. 
802.216, shall apply to all motions.
    (e) Within 10 days of the receipt of a copy of a motion, a party may 
file a written response with the Board.
    (f) As expeditiously as possible following receipt of a response to 
a motion or expiration of the response time provided in paragraph (e) of 
this section, the Board shall issue a dispositive order.
    (g) Orders granted by Clerk. The Clerk of the Board may enter orders 
on behalf of the Board in procedural matters, including but not limited 
to:
    (1) First motions for extensions of time for filing briefs and any 
papers other than notices of appeal or cross-appeal;
    (2) Motions for voluntary dismissals of appeals;
    (3) Orders to show cause why appeals should not be dismissed for 
failure to timely file a petition for review and brief (see Sec. 
802.218(b)); and
    (4) Unopposed motions which are ordinarily granted as of course, 
except that the Clerk may, in his or her discretion, refer such motions 
for disposition to a motions panel as provided by paragraph (h) of this 
section.
    (h) All other motions. All other motions will be referred for 
disposition to a panel of three members constituted pursuant to Sec. 
801.301. Any member may request that any motion be considered by the 
entire permanent Board en banc except as provided in Sec. 801.301(d).
    (i) Reconsideration of orders. Any party adversely effected by any 
interlocutory order issued under paragraph (g) or (h) may file a motion 
to reconsider, vacate or modify the order within 10 days from its 
filing, stating the grounds for such request. Any motion for 
reconsideration, vacation or modification of an interlocutory order 
shall be referred to a three-member panel that may include any member 
who previously acted on the matter. Suggestions for en banc 
reconsideration of interlocutory orders shall not be accepted. 
Reconsideration of all other orders will be treated under Sec. 802.407 
of this part.



Sec. 802.220  Party not represented by an attorney; informal procedure.

    A party to an appeal who is not represented by an attorney shall 
comply with the procedural requirements contained in this part, except 
as otherwise specifically provided in Sec. 802.211(e). In its 
discretion, the Board may prescribe additional informal procedures to be 
followed by such party.



Sec. 802.221  Computation of time.

    (a) In computing any period of time prescribed or allowed by these 
rules, by direction of the Board, or by any applicable statute which 
does not provide otherwise, the day from which the designated period of 
time begins to run

[[Page 1071]]

shall not be included. The last day of the period so computed shall be 
included, unless it is a Saturday, Sunday, or legal holiday, in which 
event the period runs until the end of the next day which is not a 
Saturday, Sunday, or legal holiday.
    (b) Whenever a paper is served on the Board or on any party by mail, 
paragraph (a) of this section will be deemed complied with if the 
envelope containing the paper is postmarked by the U.S. Postal Service 
within the time period allowed, computed as in paragraph (a) of this 
section. If there is no such postmark, or it is not legible, other 
evidence, such as, but not limited to, certified mail receipts, 
certificate of service and affidavits, may be used to establish the 
mailing date.
    (c) A waiver of the time limitations for filing a paper, other than 
a notice of appeal, may be requested by proper motion filed in 
accordance with Sec. Sec. 802.217 and 802.219.



                     Subpart C_Procedure for Review

                           Action by the Board



Sec. 802.301  Scope of review.

    (a) The Benefits Review Board is not empowered to engage in a de 
novo proceeding or unrestricted review of a case brought before it. The 
Board is authorized to review the findings of fact and conclusions of 
law on which the decision or order appealed from was based. Such 
findings of fact and conclusions of law may be set aside only if they 
are not, in the judgment of the Board, supported by substantial evidence 
in the record considered as a whole or in accordance with law.
    (b) Parties shall not submit new evidence to the Board. Any evidence 
submitted by a party which is not part of the record developed at the 
hearing before the administrative law judge will be returned without 
being considered by the Board.
    (c) Any party who considers new evidence necessary to the 
adjudication of the claim may apply for modification pursuant to section 
22 of the Longshore and Harbor Workers' Compensation Act, 33 U.S.C. 922. 
A party who files a petition for modification shall promptly notify the 
Board of such filing. Upon receipt of such notification, the Board shall 
dismiss the case without prejudice. Should the petition for modification 
be declined, the petitioner may file a request for reinstatement of his 
or her appeal with the Board within 30 days of the date the petition is 
declined. Should the petition for modification be accepted, any party 
adversely affected by the decision or order granting or denying 
modification may file a new appeal with the Board within 30 days of the 
date the decision or order on modification is filed.

[52 FR 27292, July 20, 1987, as amended at 53 FR 16519, May 9, 1988]



Sec. 802.302  Docketing of appeals.

    (a) Maintenance of dockets. A docket of all proceedings shall be 
maintained by the Board. Each proceeding shall be assigned a number in 
chronological order upon the date on which a notice of appeal is 
received. Correspondence or further applications in connection with any 
pending case shall refer to the docket number of that case.
    (b) Inspection of docket; publication of decision. The docket of the 
Board shall be open to public inspection. The Board shall publish its 
decisions in a form which is readily available for inspection, and shall 
allow the public to inspect its decisions at the permanent location of 
the Board.

                     Oral Argument Before the Board



Sec. 802.303  Decision; no oral argument.

    (a) In the event that no oral argument is ordered pursuant to Sec. 
802.306, the Board shall proceed to review the record of the case as 
expeditiously as possible after all briefs, supporting statements, and 
other pertinent documents have been received.
    (b) Each case shall be considered in the order in which it becomes 
ready for decision, regardless of docket number, although for good cause 
shown, upon the filing of a motion to expedite by a party, the Board may 
advance the order in which a particular case is to be considered.
    (c) The Board may advance an appeal on the docket on its own motion 
if the interests of justice would be served by so doing.

[[Page 1072]]



Sec. 802.304  Purpose of oral argument.

    Oral argument may be held by the Board in any case:
    (a) When there is a novel issue not previously considered by the 
Board; or
    (b) When in the interests of justice oral argument will serve to 
assist the Board in carrying out the intent of any of the Acts; or
    (c) To resolve conflicting decisions by administrative law judges on 
a substantial question of law.



Sec. 802.305  Request for oral argument.

    (a) During the pendency of an appeal, but not later than the 
expiration of 20 days from the date of receipt of the response brief 
provided by Sec. 802.212, any party may request oral argument. The 
Board on its own motion may order oral argument at any time.
    (b) A request for oral argument shall be submitted in the form of a 
motion, specifying the issues to be argued and justifying the need for 
oral argument (see Sec. 802.219).
    (c) The party requesting oral argument shall set forth in the motion 
suggested dates and alternate cities convenient to the parties when and 
where they would be available for oral argument.



Sec. 802.306  Action on request for oral argument.

    As expeditiously as possible after the date upon which a request for 
oral argument is received, the Board shall determine whether the request 
shall be granted or denied.



Sec. 802.307  Notice of oral argument.

    (a) In cases where a request for oral argument has been approved or 
where oral argument has been ordered, the Board shall give all parties a 
minimum of 30 days' notice, in writing, by mail, of the scope of 
argument and of the time when, and place where, oral argument will be 
held.
    (b) Once oral argument has been scheduled by the Board, continuances 
shall not be granted except for good cause shown by a party, such as in 
cases of extreme hardship or where attendance of a party or his or her 
representative is mandated at a previously scheduled judicial 
proceeding. Unless the ground for the request arises thereafter, 
requests for continuances must be received by the Board at least 15 days 
before the scheduled date of oral argument, must be served upon the 
other parties and must specify good cause why the requesting party 
cannot be available for oral argument.
    (c) The Board may cancel or reschedule oral argument on its own 
motion at any time.



Sec. 802.308  Conduct of oral argument.

    (a) Oral argument shall be held in Washington, DC, unless the Board 
orders otherwise, and shall be conducted at a time reasonably convenient 
to the parties. For good cause shown, the presiding judge of the panel 
may, in his or her discretion, postpone an oral argument to a more 
convenient time.
    (b) The proceedings shall be conducted under the supervision of the 
Chairman or, if the Chairman is not on the panel, the senior judge, who 
shall regulate all procedural matters arising during the course of the 
argument.
    (c) Within the discretion of the Board, oral argument shall be open 
to the public and may be presented by any party, representative, or duly 
authorized attorney. Presentation of oral argument may be denied by the 
Board to a party who has not significantly participated in the appeal 
prior to oral argument.
    (d) The Board shall determine the scope of any oral argument 
presented and shall so inform the parties in its notice scheduling oral 
argument pursuant to Sec. 802.307.
    (e) The Board in its discretion shall determine the amount of time 
allotted to each party for argument and rebuttal.



Sec. 802.309  Absence of parties.

    The unexcused absence of a party or his or her authorized 
representative at the time and place set for argument shall not be the 
occasion for delay of the proceeding. In such event, argument on behalf 
of other parties may be heard and the case shall be regarded as 
submitted on the record by the absent party. The presiding judge may, 
with the consent of the parties present, cancel the oral argument and 
treat the appeal as submitted on the written record.

[[Page 1073]]



                  Subpart D_Completion of Board Review

                               Dismissals



Sec. 802.401  Dismissal by application of party.

    (a) At any time prior to the issuance of a decision by the Board, 
the petitioner may move that the appeal be dismissed. If granted, such 
motion for dismissal shall be granted with prejudice to the petitioner.
    (b) At any time prior to the issuance of a decision by the Board, 
any party or representative may move that the appeal be dismissed.



Sec. 802.402  Dismissal by abandonment.

    (a) Upon motion by any party or representative or upon the Board's 
own motion, an appeal may be dismissed upon its abandonment by the party 
or parties who filed the appeal. Within the discretion of the Board, a 
party may be deemed to have abandoned an appeal if neither the party nor 
his representative participates significantly in the review proceedings.
    (b) An appeal may be dismissed on the death of a party only if the 
record affirmatively shows that there is no person who wishes to 
continue the action and whose rights may be prejudiced by dismissal.

                          Decision of the Board



Sec. 802.403  Issuance of decisions; service.

    (a) The Board shall issue written decisions as expeditiously as 
possible after the completion of review proceedings before the Board. 
The transmittal of the decision of the Board shall indicate the 
availability of judicial review of the decision under section 21(c) of 
the LHWCA when appropriate.
    (b) The original of the decision shall be filed with the Clerk of 
the Board. A copy of the Board's decision shall be sent by certified 
mail or otherwise presented to all parties to the appeal and the 
Director. The record on appeal, together with a transcript of any oral 
proceedings, any briefs or other papers filed with the Board, and a copy 
of the decision shall be returned to the appropriate deputy commissioner 
for filing.
    (c) Proof of service of Board decisions shall be certified by the 
Clerk of the Board or by another employee in the office of the Clerk of 
the Board who is authorized to certify proof of service.



Sec. 802.404  Scope and content of Board decisions.

    (a) In its decision the Board shall affirm, modify, vacate or 
reverse the decision or order appealed from, and may remand the case for 
action or proceedings consistent with the decision of the Board. The 
consent of the parties shall not be a prerequisite to a remand ordered 
by the Board.
    (b) In appropriate cases, such as where the issues raised on appeal 
have been thoroughly discussed and disposed of in prior cases by the 
Board or the courts, or where the findings of fact and conclusions of 
law are both correct and adequately discussed, the Board in its 
discretion may issue a brief, summary decision in writing, disposing of 
the appeal.
    (c) In cases which cannot be disposed of as in paragraph (b) of this 
section, a full, written decision discussing the issues and applicable 
law shall be issued.



Sec. 802.405  Remand.

    (a) By the Board. Where a case is remanded, such additional 
proceedings shall be initiated and such other action shall be taken as 
is directed by the Board.
    (b) By a court. Where a case has been remanded by a court, the Board 
may proceed in accordance with the court's mandate to issue a decision 
or it may in turn remand the case to an administrative law judge or 
deputy commissioner with instructions to take such action as is ordered 
by the court and any additional necessary action.



Sec. 802.406  Finality of Board decisions.

    A decision rendered by the Board pursuant to this subpart shall 
become final 60 days after the issuance of such decision unless a 
written petition for review praying that the order be modified or set 
aside, pursuant to section 21(c) of the LHWCA, is filed in the 
appropriate U.S. court of appeals prior to

[[Page 1074]]

the expiration of the 60-day period herein described, or unless a timely 
request for reconsideration by the Board has been filed as provided in 
Sec. 802.407. If a timely request for reconsideration has been filed, 
the 60-day period for filing such petition for review will run from the 
issuance of the Board's decision on reconsideration.

                             Reconsideration



Sec. 802.407  Reconsideration of Board decisions.

    (a) Any party-in-interest may, within 30 days from the filing of a 
decision or non-interlocutory order by a panel or the Board pursuant to 
Sec. 802.403(b), request reconsideration of such decision by those 
members who rendered the decision. The panel of members who heard and 
decided the appeal will rule on the motion for reconsideration. If any 
member of the original panel is unavailable, the Chariman shall 
designate a new panel member.
    (b) Except as provided in Sec. 801.301(d), a party may, within 30 
days from the filing of a decision or non-interlocutory order by a panel 
of the Board pursuant to Sec. 802.403(b), suggest the appropriateness 
of reconsideration by the permanent members sitting en banc. Such 
suggestion, however, must accompany a motion for reconsideration 
directed to the panel which rendered the decision. The suggestion for 
reconsideration en banc must be clearly marked as such.
    (c) Except as provided in Sec. 801.301(d), even where no party has 
suggested reconsideration en banc, any permanent member may petition the 
permanent Board for reconsideration en banc of a panel decision.
    (d) Reconsideration en banc shall be granted upon the affirmative 
vote of the majority of permanent members of the Board. A panel decision 
shall stand unless vacated or modified by the concurring vote of at 
least three permanent members.



Sec. 802.408  Notice of request for reconsideration.

    (a) In the event that a party requests reconsideration of a decision 
or order, he or she shall do so in writing, in the form of a motion, 
stating the supporting rationale for the request, and include any 
material pertinent to the request.
    (b) The request shall be sent by mail, or otherwise presented, to 
the Clerk of the Board. Copies shall be served on all other parties.



Sec. 802.409  Grant or denial of request.

    All requests for reconsideration shall be reviewed by the Board and 
shall be granted or denied in the discretion of the Board.

                             Judicial Review



Sec. 802.410  Judicial review of Board decisions.

    (a) Within 60 days after a decision by the Board has been filed 
pursuant to Sec. 802.403(b), any party adversely affected or aggrieved 
by such decision may file a petition for review with the appropriate 
U.S. Court of Appeals pursuant to section 21(c) of the LHWCA.
    (b) The Director, OWCP, as designee of the Secretary of Labor 
responsible for the administration and enforcement of the statutes 
listed in Sec. 802.101, shall be deemed to be the proper party on 
behalf of the Secretary of Labor in all review proceedings conducted 
pursuant to section 21(c) of the LHWCA.



Sec. 802.411  Certification of record for judicial review.

    The record of a case including the record of proceedings before the 
Board shall be transmitted to the appropriate court pursuant to the 
rules of such court.

[[Page 1075]]



        CHAPTER VIII--JOINT BOARD FOR THE ENROLLMENT OF ACTUARIES




  --------------------------------------------------------------------
Part                                                                Page
900             Statement of organization...................        1077
901             Regulations governing the performance of 
                    actuarial services under the Employee 
                    Retirement Income Security Act of 1974..        1077
902             Rules regarding availability of information.        1095
903             Access to records...........................        1097

[[Page 1077]]



PART 900_STATEMENT OF ORGANIZATION--Table of Contents




Sec.
900.1 Basis.
900.2 Establishment.
900.3 Composition.
900.4 Meetings.
900.5 Staff.
900.6 Offices.
900.7 Delegations of authority.

    Authority: Sec. 3041-2, Pub. L. 93-406, 88 Stat. 829, 1002 (29 
U.S.C. 1241-2).

    Source: 40 FR 18776, Apr. 30, 1975, unless otherwise noted.



Sec. 900.1  Basis.

    This statement is issued by the Joint Board for the Enrollment of 
Actuaries (the Joint Board) pursuant to the requirement of section 552 
of title 5 of the United States Code that every agency shall publish in 
the Federal Register a description of its central and field 
organization.



Sec. 900.2  Establishment.

    The Joint Board has been established by the Secretary of Labor and 
the Secretary of the Treasury pursuant to section 3041 of the Employee 
Retirement Income Security Act of 1974 (29 U.S.C. 1241). Bylaws of the 
Board have been issued by the two Secretaries.\1\
---------------------------------------------------------------------------

    \1\ Copy filed with the Office of the Federal Register. Copies may 
also be obtained from the Executive Director of the Board.
---------------------------------------------------------------------------



Sec. 900.3  Composition.

    Pursuant to the Bylaws, the Joint Board consists of three members 
appointed by the Secretary of the Treasury and two appointed by the 
Secretary of Labor. The Board elects a Chairman from among the Treasury 
Representatives and a Secretary from among the Department of Labor 
Representatives. The Pension Benefit Guaranty Corporation may designate 
a non-voting representative to sit with, and participate in, the 
discussions of the Board. All decisions of the Board are made by simple 
majority vote.



Sec. 900.4  Meetings.

    The Joint Board meets on the call of the Chairman at such times as 
are necessary in order to consider matters requiring action. Minutes are 
kept of each meeting by the Secretary.



Sec. 900.5  Staff.

    (a) The Executive Director advises and assists the Joint Board 
directly in carrying out its responsibilities under the Act and performs 
such other functions as the Board may delegate to him.
    (b) Members of the staffs of the Departments of the Treasury and of 
Labor, by arrangement with the Joint Board, perform such services as may 
be appropriate in assisting the Board in the discharge of its 
responsibilities.



Sec. 900.6  Offices.

    The Joint Board does not maintain offices separate from those of the 
Departments of the Treasury and Labor. Its post office address is Joint 
Board for the Enrollment of Actuaries, c/o Department of the Treasury, 
Washington, D.C. 20220.



Sec. 900.7  Delegations of authority.

    As occasion warrants, the Joint Board may delegate functions to the 
Chairman or the Executive Director, including the authority to receive 
applications and to give notice of actions. Any such delegation of 
authority is conferred by resolution of the Board.



PART 901_REGULATIONS GOVERNING THE PERFORMANCE OF ACTUARIAL SERVICES 
UNDER THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974--Table of 
Contents




Sec.
901.0 Scope.

   Subpart A_Definitions and Eligibility To Perform Actuarial Services

901.1 Definitions.
901.2 Eligibility to perform actuarial services.

                    Subpart B_Enrollment of Actuaries

901.10 Application for enrollment.
901.11 Enrollment procedures.
901.12 Eligibility for enrollment of individuals applying for enrollment 
          before January 1, 1976.
901.13 Eligibility for enrollment of individuals applying for enrollment 
          on or after January 1, 1976.

[[Page 1078]]

        Subpart C_Standards of Performance for Enrolled Actuaries

901.20 Standards of performance of actuarial services.

            Subpart D_Suspension or Termination of Enrollment

901.30 Authority to suspend or terminate enrollment.
901.31 Grounds for suspension or termination of enrollment.
901.32 Receipt of information concerning enrolled actuaries.
901.33 Initiation of proceeding.
901.34 Conferences.
901.35 Contents of complaint.
901.36 Service of complaint and other papers.
901.37 Answer.
901.38 Supplemental charges.
901.39 Reply to answer.
901.40 Proof; variance; amendment of pleadings.
901.41 Motions and requests.
901.42 Representation.
901.43 Administrative Law Judge.
901.44 Hearings.
901.45 Evidence.
901.46 Depositions.
901.47 Transcript.
901.48 Proposed findings and conclusions.
901.49 Decision of the Administrative Law Judge.
901.50 Appeal to the Joint Board.
901.51 Decision of the Joint Board.
901.52 Effect of suspension, termination or resignation of enrollment; 
          surrender of enrollment certificate.
901.53 Notice of suspension, termination or resignation of enrollment.
901.54 Petition for reinstatement.

                      Subpart E_General Provisions

901.70 Records.
901.71 Special orders.

    Authority: Sec. 3042, subtitle C, title 3, Employee Retirement 
Income Security Act of 1974. (88 Stat. 1002, 29 U.S.C. 1241, 1242), 
unless otherwise noted.

    Source: 42 FR 39200, Aug. 3, 1977, unless otherwise noted.



Sec. 901.0  Scope.

    This part contains rules governing the performance of actuarial 
services under the Employee Retirement Income Security Act of 1974, 
hereinafter also referred to as ERISA. Subpart A of this part sets forth 
definitions and eligibility to perform actuarial services; subpart B of 
this part sets forth rules governing the enrollment of actuaries; 
subpart C of this part sets forth standards of performance to which 
enrolled actuaries must adhere; subpart D of this part is reserved and 
will set forth rules applicable to suspension and termination of 
enrollment; and subpart E of this part sets forth general provisions.



   Subpart A_Definitions and Eligibility To Perform Actuarial Services



Sec. 901.1  Definitions.

    As used in this part, the term:
    (a) Actuarial experience means the performance of, or the direct 
supervision of, services involving the application of principles of 
probability and compound interest to determine the present value of 
payments to be made upon the fulfillment of certain specified conditions 
or the occurrence of certain specified events.
    (b) Responsible actuarial experience means actuarial experience:
    (1) Involving participation in making determinations that the 
methods and assumptions adopted in the procedures followed in actuarial 
services are appropriate in the light of all pertinent circumstances, 
and
    (2) Demonstrating a thorough understanding of the principles and 
alternatives involved in such actuarial services.
    (c) Month of responsible actuarial experience means a month during 
which the actuary spent a substantial amount of time in responsible 
actuarial experience.
    (d) Responsible pension actuarial experience means responsible 
actuarial experience involving valuations of the liabilities of pension 
plans, wherein the performance of such valuations requires the 
application of principles of life contingencies and compound interest in 
the determination, under one or more standard actuarial cost methods, of 
such of the following as may be appropriate in the particular case:
    (1) Normal cost.
    (2) Accrued liability.
    (3) Payment required to amortize a liability or other amount over a 
period of time.
    (4) Actuarial gain or loss.

[[Page 1079]]

    (e) Month of responsible pension actuarial experience means a month 
during which the actuary spent a substantial amount of time in 
responsible pension actuarial experience.
    (f) Applicant means an individual who has filed an application to 
become an enrolled actuary.
    (g) Enrolled actuary means an individual who has satisfied the 
standards and qualifications as set forth in this part and who has been 
approved by the Joint Board (or its designee) to perform actuarial 
services required under ERISA or regulations thereunder.
    (h) Actuarial services means performance of actuarial valuations and 
preparation of any actuarial reports.



Sec. 901.2  Eligibility to perform actuarial services.

    (a) Enrolled actuary. Subject to the standards of performance set 
forth in subpart C of this part, any individual who is an enrolled 
actuary as defined in Sec. 901.1(g) may perform actuarial services 
required under ERISA or regulations thereunder. Where a corporation, 
partnership, or other entity is engaged to provide actuarial services, 
such services may be provided on its behalf only by an enrolled actuary 
who is an employee, partner or consultant.
    (b) Government officers and employees. No officer or employee of the 
United States in the executive, legislative, or judicial branch of the 
Government, or in any agency of the United States, including the 
District of Columbia, may perform actuarial services required under 
ERISA or regulations thereunder if such services would be in violation 
of 18 U.S.C. 205. No Member of Congress or Resident Commissioner (elect 
or serving) may perform such actuarial services if such services would 
be in violation of 18 U.S.C. 203 or 205.
    (c) Former government officers and employees--(1) Personal and 
substantial participation in the performance of actuarial services. No 
former officer or employee of the executive branch of the United States 
Government, of any independent agency of the United States, or of the 
District of Columbia, shall perform actuarial services required under 
ERISA or regulations thereunder or aid or assist in the performance of 
such actuarial services, in regard to particular matters, involving a 
specific party or parties, in which the individual participated 
personally and substantially as such officer or employee.
    (2) Official responsibility. No former officer or employee of the 
executive branch of the United States Government, of any independent 
agency of the United States, or of the District of Columbia, shall, 
within 1 year after his employment has ceased, perform actuarial 
services required under ERISA or regulations thereunder in regard to any 
particular matter involving a specific party or parties which was under 
the individual's official responsibility as an officer or employee of 
the Government at any time within a period of 1 year prior to the 
termination of such responsibility.



                    Subpart B_Enrollment of Actuaries



Sec. 901.10  Application for enrollment.

    (a) Form. As a requirement for enrollment, an applicant shall file 
with the Executive Director of the Joint Board a properly executed 
application on a form or forms specified by the Joint Board, and shall 
agree to comply with the regulations of the Joint Board.
    (b) Additional information. The Joint Board or Executive Director, 
as a condition to consideration of an application for enrollment, may 
require the applicant to file additional information and to submit to 
written or oral examination under oath or otherwise.
    (c) Denial of application. If the Joint Board proposes to deny an 
application for enrollment, the Executive Director shall notify the 
applicant in writing of the proposed denial and the reasons therefor, of 
his rights to request reconsideration, of the address to which such 
request should be made and the date by which such request must be made. 
The applicant may, within 30 days from the date of the written proposed 
denial, file a written request for reconsideration therefrom, together 
with his reasons in support thereof, to the Joint Board. The Joint Board 
may afford an applicant the opportunity to make a personal appearance 
before the Joint Board. A decision on the request for reconsideration 
shall be rendered by the Joint Board as soon as practicable. In

[[Page 1080]]

the absence of a request for reconsideration within the aforesaid 30 
days, the proposed denial shall, without further proceeding, constitute 
a final decision of denial by the Joint Board.



Sec. 901.11  Enrollment procedures.

    (a) Enrollment. The Joint Board shall enroll each applicant it 
determines has met the requirements of these regulations and shall so 
notify the applicant. Subject to the provisions of subpart D of this 
part, an individual must renew his or her enrollment in the manner 
described in paragraph (d) of this section.
    (b) Enrollment certificate. The Joint Board (or its designee) shall 
issue a certificate of enrollment to each actuary who is duly enrolled 
under this part.
    (c) Rosters. The Executive Director shall maintain rosters of all 
actuaries who are duly enrolled under this part and of all individuals 
whose enrollment has been suspended or terminated.
    (d) Renewal of enrollment. To maintain active enrollment to perform 
actuarial services under the Employee Retirement Income Security Act of 
1974, each enrolled actuary is required to have his/her enrollment 
renewed as set forth herein. Failure by an individual to receive 
notification of the renewal requirement from the Joint Board will not be 
justification for circumvention of such requirement.
    (1) All individuals enrolled before January 1, 1990, shall apply for 
renewal of enrollment on the prescribed form before March 1, 1990. The 
effective date of renewal for such individuals is April 1, 1990.
    (2) Thereafter, applications for renewal will be required of all 
enrolled actuaries between October 1, 1992, and March 1, 1993, and 
between October 1 and March 1 of every third year period subsequent 
thereto.
    (3) The Executive Director of the Joint Board will notify each 
enrolled actuary of the renewal of enrollment requirement at his/her 
address of record with the Joint Board.
    (4) A reasonable non-refundable fee may be charged for each 
application for renewal of enrollment filed.
    (5) Forms required for renewal may be obtained from the Executive 
Director, Joint Board for the Enrollment of Actuaries, c/o Department of 
the Treasury, Washington, DC 20220.
    (e) Condition for renewal: Continuing professional education. To 
qualify for renewal of enrollment, an enrolled actuary must certify, on 
the form prescribed by the Executive Director, that he/she has satisfied 
the following continuing professional education requirements.
    (1) For renewed enrollment effective April 1, 1990. (i) A minimum of 
10 hours of continuing education credit must be completed between (the 
effective date of these regulations) and December 31, 1989. Of the 10 
hours, at least 6 hours must be comprised of core subject matter; the 
remainder may be comprised of non-core subject matter.
    (ii) An individual who receives initial enrollment between October 
1, 1988 and December 31, 1989 is exempt from the continuing education 
requirement for the enrollment cycle ending December 31, 1989, but is 
required to file a timely application for renewal of enrollment 
effective April 1, 1990.
    (2) For renewed enrollment effective April 1, 1993 and every third 
year thereafter. (i) A minimum of 36 hours of continuing education 
credit must be completed between January 1, 1990, and December 31, 1992, 
and between January 1 and December 31 for each three year period 
subsequent thereto. Each such three year period is known as an 
enrollment cycle. Of the 36 hours, at least 18 must be comprised of core 
subject matter; the remainder may be of a non-core nature.
    (ii) An individual who receives initial enrollment during the first 
or second year of an enrollment cycle must satisfy the following 
requirements by the end of the enrollment cycle: Those enrolled during 
the first year of an enrollment cycle must complete 24 hours of 
continuing education; those enrolled during the second year of an 
enrollment cycle must complete 12 hours of continuing education. At 
least one-half of the applicable hours must be comprised of core subject 
matter; the remainder may be comprised of non-core subject matter. For 
purposes of this paragraph, credit will be awarded for continuing 
education completed after January 1 of the year in which initial 
enrollment was received.

[[Page 1081]]

    (iii) An individual who receives initial enrollment during the third 
year of an enrollment cycle is exempt from the continuing education 
requirements until the next enrollment cycle, but must file a timely 
application for renewal.
    (3) Enrolled actuaries whose enrollment status would have expired 
under previous regulations during the five year period from October 1, 
1988, are not subject to compliance with such previous regulations 
addressing renewal of enrollment. Their enrollment status will not be 
adversely affected provided they comply with requirements on this part.
    (f) Qualifying continuing education--(1) In general. To qualify for 
continuing education credit consistent with the requirements of the 
above subsections, a course of learning must be a qualifying program 
comprised of core and/or non-core subject matter conducted by a 
qualifying sponsor.
    (i) Core subject matter is program content designed to enhance the 
knowledge of an enrolled actuary with respect to matters directly 
related to the performance of pension actuarial services under ERISA or 
the Internal Revenue Code. Such core subject matter includes the 
characteristics of actuarial cost methods under ERISA, actuarial 
assumptions, minimum funding standards, title IV of ERISA, requirements 
with respect to the valuation of plan assets, requirements for 
qualification of pension plans, maximum deductible contributions, tax 
treatments of distributions from qualified pension plans, excise taxes 
related to the funding of qualified pension plans and standards of 
performance for actuarial services.
    (ii) Non-core subject matter is program content designed to enhance 
the knowledge of an enrolled actuary in matters related to the 
performance of pension actuarial services. Examples include economics, 
computer programs, pension accounting, investment and finance, risk 
theory, communication skills and business and general tax law.
    (iii) The Joint Board may publish other topics or approve other 
topics which may be included in a qualifying program as core or non-core 
subject matter.
    (iv) Repeated taking of the same course of study cannot be used to 
satisfy the continuing education requirements of the regulations. If the 
major content of a program or session differs substantively from a 
previous one bearing the same or similar title, it may be used to 
satisfy such requirements.
    (2) Qualifying Programs--(i) Formal programs. Formal programs 
qualify as continuing education programs if they:
    (A) Require attendance by at least three individuals engaged in 
substantive pension service in addition to the instructor, discussion 
leader or speaker;
    (B) Require that the program be conducted by a qualified instructor, 
discussion leader or speaker, i.e., a person whose background, training, 
education and/or experience is appropriate for instructing or leading a 
discussion on the subject matter of the particular program; and
    (C) Require a written outline and/or textbook and certificate of 
attendance provided by the sponsor, all of which must be retained by the 
enrolled actuary for a three year period following the end of the 
enrollment cycle.
    (ii) Correspondence or individual study programs (including audio 
and/or video taped programs). Qualifying continuing education programs 
include correspondence or individual study programs completed on an 
individual basis by the enrolled actuary and conducted by qualifying 
sponsors. The allowable credit hours for such programs will be measured 
on a basis comparable to the measurement of a seminar or course for 
credit in an accredited educational institution. Such programs qualify 
as continuing education programs if they:
    (A) Require registration of the participants by the sponsor;
    (B) Provide a means for measuring completion by the participants 
(e.g., written examination); and
    (C) Require a written outline and/or textbook and certificate of 
completion provided by the sponsor. Such certificate must be retained by 
the participant for a three year period following the end of an 
enrollment cycle.

[[Page 1082]]

    (iii) Teleconferencing. Programs utilizing teleconferencing or other 
communications technologies qualify for continuing education purposes if 
they either:
    (A) Meet all the requirements of formal programs, except that they 
may include a sign-on/sign-off capacity or similar technique in lieu of 
the physical attendance of participants; or
    (B) Meet all the requirements of correspondence or individual study 
programs.
    (iv) Serving as an instructor, discussion leader or speaker. (A) 
Four hours of continuing education credit will be awarded for each 
contact hour completed as an instructor, discussion leader or speaker at 
an educational program which meets the continuing education requirements 
of this section, in recognition of both presentation and preparation 
time.
    (B) The credit for instruction and preparation may not exceed 50% of 
the continuing education requirement for an enrollment cycle.
    (C) Presentation of the same material as an instructor, discussion 
leader or speaker more than one time in any 36 month period will not 
qualify for continuing education credit. A program will not be 
considered to consist of the same material if a substantial portion of 
the content has been revised to reflect changes in the law or in the 
state of the art relative to the performance of pension actuarial 
service.
    (D) Credit as an instructor, discussion leader or speaker will not 
be awarded to panelists, moderators or others whose contribution does 
not constitute a substantial portion of the program. However, such 
individuals may be awarded credit for attendance, provided the other 
provisions of this section are met.
    (E) The nature of the subject matter will determine if credit will 
be of a core or non-core nature.
    (v) Credit for published articles, books, films, audio and video 
tapes, etc. (A) Continuing education credit will be awarded for the 
creation of materials for publication or distribution with respect to 
matters directly related to the continuing professional education 
requirements of this section.
    (B) The credit allowed will be on the basis of one hour credit for 
each hour of preparation time of the material. It will be the 
responsibility of the person claiming the credit to maintain records to 
verify preparation time.
    (C) Publication or distribution may utilize any available technology 
for the dissemination of written, visual or auditory materials.
    (D) The materials must be available on reasonable terms for 
acquisition and use by all enrolled actuaries.
    (E) The credit for the creation of materials may not exceed 25% of 
the continuing education requirement of any enrollment cycle.
    (F) The nature of the subject matter will determine if credit will 
be of a core or non-core nature.
    (G) Publication of the same material more than one time will not 
qualify for continuing education credit. A publication will not be 
considered to consist of the same material if a substantial portion has 
been revised to reflect changes in the law or in the state of the art 
relating to the performance of pension actuarial service.
    (vi) Service on Joint Board advisory committee(s). Continuing 
education credit may be awarded by the Joint Board for service on (any 
of) its advisory committee(s), to the extent that the Board considers 
warranted by the service rendered.
    (vii) Preparation of Joint Board examinations. Continuing 
educational credit may be awarded by the Joint Board for participation 
in drafting questions for use on Joint Board examinations or in 
pretesting its examinations, to the extent the Board determines 
suitable. Such credit may not exceed 50% of the continuing professional 
education requirement for the applicable enrollment cycle.
    (viii) Society examinations. Individuals may earn continuing 
professional education credit for achieving a passing grade on proctored 
examinations sponsored by a professional organization or society 
recognized by the Joint Board. Such credit is limited to the number of 
hours scheduled for each examination and may be applied only as non-core 
credit provided the content of the examination is non-core.

[[Page 1083]]

    (ix) Pension law examination. Individuals may establish eligibility 
for renewal of enrollment for any enrollment cycle by:
    (A) Achieving a passing score on the pension law actuarial 
examination offered by the Joint Board and administered under this part 
during the applicable enrollment cycle; and
    (B) Completing a minimum of 12 hours of qualifying continuing 
education in core subject matter during the same applicable enrollment 
cycle.
    (C) This option of satisfying the continuing professional education 
requirements is not available to those who receive initial enrollment 
during the enrollment cycle.
    (g) Sponsors. (1) Sponsors are those responsible for presenting 
programs.
    (2) To qualify as a sponsor, a program presenter must:
    (i) Be an accredited educational institution;
    (ii) Be recognized for continuing education purposes by the 
licensing body of any State, possession, territory, Commonwealth, or the 
District of Columbia responsible for the issuance of a license in the 
field of actuarial science, insurance, accounting or law;
    (iii) Be recognized by the Executive Director of the Joint Board as 
a professional organization or society whose programs include offering 
continuing professional education opportunities in subject matter within 
the scope of this section; or
    (iv) File a sponsor agreement with the Executive Director of the 
Joint Board to obtain approval of the program as a qualifying continuing 
education program.
    (3) Professional organizations or societies and others wishing to be 
considered as qualifying sponsors shall request such status of the 
Executive Director of the Joint Board and furnish information in support 
of the request together with any further information deemed necessary by 
the Executive Director.
    (4) A qualifying sponsor must ensure the program complies with the 
following requirements:
    (i) Programs must be developed by individual(s) qualified in the 
subject matter.
    (ii) Program subject matter must be current.
    (iii) Instructors, discussion leaders, and speakers must be 
qualified with respect to program content.
    (iv) Programs must include some means for evaluation of technical 
content and presentation.
    (v) Certificates of completion must be provided those who have 
successfully completed the program.
    (vi) Records must be maintained by the sponsor to verify 
satisfaction of the requirements of this section. Such records must be 
retained for a period of three years following the end of the enrollment 
cycle in which the program is held. In the case of programs of more than 
one session, records must be maintained to verify completion of the 
program and attendance by each participant at each session of the 
program.
    (5) Sponsor agreements and qualified professional organization or 
society sponsors approved by the Executive Director will remain in 
effect for one enrollment cycle. The names of such sponsors will be 
published on a periodic basis.
    (h) Measurement of continuing education course work. (1) All 
continuing education programs will be measured in terms of credit hours. 
The shortest recognized program will be one credit hour.
    (2) A credit hour is 50 minutes of continuous participation in a 
program. Each session in a program must be at least one full credit 
hour, i.e., 50 minutes. For example, a single-session program lasting 
100 minutes will count as two credit hours, and a program comprised of 
three 75 minute sessions (225 minutes) constitutes four credit hours. 
However, at the end of an enrollment cycle, an individual may total the 
number of minutes of sessions of at least one credit hour in duration 
attended during the cycle and divide by fifty. For example, attending 
three 75 minute segments at two separate programs will accord an 
individual nine credit hours (450 minutes divided by 50) toward 
fulfilling the minimum number of continuing professional education 
hours. It will not be permissible to merge non-core hours with core 
hours. For university or college courses, each

[[Page 1084]]

``semester'' hour credit will equal 15 credit hours and each ``quarter'' 
hour credit will equal 10 credit hours. Measurements of other formats of 
university or college courses will be handled on a comparable basis.
    (i) Record keeping requirements. (1) Each individual applying for 
renewal shall retain for a period of three years following the end of an 
enrollment cycle the information required with regard to qualifying 
continuing professional education credit hours. Such information shall 
include:
    (i) The name of the sponsoring organization;
    (ii) The location of the program;
    (iii) The title of the program and description of its content, e.g., 
course syllabus and/or textbook;
    (iv) The dates attended;
    (v) The credit hours claimed and whether core or non-core subject 
matter;
    (vi) The name(s) of the instructor(s), discussion leader(s), or 
speaker(s), if appropriate;
    (vii) The certificate of completion and/or signed statement of the 
hours of attendance obtained from the sponsor; and
    (viii) The total core and non-core credit.
    (2) To receive continuing education credit for service completed as 
an instructor, discussion leader, or speaker, the following information 
must be maintained for a period of three years following the end of the 
applicable enrollment cycle.
    (i) The name of the sponsoring organization;
    (ii) The location of the program;
    (iii) The title of the program and description of its content;
    (iv) The dates of the program; and
    (v) The credit hours claimed and whether core or non-core subject 
matter.
    (3) To receive continuing education credit for a publication, the 
following information must be maintained for a period of three years 
following the end of the applicable enrollment cycle.
    (i) The publisher;
    (ii) The title of the publication;
    (iii) A copy of the publication;
    (iv) The date of publication;
    (v) The credit hours claimed;
    (vi) Whether core or non-core subject matter; and
    (vii) The availability and distribution of the publications to 
enrolled actuaries.
    (j) Waivers. (1) Waiver from the continuing education requirements 
for a given period may be granted by the Executive Director of the Joint 
Board for the following reasons:
    (i) Physical incapacity, which prevented compliance with the 
continuing education requirements;
    (ii) Extended active military duty;
    (iii) Absence from the individual's country of residence for an 
extended period of time due to employment or other reasons, provided the 
individual does not perform services as an enrolled actuary during such 
absence; and
    (iv) Other compelling reasons, which will be considered on a case-
by-case basis.
    (2) A request for waiver must be accompanied by appropriate 
documentation. The individual will be required to furnish any additional 
documentation or explanation deemed necessary by the Executive Director 
of the Joint Board. Examples of appropriate documentation could be a 
medical certificate, military orders, etc.
    (3) A request for waiver must be filed no later than the last day of 
the renewal application period.
    (4) If a request for waiver is not approved, the individual will be 
so notified by the Executive Director of the Joint Board and placed on a 
roster of inactive enrolled individuals.
    (5) If a request for waiver is approved, the individual will be so 
notified.
    (6) Those who are granted waivers are required to file timely 
applications for renewal of enrollment.
    (k) Failure to comply. (1) Compliance by an individual with the 
requirements of this part shall be determined by the Executive Director 
of the Joint Board. An individual who applies for renewal of enrollment 
but who fails to meet the requirements of eligibility for renewal will 
be notified by the Executive Director at his/her last known address by 
first class mail. The notice will state the basis for the non-compliance 
and will provide the individual an opportunity to furnish in writing, 
within 60

[[Page 1085]]

days of the date of the notice, information relating to the matter. Such 
information will be considered by the Executive Director in making a 
final determination as to eligibility for renewal of enrollment.
    (2) The Executive Director of the Joint Board may require any 
individual, by first class mail sent to his/her mailing address of 
record with the Joint Board, to provide copies of any records required 
to be maintained under this section. The Executive Director may disallow 
any continuing professional education hours claimed if the individual 
concerned fails to comply with such requirements.
    (3) An individual whose application for renewal is not approved may 
seek review of the matter by the Joint Board. A request for review and 
the reasons in support of the request must be filed with the Joint board 
within 30 days of the date of the non-approved notice.
    (4) An individual who has not filed a timely application for renewal 
of enrollment, who has not made a timely response to the notice of non-
compliance with the renewal requirements, or who has not satisfied the 
requirements of eligibility for renewal will be placed on a roster of 
inactive enrolled actuaries for a period of three years from the date 
renewal would have been effective. During this time, the individual will 
be ineligible to perform services as an enrolled actuary and to practice 
before the Internal Revenue Service.
    (5) During inactive enrollment status or at any other time an 
individual is ineligible to perform services as an enrolled actuary and 
to practice before the Internal Revenue Service, the individual shall 
not in any manner, directly or indirectly, indicate he or she is so 
enrolled, or use the term ``enrolled actuary,'' the designation 
``E.A.,'' or other form of reference to eligibility to perform services 
as an enrolled actuary.
    (6) An individual placed in an inactive status must file an 
application for renewal of enrollment and satisfy the requirements for 
renewal as set forth in this section within three years from the date 
renewal would have been effective. The name of such individual otherwise 
will be removed from the inactive enrollment roster and his/her 
enrollment will terminate. Eligibility for enrollment must then be 
reestablished by the individual as provided in this part.
    (7) An individual placed in an inactive status may satisfy the 
requirements for renewal of enrollment at any time during his/her period 
of inactive enrollment. If such satisfaction includes completing the 
continuing education requirement, the application for renewal may be 
filed immediately upon such completion. Continuing education credit 
under this subsection may not be used to satisfy the requirements of the 
enrollment cycle in which the individual has been placed back on the 
active roster.
    (8) An individual in inactive status remains subject to the 
jurisdiction of the Joint Board and/or the Department of the Treasury 
with respect to disciplinary matters.
    (9) An individual who is in good faith has certified that he/she has 
satisfied the continuing professional education requirements of this 
section will not be considered to be in non-compliance with such 
requirements on the basis of a program he/she has attended being found 
inadequate or not in compliance with the requirements for renewal. Such 
individual will be granted renewal, but the Executive Director may 
require such individual to remedy the resulting shortfall by earning 
replacement credit during the cycle in which renewal was granted or 
within a reasonable time period as determined by the Executive Director. 
For example, if six of the credit hours claimed were disallowed, the 
individual may be required to present 42 credit hours instead of the 
minimum 36 credit hours to qualify for renewal related to the next 
cycle.
    (l) Inactive retirement status. An individual who no longer performs 
services as an enrolled actuary may request placement in an inactive 
retirement status at any time and such individual will be placed in such 
status. The individual will be ineligible to perform services as an 
enrolled actuary. Such individual must file a timely application for 
renewal of enrollment at each applicable renewal cycle as provided in

[[Page 1086]]

this part. An individual who is placed in an inactive retirement status 
may be reinstated to active enrollment status upon filing an application 
for renewal of enrollment and providing evidence of the completion of 
the required continuing professional education hours for the applicable 
enrollment cycle. An individual in inactive retirement status remains 
subject to the jurisdiction of the Joint Board and/or the Department of 
the Treasury with respect to disciplinary matters.
    (m) Renewal while under suspension or disbarment. An individual who 
is ineligible to perform actuarial services and/or to practice before 
the Internal Revenue Service by virtue of disciplinary action is 
required to meet the requirements for renewal of enrollment during the 
period of such ineligibility.
    (n) Verification. The Executive Director of the Joint Board or his/
her designee may review the continuing education records of an enrolled 
actuary and/or qualified sponsor, including attending programs, in a 
manner deemed appropriate to determine compliance with the requirements 
and standards for the renewal of enrollment as provided in this section.

[42 FR 39200, Aug. 3, 1977, as amended at 53 FR 34484, Sept. 7, 1988]



Sec. 901.12  Eligibility for enrollment of individuals applying for 
enrollment before January 1, 1976.

    (a) In general. An individual applying before January 1, 1976, to be 
an enrolled actuary must fulfill the experience requirements of 
paragraph (b) of this section and either the examination requirements of 
paragraph (c) of this section or the educational requirements of 
paragraph (d) of this section.
    (b) Qualifying experience. Within a 15 year period immediately 
preceding the date of application, the applicant shall have completed 
either:
    (1) A minimum of 36 months of responsible pension actuarial 
experience, or
    (2) A minimum of 60 months of responsible actuarial experience, 
including at least 18 months of responsible pension actuarial 
experience.
    (c) Examination requirement. The applicant shall satisfactorily 
complete the Joint Board examination requirement of paragraph (c)(1) of 
this section or the organization examination requirement of paragraph 
(c)(2) of this section.
    (1) Joint Board examination. To satisfy the Joint Board examination 
requirement, the applicant shall have completed, to the satisfaction of 
the Joint Board, an examination prescribed by the Joint Board in 
actuarial mathematics and methodology related to pension plans, 
including the funding requirements of ERISA.
    (2) Organization examination. (i) To satisfy the organization 
examination requirement, the applicant shall, before March 1, 1975, have 
attained by proctored examination one of the following classes of 
qualification in one of the following organizations:
    (A) Member of the American Academy of Actuaries,
    (B) Fellow or Member of the American Society of Pension Actuaries,
    (C) Fellow or Associate of the Casualty Actuarial Society,
    (D) Fellow or Member of the Conference of Actuaries in Public 
Practice,
    (E) Fellow or Associate of the Society of Actuaries, or
    (F) A class attained by proctored examination in any other actuarial 
organization in the United States or elsewhere if the Joint Board 
determines that the subject matter included in such examination, 
complexity of questions, and the minimum acceptable qualifying score are 
at least comparable to proctored examinations administered by any of the 
above organizations before March 1, 1975; or
    (ii) On or after March 1, 1975, the applicant shall have attained 
one of the classes of qualification specified in paragraph (c)(2)(i) of 
this section, the attainment of such qualification having been by 
proctored examination under requirements determined by the Joint Board 
to be of not lower standards than the requirements for qualification 
during the 12 months immediately preceding March 1, 1975.
    (d) Qualifying formal education. Prior to filing an application, the 
applicant shall have satisfied one of the following educational 
requirements:
    (1) Received a bachelor's or higher degree from an accredited 
college or university, such degree having been

[[Page 1087]]

granted after the satisfactory completion of a course of study in which 
the major area of concentration was actuarial science, or
    (2) Received a bachelor's or higher degree from an accredited 
college or university, such degree having been granted after the 
satisfactory completion of a course of study in which the major area of 
concentration was mathematics, statistics, or computer science, and 
shall have successfully completed at least 6 semester hours or 9 quarter 
hours of courses in life contingencies at an accredited college or 
university.
    (e) Disreputable conduct. The applicant may be denied enrollment if 
it is found that he/she, after his/her eighteenth birthday, has:
    (1) Engaged in any conduct evidencing fraud, dishonesty or breach of 
trust; or
    (2) Been convicted of any of the offenses referred to in section 411 
of ERISA; or
    (3) Submitted false or misleading information on an application for 
enrollment to perform actuarial services or in any oral or written 
information submitted in connection therewith or in any report 
presenting actuarial information to any person, knowing the same to be 
false or misleading.



Sec. 901.13  Eligibility for enrollment of individuals applying for 
enrollment on or after January 1, 1976.

    (a) In general. An individual applying on or after January 1, 1976, 
to be an enrolled actuary, must fulfill the experience requirement of 
paragraph (b) of this section, the basic actuarial knowledge requirement 
of paragraph (c) of this section, and the pension actuarial knowledge 
requirement of paragraph (d) of this section.
    (b) Qualifying experience. Within a 10 year period immediately 
preceding the date of application, the applicant shall have completed 
either:
    (1) A minimum of 36 months of responsible pension actuarial 
experience, or
    (2) A minimum of 60 months of responsible actuarial experience, 
including at least 18 months of responsible pension actuarial 
experience.
    (c) Basic actuarial knowledge. The applicant shall demonstrate 
knowledge of basic actuarial mathematics and methodology by one of the 
following:
    (1) Joint Board basic examination. Successful completion, to a score 
satisfactory to the Joint Board, of an examination, prescribed by the 
Joint Board, in basic actuarial mathematics and methodology including 
compound interest, principles of life contingencies, commutation 
functions, multiple-decrement functions, and joint life annuities.
    (2) Organization basic examinations. Successful completion, to a 
score satisfactory to the Joint Board, of one or more proctored 
examinations which are given by an actuarial organization and which the 
Joint Board has determined cover substantially the same subject areas, 
have at least a comparable level of difficulty, and require at least the 
same competence as the Joint Board basic examination referred to in 
paragraph (c)(1) of this section.
    (3) Qualifying formal education. Receipt of a bachelor's or higher 
degree from an accredited college or university after the satisfactory 
completion of a course of study:
    (i) In which the major area of concentration was actuarial 
mathematics, or
    (ii) Which included at least as many semester hours or quarter hours 
each in mathematics, statistics, actuarial mathematics and other 
subjects as the Board determines represent equivalence to paragraph 
(c)(3)(i) of this section.
    (d) Pension actuarial knowledge. The applicant shall demonstrate 
pension actuarial knowledge by one of the following:
    (1) Joint Board pension examination. Successful completion, to a 
score satisfactory to the Joint Board, of an examination, prescribed by 
the Joint Board, in actuarial mathematics and methodology relating to 
pension plans, including the provisions of ERISA relating to the 
minimium funding requirements and allocation of assets on plan 
termination.
    (2) Organization pension examinations. Successful completion, to a 
score satisfactory to the Joint Board, of one or more proctored 
examinations which

[[Page 1088]]

are given by an actuarial organization and which the Joint Board has 
determined cover substantially the same subject areas, have at least a 
comparable level of difficulty, and require at least the same competence 
as the Joint Board pension examination referred to in paragraph (d)(1) 
of this section.
    (e) Form; fee. An applicant who wishes to take an examination 
administered by the Joint Board under paragraph (c)(1) or (d)(1) of this 
section shall file an application on a form prescribed by the Joint 
Board. Such application shall be accompanied by a check or money order 
in the amount set forth on the application form, payable to the Treasury 
of the United States. The amount represents a fee charged to each 
applicant for examination and is designed to cover the costs assessed 
the Joint Board for the administration of the examination. The fee shall 
be retained by the United States whether or not the applicant 
successfully completes the examination or is enrolled.
    (f) Denial of enrollment. An applicant may be denied enrollment if:
    (1) The Joint Board finds that the applicant, during the 15-year 
period immediately preceding the date of application and on or after the 
applicant's eighteenth birthday has engaged in disreputable conduct. The 
term disreputable conduct includes, but is not limited to:
    (i) An adjudication, decision, or determination by a court of law, a 
duly constituted licensing or accreditation authority (other than the 
Joint Board), or by any federal or state agency, board, commission, 
hearing examiner, administrative law judge, or other official 
administrative authority, that the applicant has engaged in conduct 
evidencing fraud, dishonesty or breach of trust.
    (ii) Giving false or misleading information, or participating in any 
way in the giving of false or misleading information, to the Department 
of the Treasury or the Department of Labor or the Pension Benefit 
Guaranty Corporation or any officer or employee thereof in connection 
with any matter pending or likely to be pending before them, knowing 
such information to be false or misleading.
    (iii) Willfully failing to make a Federal tax return in violation of 
the revenue laws of the United States, or evading, attempting to evade, 
or participating in any way in evading or attempting to evade any 
federal tax or payment thereof, knowingly counseling or suggesting to a 
client or prospective client an illegal plan to evade federal taxes or 
payment thereof, or concealing assets of himself or another to evade 
federal taxes or payment thereof.
    (iv) Directly or indirectly attempting to influence, or offering or 
agreeing to attempt to influence, the official action of any officer or 
employee of the Department of the Treasury or the Department of Labor or 
the Pension Benefit Guaranty Corporation by the use of threats, false 
accusations, duress or coercion, by the offer of any special inducement 
or promise of advantage or by the bestowing of any gift, favor, or thing 
of value.
    (v) Disbarment or suspension from practice as an actuary, attorney, 
certified public accountant, public accountant, or an enrolled agent by 
any duly constituted authority of any state, possession, territory, 
Commonwealth, the District of Columbia, by any Federal Court of record, 
or by the Department of the Treasury.
    (vi) Contemptuous conduct in connection with matters before the 
Department of the Treasury, or the Department of Labor, or the Pension 
Benefit Guaranty Corporation including the use of abusive language, 
making false accusations and statements knowing them to be false, or 
circulating or publishing malicious or libelous matter.
    (2) The applicant has been convicted of any of the offenses referred 
to in section 411 of ERISA.
    (3) The applicant has submitted false or misleading information on 
an application for enrollment to perform actuarial services or in any 
oral or written information submitted in connection therewith or in any 
report presenting actuarial information to any person,

[[Page 1089]]

knowing the same to be false or misleading.

(Sec. 3042, subtitle C, title 3, Employee Retirement Income Security Act 
of 1974 (88 Stat. 1002, 29 U.S.C. 1241, 1242), and the Act of August 31, 
1951, ch. 376, title V, section 501, 65 Stat. 290, 31 U.S.C. 483a)

[44 FR 11751, Mar. 2, 1979, as amended at 44 FR 68458, Nov. 29, 1979]



        Subpart C_Standards of Performance for Enrolled Actuaries



Sec. 901.20  Standards of performance of actuarial services.

    In the discharge of duties required by ERISA of enrolled actuaries 
with respect to any plan to which the Act applies:
    (a) In general. An enrolled actuary shall undertake an actuarial 
assignment only when qualified to do so.
    (b) Professional duty. An enrolled actuary shall not perform 
actuarial services for any person or organization which he/she believes 
or has reasonable grounds for believing may utilize his/her services in 
a fraudulent manner or in a manner inconsistent with law.
    (c) Advice or explanations. An enrolled actuary shall provide to the 
plan administrator upon appropriate request, supplemental advice or 
explanation relative to any report signed or certified by such enrolled 
actuary.
    (d) Conflicts of interest. In any situation in which the enrolled 
actuary has a conflict of interest with respect to the performance of 
actuarial services, of which the enrolled actuary has knowledge, he/she 
shall not perform such actuarial services except after full disclosure 
has been made to the plan trustees, any named fiduciary of the plan, the 
plan administrator, and, if the plan is subject to a collective 
bargaining agreement, the collective bargaining representative.
    (e) Assumptions, calculations and recommendations. The enrolled 
actuary shall exercise due care, skill, prudence and diligence to ensure 
that:
    (1) The actuarial assumptions are reasonable in the aggregate, and 
the actuarial cost method and the actuarial method of valuation of 
assets are appropriate,
    (2) The calculations are accurately carried out, and
    (3) The report, any recommendations to the plan administrator and 
any supplemental advice or explanation relative to the report reflect 
the results of the calculations.
    (f) Report or certificate. An enrolled actuary shall include in any 
report or certificate stating actuarial costs or liabilities, a 
statement or reference describing or clearly identifying the data, any 
material inadequacies therein and the implications thereof, and the 
actuarial methods and assumptions employed.
    (g) Utilization of enrolled actuary designation. An enrolled actuary 
shall not advertise his/her status as an enrolled actuary in any 
solicitation related to the performance of actuarial services, and shall 
not employ, accept employment in partnership, corporate, or any other 
form, or share fees with, any individual or entity who so solicits. 
However, the use of the term ``enrolled actuary'' to identify an 
individual who is named on the stationery, letterhead or business card 
of an enrolled actuary, or of a partnership, association, or corporation 
shall not be considered in violation of this section. In addition, the 
term ``enrolled actuary'' may appear after the general listing of an 
enrolled actuary's name in a telephone directory provided such listing 
is not of a distinctive nature.
    (h) Notification. An enrolled actuary shall provide written 
notification of the non-filing of any actuarial document he/she has 
signed upon discovery of the non-filing. Such notification shall be made 
to the office of the Internal Revenue Service, the Department of Labor, 
or the Pension Benefit Guaranty Corporation where such document should 
have been filed.

[40 FR 18776, Apr. 30, 1975, as amended at 43 FR 39757, Sept. 7, 1978]



            Subpart D_Suspension or Termination of Enrollment

    Authority: Sec. 3042(b), ERISA, 29 U.S.C. 1242(b).

    Source: 43 FR 39757, Sept. 7, 1978, unless otherwise noted.

[[Page 1090]]



Sec. 901.30  Authority to suspend or terminate enrollment.

    Under section 3042(b) of ERISA the Joint Board may, after notice and 
opportunity for a hearing, suspend or terminate the enrollment of an 
enrolled actuary if the Joint Board finds that such enrolled actuary
    (a) Has failed to discharge his/her duties under ERISA, or
    (b) Does not satisfy the requirements for enrollment in effect at 
the time of his/her enrollment.



Sec. 901.31  Grounds for suspension or termination of enrollment.

    (a) Failure to satisfy requirements for enrollment. The enrollment 
of an actuary may be terminated if it is found that the actuary did not 
satisfy the eligibility requirements set forth in Sec. Sec. 901.12 or 
901.13, whichever is applicable.
    (b) Failure to discharge duties. The enrollment of an actuary may be 
suspended or terminated if it is found that the actuary, following 
enrollment, failed to discharge his/her duties under ERISA. Such duties 
include those set forth in Sec. 901.20.
    (c) Disreputable conduct. The enrollment of an actuary may be 
suspended or terminated if it is found that the actuary has, at any time 
after he/she applied for enrollment, engaged in any conduct set forth in 
Sec. 901.13(e)(1)(i)-(vi) or other conduct evidencing fraud, 
dishonesty, or breach of trust. Such other conduct includes, but is not 
limited to, the following:
    (1) Conviction of any criminal offense under the laws of the United 
States (including section 411 of ERISA, 29 U.S.C. 1111), any State 
thereof, the District of Columbia, or any territory or possession of the 
United States, which evidences fraud, dishonesty, or breach of trust.
    (2) Knowingly filing false or altered documents, affidavits, 
financial statements or other papers on matters relating to employee 
benefit plans or actuarial services.
    (3) Knowingly making false or misleading representations, either 
orally or in writing, on matters relating to employee benefit plans or 
actuarial services, or knowingly failing to disclose information 
relative to such matters.
    (4) The use of false or misleading representations with intent to 
deceive a client or prospective client, or of intimations that the 
actuary is able to obtain special consideration or action from an 
officer or employee of any agency or court authorized to determine the 
validity of pension plans under ERISA.
    (5) Willful violation of any of the regulations contained in this 
part.



Sec. 901.32  Receipt of information concerning enrolled actuaries.

    If an officer or employee of the Department of the Treasury, the 
Department of Labor, the Pension Benefit Guaranty Corporation, or a 
member of the Joint Board has reason to believe that an enrolled actuary 
has violated any provision of this part, or if any such officer, 
employee or member receives information to that effect, he/she may make 
a written report thereof, which report or a copy thereof shall be 
forwarded to the Executive Director. If any other person has information 
of any such violation, he/she may make a report thereof to the Executive 
Director or to any officer or employee of the Department of the 
Treasury, the Department of Labor, or to the Pension Benefit Guaranty 
Corporation.



Sec. 901.33  Initiation of proceeding.

    Whenever the Executive Director has reason to believe that an 
enrolled actuary has violated any provision of the laws or regulations 
governing enrollment, such individual may be reprimanded or a proceeding 
may be initiated for the suspension or termination of such individual's 
enrollment. A reprimand as used in this paragraph is a statement 
informing the enrolled actuary that, in the opinion of the Executive 
Director, his/her conduct is in violation of the regulations and 
admonishing the enrolled actuary that repetition of the conduct 
occasioning the reprimand may result in the institution of a proceeding 
for the suspension or termination of the actuary's enrollment. A 
proceeding for suspension or

[[Page 1091]]

termination of enrollment shall be initiated by a complaint naming the 
respondent actuary, signed by the Executive Director and filed in the 
Executive Director's office. Except in cases where the nature of the 
proceeding or the public interest does not permit, a proceeding will not 
be initiated under this section until the facts which may warrant such a 
proceeding have been called to the attention of the actuary in writing 
and he/she has been given an opportunity to respond to the allegations 
of misconduct.



Sec. 901.34  Conferences.

    (a) In general. The Executive Director may confer with an enrolled 
actuary concerning allegations of his/her misconduct whether or not a 
proceeding for suspension or termination has been initiated against him/
her. If the conference results in agreement as to certain facts or other 
matters in connection with such a proceeding, such agreement may be 
entered in the record at the request of the actuary or the Executive 
Director.
    (b) Voluntary suspension or termination of enrollment. An enrolled 
actuary, in order to avoid the initiation or conclusion of a suspension 
or termination proceeding, may offer his/her consent to suspension or 
termination of enrollment or may offer his/her resignation. The 
Executive Director may accept the offered resignation or may suspend or 
terminate enrollment in accordance with the consent offered.



Sec. 901.35  Contents of complaint.

    (a) Charges. A complaint initiating a suspension or termination 
proceeding shall describe the allegations which are the basis for the 
proceeding, and fairly inform the respondent of the charges against him/
her.
    (b) Answer. In the complaint, or in a separate paper attached to the 
complaint, notice shall be given of the place at, and time within which 
the respondent shall file an answer, which time shall not be less than 
15 days from the date of service of the complaint. Notice shall be given 
that a decision by default may be rendered against the respondent if an 
answer is not filed as required.



Sec. 901.36  Service of complaint and other papers.

    (a) Complaint. The complaint or a copy thereof may be served upon 
the respondent by certified mail, or first-class mail as hereinafter 
provided, by delivering it to the respondent, or the respondent's 
attorney or agent of record either in person or by leaving it at the 
office or place of business of the respondent, the attorney or agent, or 
in any other manner which may have been agreed to in writing by the 
respondent. Where the service is by certified mail, the return post 
office receipt signed by or on behalf of the respondent shall be proof 
of service. If the certified matter is not claimed or accepted by the 
respondent and is returned undelivered, complete service may be made 
upon the respondent by mailing the complaint to him/her by first-class 
mail, addressed to the respondent at the last address known to the 
Executive Director. If service is made upon the respondent or his/her 
attorney or agent in person or by leaving the complaint at the office or 
place of business of the respondent, attorney, or agent, the verified 
return by the person making service, setting forth the manner of 
service, shall be proof of such service.
    (b) Service of papers other than complaint. Any paper other than the 
complaint may be served upon the respondent as provided in paragraph (a) 
of this section or by mailing the paper by first-class mail to the 
respondent at the last address known to the Executive Director or by 
mailing the paper by first-class mail to the respondent's attorney or 
agent. Such mailing shall constitute complete service. Notices may also 
be served upon the respond- ent or his/her attorney or agent by 
telegraph.
    (c) Filing of papers. Whenever the filing of a paper is required or 
permitted in connection with a suspension or termination proceeding, and 
the place of filing is not specified by this subpart or by rule or order 
of the Administrative Law Judge, the paper shall be filed with the 
Executive Director of the Joint Board for the Enrollment of Actuaries, 
Treasury Department, Washington, D.C. 20220. All papers shall be filed 
in duplicate.

[[Page 1092]]



Sec. 901.37  Answer.

    (a) Filing. The respondent's answer shall be filed in writing within 
the time specified in the complaint or notice of initiation of the 
proceeding, unless, on application, the time is extended by the 
Executive Director or the Administrative Law Judge. The answer shall be 
filed in duplicate with the Executive Director.
    (b) Contents. The answer shall contain a statement of facts which 
constitute the grounds of defense and it shall specifically admit or 
deny each allegation set forth in the complaint, except that the 
respondent shall not deny a material allegation in the complaint which 
he/she knows to be true, or state that he/she is without sufficient 
information to form a belief when in fact the respondent possesses such 
information. The respondent may also state affirmatively special matters 
of defense.
    (c) Failure to deny or answer allegations in the complaint. Every 
allegation in the complaint which is not denied in the answer shall be 
deemed to be admitted and may be considered as proven, and no further 
evidence in respect of such allegation need be adduced at a hearing. 
Failure to file an answer within the time prescribed in the notice to 
the respondent, except as the time for answer is extended by the 
Executive Director or the Administrative Law Judge, shall constitute an 
admission of the allegations of the complaint and a waiver of hearing, 
and the Administrative Law Judge may make a decision by default, without 
a hearing or further procedure.



Sec. 901.38  Supplemental charges.

    If it appears to the Executive Director that the respondent in his/
her answer falsely and in bad faith denies a material allegation of fact 
in the complaint or states that the respondent has no knowledge 
sufficient to form a belief when he/she in fact possesses such 
knowledge, or if it appears that the respondent has knowingly introduced 
false testimony during proceedings for suspension or termination of his/
her enrollment, the Executive Director may file supplemental charges 
against the respondent. Such supplemental charges may be tried with 
other charges in the case, provided the respondent is given due notice 
thereof and is afforded an opportunity to prepare a defense thereto.



Sec. 901.39  Reply to answer.

    No reply to the respondent's answer shall be required, but the 
Executive Director may file a reply at his/her discretion or at the 
request of the Administrative Law Judge.



Sec. 901.40  Proof; variance; amendment of pleadings.

    In the case of a variance between the allegations in a pleading and 
the evidence adduced in support of the pleading, the Administrative Law 
Judge may order or authorize amendment of the pleading to conform to the 
evidence, provided that the party who would otherwise be prejudiced by 
the amendment is given reasonable opportunity to meet the allegations of 
the pleading as amended. The Administrative Law Judge shall make 
findings on any issue presented by the pleadings as so amended.



Sec. 901.41  Motions and requests.

    Motions and requests may be filed with the Executive Director or 
with the Administrative Law Judge.



Sec. 901.42  Representation.

    A respondent or proposed respondent may appear at conference or 
hearing in person or may be represented by counsel or other 
representative. The Executive Director may be represented by an attorney 
or other employee of the Treasury Department.



Sec. 901.43  Administrative Law Judge.

    (a) Appointment. An administrative law judge, appointed as provided 
by section 11 of the Administrative Procedure Act, 60 Stat. 244 (5 
U.S.C. 3105), shall conduct proceedings upon complaints for the 
suspension or termination of enrolled actuaries.
    (b) Powers of Administrative Law Judge. Among other powers, the 
Administrative Law Judge shall have authority, in connection with any 
suspension or termination proceeding of an enrolled actuary, to do the 
following:
    (1) Administer oaths and affirmations;

[[Page 1093]]

    (2) Make rulings upon motions and requests, which may not be 
appealed before the close of a hearing except at the discretion of the 
Administrative Law Judge;
    (3) Determine the time and place of hearing and regulate its course 
of conduct;
    (4) Adopt rules of procedure and modify the same as required for the 
orderly disposition of proceedings;
    (5) Rule upon offers of proof, receive relevant evidence, and 
examine witnesses;
    (6) Take or authorize the taking of depositions;
    (7) Receive and consider oral or written argument on facts or law;
    (8) Hold or provide for the holding of conferences for the 
settlement or simplification of the issues by consent of the parties;
    (9) Perform such acts and take such measures as are necessary or 
appropriate to the efficient conduct of any proceeding; and
    (10) Make initial decisions.



Sec. 901.44  Hearings.

    (a) In general. The Administrative Law Judge shall preside at the 
hearing on a complaint for the suspension or termination of an enrolled 
actuary. Hearings shall be stenographically recorded and transcribed and 
the testimony of witnesses shall be taken under oath or affirmation. 
Hearings will be conducted pursuant to section 7 of the Administrative 
Procedure Act, 60 Stat. 241 (5 U.S.C. 556).
    (b) Failure to appear. If either party to the proceeding fails to 
appear at the hearing, after due notice thereof has been sent to the 
parties, the Administrative Law Judge may make a decision against the 
absent party by default.



Sec. 901.45  Evidence.

    (a) In general. The rules of evidence prevailing in courts of law 
and equity are not controlling in hearings on complaints for the 
suspension or the termination of the enrollment of enrolled actuaries. 
However, the Administrative Law Judge shall exclude evidence which is 
irrelevant, immaterial, or unduly repetitious.
    (b) Depositions. The deposition of any witness taken pursuant to 
Sec. 901.46 may be admitted.
    (c) Proof of documents. Official documents, records, and papers of 
the Department of the Treasury, the Department of Labor, the Pension 
Benefit Guaranty Corporation, the Joint Board for the Enrollment of 
Actuaries or the Office of the Executive Director of the Joint Board for 
the Enrollment of Actuaries shall be admissible into evidence without 
the production of an officer or employee to authenticate them. Any such 
documents, records, and papers may be evidenced by a copy attested to or 
identified by an officer or employee of the Department of the Treasury, 
the Department of Labor, the Pension Benefit Guaranty Corporation, the 
Joint Board for the Enrollment of Actuaries, or the Office of the 
Executive Director of the Joint Board for the Enrollment of Actuaries, 
as the case may be.
    (d) Exhibits. If any document, record, or other paper is introduced 
into evidence as an exhibit, the Administrative Law Judge may authorize 
the withdrawal of the exhibit subject to any conditions which he/she 
deems proper.
    (e) Objections. Objections to evidence shall state the grounds 
relied upon, and the record shall not include argument thereon, except 
as ordered by the Administrative Law Judge. Rulings on such objections 
shall be part of the record. No exception to the ruling is necessary to 
preserve the rights of the parties.



Sec. 901.46  Depositions.

    Depositions for use at a hearing may, with the written approval of 
the Administrative Law Judge, be taken by either the Executive Director 
or the respondent or their duly authorized representatives. Depositions 
may be taken upon oral or written interrogatories, upon not less than 10 
days written notice to the other party, before any officer duly 
authorized to administer an oath for general purposes or before an 
officer or employee of the Department of the Treasury, the Department of 
Labor, the Pension Benefit Guaranty Corporation, or the Joint Board who 
is authorized to administer an oath. Such

[[Page 1094]]

notice shall state the names of the witnesses and the time and place 
where the depositions are to be taken. The requirement of 10 days notice 
may be waived by the parties in writing, and depositions may then be 
taken from the persons and at the times and places mutually agreed upon 
by the parties. When a deposition is taken upon written interrogatories, 
any cross-examination shall be upon written interrogatories. Copies of 
such written interrogatories shall be served upon the other party with 
the notice, and the copies of any written cross-interrogatories shall be 
mailed or delivered to the opposing party at least five days before the 
date of taking the depositions, unless the parties mutually agree 
otherwise. A party upon whose behalf a deposition is taken must file it 
with the Administrative Law Judge and serve one copy upon the opposing 
party. Expenses in the reporting of depositions shall be borne by the 
party at whose instance the deposition is taken.



Sec. 901.47  Transcript.

    In cases where the hearing is stenographically reported by a 
Government contract reporter, copies of the transcript may be obtained 
from the reporter at rates not to exceed the maximum rates fixed by 
contract between the Government and the reporter. Where the hearing is 
stenographically reported by a regular employee of the Department of the 
Treasury, the Department of Labor, the Pension Benefit Guaranty 
Corporation, or the Joint Board, a copy thereof will be supplied to the 
respondent either without charge or upon the payment of a reasonable 
fee. Copies of exhibits introduced at the hearing or at the taking of 
depositions will be supplied to parties upon the payment of a reasonable 
fee (31 U.S.C. 483a).



Sec. 901.48  Proposed findings and conclusions.

    Except in cases where the respondent has failed to answer the 
complaint or where a party has failed to appear at the hearing, the 
Administrative Law Judge, before making his/her decision, shall give the 
parties a reasonable opportunity to submit proposed findings and 
conclusions and supporting reasons therefor.



Sec. 901.49  Decision of the Administrative Law Judge.

    As soon as practicable after the conclusion of a hearing and the 
receipt of any proposed findings and conclusions timely submitted by the 
parties, the Administrative Law Judge shall make the initial decision in 
the case. The decision should be based solely upon the pleading, the 
testimony and exhibits received in evidence at the hearing or 
specifically authorized to be subsequently submitted under the 
applicable laws and regulations. The decision shall include (a) a 
statement of findings and conclusions, as well as the reasons or basis 
therefor, upon all the material issues of fact or law presented on the 
record, and (b) an order of suspension, termination or reprimand or an 
order of dismissal of the complaint. The Administrative Law Judge shall 
file the decision with the Executive Director and shall transmit a copy 
thereof to the respondent or his/her attorney or agent of record. In the 
absence of an appeal to the Joint Board or review of the decision upon 
motion of the Joint Board, the decision of the Administrative Law Judge 
shall without further proceedings become the decision of the Joint Board 
30 days from the date of the Administrative Law Judge's decision.



Sec. 901.50  Appeal to the Joint Board.

    Within 30 days from the date of the Administrative Law Judge's 
decision, either party may appeal to the Joint Board for the Enrollment 
of Actuaries. The appeal shall be filed with the Executive Director in 
duplicate and shall include exceptions to the decision of the 
Administrative Law Judge and supporting reasons for such exceptions. If 
an appeal is filed by the Executive Director, a copy thereof shall be 
transmitted to the respondent. Within 30 days after receipt of an appeal 
or copy thereof, the other party may file a reply brief in duplicate 
with the Executive Director. If the reply brief is filed by the 
Executive Director, a copy of it shall be transmitted to the respondent. 
Upon the filing of an appeal and a reply brief, if any, the Executive 
Director

[[Page 1095]]

shall transmit the entire record to the joint board.



Sec. 901.51  Decision of the Joint Board.

    On appeal from or review of the initial decision of the 
Administrative Law Judge, the Joint Board for the Enrollment of 
Actuaries will make the final decision. In making its decision the Joint 
Board will review the record of such portions thereof as may be cited by 
the parties to permit limiting of the issues. A copy of the Joint 
Board's decision shall be transmitted to the respondent by the Executive 
Director.



Sec. 901.52  Effect of suspension, termination or resignation of 
enrollment; surrender of enrollment certificate.

    If the respondent's enrollment is suspended, the respondent shall 
not thereafter be permitted to perform actuarial services under ERISA 
during the period of suspension. If the respondent's enrollment is 
terminated, the respondent shall not thereafter be permitted to perform 
actuarial serv- ices under ERISA unless and until authorized to do so by 
the Executive Director pursuant to Sec. 901.54. The respondent shall 
surrender his/her enrollment certificate to the Executive Director for 
cancellation in the case of a termination or resignation of enrollment 
or for retention during a period of suspension.



Sec. 901.53  Notice of suspension, termination or resignation of 
enrollment.

    Upon the resignation or the issuance of a final order suspending or 
terminating the enrollment of an actuary, the Executive Director shall 
give notice thereof to appropriate officers and employees of the 
Department of the Treasury, the Department of Labor, the Pension Benefit 
Guaranty Corporation, and to other interested departments and agencies 
of the Federal Government.



Sec. 901.54  Petition for reinstatement.

    Any individual whose enrollment has been terminated may petition the 
Executive Director for reinstatement after the expiration of five years 
following such termination. Reinstatement may not be granted unless the 
Executive Director, with the approval of the Joint Board, is satisfied 
that the petitioner is not likely to conduct himself/herself thereafter 
contrary to the regulations in this part, and that granting such 
reinstatement would not be contrary to the public interest.



                      Subpart E_General Provisions

    Authority: Sec. 3042(b), ERISA, 29 U.S.C. 1242(b).

    Source: 43 FR 39761, Sept. 7, 1978, unless otherwise noted.



Sec. 901.70  Records.

    (a) Availability. There are made available for public inspection at 
the Office of the Executive Director of the Joint Board for the 
Enrollment of Actuaries a roster of all persons enrolled to perform 
actuarial services under ERISA and a roster of all persons whose 
enrollments to perform such services have been suspended or terminated. 
Other records may be disclosed upon specific request, in accordance with 
the applicable disclosure and privacy statutes.
    (b) Disciplinary procedures. A request by an enrolled actuary that a 
hearing in a disciplinary proceeding concerning him/her be public, and 
that the record thereof be made available for inspection by interested 
persons may be granted if written agreement is reached in advance to 
protect from disclosure tax information which is confidential, in 
accordance with applicable statutes and regulations.



Sec. 901.71  Special orders.

    The Joint Board reserves the power to issue such special orders as 
it may deem proper in any case within the purview of this part.



PART 902_RULES REGARDING AVAILABILITY OF INFORMATION--Table of Contents




Sec.
902.1 Scope.
902.2 Definitions.
902.3 Published information.
902.4 Access to records.
902.5 Appeal.

    Authority: Sec. 3042, subtitle C, title 3, Employee Retirement 
Income Security Act of 1974 (88 Stat. 1002, 29 U.S.C. 1241, 1242).

[[Page 1096]]


    Source: 42 FR 39204, Aug. 3, 1977, unless otherwise noted.



Sec. 902.1  Scope.

    This part is issued by the Joint Board for the Enrollment of 
Actuaries (the ``Joint Board'') pursuant to the requirements of section 
552 of title 5 of the United States Code, including the requirements 
that every Federal agency shall publish in the Federal Register, for the 
guidance of the public, descriptions of the established places at which, 
the officers from whom, and the methods whereby, the public may obtain 
information, make submittals or requests, or obtain decisions.



Sec. 902.2  Definitions.

    (a) Records of the Joint Board. For purposes of this part, the term 
``records of the Joint Board'' means rules, statements, opinions, 
orders, memoranda, letters, reports, accounts, and other papers 
containing information in the possession of the Joint Board that 
constitute part of the Joint Board's official files.
    (b) Unusual Circumstances. For purposes of this part, ``unusual 
circumstances'' means, but only to the extent reasonably necessary for 
the proper processing of the particular request:
    (1) The need to search for and collect the requested records from 
other establishments that are separate from the Joint Board's office 
processing the request;
    (2) The need to search for, collect, and appropriately examine a 
voluminous amount of separate and distinct records which are demanded in 
a single request; or
    (3) The need for consultation, which shall be conducted with all 
practicable speed, with another agency having a substantial interest in 
the determination of the request.



Sec. 902.3  Published information.

    (a) Federal Register. Pursuant to sections 552 and 553 of title 5 of 
the United States Code, and subject to the provisions of Sec. 902.5, 
the Joint Board publishes in the Federal Register for the guidance of 
the public, in addition to this part, descriptions of its organization 
and procedures, substantive rules of general applicability, and, as may 
from time to time be appropriate, statements of general policy, and 
interpretations of general applicability.
    (b) Other published information. From time to time, the Joint Board 
issues statements to the press relating to its operations.
    (c) Obtaining printed information. If not available through the 
Government Printing Office, printed information released by the Joint 
Board may be obtained without cost from the Executive Director of the 
Joint Board (``Executive Director'').



Sec. 902.4  Access to records.

    (a) General rule. All records of the Joint Board, including 
information set forth in section 552(a)(2) of title 5 of the United 
States Code, are made available to any person, upon request, for 
inspection and copying in accordance with the provisions of this section 
and subject to the limitations stated in section 552(b) of title 5 of 
the United States Code. Records falling within such limitations may 
nevertheless be made available in accordance with this section to the 
extent consistent, in the judgment of the Chairman of the Joint Board 
(``Chairman''), with the effective performance of the Joint Board's 
statutory responsibilities and with the avoidance of injury to a public 
or private interest intended to be protected by such limitations.
    (b) Obtaining access to records. Records of the Joint Board subject 
to this section are available by appointment for public inspection or 
copying during regular business hours on regular business days at the 
office of the Executive Director. Every request for access to such 
records, other than published records described in Sec. 902.3, shall be 
signed and submitted in writing to the Executive Director, Joint Board 
for the Enrollment of Actuaries, c/o Department of the Treasury, 
Washington, DC 20220, shall state the name and address of the person 
requesting such access, and shall describe such records in a manner 
reasonably sufficient to permit their identification without undue 
difficulty.
    (c) Fees. A fee at the rate of $5.00 per hour or fraction thereof or 
the time required to locate such records, plus ten

[[Page 1097]]

cents per standard page for any copying thereof, shall be paid by any 
person requesting records other than published records described in 
Sec. 902.3. In addition, the cost of postage and any packaging and 
special handling shall be paid by the requester. Documents shall be 
provided without charge or at a reduced charge where the Chairman 
determines that waiver or reduction of the fee is in the public interest 
because furnishing the information can be considered as primarily 
benefiting the general public.
    (d) Actions on requests. The Executive Director shall, within ten 
days (excepting Saturdays, Sundays and legal public holidays) from 
receipt of request, determine whether to comply with such request for 
records and shall immediately notify in writing the person making such 
request of such determination and the reason therefor, and of the right 
of such person to appeal any adverse determination, as provided in Sec. 
902.5. In unusual circumstances, the time limit for the determination 
may be extended by written notice to the person making such request 
setting forth the reasons for such extension and the date on which the 
determination is expected to be dispatched. No such notice shall specify 
a date that will result in an extension of more than ten working days.



Sec. 902.5  Appeal.

    (a) Any person denied access to records requested under Sec. 902.4, 
may within thirty days after notification of such denial, file a signed 
written appeal to the Joint Board. The appeal shall provide the name and 
address of the appellant, the identification of the records denied, and 
the dates of the original request and its denial.
    (b) The Joint Board shall act upon any such appeal within twenty 
days (excepting Saturdays, Sundays and legal public holidays) of its 
receipt, unless for unusual circumstances the time for such action is 
deferred, subject to Sec. 902.4(b), for not more than ten days. If 
action upon any such appeal is so deferred, the Joint Board shall notify 
the requester of the reasons for such deferral and the date on which the 
final reply is expected to be dispatched. If it is determined that the 
appeal from the initial denial shall be denied (in whole or in part), 
the requester shall be notified in writing of the denial, of the reasons 
therefor, of the fact the Joint Board is responsible for the denial, and 
of the provisions of section 552(a)(4) of title 5 of the United States 
Code for judicial review of the determination.
    (c) Any extension or extensions of time under Sec. Sec. 902.4(d) 
and 902.5(b) shall not cumulatively total more than ten days (excepting 
Saturdays, Sundays and legal public holidays). If an extension is 
invoked in connection with an initial determination under Sec. 
902.4(d), any unused days of such extension may be invoked in connection 
with the determination on appeal under Sec. 902.5(a), by written notice 
from the Joint Board.



PART 903_ACCESS TO RECORDS--Table of Contents




               Subpart A_Records Pertaining to Individuals

Sec.
903.1 Purpose and scope of regulations.
903.2 Definitions.
903.3 Procedures for notification with respect to records regarding 
          individuals.
903.4 Procedures for access to records and accountings of disclosures 
          from records, regarding individuals.
903.5 Procedures for amendment of records regarding individual--format, 
          agency review and appeal from initial adverse agency 
          determination.
903.6 Fees.
903.7 Guardianship.
903.8 Exemptions.

    Authority: 5 U.S.C. 552a.

    Source: 41 FR 1493, Jan. 8, 1976, unless otherwise noted.



               Subpart A_Records Pertaining to Individuals



Sec. 903.1  Purpose and scope of regulations.

    The regulations in this subpart are issued to implement the 
provisions of the Privacy Act of 1974 (5 U.S.C. 552a). The regulations 
relate to all records maintained by the Joint Board for the Enrollment 
of Actuaries (Joint Board) which are identifiable by individual name or 
identifier and all systems of such records which are retrievable by name 
or other identifier. They do not

[[Page 1098]]

relate to personnel records of Government employees, which are under the 
jurisdiction of the Civil Service Commission, and, thus, subject to 
regulations issued by such Commission. The regulations set forth the 
procedures by which individuals may request notification of whether the 
Joint Board maintains or has disclosed a record pertaining to them or 
may seek access to such records maintained in any non-exempt system of 
records, request amendment of such records, and appeal any initial 
adverse determination with respect to any such request.



Sec. 903.2  Definitions.

    (a) The term agency includes any executive department, military 
department, Government corporation, Government controlled corporation, 
or other establishment in the executive branch of the Government 
(including the Executive Office of the President), or any independent 
regulatory agency (see 5 U.S.C. 552(e));
    (b) The term individual means a citizen of the United States or an 
alien lawfully admitted for permanent residence;
    (c) The term maintain includes maintain, use, collect or 
disseminate;
    (d) The term record means any item, collection, or grouping of 
information about an individual that is maintained by the Joint Board, 
including, but not limited to, his education, financial transactions, 
medical history, and criminal or employment history and that contains 
his name, or the identifying number, symbol, or other identifying 
particular assigned to the individual such as a finger or voice print or 
a photograph;
    (e) The term system of records means a group of any records under 
the control of the Joint Board from which information is retrieved by 
the name of the individual or by some identifying number, symbol, or 
other identifying particular assigned to the individual;
    (f) The term routine use means, with respect to the disclosure of a 
record, the use of such record for a purpose which is compatible with 
the purpose for which it was collected.



Sec. 903.3  Procedures for notification with respect to records 
regarding individuals.

    (a) Procedures for notification. The systems of records maintained 
by the Joint Board are listed annually as required by the Privacy Act of 
1974. Any individual, who wishes to know whether a system of records 
contains a record regarding him, may write to the Executive Director, 
Joint Board for the Enrollment of Actuaries, c/o U.S. Department of the 
Treasury, Washington, DC 20220. Requests may also be delivered 
personally to the Executive Director, Joint Board for the Enrollment of 
Actuaries, 2401 E Street, NW., suite 1537, Washington, D.C. between the 
hours of 9 a.m. and 5 p.m. on workdays. Any such inquiry will be 
acknowledged in writing within 10 days (excluding Saturdays, Sundays and 
legal public holidays) of receipt of the request.
    (b) Requests. A request for notification of whether a record exists 
shall:
    (1) Be made in writing and signed by the person making the request, 
who must be the individual about whom the record is maintained, or his 
duly authorized representative (see Sec. 903.7);
    (2) State that it is made pursuant to the Privacy Act, 5 U.S.C. 
552a, or the regulations contained in this part;
    (3) Furnish the name of the system of records with respect to which 
notification is sought, as specified in the systems notices published in 
the Federal Register, Volume 40, No. 167;
    (4) Mark ``Privacy Act Request'' on the request and on the envelope 
in which the request is contained;
    (5) Be addressed as specified in paragraph (a) of this section, 
unless personally delivered; and
    (6) Meet the requirements set forth in paragraph (c) of this 
section.
    (c) Verification of identity. Notification of the existence of 
records in certain systems maintained by the Joint Board will not be 
made unless the individual requester's identity is verified. Where 
applicable, requirements for verification of identity are specified in 
the notices of systems published in the Federal Register, Volume 40, No. 
167.
    (d) Date of receipt of request. A request for notification with 
respect to records

[[Page 1099]]

shall be considered to have been received on the date on which the 
requirements of paragraphs (a), (b) and (c) of this section have been 
satisfied. Requests for notification shall be stamped with the date of 
receipt by the Office of the Executive Director.
    (e) Exemptions. The procedures prescribed under paragraphs (a), (b) 
and (c) of this section shall not apply to: (1) Systems of records 
exempted pursuant to 5 U.S.C. 552a(k); (2) information compiled in 
reasonable anticipation of a civil action or proceeding (see 5 U.S.C. 
552a(d) (5); or (3) information regarding an individual which is 
contained in, and inseparable from, another individual's record.
    (f) Notification of determination--(1) In general. The Executive 
Director shall, except as otherwise provided in this paragraph, notify 
an individual requester as to whether or not a system of records 
contains a record regarding such individual. Such notification shall be 
made within 30 days (excluding Saturdays, Sundays and legal public 
holidays) after the date of receipt of the request, as determined in 
accordance with paragraph (d) of this section. If it is not possible to 
respond within 30 days, the Executive Director will inform the 
requester, stating the reasons for the delay (e.g., volume of records 
involved, need to consult other agencies, or the difficulty of the legal 
issues involved) and when a response will be dispatched.
    (2) Denial of request. When it is determined that a request for 
notification with respect to records will be denied (whether in whole or 
in part or subject to conditions or exceptions), the person making the 
request shall be so notified by mail in accordance with paragraph (f)(1) 
of this section. The letter of notification shall set forth the name and 
title or position of the responsible official.
    (3) Records exempt in whole or in part. (i) When an individual 
requests notification with respect to records concerning himself which 
have been compiled in reasonable anticipation of a civil action or 
proceeding either in a court or before an administrative tribunal, the 
Executive Director will neither confirm nor deny the existence of the 
record but shall advise the individual only that no record with respect 
to the existence of which he is entitled to be notified pursuant to the 
Privacy Act of 1974 has been identified.
    (ii) Requests for records which have been exempted from the 
requirement of notification pursuant to 5 U.S.C. 552a(k)(2) shall be 
responded to in the manner provided in paragraph (f)(3)(i) of this 
section.



Sec. 903.4  Procedures for access to records and accountings of 
disclosures from records, regarding individuals.

    (a) Access. The Executive Director of the Joint Board shall, upon 
request by any individual to gain access to a record regarding him which 
is contained in a system of records maintained by the Joint Board, or to 
an accounting of a disclosure from such record made pursuant to 5 U.S.C. 
552a(c)(1), permit that individual, and, upon his/her request, a person 
he/she chooses to accompany him/her, to review the record or any such 
accounting and have a copy made of all or any portion thereof in a form 
comprehensible to the individual, except that the Executive Director may 
require the individual to furnish a written statement authorizing 
discussion of that individual's record in the accompanying person's 
presence. Such request may be addressed to the Executive Director, Joint 
Board for the Enrollment of Actuaries, c/o U.S. Department of the 
Treasury, Washington, DC 20220. Requests may also be delivered 
personally to the Executive Director, Joint Board for the Enrollment of 
Actuaries, 2401 E Street, NW., suite 1537, Washington, DC, between the 
hours of 9 a.m. and 5 p.m. on workdays. Any such inquiry will be 
acknowledged in writing within 10 days (excluding Saturdays, Sundays and 
legal public holidays) of receipt of the request (see paragraph (e) of 
this section).
    (b) Requests. A request for access to records or accountings of 
disclosure from records, shall:
    (1) Be signed in writing by the person making the request, who must 
be the individual about whom the record is maintained, or his duly 
authorized representative (see Sec. 903.7);

[[Page 1100]]

    (2) State that it is made pursuant to the Privacy Act, 5 U.S.C. 
552a, or the regulations contained in this part;
    (3) Furnish the name of the system of records to which access is 
sought, or the name of the system for a disclosure from which an 
accounting is sought, as specified in the systems notices published in 
the Federal Register, Volume 40, No. 167;
    (4) Mark ``Privacy Act Request'' on the request and on the envelope 
in which the request is contained;
    (5) Be addressed as specified in paragraph (a) of this section, 
unless personally delivered;
    (6) State whether the requester wishes to inspect the records and/or 
accountings of disclosures therefrom, or desires to have a copy made and 
furnished without inspecting them;
    (7) State, if the requester desires to have a copy made, the 
requester's agreement to pay the fees for duplication as ultimately 
determined in accordance with Sec. 903.6; and
    (8) Meet the requirements set forth in paragraph (c) of this 
section.
    (c) Verification of identity. Access to records contained in certain 
systems maintained by the Joint Board and/or accountings of disclosures 
from such records, will not be granted unless the individual requester's 
identity is verified. Where applicable, requirements for verification of 
identity are specified in the notices of systems published in the 
Federal Register, Volume 40, No. 167.
    (d) Exemptions. The procedures specified in paragraphs (a), (b) and 
(c) of this section shall not apply to: (1) Systems of records exempted 
pursuant to 5 U.S.C. 552a(k); (2) information compiled in reasonable 
anticipation of a civil action or proceeding (see 5 U.S.C. 552a(d)(5)); 
or (3) information regarding an individual which is contained in, and 
inseparable from, another individual's record.
    (e) Date of receipt of request. A request for access to records and/
or accountings shall be considered to have been received on the date on 
which the requirements of paragraphs (a), (b) and (c) of this section 
have been satisfied. Requests for access, and any separate agreement to 
pay, shall be stamped with the date of receipt by the Office of the 
Executive Director. The latest of such stamped dates will be deemed to 
be the date of receipt of the request.
    (f) Notification of determination--(1) In general. Notification of 
determinations as to whether to grant access to records and/or 
accountings requested will be made by the Executive Director of the 
Joint Board. The notification of the determination shall be made within 
30 days (excluding Saturdays, Sundays and legal public holidays) after 
the date of receipt of the request, as determined in accordance with 
paragraph (g) of this section. If it is not possible to respond within 
30 days, the Executive Director will inform the requester, stating the 
reason(s) for the delay (e.g., volume of records requested, need to 
consult other agencies, or the difficulty of the legal issues involved) 
and when a response will be dispatched (See 5 U.S.C. 552a (d) and (f)).
    (2) Granting of access. (i) When it has been determined that the 
request for access will be granted--(A) and a copy requested; such copy 
in a form comprehensible to him shall be furnished promptly, together 
with a statement of the applicable fees for duplication as set forth 
elsewhere in these regulations (See Sec. 903.6); and (B) and the right 
to inspect has been requested, the requester shall be promptly notified 
in writing of the determination, and when and where the requested 
records and/or accountings may be inspected.
    (ii) An individual seeking to inspect records concerning himself 
and/or accountings of disclosure from such records may be accompanied by 
another individual of his own choosing. The individual seeking access 
shall be required to sign the required form indicating that the Joint 
Board is authorized to discuss the contents of the subject record in the 
accompanying person's presence. If, after making the inspection, the 
individual making the request desires a copy of all or portion of the 
requested records, such copy in a form comprehensible to him shall be 
furnished upon payment of the applicable fees for duplication as 
prescribed by Sec. 903.6. Fees shall not be charged where they would 
amount, in the aggregate, to less than $53.00. (See 5 U.S.C. 552a (d) 
and (f):

[[Page 1101]]

    (3) Denial of request. (i) When it is determined that the request 
for access to records will be denied (whether in whole or in part or 
subject to conditions or exceptions), the person making the request 
shall be so notified by mail in accordance with paragraph (f)(1) of this 
section. The letter of notification shall contain a statement of the 
reasons for not granting the request as made, set forth the name and 
title or position of the responsible official and advise the individual 
making the request of the right to file suit in accordance with 5 U.S.C. 
552a(g)(1)(B).
    (ii) When it is determined that a request for access to accountings 
will be denied, the person making the request shall be so notified by 
mail in accordance with paragraph (f)(1)(4)(iii) of this section.
    (4) Records exempt in whole or in part. (i) When an individual 
requests records concerning himself which have been compiled in 
reasonable anticipation of a civil action or proceeding either in a 
court or before an administrative tribunal, the Executive Director will 
neither confirm nor deny the existence of the record but shall advise 
the individual only that no record available to him pursuant to the 
Privacy Act of 1974 has been identified.
    (ii) Requests for records which have been exempted from disclosure 
pursuant to 5 U.S.C. 552a(k)(2) shall be responded to in the manner 
provided in paragraph (f)(4)(i) of this section unless a review of the 
information indicates that the information has been used or is being 
used to deny the individual any right, privilege or benefit for which he 
is eligible or to which he would otherwise be entitled under Federal 
law. In that event, the individual shall be advised of the existence of 
the information but such information as would identify a confidential 
source shall be extracted or summarized in a manner which protects the 
source to the maximum degree possible and the summary extract shall be 
provided to the requesting individual.
    (iii) When an individual requests access to accountings of 
disclosure from records concerning himself which have been compiled in 
reasonable anticipation of a civil action or proceeding, either in a 
court or before an administrative tribunal, or which have been exempted 
from disclosure pursuant to 5 U.S.C. 552a(k)(2), the Executive Director 
will neither confirm nor deny the existence of the record or accountings 
of disclosure therefrom, but shall advise the individual that no 
accounting available to him pursuant to the Privacy Act of 1974 has been 
identified.



Sec. 903.5  Procedures for amendment of records regarding 
individual--format, agency review and appeal from initial adverse 
agency determination.

    (a) In general. Subject to the application of exemptions promulgated 
by the Joint Board, in accordance with 5 U.S.C. 552a(k), the Executive 
Director shall, in conformance with 5 U.S.C. 552a(d)(2), permit an 
individual to request amendment of a record pertaining to him. Any such 
request shall be addressed to the Executive Director, Joint Board for 
the Enrollment of Actuaries, U.S. Department of the Treasury, 
Washington, DC 20220 or delivered personally to the Executive Director, 
Joint Board for the Enrollment of Actuaries, 2401 E Street, NW., suite 
1537, Washington, DC. Any request for amendment of records or any appeal 
from the initial denial of a request which does not fully comply with 
the requirements of this section will not be deemed subject to the time 
constraints of paragraph (e) of this section, unless and until amended 
so as to comply. However, the Executive Director shall forthwith advise 
the requester in what respect the request or appeal is deficient so that 
it may be resubmitted or amended. (See 5 U.S.C. 552a (d) and (f)).
    (b) Form of request to amend records. In order to be subject to the 
provisions of this section, a request to amend records shall:
    (1) Be made in writing and signed by the person making the request, 
who must be the individual about whom the record is maintained, or his 
duly authorized representative. (See Sec. 903.7);
    (2) State that it is made pursuant to the Privacy Act, 5 U.S.C. 552a 
or these regulations;
    (3) Mark ``Privacy Act Amendment Request'' on the request and on the 
envelope; and
    (4) Reasonably describe the records which the individual desires to 
have

[[Page 1102]]

amended, including, to the best of the requester's knowledge, dates of 
letters requesting access to such records previously and dates of 
letters in which notification concerning access was made, if any, and 
the individual's documentation justifying the correction. (See 5 U.S.C. 
552a (d) and (f)).
    (c) Date of receipt of request. A request for amendment of records 
pertaining to an individual shall be deemed to have been received for 
purposes of this subpart when the requirements of paragraphs (a) and (b) 
of this section have been satisfied. The Office of the Executive 
Director shall stamp the date of receipt of the request thereon. (See 5 
U.S.C. 552a (d) and (f)).
    (d) Review of requests to amend records. The Executive Director 
shall:
    (1) Not later than 10 days (excluding Saturdays, Sundays, and legal 
public holidays) after the date of receipt of such request, acknowledge 
in writing such receipt; and
    (2) Promptly, either--(i) make any correction of any portion of a 
record which the individual believes and the Executive Director agrees 
is not accurate, relevant, timely, or complete; or (ii) inform the 
individual of the refusal to amend the record in accordance with his 
request, the reason for the refusal, and that he may request that the 
Joint Board review such refusal. (See 5 U.S.C. 552a (d) and (f)).
    (e) Administrative appeal--(1) Ingeneral. The Joint Board shall 
permit individuals to request a review of initial decisions made under 
paragraph (d) of this section when an individual disagrees with a 
refusal to amend his record. (See 5 U.S.C. 552a(d), and (g)(1)).
    (2) Form of request for administrative review of refusal to amend 
record. At any time within 35 days after the date of the notification of 
the initial decision described in paragraph (d)(2)(ii) of this section, 
the requester may submit a request for review of such refusal to the 
official specified in the notification of the initial decision. The 
appeal shall:
    (i) Be made in writing stating any arguments in support thereof and 
be signed by the person to whom the record pertains, or his duly 
authorized representative (See Sec. 903.7);
    (ii) Within 35 days of the date of the initial decision: (A) Be 
addressed and mailed to the Joint Board for the Enrollment of Actuaries, 
c/o U.S. Department of the Treasury, Washington, DC 20220; or (B) be 
personally delivered to the Executive Director, Joint Board for the 
Enrollment of Actuaries, 2401 E Street NW., suite 1537, Washington, DC 
on workdays between the hours of 9 a.m. and 5 p.m.;
    (iii) Have clearly marked on the appeal and on the envelope, 
``Privacy Act Amendment Appeal'';
    (iv) Reasonably describe the records requested to be amended; and
    (v) Specify the date of the initial request to amend records, and 
the date of the letter giving notification that the request was denied. 
(See 5 U.S.C. 552a (d) and (f)).
    (3) Date of Receipt. Appeals shall be promptly stamped with the date 
of their receipt by the Office of the Executive Director and such 
stamped date will be deemed to be the date of receipt for all purposes 
of this section. The receipt of the appeal shall be acknowledged within 
10 days from the date of receipt (unless the determination on appeal is 
dispatched in 10 days, in which case, no acknowledgment is required) by 
the Joint Board and the requester is advised of the date of receipt 
established by the foregoing and when a response is due in accordance 
with this paragraph. (See 5 U.S.C. 552a (d) and (f)).
    (4) Review of administrative appeals from denial of requests to 
amend records. The Joint Board shall complete the review and notify the 
requester of the final agency decision within 30 days (exclusive of 
Saturdays, Sundays and legal public holidays) after the date of receipt 
of such appeal, unless it extends the time for good cause shown. If such 
final agency decision is to refuse to amend the record, in whole or in 
part, the requester shall also be advised of his right; (i) to file a 
concise ``Statement of Disagreement'' setting forth the reasons for his 
disagreement with the decision which shall be filed within 35 days of 
the date of the notification of the final agency decision and (ii) to 
seek judicial review of the final agency decision under 5 U.S.C. 
552a(g)(1)(A). (See 5 U.S.C. 552a (d), (f) and (g)(1)).

[[Page 1103]]

    (5) Notation on record and distribution of statements of 
disagreement. (i) The Executive Director is responsible, in any 
disclosure containing information about which an individual has filed a 
``Statement of Disagreement,'' occurring after the filing of the 
statement under paragraph (e)(4) of this section, for clearly noting any 
portion of the record which is disputed and providing copies of the 
statement and, if deemed appropriate, a concise statement of the Joint 
Board's reasons for not making the amendments requested, to persons or 
other agencies to whom the disputed record has been disclosed. (See 5 
U.S.C. 552a(d)(4)).
    (ii) In addition, when a ``Statement of Disagreement'' is filed 
regarding information previously disclosed to a person or other agency 
and when, for such disclosure, an accounting was made pursuant to 5 
U.S.C. 552(c)(1). then the Executive Director shall provide such person 
or other agency with the following:
    (A) Copy of the ``Statement of Disagreement'';
    (B) Copy of the portion of the previously disclosed in dispute 
clearly noted as disputed and;
    (C) If deemed approprirate, a concise statement of the Joint Board's 
reasons for not making requested amendments.
    (f) Records not subject to correction. The following records are not 
subject to correction or amendment by individuals:
    (1) Transcripts or written statements made under oath;
    (2) Transcripts of Grand Jury proceedings, judicial or quasi-
judicial proceedings which form the official record of those 
proceedings;
    (3) Pre-sentence reports comprising the property of the courts but 
maintained in agency files;
    (4) Records pertaining to the determination, the collection and the 
payment of federal taxes; and
    (5) Records duly exempted from correction by notice published in the 
Federal Register.

[41 FR 1493, Jan. 8, 1976, as amended at 45 FR 84994, Dec. 24, 1980]



Sec. 903.6  Fees.

    Charges for copies of records made pursuant to part 903 of this 
chapter will be at the rate of $0.10 per copy. For records not 
susceptible to photocopying, e.g., over-size materials, photographs, 
etc., the amount charged will be the actual cost of copying. Only one 
copy of each record requested will be provided. No charge will be made 
unless the charge as computed above would exceed $3 for each request or 
related series of requests. If a fee in excess of $25 is required, the 
requester will be notified that the fee must be tendered before the 
records will be copied.



Sec. 903.7  Guardianship.

    The guardian of a person judicially determined to be incompetent 
shall, in additon to establishing the identity of the person he 
represents, establish his own guardianship by furnishing a copy of a 
court order establishing the guardianship and may thereafter act on 
behalf of such individual. (See 5 U.S.C. 552a(h)).



Sec. 903.8  Exemptions.

    (a) Names of systems: (1) JBEA--Enrollment Files.
    (2) JBEA--Application Files.
    (3) JBEA--General Information.
    (4) JBEA--Charge Case Inventory Files.
    (5) JBEA--Suspension and Termination Files.
    (b) Provisions from which exempted: These systems contain records 
described in 5 U.S.C. 552a(k), the Privacy Act of 1974. Exemption will 
be claimed for such records only where appropriate from the following 
provisions: subsections (c)(3), (d)(1), (2), (3) and (4), (e)(1), 
(c)(4)(G), (H) and (I), and (f)(1), (2), (3), (4) and (5) of 5 U.S.C. 
552a.
    (c) Reasons for claimed exemptions: (1) The Privacy Act of 1974 
creates several methods by which individuals may learn of and obtain 
records containing information on such individuals and consisting of 
investigatory material compiled for law enforcement purposes. These 
methods are as follows: Subsection (c)(3) allows individuals to discover 
if other agencies are investigating such individuals; subsections 
(d)(1), (e)(4)(H) and (f)(2), (3) and (5) establish the ability of 
individuals to gain access to investigatory material

[[Page 1104]]

compiled on such individuals; subsections (d)(2), (3) and (4), (e)(4)(H) 
and (f)(4) presuppose access and enable individuals to contest the 
contents of investigatory material compiled on these individuals; and 
subsections (e)(4)(G) and (f)(1) allow individuals to determine whether 
or not they are under investigation. Because these subsections are 
variations upon the individual's ability to ascertain whether his civil 
or criminal misconduct has been discovered, these subsections have been 
grouped together for purposes of this notice.
    (2)(i) The Joint Board believes that imposition of the requirements 
of subsection (c)(3), which requires that accountings of disclosures be 
made available to individuals, would impair the ability of the Joint 
Board and other investigative entities to conduct investigations of 
alleged or suspected violations of the regulations governing the 
performance of actuarial services with respect to plans to which the 
Employee Retirement Income Security Act (ERISA) applies, and of civil or 
criminal laws. Making the accountings of disclosures available to 
individuals enables such individuals to identify entities investigating 
them and thereby to determine the nature of the violations of which they 
are suspected. With such knowledge, individuals would be able to alter 
their illegal activities, destroy or alter evidence of such activities 
and seriously impair the successful completion of investigations. For 
these reasons, the Joint Board seeks exemption from the requirements of 
subsection (c)(3).
    (ii) With respect to subsections (d)(1), (e)(4)(H), and (f)(2), (3) 
and (5), the Joint Board believes that access to investigatory material 
would prevent the successful completion of investigations. Individuals 
who gain access to investigatory material involving them discover the 
nature and extent of the violations of regulations, and of civil and 
criminal laws, of which they are suspected. By gaining access, such 
individuals also learn the facts developed during investigations. 
Knowledge of these matters enables these individuals to destroy or alter 
evidence which would otherwise have been used against them. In addition, 
knowledge of the facts and suspected violations gives individuals, who 
are committing ongoing violations, or who are about to commit violations 
of regulations, or of civil or criminal laws, the opportunity to 
temporarily postpone the commission of the violations or to effectively 
disguise the commission of these violations. Material compiled on 
investigated individuals reveals investigative techniques and 
procedures, disclosure of which enables such individuals to structure 
their illegal activities so as to escape detection. Further, such 
material may contain, or by its very nature reveal, the identity of 
confidential sources. When the identities of confidential sources are 
revealed, they may be subjected to various forms of reprisal. If 
confidential sources of information are subjected to actual reprisals or 
fear thereof, they may become reluctant to provide information necessary 
to identify or prove the guilt of persons who violate regulations, or 
civil or criminal laws. Further, the protections afforded by the above-
referenced subsections are unnecessary because the Joint Board may not 
deny enrollment or suspend or terminate the enrollment of an individual 
to perform actuarial services until it has provided such individual with 
due process safeguards. For the reasons stated in this subparagraph, the 
Joint Board seeks exemptions from the requirements of subsections 
(d)(1), (e)(4)(H), and (f)(2), (3) and (5).
    (iii) With respect to subsections (d) (2), (3) and (4), (e)(4)(H), 
and (f)(4), the Joint Board believes that the imposition of these 
requirements, which presuppose access and provide for amending records, 
would impair the ability to conduct investigations and would be 
unnecessary for the same reasons stated in the preceding subparagraph 
(2)(B). These reasons herein are incorporated by reference. Therefore, 
the Joint Board seeks exemption from the requirements of subsections (d) 
(2), (3) and (4), (e)(4)(H), and (f)(4).
    (iv) With respect to subsections (e)(4)(G) and (f)(1), the Joint 
Board believes that informing individuals that they are the subjects of 
a particular system or systems of records would impair the ability of 
the Joint Board and

[[Page 1105]]

its agents to successfully complete investigations of suspected or 
alleged violators of the regulations governing the performance of 
actuarial services with respect to plans to which ERISA applies. 
Individuals who learn that they are suspected of violating said 
regulations are given the opportunity to destroy or alter evidence 
needed to prove the alleged violations. Such individuals may also be 
able to impair investigations by temporarily suspending or restructuring 
the activities which place them in violation of said regulations. 
Further, as noted in preceding subparagraph (2)(B) and incorporated by 
reference herein, the procedural requirements imposed on the Joint Board 
by ERISA make the protections afforded by subsections (c)(4)(G) and 
(f)(1) unnecessary. For these reasons, the Joint Board seeks exemptions 
from the requirements of subsections (c)(4)(G) and (f)(1).
    (v) Subsection (e)(1) of the Privacy Act of 1974 requires that the 
Joint Board maintain in its records only information that is relevant 
and necessary to accomplish a purpose of the Office required to be 
accomplished by statute or by executive order of the President. The 
Joint Board believes that imposition of said requirement would seriously 
impair its ability, and the abilities of its agents and other 
investigative entities to effectively investigate suspected or alleged 
violations of regulations and of civil or criminal laws. The Joint Board 
does not initiate inquires into individuals' conduct unless it receives 
information evidencing violation by such individuals of the regulations 
governing performance of actuarial services with respect to plans to 
which ERISA applies. Sources of such information may be unfamiliar with 
the Joint Board's interpretations of said regulations and, therefore, 
may not always provide only relevant and necessary information. 
Therefore, it may often be impossible to determine whether or not 
information is relevant and necessary. For these reasons, the Joint 
Board seeks exemptions from the requirement of subsection (e)(1).
    (vi) Subsection (e)(4)(I) of the Privacy Act of 1974 requires the 
publication of the categories of sources of records in each system of 
records. The Joint Board believes that imposition of said requirement 
would seriously impair its ability to obtain information from such 
sources for the following reasons. Revealing such categories of sources 
could disclose investigative techniques and procedures and could cause 
sources to decline to provide information because of fear of reprisal, 
or fear of breaches of promises of confidentiality. For these reasons, 
the Joint Board seeks exemptions from the requirement of subsection 
(e)(4)(I).

[[Page 1107]]



 CHAPTER IX--OFFICE OF THE ASSISTANT SECRETARY FOR VETERANS' EMPLOYMENT 
                AND TRAINING SERVICE, DEPARTMENT OF LABOR




  --------------------------------------------------------------------
Part                                                                Page
1001            Services for veterans.......................        1109
1002            Regulations under the Uniformed Services 
                    Employment and Reemployment Rights Act 
                    of 1994.................................        1115

[[Page 1109]]



PART 1001_SERVICES FOR VETERANS--Table of Contents




                    Subpart A_Purpose and Definitions

Sec.
1001.100 Purpose and scope of subpart.
1001.101 Definitions of terms used in subpart.

                   Subpart B_Federal Responsibilities

1001.110 Role of the Assistant Secretary for Veterans' Employment and 
          Training (ASVET).

 Subpart C_Standards of Performance Governing State Agency Services to 
                      Veterans and Eligible Persons

1001.120 Standards of performance governing State agency services.
1001.121 Performance standard on facilities and support for Veterans' 
          Employment and Training Service (VETS) staff.
1001.122 Reporting and budget requirements.
1001.123 Performance standards governing the assignment and role of 
          Local Veterans' Employment Representatives (LVERs).
1001.124 Standards of performance governing State agency cooperation and 
          coordination with other agencies and organizations.
1001.125 Standards of performance governing complaints of veterans and 
          eligible persons.

          Subpart D_State Employment Service Agency Compliance

1001.130 Determination of compliance.
1001.131 Secretary's annual report to Congress.

   Subpart E_Standards of Performance Governing the Disabled Veterans 
                         Outreach Program (DVOP)

1001.140 Administration of DVOP.
1001.141 Functions of DVOP staff.
1001.142 Stationing of DVOP staff.

  Subpart F_Formula for the Allocation of Grant Funds to State Agencies

1001.150 Method of calculating State basic grant awards.
1001.151 Other funding criteria.
1001.152 Hold-harmless criteria and minimum funding level.

    Authority: 29 U.S.C. 49k; 38 U.S.C. chapters 41 and 42.



                    Subpart A_Purpose and Definitions



Sec. 1001.100  Purpose and scope of subpart.

    (a) This subpart contains the Department of Labor's regulations for 
implementing 38 U.S.C. 2001-2012, chapters 41 and 42, which require the 
Secretary of Labor to provide eligible veterans and eligible persons the 
maximum of employment and training opportunities, with priority given to 
the needs of disabled veterans and veterans of the Vietnam era, through 
the public employment service system established pursuant to the Wagner-
Peyser Act, as amended.
    (b) This subpart describes the roles and responsibilities of the 
Assistant Secretary for Veterans' Employment and Training (ASVET) and 
the staff of the Veterans' Employment and Training Service (VETS).
    (c) This subpart describes the performance standards for determining 
compliance of State agencies in carrying out the provisions of 38 
U.S.C., chapters 41 and 42 with respect to:
    (1) Providing services to eligible veterans and eligible persons to 
enhance their employment prospects,
    (2) Priority referral of special disabled veterans and veterans of 
the Vietnam era to job openings listed by Federal contractors pursuant 
to 38 U.S.C. 2012(a), and
    (3) Reporting of services provided to eligible veterans and eligible 
persons pursuant to 38 U.S.C. 2007(c) and 2012(c).
    (d) Performance standards are contained in this part at Sec. Sec. 
1001.140-1001.142 on the conduct of the Disabled Veterans Outreach 
Program (DVOP) in accordance with 38 U.S.C. 2003A.

[49 FR 12919, Mar. 30, 1984. Redesignated and amended at 54 FR 39353, 
Sept. 26, 1989]



Sec. 1001.101  Definitions of terms used in subpart.

    Assistant Secretary for Veterans' Employment and Training (ASVET) 
shall mean the official of the Department of Labor as described in Sec. 
1001.110 of this part.
    Assistant State Director for Veterans' Employment and Training 
Service

[[Page 1110]]

(ASDVETS) shall mean a Federal employee who is designated as an 
assistant to a State Director for Veterans' Employment and Training 
Service (SDVETS).
    Disabled Veteran shall mean a veteran who is entitled to 
compensation (or who but for the receipt of military retired pay would 
be entitled to compensation) under laws administered by the Veterans 
Administration and whos not classified as a Special Disabled Veteran.
    Eligible person shall mean:
    (1) The spouse of any person who died of a service-connected 
disability; or
    (2) The spouse of any member of the armed forces serving on active 
duty who at the time of application for assistance under this subpart, 
is listed, pursuant to 37 U.S.C. 556 and the regulations issued 
thereunder, by the Secretary concerned, in one or more of the following 
categories and has been so listed for a total of more than 90 days: (i) 
Missing in action, (ii) captured in line of duty by a hostile force, or 
(iii) forcibly detained or interned in line of duty by a foreign 
government or power; or
    (3) The spouse of any person who has a total disability permanent in 
nature resulting from a service-connected disability or the spouse of a 
veteran who died while a disability so evaluated was in existence.
    Eligible veteran shall mean a person who (1) served on active duty 
for a period of more than 180 days and was discharged or released 
therefrom with other than a dishonorable discharge, or (2) was 
discharged or released from active duty because of a service-connected 
disability.
    Local Veterans' Employment Representative (LVER) shall mean a member 
of the State agency staff designated and assigned by the State agency 
administrator to serve veterans and eligible persons pursuant to this 
subpart.
    Regional Director for Veterans' Employment and Training Service 
(RDVETS) is the representative of the ASVET on the staff of the 
Veterans' Employment and Training Service (VETS) at the regional level; 
supervises all other VETS staff within the region to which assigned; and 
shall report to, be responsible to, and be under the administrative 
direction of the ASVET.
    Service Delivery Point (SDP) shall mean a designated local 
employment service office which serves an area that may also contain 
extended service locations.
    Special disabled veteran shall mean (1) a veteran who is entitled to 
compensation (or who but for the receipt of military retired pay would 
be entitled to compensation) under laws administered by the Veterans 
Administration for a disability rated at 30 percent or more, or (2) a 
person who was discharged or released from active duty because of a 
service-connected disability.
    State agency means the State governmental unit designated pursuant 
to section 4 of the Wagner-Peyser Act, as amended, to cooperate with the 
United States Employment Service in the operation of the public 
employment service system.
    State Director for Veterans' Employment and Training Service 
(SDVETS) is the representative of ASVET on the staff of the Veterans' 
Employment and Training Service (VETS) at the State level.
    United States Employment Service (USES) shall mean the component of 
the Employment and Training Administration of the Department of Labor, 
established under the Wagner-Peyser Act, as amended, to maintain and 
coordinate a national system of public employment service agencies.
    Veteran of the Vietnam era shall mean an eligible veteran who (1) 
served on active duty for a period of more than 180 days, any part of 
which occurred during the Vietnam era (August 5, 1964, through May 7, 
1975) and was discharged or released therefrom with other than a 
dishonorable discharge; or (2) was discharged or released from active 
duty for a service-connected disability if any part of such active duty 
was performed during the Vietnam era.
    Veterans' Employment and Training Service (VETS) shall mean the 
organizational component of the Department of Labor administered by the 
Assistant Secretary of Labor for Veterans' Employment and Training 
established to promulgate and administer policies

[[Page 1111]]

and regulations to provide eligible veterans and eligible persons the 
maximum of employment and training opportunities according to 38 U.S.C. 
2002.

[49 FR 12919, Mar. 30, 1984. Redesignated and amended at 54 FR 39353, 
Sept. 26, 1989]



                   Subpart B_Federal Responsibilities



Sec. 1001.110  Role of the Assistant Secretary for Veterans' Employment 
and Training (ASVET).

    (a) As the principal veterans' advisor to the Secretary of Labor, 
the ASVET shall formulate, promulgate, and administer policies, 
regulations, grant procedures, grant agreements and administrative 
guidelines and administer them through the Veterans' Employment and 
Training Service (VETS) so as to provide eligible veterans and eligible 
persons the maximum of employment and training opportunities, with 
priority given to the needs of disabled veterans and veterans of the 
Vietnam era, through existing programs, coordination, and merger of 
programs and implementation of new programs.
    (b) ASVET shall oversee activities carried out by State agencies 
pursuant to 38 U.S.C., chapters 41 and 42.
    (c) ASVET shall ensure that appropriate records and reports are 
maintained by State agencies within their management information systems 
to fulfill their obligations under this subpart.

[49 FR 12919, Mar. 30, 1984. Redesignated at 54 FR 39353, Sept. 26, 
1989]



 Subpart C_Standards of Performance Governing State Agency Services to 
                      Veterans and Eligible Persons

    Source: 49 FR 12919, Mar. 30, 1984, unless otherwise noted. 
Redesignated at 54 FR 39353, Sept. 26, 1989.



Sec. 1001.120  Standards of performance governing State agency services.

    (a) To the extent required by 38 U.S.C. 2002 and other applicable 
law, each State agency shall assure that all of its SDPs, using LVERs 
and other staff, shall provide maximum employment and training 
opportunities to eligible veterans and eligible persons with priority 
given to disabled veterans and veterans of the Vietnam-era, by giving 
them preference over non-veterans in the provision of employment and 
training services available at the SDP involved. Services are those 
activities or efforts including but not limited to registration, 
counseling, referral to supportive services, job development, etc., 
which are directed to help applicants find jobs or training. When making 
referrals from the group of applicants meeting the specific eligibility 
criteria for a particular program, State agencies shall observe the 
priority order to referral in paragraph (b).
    (b) In making referrals of qualified applicants to job openings and 
training opportunities, to provide maximum employment and training 
opportunities under 38 U.S.C., SDPs shall observe the following order of 
priority:
    (1) Special disabled veterans;
    (2) Veterans of the Vietnam era;
    (3) Disabled veterans other than special disabled veterans;
    (4) All other veterans and eligible persons; and
    (5) Nonveterans.



Sec. 1001.121  Performance standard on facilities and support for 
Veterans' Employment and Training Service (VETS) staff.

    Each State agency shall provide adequate and appropriate facilities 
and administrative support such as office space, furniture, telephone, 
equipment, and supplies to VETS staff.



Sec. 1001.122  Reporting and budget requirements.

    (a) State agencies shall provide RDVETS, SDVETS, and ASDVETS with 
access to regular and special internal State agency reports which relate 
in whole or in part with services to veterans and/or eligible persons.
    (b) Each State agency shall make reports and prepare budgets 
pursuant to instructions issued by the ASVET and in such format as the 
ASVET shall prescribe.

[[Page 1112]]



Sec. 1001.123  Performance standards governing the assignment and role 
of Local Veterans' Employment Representatives (LVERs).

    (a) To carry out the requirements of 38 U.S.C. 2004, at least one 
member of each State agency staff, preferably an eligible veteran, shall 
be designated and assigned by each State agency administrator as a full-
time or part-time LVER in each SDP in accordance with terms/requirements 
of a grant agreement approved by the ASVET. The ASVET intends to use the 
following criteria in establishing the terms and requirements of grant 
agreements:
    (1) At least one full-time LVER shall be assigned in each SDP which 
has had 1,000 new or renewed applications from veterans and eligible 
persons during the most recent twelve-month report period unless a 
waiver based on demonstrated lack of need is granted by the ASVET, and
    (2) At least one part-time LVER whose time shall be devoted to 
veterans' services in proportion to the full-time criteria shall be 
assigned to each SDP not meeting the criteria for full-time LVERs in 
paragraph (a)(1) of this section.
    (b) Additional full-time or part-time LVERs may be assigned based on 
a determination of need by the State agency administrator and in 
accordance with terms/requirements of a grant agreement approved by the 
ASVET.
    (c) Each LVER shall perform, at the SDP level, the duties prescribed 
at 38 U.S.C. 2003(c) required by 38 U.S.C. 2004.

[49 FR 12919, Mar. 30, 1984. Redesignated and amended at 54 FR 39353, 
Sept. 26, 1989]



Sec. 1001.124  Standards of performance governing State agency 
cooperation and coordination with other agencies and organizations.

    (a) Each State agency shall establish cooperative working 
relationships through written agreements with the Veterans 
Administration (VA) offices serving the State to maximize the use of VA 
employment and training programs for veterans and eligible persons.
    (b) All programs and activities governed by this subpart will be 
coordinated to the maximum extent feasible with other programs and 
activities under 38 U.S.C., the Wagner-Peyser Act, the Job Training 
Partnership Act, and other employment and training programs at the State 
and local level.
    (c) Such relationships or agreements may be described in the 
Governor's Coordination and Special Services Plan prepared according to 
section 121(b) of the Job Training Partnership Act (Pub. L. 97-300).



Sec. 1001.125  Standards of performance governing complaints of veterans 
and eligible persons.

    Each SDP shall display information on the various complaint systems 
to advise veterans and eligible persons about procedures for filing 
employment service, Federal contractor, equal opportunity, and other 
complaints.



          Subpart D_State Employment Service Agency Compliance



Sec. 1001.130  Determination of compliance.

    (a) The ASVET shall have authority for applying the requirements and 
remedial actions necessary to implement 20 CFR part 658, subpart H. In 
the event of such application, references in 20 CFR part 658, subpart H, 
to ``ETA'' shall read instead ``OASVET''; references to ``Regional 
Administrator'' shall read instead ``RDVETS''; and references to ``JS 
regulations'' shall include this part.
    (b) The ASVET shall establish appropriate program and management 
measurement and appraisal mechanisms to ensure that the standards of 
performance set forth in Sec. Sec. 1001.120-1001.125 of this part are 
met. Specific performance standards designed to measure State agency 
services provided to veterans and eligible persons required by Sec. 
1001.120(a) of this part will be developed administratively through 
negotiations between State agency administrators and SDVETS and 
numerical values of the standards will be published as public notices in 
the Federal Register. A full report of those State agencies in 
noncompliance with the standards of performance and their corrective 
action plans shall be incorporated into the Secretary's annual report to 
the Congress cited at Sec. 1001.131 of this part.

[[Page 1113]]

    (c) Every effort should be made by the State agency administrator 
and the SDVETS to resolve all issues informally before proceeding with 
the formal process.
    (d) If it is determined by the ASVET that certain State agencies are 
not complying with the performance standards at Sec. Sec. 1001.120-
1001.125 of this part, such State agencies shall be required to provide 
documentary evidence to the ASVET that their failure is based on good 
cause. If good cause is not shown, the ASVET, pursuant to subpart H of 
20 CFR part 658, shall formally designate the State agency as out of 
compliance, shall require it to submit a corrective action plan for the 
following program year, and may take other action against the State 
agency pursuant to subpart H of 20 CFR part 658.

[49 FR 12919, Mar. 30, 1984. Redesignated and amended at 54 FR 39353, 
Sept. 26, 1989]



Sec. 1001.131  Secretary's annual report to Congress.

    The Secretary shall report, after the end of each program year, on 
the success of the Department and State agencies in carrying out the 
provisions of this part.

[49 FR 12919, Mar. 30, 1984. Redesignated at 54 FR 39353, Sept. 26, 
1989, and amended at 54 FR 39354, Sept. 26, 1989]



   Subpart E_Standards of Performance Governing the Disabled Veterans 
                         Outreach Program (DVOP)

    Source: 49 FR 12919, Mar. 30, 1984, unless otherwise noted. 
Redesignated at 54 FR 39353, Sept. 26, 1989.



Sec. 1001.140  Administration of DVOP.

    (a) The ASVET shall negotiate and enter into grant agreements within 
each State to carry out the requirements of 38 U.S.C. 2003A for support 
of a Disabled Veterans Outreach Program (DVOP) to meet the employment 
needs of veterans, especially disabled veterans of the Vietnam era.
    (b) The ASVET shall be responsible forthe supervision and monitoring 
of the DVOP program, including monitoring of the appointment of DVOP 
specialists.
    (c) DVOP specialists shall be in addition to and shall not supplant 
local veterans' employment representatives assigned under Sec. 1001.123 
of this part.

[49 FR 12919, Mar. 30, 1984. Redesignated at 54 FR 39353, Sept. 26, 
1989, and amended at 54 FR 39354, Sept. 26, 1989]



Sec. 1001.141  Functions of DVOP staff.

    Each DVOP specialist shall carry out the duties and functions for 
providing services to eligible veterans according to provisions of 38 
U.S.C. 2003A (b) and (c).



Sec. 1001.142  Stationing of DVOP staff.

    DVOP specialists shall be stationed at various locations in 
accordance with 38 U.S.C. 2003A(b)(2).



  Subpart F_Formula for the Allocation of Grant Funds to State Agencies

    Source: 70 FR 28406, May 17, 2005, unless otherwise noted.



Sec. 1001.150  Method of calculating State basic grant awards.

    (a) In determining the amount of funds available to each State, the 
ratio of the number of veterans seeking employment in the State to the 
number of veterans seeking employment in all States will be used.
    (b) The number of veterans seeking employment will be determined 
based on the number of veterans in the civilian labor force and the 
number of unemployed persons. The civilian labor force data will be 
obtained from the Current Population Survey (CPS) and the unemployment 
data will be obtained from the Local Area Unemployment Statistics 
(LAUS), both of which are compiled by the Department of Labor's Bureau 
of Labor Statistics.
    (c) Each State's basic grant allocation will be determined by 
dividing the number of unemployed persons in each State by the number of 
unemployed persons across all States (LAUS for the individual States / 
LAUS for all States) and by dividing the number of veterans in the 
civilian labor force in each State

[[Page 1114]]

by the number of veterans in the civilian labor force across all States 
(CPS for the individual States / CPS for all States). The result of 
these two ratios will be averaged and converted to a percentage of 
veterans seeking employment in the State compared to the percentage of 
veterans seeking employment in all States. Three-year averages of the 
CPS and LAUS data will be used in calculating the funding formula to 
stabilize the effect of annual fluctuations in the data in order to 
avoid undue fluctuations in the annual basic grant amounts allocated to 
States.
    (d) State Plans are prepared in response to estimated basic grant 
allocation amounts prepared by the Department of Labor, based upon a 
projection of the appropriation. Variations from Department of Labor 
projections will be treated as follows:
    (1) If the actual appropriation varies from the projection, the 
Secretary will make every reasonable effort to avoid recalculating the 
estimated basic grant allocation amounts, in order to maintain the 
delivery of services to veterans and to minimize the administrative 
workload required to recalculate grant allocations and to revise State 
Plans. Therefore upon enactment and allotment of an appropriated amount, 
it is the Department's intent to proceed by awarding the estimated basic 
grant allocation amounts to State agencies, unless the difference 
between the projection and the appropriation creates a compelling reason 
to do otherwise.
    (2) If the actual appropriation exceeds the projection, the 
Secretary will determine whether the appropriation and the projection is 
large enough to warrant recalculating the State basic grant amounts. In 
such case, state basic grant amounts will be recalculated in accordance 
with paragraphs (a) through (c) of this section. If it is determined 
that no compelling reason to recalculate exists, the increased amount 
available for basic grants will be retained as undistributed funds. 
These undistributed basic grant funds will be retained separately from 
the funds retained for TAP workload and other exigencies, as established 
by Sec. 1001.151(a). The intent will be to award these undistributed 
basic grant funds to States as basic grant supplements, in response to 
circumstances arising during the applicable fiscal year.
    (3) If the actual appropriation falls below the projection, the 
Secretary will determine whether the lower appropriation creates a 
compelling reason to recalculate the State basic grant amounts. If it is 
determined that not recalculating the State basic grant amounts would 
jeopardize the availability of sufficient funding for TAP workload and 
other exigencies, a compelling reason to recalculate would exist. In 
that case, the State basic grant amounts will be recalculated under 
paragraphs (a) through (c) of this section in response to the reduced 
appropriation, to the extent required to assure that sufficient funding 
is available for TAP workload and other exigencies.



Sec. 1001.151  Other funding criteria.

    (a) Up to four percent of the total amount available for allocation 
will be available for distribution based on Transition Assistance 
Program (TAP) workload and other exigencies.
    (b) Funding for TAP workshops will be allocated on a per workshop 
basis. Funding to the States will be provided pursuant to the approved 
State Plan.
    (c) Funds for exigent circumstances, such as unusually high levels 
of unemployment, surges in the demand for transitioning services, 
including the need for TAP workshops, will be allocated based on need.



Sec. 1001.152  Hold-harmless criteria and minimum funding level.

    (a) A hold-harmless rate of 90 percent of the prior year's funding 
level will be applied after the funding formula phase-in period is 
completed (beginning fiscal year 2006 and subsequent years).
    (b) A hold-harmless rate of 80 percent of the prior year's funding 
level will be applied for fiscal year 2005.
    (c) A minimum funding level is established to ensure that in any 
year, no State will receive less than 0.28 percent (.0028) of the 
previous year's total funding for all States.
    (d) If the appropriation for a given fiscal year does not provide 
sufficient funds to comply with the hold-harmless provision, the 
Department will:

[[Page 1115]]

    (1) Update, as appropriate, the States' estimates of TAP workload 
and reserve sufficient funds for that purpose from the total amount 
available for allocation to the States. Beyond TAP workload, no funds 
will be reserved for exigent circumstances because the shortfall in the 
appropriation will be the primary exigent circumstance to be addressed.
    (2) Apply proportionally the remaining balance available for basic 
grant allocations to the States for that fiscal year. The proportion 
will be calculated by dividing the remaining balance available for 
allocation by the total estimated State basic grant allocations for that 
fiscal year. The proportion resulting from that calculation will be 
applied to each State's estimated basic grant allocation to calculate 
the amount to be awarded.



PART 1002_REGULATIONS UNDER THE UNIFORMED SERVICES EMPLOYMENT AND 
REEMPLOYMENT RIGHTS ACT OF 1994--Table of Contents




 Subpart A_Introduction to the Regulations Under the Uniformed Services 
             Employment and Reemployment Rights Act of 1994

                           General Provisions

Sec.
1002.1 What is the purpose of this part?
1002.2 Is USERRA a new law?
1002.3 When did USERRA become effective?
1002.4 What is the role of the Secretary of Labor under USERRA?
1002.5 What definitions apply to USERRA?
1002.6 What types of service in the uniformed services are covered by 
          USERRA?
1002.7 How does USERRA relate to other laws, public and private 
          contracts, and employer practices?

           Subpart B_Anti-Discrimination and Anti-Retaliation

         Protection From Employer Discrimination and Retaliation

1002.18 What status or activity is protected from employer 
          discrimination by USERRA?
1002.19 What activity is protected from employer retaliation by USERRA?
1002.20 Does USERRA protect an individual who does not actually perform 
          service in the uniformed services?
1002.21 Do the Act's prohibitions against discrimination and retaliation 
          apply to all employment positions?
1002.22 Who has the burden of proving discrimination or retaliation in 
          violation of USERRA?
1002.23 What must the individual show to carry the burden of proving 
          that the employer discriminated or retaliated against him or 
          her?

                 Subpart C_Eligibility for Reemployment

            General Eligibility Requirements for Reemployment

1002.32 What criteria must the employee meet to be eligible under USERRA 
          for reemployment after service in the uniformed services?
1002.33 Does the employee have to prove that the employer discriminated 
          against him or her in order to be eligible for reemployment?

                   Coverage of Employers and Positions

1002.34 Which employers are covered by USERRA?
1002.35 Is a successor in interest an employer covered by USERRA?
1002.36 Can an employer be liable as a successor in interest if it was 
          unaware that an employee may claim reemployment rights when 
          the employer acquired the business?
1002.37 Can one employee be employed in one job by more than one 
          employer?
1002.38 Can a hiring hall be an employer?
1002.39 Are States (and their political subdivisions), the District of 
          Columbia, the Commonwealth of Puerto Rico, and United States 
          territories, considered employers?
1002.40 Does USERRA protect against discrimination in initial hiring 
          decisions?
1002.41 Does an employee have rights under USERRA even though he or she 
          holds a temporary, part-time, probationary, or seasonal 
          employment position?
1002.42 What rights does an employee have under USERRA if he or she is 
          on layoff, on strike, or on a leave of absence?
1002.43 Does an individual have rights under USERRA even if he or she is 
          an executive, managerial, or professional employee?
1002.44 Does USERRA cover an independent contractor?

              Coverage of Service in the Uniformed Services

1002.54 Are all military fitness examinations considered ``service in 
          the uniformed services?''
1002.55 Is all funeral honors duty considered ``service in the uniformed 
          services?''

[[Page 1116]]

1002.56 What types of service in the National Disaster Medical System 
          are considered ``service in the uniformed services?''
1002.57 Is all service as a member of the National Guard considered 
          ``service in the uniformed services?''
1002.58 Is service in the commissioned corps of the Public Health 
          Service considered ``service in the uniformed services?''
1002.59 Are there any circumstances in which special categories of 
          persons are considered to perform ``service in the uniformed 
          services?''
1002.60 Does USERRA cover an individual attending a military service 
          academy?
1002.61 Does USERRA cover a member of the Reserve Officers Training 
          Corps?
1002.62 Does USERRA cover a member of the Commissioned Corps of the 
          National Oceanic and Atmospheric Administration, the Civil Air 
          Patrol, or the Coast Guard Auxiliary?

Absence From a Position of Employment Necessitated by Reason of Service 
                        in the Uniformed Services

1002.73 Does service in the uniformed services have to be an employee's 
          sole reason for leaving an employment position in order to 
          have USERRA reemployment rights?
1002.74 Must the employee begin service in the uniformed services 
          immediately after leaving his or her employment position in 
          order to have USERRA reemployment rights?

                          Requirement of Notice

1002.85 Must the employee give advance notice to the employer of his or 
          her service in the uniformed services?
1002.86 When is the employee excused from giving advance notice of 
          service in the uniformed services?
1002.87 Is the employee required to get permission from his or her 
          employer before leaving to perform service in the uniformed 
          services?
1002.88 Is the employee required to tell his or her civilian employer 
          that he or she intends to seek reemployment after completing 
          uniformed service before the employee leaves to perform 
          service in the uniformed services?

                            Period of Service

1002.99 Is there a limit on the total amount of service in the uniformed 
          services that an employee may perform and still retain 
          reemployment rights with the employer?
1002.100 Does the five-year service limit include all absences from an 
          employment position that are related to service in the 
          uniformed services?
1002.101 Does the five-year service limit include periods of service 
          that the employee performed when he or she worked for a 
          previous employer?
1002.102 Does the five-year service limit include periods of service 
          that the employee performed before USERRA was enacted?
1002.103 Are there any types of service in the uniformed services that 
          an employee can perform that do not count against USERRA's 
          five-year service limit?
1002.104 Is the employee required to accommodate his or her employer's 
          needs as to the timing, frequency or duration of service?

                      Application for Reemployment

1002.115 Is the employee required to report to or submit a timely 
          application for reemployment to his or her pre-service 
          employer upon completing the period of service in the 
          uniformed services?
1002.116 Is the time period for reporting back to an employer extended 
          if the employee is hospitalized for, or convalescing from, an 
          illness or injury incurred in, or aggravated during, the 
          performance of service?
1002.117 Are there any consequences if the employee fails to report for 
          or submit a timely application for reemployment?
1002.118 Is an application for reemployment required to be in any 
          particular form?
1002.119 To whom must the employee submit the application for 
          reemployment?
1002.120 If the employee seeks or obtains employment with an employer 
          other than the pre-service employer before the end of the 
          period within which a reemployment application must be filed, 
          will that jeopardize reemployment rights with the pre-service 
          employer?
1002.121 Is the employee required to submit documentation to the 
          employer in connection with the application for reemployment?
1002.122 Is the employer required to reemploy the employee if 
          documentation establishing the employee's eligibility does not 
          exist or is not readily available?
1002.123 What documents satisfy the requirement that the employee 
          establish eligibility for reemployment after a period of 
          service of more than thirty days?

                          Character of Service

1002.134 What type of discharge or separation from service is required 
          for an employee to be entitled to reemployment under USERRA?
1002.135 What types of discharge or separation from uniformed service 
          will make the employee ineligible for reemployment under 
          USERRA?

[[Page 1117]]

1002.136 Who determines the characterization of service?
1002.137 If the employee receives a disqualifying discharge or release 
          from uniformed service and it is later upgraded, will 
          reemployment rights be restored?
1002.138 If the employee receives a retroactive upgrade in the 
          characterization of service, will that entitle him or her to 
          claim back wages and benefits lost as of the date of 
          separation from service?

                       Employer Statutory Defenses

1002.139 Are there any circumstances in which the pre-service employer 
          is excused from its obligation to reemploy the employee 
          following a period of uniformed service? What statutory 
          defenses are available to the employer in an action or 
          proceeding for reemployment benefits?

   Subpart D_Rights, Benefits, and Obligations of Persons Absent from 
           Employment Due to Service in the Uniformed Services

                Furlough and Leave of Absence

1002.149 What is the employee's status with his or her civilian employer 
          while performing service in the uniformed services?
1002.150 Which non-seniority rights and benefits is the employee 
          entitled to during a period of service?
1002.151 If the employer provides full or partial pay to the employee 
          while he or she is on military leave, is the employer required 
          to also provide the non-seniority rights and benefits 
          ordinarily granted to similarly situated employees on furlough 
          or leave of absence?
1002.152 If employment is interrupted by a period of service in the 
          uniformed services, are there any circumstances under which 
          the employee is not entitled to the non-seniority rights and 
          benefits ordinarily granted to similarly situated employees on 
          furlough or leave of absence?
1002.153 If employment is interrupted by a period of service in the 
          uniformed services, is the employee permitted upon request to 
          use accrued vacation, annual or similar leave with pay during 
          the service? Can the employer require the employee to use 
          accrued leave during a period of service?

                          Health Plan Coverage

1002.163 What types of health plans are covered by USERRA?
1002.164 What health plan coverage must the employer provide for the 
          employee under USERRA?
1002.165 How does the employee elect continuing health plan coverage?
1002.166 How much must the employee pay in order to continue health plan 
          coverage?
1002.167 What actions may a plan administrator take if the employee does 
          not elect or pay for continuing coverage in a timely manner?
1002.168 If the employee's coverage was terminated at the beginning of 
          or during service, does his or her coverage have to be 
          reinstated upon reemployment?
1002.169 Can the employee elect to delay reinstatement of health plan 
          coverage until a date after the date he or she is reemployed?
1002.170 In a multiemployer health plan, how is liability allocated for 
          employer contributions and benefits arising under USERRA's 
          health plan provisions?
1002.171 How does the continuation of health plan benefits apply to a 
          multiemployer plan that provides health plan coverage through 
          a health benefits account system?

               Subpart E_Reemployment Rights and Benefits

                           Prompt Reemployment

1002.180 When is an employee entitled to be reemployed by his or her 
          civilian employer?
1002.181 How is ``prompt reemployment'' defined?

                          Reemployment Position

1002.191 What position is the employee entitled to upon reemployment?
1002.192 How is the specific reemployment position determined?
1002.193 Does the reemployment position include elements such as 
          seniority, status, and rate of pay?
1002.194 Can the application of the escalator principle result in 
          adverse consequences when the employee is reemployed?
1002.195 What other factors can determine the reemployment position?
1002.196 What is the employee's reemployment position if the period of 
          service was less than 91 days?
1002.197 What is the reemployment position if the employee's period of 
          service in the uniformed services was more than 90 days?
1002.198 What efforts must the employer make to help the employee become 
          qualified for the reemployment position?
1002.199 What priority must the employer follow if two or more returning 
          employees are entitled to reemployment in the same position?

[[Page 1118]]

                      Seniority Rights and Benefits

1002.210 What seniority rights does an employee have when reemployed 
          following a period of uniformed service?
1002.211 Does USERRA require the employer to use a seniority system?
1002.212 How does a person know whether a particular right or benefit is 
          a seniority-based right or benefit?
1002.213 How can the employee demonstrate a reasonable certainty that he 
          or she would have received the seniority right or benefit if 
          he or she had remained continuously employed during the period 
          of service?

                           Disabled Employees

1002.225 Is the employee entitled to any specific reemployment benefits 
          if he or she has a disability that was incurred in, or 
          aggravated during, the period of service?
1002.226 If the employee has a disability that was incurred in, or 
          aggravated during, the period of service, what efforts must 
          the employer make to help him or her become qualified for the 
          reemployment position?

                               Rate of Pay

1002.236 How is the employee's rate of pay determined when he or she 
          returns from a period of service?

                      Protection Against Discharge

1002.247 Does USERRA provide the employee with protection against 
          discharge?
1002.248 What constitutes cause for discharge under USERRA?

                          Pension Plan Benefits

1002.259 How does USERRA protect an employee's pension benefits?
1002.260 What pension benefit plans are covered under USERRA?
1002.261 Who is responsible for funding any plan obligation to provide 
          the employee with pension benefits?
1002.262 When is the employer required to make the plan contribution 
          that is attributable to the employee's period of uniformed 
          service?
1002.263 Does the employee pay interest when he or she makes up missed 
          contributions or elective deferrals?
1002.264 Is the employee allowed to repay a previous distribution from a 
          pension benefits plan upon being reemployed?
1002.265 If the employee is reemployed with his or her pre-service 
          employer, is the employee's pension benefit the same as if he 
          or she had remained continuously employed?
1002.266 What are the obligations of a multiemployer pension benefit 
          plan under USERRA?
1002.267 How is compensation during the period of service calculated in 
          order to determine the employee's pension benefits, if 
          benefits are based on compensation?

        Subpart F_Compliance Assistance, Enforcement and Remedies

                          Compliance Assistance

1002.277 What assistance does the Department of Labor provide to 
          employees and employers concerning employment, reemployment, 
          or other rights and benefits under USERRA?

                       Investigation and Referral

1002.288 How does an individual file a USERRA complaint?
1002.289 How will VETS investigate a USERRA complaint?
1002.290 Does VETS have the authority to order compliance with USERRA?
1002.291 What actions may an individual take if the complaint is not 
          resolved by VETS?
1002.292 What can the Attorney General do about the complaint?

 Enforcement of Rights and Benefits Against a State or Private Employer

1002.303 Is an individual required to file his or her complaint with 
          VETS?
1002.304 If an individual files a complaint with VETS and VETS' efforts 
          do not resolve the complaint, can the individual pursue the 
          claim on his or her own?
1002.305 What court has jurisdiction in an action against a State or 
          private employer?
1002.306 Is a National Guard civilian technician considered a State or 
          Federal employee for purposes of USERRA?
1002.307 What is the proper venue in an action against a State or 
          private employer?
1002.308 Who has legal standing to bring an action under USERRA?
1002.309 Who is a necessary party in an action under USERRA?
1002.310 How are fees and court costs charged or taxed in an action 
          under USERRA?
1002.311 Is there a statute of limitations in an action under USERRA?
1002.312 What remedies may be awarded for a violation of USERRA?
1002.313 Are there special damages provisions that apply to actions 
          initiated in the name of the United States?
1002.314 May a court use its equity powers in an action or proceeding 
          under the Act?

Appendix to Part 1002--Notice of Your Rights Under USERRA


[[Page 1119]]


    Authority: Section 4331(a) of the Uniformed Services Employment and 
Reemployment Rights Act of 1994 (USERRA), 38 U.S.C. 4331(a) (Pub. L. 
103-353, 108 Stat. 3150).

    Source: 70 FR 75292, Dec. 19, 2005, unless otherwise noted.



 Subpart A_Introduction to the Regulations Under the Uniformed Services 
             Employment and Reemployment Rights Act of 1994

                           General Provisions



Sec. 1002.1  What is the purpose of this part?

    This part implements the Uniformed Services Employment and 
Reemployment Rights Act of 1994 (``USERRA'' or ``the Act''). 38 U.S.C. 
4301-4334. USERRA is a law that establishes certain rights and benefits 
for employees, and duties for employers. USERRA affects employment, 
reemployment, and retention in employment, when employees serve or have 
served in the uniformed services. There are five subparts to these 
regulations. Subpart A gives an introduction to the USERRA regulations. 
Subpart B describes USERRA's anti-discrimination and anti-retaliation 
provisions. Subpart C explains the steps that must be taken by a 
uniformed service member who wants to return to his or her previous 
civilian employment. Subpart D describes the rights, benefits, and 
obligations of persons absent from employment due to service in the 
uniformed services, including rights and obligations related to health 
plan coverage. Subpart E describes the rights, benefits, and obligations 
of the returning veteran or service member. Subpart F explains the role 
of the Department of Labor in enforcing and giving assistance under 
USERRA. These regulations implement USERRA as it applies to States, 
local governments, and private employers. Separate regulations published 
by the Federal Office of Personnel Management implement USERRA for 
Federal executive agency employers and employees.



Sec. 1002.2  Is USERRA a new law?

    USERRA is the latest in a series of laws protecting veterans' 
employment and reemployment rights going back to the Selective Training 
and Service Act of 1940. USERRA's immediate predecessor was commonly 
referred to as the Veterans' Reemployment Rights Act (VRRA), which was 
enacted as section 404 of the Vietnam Era Veterans' Readjustment 
Assistance Act of 1974. In enacting USERRA, Congress emphasized USERRA's 
continuity with the VRRA and its intention to clarify and strengthen 
that law. Congress also emphasized that Federal laws protecting 
veterans' employment and reemployment rights for the past fifty years 
had been successful and that the large body of case law that had 
developed under those statutes remained in full force and effect, to the 
extent it is consistent with USERRA. USERRA authorized the Department of 
Labor to publish regulations implementing the Act for State, local 
government, and private employers. USERRA also authorized the Office of 
Personnel Management to issue regulations implementing the Act for 
Federal executive agencies (other than some Federal intelligence 
agencies). USERRA established a separate program for employees of some 
Federal intelligence agencies.



Sec. 1002.3  When did USERRA become effective?

    USERRA became law on October 13, 1994. USERRA's reemployment 
provisions apply to members of the uniformed services seeking civilian 
reemployment on or after December 12, 1994. USERRA's anti-discrimination 
and anti-retaliation provisions became effective on October 13, 1994.



Sec. 1002.4  What is the role of the Secretary of Labor under USERRA?

    (a) USERRA charges the Secretary of Labor (through the Veterans' 
Employment and Training Service) with providing assistance to any person 
with respect to the employment and reemployment rights and benefits to 
which such person is entitled under the Act. More information about the 
Secretary's role in providing this assistance is contained in Subpart F.
    (b) USERRA also authorizes the Secretary of Labor to issue 
regulations implementing the Act with respect to

[[Page 1120]]

States, local governments, and private employers. These regulations are 
issued under this authority.
    (c) The Secretary of Labor delegated authority to the Assistant 
Secretary for Veterans' Employment and Training for administering the 
veterans' reemployment rights program by Secretary's Order 1-83 
(February 3, 1983) and for carrying out the functions and authority 
vested in the Secretary pursuant to USERRA by memorandum of April 22, 
2002 (67 FR 31827).



Sec. 1002.5  What definitions apply to USERRA?

    (a) Attorney General means the Attorney General of the United States 
or any person designated by the Attorney General to carry out a 
responsibility of the Attorney General under USERRA.
    (b) Benefit, benefit of employment, or rights and benefits means any 
advantage, profit, privilege, gain, status, account, or interest (other 
than wages or salary for work performed) that accrues to the employee 
because of an employment contract, employment agreement, or employer 
policy, plan, or practice. The term includes rights and benefits under a 
pension plan, health plan, or employee stock ownership plan, insurance 
coverage and awards, bonuses, severance pay, supplemental unemployment 
benefits, vacations, and the opportunity to select work hours or the 
location of employment.
    (c) Employee means any person employed by an employer. The term also 
includes any person who is a citizen, national or permanent resident 
alien of the United States who is employed in a workplace in a foreign 
country by an employer that is an entity incorporated or organized in 
the United States, or that is controlled by an entity organized in the 
United States. ``Employee'' includes the former employees of an 
employer.
    (d)(1) Employer, except as provided in paragraphs (d)(2) and (3) of 
this section, means any person, institution, organization, or other 
entity that pays salary or wages for work performed, or that has control 
over employment opportunities, including--
    (i) A person, institution, organization, or other entity to whom the 
employer has delegated the performance of employment-related 
responsibilities, except in the case that such entity has been delegated 
functions that are purely ministerial in nature, such as maintenance of 
personnel files or the preparation of forms for submission to a 
government agency;
    (ii) The Federal Government;
    (iii) A State;
    (iv) Any successor in interest to a person, institution, 
organization, or other entity referred to in this definition; and,
    (v) A person, institution, organization, or other entity that has 
denied initial employment in violation of 38 U.S.C. 4311, USERRA's anti-
discrimination and anti-retaliation provisions.
    (2) In the case of a National Guard technician employed under 32 
U.S.C. 709, the term ``employer'' means the adjutant general of the 
State in which the technician is employed.
    (3) An employee pension benefit plan as described in section 3(2) of 
the Employee Retirement Income Security Act of 1974 (ERISA)(29 U.S.C. 
1002(2)) is considered an employer for an individual that it does not 
actually employ only with respect to the obligation to provide pension 
benefits.
    (e) Health plan means an insurance policy, insurance contract, 
medical or hospital service agreement, membership or subscription 
contract, or other arrangement under which health services for 
individuals are provided or the expenses of such services are paid.
    (f) National Disaster Medical System (NDMS) is an agency within the 
Federal Emergency Management Agency, Department of Homeland Security, 
established by the Public Health Security and Bioterrorism Preparedness 
and Response Act of 2002, Public Law 107-188. The NDMS provides medical-
related assistance to respond to the needs of victims of public health 
emergencies. Participants in the NDMS are volunteers who serve as 
intermittent Federal employees when activated. For purposes of USERRA 
coverage only, these persons are treated as members of the uniformed 
services when they are activated to provide assistance in response to a 
public health emergency or to be present for a short period of time when 
there is a risk of a public health emergency, or when they are

[[Page 1121]]

participating in authorized training. See 42 U.S.C. 300hh-11(e).
    (g) Notice, when the employee is required to give advance notice of 
service, means any written or verbal notification of an obligation or 
intention to perform service in the uniformed services provided to an 
employer by the employee who will perform such service, or by the 
uniformed service in which the service is to be performed.
    (h) Qualified, with respect to an employment position, means having 
the ability to perform the essential tasks of the position.
    (i) Reasonable efforts, in the case of actions required of an 
employer, means actions, including training provided by an employer that 
do not place an undue hardship on the employer.
    (j) Secretary means the Secretary of Labor or any person designated 
by the Secretary of Labor to carry out an activity under USERRA and 
these regulations, unless a different office is expressly indicated in 
the regulation.
    (k) Seniority means longevity in employment together with any 
benefits of employment that accrue with, or are determined by, longevity 
in employment.
    (l) Service in the uniformed services means the performance of duty 
on a voluntary or involuntary basis in a uniformed service under 
competent authority. Service in the uniformed services includes active 
duty, active and inactive duty for training, National Guard duty under 
Federal statute, and a period for which a person is absent from a 
position of employment for an examination to determine the fitness of 
the person to perform such duty. The term also includes a period for 
which a person is absent from employment to perform funeral honors duty 
as authorized by law (10 U.S.C. 12503 or 32 U.S.C. 115). The Public 
Health Security and Bioterrorism Preparedness and Response Act of 2002, 
Pub. L. 107-188, provides that service as an intermittent disaster-
response appointee upon activation of the National Disaster Medical 
System (NDMS) or as a participant in an authorized training program is 
deemed ``service in the uniformed services.'' 42 U.S.C. 300hh-11(e)(3).
    (m) State means each of the several States of the United States, the 
District of Columbia, the Commonwealth of Puerto Rico, Guam, the Virgin 
Islands, and other territories of the United States (including the 
agencies and political subdivisions thereof); however, for purposes of 
enforcement of rights under 38 U.S.C. 4323, a political subdivision of a 
State is a private employer.
    (n) Undue hardship, in the case of actions taken by an employer, 
means an action requiring significant difficulty or expense, when 
considered in light of--
    (1) The nature and cost of the action needed under USERRA and these 
regulations;
    (2) The overall financial resources of the facility or facilities 
involved in the provision of the action; the number of persons employed 
at such facility; the effect on expenses and resources, or the impact 
otherwise of such action upon the operation of the facility;
    (3) The overall financial resources of the employer; the overall 
size of the business of an employer with respect to the number of its 
employees; the number, type, and location of its facilities; and,
    (4) The type of operation or operations of the employer, including 
the composition, structure, and functions of the work force of such 
employer; the geographic separateness, administrative, or fiscal 
relationship of the facility or facilities in question to the employer.
    (o) Uniformed services means the Armed Forces; the Army National 
Guard and the Air National Guard when engaged in active duty for 
training, inactive duty training, or full-time National Guard duty; the 
commissioned corps of the Public Health Service; and any other category 
of persons designated by the President in time of war or national 
emergency. For purposes of USERRA coverage only, service as an 
intermittent disaster response appointee of the NDMS when federally 
activated or attending authorized training in support of their Federal 
mission is deemed ``service in the uniformed services,'' although such 
appointee is not a member of the ``uniformed services'' as defined by 
USERRA.

[[Page 1122]]



Sec. 1002.6  What types of service in the uniformed services are 
covered by USERRA?

    USERRA's definition of ``service in the uniformed services'' covers 
all categories of military training and service, including duty 
performed on a voluntary or involuntary basis, in time of peace or war. 
Although most often understood as applying to National Guard and reserve 
military personnel, USERRA also applies to persons serving in the active 
components of the Armed Forces. Certain types of service specified in 42 
U.S.C. 300hh-11 by members of the National Disaster Medical System are 
covered by USERRA.



Sec. 1002.7  How does USERRA relate to other laws, public and private 
contracts, and employer practices?

    (a) USERRA establishes a floor, not a ceiling, for the employment 
and reemployment rights and benefits of those it protects. In other 
words, an employer may provide greater rights and benefits than USERRA 
requires, but no employer can refuse to provide any right or benefit 
guaranteed by USERRA.
    (b) USERRA supersedes any State law (including any local law or 
ordinance), contract, agreement, policy, plan, practice, or other matter 
that reduces, limits, or eliminates in any manner any right or benefit 
provided by USERRA, including the establishment of additional 
prerequisites to the exercise of any USERRA right or the receipt of any 
USERRA benefit. For example, an employment contract that determines 
seniority based only on actual days of work in the place of employment 
would be superseded by USERRA, which requires that seniority credit be 
given for periods of absence from work due to service in the uniformed 
services.
    (c) USERRA does not supersede, nullify or diminish any Federal or 
State law (including any local law or ordinance), contract, agreement, 
policy, plan, practice, or other matter that establishes an employment 
right or benefit that is more beneficial than, or is in addition to, a 
right or benefit provided under the Act. For example, although USERRA 
does not require an employer to pay an employee for time away from work 
performing service, an employer policy, plan, or practice that provides 
such a benefit is permissible under USERRA.
    (d) If an employer provides a benefit that exceeds USERRA's 
requirements in one area, it cannot reduce or limit other rights or 
benefits provided by USERRA. For example, even though USERRA does not 
require it, an employer may provide a fixed number of days of paid 
military leave per year to employees who are members of the National 
Guard or Reserve. The fact that it provides such a benefit, however, 
does not permit an employer to refuse to provide an unpaid leave of 
absence to an employee to perform service in the uniformed services in 
excess of the number of days of paid military leave.



           Subpart B_Anti-Discrimination and Anti-Retaliation

         Protection From Employer Discrimination and Retaliation



Sec. 1002.18  What status or activity is protected from employer 
discrimination by USERRA?

    An employer must not deny initial employment, reemployment, 
retention in employment, promotion, or any benefit of employment to an 
individual on the basis of his or her membership, application for 
membership, performance of service, application for service, or 
obligation for service in the uniformed services.



Sec. 1002.19  What activity is protected from employer retaliation by 
USERRA?

    An employer must not retaliate against an individual by taking any 
adverse employment action against him or her because the individual has 
taken an action to enforce a protection afforded any person under 
USERRA; testified or otherwise made a statement in or in connection with 
a proceeding under USERRA; assisted or participated in a USERRA 
investigation: or, exercised a right provided for by USERRA.

[[Page 1123]]



Sec. 1002.20  Does USERRA protect an individual who does not actually 
perform service in the uniformed services?

    Yes. Employers are prohibited from taking actions against an 
individual for any of the activities protected by the Act, whether or 
not he or she has performed service in the uniformed services.



Sec. 1002.21  Do the Act's prohibitions against discrimination and 
retaliation apply to all employment positions?

    The prohibitions against discrimination and retaliation apply to all 
covered employers (including hiring halls and potential employers, see 
sections 1002.36 and .38) and employment positions, including those that 
are for a brief, nonrecurrent period, and for which there is no 
reasonable expectation that the employment position will continue 
indefinitely or for a significant period. However, USERRA's reemployment 
rights and benefits do not apply to such brief, nonrecurrent positions 
of employment.



Sec. 1002.22  Who has the burden of proving discrimination or 
retaliation in violation of USERRA?

    The individual has the burden of proving that a status or activity 
protected by USERRA was one of the reasons that the employer took action 
against him or her, in order to establish that the action was 
discrimination or retaliation in violation of USERRA. If the individual 
succeeds in proving that the status or activity protected by USERRA was 
one of the reasons the employer took action against him or her, the 
employer has the burden to prove the affirmative defense that it would 
have taken the action anyway.



Sec. 1002.23  What must the individual show to carry the burden of 
proving that the employer discriminated or retaliated against him or her?

    (a) In order to prove that the employer discriminated or retaliated 
against the individual, he or she must first show that the employer's 
action was motivated by one or more of the following:
    (1) Membership or application for membership in a uniformed service;
    (2) Performance of service, application for service, or obligation 
for service in a uniformed service;
    (3) Action taken to enforce a protection afforded any person under 
USERRA;
    (4) Testimony or statement made in or in connection with a USERRA 
proceeding;
    (5) Assistance or participation in a USERRA investigation; or,
    (6) Exercise of a right provided for by USERRA.
    (b) If the individual proves that the employer's action was based on 
one of the prohibited motives listed in paragraph (a) of this section, 
the employer has the burden to prove the affirmative defense that the 
action would have been taken anyway absent the USERRA-protected status 
or activity.



                 Subpart C_Eligibility For Reemployment

            General Eligibility Requirements for Reemployment



Sec. 1002.32  What criteria must the employee meet to be eligible under 
USERRA for reemployment after service in the uniformed services?

    (a) In general, if the employee has been absent from a position of 
civilian employment by reason of service in the uniformed services, he 
or she will be eligible for reemployment under USERRA by meeting the 
following criteria:
    (1) The employer had advance notice of the employee's service;
    (2) The employee has five years or less of cumulative service in the 
uniformed services in his or her employment relationship with a 
particular employer;
    (3) The employee timely returns to work or applies for reemployment; 
and,
    (4) The employee has not been separated from service with a 
disqualifying discharge or under other than honorable conditions.
    (b) These general eligibility requirements have important 
qualifications and exceptions, which are described in detail in 
Sec. Sec. 1002.73 through 1002.138. If the employee meets these 
eligibility criteria, then he or she is eligible for

[[Page 1124]]

reemployment unless the employer establishes one of the defenses 
described in Sec. 1002.139. The employment position to which the 
employee is entitled is described in Sec. Sec. 1002.191 through 
1002.199.



Sec. 1002.33  Does the employee have to prove that the employer 
discriminated against him or her in order to be eligible for reemployment?

    No. The employee is not required to prove that the employer 
discriminated against him or her because of the employee's uniformed 
service in order to be eligible for reemployment.

                   Coverage of Employers and Positions



Sec. 1002.34  Which employers are covered by USERRA?

    (a) USERRA applies to all public and private employers in the United 
States, regardless of size. For example, an employer with only one 
employee is covered for purposes of the Act.
    (b) USERRA applies to foreign employers doing business in the United 
States. A foreign employer that has a physical location or branch in the 
United States (including U.S. territories and possessions) must comply 
with USERRA for any of its employees who are employed in the United 
States.
    (c) An American company operating either directly or through an 
entity under its control in a foreign country must also comply with 
USERRA for all its foreign operations, unless compliance would violate 
the law of the foreign country in which the workplace is located.



Sec. 1002.35  Is a successor in interest an employer covered by USERRA?

    USERRA's definition of ``employer'' includes a successor in 
interest. In general, an employer is a successor in interest where there 
is a substantial continuity in operations, facilities, and workforce 
from the former employer. The determination whether an employer is a 
successor in interest must be made on a case-by-case basis using a 
multi-factor test that considers the following:
    (a) Whether there has been a substantial continuity of business 
operations from the former to the current employer;
    (b) Whether the current employer uses the same or similar 
facilities, machinery, equipment, and methods of production;
    (c) Whether there has been a substantial continuity of employees;
    (d) Whether there is a similarity of jobs and working conditions;
    (e) Whether there is a similarity of supervisors or managers; and,
    (f) Whether there is a similarity of products or services.



Sec. 1002.36  Can an employer be liable as a successor in interest if 
it was unaware that an employee may claim reemployment rights when the 
employer acquired the business?

    Yes. In order to be a successor in interest, it is not necessary for 
an employer to have notice of a potential reemployment claim at the time 
of merger, acquisition, or other form of succession.



Sec. 1002.37  Can one employee be employed in one job by more than one 
employer?

    Yes. Under USERRA, an employer includes not only the person or 
entity that pays an employee's salary or wages, but also includes a 
person or entity that has control over his or her employment 
opportunities, including a person or entity to whom an employer has 
delegated the performance of employment-related responsibilities. For 
example, if the employee is a security guard hired by a security company 
and he or she is assigned to a work site, the employee may report both 
to the security company and to the site owner. In such an instance, both 
employers share responsibility for compliance with USERRA. If the 
security company declines to assign the employee to a job because of a 
uniformed service obligation (for example, National Guard duties), then 
the security company could be in violation of the reemployment 
requirements and the anti-discrimination provisions of USERRA. 
Similarly, if the employer at the work site causes the employee's 
removal from the job position because of his or her uniformed service 
obligations, then the work site employer could be in violation of the 
reemployment requirements and the anti-discrimination provisions of 
USERRA.

[[Page 1125]]



Sec. 1002.38  Can a hiring hall be an employer?

    Yes. In certain occupations (for example, longshoreman, stagehand, 
construction worker), the employee may frequently work for many 
different employers. A hiring hall operated by a union or an employer 
association typically assigns the employee to the jobs. In these 
industries, it may not be unusual for the employee to work his or her 
entire career in a series of short-term job assignments. The definition 
of ``employer'' includes a person, institution, organization, or other 
entity to which the employer has delegated the performance of 
employment-related responsibilities. A hiring hall therefore is 
considered the employee's employer if the hiring and job assignment 
functions have been delegated by an employer to the hiring hall. As the 
employer, a hiring hall has reemployment responsibilities to its 
employees. USERRA's anti-discrimination and anti-retaliation provisions 
also apply to the hiring hall.



Sec. 1002.39  Are States (and their political subdivisions), the 
District of Columbia, the Commonwealth of Puerto Rico, and United 
States territories, considered employers?

    Yes. States and their political subdivisions, such as counties, 
parishes, cities, towns, villages, and school districts, are considered 
employers under USERRA. The District of Columbia, the Commonwealth of 
Puerto Rico, Guam, the Virgin Islands, and territories of the United 
States, are also considered employers under the Act.



Sec. 1002.40  Does USERRA protect against discrimination in initial 
hiring decisions?

    Yes. The Act's definition of employer includes a person, 
institution, organization, or other entity that has denied initial 
employment to an individual in violation of USERRA's anti-discrimination 
provisions. An employer need not actually employ an individual to be his 
or her ``employer'' under the Act, if it has denied initial employment 
on the basis of the individual's membership, application for membership, 
performance of service, application for service, or obligation for 
service in the uniformed services. Similarly, the employer would be 
liable if it denied initial employment on the basis of the individual's 
action taken to enforce a protection afforded to any person under 
USERRA, his or her testimony or statement in connection with any USERRA 
proceeding, assistance or other participation in a USERRA investigation, 
or the exercise of any other right provided by the Act. For example, if 
the individual has been denied initial employment because of his or her 
obligations as a member of the National Guard or Reserves, the company 
or entity denying employment is an employer for purposes of USERRA. 
Similarly, if an entity withdraws an offer of employment because the 
individual is called upon to fulfill an obligation in the uniformed 
services, the entity withdrawing the employment offer is an employer for 
purposes of USERRA.



Sec. 1002.41  Does an employee have rights under USERRA even though 
he or she holds a temporary, part-time, probationary, or seasonal 
employment position?

    USERRA rights are not diminished because an employee holds a 
temporary, part-time, probationary, or seasonal employment position. 
However, an employer is not required to reemploy an employee if the 
employment he or she left to serve in the uniformed services was for a 
brief, nonrecurrent period and there is no reasonable expectation that 
the employment would have continued indefinitely or for a significant 
period. The employer bears the burden of proving this affirmative 
defense.



Sec. 1002.42  What rights does an employee have under USERRA if he 
or she is on layoff, on strike, or on a leave of absence?

    (a) If an employee is laid off with recall rights, on strike, or on 
a leave of absence, he or she is an employee for purposes of USERRA. If 
the employee is on layoff and begins service in the uniformed services, 
or is laid off while performing service, he or she may be entitled to 
reemployment on return if the employer would have recalled the employee 
to employment during the period of service. Similar principles

[[Page 1126]]

apply if the employee is on strike or on a leave of absence from work 
when he or she begins a period of service in the uniformed services.
    (b) If the employee is sent a recall notice during a period of 
service in the uniformed services and cannot resume the position of 
employment because of the service, he or she still remains an employee 
for purposes of the Act. Therefore, if the employee is otherwise 
eligible, he or she is entitled to reemployment following the conclusion 
of the period of service even if he or she did not respond to the recall 
notice.
    (c) If the employee is laid off before or during service in the 
uniformed services, and the employer would not have recalled him or her 
during that period of service, the employee is not entitled to 
reemployment following the period of service simply because he or she is 
a covered employee. Reemployment rights under USERRA cannot put the 
employee in a better position than if he or she had remained in the 
civilian employment position.



Sec. 1002.43  Does an individual have rights under USERRA even if he 
or she is an executive, managerial, or professional employee?

    Yes. USERRA applies to all employees. There is no exclusion for 
executive, managerial, or professional employees.



Sec. 1002.44  Does USERRA cover an independent contractor?

    (a) No. USERRA does not provide protections for an independent 
contractor.
    (b) In deciding whether an individual is an independent contractor, 
the following factors need to be considered:
    (1) The extent of the employer's right to control the manner in 
which the individual's work is to be performed;
    (2) The opportunity for profit or loss that depends upon the 
individual's managerial skill;
    (3) Any investment in equipment or materials required for the 
individual's tasks, or his or her employment of helpers;
    (4) Whether the service the individual performs requires a special 
skill;
    (5) The degree of permanence of the individual's working 
relationship; and,
    (6) Whether the service the individual performs is an integral part 
of the employer's business.
    (c) No single one of these factors is controlling, but all are 
relevant to determining whether an individual is an employee or an 
independent contractor.

              Coverage of Service in the Uniformed Services



Sec. 1002.54  Are all military fitness examinations considered 
``service in the uniformed services?''

    Yes. USERRA's definition of ``service in the uniformed services'' 
includes a period for which an employee is absent from a position of 
employment for the purpose of an examination to determine his or her 
fitness to perform duty in the uniformed services. Military fitness 
examinations can address more than physical or medical fitness, and 
include evaluations for mental, educational, and other types of fitness. 
Any examination to determine an employee's fitness for service is 
covered, whether it is an initial or recurring examination. For example, 
a periodic medical examination required of a Reserve component member to 
determine fitness for continued service is covered.



Sec. 1002.55  Is all funeral honors duty considered ``service in the 
uniformed services?''

    (a) USERRA's definition of ``service in the uniformed services'' 
includes a period for which an employee is absent from employment for 
the purpose of performing authorized funeral honors duty under 10 U.S.C. 
12503 (members of Reserve ordered to perform funeral honors duty) or 32 
U.S.C. 115 (Member of Air or Army National Guard ordered to perform 
funeral honors duty).
    (b) Funeral honors duty performed by persons who are not members of 
the uniformed services, such as members of veterans' service 
organizations, is not ``service in the uniformed services.''



Sec. 1002.56  What types of service in the National Disaster Medical 
System are considered ``service in the uniformed services?''

    Under a provision of the Public Health Security and Bioterrorism 
Preparedness and Response Act of 2002, 42

[[Page 1127]]

U.S.C. 300hh 11(e)(3), ``service in the uniformed services'' includes 
service performed as an intermittent disaster-response appointee upon 
activation of the National Disaster Medical System or participation in 
an authorized training program, even if the individual is not a member 
of the uniformed services.



Sec. 1002.57  Is all service as a member of the National Guard 
considered ``service in the uniformed services?''

    The National Guard has a dual status. It is a Reserve component of 
the Army, or, in the case of the Air National Guard, of the Air Force. 
Simultaneously, it is a State military force subject to call-up by the 
State Governor for duty not subject to Federal control, such as 
emergency duty in cases of floods or riots. National Guard members may 
perform service under either Federal or State authority, but only 
Federal National Guard service is covered by USERRA.
    (a) National Guard service under Federal authority is protected by 
USERRA. Service under Federal authority includes active duty performed 
under Title 10 of the United States Code. Service under Federal 
authority also includes duty under Title 32 of the United States Code, 
such as active duty for training, inactive duty training, or full-time 
National Guard duty.
    (b) National Guard service under authority of State law is not 
protected by USERRA. However, many States have laws protecting the 
civilian job rights of National Guard members who serve under State 
orders. Enforcement of those State laws is not covered by USERRA or 
these regulations.



Sec. 1002.58  Is service in the commissioned corps of the Public Health 
Service considered ``service in the uniformed services?''

    Yes. Service in the commissioned corps of the Public Health Service 
(PHS) is ``service in the uniformed services'' under USERRA.



Sec. 1002.59  Are there any circumstances in which special categories 
of persons are considered to perform ``service in the uniformed services?''

    Yes. In time of war or national emergency the President has 
authority to designate any category of persons as a ``uniformed 
service'' for purposes of USERRA. If the President exercises this 
authority, service as a member of that category of persons would be 
``service in the uniformed services'' under USERRA.



Sec. 1002.60  Does USERRA cover an individual attending a military 
service academy?

    Yes. Attending a military service academy is considered uniformed 
service for purposes of USERRA. There are four service academies: The 
United States Military Academy (West Point, New York), the United States 
Naval Academy (Annapolis, Maryland), the United States Air Force Academy 
(Colorado Springs, Colorado), and the United States Coast Guard Academy 
(New London, Connecticut).



Sec. 1002.61  Does USERRA cover a member of the Reserve Officers 
Training Corps?

    Yes, under certain conditions.
    (a) Membership in the Reserve Officers Training Corps (ROTC) or the 
Junior ROTC is not ``service in the uniformed services.'' However, some 
Reserve and National Guard enlisted members use a college ROTC program 
as a means of qualifying for commissioned officer status. National Guard 
and Reserve members in an ROTC program may at times, while participating 
in that program, be receiving active duty and inactive duty training 
service credit with their unit. In these cases, participating in ROTC 
training sessions is considered ``service in the uniformed services,'' 
and qualifies a person for protection under USERRA's reemployment and 
anti-discrimination provisions.
    (b) Typically, an individual in a College ROTC program enters into 
an agreement with a particular military service that obligates such 
individual to either complete the ROTC program and accept a commission 
or, in case he or she does not successfully complete the ROTC program, 
to serve as an enlisted member. Although an individual does not qualify 
for reemployment protection, except as specified in (a) above, he or she 
is protected under

[[Page 1128]]

USERRA's anti-discrimination provisions because, as a result of the 
agreement, he or she has applied to become a member of the uniformed 
services and has incurred an obligation to perform future service.



Sec. 1002.62  Does USERRA cover a member of the Commissioned Corps of 
the National Oceanic and Atmospheric Administration, the Civil Air 
Patrol, or the Coast Guard Auxiliary?

    No. Although the Commissioned Corps of the National Oceanic and 
Atmospheric Administration (NOAA) is a ``uniformed service'' for some 
purposes, it is not included in USERRA's definition of this term. 
Service in the Civil Air Patrol and the Coast Guard Auxiliary similarly 
is not considered ``service in the uniformed services'' for purposes of 
USERRA. Consequently, service performed in the Commissioned Corps of the 
National Oceanic and Atmospheric Administration (NOAA), the Civil Air 
Patrol, and the Coast Guard Auxiliary is not protected by USERRA.

Absence From a Position of Employment Necessitated by Reason of Service 
                        in the Uniformed Services



Sec. 1002.73  Does service in the uniformed services have to be an 
employee's sole reason for leaving an employment position in order 
to have USERRA reemployment rights?

    No. If absence from a position of employment is necessitated by 
service in the uniformed services, and the employee otherwise meets the 
Act's eligibility requirements, he or she has reemployment rights under 
USERRA, even if the employee uses the absence for other purposes as 
well. An employee is not required to leave the employment position for 
the sole purpose of performing service in the uniformed services. For 
example, if the employee is required to report to an out of State 
location for military training and he or she spends off-duty time during 
that assignment moonlighting as a security guard or visiting relatives 
who live in that State, the employee will not lose reemployment rights 
simply because he or she used some of the time away from the job to do 
something other than attend the military training. Also, if an employee 
receives advance notification of a mobilization order, and leaves his or 
her employment position in order to prepare for duty, but the 
mobilization is cancelled, the employee will not lose any reemployment 
rights.



Sec. 1002.74  Must the employee begin service in the uniformed services 
immediately after leaving his or her employment position in order to 
have USERRA reemployment rights?

    No. At a minimum, an employee must have enough time after leaving 
the employment position to travel safely to the uniformed service site 
and arrive fit to perform the service. Depending on the specific 
circumstances, including the duration of service, the amount of notice 
received, and the location of the service, additional time to rest, or 
to arrange affairs and report to duty, may be necessitated by reason of 
service in the uniformed services. The following examples help to 
explain the issue of the period of time between leaving civilian 
employment and beginning of service in the uniformed services:
    (a) If the employee performs a full overnight shift for the civilian 
employer and travels directly from the work site to perform a full day 
of uniformed service, the employee would not be considered fit to 
perform the uniformed service. An absence from that work shift is 
necessitated so that the employee can report for uniformed service fit 
for duty.
    (b) If the employee is ordered to perform an extended period of 
service in the uniformed services, he or she may require a reasonable 
period of time off from the civilian job to put his or her personal 
affairs in order, before beginning the service. Taking such time off is 
also necessitated by the uniformed service.
    (c) If the employee leaves a position of employment in order to 
enlist or otherwise perform service in the uniformed services and, 
through no fault of his or her own, the beginning date of the service is 
delayed, this delay does not terminate any reemployment rights.

[[Page 1129]]

                          Requirement of Notice



Sec. 1002.85  Must the employee give advance notice to the employer 
of his or her service in the uniformed services?

    (a) Yes. The employee, or an appropriate officer of the uniformed 
service in which his or her service is to be performed, must notify the 
employer that the employee intends to leave the employment position to 
perform service in the uniformed services, with certain exceptions 
described below. In cases in which an employee is employed by more than 
one employer, the employee, or an appropriate office of the uniformed 
service in which his or her service is to be performed, must notify each 
employer that the employee intends to leave the employment position to 
perform service in the uniformed services, with certain exceptions 
described below.
    (b) The Department of Defense USERRA regulations at 32 CFR 104.3 
provide that an ``appropriate officer'' can give notice on the 
employee's behalf. An ``appropriate officer'' is a commissioned, 
warrant, or non-commissioned officer authorized to give such notice by 
the military service concerned.
    (c) The employee's notice to the employer may be either verbal or 
written. The notice may be informal and does not need to follow any 
particular format.
    (d) Although USERRA does not specify how far in advance notice must 
be given to the employer, an employee should provide notice as far in 
advance as is reasonable under the circumstances. In regulations 
promulgated by the Department of Defense under USERRA, 32 CFR 
104.6(a)(2)(i)(B), the Defense Department ``strongly recommends that 
advance notice to civilian employers be provided at least 30 days prior 
to departure for uniformed service when it is feasible to do so.''



Sec. 1002.86  When is the employee excused from giving advance notice 
of service in the uniformed services?

    The employee is required to give advance notice of pending service 
unless giving such notice is prevented by military necessity, or is 
otherwise impossible or unreasonable under all the circumstances.
    (a) Only a designated authority can make a determination of 
``military necessity,'' and such a determination is not subject to 
judicial review. Guidelines for defining ``military necessity'' appear 
in regulations issued by the Department of Defense at 32 CFR 104.3. In 
general, these regulations cover situations where a mission, operation, 
exercise or requirement is classified, or could be compromised or 
otherwise adversely affected by public knowledge. In certain cases, the 
Secretary of Homeland Security, in consultation with the Secretary of 
Defense, can make a determination that giving of notice by intermittent 
disaster-response appointees of the National Disaster Medical System is 
precluded by ``military necessity.'' See 42 U.S.C. 300hh-11(e)(3)(B).
    (b) It may be impossible or unreasonable to give advance notice 
under certain circumstances. Such circumstances may include the 
unavailability of the employee's employer or the employer's 
representative, or a requirement that the employee report for uniformed 
service in an extremely short period of time.



Sec. 1002.87  Is the employee required to get permission from his or 
her employer before leaving to perform service in the uniformed services?

    No. The employee is not required to ask for or get his or her 
employer's permission to leave to perform service in the uniformed 
services. The employee is only required to give the employer notice of 
pending service.



Sec. 1002.88  Is the employee required to tell his or her civilian 

employer that he or she intends to seek reemployment after completing 
uniformed service before the employee leaves to perform service in the 
uniformed services?

    No. When the employee leaves the employment position to begin a 
period of service, he or she is not required to tell the civilian 
employer that he or she intends to seek reemployment after completing 
uniformed service. Even if the employee tells the employer before 
entering or completing uniformed service that he or she does not intend 
to

[[Page 1130]]

seek reemployment after completing the uniformed service, the employee 
does not forfeit the right to reemployment after completing service. The 
employee is not required to decide in advance of leaving the civilian 
employment position whether he or she will seek reemployment after 
completing uniformed service.

                            Period of Service



Sec. 1002.99  Is there a limit on the total amount of service in the 
uniformed services that an employee may perform and still retain 
reemployment rights with the employer?

    Yes. In general, the employee may perform service in the uniformed 
services for a cumulative period of up to five (5) years and retain 
reemployment rights with the employer. The exceptions to this rule are 
described below.



Sec. 1002.100  Does the five-year service limit include all absences 
from an employment position that are related to service in the uniformed 
services?

    No. The five-year period includes only the time the employee spends 
actually performing service in the uniformed services. A period of 
absence from employment before or after performing service in the 
uniformed services does not count against the five-year limit. For 
example, after the employee completes a period of service in the 
uniformed services, he or she is provided a certain amount of time, 
depending upon the length of service, to report back to work or submit 
an application for reemployment. The period between completing the 
uniformed service and reporting back to work or seeking reemployment 
does not count against the five-year limit.



Sec. 1002.101  Does the five-year service limit include periods of 
service that the employee performed when he or she worked for a previous 
employer?

    No. An employee is entitled to a leave of absence for uniformed 
service for up to five years with each employer for whom he or she 
works. When the employee takes a position with a new employer, the five-
year period begins again regardless of how much service he or she 
performed while working in any previous employment relationship. If an 
employee is employed by more than one employer, a separate five-year 
period runs as to each employer independently, even if those employers 
share or co-determine the employee's terms and conditions of employment.



Sec. 1002.102  Does the five-year service limit include periods of 
service that the employee performed before USERRA was enacted?

    It depends. USERRA provides reemployment rights to which an employee 
may become entitled beginning on or after December 12, 1994, but any 
uniformed service performed before December 12, 1994, that was counted 
against the service limitations of the previous law (the Veterans 
Reemployment Rights Act), also counts against USERRA's five-year limit.



Sec. 1002.103  Are there any types of service in the uniformed services 
that an employee can perform that do not count against USERRA's five-year 
service limit?

    (a) USERRA creates the following exceptions to the five-year limit 
on service in the uniformed services:
    (1) Service that is required beyond five years to complete an 
initial period of obligated service. Some military specialties require 
an individual to serve more than five years because of the amount of 
time or expense involved in training. If the employee works in one of 
those specialties, he or she has reemployment rights when the initial 
period of obligated service is completed;
    (2) If the employee was unable to obtain orders releasing him or her 
from service in the uniformed services before the expiration of the 
five-year period, and the inability was not the employee's fault;
    (3)(i) Service performed to fulfill periodic National Guard and 
Reserve training requirements as prescribed by 10 U.S.C. 10147 and 32 
U.S.C. 502(a) and 503; and,
    (ii) Service performed to fulfill additional training requirements 
determined and certified by a proper military authority as necessary for 
the employee's professional development, or

[[Page 1131]]

to complete skill training or retraining;
    (4) Service performed in a uniformed service if he or she was 
ordered to or retained on active duty under:
    (i) 10 U.S.C. 688 (involuntary active duty by a military retiree);
    (ii) 10 U.S.C. 12301(a) (involuntary active duty in wartime);
    (iii) 10 U.S.C. 12301(g) (retention on active duty while in captive 
status);
    (iv) 10 U.S.C. 12302 (involuntary active duty during a national 
emergency for up to 24 months);
    (v) 10 U.S.C. 12304 (involuntary active duty for an operational 
mission for up to 270 days);
    (vi) 10 U.S.C. 12305 (involuntary retention on active duty of a 
critical person during time of crisis or other specific conditions);
    (vii) 14 U.S.C. 331 (involuntary active duty by retired Coast Guard 
officer);
    (viii) 14 U.S.C. 332 (voluntary active duty by retired Coast Guard 
officer);
    (ix) 14 U.S.C. 359 (involuntary active duty by retired Coast Guard 
enlisted member);
    (x) 14 U.S.C. 360 (voluntary active duty by retired Coast Guard 
enlisted member);
    (xi) 14 U.S.C. 367 (involuntary retention of Coast Guard enlisted 
member on active duty); and
    (xii) 14 U.S.C. 712 (involuntary active duty by Coast Guard Reserve 
member for natural or man-made disasters).
    (5) Service performed in a uniformed service if the employee was 
ordered to or retained on active duty (other than for training) under 
any provision of law because of a war or national emergency declared by 
the President or the Congress, as determined by the Secretary concerned;
    (6) Service performed in a uniformed service if the employee was 
ordered to active duty (other than for training) in support of an 
operational mission for which personnel have been ordered to active duty 
under 10 U.S.C. 12304, as determined by a proper military authority;
    (7) Service performed in a uniformed service if the employee was 
ordered to active duty in support of a critical mission or requirement 
of the uniformed services as determined by the Secretary concerned; and,
    (8) Service performed as a member of the National Guard if the 
employee was called to respond to an invasion, danger of invasion, 
rebellion, danger of rebellion, insurrection, or the inability of the 
President with regular forces to execute the laws of the United States.
    (b) Service performed to mitigate economic harm where the employee's 
employer is in violation of its employment or reemployment obligations 
to him or her.



Sec. 1002.104  Is the employee required to accommodate his or her 
employer's needs as to the timing, frequency or duration of service?

    No. The employee is not required to accommodate his or her 
employer's interests or concerns regarding the timing, frequency, or 
duration of uniformed service. The employer cannot refuse to reemploy 
the employee because it believes that the timing, frequency or duration 
of the service is unreasonable. However, the employer is permitted to 
bring its concerns over the timing, frequency, or duration of the 
employee's service to the attention of the appropriate military 
authority. Regulations issued by the Department of Defense at 32 CFR 
104.4 direct military authorities to provide assistance to an employer 
in addressing these types of employment issues. The military authorities 
are required to consider requests from employers of National Guard and 
Reserve members to adjust scheduled absences from civilian employment to 
perform service.

                      Application for Reemployment



Sec. 1002.115  Is the employee required to report to or submit a timely 
application for reemployment to his or her pre-service employer upon 
completing the period of service in the uniformed services?

    Yes. Upon completing service in the uniformed services, the employee 
must notify the pre-service employer of his or her intent to return to 
the employment position by either reporting to work or submitting a 
timely application for reemployment. Whether the employee is required to 
report to work or submit a timely application for reemployment depends 
upon the length of service, as follows:

[[Page 1132]]

    (a) Period of service less than 31 days or for a period of any 
length for the purpose of a fitness examination. If the period of 
service in the uniformed services was less than 31 days, or the employee 
was absent from a position of employment for a period of any length for 
the purpose of an examination to determine his or her fitness to perform 
service, the employee must report back to the employer not later than 
the beginning of the first full regularly-scheduled work period on the 
first full calendar day following the completion of the period of 
service, and the expiration of eight hours after a period allowing for 
safe transportation from the place of that service to the employee's 
residence. For example, if the employee completes a period of service 
and travel home, arriving at ten o'clock in the evening, he or she 
cannot be required to report to the employer until the beginning of the 
next full regularly-scheduled work period that begins at least eight 
hours after arriving home, i.e., no earlier than six o'clock the next 
morning. If it is impossible or unreasonable for the employee to report 
within such time period through no fault of his or her own, he or she 
must report to the employer as soon as possible after the expiration of 
the eight-hour period.
    (b) Period of service more than 30 days but less than 181 days. If 
the employee's period of service in the uniformed services was for more 
than 30 days but less than 181 days, he or she must submit an 
application for reemployment (written or verbal) with the employer not 
later than 14 days after completing service. If it is impossible or 
unreasonable for the employee to apply within 14 days through no fault 
of his or her own, he or she must submit the application not later than 
the next full calendar day after it becomes possible to do so.
    (c) Period of service more than 180 days. If the employee's period 
of service in the uniformed services was for more than 180 days, he or 
she must submit an application for reemployment (written or verbal) not 
later than 90 days after completing service.



Sec. 1002.116  Is the time period for reporting back to an employer 

extended if the employee is hospitalized for, or convalescing from, 
an illness or injury incurred in, or aggravated during, the performance 
of service?

    Yes. If the employee is hospitalized for, or convalescing from, an 
illness or injury incurred in, or aggravated during, the performance of 
service, he or she must report to or submit an application for 
reemployment to the employer at the end of the period necessary for 
recovering from the illness or injury. This period may not exceed two 
years from the date of the completion of service, except that it must be 
extended by the minimum time necessary to accommodate circumstances 
beyond the employee's control that make reporting within the period 
impossible or unreasonable. This period for recuperation and recovery 
extends the time period for reporting to or submitting an application 
for reemployment to the employer, and is not applicable following 
reemployment.



Sec. 1002.117  Are there any consequences if the employee fails to 
report for or submit a timely application for reemployment?

    (a) If the employee fails to timely report for or apply for 
reemployment, he or she does not automatically forfeit entitlement to 
USERRA's reemployment and other rights and benefits. Rather, the 
employee becomes subject to the conduct rules, established policy, and 
general practices of the employer pertaining to an absence from 
scheduled work.
    (b) If reporting or submitting an employment application to the 
employer is impossible or unreasonable through no fault of the employee, 
he or she may report to the employer as soon as possible (in the case of 
a period of service less than 31 days) or submit an application for 
reemployment to the employer by the next full calendar day after it 
becomes possible to do so (in the case of a period of service from 31 to 
180 days), and the employee will be considered to have timely reported 
or applied for reemployment.

[[Page 1133]]



Sec. 1002.118  Is an application for reemployment required to be in 
any particular form?

    An application for reemployment need not follow any particular 
format. The employee may apply orally or in writing. The application 
should indicate that the employee is a former employee returning from 
service in the uniformed services and that he or she seeks reemployment 
with the pre-service employer. The employee is permitted but not 
required to identify a particular reemployment position in which he or 
she is interested.



Sec. 1002.119  To whom must the employee submit the application for 
reemployment?

    The application must be submitted to the pre-service employer or to 
an agent or representative of the employer who has apparent 
responsibility for receiving employment applications. Depending upon the 
circumstances, such a person could be a personnel or human resources 
officer, or a first-line supervisor. If there has been a change in 
ownership of the employer, the application should be submitted to the 
employer's successor-in-interest.



Sec. 1002.120  If the employee seeks or obtains employment with an 

employer other than the pre-service employer before the end of the 
period within which a reemployment application must be filed, will 
that jeopardize reemployment rights with the pre-service employer?

    No. The employee has reemployment rights with the pre-service 
employer provided that he or she makes a timely reemployment application 
to that employer. The employee may seek or obtain employment with an 
employer other than the pre-service employer during the period of time 
within which a reemployment application must be made, without giving up 
reemployment rights with the pre-service employer. However, such 
alternative employment during the application period should not be of a 
type that would constitute cause for the employer to discipline or 
terminate the employee following reemployment. For instance, if the 
employer forbids employees from working concurrently for a direct 
competitor during employment, violation of such a policy may constitute 
cause for discipline or even termination.



Sec. 1002.121  Is the employee required to submit documentation to the 
employer in connection with the application for reemployment?

    Yes, if the period of service exceeded 30 days and if requested by 
the employer to do so. If the employee submits an application for 
reemployment after a period of service of more than 30 days, he or she 
must, upon the request of the employer, provide documentation to 
establish that:
    (a) The reemployment application is timely;
    (b) The employee has not exceeded the five-year limit on the 
duration of service (subject to the exceptions listed at Sec. 
1002.103); and,
    (c) The employee's separation or dismissal from service was not 
disqualifying.



Sec. 1002.122  Is the employer required to reemploy the employee if 
documentation establishing the employee's eligibility does not exist 
or is not readily available?

    Yes. The employer is not permitted to delay or deny reemployment by 
demanding documentation that does not exist or is not readily available. 
The employee is not liable for administrative delays in the issuance of 
military documentation. If the employee is reemployed after an absence 
from employment for more than 90 days, the employer may require that he 
or she submit the documentation establishing entitlement to reemployment 
before treating the employee as not having had a break in service for 
pension purposes. If the documentation is received after reemployment 
and it shows that the employee is not entitled to reemployment, the 
employer may terminate employment and any rights or benefits that the 
employee may have been granted.



Sec. 1002.123  What documents satisfy the requirement that the employee 
establish eligibility for reemployment after a period of service of more 
than thirty days?

    (a) Documents that satisfy the requirements of USERRA include the 
following:

[[Page 1134]]

    (1) DD (Department of Defense) 214 Certificate of Release or 
Discharge from Active Duty;
    (2) Copy of duty orders prepared by the facility where the orders 
were fulfilled carrying an endorsement indicating completion of the 
described service;
    (3) Letter from the commanding officer of a Personnel Support 
Activity or someone of comparable authority;
    (4) Certificate of completion from military training school;
    (5) Discharge certificate showing character of service; and,
    (6) Copy of extracts from payroll documents showing periods of 
service;
    (7) Letter from National Disaster Medical System (NDMS) Team Leader 
or Administrative Officer verifying dates and times of NDMS training or 
Federal activation.
    (b) The types of documents that are necessary to establish 
eligibility for reemployment will vary from case to case. Not all of 
these documents are available or necessary in every instance to 
establish reemployment eligibility.

                          Character of Service



Sec. 1002.134  What type of discharge or separation from service is 
required for an employee to be entitled to reemployment under USERRA?

    USERRA does not require any particular form of discharge or 
separation from service. However, even if the employee is otherwise 
eligible for reemployment, he or she will be disqualified if the 
characterization of service falls within one of four categories. USERRA 
requires that the employee not have received one of these types of 
discharge.



Sec. 1002.135  What types of discharge or separation from uniformed 
service will make the employee ineligible for reemployment under USERRA?

    Reemployment rights are terminated if the employee is:
    (a) Separated from uniformed service with a dishonorable or bad 
conduct discharge;
    (b) Separated from uniformed service under other than honorable 
conditions, as characterized by regulations of the uniformed service;
    (c) A commissioned officer dismissed as permitted under 10 U.S.C. 
1161(a) by sentence of a general court-martial; in commutation of a 
sentence of a general court-martial; or, in time of war, by order of the 
President; or,
    (d) A commissioned officer dropped from the rolls under 10 U.S.C. 
1161(b) due to absence without authority for at least three months; 
separation by reason of a sentence to confinement adjudged by a court-
martial; or, a sentence to confinement in a Federal or State 
penitentiary or correctional institution.



Sec. 1002.136  Who determines the characterization of service?

    The branch of service in which the employee performs the tour of 
duty determines the characterization of service.



Sec. 1002.137  If the employee receives a disqualifying discharge or 
release from uniformed service and it is later upgraded, will 
reemployment rights be restored?

    Yes. A military review board has the authority to prospectively or 
retroactively upgrade a disqualifying discharge or release. A 
retroactive upgrade would restore reemployment rights providing the 
employee otherwise meets the Act's eligibility criteria.



Sec. 1002.138  If the employee receives a retroactive upgrade in the 
characterization of service, will that entitle him or her to claim back 
wages and benefits lost as of the date of separation from service?

    No. A retroactive upgrade allows the employee to obtain 
reinstatement with the former employer, provided the employee otherwise 
meets the Act's eligibility criteria. Back pay and other benefits such 
as pension plan credits attributable to the time period between 
discharge and the retroactive upgrade are not required to be restored by 
the employer in this situation.

[[Page 1135]]

                       Employer Statutory Defenses



Sec. 1002.139  Are there any circumstances in which the pre-service 

employer is excused from its obligation to reemploy the employee 
following a period of uniformed service? What statutory defenses are 
available to the employer in an action or proceeding for reemployment 
benefits?

    (a) Even if the employee is otherwise eligible for reemployment 
benefits, the employer is not required to reemploy him or her if the 
employer establishes that its circumstances have so changed as to make 
reemployment impossible or unreasonable. For example, an employer may be 
excused from reemploying the employee where there has been an 
intervening reduction in force that would have included that employee. 
The employer may not, however, refuse to reemploy the employee on the 
basis that another employee was hired to fill the reemployment position 
during the employee's absence, even if reemployment might require the 
termination of that replacement employee;
    (b) Even if the employee is otherwise eligible for reemployment 
benefits, the employer is not required to reemploy him or her if it 
establishes that assisting the employee in becoming qualified for 
reemployment would impose an undue hardship, as defined in Sec. 
1002.5(n) and discussed in Sec. 1002.198, on the employer; or,
    (c) Even if the employee is otherwise eligible for reemployment 
benefits, the employer is not required to reemploy him or her if it 
establishes that the employment position vacated by the employee in 
order to perform service in the uniformed services was for a brief, 
nonrecurrent period and there was no reasonable expectation that the 
employment would continue indefinitely or for a significant period.
    (d) The employer defenses included in this section are affirmative 
ones, and the employer carries the burden to prove by a preponderance of 
the evidence that any one or more of these defenses is applicable.



   Subpart D_Rights, Benefits, and Obligations of Persons Absent from 
           Employment Due to Service in the Uniformed Services

                      Furlough and Leave of Absence



Sec. 1002.149  What is the employee's status with his or her civilian 
employer while performing service in the uniformed services?

    During a period of service in the uniformed services, the employee 
is deemed to be on furlough or leave of absence from the civilian 
employer. In this status, the employee is entitled to the non-seniority 
rights and benefits generally provided by the employer to other 
employees with similar seniority, status, and pay that are on furlough 
or leave of absence. Entitlement to these non-seniority rights and 
benefits is not dependent on how the employer characterizes the 
employee's status during a period of service. For example, if the 
employer characterizes the employee as ``terminated'' during the period 
of uniformed service, this characterization cannot be used to avoid 
USERRA's requirement that the employee be deemed on furlough or leave of 
absence, and therefore entitled to the non-seniority rights and benefits 
generally provided to employees on furlough or leave of absence.



Sec. 1002.150  Which non-seniority rights and benefits is the employee 
entitled to during a period of service?

    (a) The non-seniority rights and benefits to which an employee is 
entitled during a period of service are those that the employer provides 
to similarly situated employees by an employment contract, agreement, 
policy, practice, or plan in effect at the employee's workplace. These 
rights and benefits include those in effect at the beginning of the 
employee's employment and those established after employment began. They 
also include those rights and benefits that become effective during the 
employee's period of service and that are provided to similarly situated 
employees on furlough or leave of absence.
    (b) If the non-seniority benefits to which employees on furlough or 
leave

[[Page 1136]]

of absence are entitled vary according to the type of leave, the 
employee must be given the most favorable treatment accorded to any 
comparable form of leave when he or she performs service in the 
uniformed services. In order to determine whether any two types of leave 
are comparable, the duration of the leave may be the most significant 
factor to compare. For instance, a two-day funeral leave will not be 
``comparable'' to an extended leave for service in the uniformed 
service. In addition to comparing the duration of the absences, other 
factors such as the purpose of the leave and the ability of the employee 
to choose when to take the leave should also be considered.
    (c) As a general matter, accrual of vacation leave is considered to 
be a non-seniority benefit that must be provided by an employer to an 
employee on a military leave of absence only if the employer provides 
that benefit to similarly situated employees on comparable leaves of 
absence.



Sec. 1002.151  If the employer provides full or partial pay to the 

employee while he or she is on military leave, is the employer required 
to also provide the non-seniority rights and benefits ordinarily granted to 
similarly situated employees on furlough or leave of absence?

    Yes. If the employer provides additional benefits such as full or 
partial pay when the employee performs service, the employer is not 
excused from providing other rights and benefits to which the employee 
is entitled under the Act.



Sec. 1002.152  If employment is interrupted by a period of service in 

the uniformed services, are there any circumstances under which the 
employee is not entitled to the non-seniority rights and benefits 
ordinarily granted to similarly situated employees on furlough or leave 
of absence?

    If employment is interrupted by a period of service in the uniformed 
services and the employee knowingly provides written notice of intent 
not to return to the position of employment after service in the 
uniformed services, he or she is not entitled to those non-seniority 
rights and benefits. The employee's written notice does not waive 
entitlement to any other rights to which he or she is entitled under the 
Act, including the right to reemployment after service.



Sec. 1002.153  If employment is interrupted by a period of service in 

the uniformed services, is the employee permitted upon request to use 
accrued vacation, annual or similar leave with pay during the service? 
Can the employer require the employee to use accrued leave during a 
period of service?

    (a) If employment is interrupted by a period of service, the 
employee must be permitted upon request to use any accrued vacation, 
annual, or similar leave with pay during the period of service, in order 
to continue his or her civilian pay. However, the employee is not 
entitled to use sick leave that accrued with the civilian employer 
during a period of service in the uniformed services, unless the 
employer allows employees to use sick leave for any reason, or allows 
other similarly situated employees on comparable furlough or leave of 
absence to use accrued paid sick leave. Sick leave is usually not 
comparable to annual or vacation leave; it is generally intended to 
provide income when the employee or a family member is ill and the 
employee is unable to work.
    (b) The employer may not require the employee to use accrued 
vacation, annual, or similar leave during a period of service in the 
uniformed services.

                          Health Plan Coverage



Sec. 1002.163  What types of health plans are covered by USERRA?

    (a) USERRA defines a health plan to include an insurance policy or 
contract, medical or hospital service agreement, membership or 
subscription contract, or arrangement under which the employee's health 
services are provided or the expenses of those services are paid.
    (b) USERRA covers group health plans as defined in the Employee 
Retirement Income Security Act of 1974 (ERISA) at 29 U.S.C. 1191b(a). 
USERRA applies to group health plans that are subject to ERISA, and 
plans that are not subject to ERISA, such as those

[[Page 1137]]

sponsored by State or local governments or religious organizations for 
their employees.
    (c) USERRA covers multiemployer plans maintained pursuant to one or 
more collective bargaining agreements between employers and employee 
organizations. USERRA applies to multiemployer plans as they are defined 
in ERISA at 29 U.S.C. 1002(37). USERRA contains provisions that apply 
specifically to multiemployer plans in certain situations.



Sec. 1002.164  What health plan coverage must the employer provide for 
the employee under USERRA?

    If the employee has coverage under a health plan in connection with 
his or her employment, the plan must permit the employee to elect to 
continue the coverage for a certain period of time as described below:
    (a) When the employee is performing service in the uniformed 
services, he or she is entitled to continuing coverage for himself or 
herself (and dependents if the plan offers dependent coverage) under a 
health plan provided in connection with the employment. The plan must 
allow the employee to elect to continue coverage for a period of time 
that is the lesser of:
    (1) The 24-month period beginning on the date on which the 
employee's absence for the purpose of performing service begins; or,
    (2) The period beginning on the date on which the employee's absence 
for the purpose of performing service begins, and ending on the date on 
which he or she fails to return from service or apply for a position of 
employment as provided under sections 1002.115-123 of these regulations.
    (b) USERRA does not require the employer to establish a health plan 
if there is no health plan coverage in connection with the employment, 
or, where there is a plan, to provide any particular type of coverage.
    (c) USERRA does not require the employer to permit the employee to 
initiate new health plan coverage at the beginning of a period of 
service if he or she did not previously have such coverage.



Sec. 1002.165  How does the employee elect continuing health plan 
coverage?

    USERRA does not specify requirements for electing continuing 
coverage. Health plan administrators may develop reasonable requirements 
addressing how continuing coverage may be elected, consistent with the 
terms of the plan and the Act's exceptions to the requirement that the 
employee give advance notice of service in the uniformed services. For 
example, the employee cannot be precluded from electing continuing 
health plan coverage under circumstances where it is impossible or 
unreasonable for him or her to make a timely election of coverage.



Sec. 1002.166  How much must the employee pay in order to continue 
health plan coverage?

    (a) If the employee performs service in the uniformed service for 
fewer than 31 days, he or she cannot be required to pay more than the 
regular employee share, if any, for health plan coverage.
    (b) If the employee performs service in the uniformed service for 31 
or more days, he or she may be required to pay no more than 102% of the 
full premium under the plan, which represents the employer's share plus 
the employee's share, plus 2% for administrative costs.
    (c) USERRA does not specify requirements for methods of paying for 
continuing coverage. Health plan administrators may develop reasonable 
procedures for payment, consistent with the terms of the plan.



Sec. 1002.167  What actions may a plan administrator take if the 
employee does not elect or pay for continuing coverage in a timely manner?

    The actions a plan administrator may take regarding the provision or 
cancellation of an employee's continuing coverage depend on whether the 
employee is excused from the requirement to give advance notice, whether 
the plan has established reasonable rules for election of continuation 
coverage, and whether the plan has established reasonable rules for the 
payment for continuation coverage.
    (a) No notice of service and no election of continuation coverage: 
If an employer

[[Page 1138]]

provides employment-based health coverage to an employee who leaves 
employment for uniformed service without giving advance notice of 
service, the plan administrator may cancel the employee's health plan 
coverage upon the employee's departure from employment for uniformed 
service. However, in cases in which an employee's failure to give 
advance notice of service was excused under the statute because it was 
impossible, unreasonable, or precluded by military necessity, the plan 
administrator must reinstate the employee's health coverage 
retroactively upon his or her election to continue coverage and payment 
of all unpaid amounts due, and the employee must incur no administrative 
reinstatement costs. In order to qualify for an exception to the 
requirement of timely election of continuing health care, an employee 
must first be excused from giving notice of service under the statute.
    (b) Notice of service but no election of continuing coverage: Plan 
administrators may develop reasonable requirements addressing how 
continuing coverage may be elected. Where health plans are also covered 
under the Consolidated Omnibus Budget Reconciliation Act of 1985, 26 
U.S.C. 4980B (COBRA), it may be reasonable for a health plan 
administrator to adopt COBRA-compliant rules regarding election of 
continuing coverage, as long as those rules do not conflict with any 
provision of USERRA or this rule. If an employer provides employment-
based health coverage to an employee who leaves employment for uniformed 
service for a period of service in excess of 30 days after having given 
advance notice of service but without making an election regarding 
continuing coverage, the plan administrator may cancel the employee's 
health plan coverage upon the employee's departure from employment for 
uniformed service, but must reinstate coverage without the imposition of 
administrative reinstatement costs under the following conditions:
    (1) Plan administrators who have developed reasonable rules 
regarding the period within which an employee may elect continuing 
coverage must permit retroactive reinstatement of uninterrupted coverage 
to the date of departure if the employee elects continuing coverage and 
pays all unpaid amounts due within the periods established by the plan;
    (2) In cases in which plan administrators have not developed rules 
regarding the period within which an employee may elect continuing 
coverage, the plan must permit retroactive reinstatement of 
uninterrupted coverage to the date of departure upon the employee's 
election and payment of all unpaid amounts at any time during the period 
established in section 1002.164(a).
    (c) Election of continuation coverage without timely payment: Health 
plan administrators may adopt reasonable rules allowing cancellation of 
coverage if timely payment is not made. Where health plans are covered 
under COBRA, it may be reasonable for a health plan administrator to 
adopt COBRA-compliant rules regarding payment for continuing coverage, 
as long as those rules do not conflict with any provision of USERRA or 
this rule.



Sec. 1002.168  If the employee's coverage was terminated at the 
beginning of or during service, does his or her coverage have to 
be reinstated upon reemployment?

    (a) If health plan coverage for the employee or a dependent was 
terminated by reason of service in the uniformed services, that coverage 
must be reinstated upon reemployment. An exclusion or waiting period may 
not be imposed in connection with the reinstatement of coverage upon 
reemployment, if an exclusion or waiting period would not have been 
imposed had coverage not been terminated by reason of such service.
    (b) USERRA permits a health plan to impose an exclusion or waiting 
period as to illnesses or injuries determined by the Secretary of 
Veterans Affairs to have been incurred in, or aggravated during, 
performance of service in the uniformed services. The determination that 
the employee's illness or injury was incurred in, or aggravated during, 
the performance of service may only be made by the Secretary of Veterans 
Affairs or his or her representative. Other coverage, for injuries or 
illnesses that

[[Page 1139]]

are not service-related (or for the employee's dependents, if he or she 
has dependent coverage), must be reinstated subject to paragraph (a) of 
this section.



Sec. 1002.169  Can the employee elect to delay reinstatement of health 
plan coverage until a date after the date he or she is reemployed?

    USERRA requires the employer to reinstate health plan coverage upon 
request at reemployment. USERRA permits but does not require the 
employer to allow the employee to delay reinstatement of health plan 
coverage until a date that is later than the date of reemployment.



Sec. 1002.170  In a multiemployer health plan, how is liability 
allocated for employer contributions and benefits arising under 
USERRA's health plan provisions?

    Liability under a multiemployer plan for employer contributions and 
benefits in connection with USERRA's health plan provisions must be 
allocated either as the plan sponsor provides, or, if the sponsor does 
not provide, to the employee's last employer before his or her service. 
If the last employer is no longer functional, liability for continuing 
coverage is allocated to the health plan.



Sec. 1002.171  How does the continuation of health plan benefits apply 
to a multiemployer plan that provides health plan coverage through a 
health benefits account system?

    (a) Some employees receive health plan benefits provided pursuant to 
a multiemployer plan that utilizes a health benefits account system in 
which an employee accumulates prospective health benefit eligibility, 
also commonly referred to as ``dollar bank,'' ``credit bank,'' and 
``hour bank'' plans. In such cases, where an employee with a positive 
health benefits account balance elects to continue the coverage, the 
employee may further elect either option below:
    (1) The employee may expend his or her health account balance during 
an absence from employment due to service in the uniformed services in 
lieu of paying for the continuation of coverage as set out in Sec. 
1002.166. If an employee's health account balance becomes depleted 
during the applicable period provided for in Sec. 1002.164(a), the 
employee must be permitted, at his or her option, to continue coverage 
pursuant to Sec. 1002.166. Upon reemployment, the plan must provide for 
immediate reinstatement of the employee as required by Sec. 1002.168, 
but may require the employee to pay the cost of the coverage until the 
employee earns the credits necessary to sustain continued coverage in 
the plan.
    (2) The employee may pay for continuation coverage as set out in 
Sec. 1002.166, in order to maintain intact his or her account balance 
as of the beginning date of the absence from employment due to service 
in the uniformed services. This option permits the employee to resume 
usage of the account balance upon reemployment.
    (b) Employers or plan administrators providing such plans should 
counsel employees of their options set out in this subsection.



               Subpart E_Reemployment Rights and Benefits

                           Prompt Reemployment



Sec. 1002.180  When is an employee entitled to be reemployed by his 
or her civilian employer?

    The employer must promptly reemploy the employee when he or she 
returns from a period of service if the employee meets the Act's 
eligibility criteria as described in Subpart C of these regulations.



Sec. 1002.181  How is ``prompt reemployment'' defined?

    ``Prompt reemployment'' means as soon as practicable under the 
circumstances of each case. Absent unusual circumstances, reemployment 
must occur within two weeks of the employee's application for 
reemployment. For example, prompt reinstatement after a weekend National 
Guard duty generally means the next regularly scheduled working day. On 
the other hand, prompt reinstatement following several years of active 
duty may require more time, because the employer may have to reassign or 
give notice to another employee who occupied the returning employee's 
position.

[[Page 1140]]

                          Reemployment Position



Sec. 1002.191  What position is the employee entitled to upon 
reemployment?

    As a general rule, the employee is entitled to reemployment in the 
job position that he or she would have attained with reasonable 
certainty if not for the absence due to uniformed service. This position 
is known as the escalator position. The principle behind the escalator 
position is that, if not for the period of uniformed service, the 
employee could have been promoted (or, alternatively, demoted, 
transferred, or laid off) due to intervening events. The escalator 
principle requires that the employee be reemployed in a position that 
reflects with reasonable certainty the pay, benefits, seniority, and 
other job perquisites, that he or she would have attained if not for the 
period of service. Depending upon the specific circumstances, the 
employer may have the option, or be required, to reemploy the employee 
in a position other than the escalator position.



Sec. 1002.192  How is the specific reemployment position determined?

    In all cases, the starting point for determining the proper 
reemployment position is the escalator position, which is the job 
position that the employee would have attained if his or her continuous 
employment had not been interrupted due to uniformed service. Once this 
position is determined, the employer may have to consider several 
factors before determining the appropriate reemployment position in any 
particular case. Such factors may include the employee's length of 
service, qualifications, and disability, if any. The reemployment 
position may be either the escalator position; the pre-service position; 
a position comparable to the escalator or pre-service position; or, the 
nearest approximation to one of these positions.



Sec. 1002.193  Does the reemployment position include elements such 
as seniority, status, and rate of pay?

    (a) Yes. The reemployment position includes the seniority, status, 
and rate of pay that an employee would ordinarily have attained in that 
position given his or her job history, including prospects for future 
earnings and advancement. The employer must determine the seniority 
rights, status, and rate of pay as though the employee had been 
continuously employed during the period of service. The seniority 
rights, status, and pay of an employment position include those 
established (or changed) by a collective bargaining agreement, employer 
policy, or employment practice. The sources of seniority rights, status, 
and pay include agreements, policies, and practices in effect at the 
beginning of the employee's service, and any changes that may have 
occurred during the period of service. In particular, the employee's 
status in the reemployment position could include opportunities for 
advancement, general working conditions, job location, shift assignment, 
rank, responsibility, and geographical location.
    (b) If an opportunity for promotion, or eligibility for promotion, 
that the employee missed during service is based on a skills test or 
examination, then the employer should give him or her a reasonable 
amount of time to adjust to the employment position and then give a 
skills test or examination. No fixed amount of time for permitting 
adjustment to reemployment will be deemed reasonable in all cases. 
However, in determining a reasonable amount of time to permit an 
employee to adjust to reemployment before scheduling a makeup test or 
examination, an employer may take into account a variety of factors, 
including but not limited to the length of time the returning employee 
was absent from work, the level of difficulty of the test itself, the 
typical time necessary to prepare or study for the test, the duties and 
responsibilities of the reemployment position and the promotional 
position, and the nature and responsibilities of the service member 
while serving in the uniformed service. If the employee is successful on 
the makeup exam and, based on the results of that exam, there is a 
reasonable certainty that he or she would have been promoted, or made 
eligible for promotion, during the time that the employee served in the 
uniformed service, then

[[Page 1141]]

the promotion or eligibility for promotion must be made effective as of 
the date it would have occurred had employment not been interrupted by 
uniformed service.



Sec. 1002.194  Can the application of the escalator principle result 
in adverse consequences when the employee is reemployed?

    Yes. The Act does not prohibit lawful adverse job consequences that 
result from the employee's restoration on the seniority ladder. 
Depending on the circumstances, the escalator principle may cause an 
employee to be reemployed in a higher or lower position, laid off, or 
even terminated. For example, if an employee's seniority or job 
classification would have resulted in the employee being laid off during 
the period of service, and the layoff continued after the date of 
reemployment, reemployment would reinstate the employee to layoff 
status. Similarly, the status of the reemployment position requires the 
employer to assess what would have happened to such factors as the 
employee's opportunities for advancement, working conditions, job 
location, shift assignment, rank, responsibility, and geographical 
location, if he or she had remained continuously employed. The 
reemployment position may involve transfer to another shift or location, 
more or less strenuous working conditions, or changed opportunities for 
advancement, depending upon the application of the escalator principle.



Sec. 1002.195  What other factors can determine the reemployment 
position?

    Once the employee's escalator position is determined, other factors 
may allow, or require, the employer to reemploy the employee in a 
position other than the escalator position. These factors, which are 
explained in Sec. Sec. 1002.196 through 1002.199, are:
    (a) The length of the employee's most recent period of uniformed 
service;
    (b) The employee's qualifications; and,
    (c) Whether the employee has a disability incurred or aggravated 
during uniformed service.



Sec. 1002.196  What is the employee's reemployment position if the 
period of service was less than 91 days?

    Following a period of service in the uniformed services of less than 
91 days, the employee must be reemployed according to the following 
priority:
    (a) The employee must be reemployed in the escalator position. He or 
she must be qualified to perform the duties of this position. The 
employer must make reasonable efforts to help the employee become 
qualified to perform the duties of this position.
    (b) If the employee is not qualified to perform the duties of the 
escalator position after reasonable efforts by the employer, the 
employee must be reemployed in the position in which he or she was 
employed on the date that the period of service began. The employee must 
be qualified to perform the duties of this position. The employer must 
make reasonable efforts to help the employee become qualified to perform 
the duties of this position.
    (c) If the employee is not qualified to perform the duties of the 
escalator position or the pre-service position, after reasonable efforts 
by the employer, he or she must be reemployed in any other position that 
is the nearest approximation first to the escalator position and then to 
the pre-service position. The employee must be qualified to perform the 
duties of this position. The employer must make reasonable efforts to 
help the employee become qualified to perform the duties of this 
position.



Sec. 1002.197  What is the reemployment position if the employee's 
period of service in the uniformed services was more than 90 days?

    Following a period of service of more than 90 days, the employee 
must be reemployed according to the following priority:
    (a) The employee must be reemployed in the escalator position or a 
position of like seniority, status, and pay. He or she must be qualified 
to perform the duties of this position. The employer must make 
reasonable efforts to help the employee become qualified to perform the 
duties of this position.

[[Page 1142]]

    (b) If the employee is not qualified to perform the duties of the 
escalator position or a like position after reasonable efforts by the 
employer, the employee must be reemployed in the position in which he or 
she was employed on the date that the period of service began or in a 
position of like seniority, status, and pay. The employee must be 
qualified to perform the duties of this position. The employer must make 
reasonable efforts to help the employee become qualified to perform the 
duties of this position.
    (c) If the employee is not qualified to perform the duties of the 
escalator position, the pre-service position, or a like position, after 
reasonable efforts by the employer, he or she must be reemployed in any 
other position that is the nearest approximation first to the escalator 
position and then to the pre-service position. The employee must be 
qualified to perform the duties of this position. The employer must make 
reasonable efforts to help the employee become qualified to perform the 
duties of this position.



Sec. 1002.198  What efforts must the employer make to help the employee 
become qualified for the reemployment position?

    The employee must be qualified for the reemployment position. The 
employer must make reasonable efforts to help the employee become 
qualified to perform the duties of this position. The employer is not 
required to reemploy the employee on his or her return from service if 
he or she cannot, after reasonable efforts by the employer, qualify for 
the appropriate reemployment position.
    (a)(1) ``Qualified'' means that the employee has the ability to 
perform the essential tasks of the position. The employee's inability to 
perform one or more non-essential tasks of a position does not make him 
or her unqualified.
    (2) Whether a task is essential depends on several factors, and 
these factors include but are not limited to:
    (i) The employer's judgment as to which functions are essential;
    (ii) Written job descriptions developed before the hiring process 
begins;
    (iii) The amount of time on the job spent performing the function;
    (iv) The consequences of not requiring the individual to perform the 
function;
    (v) The terms of a collective bargaining agreement;
    (vi) The work experience of past incumbents in the job; and/or
    (vii) The current work experience of incumbents in similar jobs.
    (b) Only after the employer makes reasonable efforts, as defined in 
Sec. 1002.5(i), may it determine that the employee is not qualified for 
the reemployment position. These reasonable efforts must be made at no 
cost to the employee.



Sec. 1002.199  What priority must the employer follow if two or more 
returning employees are entitled to reemployment in the same position?

    If two or more employees are entitled to reemployment in the same 
position and more than one employee has reported or applied for 
employment in that position, the employee who first left the position 
for uniformed service has the first priority on reemployment in that 
position. The remaining employee (or employees) is entitled to be 
reemployed in a position similar to that in which the employee would 
have been reemployed according to the rules that normally determine a 
reemployment position, as set out in Sec. Sec. 1002.196 and 1002.197.

                      Seniority Rights and Benefits



Sec. 1002.210  What seniority rights does an employee have when 
reemployed following a period of uniformed service?

    The employee is entitled to the seniority and seniority-based rights 
and benefits that he or she had on the date the uniformed service began, 
plus any seniority and seniority-based rights and benefits that the 
employee would have attained if he or she had remained continuously 
employed. In determining entitlement to seniority and seniority-based 
rights and benefits, the period of absence from employment due to or 
necessitated by uniformed service is not considered a break in 
employment. The rights and benefits protected by USERRA upon 
reemployment include those provided by the employer and those required 
by statute. For example,

[[Page 1143]]

under USERRA, a reemployed service member would be eligible for leave 
under the Family and Medical Leave Act of 1993, 29 U.S.C. 2601-2654 
(FMLA), if the number of months and the number of hours of work for 
which the service member was employed by the civilian employer, together 
with the number of months and the number of hours of work for which the 
service member would have been employed by the civilian employer during 
the period of uniformed service, meet FMLA's eligibility requirements. 
In the event that a service member is denied FMLA leave for failing to 
satisfy the FMLA's hours of work requirement due to absence from 
employment necessitated by uniformed service, the service member may 
have a cause of action under USERRA but not under the FMLA.



Sec. 1002.211  Does USERRA require the employer to use a seniority 
system?

    No. USERRA does not require the employer to adopt a formal seniority 
system. USERRA defines seniority as longevity in employment together 
with any employment benefits that accrue with, or are determined by, 
longevity in employment. In the absence of a formal seniority system, 
such as one established through collective bargaining, USERRA looks to 
the custom and practice in the place of employment to determine the 
employee's entitlement to any employment benefits that accrue with, or 
are determined by, longevity in employment.



Sec. 1002.212  How does a person know whether a particular right or 
benefit is a seniority-based right or benefit?

    A seniority-based right or benefit is one that accrues with, or is 
determined by, longevity in employment. Generally, whether a right or 
benefit is seniority-based depends on three factors:
    (a) Whether the right or benefit is a reward for length of service 
rather than a form of short-term compensation for work performed;
    (b) Whether it is reasonably certain that the employee would have 
received the right or benefit if he or she had remained continuously 
employed during the period of service; and,
    (c) Whether it is the employer's actual custom or practice to 
provide or withhold the right or benefit as a reward for length of 
service. Provisions of an employment contract or policies in the 
employee handbook are not controlling if the employer's actual custom or 
practice is different from what is written in the contract or handbook.



Sec. 1002.213  How can the employee demonstrate a reasonable certainty 
that he or she would have received the seniority right or benefit if he 
or she had remained continuously employed during the period of service?

    A reasonable certainty is a high probability that the employee would 
have received the seniority or seniority-based right or benefit if he or 
she had been continuously employed. The employee does not have to 
establish that he or she would have received the benefit as an absolute 
certainty. The employee can demonstrate a reasonable certainty that he 
or she would have received the seniority right or benefit by showing 
that other employees with seniority similar to that which the employee 
would have had if he or she had remained continuously employed received 
the right or benefit. The employer cannot withhold the right or benefit 
based on an assumption that a series of unlikely events could have 
prevented the employee from gaining the right or benefit.

                           Disabled Employees



Sec. 1002.225  Is the employee entitled to any specific reemployment 
benefits if he or she has a disability that was incurred in, or 
aggravated during, the period of service?

    Yes. A disabled service member is entitled, to the same extent as 
any other individual, to the escalator position he or she would have 
attained but for uniformed service. If the employee has a disability 
incurred in, or aggravated during, the period of service in the 
uniformed services, the employer must make reasonable efforts to 
accommodate that disability and to help the employee become qualified to 
perform the duties of his or her reemployment position. If the employee 
is not qualified

[[Page 1144]]

for reemployment in the escalator position because of a disability after 
reasonable efforts by the employer to accommodate the disability and to 
help the employee to become qualified, the employee must be reemployed 
in a position according to the following priority. The employer must 
make reasonable efforts to accommodate the employee's disability and to 
help him or her to become qualified to perform the duties of one of 
these positions:
    (a) A position that is equivalent in seniority, status, and pay to 
the escalator position; or,
    (b) A position that is the nearest approximation to the equivalent 
position, consistent with the circumstances of the employee's case, in 
terms of seniority, status, and pay. A position that is the nearest 
approximation to the equivalent position may be a higher or lower 
position, depending on the circumstances.



Sec. 1002.226  If the employee has a disability that was incurred in, 

or aggravated during, the period of service, what efforts must the 
employer make to help him or her become qualified for the reemployment 
position?

    (a) USERRA requires that the employee be qualified for the 
reemployment position regardless of any disability. The employer must 
make reasonable efforts to help the employee to become qualified to 
perform the duties of this position. The employer is not required to 
reemploy the employee on his or her return from service if he or she 
cannot, after reasonable efforts by the employer, qualify for the 
appropriate reemployment position.
    (b) ``Qualified'' has the same meaning here as in Sec. 1002.198.

                               Rate of Pay



Sec. 1002.236  How is the employee's rate of pay determined when he 
or she returns from a period of service?

    The employee's rate of pay is determined by applying the same 
escalator principles that are used to determine the reemployment 
position, as follows:
    (a) If the employee is reemployed in the escalator position, the 
employer must compensate him or her at the rate of pay associated with 
the escalator position. The rate of pay must be determined by taking 
into account any pay increases, differentials, step increases, merit 
increases, or periodic increases that the employee would have attained 
with reasonable certainty had he or she remained continuously employed 
during the period of service. In addition, when considering whether 
merit or performance increases would have been attained with reasonable 
certainty, an employer may examine the returning employee's own work 
history, his or her history of merit increases, and the work and pay 
history of employees in the same or similar position. For example, if 
the employee missed a merit pay increase while performing service, but 
qualified for previous merit pay increases, then the rate of pay should 
include the merit pay increase that was missed. If the merit pay 
increase that the employee missed during service is based on a skills 
test or examination, then the employer should give the employee a 
reasonable amount of time to adjust to the reemployment position and 
then give him or her the skills test or examination. No fixed amount of 
time for permitting adjustment to reemployment will be deemed reasonable 
in all cases. However, in determining a reasonable amount of time to 
permit an employee to adjust to reemployment before scheduling a makeup 
test or examination, an employer may take into account a variety of 
factors, including but not limited to the length of time the returning 
employee was absent from work, the level of difficulty of the test 
itself, the typical time necessary to prepare or study for the test, the 
duties and responsibilities of the reemployment position and the 
promotional position, and the nature and responsibilities of the service 
member while serving in the uniformed service. The escalator principle 
also applies in the event a pay reduction occurred in the reemployment 
position during the period of service. Any pay adjustment must be made 
effective as of the date it would have occurred had the employee's 
employment not been interrupted by uniformed service.
    (b) If the employee is reemployed in the pre-service position or 
another position, the employer must compensate

[[Page 1145]]

him or her at the rate of pay associated with the position in which he 
or she is reemployed. As with the escalator position, the rate of pay 
must be determined by taking into account any pay increases, 
differentials, step increases, merit increases, or periodic increases 
that the employee would have attained with reasonable certainty had he 
or she remained continuously employed during the period of service.

                      Protection Against Discharge



Sec. 1002.247  Does USERRA provide the employee with protection against 
discharge?

    Yes. If the employee's most recent period of service in the 
uniformed services was more than 30 days, he or she must not be 
discharged except for cause--
    (a) For 180 days after the employee's date of reemployment if his or 
her most recent period of uniformed service was more than 30 days but 
less than 181 days; or,
    (b) For one year after the date of reemployment if the employee's 
most recent period of uniformed service was more than 180 days.



Sec. 1002.248  What constitutes cause for discharge under USERRA?

    The employee may be discharged for cause based either on conduct or, 
in some circumstances, because of the application of other legitimate 
nondiscriminatory reasons.
    (a) In a discharge action based on conduct, the employer bears the 
burden of proving that it is reasonable to discharge the employee for 
the conduct in question, and that he or she had notice, which was 
express or can be fairly implied, that the conduct would constitute 
cause for discharge.
    (b) If, based on the application of other legitimate 
nondiscriminatory reasons, the employee's job position is eliminated, or 
the employee is placed on layoff status, either of these situations 
would constitute cause for purposes of USERRA. The employer bears the 
burden of proving that the employee's job would have been eliminated or 
that he or she would have been laid off.

                          Pension Plan Benefits



Sec. 1002.259  How does USERRA protect an employee's pension benefits?

    On reemployment, the employee is treated as not having a break in 
service with the employer or employers maintaining a pension plan, for 
purposes of participation, vesting and accrual of benefits, by reason of 
the period of absence from employment due to or necessitated by service 
in the uniformed services.
    (a) Depending on the length of the employee's period of service, he 
or she is entitled to take from one to ninety days following service 
before reporting back to work or applying for reemployment (See Sec. 
1002.115). This period of time must be treated as continuous service 
with the employer for purposes of determining participation, vesting and 
accrual of pension benefits under the plan.
    (b) If the employee is hospitalized for, or convalescing from, an 
illness or injury incurred in, or aggravated during, service, he or she 
is entitled to report to or submit an application for reemployment at 
the end of the time period necessary for him or her to recover from the 
illness or injury. This period, which may not exceed two years from the 
date the employee completed service, except in circumstances beyond his 
or her control, must be treated as continuous service with the employer 
for purposes of determining the participation, vesting and accrual of 
pension benefits under the plan.



Sec. 1002.260  What pension benefit plans are covered under USERRA?

    (a) The Employee Retirement Income Security Act of 1974 (ERISA) 
defines an employee pension benefit plan as a plan that provides 
retirement income to employees, or defers employee income to a period 
extending to or beyond the termination of employment. Any such plan 
maintained by the employer or employers is covered under USERRA. USERRA 
also covers certain pension plans not covered by ERISA, such as those 
sponsored by a State, government entity, or church for its employees.

[[Page 1146]]

    (b) USERRA does not cover pension benefits under the Federal Thrift 
Savings Plan; those benefits are covered under 5 U.S.C. 8432b.



Sec. 1002.261  Who is responsible for funding any plan obligation to 
provide the employee with pension benefits?

    With the exception of multiemployer plans, which have separate rules 
discussed below, the employer is liable to the pension benefit plan to 
fund any obligation of the plan to provide benefits that are 
attributable to the employee's period of service. In the case of a 
defined contribution plan, once the employee is reemployed, the employer 
must allocate the amount of its make-up contribution for the employee, 
if any; his or her make-up employee contributions, if any; and his or 
her elective deferrals, if any; in the same manner and to the same 
extent that it allocates the amounts for other employees during the 
period of service. In the case of a defined benefit plan, the employee's 
accrued benefit will be increased for the period of service once he or 
she is reemployed and, if applicable, has repaid any amounts previously 
paid to him or her from the plan and made any employee contributions 
that may be required to be made under the plan.



Sec. 1002.262  When is the employer required to make the plan 
contribution that is attributable to the employee's period of uniformed 
service?

    (a) The employer is not required to make its contribution until the 
employee is reemployed. For employer contributions to a plan in which 
the employee is not required or permitted to contribute, the employer 
must make the contribution attributable to the employee's period of 
service no later than ninety days after the date of reemployment, or 
when plan contributions are normally due for the year in which the 
service in the uniformed services was performed, whichever is later. If 
it is impossible or unreasonable for the employer to make the 
contribution within this time period, the employer must make the 
contribution as soon as practicable.
    (b) If the employee is enrolled in a contributory plan he or she is 
allowed (but not required) to make up his or her missed contributions or 
elective deferrals. These makeup contributions or elective deferrals 
must be made during a time period starting with the date of reemployment 
and continuing for up to three times the length of the employee's 
immediate past period of uniformed service, with the repayment period 
not to exceed five years. Makeup contributions or elective deferrals may 
only be made during this period and while the employee is employed with 
the post-service employer.
    (c) If the employee's plan is contributory and he or she does not 
make up his or her contributions or elective deferrals, he or she will 
not receive the employer match or the accrued benefit attributable to 
his or her contribution because the employer is required to make 
contributions that are contingent on or attributable to the employee's 
contributions or elective deferrals only to the extent that the employee 
makes up his or her payments to the plan. Any employer contributions 
that are contingent on or attributable to the employee's make-up 
contributions or elective deferrals must be made according to the plan's 
requirements for employer matching contributions.
    (d) The employee is not required to make up the full amount of 
employee contributions or elective deferrals that he or she missed 
making during the period of service. If the employee does not make up 
all of the missed contributions or elective deferrals, his or her 
pension may be less than if he or she had done so.
    (e) Any vested accrued benefit in the pension plan that the employee 
was entitled to prior to the period of uniformed service remains intact 
whether or not he or she chooses to be reemployed under the Act after 
leaving the uniformed service.
    (f) An adjustment will be made to the amount of employee 
contributions or elective deferrals the employee will be able to make to 
the pension plan for any employee contributions or elective deferrals he 
or she actually made to the plan during the period of service.

[[Page 1147]]



Sec. 1002.263  Does the employee pay interest when he or she makes up 
missed contributions or elective deferrals?

    No. The employee is not required or permitted to make up a missed 
contribution in an amount that exceeds the amount he or she would have 
been permitted or required to contribute had he or she remained 
continuously employed during the period of service.



Sec. 1002.264  Is the employee allowed to repay a previous distribution 
from a pension benefits plan upon being reemployed?

    Yes, provided the plan is a defined benefit plan. If the employee 
received a distribution of all or part of the accrued benefit from a 
defined benefit plan in connection with his or her service in the 
uniformed services before he or she became reemployed, he or she must be 
allowed to repay the withdrawn amounts when he or she is reemployed. The 
amount the employee must repay includes any interest that would have 
accrued had the monies not been withdrawn. The employee must be allowed 
to repay these amounts during a time period starting with the date of 
reemployment and continuing for up to three times the length of the 
employee's immediate past period of uniformed service, with the 
repayment period not to exceed five years (or such longer time as may be 
agreed to between the employer and the employee), provided the employee 
is employed with the post-service employer during this period.



Sec. 1002.265  If the employee is reemployed with his or her pre-service 
employer, is the employee's pension benefit the same as if he or she had 
remained continuously employed?

    The amount of the employee's pension benefit depends on the type of 
pension plan.
    (a) In a non-contributory defined benefit plan, where the amount of 
the pension benefit is determined according to a specific formula, the 
employee's benefit will be the same as though he or she had remained 
continuously employed during the period of service.
    (b) In a contributory defined benefit plan, the employee will need 
to make up contributions in order to have the same benefit as if he or 
she had remained continuously employed during the period of service.
    (c) In a defined contribution plan, the benefit may not be the same 
as if the employee had remained continuously employed, even though the 
employee and the employer make up any contributions or elective 
deferrals attributable to the period of service, because the employee is 
not entitled to forfeitures and earnings or required to experience 
losses that accrued during the period or periods of service.



Sec. 1002.266  What are the obligations of a multiemployer pension 
benefit plan under USERRA?

    A multiemployer pension benefit plan is one to which more than one 
employer is required to contribute, and which is maintained pursuant to 
one or more collective bargaining agreements between one or more 
employee organizations and more than one employer. The Act uses ERISA's 
definition of a multiemployer plan. In addition to the provisions of 
USERRA that apply to all pension benefit plans, there are provisions 
that apply specifically to multiemployer plans, as follows:
    (a) The last employer that employed the employee before the period 
of service is responsible for making the employer contribution to the 
multiemployer plan, if the plan sponsor does not provide otherwise. If 
the last employer is no longer functional, the plan must nevertheless 
provide coverage to the employee.
    (b) An employer that contributes to a multiemployer plan and that 
reemploys the employee pursuant to USERRA must provide written notice of 
reemployment to the plan administrator within 30 days after the date of 
reemployment. The returning service member should notify the reemploying 
employer that he or she has been reemployed pursuant to USERRA. The 30-
day period within which the reemploying employer must provide written 
notice to the multiemployer plan pursuant to this subsection does not 
begin until the employer has knowledge that the employee was reemployed 
pursuant to USERRA.
    (c) The employee is entitled to the same employer contribution 
whether

[[Page 1148]]

he or she is reemployed by the pre-service employer or by a different 
employer contributing to the same multiemployer plan, provided that the 
pre-service employer and the post-service employer share a common means 
or practice of hiring the employee, such as common participation in a 
union hiring hall.



Sec. 1002.267  How is compensation during the period of service 
calculated in order to determine the employee's pension benefits, 
if benefits are based on compensation?

    In many pension benefit plans, the employee's compensation 
determines the amount of his or her contribution or the retirement 
benefit to which he or she is entitled.
    (a) Where the employee's rate of compensation must be calculated to 
determine pension entitlement, the calculation must be made using the 
rate of pay that the employee would have received but for the period of 
uniformed service.
    (b)(1) Where the rate of pay the employee would have received is not 
reasonably certain, such as where compensation is based on commissions 
earned, the average rate of compensation during the 12-month period 
prior to the period of uniformed service must be used.
    (2) Where the rate of pay the employee would have received is not 
reasonably certain and he or she was employed for less than 12 months 
prior to the period of uniformed service, the average rate of 
compensation must be derived from this shorter period of employment that 
preceded service.



        Subpart F_Compliance Assistance, Enforcement and Remedies

                          Compliance Assistance



Sec. 1002.277  What assistance does the Department of Labor provide 
to employees and employers concerning employment, reemployment, or 
other rights and benefits under USERRA?

    The Secretary, through the Veterans' Employment and Training Service 
(VETS), provides assistance to any person or entity with respect to 
employment and reemployment rights and benefits under USERRA. This 
assistance includes a wide range of compliance assistance outreach 
activities, such as responding to inquiries; conducting USERRA briefings 
and Webcasts; issuing news releases; and, maintaining the elaws USERRA 
Advisor (located at http://www.dol.gov/elaws/userra.htm), the e-VETS 
Resource Advisor and other web-based materials (located at http://
www.dol.gov/vets), which are designed to increase awareness of the Act 
among affected persons, the media, and the general public. In providing 
such assistance, VETS may request the assistance of other Federal and 
State agencies, and utilize the assistance of volunteers.

                       Investigation and Referral



Sec. 1002.288  How does an individual file a USERRA complaint?

    If an individual is claiming entitlement to employment rights or 
benefits or reemployment rights or benefits and alleges that an employer 
has failed or refused, or is about to fail or refuse, to comply with the 
Act, the individual may file a complaint with VETS or initiate a private 
legal action in a court of law (see Sec. 1002.303). A complaint may be 
filed with VETS either in writing, using VETS Form 1010, or 
electronically, using VETS Form e1010 (instructions and the forms can be 
accessed at http://www.dol.gov/elaws/vets/userra/1010.asp). A complaint 
must include the name and address of the employer, a summary of the 
basis for the complaint, and a request for relief.



Sec. 1002.289  How will VETS investigate a USERRA complaint?

    (a) In carrying out any investigation, VETS has, at all reasonable 
times, reasonable access to and the right to interview persons with 
information relevant to the investigation. VETS also has reasonable 
access to, for purposes of examination, the right to copy and receive 
any documents of any person or employer that VETS considers relevant to 
the investigation.

[[Page 1149]]

    (b) VETS may require by subpoena the attendance and testimony of 
witnesses and the production of documents relating to any matter under 
investigation. In case of disobedience of or resistance to the subpoena, 
the Attorney General may, at VETS' request, apply to any district court 
of the United States in whose jurisdiction such disobedience or 
resistance occurs for an order enforcing the subpoena. The district 
courts of the United States have jurisdiction to order compliance with 
the subpoena, and to punish failure to obey a subpoena as a contempt of 
court. This paragraph does not authorize VETS to seek issuance of a 
subpoena to the legislative or judicial branches of the United States.



Sec. 1002.290  Does VETS have the authority to order compliance with 
USERRA?

    No. If VETS determines as a result of an investigation that the 
complaint is meritorious, VETS attempts to resolve the complaint by 
making reasonable efforts to ensure that any persons or entities named 
in the complaint comply with the Act.
    If VETS' efforts do not resolve the complaint, VETS notifies the 
person who submitted the complaint of:
    (a) The results of the investigation; and,
    (b) The person's right to proceed under the enforcement of rights 
provisions in 38 U.S.C. 4323 (against a State or private employer), or 
38 U.S.C. 4324 (against a Federal executive agency or the Office of 
Personnel Management (OPM)).



Sec. 1002.291  What actions may an individual take if the complaint 
is not resolved by VETS?

    If an individual receives a notification from VETS of an 
unsuccessful effort to resolve his or her complaint relating to a State 
or private employer, the individual may request that VETS refer the 
complaint to the Attorney General.



Sec. 1002.292  What can the Attorney General do about the complaint?

    (a) If the Attorney General is reasonably satisfied that an 
individual's complaint is meritorious, meaning that he or she is 
entitled to the rights or benefits sought, the Attorney General may 
appear on his or her behalf and act as the individual's attorney, and 
initiate a legal action to obtain appropriate relief.
    (b) If the Attorney General determines that the individual's 
complaint does not have merit, the Attorney General may decline to 
represent him or her.

 Enforcement of Rights and Benefits Against a State or Private Employer



Sec. 1002.303  Is an individual required to file his or her complaint 
with VETS?

    No. The individual may initiate a private action for relief against 
a State or private employer if he or she decides not to apply to VETS 
for assistance.



Sec. 1002.304  If an individual files a complaint with VETS and VETS' 
efforts do not resolve the complaint, can the individual pursue the 
claim on his or her own?

    Yes. If VETS notifies an individual that it is unable to resolve the 
complaint, the individual may pursue the claim on his or her own. The 
individual may choose to be represented by private counsel whether or 
not the Attorney General decides to represent him or her as to the 
complaint.



Sec. 1002.305  What court has jurisdiction in an action against a State 
or private employer?

    (a) If an action is brought against a State or private employer by 
the Attorney General, the district courts of the United States have 
jurisdiction over the action. If the action is brought against a State 
by the Attorney General, it must be brought in the name of the United 
States as the plaintiff in the action.
    (b) If an action is brought against a State by a person, the action 
may be brought in a State court of competent jurisdiction according to 
the laws of the State.
    (c) If an action is brought against a private employer or a 
political subdivision of a State by a person, the district courts of the 
United States have jurisdiction over the action.

[[Page 1150]]

    (d) An action brought against a State Adjutant General, as an 
employer of a civilian National Guard technician, is considered an 
action against a State for purposes of determining which court has 
jurisdiction.



Sec. 1002.306  Is a National Guard civilian technician considered a 
State or Federal employee for purposes of USERRA?

    A National Guard civilian technician is considered a State employee 
for USERRA purposes, although he or she is considered a Federal employee 
for most other purposes.



Sec. 1002.307  What is the proper venue in an action against a State or 
private employer?

    (a) If an action is brought by the Attorney General against a State, 
the action may proceed in the United States district court for any 
district in which the State exercises any authority or carries out any 
function.
    (b) If an action is brought against a private employer, or a 
political subdivision of a State, the action may proceed in the United 
States district court for any district in which the employer maintains a 
place of business.



Sec. 1002.308  Who has legal standing to bring an action under USERRA?

    An action may be brought only by the United States or by the person, 
or representative of a person, claiming rights or benefits under the 
Act. An employer, prospective employer or other similar entity may not 
bring an action under the Act.



Sec. 1002.309  Who is a necessary party in an action under USERRA?

    In an action under USERRA only an employer or a potential employer, 
as the case may be, is a necessary party respondent. In some 
circumstances, such as where terms in a collective bargaining agreement 
need to be interpreted, the court may allow an interested party to 
intervene in the action.



Sec. 1002.310  How are fees and court costs charged or taxed in an 
action under USERRA?

    No fees or court costs may be charged or taxed against an individual 
if he or she is claiming rights under the Act. If the individual obtains 
private counsel for any action or proceeding to enforce a provision of 
the Act, and prevails, the court may award reasonable attorney fees, 
expert witness fees, and other litigation expenses.



Sec. 1002.311  Is there a statute of limitations in an action under 
USERRA?

    USERRA does not have a statute of limitations, and it expressly 
precludes the application of any State statute of limitations. At least 
one court, however, has held that the four-year general Federal statute 
of limitations, 28 U.S.C. 1658, applies to actions under USERRA. Rogers 
v. City of San Antonio, 2003 WL 1566502 (W.D. Texas), reversed on other 
grounds, 392 F.3d 758 (5th Cir. 2004). But see Akhdary v. City of 
Chattanooga, 2002 WL 32060140 (E.D. Tenn.). In addition, if an 
individual unreasonably delays asserting his or her rights, and that 
unreasonable delay causes prejudice to the employer, the courts have 
recognized the availability of the equitable doctrine of laches to bar a 
claim under USERRA. Accordingly, individuals asserting rights under 
USERRA should determine whether the issue of the applicability of the 
Federal statute of limitations has been resolved and, in any event, act 
promptly to preserve their rights under USERRA.



Sec. 1002.312  What remedies may be awarded for a violation of USERRA?

    In any action or proceeding the court may award relief as follows:
    (a) The court may require the employer to comply with the provisions 
of the Act;
    (b) The court may require the employer to compensate the individual 
for any loss of wages or benefits suffered by reason of the employer's 
failure to comply with the Act;
    (c) The court may require the employer to pay the individual an 
amount equal to the amount of lost wages and benefits as liquidated 
damages, if the court determines that the employer's failure to comply 
with the Act was willful. A violation shall be considered to be willful 
if the employer either knew or showed reckless disregard for

[[Page 1151]]

whether its conduct was prohibited by the Act.
    (d) Any wages, benefits, or liquidated damages awarded under 
paragraphs (b) and (c) of this section are in addition to, and must not 
diminish, any of the other rights and benefits provided by USERRA (such 
as, for example, the right to be employed or reemployed by the 
employer).



Sec. 1002.313  Are there special damages provisions that apply to 
actions initiated in the name of the United States?

    Yes. In an action brought in the name of the United States, for 
which the relief includes compensation for lost wages, benefits, or 
liquidated damages, the compensation must be held in a special deposit 
account and must be paid, on order of the Attorney General, directly to 
the person. If the compensation is not paid to the individual because of 
the Federal Government's inability to do so within a period of three 
years, the compensation must be converted into the Treasury of the 
United States as miscellaneous receipts.



Sec. 1002.314  May a court use its equity powers in an action or 
proceeding under the Act?

    Yes. A court may use its full equity powers, including the issuance 
of temporary or permanent injunctions, temporary restraining orders, and 
contempt orders, to vindicate the rights or benefits guaranteed under 
the Act.

        Appendix to Part 1002--Notice of Your Rights Under USERRA

    Pursuant to 38 U.S.C. 4334(a), each employer shall provide to 
persons entitled to rights and benefits under USERRA a notice of the 
rights, benefits, and obligations of such persons and such employers 
under USERRA. The requirement for the provision of notice under this 
section may be met by the posting of one of the following notices where 
employers customarily place notices for employees. The following texts 
are provided by the Secretary of Labor to employers pursuant to 38 
U.S.C. 4334(b). Text A is appropriate for use by employers in the 
private sector and for State government employers. Text B is appropriate 
for use by Federal Executive Agencies.

    Text A--For Use by Private Sector and State Government Employers

                        Your Rights Under USERRA

    A. The Uniformed Services Employment and Reemployment Rights Act

    USERRA protects the job rights of individuals who voluntarily or 
involuntarily leave employment positions to undertake military service 
or certain types of service in the National Disaster Medical System. 
USERRA also prohibits employers from discriminating against past and 
present members of the uniformed services, and applicants to the 
uniformed services.

                         B. Reemployment Rights

    You have the right to be reemployed in your civilian job if you 
leave that job to perform service in the uniformed service and:
     You ensure that your employer receives advance 
written or verbal notice of your service;
     You have five years or less of cumulative service 
in the uniformed services while with that particular employer;
     You return to work or apply for reemployment in a 
timely manner after conclusion of service; and
     You have not been separated from service with a 
disqualifying discharge or under other than honorable conditions.
    If you are eligible to be reemployed, you must be restored to the 
job and benefits you would have attained if you had not been absent due 
to military service or, in some cases, a comparable job.

         C. Right To Be Free From Discrimination and Retaliation

    If you:
     Are a past or present member of the uniformed 
service;
     Have applied for membership in the uniformed 
service; or
     Are obligated to serve in the uniformed service;
then an employer may not deny you

     Initial employment;
     Reemployment;
     Retention in employment;
     Promotion; or
     Any benefit of employment.

because of this status.

    In addition, an employer may not retaliate against anyone assisting 
in the enforcement of USERRA rights, including testifying or making a 
statement in connection with a proceeding under USERRA, even if that 
person has no service connection.

[[Page 1152]]

                     D. Health Insurance Protection

     If you leave your job to perform military 
service, you have the right to elect to continue your existing employer-
based health plan coverage for you and your dependents for up to 24 
months while in the military.
     Even if you don't elect to continue coverage 
during your military service, you have the right to be reinstated in 
your employer's health plan when you are reemployed, generally without 
any waiting periods or exclusions (e.g., pre-existing condition 
exclusions) except for service-connected illnesses or injuries.

                             E. Enforcement

     The U.S. Department of Labor, Veterans' 
Employment and Training Service (VETS) is authorized to investigate and 
resolve complaints of USERRA violations.
    For assistance in filing a complaint, or for any other information 
on USERRA, contact VETS at 1-866-4-USA-DOL or visit its Web site at 
http://www.dol.gov/vets. An interactive online USERRA Advisor can be 
viewed at http://www.dol.gov/elaws/userra.htm.
     If you file a complaint with VETS and VETS is 
unable to resolve it, you may request that your case be referred to the 
Department of Justice for representation.
     You may also bypass the VETS process and bring a 
civil action against an employer for violations of USERRA.
    The rights listed here may vary depending on the circumstances. The 
text of this notice was prepared by VETS, and may be viewed on the 
Internet at this address: http://www.dol.gov/vets/programs/userra/
poster.htm. Federal law requires employers to notify employees of their 
rights under USERRA, and employers may meet this requirement by 
displaying the text of this notice where they customarily place notices 
for employees.

              Text B--For Use by Federal Executive Agencies

                        Your Rights Under USERRA

    A. The Uniformed Services Employment and Reemployment Rights Act

    USERRA protects the job rights of individuals who voluntarily or 
involuntarily leave employment positions to undertake military service 
or certain types of service in the National Disaster Medical System. 
USERRA also prohibits employers from discriminating against past and 
present members of the uniformed services, and applicants to the 
uniformed services.

                         B. Reemployment Rights

    You have the right to be reemployed in your civilian job if you 
leave that job to perform service in the uniformed service and:
     You ensure that your employer receives advance 
written or verbal notice of your service;
     You have five years or less of cumulative service 
in the uniformed services while with that particular employer;
     You return to work or apply for reemployment in a 
timely manner after conclusion of service; and
     You have not been separated from service with a 
disqualifying discharge or under other than honorable conditions.
    If you are eligible to be reemployed, you must be restored to the 
job and benefits you would have attained if you had not been absent due 
to military service or, in some cases, a comparable job.

         C. Right To Be Free From Discrimination and Retaliation

    If you:
     Are a past or present member of the uniformed 
service;
     Have applied for membership in the uniformed 
service; or
     Are obligated to serve in the uniformed service;

then an employer may not deny you

     Initial employment;
     Reemployment;
     Retention in employment;
     Promotion; or
     Any benefit of employment.

because of this status.

    In addition, an employer may not retaliate against anyone assisting 
in the enforcement of USERRA rights, including testifying or making a 
statement in connection with a proceeding under USERRA, even if that 
person has no service connection.

                     D. Health Insurance Protection

     If you leave your job to perform military 
service, you have the right to elect to continue your existing employer-
based health plan coverage for you and your dependents for up to 24 
months while in the military.
     Even if you don't elect to continue coverage 
during your military service, you have the right to be reinstated in 
your employer's health plan when you are reemployed, generally without 
any waiting periods or exclusions (e.g., pre-existing condition 
exclusions) except for service-connected illnesses or injuries.

                             E. Enforcement

     The U.S. Department of Labor, Veterans' 
Employment and Training Service (VETS) is authorized to investigate and 
resolve complaints of USERRA violations.
    For assistance in filing a complaint, or for any other information 
on USERRA, contact VETS at 1-866-4-USA-DOL or visit its Web site at 
http://www.dol.gov/vets. An interactive

[[Page 1153]]

online USERRA Advisor can be viewed at http://www.dol.gov/elaws/
userra.htm. In some cases involving USERRA claims against Federal 
executive agencies, a complaint filed with VETS before September 30, 
2007, may be transferred to the Office of Special Counsel for 
investigation and resolution pursuant to a demonstration project 
established under Section 204 of the Veterans Benefits Improvement Act 
of 2004, Public Law 108-454 (Dec. 10, 2004).
     If VETS is unable to resolve a complaint that has 
not been transferred for investigation under the demonstration project, 
you may request that your case be referred to the Office of Special 
Counsel for representation.
     You may also bypass the VETS process and bring a 
civil action against an employer for violations of USERRA.
    The rights listed here may vary depending on the circumstances. The 
text of this notice was prepared by VETS, and may be viewed on the 
Internet at this address: http://www.dol.gov/vets/programs/userra/
poster.htm. Federal law requires employers to notify employees of their 
rights under USERRA, and employers may meet this requirement by 
displaying the text of this notice where they customarily place notices 
for employees.

U.S. Department of Labor, Veterans' Employment and Training Service, 1-
866-487-2365.

[70 FR 75316, Dec. 19, 2005]

[[Page 1155]]



                              FINDING AIDS




  --------------------------------------------------------------------

  A list of CFR titles, subtitles, chapters, subchapters and parts and 
an alphabetical list of agencies publishing in the CFR are included in 
the CFR Index and Finding Aids volume to the Code of Federal Regulations 
which is published separately and revised annually.

  Table of CFR Titles and Chapters
  Alphabetical List of Agencies Appearing in the CFR
  List of CFR Sections Affected

[[Page 1157]]



                    Table of CFR Titles and Chapters




                      (Revised as of April 1, 2006)

                      Title 1--General Provisions

         I  Administrative Committee of the Federal Register 
                (Parts 1--49)
        II  Office of the Federal Register (Parts 50--299)
        IV  Miscellaneous Agencies (Parts 400--500)

                    Title 2--Grants and Agreements

            Subtitle A--Office of Management and Budget Guidance 
                for Grants and Agreements
         I  Office of Management and Budget Governmentwide 
                Guidance for Grants and Agreements (Parts 100-199)
        II  Office of Management and Budget Circulars and Guidance 
                (200-299)
            Subtitle B--Federal Agency Regulations for Grants and 
                Agreements [Reserved]


                        Title 3--The President

         I  Executive Office of the President (Parts 100--199)

                           Title 4--Accounts

         I  Government Accountability Office (Parts 1--99)

                   Title 5--Administrative Personnel

         I  Office of Personnel Management (Parts 1--1199)
        II  Merit Systems Protection Board (Parts 1200--1299)
       III  Office of Management and Budget (Parts 1300--1399)
         V  The International Organizations Employees Loyalty 
                Board (Parts 1500--1599)
        VI  Federal Retirement Thrift Investment Board (Parts 
                1600--1699)
      VIII  Office of Special Counsel (Parts 1800--1899)
        IX  Appalachian Regional Commission (Parts 1900--1999)
        XI  Armed Forces Retirement Home (Part 2100)
       XIV  Federal Labor Relations Authority, General Counsel of 
                the Federal Labor Relations Authority and Federal 
                Service Impasses Panel (Parts 2400--2499)

[[Page 1158]]

        XV  Office of Administration, Executive Office of the 
                President (Parts 2500--2599)
       XVI  Office of Government Ethics (Parts 2600--2699)
       XXI  Department of the Treasury (Parts 3100--3199)
      XXII  Federal Deposit Insurance Corporation (Part 3201)
     XXIII  Department of Energy (Part 3301)
      XXIV  Federal Energy Regulatory Commission (Part 3401)
       XXV  Department of the Interior (Part 3501)
      XXVI  Department of Defense (Part 3601)
    XXVIII  Department of Justice (Part 3801)
      XXIX  Federal Communications Commission (Parts 3900--3999)
       XXX  Farm Credit System Insurance Corporation (Parts 4000--
                4099)
      XXXI  Farm Credit Administration (Parts 4100--4199)
    XXXIII  Overseas Private Investment Corporation (Part 4301)
      XXXV  Office of Personnel Management (Part 4501)
        XL  Interstate Commerce Commission (Part 5001)
       XLI  Commodity Futures Trading Commission (Part 5101)
      XLII  Department of Labor (Part 5201)
     XLIII  National Science Foundation (Part 5301)
       XLV  Department of Health and Human Services (Part 5501)
      XLVI  Postal Rate Commission (Part 5601)
     XLVII  Federal Trade Commission (Part 5701)
    XLVIII  Nuclear Regulatory Commission (Part 5801)
         L  Department of Transportation (Part 6001)
       LII  Export-Import Bank of the United States (Part 6201)
      LIII  Department of Education (Parts 6300--6399)
       LIV  Environmental Protection Agency (Part 6401)
        LV  National Endowment for the Arts (Part 6501)
       LVI  National Endowment for the Humanities (Part 6601)
      LVII  General Services Administration (Part 6701)
     LVIII  Board of Governors of the Federal Reserve System (Part 
                6801)
       LIX  National Aeronautics and Space Administration (Part 
                6901)
        LX  United States Postal Service (Part 7001)
       LXI  National Labor Relations Board (Part 7101)
      LXII  Equal Employment Opportunity Commission (Part 7201)
     LXIII  Inter-American Foundation (Part 7301)
       LXV  Department of Housing and Urban Development (Part 
                7501)
      LXVI  National Archives and Records Administration (Part 
                7601)
     LXVII  Institute of Museum and Library Services (Part 7701)
      LXIX  Tennessee Valley Authority (Part 7901)
      LXXI  Consumer Product Safety Commission (Part 8101)
    LXXIII  Department of Agriculture (Part 8301)
     LXXIV  Federal Mine Safety and Health Review Commission (Part 
                8401)
     LXXVI  Federal Retirement Thrift Investment Board (Part 8601)

[[Page 1159]]

    LXXVII  Office of Management and Budget (Part 8701)
     XCVII  Department of Homeland Security Human Resources 
                Management System (Department of Homeland 
                Security--Office of Personnel Management) (Part 
                9701)
      XCIX  Department of Defense Human Resources Management and 
                Labor Relations Systems (Department of Defense--
                Office of Personnel Management) (Part 9901)

                      Title 6--Homeland Security

         I  Department of Homeland Security, Office of the 
                Secretary (Parts 0--99)

                         Title 7--Agriculture

            Subtitle A--Office of the Secretary of Agriculture 
                (Parts 0--26)
            Subtitle B--Regulations of the Department of 
                Agriculture
         I  Agricultural Marketing Service (Standards, 
                Inspections, Marketing Practices), Department of 
                Agriculture (Parts 27--209)
        II  Food and Nutrition Service, Department of Agriculture 
                (Parts 210--299)
       III  Animal and Plant Health Inspection Service, Department 
                of Agriculture (Parts 300--399)
        IV  Federal Crop Insurance Corporation, Department of 
                Agriculture (Parts 400--499)
         V  Agricultural Research Service, Department of 
                Agriculture (Parts 500--599)
        VI  Natural Resources Conservation Service, Department of 
                Agriculture (Parts 600--699)
       VII  Farm Service Agency, Department of Agriculture (Parts 
                700--799)
      VIII  Grain Inspection, Packers and Stockyards 
                Administration (Federal Grain Inspection Service), 
                Department of Agriculture (Parts 800--899)
        IX  Agricultural Marketing Service (Marketing Agreements 
                and Orders; Fruits, Vegetables, Nuts), Department 
                of Agriculture (Parts 900--999)
         X  Agricultural Marketing Service (Marketing Agreements 
                and Orders; Milk), Department of Agriculture 
                (Parts 1000--1199)
        XI  Agricultural Marketing Service (Marketing Agreements 
                and Orders; Miscellaneous Commodities), Department 
                of Agriculture (Parts 1200--1299)
       XIV  Commodity Credit Corporation, Department of 
                Agriculture (Parts 1400--1499)
        XV  Foreign Agricultural Service, Department of 
                Agriculture (Parts 1500--1599)
       XVI  Rural Telephone Bank, Department of Agriculture (Parts 
                1600--1699)
      XVII  Rural Utilities Service, Department of Agriculture 
                (Parts 1700--1799)

[[Page 1160]]

     XVIII  Rural Housing Service, Rural Business-Cooperative 
                Service, Rural Utilities Service, and Farm Service 
                Agency, Department of Agriculture (Parts 1800--
                2099)
        XX  Local Television Loan Guarantee Board (Parts 2200--
                2299)
      XXVI  Office of Inspector General, Department of Agriculture 
                (Parts 2600--2699)
     XXVII  Office of Information Resources Management, Department 
                of Agriculture (Parts 2700--2799)
    XXVIII  Office of Operations, Department of Agriculture (Parts 
                2800--2899)
      XXIX  Office of Energy Policy and New Uses, Department of 
                Agriculture (Parts 2900--2999)
       XXX  Office of the Chief Financial Officer, Department of 
                Agriculture (Parts 3000--3099)
      XXXI  Office of Environmental Quality, Department of 
                Agriculture (Parts 3100--3199)
     XXXII  Office of Procurement and Property Management, 
                Department of Agriculture (Parts 3200--3299)
    XXXIII  Office of Transportation, Department of Agriculture 
                (Parts 3300--3399)
     XXXIV  Cooperative State Research, Education, and Extension 
                Service, Department of Agriculture (Parts 3400--
                3499)
      XXXV  Rural Housing Service, Department of Agriculture 
                (Parts 3500--3599)
     XXXVI  National Agricultural Statistics Service, Department 
                of Agriculture (Parts 3600--3699)
    XXXVII  Economic Research Service, Department of Agriculture 
                (Parts 3700--3799)
   XXXVIII  World Agricultural Outlook Board, Department of 
                Agriculture (Parts 3800--3899)
       XLI  [Reserved]
      XLII  Rural Business-Cooperative Service and Rural Utilities 
                Service, Department of Agriculture (Parts 4200--
                4299)

                    Title 8--Aliens and Nationality

         I  Department of Homeland Security (Immigration and 
                Naturalization) (Parts 1--499)
         V  Executive Office for Immigration Review, Department of 
                Justice (Parts 1000--1399)

                 Title 9--Animals and Animal Products

         I  Animal and Plant Health Inspection Service, Department 
                of Agriculture (Parts 1--199)
        II  Grain Inspection, Packers and Stockyards 
                Administration (Packers and Stockyards Programs), 
                Department of Agriculture (Parts 200--299)
       III  Food Safety and Inspection Service, Department of 
                Agriculture (Parts 300--599)

[[Page 1161]]

                           Title 10--Energy

         I  Nuclear Regulatory Commission (Parts 0--199)
        II  Department of Energy (Parts 200--699)
       III  Department of Energy (Parts 700--999)
         X  Department of Energy (General Provisions) (Parts 
                1000--1099)
      XIII  Nuclear Waste Technical Review Board (Parts 1303--
                1399)
      XVII  Defense Nuclear Facilities Safety Board (Parts 1700--
                1799)
     XVIII  Northeast Interstate Low-Level Radioactive Waste 
                Commission (Part 1800)

                      Title 11--Federal Elections

         I  Federal Election Commission (Parts 1--9099)

                      Title 12--Banks and Banking

         I  Comptroller of the Currency, Department of the 
                Treasury (Parts 1--199)
        II  Federal Reserve System (Parts 200--299)
       III  Federal Deposit Insurance Corporation (Parts 300--399)
        IV  Export-Import Bank of the United States (Parts 400--
                499)
         V  Office of Thrift Supervision, Department of the 
                Treasury (Parts 500--599)
        VI  Farm Credit Administration (Parts 600--699)
       VII  National Credit Union Administration (Parts 700--799)
      VIII  Federal Financing Bank (Parts 800--899)
        IX  Federal Housing Finance Board (Parts 900--999)
        XI  Federal Financial Institutions Examination Council 
                (Parts 1100--1199)
       XIV  Farm Credit System Insurance Corporation (Parts 1400--
                1499)
        XV  Department of the Treasury (Parts 1500--1599)
      XVII  Office of Federal Housing Enterprise Oversight, 
                Department of Housing and Urban Development (Parts 
                1700--1799)
     XVIII  Community Development Financial Institutions Fund, 
                Department of the Treasury (Parts 1800--1899)

               Title 13--Business Credit and Assistance

         I  Small Business Administration (Parts 1--199)
       III  Economic Development Administration, Department of 
                Commerce (Parts 300--399)
        IV  Emergency Steel Guarantee Loan Board, Department of 
                Commerce (Parts 400--499)
         V  Emergency Oil and Gas Guaranteed Loan Board, 
                Department of Commerce (Parts 500--599)

[[Page 1162]]

                    Title 14--Aeronautics and Space

         I  Federal Aviation Administration, Department of 
                Transportation (Parts 1--199)
        II  Office of the Secretary, Department of Transportation 
                (Aviation Proceedings) (Parts 200--399)
       III  Commercial Space Transportation, Federal Aviation 
                Administration, Department of Transportation 
                (Parts 400--499)
         V  National Aeronautics and Space Administration (Parts 
                1200--1299)
        VI  Air Transportation System Stabilization (Parts 1300--
                1399)

                 Title 15--Commerce and Foreign Trade

            Subtitle A--Office of the Secretary of Commerce (Parts 
                0--29)
            Subtitle B--Regulations Relating to Commerce and 
                Foreign Trade
         I  Bureau of the Census, Department of Commerce (Parts 
                30--199)
        II  National Institute of Standards and Technology, 
                Department of Commerce (Parts 200--299)
       III  International Trade Administration, Department of 
                Commerce (Parts 300--399)
        IV  Foreign-Trade Zones Board, Department of Commerce 
                (Parts 400--499)
       VII  Bureau of Industry and Security, Department of 
                Commerce (Parts 700--799)
      VIII  Bureau of Economic Analysis, Department of Commerce 
                (Parts 800--899)
        IX  National Oceanic and Atmospheric Administration, 
                Department of Commerce (Parts 900--999)
        XI  Technology Administration, Department of Commerce 
                (Parts 1100--1199)
      XIII  East-West Foreign Trade Board (Parts 1300--1399)
       XIV  Minority Business Development Agency (Parts 1400--
                1499)
            Subtitle C--Regulations Relating to Foreign Trade 
                Agreements
        XX  Office of the United States Trade Representative 
                (Parts 2000--2099)
            Subtitle D--Regulations Relating to Telecommunications 
                and Information
     XXIII  National Telecommunications and Information 
                Administration, Department of Commerce (Parts 
                2300--2399)

                    Title 16--Commercial Practices

         I  Federal Trade Commission (Parts 0--999)
        II  Consumer Product Safety Commission (Parts 1000--1799)

[[Page 1163]]

             Title 17--Commodity and Securities Exchanges

         I  Commodity Futures Trading Commission (Parts 1--199)
        II  Securities and Exchange Commission (Parts 200--399)
        IV  Department of the Treasury (Parts 400--499)

          Title 18--Conservation of Power and Water Resources

         I  Federal Energy Regulatory Commission, Department of 
                Energy (Parts 1--399)
       III  Delaware River Basin Commission (Parts 400--499)
        VI  Water Resources Council (Parts 700--799)
      VIII  Susquehanna River Basin Commission (Parts 800--899)
      XIII  Tennessee Valley Authority (Parts 1300--1399)

                       Title 19--Customs Duties

         I  Bureau of Customs and Border Protection, Department of 
                Homeland Security; Department of the Treasury 
                (Parts 0--199)
        II  United States International Trade Commission (Parts 
                200--299)
       III  International Trade Administration, Department of 
                Commerce (Parts 300--399)
        IV  Bureau of Immigration and Customs Enforcement, 
                Department of Homeland Security (Parts 400--599)

                     Title 20--Employees' Benefits

         I  Office of Workers' Compensation Programs, Department 
                of Labor (Parts 1--199)
        II  Railroad Retirement Board (Parts 200--399)
       III  Social Security Administration (Parts 400--499)
        IV  Employees Compensation Appeals Board, Department of 
                Labor (Parts 500--599)
         V  Employment and Training Administration, Department of 
                Labor (Parts 600--699)
        VI  Employment Standards Administration, Department of 
                Labor (Parts 700--799)
       VII  Benefits Review Board, Department of Labor (Parts 
                800--899)
      VIII  Joint Board for the Enrollment of Actuaries (Parts 
                900--999)
        IX  Office of the Assistant Secretary for Veterans' 
                Employment and Training, Department of Labor 
                (Parts 1000--1099)

                       Title 21--Food and Drugs

         I  Food and Drug Administration, Department of Health and 
                Human Services (Parts 1--1299)
        II  Drug Enforcement Administration, Department of Justice 
                (Parts 1300--1399)
       III  Office of National Drug Control Policy (Parts 1400--
                1499)

[[Page 1164]]

                      Title 22--Foreign Relations

         I  Department of State (Parts 1--199)
        II  Agency for International Development (Parts 200--299)
       III  Peace Corps (Parts 300--399)
        IV  International Joint Commission, United States and 
                Canada (Parts 400--499)
         V  Broadcasting Board of Governors (Parts 500--599)
       VII  Overseas Private Investment Corporation (Parts 700--
                799)
        IX  Foreign Service Grievance Board Regulations (Parts 
                900--999)
         X  Inter-American Foundation (Parts 1000--1099)
        XI  International Boundary and Water Commission, United 
                States and Mexico, United States Section (Parts 
                1100--1199)
       XII  United States International Development Cooperation 
                Agency (Parts 1200--1299)
       XIV  Foreign Service Labor Relations Board; Federal Labor 
                Relations Authority; General Counsel of the 
                Federal Labor Relations Authority; and the Foreign 
                Service Impasse Disputes Panel (Parts 1400--1499)
        XV  African Development Foundation (Parts 1500--1599)
       XVI  Japan-United States Friendship Commission (Parts 
                1600--1699)
      XVII  United States Institute of Peace (Parts 1700--1799)

                          Title 23--Highways

         I  Federal Highway Administration, Department of 
                Transportation (Parts 1--999)
        II  National Highway Traffic Safety Administration and 
                Federal Highway Administration, Department of 
                Transportation (Parts 1200--1299)
       III  National Highway Traffic Safety Administration, 
                Department of Transportation (Parts 1300--1399)

                Title 24--Housing and Urban Development

            Subtitle A--Office of the Secretary, Department of 
                Housing and Urban Development (Parts 0--99)
            Subtitle B--Regulations Relating to Housing and Urban 
                Development
         I  Office of Assistant Secretary for Equal Opportunity, 
                Department of Housing and Urban Development (Parts 
                100--199)
        II  Office of Assistant Secretary for Housing-Federal 
                Housing Commissioner, Department of Housing and 
                Urban Development (Parts 200--299)
       III  Government National Mortgage Association, Department 
                of Housing and Urban Development (Parts 300--399)
        IV  Office of Housing and Office of Multifamily Housing 
                Assistance Restructuring, Department of Housing 
                and Urban Development (Parts 400--499)
         V  Office of Assistant Secretary for Community Planning 
                and Development, Department of Housing and Urban 
                Development (Parts 500--599)

[[Page 1165]]

        VI  Office of Assistant Secretary for Community Planning 
                and Development, Department of Housing and Urban 
                Development (Parts 600--699) [Reserved]
       VII  Office of the Secretary, Department of Housing and 
                Urban Development (Housing Assistance Programs and 
                Public and Indian Housing Programs) (Parts 700--
                799)
      VIII  Office of the Assistant Secretary for Housing--Federal 
                Housing Commissioner, Department of Housing and 
                Urban Development (Section 8 Housing Assistance 
                Programs, Section 202 Direct Loan Program, Section 
                202 Supportive Housing for the Elderly Program and 
                Section 811 Supportive Housing for Persons With 
                Disabilities Program) (Parts 800--899)
        IX  Office of Assistant Secretary for Public and Indian 
                Housing, Department of Housing and Urban 
                Development (Parts 900--1699)
         X  Office of Assistant Secretary for Housing--Federal 
                Housing Commissioner, Department of Housing and 
                Urban Development (Interstate Land Sales 
                Registration Program) (Parts 1700--1799)
       XII  Office of Inspector General, Department of Housing and 
                Urban Development (Parts 2000--2099)
        XX  Office of Assistant Secretary for Housing--Federal 
                Housing Commissioner, Department of Housing and 
                Urban Development (Parts 3200--3899)
       XXV  Neighborhood Reinvestment Corporation (Parts 4100--
                4199)

                           Title 25--Indians

         I  Bureau of Indian Affairs, Department of the Interior 
                (Parts 1--299)
        II  Indian Arts and Crafts Board, Department of the 
                Interior (Parts 300--399)
       III  National Indian Gaming Commission, Department of the 
                Interior (Parts 500--599)
        IV  Office of Navajo and Hopi Indian Relocation (Parts 
                700--799)
         V  Bureau of Indian Affairs, Department of the Interior, 
                and Indian Health Service, Department of Health 
                and Human Services (Part 900)
        VI  Office of the Assistant Secretary-Indian Affairs, 
                Department of the Interior (Parts 1000--1199)
       VII  Office of the Special Trustee for American Indians, 
                Department of the Interior (Part 1200)

                      Title 26--Internal Revenue

         I  Internal Revenue Service, Department of the Treasury 
                (Parts 1--899)

           Title 27--Alcohol, Tobacco Products and Firearms

         I  Alcohol and Tobacco Tax and Trade Bureau, Department 
                of the Treasury (Parts 1--399)

[[Page 1166]]

        II  Bureau of Alcohol, Tobacco, Firearms, and Explosives, 
                Department of Justice (Parts 400--699)

                   Title 28--Judicial Administration

         I  Department of Justice (Parts 0--299)
       III  Federal Prison Industries, Inc., Department of Justice 
                (Parts 300--399)
         V  Bureau of Prisons, Department of Justice (Parts 500--
                599)
        VI  Offices of Independent Counsel, Department of Justice 
                (Parts 600--699)
       VII  Office of Independent Counsel (Parts 700--799)
      VIII  Court Services and Offender Supervision Agency for the 
                District of Columbia (Parts 800--899)
        IX  National Crime Prevention and Privacy Compact Council 
                (Parts 900--999)
        XI  Department of Justice and Department of State (Parts 
                1100--1199)

                            Title 29--Labor

            Subtitle A--Office of the Secretary of Labor (Parts 
                0--99)
            Subtitle B--Regulations Relating to Labor
         I  National Labor Relations Board (Parts 100--199)
        II  Office of Labor-Management Standards, Department of 
                Labor (Parts 200--299)
       III  National Railroad Adjustment Board (Parts 300--399)
        IV  Office of Labor-Management Standards, Department of 
                Labor (Parts 400--499)
         V  Wage and Hour Division, Department of Labor (Parts 
                500--899)
        IX  Construction Industry Collective Bargaining Commission 
                (Parts 900--999)
         X  National Mediation Board (Parts 1200--1299)
       XII  Federal Mediation and Conciliation Service (Parts 
                1400--1499)
       XIV  Equal Employment Opportunity Commission (Parts 1600--
                1699)
      XVII  Occupational Safety and Health Administration, 
                Department of Labor (Parts 1900--1999)
        XX  Occupational Safety and Health Review Commission 
                (Parts 2200--2499)
       XXV  Employee Benefits Security Administration, Department 
                of Labor (Parts 2500--2599)
     XXVII  Federal Mine Safety and Health Review Commission 
                (Parts 2700--2799)
        XL  Pension Benefit Guaranty Corporation (Parts 4000--
                4999)

[[Page 1167]]

                      Title 30--Mineral Resources

         I  Mine Safety and Health Administration, Department of 
                Labor (Parts 1--199)
        II  Minerals Management Service, Department of the 
                Interior (Parts 200--299)
       III  Board of Surface Mining and Reclamation Appeals, 
                Department of the Interior (Parts 300--399)
        IV  Geological Survey, Department of the Interior (Parts 
                400--499)
       VII  Office of Surface Mining Reclamation and Enforcement, 
                Department of the Interior (Parts 700--999)

                 Title 31--Money and Finance: Treasury

            Subtitle A--Office of the Secretary of the Treasury 
                (Parts 0--50)
            Subtitle B--Regulations Relating to Money and Finance
         I  Monetary Offices, Department of the Treasury (Parts 
                51--199)
        II  Fiscal Service, Department of the Treasury (Parts 
                200--399)
        IV  Secret Service, Department of the Treasury (Parts 
                400--499)
         V  Office of Foreign Assets Control, Department of the 
                Treasury (Parts 500--599)
        VI  Bureau of Engraving and Printing, Department of the 
                Treasury (Parts 600--699)
       VII  Federal Law Enforcement Training Center, Department of 
                the Treasury (Parts 700--799)
      VIII  Office of International Investment, Department of the 
                Treasury (Parts 800--899)
        IX  Federal Claims Collection Standards (Department of the 
                Treasury--Department of Justice) (Parts 900--999)

                      Title 32--National Defense

            Subtitle A--Department of Defense
         I  Office of the Secretary of Defense (Parts 1--399)
         V  Department of the Army (Parts 400--699)
        VI  Department of the Navy (Parts 700--799)
       VII  Department of the Air Force (Parts 800--1099)
            Subtitle B--Other Regulations Relating to National 
                Defense
       XII  Defense Logistics Agency (Parts 1200--1299)
       XVI  Selective Service System (Parts 1600--1699)
     XVIII  National Counterintelligence Center (Parts 1800--1899)
       XIX  Central Intelligence Agency (Parts 1900--1999)
        XX  Information Security Oversight Office, National 
                Archives and Records Administration (Parts 2000--
                2099)
       XXI  National Security Council (Parts 2100--2199)
      XXIV  Office of Science and Technology Policy (Parts 2400--
                2499)
     XXVII  Office for Micronesian Status Negotiations (Parts 
                2700--2799)

[[Page 1168]]

    XXVIII  Office of the Vice President of the United States 
                (Parts 2800--2899)

               Title 33--Navigation and Navigable Waters

         I  Coast Guard, Department of Homeland Security (Parts 
                1--199)
        II  Corps of Engineers, Department of the Army (Parts 
                200--399)
        IV  Saint Lawrence Seaway Development Corporation, 
                Department of Transportation (Parts 400--499)

                          Title 34--Education

            Subtitle A--Office of the Secretary, Department of 
                Education (Parts 1--99)
            Subtitle B--Regulations of the Offices of the 
                Department of Education
         I  Office for Civil Rights, Department of Education 
                (Parts 100--199)
        II  Office of Elementary and Secondary Education, 
                Department of Education (Parts 200--299)
       III  Office of Special Education and Rehabilitative 
                Services, Department of Education (Parts 300--399)
        IV  Office of Vocational and Adult Education, Department 
                of Education (Parts 400--499)
         V  Office of Bilingual Education and Minority Languages 
                Affairs, Department of Education (Parts 500--599)
        VI  Office of Postsecondary Education, Department of 
                Education (Parts 600--699)
        XI  National Institute for Literacy (Parts 1100--1199)
            Subtitle C--Regulations Relating to Education
       XII  National Council on Disability (Parts 1200--1299)

                          Title 35 [Reserved]

             Title 36--Parks, Forests, and Public Property

         I  National Park Service, Department of the Interior 
                (Parts 1--199)
        II  Forest Service, Department of Agriculture (Parts 200--
                299)
       III  Corps of Engineers, Department of the Army (Parts 
                300--399)
        IV  American Battle Monuments Commission (Parts 400--499)
         V  Smithsonian Institution (Parts 500--599)
       VII  Library of Congress (Parts 700--799)
      VIII  Advisory Council on Historic Preservation (Parts 800--
                899)
        IX  Pennsylvania Avenue Development Corporation (Parts 
                900--999)
         X  Presidio Trust (Parts 1000--1099)
        XI  Architectural and Transportation Barriers Compliance 
                Board (Parts 1100--1199)
       XII  National Archives and Records Administration (Parts 
                1200--1299)
        XV  Oklahoma City National Memorial Trust (Part 1501)

[[Page 1169]]

       XVI  Morris K. Udall Scholarship and Excellence in National 
                Environmental Policy Foundation (Parts 1600--1699)

             Title 37--Patents, Trademarks, and Copyrights

         I  United States Patent and Trademark Office, Department 
                of Commerce (Parts 1--199)
        II  Copyright Office, Library of Congress (Parts 200--299)
       III  Copyright Royalty Board, Library of Congress (Parts 
                301--399)
        IV  Assistant Secretary for Technology Policy, Department 
                of Commerce (Parts 400--499)
         V  Under Secretary for Technology, Department of Commerce 
                (Parts 500--599)

           Title 38--Pensions, Bonuses, and Veterans' Relief

         I  Department of Veterans Affairs (Parts 0--99)

                       Title 39--Postal Service

         I  United States Postal Service (Parts 1--999)
       III  Postal Rate Commission (Parts 3000--3099)

                  Title 40--Protection of Environment

         I  Environmental Protection Agency (Parts 1--1099)
        IV  Environmental Protection Agency and Department of 
                Justice (Parts 1400--1499)
         V  Council on Environmental Quality (Parts 1500--1599)
        VI  Chemical Safety and Hazard Investigation Board (Parts 
                1600--1699)
       VII  Environmental Protection Agency and Department of 
                Defense; Uniform National Discharge Standards for 
                Vessels of the Armed Forces (Parts 1700--1799)

          Title 41--Public Contracts and Property Management

            Subtitle B--Other Provisions Relating to Public 
                Contracts
        50  Public Contracts, Department of Labor (Parts 50-1--50-
                999)
        51  Committee for Purchase From People Who Are Blind or 
                Severely Disabled (Parts 51-1--51-99)
        60  Office of Federal Contract Compliance Programs, Equal 
                Employment Opportunity, Department of Labor (Parts 
                60-1--60-999)
        61  Office of the Assistant Secretary for Veterans' 
                Employment and Training Service, Department of 
                Labor (Parts 61-1--61-999)
            Subtitle C--Federal Property Management Regulations 
                System
       101  Federal Property Management Regulations (Parts 101-1--
                101-99)
       102  Federal Management Regulation (Parts 102-1--102-299)

[[Page 1170]]

       105  General Services Administration (Parts 105-1--105-999)
       109  Department of Energy Property Management Regulations 
                (Parts 109-1--109-99)
       114  Department of the Interior (Parts 114-1--114-99)
       115  Environmental Protection Agency (Parts 115-1--115-99)
       128  Department of Justice (Parts 128-1--128-99)
            Subtitle D--Other Provisions Relating to Property 
                Management [Reserved]
            Subtitle E--Federal Information Resources Management 
                Regulations System
       201  Federal Information Resources Management Regulation 
                (Parts 201-1--201-99) [Reserved]
            Subtitle F--Federal Travel Regulation System
       300  General (Parts 300-1--300-99)
       301  Temporary Duty (TDY) Travel Allowances (Parts 301-1--
                301-99)
       302  Relocation Allowances (Parts 302-1--302-99)
       303  Payment of Expenses Connected with the Death of 
                Certain Employees (Part 303-1--303-99)
       304  Payment of Travel Expenses from a Non-Federal Source 
                (Parts 304-1--304-99)

                        Title 42--Public Health

         I  Public Health Service, Department of Health and Human 
                Services (Parts 1--199)
        IV  Centers for Medicare & Medicaid Services, Department 
                of Health and Human Services (Parts 400--499)
         V  Office of Inspector General-Health Care, Department of 
                Health and Human Services (Parts 1000--1999)

                   Title 43--Public Lands: Interior

            Subtitle A--Office of the Secretary of the Interior 
                (Parts 1--199)
            Subtitle B--Regulations Relating to Public Lands
         I  Bureau of Reclamation, Department of the Interior 
                (Parts 200--499)
        II  Bureau of Land Management, Department of the Interior 
                (Parts 1000--9999)
       III  Utah Reclamation Mitigation and Conservation 
                Commission (Parts 10000--10010)

             Title 44--Emergency Management and Assistance

         I  Federal Emergency Management Agency, Department of 
                Homeland Security (Parts 0--399)
        IV  Department of Commerce and Department of 
                Transportation (Parts 400--499)

[[Page 1171]]

                       Title 45--Public Welfare

            Subtitle A--Department of Health and Human Services 
                (Parts 1--199)
            Subtitle B--Regulations Relating to Public Welfare
        II  Office of Family Assistance (Assistance Programs), 
                Administration for Children and Families, 
                Department of Health and Human Services (Parts 
                200--299)
       III  Office of Child Support Enforcement (Child Support 
                Enforcement Program), Administration for Children 
                and Families, Department of Health and Human 
                Services (Parts 300--399)
        IV  Office of Refugee Resettlement, Administration for 
                Children and Families, Department of Health and 
                Human Services (Parts 400--499)
         V  Foreign Claims Settlement Commission of the United 
                States, Department of Justice (Parts 500--599)
        VI  National Science Foundation (Parts 600--699)
       VII  Commission on Civil Rights (Parts 700--799)
      VIII  Office of Personnel Management (Parts 800--899)
         X  Office of Community Services, Administration for 
                Children and Families, Department of Health and 
                Human Services (Parts 1000--1099)
        XI  National Foundation on the Arts and the Humanities 
                (Parts 1100--1199)
       XII  Corporation for National and Community Service (Parts 
                1200--1299)
      XIII  Office of Human Development Services, Department of 
                Health and Human Services (Parts 1300--1399)
       XVI  Legal Services Corporation (Parts 1600--1699)
      XVII  National Commission on Libraries and Information 
                Science (Parts 1700--1799)
     XVIII  Harry S. Truman Scholarship Foundation (Parts 1800--
                1899)
       XXI  Commission on Fine Arts (Parts 2100--2199)
     XXIII  Arctic Research Commission (Part 2301)
      XXIV  James Madison Memorial Fellowship Foundation (Parts 
                2400--2499)
       XXV  Corporation for National and Community Service (Parts 
                2500--2599)

                          Title 46--Shipping

         I  Coast Guard, Department of Homeland Security (Parts 
                1--199)
        II  Maritime Administration, Department of Transportation 
                (Parts 200--399)
       III  Coast Guard (Great Lakes Pilotage), Department of 
                Homeland Security (Parts 400--499)
        IV  Federal Maritime Commission (Parts 500--599)

                      Title 47--Telecommunication

         I  Federal Communications Commission (Parts 0--199)

[[Page 1172]]

        II  Office of Science and Technology Policy and National 
                Security Council (Parts 200--299)
       III  National Telecommunications and Information 
                Administration, Department of Commerce (Parts 
                300--399)

           Title 48--Federal Acquisition Regulations System

         1  Federal Acquisition Regulation (Parts 1--99)
         2  Defense Acquisition Regulations System, Department of 
                Defense (Parts 200--299)
         3  Department of Health and Human Services (Parts 300--
                399)
         4  Department of Agriculture (Parts 400--499)
         5  General Services Administration (Parts 500--599)
         6  Department of State (Parts 600--699)
         7  United States Agency for International Development 
                (Parts 700--799)
         8  Department of Veterans Affairs (Parts 800--899)
         9  Department of Energy (Parts 900--999)
        10  Department of the Treasury (Parts 1000--1099)
        12  Department of Transportation (Parts 1200--1299)
        13  Department of Commerce (Parts 1300--1399)
        14  Department of the Interior (Parts 1400--1499)
        15  Environmental Protection Agency (Parts 1500--1599)
        16  Office of Personnel Management, Federal Employees 
                Health Benefits Acquisition Regulation (Parts 
                1600--1699)
        17  Office of Personnel Management (Parts 1700--1799)
        18  National Aeronautics and Space Administration (Parts 
                1800--1899)
        19  Broadcasting Board of Governors (Parts 1900--1999)
        20  Nuclear Regulatory Commission (Parts 2000--2099)
        21  Office of Personnel Management, Federal Employees' 
                Group Life Insurance Federal Acquisition 
                Regulation (Parts 2100--2199)
        23  Social Security Administration (Parts 2300--2399)
        24  Department of Housing and Urban Development (Parts 
                2400--2499)
        25  National Science Foundation (Parts 2500--2599)
        28  Department of Justice (Parts 2800--2899)
        29  Department of Labor (Parts 2900--2999)
        30  Department of Homeland Security, Homeland Security 
                Acquisition Regulation (HSAR) (Parts 3000--3099)
        34  Department of Education Acquisition Regulation (Parts 
                3400--3499)
        35  [Reserved]
        44  Federal Emergency Management Agency (Parts 4400--4499)
        51  Department of the Army Acquisition Regulations (Parts 
                5100--5199)

[[Page 1173]]

        52  Department of the Navy Acquisition Regulations (Parts 
                5200--5299)
        53  Department of the Air Force Federal Acquisition 
                Regulation Supplement (Parts 5300--5399)
        54  Defense Logistics Agency, Department of Defense (Parts 
                5400--5499)
        57  African Development Foundation (Parts 5700--5799)
        61  General Services Administration Board of Contract 
                Appeals (Parts 6100--6199)
        63  Department of Transportation Board of Contract Appeals 
                (Parts 6300--6399)
        99  Cost Accounting Standards Board, Office of Federal 
                Procurement Policy, Office of Management and 
                Budget (Parts 9900--9999)

                       Title 49--Transportation

            Subtitle A--Office of the Secretary of Transportation 
                (Parts 1--99)
            Subtitle B--Other Regulations Relating to 
                Transportation
         I  Pipeline and Hazardous Materials Safety 
                Administration, Department of Transportation 
                (Parts 100--199)
        II  Federal Railroad Administration, Department of 
                Transportation (Parts 200--299)
       III  Federal Motor Carrier Safety Administration, 
                Department of Transportation (Parts 300--399)
        IV  Coast Guard, Department of Homeland Security (Parts 
                400--499)
         V  National Highway Traffic Safety Administration, 
                Department of Transportation (Parts 500--599)
        VI  Federal Transit Administration, Department of 
                Transportation (Parts 600--699)
       VII  National Railroad Passenger Corporation (AMTRAK) 
                (Parts 700--799)
      VIII  National Transportation Safety Board (Parts 800--999)
         X  Surface Transportation Board, Department of 
                Transportation (Parts 1000--1399)
        XI  Research and Innovative Technology Administration, 
                Department of Transportation (Parts 1400--1499)
       XII  Transportation Security Administration, Department of 
                Homeland Security (Parts 1500--1699)

                   Title 50--Wildlife and Fisheries

         I  United States Fish and Wildlife Service, Department of 
                the Interior (Parts 1--199)
        II  National Marine Fisheries Service, National Oceanic 
                and Atmospheric Administration, Department of 
                Commerce (Parts 200--299)
       III  International Fishing and Related Activities (Parts 
                300--399)

[[Page 1174]]

        IV  Joint Regulations (United States Fish and Wildlife 
                Service, Department of the Interior and National 
                Marine Fisheries Service, National Oceanic and 
                Atmospheric Administration, Department of 
                Commerce); Endangered Species Committee 
                Regulations (Parts 400--499)
         V  Marine Mammal Commission (Parts 500--599)
        VI  Fishery Conservation and Management, National Oceanic 
                and Atmospheric Administration, Department of 
                Commerce (Parts 600--699)

                      CFR Index and Finding Aids

            Subject/Agency Index
            List of Agency Prepared Indexes
            Parallel Tables of Statutory Authorities and Rules
            List of CFR Titles, Chapters, Subchapters, and Parts
            Alphabetical List of Agencies Appearing in the CFR

[[Page 1175]]





           Alphabetical List of Agencies Appearing in the CFR




                      (Revised as of April 1, 2006)

                                                  CFR Title, Subtitle or 
                     Agency                               Chapter

Administrative Committee of the Federal Register  1, I
Advanced Research Projects Agency                 32, I
Advisory Council on Historic Preservation         36, VIII
African Development Foundation                    22, XV
  Federal Acquisition Regulation                  48, 57
Agency for International Development, United      22, II
     States
  Federal Acquisition Regulation                  48, 7
Agricultural Marketing Service                    7, I, IX, X, XI
Agricultural Research Service                     7, V
Agriculture Department                            5, LXXIII
  Agricultural Marketing Service                  7, I, IX, X, XI
  Agricultural Research Service                   7, V
  Animal and Plant Health Inspection Service      7, III; 9, I
  Chief Financial Officer, Office of              7, XXX
  Commodity Credit Corporation                    7, XIV
  Cooperative State Research, Education, and      7, XXXIV
       Extension Service
  Economic Research Service                       7, XXXVII
  Energy, Office of                               7, XXIX
  Environmental Quality, Office of                7, XXXI
  Farm Service Agency                             7, VII, XVIII
  Federal Acquisition Regulation                  48, 4
  Federal Crop Insurance Corporation              7, IV
  Food and Nutrition Service                      7, II
  Food Safety and Inspection Service              9, III
  Foreign Agricultural Service                    7, XV
  Forest Service                                  36, II
  Grain Inspection, Packers and Stockyards        7, VIII; 9, II
       Administration
  Information Resources Management, Office of     7, XXVII
  Inspector General, Office of                    7, XXVI
  National Agricultural Library                   7, XLI
  National Agricultural Statistics Service        7, XXXVI
  Natural Resources Conservation Service          7, VI
  Operations, Office of                           7, XXVIII
  Procurement and Property Management, Office of  7, XXXII
  Rural Business-Cooperative Service              7, XVIII, XLII
  Rural Development Administration                7, XLII
  Rural Housing Service                           7, XVIII, XXXV
  Rural Telephone Bank                            7, XVI
  Rural Utilities Service                         7, XVII, XVIII, XLII
  Secretary of Agriculture, Office of             7, Subtitle A
  Transportation, Office of                       7, XXXIII
  World Agricultural Outlook Board                7, XXXVIII
Air Force Department                              32, VII
  Federal Acquisition Regulation Supplement       48, 53
Air Transportation Stabilization Board            14, VI
Alcohol and Tobacco Tax and Trade Bureau          27, I
Alcohol, Tobacco, Firearms, and Explosives,       27, II
     Bureau of
AMTRAK                                            49, VII
American Battle Monuments Commission              36, IV
American Indians, Office of the Special Trustee   25, VII
Animal and Plant Health Inspection Service        7, III; 9, I
Appalachian Regional Commission                   5, IX

[[Page 1176]]

Architectural and Transportation Barriers         36, XI
     Compliance Board
Arctic Research Commission                        45, XXIII
Armed Forces Retirement Home                      5, XI
Army Department                                   32, V
  Engineers, Corps of                             33, II; 36, III
  Federal Acquisition Regulation                  48, 51
Benefits Review Board                             20, VII
Bilingual Education and Minority Languages        34, V
     Affairs, Office of
Blind or Severely Disabled, Committee for         41, 51
     Purchase From People Who Are
Broadcasting Board of Governors                   22, V
  Federal Acquisition Regulation                  48, 19
Census Bureau                                     15, I
Centers for Medicare & Medicaid Services          42, IV
Central Intelligence Agency                       32, XIX
Chief Financial Officer, Office of                7, XXX
Child Support Enforcement, Office of              45, III
Children and Families, Administration for         45, II, III, IV, X
Civil Rights, Commission on                       45, VII
Civil Rights, Office for                          34, I
Coast Guard                                       33, I; 46, I; 49, IV
Coast Guard (Great Lakes Pilotage)                46, III
Commerce Department                               44, IV
  Census Bureau                                   15, I
  Economic Affairs, Under Secretary               37, V
  Economic Analysis, Bureau of                    15, VIII
  Economic Development Administration             13, III
  Emergency Management and Assistance             44, IV
  Federal Acquisition Regulation                  48, 13
  Fishery Conservation and Management             50, VI
  Foreign-Trade Zones Board                       15, IV
  Industry and Security, Bureau of                15, VII
  International Trade Administration              15, III; 19, III
  National Institute of Standards and Technology  15, II
  National Marine Fisheries Service               50, II, IV, VI
  National Oceanic and Atmospheric                15, IX; 50, II, III, IV, 
       Administration                             VI
  National Telecommunications and Information     15, XXIII; 47, III
       Administration
  National Weather Service                        15, IX
  Patent and Trademark Office, United States      37, I
  Productivity, Technology and Innovation,        37, IV
       Assistant Secretary for
  Secretary of Commerce, Office of                15, Subtitle A
  Technology, Under Secretary for                 37, V
  Technology Administration                       15, XI
  Technology Policy, Assistant Secretary for      37, IV
Commercial Space Transportation                   14, III
Commodity Credit Corporation                      7, XIV
Commodity Futures Trading Commission              5, XLI; 17, I
Community Planning and Development, Office of     24, V, VI
     Assistant Secretary for
Community Services, Office of                     45, X
Comptroller of the Currency                       12, I
Construction Industry Collective Bargaining       29, IX
     Commission
Consumer Product Safety Commission                5, LXXI; 16, II
Cooperative State Research, Education, and        7, XXXIV
     Extension Service
Copyright Office                                  37, II
Copyright Royalty Board                           37, III
Corporation for National and Community Service    45, XII, XXV
Cost Accounting Standards Board                   48, 99
Council on Environmental Quality                  40, V
Court Services and Offender Supervision Agency    28, VIII
     for the District of Columbia
Customs and Border Protection Bureau              19, I
Defense Contract Audit Agency                     32, I
Defense Department                                5, XXVI; 32, Subtitle A; 
                                                  40, VII

[[Page 1177]]

  Advanced Research Projects Agency               32, I
  Air Force Department                            32, VII
  Army Department                                 32, V; 33, II; 36, III, 
                                                  48, 51
  Defense Acquisition Regulations System          48, II
  Defense Intelligence Agency                     32, I
  Defense Logistics Agency                        32, I, XII; 48, 54
  Engineers, Corps of                             33, II; 36, III
  National Imagery and Mapping Agency             32, I
  Navy Department                                 32, VI; 48, 52
  Secretary of Defense, Office of                 32, I
Defense Contract Audit Agency                     32, I
Defense Intelligence Agency                       32, I
Defense Logistics Agency                          32, XII; 48, 54
Defense Nuclear Facilities Safety Board           10, XVII
Delaware River Basin Commission                   18, III
District of Columbia, Court Services and          28, VIII
     Offender Supervision Agency for the
Drug Enforcement Administration                   21, II
East-West Foreign Trade Board                     15, XIII
Economic Affairs, Under Secretary                 37, V
Economic Analysis, Bureau of                      15, VIII
Economic Development Administration               13, III
Economic Research Service                         7, XXXVII
Education, Department of                          5, LIII
  Bilingual Education and Minority Languages      34, V
       Affairs, Office of
  Civil Rights, Office for                        34, I
  Educational Research and Improvement, Office    34, VII
       of
  Elementary and Secondary Education, Office of   34, II
  Federal Acquisition Regulation                  48, 34
  Postsecondary Education, Office of              34, VI
  Secretary of Education, Office of               34, Subtitle A
  Special Education and Rehabilitative Services,  34, III
       Office of
  Vocational and Adult Education, Office of       34, IV
Educational Research and Improvement, Office of   34, VII
Elementary and Secondary Education, Office of     34, II
Emergency Oil and Gas Guaranteed Loan Board       13, V
Emergency Steel Guarantee Loan Board              13, IV
Employee Benefits Security Administration         29, XXV
Employees' Compensation Appeals Board             20, IV
Employees Loyalty Board                           5, V
Employment and Training Administration            20, V
Employment Standards Administration               20, VI
Endangered Species Committee                      50, IV
Energy, Department of                             5, XXIII; 10, II, III, X
  Federal Acquisition Regulation                  48, 9
  Federal Energy Regulatory Commission            5, XXIV; 18, I
  Property Management Regulations                 41, 109
Energy, Office of                                 7, XXIX
Engineers, Corps of                               33, II; 36, III
Engraving and Printing, Bureau of                 31, VI
Environmental Protection Agency                   5, LIV; 40, I, IV, VII
  Federal Acquisition Regulation                  48, 15
  Property Management Regulations                 41, 115
Environmental Quality, Office of                  7, XXXI
Equal Employment Opportunity Commission           5, LXII; 29, XIV
Equal Opportunity, Office of Assistant Secretary  24, I
     for
Executive Office of the President                 3, I
  Administration, Office of                       5, XV
  Environmental Quality, Council on               40, V
  Management and Budget, Office of                5, III, LXXVII; 14, VI; 
                                                  48, 99
  National Drug Control Policy, Office of         21, III
  National Security Council                       32, XXI; 47, 2
  Presidential Documents                          3
  Science and Technology Policy, Office of        32, XXIV; 47, II

[[Page 1178]]

  Trade Representative, Office of the United      15, XX
       States
Export-Import Bank of the United States           5, LII; 12, IV
Family Assistance, Office of                      45, II
Farm Credit Administration                        5, XXXI; 12, VI
Farm Credit System Insurance Corporation          5, XXX; 12, XIV
Farm Service Agency                               7, VII, XVIII
Federal Acquisition Regulation                    48, 1
Federal Aviation Administration                   14, I
  Commercial Space Transportation                 14, III
Federal Claims Collection Standards               31, IX
Federal Communications Commission                 5, XXIX; 47, I
Federal Contract Compliance Programs, Office of   41, 60
Federal Crop Insurance Corporation                7, IV
Federal Deposit Insurance Corporation             5, XXII; 12, III
Federal Election Commission                       11, I
Federal Emergency Management Agency               44, I
  Federal Acquisition Regulation                  48, 44
Federal Employees Group Life Insurance Federal    48, 21
     Acquisition Regulation
Federal Employees Health Benefits Acquisition     48, 16
     Regulation
Federal Energy Regulatory Commission              5, XXIV; 18, I
Federal Financial Institutions Examination        12, XI
     Council
Federal Financing Bank                            12, VIII
Federal Highway Administration                    23, I, II
Federal Home Loan Mortgage Corporation            1, IV
Federal Housing Enterprise Oversight Office       12, XVII
Federal Housing Finance Board                     12, IX
Federal Labor Relations Authority, and General    5, XIV; 22, XIV
     Counsel of the Federal Labor Relations 
     Authority
Federal Law Enforcement Training Center           31, VII
Federal Management Regulation                     41, 102
Federal Maritime Commission                       46, IV
Federal Mediation and Conciliation Service        29, XII
Federal Mine Safety and Health Review Commission  5, LXXIV; 29, XXVII
Federal Motor Carrier Safety Administration       49, III
Federal Prison Industries, Inc.                   28, III
Federal Procurement Policy Office                 48, 99
Federal Property Management Regulations           41, 101
Federal Railroad Administration                   49, II
Federal Register, Administrative Committee of     1, I
Federal Register, Office of                       1, II
Federal Reserve System                            12, II
  Board of Governors                              5, LVIII
Federal Retirement Thrift Investment Board        5, VI, LXXVI
Federal Service Impasses Panel                    5, XIV
Federal Trade Commission                          5, XLVII; 16, I
Federal Transit Administration                    49, VI
Federal Travel Regulation System                  41, Subtitle F
Fine Arts, Commission on                          45, XXI
Fiscal Service                                    31, II
Fish and Wildlife Service, United States          50, I, IV
Fishery Conservation and Management               50, VI
Food and Drug Administration                      21, I
Food and Nutrition Service                        7, II
Food Safety and Inspection Service                9, III
Foreign Agricultural Service                      7, XV
Foreign Assets Control, Office of                 31, V
Foreign Claims Settlement Commission of the       45, V
     United States
Foreign Service Grievance Board                   22, IX
Foreign Service Impasse Disputes Panel            22, XIV
Foreign Service Labor Relations Board             22, XIV
Foreign-Trade Zones Board                         15, IV
Forest Service                                    36, II
General Services Administration                   5, LVII; 41, 105
  Contract Appeals, Board of                      48, 61
  Federal Acquisition Regulation                  48, 5
  Federal Management Regulation                   41, 102

[[Page 1179]]

  Federal Property Management Regulations         41, 101
  Federal Travel Regulation System                41, Subtitle F
  General                                         41, 300
  Payment From a Non-Federal Source for Travel    41, 304
       Expenses
  Payment of Expenses Connected With the Death    41, 303
       of Certain Employees
  Relocation Allowances                           41, 302
  Temporary Duty (TDY) Travel Allowances          41, 301
Geological Survey                                 30, IV
Government Accountability Office                  4, I
Government Ethics, Office of                      5, XVI
Government National Mortgage Association          24, III
Grain Inspection, Packers and Stockyards          7, VIII; 9, II
     Administration
Harry S. Truman Scholarship Foundation            45, XVIII
Health and Human Services, Department of          5, XLV; 45, Subtitle A
  Centers for Medicare & Medicaid Services        42, IV
  Child Support Enforcement, Office of            45, III
  Children and Families, Administration for       45, II, III, IV, X
  Community Services, Office of                   45, X
  Defense Acquisition Regulations System          48, 2
  Family Assistance, Office of                    45, II
  Federal Acquisition Regulation                  48, 3
  Food and Drug Administration                    21, I
  Human Development Services, Office of           45, XIII
  Indian Health Service                           25, V; 42, I
  Inspector General (Health Care), Office of      42, V
  Public Health Service                           42, I
  Refugee Resettlement, Office of                 45, IV
Homeland Security, Department of                  6, I
  Coast Guard                                     33, I; 46, I; 49, IV
  Coast Guard (Great Lakes Pilotage)              46, III
  Customs and Border Protection Bureau            19, I
  Federal Emergency Management Agency             44, I
  Immigration and Customs Enforcement Bureau      19, IV
  Immigration and Naturalization                  8, I
  Transportation Security Administration          49, XII
Housing and Urban Development, Department of      5, LXV; 24, Subtitle B
  Community Planning and Development, Office of   24, V, VI
       Assistant Secretary for
  Equal Opportunity, Office of Assistant          24, I
       Secretary for
  Federal Acquisition Regulation                  48, 24
  Federal Housing Enterprise Oversight, Office    12, XVII
       of
  Government National Mortgage Association        24, III
  Housing--Federal Housing Commissioner, Office   24, II, VIII, X, XX
       of Assistant Secretary for
  Housing, Office of, and Multifamily Housing     24, IV
       Assistance Restructuring, Office of
  Inspector General, Office of                    24, XII
  Public and Indian Housing, Office of Assistant  24, IX
       Secretary for
  Secretary, Office of                            24, Subtitle A, VII
Housing--Federal Housing Commissioner, Office of  24, II, VIII, X, XX
     Assistant Secretary for
Housing, Office of, and Multifamily Housing       24, IV
     Assistance Restructuring, Office of
Human Development Services, Office of             45, XIII
Immigration and Customs Enforcement Bureau        19, IV
Immigration and Naturalization                    8, I
Immigration Review, Executive Office for          8, V
Independent Counsel, Office of                    28, VII
Indian Affairs, Bureau of                         25, I, V
Indian Affairs, Office of the Assistant           25, VI
     Secretary
Indian Arts and Crafts Board                      25, II
Indian Health Service                             25, V; 42, I
Industry and Security, Bureau of                  15, VII
Information Resources Management, Office of       7, XXVII
Information Security Oversight Office, National   32, XX
   Archives and Records Administration
[[Page 1180]]

Inspector General
  Agriculture Department                          7, XXVI
  Health and Human Services Department            42, V
  Housing and Urban Development Department        24, XII
Institute of Peace, United States                 22, XVII
Inter-American Foundation                         5, LXIII; 22, X
Interior Department
  American Indians, Office of the Special         25, VII
       Trustee
  Endangered Species Committee                    50, IV
  Federal Acquisition Regulation                  48, 14
  Federal Property Management Regulations System  41, 114
  Fish and Wildlife Service, United States        50, I, IV
  Geological Survey                               30, IV
  Indian Affairs, Bureau of                       25, I, V
  Indian Affairs, Office of the Assistant         25, VI
       Secretary
  Indian Arts and Crafts Board                    25, II
  Land Management, Bureau of                      43, II
  Minerals Management Service                     30, II
  National Indian Gaming Commission               25, III
  National Park Service                           36, I
  Reclamation, Bureau of                          43, I
  Secretary of the Interior, Office of            43, Subtitle A
  Surface Mining and Reclamation Appeals, Board   30, III
       of
  Surface Mining Reclamation and Enforcement,     30, VII
       Office of
Internal Revenue Service                          26, I
International Boundary and Water Commission,      22, XI
     United States and Mexico, United States 
     Section
International Development, United States Agency   22, II
     for
  Federal Acquisition Regulation                  48, 7
International Development Cooperation Agency,     22, XII
     United States
International Fishing and Related Activities      50, III
International Investment, Office of               31, VIII
International Joint Commission, United States     22, IV
     and Canada
International Organizations Employees Loyalty     5, V
     Board
International Trade Administration                15, III; 19, III
International Trade Commission, United States     19, II
Interstate Commerce Commission                    5, XL
James Madison Memorial Fellowship Foundation      45, XXIV
Japan-United States Friendship Commission         22, XVI
Joint Board for the Enrollment of Actuaries       20, VIII
Justice Department                                5, XXVIII; 28, I, XI; 40, 
                                                  IV
  Alcohol, Tobacco, Firearms, and Explosives,     27, II
       Bureau of
  Drug Enforcement Administration                 21, II
  Federal Acquisition Regulation                  48, 28
  Federal Claims Collection Standards             31, IX
  Federal Prison Industries, Inc.                 28, III
  Foreign Claims Settlement Commission of the     45, V
       United States
  Immigration Review, Executive Office for        8, V
  Offices of Independent Counsel                  28, VI
  Prisons, Bureau of                              28, V
  Property Management Regulations                 41, 128
Labor Department                                  5, XLII
  Benefits Review Board                           20, VII
  Employee Benefits Security Administration       29, XXV
  Employees' Compensation Appeals Board           20, IV
  Employment and Training Administration          20, V
  Employment Standards Administration             20, VI
  Federal Acquisition Regulation                  48, 29
  Federal Contract Compliance Programs, Office    41, 60
       of
  Federal Procurement Regulations System          41, 50
  Labor-Management Standards, Office of           29, II, IV
  Mine Safety and Health Administration           30, I
  Occupational Safety and Health Administration   29, XVII
  Public Contracts                                41, 50

[[Page 1181]]

  Secretary of Labor, Office of                   29, Subtitle A
  Veterans' Employment and Training Service,      41, 61; 20, IX
       Office of the Assistant Secretary for
  Wage and Hour Division                          29, V
  Workers' Compensation Programs, Office of       20, I
Labor-Management Standards, Office of             29, II, IV
Land Management, Bureau of                        43, II
Legal Services Corporation                        45, XVI
Library of Congress                               36, VII
  Copyright Office                                37, II
  Copyright Royalty Board                         37, III
Local Television Loan Guarantee Board             7, XX
Management and Budget, Office of                  5, III, LXXVII; 14, VI; 
                                                  48, 99
Marine Mammal Commission                          50, V
Maritime Administration                           46, II
Merit Systems Protection Board                    5, II
Micronesian Status Negotiations, Office for       32, XXVII
Mine Safety and Health Administration             30, I
Minerals Management Service                       30, II
Minority Business Development Agency              15, XIV
Miscellaneous Agencies                            1, IV
Monetary Offices                                  31, I
Morris K. Udall Scholarship and Excellence in     36, XVI
     National Environmental Policy Foundation
National Aeronautics and Space Administration     5, LIX; 14, V
  Federal Acquisition Regulation                  48, 18
National Agricultural Library                     7, XLI
National Agricultural Statistics Service          7, XXXVI
National and Community Service, Corporation for   45, XII, XXV
National Archives and Records Administration      5, LXVI; 36, XII
  Information Security Oversight Office           32, XX
National Bureau of Standards                      15, II
National Capital Planning Commission              1, IV
National Commission for Employment Policy         1, IV
National Commission on Libraries and Information  45, XVII
     Science
National Council on Disability                    34, XII
National Counterintelligence Center               32, XVIII
National Credit Union Administration              12, VII
National Crime Prevention and Privacy Compact     28, IX
     Council
National Drug Control Policy, Office of           21, III
National Foundation on the Arts and the           45, XI
     Humanities
National Highway Traffic Safety Administration    23, II, III; 49, V
National Imagery and Mapping Agency               32, I
National Indian Gaming Commission                 25, III
National Institute for Literacy                   34, XI
National Institute of Standards and Technology    15, II
National Labor Relations Board                    5, LXI; 29, I
National Marine Fisheries Service                 50, II, IV, VI
National Mediation Board                          29, X
National Oceanic and Atmospheric Administration   15, IX; 50, II, III, IV, 
                                                  VI
National Park Service                             36, I
National Railroad Adjustment Board                29, III
National Railroad Passenger Corporation (AMTRAK)  49, VII
National Science Foundation                       5, XLIII; 45, VI
  Federal Acquisition Regulation                  48, 25
National Security Council                         32, XXI
National Security Council and Office of Science   47, II
     and Technology Policy
National Telecommunications and Information       15, XXIII; 47, III
     Administration
National Transportation Safety Board              49, VIII
National Weather Service                          15, IX
Natural Resources Conservation Service            7, VI
Navajo and Hopi Indian Relocation, Office of      25, IV
Navy Department                                   32, VI
  Federal Acquisition Regulation                  48, 52

[[Page 1182]]

Neighborhood Reinvestment Corporation             24, XXV
Northeast Interstate Low-Level Radioactive Waste  10, XVIII
     Commission
Nuclear Regulatory Commission                     5, XLVIII; 10, I
  Federal Acquisition Regulation                  48, 20
Occupational Safety and Health Administration     29, XVII
Occupational Safety and Health Review Commission  29, XX
Offices of Independent Counsel                    28, VI
Oklahoma City National Memorial Trust             36, XV
Operations Office                                 7, XXVIII
Overseas Private Investment Corporation           5, XXXIII; 22, VII
Patent and Trademark Office, United States        37, I
Payment From a Non-Federal Source for Travel      41, 304
     Expenses
Payment of Expenses Connected With the Death of   41, 303
     Certain Employees
Peace Corps                                       22, III
Pennsylvania Avenue Development Corporation       36, IX
Pension Benefit Guaranty Corporation              29, XL
Personnel Management, Office of                   5, I, XXXV; 45, VIII
  Federal Acquisition Regulation                  48, 17
  Federal Employees Group Life Insurance Federal  48, 21
       Acquisition Regulation
  Federal Employees Health Benefits Acquisition   48, 16
       Regulation
Pipeline and Hazardous Materials Safety           49, I
     Administration
Postal Rate Commission                            5, XLVI; 39, III
Postal Service, United States                     5, LX; 39, I
Postsecondary Education, Office of                34, VI
President's Commission on White House             1, IV
     Fellowships
Presidential Documents                            3
Presidio Trust                                    36, X
Prisons, Bureau of                                28, V
Procurement and Property Management, Office of    7, XXXII
Productivity, Technology and Innovation,          37, IV
     Assistant Secretary
Public Contracts, Department of Labor             41, 50
Public and Indian Housing, Office of Assistant    24, IX
     Secretary for
Public Health Service                             42, I
Railroad Retirement Board                         20, II
Reclamation, Bureau of                            43, I
Refugee Resettlement, Office of                   45, IV
Regional Action Planning Commissions              13, V
Relocation Allowances                             41, 302
Research and Innovative Technology                49, XI
     Administration
Rural Business-Cooperative Service                7, XVIII, XLII
Rural Development Administration                  7, XLII
Rural Housing Service                             7, XVIII, XXXV
Rural Telephone Bank                              7, XVI
Rural Utilities Service                           7, XVII, XVIII, XLII
Saint Lawrence Seaway Development Corporation     33, IV
Science and Technology Policy, Office of          32, XXIV
Science and Technology Policy, Office of, and     47, II
     National Security Council
Secret Service                                    31, IV
Securities and Exchange Commission                17, II
Selective Service System                          32, XVI
Small Business Administration                     13, I
Smithsonian Institution                           36, V
Social Security Administration                    20, III; 48, 23
Soldiers' and Airmen's Home, United States        5, XI
Special Counsel, Office of                        5, VIII
Special Education and Rehabilitative Services,    34, III
     Office of
State Department                                  22, I; 28, XI
  Federal Acquisition Regulation                  48, 6
Surface Mining and Reclamation Appeals, Board of  30, III
Surface Mining Reclamation and Enforcement,       30, VII
     Office of
Surface Transportation Board                      49, X
Susquehanna River Basin Commission                18, VIII

[[Page 1183]]

Technology Administration                         15, XI
Technology Policy, Assistant Secretary for        37, IV
Technology, Under Secretary for                   37, V
Tennessee Valley Authority                        5, LXIX; 18, XIII
Thrift Supervision Office, Department of the      12, V
     Treasury
Trade Representative, United States, Office of    15, XX
Transportation, Department of                     5, L
  Commercial Space Transportation                 14, III
  Contract Appeals, Board of                      48, 63
  Emergency Management and Assistance             44, IV
  Federal Acquisition Regulation                  48, 12
  Federal Aviation Administration                 14, I
  Federal Highway Administration                  23, I, II
  Federal Motor Carrier Safety Administration     49, III
  Federal Railroad Administration                 49, II
  Federal Transit Administration                  49, VI
  Maritime Administration                         46, II
  National Highway Traffic Safety Administration  23, II, III; 49, V
  Pipeline and Hazardous Materials Safety         49, I
       Administration
  Saint Lawrence Seaway Development Corporation   33, IV
  Secretary of Transportation, Office of          14, II; 49, Subtitle A
  Surface Transportation Board                    49, X
  Transportation Statistics Bureau                49, XI
Transportation, Office of                         7, XXXIII
Transportation Security Administration            49, XII
Transportation Statistics Bureau                  49, XI
Travel Allowances, Temporary Duty (TDY)           41, 301
Treasury Department                               5, XXI; 12, XV; 17, IV; 
                                                  31, IX
  Alcohol and Tobacco Tax and Trade Bureau        27, I
  Community Development Financial Institutions    12, XVIII
       Fund
  Comptroller of the Currency                     12, I
  Customs and Border Protection Bureau            19, I
  Engraving and Printing, Bureau of               31, VI
  Federal Acquisition Regulation                  48, 10
  Federal Law Enforcement Training Center         31, VII
  Fiscal Service                                  31, II
  Foreign Assets Control, Office of               31, V
  Internal Revenue Service                        26, I
  International Investment, Office of             31, VIII
  Monetary Offices                                31, I
  Secret Service                                  31, IV
  Secretary of the Treasury, Office of            31, Subtitle A
  Thrift Supervision, Office of                   12, V
Truman, Harry S. Scholarship Foundation           45, XVIII
United States and Canada, International Joint     22, IV
     Commission
United States and Mexico, International Boundary  22, XI
     and Water Commission, United States Section
Utah Reclamation Mitigation and Conservation      43, III
     Commission
Veterans Affairs Department                       38, I
  Federal Acquisition Regulation                  48, 8
Veterans' Employment and Training Service,        41, 61; 20, IX
     Office of the Assistant Secretary for
Vice President of the United States, Office of    32, XXVIII
Vocational and Adult Education, Office of         34, IV
Wage and Hour Division                            29, V
Water Resources Council                           18, VI
Workers' Compensation Programs, Office of         20, I
World Agricultural Outlook Board                  7, XXXVIII

[[Page 1185]]



List of CFR Sections Affected



All changes in this volume of the Code of Federal Regulations that were 
made by documents published in the Federal Register since January 1, 
2001, are enumerated in the following list. Entries indicate the nature 
of the changes effected. Page numbers refer to Federal Register pages. 
The user should consult the entries for chapters and parts as well as 
sections for revisions.
For the period before January 1, 2001, see the ``List of CFR Sections 
Affected, 1949-1963, 1964-1972, 1973-1985, and 1986-2000,'' published in 
11 separate volumes.

                                  2001

20 CFR
                                                                   66 FR
                                                                    Page
Chapter V
625.5 (c) added; interim...........................................56962
645 Revised; interim................................................2711
    Regulation at 66 FR 2711 eff. date delayed to 4-13-01; interim
                                                                    9763
655.0 Regulation at 65 FR 43542 and 67628 eff. date delayed to 9-
        27-02......................................................49275
    Regulation at 66 FR 49275 eff. date correctly extended to 9-
27-02..............................................................51095
655.00 Regulation at 65 FR 43542 and 67628 eff. date delayed to 9-
        27-02......................................................49275
    Regulation at 66 FR 49275 eff. date correctly extended to 9-
27-02..............................................................51095
655.90--655.113 (Subpart B) Regulation at 65 FR 43542 and 67628 
        eff. date delayed to 9-27-02...............................49275
    Regulation at 66 FR 49275 eff. date correctly extended to 9-
27-02..............................................................51095
655.92 Regulation at 65 FR 43542 and 67628 eff. date delayed to 9-
        27-02......................................................49275
    Regulation at 66 FR 49275 eff. date correctly extended to 9-
27-02..............................................................51095
655.100 Regulation at 65 FR 43543 and 67628 eff. date delayed to 
        9-27-02....................................................49275
    Regulation at 66 FR 49275 eff. date correctly extended to 9-
27-02..............................................................51095
655.101 Regulation at 65 FR 43543 and 67628 eff. date delayed to 
        9-27-02....................................................49275
    Regulation at 66 FR 49275 eff. date correctly extended to 9-
27-02..............................................................51095
655.103 Regulation at 65 FR 43543 and 67628 eff. date delayed to 
        9-27-02....................................................49275
    Regulation at 66 FR 49275 eff. date correctly extended to 9-
27-02..............................................................51095
655.104 Regulation at 65 FR 43543 and 67628 eff. date delayed to 
        9-27-02....................................................49275
    Regulation at 66 FR 49275 eff. date correctly extended to 9-
27-02..............................................................51095
655.105 Regulation at 65 FR 43543 and 67628 eff. date delayed to 
        9-27-02....................................................49275
    Regulation at 66 FR 49275 eff. date correctly extended to 9-
27-02..............................................................51095
655.106 Regulation at 65 FR 43543 and 67628 eff. date delayed to 
        9-27-02....................................................49275
    Regulation at 66 FR 49275 eff. date correctly extended to 9-
27-02..............................................................51095
655.108 Regulation at 65 FR 43544 and 67628 eff. date delayed to 
        9-27-02....................................................49275
    Regulation at 66 FR 49275 eff. date correctly extended to 9-
27-02..............................................................51095

[[Page 1186]]

655.112 Regulation at 65 FR 43544 and 67628 eff. date delayed to 
        9-27-02....................................................49275
    Regulation at 66 FR 49275 eff. date correctly extended to 9-
27-02..............................................................51095
655.114 Regulation at 65 FR 43544 and 67628 eff. date delayed to 
        9-27-02....................................................49275
    Regulation at 66 FR 49275 eff. date correctly extended to 9-
27-02..............................................................51095
655.700 OMB number.................................................10814
    (b)(1) amended.................................................63300
655.705 (c) revised................................................63300
655.720 Revised....................................................63301
655.730 (b) and (c)(1) introductory text revised...................63301
655.731 OMB number.................................................10814
    Introductory text, (a) and (b)(1) amended......................63302
655.732 Introductory text amended..................................63302
655.733 Introductory text amended..................................63302
655.734 Introductory text and (b) amended; (a)(3) revised..........63302
655.736 (b)(2)(iii) corrected.......................................1375
    OMB number.....................................................10814
    (e) amended....................................................63302
655.737 OMB number.................................................10814
655.738 OMB number.................................................10814
655.739 OMB number.................................................10814
655.740 (a)(1) amended; (a)(2)(i) and (ii) revised.................63302
655.750 (a) revised................................................63302
655.760 OMB number.................................................10814
    (a)(1) revised.................................................63302
655.700--655.760 (Subpart H) Appendix A correctly removed..........10814
655.805 (d) revised................................................63302
656 Authority citation revised.....................................40590
656.21 (i)(6) added................................................40590

                                  2002

20 CFR
                                                                   67 FR
                                                                    Page
Chapter V
655 Regulation at 65 FR 43542 withdrawn............................59779
655.0 Regulation at 65 FR 43542 withdrawn..........................59779
655.00 Regulation at 65 FR 43542 withdrawn.........................59779
655.90--655.114 (Subpart B) Regulation at 65 FR 43542 withdrawn....59779
655.90 Regulation at 65 FR 43542 withdrawn.........................59779
655.92 Regulation at 65 FR 43542 withdrawn.........................59779
655.100 Regulation at 65 FR 43543 withdrawn........................59779
655.101 Regulation at 65 FR 43543 withdrawn........................59779
655.103 Regulation at 65 FR 43543 withdrawn........................59779
655.104 Regulation at 65 FR 43543 withdrawn........................59779
655.105 Regulation at 65 FR 43543 withdrawn........................59779
655.106 Regulation at 65 FR 43543 and 43544 withdrawn..............59779
655.108 Regulation at 65 FR 43544 withdrawn........................59779
655.112 Regulation at 65 FR 43544 withdrawn........................59779
655.114 Regulation at 65 FR 43544 withdrawn........................59779

                                  2003

20 CFR
                                                                   68 FR
                                                                    Page
Chapter V
604 Removed........................................................58549
625.5 Regulation at 66 FR 56962 confirmed; (c)(2) and (3) revised; 
        eff. in part 4-7-03........................................10937
Chapter VI
718.2 Revised......................................................69935
725.2 (c) revised..................................................69935
725.459 (b) revised; (d) removed...................................69935
Chapter IX
1001.150--1001.152 (Subpart F) Added; interim......................39002

                                  2004

20 CFR
                                                                   69 FR
                                                                    Page
Chapter V
641 Revised........................................................19051
655 Authority citation revised.....................................68226
655.0 (d) revised; interim.........................................68226
655.700--655.760 (Subpart H) Heading revised; interim..............68226

[[Page 1187]]

655.700 Heading and (a) introductory text revised; introductory 
        text, (c)(3) and (d) added; interim........................68226
655.715 Amended; interim...........................................68228
655.730 Introductory text added; interim...........................68228
655.731 (c)(10)(i)(C) and (ii) amended; interim....................68228
    (a)(2), (d)(1), (2) introductory text and (i) revised; 
(b)(3)(iii)(B)(2), (3), (C)(2) and (3) redesignated as 
(b)(3)(iii)(B)(3), (4), (C)(3) and (4); new (b)(3)(iii)(B)(2) and 
(C)(2) added; (d)(4) removed.......................................77384
655.740 (a)(2)(ii) amended; interim................................68228
655.760 (b) revised; interim.......................................68228
655.800--655.855 (Subpart I) Heading revised; interim..............68228
655.800 (a) and (c) amended; interim...............................68228
655.801 (a)(1), (2), (b) and (c) amended; interim..................68229
655.805 (c) amended; interim.......................................68229
655.810 (b)(1)(vi) and (c)(4) amended; interim.....................68229
656 Revised........................................................77386
656.24a Added; interim.............................................43718
667 Authority citation revised.....................................41890
667.266 Heading and (b) revised....................................41891
667.275 Heading and (b) revised....................................41891
670 Authority citation revised.....................................41891
670.555 (b) removed; (d) redesignated as (b); (c) revised..........41891

                                  2005

20 CFR
                                                                   70 FR
                                                                    Page
Chapter V
646 Removed........................................................40870
655.700 (b)(1) revised; (d)(1) amended.............................72560
655.705 Heading, (c) introductory text and (1) revised.............72560
655.710 (b) revised................................................72561
655.715 Amended....................................................72561
655.720 Revised....................................................72561
655.721 Removed....................................................72562
655.730 (b), (c) and (d)(5) revised................................72562
655.734 (a)(1)(ii) amended.........................................72563
655.736 (c) introductory text, (g)(2) and (4) revised; (g)(1) 
        amended....................................................72563
655.740 (a) introductory text, (1) and (3) amended.................72563
655.750 (a) and (b)(2) revised.....................................72563
655.760 (a)(1) revised.............................................72563
Chapter VI
701 Authority citation revised.....................................43232
701.101 Revised....................................................43232
701.102 Revised....................................................43232
701.201 Revised....................................................43232
701.202 Removed....................................................43233
701.203 Removed....................................................43233
701.301 (a)(1), (5) through (10), (12)(i)(B), (ii)(A) and (iii)(E) 
        revised....................................................43233
703 Authority citation revised.....................................43233
703.001 Redesignated as 703.1......................................43233
703.002 Redesignated as 703.2......................................43233
703.003 Redesignated as 703.3......................................43233
703.1--703.3 Designated as Subpart A and revised...................43233
703.1 Redesignated from 703.001....................................43233
703.2 Redesignated from 703.002....................................43233
703.3 Redesignated from 703.003....................................43233

[[Page 1188]]

703.101--703.120 Center heading designated as Subpart B............43233
703.201--703.213 (Subpart C) Added.................................43234
703.301--703.312 Center heading designated as Subpart D; Subpart D 
        revised....................................................43234
703.501--703.503 Center heading designated as Subpart E............43234
Chapter IX
1001.150--1001.152 (Subpart F) Revised.............................28406
1002 Added; interim................................................12108
    Revised........................................................75292
1002 Appendix added................................................75316

                                  2006

   (Regulations published from January 1, 2006 through April 1, 2006)

20 CFR
                                                                   71 FR
                                                                    Page
Chapter IX
1002 Authority citation corrected..................................15338


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