[Federal Register Volume 64, Number 72 (Thursday, April 15, 1999)]
[Rules and Regulations]
[Pages 18662-18764]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-8398]



[[Page 18661]]

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Part II





Department of Labor





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Employment and Training Administration



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20 CFR Part 652, et al.



Workforce Investment Act; Interim Final Rule

  Federal Register / Vol. 64, No. 72 / Thursday, April 15, 1999 / Rules 
and Regulations  

[[Page 18662]]



DEPARTMENT OF LABOR

Employment and Training Administration

20 CFR Part 652 and Parts 660 through 671

RIN 1205-AB20


Workforce Investment Act

AGENCY: Employment and Training Administration (ETA), Labor.

ACTION: Interim Final Rule; request for comments.

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SUMMARY: The Department of Labor (DOL) is issuing an Interim Final Rule 
implementing provisions of titles I, III and V of the Workforce 
Investment Act. Through these regulations, the Department implements 
the first major reform of the nation's job training system in more than 
15 years. Key components of this reform include streamlining services 
through a One-Stop service delivery, empowering individuals through 
information and access to training resources through Individual 
Training Accounts, providing universal access to core services, 
increasing accountability for results, ensuring a strong role for Local 
Boards and the private sector in the workforce investment system, 
facilitating State and local flexibility, and improving youth programs.

DATES: This Interim Final Rule will become effective on May 17, 1999.
    Comment Period: Comments must be submitted by July 14, 1999. The 
Department cannot guarantee that comments received after this date will 
be considered. Comments that are less than 10 pages in length may be 
transmitted via a facsimile at (202) 219-0323 provided that submission 
of written text follows. Commenters wishing acknowledgment of receipt 
of their comments must submit them by certified mail, return receipt 
requested. Also, comments may be sent electronically using the Internet 
web page at http://usworkforce.org.

ADDRESSES: Submit written comments to the Employment and Training 
Administration, Workforce Investment Act Implementation Taskforce, 200 
Constitution Avenue, NW, Room S5513, Washington, DC 20210, Attention: 
Eric Johnson.
    All comments will be available for public inspection and copying 
during normal business hours at the Employment and Training 
Administration, Workforce Investment Act Implementation Taskforce, 200 
Constitution Avenue, NW, Room S5513, Washington, DC 20210. Copies of 
the Interim Final Rule are available in alternate formats of large 
print and electronic file on computer disk, which may be obtained at 
the above-stated address. The Interim Final Rule is also available on 
the WIA website at http://usworkforce.org
    In compliance with 28 U.S.C. 2112(a), the Employment and Training 
Administration designates the Associate Solicitor for Employment and 
Training Services, Office of the Solicitor, U.S. Department of Labor, 
200 Constitution Avenue, NW, Room N-2101, Washington, DC 20210, as the 
recipient of petitions to review this Interim Final Rule.

FOR FURTHER INFORMATION CONTACT: Mr. Eric Johnson, Workforce Investment 
Act Implementation Taskforce Office, U.S. Department of Labor, 200 
Constitution Avenue, NW, Room S5513, Washington, DC 20210, Telephone: 
(202) 219-0316 (voice) (this is not a toll-free number) or 1-800-326-
2577 (TDD).

SUPPLEMENTARY INFORMATION:

Paperwork Reduction Act

    Certain sections of this Interim Final Rule, such as Secs. 667.300, 
667.900, 668.800, and 669.570 contain information collection 
requirements. As required by the Paperwork Reduction Act of 1995 (44 
U.S.C. 3507(d)), the Department of Labor has submitted a copy of these 
sections to the Office of Management and Budget for its review. 
Comments must be submitted by May 17, 1999 to: Desk Officer for the 
Department of Labor, Employment Training Administration, Office of 
Management and Budget, 725 17th Street, NW (Rm 10235), Washington DC 
20503. Affected parties do not have to comply with the information 
collection requirements in this document until DOL publishes in the 
Federal Register the control numbers assigned by the Office of 
Management and Budget (OMB). Publication of the control numbers 
notifies the public that OMB has approved this information collection 
requirement under the Paperwork Reduction Act of 1995. An OMB control 
number (1205-0398) was issued for the WIA state planning guidance 
authorized under 20 CFR 661.220, and published at 64 FR 9402 (Feb. 25, 
1999).

I. Background

A. WIA Principles

    On August 7, 1998, President Clinton signed the Workforce 
Investment Act of 1998 (WIA), comprehensive reform legislation that 
supersedes the Job Training Partnership Act (JTPA) and amends the 
Wagner-Peyser Act. The WIA also contains the Adult Education and Family 
Literacy Act (title II) and the Rehabilitation Act Amendments of 1998 
(title IV). Guidance or regulations implementing titles II and IV will 
be issued by the Department of Education.
    The WIA reforms Federal job training programs and creates a new, 
comprehensive workforce investment system. The reformed system is 
intended to be customer-focused, to help Americans access the tools 
they need to manage their careers through information and high quality 
services, and to help U.S. companies find skilled workers.
    This new law embodies seven key principles. They are:
     Streamlining services through better integration at the 
street level in the One-Stop delivery system. Programs and providers 
will co-locate, coordinate and integrate activities and information, so 
that the system as a whole is coherent and accessible for individuals 
and businesses alike.
     Empowering individuals in several ways. First, eligible 
adults are given financial power to use Individual Training Accounts 
(ITA's) at qualified institutions. These ITA's supplement financial aid 
already available through other sources, or, if no other financial aid 
is available, they may pay for all the costs of training. Second, 
individuals are empowered with greater levels of information and 
guidance, through a system of consumer reports providing key 
information on the performance outcomes of training and education 
providers. Third, individuals are empowered through the advice, 
guidance, and support available through the One-Stop system, and the 
activities of One-Stop partners.
     Universal access. Any individual will have access to the 
One-Stop system and to core employment-related services. Information 
about job vacancies, career options, student financial aid, relevant 
employment trends, and instruction on how to conduct a job search, 
write a resume, or interview with an employer is available to any job 
seeker in the U.S., or anyone who wants to advance his or her career.
     Increased accountability. The goal of the Act is to 
increase employment, retention, and earnings of participants, and in 
doing so, improve the quality of the workforce to sustain economic 
growth, enhance productivity and competitiveness, and reduce welfare 
dependency. Consistent with this goal, the Act identifies core 
indicators of performance that State and local entities managing the 
workforce investment system must meet--or suffer sanctions. However, 
State and local entities

[[Page 18663]]

exceeding the performance levels can receive incentive funds. Training 
providers and their programs also have to demonstrate successful 
performance to remain eligible to receive funds under the Act. And 
participants, with their ITA's, have the opportunity to make training 
choices based on program outcomes. To survive in the market, training 
providers must make accountability for performance and customer 
satisfaction a top priority.
     Strong role for local workforce investment boards and the 
private sector, with local, business-led boards acting as ``boards of 
directors,'' focusing on strategic planning, policy development and 
oversight of the local workforce investment system. Business and labor 
have an immediate and direct stake in the quality of the workforce 
investment system. Their active involvement is critical to the 
provision of essential data on what skills are in demand, what jobs are 
available, what career fields are expanding, and the identification and 
development of programs that best meet local employer needs. Highly 
successful private industry councils under JTPA exhibit these 
characteristics now. Under WIA, this will become the norm.
     State and local flexibility. States and localities have 
increased flexibility, with significant authority reserved for the 
Governor and chief elected officials, to build on existing reforms in 
order to implement innovative and comprehensive workforce investment 
systems tailored to meet the particular needs of local and regional 
labor markets.
     Improved youth programs linked more closely to local labor 
market needs and community youth programs and services, and with strong 
connections between academic and occupational learning. Youth programs 
include activities that promote youth development and citizenship, such 
as leadership development through voluntary community service 
opportunities; adult mentoring and followup; and targeted opportunities 
for youth living in high poverty areas.
    Many States and local areas have already taken great strides in 
implementing these principles, supported by grants from the Department 
of Labor to build One-Stop service delivery systems and school-to-work 
transition systems. The Act builds on these reforms and ensures that 
they will be available throughout the country.
    The Department wishes to emphasize that it considers the reforms 
embodied in the Workforce Investment Act to be pivotal, and not 
``business as usual.'' This legislation provides unprecedented 
opportunity for major reforms that can result in a reinvigorated, 
integrated workforce investment system. States and local communities, 
together with business, labor, community-based organizations, 
educational institutions, and other partners, must seize this historic 
opportunity by thinking expansively as they design a customer-focused, 
comprehensive delivery system.
    The success of the reformed workforce investment system is 
dependent on the development of true partnerships and honest 
collaboration at all levels and among all stakeholders. While the 
Workforce Investment Act and these regulations assign specific roles 
and responsibilities to specific entities, for the system to realize 
its potential necessitates moving beyond current categorical 
configurations and institutional interests. Also, it is imperative that 
input is received from all stakeholders and the public at each stage of 
the development of State and local workforce investment systems.
    The cornerstone of the new workforce investment system is One-Stop 
service delivery which unifies numerous training, education and 
employment programs into a single, customer-friendly system in each 
community. The underlying notion of One-Stop is the coordination of 
programs, services and governance structures so that the customer has 
access to a seamless system of workforce investment services. It is 
envisioned that a variety of programs could use common intake, case 
management and job development systems in order to take full advantage 
of the One-Stops' potential for efficiency and effectiveness. A wide 
range of services from a variety of training and employment programs 
will be available to meet the needs of employers and job seekers. The 
challenge in making One-Stop live up to its potential is to make sure 
that the State and Local Boards can effectively coordinate and 
collaborate with the network of other service agencies, including TANF 
agencies, transportation agencies and providers, metropolitan planning 
organizations, child care agencies, nonprofit and community partners, 
and the broad range of partners who work with youth.

B. Early Implementation

    Many States have expressed interest in which features of WIA may be 
phased-in after approval of the State workforce investment plan, and 
how long they will have before they must be in full compliance.
     The planning guidance (which was published in the Federal 
Register on February 25, 1999) and regulations specify that States may 
submit a State workforce investment plan to the Department for approval 
at any time between April 1, 1999 and April 1, 2000. For those States 
that plan to transition to WIA prior to July 1, 2000, and do not have 
all policies, procedures and systems fully developed, the State may 
submit a Transition Plan that outlines when the State expects to have 
each of the WIA components (for example, the One-Stop system, or the 
Individual Training Account system) fully operational. All components 
must be in place by July 1, 2000. Under this option, the Department 
will conditionally approve the State workforce investment plan. The 
State workforce investment plan will be fully approved once all of the 
WIA components are in place. This option provides some flexibility for 
early implementing States, while ensuring that full implementation is 
completed for all States by July 1, 2000.
     States and local areas may use the current waiver 
authority and allowable activities under JTPA, to plan for and 
implement WIA reforms. Activities that are allowable during this phase 
include: (1) Strategic planning; (2) establishment of State and local 
workforce investment boards; (3) consultation with One-Stop partners; 
(4) establishment of ITA systems; and (5) establishment of consumer 
report systems.
     Because JTPA title II youth funds are available for 
obligation on April 1, 1999, the Calendar Year 1999 Summer Youth 
Employment and Training Program, and JTPA title II-C youth program 
allocations have been made and are to be allocated by States to local 
areas under the JTPA rules. The Department will issue transition 
guidance which will provide further direction and specification.
     A 90 percent hold harmless provision for within-State 
allocations for the youth and adult funding streams, that is based on 
allocations in the first two years of WIA operation, becomes effective 
in the third year a State operates under WIA. Structured to facilitate 
creation of new local areas by freeing States from allocation formulas 
established under JTPA, there is no hold harmless provision effective 
in the first two years of a state's WIA implementation that would cover 
the transition period from JTPA. The lack of a hold harmless provision 
during this period could result in some instability during the early 
stages of WIA implementation. However, Governors do have options 
available to promote stability. For program year 1999 only, the 
Governor may elect to utilize the

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JTPA hold harmless provision. However, in doing so, the two year hold 
harmless is delayed for one year. Therefore, if a State elects to use 
this option, the two year hold harmless would apply for PY 2000 and 
2001 unless Congress decides to address this area with a technical 
amendment. Also, Governors may use some of their 15 percent State 
reserve funds to assist local areas that are negatively impacted by the 
WIA funding formulas, or choose to adopt an adult or youth within-State 
allocation formula that incorporates additional targeting factors, 
provided for in sections 128 and 133 of WIA.

C. Rule Format

    The format, as well as the substance, of the Interim Final Rule, 
reflects the Administration's commitment to regulatory reform and to 
writing regulations that are reader-friendly. The Department has 
attempted to make these regulations clear and easy to understand, as 
well as to anticipate issues that may arise and to provide appropriate 
direction. To this end, the regulatory text is presented in a 
``question and answer'' format. The Department has organized the 
regulations in a way that will help those who must implement the new 
system to recognize the various steps they must take as they develop 
the organization and services that make up the workforce investment 
system. In many cases, the provisions of WIA are not repeated in these 
regulations. As requested by some interested parties, however, in a 
number of instances, it was determined that the regulations would 
provide context and be more reader-friendly if the Act's provisions 
were included in an answer rather than merely cross-referencing the 
statute.
    Section 506(c)(1) of the Act requires the Secretary of Labor to 
issue this Interim Final Rule implementing provisions of the WIA under 
the Department's purview within 180 days of enactment. WIA also 
requires that final regulations be published by December 31, 1999. 
Under Secretary of Labor's Order No. 4-75, the Assistant Secretary for 
Employment and Training has been delegated the responsibility to carry 
out WIA policies, programs, and activities for the Secretary of Labor.
    Given the short time frame imposed, the Department has employed a 
variety of means to initiate extensive coordination with other Federal 
agencies that have roles and responsibilities under the Workforce 
Investment Act. In addition, the Department of Labor, the Department of 
Education, the Department of Health and Human Services, the Department 
of Transportation, and the Department of Housing and Urban Development 
continue to meet on a regular basis to resolve issues surrounding the 
development of the Interim Final Rule and WIA implementation.
    The Department also requested and received input from a broad range 
of sources regarding guidance on how to comply with a number of WIA 
statutory provisions. The Department solicited broad input on WIA 
implementation through a variety of mechanisms: establishing a website 
to encourage input; publishing a Federal Register notice on September 
15, 1998, conducting regional and national panel discussions in October 
1998; publishing a White Paper announcing goals and principles 
governing implementation; posting issues on the usworkforce.org 
website; sharing a discussion draft of regulatory issues with 
stakeholders; holding town hall meetings across the country in December 
1998; conducting several workgroups in December 1998; and issuing draft 
Planning Guidance in December 1998.
    A number of the suggestions received are discussed in the Summary 
and Explanation of the individual provisions of the Interim Final Rule. 
However, because of the large volume of suggestions received and the 
short time allowed for preparation of the regulations, as well as the 
fact that suggestions continue to be received, it was not possible to 
address each one. Where input has not been addressed, it will be 
considered along with comments on the Interim Final Rule before 
publication of the Final Rule. Also, the Department will ensure that 
there are other opportunities for public input and dialogue on the 
important issues surrounding implementation of the Workforce Investment 
Act prior to the publication of the Final Rule.
    The Department has determined that this Interim Final Rule, as 
promulgated, complies with the WIA statutory mandate and provides 
effective direction for the implementation of WIA programs. ETA will 
review all comments received in the development of and response to the 
Interim Final Rule, as well as the experience of early implementing 
States, in considering what further action is necessary in promulgating 
a Final Rule.

II. Summary and Explanation

    This section describes and explains the specific provisions of the 
Interim Final Rule. The explanatory text, in general, adheres closely 
to the corresponding WIA statutory and regulatory language. A 
supporting rationale is provided in those instances where the Rule 
promulgates specific provisions to fulfill the requirements of the WIA 
statute.
    The Department has set regulations only where they are necessary to 
clarify or to explain how the Department intends to interpret the WIA 
statute, to provide context for interpretations or to provide a clear 
statement of the Act's requirements. In several instances--for example, 
the Indian and Native American Programs, and Migrant and Seasonal 
Farmworker Programs--the regulations were developed in consultation 
with advisory councils and are more comprehensive in order to assist 
those grantees. Consistent with the Act, the Interim Final Rule 
provides the States and local governments with the primary 
responsibility to initiate and develop program implementation 
procedures and policy guidance regarding WIA administration. The 
Department has not defined what constitutes many of the activities 
under the Act in order to provide policy-making flexibility to States 
and local areas. Section 661.120 formalizes this flexibility in the 
regulations.

Description of Regulatory Provisions

    The Rule adds 12 new parts to the Code of Federal Regulations, and 
a new subpart to the existing Wagner-Peyser Act regulations. Parts 660-
672 are organized by subject matter; for example, 661 describes State 
and local system design, 667 contains administrative requirements 
applicable to WIA title I funds, and 669 describes requirements 
particularly applicable to Migrant and Seasonal Farmworker programs. 
This discussion section follows that organizational structure.

Part 660--Introduction to the Regulations for the Workforce 
Investment Systems Under Title I of the Workforce Investment Act

    Part 660 discusses the purpose of title I of the Workforce 
Investment Act, explains the format of the regulations governing title 
I, and provides definitions which are not found in the Act. Sections 
101, 142, 166(b), 167(h) 301 and 502 of the Act contain additional 
definitions. Among the regulatory definitions, the Department has 
defined the term ``register'' in order to clarify that programs do not 
need to register participants until they receive a core service beyond 
those that are self-service or informational. This point in time also 
corresponds to the point when the EEO data must be collected, when the 
eligibility definition begins, and when the participants are counted 
for performance measurement purposes.

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Part 661--Statewide and Local Governance of the Workforce 
Investment System Under Title I of the Workforce Investment Act

Introduction

    This part covers the critical underpinnings of how the workforce 
investment system is organized under WIA at the State and local levels. 
Specifically, it consists of four subparts--General Governance, State 
Governance, Local Governance Provisions and Waiver Provisions. The 
General Governance subpart broadly describes the WIA system and sets 
forth the roles of the governmental partners. The State and local 
subparts cover the State and local workforce investment boards and the 
designation process, including alternative entities, and the planning 
requirements. The waiver subpart discusses the processes for obtaining 
general and work-flex waivers.

Subpart A--General Governance Provisions

    1. Subpart A describes the workforce investment system, and sets 
forth the roles of the government partners in the system: the Federal 
government, State governments and local governments. The workforce 
investment system is the method of delivery of workforce investment 
activities to individuals under title I of WIA, and is composed of 
State and local workforce investment boards, local workforce investment 
areas, and the One-Stop system. Through the One-Stop system, the 
workforce investment system is a gateway to a wide variety of 
employment, training, educational and other human resource programs. In 
the Department's view, close cooperation and coordination among the 
Federal, State and local government partners are essential to the 
system's success in providing services to those who need them. Sections 
661.110 and 661.120, describe, in general terms, the roles of the 
government partners. The Department sees one of its roles as Federal 
partner as providing leadership, guidance and support to the system, so 
that State and local governmental partners can better respond to the 
needs of customers. To that end, the WIA regulations are intended to 
provide a framework in which States and local partners may design 
systems and deliver services in ways that best achieve the goals of WIA 
based on particular need. Thus, whenever possible, items such as design 
options and categories of service are not narrowly defined in the 
regulations. Section 660.120 provides authority to State and local 
governments to establish their own policies, interpretations, 
guidelines and definitions relating to program operations under title 
I, as long as they are not inconsistent with WIA or the regulations, 
and, in the case of local governments, not inconsistent with State 
policies. To assist with such interpretations, the Department, with the 
participation of other Federal agencies, as appropriate, will issue 
technical assistance guidance to help States and localities interpret 
WIA and the regulations. Such guidance is not intended to limit State 
flexibility, but rather is intended to provide helpful models on which 
States and local governments can rely to ensure that their own 
interpretations are not inconsistent with the Act and regulations.

Subpart B--State Governance Provisions

    1. State Workforce Investment Board: Sections 661.200--661.210 
describe the membership requirements and responsibilities of the State 
Workforce Investment Board (State Board) and procedures regarding 
designation of an alternative entity to perform the functions of the 
State Board. The role of the State Board is to assist the Governor in 
the development of the State workforce investment plan (State Plan) and 
to carry out the additional functions described in WIA section 111(d). 
Section 661.200 describes the membership requirements of the State 
Board. This section clarifies that State Boards must contain two or 
more members from each of the representative categories described in 
sections 111(b)(1)(C)(iii)-(v) of WIA. These categories are labor 
organizations, individuals and organizations that have experience with 
youth activities, and individuals and organizations that have 
experience and expertise in the delivery of workforce investment 
activities. The Rule requires that, in appointing representatives with 
experience in workforce investment activities, special consideration be 
given to chief executive officers of community colleges and community-
based organizations in the State. The Department acknowledges the 
special expertise that the community college system brings to the 
workforce investment system. The Department foresees a strong role for 
community colleges across states and in local areas and encourages 
states and local areas to appoint presidents and executive officers of 
the state community college system and local community colleges to the 
State and Local Workforce Investment Boards. The Department also 
emphasizes the importance of including the director of the state agency 
responsible for TANF on the State Board, in order to foster linkages 
between WIA and TANF, and to facilitate participation of TANF in One-
Stop systems in the state.
    The Department also received suggestions concerning the 
representation of the State Vocational Rehabilitation Services program, 
a required One-Stop partner, on the State Board. Individuals with 
disabilities represent a large untapped potential workforce, and the 
workforce needs of this group is of significant importance to the 
Department and other Federal agencies. To signal the importance of this 
issue, the Presidential Taskforce on Employment of Adults with 
Disabilities was formed in 1998. In light of this emphasis on 
increasing the employment rate for individuals with disabilities as 
well as the complexity of the organizational requirements applicable to 
this program, the director of the designated State unit under section 
101(a)(2)(B)(ii)(II) of the Rehabilitation Act, if a State has such a 
unit, should be considered the lead State agency official with 
responsibility for the State's vocational rehabilitation program and, 
therefore, should serve on the State Board. In addition, a program 
operated by a State agency for the blind or by a designated State unit 
for the blind should be considered a separate program for purposes of 
appointing members to the State Board under WIA section 111. Among the 
contributions the unit head(s) would make as a member of the State 
Board is assisting in the development of the State performance 
measures. The expertise of the unit head(s) would be particularly 
useful since the Department, in coordination with the Department of 
Education, will be working on the development of an additional 
performance indicator focusing on individuals with disabilities that 
may be used by States under title I of WIA. The Department of Labor and 
the Department of Education will work with the States as they develop 
and implement their State plans to ensure the effective delivery of 
services under the WIA to individuals with disabilities. The Department 
will also be conducting a study of WIA implementation that will include 
a review of the manner and extent to which Vocational Rehabilitation 
programs are integrated in the workforce investment system, and how 
effectively the system serves individuals with disabilities.
    As discussed below, regarding local workforce investment board 
(Local Board) membership requirements, the

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Department received substantial input expressing concern that the 
statutory membership requirements relating to the State and local 
boards will lead to large, unmanageable State and Local Boards. In 
contrast, others thought larger boards would be better in representing 
a wider array of interests. The Department recognizes this concern, 
and, although constrained by the statutory requirements that each 
category of membership contain more than one representative and a 
business majority, the Department has avoided adding additional 
requirements relating to the number of members required. The Department 
believes that problems associated with large board size can be 
addressed in a number of ways, such as the use of committees. The 
Department will be providing technical assistance on creative 
approaches State and Local Boards may wish to consider in addressing 
this issue.
    2. Alternative Entities: The Department believes that changing from 
existing JTPA boards and councils to State Boards meeting the 
requirements of WIA section 111(b) is essential to the reforms of WIA. 
The Department encourages all States to create new, fully functional 
State Boards as early as possible, and is committed to providing 
assistance to States to make such changes. In order to accommodate 
States that have already begun to reform their boards prior to the 
enactment of WIA, the statute provides an option to use an existing 
entity to carry out the functions of the State Board. Section 661.210 
describes the requirements relating to the appointment of this 
alternative entity. Because of questions regarding the application of 
these requirements, paragraph (b) of Sec. 661.210 makes clear that an 
alternative entity must meet each of the three criteria set forth in 
WIA section 111(e). The three criteria are that the entity: (1) Was in 
existence on December 31, 1997; (2)(a) was established pursuant to 
section 122 or title VII of the Job Training Partnership Act, as in 
effect on December 31, 1997, or (b) is substantially similar to the 
State Board as described in subsections (a), (b), and (c) of WIA 
section 111; and (3) includes representatives of business in the state 
and representatives of labor organizations in the state. An entity 
which fails to meet any one of the criteria is not eligible to perform 
the functions of the State Board. A key requirement for an alternative 
entity that was not created under JTPA, is that it be substantially 
similar to the Boards required under WIA. The Department considered 
various ways to define the term ``substantially similar'' but, in the 
end, decided to leave the term undefined. All groups required for 
membership on Workforce Investment Boards are equally important and the 
Department sees alternative entities as a transitional phase during 
which states can operate until a new Board is appointed.
    While an alternative entity need not contain the identical 
membership structure required of State Boards, in the Department's view 
it is important that each of the groups listed in WIA section 111(b) 
have a role in the workforce investment system if the system is to be 
successful. Therefore, the Rule requires that if the Governor 
identifies an alternative entity, the State Plan must explain how the 
State will ensure the ongoing participation of any omitted membership 
groups in the functions of State workforce investment system. While 
this Rule does not mean that omitted groups must be seated on an 
alternative entity, it does require that the State Plan describe how 
these groups will have an opportunity for meaningful input into 
decisions made by the State Board.
    Paragraph (d) of Sec. 661.210 amplifies the requirement that an 
alternative entity must have been established by and in existence on 
December 31, 1997. Because of this requirement, modifications to the 
alternative entity are not allowed; a change to the membership 
structure after December 31, 1997 will invalidate the entity's 
eligibility as an alternative entity. The membership structure is not 
considered to be changed when an existing member leaves the board and a 
replacement member is appointed. However, the membership structure is 
considered to be changed when a change is made to the organizational 
structure of the State Board that requires a change (whether the change 
is formally made or not) in the State Board's charter or to a similar 
document that defines the organizational structure of the State Board, 
such as appointing members of a category not previously represented. In 
such a case, the entity would no longer be eligible to perform the 
functions of the State Board and a new entity, meeting all the 
requirements of section 111 of WIA must be created. This prevents 
piecemeal modification of alternative entities that would add certain 
section 111(b) membership categories but not others.
    3. State Workforce Investment Plan Requirements: Sections 661.220 
and 661.230, describe the requirements for submission, approval and 
modification of the State workforce investment plan. The State Plan 
must be submitted in accordance with planning guidelines to be issued 
by the Secretary, and must be developed through an open public comment 
process. The State Plan must document the timeline and the steps taken 
to ensure the opportunity for meaningful public comment. The Department 
intends that the information contained in the State Plan be subject to 
the broadest possible stakeholder involvement in policy development and 
the broadest possible range of public comment. The planning guidelines 
set forth the information needed for the Secretary to make an informed 
judgment as to whether a State Plan is consistent with WIA. The Rule 
restates the statutory language regarding the process for State Plan 
approval. All plans must be approved within 90 days unless the 
Secretary determines in writing that the State Plan is inconsistent 
with the provisions of title I of WIA and its implementing regulations 
or it does not satisfy the State Plan approval requirements of the 
Wagner-Peyser Act and its implementing regulations. This reflects 
changes made by the technical corrections added in the Omnibus 
Appropriations Act for FY 1999, which clarified that the State plan 
will not be approved if it fails to meet the requirements of either WIA 
or the Wagner-Peyser Act rather than only when it fails to meet both. 
Failure to have completed negotiations with the Secretary of Labor on 
performance measures means the plan is not consistent with title I of 
WIA. A state's failure to have an effective strategy in place to ensure 
the development of a fully operational One-Stop delivery system in the 
state also means the state plan is not consistent with WIA title I. An 
important part of this strategy is an impasse procedure designed to 
facilitate collaboration and coordination between One-Stop partners at 
the local level.
    4. State Plan Modifications: Section 661.230 provides the approval 
process for State Plan modifications. It clarifies that modifications 
may be made at any time during the life of the State Plan, and must be 
made upon certain conditions. Because the State Plan is a five year 
strategic plan and designed to be a living document, it is likely that 
assumptions based upon such things as State or Federal policy, economic 
conditions, performance goals, State and local organizational 
structures and/or State and local needs may change during the course of 
the State Plan. The provision for a five year State Plan was intended 
to reduce paperwork burdens on the States. Accordingly, only 
significant changes require a modification. Examples are: changes in 
performance indicators, changes in the

[[Page 18667]]

methodology used to determine local allocation of funds, or changes to 
the membership structure of the State Board or alternative entity. 
Modifications triggered by significant changes will be subject to the 
same review process as the original State Plan. While it is impossible 
to foresee all such changes that may occur during a five year period, 
through timely modifications of the State Plan, State strategies can 
continue to guide Local Board policy development. The Secretary must 
approve all State Plan modifications unless the disapproval criteria in 
Sec. 661.220 are met.
    5. Local Workforce Investment Area Designation Requirements: 
Sections 661.250 through 661.280 discuss the requirements applicable to 
the designation of local workforce investment areas. The Rule tracks 
the statutory language regarding the State Board recommendation and 
Governor's approval process for designation. It refers to the statutory 
provisions regarding automatic designation of areas with a population 
of 500,000 or more (that request designation) at section 116(a)(2) of 
WIA and temporary and subsequent designation of JTPA service delivery 
areas meeting certain performance criteria (that request designation) 
at section 116(a)(3) of WIA. The statute prohibits the Department from 
further regulating on the standards and criteria for temporary and 
subsequent designation and requires the Department to provide the 
States with technical assistance to make the designations. The 
regulations restate the statutory language regarding the rights of 
areas to appeal the denial of a request for automatic or temporary and 
subsequent designation as a local workforce investment area.
    6. Regional Planning Activities: Section 661.290 describes the 
circumstances in which the State may require Local Boards to take part 
in regional planning activities. This provision permits States to 
undertake methods to improve performance across area boundaries by 
requiring local areas to engage in a regional planning process to share 
employment-related information and to coordinate the provision of local 
services pursuant to that regional planning. The regulation follows the 
statutory language regarding the requirements for regional planning, 
and permits regional planning to occur across State boundaries. Section 
661.290 clarifies that Local Boards which are part of State-designated 
regional planning areas must participate in regional planning 
activities. However, to strike a balance, the regulation also provides 
that regional planning and performance requirements may not substitute 
for the local planning and performance requirements unless the affected 
chief elected officials and the Governor agree to that substitution.

Subpart C--Local Governance Provisions

    This Subpart covers the designation of local workforce investment 
areas and the responsibilities and membership requirements of local 
boards.
    1. Role of the Local Workforce Investment Board: Under WIA, the 
Local Board, in partnership with the chief elected official, is 
responsible for setting policy and overseeing workforce investment 
programs for a workforce investment area. Sections 661.300 and 661.305 
reiterate the roles and responsibilities of Local Boards. There was 
some concern expressed that the Local Board activities be carried out 
in an open manner which encourages public comment and participation. 
The Department responds to these concerns by restating the WIA section 
117(e) ``sunshine provision'' in Sec. 661.305(d).
    2. Local Boards as Service Providers: Section 117(f)(1) of WIA 
places limitations on Local Boards' direct provision of core services, 
intensive services, or training services. In response to requests for 
clarification, Sec. 661.310(c) specifies that the prohibition related 
to providing core, intensive and training services by the Local Board 
also applies to the staff of the Local Board. This regulation also 
cites the statutory provision allowing a Local Board to be designated 
or certified as a One-Stop operator only with the agreement of the 
chief elected official and the Governor.
    3. Membership Requirements: Section 661.315 of the regulations 
addresses the membership requirements for the Local Board that are 
contained in section 117(b) of WIA. There were suggestions on several 
issues related to the required membership of the Local Board, 
particularly as to how the terms ``representatives'' and ``including'' 
would be defined.
    Representatives: Some parties expressed the view that the term 
``representatives,'' as used in section 117(b)(2)(A) (ii)-(v) of WIA, 
requires that there be multiple representatives from each of the 
specified entities. While others wanted a more restrictive definition, 
the regulations specify that the Local Board must contain two or more 
members representing the categories described in section 117(b)(2)(A) 
(ii)-(v) of WIA. These categories cover different types of local 
educational entities, labor organizations, community-based 
organizations (including those representing individuals with 
disabilities and veterans), and economic development agencies.
    Including: There also were many questions on the meaning of the 
term ``including'' as it is used in WIA section 117(b). Some expressed 
the view that each of the entities following the word ``including'' in 
section 117(b)(2)(A)(ii), (iv), and (v) of WIA must be a required 
member of the Local Board, while others disagreed with this 
interpretation. The regulations address this issue by requiring that 
special consideration be given to including representatives of 
community colleges in the selection of members representing local 
educational entities; to including representatives of organizations 
representing individuals with disabilities and veterans, in selection 
of members representing community-based organizations; and 
representatives of private sector economic development entities in 
selecting representatives of economic development agencies. The 
regulations do not mandate a membership seat for each such entity.
    Board Size: The Department heard many concerns that the statutory 
membership requirements relating to Local Boards will lead to large, 
unwieldy, and unmanageable Local Boards. The Department recognizes this 
concern, and while the Department is constrained by the statutory 
requirements that each category of membership contain more than one 
representative and that the board contain a business majority, the 
Department has not added additional regulatory requirements on the 
number of members required. The Department believes that problems 
associated with large board size can be addressed in a number of ways, 
such as through the use of committees. The Department will provide 
technical assistance on creative approaches State and Local Boards may 
wish to consider in addressing this issue.
    4. Alternative Entity: The Department believes that changing from 
existing JTPA Private Industry Councils to local workforce investment 
boards is essential to the reforms of WIA. The Department strongly 
encourages all eligible areas to create new, fully functional Local 
Boards as early as possible, and is committed to providing assistance 
to facilitate such changes. However, the Department recognizes that the 
statute provides an option to use an existing entity to carry out the 
functions of the Local Board. Section 661.330 describes the 
requirements relating to the appointment of such an alternative entity. 
Because of questions regarding

[[Page 18668]]

the application of these requirements, paragraph (a) of Sec. 661.330 
makes clear that an alternative entity must meet each of the four 
criteria set forth in WIA section 117(i), including the requirement 
that the alternative entity must have been established by December 31, 
1997. An entity which fails to meet any one of these criteria is not 
eligible to perform the functions of the Local Board.
    While an alternative entity need not contain the identical 
membership structure as that required of Local Boards, section 
117(i)(1)(c)(ii) does require the alternative entity to be 
substantially similar to the Local Boards. In the Department's view it 
is extremely important that each of the groups listed in section 
117(b)(2) have an active role in the workforce investment system if the 
system is to be successful. Therefore, the Rule requires that the 
alternative entity be identified in the State Plan and the local 
workforce investment plan, and that these workforce investment plans 
explain the manner in which the Local Board will ensure the ongoing 
participation of any omitted membership groups in the local workforce 
investment area. While this Rule does not require that such groups be 
seated on the Board, it does require the State and local workforce 
investment plans to describe the means by which such groups will have 
periodic regular meaningful opportunities for input into decisions made 
by the Local Board.
    Paragraph (c) of Sec. 661.330 amplifies the requirement that an 
alternative entity must have been established by and in existence on 
December 31, 1997. Because of this requirement, modifications of the 
alternative entity are not allowed; any change to the membership 
structure will invalidate the entity's eligibility as an alternative 
entity. The membership structure is not considered to be changed when 
an existing member leaves the Local Board and a replacement member is 
appointed. However, it is considered to be changed when a change is 
made to the organizational structure of the Local Board that requires a 
change (whether the change is formally made or not) in the Local 
Board's charter or to a similar document that defines the 
organizational structure of the Local Board, such as appointing members 
of a category not previously represented. In that case, the entity is 
no longer eligible to perform the functions of the Local Board and a 
new entity, meeting all the requirements of section 117 of WIA must be 
created. This prevents piecemeal modification of alternative entities 
that would add certain WIA section 117(b)(2) membership categories, but 
not others.
    5. Youth Council: Section 117(h) of WIA establishes youth councils 
as a subgroup of the Local Boards. Youth councils are an innovative new 
entity intended to broaden participation in the design and delivery of 
youth services at the local level. Section 661.335 describes the 
relationship of the youth council to the Local Board as well as the 
membership requirements and Sec. 661.340 explains the responsibilities 
of the youth council, as described in section 117(h) of WIA.
    6. Local Workforce Investment Plan: Sections 661.345 and 661.350 
describe the requirements for the submission of the local workforce 
investment plan (Local Plan) and the contents of the Local Plan. 
Section 661.350 enumerates the Local Plan components outlined in WIA 
section 118(b). The Local Plan also must include information on the 
process for directing the One-Stop operators to give priority to low-
income individuals and recipients of public assistance in the event 
that adult funds are limited, as required by WIA section 134(d)(4)(E). 
This priority is discussed in more detail under Sec. 663.600.
    Section 118 of WIA indicates that Local Plans cover a five year 
period. Some parties suggested that modifications to the local plan 
will likely be needed within the five year span. The Department 
concurs, and the regulations permit the Governor to require local plan 
modifications and, at Sec. 661.355, offer a few examples of when such 
modifications might be required by the Governor. Section 661.355 states 
that the Governor must establish procedures for Local Plan 
modifications.

Subpart D--Waivers and Workflex

    Subpart D indicates the elements of WIA and the Wagner-Peyser Act 
that may and may not be waived under either the General Waiver 
Authority or the Work Flex provision. The purpose of the general 
statutory and regulatory waiver authority provided by section 189(i)(4) 
and workforce flexibility waiver authority provided at section 192 is 
to give flexibility to States and local areas in the design and 
implementation of consolidated workforce development programs under 
WIA. The regulations specify that the Secretary does not intend to 
waive any of the key elements of the reform principles embodied in the 
Act (listed in the background section of this preamble and in 
Sec. 661.400), except in extremely unusual circumstances. It also 
specifies that the provisions that incorporate the reform principles 
embodied in the Act may not be waived under the Work Flex authority.

Part 662--Description of the One-Stop System Under Title I of the 
Workforce Investment Act

Introduction

    The establishment of a One-Stop delivery system for workforce 
development services is a cornerstone of the reforms contained in title 
I of WIA. This delivery system streamlines access to numerous workforce 
investment and educational and other human resource services, 
activities and programs. The Act's requirements build on reform efforts 
that are already underway in all States through the Department's One-
Stop grant initiative. Rather than requiring individuals and employers 
to seek workforce development information and services at several 
different locations, which is often costly, discouraging and confusing, 
WIA requires States and communities to integrate multiple workforce 
development programs and resources for individuals at the ``street 
level'' through a user friendly One-Stop delivery system. This system 
will simplify and expand access to services for job seekers and 
employers.
    The Act specifies nineteen required One-Stop partners and an 
additional five optional partners to streamline access to a range of 
employment and training services. WIA requires coordination among all 
Department of Labor funded programs as well as other workforce 
investment programs administered by the Departments of Education, 
Health and Human Services, and Housing and Urban Development. WIA also 
encourages participation in the One-Stop delivery system by other 
relevant programs, such as those administered by the Departments of 
Agriculture, Health and Human Services, and Transportation, as well as 
the Corporation for National and Community Service. In addition, local 
areas are authorized to add additional partners as local needs may 
require. All of these Federal Agencies will continue to work together 
to ensure effective communication and collaboration at the Federal 
level in support of One-Stop service delivery.

Subpart A--One-Stop Delivery System

    1. Structure: Subpart A describes the structure of a One-Stop 
delivery system. The regulation, at Sec. 662.100, describes the One-
Stop system as a seamless system of service delivery that is created 
through the collaboration of entities responsible for separate 
workforce development funding streams. The One-Stop system is designed 
to enhance access to services and improve outcomes for individuals 
seeking

[[Page 18669]]

assistance. The regulation specifically defines the system as 
consisting of one or more comprehensive, physical One-Stop centers in a 
local area that provides the core services specified in WIA section 
134(d)(2) and that provide access to the other activities and programs 
provided under WIA and by each One-Stop partner. In locating each 
comprehensive center, Local Boards should coordinate with the broader 
community, including transportation agencies, to ensure that the 
centers are accessible to their customers. In addition to the 
comprehensive centers, the regulation notes that WIA allows for three 
other arrangements to supplement the comprehensive center. These 
supplemental arrangements include: (1) A network of affiliated sites 
that provide one or more of the programs, services and activities of 
the partners; (2) a network of One-Stop partners through which the 
partners provide services linked to an affiliated site and through 
which all individuals are provided information on the availability of 
core services in the local area; and (3) specialized centers that 
address specific needs. In essence, this structure may be described as 
a ``one right door and no wrong door'' approach. One-Stop partners have 
an obligation to ensure that core services that are appropriate for 
their particular populations are made available at one comprehensive 
center. If an individual enters the system through one of the network 
sites rather than the comprehensive One-Stop center, the individual may 
still obtain certain services at the network site and information about 
how and where all the other services provided through the One-Stop 
system may be obtained.

Subpart B--One Stop Partners

    1. Responsibilities: Subpart B identifies the One-Stop partners and 
their responsibilities in the One-Stop delivery system. The required 
partners are entities that carry out the workforce development 
programs. They are specifically identified in section 121(b)(1) of WIA 
and Sec. 662.200. The regulation at Sec. 662.200(a)(1)(i through vii) 
separately specifies the funding streams under title I that are 
included as required partners. The regulations also identify the other 
required programs, with some clarification of the particular sections 
of certain Acts (for example, the Vocational Rehabilitation Act and the 
Carl D. Perkins Act) that authorize the program that must participate. 
Section 662.210 identifies additional partners that may be a part of 
the One-Stop system at local option.
    Entities--The regulation at Sec. 662.220 provides a general 
definition of the ``entity'' that carries out the specified programs 
and serves as the partner. In light of the responsibilities of the 
partners, which are described below and include decisions regarding the 
use and administration of program resources, the regulation defines the 
entity as the grant recipient or other entity or organization 
responsible for administering the program's funds in the local area. 
The term ``entity'' does not include service providers that contract 
with or are subrecipients of the local entity. The regulation notes 
that for programs that do not have local administrative entities, the 
responsible State agency may be the One-Stop partner. In addition, the 
regulation specifies the appropriate entity to serve as partner for the 
Adult Education and Vocational Rehabilitation programs. Entities that 
serve as the partner under the Indian and Native American, Migrant and 
Seasonal Farmworker, Job Corps, and Youth programs are identified in 
the sections of the regulations applicable to those programs.
    Partner Responsibilities--This subpart also describes and 
elaborates on the statutory responsibilities of the partners. The 
regulation at Sec. 662.230 identifies the five provisions of the Act 
that describe these responsibilities. One of the key responsibilities 
of each partner is to make available at the comprehensive center 
through the One-Stop system appropriate core services that are 
applicable to the partner's program. The regulation at Sec. 662.240 
lists the core services that are described in section 134(d)(2) of WIA, 
and defines ``applicable'' to mean the services from that list that are 
authorized and provided under the partner programs. The extent to which 
core services are applicable to a partner program, as well as the 
manner in which services are provided, are determined by the program's 
authorizing statute.
    Availability of Services--The regulation at Sec. 662.250 describes 
where and to what extent the One-Stop partners must make available the 
applicable core services. Since section 134(c) of WIA requires that 
core services be provided, at a minimum, at one comprehensive physical 
center, the regulation requires that the applicable core services 
attributable to the partner's program be made available by each partner 
at that comprehensive center. To avoid duplication of services 
traditionally provided under the Wagner-Peyser Act, this requirement is 
limited to those applicable core services that are in addition to the 
basic labor exchange services traditionally provided in the local area 
under the Wagner-Peyser program. While a partner would not, for 
example, be required to duplicate an assessment provided under the 
Wagner-Peyser Act, the partner would be expected to be responsible for 
any needed assessment that includes additional elements specifically 
tailored to participants under the partner's program. However, the 
adult and dislocated worker program partners are required to make all 
of the core services available at the center.
    Flexibility--The regulations also provide significant flexibility 
regarding how the core services are to be made available at the One-
Stop center by allowing for services to be provided through appropriate 
technology at the center, through co-location of personnel, cross-
training of staff, or through contractual or other arrangements between 
the partner and the service providers at the center.
    2. Proportional Responsibility: The regulation also provides that 
the responsibility for the provision of and financing for applicable 
core services is to be proportionate to the use of services at the 
center by individuals attributable to the partners' programs. The 
regulation further provides that the individuals attributable to a 
partners' program may include individuals referred through the center 
and enrolled in the partner's program after the receipt of core 
services, individuals enrolled prior to the receipt of core services, 
individuals who meet the eligibility criteria for the partner's program 
and who receive an applicable core service, or individuals who meet an 
alternative definition described in the Memorandum of Understanding 
(MOU), described in subpart C. This ``proportionate responsibility'' 
provision is intended to provide an equitable principle for sharing 
responsibility among the partners. The regulation provides that the 
specific method for determining proportionate responsibility (for 
example, surveys) must be described in the MOU.
    Additional Sites--The regulation provides that core services may be 
provided at sites in addition to the comprehensive center under the 
MOU. Therefore, it is not required that partners provide applicable 
core services exclusively at a One-Stop center. If an individual seeks 
core services at the One-Stop center rather than at the partner's site, 
they should be made available to him or her without referral to another 
location, but a partner is not required to route all of its 
participants through the comprehensive One-Stop center.
    Access to Services--The regulation at Sec. 662.260 provides that, 
in addition to the provision of core services, the One-

[[Page 18670]]

Stop partners must use the One-Stop system to provide access to the 
partners' other activities and programs. This access must be described 
in the MOU. This requirement is essential to ensuring a seamless, 
comprehensive workforce development system that identifies the service 
options available to individuals and takes the critical next step of 
facilitating access to these services.
    3. Cost Sharing: The regulation at Sec. 662.270 provides that the 
particular arrangements for funding the services provided through the 
One-Stop system and the operating costs of the One-Stop system must be 
described in the MOU. Each partner must contribute a fair share of the 
operating costs based on the use of the One-Stop delivery system by 
individuals attributable to the partner's program. This is an equitable 
principle and there are a number of methods that may be used for 
allocating costs among partners that are consistent with this principle 
and the OMB circulars. To promote efficiency and optimal performance, 
partner contributions for the administrative costs of the system may be 
re-evaluated annually through the memorandum of understanding process. 
The regulation identifies a number of methodologies, including cost 
pooling, indirect cost allocation, and activity based cost allocation 
plans, that may be used. The Department, in consultation with other 
affected Federal agencies, intends to issue guidance or technical 
assistance relating to cost allocation methods to assist in this area.
    Allocation Process--The regulation at Sec. 662.280 clarifies that 
the requirements of each partner's authorizing legislation continue to 
apply under the One-Stop system. Therefore, while the overall effect of 
linking One-Stop partners in the One-Stop system is to create 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 the program.
    As noted above, consistent with this principle, there are a variety 
of methods for allocating costs among programs. In sum, this regulation 
is intended to clarify that participation in the One-Stop delivery 
system is a requirement that is in addition to, rather than in lieu of, 
the other requirements applicable to the partner program under each 
authorizing law.

Subpart C--Memorandum of Understanding

    Subpart C describes the operation of the local One-Stop system. 
Section 662.300 addresses the Memorandum of Understanding (MOU) that 
must be executed between the Local Board and the One-Stop partners. 
Section 662.310 states that the local areas may develop a single 
umbrella MOU covering all partners and the Local Board, or separate 
MOU's between partners and the Local Board. In many areas, the umbrella 
approach may be the preferred means to facilitate a comprehensive and 
equitable resolution of the operational issues relating to the One-
Stop. The regulation also emphasizes that it is a legal obligation for 
the partners and the Local Board to engage in good faith negotiation 
and reach agreement on the MOU. The partners and the Local Boards may 
seek the assistance of the appropriate State agencies, the Governor, 
State Board or the appropriate parties in reaching agreement. 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. If an impasse has not been resolved, 
parties that fail to execute an MOU may not be permitted to serve on 
the Local Board. In addition, if a Local Board has not executed an MOU 
with all required parties, the local area is not eligible for State 
incentive grants awarded for local coordination.

Subpart D--One-Stop Operator

    This subpart addresses the role and selection of One-Stop 
operators. The operators are responsible for administering the One-Stop 
centers and their role may range from simply coordinating service 
providers in the center to being the primary provider of services at 
the center. The role is determined by the Local Board. In areas where 
there is more than one comprehensive One-Stop center, there may be 
separate operators for each center or one operator for multiple 
centers. The operator may be selected by the Local Board through a 
competitive process, or the Local Board may designate a consortium that 
includes three or more required One-Stop partners as an operator. The 
Local Board itself may serve as a One-Stop operator only with the 
consent of the chief elected official and the Governor. This subpart 
also addresses the ``grandfathering'' of existing One-Stop operators. 
The regulations provide some continuity for areas that have already 
established One-Stop systems while ensuring that fundamental features 
of the new One-Stop system are incorporated. A local area does not have 
to comply with the One-Stop operator selection procedures if the One-
Stop delivery system, of which the operator is a part, existed before 
August 7, 1998 (the date of the WIA's enactment); if the One-Stop 
system includes all of the required One-Stop partners; and if an MOU is 
executed consistent with the requirements of the Act.

Part 663--Adult and Dislocated Worker Activities Under Title I of 
the Workforce Investment Act

Introduction

    This part of the regulations describes requirements relating to the 
services that are available for adults and dislocated workers. Along 
with Wagner-Peyser labor exchange services, the required adult and 
dislocated worker services, described as core, intensive, and training 
services, form the backbone of the One-Stop delivery system. The WIA 
goal of universal access to core services is achieved through close 
integration of services provided by the Wagner-Peyser, WIA adult and 
dislocated worker partners and other partners in the One-Stop center 
and system. Intensive and training services are available to 
individuals who meet the eligibility requirements for the funding 
streams and who are determined to need these services to achieve 
employment, or in the case of employed individuals, to obtain or retain 
self-sufficient employment. Supportive services, to enable individuals 
to participate in these other activities, including needs-related 
payments for individuals in training, may also be provided.
    These regulations also introduce the Individual Training Account 
(ITA), which is a key reform element of the Workforce Investment Act. 
Individuals are expected to take a proactive role in choosing the 
training services which meet their needs. They will be provided with 
quality information on providers of training and, armed with effective 
case management and an ITA as the payment mechanism, they will have the 
opportunity to choose the training provider that best meets their 
needs.

Subpart A--One-Stop System

    1. Role of the Adult and Dislocated Worker Program in the One-Stop 
System: The regulation at Sec. 663.100 provides that the One-Stop 
system is the basic delivery system for services to adults and 
dislocated workers. The concept of a single system that provides 
universal access to certain services to all individuals age 18 or older 
is a key tenet of the Workforce Investment Act. The regulation reflects 
the emphasis in WIA to consolidate and coordinate services. The grant 
recipient(s) for the adult and dislocated worker program is a required 
partner and is subject to Sec. 662.210

[[Page 18671]]

regarding required partner responsibilities. Access to services through 
the One-Stop system ensures that individual needs are identified and, 
to the extent possible, met. The consolidation of and access to 
services will result in improved services for both adults and 
dislocated workers.
    2. Registration and Eligibility: Sections 663.105 through 663.120 
address registration and basic eligibility requirements. In response to 
concerns regarding the timing of eligibility determination for services 
in a One-Stop system, the Department has provided general guidance in 
the regulation at Sec. 663.105 on when adults and dislocated workers 
must be registered. Sections 663.110 and 663.120 contain the basic 
eligibility criteria for adults and dislocated workers, respectively.
    Individuals who are primarily seeking information and do not seek 
direct, one-on-one staff assistance, do not need to be registered. 
However, when an individual seeks more than minimal assistance from 
staff in taking the next steps toward self-sufficient employment, then 
eligibility must be determined. Registration is the point at which 
information that is used in performance measurement begins to be 
collected. In addition, equal employment opportunity data must be 
collected on individuals when any assessment or discretionary decision 
regarding a specific individual is made. Such assessments or decisions 
include: Decisions regarding service or program eligibility, either 
positive or negative; and decisions made on the part of any workforce 
investment system employee which lead to a targeting of services for 
the individual. The Department will issue further guidance regarding 
this data collection. Additional information needed to determine 
eligibility for other assistance available at the One-Stop site may 
also be determined at the same time. Program operators should determine 
the information that they need for cost allocation purposes and when 
they can most efficiently collect it. Electronic records systems allow 
information to be collected incrementally as higher levels of 
assistance are provided.
    3. Displaced Homemaker Eligibility: In response to inquiries 
regarding assistance to displaced homemakers, the regulation at 
Sec. 663.120 clarifies that a displaced homemaker who has been 
dependent on the income of another family member but is no longer 
supported by that income, is unemployed or underemployed and is 
experiencing difficulty in obtaining or upgrading employment, may 
receive assistance with funds available to Local Boards for services to 
dislocated workers.
    4. Title I Funds: Section 663.145 clarifies how title I adult and 
dislocated worker funds are used to contribute to the provision of core 
services, and to provide intensive and training services through the 
One-Stop delivery system. All three types of services must be provided, 
but the Local Boards determine the mix of the three services.
    5. Sequence of Services: WIA provides for three levels of services: 
Core, intensive, and training, with service at one level being a 
prerequisite to moving to the next level. There was a great deal of 
concern expressed about how this tiered approach would be implemented. 
Many were particularly concerned that the Department might require a 
``failed'' job search or a minimum time period in one level of service 
before moving on to the next level. The regulations establish the 
concept of a tiered approach but allow significant flexibility at the 
local level. The Department, in response to the comments received, did 
not establish a minimum number of ``failed'' job applications or a 
minimum time period but, instead, allows localities to establish 
gateway activities that lead from participation in core to intensive 
and training services. Any core service, such as an initial assessment 
or job search and placement assistance, could be the gateway activity. 
In intensive services, the gateway activity could be the development of 
an individual employment plan, individual counseling and career 
planning or another intensive service. Key to these gateway activities 
is the determination, made at the local level, that intensive or 
training services are required for the participant to achieve the goal 
of obtaining or retaining self-sufficient employment. The three levels 
of services are discussed separately in the regulations.
    6. Core Services: The regulations at Secs. 663.150 to 663.165 
discuss the core services. All of the core services that are listed in 
the Act must be made available in each local area through the One-Stop 
system. Followup services must be available for a minimum of 12 months 
after employment begins, to registered participants who are placed in 
unsubsidized employment. Among the core services available is 
information on targeted assistance available through the One-Stop 
system for specific groups of workers, such as Migrant and Seasonal 
Farm Workers, and veterans.
    Core services also include assistance in establishing eligibility 
for the Welfare-to-Work program and programs of financial aid for 
training and education programs. The specific form of this assistance 
is determined at the local level based on the participant's needs and 
in coordination with the other partner programs. This assistance may 
include: referrals to specific agencies; information relating to, or 
provision of, required applications or other forms; or specific on-site 
assistance.
    Another core service is the provision of information relating to 
the availability of supportive services, including child care and 
transportation, available in the local area, and referral to such 
services as appropriate. The Department encourages Local Boards to 
establish strong linkages with a variety of supportive service 
programs, including Food Stamps, Medicaid programs, and CHIP. Such 
programs provide key supports for low-income working families and 
families making the transition from welfare to self-sufficiency.
    The Department also encourages Local Boards to establish strong 
linkages to child support agencies and organizations serving fathers. 
WIA services can help raise the employment and earnings of non-
custodial fathers and fathers living with their children so that they 
can better support their children. Child support payments help low 
income single parents stabilize and raise their income. At the same 
time, it is important for One-Stop programs to be aware of the child 
support requirements on non-custodial parents who may receive services.

Subpart B--Intensive Services

    1. Intensive Services for Adults and Dislocated Workers: The 
regulation at Sec. 663.200 discusses intensive services. The regulation 
provides that intensive services beyond those listed in the Act may 
also be provided. Out-of-area job search expenses, relocation expenses, 
internships, and work experience are specifically mentioned to clarify 
that they are among the additional intensive services that may be 
provided. Intensive services are intended to identify obstacles to 
employment through a comprehensive assessment or individual employment 
plan in order to determine specific services needed, such as counseling 
and career planning, referrals to community services, and, if 
appropriate, referrals to training.
    2. Participation in Intensive Services: Section 663.220 explains 
that intensive services are provided to unemployed adults and 
dislocated workers who are unable to obtain employment through core 
services and require these services to obtain or retain employment, and 
employed workers who need services to obtain or retain employment that 
leads

[[Page 18672]]

to self-sufficiency. The regulations at Secs. 663.240 through 663.250 
specify that an individual must receive at least one intensive service, 
such as the development of an individual employment plan with a case 
manager or individual counseling and career planning, before the 
individual may receive training services and that there is no Federally 
required minimum time for participation in intensive services. Each 
person in intensive services should have a case management file, either 
hard copy, electronic or both. Section 663.240 explains that the case 
file must contain a determination of need for training services, as 
identified through the intensive service received.
    3. Self-sufficiency: This regulation, at Sec. 663.230, discusses 
how ``self-sufficiency'' should be determined. WIA requires a 
determination that employed adults and dislocated workers need 
intensive or training services to obtain or retain employment that 
allows for self-sufficiency as a condition for providing those 
services. Recognizing that there are different local conditions that 
should be considered in this determination, the regulation provides 
maximum flexibility, requiring only that self-sufficiency mean 
employment that pays at least the lower living standard income level. 
State Boards or Local Boards must set the criteria for determining 
whether employment leads to self-sufficiency. Such factors as family 
size and local economic conditions may be included in the criteria. It 
may often occur that dislocated workers require a wage higher than the 
lower living standard income level to maintain self-sufficiency. 
Therefore, the Rule allows self-sufficiency for a dislocated worker to 
be defined in relation to a percentage of the lay-off wage.

Subpart C--Training Services

    1. Training Services: Training services are discussed at 
Secs. 663.300 and 663.320. Training services are designed to equip 
individuals to enter the workforce and retain employment. Under JTPA, a 
dislocated worker participating in training under title III of JTPA is 
deemed to be in training with the approval of the State Unemployment 
Compensation Agency. With such approval, unemployment compensation 
cannot be denied to the individual solely on the basis that the 
individual is not available for work because he or she is in training. 
Although there is no comparable provision in WIA, this JTPA provision 
will remain in effect during the transition period under the 
Secretary's authority to guide that transition from JTPA to WIA. The 
Department will seek an amendment adding similar language to WIA which 
would deem all adults participating in training under title I of WIA to 
be in approved training for the purposes of unemployment compensation 
qualification.
    2. Determining the Need for Training: The regulations at 
Sec. 663.310 provide that the One-Stop operator or partner determines 
the need for training based on an individual (1) meeting the 
eligibility requirements for intensive services; (2) being unable to 
obtain or retain employment through such services; and (3) being 
determined after an interview, evaluation or assessment to be in need 
of training. Section 663.310 requires that, to receive training, an 
individual must select a program of services directly linked to 
occupations in demand in the area, based on information provided by the 
One-Stop operator or partner. If individuals are willing to relocate, 
they may receive training in occupations in demand in another area.
    3. Requirements When Other Grant Assistance is Available to 
Participants. Section 663.320 implements the requirements of WIA 
section 134(d)(4)(B), which limits the use of WIA funds for training 
services to instances when there is no or inadequate grant assistance 
from other sources available to pay for those costs. The statute 
specifically requires that funds not be used to pay for the costs of 
training when Pell Grant funds or grant assistance from other sources 
are available to pay the costs. This section is intended to give effect 
to this WIA requirement and still give effect to title IV of the Higher 
Education Act (HEA) as amended (20 U.S.C. 1087uu), which prohibits 
taking into account either a Pell Grant or other Federal student 
financial assistance when determining an individual's eligibility for, 
or the amount of, any other Federal funding assistance program.
    Section 134(d)(4)(B) of WIA requires the coordination of training 
costs with funds available under other Federal programs. To avoid 
duplicate payment of costs when an individual is eligible for both WIA 
and other assistance, including a Pell Grant, Sec. 663.320(b) requires 
that program operators and training providers coordinate by entering 
into arrangements with the entities administering the alternate sources 
of funds, including eligible providers administering Pell Grants. These 
entities should consider all available sources of funds, excluding 
loans, in determining an individual's overall need for WIA funds. The 
exact mix of funds should be determined based on the availability of 
funding for either training costs or supportive services, with the goal 
of ensuring that the costs of the training program the participant 
selects are fully paid and that necessary supportive services are 
available so that the training can be completed successfully. This 
determination should focus on the needs of the participant; simply 
reducing the amount of WIA funds by the amount of Pell Grant funds is 
not permitted. Participation in a training program funded under WIA may 
not be conditioned on applying for or using a loan to help finance 
training costs.
    With such coordination and arrangements, the WIA counselor is 
likely to know the amount of WIA funds available to the WIA participant 
when calculating the amount of financial assistance needed for the 
participant to complete the training program successfully. The WIA 
counselor needs to work with the WIA participant to calculate the total 
funding resources available as well as to assess the full ``education 
and education related costs'' (training and supportive services costs) 
incurred if the participant is to complete the chosen program. This 
also ensures both that duplicate payments of training costs are not 
made and that the amount of WIA funded training is not reduced by the 
amount of Federal student financial assistance in violation of 20 
U.S.C. 1087uu.
    It is important to note that the Pell Grant is not school-based; 
rather, it is a portable grant for which preliminary eligibility can, 
and should, be determined before the participant enrolls in a 
particular school or training program. The application for determining 
eligibility and ultimately the amount of the grant, should be readily 
available at all One-Stop centers for assistance in the completion of 
these ``gateway'' financial aid applications.
    Section 663.320(c) implements the requirements of WIA section 
134(d)(4)(B)(ii). This section permits a WIA participant to enroll in a 
training program with WIA funds while an application for Pell Grant 
funds is pending, but requires that the local workforce investment area 
be reimbursed for the amount of the Pell Grant used for training if the 
application is approved. Since Pell Grants are intended to provide for 
both tuition and other education-related costs, the Rule also clarifies 
that only the portion provided for tuition is subject to reimbursement.
    In the limited cases where contracts are used rather than ITA's, 
the contracts negotiated by the One-Stop center must prohibit training 
institutions or

[[Page 18673]]

organizations from holding the student liable for outstanding charges. 
Otherwise, the performance agreements would be undercut because the 
incentive for the institution or organization to perform would be 
removed. Also, the practice of withholding Pell Grants from students is 
prohibited by the U.S. Department of Education.

Subpart D--Individual Training Accounts

    1. Definition of an Individual Training Account: Information 
regarding Individual Training Accounts (ITA) is contained in 
Secs. 663.400 through 663.430. A key reform tenet of the Workforce 
Investment Act is that adults and dislocated workers who have been 
determined to need training, may access training with an Individual 
Training Account. The regulation at Sec. 663.410 provides a definition 
for an ITA that seeks to provide maximum flexibility to State and local 
program operators in managing ITA's. These regulations do not establish 
the procedures for making payments, restrictions on the duration or 
amounts of the ITA, or policies regarding exceptions to the limits, but 
provide that authority to the State or Local Boards. However, this 
authority to restrict the duration of ITA's or restrict funding amounts 
should not be used to establish limits that arbitrarily exclude 
eligible providers.
    2. Exceptions to ITA's: The Act at section 134(d)(4)(G)(ii) and 
Sec. 663.430 of the regulations provide that, under certain limited 
circumstances, contracts for training rather than ITA's may be used. 
Specifically, on-the-job training contracts with employers and 
customized training contracts are authorized. Contracts may also be 
used when there is an insufficient number of eligible providers in a 
local area. This exception applies primarily to rural areas. The 
exceptions to ITA's are to be used infrequently. The Act reforms the 
local service delivery system by eliminating the current practice of 
assigning participants to contracted training services and instead 
establishing a system that maximizes customer choice in the selection 
of training providers. When the Local Board determines there are an 
insufficient number of eligible providers in the local area to 
accomplish the purposes of a system of ITA's, and intends to use 
contracts for services, there must be at least a 30 day public comment 
period for interested providers.
    Contracts for Special Populations--Contracts for training are also 
authorized when the Local Board determines that there are special 
populations that face multiple barriers to employment, as identified in 
Sec. 663.430(b), and that there is a training services program of 
demonstrated effectiveness offered by an eligible provider. Section 
663.430(a)(3) explains that an eligible provider in this case is a 
community based organization (CBO) or other private organization. The 
Department has received many suggestions about this exception and the 
extent to which it may be used. This exception is intended to meet 
special needs and should be used infrequently. Those training providers 
operating under the ITA exceptions still must qualify as eligible 
providers, as required at Sec. 663.505. The Department believes that 
effective eligible training providers, including CBO's and other 
training providers, can and will compete for individual training 
accounts and, that providers should view the use of ITA's as an 
opportunity to expand their customer base.
    Criteria for ``Demonstrated Effectiveness''--The regulation at 
Sec. 663.430(a)(3) provides that when the exception for special 
populations is used, the Local Board must apply criteria it develops to 
determine ``demonstrated effectiveness,'' particularly as it applies to 
the special participant population it proposes to serve. This 
determination is in addition to meeting the requirements for qualifying 
as an eligible training provider. The provisions in the regulation are 
illustrative and Local Boards should develop specific criteria 
applicable to their local areas.

Subpart E--Eligible Training Providers

    1. Subpart E describes the methods by which organizations qualify 
as eligible providers of training services under WIA. It also describes 
the roles and responsibilities of Local Boards and the State in 
managing this process. Although no single entity has full 
responsibility for the entire process, the State must play a leadership 
role in ensuring the success of the eligible provider system. The 
Governor establishes minimum performance levels for initial 
determination of non-Higher Education Act/registered apprenticeship 
providers and for all subsequent eligibility determinations. The Local 
Board may establish additional local performance levels for subsequent 
eligibility determinations. The eligible provider process requires a 
collaborative effort among the State, Local Boards, and other partners. 
The regulations attempt to amplify and clarify the intent of the Act, 
by linking statutory language on eligible providers in WIA section 122 
with section 134 provisions covering Individual Training Accounts. In 
Sec. 663.505, the regulations clarify that all training providers, 
including those operating under the ITA exceptions, must qualify as 
eligible providers, except for those engaged in on-the-job and 
customized training (for which the Governor should establish qualifying 
procedures as discussed in Sec. 663.595). Finally, in order to ensure 
the strong relationship between the eligible provider process and 
program performance, the regulation at Sec. 663.530 establishes a 
maximum eighteen month period for an organization's initial 
determination as an eligible provider.
    The Department heard concern that some traditional providers of 
training under previous workforce programs, such as community-based 
organizations, would face difficulties in participating in this system. 
The regulations clarify that such organizations have the opportunity to 
deliver training funded under WIA, provided they deliver services that 
customers value and meet training performance requirements. It is 
important that States provide access to these organizations in order to 
maximize customer choice. States should provide access to a broad and 
diverse set of providers, including CBO's, while maintaining the 
quality and integrity of training services.

Subpart F--Priority and Special Populations

    1. Priority Under Limited Adult Funding: This subpart contains 
requirements related to the statutorily-required priority for the use 
of adult funds when funds are limited. WIA section 134(d)(4)(E) states 
that in the event that funds allocated to a local area for adult 
employment and training activities are limited, priority shall be given 
to recipients of public assistance and other low-income individuals for 
intensive services and training services. The appropriate Local Board 
and the Governor must direct the One-Stop operators in the local area 
with regard to making determinations related to such priority. The 
Department assumes that adult funding is generally limited because 
there are not enough adult funds available to provide services to all 
of the adults who could benefit from such services. However, the 
Department also recognizes that conditions are different from one area 
to another and funds might not be limited in all areas. Because of 
this, the regulation requires that all Local Boards must consider the 
availability of funds in their area. In making this determination, the 
availability of other Federal funding, such as TANF and Welfare-to-Work

[[Page 18674]]

funds, should be taken into consideration. Unless the Local Board 
determines that funds are not limited in the local area, the priority 
requirement will be in effect. States and Local Boards must work 
together to establish the criteria that must be used in making this 
determination. States and Local Boards also may administer their 
priority for adult recipients of public assistance and other low income 
adults so as not to preclude providing intensive and training services 
to other individuals.
    A substantial number of parties expressed views on the priority 
issue. Many believed that the Department should not write any 
regulations that would, in effect, establish a nationwide priority. 
Some believed that the Department should not write any regulations at 
all on this section of the statute. However, the Department believes 
that the interpretation of this requirement is of such importance that 
there must be regulations. This section reiterates the statutory 
language that provides States and Local Boards with the authority to 
determine the criteria to be applied when making the determination that 
there are sufficient funds available so that the priority is not in 
effect. Section 663.610 clarifies that the statutory priority only 
applies to adult funds for intensive and training services, and not to 
dislocated worker funds.
    2. Welfare-to-Work and Temporary Assistance to Needy Families as 
Part of One-Stop: At Sec. 663.620, the regulation discusses the 
relationship of the Welfare-to-Work program and the Temporary 
Assistance to Needy Families (TANF) program to the One-Stop delivery 
system. Welfare-to-Work is a required partner to which the One-Stop 
partner regulations apply. The TANF agency is specifically suggested as 
an additional partner. Both programs can benefit from close cooperation 
with the One-Stop delivery system because their respective participants 
will have access to a much broader range of services to promote 
employment retention and self-sufficiency.

Subpart G--On-the-Job Training and Customized Training

    1. Sections 663.700 through 663.720 are the regulatory provisions 
for conducting on-the-job (OJT) and customized training activities. 
They include specific information regarding general, contract, and 
employer payment requirements. The Department received input advocating 
OJT regulations which do not restrict the duration of OJT and which 
permit eligible employed workers to also receive this training. Unlike 
JTPA, OJT is not limited to six months. However, as specified in WIA 
section 101(31)(C), it is limited in duration as appropriate for the 
occupation being trained for. Section 663.705 establishes requirements 
that permit OJT contracts for employed workers.
    Some parties called for minimal regulations in this area; however, 
there were a few who suggested the need for information regarding 
documentation requirements to avoid audit exceptions. Section 663.710 
provides that employers are not required to document the extraordinary 
costs associated with providing OJT, and no further documentation 
requirements are established. Instead, program operators should put 
emphasis on the development and/or selection of OJT assignments that 
meet the identified needs of the participants.

Subpart H--Supportive Services

    1. Flexibility in the Provision of Supportive Services: The 
regulations in subpart H define the scope and purpose of supportive 
services and the requirements governing their disbursement. A 
fundamental principle of WIA is to provide local areas with the 
authority to make policy and administrative decisions as well as the 
flexibility to tailor the workforce investment system to meet the needs 
of the local community. To ensure this flexibility, the regulations 
afford local areas the discretion to provide supportive services as 
they deem appropriate with limitations only in the areas defined in the 
Act. Local Boards are required to develop policies and procedures 
addressing coordination with other entities to ensure non-duplication 
of resources and services, as well as any limits on the amount and 
duration of such services. Attention should be given to developing 
policies and procedures that ensure that the supportive services 
provided are not available through other agencies and that they are 
necessary for the individual to participate in title I activities.
    2. Needs-Related Payments: There were a number of issues regarding 
the eligibility requirements for dislocated workers to receive needs-
related payments that came to our attention, including the concern that 
training enrollment requirements restrict the numbers of individuals 
eligible to receive this income support which they need to participate 
in training. Studies show that early entry into training for dislocated 
workers who require it is a key factor in reducing the period of 
unemployment during the adjustment process. Early intervention 
strategies and policies are best implemented through quality rapid 
response assistance which includes comprehensive core services, and the 
provision of other reemployment assistance, including intensive and 
training services, as soon as the need can be identified, preferably 
before layoff. The statute authorizes all levels of assistance under 
title I of WIA to many workers six months (180 days) before layoff, or 
at least as soon as a layoff notice is received. Providing these 
workers with access to quality information regarding all adjustment 
assistance available in the community, including any deadlines that 
must be met, is critical for workers to make intelligent reemployment 
choices. Thus, many of the concerns raised can be resolved through the 
use of early intervention strategies. The Department has decided to 
issue only limited regulations on needs-related payments eligibility at 
Sec. 663.815 through Sec. 663.840.

Part 664--Youth Activities Under Title I

Introduction

    The youth regulations attempt to reflect the intent of the 
legislation by moving away from one-time, short-term interventions and 
moving to a systematic approach that offers youth a broad range of 
coordinated services. Such offerings include opportunities for 
assistance in both academic and occupational learning; developing 
leadership skills; and preparing for further education, additional 
training, and eventual employment. Rather than supporting separate, 
categorical programs, the youth regulations are written to facilitate 
the provision of a menu of varied services that may be provided in 
combination or alone at different times during a youth's development.
    Legislation creating the youth council, the local entity 
responsible for recommending and coordinating youth policies and 
programs, intends that the youth council be a catalyst for such broad 
change. The regulations support that legislative intent.
    Flexibility for local program operators in conducting youth 
programs is key to the legislation and these regulations. The 
Department encourages local decision making in terms of policy, youth 
program design within the statutory framework, and determining 
appropriate program offerings for each individual youth. It is the 
Department's expectation that these offerings will provide needed 
guidance for youth that is balanced with appropriate

[[Page 18675]]

consideration of each youth's involvement in his or her training and 
educational plan. Further, the regulations support strong connections 
between youth program activities and the One-Stop service delivery 
system, so that youth learn early in their development how to access 
the services of the One-Stop system and continue to use those services 
throughout their working lives.

Subpart A--Youth Councils

    1. This subpart explains the purpose of youth councils. The youth 
council is a new feature of the workforce investment system that helps 
develop youth employment and training policy, brings a youth 
development perspective to the establishment of such policy, 
establishes linkages with other local youth services organizations, and 
takes into account a range of issues that can have an impact on the 
success of youth in the labor market. Working with the youth council, 
the Local Board has responsibility for oversight of youth programs. It 
may be advantageous for Local Boards to delegate responsibility for 
oversight of youth programs to youth councils which have expertise in 
youth issues, as is permitted by Sec. 664.110.

Subpart B--Eligibility for Youth Services

    1. Definition of Sixth Eligibility Barrier: Under section 
101(13)(C)(vi) of the Act, a low income youth is eligible for services 
if he or she ``requires additional assistance to complete an 
educational program, or to secure and hold employment.'' The regulation 
at Sec. 664.210 envisions that Local Boards will define this term, 
however, if State policy is set regarding this provision, the policy 
must be described in the State Plan.
    2. Registering Youth Participants: Section 664.215 provides that 
all youth participants be registered by collecting information for 
supporting eligibility determinations, as well as EEO data. The EEO 
data must be collected on individuals when any assessment or 
discretionary decision regarding an individual is made. Such 
assessments include decisions regarding service or program eligibility, 
either positive or negative, and decisions made on the part of any 
workforce investment system employee which lead to a targeting of 
services for the individual. The Department will issue further guidance 
regarding this data collection requirement.
    3. Non-Income Eligible Youth: Section 129(c)(5) of the Act provides 
that up to five percent of youth participants served in a local area 
may be individuals who do not meet income criteria for eligible youth, 
provided that they meet one or more of the criteria specified in 
section 129(c)(5) of the Act and the regulations at Sec. 664.220. Local 
Boards may define the term ``serious barriers to employment'' and 
describe it in the Local Plan.
    4. Eligibility under the National School Lunch Program: Eligibility 
for free school lunches is not a substitute for income eligibility 
under the Act. The Department received suggestions that program 
operators be allowed to use eligibility for free lunch as a substitute 
for determining eligibility under the Act, and encouraging the 
Department to seek a technical amendment that would include such a 
provision in the legislation. The Department recognizes the importance 
of this issue, yet lacks statutory authority to change the Act's income 
eligibility requirements.
    5. Eligibility of Youth with Disabilities: Section 664.250 provides 
that a disabled individual whose family income exceeds maximum income 
levels under the Act may qualify for services if the individual's own 
income meets the income criteria established in WIA section 101(25)(F), 
or the eligibility criteria for cash payments under any Federal, State 
or Local public assistance program. (WIA section 101(25)(B).)

Subpart C--Out of School Youth

    1. Defining Out-of-School Youth: Sections 664.300, 664.310, and 
664.320 address issues related to out-of-school youth. Section 101(33) 
of the Act defines ``out-of-school youth'' as: eligible youth who are 
school dropouts or who have received a secondary school diploma or its 
equivalent, but are basic skills deficient, unemployed, or 
underemployed. Youth enrolled in alternative schools are not school 
dropouts. The Department received a number of requests that it seek a 
technical amendment that would allow youth attending alternative 
schools to be included in the definition of ``dropout,'' noting that 
this would permit Local Boards to provide services to more youth in 
alternative educational environments and to design programs that take 
advantage of local resources and best meet the needs of local youth. 
While recognizing the importance of local flexibility and of serving 
youth in alternative school settings, the Department lacks statutory 
authority to change definitions established under the Act. Section 
664.310 of the regulations clarifies this issue.
    2. Funds for Summer Activities for Out-of-School Youth: The 
Department received a number of inquiries asking if summer activities 
are exempt from the requirement that 30 percent of youth funds be spent 
on services for out-of-school youth. Transition guidance will address 
how the 30% requirement applies to the Program Year 1999 JTPA summer 
funds. Section 664.320 clarifies that there is no exemption from this 
requirement for summer activities. There is no separate summer program 
under the Act. A single allocation of youth funds is available to local 
areas for year-round and summer activities. Thirty percent of the total 
youth allocation must be spent on services for out-of-school youth. 
This 30 percent, like the remaining 70 percent, may or may not be 
proportional between summer and year-round activities, as determined by 
the Local Board in consultation with the chief elected official.

Subpart D--Youth Program Design, Elements, and Parameters

    1. Program Design: Features of the youth program design are 
outlined in section 129(c) of the Act. While there are three program 
design categories and ten program elements are required, there is 
individual program design flexibility and flexibility in determining 
the definition, scope, and characteristics of the elements.
    Program Design Categories--Under section 129(c)(1), three 
categories provide the framework for youth program design. They are: 
(1) An objective assessment of each participant; (2) individual service 
strategies; and (3) services that prepare youth for postsecondary 
educational opportunities, link academic and occupational learning, 
prepare youth for employment, and provide connections to intermediary 
organizations linked to the job market and employers.
    Linkages to Entities--Youth councils and programs are required to 
establish linkages to entities that will foster the participation of 
eligible youth. Suggested linkages are included in Sec. 664.400(c).
    Information and Referrals--Section 129(c)(3) of the Act requires 
that Local Boards ensure that eligible youth receive information and 
referrals, including information on the full array of appropriate 
services available to them and referrals to appropriate training and 
educational programs. Youth program providers must ensure that eligible 
applicants who do not meet the enrollment requirements of their program 
or who cannot be served by their program are referred for additional 
assessment and program placement. This language was included in 
Sec. 664.400(d) of the regulations to emphasize the importance of 
referrals as

[[Page 18676]]

a part of overall youth program design. To further promote the concept 
of seamless One-Stop service delivery, One-Stop operators are 
encouraged to send those youth assessments that are completed at the 
One-Stop center to other training and educational programs to which the 
youth is referred.
    2. Program elements: Section 129(c)(2) of the Act lists 10 program 
elements that must be generally available to youth through local 
programs. The Department received requests for clarification that not 
all of the 10 youth program elements must be provided to every youth 
participant, and this interpretation is included in Sec. 664.410(b). 
Local program operators must determine what program elements will be 
provided to each youth participant based on the participant's objective 
assessment and service strategy; however, it is envisioned that each 
youth will participate in more than one of the ten program elements 
required as part of any local youth program, and all youth must receive 
follow-up services. For example, even if it is determined appropriate 
that a youth participate in only summer employment activities, he or 
she would still receive at least 12 months of followup services. 
Followup service requirements are fully described in Sec. 664.450. 
Sections 664.420 through 664.470 further define and discuss five 
program elements: leadership development, positive social behaviors, 
supportive services, followup services, and work experiences.
    Leadership Development--The Act states that youth programs must 
provide leadership development opportunities, and gives the following 
examples of such activities: community service and peer-centered 
activities encouraging responsibility and other positive social 
behaviors during non-school hours. Some additional examples of 
leadership development activities are outlined in Sec. 664.420 which 
elaborates on the definition of leadership development opportunities. 
The development of leadership abilities might address team work, 
decision making, personal responsibility, and citizenship training, as 
well positive social behavior training in areas such as positive 
attitudinal development, self esteem building, issues of cultural 
diversity, and other skills and attributes that would help youth to 
lead effectively, responsibly, and by example.
    Supportive Services--The Act states that youth programs must 
provide supportive services. Section 101(46) of the Act defines 
supportive services to include services such as transportation, child 
care, dependent care, housing, and needs-related payments, that are 
necessary to participate in activities authorized under the Act. 
Section 664.440 elaborates on the definition of supportive services as 
it applies to youth. Such services may include: linkages to community 
services; referrals to medical services; and assistance with work 
attire and work-related tool costs, including such items as eye glasses 
and protective eye gear.
    Followup Services--The Act states that followup services will be 
provided for not less than 12 months after the completion of 
participation, as appropriate. Section 664.450(b) clarifies that all 
youth participants must receive some form of followup services. Such 
services must be for a minimum of 12 months. Followup services for 
youth who participate in only summer employment activities may, 
however, be less intensive than for those youth who participate in 
other types of activities. Program operators are encouraged to consider 
the intensity of the services provided and the needs of the individual 
youth in determining the appropriate level of followup services. This 
section also provides that followup may include leadership development 
or supportive service activities, as well as other allowable 
activities, and provides additional examples of permissible followup 
services.
    Evaluation studies such as Abt Associates' Final Report on the 
National JTPA Study, have shown disappointing results for short-term 
job training programs for youth. Meanwhile, programs such as STRIVE and 
the Children's Village have shown much success with longer-term 
followup strategies. A 1993 study by MDRC showed that the Center for 
Employment Training, which features close ties to the private sector 
and a strong job placement component with followup with employers, 
increased the earnings of enrollees by $3,000 a year over a control 
group during the last two years of a four-year evaluation.
    Work Experiences--Sections 664.460 and 664.470 address work 
experiences for youth. Work experiences are planned, structured 
learning experiences that take place in a workplace for a limited 
period of time. No specific time period is specified. As provided in 
section 129(c)(2)(D) of the Act, work experiences may be paid or 
unpaid, as appropriate. Section 664.460 states that work experiences 
may be in the private for-profit sector, the nonprofit sector, or the 
public sector, and gives examples of the types of activities that work 
experiences may include, such as On-the-Job Training (OJT). While OJT 
is likely not an appropriate activity for most youth under age 18, it 
may be used as a service strategy for such youth based on the needs 
identified in an objective assessment of an individual youth 
participant. Section 664.470 provides that youth funds may be used to 
pay the wages of youth in work experience. Youth funds may be used to 
pay the wages of youth in work experiences, including in the private, 
for-profit sector, under conditions designed to protect youth and 
incumbent workers when the purpose of the work experiences is to 
provide youth with opportunities for career exploration and skill 
development and not to benefit the employer. If an unpaid work 
experience creates an employer/employee relationship, federal wage 
standards may apply. This relationship is determined under the Fair 
Labor Standards Act.

Subpart E--Concurrent Enrollment

    1. Concurrent Enrollment in Youth and Adult Programs: Under the 
Act, an eligible youth is an individual 14 through 21 years of age. 
Adults are defined in the Act as individuals age 18 and older. The 
Department received suggestions that local program operators be allowed 
to decide whether youth or adult services are appropriate for 
individuals aged 18 through 21 based on individual participant 
assessments and service strategies. The Department encourages local 
flexibility in serving both youth and adult participants, and thus 
included this clarification in the regulations. Section 664.500(b) 
clarifies that eligible youth who are 18 through 21 years old may 
participate in youth and adult programs concurrently, as appropriate 
for the individual. Such individuals must meet the eligibility 
requirements under the applicable youth or adult criteria for the 
services received. Local program operators must identify and track the 
funding streams for services provided to individuals who participate in 
youth and adult programs concurrently, ensuring non-duplication of 
services.
    2. Individual Training Accounts for Youth: Section 664.510 states 
that ITA's are not an authorized use of youth funds. The ITA is the 
currency of a market-based system that enables adults to select the 
service providers most suited to their needs based on information about 
the past performance of such providers. Under the Act, ITA's are not 
authorized for youth below age 18. Providers of youth services are 
competitively selected based on predetermined criteria, the judgment of 
Local Boards, and recommendations of youth councils about the 
providers' ability to meet the needs of youth

[[Page 18677]]

participants. Youth aged 18 through 21 can access ITA's under the adult 
or dislocated worker program, if appropriate.

Subpart F--Summer Employment Opportunities

    1. Summer Employment Activities: This subpart provides 
clarification about summer youth employment. Although all Local Boards 
must offer summer employment opportunities for eligible youth as one of 
the ten required program elements listed in WIA section 129(c)(2) and 
Sec. 664.410, the proportion of youth funds used for summer employment 
is determined by the Local Board in consultation with the chief elected 
official. Section 664.600 elaborates on the activities that must be 
included in all summer employment opportunities, including direct 
linkages to academic and occupational learning, as well as followup 
services for at least 12 months. Numerous inquiries were received about 
whether the Act would allow cities and counties to continue to operate 
their summer activities. Section 664.610 provides that this practice is 
still allowed, and clarifies that if summer employment opportunities 
are provided by entities other than the grant recipient/fiscal agent, 
the providers must be selected by awarding a grant or contract on a 
competitive basis based on recommendations of the youth council and on 
criteria contained in the State plan.
    2. Application of Performance Indicators: In terms of performance 
measurement, the Department received requests for clarification on 
whether all of the core indicators listed in the Act apply to the 
summer program element as well as to youth activities that are longer 
in duration. It is important to note that the core indicators specified 
in section 136 of the Act apply to all youth program activities. This 
is consistent with the intent of the Act to move from a focus on 
separate, categorical programs to a more systematic approach to 
workforce investment and serving the needs of youth. Summer employment 
opportunities then, are to be viewed as one element among many 
available to youth as a part of a menu of activities offered by the 
Local Board. Section 664.620 indicates that summer activities, as part 
of the overall youth program, are required to meet the same core 
indicators of performance as the other youth activities.

Subpart G--One-Stop Career Center Services to Youth

    1. The Connection between the Title I Youth Program and the One-
Stop Delivery System: This subpart explains that the chief elected 
official (as the local grant recipient for the youth program), as a 
required One-Stop partner, is subject to the One-Stop provisions 
related to such partners described in part 662 of the regulations and 
is responsible for connecting the youth program and its activities to 
the One-Stop system. In addition to the provisions of part 662, 
connections between the youth program and the One-Stop system may 
include those that facilitate:
     The coordination of youth activities;
     Connections to the job market and employers;
     Access for eligible youth to information and services; and
     Other activities designed to achieve the purposes of the 
youth program.
    The Department received requests for clarification on connecting 
youth program activities to the One-Stop delivery system; however, some 
parties felt that the youth program, as a One-Stop partner, should not 
be made to conform to the same One-Stop partner requirements as other 
partners. The Rule attempts to clarify the role of the youth program in 
the One-Stop center through a cross-reference to the One-Stop 
regulations found in 20 CFR, part 662.
    2. Universal Access to One-Stop Centers for Youth under 18: Under 
section 134(d)(2) of the Act, adults have access to core services in 
One-Stop centers without regard to eligibility. Adults are defined 
under the Act as persons aged 18 and above. Section 664.710 of the 
regulations clarifies that local area youth, including youth under age 
18 who are not eligible under the title I youth program, may receive 
services through the One-Stop centers; however, services for such youth 
must be funded from sources that do not restrict eligibility for 
services, such as Wagner-Peyser. The Department believes that the 
intent of the Act is to introduce youth, particularly out-of-school 
youth, to the services of the One-Stop system early in their 
development and to encourage the use of the One-Stop system as an entry 
point to obtaining education, training, and job search services.

Subpart H--Youth Opportunity Grant Programs

    This subpart explains that competitive procedures for awarding 
Youth Opportunity Grants will be established by the Secretary. It also 
restates statutory language regarding the eligibility of Local Boards 
and other entities in high poverty areas to apply for Youth Opportunity 
Grants. Provisions of the Act regarding eligibility for services under 
Youth Opportunity Grants and the process for establishing performance 
measures are clarified at Secs. 664.800 to 664.830. The Department 
views these grants as a distinct opportunity to provide a variety of 
needed services to youth in high poverty areas, building on the current 
successful activities and innovations already at work in many 
communities.

Part 665--Statewide Activities Under Title I of the Workforce 
Investment Act

Introduction

    This part addresses the funds reserved at the State level for 
workforce investment activities under sections 128(a) and 133(2) of 
WIA.

Subpart A--General Description

    This subpart provides a general description of Statewide activities 
conducted with up to 15 percent reserved from youth, adult and 
dislocated worker funding streams (``15 percent funds''), and up to an 
additional 25 percent of dislocated worker funds reserved for Statewide 
activities from annual allotments to the State.
    1. Section 665.110(b) explains that the 15 percent reserved funds 
may be pooled and expended on workforce investment activities without 
regard to the source of the funding. For example, funds reserved from 
the adult funding stream may be used to carry out Statewide youth 
activities and vice versa. The Department believes that the use of 
these funds can provide critical leadership in the development and 
continuous improvement of a comprehensive workforce investment system 
for each State and, as a result, create a national system to which job 
seekers and workers can look for expert assistance, and employers can 
look for a qualified workforce.

Subpart B--Required and Allowable Statewide Workforce Investment 
Activities

    This subpart discusses required and optional activities conducted 
with funds reserved from the three title I funding streams (youth, 
adults, and dislocated workers).
    1. Required Activities: Section 665.200 identifies the eight 
activities which each State is required to carry out with its reserved 
funds from the three funding streams. The Governor must reserve funding 
for these activities, but has discretion to determine the amount 
reserved, up to the maximum 15 percent of each funding stream. One use 
of these funds is administration, subject to the five percent 
administrative cost

[[Page 18678]]

limitation at 20 CFR 667.210(a)(1). This section clarifies that while 
there is no specific amount for each of the seven of the eight required 
activities to be carried out with the 15 percent funds, it is expected 
that the State will expend a sufficient amount to ensure effective 
implementation of those activities. The eighth required activity, rapid 
response, is discussed in subpart C.
    2. Optional Activities: Section 665.210 also identifies activities 
which each State is allowed to carry out with the 15 percent funds. For 
the first time, States have the discretion to conduct research and 
demonstration projects, and incumbent worker projects, including the 
establishment and implementation of an employer loan program. Section 
665.220 makes clear that employed (incumbent) workers served under 
projects funded with these reserve funds are not required to meet the 
requirements that training is needed to lead to a self-sufficient wage 
applicable to employed adult or dislocated workers served with local 
formula funds.

Subpart C--Rapid Response Activities

    This subpart addresses the use of funds that must be reserved (up 
to 25 percent of dislocated worker funds allotted to States under 
section 132(b)(2)(B) of WIA) to provide rapid response assistance.
    1. Section 665.300 describes what are rapid response activities and 
who is responsible for providing them. Rapid response assistance 
commences at the site of dislocation as soon as a State has received a 
WARN notice, a public announcement or other information that a mass 
dislocation or plant closure is scheduled to take place. The Department 
believes that this early intervention feature for dislocated workers, 
if provided in a comprehensive and systematic manner through 
collaboration between the State and Local Boards, One-Stop partners and 
other applicable entities, is critical to enabling workers to minimize 
the duration of unemployment following layoff. The Department strongly 
urges States and Local Boards to implement processes that allow for 
core services to be an integral part of rapid response assistance, 
preferably on-site, if the size of the dislocation or other factors 
warrant it. Further, WIA defines a dislocated worker at section 101(9) 
in a way that permits formula funds to be used for intensive and 
training services for workers: (1) As soon as they have layoff notices; 
or (2) six months (180 days) prior to layoff if employed at a facility 
that has made a general announcement that it will close within 180 
days.
    The Department believes that this is a critical period for workers, 
States, Local Boards, One-Stop operators and partners to begin to make 
important decisions. One important decision is whether there are 
sufficient formula funds in the State (at the State or local levels) to 
adequately serve the workers being dislocated, or whether national 
emergency grant funds must be requested in a timely manner so that all 
services are available to the workers when they need them.
    2. In response to numerous concerns regarding whether rapid 
response funds may be used beyond those types of required rapid 
response assistance described in the Act and Sec. 665.310, the 
Department has elaborated on the authorized rapid response activities 
in the regulation at Sec. 665.320. These additional activities were 
recommended by experts consulted on this topic.
    3. Section 665.330 addresses the linkage of rapid response 
assistance and WIA title I assistance to NAFTA-Transitional Adjustment 
Assistance (NAFTA-TAA). This linkage is an important feature of the 
One-Stop delivery system, and a requirement under NAFTA-TAA.

Part 666--Performance Accountability Under Title I of the Workforce 
Investment Act

Introduction

    This part presents the performance accountability requirements 
under title I of the Act. This part of the regulations primarily 
summarizes the statutory language in the Act and clarifies a few key 
areas based on input the Department has received. WIA's purpose is to 
provide workforce investment activities that improve the quality of the 
workforce. The Department is strongly committed to a systemwide 
continuous improvement approach, grounded upon proven quality 
principles and practices. The regulations identify some of the major 
issues where further guidance will be provided.

Subpart A--State Measures of Performance

    1. Indicators: Section 666.100 identifies the 15 core indicators of 
performance and the two customer satisfaction indicators that States 
are required to address in title I grant applications. The 15 core 
indicators represent the four core indicators that will be applied 
separately for the three population categories (adult, dislocated 
workers and eligible youth age 19 through 21) for a total of 12 
indicators and the three youth indicators. There is one customer 
satisfaction indicator for participants and one for employers. Section 
666.110 clarifies that Governors may develop additional performance 
indicators to be negotiated with Local Boards and that these additional 
indicators must be included in the State Plan.
    2. Definitions: Section 666.100(b) also explains that the 
Departments of Labor and Education will issue more detailed definitions 
for the title I and title II indicators after further consultation with 
representatives identified in section 502(b) of WIA. The Departments 
will consult further on the indicator definitions, including taking 
into account factors such as the degree of difficulty and expense of 
collecting data and reporting on the measures.
    3. Negotiations: As noted at Sec. 666.120(a), the Department will 
provide further guidance on each of these areas after additional 
consultation. Section 666.120(b) addresses the requirement that States 
must submit expected or proposed levels of performance for the core 
indicators and customer satisfaction indicators for years one through 
three of the State Plan. The Department may require States to express 
levels of improvement as a percentage improvement over the previous 
year's actual performance. The Department recognizes that continuous 
improvement is more than incremental increases in performance and will 
develop a comprehensive and rigorous approach to integrate continuous 
improvement at all levels of the workforce investment system. The 
Department received input that underscored this need to view continuous 
improvement as a system building activity, not a compliance activity.
    4. Participants Included in Measures: The Department was requested 
to clarify when a customer becomes a participant for the purpose of 
applying the core indicators of performance. Section 666.140 explains 
that all individuals, except for those adults and dislocated workers 
who receive services that are self-service or primarily informational, 
must be registered and included in the core indicators of performance. 
The Department will issue guidance to further specify which activities 
and services require registration and which ones do not. In addition, 
Sec. 666.140(b) implements the requirement that a standardized record 
must be completed for registered participants.
    5. Wage Record Data. Section 136(f)(2) of the Act requires States 
to use quarterly wage records, consistent with State law, to measure 
progress on the core indicators of performance. Section

[[Page 18679]]

666.150 clarifies that each State must describe its strategy for using 
quarterly wage record data for performance measurement in the State 
Plan. The State Plan must also identify the entities that may have 
access to the wage record data for this purpose. In addition, 
Sec. 666.150(c) defines ``quarterly wage record information'' (1) as 
wages paid to an individual, (2) the individual's social security 
number (or numbers if more than one), (3) the employer's name, address, 
State where located, and (4) the Federal employer identification number 
(when known). As requested, the Department will continue to explore the 
implications and provide guidance for complying with the 
confidentiality requirements at section 444 of the General Education 
Act (20 U.S.C. 1232g (as added by the Family Educational Rights and 
Privacy Act of 1974). Furthermore, the Department will continue to take 
into account concerns about possible violations of State unemployment 
compensation laws, confidentiality and privacy statutes and wage record 
collection systems. The Department will issue further guidance about 
the use of quarterly wage records.

Subpart B--Incentives and Sanctions for State Performance

    1. Criteria: Section 666.200 restates the eligibility criteria for 
States to apply for an incentive grant. Section 666.210 addresses the 
use of incentive funds for one or more innovative programs consistent 
with requirements of title I of WIA, title II of WIA and the Carl D. 
Perkins Vocational and Applied Technology Education Act.
    2. Timing: There were suggestions that the Department postpone the 
incentive program until a State's second year progress report is 
received. Additional time has also been requested to enable the 
workforce investment system to have a year of performance information 
to assist in establishing baseline levels and to learn more about using 
the unemployment compensation wage records for performance measurement 
and about the data and reporting systems for title II Adult Education 
and Literacy programs and Carl D. Perkins programs. The Department 
recognizes these concerns and is considering available options. The 
regulations do not address the timing issue.
    3. Awards: Section 666.230 explains that the Secretary of Labor 
will consult with the Secretary of Education and issue annual 
instructions listing the amounts of incentive funds available to each 
eligible State and giving application instructions. The list will be 
developed after annual performance reports are received and will be 
based on the reported performance. It also describes the factors that 
will be taken into account in determining the amount of Incentive Grant 
awards.
    4. Sanctions: Section 666.240 explains that States failing to meet 
for any program adjusted levels of performance for core indicators and 
the customer satisfaction indicators for any program, in any year, will 
receive technical assistance, if requested. If a State fails to meet 
the required indicators for the same program for a second consecutive 
year, the State may receive a reduction of as much as five percent of 
the succeeding year's grant allocation.

Subpart C--Local Measures of Performance

    Section 666.300 explains that each local workforce investment area 
will be subject to the same 15 core performance indicators and two 
customer satisfaction indicators that States are required to address. 
Governors may elect to apply additional performance indicators to local 
areas. Section 666.310 states that local performance levels will be 
based on the State adjusted levels of performance and negotiated by the 
Local Board and chief elected official and the Governor to account for 
variations in local conditions.

Subpart D--Incentives and Sanctions for Local Performance

    Section 666.400(a) restates local area eligibility for State 
incentive grants. Section 666.400(b) states that the amount of funds 
available for incentive grants and specific criteria to be used are 
determined by the Governor. Section 666.420 also explains that local 
areas failing to meet agreed upon levels of performance will receive 
technical assistance for any program year. Governors must take 
corrective actions for local areas failing to meet the required 
indicators for two consecutive years.

Part 667 Administration Provisions

Introduction

    This part establishes administrative provisions which apply to WIA 
programs conducted at the Federal, State and local levels. These 
regulations are written to clarify what was written in the Act and to 
assemble all of the administrative requirements from the various parts 
of the Act and other applicable sources in order to facilitate the 
administrative management of WIA programs.

Subpart A--Funding

    This subpart addresses fund availability. Questions have been 
raised about to reallotment and reallocation focused on procedures and 
amounts. The regulation clarifies that the amount reserved for the 
costs of administration is excluded from the calculation of unobligated 
balances upon which reallotment/reallocation are to be based. The 
regulation also emphasizes that any amount to be recaptured and the 
reallotment/reallocation are to be separately determined for each of 
the three funding streams. Thus, for example, it is possible that a 
State may be subject to recapture of youth funds while receiving a 
reallotment of adult funds. The Department will provide additional 
guidance on these processes.

Subpart B--Administrative Rules, Costs and Limitations

    1. Fiscal and Administrative Rules: This subpart specifies the 
Rules applicable to WIA grants in the areas of fiscal and 
administrative requirements, audit requirements, allowable cost/cost 
principles, debarment and suspension, a drug-free workplace, 
restrictions on lobbying, and nondiscrimination. This subpart also 
addresses State and Local Board conflict of interest and program income 
requirements, procurement contracts and fee-for-service use by 
employers, nepotism, responsibility review for grant applicants, and 
the Governor's prior approval authority in subtitle B programs. Section 
667.170 sets forth the Department's authority to perform a 
responsibility review of potential grant applicants. The Department may 
review any information that has come to its attention as part of an 
assessment of applicant's responsibility to administer Federal funds. 
The responsibility tests include the items set forth in paragraphs 
(a)(1) through (a)(14). In this section, the term ``include'' is used 
as it is throughout the Interim Final Rule, to indicate an 
illustrative, but not exhaustive list of examples.
    2. Administrative Costs: Administrative Cost Limits: Section 
667.210 restates the provision of the Act which set a State level 
administrative cost limit of five percent of total funds allotted to 
the State by the Department and a local administrative cost limit of 
10% of funds allocated by the State to the local area. It also provides 
that the cost limitation applicable to awards under subtitle D will be 
specified in the grant agreement. In addition, this regulation includes 
a provision which excludes from the administrative cost limitation 
calculation the acquisition

[[Page 18680]]

costs of hardware and software used for tracking and monitoring 
participants, and for collecting, storing and disseminating information 
required as a core service under the Act.
    Definition of Administrative Costs: Section 667.220 provides the 
Department's definition of Administrative Costs. To comply with the 
statutory requirement for consultation with the Governors in developing 
this definition, the Department consulted with representatives of the 
Governors and included both State and local stakeholders in the 
discussion. In addition to the input received through the consultation, 
the Department received suggestions related to the definition of 
administrative costs in various forums and by direct communications 
from a number of different sources. The key theme which emerged is that 
the function and intended purpose of an activity should be used to 
determine whether the costs associated with it should be charged to the 
program or administrative cost category.
    The Department received input regarding what to include and what to 
exclude from the definition of administrative costs. There were 
specific recommendations that costs of information technology and costs 
associated with continuous improvement activities be excluded from the 
administrative cost category. These suggestions helped the Department 
as it framed the regulation which defines administrative costs.
    The Department valued this consultation and carefully considered 
all input and crafted its definition to incorporate this function-based 
approach. The regulation enumerates those functions of State Boards, 
Local Boards and boards of chief elected officials which are classified 
as administrative and indicates that those costs and the costs of like 
activities/functions performed by One-Stop operators are classified as 
administrative costs. The regulation also includes additional cost 
classification guidance to clarify areas where questions have arisen 
concerning the allocation of costs between the program and 
administrative categories. The regulation provides the system with the 
flexibility needed to allocate costs to the program or administrative 
cost category based on the purpose or nature of the activity or 
function. As a result, the locus of responsibility and intended purpose 
of the function, whether direct or indirect, determines the appropriate 
cost category.
    3. Prohibited Activities: Sections 667.260 through 270 address a 
number of prohibited activities that are located in various sections of 
the Act. The regulation clarifies the Department's interpretation that 
the Act's prohibition on employment generating activities, economic 
development and other similar activities does not apply when they are 
directly related to training of eligible participants. It is not 
intended that such activities must benefit individually identified 
participants to be allowable, rather, such approaches as first source 
hiring agreements that promise to benefit participants as a group would 
suffice. The Rule includes a list of activities that may be provided as 
allowable economic development or similar activities. This list is not 
meant to be exclusive. There may be other activities of a similar 
nature that are directly related to training for eligible individuals 
that are permissible under WIA. In this section, the term include is 
used, as it is throughout the Interim Final Rule, to indicate an 
illustrative, but not exhaustive, list of examples. With respect to the 
prohibition of WIA support of inducing relocation of a business, the 
regulation provides a process for a preaward review to ensure that 
funds are not spent in violation of the provision. Section 667.269 
specifies where the procedures for resolution of violations of these 
prohibitions, as well as the related sanctions and remedies, can be 
found.
    Sectarian Facilities: Section 667.266 restates the Act's 
prohibition on the employment of participants in the construction, 
operation, or maintenance of a facility that is used for sectarian 
instruction or as a place of religious worship, and describes the Act's 
limited exception to this prohibition.
    4. Impairment of Collective Bargaining Agreements: Section 667.270 
lists the safeguards that ensure that participants in WIA activities do 
not displace other employees. These include the prohibition on 
impairment of existing contracts for services or collective bargaining 
agreements that is contained in WIA section 181(b)(2). When an 
employment and training activity described in WIA section 134 would be 
inconsistent with a collective bargaining agreement, the Rule requires 
that the appropriate labor organization and employer provide written 
concurrence before the activity begins.
    5. Labor Protections: Section 667.272 requires that individuals 
engaged in on-the-job training or employed in activities under Title I 
of WIA must be paid at the same rate, including the same periodic wage 
increases, as other workers who are similarly situated in similar 
occupations by the same employer and who have similar training, 
experience and skills. Wage rates must be in accordance with applicable 
law, and must be at least equal to the rate specified in section 
6(a)(1) of the Fair Labor Standards Act of 1938 (FLSA) (29 U.S.C. 
206(a)(1)) or the applicable State or local minimum wage law, whichever 
is higher. The determination of whether an individual is ``employed'' 
in a WIA activity for purposes of this provision, including 
participation in paid or unpaid work experience, must be made in 
accordance with the requirements of the FLSA. Questions regarding the 
application of FLSA to participants in WIA activities should be 
directed to the DOL, Employment Standards Administration, Wage and Hour 
Division.
    Section 677.274 mandates that all Federal and state health and 
safety standards and state workers' compensation laws applicable to the 
working conditions of similarly situated workers are equally applicable 
to the working conditions of participants in programs and activities 
under Title I of WIA. Paragraph (b)(2) clarifies the application state 
workers' compensation laws to individuals engaged in 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.
    6. Nondiscrimination: Section 188 of the Act prohibits 
discrimination on the basis of race, color, national origin, sex, age, 
disability, religion, political affiliation or belief, participant 
status, and against certain noncitizens. It also requires the Secretary 
to issue regulations ``necessary to implement this section not later 
than one year after the date on enactment'' of the Act. The Department 
anticipates the publication of an Interim Final Rule to implement the 
nondiscrimination and equal opportunity provisions of the Act prior to 
July 1, 1999 (63 FR 62003, November 9, 1998). The Rule will be located 
at 29 CFR part 37.
    The provisions of WIA sec.188 are substantially similar to sec. 167 
of JTPA, as amended. As a consequence, the Department anticipates 
little difference between 29 CFR part 37 and the regulation 
implementing sec. 167.
    Section 667.275(a) provides that recipients must comply with the 
nondiscrimination and equal opportunity provisions of the Act and its 
implementing regulations. This provision is substantially similar to 
that found in Sec. 627.210, the companion section of the regulations 
implementing

[[Page 18681]]

the JTPA. A slight modification has been made to the language to 
eliminate any possible confusion about who is covered by sec. 188. The 
term recipient, as used in Sec. 671.275, has the same broad meaning as 
that found in other civil rights regulations (for example, in 29 CFR 
parts 31, 32, and 34), and that meaning will be carried over to 29 CFR 
part 37. In the context of Sec. 667.275, a recipient is any entity that 
receives funds under title I of the Act (except for the ultimate 
beneficiary) whether the assistance comes directly from the Department, 
through the Governor, or through another recipient. Some entities may 
be identified as vendors or subrecipients, or some other term. However, 
for the purpose of Sec. 667.275, these entities are considered 
recipients and subject to section 188 and its implementing regulations. 
Section 667.275 generally follows the language in Sec. 667.210, but 
provides for the exception found in sec. 188(a)(3). This exception 
allows for using funds under title I of WIA to employ participants in 
maintenance of a part of a religious facility that is not primarily or 
inherently devoted to sectarian instruction or religious worship, in a 
case in which the organization operating the facility is part of a 
program or activity providing services to participants.

Subpart C--Reporting Requirements

    There were suggestions and questions related to the mechanics of 
reporting. In response, Sec. 667.300 indicates that the Department will 
issue instructions and formats for financial, participant and 
performance reporting. We anticipate that reporting will be done 
electronically. Section 667.300 also provides that a grantee may impose 
different reporting requirements on its subrecipients including 
different forms, shorter due dates, etc. When a State is the grantee 
and plans to impose different reporting requirements, it must describe 
them in its State Plan. Section 667.300(e), concerning the Annual 
Performance Progress Report specifies the situations under which a 
sanction, including a possible reduction in the subsequent year's grant 
amount, may be imposed.

Subpart D--Oversight and Monitoring

    This subpart includes regulations which provide for both Federal 
and State oversight responsibilities. For formula grants, the 
Department's monitoring of the States will be conducted primarily at 
the State level and may include a sample of subrecipients. The 
regulation emphasizes the requirement that States funded under this 
program develop a Statewide monitoring system. States must be able to 
demonstrate that the monitoring system meets certain regulatory 
requirements. One way to so demonstrate is to make a monitoring plan 
available for Federal review. The regulation which specifies the 
oversight roles and responsibilities of WIA grant recipients and 
subrecipients reflects the statutory language of sections 183 and 184 
of the Act.

Subpart E--Resolution of Findings from Monitoring and Oversight 
Reviews

    1. Resolution of Findings and Grant Officer Resolution Process: 
This subpart addresses the resolution of findings that arise from 
audits, investigations, monitoring reviews, and the Grant Officer 
resolution process. The processes are essentially the same as they were 
under JTPA.
    2. Nondiscrimination: To avoid confusion about which procedures 
apply to nondiscrimination findings, the regulation specifies that 
findings arising from investigations or reviews conducted under 
nondiscrimination laws are to be resolved in accordance with section 
188 of the Act and the applicable Department of Labor nondiscrimination 
regulations. While 29 CFR part 34 is currently in effect, the 
Department will issue a new 29 CFR part 37 to specifically implement 
the provisions of section 188 of WIA. Therefore, States which do not 
fully or partially implement WIA before July 1, 2000 will be subject to 
the rules of 29 CFR, part 34 during PY 99. All States that implement 
early, including those which implement under a transition plan, will be 
subject to the new rules at 29 CFR, part 37, during PY 99.

Subpart F--Grievance Procedures, Complaints, and State Appeals 
Processes

    There were recommendations for and against the application of 
grievance procedures to One-Stop partners not funded by the Department. 
In response, the regulations allow such partners to file a grievance or 
complaint when they are affected by the WIA system, but do not attempt 
to address any grievance or complaint that might arise about their own 
programs. Grievance procedures available in partners' programs are 
those available under the law authorizing that program. A person who 
believes that a partner may have violated WIA may use the grievance 
procedure available under WIA.
    1. Grievance Procedures: Section 667.600 describes those elements 
required for local area, State and other direct recipient grievance 
procedures. It also specifies that complaints of discrimination follow 
the resolution process at sec. 188 and Department of Labor 
nondiscrimination regulations. The regulation specifies the two 
situations in which the Department will investigate and/or review 
allegations that arise through local, State and other direct recipient 
grievance procedures. In particular, as part of the State's 
responsibilities, it must provide an opportunity for a timely review of 
local level grievance adjudications.
    2. Complaints and Appeals: Sections 667.630-650 address complaints 
and reports of criminal activity, and the additional appeal processes 
which a State must have for its WIA programs for nondesignation of 
local areas, termination of eligibility or denial of training 
providers, and testing and sanctions for use of controlled substances.

Subpart G--Sanctions, Corrective Actions, and Waiver of Liability

    This subpart addresses sanctions and corrective actions, waiver of 
liability, advance approval of contemplated corrective actions, as well 
as the offset and State deduction provision.

Subpart H--Administrative Adjudication and Judicial Review

    This subpart specifies those actions which may be appealed to the 
Department's Office of Administrative Law Judge (OALJ), and the rules 
of procedure and timing of decisions for OALJ hearings. Section 667.825 
sets forth special requirements that apply to reviews of MSFW and INA 
grant selections. These rules are similar to those currently in effect 
under JTPA. Section 667.840 also provides for an alternate dispute 
resolution process. In addition, Sec. 667.850 describes the authority 
for judicial review of a final order of the Secretary.

Subpart I--Transition

    Section 667.900 indicates that a Governor may reserve up to two 
percent of Program Years 1998 and 1999 JTPA formula funds, of which not 
less than 50% must be made available to local entities, for expenditure 
on WIA transition planning activities. It specifies that the source of 
funds may be any one or more of JTPA's titles or subtitles. It includes 
a provision that expressly states the Department's position to exclude 
funds so reserved from any calculation of compliance with JTPA cost 
limitations. The Governor must decide to make the funds available to 
one or more local entities. These might include a local JTPA entity, a 
local entity established for the purpose

[[Page 18682]]

of operating WIA programs, or any other local entity. Additional 
information and guidance on the process of transition will be 
forthcoming.

Part 668--Indian and Native American Programs

Introduction

    This part establishes the operation of employment and training 
programs for Indians and Native Americans under the authority of 
section 166 of the Act. This part is broken into subparts dealing with: 
Purposes and policies; service delivery systems; customer services; 
youth services; services to communities; grantee accountability; 
planning and funding; administration; and miscellaneous provisions such 
as waivers. In crafting the section 166 regulations, the Department 
attempted to represent the program from the grantees' perspectives, and 
to provide an organization which is relatively easy to follow and as 
comprehensive as possible without repeating major sections of the 
general WIA administrative regulations contained in part 667. Cross-
references to that part are provided in the body of these regulations, 
when appropriate.

Need for Regulations

    There are several reasons why these regulations exist separately, 
and why they contain the areas regulated. The primary reason separate 
regulations are drafted for the section 166 program is that it is 
clearly the intent of Congress and the Administration that there be a 
supplemental employment and training program under WIA solely for 
Indians and Native Americans, with requirements, policies, and 
procedures unique to that customer group. The current grantee community 
stated a desire to have regulations which are as self-contained as 
possible. Therefore, some material covered under the regulations 
implementing the State workforce investment system is repeated in these 
regulations, but usually not in the depth contained in part 667. Cross-
references direct the grantee to sections where greater detail is 
provided.

Subject Areas Covered

    The specific subject areas covered by these regulations, and cited 
above, are being regulated because the language of section 166 does not 
cover the detailed operation of the program. Statements of policy are 
made to clearly delineate the Department's position with respect to the 
section 166 program and the nature of the relationship between the 
Department and its section 166 grantees. Areas such as those concerning 
the designation of section 166 grantees must be regulated in order to 
clarify the statutory provisions, and it is desirable to clearly define 
these procedures and requirements for ease of compliance by those who 
are or wish to be part of the system. The subparts in this Interim 
Final Rule represent a logical sequence, from policies and purposes 
through miscellaneous provisions, generally representing the reality of 
program implementation as experienced by the typical grantee. This 
sequence reflects grantee comments. The primary vehicle for soliciting 
input on these regulations is the Native American Employment and 
Training Council. Drafts of areas under consideration for regulation 
were circulated to the grantee community by the Council, in their 
statutorily-mandated advisory role. Input received from grantees came 
either through the Council or directly to ETA's Division of Indian and 
Native American Programs (DINAP), either in writing (including faxes), 
orally (over the telephone), or via E-Mail. There were also discussion 
sessions held at the three multi-regional meetings in Washington, DC, 
Albuquerque, and Maui, as well as at the Advisory Council meeting in 
November in Washington, DC. Each of these meetings generated 
suggestions which were considered in crafting the present regulations. 
Input was also received through individual members of the Work Group, 
which is a body composed of Council members and other select grantee 
program directors, and is an official Council subcommittee. All in all, 
well over 50 parties submitted views on various aspects of the draft 
regulations. The most significant input is synopsized below.

Areas Not Covered

    Because a Final Rule will be effective for PY 2000, this Rule was 
designed to address issues that affect grantees who implement in PY 
1999. The Department will issue program direction and administrative 
guidance to assist implementing grantees. These areas are as follows:
    1. Transition to WIA: Although several sections allude to the 
transition, no detailed instructions are included in this Rule. Because 
this event will occur only once for each grantee, the Department 
decided that the conversion from JTPA to WIA would be more 
appropriately covered in administrative guidance to be completed and 
distributed to grantees at a later date. This includes the closeout of 
JTPA grants.
    2. Public Law 102-477: A separate subpart was suggested to address 
the various aspects of the demonstration under Pub. L. 102-477, The 
Indian Employment, Training and Related Services Demonstration Act of 
1992, including procedures for transitioning from a JTPA/WIA grantee to 
a ``477 tribe.'' Because no separate regulations are authorized for the 
demonstration, and participation is limited by law to Federally-
recognized tribes and Alaska Native entities, it was decided that such 
a subpart would be inappropriate. However, Sec. 668.930 clearly states 
that grantees who qualify may participate under Pub. L. 102-477. The 
Department considers this to be an adequate reference for these 
regulations.
    3. Supplemental Youth Services: The Department believes that 
establishing a separate subpart for youth services adequately covers 
the provision of youth services for these regulations, but it 
recognizes that further instruction in the creation and submission of 
these youth plans will be necessary. In order to provide the 
flexibility needed to adapt to these changes as they occur, the 
Department believes it is appropriate at this time to provide policies 
and procedures for the youth program in program guidance and policy 
documents.
    4. Performance Measures and Standards: While performance measures 
and standards are referenced in Sec. 668.460 and Sec. 668.620, these 
regulations do not specify which measures may or must be used, or how 
accompanying performance standards will be derived. The development of 
revised performance measures and levels for Native American employment 
and training grantees has been on-going for several years under JTPA, 
and will continue under WIA. This effort is considered to be on a 
``separate track'' from the development of regulations, whether under 
JTPA or WIA. When section 166 performance measures and standards are 
finalized, they will be transmitted to the grantees in a separate 
administrative issuance, and will not appear in regulations.

Subpart A--Purposes and Policies.

    1. Self-determination: In Sec. 668.120, the Department clearly 
commits to the principles of self-determination and sovereignty, and 
names DINAP as the ``single organizational unit'' required in the Act 
to administer section 166 programs. In addition to the language in the 
Act, which the Department thought it appropriate to repeat by 
paraphrasing, the Department has added a statement on helping customers 
achieve personal and economic self-sufficiency. The Department 
considers this statement to be one of the prime purposes of all

[[Page 18683]]

Federal employment and training efforts, and especially appropriate to 
the Native American population.
    2. Consultation: The operating principle of ``partnership'' is 
embodied in these regulations at Sec. 668.130, which paraphrases 
section 166 (h)(2) of the Act.
    3. Definitions: These regulations do not repeat definitions covered 
in the Act or in the main definitions section at Sec. 660.300. The term 
``underemployed'' is defined in this section of the regulation because 
it is not defined elsewhere, and the definition of ``family income'' is 
specific to Indian and/or Alaska Native circumstances. The Department 
has made clarifications to the definition of ``family income'' for 
section 166 purposes. The regulations include a section from the Alaska 
Native Claims Settlement Act (ANCSA) (43 U.S.C. 1626(c)) concerning the 
treatment of income for Alaska Natives which is applicable by law to 
all Federally-funded programs.
    4. Applicable Regulations: To create a more ``user friendly'' 
document, the Department added Sec. 668.140 to the Rule, which 
describes what other regulations affect upon section 166 program 
operation.

Subpart B--Service Delivery Systems

    1. Designation: The current JTPA designation procedures, 
eligibility requirements, competition hierarchies, etc., are retained 
in this Interim Final Rule for PY 1999. WIA section 166 requires that 
grantees be selected on a competitive basis except where a waiver of 
competition is granted due to successful performance. The requirements 
for the selection of grantees through the designation process are set 
forth in Sec. 668.200--Sec. 668.280. In order to be selected as an INA 
grantee, an entity must have legal status as a government or agency of 
a government, a private non-profit corporation or a consortium 
containing one of these groups; it must have the ability to administer 
federal funds as determined under Sec. 668.220; and it must meet 
certain eligible population requirements. To be consistent with the 
goal of the Indian Self-Determination and Education Assistance Act and 
to provide Indians with the opportunity to achieve ``self-determination 
essential to their social and economic well-being,'' the rule, at 
Sec. 668.210, gives priority in the competitive designation process to 
federally-recognized Indian tribes, Alaskan Native entities and 
consortia of these entities. However, as part of the competitive 
selection process, no entity may be designated as an INA grantee unless 
it demonstrates that it has the ability to administer federal funds, as 
defined in Sec. 668.220. The Department believes that this process is 
consistent with the mandates of the Indian Self-Determination and 
Education Assistance Act and with the requirement that grants, 
contracts, and cooperative agreements be made on a competitive basis.
    The Department is establishing a new designation threshold for PY 
2000 and beyond in Sec. 668.200(b)(3), with allowances made for smaller 
grantees wishing to participate in the demonstration under Pub. L. 102-
477. Also for PY 2000, the dates for submission of the Notice of Intent 
and any additional required supporting documentation, contained in 
Secs. 668.240 and 668 .250, are different from those for PY 1999, 
primarily to allow both applicants and the Department more time to 
implement the designation process, especially in the event of more than 
one applicant competing for a given service area. An area of frequent 
comment involved the current JTPA criteria for designation as a Native 
American grantee, specifically the issues of size and the competition 
hierarchy. Most of the suggestions received were from smaller 
Federally-recognized tribes, either without the currently required 
1,000 Indian or Native American population in their service area or 
without a significant reservation land base from which to claim a 
Hierarchy 1 preference. There were suggestions that the Department 
abandon the numbers altogether, and instead assign a dollar threshold 
which would be a better indication of grantee viability. For the PY 
2000 designation and beyond, the Department has chosen $100,000 as the 
minimum funding threshold. This includes any supplemental youth 
services funds awarded to the grantee. In response to requests from 
some smaller grantees, the Department has included in 
Sec. 668.200(b)(3) a statement ``grandfathering in'' those current 
grantees which do not meet the $100,000 threshold for PY 2000 and 
beyond. Also in response to suggestions received from some smaller, 
non-JTPA tribes wishing to participate in the demonstration under Pub. 
L. 102-477, the Department made the $100,000 limit applicable to total 
resources to be included in the ``477 plan.'' This will enable the 
smaller Federally-recognized tribes to receive their own WIA funding 
and participate in the demonstration authorized by P.L. 102-477, if 
their total employment and training funds to be included in the plan 
equal or exceed that dollar threshold. There were also suggestions that 
the Department attempt to accommodate Congressionally mandated service 
areas, States and counties identified in statute as comprising the 
service area of a specific tribe into the hierarchy system, which these 
draft regulations attempt to do. The Department will continue to review 
this issue as it develops the Final Rule.
    2. Geographic Coverage: To address problems which have arisen under 
JTPA, Sec. 668.294 states the Department's position on covering 
specific geographic areas for which there are no viable entities 
willing or able to provide services under section 166 of WIA. The 
Department will make every effort to fund suitable grantees for each 
area. If a suitable grantee cannot be found, the funds for that service 
area will be used for technical assistance or distributed among other 
grantees.
    3. Funding Formula(s): As under JTPA, the WIA rule allocates funds 
for Native American grantees by geographic service area, based upon the 
funding formula set forth in Sec. 668.300. The Department has chosen to 
allocate funds by formula rather than base grant amounts upon the 
levels proposed in grant applications for several reasons. First, other 
than a requirement that the Department consult with the grantee 
community on ``developing a funding distribution plan,'' the Act is 
silent as to how funds are to be distributed among selected grantees. 
The legislative history does not indicate any Congressional intent to 
deviate from the Department's traditional method of funding by a 
geographic allocation formula. The Department believes that experience 
in funding by formula under JTPA for over 15 years has demonstrated 
success in ensuring sufficient funds for a high level of service to 
customers. Once a grantee demonstrates that it meets the minimum 
threshold for designation, including the ability to administer funds 
under Sec. 668.220, the funding formula ensures that sufficient funds 
are available so that selected grantees can operate a viable, 
successful program. For these reasons, it is the Department's view that 
the proposed allocation formula of Sec. 668.300 is consistent with the 
requirement that grants, contracts and cooperative agreements be made 
on a competitive basis. The current JTPA section 401 funding formula is 
retained in this Rule, pending further discussions on the subject 
during the formulation of the Final Rule during 1999. Also included in 
Sec. 668.296 are the hold-harmless provisions, carry-in limitations, 
and the 1% set-aside for technical assistance and training (TAT) 
contained in the current JTPA regulations or policy.

[[Page 18684]]

Subpart C--Services to Customers

    1. Services to Customers: The same basic JTPA section 401 
eligibility criteria are being retained for the section 166 program. 
The allowable services are taken straight from the Act, and listed in 
this subpart for clarity and to further promote the ``user friendly'' 
approach of the regulations. Indian-specific activities, such as 
support of the Tribal Employment Rights Office (TERO), have been 
included, as well as the allowability of sequential enrollment or 
enrollment of participants in more than one WIA program.
    2. Restrictions on Allowable Activities: Because of the importance 
of some of these restrictions, such as the prohibition on using WIA 
funds for economic development in the section 166 program, the 
Department included Sec. 668.350 in these regulations rather than 
merely referring to similar sections in the State workforce investment 
system regulations. Section 668.350 lists these restrictions, primarily 
from WIA sections 181 and 195.
    3. Interaction with One-Stop Centers: Section 668.360 recognizes 
that section 166 grantees are ``mandatory partners,'' in the One-Stop 
delivery system, and reiterates the statutory requirement for a 
memorandum of understanding (MOU) between the section 166 grantee and 
the Local Board. This section outlines the provisions the MOU must 
contain, and the circumstances under which the Local Board may engage 
the section 166 grantee in these negotiations. Because of the remote 
location(s) of some section 166 grantees (their distance from the 
nearest One-Stop center) and other logistical problems, especially for 
tribes serving rural areas, the Department recognizes that successfully 
executing a meaningful MOU with the Local Board may not always be 
possible. Thus, Sec. 668.910 allows Federally-recognized tribes to 
request a waiver of section 121 requirements with the agreement of the 
Local Board. Although financial contribution to the operation of a One-
Stop center is a matter of local negotiation, the funding and audit 
issues involving the restrictions on the uses of section 166 funds must 
be taken into consideration. The primary argument against having to 
financially support the One-Stop centers is that the State is already 
funded to serve Native Americans, at least for core services, and all 
requests for intensive and training services would probably be referred 
to the Native American grantee. The INA Rules specify the INA grantee's 
responsibility as a One-Stop partner. This part does not relieve the 
One-Stop system of its responsibility to serve Native Americans in the 
same manner as it serves all other individuals or specialized groups. 
Some parties also expressed concern that any funds provided to another 
agency which could not be directly tied to the provision of services to 
Native Americans could result in a disallowed cost to the INA grantee. 
In response to suggestions, the Department took a closer look at 
section 121 of WIA and attempted to write regulations in such a way 
that interaction with One-Stop systems would adhere to statutory 
requirements, but not dictate the exact nature of section 166 grantee 
interaction with the One-Stop system. Additional questions which were 
raised concerning the limitation on section 166 funds, that they only 
be used for the benefit of Native Americans. Questions dealt with 
financial support of a One-Stop center, and how this prohibition would 
be documented for audit purposes. Section 668.340 clearly states that 
no expenditures of section 166 funds may be made for individuals not 
eligible under section 166. Part 662 contains specific language that 
addresses One-Stop arrangements, including a similar provision 
providing that a partner's resources may only be used to provide 
services to individuals eligible under the partner's authorizing 
statute. This section also requires the grantees to describe the 
process for negotiating the MOU with their Local Board in their Two 
Year Plan.
    4. Payments to Participants: Section 668.370 contains the same 
requirements about minimum wage coverage, the payment of allowances, 
the applicability of labor standards, and limitations on participant 
wages that were in effect under JTPA in 20 CFR part 632. The Department 
considers it important, for ease of reference by the grantees, to 
clearly state these requirements in regulations rather than cross-
referencing the Act or other statutes. The Department also included a 
statement in Sec. 668.370 specifically allowing the payment of 
incentive bonus payments to participants who meet or exceed established 
goals, to avoid audit questions which have arisen under JTPA section 
401 activities.
    5. Grantee Capacity Building: Section 668.380 reflects the 
Department's intention to provide section 166 grantees with technical 
assistance and training as required by section 166(h)(5) of the Act.

Subpart D--Supplemental Youth Services

    It is significant that this is a separate subpart. Although this 
program is only available to certain types of entities, and eligible 
grantees will cover the provision of supplemental youth services in 
their Two Year Plan rather than in a separate document, the Department 
received suggestions for a separate youth subpart for clarity's sake. 
The Department agrees that supplemental youth services warrants a 
separate subpart in this Rule. In part 668, the youth requirements are 
covered in subpart D, with a minimum of definition beyond that provided 
in the Act, except for the funding formula (Sec. 668.440) and the 
provisions making the hold harmless factor, the reallocation 
provisions, and provisions concerning the use of funds not claimed by 
grantees applicable to youth funds as well. Section 668.460 covers the 
applicability of performance measures and standards to the supplemental 
youth program. A number of suggestions received from ``urban'' grantees 
indicated their desire to receive supplemental youth services funding. 
However, after further review, the Department decided that the language 
of the statute did indeed limit recipients of these funds to those 
entities serving Indian/Alaska Native/Native Hawaiian youth residing on 
or near a reservation. The regulations clarify additional details 
concerning the provision of supplemental youth services, such as the 
requirement that most participants be low-income individuals, that the 
definition of ``eligible youth'' applies to section 166 programs, that 
performance measures and standards are applicable to the supplemental 
youth programs, and that the funding provisions for the adult program 
(reallocation, carry-in limits, use of funds, etc.) also apply to youth 
programs.

Subpart E--Services to Communities

    Not contained in the current JTPA section 401 regulations, this 
subpart, addressing services to communities, was included for purposes 
of clarification, following the recommendations of the Work Group. The 
regulations discuss the kinds of services that can be provided to 
communities and employers, such as customized training and child care. 
Many of these services, especially to communities at large, have been 
provided under JTPA for some time, but have not been discussed 
previously in regulations. Some of the provisions found here, however, 
appear in 20 CFR part 632 in various places, such as the reference to 
the Indian Financing Act of 1974, contained in Sec. 668.520.

[[Page 18685]]

Subpart F--Accountability for Services and Expenditures

    1. Contents of Subpart: This subpart reflects one of the Act's key 
reform principles of strengthened accountability, and contains sections 
on various aspects of grantee ``accountability,'' including the nature 
of the INA grantee's accountability to the Native American community, 
to the Department, and to the individual participants. Sections covered 
here include reporting, performance measures and standards, the 
prevention of fraud and abuse, grievance systems, and equal access 
provisions which are similar to the corresponding JTPA section 401 
provisions. Several of the regulatory provisions, such as those at 
Sec. 668.630(c) and (d) (gifts and nepotism), are unique to the Native 
American grantee program.
    2. Service Preference: There has always been a controversy in 
Indian programs, dating back to JTPA and its predecessor, the 
Comprehensive Employment and Training Act (CETA), concerning the 
ability of a tribe to grant preference to its own tribal members at the 
expense of, or to the exclusion of, other Native Americans residing in 
its service area. These regulations clearly state that these 
exclusionary practices are prohibited. However, in response to grantee 
concerns, the regulations state that grantees may still identify target 
populations to be served (for example, the disabled, Temporary 
Assistance to Needy Families (TANF) recipients, substance abusers) and 
have this priority approved in the Two Year Plan.

Subpart G--Planning/Funding Process

    This subpart contains details about plan formulation and 
submission, including the statutory requirement for a Two Year Plan for 
delivering comprehensive WIA services. Also included here are the 
Department's procedures for plan review and approval, and the 
requirements for subsequent plan modification. These procedures are 
being added to make the regulations more ``user friendly,'' and because 
there are changes from the procedures used under JTPA, such as the 
change from a one-year plan to a two-year plan, and the dropping of a 
requirement for a separate summer plan.

Subpart H--Administrative Requirements

    1. Contents of Subpart: This subpart describes in detail the 
systems each grantee must have in place to properly administer a 
section 166 program under WIA. It also addresses cost allocation and 
allowability, audit requirements, applicable cost principles, cash 
management requirements, and the treatment of program income. Much of 
this subpart consists of cross-references to the appropriate general 
administrative sections of 20 CFR part 667, or to other Departmental or 
Federal regulations.
    2. Administrative Cost Limits: By far the majority of suggestions 
received involved the issue of the administrative cost limit under WIA. 
Section 166 of the Act is silent on the level of administrative costs 
permitted. Many felt that the 10 percent (10%) limit on local workforce 
investment areas in title I would place a tremendous strain on even the 
largest programs, while making it impossible for smaller grantees to 
operate at all (97 out of 183 JTPA section 401 grantees receive less 
than $100,000 annually). The grantees who submitted suggestions all 
wanted at least the 20% administrative cost limit currently in place 
for JTPA, section 401, and the INA Welfare-to-Work (INA WtW) programs. 
To allay concerns over adjusting to new rates, Sec. 667.210(b) provides 
that the INA administrative cost ceiling is to be established in the 
grant agreement. Any adjustments to the 10 percent limit will be 
addressed in the grant agreement, and will be based on the particular 
needs of the grantee.

Subpart I--Miscellaneous Program Provisions

    Covered in this subpart are the regulatory and statutory waiver 
provisions under section 166(h)(3) of WIA, which were not available 
under JTPA. This includes the requirements for documenting a waiver and 
circumstances under which section 121 requirements may be waived, and 
provisions which may not be waived. Also covered are the allowability 
of participation in the demonstration under Pub. L. 102-477, and an 
elaboration of the role of the Native American Employment and Training 
Council. The latter section was added to clearly state the role of the 
Council in the consultative process, and to support its activities.

Part 669--Migrant and Seasonal Farmworker Programs under Section 
167

Introduction

    This part provides the program and administrative requirements for 
the operation of the Migrant and Seasonal Farmworker (MSFW) program, 
including the MSFW Youth program under section 127(b)(1)(A)(iii). Part 
669 is organized in five subparts addressing: purpose and definitions; 
the MSFW program's service delivery system; MSFW customers and 
available program services; performance accountability, planning and 
waiver authority; and the MSFW youth program.
    The MSFW program is administered nationally in the Department by 
using a limited competitive process to select applicants for grant 
awards. The selected grantees operate the grant programs in most States 
and Puerto Rico. The vehicle for soliciting and receiving comments 
during the development of the MSFW regulations is the Migrant and 
Seasonal Farmworker Employment and Training Advisory Committee. At the 
Committee's first meeting on November 5 and 6, 1998, two workgroups of 
volunteers from the grantee community were formed to assist the 
Department in developing the policies underlying these regulations. The 
members met to develop an initial discussion draft and continued 
providing comments by e-mail.

Subpart A--Purpose, Definitions, and Federal Administration

    This subpart covers the statement of purpose at Sec. 669.100, and 
provides applicable farmworker-specific definitions and Federal 
administrative requirements.
    1. Definitions: The definitions in this subpart are those unique to 
this program. The major issues requiring definition are ``allowances,'' 
``capacity enhancement,'' and ``emergency assistance.'' (Other terms 
are defined for clarification.)
    Allowances--The MSFW program permits payments of allowances to 
enable individuals to participate in classroom training. The economic 
condition of most farmworkers does not permit their participation in 
full-time training without on-going financial assistance. The 
definition of ``allowances'' establishes when allowance payments are 
permitted and the maximum hourly rate. Grantees may use a lower rate.
    Capacity Enhancement--Section 167 of WIA authorizes the Department 
to provide funds for capacity enhancement as part of technical 
assistance activities. The Rule provides that capacity enhancement 
includes staff training for grantee staff members. The MSFW program has 
a history of using discretionary funds to finance some of the costs of 
grantee staff development activities. The definition authorizes the 
continuation of such activities.
    Emergency Assistance--Some parties expressed a need for reducing 
the administrative burdens relating to providing emergency assistance 
to farmworkers. These services are unique

[[Page 18686]]

for the MSFW program and address urgent needs of a short duration, such 
as medical, housing or food support required by MSFWs moving along the 
migrant stream. When applying for emergency assistance, farmworkers 
must provide personal and family information to demonstrate 
eligibility. The general program eligibility requirement of having to 
produce verifying source documentation such as annual tax returns that 
one would normally leave at home, frustrates grantees' attempts to 
respond to urgent needs of farmworkers. To rectify this problem, the 
regulation provides that when a person applies for emergency services 
only, an expedited eligibility determination process may be used. The 
process is expedited by exempting the grantee from requiring 
documentary evidence to support the farmworker's eligibility except 
regarding work authorization and compliance with Selective Service 
registration requirements. The farmworker's eligibility is established 
by a self-certification. This abbreviation of the application 
requirement for receipt of emergency assistance is consistent with the 
low unit cost of these services.
    2. Federal Administration: Sections 669.120 and 669.130 provide 
that the Department's administration of the MSFW program will be under 
its national office, working directly with the operational grantees. 
Section 669.140 restates the Department's obligation to provide 
technical assistance. Sections 669.150 and 669.160 ensure consultation 
with the Secretary's Migrant and Seasonal Farmworker Employment and 
Training Advisory Committee. The MSFW Advisory Committee was 
established in 1998 under the Federal Advisory Committee Act (FACA) for 
this purpose, and it is intended that the Committee will advise the 
Department on a variety of MSFW program matters. Since WIA does not 
require the use of an Advisory Committee for the MSFW program, this 
section establishes by regulation the FACA consultative process for the 
MSFW program.

Subpart B--MSFW Program's Service Delivery System

    This subpart contains provisions on the grantee selection process.
    1. Eligible Entities: Section 167(b) of the Act requires that 
organizations seeking to operate MSFW programs demonstrate their 
familiarity with and an understanding of the target population. This 
capacity is critical to the entity's ability to effectively provide the 
services needed by MSFW's.
    2. General Approach to Service Delivery: Grantees expressed concern 
that, without regulatory clarification, some Local Boards would refuse 
to recognize the MSFW grantee as a required partner in the One-Stop 
delivery system established under title I of the WIA. These regulations 
and those for the title I Adult and Dislocated Worker programs, clearly 
state that MSFW grantees are required partners in those local areas 
where grantee offices are located.
    Grantees indicated that the regulations should provide for 
equitable availability of all WIA services to all farmworkers entering 
the One-Stop center doors. The primary service providers under Wagner-
Peyser and the title I Adult and Dislocated Worker programs have a 
general responsibility to make their core, intensive and training 
services available to all eligible farmworkers on a basis that is 
equitable with other customer groups. The MSFW program has a specific 
responsibility to supplement the level of those services by offering 
farmworkers the services available under the MSFW program that are 
tailored for farmworkers. Although the services available from the MSFW 
program must include the general core services of the local One-Stop 
centers, the MSFW program provides services developed especially for 
addressing the unique needs of MSFW's.
    To fulfill the required partner requirement, the MSFW grantee and 
the One-Stop centers must develop the coordination necessary for the 
effective delivery of One-Stop core services to farmworkers. This is to 
be achieved through the agreements negotiated between the MSFW grantee 
and the Local Boards. The resulting agreements, including appropriate 
cost sharing arrangements, are to be described in the Memorandum of 
Understanding. MSFW grantees have stressed the importance of having an 
operational structure under the regulations to establish good-faith 
negotiation of the MOU's. Without protections for ensuring the 
integrity of the MOU negotiations, these grantees believed that their 
participation at many One-Stop centers would be jeopardized. The 
specific environment expected is one that ensures the MSFW grantees 
have a level playing field for negotiating with the Local Boards. Both 
part 662 and Sec. 669.220 make it clear that Local Boards and MSFW 
grantees must enter into good faith negotiations to develop an 
equitable assignment of roles, responsibilities and costs between them.
    MSFW grantees have made it clear that they want to be recognized as 
required One-Stop partners only where it is geographically appropriate 
to their operations, stressing the importance of limiting the required 
MOU's within the States to those appropriate to the MSFW grantee's 
circumstances. This is due to the potential administrative burden in 
many States because of the large number of Local Boards with which 
MOU's would have to be negotiated. There is a clear preference for a 
regulatory provision permitting the negotiation of a single, Statewide 
MOU or limiting the required MOU's to those Local Boards where it is 
clearly meaningful, such as with those areas in which the MSFW grantee 
operates.
    The regulations provide an operating structure for MOU 
negotiations. Section 669.350 states the MSFW grantees' obligations for 
providing the core services of the local One-Stop center to the 
farmworkers it serves. A corollary requirement exists for the Local 
Board under Sec. 662.410(b). Basically, the process for addressing how 
respective obligations will be fulfilled is the negotiation of the MOU, 
as required for all local partners in a One-Stop delivery system. The 
regulation clarifies that the MOU's negotiated by the MSFW grantees 
shall provide the terms of necessary financial or in-kind compensation 
for services exchanged between the MSFW grantee and the Local Board. 
The matter of establishing an appropriate environment for negotiating 
MOU's is addressed in this section. It provides for ETA to determine 
when the MSFW grantee is responsible for failed negotiation of MOU's 
with Local Boards. Under the regulations for the One-Stop delivery 
system, any failure to execute a MOU with a required partner must be 
reported by the Local Board to the Governor, and by the Governor to the 
Secretary of Labor and to any other head of a Federal agency with 
responsibility for oversight of a partner's program. The regulation 
limits the required MOU's to those Local Boards located in areas where 
there is a grantee field office. This limitation establishes that the 
MSFW grantees are not required to negotiate MOU's with Local Boards 
serving geographic areas that are inappropriate for the MSFW program, 
such as areas where the MSFW program will not be operating. The 
Department encourages MSFW grantees to develop working relationships 
through electronic or other means for an appropriate purpose such as 
referral, in areas with large concentrations of MSFWS which are not 
served by a grantee field office.
    3. Termination: Section 669.230 provides the grounds for 
terminating an MSFW grantee. The regulation provides authority for the 
Grant Officer to initiate

[[Page 18687]]

termination when there is a need to protect funds and when there is a 
substantial or persistent violation of requirements. It also outlines 
the procedures for emergency termination.
    4. Discretionary Account: Section 669.240(b) authorizes the 
continuation of a discretionary account. Historically, the Department 
has been authorized to reserve up to six percent of the funds 
appropriated each year for the MSFW program to fund discretionary 
activities. These activities support those needs of MSFWs that are not 
met by the basic job training program. Such activities include grants 
to support housing programs for farmworkers, and ETA-sponsored 
technical assistance for grantees such as conferences, direct mini-
grants for specific grantee needs, and other technical assistance 
activities. The delivery of technical assistance to grantee staff is 
consistent with the provision of ``capacity enhancement,'' described 
above. The funds also support the costs of the Secretary's Migrant and 
Seasonal Farmworker Advisory Committee. Section 669.240(b) continues 
this limited discretionary authority to use up to six percent of the 
funds appropriated under section 167.

Subpart C--MSFW Program Customers and Available Program Services

    This subpart describes who is eligible for services provided under 
section 167 of WIA, the program responsibilities, and the nature and 
scope of the program activities authorized under the Act.
    1. Eligibility: Section 669.320 summarizes applicant eligibility 
terms defined in section 167 (h) of the Act.
    2. Customer Approach: Customer choice is a primary focus of WIA. 
The regulations are necessary to ensure that farmworkers have an 
opportunity to make choices about the services and training available 
to them. To meet these objectives, it is necessary to provide guidance 
to the MSFW grantees on serving their farmworker customers. This is 
achieved by providing services through a case management approach, 
which may include core, intensive, and training services, and related 
assistance and supportive services (Sec. 669.330). As provided in 20 
CFR part 663, prior to intensive services, a participant must receive 
at least one core service, and prior to training services, a 
participant must receive at least one intensive service. The 
regulations provide, however, that the delivery of intensive services 
(Sec. 669.370) and training services (Sec. 669.410) may be combined 
under a single structure or continuum. To meet immediate needs of 
farmworkers and their families, Sec. 669.360 authorizes grantees to 
provide emergency assistance--for example, services such as health care 
and housing assistance. This is an example of features within the MSFW 
program and these regulations to address the special needs of MSFW's. 
It illustrates how this MSFW program supplements through its diversity 
of approaches, the types of services available to farmworkers under the 
Adult and Dislocated Worker programs.
    3. Intensive Services: Many farmworkers have special needs and 
require additional resources that the MSFW grantees are funded to 
provide. Accordingly, MSFW grantees provide intensive services, which 
may include individual employment plans, and may be based on objective 
assessments and periodic reviews of participant employment and training 
needs. Section 669.370 indicates the kinds of intensive services that 
are appropriate for MSFW's. This approach may differ from the service 
delivery design of a local One-Stop center because the MSFW program is 
intended to offer opportunities for MSFWs to redirect their lives by 
learning the skills and knowledge required for employment in higher 
skilled occupations. Usually, when farmworkers seek employment 
assistance from an MSFW grantee, they are trying to abandon seasonal 
farmwork (but not necessarily all agricultural employment) with its 
inherent uncertainty, poverty and other hardships. Helping farmworkers 
to overcome the barriers they face when seeking to attain better 
employment may require the concurrent provision of intensive and 
training services.
    4. Objective Assessment and Individual Employment Plan: These two 
case management instruments may be utilized for participants seeking 
services beyond core services, and provide the means to achieve a 
sustained customer focus. The description of objective assessment is 
covered at Sec. 669.380. The description of objective assessment is 
provided to clarify the range of resources available and to suggest 
that assessment should be an ongoing process. Customer focus is 
maintained through the use of an individual employment plan (IEP), a 
tool to identify the intensive services, training, and support services 
necessary to lead to economic self-sufficiency. The most important 
aspects of the IEP are that it is jointly developed between the 
customer and the service provider and that it should be continuously 
relied upon to guide the participant's participation to a successful 
conclusion. The IEP is a record of the participant's employment, 
training, and supportive services needs, and a mutually developed 
strategy for reaching the participant's goals. Regulatory guidance is 
necessary to ensure that the minimum standards expected by ETA and the 
grantee community, are understood and achieved in developing and 
maintaining IEP's for MSFW's.
    5. Training Services: In addition to the training services 
authorized under section 134(d)(4)(D) and section 167(d) of the Act, 
experience has shown that additional training services, such as 
training in housing development assistance or workplace safety, are 
occasionally required to assist farmworker customers. Section 669.410 
authorizes MSFW grantees to provide such services. Section 669.420 also 
regulates the minimum requirements for OJT contracts under the MSFW 
program.

Subpart D--Performance Accountability, Planning and Waiver 
Authority

    This subpart addresses program administration, consultation with 
grantees and awarding of grants.
    1. Performance Standards and Measures: Section 669.500 provides 
that the core performance indicators applicable to the formula programs 
under title I will also apply to the MSFW program. This section also 
authorizes the MSFW program to develop performance measures that are in 
addition to the core indicators of performance. The levels of 
performance for each indicator will take into account the 
characteristics of the participants to be served and the economic 
conditions in the area served by the grantee and negotiated as part of 
the grantee plan approval.
    2. Funding and Planning Documents: Sections 669.510 through 669.540 
describe the grant planning process. To reduce administrative effort at 
both the Federal and grantee levels, Sec. 668.510 requires that the 
plans submitted cover a two-year (biennial) period even though funding 
is available on an annual basis. This represents a change from past 
requirements for single year plans and affords an opportunity for 
strategic planning and continuous improvement. Section 669.520 
establishes the minimum requirement for the MSFW grant plan. Other 
requirements may be added by the Solicitation for Grant Application 
(SGA) for any given biennial period.
    3. Unilateral Modifications: Section 669.540 authorizes the 
Department to unilaterally increase or reduce grant funding levels in 
response to Congressional action. The section also establishes the 
limitations under which grantees may unilaterally modify grant

[[Page 18688]]

plans and provide authority for bilateral modifications.
    4. Cost Classification and Reporting: Section 669.550 describes 
cost classification and reporting procedures and addresses compliance 
with the administrative cost limitations.
    5. Waivers: The general waiver authority in WIA does not apply to 
the MSFW program. However, waiver authority may prove beneficial for 
addressing unforseen circumstances encountered by MSFW program 
grantees. The regulations at Secs. 669.560 and 669.570 provide MSFW 
program grantees with limited regulatory waiver authority to waive 
certain provisions of the WIA regulations.

Subpart E--The MSFW Youth Program

    This subpart includes 669.600 through 669.680 which provide the 
introduction to the MSFW youth program by stating its purpose and its 
relationship to the MSFW program under section 167. Regulations at 
Secs. 669.630 through 669.660 provide the qualifying process for 
receiving a MSFW youth grant.
    1. Designation of Grantees: The section 167 MSFW youth program will 
be administered through grant agreements with eligible entities, 
selected through a competitive process. Sections 669.630 and 668.640 
describe the eligibility criteria for designation and the process by 
which an entity may apply for designation as a MSFW youth program 
grantee. To be designated, an organization must submit a youth program 
plan in response to the Departments's Solicitation for Grant 
Applications. MSFW grantees expressed concern that a separate 
competition for youth grants would lead to instances where two 
different MSFW grantees were operating in the same areas. To respond to 
this concern, MSFW grantees operating within the same service area will 
be afforded special consideration in the grant competition.
    2. Allocation of Funds: Section 669.650 regulates the funding of 
the MSFW youth program on a competitive basis by providing that the 
allocation of funds will be based on the merits of the proposal. In 
addition, the process may utilize allocation methods that promote a 
geographical distribution of funds that supports a balanced funding of 
both large and small scale competitive applications. The grantees also 
expressed concern that a larger jurisdictions would have a competitive 
advantage. To allay concerns over the potential for irregular 
distributions among jurisdictions and grantees due to relative 
differences in size, the regulations provide that the Department will 
use a means for geographical distribution that promotes acceptance of 
both large and small scale applications under the competition.
    3. Grant Plans: Section 669.660 describes the planning documents 
required in an applicant's response to the Department's SGA and the 
applicable submission dates, respectively.
    4. Eligibility: Section 669.670 establishes the eligibility 
criteria for farmworker youth who wish to participate in the MSFW youth 
program. They are youth age 14 through 21, who are economically 
disadvantaged.
    5. Allowable Activities and Services: Section 669.680 authorizes 
the MSFW youth program activities. Specific activities are authorized 
by references to sections of the WIA and by described youth activities.

Part 670--Job Corps

Introduction

    This part provides regulations for the Job Corps program, 
authorized in title I, subtitle C of WIA. The regulations address the 
scope and purpose of the Job Corps program and provide requirements 
relating to selection of sites for Job Corps centers; selection and 
funding of service providers; screening, selection and assignment of 
eligible youth to Job Corps centers; operation of Job Corps centers; 
and required services for Job Corps students. This part also provides 
regulations covering new WIA requirements such as the establishment of 
a business and community liaison and an industry council for each Job 
Corps center, and the focus on accountability, including specific 
performance measures for Job Corps centers and service providers. The 
Department's intent in these regulations is to incorporate the 
requirements of title I, subtitle C of the Act, and to describe the 
programs and services which must be available for Job Corps students, 
as well as the requirements dictated by the unique residential 
environment of a Job Corps center (such as provision of meals, 
transportation, recreational activities and related services).

Subpart A--Scope and Purpose

    1. Purpose: This subpart indicates that part 670 contains 
regulatory provisions that apply to the Job Corps program, describes 
the purpose of the program, and provides definitions. It also specifies 
that the Job Corps Director is delegated authority to carry out the 
responsibilities of the Secretary under title I, subtitle C of the Act 
related to the operation of the Job Corps program, and that references 
in this part referring to ``guidelines'' or ``procedures issued by the 
Secretary'' mean that the Job Corps Director will issue such 
guidelines. Procedures guiding day-to-day operations are provided in a 
Policy and Requirements Handbook (PRH). The PRH includes minimum 
program requirements and expected outcomes for specific program 
components, such as education and training, student support, and 
administration. In addition, general guidance and best practices are 
provided for in a number of program areas in Job Corps Technical 
Assistance Guides issued by the Job Corps Director.
    2. Partnership: The program purpose incorporates the Act's intent 
that Job Corps will operate as a national, residential program in 
partnership with States and local communities. The partnership theme is 
carried throughout various sections of part 670 in requirements for Job 
Corps centers and service providers to serve on local youth councils, 
to operate as a One-Stop partner, and to work with employers.
    Several parties noted that the regulations provide in this subpart 
that Job Corps is a national program which operates in partnership with 
States, communities, Local Boards, youth councils, One-Stop centers and 
partners, and other youth programs, but argued that the earlier 
proposed language relating to partnership with One-Stop was not strong 
enough in other statements indicating services (such as outreach/
admissions and placement) would be provided by One-Stop centers or 
partners to the extent practicable. The intent in using language such 
as ``to the extent practicable'' or ``to the fullest extent possible'' 
is not to limit or discourage the development of linkages between Job 
Corps and One-Stop, but to recognize (1) the language in section 
145(a)(3) of the Act which requires the Secretary to conduct outreach 
and screening activities ``to the extent practicable'' through 
arrangements with applicable One-Stop centers, community action 
agencies, business organizations, labor organizations, and entities 
that have contact with youth; (2) the requirements in section 147 of 
the Act for selection of Job Corps center operators and other service 
providers (such as outreach/admissions, placement, and provision of 
continued services) on a competitive basis in accordance with Federal 
procurement law and regulations; and (3) the language in section 148(e) 
and section 149(b) of the Act which requires the Secretary to give 
priority to ``One-Stop partners'' in selecting a provider for continued 
services for graduates and to ``utilize One-Stop delivery systems to

[[Page 18689]]

the fullest extent possible'' for the placement of graduates into jobs. 
The use of these phrases should not be interpreted as a limitation, but 
as a statement of intent to enter into partnerships in all situations 
where it is feasible to do so.

Subpart B--Site Selection and Protection and Maintenance of 
Facilities

    This subpart describes how sites for Job Corps centers are 
selected, the handling of capital improvements and new construction on 
Job Corps centers, and responsibilities for facility protection and 
maintenance. The requirements in this subpart are not significantly 
different from the corresponding requirements in the JTPA Job Corps 
regulations.

Subpart C--Funding and Selection of Service Providers

    This subpart describes entities which are eligible to receive funds 
to operate Job Corps centers and to provide operational support 
services. It also describes how contract center operators and 
operational support service contractors are selected, emphasizing the 
requirements for competitive contract awards. New requirements, 
including consultation with the appropriate Governor, center industry 
council, and Local Board in development of requests for proposals for 
center operators, are included in Sec. 670.310(a). In addition, 
Sec. 670.310(c), describes requirements to be included in center 
requests for proposals to assess providers' past performance as well as 
their ability to coordinate Job Corps center activities with State and 
local activities (including One-Stop centers), and to provide 
vocational training that reflects employment opportunities in areas 
where students will seek jobs. These requirements are described in 
section 147(a)(2)(B) of the Act.

Subpart D--Recruitment, Eligibility, Screening, Selection and 
Assignment, and Enrollment

    1. This subpart describes who is eligible for Job Corps under WIA 
and provides additional factors which are considered in selecting an 
eligible applicant for enrollment. This subpart also discusses who will 
conduct outreach and admissions activities for the Job Corps, and the 
responsibilities of those organizations. Section 670.450 describes the 
new requirements of section 145(c) of WIA for an assignment plan for 
Job Corps centers. Assignment plans will be developed and used to 
establish a target for each Job Corps center for the percentage of 
students enrolled who will come from the State or Department of Labor 
region in which the center is located, and the regions surrounding the 
center. In addition, this subpart addresses the requirement of section 
145(d) of the Act that students must be assigned to centers closest to 
their homes, with consideration given to the special needs of 
applicants or their parents or guardians when making assignments.

Subpart E--Program Activities and Center Operations

    1. Program Activities: This subpart describes the services and 
types of training each Job Corps center must provide, as well as center 
responsibilities in the administration of work-based learning. This 
subpart also describes the residential support services Job Corps 
centers must provide, and centers' responsibility for student 
accountability. Required residential support services include providing 
a safe, secure environment, an ongoing counseling program, food 
service, access to medical care, recreation, and leadership programs 
for students. In addition, centers must account for the whereabouts, 
participation, and status of students while they are enrolled in Job 
Corps.
    2. Behavior Management and Zero Tolerance for Violence and Drugs: 
This subpart establishes requirements for Job Corps centers to have 
student behavior management systems. Section 670.540 describes Job 
Corps' zero tolerance policy for violence, drugs, and unauthorized 
goods. The regulatory language in this section continues current 
requirements for automatic dismissal of students who commit specific 
offenses (the one strike and you're out policy) specified in Job Corps' 
zero tolerance policy. The Secretary will issue procedures which 
continue this practice. Section 670.540 also addresses the requirements 
of section 145(a)(2) of the Act for drug testing of all students. This 
subpart also contains requirements to ensure students are provided due 
process in disciplinary actions. This process will include center fact-
finding and review boards, and appeal procedures.
    3. Experimental, Research, and Demonstration Projects: This subpart 
also addresses the authorization, provided in section 156 of the Act, 
for experimental, research and demonstration projects related to the 
Job Corps program.

Subpart F--Student Support

    This subpart includes authorization of leave for students from 
center activities, and provisions of cash allowances and bonuses, and 
clothing for students. In addition to being eligible to receive 
transportation, students are eligible for other benefits, including 
basic living allowances to cover personal expenses, such as toiletries, 
snacks, etc., in accordance with guidance issued by the Secretary. The 
allowance and bonus system is structured to provide incentives for 
specific accomplishments of students, such as vocational completion. 
Students are also provided with a modest clothing allowance to enable 
them to obtain clothes that are appropriate for class and for the 
workplace.

Subpart G--Placement and Continued Services

    1. Placement Services: This subpart discusses placement services 
for graduates of the Job Corps program in accordance with section 149 
of the Act. The regulation focuses on graduates, which is a significant 
change from previous Job Corps policy and practice, since placement 
services have traditionally been provided for all students who leave 
Job Corps, no matter how long they were enrolled or how much of the 
program they completed. The regulatory language in this subpart is 
substantially different from what is contained in the JTPA Job Corps 
regulations to reflect the emphasis in title I, subtitle C on provision 
of services for graduates. The authority provided in section 149(d) of 
the Act, to allow for placement of former students (non-graduates), is 
reflected in Sec. 670.710, but placement services are not required for 
anyone other than graduates. The ability to provide placement services 
for former students as well as for graduates will be contingent on 
having the funding resources to do so. It is, therefore, likely that 
the level of placement services for graduates and for former enrollees 
will differ. This subpart also discusses who will provide placement 
services, and the responsibilities of Job Corps placement agencies in 
placing graduates in jobs.
    2. Continued Services for Graduates: This subpart discusses section 
148(d) of the Act, which requires provision of 12 months of continued 
service for graduates. Sections 670.740 and 670.750 discuss this 
requirement and who may provide those services. Provision of continued 
services is a new requirement, and a new level of effort for Job Corps 
service providers, and will likely divert some funding resources which 
have been used in the past for provision of placement services for all 
students.

[[Page 18690]]

Subpart H--Community Connections

    1. This subpart describes new requirements for Job Corps 
representatives to serve on local youth councils, as provided for in 
section 117(h) of the Act, for center business and community liaisons, 
and for center industry councils. Section 670.800(d) describes the role 
of center industry councils, as prescribed in section 154(b) of the 
Act, to analyze labor market information and identify job opportunities 
in areas where students will seek employment and the skills needed for 
those jobs, and to recommend changes in center vocational training 
offerings as appropriate. The intent of this subpart is to provide 
regulatory language to tie Job Corps centers more closely to their 
local communities and local employers to ensure that the vocational and 
other training students receive will enable them to obtain meaningful 
jobs in their home communities when they graduate.

Subpart I--Administrative and Management Provisions

    1. Student Benefits and Protections: This subpart provides 
requirements relating to Tort Claims, Federal Employees Compensation 
Act (FECA) benefits for students, safety and health, and law 
enforcement jurisdiction on Job Corps center property.
    2. Program Accountability and Performance Indicators: Subpart I 
also incorporates specific requirements relating to performance 
assessment and accountability contained in section 159(c) of the Act, 
as well as requirements for performance improvement plans, as provided 
for in section 159(f)(2), for Job Corps center operators or other 
service providers who fail to meet expected levels of performance. 
Sections 670.975 and 670.980 describe how performance of the Job Corps 
program will be assessed and the required indicators of performance. 
Indicators of performance include placement rates of graduates in jobs, 
including jobs related to vocational training received, average wage at 
placement and six and twelve months after job entry, retention in 
employment six and twelve months after job entry, the number of 
graduates who achieved job readiness and employment skills, and the 
number who entered postsecondary or advanced training programs.
    3. Financial and Audit Responsibilities: This subpart also 
discusses financial management responsibilities of Job Corps center 
operators and other Job Corps service providers, as well as Federal 
audit requirements.
    4. Disclosure of Information and Resolution of Complaints: This 
subpart includes requirements relating to student records and 
disclosure of information about Job Corps students; and procedures for 
resolution of complaints and disputes of students and other parties by 
center operators and service providers.

Part 671--National Emergency Grants for Dislocated Workers

Introduction

    Section 170 of WIA provides for technical assistance, and section 
171 provides for demonstration, pilot, multiservice, research and 
multistate projects. Although the Department has not regulated on these 
sections, it is important to note these activities for the general 
workforce investment system.
    Section 170(a) provides that the Secretary will provide, coordinate 
and support the development of training, technical assistance, staff 
development and other activities to States and localities, and in 
particular, to assist States in making transitions from carrying out 
JTPA to carrying out activities under title I of WIA.
    Section 170(b) provides for a portion of the funds reserved by the 
Secretary under WIA section 132(a)(2) to be used to: (1) Assist States 
that do not meet the State performance measures for dislocated workers; 
(2) assist other States, local areas and other entities involved in 
providing assistance for dislocated workers and to promote continuous 
improvement to dislocated workers under title I of WIA; or (3) assist 
staff who provide rapid response services, including training of those 
staff regarding proven methods of promoting, establishing and assisting 
labor-management or transition committees to plan for effective 
adjustment assistance for workers impacted by dislocation events.
    Section 171(a), (b), and (c) of WIA describe employment and 
training projects which may be funded as well as the processes for such 
funding. Section 171(d) provides for dislocated worker demonstration 
projects and pilot projects, multiservice and multistate projects. The 
purpose of dislocated worker demonstration projects is to test 
innovative approaches that address priorities established by the 
Secretary, are consistent with the goals described in WIA, and 
subsequently may prove beneficial in providing adjustment assistance to 
larger dislocated worker populations. Generally, projects will be 
funded as a result of competitive solicitations published in the 
Federal Register, however, the Secretary may negotiate and fund 
projects other than through such solicitations.
    Part 671 describes the availability of a portion of the funds 
reserved by the Secretary under WIA section 132(a)(2)(A) for assistance 
to dislocated workers.
    1. National Emergency Grants: Part 671 contains limited regulations 
regarding dislocated worker funds reserved for national emergency 
grants. Section 173 of WIA authorizes the Secretary to award 
discretionary funds to serve dislocated workers in certain situations. 
These regulations describe circumstances under which funds may be 
available, including to provide employment and training assistance to 
workers affected by major economic dislocations (such as plant 
closures, mass layoffs, closures or realignments of military 
installations, dislocations due to federal policies, etc.); and to 
provide assistance to Governors of States when FEMA has determined that 
a major disaster, as defined in the Robert T. Stafford Disaster Relief 
and Emergency Assistance Act (42 U.S.C. 5122 (1) and (2)), has occurred 
in the area.
    These regulations emphasize the importance of rapid response 
assistance for the development of requests for national emergency 
funds. The Department sets a high priority on the early collection of 
information regarding workers being laid off, receiving requests for 
funds when there are insufficient State and local dislocated formula 
funds available to meet the needs of workers being laid off--to ensure 
that there are funds available in the local area when the workers first 
need the assistance. Early intervention to assist workers being 
dislocated is critical to enable them to find or qualify for new jobs 
as soon as possible after the dislocation occurs. While these 
regulations highlight some of the key elements and requirements for 
applying for national emergency funds, guidelines to apply for national 
emergency funds will be published separately in the Federal Register.

Part 652--Establishment and Functioning of State Employment 
Services

Introduction

    This part implements the amendments to the Wagner-Peyser Act (the 
Act) made by WIA. The WIA amendments add regulations at 20 CFR part 
652, subpart C and make technical changes to subpart A.

[[Page 18691]]

Subpart A--Employment Service Planning and Operations

    In subpart A, the Department removes references to JTPA, and 
replaces them with WIA. It also updates definitions and removes and 
reserves two sections. These WIA amendments to the Act are effective 
July 1, 1999.
    A comprehensive reading of WIA shows that Congress intended to 
ensure a central role for the Wagner-Peyser Act State agency designated 
to administer funds authorized under the Act to provide job finding and 
placement services to job seekers, including unemployment insurance 
(UI) claimants, veterans, migrant and seasonal farm workers, disabled 
individuals, and employers in the State One-Stop delivery system. The 
regulations governing the operation of the basic labor exchange program 
have been located at 20 CFR part 652, subpart A for many years and they 
are well known to State agencies administering the Wagner-Peyser Act. 
The Workforce Investment Act changes the environment in which the 
existing rules are applied. It does not amend the statutory provisions 
underlying the rules. The Department determined that it would not be 
appropriate to add new rules resulting from amendments to the Wagner-
Peyser Act to 20 CFR part 652, subpart A, but that it is important the 
new rules be linked with the existing rules. Therefore, the Department 
restricted amendments to the Wagner-Peyser Act regulations at 20 CFR 
part 652, subpart A to only those reference citations required by the 
Workforce Investment Act. The Department will raise no issue under 20 
CFR part 652 with States solely on the basis that they operate under 
JTPA during PY 1999. The operations rules governing Wagner-Peyser Act 
services required by WIA are reflected in part 20 CFR 652, subpart C.

Subpart C--Wagner-Peyser Act Services in a One-Stop Delivery System 
Environment

    Section 652, subpart C, Secs. 652.200 through 652.216, describe the 
requirements for the establishment and functioning of State Wagner-
Peyser Act services in a One-Stop delivery system environment. The 
State must maintain Wagner-Peyser Act funds under the authority of the 
Governor as a separate funding source to ensure a statewide delivery 
system of public labor exchange services. These regulations specify 
that the Wagner-Peyser Act agency retains responsibility for, and 
oversight of, all Wagner-Peyser Act services provided through the One-
Stop delivery system, and explain that funds allocated to States under 
section 7(a) must be used to deliver Wagner-Peyser Act services through 
the One-Stop delivery system. Each of the three tiers of labor exchange 
service must be available: self-service, facilitated self-help service, 
and staff-assisted service. Sections 652.209 and 210 strengthen the 
relationship between the Wagner-Peyser Act State agency and the UI 
agency by requiring that reemployment services be provided, 
commensurate with available resources and in conjunction with other 
One-Stop partners, to those UI claimants who are required under any 
Federal or State UI law to receive the services as a condition of 
receiving unemployment benefits. The regulations reflect the 
Department's interpretation of the Wagner-Peyser Act, affirmed in State 
of Michigan v. Alexis M. Herman, (W.D. MI, Southern Div.) to require 
that job finding, placement and reemployment services funded under the 
Act, including services to veterans, be delivered by public merit-staff 
employees.
    The Department is issuing these regulations after carefully 
considering and reacting to input received from the public. The 
preponderance of input focused on two themes: the relationship between 
the Wagner-Peyser Act State Agency and the One-Stop delivery system 
centers, and the preservation of the merit system for public employees.
    A range of suggestions were received regarding the relationship 
between Wagner-Peyser Act services and the One-Stop delivery system. 
These regulations emphasize the State Agency's role as a One-Stop 
partner in delivering services seamlessly to job seekers and employers 
as a part of the One-Stop delivery system. State agencies have 
flexibility to deliver labor exchange services appropriate to local 
needs in accordance with a Memorandum of Understanding entered into 
with the local workforce investment board.
    Some parties responding to merit-staff issues expressed concern 
that merit-staff employees might potentially come under the direction 
of an individual who is employed by a different agency or entity. In 
response to this concern, the Department has written the regulations at 
Sec. 652.215 and Sec. 652.216 to emphasize the retention of merit 
system protections for public employees, and limit the One-Stop 
operator to providing guidance to employees funded under the Wagner-
Peyser Act in accordance with an agreed-upon MOU.

III. Regulatory Flexibility and Regulatory Impact Analysis

    The Regulatory Flexibility Act of 1980, as amended in 1996 (5 
U.S.C. chapter 6), requires the Federal government to anticipate and 
minimize the impact of rules and paperwork requirements on small 
entities. ``Small entities'' are defined as small businesses (those 
with fewer than 500 employees, except where otherwise provided), small 
non-profit organizations (those with fewer than 500 employees, except 
where otherwise provided) and small governmental entities (those in 
areas with fewer than 50,000 residents). ETA has assessed the potential 
impact of this Interim Final Rule by consulting with a wide range of 
small entities, in order to identify and address any areas of concern. 
Based on that assessment, the Agency certifies that the Interim Final 
Rule, as promulgated, will not have a significant impact on a 
substantial number of small entities.
    The WIA Interim Final Rule implements major reforms to the nation's 
job training system. The WIA will provide resources to states, 
localities, and other entities, including small entities, to assist 
youth, adults, and dislocated workers in preparing for, obtaining and 
retaining employment. This Rule sets forth the rights, responsibilities 
and conditions under which state and local governments may receive 
grants to operate programs in local workforce investment areas with 
such funds. Governments in local workforce investment areas are not 
small governmental entities. These areas generally have a population of 
at least 500,000 and are intended to replace existing service areas 
under the Job Training Partnership Act (JTPA) which generally have a 
population of at least 200,000. Consequently, the Department does not 
foresee an adverse impact on small governmental entities. Nevertheless, 
the Department has consulted extensively with state and local officials 
and their representatives to insure that any potential effect would be 
minimal. These consultations included two week-long conferences in 
which state and local governmental participants worked in groups 
divided by specialized area of interest, and the participation of state 
and local governmental officials under the Intergovernmental Personnel 
Act.
    The Department also provided a number of opportunities, through a 
variety of media, for the input of small businesses, non-profits and 
any other interested parties. These opportunities included 12 town hall 
meetings spanning the nation in ten locations,

[[Page 18692]]

and an interactive web site providing ETA policy and responses to 
questions from the public. Additionally, in order to solicit comments 
from the widest possible audience, ETA broadly disseminated its 
developing policies through the publication of a White Paper, among 
other documents, which were available on the Internet, published in the 
Federal Register and distributed throughout the employment and training 
community.
    The Interim Final Rule provides significant flexibility to States 
and Local governments to design programs and to determine policy and 
spending priorities for the use of WIA grant funds. This policy-making 
flexibility is embodied in Sec. 661.120. The Rule provides States and 
Local governments with additional flexibility to design systems that 
meet the specific needs of each state and local area through the 
general and work-flex waiver provisions at Secs. 661.410 and 661.430. 
The Department has taken steps to further ameliorate any potential 
burdens through Sec. 667.210 of the Interim Final Rule, which provides 
that states and localities may use a portion of their grant funds (up 
to five percent at the State level and up to ten percent at the local 
level) for management and administration of the grant, rather than for 
the direct provision of services to participants. Because the WIA 
statutory limit on administrative cost is lower than the existing JTPA 
limit, States and localities were also extensively consulted regarding 
the regulatory definition of these administrative costs to ensure that 
this cost category is defined as flexibly as possible. The Rule 
requires the reporting of costs in only two categories--program and 
administrative--and excludes certain information technology costs from 
the administrative cost category.
    A portion of WIA funds is available for direct grants from the 
Department. ETA has consulted with representatives of the migrant and 
seasonal farm worker community, and Indian and Native American tribal 
governments to minimize any burdens that provisions of the Rule would 
have on those communities. The Rule provides limited authority to these 
grantees to receive waivers of certain provisions of the Rule, to 
lessen any burden on these communities.
    To further ameliorate any burden on WIA direct grantees, the Rule 
permits direct grantees to use a portion of WIA funds for 
administrative costs expenditure. Unlike formula funds, the 
administrative cost limit for direct grantees is not specified in the 
Rule but will be negotiated in the grant agreement to take into account 
individual circumstances. Similarly, the period of availability for 
expenditure of grant funds is established in the grant agreement rather 
than set by Rule to take into account individual circumstances. Based 
on provisions such as these, the Department has concluded that the Rule 
will not place undue burdens on small entities. In addition, under to 
the Small Business Regulatory Fairness Act (SBREFA) (5 U.S.C. Chapter 
8), the Department has determined that this Interim Final Rule is not a 
``major rule,'' as defined in 5 U.S.C. 804(2). The Department certifies 
that this Interim Final Rule has been assessed in accordance with Pub. 
L. 105-227, 112 Stat. 2681, for its effect on family well-being.

IV. Executive Order 12866

    Pursuant to Executive Order 12866, the Department has evaluated 
this Interim Final Rule and has determined its provisions are 
consistent with the statement of regulatory philosophy and principles 
promulgated by the Executive Order. The Department of Labor is required 
by statute to prescribe regulations for the WIA program within 180 days 
of enactment. Within this limited time frame, the Department has made 
every reasonable effort to obtain input in a purposeful manner from a 
variety of interested parties (State and local government officials, 
community-based organizations, Intergovernmental Organizations, other 
stakeholders, and the general public). The WIA grants increase the 
resources available to the public and private organizations that 
promote long-term employment and self-sufficiency. The Department has 
determined the Interim Final Rule will not have an adverse effect in a 
material way on the nation's economy.
    The Department has developed the Interim Final Rule in close 
consultation with the Department of Education, and with other 
interested Federal agencies. Based on that consultation, the Department 
has determined that this Interim Final Rule will not create a serious 
inconsistency or otherwise interfere with any action taken or planned 
by another Federal Agency.
    This Interim Final Rule implements the Workforce Investment Act, 
which is the only major reform of the nation's job training and 
employment system in over 15 years. Consequently, this Interim Final 
Rule raises novel policy issues. Therefore, the Department finds it to 
be a significant regulatory action which has been reviewed by the 
Office of Management and Budget for the purposes of Executive Order 
12866.

V. Unfunded Mandates

    The Interim Final Rule has been reviewed in accordance with the 
Unfunded Mandates Reform Act of 1995 (UMRA) (2 U.S.C. 1501 et seq.) and 
Executive Order 12875. Section 202 of UMRA requires that a covered 
agency prepare a budgetary impact statement before promulgating a rule 
that includes any Federal mandate that may result in the expenditure by 
state, local and Tribal governments, in the aggregate, or by the 
private sector, of $100 million or more in any one year.
    If a covered agency must prepare a budgetary impact statement, 
section 205 of UMRA further requires that it select the most cost-
effective and least burdensome alternative that achieves the objectives 
of the rule and is consistent with the statutory requirements. In 
addition, section 203 of UMRA requires a plan for informing and 
advising any small government that may be significantly or uniquely 
impacted.
    The Department has determined that the WIA Interim Final Rule will 
not mandate the expenditure by the State, local, and Tribal 
governments, in the aggregate, or by the private sector, of more than 
$100 million in any one year. Accordingly, the Department has not 
prepared a budgetary impact statement, specifically addressed the 
regulatory alternatives considered, or prepared a plan for informing 
and advising any significant or uniquely impacted small government.

VI. Effective Date and Absence of Notice and Comment

    The Department has determined, in accordance with 5 U.S.C. 
553(b)(3)(B), that the statutory mandate to promulgate regulations 
within 180 days of the enactment of the statute constitutes good cause 
for waiving notice and comment proceedings. Furthermore, WIA became 
effective upon the date of enactment, August 7, 1998. It is critical 
that the Department quickly issue regulations to assist States which 
wish to begin operating under WIA as early as possible. Congress also 
recognized this urgency in sec. 506(c) of the Act, by specifically 
authorizing the Department to issue an Interim Final Rule. Accordingly, 
the Department finds that the issuance of a Proposed Rule, rather than 
an Interim Final Rule, would be contrary to the public interest. This 
Interim Final Rule will become effective on May 17, 1999. The 
Department is committed to meeting the statutory deadline to issue a 
Final Rule by December 31, 1999. This Interim Final Rule sets a comment 
period to elicit any concerns raised by the rule for

[[Page 18693]]

consideration in the development of the Final Rule. The Department has 
provided a comment period of 90 days to provide a significant period 
for public input into any revisions to parts 652 and 660 through 671 
for the Final Rule.

VII. Catalog of Federal Domestic Assistance Number

    The program is listed in the Catalog of Federal Domestic Assistance 
at No. 17.255.

List of Subjects in 20 CFR Parts 652 and 660 through 671

    Grant programs, labor, employment, job training programs.

    Signed at Washington, DC, this 31st day of March 1999.
Alexis M. Herman,
Secretary of Labor.
Raymond L. Bramucci,
Assistant Secretary of Labor, Employment and Training Administration.

    For the reason stated in the preamble, 20 CFR Ch. V is amended as 
follows:
    1. Parts 660 through 671 are added and Part 652 is amended to read 
as follows:

PART 660--INTRODUCTION TO THE REGULATIONS FOR WORKFORCE INVESTMENT 
SYSTEMS UNDER TITLE I OF THE WORKFORCE INVESTMENT ACT

Sec.
Sec. 660.100  What is the purpose of title I of the Workforce 
Investment Act of 1998?
Sec. 660.200  What do the regulations for workforce investment 
systems under title I of the Workforce Investment Act cover?
Sec. 660.300  What definitions apply to the regulations for 
workforce investment systems under title 1 of WIA?

    Authority: Sec. 506(c), Pub. L. 105-220; 20 USC 9276(c).


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 
(hereafter referred to as 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--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.


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 sec. 101, the 
following definitions apply to the regulations set forth in 20 CFR 
parts 660--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.
    EEO data means data on race and ethnicity, age, sex, and disability 
required by regulations implementing sec. 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.
    Literacy means an individual's ability to read, write, and speak in 
English, and to compute, and solve problems, at 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 sec. 117, to set policy for the local workforce investment 
system.
    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 20 CFR 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 secs. 
127(b)(1)(C)(i)(II), 132(b)(1)(B) and 132(b)(2)(B).
    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 Board means a State workforce investment board established 
under WIA sec. 111.
    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.
    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.
    Vendor means an entity responsible for providing generally required 
goods or services to be used in the WIA

[[Page 18694]]

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.
    Wagner-Peyser Act means the Act of June 6, 1933, as amended, 
codified at 29 U.S.C. 49 et seq.
    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

Subpart A--General Governance Provisions

Sec. 661.100  What is the workforce investment system?
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?
Sec. 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

Sec. 661.200  What is the State Workforce Investment Board?
Sec. 661.205  What is the role 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?
Sec. 661.220  What are the requirements for the submission of the 
State workforce investment plan?
Sec. 661.230  What are the requirements for modification of the 
State workforce investment plan?
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?
Sec. 661.250  What are the requirements for designation of local 
workforce investment areas?
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?
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?
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?
Sec. 661.290  Under what circumstances may States require Local 
Boards to take part in regional planning activities?

Subpart C--Local Governance Provisions

Sec. 661.300  What is the Local Workforce Investment Board?
Sec. 661.305  What is the role of the Local Workforce Investment 
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?
Sec. 661.315  Who are the required members of the Local Workforce 
Investment Boards?
Sec. 661.320  Who must chair a Local Board?
Sec. 661.325  What criteria will be used to establish membership of 
the Local Board?
Sec. 661.330  Under what circumstances may the State use an 
alternative entity as the local workforce investment board?
Sec. 661.335  What is a youth council, and what is its relationship 
to the Local Board?
Sec. 661.340  What are the responsibilities of the youth council?
Sec. 661.345  What are the requirements for the submission of the 
local workforce investment plan?
Sec. 661.350  What are the contents of the local workforce 
investment plan?
Sec. 661.355  When must a local plan be modified?

Subpart D--Waivers and Work-Flex

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?
Sec. 661.410  What provisions of WIA and the Wagner-Peyser Act may 
be waived, and what provisions may not be waived?
Sec. 661.420  Under what conditions may a Governor request and the 
Secretary approve a general waiver under section 189(i)(4)?
Sec. 661.430  Under what conditions may the Governor submit a 
workforce flexibility plan?
Sec. 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).

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. These 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 not narrowly 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 of this subpart.


Sec. 661.120  What are the roles of the local and State governmental 
partner in the governance of the workforce investment system?

    (a) Local Boards 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 or the regulations or 
with State policies.
    (b) State Boards 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 regulations.

[[Page 18695]]

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 sections 
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 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 662.210, 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.
    (j) 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, including information about the State Plan prior to 
submission of the plan, information about membership, and on request, 
minutes of formal meetings of the State Board. (WIA section 111)


Sec. 661.205  What is the role of the State Board?

    The State Board must assist the Governor in the:
    (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 section 111(d).)


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 such group in the 
workforce investment system.
    (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). A significant change in the 
membership structure does not mean the filling of a vacancy on the 
alternative entity, but does include any 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.
    (e) 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.

[[Page 18696]]

    (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 these regulations 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 these regulations. 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.


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 652.210.
    (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, 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.
    (c) A State which submits a unified plan under paragraph (a) of 
this section will not be required to submit additional planning 
materials as a condition for approval to receive Federal funds.
    (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 
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. (WIA section 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).


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

[[Page 18697]]

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 
Secs. 661.260-661.270, 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 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 section 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 section 117 (d).)
    (e) In the case in which 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) In the case in which 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 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 sec. 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.
    (d) The Local Board must conduct 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, including information about the local plan before 
submission of the plan, and about membership, the designation and 
certification of One-Stop operators, and the award of grants or 
contracts to eligible providers of

[[Page 18698]]

youth activities, and on request, minutes of formal meetings of the 
Local Board. (WIA sec. 117.)


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 and may be renewed for not more than one additional year.
    (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).)


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 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 to 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), the local workforce investment plan must 
explain the manner in which the Local Board will ensure an ongoing role 
for any such group in the local workforce investment system.
    (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. 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). A significant change in the membership structure does 
not mean the filling of a vacancy on the alternative entity, but does 
include any change in the organization of the alternative entity or in 
the categories of entities represented on the alternative entity that 
requires a change to the alternative entity's charter or a similar 
document that defines the formal organization of the alternative 
entity.
    (d) In these regulations, 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, 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.

[[Page 18699]]

    (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 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 sec. 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:
    (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 these 
regulations, including the required consultations and public comment 
provisions.
    (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 these 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.


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


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

[[Page 18700]]

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; and
    (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 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 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; and
    (iii) Provide any Local Board affected by the waiver an opportunity 
to comment on the request.
    (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 Secs. 661.400-661.420 of this 
subpart; 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.
    (g) 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;
    (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 sec. 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

[[Page 18701]]

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 Secs. 661.410-661.420 of this subpart.
    (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.

PART 662--DESCRIPTION OF THE ONE-STOP SYSTEM UNDER TITLE I OF THE 
WORKFORCE INVESTMENT ACT

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?
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 existing One-Stop delivery 
systems be certified to act as the One-Stop operator?

    Authority: Section 506(c), Pub. L. 105-220; 20 U.S.C. 9276(c).

Subpart A--General Description of 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
    (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.

[[Page 18702]]

    (b) The required partners are the entities that carry out:
    (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) Vocational rehabilitation 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 programs, including programs related to 
transportation and housing. (WIA section 121(b)(2).)


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 Secs. 662.200 and 662.210 of this subpart, 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 specific programs are identified in 
paragraph (b) of this section.
    (b)(1) For title II of WIA, the entity that carries out the program 
for the purposes of paragraph (a) of this section is the State eligible 
entity. The State eligible entity may designate an eligible provider 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 section 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) Serve as a representative 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;
    (4) Job search and placement assistance, and where appropriate, 
career counseling;
    (5) Provision of employment statistics information, including the 
provision of

[[Page 18703]]

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 
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 requirements 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 of the One-Stop Delivery 
System


Sec. 662.300  What is the Memorandum of Understanding?

    (a) The Memorandum of Understanding (MOU) is an agreement developed 
and executed between the Local Board, with the agreement of the

[[Page 18704]]

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 
these regulations agreed to by the parties. (WIA sec. 121(c).)


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 and all partners, or the Local Board and the partners may decide 
to enter into separate agreements between the Local Board and one or 
more partners. Under either approach, the requirements described in 
Sec. 662.310 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 and One-Stop partners. Local Boards and partners must enter into 
good-faith negotiations. Local Boards 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).

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. (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, or
    (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. (WIA sec. 121(d).)


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 made publicly, in 
accordance with the requirements of the ``sunshine provision'' in WIA 
section 117(e), and 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 existing One-Stop delivery 
systems be certified to act as the One-Stop operator?

    Under WIA section 121(e), the Local Board, the chief elected 
official and the Governor may agree to certify an entity as a One-Stop 
operator under the following circumstances:
    (a) A One-Stop delivery system, consistent with the scope and 
meaning of the term in WIA section 134(c), existed in the local area 
prior to August 7, 1998;
    (b) The certification is consistent with the requirements of:
    (1) WIA section 121(b) and;
    (2) the Memorandum(s) of Understanding; and
    (c) The certification must be made publicly, in accordance with the 
``sunshine provision'' at WIA section 117(e). (WIA section 121(e).)

PART 663--ADULT AND DISLOCATED WORKER ACTIVITIES UNDER TITLE I OF 
THE WORKFORCE INVESTMENT ACT

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 program 
in the One-Stop delivery system?
663.105  When must adults and dislocated workers be registered?
663.110  What are the eligibility criteria for adults in the adult 
and dislocated worker program?
663.115  What are the eligibility criteria for dislocated workers in 
the Adult and Dislocated worker program?
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?

[[Page 18705]]

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 prior to 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?
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?
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 determination of 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 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 a disabled individual 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?

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).

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 
program 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.
    (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 of training. These lists contain 
quality consumer information, including cost and performance 
information for each of the providers, 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 for 
supporting 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) EEO data must be collected on individuals during the 
registration process.


Sec. 663.110  What are the eligibility criteria for adults in the adult 
and dislocated worker program?

    To be an eligible adult in the adult and dislocated worker program, 
an individual must be 18 years of age or older. To be eligible for the 
dislocated worker program, an eligible adult must meet the criteria of 
Sec. 663.115 of this subpart.

[[Page 18706]]

Sec. 663.115  What are the eligibility criteria for dislocated workers 
in the adult and dislocated worker program?

    (a) To be an eligible dislocated worker in the adult and dislocated 
worker program, an individual must meet the definition of ``dislocated 
worker'' at WIA section 101(9).
    (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 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.
    (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 662.220 must be provided in each local area 
through the One-Stop delivery system.
    (b) Followup services must be made available, 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 
determines the individual's skill levels, aptitudes, 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.


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 section 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.


Sec. 663.210  How are intensive services delivered?

    (a) Intensive services must be provided through the One-Stop 
delivery system. Intensive services may be provided directly by the 
One-Stop operator or through contracts with 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

[[Page 18707]]

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.


Sec. 663.240  Are there particular intensive services an individual 
must receive prior to 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.


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. 
(WIA section 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 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 section 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 Pell Grants and other 
sources of grants to pay for training costs, 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 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 section 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 section 
134(d)(4)(G).)


Sec. 663.410  What is an Individual Training Account?

    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 section 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:

[[Page 18708]]

    (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.


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 measures appropriate to the 
program including 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 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 whose performance qualifies them to receive 
WIA funds to train adults and dislocated workers. 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.
    (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 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:
    (a) One or more courses or classes that, upon successful 
completion, leads to:

[[Page 18709]]

    (1) A certificate, an associate degree, or baccalaureate degree, or
    (2) A competency or skill recognized by employers, or
    (b) A training regimen that provides individuals with additional 
skills or competencies generally recognized by employers.


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 ``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, which is comprised of lists submitted by Local Boards;
    (2) Verifying the accuracy of the information on the State list, in 
consultation with the Local Boards, removing providers who 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;
    (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) For postsecondary educational institutions that are eligible to 
receive assistance under title IV of the Higher Education Act, and that 
provide a program that leads to an associate or baccalaureate degree or 
certificate, and for entities carrying out apprenticeship programs 
registered under the National Apprenticeship Act to be initially 
eligible to receive adult or dislocated worker training funds under 
title I of WIA, the institution or entity must submit an application to 
the Local Board(s) for the local area(s) in which the provider desires 
to provide training services that describes each program of training 
services, as defined in Sec. 663.508, that leads to such a degree or 
certificate or is registered under the National Apprenticeship Act.
    (b) Local Boards determine the procedures to use in making an 
application under paragraph (a) of this section. The Local Board 
procedures must specify the timing, manner, and contents of the 
required application.
    (c) For other providers,
    (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; and
    (ii) Providing an opportunity for interested members of the public, 
including representatives of business and labor organizations, to 
submit comments on the procedure.
    (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 of this subpart, 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 section 
122(b)(2)(D).)
    (4) Programs of training services provided by postsecondary 
educational institutions that do not lead to an associate or 
baccalaureate degree or certificate and apprenticeship programs that 
are not registered under the National Apprenticeship Act must be 
determined initially eligible under the provisions of this paragraph 
(c).
    (d) The Local Board must include providers that meet the 
requirements of paragraphs (a) 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 verify the information relating to the providers under 
paragraph (c) of this section. After the agency verifies that the 
provider meets the criteria for initial eligibility, or 30 days have 
elapsed, whichever occurs first, the provider is initially eligible as 
a provider of training services. The providers submitted under 
paragraph (a) of this section are initially eligible without State 
agency review. (WIA section 122(e).)


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.

[[Page 18710]]

Sec. 663.535  What is the process for determination of 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 (a) and (c), 
after:
    (1) Soliciting and taking into consideration recommendations from 
Local Boards and providers of training services within the State, and
    (2) Providing an opportunity for interested members of the public, 
including representatives of business and labor organizations, to 
submit comments on such procedure.
    (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 sections 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 annually meet minimum performance levels described at 
WIA section 122(c)(6).
    (d) The provider'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 
providers than the levels specified in the procedures established by 
the Governor. (WIA sections 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 providers 
seeking eligibility, including the demonstrated difficulties in serving 
these populations, where applicable.
    (g) The Local Board retains those providers 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 provider 
does not meet the performance levels established under paragraph (c)(2) 
of this section, the provider may be removed from the list. A provider 
retained on the local list and not removed by the designated State 
agency is considered an eligible provider 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):
    (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) 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,
    (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 providers in the State (the ``State list'').
    (b) The State list is a compilation of the eligible providers 
identified or retained by local areas and that have not been removed 
under Sec. 663.535(c) 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 section 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.
    (b) If the provider does not meet the established performance 
levels, it will be removed from the eligible provider list.
    (1) A Local Board must determine, during the subsequent eligibility 
determination process, whether a provider meets performance levels. If 
the provider fails 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 a provider from the 
State list if the agency determines the provider failed to meet the 
levels of performance prescribed under Sec. 663.535(c).
    (3) Providers determined to have intentionally supplied inaccurate

[[Page 18711]]

information or to have subsequently violated any provision of title I 
of WIA or these regulations 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 part 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 in the 
local area. It is built upon the State list of eligible providers 
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 on the 
State list. A State may also establish a reciprocal agreement with 
another State(s) to permit eligible providers of training services in 
each State to accept individual training accounts provided in the other 
State. (WIA sections 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 be determined eligible providers of 
training services, under WIA section 122 and this subpart. As eligible 
providers, CBO's provide 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. 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. TANF recipients will have 
access to more information about employment opportunities and services

[[Page 18712]]

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 a disabled individual 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 a disabled individual does not meet the 
income eligibility criteria, the disabled individual 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 section 
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 by an employer in the public, private non-profit, or 
private sector. A contract may be developed between the employer and 
the local program that provides occupational training 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 section 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 section 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 section 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.


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 section 
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 section 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.

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 section 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 section 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 section 101(46).)

[[Page 18713]]

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.
    (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 assistance 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 section 
134(e)(3)(C).)

PART 664--YOUTH ACTIVITIES UNDER TITLE I OF THE WORKFORCE 
INVESTMENT ACT

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 
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 for the income 
eligibility criteria under the 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  Is a youth attending an alternative school a ``dropout''?
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  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 followup 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 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)

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:

[[Page 18714]]

    (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 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 delegate its responsibility for oversight 
of eligible youth providers, as well as other 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(h)(4).)

Subpart B--Eligibility for Youth Services


Sec. 664.200  Who is eligible for youth services?

    An eligible youth is defined, under WIA section 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, but must include a determination that an 
individual:
    (1) Computes or solves problems, reads, writes, or speaks English 
at or below grade level 8.9; 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.
    (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) EEO data must be collected on individuals during the 
registration process.


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
    (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. 664.200 and Sec. 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 the 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 is to 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 ``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  Is youth attending an alternative school a ``dropout'?

    No. 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 attending an alternative 
school is not a dropout. (WIA sec. 101(39).)

[[Page 18715]]

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 section 128(b)(2)(A) or 
(b)(3) of WIA.
    (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  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 a 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.
    (b) The local plan must describe the design framework for youth 
program design in the local area, and of how the ten program elements 
required in Sec. 664.410 of this part 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, providers found eligible by the board, 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 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 Secs. 664.460 and 664.470 of this part;
    (5) Occupational skill training;
    (6) Leadership development opportunities, which may include such 
activities as positive social behavior and soft skills, decision 
making, team work, and other activities, as provided in Secs. 664.420 
and 664.430 of this part;
    (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 for youth may include the 
following:
    (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;
    (f) Citizenship training, including life skills training such as 
parenting, work behavior training, and budgeting of resources;
    (g) Employability; and
    (h) Positive social behaviors. (WIA sec. 129(c)(2)(F).)


Sec. 664.430  What are positive social behaviors?

    Positive social behaviors, often referred to as soft skills, are 
incorporated by many local programs as part of their menu of services 
which focus on areas that may include, but are not limited to, the 
following:
    (a) Positive attitudinal development;
    (b) Self esteem building;
    (c) Cultural diversity training; and
    (d) Work simulation activities. (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:

[[Page 18716]]

    (a) Linkages to community services;
    (b) Assistance with transportation costs;
    (c) Assistance with child care and dependent care costs;
    (d) Assistance with housing costs;
    (e) Referrals to medical services; and
    (f) Assistance with uniforms or other appropriate work attire and 
work-related tool costs, including such items as eye glasses and 
protective eye gear. (WIA sec. 129(c)(2)(G).)


Sec. 664.450  What are followup services for youth?

    (a) Followup services for youth may include:
    (1) The leadership development and supportive service activities 
listed in Secs. 664.420 and 664.440 of this part;
    (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;
    (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 followup 
services for a minimum duration of 12 months. Followup 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 followup 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 stated 
in 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 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; and
    (8) Other elements designed to achieve the goals of work 
experience.
    (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 programs 
concurrently?

    (a) 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.
    (b) Eligible individuals who are 18 through 21 years old may 
participate in adult and youth programs concurrently. Such individuals 
must be eligible under the youth or adult eligibility criteria 
applicable to the services received. Local program operators may 
determine, for individuals in this age group, the appropriate level and 
balance of youth and/or adult services.
    (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 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 program, may 
receive Individual Training Accounts through that program. Requirements 
for concurrent participation requirements are set forth in Sec. 664.500 
of this part. 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 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

[[Page 18717]]

basis, based on the recommendation of the youth council and on criteria 
contained in the State Plan. (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. The law 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 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 Secs. 664.400 and 664.410 of this part; 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 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 sections 
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 
sec. 166; and
    (2) Serves a community that:
    (i) Meets the poverty rate criteria in sections 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 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

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

Sec. 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 may be undertaken as part of rapid 
response?
665.330  Are the NAFTA/TAA requirements for rapid response also 
required activities?

    Authority: Section 506(c), Pub. L. 105-220; 20 USC 9276(c)

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

[[Page 18718]]

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 secstions 129(b), 134(a)(2)(B) or 
134(a)(3)(A) (which are described in Secs. 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 sec. 133(a)(2) and may be used to provide the activities 
authorized at sec. 134(a)(2)(A) (which are described in Secs. 665.310 
to 665.330 of this part). (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 of this part;
    (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 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;
    (c) 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 conducted in coordination with local boards in the 
State and, to the maximum extent practicable, in coordination with 
Federal evaluations carried out under WIA section 172.
    (d) 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.
    (e) Providing technical assistance to local areas that fail to meet 
local performance measures.
    (f) 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).]
    (g) Providing additional assistance to local areas that have high 
concentrations of eligible youth.
    (h) 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) and 
134(a)(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 innovative incumbent worker 
training programs, which may include an employer loan program to assist 
in skills upgrading, and 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 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 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 
workers at 20 CRF 663.220(a)(2) 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 Secs. 665.310 
through 665.330 of this part. 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) 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;

[[Page 18719]]

    (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 program and the NAFTA-TAA program;
    (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 additional rapid 
response activities in addition to the activities required to be 
provided under Sec. 665.310. In order to provide effective rapid 
response upon 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 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 Worker Security Act 
(Pub. L. 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 finding that:
    (a) The sales or production, or both, of such firm or subdivision 
have decreased absolutely, and
    (b)(1) Imports from Mexico or Canada of articles like or directly 
competitive with those produced by such firm or subdivision have 
increased; or
    (2) 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.

PART 666--PERFORMANCE ACCOUNTABILITY UNDER TITLE I OF THE WORKFORCE 
INVESTMENT ACT

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 adjusted 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 State Board's 
application for an Incentive Grant?
666.230  How will 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 adjusted 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).

[[Page 18720]]

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, and, as appropriate, work readiness 
or occupational skills;
    (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 
secs. 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 secs. 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) The Department issues 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 actual 
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 adjusted levels of performance for the 
first three years of the State Plan. These levels will 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 adjusted 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 Governor are considered to be State adjusted levels of 
performance, but are not part of the negotiations described in 
paragraphs (c) and (e) of this section. (WIA sec. 136(b)(3).)
    (h) State adjusted levels of performance may be revised in 
accordance with Sec. 666.130 of this subpart.


Sec. 666.130  Under what conditions may a State or DOL request 
revisions to the State adjusted 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) 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

[[Page 18721]]

informational activities. (WIA sec. 136(b)(2)(A).)
    (b) For registered participants, a standardized record that 
includes appropriate performance information must be maintained in 
accordance with WIA section 185(a)(3).


Sec. 666.150  What responsibility do States have to use quarterly wage 
record information for performance accountability?

    (a) States must, consistent with State law, use quarterly wage 
record information in measuring the progress on State and local 
performance measures.
    (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:
    (a) The State's adjusted 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 included in plans submitted 
to the Department of Education for title II Adult Education and 
Literacy programs; and
    (c) The adjusted levels of performance under title I 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, the Secretary 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. The award amounts for 
each eligible State will be published by the Secretary, 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 section 503(a).)


Sec. 666.220  What information must be included in State Board's 
application for an Incentive Grant?

    (a) The Secretary of Labor, after consultation with the Secretary 
of Education, 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 adjusted levels of performance for 
title I, the adjusted levels of performance under title II and the 
adjusted levels for vocational and technical programs under the Carl D. 
Perkins Vocational and Technical Education Act. (WIA section 503(b).)


Sec. 666.230  How does the Department determine the amounts for 
Incentive Grant awards?

    (a) DOL determines 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) The award amount for eligible States will be published by the 
Secretary of Labor, after consultation with the Secretary of Education, 
within 90 days after the due date established under Sec. 666.205(a) of 
the latest State performance progress report providing the annual 
information needed to determine State eligibility.
    (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 adjusted 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 adjusted levels of performance were 
negotiated;
    (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 adjusted levels of performance for title I?

    (a) If a State fails to meet the adjusted 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 program under title I of WIA, the Secretary must, upon request, 
provide technical assistance, as authorized under WIA sections 136(g) 
and 170.

[[Page 18722]]

    (b) If a State fails to meet the adjusted 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 adjusted levels of performance for 
core indicators. In making a determination of the amount, if any, of 
such a sanction, the Department 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 section 
136(g).)
    (d) In accordance with 20 CFR 667.300(e), a State grant may be 
reduced for failure to submit an annual performance progress report.
    (e) A State may request review of a sanction imposed by the 
Department 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 of this part, 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 in Sec. 666.300 of this 
subpart. The levels must be based on the State adjusted 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 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 areas 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

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?
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?
667.140  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?

[[Page 18723]]

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?
667.260  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 sectarian 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 
Secs. 667.260 to 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, as well as nonparticipation 
in sectarian 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 does the Department 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 does the Secretary 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 areas?

Subpart G--Sanctions, Corrective Actions, and Waiver of Liability

667.700  What procedure does the Department utilize 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 does the Department handle a recipient's request for 
waiver of liability under WIA section 184(d)(2)?
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 WIA section 184(c)?

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 will the Administrative Law Judge have in 
ordering relief as an outcome of an administrative hearing?
667.825  What special rules apply to reviews of MSFW and WIAINA 
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 WIA section 186?
667.860  Are there other authorities for the pursuit of remedies 
outside of the Act?

Subpart I--Transition Planning

667.900  What special rules apply during the JTPA/WIA transition?

    Authority: Sec. 506(c), Pub. L. 105-220; 20 U.S.C. 9276(c).

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. 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:
    (1) Has performed satisfactorily; and
    (2) Submits a satisfactory two-year program plan for the succeeding 
two-year grant, contract or agreement period.
    (d) Migrant and Seasonal Farmworker Programs. (1) Awards of grants 
or contracts for the Migrant and Seasonal Farmworker program will be 
made to eligible entities on a competitive basis every two program 
years for a two-year

[[Page 18724]]

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 secs. 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 section 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:
    (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 section 171 and 172. (a) Funds 
obligated for any program year for a program or activity authorized 
under section 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 section 8, and 20 CFR Sec. 652.6, 652.7, and 
661.220.


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 
section 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.

[[Page 18725]]

    (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 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 pargraph (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 an discretionary formula. Under 
that formula, the State must allocate a minimum of 70 percent of adult 
funds on the basis of such 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 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. 667.140  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 local

[[Page 18726]]

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 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.


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, the Department 
conducts a review of the available records to assess the organization's 
overall responsibility to administer Federal funds. As part of this 
review, the Department may consider any information that has come to 
its 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 identified by the 
Department, such as failure to maintain a financial management system 
as required by Federal regulations;
    (4) Willful obstruction of the audit process;
    (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 (6) of this 
section, institutions of higher education, hospitals, and other non-
profit 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 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 or 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,

[[Page 18727]]

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.
    (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) 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 
particpants 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) The Department is 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 April 15, 1999) 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 paragraph (c)(6) 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) In addition to the allowable cost provisions identified above, 
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 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 31.2(h), must comply with the nondiscrimination and 
equal opportunity provisions of WIA sec. 188 and its implementing 
regulations. Information on the handling of discrimination complaints 
by participants and other interested parties may be found at 
Sec. 667.600(f) of this part.
    (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 need 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) Although administrative in nature, costs of information 
technology--computer hardware and software--needed for tracking and 
monitoring of WIA program, participant, or performance requirements; or 
for collecting, storing and disseminating information under the core 
services provisions at sections 134(d)(2)(E), (F), (G), (H) and (I) of 
the Act, are excluded from the administrative cost limit calculation.
    (d) 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.

[[Page 18728]]

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 allowable costs that are associated with the overall 
management and administration of the workforce investment system and 
which are not related to the direct provision of workforce investment 
activities. These costs can be both personnel and non-personnel and 
both direct and indirect.
    (b) The costs of administration include the costs associated with 
performing the responsibilities of the State and Local Workforce 
Investment Boards and of chief elected officials or boards of chief 
elected officials required for the local public/private partnership. 
The specific responsibilities of these boards and officials include, 
but are not limited to, those identified in the sections of the Act 
dealing with workforce investment boards and areas and one-stop 
systems, (WIA secs. 111(d), 116, 117(d), (e) & (h)(4), and 121(a)), 
such as:
    (1) Performing overall general administrative functions and 
coordination of those functions under WIA title I including:
    (i) Preparing program plans, budgets, related schedules, and 
amendments or modifications thereto;
    (ii) Negotiating MOUs and awarding specific subgrants, contracts, 
and purchase orders through appropriate procurement processes,
    (iii) Conducting public relations activities which are not related 
to program outreach,
    (iv) Developing systems and procedures, including information 
systems for assuring compliance with program requirements, except:
    (A) Those needed for tracking and monitoring of WIA program, 
participant, or performance requirements; or
    (B) For collecting, storing and disseminating information under the 
core services provisions at WIA sections 134(d)(2)(E), (F), (G), (H) 
and (I) and information necessary to comply with WIA section 188 and 
its implementing regulations.
    (v) Coordinating the resolution of findings arising from audits, 
reviews, investigations and incident reports, and
    (vi) Performing administrative services, including such services as 
general legal services, financial management and accounting services, 
audit services; and managing purchasing, property, payroll, and 
personnel;
    (2) Performing oversight responsibilities including monitoring of 
WIA programs, projects and subrecipients, and related systems and 
processes for compliance with program requirements,
    (3) Costs for goods and services required for administration 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) The costs of organization-wide management functions;
    (5) Travel costs incurred for official business in carrying out 
administrative activities or the overall management of the WIA system; 
and
    (6) Costs of information systems not related to the tracking and 
monitoring of WIA program, participant, or performance requirements; or 
for collecting, storing and disseminating information under the core 
services provisions at sections 134(d)(2)(E), (F), (G), (H) and (I) of 
the Act, (for example, personnel, accounting and payroll systems).
    (c)(1) That portion of the costs of One-Stop operators which are 
associated with the performance of the administrative functions 
described in paragraph (b) of this section are classified as 
administrative costs. That portion of the costs of one-stop operators 
which are associated with the direct provision of workforce investment 
activities are classified as program costs.
    (2) Personnel and related non-personnel costs of the recipient's or 
subrecipient's staff, including project directors, who perform both 
administrative and programmatic services or activities may 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) Costs of staff who provide program services directly to 
participants and, where applicable, the first line supervisors and/or 
team leaders responsible for those staff are classified as a program 
cost.
    (4) 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.
    (5) The costs of contracts, whether fixed price or cost 
reimbursement, awarded for the purpose of obtaining specific goods or 
services may be charged to the administration or program category based 
on the purpose for which the contract was awarded.
    (6) The following information systems and 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;
    (7) 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. 667.260  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 
31.2(h), 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, alterations and capital improvements of:
    (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) For 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

[[Page 18729]]

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);
    (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 sectarian activities?

    (a) WIA title I funds may not be spent on the employment or 
training of participants in sectarian activities.
    (b) Participants must not be employed under title I of WIA to carry 
out the construction, operation, or maintenance of any part of any 
facility that is used or to be used for sectarian instruction or as a 
place for religious worship. However, WIA funds may be used for the 
maintenance of a facility that is not primarily or inherently devoted 
to sectarian instruction or religious worship if the organization 
operating the facility is part of a program or activity providing 
services to WIA participants. (WIA sec. 188(a)(3).)


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. 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. (WIA sec. 181(d).)


Sec. 667.269  What procedures and sanctions apply to violations of 
Secs. 667.260 through 667.268?

    (a) The Secretary will promptly review and take appropriate action 
with regard to 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 of this subpart. 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 sectarian activities in 
(Sec. 667.266(a)).
    (c) Sanctions and remedies are provided for under WIA section 
181(d)(3) for violations of Sec. 667.268 of this subpart, which 
addresses business relocation.
    (d) Violations of Sec. 667.266(b) will be handled in accordance 
with the DOL nondiscrimination regulations implementing WIA section 
188.


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 activitiy authorized under title 
I of WIA must not displace (including a partial displacement, such as a 
reduction in the hours of nonovertime 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

[[Page 18730]]

    (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 of this part. (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 USC 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 
with respect to 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.


Sec. 667.275  What are a recipient's obligations to ensure 
nondiscrimination and equal opportunity, as well as nonparticipation in 
sectarian activities?

    (a)(1) Recipients, including State and local workforce investment 
boards, One-Stop operators, service providers, vendors and 
subrecipients, must comply with the nondiscrimination and equal 
opportunity provisions of WIA section 188 and its implementing 
regulations.
    (2) Nondiscrimination and equal opportunity requirements and 
procedures, including complaint processing and compliance reviews, are 
governed by the regulations implementing WIA sec. 188 and are 
administered and enforced by the DOL Civil Rights Center.
    (3) As described in Sec. 667.260(a), funds may be used to meet a 
recipient's obligation to provide physical and programmatic 
accessibility and reasonable accommodation in regard to the WIA 
program, as required by section 504 of the Rehabilitation Act of 1973, 
as amended, and the Americans with Disabilities Act of 1990, as 
amended.
    (b) Except with respect to the maintenance of a facility that is 
not primarily or inherently devoted to sectarian instruction or 
religious worship, in a case in which the organization operating the 
facility is part of a program or activity providing services to 
participants, the employment or training of participants in sectarian 
activities is prohibited.

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 to DOL.
    (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 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

[[Page 18731]]

of all grants awarded and funds expended under WIA title I to determine 
compliance with the Act and these 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, the Secretary 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 secs. 127 and 132, the Governor 
must develop a State monitoring system that meets the requirements of 
Sec. 667.410(b) of this subpart. 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 
these regulations;
    (2) Determine whether or not there is compliance with other 
provisions of the Act and these 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 demonstrate to the 
Department, 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 these regulations, 
including 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 sec. 118(d)(1).
    (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 sections 
184(b) and (c) in the event of a subrecipients'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) 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 of this subpart, 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 of this part.
    (c) Resolution of nondiscrimination findings. Findings arising from 
investigations or reviews conducted under nondiscrimination laws will 
be resolved in accordance with WIA section 188 and the Department of 
Labor nondiscrimination regulations implementing WIA section 188.


Sec. 667.505  How does the Department resolve investigative and 
monitoring findings?

    (a) As a result of an investigation, on-site visit or other 
monitoring, the Department notifies 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 sections 184(b) and (c). If the 
Grant Officer agrees with the recipient's handling of the situation, 
the Grant

[[Page 18732]]

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 of this 
subpart.


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 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 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.
    (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) 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.
    (c) 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 (b)(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; 
and
    (d) 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.
    (e) The remedies that may be imposed under local, State and direct 
recipient grievance procedures are enumerated at WIA section 181(c)(3).
    (f)(1) Under WIA section 188(a), complaints of discrimination from 
participants and other interested parties must be handled in accordance 
with WIA section 188(b), and the Department of Labor nondiscrimination 
regulations implementing that section.
    (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, DC 20210, for 
processing.
    (g) 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 does the Secretary use to review State and 
local grievances and complaints?

    (a) The Secretary investigates allegations arising through the 
grievance procedures described in Sec. 667.600 when:
    (1) A decision relating to a grievance or complaint under 
Sec. 667.600(c) has not been reached within 60 days of receipt

[[Page 18733]]

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 relating to a grievance or complaint under 
Sec. 667.600(c) has been reached and the party to which such decision 
is adverse appeals to the Secretary.
    (b) The Secretary must make a final decision on an appeal under 
paragraph (a) of this section no later than 120 days after receiving 
such appeal.
    (c) Appeals made under to paragraph (a)(2) of this section must be 
filed within 60 days of the receipt of the decision being appealed. 
Appeals made under to 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), 
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 the Secretary notifies the parties 
that the Department will investigate the grievance under the procedures 
at Sec. 667.505.


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, 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. Complaints of a non-criminal nature are handled under the 
procedures set forth in Sec. 667.505 of this part 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 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 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)(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 at 
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 to 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 
sections 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 sections 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 actions 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 18734]]

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 does the Department utilize to impose 
sanctions and corrective actions on recipients and subrecipients of WIA 
grant funds?

    (a) Except for actions under WIA section 188(a) (relating to 
nondiscrimination requirements), the Grant Officer uses the initial and 
final determination procedures outlined in Sec. 667.510 of this part to 
impose a sanction or corrective action.
    (b) To impose a sanction or corrective action regarding a violation 
of WIA section 188(a), the Department will utilize the procedures of 
WIA section 188(b) and the Department of Labor nondiscrimination 
regulations implementing that section.
    (c) 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) of this part, when the Secretary 
determines that the Governor has not taken corrective action to remedy 
the violation required by WIA section 184(a)(5), the Grant Officer, 
under the authority of WIA section 184(a)(7), may impose any of the 
corrective actions set forth at WIA section 184(b)(1). In such 
situations, the Secretary may immediately suspend or terminate 
financial assistance in accordance with WIA section 184(e).
    (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 joint 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 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) If the Secretary finds 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 must take such actions 
against the State recipient or the local area, as appropriate.


Sec. 667.720  How does the Department 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) of this part.
    (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 18735]]

    (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 WIA section 184(c)?

    (a)(1) For recipient level misexpenditures, the Secretary 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, the 
Secretary 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 (b)(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 the Secretary has 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)(2) 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 the Secretary has 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 will constitute 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 the Departmental official who issued the 
determination.
    (e) 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. 667.840 of this part 
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 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 will 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 MSFW 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 MSFW grantee under 20 CFR part 669 is 
denied in whole or in part by the Department may request an 
administrative review under Sec. 667.800(a) with respect to whether 
there is a basis in the record to support the Department's decision. 
This appeal

[[Page 18736]]

will not in any way interfere with the Department's 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 MSFW 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. The appellant may not be 
awarded a grant nor given any kind of preference beyond the current two 
year-grant period.
    (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, 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 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 MSFW 
grantee 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 MSFW funding.


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 Administrative Law Judge (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 120 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 of this part 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 WIA sec. 186 of the Act?

    (a) Any party to a proceeding which resulted in a final order of 
the Secretary 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 authorities for the pursuit of remedies 
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.

Subpart I--Transition


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 PY's 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 issued 
by the Secretary, but 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) The Secretary will issue such other transition guidance as 
necessary and appropriate.

PART 668--INDIAN AND NATIVE AMERICAN PROGRAMS UNDER TITLE I OF THE 
WORKFORCE INVESTMENT ACT

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 (WIA)?
668.120  How must INA programs be administered?
668.130  What obligation does the Department have to consult with 
the INA grantee community in developing rules, regulations, and 
standards of accountability for INA programs?
668.140  How do the 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 the Department determine an entity's ``ability to 
administer funds?'
668.240  What is the process for applying for designation as an INA 
grantee?

[[Page 18737]]

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  Does the Department 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 DOL 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?
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 to 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 eligible segments of the 
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 to the 
Department?
668.720  What information must these planning documents contain?
668.730  When must these plans be submitted?
668.740  How will the Department review and approve such plans?
668.750  Under what circumstances can the Department 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?
668.830  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 the 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)

Subpart A--Purposes and Policies


Sec. 668.100  What is the purpose of the programs established to serve 
Native American peoples (INA programs) under sec. 166 of the Workforce 
Investment Act (WIA)?

    (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 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) The Department 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, the Department will observe 
the Congressional declaration of policy set forth in the Indian Self-
Determination and Education Assistance Act, at 25 U.S.C. 450a, as well 
as the Department of Labor's ``American Indian and Alaska Native 
Policy,'' dated July 29, 1998.
    (c) These regulations are not intended to abrogate the trust 
responsibilities of the Federal Government to Native American bands, 
tribes, or groups in any way.
    (d) The Department will administer INA programs through a single 
organizational unit and consistent with the requirements in section 
166(h) of the Act. The Department has 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) The Department will establish and maintain administrative 
procedures for the selection, administration, monitoring, and 
evaluation of Native American employment and training programs 
authorized under this Act. The Department will utilize staff who have a 
particular competence in this field to administer these programs. (WIA 
sec. 166(h).)

[[Page 18738]]

Sec. 668.130  What obligation does the Department have to consult with 
the INA grantee community in developing rules, regulations, and 
standards of accountability for INA programs?

    The Department will consult with the Native American grantee 
community as a full partner in developing policies for the INA 
programs. The Department 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  How do the 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, and 
97, as applicable.


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 INA 
program and which has a grant agreement pursuant to 20 CFR 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 (Pub. L. 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 
attainment.

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 for PY 1999, an entity must 
have:
    (1) A legal status as a government or as an agency of a government, 
as a 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 of this subpart; and
    (3) For PY 1999 only, a population within the designated geographic 
service area of 1,000 or more Native American persons.
    (b) For PY 2000 and beyond, 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 of this subpart; 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 PY 2000 and beyond 
will be grandfathered in. We will make an exception for grantees 
wishing to participate in the demonstration program under Pub. L. 102-
477 if all resources to be consolidated under the Pub. L. 102-477 plan 
total at least $100,000.
    (c) To be designated as a Native American grantee, a consortium or 
its members must meet the requirements of paragraphs (a) and (b) 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.
    (d) 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) State-recognized Indian tribes;
    (6) Native American-controlled organizations serving Indians; and
    (7) Consortia of eligible entities which meets the legal 
requirements for a consortium described in paragraph (c) of this 
section.


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 over which they have legal jurisdiction. 
(WIA section 166(c)(1).)
    (b) If the Department decides not to designate Indian tribes or 
Alaska Native entities to serve their service areas, the Department 
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

[[Page 18739]]

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 the Department determine an entity's ``ability 
to administer funds?''

    (a) Before determining which entity to designate for a particular 
service area, the Department 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 these 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. 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) 424--Application for Federal Assistance;
    (3) A specific description, by State, county, reservation or 
similar area, or service population, of the geographic area for which 
the entity requests designation;
    (4) 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.
    (5) A description of the planning process used by the entity, 
including the involvement of the governing body and local employers.
    (6) Evidence to establish an entities ability to administer funds 
under Secs. 668.220-668.230.


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, the Department issues 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.
    (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, the Department designates 
or conditionally designates 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).)
    (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 these 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.

[[Page 18740]]

    (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, these regulations, and other 
appropriate requirements. Funds are released to the grantee upon 
Departmental approval of the required planning documents, as described 
in Secs. 668.710 through 668.740.


Sec. 668.294  Does the Department 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, the Department 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). Remaining 
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, 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, the Department, 
based upon criteria to be described in the SGA, 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) The Department 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) The Department may reserve up to one percent (1 percent) of the 
funds appropriated 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, the Secretary issues 
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 regarding 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 relating to 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;

[[Page 18741]]

    (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;
    (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 in combination with any training 
services described in paragraphs (d)(1) through (8) 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 
Sec. 664.420;
    (14) Follow-up services as defined in Sec. 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 section 
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 
section 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).)
    (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; and (WIA sec. 181(a)(1).)
    (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 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 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. (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 there is a INA 
grantee field office, 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 must also be 
executed.
    (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

[[Page 18742]]

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 requirement that no expenditures may be 
made with INA program funds for individuals who are not eligible under 
this part.
    (c) The INA grantee's Two Year Plan must describe the efforts the 
grantee 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 is involved in an 
employer-employee relationship, including participants in OJT, 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 section 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 DOL do to strengthen the capacity of INA 
grantees to deliver effective services?

    The Department 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 Secs. 668.710 and 668.720 of this 
part). 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, 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 section 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 INA service areas.
    (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) will 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). 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 to 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) The Department encourages 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. Specific indicators of performance and levels of 
performance for supplemental youth services activities will be 
developed by the Department in partnership with the Native American

[[Page 18743]]

Employment and Training Council, and transmitted 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;
    (8) Other innovative forms of worksite training.
    (b) In addition to the services listed above, other grantee-
determined services intended to assist eligible participants to obtain 
or retain employment may also be provided to or for employers approved 
in the grantee's Two Year Plan.


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.
    (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. 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. For the purposes of report 
submission, a postmark or date indicating receipt by a private express 
delivery service is acceptable proof of timely submission.
    (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 DOL, in accordance with 
guidelines developed by the Department 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

[[Page 18744]]

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.
    (f) No assistance provided under this Act may involve political 
activities. (WIA section 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 regarding embezzlement 
apply to programs under WIA.
    (i) Sectarian activities involving WIA funding or participants are 
prohibited.
    (j) INA grantees are prohibited from discriminatory practices as 
outlined at WIA section 188, and the regulations implementing WIA 
section 188. 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 eligible segments of the 
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.

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) The 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 to the 
Department?

    Each grantee receiving funds under WIA sec. 166 must submit to 
DINAP a comprehensive services plan and a projection of participant 
services and expenditures covering the two-year planning cycle. The 
Department 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 on 
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 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) Beginning in PY 2000, eligible INA grantees must include in 
their plan narratives a description of activities planned under the 
supplemental youth program, including items described in paragraph (a) 
(1) through (5) of this section.
    (c) INA grantees must include a detailed budget of proposed 
Administrative Costs, utilizing the definition at 20 CFR 667.220, to 
use as a basis of negotiation with DINAP.
    (d) INA grantees' plans must contain a projection of participant 
services and expenditures for each Program Year, consistent with 
guidance issued by the Department.
    (e) For PY 1999, INA grantees who are early implementers under WIA 
must prepare and submit an Annual Plan rather than a Two Year Plan.

[[Page 18745]]

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. The Department 
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. For PY 1999, a separate youth plan is 
required, and INA grantees will be required to submit their plans 
early, to allow for prompt funding of the youth component.
    (c) INA grantees must submit modifications for the second year 
reflecting exact funding amounts, after the individual allotments have 
been determined. They will be submitted at a time determined by the 
Department, but no later than June 1 prior to the beginning of the 
second year of the designation cycle.


Sec. 668.740  How will the Department review and approve such plans?

    (a) The Department will approve a grantee's planning documents 
prior to the date on which funds for the program become available 
unless:
    (1) The planning documents do not contain the information specified 
in these regulations; or
    (2) The services which the INA grantee proposes are not permitted 
under WIA or applicable regulations.
    (b) The Department may approve a portion of the plan, and 
disapprove other portions. The grantee also has the right to appeal the 
Department's 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 the Department disapproves 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 Department's 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 the Department or the INA 
grantee modify the terms of the grantee's plan(s)?

    (a) The Department 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 Departmental approval to modify its 
plan to add, expand, delete, or diminish any service allowable under 
these regulations. The INA grantee may modify its plan without 
Departmental approval, unless the modification reduces the total number 
of participants to be served annually 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) The Department 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, the 
Department 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 with respect to:
    (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 the 
consolidated regulations at 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 
the consolidated regulations at 20 CFR 667.210 and 667.220.


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 sec. 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, 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 may apply to those 
grantees required to keep their funds in interest-bearing accounts, and 
to grantees participating in the demonstration under Pub. L. 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

[[Page 18746]]

participant in an establishment under paragraph (b) of this section.

Subpart I--Miscellaneous Program Provisions


Sec. 668.900  Does the 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. The 
Department 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 (Pub. L. 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. The 
Department continues to support the Council.

PART 669--MIGRANT AND SEASONAL FARMWORKER PROGRAMS UNDER TITLE I OF 
THE WORKFORCE INVESTMENT ACT

Subpart A--Purpose and Definitions

Sec.
669.100  What is the purpose of the Migrant and Seasonal Farmworker 
(MSFW) Program established under WIA section 167?
669.110  What definitions apply to this program?
669.120  How is the MSFW program administered by the Department of 
Labor?
669.130  What unit within the Department administers the Migrant and 
Seasonal Farmworker programs funded under WIA section 167?
669.140  How does the DSFP assist the MSFW grantee organizations 
serve farmworker customers?
669.150  How are regulations established for this program?
669.160  How does the Department consult with MSFW organizations in 
developing rules, regulations and standards of accountability and 
other policy guidance for the MSFW Programs?
669.170  What WIA regulations apply to the programs funded under WIA 
section 167?

Subpart B--MSFW Program's Service Delivery System

669.200  Who is eligible to receive a MSFW grant?
669.210  How does an eligible entity become a MSFW grantee?
669.220  What is the role of the MSFW grantee in the One-Stop 
delivery system?
669.230  Can a MSFW grantee's designation be terminated?
669.240  How will the Department use funds appropriated under WIA 
section 167 for MSFW programs?

Subpart C--MSFW Program Customers and Available Program Services

669.300  What are the general responsibilities of the MSFW grantees?
669.310  What are the basic components of a MSFW service delivery 
strategy?
669.320  Who is eligible to receive services under the MSFW Program?
669.330  How are services delivered to the customer?
669.340  What core services are available to eligible MSFWs?
669.350  How are core services delivered to MSFWs?
669.360  May grantees provide emergency assistance to MSFWs?
669.370  What intensive services may be provided to eligible MSFWs?
669.380  What is the objective assessment that is authorized as an 
intensive service?
669.400  What are the elements of the IEP that is authorized as an 
intensive service?
669.410  What training services may be provided to eligible MSFWs?
669.420  What must be included in an on-the-job training contract?

Subpart D--Performance Accountability, Planning and Waiver Provision

669.500  What performance measures and standards apply to the MSFW 
Program?
669.510  What planning documents must a MSFW grantee submit to the 
Department?
669.520  What information is required in the MSFW 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 MSFW Program?
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 MSFW program authorized at WIA section 167?
669.620  How do the MSFW youth program regulations apply to the MSFW 
program authorized under WIA section 167?
669.630  What are the requirements for designation as a ``MSFW youth 
program grantee'?
669.640  What is the process for applying for designation as a MSFW 
youth program grantee?
669.650  How are MSFW youth funds allocated to section 167 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)

Subpart A--Purpose and Definitions


Sec. 669.100  What is the purpose of the Migrant and Seasonal 
Farmworker (MSFW) program established under WIA section 167?

    The purpose of the MSFW Program is to 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 program.

[[Page 18747]]

Sec. 669.110  What definitions apply to this program?

    In addition to the definitions found in WIA secs. 101 and 167 and 
in 20 CFR 660.330, the following definitions apply to programs under 
this subpart:
    Allowances means direct payments, which must not exceed the higher 
of the State or Federal minimum wage, made to MSFW participants during 
their enrollment to enable them to participate in training services.
    Capacity enhancement means the technical assistance afforded to 
grantees and grantee staff by the Department to improve the quality of 
the program and the delivery of program services to MSFWs.
    Department means the U.S. Department of Labor, including its 
agencies and organizational units, unless otherwise indicated.
    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.
    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 MSFW program by the applicant farmworker.
    Emergency Assistance means assistance that addresses immediate 
needs of farmworkers and their families, provided by MSFW 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 in the agricultural industries 
identified by the Department for inclusion in its allocation formula 
for MSFW-funded programs.
    MSFW program grantee means an entity which is awarded a WIA grant 
directly from the Department to carry out the MSFW program in one or 
more designated States or substate areas.
    MSFW means a Migrant or Seasonal Farmworker under WIA section 167.
    MOU means Memorandum of Understanding.
    Self-certification means a farmworker's signed attestation that the 
information he/she submits to demonstrate eligibility for the MSFW 
program 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 paid or unpaid, as appropriate.


Sec. 669.120  How is the MSFW program administered by the Department of 
Labor?

    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, the Secretary designates grantees using 
procedures consistent with standard Federal government competitive 
procedures. The Secretary awards other grants and contracts using 
similar competitive procedures.


Sec. 669.130  What unit within the Department administers the Migrant 
and Seasonal Farmworker programs funded under WIA section 167?

    The Department has designated the Division of Seasonal Farmworker 
Programs (DSFP), or its successor organization, within the Employment 
and Training Administration, as the organizational unit that 
administers MSFW programs at the Federal level.


Sec. 669.140  How does the DSFP assist the MSFW grantee organizations 
serve farmworker customers?

    The Department provides 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, the Secretary 
consults 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 does the Department consult with MSFW organizations 
in developing rules, regulations and standards of accountability and 
other policy guidance for the MSFW Programs?

    (a) The Department considers the MSFW grantee community as a full 
partner in the development of policies for the MSFW programs under the 
Act.
    (b) The Department has established and continues to support the 
MSFW Employment and Training Advisory Committee. Through the Advisory 
Committee, the Department actively seeks and considers the views of the 
grantee community prior to 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 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, 
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.

Subpart B--MSFW Program's Service Delivery System


Sec. 669.200  Who is eligible to receive a MSFW 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.
    (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.


Sec. 669.210  How does an eligible entity become a MSFW grantee?

    To become a MSFW grantee and receive a grant under this subpart, 
the entity 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

[[Page 18748]]

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 MSFW grantee in the One-Stop 
delivery system?

    (a) In those local areas where there is a grantee MSFW field 
office, 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 
sets forth their respective responsibilities for making the full range 
of core services available to farmworkers. In local areas without a 
grantee MSFW field office but with a large concentration of MSFWs, the 
grantee should 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 should reflect appropriate and equitable services to 
MSFWs, and may include costs of services to MSFWs incurred by the One-
Stop that extend beyond Wagner-Peyser funded services and activities.


Sec. 669.230  Can a MSFW 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 these 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 will the Department use funds appropriated under WIA 
section 167 for MSFW programs?

    (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 the competitive process for the provision of services to 
eligible farmworkers within each service area.
    (b) The balance, 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--MSFW Program Customers and Available Program Services


Sec. 669.300  What are the general responsibilities of the MSFW 
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 a MSFW service delivery 
strategy?

    The MSFW 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 MOUs with the applicable Local 
Workforce Investment Boards for the delivery of core services to MSFWs.


Sec. 669.320  Who is eligible to receive services under the MSFW 
Program?

    Disadvantaged migrant and seasonal farmworkers, as defined in 
Sec. 669.110, and their dependents are eligible for services funded by 
the MSFW program.


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 Secs. 669.340 through 669.410 of this subpart. Consistent 
with 20 CFR part 663, prior to intensive services, a participant must 
receive at least one core service, and, prior to training services, a 
participant must receive at least one intensive service.


Sec. 669.340  What core services are available to eligible MSFWs?

    The core services identified in WIA section 134(d)(2).


Sec. 669.350  How are core services delivered to MSFWs?

    (a) The full range of core services are available to MSFWs, as well 
as other individuals, at One-Stop Centers as described in 20 CFR part 
662.
    (b) Where a MSFW field office is located within the workforce 
investment area of a One-Stop center, core services must be made 
available through the One-Stop delivery system, as determined in the 
required MOU between the Local Board and the MSFW grantee.


Sec. 669.360  May grantees provide emergency assistance to MSFWs?

    (a) Yes. Emergency assistance (as defined in Sec. 669.110 of this 
part) 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 MSFW 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 
MSFWs?

    (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 public and private non-profit and private for-profit sectors); and
    (ii) Compensates participants at no less than the applicable State 
or Federal minimum wage.
    (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

[[Page 18749]]

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 IEP that is authorized as an 
intensive service?

    The elements of the IEP are:
    (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 MSFWs?

    (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) Workplace safety and farmworker pesticide training;
    (3) Housing development assistance;
    (4) Training-related supportive services; and
    (b) Other training activities identified in the approved grant 
plan.


Sec. 669.420  What must be included in an on-the-job training contract?

    At a minimum, the on-the-job training contract 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;
    (h) Application of the general program requirements of WIA section 
195(4) and section 101(31); and
    (i) 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;

Subpart D--Performance Accountability, Planning and Waiver 
Provision


Sec. 669.500  What performance measures and standards apply to the MSFW 
Program?

    (a) The MSFW program 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 pursuant to 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 are to be included in the grantee 
plan submission, and the agreed to levels must be included in the 
approved plan.
    (b) The Department may develop additional performance indicators 
with appropriate levels of performance for evaluating programs that 
serve farmworkers and which are reflective of the State service area 
economy and local demographics of eligible MSFWs. 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 a MSFW grantee submit to the 
Department?

    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 MSFW grant plans?

    An MSFW 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 prescribed by the Department. 
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 of this part.


Sec. 669.530  What are the submission dates for these plans?

    Plan submission dates will be announced by the Department in the 
SGA issued under Sec. 669.220 of this part.


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. Modifications for second year 
funding must be submitted at a time to be determined by the Department, 
generally no later than June 1 prior to the beginning of the second 
year of the designation cycle.
    (b) The Department 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 Departmental approval 
except where the modification reduces the total number

[[Page 18750]]

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 Departmental approval.
    (d) If the grantee is approved for a regulatory waiver under 
Secs. 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 MSFW Program?

    Costs are classified as follows:
    (a) Administrative costs, as defined in 20 CFR 667.220; and
    (b) Program costs, which are all other costs not defined as 
administrative.
    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.


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) MSFW 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?

    (a) To request a waiver, a grantee must submit a waiver plan that:
    (1) Describes the goals of the waiver, the expected programmatic 
outcomes, and how the waiver will improve the provision of WIA 
activities;
    (2) Is consistent with guidelines established by the Department and 
the waiver provisions at 20 CFR 661.400 through 661.420; and
    (b) 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 MSFW program 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 
MSFW 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 MSFW program 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 a ``MSFW 
youth program grantee''?

    Any entity may apply for designation as a ``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 MSFW 
program grantee.


Sec. 669.640  What is the process for applying for designation as a 
MSFW youth program grantee?

    (a) To apply for designation as a 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 distinct from the one used to 
select WIA section 167 MSFW program grantees.


Sec. 669.650  How are MSFW youth funds allocated to section 167 
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, the Secretary 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 sec. 167 
MSFW program 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 
Secs. 669.400 and 669.410 of this part;
    (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; 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

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?

[[Page 18751]]

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?
Sec.670.220  Is the Secretary responsible for 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 can a student be enrolled in Job Corps?

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 does 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 will be provided for Job Corps 
students?
670.720  Who will provide 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?
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 will students be protected from unsafe or unhealthy 
situations?
670.940  What are the requirements relating to 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 will performance of the Job Corps program be 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 regulations?
670.993  How does Job Corps ensure that contract disputes will be 
resolved?
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: Sec. 506(c), Pub. L. 105-220; 20 U.S.C. 9276(c).

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.

[[Page 18752]]

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 referred 
to as ``students'' in this part.
    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) 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, 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.


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

[[Page 18753]]

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  Is the Secretary responsible for 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 sections 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, et seq.) 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 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 is proposing 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 CCCs which 
will 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 CCCs 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; and
    (c) An individual who is facing one or more of the following 
barriers to education and employment:
    (1) Is basic skills deficient, as defined in WIA section 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.
    (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:
    (1) Prevent other students from receiving the benefit of the 
program;
    (2) Be incompatible with the maintenance of sound discipline; or

[[Page 18754]]

    (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 by 
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 of this part.


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 Secs. 670.400 and 670.410 of this subpart.
    (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. 670.400 and Sec. 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:
    (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 Secs. 670.990 and 670.991 of this part. 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 sec. 188, the individual may proceed under the 
applicable DOL nondiscrimination regulations implementing WIA sec. 188.
    (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 can a student be enrolled in Job Corps?

    (a) Except as provided in paragraph (b) of this section, a student 
may remain

[[Page 18755]]

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;
    (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 of this 
part, 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 Sec. 670.310 of this part.


Sec. 670.515  What responsibilities does 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 
of this part.


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
    (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

[[Page 18756]]

disciplinary proceedings according to procedures developed by the 
Secretary. These procedures must include, at a minimum, center fact-
finding and behavior review boards, 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) Religious services may not be held on-center unless the center 
is so isolated that transportation to and from community religious 
facilities is impractical.
    (c) If religious services are held on-center, no Federal funds may 
be paid to those who conduct services. Services may not be confined to 
one religious denomination, and centers may not require students to 
attend services.


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 that are 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 that are 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 are paid according to provisions of 5 U.S.C. 5582 relating to 
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 that are 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 will be 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 will provide 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 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

[[Page 18757]]

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 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. 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?

    (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 sec. 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:
    (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

[[Page 18758]]

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) By intoxication or 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 ch. I, 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 will students be 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 relating to 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.


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 information 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 of 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 70a 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.


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

[[Page 18759]]

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 will performance of the Job Corps program be 
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 these regulations 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 of this subpart 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 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 
of this part 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 and Sec. 670.995 of this subpart.


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 of this 
subpart, 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 these 
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 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 of this subpart; 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) of this 
subpart, or will report the incident to the DOL

[[Page 18760]]

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 
he 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 applicable, provisions of 
the following Department of Labor regulations:
    (a) Regulations implementing WIA section 188 for programs receiving 
Federal financial assistance under WIA.
    (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

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).


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?

    The Secretary uses 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 will be 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 
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?

    The Department publishes 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) 
of this subpart, 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

[[Page 18761]]

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 regarding 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, for example:
    (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; and
    (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.
    (d) A national emergency grant to respond to a declared emergency 
or natural disaster, as defined at Sec. 671.110(e) of this subpart, may 
provide short-term disaster relief employment for:
    (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) Application of existing general statutory or regulatory waivers 
and workflex waivers to National Emergency Grants may be requested by 
State and Local Board grantees, and approved by the Department for 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 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. The 
Department considers 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). 
Pursuant to 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 subpart 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 project. Administration costs are negotiated between 
the applicant and the Department 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) The Secretary 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) The Secretary may negotiate and fund projects under terms other 
than those specified in this subpart where it can be clearly 
demonstrated that such adjustments will achieve a greater positive 
benefit for the workers and/or communities being assisted.

PART 652--ESTABLISHMENT AND FUNCTIONING OF STATE EMPLOYMENT 
SERVICES

    1. The authority citation for part 652 continues to read as 
follows:

    Authority: 29 U.S.C. 49k.

    2. Section 652.1 is amended by revising paragraph (a), and in 
paragraph (b), by adding the definition of State Workforce Investment 
Board (State Board) and the definition of WIA, by revising the 
definition of State agency, and by removing the definition of Director, 
to read as follows:


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.

[[Page 18762]]

    (b) * * *
    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.).
    3. Section 652.3 is amended by revising paragraph (d) to read as 
follows:


Sec. 652.3  Basic labor exchange system.

* * * * *
    (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.
* * * * *
    4. Section 652.5 is revised to read as follows:


Sec. 652.5  Services authorized.

    The sums allotted to each State pursuant to section 6 of the Act 
shall be expended consistent with an approved plan under 20 CFR 
660.100-660.104 and Secs. 652.222-214 of this part. At a minimum, each 
State shall provide the basic labor exchange elements at Sec. 652.3 of 
this part.


Secs. 652.6 and 652.7  [Removed and reserved]

    5. Sections 652.6 and 652.7 are removed and reserved.


Sec. 652.8  [Amended]

    6. Section 652.8 is amended in paragraph (j)(1) by removing the 
phrase ``29 CFR part 31.'' and adding ``the applicable DOL 
nondiscrimination regulations.'' and in paragraph (j)(5) by removing 
the phrase ``the provisions of 29 CFR parts 31 and 32.'' and adding 
``the applicable DOL nondiscrimination regulations.''
    7. Subpart C is added to read as follows:

Subpart C--Wagner-Peyser Act Services in a One-Stop Delivery System 
Environment

Sec.
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 the One-
Stop 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 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 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 
publicly funded merit-staff employees must deliver services provided 
under the Act?
652.216  May the One-Stop operator provide guidance to a merit-
staffed employee under the Act?

Subpart C--Wagner-Peyser Act in a One-Stop Delivery System 
Environment


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 in this 
part 652 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 
operational issues 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 the 
One-Stop delivery system?

    (a) No.
    (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;
    (2) The services described in paragraph (b)(1) of this section are 
available in at least one physical center 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 Sec. 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 section 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

[[Page 18763]]

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
    (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 20 CFR 663.150 and may be used to 
provide intensive services as defined 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 farm workers, 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 Workforce Investment Area, in at least one physical 
center, staff funded under the Act must provide core and applicable 
intensive services including staff-assisted labor exchange services.
    (4) Those labor exchange services provided under the Act in a 
Workforce Investment Area must be described in the Memorandum of 
Understanding.


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 three methods of service delivery described in 
Sec. 652.207(b)(2). These methods are:
    (a) Self-service;
    (b) Facilitated self-help services; and
    (c) Staff-assisted service.


Sec. 652.209  What are the requirements under the Act for providing 
reemployment services to referred UI claimants?

    In accordance with section 3(c)(3) of the Act, a State must provide 
reemployment services to UI claimants for whom such services are 
required as a condition for receipt of UI benefits. The State Agency, 
through the One-Stop delivery system, must provide reemployment 
services to UI claimants. Services must be appropriate to the needs of 
the UI claimants who are referred to reemployment services under any 
Federal or State UI law and must be provided to the extent that funds 
are available.


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 make a meaningful and 
realistic work search; and
    (3) UI program staff receive information about a UI claimant's 
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 and submit a five-year Statewide plan for 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 has the authority to submit modifications to the five-
year plan as necessary during the five-year period, and to 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, or any change in services delivered by 
public 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 as addressed 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 changes occur in Federal or State 
law or policies, Statewide vision or strategy, or if changes in 
economic conditions occur. A State must submit modifications to adjust 
service strategies if performance goals are not met.


Sec. 652.215  Do any provisions in WIA change the requirement that 
publicly funded merit-staff employees must deliver services provided 
under the Act?

    No. The Secretary has the legal authority to set staffing standards 
and requirements to ensure the effective delivery of services provided 
under the Act. The Secretary requires that labor exchange services 
provided under authority of the Act, to include services to veterans, 
be provided by public 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.


Sec. 652.216  May the One-Stop operator provide guidance to a merit-
staffed employee under the Act?

    Yes. The One-Stop 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, One-Stop partners 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 merit-staff employees 
funded under the Wagner-

[[Page 18764]]

Peyser Act, remain under the authority of the State Agency (including 
such matters that are delegated to any other public agency). Such 
guidance given to employees must be consistent with the provisions of 
the Wagner-Peyser Act.

[FR Doc. 99-8398 Filed 4-14-99; 8:45 am]
BILLING CODE 4510-30-P