[Federal Register Volume 65, Number 156 (Friday, August 11, 2000)]
[Rules and Regulations]
[Pages 49294-49464]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-19985]



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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; Final Rules

  Federal Register / Vol. 65, No. 156 / Friday, August 11, 2000 / Rules 
and Regulations  

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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: Final rule.

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SUMMARY: The Department of Labor (DOL) is issuing a Final Rule 
implementing provisions of titles I, III and V of the Workforce 
Investment Act. Through these regulations, the Department implements 
major reforms of the nation's job training system and provides guidance 
for statewide and local workforce investment systems that increase the 
employment, retention and earnings of participants, and increase 
occupational skill attainment by participants, and as a result, improve 
the quality of the workforce, reduce welfare dependency, and enhance 
the productivity and competitiveness of the Nation. Key components of 
this reform include streamlining services through a One-Stop service 
delivery system, 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 Final Rule will become effective on September 11, 2000.

ADDRESSES: All comments received during the comment period following 
the publication of the Interim Final Rule (64 FR 18662, et seq., Apr. 
15, 1999) are available for public inspection and copying during normal 
business hours at the Employment and Training Administration, Office of 
Career Transition Assistance, 200 Constitution Avenue, NW., Room S-
4231, Washington, DC 20210. Copies of the 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 Final Rule is 
also available on the WIA web site at http://usworkforce.org.

FOR FURTHER INFORMATION CONTACT: Mr. Eric Johnson, Office of Career 
Transition Assistance, U.S. Department of Labor, 200 Constitution 
Avenue, NW., Room S-4231, Washington, DC 20210, Telephone: (202) 219-
7831 (voice) (this is not a toll-free number) or 1-800-326-2577 (TDD).

SUPPLEMENTARY INFORMATION:

Paperwork Reduction Act

    This Final Rule does not add any new information collection 
requirements to those of the Interim Final Rule. Certain sections of 
this Final Rule, such as Secs. 667.300, 667.900, 668.800, and 669.570 
contain information collection requirements. These requirements have 
not been changed. Under the Paperwork Reduction Act of 1995 (44 U.S.C. 
3507(d)), the Department of Labor submitted a copy of these sections to 
the Office of Management and Budget for review. No comments were 
received about and no changes have been made to the information 
collection requirements.
    We have prepared documents providing guidance on specific 
information collection requirements. As required by the Paperwork 
Reduction Act of 1995 (44 U.S.C. 3507(d)), we submitted these documents 
to the Office of Management and Budget (OMB) for its review. Affected 
parties do not have to comply with the information collection 
requirements contained in this document until we publish in the Federal 
Register the control numbers assigned by the Office of Management and 
Budget. Publication of the control numbers notifies the public that OMB 
has approved this information collection requirement under the 
Paperwork Reduction Act of 1995. For further information contact: Ira 
Mills, Departmental Clearance Officer, Department of Labor, 200 
Constitution Avenue, NW., Washington, DC 20210, (202) 219-5095, ext. 
143.

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. 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.
    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 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

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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 (DOL) 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.
    We wish to emphasize that DOL considers the reforms embodied in the 
Workforce Investment Act to be pivotal, and not ``business as usual.'' 
This legislation provides an 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. We 
envision 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. Rule Format

    The format, as well as the substance, of the Final Rule, reflects 
the Administration's commitment to regulatory reform and to writing 
regulations that are reader-friendly. We have 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. We have organized the regulations in a way that will help those 
implementing the new system to recognize the various steps that must be 
taken to 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. In response to comments, however, we 
determined that, in a number of instances, 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.

C. Prior Actions

    Since the passage of the Workforce Investment Act in August of 
1998, we have used a variety of means to initiate extensive 
coordination with other Federal agencies that have roles and 
responsibilities under WIA. 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 WIA implementation.
    Before publishing the Interim Final Rule, we also requested and 
received input from a broad range of sources about how to structure 
guidance on how to comply with a number of WIA statutory provisions. We 
solicited broad input on WIA implementation through a variety of 
mechanisms: establishing a web site 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 web site; 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; issuing draft Planning Guidance in December 1998; and conducting 
a series of WIA Implementation Technical Assistance Conferences across 
the country in March and April of 1999.
    On April 15, 1999, the Interim Final Rule was published in the 
Federal Register, at 64 FR 18662 through 18764, and a 90-day comment 
period commenced. We continued to provide information by posting 
questions and answers on the usworkforce.org web site; publishing a 
series of consultation papers in April, May and August of 1999, on 
defining and measuring performance, incentives and sanctions, customer 
satisfaction, and continuous improvement; conducting a second round of 
Town Hall meetings across the country in August of 1999; and hosting 
``Voice of Experience'' forums in February and March of 2000 where 
practitioners shared insights and suggestions for successful 
implementation of WIA. An Interim Final Rule implementing section 188 
nondiscrimination and equal

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opportunity provisions of WIA, codified in 29 CFR part 37, was 
published separately in the Federal Register, at 64 FR 61692 through 
61738, Nov. 12, 1999. Comments received on those regulations will be 
addressed in the preamble to that Final Rule.
    We reviewed every comment received during the comment period 
following publication of the Interim Final Rule, as well as the 
experience of early implementing States, and suggestions received from 
partners and stakeholders when considering whether the Final Rule 
should differ from the Interim Final Rule. These comments are discussed 
in the Summary and Explanation of the individual provisions of the 
Final Rule. Section 506(c)(1) of the Act required the Secretary of 
Labor to issue this Final Rule implementing provisions of the WIA under 
the Department's purview by December 31, 1999. While we were unable to 
meet this deadline, we have endeavored to issue this Final Rule as 
expeditiously as possible without compromising the quality of the 
document. 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. We have determined that this Final Rule, as 
promulgated, complies with the WIA statutory mandate to issue a Final 
Rule and provides effective direction for the implementation of WIA 
programs.

II. Summary and Explanation

    This section contains our response to comments received on the 
Interim Final Rule during the comment period. The comments are 
discussed at considerable length in order to make clear our 
interpretation of WIA through these final regulations and of their 
application to some of the challenges that may arise in implementing 
the Act.
    We have set regulations only where they are necessary to clarify or 
to explain how we intend 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 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.
    There are a limited number of changes in the Final Rule because of 
our commitment to allowing maximum flexibility at the State and local 
level. Section 661.120 formalizes this flexibility in the regulations. 
A number of comments suggested that we specify certain groups of 
providers and participants and types of activities in numerous sections 
of the regulations. Among others, these comments suggested revising the 
regulations to: add new definitions, and additional State and local 
planning requirements; require States and locals to consult with 
specific organizations in order to fulfill the public comment process 
requirements; and identify certain types of programs, providers or 
participants, such as service learning opportunities, and 
nontraditional employment and training opportunities for women and 
dislocated homemakers, in matters where States and localities have 
discretion to define terms and make other discretionary decisions. To 
provide policy-making flexibility to States and local areas and to 
avoid suggesting that any one group or activity is more important than 
those not highlighted in the regulations, we have generally not made 
those changes. However, we do believe that consultation with and 
inclusion of these groups is important to obtaining the optimal 
functioning of the cooperative system envisioned by WIA. We fully 
expect that States and local areas will consult broadly before adopting 
plans and policies; and that their workforce investment systems will be 
structured to include all providers and programs that may help meet the 
needs of their populations, and equitably serve all population segments 
within their service areas.
    In addition to the changes made based upon the comments received, 
in order to clarify policy and interpretation and improve upon the 
Rule's reader-friendly format, we have also made technical changes to 
correct typographical errors, such as consistent capitalization, 
abbreviations, grammatical corrections and citations, and for 
consistency with the regulations implementing the nondiscrimination and 
equal opportunity provisions of WIA section 188, which were first 
published in the Federal Register on November 12, 1999 (64 FR 61692 
through 61738, 29 CFR part 37).
    When publishing a Final Rule following a comment period, it is 
customary to publish only changes made to the rule, however, in order 
to be more user-friendly, we are publishing the entire Rule, including 
those parts that have not been changed, for WIA titles I and V. This 
means that one document which contains all of the regulations and 
commentary may be consulted rather than needing to compare various 
documents. Similarly, the new Wagner-Peyser regulations at part 652 
subpart C are republished in full.

Description of Regulatory Provisions

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 and explains the format of the regulations governing 
title I.
    A few commenters suggested we add the attainment of self-
sufficiency to the description of the purpose of title I in 
Sec. 660.100.
    Response: While we agree that the attainment of self-sufficiency is 
an important goal of workforce investment systems under title I of the 
Act, we have not added that phrase to the regulation since the current 
language tracks section 106 of the Act.
    Part 660 also provides definitions which are not found in the Act, 
as well as some of the statutory definitions we felt should be added 
for emphasis or clarification. Sections 101, 142, 166(b), 167(h) 301 
and 502 of the Act contain additional definitions. We received several 
comments on the definitions contained in Sec. 660.300. One commenter 
suggested that we add ``youth'' to the definition of ``employment and 
training activity''.
    Response: The three terms, ``workforce investment activity,'' 
``employment and training activity,'' and ``youth activity,'' are 
defined in section 101 of WIA. We have not added ``youth'' to the 
definition of ``employment and training activity'' since employment and 
training activities are a separate subset of workforce investment 
activities under title I, Chapter 5 of the Act. Workforce investment 
activities are the array of activities permitted under title I of WIA, 
which include employment and training activities for adults and 
dislocated workers, and youth activities.
    A commenter requested that we define the term ``labor federation'' 
as used in relation to nomination requirements for labor 
representatives to the State and Local Boards, stating ``[i]t is our 
understanding that [this term] is intended to include AFL-CIO State 
Federations, State Building and Construction Trades Councils, AFL-CIO 
Central Labor Councils, and Local

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Building and Construction Trade Councils.''
    Response: We have added a definition of the term ``labor 
federation'', similar to that used in JTPA, which will include these 
groups within that term.
    We received several comments on the definition of ``literacy''. One 
commenter suggested that the definition of ``literacy'' be expanded to 
mean the ability to read, write and speak in English or an individual's 
native language, if that is not English.
    Response: In order to promote consistency among Federal Programs, 
title I, section 101(19) of WIA defines ``literacy'' by stating that it 
is the same definition used in title II, section 203(12) of the Act. 
Section 660.300 of the regulations restates this definition for the 
convenience of the reader. Literacy is defined as the ``ability to 
read, write, and speak in English, compute and solve problems, at the 
levels of proficiency necessary to function on the job, in the family 
of the individual and in society.'' No change has been made to this 
statutory definition.
    Another commenter suggested that the term ``literacy'' be amended 
to include computer literacy since it is an important and necessary 
workplace skill.
    Response: We agree that computer literacy is a key skill, however, 
as stated above, no changes have been made to the definition of 
``literacy'' since it is a statutory definition found in section 
203(12) of title II of WIA.
    Among the regulatory definitions, we have 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 participants are counted for performance measurement 
purposes. A few commenters suggested that the term ``register'' be 
redefined to require all adults and dislocated workers who receive 
services, including those who only receive self-service or 
informational services, to be registered in order to track universal 
participation in the workforce investment system.
    Response: The process of registration is designed to signal when an 
individual is counted against the core measures of performance title I 
programs. Since the Act exempts informational and self-service 
activities from the core measures, we are not requiring individuals who 
only receive those services to be registered. However, States and local 
areas are authorized to collect information beyond what is required at 
the Federal level. In March 2000, we issued Training and Employment 
Letter (TEGL) 7-99 which provides additional guidance on the point of 
registration. This guidance can be found on the Internet at 
www.usworkforce.org. Additional discussion of this issue is contained 
in part 663 and part 664 of these regulations. Part 666 provides new 
guidelines on when a service is determined to be self-service or 
informational. Finally, while participants may not need to be 
registered until they receive core services for performance measurement 
purposes, recipients must collect equal opportunity data regarding any 
individual who has submitted personal information in response to a 
request by the recipient for such information. See 29 CFR 37.4 
(definitions of ``applicant'' and ``registrant''), and 
Sec. 37.37(b)(2).
    Another commenter suggested that the term ``register'' be more 
clearly defined, and requested a description of the differences between 
registration, enrollment and participation.
    Response: While we have not changed the definition of ``register,'' 
additional guidance on the registration process and its connection to 
the performance accountability system can be found in TEGL 7-99, as 
well as part 663 and part 664 of these regulations. In general, 
``enrollment'' is not a term that is being used in the WIA title I 
performance system. An individual who registers for services is 
determined eligible and is counted against the core indicators of 
performance. This registered individual is considered a participant 
while receiving services (except followup services) funded under 
subtitle B of WIA title I.
    This commenter also suggested that we clarify that information on 
citizenship and selective service status be collected at the time of 
registration.
    Response: In addition to any other statutory or regulatory 
requirements, under WIA section 188(a)(5)--``Prohibition on 
Discrimination Against Certain Non-Citizens''--participation in 
programs or activities, or receiving financial assistance under WIA 
title I, must be available to citizens and nationals of the United 
States, lawfully admitted permanent resident aliens, refugees, asylees, 
and parolees and other immigrants authorized to work in the United 
States. Compliance with the non-discrimination provisions of WIA is 
addressed in the Interim Final Regulations promulgated by the 
Department's Civil Rights Center at 29 CFR part 37 (64 FR 61692, 
November 12, 1999). A discussion of these provisions can be found in 
the preamble discussion of 29 CFR 37.37(b)(2), at 64 FR 61705.
    Section 189 of WIA provides that the Military Selective Service Act 
(50 U.S.C. App. 453) must be complied with to receive any assistance or 
benefit under title I. In order to allow the greatest possible 
flexibility in the provision of services, we will not dictate specific 
ways to comply with this straightforward requirement.
    Several commenters suggested adding definitions of ``contract'' and 
``commercial organization'' or ``for-profit entity'' and modifying the 
definitions of ``grant,'' ``subrecipient,'' and ``vendor'' to ensure 
consistency with the Federal Grant and Cooperative Agreement Act, (31 
U.S.C. 6301), and to reduce confusion about what awards are subject to 
the uniform procurement requirements at 29 CFR 95.40 through 95.48 and 
29 CFR 97.36, and what awards are not subject to these requirements.
    Response: We have decided not to add definitions of ``contract,'' 
``commercial organization'' or ``for-profit entity'', because these 
terms are defined or discussed in the Department's rules on uniform 
administrative requirements at 29 CFR parts 95 and 97 (the ``Common 
Rules''), as well as in the Department's rules on audit requirements 
for grantees in 29 CFR parts 96 and 99, all of which are incorporated 
by reference at 20 CFR 667.200. We are modifying the definitions of 
``subrecipient'' and ``vendor'' to cross-reference the discussion in 
the DOL audit requirements, at 29 CFR 99.210, which contrasts the 
differences between subrecipients and vendors. Since the definition of 
``grant'' in Sec. 660.300, is already quite specific as to the types of 
organizations which may be awarded grants, we consider changes to this 
term to be unnecessary. We also are modifying the definition of 
``recipient'' to indicate that the term refers to the entire legal 
entity receiving the award, not just the particular component within 
that entity which is designated in the award document. The modification 
is consistent with the definition of ``recipient'' in the JTPA 
regulations at 20 CFR 626.5 and the definition of ``grantee'' in the 
Common Rule at 29 CFR 97.3. Also, we are reiterating the Common Rule's 
definition of the term ``subgrant'' for the convenience of the reader.
    Another commenter suggested defining the term ``obligation'' so 
that Individual Training Account (ITA) commitments could be treated as 
obligations for purposes of the reallotment and reallocation procedures

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of 20 CFR Secs. 667.150 and 667.160, even though they might not meet 
the standards of obligation used by particular State or local 
governments.
    Response: Section 667.150 of the regulations provides for recapture 
by the Secretary of unobligated balances from States with unobligated 
balances which exceed 20 percent of the amount allotted in the previous 
program year, after adjustment for amounts reserved by a State for 
administration and amounts transferred by the State between youth and 
adult funds. Reallotment is then made to States which have obligated at 
least 80 percent of the amounts allotted in the previous program year, 
after adjustment for transfers and amounts reserved for administration. 
Section 667.160 covers the recapture and reallocation of amounts within 
the State using the same factors used in the Secretary's reallotment 
process.
    We have added a definition of ``obligation'' to Sec. 660.300 which, 
for the purpose of reallotments under 20 CFR 667.150, specifically 
excludes: (1) Amounts allocated to a single local area State or to a 
balance of State local area administered by a unit of the State 
government; and (2) inter-agency transfers and other actions treated by 
the State as encumbrances against amounts reserved by the State under 
WIA sections 128(a) and 133(a) for Statewide workforce investment 
activities. These exclusions were also in effect under JTPA. The 
purpose of these exclusions is to treat similar financial transactions 
the same way in all States, even where a State only recognizes a 
financial transaction as a legally enforceable ``obligation'' if it 
involves an arms-length award to another party or if performance has 
already occurred. We also are adding the definition of ``unobligated 
balance,'' which appears at 29 CFR 97.3, for the convenience of the 
reader.
    With respect to the comment regarding defining commitments under 
ITA's as obligations, we are not aware of any unique characteristics of 
ITA's which necessitate expanding the definition of ``obligation'' 
provided in Sec. 660.300 of these regulations. Commitments under ITA's 
should be treated the same way as similar commitments of the 
recipient's or subrecipient's non-WIA funds, whether as obligations or 
otherwise.
    Other commenters suggested we include a definition of the term 
``individual with a disability'' to encourage One-Stop center staff to 
have a knowledge and sensitivity to the needs of such individuals.
    Response: Since the provision of quality services to individuals 
with disabilities is a key facet of the One-Stop service delivery 
system, we have added the WIA title I, section 101(17) definition of 
the term ``individual with a disability'' to Sec. 660.300.
    One commenter was concerned that the definition of ``veteran'' 
contained in section 101(49) of the Act was too broad and raised 
uncertainty as to which veterans were to be served under title I of 
WIA. The commenter suggested that we replace the definition in the 
Interim Final Regulations with the definition of ``veteran'' contained 
in title 38 of the U.S. Code since it provides more specificity and 
consistency between programs.
    Response: Since the definition of ``veteran'' appears in title I of 
WIA, we are not making any change in the Final Regulation. We encourage 
States and local areas to take these definitions into account as they 
undertake their responsibility to assure that the delivery of services 
under WIA title I programs and activities authorized under the chapter 
41 of U.S.C. title 38 partner program are coordinated through the One-
Stop service delivery system.
    One commenter suggested that we add definitions of a sectoral 
employment intervention strategy and the self-sufficiency standard. A 
sectoral employment intervention strategy is an approach to community 
economic development that connects members of low-income communities to 
employment opportunities, self-sufficiency wages and/or advancement 
opportunities by both redirecting training resources and education, and 
facilitating direct linkages to employers in targeted regional 
industries. The self-sufficiency standard defines the minimum amount of 
cash resources needed for a family to meet its basic needs and be self-
sufficient.
    Response: While we encourage State and Local Boards to develop 
linkages between their workforce and economic development systems, we 
do not think it is appropriate to highlight one strategy for achieving 
such linkages. As for a definition of self-sufficiency, 20 CFR 663.230 
requires State or Local Boards to 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, defined in WIA section 
101(24). No changes are being made to the regulations.
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 
Provisions, State Governance Provisions, Local Governance Provisions 
and Waiver Provisions. The General Governance subpart broadly describes 
the WIA system and describes the roles of the governmental partners. 
The State and Local Governance 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
    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.
    Section 661.120 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, these regulations, and Federal 
statutes and regulations governing One-Stop partner programs. The 
reference to Federal statutes and regulations governing One-Stop 
partner programs has been added to Sec. 661.120 (a) and (b) as a 
reminder that State and local administration of the One-Stop system 
must be consistent with the requirements of the Federal law applicable 
to the partner's program. In the case of local governments such 
policies, interpretation, guidelines and definitions may not be 
inconsistent with State policies. This section has also been revised to 
correct an inconsistency between terms used in the question and answer. 
The question refers to ``Local and State governmental partners'' while 
the answer refers to Local and State Boards. We do not intend to 
exclude the Governors and local elective officials from the authority 
to develop State and local policies relating to WIA title I, provided 
those policies are consistent with the Act, regulations and, where 
appropriate, other State policies. Therefore, paragraphs (a) and (b) 
are revised to replace the phrases ``Local

[[Page 49299]]

Boards'' and ``State Boards'' with ``Local areas'' and ``States'' 
respectively so that they will not appear to be inconsistent with the 
terms used in the question.
    To assist with the State and local interpretations authorized under 
Sec. 661.120, we have issued technical assistance guidance, with the 
participation of other Federal agencies, as appropriate, to help States 
and localities interpret WIA and the regulations. This 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. In our role as Federal partner we will continue to provide 
technical assistance to States and localities, in collaboration with 
other Federal agencies as appropriate, however we remain committed to 
the principles in the statute which allow and encourage flexibility.
    A commenter suggested that the standard against which State and 
local policies, interpretations, etc. are measured under Sec. 661.120 
should be whether they are ``consistent'' with WIA and the regulations 
rather than ``not inconsistent.'' The commenter suggests that the 
current language may send an inappropriate message about the need to 
conform to statutory and regulatory requirements and may lead to 
differing interpretations of some provisions.
    Response: We don't agree that this provision should be changed. The 
workforce investment system is a partnership between State, local and 
Federal stakeholders. One of WIA's key principles is that States and 
localities have increased authority to implement innovative workforce 
investment strategies to best serve the needs of the labor market. 
While we take very seriously our responsibility to ensure that State 
and local policies, interpretations, guidelines and definitions do not 
violate the provisions of the statute and these regulations, where 
differing interpretations are legally possible we believe that States 
and localities should have the flexibility to implement systems that 
they feel are best suited to their particular needs. The current 
regulation best serves this flexibility, because it does not imply that 
there is only one ``consistent'' interpretation available. Therefore, 
we have not changed the regulation.
    Several commenters expressed differing views regarding the relative 
roles of State and local partners in the One-Stop system. Some 
commenters requested that we expressly state that States and localities 
are equal partners in the One-Stop system, while others requested that 
we clarify that States have clear authority to promulgate 
interpretations and other guidance to State and local agencies.
    Response: In our view, neither of these positions is absolutely 
correct. The success of the workforce investment system depends on a 
commitment, particularly among the governmental entities and the One-
Stop partners, to collaborate and form real partnerships. On many 
matters, the State has the authority to set Statewide policies 
applicable to local areas. However, WIA also gives certain 
responsibilities and authority to local areas. Close coordination among 
State and local government partners is essential to the success of the 
system. The flexibility of the WIA system offers a unique opportunity 
for leadership from both the State and local level to work 
cooperatively with one another to address the specific workforce needs 
of each community and benefit the State as a whole. We do not think it 
would be productive to enumerate where each entity has authority, but 
trust that in establishing the workforce investment system Governors 
and chief executive officers will take their roles and responsibilities 
seriously and work together to create a system that best helps their 
community aid those in need.
    According to one commenter, there may be confusion resulting from 
the language in WIA section 117(d)(3)(B)(i) that holds chief elected 
officials liable, as grant recipient, for misuse of local formula funds 
(unless the Governor agrees to undertake such liability). The commenter 
reported that some local areas were worried that this liability would 
be interpreted as the personal liability of the elected official.
    Response: While we have not changed the regulations, we wish to 
clearly state our interpretation of this provision. We interpret this 
provision as holding the chief elected officials (and the Governor, 
when appropriate) liable in their official capacity and not holding 
them personally liable for misuse of WIA funds.
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 for designating 
an alternative entity to perform the functions of the State Board. 
Section 661.200(a) requires that the State Board be established by the 
Governor. Of course, the Governor must select the members of the State 
Board in a nondiscriminatory fashion, in accordance with the 
requirements of 29 CFR part 37. A correction is made to paragraph 
661.200(i), to correct a cross-reference to provisions in part 662 
identifying One-Stop partners.
    WIA and these regulations provide significant flexibility to States 
and local areas to develop policies, interpretations, guidelines and 
definitions relating to program operations under WIA title I. Several 
commenters requested that we require that State and local boards 
include significant policies and interpretations in the State and local 
plans or consult with specified parties when developing these policies 
and interpretations. We do not believe we can mandate these 
suggestions, but encourage State and local boards to include in the 
plans any significant policies and interpretations etc., that are not 
already required to be included. Moreover, under Secs. 661.200(j) and 
661.305(d), the development of significant policies, interpretations, 
guidelines and definitions, as an activity of the boards must be done 
in an open manner. To emphasize this requirement, we have moved these 
requirements to new Secs. 661.207 and 661.307, and have specified that 
the development of significant policies, interpretations, guidelines 
and definitions must be conducted in an open manner. We consider 
policies and interpretations etc,. relating to eligibility requirements 
and self-sufficiency standards to be the type of significant policies 
and interpretations etc., that must be developed in an open manner.
    One commenter recommended that we require that any newly 
established State Board review and/or ratify any policies implemented 
by the entity acting as the Board during the State's transition to WIA.
    Response: We find this to be a helpful suggestion, but do not 
believe it is appropriate to impose it as a mandatory requirement on 
States. We believe that an effective State Board will periodically 
review State policies as part of its oversight role. It seems natural 
that a newly established Board might find the need to reconsider some 
of the policies implemented by its predecessor. In that case, 
Sec. 661.230(a) provides the State Board with the authority to submit a 
modification to the State plan.
    The greatest number of comments on part 661 related to State and 
Local Board membership requirements. Many of the comments on State 
Boards are equally applicable to Local Boards. We have consolidated our 
discussion of State and Local Board membership

[[Page 49300]]

requirements in the following paragraphs.
    We received a large number of comments about the requirement, at 
Secs. 661.200(b) and 661.315(a), that at least two or more members of 
the State and Local Boards be selected to represent the membership 
categories set forth at WIA sections 111(b)(1)(C) (iii)-(v) and 
117(b)(2)(A) (ii)-(v), and that the Local Board contain at least one 
member representing each One-Stop partner. The comments reflect a 
tension between the need to provide States and Local areas with the 
flexibility needed to keep these Boards at a manageable size, with the 
need for specificity as to what level of participation is guaranteed to 
stakeholders in the Workforce Investment system. Many commenters felt 
that the two or more member requirement led to large, unwieldy-sized 
Boards and requested that this requirement be eliminated. Other 
commenters sought clarification of the number of members of each 
partner on the Local Board. Many commenters requested clarification 
about whether an individual seated on the State or Local Board could 
represent more than one entity or institution, particularly when 
multiple grantees of a One-Stop partner program are located in a local 
area.
    Many commenters requested more specificity as to which entities are 
entitled to a seat on the Boards. For example, many commenters felt 
that the language in the preamble to the Interim Final Rule did not go 
far enough in recommending that States consider appointing 
representatives from both the designated State unit under section 
101(a)(2)(B) of the Rehabilitation Act and from the State agency for 
the blind to represent programs that provide vocational rehabilitation 
services. These commenters recommended that we amend the regulations to 
change this recommendation into a requirement that States appoint 
representatives from both of these organizations. Others sought 
specific appointment of members representing community-based 
organizations (CBO's), mental health agencies, disabled youth and 
disabled youth service providers, disabled adults, literacy providers, 
non-labor construction workers, and other groups.
    Response: In our view, no individual (other than the Governor) or 
group is entitled to a ``seat'' on a State or Local Workforce 
Investment Board. However, certain specified groups, including One-Stop 
partner programs, are entitled to a ``voice'' on the Boards through a 
representative.
    A partner program may feel that it should have the right to choose 
who sits on a State or Local Board as its representative. The 
regulations cannot provide this power to the partners, because WIA 
gives the authority to select State or Local Board members to the 
Governor or chief elected official (CEO), respectively. However, the 
Governor's and CEO's discretion to select individuals to serve as 
representatives of partner programs and other entities on State and 
Local Boards must be exercised in a manner that is consistent with the 
requirements set forth in WIA and these regulations. For One-Stop 
partner programs, the individual selected as the Local Board 
representative may or may not be the specific individual that each 
funded entity would prefer, but that individual must be an individual 
with ``optimum policy-making authority'' within an entity that receives 
funds or carries out activities under the partner program.
    We recognize that the representation issue is a legitimate and 
serious concern. It is exacerbated by equally legitimate concerns over 
Board size, especially at the local level. We encourage as broad a 
representation as possible on all WIA Boards, especially representation 
of those entities identified as required partners in the Act. We expect 
that local workforce investment areas will follow the regulations and 
that States will ensure that all required partner programs have 
appropriate and effective representation on Local Boards. We encourage 
local parties to resolve issues of representation to their mutual 
satisfaction, in accordance with the Act and regulations. We view this 
generally as a matter of local implementation. We believe that 
consultation between Governors or CEO's and partner programs, and other 
organizations entitled to representation on the Boards, in the 
selection of Board representatives will help to develop positive 
relationships leading to more effective delivery of services, and we 
encourage such consultations. The final regulations attempt to 
facilitate this process by providing Local areas with flexibility for 
finding the right mix of representatives on the Local Board, while 
ensuring that the Board is an effective policy-making body by 
protecting the rights of all participants in the system and by 
stressing the requirement that members be individuals with optimum 
policy-making authority.
    To this end, we have made several changes to the interim final 
rule. However, we did not change the requirement that each Board 
contain two or more members representing the groups specified in WIA 
sections 111(b)(1)(C) (iii)-(v) and 117(b)(2)(A) (ii)-(v). As indicated 
in the preamble to the Interim Final Rule, we are constrained by 
statutory language to follow this requirement. One commenter suggested 
that the provision at 1 U.S.C. 1 may provide justification for a more 
flexible interpretation of the membership requirement. While this 
provision provides the general rule that statutory reference to plurals 
includes the singular, we think that, in this instance, the context of 
WIA section 111 and 117, indicates that the term ``representatives'' 
was intended to mean two or more. The requirement that the Local Board 
contain at least one member representing each local One-Stop partner 
program is consistent with this interpretation. As is does for the 
other membership classes specified at WIA section 117(b)(2)(A) (ii) 
through (v), the Local Board must contain two or members representing 
the class of One-Stop partner programs identified at section 
117(b)(2)(A)(vi). Because each One-Stop system will include many 
partners, the requirement that the class is represented by two or more 
members will neccesarily be met by one member representing each partner 
program. Consequently, we have not changed this requirement.
    We have made several changes to clarify what is meant by 
representation on the State and Local Workforce Investment Boards. We 
have made changes to accommodate the concerns of those commenters who 
asked whether an individual seated on the Board could represent more 
than one entity or institution. While such ``multiple entity'' 
representation may not be appropriate in all cases, we believe that 
there may be instances when such representation may be an effective 
tool for reducing Board size while still ensuring that all parties 
entitled to representation receive effective representation. Therefore, 
we have added new paragraphs to Secs. 661.200 and 661.315 to permit it 
when appropriate. For example, where the same State agency has 
authority for several One-Stop partner programs, such as a State 
employment security agency which oversees the employment service and 
unemployment insurance service, the head of the agency (or other 
official with optimum policy-making authority) may be appointed to the 
State Board to represent both of these programs. On the other hand, 
such ``multiple entity'' representation will not be appropriate where 
the individual so appointed does not have authority to make policy for 
all of the programs that s/he purportedly represents. For example, 
appointing a local business

[[Page 49301]]

person, who is a member of a veterans' organization, as representative 
of the 41 U.S.C. chapter 38 veterans' program and of local business 
and/or the local veterans' organization, will not satisfy the Local 
Board membership requirements if the individual does not possess 
optimum policy-making authority within the 41 U.S.C. chapter 38 program 
and within the veterans' organization and within the business. 
Similarly, if the State vocational rehabilitation agency (including the 
vocational rehabilitation agency for the Blind) is primarily concerned 
with the rehabilitation of individuals with disabilities under section 
101(a)(2)(B)(i) of the Rehabilitation Act, then the head of that agency 
must represent the vocational rehabilitation program on the State 
Board. An individual from any other State agency would not be an 
appropriate representative of the vocational rehabilitation program.
    We have added a new Sec. 661.203, in which we have defined the 
terms ``optimum policy-making authority'' and ``expertise relating to 
[a] program, service or activity'' in order to assist States and Local 
areas in determining when such representation is appropriate. A 
representative with ``optimum policy making authority'' is an 
individual who can reasonably be expected to speak affirmatively on 
behalf of the entity he or she represents and to commit that entity to 
a chosen course of action. In the case of a One-Stop partner program, 
an individual who does not have ``optimum policy-making authority'' 
within an entity that receives funds or carries out activities under 
the partner program cannot serve as that program's representative on 
the Local Board. A representative with ``expertise relating to [a] 
program, service or activity'' includes a person who is an official 
with a One-Stop partner program and a person with documented expertise 
relating to the One-Stop partner program.
    Finally, we have added new Sec. 661.317 to clarify representation 
when there are several Local grantees or operating entities of a 
partner program in a One-Stop system. In such a case, the Local Board 
membership requirements may be met by the appointment of one member to 
represent all of the Local partner program entities. Also, Sec. 661.317 
permits the chief elected official to solicit nominations from One-Stop 
partner program entities to facilitate the selection of such 
representatives. Soliciting nominations from partner program entities 
may be useful to chief elected officials in identifying the individual 
who will be able to represent the program most effectively in the work 
of the Local Board. Of course, the chief elected official can opt to 
appoint more than one member to represent this program, if he or she so 
chooses and the selection criteria permit it.
    To implement the policy described in the joint letter, dated March 
24, 2000, from the Assistant Secretary of Labor for Employment and 
Training, the Assistant Secretary of Education for Special Education 
and Rehabilitative Services, and the Commissioner of the Rehabilitative 
Services Administration regarding Vocational Rehabilitation (VR) 
representation on State Boards, we have added a new paragraph (3) to 
Sec. 661.200(i). Under this provision, if the director of the 
designated State unit, as defined in section 7(8)(B) of the 
Rehabilitation Act, does not represent the State Vocational 
Rehabilitation Services program (VR program) on the State Board, then 
the State must describe in its State Plan how the members of the State 
Board representing the VR program will effectively represent the 
interests, needs, and priorities of the VR program and how the 
employment needs of individuals with disabilities in the State will be 
addressed.
    Other comments on the State and Local Board membership requirements 
questioned the different descriptions relating to the creation of State 
and Local Boards, the different processes for selecting the 
chairpersons of the Boards, and suggested that we mandate that the 
business majority requirement apply to any subcommittees of Boards.
    Response: Section 661.200(a) describes the State Board as being 
``established'' by the Governor, while Sec. 661.300(a) describes the 
Local Board as being ``appointed'' by the CEO. These descriptions are 
intended to simply reflect the terms used in the statute and are not 
meant to imply an inferior or superior relationship. Section 661.200(g) 
provides that the Governor must select a State Board chairperson from 
the business representatives on the Board, while Sec. 661.320 provides 
that the Local Board members elect a chairperson from the business 
representatives. Because these different processes are specified in WIA 
sections 111(c) and 117(b)(5), we have not changed the rule. With 
regard to the business majority requirement, we agree with the 
commenter that a strong role for business representatives is an 
essential ingredient for successful Boards, but we do not think it is 
appropriate that the regulations should dictate the internal structure 
and day-to-day workings of the Boards. Within the framework required by 
the statute and regulations, States and localities have the flexibility 
to design Boards that best serve their needs.
    A commenter suggested that we add sanctions provisions to make 
clear that the Governor can refuse to appoint to the State Board a 
representative of partners which have not cooperated in good faith with 
the One-stop system at the local level.
    Response: As the commenter pointed out, Sec. 661.310 addresses this 
very issue at the local level. Under this section, one of the sanctions 
for a partner failing to engage in good faith negotiations over the 
terms of the local MOU is a loss of representation on the Local Board. 
We expect that this provision, will be sufficient incentive for Local 
Boards and One-stop partners to engage in good faith negotiation. If 
experience does not bear this out, we will consider issuing additional 
guidance in the future.
    A commenter requested that we define the term ``labor federation'' 
as used in the nomination requirements for labor representatives to the 
State and Local Boards, stating ``[i]t is our understanding that [this 
term] is intended to include AFL-CIO State Federations, State Building 
and Construction Trades Councils, AFL-CIO Central Labor Councils, and 
Local Building and Construction Trade Councils.''
    Response: We have added to 20 CFR 660.300 a definition of the term 
``labor federation'', similar to that used in JTPA, which will include 
groups such as those suggested within that term.
    2. Alternative Entities: Because many of the comments relating to 
alternative entities are applicable at both the State and local levels, 
we have consolidated our discussion of this issue here. One commenter 
expressed the view that the requirement in Secs. 661.210(c) and 
661.330(b)(2), that the State and local plans must describe how the 
Boards will ensure an ongoing role for any required membership groups 
not represented on an alternative entity, is not supported by WIA.
    Response: We find that the ongoing role requirement is a reasonable 
interpretation of WIA requirements relating to Board membership and 
responsibility. It is clear from the statute that Congress intended 
that certain specified groups have a strong leadership role in the 
State and local workforce investment systems, as expressed by the 
representation requirements. The regulatory requirement that Boards 
provide an ongoing role for any of those statutorily identified 
entities which are not represented on the alternative entity is 
consistent with this intent. The regulation does not specify the scope 
of

[[Page 49302]]

a group's ongoing role, but rather permits States and localities to 
determine it as part of the public planning process. Therefore, we have 
maintained this requirement. However, as described below, we have made 
changes to this regulation to provide guidance as to how the ongoing 
role requirement may be met.
    There were several comments regarding the provision in 
Secs. 661.210(d) and 661.330(c) about changes in the membership 
structure of an alternative entity serving as the State Workforce 
Investment Board or as a Local Workforce Investment Board. Two 
commenters thought that the rule was overly restrictive about 
permitting changes to alternative entities and suggested that we revise 
the Interim Final Rule to permit incremental changes to these entities 
so that at least some of the representational groups required by the 
WIA Board membership requirements could be added to existing entities, 
or that we permit incremental changes that increase the efficiency and 
effectiveness of the workforce investment system. A commenter noted 
that in single workforce investment areas states, where the State Board 
is acting as the Local Board under WIA section 117(c)(4), the use of an 
existing state board under the alternative entity provisions may 
exclude even more partners from participation on the board at the local 
level.
    Response: We are sympathetic to these concerns, but believe that 
permitting incremental changes to the boards will, in fact, act as a 
disincentive to the creation of Workforce Investment Boards that 
include all required representatives, by permitting inclusion of some 
groups while still excluding other groups. By requiring the 
establishment of a new WIA-compliant Board whenever the membership 
structure of an alternative entity is significantly changed, other 
excluded groups will be able ``to ride the coattails'' of the newly 
added group. Therefore, because we remain committed to the goal of 
encouraging fully compliant Workforce Investment Boards in each State 
and local workforce investment area, the requirement that a new WIA-
compliant Board must be created when the membership structure of an 
alternative entity is significantly changed has not been changed. 
However, we have added language to clarify the type of situation in 
which the membership structure of an alternative entity is considered 
to have been significantly changed. Specifically, a significant change 
in the membership structure is considered to have occurred when members 
are added to represent groups not previously represented on the entity. 
A significant change in the membership structure is not considered to 
have occurred when additional members are added to an existing 
membership category, when non-voting members (including a Youth 
Council) are added, or when a member is added to fill a vacancy created 
in an existing membership category. A change to the charter is not 
itself grounds for disqualification of an alternative entity. The 
relevant question is whether the organization or membership structure 
has been changed. However, we continue to consider the need for a 
change to the charter as a good indicator of a significant change in 
the membership structure, and have clarified that this is true 
regardless of whether the required change has been made.
    Other commenters identified the need for additional guidance as to 
what measures an alternative entity must take to ensure an ongoing role 
in the State or Local Workforce Investment system for any of the WIA-
specified membership groups who are not represented on the alternative 
entity. As discussed below in relation to the Migrant and Seasonal 
Farmworker (MSFW) program, commenters have sometimes found that it is 
difficult to ensure full and active participation in a One-Stop system 
when a partner or other membership group is not represented on an 
alternative entity.
    Response: To address this problem, we have added language to 
Sec. 661.210(c) and have added a new paragraph 661.330(b)(3) to 
identify ways in which to ensure such an ongoing role. For example, the 
Boards could provide for regularly scheduled consultations, may provide 
an opportunity for input into the State or local plan or other policy 
development, or may establish an advisory committee of unrepresented 
groups. We also require that the alternative entity engage in good-
faith negotiation over the terms of the MOU, with all omitted partner 
programs. We have made a change to more clearly identify those groups 
which are specified for representation on State and local boards under 
WIA but are not represented on the alternative entity as 
``unrepresented membership groups''. This replaces the somewhat 
ambiguous term ``such groups'' used in the Interim Final Rule.
    3. State Workforce Investment Plan Requirements: Section 661.220 
describes the requirements for submission of the State Workforce 
Investment Plan and the process for review and approval of that plan. A 
commenter pointed out that the reference to Wagner-Peyser Act State 
Plan modifications in Sec. 661.230(c) was inaccurate. We have edited 
Sec. 661.230(c)(2) to reference 20 CFR 652.212. Under her authority to 
provide for an orderly transition from JTPA to WIA, the Secretary 
permitted States to submit a transition plan during program year 1999 
to allow the provision of WIA services with funds appropriated for JTPA 
services. Such a plan would be approved for program year 1999, but 
would not be considered an approved five-year Workforce Investment 
Plan. To reflect this practice, a new paragraph (e)(3) is added to 
Sec. 661.220 is added to clarify that a plan that is incomplete or does 
not contain sufficient information to determine whether it is fully 
compliant with the statutory and regulatory requirements of WIA and the 
Wagner-Peyser Act is considered to be inconsistent with these 
requirements for plan approval purposes.
    A commenter requested that the provision of Sec. 661.230(e)(2) 
describing the plan approval process be revised to more clearly 
indicate that the portion of the plan describing Wagner-Peyser Act 
activities, requirements and delivery of services is an integral part 
of the plan and not a separate plan.
    Response: We agree and have made the suggested change.
    Some commenters remarked that they found that the State Plan 
requirements focused on process and compliance rather than on strategic 
planning issues.
    Response: We believe that the State Plan guidelines seeks the 
information needed to support broad strategic planning objectives while 
ensuring compliance with the statutory requirements. We acknowledge 
that it is difficult to balance these two goals. Based upon our 
experience with early implementing States, we hope to amend the 
planning guidelines to streamline them, but remain committed to 
requiring that States submit the information we need to assess whether 
the plan complies with the statute and regulations.
    We received several comments on the need for specific public 
comment periods for State Plans, consistent with Local Plan 
requirements. Others felt that modifications as well as planning 
documents should be subject a public comment period.
    Response: We intend 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 Interim Final Rule, at Sec. 661.230(d) already requires that plan 
modifications undergo the same public review and

[[Page 49303]]

comment as the State plan. The Workforce Investment Act State planning 
guidelines set forth the information needed for the Secretary to make 
an informed judgment about whether a State Plan is consistent with WIA, 
and the plan review process requires evidence of a public comment 
period. We have clearly stated the need for an open and inclusive 
planning process at both the State and local levels and we expect the 
States to establish the appropriate time lines and procedures. 
Consequently, no change in the rule is being made at this time, 
although we will carefully review State plans for compliance with the 
WIA public comment requirements.
    Commenters suggested that we change Sec. 661.220(d) to require that 
States submit to us all oral and written comments made during the 
public comment process, including comments made on drafts, and 
responses to those comments, that we review the responses as part of 
our plan review process, and that we specify that failure to actively 
consult with local areas is grounds for plan disapproval. Other 
commenters suggested that we mandate a 30-day review period as part of 
the State plan public comment process.
    Response: Based upon our review of plans submitted by early 
implementing States, we have found that requiring submission of 
comments on State plans does not significantly help the plan review 
process. Given the short time period for plan review and approval, we 
are unable to provide any meaningful review to comments submitted with 
the plan. We do not think it is necessary to impose a mandatory public 
comment period on the States. We expect that States will undertake a 
good faith effort to develop State plans through a meaningful public 
process. We believe that our review of the State plan's description of 
the process will enable us to ensure that the State planning process 
complies with this requirement. A failure to develop the plan through 
the public comment and consultation process described in the 
regulations could be grounds for plan disapproval under the existing 
standards. No change has been made to the regulation.
    Section 661.240 contains provisions relating to unified plans, 
submitted under the authority of WIA section 501. On January 14, 2000, 
the Department, in partnership with the Departments of Agriculture, 
Education, Health and Human Services, and Housing and Urban 
Development, and with the assistance of the Office of Management and 
Budget, issued joint unified planning guidance entitled State Unified 
Plan, Planning Guidance for State Unified Plans Submitted Under Section 
501 of the Workforce Investment Act of 1998. This document was 
published in the Federal Register at 65 FR 2464 (Jan. 14, 2000). We 
have revised Sec. 631.240(b) to add a new paragraph (2), that 
specifically provides that States may submit unified plans that contain 
the information required in the unified planning guidance in lieu of 
the individual planning guidelines of the programs covered by the 
unified plan.
    One commenter remarked that the unified planning guidelines were 
too narrowly focused to lead to effective unified planning. Other 
comments on Sec. 661.240 requested that we hold unified plans to the 
same public review and comment requirements as required of standalone 
WIA State plans, that we explain how to resolve different planning 
timetables for programs included in the unified plan, and that we 
provide incentives to encourage States to submit unified plans.
    Response: We believe that the unified planning guidance is an 
important first step towards collaborative planning and effective 
coordination of federal programs. Currently, it is the only planning 
approach that streamlines existing non-statutory planning requirements. 
We believe these streamlined planning requirements offer an incentive 
encouraging States to undertake unified planning. While it may not go 
as far as some would like, we believe that, as the Federal partners 
work with the States to acquire more experience with unified planning, 
we will be able to develop alternative approaches that could offer even 
greater flexibility and burden reduction.
    With regard to the substantive comments on Sec. 661.240, WIA 
section 501(c)(1) provides that the portion of the unified plan 
covering a particular program or activity is still subject to the 
applicable planning requirements of the statute that authorizes the 
program. Therefore, for unified plans containing the State WIA/Wagner-
Peyser Act plan, the WIA plan review and public comment requirements, 
at Sec. 661.220(d) still apply. Similarly, while the WIA/Wagner-Peyser 
Act portion of the unified plan is submitted on a five-year planning 
cycle, the inclusion of a plan on a different planning cycle does not 
change the plan for that program to a five-year plan. We believe that 
the time saved through joint planning is itself a strong incentive 
towards engaging in unified planning. Joint planning also benefits 
States by leading to an improved use of State and Federal resources, 
increased coordination at the local level, and burden reduction through 
elimination of duplicate planning processes. These and other benefits 
of unified planning are discussed in the unified planning guidance at 
65 FR 2464, 2468.
    4. Local Workforce Investment Area Designation Requirements: 
Sections 661.250 through 661.280 discuss the requirements applicable to 
the designation of local workforce investment areas (local areas). 
Section 661.250 sets forth the process for designating local areas. 
Commenters noted that this section did not refer to the provision, at 
WIA section 116(b), that permits Governors of States which were single 
service delivery area States under JTPA, as of July 1, 1998, to 
designate the State as a single local workforce investment area.
    Response: We interpret section 116(b) as limiting single local area 
designations to only those States which were designated as a single 
service delivery area State under JTPA, as of July 1, 1998. Section 
661.250 is revised to by adding a new paragraph (d) to specifically 
authorize Governors of States which were single service delivery area 
States under JTPA, as of July 1, 1998, to designate the State as a 
single local workforce investment area.
    A commenter noted that the applicability of the automatic local 
area designation provisions for units of general local government of 
500,000 or more may depend upon the population statistics used in 
making designations. An area may or may not be found to meet this 
threshold population level depending on whether 1990 Census data or 
more up-to-date estimates are used. The commenter suggested specifying 
certain data, or specifically delegating the authority to determine 
which data to use to the Governor.
    Response: While we do not believe it is appropriate that we specify 
the source of the data to be used in the regulations, we agree with the 
suggestion to specify that the Governor has the authority to determine 
which population data to use when making designation determinations. 
Section 661.260 is amended to make this clear.
    A commenter noted that Sec. 661.280(c) provides that, on appeal of 
a denial of a request for designation, the Secretary can require that 
an area be designated solely upon her finding that the area was not 
afforded the procedural rights guaranteed by the statute. The commenter 
suggested that, in that instance, a finding that the area meets the 
requirements for designation should also be required before the State 
can be ordered to designate the area.
    Response: We think that Sec. 661.280(c) accurately restates the 
provisions of

[[Page 49304]]

WIA section 116(a)(5) that the Secretary may require designation upon a 
finding of either a denial of procedural rights or a finding that the 
area meets the requirements for designation. No change has been made to 
the regulation.
    Section 661.290 describes the State's authority to require regional 
planning by Local Boards. Paragraph (d) of this section provides that 
regional planning may not substitute for or replace local planning 
unless the Governor and all the affected CEO's agree to the 
substitution or replacement. A commenter opined that WIA does not give 
the Department the authority to undermine the State's authority to 
require regional planning in this way.
    Response: We do not agree that this regulation impermissibly 
undermines the State's authority. Section 661.290(a) is consistent with 
WIA section 116 by providing the State with authority to require Local 
Boards to participate in a regional planning process. The agreement of 
the local areas is not required for this. Requiring local area 
agreement before regional planning can replace local planning may 
reduce the ability of the State to unilaterally impose effective 
regional planning, since the regional planning may overlap or duplicate 
local planning. However, we believe that this provision fairly balances 
the rights of States and localities. In our view, the most effective 
regional planning will occur when all parties in the region are 
committed to cooperating with one another.
Subpart C--Local Governance Provisions
    This subpart covers the designation of Local Workforce Investment 
areas and the responsibilities and membership requirements of Local 
Boards. Because many issues relating to Local Boards and alternative 
entities are equally applicable at the State and local level, comments 
on these issues are discussed above, under subpart B.
    1. Responsibilities of Chief Elected Officials: Section 300(a) 
requires chief elected officials to appoint the Local Board in 
accordance with State criteria established under WIA section 117(b). 
Appointments to the Local Board must be made in a nondiscriminatory 
fashion, in accordance with the requirements of 29 CFR part 37. A few 
commenters found the provision in Sec. 661.300, authorizing the Local 
Board and the chief elected official(s) in a local area to enter into 
an agreement that describes the respective roles and responsibilities 
of the parties to be confusing in light of the statement in 20 CFR 
667.705 regarding liability of funds in local areas comprised of more 
than one unit of general local government.
    Response: Under 20 CFR 667.705, when a local area is comprised of 
more than one unit of general local government, the liability of the 
individual jurisdictions for funds provided to the local area must be 
specified in a written agreement between the chief elected officials. 
This is a mandatory provision. The agreement authorized in 
Sec. 661.300(c) regarding a description of general roles and 
responsibilities is optional. Chief elected officials are not required 
to enter into such an agreement, but the agreement may be a useful tool 
for specifying the division of duties among the chief elected officials 
in the local area. No change has been made to the regulations.
    A few commenters asked for clarification as to what extent a chief 
elected official(s) may delegate their responsibilities under title I 
of WIA.
    Response: In general, the chief elected official(s) is authorized 
to delegate their authority under title I of WIA to other entities such 
as the Local Board or a local governmental agency. In multiple 
jurisdiction local areas, the chief elected officials may delegate 
certain roles as part of the agreement authorized in Sec. 661.300(c), 
as discussed above. For example, WIA section 117(d)(3)(B)(i)(II) 
specifically authorizes the chief elected official(s) to designate an 
entity to serve as a local fiscal agent in order to assist in the 
administration of grant funds at the local level. Similarly, the chief 
elected official(s) may designate an entity to carry out their other 
responsibilities. Under Sec. 661.300(c), the chief elected official(s) 
may enter into an agreement with the Local Board that describes the 
respective roles and responsibilities of the parties. However, the 
chief elected official(s) remains liable for funds received under title 
I of WIA unless they reach an agreement with the Governor to bear such 
liability. This is the only situation in which the chief elected 
official(s) is not liable for funds.
    Some commenters requested a clarification of the role of the chief 
elected official as a One-Stop partner.
    Response: This issue is addressed in the preamble to 20 CFR part 
662.
    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. These limitations and waivers 
of the limitation on providing training services are set forth in 
Sec. 661.310. Commenters noted that Sec. 661.310(b) permits a waiver of 
the prohibition on providing training services to be renewed only once.
    Response: This limitation was inadvertent. We have revised this 
paragraph to indicate that a waiver may be renewed more than once, 
although no waiver may be for more than one-year at a time.
    A commenter opined that the provision in Sec. 661.310(c) that 
extended the service delivery restrictions of the Local Board to the 
staff of the Board is not supported by WIA.
    Response: We don't agree that this provision is inconsistent with 
WIA. The limitation on the Local Board's authority to be a service 
provider in Sec. 661.310(c) is meant to ensure that the Local Board 
serves as the ``board of directors'' for the local area. This frees the 
Board from the day-to-day functioning of the local workforce system and 
allows the Local Board to focus on strategic planning, policy 
development and oversight of the system. To permit the staff of the 
Local Board to provide direct services on behalf of the Board would 
undermine this principle.
    However, we read the service delivery limitations in WIA section 
117 as applying to the Local Board as an entity and not to the members 
of the Board as individuals. Therefore, members of the Local Board may 
not provide services in their capacity as a member of the Board. 
However, if an individual member of the Board is also an employee of a 
service provider, then as an employee of that service provider entity 
s/he may provide services on behalf of that entity. Of course, this 
must be consistent with federal, state and local conflict of interest 
requirements. The same rules apply to the staff of the Local Board. 
Members of the Local Board's staff may also be employees of the entity 
administering the local area's WIA grant. We acknowledge that many 
local areas use staff from inter-related agencies to provide support to 
the Local Board as well as the administrative entity for the grant 
recipient. When these roles are clearly defined, the fact that an 
individual works for both the Local Board and the entity administering 
the WIA grant does not preclude the entity from providing services.
    3. Youth Council: Sections 661.330 and 661.335 describe the 
membership requirements and responsibilities of the Youth Council. 
Commenters suggested that we amend this section to require that 
representatives of vocational rehabilitation agencies and members with 
experience in nontraditional training employment for women be selected 
for the Youth Council.

[[Page 49305]]

    Response: We have not made the suggested change, because we do not 
believe it is appropriate to specify certain groups for Youth Council 
membership beyond those provided by statute. However, we agree that the 
viewpoint of these groups could serve the Youth Council well. We 
encourage chief elected officials to consider appointing such 
representatives under the existing Youth Council membership categories.
    One commenter suggested changes to Sec. 661.335(b)(4) which lists 
``parents of eligible youth seeking assistance under subtitle B of 
title I of WIA'' as required members of the youth council. The 
commenter expressed a fear that it will be difficult to find parents of 
participants and former participants who will be likely to make a 
positive contribution to the youth council. The commenter asked whether 
a local area will be penalized if it is unable to find parents and 
participants to serve on the youth council and suggests changing 
Sec. 661.335(b)(4) to read ``parents, that may include those of 
eligible youth seeking assistance. . . .''
    Response: We recognize the commenter's concern, however, the 
regulation restates the language of WIA section 117 (h)(iv) and (v). 
Therefore, these membership categories have been statutorily mandated 
by Congress. We do not interpret the statutory standard to limit youth 
council membership to parents of youth participants. Section 117(h)(iv) 
of the Act requires the youth council to include members who are: 
``parents of eligible youth seeking assistance under this subtitle.'' 
This statutory phrase is somewhat confusing, since it could be read as 
requiring parents of eligible youth seeking assistance rather than 
parents of participants who are receiving assistance. We interpret this 
language to mean that the representatives for this membership category 
must come from families who currently experience the barriers described 
in WIA section 101(13)(A) and (B), and in Secs. 664.200 or 664.220, or 
who have faced those barriers in the past. This interpretation allows 
those families who have successfully overcome their barrers to 
education and employment to have a voice on the youth council. We 
believe that it is important that youth councils include the views of 
parents, especially the views of parents of youth participating in WIA 
youth programs. We feel it is important that the representatives for 
this membership category possess a first-hand understanding of the 
needs and barriers facing eligible youth and strongly encourage chief 
elected officials to seek out parents of WIA youth participants. Just 
as the Individual Training Account system in the adult and dislocated 
worker programs empowers the customer to take an active role in the 
training process, these membership categories empower the families most 
affected by youth services to take an active role in designing and 
improving the system. This interpretation, of course, does not prohibit 
the appointment of other parents in the community under WIA section 
117(h)(2)(B), which authorizes the appointment of ``other individuals 
as the chairperson of the Local Board, in cooperation with the chief 
elected official, determines to be appropriate.''
    Similarly, this commenter also requested a change to 
Sec. 661.335(b)(5), which lists ``Individuals, including former 
participants, and members who represent organizations that have 
experience relating to youth activities'' as required members of the 
youth council. The suggestion would have Sec. 661.335(b)(5) state 
``individuals, that may include former participants, and members who . 
. .'' We have not made the commenter's change because the regulation 
already uses the phrase ``individuals, including former participants . 
. . .''
    4. Local Workforce Investment Plan: Sections 661.345 through 
661.355 describe requirements relating to the submission and 
modification of local workforce investment plans.
    A commenter disagreed with the provision, in Sec. 661.345(c), that 
the Secretary performs the roles of the Governor in reviewing the local 
plan developed in a single local workforce investment area State, 
particularly regarding the review of the MOU's. The commenter compared 
this process with the process in other States where the Governor 
reviews locally developed MOU's submitted as part of the local plan. 
The commenter emphasized that development and review MOU's should 
remain as close as possible to the local level.
    Response: We agree that successful implementation of the One-Stop 
system in a single local workforce investment area State requires 
strong local involvement. MOU's should be developed at the local level. 
Section 661.350(c)(3) facilitates local involvement by ensuring that 
the local chief elected officials in those States retain their roles in 
the system. However, we believe that an independent review of local 
plans is necessary. In a single workforce investment area State, where, 
in essence, the State itself is the local area, we believe it is 
appropriate that the Secretary undertake the role of providing 
independent review of the local plan for the State. Since the MOU's are 
required to be included in the local plan, the Secretary's review will 
include review of the MOU's. No change has been made to the regulation.
    With regard to the required local plan contents of Sec. 661.350, 
several commenters suggested that we encourage States to require 
additional items, such as a comprehensive assessment of activities in 
the local area, a description of services available to displaced 
homemakers, disadvantaged individuals and to other groups, a 
description of nontraditional training and employment activities, a 
local plan for the provision of supportive services, and to use a 
``sectoral approach'' to link the needs of employers with the skills of 
workers.
    Response: The authority to require additional items in local plans, 
beyond the requirements specified in Sec. 661.350, lies with the 
Governor. We encourage Governors to consider the suggested items when 
establishing those requirements.
    A commenter requested that we add language to 
Sec. 661.350(a)(3)(ii) to authorize the submission with the plan of a 
status report on MOU's when some MOU's are still in negotiation. The 
commenter stated that it appears that it will take some time to 
negotiate all the necessary MOU's and asks that we recognize this and 
permit the plan process to move forward.
    Response: We recognize that the commenter may have a valid point. 
Our experience with early implementing States has shown that the 
negotiation of MOU's can be an involved process. However, because the 
MOU's are the primary means for coordinating the services of the One-
Stop partners, they are the foundation of the entire workforce 
investment system. The MOU's address issues with the partners such as 
which services each partner will provide through the One-Stop system, 
how the costs of the system will be allocated among the partners, how 
customers will be referred by the One-Stop operator to the appropriate 
partner, among others. Because the resolution of these issues forms the 
building blocks of the One-Stop system, we are not prepared to change 
the regulation at this time. We strongly encourage States and 
localities to take the necessary steps to ensure that the negotiation 
of these important documents will be done in a timely manner. However, 
in recognition of the fact that some local areas may need additional 
time to develop a fully approvable local plan, we have added a new 
Sec. 661.350(d), authorizing Governors

[[Page 49306]]

to approve local plans on a transitional basis during program year 
2000. Governors may use this authority to give transitional approval to 
local areas that have not finalized their MOU's or other elements of 
their plan. Such a conditional approval is considered to be a written 
determination that the local plan is not approved, but will allow 
implementation of WIA reforms as they finalize the transition from JTPA 
to WIA. This authority is similar to, and derives from, the Department 
of Labor's authority under WIA sec. 506(d), to approve incomplete State 
plans on a transitional basis.
    There were a few comments about the requirements for local plan 
modifications at Sec. 661.355. One commenter suggested that we drop, as 
unnecessary, the requirement in Sec. 661.355 that the Governor 
establish procedures for modification of local plans.
    Response: While the commenter may be correct that Governors already 
know their responsibilities so this regulation is not needed, we 
believe that there is value in clearly specifying the responsibility to 
establish these procedures so that it is not inadvertently overlooked.
    A commenter suggested that we amend the illustrative list of the 
circumstances when a local plan modification may be required by the 
Governor, at Sec. 661.355, to include changes to the membership 
structure of the Local Board among those circumstances.
    Response: The regulation as written already includes this factor. 
The conditions under which a State plan modification is required, in 
Sec. 661.230(b), also include changes to the membership structure of 
the State Board.
    Another commenter asked, regarding one of the existing 
circumstances in which a local plan modification may be required--at 
what point is a ``change in the financing available to support WIA 
title I and partner-provided WIA services'' significant enough to 
warrant a modification?
    Response: When developing the local plan modification procedure 
under Sec. 661.355, this is one of the questions the Governor should 
consider. The answer is likely to be different for different states and 
possibly for different areas. We do not think it is appropriate to 
restrict the Governors' authority by setting a federal standard.
Subpart D--General Waivers and Work-Flex Waivers
    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 of WIA section 189(i) or the work-flex provision at WIA 
section 192. In response to comments, we have made a technical 
correction in Sec. 661.420, changing paragraph (g) to (f).
    We received several comments about the exceptions to the 
Secretary's waiver authority, described at Sec. 661.410, and work-flex 
waiver authority, described at Sec. 661.430. Commenters requested that 
the regulation be amended to specify that the Secretary will not 
approve waivers of title I of the Rehabilitation Act, nor of the State 
merit staffing requirements of the Wagner-Peyser Act, and deleting the 
Older Americans Act from work-flex waiver authority.
    Response: Regarding the Rehabilitation Act, the regulations make 
clear that the Secretary's authority to approve waiver requests is 
limited to requests for waiver of certain provisions of WIA and the 
Wagner-Peyser Act. We cannot waive provisions of other statutes. While 
we are not making the suggested change, we wish to make clear that the 
Department does not intend, nor do we have authority to entertain or 
grant waivers of title I of the Rehabilitation Act. Similarly, an 
exception for the Wagner-Peyser Act State merit staffing requirement is 
not necessary. Our authority to waive Wagner-Peyser Act provisions is 
limited to requirements under sections 8 through 10 of that Act. The 
requirement that Wagner-Peyser Act services be provided by State merit 
staff employees derives from sections 3 and 5(b)(1) of the Wagner-
Peyser Act. Accordingly, we do not intend to, nor do we have authority 
to entertain or grant waivers of the Wagner-Peyser Act merit staffing 
requirement. Finally, we have retained the authority for Governors to 
approve waivers of certain provisions of the Older Americans Act, 
because WIA section 192(a)(3) specifically provides that authority.
    Other commenters suggested that we define the existing exception 
prohibiting waivers of provisions relating to worker rights, 
participation and protections to prohibit waivers of provisions 
relating to labor nominations and appointments to State and Local 
Boards, opportunities for comment on State and local plans, and the 
certification process for eligible training providers. The commenters 
also requested that States be required to establish a public comment 
process, that includes comment from organized labor, on proposed 
waivers and a work-flex plan; and asked that we conduct periodic 
evaluation of the impact of waivers and work-flex activities.
    Response: We have not added the suggested definition of the worker 
rights, participation and protection exceptions. First, we do not agree 
that the suggested provisions fall within the scope of the worker 
rights, participation and protection exceptions. Secondly, we do not 
think it is appropriate to define the scope of these provisions by 
regulation and believe it will be more effective to deal with waiver 
requests as they occur. On the other hand, we believe that requests for 
waivers of the provisions suggested by the commenters will likely fall 
within other exceptions to waiver authority. Section 661.410(a)(9) 
excludes waivers of requirements relating to procedures for review and 
approval of plans, which would exclude a waiver of the public comment 
requirements for State and local plans. Provisions related to the 
establishment and function of Local Boards may not be waived. This will 
prohibit waivers of the nomination and appointment requirements for 
Local Boards. The eligible training provider requirements seem to fall 
within the key principles of empowering individuals and increasing 
accountability identified at Sec. 661.400(b)(2) and (4). Provisions 
relating to the key principles may not be waived under Work-flex 
authority, and will only be waived by the Secretary in extremely 
unusual circumstances when the provision can be demonstrated to be 
impeding reform.
    We agree with the commenters' suggestion regarding the public 
comment process for waiver plans and work-flex plans. Section 
661.430(e) already requires that the State work-flex plan undergo a 
public comment process, similar to that of the State five-year plan. 
While WIA section 189(i) does not specifically require that a stand-
alone waiver plan go through a similar process (a waiver plan included 
within the State five-year plan would undergo public review along with 
the rest of that plan), the requirement for Local Board comment on the 
waiver plan at WIA section 189(i)(4)(B)(v) and the sunshine provisions 
for State and Local Board activities at WIA sections 111(g) and 117(e) 
indicate clear Congressional intent that major decisions involving the 
workforce investment system be made in a public and open manner. In our 
view, the decision to request a waiver of statutory or regulatory 
requirements is such a major decision. Accordingly, we have revised 
Sec. 661.420(a)(5), to require a description of the process used to 
ensure meaningful public comment, including comment by business and 
organized labor, on the State waiver plan. Finally, we agree on the 
need for

[[Page 49307]]

evaluation of the waiver process. Although, we have not yet made 
specific plans for such a review, we intend to do so in the future.
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 well established 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 coordinate activities and 
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 the 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. Section 662.100, describes the One-Stop system as a 
seamless system of service delivery 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 assistance. The regulation 
specifically defines the system as consisting of one or more 
comprehensive, physical One-Stop centers in a local area. Core services 
specified in WIA section 134(d)(2) must be provided at the One-Stop 
center as must access to the other activities and programs provided 
under WIA and by each One-Stop partner. In addition to the statutory 
list of core services, States and locals are encourated to add 
additional core services such as the provision of information relating 
to the availability of work supports, including, Food Stamps, Medicaid, 
Children's Health Insurance Program, child support, and the Earned 
Income Tax Credit. In locating each comprehensive center, Local Boards 
should coordinate with the broader community, including transportation 
agencies and existing public and private sector service providers, to 
ensure that the centers and services are accessible to their customers, 
including individuals with disabilities.
    In addition to the comprehensive centers, Sec. 662.100(d) describes 
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, and through additional sites, as described in the local plan 
and consistent with the local memorandum of understanding (MOU). If an 
individual enters the system through one of the network sites rather 
than the comprehensive One-Stop center, the individual may obtain 
certain services at the network site and must be able to receive 
information about how and where the other services provided through the 
One-Stop system may be obtained.
    Some commenters expressed concern that the description in 
Sec. 662.100 emphasizes physical locations rather than the development 
of systems. The commenters suggested that the regulations be expanded 
to provide that, in addition to the comprehensive center, it is 
expected that local areas will build a One-Stop system by developing 
affiliate relationships with existing public and private sector 
providers. The commenters further suggested that more examples should 
be offered as to how the centers and affiliates may mix and match 
services.
    Response: The purpose of Sec. 662.100 is simply to describe the 
general objectives of the One-Stop system and to identify the required 
components of that system as well as the alternative designs specified 
in WIA. While we agree that effective networks connecting the centers 
and affiliates will generally be critical to the success of the One-
Stop system, WIA allows local areas significant flexibility in 
tailoring the design of the system to best meet local needs. Therefore, 
rather than include examples as part the requirements of this 
regulation, we will disseminate information and provide technical 
assistance about how different local areas have designed effective One-
Stop systems.
    Commenters also requested clarification that physical co-location 
at the centers was not required for all of the services provided by a 
partner's program and that each partner was not required to be co-
located at the centers.
    Response: The description of the One-Stop system in Sec. 662.100 
and the requirements for the provision of services at the centers in 
Sec. 662.250 make it clear that WIA requires the provision of specified 
core services at the centers. However, Sec. 662.250(b) specifically 
provides that the core services may be provided at the centers by the 
partners in a variety of ways, including agreements with service 
providers at the centers to provide the core services or the provision 
of appropriate technology, as alternatives to the co-location of 
personnel. The extent to which services in addition to the specified 
core services are provided at the centers and how services are to be 
provided are matters to be addressed in the local MOU's, and are not 
specified by WIA. We believe the current provisions are clear on these 
issues and have not made changes to the regulations.
    Some commenters also expressed concern that the description of the 
One-Stop system did not address access for individuals with 
disabilities, and suggested that we reiterate the applicability of the 
Americans with Disabilities Act and Section 504 of the

[[Page 49308]]

Rehabilitation Act of 1973 to the One-Stop system.
    Response: Section 667.275(a)(3) specifically states that the ADA 
and Section 504, as well as the nondiscrimination provisions of WIA 
section 188, are applicable to the One-Stop system as well as the other 
activities administered under title I of WIA. We believe that, as with 
other uniform requirements, adding this statement to every affected 
section of these regulations would be duplicative and potentially 
confusing. The Department's regulations implementing the 
nondiscrimination provisions in WIA section 188 (29 CFR part 37) 
extensively address this issue.
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. Section 662.200(b)(1)(i through vii) separately 
specifies the programs under title I that are included as required 
partners. Section 662.200(b)(2)-(12) also identifies the other required 
programs, with some clarification of the particular provisions of 
certain Acts (for example, the Vocational Rehabilitation Act and the 
Carl D. Perkins Act) that authorize the required partner program. 
Section 662.210 identifies additional partners that may be a part of 
the One-Stop system.
    One commenter suggested that the Governor has the authority under 
WIA to require that additional partners be included in all the local 
One-Stop delivery systems in the State and asks that the regulation 
include such authority. The commenter cites section 112(b)(8)(A) of 
WIA, which requires the State to describe in the State plan procedures 
to assure coordination and avoid duplication among specified programs, 
and section 117(b)(1) of WIA, which provides that the Governor 
establish criteria for the appointment of members of local boards, as 
the basis for this authority.
    Response: We agree that the provisions cited by the commenter 
authorize the State to require that additional partners participate as 
partners in all of the One-Stop systems in the State. This includes the 
program specified in WIA section 121(b)(2)(B)(i) through (iv) or any 
other appropriate program under WIA section 121(b)(2)(B)(v). We have 
added a new section 662.210(c) to clarify that the State does have this 
authority. The State's authority to identify additional partners to be 
included in all One-Stop systems does not affect the CEO's authority to 
include locally-identified human resource programs as One-Stop 
partners. Under WIA section 121(b)(2), the CEO and Local Board may 
approve any appropriate Federal, State or local program, including 
programs in the private sector, for participation as a partner in the 
local One-Stop system.
    Entities--Section 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 in Sec. 662.230 and which include decisions about 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. Section 662.220(a) 
provides that for programs that do not have local administrative 
entities, the responsible State agency should be the One-Stop partner. 
In addition, Sec. 662.220(b) (1) and (2) specifies the appropriate 
entities 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, and Job 
Corps programs are identified in the parts of the regulations 
applicable to those programs (parts 668, 669, and 670 respectively).
    One commenter requested two clarifications about the partner 
representing the Adult Education and Literacy programs under title II 
of WIA. First, while the regulation specifies that the partner for 
those programs is the State eligible entity or an eligible provider 
designated by the State entity, the commenter suggested adding 
authority for the State entity to designate a consortium of eligible 
providers as the partner. Second, the commenter suggested clarifying 
that the State eligible entity also has the authority to designate the 
individual representing the partner on the local boards, not just the 
entity.
    Response: We agree that the State eligible entity may designate a 
consortium of eligible providers to serve as the local One-Stop partner 
and have modified the regulation to clarify this authority. However, we 
assume that any consortium so designated would have mechanisms in place 
so that it speaks with one voice on behalf of Adult Education and 
Literacy programs on issues affecting the One-Stop system. We would not 
expect that the designation of a consortium would require the Local 
Board to separately negotiate with each member of the consortium about 
how the responsibilities of the partner will be carried out.
    The second issue is addressed in the preamble discussion of 20 CFR 
part 661.
    Another commenter noted that Sec. 662.220(b)(3) only defines 
national programs under title I of WIA as required partners if such 
programs are present in the local area and suggested that the 
regulation apply the same condition to the other required partners.
    Response: We agree that the responsibilities of a required partner 
apply in those local areas where the required partner provides 
services. We do not believe WIA was intended to require programs not 
serving local areas to begin to provide services in such areas, but 
instead to require collaboration through the One-Stop system in any 
local area in which such services are provided. While we believe that 
the vast majority of local areas are currently served by the required 
partner programs, the regulation is modified to clarify this 
requirement.
    Several commenters also noted that several of the programs 
identified as required partners may be administered by the same entity 
in the State or local area and the regulation should indicate that one 
individual from that entity may represent all such programs on the 
local board.
    Response: This issue is addressed in the preamble discussion of 20 
CFR part 661.
    Partner Responsibilities--Section 662.230 describes and elaborates 
on the statutory responsibilities of the partners and identifies the 
five provisions of the Act that describe these responsibilities. These 
responsibilities include: (1) Making available through the One-Stop 
system appropriate core services that are applicable to the partner's 
program; (2) using a portion of funds available to the partner's 
program, to the extent not inconsistent with the Federal law 
authorizing the program, to create and maintain the One-Stop delivery 
system and to provide core services; (3) entering into an MOU regarding 
the operation of the One-Stop system; (4) participating in the 
operation of the One-Stop system; and (5) provide representation on the 
Local Board.
    Several commenters expressed concerns about the required use of a 
portion of the partners' funds to support the One-Stop system. Some 
commenters suggested that certain authorizing laws, such as the Perkins 
Vocational Education Act, would not permit such

[[Page 49309]]

use. Other commenters suggested that since the WIA statutory language 
requires that partner funds be used to ``establish'' the One-Stop 
system, the regulatory requirement be limited to initial start-up of 
the system and not include any responsibility to use funds to 
``maintain'' the system. In addition, some commenters were concerned 
about whether we could enforce the use of funds requirement and 
suggested that unless the partners contributed real resources, the 
overall WIA vision would not be achieved.
    Response: WIA section 134(d)(1)(B) specifically requires all of the 
required partners to use a portion of their funds to support the One-
Stop system. We believe the language providing that the use of the 
partners' funds not be inconsistent with the authorizing law may affect 
the particular One-Stop activities the partner may support, but is not 
intended to nullify this requirement. Several of the core services 
(e.g., outreach) are authorized under all programs, and each partner 
should collaborate to ensure that the local One-Stop system is 
providing workforce investment activities that are of benefit to 
participants in the partner's program. A portion of the partner's funds 
is then used to support the system in providing those activities. The 
details of the particular portion and use of those funds are to be 
addressed in the MOU. These issues are further addressed in the 
subsequent regulatory provisions of this subpart.
    With respect to the responsibility to assist in maintaining the 
system, we believe that the requirement in Sec. 662.230(a)(2)(i) that a 
portion of funds be used to ``create and maintain'' the One-Stop system 
is the appropriate interpretation of the statutory requirement in WIA 
section134(d)(1)(B) that a partner use a portion of funds to 
``establish'' the One-Stop delivery system. There is nothing in WIA or 
the legislative history to suggest that ``establish'' refers to a one-
time start-up activity. To the contrary, all of the partners' 
responsibilities apply as long as the One-Stop system is in operation 
and include participation in the operation of the One-Stop system (WIA 
section121(b)(1)(B)) and carrying out the MOU that includes the details 
on the funding of the system (WIA sec. 121(c)). We do not believe that 
Congress intended that the partners continue to participate in the 
operation of the one-stop system, but that their responsibility to use 
funds to support that system terminate as soon as some undefined start-
up period is completed. Rather, we believe the only reasonable 
interpretation is that a required partner's responsibility to use a 
portion of funds to support the system continues along with the 
participation of the partner in the system. Therefore, we have not 
changed this provision of the regulations.
    With respect to enforcement of these requirements, we are working 
with the other Federal agencies to ensure that all partner programs are 
aware of and carry out these requirements. We believe that full 
participation in the One-Stop system will be of great benefit to the 
partners' programs and to their participants, and, therefore, these 
requirements should be viewed as promoting a comprehensive and 
effective system of service delivery for each local area.
    Section 662.240 addresses the core services applicable to a 
partner's program that are to be provided through the One-Stop system. 
Section 662.400(a) 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.
    Some commenters suggested we further define many of the listed core 
services. For example, one suggestion was to require career counseling 
to include a discussion of self-sufficiency standards to assist in 
setting long-term employment goals. Another suggestion was to require 
additional employment statistics information relating to high wage jobs 
and employment laws. Other suggestions included adding computer 
literacy to the initial assessment, and information relating to 
employment rights to follow-up services.
    Response: We believe many of the proposed elements would enhance 
the provision of services. However, we believe they should be 
disseminated as technical assistance rather than as regulatory 
requirements. The purpose of this provision is to identify the list of 
core services contained in the statute that must be made available 
through the One-Stop system. The specific elements of these services is 
a matter that may be addressed in the MOU and should be tailored to 
meet local needs. Therefore, we have not made any changes to the 
statutory list of core services under this regulation.
    Availability of Services--Section 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 core services applicable 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 responsible for any needed assessment that includes 
additional elements specifically tailored to participants under that 
partner's program. We encourage partners to work together at the local 
level to tailor the initial assessment so that the information taken 
can provide a gateway to the partner program's more specific 
requirements. However, it is important to note that the adult and 
dislocated worker partner programs are required to make all of the core 
services available at the center (see Sec. 662.250(a)).
    Flexibility--Section 662.250(b) also provides significant 
flexibility about how the core services are 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.
    Proportionate Responsibility: Section 662.250(c) 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. Section 662.250(d) 
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 MOU. This ``proportionate 
responsibility'' provision is intended to provide an equitable 
principle for sharing cost and service responsibilities among the 
partners. The regulation provides that the specific method for 
determining proportionate responsibility (for example, surveys) must be 
described in the MOU.

[[Page 49310]]

    Additional Sites--Section 662.250(e) provides that, under the MOU, 
core services may be provided at sites in addition to the comprehensive 
center. Therefore, it is not required that partners provide 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.
    There were a number of comments on these provisions about the 
availability of core services and proportionate responsibility. 
Commenters questioned whether the requirement that partners provide 
core services at the One-Stop center went beyond the statute, and 
whether proportionate responsibility was required by the statute. 
Several commenters expressed concern that the concepts of proportionate 
responsibility and attributable individuals did not provide clear 
direction. In addition, some commenters requested clarification that 
not all applicants for a partner's program would be attributable to 
that program while others suggested the regulation should provide that 
only individuals enrolled in the program should be attributable. 
Finally, some commenters were concerned that proportionate 
responsibility would require undue tracking and recordkeeping.
    Response: We believe these regulatory provisions are appropriate 
interpretations of WIA and the general cost principles enunciated in 
the relevant OMB circulars. We believe that, read together, the 
requirements of WIA section 134(c)(1), regarding the actual provision 
of core services and the provision of access to other services, WIA 
section 134(c)(2), regarding the accessibility of these services at a 
physical center, and WIA section 121, requiring that the partners 
provide the applicable core services, support the requirement that each 
partner provide the applicable core services at the center. As noted 
above, such core services may also be provided at other sites in the 
One-Stop delivery system in addition to being provided at the center. 
Section 662.250 does include provisions to ensure that there is 
significant flexibility in the manner in which core services may be 
provided at the center, and does not require partners to provide those 
core services at the center that are traditionally provided by the 
Wagner-Peyser program. The Department, in partnership with other 
federal agencies will provide additional technical assistance to help 
implement these requirements. We believe these requirements are 
essential to ensure that basic information and services relating to 
workforce development can truly be obtained at ``One-Stop'', and that 
the partners effectively collaborate to provide a seamless system of 
service delivery.
    The principle of a partner's responsibility for the proportionate 
use of these services by individuals attributable to the program of the 
partner is derived from general cost principles of the OMB circulars, 
as well our interpretation of the WIA provisions relating to the 
required provision of applicable core services. As noted above, we 
believe this is an equitable principle that is intended to ensure an 
appropriate level of participation by the partners in a manner that is 
fair to the partners. We do not want to prescribe how such 
proportionate use is to be calculated, but simply to identify options 
that we believe would be acceptable under the circulars for attributing 
individuals to a program. The regulation does not require that a 
particular option be used, only that the methods be described in the 
MOU. Therefore, whether attribution is based on enrollment in the 
program or some other basis is a matter to be determined locally among 
the partners. Tracking and recordkeeping will also be affected by how 
the local area chooses to determine proportionate use and we do not 
believe such requirements need be unduly burdensome. Consistent with 
our principle of writing these regulations to provide maximum State and 
local flexibility, the regulation seeks to balance the need for Federal 
guidance to ensure that the objectives of WIA are realized with the 
need for flexibility at the State and local level to tailor specific 
approaches to meet local needs. We do not want this flexibility to be 
used to avoid implementing the changes in service delivery required 
under WIA, but we also do not want to preclude innovative approaches to 
implementing those changes. Therefore, we intend to retain the 
regulatory requirements of this section and offer technical assistance 
to facilitate implementation.
    Access to Services--Section 662.260 provides that, in addition to 
the provision of core services, the One-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.
    Several commenters suggested that we maintain a flexible 
interpretation of the term ``access'' in Sec. 662.260 when referring to 
the access to activities and services, other than the core services, 
that a partner must provide through the One-Stop system. These 
commenters expressed concern that a partner with a broad array of 
services could not provide all services at a single One-Stop center, 
and suggested that we encourage flexible delivery models, such as 
outstationing of staff or electronic access, to meet this requirement.
    Response: We have intentionally not defined what constitutes access 
to these other activities and services in the regulation and the 
regulation simply requires each local area to describe how access is 
provided through the One-Stop system in the MOU. We believe access is 
intended to go beyond the mere listing of a program and location, but 
instead that the One-Stop will provide added value by assisting 
customers to identify the services and programs that may best meet 
their particular needs and by arranging to obtain such services. Co-
location of certain services at the center may be the most user-
friendly approach to providing access in some areas, while other areas 
may rely more on electronic and other affiliate connections to ensure 
access. That is a matter to be determined among the partners in the 
local area through the MOU and this section of the regulation retains 
that requirement.
    2. Cost Sharing: Section 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 costs of the system may be re-evaluated annually 
through the MOU process. This 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, issued guidance. 
The guidance was published in the Federal Register on June 27, 2000.

[[Page 49311]]

    There were numerous comments about this section. Many of the 
comments about the requirement that each partner contribute a fair 
share to the operation of the One-Stop system based on proportionate 
use of the system by individuals attributable to the program of the 
partner were the same as or similar to the comments on proportionate 
responsibility under Sec. 662.250. Some commenters suggested that the 
methodology for allocating costs of the One-Stop system be strengthened 
and clarified. Some commenters suggested prescribing particular 
approaches, such as requiring cost sharing only be based on real costs 
directly attributable to the use of One-Stop center space and utilities 
when the partners are co-located, while others suggested limiting the 
methods for attributing individuals to a program to services received 
after enrollment in the program. Some commenters suggested that the 
regulation provide for pooling of overhead costs and proportionate 
allocation of service costs. Some commenters expressed concern that the 
multiple cost allocation methodologies identified in the regulation 
were at odds with the proportionate use approach, while others 
expressed concern that the proportionate use approach required 
extensive recordkeeping and tracking. Some commenters stressed the need 
for time to determine baseline percentages of how many people each 
partner serves relative to the total traffic and suggested that we 
provide additional guidance on developing baselines. A commenter 
expressed concern that a proportionate cost allocation approach could 
cause discord and undercut collaboration and co-location, while other 
commenters expressed concern about whether this approach could be 
enforced.
    In addition, some commenters suggested clarifying that operating 
costs include both administrative and programmatic costs. Other 
commenters suggested that the regulations allow the fair share to be 
contributed ``in-kind''. Some commenters suggested removing the 
multiple methodologies described in the regulation while others 
expressed concern that without more specific requirements title I 
programs would end up paying all the costs.
    Some commenters expressed concern that reliance on the OMB 
circulars based on benefit to the program would be a barrier to One-
Stop delivery and suggested a new circular that would promote 
integrated service delivery should be developed. A number of commenters 
indicated that it was important that Federal agencies work together to 
present a coherent message in support of sharing costs and integrating 
programs and that technical assistance be provided to facilitate the 
development of acceptable cost allocation methodologies.
    Response: We believe that the ``fair share'' requirement of this 
regulation is the appropriate interpretation of the WIA provisions 
relating to the contributions of the One-Stop partners and the 
applicable OMB circulars. The regulation is intended to identify each 
partner's responsibility to contribute to the operation of the system 
based on proportionate use, while allowing each local area significant 
flexibility in providing how that contribution is to be determined. 
While prescribing a more detailed methodology may provide clearer 
direction and facilitate more rapid resolution of the cost allocation 
issue at the local level, it would also significantly limit the ability 
of each local area to tailor the arrangements to meet their particular 
needs. Therefore, we believe that the ``fair share'' requirement is a 
reasonable and flexible standard that should be retained and 
supplemented by technical assistance that will inform local areas of 
acceptable approaches in more detail. The cost allocation and resource 
sharing guidance published in the Federal Register by the Department, 
in consultation with the Federal partner agencies, on June 27, 2000, 
addresses this issue in more detail.
    The proportionate use standard is not intended to be rigid and we 
do not believe the multiple methodologies identified in the regulation 
are inconsistent with that standard. The various methodologies offer 
different approaches that may be used in implementing these 
requirements. As indicated with respect to Sec. 662.250, we do not 
believe that this standard necessarily requires extensive tracking and 
recordkeeping. The burdens attendant to the adoption of a particular 
cost allocation method are a legitimate factor to be considered in 
negotiating MOU's. We believe that local areas have the flexibility to 
refine and modify the cost allocation procedures as more experience is 
gained. For example, there is the flexibility to refine the development 
of baselines on proportionate use over time, and such adjustments may 
be facilitated if the funding arrangements in the MOU are revised 
annually.
    Contrary to the concern that the proportionate use standard will 
promote discord and deter co-location and collaboration, we believe 
that standard provides an equitable framework which should assist local 
areas and partners in reaching agreement and within which a more 
detailed methodology may be developed that supports the particular 
design of the One-Stop system in each area. With respect to 
enforcement, we are working with other Federal agencies to develop 
models of acceptable methodologies and to assist in ensuring that 
partners are aware of the opportunities of the One-Stop delivery system 
and of their responsibilities under WIA.
    On the question of the kinds of operating costs of the One-Stop 
system for which the One-Stop partners must contribute, we believe 
those costs are the common costs of operating the One-Stop system, and 
could include such items as space and occupancy costs, utilities, 
common supplies and equipment, a common receptionist, and other shared 
staff. However, these common costs will vary depending on the design of 
the One-Stop system and we intend to address these costs as part of the 
technical assistance that we are developing in partnership other 
federal agencies. Therefore, we have not modified the regulation to 
further define these costs.
    On the question of whether the contribution of the partners to the 
operating costs of the One-Stop system may be ``in-kind,'' which we 
understand to mean provided with resources other than cash, we 
understand that the OMB circulars recognize the provision of noncash 
resources as acceptable in meeting certain costs. However, the 
contributions of partners may also consist of cash resources, or a 
mixture of cash and noncash resources. Rather, the determination 
regarding the forms of the contributions is a matter to be determined 
locally through the MOU negotiation process, taking into account the 
needs of the One-Stop system to ensure customer-friendly access to 
services and the proportionate responsibility of and resources 
available to the partners. We also intend to address this issue in the 
technical assistance we will provide with other agencies and have not 
modified the regulation.
    On the issue of reliance on the OMB circulars, while the circulars 
do set parameters that relate the allocation of costs to the benefit 
received by a program, we believe they also allow flexibility to 
develop cost allocation methodologies that support integrated service 
delivery. We do not expect the issuance of a new circular to address 
One-Stop delivery, but, as noted above, we are working with OMB and 
other agencies to identify cost allocation methodologies that will be 
useful in a One-Stop environment.
    Finally, we agree with the comment about the importance of Federal

[[Page 49312]]

agencies working together in support of cost sharing and integrating 
programs. There have been significant joint efforts to assist in 
implementing WIA, including issuance of the streamlined unified 
planning guidance, and other joint communications designed to assist 
the partners in working together. This effort includes the joint 
technical assistance being prepared on cost allocation methodologies 
and additional ongoing activities intended to assist in the 
implementation of the other elements of the One-Stop system.
    Allocation Process--Section 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 and to facilitate access to partner 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. 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.
    There were several comments suggesting that we reiterate in several 
different sections of part 662 that the requirements of the laws 
authorizing the programs of the partner continue to apply. For example, 
commenters suggested that Sec. 662.260, on access to services and 
Sec. 662.300, on MOU's, be revised to specifically provide that the 
requirements of the laws authorizing the programs of the partner 
continue to apply.
    Response: We believe that Sec. 662.280 effectively describes the 
continued applicability of the requirements of the authorizing laws and 
have not repeated this language in other sections except where the 
underlying statutory provision specifically makes reference to 
consistency with the authorizing laws. We have made no change to the 
regulations.
Subpart C--Memorandum of Understanding (MOU)
    Subpart C describes the requirements relating to the local 
Memorandum of Understanding MOU that governs the operation of the local 
One-Stop system. Section 662.300 addresses the contents of the MOU that 
must be executed between the Local Board, with the agreement of the 
local elected official, and the One-Stop partners. The MOU must 
describe the services to be provided through the One-Stop delivery 
system, the funding of the services and the operating costs of the 
system, the methods for referring individuals between the One-Stop 
operators and the partners and the duration of and procedures for 
amending the MOU. The MOU may also include other provisions about the 
operation of the One-Stop system that the parties consider appropriate. 
For example, the parties may use the MOU to address the coordination of 
equal opportunity responsibilities such as the handling of 
discrimination complaints or other grievances relating to the One-Stop 
system.
    Section 662.310 provides 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, adding information specific to each individual partner 
organization. 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 other 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. If an impasse has not been resolved, in addition to any 
programmatic remedies that may be taken, parties that fail to execute 
an MOU may not be permitted to serve on the Local Board. In addition, 
if the 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.
    Several commenters suggested that the regulation provide that only 
required partners ``in the area'' must enter into the MOU and also 
requested clarification as to whether optional partners were required 
to enter into MOU's.
    Response: We agree that a required One-Stop partner must enter into 
an MOU only in those local areas in which the partner's program 
provides services. However, that condition also applies to carrying out 
the other responsibilities of a required partner, and, as described 
above, we have modified section 662.220(a) to clarify that condition. 
We do not believe it is necessary to repeat that condition in this 
section. We also believe the intent of WIA section 121 is that optional 
partners must be included in the MOU, or execute a separate MOU with 
the Local Board, to become part of the One-Stop system. Since the MOU 
describes the operational details of the One-Stop system, we believe 
WIA intends that the MOU also be the vehicle for addressing the 
specified issues of services, costs, and referrals with the optional 
partners. WIA section 121(c) refers to One-Stop partners as parties to 
the MOU without distinguishing between required and optional partners. 
However, we note that the regulation similarly refers to One-Stop 
partners generally and is not limited to required partners. We 
therefore do not believe it necessary to modify the regulation.
    Some commenters indicated that the involvement of the chief elected 
official was critical to the successful development and implementation 
of MOU's and expressed concern that while the agreement of the chief 
elected official to the MOU was required under Sec. 662.300, the chief 
elected official was not identified as a party to the MOU in 
Sec. 662.310.
    Response: We agree that the chief elected official has a 
significant role to play in facilitating the development, completion 
and operation of the MOU's. This role is explicit in WIA section 
121(c), which provides that the Local Board is to develop and enter 
into MOU's with the agreement of the chief elected official. This role 
is included in Sec. 662.300 and we are adding similar language to 
Sec. 662.310. In addition, the chief elected official will often have 
authority over many of the title I One-Stop partners in the role of 
grant recipient/fiscal agent for the adult, dislocated worker and youth 
programs and may play an important role in ensuring that those partners 
contribute to the effective development and implementation of MOU's.
    Some commenters stated that strong guidance and support for MOU's 
at the State level was essential and that a strategy should be 
developed to monitor and evaluate MOU's at the State and local levels. 
Other commenters suggested that local systems would benefit from MOU's 
that offer incentives or penalties to required partners depending on 
their performance relative to systemize performance. These commenters 
also suggested that the regulations should provide incentives to 
Governors to make MOU's and partnerships strong at the outset so that

[[Page 49313]]

regulatory effort need not be spent on developing sanctions and 
penalties for those who fail to perform as intended. Several commenters 
questioned whether the sanctions specified in the regulation for 
failure to execute an MOU were consistent with WIA, arguing that WIA 
requires that partners be represented on the Local Board without 
reference to whether or not they have executed an MOU, while other 
commenters suggested that exceptions to the sanctions be allowed by the 
regulation where a party has exhibited good faith.
    Response: We agree that the Governor and the State have a critical 
role to play in facilitating the execution of local MOU's. That role is 
reflected in the requirement in WIA section 112(b)(14) that the State 
plan describe the strategy of the State for assisting local areas in 
the development and implementation of fully operational One-Stop 
delivery systems. The regulation also identifies a State role in 
assisting local areas to reach agreements on the MOU. We do not believe 
the regulations need to provide additional incentives for the State to 
promote strong MOU's since the development of MOU's will generally be 
critical to enabling local areas and the State to obtain the 
performance outcome levels needed to qualify for Federal incentive 
payments. The State also has a significant role since many of the 
parties to the MOU will be State agencies under the direction of the 
Governor. We believe it is important that the Governor work with those 
agencies and with localities to ensure that effective MOU's are 
executed and implemented. We agree, however, that the suggested 
inclusion in the MOU of performance-based incentives or penalties, 
whether based on the relative performance of partners or their shared 
performance, may be useful in many local areas. We are willing to 
assist in the development of performance-based provisions that meet 
relevant legal requirements while promoting State and local objectives. 
However, we do not believe the regulation needs to contain incentive or 
penalty provisions since WIA and the regulations already provide for 
the addition of provisions that the parties deem appropriate.
    With respect to the sanctions identified in Sec. 662.310(c), we 
believe it is reasonable to interpret the reference to representatives 
of the One-Stop partners on the Local Board in WIA section 
117(b)(2)(A)(vi) as referring to those One-Stop partners that meet the 
requirements for being partners in the local One-Stop system, including 
executing the MOU. Since the MOU is the vehicle through which the 
partner's role in the local system is detailed, the inability to reach 
agreement on that role means that an entity has not assumed the role of 
a One-Stop partner in that local system for purposes of representation 
on the Local Board.
    On the question of allowing a ``good faith'' exception that would 
permit local areas to be eligible for a State coordination incentive 
grant even if the area has not executed an MOU with all required 
partners, we believe that such grants are only intended to be awarded 
to areas that demonstrate exemplary coordination activities that are in 
addition to meeting the minimum requirements for coordination under 
WIA. We believe that incentive grants are not intended to be awarded to 
areas that are unable to meet the minimum requirement that the local 
area have an MOU executed with all required partners, even if the Local 
Board has acted in good faith in attempting to reach agreement.
    We also believe it should be noted that the sanctions specified in 
Sec. 662.310(c) are in addition to rather than in lieu of any other 
remedies that may be applicable to the Local Board or to each of the 
partners for failure to comply with the Federal statutory requirement 
that they execute an MOU and have clarified this point in the 
regulation.
    Some commenters suggested that the regulation specify that the 
details of the assessments of individuals seeking services through the 
One-Stop system be described in the MOU and that we set parameters that 
will help the States and localities reach agreement on assessment 
goals, tools and processes.
    Response: We agree that the MOU is a vehicle that local areas 
should use to coordinate how assessments and other services are to be 
carried out in the One-Stop system. We will work with other Federal 
agencies and interested State and local partners to provide technical 
assistance that promotes agreement on and enhances how assessments and 
other services are delivered. However, we believe that WIA allows 
States and localities significant flexibility in determining how, 
consistent with the Federal authorizing laws, such services are carried 
out and coordinated and, therefore, do not believe it is appropriate to 
establish parameters for these services in the regulations.
    Some commenters suggested that the regulation be modified to 
require that the MOU's contain specific information on staffing 
arrangements, including assignment and supervision of staff, staff 
training and related personnel policies. In addition, these commenters 
suggested that the regulation require written concurrence from 
appropriate labor organizations when such arrangements affect their 
members or a collective bargaining agreement. These commenters also 
suggested that the MOU contain the assurances described in WIA section 
181(b)(7) prohibiting the use of funds to assist, promote, or deter 
union organizing.
    Response: We believe the MOU may be an appropriate vehicle to 
address certain personnel issues in many local areas. Section 652.216 
of these regulations, governing the Wagner-Peyser Act, provides that 
personnel matters for the State merit staffed employees funded under 
the Wagner-Peyser Act are the responsibility of the State agency, 
although, as part of the MOU, Wagner-Peyser funded employees may 
receive guidance on the provision of labor exchange services from the 
One-Stop operator. However, we do not believe it would be appropriate 
to mandate that additional personnel issues be addressed in the MOU. 
The determination of the extent to which such issues are addressed in 
the MOU remains with the parties to the MOU under this regulation.
    WIA section 181(b)(2)(B) provides that activities carried out with 
funds under title I of WIA must not impair collective bargaining 
agreements and that no activity inconsistent with the terms of a 
collective bargaining agreement may be undertaken without the written 
concurrence of the labor organization and employer concerned. 
Therefore, to the extent an MOU provides that title I funds be used in 
a manner inconsistent with a collective bargaining agreement, written 
concurrence is required. However, we do not believe it is necessary to 
restate this requirement in this section of the regulation since this 
requirement applies to all activities undertaken with title I funds.
    Similarly, the prohibition on the use of title I funds to assist, 
promote or deter union organizing is applicable to the use of all WIA 
title I funds. However, since this prohibition applies to all WIA-
funded activities, we do not believe that WIA requires that an 
assurance regarding this prohibition be written into each MOU. Local 
areas may be prudent in doing so, but the regulation has not been 
modified to require that the MOU contain such a written assurance.
    Several commenters suggested that the final rule require MOU's to 
be available for public review and comment before execution, 
particularly to training providers.
    Response: WIA section 118(b)(2)(B) requires that the MOU's be part 
of the local plan that is subject to public

[[Page 49314]]

review and comment requirements. We believe this requirement ensures 
public review and that an additional regulatory requirement is 
unnecessary. However, we do encourage local areas to provide 
significant opportunities for public input regarding the form and 
contents of the MOU as early in the process as is possible.
    Several commenters suggested that, due to potential shifts in the 
annual appropriations affecting the programs of the partners, the 
regulation require annual review of the MOU's by the parties. Other 
commenters suggested that due to the difficulty in reaching agreement 
and the need for stability, the regulation clarify that multi-year 
agreements are permissible.
    Response: Section 662.300(b) provides, as does WIA section 
121(c)(2)(A)(iv), that the duration of the MOU, and the procedures for 
modification, must be addressed in the MOU itself and does not 
prescribe an annual review process. Section 662.310(a) indicates that, 
in light of the annual appropriations process, the financial agreements 
``may'' be negotiated annually, but also allows a multi-year agreement. 
We believe these provisions are appropriate interpretations of WIA and 
have not modified the regulations.
Subpart D--One-Stop Operator
    This subpart addresses the role and selection of One-Stop 
operators. One-Stop 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 chief elected 
official. 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. Section 662.430 provides 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). 
However, that One-Stop system must be modified to meet the WIA 
requirements about the inclusion of the required One-Stop partners and 
the MOU.
    Some commenters suggested that the regulations be modified to allow 
for a system operator (rather than separate center operators) that may 
be responsible for the coordination of the entire local one-stop 
system, or the maintenance and development of the linkages and 
technology between centers.
    Response: While WIA section 121(d) refers to the operator primarily 
in connection with the operation of centers, we believe that the law 
does not preclude the expansion of that role to include additional 
coordination responsibilities relating to the One-Stop system. The 
particular role may vary depending on the design of the local system. 
We have modified section 662.410(c) to include the possibility of 
broader One-Stop operator coordination responsibilities.
    Several commenters suggested that the regulations be modified to 
clarify that the public must have the opportunity to review and comment 
on documents relating to the selection of a One-Stop operator if a 
competitive selection process is used.
    Response: WIA section 117(e) contains a general sunshine provision 
that requires the Local Board to make available on a regular basis 
information regarding its activities, including information on the 
designation and certification of One-Stop operators. This requirement 
applies to whatever designation process is used by the local area, 
whether it be competitive or an agreement with a consortium. Section 
662.420(b) referred to this requirement only in connection with the 
designation of the Local Board as the operator and the designation of 
an existing operator. We have removed the reference in Sec. 662.420(b) 
and have modified Sec. 662.410 to clarify that the Local Board's 
sunshine provision, which is now described in Sec. 661.307, applies to 
all designations and certifications of One-Stop operators.
    Some commenters suggested that the regulation describe the various 
financial assistance agreements that may be made with the One-Stop 
operator following the selection process. Specifically, the commenters 
suggested that the regulation identify grants, cooperative agreements, 
and procurement contracts as the alternative arrangements and identify 
the OMB circulars that apply to each arrangement.
    Response: We believe that the fiscal and administrative rules 
relating to the use of WIA title I funds, including the use of such 
funds to support the One-Stop operator, are appropriately described in 
20 CFR 667.200 and need not be restated in each section of the 
regulations to which they are applicable.
    Some commenters suggested that we should encourage the 
grandfathering of One-Stop operators that were designated pursuant to a 
collaborative process. These commenters also suggested that 
Sec. 662.430 appears to impose more requirements on the grandfathering 
of existing One-Stop operators than apply to new designations and that 
those requirements should be uniform.
    Response: We believes that WIA provides options for the designation 
of One-Stop operators and intends for each local area to determine the 
approach that best meets local needs. We will disseminate information 
relating to the experience of local areas that have used each of the 
allowable options. We will also modify this regulation to clarify that 
the only difference between One-Stop systems that choose to grandfather 
the One-Stop operator and systems that designate the operator pursuant 
to competition or consortium agreement is the selection process. The 
WIA requirements relating to the inclusion of required partners, the 
provision of services, and the execution of the MOU's apply to all One-
Stop systems, including those with operators retained under the 
grandfathering provision. Such systems must be modified, to the extent 
necessary, to comply with all WIA requirements regarding the One-Stop 
system. We have modified Sec. 662.430 to make these distinctions 
clearer.
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. The 
required adult and dislocated worker services, described as core, 
intensive, and training services, form the backbone of the One-Stop 
delivery system for services to two workforce program customers, job 
seekers and employers. The WIA goal of universal access to core 
services is achieved, among other strategies, 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

[[Page 49315]]

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 will now be able 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, an ITA as the payment mechanism. These tools will 
enable them to choose the training provider that best serves their 
individual needs.
    Along with part 664, this part contains most of the program service 
requirements that apply to WIA title I formula funds. WIA provides 
States and local areas with significant flexibility to deliver services 
in ways that best serve the particular needs of each State and local 
communities. These regulations support that principle; wherever 
possible, program design options and categories of service are defined 
broadly. States and local areas are reminded that they must use that 
flexibility in a manner that broadens the opportunities available under 
the Act to all customers. Recipients of financial assistance under WIA 
title I must be mindful of their responsibilities under the 
nondiscrimination provisions of section 188, and must not unfairly 
exclude individuals from opportunities or otherwise make decisions 
based upon race, color, religion, sex, national origin, age, political 
affiliation or belief, disability status, or citizenship. The 
Department published comprehensive regulations implementing section 188 
at 29 CFR part 37. 20 CFR 667.275 makes clear that all recipients of 
financial assistance under WIA title I must comply with 29 CFR part 37 
when exercising the flexibility provided by WIA and this Final Rule.
Subpart A--One-Stop System
    1. Role of the Adult and Dislocated Worker Programs in the One-Stop 
System: Section 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 becomes a required partner of the 
One Stop system, and is subject to 20 CFR 662.230 regarding required 
partner responsibilities, including serving on the Local Board. 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.
    One comment on Sec. 663.100 noted that adult and dislocated worker 
programs are separate activities with separate funding streams, and 
asked whether they might each have separate representatives on the 
Local Board.
    Response: We understand that the heading for Sec. 663.100 may be 
misleading, in that it may be read to imply that there is a single 
program serving adults and dislocated workers, which is clearly not the 
case. As accurately noted by the commenter, these are separate programs 
with separate funding streams. Accordingly, we have revised the 
headings and regulatory text in Secs. 663.100, 110 and 115 to pluralize 
the word ``Program,'' to more accurately reflect the discrete nature of 
the two programs. On the matter of separate representation for each of 
these programs on the Local Board, we feel the rule already 
sufficiently addresses this issue in the Local Governance provisions at 
20 CFR 661.315, and 662.200(a), concerning the required One-Stop 
partners. These sections make it clear that the Local Board must have 
at least one member representing each One-Stop partner program--
including the Adult and Dislocated Worker programs. The CEO may select 
one member to represent the Adult program and a different member to 
represent the Dislocated Worker program. Or, under new paragraph 
661.315(f), the CEO may select one member to represent both of those 
programs, if that member meets all the criteria for representation for 
each program. Accordingly, no change has been made to the Rule.
    Another commenter observed that Individual Training Accounts were 
the only method for providing training specifically referenced in 
Sec. 663.100(b)(3) and suggested that the Final Rule also list all 
training services, including contract training, OJT, and customized 
training.
    Response: The purpose of Sec. 663.100 is to highlight the key 
facets of the Adult and Dislocated Worker programs in the One-Stop 
delivery system, one of which is the establishment of ITAs. Since the 
purpose of this provision is to highlight ITAs as an important 
component of the new workforce investment system, rather than to 
clarify the types of training that may be provided under the adult and 
dislocated worker programs, no change is being made to the regulations. 
Section 663.300 clarifies that training services are listed in WIA 
section 134(d)(4), and that the list is not all-inclusive and 
additional training services may be provided.
    2. Registration and Eligibility: Sections 663.105 through 
Sec. 663.115 address registration and basic eligibility requirements. 
These sections provide 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.
    Registration is an information collection process that documents a 
determination of eligibility. It is also the point at which performance 
accountability information begins to be collected. Individuals who are 
seeking information and who, therefore, do not require a significant 
degree of staff assistance, do not need to be registered. Accordingly, 
of the core services listed in the Act, only staff assisted services 
such as individualized job search services, career counseling, and job 
development will automatically require registration. Additional core 
services offered at the discretion of the State and Local Boards, and 
not listed in the Act, may or may not require registration, depending 
on the degree of staff assistance involved, and other established local 
policies. Participation in any intensive or training service, whether 
those specifically listed in the Act, or another offered at the State 
or Local Board's discretion, will always require registration.
    In addition to the responsibility to register participants, EO data 
must be collected on every individual who is interested in being 
considered for WIA title I financially assisted aid, benefits, 
services, or training by a recipient, and who has signified that 
interest by submitting personal information in response to a request 
from the recipient. See 29 CFR 37.4 (definition of ``applicant'') and 
29 CFR 37.37(b)(2). The point at which such personal information should 
be collected is within the recipient's discretion; however, the 
recipient's request for and receipt of that information with regard to 
a specific individual triggers the accompanying responsibility to 
collect EO data at the same time. The EO data

[[Page 49316]]

must be maintained in a manner that allows the individuals from whom 
the data was collected to be identified, and that ensure 
confidentiality. This responsibility is separate from, and might not 
arise at the same point in the process, as the registration 
responsibility. We will issue further guidance on this data collection 
requirement. Further, all requirements of WIA Section 188 and 29 CFR 
part 37 must be followed during the registration and eligibility 
determination process to ensure non-discrimination in the assessment 
process.
    Additional information needed to determine eligibility for 
assistance other than Title I of WIA available at the One-Stop site may 
also be determined at the same time. Program operators should determine 
what information 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.
    One commenter felt that the rule at Sec. 663.105(b), which requires 
registration for any service other than self-service or informational 
activities, is in conflict with the goal of universal access.
    Response: There has been confusion over the issue of precisely when 
participants must be registered. For the core services listed in the 
Act, only those core services that are not informational and for which 
the participant requires significant staff-assistance, such as follow-
up services, individual job development, job clubs and screened 
referrals, will require registration under title I of WIA. This 
interpretation preserves the goal of universal access and makes the 
services delivery process as customer-friendly as possible, consistent 
with the legislative requirements of performance accountability. All 
persons will have access to core employment-related information and 
self-service tools without restrictions or additional eligibility 
requirements. No change has been made to the Final Rule. Additional 
information on the issue of registration under title I of WIA is 
contained in Training and Employment Guidance Letter (TEGL) 7-99 which 
can be accessed at www.usworkforce.org.
    We received many comments expressing concern that there is no 
mechanism in the regulations to ensure that unregistered individuals 
receiving informational and self-help core services are benefitting 
from those services. Two comments suggested that One-Stops should 
either be required to track these individuals' outcomes or that the 
Department itself engage in some sort of periodic tracking. Another 
commenter questioned whether a State could collect this information 
independent of a regulatory requirement to do so.
    Response: While we have chosen not to require registration or 
collection of outcomes information for those using only self-service or 
informational activities, this does not preclude States and One-Stop 
operators from collecting a variety of other information about service 
use, customer outcomes consistent with rules governing confidentiality, 
and/or customer satisfaction if they so choose. We strongly encourage 
States and local areas to seek customer feedback regarding the quality 
of services available, in order to further their continuous improvement 
efforts. Finally, local areas may also choose to have less formal 
tracking mechanisms which fall short of official registration, 
including paper-based or electronic ``sign-in'' when individuals enter 
the center. Realizing that some assessment of the value of these 
services is important for determining what resources are devoted to 
these types of activities we will convene a workgroup of Federal, State 
and local representatives to discuss the issue of self-service measures 
in the Fall of 2000. We anticipate that this workgroup will develop a 
menu of optional self-service measures that States and local areas can 
utilize.
    We also received comments which argued that the existing data 
collection requirements are too burdensome and should be limited. In 
addressing the data collection requirements in the regulations, we have 
attempted to strike a reasonable balance which satisfies our reporting 
needs under WIA without over-burdening States and local areas. No 
change has been made to the Final Rule in response to these comments. 
We issued a Federal Register notice on WIA title I reporting 
requirements on April 3, 2000. The purpose of the notice was to solicit 
comments concerning the new management information and reporting system 
including the WIA Standardized Record Data, the Quarterly Summary 
Report and the Annual.
    One commenter suggested that, in order to avoid redundancy, 
individuals eligible for TAA, or NAFTA-TAA, or those referred from the 
Worker Profiling and Reemployment Services initiative, should 
automatically be eligible for dislocated worker services and should be 
specifically included in Sec. 663.115 in the Final Rule.
    Response: We agree that most workers certified as eligible for the 
TAA and NAFTA-TAA programs will also meet the Act's definition of 
dislocated workers. To determine dislocated worker eligibility, the 
One-Stop operator must have sufficient information from which to make 
that determination, and in States with common intake systems, no 
further collection of registration information may be required in order 
to determine eligibility. One of the key reforms of WIA is streamlining 
customer services, and we would encourage local areas to examine 
methods through which they can determine eligibility for multiple 
programs at one time, through the coordination of One Stop Center 
partner activities. We further recommend that TAA and NAFTA-TAA 
certified workers who qualify as dislocated workers should also be 
enrolled under Title I of WIA. By doing this, those TAA and NAFTA-TAA 
workers who are determined to be in need of intensive, supportive or 
training services would be able to receive any of these services that 
cannot be provided under the TAA or NAFTA-TAA programs under Title I of 
WIA. Procedures to govern these processes should be part of the MOU's 
developed between WIA partners, in accordance with the dislocated 
worker eligibility determination procedures described in 
Sec. 663.115(b) of these regulations.
    Acceptance of profiled and referred Unemployment Insurance (UI) 
claimants as eligible dislocated workers is a decision to be made by 
Governors and Local Boards consistent with the definition at WIA 
Section 101(9). The policies and procedures established by Governors 
and Local Boards may include a policy that the UI profiling methodology 
and referral process meets the criteria in WIA Section 101(9). In such 
instances, no further documentation would be needed to establish the 
``unlikely to return'' criterion at WIA section 101(9)(A)(iii). Other 
eligibility criteria could also be documented by the unemployment 
compensation system through this process. Since acceptance of TAA, 
NAFTA-TAA and UI profiling data to prove eligibility are matters for 
State or local decision, no change has been made to the Final Rule.
    One comment suggested that language be added to Sec. 663.105 in the 
Final Rule permitting the use by One-Stops of intake application data 
and other information collected by non-WIA funded providers for 
registration and eligibility determination.
    Response: We support the goal of developing common intake systems 
that can be used across a variety of programs and which eliminate 
redundancy of data collection and encourage States and local areas to 
develop such systems. We

[[Page 49317]]

think that these activities are an essential part of the reforms 
envisioned by WIA and the creation of the One-Stop system and can lead 
to improved efficiency for program operators and better customer 
service. One Stop partners must work cooperatively to develop 
procedures, outlined in the MOU's, which will facilitate such 
streamlining. At the Federal level we are working with other Federal 
agencies to develop common definitions and data elements to facilitate 
this process. Since the integration of intake systems is currently 
permissible under the regulations as long as all necessary data is 
collected, no change has been made in the Final Rule.
    Another comment suggested State and Local Boards should be 
prohibited from developing dislocated worker definitions that exclude 
groups of workers based on their industry, occupation, or union 
affiliation.
    Response: In considering the procedures for determining 
eligibility, we believe that need for services should be based on 
individual circumstances, and that State and locally developed 
definitions must be consistent with WIA section 101(9). There is no 
language in that Section that we interpret as authorizing an 
eligibility definition based on industry or union affiliation, thereby 
allowing any exclusions based on the same. We strongly agree that 
workers should not be prohibited from receiving services based on their 
union affiliation. Blanket exclusions based on industry or occupation 
are too general to accommodate individual needs and unique situations. 
It should also be noted that the union representative as well as other 
members of the Local Board have an opportunity to raise concerns 
regarding consideration of such blanket eligibility decisions, through 
the WIA ``sunshine provisions'' in sections 111 and 117 and described 
in new Secs. 661.207 and 661.307, governing Board activity, and through 
the required public comment process.
    Many comments from the Vocational Rehabilitation system suggested 
that eligibility for Vocational Rehabilitation services must remain a 
distinct concept from eligibility determination for services under 
Title I of WIA.
    Response: While we acknowledge there are separate eligibility 
criteria for the two programs, we see no need for additional regulatory 
language on this issue. 20 CFR 662.280 clearly addresses this issue and 
states that the eligibility requirements of each One-Stop partner's 
program continue to apply. Additionally, the resources of each partner 
may only be used to provide services that are authorized and provided 
for under the partner's program, to individuals that are eligible under 
such program. We encourage local One-Stops to maximize coordination 
arrangements which promote convenient and accurate eligibility 
determination for individuals with disabilities who may need Vocational 
Rehabilitation services, while maintaining the integrity of the One-
Stop Center's integrated service strategy. One benefit of a closely 
coordinated One-Stop system is increased administrative efficiency, as 
well as more seamless service to the customer, through the use of 
common intake systems. Moreover, we emphasize that under 29 CFR 37.7, 
individuals with disabilities should be served through the same 
channels as individuals without disabilities, receiving reasonable 
accommodation as appropriate under 29 CFR 37.8.
    Several commenters noted that, under Sec. 663.115, Governors and 
Local Boards are allowed to develop policies and procedures for the 
interpretation of the dislocated worker eligibility criteria, and asked 
how disputes between these parties would be resolved.
    Response: While we provide technical assistance on matters of 
legislative and regulatory interpretation, we look to the State and 
Local Boards to develop a process to avoid, and if necessary resolve 
any disagreements. Under 20 CFR 661.120, local policies must be 
consistent with established State policies, as well as the Act and the 
regulations. Thus, while Local Boards may develop policies which 
supplement State policies, they may not adopt policies which conflict 
with State policies. No change has been made to the Final Rule.
    One comment stated that dislocated worker programs serving union 
members must consult the union in the design and implementation of 
those programs.
    Response: Unions are well-positioned to understand the needs of 
their members and can be a valuable resource in the design of effective 
dislocated worker programs. WIA requires that organized labor 
participate in the development and design of available services to 
dislocated workers, through their representation on State and Local 
Boards. Additionally, the public, including the organized Labor 
community, must have an opportunity to review and comment on the 
proposed design of programs serving dislocated workers, as part of the 
plan review and approval process. State and Local Boards are encouraged 
to use input from all key stakeholders, including employees, their 
representatives, and employers, and to work collaboratively with them 
when designing services. It is up to the governance structure at the 
Local level to set procedures to ensure this input is considered in 
program planning. Accordingly, no change has been made to the Final 
Rule.
    One commenter requested that the regulations provide that where the 
Local Board wishes to pursue training services not listed in the Act, 
that such services must be identified in the Local Plan, and that a 
review process that includes consultation with labor organizations 
whose members have skills in the specific training being proposed by 
the One-Stop operator, prior to funding such activities.
    Response: The Act, at section 118(b), provides, among other things, 
that the Local Plan identify the current and projected employment 
opportunities in the local area, and the job skills necessary to obtain 
such employment opportunities. Although the Act does not include 
``formal'' consultation with labor organizations whose members have 
skills like those in which training is proposed, such issues may be 
addressed as part of the development of the Local Plan, and the public 
plan review and approval process. Local Boards include representatives 
of labor organizations who will participate in the development of the 
Plan, and therefore in the design of training activities to be 
conducted in the local area. Additionally, the Act, at section 
118(b)(7), provides that the Local Plan include a public comment 
process which includes an opportunity for representatives of labor 
organizations to provide comments on the Plan, and input into the 
development of the Local Plan, prior to its submission. In addition, 20 
CFR 667.270 provides safeguards to ensure that participants in WIA 
training activities do not displace other employees. No change to the 
Final Rule is necessary.
    Another commenter suggested that we amend the regulations to 
require One-Stop operators to consult with the appropriate labor 
organizations whose members have skills in the area in which the OJT or 
customized training is proposed in the development of the training 
contract. The comment does not limit this consultation to circumstances 
where a collective bargaining agreement is in effect.
    Response: WIA section 181(b)(2)(B) requires consultation, and 
written concurrence of the labor organization and employer, where the 
proposed training would impair an existing collective bargaining 
agreement. It does not address consultation in other circumstances. We 
believe, however,

[[Page 49318]]

that informal consultation with organized labor on the nature and scope 
of proposed OJT or customized training can help to ensure its quality 
and relevance. The labor representative(s) on the Local Board is in an 
ideal position to establish policies about the consultation role of 
organized labor and to help identify situations where appropriate labor 
organizations should be consulted in the development of an OJT 
contract. Accordingly, no change to the Final Rule is necessary.
    One comment suggested that we define the term ``substantial 
layoff,'' as found in WIA Section 101(9)(B)(i) and Sec. 663.115, to 
include situations in which employers use layoff status to avoid their 
WARN Act obligations to announce a plant closing or significant 
permanent downsizing.
    Response: The purpose of this comment is unclear. However, any 
definition of the term ``substantial layoff'' for defining an eligible 
dislocated worker under WIA section 101(9)(B)(i) is irrelevant to 
employer obligations under the WARN Act. WIA provisions cannot be used 
to enforce WARN Act employer notification obligations. We believe that 
the definition of ``substantial layoff'' for WIA purposes is best left 
to State and local areas to decide in light of their particular 
economic conditions. We do not plan to further define ``substantial 
layoff'' at this time.
    The same commenter also suggested State and Local Boards be 
encouraged to develop the broadest possible definition of a general 
announcement of a plant closing, including information that is ``public 
knowledge,'' despite the failure of the employer to acknowledge the 
closing.
    Response: Rapid response activity may be triggered by a variety of 
information sources such as public announcements or press releases by 
the employer or representatives of an employer, and other less formal 
information developed by early warning networks, individual phone 
calls, or other sources. A Rapid Response contact with an employer may 
confirm a planned plant layoff or closing. ``Public knowledge'' is, 
however, a very elusive concept and public funds are limited. It is 
important to have a creditable source of information or confirmation 
from the employer or some other clearly credible evidence of an 
imminent dislocation event before triggering rapid response activities. 
No change has been made to the Final Rule.
    3. Displaced Homemaker Eligibility: Section 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.
    Several commenters recommended that we require State Plans to 
further discuss the eligibility of displaced homemakers and the service 
strategies for meeting this group's special needs.
    Response: States are required to discuss displaced homemaker 
service strategies as part of their State Plans (WIA Section 
112(b)(17)(A)(iv)). This requirement is addressed in the WIA Planning 
Guidance for Strategic Five Year State Plans. This requirement is also 
addressed in, Final Unified Plan Guidance for the Workforce Investment 
Act, published in the Federal Register Vol.65, No. 10 on January 14, 
2000, which contains instructions for plan narrative discussions on how 
special populations, including displaced homemakers, will be served. 
Services to displaced homemakers are also addressed in 20 CFR 
665.210(f), which provides that, among other things, implementing 
innovative programs for displaced homemakers is an allowable Statewide 
workforce investment activity. No changes have been made to the Final 
Rule.
    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.
    One commenter supported the requirement that all three types of 
services, (core, intensive, and training), must be available through 
the One-Stop delivery system, but wanted the regulations to limit the 
provision of the ``discretionary'' services authorized under WIA 
section 134(e)(1) to those that do not reduce the availability or 
accessibility of other mandatory services to eligible participants 
under the Act.
    Response: While it is not entirely clear from the comment, we 
assume that the commenter is referring only to those employment and 
training activities labeled ``discretionary'' under WIA section 
134(e)(1), and not to all ``permissible'' local activities under 
section 134(e) of the Act. We agree that required activities for 
eligible individuals take precedence over the permissible discretionary 
activities described in Sec. 663.145(b), and that core, intensive and 
training services, as defined in section 134(d)(2) through (4), must be 
provided in each local area. However, to impose a hard and fast rule on 
when each State or local area may provide discretionary activities, 
reduces the flexibility of Boards to make more localized decisions, 
which is contrary to the reforms of WIA. In the past, these kinds of 
concerns were addressed through mandatory spending percentages for 
various categories of services, such as the 50 percent for training 
provision under the Job Training Partnership Act. The customized 
screening and referral services listed in section 134(e)(1)(A) may 
provide useful and necessary services to eligible participants and 
could be very valuable in some labor markets. The customized employer 
services listed in section 134(e)(1)(B) are to be provided on a fee-
for-service basis and should not result in any diminution of available 
WIA funds. In either case, it is up to the States and Local Boards to 
develop a mix of activities and services which will best serve the 
customers of their area. The resources of all of the One-Stop partner 
programs should be taken into account when determining the appropriate 
mix of activities and services to be provided. Once a participant has 
become part of the WIA system, she/he should be able to receive all the 
services needed to reach an employment goal. We do not think it is 
appropriate to attempt to set a rule that constrains the way in which 
States and Local Boards provide that mix of services as long as 
mandatory services are made available.
    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. The regulations establish the 
concept of a tiered approach but allow significant flexibility at the 
local level. We chose not to establish a minimum number of ``failed'' 
job applications or a minimum time period but, instead, the regulations 
allow 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 (IEP), 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

[[Page 49319]]

obtaining employment or, for employed participants, obtaining or 
retaining self-sufficient employment. The three levels of services are 
discussed separately in the regulations.
    We received many comments concerning our general approach to 
regulating participant progression through the sequence of services. 
The commenters were uniformly pleased that the regulations did not 
require a certain number of failed job search attempts or minimum 
lengths of time in one service tier before an individual could be found 
eligible for the next tier of services. Several commenters, however, 
felt we should do even more to ensure that the Act is not interpreted 
as a ``work first'' program. Some comments suggested that we should 
preclude State and Local Boards from establishing minimum time periods 
of participation in core and intensive services.
    Response: While the regulations do not explicitly preclude State or 
Local Boards from establishing minimum time periods within each tier of 
services, we agree that mandatory waiting periods are not consistent 
with customization of services according to each participant's unique 
needs. Consistent with our intent to write regulations that maximize 
State and local flexibility, however, we continue to support the idea 
that local level program operators are best positioned to determine the 
appropriate mix, and duration of services.
    6. Core Services: Sections 663.150 to Sec. 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. Follow-
up services must be available for a minimum of 12 months after 
employment begins, to registered participants who are placed in 
unsubsidized employment. We have made a technical correction to 
Sec. 663.150, to conform with the statutory requirement that followup 
services be made available ``as appropriate'' to the individual. This 
means that the intensity of the followup services provided to 
individuals may vary, depending upon the needs of the individual. 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. Local Boards are encouraged to establish 
strong linkages with a variety of supportive service programs and work 
supports, including child support, EITC, dependent care, housing, Food 
Stamps, Medicaid programs, and the Children's Health Insurance Program, 
that may benefit the customers they are serving at the One-Stop Center. 
Such programs provide key supports for low-income working families and 
families making the transition from welfare to self-sufficiency.
    We also encourage 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 impact that child support 
requirements may have on non-custodial parents who may seek services.
    One commenter recommended that the provision of ``brokering 
services,'' as presently performed by CBO's under JTPA be expressly 
permitted under Part 663. These services include facilitating and 
brokering relationships between low-income community residents, local 
businesses, and specialized groups, as well as referrals to groups to 
provide training and placement.
    Response: While we agree that these brokering services are valuable 
activities, decisions about program design, including the selection of 
outreach, recruitment and referral activities, are within the purview 
of the Local Board, operating within State policies. We expect that 
Local Boards will consider a wide variety of services in designing 
their WIA programs. We expect CBO's, as well as other stakeholders, 
will be an integral part of program planning and design decisions 
through their membership on the Local Board, their provision of input 
through the public review process, and in many cases as customer 
service providers. Accordingly, no change has been made to the Final 
Rule.
    Commenting on Sec. 663.150, one organization remarked on the 
importance of ensuring that individuals seeking assistance through core 
services be provided with opportunities for self-service, facilitated 
self-help, and staff-assisted services.
    Response: The service delivery options cited by the commenter are 
activities specified in the Wagner-Peyser Act regulations at 20 CFR 
652.207, to ensure universal access to Wagner-Peyser labor exchange 
services for job seekers and employers. Although technically, these 
three levels of service do not apply to core services provided with 
funds other than Wagner-Peyser funds, practically, it makes sense to 
have all three service levels available for all core services. Also, in 
order to best serve the diverse needs of workforce investment 
customers, both job seekers and employers, multiple service delivery 
formats must be available. State and Local Plans are expected to 
address WIA service delivery strategies. Local Plans should ensure that 
the service delivery design reflects the needs of all customer groups 
in the mix of self-service, informational and staff-assisted core 
services. Since the issue is covered in the Wagner-Peyser regulations, 
no change has been made to the Final Rule.
    One commenter asked that the regulations provide a list of 
available followup services which could be provided to all adults and 
dislocated workers. The commenter also requested that the regulations 
ensure that followup services are provided to all participants.
    Response: The goal of follow-up services is to ensure job 
retention, wage gains and career progress for participants who have 
been referred to unsubsidized employment. While we do not think it is 
necessary to specify or define followup services in Sec. 663.150(b), to 
provide further guidance we discuss an illustrative list of possible 
followup services below. Followup services must be made available for a 
minimum of 12 months following the first day of employment. While 
followup services must be made available, not all of the adults and 
dislocated workers who are registered and placed into unsubsidized 
employment will need or want such services. Also, as discussed above, 
the intensity of appropriate followup services may vary among different 
participants. Participants who have multiple employment barriers and 
limited work histories may be in need of significant followup services 
to ensure long-term success in the labor

[[Page 49320]]

market. Other participants may identify an area of weakness in the 
training provided by WIA prior to placement that will affect their 
ability to progress further in their occupation or to retain their 
employment. Therefore, we have chosen not to change the regulatory 
language that such services must be ``made available''.
    Followup services could include, but are not limited to: additional 
career planning and counseling; contact with the participant's 
employer, including assistance with work-related problems that may 
arise; peer support groups; information about additional educational 
opportunities, and referral to supportive services available in the 
community. In determining the need for post-placement services, there 
may also be a review of the participant's need for supportive services 
to meet the participant's employment goals. As provided in 
Sec. 663.815, financial assistance, such as needs-related payments, for 
employed participants is not an allowable follow-up service since, 
under WIA section 134(e)(3)(A), needs-related payments are restricted 
to unemployed persons who have exhausted or do not qualify for 
unemployment compensation and who need the payments to participate in 
training. We expect that the provision of training and supportive 
services after entry into unsubsidized employment (``post-placement'') 
will be limited, and will be part of the IEP, clearly documented in the 
participant case file. Such post-placement training and supportive 
services may be provided consistent with policies established by the 
State or Local Board, and determined to be necessary on an individual 
basis by the One Stop partner.
    Several commenters noted there is no uniform understanding of 
``assessment'' and that many One-Stop partners have different ideas of 
what assessment should entail. Some comments also asked for examples or 
additional guidance concerning best practices in this area.
    Response: The purpose of assessment is to help individuals and 
program staff make decisions about appropriate employment goals and to 
develop effective service strategies for reaching those goals. We 
strongly believe that meaningful service planning cannot occur in the 
absence of effective assessment practices. We also believe there is no 
single correct approach to conducting assessment--it could be 
accomplished through the use of any number of formalized instruments, 
through structured interviews, or through a combination of processes 
developed at the local level. Further, assessments could be conducted 
by the One-Stop operator, by a partner agency, or by an outside 
organization on a contract basis.
    Clarifying language has been added to the regulations at 
Sec. 663.160 which states that initial assessment ``provides 
preliminary information regarding the individual's skill levels, 
aptitudes, interests, (re)employability and other needs.'' As a core 
service, the initial assessment is necessarily a brief, preliminary 
information gathering process that, among other things, will provide 
sufficient information about an individual's basic literacy and 
occupational skill levels to enable the One-Stop operator to make 
appropriate referrals to services available through the One-Stop and 
partner programs. Comprehensive assessment, which is an intensive 
service, is a more detailed examination of these issues and may explore 
any number of things relevant to the development of a person's IEP. 
These might include some combination or all of the following: 
educational attainment; employment history; more in-depth information 
about basic literacy and occupational skill levels; interests; 
aptitudes; family and financial situation; emotional and physical 
health, including disabilities; attitudes toward work; motivation; and 
supportive service needs. We expect that all partner agencies in the 
One-Stop, under any applicable State policies, will work to achieve 
consensus on the required components of the assessment system for the 
One-Stop system at any local level. In doing so, they should take into 
account any special assessment needs that may be experienced by 
individuals with disabilities and other populations with multiple 
barriers to employment. As we proceed with the implementation of WIA we 
will consider gathering ``best practices'' on the delivery of 
assessment services to share with the system.
    One commenter suggested adding language to Sec. 663.160 mandating 
that assessment and service strategies identified in IEPs conducted by 
a non-WIA program, satisfy the conditions of WIA, thereby making 
participants eligible for intensive and training services under the 
Act.
    Response: Because there are differences in the legal and program 
requirements among the various programs that might provide assessments, 
we do not think we can require that all assessments from any source be 
accepted as valid for WIA. We do, however, support efforts to create 
common intake systems and to share data across programs, thereby 
eliminating duplication of effort for program staff or customers. We 
also believe that assessments, evaluations, and service strategies 
developed by partner agencies for individuals are the product of that 
agency's unique expertise, and, therefore, should be given careful 
consideration. We encourage Local Boards and partner agencies to 
develop MOU's, with required and optional partners, that provide for 
procedures to ensure that, where appropriate, partner assessments will 
be accepted as valid for WIA, and WIA assessments will be accepted as 
valid for partner programs. Of course, to be acceptable, an assessment, 
from any source, must provide the information needed by the One-Stop 
operator or the partner program. Local Boards and partner programs 
should work together to develop assessment tools that will serve all 
partner interests. If necessary for WIA purposes, the One-Stop operator 
may choose to supplement assessment information provided from another 
agency. Given the limited funding available, it is important to avoid 
duplication of services. No changes have been made to the Final Rule in 
this section.
Subpart B--Intensive Services
    1. Intensive Services for Adults and Dislocated Workers: Section 
663.200 discusses intensive services. It 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.
    Several commenters supported Sec. 663.250 which provides that there 
is no minimum amount of time for individuals to stay in core or 
intensive services, stating that this approach maximizes local 
flexibility and ensures that each person's needs are properly 
addressed. In general, the comments received on subpart B related both 
to expanding or limiting allowable intensive services, to listing 
specific populations as among those potentially eligible for intensive 
services, and to proposing definitions of ``self sufficiency.''
    We received several comments on the definition of intensive 
services at

[[Page 49321]]

Sec. 663.200(a). Two comments wanted nearly all of the specific 
statutory language illustrating intensive services, at WIA Section 
134(d)(3)(C), reiterated in this section. They also requested that 
``orientation and mobility training for persons with disabilities'' be 
added to the list of allowable intensive services. One commenter 
recommended adding to the list of intensive services ``English as a 
Second Language (ESL), Vocational Education integrated with ESL (VESL), 
Functional Context Education Programs that integrate literacy or ESL 
and job training.'' Another commenter asked that the Final Rule define 
literacy to include reading and math literacy.
    Response: Sec. 663.200(a) refers to the provisions at WIA Section 
134(d)(3)(C) on the types of intensive services. The list of services 
in this section is not intended to be all inclusive and may be expanded 
by State Boards and Local Boards based on, among other things, local 
conditions and the needs of the various populations within the local 
area for such additional intensive services. Although the types of 
services recommended by the commenters may have merit for certain 
populations and would be permissible WIA-funded intensive services, we 
believe that the determination of the specific types of intensive 
services to be provided are matters for local decision-making and 
should be an integral part of the State and Local Plan process. 
Clearly, we expect State and Local Boards to consider the needs of the 
local population, including individuals with disabilities and other 
special needs populations, in the design and delivery of services which 
respond to those needs. It is also expected that concerned parties will 
have the opportunity to contribute to the planning and design of local 
programs and services through either representation on the State and 
Local Workforce Investment Boards or the open plan review and comment 
process.
    On the suggestion of including ESL, VESL and Functional Context 
Education Programs that integrate literacy or ESL and job training as 
intensive services, we note that WIA section 134(d)(4)(D), which 
describes ``Training services,'' specifically includes adult education 
and literacy activities provided in combination with other job skills 
training. Such adult education and literacy training activities, when 
combined with a job may include ESL, and other needed educational 
services for participants, including reading and math literacy, as 
determined by Local Board policies, and the individual assessment. As 
indicated above, the list of intensive services is not all inclusive. 
However, language skills independent of skills training would appear to 
be of limited value in leading to (re)employability for individuals 
without significant work histories and occupational skills. We expect 
that basic language skills will be provided as a short-term 
prevocational service when part of an Individual Employment Plan in 
which such activities are followed by additional language skills 
training as a ``training service,'' in accordance with procedures 
established by the State or Local Board. Such determinations are for 
State and local decision-making. No change has been made in the Final 
Rule.
    Several commenters expressed concern about the inclusion, at 
Sec. 663.200(a), of internships and work experiences as intensive 
services, rather than as training services. Some commenters were 
concerned that participants could be exploited in unpaid work 
experience and recommended that we establish time limits (e.g., not to 
exceed 90 days) for such activities, and emphasize that labor standards 
apply. One commenter thought that there may be a potential conflict 
with Wage and Hour rules if work experience is in the private for-
profit sector and unpaid. Other commenters wanted to exclude work 
experiences with private for-profit employers, limiting it to public 
and private non-profit entities, and allow placement with private for-
profit employers only for on-the-job training (OJT), because of the 
potential for abuse by employers that the commenter believes has 
occurred in the past.
    A few commenters indicated that since internships and work 
experiences are designed to impart specific skill and behavioral 
competencies they should be defined as ``training'' rather than 
``intensive services.'' One comment suggested that, consistent with 
prior JTPA provisions, work experience under WIA should be only for 
those individuals with no significant work history. Another comment 
asserted that, given the high cost of providing work experience, 
participants could be best served by job readiness or some other 
intensive service.
    Two commenters indicated that internships and work experience must 
be measured through outcomes, including training-related placements, 
career ladders, and competencies. One of the commenters added that 
these must be paid activities. One commenter recommended that the Final 
Rule make clear that work experience could be with a public sector 
employer, including a service or conservation corps.
    Response: We understand the commenters' general concerns regarding 
internships and work experience, particularly unpaid work experience. 
We expect that work experience will be paid in most cases and labor 
standards will apply in any situation where an employer/ employee 
relationship, as defined by the Fair Labor Standards Act, exists. We 
have revised Sec. 663.200(b) to clarify this policy.
    We believe that the use of unpaid internships and work experiences 
should be limited and based on a service strategy identified in an 
Individual Employment Plan, and combined with other services. We expect 
that such activities will be of limited duration, based on the needs of 
the individual participant. State and Local Boards are responsible for 
developing policies on the use, and duration, of both paid and unpaid 
internships and work experiences as a service strategy. Similarly, we 
expect that, along with other activities, State and Local Boards will 
monitor and evaluate the effectiveness of intensive services, including 
internships and work experience, in responding to the needs of 
participants and the results on participant outcomes. While not 
minimizing the commenters' concerns, there are good examples of local 
programs using paid and unpaid work experience which respond to the 
needs of participants, for example the School-to-Work Opportunities 
initiative provided many young people the experience the needed to 
secure higher paying, higher skilled employment.
    On the issue of defining internships and work experience as 
``training'' rather than ``intensive services,'' we believe that such 
services may respond to the needs of particular clients which, when 
combined with core services already received and other intensive 
services, may result in positive employment outcomes without the need 
for ``training'' services. For other clients, such experiences may 
prove beneficial in identifying the need for, and referral to, needed 
training services consistent with the Individual Employment Plan. No 
change has been made in the Final Rule.
    On the issue of limiting internships and work experience to the 
public and private non-profit sectors, we feel that such a limitation 
would unnecessarily restrict the employment opportunities for clients 
seeking services and, to a degree, limit customer choice since the 
majority of employment opportunities exist in the private for-profit 
sector. Nothing in the rule prevents Local Boards from providing work 
experience with community service or conservation

[[Page 49322]]

service corps programs. No change has been made to the Final Rule.
    2. Delivery of Intensive Services: We received a few comments on 
the provisions in Sec. 663.210 about how intensive services are to be 
delivered. A few commenters wanted to revise Sec. 663.210(a) to address 
special needs populations by adding at the end of the first sentence 
``, including specialized One-Stop centers as authorized.,'' and, in 
the second sentence inserting after ``service providers'' and before 
``that''--``, which may include contracts with public, private for-
profit, and private non-profit service providers, and including 
specialized service providers (i.e., community rehabilitation programs 
for persons with disabilities).''
    Response: Section 134(c)(3) of the Act authorizes specialized 
centers as part of the One-Stop service delivery system. Language has 
been added to Sec. 663.210(a) in the Final Rule to clarify that 
intensive services may be provided through such specialized One-Stop 
centers. Section 134(d)(3)(B)(ii) of the Act provides that intensive 
services may be provided through contracts with service providers, 
which may include contracts with public, private for-profit, and 
private non-profit entities approved by the Local Board, and as noted, 
language has been added in the Final Rule at Sec. 663.210(a) to reflect 
the statutory provision on delivery of intensive services through 
contracts with service providers, and have clarified that such service 
providers may include specialized service providers. However, we have 
not added the parenthetical phrase related to community rehabilitation 
programs.
    One commenter felt that the Final Rule must make clear that 
intensive services cannot be provided through individual training 
accounts or vouchers.
    Response: We believe that the statutory and regulatory provisions 
are sufficiently clear on how WIA-funded services are delivered to 
participants. The Individual Training Account is a tool for providing 
WIA title I funded training services under section 134(d)(4)(G). The 
requirements for delivery of intensive services are described at WIA 
section 134(d)(3)(B) and Sec. 663.210. Consistent with our policy of 
providing flexibility to States and local areas, we believe the method 
of delivery of intensive services is a matter of State and local 
discretion, provided that the statutory and regulatory requirements are 
met. Therefore, no change has been made to the Final Rule.
    3. 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 to self-sufficiency. Sections 663.240 through Sec. 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.
    A number of commenters expressed concern that Sec. 663.220(a) 
describes eligibility for unemployed individuals as simply requiring 
that they are unable to obtain employment through core services while 
Sec. 663.220(b) describes employed and/or dislocated workers as in need 
of intensive services to obtain or retain employment that leads to 
self-sufficiency. Commenters felt this appeared to set a double 
standard and conflicted with the provisions of Titles II and IV of WIA 
which clearly tie self-sufficiency to employment in all cases. The 
commenters felt that these provisions might be interpreted to mean that 
unemployed individuals may be put in jobs that do not lead to self-
sufficiency. Commenters recommended that the Final Rule provide that 
States and Local Boards may set their own standards for employment, 
e.g., using the Self-Sufficiency Standard for all job-seekers.
    Response: We agree that the ultimate goal for all employment, 
whether under WIA or any other program, should be self-sufficiency for 
the job seeker. However, that is different from establishing 
eligibility for adults and dislocated workers to receive intensive 
services under WIA. The eligibility criteria set forth in Sec. 663.220 
restates the statutory definition established in WIA section 
134(d)(3)(A). The reference to employment leading to self-sufficiency 
appears only in WIA section 134(d)(3)(A)(ii), governing the eligibility 
of employed individuals to receive intensive services. A determination 
that an employed or dislocated worker is in need of intensive services 
to obtain or retain employment that allows for self-sufficiency is one 
of the criteria for the receipt of such services. Although the statute 
establishes slightly different eligibility criteria for unemployed and 
employed adults and dislocated workers to receive intensive services, 
we do not believe that there is a direct conflict with the provisions 
of WIA Titles II and IV concerning self-sufficiency as it relates to 
Adult Education and Literacy Programs and Vocational Rehabilitation 
Programs, respectively.
    While it is true that the difference in eligibility for intensive 
services for unemployed and employed adults and dislocated workers 
might be interpreted to mean that unemployed individuals can be put in 
jobs which do not lead to self-sufficiency, we want to make clear that 
the eligibility criterion is a service requirement and not an 
employment outcome. Other provisions in WIA pertaining to wage and 
benefit requirements, which appear at WIA section 181, labor standards, 
at WIA section 181(b), employment in demand and growth occupations, at 
WIA section 134(c)(4)(G)(iii), and employment in jobs with upward 
mobility, at WIA section 195(1), to cite a few, all enhance 
opportunities for employment which allows for self-sufficiency. 
Additionally, the performance standard measures, at WIA section 
136(b)(2)(A), will also be a spur to placing, and retaining, 
participants in jobs with good, self-sufficient wages. As the 
eligibility criteria are statutory requirements which the Secretary 
does not have authority to change, no change has been made to the Final 
Rule.
    We agree with the suggestion the State and Local Boards be allowed 
to set their own standards for employment, using the self-sufficiency 
standard developed by the State or Local Boards for all employment. 
There is nothing in the Act or Interim Final Rule that would preclude 
such a policy as a goal for participant outcomes. Any such policy must 
meet the minimum requirements in Sec. 663.230 for defining self-
sufficiency. While statutory language prevents us from mandating such a 
policy, we do strongly recommend it. No change has been made to the 
Final Rule.
    One commenter suggested that leaving it solely to the One-Stop 
operator to determine who is in need of more intensive or training 
services could be problematic, particularly if the operator is a for-
profit entity which could financially benefit from limiting access to 
intensive and training services.
    Response: WIA contains provisions which address this commenter's 
concerns. Section 121(d) of WIA provides that the Local Board, with the 
agreement of the chief elected official

[[Page 49323]]

(CEO), is authorized to designate or certify One-Stop operators and to 
terminate, for cause, the eligibility of such operators. The 
eligibility provisions for One-Stop operators at WIA section 
121(d)(2)(A) provide that such operators must be designated or 
certified through a competitive process or through an agreement between 
the Local Board and a consortium of entities that, at a minimum, must 
include three or more of the One-Stop partners described at WIA section 
121(b)(1). In addition, the One-Stop operators are subject to the 
provisions of the local Memorandum of Understanding which must include, 
among other things, methods for referral of individuals between the 
One-Stop operator and the One-Stop partners, for the appropriate 
services and activities. Potential problem areas may also be identified 
through local program monitoring and oversight, requiring that action 
be taken to correct identified deficiencies. Additionally, the 
regulations, at 20 CFR 667.600, provide for the establishment of local 
grievance procedures for handling complaints and grievances from 
participants and other interested parties affected by the local 
workforce investment system, including an opportunity for local level 
appeal to the State. These and other provisions will help State and 
Local Boards ensure the integrity of the new program. Accordingly, no 
change has been made to the Final Rule.
    We received a few comments about to the sequencing of intensive and 
training services at Sec. 663.240.
    One commenter supported the requirement that participants must 
receive at least one intensive service such as development of 
individual employment plan or individual counseling and career planning 
before receiving training services. Another commenter wants an 
Individual Employment Plan to be required for any worker seeking 
intensive or training services.
    Response: We agree that doing an Individual Employment Plan for 
participants determined eligible for intensive services is a good idea, 
and we recommend that an IEP be developed for every individual who uses 
intensive or training services. However, the Act provides that the 
development of an Individual Employment Plan is only one of the 
intensive services that may be provided to individuals determined to be 
in need of such services; it is not a condition to receive that 
service. Accordingly, no change was made to the Final Rule.
    One commenter acknowledged that the One-Stop partners, the Local 
Board, and the CEO must participate in the development of policies for 
eligibility beyond core services, but recommended that these policies 
must also be available for public review and comment to assure fairness 
in the selection process.
    Response: We agree with the comment and believe that, although not 
specifically required, such policies should be included in the Local 
Plan and available for public review and comment. While we cannot 
mandate their inclusion, we encourage Local Boards to include such a 
policy in their local workforce investment plan development process. If 
such policies are not included in the plan, their development, as an 
activity of the Board, is subject to the sunshine provision at WIA 
section 117(e) and new section 20 CFR 661.307. The sunshine provision 
requires that the Board make information about its activities publicly 
available through open meetings and minutes of meetings, on request. 
These requirements also provide an opportunity for public input into 
Local Board plans and policies. No changes have been made to the Final 
Rule.
    A few comments requested that a new sentence be added at the end 
Sec. 663.220(b) to read: ``Persons with disabilities and other special 
needs populations may also qualify for intensive services.''
    Response: Eligibility for intensive services is open to all 
unemployed adults and dislocated workers and all employed adults and 
dislocated workers who meet the eligibility criteria and are determined 
to be in need of such services. To single out specific populations in 
the regulations would imply that there are different criteria for those 
populations to receive intensive services, which is not the case. 
Individuals with disabilities and other special needs populations may 
as easily qualify for intensive services under the existing eligibility 
criteria as any other person or group since the eligibility criteria 
are based on need for the services. In addition, any barrier to 
employment an individual may face (which may include a disability) 
should be taken into account during the process of determining 
eligibility for intensive services. We believe that the existing 
language adequately addresses the statutory requirements, and is 
consistent with the key principle to provide maximum flexibility to 
States and local areas, that additional proscriptive language in 
regulations is not needed.
    4. Self-sufficiency: Section 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 
are empowered to 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.
    From our review of the comments received on Sec. 663.230, it 
appears that there is some confusion with respect to the term ``self-
sufficiency'' and how it applies under WIA. A number of commenters are 
clearly under the mistaken impression that the provisions of 
Secs. 663.220(b) and 663.230 treat ``employment leading to self-
sufficiency'' as a performance outcome measure under WIA, which is not 
the case. The commenters raised the point that the manner in which 
self-sufficiency is defined could impact performance outcomes if 
standards are set low in one area and higher in another. If such 
measures will be used in comparisons across State and local lines, 
setting higher standards for employment that leads to self-sufficiency 
could negatively impact the outcomes achieved by the local system with 
higher standards.
    WIA section 136 establish the WIA performance accountability 
system, including State and local performance measures intended to 
assess the effectiveness of States and local areas in achieving 
continuous improvement of WIA Title I-B funded workforce investment 
activities. Although the core indicators of performance for WIA adult 
and dislocated worker activities look at outcomes such as wage gain, 
job retention and other factors in determining successful performance 
of the programs; ``self-sufficiency'' is not one of the statutory core 
indicators. Section 663.230 is not intended to imply that this is the 
case.
    Unlike predecessor employment and training programs, WIA opens up 
employment and training services to

[[Page 49324]]

employed adults and dislocated workers. In doing so, the Act 
establishes certain criteria that employed workers must meet in order 
to receive services beyond core services. As indicated in our response 
to the comments received on the ``Participation in Services'' sections, 
the use of the term ``self-sufficiency'in Sec. 663.220(b) only applies 
in the context of establishing eligibility for employed adults and 
employed dislocated workers to receive intensive services under WIA. A 
determination that an employed adult or dislocated worker is in need of 
intensive services to obtain or retain employment that allows for self-
sufficiency is one of the criteria for the receipt of such services. 
This provision serves as a ``limiter'' in determining service 
eligibility for such employed workers, which helps ensure that 
intensive services are provided to those employed adults or dislocated 
workers most-in-need of such services, such as individuals employed in 
low skill/low wage jobs and dislocated workers who may be working but 
who have not achieved the wage replacement rate for self-sufficiency 
defined by a State or Local Board for dislocated workers.
    As indicated above, the regulations at Sec. 663.230 were developed 
with the recognition that the ``self-sufficiency'' definition would 
vary from State-to-State, and even from area-to-area within a State. 
Therefore, the regulations provide that, for the purposes of 
determining the eligibility of employed and dislocated workers for 
intensive services, State and Local Boards are responsible for 
establishing the criteria for determining whether employment leads to 
self-sufficiency. Accordingly, the regulation provides maximum 
flexibility, requiring only that self-sufficiency mean employment that 
pays at least 100 percent of the lower living standard income level 
(LLSIL).
    In general, the majority of the comments received on Sec. 663.230 
dealt with two areas: (1) recommendations on factors that should be 
included in defining ``self-sufficiency,'' and (2) the need for a more 
reliable measure of self-sufficiency than the LLSIL.
    A few commenters asked why, since the LLSIL takes family size and 
economic conditions into account, there was a need to require the use 
of other factors in determining self-sufficiency. The commenters also 
asked for clarification of the purpose of asking State and Local Boards 
to set additional criteria for self-sufficiency, as well as the benefit 
to a local system.
    Response: Under JTPA, the LLSIL was used as one of the ceilings to 
measure whether a participant was economically disadvantaged. Service 
Delivery Areas had little discretion in setting local definitions 
different from the statutory definition. Under WIA, in contrast, the 
LLSIL is a floor to measure whether a job leads to self-sufficiency and 
States and local areas have broad discretion to set a standard above 
that floor. The Preamble to the Interim Final Rule clearly indicates 
that factors such as family size and local economic conditions may be 
included in criteria developed by a State or Local Board to define 
self-sufficiency. The LLSIL also includes, and is adjusted using, these 
and other factors. In acknowledging that conditions vary from place to 
place, we have maintained maximum flexibility by allowing States and 
Local Boards to determine what self-sufficiency means in their areas, 
which may include other factors not included in determining the LLSIL.
    As indicated above, State and Local Boards are responsible for 
determining self-sufficiency and must develop criteria for making that 
determination. The reason for authorizing the State and Local Boards to 
develop criteria for making these determinations is that State and 
Local Boards are best able to judge such factors as the cost of living 
in a local area and the wages available in jobs in the local area. 
Thus, they are best able to set a standard for self-sufficiency that 
meet the needs of their local economy. The ``benefit'' to a local 
system is the flexibility provided to develop such criteria, above the 
established floor of the LLSIL, so that local conditions may be taken 
into account. Therefore, no change has been made to the Final Rule.
    A number of commenters stated that since the regulations use self-
sufficiency as a means to measure WIA success, it should be defined in 
an individualized way. Further, data collection systems must be able to 
account for higher living expenses experienced by persons with 
disabilities in any determination of ``self-sufficiency''. One 
commenter added that Federal and State work incentives used by people 
with disabilities should not be viewed as lack of self-sufficiency. 
Another commenter said that self-sufficiency must also include measures 
for long-term success in the labor market.
    One commenter noted that the regulations say that self-sufficiency 
for employed dislocated workers may be defined relative to a percentage 
of the layoff wage, and suggested specifying in the Final Rule that for 
displaced homemakers, self-sufficiency may be defined as a percentage 
of household income before displacement. One commenter indicated that 
the definition for self-sufficiency must include discrete measures for 
benefits, particularly health benefits. Also, the commenter suggested 
that we provide guidance and technical assistance to State and Local 
Boards to help them develop measures of self-sufficiency that are tied 
to family wage/benefit levels needed to live in local communities.
    Response: The regulations provide that State and Local Boards have 
the responsibility for developing the criteria for determining whether 
employment leads to self-sufficiency. With the exception of 
establishing the minimum LLSIL requirement for such criteria, we have 
refrained from establishing further criteria in the regulations to 
provide maximum flexibility to State and Local Boards in developing 
such criteria. That flexibility includes tailoring definitions of self 
sufficiency to meet factors peculiar to an individual or group. The 
State and Local Boards are in the best position to develop criteria 
which reflect local economic conditions and other factors impacting on 
the financial needs of the populations to be served, in defining self-
sufficiency for determining eligibility for intensive services. 
Although the factors suggested by the commenters may have merit, and 
serve as examples that Boards might consider, the development of such 
criteria is subject to local decision-making and should be explored at 
that level. We do, however, expect State and Local Boards to consider, 
among other things, the needs of individuals with disabilities, and 
other special needs populations with multiple barriers to employment, 
in the development of such criteria. We have modified Sec. 663.230 to 
reflect this expectation.
    One commenter stated that the regulations must require Local Boards 
to consult with organized labor and community based organizations in 
the development of self-sufficiency measures, and wants the process for 
establishing and updating self-sufficiency measures included in the 
plan as well as all plan modifications.
    Response: Organized labor and community-based organizations will 
participate in the development of self-sufficiency measures by virtue 
of their representation on State and Local Boards, along with other 
representatives and local partners on the board. As with other policies 
and procedures not specifically addressed in the Local Plan 
requirements at WIA section 118, we believe that, although not 
specifically required, such self-sufficiency policies should be 
included in the Local Plan and available for public review and comment. 
While we cannot mandate

[[Page 49325]]

inclusion, we encourage the Local Boards to include such a policy in 
their plan development process. If such policies are not included in 
the plan, they are, their development, as an activity of the Board, is 
subject to the Sunshine Provision at WIA section 117(e) and new section 
20 CFR 661.307.
    One commenter, while appreciative that self-sufficiency as it 
relates to intensive services is set at the lower living standard 
income level, added that research has shown that a ``true'' standard 
for self-sufficiency should be even higher, at 150 percent of the lower 
living standard. The comment concluded that this level has a potential 
for setting a high bar for measuring success under WIA--sending a 
signal that the system has not succeeded when individuals end up in 
minimum wage jobs. The commenter urged that the regulations require 
that the Local Plans spell out how the local areas will define self-
sufficiency, so that it may be subject to public comment and review. 
Another commenter felt that the LLSIL is not a reliable measure of 
self-sufficiency, and recommended that the Bureau of Labor Statistics 
(BLS) develop a new LLSIL that reflects the costs of self-sufficiency 
for today's families, including the cost of child care. Until such a 
measure is developed it was recommend that the self-sufficiency floor 
be set at 150% of the LLSIL.
    Response: As indicated earlier, ``self-sufficiency'' is an 
eligibility criterion for the determination of need for intensive 
services for employed workers. Also, the regulations set the floor for 
self-sufficiency at employment that pay at least 100 percent of the 
LLSIL. State and Local Boards may adjust the level upward in defining 
employment that leads to self-sufficiency, based on, among other 
things, local conditions and the needs of the populations to be served. 
Our intent in drafting Sec. 663.230 was to give State and Local Boards 
maximum flexibility to define ``self-sufficiency''. As indicated above, 
we intended to use the LLSIL as a floor below which Boards cannot go in 
their definition. We agree with the commenters that there are good 
arguments that the ``real'' measure of self-sufficiency will be above 
the LLSIL in most areas, sometimes significantly above it. We think 
that one of the important purposes of the workforce investment system 
is to help customers find jobs that will support them and their 
families. We expect that State or local definitions will reflect this 
reality and this purpose. We do not, however, wish to constrain State 
and local discretion too far. Neither can we reasonably select a higher 
floor that we can be sure will cover all of the variety of economic 
conditions that exist in this diverse nation. Therefore, no change has 
been made to the Final Rule.
    One commenter wanted to know what action we will take if the State 
Board and the Local Board decide to set different criteria for self-
sufficiency and they do not agree?
    Response: It is entirely possible that self-sufficiency measures 
developed by a State Board and a Local Board may, in some respects, 
differ depending upon local conditions and other factors that may not 
be present in other areas within the State. The regulations provide 
maximum flexibility to State and Local Boards to address this issue. It 
is also possible that the State board might establish some general 
guidelines for use by Local Boards in developing such measures, with 
latitude for the Local Boards to tailor the measures to their local 
needs. However, since Local Boards must comply with the State policies, 
State Boards are encouraged to adopt policies that Local Boards can 
adapt. We do not anticipate that this will be a problem area, however, 
if it does become one, we are available to provide technical assistance 
upon request.
    One commenter felt that using the minimum requirement of the LLSIL 
will result in various definitions for different individuals, depending 
on the size of the family, and suggested it is more reasonable to use a 
percentage of the area's average annual income.
    Response: We agree that the LLSIL is based on family size and will 
result in different income levels for individuals, depending on family 
size. The LLSIL is adjusted for regional, metropolitan, urban, and 
rural differences and family size. The use of a single measure as 
suggested would be an insufficient measure of self-sufficiency because 
it would exclude other factors that impact on such a determination, 
most importantly family size. We encourage State and Local Boards to 
adopt definitions which reasonably reflects local economic conditions 
and family needs, and made no change to the Final Rule.
    One commenter would like the definition of low-income to be changed 
to 100 percent of LLSIL, rather than 70 percent.
    Response: The term ``low income individual'' is statutorily defined 
at WIA section 101(25). We do not have authority to change this 
statutory provision. However, Sec. 663.230 provides that, at a minimum, 
self-sufficiency is at least 100 percent of LLSIL for determining if 
employed adults and dislocated workers need intensive services. No 
change has been made to the Final Rule.
    We received comments on the definition of an Individual Employment 
Plan at Sec. 663.245. One commenter recommended inserting, ``including 
support services'' between the words ``appropriate combination of 
services'' and ``for'' in order to ensure that the potential need for 
supportive services is discussed and that appropriate information, 
supportive services and referrals for services are provided. Another 
commenter suggested replacing the word ``strategy'' with ``process'' to 
convey a more interactive mode between case manager and client.
    Response: Section 663.245, defining the Individual Employment Plan, 
provides that these plans will identify the appropriate combination of 
services for the participants to achieve their employment goals. The 
``appropriate combination of services'' would, by definition, include 
supportive services if determined appropriate, based on the need of the 
individual participant. To single out a specific service in the 
regulations would imply that the service is a plan element in all 
cases, which is not the necessarily the case. A determination on the 
need for services, and the appropriate service mix to respond to those 
needs, are made at the local level on a case-by-case basis. On the 
suggestion to replace ``strategy'' with ``process,'' while not wanting 
to appear to quibble over the choice of words, we feel that, in this 
case, the former is the more proactive word and conveys the idea of a 
well planned approach for individual employment goals worked out in an 
interactive way by the case manager and the participant, as envisioned 
under WIA. No changes have been made to the Final Rule.
    One commenter felt that the employment goals should include earning 
a self-sufficiency wage. States should be encouraged to pursue 
innovative strategies to meet that goal, as provided for in the Act, 
including access to training and employment in nontraditional fields 
for women, entrepreneurship training and asset-building instruction and 
guidance.
    Response: As indicated earlier, we think that self-sufficient 
employment is an important goal for all employment whether under WIA or 
any other program. The workforce investment system contemplated under 
WIA encourages State and Local Boards to develop innovative approaches 
in the design and delivery of services which respond to the needs of 
all job seekers, including those suggested by the commenter. The Act, 
however, only requires a determination that

[[Page 49326]]

employment leads to self-sufficiency when deciding whether an employed 
adult or dislocated worker is eligible for intensive or training 
services and we do not think we can require it as a precondition to all 
employment. Therefore, no change has been made to the Final Rule.
    Some comments addressed Sec. 663.250, which provides that there is 
no minimum length of time a participant must spend in intensive 
services.
    One commenter recommended that, even though Sec. 663.250 places no 
minimum time limit for participation in intensive services before 
receiving training services, local One-Stop systems be urged to provide 
sufficient intensive services to ensure that individuals are well 
prepared for training and long term employment opportunities. Another 
commenter said that States and Local Boards must be precluded from 
establishing minimum and maximum time periods for participation in 
intensive services.
    Response: Section 663.250 recognizes that the duration of intensive 
services will vary among individual participants. State and Local 
Boards have the flexibility to develop policies on the delivery of 
intensive services, which may include limits on the duration of 
particular services, depending on the types of services provided and 
the needs of the participant. We expect that the time spent in 
intensive services will be sufficient for the participant to receive 
needed services, consistent with employment goals, and have modified 
Sec. 663.250 to reflect that expectation. We have not made a change in 
the regulations in response to the comment suggesting we preclude 
States or Local Boards from establishing minimum and maximum time 
periods for participation in intensive services, since we want to 
ensure State and local flexibility in this important area.
    A commenter recommended that States be required to establish 
measures for determining the ongoing effectiveness of intensive 
services to assure that participants receive the maximum benefit.
    Response: Under WIA sections 111 and 117, State and Local Boards 
are required to monitor and evaluate the effectiveness of the WIA 
program and we expect this to include monitoring the effectiveness of 
intensive services to respond to the needs of participants and to 
produce good participant outcomes. Additionally, the State, in 
accordance with WIA section 136(e), must conduct ongoing evaluation 
studies of Statewide title I-B workforce investment activities. Such 
studies are intended to promote, establish, implement and utilize 
methods for continuously improving such activities in order to achieve 
high-level performance within, and high-level outcomes from, the 
statewide workforce investment system. The State is required to 
periodically prepare and submit reports of the evaluation studies to 
State and Local Boards to promote efficiency and effectiveness of the 
statewide system in improving the employability for job seekers and 
competitiveness for employers. We think that these requirements meet 
the intent of the commenter's request. No change has been made to the 
Final Rule.
Subpart C--Training Services
    1. Training Services: Training services are discussed in 
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. We 
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.
    One commenter asked that we clarify in the Final Rule that, under 
WIA, training may be provided to both employed and incumbent workers.
    Response: While this statement is true on its face, we believe 
there is confusion within the workforce development community about the 
distinctions between ``employed'' and ``incumbent'' workers. The State 
Board defines the term incumbent worker since incumbent worker training 
is an allowable statewide activity under WIA section 
134(a)(3)(A)(iv)(I). Funding for incumbent worker training must be 
drawn from the State's combined adult, youth, and dislocated worker 
``15-percent funds.'' As provided at 20 CFR 665.320(d)(2), the State 
may also use a portion of its dislocated worker ``25-percent rapid 
response funds'' to devise and oversee strategies for incumbent worker 
training. These latter funds, however, may not be used to directly fund 
the incumbent worker training itself. These individuals do not 
necessarily have to meet the eligibility criteria for dislocated 
workers contained at section 101(9) of the Act nor do they have to meet 
the criteria for employed adults and dislocated workers under WIA 
section 134(d)(4)(A).
    ``Employed'' adults and dislocated workers may also receive 
training services through the One-Stop system under WIA when certain 
conditions are met. These individuals must meet the statutory 
definition of an eligible adult or dislocated worker and, to receive 
intensive services, and ultimately training, an employed individual 
must be determined by a One-Stop operator to be in need of such 
services to obtain or retain employment that leads to self-sufficiency. 
Funding for these activities comes from the ``formula'' funds provided 
to the Workforce Investment Area.
    One commenter felt that, in order to protect participants, any 
training service that a Local Board offers that is in addition to those 
listed in the Act must be identified in the Local Plan so that there 
can be public review and comment. Similarly, any additional training 
services that are offered after the approval of the Local Plan must 
also be subject to public review and comment.
    Response: We agree with the comment and believe that, although not 
specifically required, the training services that the Local Board 
intends to offer should be included in the Local Plan and available for 
public review and comment. While inclusion is not mandated, we 
encourage the Local Boards to include such information in their plan 
development process. This allows the Local Board to communicate its 
vision and its proposed priorities in the delivery of services, and 
ensures that all interested parties have an opportunity to review and 
comment on those proposed policies. We also agree with the comment that 
the plan should contain policies concerning plan modifications, 
including a definition of ``substantive change,'' and provide that when 
such changes occur there should be a similar process allowing for 
public review and comment. As indicated in earlier discussions on Local 
Plan requirements, if such policies are not included in the plan, they 
are, as an activity of the Board, subject to the sunshine provision at 
WIA section 117(e) and new Sec. 661.307 and must be developed in an 
open manner. No change has been made to the Final Rule.
    Two commenters suggested that the regulations should list non-
traditional job training, including entrepreneurial training, asset 
building, financial literacy training, micro enterprise

[[Page 49327]]

development, and vocational English as a Second Language training, as 
well as other kinds of training services not specifically listed in the 
Act.
    Response: We support the provision of a wide variety of training 
services for eligible customers of the workforce development system, 
including all those mentioned by the commenter. As noted in the 
regulations at Sec. 663.300, the list of training services in the Act 
is not all-inclusive and additional services may be provided. We 
believe that this language provides State and Local Boards the 
flexibility necessary to offer training services appropriate to their 
particular needs, without prescribing to the Local Boards what those 
services should be. Accordingly, no change has been made in the Final 
Rule.
    2. Determining the Need for Training: Section 663.310 provides, 
among other things, 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.
    We received numerous comments about the impact of training 
eligibility criteria on individuals with disabilities. The commenters 
were concerned about the requirement that eligible individuals must be 
found to have the skills and qualifications to successfully participate 
in the selected program of training services. Commenters felt that this 
could limit the opportunities available for disabled persons.
    Response: While we are sensitive to these concerns, we must point 
out that this criterion is taken directly from the Act at section 
134(d)(4)(ii), and is, therefore, a required element for all One-Stop 
operators making training eligibility decisions. This criterion applies 
only to training funded by WIA title I and not to training funded by 
other WIA partners. We believe all training eligibility decisions 
should be made on the basis of each individual's skills, abilities, 
interests, and needs. It would, of course, be inappropriate to enroll 
any individual, whether or not they are disabled, into training 
programs for which they did not have the skills to be successful. We 
also recognize that care must be taken not to stereotype persons with 
barriers to employment, including disabilities, when evaluating their 
skills, abilities, interests, and needs. Occasionally, some question 
may arise as to whether a particular individual--such as a person with 
disabilities--has the capacity to be successful in a given training 
program, taking into consideration the availability of reasonable 
accommodation or modification under 29 CFR 37.8. An advantage of the 
One-Stop service delivery structure is that partner agencies with 
specialized expertise will be available, when necessary, to assist with 
determinations as to what training may fall within a particular 
individual's skills and qualifications. We encourage One-Stop operators 
and staff to take advantage of the unique expertise of these partners 
when serving individuals with special needs. We also note that 
individuals with a disability, or any others, who feel they have been 
improperly assessed by One-Stop staff regarding their skills and 
qualifications may appeal the decision using the appropriate local 
grievance or complaints procedures established in accordance with WIA 
section 181(c) and 20 CFR 667.700. No change has been made to the Final 
Rule. An individual who feels that he or she has been discriminated 
against because of his or her disability may file a complaint in 
accordance with procedures for processing discrimination complaints, as 
set forth in 29 CFR 37.70 through 37.80.
    One comment suggested that Sec. 663.310 was not sufficiently 
specific in linking training services to occupations in demand, as 
required by the Act.
    Response: The language used in the rule at Sec. 663.310(c) is 
essentially the same as that found in the Act at 
section134(d)(4)(A)(iii). Section 134(d)(4)(A)(iii), discussing 
eligibility for training uses the phrase ``directly linked to the 
employment opportunities in the local area or in another area. . . .'' 
In contrast, section 134(d)(4)(G)(iii), dealing with ITA's uses a 
slightly different phrase, ``directly linked to occupations that are in 
demand in the local area. . . .'' We assume that when Congress uses 
different language, it means different things. In this case, we think 
that the differences in phrasing mean that a person may be eligible to 
receive training if she/he seeks training in an occupation in which 
there are jobs available in the local area or in another local area to 
which the person is willing to relocate. On the other hand, training 
may not be financed through an ITA unless the training sought is in an 
occupation in demand in the local area or in an area to which the 
participant is willing to relocate. Thus, if a participant is found 
eligible for training because he/she seeks training in an occupation in 
which there are employment opportunities available but which is not 
classified by the local area as an occupation in demand, the training 
can only be provided if it can be arranged through one of the three 
exceptions to ITA's. While it is possible that individual may not be 
able to receive WIA-funded training because of this distinction, we 
think that there will not be many cases where this occurs. Since 
Sec. 663.310 correctly reflects the statutory language, no change has 
been made to the Final rule. We do, however, encourage State and Local 
Boards to consider a range of approaches for identifying ``employment 
opportunities in the local area,'' including allowing participants to 
demonstrate employer-identified job opportunities.
    We received a number of comments about the effects of the 
requirement that training programs selected must be directly linked to 
demand occupations in the local area, or in another area to which the 
individual is willing to relocate, on individual with disabilities. 
Commenters felt that this could restrict persons with disabilities from 
participating in the title I program and suggested granting a waiver of 
the requirement in appropriate cases.
    We think that the commenters' concerns about the occupations in 
demand requirement are misplaced. As discussed above, the requirement 
for training eligibility is that the training must be linked to an 
employment opportunity available in the local community or in a place 
to which the participant is willing to relocate. The phrase on which 
the commenters focus, the occupations in demand requirement, is an 
eligibility condition for receipt of an ITA. Thus, a participant may be 
eligible for and receive training in any occupation (job) that is 
available to the participant. If the job is not in an occupation in 
demand, the participant may not be able to have the training funded 
through an ITA, but may still receive the training through one of the 
exceptions to ITA's, for example, through contracted training provided 
by a CBO with demonstrated effectiveness in serving populations with 
special needs. No change has been made to the regulations.
    There were several other more general comments about the criteria 
governing training eligibility. One commenter urged that training 
services be linked with employment opportunities in high

[[Page 49328]]

wage/high skill demand occupations that provide career and upgrade 
opportunities.
    Response: We agree that this is a worthy goal, and one which 
promotes employment opportunities leading to economic self-sufficiency. 
However, in order to ensure that State and Local Boards retain maximum 
flexibility to establish training policies that best meet their unique 
needs and circumstances, we have refrained from including additional 
regulatory requirements. The regulations do contain other provisions 
that impact on this issue. The provisions on performance 
accountability, at 20 CFR 666.100, include measures on, among other 
things, job retention, wage gains and credentialing which may serve as 
an incentive to stress training in high wage and high skill demand 
occupations. No change has been made in the Final Rule.
    Similarly, another comment suggested that Sec. 663.310(c) be 
modified to clarify that training should only be for employment 
opportunities ``that provide a self-sufficiency wage.'' We agree, in 
concept, that the ultimate goal for all employment, whether under WIA 
or any other program, should be self-sufficiency for the job seeker. We 
expect that State and Local Boards will consider a wide range of issues 
including training for jobs that allow participants the opportunity to 
attain self-sufficiency. Section 663.310, as written, is essentially a 
recitation of the Act's training eligibility provisions. No change has 
been made to the Final Rule.
    One comment suggested that the One-Stop partners, the Local Board, 
and the chief elected official must participate in the development of 
training eligibility policies, and that those policies must also be 
made available for public review and comment to assure fairness in the 
selection process.
    Response: We agree that the Local Board, which must include 
representatives of the One-Stop partner agencies, is the entity 
responsible for making policy at the local level. We also believe that, 
although not specifically required, such policies should be included in 
the Local Plan and available for public review and comment. We 
encourage the Local Boards to include such a policy in their plan 
development process. If such policies are not included in the plan, 
their development, as an activity of the Board, is subject to the 
sunshine provision at WIA section 117(e) and new section 20 CFR 
661.307. No change has been made to the Final Rule.
    Another commenter suggested that Title I of the Act ``radically'' 
and ``bureaucratically'' restricts access to job skills training, and 
believed that the regulations require unemployed individuals to accept 
any job available, regardless of whether that job enables the 
participant to rise above the poverty level or not.
    Response: We strongly disagree that the regulations require the 
result suggested by the commenter. The intent is not to require 
unemployed individuals to accept just any job. As we have stated above, 
in responding to comments on eligibility for intensive services, the 
different eligibility criteria for unemployed adults or dislocated 
workers should in no way be construed to allow participants to be 
placed in jobs that do not provide the opportunity for participants to 
attain self-sufficiency. The regulations clearly state there are no 
federally imposed minimum waiting periods before participants can 
progress to the next tier of services. Neither is there a federally 
imposed minimum number of failed job searches to demonstrate 
eligibility for the next tier of services. Rather, the regulations 
reflect our position that decisions regarding which services to 
provide, and the timing of their delivery, are best made on a case-by-
case basis at the local level. Finally, we again note that neither the 
Act nor the federal regulations mandate a ``work first'' system that 
forces individuals into the first-available employment, regardless of 
whether or not that employment leads to self-sufficiency. No change has 
been made to the Final Rule.
    3. Requirements When Other Grant Assistance is Available to 
Participants: Section 663.320 implements the requirements of WIA 
section 134(d)(4)(B), which limit the use of WIA funds for training 
services to instances when there is no or insufficient 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 those costs. Section 663.320 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 Free Application for Student 
Aid (FASA), which is used to establish Pell Grant eligibility, 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

[[Page 49329]]

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 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.
    We received a few comments on Pell Grant issues. One commenter 
stated that WIA section 134(d)(4)(B) does not require disbursement from 
that portion of Pell paid to WIA participants for education-related 
expenses. The commenter recommended that, although the issue was 
discussed in the preamble to the Interim Final Rule, the rule should be 
modified to state that the training provider must reimburse only for 
``tuition portion'' of the Pell grant. The commenter also raised the 
issue of the need for reimbursement arrangements for WIA funds used to 
``underwrite the training'' with training provider while Pell funding 
is pending. The commenter also requested clarification on whether 
tuition costs include or exclude specifically required fees for lab, 
supplies and other fees. Another commenter noted that the regulations 
appear to assign the One-Stop operator the responsibility for making 
arrangements with training providers to process reimbursements when WIA 
participants enroll in training while their application for a Pell 
Grant is pending. This precludes the other One-Stop partners from 
having this responsibility. The commenter recommended that we replace 
all references in the regulations that assign specific responsibilities 
to the One-Stop operator with language that allows for flexibility.
    Response: We will continue to work with the U.S. Department of 
Education to address the coordination of Pell grant assistance with WIA 
title I funded training assistance. We will provide additional guidance 
to the WIA Workforce Development System through administrative 
issuance. We are also pursuing a legislative amendment to make clear 
the order of payment for training costs for individuals eligible for 
both WIA activities and Pell Grant educational assistance. In the 
meantime, we have adopted the changes suggested by the commenters.
Subpart D--Individual Training Accounts
    1. Definition of an Individual Training Account: Sections 663.400 
through 663.430 contain information about Individual Training Accounts 
(ITA's). 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 which enables 
them to choose among available training providers, thus bringing market 
forces into federally funded training programs. Section 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, or policies regarding 
exceptions to the limits of the ITA, rather they provide that authority 
to the State or Local Boards.
    One commenter felt that the accountability requirements in the Act 
and regulations deny States and Local Boards the flexibility needed to 
ensure that individuals have enough financial power over their use of 
ITA's, but believes that this is a necessary result of the 
accountability requirements of the Act and regulations. The commenter 
suggested that, to accomplish the desired flexibility, Congress and the 
Department must lower performance and accountability expectations.
    Response: We believe the performance and accountability 
expectations of the Act must be balanced against the flexibility 
provided to the State and Local Boards to design their ITA programs. 
The performance and cost information that training providers must 
submit to be identified as an eligible provider of training services 
under WIA section 122, combined with the negotiated local area 
performance measures, are essential for ensuring high quality 
individual and program-wide outcomes. Within this structure, we have 
attempted to give State and Local Boards the maximum possible 
discretion to develop ITA programs. No change has been made to the 
Final Rule.
    Procedures for making payments--State and Local Boards have the 
authority to establish procedures for making payments for ITA's funded 
under WIA section 134(d)(4)(g) and Sec. 663.410. There were a number of 
comments about the nature of payments to training providers under 
ITA's. Two commenters suggested that the regulations explicitly state 
that payments to community colleges for a training program or program 
segment must be made under the same terms that the colleges require of 
other students, rather than incrementally. Other commenters supported 
the current language in Sec. 663.410 that offers the flexibility for 
incremental payments to training providers.
    Response: We generally agree that the normal form and manner of 
tuition payments to community colleges should not change as the result 
of the use of ITA's. At the same time, we do not want to prohibit Local 
Boards from adopting methods that tie payments to contractually agreed 
upon benchmarks that can benefit both participants and training 
providers, and support the achievement of performance measures. No 
change has been made to the regulations.
    One commenter, which favored retention of the regulatory language 
authorizing interim payments, seemed to believe that such a payment 
methodology would also apply to the supportive services that an ITA 
participant might be receiving.
    Response: We do not read the regulations to require that when a 
Board chooses to make incremental payments for training, it is under an 
obligation to pay for other associated services in that same manner.
    Another commenter recommended that the regulations require an ITA 
payment system that incorporates independent verification procedures 
that will ensure that the training provider has measured and certified 
the training received. That same commenter also suggested we establish 
a payment system that is efficient and easy to use while providing the 
strongest fiscal controls to prevent abuse.
    Response: We have chosen not to impose a particular payment 
procedures but we note that the process of identifying eligible 
training providers in and of itself helps to ensure quality training. 
We also encourage Local Boards to adopt other practices that promote 
quality training, such as documentation by the training provider of the 
delivery of training or the participant's achievement of agreed upon 
benchmarks or outcomes, on-site and desk reviews of the training 
provider and regular contact with the participant. We also agree that 
payment systems should be designed to ensure strong fiscal 
accountability and to

[[Page 49330]]

prevent fraud and abuse. No change has been made to the Final Rule.
    Role of the case manager--WIA section 134(d)(4)(A)(ii) provides 
that one of the eligibility criteria for adults and dislocated workers 
to receive training services is that, after an interview, evaluation, 
or assessment and case management, the participant has been determined 
by a One-Stop operator to be in need of training services and to have 
the skills and qualifications to successfully participate in the 
selected program of training services. Commenters supported the role 
that is described for case managers in Sec. 663.410, that is, assisting 
the participant to select the eligible provider from which to purchase 
training. One of these commenters further suggested that we emphasize 
the need for skilled, professional case managers while another pointed 
out that demonstration studies on the use of vouchers have found that 
skill, professional case management was the key factor in determining 
the effectiveness of vouchers
    Response: We acknowledge the critical role of case managers and 
urge, where necessary, States and/or local areas to arrange quickly for 
staff training to ensure case managers have the understanding and 
knowledge to carry out this role effectively. We believe, however, that 
prescribing the role of case managers in the regulations is 
inconsistent with our principle that the regulations should permit 
State and Local Boards the maximum possible flexibility. The 
regulations have not been changed.
    National data collection and evaluation of the new ITA system: 
There were also comments urging us to collect information on the actual 
costs of training and to conduct evaluations of the relationship 
between training and job placement, as well as the relationship between 
the amount and duration of ITA's and the success of workers in securing 
jobs that provide self-sufficiency. Additionally, the commenter asked 
us to establish a system to collect information on outcomes for ITA's 
including the relationship of training to job placement.
    Response: We believe that both evaluations and analyses of JTPA 
SPIR data have already demonstrated the strong relationship between 
training, including training durations, and outcomes. The evaluations 
that will be conducted of current ITA demonstrations will further 
examine the issues raised by the commenters. Also, WIA section 
136(d)(2)(A) requires States to report on entry into unsubsidized 
employment that is related to the training provided to participants, 
and section 136(d)(2)(C) requires States to report the cost of 
workforce investment activities (which include training) relative to 
the effect of the activities on the performance of participants, to the 
Department as part of their annual report. We encourage State and Local 
Boards, as part of their ongoing responsibility to manage performance, 
to examine those same issues. In addition, we will continue to provide 
technical assistance regarding various program design issues and the 
implications and potential unintended consequences that must be 
considered in making ITA policy decisions. No change has been made to 
the Final Rule.
    Two other commenters suggested that the regulations authorize the 
use of ITA's to pay the full cost of customized training programs in 
which tuition is not otherwise charged.
    Response: The Act specifically identifies customized training as an 
exception to ITA's. In general, customized training is provided based 
on a specific training curriculum ``customized'' to the particular 
worker skill needs of a specific employer or group of employers. While 
participants may choose to participate in such training, there is no 
provision for customer choice among training providers, rather there is 
a single training provider who has been selected to ``customize'' the 
training. Because there is no customer choice on the part of the 
participant, ITA's are not an appropriate mechanism for customized 
training. On the separate issue of the use of WIA funds to pay for the 
full cost of customized training, we are constrained by section 
101(8)(C) of the Act, which requires the employer to pay not less than 
50 percent of the cost of the training. No change has been made to the 
Final Rule.
    2. Limitations on the amount and duration of ITA's: A number of 
commenters raised concerns about the policies that State and Local 
Boards might establish with respect to a dollar and/or duration 
limitation for ITA's. Section 663.420 provides guidance for State and 
Local Boards in their policy decisions to impose amount or duration 
limits on ITA's. In general, although the regulations allow limits, we 
expect that the limits will be realistic and will neither preclude 
people from getting the training that they need nor providers from 
participating in the system. In setting limits, State and Local Boards 
need to consider the factors described above to be sure that the limits 
are not too restrictive.
    A commenter recommended that the limits on ITA's be as flexible as 
possible to allow workers to invest in training that will lead to a 
living wage and long-term self sufficiency and a second urged State and 
Local Boards to consider the needs of different populations in setting 
limits.
    Response: Section 663.420(b)(1) allows State and Local Boards to 
establish limits based on a participant's needs, which should include 
the need for a job that leads to self-sufficiency. In addition, 
Sec. 663.420(b)(2) allows State or Local Boards to set a range of 
limits, an option which Boards may choose when considering the varying 
needs of different population groups. These two options provide 
considerable flexibility to the Local Board to support a policy that 
provides for variations in the funding of ITA's. Thus, particular 
occupational training that leads to self-sufficiency, or furthers other 
goals of the workforce investment, could be set at different dollar 
limits. Similarly, Local Boards could seek to ensure a large number of 
providers of entry level skills training are available to aid 
participants in avoiding transportation costs and long commutes during 
training. While we agree with the comment, and do not want limits of 
amount of duration to preclude people from getting the training they 
need or training providers from participating in the system, in order 
to preserve State and local flexibility, no change has been made to the 
regulations.
    To ensure that State and Local Board are able to make informed 
decisions about how effectively different populations can be served 
under an ITA system, commenters recommended that we encourage State and 
Local Boards to gather data from training providers and other 
stakeholders on the actual costs of and time needed for training. One 
commenter focused this concern on low-income unemployed individuals. 
The commenter asked that we include affirmative examples to States and 
Local Boards in regulations or in guidance to ensure that such 
limitations do not impede the success of intervention. Other commenters 
suggested that there is evidence that previously established limits 
have been too restrictive to effectively serve low income populations.
    Response: We believe that is important for the eligible training 
provider list to include sufficient numbers of training providers to 
ensure that customer choice is a reality. This means that State and 
Local Boards must develop ITA policies that ensure the marketplace can 
operate and that a number of training providers across a

[[Page 49331]]

wide variety of occupations will believe it is in their best interests 
to apply to become an eligible provider. If the number of training 
providers seeking to be included on the eligible provider list is 
sufficient to ensure healthy competition, then the need for extensive 
cost analysis may be eliminated. No change has been made to the Final 
Rule.
    We have begun to develop additional information about ITA's, 
including information drawn from a new ITA demonstration that will 
explore a number of approaches to the administration of ITA's and 
provide a laboratory for stakeholders and local operators to visit and 
observe. We will use this information to provide guidance to the system 
through conference workshops.
    Numerous comments concerned Sec. 663.420, which gives the State or 
Local Board the authority to establish limits on the dollar amount and 
the duration of an ITA. Several commenters were concerned that cost and 
duration limitations on ITA's will limit customer choice. They were 
especially concerned that cost limitations would be set too low to 
provide a range of eligible training providers from which to choose. 
The commenters voiced concern that the cost limitations could be set at 
amounts less than the actual cost of training services. They requested 
that we provide regulations or guidance to ensure that ITA 
administration does not become a limiting factor in serving job 
seekers. Similarly, many commenters felt that limits on the amount and 
duration of an ITA conflicted with Title I of the Rehabilitation Act 
and limits informed choice of individuals with disabilities.
    Response: We are also concerned that the dollar and duration 
limitations could have the potential for limiting customer choice. 
Consequently, Sec. 663.420(c) provides that these limitations should be 
implemented in a manner that maximizes customer choice. We emphasize 
that any limits established by a State or Local Board apply only to 
training under Title I of WIA, not to training under Title I of the 
Rehabilitation Act. We also note that, under WIA, access to training or 
any other services is not an entitlement. Local Boards must exercise 
discretion in establishing ITA's for eligible participants. The 
regulations at Sec. 663.420(b) permit State and Local Boards to 
establish ITA limitations in a number of different ways and provides 
substantial discretion to allow for other circumstances such as the 
availability of other funding, the contribution such training would 
make to the overall workforce skill needs of the community, or the 
needs of the individual participant to be taken into consideration.
    We have added language to Sec. 663.420(c) to clarify that any ITA 
limitations that are established may provide for exceptions to the 
limitations in individual cases. We believe that more effective 
programs will include this type of flexible limitation policies, so 
that individuals are not excluded from training solely because of an 
ITA limitation. In establishing guidance or limits on training funding, 
a number of factors may be taken into consideration, such as the skill 
shortages identified by local employers, the costs of training to 
address these occupations in demand, and the training needs and 
interests of the participants. The availability of other funding 
resources should also be considered in the development of the training 
portion of the Individual Development Plan, including Rehabilitation 
Act funds, TANF, Pell Grants, and other Federal and State funding. 
Coordination and cost sharing between Local Boards and Rehabilitation 
Act grantees as well as other partners with training funds is a matter 
for local negotiation and inclusion in the MOU. 20 CFR part 662 
contains a detailed discussion of MOUs.
    DOL's WIA title I performance accountability specifications do not 
measure cost per participant, therefore, the setting of cost 
limitations for ITA's will not have an impact on the performance 
accountability system. The decision to establish cost and duration 
limitations should be made after fully considering their benefits to 
the overall workforce system and their effects on individuals and 
populations in need of training. In making such decisions, State and 
Local Boards should consider all public costs, not simply available WIA 
funds, the value of such training in contributing to the 
competitiveness of local businesses that may be ``at risk'' or may be 
expanding and other economic development benefits.
    One commenter suggested that the language in Sec. 663.420(a) which 
gives the State or Local Board responsibility for establishing dollar 
and duration limits be revised to give the Local Board the sole 
responsibility.
    Response: State and Local Boards both play an important role in the 
ITA/eligible training provider systems. Local Boards have an important 
familiarity with the local labor market and local training providers, 
while the State plays an important leadership role in the establishment 
of the workforce investment system as a whole--including the ITA/
eligible training provider system. As a result, no change has been made 
to the Final Rule.
    One commenter asked how disagreements between a State and Local 
Board over the establishment of limits to ITA's would be resolved.
    Response: The State Board's limits would prevail in such a case. 
State or Local Boards should consider the range of costs and types of 
training in demand by employers throughout the State in setting limits. 
Policies concerning spending limits on ITA's should not unduly exclude 
eligible providers or unduly limit customers' training options in any 
geographical area of the State. Any cost limits established by State or 
Local Boards apply only to WIA funds, and not to the total cost of 
training. Where the cost of the desired training exceeds the 
established State or Local Board limit for ITA's, an eligible 
participant should still be able to access WIA ITA funds, when the WIA 
training funds will be supplemented with funds from other sources--such 
as Pell Grants, scholarships, severance pay and other sources. Section 
Sec. 663.420 has been changed by adding a new paragraph (d) to reflect 
the ability of participants to access ITA funds when the ITA funds will 
not pay the full cost of training. This approach is supported by 
Sec. 663.310(d) which provides that training services may be made 
available to employed and unemployed adults and dislocated workers who 
are unable to obtain sufficient grant assistance from other sources to 
pay the cost of training and require WIA assistance in addition to 
other sources of assistance.
    Although discussing limits to ITA's, one commenter suggested that 
State and Local Boards be required to establish criteria and written 
policies governing access to and the distribution of ITA's and that the 
process for developing these policies be required to include 
consultation with appropriate labor organizations. Further, the 
commenter suggested that such policies be available to the interested 
parties, the general public and all individuals served through the One-
Stop system.
    Response: The State is required, in 20 CFR 661.220(d), to provide 
an opportunity for public comment on and input into the development of 
the state plan prior to its submission. The required opportunity for 
public comment requires that representatives of labor organizations, as 
well as representatives of business and chief elected officials be 
afforded the opportunity to comment. Similarly, Sec. 661.345(b)(2) 
requires that the Local Board provide an opportunity for public comment 
on and input to the development of the local workforce

[[Page 49332]]

investment plan, prior to its submission, be provided to 
representatives of labor organizations and business. WIA section 117(e) 
also requires the Local Board to provide information to the public on 
Local Board activity.
    We believe that access to and distribution of ITA's is based 
broadly on the Local Board's policy decision about the amount of 
funding to be devoted to training services and, more narrowly, on 
individual participants' need for training and their eligibility for 
it. We strongly encourage Local Boards to consult with a variety of 
organizations, including organized labor, when making policy decisions 
concerning ITA's. No change has been made to the Final Rule.
    A commenter recommended that we should include a prohibition on 
discrimination on the basis of union affiliation in the selection of 
training programs.
    Response: We believe that WIA section 122 and Subpart E of part 
663, which provides further direction regarding eligible training 
providers, establish sufficiently objective procedures to ensure 
against discrimination in the selection of training offered either by 
unions or by employer organizations. No change has been made to the 
Final Rule.
    Another commenter requested authority for training providers to 
reject students with ITA's where they think the student will not 
succeed in, or benefit by, the program.
    Response: There is no requirement that eligible training providers 
must accept any participant who seeks to enroll under the local 
workforce investment area's ITA program. Further, we are not limiting 
an eligible training provider's ability to set entrance criteria or 
screening tests to determine that the participant is likely to success 
in the particular training curriculum. We believe that the intensive 
services provided to a participant, especially assessment and career 
counseling in consultation with the case manger in developing a 
realistic Individual Employment Plan, combined with customer-oriented 
information on eligible training providers that reflects the entrance 
criteria for the desired training curriculum, will be critical to the 
participant's selection of appropriate training in which they can 
achieve success and ultimately, job placement. No change has been made 
to the regulations.
    3. Exceptions to ITA's: The Act, at Sec. 134(d)(4)(G)(ii), and the 
regulations at Sec. 663.430, 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--Section 663.430(b) also 
authorizes contracts for training when the Local Board determines that 
there are special populations that face multiple barriers to employment 
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. We have received many 
suggestions about this exception and the extent to which it may be 
used.
    Response: Generally, it is our position that 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. We believe 
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.
    Numerous comments recommended that the list of special participant 
populations be expanded to include individuals with disabilities who 
require multiple services over extended periods of time. Other 
commenters recommended that the list also be expanded to include older 
individuals or low income older individuals. Two commenters disagreed, 
in part, with the recommendation that individuals with disabilities be 
included as a special participant populations. They made the point that 
such individuals should not be automatically perceived as a special 
participant population and excluded from benefitting from ITA's.
    Response: The Act does not specifically list any of these 
populations in section 134(d)(4)(F)(iv). The Act and Sec. 663.430(b) 
do, however, list as one of the four special participant populations 
defined in the Act ``Other hard-to-serve populations as defined by the 
Governor involved.'' As a result, Governors have the authority to add 
additional groups, such as individuals with disabilities, to the list 
contained in the statute. Other provisions that assure that persons 
with disabilities will have full and fair access to WIA services. For 
example, section 188(a)(2) provides that no individual shall be 
excluded from or denied benefits under any WIA title I program or 
activity on the basis of disability. Regulations implementing this 
provision are found at 29 CFR part 37. In addition, section 112(b)(17) 
of the Act requires the Governor to describe, in the State Plan, how 
the State will serve the employment and training needs of ``individuals 
with multiple barrier to employment (including older individuals and 
individuals with disabilities).'' We believe that this direction, which 
is included in the WIA State Planning Guidance, provides sufficient 
direction for consideration of these and other population groups not 
specifically mentioned in section 134(d)(4)(F)(iv) of WIA. The 
requirement for public comment on the plan in Sec. 661.220 of the 
regulations allows interested parties the opportunity to promote the 
interests of those two groups.
    In addition, we would like to clarify that within the special 
participant populations that are listed in the Act and that are 
identified by the Governor, there will be individuals for whom an ITA 
is the most appropriate avenue to employment. We encourage One-Stop 
operators and intensive service providers to consider all training 
options when working with special participant populations. It is 
important that consumer reports reflect adequate information to 
determine the appropriateness of training provided by an eligible 
training provider with regard to accessibility, auxiliary aids and 
services, etc., to enable customers with special needs to make an 
informed choice.
    One commenter recommended that the Governor be required to solicit 
comments from key stakeholders, including business, organized labor, 
and CBO's, when identifying additional populations.
    Response: Section 112(b)(17)(A)(iv) of the Act requires the 
Governor to have this information in the State plan, which is, of 
course, subject to comment.

[[Page 49333]]

No change has been made to the Final Rule.
    Criteria for ``Demonstrated Effectiveness'': Section 663.430(a)(3), 
provides that when the exception for special populations is used, the 
Local Board must have in place criteria it developed 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 criteria listed in the regulation are 
illustrative and Local Boards should develop specific criteria 
applicable to their local areas.
    One commenter suggested that, in selecting CBO's as training 
providers through a contract for services to serve special participant 
populations, State and Local Boards should be able to consider quality 
training even if that training program is not included on the eligible 
provider list.
    Response: We cannot agree to that recommendation since WIA section 
122 requires that all training providers meet the requirements for 
inclusion on the eligible provider list. Section 122(f) lists two 
exceptions to the requirement that deliverers of training services be 
eligible training providers; on-the-job training and customized 
training. We interpret these exceptions to be exclusive; providers of 
all other training services must go through the eligible provider 
process. No change has been made to the Final Rule.
    One commenter felt that one of the criteria of demonstrated 
effectiveness established in Sec. 663.430(a)(3), ``financial 
stability,'' was too restrictive and should not be a factor in 
considering CBO's which have a record of providing crucial services to 
disadvantaged groups.
    Response: In order to ensure the proper expenditure of Federal 
funds, we believe the financial stability of a CBO or of any private 
organization is relevant in a Local Board's determination when 
selecting a training provider for special participant populations. 
While financial stability is not the only factor that a Local Board may 
consider, and may not be the decisive factor, it is reasonable for a 
Local Board to consider the financial stability of an organization in 
which it may invest scarce training funds. No change has been made in 
the Final Rule.
    The same commenter also recommended that we change 
Sec. 663.430(a)(3)(ii) to establish, as an alternative to the listed 
program measures, the criterion of a demonstrated ability to do 
outreach to and serve populations that face multiple barriers.
    Response: Section 663.430(a)(3) does not limit Local Boards to the 
listed factors in establishing criteria for demonstrated effectiveness. 
The Local Board may also consider the CBO's or private organization's 
success in reaching out to disadvantaged populations. No change has 
been made to the Final Rule.
    Another commenter suggested expanding the criteria for demonstrated 
performance to include the attainment of a self sufficiency wage.
    Response: Although we have, in Sec. 663.230, established a minimum 
definition of self-sufficiency--employment that pays at least the lower 
living standard income level, as defined in WIA section 101(24)--the 
criteria for determining whether employment leads to self-sufficiency 
is left to the State and Local Boards. This means the criteria to be 
applied could vary substantially from area to area. In addition, the 
performance accountability system, established in section 136 of WIA, 
does not refer to attainment of self-sufficiency. While, as we have 
said above, we recognize the importance of self-sufficiency as a goal 
for all employment and training activities and urge State and Local 
Boards to adopt that standard, we are not prepared to impose that 
standard on the system. However, Sec. 663.430(a)(3) does not limit the 
ability of the State or Local Board to adopt additional criteria of 
demonstrated effectiveness by including attainment of self-sufficiency 
as a measure of demonstrated performance. No change has been made to 
the regulations.
    One commenter suggested expanding the criteria for demonstrated 
performance to include the demonstrated ability to serve ``hard to 
serve'' populations.
    Response: We have modified Sec. 663.430(a)(3)(ii) to clarify that 
the criteria listed in that section are among the ways available to 
demonstrate effective delivery of services to hard to serve 
populations.
    4. Requirements for Consumer Choice: WIA section 134(d)(4)(F), and 
the regulations, at Sec. 663.440, identify the information on training 
providers that must be made available to One-Stop center customers. 
They require Local Boards to make available, through the One-Stop 
centers, the eligible training provider list as well as the performance 
and cost information associated with each provider. Section 663.440(c) 
provides additional guidance on how participants may use that 
information to select a training provider and have an ITA established 
on their behalf. We received a number of comments on the contents of 
the information, the manner in which it would be made available, and 
the level of authority the Local Board and the One-Stop operator will 
have in establishing ITA's.
    A commenter expressed concern that, if the same entities that 
establish ITA's also offer training, they will have the potential to 
steer individuals toward their own training services.
    Response: The introduction of ITA's was intended to maximize 
customer choice and reduce any forms of inappropriate referral 
practices that may have existed. The limited circumstances in which 
exceptions to ITA's are authorized are a further safeguard against the 
recurrence of such practices. The Act, at Section 117(f)(1)(B), also 
establishes stringent conditions that a Local Board must meet before a 
Governor can consider a waiver of the general prohibition against a 
Local Board's provision of training. Further, the Act, at section 
134(d)(4)(F), requires Local Boards to make available through the One-
Stop centers the eligible training provider list and the program and 
cost information associated with each eligible provider. The 
availability of that information will allow participants to assume more 
control over the choice of training provider. Finally, through its 
monitoring and oversight role, the State may identify and review any 
unusual patterns of eligible provider usage to determine if corrective 
action is necessary. We believe these protections are sufficient to 
avoid the practices the commenter fears. No change has been made to the 
final regulations.
    Another commenter asked how customer choice requirements apply to 
incumbent workers.
    Response: It is important to recognize the difference between 
incumbent and employed workers. As we have explained above, incumbent 
workers are individuals who are employed, however, not all incumbent 
workers are also eligible for services to employed worker as described 
in WIA sec. 134(d)(3)(A)(ii). Training for incumbent workers is 
specifically authorized only as a Statewide Workforce Investment 
Activity under WIA section 134(a)(3(A)(iv)(I) and Sec. 665.210(d). This 
is an optional activity in which the States may decide to engage. 
Generally, incumbent worker training is developed with an employer or 
employer association to upgrade skills training of a particular 
workforce. It usually takes place in the workplace or after work hours 
for employees of a specific employer or employer association.

[[Page 49334]]

There is no requirement that all incumbent workers to be trained must 
be determined to be in need of training services to obtain or retain 
employment that allows for self-sufficiency. Frequently, such training 
is part of an economic development or business retention strategy 
developed by a State. In such cases, the employer is involved in the 
arrangement of the training curricula and usually has a role in the 
selection of the training provider. Since the training is usually 
arranged by the employer with a specific training provider, there is no 
customer choice on the part of the individual incumbent worker other 
than whether or not to participate in the training. This issue is also 
addressed in the preamble discussion of 20 CFR part 665.
    In contrast, when a One-Stop operator determines that an employed 
worker meets the eligibility criteria, established under WIA Sec. 
134(d)(3)(A)(ii), for training with local (formula) funds, that worker 
should is no different from any other worker found eligible for 
training services and must enjoy the same degree of consumer choice as 
any other person eligible for training. An Individual Employment Plan 
would be developed for the employed worker as part of the intensive 
services provided to the participant and a training plan, if so 
indicated, developed in the same manner as for any other participant. 
Since the customer choice requirements do not apply to incumbent worker 
training, no change has been made to the regulations.
    Availability of training funds--There were several comments about 
the language in Sec. 663.440(c) which requires a One-Stop operator to 
refer an eligible individual to a training program and establish an ITA 
``unless the program has exhausted funds for the program year. . . .'' 
One commenter suggested that, to avoid the early exhaustion of program 
funds, we should add language requiring the use other available State 
and local resources, particularly for incumbent workers, before using 
WIA funds for ITA's. Another commenter felt that the language infringed 
upon a Local Board's authority to allocate funds among core, intensive 
and training services, presumably by mandating the expenditure of funds 
on training at the expense of core and intensive services.
    Response: It is important to emphasize that, under section 
134(d)(4)(B), the opportunity for an individual to enroll in a training 
program does not rely exclusively on the availability of WIA training 
funds. In all cases, the resources of partners as well as Federal, 
State, local and personal funding sources should must also be taken 
into account in the development of the Individual Employment Plan. 
Thus, an eligible individual may receive intensive services and receive 
assistance in making arrangements for training regardless of whether 
the local WIA program has exhausted training funds for the program year 
and is unable to provide an ITA. Since we have already discussed the 
requirements to consider and use other funding sources in Sec. 663.320, 
we do not think it is necessary to add an additional mandate that 
operators consider other funding sources before approving training. 
Section 195(2) of the Act establishes a ``maintenance of effort'' type 
of requirement by mandating that WIA funds be used for activities that 
are in addition to those already available in the local area, and 
Sec. 663.310(d) specifies that training services may be made available 
to eligible adults and dislocated workers who are unable to obtain 
grant assistance from other sources. In an effective One-Stop system, 
the One-Stop operator will have knowledge of additional resources and 
will be able to coordinate WIA services with those of other partner 
programs, thus increasing the opportunity to provide increased services 
to customers of all the partner programs. Finally, incumbent worker 
training activities are funded from statewide workforce investment 
funds authorized under section 134(a)(3)(A)(iv)(I) and rather than 
local training funds.
    In response to the second comment, the ``exhausted funds'' language 
of Sec. 663.440(c) is not intended to contradict, and must be read in 
conjunction with, the Local Board's authority to determine the 
appropriate mix of core, intensive and training services in the local 
area, described in Sec. 663.145(a). In recognition of this, we have 
changed Sec. 663.440(c) to clarify that a One-Stop operator must refer 
an individual to training and establish an ITA except when the Local 
Board determines that training funds have been exhausted.
    The commenter also suggested that the costs of referral to training 
be borne by the One-Stop operator.
    Response: No change has been made in the regulations since 
Sec. 663.440(d) already requires that the cost of that referral be paid 
by the applicable Title I adult or dislocated worker program.
    Another commenter suggested that in order to assure ``true'' 
customer choice, the consumer information provided by the Local Board 
should include a listing of the types of jobs into which providers have 
placed people and the wages earned in those jobs.
    Response: WIA section 122(d) does not require eligible training 
providers to submit specific information on jobs, although the Governor 
or the Local Board may choose to include such a requirement; that same 
section does, however, require the submission of information on wages 
and permits requiring the submission of information on the percentage 
of individuals who obtain employment in an occupation related to the 
program (WIA sec.122(d)(1)(A)(i)(II)). We note, though, that the 
information required by section 122(d) must be submitted for each 
specific training program on the list of eligible training programs, 
not for the eligible provider's full range of programs. Information on 
the specific training program, along with information submitted at the 
Governor's or Local Board's option on training-related placements, may 
serve as a useful substitute for the specific job information the 
commenter seeks. As discussed further in subpart E, WIA section 
122(d)(3) sets conditions under which additional information may be 
requested. No change has been made in the regulations.
    Another commenter supported the requirement in Sec. 663.430(a)(2) 
for a public comment period of 30 days before a Local Board can 
determine that there is an insufficient number of eligible training 
providers in the local area to accomplish the purposes of ITA's.
    Response: The regulations retain that requirement.
Subpart E--Eligible Training Providers
    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 the provisions covering Individual Training Accounts

[[Page 49335]]

(ITA's) in WIA section 134. 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 
may 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, Sec. 663.530 
establishes a maximum eighteen month period for an organization's 
initial determination as an eligible provider.
    Before publication of the Interim Final Rule, some traditional 
providers of training under previous workforce programs, such as 
community-based organizations, expressed concern that they would face 
difficulties in participating in this system. The regulations clarify 
that such organizations have the opportunity to deliver training funded 
under WIA, provided that 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 range of 
providers, including CBO's, while maintaining the quality and integrity 
of training services.
    A commenter recommended that the Act and the regulations for 
subpart E be changed to permit use of a competitive procurement 
process, such as that permitted for youth providers in the Act, since 
the identification of eligible training providers for adult training 
services was viewed as ``overly complicated.''
    Response: We recognize that the eligible training provider 
requirements may present significant implementation challenges to 
States and local areas. However, these requirements are essential to 
the new system envisioned under WIA, in which consumer choice and 
accountability are key principles. Although ITA's must be used for most 
training services, contacts for training are permissible in certain 
limited circumstances (discussed in Sec. 663.430): for customized or 
on-the-job training (OJT); when there are a limited number of 
providers, or for programs of demonstrated effectiveness offered by 
CBO's or other private organizations for special participant 
populations facing multiple barriers to employment. Under 20 CFR 
661.350(b)(10), Local Boards are required to describe in their local 
plan the competitive process to be used to award contracts for training 
services when exceptions are made to the use of ITA's. No change has 
been made to the Final rule.
    Several commenters suggested that language should be added in 
Sec. 663.500 and throughout the subpart to clarify that programs, not 
providers, are made eligible, and that eligibility is not automatically 
conferred on all of an eligible provider's programs.
    Response: We agree that clarification is needed. We have added 
language throughout the subpart (in Secs. 663.500, 663.510, 663.515, 
663.535, 663.550, 663.565, 663.570, 663.585, and 663.590) to clarify 
that:
     programs as well as providers must be eligible;
     providers are eligible to provide training services only 
for the programs described in their applications;
     the Local Board and the Governor may require application 
information on providers as institutions, in addition to information 
regarding programs;
     application requirements for all programs not eligible 
under the Higher Education Act nor registered under the National 
Apprenticeship Act (regardless of the type of provider) fall under the 
Governor's initial eligibility procedures;
     providers submit performance information on programs and 
those programs that don't meet performance levels must be removed from 
local lists;
     providers may continue to be eligible if at least one of 
their programs is eligible (even if other of their programs are 
determined ineligible and removed from the local and State lists); and
     State and local lists must include information on eligible 
training programs as well as providers.
    A number of commenters wanted us to add specific language in 
Sec. 663.500 and throughout this subpart on the need to assure that 
there is diversity in the types of programs offered and in entrance 
requirements, that community-based organizations are included, and that 
nontraditional employment for women be a suggested focus for new 
training providers.
    Response: Under Sec. 663.440(a), training services must be provided 
in a manner that maximizes consumer choice. We agree with the 
commenters that maximizing consumer choice requires that Governors and 
Local Boards ensure that eligible training provider systems offer a 
diverse array of high-quality programs that meet the varying career 
interests, skill levels, and training needs of WIA customers, including 
low income adults, dislocated workers, and other priority groups under 
WIA. Governors and Local Boards are strongly encouraged to provide 
outreach, technical assistance, and leadership to different types of 
providers, including CBO's and providers of non-traditional employment 
and training opportunities, in order to ensure a diverse array of high-
quality training options. In fact, 29 CFR 37.42 requires recipients 
(including Governors and Local Boards) to conduct outreach efforts to 
various populations. Community-based organizations, recognized at 
Sec. 663.590 as being able to apply and be determined eligible, have, 
in many local areas, proven to be a key source of quality programs. We 
do not think it would be useful to try to prescribe a uniform rule to 
cover the variety of State and local selection processes and criteria 
that will exist. We encourage Governors and Local Boards to administer 
the selection process in a manner that assures that significant numbers 
of competent providers, offering a wide variety of programs are 
available to customers, and have added language indicating this to 
Sec. 663.500.
    A number of commenters were concerned that the requirements in 
section 122 of the Act and all of Secs. 663.500 through 663.595 of the 
regulations would be in conflict with ``informed choice'' requirements 
in title I of the Rehabilitation Act of 1973, as amended by title IV of 
the Workforce Investment Act. Commenters noted that State Vocational 
Rehabilitation (VR) agencies have their own vendor approval procedures, 
maintain their own vendor lists, and that some organizations that work 
with persons with disabilities may not be on a WIA eligible training 
provider list.
    Response: While VR agencies are required partners in the One-stop 
system, participants in VR-funded services can select vendors, 
including training providers, approved under the State VR agency's 
procedures and policies. Only when VR participants also use WIA title I 
funds must training services be from a provider and program eligible 
under WIA title I.
    Both title I of WIA and Section 102(d) of the Rehabilitation Act 
(title IV of WIA) contain provisions that we believe are intended to 
serve the same goal--providing participants with the opportunity and 
the means to make informed choices about the services they receive. 
Title I of WIA mandates that training be delivered in a manner that 
maximizes consumer choice and requires the use of ITA's, provision of 
descriptive and performance information on eligible providers and 
programs, and delivery of intensive services, such as assessment and 
case management. Similarly, section 102(d) of the Rehabilitation Act 
requires State VR agencies to implement policies to

[[Page 49336]]

assure that individuals can exercise informed choice in decisions 
related to assessment, selection of employment outcome, specific 
vocational rehabilitation services, the entity that will provide 
services, the employment setting in which services will be provided, 
and the methods available for procuring services.
    We encourage State VR agencies and WIA systems to harmonize and 
coordinate their respective policies and procedures on informed 
consumer choice and the creation of lists of, and information on, 
eligible or approved providers of training services. Both systems could 
explore, for example, common application requirements or approval 
criteria for vendors of training services, expediting the application 
or approval process to assure timely inclusion of vendors from the 
partner system, providing outreach to their respective providers on how 
they can become eligible or approved under the partner's system, and 
creation of a common, accessible consumer information system on 
programs and providers that can be used by participants in both WIA 
title I and VR as they exercise their choice.
    As we noted earlier, we encourage Governors and Local Boards to 
ensure that the eligible training provider system provides access to a 
broad diversity of programs that can accommodate the varying needs, 
career interests and preferences of priority groups under WIA. We 
encourage Governors and Local Boards to make sure that State and local 
WIA procedures, while maintaining the quality and integrity of training 
services, afford adequate and timely opportunities for applications 
from training programs and providers serving individuals with 
disabilities. Also, when developing initial and subsequent eligibility 
procedures, under Secs. 663.515(c)(1)(I) and 663.535 (a)(1), Governors 
must solicit and take into consideration the recommendations of 
providers. We encourage Governors to extend this opportunity to 
providers offering training services to individuals with disabilities. 
Since we do not see a conflict between WIA's customer choice and VR's 
informed choice requirements, no change has been made to the Final 
rule.
    Section 663.505--What are Eligible Providers--One commenter wanted 
to ensure that Sec. 663.505 permits apprenticeship programs with 
applications pending to be recognized as eligible training providers.
    Response: Apprenticeship programs awaiting State or federal 
approval can be recognized as eligible by Local Boards. However, since 
such programs are not yet registered under the National Apprenticeship 
Act, the provider would have to apply under the Governor's procedures 
for initial eligibility, which requires the provision of performance 
and cost information. No change has been made to the Final rule.
    A commenter suggested that Sec. 663.505 (b)(2)(iii), be revised to 
specifically mention service or conservation corps as other eligible 
providers of training services.
    Response: Service or conservation corps programs are among the 
types of programs that could be eligible to provide adult training 
services under State and local initial eligibility procedures. There 
are many types of organizations that could apply and become eligible, 
but we do not think it is appropriate to try to enumerate them all, or 
to specify certain groups. No change has been made to the Final rule.
    One commenter wanted us to ensure that CBO's, whose eligibility is 
discussed in Sec. 663.505(b)(2)(v), are not left out as eligible 
training providers simply because they are not ``automatically'' 
eligible under WIA section 122(b)(1).
    Response: Since most CBO's and their programs are not HEA-eligible, 
they will have to provide program performance and cost information in 
initial applications and their programs will have to be determined 
eligible by the Local Board. However, we anticipate that many CBO 
programs will be able to meet performance requirements both initially 
and subsequently, and thus will be included on local and State lists. 
As noted earlier, we strongly encourage States and Local Boards to 
provide outreach and technical assistance to providers such as CBO's, 
to ensure that there is a wide array of providers and programs that can 
both accommodate WIA participants' diverse training needs and career 
interests and meet accountability requirements. Community-based 
organizations, recognized at Sec. 663.590 as being able to apply and be 
determined eligible, have proven able in many communities to meet these 
skill needs and career interests while increasing participants' 
earnings and employment. We encourage CBO's to take part in the 
consultation process required under Secs. 663.515(c) and 663.535(a). 
Under these provisions Governors must solicit and take into 
consideration the recommendations of training service providers and 
interested members of the public on both initial and subsequent 
eligibility procedures. We believe that the regulations adequately 
protect the interests of CBO's, thus, no change has been made to the 
Final rule.
    Section 663.508--Definition of a Program of Training Services--A 
number of commenters felt that the definition of a program of training 
services in Sec. 663.508 should be clarified. The commenters suggested 
that a course or sequence of courses leading to a ``competency or skill 
recognized by employers'' and ``a training regimen that provides 
individuals with additional skills or competencies generally recognized 
by employers'' were similar, but vague. Commenters wondered if one 
definition applied to services for the unemployed while the other 
applied to such services for the employed, and what the word 
``generally'' was intended to convey. One commenter recommended that 
the definition require that competencies and training regimen be 
identified and approved prior to training, and several commenters 
suggested that the competencies approved by labor organizations or 
labor-management committees should be acceptable. Another commenter 
suggested that the regulation clarify that the competencies and skills 
could include increased literacy or increased English language 
abilities.
    Response: The definition of a program of training services was 
intended to ensure that individuals using ITA's have access to a broad 
array of training options, and that no arbitrary limits would be 
established as the length, nature, location or outcomes of the 
training, unless required under other parts of the Act or regulations 
(such as requirements for on-the-job training and customized training 
at Secs. 663.700-663.720). We did not intend to differentiate between 
training programs for the employed or unemployed. Section 663.508 has 
been revised to clarify that a program of training services can consist 
of one or more courses or a training regimen, and that either of these 
can lead to a formal credential (such as a degree or certificate) or to 
the acquisition of skills and competencies recognized by employers for 
a specific job or occupation, as well as general skills and 
competencies necessary for a broad range of occupations, or job 
readiness. Section 663.508 has also been changed to indicate that the 
skills and competencies should be recognized by employers and 
identified in advance. Such competencies may include literacy or 
English language abilities. We encourage Local Boards and Governors to 
develop application requirements that solicit information on the skills 
and competencies to be taught and how

[[Page 49337]]

these are ``recognized'' by employers, labor-management committees, or 
labor organizations, particularly when programs do not offer a formal 
credential. We also encourage Governors and Local Boards to create 
policies and procedures for initial and subsequent eligibility (and 
data reporting) to accommodate situations in which WIA participants' 
training plans do not require a full ``program,'' but rather only part 
of a program or courses from different programs.
    Section 663.510--State and Local Roles in Managing the Eligible 
Provider Process--One commenter asked that Sec. 663.510 be modified to 
ensure that the public is provided access to the provider list and 
performance information, that the lists are provided upon request, and 
that satellite and affiliate offices of the One-Stop system also 
receive the list.
    Response: Under Sec. 663.555, the State list and consumer reports 
containing performance information must be made available throughout 
the One-stop system as a core service to the general public, to WIA 
participants, and to participants whose training is supported by other 
One-Stop partners. We strongly encourage States and local One-Stop 
systems to assure that the list is available in all satellite and 
affiliate offices. In addition, under 29 CFR 37.9, the provider list 
and performance information must be made available in alternate formats 
to individuals with disabilities. Since the regulations already 
accommodate the commenter's request, no change has been made to the 
Final rule.
    A number of comments criticized Sec. 663.510 for failing to address 
States' and Local Boards' responsibility to ensure that available 
training options include nontraditional occupational training for 
women, small business development and other programs targeting 
particular populations or industrial sectors for which there may be 
high demand. Commenters asked that the Final Rule include language 
requiring States and localities to ensure that the eligibility 
determination process assures the availability of non-traditional 
training options for women. One commenter wanted the regulations to 
require States and Local Boards to conduct outreach to CBO's that 
provide services to disadvantaged populations to help them apply for 
certification and contracts.
    Response: As noted earlier, in order to support informed customer 
choice by WIA participants with diverse skill needs and career 
interests, Local Boards and Governors should make every effort to 
ensure there is a broad range of programs and providers identified on 
State and local lists. We strongly encourage States and Local Boards to 
conduct outreach and technical assistance to various types of providers 
in order to enhance the likelihood that customers will have access to a 
broad range of programs and providers. Since the State and Local Boards 
are accountable for their own performance, they must ensure that 
programs other than HEA and NAA programs included on the initial lists 
and all programs included on subsequent lists have met minimally 
acceptable levels of performance. Although we strongly encourage States 
and Local Boards to take affirmative steps to make sure that programs 
offering non-traditional training and programs offered by CBO's are 
included on their eligible provider lists, ultimately, the programs 
must meet State and local performance requirement to be included. We 
cannot require States and Local Boards to include programs that do not 
meet their legitimate performance standards. Thus, no change has been 
made to the Final rule.
    One commenter requested that the regulations clarify that cost and 
performance information is required for all providers, as indicated, in 
the commenter's view, by the requirement at Sec. 663.510(c)(3) that the 
designated State agency disseminate the State list ``accompanied by 
performance and cost information related to each provider * * *''
    Response: The commenter is partially correct. For subsequent 
eligibility, performance and cost information is required of all 
programs. For initial eligibility of non-HEA and non-NAA programs and 
providers, Sec. 663.515(c)(3)(ii) requires Local Boards to use the 
Governor's procedures for determining eligibility and those procedures 
must require that appropriate portions of cost and performance 
information be provided. For initial eligibility of HEA and NAA 
programs and providers, Sec. 663.515(b) provides that the application 
contents are determined by Local Boards, which are not required to 
request performance and cost information. Local Boards are not 
precluded from requesting such information, but the Act does not permit 
performance levels to be used in determining initial eligibility of HEA 
and NAA programs. No change has been made to the Final rule.
    One commenter was concerned that, as local lists are combined to 
form a State list, as discussed in Sec. 663.510, some programs and 
providers could be included for which a Local Board would not want to 
allow customers to use title I training funds. The commenter further 
recommended that the regulations give final authority to Local Boards 
to choose what programs and providers to include on a local list.
    Response: We recognize that Local Boards may have legitimate 
concerns about the quality or integrity of a program or provider. Such 
concerns may arise if a program from another area's performance is 
unknown or lower than the levels set by the Local Board for subsequent 
eligibility, if there have been, or continue to be, problems known to 
the Local Board related to training program inputs (such as curriculum, 
instruction, or equipment) or if the provider has not complied with 
administrative or financial requirements. These problems may exist for 
programs and providers included by other Local Boards or by the Local 
Board itself. However, the Board must permit eligible participants to 
choose from providers on the State list which must include: (1) HEA and 
NAA programs which submit complete applications for initial eligibility 
in accordance with the Local Board's requirements, (2) non-HEA, non-NAA 
programs which meet the criteria in the Governor's procedures, and (3) 
programs placed on the list by another Local Board and approved by the 
State agency.
    The Act, at section 122(e)(4)(b), requires that individuals 
eligible to receive training have the opportunity to select any 
eligible provider from any local area that is included on the State 
list. Local Boards are required to make this list available to the 
local One-Stop system. We believe that, to maximize customer choice, 
Local Boards must ensure that participants are informed about the State 
and local lists, encouraged to use them, and informed of their right to 
choose any programs on the list. For individuals determined eligible 
for training services, there are only three conditions a Local Board 
can impose on participants using ITA's: the training must be in an 
occupation for which there is demand, the individual must have the 
qualifications to succeed in the program, and the selection occurs 
after consultation with a case manager. Since Local Boards must allow 
title I funds to be used in the programs selected by training 
participants if these three conditions are met, Local Boards should 
ensure that the participants select the provider that best suits their 
individual needs especially when the provider is not located in the 
local area. Local Boards are encouraged to consider:
     Enhancing the quality of information on programs and 
providers.

[[Page 49338]]

High quality information can aid customers in making informed judgments 
and steering clear of questionable programs or providers. We encourage 
Local Boards to make recommendations on the types of information to be 
collected as part of the Governor's procedures for initial eligibility 
for non-HEA, non-NAA programs and providers and to ensure that their 
own applications for HEA and NAA programs and providers solicit the 
needed types of information and to obtain appropriate information to 
determine subsequent eligibility. Extensive supplementary information 
on providers and programs can also be included on the local list under 
Sec. 663.575 and Local Boards and case managers can present additional 
information during the decision-making process, or encourage WIA 
customers themselves to acquire additional information on programs and 
providers under consideration. Local Boards can also coordinate with 
one another on the types of information required in initial 
applications and in supplementary information, to assure that there are 
high levels of information on programs in all local areas.
     Providing quality guidance and continuing case management. 
Individuals eligible for training services select a program after 
consultation with a case manager. States and Local Boards can take 
steps to ensure that case managers: encourage individuals to fully 
utilize the information available in the local or State list and in the 
consumer reports; provide additional information beyond the lists and 
consumer reports; assist individuals in doing their own research on 
programs or providers; and help individuals identify specific options 
and systematically compare them. If an individual does chose a 
questionable program, case managers can monitor the individual's 
progress and the training program's performance, in order to identify 
and take action to avoid potential problems.
     Creating procedures to assure high performance. State and 
Local Boards can create procedures to hold questionable providers 
accountable for performance. For example, procedures could permit ITA's 
to be paid incrementally upon completion of specific milestones.
    Because the Act encourages broad customer choice, we do not think 
it appropriate to change the regulations. State and Local Boards have 
the flexibility to help individuals to make the best choice for their 
circumstances.
    A commenter wanted Sec. 663.510 to ensure that Local Boards have 
the flexibility to set policy on providers and programs that reflects 
local conditions and that the State cannot add its own providers to the 
State list.
    Response: WIA section 122(e)(2) makes it clear that, in compiling 
the State list, the State has authority to include only providers and 
programs submitted as part of local lists. The State has no authority 
to include additional providers and programs. However, Local Boards 
have only limited authority to determine which programs or providers 
are included or excluded from the local list. Rather, the Local Board 
must, for initial eligibility, include all HEA and NAA programs and 
providers for which complete applications are submitted and include 
non-HEA and non-NAA programs which meet the Governor's criteria, which 
are not required to, but may, permit adjustments to performance levels 
for local conditions. For subsequent eligibility, all programs must 
meet minimum acceptable performance levels specified in the Governor's 
procedures and adjusted according to the Governor's procedures for 
local factors and the characteristics of the population served by the 
providers. Local Boards have the flexibility to require higher, but not 
lower, levels of performance. We encourage Local Boards to actively 
participate in the development of the procedures for determining 
initial and subsequent eligibility.
    We recognize that, during both initial and subsequent eligibility, 
there may be programs which a Local Board believes are valuable in 
meeting local workforce needs that do not meet performance levels (or 
other criteria) and, therefore, cannot be included on the local list. 
To avoid this situation, we encourage local Boards to make their 
recommendations on the Governor's initial eligibility procedures, an 
opportunity which Governors are required to make available to Local 
Boards under Sec. 663.515(c)(1)(I). As discussed earlier, in order to 
ensure access to a broad array of programs that can meet customer's 
diverse skill needs, career interests, and preferences, we also 
encourage Local Boards, to provide outreach and technical assistance to 
providers.
    We recognize that, in other instances, a Local Board may 
reluctantly have to include programs or providers which it believes are 
questionable on the local list. To avoid individuals selecting 
questionable programs or providers or to prevent any problems if they 
are selected, we encourage Local Boards to explore the approaches 
suggested above, for enhancing the quality of information, providing 
high quality case management and guidance, and creating procedures to 
enhance performance. Since the regulation accurately reflects the 
statutory requirements, no change has been made to the Final rule.
    One commenter was concerned that the Preamble and Sec. 663.510(b) 
were inconsistent in discussing the need for setting performance levels 
for initial eligibility.
    Response: It was unclear what the commenter found inconsistent. The 
Governor determines the initial eligibility procedures, including 
appropriate of levels of performance, for non-HEA and non-NAA programs 
and sets minimum acceptable levels for all programs for subsequent 
eligibility (though such levels can be increased by the Local Board). 
These provisions are included in Secs. 663.515 and 663.535.
    Another commenter stated that the process for determining eligible 
providers, as described in Sec. 663.510, should be as transparent as 
possible, and allow qualified providers to become eligible while 
setting sufficient thresholds to limit participation of unqualified 
providers.
    Response: We believe that the Act and regulations provide States 
and Local Boards with the opportunity to set up systems that will be 
transparent and achieve the goals suggested by the commenter. No change 
has been made to the Final rule.
    Some commenters questioned whether Secs. 663.510(c)(2) and 
663.515(d) give too much authority to designated State agency by 
authorizing it to verify performance information on providers' programs 
submitted by the Local Board. One commenter felt that the regulations 
exceed the language of the Act, which only requires that the State 
determine if performance levels are met. Another commenter suggested 
that the regulations should not shift this responsibility onto States 
and that, if States have this responsibility, we should provide support 
and technical assistance in carrying out verification. The commenter 
also suggested that the Act appears to require a duplicative function 
by Local Boards and the designated State agency in determining if 
performance levels are met.
    Response: We agree that the Act, in section 122(e)(2), specifies 
that the State determines if performance levels are met for programs 
submitted on local lists. However, we believe that the role of the 
State agency in verifying performance information is implicit in the 
statutory scheme, based on the State agency's authority to enforce 
provisions of section 122(f)(1) on the intentional submission of 
inaccurate performance information (which can only be determined as 
inaccurate if there is a

[[Page 49339]]

way to verify the information submitted) and on the requirement that 
providers submit verifiable program-specific information. We have 
changed the language in Sec. 663.510(c)(2) to clarify that the State 
agency must determine if programs meet performance levels, and, in so 
doing, may verify the accuracy the performance information submitted. 
We have also revised Sec. 663.515(d) to clarify that the designated 
State agency determines if the performance levels are met for programs 
Local Boards submit as part of their local list. In addition, since 
State agency consultation with the Local Board is required under 
section 122(f)(1) and verifiable information is required to be 
submitted to the Local Board, we believe that the Act also provides 
implicit authority to Local Boards to verify performance information 
and to report suspected inaccuracies to the State agency. We have added 
language in a new paragraph 663.510(e)(4) to clarify that Local Boards 
may perform verification of performance information, under the 
Governor's procedures. Technical assistance on verification and other 
aspects of implementing WIA section 122 is being planned.
    We agree that the roles of the State agency and Local Boards may 
overlap in determining if programs meet performance levels and in 
verifying performance information, and we encourage States and Local 
Boards to work toward eliminating needless duplication. The Act does 
not, however, authorize the State to review Local Boards' 
determinations of programs that do not meet the performance levels and 
are, therefore, neither included on local lists nor forwarded to the 
State. No change has been made to this aspect of the Final rule.
    Section 663.515--Initial Eligibility Process--One commenter 
suggested that initial eligibility criteria for institutions offering 
degree programs be accreditation or approval by the appropriate 
authority and, for institutions that offer certificate programs, 
appropriate licensing by the State.
    Response: In determining initial eligibility, Local Boards have the 
option to request information about accreditation and approval from 
HEA-eligible and NAA-registered programs and providers as part of the 
application and to include such information on the local list. However, 
we do not believe that Act provides authority for any approval criteria 
for HEA and NAA programs and their providers, as long as completed 
applications are submitted and the program or provider meets the 
eligibility criteria of WIA section 122(a)(2)(A) and (B). We note that 
to be eligible under HEA title IV, providers must be accredited, and, 
if a public institution, approved by appropriate State authorities. For 
non-HEA and non-NAA programs and their providers, the Governor's 
procedures could require that State licensing, or any other applicable 
criteria, be used for both approval or information purposes. No change 
has been made to the Final rule.
    We encourage State WIA systems to work with State public education, 
and licensing authorities to harmonize, coordinate, or strengthen 
requirements for all types of programs and providers, since the 
strictness and consistency of approval, licensing and accreditation for 
providers and programs varies widely between--and even within--States. 
Similarly, requirements for certificate programs, offered at both HEA-
eligible and non-HEA-eligible providers, vary widely in terms of 
length, content, and rigor.
    Another commenter asked that Secs. 663.515 and 663.535 require the 
Governor to allow sufficient time for labor organizations and 
businesses to provide comments on initial and subsequent eligibility 
procedures and suggested a minimum of 30 days. The commenter also 
wanted the regulations to require that State and local labor 
federations be part of the consultation process.
    Response: We view the comment and consultation provisions in this 
section, as throughout the Act, as cornerstones of the new system 
envisioned in the Act. To assure there is adequate time for comments, 
while permitting as much State flexibility as possible, we have added 
language at Secs. 663.515(c)(1)(iii) and 663.535(a)(3) to require 
Governors to establish and adhere to a specific time period for the 
consultation and comment process during the development of procedures 
for initial and subsequent eligibility. We strongly encourage Governors 
to take affirmative steps to include State and local labor federations 
in the comment and consultation process, but we do not think additional 
changes to the Final rule are warranted. Under the rule as written, 
Governors are required to solicit and take into consideration the 
recommendations of providers of training services, which may, in some 
areas, include labor federations involved in providing apprenticeship 
or other training, and must provide an opportunity for representatives 
of labor organizations to submit comments on the procedures.
    A commenter suggested that Governor's procedures for initial 
eligibility require evidence that training providers have consulted 
with labor organizations who represent workers having the skills in 
which training is proposed.
    Response: While such an activity may be desirable, the Act does not 
provide authority to require Governors to include such a provision in 
their initial eligibility procedures. The contents of applications for 
initial and subsequent approval are left to the Governor's discretion, 
after appropriate consultation. We encourage Governors to consider such 
consultation requirements for initial eligibility, in order to assure 
that programs are of high-quality and match current skill requirements. 
We also encourage both Governors and Local Boards to consider including 
information items in initial eligibility procedures and applications 
that will help consumers identify if programs have been subject to 
review and approval by appropriate labor and industry organizations. No 
change has been made to the Final rule.
    One commenter was concerned that the 30 days, permitted in section 
122(e) of the Act, for the State agency to determine if programs 
submitted by Local Boards meet the performance criteria for initial and 
subsequent eligibility, was insufficient. The commenter recommended 
that State agencies be given 90 days.
    Response: We recognize that until State data collection and records 
linkages systems are in place, States will have difficulty in meeting 
the timing requirement for verifying information and for determining if 
performance levels are met. Since the law specifies that the State 
agency has only 30 days, the State may not be able to determine if such 
levels are met on all programs' performance and the State may have to 
develop a prioritizing or sampling system. However, we also recognize 
that in a number of circumstances, timing problems will persist even 
once such data systems are in place, since there are time lags in 
accessing UI quarterly records for verifying program performance 
information. We have added language in Sec. 663.530 to provide that, in 
the limited circumstance when insufficient data is available, initial 
eligibility may be extended for a period of up to six additional 
months, if the Governor's procedures provide for such an extension.
    A number of commenters expressed suspicion that initial eligibility 
procedures, by providing complete discretion to Governors and Local 
Boards, would result in programs being determined eligible on the basis 
of arbitrary performance and cost thresholds, and thus lead to 
``creaming''

[[Page 49340]]

of programs and participants. Commenters expressed concern that the 
regulations do not define an ``appropriate portion of performance and 
cost information'' and ``appropriate levels of performance'' and asked 
that we define these terms and offer examples of how States and Local 
Boards could set up initial eligibility procedures to assure a diverse 
provider system. Commenters suggested several other remedies: requiring 
or allowing use of adjustment or weighting factors for the local area 
and participant characteristics; encouraging use of data from outside 
the JTPA system to ensure a wide array of performance information; 
requiring Governors to set aside technical assistance funds to help 
small, nonprofit CBO's with application and data collection activities; 
requiring information on growth occupations and growing sectors in the 
area; and requiring that CBO's be listed as examples of interested 
members of the public to whom opportunities to comment should be 
provided.
    Response: We believe that the Act provides broad discretion to 
Governors to determine initial and subsequent eligibility procedures. 
Since we want to provide as much flexibility to States as possible, we 
have not defined what constitute ``appropriate portions of performance 
and cost information'' or ``appropriate levels of performance.'' 
However, we are concerned that all procedures and practices be fair and 
not arbitrary, and that they be based on research, information from 
past experience, and sound management approaches. We are also concerned 
about practices that result in ``creaming'' of participants or lead to 
a lack of training options that meet the diverse skill needs and career 
interests of WIA participants. We plan to develop technical assistance 
on development of initial and subsequent eligibility criteria.
    As noted earlier, we strongly encourage outreach and technical 
assistance by States and Local Boards to providers in order to assure 
that WIA participants have access to a broad range of programs. Also, 
we strongly encourage CBO's to take advantage of the public comment and 
consultation required to be provided by the Governor in the development 
of procedures for initial eligibility for non-HEA, non-NAA programs and 
subsequent eligibility for all programs. No change has been made to the 
Final rule.
    One commenter requested clarification on how both initial and 
subsequent eligibility under WIA fits with requirements of State and 
national systems for accreditation, approval, and performance 
information. Several commenters recommended that the WIA system for 
collecting and disseminating performance information be used in other 
systems.
    Response: The Act recognizes the value of at least two other 
national recognition systems, in the requirements for HEA and NAA 
programs for initial eligibility. We encourage all One-Stop partners at 
the State and local level to harmonize and coordinate performance 
requirements and to enhance systems for certification, licensure, and 
accreditation. We encourage all partners to avoid the creation of, or 
resolve, duplicative or conflicting requirements regarding programs, 
institutions, and data on individuals. We also support the creation of 
unified data collection systems that can reduce administrative burden 
while permitting information to be generated to meet reporting 
requirements under many programs. We believe that WIA's requirements 
will strengthen accountability and customer choice by supplementing 
existing systems established through State and federal higher education 
requirements and State licensing agencies. Information disseminated on 
individual training programs' performance under WIA will be a 
significant addition to the accountability systems currently in place, 
and will provide the general public, program administrators and front-
line staff access to information that, in most parts of the Nation, has 
never before been available. We encourage Governors and Local Boards to 
consider ways to make use of performance and cost information already 
available through these other systems. We do not think, however, that 
WIA section 122 gives the authority to mandate this kind of 
coordination; thus, no change has been made to the Final rule.
    Section 663.530--Time Limit for Initial Eligibility--A number of 
commenters expressed approval of the clear expression of how long 
initial eligibility may last and supported the swift transition to 
subsequent eligibility when all providers would be subject to the 
performance requirements. One commenter, however, was concerned that 
the requirement in Sec. 663.530 that initial eligibility be only 12 to 
18 months will create problems for institutions eligible under the 
Higher Education Act that will not be able to compile information in 
time for subsequent eligibility determination.
    Response: We agree that, in certain circumstances, providers will 
have difficulty in collecting all the performance information required; 
similarly, the designated State agency may have difficulty verifying 
the information, particularly because of the lag time in using UI 
quarterly records. However, because of the critical importance of 
performance information for consumer choice and accountability, initial 
eligibility should be extended only in very limited circumstances, such 
as for new programs for which no data under the methodology the 
Governor selects would be available within 12 to 18 months. In other 
circumstances, Governors' procedures could permit an extension of 
initial eligibility of up to six months, when insufficient data is 
available. In such cases, it may be a good idea to partially assess 
performance by using the information that is available even if it is 
only partial information (such data on all students that recently left 
a program even if no WIA client information is yet available) or by 
using survey-based information until UI records can be used for 
verification. We have added language to Sec. 663.530 to permit 
Governor's procedures to extend initial eligibility in limited 
circumstances.
    Section 663.535--Subsequent Eligibility--One commenter wanted 
Sec. 663.535 to be revised to clarify that the State agency can verify 
information on performance and cost effectiveness for subsequent 
eligibility.
    Response: As discussed above, we have changed Sec. 663.510 to 
clarify that the State, as well as the Local Board, may verify 
performance information in the process of determining if performance 
levels at initial and subsequent eligibility are met. The Act 
authorizes the State agency to determine if the performance levels are 
met for programs submitted by the Local Boards. The State does not have 
a role in reviewing performance of programs not approved by the Local 
Board and not included on local lists. However, there is nothing to 
preclude Local Boards from delegating to the State agency the authority 
to perform all initial determinations of eligibility of non-HEA and 
non-NAA programs, and subsequent eligibility determination for all 
programs, although responsibility for this process still remains with 
the Local Board. The Act does not explicitly authorize the State agency 
to determine ``cost-effectiveness,'' but rather requires that the 
information on the costs of the training services be required in 
applications for initial eligibility of non-HEA and non-NAA and for all 
programs for subsequent eligibility. Although States and Local Boards 
may choose to use the available cost and performance information to 
determine the cost-effectiveness of training programs, the decision to 
do so is a matter of State or

[[Page 49341]]

local discretion. We have made no additional change to the final 
regulations.
    Several commenters were concerned that provider requirements at 
Sec. 663.535 will not take into account the characteristics of the 
population served and the difficulties in serving these populations.
    Response: These concerns are addressed in our response to similar 
comments on adjustments to performance levels in the discussion of 
Sec. 663.540.
    Section 663.540--Types of Performance and Cost Information Required 
and Extraordinary Costs of Collecting Performance Information--One 
commenter was concerned that federal requirements on confidentiality of 
student records possibly presents a major problem for developing 
information on students not funded with ITA's.
    Response: We recognize that regulations and administrative guidance 
for the Federal Educational Rights and Privacy Act (FERPA) under 20 
U.S.C. Sec. 1232g, as issued by the U.S. Department of Education, may 
need to address the issue of how States can assure that performance 
information on all students in eligible programs can be developed, 
particularly when UI quarterly records must be used, as required under 
section 122 of WIA. We are working with the U.S. Department of 
Education to identify how State WIA systems, State education systems, 
and educational institutions can comply with FERPA and also generate 
the information required under WIA and plan to issue joint guidance 
that will assist States in complying with FERPA. No change has been 
made to the Final rule.
    One commenter recommended that the law and regulations be changed 
so that information on all participants in a program, which may be 
difficult to obtain, is not required.
    Response: We believe that eliminating this information would 
vitiate one of the key elements needed for maximizing customer choice. 
As the commenter recognizes, the Act requires performance information 
on all students in a program. State WIA systems are encouraged to work 
with State public education and licensing authorities to harmonize, 
coordinate, or strengthen information requirements in all systems. No 
change has been made to the Final rule.
    One commenter recommended that Governors be allowed to require 
additional verifiable performance information describing the 
demographics of the populations served in a training program, including 
age, race, national origin, English proficiency, sex, and disability. 
The commenter further recommended that all such information be included 
in the consumer reports system.
    Response: 29 CFR 37.37(b)(2) requires recipients, including 
training providers, to ``record the race/ethnicity, sex, age, and where 
known, disability status, of every applicant, registrant, eligible 
applicant/registrant, participant, terminee, applicant for employment, 
and employee.'' Governors should consider the merits of including such 
information in the consumer reports system. No change has been made to 
the Final rule.
    Several commenters wanted the regulations to require Governors and 
Local Boards to demonstrate how local area factors and population 
characteristics are considered in determining performance levels for 
subsequent eligibility as well as requiring that Governors and Local 
Boards to demonstrate that the most disadvantaged are being served.
    Response: Under Sec. 663.535(f), the Governor's procedures already 
must ensure that Local Boards takes such factors into consideration. As 
we have said above, Governors and Local Boards should assure that all 
WIA participants who may have multiple barriers to employment have 
access to programs that can effectively serve their needs. No change 
has been made to the Final Rule.
    A number of commenters noted that Sec. 663.540 does not define what 
constitute ``extraordinary costs'' and that differences of opinion on 
this matter should be an allowable basis to appeal denial or 
termination of eligibility. Some commenters recommended that training 
providers be given explicit authority to present to their Local Board 
and Governor evidence of extraordinary costs and that a response should 
be required within a reasonable period of time. They further suggested 
that, if additional resources or cost-effective data collection methods 
were not provided, the provider would be exempted from submitting the 
performance information. One commenter recommended that providers 
which, after presenting evidence of extraordinary costs involved in 
providing performance information, receive neither additional resources 
nor cost-effective information-collection methods, should be exempted 
from submitting information on their programs' performance and that 
such programs should remain eligible. By contrast, one commenter wanted 
to assure there were limits on the amount of funds Governors must offer 
to training providers who need additional funds to collect performance 
information.
    Response: The Act requires Governors to provide additional 
resources or cost-effective methods of data collection when providers 
experience extraordinary costs in providing required information, under 
section 122(d)(1)(A)(ii), on program participants who receive 
assistance under the adult or dislocated worker programs, or in 
providing additional information under section 122(d)(2). In order to 
assure that Governors provide such assistance, Sec. 663.540(c) has been 
revised to require that the Governor establish procedures by which such 
costs can be determined. While Governors must define the methodology to 
be used in determining such costs and either provide the funds or 
procedures to help defray or lower these costs when they are determined 
to be extraordinary, we have not mandated that the Governor or Local 
Board is required to defray all of the provider's extraordinary costs. 
Reasonable parties may differ over whether information costs are 
extraordinary and whether the State has undertaken reasonable means to 
defray or lower such costs. States and local areas will have to devise 
a system under which disputes regarding extraordinary costs can be 
reasonably resolved. For example, a Local Board may base its initial 
decision on the basic information required, while attempting to reach 
agreement on the costs of the additional information. If a provider is 
denied eligibility because it has not provided the required 
information, section 663.565(b)(4) provides an opportunity for review 
of that decision.
    Section 663.555--Dissemination of the State List--Several 
commenters want the state list of eligible training providers to be 
made available to the public and not just individuals.
    Response: Section 663.555 already provides that the list and 
consumer reports are required to be widely disseminated and made 
available as a core service throughout the One-Stop delivery systems in 
the State. We believe that the One-Stop system is the appropriate way 
to ensure wide access of the list, so no change has been made to the 
Final rule.
    Section 663.565--Loss of Eligibility and the Appeals Procedures--A 
number of commenters recommended there be a time limit required for 
prompt resolution of appeals and suggested 60 days as the limit.
    Response: States must develop procedures that assure prompt 
resolution of appeals. Unlike other provisions in WIA, for example, 
section 181(c), which establish time limits for

[[Page 49342]]

the resolution of grievances or appeals, section 122(g) does not 
establish a time limit on the appeal; it leaves the details of the 
procedure to the Governor. We do not think we can mandate a time limit 
where Congress has chosen to give the Governor the discretion to 
fashion an appeal procedure. We do, however, strongly encourage States 
to establish and adhere to time limits for such appeals and to make 
those time limits consistent with the time limits in their other WIA 
appeal procedures. No change has been made to the Final rule.
    One commenter noted that the criteria for termination of 
eligibility do not address situations in which institutions lose their 
license to operate, when they or their programs lose accreditation, or 
State educational agency approval, and when providers violate State or 
local laws.
    Response: The criteria for initial eligibility for non-HEA and non-
NAA programs are determined in the Governor's procedures and may cover 
a number of different situations, such as when programs are in 
violation of State and local laws or have lost their license to 
operate. WIA section 122 does not mandate the detailed criteria to be 
used in determining eligibility for providers and programs, but rather 
permits Governors and Local Boards to set application information 
requirements and determine that the information is complete. For 
example, information on the status of a program or provider as eligible 
under HEA, registered under NAA, and on accreditation or compliance 
with various State and local laws could be required and included on the 
State or local list). The only criteria in WIA for termination of 
subsequent eligibility are limited to: not meeting performance levels, 
intentionally submitting inaccurate information, and noncompliance with 
the Act and its regulations. If a State or Local Board asks for 
information about accreditation status or compliance with laws and the 
provider submits inaccurate information, it may be subject to 
termination under Sec. 663.565(b)(3). Because WIA is silent about what 
happens if a provider's license accreditation status change during the 
period between initial and subsequent eligibility determinations or 
between annual subsequent eligibility determinations, we want to 
clarify that Governors may set procedures for resubmission of initial 
applications or other information in cases where the status of a 
provider or its program has changed.
    The same commenter noted that Sec. 663.565(b)(1) requires that 
Local Boards must remove programs that do not meet performance levels 
from the local list, while, under Sec. 663.565(b)(2), States only may 
remove such programs from the State list, which could result in 
incompatible State and local lists and in Local Boards being sued by 
providers.
    Response: The Local Board has the authority and the obligation, 
under WIA section 122(c)(6)(A) and (e)(1), to deny initial eligibility 
and subsequent eligibility if programs and providers fail to meet 
performance levels. Since, under WIA section 122(c)(6)(B), Local Boards 
may set higher performance standards for providers or programs to be 
included on their local list, it is possible that one local area may 
remove a program or provider while another places them on its local 
list. In that case, the State Agency must decide whether or not to 
remove the program or provider from the State list. The possibility of 
being sued by providers exists at both the local and the State levels, 
depending on which level is involved in denying or terminating 
eligibility. No change has been made to the Final rule.
    Sections 663.570 and 663.575--The Consumer Reports System and 
Additional Local Information--A number of commenters asked that the 
regulations require consumer reports to include information about wage 
trends and projections, occupations that provide high wages, in 
addition to information on growth occupations, or those in growing 
sectors of the economy.
    Response: We agree that such information is valuable to individuals 
in determining which occupations and training to pursue. Section 
663.570 encourages States and Local Boards to make program specific 
information on wage trends and projections available in the consumer 
reports. Section 663.575 permits Local Boards to supplement the 
information on the State list with information on training linked to 
occupations in demand in the local areas. This kind of information is 
readily available since information on job vacancies, occupations in 
demand, and the earnings and skill requirements of such occupations is 
required as a core service available to the general public and to all 
WIA clients under Sec. 663.240(b)(5). No change has been made to the 
Final rule.
    Several commenters asked that ``program entrance requirements'' be 
added to the list of information that can be included in consumer 
reports in Sec. 663.570 and further suggested that information be 
required to be presented ``in user-friendly format and language, taking 
into consideration the literacy levels, languages and developmental 
stages of the communities to be served.'' In addition, a few commenters 
asked that the regulations mention that information about 
nontraditional occupational training and placement of women in 
nontraditional jobs be specifically identified as appropriate 
information related to the objectives of the Act.
    Response: We agree that program entrance requirements and the use 
of a user-friendly format and language are highly valuable to assist 
adults or dislocated workers to fully understand the options available 
in choosing a program of training services. States and Local Boards 
should assure that as much information as possible is accessible to 
anticipated users of ITA's and key populations who use such information 
as part of the core services available in the local One-Stop system. It 
is up to States and Local Boards to determine the types of information 
to be required; we do not believe it is appropriate to specify required 
information in the regulations. In making such determinations, we 
encourage States and Local Boards to consider whether to highlight 
information on specific types of programs, such as nontraditional 
occupational training for women. No change has been made to the Final 
rule.
    Section 663.585--Providers Outside the Local Area and Reciprocal 
Agreements with Other States--One commenter asked that we add language 
to Sec. 663.585 on portability of apprenticeship skill credentials, to 
assure that individuals registered in an apprenticeship program in one 
State would be deemed registered in an accredited program in other 
States.
    Response: WIA does not address recognition of individuals' 
registration status by apprenticeship programs in different States. 
Rather, the Act permits reciprocal agreements among States so that 
individuals with ITA's can use providers in other States. If such an 
agreement had been made, the ability of individuals to participate in 
other States' programs would depend on whether those programs were 
included on the State list and the program's own policies regarding 
recognition of skill attainments and credentials from other programs. 
Questions of the portability of credentials in the apprenticeship 
system are the province of the Bureau of Apprenticeship and Training. 
No change has been made to the Final rule.
    Section 663.590--Community-Based Organizations--One commenter 
expressed gratitude that the regulations clarify that CBO's can be 
determined

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eligible and they and their programs included on the State and local 
lists.
    Section 663.595--Requirements for Providers of OJT and Customized 
Training--One commenter recommended that the Governor solicit comments 
from business and labor organizations on the development of performance 
information for OJT and customized training while another commenter 
suggested that it was inadvisable to disseminate information on the 
performance of employers, since many employers would be unwilling to 
participate if their identity was to be made known to the general 
public.
    Response: There is nothing to preclude Governors from soliciting 
comments from business and labor in developing these performance 
requirements and learning if disseminating performance information 
would be a deterrent to other employers and it would be consistent with 
both the process for developing provider and program eligibility 
procedures and the general intent of WIA to promote openness and 
consultation to do so. Governors need to consider the impact of 
requiring performance information in terms of employer participation, 
particularly since employer-provided training has, in the past, been an 
effective method for providing training. However, if the Governor 
determines that performance information must be collected and the 
criteria to be met, One-Stop operators must collect such information, 
determine if performance criteria are met, and disseminate information 
on employers that meet the criteria. We note that information does not 
have to be disseminated on employers that do not meet Governor's 
criteria under the current regulation. No change has been made to the 
Final rule.
    One commenter noted that the Preamble to the Interim Final rule, 
page 18673, column three, lines 8-11, should have said that the 
Governor has the option to require performance information of providers 
of OJT and customized training.
    Response: We agree that the Preamble was in error. It should have 
said that Governors may require performance information.
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, authorized under WIA section 133(b)(2)(A) or (3), 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. We assume 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, we also recognize 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 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.
    We received a substantial number of comments on the priority issue. 
Many commenters voiced their support for interpretation that adult 
funds will generally be limited and for clarifying the State's and 
local areas' role in prioritizing the use of these funds for TANF 
recipients and other low-income individuals. Many other commenters 
believed that we should not write any regulations at all on this 
section of the statute.
    Response: We believe that the interpretation of this requirement is 
of such importance that there must be regulations. Section 663.600 
interprets 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. No change has been made to the Final rule.
    Some commenters requested further guidance and technical assistance 
regarding the process described at Sec. 663.600(b), (c), and (d) that 
permits the priority for services to the recipients of public 
assistance and low income individuals to be exercised while still 
serving other eligible individuals. A number of these commenters 
supported the ``cone of service'' concept that provides universal 
service to the largest number of individuals and, through a process of 
determining individuals' employment service needs and their 
eligibility, leads to reduce numbers of individuals receiving services 
as the services become more staff intensive, longer in duration, and 
more costly. They asked that priority guidance be based on this 
concept.
    Response: In general, Sec. 663.600(d) clarifies that the process 
for determining whether to apply the priority established under 
paragraph (b) does not necessarily mean that only recipients on 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 are 
specifically authorized to establish a process that gives priority for 
services to recipients on public assistance and other low income 
individuals and that also serves other individuals meeting eligibility 
requirements.
    We used the ``cone of service'' concept to illustrate an estimated 
distribution of service needs by One-Stop customers. It was not 
intended to convey a scheme of priority of service. The distribution of 
service needs in a local area may vary from the pure ``cone'' in areas 
with a number of job seekers with extensive barriers to employment or 
in areas of highly educated, self-directed job seekers. The ``cone'' 
illustration is not intended to be applied as strict percentages of 
service provision to the pool of eligibles candidates for services. 
Rather each local area must assess the needs of its workforce and 
determine the most appropriate distribution of services against 
projected levels of service needs. However, recognizing the important 
role that the adult and dislocated worker funds play in the One-Stop 
system, Sec. 662. 250(a) requires these programs to provide all of the 
required core services in each of the comprehensive One-Stop centers. 
The fact that WIA adult funds may be used to provide core services on a 
universal basis is one of the key reform elements of the legislation, 
and augments the investment traditionally provided by the Wagner-Peyser 
Act. No change has been made to the Final Rule.
    Commenters expressed concern that the priority requirement would be 
implemented by establishing an arbitrary minimum standard, such as 
establishing a percentage of participants or funds that must be 
targeted to TANF and other low-income job seekers, which could become a 
``check off'' rather than a thoughtful balancing of needs. Commenters 
also were concerned

[[Page 49344]]

that an arbitrary percentage not be used to satisfy the priority 
requirement.
    Response: While the regulation requires that States and local areas 
consider whether funds are limited, it gives them flexibility to 
determine the criteria on which to base the determination, because 
local areas vary widely in the characteristics of their work force. We 
discourage States and local areas from setting an arbitrary percentage 
of TANF and low-income job seekers to be served could result in 
sufficiently skewing the distribution of services relative to the 
workforce's needs that differences in the severity of service needs 
would not necessarily be reflected in the process. We believe that the 
present language in the regulations permits the maximum flexibility in 
the design of the priority process and provides a sufficient framework 
to implement priority of service for public assistance recipients and 
low income individuals consistent with the Act. We expect that States 
and local areas will take seriously the responsibility to develop 
effective priority criteria, and believe that the public input 
generated through the local planning process will result in criteria 
that effectively serve the needs of the local area. No change has been 
made to the Final rule.
    Other commenters requested assurance in the regulations that if 
local entities determine that there is not limited funding, that we 
would not reevaluate their determination at a later date and find the 
local area out of compliance.
    Response: The regulations, at Sec. 661.350(a)(11), require that the 
local workforce investment plan include a description of the criteria 
to be used by the Governor and the Local Board, under Sec. 663.600, to 
determine whether funds allocated to a local area for adult employment 
and training activities under WIA Secs. 133(b)(2)(A) or (3) are 
limited, and the process by which any priority will be applied by the 
One-Stop operator(s). The local plan is subject to public comment as 
well as review and approval by the Governor. Upon approval by the 
Governor and local implementation of its priority determination, it is 
expected that the local workforce staff will continue to monitor 
workforce employment and training population needs and conditions to 
ensure that the priority determination continues to be appropriate. 
Later modifications to the plan would require public comment. No change 
has been made to the Final rule. We recognize that this will be an area 
of interest to the Department and national policymakers and as such, 
State and local areas can expect that it will be evaluated during the 
implementation studies.
    Commenters suggested that we add language to the regulations that 
would require the mix of individuals served by the local One-Stop 
system to reflect the demographic characteristics of the eligible 
population in the community and that the local plan provide an 
interpretation of the priority as applied to the demographics of the 
area.
    Response: The Department has an obligation, as part of its 
oversight responsibilities, to determine whether a particular function, 
e.g., service delivery, is consistent with the intent of the Act and 
regulations. Non-discrimination and equal opportunity requirements and 
procedures, including complaint processing and compliance reviews, are 
administered and enforced by our Civil Rights Center. Regulations 
implementing the requirements of WIA section 188 are published at 29 
CFR part 37. It should be noted that except where service to specific 
populations is authorized by statute (such as in WIA section 166), it 
is unlawful under WIA section 188(a)(2) and 29 CFR 37.6(b)(1)-(6) for 
One-Stop systems to use demographic characteristics to determine which 
individuals will receive services. However, under 29 CFR 37.42, One-
Stop systems must do outreach to various populations, to ensure that 
members of those populations are aware of the programs and services 
provided by the systems. No change has been made to the Final Rule.
    We received a number of comments about the definition of ``public 
assistance'' as it relates to individuals served under the priority 
provision. Commenters stated the belief that while application of the 
priority could result in improved access to persons with disabilities, 
the potential for this increased access is dependent, to some degree, 
on the application of a broad definition of public assistance. WIA 
section 101(37), defines public assistance to mean ``Federal, State or 
local government cash payments for which eligibility is determined by a 
needs or income test.'' The commenters requested a definition that 
specifically recognizes other forms of assistance such as Medicaid, 
Medicare, Social Security Disability Income (SSDI) and Supplemental 
Security Income (SSI) as well as ``other funding used heavily by 
persons with disabilities.''
    Response: A definition of the term ``public assistance'' developed 
by States and local areas that includes the availability of other 
Federal, State or local government cash payments to an individual based 
on a needs or income test would be consistent with WIA requirements. 
The statutory definition of ``public assistance'' at WIA sec. 101(37) 
contains a two-part test. The program must provide ``cash payments'' 
and eligibility for the program must be determined by a ``needs or 
income test.'' Under this definition, cash payments, such as SSI, state 
payments to individuals with a disability, and local general relief 
payments to homeless individuals would meet both parts of the statutory 
definition of public assistance.
    On the other hand, the statute would not permit a state or local 
definition that included programs providing benefits that are not cash 
payments, or programs that are not needs or income-based. For example, 
SSDI payments are not income tested, and, therefore, cannot be 
considered public assistance under WIA. However, as a practical matter, 
SSDI beneficiaries may still qualify for priority under WIA. For 
example, SSDI beneficiaries might be determined to be eligible under 
the priority for WIA services as ``other low income individuals'' based 
on their income, under 20 CFR 663.640, which provides for the 
individual with a disability to be considered a low income individual 
even if the family income does not meet the income eligibility criteria 
when the individual's own income meets the income criteria. Similarly, 
Medicaid and Medicare benefits are not considered public assistance as 
defined under WIA. Medicare is a medical insurance for which 
individuals are eligible based their having attained the age of 65 and 
contributed to the fund during their employment. There is no needs or 
income test to determine an individual's receipt of Medicare benefits. 
Furthermore, while Medicaid eligibility is dependent upon an income 
test, it fails to meet the second part of the WIA definition. Under 
Medicaid, there is no cash payment provided to the individual, rather 
payments representing reimbursements of medical expenses are paid 
directly to the medical services provider. However, individuals 
receiving Medicaid or Medicare payments may still be determined 
appropriate for the WIA service priority as ``other low income 
individuals'' based on their income. No change has been made to the 
Final rule.
    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-

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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.
    A commenter suggested that Sec. 663.620(a), which provides that 
Welfare-to-Work participants may be referred to receive WIA training, 
should include a statement that such funding assistance is not 
available under Welfare-to-Work or should clarify that Sec. 663.620 is 
an exception to Sec. 663.310(d), if that is the intent.
    Response: Section 663.310(d) provides that training services are 
available to adults who ``are unable to obtain grant assistance from 
other sources to pay the costs of such training'' and notes as an 
example of other grant assistance, Federal Pell Grants. It is not 
intended that this section limit ``other grant assistance'' to only 
Federal Pell Grants, rather it is expected that access to other grant 
funds that will maximize the availability of WIA funds so that the 
broadest number of individuals may be served. ``Other grant 
assistance'' funds would be considered as additional training resources 
for individuals requiring training. Such funds could include not only 
Federal Pell Grants, but also Welfare-to-Work grant funds (which, under 
recent amendments may be used to provide limited occupational 
training), State education grants and dislocated worker funds where 
such an application is appropriate. The language in Sec. 663.310(d) has 
been changed to provide Welfare-to-Work and other examples in addition 
to the Pell Grant reference as appropriate to the eligibility of the 
individual involved for other training fund assistance.
Subpart G--On-the-Job Training and Customized Training
    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. Unlike JTPA, WIA does not limit OJT to six 
months. However, as specified in WIA Sec. 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.
    One commenter supported the brevity of the regulations related to 
OJT. A second commenter apparently construed the language in 
Sec. 663.700(a) that states that, ``A contract may be developed * * *'' 
to mean that the use of contracts for the development and delivery of 
OJT is optional.
    Response: The language in Sec. 663.700(a) has been changed to 
clarify that OJT must be provided through a contractual arrangement as 
an exception to the ITA requirement under WIA section 
134(d)(4)(G)(ii)(I). We believe that written agreements are necessary 
to ensure that the requirements of OJT are met. The regulations, in 
Sec. 663.700 (b) and (c), establish minimal requirements for OJT 
contracts. OJT contracts must ensure that participants are provided a 
structured training opportunity in which to gain the knowledge and 
competencies necessary to be successful in the occupation in which they 
receive training.
    That same commenter also suggested that the regulations be amended 
to require that the OJT contract contain detailed information on the 
skills and competencies to be acquired, the time frame for acquiring 
them, and sufficient documentation to demonstrate that workers received 
bonafide training and acquired the competencies.
    Response: Generally, we believe that States and local areas should 
have the flexibility to determine the information needed for inclusion 
in the required OJT contracts. Therefore, we have not mandated that the 
contracts contain documentation that the competencies are acquired. 
However, in order to ensure that workers and employers have a common 
understanding of the goals and purpose of the OJT assignment, we 
believe that certain general terms should be reduced to writing. 
Accordingly, we have amended Sec. 663.700(c) to require that the OJT 
contract identify the occupation, the skills and competencies to be 
learned and the length of time the training will be provided.
    We received comments which recommended that the regulations require 
local programs, in entering into OJT contracts or undertaking 
customized training, give priority to employers who: offer wages and 
benefits that lead to family self sufficiency; ensure long term self 
sufficiency for their employees; exhibit a strong pattern of union 
management cooperation; and after upgrading existing employees through 
OJT, backfill vacancies with public assistance recipients and other low 
income persons.
    Response: We have chosen not to limit local options by specifically 
identifying priorities for the selection of such employers. However, 
Local Boards may consider these and other factors in selecting 
employers to provide training opportunities that will assist in their 
efforts to provide services that meet or exceed the performance 
objectives regarding employment leading to self sufficiency and job 
retention. No change has been made to the Final rule.
    Commenters recommended that the regulations be revised to eliminate 
from consideration for an OJT contract or for customized training any 
employer which has violated: anti-discrimination statutes; labor and 
employment laws; environmental laws; or health and safety laws.
    Response: We concur that Federal grant funds should not be used to 
engage employers that have violated Federal law. Such information 
should be available under information requirements at 29 CFR 37.38(b). 
We encourage States and Local Boards to require a written assurance by 
a potential employer, that no such violations have occurred within some 
reasonable period of time. It would also be appropriate to obtain 
written assurance from the employer that the training to be provided 
will be in accordance with WIA Sec. 181(a)(1)(A) and Sec. 667.272 for 
wage and labor standards, and WIA Sec. 181(a)(2) and Sec. 667.274(a) 
for health and safety standards.
    29 CFR 37.20(a)(1) contains an assurance regarding 
nondiscrimination and equal opportunity. Under 29 CFR 37.20(a)(2), this 
assurance is considered incorporated by operation of law, and may be 
incorporated by reference, in documents that make WIA Title I financial 
assistance available, such as OJT contracts.
    A commenter recommended that we add a requirement that employers be 
required to retain, or transition to new upgraded jobs with wages and 
benefits commensurate with their new skills, those workers who receive 
customized retraining.
    Response: WIA Sec. 181(b)(2) and 20 CFR 667.270 establish 
safeguards for workers to ensure that participants in WIA employment 
and training activities do not displace other employees. These 
protections may affect immediate opportunities for workers receiving 
customized training to ``transition to new upgraded jobs.'' However, 
Local Boards may establish policies concerning the selection and non-
selection of employers for the OJT and customized training programs. We 
encourage the development of policies that maximize the opportunities 
presented by funding upgrade skill training on-site, which, upon 
completion of the training, will result not only in a more highly 
skilled workforce, but also in new entry level jobs for additional 
program participants.

[[Page 49346]]

We have made no change to the regulations.
    A commenter requested that the regulations require that a system be 
in place to assure that customized training funds are used to 
supplement rather than supplant an employer's own training.
    Response: We do not believe it is necessary to require such a 
system. With the limited funding available for training, issues of 
maintenance of effort or substitution of public funds for training 
previously funded by the employer will most likely be considered an 
important factor in a local or state policy for the selection of 
employers for customized training. We have made no change to the 
regulations.
    A commenter suggested that the performance outcomes of employers 
who have OJT contracts should be considered public documents and made 
available for review and comment. At the same time, the commenter 
cautioned that the confidentiality of participant records must be 
preserved.
    Response: Performance information on providers of OJT and 
customized training is collected and disseminated under the eligible 
provider requirements of Sec. 663.595.
    A commenter recommended that we modify the regulations to require 
that local programs conduct retention services with individuals placed 
in OJT to determine whether the OJT requirements and nondiscrimination 
and other employment rights are satisfied.
    Response: As discussed above, all OJT contracts are subject to the 
worker protection requirements set forth in WIA sections 181(a)(1) (A) 
and (B), (b) (2), (3), (4) and (5), and 188. In addition, we believe 
that monitoring of OJT contractors must include review of selection 
patterns and other areas of potential concern regarding trainees' civil 
and other employment rights (consistent with the requirements of 29 CFR 
37.54(d)(2)(ii)) to ensure the quality of the One-Stop operator's 
selection of training opportunities. No change has been made to the 
regulations.
    A commenter suggested that to assure compliance with WIA section 
181(b)(7), OJT and customized training contracts be required to include 
a provision guarantees that customized training funds or subsidies will 
not be used directly or indirectly to assist, promote or deter union 
organizing.
    Response: We don't believe it is appropriate to mandate the 
inclusion of a particular provision in these contracts. However, we 
have specifically identified this prohibition in new Sec. 663.730 to 
ensure that this information is readily available to practitioners.
    Several commenters urged that we drop the requirements in 
Secs. 663.705 and 663.720, that in order for employed workers to be 
determined eligible for OJT and for customized training they must not 
be earning a self-sufficient wage as determined by the Local Board. The 
commenters observed that there is no specific wage criterion on OJT and 
customized training eligibility in WIA, and that it would limit 
customized training available for skill upgrading for new technology 
and new job skills noted in Sec. 663.720(c). The commenters believed 
that such a limitation on customized training could also affect the 
linkages with employers and economic development efforts.
    Response: The Act, in sections 134 (d)(3)(A)(ii) and (d)(4)(A)(i), 
provides that one of the eligibility criteria for intensive and 
training services for employed individuals is that they need such 
services in order to obtain or retain employment that allows for self-
sufficiency. These criteria enable employed adults in entry level jobs 
to receive those services to initiate the steps toward a career or to 
obtain those skills necessary to improve their earning capacity in 
another job to assist them in attaining self-sufficiency. Therefore, no 
change has been made to the Final rule. However, this eligibility 
requirement does not apply to training provided as part of the 
Statewide workforce investment activities under 20 CFR 665.210(d), 
which provides for establishing and implementing innovative incumbent 
workers training programs.
    We received a comment requesting that we add language to the 
regulations to assure that labor organizations who operate training 
programs be considered eligible to operate customized training 
programs.
    Response: The definition of customized training, at Sec. 663.715, 
does not limit providers of customized training to employers, but 
provides that it be ``conducted with a commitment by the employer to 
employ an individual on successful completion of the training, and * * 
* for which the employer pays for not less than 50 percent of the 
training.'' Neither the Act nor regulations preclude any specific 
organization which meets the criteria established by local areas from 
being a provider of a customized training program. Because a wide range 
of programs and providers are available, we have decided not to 
identify any specific type of program or provider in the regulations.
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 needs related payments and the requirements governing 
their disbursement. Supportive services include 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. We also strongly encourage Local Boards 
to establish linkages with programs such as child support, EITC, Food 
Stamps, Medicaid, and the Children's Health Insurance Program, which 
also serve as key supports for customers making the transition to self-
sufficiency. 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.
    We received a comment suggesting that States must be encouraged to 
provide incentive and performance rewards to those local areas which 
provide substantial supportive services.
    Response: States certainly may choose to spend Statewide reserve 
funds on this type of incentive award. However, we believe that 
amending the regulations to encourage States to provide incentive and 
performance rewards to local areas for supportive services is not 
consistent with the principle of granting discretion to Local Boards to 
determine the appropriate mix of services, including provision of 
supportive services, for their area based on their assessment of local 
needs and resources. No change has been made to the regulations.
    A comment asked that the local supportive services policy be 
required to address service delivery and procedures for referrals.

[[Page 49347]]

    Response: Although Local Boards are required to adopt policies that 
ensure coordination of any supportive services provided, we have not 
mandated that the policy specifically address the delivery of such 
services. The inclusion of such a mandate, or the substitution of 
``must'' for ``should'' with respect to referral procedures in the 
context of this regulation would be inconsistent with the principle of 
granting local discretion in the provision of supportive services. No 
change has been made to the Final rule.
    2. Needs-Related Payments: Sections 663.815 through 663.840 address 
requirements relating to needs-related payments. Section 663.825, in 
particular, deals with needs-related payments to dislocated workers. 
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, any 
concerns that the enrolled in training requirement may limit the number 
of dislocated workers who are eligible for needs-related payments can 
be resolved through the use of early intervention strategies.
    A commenter asked that the regulations be changed to require that 
Local Boards must fund supportive services, and, particularly, needs-
related payments, when other resources are not available.
    Response: WIA, at Section 134(e) (2) and (3) lists supportive 
services and needs-related payments as permissible employment and 
training activities. Although we agree that supportive services and 
needs-related payments should be provided with WIA funds when other 
funds are not available, we also recognize that WIA recognizes that 
Local Boards or One-Stop operators may have to make hard decisions 
about the use of limited WIA resources. To enable them to make these 
hard decisions, WIA makes the provision of supportive services a 
discretionary decision. It would be inconsistent with the Act and with 
our principle of maximizing flexibility to create the requirement the 
commenter requests. No change has been made to the regulations. 
However, as a matter of policy, we will follow State and local policy 
with respect to provision of needs-related payments to dislocated 
worker program participants under national emergency grants operating 
in a local area.
    A commenter noted the different time requirements for training 
enrollments for TAA and NAFTA-TAA, as compared to WIA, and asked that 
the requirements be aligned to permit more complete assistance to 
dislocated workers eligible for TAA and NAFTA-TAA.
    Response: The eligibility requirements for TAA benefits and needs-
related payments are established by different authorizing statutes, and 
may not be changed by these regulations. As also noted above, early 
entry into training for dislocated workers needing it is a key 
determinant in reducing an individual's period of unemployment.
    We received two other comments about the eligibility requirements 
for dislocated workers to receive needs-related payments found in 
Sec. 663.825. One comment indicated that references to TAA seemed to be 
intended for TRA. A second comment noted a missing reference to 
training as an eligibility requirement for needs-related payments by 
those dislocated workers who are unemployed and who did not qualify for 
unemployment compensation or trade readjustment allowances.
    Response: Section 663.825 has been revised to change the incorrect 
reference to ``trade readjustment assistance'' to ``trade readjustment 
allowances.'' However, difference in eligibility criteria for 
individuals who did not qualify for unemployment insurance or trade 
readjustment allowances is required by WIA section 134(e)(3).
    One comment was received in regard to Sec. 663.840 asking that all 
needs-related payments and support services ``packages'' be required to 
be comparable to the applicable weekly level of the unemployment 
compensation benefit.
    Response: WIA sets a maximum level for needs-related payments, but 
does not specify a minimum level. As noted previously, we do not think 
it is appropriate to limit the flexibility granted to States and local 
areas by statute.
Part 664--Youth Activities Under Title I

Introduction

    The regulations for youth activities reflect the intent of the 
legislation by moving away from one-time, short-term interventions and 
toward a systematic approach that offers youth a broad range of 
coordinated services. This includes opportunities for assistance in 
academic and occupational learning; development of leadership skills; 
and preparation for further education, additional training, and 
eventual employment. Rather than supporting separate, categorical 
programs, the regulations for youth activities 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.
    The youth council, (the local entity responsible for recommending 
and coordinating youth policies and programs), a new entity created in 
WIA, serves as a catalyst for this broad change. The regulations 
support that legislative intent.
    Flexibility for local program operators to conduct youth programs 
is key to WIA and these regulations. We encourage local decision-making 
in developing policy, youth program design within the statutory 
framework, and determining appropriate program offerings for each 
individual youth. We expect that these programs and activities will 
provide needed guidance for youth that is balanced with appropriate 
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
    Subpart A explains the purpose of youth councils which are created 
at section 117(h) of the Act and discussed in 20 CFR 661.335 and 
661.340 of the local governance regulations in part 661. 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 that 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.

[[Page 49348]]

    There were several comments about the youth councils. One commenter 
suggested requiring that the youth council include representatives from 
organized labor, particularly from recognized apprenticeship programs 
and teachers' unions.
    Response: As stated in WIA section 117(h)(1), members of the youth 
council are appointed by the Local Board in cooperation with the chief 
elected officials(s) (CEO) in the local area. Among other categories of 
youth council representatives, paragraph (2) of WIA section 117(h) 
states that the youth council must include Local Board members 
described in paragraph (A) or (B) of section 117(b)(2) with special 
interest or expertise in youth policy. Therefore, union members 
(including those who may be from recognized apprenticeship programs or 
teachers' unions) who are members of the Local Board and have an 
interest or expertise in youth issues may be appointed to the youth 
council under this provision. Additionally, clause (B) of WIA section 
117(h)(2) provides that the chairperson of the Local Board, in 
cooperation with the CEO's, may appoint other ``appropriate'' 
individuals to the youth council. In short, the Act already provides 
avenues through which representatives of organized labor may be 
appointed to the youth council. Because we believe that local areas 
should have as much discretion as possible in selecting members of the 
youth council to best serve their communities, we do not feel it is 
appropriate to prescribe requirements in addition to those in the Act. 
No change has been made to the regulation.
    Other commenters asked that we require that youth be included as 
full members of these councils at all levels. A number of other 
commenters encouraged us to require that youth with disabilities are 
members of the youth councils
    Response: While there is no specific requirement for the 
appointment of youth, including youth with disabilities, to the youth 
council, there is also no prohibition to naming them to the youth 
council. In fact, 20 CFR 661.335(a) requires representation by 
individuals with experience relating to youth activities and 20 CFR 
661.335(c) authorizes the Local Board Chair and CEO to appoint such 
other individuals as they determine appropriate. Either of these 
provisions could support the appointment of youth, including 
participants and youth with disabilities, to the youth council. 
Furthermore, WIA section 129(c)(3)(C) and Sec. 664.400(f) provide that 
Local Boards must ensure that youth participants are among the 
individuals who are involved in both the design and the implementation 
of its youth program. Youth with disabilities may, of course, be 
included among the youth participants who are designated to be involved 
in this process. We agree with the commenters that Local Boards should 
seek to involve a diverse cross-section of its youth population in the 
planning and design of activities, however, we feel that adding 
additional youth council requirements beyond those already in the Act 
and the regulations, is neither necessary nor appropriate. As discussed 
above, we believe that local areas should have as much discretion as 
possible, in selecting members of the youth council to best serve their 
communities. The issue of youth council membership is also discussed in 
20 CFR 661.335, as well as the preamble discussion of that section. No 
change has been made to the regulations.
    Section 664.110 discusses oversight responsibilities for youth 
programs and activities. Working with the youth council, the Local 
Board has responsibility for oversight of youth programs. As required 
by WIA section 117(d)(4), Sec. 664.110(b) requires local program 
oversight to be conducted in consultation with the CEO. In order to 
make Sec. 664.110(c) consistent with Sec. 664.110(b), a commenter 
recommended revising Sec. 664.110(c) to add that the Local Board should 
consult with the CEO about delegating its responsibility for oversight 
of youth programs to the youth council.
    Response: We agree that it may be advantageous for Local Boards, in 
consultation with local area CEO, to delegate the responsibility for 
oversight of youth programs to youth councils which have expertise in 
youth issues, as is permitted by Sec. 664.110. Section 664.110(c) has 
been revised to reflect this comment.
    A commenter requested that we provide guidance to youth councils on 
identifying and certifying eligible non-traditional training providers 
to ensure that youth are able to pursue non-traditional employment. The 
commenter feels that more information is needed on non-traditional 
training, specifically guidance on non-traditional employment for 
women.
    Response: We support the idea that local youth programs can benefit 
by making non-traditional training opportunities available to 
participants, and encourage States to consider non-traditional service 
providers among the lists of service providers designated in local 
areas. In addition, should the need arise, we will consider addressing 
the issue of non-traditional training providers and eligible providers 
list through subsequent guidance and technical assistance. At this 
time, however, we do not see a need for additional guidance.
Subpart B--Eligibility for Youth Services
    Subpart B provides regulations under which youth are determined 
eligible for WIA youth services. A commenter requested that we amend 
the criteria in Sec. 664.200 so that a low-income youth, regardless of 
any other barriers may participate in the youth employment programs 
funded through WIA. The commenter feels that youth served by their 
agency do not meet the barrier to employment eligibility criteria to 
allow them to participate in WIA youth activities.
    Response: We cannot accommodate the commenter's concerns. The Act 
specifically requires that, to be determined eligible, a low income 
youth must have at least one of the barriers listed in section 
101(13)(C) of the Act and Sec. 664.200(c) of the regulations.
    We received a comment suggesting that we make the definition of 
basic literacy skills at Sec. 664.205 consistent with the definition of 
basic skills deficient in section 101(4) the Act, in order to eliminate 
confusion.
    Response: Section 664.205 is revised to better align the definition 
of these two terms by using the same grade level criterion for both 
terms. While we made changes to better align the definitions, the two 
terms are not identical. Section 101(4) of the Act refers to a 
definition of basic skills deficient for use as one of the categories 
of youth not meeting the income eligibility test who may be served with 
up to 5% of youth funds, as well as one of the standards for 
determining ``out-of-school-youth.'' Section 664.205 addresses the 
criterion for documenting general eligibility when determining whether 
youth are deficient in basic literacy skills. The regulatory definition 
of ``deficient in basic literacy skills'' is based on the statutory 
definition of the term ``literacy'' found in WIA section 203 and cross-
referenced in WIA section 101(19). Therefore, the terms and their 
definitions are not identical. However, Sec. 664.205(a) provides 
authority for States and local areas to define the term ``deficient in 
basic literacy skills,'' so long as certain minimum criteria are met. 
The flexibility provided at Sec. 664.205(a) as revised, would allow 
States and/or local areas which choose to do so to define the term in a 
way in which an individual who is determined to be ``deficient in basic 
literacy skills'' on the basis of the grade level criteria,

[[Page 49349]]

will also be considered to be ``basic skills deficient'' for purposes 
of determining whether the out-of-school youth or 5% youth standards 
are met.
    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. We 
envision that Local Boards will define this term, however, under 
Sec. 664.210, if the State sets policy regarding this provision, the 
policy must be described in the State Plan.
    Section 664.215 requires that all youth participants be registered 
by collecting information for supporting eligibility determinations, as 
well as Equal Opportunity (EO) data. We received a number of comments 
asking that we make the policy that all youth must be registered to 
participate in youth programs consistent with the adult policy, 
allowing the same exceptions to the registration requirement.
    Response: While these commenters feel that the registration policy 
for youth and adults should be the same, we believe that the policy for 
youth should not be changed because the basic approach for serving 
youth differs from adults. The difference in the registration criteria 
for youth and adults arises from the way in which an applicant enters 
each program. WIA section 129(c)(1) makes it clear that each youth 
participant is to have an assessment and a service strategy, activities 
which would also require registration under the Adult program. An adult 
may enter the One-Stop and receive only informational or self-help 
services, for which registration is not required. The more 
individually-focused youth program does not envision these kinds of 
activities as part of entry. (Of course, a youth may avail him/herself 
of informational or self-help services through the One-Stop.) 
Therefore, no change has been made to this section of the regulations.
    EO data must be collected for every individual who is interested in 
being considered for WIA title I financially assisted aid, benefits, 
services, or training by a recipient, and who has signified that 
interest by submitting personal information in response to a request by 
the recipient. See 29 CFR 37.4 (definition of ``applicant'') and 29 CFR 
37.37. This includes all youth participants. We will issue further 
guidance regarding this data collection requirement.
    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 the income criterion for eligible youth, if they meet one or more 
of the criteria specified in section 129(c)(5)(A) through (H) of the 
Act, restated in the regulations at Sec. 664.220. Local Boards may 
define the term ``serious barriers to employment'' and describe it in 
the Local Plan. One commenter also supported WIA's requirements that 
allow individuals with one or more disabilities, including learning 
disabilities, to be eligible under the exception to permit five percent 
of youth participants to be individuals who do not meet the income 
criteria.
    Section 664.240 explains that eligibility for free school lunches 
is not a substitute for income eligibility under the Act. When drafting 
the Interim Final Regulations, we received suggestions that program 
operators be allowed to use eligibility for free lunch as a substitute 
for determining eligibility under the Act, and encouraging us to seek a 
technical amendment to include such a provision in the legislation. 
Several commenters again made requests that we pursue a technical 
amendment on the free lunch and reduced lunch eligibility issue and 
suggested that eligibility for these programs be used to determine 
eligibility for WIA youth services.
    Response: We recognize the importance of this issue, yet lack 
statutory authority to change the Act's income eligibility 
requirements. Should such a change be made to the statute, Sec. 664.240 
would be revised. We support a technical amendment in this area, and 
have discussed the issue with Congressional staff.
    Section 664.250 provides that a youth with a disability 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).) One commenter strongly supported 
WIA's recognition, in the Act and the regulations, of the need for 
youth with disabilities to receive youth services.
Subpart C--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. ``School dropout'' is defined 
in WIA section 101(39) and Sec. 664.310. Youth enrolled in alternative 
schools are not school dropouts.
    We received a number of comments requesting that we seek a 
technical amendment to WIA that would allow youth attending alternative 
schools to be included in the definition of ``school dropout.'' The 
commenters felt 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.
    Response: While we recognize the importance of local flexibility 
and of serving youth in alternative school settings, we lack statutory 
authority to change definitions established under the Act. However, we 
have revised Sec. 664.310 to clarify that a youth's dropout status is 
determined at the time of registration. Therefore, an individual who is 
out-of-school at the time of registration and subsequently placed in an 
alternative school, may be considered an out-of-school youth for the 
purposes of the 30 percent expenditure requirement for out-of-school 
youth.
    We also received comments suggesting that Sec. 664.310 should make 
it clear that, for the purposes of determining whether a youth in an 
alternative school can be considered out-of-school, their dropout 
status should be determined at the point of intake.
    Response: We agree. Section 664.310 is revised to clarify that 
dropout status is determined at the time of registration.
    At least thirty percent of the total youth allocation (except for 
local area expenditures for administrative purposes) must be spent on 
services for out-of-school youth. This 30 percent, like the remaining 
70 percent, need not be spent proportionally between summer and year-
round activities. The Local Board, in consultation with the chief 
elected official, determines the distribution of funds. There is no 
separate summer program under WIA. Therefore, there is no exemption 
from the 30 percent requirement for funds spent on summer employment 
opportunities. A single allocation of youth funds, at least 30 percent 
of which must be spent on out-of-school youth, is available to local 
areas for year-round and summer employment opportunities.
Subpart D--Youth Program Design, Elements, and Parameters
    The features of the youth program design are outlined in section 
129(c) of the Act. While the Act specifies three program design 
categories and ten

[[Page 49350]]

program elements, it permits individual program design flexibility in 
determining the definition, scope, and characteristics of the elements.
    A commenter suggested that, to avoid confusion, we should clarify 
the number of youth elements that are required and the entity 
responsible for providing the ten elements. The commenter also 
suggested replacing the term ``local program'' in Sec. 664.410 with 
either ``local workforce investment board'' or ``local workforce 
investment area'' to identify the entity responsible for making the ten 
elements available.
    Response: WIA requires that Local Boards must ensure that all ten 
elements are available for youth in their local area. To provide 
further guidance to assist Local Boards, we added a new Sec. 664.400 to 
define the composition of a local youth program and to address the 
difference between local programs and local program operators. This 
definition clarifies that a local youth program must include all the 
youth activities in a local area, irrespective of the number of 
operators or alternative services. In addition, we redesignated 
Sec. 664.400 of the Interim Final Rule as Sec. 664.405 and have added a 
provision which we discuss below.
    Redesignated Sec. 664.405 discusses the three categories required 
under WIA section 129(c)(1) which 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.
    A commenter asked us to clarify that the requirement, in WIA 
section 123, that eligible providers of only the ten required program 
elements be identified by awarding grants or contracts on a competitive 
basis, does not apply to the design framework component of the program.
    Response: Eligible providers of the ten program elements must be 
identified as required by WIA section 123; however, we have added a new 
paragraph (a)(4) to the redesignated Sec. 664.405 to clarify that this 
requirement does not apply to the design framework of local youth 
programs when the grant recipient/fiscal agent is the provider of the 
design framework activity. A similar exception in Sec. 664.610 also 
applies to the grant recipient/fiscal agent's provision of summer 
employment activities.
    A commenter requested that we clarify that developing a career goal 
for each youth could be part of the individual's service strategy 
rather than an immediate requirement to identify a career goal because 
many young people 14 years and above do not know what they want to do.
    Response: We agree that developing a career goal may be part of an 
individual service strategy rather than an immediate requirement for 
younger youth. However, setting goals for younger youth may reflect a 
career interest. Goals may change as a youth ages and interests broaden 
as a result of participation in workforce development activities. 
Therefore, we believe local program operators should encourage younger 
youth to identify career interests which may serve as a career goal. We 
have added the phrase ``age-appropriate'' to redesignated 
Sec. 664.405(a)(2) to clarify that the career goals selected should 
appropriate for the age of the youth participant.
    Redesignated Sec. 664.405(c) requires Local Boards to establish 
linkages to entities that will foster the participation of eligible 
youth. We received several comments stating that youth programs should 
be designed to address the needs of teen parents (such as child care, 
flexibility in schedule), to combat the occupational segregation which 
contributes to low wages of women and that training should be evaluated 
for access to non-traditional jobs and career paths for women and 
girls. The commenters also suggested that we add language to this 
section to provide for linking youth programs with educational 
institutions, child care facilities, and other entities to meet women-
specific needs.
    Response: The final regulations, in redesignated 
Sec. 664.405(a)(3), provide for linking youth programs with other 
entities to assist youth. Examples of linkages are listed in 
Sec. 644.405(c), but the list is not exhaustive. Local Boards must 
ensure that there are appropriate links to entities that will foster 
the participation of eligible local area youth. Program operators may 
link their programs to entities such as local high schools, alternative 
schools, childcare agencies, vocational programs, and two-and four-year 
postsecondary institutions that provide services to address the 
specific needs of the targeted population, including teen parents, for 
eligible youth services. We agree with the commenters about the 
importance of these linkages in fostering the participation of eligible 
youth, however, we do not want to be overly prescriptive, decreasing 
the discretion of local areas in making such decisions. No change has 
been made in the final regulations.
    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 is included in redesignated Sec. 664.405(d) to 
emphasize the importance of referrals as 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.
    Section 129(c)(2) of the Act lists 10 program elements that must be 
generally available to youth through local programs. A commenter asked 
for clarification on the number of youth elements required and whether 
these elements must be provided to every youth participant.
    Response: Section 664.410(a) makes it clear that the Local Board 
must ensure that all ten elements are available for youth in their 
local area. However, Sec. 664.410(b) provides that a local program is 
not required to provide all ten program elements to every participant. 
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. We envision 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. Since the regulations 
address this issue, no change is necessary.
    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.
    Under WIA section 129(c)(2)(F) and Sec. 664.410, youth programs 
must make leadership development opportunities available. The Act gives 
the following examples of leadership activities:

[[Page 49351]]

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 listed 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 as positive social 
behavior training in areas such as positive attitudinal development, 
self-esteem building, cultural diversity training, and other skills and 
attributes that would help youth to lead effectively, responsibly, and 
by example.
    One commenter suggested that the examples of leadership development 
opportunities should include actual opportunities for youth to assume 
leadership roles, such as: involving participants in program governance 
and decision making, entrepreneurship training and peer leadership 
opportunities.
    Response: The examples of leadership development and positive 
social behaviors in Sec. 664.420 are not intended to be all inclusive, 
they are merely examples. Other kinds of leadership development 
opportunities may be provided at the discretion of the Local Board. The 
commenter provides good examples of the types of leadership development 
opportunities Local Boards may want to consider when designing their 
local youth programs. No change has been made in the final regulations.
    A commenter suggested that the rules define ``positive social 
behaviors'' and make it clear that positive social behaviors are 
outcomes of leadership opportunities. The commenter recommended a new 
definition of positive social behavior which includes some of the 
following activities: maintaining healthy lifestyles, including being 
drug and alcohol free; maintaining positive relationships with 
responsible adults and peers; contributing to the well-being of one's 
community; voting; being committed to learning and academic success; 
remaining non-delinquent; and postponed and responsible parenting.
    Response: We have added these suggestions to the list of positive 
social behaviors in Sec. 664.430 because we think that the original 
list of examples was too narrow to reflect the full range of positive 
social behaviors. As a technical correction, we have removed the phrase 
``but not limited to'' from this section. This does not change the 
meaning of this provision. Here, as throughout the regulations, the 
term ``include'' is used to indicate an illustrative, but not 
exhaustive list of examples.
    Another of the ten required program elements is 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 title I of 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. Child support, EITC, Food Stamps, Medicaid, and 
the Children's Health Insurance Program are among the programs with 
which Local Boards are encouraged to coordinate. We have made a slight 
modification to this section which previously referred to assistance 
with transportation, dependent care and housing ``costs''. We have 
removed the reference to ``costs'' for the services since WIA title I 
funds may be used to provide services such as on-site child care as 
well as to directly provide or reimburse the costs of these services.
    Section 664.450 requires that followup services be provided to all 
youth participants for not less than 12 months after the completion of 
participation, as appropriate. The appropriate scope of followup 
services must be based on the needs of the individual participant. 
Followup services have proved to be effective. 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. 
In contrast, 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 programs of the Center for Employment Training, 
which feature 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.
    Section 664.450(a)(1) 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. The list is intended to present examples of followup 
services; other types of followup services may be determined at the 
local level.
    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.
    A commenter suggested revising the sentence referring to less 
intensive followup services for youth who have only participated in 
summer employment opportunities, to say that the scope and intensity of 
these followup services should be consistent with each participant's 
individual service strategy.
    Response: Section 664.450(b) already states that the types of 
services provided and the duration of services must be determined based 
on the needs of the individual. Therefore, we do not feel that further 
clarification is required. Local programs will make the determination 
on the intensity of followup services. However, we will provide 
additional guidance on other aspects of this subject through our 
regular system of communication to States and local areas for States 
that may need technical assistance.
    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. The regulations do 
not specify a particular time limit for work experiences. A commenter 
requested that we place a maximum time limit on work experiences (no 
more than 30 days), and require that all work experiences be paid, with 
priority given to employers who have evidenced a commitment to training 
for their own workers and union management approaches to training.
    Response: We agree that Local Boards should make a point of 
establishing work experiences opportunities for youth with employers 
who have demonstrated quality approaches to training and labor 
management, but do not think it is necessary to mandate this approach. 
We believe, however, that establishing a regulatory time limit, 
requiring that all work experiences be paid and giving priority to 
select employers is inconsistent with principle of local flexibility in 
designing

[[Page 49352]]

programs. No change has been made in the final regulations.
    As provided in Section 129(c)(2)(D) of the Act, work experiences 
may be paid or unpaid, as appropriate. A commenter suggested that we 
clarify that work experiences are appropriate and desirable activities 
for many youth throughout the year.
    Response: We agree and have added the suggested language to 
Sec. 664.460(c).
    Section 664.460 provides 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 internships and job shadowing. A few commenters 
recommended adding other examples to Sec. 664.600 to expand the types 
of acceptable work experiences. They suggested that the definition of 
work experiences should make it clear that paid or unpaid community 
service programs, such as youth services or conservation corps, are 
valid examples of work experiences, and suggested that language be 
added to encourage Local Boards to maximize the use of paid work 
experiences in summer conservation corps programs managed by qualified 
State, local, non-profit or Federal agencies, as key element or 
strategy. In addition, a commenter proposed that the regulations 
encourage Local Boards to maximize collaboration with federal agencies 
that operate summer youth conservation corps program.
    Response: We agree that paid and unpaid community service programs 
may be appropriate types of work experiences for youth, and have 
amended the list of examples in Sec. 664.460(c) to include them. 
However, while we agree that youth conservation corps may be one of the 
programs in which WIA youth participants gain work experiences, we have 
refrained from identifying particular types of program providers 
throughout the regulations. Therefore, consistent with the principle of 
maximizing State and local discretion, we have not specified this 
program in the regulations.
    A few commenters also endorsed the principle that decisions 
regarding OJT for youth participants should be left to Local Boards.
    Response: We agree that the decision about when to provide OJT to 
youth under age 18 should remain a decision left to Local Boards. While 
OJT is not an appropriate activity for most youth under age 18, local 
programs may choose to use this service strategy for such youth based 
on the needs identified in an individual youth's objective assessment. 
Since Sec. 664.460(d) provides for local discretion in deciding when to 
use OJT, based on a youth's service strategy, no change is made to the 
regulations.
    Section 664.470 provides that 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.
    One commenter asked that we clarify the statement that the purpose 
of work experiences is not to benefit the employer although the 
employers may, in fact, benefit from activities performed by the youth, 
stating that Sec. 664.460 (c) is ambiguous.
    Response: The intent of work experiences is to provide youth with 
opportunities for career exploration and skill development and to 
enhance their work readiness skills in preparation for employment. 
While this is the primary objective of work experiences, we recognize 
that the employer may also receive some benefit in the form of work 
being done or of recruiting a potential new employee. We believe that 
the regulations adequately explain this; therefore, no change has been 
made to the regulations.
Subpart E--Concurrent Enrollment
    Under the criteria of section 101(13) of the Act, an eligible youth 
is an individual 14 through 21 years of age. Adults are defined in 
section 101(1) of the Act as individuals age 18 and older. 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.
    A commenter asked that we make it clear that out-of-school youth 
may enroll in adult programs under Titles I and Title II of the Act.
    Response: We have revised paragraph (b) of Sec. 664.500 to clarify 
that concurrent enrollment is allowable for youth served in the adult 
program, dislocated worker program, adult education programs under 
title II of WIA, and other programs, in order to broaden options for 
serving youth.
    A commenter suggested that youth co-enrolled in both youth and 
adult programs should also be offered the complete services available 
to youth.
    Response: We think the regulations already cover this suggestion 
since youth enrolled in youth programs must receive an individual 
assessment and service strategy based on their need, regardless of 
whether they are co-enrolled in an adult program. The service strategy 
should consider all the service options available under both the youth 
and adult programs.
    Section 664.510 provides that ITA's are not an authorized use of 
youth funds. One commenter stated that WIA is silent on the use of 
ITA's for youth and this should be a State or local decision. This 
commenter felt that since it is allowable to enroll 18 year old youth 
in both youth and adult programs, the use of ITA's should be allowed as 
an activity for 18-21 year old youth enrolled only in youth funded 
activities. Another commenter asked that we reverse the rule 
disallowing ITA's for youth participants not eligible for training 
services under the adult and dislocated worker programs.
    Response: The ITA is the currency of a market-based system that 
enables adults and dislocated workers to select the service providers 
most suited to their needs based on information about the past 
performance of such providers. While the Act does not mention ITA's in 
its youth provisions, it does require that providers of the ten 
required youth program elements be competitively selected. The 
competitive selection requirement effectively precludes the use of 
ITA's since providers are selected by the Local Board, rather than by 
the participant. Thus, because the supply of providers may be limited, 
we interpret the Act to preclude ITA's for youth below age 18. Youth 
aged 18 through 21 can access ITA's under the adult or dislocated 
worker program, if appropriate. Accordingly, we have not changed this 
section.
Subpart F--Summer Employment Opportunities
    Subpart F provides clarification about summer employment 
opportunities for youth. Commenters expressed concern that WIA does not 
have a separate funding authorization for summer youth employment and 
training programs. A commenter also felt that without a separate 
authorization, the summer youth employment program could find

[[Page 49353]]

itself in some peril in the future and suggested that regulatory 
language be added to preclude any diminution in this highly important 
activity.
    Response: The commenters are correct that the summer youth 
employment and training program is no longer a separately funded 
activity. Rather, summer employment opportunities are intended to be 
part of a comprehensive array of services available to youth in a local 
area. 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. 664.420, 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. Accordingly, we believe it would be contrary to the 
intent of the Act and inconsistent with local flexibility to regulate 
the level of activity required for any of the ten program elements, 
including the summer youth employment opportunities. We will, however, 
work with States and local areas to assist them with making the 
transition to providing summer employment activities as part of a 
comprehensive system of youth services. For example, we issued Training 
and Employment Guidance Letter (TEGL) 3-99 in January 2000, to provide 
guidance to States and local areas on implementing comprehensive youth 
services under title I of WIA during the summer of 2000. This guidance 
is available on the Internet at www.usworkforce.org. Therefore, a 
change in the regulations is not necessary.
    A commenter also asked that a new paragraph (e) be added to 
Sec. 664.600 to require each local area to report yearly on the number 
of youth participants who are provided summer employment opportunities.
    Response: Section 183 of the Act authorizes the Secretary to 
monitor all recipients of financial assistance, which would include 
grant recipients that operate summer employment activities. We are in 
the process of developing a reporting system to collect information on 
WIA participants, youth participants will be included in the reporting 
system. This reporting system will include information on how many 
youth participants participated in summer employment opportunities, as 
well as the characteristics of those participants. Since this issue is 
being addressed in the reporting arena, no change is made to these 
regulations. In addition, Training and Employment Guidance Letter 
(TEGL) 14-99, transmitting instructions for the WIA Transition Summer 
Report addresses these issues. The TEGL was issued on June 12, 2000 and 
can be found on the Internet at www.usworkforce.org.
    We received numerous inquiries about whether the Act would allow 
cities and counties to continue to operate their summer employment 
opportunity activities.
    Response: Section 664.610 provides that this practice is still 
allowed when the local chief elected official is the grant recipient/
fiscal agent. It clarifies that if summer employment opportunities are 
provided by entities other than the grant recipient/fiscal agent, then, 
under WIA section 123, 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. Thus, a 
city or county may continue to operate the summer employment 
opportunities component of the youth program, and is not required to 
engage in a competitive selection process for that component, if it 
acts as the grant recipient/fiscal agent for the Local Area. However, 
under WIA section 123, providers must be selected on a competitive 
basis if providers other than the grant recipient/fiscal agent provide 
the summer employment opportunities component of the local youth 
program.
    A commenter also suggested that we clarify that local government 
units operating summer youth employment opportunities as a consortium 
may provide summer youth opportunities without competitive bidding.
    Response: We agree and have revised Sec. 664.610 to specifically 
recognize consortia of local governments.
    One commenter requested that we allow the selection of private 
sector unsubsidized employment opportunities to be excluded from the 
competitive process.
    Response: We agree and Sec. 664.610 has been revised accordingly.
    Some commenters suggested that the description of summer youth 
employment should make it clear that youth service and conservation 
corps constitute valid summer employment opportunities. They also 
recommended that we encourage Local Boards to maximize collaboration 
with Federal agencies that operate summer youth conservation corps 
programs.
    Response: In our discussion of Sec. 664.460, we have identified 
youth conservation corps and youth service corps as available work 
experiences opportunities for youth. As such, placement with these 
programs as part of summer employment opportunities may also be 
appropriate. However, we do not believe it is necessary to specifically 
identify these programs in the regulations.
    The core indicators specified in section 136 of the Act apply to 
the youth program as a whole, including 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 participants in summer 
activities, as part of the overall youth program, are required to be 
included in the same core indicators of performance as the other youth 
activities.
    A commenter thought that performance measures in Title I and Title 
II should be the same for youth because youth can be simultaneously 
enrolled in both programs.
    Response: We agree that performance measures for federal education 
and training programs should be coordinated to the extent possible. We 
have held discussions with the Department of Education to identify 
similar performance measures which would apply to both Title I and 
Title II programs and will continue our joint efforts to harmonize 
performance measures across programs.
Subpart G--One-Stop Services to Youth
    Subpart G explains that the chief elected official (as the local 
grant recipient for the youth program), is a required One-Stop partner, 
is subject to the One-Stop provisions related to required partners, 
described in 20 CFR part 662, and is responsible for connecting the 
youth program and its activities to the One-Stop system. In addition to 
the provisions of 20 CFR part 662, links 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.

[[Page 49354]]

    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 the Wagner-Peyser Act. We believe that WIA's 
intent 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.
    Commenters suggested that One-Stop Centers should make significant 
efforts to make their programs and services accessible to youth and 
work with local school systems to reach eligible youth. One of the 
commenters also suggested amending Sec. 664.700(b)(2) to add the local 
school systems to the linkage requirement, and to require One-Stops to 
provide materials at low literacy and developmentally diverse levels. 
To better serve participants of all ages, staff should be trained on 
the developmental stages of youth and adulthood. A commenter also 
stated that it is important that, in all cases, written material and/or 
electronically accessed information available at one-stop centers and 
throughout the system be written at no more than a fifth grade reading 
level and, where appropriate, also available in languages other than 
English spoken by a majority of potential customers.
    Response: While neither WIA nor its implementing regulations 
require any sort of reading level analysis for EO purposes, local areas 
may consider providing written materials at low literacy and 
developmentally diverse levels. The WIA nondiscrimination regulations, 
at 29 CFR 37.35, set forth the specific obligations to provide services 
and information in languages other than English. The level that 
triggers the obligation to prepare non-English materials and services 
in advance is ``a significant number or proportion of the population 
eligible to be served or likely affected.'' Since One-Stop centers must 
adhere to the 29 CFR part 37 Civil Rights regulations when adopting 
such policies, no changes to Sec. 664.700 are necessary.
Subpart I --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 about 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 in Secs. 664.800 to 664.830. We view 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 
statewide workforce investment activities under WIA sections 128(a) and 
133(a)(2).
Subpart A--General Description
    Subpart A provides a general description of Statewide activities 
conducted with the up to 15 percent of the funds which the Governor may 
reserve from the youth, adult and dislocated worker funding streams 
(``15 percent funds''), and the up to an additional 25 percent of 
dislocated worker funds which the Governor may reserve for Statewide 
activities.
    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. We believe 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 to for expert assistance, and employers can look 
to for a qualified workforce. This issue is also addressed in 20 CFR 
667.130(b).
    We did not receive any comments on this subpart and no changes have 
been made in the final regulations.
Subpart B--Required and Allowable Statewide Workforce Investment 
Activities
    Subpart B 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 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 authorized use 
of these funds is administration, subject to the five percent 
administrative cost limitation at 20 CFR 667.210(a)(1). This paragraph 
clarifies that while there is no specific amount that must be spent for 
each of the seven activities that are required 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.
    States are also required to provide additional assistance to local 
areas that have high concentrations of eligible youth. This activity is 
one way States can help local areas maximize the number of youth served 
under title I of WIA. Another required activity, rapid response, is 
discussed in subpart C of part 665.
    Section 665.200(b) discusses the States' responsibility for 
disseminating information about eligible providers of training services 
for adults, dislocated workers and youth, including the statewide list 
of eligible providers and information on performance and program cost. 
One commenter stated that, when discussing statewide dissemination 
strategies, the regulation should encourage States to disseminate 
information in different languages, for different reading levels, and 
to use radio and television public service announcements to reach as 
wide and diverse an audience as possible.
    Response: We agree with the commenter and encourage States to 
develop dissemination strategies using multiple means, including those 
suggested by the commenter, to provide information in such a way as to 
reach the widest population. The Interim Final Regulation implementing 
WIA's section 188 nondiscrimination provisions contains requirements 
for the effective communication of information to individuals with 
disabilities, including dissemination of information in different 
languages and to various population groups. 29 CFR 37.9; 37.35;

[[Page 49355]]

37.42, (published at 64 FR 61692) (Nov. 12, 1999)). We will work with 
the Department of Labor's Civil Rights Center to issue guidance on 
compliance with 29 CFR 37.35 to assist providers in meeting their 
obligations to provide materials and services in languages other than 
English. To permit maximum State and local flexibility, we have chosen 
not to specify particular methods by which information on eligible 
providers must be disseminated. However, we have added a new paragraph 
(5) to Sec. 665.200(b) which requires that States assure that the 
information listed in paragraphs (1) through (4) is widely available.
    Section 665.200(c) discusses conducting evaluations (WIA section 
136(e)) of workforce investment activities for adults, dislocated 
workers and youth as one of the eight required Statewide activities. 
One commenter suggested that ``high wages'' be specified as part of 
``high-level outcomes'' which result from the improvements identified 
in the evaluations.
    Response: Section 665.200(c) discusses broad Statewide program 
goals leading to high-level performance and outcomes and is not 
intended to require specific measures to be used in achieving them, nor 
to address individual participant outcomes. We believe that high wages 
may be better addressed by the core performance indicators required by 
WIA section 136 and discussed in 20 CFR 666.100, especially by the 6-
month post employment earnings measure, which, by definition, addresses 
wages. Also, it is expected that the Governors will use additional 
indicators of performance on a Statewide and local basis that may more 
fully address the commenter's concern (see 20 CFR 666.110 and 
666.300(b)). Finally, ``high wages'' is a relative term and, as such, 
is difficult to define in a useful way, except on an individual basis 
because it is a function of a particular occupation, local labor market 
conditions, an individual worker's skills, experience, education level, 
and other factors. What are high wages for one person may be low wages 
for another. For these reasons, the final regulation is unchanged.
    Another commenter expressed concern that, under a universal access 
system and uniform performance standards, special populations with 
significant barriers to employment will experience difficulties in 
learning about, accessing and receiving appropriate services. The 
commenter suggested that the final regulations encourage evaluations of 
the delivery of workforce investment activities to economically 
disadvantaged and other special populations.
    Response: While we agree that the evaluation of activities, 
including outreach, for these populations is important and should be 
encouraged, we do not wish to limit the Governors' flexibility in 
allocating and administering the funds reserved for these required 
activities. 29 CFR 37.42, in the regulations implementing the WIA 
nondiscrimination and equal opportunity provisions, contains further 
obligations regarding outreach and universal access. Under WIA, the 
Governors have been given the discretion to determine funding levels 
for outreach and evaluation activities and whether the activities will 
be targeted to specific organizations, populations or programs. 
However, WIA section 136(e)(2) and Sec. 665.200(c) require Governors to 
design the evaluations in conjunction with the State and Local 
Workforce Investment Boards and to coordinate with Local Boards in 
conducting the evaluation studies. Community-based organizations, 
advocacy groups, and other stakeholders have a variety of opportunities 
for participation in the workforce investment system decision-making 
process. They are among the groups represented on State and Local 
Boards. They may attend Local Board meetings, provide comments on 
workforce investment plans, become eligible training providers, and 
demonstrate effectiveness in the delivery of training programs. We 
believe that the commenter's concerns should be, and will be, addressed 
through this broad consultation process. However, Sec. 665.200(c) of 
the final regulations is revised to include a reference to the 
requirements of WIA section 136(e)(2), which was not included in the 
Interim Final Rule.
    Other commenters suggested that, for the purposes of awarding 
incentive grants, the final regulations should define the term 
``exemplary performance,'' used at Sec. 665.200(d)(3), in a way that 
will reward local areas that assist a significant percentage of 
individuals to meet their self-sufficiency standard (i.e., to earn 
wages needed to cover costs for various family sizes and types, without 
governmental assistance).
    Response: We agree that consideration of the extent to which 
programs lead to self-sufficiency is an important factor in measuring 
program effectiveness and encourage States to look at this factor in 
determining incentive grants. Under WIA, however, the Governor has the 
discretion to develop additional indicators of performance by further 
defining exemplary performance beyond the core performance measures 
specified in the Act and regulations. As stated in 20 CFR 666.300, WIA 
section 136(c)(1) authorizes the Governor, and not the Department, to 
apply additional indicators of performance, such as self-sufficiency, 
to local areas and to use them along with the core performance measures 
as the basis for awarding Incentive Grants for exemplary performance. 
As stated in 20 CFR 666.400(b), WIA section 134(a)(2)(B)(iii) further 
provides that the authority to determine the criteria for exemplary 
local performance that qualifies for incentive grants, as well as the 
amount of funds used for these grants, lies with the Governor. To limit 
the Governors' discretion in this area by requiring additional 
indicators would not be in keeping with the letter and intent of WIA to 
provide increased State and local flexibility. Consequently, this 
provision remains unchanged in the final regulations and the States 
retain the authority to exercise discretion in these matters.
    Section 665.200(e) provides for technical assistance to local areas 
that fail to meet local performance measures. A commenter indicated 
that such technical assistance must include capacity building for Local 
Board members to help improve services and performance.
    Response: The State has the flexibility to develop technical 
assistance strategies and, therefore, a State may decide to include 
capacity building activities as part of its overall technical 
assistance strategy. WIA section 134(a)(3)(A)(ii) and Sec. 665.210(b) 
list capacity building activities as an allowable statewide activity. 
Consistent with the WIA principle of maximizing State and local 
flexibility, we believe that it would not be appropriate to limit 
flexibility by specifying a particular type of technical assistance 
activity that must be provided. While we agree that capacity building 
for Board members is often a useful technical assistance strategy, we 
are not prepared to require it in all cases. This provision remains 
unchanged in the final regulation.
    2. Optional Activities: Section 665.210 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. We 
encourage States to establish policies and definitions to determine 
which workers, or groups of workers, are eligible for incumbent worker 
projects. We have added the phrase ``or groups of

[[Page 49356]]

workers'' to Sec. 665.220 to clarify that groups of workers, in 
addition to individual workers, may be determined eligible for 
incumbent worker training, and that the eligibility determination for 
the ``group'' does not have to be done on an individual basis. Section 
665.220 makes clear that incumbent workers served under projects funded 
with these reserve funds do not necessarily have to meet the 
requirement that training leads to a self-sufficient wage. However, 
because of different WIA requirements, employed adult or dislocated 
workers served with local formula funds must meet the self-sufficiency 
requirement.
    Under their capacity-building function (one of the allowable 
Statewide workforce investment activities), states may also conduct 
activities and implement programs designed to promote access to and 
coordination among supportive services and work supports administered 
by other state agencies. Because supportive service and work support 
programs are vital for low-income families making the transition to 
self-sufficiency, efforts to integrate and coordinate such programs at 
the state level will greatly enhance the capacity of One-Stop providers 
to serve their participants successfully.
    One commenter suggested that States consult and coordinate 
allowable Statewide workforce investment activities with State labor 
federations and appropriate labor organizations, especially in the case 
of incumbent worker training. The same commenter also suggested that 
States be required to provide assurances that capacity building and 
technical assistance funds are used to enhance participation of all 
stakeholders, including organized labor.
    Response: We agree that State labor federations and other 
appropriate labor organizations at the State and local level should be 
involved in consulting and coordinating on allowable Statewide 
workforce investment activities, including capacity building (which is 
one of the allowable activities), and technical assistance (a required 
activity for local areas that fail to meet performance levels). 
Representatives of labor organizations have the opportunity for 
consultation and coordination through their membership on State and 
Local Boards, the opportunity for public comment during State and local 
planning processes, as well as other opportunities provided under the 
sunshine provisions of WIA (WIA sections 111(g) and 117(e), and 20 CFR 
661.220(d) and 661.305(d)). We believe the commenter's concerns on 
consultation and coordination will be addressed by these broad 
consultation processes. This provision remains unchanged in the final 
regulations.
    One commenter suggested that States must consult on policies 
governing incumbent worker training with organized labor 
representatives, especially those whose members have the skills in 
which training is proposed. In addition, the commenter suggested that 
written concurrence on the training programs must be provided by the 
unions whose members are being affected by these programs.
    Response: We agree that written union concurrence is required, 
under WIA section 181(b)(2)(B) and 20 CFR 667.270(b), where a training 
program would impair or be inconsistent with an existing collective 
bargaining agreement. We believe that general consultation on incumbent 
worker training initiative policies will occur with organized labor 
representatives through the processes described above. We strongly 
encourage State and Local Boards to also consult with the specific 
organized labor organizations whose members have the skills in which 
incumbent worker training programs are being planned, as well as with 
organized labor organizations whose members are affected by such 
programs even where the is no question of impairment of collective 
bargaining agreements. No changes have been made to the final 
regulations.
    Several commenters suggested that we add illustrative language to 
the list of optional Statewide activities specified in Sec. 665.210 to 
identify and encourage the selection of particular programs or types of 
providers that may be funded with the State's 15 percent reserve funds.
    Response: These suggestions are discussed in more detail below. As 
a matter of policy, we agree that the commenters' suggestions would be 
permissible uses of the 15 percent funds. However, we are not prepared 
to single out any particular type of program or provider, consistent 
with our overarching policy of providing State and local flexibility in 
program design and implementation.
    One commenter asked that the following language be added to 
Sec. 665.210(b)(1) regarding staff development and training: 
``particularly for non-profit community-based organizations that serve 
disadvantaged populations to assist them in being certified as eligible 
providers and to comply with data collection requirements.'' The 
commenter also suggested that language in Sec. 665.210(e) should 
specifically mention that the support provided to local areas for 
identifying eligible training providers should include outreach efforts 
to community-based organizations that serve disadvantaged (minority, 
immigrant, low-income, disabled) populations.
    Response: While we are not prepared to limit State and local 
flexibility by imposing this requirement, we are committed to assisting 
disadvantaged populations, such as low-income individuals or 
individuals with disabilities, and agree that community-based 
organizations are an important part of the workforce investment system 
with their focus on serving these populations. Outreach to groups 
serving disadvantaged population groups is an important part of the 
Local Board's responsibility to provide universal access to WIA funded 
activities. See 29 CFR 37.42. Therefore, we encourage Local Boards to 
engage in outreach activities to community-based organizations. In 
addition, community-based organizations will be represented on Local 
Boards, will have the opportunity to attend Local Board meetings, and 
provide comments on the eligible provider process and to demonstrate 
effectiveness in the delivery of training programs. We expect States to 
provide training activities for all organizations that have 
traditionally been partners of the system. No change has been made in 
the regulations.
    Another commenter suggested that Sec. 665.210(b)(2) should 
specifically list programs provided by State and local youth service 
and conservation corps as examples of exemplary program activities.
    Response: We believe that when a State is developing exemplary 
program activities, it should include programs, such as those 
suggested, that have proven successful in delivering employment and 
training activities for youth, adults and dislocated workers. However, 
we also recognize that the Governor has the authority to determine what 
allowable activities will be conducted and how the 15 percent funds 
will be used to conduct those activities. Since we do not believe it is 
appropriate to prescribe how the States should spend those funds, no 
change has been made in the final regulations.
    A commenter noted that Secs. 665.200(b)(1) and 665.210(f) provide 
for nontraditional training and employment in both required and 
allowable Statewide workforce investment activities. The commenter 
suggested that we should provide more specific guidance on how States 
should provide opportunities for training for non-traditional 
employment at the State and local levels.

[[Page 49357]]

    Response: We agree that training for non-traditional employment is 
an important component of the workforce investment system. While the 
rule remains unchanged in the final regulations, we expect to issue 
guidance to States and local areas on the provision of training for 
non-traditional employment. In addition to implementing innovative 
programs for displaced homemakers, and programs to increase the number 
of individuals trained for and placed in non-traditional employments, 
we also encourage states to implement programs to promote increase 
employment of low-income fathers so they can support their children 
more adequately.
    One commenter indicated that Sec. 665.210(f) should list 
entrepreneurship and asset-building initiatives as examples of 
innovative programs for displaced homemakers.
    Response: We encourage States to develop innovative programs, which 
may include those specified by the commenter, when designing innovative 
programs for displaced homemakers. However, we believe that the States 
should have the flexibility to design programs which meet their 
specific needs. The rule, therefore, remains unchanged in the final 
regulations.
    The same commenter suggested that Sec. 665.210(f) should specify 
that when a State is implementing programs to increase the number of 
individuals trained for and placed in non-traditional employment, 
special attention should be given to low-income individuals and 
recipients of public assistance.
    Response: Although we agree that States should take steps to assure 
that all training activities are available to low-income individuals 
and public assistance recipients, we believe that States must have the 
flexibility to design programs which increase the participation of all 
individuals. We do not think it is appropriate to narrowly limit this 
flexibility. Therefore, the regulation remains unchanged.
    Another commenter suggested that the listing of required and 
allowable Statewide workforce investment activities should specify that 
the needs of older workers can be addressed with these resources.
    Response: We agree that the Governor has the discretion to fund 
activities for older workers and other specific groups. However, as 
stated above, we believe the States should have the flexibility to 
design programs which meet their needs. Consequently, we have not 
specified this permissive use of funds in the final regulations.
    One commenter suggested adding language to Sec. 665.210(b)(2) that 
encourages States to continue exemplary programs funded through 
targeted JTPA funds as they transition to WIA so that individuals 
currently participating in such exemplary programs may continue to 
receive services and avoid abrupt termination.
    Response: While one of the reforms contained in WIA was the 
elimination of the mandatory set-asides (such as the 5 percent set-
aside for older worker programs) in order to increase State 
flexibility, we expect that programs under WIA will benefit from the 
experience and expertise gained under JTPA. Further, WIA policy 
guidance (in WIA Questions and Answers dated April 1999, Section I., 
Transition Issues, Number 1 at www.usworkforce.org) expresses our 
intent that individuals who are receiving JTPA services continue to 
receive services under WIA when a local area transitions to WIA so that 
they may complete their JTPA service strategy without interruption. 
These participant transition provisions have been added to subpart I of 
part 667 of these regulations.
    One commenter suggests that Sec. 665.210(d) either provide more 
information on the reference to Empowerment Zones and Enterprise 
Communities in relation to innovative incumbent worker initiatives, or 
delete the reference entirely, because this reference could not be 
located in the WIA legislation.
    Response: WIA, at section 134(a)(3)(A)(iv)(II), specifically 
authorizes programs targeted to Empowerment Zones and Enterprise 
Communities. This is separate from the authority to operate innovative 
incumbent worker initiatives. The Empowerment Zone and Enterprise 
Community initiative is a joint effort of the U.S. Department of 
Housing and Urban Development and the U.S. Department of Agriculture. 
The initiative is designed to provide Federal tax incentives and 
flexible grant assistance to distressed urban and rural areas, and is 
framed around four key principles: economic opportunity; sustainable 
community development; community-based partnerships; and a strategic 
vision for change. Over 100 communities around the country have been 
named Empowerment Zones or Enterprise Communities. More information on 
this initiative can be found at www.hud.gov.
    In order to clarify the statutory provisions in WIA section 
134(a)(3)(A)(iv)(I) and (II), which separates the establishment and 
implementation of programs targeted to Empowerment Zones and Enterprise 
Communities from the implementation of innovative incumbent worker 
training programs, we are breaking paragraph (d) of Sec. 665.210 into 
two paragraphs to clarify that these are two separate allowable 
activities.
    One commenter suggested that Sec. 665.210(g) should specify 
entrepreneurship and asset-building training as types of employment and 
training activities which the State can use its reserve funds to 
provide to adult and dislocated workers.
    Response: WIA section 134(d)(4)(D) lists the types of training 
services that may be provided to adult and dislocated workers, 
including entrepreneurship training. (WIA section 134(d)(4)(D)(vi).) 
However, as 20 CFR 663.300 makes clear, the list is not all-inclusive 
and other training services may be provided. Therefore, the State, with 
local input, has the flexibility to determine what types of training 
programs will be made available to adult and dislocated workers. We 
encourage States to consider various types of training programs, 
including asset-building training, as long as it meets the training 
program requirements in Sec. 663.508. We have structured 
Sec. 665.210(g) broadly to provide States with maximum discretion about 
the kinds of training activities they will assist with Statewide 
activity funds. This provision remains unchanged in the final 
regulations.
    Section 665.220 sets standards for determining the eligibility of 
incumbent workers served with Statewide funds. Commenters pointed out 
that Sec. 665.220 contains no income requirements in the definition of 
incumbent worker for Statewide workforce activities, but imposes a 
``self-sufficient'' wage level in customized training for an eligible 
employed individual at the local level under Sec. 663.720. They 
suggested that the same requirements should hold at the State and local 
levels.
    Response: Section 665.220 reflects Congress' intent that States may 
choose to treat incumbent workers served with Statewide reserve funds 
differently from employed workers served with formula funds at the 
local level, for whom specific eligibility requirements are imposed. 
While WIA section 134(a) sets no eligibility requirements on State-
funded incumbent worker training, at the local level, WIA section 
134(d)(3)(A)(ii) requires that employed workers be trained for jobs 
which will provide them self-sufficiency. Thus, since the statutory 
provisions are not the same, we have not made the regulatory provisions 
the same, although the State has the option to define the two terms in 
the same way. Consequently, this provision remains unchanged in the 
final regulations.

[[Page 49358]]

Subpart C--Rapid Response Activities
    Subpart C 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.
    Section 665.300 describes what rapid response activities are and 
who is responsible for providing them. Rapid response assistance begins 
at the dislocation site 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. We believe 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. We strongly urge 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 
``dislocated worker'' at section 101(9) in a way that permits 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) before layoff if 
employed at a facility that has made a general announcement that it 
will close within 180 days.
    We believe 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 enough 
formula funds in the State (at the State or local levels) to adequately 
serve the workers being dislocated, or whether national emergency grant 
funds, authorized under WIA section 173 and discussed in 20 CFR part 
671, must be requested in a timely manner so that all services are 
available to the workers when they need them.
    Section 665.320 provides details on rapid response activities that 
may be provided in addition to the required activities described in 
Sec. 665.310.
    One commenter indicated that the current regulations do not include 
language about the for-profit business sector participation in planning 
and implementing Rapid Response activities. The commenter would like 
the regulations to emphasize that there is an important role for 
private for-profit businesses in this effort. A commenter thought the 
Job Service Employer Committee (JSEC) employers can provide assistance 
in designing rapid response services to help affected workers and 
employers. Another commenter suggested that the regulations specify a 
similar role for labor organizations. The commenter went on to state 
that we should consider providing a portion of our incentive grant 
funds for comprehensive rapid response services, including the 
participation of the State labor federation in Statewide rapid 
response.
    Response: We agree that the Act provides many opportunities for 
stakeholders and we encourage States to be as inclusive as possible in 
planning and implementing their rapid response activities. Just as the 
Act recognizes the important role of business and labor in the makeup 
of State and Local Boards, the inclusion of both interests in the 
design and operation of rapid response activities is equally important. 
The State, however, is responsible, under WIA section 134(a)(2)(A)(i), 
for providing rapid response activities and it is up to the State to 
determine how it will plan for and implement those activities. 
Consistent with our principle of providing States with maximum 
discretion in the design of their programs, this provision remains 
unchanged in the Final Rule.
    On the issue of using incentive grant funds to encourage States to 
include labor (or business) participation, we believe that the 
commenter's suggestion has merit. However, we have chosen not to define 
innovative programs in the regulations so that we can provide the 
States the opportunity to experiment with a wide variety of programs. 
We will develop guidelines (under 20 CFR 666.220) for incentive grants. 
We may decide to provide examples of innovative programs, such as the 
establishment of State labor liaisons with State rapid response 
activities, in the application guidelines. This provision remains 
unchanged in the final regulation.
    Section 665.300(c) requires a State to establish a rapid response 
dislocated worker unit to carry out Statewide rapid response 
activities. One commenter suggested requiring the State to maintain an 
identifiable dislocated worker unit or a State entity that has the 
responsibility for carrying out rapid response activities and that such 
responsibilities should not be devolved to other entities.
    Response: States are required to establish a dislocated worker unit 
and have ultimate responsibility for providing rapid response 
activities under Sec. 665.300(b). However, WIA section 134(a)(2)(A)(i) 
authorizes States, working in conjunction with the Local Boards and the 
chief elected officials in the local areas, to designate an entity to 
provide rapid response activities. The provision remains unchanged in 
the final regulations.
    A commenter wanted on-site contact, which is required by section 
101(38)(A) of the Act and Sec. 665.310(a), to require contact with the 
bargaining agent when an affected employer has a collective bargaining 
agreement and that such on-site contact must take place within 48 hours 
of the State receiving the notice/announcement of layoff. The commenter 
also asserted that the bargaining agent must be contacted at the outset 
and involved as a full partner in the development of programs and 
services that affect its members.
    Response: Section 665.310(a) does require that on-site contact be 
made with the employer, representatives of the affected workers and 
representatives of the local community. When employees are represented 
by a labor organization, this provision requires contact with the 
bargaining agent. WIA section 101(38)(A) also requires that on-site 
contact be made with employers and employee representatives, and 
provides that the contact must be made immediately after the State is 
notified of a current or projected permanent closure or layoff, or in 
the case of a disaster, immediately after the State is made aware of 
mass job dislocation as a result of the disaster. We have added the 
phrase ``immediate and'' to paragraph (a) of Sec. 665.310 to reiterate 
this requirement in WIA section 101(38)(A). In addition, we believe 
that the purpose of these requirements is to ensure the involvement of 
both the employer and the workers or their representatives in planning 
and implementing the entire range of services to the affected workers. 
We encourage the State to coordinate with all interested parties, 
including employee representatives, when developing programs and 
services for the affected workers.
    This same commenter suggested that the dislocated worker unit be 
required to provide information to all workers and companies about the 
opportunities available under the Trade Adjustment Assistance (TAA) and 
the NAFTA-Transitional Adjustment Assistance (NAFTA-TAA) programs as 
part of rapid response (19 U.S.C. Sec. 2271, et seq.).
    Response: Section 665.310(b) requires that information and access 
to unemployment compensation benefits, comprehensive One-Stop system 
services, including information on TAA and NAFTA-TAA, be provided to 
affected workers. Therefore, because the

[[Page 49359]]

regulations already address the commenter's concerns, no change has 
been made.
    A commenter noted that Sec. 665.310(a)(5) provides that required 
rapid response activities include ``available resources to meet the 
short and long-term assistance needs of affected workers.'' The 
commenter asked whether this means that rapid response funds must be 
used to provide needs-related payments and, if so, asked that the 
regulations be revised to reflect this. Another commenter argued that 
States must not be allowed to use rapid response funds for core, 
intensive or training services, but should maximize the integration of 
these services with its rapid response activities at the local level.
    Response: The requirement that Sec. 665.310(a)(5) imposes on States 
is to assess available resources as part of the assessment of the other 
factors specified in Sec. 665.310(a). This refers to the review of 
funds and services available in the area to help the affected workers. 
In addition, WIA sections 101(38) and 134(a)(2)(A)(i) describe the uses 
of the funds set aside for rapid response, which is amplified in 
Sec. 665.320. Under WIA section 134(a)(2)(A)(ii), the State may use 
some of the rapid response funds to assist affected workers with direct 
services, which could include intensive services, training, or needs-
related payments, if local resources cannot meet the needs of these 
workers. These funds can be provided as ``State'' funds or as 
additional local funding assistance beyond the initial formula 
allocation for the area. In order to clarify this distinction, a new 
section, Sec. 665.340, has been added to the final regulations. The new 
Sec. 665.340 discusses the use of reserve funds to provide additional 
assistance to local areas and makes it clear that a State must reserve 
enough funds from its 25 percent funds to adequately fund its rapid 
response unit.
    A commenter indicated that the items listed in Sec. 665.320 are 
positive and pro-active approaches to rapid response, however, the 
commenter would like us to add an additional provision to Sec. 665.320 
to require that labor organizations whose members are affected by a 
layoff be consulted in the development and design of all rapid response 
and dislocated worker programs.
    Response: Section 665.320 provides a list of additional rapid 
response activities that a State or designated entity may provide in 
addition to the required rapid response activities in Sec. 665.310. To 
the extent that a State or designated entity conducts any of the 
activities listed in paragraphs (a)(1) through (3) of Sec. 665.320, 
those activities must be conducted in conjunction with the groups 
listed in paragraph (a) of Sec. 665.320, which includes labor 
organizations. We encourage States to continue working in collaboration 
with all interested parties when providing all rapid response 
activities. This provision remains unchanged in the final regulations.
    Section 665.330 addresses the linkage of rapid response assistance 
and WIA title I assistance to NAFTA-TAA. This linkage is a requirement 
under NAFTA-TAA and is an important feature of the One-Stop service 
delivery system. One commenter indicated that unions whose members have 
been affected by NAFTA must be consulted in the design and 
implementation of programs to assist their members and that this same 
provision must also apply to TAA participants as well.
    Response: We believe that in providing rapid response, a State 
should coordinate such efforts with all interested parties including 
representatives of the affected workers. As discussed above, consistent 
with our principle of providing States with maximum discretion in the 
design of their programs, this provision remains unchanged in the final 
regulations.
    Section 665.330 requires rapid response to be available when the 
Governor makes a preliminary finding that NAFTA-TAA certification 
criteria have been met. A commenter suggested that the final rule 
clearly state that the Secretary makes the final determination on 
NAFTA-TAA eligibility for a group of workers covered by a petition.
    Response: We agree that the clarification is appropriate. In order 
to clarify the rule, we have revised this provision to indicate that 
the requirement that rapid response be made available occurs when the 
Governor makes a ``preliminary finding'' that the NAFTA-TAA 
certification criteria have been met. (More information on preliminary 
findings can be found at 19 U.S.C. Sec. 2331(b).) It is important to 
restate our policy that rapid response should occur as soon as possible 
after information on an actual or probable layoff has been received. If 
a preliminary affirmative finding occurs after the rapid response, the 
State may wish to provide additional information and assistance to the 
workers. If rapid response has not occurred before a preliminary 
affirmative finding by the Governor, the Governor must ensure that 
rapid response is provided to the workers at that point.
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. It largely summarizes the statutory language 
in the Act, and establishes the framework for definitions, guidelines 
and instructions that we will issue later to implement and carry out 
the requirements of the Act. WIA's purpose is to provide workforce 
investment activities that improve the quality of the workforce. We are 
strongly committed to a system-wide continuous improvement approach, 
grounded upon proven quality principles and practices.
    The development and establishment of a performance accountability 
system that reflects this commitment requires collaboration with 
representatives of appropriate Federal agencies, and representatives of 
States and political subdivisions, business and industry, labor 
organizations, employees, eligible providers of employment and training 
activities, including those serving hard to serve and non-traditional 
participants, educators, and participants, with expertise regarding 
workforce investment policies and workforce investment activities. 
During the period since the passage of the Workforce Investment Act, we 
have published a series of consultation papers to engage the system in 
a dialogue and to seek input into the establishment of a performance 
accountability system. On March 24, 1999, two consultation papers, 
``Performance Accountability Measurement for the Workforce Investment 
System'' and ``Reaching Agreement on State Adjusted Levels of 
Performance,'' were published in the Federal Register Volume 64, No. 56 
on March 24, 1999. On April 24, 1999, a third consultation paper, 
``Incentives and Sanctions Under WIA,'' was published in the Federal 
Register, Volume 64, No. 80. And, on August 5, 1999, the fourth and 
fifth consultation papers, ``Continuous Improvement Under Title I of 
the Workforce Investment Act of 1998'' and ``Customer Satisfaction 
Under Title I of the Workforce Investment Act of 1998,'' were published 
in the Federal Register, Volume 64, Number 150. In addition, we held 
Town Hall meetings in 11 cities across the country in August of 1999 to 
invite and listen to suggestions and concerns of the partners and 
stakeholders on a range of issues including performance accountability.

[[Page 49360]]

    The comments received in response to the publication of the five 
consultation papers, plus the comments received in response to the 
publication of the Interim Final Rule and the input from the Town Hall 
meetings have been instrumental in the development and dissemination of 
guidance to the system on performance accountability. The substance of 
comments received in response to the publication of the Interim Final 
Regulations are discussed in this preamble, and reflected in the final 
regulations. We continue discussions with our other federal partner 
agencies to expand agreement on common definitions and measures, and 
further guidance will be made continually available, reflecting on-
going consultation with our partners and stakeholders.
Subpart A--State Measures of Performance
    1. Indicators: Section 666.100 identifies the core indicators of 
performance and the customer satisfaction indicators that States are 
required to address in title I State Plans. The core indicators 
represent four basic measures that will be applied to each of the three 
programs serving adults, dislocated workers and eligible youth age 19 
through 21, and three measures specifically for younger youth (age 14 
through 18). There is one customer satisfaction measure for 
participants and one for employers.
    Several comments suggested changes to the core indicators of 
performance to include part time employment, or to focus on non-
traditional employment. Other comments requested the addition of new 
measures, for example for placement in non-traditional jobs, provision 
of services to low income people, and the inclusion of part-time 
employment as a placement measure. There were comments about the 
addition of a youth measure relating to placement in employment that 
creates a career path leading to long term self-sufficiency.
    Response: The interest in more measures, or in measures for 
specific target populations is anticipated in the Act and the 
regulations, and States may develop those measures, as provided for in 
the Act, at section 136((b)(2)(C), and in the regulations, at 
Sec. 666.110, and as described in their State Plan. We believe that the 
Act commits the development of additional measures to the Governor's 
discretion and that we lack the authority to impose additional 
performance standards. Those interested in State adoption of additional 
performance standards have a variety of opportunities to have their 
views heard through opportunities to comment on the State Plan and 
through the Act's sunshine provisions. Therefore, no change to the 
regulations was needed.
    Some comments requested greater specificity and clarity for the 
definitions of the measures.
    Response: The language in Sec. 666.100(a) reflects the language in 
section 136(b)(2) of the Act. In general, we feel that the statutory 
language provides the basis for on-going consultation with partners and 
stakeholders. Then, as appropriate, additional guidance can be 
provided, such as the recent guidance on the measures provided in 
Training and Employment Guidance Letters (TEGL), number 7-99 and 8-99.
    However, in response to a specific comment that attainment of basic 
skills was too general and not necessarily related to program services, 
we clarified the measure for younger youth, at Sec. 666.100(a)(3)(i), 
to reflect the basic program design for youth that establishes one or 
more goals for participants each year. Attainment of basic skills 
goals, and, as appropriate, work readiness or occupational skills 
goals, is, therefore, a more accurate way to describe the measure, but 
it is limited to no more than three goals per year. Use of the term 
``goals'' in reference to these difference skills acknowledges that 
obtaining skills, especially for younger youth, is an incremental 
process. This concept is described in more detail in TEGL 7-99.
    A number of comments noted that the core performance indicators are 
not all directly related to the Vocational Rehabilitation program of 
services under title IV of WIA, taking the position that Vocational 
Rehabilitation performance indicators must remain separate from title I 
WIA performance indicators.
    Response: We feel that the language in Sec. 666.100(a) is 
sufficiently clear that the core indicators of performance apply only 
to adult, dislocated worker and youth programs under WIA title I 
subtitle B. Nothing in this language suggests that these core 
measurements replace or supercede measurements required by other 
partner programs.
    Three comments described the 15 core indicators of performance and 
2 customer satisfaction indicators required in Sec. 666.100 as 
excessive and too complex.
    Response: The Act specifically identifies four core measures for 
employment and training activities, including activities for youth 19-
21, with three additional measures for younger youth. It is clear that 
States will be accountable for measuring performance for the Adult, 
Youth and Dislocated Worker programs separately, just as there will be 
separate measures of performance for the other partner programs. Our 
intention in the regulations is to set out what the Act already 
requires, but to do so in a way that makes clear how the Act's 
performance indicators apply to the different population groups which 
WIA serves.
    The decision to measure customer satisfaction for job seekers and 
workers separately from employers was made after considerable 
consultation with the system. The two customer satisfaction measures 
are intended to provide more meaningful feedback to the States and the 
workforce investment system as a whole by acknowledging the different 
expectations held by the two very different customer groups. We believe 
that this is a reasonable and practical interpretation of the statutory 
requirement to have customer satisfaction measures for employers and 
participants.
    Thus, the regulations were drafted to track the provisions in the 
Act by applying the core measures to the different programs, and to 
clarify that the application of the core measures, along with 
satisfaction measures for each of the key customer groups, requires the 
separate measurements identified in Sec. 666.100(a).
    2. Additional indicators: Section 666.110 provides that Governors 
may develop additional performance indicators and that these additional 
indicators must be included in the State Plan.
    One comment questioned whether the requirement that additional 
indicators ``must'' be included in the State Plan was consistent with 
the language in the Act, citing section 136(b)(2)(C) of WIA which 
provides that ``A state may identify in the state plan additional 
indicators for workforce investment activities authorized under this 
subtitle.''
    Response: We interpret this provision of WIA to authorize States to 
establish additional indicators, without requiring that States do so. 
However, if optional measures are established, they must be identified 
in the State Plan. This is confirmed by the use of similar language in 
WIA section 112(b)(3). Therefore, if a State wishes to establish 
additional indicators, the State must identify them in the State Plan.
    A number of comments suggested that there should be a performance 
indicator for the self-service and informational activities so 
important to the system and the customers.

[[Page 49361]]

    Response: WIA section 136(b)(2)(A)(i) specifically excludes these 
activities from the core measures. States and Local areas, however, are 
dedicating considerable and growing resources to self-service and 
informational activities in the One-Stop centers, and more and more of 
the customers of the workforce investment system are taking advantage 
of the information they can access on their own. Many will be doing so 
by using the Internet from home or work or some other location, without 
ever entering the One-Stop office. Efforts to identify and track the 
users of these services, even at a modest cost per individual, can 
become significant when we consider the huge numbers of customers who 
access these services on their own. Further, the cost of information 
and self-service activities for the individual served is generally very 
low when compared to the cost of staff-assisted services. Thus, the 
cost of identifying and tracking these customers could easily exceed 
the actual cost of the service they received.
    However, we realize that some assessment of the value of these 
services is important for determining what resources are devoted to 
these types of activities. We will convene a workgroup of Federal, 
State and local representatives to discuss the issue of self-service 
measures in the Fall of 2000. We anticipate that this workgroup will 
develop a menu of optional self-service measures that States and local 
areas can utilize.
    3. Negotiations: 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 in their State 
Plans. We received comments requesting clarification of the process for 
negotiating levels of performance, especially with regard to the 
factors that may be considered during the negotiations. Further 
comments suggested the reestablishment of State baselines after one 
year of WIA activity.
    Response: The negotiation of performance levels for programs under 
title I B will be part of the process of reviewing and approving State 
Plans. To help clarify and reflect the goal of the process, we have 
replaced the term ``adjusted level'' with the term ``negotiated level'' 
throughout the regulations to refer to the outcome of the process and 
the resulting numerical levels of performance for each indicator that 
will be used to determine whether sanctions will be applied or 
incentive grant funds will be awarded.
    In consultation with the system, and using the experience of early 
implementing States, we developed a list of possible factors that may 
be considered when negotiating levels of performance. The list, which 
was published in TEGL 8-99, is not intended to be prescriptive or 
exhaustive, but to suggest the kinds of information that might be 
considered.
    Thus, ``differences in economic conditions'' might include:
     the unemployment rate;
     the rate of job creation or loss; and/or
     the rate of new business start-ups.
    The negotiations can take into account ``differences in participant 
characteristics,'' which might include:
     indicators of welfare dependency;
     indicators of educational level;
     indicators of poor work history;
     indicators of basic skills deficiency;
     indicators of disability;
     indicators of age; and/or
     creation of a ``hardest-to-serve'' index.
    The kinds of factors related to ``proposed service mix and 
strategies'' might include:
     percentage of WIA Title I B funds to be used for core, 
intensive, and training services;
     extent of follow-up services planned;
     extent and type of experimental or pilot programs planned; 
and/or
     extent to which non-WIA Title I B funds are available for 
training or other services.
    Other factors that might be considered when proposing and 
negotiating performance levels could include:
     community factors such as the availability of 
transportation and daycare;
     policy objectives such as application of Malcolm Baldrige 
criteria, pursuit of new or enhanced partnerships, or piloting of new 
programs or activities.
    ETA Regional Offices will work with the individual States to 
identify baseline data, using experience under the Job Training 
Partnership Act. The establishment of baselines, and the process for 
proposing and negotiating levels of performance is addressed in 
Training and Employment Guidance Letter No. 8-99. Those negotiated 
levels of performance may be revised, as provided for in Sec. 666.130.
    Some commenters suggested that incremental increases in negotiated 
levels of performance not be the only way to consider and demonstrate 
continuous improvement. Other comments observed that the continuous 
improvement requirements were not well defined and did not encourage 
the State and local partners and stakeholders to take a larger role in 
defining system accountability.
    Response: We agree that continuous improvement is desirable even in 
areas not directly measurable by performance measures, like increasing 
administrative efficiency. We have added language to Sec. 666.120(g) to 
more clearly provide States with the opportunity to define areas 
targeted for continuous improvement that may be in addition to the 
indicators of performance required under Sec. 666.100.
    4. Participants Included in Measures: Section 666.140 explains that 
all individuals, except for those adults and dislocated workers who 
receive services that are self-service or informational, must be 
registered and included in the core indicators of performance. In 
addition, Sec. 666.140(b) implements the requirement that a 
standardized record must be completed for registered participants.
    A number of comments took exception to the provision that all youth 
must be registered and included in the measures of performance, but 
that adults and dislocated workers who participate exclusively in self-
service or informational activities are excluded from registration and 
are, therefore, not included in the performance accountability system.
    Response: While these commenters feel that the registration policy 
for youth and adults should be the same, we believe that the policy 
should not be changed because of basic approach for serving youth 
differs from adults. The difference in the registration criteria for 
the Youth program and the Adult and Dislocated Worker programs arises 
from the way in which an applicant enters each program. WIA section 
129(c)(1) makes it clear that each youth participant is to have an 
assessment and a service strategy, activities which would also require 
registration under the Adult or Dislocated Worker programs. The Act 
specifically excludes individuals who receive only self-service and 
informational activities under the Adult and Dislocated Worker Programs 
under WIA section 134 from the core measures of performance, and, 
therefore, keeping records on the individuals taking advantage of the 
services is not an issue. The more individually-focused youth program 
does not envision these kinds of activities as part of the entry. (Of 
course, a youth may avail him/herself of informational or self-help 
services through the One-Stop.)
    To help clarify the issue of registration, we have added a new 
paragraph (a)(2) to Sec. 666.140 to explain that ``self-service and 
informational

[[Page 49362]]

activities'' are core services consisting of widely available 
information that does not require significant staff involvement with 
the individual in terms of resources or time. Many customers of the 
workforce investment system do not require staff assistance to access 
employment statistics or job listings, for example, that are 
increasingly available on the Internet or in handouts or brochures 
designed to be widely distributed to the general public. We are, 
however, aware of the commenters' concerns that the system's 
performance in serving these self-service customers also needs to be 
measured. As discussed above, we will work with our partners to develop 
optional self-service measures.
    Other comments suggested a need to provide a system-wide 
measurement for participants who received services under programs 
operated by the partners, and a need to clarify when to measure 
performance that could be applied across the system by all States.
    Response: The comments about when an individual's participation is 
considered to begin for purposes of the measurement of performance, 
including the measurement for individuals served by partner programs, 
were widely discussed during the consultations with partners and 
stakeholders. WIA promotes the partnership of programs and activities 
in local One-Stop systems, and the performance accountability system 
must be able to reflect that desire for partnership without interfering 
with it. The standardized record, referred to in Sec. 666.140(b), can 
be used to document services and activities provided by any of the 
partners in the local One-Stop system. Performance will be measured by 
looking at outcomes and results achieved by each registered participant 
following receipt of services under Title I B and any other services 
provided by a partner in the local One-Stop system. This clarification 
has been included in a new paragraph (c) to Sec. 666.140. The 
performance measurement system in these regulations, including the 
standardized record, has been developed in consultation with Federal 
partners so it can be used (or modified for use) by other system 
partners. Other partner programs, however, are not required to use or 
conform to this performance measurement system, and multiple reports 
may track and display the outcomes achieved by a single individual who 
receives services under separate programs.
    We have provided additional guidance in the instructions for the 
standardized record, including guidance to clarify when to begin 
measuring results achieved for those performance indicators that are to 
be measured following the receipt of service in Training and Employment 
Guidance Letter No. 7-99. This guidance was repeated in a document 
published in the April 3, 2000, Federal Register, entitled, ``Workforce 
Investment Act (WIA) Standardized Record Data (WIASRD), Quarterly 
Summary Report, and Annual Report''.
    5. Wage Record Data: Section 136(f)(2) requires States to use 
quarterly wage records, consistent with State law, to measure progress 
on the core indicators of performance, and authorizes the Secretary to 
make arrangements to ensure that the wage records of any State are 
available to other States. In order for States to meet this 
requirement, Sec. 666.150(a) has been amended to authorize the 
collection and other use of social security numbers from registered 
participants and such other information as is necessary to accurately 
track the results of the participants through wage records. The use of 
quarterly wage records is essential to achieving full accountability 
under the WIA performance accountability system, by ensuring high 
quality, comparable data upon which to identify and reward high 
performing States and localities, and, if necessary, to sanction low 
performing States and localities. Matching participant social security 
numbers against quarterly wage record information is the most effective 
means by which timely and accurate data can be made available to the 
system. For this reason, we interpret WIA section 136(f)(2)'s express 
requirements that States use quarterly wage records and that the 
Secretary arrange for State to State disclosure of quarterly wage 
records for WIA performance purposes as indicating Congress' intent to 
supersede the limitation on disclosure of social security numbers in 
Social Security Act section 205(c)(2)(C)(viii)(I). Section 666.150(b) 
clarifies that each State must describe its strategy for using 
quarterly wage record data, including appropriate safeguards for 
disclosure, in the State Plan.
    We received comments that reliance on the UI wage data will be 
plagued by problems of uncovered employment, out-of-state employment, 
incomplete reporting, and other issues that may make comparisons 
difficult.
    Response: The requirement to use wage records is quite clear, but, 
in consultation with partners and stakeholders, we have provided 
guidance on when additional information may be used to supplement the 
wage records in Training and Employment Guidance Letter No. 7-99.
    Other comments urged specific regulatory language regarding the 
confidentiality of wage records, both from commenters who wished to 
access the data, as well as from commenters who wanted to ensure 
protection for the employers and workers.
    Response: UI wage records are owned and managed by the States, and 
are subject to the rules and protections established by the States, 
within general provisions of Federal law and guidance. We are working 
with the State Agencies that have responsibility for these records to 
ensure that information will be available as necessary, and that 
protections will be provided in accordance with State law, without 
attempting to mandate procedures. Therefore, no changes were made to 
these regulations.
Subpart B--Incentives and Sanctions for State Performance
    1. Incentive Process: Section 666.200 restates the eligibility 
criteria for States to apply for an incentive grant. The process for 
applying for incentive grants is described in Sec. 666.205, which 
explains the timing of the applications, and Sec. 666.220, which 
defines what must be included in an application. The process for 
determining the amount of the incentive grant awards is discussed in 
Sec. 666.230. These grants will be provided to States in recognition of 
performance that exceeds negotiated levels, and the incentive grant 
award process will be administered by the Secretary of Labor in 
consultation with the Secretary of Education.
    We received several comments about the implementation of the 
performance requirements during the first year following implementation 
of WIA. The comments suggested that incentives and sanctions be delayed 
for a year.
    Response: WIA establishes new requirements and expectations for the 
workforce investment system that went into effect on July 1, 2000, but 
that will not be the end of the process to reform and improve the 
system. We are committed to working with the system to effectively 
implement the Workforce Investment Act, including the principle of 
increased accountability, and continue to seek input from the partners 
and stakeholders about the best way to measure and acknowledge 
performance. We do not see any programmatic advantage to delaying 
implementation of the incentives and sanctions process. The Adult, 
Youth and Dislocated Worker programs under WIA Title I B are replacing 
programs under the Job Training Partnership Act that have

[[Page 49363]]

measured and reported performance for over 15 years. States that are 
able to achieve good performance and satisfy their customers should be 
recognized and should be able to apply for the incentives and rewards 
Congress has authorized. Conversely, States that experience problems in 
achieving positive outcomes for their customers deserve the assistance 
authorized under the Act so that they may be able to modify and 
improve. Thus, we see no reason to postpone awarding Incentive Grants. 
We will provide technical assistance to the system and to the States 
throughout the first year to help achieve the highest possible levels 
of performance from the very beginning.
    Some comments pointed out that the States are very different, and 
that the principle of State and local flexibility means that not only 
will performance vary from State to State, but the quality of the data 
and the methods for capturing the data used to measure performance will 
vary as well. For these reasons, the commenters took exception to 
comparing a State's relative performance to other States' performance 
when determining the amount that would be available under an incentive 
grant award.
    Response: The incentive grant awards will be made to those States 
that exceed levels negotiated specifically for that State. The 
incentive grant will not be awarded or denied on the basis of relative 
performance; but the concept of comparing the performance of the States 
is firmly and clearly rooted in the Act, which requires the Secretary 
to disseminate State-by-State comparisons of the information. Also, as 
described in Sec. 666.120(c)(4), one of the required factors in 
developing the negotiated levels of performance for the State is a 
comparison with other States. However, we believe that relative 
performance is a legitimate factor to be considered in apportioning a 
limited pool of incentive funds. Thus, the regulation explains that the 
Secretary ``may consider'' a list of 6 possible factors, including 
relative performance. We will be working with the States to make sure 
that the data collection process is as consistent as possible, and will 
consider this as a possible factor for establishing the amount of 
awards when it is appropriate. No change has been made in the 
regulation.
    2. 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.
    We received several comments suggesting that the limited experience 
in using wage records to measure performance, plus the energy and 
resources being focused on the creation of new partnerships and the 
establishment of new customer-focused, streamlined service designs, may 
have a negative impact on performance, possibly exposing States to 
sanctions. The comments proposed delaying the application of sanctions 
until baseline data could be developed, and States would be better 
prepared to negotiate realistic levels of performance against which 
they would be measured.
    Response: We recognize that the changes being undertaken with the 
implementation of WIA should ultimately lead to higher performance and 
a more sophisticated and accurate performance measurement system. 
Nonetheless, as a result of consultation with partners and 
stakeholders, we have clarified the process for determining acceptable 
and unacceptable performance by establishing a range so that a State's 
performance will be deemed to be acceptable if the actual performance 
falls within 20 percent of the negotiated level. Therefore, sanctions 
will not be considered unless actual performance is more than 20 
percent below the negotiated level. This rule has been included as a 
new provision at Sec. 666.240(d).
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.
    Some commenters were concerned that local programs and partners 
were going to be faced with performance levels imposed as a result of 
negotiations between the State and the Department, and suggested that 
establishment of performance standards should be negotiated at the 
local Workforce Board level first.
    Response: The Governor's authority to identify and require 
additional measures of performance is clearly spelled out in WIA 
section 136(c)(1). The local levels of performance may be an important 
factor the State takes into account when negotiating or re-negotiating 
levels of performance with the Department. While we continue to support 
collaboration and partnership between the State and local partners, how 
that process occurs within the state is not a matter on which we can 
limit the Governor's authority by regulation.
Subpart D--Incentives and Sanctions for Local Performance
    Section 666.400(a) restates local area eligibility for State 
incentive grants. Under section 666.400(b) 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.
    We received one comment on incentive grants being available to only 
States or local Workforce Investment Areas. The commenter requested 
that Indian and Native American grantees who meet or exceed their 
performance standards during a program year be eligible to receive 
incentive grants.
    Response: The reasons why we do not provide incentive grants for 
the WIA Indian and Native American program are addressed in the 
Preamble discussion of comments on part 668, covering Indian and Native 
American programs under the Workforce Investment Act.
Part 667--Administration Provisions

Introduction

    This part establishes the administrative provisions that apply to 
all WIA title I programs conducted at the Federal, State and local 
levels, and to continued service to Job Training Partnership Act 
enrollees.
Subpart A--Funding
    Subpart A addresses fund availability. One commenter expressed 
concern about the appeals processes associated with the selection of 
grantees under the Indian and Native American (INA) and National 
Farmworker Jobs Program (NFJP) (formerly known as the Migrant and 
Seasonal Farmworker program).
    Response: Section 667.105, which covers grant instruments and grant 
award processes, is being modified in response to this comment. The 
only

[[Page 49364]]

remedy which may be provided to successful appellants from designation 
actions is designation for the remainder of the grant period. However, 
under Sec. 667.825(b), this remedy cannot be provided if less than six 
months remains in the grant period. Due to the average length of 
appeals, few appellants qualify for relief during the two-year grant 
period. In order to improve the fairness and effectiveness of the 
appeals process, we are modifying Sec. 667.105(c) to permit INA grants 
to be awarded to a particular grantee without competition only once 
during a four year period. Similar procedures are already included in 
Sec. 667.105(d) for the MSFW program. It is DOL's position that the 
successful appellant does have the right to compete for a grant award 
for the second two years of a four year designation period, and we have 
revised section 667.825 to provide that we will not give a waiver of 
competition for the second two-year grant period in these situations.
    Several commenters asked for information about the treatment of 
summer youth funds for the years 1999 and 2000.
    Response: JTPA funds for the 1999 summer youth employment program 
were distributed in the same manner as in previous years and were 
unaffected by WIA. Year 2000 WIA youth funds were available beginning 
in April 2000 to States with approved WIA plans or approved Youth 
transition plans addressing youth activities for PY 2000. Since this 
issue is addressed in Sec. 667.100(b), no change has been made to the 
regulations.
    One commenter thought that WIA Youth funds should be distributed in 
July instead of April because the summer youth employment program is 
not authorized for the Summer of 2000.
    Response: It is true that there is no longer a separate summer 
youth employment program, but WIA summer employment opportunities are 
an important component of local areas' comprehensive youth programs. We 
wish to enable States and local areas that want to plan for and offer 
WIA Youth services on the JTPA time schedule to do so under the 
conditions indicated in Field Memorandum (FM) 52-99, dated September 9, 
1999, which is accessible on the Internet at www.usworkforce.org. FM 
52-99 permits a State to plan for and operate WIA youth programs before 
we have approved the State's full five year strategic plan, which 
covers all WIA activities. However, the State's WIA Youth Plan must 
satisfy WIA criteria, which are more extensive than the criteria were 
for the JTPA summer youth employment program. For example, 30% of the 
youth funds in each local area must be used to serve out-of-school 
youth.
    We received many comments about expected reductions in State 
allotments and within-State allocations due to the application of the 
allotment and allocation factors prescribed by sections 128 and 133 of 
WIA--the relative number of unemployed individuals, the relative excess 
number of unemployed individuals, and the relative number of 
disadvantaged individuals. Beginning with the third year of WIA, 
workforce investment areas will be allocated at least 90 percent of the 
average of the two preceding years' allocations of Adult funds and 
Youth funds as a ``hold harmless''. (WIA sections 128(b)(2)(A)(ii) and 
133(b)(2)(A)(ii)). However, many grantees expect to experience severe 
funding reductions and possible service interruptions in their 
workforce programs in the first two years of WIA.
    Response: Consistent with the new hold-harmless policy we announced 
in October 1999, we are addressing this problem by adding a new 
section, Sec. 667.135, which permits States to apply Job Training 
Partnership Act hold harmless provisions during the first two years of 
WIA, and sets forth the WIA hold harmless procedures, which take effect 
in subsequent years. We are making the JTPA hold harmless procedures 
available for the first two years of WIA as a transition measure under 
the authority of WIA section 506. States may elect to use JTPA hold 
harmless procedures in allocating PY 2000 and PY 2001 funds to local 
areas. A State that elects to use JTPA hold harmless procedures for PY 
2000 and/or PY 2001 must allocate at least 90% of the average 
allocation to each workforce investment area that received an 
allocation under either JTPA or WIA for the two preceding fiscal years. 
(JTPA sections 202(b)(2)(A) and 262(b)(2)(A)). States may use JTPA hold 
harmless procedures even where the geographical boundaries of some or 
all JTPA service delivery areas are different from those of the State's 
WIA Workforce Investment Areas. This can be done for the PY 2000 WIA 
allotment by (1) taking the amount allocated to WIA local areas, (2) 
calculating the amount each local area would have received using the PY 
1998 and PY 1999 JTPA allocations (JTPA proxy amounts), and (3) 
calculating 90 percent of the average JTPA proxy amounts for each local 
area. Under either the permitted JTPA hold harmless or the WIA hold 
harmless provision, the amount needed to provide the increased 
allocation(s) to the affected local areas is to be obtained by ratably 
reducing the allocations to the other local areas.
    Section 667.140 describes the authority of Local Boards to transfer 
funds between programs. We received several comments suggesting that 
the regulation authorize local areas to transfer funds between the 
Youth funding stream and either Adult funds or Dislocated worker funds.
    Response: The Act does not authorize transfers involving Youth 
program funds. The regulation has not been changed.
    Section 667.150, which covers allotments, recapture of unobligated 
balances of allotments, and reallotments is being modified to exclude 
certain amounts from coverage by the recapture provision, namely: (1) 
amounts allocated to a single State local area or to a balance of State 
local area administered by a unit of the State government; and (2) 
inter-agency transfers and other actions treated by the State as 
encumbrances against amounts reserved by the State under WIA sections 
128(a) and 133(a) for Statewide workforce investment activities. The 
reasons for this modification are discussed earlier in this preamble in 
the discussion on the addition of a definition of ``obligation'' to 
Sec. 660.300.
    Section 667.170 sets forth our authority to perform a 
responsibility review of potential grant applicants. We may review any 
information that has come to our 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. One commenter requested clarification of 
Sec. 667.170(a) about the identity of the party(ies) subject to the 
responsibility review requirements, particularly with regard to the 
taking of ``final agency action.''
    Response: Section 667.170(a) refers to the organization that is the 
direct recipient of a grant from the Department. The agency referred to 
in the phrase ``final agency action'' in Sec. 667.170(a)(1) is the 
awarding agency which awarded the funds in question in the debt 
recovery action. No change has been made to the regulations.
Subpart B--Administrative Rules, Costs and Limitations
    1. Fiscal and Administrative Rules: Subpart B specifies the rules 
applicable to WIA grants in the areas of fiscal and administrative 
requirements, audit

[[Page 49365]]

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.
    We have updated references to the nondiscrimination regulations at 
29 CFR part 37 in paragraph 667.200(f) and made three other changes to 
Sec. 667.200 to correct inadvertent errors in the Interim Final Rule. 
The first is to include commercial organizations among the types of 
organizations listed in Sec. 667.200(a)(2), which specifies the covered 
organizations identified at 29 CFR 95.1. The second change is to insert 
a new paragraph (a)(7) in Sec. 667.200, to indicate that interest 
income earned on funds received under this title is to be treated as 
program income, as required by WIA section 195(7)(B)(iii) and to 
renumber the existing paragraph (a)(7) as (a)(8).
    The third change is to insert a new paragraph (c)(6) in 
Sec. 667.200, which provides that the costs of claims against the 
Government, including appeals to the Administrative Law Judges, are 
unallowable costs. This provision clarifies our long-standing 
application of the cost principles of OMB Circulars A-87 and A-122, and 
A-21, which was inadvertently left out of the Interim Final Rule. The 
provision distinguishes the allowable costs of informally resolving 
findings from audits and monitoring reviews from the unallowable costs 
of making formal claims against the Government at a later point in the 
process.
    Several comments suggested including specific requirements in 
Sec. 667.200(a) about the use and contents of particular types of 
agreements between particular types of organizations for providing 
goods and services for WIA purposes. Section 667.200 incorporates the 
uniform administrative requirements at 29 CFR Parts 95 and 97 into 
these regulations by reference, including requirements covering 
procurement actions by grantees and subrecipients. Most of these 
comments want us to require grantees and subrecipients to increase the 
opportunities for potential providers to compete to provide services to 
grantees, subrecipients, and participants, including the operation of 
One-Stop centers. One commenter wanted us to clarify whether the 
uniform procurement requirements apply to the selection of one-stop 
operators and service providers. Other commenters wanted us to require 
DOL direct grantees to require their subgrantees to make all awards to 
one-stop operators and service providers in accordance with the 
Department's uniform procurement procedures. Another commenter wanted 
us to say as little as possible on the subject due to the complexity of 
local procurement rules and the inevitable conflicts which would result 
from issuance of additional Federal requirements.
    Response: We have, for many years, aggressively sought to maximize 
competition throughout the JTPA system so that JTPA grantees and 
subgrantees obtain the best possible workforce development and related 
services (employment and training services) at the lowest possible 
cost. Under WIA, vigorous competition to provide workforce services is 
embedded in the design of the program through the use of ITA's. In 
addition, use of generally applicable cost principles and 
administrative requirements under Sec. 667.200 should assist grantees 
and subrecipients to obtain the goods and services needed for operation 
of the program with less administrative effort than was the case under 
JTPA. Consequently, it is premature to begin regulating the details of 
how grantees and subrecipients obtain goods and services for their own 
WIA activities, as well as how they conduct the administrative 
activities necessary to obtain and pay for training and supportive 
services for participants. We have, therefore, decided that we will not 
impose procedural requirements on awards of WIA-funded procurement 
contracts and financial assistance on grantees and subrecipients, 
beyond those generally applicable requirements which apply to all 
Federal and non-Federal activities of the grantee or subrecipient. This 
issue is also discussed in the preamble discussion of part 660. It 
should be noted that the Act specifies a few circumstances in which a 
competitive process is not needed, such as the designation or 
certification of a One-Stop operator by a consortium of One-Stop 
partners under WIA section 121(d)(2)(A)(ii). No change has been made to 
the regulations.
    We received a number of comments on cost allocation issues 
particular to WIA and One-Stop organizations. One comment suggested 
that we should seek the issuance of special cost principles for One-
Stops using cost allocation basis other than benefits received, or 
other widely used basis.
    Response: Our policy on WIA cost determination is to let the 
parties involved negotiate appropriate cost allocation methodologies 
which reflect local factors and local needs, and to refrain from 
imposing program-wide regulations unless a general need exists. 
However, we are working with the other WIA federal partner agencies, 
such as the Department of Education, to develop joint guidance on this 
issue.
    One commenter thought it was inconsistent to require in 
Sec. 667.200(a)(3) that procurement and other relationships between 
governments be conducted on a cost-reimbursement basis, while also 
requiring in Sec. 667.200(a)(6) that any excess of revenue over costs 
earned by governmental or non-profit organizations be treated as 
program income.
    Response: Both the cost-reimbursement and program income provisions 
are statutory in origin. The cost reimbursement provision in WIA 
section 184(a)(3)(B) is similar to the Uniform Administrative Standards 
provision in 29 CFR 97.22, allowable costs, which prohibits the use of 
grant funds for any fee, or other increment over cost sought, by 
governmental grantees and subgrantees. The program income provision in 
WIA section 195(7)(A) ensures that any amount remaining on hand after 
all receipts and expenditures have been accounted, regardless of the 
source of the receipts, will be treated as program income and added to 
available program resources, (see change to Sec. 667.200 noted above). 
Both provisions seek to maximize grant resources by assuring that 
governmental grantees only charge the grant for their actual costs and 
return any excess funds to the program. Thus, there is no necessary 
conflict between the two provisions.
    One commenter proposed that we establish audit requirements for 
contractors which are commercial organizations. Section 667.200(b)(2) 
makes commercial organizations which are subrecipients subject to audit 
requirements like those applicable to governmental and non-profit 
recipients and subrecipients.
    Response: Under 29 CFR part 96 (subpart B), the Department is 
responsible for the audit of commercial organizations which are direct 
recipients. There is no Federal requirement for audits of commercial 
organizations which are vendors. If a grantee or subgrantee chooses to 
require audits of such vendor organizations, they can do so by contract 
if the parties agree that such requirements are necessary. No change 
has been made to the regulations.

[[Page 49366]]

    2. Administrative Costs: Section 667.210 restates the provisions in 
section 128(b)(4) 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. We received many comments on the administrative 
cost limits. Almost all of the comments said that the limits were too 
low and that they would jeopardize the program's prospects for success. 
Comments addressed how particular groups would be especially burdened 
by the cost limitations. Many INA and NFJP grantees, as well as 
individuals and groups concerned about INA and NFJP programs, appeared 
to believe that the Subtitle B cost limitations also applied to 
Subtitle D INA and NFJP grants.
    Response: Section 667.210(b) provides that the applicable cost 
limitations for subtitle D programs will be identified in the award 
document. The administrative cost limitation for INA and MSFW grants 
under subtitle D of Title I may exceed the 10 percent limitation 
applicable to Subtitle B activities. However, no such flexibility is 
available for Subtitle B activities, since the Subtitle B cost 
limitations are established by law. Accordingly, no changes were made 
to paragraphs (a) and (b) of this section.
    Paragraph (c), which excepts hardware and software costs of 
participant tracking and monitoring systems from the administrative 
cost limitation, has been removed from the final regulation. This 
provision became unnecessary after administrative costs were redefined 
in response to public comments and our own re-examination of how 
administrative costs were defined in other DOL-funded programs and the 
programs of other partner agencies whose programs were represented in 
One-Stop centers.
    Definition of Administrative Costs--Section 667.220 provides our 
definition of Administrative Costs. To comply with the statutory 
requirement for consultation with the Governors in developing this 
definition, we have continuously consulted with representatives of the 
Governors, and State and local stakeholders. In addition to the input 
received through the consultation, we received suggestions about the 
definition of administrative costs in various forums and by direct 
communications from a number of different sources including comments on 
the Interim Final Rule. The key theme which emerged from this public 
consultation 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. We received 
a number of comments on this subject and on the WIA cost limitations, 
to which it is closely related. In addition, we did some sampling 
studies of how modifications of the definition of administrative costs 
would affect WIA program administration generally and the ability of 
the States and of Local Boards to comply with the cost limitations.
    A common criticism of the administrative cost definition in the 
Interim Final Rule was that redefining administrative costs and, in 
particular, treating the cost of first tier supervision of direct 
program staff as program costs would have little impact on total 
administrative costs or compliance with the administrative cost 
limitation. The same criticism was directed at the treatment of 
computer hardware/software costs incurred for participant tracking and 
monitoring as excepted from the administrative cost limitation. One 
comment recommended saying that all staff costs associated with the 
tracking and monitoring of participants should be classified as program 
(non-administrative) costs; another commenter suggested that all 
tracking and monitoring system development and utilization costs be 
charged to program costs.
    We received numerous suggestions on how particular categories of 
costs should be defined. Many, but not all of these suggestions were 
based on the effect such changes would have on compliance with the 
administrative cost limitation. For example, one comment suggested 
either treating all One-Stop or contractor costs as programmatic, or 
retaining the 15 percent cost limitation under JTPA title III; several 
comments recommended treating all costs incurred by One-Stop operators 
and service providers as program costs regardless of the functions they 
were performing. Several comments were directed to obtaining 
clarification of the phrase ``direct provision of workforce investment 
activities'' in Sec. 667.220(c)(1), and to associate the term with the 
activities of One-Stop operators and service providers. Several 
commenters suggested that the ``intended purpose'' language in 
Sec. 667.220(c)(5) should be clarified so that administrative costs 
would not have to be broken out from contracts with for-profit 
organizations. One comment requested that a clear distinction be made 
between tracking and monitoring costs on the one hand and program 
monitoring costs on the other.
    Several commenters suggested that other Federal agencies' criteria 
for administrative costs in grants to other One-Stop partners are more 
liberal than DOL's criteria, especially their criteria for costs 
incurred by service providers and other contractors. A few commenters 
suggested that no costs incurred by for-profit contractors should be 
treated as administrative. One comment suggested that all continuous 
improvement costs be charged to training (program) based on language in 
Sec. 666.120(a) relating improvement to program participation rather 
than systemic changes. Finally, one commenter suggested that all 
reasonable administrative costs be funded, or that we reduce our level 
of expectations with regard to oversight, procurement, and fiscal 
requirements.
    Response: Section 667.220 has been extensively revised as a result 
of these comments, and of our own review of the effect of various 
administrative cost definition proposals on efficiency and ease of 
administration, as well as compliance with the cost limitations. As 
part of the review process, a sample of subrecipients' costs were 
compared under three different formulations of the administrative costs 
definition. The revised definition provides that administrative costs 
are only those costs incurred for overall program management purposes 
by State and local workforce boards, direct WIA grant recipients, local 
grant subrecipients, local fiscal agents, and One-Stop operators. The 
only One-Stop operators' costs which are to be classified as 
administrative costs are those for one or more of the functions 
enumerated in Sec. 667.220(b) and discussed in the following paragraph. 
All costs of vendors and subrecipients, other than local grant 
subrecipients, are program costs with the single exception of awards to 
such vendors and subrecipients which are solely for the purpose of 
performing functions enumerated in the following paragraph. Thus, 
incidental administrative costs incurred by a contractor whose 
contract's intended purpose is to provide identifiable program services 
do not have to be identified, broken out from other costs incurred 
under the contract, and tracked against the administrative cost 
limitation. Costs incurred under contracts whose intended purpose is 
administrative have to be charged to the administrative cost category.
    The enumerated administrative functions performed by the identified

[[Page 49367]]

administrative entities are the following: accounting and budgeting; 
financial and cash management; procurement and purchasing; property 
management; payroll and personnel management; general oversight, audit 
and coordinating the resolution of findings from audits, reviews, 
investigations, and incident reports; general legal services; 
developing and operating systems and procedures, including information 
systems, required for administrative functions; and oversight and 
monitoring of administrative functions. Only these enumerated 
administrative functions are to be charged as administrative costs. The 
costs of first line supervisors of staff providing direct services to 
participants are program costs. The discussion of this cost item has 
been removed from this new definition because it is no longer needed.
    Two types of costs that were specifically previously classified as 
administrative costs, preparing program-level budgets and program 
plans, and negotiating MOU's and other program-level agreements, are 
now classified as program costs, even though they are often associated 
with general organizational management. Costs of such activities as 
information systems development and operation, travel, and continuous 
improvement are charged to program costs or administration, according 
to whether the underlying functions which they support are classified 
as programmatic or administrative. For example, the costs of developing 
an information system which serves both administrative functions and 
the tracking and monitoring of participants would be allocated between 
program costs and administrative costs in proportion to the utilization 
of the system for each intended purpose.
    We believe that these changes in the definition of administrative 
costs not only address the varying concerns and perspectives expressed 
in the comments, but also take advantage of the opportunities for 
simplifying program administration offered by the changes in the way 
program services will be delivered under WIA. Under WIA, the role of 
the One-Stop center operator is broader than just that of provider of 
programmatic services; it is also responsible for the operation of the 
One-Stop center and the coordination of all activities within the 
center. The definition of administrative costs in this Final Rule was 
tested using a sample drawn from a group of JTPA subrecipients whose 
administrative costs had previously been reviewed to test the Interim 
Final Rule definition of administrative costs. The results showed a 
significant reduction in the level of administrative costs at all but 
one of the sampled sites. That site was one in which all JTPA 
activities were provided by the subrecipient, which is quite unlike the 
service delivery methodology envisioned by WIA. These results indicate 
that local areas should be able to operate within the WIA cost 
limitations, using the revised definition of administrative costs at 
Sec. 667.220.
    3. Eligibility Determinations: Our partners in the Veterans 
Employment and Training Service indicated that workforce investment 
programs may not be fully aware of special rules applying to veterans 
when income is a factor in eligibility determination. Therefore, we 
have added a new Sec. 667.255 which refers programs to 38 U.S.C. 4213, 
which exempts military pay and certain other benefits from past income 
for eligibility purposes.
    4. Prohibited Activities: Sections 667.260 through 667.270 address 
a number of prohibited activities that are located in various sections 
of the Act. We have revised Sec. 667.266 to provide the appropriate 
cross-reference to the nondiscrimination regulations at 29 CFR 37.6(f), 
which implement the WIA limitations on the use of financial assistance 
for sectarian activities. Section 667.269 specifies where the 
procedures for resolution of violations of these prohibitions, as well 
as the sanctions and remedies, may be found.
    Section 667.260 prohibits the use of WIA funds for the purchase or 
construction of facilities or buildings with certain exceptions. This 
is an exception to the generally applicable cost principles, 
incorporated by reference in Sec. 667.200(c), under which such costs 
are allowable with prior grantor approval as direct costs, provided 
they are not specifically prohibited, as they are here. We received 
several comments asking that we clarify or expand the exception to the 
purchase and construction ban under which the costs of repairs, 
alterations, and renovations are allowable for grantee-owned buildings 
acquired with JTPA, Wagner-Peyser, or UI grant funds to also cover 
leased buildings. Several comments suggested permitting the use of WIA 
funds for capital costs and current operating costs of leased and 
``loaned'' buildings.
    Response: WIA funds may be used for renovations and other capital 
expenditures on grantee/subrecipient-owned or leased buildings in order 
to provide reasonable accommodation under section 504 of the 
Rehabilitation Act of 1973, the Americans with Disabilities Act, 
section 188 of WIA, and the regulations implementing these statutory 
provisions. WIA funds may also be used for repairs, alterations, and 
other current operating costs incurred for this purpose.
    In general, repairs and alterations are current operating costs; 
use of WIA funds for such costs is not restricted in the statute or in 
these regulations. Renovation costs are usually capital expenditures. 
Capital expenditures, that is expenditures of $5,000 or more which 
increase the value or a useful life of property, are subject to the 
restrictions of Sec. 667.260(b), which apply to grantee/subrecipient-
owned real property. In response to the comments, this paragraph has 
been clarified to explicitly cover renovations to grantee/subrecipient-
owned real property acquired with JTPA, Wagner-Peyser, or UI grant 
funds. Neither the Act nor the regulation restricts the use of WIA 
funds for capital expenditures or current operating costs of leased and 
loaned properties. Consequently, these expenditures are allowable if 
consistent with generally applicable grantee/subrecipient policy 
relating to leased premises and lease cost adjustments for tenant 
expenditures for improvements to the landlord's property, and if 
consistent with the other provisions of Sec. 667.260(b).
    One comment suggested that ETA consider an additional exception to 
the prohibition of building or buying real property in the case of 
capital leases.
    Response: Consistent with the OMB allowable cost circulars, we 
consider capital leases, for example, rental-purchase agreements and 
leases with an option to purchase, to be purchases of property with 
borrowed funds. They are leases in form only. Consequently, WIA funds 
cannot be used for the costs of such an arrangement. Allocable 
depreciation and interest costs would however, be allowable. No change 
has been made to the regulations.
    One comment suggested changing Sec. 667.262, which covers 
employment generating activities (EGA), to include contacts with labor 
organizations and resource centers, and contacts with joint labor-
management committees under permissible employer outreach and job 
development activities.
    Response: The regulation has been modified accordingly. We have not 
acceded to a related suggestion that grantees specifically account for 
EGA costs because we think this is not necessary in view of the fact 
that the financial management standards included in 29 CFR Parts 95 and 
97 already require recipients to be able to account for the source and 
application of grant funds.

[[Page 49368]]

    One comment suggested making an exception to the prohibition in 
Sec. 667.264 against foreign travel in the case of cross-border 
official business conducted by border State staff.
    Response: We have not changed the regulation because the statute 
explicitly prohibits foreign travel for programs under Title I, subpart 
B.
    Section 667.268 which prohibits the use of WIA funds to encourage 
business relocation, provided several comments asking if there is a 
national site where interested parties can obtain information relative 
to the relocating establishment requirements of Sec. 667.268.
    Response: No such site exists at present and we have no current 
plans for establishing such a site.
    A commenter suggested adding consultation with labor organizations 
and councils to the pre-award review of new and expanded establishments 
in Sec. 667.268.
    Response: We have added a new paragraph(b)(2) to Sec. 667.268 to 
provide for permissive consultation with labor organizations in the 
affected area.
    A comment, which concerned the applicability of the Davis-Bacon Act 
to training activities, is not dealt with here because it is a subject 
which is considered in connection with training program requirements 
rather than general administrative requirements.
    5. 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.
    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. Interim Final 
Regulations implementing this section were published at 29 CFR part 37 
and are available at 64 FR 61692 (Nov. 12, 1999). We have revised 
references to the section 188 regulations throughout this Final Rule to 
specifically refer to 29 CFR part 37.
    Section 667.275(a) provides that recipients must comply with the 
section 188 nondiscrimination and equal opportunity provisions of the 
Act and its implementing regulations at 29 CFR part 37. This provision 
is substantially similar to that found in Sec. 627.210, the companion 
section of the regulations implementing the JTPA. Slight modifications 
have been made to the language to eliminate any possible confusion 
about who is covered by section 188 and 29 CFR part 37. In the context 
of those provisions, a recipient is any entity that receives financial 
assistance, as defined in 29 CFR 37.4, 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. A variety of terms not specifically listed in the definition 
at 29 CFR 37.4, such as vendors or subrecipients, may be used to 
identify such entities. However, any entity that receives financial 
assistance under title I of WIA is a recipient and is, therefore, 
subject to section 188 of WIA and its implementing regulations at 29 
CFR part 37, and to Sec. 667.275 of this part, to the extent that those 
entities participate in the One-Stop delivery system.
    Several comments on Secs. 667.270 and 667.275 suggested enhancing 
the protections afforded incumbent workers against displacement, and 
the non-discrimination and equal opportunity protections afforded 
participants through such means as the Department notifying employees 
about these protections or requiring the States to do so, requiring 
One-Stops to provide information on the availability of non-traditional 
opportunities for women in order to reduce the incidence of gender-
tracking, specifying coverage of OJT or other employer-provider 
services to individuals in these provisions, and banning the use of WIA 
funds to subsidize new employees that an employer would have hired 
without WIA support.
    Response: We are not modifying the non-discrimination provisions 
here because this subject is covered in much greater detail in the WIA 
section 188 nondiscrimination regulations at 29 CFR part 37. We are not 
modifying the incumbent workers protections provision of Sec. 667.270 
because the maintenance of effort requirement which the commenter seeks 
to impose on employers receiving WIA funds exceeds the protections 
authorized by WIA section 181. Several of the commenters' requests are 
discussed in more detail in other parts of this preamble.
Subpart C--Reporting Requirements
    Section 667.300 indicates that we will issue instructions and 
formats for financial, participant and performance reporting. A request 
for public comment on the Department's WIA Standardized Record Data, 
Quarterly Summary Report, and Annual Report was published in the 
Federal Register on April 3, 2000. A copy of the notice can be found on 
the Internet at www.usworkforce.org. We anticipate that DOL reporting 
will be done electronically. We will issue reporting guidance which 
discusses such specific matters as the anticipated lag-time in using UI 
wage records at follow-up. 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. Some comments suggested that 
flexibility be provided in imposing additional reporting requirements 
on subrecipients.
    Response: We have not changed the regulation since it already 
permits grantees to impose different requirements on subrecipients, 
provided they are consistent with the State WIA plan and produce the 
information required for grantee reports.
    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. Two comments expressed concern that unspecified verification 
procedures would be used for imposing sanctions and that there needed 
to be flexibility in the imposition of sanctions.
    Response: Specifications regarding sanctions have been issued in 
ETA Training and Employment Guidance Letter 8-99, Negotiating 
Performance Goals and Incentives and Sanctions Process under Title I of 
WIA.
    Other comments suggested the due date for financial reports be 
extended past the 45 days stated in the regulation, but no specific 
reason for an extended time period was given.
    Response: We are unaware of any reason why additional time is 
required for submitting reports. No change has been made to the 
regulations.
Subpart D--Oversight and Monitoring
    We have modified Sec. 667.410(b) to include a reference to 29 CFR 
part 37 relating to the State's monitoring system. Subpart C of 29 CFR 
part 37 contains additional provisions regarding

[[Page 49369]]

the Governor's nondiscrimination-related oversight responsibilities.
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. One comment raised the question of what findings resolution 
process should be used where more than one process is available to, and 
could be used by, the grantee to resolve findings relating to WIA 
activities.
    Response: Our position is that such matters are State matters; what 
procedures to use is left to the States to determine. The exception is 
that resolution of findings related to discrimination issues arising 
under section 188 of WIA or 29 CFR part 37 must be conducted in 
accordance with the procedures set forth in that part.
    A commenter suggested allowing 90 days instead of 60 for commenting 
on and taking appropriate corrective action on findings from monitoring 
and investigative reports.
    Response: We believe that 60 days is sufficient for taking the 
required actions, based on our experience with other work and training 
programs operated by governmental grantees.
Subpart F--Grievance Procedures, Complaints, and State Appeals 
Processes
    Section 667.600 describes the grievance and complaints procedures 
required by WIA. We have revised Sec. 667.600(g)(1) to clarify that 
complaints alleging discrimination must be handled in accordance with 
procedures that meet the requirements of 29 CFR part 37. Paragraph 
667.600(g)(2) gives the address of the Department of Labor's Civil 
Rights Center, where individuals can send questions or complaints 
alleging violation of WIA section 188. The address is: U.S. Department 
of Labor, Civil Rights Center, 200 Constitution Avenue, NW, Room N4123, 
Washington, DC 20210. Individuals may also contact the Civil Rights 
Center by telephone at 202-219-6118 (voice) or 1-800-326-2577 (TTY/
TDD).
    We received numerous comments on grievance procedure requirements 
for States, local areas, and other direct recipients. Most concerned 
assuring that participants and other potential greivants receive 
sufficient notice of their rights in a format understandable to youth 
or to persons with limited English proficiency. Some comments asked 
that we impose a requirement on grantees and subrecipients that they 
require One-Stops and other providers to notify participants of their 
appeal rights. Other comments urged us to establish particular 
requirements governing procedures to be used for assuring procedural 
due process, conducting investigations, adjudicating complaints, 
conducting discovery, providing for informal hearings, enforcement, 
review by United States courts, protection against retaliation, and the 
use of mediators. Some commenters sought clarification or greater 
specificity in particular areas, such as coverage of employers of 
participants, and particular sanctions available against non-compliant 
employers. One comment objected to using the denial of procedural 
rights as a ground for appeals of local area designations to the 
Secretary under section 116(a)(5) of the Act.
    Response: We are quite interested in assuring that all persons 
affected by WIA are aware of their rights under the Act. We also want 
to assure persons who believe their rights have been negatively 
affected by WIA-related actions of non-Federal parties, as well as by 
the Department of Labor and its Federal partners, have access to 
appropriate remedies. In response to the comments on informing 
participants who are youth or persons with limited English proficiency, 
we are modifying the regulation by inserting a new paragraph 
Sec. 667.600(b) to require States and local areas to assure that all 
participants and other interested parties are notified of their appeal 
rights in language which can be understood by youth and persons of 
limited English proficiency. Such efforts must comply with the 
requirements of 29 CFR 37.35 about the provision of services and 
information in languages other than English. We cannot authorize 
appeals to United States District courts by regulation because it 
exceeds the authority Congress has given us. WIA section 187 specifies 
that appeals of Administrative Law Judge (AJL) decisions be taken to 
the appropriate United States Court of Appeals, (as provided in 
Sec. 667.850). With regard to the other issues raised by commenters, we 
have not modified the regulation. While we agree that State and local 
grievance procedures should contain full due process protections, we 
have not modified the regulations to include the specific protections 
requested by commenters in the interest of affording States and local 
areas flexibility to design effective grievance procedures that work in 
their particular circumstances.
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. We have modified 
Sec. 667.700(a) and (b) to clarify that the processes outlined in 29 
CFR part 37 must be followed in matters involving claims of 
discrimination. The only comments received on this subpart were on 
Sec. 667.705(c), which requires CEO's of local governments comprising a 
WIA local area to specify the joint liability of such local governments 
in a written agreement. Two of the comments took opposing positions on 
whether there should be any joint liability at all. The third comment 
said the regulation should ``clarify'' the local governments' liability 
for misuse of funds.
    Response: Section 117(d)(3)(B)(i) of WIA designates local CEO's as 
grant recipients and makes them liable for misuse of funds unless they 
obtain the Governor's agreement to serve as recipient for their area 
and assume their liability. The regulation interprets this provision to 
mean that the local jurisdictions are liable for misuse of funds and 
where multiple jurisdictions receive funding under a single grant, the 
liability assumed by each local government must be clearly stated in a 
written agreement between the parties. It is our intention in this 
provision that the liability of the local governments in a multiple 
jurisdiction local area be determined by those governments. We did not 
to imply that governments in multiple jurisdiction local areas must be 
``jointly and severally'' liable, although they may choose to share 
liability in that manner. Therefore, we have dropped reference to the 
phrase ``joint liability'' in Sec. 667.705(c) and replaced it with 
``liability''.
    Sections 667.700 and 667.710 have been revised to more accurately 
specify the Grant Officer's and the Secretary's authority to impose 
corrective actions, including plan revocations and reorganizations, 
directly against local areas, and to terminate or suspend financial 
assistance. As revised, Sec. 667.700(d) provides that if the Governor 
does not promptly take corrective actions against a local area for 
substantial violations of WIA and its regulations, the Grant Officer, 
under WIA section 184(b)(3), may impose corrective actions directly 
against the local area. Sections 667.700(c) and 667.710(c) provide that 
if the Governor

[[Page 49370]]

has failed to promptly take corrective actions against a local area for 
not complying with the uniform administrative requirements, or if the 
Governor has not monitored and certified local area compliance with 
those requirements, the Grant Officer, under WIA section 184(a)(7), may 
require the Governor to take the necessary actions. If the Governor 
fails to take the corrective actions required by the Grant Officer, the 
Secretary may immediately suspend or terminate financial assistance 
under WIA section 184(e).
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 NFJP and INA 
grant selections. A change has been made to Sec. 667.105 (discussed 
above, in subpart A), which relates to this provision. We have 
corrected an error in Sec. 667.830(b), to provide that any appeal 
accepted by the Administrative Review Board must be decided within 180 
days of acceptance, as required by WIA section 186(c). 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.
    One commenter recommended increasing DOL's burden of production in 
OALJ appeals to require presentation of a prima facie case.
    Response: We have not changed these procedural rules, which have 
worked well over the years and have provided appellants procedural due 
process.
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 excludes 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 of operating WIA programs, or any other local entity.
    One commenter suggested replacing the references to program years 
1998 and 1999 with fiscal year references.
    Response: We have replaced the reference to program years in 
Sec. 667.900 with fiscal years.
    Another comment suggested clarifying which local entities were to 
receive transition funding from the State.
    Response: This matter was not addressed in the statute and we not 
aware of any reason for reducing State flexibility in this area. 
Accordingly, we will not prescribe how transition funds are to be 
allocated to local entities.
    We have received a number of questions about how JTPA enrollees are 
to be transitioned over to WIA. We have responded to several situations 
in a Question and Answer format which can be found through our website 
at http://usworkforce.org/q&a-transition.htm. In order to emphasize the 
importance of ensuring a smooth transition from JTPA to WIA for 
participants, we have added a new Sec. 667.910 clarifying that all JTPA 
participants who are enrolled in JTPA must be grandfathered into WIA. 
These participants can complete the JTPA services specified in their 
individual service strategy, even if that service strategy is not 
allowable under WIA, or if the participant is not eligible to receive 
these services under WIA.
Part 668--Indian and Native American Programs under Title I of the 
Workforce Investment Act

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 these regulations, we have attempted to 
organize part 668 in a way 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.
    During the comment period on the WIA Interim Final Rule, we 
received written comments submitted by more than one hundred current 
JTPA Indian and Native American grantees. In addition, we held several 
``town hall'' meetings in ``Indian Country'' which produced additional 
comments submitted in writing or presented orally in the course of 
discussion of relevant issues. We also received input from the Native 
American Employment and Training Council (the Advisory Council) and its 
regulations work group. We will discuss the most frequently raised 
issues first and then discuss the other comments.
    We have condensed the remaining comments into several major areas 
of general concern to most commenters. Issues involving administrative 
cost limitations and representation on State and Local Workforce 
Investment Boards are primary concerns of some section 166 grantees. 
They are concerned with regulations outside of part 668, and so are 
covered as part of the general discussion.

Administrative Cost Limitation

    The issue which concerned commenters most was the administrative 
cost rate, and its application to section 166 grantees under WIA. 
Commenters expressed the concern that section 166 grantees would be 
held to a 10% administrative cost limitation. They viewed this 
limitation as providing inadequate funding for the administrative work 
they have to do to administer their grants. They pointed out that the 
WIA requirements for active partnership in local Workforce Investment 
Areas and for negotiating One-Stop MOU's, place new administrative 
burdens on section 166 grantees. Some commenters suggested that the 
regulations adopt a 20% limitation on administrative costs.
    Response: The provision on administrative cost limitations, at 20 
CFR 667.210(b), does not specify a given administrative cost rate for 
section 166 programs; rather it provides that each grantee's limit on 
administrative costs will be identified in the grant document. The 
regulations reflect our intent to provide section 166 grantees adequate 
administrative funding through the grant negotiation process. Thus, 
suggestions that we exempt amounts spent on indirect costs from the 
administrative costs definition (and thus from any cost limits), or 
that we fund indirect costs from a separate funding source which would 
not be subject to any cost limits are not necessary to accomplish the 
commenters' goals. We consider both suggestions to be either contrary 
to Departmental practices or contrary to the funding formula(s) 
contained in this Rule. However, to provide additional clarification, 
we have added a new section to part 668 (Sec. 668.825) stating that 
limits on administrative costs for section 166

[[Page 49371]]

grants will be negotiated with the grantee and identified in the grant 
award document.

General Issues of Representation and Workforce Investment System 
Governance

    The rules relating to the participation of INA grantees in the 
state and local workforce investment system generated many comments. 
Below, we discuss issues relating to alternative entities and 
representation on State Boards, Local Boards and Youth Councils. 
Similar issues are discussed in relation to the National Farmworker 
Jobs Program in the preamble to part 669, and for the workforce 
investment system in general in the preamble to part 661.

Alternative Entities

    Indian and Native American grantees expressed concern over the 
effects of the designation of alternative entities under WIA on their 
ability to play a partnership role in the local workforce investment 
system. Although alternative entities are permitted by section 117(i) 
of WIA, commenters feel that alternative entities violate WIA section 
117(b)(2)(A)(vi) which mandates that each Local Board contain ``a 
representative of each of the one-stop partners''. Since section 
121(b)(1)(B)(i) of the Act identifies section 166 grantees as mandatory 
(``required'') partners in the One-Stop System, most grantees feel this 
requires that they be given a seat on their Local Board.
    Response: We recognize that lack of representation on Local Boards 
is a legitimate and serious concern. WIA section 117(i) does, however, 
permit the use of alternative entities. We certainly encourage as broad 
a representation as possible on all WIA boards or councils, especially 
representation of those entities identified as ``required partners'' in 
the Act. The Interim Final Rule, at 20 CFR 661.330(b)(2), addresses 
this problem by requiring that, if an alternative entity is used, ``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'' if that entity is not represented on the 
board of an alternative entity. To clarify that the required partners 
must be included among ``any such group'' ensured of an ongoing role, 
we amended this provision, by replacing that phrase with the phrase 
``the unrepresented membership group,'' and by inserting the phrase 
``including all the partners'' following ``each of the categories of 
required Local Board membership under WIA section 117(b).'' 20 CFR 
661.330(b)(3) provides that the ongoing role requirement may be met by 
providing for ongoing consultations with an unrepresented One-stop 
partner program. It also provides that, as part of its ``ongoing role'' 
responsibility, the alternative entity must undertake good faith 
negotiations with each unrepresented partner on the terms of its 
Memorandum of Understanding (MOU) with the unrepresented partner.
    We expect that local workforce investment areas will follow the 
regulations and that the States will ensure that all partners have 
appropriate and effective representation on Local Boards or alternate 
entities. We encourage local parties to resolve issues of 
representation to their mutual satisfaction, in accordance with the Act 
and regulations.

Representation on State Boards

    Several grantees expressed a belief that there is no requirement 
for Native American representation on the State Workforce Investment 
Boards. Others were concerned that Governors were appointing 
individuals to represent INA grantees who did not have INA program 
expertise. Although not specifically required in the statute, our 
grantees have expressed the desire that the Final Rule include at least 
the encouragement (if not the requirement) that all types of WIA 
grantees (Indians, farmworkers, etc.) at least be represented on the 
State Board by a member of that class of service provider.
    Response: While the Act does not require that the interests of 
section 166 grantees be represented by a representative appointed by 
the grantee, section 111(b)(1)(C)(vi)(II) of the Act clearly requires 
that those interests, and the interests of all One-Stop partner 
programs, be represented on State Boards by either the lead State 
agency officials with responsibility for the program or, if there is no 
such official, by a representative with expertise in the program.
    In many cases, there will not be a lead State agency with 
responsibility for Indian and Native American programs, so the 
interests of section 166 grantees will be represented by a person 
having expertise in Indian and Native American programs. While we 
encourage Governors to appoint a representative nominated by Indian and 
Native American programs and Migrant and Seasonal Farmworker programs 
to represent those programs on State Boards, we cannot require them to 
do so. We have, however, revised the regulations in 20 CFR part 661 to 
clarify the requirements for representation of One-Stop partner 
programs on the State Board. Under new 20 CFR 661.203(b), the 
representation of a One-stop partner program may be fulfilled by an 
official from the program partner, such as the section 166 grantee, or 
the Governor may appoint a representative in the State having 
``documented expertise relating to'' the required partner program in 
the State. An agency official or other individual representing a One-
stop partner program also must be an official with optimum policy-
making authority in the organization he or she represents. As defined 
in 20 CFR 661.203(a), a representative with ``optimum policy making 
authority'' is an individual who can reasonably be expected to speak 
affirmatively on behalf of the entity he or she represents and to 
commit that entity to a chosen course of action. We think that these 
new definitions will provide grantees with significant assurance of 
appropriate and effective representation on the State Boards.

Representation on State and Local Boards as Employers

    Several grantees have expressed the desire that the regulations be 
revised to suggest that, where appropriate, tribal entities be included 
on State and Local Boards as employers, which would be especially 
appropriate for some tribes with significant economic development 
activities which may make them a significant employer in their portion 
of the State.
    Response: While we see the merit in this approach and encourage 
Governors and chief elected officials to consider it as an option, we 
think the Act gives Governors and chief elected officials broad 
discretion in selecting business members of State or Local Boards from 
among those nominated. We do not think we can limit that discretion as 
the grantees request. Thus, we have not made the suggested regulatory 
change. However, we have revised 20 CFR 661.200 and 661.315 to 
expressly authorize multiple representation by an individual appointed 
to a State or Local Board. Therefore, where the Governor or CEO selects 
an individual who meets the representation requirements for the 166 
partner program and for business representation, the regulations 
authorize that person to represent both groups.

Grantee Representation on Local Boards

    Many grantees have commented that States and local areas are not 
clear on the WIA representation requirements even where Local Boards 
are newly created and must meet the representation requirements of the 
Act. Questions have arisen about whether Local Boards must include all 
section 166 grantees in their area, or just ``a

[[Page 49372]]

representative'' of Native American grantees. Commenting Native 
American grantees urged that the regulations at 20 CFR 661.315(a) be 
strengthened to specify that each individual section 166 grantee in a 
local WIA is entitled to a seat on the local board. Some commenters 
have suggested that the grantee should have the authority to select the 
individual who is to represent them on the Board.
    Response: While we agree that section 166 grantees must be 
represented on the Local Board, we also recognize the problem, raised 
by a number of other commenters, of the potentially large size of Local 
Boards. We strongly encourage local elected officials to give 
representation to all partner programs within their local area, but we 
do not interpret WIA as requiring that each local grantee be 
individually represented on the Local Board, in cases where there is 
more than one grantee of a particular One-Stop partner program 
operating in a local area. As discussed below, the part 661 regulations 
now clarify that CEO's may appoint one individual to represent multiple 
entities, but also clarify that CEO's may solicit nominations for 
appointments from the grantees.
    Nor are we able to change the regulations to permit a One-stop 
partner program to choose who it wishes to represent it. While we 
cannot require that the CEO select a representative nominated by the 
grantee to represent it/them on the Local Board, there are significant 
protections in the Act and regulations to assure that grantees are 
properly represented. The CEO has discretion in determining who to 
appoint to a Local Board. That discretion is, however, constrained by 
the requirement in WIA section 117(b)(3) and in 20 CFR 661.315 that the 
representative of a partner have ``optimum policymaking authority 
within'' the partner entity. In cases where there is a single section 
166 grantee in a local area, the CEO's discretion is quite limited. In 
cases where there are more than one grantee in the local area, the 
CEO's discretion is a little broader since, as provided in 20 CFR 
661.317, the CEO is only required to appoint one representative of the 
partner program. In either case, however, the interests of section 166 
grantees must be represented by an individual who has optimum 
policymaking authority and, therefore, can knowledgeably and 
effectively represent the partners' interests.

Youth Councils

    Commenters asked for clarification of the role of the youth 
councils in the WIA process, and especially the role of section 166 
grantees in the youth councils. For example, to what degree will the 
youth council ``coordinate'' youth activities in a local area? Will 
section 166 grantees who sit on the local board be entitled to sit on 
the youth council if they provide services to youth, but don't get 
supplemental youth services funding (such as an urban grantee)? To what 
degree will a section 166 grantee which receives supplemental youth 
services funding be required to ``coordinate'' its youth program with 
or through the youth council?
    Response: Neither the regulations in part 668, subpart D, nor the 
regulations in 20 CFR part 664 currently address these issues. 
Commenters basically asked for further definition of the whole area of 
youth services, either in regulations or other administrative guidance. 
Unlike the requirements for Local Board membership in WIA section 
117(b), section 117(h) contains no entitlement for specific 
organizational representation on a local youth council. However, as 
stated in WIA section 117(h)(1), members of the youth council are 
appointed by the Local Board in cooperation with the chief elected 
official(s) in the local area. Among the categories of youth council 
representatives, paragraph (2) of WIA section 117(h) provides that the 
youth council must include Local Board members described in paragraph 
(A) or (B) of section 117(b)(2) with special interest or expertise in 
youth policy. Therefore, section 166 grantees who are members of the 
Local Board and have an interest or expertise in youth issues may be 
appointed to the youth council under this provision. Additionally, WIA 
section 117(h)(2) requires that youth councils contain representatives 
of youth service agencies and provides that the chairperson of the 
Local Board, in cooperation with the CEO's, may appoint other 
``appropriate'' individuals to the youth council. While we encourage 
Local Boards and CEO's to create broadly representative youth councils, 
including representatives of section 166 grantees which operate youth 
programs, we do not read the Act to authorize us to require that 
specific organizations be represented on the Youth Council. This is 
another ``representation and implementation issue'' which involves the 
operation of WIA at the local level. We prefer to allow local people to 
resolve local issues on their own, in a mutually satisfactory manner.
    Those section 166 grantees which serve reservation areas will have 
to include a section on the provision of supplemental youth services in 
their comprehensive services plan, as required by Secs. 668.420, 
668.710, and 668.720. While the section 166 youth program is separate 
from the WIA title I youth program, and is not subject to any mandatory 
authority of the youth council, we encourage section 166 grantees to 
coordinate their provision of supplemental youth services with other 
providers of youth services in the local area.
    Following is a discussion of a variety of other comments on the 
Interim Final Rule. The comments are organized by the subparts of the 
Interim Final regulations to which they pertain.
Subpart A--Purposes and Policies
    Technical Corrections: The regulations work group pointed out that 
the language in the second part of the definition of ``underemployed'' 
at Sec. 668.150 would seem to be limited to instances where the 
individual is working below his or her education level, without regard 
to the attainment or establishment of other work skills, knowledges, or 
abilities. We agree with this observation and have modified the 
definition to include reference to ``skill achievement''. We have also 
made a grammatical modification to the question in Sec. 668.140, and 
have added a new paragraph (d) to Sec. 668.140 to clarify that the 
Department's regulations implementing the nondiscrimination provisions 
in WIA section 188 (29 CFR part 37) apply to INA programs and 
activities.
Subpart B--Service Delivery Systems Applicable to Section 166 Programs
    Clarification of Designation Requirements for Potential Pub. L. 
102-477 Participants: Section 668.200(b)(3) of the Interim Final Rule 
provided that a new entity applying for a section 166 grant must have a 
service area resulting in formula funding of at least $100,000, 
including any amounts received for supplemental youth services, except 
in the case where the entity is a tribe submitting a plan for 
participation under Public Law 102-477, the Indian Employment, Training 
and Related Services Demonstration Act of 1992 (25 U.S.C. 3401 et 
seq.). In those cases, the total resources in the ``477 plan'' must add 
up to at least $100,000 for the entity to be designated under section 
166 of WIA.
    When the regulations were drafted, we did not anticipate that any 
extremely small entities (i.e., with service populations under a 
hundred people) would submit ``477 plans'' and, as a result, apply for 
WIA designation. However, during the first WIA

[[Page 49373]]

designation cycle, this possibility occurred. We have determined that 
designating an entity which would receive only a few hundred or a few 
thousand dollars in total WIA funds would not be cost effective, and 
would serve to unduly fragment already scarce program resources. In 
consultation with the designation work group of the Native American 
Employment and Training Council, we have revised this requirement by 
placing a minimum funding threshold of $20,000 in WIA formula funding 
on entities applying for section 166 designation for the purpose of 
``going 477'' (this minimum corresponds to the allotment of our 
smallest current JTPA grantee). We applied this limit in the WIA 
section 166 designation cycle for Program Years 2000-2001. We have, 
however, provided for the possibility of an exception for those 
entities which are close to the limit and which have demonstrated the 
capability to operate an employment and training program successfully 
under such related programs as Native Employment Works or the Indian 
set-aside under the Welfare-to-Work Program.
    Accordingly, Sec. 668.200(b)(3) is revised to provide that the 
exception will apply to grantees wishing to participate in the 
demonstration program if all resources to be consolidated total at 
least $100,000, with at least $20,000 derived from section 166 funds as 
determined by the most recent Census data. The revised regulation also 
provides that exceptions to this $20,000 limit may be made for those 
entities which are close to the limit and which have demonstrated the 
capacity to administer Federal funds and operate a successful 
employment and training program.

Clarification of Requirements for Designation

    The issue of State-recognized tribes is a point of contention in 
``Indian Country,'' because of the inconsistent nature of the process 
of State recognition between different States. There are great 
differences between State-recognized tribes which exercise certain 
quasi-governmental authority and provide their members with services, 
and those entities designated as State-recognized for purely political 
or social/cultural purposes. The majority of commenters favored the 
elimination of any priority for State-recognized tribes as such, 
reasoning that they could still qualify as Indian-controlled 
organizations.
    Response: Section 166 does not include State-recognized tribes in 
its definition of ``Indian, Indian Tribe and Tribal Organization.'' We 
decided that the inclusion of State-recognized tribes as an independent 
basis for qualifying for designation in Sec. 668.200(d)(5) is not 
supported by section 166(b) of the Act, which refers to section 4 of 
the Indian Self-Determination and Education Assistance Act (25 U.S.C. 
450 et seq.) for the definitions of Indians and Indian tribes. It also 
appears to be in conflict with the underlying principles of section 
166, as expressed in the Indian Self-Determination and Education 
Assistance Act. However, there is also the need to comply with the 
``grandfathering'' provision of Section 166(d)(2)(B), which addresses 
the continued WIA eligibility of individuals who were eligible under 
JTPA. We addressed the grandfathering issue in a provision of the 
recently-issued SGA for designation of section 166 grantees for Program 
Years 2000-2001, which reads as follows: ``It should be noted that, 
pursuant to WIA section 166(d)(2)(B), individuals who were eligible to 
participate under section 401 of JTPA on August 6, 1998, shall be 
eligible to participate under WIA. Organizations serving such 
individuals shall be considered `Indian controlled' for WIA section 166 
purposes.'' We have rewritten Sec. 668.200 to eliminate the mention of 
State-recognized tribes as specifically eligible for designation based 
solely upon such status, but have adapted the above-quoted language, as 
new paragraph 668.200(e), to permit existing State-recognized tribal 
grantees to continue to serve their members. These changes continue the 
eligibility of individuals who were eligible under JTPA as a result of 
being members of State-recognized tribes, as well as establishing the 
status of those State-recognized tribal grantees as ``Indian-controlled 
organizations''.

Clarification of Designation Priority

    The regulations work group pointed out that the designation 
priorities in Sec. 668.210(a) do not specifically mention situations, 
which occur primarily in Oklahoma, where grantees are designated to 
serve only their own tribal members in a given county or counties.
    Response: We agree and have revised that paragraph to indicate that 
``populations'' (over which the grantee has jurisdiction) are also 
included in addition to geographic areas.

Technical Correction to Sec. 668.240

    Section 668.240 describes the process for applying for designation 
as an INA grantee. We have added a new paragraph to this section 
specifying that the assurance contained in the WIA nondiscrimination 
regulations at 29 CFR 37.20 must be contained in the application for 
financial assistance.

Funding Formula

    A comment on the funding formula, found at Sec. 668.296, is 
discussed below in subpart G, under the heading Cost of Living Factor.

Mandatory Quotas Based on Race and Population

    In the implementation discussions held around the country, several 
grantees recommended that we require that States with significant 
Native American populations expend a percentage of their total State 
WIA budgets on Native American clients which would correspond to their 
percentage of State population, and that Local Workforce Investment 
Boards not be allowed to refer all Native American applicants to the 
local section 166 grantee for services.
    Response: While we realize there is a shortage of resources in 
``Indian Country,'' there is no legal authority in WIA which would 
allow us to establish and enforce ``service quotas'' on any State or 
Local Area. In addition, as described in WIA section 188(a)(2), it is 
unlawful for recipients of WIA financial assistance to use race, color 
or national origin, including tribal affilitation, to determine which 
individuals will receive services. We certainly agree that the section 
166 program is intended to provide additional services for Native 
Americans and is not to be used as a substitute for Local Board 
services to eligible Native Americans or as an excuse for not serving 
that population. The concept of One-Stop and core services is based on 
the provision of universal service, without regard to race or 
ethnicity. A fair and effective way to address these concerns, while 
ensuring that these nondiscrimination provisions are complied with, may 
be to describe the provision of other services, in addition to WIA core 
services, in the MOU. The regulations at 29 CFR part 37 provide 
specific requirements on the issue of nondiscrimination.
Subpart C--Services to Customers

Clarification of Allowable Activities

    The regulations work group suggested that the Interim Final Rule, 
at Sec. 668.340(d)(8), appears to allow the attainment of a GED only in 
conjunction with other training services, and not as a stand-alone 
objective.
    Response: To eliminate possible confusion or misinterpretation, we 
have modified Sec. 668.340(d)(8) to indicate that the listed services 
(including GED attainment) may be provided alone or in

[[Page 49374]]

combination with any other training or intensive service(s).

Technical Change to Sec. 668.350(e)

    We have inserted the term ``WIA'' before ``funds'' to more clearly 
indicate that the requirement that funds be used for activities in 
addition to those otherwise available applies to WIA funds.

Clarification of Grantees' Role(s) in the One-Stop System

    The requirements for negotiation of MOU's have been a source of 
confusion to some grantees, especially the provision in Sec. 668.360 
concerning the ``field office'' requirement. Grantees have asked for 
further definition of this term, and have asked about the status of 
grantees which have no ``field offices'' as such, but whose service 
area includes all or part of several local workforce investment areas. 
Grantees also raised questions about the provision of services, the 
design of the One-Stop system, and the nature of the MOU within States 
with only one local area.
    Response: We agree that this is an issue requiring clarification, 
and have changed the regulatory language in Sec. 668.360. We have 
dropped the term ``field office'' and rewritten Sec. 668.360 to 
indicate that an INA grantee is a required partner when the grantee 
``provides substantial services,'' either by having a permanent, year-
round presence or by being present on a seasonal or part-time basis 
(e.g., one day of the week or daily for four months of the year). The 
regulation has been revised to refer to 20 CFR 661.330(b)(2), to assure 
that in the cases where the INA grantee provides substantial services 
in a local area that uses an alternate entities which does not include 
a representative of the grantee, the INA grantee will have an ongoing 
role in the workforce investment system. The revised regulation also 
addresses the situation in which there is a significant Native American 
presence in a local area in which the INA grantee does not provide 
substantial services, but which is within the INA grantee's service 
area. Language has been added encouraging the INA grantee to encourage 
eligible individuals to use the services of the One-Stop. Issues of MOU 
negotiation and/or representation will be addressed on an individual 
basis. Here again, we hesitate to dictate specific representation 
requirements for any given local area, preferring that all required 
partners reach mutually satisfactory arrangements which implement the 
inclusive spirit of the Act. We suggest that grantees, and other 
partners, refer to the discussion of MOU issues in the preamble to part 
662. The same MOU requirements apply to single local area States as 
apply to States composed of multiple local areas.

Status of Community Service Employment

    Commenters questioned the reason for elimination of Community 
Service Employment (CSE) and lamented its demise, questioning what 
would become of CSE participants when the transition to WIA occurred.
    Response: WIA, at section 195(10), prohibits ``public service 
employment,'' except as specifically authorized under title I of WIA. 
This differs from JTPA which prohibited public service employment only 
in the adult and youth programs. Although section 166 states that its 
purpose is to ``promote the economic and social development of Indian, 
Alaska Native, and Native Hawaiian communities * * *,'' this does not 
provide specific authorization of Community Service Employment. 
Grantees who are concerned about transitioning current CSE participants 
should refer to 20 CFR 667.910 which provides that JTPA participants 
who transition into WIA programs must be allowed to finish their JTPA 
activity, in accordance with the terms of their Individual Employment 
Plan, even if it is not authorized under WIA.
Subpart D--Supplemental Youth Services

Flexibility in the Supplemental Youth Services Funding Formula

    Grantees raised questions about the supplemental youth services 
funding formula, specifically about the formula's relation to 
participant eligibility for program services. The grantees argued that, 
since services are to be limited to ``(economically) disadvantaged 
youth,'' the funding formula should be based on the number of 
economically disadvantaged youth residing ``on or near'' the 
reservation, rather than on the total number of youth, as is currently 
the case.
    Response: This suggestion appears logical, and we are looking into 
the possibility of extracting (and the impact of implementing) such 
information from the 1990 Census file we use to calculate the funding 
formulas for the section 401 program. Section 668.440(a) has been 
changed to reflect the possibility of altering the supplemental youth 
services funding formula at a future date.

Lower Level of Supplemental Youth Services Funding Under WIA

    One commenter was concerned that the projected funding for the 
supplemental youth services program will be slightly less than what is 
currently available for the JTPA title II-B program, which will make it 
impossible to operate a year-round youth effort (since the current 
allotment is not sufficient to finance the tribe's Summer Youth Program 
under JTPA).
    Response: While we recognize that reductions in available funding 
may lead to reductions in service levels, the matter of allocations is 
one of budget and not regulations. Also, there is no requirement in the 
section 166 program that grantees operate a year-round youth effort, or 
that they continue to operate a summer youth component. Section 
668.450(a) provides that grantees may offer supplemental services to 
youth throughout the school year, during the summer vacation, and/or 
during other breaks in the school year at the grantees discretion. The 
parameters of each supplemental youth services grantee's youth program 
must be described in its Comprehensive Services Plan which is 
applicable to each local area.

Expanded Availability of Supplemental Youth Services Funds

    Several commenters noted that supplemental youth services funding 
is only being made available to grantees who serve reservations, and 
urged that we broaden the definition of ``on or near'' to include 
urban/suburban/rural areas within a specified distance of a 
reservation, and make non-tribal grantees serving these areas eligible 
to receive supplemental youth services funds and to provide youth 
services in those areas.
    Response: When this issue was raised with the regulations work 
group of the Advisory Council, it was the general consensus that no 
changes be made to the way INA grantees are currently provided youth 
services funding. The members of the work group did not feel that the 
``on or near'' reference in the Act was intended to divert funds away 
from reservations or from the tribes/grantees serving those 
reservations. We agree with the regulations work group, and have made 
no change in the final regulations.
Subpart E--Services to Communities

Technical Corrections

    We have made a technical correction to move a misplaced phrase in 
Sec. 668.500(b). In addition, we have moved Sec. 668.630(i) to 
Sec. 668.350 as new paragraph (g), where a cross reference to 20 CFR 
667.266, about limitations on sectarian activities set forth in 29 CFR 
37.6(f), has been added.

[[Page 49375]]

Subpart G--Section 166 Planning/Funding Process

Clarification of Budget Justification Requirements for Administrative 
Costs

    Members of the Native American Employment and Training Council 
suggested that Sec. 668.720(c) seems to require that a detailed 
administrative budget must be submitted as part of the Comprehensive 
Services Plan. This could present grantees with an extra planning 
burden which had never been required under JTPA and is not in keeping 
with other recent planning decisions which require that the grantee 
justify the need for administrative costs based on actual costs.
    Response: We agree that the regulation was drafted at an earlier 
time, when the entire issue of administrative costs was viewed in a 
different light by all parties involved. Accordingly, we have modified 
Sec. 668.720(c) to remove the requirement that grantees submit a 
detailed budget of proposed administrative costs and to indicate that 
the grantees need to be prepared to justify the amount of proposed 
administrative costs.

Cost of Living Factor

    A commenter recommended that we build a cost-of-living factor into 
the funding formula (which is described at Sec. 668.296) so that 
grantees serving areas which are more costly could receive additional 
funds to offset the high cost of living (primarily in urban areas).
    Response: While we sympathize with those grantees trying to operate 
programs in high cost areas, the Census data used in the formula and 
the current regulatory funding formula(s) for adult and youth programs 
do not provide for such cost-of-living adjustments. We see no fair way 
to balance the higher cost of goods and services in an urban area 
against the higher costs for transportation and other services incurred 
by reservation and/or rural grantees serving areas which lack the 
infrastructure of cities and suburban areas. No change has been made in 
the final regulations.

Availability of Incentive Grants to Section 166 Grantees

    Commenters questioned why ``incentive grants'' are not being made 
available to section 166 grantees who exceed their planned performance 
levels.
    Response: The statutory language in WIA section 503, which 
authorizes the Department to provide incentive grants, only applies to 
States which exceed their State adjusted levels of performance. There 
are no statutory provisions authorizing incentive grants for section 
166 grantees, nor is there specific authorization to build such a 
factor into the current funding formula(s). At this time, we have not 
determined a fair way to account for the myriad of differences between 
our grantees in a way that ensures an equal opportunity for any type of 
performance incentive. We note that WIA section 166(c)(2)'s waiver of 
competition is one form of recognizing successful performance.

Mandatory Cost Sharing Among Section 166 Grantees

    One commenter suggested that costs associated with enrolled tribal 
members be charged back to their tribes, or that tribes be required to 
pay employment and training costs for their tribal members 
participating in programs operated by urban grantees.
    Response: Although we have never opposed individual grantees 
working out funding reciprocity agreements on a voluntary basis, the 
service area concept currently in place through the designation process 
mandates that grantees serve those eligible clients residing in their 
service areas, regardless of tribal affiliation. While other entities 
have, from time to time suggested that we provide funds to tribes to 
serve their own members only, regardless of where they may reside, we 
feel that to operate the section 166 program in this manner would be 
chaotic and ultimately unworkable, and would not be in the best 
interests of Native American employment and training programs 
authorized under the Workforce Investment Act. Moreover, as described 
in WIA section 188(a)(2), it is unlawful for recipients of WIA 
financial assistance to use race, color or national origin, including 
tribal affilitation, to determine which individuals will receive 
services.

Information To Be Contained in Plans

    We have revised Sec. 668.740(a)(1) to clarify that plans must 
include information specified in these regulations as well as 
Departmental planning guidance.

Technical Correction To Remove Requirements Applicable Only to PY 1999

    Finally, we have removed Sec. 668.200(a) which refers to 
designation criteria for PY 1999. We have also removed from 
Secs. 668.720(e) and 668.730(b) references to planning requirements 
applicable only to PY 1999.
    We received many other comments as part of this process. However, 
they involved such topics as reporting requirements, including 
frequency and specific data elements, section 166 performance measures 
and standards, and the closeout of JTPA section 401 grants. While 
important to the overall scope of program transition and 
implementation, these issues are not covered in these regulations. 
These and other programmatic details will be handled administratively 
through DINAP Bulletins or other policy guidance, issued after 
consultation with the grantee community.
Part 669--National Farmworker Jobs Program Under Section 167

New Name of the MSFW (WIA Sec. 167 & JTPA Sec. 402) Training Program

    On August 27, 1999, the Secretary's Migrant and Seasonal Farmworker 
Advisory Committee voted to name the job training portion of the 
workforce investment program for farmworkers, ``The National Farmworker 
Jobs Program (NFJP)''. We have incorporated the name in the definitions 
section, Sec. 660.300, to establish the NFJP as the farmworker training 
and assistance program that is a required One-Stop partner, and to 
distinguish the NFJP from the other workforce investment grants and 
activities funded under WIA section 167, such as the farmworker housing 
assistance grants. We have adopted the NFJP name in the portions of the 
20 CFR Part 669 regulations that apply exclusively to the NFJP, and the 
NFJP name is used to identify the program in this preamble.

Introduction

    The comments we received about the regulations governing the 
operation of the National Farmworker Jobs Program under WIA section 167 
primarily came from the current NFJP grantee community. The grantees 
submitted written comments during the formal comment period. 
Additionally, we consulted with the migrant and seasonal farmworker 
grantee community during ETA's Seasonal Farmworker Program National 
Conference and through the Secretary's Migrant and Seasonal Farmworker 
Program Advisory Committee. The comments reflect a substantial level of 
interest in how the regulations will impact the program as it 
implements under the Workforce Investment Act. The commenters seek to 
make the WIA regulations' impact on their ability to serve their 
farmworker customers under WIA as positive for the farmworkers as 
possible.
    During these consultations, the NFJP grantees reported on their 
initial experiences in seeking partnership participation on Workforce 
Investment

[[Page 49376]]

Boards in a number of states and local areas. The conditions these NFJP 
grantees encountered in a significant number of locations, as their 
state and local systems prepare for WIA implementation, are not 
conducive to their successful participation in the local One-Stop 
systems. As reported, the specific approach being taken by the 
representatives from some State and Local Boards fails to recognize the 
independent standing of the NFJP program partner as a party with which 
the Local Board must negotiate a Memorandum of Understanding. A 
required objective of the negotiations is to develop the arrangements, 
including costs or cost sharing, for making the services of the Local 
One-Stop Center available to the farmworker community the grantee 
serves. We expect the terms for participating in a local One-Stop 
service delivery system to develop rationally from the negotiations 
when the task is approached in good faith by both parties.
    The grantees reported that they most often encountered an adverse 
negotiating climate in those States and local workforce investment 
areas where the States have exercised their authority under the 
alternative entity provisions of WIA sections 111(e) and 117(i) (20 CFR 
661.210 and 661.330, respectively) by approving existing boards to 
serve as the State and/or Local Workforce Investment Boards under WIA. 
The grantees reported that some States and Boards exercise the 
alternative entity option in a manner that seriously impairs the NFJP 
grantee's ability to participate as a One-Stop partner by failing to 
provide an opportunity for good faith negotiation over the terms of the 
MOU. Consequently, the necessary arrangements for making the services 
of the local One-Stop Centers available to the farmworker customers 
served by the NFJP program grantee may be inadequately developed.
    Through a motion unanimously passed by the Migrant and Seasonal 
Farmworker Employment and Training Advisory Committee, MSFW grantees 
communicated their concerns in a letter to Secretary Alexis Herman, 
dated September 27, 1999. In their letter, the grantees made specific 
recommendations for changes to the Interim Final Rule that may be 
summarized as follows: (1) To clarify that the composition of State 
Workforce Investment Boards must include representation from the 
required partner; (2) where the State Board is established under the 
alternative entity authority of WIA section 111(e), the States be 
advised through policy guidance that representation of farmworker and 
other subtitle D operators is the ``preferred response to the spirit of 
the Act''; and (3) that where a Local Workforce Board is an approved 
alternative entity, there must be a way to ensure that an ongoing role 
is actually provided to the required partners that are not members of 
the alternative entity, or provision for regulatory relief from the 
required partner obligations should be available for the national 
grantees. These issues and other comments are discussed below.

The NFJP and Workforce Investment System Governance

    As discussed above, the rules relating to the participation of NFJP 
grantees in the state and local workforce investment system generated 
many comments from the NFJP community. Below, we discuss issues 
relating to alternative entities and representation on State Boards and 
Local Boards. Similar issues are discussed in relation to the WIA 
section 168 Indian and Native American Program in the preamble to part 
668, and for the workforce investment system in general in the preamble 
to part 661.

General Representational Question Regarding the NFJP and Appointments 
to State and Local Workforce Investment Boards

    The answer to the representational issue raised by the Farmworker 
Advisory Committee is found within the design of the One-Stop system 
and in the requirement that it be operated through the collaboration of 
the required partners. In order for a partner's participation to be 
viable, the regulations provide that the partner must have 
representation in the One-Stop system, either through Local Board 
representation or, when the partner is not represented on an 
alternative entity, through an on-going role in the workforce 
investment system.
    We are not able to change the regulations to permit One-stop 
partner programs to choose whom they wish to represent them. Under WIA, 
the authority to select State and local board members lies with the 
Governor and local chief elected official, respectively. However, there 
are objective standards to ensure that all parties have a voice in the 
workforce investment system through bona fide representation. We expect 
that Local Workforce Investment Areas will follow the regulations and 
that States will ensure that all required partners have appropriate and 
effective representation on Local Boards. The final regulations attempt 
to facilitate this process by providing local areas with flexibility to 
find the right mix of representatives on the Local Board, while 
ensuring that the Board is an effective policy-making body by 
protecting the rights of all participants in the system and by 
stressing the requirement that members be individuals with optimum 
policy-making authority. We believe that the party who may most 
authoritatively speak for any partner program is an official of the 
partner in the State or local area or a representative acceptable to 
the partner. Consequently, for effective governance, official 
representation of the partner program on the State and Local Workforce 
Investment Boards will usually be by such a person.
    As discussed in the preamble to 20 CFR part 661, above, changes 
have been made to the regulations governing board membership to clarify 
the role of One-stop partner representatives. For example, when there 
is more than one partner program grantee in a local area, 20 CFR 
661.317 permits the appointment of one member to represent the group of 
grantees. This section also authorizes the chief elected official to 
solicit nominations from One-Stop partner program entities to 
facilitate the selection of such representatives. Of course, the chief 
elected official can opt to appoint more than one member to represent 
this program, if he or she so chooses and the selection criteria permit 
it. Also, as discussed below, we have added new regulations defining 
the terms ``optimal policy-making authority'' and ``expertise relating 
to [a] program, service or activity.''

State Board Representation for Required National Program Partners

    The Farmworker Advisory Committee commenters indicated that the 
Interim Final Rule is unclear as to whether representation on the State 
Boards is mandatory for all required partners such as the national 
program partners. As a result, the commenters reported that many States 
are claiming to represent the NFJP on the State's Workforce Investment 
Board through a non-partner surrogate, possibly a State agency 
representative having familiarity with farmworker or related 
agricultural issues, such as the State Monitor Advocate or a 
representative from the State's Farm Bureau.
    Response: WIA section 111(b)(1)(C)(vi)(II) requires representation 
of the Title I partner on the State Board by its provision for ``the 
lead State agency officials with responsibility for the programs'' or 
``a representative in the State with expertise relating to such 
[section

[[Page 49377]]

121(b)] program.'' WIA section 111(b)(2) requires that Board members 
who represent organizations, agencies or other entities be individuals 
with ``optimum policy-making authority'' within the program they 
represent. We believe WIA section 111(b)(1)(C)(vi)(II) is clear that a 
State agency official may only be appointed to represent those One-stop 
partner programs over which the official has ``responsibility.'' Where 
there is no such state agency official, an individual with expertise 
relating to the One-stop partner program must be appointed to represent 
the program. We have revised the regulations in part 661 to clarify 
this. Under new 20 CFR 661.203(b), the representation of a One-Stop 
partner program may be fulfilled by an official from the program 
partner, such as the NFJP grantee, or the Governor may appoint a 
representative in the State having ``documented expertise relating to'' 
the required partner program in the State. For purposes of the NFJP, we 
believe that documented expertise in the NFJP is shown by a minimum of 
two years combined managerial level experience in the operation of the 
NFJP or with an NFJP grantee association, and suggest that Governors 
adopt this standard when selecting representatives for the NFJP 
program.
    Without the clarification that representation must be specific to 
the required partner program, appointments made to represent the 
interests of a required partner could include a person who may have no 
vested interest to represent the partner. This condition, which leaves 
the required national partners vulnerable to the consequences of 
unqualified representation, is what the NFJP grantees reported has been 
occurring initially in some States. An agency official or other 
individual representing a One-stop partner program must be an official 
with optimum policy-making authority in the organization he or she 
represents. As defined in 20 CFR 661.205(a), a representative with 
``optimum policy making authority'' is an individual who can reasonably 
be expected to speak affirmatively on behalf of the entity he or she 
represents and to commit that entity to a chosen course of action.

Local Boards Authorized by Governors Under the Alternative Entity 
Provisions

    Commenters reported that the national programs, possibly without 
exception, are not included on a Local Workforce Investment Board where 
the Local Board is an alternative entity approved by the Governor under 
WIA section 117(i) (and under 20 CFR 661.330). This is to be expected 
because the composition of Local Boards approved under the alternative 
entity provision is derived from arrangements developed under JTPA, and 
the JTPA did not provide for the participation of the national programs 
in local workforce systems as now required by WIA. However, where the 
membership of the approved alternative entity does not provide for the 
representation required by WIA section 117(b), the Interim Final Rule 
at Sec. 661.330(b)(2) required Local Boards to ``ensure an ongoing role 
for any such group in the local workforce investment system'' which is 
not represented on the alternative entity Local Board.
    The commenters found that the use of the word ``group'' in the 
Interim Final Rule, to be too generalized to make a clear requirement 
that the local workforce investment plan must provide an ongoing role 
for each unrepresented partner category whenever the membership 
requirement of WIA section 117(b)(2) is not matched by the incumbent 
membership of the alternative entity Local Board. At the National 
Conference, the commenters described instances of alternative entity 
boards refusing to negotiate MOU's with their NFJP program 
representatives. They pointed out that in the instance of a required 
partner, a Local Board cannot have established a working relationship 
or demonstrated that it has provided for an ongoing role for the 
unrepresented partner until it has attempted good faith negotiations of 
an MOU with that partner.
    Response: To clarify that the required partners must be included 
among ``any such group,'' we have amended the local governance 
provision at 20 CFR 661.330(b)(2), by replacing that phrase with the 
phrase ``the unrepresented membership group,'' and by inserting the 
phrase ``including all the partners'' following ``each of the 
categories of required Local Board membership under WIA sec. 117(b).'' 
We have added a new paragraph (b)(3) to 20 CFR 661.330 which provides 
that the ongoing role requirement may be met by providing for ongoing 
consultations with an unrepresented One-stop partner program, such as 
the NFJP grantee operating in the State of local area. It also provides 
that, as part of its ``ongoing role'' responsibility, the alternative 
entity must undertake good faith negotiations with each unrepresented 
partner on the terms of its Memorandum of Understanding with the 
unrepresented partner. We have added a corollary requirement to the 
NFJP regulations by adding a new third sentence to Sec. 669.220(a) 
requiring the NFJP grantee to negotiate with the Local Board on the 
terms of its ongoing role in the workforce investment system.

Ensuring Fair Treatment When Negotiations Between a Partner and an 
Alternative Entity Board Fail

    In connection with the reports from NFJP grantees of the instances 
where they had been approached by State and Local Boards with non-
negotiable terms or they were not offered an ongoing role, the grantee 
commenters expressed their concern over how such practices might 
influence the outcome of the next NFJP competition in the State. The 
commenters explained that where the State does not foster an 
environment supporting good faith negotiations between its State and 
Local Boards and the non-governmental NFJP grantee, the consequent 
nonparticipation by the NFJP grantee in the State's local workforce 
investment systems could be viewed unfavorably. The commenters were 
concerned that such a condition could result in an unfair rating of the 
incumbent non-State agency grantee.
    Response: To promote competitions that are perceived as fair and 
merit-based in their treatment of all the eligible applicants, we have 
revised Sec. 669.200 by adding to the eligible applicant criteria in 
paragraph (a), the capacity to work effectively as a One-Stop system 
partner. The manner by which applicants may demonstrate this capacity 
is explained in a new paragraph (c). Where an incumbent grantee cannot 
demonstrate its capacity to work as a One-Stop partner, it will be 
found to lack the capacity to work as a One-Stop partner under 
Sec. 669.200(a)(4) unless the policies or actions of a Local Board that 
is established under the alternative entity provisions of WIA section 
117(i) precluded such participation or contributed to the failure to 
reach agreement on an MOU. Wherever a Local Board is an alternative 
entity and fails to agree on terms for its MOU with the incumbent NFJP 
grantee, despite good faith negotiations on the part of the grantee, 
new paragraph (d) requires the Grant Officer to consider the impact of 
the policies and actions of the alternative entity board on the 
incumbent grantee's ability to participate in the One-Stop system and 
determine whether the policies or actions contributed to the failed 
participation of the incumbent NFJP grantee. Where the Grant Officer 
finds the local policy actions of an alternative entity Board precluded 
or failed to promote the participation of the incumbent NFJP grantee 
through an MOU, and the eligible applicant is a State-controlled 
entity, or is an entity represented on the alternative entity

[[Page 49378]]

Board within the State, the Grant Officer must consider this fact when 
weighing the capacity of the competitors. Under this provision, the 
Grant Officer has the discretion to determine that the incumbent has 
the capacity to work effectively as a One-Stop partner. (The provisions 
of Sec. 669.200 (d)(1) apply only when the incumbent grantee does not 
have voting status in the alternative entity Local Board.)

The Judge Richey Court Order and the NFJP

    Several non-NFJP commenters raised a question about the 
relationship between the Judge Richey Court Order and the NFJP for 
serving migrant and seasonal farmworkers under WIA section 167. The 
comments basically inquire whether the NFJP is the program for 
farmworkers under WIA, and, as such, whether it brings to an end the 
system of monitor advocates created by the Order.
    Response: These commenters seem to be unaware of the fact that the 
NFJP has been authorized continuously since its creation under the 
Economic Opportunity Act of 1964, and most recently under section 402 
of JTPA. The NFJP supplements the workforce investment activities of 
the States with services that respond to the unique needs of 
farmworkers and their families. The NFJP is not a substitute for the 
other WIA services that must be made available to the farmworker job 
seekers in the State.
    The States are required to make the services of the One-Stop 
systems in the State available to all job seekers in an equitable 
fashion. The services available from the Adult and Dislocated Workers 
program, from the Job Service, and from all other DOL-funded Workforce 
Investment System partners in the State, must be available to 
farmworkers in an equitable fashion, appropriate to their needs as job 
seekers as well as to their needs as farmworkers. Judge Richey's 
decision in the case brought against the Employment Service required 
the entire system to serve farmworkers equitably. That requirement has 
not changed under WIA.
Subpart A--Purpose, Definitions, and Federal Administration

Technical Corrections to Definitions

    The commenters noted several typographical errors and suggested 
clarifications in the definitions for the farmworker program in 
Sec. 669.110 of the Interim Final Rule.
    Response: The word ``be'' is missing from the definition of ``work 
experience'' in the Interim Final Rule and is added in the Final Rule. 
The definition of ``farmwork'' is corrected by removing the reference 
to the allocation formula. To correct for an omission, the definition 
of ``allowances'' is amended to permit receipt of allowance payments to 
participants enrolled in intensive services as well as in training 
services.

Add Definition of ``Related Assistance''

    Questions about the characterization of emergency assistance as a 
form of related assistance in Sec. 669.360 led some commenters to ask 
about the nature of related assistance and what other services it 
includes.
    Response: We have added a definition of ``related assistance'' in 
Sec. 669.110. We discuss related assistance further in the discussion 
below of ``Classification of Emergency Assistance and Other Named 
Activities as Related Assistance.''

Eligibility

    There were a variety of comments asking that we define certain 
terms related to participant eligibility, in particular that we specify 
which dependents of a farmworker are eligible for NFJP assistance and 
that we add an adjustment for family-size to the definition of 
``disadvantaged'' for eligibility purposes. Other comments raised a 
variety of issues that include: clarification of the floating 12 month 
eligibility determination period; allowing for exceptions to the 
eligibility period for formerly institutionalized and hospitalized 
applicants; identifying the qualifying farmwork occupations and 
defining the farmwork thresholds--expressed in terms of income from 
farmwork and time employed in farmwork--that must be met by an 
applicant to qualify as a farmworker who is eligible for NFJP services.
    Response: While most requests for clarification of eligibility 
provisions will be addressed in the policy guidance on participant 
eligibility to be provided by the Division of Seasonal Farmworker 
Programs (DSFP), we have revised the definitions section in response to 
these comments. We have added a definition of ``dependent'' to the 
Final Rule to specify the family member relationships within the family 
of an eligible farmworker who qualify for receipt of assistance from 
the NFJP. Because of comments suggesting that the definition of 
``disadvantaged'' needed to be clarified to consider family size when 
making eligibility determinations, we have revised the definition of 
``disadvantaged'' by adding ``adjusted for family size'' to be clear 
that the requirement to be economically disadvantaged, as determined 
under the poverty line or the Lower Living Standard Income Level, must 
take family size into account.
    The comments about the clarification of the floating 12 month 
eligibility determination period, formerly institutionalized and 
hospitalized applicants, identifying the qualifying farmwork 
occupations and defining the farmwork thresholds topics will be 
addressed in policy guidance on participant eligibility. Grantees 
should refer to WIA nondiscrimination regulations, at 29 CFR 37.8, for 
guidance on whether an extension of the eligibility period for formerly 
institutionalized and hospitalized participants may be a form of 
reasonable accomodation.
    The commenters raised a related concern that allowance be made for 
situations where a farmworker may be disqualified by the income of an 
abusive spouse and the family unit may technically remain in place. The 
commenters prefer that there be the flexibility available to 
accommodate such situations where appropriate.
    Response: We have revised the definition of ``disadvantaged'' to 
recognize this concern by permitting consideration of circumstances 
where, due to known instability of the family unit, the inclusion of 
income from certain members would be inappropriate or unjust. We will 
provide policy guidance in consultation with the grantee partners to 
provide clarification for determining what is appropriate.

Additional Technical Corrections

    We have removed the definition of ``Department'' from Sec. 669.110 
since it appears in 20 CFR 660.300. In addition, we have added a new 
paragraph (e) to Sec. 669.170 clarifying that the Department's 
regulations implementing the nondiscrimination provisions in WIA 
section 188 (29 CFR part 37) apply to NFJP grants.
Subpart B--MSFW Program's Service Delivery System

Clarification of the Areas of a State Where the NFJP Program Operates

    Commenters reported that there was confusion between the NFJP 
grantees and the States and Local Boards over the areas within the 
States where the NFJP grantee is a mandatory partner in the local One-
Stop system. The grantees asked that the regulations be amended to 
clarify that the NFJP is a One-Stop partner in those local workforce 
investment areas where the NFJP operates by serving NFJP customers, not 
necessarily where there is ``field office'' presence, as provided in 
Sec. 669.220(a) of the Interim Final Rule.

[[Page 49379]]

    Response: We have modified Sec. 669.220(a) to clarify that the NFJP 
grantee is a required One-Stop partner for the local workforce 
investment areas where it operates its NFJP program.
Subpart C--The National Farmworker Jobs Program Customers and Available 
Program Services

Classification of Emergency Assistance and Other Named Activities as 
Related Assistance

    Commenters questioned the consistency of classifying emergency 
assistance as a form of related assistance and of classifying certain 
non-occupational training activities as training services. 
Specifically, the commenters questioned the classification of 
``workplace safety'' training and ``farmworker pesticide training'' as 
training services in Sec. 669.410(a)(2) of the Interim Final Rule. The 
commenters suggested that the designation of emergency assistance as a 
form of related assistance, without further clarifying the nature of 
related assistance, also contributed to the confusing organization of 
the service classifications.
    Response: Pesticide safety instruction for farmworkers means 
educational instruction on health and safety information about 
agricultural pesticides. To protect their health, farmworkers need to 
have a general understanding of this information and a full 
appreciation of the seriousness of these hazzards when approved 
procedures are compromised or disregarded. The instruction typically 
includes information on the hazzards associated with pesticide 
exposure, the physical symptoms of toxic exposures, use of protective 
equipment and the importance of adhering to the manufacturer's 
instructions on when fields may be entered following application. These 
activities are considered supportive services under JTPA and are often 
provided under JTPA in a ``non-training related'' context that advance 
the farmworker's welfare as a farmworker. These types of farmworker 
``training'' activities are very short term instructional services. 
They are not occupational skills training. Although they may be 
provided to participants enrolled in intensive services or training 
services, these activities are principally designed to assist 
farmworkers who are continuing to be employed in farmwork. We agree 
with the commenters that the classification of these non-skills-
training activities as training services and the classification of 
emergency assistance as the only form of ``related assistance'' is 
confusing.
    To resolve the confusing classifications, we have decided to 
combine the short-term, non-occupational skills training activities 
with supportive services such as emergency assistance. This will form a 
classification of congruous services that historically have been 
provided to MSFW's and that are uniquely required by them. To 
accomplish this, we have amended Sec. 669.310 to create a fourth basic 
service component of the NFJP service delivery strategy, called 
``related assistance services.'' Related assistance consists of short-
term forms of direct assistance to eligible farmworkers and their 
family members. The related assistance services are ones that stabilize 
farmworkers' agricultural employment. The activities include such 
services as emergency assistance, English language instruction, short 
duration basic education, workplace safety training, farmworker 
pesticide safety instruction, and farmworker housing development 
assistance. The services under related assistance encompass all the 
activities formerly classified under JTPA as ``services-only.'' Related 
assistance activities also include the non training-related 
``enhancement-only'' services that were recognized under JTPA. These 
forms of assistance predominantly assist farmworkers to maintain their 
current lifestyle within the agricultural community by supporting them 
in their endeavors to remain employed in farmwork, thereby contributing 
collaterally to the economic stabilization of the agricultural 
community. Related assistance services also may be used to support 
farmworkers who have enrolled in either intensive or training services.
    To establish the ``related assistance services'' category, we made 
a number of changes. We added a definition of ``related assistance,'' 
as described above, in Sec. 669.110. Related assistance services are 
identified in Sec. 669.310 as one of the four basic components of the 
NFJP service delivery strategy. A new Sec. 669.430 is added to classify 
the activities that are included in related assistance services as 
described above. The description of training services in Sec. 669.410 
has been revised to reflect that training services are activities 
focusing on occupational training, including basic education activity. 
A new Sec. 669.440 provides that related assistance services may be 
provided at any time there is a need identified for any eligible 
farmworker or family member. This includes farmworker youth enrolled in 
the MSFW Youth program. Accordingly, we added a clause to Sec. 669.680 
clarifying that the related assistance services available under 
Sec. 669.430 are authorized under the MSFW Youth program. The need for 
related assistance may be documented by the grantee or in a statement 
by the farmworker that is acceptable to the grantee.
    We also added a definition for ``farmworker housing development 
assistance'' as requested by comments made at the National Conference. 
Finally, a technical correction is made by adding the word ``grantee'' 
to Sec. 669.360(b) where it was omitted from the Interim Final Rule.

Work Experience Classification

    We received a number of comments about the treatment of work 
experience in the Interim Final Rule. The comments addressed two 
issues. One issue is the authorization under Sec. 669.370(b)(3)(i) to 
develop arrangements with private for-profit businesses to host work 
experience activities. The commenters were concerned that this will 
lead to abuse of program resources by providing favored businesses with 
free, albeit unskilled, WIA-funded laborers. Commenters were also 
concerned that the authorization for unpaid work experience contained 
in the definition could lead to abuses.
    Response: Unlike ETA's relationship with the States, the NFJP 
grantees are the program operators in most instances. After considering 
the commenters' concerns, we agree that a closer federal-level 
oversight of work experience is appropriate to ensure the farmworker 
program participants are adequately protected where the activity will 
be unpaid or will be hosted by for-profit entities.
    We have changed Sec. 669.370(b)(3)(i) to authorize NFJP work 
experience in the for-profit sector only when there is a system 
described in the approved grant plan for the use of for-profit 
businesses to host the structured learning experience for NFJP 
participants. Similarly, to reconcile the authorization for unpaid work 
experience to the requirement in Sec. 669.370(b)(3)(ii), which 
establishes a minimum compensation rate for paid work experience, we 
have revised Sec. 669.370(b)(3)(ii) to require that the grantee's 
unpaid work experience activity be described in the approved grant 
plan. To be acceptable, the plan must show how the work experience 
participation at a for-profit host or in an unpaid activity will 
provide tangible benefits to the work experience participant. The plan 
must show that such benefits will be commensurate

[[Page 49380]]

with the participant's contributions to the hosting agency.
    We also received comments about the classification of work 
experience as an intensive service under Sec. 669.370. A number of 
commenters urged that work experience be considered a training service. 
Some commenters explained that work experience is effectively used to 
``train'' farmworker participants on the different working conditions 
of non-agricultural work environments, since the participants have 
developed the basic workplace-values from their farmwork experiences.
    Response: In our view, work experience primarily functions as a 
workplace-values activity, while training activities are about the 
acquisition of specific occupational or job skills. Work experience 
provides an opportunity for new entrants in the workforce to acquire, 
through close supervision, an appreciation of workplace norms that may 
include self-discipline, relating to others, attendance and 
accountability, understanding compensation and learning to appreciate 
and meet employers' reasonable expectations. The concept of intensive 
services in WIA is more than sufficiently broad to encompass the full 
range of activities traditionally undertaken as work experience. The 
classification of work experience as a WIA intensive service does not 
change the nature of work experience as it was authorized and operated 
under the predecessor laws: the Job Training Partnership Act, the 
Comprehensive Employment and Training Act and the Economic Opportunity 
Act. As a practical matter, the grantees retain the same degree of 
flexibility in designing service strategies for meeting the needs of 
their customers, regardless of perceived differences caused by the 
classification nomenclature used under WIA. The adult program under 
Sec. 663.200(b) also classifies work experience as an intensive 
service.
    WIA section 134(d)(4)(D) does recognize ``job readiness training'' 
as a training service. Job readiness training provides, through 
classroom lecture and role play, the development of the same set of 
skills and understanding to be acquired through work experience. It is 
generally offered as pre-vocational world-of-work skills that may 
include showing up on time, work place attitudes and behaviors, and the 
like. Job readiness training usually does not include an associated 
work component, but it may.
    For these reasons, we have made no change to the Final Rule about 
the classification of work experience as an intensive service.
Subpart D--Performance Accountability, Planning and Waiver Provision

Administrative Costs Limitation

    The issue on which we received the largest number of comments 
during the formal comment period is the administrative costs 
limitation. The Interim Final Rule, at 20 CFR 667.210(b), provides that 
the administrative costs for the NFJP ``will be identified in the grant 
or contract award document.'' In the guidance (Farmworker Bulletin No. 
99-04) to grantees for preparation of their 1999 Program Year plans, we 
established an administrative cost limitation policy for those grantees 
implementing WIA for the 1999 Program Year. The policy limited the 
amount budgeted for administration to 20 percent, with costs over 15 
percent requiring justification satisfactory to the Grant Officer. It 
was anticipated that, after WIA transition, the rates could be expected 
to fall. The grantees have traditionally operated within a 20 percent 
limitation for administrative costs, without having to justify the 
administrative cost rates to the Department.
    The grantees' comments on administrative costs limitations were 
based on the historical context of this stated policy. They expressed 
concern that a 10-15% administrative costs limitation was unjust 
because of the state-wide scope of most NFJP operations and the 
continuing need to participate in the business of the State Board and 
to serve on and negotiate MOU's with numerous Local Boards.
    Response: In order to provide clarification on this issue, we are 
adding a new section, Sec. 669.555 to the Final Rule stating that 
limits on administrative costs for NFJP grants will be negotiated with 
the grantee and identified in the grant award document. In addition, 20 
CFR 667.210 (b), which provides that the administrative costs 
limitation for Subtitle D programs (INA and NFJP) will be identified in 
the grant award document, is unchanged.
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. Our 
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

Purpose

    Subpart A describes the purpose of the program and provides 
definitions. Section 670.100 explains that references in this part 
referring to guidelines or procedures issued by the Secretary mean that 
the Job Corps Director will issue such guidelines. Section 670.130 
specifies that the Job Corps Director has been delegated authority to 
carry out the Secretary's responsibilities under title I, subtitle C of 
the Act for the operation of the Job Corps program. As section 670.100 
explains, 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 in a number of program areas in Job Corps Technical Assistance 
Guides issued by the Job Corps Director.

Partnership

    The regulatory provision on program purpose (Sec. 670.110) 
incorporates the Act's intent that Job Corps will operate as a 
national, residential program in partnership with States and local 
communities. This partnering relationship is carried throughout various 
sections of part 670, such as 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.
    During the development of the Interim Final Rule, several parties 
noted that the regulations in this subpart provide that Job Corps is a 
national program which operates in partnership with States, 
communities, Local Boards, youth councils, One-Stop centers and

[[Page 49381]]

partners, and other youth programs. They argued that the language 
relating to partnership with One-Stops was not strong enough in other 
regulatory provisions governing services (such as outreach/admissions 
and placement). They believed that the regulations should clearly state 
that services would be provided by One-Stop centers or partners to the 
extent practicable. Our 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-Stops, 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 sections 148(d) and 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 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
    Subpart B 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
    Subpart C 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. Section 670.300 specifically describes the 
kinds of entities that are eligible to receive funds to operate centers 
and provide training and operational support services as specified in 
sections 147(a) and (d), 145(a)(3) and 149(b) of the Act.
    One commenter suggested that Sec. 670.300 be revised to expand the 
list of entities eligible to receive funds to operate centers and 
provide training and operational support services by adding ``including 
service or conservation corps'' to paragraphs (a)(1) and (a)(2) of that 
section.
    Response: We have not revised this section because these entities 
were not specifically listed in the Act and the existing regulatory 
language does not preclude service or conservation corps from 
responding to requests for proposals (RFP's) for operation of Job Corps 
centers or provision of training and support services.
    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), restates the criteria, 
specified in WIA section 147(a)(2)(B), that must be included in center 
requests for proposals. These criteria include an assessment of 
providers' past performance, their ability to coordinate Job Corps 
center activities with State and local activities (including One-Stop 
centers), and their ability to provide vocational training that 
reflects employment opportunities in areas where students will seek 
jobs. Several commenters recommended adding a fifth criterion category 
to Sec. 670.310(c) that would require that criteria for selection of 
center operators include the degree to which the entity would provide 
access to non-traditional jobs and career paths for women and girls.
    Response: Each Job Corps center must offer training in occupational 
areas which will enable all students--male and female--to get jobs in 
their home communities after completing the program. In selecting their 
occupational training, students go through an occupational exploration 
program which provides exposure to all types of training offered by the 
center as well as information on training requirements, qualifications 
for job entry and average wages for each occupational area. Existing 
regulatory language and policies regarding student services require 
that young women be provided access to occupational training, including 
training in non-traditional occupations. Accordingly, we have not 
revised Sec. 670.310.
Subpart D--Recruitment, Eligibility, Screening, Selection and 
Assignment, and Enrollment
    Subpart D describes who is eligible for Job Corps under WIA and 
provides additional factors which must be 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(a) 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, Sec. 670.450(b) and (c) addresses the requirement 
of section 145(d) of the Act which requires that students be assigned 
to the center closest to their homes, with consideration given to the 
special needs of applicants or their parents or guardians, as listed in 
the regulation, when making assignments. Section 670.490 provides 
authorization for extensions of enrollment of students for up to one 
year in special cases, such as when additional time is required for a 
student to complete an advanced program or to reasonably accommodate a 
student's disability.
    Several commenters supported the regulatory exclusion in 
Sec. 670.400 of an upper age limit for an otherwise Job Corps eligible 
individual with a disability. Several other commenters noted that 
parenting and child care responsibility in the Job Corps program are 
mentioned in Secs. 670.400 (eligibility), 670.410(c) (factors for 
selection of applicants for enrollment), 670.460 (nonresidential 
enrollment), and 670.550 (center responsibility to assist students with 
child care needs), and suggested that the regulations be clarified to 
require contractors to provide on-site or nearby child care for 
students.
    Response: WIA section 148(e) requires that ``The Secretary shall, 
to the extent practicable, provide child care at or near Job Corps 
centers, for individuals who require child care for their children in 
order to participate in Job Corps.'' In response to Congressional 
reports accompanying recent appropriations, some Job Corps centers now 
have on-site child care programs operated by other Federally-funded 
initiatives such as Head Start. However, provision of child care at or 
near all Job Corps centers is not always feasible due to

[[Page 49382]]

space, center size and other factors such as their remote or rural 
location. Where Job Corps centers do not have on-site child care, Job 
Corps admissions counselors and center staff must work with students to 
assist them in making off-center arrangements to make sure their 
children are properly cared for during the time they are enrolled in 
the program. Accordingly, these sections have not been revised.
Subpart E--Program Activities and Center Operations

Program Activities

    Subpart E 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. Under Sec. 670.520, 
required residential support services include providing a safe, secure 
environment, an ongoing counseling program, food service, access to 
medical care, recreation, leadership programs for students and a 
student welfare association. In addition, centers must account for the 
whereabouts, participation, and status of students while they are 
enrolled in Job Corps.
    Section 670.555 discusses religious rights of students. Based on 
comments received, Sec. 670.555 has been revised to clarify that 
students may file a complaint under the procedures set forth in 29 CFR 
part 37 if they believe their religious rights have been violated.

Behavior Management and Zero Tolerance for Violence and Drugs

    Subpart E 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 the Policy 
and Requirements Handbook (PRH) in Job Corps' zero tolerance policy. 
The Secretary will issue procedures which continue this practice. 
Section 670.540(b) also addresses the requirements of section 145(a)(2) 
of the Act for drug testing of all students. Section 670.545 of this 
subpart also contains requirements to ensure that students are provided 
due process in disciplinary actions. This process includes center fact-
finding and behavior review boards, notification of potential penalties 
and appeal procedures, including going to a regional appeal board.

Experimental, Research, and Demonstration Projects

    Subpart E section 670.560 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
    Subpart F includes authorization of leave for students from center 
activities, and provisions of cash allowances, 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

Placement Services

    Subpart G discusses placement services for graduates of the Job 
Corps program in accordance with section 149 of the Act. The 
regulations focus 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 subpart G is substantially 
different from the language in the JTPA Job Corps regulations in order 
to reflect this new emphasis on providers of services to graduates. 
This subpart also discusses who provides placement services, and the 
responsibilities of Job Corps placement agencies in placing graduates 
in jobs.
    The authority provided in section 149(d) of the Act, to allow for 
placement of former students (non-graduates), is reflected in 
Secs. 670.710 and 670.720; however, placement services are not required 
for anyone other than graduates. Implementation of new requirements for 
provision of 12 months of continued services for graduates and for 6 
and 12 month follow-up tracking of graduates placed in jobs 
(Sec. 670.980 (a)(4) and (a)(5)) will require a realignment of existing 
financial resources to support these new initiatives. The ability to 
provide placement services for former students in addition to the 
required placement services for graduates will be contingent on having 
the funding resources to do so. We anticipate that some funds used in 
the past to provide placement services for all former enrollees will 
have to be realigned to support the new required services for 
graduates, therefore, it is likely that the level of placement services 
for graduates and for former enrollees will differ.

Continued Services for Graduates

    Subpart G 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 12 months of continued services is a new 
requirement, which requires a new level of effort for Job Corps service 
providers. As discussed above, this will likely divert some funding 
resources which have been used in the past for provision of placement 
services for all students. As we implement the new requirement for 12 
months of continued services for graduates, we will use various 
approaches in order to learn what these services should consist of and 
how best to procure and provide them. We anticipate that provision of 
continued services for graduates may be handled by placement and 
support contractors, by Job Corps centers, and/or by One-Stops.
Subpart H--Community Connections
    Subpart H describes new requirements for Job Corps representatives 
to serve on local youth councils, as provided for in section 117(h) of 
the Act, as well as for center business and community liaisons, and for 
center industry councils, as provided for in WIA sections 153 and 154, 
respectively. Section 670.800(f) describes the role and 
responsibilities of center industry councils, as prescribed in section 
154(c) 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 upon graduation.

[[Page 49383]]

Subpart I--Administrative and Management Provisions

Student Benefits and Protections

    Subpart I provides requirements relating to Tort Claims 
(Secs. 670.900 and .905), Federal Employees Compensation Act (FECA) 
benefits for students (Secs. 670.910 through 930), safety and health 
(Sec. 670.935), and law enforcement jurisdiction on Job Corps center 
property (Sec. 670.940).

Financial and Audit Responsibilities

    Subpart I also discusses financial management responsibilities of 
Job Corps center operators and other Job Corps service providers, as 
well as Federal audit requirements.

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 WIA 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 at six months 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.

Disclosure of Information and Resolution of Complaints

    Subpart I includes requirements relating to student records and 
disclosure of information about Job Corps students. It also contains 
the procedures that center operators and service providers must follow 
when resolving complaints and disputes of students and other parties.
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 we have not regulated on these sections, 
it is again 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, assist States in making transitions from carrying out JTPA 
to carrying out activities under title I of WIA.
    Section 170(b) provides that a portion of the funds reserved by the 
Secretary under WIA section 132(a)(2) 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 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 in 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.

National Emergency Grants

    Part 671 contains limited regulations about 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. We set a high priority on the early collection of information 
about workers being laid off, so that requests for funds will be made 
promptly when it is determined that there are insufficient State and 
local formula funds available to meet the needs of workers being laid 
off. This process ensures 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.
    We received several comments on Sec. 671.120, including requests 
that we add language to allow labor organizations the opportunity to 
comment on and grieve decisions regarding eligible applications to the 
Department, and that we add language that cites labor organizations as 
an example of an organization with unique capabilities to respond to a 
dislocation.
    Response: WIA provides for labor organization membership on both 
State and Local Boards. In addition, labor organizations are 
represented on labor-management committees, where such committees are 
formed. These boards and committees would be involved in the 
development and review of National Emergency Grant requests and, 
therefore, labor organizations, as well as other interested parties, 
should have sufficient opportunity to comment on applications through 
those roles. While we agree that labor organizations are often valuable 
partners in, or operators of, dislocated worker programs, we have not 
granted the request to specifically name them in the regulations. 
Employers and other organizations may also be excellent partners or 
operators. To list one group to the exclusion of others could be 
considered unfair. Section 671.120(b) and (c), identifying ``other 
private entities'' and ``other entities,'' respectively, as potential

[[Page 49384]]

eligible applicants for National Emergency Grants are sufficiently 
inclusive of a wide variety of organizations, including labor 
organizations.
    Section 671.140(c)(1) describes the deadline for a National 
Emergency Grant participant to be enrolled in training to be eligible 
for needs-related payments under the grant. The current deadline is by 
the end of the 6th week following the date of grant award. Comments 
focused on extending this deadline. The commenters viewed the time 
frame as overly restrictive, given the new requirements under WIA, such 
as receipt of core and intensive services and the use of ITA's.
    Response: This provision is based on prior years' JTPA 
appropriations language, and is included to give States additional 
flexibility, beyond the 13/8 week enrollment in training requirement at 
WIA section 134(e)(3)(B), in the event that there is a lack of formula 
or emergency grant funds in the State or local area at the time of the 
dislocation. We have not granted the request to extend the deadline, as 
this deadline is only to prevent a participant from losing their 
eligibility for needs-related payments because funds are not available 
in the State or local area to enroll the participant in training by the 
13/8 week deadline. We have, however, revised the regulations to 
include other exceptions ``as described in the National Emergency Grant 
application guidelines''. Early intervention is critical in getting 
workers back to work quickly, potential grant participants should be 
receiving core and intensive services while a National Emergency Grant 
application is being developed and reviewed, then enrolled in training 
once the grant funds become available. While 20 CFR 663.160 and 663.240 
require that an individual receive at least one core and one intensive 
service, respectively; 20 CFR 663.165 and 663.250 provide that there is 
no minimum time period in which an individual must participate in core 
services before receiving intensive services, nor in intensive services 
before moving to training services, that would hinder a grant 
participants from meeting the six week time frame.
Part 652--Establishment and Functioning of State Employment Services

Introduction

    In amending the Wagner-Peyser Act in title III of the Workforce 
Investment Act (WIA) of 1998, Congress intended to encourage 
coordination in the planning and delivery of Wagner-Peyser Act and WIA 
title I services, while retaining State agency administration of a 
separate Wagner-Peyser Act program and funding stream for the delivery 
of services in a One-Stop environment. The amendments to the Wagner-
Peyser Act require the State agency to provide labor exchange services 
delivered by State merit-staff employees as part of a One-Stop delivery 
system, and to ensure that the delivery of services funded under the 
Wagner-Peyser Act is coordinated with other One-Stop partner programs 
in accordance with a five-year strategic plan.
Subpart A--Employment Service Operations
    The rules governing the operation of the basic labor exchange 
program have been located in 20 CFR part 652, subpart A for many years 
and are well known to State agencies administering the Wagner-Peyser 
Act. The rules governing Wagner-Peyser Act services in a One-Stop 
delivery system environment, as required by WIA, are contained in 
subpart C of 20 CFR part 652.
    The final regulations at part 652 subpart A contain revisions that 
update definitions and update references in administrative provisions.
    Under the authority of the Wagner-Peyser Act, the Governor is 
required to designate a State agency to administer funds authorized 
under the Wagner-Peyser Act and to provide labor exchange services to 
employers and job seekers, including unemployment insurance (UI) 
claimants, veterans, migrant and seasonal farmworkers, and persons with 
disabilities.
    We received no written comments about the Interim Final Rule's 
changes to subpart A. However, we have made some technical changes to 
conform the regulations to WIA requirements. The words ``Planning and'' 
are removed from the heading of subpart A to reflect the previous 
removal of Secs. 652.6 and 652.7 that discussed planning. Regulations 
for State plans are now located in subpart C at Secs. 652.211 through 
652.214. The definition of State Job Training Coordinating Council 
(SJTCC), at Sec. 652.1, is removed. Citation errors are corrected in 
the revision to Sec. 652.5.
    Technical changes to Sec. 652.8, Administrative Provisions, consist 
of revised references to specified federal regulations and OMB Circular 
A-87 (Revised). We have made a technical change to Sec. 652.8(j)(1), to 
clarify that Wagner-Peyser Act grantees are required to comply with all 
applicable Federal nondiscrimination laws, including laws prohibiting 
discrimination on the basis of the factors specified in the regulation. 
As it is used in the WIA regulations, the term ``including'' in this 
provision is used to indicate an illustrative, but not exhaustive list 
of examples. Additionally, the term ``handicap'' has been changed to 
``disability'' to correspond to the phrase normally used in laws 
prohibiting discrimination on the basis of handicap or disability.
Subpart C--Wagner-Peyser Act Services in a One-Stop Delivery System 
Environment
    Part 652, subpart C, describes requirements for the establishment 
and functioning of State Wagner-Peyser Act services in a One-Stop 
delivery system environment. Governors must designate a State agency 
responsible for administering Wagner-Peyser Act funds as a distinct 
funding source. The rule requires that the State agency retain 
responsibility for, and oversight of, all Wagner-Peyser Act labor 
exchange services provided through the One-Stop delivery system.

Employment Services in the One-Stop Delivery System

    Funds allocated to States under section 7(a) of the Wagner-Peyser 
Act must be used by the State agency to provide the three methods of 
labor exchange services (self-service, facilitated self-help service, 
and staff-assisted service) in at least one comprehensive physical 
center in each local workforce investment area during normal and 
customary hours of operation, and in accordance with a local Memorandum 
of Understanding (MOU). Within the local area, there also may be 
affiliated sites, as described in Sec. 652.202(b), that provide the 
labor exchange services described at section 7(a) of the Wagner-Peyser 
Act. In accordance with the local MOU, and, consistent with State and 
Local Plans, these affiliated sites should be an important part of the 
State's network of local sites that provide job seekers and employers 
multiple access points to One-Stop partners' services through the One-
Stop delivery system. We have revised Secs. 652.202 and 652.207 to add 
the word ``comprehensive'' which was omitted in error in the Interim 
Final Rule. To ensure coordination of service delivery with title I of 
WIA, we have revised Sec. 652.202(b)(1) to reference Sec. 652.207(b). 
For the same reason, we have revised Sec. 652.202(b)(2) to reference 20 
CFR 662.100. Finally, we emphasize that Wagner-Peyser Act funded 
services must be available to and accessible by individuals with 
disabilities.

[[Page 49385]]

Wagner-Peyser Act Funds

    We received comments about funds authorized under section 7 of the 
Wagner-Peyser Act. One commenter expressed concern that Sec. 652.205 
had given State legislatures the authority to distribute funds under 
section 7(c) of the Wagner-Peyser Act.
    Response: Under section 4 of the Wagner-Peyser Act, the Governor is 
required to designate or authorize the creation of a State agency 
responsible for cooperating with the Secretary under the Wagner-Peyser 
Act. The State agency, under the direction of the Governor, is 
responsible for the distribution and oversight of all authorized funds 
under section 7 of the Wagner-Peyser Act, as described in Sec. 652.203. 
Section 7(c) of the Wagner-Peyser Act does not authorize State 
legislatures to distribute Wagner-Peyser Act funds. Thus, no change 
needs to be made to Sec. 652.205. While the State legislature may not 
distribute the funds, it may have the authority to set priorities for 
the uses of Wagner-Peyser funds.
    Another commenter suggested that Sec. 652.206 clearly indicate the 
limitations on the use of funds under section 7(b) of the Wagner-Peyser 
Act.
    Response: Since Sec. 652.204 references the specific activities 
authorized for funds reserved by the Governor under section 7(b), no 
change has been made to Sec. 652.206.

Wagner-Peyser Act Services

    Wagner-Peyser Act funds must be used to provide core services and 
may be used to provide applicable intensive services, as defined in 
title I of WIA. One commenter asked that core and intensive services be 
defined in the regulations and asked how it would be determined whether 
to provide intensive services.
    Response: Section 652.206 contains cross-references to the 
definitions of core and intensive services, which are found on 20 CFR 
663.150 and 663.200. The regulations allow the State agency discretion 
in providing required core and applicable intensive Wagner-Peyser Act 
services under section 7(a) of the Wagner-Peyser Act. Applicable 
intensive services include services such as individual and group 
counseling, job search and placement assistance, staff-assisted 
referrals to jobs, and staff-assisted employer services. These services 
must be provided consistent with the needs of job seekers and 
employers, in accordance with a local MOU. State agencies must ensure 
the availability of an appropriate mix of services, ranging from 
electronic self-services to staff-assisted services, in their One-Stop 
delivery systems. No change has been made to Sec. 652.206.
    Two commenters suggested that Wagner-Peyser Act resources should be 
used solely, or to the greatest extent possible, to provide the core 
services delivered through the One-Stop delivery system.
    Response: The rule, at 20 CFR 662.250, discusses the requirements 
to provide core services funded under other One-Stop partner programs. 
However, both the Wagner-Peyser Act and Sec. 652.206 permit the 
expenditure of Wagner-Peyser Act funds on applicable intensive services 
as well. Funding of core services authorized and traditionally provided 
by the Wagner-Peyser program and other One-Stop partner programs should 
be determined by the local MOU. No change has been made to the 
regulations.

Services to UI Claimants

    One commenter suggested that the term ``other activities'' referred 
to at section 3(c)(3) of the Wagner-Peyser Act, be specified in the 
regulations.
    Response: We agree with the commenter and have revised Sec. 652.209 
to specify what are considered ``other activities.'' These ``other 
activities'' are: (1) coordination of labor exchange services with the 
provision of UI eligibility services as required by section 5(b)(2) of 
the Wagner-Peyser Act; and (2) administration of the work test and 
provision of job finding and placement services as required by section 
7(a)(3)(F) of the Wagner-Peyser Act.
    The commenter also expressed concern about the availability of 
Wagner-Peyser Act funds to provide reemployment services to UI 
claimants who are required to participate in reemployment services as a 
condition for receipt of benefits.
    Response: Section 652.209 requires the provision of Wagner-Peyser 
Act reemployment services to those UI claimants required by Federal or 
State law to participate in reemployment services as a condition for 
receipt of UI benefits, to the extent that funds are available. An 
individual's requirement to participate in reemployment services also 
may be met through the provision of services funded through sources 
other than the Wagner-Peyser Act. States have discretion in determining 
the sources of funding for services to these claimants. Moreover, UI 
claimants who are not required to participate in reemployment services 
as a condition for receipt of UI benefits, also may request 
reemployment services provided under Sec. 652.210.

State Planning Requirements

    One commenter identified the need to make clear that the detailed 
Wagner-Peyser Act plan is part of the Strategic Five-Year Plan for 
Title I of the Workforce Investment Act and the Wagner-Peyser Act 
submitted by the Governor in accordance with WIA regulations at 20 CFR 
661.220.
    Response: We have made a technical change to Sec. 652.211 to 
indicate that the State agency must prepare that portion of the 
Strategic Five-Year Plan for Title I of the Workforce Investment Act 
and Wagner-Peyser Act describing the delivery of services provided 
under the Wagner-Peyser Act. Further, to correct an editorial error in 
Sec. 652.214, the requirement on modifications to the State Plan to 
adjust service strategies if performance goals are not met has been 
moved to the list of requirements in Sec. 652.212(b).

Delivery of Wagner-Peyser Act Services by State Merit-Staff Employees

    We received several comments about the Secretary's authority under 
sections 3(a) and 5(b) of the Wagner-Peyser Act to require the delivery 
of labor exchange services by merit-staff employees. Section 652.215 of 
the final regulations reflects the Department's authority under the 
Wagner-Peyser Act, affirmed in State of Michigan v. Alexis M. Herman, 
81 F.Supp. 2d 840 (W.D. Mich. 1998), to require that job finding, 
placement, and reemployment services funded under the Wagner-Peyser 
Act, including services to veterans, be delivered by State merit-staff 
employees.
    Two commenters suggested that Sec. 652.215 be clarified to 
stipulate that Wagner-Peyser Act services must be delivered by merit-
staff employees of a State agency. Three commenters suggested that the 
interpretation of the merit-staffing requirement be broadened 
specifically to include units of general local government.
    Response: After carefully examining and considering all of the 
comments received, we have revised Sec. 652.215 to make clear that 
Wagner-Peyser Act services must be delivered by merit-staff employees 
of a State agency. Since the beginning of the Federal-State Wagner-
Peyser Act program, we have required that annual State Wagner-Peyser 
Act service plans include a merit system of personnel administration. 
To ensure consistency in the application of merit personnel systems and 
to promote greater statewide administrative efficiency, merit-staff 
employees of the State agency must deliver Wagner-Peyser Act services, 
as a condition for

[[Page 49386]]

receipt of grants. We have determined that State agency merit-staffing 
preserves and maintains competence, impartiality, and nonpartisanship 
in the administration of Wagner-Peyser Act services to job seekers and 
employers as part of the One-Stop delivery system.
    Under section 3(a) of the Wagner-Peyser Act, prior to issuance of 
the Interim Final Rule, the Department authorized demonstrations of the 
effective delivery of Wagner-Peyser Act services utilizing non-State 
agency employees in the States of Colorado, Massachusetts, and 
Michigan. These three demonstrations were permitted as exceptions to 
the long-standing policy described above in order to assess the 
effectiveness of alternative delivery systems. We have determined that 
these three demonstrations reflect a sufficient range of delivery 
options utilizing non-State agency employees to determine whether using 
such employees is an effective and efficient way to deliver Wagner-
Peyser services. Therefore, the Department is not authorizing other 
States to demonstrate Wagner-Peyser Act service delivery using non-
State agency employees. Failure to comply with the State merit staffing 
requirements of Sec. 652.215 may result in revocation of authority to 
draw down Wagner-Peyser Act funds, disallowance of costs, and/or 
decertification of a State to receive Wagner-Peyser Act funds.
    One commenter suggested that the Department develop federal 
procedures to ensure compliance with State merit-staffing requirements.
    Response: We believe that State merit-staffing compliance is 
ensured through the final regulations at 20 CFR part 652 and the 
federal review guidelines contained in the Wagner-Peyser Act Review 
Guide for Basic Labor Exchange Services (ETA Field Memorandum No. 14-
99, January 12, 1999). Thus, at this time, we do not believe there is a 
need to issue further guidance.

Guidance by the One-Stop Operator

    One commenter suggested that the provision in Sec. 652.216 which 
limits the ability of a One-Stop operator, other than the State agency, 
to provide only guidance to State agency merit-staff employees is 
contrary to the concept of service integration by preventing the 
operator from providing supervision to all employees in the One-Stop 
center. Other commenters recommended that the regulations remain silent 
on the issue of guidance. Another suggestion was that labor unions, 
whose members and/or bargaining agreements are affected by the terms of 
a local MOU that defines ``guidance,'' must provide written 
concurrence.
    Response: The focus of these comments was on whether the word 
``guidance'' in Sec. 652.216 gives the One-Stop operator too little or 
too much control over State agency employees. After careful 
consideration of the comments, we are retaining the term ``guidance'' 
to describe the level of supervision of State merit-staff employees by 
the One-Stop operator. This term best reflects the appropriate 
relationship that should exist between a non-State agency One-Stop 
operator and State merit-staff employees funded under the Wagner-Peyser 
Act in the day-to-day operation of the One-Stop center. To ensure 
consistency with collective bargaining agreements, we have revised 
Sec. 652.216 to allow the One-Stop operator to provide guidance to 
merit-staff employees of the State agency consistent with the 
provisions of the Wagner-Peyser Act, the local MOU, and applicable 
collective bargaining agreements.
    Finally, a commenter indicated that the wording regarding 
delegation to ``any other public agency'' contained in the 
parenthetical phrase in Sec. 652.216 of the Interim Final Rule may 
appear to be contradictory.
    Response: We agree that the parenthetical phrase is unnecessary 
since the State agency is solely responsible for personnel matters 
pertaining to merit-staff employees of the State agency funded by the 
Act. Thus, the parenthetical phrase is removed.

Additional Comments

    We received a number of comments that did not pertain directly to 
20 CFR part 652 subpart A or C, but which did refer to the Wagner-
Peyser Act. One was a question of whether priority of service to 
veterans under the Wagner-Peyser Act has been maintained.
    Response: The rule, at 20 CFR 652, Subpart B--Services to Veterans 
is retained. Subpart B refers to 20 CFR part 1001 which contains 
criteria for priority of service to veterans under the Wagner-Peyser 
Act.
    Another commenter asked whether the current migrant and seasonal 
farmworkers' regulations for the Employment Service remain in effect.
    Response: The requirements for services to migrant and seasonal 
farmworkers and other requirements pertaining to the administration of 
Wagner-Peyser Act services at 20 CFR parts 653 and 658 remain in 
effect.
    A commenter expressed concern about the lack of a limit on 
administrative costs for Wagner-Peyser Act services as well as the lack 
of a requirement to track the income of job seekers.
    Response: The WIA amendments to the Wagner-Peyser Act did not 
include a limitation on administrative costs or a requirement to track 
the income of job seekers. The Employment Service system created by the 
Wagner-Peyser Act has always been universally available to all job 
seekers regardless of income. Nothing in WIA has changed this 
requirement. Thus, we can see no need to track job seekers' income. We 
intend, however, to develop a system of performance measures for 
Wagner-Peyser funded labor exchange services and will soon publish for 
comment a proposal describing such measures.

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). We have assessed the potential 
impact of this 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, we certify that the Final Rule, as promulgated, 
will not have a significant impact on a substantial number of small 
entities. We are transmitting a copy our certification to the Chief 
Counsel for Advocacy of the Small Business Administration.
    The WIA 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 these 
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, we do not

[[Page 49387]]

foresee an adverse impact on small governmental entities. Nevertheless, 
we have 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.
    As during the development of the Interim Final Rule, we 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 town hall meetings spanning the 
nation in eleven locations, 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, we broadly 
disseminated our developing policies through the publication of 
consultation documents which were available on the Internet, published 
in the Federal Register and distributed throughout the employment and 
training community. These documents were published before all the 
issues had been fully resolved so that stakeholders could truly have a 
voice in the policy making process. In addition to the Interim Final 
Rule, which was posted on our web site in addition to being published 
in the Federal Register, we also used the Internet to publish guidance 
about policy issues and to engage the system in discussions around 
those issues.
    The 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 20 CFR 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 20 CFR 661.410 and 661.430. 
We have taken steps to further ameliorate any potential burdens through 
20 CFR 667.210 of the 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 costs is lower than the existing JTPA limit, we 
extensively consulted with States and localities about the regulatory 
definition of these administrative costs to ensure that this cost 
category is defined as flexibly as possible. We also initiated a pilot 
study of ten JTPA service delivery areas (SDA's), to assess the Interim 
Final Rule's definition of administrative costs. As a result of those 
consultations and our study, we made significant adjustments to the 
definition of administrative costs in the Final Rule in order to take 
account of the practical realities of implementing and maintaining this 
new system.
    A portion of WIA funds is available to certain communities in 
direct grants from the Department. We have 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 
also 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. Due to some confusion, new regulatory 
provisions have been added to expressly state this. 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, we have 
concluded that the Rule will not place undue burdens on small entities. 
In addition, under the Small Business Regulatory Fairness Act (SBREFA) 
(5 U.S.C. Chapter 8), we have determined that this Final Rule is not a 
``major rule,'' as defined in 5 U.S.C. 804(2). We certify that this 
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

    Under Executive Order 12866, we have evaluated this Final Rule and 
have 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. We have 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. We have determined the Final Rule will not have 
an adverse effect in a material way on the nation's economy.
    We have developed the Final Rule in close consultation with the 
Department of Education, and with other interested Federal agencies. 
Based on those consultations, we have determined that this Final Rule 
will not create a serious inconsistency or otherwise interfere with any 
action taken or planned by another Federal Agency.
    This Final Rule implements the Workforce Investment Act, which is 
the first major reform of the nation's job training and employment 
system in over 15 years. Consequently, this Final Rule raises novel 
policy issues. Therefore, this is 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 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.
    We have determined that the WIA 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, we have not prepared a budgetary impact 
statement, specifically addressed the regulatory alternatives 
considered, or prepared a plan for informing and

[[Page 49388]]

advising any significant or uniquely impacted small government.

VI. Executive Order 12988

    This regulation has been drafted and reviewed in accordance with 
Executive Order 12988, Civil Justice Reform, and will not unduly burden 
the Federal court system. The regulation has been written so as to 
minimize litigation and provide a clear legal standard for affected 
conduct, and has been reviewed carefully to eliminate drafting errors 
and ambiguities.

VII. Executive Order 13132

Federalism Impact Statement

    There are some federalism implications in this rule, for example, 
the regulations implementing sections 3(a) and 5(b) of the Wagner-
Peyser Act may have a direct effect on the States' personnel management 
policies. Specifically, 20 CFR 652.215 and 652.216, reiterate, in 
regulation, the long-standing policy of requiring that the delivery of 
Wagner-Peyser Act labor exchange services be provided by State merit 
staff employees in the context of the One-Stop delivery system. Since 
the implementation of the Wagner-Peyser Act of 1933, there has been an 
uninterrupted application of this requirement as a condition imposed 
upon States for receipt of grants for the administration of Wagner-
Peyser Act services. The requirement that job finding, placement, and 
reemployment services funded under the Wagner-Peyser Act, including 
services to veterans, be delivered by merit-staff employees was 
affirmed by the Federal District Court in Michigan v. Alexis M. Herman, 
81 F.Supp. 2d 840 (W.D. Mich. 1998).
    Throughout the development of the Interim Final Rule and the Final 
Rule, we participated in numerous consultations with State and local 
officials, including organizations representing elected officials, 
about these particular provisions as well as the regulations in 
general. These consultations began with the development of the Interim 
Final Rule before the issuance of Executive Order 13132 and continued 
throughout the rulemaking process. The groups consulted included the 
National Governors Association, the U.S. Conference of Mayors, the 
National Association of State Legislators, the Interstate Conference of 
Employment Security Agencies, the National Association of Counties, the 
National League of Cities, and the U.S. Conference of Black Mayors. 
Perhaps because 20 CFR 652.215 and 652.216 merely reiterate the long-
standing policy of the Department, State and local government officials 
and representatives did not raise any concerns with this on-going 
policy. During these consultations we did receive questions regarding 
the scope and duration of the three demonstrations authorized by the 
Secretary, to which we promptly responded. Although not from State and 
local government officials, we did receive some written comments on 
these provisions. These are discussed and responded to in detail in the 
preamble section on part 652.
    After consulting with the groups specified above, and carefully 
examining and considering all of the concerns raised, we have revised 
20 CFR 652.215 to more clearly state our long-standing policy position 
that Wagner-Peyser Act services must be delivered by merit-staff 
employees of a State agency. Since the beginning of the Federal-State 
Wagner-Peyser Act program, we have required that annual State Wagner-
Peyser Act service plans include a merit system of personnel 
administration. To ensure consistency in the application of merit 
personnel systems and to promote greater statewide administrative 
efficiency, merit-staff employees of the State agency must deliver 
Wagner-Peyser Act services, as a condition for receipt of grants. Under 
20 CFR 652.216 non-merit staff employees are not prohibited from 
providing guidance to merit staff employees. We have determined that 
State merit-staffing preserves and maintains competence, impartiality, 
and nonpartisanship in the administration of Wagner-Peyser Act services 
to job seekers and employers as part of the One-Stop delivery system.
    Under section 3(a) of the Wagner-Peyser Act, before issuance of the 
Interim Final Rule, the Department authorized demonstrations of the 
effective delivery of Wagner-Peyser Act services using non-State agency 
employees in the States of Colorado, Massachusetts, and Michigan. These 
three demonstrations were permitted as exceptions to the long-standing 
policy described above in order to assess the effectiveness of 
alternative delivery systems. We have determined that these three 
demonstrations reflect a sufficient range of delivery options using 
non-State agency employees to determine whether using such employees is 
an effective and efficient way to deliver Wagner-Peyser services. No 
additional demonstrations will be authorized.
    We, therefore, have promulgated these regulations only after 
extensive consultations as well as initiating actual demonstrations in 
three States.

VIII. Effective Date

    WIA became effective upon the date of enactment, August 7, 1998. We 
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 constituted good cause for waiving notice and 
comment proceeding in order for the timely issuance of regulations to 
assist States in operating under WIA as early as possible. Congress 
also recognized this urgency in section 506(c) of the Act, by 
specifically authorizing the issuance of an Interim Final Rule. The 
Interim Final Rule set a comment period to elicit any concerns raised 
by the rule for consideration in the development of this Final Rule. We 
provided a comment period of 90 days to provide a significant period 
for public input into any revisions to part 652, and parts 660 through 
671 for the Final Rule. We fully reviewed all comments received, and 
considered the input provided by our State, local and Federal partners 
through our many consultations. This Final Rule will become effective 
on September 11, 2000.

IX. 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

    Employment, Grant programs, Job training programs, Labor.

    Signed at Washington, DC, this 24th day of July, 2000.
Alexis M. Herman,
Secretary of Labor.

    For the reasons stated in the preamble, 20 CFR Chapter V is amended 
as follows:
    1. Parts 660 through 671 are revised to read as follows:

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

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

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

[[Page 49389]]

Sec. 660.100  What is the purpose of title I of the Workforce 
Investment Act of 1998?

    The purpose of title I of the Workforce Investment Act of 1998 
(WIA) is to provide workforce investment activities that increase the 
employment, retention and earnings of participants, and increase 
occupational skill attainment by participants, which will improve the 
quality of the workforce, reduce welfare dependency, and enhance the 
productivity and competitiveness of the Nation's economy. These goals 
are achieved through the workforce investment system. (WIA sec. 106.)


Sec. 660.200  What do the regulations for workforce investment systems 
under title I of the Workforce Investment Act cover?

    The regulations found in 20 CFR parts 660 through 671 set forth the 
regulatory requirements that are applicable to programs operated with 
funds provided under title I of WIA. This part 660 describes the 
purpose of that Act, explains the format of these regulations and sets 
forth definitions for terms that apply to each part. Part 661 contains 
regulations relating to Statewide and local governance of the workforce 
investment system. Part 662 describes the One-Stop system and the roles 
of One-Stop partners. Part 663 sets forth requirements applicable to 
WIA title I programs serving adults and dislocated workers. Part 664 
sets forth requirements applicable to WIA title I programs serving 
youth. Part 665 contains regulations relating to Statewide activities. 
Part 666 describes the WIA title I performance accountability system. 
Part 667 sets forth the administrative requirements applicable to 
programs funded under WIA title I. Parts 668 and 669 contain the 
particular requirements applicable to programs serving Indians and 
Native Americans and Migrant and Seasonal Farmworkers, respectively. 
Parts 670 and 671 describe the particular requirements applicable to 
the Job Corps and other national programs, respectively. In addition, 
part 652 describes the establishment and functioning of State 
Employment Services under the Wagner-Peyser Act, and 29 CFR part 37 
contains the Department's nondiscrimination regulations implementing 
WIA section 188.


Sec. 660.300  What definitions apply to the regulations for workforce 
investment systems under title I of WIA?

    In addition to the definitions set forth at WIA section 101, the 
following definitions apply to the regulations in 20 CFR parts 660 
through 671:
    Department or DOL means the U.S. Department of Labor, including its 
agencies and organizational units.
    Designated region means a combination of local areas that are 
partly or completely in a single labor market area, economic 
development region, or other appropriate contiguous subarea of a State, 
that is designated by the State under WIA section 116(c), or a similar 
interstate region that is designated by two or more States under WIA 
section 116(c)(4).
    Employment and training activity means a workforce investment 
activity that is carried out for an adult or dislocated worker.
    EO data means data on race and ethnicity, age, sex, and disability 
required by 29 CFR part 37 of the DOL regulations implementing section 
188 of WIA, governing nondiscrimination.
    ETA means the Employment and Training Administration of the U.S. 
Department of Labor.
    Grant means an award of WIA financial assistance by the U.S. 
Department of Labor to an eligible WIA recipient.
    Grantee means the direct recipient of grant funds from the 
Department of Labor. A grantee may also be referred to as a recipient.
    Individual with a disability means an individual with any 
disability (as defined in section 3 of the Americans with Disabilities 
Act of 1990 (42 U.S.C. 12102)). For purposes of WIA section 188, this 
term is defined at 29 CFR 37.4.
    Labor Federation means an alliance of two or more organized labor 
unions for the purpose of mutual support and action.
    Literacy means an individual's ability to read, write, and speak in 
English, and to compute, and solve problems, at levels of proficiency 
necessary to function on the job, in the family of the individual, and 
in society.
    Local Board means a Local Workforce Investment Board established 
under WIA section 117, to set policy for the local workforce investment 
system.
    Obligations means the amounts of orders placed, contracts and 
subgrants awarded, goods and services received, and similar 
transactions during a funding period that will require payment by the 
recipient or subrecipient during the same or a future period. For 
purposes of the reallotment process described at 20 CFR 667.150, the 
Secretary also treats as State obligations any amounts allocated by the 
State under WIA sections 128(b) and 133(b) to a single area State or to 
a balance of State local area administered by a unit of the State 
government, and inter-agency transfers and other actions treated by the 
State as encumbrances against amounts reserved by the State under WIA 
sections 128(a) and 133(a) for Statewide workforce investment 
activities.
    Outlying area means the United States Virgin Islands, Guam, 
American Samoa, the Commonwealth of the Northern Mariana Islands, the 
Republic of the Marshall Islands, the Federated States of Micronesia, 
and the Republic of Palau.
    Participant means an individual who has registered under 20 CFR 
663.105 or 664.215 and has been determined to be eligible to 
participate in and who is receiving services (except for follow up 
services) under a program authorized by WIA title I. Participation 
commences on the first day, following determination of eligibility, on 
which the individual begins receiving core, intensive, training or 
other services provided under WIA title I.
    Recipient means an entity to which a WIA grant is awarded directly 
from the Department of Labor to carry out a program under title I of 
WIA. The State is the recipient of funds awarded under WIA sections 
127(b)(1)(C)(I)(II), 132(b)(1)(B) and 132(b)(2)(B). The recipient is 
the entire legal entity that received the award and is legally 
responsible for carrying out the WIA program, even if only a particular 
component of the entity is designated in the grant award document.
    Register means the process for collecting information to determine 
an individual's eligibility for services under WIA title I. Individuals 
may be registered in a variety ways, as described in 20 CFR 663.105 and 
20 CFR 664.215.
    Secretary means the Secretary of the U.S. Department of Labor.
    Self certification means an individual's signed attestation that 
the information he/she submits to demonstrate eligibility for a program 
under title I of WIA is true and accurate.
    State means each of the several States of the United States, the 
District of Columbia and the Commonwealth of Puerto Rico. The term 
``State'' does not include outlying areas.
    State Board means a State Workforce Investment Board established 
under WIA section 111.
    Subgrant means an award of financial assistance in the form of 
money, or property in lieu of money made under a grant by a grantee to 
an eligible subrecipient. The term includes financial assistance when 
provided by contractual legal agreement, but does not include 
procurement purchases, nor does it include any form of assistance which 
is excluded from the definition of Grant in this part.

[[Page 49390]]

    Subrecipient means an entity to which a subgrant is awarded and 
which is accountable to the recipient (or higher tier subrecipient) for 
the use of the funds provided. DOL's audit requirements for States, 
local governments, and non-profit organizations provides guidance on 
distinguishing between a subrecipient and a vendor at 29 CFR 99.210.
    Unobligated balance means the portion of funds authorized by the 
Federal agency that has not been obligated by the grantee and is 
determined by deducting the cumulative obligations from the cumulative 
funds authorized.
    Vendor means an entity responsible for providing generally required 
goods or services to be used in the WIA program. These goods or 
services may be for the recipient's or subrecipient's own use or for 
the use of participants in the program. DOL's audit requirements for 
States, local governments, and non-profit organizations provides 
guidance on distinguishing between a subrecipient and a vendor at 29 
CFR 99.210.
    Wagner-Peyser Act means the Act of June 6, 1933, as amended, 
codified at 29 U.S.C. 49 et seq.
    WIA regulations mean the regulations in 20 CFR parts 660 through 
671, the Wagner-Peyser Act regulations in 20 CFR part 652, subpart C, 
and the regulations implementing WIA section 188 in 29 CFR part 37.
    Workforce investment activities mean the array of activities 
permitted under title I of WIA, which include employment and training 
activities for adults and dislocated workers, as described in WIA 
section 134, and youth activities, as described in WIA section 129.
    Youth activity means a workforce investment activity that is 
carried out for youth.

PART 661--STATEWIDE AND LOCAL GOVERNANCE OF THE WORKFORCE 
INVESTMENT SYSTEM UNDER TITLE I OF THE WORKFORCE INVESTMENT ACT

Subpart A --General Governance Provisions
Sec.
661.100   What is the workforce investment system?
661.110   What is the role of the Department of Labor as the Federal 
governmental partner in the governance of the workforce investment 
system?
661.120   What are the roles of the local and State governmental 
partner in the governance of the workforce investment system?
Subpart B--State Governance Provisions
661.200   What is the State Workforce Investment Board?
661.203   What is meant by the terms ``optimum policy making 
authority'' and ``expertise relating to [a] program, service or 
activity''?
661.205   What is the role of the State Board?
661.207   How does the State Board meet its requirement to conduct 
business in an open manner under the ``sunshine provision'' of WIA 
section 111(g)?
661.210   Under what circumstances may the Governor select an 
alternative entity in place of the State Workforce Investment Board?
661.220   What are the requirements for the submission of the State 
Workforce Investment Plan?
661.230   What are the requirements for modification of the State 
Workforce Investment Plan?
661.240   How do the unified planning requirements apply to the 
five-year strategic WIA and Wagner-Peyser plan and to other 
Department of Labor plans?
661.250   What are the requirements for designation of local 
workforce investment areas?
661.260   What are the requirements for automatic designation of 
workforce investment areas relating to units of local government 
with a population of 500,000 or more?
661.270   What are the requirements for temporary and subsequent 
designation of workforce investment areas relating to areas that had 
been designated as service delivery areas under JTPA?
661.280   What right does an entity have to appeal the Governor's 
decision rejecting a request for designation as a workforce 
investment area?
661.290   Under what circumstances may States require Local Boards 
to take part in regional planning activities?
Subpart C--Local Governance Provisions
661.300   What is the Local Workforce Investment Board?
661.305   What is the role of the Local Workforce Investment Board?
661.307   How does the Local Board meet its requirement to conduct 
business in an open manner under the ``sunshine provision'' of WIA 
section 117(e)?
661.310   Under what conditions may a Local Board directly be a 
provider of core services, intensive services, or training services, 
or act as a One-Stop Operator?
661.315   Who are the required members of the Local Workforce 
Investment Boards?
661.317   Who may be selected to represent a particular One-Stop 
partner program on the Local Board when there is more than one 
partner program entity in the local area?
661.320   Who must chair a Local Board?
661.325   What criteria will be used to establish the membership of 
the Local Board?
661.330   Under what circumstances may the State use an alternative 
entity as the Local Workforce Investment Board?
661.335   What is a youth council, and what is its relationship to 
the Local Board?
661.340   What are the responsibilities of the youth council?
661.345   What are the requirements for the submission of the local 
workforce investment plan?
661.350   What are the contents of the local workforce investment 
plan?
661.355   When must a local plan be modified?
Subpart D--Waivers and Work-Flex
661.400   What is the purpose of the General Statutory and 
Regulatory Waiver Authority provided at section 189(i)(4) of the 
Workforce Investment Act?
661.410   What provisions of WIA and the Wagner-Peyser Act may be 
waived, and what provisions may not be waived?
661.420  Under what conditions may a Governor request, and the 
Secretary approve, a general waiver of statutory or regulatory 
requirements under WIA section189(i)(4)?
661.430  Under what conditions may the Governor submit a Workforce 
Flexibility Plan?
661.440  What limitations apply to the State's Workforce Flexibility 
Plan authority under WIA?

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

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

[[Page 49391]]

goals of WIA based on their particular needs. The WIA regulations 
provide the framework in which State and local officials can exercise 
such flexibility within the confines of the statutory requirements. 
Wherever possible, system features such as design options and 
categories of services are broadly defined, and are subject to State 
and local interpretation.
    (c) The Secretary, in consultation with other Federal Agencies, as 
appropriate, may publish guidance on interpretations of statutory and 
regulatory provisions. State and local policies, interpretations, 
guidelines and definitions that are consistent with interpretations 
contained in such guidance will be considered to be consistent with the 
Act for purposes of Sec. 661.120.


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

    (a) Local areas should establish policies, interpretations, 
guidelines and definitions to implement provisions of title I of WIA to 
the extent that such policies, interpretations, guidelines and 
definitions are not inconsistent with the Act and the regulations 
issued under the Act, Federal statutes and regulations governing One-
Stop partner programs, and with State policies.
    (b) States should establish policies, interpretations, guidelines 
and definitions to implement provisions of title I of WIA to the extent 
that such policies, interpretations, guidelines and definitions are not 
inconsistent with the Act and the regulations issued under the Act, as 
well as Federal statutes and regulations governing One-Stop partner 
programs.

Subpart B--State Governance Provisions


Sec. 661.200  What is the State Workforce Investment Board?

    (a) The State Board is a board established by the Governor in 
accordance with the requirements of WIA section 111 and this section.
    (b) The membership of the State Board must meet the requirements of 
WIA section 111(b). The State Board must contain two or more members 
representing the categories described in WIA section 111(b)(1)(C)(iii)-
(v), and special consideration must be given to chief executive 
officers of community colleges and community based organizations in the 
selection of members representing the entities identified in WIA 
section 111(b)(1)(C)(v).
    (c) The Governor may appoint any other representatives or agency 
officials, such as agency officials responsible for economic 
development, child support and juvenile justice programs in the State.
    (d) Members who represent organizations, agencies or other entities 
must be individuals with optimum policy making authority within the 
entities they represent.
    (e) A majority of members of the State Board must be 
representatives of business. Members who represent business must be 
individuals who are owners, chief executive officers, chief operating 
officers, or other individuals with optimum policy making or hiring 
authority, including members of Local Boards.
    (f) The Governor must appoint the business representatives from 
among individuals who are nominated by State business organizations and 
business trade associations. The Governor must appoint the labor 
representatives from among individuals who are nominated by State labor 
federations.
    (g) The Governor must select a chairperson of the State Board from 
the business representatives on the board.
    (h) The Governor may establish terms of appointment or other 
conditions governing appointment or membership on the State Board.
    (i) For the programs and activities carried out by One-Stop 
partners, as described in WIA section 121(b) and 20 CFR 662.200 and 
662.210, the State Board must include:
    (1) The lead State agency officials with responsibility for such 
program, or
    (2) In any case in which no lead State agency official has 
responsibility for such a program service, a representative in the 
State with expertise relating to such program, service or activity.
    (3) If the director of the designated State unit, as defined in 
section 7(8)(B) of the Rehabilitation Act, does not represent the State 
Vocational Rehabilitation Services program (VR program) on the State 
Board, then the State must describe in its State plan how the member of 
the State Board representing the VR program will effectively represent 
the interests, needs, and priorities of the VR program and how the 
employment needs of individuals with disabilities in the State will be 
addressed.
    (j) An individual may be appointed as a representative of more than 
one entity if the individual meets all the criteria for representation, 
including the criteria described in paragraphs (d) through (f) of this 
section, for each entity. (WIA sec. 111)


Sec. 661.203  What is meant by the terms ``optimum policy making 
authority'' and ``expertise relating to [a] program, service or 
activity''?

    For purposes of selecting representatives to State and local 
workforce investment boards:
    (a) A representative with ``optimum policy making authority'' is an 
individual who can reasonably be expected to speak affirmatively on 
behalf of the entity he or she represents and to commit that entity to 
a chosen course of action.
    (b) A representative with ``expertise relating to [a] program, 
service or activity'' includes a person who is an official with a One-
stop partner program and a person with documented expertise relating to 
the One-stop partner program.


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

    The State Board must assist the Governor in the:
    (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

[[Page 49392]]

    (i) Development of an application for an incentive grant under WIA 
section 503. (WIA sec. 111(d).)


Sec. 661.207  How does the State Board meet its requirement to conduct 
business in an open manner under the ``sunshine provision'' of WIA 
section 111(g)?

    The State Board must conduct its business in an open manner as 
required by WIA section 111(g), by making available to the public, on a 
regular basis through open meetings, information about the activities 
of the State Board. This includes information about the State Plan 
prior to submission of the plan; information about membership; the 
development of significant policies, interpretations, guidelines and 
definitions; and, on request, minutes of formal meetings of the State 
Board.


Sec. 661.210  Under what circumstances may the Governor select an 
alternative entity in place of the State Workforce Investment Board?

    (a) The State may use any State entity that meets the requirements 
of WIA section 111(e) to perform the functions of the State Board.
    (b) If the State uses an alternative entity, the State workforce 
investment plan must demonstrate that the alternative entity meets all 
three of the requirements of WIA section 111(e). Section 111(e) 
requires that such entity:
    (1) Was in existence on December 31, 1997;
    (2)(i) Was established under section 122 (relating to State Job 
Training Coordinating Councils) or title VII (relating to State Human 
Resource Investment Councils) of the Job Training Partnership Act (29 
U.S.C.1501 et seq.), as in effect on December 31, 1997, or
    (ii) Is substantially similar to the State Board described in WIA 
section 111(a), (b), and (c) and Sec. 661.200; and
    (3) Includes, at a minimum, two or more representatives of business 
in the State and two or more representatives of labor organizations in 
the State.
    (c) If the alternative entity does not provide for representative 
membership of each of the categories of required State Board membership 
under WIA section 111(b), the State Plan must explain the manner in 
which the State will ensure an ongoing role for any unrepresented 
membership group in the workforce investment system. The State Board 
may maintain an ongoing role for an unrepresented membership group, 
including entities carrying out One-stop partner programs, by means 
such as regularly scheduled consultations with entities within the 
unrepresented membership groups, by providing an opportunity for input 
into the State Plan or other policy development by unrepresented 
membership groups, or by establishing an advisory committee of 
unrepresented membership groups.
    (d) If the membership structure of the alternative entity is 
significantly changed after December 31, 1997, the entity will no 
longer be eligible to perform the functions of the State Board. In such 
case, the Governor must establish a new State Board which meets all of 
the criteria of WIA section 111(b).
    (e) A significant change in the membership structure includes any 
significant change in the organization of the alternative entity or in 
the categories of entities represented on the alternative entity which 
requires a change to the alternative entity's charter or a similar 
document that defines the formal organization of the alternative 
entity, regardless of whether the required change to the document has 
or has not been made. A significant change in the membership structure 
is considered to have occurred when members are added to represent 
groups not previously represented on the entity. A significant change 
in the membership structure is not considered to have occurred when 
additional members are added to an existing membership category, when 
non-voting members are added, or when a member is added to fill a 
vacancy created in an existing membership category.
    (f) In 20 CFR parts 660 through 671, all references to the State 
Board also apply to an alternative entity used by a State.


Sec. 661.220  What are the requirements for the submission of the State 
Workforce Investment Plan?

    (a) The Governor of each State must submit a State Workforce 
Investment Plan (State Plan) in order to be eligible to receive funding 
under title I of WIA and the Wagner-Peyser Act. The State Plan must 
outline the State's five year strategy for the workforce investment 
system.
    (b) The State Plan must be submitted in accordance with planning 
guidelines issued by the Secretary of Labor. The planning guidelines 
set forth the information necessary to document the State's vision, 
goals, strategies, policies and measures for the workforce investment 
system (that were arrived at through the collaboration of the Governor, 
chief elected officials, business and other parties), as well as the 
information required to demonstrate compliance with WIA, and the 
information detailed by WIA and the WIA regulations, including 29 CFR 
part 37, and the Wagner-Peyser Act and the Wagner-Peyser regulations at 
20 CFR part 652:
    (c) The State Plan must contain a description of the State's 
performance accountability system, and the State performance measures 
in accordance with the requirements of WIA section 136 and 20 CFR part 
666.
    (d) The State must provide an opportunity for public comment on and 
input into the development of the State Plan prior to its submission. 
The opportunity for public comment must include an opportunity for 
comment by representatives of business, representatives of labor 
organizations, and chief elected official(s) and must be consistent 
with the requirement, at WIA section 111(g), that the State Board makes 
information regarding the State Plan and other State Board activities 
available to the public through regular open meetings. The State Plan 
must describe the State's process and timeline for ensuring a 
meaningful opportunity for public comment.
    (e) The Secretary reviews completed plans and must approve all 
plans within ninety days of their submission, unless the Secretary 
determines in writing that:
    (1) The plan is inconsistent with the provisions of title I of WIA 
or the WIA regulations, including 29 CFR part 37. For example, a 
finding of inconsistency would be made if the Secretary and the 
Governor have not reached agreement on the adjusted levels of 
performance under WIA section 136(b)(3)(A), or there is not an 
effective strategy in place to ensure development of a fully 
operational One-Stop delivery system in the State; or
    (2) The portion of the plan describing the detailed Wagner-Peyser 
plan does not satisfy the criteria for approval of such plans as 
provided in section 8(d) of the Wagner-Peyser Act or the Wagner-Peyser 
regulations at 20 CFR part 652.
    (3) A plan which is incomplete, or which does not contain 
sufficient information to determine whether it is consistent with the 
statutory or regulatory requirements of title I of WIA or of section 
8(d) of the Wagner-Peyser Act, will be considered to be inconsistent 
with those requirements.


Sec. 661.230  What are the requirements for modification of the State 
Workforce Investment Plan?

    (a) The State may submit a modification of its workforce investment 
plan at any time during the five-year life of the plan.
    (b) Modifications are required when:
    (1) Changes in Federal or State law or policy substantially change 
the assumptions upon which the plan is based.

[[Page 49393]]

    (2) There are changes in the Statewide vision, strategies, 
policies, performance indicators, the methodology used to determine 
local allocation of funds, reorganizations which change the working 
relationship with system employees, changes in organizational 
responsibilities, changes to the membership structure of the State 
Board or alternative entity and similar substantial changes to the 
State's workforce investment system.
    (3) The State has failed to meet performance goals, and must adjust 
service strategies.
    (c) Modifications are required in accordance with the Wagner-Peyser 
provisions at 20 CFR 652.212.
    (d) Modifications to the State Plan are subject to the same public 
review and comment requirements that apply to the development of the 
original State Plan.
    (e) State Plan modifications will be approved by the Secretary 
based on the approval standard applicable to the original State Plan 
under Sec. 661.220(e).


Sec. 661.240  How do the unified planning requirements apply to the 
five-year strategic WIA and Wagner-Peyser plan and to other Department 
of Labor plans?

    (a) A State may submit to the Secretary a unified plan for any of 
the programs or activities described in WIA section 501(b)(2). This 
includes the following DOL programs and activities:
    (1) The five-year strategic WIA and Wagner-Peyser plan;
    (2) Trade adjustment assistance activities and NAFTA-TAA;
    (3) Veterans' programs under 38 U.S.C. Chapter 41;
    (4) Programs authorized under State unemployment compensation laws;
    (5) Welfare-to-Work (WtW) programs; and
    (6) Senior Community Service Employment Programs under title V of 
the Older Americans Act.
    (b) For purposes of paragraph (a) of this section:
    (1) A State may submit, as part of the unified plan, any plan, 
application form or any other similar document, that is required as a 
condition for the approval of Federal funding under the applicable 
program. These plans include such things as the WIA plan, or the WtW 
plan. They do not include jointly executed funding instruments, such as 
grant agreements, or Governor/Secretary Agreements or items such as 
corrective actions plans.
    (2) A state may submit a unified plan meeting the requirements of 
the Interagency guidance entitled State Unified Plan, Planning Guidance 
for State Unified Plans Under Section 501 of the Workforce Investment 
Act of 1998, in lieu of completing the individual State planning 
guidelines of the programs covered by the unified plan.
    (c) A State which submits a unified plan covering an activity or 
program described in subsection 501(b) of WIA that is approved under 
subsection 501(d) of the Act will not be required to submit any other 
plan or application in order to receive Federal funds to carry out the 
activity or program.
    (d) Each portion of a unified plan submitted under paragraph (a) of 
this section is subject to the particular requirements of Federal law 
authorizing the program. All grantees are still subject to such things 
as reporting and record-keeping requirements, corrective action plan 
requirements and other generally applicable requirements.
    (e) A unified plan must contain the information required by WIA 
section 501(c) and will be approved in accordance with the requirements 
of WIA section 501(d).


Sec. 661.250  What are the requirements for designation of local 
workforce investment areas?

    (a) The Governor must designate local workforce investment areas in 
order for the State to receive funding under title I of WIA.
    (b) The Governor must take into consideration the factors described 
in WIA section 116(a)(1)(B) in making designations of local areas. Such 
designation must be made in consultation with the State Board, and 
after consultation with chief elected officials. The Governor must also 
consider comments received through the public comment process described 
in the State workforce investment plan under Sec. 661.220(d).
    (c) The Governor may approve a request for designation as a 
workforce investment area from any unit of general local government, 
including a combination of such units, if the State Board determines 
that the area meets the requirements of WIA section 116(a)(1)(B) and 
recommends designation.
    (d) The Governor of any State that was a single service delivery 
area State under the Job Training Partnership Act as of July 1, 1998, 
and only those States, may designate the State as a single local 
workforce investment area State. (WIA sec.116.)


Sec. 661.260  What are the requirements for automatic designation of 
workforce investment areas relating to units of local government with a 
population of 500,000 or more?

    The requirements for automatic designation relating to units of 
local government with a population of 500,000 or more and to rural 
concentrated employment programs are contained in WIA section 
116(a)(2). The Governor has authority to determine the source of 
population data to use in making these designations.


Sec. 661.270  What are the requirements for temporary and subsequent 
designation of workforce investment areas relating to areas that had 
been designated as service delivery areas under JTPA?

    The requirements for temporary and subsequent designation relating 
to areas that had been designated as service delivery areas under JTPA 
are contained in WIA section 116(a)(3).


Sec. 661.280  What right does an entity have to appeal the Governor's 
decision rejecting a request for designation as a workforce investment 
area?

    (a) A unit of local government (or combination of units) or a rural 
concentrated employment program grant recipient (as described at WIA 
section 116(a)(2)(B), which has requested but has been denied its 
request for designation as a workforce investment area under 
Secs. 661.260 through 661.270, may appeal the decision to the State 
Board, in accordance with appeal procedures established in the State 
Plan.
    (b) If a decision on the appeal is not rendered in a timely manner 
or if the appeal to the State Board does not result in designation, the 
entity may request review by the Secretary of Labor, under the 
procedures set forth at 20 CFR 667.640(a).
    (c) The Secretary may require that the area be designated as a 
workforce investment area, if the Secretary determines that:
    (1) The entity was not accorded procedural rights under the State 
appeals process; or
    (2) The area meets the automatic designation requirements at WIA 
section 116(a)(2) or the temporary and subsequent designation 
requirements at WIA section 116(a)(3), as appropriate.


Sec. 661.290  Under what circumstances may States require Local Boards 
to take part in regional planning activities?

    (a) The State may require Local Boards within a designated region 
(as defined at 20 CFR 660.300) to:
    (1) Participate in a regional planning process that results in 
regional performance measures for workforce investment activities under 
title I of WIA. Regions that meet or exceed the regional performance 
measures may receive regional incentive grants;
    (2) Share, where feasible, employment and other types of 
information that will assist in improving the performance of

[[Page 49394]]

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 sec. 116(a).)

Subpart C--Local Governance Provisions


Sec. 661.300  What is the Local Workforce Investment Board?

    (a) The Local Workforce Investment Board (Local Board) is appointed 
by the chief elected official in each local area in accordance with 
State criteria established under WIA section 117(b), and is certified 
by the Governor every two years, in accordance with WIA section 
117(c)(2).
    (b) In partnership with the chief elected official(s), the Local 
Board sets policy for the portion of the Statewide workforce investment 
system within the local area.
    (c) The Local Board and the chief elected official(s) may enter 
into an agreement that describes the respective roles and 
responsibilities of the parties.
    (d) The Local Board, in partnership with the chief elected 
official, develops the local workforce investment plan and performs the 
functions described in WIA section 117(d). (WIA sec.117 (d).)
    (e) If a local area includes more than one unit of general local 
government in accordance with WIA section 117 (c)(1)(B), the chief 
elected officials of such units may execute an agreement to describe 
their responsibilities for carrying out the roles and responsibilities. 
If, after a reasonable effort, the chief elected officials are unable 
to reach agreement, the Governor may appoint the members of the local 
board from individuals nominated or recommended as specified in WIA 
section 117(b).
    (f) If the State Plan indicates that the State will be treated as a 
local area under WIA title I, the Governor may designate the State 
Board to carry out any of the roles of the Local Board.


Sec. 661.305  What is the role of the Local Workforce Investment Board?

    (a) WIA section 117(d) specifies that the Local Board is 
responsible for:
    (1) Developing the five-year local workforce investment plan (Local 
Plan) and conducting oversight of the One-Stop system, youth activities 
and employment and training activities under title I of WIA, in 
partnership with the chief elected official;
    (2) Selecting One-Stop operators with the agreement of the chief 
elected official;
    (3) Selecting eligible youth service providers based on the 
recommendations of the youth council, and identifying eligible 
providers of adult and dislocated worker intensive services and 
training services, and maintaining a list of eligible providers with 
performance and cost information, as required in 20 CFR part 663, 
subpart E;
    (4) Developing a budget for the purpose of carrying out the duties 
of the Local Board, subject to the approval of the chief elected 
official;
    (5) Negotiating and reaching agreement on local performance 
measures with the chief elected official and the Governor;
    (6) Assisting the Governor in developing the Statewide employment 
statistics system under the Wagner-Peyser Act;
    (7) Coordinating workforce investment activities with economic 
development strategies and developing employer linkages; and
    (8) Promoting private sector involvement in the Statewide workforce 
investment system through effective connecting, brokering, and coaching 
activities through intermediaries such as the One-Stop operator in the 
local area or through other organizations, to assist employers in 
meeting hiring needs.
    (b) The Local Board, in cooperation with the chief elected 
official, appoints a youth council as a subgroup of the Local Board and 
coordinates workforce and youth plans and activities with the youth 
council, in accordance with WIA section 117(h) and Sec. 661.335.
    (c) Local Boards which are part of a State designated region for 
regional planning must carry out the regional planning responsibilities 
required by the State in accordance with WIA section 116(c) and 
Sec. 661.290. (WIA sec. 117.)


Sec. 661.307  How does the Local Board meet its requirement to conduct 
business in an open manner under the ``sunshine provision'' of WIA 
section 117(e)?

    The Local Board must conduct its business in an open manner as 
required by WIA section 117(e), by making available to the public, on a 
regular basis through open meetings, information about the activities 
of the Local Board. This includes information about the Local Plan 
prior to submission of the plan; information about membership; the 
development of significant policies, interpretations, guidelines and 
definitions; and, on request, minutes of formal meetings of the Local 
Board.


Sec. 661.310  Under what limited conditions may a Local Board directly 
be a provider of core services, intensive services, or training 
services, or act as a One-Stop Operator?

    (a) A Local Board may not directly provide core services, or 
intensive services, or be designated or certified as a One-Stop 
operator, unless agreed to by the chief elected official and the 
Governor.
    (b) A Local Board is prohibited from providing training services, 
unless the Governor grants a waiver in accordance with the provisions 
in WIA section 117(f)(1). The waiver shall apply for not more than one 
year. The waiver may be renewed for additional periods, but for not 
more than one additional year at a time.
    (c) The restrictions on the provision of core, intensive, and 
training services by the Local Board, and designation or certification 
as One-Stop operator, also apply to staff of the Local Board. (WIA sec. 
117(f)(1) and (f)(2).)


Sec. 661.315  Who are the required members of the Local Workforce 
Investment Boards?

    (a) The membership of Local Board must be selected in accordance 
with criteria established under WIA section 117(b)(1) and must meet the 
requirements of WIA section 117(b)(2). The Local Board must contain two 
or more members representing the categories described in WIA section 
117(b)(2)(A)(ii)--(v), and special consideration must be given to the 
entities identified in WIA section 117(b)(2)(A)(ii), (iv) and (v) in 
the selection of members representing those categories. The Local Board 
must contain at least one member representing each One-Stop partner.
    (b) The membership of Local Boards may include individuals or 
representatives of other appropriate

[[Page 49395]]

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).)
    (f) An individual may be appointed as a representative of more than 
one entity if the individual meets all the criteria for representation, 
including the criteria described in paragraphs (c) through (e) of this 
section, for each entity.


Sec. 661.317  Who may be selected to represent a particular One-Stop 
partner program on the Local Board when there is more than one partner 
program entity in the local area?

    When there is more than one grant recipient, administrative entity 
or organization responsible for administration of funds of a particular 
One-stop partner program in the local area, the chief elected official 
may appoint one or more members to represent all of those particular 
partner program entities. In making such appointments, the local 
elected official may solicit nominations from the partner program 
entities.


Sec. 661.320  Who must chair a Local Board?

    The Local Board must elect a chairperson from among the business 
representatives on the board. (WIA sec. 117(b)(5).)


Sec. 661.325  What criteria will be used to establish the membership of 
the Local Board?

    The Local Board is appointed by the chief elected official(s) in 
the local area in accordance with State criteria established under WIA 
section 117(b), and is certified by the Governor every two years, in 
accordance with WIA section 117(c)(2). The criteria for certification 
must be described in the State Plan. (WIA sec. 117(c).)


Sec. 661.330  Under what circumstances may the State use an alternative 
entity as the Local Workforce Investment Board?

    (a) The State may use any local entity that meets the requirements 
of WIA section 117(i) to perform the functions of the Local Board. WIA 
section 117(i) requires that such entity:
    (1) Was established to serve the local area (or the service 
delivery area that most closely corresponds to the local area);
    (2) Was in existence on December 31, 1997;
    (3)(i) Is a Private Industry Council established under section 102 
of the Job Training Partnership Act, as in effect on December 31, 1997; 
or
    (ii) Is substantially similar to the Local Board described in WIA 
section 117 (a), (b), and (c) and (h)(1) and (2); and,
    (4) Includes, at a minimum, two or more representatives of business 
in the local area and two or more representatives of labor 
organizations nominated by local labor federations or employees in the 
local area.
    (b)(1) If the Governor certifies an alternative entity to perform 
the functions of the Local Board; the State workforce investment plan 
must demonstrate that the alternative entity meets the requirements of 
WIA section 117(i), set forth in paragraph (a) of this section.
    (2) If the alternative entity does not provide for representative 
membership of each of the categories of required Local Board membership 
under WIA section 117(b), including all of the One-stop partner 
programs, the local workforce investment plan must explain the manner 
in which the Local Board will ensure an ongoing role for the 
unrepresented membership group in the local workforce investment 
system.
    (3) The Local Board may provide an ongoing role for an 
unrepresented membership group, including entities carrying out One-
stop partner programs, by means such as regularly scheduled 
consultations with entities within the unrepresented membership groups, 
by providing an opportunity for input into the local plan or other 
policy development by unrepresented membership groups, or by 
establishing an advisory committee of unrepresented membership groups. 
The Local Board must enter into good faith negotiations over the terms 
of the MOU with all entities carrying out One-stop partner programs, 
including programs not represented on the alternative entity.
    (c) If the membership structure of an alternative entity is 
significantly changed after December 31, 1997, the entity will no 
longer be eligible to perform the functions of the Local Board. In such 
case, the chief elected official(s) must establish a new Local Board 
which meets all of the criteria of WIA section 117(a), (b), and (c) and 
(h)(1) and (2).
    (d) A significant change in the membership structure includes any 
significant change in the organization of the alternative entity or in 
the categories of entities represented on the alternative entity which 
requires a change to the alternative entity's charter or a similar 
document that defines the formal organization of the alternative 
entity, regardless of whether the required change to the document has 
or has not been made. A significant change in the membership structure 
is considered to have occurred when members are added to represent 
groups not previously represented on the entity. A significant change 
in the membership structure is not considered to have occurred when 
additional members are added to an existing membership category, when 
non-voting members (including a Youth Council) are added, or when a 
member is added to fill a vacancy created in an existing membership 
category.
    (e) In 20 CFR parts 660 through 671, all references to the Local 
Board must be deemed to also apply to an alternative entity used by a 
local area. (WIA sec. 117(i).)


Sec. 661.335  What is a youth council, and what is its relationship to 
the Local Board?

    (a) A youth council must be established as a subgroup within each 
Local Board.
    (b) The membership of each youth council must include:
    (1) Members of the Local Board, such as educators, which may 
include special education personnel, employers, and representatives of 
human service agencies, who have special interest or expertise in youth 
policy;
    (2) Members who represent service agencies, such as juvenile 
justice and local law enforcement agencies;
    (3) Members who represent local public housing authorities;
    (4) Parents of eligible youth seeking assistance under subtitle B 
of title I of WIA;
    (5) Individuals, including former participants, and members who 
represent organizations, that have

[[Page 49396]]

experience relating to youth activities; and
    (6) Members who represent the Job Corps, if a Job Corps Center is 
located in the local area represented by the council.
    (c) Youth councils may include other individuals, who the chair of 
the Local Board, in cooperation with the chief elected official, 
determines to be appropriate.
    (d) Members of the youth council who are not members of the Local 
Board must be voting members of the youth council and nonvoting members 
of the Local Board.


Sec. 661.340  What are the responsibilities of the youth council?

    The youth council is responsible for:
    (a) Coordinating youth activities in a local area;
    (b) Developing portions of the local plan related to eligible 
youth, as determined by the chairperson of the Local Board;
    (c) Recommending eligible youth service providers in accordance 
with WIA section 123, subject to the approval of the Local Board;
    (d) Conducting oversight with respect to eligible providers of 
youth activities in the local area, subject to the approval of the 
Local Board; and
    (e) Carrying out other duties, as authorized by the chairperson of 
the Local Board, such as establishing linkages with educational 
agencies and other youth entities.


Sec. 661.345  What are the requirements for the submission of the local 
workforce investment plan?

    (a) WIA section 118 requires that each Local Board, in partnership 
with the appropriate chief elected officials, develops and submits a 
comprehensive five-year plan to the Governor which identifies and 
describes certain policies, procedures and local activities that are 
carried out in the local area, and that is consistent with the State 
Plan.
    (b) The Local Board must provide an opportunity for public comment 
on and input into the development of the local workforce investment 
plan prior to its submission, and the opportunity for public comment on 
the local plan must:
    (1) Make copies of the proposed local plan available to the public 
(through such means as public hearings and local news media);
    (2) Include an opportunity for comment by members of the Local 
Board and members of the public, including representatives of business 
and labor organizations;
    (3) Provide at least a thirty (30) day period for comment, 
beginning on the date on which the proposed plan is made available, 
prior to its submission to the Governor; and
    (4) Be consistent with the requirement, in WIA section 117(e), that 
the Local Board make information about the plan available to the public 
on a regular basis through open meetings.
    (c) The Local Board must submit any comments that express 
disagreement with the plan to the Governor along with the plan.


Sec. 661.350  What are the contents of the local workforce investment 
plan?

    (a) The local workforce investment plan must meet the requirements 
of WIA section 118(b). The plan must include:
    (1) An identification of the workforce investment needs of 
businesses, job-seekers, and workers in the local area;
    (2) An identification of current and projected employment 
opportunities and job skills necessary to obtain such opportunities;
    (3) A description of the One-Stop delivery system to be established 
or designated in the local area, including:
    (i) How the Local Board will ensure continuous improvement of 
eligible providers of services and ensure that such providers meet the 
employment needs of local employers and participants; and
    (ii) A copy of the local Memorandum(s) of Understanding between the 
Local Board and each of the One-Stop partners concerning the operation 
of the local One-Stop delivery system;
    (4) A description of the local levels of performance negotiated 
with the Governor and the chief elected official(s) to be used by the 
Local Board for measuring the performance of the local fiscal agent 
(where appropriate), eligible providers, and the local One-Stop 
delivery system;
    (5) A description and assessment of the type and availability of 
adult and dislocated worker employment and training activities in the 
local area, including a description of the local ITA system and the 
procedures for ensuring that exceptions to the use of ITA's, if any, 
are justified under WIA section 134(d)(4)(G)(ii) and 20 CFR 663.430;
    (6) A description of how the Local Board will coordinate local 
activities with Statewide rapid response activities;
    (7) A description and assessment of the type and availability of 
youth activities in the local area, including an identification of 
successful providers of such activities;
    (8) A description of the process used by the Local Board to provide 
opportunity for public comment, including comment by representatives of 
business and labor organizations, and input into the development of the 
local plan, prior to the submission of the plan;
    (9) An identification of the fiscal agent, or entity responsible 
for the disbursal of grant funds;
    (10) A description of the competitive process to be used to award 
grants and contracts for activities carried out under this subtitle I 
of WIA, including the process to be used to procure training services 
that are made as exceptions to the Individual Training Account process 
(WIA section 134(d)(4)(G)),
    (11) A description of the criteria to be used by the Governor and 
the Local Board, under 20 CFR 663.600, to determine whether funds 
allocated to a local area for adult employment and training activities 
under WIA sections 133(b)(2)(A) or (3) are limited, and the process by 
which any priority will be applied by the One-Stop operator;
    (12) In cases where an alternate entity functions as the Local 
Board, the information required at Sec. 661.330(b), and
    (13) Such other information as the Governor may require.
    (b) The Governor must review completed plans and must approve all 
such plans within ninety days of their submission, unless the Governor 
determines in writing that:
    (1) There are deficiencies identified in local workforce investment 
activities carried out under this subtitle that have not been 
sufficiently addressed; or
    (2) The plan does not comply with title I of WIA and the WIA 
regulations, including the required consultations, the public comment 
provisions, and the nondiscrimination requirements of 29 CFR part 37.
    (c) In cases where the State is a single local area:
    (1) The Secretary performs the roles assigned to the Governor as 
they relate to local planning activities.
    (2) The Secretary issues planning guidance for such States.
    (3) The requirements found in WIA and in the WIA regulations for 
consultation with chief elected officials apply to the development of 
State and local plans and to the development and operation of the One-
Stop delivery system.
    (d) During program year 2000, if a local plan does not contain all 
of the elements described in paragraph (a) of this section, the 
Governor may approve a local plan on a transitional basis. A 
transitional approval under this paragraph is considered to be a 
written determination that the local plan is not

[[Page 49397]]

approved under paragraph (b) of this section.


Sec. 661.355  When must a local plan be modified?

    The Governor must establish procedures governing the modification 
of local plans. Situations in which modifications may be required by 
the Governor include significant changes in local economic conditions, 
changes in the financing available to support WIA title I and partner-
provided WIA services, changes to the Local Board structure, or a need 
to revise strategies to meet performance goals.

Subpart D--Waivers and Work-Flex Waivers


Sec. 661.400  What is the purpose of the General Statutory and 
Regulatory Waiver Authority provided at section 189(i)(4) of the 
Workforce Investment Act?

    (a) The purpose of the general statutory and regulatory waiver 
authority is to provide flexibility to States and local areas and 
enhance their ability to improve the statewide workforce investment 
system.
    (b) A waiver may be requested to address impediments to the 
implementation of a strategic plan, including the continuous 
improvement strategy, consistent with the key reform principles of WIA. 
These key reform principles include:
    (1) Streamlining services and information to participants through a 
One-Stop delivery system;
    (2) Empowering individuals to obtain needed services and 
information to enhance their employment opportunities;
    (3) Ensuring universal access to core employment-related services;
    (4) Increasing accountability of States, localities and training 
providers for performance outcomes;
    (5) Establishing a stronger role for Local Boards and the private 
sector;
    (6) Providing increased State and local flexibility to implement 
innovative and comprehensive workforce investment systems; and
    (7) Improving youth programs through services which emphasize 
academic and occupational learning.


Sec. 661.410  What provisions of WIA and the Wagner-Peyser Act may be 
waived, and what provisions may not be waived?

    (a) The Secretary may waive any of the statutory or regulatory 
requirements of subtitles B and E of title I of WIA, except for 
requirements relating to:
    (1) Wage and labor standards;
    (2) Non-displacement protections;
    (3) Worker rights;
    (4) Participation and protection of workers and participants;
    (5) Grievance procedures and judicial review;
    (6) Nondiscrimination;
    (7) Allocation of funds to local areas;
    (8) Eligibility of providers or participants;
    (9) The establishment and functions of local areas and local 
boards;
    (10) Procedures for review and approval of State and Local plans; 
and
    (b) The Secretary may waive any of the statutory or regulatory 
requirements of sections 8 through 10 of the Wagner-Peyser Act (29 
U.S.C. 49g-49i) except for requirements relating to:
    (1) The provision of services to unemployment insurance claimants 
and veterans; and
    (2) Universal access to the basic labor exchange services without 
cost to job seekers.
    (c) The Secretary does not intend to waive any of the statutory or 
regulatory provisions essential to the key reform principles embodied 
in the Workforce Investment Act, described in Sec. 661.400, except in 
extremely unusual circumstances where the provision can be demonstrated 
as impeding reform. (WIA sec. 189(i).)


Sec. 661.420  Under what conditions may a Governor request, and the 
Secretary approve, a general waiver of statutory or regulatory 
requirements under WIA section 189(i)(4)?

    (a) A Governor may request a general waiver in consultation with 
appropriate chief elected officials:
    (1) By submitting a waiver plan which may accompany the State's WIA 
5-year strategic Plan; or
    (2) After a State's WIA Plan is approved, by directly submitting a 
waiver plan.
    (b) A Governor's waiver request may seek waivers for the entire 
State or for one or more local areas.
    (c) A Governor requesting a general waiver must submit to the 
Secretary a plan to improve the Statewide workforce investment system 
that:
    (1) Identifies the statutory or regulatory requirements for which a 
waiver is requested and the goals that the State or local area, as 
appropriate, intends to achieve as a result of the waiver and how those 
goals relate to the Strategic Plan goals;
    (2) Describes the actions that the State or local area, as 
appropriate, has undertaken to remove State or local statutory or 
regulatory barriers;
    (3) Describes the goals of the waiver and the expected programmatic 
outcomes if the request is granted;
    (4) Describes the individuals affected by the waiver; and
    (5) Describes the processes used to:
    (i) Monitor the progress in implementing the waiver;
    (ii) Provide notice to any Local Board affected by the waiver;
    (iii) Provide any Local Board affected by the waiver an opportunity 
to comment on the request; and
    (iv) Ensure meaningful public comment, including comment by 
business and organized labor, on the waiver.
    (d) The Secretary issues a decision on a waiver request within 90 
days after the receipt of the original waiver request.
    (e) The Secretary will approve a waiver request if and only to the 
extent that:
    (1) The Secretary determines that the requirements for which a 
waiver is requested impede the ability of either the State or local 
area to implement the State's plan to improve the Statewide workforce 
investment system;
    (2) The Secretary determines that the waiver plan meets all of the 
requirements of WIA section 189(i)(4) and Secs. 661.400 through 
661.420; and
    (3) The State has executed a Memorandum of Understanding with the 
Secretary requiring the State to meet, or ensure that the local area 
meets, agreed-upon outcomes and to implement other appropriate measures 
to ensure accountability.
    (f) The Secretary will issue guidelines under which the States may 
request general waivers of WIA and Wagner-Peyser requirements. (WIA 
sec. 189(i).)


Sec. 661.430  Under what conditions may the Governor submit a Workforce 
Flexibility Plan?

    (a) A State may submit to the Secretary, and the Secretary may 
approve, a workforce flexibility (work-flex) plan under which the State 
is authorized to waive, in accordance with the plan:
    (1) Any of the statutory or regulatory requirements under title I 
of WIA applicable to local areas, if the local area requests the waiver 
in a waiver application, except for:
    (i) Requirements relating to the basic purposes of title I of WIA;
    (ii) Wage and labor standards;
    (iii) Grievance procedures and judicial review;
    (iv) Nondiscrimination;
    (v) Eligibility of participants;
    (vi) Allocation of funds to local areas;
    (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

[[Page 49398]]

embodied in the Workforce Investment Act, described in Sec. 661.400.
    (2) Any of the statutory or regulatory requirements applicable to 
the State under section 8 through 10 of the Wagner-Peyser Act (29 
U.S.C. 49g-49i), except for requirements relating to:
    (i) The provision of services to unemployment insurance claimants 
and veterans; and
    (ii) Universal access to basic labor exchange services without cost 
to job seekers; and
    (3) Any of the statutory or regulatory requirements under the Older 
Americans Act of 1965 (OAA) (42 U.S.C. 3001 et seq.), applicable to 
State agencies on aging with respect to activities carried out using 
funds allotted under OAA section 506(a)(3) (42 U.S.C. 3056d(a)(3)), 
except for requirements relating to:
    (i) The basic purposes of OAA;
    (ii) Wage and labor standards;
    (iii) Eligibility of participants in the activities; and
    (iv) Standards for agreements.
    (b) A State's workforce flexibility plan may accompany the State's 
five-year Strategic Plan or may be submitted separately. If it is 
submitted separately, the workforce flexibility plan must identify 
related provisions in the State's five-year Strategic Plan.
    (c) A workforce flexibility plan submitted under paragraph (a) of 
this section must include descriptions of:
    (1) The process by which local areas in the State may submit and 
obtain State approval of applications for waivers;
    (2) The statutory and regulatory requirements of title I of WIA 
that are likely to be waived by the State under the workforce 
flexibility plan;
    (3) The statutory and regulatory requirements of sections 8 through 
10 of the Wagner-Peyser Act that are proposed for waiver, if any;
    (4) The statutory and regulatory requirements of the Older 
Americans Act of 1965 that are proposed for waiver, if any;
    (5) The outcomes to be achieved by the waivers described in 
paragraphs (c)(1) to (4) of this section including, where appropriate, 
revisions to adjusted levels of performance included in the State or 
local plan under title I of WIA; and
    (6) The measures to be taken to ensure appropriate accountability 
for Federal funds in connection with the waivers.
    (d) The Secretary may approve a workforce flexibility plan for a 
period of up to five years.
    (e) Before submitting a workforce flexibility plan to the Secretary 
for approval, the State must provide adequate notice and a reasonable 
opportunity for comment on the proposed waiver requests under the 
workforce flexibility plan to all interested parties and to the general 
public.
    (f) The Secretary will issue guidelines under which States may 
request designation as a work-flex State.


Sec. 661.440  What limitations apply to the State's Workforce 
Flexibility Plan authority under WIA?

    (a)(1) Under work-flex waiver authority a State must not waive the 
WIA, Wagner-Peyser or Older Americans Act requirements which are 
excepted from the work-flex waiver authority and described in 
Sec. 661.430(a).
    (2) Requests to waive statutory and regulatory requirements of 
title I of WIA applicable at the State level may not be granted under 
work-flex waiver authority granted to a State. Such requests may only 
be granted by the Secretary under the general waiver authority 
described at Secs. 661.410 through 661.420.
    (b) As required in Sec. 661.430(c)(5), States must address the 
outcomes to result from work-flex waivers as part of its workforce 
flexibility plan. Once approved, a State's work-flex designation is 
conditioned on the State demonstrating it has met the agreed-upon 
outcomes contained in its workforce flexibility plan.

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 (MOU)?
662.310   Is there a single MOU for the local area or are there to 
be separate MOU's between the Local Board and each partner?
Subpart D--One-Stop Operators
662.400   Who is the One-Stop operator?
662.410   How is the One-Stop operator selected?
662.420   Under what conditions may the Local Board be designated or 
certified as the One-Stop operator?
662.430   Under what conditions may One-Stop operators designated to 
operate in a One-Stop delivery system established prior to the 
enactment of WIA be designated to continue to act as a One-Stop 
operator under WIA without meeting the requirements of 
Sec. 662.410(b)?

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

Subpart A--General Description of the One-Stop Delivery System


Sec. 662.100  What is the One-Stop delivery system?

    (a) In general, the One-Stop delivery system is a system under 
which entities responsible for administering separate workforce 
investment, educational, and other human resource programs and funding 
streams (referred to as One-Stop partners) collaborate to create a 
seamless system of service delivery that will enhance access to the 
programs' services and improve long-term employment outcomes for 
individuals receiving assistance.
    (b) Title I of WIA assigns responsibilities at the local, State and 
Federal level to ensure the creation and maintenance of a One-Stop 
delivery system that enhances the range and quality of workforce 
development services that are accessible to individuals seeking 
assistance.
    (c) The system must include at least one comprehensive physical 
center in each local area that must provide the core services specified 
in WIA section 134(d)(2), and must provide access to other programs and 
activities carried out by the One-Stop partners.
    (d) While each local area must have at least one comprehensive 
center (and may have additional comprehensive centers), WIA section 
134(c) allows for arrangements to supplement the center. These 
arrangements may include:

[[Page 49399]]

    (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.
    (b) The required partners are the entities that are responsible for 
administering the following programs and activities in the local area:
    (1) Programs authorized under title I of WIA, serving:
    (i) Adults;
    (ii) Dislocated workers;
    (iii) Youth;
    (iv) Job Corps;
    (v) Native American programs;
    (vi) Migrant and seasonal farmworker programs; and
    (vii) Veterans' workforce programs; (WIA sec. 121(b)(1)(B)(i));
    (2) Programs authorized under the Wagner-Peyser Act (29 U.S.C. 49 
et seq.); (WIA sec. 121(b)(1)(B)(ii));
    (3) Adult education and literacy activities authorized under title 
II of WIA; (WIA sec. 121(b)(1)(B)(iii));
    (4) Programs authorized under parts A and B of title I of the 
Rehabilitation Act (29 U.S.C. 720 et seq.); (WIA sec. 
121(b)(1)(B)(iv));
    (5) Welfare-to-work programs authorized under sec. 403(a)(5) of the 
Social Security Act (42 U.S.C. 603(a)(5) et seq.); (WIA sec. 
121(b)(1)(B)(v));
    (6) Senior community service employment activities authorized under 
title V of the Older Americans Act of 1965 (42 U.S.C. 3056 et seq.); 
(WIA sec. 121(b)(1)(B)(vi));
    (7) Postsecondary vocational education activities under the Carl D. 
Perkins Vocational and Applied Technology Education Act (20 U.S.C. 2301 
et seq.); (WIA sec. 121(b)(1)(B)(vii));
    (8) Trade Adjustment Assistance and NAFTA Transitional Adjustment 
Assistance activities authorized under chapter 2 of title II of the 
Trade Act of 1974 (19 U.S.C. 2271 et seq.); (WIA sec. 
121(b)(1)(B)(viii));
    (9) Activities authorized under chapter 41 of title 38, U.S.C. 
(local veterans' employment representatives and disabled veterans 
outreach programs); (WIA sec. 121(b)(1)(B)(ix));
    (10) Employment and training activities carried out under the 
Community Services Block Grant (42 U.S.C. 9901 et seq.); (WIA sec. 
121(b)(1)(B)(x));
    (11) Employment and training activities carried out by the 
Department of Housing and Urban Development; (WIA sec. 
121(b)(1)(B)(xi)); and
    (12) Programs authorized under State unemployment compensation laws 
(in accordance with applicable Federal law); (WIA sec. 
121(b)(1)(B)(xii).)


Sec. 662.210  What other entities may serve as One-Stop partners?

    (a) WIA provides that other entities that carry out a human 
resource program, including Federal, State, or local programs and 
programs in the private sector may serve as additional partners in the 
One-Stop system if the Local Board and chief elected official(s) 
approve the entity's participation.
    (b) Additional partners may include:
    (1) TANF programs authorized under part A of title IV of the Social 
Security Act (42 U.S.C. 601 et seq.);
    (2) Employment and training programs authorized under section 
6(d)(4) of the Food Stamp Act of 1977 (7 U.S.C. 2015(d)(4));
    (3) Work programs authorized under section 6(o) of the Food Stamp 
Act of 1977 (7 U.S.C. 2015(o));
    (4) Programs authorized under the National and Community Service 
Act of 1990 (42 U.S.C. 12501 et seq.); and
    (5) Other appropriate Federal, State or local programs, including 
programs related to transportation and housing and programs in the 
private sector. (WIA sec. 121(b)(2).)
    (c) The State may require that one or more of the programs 
identified in paragraph (b) of this section be included as a partner in 
all of the local One-Stop delivery systems in the State.


Sec. 662.220  What entity serves as the One-Stop partner for a 
particular program in the local area?

    (a) The ``entity'' that carries out the program and activities 
listed in Secs. 662.200 and 662.210 and, therefore, serves as the One-
Stop partner is the grant recipient, administrative entity or 
organization responsible for administering the funds of the specified 
program in the local area. The term ``entity'' does not include the 
service providers that contract with or are subrecipients of the local 
administrative entity. For programs that do not include local 
administrative entities, the responsible State Agency should be the 
partner. Specific entities for particular programs are identified in 
paragraph (b) of this section. If a program or activity listed in 
Sec. 662.200 is not carried out in a local area, the requirements 
relating to a required One-Stop partner are not applicable to such 
program or activity in that local One-Stop system.
    (b)(1) For title II of WIA, the entity that carries out the program 
for the purposes of paragraph (a) is the State eligible entity. The 
State eligible entity may designate an eligible provider, or a 
consortium of eligible providers, as the ``entity'' for this purpose;
    (2) For title I, Part A, of the Rehabilitation Act, the entity that 
carries out the program for the purposes of paragraph (a) of this 
section is the designated State agency or designated unit specified 
under section 101(a)(2) that is primarily concerned with vocational 
rehabilitation, or vocational and other rehabilitation, of individuals 
with disabilities; and
    (3) Under WIA, the national programs, including Job Corps, the WIA 
Indian and Native American program, the Migrant and Seasonal 
Farmworkers program, and the Veterans' Workforce Investment program, 
are required One-Stop partners. Local Boards must include them in the 
One-Stop delivery system where they are present in their local area. In 
local areas where the national programs are not present, States and 
Local Boards should take steps to ensure that customer groups served by 
these programs have access to services through the One-Stop delivery 
system.


Sec. 662.230  What are the responsibilities of the required One-Stop 
partners?

    All required partners must:
    (a) Make available to participants through the One-Stop delivery 
system the core services that are applicable to the partner's programs; 
(WIA sec. 121(b)(1)(A).)
    (b) Use a portion of funds made available to the partner's program, 
to the extent not inconsistent with the Federal law authorizing the 
partner's program, to:
    (1) Create and maintain the One-Stop delivery system; and
    (2) Provide core services; (WIA sec. 134(d)(1)(B).)

[[Page 49400]]

    (c) Enter into a memorandum of understanding (MOU) with the Local 
Board relating to the operation of the One-Stop system that meets the 
requirements of Sec. 662.300, including a description of services, how 
the cost of the identified services and operating costs of the system 
will be funded, and methods for referrals (WIA sec. 121(c));
    (d) Participate in the operation of the One-Stop system consistent 
with the terms of the MOU and requirements of authorizing laws; (WIA 
sec. 121(b)(1)(B).) and
    (e) Provide representation on the Local Workforce Investment Board. 
(WIA sec. 117(b)(2)(A)(vi).)


Sec. 662.240  What are a program's applicable core services?

    (a) The core services applicable to any One-Stop partner program 
are those services described in paragraph (b) of this section, that are 
authorized and provided under the partner's program.
    (b) The core services identified in section 134(d)(2) of the WIA 
are:
    (1) Determinations of whether the individuals are eligible to 
receive assistance under subtitle B of title I of WIA;
    (2) Outreach, intake (which may include worker profiling), and 
orientation to the information and other services available through the 
One-Stop delivery system;
    (3) Initial assessment of skill levels, aptitudes, abilities, and 
supportive service needs;
    (4) Job search and placement assistance, and where appropriate, 
career counseling;
    (5) Provision of employment statistics information, including the 
provision of accurate information relating to local, regional, and 
national labor market areas, including--
    (i) Job vacancy listings in such labor market areas;
    (ii) Information on job skills necessary to obtain the listed jobs; 
and
    (iii) Information relating to local occupations in demand and the 
earnings and skill requirements for such occupations;
    (6) Provision of program performance information and program cost 
information on:
    (i) Eligible providers of training services described in WIA 
section 122;
    (ii) Eligible providers of youth activities described in WIA 
section 123;
    (iii) Providers of adult education described in title II;
    (iv) Providers of postsecondary vocational education activities and 
vocational education activities available to school dropouts under the 
Carl D. Perkins Vocational and Applied Technology Education Act (20 
U.S.C. 2301 et seq.); and
    (v) Providers of vocational rehabilitation program activities 
described in title I of the Rehabilitation Act of 1973 (29 U.S.C. 720 
et seq.);
    (7) Provision of information on how the local area is performing on 
the local performance measures and any additional performance 
information with respect to the One-Stop delivery system in the local 
area;
    (8) Provision of accurate information relating to the availability 
of supportive services, including, at a minimum, child care and 
transportation, available in the local area, and referral to such 
services, as appropriate;
    (9) Provision of information regarding filing claims for 
unemployment compensation;
    (10) Assistance in establishing eligibility for--
    (i) Welfare-to-work activities authorized under section 403(a)(5) 
of the Social Security Act (42 U.S.C. 603(a)(5)) available in the local 
area; and
    (ii) Programs of financial aid assistance for training and 
education programs that are not funded under this Act and are available 
in the local area; and
    (11) Followup services, including counseling regarding the 
workplace, for participants in workforce investment activities 
authorized under subtitle (B) of title I of WIA who are placed in 
unsubsidized employment, for not less than 12 months after the first 
day of the employment, as appropriate.


Sec. 662.250  Where and to what extent must required One-Stop partners 
make core services available?

    (a) At a minimum, the core services that are applicable to the 
program of the partner under Sec. 662.220, and that are in addition to 
the basic labor exchange services traditionally provided in the local 
area under the Wagner-Peyser program, must be made available at the 
comprehensive One-Stop center. These services must be made available to 
individuals attributable to the partner's program who seek assistance 
at the center. The adult and dislocated worker program partners are 
required to make all of the core services listed in Sec. 662.240 
available at the center in accordance with 20 CFR 663.100(b)(1).
    (b) The applicable core services may be made available by the 
provision of appropriate technology at the comprehensive One-Stop 
center, by co-locating personnel at the center, cross-training of 
staff, or through a cost reimbursement or other agreement between 
service providers at the comprehensive One-Stop center and the partner, 
as described in the MOU.
    (c) The responsibility of the partner for the provision of core 
services must be proportionate to the use of the services at the 
comprehensive One-Stop center by the individuals attributable to the 
partner's program. The specific method of determining each partner's 
proportionate responsibility must be described in the MOU.
    (d) For purposes of this part, individuals attributable to the 
partner's program may include individuals who are referred through the 
comprehensive One-Stop center and enrolled in the partner's program 
after the receipt of core services, who have been enrolled in the 
partner's program prior to receipt of the applicable core services at 
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

[[Page 49401]]

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 for the One-Stop Delivery 
System


Sec. 662.300  What is the Memorandum of Understanding (MOU)?

    (a) The Memorandum of Understanding (MOU) is an agreement developed 
and executed between the Local Board, with the agreement of the chief 
elected official, and the One-Stop partners relating to the operation 
of the One-Stop delivery system in the local area.
    (b) The MOU must contain the provisions required by WIA section 
121(c)(2). These provisions cover services to be provided through the 
One-Stop delivery system; the funding of the services and operating 
costs of the system; and methods for referring individuals between the 
One-Stop operators and partners. The MOU's provisions also must 
determine the duration and procedures for amending the MOU, and may 
contain any other provisions that are consistent with WIA title I and 
the WIA regulations agreed to by the parties. (WIA sec. 121(c).)


Sec. 662.310  Is there a single MOU for the local area or are there to 
be separate MOU's between the Local Board and each partner?

    (a) A single ``umbrella'' MOU may be developed that addresses the 
issues relating to the local One-Stop delivery system for the Local 
Board, chief elected official and all partners, or the Local Board, 
chief elected official and the partners may decide to enter into 
separate agreements between the Local Board (with the agreement of the 
chief elected official) and one or more partners. Under either 
approach, the requirements described in this subpart apply. Since funds 
are generally appropriated annually, financial agreements may be 
negotiated with each partner annually to clarify funding of services 
and operating costs of the system under the MOU.
    (b) WIA emphasizes full and effective partnerships between Local 
Boards, chief elected officials and One-Stop partners. Local Boards and 
partners must enter into good-faith negotiations. Local Boards, chief 
elected officials and partners may request assistance from a State 
agency responsible for administering the partner program, the Governor, 
State Board, or other appropriate parties. The State agencies, the 
State Board, and the Governor may also consult with the appropriate 
Federal agencies to address impasse situations after exhausting other 
alternatives. The Local Board and partners must document the 
negotiations and efforts that have taken place. Any failure to execute 
an MOU between a Local Board and a required partner must be reported by 
the Local Board and the required partner to the Governor or State 
Board, and the State agency responsible for administering the partner's 
program, and by the Governor or the State Board and the responsible 
State agency to the Secretary of Labor and to the head of any other 
Federal agency with responsibility for oversight of a partner's 
program. (WIA sec. 121(c).)
    (c) If an impasse has not been resolved through the alternatives 
available under this section any partner that fails to execute an MOU 
may not be permitted to serve on the Local Board. In addition, any 
local area in which a Local Board has failed to execute an MOU with all 
of the required partners is not eligible for State incentive grants 
awarded on the basis of local coordination of activities under 20 CFR 
665.200(d)(2). These sanctions are in addition to, not in lieu of, any 
other remedies that may be applicable to the Local Board or to each 
partner for failure to comply with the statutory requirement.

Subpart D--One-Stop Operators


Sec. 662.400  Who is the One-Stop operator?

    (a) The One-Stop operator is the entity that performs the role 
described in paragraph (c) of this section. The types of entities that 
may be selected to be the One-Stop operator include:
    (1) A postsecondary educational institution;
    (2) An Employment Service agency established under the Wagner-
Peyser Act on behalf of the local office of the agency;
    (3) A private, nonprofit organization (including a community-based 
organization);
    (4) A private for-profit entity;
    (5) A government agency; and
    (6) Another interested organization or entity.
    (b) One-Stop operators may be a single entity or a consortium of 
entities and may operate one or more One-Stop centers. In addition, 
there may be more than one One-Stop operator in a local area.
    (c) The agreement between the Local Board and the One-Stop operator 
shall specify the operator's role. That role may range between simply 
coordinating service providers within the center, to being the primary 
provider of services within the center, to coordinating activities 
throughout the One-Stop system. (WIA sec. 121(d).)


Sec. 662.410  How is the One-Stop Operator selected?

    (a) The Local Board, with the agreement of the chief elected 
official, must designate and certify One-Stop operators in each local 
area.
    (b) The One-Stop operator is designated or certified:
    (1) Through a competitive process,
    (2) Under an agreement between the Local Board and a consortium of 
entities that includes at least three or more of the required One-Stop 
partners.identified at Sec. 662.200, or
    (3) Under the conditions described in Secs. 662.420 or 662.430. 
(WIA sec.121(d), 121(e) and 117(f)(2))
    (c) The designation or certification of the One-Stop operator must 
be carried out in accordance with the ``sunshine provision'' at 20 CFR 
661.307.


Sec. 662.420  Under what limited conditions may the Local Board be 
designated or certified as the One-Stop operator?

    (a) The Local Board may be designated or certified as the One-Stop 
operator only with the agreement of the chief elected official and the 
Governor.
    (b) The designation or certification must be reviewed whenever the 
biennial certification of the Local Board is made under 20 CFR 
663.300(a). (WIA sec. 117(f)(2).)

[[Page 49402]]

Sec. 662.430  Under what conditions may One-Stop operators designated 
to operate in a One-Stop delivery system established prior to the 
enactment of WIA be designated to continue as a One-Stop operator under 
WIA without meeting the requirements of Sec. 662.410(b)?

    Under WIA section 121(e), the Local Board, the chief elected 
official and the Governor may agree to certify an entity that has been 
serving as a One-Stop operator in a One-Stop delivery system 
established prior to the enactment of WIA (August 7,1998) to continue 
to serve as a One-Stop operator without meeting the requirements for 
designation under Sec. 662.410(b) if the local One-Stop delivery system 
is modified, as necessary, to meet the other requirements of this part, 
including the requirements relating to the inclusion of One-Stop 
partners, the execution of the MOU, and the provision of services.(WIA 
sec. 121(e).)

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

Subpart A-- Delivery of Adult and Dislocated Worker Services through 
the One-Stop Delivery System
Sec.
663.100   What is the role of the adult and dislocated worker 
programs in the One-Stop delivery system?
663.105   When must adults and dislocated workers be registered?
663.110   What are the eligibility criteria for core services for 
adults in the adult and dislocated worker programs?
663.115   What are the eligibility criteria for core services for 
dislocated workers in the adult and dislocated worker programs?
663.120   Are displaced homemakers eligible for dislocated worker 
activities under WIA?
663.145   What services are WIA title I adult and dislocated workers 
formula funds used to provide?
663.150   What core services must be provided to adults and 
dislocated workers?
663.155   How are core services delivered?
663.160   Are there particular core services an individual must 
receive before receiving intensive services under WIA section 
134(d)(3)?
663.165   How long must an individual be in core services in order 
to be eligible for intensive services?
Subpart B--Intensive Services
663.200   What are intensive services for adults and dislocated 
workers?
663.210   How are intensive services delivered?
663.220   Who may receive intensive services?
663.230   What criteria must be used to determine whether an 
employed worker needs intensive services to obtain or retain 
employment leading to ``self-sufficiency''?
663.240   Are there particular intensive services an individual must 
receive before receiving training services under WIA section 
134(d)(4)(A)(i)?
663.245   What is the individual employment plan?
663.250   How long must an individual participant be in intensive 
services to be eligible for training services?
Subpart C--Training Services
663.300   What are training services for adults and dislocated 
workers?
663.310   Who may receive training services?
663.320   What are the requirements for coordination of WIA training 
funds and other grant assistance?
Subpart D--Individual Training Accounts
663.400   How are training services provided?
663.410   What is an Individual Training Account (ITA)?
663.420   Can the duration and amount of ITA's be limited?
663.430   Under what circumstances may mechanisms other than ITA's 
be used to provide training services?
663.440   What are the requirements for consumer choice?
Subpart E--Eligible Training Providers
663.500   What is the purpose of this subpart?
663.505   What are eligible providers of training services?
663.508   What is a ``program of training services''?
663.510   Who is responsible for managing the eligible provider 
process?
663.515   What is the process for initial determination of provider 
eligibility?
663.530   Is there a time limit on the period of initial eligibility 
for training providers?
663.535   What is the process for determining the subsequent 
eligibility of a provider?
663.540   What kind of performance and cost information is required 
for determinations of subsequent eligibility?
663.550   How is eligible provider information developed and 
maintained?
663.555   How is the State list disseminated?
663.565   May an eligible training provider lose its eligibility?
663.570   What is the consumer reports system?
663.575   In what ways can a Local Board supplement the information 
available from the State list?
663.585   May individuals choose training providers located outside 
of the local area?
663.590   May a community-based organization (CBO) be included on an 
eligible provider list?
663.595   What requirements apply to providers of OJT and customized 
training?
Subpart F--Priority and Special Populations
663.600   What priority must be given to low-income adults and 
public assistance recipients served with adult funds under title I?
663.610   Does the statutory priority for use of adult funds also 
apply to dislocated worker funds?
663.620   How do the Welfare-to-Work program and the TANF program 
relate to the One-Stop delivery system?
663.630   How does a displaced homemaker qualify for services under 
title I?
663.640   May an individual with a disability whose family does not 
meet income eligibility criteria under the Act be eligible for 
priority as a low-income adult?
Subpart G--On-the-Job Training (OJT) and Customized Training
663.700   What are the requirements for on-the-job training (OJT)?
663.705   What are the requirements for OJT contracts for employed 
workers?
663.710   What conditions govern OJT payments to employers?
663.715   What is customized training?
663.720   What are the requirements for customized training for 
employed workers?
663.730   May funds provided to employers for OJT of customized 
training be used to assist, promote, or deter union organizing?
Subpart H--Supportive Services
663.800   What are supportive services for adults and dislocated 
workers?
663.805   When may supportive services be provided to participants?
663.810   Are there limits on the amounts or duration of funds for 
supportive services?
663.815   What are needs-related payments?
663.820   What are the eligibility requirements for adults to 
receive needs-related payments?
663.825   What are the eligibility requirements for dislocated 
workers to receive needs-related payments?
663.830   May needs-related payments be paid while a participant is 
waiting to start training classes?
663.840   How is the level of needs-related payments determined?

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

Subpart A--Delivery of Adult and Dislocated Worker Services through 
the One-Stop Delivery System


Sec. 663.100  What is the role of the adult and dislocated worker 
programs in the One-Stop delivery system?

    (a) The One-Stop system is the basic delivery system for adult and 
dislocated worker services. Through this system, adults and dislocated 
workers can access a continuum of services. The services are organized 
into three levels: core, intensive, and training.
    (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

[[Page 49403]]

CFR part 662. Consistent with those provisions:
    (1) Core services for adults and dislocated workers must be made 
available in at least one comprehensive One-Stop center in each local 
workforce investment area. Services may also be available elsewhere, 
either at affiliated sites or at specialized centers. For example, 
specialized centers may be established to serve workers being 
dislocated from a particular employer or industry, or to serve 
residents of public housing.
    (2) The One-Stop centers also make intensive services available to 
adults and dislocated workers, as needed, either by the One-Stop 
operator directly or through contracts with service providers that are 
approved by the Local Board.
    (3) Through the One-Stop system, adults and dislocated workers 
needing training are provided Individual Training Accounts (ITA's) and 
access to lists of eligible providers and programs of training. These 
lists contain quality consumer information, including cost and 
performance information for each of the providers' programs, so that 
participants can make informed choices on where to use their ITA's. 
(ITA's are more fully discussed in subpart D of this part.)


Sec. 663.105  When must adults and dislocated workers be registered?

    (a) Registration is the process for collecting information to 
support a determination of eligibility. This information may be 
collected through methods that include electronic data transfer, 
personal interview, or an individual's application.
    (b) Adults and dislocated workers who receive services funded under 
title I other than self-service or informational activities must be 
registered and determined eligible.
    (c) EO data must be collected on every individual who is interested 
in being considered for WIA title I financially assisted aid, benefits, 
services, or training by a recipient, and who has signified that 
interest by submitting personal information in response to a request 
from the recipient.


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

    To be eligible to receive core services as an adult in the adult 
and dislocated worker programs, an individual must be 18 years of age 
or older. To be eligible for the dislocated worker programs, an 
eligible adult must meet the criteria of Sec. 663.115. Eligibility 
criteria for intensive and training services are found at Secs. 663.220 
and 663.310.


663.115  What are the eligibility criteria for core services for 
dislocated workers in the adult and dislocated worker programs?

    (a) To be eligible to receive core services as a dislocated worker 
in the adult and dislocated worker programs, an individual must meet 
the definition of ``dislocated worker'' at WIA section 101(9). 
Eligibility criteria for intensive and training services are found at 
Secs. 663.220 and 663.310.
    (b) Governors and Local Boards may establish policies and 
procedures for One-Stop operators to use in determining an individual's 
eligibility as a dislocated worker, consistent with the definition at 
WIA section 101(9). These policies and procedures may address such 
conditions as:
    (1) What constitutes a ``general announcement'' of plant closing 
under WIA section 101(9)(B)(ii) or (iii); and
    (2) What constitutes ``unemployed as a result of general economic 
conditions in the community in which the individual resides or because 
of natural disasters'' for determining the eligibility of self-employed 
individuals, including family members and farm or ranch hands, under 
WIA section 101(9)(C).


Sec. 663.120  Are displaced homemakers eligible for dislocated worker 
activities under WIA?

    (a) Yes, there are two significant differences from the eligibility 
requirements under the Job Training Partnership Act.
    (b) Under the dislocated worker program in JTPA, displaced 
homemakers are defined as ``additional dislocated workers'' and are 
only eligible to receive services if the Governor determines that 
providing such services would not adversely affect the delivery of 
services to the other eligible dislocated workers. Under WIA section 
101(9), displaced homemakers who meet the definition at WIA section 
101(10) are eligible dislocated workers without any additional 
determination.
    (c) The definition of displaced homemaker under JTPA included 
individuals who had been dependent upon public assistance under Aid for 
Families with Dependent Children (AFDC) as well as those who had been 
dependent on the income of another family member. The definition in WIA 
section 101(10) includes only those individuals who were dependent on a 
family member's income. Those individuals who have been dependent on 
public assistance may be served in the adult program.


Sec. 663.145  What services are WIA title I adult and dislocated 
workers formula funds used to provide?

    (a) WIA title I formula funds allocated to local areas for adults 
and dislocated workers must be used to provide core, intensive and 
training services through the One-Stop delivery system. Local Boards 
determine the most appropriate mix of these services, but all three 
types must be available for both adults and dislocated workers. There 
are different eligibility criteria for each of these types of services, 
which are described at Secs. 663.110, 663.115, 663.220 and 663.310.
    (b) WIA title I funds may also be used to provide the other 
services described in WIA section 134(e):
    (1) Discretionary One-Stop delivery activities, including:
    (i) Customized screening and referral of qualified participants in 
training services to employment; and
    (ii) Customized employment-related services to employers on a fee-
for-service basis that are in addition to labor exchange services 
available to employers under the Wagner-Peyser Act.
    (2) Supportive services, including needs-related payments, as 
described in subpart H of this part.


Sec. 663.150  What core services must be provided to adults and 
dislocated workers?

    (a) At a minimum, all of the core services described in WIA section 
134(d)(2) and 20 CFR 662.240 must be provided in each local area 
through the One-Stop delivery system.
    (b) Followup services must be made available, as appropriate, for a 
minimum of 12 months following the first day of employment, to 
registered participants who are placed in unsubsidized employment.


Sec. 663.155  How are core services delivered?

    Core services must be provided through the One-Stop delivery 
system. Core services may be provided directly by the One-Stop operator 
or through contracts with service providers that are approved by the 
Local Board. The Local Board may only be a provider of core services 
when approved by the chief elected official and the Governor in 
accordance with the requirements of WIA section 117(f)(2) and 20 CFR 
661.310.


Sec. 663.160  Are there particular core services an individual must 
receive before receiving intensive services under WIA section 
134(d)(3)?

    (a) Yes, at a minimum, an individual must receive at least one core 
service, such as an initial assessment or job

[[Page 49404]]

search and placement assistance, before receiving intensive services. 
The initial assessment provides preliminary information about the 
individual's skill levels, aptitudes, interests, and supportive 
services needs. The job search and placement assistance helps the 
individual determine whether he or she is unable to obtain employment, 
and thus requires more intensive services to obtain employment. The 
decision on which core services to provide, and the timing of their 
delivery, may be made on a case-by-case basis at the local level 
depending upon the needs of the participant.
    (b) A determination of the need for intensive services under 
Sec. 663.220, as established by the initial assessment or the 
individual's inability to obtain employment through the core services 
provided, must be contained in the participant's case file.


Sec. 663.165  How long must an individual be in core services in order 
to be eligible for intensive services?

    There is no Federally-required minimum time period for 
participation in core services before receiving intensive services. 
(WIA sec. 134(d)(3).)

Subpart B--Intensive Services


Sec. 663.200  What are intensive services for adults and dislocated 
workers?

    (a) Intensive services are listed in WIA section 134(d)(3)(C). The 
list in the Act is not all-inclusive and other intensive services, such 
as out-of-area job search assistance, literacy activities related to 
basic workforce readiness, relocation assistance, internships, and work 
experience may be provided, based on an assessment or individual 
employment plan.
    (b) For the purposes of paragraph (a) of this section, work 
experience is a planned, structured learning experience that takes 
place in a workplace for a limited period of time. Work experience may 
be paid or unpaid, as appropriate. A work experience workplace may be 
in the private for profit sector, the non-profit sector, or the public 
sector. Labor standards apply in any work experience where an employee/
employer relationship, as defined by the Fair Labor Standards Act, 
exists.


Sec. 663.210  How are intensive services delivered?

    (a) Intensive services must be provided through the One-Stop 
delivery system, including specialized One-Stop centers. Intensive 
services may be provided directly by the One-Stop operator or through 
contracts with service providers, which may include contracts with 
public, private for-profit, and private non-profit service providers 
(including specialized service providers), that are approved by the 
Local Board. (WIA secs. 117(d)(2)(D) and 134(d)(3)(B).)
    (b) The Local Board may only be a provider of intensive services 
when approved by the chief elected official and the Governor in 
accordance with WIA section 117(f)(2) and 20 CFR 661.310.


Sec. 663.220  Who may receive intensive services?

    There are two categories of adults and dislocated workers who may 
receive intensive services:
    (a) Adults and dislocated workers who are unemployed, have received 
at least one core service and are unable to obtain employment through 
core services, and are determined by a One-Stop operator to be in need 
of more intensive services to obtain employment; and
    (b) Adults and dislocated workers who are employed, have received 
at least one core service, and are determined by a One-Stop operator to 
be in need of intensive services to obtain or retain employment that 
leads to self-sufficiency, as described in Sec. 663.230.


Sec. 663.230  What criteria must be used to determine whether an 
employed worker needs intensive services to obtain or retain employment 
leading to ``self-sufficiency''?

    State Boards or Local Boards must set the criteria for determining 
whether employment leads to self-sufficiency. At a minimum, such 
criteria must provide that self-sufficiency means employment that pays 
at least the lower living standard income level, as defined in WIA 
section 101(24). Self-sufficiency for a dislocated worker may be 
defined in relation to a percentage of the layoff wage. The special 
needs of individuals with disabilities or other barriers to employment 
should be taken into account when setting criteria to determine self-
sufficiency.


Sec. 663.240  Are there particular intensive services an individual 
must receive before receiving training services under WIA section 
134(d)(4)(A)(i)?

    (a) Yes, at a minimum, an individual must receive at least one 
intensive service, such as development of an individual employment plan 
with a case manager or individual counseling and career planning, 
before the individual may receive training services.
    (b) The case file must contain a determination of need for training 
services under Sec. 663.310, as identified in the individual employment 
plan, comprehensive assessment, or through any other intensive service 
received.


Sec. 663.245  What is the individual employment plan?

    The individual employment plan is an ongoing strategy jointly 
developed by the participant and the case manager that identifies the 
participant's employment goals, the appropriate achievement objectives, 
and the appropriate combination of services for the participant to 
achieve the employment goals.


Sec. 663.250  How long must an individual participant be in intensive 
services to be eligible for training services?

    There is no Federally-required minimum time period for 
participation in intensive services before receiving training services. 
The period of time an individual spends in intensive services should be 
sufficient to prepare the individual for training or employment. (WIA 
sec. 134(d)(4)(A)(i).)

Subpart C--Training Services


Sec. 663.300  What are training services for adults and dislocated 
workers?

    Training services are listed in WIA section 134(d)(4)(D). The list 
in the Act is not all-inclusive and additional training services may be 
provided.


Sec. 663.310  Who may receive training services?

    Training services may be made available to employed and unemployed 
adults and dislocated workers who:
    (a) Have met the eligibility requirements for intensive services, 
have received at least one intensive service under Sec. 663.240, and 
have been determined to be unable to obtain or retain employment 
through such services;
    (b) After an interview, evaluation, or assessment, and case 
management, have been determined by a One-Stop operator or One-Stop 
partner, to be in need of training services and to have the skills and 
qualifications to successfully complete the selected training program;
    (c) Select a program of training services that is directly linked 
to the employment opportunities either in the local area or in another 
area to which the individual is willing to relocate;
    (d) Are unable to obtain grant assistance from other sources to pay 
the costs of such training, including such sources as Welfare-to-Work, 
State-funded training funds, Trade Adjustment Assistance and Federal 
Pell Grants established under title IV of the Higher Education Act of 
1965, or require WIA assistance in addition to other sources of grant 
assistance, including Federal Pell Grants (provisions relating to fund 
coordination are found at

[[Page 49405]]

Sec. 663.320 and WIA section 134(d)(4)(B)); and
    (e) For individuals whose services are provided through the adult 
funding stream, are determined eligible in accordance with the State 
and local priority system, if any, in effect for adults under WIA 
section 134(d)(4)(E) and Sec. 663.600. (WIA sec. 134(d)(4)(A).)


Sec. 663.320  What are the requirements for coordination of WIA 
training funds and other grant assistance?

    (a) WIA funding for training is limited to participants who:
    (1) Are unable to obtain grant assistance from other sources to pay 
the costs of their training; or
    (2) Require assistance beyond that available under grant assistance 
from other sources to pay the costs of such training. Program operators 
and training providers must coordinate funds available to pay for 
training as described in paragraphs (b) and (c) of this section.
    (b) Program operators must coordinate training funds available and 
make funding arrangements with One-Stop partners and other entities to 
apply the provisions of paragraph (a) of this section. Training 
providers must consider the availability of other sources of grants to 
pay for training costs such as Welfare-to-Work, State-funded training 
funds, and Federal Pell Grants, so that WIA funds supplement other 
sources of training grants.
    (c) A WIA participant may enroll in WIA-funded training while his/
her application for a Pell Grant is pending as long as the One-Stop 
operator has made arrangements with the training provider and the WIA 
participant regarding allocation of the Pell Grant, if it is 
subsequently awarded. In that case, the training provider must 
reimburse the One-Stop operator the WIA funds used to underwrite the 
training for the amount the Pell Grant covers. Reimbursement is not 
required from the portion of Pell Grant assistance disbursed to the WIA 
participant for education-related expenses. (WIA sec. 134(d)(4)(B).)

Subpart D--Individual Training Accounts


Sec. 663.400  How are training services provided?

    Except under the three conditions described in WIA section 
134(d)(4)(G)(ii) and Sec. 663.430(a), the Individual Training Account 
(ITA) is established for eligible individuals to finance training 
services. Local Boards may only provide training services under 
Sec. 663.430 if they receive a waiver from the Governor and meet the 
requirements of 20 CFR 661.310 and WIA section 117(f)(1). (WIA sec. 
134(d)(4)(G).)


Sec. 663.410  What is an Individual Training Account (ITA)?

    The ITA is established on behalf of a participant. WIA title I 
adult and dislocated workers purchase training services from eligible 
providers they select in consultation with the case manager. Payments 
from ITA's may be made in a variety of ways, including the electronic 
transfer of funds through financial institutions, vouchers, or other 
appropriate methods. Payments may also be made incrementally; through 
payment of a portion of the costs at different points in the training 
course. (WIA sec. 134(d)(4)(G).)


Sec. 663.420  Can the duration and amount of ITA's be limited?

    (a) Yes, the State or Local Board may impose limits on ITA's, such 
as limitations on the dollar amount and/or duration.
    (b) Limits to ITA's may be established in different ways:
    (1) There may be a limit for an individual participant that is 
based on the needs identified in the individual employment plan; or
    (2) There may be a policy decision by the State Board or Local 
Board to establish a range of amounts and/or a maximum amount 
applicable to all ITA's.
    (c) Limitations established by State or Local Board policies must 
be described in the State or Local Plan, respectively, but should not 
be implemented in a manner that undermines the Act's requirement that 
training services are provided in a manner that maximizes customer 
choice in the selection of an eligible training provider. ITA 
limitations may provide for exceptions to the limitations in individual 
cases.
    (d) An individual may select training that costs more than the 
maximum amount available for ITAs under a State or local policy when 
other sources of funds are available to supplement the ITA. These other 
sources may include: Pell Grants; scholarships; severance pay; and 
other sources.


Sec. 663.430  Under what circumstances may mechanisms other than ITA's 
be used to provide training services?

    (a) Contracts for services may be used instead of ITA's only when 
one of the following three exceptions applies:
    (1) When the services provided are on-the-job training (OJT) or 
customized training;
    (2) When the Local Board determines that there are an insufficient 
number of eligible providers in the local area to accomplish the 
purpose of a system of ITA's. The Local Plan must describe the process 
to be used in selecting the providers under a contract for services. 
This process must include a public comment period for interested 
providers of at least 30 days;
    (3) When the Local Board determines that there is a training 
services program of demonstrated effectiveness offered in the area by a 
community-based organization (CBO) or another private organization to 
serve special participant populations that face multiple barriers to 
employment, as described in paragraph (b) in this section. The Local 
Board must develop criteria to be used in determining demonstrated 
effectiveness, particularly as it applies to the special participant 
population to be served. The criteria may include:
    (i) Financial stability of the organization;
    (ii) Demonstrated performance in the delivery of services to hard 
to serve participant populations through such means as program 
completion rate; attainment of the skills, certificates or degrees the 
program is designed to provide; placement after training in 
unsubsidized employment; and retention in employment; and
    (iii) How the specific program relates to the workforce investment 
needs identified in the local plan.
    (b) Under paragraph (a)(3) of this section, special participant 
populations that face multiple barriers to employment are populations 
of low-income individuals that are included in one or more of the 
following categories:
    (1) Individuals with substantial language or cultural barriers;
    (2) Offenders;
    (3) Homeless individuals; and
    (4) Other hard-to-serve populations as defined by the Governor.


Sec. 663.440  What are the requirements for consumer choice?

    (a) Training services, whether under ITA's or under contract, must 
be provided in a manner that maximizes informed consumer choice in 
selecting an eligible provider.
    (b) Each Local Board, through the One-Stop center, must make 
available to customers the State list of eligible providers required in 
WIA section 122(e). The list includes a description of the programs 
through which the providers may offer the training services, the 
information identifying eligible providers of on-the-job training and 
customized training required under WIA section 122(h) (where 
applicable), and the performance and cost information about eligible 
providers of training services described in WIA sections 122 (e) and 
(h).

[[Page 49406]]

    (c) An individual who has been determined eligible for training 
services under Sec. 663.310 may select a provider described in 
paragraph (b) of this section after consultation with a case manager. 
Unless the program has exhausted training funds for the program year, 
the operator must refer the individual to the selected provider, and 
establish an ITA for the individual to pay for training. For purposes 
of this paragraph, a referral may be carried out by providing a voucher 
or certificate to the individual to obtain the training.
    (d) The cost of referral of an individual with an ITA to a training 
provider is paid by the applicable adult or dislocated worker program 
under title I of WIA.

Subpart E--Eligible Training Providers


Sec. 663.500  What is the purpose of this subpart?

    The workforce investment system established under WIA emphasizes 
informed customer choice, system performance, and continuous 
improvement. The eligible provider process is part of the strategy for 
achieving these goals. Local Boards, in partnership with the State, 
identify training providers and programs whose performance qualifies 
them to receive WIA funds to train adults and dislocated workers. In 
order to maximize customer choice and assure that all significant 
population groups are served, States and local areas should administer 
the eligible provider process in a manner to assure that significant 
numbers of competent providers, offering a wide variety of training 
programs and occupational choices, are available to customers. After 
receiving core and intensive services and in consultation with case 
managers, eligible participants who need training use the list of these 
eligible providers to make an informed choice. The ability of providers 
to successfully perform, the procedures State and Local Boards use to 
establish eligibility, and the degree to which information, including 
performance information, on those providers is made available to 
customers eligible for training services, are key factors affecting the 
successful implementation of the Statewide workforce investment system. 
This subpart describes the process for determining eligible training 
providers.


Sec. 663.505  What are eligible providers of training services?

    (a) Eligible providers of training services are described in WIA 
section 122. They are those entities eligible to receive WIA title I-B 
funds to provide training services to eligible adult and dislocated 
worker customers.
    (b) In order to provide training services under WIA title I-B, a 
provider must meet the requirements of this subpart and WIA section 
122.
    (1) These requirements apply to the use of WIA title I adult and 
dislocated worker funds to provide training:
    (i) To individuals using ITA's to access training through the 
eligible provider list; and
    (ii) To individuals for training provided through the exceptions to 
ITA's described at Sec. 663.430 (a)(2) and (a)(3).
    (2) These requirements apply to all organizations providing 
training to adult and dislocated workers, including:
    (i) Postsecondary educational institutions providing a program 
described in WIA section 122(a)(2)(A)(ii);
    (ii) Entities that carry out programs under the National 
Apprenticeship Act (29 U.S.C. 50 et seq.);
    (iii) Other public or private providers of a program of training 
services described in WIA section 122(a)(2)(C);
    (iv) Local Boards, if they meet the conditions of WIA section 
117(f)(1); and
    (v) Community-based organizations and other private organizations 
providing training under Sec. 663.430.
    (c) Provider eligibility procedures must be established by the 
Governor, as required by this subpart. Different procedures are 
described in WIA for determinations of ``initial'' and ``subsequent'' 
eligibility. Because the processes are different, they are discussed 
separately.


Sec. 663.508  What is a ``program of training services''?

    A program of training services is one or more courses or classes, 
or a structured regimen, that upon successful completion, leads to:
    (a) A certificate, an associate degree, baccalaureate degree, or
    (b) The skills or competencies needed for a specific job or jobs, 
an occupation, occupational group, or generally, for many types of jobs 
or occupations, as recognized by employers and determined prior to 
training.


Sec. 663.510  Who is responsible for managing the eligible provider 
process?

    (a) The State and the Local Boards each have responsibilities for 
managing the eligible provider process.
    (b) The Governor must establish eligibility criteria for certain 
providers to become initially eligible and must set minimum levels of 
performance for all providers to remain subsequently eligible.
    (c) The Governor must designate a State agency (called the 
``designated State agency'') to assist in carrying out WIA section 122. 
The designated State agency is responsible for:
    (1) Developing and maintaining the State list of eligible providers 
and programs, which is comprised of lists submitted by Local Boards;
    (2) Determining if programs meet performance levels, including 
verifying the accuracy of the information on the State list in 
consultation with the Local Boards, removing programs that do not meet 
program performance levels, and taking appropriate enforcement actions, 
against providers in the case of the intentional provision of 
inaccurate information, as described in WIA section 122(f)(1), and in 
the case of a substantial violation of the requirements of WIA, as 
described in WIA section 122(f)(2);
    (3) Disseminating the State list, accompanied by performance and 
cost information relating to each provider, to One-Stop operators 
throughout the State.
    (d) The Local Board must:
    (1) Accept applications for initial eligibility from certain 
postsecondary institutions and entities providing apprenticeship 
training;
    (2) Carry out procedures prescribed by the Governor to assist in 
determining the initial eligibility of other providers;
    (3) Carry out procedures prescribed by the Governor to assist in 
determining the subsequent eligibility of all providers;
    (4) Compile a local list of eligible providers, collect the 
performance and cost information and any other required information 
relating to providers;
    (5) Submit the local list and information to the designated State 
agency;
    (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

[[Page 49407]]

providers to maintain subsequent eligibility.


Sec. 663.515  What is the process for initial determination of provider 
eligibility?

    (a) To be eligible to receive adult or dislocated worker training 
funds under title I of WIA, all providers must submit applications to 
the Local Boards in the areas in which they wish to provide services. 
The application must describe each program of training services to be 
offered.
    (b) For programs eligible under title IV of the Higher Education 
Act and apprenticeship programs registered under the National 
Apprenticeship Act (NAA), and the providers or such programs, Local 
Boards determine the procedures to use in making an application. The 
procedures established by the Local Board must specify the timing, 
manner, and contents of the required application.
    (c) For programs not eligible under title IV of the HEA or 
registered under the NAA, and for providers not eligible under title IV 
of the HEA or carrying out apprenticeship programs under NAA:
    (1) The Governor must develop a procedure for use by Local Boards 
for determining the eligibility of other providers, after
    (i) Soliciting and taking into consideration recommendations from 
Local Boards and providers of training services within the State;
    (ii) Providing an opportunity for interested members of the public, 
including representatives of business and labor organizations, to 
submit comments on the procedure; and
    (iii) Designating a specific time period for soliciting and 
considering the recommendations of Local Boards and provider, and for 
providing an opportunity for public comment.
    (2) The procedure must be described in the State Plan.
    (3)(i) The procedure must require that the provider must submit an 
application to the Local Board at such time and in such manner as may 
be required, which contains a description of the program of training 
services;
    (ii) If the provider provides a program of training services on the 
date of application, the procedure must require that the application 
include an appropriate portion of the performance information and 
program cost information described in Sec. 663.540, and that the 
program meet appropriate levels of performance;
    (iii) If the provider does not provide a program of training 
services on that date, the procedure must require that the provider 
meet appropriate requirements specified in the procedure. (WIA sec. 
122(b)(2)(D).)
    (d) The Local Board must include providers that meet the 
requirements of paragraphs (b) and (c) of this section on a local list 
and submit the list to the designated State agency. The State agency 
has 30 days to determine that the provider or its programs do not meet 
the requirements relating to the providers under paragraph (c) of this 
section. After the agency determines that the provider and its programs 
meet(s) the criteria for initial eligibility, or 30 days have elapsed, 
whichever occurs first, the provider and its programs are initially 
eligible. The programs and providers submitted under paragraph (b) of 
this section are initially eligible without State agency review. (WIA 
sec. 122(e).)


Sec. 663.530  Is there a time limit on the period of initial 
eligibility for training providers?

    Yes, under WIA section 122(c)(5), the Governor must require 
training providers to submit performance information and meet 
performance levels annually in order to remain eligible providers. 
States may require that these performance requirements be met one year 
from the date that initial eligibility was determined, or may require 
all eligible providers to submit performance information by the same 
date each year. If the latter approach is adopted, the Governor may 
exempt eligible providers whose determination of initial eligibility 
occurs within six months of the date of submissions. The effect of this 
requirement is that no training provider may have a period of initial 
eligibility that exceeds eighteen months. In the limited circumstance 
when insufficient data is available, initial eligibility may be 
extended for a period of up to six additional months, if the Governor's 
procedures provide for such an extension.


Sec. 663.535  What is the process for determining 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 (b) and (c), 
after:
    (1) Soliciting and taking into consideration recommendations from 
Local Boards and providers of training services within the State;
    (2) Providing an opportunity for interested members of the public, 
including representatives of business and labor organizations, to 
submit comments on such procedure; and
    (3) Designating a specific time period for soliciting and 
considering the recommendations of Local Boards and providers, and for 
providing an opportunity for public comment.
    (b) The procedure must be described in the State Plan.
    (c) The procedure must require that:
    (1) Providers annually submit performance and cost information as 
described at WIA section 122(d)(1) and (2), for each program of 
training services for which the provider has been determined to be 
eligible, in a time and manner determined by the Local Board;
    (2) Providers and programs annually meet minimum performance levels 
described at WIA section 122(c)(6), as demonstrated utilizing UI 
quarterly wage records where appropriate.
    (d) The program's performance information must meet the minimum 
acceptable levels established under paragraph (c)(2) of this section to 
remain eligible;
    (e) Local Boards may require higher levels of performance for local 
programs than the levels specified in the procedures established by the 
Governor. (WIA sec.122(c)(5) and (c)(6).)
    (f) The State procedure must require Local Boards to take into 
consideration:
    (1) The specific economic, geographic and demographic factors in 
the local areas in which providers seeking eligibility are located, and
    (2) The characteristics of the populations served by programs 
seeking eligibility, including the demonstrated difficulties in serving 
these populations, where applicable.
    (g) The Local Board retains those programs on the local list that 
meet the required performance levels and other elements of the State 
procedures and submits the list, accompanied by the performance and 
cost information, and any additional required information, to the 
designated State agency. If the designated State agency determines 
within 30 days from the receipt of the information that the program 
does not meet the performance levels established under paragraph (c)(2) 
of this section, the program may be removed from the list. A program 
retained on the local list and not removed by the designated State 
agency is considered an eligible program of training services.


Sec. 663.540  What kind of performance and cost information is required 
for determinations of subsequent eligibility?

    (a) Eligible providers of training services must submit, at least 
annually, under procedures established by the Governor under 
Sec. 663.535(c):
    (1) Verifiable program-specific performance information, including:
    (i) The information described in WIA section 122(d)(1)(A)(i) for 
all

[[Page 49408]]

individuals participating in the programs of training services, 
including individuals who are not receiving assistance under WIA 
section 134 and individuals who are receiving such assistance; and
    (ii) The information described in WIA section 122(d)(1)(A)(ii) 
relating only to individuals receiving assistance under the WIA adult 
and dislocated worker program who are participating in the applicable 
program of training services; and
    (2) Information on program costs (such as tuition and fees) for WIA 
participants in the program.
    (b) Governors may require any additional verifiable performance 
information (such as the information described at WIA section 
122(d)(2)) that the Governor determines to be appropriate to obtain 
subsequent eligibility, including information regarding all 
participating individuals as well as individuals receiving assistance 
under the WIA adult and dislocated worker program.
    (c) Governors must establish procedures by which providers can 
demonstrate if the additional information required under paragraph (b) 
of this section imposes extraordinary costs on providers, or if 
providers experience extraordinary costs in the collection of 
information. If, through these procedures, providers demonstrate that 
they experience such extraordinary costs:
    (1) The Governor or Local Board must provide access to cost-
effective methods for the collection of the information; or
    (2) The Governor must provide additional resources to assist 
providers in the collection of the information from funds for Statewide 
workforce investment activities reserved under WIA sections 128(a) and 
133(a)(1).
    (d) The Local Board and the designated State agency may accept 
program-specific performance information consistent with the 
requirements for eligibility under title IV of the Higher Education Act 
of 1965 from a provider for purposes of enabling the provider to 
fulfill the applicable requirements of this section, if the information 
is substantially similar to the information otherwise required under 
this section.


Sec. 663.550  How is eligible provider information developed and 
maintained?

    (a) The designated State agency must maintain a list of all 
eligible training programs and providers in the State (the ``State 
list'').
    (b) The State list is a compilation of the eligible programs and 
providers identified or retained by local areas and that have not been 
removed under Secs. 663.535(g) and 663.565.
    (c) The State list must be accompanied by the performance and cost 
information contained in the local lists as required by 
Sec. 663.535(e). (WIA sec. 122(e)(4)(A).)


Sec. 663.555  How is the State list disseminated?

    (a) The designated State agency must disseminate the State list and 
accompanying performance and cost information to the One-Stop delivery 
systems within the State.
    (b) The State list and information must be updated at least 
annually.
    (c) The State list and accompanying information form the primary 
basis of the One-Stop consumer reports system that provides for 
informed customer choice. The list and information must be widely 
available, through the One-Stop delivery system, to customers seeking 
information on training outcomes, as well as participants in employment 
and training activities funded under WIA and other programs.
    (1) The State list must be made available to individuals who have 
been determined eligible for training services under Sec. 663.310.
    (2) The State list must also be made available to customers whose 
training is supported by other One-Stop partners.


Sec. 663.565  May an eligible training provider lose its eligibility?

    (a) Yes. A training provider must deliver results and provide 
accurate information in order to retain its status as an eligible 
training provider.
    (b) If the provider's programs do not meet the established 
performance levels, the programs will be removed from the eligible 
provider list.
    (1) A Local Board must determine, during the subsequent eligibility 
determination process, whether a provider's programs meet performance 
levels. If the program fails to meet such levels, the program must be 
removed from the local list. If all of the provider's programs fail to 
meet such levels, the provider must be removed from the local list.
    (2) The designated State agency upon receipt of the performance 
information accompanying the local list, may remove programs from the 
State list if the agency determines the program failed to meet the 
levels of performance prescribed under Sec. 663.535(c). If all of the 
provider's programs are determined to have failed to meet the levels, 
the designated State agency may remove the provider from the State 
list.
    (3) Providers determined to have intentionally supplied inaccurate 
information or to have subsequently violated any provision of title I 
of WIA or the WIA regulations, including 29 CFR part 37, may be removed 
from the list in accordance with the enforcement provisions of WIA 
section 122(f). A provider whose eligibility is terminated under these 
conditions is liable to repay all adult and dislocated worker training 
funds it received during the period of noncompliance.
    (4) The Governor must establish appeal procedures for providers of 
training to appeal a denial of eligibility under this subpart according 
to the requirements of 20 CFR 667.640(b).


Sec. 663.570  What is the consumer reports system?

    The consumer reports system, referred to in WIA as performance 
information, is the vehicle for informing the customers of the One-Stop 
delivery system about the performance of training providers and 
programs in the local area. It is built upon the State list of eligible 
providers and programs developed through the procedures described in 
WIA section 122 and this subpart. The consumer reports system must 
contain the information necessary for an adult or dislocated worker 
customer to fully understand the options available to him or her in 
choosing a program of training services. Such program-specific factors 
may include overall performance, performance for significant customer 
groups (including wage replacement rates for dislocated workers), 
performance of specific provider sites, current information on 
employment and wage trends and projections, and duration of training 
programs.


Sec. 663.575  In what ways can a Local Board supplement the information 
available from the State list?

    (a) Local Boards may supplement the information available from the 
State list by providing customers with additional information to assist 
in supporting informed customer choice and the achievement of local 
performance measures (as described in WIA section 136).
    (b) This additional information may include:
    (1) Information on programs of training services that are linked to 
occupations in demand in the local area;
    (2) Performance and cost information, including program-specific 
performance and cost information, for the local outlet(s) of multi-site 
eligible providers; and
    (3) Other appropriate information related to the objectives of WIA, 
which may include the information described in Sec. 663.570.

[[Page 49409]]

Sec. 663.585  May individuals choose training providers located outside 
of the local area?

    Yes, individuals may choose any of the eligible providers and 
programs on the State list. A State may also establish a reciprocal 
agreement with another State(s) to permit providers of eligible 
training programs in each State to accept individual training accounts 
provided by the other State. (WIA secs. 122(e)(4) and (e)(5).)


Sec. 663.590  May a community-based organization (CBO) be included on 
an eligible provider list?

    Yes, CBO's may apply and they and their programs may be determined 
eligible providers of training services, under WIA section 122 and this 
subpart. As eligible providers, CBO's provide training through ITA's 
and may also receive contracts for training special participant 
populations when the requirements of Sec. 663.430 are met.


Sec. 663.595  What requirements apply to providers of OJT and 
customized training?

    For OJT and customized training providers, One-Stop operators in a 
local area must collect such performance information as the Governor 
may require, determine whether the providers meet such performance 
criteria as the Governor may require, and disseminate a list of 
providers that have met such criteria, along with the relevant 
performance information about them, through the One-Stop delivery 
system. Providers determined to meet the criteria are considered to be 
identified as eligible providers of training services. These providers 
are not subject to the other requirements of WIA section 122 or this 
subpart.

Subpart F--Priority and Special Populations


Sec. 663.600  What priority must be given to low-income adults and 
public assistance recipients served with adult funds under title I?

    (a) WIA states, in section 134(d)(4)(E), that in the event that 
funds allocated to a local area for adult employment and training 
activities are limited, priority for intensive and training services 
funded with title I adult funds must be given to recipients of public 
assistance and other low-income individuals in the local area.
    (b) Since funding is generally limited, States and local areas must 
establish criteria by which local areas can determine the availability 
of funds and the process by which any priority will be applied under 
WIA section 134(d)(2)(E). Such criteria may include the availability of 
other funds for providing employment and training-related services in 
the local area, the needs of the specific groups within the local area, 
and other appropriate factors.
    (c) States and local areas must give priority for adult intensive 
and training services to recipients of public assistance and other low-
income individuals, unless the local area has determined that funds are 
not limited under the criteria established under paragraph (b) of this 
section.
    (d) The process for determining whether to apply the priority 
established under paragraph (b) of this section does not necessarily 
mean that only the recipients of public assistance and other low income 
individuals may receive WIA adult funded intensive and training 
services when funds are determined to be limited in a local area. The 
Local Board and the Governor may establish a process that gives 
priority for services to the recipients of public assistance and other 
low income individuals and that also serves other individuals meeting 
eligibility requirements.


Sec. 663.610  Does the statutory priority for use of adult funds also 
apply to dislocated worker funds?

    No, the statutory priority applies to adult funds for intensive and 
training services only. Funds allocated for dislocated workers are not 
subject to this requirement.


Sec. 663.620  How do the Welfare-to-Work program and the TANF program 
relate to the One-Stop delivery system?

    (a) The local Welfare-to-Work (WtW) program operator is a required 
partner in the One-Stop delivery system. 20 CFR part 662 describes the 
roles of such partners in the One-Stop delivery system and applies to 
the Welfare-to-Work program operator. WtW programs serve individuals 
who may also be served by the WIA programs and, through appropriate 
linkages and referrals, these customers will have access to a broader 
range of services through the cooperation of the WtW program in the 
One-Stop system. WtW participants, who are determined to be WIA 
eligible, and who need occupational skills training may be referred 
through the One-Stop system to receive WIA training, when WtW grant and 
other grant funds are not available in accordance with Sec. 663.320(a). 
WIA participants who are also determined WtW eligible, may be referred 
to the WtW operator for job placement and other WtW assistance.
    (b) The local TANF agency is specifically suggested under WIA as an 
additional partner in the One-Stop system. TANF recipients will have 
access to more information about employment opportunities and services 
when the TANF agency participates in the One-Stop delivery system. The 
Governor and Local Board should encourage the TANF agency to become a 
One-Stop partner to improve the quality of services to the WtW and 
TANF-eligible populations. In addition, becoming a One-Stop partner 
will ensure that the TANF agency is represented on the Local Board and 
participates in developing workforce investment strategies that help 
cash assistance recipients secure lasting employment.


Sec. 663.630  How does a displaced homemaker qualify for services under 
title I?

    Displaced homemakers may be eligible to receive assistance under 
title I in a variety of ways, including:
    (a) Core services provided by the One-Stop partners through the 
One-Stop delivery system;
    (b) Intensive or training services for which an individual 
qualifies as a dislocated worker/displaced homemaker if the 
requirements of this part are met;
    (c) Intensive or training services for which an individual is 
eligible if the requirements of this part are met;
    (d) Statewide employment and training projects conducted with 
reserve funds for innovative programs for displaced homemakers, as 
described in 20 CFR 665.210(f).


Sec. 663.640  May an individual with a disability whose family does not 
meet income eligibility criteria under the Act be eligible for priority 
as a low-income adult?

    Yes, even if the family of an individual with a disability does not 
meet the income eligibility criteria, the individual with a disability 
is to be considered a low-income individual if the individual's own 
income:
    (a) Meets the income criteria established in WIA section 
101(25)(B); or
    (b) Meets the income eligibility criteria for cash payments under 
any Federal, State or local public assistance program. (WIA sec. 
101(25)(F).)

Subpart G--On-the-Job Training (OJT) and Customized Training


Sec. 663.700  What are the requirements for on-the-job training (OJT)?

    (a) On-the-job training (OJT) is defined at WIA section 101(31). 
OJT is provided under a contract with an employer in the public, 
private non-profit, or private sector. Through the OJT contract, 
occupational training is provided for the WIA participant in

[[Page 49410]]

exchange for the reimbursement of up to 50 percent of the wage rate to 
compensate for the employer's extraordinary costs. (WIA sec. 
101(31)(B).)
    (b) The local program must not contract with an employer who has 
previously exhibited a pattern of failing to provide OJT participants 
with continued long-term employment with wages, benefits, and working 
conditions that are equal to those provided to regular employees who 
have worked a similar length of time and are doing the same type of 
work. (WIA sec. 195(4).)
    (c) An OJT contract must be limited to the period of time required 
for a participant to become proficient in the occupation for which the 
training is being provided. In determining the appropriate length of 
the contract, consideration should be given to the skill requirements 
of the occupation, the academic and occupational skill level of the 
participant, prior work experience, and the participant's individual 
employment plan. (WIA sec. 101(31)(C).)


Sec. 663.705  What are the requirements for OJT contracts for employed 
workers?

    OJT contracts may be written for eligible employed workers when:
    (a) The employee is not earning a self-sufficient wage as 
determined by Local Board policy;
    (b) The requirements in Sec. 663.700 are met; and
    (c) The OJT relates to the introduction of new technologies, 
introduction to new production or service procedures, upgrading to new 
jobs that require additional skills, workplace literacy, or other 
appropriate purposes identified by the Local Board.


Sec. 663.710  What conditions govern OJT payments to employers?

    (a) On-the-job training payments to employers are deemed to be 
compensation for the extraordinary costs associated with training 
participants and the costs associated with the lower productivity of 
the participants.
    (b) Employers may be reimbursed up to 50 percent of the wage rate 
of an OJT participant for the extraordinary costs of providing the 
training and additional supervision related to the OJT. (WIA sec. 
101(31)(B).)
    (c) Employers are not required to document such extraordinary 
costs.


Sec. 663.715  What is customized training?

    Customized training is training:
    (a) That is designed to meet the special requirements of an 
employer (including a group of employers);
    (b) That is conducted with a commitment by the employer to employ, 
or in the case of incumbent workers, continue to employ, an individual 
on successful completion of the training; and
    (c) For which the employer pays for not less than 50 percent of the 
cost of the training. (WIA sec. 101(8).)


Sec. 663.720  What are the requirements for customized training for 
employed workers?

    Customized training of an eligible employed individual may be 
provided for an employer or a group of employers when:
    (a) The employee is not earning a self-sufficient wage as 
determined by Local Board policy;
    (b) The requirements in Sec. 663.715 are met; and
    (c) The customized training relates to the purposes described in 
Sec. 663.705(c) or other appropriate purposes identified by the Local 
Board.


Sec. 663.730  May funds provided to employers for OJT of customized 
training be used to assist, promote, or deter union organizing?

    No, funds provided to employers for OJT or customized training must 
not be used to directly or indirectly assist, promote or deter union 
organizing.

Subpart H--Supportive Services


Sec. 663.800  What are supportive services for adults and dislocated 
workers?

    Supportive services for adults and dislocated workers are defined 
at WIA sections 101(46) and 134(e)(2) and (3). They include services 
such as transportation, child care, dependent care, housing, and needs-
related payments, that are necessary to enable an individual to 
participate in activities authorized under WIA title I. Local Boards, 
in consultation with the One-Stop partners and other community service 
providers, must develop a policy on supportive services that ensures 
resource and service coordination in the local area. Such policy should 
address procedures for referral to such services, including how such 
services will be funded when they are not otherwise available from 
other sources. The provision of accurate information about the 
availability of supportive services in the local area, as well as 
referral to such activities, is one of the core services that must be 
available to adults and dislocated workers through the One-Stop 
delivery system. (WIA sec. 134(d)(2)(H).)


Sec. 663.805  When may supportive services be provided to participants?

    (a) Supportive services may only be provided to individuals who 
are:
    (1) Participating in core, intensive or training services; and
    (2) Unable to obtain supportive services through other programs 
providing such services. (WIA sec. 134(e)(2)(A) and (B).)
    (b) Supportive services may only be provided when they are 
necessary to enable individuals to participate in title I activities. 
(WIA sec. 101(46).)


Sec. 663.810  Are there limits on the amounts or duration of funds for 
supportive services?

    (a) Local Boards may establish limits on the provision of 
supportive services or provide the One-Stop operator with the authority 
to establish such limits, including a maximum amount of funding and 
maximum length of time for supportive services to be available to 
participants.
    (b) Procedures may also be established to allow One-Stop operators 
to grant exceptions to the limits established under paragraph (a) of 
this section.


Sec. 663.815  What are needs-related payments?

    Needs-related payments provide financial assistance to participants 
for the purpose of enabling individuals to participate in training and 
are one of the supportive services authorized by WIA section 134(e)(3).


Sec. 663.820  What are the eligibility requirements for adults to 
receive needs-related payments?

    Adults must:
    (a) Be unemployed,
    (b) Not qualify for, or have ceased qualifying for, unemployment 
compensation; and
    (c) Be enrolled in a program of training services under WIA section 
134(d)(4).


Sec. 663.825  What are the eligibility requirements for dislocated 
workers to receive needs-related payments?

    To receive needs related payments, a dislocated worker must:
    (a) Be unemployed, and:
    (1) Have ceased to qualify for unemployment compensation or trade 
readjustment allowance under TAA or NAFTA-TAA; and
    (2) Be enrolled in a program of training services under WIA section 
134(d)(4) by the end of the 13th week after the most recent layoff that 
resulted in a determination of the worker's eligibility as a dislocated 
worker, or, if later, by the end of the 8th week after the worker is 
informed that a short-term layoff will exceed 6 months; or
    (b) Be unemployed and did not qualify for unemployment

[[Page 49411]]

compensation or trade readjustment assistance under TAA or NAFTA-TAA.


Sec. 663.830  May needs-related payments be paid while a participant is 
waiting to start training classes?

    Yes, payments may be provided if the participant has been accepted 
in a training program that will begin within 30 calender days. The 
Governor may authorize local areas to extend the 30 day period to 
address appropriate circumstances.


Sec. 663.840  How is the level of needs-related payments determined?

    (a) The payment level for adults must be established by the Local 
Board.
    (b) For dislocated workers, payments must not exceed the greater of 
either of the following levels:
    (1) For participants who were eligible for unemployment 
compensation as a result of the qualifying dislocation, the payment may 
not exceed the applicable weekly level of the unemployment compensation 
benefit; or
    (2) For participants who did not qualify for unemployment 
compensation as a result of the qualifying layoff, the weekly payment 
may not exceed the poverty level for an equivalent period. The weekly 
payment level must be adjusted to reflect changes in total family 
income as determined by Local Board policies. (WIA sec. 134(e)(3)(C).)

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

Subpart A--Youth Councils
Sec.
664.100   What is the youth council?
664.110   Who is responsible for oversight of youth programs in the 
local area?
Subpart B--Eligibility for Youth Services
664.200   Who is eligible for youth services?
664.205   How is the ``deficient in basic literacy skills'' 
criterion in Sec. 664.200(c)(1) defined and documented?
664.210   How is the ``requires additional assistance to complete an 
educational program, or to secure and hold employment'' criterion in 
Sec. 664.200(c)(6) defined and documented?
664.215   Must youth participants be registered to participate in 
the youth program?
664.220   Is there an exception to permit youth who are not low-
income individuals to receive youth services?
664.230   Are the eligibility barriers for eligible youth the same 
as the eligibility barriers for the five percent of youth 
participants who do not have to meet income eligibility 
requirements?
664.240   May a local program use eligibility for free lunches under 
the National School Lunch Program as a substitute for the income 
eligibility criteria under title I of WIA?
664.250   May a disabled youth whose family does not meet income 
eligibility criteria under the Act be eligible for youth services?
Subpart C--Out-of-School Youth
664.300   Who is an ``out-of-school youth''?
664.310   When is dropout status determined, particularly for youth 
attending alternative schools?
664.320   Does the requirement that at least 30 percent of youth 
funds be used to provide activities to out-of-school youth apply to 
all youth funds?
Subpart D--Youth Program Design, Elements, and Parameters
664.400   What is a local youth program?
664.405   How must local youth programs be designed?
664.410   Must local programs include each of the ten program 
elements listed in WIA section 129(c)(2) as options available to 
youth participants?
664.420   What are leadership development opportunities?
664.430   What are positive social behaviors?
664.440   What are supportive services for youth?
664.450   What are follow-up services for youth?
664.460   What are work experiences for youth?
664.470   Are paid work experiences allowable activities?
Subpart E--Concurrent Enrollment
664.500   May youth participate in both youth and adult/dislocated 
worker programs concurrently?
664.510   Are Individual Training Accounts allowed for youth 
participants?
Subpart F--Summer Employment Opportunities
664.600   Are Local Boards required to offer summer employment 
opportunities in the local youth program?
664.610   How is the summer employment opportunities element 
administered?
664.620   Do the core indicators described in 20 CFR 666.100(a)(3) 
apply to participation in summer employment activities?
Subpart G--One-Stop Services to Youth
664.700   What is the connection between the youth program and the 
One-Stop service delivery system?
664.710   Do Local Boards have the flexibility to offer services to 
area youth who are not eligible under the youth program through the 
One-Stop centers?
Subpart H--Youth Opportunity Grants
664.800   How are the recipients of Youth Opportunity Grants 
selected?
664.810   How does a Local Board or other entity become eligible to 
receive a Youth Opportunity Grant?
664.820   Who is eligible to receive services under Youth 
Opportunity Grants?
664.830   How are performance measures for Youth Opportunity Grants 
determined?

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

Subpart A--Youth Councils


Sec. 664.100  What is the youth council?

    (a) The duties and membership requirements of the youth council are 
described in WIA section 117(h) and 20 CFR 661.335 and 661.340.
    (b) The purpose of the youth council is to provide expertise in 
youth policy and to assist the Local Board in:
    (1) Developing and recommending local youth employment and training 
policy and practice;
    (2) Broadening the youth employment and training focus in the 
community to incorporate a youth development perspective;
    (3) Establishing linkages with other organizations serving youth in 
the local area; and
    (4) Taking into account a range of issues that can have an impact 
on the success of youth in the labor market. (WIA sec. 117(h).)


Sec. 664.110  Who is responsible for oversight of youth programs in the 
local area?

    (a) The Local Board, working with the youth council, is responsible 
for conducting oversight of local youth programs operated under the 
Act, to ensure both fiscal and programmatic accountability.
    (b) Local program oversight is conducted in consultation with the 
local area's chief elected official.
    (c) The Local Board may, after consultation with the CEO, delegate 
its responsibility for oversight of eligible youth providers, as well 
as other youth program oversight responsibilities, to the youth 
council, recognizing the advantage of delegating such responsibilities 
to the youth council whose members have expertise in youth issues. (WIA 
sec. 117(d); 117(h)(4).)

Subpart B--Eligibility for Youth Services


Sec. 664.200  Who is eligible for youth services?

    An eligible youth is defined, under WIA sec. 101(13), as an 
individual who:
    (a) Is age 14 through 21;
    (b) Is a low income individual, as defined in the WIA section 
101(25); and
    (c) Is within one or more of the following categories:
    (1) Deficient in basic literacy skills;
    (2) School dropout;
    (3) Homeless, runaway, or foster child;
    (4) Pregnant or parenting;
    (5) Offender; or
    (6) Is an individual (including a youth with a disability) who 
requires

[[Page 49412]]

additional assistance to complete an educational program, or to secure 
and hold employment. (WIA sec. 101(13).)


Sec. 664.205  How is the ``deficient in basic literacy skills'' 
criterion in Sec. 664.200(c)(1) defined and documented?

    (a) Definitions and eligibility documentation requirements 
regarding the ``deficient in basic literacy skills'' criterion in 
Sec. 664.200(c)(1) may be established at the State or local level. 
These definitions may establish such criteria as are needed to address 
State or local concerns, and must include a determination that an 
individual:
    (1) Computes or solves problems, reads, writes, or speaks English 
at or below the 8th grade level on a generally accepted standardized 
test or a comparable score on a criterion-referenced test; or
    (2) Is unable to compute or solve problems, read, write, or speak 
English at a level necessary to function on the job, in the 
individual's family or in society. (WIA secs. 101(19), 203(12).)
    (b) In cases where the State Board establishes State policy on this 
criterion, the policy must be included in the State plan. (WIA secs. 
101(13)(C)(i), 101(19).)


Sec. 664.210  How is the ``requires additional assistance to complete 
an educational program, or to secure and hold employment'' criterion in 
Sec. 664.200(c)(6) defined and documented?

    Definitions and eligibility documentation requirements regarding 
the ``requires additional assistance to complete an educational 
program, or to secure and hold employment'' criterion of 
Sec. 664.200(c)(6) may be established at the State or local level. In 
cases where the State Board establishes State policy on this criterion, 
the policy must be included in the State Plan. (WIA sec. 
101(13)(C)(iv).)


Sec. 664.215  Must youth participants be registered to participate in 
the youth program?

    (a) Yes, all youth participants must be registered.
    (b) Registration is the process of collecting information to 
support a determination of eligibility.
    (c) Equal opportunity data must be collected during the 
registration process on any individual who has submitted personal 
information in response to a request by the recipient for such 
information.


Sec. 664.220  Is there an exception to permit youth who are not low-
income individuals to receive youth services?

    Yes, up to five percent of youth participants served by youth 
programs in a local area may be individuals who do not meet the income 
criterion for eligible youth, provided that they are within one or more 
of the following categories:
    (a) School dropout;
    (b) Basic skills deficient, as defined in WIA section 101(4);
    (c) Are one or more grade levels below the grade level appropriate 
to the individual's age;
    (d) Pregnant or parenting;
    (e) Possess one or more disabilities, including learning 
disabilities;
    (f) Homeless or runaway;
    (g) Offender; or
    (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 Secs. 664.200 and 664.220 are not the 
same. Both lists of eligibility barriers include school dropout, 
homeless or runaway, pregnant or parenting, and offender, but each list 
contains barriers not included on the other list.


Sec. 664.240  May a local program use eligibility for free lunches 
under the National School Lunch Program as a substitute for the income 
eligibility criteria under title I of WIA?

    No, the criteria for income eligibility under the National School 
Lunch Program are not the same as the Act's income eligibility 
criteria. Therefore, the school lunch list may not be used as a 
substitute for income eligibility to determine who is eligible for 
services under the Act.


Sec. 664.250  May a disabled youth whose family does not meet income 
eligibility criteria under the Act be eligible for youth services?

    Yes, even if the family of a disabled youth does not meet the 
income eligibility criteria, the disabled youth may be considered a 
low-income individual if the youth's own income:
    (a) Meets the income criteria established in WIA section 
101(25)(B); or
    (b) Meets the income eligibility criteria for cash payments under 
any Federal, State or local public assistance program. (WIA sec. 
101(25)(F).)

Subpart C--Out-of-School Youth


Sec. 664.300  Who is an ``out-of-school youth''?

    An out-of-school youth is an individual who:
    (a) Is an eligible youth who is a school dropout; or
    (b) Is an eligible youth who has either graduated from high school 
or holds a GED, but is basic skills deficient, unemployed, or 
underemployed. (WIA sec. 101(33).)


Sec. 664.310  When is dropout status determined, particularly for youth 
attending alternative schools?

    A school dropout is defined as an individual who is no longer 
attending any school and who has not received a secondary school 
diploma or its recognized equivalent. A youth's dropout status is 
determined at the time of registration. A youth attending an 
alternative school at the time of registration is not a dropout. An 
individual who is out-of school at the time of registration and 
subsequently placed in an alternative school, may be considered an out-
of-school youth for the purposes of the 30 percent expenditure 
requirement for out-of-school youth. (WIA sec. 101(39).)


Sec. 664.320  Does the requirement that at least 30 percent of youth 
funds be used to provide activities to out-of-school youth apply to all 
youth funds?

    (a) Yes, the 30 percent requirement applies to the total amount of 
all funds allocated to a local area under WIA section 128(b)(2)(A) or 
(b)(3), except for local area expenditures for administrative purposes 
under 20 CFR 667.210(a)(2).
    (b) Although it is not necessary to ensure that 30 percent of such 
funds spent on summer employment opportunities (or any other particular 
element of the youth program) are spent on out-of-school youth, the 
funds spent on these activities are included in the total to which the 
30 percent requirement applies.
    (c) There is a limited exception, at WIA section 129(c)(4)(B), 
under which certain small States may apply to the Secretary to reduce 
the minimum amount that must be spent on out-of-school youth. (WIA sec. 
129(c)(4).)

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


Sec. 664.400  What is a local youth program?

    A local youth program is defined as those youth activities offered 
by a Local Workforce Investment Board for a designated local workforce 
investment area, as specified in 20 CFR part 661.


Sec. 664.405  How must local youth programs be designed?

    (a) The design framework of local youth programs must:
    (1) Provide an objective assessment of each youth participant, that 
meets the requirements of WIA section

[[Page 49413]]

129(c)(1)(A), and includes a review of the academic and occupational 
skill levels, as well as the service needs, of each youth;
    (2) Develop an individual service strategy for each youth 
participant that meets the requirements of WIA section 129(c)(1)(B), 
including identifying an age-appropriate career goal and consideration 
of the assessment results for each youth; and
    (3) Provide preparation for postsecondary educational 
opportunities, provide linkages between academic and occupational 
learning, provide preparation for employment, and provide effective 
connections to intermediary organizations that provide strong links to 
the job market and employers.
    (4) The requirement in WIA section 123 that eligible providers of 
youth services be selected by awarding a grant or contract on a 
competitive basis does not apply to the design framework component, 
such as services for intake, objective assessment and the development 
of individual service strategy, when these services are provided by the 
grant recipient/fiscal agent.
    (b) The local plan must describe the design framework for youth 
program design in the local area, and how the ten program elements 
required in Sec. 664.410 are provided within that framework.
    (c) Local Boards must ensure appropriate links to entities that 
will foster the participation of eligible local area youth. Such links 
may include connections to:
    (1) Local area justice and law enforcement officials;
    (2) Local public housing authorities;
    (3) Local education agencies;
    (4) Job Corps representatives; and
    (5) Representatives of other area youth initiatives, including 
those that serve homeless youth and other public and private youth 
initiatives.
    (d) Local Boards must ensure that the referral requirements in WIA 
section 129(c)(3) for youth who meet the income eligibility criteria 
are met, including:
    (1) Providing these youth with information regarding the full array 
of applicable or appropriate services available through the Local Board 
or other eligible providers, or One-Stop partners; and
    (2) Referring these youth to appropriate training and educational 
programs that have the capacity to serve them either on a sequential or 
concurrent basis.
    (e) In order to meet the basic skills and training needs of 
eligible applicants who do not meet the enrollment requirements of a 
particular program or who cannot be served by the program, each 
eligible youth provider must ensure that these youth are referred:
    (1) For further assessment, as necessary, and
    (2) To appropriate programs, in accordance with paragraph (d)(2) of 
this section.
    (f) Local Boards must ensure that parents, youth participants, and 
other members of the community with experience relating to youth 
programs are involved in both the design and implementation of its 
youth programs.
    (g) The objective assessment required under paragraph (a)(1) of 
this section or the individual service strategy required under 
paragraph (a)(2) of this section is not required if the program 
provider determines that it is appropriate to use a recent objective 
assessment or individual service strategy that was developed under 
another education or training program. (WIA section 129(c)(1).)


Sec. 664.410  Must local programs include each of the ten program 
elements listed in WIA section 129(c)(2) as options available to youth 
participants?

    (a) Yes, local programs must make the following services available 
to youth participants:
    (1) Tutoring, study skills training, and instruction leading to 
secondary 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;
    (5) Occupational skill training;
    (6) Leadership development opportunities, which include community 
service and peer-centered activities encouraging responsibility and 
other positive social behaviors;
    (7) Supportive services, which may include the services listed in 
Sec. 664.440;
    (8) Adult mentoring for a duration of at least twelve (12) months, 
that may occur both during and after program participation;
    (9) Followup services, as provided in Sec. 664.450; and
    (10) Comprehensive guidance and counseling, including drug and 
alcohol abuse counseling, as well as referrals to counseling, as 
appropriate to the needs of the individual youth.
    (b) Local programs have the discretion to determine what specific 
program services will be provided to a youth participant, based on each 
participant's objective assessment and individual service strategy. 
(WIA sec. 129(c)(2).)


Sec. 664.420  What are leadership development opportunities?

    Leadership development opportunities are opportunities that 
encourage responsibility, employability, and other positive social 
behaviors such as:
    (a) Exposure to postsecondary educational opportunities;
    (b) Community and service learning projects;
    (c) Peer-centered activities, including peer mentoring and 
tutoring;
    (d) Organizational and team work training, including team 
leadership training;
    (e) Training in decision-making, including determining priorities; 
and
    (f) Citizenship training, including life skills training such as 
parenting, work behavior training, and budgeting of resources. (WIA 
sec. 129(c)(2)(F).)


Sec. 664.430  What are positive social behaviors?

    Positive social behaviors are outcomes of leadership opportunities, 
often referred to as soft skills, which are incorporated by many local 
programs as part of their menu of services. Positive social behaviors 
focus on areas that may include the following:
    (a) Positive attitudinal development;
    (b) Self esteem building;
    (c) Openness to working with individuals from diverse racial and 
ethnic backgrounds;
    (d) Maintaining healthy lifestyles, including being alcohol and 
drug free;
    (e) Maintaining positive relationships with responsible adults and 
peers, and contributing to the well being of one's community, including 
voting;
    (f) Maintaining a commitment to learning and academic success;
    (g) Avoiding delinquency;
    (h) Postponed and responsible parenting; and
    (i) Positive job attitudes and work skills. (WIA sec. 
129(c)(2)(F).)


Sec. 664.440  What are supportive services for youth?

    Supportive services for youth, as defined in WIA section 101(46), 
may include the following:
    (a) Linkages to community services;
    (b) Assistance with transportation;
    (c) Assistance with child care and dependent care;
    (d) Assistance with housing;
    (e) Referrals to medical services; and
    (f) Assistance with uniforms or other appropriate work attire and 
work-related tools, including such items as eye glasses and protective 
eye gear. (WIA sec. 129(c)(2)(G).)

[[Page 49414]]

Sec. 664.450  What are follow-up services for youth?

    (a) Follow-up services for youth may include:
    (1) The leadership development and supportive service activities 
listed in Secs. 664.420 and 664.440;
    (2) Regular contact with a youth participant's employer, including 
assistance in addressing work-related problems that arise;
    (3) Assistance in securing better paying jobs, career development 
and further education;
    (4) Work-related peer support groups;
    (5) Adult mentoring; and
    (6) Tracking the progress of youth in employment after training.
    (b) All youth participants must receive some form of follow-up 
services for a minimum duration of 12 months. Follow-up services may be 
provided beyond twelve (12) months at the State or Local Board's 
discretion. The types of services provided and the duration of services 
must be determined based on the needs of the individual. The scope of 
these follow-up services may be less intensive for youth who have only 
participated in summer youth employment opportunities. (WIA sec. 
129(c)(2)(I).)


Sec. 664.460  What are work experiences for youth?

    (a) Work experiences are planned, structured learning experiences 
that take place in a workplace for a limited period of time. As 
provided in WIA section 129(c)(2)(D) and Sec. 664.470, work experiences 
may be paid or unpaid.
    (b) Work experience workplaces may be in the private, for-profit 
sector; the non-profit sector; or the public sector.
    (c) Work experiences are designed to enable youth to gain exposure 
to the working world and its requirements. Work experiences are 
appropriate and desirable activities for many youth throughout the 
year. Work experiences should help youth acquire the personal 
attributes, knowledge, and skills needed to obtain a job and advance in 
employment. The purpose is to provide the youth participant with the 
opportunities for career exploration and skill development and is not 
to benefit the employer, although the employer may, in fact, benefit 
from the activities performed by the youth. Work experiences may be 
subsidized or unsubsidized and may include the following elements:
    (1) Instruction in employability skills or generic workplace skills 
such as those identified by the Secretary's Commission on Achieving 
Necessary Skills (SCANS);
    (2) Exposure to various aspects of an industry;
    (3) Progressively more complex tasks;
    (4) Internships and job shadowing;
    (5) The integration of basic academic skills into work activities;
    (6) Supported work, work adjustment, and other transition 
activities;
    (7) Entrepreneurship;
    (8) Service learning;
    (9) Paid and unpaid community service; and
    (10) Other elements designed to achieve the goals of work 
experiences.
    (d) In most cases, on-the-job training is not an appropriate work 
experiences activity for youth participants under age 18. Local program 
operators may choose, however, to use this service strategy for 
eligible youth when it is appropriate based on the needs identified by 
the objective assessment of an individual youth participant. (WIA sec. 
129(c)(2)(D).)


Sec. 664.470  Are paid work experiences allowable activities?

    Funds under the Act may be used to pay wages and related benefits 
for work experiences in the public; private, for-profit or non-profit 
sectors where the objective assessment and individual service strategy 
indicate that work experiences are appropriate. (WIA sec. 
129(c)(2)(D).)

Subpart E--Concurrent Enrollment


Sec. 664.500  May youth participate in both youth and adult/dislocated 
worker programs concurrently?

    (a) Yes, under the Act, eligible youth are 14 through 21 years of 
age. Adults are defined in the Act as individuals age 18 and older. 
Thus, individuals ages 18 through 21 may be eligible for both adult and 
youth programs. There is no specified age for the dislocated worker 
program.
    (b) Individuals who meet the respective eligibility requirements 
may participate in adult and youth programs concurrently. Concurrent 
enrollment is allowable for youth served in programs under WIA titles I 
or II. Such individuals must be eligible under the youth or adult/
dislocated worker eligibility criteria applicable to the services 
received. Local program operators may determine, for individuals in 
this age group, the appropriate level and balance of services under the 
youth, adult, dislocated worker, or other services.
    (c) Local program operators must identify and track the funding 
streams which pay the costs of services provided to individuals who are 
participating in youth and adult/dislocated worker programs 
concurrently, and ensure that services are not duplicated.


Sec. 664.510  Are Individual Training Accounts allowed for youth 
participants?

    No, however, individuals age 18 and above, who are eligible for 
training services under the adult and dislocated worker programs, may 
receive Individual Training Accounts through those programs. 
Requirements for concurrent participation requirements are set forth in 
Sec. 664.500. To the extent possible, in order to enhance youth 
participant choice, youth participants should be involved in the 
selection of educational and training activities.

Subpart F--Summer Employment Opportunities


Sec. 664.600  Are Local Boards required to offer summer employment 
opportunities in the local youth program?

    (a) Yes, Local Boards are required to offer summer youth employment 
opportunities that link academic and occupational learning as part of 
the menu of services required in Sec. 664.410(a).
    (b) Summer youth employment must provide direct linkages to 
academic and occupational learning, and may provide other elements and 
strategies as appropriate to serve the needs and goals of the 
participants.
    (c) Local Boards may determine how much of available youth funds 
will be used for summer and for year-round youth activities.
    (d) The summer youth employment opportunities element is not 
intended to be a stand-alone program. Local programs should integrate a 
youth's participation in that element into a comprehensive strategy for 
addressing the youth's employment and training needs. Youths who 
participate in summer employment opportunities must be provided with a 
minimum of twelve months of followup services, as required in 
Sec. 664.450. (WIA sec. 129(c)(2)(C).)


Sec. 664.610  How is the summer employment opportunities element 
administered?

    Chief elected officials and Local Boards are responsible for 
ensuring that the local youth program provides summer employment 
opportunities to youth. The chief elected officials (which may include 
local government units operating as a consortium) are the grant 
recipients for local youth funds, unless another entity is chosen to be 
grant recipient or fiscal agent under WIA section 117(d)(3)(B). If, in 
the administration of the summer employment opportunities element of 
the local youth program, providers other than the grant recipient/
fiscal agent, are used to provide summer youth employment 
opportunities, these

[[Page 49415]]

providers must be selected by awarding a grant or contract on a 
competitive basis, based on the recommendation of the youth council and 
on criteria contained in the State Plan. However, the selection of 
employers who are providing unsubsidized employment opportunities may 
be excluded from the competitive process. (WIA sec. 129(c)(2)(C).)


Sec. 664.620  Do the core indicators described in 20 CFR 666.100(a)(3) 
apply to participation in summer employment activities?

    Yes, the summer employment opportunities element is one of a number 
of activities authorized by the WIA youth program. WIA section 
136(b)(2) (A)(ii) and(B) provides specific core indicators of 
performance for youth, and requires that all participating youth be 
included in the determination of whether the local levels of 
performance are met. Program operators can help ensure positive 
outcomes for youth participants by providing them with continuity of 
services.

Subpart G--One-Stop Services to Youth


Sec. 664.700  What is the connection between the youth program and the 
One-Stop service delivery system?

    (a) The chief elected official (or designee, under WIA section 
117(d)(3)(B)), as the local grant recipient for the youth program is a 
required One-Stop 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; and
    (4) Other activities designed to achieve the purposes of the youth 
program and youth activities as described in WIA section 129(a). (WIA 
secs. 121(b)(1)(B)(i); 129.)


Sec. 664.710  Do Local Boards have the flexibility to offer services to 
area youth who are not eligible under the youth program through the 
One-Stop centers?

    Yes, however, One-Stop services for non-eligible youth must be 
funded by programs that are authorized to provide services to such 
youth. For example, basic labor exchange services under the Wagner-
Peyser Act may be provided to any youth.

Subpart H--Youth Opportunity Grants


Sec. 664.800  How are the recipients of Youth Opportunity Grants 
selected?

    (a) Youth Opportunity Grants are awarded through a competitive 
selection process. The Secretary establishes appropriate application 
procedures, selection criteria, and an approval process for awarding 
Youth Opportunity Grants to applicants which can accomplish the purpose 
of the Act and use available funds in an effective manner in the 
Solicitation for Grant Applications announcing the competition.
    (b) The Secretary distributes grants equitably among urban and 
rural areas by taking into consideration such factors as the following:
    (1) The poverty rate in urban and rural communities;
    (2) The number of people in poverty in urban and rural communities; 
and
    (3) The quality of proposals received. (WIA sec.169(a) and (e).)


Sec. 664.810  How does a Local Board or other entity become eligible to 
receive a Youth Opportunity Grant?

    (a) A Local Board is eligible to receive a Youth Opportunity Grant 
if it serves a community that:
    (1) Has been designated as an empowerment zone (EZ) or enterprise 
community (EC) under section 1391 of the Internal Revenue Code of 1986;
    (2) Is located in a State that does not have an EZ or an EC and 
that has been designated by its Governor as a high poverty area; or
    (3) Is one of two areas in a State that has been designated by the 
Governor as an area for which a local board may apply for a Youth 
Opportunity Grant, and that meets the poverty rate criteria in section 
1392 (a)(4), (b), and (d) of the Internal Revenue Code of 1986.
    (b) An entity other than a Local Board is eligible to receive a 
grant if that entity:
    (1) Is a WIA Indian and Native American grant recipient under WIA 
section 166; and
    (2) Serves a community that:
    (i) Meets the poverty rate criteria in section 1392(a)(4), (b), and 
(d) of the Internal Revenue Code of 1986; and
    (ii) Is located on an Indian reservation or serves Oklahoma Indians 
or Alaska Native villages or Native groups, as provided in WIA section 
169 (d)(2)(B). (WIA sec. 169(c) and (d).)


Sec. 664.820  Who is eligible to receive services under Youth 
Opportunity Grants?

    All individuals ages 14 through 21 who reside in the community 
identified in the grant are eligible to receive services under the 
grant. (WIA sec. 169(a).)


Sec. 664.830  How are performance measures for Youth Opportunity Grants 
determined?

    (a) The Secretary negotiates performance measures, including 
appropriate performance levels for each indicator, with each selected 
grantee, based on information contained in the application.
    (b) Performance indicators for the measures negotiated under Youth 
Opportunity Grants are the indicators of 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
665.200  What are required Statewide workforce investment 
activities?
665.210  What are allowable Statewide workforce investment 
activities?
665.220  Who is an ``incumbent worker'' for purposes of Statewide 
workforce investment activities?
Subpart C--Rapid Response Activities
665.300  What are rapid response activities and who is responsible 
for providing them?
665.310  What rapid response activities are required?
665.320  May other activities be undertaken as part of rapid 
response?
665.330  Are the NAFTA-TAA program requirements for rapid response 
also required activities?
665.340  What is meant by ``provision of additional assistance'' in 
WIA section 134(a)(2)(A)(ii)?

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

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

[[Page 49416]]

Statewide workforce investment funds. Descriptions of these policies 
and strategies must be included in the State Plan. (WIA secs. 129(b), 
134(a).)


Sec. 665.110  How are Statewide workforce investment activities funded?

    (a) Except for the Statewide rapid response activities described in 
paragraph (c) of this section, Statewide workforce investment 
activities are supported by funds reserved by the Governor under WIA 
section 128(a).
    (b) Funds reserved by the Governor for Statewide workforce 
investment activities may be combined and used for any of the 
activities authorized in WIA sections 129(b), 134(a)(2)(B) or 
134(a)(3)(A) (which are described in 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 section 133(a)(2) and may be used to provide the activities 
authorized at section 134(a)(2)(A) (which are described in 
Secs. 665.310 through 665.330). (WIA secs. 129(b), 133(a)(2), 
134(a)(2)(B), and 134(a)(3)(A).)

Subpart B--Required and Allowable Statewide Workforce Investment 
Activities


Sec. 665.200  What are required Statewide workforce investment 
activities?

    Required Statewide workforce investment activities are:
    (a) Required rapid response activities, as described in 
Sec. 665.310;
    (b) Disseminating:
    (1) The State list of eligible providers of training services 
(including those providing non-traditional training services), for 
adults and dislocated workers;
    (2) Information identifying eligible providers of on-the-job 
training (OJT) and customized training;
    (3) Performance and program cost information about these providers, 
as described in 20 CFR 663.540; and
    (4) A list of eligible providers of youth activities as described 
in WIA section 123;
    (c) States must assure that the information listed in paragraphs 
(b)(1) through (4) of this section is widely available.
    (d) Conducting evaluations, under WIA section 136(e), of workforce 
investment activities for adults, dislocated workers and youth, in 
order to establish and promote methods for continuously improving such 
activities to achieve high-level performance within, and high-level 
outcomes from, the Statewide workforce investment system. Such 
evaluations must be designed and conducted in conjunction with the 
State and Local Boards, and must include analysis of customer feedback, 
outcome and process measures in the workforce investment system. To the 
maximum extent practicable, these evaluations should be conducted in 
coordination with Federal evaluations carried out under WIA section 
172.
    (e) Providing incentive grants:
    (1) To local areas for regional cooperation among Local Boards 
(including Local Boards for a designated region, as described in 20 CFR 
661.290);
    (2) For local coordination of activities carried out under WIA; and
    (3) For exemplary performance by local areas on the performance 
measures.
    (f) Providing technical assistance to local areas that fail to meet 
local performance measures.
    (g) Assisting in the establishment and operation of One-Stop 
delivery systems, in accordance with the strategy described in the 
State workforce investment plan. (WIA sec. 112(b)(14).)
    (h) Providing additional assistance to local areas that have high 
concentrations of eligible youth.
    (i) Operating a fiscal and management accountability information 
system, based on guidelines established by the Secretary after 
consultation with the Governors, chief elected officials, and One-Stop 
partners, as required by WIA section 136(f). (WIA secs. 129(b)(2), 
134(a)(2), and 136(e)(2).)


Sec. 665.210  What are allowable Statewide workforce investment 
activities?

    Allowable Statewide workforce investment activities include:
    (a) State administration of the adult, dislocated worker and youth 
workforce investment activities, consistent with the five percent 
administrative cost limitation at 20 CFR 667.210(a)(1).
    (b) Providing capacity building and technical assistance to local 
areas, including Local Boards, One-Stop operators, One-Stop partners, 
and eligible providers, which may include:
    (1) Staff development and training; and
    (2) The development of exemplary program activities.
    (c) Conducting research and demonstrations.
    (d) Establishing and implementing:
    (1) Innovative incumbent worker training programs, which may 
include an employer loan program to assist in skills upgrading; and
    (2) Programs targeted to Empowerment Zones and Enterprise 
Communities.
    (e) Providing support to local areas for the identification of 
eligible training providers.
    (f) Implementing innovative programs for displaced homemakers, and 
programs to increase the number of individuals trained for and placed 
in non-traditional employment.
    (g) Carrying out such adult and dislocated worker employment and 
training activities as the State determines are necessary to assist 
local areas in carrying out local employment and training activities.
    (h) Carrying out youth activities Statewide.
    (i) Preparation and submission to the Secretary of the annual 
performance progress report as described in 20 CFR 667.300(e). (WIA 
secs. 129(b)(3) and 134(a)(3).)


Sec. 665.220  Who is an ``incumbent worker'' for purposes of Statewide 
workforce investment activities?

    States may establish policies and definitions to determine which 
workers, or groups of workers, are eligible for incumbent worker 
services under this subpart. An incumbent worker is an individual who 
is employed, but an incumbent worker does not necessarily have to meet 
the eligibility requirements for intensive and training services for 
employed adults and dislocated workers at 20 CFR 663.220(b) and 
663.310. (WIA sec. 134(a)(3)(A)(iv)(I).)

Subpart C--Rapid Response Activities


Sec. 665.300  What are rapid response activities and who is responsible 
for providing them?

    (a) Rapid response activities are described in Secs. 665.310 
through 665.330. They encompass the activities necessary to plan and 
deliver services to enable dislocated workers to transition to new 
employment as quickly as possible, following either a permanent closure 
or mass layoff, or a natural or other disaster resulting in a mass job 
dislocation.
    (b) The State is responsible for providing rapid response 
activities. Rapid response is a required activity carried out in local 
areas by the State, or an entity designated by the State, in 
conjunction with the Local Board and chief elected officials. The State 
must establish methods by which to provide additional assistance to 
local areas that experience disasters, mass layoffs, plant closings, or 
other dislocation events when such events substantially increase the 
number of unemployed individuals.
    (c) States must establish a rapid response dislocated worker unit 
to carry out Statewide rapid response activities.

[[Page 49417]]

(WIA secs. 101(38), 112(b)(17)(A)(ii) and 134(a)(2)(A).)


Sec. 665.310  What rapid response activities are required?

    Rapid response activities must include:
    (a) Immediate and on-site contact with the employer, 
representatives of the affected workers, and the local community, which 
may include an assessment of the:
    (1) Layoff plans and schedule of the employer;
    (2) Potential for averting the layoff(s) in consultation with State 
or local economic development agencies, including private sector 
economic development entities;
    (3) Background and probable assistance needs of the affected 
workers;
    (4) Reemployment prospects for workers in the local community; and
    (5) Available resources to meet the short and long-term assistance 
needs of the affected workers.
    (b) The provision of information and access to unemployment 
compensation benefits, comprehensive One-Stop system services, and 
employment and training activities, including information on the Trade 
Adjustment Assistance (TAA) program and the NAFTA-TAA program (19 
U.S.C. 2271 et seq.);
    (c) The provision of guidance and/or financial assistance in 
establishing a labor-management committee voluntarily agreed to by 
labor and management, or a workforce transition committee comprised of 
representatives of the employer, the affected workers and the local 
community. The committee may devise and oversee an implementation 
strategy that responds to the reemployment needs of the workers. The 
assistance to this committee may include:
    (1) The provision of training and technical assistance to members 
of the committee;
    (2) Funding the operating costs of a committee to enable it to 
provide advice and assistance in carrying out rapid response activities 
and in the design and delivery of WIA-authorized services to affected 
workers. Typically, such support will last no longer than six months; 
and
    (3) Providing a list of potential candidates to serve as a neutral 
chairperson of the committee.
    (d) The provision of emergency assistance adapted to the particular 
closing, layoff or disaster.
    (e) The provision of assistance to the local board and chief 
elected official(s) to develop a coordinated response to the 
dislocation event and, as needed, obtain access to State economic 
development assistance. Such coordinated response may include the 
development of an application for National Emergency Grant under 20 CFR 
part 671. (WIA secs. 101(38) and 134(a)(2)(A).)


Sec. 665.320  May other activities be undertaken as part of rapid 
response?

    Yes, a State or designated entity may provide rapid response 
activities in addition to the activities required to be provided under 
Sec. 665.310. In order to provide effective rapid response upon 
notification of a permanent closure or mass layoff, or a natural or 
other disaster resulting in a mass job dislocation, the State or 
designated entity may:
    (a) In conjunction, with other appropriate Federal, State and Local 
agencies and officials, employer associations, technical councils or 
other industry business councils, and labor organizations:
    (1) Develop prospective strategies for addressing dislocation 
events, that ensure rapid access to the broad range of allowable 
assistance;
    (2) Identify strategies for the aversion of layoffs; and
    (3) Develop and maintain mechanisms for the regular exchange of 
information relating to potential dislocations, available adjustment 
assistance, and the effectiveness of rapid response strategies.
    (b) In collaboration with the appropriate State agency(ies), 
collect and analyze information related to economic dislocations, 
including potential closings and layoffs, and all available resources 
in the State for dislocated workers in order to provide an adequate 
basis for effective program management, review and evaluation of rapid 
response and layoff aversion efforts in the State.
    (c) Participate in capacity building activities, including 
providing information about innovative and successful strategies for 
serving dislocated workers, with local areas serving smaller layoffs.
    (d) Assist in devising and overseeing strategies for:
    (1) Layoff aversion, such as prefeasibility studies of avoiding a 
plant closure through an option for a company or group, including the 
workers, to purchase the plant or company and continue it in operation;
    (2) Incumbent worker training, including employer loan programs for 
employee skill upgrading; and
    (3) Linkages with economic development activities at the Federal, 
State and local levels, including Federal Department of Commerce 
programs and available State and local business retention and 
recruitment activities.


Sec. 665.330  Are the NAFTA-TAA program requirements for rapid response 
also required activities?

    The Governor must ensure that rapid response activities under WIA 
are made available to workers who, under the NAFTA Implementation Act 
(Public Law 103-182), are members of a group of workers (including 
those in any agricultural firm or subdivision of an agricultural firm) 
for which the Governor has made a preliminary finding that:
    (a) A significant number or proportion of the workers in such firm 
or an appropriate subdivision of the firm have become totally or 
partially separated, or are threatened to become totally or partially 
separated; and
    (b) Either: (1) The sales or production, or both, of such firm or 
subdivision have decreased absolutely; and
    (2) Imports from Mexico or Canada of articles like or directly 
competitive with those produced by such firm or subdivision have 
increased; or
    (c) There has been a shift in production by such workers' firm or 
subdivision to Mexico or Canada of articles which are produced by the 
firm or subdivision.


Sec. 665.340  What is meant by ``provision of additional assistance'' 
in WIA section 134(a)(2)(A)(ii)?

    Up to 25 percent of dislocated worker funds may be reserved for 
rapid response activities. Once the State has reserved adequate funds 
for rapid response activities, such as those described in Sec. 665.310 
and 665.320, the remainder of the funds may be used by the State to 
provide funds to local areas, that experience increased numbers of 
unemployed individuals due to natural disasters, plant closings, mass 
layoffs or other events, for provision of direct services to 
participants (such as intensive, training, and other services) if there 
are not adequate local funds available to assist the dislocated 
workers.

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?

[[Page 49418]]

666.130   Under what conditions may a State or DOL request revisions 
to the State negotiated levels of performance?
666.140   Which individuals receiving services are included in the 
core indicators of performance?
666.150   What responsibility do States have to use quarterly wage 
record information for performance accountability?
Subpart B--Incentives and Sanctions for State Performance
666.200   Under what circumstances is a State eligible for an 
Incentive Grant?
666.205   What are the time frames under which States submit 
performance progress reports and apply for incentive grants?
666.210   How may Incentive Grant funds be used?
666.220   What information must be included in a State Board's 
application for an Incentive Grant?
666.230   How does the Department determine the amounts for 
Incentive Grant awards?
666.240   Under what circumstances may a sanction be applied to a 
State that fails to achieve negotiated levels of performance for 
title I?
Subpart C--Local Measures of Performance
666.300   What performance indicators apply to local areas?
666.310   What levels of performance apply to the indicators of 
performance in local areas?
Subpart D--Incentives and Sanctions for Local Performance
666.400   Under what circumstances are local areas eligible for 
State Incentive Grants?
666.410   How may local incentive awards be used?
666.420   Under what circumstances may a sanction be applied to 
local areas for poor performance?

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

Subpart A--State Measures of Performance


Sec. 666.100  What performance indicators must be included in a State's 
plan?

    (a) All States submitting a State Plan under WIA title I, subtitle 
B must propose expected levels of performance for each of the core 
indicators of performance for the adult, dislocated worker and youth 
programs, respectively and the two customer satisfaction indicators.
    (1) For the Adult program, these indicators are:
    (i) Entry into unsubsidized employment;
    (ii) Retention in unsubsidized employment six months after entry 
into the employment;
    (iii) Earnings received in unsubsidized employment six months after 
entry into the employment; and
    (iv) Attainment of a recognized credential related to achievement 
of educational skills (such as a secondary school diploma or its 
recognized equivalent), or occupational skills, by participants who 
enter unsubsidized employment.
    (2) For the Dislocated Worker program, these indicators are:
    (i) Entry into unsubsidized employment;
    (ii) Retention in unsubsidized employment six months after entry 
into the employment;
    (iii) Earnings received in unsubsidized employment six months after 
entry into the employment; and
    (iv) Attainment of a recognized credential related to achievement 
of educational skills (such as a secondary school diploma or its 
recognized equivalent), or occupational skills, by participants who 
enter unsubsidized employment.
    (3) For the Youth program, these indicators are:
    (i) For eligible youth aged 14 through 18:
    (A) Attainment of basic skills goals, and, as appropriate, work 
readiness or occupational skills goals, up to a maximum of three goals 
per year;
    (B) Attainment of secondary school diplomas and their recognized 
equivalents; and
    (C) Placement and retention in postsecondary education, advanced 
training, military service, employment, or qualified apprenticeships.
    (ii) For eligible youth aged 19 through 21:
    (A) Entry into unsubsidized employment;
    (B) Retention in unsubsidized employment six months after entry 
into the employment;
    (C) Earnings received in unsubsidized employment six months after 
entry into the employment; and
    (D) Attainment of a recognized credential related to achievement of 
educational skills (such as a secondary school diploma or its 
recognized equivalent), or occupational skills, by participants who 
enter post-secondary education, advanced training, or unsubsidized 
employment.
    (4) A single customer satisfaction measure for employers and a 
single customer satisfaction indicator for participants must be used 
for the WIA title I, subtitle B programs for adults, dislocated workers 
and youth. (WIA sec. 136(b)(2).)
    (b) After consultation with the representatives identified in WIA 
sections 136(i) and 502(b), the Departments of Labor and Education will 
issue definitions for the performance indicators established under 
title I and title II of WIA. (WIA sec. 136 (b), (f) and (i).)


Sec. 666.110  May a Governor require additional indicators of 
performance?

    Yes, Governors may develop additional indicators of performance for 
adults, youth and dislocated worker activities. These indicators must 
be included in the State Plan. (WIA sec. 136(b)(2)(C).)


Sec. 666.120  What are the procedures for negotiating annual levels of 
performance?

    (a) We issue instructions on the specific information that must 
accompany the State Plan and that is used to review the State's 
expected levels of performance. The instructions may require that 
levels of performance for years two and three be expressed as a 
percentage improvement over the immediately preceding year's 
performance, consistent with the objective of continuous improvement.
    (b) States must submit expected levels of performance for the 
required indicators for each of the first three program years covered 
by the Plan.
    (c) The Secretary and the Governor must reach agreement on levels 
of performance for each core indicator and the customer satisfaction 
indicators. In negotiating these levels, the following must be taken 
into account:
    (1) The expected levels of performance identified in the State 
Plan;
    (2) The extent to which the levels of performance for each core 
indicator assist in achieving high customer satisfaction;
    (3) The extent to which the levels of performance promote 
continuous improvement and ensure optimal return on the investment of 
Federal funds; and
    (4) How the levels compare with those of other States, taking into 
account factors including differences in economic conditions, 
participant characteristics, and the proposed service mix and 
strategies.
    (d) The levels of performance agreed to under paragraph (c) of this 
section will be the State's negotiated levels of performance for the 
first three years of the State Plan. These levels will be used to 
determine whether sanctions will be applied or incentive grant funds 
will be awarded.
    (e) Before the fourth year of the State Plan, the Secretary and the 
Governor must reach agreement on levels of performance for each core 
indicator and the customer satisfaction indicators for the fourth and 
fifth years covered by the plan. In negotiating these levels, the 
factors listed in paragraph (c) of this section must be taken into 
account.

[[Page 49419]]

    (f) The levels of performance agreed to under paragraph (e) of this 
section will be the State negotiated levels of performance for the 
fourth and fifth years of the plan and must be incorporated into the 
State Plan.
    (g) Levels of performance for the additional indicators developed 
by the Governor, including additional indicators to demonstrate and 
measure continuous improvement toward goals identified by the State, 
are not part of the negotiations described in paragraphs (c) and (e) of 
this section. (WIA sec. 136(b)(3).)
    (h) State negotiated levels of performance may be revised in 
accordance with Sec. 666.130.


Sec. 666.130  Under what conditions may a State or DOL request 
revisions to the State negotiated levels of performance?

    (a) The DOL guidelines describe when and under what circumstances a 
Governor may request revisions to negotiated levels. These 
circumstances include significant changes in economic conditions, in 
the characteristics of participants entering the program, or in the 
services to be provided from when the initial plan was submitted and 
approved. (WIA sec. 136(b)(3)(A)(vi).)
    (b) The guidelines will establish the circumstances under which a 
State will be required to submit revisions under specified 
circumstances.


Sec. 666.140  Which individuals receiving services are included in the 
core indicators of performance?

    (a)(1) The core indicators of performance apply to all individuals 
who are registered under 20 CFR 663.105 and 664.215 for the adult, 
dislocated worker and youth programs, except for those adults and 
dislocated workers who participate exclusively in self-service or 
informational activities. (WIA sec. 136(b)(2)(A).)
    (2) Self-service and informational activities are those core 
services that are made available and accessible to the general public, 
that are designed to inform and educate individuals about the labor 
market and their employment strengths, weaknesses, and the range of 
services appropriate to their situation, and that do not require 
significant staff involvement with the individual in terms of resources 
or time.
    (b) For registered participants, a standardized record that 
includes appropriate performance information must be maintained in 
accordance with WIA section 185(a)(3).
    (c) Performance will be measured on the basis of results achieved 
by registered participants, and will reflect services provided under 
WIA title I, subtitle B programs for adults, dislocated workers and 
youth. Performance may also take into account services provided to 
participants by other One-Stop partner programs and activities, to the 
extent that the local MOU provides for the sharing of participant 
information.


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

    (a) States must, consistent with State laws, use quarterly wage 
record information in measuring the progress on State and local 
performance measures. In order to meet this requirement the use of 
social security numbers from registered participants and such other 
information as is necessary to measure the progress of those 
participants through quarterly wage record information is authorized.
    (b) The State must include in the State Plan a description of the 
State's performance accountability system, and a description of the 
State's strategy for using quarterly wage record information to measure 
the progress on State and local performance measures. The description 
must identify the entities that may have access to quarterly wage 
record information for this purpose.
    (c) ``Quarterly wage record information'' means information 
regarding wages paid to an individual, the social security account 
number (or numbers, if more than one) of the individual and the name, 
address, State, and (when known) the Federal employer identification 
number of the employer paying the wages to the individual. (WIA sec. 
136(f)(2).)

Subpart B--Incentives and Sanctions for State Performance


Sec. 666.200  Under what circumstances is a State eligible for an 
Incentive Grant?

    A State is eligible to apply for an Incentive Grant if its 
performance for the immediately preceding year exceeds:
    (a) The State's negotiated levels of performance for the required 
core indicators for the adult, dislocated worker and youth programs 
under title I of WIA as well as the customer satisfaction indicators 
for WIA title I programs;
    (b) The adjusted levels of performance for title II Adult Education 
and Family Literacy programs; and
    (c) The adjusted levels of performance under section 113 of the 
Carl D. Perkins Vocational and Technical Education Act (20 U.S.C. 2301 
et seq.). (WIA sec. 503.)


Sec. 666.205  What are the time frames under which States submit 
performance progress reports and apply for incentive grants?

    (a) State performance progress reports must be filed by the due 
date established in reporting instructions issued by the Department.
    (b) Based upon the reports filed under paragraph (a) of this 
section, we will determine the amount of funds available, under WIA 
title I, to each eligible State for incentive grants, in accordance 
with the criteria of Sec. 666.230. We will publish the award amounts 
for each eligible State, after consultation with the Secretary of 
Education, within ninety (90) days after the due date for performance 
progress reports established under paragraph (a) of this section.
    (c) Within forty-five (45) days of the publication of award amounts 
under paragraph (b) of this section, States may apply for incentive 
grants in accordance with the requirements of Sec. 666.220.


Sec. 666.210  How may Incentive Grant funds be used?

    Incentive grant funds are awarded to States to carry out any one or 
more innovative programs under titles I or II of WIA or the Carl D. 
Perkins Vocational and Technical Education Act, regardless of which Act 
is the source of the incentive funds. (WIA sec. 503(a).)


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

    (a) After consultation with the Secretary of Education, we will 
issue instructions annually which will include the amount of funds 
available to be awarded for each State and provide instructions for 
submitting applications for an Incentive Grant.
    (b) Each State desiring an incentive grant must submit to the 
Secretary an application, developed by the State Board, containing the 
following assurances:
    (1) The State legislature was consulted regarding the development 
of the application.
    (2) The application was approved by the Governor, the eligible 
agency (as defined in WIA section 203), and the State agency 
responsible for vocational and technical programs under the Carl D. 
Perkins Vocational and Technical Education Act.
    (3) The State exceeded the State negotiated levels of performance 
for title I, the levels of performance under title II and the levels 
for vocational and technical programs under the Carl D. Perkins 
Vocational and Technical Education Act. (WIA sec. 503(b).)

[[Page 49420]]

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

    (a) We determine the total amount to be allocated from funds 
available under WIA section 174(b) for Incentive Grants taking into 
consideration such factors as:
    (1) The availability of funds under section 174(b) for technical 
assistance, demonstration and pilot projects, evaluations, and 
Incentive Grants and the needs for these activities;
    (2) The number of States that are eligible for Incentive Grants and 
their relative program formula allocations under title I;
    (3) The availability of funds under WIA section 136(g)(2) resulting 
from funds withheld for poor performance by States; and
    (4) The range of awards established in WIA section 503(c).
    (b) We will publish the award amount for eligible States, after 
consultation with the Secretary of Education, within 90 days after the 
due date, established under Sec. 666.205(a), for the latest State 
performance progress report providing the annual information needed to 
determine State eligibility.
    (c) In determining the amount available to an eligible State, the 
Secretary, with the Secretary of Education, may consider such factors 
as:
    (1) The relative allocations of the eligible State compared to 
other States;
    (2) The extent to which the negotiated levels of performance were 
exceeded;
    (3) Performance improvement relative to previous years;
    (4) Changes in economic conditions, participant characteristics and 
proposed service design since the negotiated levels of performance were 
agreed to;
    (5) The eligible State's relative performance for each of the 
indicators compared to other States; and
    (6) The performance on those indicators considered most important 
in terms of accomplishing national goals established by each of the 
respective Secretaries.


Sec. 666.240  Under what circumstances may a sanction be applied to a 
State that fails to achieve negotiated levels of performance for title 
I?

    (a) If a State fails to meet the negotiated levels of performance 
agreed to under Sec. 666.120 for core indicators of performance or 
customer satisfaction indicators for the adult, dislocated worker or 
youth programs under title I of WIA, the Secretary must, upon request, 
provide technical assistance, as authorized under WIA sections 136(g) 
and 170.
    (b) If a State fails to meet the negotiated levels of performance 
for core indicators of performance or customer satisfaction indicators 
for the same program in two successive years, the amount of the 
succeeding year's allocation for the applicable program may be reduced 
by up to five percent.
    (c) The exact amount of any allocation reduction will be based upon 
the degree of failure to meet the negotiated levels of performance for 
core indicators. In making a determination of the amount, if any, of 
such a sanction, we may consider factors such as:
    (1) The State's performance relative to other States;
    (2) Improvement efforts underway;
    (3) Incremental improvement on the performance measures;
    (4) Technical assistance previously provided;
    (5) Changes in economic conditions and program design;
    (6) The characteristics of participants served compared to the 
participant characteristics described in the State Plan; and
    (7) Performance on other core indicators of performance and 
customer satisfaction indicators for that program. (WIA sec. 136(g).)
    (d) Only performance that is less than 80 percent of the negotiated 
levels will be deemed to be a failure to achieve negotiated levels of 
performance.
    (e) In accordance with 20 CFR 667.300(e), a State grant may be 
reduced for failure to submit an annual performance progress report.
    (f) A State may request review of a sanction we impose in 
accordance with the provisions of 20 CFR 667.800.

Subpart C--Local Measures of Performance


Sec. 666.300  What performance indicators apply to local areas?

    (a) Each local workforce investment area in a State is subject to 
the same core indicators of performance and the customer satisfaction 
indicators that apply to the State under Sec. 666.100(a).
    (b) In addition to the indicators described in paragraph (a) of 
this section, under Sec. 666.110, the Governor may apply additional 
indicators of performance to local areas in the State. (WIA sec. 
136(c)(1).)


Sec. 666.310  What levels of performance apply to the indicators of 
performance in local areas?

    (a) The Local Board and the chief elected official must negotiate 
with the Governor and reach agreement on the local levels of 
performance for each indicator identified under Sec. 666.300. The 
levels must be based on the State negotiated levels of performance 
established under Sec. 666.120 and take into account the factors 
described in paragraph (b) of this section.
    (b) In determining the appropriate local levels of performance, the 
Governor, Local Board and chief elected official must take into account 
specific 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

[[Page 49421]]

Sec. 666.310 for the core indicators of performance or customer 
satisfaction indicators for a program for two consecutive program 
years, the Governor must take corrective actions. The corrective 
actions may include the development of a reorganization plan under 
which the Governor:
    (1) Requires the appointment and certification of a new Local 
Board;
    (2) Prohibits the use of particular service providers or One-Stop 
partners that have been identified as achieving poor levels of 
performance; or
    (3) Requires other appropriate measures designed to improve the 
performance of the local area.
    (c) A local area may appeal to the Governor to rescind or revise a 
reorganization plan imposed under paragraph (b) of this section not 
later than thirty (30) days after receiving notice of the plan. The 
Governor must make a final decision within 30 days after receipt of the 
appeal. The Governor's final decision may be appealed by the Local 
Board to the Secretary under 20 CFR 667.650(b) not later than thirty 
(30) days after the local area receives the decision. The decision by 
the Governor to impose a reorganization plan becomes effective at the 
time it is issued, and remains effective unless the Secretary rescinds 
or revises the reorganization plan. Upon receipt of the appeal from the 
local area, the Secretary must make a final decision within thirty (30) 
days. (WIA sec. 136(h).)

PART 667--ADMINISTRATIVE PROVISIONS UNDER TITLE I OF THE WORKFORCE 
INVESTMENT ACT

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?
667.135   What ``hold harmless'' provisions apply to WIA adult and 
youth allocations?
667.140   Does a Local Board have the authority to transfer funds 
between programs?
667.150   What reallotment procedures does the Secretary use?
667.160   What reallocation procedures must the Governors use?
667.170   What responsibility review does the Department conduct for 
awards made under WIA title I, subtitle D?
Subpart B--Administrative Rules, Costs and Limitations
667.200   What general fiscal and administrative rules apply to the 
use of WIA title I funds?
667.210   What administrative cost limits apply to Workforce 
Investment Act title I grants?
667.220   What Workforce Investment Act title I functions and 
activities constitute the costs of administration subject to the 
administrative cost limit?
667.250   What requirements relate to the enforcement of the 
Military Selective Service Act?
667.255   Are there special rules that apply to veterans when income 
is a factor in eligibility determinations?
667.260   May WIA title I funds be spent for construction?
667.262   Are employment generating activities, or similar 
activities, allowable under WIA title I?
667.264   What other activities are prohibited under title I of WIA?
667.266   What are the limitations related to 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 through 667.268?
667.270   What safeguards are there to ensure that participants in 
Workforce Investment Act employment and training activities do not 
displace other employees?
667.272   What wage and labor standards apply to participants in 
activities under title I of WIA?
667.274   What health and safety standards apply to the working 
conditions of participants in activities under title I of WIA?
667.275   What are a recipient's obligations to ensure 
nondiscrimination and equal opportunity, 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 do we resolve investigative and monitoring findings?
667.510   What is the Grant Officer resolution process?
Subpart F--Grievance Procedures, Complaints, and State Appeals 
Processes
667.600   What local area, State and direct recipient grievance 
procedures must be established?
667.610   What processes do we use to review State and local 
grievances and complaints?
667.630   How are complaints and reports of criminal fraud and abuse 
addressed under WIA?
667.640   What additional appeal processes or systems must a State 
have for the WIA program?
667.645   What procedures apply to the appeals of non-designation of 
local areas?
667.650   What procedures apply to the appeals of the Governor's 
imposition of sanctions for substantial violations or performance 
failures by a local area?
Subpart G--Sanctions, Corrective Actions, and Waiver of Liability
667.700  What procedure do we use to impose sanctions and corrective 
actions on recipients and subrecipients of WIA grant funds?
667.705  Who is responsible for funds provided under title I of WIA?
667.710  What actions are required to address the failure of a local 
area to comply with the applicable uniform administrative 
provisions?
667.720  How do we handle a recipient's request for waiver of 
liability under WIA section 184(d)(2)?
667.730  What is the procedure to handle a recipient's request for 
advance approval of contemplated corrective actions?
667.740  What procedure must be used for administering the offset/
deduction provisions at section 184(c) of the Act?
Subpart H--Administrative Adjudication and Judicial Review
667.800  What actions of the Department may be appealed to the 
Office of Administrative Law Judges?
667.810  What rules of procedure apply to hearings conducted under 
this subpart?
667.820  What authority does the Administrative Law Judge have in 
ordering relief as an outcome of an administrative hearing?
667.825  What special rules apply to reviews of NFJP and 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 section 186 of the Act?
667.860  Are there other remedies available outside of the Act?
Subpart I--Transition Planning
667.900  What special rules apply during the JTPA/WIA transition?
667.910  Are JTPA participants to be grandfathered into WIA?

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

[[Page 49422]]

Subpart A--Funding


Sec. 667.100  When do Workforce Investment Act grant funds become 
available?

    (a) Program year. Except as provided in paragraph (b) of this 
section, fiscal year appropriations for programs and activities carried 
out under title I of WIA are available for obligation on the basis of a 
program year. A program year begins on July 1 in the fiscal year for 
which the appropriation is made and ends on June 30 of the following 
year.
    (b) Youth fund availability. Fiscal year appropriations for a 
program year's youth activities, authorized under chapter 4, subtitle 
B, title I of WIA, may be made available for obligation beginning on 
April 1 of the fiscal year for which the appropriation is made.


Sec. 667.105  What award document authorizes the expenditure of 
Workforce Investment Act funds under title I of the Act?

    (a) Agreement. All WIA title I funds that are awarded by grant, 
contract or cooperative agreement are issued under an agreement between 
the Grant Officer/Contracting Officer and the recipient. The agreement 
describes the terms and conditions applicable to the award of WIA title 
I funds.
    (b) Grant funds awarded to States. Under the Governor/Secretary 
Agreement described in Sec. 667.110, each program year, the grant 
agreement described in paragraph (a) of this section will be executed 
and signed by the Governor or the Governor's designated representative 
and Secretary or the Grant Officer. The grant agreement and associated 
Notices of Obligation are the basis for Federal obligation of funds 
allotted to the States in accordance with WIA sections 127(b) and 
132(b) for each program year.
    (c) Indian and Native American Programs. (1) Awards of grants, 
contracts or cooperative agreements for the WIA Indian and Native 
American program will be made to eligible entities on a competitive 
basis every two program years for a two-year period, in accordance with 
the provisions of 20 CFR part 668. An award for the succeeding two-year 
period may be made to the same recipient on a non-competitive basis if 
the recipient:
    (i) Has performed satisfactorily; and
    (ii) Submits a satisfactory two-year program plan for the 
succeeding two-year grant, contract or agreement period.
    (2) A grant, contract or cooperative agreement may be renewed under 
the authority of paragraph (c)(1) of this section no more than once 
during any four-year period for any single recipient.
    (d) National Farmworker Jobs programs. (1) Awards of grants or 
contracts for the National Farmworker Jobs program will be made to 
eligible entities on a competitive basis every two program years for a 
two-year period, in accordance with the provisions of 20 CFR part 669. 
An award for the succeeding two-year period may be made to the same 
recipient if the recipient:
    (i) Has performed satisfactorily; and
    (ii) Submits a satisfactory two-year program plan for the 
succeeding two-year period.
    (2) A grant or contract may be renewed under the authority of 
paragraph (d)(1) of this section no more than once during any four-year 
period for any single recipient.
    (e) Job Corps. (1) Awards of contracts will be made on a 
competitive basis between the Contracting Officer and eligible entities 
to operate contract centers and provide operational support services.
    (2) The Secretary may enter into interagency agreements with 
Federal agencies for funding, establishment, and operation of Civilian 
Conservation Centers for Job Corps programs.
    (f) Youth Opportunity grants. Awards of grants for Youth 
Opportunity programs will be made to eligible Local Boards and eligible 
entities for a one-year period. The grants may be renewed for each of 
the four succeeding years based on criteria that include successful 
performance.
    (g) Awards under WIA sections 171 and 172. (1) Awards of grants, 
contracts or cooperative agreements will be made to eligible entities 
for programs or activities authorized under WIA sections 171 or 172. 
These funds are for:
    (i) Demonstration;
    (ii) Pilot;
    (iii) Multi-service;
    (iv) Research;
    (v) Multi-State projects; and
    (vi) Evaluations
    (2) Grants and contracts under paragraphs (g)(1)(i) and (ii) of 
this section will be awarded on a competitive basis, except that a 
noncompetitive award may be made in the case of a project that is 
funded jointly with other public or private entities that provide a 
portion of the funding.
    (3) Contracts and grants under paragraphs (g)(1)(iii), (iv), and 
(v) of this section in amounts that exceed $100,000 will be awarded on 
a competitive basis, except that a noncompetitive award may be made in 
the case of a project that is funded jointly with other public or 
private sector entities that provide a substantial portion of the 
assistance under the grant or contract for the project.
    (4) Grants or contracts for carrying out projects in paragraphs 
(g)(1)(iii), (iv), and (v) of this section may not be awarded to the 
same organization for more than three consecutive years, unless the 
project is competitively reevaluated within that period.
    (5) Entities with nationally recognized expertise in the methods, 
techniques and knowledge of workforce investment activities will be 
provided priority in awarding contracts or grants for the projects 
under paragraphs (g)(1)(iii), (iv), and (v) of this section.
    (6) A peer review process will be used for projects under 
paragraphs (g)(1)(iii), (iv), and (v) of this section for grants that 
exceed $500,000, and to designate exemplary and promising programs.
    (h) Termination. Each grant terminates when the period of fund 
availability has expired. The grant must be closed in accordance with 
the closeout provisions at 29 CFR 95.71 or 97.50, as appropriate.


Sec. 667.107  What is the period of availability for expenditure of WIA 
funds?

    (a) Grant funds expended by States. Funds allotted to States under 
WIA sections 127(b) and 132(b) for any program year are available for 
expenditure by the State receiving the funds only during that program 
year and the two succeeding program years.
    (b) Grant funds expended by local areas. (1) Funds allocated by a 
State to a local area under WIA sections 128(b) and 133(b), for any 
program year are available for expenditure only during that program 
year and the succeeding program year.
    (2) Funds which are not expended by a local area in the two-year 
period described in paragraph (b)(1) of this section, must be returned 
to the State. Funds so returned are available for expenditure by State 
and local recipients and subrecipients only during the third program 
year of availability. These funds may:
    (i) Be used for Statewide projects, or
    (ii) Be distributed to other local areas which had fully expended 
their allocation of funds for the same program year within the two-year 
period.
    (c) Job Corps. Funds obligated for any program year for any Job 
Corps activity carried out under title I, subtitle C, of WIA may be 
expended during that program year and the two succeeding program years.
    (d) Funds awarded under WIA sections 171 and 172. Funds obligated 
for any program year for a program or activity authorized under 
sections 171 or 172 of WIA remain available until expended.

[[Page 49423]]

    (e) Other programs under title I of WIA. For all other grants, 
contracts and cooperative agreements issued under title I of WIA the 
period of availability for expenditure is set in the terms and 
conditions of the award document.


Sec. 667.110  What is the Governor/Secretary Agreement?

    (a) To establish a continuing relationship under the Act, the 
Governor and the Secretary will enter into a Governor/Secretary 
Agreement. The Agreement will consist of a statement assuring that the 
State will comply with:
    (1) The Workforce Investment Act and all applicable rules and 
regulations, and
    (2) The Wagner-Peyser Act and all applicable rules and regulations.
    (b) The Governor/Secretary Agreement may be modified, revised or 
terminated at any time, upon the agreement of both parties.


Sec. 667.120  What planning information must a State submit in order to 
receive a formula grant?

    Each State seeking financial assistance under WIA sections 127 
(youth) or 132 (adults and dislocated workers) or under the Wagner-
Peyser Act must submit a single State Plan. The requirements for the 
plan content and the plan review process are described in WIA section 
112, Wagner-Peyser Act section 8, and 20 CFR 661.220, 661.240 and 
652.211 through 652.214.


Sec. 667.130  How are WIA title I formula funds allocated to local 
workforce investment areas?

    (a) General. The Governor must allocate WIA formula funds allotted 
for services to youth, adults and dislocated workers in accordance with 
WIA sections 128 and 133, and this section.
    (1) State Boards must assist Governors in the development of any 
discretionary within-State allocation formulas. (WIA sec. 111(d)(5).)
    (2) Within-State allocations must be made:
    (i) In accordance with the allocation formulas contained in WIA 
sections 128(b) and 133(b) and in the State workforce investment plan, 
and
    (ii) After consultation with chief elected officials in each of the 
workforce investment areas.
    (b) State reserve. (1) Of the WIA formula funds allotted for 
services to youth, adults and dislocated workers, the Governor must 
reserve funds from each of these sources for Statewide workforce 
investment activities. In making these reservations, the Governor may 
reserve up to fifteen (15) percent from each of these sources. Funds 
reserved under this paragraph may be combined and spent on Statewide 
employment and training activities, for adults and dislocated workers, 
and Statewide youth activities, as described in 20 CFR 665.200 and 
665.210, without regard to the funding source of the reserved funds.
    (2) The Governor must reserve a portion of the dislocated worker 
funds for Statewide rapid response activities, as described in WIA 
section 134(a)(2)(A) and 20 CFR 665.310 through 665.330. In making this 
reservation, the Governor may reserve up to twenty-five (25) percent of 
the dislocated worker funds.
    (c) Youth allocation formula. (1) Unless the Governor elects to 
distribute funds in accordance with the discretionary allocation 
formula described in paragraph (c)(2) of this section, the remainder of 
youth funds not reserved under paragraph (b)(1) of this section must be 
allocated:
    (i) 33\1/3\ percent on the basis of the relative number of 
unemployed individuals in areas of substantial unemployment in each 
workforce investment area, compared to the total number of unemployed 
individuals in all areas of substantial unemployment in the State;
    (ii) 33\1/3\ percent on the basis of the relative excess number of 
unemployed individuals in each workforce investment area, compared to 
the total excess number of unemployed individuals in the State; and
    (iii) 33\1/3\ percent on the basis of the relative number of 
disadvantaged youth in each workforce investment area, compared to the 
total number of disadvantaged youth in the State. (WIA sec. 
128(b)(2)(A)(i))
    (2) Discretionary youth allocation formula. In lieu of making the 
formula allocation described in paragraph (c)(1) of this section, the 
State may allocate youth funds under a discretionary formula. Under 
that formula, the State must allocate a minimum of 70 percent of youth 
funds not reserved under paragraph (b)(1) of this section on the basis 
of the formula in paragraph (c)(1) of this section, and may allocate up 
to 30 percent on the basis of a formula that:
    (i) Incorporates additional factors (other than the factors 
described in paragraph (c)(1) of this section) relating to:
    (A) Excess youth poverty in urban, rural and suburban local areas; 
and
    (B) Excess unemployment above the State average in urban, rural and 
suburban local areas; and
    (ii) Was developed by the State Board and approved by the Secretary 
of Labor as part of the State workforce investment plan. (WIA sec. 
128(b)(3).)
    (d) Adult allocation formula. (1) Unless the Governor elects to 
distribute funds in accordance with the discretionary allocation 
formula described in paragraph (d)(2) of this section, the remainder of 
adult funds not reserved under paragraph (b)(1) of this section must be 
allocated:
    (i) 33\1/3\ percent on the basis of the relative number of 
unemployed individuals in areas of substantial unemployment in each 
workforce investment area, compared to the total number of unemployed 
individuals in areas of substantial unemployment in the State;
    (ii) 33\1/3\ percent on the basis of the relative excess number of 
unemployed individuals in each workforce investment area, compared to 
the total excess number of unemployed individuals in the State; and
    (iii) 33\1/3\ percent on the basis of the relative number of 
disadvantaged adults in each workforce investment area, compared to the 
total number of disadvantaged adults in the State. (WIA sec. 
133(b)(2)(A)(i))
    (2) Discretionary adult allocation formula. In lieu of making the 
formula allocation described in paragraph (d)(1) of this section, the 
State may allocate adult funds under an discretionary formula. Under 
that formula, the State must allocate a minimum of 70 percent of adult 
funds on the basis of the formula in paragraph (d)(1) of this section, 
and may allocate up to 30 percent on the basis of a formula that:
    (i) Incorporates additional factors (other than the factors 
described in paragraph (d)(1) of this section) relating to:
    (A) Excess poverty in urban, rural and suburban local areas; and
    (B) Excess unemployment above the State average in urban, rural and 
suburban local areas; and
    (ii) Was developed by the State Board and approved by the Secretary 
of Labor as part of the State workforce investment plan. (WIA sec. 
133(b)(3).)
    (e) Dislocated worker allocation formula. (1) The remainder of 
dislocated worker funds not reserved under paragraph (b)(1) or (b)(2) 
of this section must be allocated on the basis of a formula prescribed 
by the Governor that distributes funds in a manner that addresses the 
State's worker readjustment assistance needs. Funds so distributed must 
not be less than 60 percent of the State's formula allotment.
    (2)(i) The Governor's dislocated worker formula must use the most 
appropriate information available to the Governor, including 
information on:
    (A) Insured unemployment data,
    (B) Unemployment concentrations,

[[Page 49424]]

    (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. 667.135  What ``hold harmless'' provisions apply to WIA adult and 
youth allocations?

    (a)(1) For the first two fiscal years after the date on which a 
local area is designated under section 116 of WIA, the State may elect 
to apply the ``hold harmless'' provisions specified in paragraph (b) of 
this section to local area allocations of WIA youth funds under 
Sec. 667.130(c) and to allocations of WIA adult funds under 
Sec. 667.130(d).
    (2) Effective at the end of the second full fiscal year after the 
date on which a local area is designated under section 116 of WIA the 
State must apply the ``hold harmless'' specified in paragraph (b) of 
this section to local area allocations of WIA youth funds under 
Sec. 667.130(c) and to allocations of WIA adult funds under 
Sec. 667.130(d).
    (3) There are no ``hold harmless'' provisions that apply to local 
area allocations of WIA dislocated worker funds.
    (b)(1) If a State elects to apply a ``hold-harmless'' under 
paragraph (a)(1) of this section, a local area must not receive an 
allocation amount for a fiscal year that is less than 90 percent of the 
average allocation of the local area for the two preceding fiscal 
years.
    (2) In applying the ``hold harmless'' under paragraph (a)(2) of 
this section, a local area must not receive an allocation amount for a 
fiscal year that is less than 90 percent of the average allocation of 
the local area for the two preceding fiscal years.
    (3) Amounts necessary to increase allocations to local areas must 
be obtained by ratably reducing the allocations to be made to other 
local areas.
    (4) If the amounts of WIA funds appropriated in a fiscal year are 
not sufficient to provide the amount specified in paragraph (b)(1) of 
this section to all local areas, the amounts allocated to each local 
area mustbe ratably reduced. (WIA secs. 128(b)(2)(A)(ii), 
133(b)(2)(A)(ii), 506.)


Sec. 667.140  Does a Local Board have the authority to transfer funds 
between programs?

    (a) A Local Board may transfer up to 20 percent of a program year 
allocation for adult employment and training activities, and up to 20 
percent of a program year allocation for dislocated worker employment 
and training activities between the two programs.
    (b) Before making any such transfer, a Local Board must obtain the 
Governor's approval.
    (c) Local Boards may not transfer funds to or from the youth 
program.


Sec. 667.150  What reallotment procedures does the Secretary use?

    (a) The first reallotment of funds among States will occur during 
PY 2001 based on obligations in PY 2000.
    (b) The Secretary determines, during the first quarter of the 
program year, whether a State has obligated its required level of at 
least 80 percent of the funds allotted under WIA sections 127 and 132 
for programs serving youth, adults, and dislocated workers for the 
prior year, as separately determined for each of the three funding 
streams. Unobligated balances are determined based on allotments 
adjusted for any allowable transfer between the adult and dislocated 
worker funding streams. The amount to be recaptured from each State for 
reallotment, if any, is based on State obligations of the funds 
allotted to each State under WIA sections 127 and 132 for programs 
serving youth, adults, or dislocated workers, less any amount reserved 
(up to 5 percent at the State level and up to 10 percent at the local 
level) for the costs of administration. This amount, if any, is 
separately determined for each funding stream.
    (c) The Secretary reallots youth, adult and dislocated worker funds 
among eligible States in accordance with the provisions of WIA sections 
127(c) and 132(c), respectively. To be eligible to receive a 
reallotment of youth, adult, or dislocated worker funds under the 
reallotment procedures, a State must have obligated at least 80 percent 
of the prior program year's allotment, less any amount reserved for the 
costs of administration of youth, adult, or dislocated worker funds. A 
State's eligibility to receive a reallotment is separately determined 
for each funding stream.
    (d) The term ``obligation'' is defined at 20 CFR 660.300. For 
purposes of this section, the Secretary will also treat as State 
obligations:
    (1) Amounts allocated by the State, under WIA sections 128(b) and 
133(b), to the single State local area if the State has been designated 
as a single local area under WIA section 116(b) or to a balance of 
State local area administered by a unit of the State government, and
    (2) Inter-agency transfers and other actions treated by the State 
as encumbrances against amounts reserved by the State under WIA 
sections 128(a) and 133(a) for Statewide workforce investment 
activities.


Sec. 667.160  What reallocation procedures must the Governors use?

    (a) The Governor may reallocate youth, adult, and dislocated worker 
funds among local areas within the State in accordance with the 
provisions of sections 128(c) and 133(c) of the Act. If the Governor 
chooses to reallocate funds, the provisions in paragraphs (b) and (c) 
of this section apply.
    (b) For the youth, adult and dislocated worker programs, the amount 
to be recaptured from each local area for purposes of reallocation, if 
any, must be based on the amount by which the prior year's unobligated 
balance of allocated funds exceeds 20 percent of that year's allocation 
for the program, less any amount reserved (up to 10 percent) for the 
costs of administration. Unobligated balances must be determined based 
on allocations adjusted for any allowable transfer between funding 
streams. This amount, if any, must be separately determined for each 
funding stream.
    (c) To be eligible to receive youth, adult or dislocated worker 
funds under the reallocation procedures, a local area must have 
obligated at least 80 percent of the prior program year's allocation, 
less any amount reserved (up to 10 percent) for the costs of 
administration, for youth, adult, or dislocated worker activities, as 
separately determined. A local area's eligibility to receive a 
reallocation must be separately determined for each funding stream.


Sec. 667.170  What responsibility review does the Department conduct 
for awards made under WIA title I, subtitle D?

    (a) Before final selection as a potential grantee, we conduct a 
review of the

[[Page 49425]]

available records to assess the organization's overall responsibility 
to administer Federal funds. As part of this review, we may consider 
any information that has come to our attention and will consider the 
organization's history with regard to the management of other grants, 
including DOL grants. The failure to meet any one responsibility test, 
except for those listed in paragraphs (a)(1) and (a)(2) of this 
section, does not establish that the organization is not responsible 
unless the failure is substantial or persistent (for two or more 
consecutive years). The responsibility tests include:
    (1) The organization's efforts to recover debts (for which three 
demand letters have been sent) established by final agency action have 
been unsuccessful, or that there has been failure to comply with an 
approved repayment plan;
    (2) Established fraud or criminal activity of a significant nature 
within the organization.
    (3) Serious administrative deficiencies that we identify, such as 
failure to maintain a financial management system as required by 
Federal regulations;
    (4) Willful obstruction of the audit process;
    (5) Failure to provide services to applicants as agreed to in a 
current or recent grant or to meet applicable performance standards;
    (6) Failure to correct deficiencies brought to the grantee's 
attention in writing as a result of monitoring activities, reviews, 
assessments, or other activities;
    (7) Failure to return a grant closeout package or outstanding 
advances within 90 days of the grant expiration date or receipt of 
closeout package, whichever is later, unless an extension has been 
requested and granted; final billings reflecting serious cost category 
or total budget cost overrun;
    (8) Failure to submit required reports;
    (9) Failure to properly report and dispose of government property 
as instructed by DOL;
    (10) Failure to have maintained effective cash management or cost 
controls resulting in excess cash on hand;
    (11) Failure to ensure that a subrecipient complies with its OMB 
Circular A-133 audit requirements specified at Sec. 667.200(b);
    (12) Failure to audit a subrecipient within the required period;
    (13) Final disallowed costs in excess of five percent of the grant 
or contract award if, in the judgement of the grant officer, the 
disallowances are egregious findings and;
    (14) Failure to establish a mechanism to resolve a subrecipient's 
audit in a timely fashion.
    (b) This responsibility review is independent of the competitive 
process. Applicants which are determined to be not responsible will not 
be selected as potential grantees irrespective of their standing in the 
competition.

Subpart B--Administrative Rules, Costs and Limitations


Sec. 667.200  What general fiscal and administrative rules apply to the 
use of WIA title I funds?

    (a) Uniform fiscal and administrative requirements. (1) Except as 
provided in paragraphs (a)(3) through (6) of this section, State, 
local, and Indian tribal government organizations that receive grants 
or cooperative agreements under WIA title I must follow the common rule 
``Uniform Administrative Requirements for Grants and Cooperative 
Agreements to State and Local Governments'' which is codified at 29 CFR 
part 97.
    (2) Except as provided in paragraphs (a)(3) through (7) of this 
section, institutions of higher education, hospitals, other non-profit 
organizations, and commercial organizations must the follow the common 
rule implementing OMB Circular A-110 which is codified at 29 CFR part 
95.
    (3) In addition to the requirements at 29 CFR 95.48 or 29 CFR 
97.36(i) (as appropriate), all procurement contracts and other 
transactions between Local Boards and units of State or local 
governments must be conducted only on a cost reimbursement basis. No 
provision for profit is allowed. (WIA sec. 184(a)(3)(B).)
    (4) In addition to the requirements at 29 CFR 95.42 or 29 CFR 
97.36(b)(3) (as appropriate), which address codes of conduct and 
conflict of interest issues related to employees:
    (i) A State Board member or a Local Board member or a Youth Council 
member must neither cast a vote on, nor participate in any decision-
making capacity, on the provision of services by such member (or any 
organization which that member directly represents), nor on any matter 
which would provide any direct financial benefit to that member or a 
member of his immediate family.
    (ii) Neither membership on the State Board, the Local Board, the 
Youth Council nor the receipt of WIA funds to provide training and 
related services, by itself, violates these conflict of interest 
provisions.
    (5) The addition method, described at 29 CFR 95.24 or 29 CFR 
97.25(g)(2) (as appropriate), must be used for the all program income 
earned under WIA title I grants. When the cost of generating program 
income has been charged to the program, the gross amount earned must be 
added to the WIA program. However, the cost of generating program 
income must be subtracted from the amount earned to establish the net 
amount of program income available for use under the grants when these 
costs have not been charged to the WIA program.
    (6) Any excess of revenue over costs incurred for services provided 
by a governmental or non-profit entity must be included in program 
income. (WIA sec. 195(7)(A) and (B).)
    (7) Interest income earned on funds received under WIA title I must 
be included in program income. (WIA sec. 195(7)(B)(iii).)
    (8) On a fee-for-service basis, employers may use local area 
services, facilities, or equipment funded under title I of WIA to 
provide employment and training activities to incumbent workers:
    (i) When the services, facilities, or equipment are not being used 
by eligible participants;
    (ii) If their use does not affect the ability of eligible 
participants to use the services, facilities, or equipment; and
    (iii) If the income generated from such fees is used to carry out 
programs authorized under this title.
    (b) Audit requirements. (1) All governmental and non-profit 
organizations must follow the audit requirements of OMB Circular A-133. 
These requirements are found at 29 CFR 97.26 for governmental 
organizations and at 29 CFR 95.26 for institutions of higher education, 
hospitals, and other non-profit organizations.
    (2)(i) We are responsible for audits of commercial organizations 
which are direct recipients of Federal financial assistance under WIA 
title I.
    (ii) Commercial organizations which are subrecipients under WIA 
title I and which expend more than the minimum level specified in OMB 
Circular A-133 ($300,000 as of August 11, 2000) must have either an 
organization-wide audit conducted in accordance with A-133 or a program 
specific financial and compliance audit.
    (c) Allowable costs/cost principles. All recipients and 
subrecipients must follow the Federal allowable cost principles that 
apply to their kind of organizations. The DOL regulations at 29 CFR 
95.27 and 29 CFR 97.22 identify the Federal principles for determining 
allowable costs which each kind of recipient and subrecipient must 
follow. The applicable Federal principles for each kind of recipient 
are described in

[[Page 49426]]

paragraphs (c)(1) through (5) of this section; all recipients must 
comply with paragraphs (c)(6) and (c)(7) of this section. For those 
selected items of cost requiring prior approval, the authority to grant 
or deny approval is delegated to the Governor for programs funded under 
sections 127 or 132 of the Act.
    (1) Allowable costs for State, local, and Indian tribal government 
organizations must be determined under OMB Circular A-87, ``Cost 
Principles for State, Local and Indian Tribal Governments.''
    (2) Allowable costs for non-profit organizations must be determined 
under OMB Circular A-122, ``Cost Principles for Non-Profit 
Organizations.''
    (3) Allowable costs for institutions of higher education must be 
determined under OMB Circular A-21, ``Cost Principles for Educational 
Institutions.''
    (4) Allowable costs for hospitals must be determined in accordance 
under appendix E of 45 CFR part 74, ``Principles for Determining Costs 
Applicable to Research and Development Under Grants and Contracts with 
Hospitals.''
    (5) Allowable costs for commercial organizations and those non-
profit organizations listed in Attachment C to OMB Circular A-122 must 
be determined under the provisions of the Federal Acquisition 
Regulation (FAR), at 48 CFR part 31.
    (6) For all types of entities, legal expenses for the prosecution 
of claims against the Federal Government, including appeals to an 
Administrative Law Judge, are unallowable.
    (7) In addition to the allowable cost provisions identified in 
paragraphs (c)(1) through (6) of this section, the cost of information 
technology--computer hardware and software--will only be allowable 
under WIA title I grants when such computer technology is ``Year 2000 
compliant.'' To meet this requirement, information technology must be 
able to accurately process date/time (including, but not limited to, 
calculating, comparing and sequencing) from, into and between the 
twentieth and twenty-first centuries, and the years 1999 and 2000. The 
information technology must also be able to make leap year 
calculations. Furthermore, ``Year 2000 compliant'' information 
technology, when used in combination with other information technology, 
must accurately process date/time data if the other information 
technology properly exchanges date/time with it.
    (d) Government-wide debarment and suspension, and government-wide 
drug-free workplace requirements. All WIA title I grant recipients and 
subrecipients must comply with the government-wide requirements for 
debarment and suspension, and the government-wide requirements for a 
drug-free workplace, codified at 29 CFR part 98.
    (e) Restrictions on lobbying. All WIA title I grant recipients and 
subrecipients must comply with the restrictions on lobbying which are 
codified in the DOL regulations at 29 CFR part 93.
    (f) Nondiscrimination. All WIA title I recipients, as the term is 
defined in 29 CFR 37.4, must comply with the nondiscrimination and 
equal opportunity provisions of WIA section 188 and its implementing 
regulations found at 29 CFR part 37. Information on the handling of 
discrimination complaints by participants and other interested parties 
may be found in 29 CFR 37.70 through 37.80, and in Sec. 667.600(g).
    (g) Nepotism. (1) No individual may be placed in a WIA employment 
activity if a member of that person's immediate family is directly 
supervised by or directly supervises that individual.
    (2) To the extent that an applicable State or local legal 
requirement regarding nepotism is more restrictive than this provision, 
such State or local requirement must be followed.


Sec. 667.210  What administrative cost limits apply to Workforce 
Investment Act title I grants?

    (a) Formula grants to States:
    (1) As part of the 15 percent that a State may reserve for 
Statewide activities, the State may spend up to five percent (5%) of 
the amount allotted under sections 127(b)(1), 132(b)(1) and 132(b)(2) 
of the Act for the administrative costs of Statewide workforce 
investment activities.
    (2) Local area expenditures for administrative purposes under WIA 
formula grants are limited to no more than ten percent (10%) of the 
amount allocated to the local area under sections 128(b) and 133(b) of 
the Act.
    (3) Neither the five percent (5%) of the amount allotted that may 
be reserved for Statewide administrative costs nor the ten percent 
(10%) of the amount allotted that may be reserved for local 
administrative costs needs to be allocated back to the individual 
funding streams.
    (b) Limits on administrative costs for programs operated under 
subtitle D of title I will be identified in the grant or contract award 
document.
    (c) In a One-Stop environment, administrative costs borne by other 
sources of funds, such as the Wagner-Peyser Act, are not included in 
the administrative cost limit calculation. Each program's 
administrative activities area chargeable to its own grant and subject 
to its own administrative cost limitations.


Sec. 667.220  What Workforce Investment Act title I functions and 
activities constitute the costs of administration subject to the 
administrative cost limit?

    (a) The costs of administration are that allocable portion of 
necessary and reasonable allowable costs of State and local workforce 
investment boards, direct recipients, including State grant recipients 
under subtitle B of title I and recipients of awards under subtitle D 
of title I, as well as local grant recipients, local grant 
subrecipients, local fiscal agents and one-stop operators that are 
associated with those specific functions identified in paragraph (b) of 
this section and which are not related to the direct provision of 
workforce investment services, including services to participants and 
employers. These costs can be both personnel and non-personnel and both 
direct and indirect.
    (b) The costs of administration are the costs associated with 
performing the following functions:
    (1) Performing the following overall general administrative 
functions and coordination of those functions under WIA title I:
    (i) Accounting, budgeting, financial and cash management functions;
    (ii) Procurement and purchasing functions;
    (iii) Property management functions;
    (iv) Personnel management functions;
    (v) Payroll functions;
    (vi) Coordinating the resolution of findings arising from audits, 
reviews, investigations and incident reports;
    (vii) Audit functions;
    (viii) General legal services functions; and
    (ix) Developing systems and procedures, including information 
systems, required for these administrative functions;
    (2) Performing oversight and monitoring responsibilities related to 
WIA administrative functions;
    (3) Costs of goods and services required for administrative 
functions of the program, including goods and services such as rental 
or purchase of equipment, utilities, office supplies, postage, and 
rental and maintenance of office space;
    (4) Travel costs incurred for official business in carrying out 
administrative activities or the overall management of the WIA system; 
and
    (5) Costs of information systems related to administrative 
functions (for example, personnel, procurement, purchasing, property 
management, accounting and payroll systems) including the purchase, 
systems

[[Page 49427]]

development and operating costs of such systems.
    (c)(1) Awards to subrecipients or vendors that are solely for the 
performance of administrative functions are classified as 
administrative costs.
    (2) Personnel and related non-personnel costs of staff who perform 
both administrative functions specified in paragraph (b) of this 
section and programmatic services or activities must be allocated as 
administrative or program costs to the benefitting cost objectives/
categories based on documented distributions of actual time worked or 
other equitable cost allocation methods.
    (3) Specific costs charged to an overhead or indirect cost pool 
that can be identified directly as a program cost are to be charged as 
a program cost. Documentation of such charges must be maintained.
    (4) Except as provided at paragraph (c)(1), all costs incurred for 
functions and activities of subrecipients and vendors are program 
costs.
    (5) Costs of the following information systems including the 
purchase, systems development and operating (e.g., data entry) costs 
are charged to the program category:
    (i) Tracking or monitoring of participant and performance 
information;
    (ii) Employment statistics information, including job listing 
information, job skills information, and demand occupation information;
    (iii) Performance and program cost information on eligible 
providers of training services, youth activities, and appropriate 
education activities;
    (iv) Local area performance information; and
    (v) Information relating to supportive services and unemployment 
insurance claims for program participants;
    (6) Continuous improvement activities are charged to administration 
or program category based on the purpose or nature of the activity to 
be improved. Documentation of such charges must be maintained.


Sec. 667.250  What requirements relate to the enforcement of the 
Military Selective Service Act?

    The requirements relating to the enforcement of the Military 
Selective Service Act are found at WIA section 189(h).


Sec. 667.255  Are there special rules that apply to veterans when 
income is a factor in eligibility determinations?

    Yes, under 38 U.S.C. 4213, when past income is an eligibility 
determinant for Federal employment or training programs, any amounts 
received as military pay or allowances by any person who served on 
active duty, and certain other specified benefits must be disregarded. 
This applies when determining if a person is a ``low-income 
individual'' for eligibility purposes, (for example, in the WIA youth, 
Job Corps, or NFJP programs) and applies if income is used as a factor 
in applying the priority provision, under 20 CFR 663.600, when WIA 
adult funds are limited. Questions regarding the application of 38 
U.S.C. 4213 should be directed to the Veterans Employment and Training 
Service.


Sec. 667.260  May WIA title I funds be spent for construction?

    WIA title I funds must not be spent on construction or purchase of 
facilities or buildings except:
    (a) To meet a recipient's, as the term is defined in 29 CFR 37.4, 
obligation to provide physical and programmatic accessibility and 
reasonable accommodation, as required by section 504 of the 
Rehabilitation Act of 1973, as amended, and the Americans with 
Disabilities Act of 1990, as amended;
    (b) To fund repairs, renovations, alterations and capital 
improvements of property, including:
    (1) SESA real property, identified at WIA section 193, using a 
formula that assesses costs proportionate to space utilized;
    (2) JTPA owned property which is transferred to WIA title I 
programs;
    (c) Job Corps facilities, as authorized by WIA section 160(3)(B); 
and
    (d) To fund disaster relief employment on projects for demolition, 
cleaning, repair, renovation, and reconstruction of damaged and 
destroyed structures, facilities, and lands located within a disaster 
area. (WIA sec. 173(d).)


Sec. 667.262  Are employment generating activities, or similar 
activities, allowable under WIA title I?

    (a) Under WIA section 181(e), WIA title I funds may not be spent on 
employment generating activities, economic development, and other 
similar activities, unless they are directly related to training for 
eligible individuals. For purposes of this section, employer outreach 
and job development activities are directly related to training for 
eligible individuals.
    (b) These employer outreach and job development activities include:
    (1) Contacts with potential employers for the purpose of placement 
of WIA participants;
    (2) Participation in business associations (such as chambers of 
commerce); joint labor management committees, labor associations, and 
resource centers;
    (3) WIA staff participation on economic development boards and 
commissions, and work with economic development agencies, to:
    (i) Provide information about WIA programs,
    (ii) Assist in making informed decisions about community job 
training needs, and
    (iii) Promote the use of first source hiring agreements and 
enterprise zone vouchering services,
    (4) Active participation in local business resource centers 
(incubators) to provide technical assistance to small and new business 
to reduce the rate of business failure;
    (5) Subscriptions to relevant publications;
    (6) General dissemination of information on WIA programs and 
activities;
    (7) The conduct of labor market surveys;
    (8) The development of on-the-job training opportunities; and
    (9) Other allowable WIA activities in the private sector. (WIA sec. 
181(e).)


Sec. 667.264  What other activities are prohibited under title I of 
WIA?

    (a) WIA title I funds must not be spent on:
    (1) The wages of incumbent employees during their participation in 
economic development activities provided through a Statewide workforce 
investment system, (WIA sec. 181(b)(1).);
    (2) Public service employment, except to provide disaster relief 
employment, as specifically authorized in section 173(d) of WIA, (WIA 
sec. 195(10));
    (3) Expenses prohibited under any other Federal, State or local law 
or regulation.
    (b) WIA formula funds available to States and local areas under 
subtitle B, title I of WIA must not be used for foreign travel. (WIA 
sec. 181(e).)


Sec. 667.266  What are the limitations related to sectarian activities?

    (a) Limitations related to sectarian activities are set forth at 
WIA section 188(a)(3) and 29 CFR 37.6(f).
    (b) Under these limitations:
    (1) WIA title I financial assistance may not be spent on the 
employment or training of participants in sectarian activities. This 
limitation is more fully described at 29 CFR 37.6(f)(1).
    (2) Under 29 CFR 37.6(f)(1), participants must not be employed 
under title I of WIA to carry out the construction, operation, or 
maintenance

[[Page 49428]]

of any part of any facility that is used or to be used for sectarian 
instruction or as a place for religious worship. However, as discussed 
in 29 CFR 37.6(f)(2), WIA financial assistance 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.
    (1) The review must include names under which the establishment 
does business, including predecessors and successors in interest; the 
name, title, and address of the company official certifying the 
information, and whether WIA assistance is sought in connection with 
past or impending job losses at other facilities, including a review of 
whether WARN notices relating to the employer have been filed.
    (2) The review may include consultations with labor organizations 
and others in the affected local area(s). (WIA sec. 181(d).)


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

    (a) We will promptly review and take appropriate action on alleged 
violations of the provisions relating to:
    (1) Employment generating activities (Sec. 667.262);
    (2) Other prohibited activities (Sec. 667.264);
    (3) The limitation related to sectarian activities (Sec. 667.266);
    (4) The use of WIA title I funds to encourage business relocation 
(Sec. 667.268).
    (b) Procedures for the investigation and resolution of the 
violations are provided for under the Grant Officer's resolution 
process at Sec. 667.510. Sanctions and remedies are provided for under 
WIA section 184(c) for violations of the provisions relating to:
    (1) Construction (Sec. 667.260);
    (2) Employment generating activities (Sec. 667.262);
    (3) Other prohibited activities (Sec. 667.264); and
    (4) The limitation related to sectarian activities 
(Sec. 667.266(b)(1)).
    (c) Sanctions and remedies are provided for in WIA section 
181(d)(3) for violations of Sec. 667.268, which addresses business 
relocation.
    (d) Violations of Sec. 667.266(b)(2) will be handled in accordance 
with the DOL nondiscrimination regulations implementing WIA section 
188, codified at 29 CFR part 37.


Sec. 667.270  What safeguards are there to ensure that participants in 
Workforce Investment Act employment and training activities do not 
displace other employees?

    (a) A participant in a program or activity authorized under title I 
of WIA must not displace (including a partial displacement, such as a 
reduction in the hours of non-overtime work, wages, or employment 
benefits) any currently employed employee (as of the date of the 
participation).
    (b) A program or activity authorized under title I of WIA must not 
impair existing contracts for services or collective bargaining 
agreements. When a program or activity authorized under title I of WIA 
would be inconsistent with a collective bargaining agreement, the 
appropriate labor organization and employer must provide written 
concurrence before the program or activity begins.
    (c) A participant in a program or activity under title I of WIA may 
not be employed in or assigned to a job if:
    (1) Any other individual is on layoff from the same or any 
substantially equivalent job;
    (2) The employer has terminated the employment of any regular, 
unsubsidized employee or otherwise caused an involuntary reduction in 
its workforce with the intention of filling the vacancy so created with 
the WIA participant; or
    (3) The job is created in a promotional line that infringes in any 
way on the promotional opportunities of currently employed workers.
    (d) Regular employees and program participants alleging 
displacement may file a complaint under the applicable grievance 
procedures found at Sec. 667.600. (WIA sec. 181.)


Sec. 667.272  What wage and labor standards apply to participants in 
activities under title I of WIA?

    (a) Individuals in on-the-job training or individuals employed in 
activities under title I of WIA must be compensated at the same rates, 
including periodic increases, as trainees or employees who are 
similarly situated in similar occupations by the same employer and who 
have similar training, experience and skills. Such rates must be in 
accordance with applicable law, but may not be less than the higher of 
the rate specified in section 6(a)(1) of the Fair Labor Standards Act 
of 1938 (29 U.S.C. 206(a)(1)) or the applicable State or local minimum 
wage law.
    (b) Individuals in on-the-job training or individuals employed in 
programs and activities under Title I of WIA must be provided benefits 
and working conditions at the same level and to the same extent as 
other trainees or employees working a similar length of time and doing 
the same type of work.
    (c) Allowances, earnings, and payments to individuals participating 
in programs under Title I of WIA are not considered as income for 
purposes of determining eligibility for and the amount of income 
transfer and in-kind aid furnished under any Federal or Federally 
assisted program based on need other than as provided under the Social 
Security Act (42 U.S.C. 301 et seq.). (WIA sec. 181(a)(2).)


Sec. 667.274  What health and safety standards apply to the working 
conditions of participants in activities under title I of WIA?

    (a) Health and safety standards established under Federal and State 
law otherwise applicable to working conditions of employees are equally 
applicable to working conditions of participants engaged in programs 
and activities under Title I of WIA.
    (b)(1) To the extent that a State workers' compensation law 
applies, workers' compensation must be provided to participants in 
programs and activities under Title I of WIA on the same basis as the 
compensation is provided to other individuals in the State in similar 
employment.
    (2) If a State workers' compensation law applies to a participant 
in work experience, workers' compensation benefits must be available 
for injuries suffered by the participant in such work experience. If a 
State workers'

[[Page 49429]]

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, as defined in 29 CFR 37.4, must comply with the 
nondiscrimination and equal opportunity provisions of WIA section 188 
and its implementing regulations, codified at 29 CFR part 37. Under 
that definition, the term ``recipients'' includes State and Local 
Workforce Investment Boards, One-Stop operators, service providers, 
vendors, and subrecipients, as well as other types of individuals and 
entitites.
    (2) Nondiscrimination and equal opportunity requirements and 
procedures, including complaint processing and compliance reviews, are 
governed by the regulations implementing WIA section 188, codified at 
29 CFR part 37, and are administered and enforced by the DOL Civil 
Rights Center.
    (3) As described in Sec. 667.260(a), financial assistance provided 
under WIA title I may be used to meet a recipient's obligation to 
provide physical and programmatic accessibility and reasonable 
accommodation/modification in regard to the WIA program, as required by 
section 504 of the Rehabilitation Act of 1973, as amended, the 
Americans with Disabilities Act of 1990, as amended, section 188 of 
WIA, and the regulations implementing these statutory provisions.
    (b) Under 29 CFR 37.6(f), the employment or training of 
participants in sectarian activities is prohibited, 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.

Subpart C--Reporting Requirements


Sec. 667.300  What are the reporting requirements for Workforce 
Investment Act programs?

    (a) General. All States and other direct grant recipients must 
report financial, participant, and performance data in accordance with 
instructions issued by DOL. Required reports must be submitted no more 
frequently than quarterly within a time period specified in the 
reporting instructions.
    (b) Subrecipient reporting. (1) A State or other direct grant 
recipient may impose different forms or formats, shorter due dates, and 
more frequent reporting requirements on subrecipients. However, the 
recipient is required to meet the reporting requirements imposed by 
DOL.
    (2) If a State intends to impose different reporting requirements, 
it must describe those reporting requirements in its State WIA plan.
    (c) Financial reports. (1) Each grant recipient must submit 
financial reports.
    (2) Reports must include any income or profits earned, including 
such income or profits earned by subrecipients, and any costs incurred 
(such as stand-in costs) that are otherwise allowable except for 
funding limitations. (WIA sec. 185(f)(2))
    (3) Reported expenditures and program income, including any profits 
earned, must be on the accrual basis of accounting and cumulative by 
fiscal year of appropriation. If the recipient's accounting records are 
not normally kept on the accrual basis of accounting, the recipient 
must develop accrual information through an analysis of the 
documentation on hand.
    (d) Due date. Financial reports and participant data reports are 
due no later than 45 days after the end of each quarter unless 
otherwise specified in reporting instructions. A final financial report 
is required 90 days after the expiration of a funding period or the 
termination of grant support.
    (e) Annual performance progress report. An annual performance 
progress report for each of the three programs under title I, subpart B 
is required by WIA section 136(d).
    (1) A State failing to submit any of these annual performance 
progress reports within 45 days of the due date may have its grant (for 
that program or all title I, subpart B programs) for the succeeding 
year reduced by as much as five percent, as provided by WIA section 
136(g)(1)(B).
    (2) States submitting annual performance progress reports that 
cannot be validated or verified as accurately counting and reporting 
activities in accordance with the reporting instructions, may be 
treated as failing to submit annual reports, and be subject to 
sanction. Sanctions related to State performance or failure to submit 
these reports timely cannot result in a total grant reduction of more 
than five percent. Any sanction would be in addition to having to repay 
the amount of any incentive funds granted based on the invalid report.

Subpart D--Oversight and Monitoring


Sec. 667.400  Who is responsible for oversight and monitoring of WIA 
title I grants?

    (a) The Secretary is authorized to monitor all recipients and 
subrecipients of all grants awarded and funds expended under WIA title 
I to determine compliance with the Act and the WIA regulations, and may 
investigate any matter deemed necessary to determine such compliance. 
Federal oversight will be conducted primarily at the recipient level.
    (b) In each fiscal year, we will also conduct in-depth reviews in 
several States, including financial and performance audits, to assure 
that funds are spent in accordance with the Act. Priority for such in-
depth reviews will be given to States not meeting annual adjusted 
levels of performance.
    (c)(1) Each recipient and subrecipient must continuously monitor 
grant-supported activities in accordance with the uniform 
administrative requirements at 29 CFR parts 95 and 97, as applicable, 
including the applicable cost principles indicated at 29 CFR 97.22(b) 
or 29 CFR 95.27, for all entities receiving WIA title I funds. For 
governmental units, the applicable requirements are at 29 CFR part 97. 
For non-profit organizations, the applicable requirements are at 29 CFR 
part 95.
    (2) In the case of grants under WIA sections 127 and 132, the 
Governor must develop a State monitoring system that meets the 
requirements of Sec. 667.410(b). The Governor must monitor Local Boards 
annually for compliance with applicable laws and regulations in 
accordance with the State monitoring system. Monitoring must include an 
annual review of each local area's compliance with the uniform 
administrative requirements.


Sec. 667.410  What are the oversight roles and responsibilities of 
recipients and subrecipients?

    (a) Roles and responsibilities for all recipients and subrecipients 
of funds under WIA title I in general. Each recipient and subrecipient 
must conduct regular oversight and monitoring of its WIA activities and 
those of its subrecipients and contractors in order to:
    (1) Determine that expenditures have been made against the cost 
categories and within the cost limitations specified in the Act and the 
regulations in this part;
    (2) Determine whether or not there is compliance with other 
provisions of the Act and the WIA regulations and other applicable laws 
and regulations; and

[[Page 49430]]

    (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, through a 
monitoring plan or otherwise, that the State monitoring system meets 
the requirements of paragraph (b)(2) of this section.
    (2) The State monitoring system must:
    (i) Provide for annual on-site monitoring reviews of local areas' 
compliance with DOL uniform administrative requirements, as required by 
WIA section 184(a)(4);
    (ii) Ensure that established policies to achieve program quality 
and outcomes meet the objectives of the Act and the WIA regulations, 
including policies relating to: the provision of services by One-Stop 
Centers; eligible providers of training services; and eligible 
providers of youth activities;
    (iii) Enable the Governor to determine if subrecipients and 
contractors have demonstrated substantial compliance with WIA 
requirements; and
    (iv) Enable the Governor to determine whether a local plan will be 
disapproved for failure to make acceptable progress in addressing 
deficiencies, as required in WIA section 118(d)(1).
    (v) Enable the Governor to ensure compliance with the 
nondiscrimination and equal opportunity requirements of WIA section 188 
and 29 CFR part 37. Requirements for these aspects of the monitoring 
system are set forth in 29 CFR 37.54(d)(2)(ii).
    (3) The State must conduct an annual on-site monitoring review of 
each local area's compliance with DOL uniform administrative 
requirements, including the appropriate administrative requirements for 
subrecipients and the applicable cost principles indicated at 
Sec. 667.200 for all entities receiving WIA title I funds.
    (4) The Governor must require that prompt corrective action be 
taken if any substantial violation of standards identified in 
paragraphs (b) (2) or (3) of this section is found. (WIA sec. 
184(a)(5).)
    (5) The Governor must impose the sanctions provided in WIA section 
184 (b) and (c) in the event of a subrecipient's failure to take 
required corrective action required under paragraph (b)(4) of this 
section.
    (6) The Governor may issue additional requirements and instructions 
to subrecipients on monitoring activities.
    (7) The Governor must certify to the Secretary every two years 
that:
    (i) The State has implemented uniform administrative requirements;
    (ii) The State has monitored local areas to ensure compliance with 
uniform administrative requirements; and
    (iii) The State has taken appropriate corrective action to secure 
such compliance. (WIA sec. 184(a)(6)(A), (B), and (C).)

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


Sec. 667.500  What procedures apply to the resolution of findings 
arising from audits, investigations, monitoring and oversight reviews?

    (a) Resolution of subrecipient-level findings. (1) The Governor is 
responsible for resolving findings that arise from the State's 
monitoring reviews, investigations and audits (including OMB Circular 
A-133 audits) of subrecipients.
    (2) A State must utilize the audit resolution, debt collection and 
appeal procedures that it uses for other Federal grant programs.
    (3) If a State does not have such procedures, it must prescribe 
standards and procedures to be used for this grant program.
    (b) Resolution of State and other direct recipient level findings. 
(1) The Secretary is responsible for resolving findings that arise from 
Federal audits, monitoring reviews, investigations, incident reports, 
and recipient level OMB Circular A-133 audits.
    (2) The Secretary uses the DOL audit resolution process, consistent 
with the Single Audit Act of 1996 and OMB Circular A-133, and Grant 
Officer Resolution provisions of Sec. 667.510, as appropriate.
    (3) A final determination issued by a Grant Officer under this 
process may be appealed to the DOL Office of Administrative Law Judges 
under the procedures at Sec. 667.800.
    (c) Resolution of nondiscrimination findings. Findings arising from 
investigations or reviews conducted under nondiscrimination laws will 
be resolved in accordance with WIA section 188 and the Department of 
Labor nondiscrimination regulations implementing WIA section 188, 
codified at 29 CFR part 37.


Sec. 667.505  How do we resolve investigative and monitoring findings?

    (a) As a result of an investigation, on-site visit or other 
monitoring, we notify the recipient of the findings of the 
investigation and gives the recipient a period of time (not more than 
60 days) to comment and to take appropriate corrective actions.
    (b) The Grant Officer reviews the complete file of the 
investigation or monitoring report and the recipient's actions under 
paragraph (a) of this section. The Grant Officer's review takes into 
account the sanction provisions of WIA section 184(b) and (c). If the 
Grant Officer agrees with the recipient's handling of the situation, 
the Grant Officer so notifies the recipient. This notification 
constitutes final agency action.
    (c) If the Grant Officer disagrees with the recipient's handling of 
the matter, the Grant Officer proceeds under Sec. 667.510.


Sec. 667.510  What is the Grant Officer resolution process?

    (a) General. When the Grant Officer is dissatisfied with the 
State's disposition of an audit or other resolution of violations 
(including those arising out of incident reports or compliance 
reviews), or with the recipient's response to findings resulting from 
investigations or monitoring report, the initial and final 
determination process, set forth in this section, is used to resolve 
the matter.
    (b) Initial determination. The Grant Officer makes an initial 
determination on the findings for both those matters where there is 
agreement and those where there is disagreement with the recipient's 
resolution, including the allowability of questioned costs or 
activities. This initial determination is based upon the requirements 
of the Act and regulations, and the terms and conditions of the grants, 
contracts, or other agreements under the Act.
    (c) Informal resolution. Except in an emergency situation, when the 
Secretary invokes the authority described in WIA section 184(e), the 
Grant Officer may not revoke a recipient's grant in whole or in part, 
nor institute corrective actions or sanctions, without first providing 
the recipient with an opportunity to present documentation or arguments 
to resolve informally those matters in controversy contained in the 
initial determination. The initial determination must provide for an 
informal resolution period of at least 60 days from issuance of the 
initial determination. If the matters are resolved informally, the 
Grant Officer must issue a final determination under paragraph (d) of 
this section which notifies the parties in writing of the nature of the 
resolution and may close the file.
    (d) Grant Officer's final determination. (1) If the matter is not 
fully resolved informally, the Grant Officer provides each party with a 
written final determination by certified

[[Page 49431]]

mail, return receipt requested. For audits of recipient-level entities 
and other recipients which receive WIA funds directly from DOL, 
ordinarily, the final determination is issued not later than 180 days 
from the date that the Office of Inspector General (OIG) issues the 
final approved audit report to the Employment and Training 
Administration. For audits of subrecipients conducted by the OIG, 
ordinarily the final determination is issued not later than 360 days 
from the date the OIG issues the final approved audit report to ETA.
    (2) A final determination under this paragraph (d) must:
    (i) Indicate whether efforts to informally resolve matters 
contained in the initial determination have been unsuccessful;
    (ii) List those matters upon which the parties continue to 
disagree;
    (iii) List any modifications to the factual findings and 
conclusions set forth in the initial determination and the rationale 
for such modifications;
    (iv) Establish a debt, if appropriate;
    (v) Require corrective action, when needed;
    (vi) Determine liability, method of restitution of funds and 
sanctions; and
    (vii) Offer an opportunity for a hearing in accordance with 
Sec. 667.800 of this part.
    (3) Unless a hearing is requested, a final determination under this 
paragraph (d) is final agency action and is not subject to further 
review.
    (e) Nothing in this subpart precludes the Grant Officer from 
issuing an initial determination and/or final determination directly to 
a subrecipient, in accordance with section 184(d)(3) of the Act. In 
such a case, the Grant Officer will inform the recipient of this 
action.

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


Sec. 667.600  What local area, State and direct recipient grievance 
procedures must be established?

    (a) Each local area, State and direct recipient of funds under 
title I of WIA, except for Job Corps, must establish and maintain a 
procedure for grievances and complaints according to the requirements 
of this section. The grievance procedure requirements applicable to Job 
Corps are set forth at 20 CFR 670.990.
    (b) Each local area, State, and direct recipient must:
    (1) Provide information about the content of the grievance and 
complaint procedures required by this section to participants and other 
interested parties affected by the local Workforce Investment System, 
including One-Stop partners and service providers;
    (2) Require that every entity to which it awards Title I funds must 
provide the information referred to in paragraph (b)(1) of this section 
to participants receiving Title I-funded services from such entities; 
and
    (3) Must make reasonable efforts to assure that the information 
referred to in paragraph (b)(1) of this section will be understood by 
affected participants and other individuals, including youth and those 
who are limited-English speaking individuals. Such efforts must comply 
with the language requirements of 29 CFR 37.35 regarding the provision 
of services and information in languages other than English.
    (c) Local area procedures must provide:
    (1) A process for dealing with grievances and complaints from 
participants and other interested parties affected by the local 
Workforce Investment System, including One-Stop partners and service 
providers;
    (2) An opportunity for an informal resolution and a hearing to be 
completed within 60 days of the filing of the grievance or complaint;
    (3) A process which allows an individual alleging a labor standards 
violation to submit the grievance to a binding arbitration procedure, 
if a collective bargaining agreement covering the parties to the 
grievance so provides; and
    (4) An opportunity for a local level appeal to a State entity when:
    (i) No decision is reached within 60 days; or
    (ii) Either party is dissatisfied with the local hearing decision.
    (d) State procedures must provide:
    (1) A process for dealing with grievances and complaints from 
participants and other interested parties affected by the Statewide 
Workforce Investment programs;
    (2) A process for resolving appeals made under paragraph (c)(4) of 
this section;
    (3) A process for remanding grievances and complaints related to 
the local Workforce Investment Act programs to the local area grievance 
process; and
    (4) An opportunity for an informal resolution and a hearing to be 
completed within 60 days of the filing of the grievance or complaint.
    (e) Procedures of direct recipients must provide:
    (1) A process for dealing with grievance and complaints from 
participants and other interested parties affected by the recipient's 
Workforce Investment Act programs; and
    (2) An opportunity for an informal resolution and a hearing to be 
completed within 60 days of the filing of the grievance or complaint.
    (f) The remedies that may be imposed under local, State and direct 
recipient grievance procedures are enumerated at WIA section 181(c)(3).
    (g)(1) The provisions of this section on grievance procedures do 
not apply to discrimination complaints brought under WIA section 188 
and/or 29 CFR part 37. Such complaints must be handled in accordance 
with the procedures set forth in that regulatory part.
    (2) Questions about or complaints alleging a violation of the 
nondiscrimination provisions of WIA section 188 may be directed or 
mailed to the Director, Civil Rights Center, U.S. Department of Labor, 
Room N4123, 200 Constitution Avenue, NW, Washington, D.C. 20210, for 
processing.
    (h) Nothing in this subpart precludes a grievant or complainant 
from pursuing a remedy authorized under another Federal, State or local 
law.


Sec. 667.610  What processes do we use to review State and local 
grievances and complaints?

    (a) We investigate allegations arising through the grievance 
procedures described in Sec. 667.600 when:
    (1) A decision on a grievance or complaint under Sec. 667.600(d) 
has not been reached within 60 days of receipt of the grievance or 
complaint or within 60 days of receipt of the request for appeal of a 
local level grievance and either party appeals to the Secretary; or
    (2) A decision on a grievance or complaint under Sec. 667.600(d) 
has been reached and the party to which such decision is adverse 
appeals to the Secretary.
    (b) We must make a final decision on an appeal under paragraph (a) 
of this section no later than 120 days after receiving the appeal.
    (c) Appeals made under paragraph (a)(2) of this section must be 
filed within 60 days of the receipt of the decision being appealed. 
Appeals made under paragraph (a)(1) of this section must be filed 
within 120 days of the filing of the grievance with the State, or the 
filing of the appeal of a local grievance with the State. All appeals 
must be submitted by certified mail, return receipt requested, to the 
Secretary, U.S. Department of Labor, Washington, DC 20210, Attention: 
ASET. A copy of the appeal must be simultaneously provided to the 
appropriate ETA Regional Administrator and the opposing party.

[[Page 49432]]

    (d) Except for complaints arising under WIA section 184(f) or 
section 188, grievances or complaints made directly to the Secretary 
will be referred to the appropriate State or local area for resolution 
in accordance with this section, unless we notify the parties that the 
Department of Labor will investigate the grievance under the procedures 
at Sec. 667.505. Discrimination complaints brought under WIA section 
188 or 29 CFR part 37 will be referred to the Director of the Civil 
Rights Center.


Sec. 667.630  How are complaints and reports of criminal fraud and 
abuse addressed under WIA?

    Information and complaints involving criminal fraud, waste, abuse 
or other criminal activity must be reported immediately through the 
Department's Incident Reporting System to the DOL Office of Inspector 
General, Office of Investigations, Room S5514, 200 Constitution Avenue 
NW., Washington, D.C. 20210, or to the corresponding Regional Inspector 
General for Investigations, with a copy simultaneously provided to the 
Employment and Training Administration. The Hotline number is 1-800-
347-3756. Complaints of a non-criminal nature are handled under the 
procedures set forth in Sec. 667.505 or through the Department's 
Incident Reporting System.


Sec. 667.640  What additional appeal processes or systems must a State 
have for the WIA program?

    (a) Non-designation of local areas: (1) The State must establish, 
and include in its State Plan, due process procedures which provide 
expeditious appeal to the State Board for a unit or combination of 
units of general local government or a rural concentrated employment 
program grant recipient (as described at WIA section 116(a)(2)(B)) that 
requests, but is not granted, automatic or temporary and subsequent 
designation as a local workforce investment area under WIA section 
116(a)(2) or 116(a)(3).
    (2) These procedures must provide an opportunity for a hearing and 
prescribe appropriate time limits to ensure prompt resolution of the 
appeal.
    (3) If the appeal to the State Board does not result in 
designation, the appellant may request review by the Secretary under 
Sec. 667.645.
    (4) If the Secretary determines that the appellant was not accorded 
procedural rights under the appeal process established in paragraph 
(a)(1) of this section, or that the area meets the requirements for 
designation at WIA section 116(a)(2) or 116(a)(3), the Secretary may 
require that the area be designated as a workforce investment area.
    (b) Denial or termination of eligibility as a training provider. 
(1) A State must establish procedures which allow providers of training 
services the opportunity to appeal:
    (i) Denial of eligibility by a Local Board or the designated State 
agency under WIA section 122 (b), (c) or (e);
    (ii) Termination of eligibility or other action by a Local Board or 
State agency under WIA section 122(f); or
    (iii) Denial of eligibility as a provider of on-the-job training 
(OJT) or customized training by a One-Stop operator under WIA section 
122(h).
    (2) Such procedures must provide an opportunity for a hearing and 
prescribe appropriate time limits to ensure prompt resolution of the 
appeal.
    (3) A decision under this State appeal process may not be appealed 
to the Secretary.
    (c) Testing and sanctioning for use of controlled substances. (1) A 
State must establish due process procedures which provide expeditious 
appeal for:
    (i) WIA participants subject to testing for use of controlled 
substances, imposed under a State policy established under WIA section 
181(f); and
    (ii) WIA participants who are sanctioned after testing positive for 
the use of controlled substances, under the policy described in 
paragraph (c)(1)(i) of this section.
    (2) A decision under this State appeal process may not be appealed 
to the Secretary.


Sec. 667.645  What procedures apply to the appeals of non-designation 
of local areas?

    (a) A unit or combination of units of general local government or 
rural concentrated employment program grant recipient (as described in 
WIA section 116(a)(2)(B)) whose appeal of the denial of a request for 
automatic or temporary and subsequent designation as a local workforce 
investment area to the State Board has not resulted in designation may 
appeal the denial of local area designation to the Secretary.
    (b) Appeals made under paragraph (a) of this section must be filed 
no later than 30 days after receipt of written notification of the 
denial from the State Board, and must be submitted by certified mail, 
return receipt requested, to the Secretary, U.S. Department of Labor, 
Washington, DC 20210, Attention: ASET. A copy of the appeal must be 
simultaneously provided to the State Board.
    (c) The appellant must establish that it was not accorded 
procedural rights under the appeal process set forth in the State Plan, 
or establish that it meets the requirements for designation in WIA 
section 116(a)(2) or (a)(3). The Secretary may consider any comments 
submitted in response by the State Board.
    (d) If the Secretary determines that the appellant has met its 
burden of establishing that it was not accorded procedural rights under 
the appeal process set forth in the State Plan, or that it meets the 
requirements for designation in WIA section 116(a)(2) or (a)(3), the 
Secretary may require that the area be designated as a local workforce 
investment area.
    (e) The Secretary must issue a written decision to the Governor and 
the appellant.


Sec. 667.650  What procedures apply to the appeals of the Governor's 
imposition of sanctions for substantial violations or performance 
failures by a local area?

    (a) A local area which has been found in substantial violation of 
WIA title I, and has received notice from the Governor that either all 
or part of the local plan will be revoked or that a reorganization will 
occur, may appeal such sanctions to the Secretary under WIA section 
184(b). The sanctions do not become effective until:
    (1) The time for appeal has expired; or
    (2) The Secretary has issued a decision.
    (b) A local area which has failed to meet local performance 
measures for two consecutive years, and has received the Governor's 
notice of intent to impose a reorganization plan, may 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.

[[Page 49433]]

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


Sec. 667.700  What procedure do we use to impose sanctions and 
corrective actions on recipients and subrecipients of WIA grant funds?

    (a)(1) Except for actions under WIA section 188(a) or 29 CFR part 
37 (relating to nondiscrimination requirements), the Grant Officer uses 
the initial and final determination procedures outlined in Sec. 667.510 
to impose a sanction or corrective action.
    (2) To impose a sanction or corrective action for a violation of 
WIA section 188(a) or 29 CFR part 37, the Department will use the 
procedures set forth in that regulatory part.
    (b) To impose a sanction or corrective action for noncompliance 
with the uniform administrative requirements set forth at section 
184(a)(3) of WIA, and Sec. 667.200(a), when the Grant Officer 
determines that the Governor has not taken corrective action to remedy 
the violation as required by WIA section 184(a)(5), the Grant Officer, 
under the authority of WIA section 184(a)(7) and Sec. 667.710(c), must 
require the Governor to impose any of the corrective actions set forth 
at WIA section 184(b)(1). If the Governor fails to impose the 
corrective actions required by the Grant Officer, the Secretary may 
immediately suspend or terminate financial assistance in accordance 
with WIA section 184(e).
    (c) For substantial violations of WIA statutory and regulatory 
requirements, if the Governor fails to promptly take the actions 
specified in WIA section 184(b)(1), the Grant Officer may impose such 
actions directly against the local area.
    (d) The Grant Officer may also impose a sanction directly against a 
subrecipient, as authorized in section 184(d)(3) of the Act. In such a 
case, the Grant Officer will inform the recipient of the action.


Sec. 667.705  Who is responsible for funds provided under title I of 
WIA?

    (a) The recipient is responsible for all funds under its grant(s).
    (b) The political jurisdiction(s) of the chief elected official(s) 
in a local workforce investment area is liable for any misuse of the 
WIA grant funds allocated to the local area under WIA sections 128 and 
133, unless the chief elected official(s) reaches an agreement with the 
Governor to bear such liability.
    (c) When a local workforce area is composed of more than one unit 
of general local government, the liability of the individual 
jurisdictions must be specified in a written agreement between the 
chief elected officials.


Sec. 667.710  What actions are required to address the failure of a 
local area to comply with the applicable uniform administrative 
provisions?

    (a) If, as part of the annual on-site monitoring of local areas, 
the Governor determines that a local area is not in compliance with the 
uniform administrative requirements found at 29 CFR part 95 or part 97, 
as appropriate, the Governor must:
    (1) Require corrective action to secure prompt compliance; and
    (2) Impose the sanctions provided for at section 184(b) if the 
Governor finds that the local area has failed to take timely corrective 
action.
    (b) An action by the recipient to impose a sanction against a local 
area, in accordance with this section, may be appealed to the Secretary 
in accordance with Sec. 667.650, and will not become effective until:
    (1) The time for appeal has expired; or
    (2) The Secretary has issued a decision.
    (c)(1) If the Secretary finds that the Governor has failed to 
monitor and certify compliance of local areas with the administrative 
requirements, under WIA section 184(a), or that the Governor has failed 
to promptly take the actions required upon a determination under 
paragraph (a) of this section that a local area is not in compliance 
with the uniform administrative requirements, the Secretary will 
require the Governor to take corrective actions against the State 
recipient or the local area, as appropriate to ensure prompt 
compliance.
    (2) If the Governor fails to take the corrective actions required 
by the Secretary under paragraph (c)(1) of this section, the Secretary 
may immediately suspend or terminate financial assistance under WIA 
section 184(e).


Sec. 667.720  How do we handle a recipient's request for waiver of 
liability under WIA section 184(d)(2)?

    (a) A recipient may request a waiver of liability, as described in 
WIA section 184(d)(2), and a Grant Officer may approve such a waiver 
under WIA section 184(d)(3).
    (b)(1) When the debt for which a waiver of liability is desired was 
established in a non-Federal resolution proceeding, the resolution 
report must accompany the waiver request.
    (2) When the waiver request is made during the ETA Grant Officer 
resolution process, the request must be made during the informal 
resolution period described in Sec. 667.510(c).
    (c) A waiver of the recipient's liability shall be considered by 
the Grant Officer only when:
    (1) The misexpenditure of WIA funds occurred at a subrecipient's 
level;
    (2) The misexpenditure was not due to willful disregard of the 
requirements of title I of the Act, gross negligence, failure to 
observe accepted standards of administration, or did not constitute 
fraud;
    (3) If fraud did exist, it was perpetrated against the recipient/
subrecipients; and
    (i) The recipient/subrecipients discovered, investigated, reported, 
and cooperated in any prosecution of the perpetrator of the fraud; and
    (ii) After aggressive debt collection action, it has been 
documented that further attempts at debt collection from the 
perpetrator of the fraud would be inappropriate or futile;
    (4) The recipient has issued a final determination which disallows 
the misexpenditure, the recipient's appeal process has been exhausted, 
and a debt has been established; and
    (5) The recipient requests such a waiver and provides documentation 
to demonstrate that it has substantially complied with the requirements 
of section 184(d)(2) of the Act, and this section.
    (d) The recipient will not be released from liability for misspent 
funds under the determination required by section 184(d) of the Act 
unless the Grant Officer determines that further collection action, 
either by the recipient or subrecipients, would be inappropriate or 
would prove futile.


Sec. 667.730  What is the procedure to handle a recipient's request for 
advance approval of contemplated corrective actions?

    (a) The recipient may request advance approval from the Grant 
Officer for contemplated corrective actions, including debt collection 
actions, which the recipient plans to initiate or to forego. The 
recipient's request must include a description and an assessment of all 
actions taken by the subrecipients to collect the misspent funds.
    (b) Based on the recipient's request, the Grant Officer may 
determine that the recipient may forego certain collection actions 
against a subrecipient when:
    (1) The subrecipient meets the criteria set forth in section 
184(d)(2) of the Act;
    (2) The misexpenditure of funds:
    (i) Was not made by that subrecipient but by an entity that 
received WIA funds from that subrecipient;
    (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

[[Page 49434]]

in any prosecution of the perpetrator of the fraud; and
    (C) After aggressive debt collection action, it has been documented 
that further attempts at debt collection from the perpetrator of the 
fraud would be inappropriate or futile;
    (3) A final determination which disallows the misexpenditure and 
establishes a debt has been issued at the appropriate level;
    (4) Final action within the recipient's appeal system has been 
completed; and
    (5) Further debt collection action by that subrecipient or the 
recipient would be either inappropriate or futile.


Sec. 667.740  What procedure must be used for administering the offset/
deduction provisions at section 184(c) of the Act?

    (a)(1) For recipient level misexpenditures, we may determine that a 
debt, or a portion thereof, may be offset against amounts that are 
allotted to the recipient. Recipients must submit a written request for 
an offset to the Grant Officer. Generally, we will apply the offset 
against amounts that are available at the recipient level for 
administrative costs.
    (2) The Grant Officer may approve an offset request, under 
paragraph (a)(1) of this section, if the misexpenditures were not due 
to willful disregard of the requirements of the Act and regulations, 
gross negligence, failure to observe accepted standards of 
administration or a pattern of misexpenditure.
    (b) For subrecipient level misexpenditures that were not due to 
willful disregard of the requirements of the Act and regulations, gross 
negligence, failure to observe accepted standards of administration or 
a pattern of misexpenditure, if we have required the State to repay 
such amount the State may deduct an amount equal to the misexpenditure 
from its subsequent year's allocations to the local area from funds 
available for the administrative costs of the local programs involved.
    (c) If offset is granted, the debt will not be fully satisfied 
until the Grant Officer reduces amounts allotted to the State by the 
amount of the misexpenditure.
    (d) A State may not make a deduction under paragraph (b) of this 
section until the State has taken appropriate corrective action to 
ensure full compliance within the local area with regard to appropriate 
expenditure of WIA funds.

Subpart H--Administrative Adjudication and Judicial Review


Sec. 667.800  What actions of the Department may be appealed to the 
Office of Administrative Law Judges?

    (a) An applicant for financial assistance under title I of WIA 
which is dissatisfied because we have issued a determination not to 
award financial assistance, in whole or in part, to such applicant; or 
a recipient, subrecipient, or a vendor against which the Grant Officer 
has directly imposed a sanction or corrective action, including a 
sanction against a State under 20 CFR part 666, may appeal to the U.S. 
Department of Labor, Office of Administrative Law Judges (OALJ) within 
21 days of receipt of the final determination.
    (b) Failure to request a hearing within 21 days of receipt of the 
final determination constitutes a waiver of the right to a hearing.
    (c) A request for a hearing under this subpart must state 
specifically those issues in the final determination upon which review 
is requested. Those provisions of the final determination not specified 
for review, or the entire final determination when no hearing has been 
requested within the 21 days, are considered resolved and not subject 
to further review. Only alleged violations of the Act, its regulations, 
grant or other agreement under the Act fairly raised in the 
determination, and the request for hearing are subject to review.
    (d) A request for a hearing must be transmitted by certified mail, 
return receipt requested, to the Chief Administrative Law Judge, U.S. 
Department of Labor, Suite 400, 800 K Street, NW., Washington, DC 
20001, with one copy to the Departmental official who issued the 
determination.
    (e) The procedures in this subpart apply in the case of a 
complainant who has not had a dispute adjudicated under the alternative 
dispute resolution process set forth in Sec. 667.840 within the 60 
days, except that the request for hearing before the OALJ must be filed 
within 15 days of the conclusion of the 60-day period provided in 
Sec. 667.840. In addition to including the final determination upon 
which review is requested, the complainant must include a copy of any 
Stipulation of Facts and a brief summary of proceedings.


Sec. 667.810  What rules of procedure apply to hearings conducted under 
this subpart?

    (a) Rules of practice and procedure. The rules of practice and 
procedure promulgated by the OALJ at subpart A of 29 CFR part 18, 
govern the conduct of hearings under this subpart. However, a request 
for hearing under this subpart is not considered a complaint to which 
the filing of an answer by DOL or a DOL agency or official is required. 
Technical rules of evidence will not apply to hearings conducted 
pursuant to this part. However, rules or principles designed to assure 
production of the most credible evidence available and to subject 
testimony to cross-examination will apply.
    (b) Prehearing procedures. In all cases, the Administrative Law 
Judge (ALJ) should encourage the use of prehearing procedures to 
simplify and clarify facts and issues.
    (c) Subpoenas. Subpoenas necessary to secure the attendance of 
witnesses and the production of documents or other items at hearings 
must be obtained from the ALJ and must be issued under the authority 
contained in section 183(c) of the Act, incorporating 15 U.S.C. 49.
    (d) Timely submission of evidence. The ALJ must not permit the 
introduction at the hearing of any documentation if it has not been 
made available for review by the other parties to the proceeding either 
at the time ordered for any prehearing conference, or, in the absence 
of such an order, at least 3 weeks prior to the hearing date.
    (e) Burden of production. The Grant Officer has the burden of 
production to support her or his decision. To this end, the Grant 
Officer prepares and files an administrative file in support of the 
decision which must be made part of the record. Thereafter, the party 
or parties seeking to overturn the Grant Officer's decision has the 
burden of persuasion.


Sec. 667.820  What authority does the Administrative Law Judge have in 
ordering relief as an outcome of an administrative hearing?

    In ordering relief, the ALJ has the full authority of the Secretary 
under the Act.


Sec. 667.825  What special rules apply to reviews of NFJP and WIA INA 
grant selections?

    (a) An applicant whose application for funding as a WIA INA grantee 
under 20 CFR part 668 or as an NFJP grantee under 20 CFR part 669 is 
denied in whole or in part may request an administrative review under 
Sec. 667.800(a) with to determine whether there is a basis in the 
record to support the decision. This appeal will not in any way 
interfere with the designation and funding of another organization to 
serve the area in question during the appeal period. The available 
remedy in such an appeal is the right to be designated in the future as 
the WIA INA or NFJP

[[Page 49435]]

grantee for the remainder of the current grant cycle. Neither 
retroactive nor immediately effective selection status may be awarded 
as relief in a non-selection appeal under this section.
    (b) If the ALJ rules that the organization should have been 
selected and the organization continues to meet the requirements of 20 
CFR part 668 or part 669, we will select and fund the organization 
within 90 days of the ALJ's decision unless the end of the 90-day 
period is within six (6) months of the end of the funding period. An 
applicant so selected is not entitled to the full grant amount, but 
will only receive the funds remaining in the grant that have not been 
expended by the current grantee through its operation of the grant and 
its subsequent closeout.
    (c) Any organization selected and/or funded as a WIA INA or NFJP 
grantee is subject to being removed as grantee in the event an ALJ 
decision so orders. The Grant Officer provides instructions on 
transition and close-out to a grantee which is removed. All parties 
must agree to the provisions of this paragraph as a condition for WIA 
INA or NFJP funding.
    (d) A successful appellant which has not been awarded relief 
because of the application of paragraph (b) of this section is eligible 
to compete for funds in the immediately subsequent two-year grant 
cycle. In such a situation, we will not issue a waiver of competition 
and for the area and will select a grantee through the normal 
competitive process.


Sec. 667.830  When will the Administrative Law Judge issue a decision?

    (a) The ALJ should render a written decision not later than 90 days 
after the closing of the record.
    (b) The decision of the ALJ constitutes final agency action unless, 
within 20 days of the decision, a party dissatisfied with the ALJ's 
decision has filed a petition for review with the Administrative Review 
Board (ARB) (established under Secretary's Order No. 2-96), 
specifically identifying the procedure, fact, law or policy to which 
exception is taken. Any exception not specifically urged is deemed to 
have been waived. A copy of the petition for review must be sent to the 
opposing party at that time. Thereafter, the decision of the ALJ 
constitutes final agency action unless the ARB, within 30 days of the 
filing of the petition for review, notifies the parties that the case 
has been accepted for review. Any case accepted by the ARB must be 
decided within 180 days of acceptance. If not so decided, the decision 
of the ALJ constitutes final agency action.


Sec. 667.840  Is there an alternative dispute resolution process that 
may be used in place of an OALJ hearing?

    (a) Parties to a complaint which has been filed according to the 
requirements of Sec. 667.800 may choose to waive their rights to an 
administrative hearing before the OALJ. Instead, they may choose to 
transfer the settlement of their dispute to an individual acceptable to 
all parties who will conduct an informal review of the stipulated facts 
and render a decision in accordance with applicable law. A written 
decision must be issued within 60 days after submission of the matter 
for informal review.
    (b) The waiver of the right to request a hearing before the OALJ 
will automatically be revoked if a settlement has not been reached or a 
decision has not been issued within the 60 days provided in paragraph 
(a) of this section.
    (c) The decision rendered under this informal review process will 
be treated as a final decision of an Administrative Law Judge under 
section 186(b) of the Act.


Sec. 667.850  Is there judicial review of a final order of the 
Secretary issued under section 186 of the Act?

    (a) Any party to a proceeding which resulted in a Secretary's final 
order under section 186 of the Act may obtain a review in the United 
States Court of Appeals having jurisdiction over the applicant or 
recipient of funds involved, by filing a review petition within 30 days 
of the issuance of the Secretary's final order.
    (b) The court has jurisdiction to make and enter a decree 
affirming, modifying, or setting aside the order of the Secretary, in 
whole or in part.
    (c) No objection to the Secretary's order may be considered by the 
court unless the objection was specifically urged, in a timely manner, 
before the Secretary. The review is limited to questions of law, and 
the findings of fact of the Secretary are conclusive if supported by 
substantial evidence.
    (d) The judgment of the court is final, subject to certiorari 
review by the United States Supreme Court.


Sec. 667.860  Are there other remedies available outside of the Act?

    Nothing contained in this subpart prejudices the separate exercise 
of other legal rights in pursuit of remedies and sanctions available 
outside the Act.

Subpart I--Transition Planning


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

    (a)(1) To facilitate planning for the implementation of WIA, a 
Governor may reserve an amount equal to no more than 2 percent of the 
total amount of JTPA formula funds allotted to the State for fiscal 
years 1998 and 1999 for expenditure on transition planning activities. 
The funds may be from any one or more of the JTPA titles and subparts, 
that is, funds do not have to be drawn proportionately from all titles 
and subparts. The Governor must report the expenditure of these funds 
for transition planning separately in accordance with instructions we 
issued, but the expenditure is not required to be allocated to the 
various titles and subparts;
    (2) These reserved transition funds may be excluded from any 
calculation of compliance with JTPA cost limitations.
    (b) Not less than 50 percent of the funds reserved by the Governor 
in paragraph (a) of this section must be made available to local 
entities.
    (c) We will issue such other transition guidance as is necessary 
and appropriate.


Sec. 667.910  Are JTPA participants to be grandfathered into WIA?

    Yes, all JTPA participants who are enrolled in JTPA must be 
grandfathered into WIA. These participants can complete the JTPA 
services specified in their individual service strategy, even if that 
service strategy is not allowable under WIA, or if the participant is 
not eligible to receive these services under WIA.

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

Subpart A--Purposes and Policies
Sec.
668.100   What is the purpose of the programs established to serve 
Native American peoples (INA programs) under section166 of the 
Workforce Investment Act?
668.120   How must INA programs be administered?
668.130   What obligation do we have to consult with the INA grantee 
community in developing rules, regulations, and standards of 
accountability for INA programs?
668.140   What WIA regulations apply to the INA program?
668.150   What definitions apply to terms used in the regulations in 
this part?

[[Page 49436]]

Subpart B--Service Delivery Systems Applicable to Section 166 Programs
668.200   What are the requirements for designation as an ``Indian 
or Native American (INA) grantee''?
668.210   What priority for designation is given to eligible 
organizations?
668.220   What is meant by the ``ability to administer funds'' for 
designation purposes?
668.230   How will we determine an entity's ``ability to administer 
funds''?
668.240   What is the process for applying for designation as an INA 
grantee?
668.250   What happens if two or more entities apply for the same 
area?
668.260   How are INA grantees designated?
668.270   What appeal rights are available to entities that are 
denied designation?
668.280   Are there any other ways in which an entity may be 
designated as an INA grantee?
668.290   Can an INA grantee's designation be terminated?
668.292   How does a designated entity become an INA grantee?
668.294   Do we have to designate an INA grantee for every part of 
the country?
668.296   How are WIA funds allocated to INA grantees?
Subpart C--Services to Customers
668.300   Who is eligible to receive services under the INA program?
668.340   What are INA grantee allowable activities?
668.350   Are there any restrictions on allowable activities?
668.360   What is the role of INA grantees in the One-Stop system?
668.370   What policies govern payments to participants, including 
wages, training allowances or stipends, or direct payments for 
supportive services?
668.380   What will we do to strengthen the capacity of INA grantees 
to deliver effective services?
Subpart D--Supplemental Youth Services
668.400   What is the purpose of the supplemental youth services 
program?
668.410   What entities are eligible to receive supplemental youth 
services funding?
668.420  What are the planning requirements for receiving 
supplemental youth services funding?
668.430  What individuals are eligible to receive supplemental youth 
services?
668.440  How is funding for supplemental youth services determined?
668.450  How will supplemental youth services be provided?
668.460  Are there performance measures and standards applicable to 
the supplemental youth services program?
Subpart E--Services to Communities
668.500  What services may INA grantees provide to or for employers 
under section 166?
668.510  What services may INA grantees provide to the community at 
large under section 166?
668.520  Must INA grantees give preference to Indian/Native American 
entities in the selection of contractors or service providers?
668.530  What rules govern the issuance of contracts and/or 
subgrants?
Subpart F--Accountability for Services and Expenditures
668.600  To whom is the INA grantee accountable for the provision of 
services and the expenditure of INA funds?
668.610  How is this accountability documented and fulfilled?
668.620  What performance measures are in place for the INA program?
668.630  What are the requirements for preventing fraud and abuse 
under section 166?
668.640  What grievance systems must a section 166 program provide?
668.650  Can INA grantees exclude segments of the eligible 
population?
Subpart G--Section 166 Planning/Funding Process
668.700  What process must an INA grantee use to plan its employment 
and training services?
668.710  What planning documents must an INA grantee submit?
668.720  What information must these planning documents contain?
668.730  When must these plans be submitted?
668.740  How will we review and approve such plans?
668.750  Under what circumstances can we or the INA grantee modify 
the terms of the grantee's plan(s)?
Subpart H--Administrative Requirements
668.800  What systems must an INA grantee have in place to 
administer an INA program?
668.810  What types of costs are allowable expenditures under the 
INA program?
668.820  What rules apply to administrative costs under the INA 
program?
668.825  Does the WIA administrative cost limit for States and local 
areas apply to section 166 grants?
668.830  How should INA program grantees classify costs?
668.840  What cost principles apply to INA funds?
668.850  What audit requirements apply to INA grants?
668.860  What cash management procedures apply to INA grant funds?
668.870  What is ``program income'' and how is it regulated in the 
INA program?
Subpart I--Miscellaneous Program Provisions
668.900  Does WIA provide regulatory and/or statutory waiver 
authority?
668.910  What information is required to document a requested 
waiver?
668.920  What provisions of law or regulations may not be waived?
668.930  May INA grantees combine or consolidate their employment 
and training funds?
668.940  What is the role of the Native American Employment and 
Training Council?

    Authority: Secs. 506(c) and 166(h)(2), Pub. L. 105-220; 20 
U.S.C. 9276(c); 29 U.S.C. 2911(h)(2).
Subpart A--Purposes and Policies


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

    (a) The purpose of WIA INA programs is to support comprehensive 
employment and training activities for Indian, Alaska Native and Native 
Hawaiian individuals in order to:
    (1) Develop more fully their academic, occupational, and literacy 
skills;
    (2) Make them more competitive in the workforce;
    (3) Promote the economic and social development of Indian, Alaska 
Native, and Native Hawaiian communities according to the goals and 
values of such communities; and
    (4) Help them achieve personal and economic self-sufficiency.
    (b) The principal means of accomplishing these purposes is to 
enable tribes and Native American organizations to provide employment 
and training services to Native American peoples and their communities. 
Services should be provided in a culturally appropriate manner, 
consistent with the principles of Indian self-determination. (WIA sec. 
166(a)(1).)


Sec. 668.120  How must INA programs be administered?

    (a) We will administer INA programs to maximize the Federal 
commitment to support the growth and development of Native American 
people and communities as determined by representatives of such 
communities.
    (b) In administering these programs, we will observe the 
Congressional declaration of policy set forth in the Indian Self-
Determination and Education Assistance Act, at 25 U.S.C. section 450a, 
as well as the Department of Labor's ``American Indian and Alaska 
Native Policy,'' dated July 29, 1998.
    (c) The regulations in this part are not intended to abrogate the 
trust responsibilities of the Federal Government to Native American 
bands, tribes, or groups in any way.
    (d) We will administer INA programs through a single organizational 
unit and consistent with the requirements in section 166(h) of the Act. 
We have designated the Division of Indian and Native American Programs 
(DINAP) within the Employment and Training Administration (ETA) as this 
single organizational unit required by WIA section 166(h)(1).
    (e) We will establish and maintain administrative procedures for 
the selection, administration, monitoring, and evaluation of Native 
American

[[Page 49437]]

employment and training programs authorized under this Act. We will 
utilize staff who have a particular competence in this field to 
administer these programs. (WIA sec. 166(h).)


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

    We will consult with the Native American grantee community as a 
full partner in developing policies for the INA programs. We will 
actively seek and consider the views of all INA grantees, and will 
discuss options with the grantee community prior to establishing 
policies and program regulations. The primary consultation vehicle is 
the Native American Employment and Training Council. (WIA sec. 
166(h)(2).)


Sec. 668.140  What WIA regulations apply to the INA program?

    (a) The regulations found in this subpart.
    (b) The general administrative requirements found in 20 CFR part 
667, including the regulations concerning Complaints, Investigations 
and Hearings found at 20 CFR part 667, subpart E through subpart H.
    (c) The Department's regulations codifying the common rules 
implementing Office of Management and Budget (OMB) Circulars which 
generally apply to Federal programs carried out by Indian tribal 
governments and nonprofit organizations, at 29 CFR parts 95, 96, 97, 
and 99 as applicable.
    (d) The Department's regulations at 29 CFR part 37, which implement 
the nondiscrimination provisions of WIA section 188, apply to 
recipients of financial assistance under WIA section 166.


Sec. 668.150  What definitions apply to terms used in the regulations 
in this part?

    In addition to the definitions found in WIA sections 101 and 166 
and 20 CFR 660.300, the following definitions apply:
    DINAP means the Division of Indian and Native American Programs 
within the Employment and Training Administration of the Department.
    Governing body means a body of representatives who are duly 
elected, appointed by duly elected officials, or selected according to 
traditional tribal means. A governing body must have the authority to 
provide services to and to enter into grants on behalf of the 
organization that selected or designated it.
    Grant Officer means a Department of Labor official authorized to 
obligate Federal funds. Indian or Native American (INA) Grantee means 
an entity which is formally designated under subpart B of this part to 
operate an INA program and which has a grant agreement under 
Sec. 668.292.
    NEW means the Native Employment Works Program, the tribal work 
program authorized under section 412(a)(2) of the Social Security Act, 
as amended by the Personal Responsibility and Work Opportunity 
Reconciliation Act (Public Law 104-193).
    Underemployed means an individual who is working part time but 
desires full time employment, or who is working in employment not 
commensurate with the individual's demonstrated level of educational 
and/or skill achievement.

Subpart B--Service Delivery Systems Applicable to Section 166 
Programs


Sec. 668.200  What are the requirements for designation as an ``Indian 
or Native American (INA) grantee''?

    (a) To be designated as an INA grantee, an entity must have:
    (1) A legal status as a government or as an agency of a government, 
private non-profit corporation, or a consortium which contains at least 
one of these entities;
    (2) The ability to administer INA program funds, as defined at 
Sec. 668.220; and
    (3) A new (non-incumbent) entity must have a population within the 
designated geographic service area which would provide funding under 
the funding formula found at Sec. 668.296(b) in the amount of at least 
$100,000, including any amounts received for supplemental youth 
services under the funding formula at Sec. 668.440(a). Incumbent 
grantees which do not meet this dollar threshold for Program Year (PY) 
2000 and beyond will be grandfathered in. We will make an exception for 
grantees wishing to participate in the demonstration program under 
Public Law 102-477 if all resources to be consolidated under the Public 
Law 102-477 plan total at least $100,000, with at least $20,000 derived 
from section 166 funds as determined by the most recent Census data. 
Exceptions to this $20,000 limit may be made for those entities which 
are close to the limit and which have demonstrated the capacity to 
administer Federal funds and operate a successful employment and 
training program.
    (b) To be designated as a Native American grantee, a consortium or 
its members must meet the requirements of paragraph (a) of this section 
and must:
    (1) Be in close proximity to one another, but they may operate in 
more than one State;
    (2) Have an administrative unit legally authorized to run the 
program and to commit the other members to contracts, grants, and other 
legally-binding agreements; and
    (3) Be jointly and individually responsible for the actions and 
obligations of the consortium, including debts.
    (c) Entities potentially eligible for designation under paragraph 
(a)(1) or (b)(1) of this section are:
    (1) Federally-recognized Indian tribes;
    (2) Tribal organizations, as defined in 25 U.S.C. 450b;
    (3) Alaska Native-controlled organizations representing regional or 
village areas, as defined in the Alaska Native Claims Settlement Act;
    (4) Native Hawaiian-controlled entities;
    (5) Native American-controlled organizations serving Indians; and
    (6) Consortia of eligible entities which individually meets the 
legal requirements for a consortium described in paragraph (c) of this 
section.
    (d) Under WIA section 166(d)(2)(B), individuals who were eligible 
to participate under section 401 of JTPA on August 6, 1998, remain 
eligible to participate under section 166 of WIA. State-recognized 
tribal organizations serving such individuals are considered to be 
``Native American controlled'' for WIA section 166 purposes.


Sec. 668.210  What priority for designation is given to eligible 
organizations?

    (a) Federally-recognized Indian tribes, Alaska Native entities, or 
consortia that include a tribe or entity will have the highest priority 
for designation. To be designated, the organizations must meet the 
requirements in this subpart. These organizations will be designated 
for those geographic areas and/or populations over which they have 
legal jurisdiction. (WIA sec. 166(c)(1).)
    (b) If we decide not to designate Indian tribes or Alaska Native 
entities to serve their service areas, we will enter into arrangements 
to provide services with entities which the tribes or Alaska Native 
entities involved approve.
    (c) In geographic areas not served by Indian tribes or Alaska 
Native entities, entities with a Native American-controlled governing 
body and which are representative of the Native American community or 
communities involved will have priority for designation.

[[Page 49438]]

Sec. 668.220  What is meant by the ``ability to administer funds'' for 
designation purposes?

    An organization has the ``ability to administer funds'' if it:
    (a) Is in compliance with Departmental debt management procedures, 
if applicable;
    (b) Has not been found guilty of fraud or criminal activity which 
would affect the entity's ability to safeguard Federal funds or deliver 
program services;
    (c) Can demonstrate that it has or can acquire the necessary 
program and financial management personnel to safeguard Federal funds 
and effectively deliver program services; and
    (d) Can demonstrate that it has successfully carried out, or has 
the capacity to successfully carry out activities that will strengthen 
the ability of the individuals served to obtain or retain unsubsidized 
employment.


Sec. 668.230  How will we determine an entity's ``ability to administer 
funds''?

    (a) Before determining which entity to designate for a particular 
service area, we will conduct a review of the entity's ability to 
administer funds.
    (b) The review for an entity that has served as a grantee in either 
of the two designation periods before the one under consideration, also 
will consider the extent of compliance with the WIA regulations or the 
JTPA regulations at 20 CFR part 632. Evidence of the ability to 
administer funds may be established by a satisfactory Federal audit 
record. It may also be established by a recent record showing 
substantial compliance with Federal record keeping, reporting, program 
performance standards, or similar standards imposed on grantees by this 
or other public sector supported programs.
    (c) For other entities, the review includes the experience of the 
entity's management in administering funds for services to Native 
American people. This review also includes an assessment of the 
relationship between the entity and the Native American community or 
communities to be served.


Sec. 668.240  What is the process for applying for designation as an 
INA grantee?

    (a) Every entity seeking designation must submit a Notice of Intent 
(NOI) which complies with the requirements of the Solicitation for 
Grant Application (SGA). An SGA will be issued every two years, 
covering all areas except for those for which competition is waived for 
the incumbent grantee under WIA section 166(c)(2).
    (b) NOI's must be submitted to the Chief of DINAP, bearing a U.S. 
Postal Service postmark indicating its submission no later than October 
1st of the year which precedes the first year of a new designation 
cycle (unless the SGA provides a later date). For NOI's received after 
October 1, only a timely official U.S. Postal Service postmark is 
acceptable as proof of timely submission. Dates indicating submission 
by private express delivery services or metered mail are unacceptable 
as proof of the timely submission of designation documents.
    (c) NOI's must include the following:
    (1) Documentation of the legal status of the entity, as described 
in Sec. 668.200(a)(1);
    (2) A Standard Form (SF) 424b;
    (3) The assurances required by 29 CFR 37.20;
    (4) A specific description, by State, county, reservation or 
similar area, or service population, of the geographic area for which 
the entity requests designation;
    (5) A brief summary of the employment and training or human 
resource development programs serving Native Americans that the entity 
currently operates or has operated within the previous two-year period;
    (6) A description of the planning process used by the entity, 
including the involvement of the governing body and local employers;
    (7) Evidence to establish an entity's ability to administer funds 
under Secs. 668.220 through 668.230.


Sec. 668.250  What happens if two or more entities apply for the same 
area?

    (a) Every two years, unless there has been a waiver of competition 
for the area, we issue a Solicitation for Grant Application (SGA) 
seeking applicants for INA program grants.
    (b) If two or more entities apply for grants for the same service 
area, or for overlapping service areas, and a waiver of competition 
under WIA section 166(c)(2) is not granted to the incumbent grantee, 
the following additional procedures apply:
    (1) The Grant Officer will follow the regulations for priority 
designation at Sec. 668.210.
    (2) If no applicant is entitled to priority designation, DINAP will 
inform each entity which submitted a NOI, including the incumbent 
grantee, in writing, of all the competing Notices of Intent no later 
than November 15 of the year the NOI's are received.
    (3) Each entity will have an opportunity to describe its service 
plan, and may submit additional information addressing the requirements 
of Sec. 668.240(c) or such other information as the applicant 
determines is appropriate. Revised Notices must be received or contain 
an official U.S. Postal Service postmark, no later than January 5th 
(unless a later date is provided in DINAP's information notice).
    (4) The Grant Officer selects the entity that demonstrates the 
ability to produce the best outcomes for its customers.


Sec. 668.260  How are INA grantees designated?

    (a) On March 1 of each designation year, we designate or 
conditionally designate Native American grantees for the coming two 
program years. The Grant Officer informs, in writing, each entity which 
submitted a Notice of Intent that the entity has been:
    (1) Designated;
    (2) Conditionally designated;
    (3) Designated for only a portion of its requested area or 
population; or
    (4) Denied designation.
    (b) Designated Native American entities must ensure and provide 
evidence to DOL that a system is in place to afford all members of the 
eligible population within their service area an equitable opportunity 
to receive employment and training activities and services.


Sec. 668.270  What appeal rights are available to entities that are 
denied designation?

    Any entity that is denied designation in whole or in part for the 
area or population that it requested may appeal the denial to the 
Office of the Administrative Law Judges using the procedures at 20 CFR 
667.800 or the alternative dispute resolution procedures at 20 CFR 
667.840. The Grant Officer will provide an entity whose request for 
designation was denied, in whole or in part, with a copy of the appeal 
procedures.


Sec. 668.280  Are there any other ways in which an entity may be 
designated as an INA grantee?

    Yes, for an area which would otherwise go unserved. The Grant 
Officer may designate an entity, which has not submitted an NOI, but 
which meets the qualifications for designation, to serve the particular 
geographic area. Under such circumstances, DINAP will seek the views of 
Native American leaders in the area involved about the decision to 
designate the entity to serve that community. DINAP will inform the 
Grant Officer of their views. The Grant Officer will accommodate their 
views to the extent possible.


Sec. 668.290  Can an INA grantee's designation be terminated?

    (a) Yes, the Grant Officer can terminate a grantee's designation 
for cause, or the Secretary or another DOL

[[Page 49439]]

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 the WIA regulations. The grantee must be 
provided with written notice 60 days before termination, stating the 
specific reasons why termination is proposed. The appeal procedures at 
20 CFR 667.800 apply.
    (c) The Secretary must give a grantee terminated in emergency 
circumstances prompt notice of the termination and an opportunity for a 
hearing within 30 days of the termination.


Sec. 668.292  How does a designated entity become an INA grantee?

    A designated entity becomes a grantee on the effective date of an 
executed grant agreement, signed by the authorized official of the 
grantee organization and the Grant Officer. The grant agreement 
includes a set of certifications and assurances that the grantee will 
comply with the terms of the Act, the WIA regulations, and other 
appropriate requirements. Funds are released to the grantee upon 
approval of the required planning documents, as described in 
Secs. 668.710 through 668.740.


Sec. 668.294  Do we have to designate an INA grantee for every part of 
the country?

    No, beginning with the PY 2000 grant awards, if there are no 
entities meeting the requirements for designation in a particular area, 
or willing to serve that area, we will not allocate funds for that 
service area. The funds allocated to that area will be distributed to 
the remaining INA grantees, or used for other program purposes such as 
technical assistance and training (TAT). Unawarded funds used for 
technical assistance and training are in addition to, and not subject 
to the limitations on, amounts reserved under Sec. 668.296(e). Areas 
which are unserved by the INA program may be restored during a 
subsequent designation cycle, when and if a current grantee or other 
eligible entity applies for and is designated to serve that area.


Sec. 668.296  How are WIA funds allocated to INA grantees?

    (a) Except for reserved funds described in paragraph (e) of this 
section and funds used for program purposes under Sec. 668.294, all 
funds available for WIA section 166(d)(2)(A)(i) comprehensive workforce 
investment services program at the beginning of a Program Year will be 
allocated to Native American grantees for their designated geographic 
service areas.
    (b) Each INA grantee will receive the sum of the funds calculated 
under the following formula:
    (1) One-quarter of the funds available will be allocated on the 
basis of the number of unemployed Native American persons in the 
grantee's designated INA service area(s) compared to all such persons 
in all such areas in the United States.
    (2) Three-quarters of the funds available will be allocated on the 
basis of the number of Native American persons in poverty in the 
grantee's designated INA service area(s) as compared to all such 
persons in all such areas in the United States.
    (3) The data and definitions used to implement these formulas is 
provided by the U.S. Bureau of the Census.
    (c) In years immediately following the use of new data in the 
formula described in paragraph (b) of this section, based upon criteria 
to be described in the SGA, we may utilize a hold harmless factor to 
reduce the disruption in grantee services which would otherwise result 
from changes in funding levels. This factor will be determined in 
consultation with the grantee community and the Native American 
Employment and Training Council.
    (d) We may reallocate funds from one INA grantee to another if a 
grantee is unable to serve its area for any reason, such as audit or 
debt problems, criminal activity, internal (political) strife, or lack 
of ability or interest. Funds may also be reallocated if a grantee has 
carry-in excess of 20 percent of the total funds available to it. 
Carry-in amounts greater than 20 percent but less than 25 percent of 
total funds available may be allowed under an approved waiver issued by 
DINAP.
    (e) We may reserve up to one percent (1 percent) of the funds 
appropriated under WIA section 166(d)(2)(A)(i) for any Program Year for 
TAT purposes. Technical assistance will be provided in consultation 
with the Native American Employment and Training Council.

Subpart C--Services to Customers


Sec. 668.300  Who is eligible to receive services under the INA 
program?

    (a) A person is eligible to receive services under the INA program 
if that person is:
    (1) An Indian, as determined by a policy of the Native American 
grantee. The grantee's definition must at least include anyone who is a 
member of a Federally-recognized tribe; or
    (2) An Alaska Native, as defined in section 3(b) of the Alaska 
Native Claims Settlement Act (ANCSA), 43 U.S.C. 1602(b); or
    (3) A Native Hawaiian, as defined in WIA section 166(b)(3).
    (b) The person must also be any one of the following:
    (1) Unemployed; or
    (2) Underemployed, as defined in Sec. 668.150; or
    (3) A low-income individual, as defined in WIA section 101(25); or
    (4) The recipient of a bona fide lay-off notice which has taken 
effect in the last six months or will take effect in the following six 
month period, who is unlikely to return to a previous industry or 
occupation, and who is in need of retraining for either employment with 
another employer or for job retention with the current employer; or
    (5) An individual who is employed, but is determined by the grantee 
to be in need of employment and training services to obtain or retain 
employment that allows for self-sufficiency.
    (c) If applicable, male applicants must also register or be 
registered for the Selective Service.
    (d) For purposes of determining whether a person is a low-income 
individual under paragraph (b)(3) of this section, we will issue 
guidance for the determination of family income. (WIA sec. 189(h).)


Sec. 668.340  What are INA grantee allowable activities?

    (a) The INA grantee may provide any services consistent with the 
purposes of this section that are necessary to meet the needs of Native 
Americans preparing to enter, reenter, or retain unsubsidized 
employment. (WIA sec. 166(d)(1)(B).) Comprehensive workforce investment 
activities authorized under WIA section 166(d)(2) include:
    (b) Core services, which must be delivered in partnership with the 
One-Stop delivery system, include:
    (1) Outreach;
    (2) Intake;
    (3) Orientation to services available;
    (4) Initial assessment of skill levels, aptitudes, abilities and 
supportive service needs;
    (5) Eligibility certification;
    (6) Job Search and placement assistance;
    (7) Career counseling;
    (8) Provision of employment statistics information and local, 
regional, and national Labor Market Information;
    (9) Provision of information about filing of Unemployment Insurance 
claims;
    (10) Assistance in establishing eligibility for Welfare-to-Work 
programs;

[[Page 49440]]

    (11) Assistance in establishing eligibility for financial 
assistance for training;
    (12) Provision of information about supportive services;
    (13) Provision of performance and cost information relating to 
training providers and training services; and
    (14) Follow-up services.
    (c) Allowable intensive services which include:
    (1) Comprehensive and specialized testing and assessment;
    (2) Development of an individual employment plan;
    (3) Group counseling;
    (4) Individual counseling and career planning;
    (5) Case Management for seeking training services;
    (6) Short term pre-vocational services;
    (7) Work experience in the public or private sector;
    (8) Tryout employment;
    (9) Dropout prevention activities;
    (10) Supportive services; and
    (11) Other services identified in the approved Two Year Plan.
    (d) Allowable training services which include:
    (1) Occupational skill training;
    (2) On-the-job training;
    (3) Programs that combine workplace training with related 
instruction, which may include cooperative education programs;
    (4) Training programs operated by the private sector;
    (5) Skill upgrading and retraining;
    (6) Entrepreneurial and small business development technical 
assistance and training;
    (7) Job readiness training;
    (8) Adult basic education, GED attainment, literacy training, and 
English language training, provided alone or in combination with 
training or intensive services described paragraphs (c)(1) through (11) 
and (d)(1) through (10) of this section;
    (9) Customized training conducted with a commitment by an employer 
or group of employers to employ an individual upon successful 
completion of training; and
    (10) Educational and tuition assistance.
    (e) Allowable activities specifically designed for youth are 
identified in section 129 of the Act and include:
    (1) Improving educational and skill competencies;
    (2) Adult mentoring;
    (3) Training opportunities;
    (4) Supportive services, as defined in WIA section 101(46);
    (5) Incentive programs for recognition and achievement;
    (6) Opportunities for leadership development, decision-making, 
citizenship and community service;
    (7) Preparation for postsecondary education, academic and 
occupational learning, unsubsidized employment opportunities, and other 
effective connections to intermediaries with strong links to the job 
market and local and regional employers;
    (8) Tutoring, study skills training, and other drop-out prevention 
strategies;
    (9) Alternative secondary school services;
    (10) Summer employment opportunities that are directly linked to 
academic and occupational learning;
    (11) Paid and unpaid work experiences, including internships and 
job shadowing;
    (12) Occupational skill training;
    (13) Leadership development opportunities, as defined in 20 CFR 
664.420;
    (14) Follow-up services, as defined in 20 CFR 664.450;
    (15) Comprehensive guidance and counseling, which may include drug 
and alcohol abuse counseling and referral; and
    (16) Information and referral.
    (f) In addition, allowable activities include job development and 
employment outreach, including:
    (1) Support of the Tribal Employment Rights Office (TERO) program;
    (2) Negotiation with employers to encourage them to train and hire 
participants;
    (3) Establishment of linkages with other service providers to aid 
program participants;
    (4) Establishment of management training programs to support tribal 
administration or enterprises; and
    (5) Establishment of linkages with remedial education, such as 
Adult Basic Education (ABE), basic literacy training, and English-as-a-
second-language (ESL) training programs, as necessary.
    (g) Participants may be enrolled in more than one activity at a 
time and may be sequentially enrolled in multiple activities.
    (h) INA grantees may provide any services which may be carried out 
by fund recipients under any provisions of the Act. (WIA sec. 166(d).)
    (i) In addition, INA grantees must develop programs which 
contribute to occupational development, upward mobility, development of 
new careers, and opportunities for nontraditional employment. (WIA sec. 
195(1).)


Sec. 668.350  Are there any restrictions on allowable activities?

    (a) All occupational training must be for occupations for which 
there are employment opportunities in the local area or another area to 
which the participant is willing to relocate. (WIA sec. 
134(d)(4)(A)(iii).)
    (b) INA grantees must provide OJT services consistent with the 
definition provided in WIA section 101(31) and other limitations in the 
Act. Individuals in OJT must:
    (1) Be compensated at the same rates, including periodic increases, 
as trainees or employees who are similarly situated in similar 
occupations by the same employer and who have similar training, 
experience, and skills (WIA sec. 181(a)(1)); and
    (2) Be provided benefits and working conditions at the same level 
and to the same extent as other trainees or employees working a similar 
length of time and doing the same type of work. (WIA sec. 181(b)(5).)
    (c) In addition, OJT contracts under this title must not be entered 
into with employers who have:
    (1) Received payments under previous contracts and have exhibited a 
pattern of failing to provide OJT participants with continued, long-
term employment as regular employees with wages and employment benefits 
and working conditions at the same level and to the same extent as 
other employees working a similar length of time and doing the same 
work; or
    (2) Who have violated paragraphs (b)(1) and/or (2) of this section. 
(WIA sec. 195(4).)
    (d) INA grantees are prohibited from using funds to encourage the 
relocation of a business, as described in WIA section 181(d) and 20 CFR 
667.268.
    (e) INA grantees must only use WIA funds for activities which are 
in addition to those that would otherwise be available to the Native 
American population in the area in the absence of such funds. (WIA sec. 
195(2).)
    (f) INA grantees must not spend funds on activities that displace 
currently employed individuals, impair existing contracts for services, 
or in any way affect union organizing.
    (g) Under 20 CFR 667.266, sectarian activities involving WIA 
financial assistance or participants are limited in accordance with the 
provisions of 29 CFR 37.6(f). (WIA sec. 181(b).)


Sec. 668.360  What is the role of INA grantees in the One-Stop system?

    (a) In those local workforce investment areas where an INA grantee 
conducts field operations or provides substantial services, the INA 
grantee is a required partner in the local One-Stop delivery system and 
is subject to the provisions relating to such partners described in 20 
CFR part 662. Consistent with those provisions, a Memorandum of 
Understanding (MOU) between the INA grantee and the Local Board over 
the operation of the One-

[[Page 49441]]

Stop Center(s) in the Local Board's workforce investment area also must 
be executed. Where the Local Board is an alternative entity under 20 
CFR 661.330, the INA grantee must negotiate with the alternative entity 
on the terms of its MOU and the scope of its on-going role in the local 
workforce investment system, as specified in 20 CFR 661.310(b)(2). In 
local areas with a large concentration of potentially eligible INA 
participants, which are in an INA grantee's service area but in which 
the grantee does not conduct operations or provide substantial 
services, the INA grantee should encourage such individuals to 
participate in the One-Stop system in that area in order to receive WIA 
services.
    (b) At a minimum, the MOU must contain provisions related to:
    (1) The services to be provided through the One-Stop Service 
System;
    (2) The methods for referral of individuals between the One-Stop 
operator and the INA grantee which take into account the services 
provided by the INA grantee and the other One-Stop partners;
    (3) The exchange of information on the services available and 
accessible through the One-Stop system and the INA program;
    (4) As necessary to provide referrals and case management services, 
the exchange of information on Native American participants in the One-
Stop system and the INA program;
    (5) Arrangements for the funding of services provided by the One-
Stop(s), consistent with the requirements at 20 CFR 662.280 that no 
expenditures may be made with INA program funds for individuals who are 
not eligible or for services not authorized under this part.
    (c) The INA grantee's Two Year Plan must describe the efforts the 
grantee has made to negotiate MOU's consistent with paragraph (b) of 
this section, for each planning cycle during which Local Boards are 
operating under the terms of WIA.


Sec. 668.370  What policies govern payments to participants, including 
wages, training allowances or stipends, or direct payments for 
supportive services?

    (a) INA grantees may pay training allowances or stipends to 
participants for their successful participation in and completion of 
education or training services (except such allowance may not be 
provided to participants in OJT). Allowances or stipends may not exceed 
the Federal or State minimum wage, whichever is higher.
    (b) INA grantees may not pay a participant in a training activity 
when the person fails to participate without good cause.
    (c) If a participant in a WIA-funded activity, including 
participants in OJT, is involved in an employer-employee relationship, 
that participant must be paid wages and fringe benefits at the same 
rates as trainees or employees who have similar training, experience 
and skills and which are not less than the higher of the applicable 
Federal, State or local minimum wage. (WIA sec. 181(a)(1).)
    (d) In accordance with the policy described in the two-year plan, 
INA grantees may pay incentive bonuses to participants who meet or 
exceed individual employability or training goals established in 
writing in the individual employment plan.
    (e) INA grantees must comply with other restrictions listed in WIA 
sections 181 through 199, which apply to all programs funded under 
title I of WIA.
    (f) INA grantees must comply with the provisions on labor standards 
in WIA section 181(b).


Sec. 668.380  What will we do to strengthen the capacity of INA 
grantees to deliver effective services?

    We will provide appropriate TAT, as necessary, to INA grantees. 
This TAT will assist INA grantees to improve program performance and 
enhance services to the target population(s), as resources permit. (WIA 
sec. 166(h)(5).)

Subpart D--Supplemental Youth Services


Sec. 668.400  What is the purpose of the supplemental youth services 
program?

    The purpose of this program is to provide supplemental employment 
and training and related services to Native American youth on or near 
Indian reservations, or in Oklahoma, Alaska, and Hawaii. (WIA sec. 
166(d)(2)(A)(ii).)


Sec. 668.410  What entities are eligible to receive supplemental youth 
services funding?

    Eligible recipients for supplemental youth services funding are 
limited to those tribal, Alaska Native, Native Hawaiian and Oklahoma 
tribal grantees funded under WIA section 166(d)(2)(A)(i), or other 
grantees serving those areas and/or populations specified in 
Sec. 668.400, that received funding under title II-B of the Job 
Training Partnership Act, or that are designated to serve an eligible 
area as specified in WIA section 166(d)(2)(A)(ii).


Sec. 668.420  What are the planning requirements for receiving 
supplemental youth services funding?

    Beginning with PY 2000, eligible INA grantees must describe the 
supplemental youth services which they intend to provide in their Two 
Year Plan (described more fully in Secs. 668.710 and 668.720). This 
Plan includes the target population the grantee intends to serve, for 
example, drop-outs, juvenile offenders, and/or college students. It 
also includes the performance measures/standards to be utilized to 
measure program progress.


Sec. 668.430  What individuals are eligible to receive supplemental 
youth services?

    (a) Participants in supplemental youth services activities must be 
Native Americans, as determined by the INA grantee according to 
Sec. 668.300(a), and must meet the definition of Eligible Youth, as 
defined in WIA section 101(13).
    (b)Youth participants must be low-income individuals, except that 
not more than five percent (5%) who do not meet the minimum income 
criteria, may be considered eligible youth if they meet one or more of 
the following categories:
    (1) School dropouts;
    (2) Basic skills deficient as defined in WIA section 101(4);
    (3) Have educational attainment that is one or more grade levels 
below the grade level appropriate to their age group;
    (4) Pregnant or parenting;
    (5) Have disabilities, including learning disabilities;
    (6) Homeless or runaway youth;
    (7) Offenders; or
    (8) Other eligible youth who face serious barriers to employment as 
identified by the grantee in its Plan. (WIA sec. 129(c)(5).)


Sec. 668.440  How is funding for supplemental youth services 
determined?

    (a) Beginning with PY 2000, supplemental youth funding will be 
allocated to eligible INA grantees on the basis of the relative number 
of Native American youth between the ages of 14 and 21, inclusive, in 
the grantee's designated INA service area as compared to the number of 
Native American youth in other eligible INA service areas. We reserve 
the right to redetermine this youth funding stream in future program 
years, in consultation with the Native American Employment and Training 
Council, as program experience warrants and as appropriate data become 
available.
    (b) The data used to implement this formula is provided by the U.S. 
Bureau of the Census.
    (c) The hold harmless factor described in Sec. 668.296(c) also 
applies to supplemental youth services funding. This factor also will 
be determined in consultation with the grantee

[[Page 49442]]

community and the Native American Employment and Training Council.
    (d) The reallocation provisions of Sec. 668.296(d) also apply to 
supplemental youth services funding.
    (e) Any supplemental youth services funds not allotted to a grantee 
or refused by a grantee may be used for the purposes outlined in 
Sec. 668.296(e), as described in Sec. 668.294. Any such funds are in 
addition to, and not subject to the limitations on, amounts reserved 
under Sec. 668.296(e).


Sec. 668.450  How will supplemental youth services be provided?

    (a) INA grantees may offer supplemental services to youth 
throughout the school year, during the summer vacation, and/or during 
other breaks during the school year at their discretion;
    (b) We encourage INA grantees to work with Local Educational 
Agencies to provide academic credit for youth activities whenever 
possible;
    (c) INA grantees may provide participating youth with the 
activities listed in 20 CFR 668.340(e).


Sec. 668.460  Are there performance measures and standards applicable 
to the supplemental youth services program?

    Yes, WIA section 166(e)(5) requires that the program plan contain a 
description of the performance measures to be used to assess the 
performance of grantees in carrying out the activities assisted under 
this section. We will develop specific indicators of performance and 
levels of performance for supplemental youth services activities in 
partnership with the Native American Employment and Training Council, 
and will transmit them to INA grantees as an administrative issuance.

Subpart E--Services to Communities


Sec. 668.500  What services may INA grantees provide to or for 
employers under section 166?

    (a) INA grantees may provide a variety of services to employers in 
their areas. These services may include:
    (1) Workforce planning which involves the recruitment of current or 
potential program participants, including job restructuring services;
    (2) Recruitment and assessment of potential employees, with 
priority given to potential employees who are or who might become 
eligible for program services;
    (3) Pre-employment training;
    (4) Customized training;
    (5) On-the-Job training (OJT);
    (6) Post-employment services, including training and support 
services to encourage job retention and upgrading;
    (7) Work experience for public or private sector work sites;
    (8) Other innovative forms of worksite training.
    (b) In addition to the services listed in paragraph (a) of this 
section, other grantee-determined services (as described in the 
grantee's Two Year Plan) which are intended to assist eligible 
participants to obtain or retain employment may also be provided to or 
for employers.


Sec. 668.510  What services may INA grantees provide to the community 
at large under section 166?

    (a) INA grantees may provide services to the Native American 
communities in their designated service areas by engaging in program 
development and service delivery activities which:
    (1) Strengthen the capacity of Native American-controlled 
institutions to provide education and work-based learning services to 
Native American youth and adults, whether directly or through other 
Native American institutions such as tribal colleges;
    (2) Increase the community's capacity to deliver supportive 
services, such as child care, transportation, housing, health, and 
similar services needed by clients to obtain and retain employment;
    (3) Use program participants engaged in education, training, work 
experience, or similar activities to further the economic and social 
development of Native American communities in accordance with the goals 
and values of those communities; and
    (4) Engage in other community-building activities described in the 
INA grantee's Two Year Plan.
    (b) INA grantees should develop their Two Year Plan in conjunction 
with, and in support of, strategic tribal planning and community 
development goals.


Sec. 668.520  Must INA grantees give preference to Indian/Native 
American entities in the selection of contractors or service providers?

    Yes, INA grantees must give as much preference as possible to 
Indian organizations and to Indian-owned economic enterprises, as 
defined in section 3 of the Indian Financing Act of 1974 (25 U.S.C. 
1452), when awarding any contract or subgrant.


Sec. 668.530  What rules govern the issuance of contracts and/or 
subgrants?

    In general, INA grantees must follow the rules of OMB Circulars A-
102 (for tribes) or A-110 (for private non-profits) when awarding 
contracts and/or subgrants under WIA section 166. The common rules 
implementing those circulars are codified for DOL-funded programs at 29 
CFR part 97 (A-102) or 29 CFR part 95 (A-110), and covered in the WIA 
regulations at 20 CFR 667.200. These rules do not apply to OJT contract 
awards.

Subpart F--Accountability for Services and Expenditures


Sec. 668.600  To whom is the INA grantee accountable for the provision 
of services and the expenditure of INA funds?

    (a) The INA grantee is responsible to the Native American community 
to be served by INA funds.
    (b) The INA grantee is also responsible to the Department of Labor, 
which is charged by law with ensuring that all WIA funds are expended:
    (1) According to applicable laws and regulations;
    (2) For the benefit of the identified Native American client group; 
and
    (3) For the purposes approved in the grantee's plan and signed 
grant document.


Sec. 668.610  How is this accountability documented and fulfilled?

    (a) Each INA grantee must establish its own internal policies and 
procedures to ensure accountability to the INA grantee's governing 
body, as the representative of the Native American community(ies) 
served by the INA program. At a minimum, these policies and procedures 
must provide a system for governing body review and oversight of 
program plans and measures and standards for program performance.
    (b) Accountability to the Department is accomplished in part 
through on-site program reviews (monitoring), which strengthen the INA 
grantee's capability to deliver effective services and protect the 
integrity of Federal funds.
    (c) In addition to audit information, as described at Sec. 668.850 
and program reviews, accountability to the Department is documented and 
fulfilled by the submission of reports. For the purposes of report 
submission, a postmark or date indicating receipt by a private express 
delivery service is acceptable proof of timely submission. These report 
requirements are as follows:
    (1) Each INA grantee must submit an annual report on program 
participants and activities. This report must be received no later than 
90 days after the end of the Program Year, and may be combined with the 
report on program expenditures. The reporting format is developed by 
DINAP, in consultation with the Native American Advisory Council, and 
published in the Federal Register.
    (2) Each INA grantee must submit an annual report on program 
expenditures. This report must be received no later

[[Page 49443]]

than 90 days after the end of the Program Year, and may be combined 
with the report on program participants and activities.
    (3) INA grantees are encouraged, but not required, to submit a 
descriptive narrative with their annual reports describing the barriers 
to successful plan implementation they have encountered. This narrative 
should also discuss program successes and other notable occurrences 
that effected the INA grantee's overall performance that year.
    (4) Each INA grantee may be required to submit interim reports on 
program participants and activities and/or program expenditures during 
the Program Year. Interim reports must be received no later than 45 
days after the end of the reporting period.


Sec. 668.620  What performance measures are in place for the INA 
program?

    Indicators of performance measures and levels of performance in use 
for INA program will be those indicators and standards proposed in 
individual grantee plans and approved by us, in accordance with 
guidelines we will develop in consultation with INA grantees under WIA 
section 166(h)(2)(A).


Sec. 668.630  What are the requirements for preventing fraud and abuse 
under section 166?

    (a) Each INA grantee must implement program and financial 
management procedures to prevent fraud and abuse. Such procedures must 
include a process which enables the grantee to take action against 
contractors or subgrantees to prevent any misuse of funds. (WIA sec. 
184.)
    (b) Each INA grantee must have rules to prevent conflict of 
interest by its governing body. These conflict of interest rules must 
include a rule prohibiting any member of any governing body or council 
associated with the INA grantee from voting on any matter which would 
provide a direct financial benefit to that member, or to a member of 
his or her immediate family, in accordance with 20 CFR 667.200(a)(4) 
and 29 CFR 97.36(b) or 29 CFR 95.42.
    (c) Officers or agents of the INA grantee must not solicit or 
personally accept gratuities, favors, or anything of monetary value 
from any actual or potential contractor, subgrantee, vendor or 
participant. This rule must also apply to officers or agents of the 
grantee's contractors and/or subgrantees. This prohibition does not 
apply to:
    (1) Any rebate, discount or similar incentive provided by a vendor 
to its customers as a regular feature of its business;
    (2) Items of nominal monetary value distributed consistent with the 
cultural practices of the Native American community served by the 
grantee.
    (d) No person who selects program participants or authorizes the 
services provided to them may select or authorize services to any 
participant who is such a person's husband, wife, father, mother, 
brother, sister, son, or daughter unless:
    (1)(i) The participant involved is a low income individual; or
    (ii) The community in which the participant resides has a 
population of less than 1,000 Native American people; and
    (2) The INA grantee has adopted and implemented the policy 
described in the Two Year Plan to prevent favoritism on behalf of such 
relatives.
    (e) INA grantees are subject to the provisions of 41 U.S.C. 53 
relating to kickbacks.
    (f) No assistance provided under this Act may involve political 
activities. (WIA sec. 195(6).)
    (g) INA grantees may not use funds under this Act for lobbying, as 
provided in 29 CFR part 93.
    (h) The provisions of 18 U.S.C. 665 and 666 prohibiting 
embezzlement apply to programs under WIA.
    (i) Recipients of financial assistance under WIA section 168 are 
prohibited from discriminatory practices as outlined at WIA section 
188, and the regulations implementing WIA section 188, at 29 CFR part 
37. However, this does not affect the legal requirement that all INA 
participants be Native American. Also, INA grantees are not obligated 
to serve populations other than those for which they were designated.


Sec. 668.640  What grievance systems must a section 166 program 
provide?

    INA grantees must establish grievance procedures consistent with 
the requirements of WIA section 181(c) and 20 CFR 667.600.


Sec. 668.650  Can INA grantees exclude segments of the eligible 
population?

    (a) No, INA grantees cannot exclude segments of the eligible 
population. INA grantees must document in their Two Year Plan that a 
system is in place to afford all members of the eligible population 
within the service area for which the grantee was designated an 
equitable opportunity to receive WIA services and activities.
    (b) Nothing in this section restricts the ability of INA grantees 
to target subgroups of the eligible population (for example, the 
disabled, substance abusers, TANF recipients, or similar categories), 
as outlined in an approved Two Year Plan. However, it is unlawful to 
target services to subgroups on grounds prohibited by WIA section 188 
and 29 CFR part 37, including tribal affilitation (which is considered 
national origin). Outreach efforts, on the other hand, may be targeted 
to any subgroups.

Subpart G--Section 166 Planning/Funding Process


Sec. 668.700  What process must an INA grantee use to plan its 
employment and training services?

    (a) An INA grantee may utilize the planning procedures it uses to 
plan other activities and services.
    (b) However, in the process of preparing its Two Year Plan for 
Native American WIA services, the INA grantee must consult with:
    (1) Customers or prospective customers of such services;
    (2) Prospective employers of program participants or their 
representatives;
    (3) Service providers, including local educational agencies, which 
can provide services which support or are complementary to the 
grantee's own services; and
    (4) Tribal or other community officials responsible for the 
development and administration of strategic community development 
efforts.


Sec. 668.710  What planning documents must an INA grantee submit?

    Each grantee receiving funds under WIA section 166 must submit to 
DINAP a comprehensive services plan and a projection of participant 
services and expenditures covering the two-year planning cycle. We 
will, in consultation with the Native American Advisory Council, issue 
budget and planning instructions which grantees must use when preparing 
their plan.


Sec. 668.720  What information must these planning documents contain?

    (a) The comprehensive services plan must cover the two Program 
Years included within a designation cycle. According to planning 
instructions issued by the Department, the comprehensive services plan 
must describe in narrative form:
    (1) The specific goals of the INA grantee's program for the two 
Program Years involved;
    (2) The method the INA grantee will use to target its services to 
specific segments of its service population;
    (3) The array of services which the INA grantee intends to make 
available;

[[Page 49444]]

    (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) Eligible INA grantees must include in their plan narratives a 
description of activities planned under the supplemental youth program, 
including items described in paragraphs (a)(1) through (5) of this 
section.
    (c) INA grantees must be prepared to justify the amount of proposed 
Administrative Costs, utilizing the definition at 20 CFR 667.220.
    (d) INA grantees' plans must contain a projection of participant 
services and expenditures for each Program Year, consistent with 
guidance issued by the Department.


Sec. 668.730  When must these plans be submitted?

    (a) The two-year plans are due at a date specified by DINAP in the 
year in which the two-year designation cycle begins. We will announce 
exact submission dates in the biennial planning instructions.
    (b) Plans from INA grantees who are eligible for supplemental youth 
services funds must include their supplemental youth plans as part of 
their regular Two Year Plan.
    (c) INA grantees must submit modifications for the second year 
reflecting exact funding amounts, after the individual allotments have 
been determined. We will announce the time for their submission, which 
will be no later than June 1 prior to the beginning of the second year 
of the designation cycle.


Sec. 668.740  How will we review and approve such plans?

    (a) We will approve a grantee's planning documents before the date 
on which funds for the program become available unless:
    (1) The planning documents do not contain the information specified 
in the regulations in this part and Departmental planning guidance; or
    (2) The services which the INA grantee proposes are not permitted 
under WIA or applicable regulations.
    (b) We may approve a portion of the plan, and disapprove other 
portions. The grantee also has the right to appeal the decision to the 
Office of the Administrative Law Judges under the procedures at 20 CFR 
667.800 or 667.840. While the INA grantee exercises its right to 
appeal, the grantee must implement the approved portions of the plan.
    (c) If we disapprove all or part of an INA grantee's plan, and that 
disapproval is sustained in the appeal process, the INA grantee will be 
given the opportunity to amend its plan so that it can be approved.
    (d) If an INA grantee's plan is amended but is still disapproved, 
the grantee will have the right to appeal the decision to the Offices 
of the Administrative Law Judges under the procedures at 20 CFR 667.800 
or 667.840.


Sec. 668.750  Under what circumstances can we or the INA grantee modify 
the terms of the grantee's plan(s)?

    (a) We may unilaterally modify the INA grantee's plan to add funds 
or, if required by Congressional action, to reduce the amount of funds 
available for expenditure.
    (b) The INA grantee may request approval to modify its plan to add, 
expand, delete, or diminish any service allowable under the regulations 
in this part. The INA grantee may modify its plan without our approval, 
unless the modification reduces the total number of participants to be 
served annually under the grantee's program by a number which exceeds 
25 percent of the participants previously proposed to be served, or by 
25 participants, whichever is larger.
    (c) We will act upon any modification within thirty (30) calendar 
days of receipt of the proposed modification. In the event that further 
clarification or modification is required, we may extend the thirty 
(30) day time frame to conclude appropriate negotiations.

Subpart H--Administrative Requirements


Sec. 668.800  What systems must an INA grantee have in place to 
administer an INA program?

    (a) Each INA grantee must have a written system describing the 
procedures the grantee uses for:
    (1) The hiring and management of personnel paid with program funds;
    (2) The acquisition and management of property purchased with 
program funds;
    (3) Financial management practices;
    (4) A participant grievance system which meets the requirements in 
section 181(c) of WIA and 20 CFR 667.600; and
    (5) A participant records system.
    (b) Participant records systems must include:
    (1) A written or computerized record containing all the information 
used to determine the person's eligibility to receive program services;
    (2) The participant's signature certifying that all the eligibility 
information he or she provided is true to the best of his/her 
knowledge; and
    (3) The information necessary to comply with all program reporting 
requirements.


Sec. 668.810  What types of costs are allowable expenditures under the 
INA program?

    Rules relating to allowable costs under WIA are covered in 20 CFR 
667.200 through 667.220.


Sec. 668.820  What rules apply to administrative costs under the INA 
program?

    The definition and treatment of administrative costs are covered in 
20 CFR 667.210(b) and 667.220.


Sec. 668.825  Does the WIA administrative cost limit for States and 
local areas apply to section 166 grants?

    No, under 20 CFR 667.210(b), limits on administrative costs for 
section 166 grants will be negotiated with the grantee and identified 
in the grant award document.


Sec. 668.830  How should INA program grantees classify costs?

    Cost classification is covered in the WIA regulations at 20 CFR 
667.200 through 667.220. For purposes of the INA program, program costs 
also include costs associated with other activities such as Tribal 
Employment Rights Office (TERO), and supportive services, as defined in 
WIA section 101(46).


Sec. 668.840  What cost principles apply to INA funds?

    The cost principles described in OMB Circulars A-87 (for tribal 
governments),

[[Page 49445]]

A-122 (for private non-profits), and A-21 (for educational 
institutions), and the regulations at 20 CFR 667.200(c), apply to INA 
grantees, depending on the nature of the grantee organization.


Sec. 668.850  What audit requirements apply to INA grants?

    The audit requirements established under the Department's 
regulations at 29 CFR part 99, which implement OMB Circular A-133, 
apply to all Native American WIA grants. These regulations, for all of 
WIA title I, are cited at 20 CFR 667.200(b). Audit resolution 
procedures are covered at 20 CFR 667.500 and 667.510.


Sec. 668.860  What cash management procedures apply to INA grant funds?

    INA grantees must draw down funds only as they actually need them. 
The U.S. Department of Treasury regulations which implement the Cash 
Management Improvement Act, found at 31 CFR part 205, apply by law to 
most recipients of Federal funds. Special rules may apply to those 
grantees required to keep their funds in interest-bearing accounts, and 
to grantees participating in the demonstration under Public Law 102-
477.


Sec. 668.870  What is ``program income'' and how is it regulated in the 
INA program?

    (a) Program income is defined and regulated by WIA section 195(7), 
20 CFR 667.200(a)(5) and the applicable rules in 29 CFR parts 95 and 
97.
    (b) For grants made under this part, program income does not 
include income generated by the work of a work experience participant 
in an enterprise, including an enterprise owned by an Indian tribe or 
Alaska Native entity, whether in the public or private sector.
    (c) Program income does not include income generated by the work of 
an OJT participant in an establishment under paragraph (b) of this 
section.

Subpart I--Miscellaneous Program Provisions


Sec. 668.900  Does WIA provide regulatory and/or statutory waiver 
authority?

    Yes, WIA section 166(h)(3) permits waivers of any statutory or 
regulatory requirement imposed upon INA grantees (except for the areas 
cited in Sec. 668.920). Such waivers may include those necessary to 
facilitate WIA support of long term community development goals.


Sec. 668.910  What information is required to document a requested 
waiver?

    To request a waiver, an INA grantee must submit a plan indicating 
how the waiver will improve the grantee's WIA program activities. We 
will provide further guidance on the waiver process, consistent with 
the provisions of WIA section 166(h)(3).


Sec. 668.920  What provisions of law or regulations may not be waived?

    Requirements relating to:
    (a) Wage and labor standards;
    (b) Worker rights;
    (c) Participation and protection of workers and participants;
    (d) Grievance procedures;
    (e) Judicial review; and
    (f) Non-discrimination may not be waived. (WIA sec. 166(h)(3)(A).)


Sec. 668.930  May INA grantees combine or consolidate their employment 
and training funds?

    Yes, INA grantees may consolidate their employment and training 
funds under WIA with assistance received from related programs in 
accordance with the provisions of the Indian Employment, Training and 
Related Services Demonstration Act of 1992 (Public Law 102-477) (25 
U.S.C. 3401 et seq.). Also, Federally-recognized tribes that administer 
INA funds and funds provided by more than one State under other 
sections of WIA title I may enter into an agreement with the Governors 
to transfer the State funds to the INA program. (WIA sec. 166(f) and 
(h)(6).)


Sec. 668.940  What is the role of the Native American Employment and 
Training Council?

    The Native American Employment and Training Council is a body 
composed of representatives of the grantee community which advises the 
Secretary on all aspects of Native American employment and training 
program implementation. WIA section 166(h)(4) continues the Council 
essentially as it is currently constituted, with the exception that all 
the Council members no longer have to be Native American. However, the 
nature of the consultative process remains essentially unchanged. We 
continue to support the Council.

PART 669--NATIONAL FARMWORKERS JOBS PROGRAM UNDER TITLE I OF THE 
WORKFORCE INVESTMENT ACT

Subpart A--Purpose and Definitions
Sec.
669.100  What is the purpose of the National Farmworker Jobs Program 
(NFJP) and the other services and activities established under WIA 
section 167?
669.110  What definitions apply to this program?
669.120  How do we administer the NFJP program?
669.130  What unit within the Department administers the National 
Farmworker Jobs Program funded under WIA section 167?
669.140  How does the Division of Seasonal and Farmworker Programs 
(DSFP) assist the MSFW grantee organizations to serve farmworker 
customers?
669.150  How are regulations established for this program?
669.160  How do we consult with NFJP organizations in developing 
rules, regulations and standards of accountability, and other policy 
guidance for the NFJP?
669.170  What WIA regulations apply to the programs funded under WIA 
section 167?
Subpart B--The Service Delivery System for the National Farmworker Jobs 
Program
669.200  Who is eligible to receive an NFJP grant?
669.210  How does an eligible entity become an NFJP grantee?
669.220  What is the role of the NFJP grantee in the One-Stop 
delivery system?
669.230  Can an NFJP grantee's designation be terminated?
669.240  How will we use funds appropriated under WIA section 167 
for the NFJP?
Subpart C--The National Farmworker Jobs Program Customers and Available 
Program Services
669.300  What are the general responsibilities of the NFJP grantees?
669.310  What are the basic components of an NFJP service delivery 
strategy?
669.320  Who is eligible to receive services under the NFJP?
669.330  How are services delivered to the customer?
669.340  What core services are available to eligible MSFW's?
669.350  How are core services delivered to MSFW's?
669.360  May grantees provide emergency assistance to MSFW's?
669.370  What intensive services may be provided to eligible MSFW's?
669.380  What is the objective assessment that is authorized as an 
intensive service?
669.400  What are the elements of the Individual Employment Plan 
that is authorized as an intensive service?
669.410  What training services may be provided to eligible MSFW's?
669.420  What must be included in an on-the-job training contract?
669.430  What Related Assistance services may be provided to 
eligible farmworkers?
669.440  When may farmworkers receive related assistance?
Subpart D--Performance Accountability, Planning and Waiver Provision
669.500  What performance measures and standards apply to the NFJP?
669.510  What planning documents must an NFJP grantee submit?
669.520  What information is required in the NFJP grant plans?

[[Page 49446]]

669.530  What are the submission dates for these plans?
669.540  Under what circumstances are the terms of the grantee's 
plan modified by the grantee or the Department?
669.550  How are costs classified under the NFJP?
669.555  Do the WIA administrative cost limits for States and local 
areas apply to NFJP grants?
669.560  Are there regulatory and/or statutory waiver provisions 
that apply to WIA section 167?
669.570  What information is required to document a requested 
waiver?
Subpart E--The MSFW Youth Program
669.600  What is the purpose of the WIA section 167 MSFW Youth 
Program?
669.610  What is the relationship between the MSFW youth program and 
the NFJP authorized at WIA section 167?
669.620  How do the MSFW youth program regulations apply to the NFJP 
authorized under WIA section 167?
669.630  What are the requirements for designation as an ``MSFW 
youth program grantee''?
669.640  What is the process for applying for designation as an MSFW 
youth program grantee?
669.650  How are MSFW youth funds allocated to section 167 youth 
grantees?
669.660  What planning documents and information are required in the 
application for MSFW youth grants and when must they be filed?
669.670  Who is eligible to receive services under the section 167 
MSFW youth program?
669.680  What activities and services may be provided under the MSFW 
youth program?

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

Subpart A--Purpose and Definitions


Sec. 669.100  What is the purpose of the National Farmworker Jobs 
Program (NFJP) and the other services and activities established under 
WIA section 167?

    The purpose of the NFJP, and the other services and activities 
established under WIA section 167, is to strengthen the ability of 
eligible migrant and seasonal farmworkers and their families to achieve 
economic self-sufficiency. This part provides the regulatory 
requirements applicable to the expenditure of WIA section 167 funds for 
such programs, services and activities.


669.110  What definitions apply to this program?

    In addition to the definitions found in WIA sections 101 and 167 
and in 20 CFR 660.300, the following definitions apply to programs 
under this part:
    Allowances means direct payments, which must not exceed the higher 
of the State or Federal minimum wage, made to NFJP participants during 
their enrollment to enable them to participate in intensive or training 
services.
    Capacity enhancement means the technical assistance we provide to 
grantees and grantee staff by the Department to improve the quality of 
the program and the delivery of program services to NFJP participants.
    Dependent means an individual who:
    (1) Was claimed as a dependent on the qualifying farmworker's 
federal income tax return for the previous year; or
    (2) Is the spouse of the qualifying farmworker; or
    (3) If not claimed as a dependent for federal income tax purposes, 
is able to establish:
    (i) A relationship as the farmworker's
    (A) Child, grandchild, great grandchild, including legally adopted 
children;
    (B) Stepchild;
    (C) Brother, sister, half brother, half sister, stepbrother, or 
stepsister;
    (D) Parent, grandparent, or other direct ancestor but not foster 
parent;
    (E) Foster child;
    (F) Stepfather or stepmother;
    (G) Uncle or aunt;
    (H) Niece or nephew;
    (I) Father-in-law, mother-in-law, son-in-law; or
    (J) Daughter-in-law, brother-in-law, or sister-in-law; and
    (ii) The receipt of over half of his/her total support from the 
eligible farmworker's family during the eligibility determination 
period.
    Disadvantaged means a farmworker whose income, for any 12 
consecutive months out of the 24 months immediately before the 
farmworker applies for the program, does not exceed the higher of 
either the poverty line or 70 percent of the lower living standard 
income level, adjusted for the farmworker's family size and including 
the income of all wage earners, except when its inclusion would be 
unjust due to unstable conditions of the family unit.
    DSFP means the Division of Seasonal Farmworker Programs within the 
Employment and Training Administration of the Department, or a 
successor organizational unit.
    Eligibility determination period means any consecutive 12-month 
period within the 24-month period immediately preceding the date of 
application for the NFJP by the applicant farmworker.
    Emergency Assistance means assistance that addresses immediate 
needs of farmworkers and their families, provided by NFJP grantees. 
Except for evidence to support legal working status in the United 
States and Selective Service registration, where applicable, the 
applicant's self-attestation is accepted as eligibility for emergency 
assistance.
    Farmwork means those occupations and industries within agricultural 
production and agricultural services that we identify for the National 
Farmworker Jobs Program.
    Housing development assistance within the NFJP, is a type of 
related assistance consisting of an organized program of education and 
on-site demonstrations about the basic elements of family housing and 
may include financing, site selection, permits and construction skills, 
leading towards home ownership.
    MOU means Memorandum of Understanding.
    MSFW means a Migrant or Seasonal Farmworker under WIA section 167.
    MSFW program grantee means an entity to which we directly award a 
WIA grant to carry out the MSFW program in one or more designated 
States or substate areas.
    National Farmworker Jobs Program (NFJP) is the nationally 
administered workforce investment program for farmworkers established 
by WIA section 167 as a required partner of the One-Stop system.
    Related Assistance means short-term forms of direct assistance 
designed to assist farmworkers and their families to retain or 
stabilize their agricultural employment or enrollment in the NFJP.
    Self-certification means a farmworker's signed attestation that the 
information he/she submits to demonstrate eligibility for the NFJP is 
true and accurate.
    Service area means the geographical jurisdiction in which a WIA 
section 167 grantee is designated to operate.
    Work experience means a planned, structured learning experience 
that takes place in a workplace for a limited period of time. Work 
experience may be paid or unpaid, as appropriate.


Sec. 669.120  How do we administer the NFJP program?

    This program is centrally administered by the Department of Labor 
in a manner consistent with the requirements of WIA section 167. As 
described in Sec. 669.210, we designate grantees using procedures 
consistent with standard Federal government competitive procedures. We 
award other grants and contracts using similar competitive procedures.


Sec. 669.130  What unit within the Department administers the National 
Farmworker Jobs Program funded under WIA section 167?

    We have designated the Division of Seasonal Farmworker Programs 
(DSFP),

[[Page 49447]]

or its successor organization, within the Employment and Training 
Administration, as the organizational unit that administers the NFJP 
and other MSFW programs at the Federal level.


Sec. 669.140  How does the Division of Seasonal Farmworker Programs 
(DSFP) assist the MSFW grantee organizations to serve farmworker 
customers?

    We provide technical assistance and training to MSFW grantees for 
the purposes of program implementation and program performance 
management leading to enhancement of services to and continuous 
improvement in the employment outcomes of farmworkers.


Sec. 669.150  How are regulations established for this program?

    In developing regulations for WIA section 167, we consult with the 
Migrant and Seasonal Farmworker Employment and Training Advisory 
Committee. The regulations and program guidance consider the economic 
circumstances and demographics of eligible migrant and seasonal 
farmworkers.


Sec. 669.160  How do we consult with NFJP organizations in developing 
rules, regulations and standards of accountability, and other policy 
guidance for the NFJP?

    (a) We consider the NFJP grantee community as a full partner in the 
development of policies for the NFJPs under the Act.
    (b) We have established and continue to support the Federal MSFW 
Employment and Training Advisory Committee. Through the Advisory 
Committee, we actively seek and consider the views of the grantee 
community before establishing policies and/or program regulations, 
according to the requirements of WIA section 167.


Sec. 669.170  What WIA regulations apply to the programs funded under 
WIA section 167?

    (a) The regulations found in this part;
    (b) The general administrative requirements found in 20 CFR part 
667, including the regulations concerning Complaints, Investigations 
and Hearings found at 20 CFR part 667, subpart E through subpart H, 
which cover programs under WIA section 167;
    (c) The Department's regulations codifying the common rules 
implementing Office of Management and Budget (OMB) Circulars, which 
generally apply to Federal programs carried out by State and local 
governments and nonprofit organizations at 29 CFR parts 95, 96, 97, and 
99, as applicable.
    (d) The regulations on partnership responsibilities contained in 20 
CFR parts 661 (Statewide and Local Governance) and 662 (the One-Stop 
System).
    (e) The Department's regulations at 29 CFR part 37, which implement 
the nondiscrimination provisions of WIA section 188, apply to 
recipients of financial assistance under WIA section 167.

Subpart B--The Service Delivery System for the National Farmworker 
Jobs Program


Sec. 669.200  Who is eligible to receive a NFJP grant?

    (a) To be eligible to receive a grant under this section, an entity 
must have:
    (1) An understanding of the problems of eligible migrant and 
seasonal farmworkers and their dependents;
    (2) A familiarity with the agricultural industry and the labor 
market needs of the geographic area to be served;
    (3) The capacity to effectively administer a diversified program of 
workforce investment activities and related assistance for eligible 
migrant and seasonal farmworkers (including farmworker youth) as 
described in paragraph (b) of this section;
    (4) The capacity to work effectively as a One-Stop partner.
    (b) For purposes of paragraph (a)(3) of this section, an entity's 
``capacity to effectively administer'' a program may be demonstrated 
by:
    (1) Organizational experience; or
    (2) Significant experience of its key staff in administering 
similar programs.
    (c) For purposes of paragraph (a)(4) of this section, an applicant 
may demonstrate its capacity to work effectively as a One-Stop partner 
through its existing relationships with Local Workforce Investment 
Boards and other One-Stop partners, as evidenced through One-Stop 
system participation and successful MOU negotiations.
    (d) As part of the evaluation of the applicant's capacity to work 
effectively as a One-Stop partner under paragraph (a)(4) of this 
section:
    (1) The Grant Officer must determine whether the policies or 
actions of any Local Board established under the authorty of the 
alternative entity provision of WIA section 117(i) and 20 CFR 661.330:
    (i) Preclude One-Stop system participation by the applicant or 
existing NFJP grantee; or
    (ii) For the prior program year, contributed to a failure to reach 
agreement on the terms of the MOU required under Sec. 669.220; and
    (2) If the Grant Officer's determinations under paragraph (d)(1) of 
this section are affirmative, then the Grant Officer may consider this 
fact when weighing the capacity of the competitors.


Sec. 669.210  How does an eligible entity become an NFJP grantee?

    To become an NFJP grantee and receive a grant under this subpart, 
an applicant must respond to a Solicitation for Grant Applications 
(SGA). The SGA may contain additional requirements for the grant 
application or the grantee's two-year plan. Under the SGA, grantees 
will be selected using standard Federal Government competitive 
procedures. The entity's proposal must describe a two-year strategy for 
meeting the needs of eligible migrant and seasonal farmworkers in the 
geographic area the entity seeks to serve.


Sec. 669.220  What is the role of the NFJP grantee in the One-Stop 
delivery system?

    (a) In those local workforce investment areas where the grantee 
operates its NFJP, the grantee is a required partner of the local One-
Stop delivery system and is subject to the provisions relating to such 
partners described in 20 CFR part 662. Consistent with those 
provisions, the grantee and the Local Board must negotiate an MOU which 
meets the requirements of 20 CFR 662.300 and sets forth their 
respective responsibilities for making the full range of services 
available through the One-Stop system available to farmworkers. Where 
the Local Board is an alternative entity under 20 CFR 661.330, the NFJP 
grantee must negotiate with the Board on the terms of its MOU and the 
scope of its on-going role in the local workforce investment system, as 
specified in 20 CFR 661.310(b)(2). In local areas where the grantee 
does not operate its NFJP and there is a large concentration of MSFW's, 
the grantee may consider the availability of electronic connections and 
other means to participate in the One-stop system in that area, in 
order to serve those individuals.
    (b) The MOU must provide for appropriate and equitable services to 
MSFW's, and may include costs of services to MSFW's incurred by the 
One-Stop that extend beyond Wagner-Peyser funded services and 
activities.


Sec. 669.230  Can an NFJP grantee's designation be terminated?

    Yes, a grantee's designation may be terminated for cause:
    (a) By the Secretary, in emergency circumstances when such action 
is necessary to protect the integrity of Federal funds or ensure the 
proper operation of the program. Any grantee so terminated will be 
provided with

[[Page 49448]]

written notice and an opportunity for a hearing within 30 days after 
the termination (WIA sec. 184(e)); or
    (b) By the Grant Officer, if there is a substantial or persistent 
violation of the requirements in the Act or the WIA regulations. In 
such a case, the Grant Officer must provide the grantee with 60 days 
prior written notice, stating the reasons why termination is proposed, 
and the applicable appeal procedures.


Sec. 669.240  How do we use funds appropriated under WIA section 167 
for the NFJP?

    (a) At least 94 percent of the funds appropriated each year for WIA 
section 167 activities must be allocated to State service areas, based 
on the distribution of the eligible MSFW population determined under a 
formula which has been published in the Federal Register. Grants are 
awarded under a competitive process for the provision of services to 
eligible farmworkers within each service area.
    (b) The balance, up to 6 percent of the appropriated funds, will be 
used for discretionary purposes, for such activities as grantee 
technical assistance and support of farmworker housing activities.

Subpart C--The National Farmworker Jobs Program Customers and 
Available Program Services


Sec. 669.300  What are the general responsibilities of the NFJP 
grantees?

    Each grantee is responsible for providing needed services in 
accordance with a service delivery strategy described in its approved 
grant plan. These services must reflect the needs of the MSFW 
population in the service area and include the services and training 
activities that are necessary to achieve each participant's employment 
goals.


Sec. 669.310  What are the basic components of an NFJP service delivery 
strategy?

    The NFJP service delivery strategy must include:
    (a) A customer-centered case management approach;
    (b) The provision of workforce investment activities, which include 
core services, intensive services, and training services, as described 
in WIA section 134, as appropriate;
    (c) The arrangements under the MOU's with the applicable Local 
Workforce Investment Boards for the delivery of the services available 
through the One-Stop system to MSFW's; and
    (d) Related assistance services.


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

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


Sec. 669.330  How are services delivered to the customer?

    To ensure that all services are focused on the customer's needs, 
services are provided through a case-management approach and may 
include: Core, intensive and training services; and related assistance, 
which includes emergency assistance and supportive services. The basic 
services and delivery of case-management activities are further 
described at Secs. 669.340 through 669.410. Consistent with 20 CFR part 
663, before receiving intensive services, a participant must receive at 
least one core service, and, prior to receiving training services, a 
participant must receive at least one intensive service.


Sec. 669.340  What core services are available to eligible MSFW's?

    The core services identified in WIA section 134(d)(2) are available 
to eligible MSFW's.


Sec. 669.350  How are core services delivered to MSFW's?

    (a) The full range of core services are available to MSFW's, as 
well as other individuals, at One-Stop Centers, as described in 20 CFR 
part 662.
    (b) Core services must be made available through the One-Stop 
delivery system. The delivery of core services to MSFW's, by the NFJP 
grantee and through the One-Stop system, must be discussed in the 
required MOU between the Local Board and the NFJP grantee.


Sec. 669.360  May grantees provide emergency assistance to MSFW's?

    (a) Yes, Emergency Assistance (as defined in Sec. 669.110) is a 
form of the related assistance that is authorized under WIA section 
167(d) and may be provided by a grantee as described in the grant plan.
    (b) In providing emergency assistance, the NFJP grantee may use an 
abbreviated eligibility determination process that accepts the 
applicant's self-attestation as final evidence of eligibility, except 
that self-attestation may not be used to establish the requirements of 
legal working status in the United States, and Selective Service 
registration, where applicable.


Sec. 669.370  What intensive services may be provided to eligible 
MSFW's?

    (a) Intensive services available to farmworkers include those 
described in WIA section 134(d)(3)(C).
    (b) Intensive services may also include:
    (1) Dropout prevention activities;
    (2) Allowance payments;
    (3) Work experience, which:
    (i) Is designed to promote the development of good work habits and 
basic work skills at the work-site (work experience may be conducted 
with the public and private non-profit sectors and with the private 
for-profit sector when the design for this service is described in the 
approved grant plan); and which:
    (ii)(A) May be paid. Paid work experience must compensate 
participants at no less than the higher of the applicable State or 
Federal minimum wage; or
    (B) May be unpaid. Unpaid work experience must provide tangible 
benefits, in lieu of wages, to those who participate in unpaid work 
experience and the strategy for ensuring that tangible benefits are 
received must be described in the approved grant plan. The benefits to 
the participant must be commensurate with the participant's 
contribution to the hosting organization;
    (4) Literacy and English-as-a-Second language; and
    (5) Other services identified in the approved grant plan.


Sec. 669.380  What is the objective assessment that is authorized as an 
intensive service?

    (a) An objective assessment is a procedure designed to 
comprehensively assess the skills, abilities, and interests of each 
employment and training participant through the use of diagnostic 
testing and other assessment tools. The methods used by the grantee in 
conducting the objective assessment may include:
    (1) Structured in-depth interviews;
    (2) Skills and aptitude assessments;
    (3) Performance assessments (for example, skills or work samples, 
including those that measure interest and capability to train in 
nontraditional employment);
    (4) Interest or attitude inventories;
    (5) Career guidance instruments;
    (6) Aptitude tests; and
    (7) Basic skills tests.
    (b) The objective assessment is an ongoing process that requires 
the grantee staff to remain in close consultation with each participant 
to continuously obtain current information about the participant's 
progress that may be relevant to his/her Individual Employment Plan 
(IEP).

[[Page 49449]]

Sec. 669.400  What are the elements of the Individual Employment Plan 
that is authorized as an intensive service?

    The elements of the Individual Employment Plan (IEP) are:
    (a) Joint development: The grantee develops the IEP in partnership 
with the participant;
    (b) Customer focus: The combination of services chosen with the 
participant must be consistent with the results of any objective 
assessment, responsive to the expressed goals of the participant, and 
must include periodic evaluation of planned goals and a record of 
accomplishments in consultation with the participant;
    (c) Length/type of service: The type and duration of intensive or 
training services must be based upon:
    (1) The employment/career goal;
    (2) Referrals to other programs for specified activities; and
    (3) The delivery agents and schedules for intensive services, 
training and training-related supportive services; and
    (d) Privacy: As a customer-centered case management tool, an IEP is 
a personal record and must receive confidential treatment.


Sec. 669.410  What training services may be provided to eligible 
MSFW's?

    (a) Training services include those described in WIA sections 
134(d)(4)(D) and 167(d), and may be described in the IEP and may 
include:
    (1) On-the-job training activities under a contract between the 
participating employer and the grantee;
    (2) Training-related supportive services; and
    (b) Other training activities identified in the approved grant plan 
such as training in self-employment skills and micro-enterprise 
development.


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

    At a minimum, an on-the-job training contract must comply with the 
requirements of WIA sections 195(4) and 101(31) and must include:
    (a) The occupation(s) for which training is to be provided;
    (b) The duration of training;
    (c) The wage rate to be paid to the trainee;
    (d) The rate of reimbursement;
    (e) The maximum amount of reimbursement;
    (f) A training outline that reflects the work skills required for 
the position;
    (g) An outline of any other separate classroom training that may be 
provided by the employer; and
    (h) The employer's agreement to maintain and make available time 
and attendance, payroll and other records to support amounts claimed by 
the employer for reimbursement under the OJT contract.


Sec. 669.430  What Related Assistance services may be provided to 
eligible farmworkers?

    Related Assistance may include such services and activities as:
    (a) Emergency Assistance;
    (b) Workplace safety and farmworker pesticide safety instruction;
    (c) Housing development assistance;
    (d) Other supportive services described in the grant plan; and
    (e) English language classes and basic education classes for 
participants not enrolled in intensive or training services.


Sec. 669.440  When may farmworkers receive related assistance?

    Farmworkers may receive related assistance services when the need 
for the related assistance is documented for any eligible farmworker or 
dependent in a determination made by the grantee or in a statement by 
the farmworker.

Subpart D--Performance Accountability, Planning and Waiver 
Provision


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

    (a) The NFJP will use the core indicators of performance common to 
the adult and youth programs, described in 20 CFR part 666. The levels 
of performance for the farmworker indicators will be established in a 
negotiation between the Department and the grantee. The levels must 
take into account the characteristics of the population to be served 
and the economic conditions in the service area. Proposed levels of 
performance must be included in the grantee plan submission, and the 
agreed-upon levels must be included in the approved plan.
    (b) We may develop additional performance indicators with 
appropriate levels of performance for evaluating programs that serve 
farmworkers and which reflect the State service area economy and local 
demographics of eligible MSFW's. The levels of performance for these 
additional indicators must be negotiated with the grantee and included 
in the approved plan.


Sec. 669.510  What planning documents must a NFJP grantee submit?

    Each grantee receiving WIA section 167 program funds must submit to 
DSFP a comprehensive service delivery plan and a projection of 
participant services and expenditures covering the two-year designation 
cycle.


Sec. 669.520  What information is required in the NFJP grant plans?

    An NFJP grantee's biennial plan must describe:
    (a) The employment and education needs of the farmworker population 
to be served;
    (b) The manner in which proposed services to farmworkers and their 
families will strengthen their ability to obtain or retain employment 
or stabilize their agricultural employment;
    (c) The related assistance and supportive services to be provided 
and the manner in which such assistance and services are to be 
coordinated with other available services;
    (d) The performance indicators and proposed levels of performance 
used to assess the performance of such entity, including the specific 
goals of the grantee's program for the two Program Years involved;
    (e) The method the grantee will use to target its services on 
specific segments of the eligible population, as appropriate;
    (f) The array of services which the grantee intends to make 
available, with costs specified on forms we prescribe. These forms will 
indicate how many participants the grantee expects to serve, by 
activity, the results expected under the grantee's plan, and the 
anticipated expenditures by cost category; and
    (g) Its response to any other requirements set forth in the SGA 
issued under Sec. 669.210.


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

    We will announce plan submission dates in the SGA issued under 
Sec. 669.220.


Sec. 669.540  Under what circumstances are the terms of the grantee's 
plan modified by the grantee or the Department?

    (a) Plans must be modified to reflect the funding level for the 
second year of the designation cycle. We will provide instructions for 
when to submit modifications for second year funding, which will 
generally be no later than June 1 prior to the beginning of the second 
year of the designation cycle.
    (b) We may unilaterally modify the grantee's plan to add funds or, 
if the total amount of funds available for allotment is reduced by 
Congress, to reduce each grantee's grant amount.
    (c) The grantee may modify its plan to add, delete, expand, or 
reduce any part of the program plan or allowable activities. Such 
modifications may be made by the grantee without our approval except 
where the modification reduces the total number of participants to be 
served annually under intensive

[[Page 49450]]

and/or training services by 15 percent or more, in which case the plan 
may only be modified with Grant Officer approval.
    (d) If the grantee is approved for a regulatory waiver under 
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 NFJP?

    (a) Costs are classified as follows:
    (1) Administrative costs, as defined in 20 CFR 667.220; and
    (2) Program costs, which are all other costs not defined as 
administrative.
    (b) Program costs must be classified and reported in the following 
categories:
    (1) Related assistance, including emergency assistance and 
supportive services, including allocated staff costs; and
    (2) All other program services, including allocated staff costs.


Sec. 669.555  Do the WIA administrative cost limits for States and 
local areas apply to NFJP grants?

    No, under 20 CFR 667.210(b), limits on administrative costs for 
NFJP grants will be negotiated with the grantee and identified in the 
grant award document.


Sec. 669.560  Are there regulatory and/or statutory waiver provisions 
that apply to WIA section 167?

    (a) The statutory waiver provision at WIA section 189(i) does not 
apply to WIA section 167.
    (b) NFJP grantees may request waiver of any regulatory provisions 
only when such regulatory provisions are:
    (1) Not required by WIA;
    (2) Not related to wage and labor standards, nondisplacement 
protection, worker rights, participation and protection of workers and 
participants, and eligibility of participants, grievance procedures, 
judicial review, nondiscrimination, allocation of funds, procedures for 
review and approval of plans; and
    (3) Not related to the key reform principles embodied in WIA, 
described in 20 CFR 661.400.


Sec. 669.570  What information is required to document a requested 
waiver?

    To request a waiver, a grantee must submit a waiver plan that:
    (a) Describes the goals of the waiver, the expected programmatic 
outcomes, and how the waiver will improve the provision of WIA 
activities;
    (b) Is consistent with guidelines we establish and the waiver 
provisions at 20 CFR 661.400 through 661.420; and
    (c) Includes a modified service delivery plan reflecting the effect 
of requested waiver.

Subpart E--The MSFW Youth Program


Sec. 669.600  What is the purpose of the WIA section 167 MSFW Youth 
Program?

    The purpose of the MSFW youth program is to provide an effective 
and comprehensive array of educational opportunities, employment 
skills, and life enhancement activities to at-risk and out-of-school 
MSFW youth that lead to success in school, economic stability and 
development into productive members of society.


Sec. 669.610  What is the relationship between the MSFW youth program 
and the NFJP authorized at WIA section 167?

    The MSFW youth program is funded under WIA section 
127(b)(1)(A)(iii) to provide farmworker youth activities under the 
auspices of WIA section 167. These funds are specifically earmarked for 
MSFW youth. Funds provided for the section 167 program may also be used 
for youth, but are not limited to this age group.


Sec. 669.620  How do the MSFW youth program regulations apply to the 
NFJP program authorized under WIA section 167?

    (a) This subpart applies only to the administration of grants for 
MSFW youth programs funded under WIA section 127(b)(1)(A)(iii).
    (b) The regulations for the NFJP in this part apply to the 
administration of the MSFW youth program, except as modified in this 
subpart.


Sec. 669.630  What are the requirements for designation as an ``MSFW 
youth program grantee''?

    Any entity that meets the requirements described in the SGA may 
apply for designation as an ``MSFW youth program grantee'' consistent 
with requirements described in the SGA. The Department gives special 
consideration to an entity in any service area for which the entity has 
been designated as a WIA section 167 NFJP program grantee.


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

    (a) To apply for designation as an MSFW youth program grantee, 
entities must respond to an SGA by submitting a plan that meets the 
requirements of WIA section 167(c)(2) and describes a two-year strategy 
for meeting the needs of eligible MSFW youth in the service area the 
entity seeks to serve.
    (b) The designation process is conducted competitively (subject to 
Sec. 669.210) through a selection process distinct from the one used to 
select WIA section 167 NFJP grantees.


Sec. 669.650  How are MSFW youth funds allocated to section 167 youth 
grantees?

    The allocation of funds among entities designated as WIA section 
167 MSFW Youth Program grantees is based on the comparative merits of 
the applications, in accordance with criteria set forth in the SGA. 
However, we may include criteria in the SGA that promote a geographical 
distribution of funds and that encourages both large- and small-scale 
programs.


Sec. 669.660  What planning documents and information are required in 
the application for MSFW youth grants and when must they be filed?

    The required planning documents and other required information and 
the submission dates for filing are described in the SGA.


Sec. 669.670  Who is eligible to receive services under the section 167 
MSFW youth program?

    Disadvantaged youth, ages 14 through 21, who are individually 
eligible or are members of eligible families under the WIA section 167 
NFJP may receive these services.


Sec. 669.680  What activities and services may be provided under the 
MSFW youth program?

    (a) Based on an evaluation and assessment of the needs of MSFW 
youth participants, grantees may provide activities and services to 
MSFW youth that include:
    (1) Intensive services and training services, as described in 
Secs. 669.400 and 669.410;
    (2) Life skills activities which may include self and interpersonal 
skills development;
    (3) Community service projects;
    (4) Small business development technical assistance and training in 
conjunction with entrepreneurial training;
    (5) Supportive services including the related assistance services, 
described in Sec. 669.430; and
    (b) Other activities and services that conform to the use of funds 
for youth activities described in 20 CFR part 664.

PART 670--THE JOB CORPS UNDER TITLE I OF THE WORKFORCE INVESTMENT 
ACT

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 49451]]

Subpart B--Site Selection and Protection and Maintenance of Facilities
670.200   Who decides where Job Corps centers will be located?
670.210   How are center facility improvements and new construction 
handled?
670.220   Are we responsible for the protection and maintenance of 
center facilities?
Subpart C--Funding and Selection of Service Providers
670.300   What entities are eligible to receive funds to operate 
centers and provide training and operational support services?
670.310   How are entities selected to receive funding?
670.320   What are the requirements for award of contracts and 
payments to Federal agencies?
Subpart D--Recruitment, Eligibility, Screening, Selection and 
Assignment, and Enrollment
670.400   Who is eligible to participate in the Job Corps program?
670.410   Are there additional factors which are considered in 
selecting an eligible applicant for enrollment?
670.420   Are there any special requirements for enrollment related 
to the Military Selective Service Act?
670.430   What entities conduct outreach and admissions activities 
for the Job Corps program?
670.440   What are the responsibilities of outreach and admissions 
agencies?
670.450   How are applicants who meet eligibility and selection 
criteria assigned to centers?
670.460   What restrictions are there on the assignment of eligible 
applicants for nonresidential enrollment in Job Corps?
670.470   May a person who is determined to be ineligible or an 
individual who is denied enrollment appeal that decision?
670.480   At what point is an applicant considered to be enrolled in 
Job Corps?
670.490   How long may a student be enrolled in Job Corps?
Subpart E--Program Activities and Center Operati
670.500   What services must Job Corps centers provide?
670.505   What types of training must Job Corps centers provide?
670.510   Are Job Corps center operators responsible for providing 
all vocational training?
670.515   What responsibilities do the center operators have in 
managing work-based learning?
670.520   Are students permitted to hold jobs other than work-based 
learning opportunities?
670.525   What residential support services must Job Corps center 
operators provide?
670.530   Are Job Corps centers required to maintain a student 
accountability system?
670.535   Are Job Corps centers required to establish behavior 
management systems?
670.540   What is Job Corps' zero tolerance policy?
670.545   How does Job Corps ensure that students receive due 
process in disciplinary actions?
670.550   What responsibilities do Job Corps centers have in 
assisting students with child care needs?
670.555   What are the center's responsibilities in ensuring that 
students' religious rights are respected?
670.560   Is Job Corps authorized to conduct pilot and demonstration 
projects?
Subpart F--Student Support
670.600   Is government-paid transportation provided to Job Corps 
students?
670.610   When are students authorized to take leaves of absence 
from their Job Corps centers?
670.620   Are Job Corps students eligible to receive cash allowances 
and performance bonuses?
670.630   Are student allowances subject to Federal Payroll Taxes?
670.640   Are students provided with clothing?
Subpart G--Placement and Continued Services
670.700   What are Job Corps centers' responsibilities in preparing 
students for placement services?
670.710   What placement services are provided for Job Corps 
students?
670.720   Who provides placement services?
670.730   What are the responsibilities of placement agencies?
670.740   Must continued services be provided for graduates?
670.750   Who may provide continued services for graduates?
670.760   How will Job Corps coordinate with other agencies?
Subpart H--Community Connections
670.800   How do Job Corps centers and service providers become 
involved in their local communities?
Subpart I--Administrative and Management Provisions
670.900   Are damages caused by students eligible for reimbursement 
under the Tort Claims Act?
670.905   Are damages that occur to private parties at Job Corps 
Centers eligible for reimbursement under the Tort Claims Act?
670.910   Are students entitled to Federal Employees Compensation 
Benefits (FECB)?
670.915   When are residential students considered to be in the 
performance of duty?
670.920   When are non-resident students considered to be in the 
performance of duty?
670.925   When are students considered to be not in the performance 
of duty?
670.930   How are FECA benefits computed?
670.935   How are students protected from unsafe or unhealthy 
situations?
670.940   What are the requirements for criminal law enforcement 
jurisdiction on center property?
670.945   Are Job Corps operators and service providers authorized 
to pay State or local taxes on gross receipts?
670.950   What are the financial management responsibilities of Job 
Corps center operators and other service providers?
670.955   Are center operators and service providers subject to 
Federal audits?
670.960   What are the procedures for management of student records?
670.965   What procedures apply to disclosure of information about 
Job Corps students and program activities?
670.970   What are the reporting requirements for center operators 
and operational support service providers?
670.975   How is the performance of the Job Corps program assessed?
670.980   What are the indicators of performance for Job Corps?
670.985   What happens if a center operator, screening and 
admissions contractor or other service provider fails to meet the 
expected levels of performance?
670.990   What procedures are available to resolve complaints and 
disputes?
670.991   How does Job Corps ensure that complaints or disputes are 
resolved in a timely fashion?
670.992   How does Job Corps ensure that centers or other service 
providers comply with the Act and the WIA regulations?
670.993   How does Job Corps ensure that contract disputes will be 
resolved?
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 49452]]

Sec. 670.120  What definitions apply to this part?

    The following definitions apply to this part:
    Absent Without Official Leave (AWOL) means an adverse enrollment 
status to which a student is assigned based on extended, unapproved 
absence from his/her assigned center or off-center place of duty. 
Students do not earn Job Corps allowances while in AWOL status.
    Applicable local board means a local Workforce Investment Board 
that:
    (1) Works with a Job Corps center and provides information on local 
demand occupations, employment opportunities, and the job skills needed 
to obtain the opportunities, and
    (2) Serves communities in which the graduates of the Job Corps seek 
employment when they leave the program.
    Capital improvement means any modification, addition, restoration 
or other improvement:
    (1) Which increases the usefulness, productivity, or serviceable 
life of an existing site, facility, building, structure, or major item 
of equipment;
    (2) Which is classified for accounting purposes as a ``fixed 
asset;'' and
    (3) The cost of which increases the recorded value of the existing 
building, site, facility, structure, or major item of equipment and is 
subject to depreciation.
    Center means a facility and an organizational entity, including all 
of its parts, providing Job Corps training and designated as a Job 
Corps center.
    Center operator means a Federal, State or local agency, or a 
contractor that runs a center under an agreement or contract with DOL.
    Civilian conservation center (CCC) means a center operated on 
public land under an agreement between DOL and another Federal agency, 
which provides, in addition to other training and assistance, programs 
of work-based learning to conserve, develop, or manage public natural 
resources or public recreational areas or to develop community projects 
in the public interest.
    Contract center means a Job Corps center operated under a contract 
with DOL.
    Contracting officer means the Regional Director or other official 
authorized to enter into contracts or agreements on behalf of DOL.
    Enrollee means an individual who has voluntarily applied for, been 
selected for, and enrolled in the Job Corps program, and remains with 
the program, but has not yet become a graduate. Enrollees are also 
referred to as ``students'' in this part.
    Enrollment means the process by which individual formally becomes a 
student in the Job Corps program.
    Graduate means an enrollee who has:
    (1) Completed the requirements of a vocational training program, or 
received a secondary school diploma or its equivalent as a result of 
participating in the Job Corps program; and
    (2) Achieved job readiness and employment skills as a result of 
participating in the Job Corps program.
    Individual with a disability means an individual with a disability 
as defined in section 3 of the Americans with Disabilities Act of 1990 
(42 U.S.C. 12102).
    Interagency agreement means a formal agreement between DOL and 
another Federal agency administering and operating centers. The 
agreement establishes procedures for the funding, administration, 
operation, and review of those centers as well as the resolution of any 
disputes.
    Job Corps means the agency of the Department established by section 
143 of the Workforce Investment Act of 1998 (WIA) (20 U.S.C. 9201 et 
seq.) to perform those functions of the Secretary of Labor set forth in 
subtitle C of WIA Title I.
    Job Corps Director means the chief official of the Job Corps or a 
person authorized to act for the Job Corps Director.
    Low income individual means an individual who meets the definition 
in WIA section 101(25).
    National Office means the national office of Job Corps.
    National training contractor means a labor union, union-affiliated 
organization, business organization, association or a combination of 
such organizations, which has a contract with the national office to 
provide vocational training, placement, or other services.
    Operational support services means activities or services required 
to support the operation of Job Corps, including:
    (1) Outreach and admissions services;
    (2) Contracted vocational training and off-center training;
    (3) Placement services;
    (4) Continued services for graduates;
    (5) Certain health services; and
    (6) Miscellaneous logistical and technical support.
    Outreach and admissions agency means an organization that performs 
outreach, and screens and enrolls youth under a contract or other 
agreement with Job Corps.
    Placement means student employment, entry into the Armed Forces, or 
enrollment in other training or education programs following separation 
from Job Corps.
    Placement agency means an organization acting under a contract or 
other agreement with Job Corps to provide placement services for 
graduates and, to the extent possible, for former students.
    Regional appeal board means the board designated by the Regional 
Director to consider student appeals of disciplinary discharges.
    Regional Director means the chief Job Corps official of a regional 
office or a person authorized to act for the Regional Director.
    Regional Office means a regional office of Job Corps.
    Regional Solicitor means the chief official of a regional office of 
the DOL Office of the Solicitor, or a person authorized to act for the 
Regional Solicitor.
    Separation means the action by which an individual ceases to be a 
student in the Job Corps program, either voluntarily or involuntarily.
    Student means an individual enrolled in the Job Corps.
    Unauthorized goods means:
    (1) Firearms and ammunition;
    (2) Explosives and incendiaries;
    (3) Knives with blades longer than 2 inches;
    (4) Homemade weapons;
    (5) All other weapons and instruments used primarily to inflict 
personal injury;
    (6) Stolen property;
    (7) Drugs, including alcohol, marijuana, depressants, stimulants, 
hallucinogens, tranquilizers, and drug paraphernalia except for drugs 
and/or paraphernalia that are prescribed for medical reasons; and
    (8) Any other goods prohibited by the center operator in a student 
handbook.


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.

[[Page 49453]]

    (b) The Secretary establishes procedures for making decisions 
concerning the establishment, relocation, expansion, or closing of 
contract centers.


Sec. 670.210  How are center facility improvements and new construction 
handled?

    The Secretary issues procedures for requesting, approving, and 
initiating capital improvements and new construction on Job Corps 
centers.


Sec. 670.220  Are we responsible for the protection and maintenance of 
center facilities?

    (a) Yes, the Secretary establishes procedures for the protection 
and maintenance of contract center facilities owned or leased by the 
Department of Labor, that are consistent with Federal Property 
Management Regulations at 41 CFR Chapter 101.
    (b) Federal agencies operating civilian conservation centers 
(CCC's) on public land are responsible for protection and maintenance 
of CCC facilities.
    (c) The Secretary issues procedures for conducting periodic 
facility surveys of centers to determine their condition and to 
identify needs such as correction of safety and health deficiencies, 
rehabilitation, and/or new construction.

Subpart C--Funding and Selection of Service Providers


Sec. 670.300  What entities are eligible to receive funds to operate 
centers and provide training and operational support services?

    (a) Entities eligible to receive funds under this subpart to 
operate centers include:
    (1) Federal, State, and local agencies;
    (2) Private for-profit and non-profit corporations;
    (3) Indian tribes and organizations; and
    (4) Area vocational education or residential vocational schools. 
(WIA sec. 147(a)(1)(A) and (d)).
    (b) Entities eligible to receive funds to provide outreach and 
admissions, placement and other operational support services include:
    (1) One-Stop Centers and partners;
    (2) Community action agencies;
    (3) Business organizations;
    (4) Labor organizations;
    (5) Private for-profit and non-profit corporations; and
    (6) Other agencies, and individuals that have experience and 
contact with youth. (WIA sec. 145(a)(3)).


Sec. 670.310  How are entities selected to receive funding?

    (a) The Secretary selects eligible entities to operate contract 
centers and operational support service providers on a competitive 
basis in accordance with the Federal Property and Administrative 
Services Act of 1949 unless section 303 (c) and (d) of that Act apply. 
In selecting an entity, Job Corps issues requests for proposals (RFP) 
for the operation of all contract centers and for provision of 
operational support services according to Federal Acquisition 
Regulation (48 CFR Chapter 1) and DOL Acquisition Regulation (48 CFR 
Chapter 29). Job Corps develops RFP's for center operators in 
consultation with the Governor, the center industry council (if 
established), and the Local Board for the workforce investment area in 
which the center is located.
    (b) The RFP for each contract center and each operational support 
service contract describes uniform specifications and standards, as 
well as specifications and requirements that are unique to the 
operation of the specific center or to the specific required 
operational support services.
    (c) The Contracting Officer selects and funds Job Corps contract 
center operators on the basis of an evaluation of the proposals 
received using criteria established by the Secretary, and set forth in 
the RFP. The criteria include the following:
    (1) The offeror's ability to coordinate the activities carried out 
through the Job Corps center with activities carried out under the 
appropriate State and local workforce investment plans;
    (2) The degree to which the offeror proposes vocational training 
that reflects employment opportunities in the local areas in which most 
of the students intend to seek employment;
    (3) The degree to which the offeror is familiar with the 
surrounding community, including the applicable One-Stop Centers, and 
the State and region in which the center is located; and
    (4) The offeror's past performance.
    (d) The Contracting Officer selects and funds operational support 
service contractors on the basis of an evaluation of the proposals 
received using criteria established by the Secretary and set forth in 
the RFP.
    (e) The Secretary enters into interagency agreements with Federal 
agencies for the funding, establishment, and operation of CCC's which 
include provisions to ensure that the Federal agencies comply with the 
regulations under this part.


Sec. 670.320  What are the requirements for award of contracts and 
payments to Federal agencies?

    (a) The requirements of the Federal Property and Administrative 
Services Act of 1949, as amended; the Federal Grant and Cooperative 
Agreement Act of 1977; the Federal Acquisition Regulation (48 CFR 
Chapter 1); and the DOL Acquisition Regulation (48 CFR Chapter 29) 
apply to the award of contracts and to payments to Federal agencies.
    (b) Job Corps funding of Federal agencies that operate CCC's are 
made by a transfer of obligational authority from DOL to the respective 
operating agency.

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


Sec. 670.400  Who is eligible to participate in the Job Corps program?

    To be eligible to participate in the Job Corps, an individual must 
be:
    (a) At least 16 and not more than 24 years of age at the time of 
enrollment, except
    (1) There is no upper age limit for an otherwise eligible 
individual with a disability; and
    (2) Not more than 20% of individuals enrolled nationwide may be 
individuals who are aged 22 to 24 years old;
    (b) A low-income individual;
    (c) An individual who is facing one or more of the following 
barriers to education and employement:
    (1) Is basic skills deficient, as defined in WIA sec. 101(4); or
    (2) Is a school dropout; or
    (3) Is homeless, or a runaway, or a foster child; or
    (4) Is a parent; or
    (5) Requires additional education, vocational training, or 
intensive counseling and related assistance in order to participate 
successfully in regular schoolwork or to secure and hold meaningful 
employment; and
    (d) Meets the requirements of Sec. 670.420, if applicable.


Sec. 670.410  Are there additional factors which are considered in 
selecting an eligible applicant for enrollment?

    Yes, in accordance with procedures issued by the Secretary, an 
eligible applicant may be selected for enrollment, only if:
    (a) A determination is made, based on information relating to the 
background, needs and interests of the applicant, that the applicant's 
educational and vocational needs can best be met through the Job Corps 
program;
    (b) A determination is made that there is a reasonable expectation 
the applicant can participate successfully in group situations and 
activities, and is not likely to engage in actions that would 
potentially:
    (1) Prevent other students from receiving the benefit of the 
program;

[[Page 49454]]

    (2) Be incompatible with the maintenance of sound discipline; or
    (3) Impede satisfactory relationships between the center to which 
the student is assigned and surrounding local communities;
    (c) The applicant is made aware of the center's rules and what the 
consequences are for failure to observe the rules, as described in 
procedures issued by the Secretary;
    (d) The applicant passes a background check conducted according to 
procedures established by the Secretary. The background check must find 
that the applicant is not on probation, parole, under a suspended 
sentence or under the supervision of any agency as a result of court 
action or institutionalization, unless the court or appropriate agency 
certifies in writing that it will approve of the applicant's release 
from its supervision and that the applicant's release does not violate 
applicable laws and regulations. No one will be denied enrollment in 
Job Corps solely on the basis of contact with the criminal justice 
system. (WIA secs. 145(b)(1)(C) and 145(b)(2));
    (e) Suitable arrangements are made for the care of any dependent 
children for the proposed period of enrollment.


Sec. 670.420  Are there any special requirements for enrollment related 
to the Military Selective Service Act?

    (a) Yes, each male applicant 18 years of age or older must present 
evidence that he has complied with section 3 of the Military Selective 
Service Act (50 U.S.C. App. 451 et seq.) if required; and
    (b) When a male student turns 18 years of age, he must submit 
evidence to the center that he has complied with the requirements of 
the Military Selective Service Act (50 U.S.C. App. 451 et seq).


Sec. 670.430  What entities conduct outreach and admissions activities 
for the Job Corps program?

    The Regional Director makes arrangements with outreach and 
admissions agencies to perform Job Corps recruitment, screening and 
admissions functions according to standards and procedures issued by 
the Secretary. One-Stop Centers or partners, community action 
organizations, private for-profit and non-profit businesses, labor 
organizations, or other entities that have contact with youth over 
substantial periods of time and are able to offer reliable information 
about the needs of youth, conduct outreach and admissions activities. 
The Regional Director awards contracts for provision of outreach and 
screening services on a competitive basis in accordance with the 
requirements in Sec. 670.310.


Sec. 670.440  What are the responsibilities of outreach and admissions 
agencies?

    (a) Outreach and admissions agencies are responsible for:
    (1) Developing outreach and referral sources;
    (2) Actively seeking out potential applicants;
    (3) Conducting personal interviews with all applicants to identify 
their needs and eligibility status; and
    (4) Identifying youth who are interested and likely Job Corps 
participants.
    (b) Outreach and admissions agencies are responsible for completing 
all Job Corps application forms and determining whether applicants meet 
the eligibility and selection criteria for participation in Job Corps 
as provided in Secs. 670.400 and 670.410.
    (c) The Secretary may decide that determinations with regard to one 
or more of the eligibility criteria will be made by the Regional 
Director.


Sec. 670.450  How are applicants who meet eligibility and selection 
criteria assigned to centers?

    (a) Each applicant who meets the application and selection 
requirements of Secs. 670.400 and 670.410 is assigned to a center based 
on an assignment plan developed by the Secretary. The assignment plan 
identifies a target for the maximum percentage of students at each 
center who come from the State or region nearest the center, and the 
regions surrounding the center. The assignment plan is based on an 
analysis of:
    (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. If the appeal is denied by the outreach/
admissions contractor or the center, the person may appeal the decision 
in writing to the Regional Director within 60 days the date of the 
denial. The Regional Director will decide within 60 days whether to 
reverse or approve the appealed decision. The decision by the Regional 
Director is the Department's final decision.
    (b) If an applicant believes that he or she has been determined 
ineligible or not selected for enrollment based upon a factor 
prohibited by WIA section 188, the individual may proceed under the 
applicable DOL nondiscrimination regulations implementing WIA section 
188. These regulations may be found at 29 CFR part 37.
    (c) An applicant who is determined to be ineligible or a person who 
is denied enrollment must be referred to the appropriate One-Stop 
Center or other local service provider.


Sec. 670.480  At what point is an applicant considered to be enrolled 
in Job Corps?

    (a) To become enrolled as a Job Corps student, an applicant 
selected for enrollment must physically arrive at the assigned Job 
Corps center on the appointed date. However, applicants selected for 
enrollment who arrive at their assigned centers by government furnished 
transportation are considered to be enrolled on their dates of 
departure by such transportation.
    (b) Center operators must document the enrollment of new students 
according to procedures issued by the Secretary.

[[Page 49455]]

Sec. 670.490  How long may a student be enrolled in Job Corps?

    (a) Except as provided in paragraph (b) of this section, a student 
may remain enrolled in Job Corps for no more than two years.
    (b)(1) An extension of a student's enrollment may be authorized in 
special cases according to procedures issued by the Secretary; and
    (2) A student's enrollment in an advanced career training program 
may be extended in order to complete the program for a period not to 
exceed one year.

Subpart E--Program Activities and Center Operations


Sec. 670.500  What services must Job Corps centers provide?

    (a) Job Corps centers must provide:
    (1) Academic, vocational, employability and social skills training;
    (2) Work-based learning; and
    (3) Recreation, counseling and other residential support services.
    (b) In addition, centers must provide students with access to the 
core services described in WIA section 134(d)(2) and the intensive 
services described in WIA section 134(d)(3).


Sec. 670.505  What types of training must Job Corps centers provide?

    (a) Job Corps centers must provide basic education, vocational and 
social skills training. The Secretary provides curriculum standards and 
guidelines.
    (b) Each center must provide students with competency-based or 
individualized training in an occupational area that will best 
contribute to the students' opportunities for permanent long-term 
employment.
    (1) Specific vocational training programs offered by individual 
centers must be approved by the Regional Director according to policies 
issued by the Secretary.
    (2) Center industry councils described in Sec. 670.800 must review 
appropriate labor market information, identify employment opportunities 
in local areas where students will look for employment, determine the 
skills and education necessary for those jobs, and as appropriate, 
recommend changes in the center's vocational training program to the 
Secretary.
    (c) Each center must implement a system to evaluate and track the 
progress and achievements of each student at regular intervals.
    (d) Each center must develop a training plan that must be available 
for review and approval by the appropriate Regional Director.


Sec. 670.510  Are Job Corps center operators responsible for providing 
all vocational training?

    No, in order to facilitate students' entry into the workforce, the 
Secretary may contract with national business, union, or union-
affiliated organizations for vocational training programs at specific 
centers. Contractors providing such vocational training will be 
selected in accordance with the requirements of Sec. 670.310.


Sec. 670.515  What responsibilities do the center operators have in 
managing work-based learning?

    (a) The center operator must emphasize and implement work-based 
learning programs for students through center program activities, 
including vocational skills training, and through arrangements with 
employers. Work-based learning must be under actual working conditions 
and must be designed to enhance the employability, responsibility, and 
confidence of the students. Work-based learning usually occurs in 
tandem with students' vocational training.
    (b) The center operator must ensure that students are assigned only 
to workplaces that meet the safety standards described in Sec. 670.935.


Sec. 670.520  Are students permitted to hold jobs other than work-based 
learning opportunities?

    Yes, a center operator may authorize a student to participate in 
gainful leisure time employment, as long as the employment does not 
interfere with required scheduled activities.


Sec. 670.525  What residential support services must Job Corps center 
operators provide?

    Job Corps center operators must provide the following services 
according to procedures issued by the Secretary:
    (a) A quality living and learning environment that supports the 
overall training program and includes a safe, secure, clean and 
attractive physical and social environment, seven days a week, 24 hours 
a day;
    (b) An ongoing, structured counseling program for students;
    (c) Food service, which includes provision of nutritious meals for 
students;
    (d) Medical services, through provision or coordination of a 
wellness program which includes access to basic medical, dental and 
mental health services, as described in the Policy and Requirements 
Handbook, for all students from the date of enrollment until separation 
from the Job Corps program;
    (e) A recreation/avocational program;
    (f) A student leadership program and an elected student government; 
and
    (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.

[[Page 49456]]

Sec. 670.545  How does Job Corps ensure that students receive due 
process in disciplinary actions?

    The center operator must ensure that all students receive due 
process in disciplinary proceedings according to procedures developed 
by the Secretary. These procedures must include, at a minimum, center 
fact-finding and behavior review boards, a code of sanctions under 
which the penalty of separation from Job Corps might be imposed, and 
procedures for students to appeal a center's decision to discharge them 
involuntarily from Job Corps to a regional appeal board.


Sec. 670.550  What responsibilities do Job Corps centers have in 
assisting students with child care needs?

    (a) Job Corps centers are responsible for coordinating with 
outreach and admissions agencies to assist students with making 
arrangements for child care for their dependent children.
    (b) Job Corps centers may operate on center child development 
programs with the approval of the Secretary.


Sec. 670.555  What are the center's responsibilities in ensuring that 
students' religious rights are respected?

    (a) Centers must ensure that a student has the right to worship or 
not worship as he or she chooses.
    (b) 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.
    (d) Students who believe their religious rights have been violated 
may file complaints under the procedures set forth in 29 CFR part 37.


Sec. 670.560  Is Job Corps authorized to conduct pilot and 
demonstration projects?

    (a) Yes, the Secretary may undertake experimental, research and 
demonstration projects related to the Job Corps program according to 
WIA section 156.
    (b) The Secretary establishes policies and procedures for 
conducting such projects.
    (c) All studies and evaluations produced or developed with Federal 
funds become the property of the United States.

Subpart F--Student Support


Sec. 670.600  Is government-paid transportation provided to Job Corps 
students?

    Yes, Job Corps provides for the transportation of students between 
their homes and centers as described in policies and procedures issued 
by the Secretary.


Sec. 670.610  When are students authorized to take leaves of absence 
from their Job Corps centers?

    Job Corps students are eligible for annual leaves, emergency leaves 
and other types of leaves of absence from their assigned centers 
according to criteria and requirements issued by the Secretary. Center 
operators and other service providers must account for student leave 
according to procedures issued by the Secretary.


Sec. 670.620  Are Job Corps students eligible to receive cash 
allowances and performance bonuses?

    (a) Yes, according to criteria and rates established by the 
Secretary, Job Corps students receive cash living allowances, 
performance bonuses, and allotments for care of dependents, and 
graduates receive post-separation readjustment allowances and placement 
bonuses. The Secretary may provide former students with post-separation 
allowances.
    (b) In the event of a student's death, any amount due under this 
section is paid according to the provisions of 5 U.S.C. 5582 governing 
issues such as designation of beneficiary, order of precedence and 
related matters.


Sec. 670.630  Are student allowances subject to Federal Payroll Taxes?

    Yes, Job Corps student allowances are subject to Federal payroll 
tax withholding and social security taxes. Job Corps students are 
considered to be Federal employees for purposes of Federal payroll 
taxes. (WIA sec. 157(a)(2).)


Sec. 670.640  Are students provided with clothing?

    Yes, Job Corps students are provided cash clothing allowances and/
or articles of clothing, including safety clothing, when needed for 
their participation in Job Corps and their successful entry into the 
work force. Center operators and other service providers must issue 
clothing and clothing assistance to students according to rates, 
criteria, and procedures issued by the Secretary.

Subpart G--Placement and Continued Services


Sec. 670.700  What are Job Corps centers' responsibilities in preparing 
students for placement services?

    Job Corps centers must test and counsel students to assess their 
competencies and capabilities and determine their readiness for 
placement.


Sec. 670.710  What placement services are provided for Job Corps 
students?

    (a) Job Corps placement services focus on placing program graduates 
in:
    (1) Full-time jobs that are related to their vocational training 
and that pay wages that allow for self-sufficiency;
    (2) Higher education; or
    (3) Advanced training programs, including apprenticeship programs.
    (b) Placement service levels for students may vary, depending on 
whether the student is a graduate or a former student.
    (c) Procedures relating to placement service levels are issued by 
the Secretary.


Sec. 670.720  Who provides placement services?

    The One-Stop system must be used to the fullest extent possible in 
placing graduates and former students in jobs. Job Corps placement 
agencies provide placement services under a contract or 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,

[[Page 49457]]

including transition support and workplace counseling, must be provided 
to program graduates for 12 months after graduation.


Sec. 670.750  Who may provide continued services for graduates?

    Placement agencies, centers or other agencies, including One-Stop 
partners, may provide post-program services under a contract or other 
agreement with the Regional Director. In selecting a provider for 
continued services, priority is given to One-Stop partners. (WIA sec. 
148(d)).


Sec. 670.760  How will Job Corps coordinate with other agencies?

    (a) The Secretary issues guidelines for the National Office, 
Regional Offices, Job Corps centers and operational support providers 
to use in developing and maintaining cooperative relationships with 
other agencies and institutions, including law enforcement, educational 
institutions, communities, and other employment and training programs 
and agencies.
    (b) The Secretary develops polices and requirements to ensure 
linkages with the One-Stop delivery system to the greatest extent 
practicable, as well as with other Federal, State, and local programs, 
and youth programs funded under this title. These linkages enhance 
services to youth who face multiple barriers to employment and must 
include, where appropriate:
    (1) Referrals of applicants and students;
    (2) Participant assessment;
    (3) Pre-employment and work maturity skills training;
    (4) Work-based learning;
    (5) Job search, occupational, and basic skills training; and
    (6) Provision of continued services for graduates.

Subpart H--Community Connections


Sec. 670.800  How do Job Corps centers and service providers become 
involved in their local communities?

    (a) Job Corps representatives serve on Youth Councils operating 
under applicable Local Boards wherever geographically feasible.
    (b) Each Job Corps center must have a Business and Community 
Liaison designated by the director of the center to establish 
relationships with local and distant employers, applicable One-Stop 
centers and local boards, and members of the community according to 
procedures established by the Secretary. (WIA sec. 153(a).)
    (c) Each Job Corps center must implement an active community 
relations program.
    (d) Each Job Corps center must establish an industry advisory 
council, according to procedures established by the Secretary. The 
industry advisory council must include:
    (1) Distant and local employers;
    (2) Representatives of labor organizations (where present) and 
employees; and
    (3) Job Corps students and graduates.
    (e) A majority of the council members must be local and distant 
business owners, chief executives or chief operating officers of 
nongovernmental employers or other private sector employers, who have 
substantial management, hiring or policy responsibility and who 
represent businesses with employment opportunities in the local area 
and the areas to which students will return.
    (f) The council must work with Local Boards and must review labor 
market information to provide recommendations to the Secretary 
regarding the center's vocational training offerings, including 
identification of emerging occupations suitable for training. (WIA 
sec.154(b)(1).)
    (g) Job Corps is identified as a required One-Stop partner. 
Wherever practicable, Job Corps centers and operational support 
contractors must establish cooperative relationships and partnerships 
with One-Stop centers and other One-Stop partners, Local Boards, and 
other programs for youth.

Subpart I--Administrative and Management Provisions


Sec. 670.900  Are damages caused by students eligible for reimbursement 
under the Tort Claims Act?

    Yes, Students are considered Federal employees for purposes of the 
Tort Claims Act (28 U.S.C. 2671 et seq.). If a student is alleged to be 
involved in the damage, loss, or destruction of the property of others, 
or in causing personal injury to or the death of another individual(s), 
the injured person(s), or their agent may file a claim with the Center 
Director. The Director must investigate all of the facts, including 
accident and medical reports, and interview witnesses, and submit the 
claim for a decision to the Regional Solicitor's Office. All tort 
claims for $25,000 or more must be sent to the Associate Solicitor for 
Employee Benefits, U.S. Department of Labor, 200 Constitution Avenue, 
N.W., Washington, DC 20210.


Sec. 670.905  Are damages that occur to private parties at Job Corps 
Centers eligible for reimbursement under the Tort Claims Act?

    (a) Whenever there is loss or damage to persons or property, which 
is believed to have resulted from operation of a Job Corps center and 
to be a proper charge against the Federal Government, the owner(s) of 
the property, the injured person(s), or their agent may submit a claim 
for the damage to the Regional Solicitor. Claims must be filed no later 
than two years from the date of loss or damage. The Regional Solicitor 
will determine if the claim is valid under the Tort Claims Act. If the 
Regional Solicitor determines a claim is not valid under the Tort 
Claims Act, the Regional Solicitor must consider the facts and may 
still settle the claim, in an amount not to exceed $1,500.
    (b) The Job Corps may pay students for valid claims under the Tort 
Claims Act for lost, damaged, or stolen property, up to a maximum 
amount set by the Secretary, when the loss is not due to the negligence 
of the student. Students must file claims no later than six months from 
the date of loss. Students are compensated for losses including those 
that result from a natural disaster or those that occur when the 
student's property is in the protective custody of the Job Corps, such 
as when the student is AWOL. Claims must be filed with Job Corps 
regional offices. The regional office will promptly notify the student 
and the center of its determination.


Sec. 670.910  Are students entitled to Federal Employees Compensation 
Benefits (FECB)?

    (a) Job Corps students are considered Federal employees for 
purposes of the Federal Employees Compensation Act (FECA). (WIA sec. 
157(a)(3).)
    (b) Job Corps students may be entitled to Federal Employees 
Compensation Benefits as specified in WIA section 157.
    (c) Job Corps students must meet the same eligibility tests for 
FECA payments that apply to all other Federal employees. One of those 
tests is that the injury must occur ``in the performance of duty.'' 
This test is described in Sec. 670.915.


Sec. 670.915  When are residential students considered to be in the 
performance of duty?

    Residential students will be considered to be in the ``performance 
of duty'' at all times while:
    (a) They are on center under the supervision and control of Job 
Corps officials;
    (b) They are engaged in any authorized Job Corps activity;

[[Page 49458]]

    (c) They are in authorized travel status; or
    (d) They are engaged in any authorized offsite activity.


Sec. 670.920  When are non-resident students considered to be in the 
performance of duty?

    Non-resident students are considered ``in performance of duty'' as 
Federal employees when they are engaged in any authorized Job Corps 
activity, from the time they arrive at any scheduled center activity 
until they leave the activity. The standard rules governing coverage of 
Federal employees during travel to and from work apply. These rules are 
described in guidance issued by the Secretary.


Sec. 670.925  When are students considered to be not in the performance 
of duty?

    Students are considered to be not in the performance of duty when:
    (a) They are AWOL;
    (b) They are at home, whether on pass or on leave
    (c) They are engaged in an unauthorized offsite activity; or
    (d) They are injured or ill due to their own:
    (1) Willful misconduct;
    (2) Intent to cause injury or death to oneself or another; or
    (3) Intoxication or illegal use of drugs.


Sec. 670.930  How are FECA benefits computed?

    (a) FECA benefits for disability or death are computed using the 
entrance salary for a grade GS-2 as the student's monthly pay.
    (b) The provisions of 5 U.S.C. 8113 (a) and (b), relating to 
compensation for work injuries apply to students. Compensation for 
disability will not begin to accrue until the day following the date on 
which the injured student completes his or her Job Corps separation.
    (c) Whenever a student is injured, develops an occupationally 
related illness, or dies while in the performance of duty, the 
procedures in the DOL Employment Standards Administration regulations, 
at 20 CFR Chapter 1, must be followed. A thorough investigation of the 
circumstances and a medical evaluation must be completed and required 
forms must be timely filed by the center operator with the DOL Office 
of Workers' Compensation Programs.


Sec. 670.935  How are students protected from unsafe or unhealthy 
situations?

    (a) The Secretary establishes procedures to ensure that students 
are not required or permitted to work, be trained, reside in, or 
receive services in buildings or surroundings or under conditions that 
are unsanitary or hazardous. Whenever students are employed or in 
training for jobs, they must be assigned only to jobs or training which 
observe applicable Federal, State and local health and safety 
standards.
    (b) The Secretary develops procedures to ensure compliance with 
applicable DOL Occupational Safety and Health Administration 
regulations.


Sec. 670.940  What are the requirements for criminal law enforcement 
jurisdiction on center property?

    (a) All Job Corps property which would otherwise be under exclusive 
Federal legislative jurisdiction is considered under concurrent 
jurisdiction with the appropriate State and locality with respect to 
criminal law enforcement. Concurrent jurisdiction extends to all 
portions of the property, including housing and recreational 
facilities, in addition to the portions of the property used for 
education and training activities.
    (b) Centers located on property under concurrent Federal-State 
jurisdiction must establish agreements with Federal, State and local 
law enforcement agencies to enforce criminal laws.
    (c) The Secretary develops procedures to ensure that any searches 
of a student's person, personal area or belongings for unauthorized 
goods follow applicable right-to-privacy laws.


Sec. 670.945  Are Job Corps operators and service providers authorized 
to pay State or local taxes on gross receipts?

    (a) A private for-profit or a nonprofit Job Corps service provider 
is not liable, directly or indirectly, to any State or subdivision for 
any gross receipts taxes, business privilege taxes measured by gross 
receipts, or any similar taxes in connection with any payments made to 
or by such service provider for operating a center or other Job Corps 
program or activity. The service provider is not liable to any State or 
subdivision to collect or pay any sales, excise, use, or similar tax 
imposed upon the sale to or use by such deliverer of any property, 
service, or other item in connection with the operation of a center or 
other Job Corps program or activity. (WIA sec. 158(d).)
    (b) If a State or local authority compels a center operator or 
other service provider to pay such taxes, the center operator or 
service provider may pay the taxes with Federal funds, but must 
document and report the State or local requirement according to 
procedures issued by the Secretary.


Sec. 670.950  What are the financial management responsibilities of Job 
Corps center operators and other service providers?

    (a) Center operators and other service providers must manage Job 
Corps funds using financial management information systems that meet 
the specifications and requirements of the Secretary.
    (b) These financial management systems must:
    (1) Provide accurate, complete, and current disclosures of the 
costs of their Job Corps activities;
    (2) Ensure that expenditures of funds are necessary, reasonable, 
allocable and allowable in accordance with applicable cost principles;
    (3) Use account structures specified by the Secretary;
    (4) Ensure the ability to comply with cost reporting requirements 
and procedures issued by the Secretary; and
    (5) Maintain sufficient cost data for effective planning, 
monitoring, and evaluation of program activities and for determining 
the allowability of reported costs.


Sec. 670.955  Are center operators and service providers subject to 
Federal audits?

    (a) Yes, Center operators and service providers are subject to 
Federal audits.
    (b) The Secretary arranges for the survey, audit, or evaluation of 
each Job Corps center and service provider at least once every three 
years, by Federal auditors or independent public accountants. The 
Secretary may arrange for more frequent audits. (WIA sec. 159(b)(2).)
    (c) Center operators and other service providers are responsible 
for giving full cooperation and access to books, documents, papers and 
records to duly appointed Federal auditors and evaluators. (WIA sec. 
159(b)(1).)


Sec. 670.960  What are the procedures for management of student 
records?

    The Secretary issues guidelines for a system for maintaining 
records for each student during enrollment and for disposition of such 
records after separation.


Sec. 670.965  What procedures apply to disclosure of information about 
Job Corps students and program activities?

    (a) The Secretary develops procedures to respond to requests for 
information or records or other necessary disclosures pertaining to 
students.
    (b) DOL disclosure of Job Corps information must be handled 
according to the Freedom of Information Act and according to DOL 
regulations at 29 CFR part 70.
    (c) Job Corps contractors are not ``agencies'' for Freedom of 
Information

[[Page 49459]]

Act purposes. Therefore, their records are not subject to disclosure 
under the Freedom of Information Act or 29 CFR part 70.
    (d) The regulations at 29 CFR part 71 apply to a system of records 
covered by the Privacy Act of 1974 maintained by DOL or to a similar 
system maintained by a contractor, such as a screening agency, contract 
center operator, or placement agency on behalf of the Job Corps.


Sec. 670.970  What are the reporting requirements for center operators 
and operational support service providers?

    The Secretary establishes procedures to ensure the timely and 
complete reporting of necessary financial and program information to 
maintain accountability. Center operators and operational support 
service providers are responsible for the accuracy and integrity of all 
reports and data they provide.


Sec. 670.975  How is the performance of the Job Corps program assessed?

    The performance of the Job Corps program as a whole, and the 
performance of individual program components, is assessed on an ongoing 
basis, in accordance with the regulations in this part and procedures 
and standards, including a national performance measurement system, 
issued by the Secretary. Annual performance assessments are done for 
each center operator and other service providers, including screening 
and admissions and placement agencies.


Sec. 670.980  What are the indicators of performance for Job Corps?

    (a) At a minimum, the performance assessment system established 
under Sec. 670.975 will include expected levels of performance 
established for each of the indicators of performance contained in WIA 
section 159(c). These are:
    (1) The number of graduates and rate of graduation, analyzed by the 
type of vocational training received and the training provider;
    (2) The job placement rate of graduates into unsubsidized 
employment, analyzed by the vocational training received, whether or 
not the job placement is related to the training received, the 
vocational training provider, and whether the placement is made by a 
local or national service provider;
    (3) The average placement wage of graduates in training-related and 
non-training related unsubsidized jobs;
    (4) The average wage of graduates on the first day of employment 
and at 6 and 12 months following placement, analyzed by the type of 
vocational training received;
    (5) The number of and retention rate of graduates in unsubsidized 
employment after 6 and 12 months;
    (6) The number of graduates who entered unsubsidized employment for 
32 hours per week or more, for 20 to 32 hours per week, and for less 
than 20 hours per week.
    (7) The number of graduates placed in higher education or advanced 
training; and
    (8) The number of graduates who attained job readiness and 
employment skills.
    (b) The Secretary issues the expected levels of performance for 
each indicator. To the extent practicable, the levels of performance 
will be continuous and consistent from year to year.


Sec. 670.985  What happens if a center operator, screening and 
admissions contractor or other service provider fails to meet the 
expected levels of performance?

    (a) The Secretary takes appropriate action to address performance 
issues through a specific performance plan.
    (b) The plan may include the following actions:
    (1) Providing technical assistance to a Job Corps center operator 
or support service provider, including a screening and admissions 
contractor;
    (2) Changing the management staff of a center;
    (3) Changing the vocational training offered at a center;
    (4) Contracting out or recompeting the contract for a center or 
operational support service provider;
    (5) Reducing the capacity of a Job Corps center;
    (6) Relocating a Job Corps center; or
    (7) Closing a Job Corps center. (WIA sec. 159 (f).)


Sec. 670.990  What procedures are available to resolve complaints and 
disputes?

    (a) Each Job Corps center operator and service provider must 
establish and maintain a grievance procedure for filing complaints and 
resolving disputes from applicants, students and/or other interested 
parties about its programs and activities. A hearing on each complaint 
or dispute must be conducted within 30 days of the filing of the 
complaint or dispute. A decision on the complaint must be made by the 
center operator or service provider, as appropriate, within 60 days 
after the filing of the complaint, and a copy of the decision must be 
immediately served, by first-class mail, on the complainant and any 
other party to the complaint. Except for complaints under Sec. 670.470 
or complaints alleging fraud or other criminal activity, complaints may 
be filed within one year of the occurrence that led to the complaint.
    (b) The procedure established under paragraph (a) of this section 
must include procedures to process complaints alleging violations of 
WIA section 188, consistent with DOL nondiscrimination regulations 
implementing WIA section 188 at 29 CFR part 37 and Sec. 670.995.


Sec. 670.991  How does Job Corps ensure that complaints or disputes are 
resolved in a timely fashion?

    (a) If a complaint is not resolved by the center operator or 
service provider in the time frames described in Sec. 670.990, the 
person making the complaint may request that the Regional Director 
determine whether reasonable cause exists to believe that the Act or 
regulations for this part of the Act have been violated. The request 
must be filed with the Regional Director within 60 days from the date 
that the center operator or service provider should have issued the 
decision.
    (b) Following the receipt of a request for review under paragraph 
(a) of this section, the Regional Director must determine within 60 
days whether there has been a violation of the Act or the WIA 
regulations. If the Regional Director determines that there has been a 
violation of the Act or Regulations, (s)he may direct the operator or 
service provider to remedy the violation or direct the service provider 
to issue a decision to resolve the dispute according to the service 
provider's grievance procedures. If the service provider does not 
comply with the Regional Director's decision within 30 days, the 
Regional Director may impose a sanction on the center operator or 
service provider for violating the Act or regulations, and/or for 
failing to issue a decision. Decisions imposing sanctions upon a center 
operator or service provider may be appealed to the DOL Office of 
Administrative Law Judges under 20 CFR 667.800 or 667.840.


Sec. 670.992  How does Job Corps ensure that centers or other service 
providers comply with the Act and the WIA regulations?

    (a) If DOL receives a complaint or has reason to believe that a 
center or other service provider is failing to comply with the 
requirements of the Act or regulations, the Regional Director must 
investigate the allegation and determine within 90 days after receiving 
the complaint or otherwise learning of the alleged violation, whether 
such allegation or complaint is true.
    (b) As a result of such a determination, the Regional Director may:

[[Page 49460]]

    (1) Direct the center operator or service provider to handle a 
complaint through the grievance procedures established under 
Sec. 670.990; or
    (2) Investigate and determine whether the center operator or 
service provider is in compliance with the Act and regulations. If the 
Regional Director determines that the center or service provider is not 
in compliance with the Act or regulations, the Regional Director may 
take action to resolve the complaint under Sec. 670.991(b), or will 
report the incident to the DOL Office of the Inspector General, as 
described in 20 CFR 667.630.


Sec. 670.993  How does Job Corps ensure that contract disputes will be 
resolved?

    A dispute between DOL and a Job Corps contractor will be handled 
according to the Contract Disputes Act and applicable regulations.


Sec. 670.994  How does Job Corps resolve disputes between DOL and other 
Federal Agencies?

    Disputes between DOL and a Federal Agency operating a center will 
be handled according to the interagency agreement with the agency which 
is operating the center.


Sec. 670.995  What DOL equal opportunity and nondiscrimination 
regulations apply to Job Corps?

    Nondiscrimination requirements, procedures, complaint processing, 
and compliance reviews are governed by, as applicable, provisions of 
the following Department of Labor regulations:
    (a) Regulations implementing WIA section 188 for programs receiving 
Federal financial assistance under WIA found at 29 CFR part 37.
    (b) 29 CFR part 33 for programs conducted by the Department of 
Labor; and
    (c) 41 CFR Chapter 60 for entities that have a Federal government 
contract.

PART 671--NATIONAL EMERGENCY GRANTS FOR DISLOCATED WORKERS

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?

    We use funds reserved under WIA section 132(a)(2)(A) to provide 
financial assistance to eligible applicant for grants under WIA section 
173.


Sec. 671.110  What are major economic dislocations or other events 
which may qualify for a national emergency grant?

    These include:
    (a) Plant closures;
    (b) Mass layoffs affecting 50 or more workers at a single site of 
employment;
    (c) Closures and realignments of military installations;
    (d) Multiple layoffs in a single local community that have 
significantly increased the total number of unemployed individuals in a 
community;
    (e) Emergencies or natural disasters, as defined in paragraphs (1) 
and (2) respectively, of section 102 of the Robert T. Stafford Disaster 
Relief and Emergency Assistance Act (42 U.S.C. 5122(1) and (2)) which 
have been declared eligible for public assistance by the Federal 
Emergency Management Agency (FEMA); and
    (f) Other events, as determined by the Secretary.


Sec. 671.120  Who is eligible to apply for national emergency grants?

    (a) For projects within a State. A State, a Local Board or another 
entity determined to be appropriate by the Governor of the State in 
which the project is located may apply for a national emergency grant. 
Also, Indian tribes, tribal organizations, Alaska Native entities, 
Indian-controlled organizations serving Indians, or Native Hawaiian 
organizations which are recipients of funds under section 166 of the 
Act (Indian and Native American Programs) may apply for a national 
emergency grant.
    (b) For inter-State projects. Consortia of States and/or Local 
Boards may apply. Other private entities which can demonstrate, in the 
application for assistance, that they possess unique capabilities to 
effectively respond to the circumstances of the major economic 
dislocation(s) covered in the application may apply.
    (c) Other entities. The Secretary may consider applications from 
other entities, to ensure that appropriate assistance is provided in 
response to major economic dislocations.


Sec. 671.125  What are the requirements for submitting applications for 
national emergency grants?

    We publish instructions for submitting applications for National 
Emergency Grants in the Federal Register. The instructions specify 
application procedures, selection criteria and the approval process.


Sec. 671.130  When should applications for national emergency grants be 
submitted to the Department?

    (a) Applications for national emergency grants to respond to mass 
layoffs and plant closures may be submitted to the Department as soon 
as:
    (1) The State receives a notification of a mass layoff or a closure 
as a result of a WARN notice, a general announcement or some other 
means determined by the Governor to be sufficient to respond;
    (2) Rapid response assistance has been initiated; and
    (3) A determination has been made, in collaboration with the 
applicable Local Board(s) and chief elected official(s), that State and 
local formula dislocated worker funds are inadequate to provide the 
level of services needed by the workers being laid off.
    (b) An eligible entity may apply for a national emergency grant at 
any time during the year.
    (c) Applications for national emergency grants to respond to a 
declared emergency or natural disaster as described in Sec. 671.110(e), 
cannot be considered until FEMA has declared that the affected area is 
eligible for disaster-related public assistance.


Sec. 671.140  What are the allowable activities and what dislocated 
workers may be served under national emergency grants?

    (a) National emergency grants may provide adjustment assistance for

[[Page 49461]]

eligible dislocated workers, described at WIA section 173(c)(2) or 
(d)(2).
    (b) Adjustment assistance includes the core, intensive, and 
training services authorized at WIA sections 134(d) and 173. The scope 
of services to be provided in a particular project are negotiated 
between the Department and the grantee, taking into account the needs 
of the target population covered by the grant. The scope of services 
may be changed through grant modifications, if necessary.
    (c) National emergency grants may provide for supportive services 
to help workers who require such assistance to participate in 
activities provided for in the grant. Needs-related payments, in 
support of other employment and training assistance, may be available 
for the purpose of enabling dislocated workers who are eligible for 
such payments to participate in programs of training services. 
Generally, the terms of a grant must be consistent with Local Board 
policies governing such financial assistance with formula funds 
(including the payment levels and duration of payments). However, the 
terms of the grant agreement may diverge from established Local Board 
policies, in the following instances:
    (1) If unemployed dislocated workers served by the project are not 
able to meet the 13 or 8 weeks enrollment in training requirement at 
WIA section 134(e)(3)(B) because of the lack of formula or emergency 
grant funds in the State or local area at the time of dislocation, such 
individuals may be eligible for needs-related payments if they are 
enrolled in training by the end of the 6th week following the date of 
the emergency grant award;
    (2) Trade-impacted workers who are not eligible for trade 
readjustment assistance under NAFTA-TAA may be eligible for needs-
related payments under a national emergency grant if the worker is 
enrolled in training by the end of the 16th week following layoff; and
    (3) Under other circumstances as specified in the national 
emergency grant application guidelines.
    (d) A national emergency grant to respond to a declared emergency 
or natural disaster, as defined at Sec. 671.110(e), may provide short-
term disaster relief employment for:
    (1) Individuals who are temporarily or permanently laid off as a 
consequence of the disaster;
    (2) Dislocated workers; and
    (3) Long-term unemployed individuals.
    (e) Temporary employment assistance is authorized on disaster 
projects that provide food, clothing, shelter and other humanitarian 
assistance for disaster victims; and on projects that perform 
demolition, cleaning, repair, renovation and reconstruction of damaged 
and destroyed structures, facilities and lands located within the 
disaster area. For such temporary jobs, each eligible worker is limited 
to no more than six months of employment for each single disaster. The 
amounts, duration and other limitations on wages will be negotiated for 
each grant.
    (f) Additional requirements that apply to national emergency 
grants, including natural disaster grants, are contained in the 
application instructions.


Sec. 671.150  How do statutory and workflex waivers apply to national 
emergency grants?

    (a) State and Local Board grantees may request and we may approve 
the application of existing general statutory or regulatory waivers and 
workflex waivers to a National Emergency Grant award. The application 
for grant funds must describe any statutory waivers which the applicant 
wishes to apply to the project that the State and/or Local Board, as 
applicable, have been granted under its waiver plan, or that the State 
has approved for implementation in the applicable local area under 
workflex waivers. We will consider such requests as part of the overall 
application review and decision process.
    (b) If, during the operation of the project, the grantee wishes to 
apply a waiver not identified in the application, the grantee must 
request a modification which includes the provision to be waived, the 
operational barrier to be removed and the effect upon the outcome of 
the project.


Sec. 671.160  What rapid response activities are required before a 
national emergency grant application is submitted?

    (a) Rapid response is a required Statewide activity under WIA 
section 134(a)(2)(A), to be carried out by the State or its designee in 
collaboration with the Local Board(s) and chief elected official(s). 
Under 20 CFR 665.310, rapid response encompasses, among other 
activities, an assessment of the general needs of the affected workers 
and the resources available to them.
    (b) In accordance with national emergency grant application 
guidelines published by the Department, each applicant must demonstrate 
that:
    (1) The rapid response activities described in 20 CFR 665.310 have 
been initiated and carried out, or are in the process of being carried 
out;
    (2) State and local funds, including those made available under 
section 132(b)(2)(B) of the Act, have been used to initiate appropriate 
services to the eligible workers;
    (3) There is a need for additional funds to effectively respond to 
the assistance needs of the workers and, in the case of declared 
emergencies and natural disasters, the community; and
    (4) The application has been developed by or in conjunction with 
the Local Board(s) and chief elected official(s) of the local area(s) 
in which the proposed project is to operate.


Sec. 671.170  What are the program and administrative requirements that 
apply to national emergency grants?

    (a) In general, the program requirements and administrative 
standards set forth at 20 CFR parts 663 and 667 will apply.
    (b) Exceptions include:
    (1) Funds provided in response to a natural disaster may be used 
for temporary job creation in areas declared eligible for public 
assistance by FEMA, subject to the limitations of WIA section 173(d), 
this part and the application guidelines issued by the Department;
    (2) National emergency grant funds may be used to pay an 
appropriate level of administrative costs based on the design and 
complexity of the project. We will negotiate administration costs with 
the applicant as part of the application review and grant award and 
modification processes;
    (3) The period of availability for expenditure of funds under a 
national emergency grant is specified in the grant agreement.
    (4) We may establish supplemental reporting, monitoring and 
oversight requirements for national emergency grants. The requirements 
will be identified in the grant application instructions or the grant 
document.
    (5) We may negotiate and fund projects under terms other than those 
specified in this part where it can be clearly demonstrated that such 
adjustments will achieve a greater positive benefit for the workers 
and/or communities being assisted.

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. The subpart heading to subpart A is revised to read as follows:

[[Page 49462]]

Subpart A--Employment Service Operations.


Sec. 652.1  [Amended]

    3. In Sec. 652.1, the definition of State Job Training Coordinating 
Council (SJTCC) is removed.
    4. Section 652.5 is revised to read as follows:


Sec. 652.5  Services authorized.

    The sums allotted to each State under section 6 of the Act must be 
expended consistent with an approved plan under 20 CFR 661.220 through 
661.240 and Secs. 652.211 through 652.214. At a minimum, each State 
shall provide the basic labor exchange elements at Sec. 652.3.
    5. Section 652.8 is amended as follows:
    a. in paragraph (a) remove the citation ``41 CFR part 29-70'' and 
add in its place the citation ``29 CFR part 97, Uniform Administrative 
Requirements for Grants and Cooperative Agreements to State and Local 
Governments,'', and remove the citation ``41 CFR. part 1-15.7'' and add 
in its place the citation ``OMB Circular A-87 (Revised)''.;
    b. in paragraph (d)(2) remove the citation ``41 CFR part 29-70'' 
and add in its place the citation ``29 CFR part 97, Uniform 
Administrative Requirements for Grants and Cooperative Agreements to 
State and Local Governments,'', and remove the citation ``41 CFR 1-
15.7'' and add in its place the citation ``OMB Circular A-87 
(Revised)'', and remove the citation ``41 CFR 29-70.215'' and add in 
its place the citation ``29 CFR 97.32(g)';
    c. in paragraph (d)(6) introductory text, remove the citation ``41 
CFR 1-15.711-13 and 711-10'' and add in its place the citation ``OMB 
Circular A-87 (Revised)'';
    d. in paragraph (d)(6)(ii) remove the citation ``41 CFR 1-15.711-13 
and 711-10'' and add in its place the citation ``OMB Circular A-87 
(Revised)'';
    e. in paragraph (d)(6)(iii) remove the citation ``41 CFR 1-15.711-
13 and 1-15.711-10'' and add in its place the citation ``OMB Circular 
A-87 (Revised)'';
    f. in paragraph (d)(6)(iv) remove the citation ``41 CFR 1-15.711-13 
and 1-15.711-10'' and add in its place the citation ``OMB Circular A-87 
(Revised)'';
    g. in paragraph (j)(4) remove the citation ``29 CFR parts 1627 and 
32'' and add in its place the citation ``29 CFR part 32 and 29 CFR 
1627.3(b)(iv).''
    h. paragraph (j)(1) is revised to read as follows:


Sec. 652.8  Administrative provisions.

* * * * *
    (j) * * *
    (1) Assure that no individual be excluded from participation in, 
denied the benefits of, subjected to discrimination under, or denied 
employment in the administration or in connection with any services or 
activities authorized under the Act in violation of any applicable 
nondiscrimination law, including laws prohibiting discrimination on the 
basis of age, race, sex, color, religion, national origin, disability, 
political affiliation or belief. All complaints alleging discrimination 
shall be filed and processed according to the procedures in the 
applicable DOL nondiscrimination regulations.
* * * * *
    6. Subpart C is revised 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 of the 
One-Stop service delivery system?
652.203  Who is responsible for funds authorized under the Act in 
the workforce investment system?
652.204  Must funds authorized under section 7(b) of the Act (the 
Governor's reserve) flow through the One-Stop delivery system?
652.205  May funds authorized under the Act be used to supplement 
funding for labor exchange programs authorized under separate 
legislation?
652.206  May a State use funds authorized under the Act to provide 
``core services'' and ``intensive services'' as defined in WIA?
652.207  How does a State meet the requirement for universal access 
to services provided under the Act?
652.208  How are core services and intensive services related to the 
methods of service delivery described in Sec. 652.207(b)(2)?
652.209  What are the requirements under the Act for providing 
reemployment services and other activities to referred UI claimants?
652.210  What are the Act's requirements for administration of the 
work test and assistance to UI claimants?
652.211  What are State planning requirements under the Act?
652.212  When should a State submit modifications to the five-year 
plan?
652.213  What information must a State include when the plan is 
modified?
652.214  How often may a State submit modifications to the plan?
652.215  Do any provisions in WIA change the requirement that State 
merit-staff employees must deliver services provided under the Act?
652.216  May the One-Stop operator provide guidance to State merit-
staff employees in accordance with the Act?

Subpart C--Wagner-Peyser Act Services 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 at 
subpart A of this part and section 2 of the Act apply to this subpart.


Sec. 652.201  What is the role of the State agency in the One-Stop 
delivery system?

    (a) The role of the State agency in the One-Stop delivery system is 
to ensure the delivery of services authorized under section 7(a) of the 
Act. The State agency is a required One-Stop partner in each local One-
Stop delivery system and is subject to the provisions relating to such 
partners that are described at 20 CFR part 662.
    (b) Consistent with those provisions, the State agency must:
    (1) Participate in the One-Stop delivery system in accordance with 
section 7(e) of the Act;
    (2) Be represented on the Workforce Investment Boards that oversee 
the local and State One-Stop delivery system and be a party to the 
Memorandum of Understanding, described at 20 CFR 662.300, addressing 
the operation of the One-Stop delivery system; and
    (3) Provide these services as part of the One-Stop delivery system.


Sec. 652.202  May local Employment Service Offices exist outside of the 
One-Stop service delivery system?

    (a) No, local Employment Service Offices may not exist outside of 
the One-Stop service delivery system.
    (b) However, local Employment Service Offices may operate as 
affiliated sites, or through electronically or technologically linked 
access points as part of the One-Stop delivery system, provided the 
following conditions are met:
    (1) All labor exchange services are delivered as a part of the 
local One-Stop delivery system in accordance with section 7(e) of the 
Act and Sec. 652.207(b);
    (2) The services described in paragraph (b)(1) of this section are 
available in at least one comprehensive physical center, as specified 
in 20 CFR 662.100, from which job seekers and employers can access 
them; and

[[Page 49463]]

    (3) The Memorandum of Understanding between the State agency local 
One-Stop partner and the Local Workforce Investment Board meets the 
requirements of 20 CFR 662.300.


Sec. 652.203  Who is responsible for funds authorized under the Act in 
the workforce investment system?

    The State agency retains responsibility for all funds authorized 
under the Act, including those funds authorized under section 7(a) 
required for providing the services and activities delivered as part of 
the One-Stop delivery system.


Sec. 652.204  Must funds authorized under section 7(b) of the Act (the 
Governor's reserve) flow through the One-Stop delivery system?

    No, these funds are reserved for use by the Governor for the three 
categories of activities specified in section 7(b) of the Act. However, 
these funds may flow through the One-Stop delivery system.


Sec. 652.205  May funds authorized under the Act be used to supplement 
funding for labor exchange programs authorized under separate 
legislation?

    (a) Section 7(c) of the Act enables States to use funds authorized 
under sections 7(a) or 7(b) of the Act to supplement funding of any 
workforce activity carried out under WIA.
    (b) Funds authorized under the Act may be used under section 7(c) 
to provide additional funding to other activities authorized under WIA 
if:
    (1) The activity meets the requirements of the Act, and its own 
requirements;
    (2) The activity serves the same individuals as are served under 
the Act;
    (3) The activity provides services that are coordinated with 
services under the Act; and
    (4) The funds supplement, rather than supplant, funds provided from 
non-Federal sources.


Sec. 652.206  May a State use funds authorized under the Act to provide 
``core services'' and ``intensive services'' as defined in WIA?

    Yes, funds authorized under section 7(a) of the Act must be used to 
provide core services, as defined at section 134(d)(2) of WIA and 
discussed at 20 CFR 663.150, and may be used to provide intensive 
services as defined at WIA section 134(d)(3)(C) and discussed at 20 CFR 
663.200. Funds authorized under section 7(b) of the Act may be used to 
provide core or intensive services. Core and intensive services must be 
provided consistent with the requirements of the Act.


Sec. 652.207  How does a State meet the requirement for universal 
access to services provided under the Act?

    (a) A State has discretion in how it meets the requirement for 
universal access to services provided under the Act. In exercising this 
discretion, a State must meet the Act's requirements.
    (b) These requirements are:
    (1) Labor exchange services must be available to all employers and 
job seekers, including unemployment insurance (UI) claimants, veterans, 
migrant and seasonal farmworkers, and individuals with disabilities;
    (2) The State must have the capacity to deliver labor exchange 
services to employers and job seekers, as described in the Act, on a 
Statewide basis through:
    (i) Self-service;
    (ii) Facilitated self-help service; and
    (iii) Staff-assisted service;
    (3) In each local workforce investment area, in at least one 
comprehensive physical center, staff funded under the Act must provide 
core and applicable intensive services including staff-assisted labor 
exchange services; and
    (4) Those labor exchange services provided under the Act in a local 
workforce investment area must be described in the Memorandum of 
Understanding (MOU).


Sec. 652.208  How are core services and intensive services related to 
the methods of service delivery described in Sec. 652.207(b)(2)?

    Core services and intensive services may be delivered through any 
of the applicable three methods of service delivery described in 
Sec. 652.207(b)(2). These methods are:
    (a) Self-service;
    (b) Facilitated self-help service; and
    (c) Staff-assisted service.


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

    (a) In accordance with section 3(c)(3) of the Act, the State 
agency, as part of the One-Stop delivery system, must provide 
reemployment services to UI claimants for whom such services are 
required as a condition for receipt of UI benefits. Services must be 
provided to the extent that funds are available and must be appropriate 
to the needs of UI claimants who are referred to reemployment services 
under any Federal or State UI law.
    (b) The State agency must also provide other activities, including:
    (1) Coordination of labor exchange services with the provision of 
UI eligibility services as required by section 5(b)(2) of the Act;
    (2) Administration of the work test and provision of job finding 
and placement services as required by section 7(a)(3)(F) of the Act.


Sec. 652.210  What are the Act's requirements for administration of the 
work test and assistance to UI claimants?

    (a) State UI law or rules establish the requirements under which UI 
claimants must register and search for work in order to fulfill the UI 
work test requirements.
    (b) Staff funded under the Act must assure that:
    (1) UI claimants receive the full range of labor exchange services 
available under the Act that are necessary and appropriate to 
facilitate their earliest return to work;
    (2) UI claimants requiring assistance in seeking work receive the 
necessary guidance and counseling to ensure they make a meaningful and 
realistic work search; and
    (3) UI program staff receive information about UI claimants' 
ability or availability for work, or the suitability of work offered to 
them.


Sec. 652.211  What are State planning requirements under the Act?

    The State agency designated to administer funds authorized under 
the Act must prepare for submission by the Governor, the portion of the 
five-year State Workforce Investment Plan describing the delivery of 
services provided under the Act in accordance with WIA regulations at 
20 CFR 661.220. The State Plan must contain a detailed description of 
services that will be provided under the Act, which are adequate and 
reasonably appropriate for carrying out the provisions of the Act, 
including the requirements of section 8(b) of the Act.


Sec. 652.212  When should a State submit modifications to the five-year 
plan?

    (a) A State may submit modifications to the five-year plan as 
necessary during the five-year period, and must do so in accordance 
with the same collaboration, notification, and other requirements that 
apply to the original plan. Modifications are likely to be needed to 
keep the strategic plan a viable and living document over its five-year 
life.
    (b) That portion of the plan addressing the Act must be updated to 
reflect any reorganization of the State agency designated to deliver 
services under the Act, any change in service delivery strategy, any 
change in levels of performance when performance goals are not met, or 
any change in services delivered by State merit-staff employees.

[[Page 49464]]

Sec. 652.213  What information must a State include when the plan is 
modified?

    A State must follow the instructions for modifying the strategic 
five-year plan in 20 CFR 661.230.


Sec. 652.214  How often may a State submit modifications to the plan?

    A State may modify its plan, as often as needed, as changes occur 
in Federal or State law or policies, Statewide vision or strategy, or 
if changes in economic conditions occur.


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

    No, the Secretary requires that labor exchange services provided 
under the authority of the Act, including services to veterans, be 
provided by State merit-staff employees. This interpretation is 
authorized by and consistent with the provisions in sections 3(a) and 
5(b) of the Act and the Intergovernmental Personnel Act (42 U.S.C. 4701 
et seq.). The Secretary has and has exercised the legal authority under 
section 3(a) of the Act to set additional staffing standards and 
requirements and to conduct demonstrations to ensure the effective 
delivery of services provided under the Act. No additional 
demonstrations will be authorized.


Sec. 652.216  May the One-Stop operator provide guidance to State 
merit-staff employees in accordance with the Act?

    Yes, the One-Stop delivery system envisions a partnership in which 
Wagner-Peyser Act labor exchange services are coordinated with other 
activities provided by other partners in a One-Stop setting. As part of 
the local Memorandum of Understanding, the State agency, as a One-Stop 
partner, may agree to have staff receive guidance from the One-Stop 
operator regarding the provision of labor exchange services. Personnel 
matters, including compensation, personnel actions, terms and 
conditions of employment, performance appraisals, and accountability of 
State merit-staff employees funded under the Act, remain under the 
authority of the State agency. The guidance given to employees must be 
consistent with the provisions of the Act, the local Memorandum of 
Understanding, and applicable collective bargaining agreements.

[FR Doc. 00-19985 Filed 8-10-00; 8:45 am]
BILLING CODE 4510-30-P