[Federal Register Volume 68, Number 44 (Thursday, March 6, 2003)]
[Rules and Regulations]
[Pages 10932-10937]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-5271]



[[Page 10931]]

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Part IX





Department of Labor





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Employment and Training Administration



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20 CFR Part 625



Disaster Unemployment Assistance Program; Final Rule

  Federal Register / Vol. 68, No. 44 / Thursday, March 6, 2003 / Rules 
and Regulations  

[[Page 10932]]


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DEPARTMENT OF LABOR

Employment and Training Administration

20 CFR Part 625

RIN: 1205-AB31


Disaster Unemployment Assistance Program

AGENCY: Employment and Training Administration, Department of Labor.

ACTION: Final rule.

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SUMMARY: The Employment and Training Administration (ETA) of the 
Department of Labor (Department) is issuing this final rule to clarify 
eligibility for disaster unemployment assistance (DUA) in the wake of 
the major disasters declared as a result of the terrorist attacks of 
September 11, 2001. The Department undertook emergency rulemaking and 
published an interim final rule on November 13, 2001, that was 
effective upon publication and which included a post-publication 
comment period to provide an opportunity for public participation in 
this rulemaking. This final rule takes into account the comments that 
were received.

DATES: The interim rule is adopted as final, effective March 6, 2003, 
except for amendments to Sec. Sec.  625.5(c)(2) and (c)(3) which will 
be effective April 7, 2003.

FOR FURTHER INFORMATION CONTACT: Betty Castillo, Division Chief, 
Division of Unemployment Insurance Operations, Office of Workforce 
Security, Employment and Training Administration (ETA), U.S. Department 
of Labor, 200 Constitution Avenue, NW., Room S-4231, Washington, DC 
20210. Telephone: (202) 693-3209 (this is not a toll-free number); 
facsimile: (202) 693-3229; e-mail: [email protected].

SUPPLEMENTARY INFORMATION:

I. The Disaster Unemployment Assistance Program

    Section 410(a) of the Robert T. Stafford Disaster Relief and 
Emergency Assistance Act (Stafford Act) (42 U.S.C. 5177(a)) sets forth 
the framework of the Disaster Unemployment Assistance (DUA) Program. 
The President is authorized by section 410(a) of the Stafford Act to 
provide to any individual who is unemployed as a result of a major 
disaster declared by the President under the Stafford Act ``such 
benefit assistance as he deems appropriate while such individual is 
unemployed for the weeks of such unemployment with respect to which the 
individual is not entitled to any other unemployment compensation . . . 
or waiting period credit.'' Section 410(a) provides that DUA is to be 
furnished to individuals for no longer than 26 weeks after the major 
disaster is declared. (Pub. L. 107-154 amended section 410(a) of the 
Stafford Act to extend to 39 weeks the availability of assistance to 
individuals unemployed as a result of the terrorist attacks of 
September 11, 2001.) Furthermore, for any week of unemployment, a DUA 
payment (a type of unemployment compensation (UC)) is not to exceed the 
maximum weekly benefit amount authorized under the applicable state UC 
law, as specified in the Department's DUA regulations implementing 
section 410(a) of the Act.
    The Department operates the DUA program under a delegation of 
authority (51 FR 4988, February 10, 1986) to the Secretary of Labor 
from the Director of the Federal Emergency Management Agency (FEMA). 
The Secretary of Labor has promulgated and published regulations for 
the DUA program at part 625 of title 20 of the Code of Federal 
Regulations. The DUA Program is administered by the states in 
accordance with an agreement each state has signed with the Secretary 
of Labor.

II. Explanation of the Interim Final Rule

    On November 13, 2001 (66 FR 56960), the Department added, at Sec.  
625.5(c), a definition of the phrase ``unemployment is a direct result 
of the major disaster,'' used in Sec.  625.5(a)(1) and (b)(1) for 
determining whether a worker's or self-employed individual's 
unemployment is caused by a major disaster. Section 410(a) of the 
Stafford Act provides, in pertinent part, that the President is 
authorized to provide benefit assistance to any individual ``unemployed 
as a result of a major disaster.'' The Department has consistently 
interpreted this phrase in its regulations as requiring, for DUA 
eligibility, that the individual's ``unemployment is a direct result of 
the major disaster.'' However, that phrase had never been defined in 
the Department's regulations. (Note that paragraphs (a)(2)-(a)(5) and 
(b)(2)-(b)(4) of Sec.  625.5 also provide for other circumstances where 
an individual's unemployment is caused by a major disaster. However, 
these provisions are not relevant here.)
    The terrorist attacks of September 11, 2001, resulting in 
declarations of major disasters in New York City and Arlington County, 
Virginia, were of catastrophic proportions. They presented a number of 
situations the regulations did not contemplate, such as the extended 
closure of Reagan National Airport. In order to address these types of 
situations, the Department defined the phrase ``unemployment is a 
direct result of the major disaster'' to clarify eligibility. By 
defining the phrase ``unemployment is a direct result of the major 
disaster,'' the Department ensured greater uniformity in applying the 
standard. This is consistent with the first and second rules of 
construction of Sec.  625.1(b) and (c) of the DUA regulations, which 
provide that sections 410 and 423 of the Stafford Act and the 
implementing regulations must be construed liberally to carry out the 
purposes of the Act and to assure, insofar as possible, the uniform 
interpretation and application of the DUA provisions of the Act 
throughout the United States.

Definition of ``Unemployment Is a Direct Result of the Major Disaster''

    In the interim final rule, the Department interpreted the phrase 
``unemployment is a direct result of the major disaster'' under 
paragraphs (a)(1) and (b)(1) of Sec.  625.5 to mean that an 
individual's unemployment must be an immediate result of the disaster 
itself, and not the result of a longer chain of events precipitated or 
exacerbated by the major disaster. This rule also clarified that an 
individual's unemployment is a direct result of the major disaster if 
the unemployment resulted from: the physical damage or destruction of 
the work site; the physical inaccessibility of the work site due to a 
federal government closure of the work site, in immediate response to 
the major disaster; or lack of work, or loss of revenues, provided that 
the employer, or the business in the case of a self-employed 
individual, prior to the disaster, received at least a majority of its 
revenue or income from either an entity damaged or destroyed in the 
disaster, or an entity closed by the federal government in immediate 
response to the disaster. This rule simply sets forth a definition for 
determining whose unemployment is a direct result of a major disaster.
    In the preamble discussion of the interim final rule, the 
Department recognized that the terrorist attacks of September 11 had a 
``ripple effect'' throughout the economy, and that many businesses 
nationwide suffered serious declines due to the effect these disasters 
had on commerce. However, individuals who became unemployed as a result 
of the general decline in commerce in response to these major disasters 
were not unemployed as a ``direct result'' of the major disasters and 
thus were not considered eligible for DUA.

[[Page 10933]]

    The above considerations apply equally to any major disaster. They 
led the Department to conclude and instruct state agencies that workers 
and self-employed individuals whose work site, for example, is within 
the presidentially-declared major disaster area yet outside the 
immediate disaster site, and who no longer have a job because the 
federal government either closed or took over the work site in 
immediate response to the major disaster, are potentially eligible for 
DUA. The interim final rule included only employees and self-employed 
individuals at facilities closed by the federal government in the major 
disaster area. (For further explanation of this issue, see ``Other 
Changes to the Final Rule'' below.) Examples of eligible individuals in 
the case of an airport shutdown in the major disaster area included 
airport employees, owners and employees of restaurants and shops 
located in airport terminal buildings, and workers or service providers 
for these and other facilities where the above conditions were met. 
However, workers at other airports not closed by the federal government 
were not considered eligible for DUA under the interim final rule. 
Individuals potentially eligible for DUA also included employees and 
self-employed individuals who could not perform services or get to 
their workplace not only because of physical damage to their place of 
employment but because a federal agency, such as FEMA, took over such 
site for disaster administration purposes. Similarly, because the 
federal government could, as an immediate emergency response to the 
major disaster, close certain facilities such as bridges or tunnels in 
the major disaster area, employees of those facilities could, 
therefore, be potentially eligible for DUA.
    As noted above, the Department also concluded in the interim final 
rule that an employee or self-employed individual could be eligible for 
DUA if the entity in the major disaster area was closed by the 
government in immediate response to the major disaster or the major 
disaster caused physical damage to or destruction of an entity in the 
major disaster area which, before the major disaster, provided at least 
a majority of the employer's or self-employed individual's revenue or 
income. Where less than a majority of the employer's or self-employed 
individual's revenue or income came from that entity, the link to the 
unemployment was viewed as too tenuous to be considered direct under 
the regulations. Just as this test would be employed to determine 
whether employees of suppliers of goods or services to entities 
physically damaged by the major disaster may be eligible for DUA, so 
too would that analysis be applicable to employees of suppliers of 
goods or services to other entities closed or taken over by the federal 
government in immediate response to the major disaster. Thus, if one of 
those entities provided at least a majority of the revenue or income of 
that employer or self-employed individual, the employees of that 
business or that self-employed individual could be eligible for DUA.
    Where it could not be established that at least a majority of the 
revenue or income of a business or self-employed individual was 
dependent upon providing goods or services to these entities, DUA 
eligibility must be denied. For example, a taxicab driver would be 
potentially eligible for DUA where a majority of his or her business 
depended on providing transportation services between points which 
included areas cordoned off because of the physical damage of the major 
disaster or because facilities were closed or commandeered by the 
federal government. On the other hand, DUA eligibility should be denied 
a taxicab driver who cannot establish that a majority of his or her 
livelihood depended on providing transportation services between points 
which include areas cordoned off because of either the physical damage 
of the major disaster or the closing or commandeering of the facilities 
in the major disaster area by the federal government.
    Further, the interim final rule said that DUA is payable only for 
those weeks of unemployment during the disaster assistance period that 
continue to be the direct result of the major disaster. Therefore, if 
the state agency finds that an eligible DUA applicant's unemployment 
can no longer be directly attributed to the major disaster, the 
applicant is no longer unemployed as a direct result of the disaster 
and is no longer eligible for DUA.

III. Comments on the Interim Final Rule

    The Department received comments on the interim final rule from a 
furloughed airline worker, three state workforce agencies (Iowa, 
Kansas, and New Jersey), three labor organizations, and five employee 
advocacy organizations. The three labor organizations were the American 
Federation of State, County, and Municipal Employees (AFSCME), the 
American Federation of Labor and Congress of Industrial Organizations 
(AFL-CIO), and the Service Employees International Union (SEIU). The 
five employee advocacy organizations included the Urban Justice Center, 
New York City, on behalf of the Chinese Staff and Worker's Association; 
the National Employment Law Project, New York City and Oakland, 
California; the Greater Boston Legal Services; the New York Taxi 
Workers' Alliance, New York City; and the Workforce Organizations for 
Regional Collaboration, Arlington, Virginia. In addition, a state 
senator from New York submitted a letter in support of the comments of 
the National Employment Law Project. The Department discusses and 
responds below only to those comments received that were relevant to 
the regulatory section we added in the interim final rule, Sec.  
625.5(c).
    The furloughed airline worker submitted a comment requesting an 
amendment to the interim final rule to include coverage of employees of 
airlines affected by the government-imposed restrictions on air 
traffic. The Department realizes that the airline industry, as well as 
this individual, suffered economically as a result of the ``ripple 
effect'' the September 11 attacks had on the overall economy. While the 
Department is sympathetic to the effect the terrorist attacks had on 
the airline industry and others, the interim final rule was promulgated 
to specifically define the phrase ``unemployment as a direct result of 
the major disaster,'' as used in the existing DUA regulations. The 
Department never intended to define the phrase to include individuals 
unemployed due to an economic ``ripple effect'' of a major disaster, as 
this would inappropriately broaden the rule's scope to include 
individuals indirectly affected by the disaster. In drafting the 
interim final rule, the Department did take into account the fact that 
certain individuals and businesses located outside the disaster area 
could be severely affected by the loss of economic activity within the 
disaster area. Therefore, the phrase ``unemployment as a direct result 
of the major disaster'' is defined to include self-employed 
individuals, as well as employees of businesses, suffering from 
unemployment because their employers or businesses received, before the 
disaster, more than fifty percent of revenues from businesses damaged, 
destroyed, or closed by the government within the major disaster area. 
The regulation, however, was never intended to cover all of the 
possible economic effects of a disaster.

[[Page 10934]]

Comments From State Workforce Agencies

    All the comments from the state workforce agencies, and nearly all 
the labor organizations and worker advocacy groups, complimented the 
Department for the provisions included in the interim final rule. The 
Kansas agency supported the amendment made by the interim final rule. 
Likewise, the Iowa agency supported the amendment, focusing 
particularly on how the rule would likely help small businesses in Iowa 
that serve farmers affected by major disasters.
    The New Jersey agency also supported the amendment but requested a 
broadening of the rule to ensure DUA eligibility for individuals not 
generally eligible for regular UC. Specifically, New Jersey suggested 
that individuals who worked exclusively out of an airport, such as 
limousine drivers, would be excluded from DUA eligibility unless the 
airport was closed or taken over by the government. While that may be 
true, the Department notes that the amendment expands the coverage for 
DUA to include the unemployment of employees and self-employed 
individuals where, before the disaster, the employer, or the business 
in the case of a self-employed individual, received at least a majority 
of its revenue or income from an entity that was either damaged or 
destroyed in the disaster, or an entity in the major disaster area 
closed by the federal, state or local government in immediate response 
to the disaster. Thus, if a limousine driver lost the majority of his 
or her business due to the government closing an airport, or if the 
driver obtained the majority of his or her income from serving guests 
at hotels and the hotels were closed because of a major disaster, then 
the individual would be potentially eligible for DUA. The Department 
recognizes that the amendment is more restrictive than New Jersey 
advocates. However, the Department chose not to broaden the scope of 
the rule as this would overextend the rule's coverage to include 
individuals indirectly injured by the major disaster, such as workers 
secondarily affected by the economic ``ripple effect'' after the 
terrorist attacks of September 11, 2001, as discussed above with regard 
to the airline industry.

Comments From Labor and Employee Advocacy Organizations

    Nearly all of the comments from labor and employee organizations 
advocated an expansion of the DUA program to reach more workers. The 
three labor organizations and the five employee advocacy organizations, 
along with a New York state senator, submitted nearly identical 
comments on one or more of the following issues:
    1. Workers otherwise covered by DUA should not be denied DUA when 
the order rendering the business inaccessible is issued by a private or 
public/governmental entity other than the federal government in 
response to security concerns or the provision of services related to a 
disaster.
    2. Workers unemployed because their company did business with an 
entity damaged or destroyed by the disaster should receive DUA when the 
loss of revenue from the company ``contributed importantly'' or 
``contributed significantly'' (rather than losing the majority of one's 
income) to the employer's decision (or self-employed individual's 
decision) to order a layoff or reduce hours of work.
    3. The regulations should abandon the requirement that a worker, 
initially determined as separated from work due to the disaster, must 
establish on a weekly basis that his or her unemployment is still the 
direct result of the disaster.
    4. Because the interim final rule expanded coverage and was a shift 
in policy, any workers who had been denied DUA prior to the publication 
of the interim final rule, as well as all individuals filing for DUA 
after the rule's publication should be entitled to receive DUA 
retroactively.
    In addition, the AFL-CIO argued that the regulations should provide 
that a worker's immigration status is immaterial to DUA eligibility. 
The AFL-CIO also advocated expanding DUA eligibility to include 
individuals employed in areas near, but not specifically designated as, 
disaster areas.
    The Department agrees, in part, with the first proposal to amend 
Sec.  625.5(c) to cover workers due to business closures by private or 
public and governmental entities in the major disaster area in response 
to security concerns or the provision of services related to that 
disaster. The interim final rule added paragraphs (c)(2) and (c)(3) to 
Sec.  625.5 which expanded the circumstances under which individuals 
would be considered unemployed as a direct result of the disaster. The 
Department intended that individuals would be covered if their 
unemployment resulted from their place of employment in the major 
disaster area being closed or taken over by the federal government in 
immediate response to that disaster, or where, prior to the disaster, 
the employer, or the business in the case of a self-employed 
individual, received at least a majority of its revenue or income from 
an entity in the major disaster area that was either damaged or 
destroyed in that disaster, or an entity in the major disaster area was 
closed by the federal government, in immediate response to that 
disaster resulting in lack of work or loss of revenues. A major reason 
for adopting these provisions was that, as far as the Department knows, 
there had never been a disaster situation where the federal government, 
as a result of the disaster, closed facilities separate and apart from 
the actual disaster site. The Department wanted to ensure that 
individuals unemployed at those sites due to a federal closure were 
considered unemployed as a direct result of the major disaster. In all 
major disasters, geographic areas within a state (generally counties 
and sometimes cities) are designated as the major disaster areas. The 
Department has consistently held that state and local governments' 
decisions affecting the closure of businesses and the health and safety 
of individuals determine whether individuals are unemployed as a direct 
result of the major disaster. For example, if a city waste treatment 
facility were flooded and the city ordered certain businesses in an 
area of the city to close because the waste treatment facility was not 
functioning as a result of the disaster, the Department would conclude 
that out-of-work individuals from those businesses were unemployed as a 
direct result of the disaster. The Department did not intend to suggest 
that the rights of state and local governments to manage disasters in 
their jurisdictions were limited by this regulation, which defines 
unemployment as a direct result of the disaster. Consequently, in order 
to be clear that the amendment covers such government closings, the 
Department has revised Sec.  625.5(c)(2) and (c)(3) to include closures 
by the federal, state, or local government.
    The Department, however, does not believe it sensible to add 
businesses closed by private entities, unless such entities were 
advised or required by governmental agencies to close for health or 
safety reasons related to the disaster. Indeed, while a private entity 
could decide to close down its operations for any reason, only 
governmental agencies have authority to force a closure of facilities 
or businesses due to a disaster, usually to protect the health and 
safety of the populace. Given that government agencies are vested with 
such responsibility, the Department believes it best to limit coverage 
to individuals unemployed

[[Page 10935]]

due to governmental actions or recommendations designed to protect the 
public's health and safety, as opposed to purely private closures.
    The Department declines to accept the second proposal to amend 
Sec.  625.5(c) to consider an individual unemployed due to the major 
disaster if that individual's loss of income ``contributed 
importantly'' or ``contributed significantly'' to his or her 
unemployment rather than as provided in the regulation, which requires 
that an individual received at least a majority of his or her revenue 
or income from the entity that was damaged, destroyed, or closed by the 
federal government. The genesis of this majority of revenue or income 
test came in the form of a 1994 Advanced Notice of Proposed Rulemaking 
(59 FR 63670, 63672), where, for purposes of Sec.  625.5(a)(1), (a)(3), 
(b)(1) and (b)(3), the Department proposed that a worker or self-
employed individual was considered unemployed due to the disaster where 
(s)he was unable to perform more than 50 percent of his or her usual 
and customary services that were being performed prior to the major 
disaster because sales to customers coming to the job site or work 
location were substantially reduced as a direct result of the major 
disaster. While this interpretation was never adopted as a regulation, 
the Department did apply it informally on a case-by-case basis. The 
Department then revised and formalized this interpretation in the 
interim final rule to include such unemployment due to lack of work, or 
loss of revenues, where prior to the disaster the employer, or the 
business in the case of a self-employed individual, received at least a 
majority of its revenue or income from an entity in the major disaster 
area that was either damaged or destroyed in that disaster, or an 
entity in the major disaster area closed by the federal government in 
immediate response to that disaster.
    This majority of income or revenue test is a defined amount, can be 
determined with a good degree of accuracy, utilizes a simple 
calculation, and is an equitable standard applicable to all claimants. 
On the other hand, the terms ``contributed importantly'' or 
``contributed significantly'' do not easily translate into a 
quantifiable amount, thus lacking the relative ease and certitude of 
the majority of income or revenue test. Adopting such subjective 
criteria would be administratively difficult for state workforce 
agencies dealing with the exigencies of a disaster to implement. While 
such a ``contributed importantly'' test is used under the Department's 
Trade Act programs (19 U.S.C. 2272(a)(3) and 2331(a)), the authorizing 
statute permits the agency 60 days under the Trade Act and 30 days 
under the expiring North American Free Trade Agreement transitional 
adjustment assistance program to make this determination (19 U.S.C. 
2273(a) and 2331(c)(1)), and the recent amendments to the Trade Act now 
change that time period to 40 days. Trade Act of 2002, Public Law 107-
210, section 112(b). Under DUA, however, the Department believes that a 
bright line test is necessary to ensure benefit determinations can be 
made quickly so assistance can be given out expeditiously to those in 
need. Furthermore, several of the comments criticized this ``majority 
of income or revenue'' standard in the interim final rule as burdensome 
on claimants because it limits them to producing tax and financial 
documents. The Department disagrees and notes that all evidence (e.g., 
affidavits, employer statements, and other credible evidence) will be 
considered in establishing a claim and not only typical financial 
records. Thus, the Department believes that the ``majority of income or 
revenue'' test is fair and provides a more workable standard.
    The Department also declines to adopt comment three to amend Sec.  
625.5(c) to eliminate the requirement for establishing on a weekly 
basis that a claimant's unemployment is still the direct result of the 
major disaster. Those advocating this comment believe that eliminating 
this requirement would make DUA more like the regular UC program, in 
that once a claimant qualifies for benefits (s)he no longer is required 
to establish that the unemployment is a result of the original layoff 
or separation. However, the Department notes that this weekly 
requirement follows the statutory requirements of section 410(a) of the 
Stafford Act whereby ``[t]he President is authorized to provide to any 
individual unemployed as a result of a major disaster such benefit 
assistance as he deems appropriate while such individual is unemployed 
for the weeks of such unemployment with respect to which the individual 
is not entitled to any other unemployment compensation.'' 42 U.S.C. 
5177(a). The Department cannot adopt this proposal as it contravenes 
the DUA authorizing statute, which establishes eligibility for benefits 
on a weekly basis.
    Comment four on the retroactive payment of DUA did not propose a 
change to Sec.  625.5(c) but instead addressed the administration of 
the new DUA regulatory provision. While advocates for comment four 
requested retroactive benefits due to the change in DUA eligibility, 
several commenters also requested aggressive publicity of these new 
eligibility rules. In response to these comments, the Department notes 
that it advised the state agencies in New York and Virginia, in a 
memorandum before publication of the interim final rule, of the 
Department's position on both retroactive and partial payments and that 
individuals could be eligible in accordance with the yet unpublished 
rule. Thus, the Department made it clear that New York and Virginia 
were to apply the principles of this rule to all claims arising out of 
the September 11 terrorist attacks. New York, for example, made 
significant efforts to publicize DUA eligibility criteria using various 
media in several different languages.
    Lastly, the AFL-CIO made two separate comments. They proposed 
paying DUA to all aliens, whether legally in the United States or not. 
However, the Department cannot adopt this proposal due to limitations 
placed on the DUA program by the Personal Responsibility and Work 
Opportunity Reconciliation Act of 1996 (PRWORA). Section 432 of the 
PRWORA (Pub. L. 104-193), as amended, provides that only aliens falling 
within the definition of ``qualified aliens'' are eligible for federal 
public benefits, which include benefits under the DUA program. 
Therefore, DUA payments to other than qualified aliens are prohibited.
    The AFL-CIO also advocated expanding DUA eligibility to include 
areas close to, but not specifically designated as, major disaster 
areas. They posited that workers in the District of Columbia who were 
adjacent to the disaster area in Arlington, Virginia were ineligible 
for DUA even though they may have been negatively affected by the 
disaster. The AFL-CIO suggests broadening coverage because the disaster 
hurt, in a general way, the District of Columbia's economy, so that the 
unemployed in DC should be eligible to receive DUA. The Department has 
sought to limit coverage to a ``direct result'' of the disaster, since 
the ``ripple effect'' on the DC economy and other adjacent 
jurisdictions would be endless. The Department notes that the interim 
final rule at Sec.  624.5(c)(3) allows for the coverage of individuals 
outside the major disaster area when they can establish that a majority 
of their income or business revenue came from an entity in the major 
disaster area either damaged or destroyed in the disaster, or closed by 
the federal government in immediate response to the disaster. Thus, an 
independent contractor in Washington, DC, who lost a majority of its 
income due to the Pentagon attack or

[[Page 10936]]

closure of Reagan National Airport, could potentially be eligible for 
DUA as could a DC taxi driver, the majority of whose revenue came from 
trips to and from Reagan National Airport.

Other Changes to the Final Rule

    The Department notes that it erred in its initial description of 
the interim final rule when, after describing the limited scope of the 
rule, it said considerations led ``the Department to conclude that 
workers and self-employed individuals whose work site, for example, is 
outside a major disaster area, and who no longer have a job because the 
federal government either closed or took over the job site in response 
to the major disaster, are potentially eligible for DUA.'' (66 FR 
56961.) This statement is wrong since the rule was never intended to 
cover the physical inaccessibility to a place of employment or the lack 
of work or loss of revenues due to damage, destruction or the closure 
of entities located outside the major disaster area. As noted earlier 
in this preamble and as demonstrated by the Department's subsequent 
implementation of the rule after publication, what was meant was not a 
place of employment or entity located ``outside the major disaster 
area'' as that term is defined in the regulations, but instead a place 
of employment or entity located ``outside the major disaster site'' 
(i.e., the actual area damaged by the disaster and not the broader 
jurisdiction, such as a county or city, that is typically designated 
the major disaster area), but within the major disaster area.
    As the interim final rule's example on taxi drivers and its 
reference to the closure of Reagan National Airport after the terrorist 
attacks make clear, the Department intended to cover individuals whose 
place of employment was located within the major disaster area but 
which may not have been located at the actual disaster site. Thus, 
individuals unemployed due to lack of work, or loss of revenues, would 
be eligible, provided that prior to the disaster, the employer, or the 
business in the case of a self-employed individual, received at least a 
majority of its revenue or income from an entity in the major disaster 
area that was either damaged or destroyed in the disaster, or an entity 
in the major disaster area closed by the federal, state or local 
government in immediate response to the disaster.
    Since publication of the interim final rule, the Department has 
acted consistently with this interpretation. Indeed, the state agency, 
in accordance with our interpretation, denied benefits to Maryland 
airport workers unemployed due to the federal government's closure of 
municipal airports in the Washington, DC Metropolitan Area, because 
their place of employment was outside the declared major disaster areas 
of Arlington, Virginia, and New York City. Moreover, these employees 
and self-employed individuals did not have employers or businesses that 
received a majority of income or revenues from an entity that was 
either damaged or destroyed in the disaster (e.g., the Pentagon), or an 
entity in the major disaster area closed by the government in immediate 
response to the disaster (e.g., Reagan National Airport). Therefore, 
these individuals were ineligible to receive benefits in accordance 
with the Department's interpretation. Consequently, in order to correct 
the error in the preamble of the interim final rule and to clarify the 
Department's interpretation, the Department has revised Sec.  
625.5(c)(2) and (c)(3) to include the phrase ``in the major disaster 
area'' when referencing the place of employment and entities described 
in those sections.

Effective Date

    Because no changes were made to the interim final rule other than 
to Sec.  625.5(c)(2) and (c)(3), the Department has determined that 
this final rule will be effective upon publication, except for Sec.  
625.5(c)(2) and (c)(3) which will be effective 30 days after 
publication.

Executive Order 12866

    This final rule is a ``significant regulatory action'' within the 
meaning of Executive Order 12866 because it meets the criteria of 
section 3(f)(4) of that Order in that it raises novel or legal policy 
issues arising out of legal mandates, the President's priorities, or 
the principles set forth in the Executive Order. Accordingly, this rule 
was submitted to, and reviewed by, the Office of Management and Budget. 
It is not ``economically significant'' within the meaning of section 
3(f)(1) of that Executive Order because it will not have an annual 
effect on the economy of $100 million or more. Rather, the Department 
estimates the cost of benefits under this rule for the major disasters 
of September 11, 2001, to be $2.205 million and, therefore, projects 
that the annual cost of benefits under this rule will be far less than 
$100 million.
    The Department has evaluated the rule and finds it consistent with 
the regulatory philosophy and principles set forth in Executive Order 
12866, which governs agency rulemaking. The rule will not impact states 
and state agencies in a material way because it would not impose any 
new requirements on states. Instead, the final rule simply clarifies 
the rules that states use to determine the eligibility of individuals 
affected by these new types of disasters now affecting the nation, such 
as the terrorist attacks of September 11, 2001. Also, the federal 
government entirely finances DUA benefits.

Paperwork Reduction Act

    The Department has determined that this final rule contains no new 
information collection requirements. The existing information 
collection requirements are approved under Office of Management and 
Budget control number 1205-0051.

Executive Order 13132

    The Department has reviewed this final rule in accordance with 
Executive Order 13132 regarding federalism. The order requires that 
agencies, to the extent possible, refrain from limiting state policy 
options, consult with states prior to taking any actions which would 
restrict states' policy options, and take such action only when there 
is clear constitutional authority and the presence of a problem of 
national scope. Because this is a federal benefit program, the 
Department has determined that the rule does not have federalism 
implications.

Executive Order 12988

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

Unfunded Mandates Reform Act of 1995 and Executive Order 12875

    The Department has reviewed this final rule in accordance with the 
Unfunded Mandates Reform Act of 1995 (UMRA) (2 U.S.C. 1501 et seq.) and 
Executive Order 12875. The Department has determined that this rule 
does not include any federal mandate that may result in increased 
expenditures by state, local, or tribal governments, in the aggregate, 
or by the private sector, of $100 million or more in any one year. 
Accordingly, the Department has not prepared a budgetary impact 
statement.

Regulatory Flexibility Act

    The Department has determined that this final rule will not have a 
significant economic impact on a substantial number of small entities. 
The rule sets forth the terms under which states and state agencies, 
which are not within the

[[Page 10937]]

definition of ``small entity'' under 5 U.S.C. 601(6), will pay federal 
benefits. Benefits provided under section 410(a) of the Stafford Act 
are fully funded by the federal government. Under 5 U.S.C. 605(b), the 
Secretary has certified to the Chief Counsel for Advocacy of the Small 
Business Administration to this effect. Accordingly, no regulatory 
flexibility analysis is required.

Effect on Family Life

    The Department certifies that this final rule has been assessed in 
accordance with section 654 of Public Law 105-277, 112 Stat. 2681, for 
its effect on family well-being. The Department concludes that the rule 
will not adversely affect the well-being of the nation's families. 
Rather, it should have a positive effect on family well-being by 
providing benefits to more individuals whose households have been 
affected by major disasters.

Small Business Regulatory Enforcement Fairness Act of 1996 and 
Congressional Notification

    The Department has determined that this final rule is not a major 
rule as defined by section 804 of the Small Business Regulatory 
Enforcement Fairness Act of 1996 (5 U.S.C. 804(2)). This rule will not 
result in an annual effect on the economy of $100,000,000 or more; a 
major increase in costs or prices; or significant adverse effects on 
competition, employment, investment, productivity innovation, or on the 
ability of United States-based companies to compete with foreign-based 
companies in domestic and export markets. With regard to the revised 
sections of the final rule, the Department will submit to each House of 
Congress and to the Comptroller General a report regarding the issuance 
of this final rule prior to the effective date of the rule, which will 
note that this rule does not constitute a ``major rule'' for purposes 
of this Act.

Catalogue of Federal Domestic Assistance Number

    This program is listed in the Catalogue of Federal Domestic 
Assistance at No. 17.225, ``Disaster Unemployment Assistance (DUA).''

List of Subjects in 20 CFR Part 625

    Disaster assistance, Labor, and Unemployment compensation.

Words of Issuance

    Accordingly, the interim final rule amending part 625 of chapter V 
of title 20, Code of Federal Regulations, which was published at 66 FR 
56960 on November 13, 2001, is adopted as a final rule with the 
following changes to Sec.  625.5(c)(2) and (c)(3):

PART 625--DISASTER UNEMPLOYMENT ASSISTANCE

    1. The authority for part 625 continues to read as follows:

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


    2. Section 625.5(c)(1) is republished, and paragraphs (c)(2) and 
(c)(3) are revised to read as follows:


Sec.  625.5  Unemployment caused by a major disaster.

* * * * *
    (c) Unemployment is a direct result of the major disaster. For the 
purposes of paragraphs (a)(1) and (b)(1) of this section, a worker's or 
self-employed individual's unemployment is a direct result of the major 
disaster where the unemployment is an immediate result of the major 
disaster itself, and not the result of a longer chain of events 
precipitated or exacerbated by the disaster. Such an individual's 
unemployment is a direct result of the major disaster if the 
unemployment resulted from:
    (1) the physical damage or destruction of the place of employment;
    (2) the physical inaccessibility of the place of employment in the 
major disaster area due to its closure by or at the request of the 
federal, state or local government, in immediate response to the 
disaster; or
    (3) lack of work, or loss of revenues, provided that, prior to the 
disaster, the employer, or the business in the case of a self-employed 
individual, received at least a majority of its revenue or income from 
an entity in the major disaster area that was either damaged or 
destroyed in the disaster, or an entity in the major disaster area 
closed by the federal, state or local government in immediate response 
to the disaster.

    Signed at Washington, DC, on February 27, 2003.
Emily Stover DeRocco,
Assistant Secretary of Labor.
[FR Doc. 03-5271 Filed 3-5-03; 8:45 am]
BILLING CODE 4510-30-P