[Federal Register Volume 73, Number 158 (Thursday, August 14, 2008)]
[Proposed Rules]
[Pages 47770-47815]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-17802]



[[Page 47769]]

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Part IV





Department of Labor





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Employment and Training Administration



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20 CFR Part 641



Senior Community Service Employment Program; Notice of Proposed 
Rulemaking; Proposed Rule

  Federal Register / Vol. 73, No. 158 / Thursday, August 14, 2008 / 
Proposed Rules  

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DEPARTMENT OF LABOR

Employment and Training Administration

20 CFR Part 641

RIN 1205-AB48


Senior Community Service Employment Program; Notice of Proposed 
Rulemaking

AGENCY: Employment and Training Administration, Labor.

ACTION: Notice of proposed rulemaking with request for comments.

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SUMMARY: The Employment and Training Administration of the Department 
of Labor (Department) is issuing this Notice of Proposed Rulemaking 
(NPRM) to propose changes in the Senior Community Service Employment 
Program resulting from the 2006 Amendments to title V of the Older 
Americans Act, and to clarify various policies. Key proposed changes 
include the introduction of a 48-month limit on participation, regular 
competition for national grants, and an available increase in the 
proportion of grant funds that can be used for participant training and 
supportive services. Comments on this proposed rule are welcome 
according to the dates listed below.

DATES: Interested persons are invited to submit comments on this 
proposed rule. To ensure consideration, comments must be received on or 
before October 14, 2008. Comments received after that date will be 
considered to the extent possible. Comments should be limited to the 
proposed changes and additions to the current regulations, all of which 
are discussed in the preamble to this NPRM, or to other changes to the 
current regulations which flow from the 2006 Amendments.

ADDRESSES: You may submit comments, identified by Regulatory 
Information Number (RIN) 1205-AB48, by either of the following methods:
     Federal e-Rulemaking Portal: www.regulations.gov. Follow 
the Web site instructions for submitting comments.
     Mail and hand delivery/courier: Written comments, disk, 
and CD-Rom submissions may be mailed to Thomas M. Dowd, Administrator, 
Office of Policy Development and Research, U.S. Department of Labor, 
200 Constitution Avenue, NW., Room N-5641, Washington, DC 20210.
    Instructions: Label all submissions with RIN 1205-AB48.
    Please be advised that the Department will post all comments 
received on www.regulations.gov without making any change to the 
comments, or redacting any information. The www.regulations.gov Web 
site is the Federal e-rulemaking portal and all comments posted there 
are available and accessible to the public. Therefore, the Department 
recommends that commenters safeguard any personal information such as 
Social Security Numbers, personal addresses, telephone numbers, and e-
mail addresses included in their comments as such may become easily 
available to the public via the www.regulations.gov Web site. It is the 
responsibility of the commenter to safeguard his or her information.
    Also, please note that due to security concerns, postal mail 
delivery in Washington, DC, may be delayed. Therefore, the Department 
encourages the public to submit comments via the Internet as indicated 
above.
    Docket: The Department will make all the comments it receives 
available for public inspection during normal business hours at the 
above address. If you need assistance to review the comments, the 
Department will provide you with appropriate aids such as readers or 
print magnifiers. The Department will make copies of the rule 
available, upon request, in large print and electronic file on computer 
disk. The Department will consider providing the rule in other formats 
upon request. To schedule an appointment to review the comments and/or 
obtain the rule in an alternative format, contact the Office of Policy 
Development and Research at (202) 693-3700 (not a toll-free number). 
You may also contact this office at the address listed above.

FOR FURTHER INFORMATION CONTACT: Sherril Hurd, Acting Team Leader, 
Regulations Unit, Office of Policy Development and Research, U.S. 
Department of Labor, 200 Constitution Avenue, NW., Room N-5641, 
Washington, DC 20210; telephone (202) 693-3700 (this is not a toll-free 
number).
    Individuals with hearing or speech impairments may access the 
telephone number above via TTY by calling the toll-free Federal 
Information Relay Service at 1-800-877-8339.

SUPPLEMENTARY INFORMATION: The preamble to this proposed rule is 
organized as follows:

I. Background--Provides a Brief Description of the Development of 
the Proposed Rule
II. Section-By-Section Review of the Proposed Rule--Summarizes and 
Discusses Proposed Changes to the Senior Community Service 
Employment Program (SCSEP) Regulations
III. Administrative Information--Sets Forth the Applicable 
Regulatory Requirements

I. Background

    On October 17, 2006, President Bush signed the Older Americans Act 
(OAA) Amendments of 2006, Public Law 109-365 (2006 OAA). This law 
amended the statute authorizing SCSEP and necessitates changes to the 
SCSEP regulations. The Department's Employment and Training 
Administration (ETA) promulgated an IFR on June 29, 2007 that 
implemented changes in the SCSEP performance measurement system 
required by the 2006 OAA. This proposed rule proposes to implement the 
remainder of the changes in the SCSEP necessitated by the 2006 OAA, and 
to clarify various program policies.
    The SCSEP, authorized by title V of the OAA, is the only Federally-
sponsored employment and training program targeted specifically to low-
income older individuals who want to enter or re-enter the workforce. 
Participants must be unemployed, 55 years of age or older, and have 
incomes no more than 125 percent of the Federal poverty level. The 
program offers participants training at community service employment 
assignments in public and non-profit agencies. The goals of the program 
are to move SCSEP participants into unsubsidized employment so that 
they can achieve economic self-sufficiency, and to promote useful 
opportunities in community service activities. In the 2006 OAA, 
Congress expressed its sense of the benefits of the SCSEP, stating, 
``placing older individuals in community service positions strengthens 
the ability of the individuals to become self-sufficient, provides 
much-needed support to organizations that benefit from increased civic 
engagement, and strengthens the communities that are served by such 
organizations.'' OAA section 516(2).
    Many of the policy initiatives contained in the 2000 OAA, Public 
Law 106-501, and reflected in the 2004 SCSEP final rule, 69 FR 19014, 
Apr. 19, 2004, are maintained in the 2006 OAA and this proposed rule. 
Other policies are amplified. Most notably, there is a greater emphasis 
on placing individuals in unsubsidized employment, as evidenced by the 
new 48-month limitation on participation in the SCSEP (OAA sec. 
518(a)(3)(B); Sec.  641.570 of this part); the new limitations on 
benefits (OAA sec. 502(c)(6)(A)(i); Sec.  641.565 of this part); and 
the increase in available funds for training and supportive services to 
prepare participants for the unsubsidized workforce (OAA sec. 
502(c)(6)(C); Sec.  641.874 of this part). A focus on the transition of 
participants

[[Page 47771]]

into unsubsidized employment allows more eligible individuals to be 
served by the SCSEP and thus to potentially benefit from employment 
opportunities and income gains.
    Coordination between the SCSEP and the programs under the Workforce 
Investment Act of 1998 (WIA), 29 U.S.C. 2801 et seq., continues to be 
an important objective of the 2006 OAA. With the enactment of WIA in 
1998, the SCSEP became a required partner in the workforce investment 
system. 29 U.S.C. 2841(b)(1)(B)(vi). In 2000, Congress amended the 
SCSEP to require coordination with the WIA One-Stop Delivery System 
(Pub. L. 106-501 sec. 505(c)(1)), including reciprocal use of 
assessment mechanisms and Individual Employment Plans (Pub. L. 106-501 
sec. 502(b)(4)). The underlying notion of the One-Stop Delivery System 
is the coordination of programs, services, and governance structures, 
so that the customer has access to a seamless system of workforce 
investment services.
    Consistent with current SCSEP practice, both WIA and the 2006 OAA 
require any grantee operating a SCSEP project in a local area to 
negotiate a Memorandum of Understanding (MOU) with the Local Workforce 
Investment Board. WIA section 121; OAA section 511(b); see also OAA 
section 502(b)(1)(O). The MOU must detail the SCSEP project's 
involvement in the One-Stop Delivery System. In particular, SCSEP 
grantees/sub-recipients must make arrangements to provide their 
participants, eligible individuals the grantees are unable to serve, as 
well as SCSEP-ineligible individuals, with access to services available 
in the One-Stop Centers. OAA secs. 510, 511; Sec. Sec.  641.210, 
641.220 of this part.
    Because the SCSEP is a required partner under WIA, SCSEP grantees 
and sub-recipients must ensure that they are familiar with WIA's 
statutory and regulatory provisions. Congress is considering 
legislation to reauthorize WIA, and reauthorization may bring changes 
to the law. SCSEP grantees and sub-recipients must ensure that they 
keep current on any changes in WIA law that could impact their program.
    The 2006 OAA also increases the accountability of grantees by 
clearly requiring a competitive process for grant awards. This proposed 
rule implements the statute's requirement that the national SCSEP 
grants be re-competed regularly, generally every four years. OAA 
section 514(a); Sec.  641.490(a) of this part. This proposed rule also 
implements the statute's requirement that a State compete its SCSEP 
grant if the current State grantee fails to meet its core performance 
goals for three consecutive years. OAA sec. 513(d)(3)(B)(iii); Sec.  
641.490(b) of this part.
    In addition, the 2006 OAA establishes new funding opportunities for 
pilot, demonstration, and evaluation projects (OAA sec. 502(e); Sec.  
641.600-640 of this part), expands the priority-for-service categories 
(OAA sec. 518(b); Sec.  641.520 of this part), and modifies how the 
program determines income eligibility (OAA sec. 518(3)(A); Sec.  
641.510 of this part).
    To the extent that the 2006 OAA does not change the 2000 OAA, these 
proposed regulations do not change the statutory interpretations or 
policy positions that supported the current regulations. The SCSEP is 
an established program; we do not propose to begin anew with this 
proposed rule but rather build upon the regulatory framework that has 
developed over the years. The proposed changes, mostly necessitated by 
statutory revisions, are discussed further in the next section of the 
preamble.
    The Department notes that it will continue to use the name ``Senior 
Community Service Employment Program'' for this program, although the 
OAA refers to it in various terms.
    The Department solicits comments on this proposed rule. For ease of 
reading, the Department is publishing the full regulatory text for 
subparts B-F, H and I. The regulatory text that was amended in the IFR, 
which includes all of subpart G and some definitions in subpart A, is 
not reprinted here. With the exception of Sec.  641.140 (definitions), 
the regulatory text herein includes the proposed changes as well as the 
several provisions that are unchanged. We are not reprinting unchanged 
definitions. The Department solicits comments on the proposed changes 
in this notice. We particularly invite comments, in accordance with the 
requirements of section 514(f) of the 2006 OAA, addressing any concerns 
that these proposed regulations significantly compromise the ability of 
grantees to serve their targeted populations of minority older 
individuals, in areas where substantial populations of minority 
individuals reside.

II. Section-by-Section Review of the Proposed Rule

    This proposed rule amends subparts A-F, H, and I of part 641 of 
Title 20 of the Code of Federal Regulations. It proposes changes 
required by the 2006 OAA, and proposes to clarify various policies. The 
Department previously promulgated an IFR, 72 FR 35832, June 29, 2007, 
which addressed changes in the SCSEP performance measurement system 
required by the 2006 OAA. The IFR revised subpart G, which addresses 
performance accountability, and added several definitions to, and 
revised certain definitions within, subpart A that relate to the 
performance measures. The amendments that were contained in the IFR are 
not repeated here.
    The Department proposes to make two changes that affect many of the 
subparts. We now refer to sub-recipients along with grantees where the 
responsibility or requirement being discussed applies to not just the 
grantees, but their sub-recipients as well. We also change from the 
term ``community service assignment'' to ``community service employment 
assignment'' throughout this part to be consistent with a similar 
change in the language of the statute (see, e.g., OAA section 
502(b)(1)(A)), and to emphasize the SCSEP's goal of employment in 
addition to community service (OAA sec. 502(a)(1)). By including 
``employment'' in the phrase ``community service employment 
assignment,'' the Department does not mean that participants have a 
right to long-term employment under the SCSEP, however. The SCSEP 
provides temporary, subsidized, part-time employment assignments to 
prepare older workers for unsubsidized employment as well as to provide 
valuable community services.

Subpart A--Purpose and Definitions

What Does This Part Cover? (Sec.  641.100)
    Section 641.100 provides an overview of each subpart of the SCSEP 
regulations. As reflected in paragraph (c) the Department proposes to 
change the name of the State Plan, and to include a reference to the 
Plan's four-year strategy, both in accordance with the 2006 OAA and as 
further described in the preamble for subpart C, below. We propose to 
add a phrase to the description of subpart D to clarify that subpart D 
contains provisions relating to the grant application and 
responsibility review requirements for ``the Department's award of 
SCSEP funds for State and National grants.'' Subpart D does not apply 
to the pilot, demonstration, and evaluation grants described in subpart 
F. As is the case in the current regulations, proposed subpart F 
contains its own provision about applying for those grants (see Sec.  
641.620).
    The Department proposes to revise paragraph (f) of the overview to 
indicate that subpart F provides the rules for pilot, demonstration, 
and evaluation projects as provided at section 502(e) of

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the 2006 OAA. These projects replace the private sector training 
projects that were authorized under section 502(e) of the 2000 OAA, 
Public Law 106-501. In paragraph (g) we propose to replace the 
reference to sanctions with a reference to corrective actions for 
failure to meet core performance measures, to mirror the language of 
the 2006 OAA (see, e.g., OAA section 513(d)). Finally, in paragraph 
(h), we describe subpart H as concerning the administrative 
requirements for SCSEP ``funds'' rather than SCSEP ``grants'' because 
many of the requirements contained in subpart H are not limited to 
grantees.
What Is the SCSEP? (Sec.  641.110)
    This section briefly describes the SCSEP. We propose to add the 
word ``unemployed'' to the description of individuals served to more 
thoroughly describe the program. In the past, grantees and applicants/
participants have asked whether a person has to be unemployed to be 
eligible for the SCSEP. Unemployed is--and has been--an eligibility 
requirement. Also, whereas in the current regulations the program 
description speaks of ``placing'' participants in ``community service 
positions,'' the Department now proposes to state that the SCSEP 
``trains'' participants in ``community service employment 
assignments.'' And, whereas the current regulations state that the 
SCSEP serves participants by ``assisting them to transition to 
unsubsidized employment,'' we propose to clarify that the SCSEP serves 
participants by ``assisting them in developing skills and experience to 
facilitate their transition to unsubsidized employment.'' We propose 
this change to provide more specificity about the services the SCSEP 
provides and how these services advance the goal of unsubsidized 
employment.
What Are the Purposes of the SCSEP? (Sec.  641.120)
    This section describes the purposes of the SCSEP, and is based on 
the statement establishing the program in section 502(a)(1) of the OAA. 
The Department proposes to revise this section in accordance with 
changes in the 2006 OAA, which rearranges the ordering of the purposes. 
In the 2006 OAA, ``foster[ing] individual economic self-sufficiency'' 
is listed first among the purposes of the SCSEP; fostering and 
promoting useful community service activities was listed first in the 
2000 OAA. We propose to amend our description accordingly. The 
Department interprets the placement of this purpose at the front of the 
list of purposes as consistent with an increased focus on placing 
participants in unsubsidized employment.
    We also propose to alter the statement of the goal concerning 
community service. The current regulations state that a purpose of the 
SCSEP is to ``foster and promote useful part-time opportunities in 
community service activities.'' We propose to change this to: ``Promote 
useful part-time opportunities in community service employment 
assignments.'' We omit the word ``foster'' from this phrase to be 
consistent with the language of the statute. Our use of the term 
community service employment assignment was discussed above, and is 
changed consistently in the rest of this proposed rule.
What Is the Scope of This Part? (Sec.  641.130)
    The proposed change in this section concerns administrative 
issuances. The current regulations indicate that administrative 
guidance and information will be provided via ``SCSEP Bulletins, 
technical assistance guides, and other SCSEP directives.'' We propose 
to revise this section to reflect the current ETA advisory system. We 
now issue administrative guidance and information for the SCSEP through 
Training and Employment Guidance Letters (TEGLs), Training and 
Employment Notices (TENs), technical assistance guides, and other SCSEP 
guidance. The Department no longer uses Older Worker Bulletins to issue 
administrative guidance; however, previously issued Bulletins that have 
not been rescinded, and have not been superseded by the 2006 OAA, are 
still in effect. All valid administrative issuances, as well as an 
abundance of other program information, may be viewed at the SCSEP Web 
site, http://www.doleta.gov/seniors.
What Definitions Apply to This Part? (Sec.  641.140)
    The Department proposes to amend several SCSEP definitions.
New Definitions
    We propose to add the following five definitions:
    Pacific Island and Asian Americans: The Department adds the 
definition of Pacific Island and Asian Americans that appears in 
section 518(a)(5) of the 2006 OAA.
    Program operator: We move the definition of ``first tier sub-
recipient'' from Sec.  641.856 to the definitions section, rename it 
``program operators,'' and expand it to make clear that it applies to 
all entities that operate a SCSEP program, not just to those entities 
that receive their funds directly from the grantee. Our intent is to 
clarify that all entities operating a SCSEP program, and not just those 
one tier down from direct SCSEP grantees, must adhere to program laws 
and regulations such as the requirement to track, record, and report 
administrative costs, and must limit those costs to comply with the 
administrative costs cap.
    Secretary: We clarify that Secretary means the Secretary of the 
Department of Labor.
    Supportive services: Section 518(a)(7) of the 2006 OAA defines 
supportive services and we adopt the statutory definition here.
    Unemployed: We adopt the definition from section 518(a)(8) of the 
2006 OAA.
Revised Definitions
    We propose to revise the following definitions:
    Authorized position level: We remove the sentence that appears at 
the end of the definition in the current regulations, which states that 
the authorized position level is calculated by dividing a grantee's 
total award by the national unit cost, because it is repetitive of 
other language in the definition.
    Community service: We revise the definition of community service to 
align more precisely with the statutory definition. We omit the opening 
phrase, ``includes, but is not limited to,'' and replace it with a 
provision at the end of the definition allowing the Secretary to 
include in the definition other services by rule as appropriate. In 
addition, we have included a lettered listing of the 2006 OAA's 
grouping of services.
    Equitable distribution report: In the phrase, ``taking the needs of 
underserved counties into account,'' we replace the word ``counties'' 
with ``jurisdictions'' to be inclusive of entities other than counties, 
such as incorporated cities, which may also be underserved.
    Grantee: We alter the list of possible entities that may serve as 
grantees to more closely follow the language of the 2006 OAA at section 
502(b)(1). Accordingly, whereas the current regulations list both 
``States'' and ``agencies of a State government'' as possible grantees, 
we now list only ``State agencies.'' Also, the 2006 OAA dropped 
language indicating that political subdivisions of a State, or a 
combination of such political subdivisions, could serve as a grantee; 
we therefore delete such language from this definition. We also modify 
the definition of grantee to eliminate the reference to section 502(e) 
grantees, since private sector training projects are

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no longer authorized, and to make technical corrections.
    Greatest economic need: We update the citation for this definition.
    Greatest social need: We alter the definition of greatest social 
need to make technical corrections and to update the statutory 
citation.
    Host agency: The Department revises the definition of host agency 
three ways. First, we insert the word ``training'' before ``work site'' 
to underscore that the community service employment assignment is a 
venue for training SCSEP participants. We also create a stand-alone 
sentence stating that political parties cannot be host agencies, for 
clarity. Concerning political parties, we note that we interpret 
section 502(b)(1)(D) of the 2006 OAA as containing a misplaced ending 
parenthesis. As political parties are not covered by section 501(c)(3) 
of the Internal Revenue Code, we consider that the final parenthesis 
should appear after the word ``parties.'' Our interpretation here 
simply maintains the same understanding of host agencies as existed 
under the 2000 OAA--political parties cannot be host agencies, and non-
profit agencies that are 501(c)(3) may be host agencies. Finally, we 
include the word ``sectarian'' before ``religious'' to more closely 
adhere to the language of the OAA.
    Indian: We update the citation.
    Indian tribe: We insert a citation to the Alaska Native Claims 
Settlement Act in the definition of Indian tribe, as is done in the 
statutory definition. We also update the citation.
    Individual Employment Plan or IEP: We modify the definition of 
Individual Employment Plan by moving to the beginning of the definition 
the statement that the IEP is based on an assessment of the 
participant, because that fact is fundamental to the development of an 
IEP. We have added language to acknowledge that a recent assessment or 
IEP prepared by another employment and training program may be used in 
lieu of one prepared by the grantee or sub-recipient, reflecting 
language in the statute and in Sec.  641.230, related to an assessment 
or IEP completed by the One-Stop delivery system. We delete the 
language concerning the ``appropriate sequence of services'' and add 
language referring to ``a related service strategy,'' reflecting 
language that has been added to the 2006 OAA. We add the word 
``appropriate'' before ``employment goal'' to indicate that the 
employment goal should be one that reflects the assessment of the 
skills, talents, and training needs of the individual, and may need to 
be modified over time. We replace the phrase, ``achievement of 
objectives,'' with the phrase, ``objectives that lead to the goal,'' 
for increased clarity. We have added ``a timeline for the achievement 
of the objectives'' because we believe it is useful for the IEP to 
include target timeframes for the achievement of the identified 
objectives. We also make grammatical changes.
    Jobs for Veterans Act: We revise the definition of the Jobs for 
Veterans Act to clarify that the Jobs for Veterans Act is a distinct 
statute from the priority of service provision in the OAA, although we 
use the definition of veteran contained in the Jobs for Veterans Act to 
determine which participants qualify for the veterans' priority for 
service (Sec.  641.520). We also modify the description of which 
participants qualify for the veterans' preference to more closely 
follow the language of the Jobs for Veterans Act.
    OAA: We revise the definition of the Older Americans Act (OAA) to 
account for all amendments.
    Other participant (enrollee) costs: We revise the definition of 
other participant (enrollee) costs to make certain technical 
corrections, we replace the phrase ``supportive services to assist'' 
with ``supportive services to enable,'' to track the language of the 
statute, and we clarify that training costs may be incurred prior to 
commencing or concurrent with a community service employment 
assignment.
    Participant: We revise the definition of participant to clarify 
that an individual must be given a community service employment 
assignment to be considered a SCSEP participant, though the person need 
not have begun that assignment to be considered a SCSEP participant. 
This change makes it possible for participants to get paid their hourly 
wage for time spent on activities such as orientation and training 
before they begin working at their community service employment 
assignment.
    Poor employment prospects: The phrase ``poor employment prospects'' 
appeared in the 2000 OAA and the Department defines it in the 2004 
SCSEP final rule. The Department used the definition of poor employment 
prospects in the current regulations as the basis for developing this 
revised definition which provides that a person with poor employment 
prospects is one who has a significant barrier to employment. The 
barriers listed in the definition are mainly the same characteristics 
that appear in this definition in the current regulations, but with 
minor changes to reduce redundancy. The Department interprets the 2006 
OAA's term ``poor employment prospects'' to have the same meaning as 
the similar phrase which also appears in the 2006 OAA, ``low employment 
prospects.'' Thus, the same definition is used for the term low 
employment prospects, which is also part of this section, but was 
published in the Senior Community Service Employment Program; 
Performance Accountability IFR at 72 FR 35832, Jun. 29, 2007.
    Program Year: We alter the definition of Program Year to remove the 
statutory reference which no longer exists and to add the word ``on'' 
before ``July 1.'' The substance of the definition is not affected by 
these changes.
    Project: We revise the definition of project for increased 
readability, to remove the unnecessary phrase, ``in a particular 
location within a State,'' and to make technical corrections. We also 
change the phrase, ``community service'' to ``service to communities'' 
in light of the Sense of Congress provision at section 516 of the 2006 
OAA which indicates that one benefit of SCSEP projects is their impact 
on communities.
    Recipient: We make technical corrections to the definition of 
recipient.
    Service area: We revise the definition of service area by adding 
the clarifying phrase, ``in accordance with a grant agreement,'' for 
increased accuracy.
    State grantee: We revise the definition of State grantee by adding 
the phrase, ``or the highest government official,'' after the word 
``Governor,'' to account for those governmental jurisdictions that 
receive State SCSEP grants but do not have a Governor.
    State Plan: We revise the definition of State Plan to specify that 
the State Plan now includes a four-year strategy for, and describes the 
planning and implementation process for, the statewide provision of 
SCSEP services, in accordance with section 503(a)(1) of the 2006 OAA.
    Sub-recipient: Although in the current regulations the Department 
treats the terms sub-grantee and sub-recipient as synonymous, we now 
clarify that sub-recipient is the preferred term to use when referring 
to entities that receive SCSEP funds from grantees. Not all entities 
that receive SCSEP funds from grantees do so pursuant to a grant; in 
some cases the mechanism is a contract. Because the term sub-recipient 
is inclusive of both sub-grantees and sub-contractors, we do not 
provide separate definitions for these terms. The definition of sub-
recipient that we employ is largely the same as the definition of sub-
grantee that appears in the current regulations; we deleted one phrase 
referring to subcontracts because the definition now includes all 
varieties of sub-awards.

[[Page 47774]]

    Title V of the OAA: We revise the definition of title V of the OAA 
to account for all amendments.
    Tribal organization: We update the citation.
    Workforce Investment Act (WIA): We clarify in the definition of the 
Workforce Investment Act that references to this law include any and 
all amendments, and we make technical corrections to the citations.
Deleted Definitions
    The Department proposes to omit several definitions that appear in 
the current regulations. First, we remove definitions of ``placement 
into public or private unsubsidized employment'' and ``retention in 
public or private unsubsidized employment'' because those performance 
measures no longer exist. They were replaced in the IFR by the common 
measures entry and six-months retention indicators. We also eliminate 
the definition of co-enrollment because it related to private sector 
502(e) projects which are no longer authorized. We eliminate the 
definition of State workforce agency because that phrase no longer 
appears in this rule. Finally, we remove the definition of sub-grantee 
and replace it with the more technically accurate term: ``sub-
recipient.''
Unchanged Definitions
    Definitions that remain unchanged are not reprinted.
    The Department added and amended some SCSEP definitions related to 
performance accountability in the SCSEP; Performance Accountability; 
IFR, 72 FR 35832, Jun. 29, 2007. Those new and amended definitions do 
not appear in this proposed rule, and comments on those amendments were 
sought in the IFR.

Subpart B--Coordination With the Workforce Investment Act

    This subpart covers those provisions of the OAA that require 
coordination with WIA. Please note that WIA contains additional 
provisions that are relevant to the SCSEP. The 2006 OAA requires 
changes to Sec.  641.240 of this part. In addition, the Department 
proposes several clarifying changes to the regulatory text.
What Is the Relationship Between the SCSEP and the Workforce Investment 
Act? (Sec.  641.200)
    The only proposed changes we make in this section are to clarify 
that sub-recipients (and not just grantees) are included in the 
requirement to follow all WIA rules and regulations, and to make 
certain technical corrections to the citations.
What Services, in Addition to the Applicable Core Services, Must SCSEP 
Grantees/Sub-Recipients Provide Through the One-Stop Delivery System? 
(Sec.  641.210)
    This section requires SCSEP grantees and sub-recipients to make 
arrangements to provide their participants, eligible individuals the 
grantees/sub-recipients are unable to serve, as well as SCSEP 
ineligible individuals, with access to other services available at the 
One-Stop Career Center. There is no change to this section other than 
two proposed clarifications. First, the Department clarifies that core 
services are those defined in the WIA regulations at Sec.  662.240 of 
this title. Second, we also clarify that, in addition to providing 
eligible and ineligible individuals with access to other activities and 
programs carried out by other One-Stop partners as is provided in the 
current regulations, SCSEP grantees/sub-recipients must also make 
arrangements through the One-Stop Delivery System to provide eligible 
and ineligible individuals with referrals to WIA intensive and training 
services. As a required One-Stop partner, and in light of the statutory 
language in both WIA and title V of the 2006 OAA on the cross-use of 
individual assessments, it is desirable that SCSEP grantees and sub-
recipients make appropriate referrals to the One-Stop system for 
intensive and training services.
Does Title I of WIA Require the SCSEP To Use OAA Funds for Individuals 
Who Are Not Eligible for SCSEP Services or for Services That Are Not 
Authorized Under the OAA? (Sec.  641.220)
    This section states that even in the One-Stop Career Center 
environment, SCSEP projects are limited to serving SCSEP-eligible 
individuals.
    As discussed in the preamble section addressing SCSEP definitions 
(Sec.  641.140), the Department is proposing to revise the definition 
of participant to clarify that an individual must be given a community 
service employment assignment, though the person need not have begun 
that assignment, to be considered a SCSEP participant. Because of this 
proposed modification, we change the language, ``are functioning in a 
community service assignment,'' which had qualified the word 
participants, to ``have each received a community service employment 
assignment.'' We also propose to add language clarifying what an MOU 
is, and propose to cross-reference the WIA regulatory provisions that 
relate to the MOU.
Must the Individual Assessment Conducted by the SCSEP Grantee/Sub-
Recipient and the Assessment Performed by the One-Stop Delivery System 
Be Accepted for Use by Either Entity To Determine the Individual's Need 
for Services in the SCSEP and Adult Programs Under Title I-B of WIA? 
(Sec.  641.230)
    The only proposed changes the Department makes to this section are 
technical ones. We add the word ``sub-recipient'' to the heading for 
clarity. We also change the citation to the OAA to reflect the 2006 
Amendments, and move the citation to after the first sentence, as the 
first sentence contains the provision located in the cited statutory 
section.
Are SCSEP Participants Eligible for Intensive and Training Services 
Under Title I of WIA? (Sec.  641.240)
    This section addresses the eligibility of SCSEP participants for 
intensive and training services under title I of WIA. Under the OAA, 
SCSEP participants are not automatically eligible to receive intensive 
and training services under WIA, however Local Boards have the 
authority to deem SCSEP participants eligible to receive intensive and 
training services under title I of WIA. We note that WIA eligibility is 
not based on income except in the adult program when a local area 
determines that its funds are insufficient and provides priority to 
low-income individuals. Rather, WIA eligibility is based on the need 
for and utility of intensive and training services to obtain 
employment.
    The Department proposes to revise paragraph (a) by removing the 
opening word ``yes'' since it could be read to imply that SCSEP 
participants are automatically eligible for intensive and training 
services under title I of WIA, even though the subsequent text states 
the contrary.
    In paragraph (b) the Department proposes to make several changes. 
First, the current regulations state that, ``SCSEP participants who 
have been assessed through a SCSEP IEP have received an intensive 
service.'' An assessment is used in developing an IEP, but assessments 
are not accomplished through an IEP. Accordingly, to clarify the 
distinct roles of the assessment and the IEP, the phrase is proposed to 
read, ``SCSEP participants who have been assessed and for whom an IEP 
has been developed have received an intensive service.''
    Also in paragraph (b), we propose to revise the sentence addressing 
SCSEP

[[Page 47775]]

participants and training. Whereas the current regulations state, 
``SCSEP participants who seek unsubsidized employment as part of their 
SCSEP IEP, may require training to meet their objectives,'' the 
proposed rule instead says, ``[i]n order to enhance skill development 
related to the IEP, it may be necessary to provide training beyond the 
community service employment assignment to enable the participant to 
meet their unsubsidized employment objectives.'' We propose this change 
to reinforce the role of the IEP, because unsubsidized employment is a 
goal for all of the SCSEP, not just certain participants, and to 
clarify that the training under discussion here is training other than 
that accomplished via the community service employment assignment. We 
also propose to add a reference to Sec.  641.540, the section of these 
regulations that addresses participant training in depth.
    The Department proposes to delete what is paragraph (c) in the 
current regulations; the Department determined this paragraph conflicts 
with other relevant regulatory provisions. Paragraph (c) states that 
community service employment assignments are analogous to work 
experience activities or intensive services under WIA. This paragraph 
could create confusion with paragraph (a) of this section, which 
correctly states that SCSEP participants are not automatically eligible 
for WIA intensive and training services. Whether or not a community 
service employment assignment is considered to be an intensive service, 
a SCSEP participant must still meet the other WIA eligibility 
requirements to be eligible for training services.
    The Department also proposes to delete what is paragraph (d) in the 
current regulations because the subject of that paragraph is thoroughly 
covered in subpart E. Paragraph (d) indicates that SCSEP participants 
may be paid while receiving intensive or training services. An 
explanation of participant wages appears in Sec.  641.565 of these 
regulations.

Subpart C--The State Plan

    The Department proposes to change the title of this subpart to 
reflect a change in the name of the State Plan in the 2006 OAA from the 
prior term, the ``State Senior Employment Services Coordination Plan.'' 
This subpart of the regulations implements the new provisions in 
section 503 of the 2006 OAA, which direct the Governor, or the highest 
government official, of each State to submit a State Plan that contains 
a four-year strategy, and require that the State Plan be updated at 
least every two years. As reflected in these proposed regulations, the 
State Plan now has a broader role than merely coordination.
    Comments are welcome on requirements for the four-year strategy, as 
well as other changes affecting the State Plan that are identified in 
this preamble or other changes to the current regulations which flow 
from the 2006 Amendments.
What Is the State Plan? (Sec.  641.300)
    This section describes the State Plan and emphasizes that it is 
intended to foster collaboration among SCSEP stakeholders. As noted 
above, the Department proposes to change the name of the State Plan to 
reflect the 2006 OAA. We also propose to add language reflecting the 
new requirement that the State Plan outline a four-year strategy for 
the statewide provision of community service and other authorized 
activities for eligible individuals under the SCSEP. The four-year 
strategy is one component of the State Plan; Sec.  641.325 of these 
proposed regulations specifies additional information required in the 
State Plan.
What Is a Four-Year Strategy? (Sec.  641.302)
    The 2006 OAA requires that States include a four-year strategy in 
the State Plan; in this proposed section, the Department explains what 
States must include in their four-year strategy. The four-year strategy 
is only one component of the State Plan; other elements are discussed 
in Sec.  641.325 of these regulations. The 2006 OAA does not elaborate 
on the contents of the four-year strategy, but grants the Secretary 
authority to determine what provisions should be in the State Plan, 
consistent with title V. These proposed regulations specify what States 
must include in the four-year strategy.
    The Department views the four-year strategy as an opportunity for 
the State to take a longer-term view of the SCSEP in the State, 
including its role in workforce development, given projected changes in 
the State's demographics (particularly the number of older workers), 
economy, and labor market. In preparing the four-year strategy, the 
State should address the role of SCSEP vis-[aacute]-vis other workforce 
programs and initiatives as well as other programs serving older 
workers, and how the State and SCSEP grantees can utilize these other 
programs to maximize the services available to the SCSEP-eligible 
population. The four-year strategy also should be used by the State to 
examine and, as appropriate, plan longer-term changes to the design of 
the program within the State, such as changes in the utilization of 
SCSEP grantees and program operators to better achieve the goals of the 
program.
    To achieve the objectives described above, the Department proposes 
to require that the four-year strategy include the following specific 
elements. First, it must explain the State's long-term plan for 
achieving an equitable distribution of SCSEP positions within the State 
(the equitable distribution report, discussed in Sec. Sec.  641.360 and 
641.365, addresses this for the short-term). This information is 
required as part of the State Plan (see Sec.  641.325), but the State 
should address equitable distribution over a longer period in its four-
year strategy. The strategy must specifically address how, over the 
four-year period, the State intends to: (1) Move positions from over-
served to underserved locations within the State, pursuant to Sec.  
641.365 of these regulations; (2) equitably serve rural and urban 
areas; and (3) serve individuals afforded priority for community 
service employment and other authorized activities, pursuant to Sec.  
641.520 of these regulations. Second, a related provision requires that 
the State explain its long-term strategy for avoiding disruptions to 
the program when new Census data that affects the distribution of SCSEP 
positions across the State becomes available, or when there is over-
enrollment for any other reason. This information is included in the 
State Plan for the short-term, but the State should plan over a longer 
term for avoidance of disruptions when new Census data become available 
or there is over-enrollment.
    Third, the four-year strategy must provide the State's long-term 
plan for serving minority older individuals under the SCSEP. Section 
515 of the 2006 OAA requires a report on services to minority 
individuals, and this element in the four-year strategy reinforces the 
law's focus on minority individuals and will provide information that 
may be used in the report. Fourth, the strategy must provide long-term 
projections for job growth in industries and occupations in the State 
that may provide employment opportunities for older workers, and how 
those relate to the types of unsubsidized jobs for which participants 
will be trained, and the types of skill training to be provided. The 
2006 OAA added to the State Plan provisions the current and projected 
employment opportunities in the State, and it makes sense to look at 
this, in relation to the types of skill training provided to 
participants, not only in the

[[Page 47776]]

short-term, but over the longer-term encompassed by the four-year 
strategy.
    Fifth, the four-year strategy must explain how the State plans to 
work with employers in the State to develop and promote opportunities 
for placement of SCSEP participants in unsubsidized employment. Working 
with employers to develop opportunities for placement of SCSEP 
participants in unsubsidized employment is an essential element of the 
program and necessary to achieve participation limits, so States should 
address this in their four-year strategy.
    Sixth, the four-year strategy must provide the long-term strategy 
for increasing the level of performance for entry into unsubsidized 
employment by SCSEP participants. Specifically, the strategy must 
demonstrate how the State will achieve the minimum levels of 
performance required by section 513(a)(2)(E)(ii) of the OAA and Sec.  
641.720(a)(6) of the SCSEP regulations (published in the IFR), which 
set forth the minimum percentage for the expected level of performance 
for entry into unsubsidized employment for each of fiscal years 2007-
2011. The expected level of performance on this core indicator 
increases over this time period, from 21 percent in fiscal year 2007, 
to 25 percent in fiscal year 2011. The Department recognizes that these 
are minimum levels and that some grantees already perform well above 
these minimum levels. All grantees should strive to continuously 
improve their performance levels to assist enrollees in becoming self-
sufficient, make available opportunities for other individuals to 
enroll in SCSEP, and better fulfill the objectives of the program.
    Seventh, the four-year strategy must indicate how the SCSEP 
activities of grantees will be coordinated with a number of other 
programs, initiatives, and entities. The State Plan must address 
coordination with WIA, but States should plan over a longer term to 
improve coordination with a variety of other programs, initiatives, and 
entities. These include: (1) Planned actions to coordinate with 
activities being carried out in the State under title I of WIA, 
including plans for utilizing the WIA One-Stop Delivery System and its 
partners to serve individuals aged 55 and older; (2) planned actions to 
coordinate with activities being carried out in the State under other 
titles of the OAA; (3) planned actions to coordinate with other public 
and private entities and programs that provide services to older 
Americans in the State (such as community and faith-based 
organizations, transportation programs, and programs for those with 
special needs or disabilities); and (4) planned actions to coordinate 
with other labor market and job training initiatives. These initiatives 
currently include the President's High Growth Job Training Initiative, 
Community-Based Job Training Grants, and the Workforce Innovation in 
Regional Economic Development (WIRED) Initiative.
    Eighth, the State should explain its long-term strategy to improve 
SCSEP services, and may include recommendations to the Department, as 
appropriate. This is derived from current State Plan Instructions 
(Older Worker Bulletin 01-04), which specify that the State Plan may 
include recommendations to the Secretary of Labor on actions to be 
taken by SCSEP grantees in the State to improve SCSEP services. The 
recommendations may include such topics as the location of positions, 
the types of community services, the time required to make changes in 
the distribution of positions, and the types of participants to be 
enrolled.
Who Is Responsible for Developing and Submitting the State Plan? (Sec.  
641.305)
    The only change we propose to this section is to add the phrase, 
``or the highest government official,'' after the word ``Governor'', to 
be inclusive of all jurisdictions that submit State Plans.
May the Governor, or the Highest Government Official, Delegate 
Responsibility for Developing and Submitting the State Plan? (Sec.  
641.310)
    The only proposed change to this provision is to add in the heading 
the phrase, ``or the highest government official,'' after the word, 
``Governor,'' to be inclusive of jurisdictions where the head of the 
government is not a Governor.
Who Participates in Developing the State Plan? (Sec.  641.315)
    This provision lists the individuals and organizations from whom 
the Governor, or the highest government official, is required to seek 
advice and recommendations related to the State Plan, in accordance 
with section 503(a)(2) of the OAA. The 2006 OAA changes the task of the 
Governor (or highest government official) from ``obtaining'' the advice 
and recommendations of these entities to ``seeking'' advice and 
recommendations. The Department therefore proposes to revise this 
section to use the word ``seek.'' We interpret this to mean that the 
Governor (or highest government official) must make a good faith effort 
to obtain advice and recommendations from the listed individuals and 
organizations, whether or not each of these chooses to submit its 
views. We also propose to replace the phrase ``underserved older 
individuals'' with ``unemployed older individuals,'' in accordance with 
the same change in the 2006 OAA.
Must All National Grantees Operating Within a State Participate in the 
State Planning Process? (Sec.  641.320)
    Section 503(a)(2) of the OAA requires the Governor, or the highest 
government official, to seek the advice and recommendations of a number 
of different parties concerning SCSEP services in the State. Although 
that particular section of the OAA does not require national grantees 
to participate in the State Plan process, section 514(c)(6) of the OAA 
establishes that when selecting national grantees, the Department must 
consider an applicant's ability to coordinate their activities with 
other organizations at the State and local levels. The State Plan is 
the process by which SCSEP services are coordinated at the State level; 
accordingly, section 514(c)(6) effectively requires national grantees 
to participate in the State planning process. To clarify the source of 
this requirement, the Department proposes to omit the language 
referring to OAA section 503(a)(2) from paragraph (a) of this section. 
We have also updated the remaining citation in paragraph (a) to account 
for where this provision is located in the 2006 OAA.
    Paragraph (b) concerns exemptions from the requirement in paragraph 
(a); we propose several changes to this paragraph. The 2004 SCSEP final 
rule exempts national grantees serving older American Indians from the 
State planning process, based on section 503(a)(8) of the 2000 OAA, 
although the Department encourages their participation. The proposed 
regulation adds grantees serving older Pacific Island and Asian 
Americans to the grantee exemption from the requirement to participate 
in the State planning process, consistent with section 503(a)(8) of the 
2006 OAA. However, the Department continues to encourage exempted 
grantees to participate in the State planning process in the areas in 
which they operate. Also in paragraph (b), we propose to change the 
phrase, ``are exempted from participating in the planning 
requirements'' to ``are exempted from the requirement to participate in 
the State planning processes,'' for clarity.
    The Department proposes to clarify in paragraph (b) that the 
exemption from the requirement to participate in the

[[Page 47777]]

State planning process applies to grantees using funds specifically 
reserved for projects serving older American Indians and older Pacific 
Island and Asian Americans under OAA section 506(a)(3); this 
clarification is consistent with section 503(a)(8) of the 2006 OAA. We 
also propose to add new language concerning a grantee using both 
reserved and non-reserved funds. All grantees of non-reserved SCSEP 
funds, including grantees that have also received reserved funds, are 
required to participate in the State planning process per paragraph 
(a). Having applied for and accepted non-reserved funds, grantees 
become subject to the same coordination requirements as all other 
recipients of non-reserved funds. Accordingly, if a grantee that 
receives reserved funds under one grant is also awarded a non-reserved 
funds grant, the grantee is required to participate in the State 
planning process for purposes of the non-reserved funds grant.
    Finally, we propose to delete from paragraph (b) the statement that 
if an exempt grantee chooses not to participate in the State planning 
process it is required to describe its plan for serving its 
constituency in its grant application. This is redundant because all 
grant applications require applicants to describe such plans, 
regardless of past participation in the State planning process. We also 
make certain grammatical improvements.
What Information Must Be Provided in the State Plan? (Sec.  641.325)
    This section lists the minimum requirements of the State Plan, 
consistent with section 503(a)(4) of the OAA. In the opening sentences 
of the proposed section we add a requirement that the State Plan 
include the State's four-year strategy, as required by section 
503(a)(1) of the 2006 OAA and as described in Sec.  641.302.
    Paragraph (a) remains unchanged. In paragraph (b), we propose to 
add a requirement that the State Plan provide information on the 
relative distribution of eligible individuals who are limited English 
proficient as required by 2006 OAA section 503 (a)(4)(C)(iii). In 
paragraph (c), we propose to replace the requirement to identify and 
address ``the employment situations and the types of skills possessed 
by eligible individuals,'' which appears in the current regulations, 
with a new requirement stemming from a revised section 503(a)(4)(D) of 
the 2006 OAA, that the plan provide information on the current and 
projected employment opportunities in the State (such as by providing 
employment statistics available under section 15 of the Wagner-Peyser 
Act (29 U.S.C. 491-2) by occupation) and the type of skills possessed 
by local eligible individuals. State labor market information is 
available through the following link to America's Career Information 
Network: http://www.acinet.org/acinet/crl/library.aspx?PostVal=10&CATID=52. We propose to make these changes in 
accordance with the same changes in the 2006 OAA.
    Paragraph (d) currently requires a description of the localities 
and populations for which community service projects in the State are 
most needed. We propose to change this paragraph by removing the words, 
``community service'' before the word ``projects'' to follow the same 
change in section 503(a)(4)(E) the 2006 OAA.
    We propose a slight modification to paragraph (e). Instead of 
requiring that the State Plan include actions taken ``or'' planned 
concerning coordination with WIA, we require the Plan to include 
actions taken ``and/or'' planned to capture actions already taken in 
addition to those being planned.
    What appears as paragraph (f) in the current regulations is moved 
to paragraph (g), and we propose a new paragraph (f), which would 
require that the State Plan describe the process used to seek advice 
and recommendations on the State Plan from representatives of 
organizations and individuals listed in Sec.  641.315, and the process 
used to seek advice and recommendations on steps to coordinate SCSEP 
services with activities funded under title I of WIA from 
representatives of organizations listed in Sec.  641.335. Since the 
2006 OAA requires that advice and recommendations be sought from 
representatives of these organizations and individuals, the Department 
believes it is reasonable for the State Plan to describe how this input 
was obtained.
    Proposed paragraph (g) mirrors what is paragraph (f) in the current 
regulations, and requires the State Plan to describe the planning 
process, including opportunities for public comment. The only change to 
this paragraph is that we propose to add a reference to Sec.  641.350, 
which requires the State to solicit public comments.
    There is no change to the text of what appears as paragraph (g) in 
the current regulations, although it appears as paragraph (h) here. The 
paragraph that is labeled (h) in the current regulations is labeled 
paragraph (i) here; the only change is that the reference to Sec.  
641.365 has been taken out of parentheses. Finally, the text that 
appears as paragraph (i) in the current regulations is repeated 
verbatim here although it is now labeled paragraph (j).
How Should the State Plan Reflect Community Service Needs? (Sec.  
641.330)
    There is no change to this provision.
How Should the Governor, or the Highest Government Official, Address 
the Coordination of SCSEP Services With Activities Funded Under Title I 
of WIA? (Sec.  641.335)
    The only proposed change to this provision is to add in the heading 
the phrase, ``or the highest government official,'' after the word, 
``Governor,'' to be inclusive of jurisdictions where the head of the 
government is not a Governor.
How Often Must the Governor, or the Highest Government Official, Update 
the State Plan? (Sec.  641.340)
    The Department proposes to reword the heading question for this 
section because the former heading assumed an annual review of the 
State Plan, which is no longer required under the 2006 OAA, and to 
include the phrase, ``or the highest government official,'' to be 
inclusive of jurisdictions for which the head of the government is not 
a Governor. Instead, the 2006 OAA requires that the State Plan be 
reviewed, updated, and submitted to the Secretary not less often than 
every two years. The Department revises the proposed section to reflect 
the new requirement. We encourage States to review their State Plan 
more frequently than every two years, and make necessary adjustments 
and submit modifications as circumstances warrant. The Department 
intends for the State Plan to be a living document that will guide the 
strategic and ongoing operations of the SCSEP within the State. Prior 
to submitting an update of the State Plan to the Department the 
Governor, or highest government official, must seek the advice and 
recommendations of the individuals and organizations identified in 
Sec.  641.315 about what, if any, changes are needed, and publish the 
State Plan, showing the changes, for public comment.
    We also propose to add cites to corresponding statutory provisions.
What Are the Requirements for Modifying the State Plan? (Sec.  641.345)
    The Department proposes a new paragraph (a) to distinguish State 
Plan updates from State Plan modifications; the remaining paragraphs 
have been re-designated. Whereas States are required to update their 
State Plan not less often than every two years, modifications may be 
submitted anytime circumstances

[[Page 47778]]

warrant. Both updates and modifications require an opportunity for the 
public to comment on the State Plan, but only in the event of a State 
Plan update (Sec.  641.340) are States required to seek the advice and 
comment of the individuals and organizations identified in Sec.  
641.315.
    Paragraph (b), which is labeled paragraph (a) in the current 
regulations, addresses what circumstances require a modification to the 
State Plan. The only changes we propose in paragraph (b) are changing 
the word ``strategies'' to ``four-year strategy,'' and adding the word 
``significant'' before the word ``changes.'' We propose the latter 
change to clarify that trivial changes do not warrant a modification to 
the State Plan.
    In paragraph (c) we state that modifications to the State Plan must 
be open for public comment. We propose to delete a reference to Sec.  
641.325 from this paragraph because that section merely lists the 
required contents of the State Plan. We propose to leave intact the 
reference to Sec.  641.350 which addresses soliciting public comment on 
the State Plan. In paragraph (d) we clarify that States need not seek 
the advice and recommendations of the individuals and organizations 
identified in Sec.  641.315 when modifying the State Plan.
    Paragraph (e), which appears as paragraph (c) in the current 
regulations, remains unchanged.
How Should Public Comments Be Solicited and Collected? (Sec.  641.350)
    There is no change to this provision.
Who May Comment on the State Plan? (Sec.  641.355)
    There is no change to this provision.
How Does the State Plan Relate to the Equitable Distribution Report? 
(Sec.  641.360)
    The equitable distribution report shows where SCSEP positions are 
located throughout a State on a grantee-by-grantee basis and is 
required by section 508 of the OAA. State grantees are responsible for 
preparing the report at the beginning of each fiscal year. SCSEP 
grantees use the equitable distribution report to improve on the 
distribution of SCSEP positions within the State. The information 
contained in the equitable distribution report is used in preparing the 
State Plan; however, the State Plan requires additional information. 
This section is substantively the same as in the current regulations, 
but the Department proposes to change the reference to the State Plan 
to reflect the statutory requirement, new to the 2006 OAA, that the 
Plan be updated and sent to the Secretary not less often than every two 
years, whereas in the current regulations we reference annual State 
Plans. The Department also proposes to remove redundant language 
concerning the role of the equitable distribution report.
How Must the Equitable Distribution Provisions Be Reconciled With the 
Provision That Disruptions to Current Participants Should Be Avoided? 
(Sec.  641.365)
    This section is largely the same as in the current regulations, but 
since the 2006 OAA places time limits on participation in the SCSEP, 
the Department proposes to revise this section to provide a cross-
reference to Sec.  641.570 of these regulations, where the new time 
limit is addressed. We propose to remove the reference to Sec.  641.575 
because limits set on the amount of time a participant spends in a 
particular community service employment assignment do not affect the 
distribution of SCSEP positions. We also propose to rephrase the first 
sentence, concerning avoiding disruptions in services, for greater 
clarity. Finally, we make several grammatical and technical 
corrections.

Subpart D--Grant Application and Responsibility Review Requirements for 
State and National SCSEP Grants

    This subpart covers the grant application, eligibility, and award 
requirements for all SCSEP grants under section 506 of the 2006 OAA, 
which describes distribution of assistance to State and national 
grantees. The Department proposes to change the title of this subpart 
to clarify that this subpart applies to National and State grants, but 
not the pilot, demonstration, and evaluation grants described in 
subpart F.
    The proposed changes in this subpart support an increased emphasis 
on the grantees' accountability for results in order to achieve 
enhanced program performance. This subpart describes organizations 
eligible to apply for SCSEP grants, application requirements, 
eligibility criteria, responsibility reviews, and how the Department 
will select grantees. Comments are welcome on the new and revised grant 
application, eligibility, and award requirements that are discussed in 
this preamble or other changes to this subpart which flow from the 2006 
OAA.
What Entities Are Eligible To Apply to the Department for Funds To 
Administer SCSEP Projects? (Sec.  641.400)
    The Department proposes to delete ``community service'' from the 
heading question of this section to be consistent with the rest of 
these regulations which generally refer simply to ``SCSEP projects.''
    Section 502(b)(1) of the 2006 OAA authorizes the Secretary to make 
grants to public and nonprofit private agencies and organizations, 
agencies of a State, and tribal organizations, to administer SCSEP 
projects. This section is the corresponding regulatory provision.
    The Department proposes no changes to paragraph (a). In the current 
regulations, paragraph (b) specifies the eligible entities that can 
apply for national grant funds in a State if the national grantee 
consistently fails to meet State performance measures. The Department 
proposes to delete paragraph (b) because under the 2006 OAA, national 
grantees are held accountable only for their national goals.
    The Department proposes a few changes to former paragraph (c), 
which is now labeled paragraph (b), concerning State grants. First, we 
divide the paragraph into two parts. Proposed paragraph (b)(1) 
addresses the general statutory requirement that the Department award a 
SCSEP grant to each State. We propose to change the phrase, ``enter 
into agreements with each State,'' to, ``award each State a grant,'' 
for clarity. Also, whereas the current regulations provide that States 
can use individual State agencies, political subdivisions of a State, a 
combination of political subdivisions, or a national grantee operating 
in the State to administer SCSEP funds, the proposed paragraph provides 
that a State may designate only an individual State agency. We propose 
to delete the options concerning political subdivisions of a State to 
follow the same change in section 502(b)(1) of the 2006 OAA. We propose 
to delete the option of a national grantee operating in a State partly 
because, to date, all State grantees have been State agencies, and 
partly because in the event of the competition contemplated by 
paragraph (b)(2), all nonprofit private agencies and organizations are 
eligible to compete.
    Proposed paragraph (b)(2) provides that a State must compete for 
its SCSEP State grant funds in the event that the designated State 
grantee fails to meet the expected levels of performance for the core 
performance measures for three consecutive years. We propose to change 
what appears as the third sentence of paragraph (b) in the current 
regulations to the active voice for readability. We also propose to 
alter the statutory reference so that we now refer to the section of 
the statute that establishes State grant funding rather

[[Page 47779]]

than the statutory section that requires that a State's funds being 
competed after repeated failure to meet performance measures.
    Finally, the Department proposes to add that the designated entity 
that failed to meet core performance measures for three consecutive 
years is not eligible to compete for SCSEP funds for the first full 
Program Year following the determination of the third year of 
consecutive failure. We add this sentence to ensure that the State 
competition acts as a consequence for repeated failure to perform. A 
similar provision governs national grantees; a national grantee that 
fails to meet the expected levels of performance for four consecutive 
years is ineligible to compete in the grant competition following the 
fourth year of consecutive failure (OAA sec. 513(d)(2)(B)(iii)).
How Does an Eligible Entity Apply? (Sec.  641.410)
    This section directs interested applicants, including States, to 
follow instructions issued by the Department to apply for a SCSEP 
grant. National grants are competed, and the Department generally 
publishes application guidelines in Solicitations for Grant 
Applications (SGA) in the Federal Register. The Department usually 
issues instructions for State grants, which are not competed, in 
administrative guidance.
    In paragraph (a), the Department proposes to add ``evaluation 
criteria'' to the list of what is included in the application 
guidelines because these criteria will be set forth in the SGA for 
national funds and may change over time. We also propose to change the 
phrase, ``State and national SCSEP funds,'' to ``national funds, and 
State funds,'' because, under the 2006 OAA, those types of funds are 
awarded differently (competitively versus noncompetitively) and on a 
different timetable (annually for State versus multi-year for 
national). We also propose to delete what is the last sentence of 
paragraph (a) in the current regulations, because it redundantly 
provides that applications are to be submitted in accordance with 
Departmental instructions.
    Paragraph (b) implements OAA section 503(a)(5), which requires 
national grant applicants to provide their applications to the 
Governor, or the highest government official, of the State in which 
projects are proposed so that the Governor (or the highest government 
official) may make recommendations relating to position distribution. 
Grantees have generally provided Governors (or the highest government 
official) with executive summaries of their application; the Department 
will continue to consider such practice as fulfilling this requirement.
    The current regulations exempt Indian organizations from this 
requirement because they are exempt from State planning. The Department 
proposes to continue this exemption policy, again because it is 
consistent with the exemption from State planning under OAA section 
503(a)(8). We propose to add organizations serving Pacific Island and 
Asian Americans to the exemption because the 2006 OAA also exempted 
those organizations from State planning. We propose to clarify that 
this exemption from submitting national grant applications to the 
Governor, or the highest government official, applies to Indian and 
Pacific Island and Asian American organizations seeking funding 
reserved under OAA section 506(a)(3). While it remains the policy of 
the Department that these organizations are not required to submit 
their applications to the Governor (or the highest government 
official), we nevertheless encourage such entities to submit their 
applications to the Governor(s) in the State(s) they propose to serve 
so that the Governor(s) may better plan the activities in their 
State(s). We also note that if a grantee that is awarded a grant with 
reserved funds chooses to compete for other, non-reserved SCSEP funds, 
such a grantee would be required to submit its non-reserved fund grant 
application to the Governor (or the highest government official).
    We also propose to add a phrase connecting the submission required 
in this paragraph to the Governor's (or the highest government 
official's) review, which is described in Sec.  641.480 of these 
regulations.
    In paragraph (c), the Department proposes to delete the phrase, 
``community service project'' from between the words ``SCSEP'' and 
``grant application'' to be consistent with the rest of these 
regulations which merely refer to ``SCSEP grants'' or ``SCSEP grant 
applications.'' We also propose to expand the cross-reference to State 
Plan requirements so that readers are directed to the entirety of 
subpart C.
What Are the Eligibility Criteria That Each Applicant Must Meet? (Sec.  
641.420)
    The Department proposes to move the former Sec.  641.420, which 
addresses what factors we consider in selecting grantees, to Sec.  
641.460, so that it follows all the provisions relating to grant 
application requirements, and we renumber the remaining sections 
accordingly.
    This renumbered section, which is Sec.  641.430 in the current 
regulations, describes the eligibility criteria for SCSEP grant 
applicants. The Department proposes to update language in paragraph 
(a), specifying that applicants must demonstrate an ability to 
administer a program that serves the greatest number of eligible 
participants and most-in-need individuals, to reflect the language of 
section 514(c)(1) of the 2006 OAA. Paragraphs (b) and (c) remain the 
same.
    The Department proposes to add a new paragraph (d) relating to the 
applicant's past performance to conform with section 514(c)(4) of the 
2006 OAA, and to re-designate the remaining paragraphs accordingly. For 
applicants that have previously received a SCSEP grant, this criterion 
addresses the applicant's prior performance in meeting SCSEP core and 
additional measures of performance. For applicants who have not 
received a SCSEP grant in the past, this addresses the applicant's 
prior performance under other Federal or State programs. The Department 
proposes to add a phrase in paragraph (e) (which is paragraph (d) in 
the current regulations) specifying that grantees must be able to move 
most-in-need individuals into unsubsidized employment, to reflect the 
eligibility criterion specified in section 514(c)(5) of the 2006 OAA.
    In paragraph (f), the Department proposes to add the word 
``activities'' to clarify the focus of coordination at the State and 
local levels, in accordance with the same change in section 514(c)(6) 
of the 2006 OAA. We propose one change in paragraph (g), which is 
paragraph (f) in the current regulations. We propose to replace the 
word, ``including'' with the phrase, ``as reflected in,'' for clarity. 
The Department also proposes to add a new paragraph (h), requiring that 
grantees be able to administer a project that provides community 
service to be considered eligible, in order to be consistent with 
section 514(c)(8) of the 2006 OAA. The Department proposes to add the 
phrase ``and in community services provided'' in paragraph (i) when 
describing a grantee's ability to minimize disruption, in accordance 
with section 514(c)(9) of the 2006 OAA. In paragraph (j) (formerly 
paragraph (h)), we propose to replace ``Secretary of Labor'' with 
``Department'' to be consistent with the rest of these regulations.

[[Page 47780]]

What Are the Responsibility Conditions That an Applicant Must Meet? 
(Sec.  641.430)
    This section contains the responsibility review provisions codified 
in section 514(d) of the 2006 OAA. The Department proposes to add an 
opening phrase, ``[s]ubject to Sec.  641.440,'' because that section 
addresses responsibility conditions that, alone, will disqualify a 
grant applicant. Also in the opening sentence, we propose to replace 
the phrase ``any of the acts of misfeasance or malfeasance described in 
Sec.  641.440(a)-(n) of this section'' with the simpler, ``any of the 
following acts,'' because paragraphs (a) through (n) comprise the 
entirety of this section and all are acts of either misfeasance or 
malfeasance.
    In paragraph (a) the Department proposes to replace the word ``sub-
grantee'' with ``sub-recipient'' for consistency throughout this 
proposed rule and with the description of sub-recipients in the Office 
of Management and Budget (OMB) Circular A-133. Accordingly, we delete 
the term ``sub-contractors'' from this paragraph because the term sub-
recipients includes both sub-grantees and sub-contractors. In paragraph 
(e), the Department proposes to change the phrase, ``meet applicable 
performance measures,'' to ``meet applicable core performance measures 
or address other applicable indicators of performance'' to reflect the 
same change in section 514(d)(4)(E) of the 2006 OAA. In paragraph (k), 
we propose to delete the reference to 20 CFR 667.200(b) because SCSEP 
grantees/sub-recipients are not required to follow the audit 
requirements in that regulation. The audit requirements for the SCSEP 
are located in Sec.  641.821, which is properly referenced in paragraph 
(k).
    We also propose several grammatical and clarifying changes.
Are There Responsibility Conditions That Alone Will Disqualify an 
Applicant? (Sec.  641.440)
    The Department proposes to combine into paragraph (a) what are 
paragraphs (a) and (b) in the current regulations for increased 
clarity. In what is now paragraph (b), the Department proposes to 
clarify that we will determine the existence of significant fraud or 
criminal activity. We also propose to revise the language concerning 
handling Federal funds to be grammatically correct. The Department 
proposes to revise the last sentence on fraud or criminal activity 
determination for readability and to again clarify that the Department 
makes that determination.
How Will the Department Examine the Responsibility of Eligible 
Entities? (Sec.  641.450)
    The Department proposes to remove the words ``conduct a'' and 
``of'' from the phrase ``conduct a review of available records,'' for 
readability.
What Factors Will the Department Consider in Selecting National 
Grantees? (Sec.  641.460)
    The Department proposes to move the former Sec.  641.420, which 
addresses what factors we consider in selecting grantees, to Sec.  
641.460, so that it follows all the provisions relating to grant 
application requirements, and we renumber the remaining sections 
accordingly. Also, we propose to add the word, ``national,'' to the 
heading of this section because the Department only executes 
competitions for national grants. Although a State grant must be 
competed if the designated State agency fails to achieve its core 
performance levels for three consecutive years, it is the State rather 
than the Department that carries out such a competition.
    This section describes the criteria to be used for the selection of 
national SCSEP grantees. The Department proposes to drop the 
conditional language ``if there is a full and open competition'' 
because the 2006 OAA requires a regular competition for national 
grants. The Department also proposes to drop the reference to past 
performance among the rating criteria the Department will consider, and 
instead adds a new criterion relating to past performance in the 
section on eligibility criteria (Sec.  641.420). The Department makes 
this change in accordance with the 2006 Amendments to section 514(c)(4) 
of the OAA. We also propose to clarify in the second sentence that the 
sections to which we refer are sections of these regulations, to avoid 
any possible confusion with sections of the OAA.
Under What Circumstances May the Department Reject an Application? 
(Sec.  641.465)
    The only change we propose to make to this section is removing the 
word ``program'' after ``the SCSEP'' because the ``P'' in the acronym 
SCSEP stands for program.
What Happens If an Applicant's Application Is Rejected? (Sec.  641.470)
    The Department proposes to revise this section to accurately 
reflect the process currently used by the Department for applications 
that are not funded. Under the current process, non-selected entities 
that request an explanation are provided with feedback on the 
shortcomings of their proposal. We also propose to include a reference 
in paragraph (a) to Sec.  641.900, which addresses the appeal process 
available to a rejected applicant. We propose to reword paragraph (b) 
to clarify that incumbent grantees are not to receive any technical 
assistance related to any new application/proposal which they are 
submitting or planning to submit for a possible new award. Any 
technical assistance that incumbent grantees receive must relate to 
activities and/or performance under the existing grant.
    The Department proposes to revise what appears as paragraph (c) in 
the current regulations in several ways. First, we propose to divide it 
into three paragraphs, now lettered (c), (d), and (f), for clarity. We 
also revise the text of what is paragraph (c) so that proposed 
paragraphs (c) and (d) accurately reflect and clarify the possible 
remedies on appeal. We propose to include another reference to Sec.  
641.900 in proposed paragraph (c). In paragraphs (c) and (d) we propose 
to change the word ``slot'' to ``position'' to be consistent with the 
use of the term ``position'' in the rest of these regulations.
    The Department proposes to add a new paragraph (e) to clarify that 
if a party is not satisfied with the Grant Officer's decision about 
whether the organization continues to meet the requirements of this 
part, whether positions will be awarded to the organization, and the 
timing of the award, the Grant Officer must return the decision to the 
Administrative Law Judge for review. We propose to re-designate the 
remaining paragraph, which appears as paragraph (d) in the current 
regulations, as paragraph (f).
    We also propose grammatical and clarifying changes.
May the Governor, or the Highest Government Official, Make 
Recommendations to the Department on National Grant Applications? 
(Sec.  641.480)
    This section explains the Governor's, or the highest government 
official's, statutory authority under section 503(a)(5) of the OAA to 
make recommendations to the Department on grant applications before 
funds are awarded. We propose to add the word ``national'' to the 
heading because this section is limited in application to national 
grants. We propose to add to paragraph (a) a reference to Sec.  
641.410(b); that is the regulatory provision that requires national 
grant applicants to submit their application to the Governor, or the 
highest government official, of each State in which projects are 
proposed. We also propose to add a

[[Page 47781]]

citation to the OAA. In paragraph (b), the Department proposes to drop 
the reference to the Governor making recommendations under 
noncompetitive conditions because national grants will now be competed 
on a regular basis.
When Will the Department Compete SCSEP Grant Awards? (Sec.  641.490)
    This section outlines the circumstances under which there must be a 
competition for SCSEP funds. The Department proposes to divide 
paragraph (a) into two subparagraphs. In paragraph (a)(1), we propose 
to reflect the statutory requirement that the Department will generally 
hold a competition for national grants every four years. We also 
propose to state that we will publish a Solicitation for Grant 
Applications in the Federal Register. In paragraph (a)(2) we propose to 
add a sentence indicating that the statute gives the Department the 
authority to provide an additional one-year grant to national grantees. 
The Department makes these changes to paragraph (a) in accordance with 
section 514(a) of the 2006 OAA; we propose to add specific statutory 
cites to both subparagraphs of paragraph (a).
    The Department proposes to revise paragraph (b) to specify that 
when a State grantee fails to meet its expected levels of performance 
for the core indicators for three consecutive Program Years, the State 
must hold a full and open competition for the SCSEP funds allotted to 
the State. We propose this change in accordance with section 
513(d)(3)(B)(iii) of the 2006 OAA, and propose to add a cite to this 
paragraph.
When Must a State Compete Its SCSEP Award? (Sec.  641.495)
    The Department proposes a new section to address the competition 
that is required if a State grantee fails to meet its expected core 
levels of performance for three consecutive Program Years. Performance 
measures were discussed in the IFR, 72 FR 35832, June 29, 2007.

Subpart E--Services to Participants

    This subpart covers services to SCSEP participants. The Department 
here proposes to implement new provisions in the 2006 OAA relating to 
income eligibility, priorities in enrollment of participants, changes 
in benefit policies, and time limits for program participation. We also 
address the types of services that participants may receive, procedures 
concerning termination from the program, and the grantee's 
responsibilities relating to participants. Comments are welcome on the 
proposed changes to subpart E described in this preamble or on other 
changes to subpart E which flow from the 2006 Amendments.
Who Is Eligible To Participate in the SCSEP? (Sec.  641.500)
    This provision establishes the statutorily defined eligibility 
criteria. The Department proposes to move what was paragraph (b) of 
this section, concerning cross-border agreements, to Sec.  641.515 of 
these regulations, which addresses participant recruitment and 
selection, because cross-border agreements are more relevant to 
participant recruitment than they are to participant eligibility. We 
propose to revise the remaining paragraph, which is paragraph (a) in 
the current regulations, to add the requirement that age- and income-
eligible individuals must also be unemployed, as required by section 
502(a)(1) of the 2006 OAA. In the current regulations, the requirement 
that the applicant be unemployed is only referenced in the regulations 
at Sec.  641.120, relating to program purpose; the Department 
subsequently issued administrative guidance clarifying that being 
unemployed was an eligibility criterion (TEGL No. 13-04). We interpret 
section 502(a)(1) of the 2006 OAA as treating unemployment as a SCSEP 
eligibility criterion. Such an interpretation is consistent with the 
training purpose of this program, and is also consistent with the 
policy expressed in Sec.  641.512 of these regulations that job-ready 
individuals cannot be enrolled in the SCSEP but should be referred to 
an employment provider. Moreover, including unemployment as an 
eligibility criterion is consistent with the role of the SCSEP as 
serving seniors who are most in need of employment and training 
services. We also propose to add the word, ``Federal,'' to clarify that 
the poverty guidelines we refer to are Federal poverty guidelines.
When Is Eligibility Determined? (Sec.  641.505)
    This section states that initial eligibility is determined at the 
time of an individual's application. After the initial eligibility 
determination, grantees/sub-recipients are responsible for verifying 
the eligibility of participants at least once every 12 months, and may 
do so more frequently as circumstances require.
    The Department proposes to add the phrase, ``including instances 
when enrollment is delayed,'' to the last sentence of this section. 
Many grantees/sub-recipients maintain waiting lists and considerable 
time may pass from the time of initial eligibility determination to the 
time when a SCSEP position becomes available. Accordingly, we indicate 
through this additional phrase that delayed enrollment is one example 
of a circumstance when it may be appropriate to verify continued 
eligibility of an individual.
How Is Applicant Income Computed? (Sec.  641.507)
    This proposed new section discusses computing income eligibility. 
We propose to move the section that is numbered Sec.  641.507 in the 
current regulations, which addresses what types of participant income 
are included and excluded to Sec.  641.510.
    Section 518(a)(4) of the 2006 OAA delineates the procedure for 
calculating participant income. The Department implemented these 
procedures effective January 1, 2007, when it issued TEGL No. 12-06. We 
now propose to establish the same procedures in this section. Grantees 
may calculate income based on the income received during the 12 months 
prior to application, or may annualize the income received during the 6 
months prior to application. (Program guidance prior to TEGL No. 12-06 
limited the calculation time period to the 6 months prior to 
application, annualized.) The Department encourages grantees to choose 
the computation method that is most favorable to each participant, on a 
case-by-case basis, for the broadest possible inclusion of eligible 
applicants.
What Types of Income Are Included and Excluded for Participant 
Eligibility Determinations? (Sec.  641.510)
    The Department proposes to delete the heading and content of what 
appears as Sec.  641.510 in the current regulations, which addresses 
terminating a participant who becomes income ineligible, because 
terminations are fully addressed in Sec.  641.580. The content of what 
is Sec.  641.510 in the current regulations is covered in Sec.  
641.580(b) of this proposed rule.
    The section addressing what types of income are included and 
excluded is numbered Sec.  641.507 in the current regulations. We 
propose to move this heading to Sec.  641.510 so that it may follow the 
section on computing income.
    The Department proposes to revise the substance of this section to 
include the 2006 OAA's requirements relating to income eligibility 
determinations and to refer to the administrative guidance that 
provides a complete explanation of SCSEP participant income eligibility 
determination procedures.

[[Page 47782]]

    Section 518(a)(3)(A) of the 2006 OAA excludes four sources of 
income from SCSEP income eligibility determinations. The Department 
issued administrative guidance in TEGL No. 12-06, which implemented 
these exclusions effective January 1, 2007. The Department implemented 
these exclusions prior to the effective date of the 2006 OAA (July 1, 
2007) in order to alleviate the difficulties grantees and sub-
recipients have encountered in recruiting sufficient numbers of 
eligible individuals under the prior income eligibility guidelines.
    In general, the Department utilizes definitions from the U.S. 
Census Bureau's Current Population Survey (CPS) to define income for 
the purposes of SCSEP income eligibility. However, in addition to the 
statutory exclusions noted above, TEGL No. 12-06 carries forward 
additional exceptions to the CPS definitions of income for purposes of 
SCSEP income eligibility determinations from guidance in effect prior 
to the 2006 OAA. The additional exceptions are based on the recognition 
that these income sources (e.g., child support, public assistance, 
income from employment and training programs) rise out of some state of 
dependency or are intended to encourage individuals drawing benefits to 
return to work and should not disqualify otherwise needy individuals. 
TEGL No. 12-06 is available on the SCSEP Web site, http://www.doleta.gov/seniors, under the Grantee Information, Technical 
Assistance link.
May Grantees/Sub-Recipients Enroll Otherwise Eligible Individuals and 
Place Them Directly Into Unsubsidized Employment? (Sec.  641.512)
    The 2006 OAA and the Department encourage grantees/sub-recipients 
to work with those participants who are the most difficult to place, 
rather than those ready for immediate job placement, to provide them 
with the services necessary to develop the skills needed for job 
placement. The Department proposes to move and substantially revise 
what is Sec.  641.560 in the current regulations and replace it with 
proposed Sec.  641.512. We propose to change the heading from Sec.  
641.560 to clarify that the subject of this section is not participants 
but potential participants. We propose to move this provision to 
641.512 so that it appears with more closely-related topics such as 
eligibility, recruitment, and selection.
    In the current regulations, Sec.  641.560 encourages grantees not 
to enroll individuals who can be placed directly into unsubsidized 
employment. Proposed Sec.  651.512 forbids grantees to enroll job-ready 
individuals, instead encouraging grantees to refer them to an 
employment provider such as the One-Stop Center for job placement 
assistance under WIA. In this way, the SCSEP can use its limited 
dollars to serve those who need the training the SCSEP provides, while 
individuals who do not need training can be served by an entity such as 
the One-Stop Career Center.
How Must Grantees/Sub-Recipients Recruit and Select Eligible 
Individuals for Participation in the SCSEP? (Sec.  641.515)
    This section addresses recruitment and selection methods, including 
use of the One-Stop Delivery System, to ensure that the maximum number 
of eligible individuals have an opportunity to participate in the 
SCSEP.
    In the current regulations, paragraph (a) includes a list of 
persons (such as minority individuals and limited English speakers) 
whom grantees should seek to enroll in the SCSEP. The list derived from 
OAA section 502(b)(1)(M), which was amended in the 2006 OAA. 
Accordingly, the Department proposes to revise the list in paragraph 
(a) to reflect the amended statutory language.
    In paragraph (b), we propose to delete the sentence concerning 
listing community service opportunities with the State Workforce Agency 
because the corresponding statutory language was omitted from section 
502(b)(1)(H) in the 2006 OAA.
    Paragraph (c), concerning cross-border agreements, is new to this 
section. In the current regulations this paragraph appears in Sec.  
641.500, which addresses eligibility. The Department proposes to move 
this paragraph because cross-border agreements are more relevant to 
participant recruitment than they are to participant eligibility. We 
propose to specify that grantees entering into cross-border agreements 
must submit such agreements to the Department ``for approval'' to 
reflect current practice. Also in paragraph (c), the Department 
proposes to replace the word ``slot'' with ``position'' to be 
consistent with the rest of this part. Finally we propose to replace 
the word, ``between,'' with, ``among,'' to allow for cross-border 
agreements involving more than two states.
Are There Any Priorities That Grantees/Sub-Recipients Must Use in 
Selecting Eligible Individuals for Participation in the SCSEP? (Sec.  
641.520)
    In paragraph (a) of this section, the Department proposes to list 
the new statutory selection priorities identified in section 518(b) of 
the 2006 OAA. In paragraph (b), we interpret the priority for veterans 
as we did in the current regulations, such that the veterans' priority 
is afforded to individuals meeting the requirements of section 2(a) of 
the Jobs for Veterans Act (JVA), Public Law 107-288 (2002), which 
includes certain spouses of veterans.
    In paragraph (c), we propose to specify an order for applying the 
priorities. The order has changed from what appears in the current 
regulations because the statutory priorities have changed. The proposed 
ordering of priorities incorporates the dual statutory priorities 
contained in the JVA and the OAA and is consistent with Departmental 
guidance on that topic (TEGL No. 5-03, available on the Department's 
Web site). Like other programs, veterans who also possess other of the 
OAA priority characteristics receive the highest preference. Because 
veteran status is a priority in both the OAA and the JVA, veterans 
without other of the OAA priority characteristics would be next in 
order of priority, followed by non-veterans with OAA priority 
characteristics.
Are There Any Other Groups of Individuals Who Should Be Given Special 
Consideration When Selecting SCSEP Participants? (Sec.  641.525 in the 
Current Regulations)
    The Department proposes to delete the section that appears as 
641.525 in the current regulations because the statutory provision upon 
which it is based, OAA section 502(b)(1)(M), is addressed in Sec.  
641.515(a).
Must the Grantee/Subgrantee Always Select Priority or Preference 
Individuals? (Sec.  641.530 in the Current Regulations)
    The Department proposes to delete the section that appears as 
641.530 in the current regulations, because according to section 518(b) 
of the 2006 OAA, a priority individual must always be chosen over a 
non-priority individual, when a choice must be made. We note that some 
grantees have ample program openings, so that all eligible individuals 
may be served. However, if there is only one opening and two eligible 
individuals apply, one of whom is a priority individual, the 2006 OAA 
requires that the priority individual be given the program position.
What Services Must Grantees/Sub-Recipients Provide to Participants? 
(Sec.  641.535)
    This section sets forth those services that grantees/sub-recipients 
must provide to all SCSEP participants. Grantees are encouraged to 
utilize the

[[Page 47783]]

WIA system to assist in accomplishing the responsibilities outlined in 
this section.
    Paragraph (a)(2) of this section describes the grantees'/sub-
recipient's responsibility for assessing participants. The Department 
proposes to divide this paragraph into two subparts, the first 
addressing what should be assessed, and the second addressing the 
frequency of assessments. The sentence that now appears in proposed 
paragraph (a)(2)(i) is the first portion of paragraph (a)(2) in the 
current regulations. In proposed paragraph (a)(2)(ii) we revise the 
language that appears as the remaining portion of paragraph (a)(2) in 
the current regulations. We propose to state that the various 
assessment functions described in paragraph (a)(2)(i) of this section 
must be done initially upon program entry, and then subsequently as 
necessary, but at least two times a year. The initial assessment may 
count as one of the two that are required in the first year. This 
clarification is consistent with the expectation that unsubsidized 
employment is a goal for SCSEP, and all participants should be 
periodically assessed to check their progress toward transitioning to 
unsubsidized employment.
    We propose several changes to paragraph (a)(3) of this section, 
which concerns IEPs. First, we propose to divide this paragraph into 
two subparagraphs to clearly delineate grantee/sub-recipient 
responsibilities related to the IEP. We propose to add the phrase, 
``that includes an appropriate employment goal,'' after, ``develop an 
IEP,'' in paragraph (a)(3)(i) because unsubsidized employment is a goal 
for all of the SCSEP, and every IEP should be oriented toward that 
eventual goal. We propose to remove the reference to Sec.  641.260 that 
appears in the current regulations; such a section does not exist in 
the current regulations nor is it in the proposed regulation. Instead, 
Sec.  641.230 provides that an assessment or IEP completed by the SCSEP 
satisfies any condition for an assessment, service strategy, or IEP 
completed at the One-Stop, and vice-versa, so we add a reference to 
that section in paragraph (a)(3)(i). We propose to add the word, 
``initial,'' before the word, ``assessment'' in paragraph (a)(3)(i) to 
distinguish this assessment from subsequent assessments. Additionally, 
the Department proposes to change the wording in both subparagraphs of 
paragraph (a)(3) to refer to an individual participant and an IEP 
rather than using the plural ``participants'' and ``IEPs;'' we propose 
these changes to clarify that an IEP must be developed for each 
participant individually. We also propose to add the words ``assessment 
and'' between ``WIA'' and ``IEP'' to clarify that assessments and IEPs 
are distinct; an assessment is used to develop an IEP. Finally, in 
proposed paragraph (a)(3)(ii), which addresses updating the IEP, we 
make one change from the language that appears as the last portion of 
paragraph (a)(3) in the current regulations. We propose to add the 
word, ``subsequent'' before ``participant assessments'' to distinguish 
these assessments from the initial assessment.
    With regard to the assessments and IEPs discussed in paragraphs 
(a)(2) and (a)(3), we note that section 502(b)(1)(N) of the 2006 OAA 
requires that grantees/sub-recipients prepare an assessment of 
participants' skills, talents, and needs for services, and a ``related 
service strategy.'' The Department has determined that preparation of 
the IEP fulfills the requirement for a related service strategy.
    In paragraph (a)(4) of this section we propose to change the word 
``activity'' to ``assignment'' to be consistent with the term 
``community service employment assignment'' used throughout this 
proposed rule.
    Paragraph (a)(5) broadly addresses the training services that 
grantees/sub-recipients must provide to participants. (Section 641.540 
addresses the specific types of training that may be provided.) In the 
current regulations there are two paragraphs concerning training: 
Paragraph (a)(5) addresses training specific to the community service 
employment assignment and paragraph (a)(6) addresses other training 
identified in participants' IEP. The Department proposes to merge those 
two paragraphs into a single paragraph because all training, whether or 
not initially provided specific to a community service assignment, must 
be consistent with a participant's IEP and should move the participant 
toward the goal of unsubsidized employment. Indeed, we consider the IEP 
to drive all services provided to participants, including training 
services. The remaining paragraphs have been renumbered accordingly.
    We note that it is still permissible to provide training that 
enables a participant to successfully fulfill the duties of his or her 
community service employment assignment. However, such training is 
acceptable only so long as it is consistent with the IEP. Further, all 
training must contribute to the eventual goal of unsubsidized 
employment. Clearly, IEPs and training needs will vary greatly among 
participants. Nevertheless, the course charted in the IEP should be 
pointed in the direction of unsubsidized employment, and any training 
provided should advance the participant further along in that same 
direction.
    Paragraph (a)(6), which appears as paragraph (a)(7) in the current 
regulations, remains unchanged. Proposed paragraphs (a)(7) and (a)(8) 
of this section appear in the current regulations, but are located at 
paragraphs (a)(12) and (a)(13). We propose to move them to paragraphs 
(a)(7) and (a)(8) to give a better sense of time order in the 
grantee's/sub-recipient's responsibilities. In paragraph (a)(7), the 
Department proposes to add the phrase ``or referring participants to 
appropriate services'' to more closely follow the statute and to 
indicate that, in addition to providing services directly or through 
WIA partner programs, SCSEP grantees/sub-recipients can use the One-
Stop Centers to access the services of other service providers in the 
community.
    In paragraph (a)(9) of this section, the Department proposes to 
change the term ``fringe benefits'' to ``benefits.'' We propose to 
delete the word ``fringe'' from the phrase ``fringe benefits'' 
throughout this proposed rule, to reinforce the notion that the SCSEP 
is a temporary training program as opposed to a more permanent 
employment situation, and to correspond to the same change in section 
502(c)(6)(A) of the 2006 OAA. The Department also proposes to specify 
in paragraph (a)(9) that participants must receive a wage while in 
training, to conform to the 2006 OAA at sections 502(b)(1)(I), 
502(b)(1)(J), and 502(c)(6)(A), as well as during orientation. Lastly, 
we propose to add to this paragraph a reference to the specific 
regulation sections that address wages and benefits.
    The paragraphs that appear as (a)(9) and (a)(11) in the current 
regulations remain unchanged but appear here as paragraphs (a)(10) and 
(a)(11). The Department proposes to delete what is paragraph (a)(10) in 
the current regulations. That paragraph requires grantees to verify 
participant income at least once every 12 months and is repetitive of 
Sec.  641.505. We also propose to delete what is paragraph (a)(14) in 
the current regulations, which discusses following up with participants 
to determine their need for supportive services after placement into 
unsubsidized employment, for two reasons. First, Sec.  641.545 already 
permits grantees to provide or arrange for supportive services after 
placement into unsubsidized employment. Second, the paragraph's 
placement in the current

[[Page 47784]]

regulations in this section meant that grantees/sub-recipients were 
required to follow up with participants to determine if they needed 
supportive services. Although the Department strongly encourages 
follow-up with participants to support them in their unsubsidized 
employment, it is not required. (OAA sec. 502(c)(6)(A)(iv)).
    We also propose to delete what is paragraph (a)(15) in the current 
regulations. That paragraph requires grantees/sub-recipients to follow 
up with former participants to determine whether that person was still 
employed. Although grantees/sub-recipients are still required to obtain 
retention data, it is not necessarily done by contacting the 
participant, nor is that a service provided to the participant, which 
is the subject of this section.
    Paragraph (b) of this section remains unchanged. Paragraph (c) of 
this section states that grantees may not use SCSEP funds for 
individuals who only need job search assistance or job referral 
services. We propose to add to this paragraph a parenthetical reference 
to Sec.  641.512, which provides that grantees cannot enroll job-ready 
participants, but must refer them to an employment provider such as the 
One-Stop Center for job placement assistance.
    Finally, we propose several grammatical and technical corrections 
in this section.
What Types of Training May Grantees/Sub-Recipients Provide to SCSEP 
Participants in Addition to the Training Received at the Community 
Service Employment Assignment? (Sec.  641.540)
    This section addresses the many forms that SCSEP training may take. 
Training received at the community service employment assignment is not 
within the scope of this section, however. The Department proposes to 
rephrase the heading accordingly, for clarity. For the same reason, we 
also propose to delete what appears in the current regulations as the 
last sentence of paragraph (a) of this section.
    Paragraph (a) provides the conceptual framework for training. The 
Department proposes to add the phrase ``and that prepares them for 
unsubsidized employment'' to this paragraph because SCSEP training 
should advance the participant toward the goal of unsubsidized 
employment.
    In paragraph (b), the Department proposes to replace training 
``before or after placement in'' with ``prior to beginning or 
concurrent with'' a community service employment assignment. This 
change is consistent with statutory language at section 
502(c)(6)(A)(ii) of the 2006 OAA, and clarifies that training may take 
place as soon as a participant has been assigned to a community service 
employment assignment even if the participant has not yet begun working 
at that assignment.
    Since the current regulations were published, online training has 
become more common. In many cases quality training can be obtained in 
an online environment that allows individuals with transportation 
difficulties access to training. Therefore, the Department proposes to 
add ``online instruction'' to the list of the types of training 
allowable in paragraph (c) to clarify that such instruction is an 
allowable use of training funds.
    The Department proposes to remove the following sentence which 
appears as paragraph (d) of this section in the current regulations: 
``Grantees and sub-recipients are encouraged to place a major emphasis 
on training available through on-the-job experience.'' The Department 
proposes this change because secs. 502(b)(1)(I) and 502(c)(6)(A)(ii) of 
the 2006 OAA emphasize the importance of all types of training in the 
SCSEP, not only on-the-job training. What is paragraph (e) in the 
current regulations becomes proposed paragraph (d) and is unchanged.
    The Department proposes to split what is paragraph (f) in the 
current regulations into two paragraphs. The first portion, addressing 
paying for training, becomes paragraph (e). We revise the language in 
paragraph (e) to mirror the language at section 502(c)(6)(A)(ii) of the 
2006 OAA. The second portion, addressing wages during training, stands 
alone as the new paragraph (f). The Department also proposes to change 
the new paragraph (f), to state that participants ``must'' be paid 
wages while in training, to be consistent with the amended statute. 
(OAA sec. 502(b)(1)(I)). We also propose to add a reference to the 
paragraph of the proposed rule that describes participants' wages.
    The Department proposes to broaden paragraph (g) to address 
supportive services generally, whereas the subject of this paragraph in 
the current regulations is, ``travel and room and board.'' We propose 
this change to conform with section 502(b)(1)(L) of the OAA. The 
Department encourages grantees and sub-recipients to seek outside 
sources of assistance to help provide supportive services to 
participants. We continue to say that a grantee/sub-recipient ``may'' 
pay for the costs of supportive services for two reasons: first, 
because we encourage grantees/sub-recipients to obtain supportive 
services from sources other than the grant whenever possible and 
second, because a grantee/sub-recipient is not required to provide 
supportive services when it determines that the supportive services 
would be too expensive, are not available, or would not be necessary to 
enable the participant to participate in the program. When a grantee/
sub-recipient decides to approve supportive services, however, it must 
either pay for or obtain the services.
    Paragraph (h) explains that in addition to training paid for by the 
SCSEP, participants may obtain training on their own, if they wish. We 
propose to clarify that any such training would be at the participant's 
own expense.
What Supportive Services May Grantees/Sub-Recipients Provide to 
Participants? (Sec.  641.545)
    This section addresses the supportive services that grantees/sub-
recipients may provide to participants. In paragraph (a), the 
Department proposes to replace ``supportive services to assist 
participants'' with ``supportive services that are necessary to enable 
an individual'' to successfully participate in SCSEP projects, to 
conform to language in secs. 502(c)(6)(A)(iv) and 518(a)(7) of the 2006 
OAA. The Department interprets this revision in statutory language 
concerning the purpose of supportive services to be somewhat more 
prescriptive. That is, the supportive services that are appropriately 
provided by the SCSEP are those that are necessary to make it possible 
for an individual to participate in the SCSEP--not just any supportive 
service that would assist an individual to participate in the program. 
Indeed, we view the new language as conveying a tighter requirement 
that the supportive services be more directly related to the eventual 
employment goal.
    At the same time, we also propose to change ``child and adult 
care'' to ``dependent care,'' ``temporary shelter'' to ``housing,'' and 
add needs-related payments, as examples of supportive services. These 
revisions are consistent with the language in OAA section 518(a)(7), 
and are chosen to be as inclusive as possible of all allowable 
supportive services. Therefore, while we interpret the purpose of SCSEP 
supportive services to be slightly narrower than in the past, the scope 
of available supportive services is slightly more expansive. We also 
propose to add to this paragraph a citation to the provision of the 
2006 OAA that defines supportive services. Paragraph (b) remains 
unchanged.
    We propose to add a paragraph (c) to this section, and move to it a 
revised

[[Page 47785]]

version of what appears in Sec.  641.555(a) in the current regulations. 
Section 641.555(a) requires grantees to contact participants during the 
first six months following placement to determine their need for 
supportive services. In the proposed paragraph (c), the Department 
proposes to change ``must'' to ``are encouraged to,'' to clarify that 
there is no statutory requirement that grantees/sub-recipients follow-
up with participants after they have been placed in unsubsidized 
employment. The statute allows such follow-up, however, and the 
Department strongly encourages it. Also in paragraph (c), the 
Department proposes to extend the time period during which grantees/
sub-recipients may contact placed participants from 6 months to 12 
months. We propose this change because one of the new additional SCSEP 
indicators of performance is retention in employment at one year; 
grantees/sub-recipients should be authorized to support placed 
participants in maintaining their employment throughout this one-year 
timeframe. The Department also proposes to change the word ``during'' 
to ``throughout'' in describing the 12 month period, to clarify that 
the Department prefers that grantees/sub-recipients not wait until 12 
months have passed to contact a placed participant. Instead, we 
encourage grantees/sub-recipients to contact placed participants as 
often as necessary to ensure that they have the needed supportive 
services to maintain unsubsidized employment. SCSEP grantees/sub-
recipients may utilize other organizations, including One-Stop 
partners, to contact the placed participants on behalf of the SCSEP, to 
determine if supportive services are necessary. SCSEP grantees/sub-
recipients are authorized to pay for or arrange for necessary 
supportive services during this twelve month period.
What Responsibility Do Grantees/Sub-Recipients Have To Place 
Participants in Unsubsidized Employment? (Sec.  641.550)
    This section outlines grantees'/sub-recipients' responsibility to 
place participants in unsubsidized employment. The Department proposes 
to change ``should'' to ``must,'' and ``reasonable efforts'' to ``every 
effort,'' in the proposed clause ``grantees and sub-recipients must 
make every effort to place participants into unsubsidized employment.'' 
We propose these changes to strengthen the emphasis on placement in 
unsubsidized employment, consistent with the 2006 OAA. The Department 
proposes to remove the phrase ``in accordance with each participant's 
IEP,'' which appears in the first sentence of this section in the 
current regulations, and the phrase that appears in the second 
sentence, ``whose IEPs include an unsubsidized employment placement 
goal,'' to emphasize that a goal for all of the SCSEP is to move 
participants into unsubsidized employment. Similarly, the Department 
proposes to remove the phrase ``as many as possible'' in the first 
sentence to again emphasize that unsubsidized employment is a goal for 
the SCSEP. Finally, the Department proposes to add the phrase ``and 
because the SCSEP limits the amount of time a participant can remain in 
the program'' to the first sentence because the 2006 OAA establishes a 
time limit for SCSEP participation that reinforces the responsibility 
to place participants in unsubsidized employment. (OAA sec. 
518(a)(3)(B)).
What Responsibility Do Grantees Have to Participants Who Have Been 
Placed in Unsubsidized Employment? (Sec.  641.555 in the Current 
Regulations)
    The Department proposes to remove this section from the 
regulations.
    We propose to move what is paragraph (a) of this section, 
addressing grantees contacting placed participants to determine their 
need for supportive services, to Sec.  641.545(c). Paragraph (b) of 
this section requires grantees to contact participants to obtain 
retention data. Paragraph (c) of this section states that subparts G 
and H of this part may include follow-up requirements. We propose to 
remove paragraphs (b) and (c) because grantees are not required to 
contact former participants to obtain retention data; retention 
information is generally obtained through other means.
May Grantees Place Participants Directly Into Unsubsidized Employment? 
(Sec.  641.560 in the Current Regulations)
    In the current regulations, this section encourages grantees not to 
enroll individuals who could be placed directly into unsubsidized 
employment. The Department proposes to remove this section; this topic 
is now addressed in a new Sec.  641.512 in this part.
What Policies Govern the Provision of Wages and Benefits to 
Participants? (Sec.  641.565)
    The Department proposes significant substantive changes to this 
section required by revisions in section 502(c)(6)(A)(i) of the 2006 
OAA. The Department also proposes to change the formatting of this 
section to outline form, rather than paragraphs containing multiple 
sentences, for clarity.
    Paragraph (a) of this section addresses participant wages. In 
paragraph (a)(1)(i) we propose to delete the phrase ``required by the 
grantee/subgrantee'' after the word ``training'' because the 2006 OAA 
requires participants to be paid for all time spent in training. OAA 
section 502(b)(1)(I). Also, the SCSEP no longer uses the term 
``required training.'' Although the program may in the past have 
considered training called for in the IEP to be ``necessary'' or 
``required'' training, those terms are no longer employed. Indeed, 
under these proposed regulations all training provided by the SCSEP 
should be identified in the IEP. We also propose to remove the words 
``work in'' before ``community service employment assignments'' because 
they are not needed in the amended language. We also propose to change 
``minimum'' to ``required'' in the phrase, ``highest applicable 
required wage,'' because the prevailing rate of pay is not a minimum 
wage.
    In proposed paragraph (a)(1)(ii) the Department states that 
grantees may pay participants for time spent on WIA intensive services. 
This policy is not new; it is stated in Sec.  641.240(d) in the current 
regulations. However, we propose to move the provision so that it 
appears here, in the provision relating to wages.
    Paragraph (a)(2) addresses the highest applicable required wage, 
and is essentially unchanged from the current regulations. The only 
change is to again change the word, ``minimum'' to ``required,'' in the 
phrase ``highest applicable required wage'' because the prevailing rate 
of pay is not a minimum wage.
    In paragraph (a)(3), the Department proposes to add language to 
clarify the grantee's/sub-recipient's responsibility to make any 
necessary adjustments in minimum wage rates during the course of the 
grant term, should such a change be required by Federal, State, or 
local statute. Grantees are responsible for managing their funds well 
and enrolling only as many participants as they have the capacity to 
serve. In determining how many participants to enroll, grantees should 
make reasonable efforts to anticipate any likely adjustments in the 
minimum wage rates that may be required during the grant term.
    Paragraph (b) of this section addresses benefits. The Department 
proposes to change the term ``Fringe Benefits'' to ``Benefits'' in the 
heading and remove ``fringe'' from the subheadings and in the text of 
the regulations. As discussed above, we propose this change throughout 
this part to reinforce the notion that the SCSEP is a temporary

[[Page 47786]]

training program as opposed to a more permanent employment situation, 
and to adhere to the same change in section 502(c)(6)(A) of the 2006 
OAA.
    The Department proposes to organize paragraph (b) to distinguish 
two categories of participant benefits: required and prohibited. These 
categories clearly communicate to grantees and sub-recipients both 
obligations and proscriptions. This organization is also consistent 
with language in the 2006 OAA. In the 2000 OAA, section 502(c)(6)(A)(i) 
merely described ``enrollee wages and fringe benefits (including 
physical examinations),'' but in the 2006 OAA the same section was 
expanded to mention various required and prohibited benefits.
    Proposed paragraph (b)(1) addresses required benefits. Grantees/
sub-recipients must provide such benefits as are required by law. 
Grantees should determine which benefits are required by law in their 
area(s) and should submit that information as part of their grant 
application.
    Proposed paragraph (b)(1)(i) remains unchanged; in this paragraph 
we state that grantees/sub-recipients must provide benefits uniformly 
to all participants within a project or subproject. Proposed paragraph 
(b)(1)(ii) also remains unchanged, and provides that participants must 
be offered the opportunity to receive a physical examination annually. 
Proposed paragraphs (b)(1)(ii)(A) and (b)(1)(ii)(B), which further 
address physical examinations, also remain unchanged. We propose a new 
paragraph (b)(1)(ii)(C) in which we state that SCSEP funds may be used 
to pay the costs of the physical examinations. Some grantees and sub-
recipients are able to obtain physical examinations at no cost, or 
locate other sources of assistance to pay for the examinations. The 
Department encourages this sort of leveraging of community resources. 
Nevertheless paying for the physical examinations with grant funds is 
an allowable SCSEP cost.
    Proposed paragraph (b)(1)(iii) addresses workers' compensation law; 
this paragraph is unchanged from the current regulations. Proposed 
paragraph (b)(1)(iv) concerns unemployment compensation. If State law 
requires grantees/sub-recipients to provide unemployment compensation 
coverage, then clearly it would be a required benefit under the SCSEP. 
For that reason, and to be consistent with the treatment of 
unemployment compensation coverage by the 2006 OAA as a required 
benefit, we propose to move and revise the regulatory provision 
addressing unemployment compensation to this paragraph. In the current 
regulations this provision is located at paragraph (b)(4) of this 
section, and is phrased in the negative (``[u]nless required by law, 
grantees may not * * *''). We propose to place this provision at 
paragraph (b)(1)(iv) and state that if it is required by State law, 
then grantees/sub-recipients must provide unemployment compensation 
coverage. We note that where not required by State law, unemployment 
compensation coverage is not an allowable benefit.
    The Department proposes to add a requirement at paragraph 
(b)(1)(v), in accordance with section 502(c)(6)(A)(i) of the 2006 OAA, 
requiring grantees and sub-recipients to provide compensation for 
scheduled work hours during which an employer's business is closed for 
a Federal holiday. For the limited purpose of implementing this 
provision, the Department proposes to interpret the word ``employer'' 
in section 502(c)(6)(A)(i) of the 2006 OAA to mean host agency. This 
interpretation will promote uniform treatment of SCSEP participants at 
the same host agency, regardless of which entity is the program 
operator.
    The Department broadly interprets the word ``compensation'' in this 
context to allow for a variety of practices. Grantees/sub-recipients 
may compensate participants for scheduled work hours during which a 
host agency is closed for a Federal holiday by methods such as paying 
for the time a participant would have worked had it not been a Federal 
holiday (essentially a paid day off), or allowing a participant to make 
up the missed work hours on other days. Other methods of compensation 
may be allowable, but must be discussed in the grant application. 
Whatever the method of compensation offered, the compensation must be 
used within a reasonable period of time, and within the Program Year. 
Grantees and sub-recipients may develop policies that require the use 
of offered compensation sooner, for example, within a pay period; such 
policies must be described in the grant application.
    The intent of the Department here is to allow flexibility in 
administering the SCSEP but prevent any carry-over of benefits from one 
Program Year to the next. For example, if a host agency is closed for 
Memorial Day, then a participant assigned to that host agency must be 
compensated for that Federal holiday. The participant may be paid. 
Alternatively, the participant may be allowed to work extra hours on 
other days to make up the missed time, but those extra hours must be 
worked before the Program Year ends on June 30, if not before. Because 
no benefits may be carried over to the next Program Year, if a 
participant is provided an opportunity to make up the time but is 
unable to do so by June 30, the participant may be paid for the time.
    In paragraph (b)(1)(vi) the Department proposes that grantees and 
sub-recipients are required to provide necessary sick leave that is not 
part of an accumulated sick leave program, again in accordance with 
section 502(c)(6)(A)(i) of the 2006 OAA. The statute does not specify 
whether this sick leave must be paid or unpaid. Accordingly, the 
Department interprets the statute to allow either option, but requires 
grantees to explain their sick leave policy in their grant application. 
Necessary sick leave must be administered uniformly for all 
participants.
    The Department interprets the word ``accumulate'' as meaning any 
storing of unused sick leave. Thus while it would be permissible for a 
grantee to have a policy allowing, say, six days of sick leave over the 
course of a Program Year, it would not be permissible for participants 
to ``earn'' a day of sick leave every two months and store the unused 
days. By way of another example, it would be permissible for a grantee 
to allow each participant one day a month of sick leave, as long as 
unused sick days did not store, or accumulate. We understand the sick 
leave contemplated by the statute to be sick leave that is either used 
or zeroed out at the end of the period provided in the grantee's leave 
policy but at least at the end of the Program Year (e.g., if the 
grantee's policy provides for one day of sick leave a month, the sick 
leave would be zeroed out at the end of the month; if the grantee's 
policy provides for 12 days of sick leave a year, the unused sick leave 
would be zeroed out at the end of the year). Again, grantees must 
explain their method of administering this required benefit in their 
grant application.
    The Department proposes to consolidate the provisions addressing 
prohibited benefits into a new paragraph (b)(2) (in the current 
regulations benefit restrictions appear in paragraphs (b)(3) and 
(b)(4)) and expand the prohibitions in light of the 2006 OAA. Section 
502(c)(6)(A)(i) of the 2006 OAA prohibits grantees from using SCSEP 
funds to pay the cost of pension benefits, annual leave, accumulated 
sick leave, and bonuses. Again, the Department's intent concerning 
these restrictions is to make compensation and benefits for SCSEP more 
consistent

[[Page 47787]]

with compensation and benefits received by participants in other time-
limited training programs, rather than those in permanent employment 
situations. This is consistent with an increased emphasis on the goal 
of placing SCSEP participants in unsubsidized employment.
    The Department also proposes to prohibit the carry over of 
allowable benefits from one Program Year to the next. This policy is 
not new to the SCSEP. It was promulgated in TEGL No. 29-04, dated April 
18, 2005, and is designed to encourage participant self-sufficiency by 
discouraging participants from staying in the SCSEP indefinitely, thus 
preventing participation by other SCSEP-eligible individuals. We also 
propose to prohibit the payout of any unused benefits such as sick 
leave. This policy is consistent with the 2006 OAA's prohibition on 
paying the cost of accumulated sick leave, and supports the view of the 
SCSEP as a training program rather than a long-term employment 
situation.
    The Department interprets section 502(c)(6)(A)(i) of the 2006 OAA 
as articulating which benefits are required, and which benefits are 
prohibited; no benefits other than the required benefits are allowable. 
Grantees/sub-recipients may not offer additional benefits to SCSEP 
participants. This interpretation of the statute is consistent with the 
Department's vision of the SCSEP as a temporary training opportunity.
Is There a Time Limit for Participation in the Program? (Sec.  641.570)
    Section 518(a)(3)(B) of the 2006 OAA establishes a new time limit 
of 48 months for participation in the SCSEP, unless the Department 
authorizes an increased period of participation for particular 
participants. The 2006 OAA (sec. 502(b)(1)(c)) also requires SCSEP 
projects to manage their program such that the average participation 
period for all a project's participants is not greater than 27 months, 
unless an extension has been granted. The Department proposes to 
completely revise Sec.  641.570 to reflect these statutory changes.
    In the proposed paragraph (a), the Department describes the 48-
month time limit required by section 518(a)(3)(B) of the 2006 OAA, and 
refers readers to paragraph (b) of this section which addresses 
increased periods of participation for certain individuals, as well as 
paragraph (c) of this section, which addresses the average 
participation cap. In paragraph (a) the Department requires grantees/
sub-recipients to inform new participants of the time limit and 
possible extension at enrollment. However, grantees/sub-recipients 
should also notify current participants immediately, if they have not 
already done so, because the time limit began on July 1, 2007 for all 
participants enrolled as of that date.
    The Department proposes a new paragraph (b) to provide the rules 
for requesting an exception to the 48-month participation limit for 
certain individuals. Section 518(a)(3)(B)(ii) of the 2006 OAA allows 
grantees to request to increase the period of participation for 
individuals who: have a severe disability; are frail or are age 75 or 
older; meet the eligibility requirements related to age for, but do not 
receive, benefits under title II of the Social Security Act; live in an 
area with persistent unemployment and have severely limited employment 
prospects; or have limited English proficiency or low literacy skills. 
The Department will authorize an increased period of participation up 
to an additional 12 months for any participant who meets one or more of 
these criteria. Each participant is eligible for one extension. The 
Department is proposing to implement the statutory extension as a one-
per-participant, maximum one-year extension to ensure that 
participation is not indefinitely extended, thus preventing other 
eligible individuals from benefiting from the SCSEP. The 2006 OAA 
allows the average participation cap to be extended for an additional 
nine months (see Sec.  641.570(c)(2)). The Department reasoned that if 
the average cap could only be extended by nine months, then the 
individual period of participation should not be increased beyond a 
year to limit the risk of exceeding the average participation cap.
    The Department proposes a new paragraph (c) to implement the 
average participation cap set by section 502(b)(1)(C) of the 2006 OAA. 
Each SCSEP project must manage the participation period for its 
enrollees such that the average participation cap for all participants 
in the project does not exceed 27 months, or 36 months under the 
extension available in Sec.  641.570(c)(2). The Department has 
determined that for the purposes of this paragraph, each SCSEP grantee 
(whether State or national) will be considered to have one project. 
That is, the average participation cap will be applied to the single, 
over-arching project, not to each local project independently. This is 
consistent with subpart G of this part, in which grantees are 
responsible for managing their various projects to achieve the expected 
levels of performance for the grant as a whole. This approach also 
affords grantees discretion to manage their sub-recipients and/or 
individual projects in whatever way best suits their circumstances, to 
realize the average participation cap.
    The average participation cap must be achieved notwithstanding any 
individual extensions authorized pursuant to paragraph (b) of this 
section. That is, even if certain participants are allowed to remain in 
the program more than 48 months, each project must nevertheless satisfy 
the average participation cap for the project as a whole.
    A grantee may request an extended period of average participation, 
if the grantee demonstrates in a request to the Department the 
existence of extenuating circumstances relating to the factors 
enumerated in section 513(a)(2)(D) of the 2006 OAA and listed in 
paragraph (c)(2) of this section. The Department may authorize an 
extended average period of not more than 36 months for a specific 
project area for a particular Program Year. OAA section 
502(b)(1)(C)(ii).
    Proposed paragraph (d) addresses the circumstance of an authorized 
break in participation. Some grantees have developed policies for 
authorized breaks in participation, to address situations such as when 
a suitable community service employment assignment is not available, or 
when a participant must take a leave of absence to attend to a loved 
one or for medical reasons. Such policies must be in writing and must 
be included in the grant application. The Department does not consider 
authorized breaks in participation, if taken pursuant to an approved 
grantee policy and entered into the SCSEP Performance and Results 
Quarterly Performance Reporting (SPARQ) system, to count against the 
individual participation limit or the average participation cap.
    We propose to add a new paragraph (e), stating that we will issue 
administrative guidance detailing the processes by which a grantee may 
request an increased period of participation pursuant to paragraph (b) 
and by which a grantee may request an extended average participation 
cap pursuant to paragraph (c)(2).
    Finally, in proposed paragraph (f), the Department provides 
grantees the authority to limit individual participation to a time 
period less than the 48 months required by statute and described in 
paragraph (a) of this section. To set a lower individual participation 
limit, grantees must specify and describe their proposed participation 
limit in their grant application. In addition, only lower participation 
limits that are uniformly

[[Page 47788]]

applied to all participants are acceptable.
May a Grantee/Sub-Recipient Establish a Limit on the Amount of Time Its 
Participants May Spend at Each Host Agency? (Sec.  641.575)
    Consistent with the current regulations, the Department allows 
grantees to establish time limits on host agency assignments. In the 
proposed rule, however, we add a phrase to the first sentence of this 
section to encourage rotations among different host agencies, or among 
different assignments within the same host agency, as such rotations 
may increase participants' skills development and employment 
opportunities. The Department also proposes to change the second 
sentence to clarify that rotations should be consistent with, though 
not necessarily reflected in (as is the language used in the current 
regulations), the participants' IEPs. Finally, we note in this proposed 
section that neither the individual participation limit nor the average 
participation cap is impacted by host agency rotations. That is, a new 
host agency assignment does not ``re-start the clock'' for purposes of 
the individual participation limit or the average participation cap.
    The Department encourages grantees that establish time limits to 
discuss this aspect of the program with participants, at least during 
orientation and preferably more often than that. Early and ongoing 
communication concerning host agency rotations is likely to decrease 
participants' anxieties about changing assignments.
Is There a Limit on Community Service Employment Assignment Hours? 
(Sec.  641.577)
    This proposed new section limits the number of community service 
employment assignment hours to 1,300 per Program Year. Though this 
provision represents a change from the current regulations, a similar 
provision appeared in the 1995 final rule. In the 1995 rule, all paid 
time, including time spent on activities such as orientation and 
training, was limited to 1,300 hours per year. In the proposed rule, 
only hours spent at the community service employment assignment are 
subject to the 1,300-hour limit. This difference is meaningful because, 
consistent with the 2006 OAA and other aspects of this proposed rule, 
the proposed 1,300-hour limit does not discourage participant training. 
The Department wants to consistently encourage grantees and 
participants to utilize available resources to obtain training that 
will enhance participants' skills and employability. At the same time, 
the Department wants to make sure that the 1,300-hour limit does not 
significantly reduce the needed community services that participants 
provide, or the participants' opportunity to earn needed wages.
    Further, a limit of 1,300 hours per year reinforces that SCSEP is 
meant to provide temporary, part-time community service employment 
assignments. It is our experience that most SCSEP grantees comply with 
the purpose of providing temporary, part-time employment assignments. 
The annual limit of 1,300 hours is well above the average hours worked 
per year by SCSEP participants, which is 20 hours a week for 52 weeks, 
or 1,040 hours. The proposed limitation will eliminate full-time and/or 
long-term assignments that are significantly above the hours worked by 
the average participant. A limit on the number of hours worked per year 
also promotes program efficiency by ensuring that grantees and sub-
recipients do not spend a disproportionate amount of funds on some 
individual participants, limiting the participation of other eligible 
individuals in the program.
Under What Circumstances May a Grantee/Sub-Recipient Terminate a 
Participant? (Sec.  641.580)
    This section addresses the various reasons for terminating a 
participant and describes the basic terminations procedures. The 
Department proposes several minor changes in this section to ensure 
consistency in termination proceedings, including consistently 
requiring that a grantee/sub-recipient ``must give the participant 
written notice explaining the reason(s) for termination.'' The current 
regulations use various phrasings to describe the written notice and do 
not require written notice in every case of termination.
    Grantees/sub-recipients may serve only those individuals who are 
eligible for the SCSEP. Paragraphs (a), (b), and (c) of this section 
address situations in which participants are found not to be eligible 
for the program. In paragraph (a), describing termination based on 
false information, the Department proposes to add the word 
``knowingly'' to clarify that the situation addressed by this paragraph 
is one where the participant knowingly furnished false information that 
leads to an incorrect eligibility determination. In the alternative, if 
a grantee/sub-recipient learns that a participant mistakenly provided 
incorrect information that may impact eligibility, the grantee/sub-
recipient should verify the individual's eligibility. If the person is 
actually not eligible for the SCSEP, the grantee/sub-recipient must 
terminate the individual pursuant to Sec.  641.580(b).
    The Department proposes various changes in paragraph (b). This 
paragraph provides that if, during verification of eligibility, a 
grantee/sub-recipient determines that a participant is no longer 
eligible, the participant must be terminated. The ``must terminate'' in 
this paragraph is a change from the current regulations which allow 
that grantees ``may terminate'' such a participant. We propose this 
change because the SCSEP cannot serve ineligible individuals. The 
Department also proposes to broaden this paragraph to apply to 
eligibility issues in general, and not merely income eligibility as in 
the current regulations.
    We propose to add the phrase, ``under Sec.  641.505'' after the 
words ``eligibility verification,'' to refer to the section of this 
part that addresses when eligibility must be verified. We also propose 
to delete the word ``annual,'' because verification must be done at 
least once every twelve months but may also occur as circumstances 
require (see Sec.  641.505). Finally, we clarify that the written 
notice of termination must be given to the participant within thirty 
days of the ineligibility determination. This is consistent with the 
content of what is Sec.  641.510 in the current regulations; paragraph 
(b) of this section is silent on the timing of the notice in the 
current regulations.
    The only change we propose to paragraph (c) is to add the words 
``for termination'' after the word, ``reason(s),'' for clarity.
    In paragraph (d), describing terminations for cause, the Department 
proposes to replace the phrase ``the proposed reasons for such 
terminations'' with ``their policies concerning for-cause 
terminations'' when describing what grantees must include in their 
grant applications, for clarity. We also propose to replace the word, 
``discuss,'' with ``include,'' concerning submitting information on 
for-cause termination policies in the grant application, for clarity. 
The Department proposes to remove from paragraph (d) the discussion 
about communicating termination policies to participants, and proposes 
to create a new paragraph (g) to address that topic; the remaining 
paragraphs are re-lettered accordingly.
    In paragraph (e), the Department proposes to add the requirement 
that grantees/sub-recipients must provide participants with written 
notice when they are terminated for repeated refusals to accept a job 
offer, so that the

[[Page 47789]]

termination is clearly communicated to the participant and in order to 
be consistent with the requirements for other terminations described in 
this section. We also propose to add that the termination must occur 30 
days after the participant receives the written notice; this is 
consistent with other termination procedures in this section.
    Proposed paragraph (f) provides that when an unfavorable 
eligibility determination is made pursuant to paragraphs (b) and (c), 
the grantee/sub-recipient should refer the terminated individual to 
other possible assistance sources such as the One-Stop Delivery System, 
and when a grantee/sub-recipient terminates a participant under 
paragraphs (d) and (e), it may refer the individual to other potential 
sources of assistance. The Department proposes to remove the redundant 
phrase ``it must give the individual a reason for termination'' from 
this paragraph because that requirement is now stated in each paragraph 
on termination. Also, we propose to delete the phrase, ``when 
feasible,'' because the Department determined that qualification was 
not necessary. Finally in paragraph (e), we propose to delete the 
reference to paragraph (a) because we determined that grantees and sub-
recipients have no obligation to offer further assistance to an 
individual that knowingly provided false eligibility information.
    In proposed paragraph (g) we rephrase the material that appears in 
paragraph (d) of this section in the current regulations, concerning 
communicating termination policies to participants. We propose to 
require grantees and sub-recipients to furnish a written copy of their 
termination policies to participants at enrollment, and to verbally 
review those policies with participants.
    The Department proposes a technical correction to paragraph (h); we 
replace ``through (f)'' with ``through (e)'' when describing the 
paragraphs on terminations. Proposed paragraph (i) remains unchanged 
from what appears as paragraph (h) in the current regulations.
What Is the Employment Status of SCSEP Participants? (Sec.  641.585)
    In the current regulations, Sec. Sec.  641.585 and 641.590 address 
different aspects of the employment status of participants. The 
Department proposes to combine those two sections into a revised Sec.  
641.585; we propose to change the heading of the section accordingly.
    In proposed paragraph (a), we state that SCSEP participants are not 
considered Federal employees solely due to their participation in the 
SCSEP; this statement is derived directly from section 504(a) of the 
2006 OAA. The same notion is expressed in paragraph (a) of this section 
in the current regulations, although in different words (``[n]o, 
participants are not Federal employees'').
    Proposed paragraph (b) contains the substance of what is Sec.  
641.590 in the current regulations. In the current regulations, we 
state that ``[g]rantees must determine if a participant is an employee 
of the grantee, local project, or host agency as the definition of 
`employee' varies depending on the laws defining an employer/employee 
relationship.'' The first sentence of proposed paragraph (b) is a close 
parallel: ``[g]rantees must determine whether or not a participant 
qualifies as an employee of the grantee, sub-recipient, local project, 
or host agency, under applicable law.'' We propose to add ``sub-
recipient'' to include all the possible employer entities. We propose 
to use the phrase, ``qualifies as,'' rather than the word ``is,'' for 
clarity. The phrase, ``under applicable law,'' is proposed to clearly 
give grantees authority to consider whatever law is relevant to their 
determination. We propose to change ``if'' to ``whether or not'' 
because a grantee may determine that participants are not employees of 
any of the listed entities.
    In the current regulations, paragraph (b) of Sec.  641.585 states 
that ``if a Federal agency is a grantee or host agency, Sec.  641.590 
applies.'' The Department proposes to keep the substance of that 
statement but revise the wording. In the second sentence of proposed 
paragraph (b) we state that the responsibility for making the 
employment status determination rests with the grantee even if a 
Federal agency is a grantee or host agency. That is, although SCSEP 
participants are not considered Federal employees by virtue of their 
participation in the SCSEP, whether a particular participant is a 
Federal employee because that participant's grantee or host agency is a 
Federal agency, is a matter to be determined by the grantee.
Are Participants Employees of the Grantee, the Local Project, and/or 
the Host Agency? (Sec.  641.590 in the Current Regulations)
    The Department proposes to delete the section that appears as 
641.590 in the current regulations, because the subject of that 
section--the employment status of participants--is now addressed in 
Sec.  641.585.

Subpart F--Pilot, Demonstration, and Evaluation Projects

    This subpart describes the opportunities for pilot, demonstration, 
and evaluation projects that are authorized under section 502(e) of the 
2006 OAA. The former subpart F described ``502(e) projects'' which 
placed individuals in private sector job opportunities; the OAA now 
authorizes different types of projects. The proposed regulatory 
provisions largely reiterate the language in the 2006 OAA; however, 
proposed Sec.  641.620 provides that additional guidance on 
implementation of these new projects will be issued administratively.
    The Department interprets section 502(e)(2)(C) of the 2006 OAA, 
reiterated in Sec.  641.630(c) of these proposed regulations, to mean 
that older individuals who are not SCSEP-eligible may participate in 
pilot and demonstration projects, but such pilot and demonstration 
projects must be designed to address the employment and training needs 
of SCSEP-eligible individuals. For example, older individuals who are 
not eligible for SCSEP may face challenges common to many older 
workers--e.g., skills that need to be upgraded (such as technology-
related skills), disabilities or other health-related issues, lack of 
flexible work arrangements, or perceived age discrimination. Projects 
that propose to serve older individuals who are not eligible for the 
SCSEP must demonstrate that successful outcomes in their projects can 
result in strategies, models, or other tools or resources that can be 
replicated for the benefit of SCSEP-eligible participants. The 
Department will continue to explore how best to exercise this 
additional flexibility regarding pilot, demonstration, or evaluation 
projects.

Subpart G--Performance Accountability

    Subpart G was published in an IFR, 72 FR 35832, June 29, 2007.

Subpart H--Administrative Requirements

    Subpart H covers the administrative requirements that apply to all 
SCSEP grants. For the most part, the proposed regulations remain the 
same as the current regulations. However, the 2006 OAA necessitates 
several changes to this subpart, and the addition of a new Sec.  
641.874 setting forth conditions regarding a grantee's request to use 
additional funds for training and supportive service costs. We welcome 
comments on this new section and on other proposed changes to subpart H 
that are discussed in this preamble or on

[[Page 47790]]

other changes to this subpart which flow from the 2006 Amendments.
What Uniform Administrative Requirements Apply to the Use of SCSEP 
Funds? (Sec.  641.800)
    There is no change to this provision.
What Is Program Income? (Sec.  641.803)
    This section is substantively unchanged. The only change we propose 
to make to this section is the addition of new parenthetical 
descriptions of other regulations being referenced, and the revision of 
the parenthetical descriptions that appear in the current regulations, 
for clarity.
How Must SCSEP Program Income Be Used? (Sec.  641.806)
    The program income provisions of this section address the 
application of the Department's uniform administrative requirements to 
SCSEP activities by indicating what types of income earned or generated 
by recipients and sub-recipients are considered program income, how the 
costs of producing program income are to be treated, and by directing 
recipients to follow the addition method described in 29 CFR 95.24 
(non-profit and commercial organizations) and 29 CFR 97.25 (State and 
local governments) and add program income to Federal and non-Federal 
resources provided for SCSEP activities. The Department proposes to add 
a clarifying phrase to paragraph (a) to reflect the fact that program 
income must be used during the grant period in which it was earned, to 
be consistent with uniform administrative requirements. We also propose 
to add to paragraph (a) parenthetical descriptions by the references to 
other regulations, for clarity. We propose to clarify in paragraph (c) 
that the recipient has no obligation to the Department for program 
income earned after the end of the grant period. Finally, we propose 
certain grammatical corrections to this section.
What Non-Federal Share (Matching) Requirements Apply to the Use of 
SCSEP Funds? (Sec.  641.809)
    This section sets forth the various matching fund requirements that 
apply to recipients of SCSEP funds and clarifies previously ambiguous 
language. We propose to add the phrase, ``allowable costs paid for 
with'' to paragraph (b) to clarify that, to be counted toward the ten 
percent non-Federal share, costs must be allowable. The regulatory 
provisions cited in paragraph (c) provide information concerning 
allowable costs.
    The current regulations indicate that a recipient may not require a 
sub-recipient or host agency to provide non-Federal resources for the 
use of the SCSEP project as a condition of entering into a sub-
recipient or host relationship. In paragraph (e), we propose to clarify 
that this does not preclude a sub-recipient or host agency from 
voluntarily contributing non-Federal resources for the use of the SCSEP 
project. Paragraph (f) in the current regulations states that the 
Department may pay all the costs of private sector training projects 
established in section 502(e); we delete this provision from the 
proposed rule because section 502(e) now relates to pilot, 
demonstration, and evaluation projects.
What Is the Period of Availability of SCSEP Funds? (Sec.  641.812)
    This section details the period of availability of SCSEP funds and 
is substantively unchanged. In the current regulations, paragraph (b) 
states that SCSEP recipients must ensure that no sub-agreement provides 
for the expenditure of any SCSEP funds before July 1, or after the end 
of the grant period, except as provided in Sec.  641.815. We propose to 
add a phrase to paragraph (b) to clarify that the July 1 at issue here 
is July 1 of the grant year.
May the Period of Availability Be Extended? (Sec.  641.815)
    There is no change to this provision.
What Happens to Funds That Are Unexpended at the End of the Program 
Year? (Sec.  641.818 in the Current Regulations)
    The Department proposes to delete the section that appears as 
641.818 in the current regulations, because it relates to an internal 
Department process and is therefore not relevant for the rule.
What Audit Requirements Apply to the Use of SCSEP Funds? (Sec.  
641.821)
    There is no change to this provision.
What Lobbying Requirements Apply to the Use of SCSEP Funds? (Sec.  
641.824)
    There is no change to this provision.
What General Nondiscrimination Requirements Apply to the Use of SCSEP 
Funds? (Sec.  641.827)
    In the current regulations, paragraph (b) of this section states 
that recipients and sub-recipients of SCSEP funds must comply with the 
Department's nondiscrimination requirements at 29 CFR part 37, for 
SCSEP activities that are administered in conjunction with the One-Stop 
Delivery System. We propose to add a phrase to paragraph (a) to clarify 
that DOL regulations regarding the equal treatment of religious 
organizations at 29 CFR part 2 subpart D also apply. We also propose, 
in paragraph (b)(1)(ii), to abbreviate ``the Workforce Investment Act'' 
to ``WIA.''
What Policies Govern Political Patronage? (Sec.  641.833)
    There is no substantive change to this provision. We propose in 
paragraph (a) to abbreviate ``the Workforce Investment Act'' to 
``WIA.'' We also propose to add the word, ``part'' before ``37'' to 
accurately reference the regulation.
What Policies Govern Political Activities? (Sec.  641.836)
    The Department proposes to make only a few grammatical changes to 
this section.
What Policies Govern Union Organizing Activities? (Sec.  641.839)
    There is no change to this provision.
What Policies Govern Nepotism? (Sec.  641.841)
    We make no substantive changes to this section. In paragraph (a), 
we propose to replace the word ``position,'' with ``assignment,'' so 
that we use the term ``community service employment assignment,'' to be 
consistent with the language used in the rest of this part. In the 
second sentence of paragraph (a), we propose to move the phrase ``this 
requirement from'' to later in the sentence and change it to, ``from 
this requirement,'' for clarity.
What Maintenance of Effort Requirements Apply to the Use of SCSEP 
Funds? (Sec.  641.844)
    This section outlines the maintenance of effort responsibilities of 
SCSEP recipients. Section 502(b)(1)(G) of the 2006 OAA consolidates and 
amends the previous statutory sections on which this regulatory section 
is based. Accordingly, we propose to revise this section to follow the 
statutory changes.
    First, the Department proposes to replace the former paragraph (a) 
with a statement that a community service employment assignment is 
permissible only when the maintenance of effort requirements are met. 
Proposed paragraph (b) contains the specific maintenance of effort 
requirements. The first requirement is that the community service 
employment assignment must not reduce the number of job opportunities 
or vacancies that would otherwise be available to non-SCSEP persons. 
The 2006 OAA omits the prior statutory requirement, which is reflected 
in Sec.  641.844(b)(1) of the

[[Page 47791]]

current regulations, that SCSEP projects must result in an increase in 
employment opportunities in addition to those that would otherwise be 
available. The next requirement is rephrased but is substantively the 
same as appears in the 2000 OAA and current regulations: a SCSEP 
project must not displace currently employed workers, including partial 
displacements. The third listed requirement is that a SCSEP project 
must not impair existing contracts or result in the substitution of 
Federal funds for other funds in connection with work that would 
otherwise be performed. The only proposed change in this requirement is 
that we drop the phrase, ``for service'' after the word ``contracts'' 
to be consistent with the language of the statute. The last 
requirement, concerning a SCSEP participant not performing the same or 
substantively the same work as a person on layoff, is substantively the 
same as what appeared in the 2000 OAA and is in the current 
regulations, but again is proposed to be slightly rephrased. Also, this 
requirement in the current regulations uses the term, ``participant,'' 
which we propose to change to the term, ``eligible individual,'' to be 
consistent with the language of the statute. We also propose to make a 
few formatting corrections.
What Uniform Allowable Cost Requirements Apply to the Use of SCSEP 
Funds? (Sec.  641.847)
    This section is substantively unchanged. The only change the 
Department proposes to make to this section is the addition of 
parenthetical descriptions for referenced regulatory sections, for 
clarity.
Are There Other Specific Allowable and Unallowable Cost Requirements 
for the SCSEP? (Sec.  641.850)
    The only proposed change to this section is found in paragraph (d), 
which provides that one allowable SCSEP cost is a SCSEP project's 
proportionate share of the costs of the local One-Stop Delivery System. 
The Department proposes to add a sentence to this paragraph to clarify 
that the cost of services provided, including such things as the wages 
and benefits of a SCSEP participant placed at a One-Stop Career Center, 
may constitute some or all of a SCSEP project's cost-sharing 
contribution.
How Are Costs Classified? (Sec.  641.853)
    This section discusses whether costs are classified as 
administrative costs or programmatic activity costs and is 
substantively unchanged. The Department proposes two minor changes to 
this section. First, we propose to replace the term ``program costs,'' 
with the term ``programmatic activity costs'' to track a corresponding 
change in section 502(c)(6) of the 2006 OAA. Second, we propose to 
change the ``shall'' in the second sentence of paragraph (b) to 
``must;'' ``must'' is a more appropriate word to use when requiring an 
action in a regulation.
What Functions and Activities Constitute Administrative Costs? (Sec.  
641.856)
    This section discusses the functions and activities that constitute 
administrative costs. To be consistent with the language of the 2006 
OAA and the rest of this regulation, we propose to change the phrase, 
``costs of administration,'' to ``administrative costs,'' in the 
heading and throughout this section. Pursuant to section 502(c)(4) of 
the 2006 OAA, we propose to add the following additional functions and 
activities as administrative costs: preparing administrative reports; 
other activities necessary for general administration of government 
funds and associated programs; and the costs of technical assistance, 
professional organization membership dues, and evaluating results 
obtained by the project involved against stated objectives. We also 
propose to delete the word, ``overall,'' from the phrase that appears 
in the current regulations, ``overall general administrative and 
coordination functions,'' to mirror the same change in section 
502(c)(4)(A) of the 2006 OAA. Finally, the Department proposes to 
remove paragraph (c), the definition of ``first-tier sub-recipient,'' 
because the term has been replaced with ``program operator'' and that 
definition can be found in Sec.  641.140. We do not intend for these 
changes to have a substantive effect on cost allocation.
What Other Special Rules Govern the Classification of Costs as 
Administrative Costs or Programmatic Activity Costs? (Sec.  641.859)
    To make it easier to operate SCSEP activities within the WIA One-
Stop Delivery System, the OAA imports the WIA cost classification 
system into the SCSEP. Accordingly, the current regulations divide 
costs into administrative costs and program costs (termed programmatic 
activity costs in the SCSEP); the same categories are continued in the 
proposed rule. As in other sections of these regulations, the 
Department proposes to change the phrase, ``program costs'' to 
``programmatic activity costs'' to be consistent with the OAA (see, 
e.g., OAA sec. 502(c)(6)). We also propose to replace the phrase, 
``first-tier sub-recipient,'' with ``program operator,'' as discussed 
in the definitions section of this preamble (Sec.  641.140).
    We propose a few changes to paragraph (b). First, we propose to 
revise paragraph (b)(3) to state that the costs of sub-recipients and 
vendors performing administrative functions on behalf of recipients and 
program operators are classified as administrative costs. In the 
current regulations, only vendors are mentioned in paragraph (b)(3). We 
also propose to delete paragraph (b)(5) and combine its content into a 
revised paragraph (b)(4) that states that, except pursuant to paragraph 
(b)(3), costs incurred by all vendors, and only those sub-recipients 
below program operators, are classified as programmatic activity costs. 
In the current regulations, both (b)(4) and (b)(5) address activities 
that are classified as programmatic activity costs. We propose to make 
these changes to paragraph (b) for clarity, and to help ensure that 
entities that carry out the program functions of the SCSEP have access 
to administrative funds.
    The only other change we propose to make to this section is in 
paragraph (d). Paragraph (d) addresses overhead or indirect cost pools. 
We clarify in the proposed paragraph (d) that that the allocable share 
of indirect or overhead costs for administrative and programmatic costs 
are to be in the same proportions as the actual costs for those 
activities which are included in the overhead or indirect cost pool. 
Because of reports that the language that appears in paragraph (d) in 
the current regulations is confusing, we have rewritten the text in an 
attempt at greater clarity; we do not intend to change the substance of 
the policy, merely our explication of it.
Must SCSEP Recipients Provide Funding for the Administrative Costs of 
Sub-Recipients? (Sec.  641.861)
    There is no change to this section.
    Section 502(b)(1)(R) of the 2006 OAA requires the Department to 
consult with grantees concerning what amount of administrative cost 
allocation is sufficient among recipients and sub-recipients. The 
Department has determined that it will determine the appropriate 
allocation on a grantee-by-grantee basis and that the process of grant 
application, review, and acceptance will be used to carry out the 
required consultation with each grantee. Grantees must include in their 
grant application their plans for allocating administrative monies; 
that is, grantees

[[Page 47792]]

must explain how much administrative money they intend to keep and how 
much they will be delegating. The Department is able to evaluate and 
respond to that information when it reviews the grant application. If 
the Department concludes, for example, that a grantee is not allocating 
sufficient administrative funds for sub-recipients, it could remand the 
application for further consideration by the applicant. The grantee 
could then respond with a revised allocation plan. The act of approving 
the grant application constitutes the conclusion of the consultation 
process.
What Functions and Activities Constitute Programmatic Activity Costs? 
(Sec.  641.864)
    The Department defines programmatic activity costs pursuant to the 
new definition in section 502(c)(6)(A) of the OAA as amended in 2006. 
Programmatic activity costs now include the costs of (1) wages and 
benefits; (2) outreach, recruitment and selection, intake, orientation, 
and assessment functions; (3) participant training; (4) job placement 
assistance; and (5) participant supportive services.
    We propose to revise paragraph (a) to track the wages and benefits 
costs authorized by statute. These are wages paid to participants, such 
benefits as are required by law (such as workers' compensation or 
unemployment compensation), the costs of physical examinations, 
compensation for scheduled work hours during which an employer's 
business is closed for a Federal holiday, and necessary sick leave that 
is not part of an accumulated sick leave program. As described in the 
preamble discussion of Sec.  641.565(b), we interpret the latter 
provision to prohibit any storing of sick leave.
    No amounts provided under the grant may be used to pay the cost of 
pension benefits, annual leave, accumulated sick leave, or bonuses, as 
described in Sec.  641.565. Unlike the current regulations which permit 
some of these benefits, the Department is bound by the statute to 
prohibit the use of SCSEP funds for these purposes.
    We propose a few changes to paragraph (c). First, we propose to add 
a reference to Sec.  641.540, which addresses participant training. 
Also, we propose to specify that participant training may be provided 
prior to beginning or concurrent with a community service employment 
assignment. We propose to replace the phrase ``on the job'' with ``at a 
host agency,'' for increased clarity. The Department interprets the 
phrase ``participant training'' to mean only those costs that are 
directly related to participant training, and not activities such as 
general staff development that relate to participant training only 
indirectly or tangentially.
    Finally, the Department proposes one change to paragraph (e). We 
propose to insert the phrase, ``to enable an individual to successfully 
participate in a SCSEP project,'' to mirror the language of section 
502(c)(6)(A)(iv) of the 2006 OAA concerning what supportive services 
are allowable.
What Are the Limitations on the Amount of SCSEP Administrative Costs? 
(Sec.  641.867)
    There is no change to this provision.
Under What Circumstances May the Administrative Cost Limitation Be 
Increased? (Sec.  641.870)
    This section continues the Department's previous practice, as is 
described in the current regulations, of allowing increases in 
administrative cost limits as permitted under section 502(c)(3) of the 
OAA, if the recipient demonstrates that such an increase is necessary 
to carry out the project and that major administrative cost increases 
are being incurred in necessary program components. We propose to 
clarify in the proposed rule that payments for workers' compensation 
refers only to payments for staff; this is because workers' 
compensation payments made on behalf of participants are classified as 
programmatic activity costs.
    Paragraph (a)(2)(iii) concerns projects that are so small that the 
amount of administrative expenses incurred to carry out the project 
necessarily exceeds 13.5 percent. We propose to make changes to the 
wording of this paragraph in accordance with corresponding changes in 
the language of the statute, but do not consider any of the changes 
substantive. Whereas the 2000 OAA referred to administrative 
``expenses,'' the 2006 OAA now uses the term ``costs.'' Also, the 2000 
OAA used the phrase, ``13.5 percent of the amount for such project,'' 
and the 2006 OAA instead says, ``13.5 percent of the grant amount.''
What Minimum Expenditure Levels Are Required for Participant Wages and 
Benefits? (Sec.  641.873)
    As amended in 2006, section 502(c)(6)(B) of the OAA provides that 
grantees generally must use not less than 75 percent of the grant funds 
to pay participant wages and benefits. In paragraph (a) the Department 
proposes to add a reference to Sec.  641.864(a), which addresses wage 
and benefit programmatic activity costs. We propose to specify in 
paragraph (b) that recipients must spend at least 75 percent of their 
total award amount on such costs, not 75 percent of their total 
expenditures, as is stated in the current regulations. In paragraph (c) 
we note that a SCSEP grantee may request approval to use additional 
funds for programmatic activity costs, pursuant to a new Sec.  641.874. 
Finally, we propose to remove an obsolete reference to awards made 
under the former section 502(e) of the OAA.
What Conditions Apply to a SCSEP Grantee Request To Use Additional 
Funds for Training and Supportive Service Costs? (Sec.  641.874)
    In this proposed section we implement a new provision at section 
502(c)(6)(C) of the 2006 OAA, which allows a SCSEP grantee to submit to 
the Department a request for approval to use up to 10 percent of grant 
funds that would otherwise be devoted to wages and benefits under Sec.  
641.873 to provide participant training and supportive services. This 
new percentage (up to ten) is in addition to the 25 percent of funds 
that are otherwise available for administrative costs to support 
participant training, job placement assistance, participant supportive 
services, outreach, recruitment, selection, intake, orientation, and 
assessments; and thus reduces the minimum level for wages and benefits 
to 65 percent.
    Proposed paragraph (a) tracks section 502(c)(6)(C)(i) of the 2006 
OAA. Proposed paragraph (a)(3) addresses acceptable uses of the 
additional programmatic activity monies. Participant training is one 
acceptable use of the money; supportive services is the other. The 
Department interprets the phrase ``participant training'' to mean only 
those costs that are directly related to participant training, and not 
activities such as general staff development that relate to participant 
training only indirectly or tangentially. Also, as we noted in the 
preamble to Sec.  641.545, the language used in the 2006 OAA to 
describe appropriate supportive services has changed to, ``supportive 
services that are necessary to enable an individual'' to successfully 
participate in a SCSEP project. This language is somewhat more 
prescriptive than the language in the 2000 OAA, which stated that the 
SCSEP could provide supportive services ``to assist an enrollee to 
successfully participate in a [SCSEP] project.''
    In proposed paragraph (b) we detail the requirements for submission 
of a request to use additional funds for training and supportive 
service costs;

[[Page 47793]]

these requirements track those set out in the statute (OAA sec. 
502(c)(6)(C)(ii)).
    Section 502(c)(6)(C)(iii) of the 2006 OAA requires that grantees 
submit a request to use additional funds for training and supportive 
service costs not later than 90 days before the proposed date of 
implementation, and that the Department must act on the request no 
later than 30 days before the proposed date of implementation. The 
Department interprets these requirements as applying to requests to 
modify an existing grant agreement. We do not consider these timing 
requirements to apply to requests to use additional funds for training 
and supportive service costs that are contained in grant applications. 
Indeed, the practical reality of the SCSEP grant cycle is that grant 
application instructions are generally not issued early enough for 
grant applicants to be able to submit their applications 90 days before 
the beginning of the Program Year (July 1), and may not be acted on 30 
days prior to the start of the Program Year. Were the Department to 
strictly enforce the 90 and 30 day deadlines, it would mean that 
grantees would be unable to implement the requested use of additional 
funds for programmatic activity costs until several weeks into the 
Program Year. Such a delay in implementation would harm participants by 
complicating the administrative management of the grant, by reducing 
the amount of funds available for training and supportive service 
costs, and by reducing the flexibility of grantees to use the funds as 
Congress intended.
    Accordingly, if a grantee wishes to change its grant agreement to 
be able to use the additional moneys for training and supportive 
services, it must submit the request not later than 90 days before, and 
the Department will act on the request not later than 30 days before, 
the proposed date of implementation. If a request to use additional 
funds for training and supportive service costs is part of the grant 
application, the request will be reviewed and approved as a part of the 
normal grant approval process and will be implemented at the start of 
the Program Year.
    Finally, we propose to state in paragraph (d) that grantees may 
apply this provision to individual sub-recipients but need not provide 
this opportunity to all their sub-recipients.
When Will Compliance With Cost Limitations and Minimum Expenditure 
Levels Be Determined? (Sec.  641.876)
    There is no change to this provision.
What Are the Financial and Performance Reporting Requirements for 
Recipients? (Sec.  641.879)
    This section covers the reporting requirements that are authorized 
by the 2006 OAA. We propose to remove a reference to reporting 
requirements for section 502(e) private sector employment projects, 
because reporting for all SCSEP recipients is now included in paragraph 
(a). In addition, proposed paragraph (a) now addresses financial 
reporting and proposed paragraph (b) addresses performance reporting, 
which conforms to the ordering in the heading question for this 
section. In the current regulations, paragraph (a) addresses 
performance reporting and paragraph (b) addresses financial reporting.
    The Department proposes to add to paragraphs (a) and (b) 
parenthetical descriptions of the referenced regulatory sections. We 
propose to change the form number referenced in paragraph (a) because 
SCSEP grantees no longer use reporting form SF 269 for financial 
reporting; ETA Form 9130 is now the proper financial reporting form. 
And, whereas the former reporting instructions provided that financial 
reports were due in 30 days, the reporting instructions for the new ETA 
Form 9130 provides grantees with 45 days within which to submit each 
quarterly report, including the report for the last quarter. Under the 
ETA electronic reporting system, grantees are to mark their financial 
report for the last quarter of the grant as final which opens the link 
for a closeout final report which is due 90 days after the end of the 
grant period of performance; we propose to add the word ``closeout'' in 
the second sentence of paragraph (a) for clarity.
    We propose to revise paragraph (b) to describe the current 
performance reporting procedure. Although the current regulations 
indicate that recipients must submit quarterly progress reports, those 
reports are actually generated by the Department using participant data 
that recipients submit electronically. Similarly, whereas the current 
regulations stress timely submission of reports, the proposed language 
emphasizes the timely submission of electronic participant data. We 
propose to delete the sentence that indicates that if a grant period 
ends on a date other than the last day of the Program Year, the final 
report is due within 90 days after the ending date of the grant. The 
Department collects data by Program Year, regardless of the grant 
period. Proposed paragraph (c) remains unchanged.
    The Department notes that section 502(c)(6)(D) of the 2006 OAA 
requires each SCSEP grantee to annually prepare and submit to the 
Department a report documenting the grantee's use of funds for 
programmatic activities described in Sec.  641.864. Because the 
financial and participant data already reported by grantees necessarily 
includes information on how the grantee uses its funds, including any 
funds for programmatic activities described in Sec.  641.864, the 
Department interprets this new requirement as being fulfilled by the 
reports required in paragraphs (a) and (b) of this section.
    Proposed paragraph (d) addresses reporting on the performance 
measures. We propose to revise the text of this paragraph slightly from 
what appears as paragraph (e) in the current regulations. Instead of 
requiring data and reports on, ``the program performance measures and 
the common performance measures,'' the proposed text requires data and 
reports on ``the performance measures,'' for simplicity and clarity. We 
also propose to change the reference to the specific sections of these 
regulations requiring performance measures, to a reference to subpart F 
generally, as all of subpart F addresses performance measures.
    Proposed paragraph (e) of this section states that grantees may be 
required to collect and submit data on the demographic characteristics 
of participants. The only proposed change to this provision, which 
appears as paragraph (f) in the current regulations, is to change from 
the singular, ``this report,'' to the plural, ``these reports,'' in the 
second sentence, to be consistent with the plural ``reports'' in the 
first sentence. Starting in 2007, in addition to prior uses, the 
Department will also be using this data to prepare a report for 
Congress on the levels of participation and performance outcomes of 
minority individuals served by SCSEP, as required by section 515 of the 
2006 OAA. The Department will not be requiring a new report from 
grantees. However, the Department may request additional information as 
part of the grant application process in order to complete its report 
to Congress.
    We also propose to make grammatical and technical corrections.
What Are the SCSEP Recipient's Responsibilities Relating to Awards to 
Sub-Recipients? (Sec.  641.881)
    This section specifies that the recipient is responsible for all 
SCSEP activities performed with SCSEP funds and for ensuring that sub-
recipients comply with SCSEP requirements. We propose to change 
paragraphs (a) and (b) to (b) and (c). We propose to add a new 
paragraph (a) to state that recipients are

[[Page 47794]]

responsible for ensuring all sub-awards are made on the basis of full 
and open competition to the maximum extent practicable in accordance 
with procurement requirements in 29 CFR 95.43 (non-profit and 
commercial organizations) and 29 CFR 97.36 (State and local 
governments). These are uniform administrative requirements, applicable 
to all Department grants.
    The parenthetical at the end of paragraph (b) refers to the 
statutory section on responsibility tests; we propose to add a 
reference to the section of these regulations addressing the 
responsibility tests, for clarity. Proposed paragraph (c), which 
appears as paragraph (b) in the current regulations, remains unchanged. 
We propose to add a new paragraph (d) to conform to the requirements of 
section 514(e) of the 2006 OAA relating to the special consideration 
that national grantees serving a service area where a substantial 
population of individuals with barriers to employment exists must 
afford in selecting sub-recipients. Section 514(e)(1) of the 2006 OAA 
provides that for purposes of this section ``individuals with barriers 
to employment'' means minority individuals, Indian individuals, 
individuals with greatest economic need, and individuals who are most-
in-need. The term most-in-need is defined in the portion of Sec.  
641.140 that was included in the IFR published at 72 FR 35832, Jun. 29, 
2007.
What Are the Grant Closeout Procedures? (Sec.  641.884)
    The Department proposes to add parenthetical descriptions for the 
regulatory references provided. Otherwise there is no change to this 
section.

Subpart I--Grievance Procedures and Appeals Process

    Subpart I describes the grievance procedures required of grantees, 
and the Department's appeal process for grant applicants and grantees. 
With two exceptions these provisions are substantively identical to the 
provisions in the current regulations.
What Appeal Process Is Available to an Applicant That Does Not Receive 
a Grant? (Sec.  641.900)
    This section describes the appeal process that is available to an 
applicant that does not receive a grant. We propose to revise the text 
of this section to more accurately reflect the current process actually 
used by the Department for applications that are not funded. An 
applicant may request feedback from the Department concerning a 
decision not to award a grant to the applicant, but debriefings are no 
longer provided. Under the current process, non-selected entities that 
request an explanation are provided with feedback on the shortcomings 
of their proposal. An applicant that wishes to appeal must file their 
appeal within 21 days of either the notification that financial 
assistance would not be awarded or the Grant Officer's feedback on the 
proposal. Under the current regulations, an applicant is required to 
request that the Grant Officer provide the reasons for not awarding 
financial assistance in order to preserve the right to appeal. Under 
this proposed section, an applicant may file an appeal within 21 days 
of the notification that an award was not given; requesting an 
explanation from the Grant Officer is not a necessary step to 
preserving the right to appeal.
    The Department also proposed to modify two timeframes. Under the 
current regulations, the Grant Officer has 20 days within which to 
provide a debriefing and a written decision explaining the reasons for 
the decision. In the proposed section, the Grant Officer has 21 days to 
provide feedback concerning the proposal. Under the current 
regulations, a party dissatisfied with the decision of the 
Administrative Law Judge has 20 days within which to file a petition 
for review. We propose to change that timeframe to 21 days. We propose 
these timeframe changes to be consistent with the 21-day timeframe used 
in other circumstances in this section. We also propose to make 
technical corrections.
What Grievance Procedures Must Grantees Make Available to Applicants, 
Employees, and Participants? (Sec.  641.910)
    Paragraph (c) of this section formerly required that any allegation 
of a Federal law violation be filed with the Chief of the Division of 
Older Worker Programs. Due to a reorganization within ETA, such an 
allegation will now be filed with the Chief of the Division of Adult 
Services. We also propose to make technical corrections to this 
section.
What Actions of the Department May a Grantee Appeal and What Procedures 
Apply to Those Appeals? (Sec.  941.920)
    We propose to delete the sentence, ``[t]he Chief Administrative Law 
Judge will designate an Administrative Law Judge to hear the appeal,'' 
from paragraph (d)(1) as it is unessential to these regulations. The 
only other changes we propose in this section are technical 
corrections.
Is There an Alternative Dispute Resolution Process That May Be Used in 
Place of an OALJ Hearing? (Sec.  641.930)
    The only changes we propose in this section are technical ones.

III. Administrative Information

Regulatory Flexibility Analysis, Executive Order 13272, Small Business 
Regulatory Enforcement Fairness Act

    The Regulatory Flexibility Act (RFA), 5 U.S.C. chapter 6, requires 
the Department to evaluate the economic impact of this proposed rule 
with regard to small entities. The RFA defines small entities to 
include small businesses, small organizations, including not-for-profit 
organizations, and small governmental jurisdictions. The Department 
must determine whether the rule imposes a significant economic impact 
on a substantial number of such small entities.
    First, the Department has determined that this NPRM does not affect 
a substantial number of small entities. There are about 900 SCSEP 
grantees, sub-recipients, and sub-sub-recipients. Of these, 50 are 
States and are not small entities as defined by the RFA. The vast 
majority of the rest are non-profit organizations that would be 
categorized as small entities for RFA purposes. However, even if all of 
the rest (850) are small non-profit organizations, that is simply not a 
substantial number. Eight hundred and fifty is less than one percent of 
the total number of non-profits in the country, which has been 
estimated to be over 1 million. Accordingly, we conclude that this 
proposes rule does not affect a substantial number of small entities.
    The Department has also determined that the economic impact of this 
proposed rule is not significant because these regulations will not 
result in any additional costs to grantees. The SCSEP is designed such 
that SCSEP funds cover the vast majority of the costs of implementing 
this program. Subpart H of this proposed rule provides detailed 
information to grantees on what costs are proper program expenditures, 
how to properly categorize those costs, etc. The SCSEP statute does 
require a ten percent non-Federal match (see Sec.  641.809); however, 
the ten percent match requirement has been in effect in previous SCSEP 
regulations and therefore does not constitute a new economic burden on 
grantees. (We note that the Department allows in-kind contributions in 
lieu of monetary payments, which significantly moderates the economic 
impact of the match requirement.) Accordingly, the Department certifies 
that this proposed

[[Page 47795]]

rule will not have a significant economic impact on a substantial 
number of small entities. The Department welcomes comments on this RFA 
certification.
    We note that this analysis is also applicable under Executive Order 
13272; for those purposes as well we certify that this proposed rule 
does not impose a significant economic impact on a substantial number 
of small entities.
    The Department has also determined that this rule is not a ``major 
rule'' for purposes of the Small Business Regulatory Enforcement 
Fairness Act (SBREFA), 5 U.S.C. chapter 8. SBREFA requires agencies to 
take certain actions when a ``major rule'' is promulgated. SBREFA 
defines a ``major rule'' as one that will have an annual effect on the 
economy of $100,000,000 or more; that will result in a major increase 
in costs or prices for, among other things, State or local government 
agencies; or that will significantly and adversely effect the business 
climate.
    This proposed rule will not significantly or adversely effect the 
business climate. First, the proposed rule will not create a 
significant impact on the business climate at all because, as discussed 
above, SCSEP grantees are governmental jurisdictions and not-for-profit 
enterprises. Moreover, any secondary impact of the program on the 
business community would not be adverse. To the contrary, the SCSEP 
functions to assist the business community by training older Americans 
to participate in the workforce.
    The proposed rule will also not result in a major increase in costs 
or prices for States or local government agencies. The SCSEP has no 
impact on prices, and, as discussed above, the only costs that could 
potentially be borne by governmental jurisdictions are limited to the 
ten percent matching share. Finally, this proposed rule will not have 
an annual effect on the economy of $100,000,000 or more.
    Therefore, because none of the definitions of ``major rule'' apply 
in this instance, we determine that this proposed rule is not a ``major 
rule'' for SBREFA purposes.

Executive Order 12866

    Executive Order 12866 requires that for each ``significant 
regulatory action'' proposed by the Department, the Department conduct 
an assessment of the proposed regulatory action and provide OMB with 
the proposed regulation and the requisite assessment prior to 
publishing the regulation. A significant regulatory action is defined 
to include an action that will have an annual effect on the economy of 
$100 million or more, as well as an action that raises a novel legal or 
policy issue.
    As discussed with regard to the SBREFA analysis, this proposed rule 
will not have an annual effect on the economy of $100 million or more. 
However, the rule does raise novel policy issues concerning 
implementing the 2006 OAA in the SCSEP. The key policy changes that are 
being implemented include the introduction of a 48-month limit on 
participation, institution of a regular competition for national 
grants, and an increase in the proportion of grant funds that can be 
used for participant training and supportive services. Therefore, the 
Department has submitted this proposed rule to the OMB.

Paperwork Reduction Act

    The purposes of the Paperwork Reduction Act of 1995 (PRA), 44 
U.S.C. 3501 et seq., include minimizing the paperwork burden on 
affected entities. The PRA requires certain actions before an agency 
can adopt or revise the collection of information, including publishing 
a summary of the collection of information and a brief description of 
the need for and proposed use of the information.
    Because the 2006 OAA necessitated changes in many of the SCSEP 
forms used by grantees until now, in July 2007 the Department submitted 
to OMB for review and approval in accordance with section 3507(d) of 
the PRA a modification to the SCSEP information collection 
requirements. The four-year strategy newly required by the 2006 OAA 
(see Sec.  641.302) was accounted for in that PRA submission. The SCSEP 
PRA submission was assigned OMB control number 1205-0040 and was 
approved by OMB in October 2007. The approval expires October 31, 2010. 
The following proposed rule neither introduces new nor revises any 
existing information collection requirements.

Unfunded Mandates Reform Act

    For purposes of the Unfunded Mandates Reform Act of 1995, this NPRM 
does not include any Federal mandate that may result in increased 
expenditure by State, local, and tribal governments in the aggregate of 
more than $100 million, or increased expenditures by the private sector 
of more than $100 million.

Executive Order 13132

    The Department has reviewed this NPRM in accordance with Executive 
Order 13132 regarding federalism and has determined that it does not 
have ``federalism implications.'' The rule does not ``have substantial 
direct effects on the States, on the relationship between the national 
government and the States, or on the distribution of power and 
responsibilities among the various levels of government.'' While States 
are SCSEP grantees, the requirements in this NPRM flow directly from 
the 2006 OAA and thus do not constitute a ``substantial direct effect'' 
on the States, nor will it alter the relationship, power, or 
responsibilities between the Federal and State governments.

Executive Order 13045

    Executive Order 13045 concerns the protection of children from 
environmental health risks and safety risks. This NPRM addresses the 
SCSEP, a program for older Americans, and has no impact on safety or 
health risks to children.

Executive Order 13175

    Executive Order 13175 addresses the unique relationship between the 
Federal Government and Indian tribal governments. The order requires 
Federal agencies to take certain actions when regulations have ``tribal 
implications.'' Required actions include consulting with tribal 
governments prior to promulgating a regulation with tribal implications 
and preparing a tribal impact statement. The order defines regulations 
as having ``tribal implications'' when they have substantial direct 
effects on one or more Indian tribes, on the relationship between the 
Federal Government and Indian tribes, or on the distribution of power 
and responsibilities between the Federal Government and Indian tribes.
    The Department has reviewed this NPRM and concludes that it does 
not have tribal implications. While tribes are sub-recipients of 
national SCSEP grantees, this proposed rule will not have a substantial 
direct effect on those tribes, because, as outlined in the Regulatory 
Flexibility section of the preamble, there are no new costs associated 
with implementing this proposed rule. This regulation does not affect 
the relationship between the Federal Government and the tribes, nor 
does it affect the distribution of power and responsibilities between 
the Federal Government and tribal governments.
    Accordingly, we conclude that this rule does not have tribal 
implications for the purposes of Executive Order 13175.

Environmental Impact Assessment

    The Department has reviewed this NPRM in accordance with the 
requirements of the National

[[Page 47796]]

Environmental Policy Act (NEPA) of 1969 (42 U.S.C. 4321 et seq.), the 
regulations of the Council on Environmental Quality (40 CFR part 1500), 
and the Department's NEPA procedures (29 CFR part 11). The NPRM will 
not have a significant impact on the quality of the human environment, 
and, thus, the Department has not prepared an environmental assessment 
or an environmental impact statement.

Assessment of Federal Regulations and Policies on Families

    Section 654 of the Treasury and General Government Appropriations 
Act, enacted as part of the Omnibus Consolidated and Emergency 
Supplemental Appropriations Act of 1999 (Pub. L. 105-277, 112 Stat. 
2681), requires the Department to assess the impact of this rule on 
family well-being. A rule that is determined to have a negative affect 
on families must be supported with an adequate rationale.
    The Department has assessed this NPRM and determines that it will 
not have a negative effect on families. Indeed, we believe the SCSEP 
strengthens families by providing job training and support services to 
low-income older Americans.

Executive Order 12630

    This NPRM is not subject to Executive Order 12630, Governmental 
Actions and Interference with Constitutionally Protected Property 
Rights, because it does not involve implementation of a policy with 
takings implications.

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.

Executive Order 13211

    This NPRM is not subject to Executive Order 13211, because it will 
not have a significant adverse effect on the supply, distribution, or 
use of energy.

Plain Language

    The Department drafted this rule in plain language.

List of Subjects in 20 CFR Part 641

    Aged, Employment, Government contracts, Grant programs--Labor, 
Reporting and recordkeeping requirements.

    For the reasons discussed in the preamble, the Department of Labor 
proposes to amend 20 CFR part 641 to read as follows:

PART 641--PROVISIONS GOVERNING THE SENIOR COMMUNITY SERVICE 
EMPLOYMENT PROGRAM

    1. The authority citation for part 641 continues to read as 
follows:

    Authority: 42 U.S.C. 3056 et seq.

Subpart A--[Amended]

    2. Revise Sec.  641.100 to read as follows:


Sec.  641.100  What does this part cover?

    Part 641 contains the Department of Labor's regulations for the 
Senior Community Service Employment Program (SCSEP), authorized under 
the title V of the Older Americans Act (OAA), 42 U.S.C. 3056 et seq., 
as amended by the Older Americans Act Amendments of 2006, Public Law 
109-365. This part, and other pertinent regulations expressly 
incorporated by reference, set forth the regulations applicable to the 
SCSEP.
    (a) Subpart A of this part contains introductory provisions and 
definitions that apply to this part.
    (b) Subpart B of this part describes the required relationship 
between the OAA and the Workforce Investment Act of 1998 (WIA), 29 
U.S.C. 2801 et seq. These provisions discuss the coordinated efforts to 
provide services through the integration of the SCSEP within the One-
Stop Delivery System.
    (c) Subpart C of this part sets forth the requirements for the 
State Plan, such as the four-year strategy, required coordination 
efforts, public comments, and equitable distribution.
    (d) Subpart D of this part establishes grant planning and 
application requirements, including grantee eligibility, and 
responsibility review provisions that apply to the Department's award 
of SCSEP funds for State and National grants.
    (e) Subpart E of this part details SCSEP participant services.
    (f) Subpart F of this part provides the rules for pilot, 
demonstration, and evaluation projects.
    (g) Subpart G of this part outlines the performance accountability 
requirements. This subpart establishes requirements for performance 
measures, defines such measures, and establishes corrective actions for 
failure to meet core performance measures.
    (h) Subpart H of this part sets forth the administrative 
requirements for SCSEP funds.
    (i) Subpart I of this part describes the grievance and appeals 
processes and requirements.
    3. Revise Sec.  641.110 to read as follows:


Sec.  641.110  What is the SCSEP?

    The Senior Community Service Employment Program (SCSEP) is a 
program administered by the Department of Labor that serves unemployed 
low-income persons who are 55 years of age and older and who have poor 
employment prospects by training them in part-time community service 
employment assignments and by assisting them in developing skills and 
experience to facilitate their transition to unsubsidized employment.
    4. Revise Sec.  641.120 to read as follows:


Sec.  641.120  What are the purposes of the SCSEP?

    The purposes of the SCSEP are to foster individual economic self-
sufficiency and promote useful part-time opportunities in community 
service employment assignments for unemployed low-income persons who 
are 55 years of age or older, particularly persons who have poor 
employment prospects, and to increase the number of older persons who 
may enjoy the benefits of unsubsidized employment in both the public 
and private sectors. (OAA sec. 502(a)(1)).
    5. Revise Sec.  641.130 to read as follows:


Sec.  641.130  What is the scope of this part?

    The regulations in this part address the requirements that apply to 
the SCSEP. More detailed policies and procedures are contained in 
administrative guidelines issued by the Department. Throughout this 
part, phrases such as, ``according to instructions (procedures) issued 
by the Department'' or ``additional guidance will be provided through 
administrative issuance'' refer to the documents issued under the 
Secretary's authority to administer the SCSEP, such as Training and 
Employment Guidance Letters (TEGLs), Training and Employment Notices 
(TENs), previously issued SCSEP Older Worker Bulletins that are still 
in effect, technical assistance guides, and other SCSEP guidance.
    6. Amend Sec.  641.140 by:
    a. Removing the definitions ``Co-enrollment,'' ``Placement into 
public or private unsubsidized employment,'' ``Retention in public or 
private unsubsidized employment,'' ``State Workforce Agency,'' and 
``Subgrantee.''
    b. Revising the definitions ``Authorized position level,'' 
``Community service,'' ``Equitable distribution report,'' ``Grantee,'' 
``Greatest economic need,'' ``Greatest

[[Page 47797]]

social need,'' ``Host agency,'' ``Indian,'' ``Indian tribe,'' 
``Individual employment plan or IEP,'' ``Jobs for Veterans Act,'' 
``OAA,'' ``Other participant (enrollee) costs,'' ``Participant,'' 
``Poor employment prospects,'' ``Program year,'' ``Project,'' 
``Recipient,'' ``Service area,'' ``State grantee,'' ``State Plan,'' 
``Sub-recipient,'' ``Title V of the OAA,'' ``Tribal organization,'' and 
``Workforce Investment Act or WIA,'' to read as set forth below.
    c. Adding in alphabetical order the definitions ``Pacific Island 
and Asian Americans,'' ``Program operator,'' ``Secretary,'' 
``Supportive services,'' and ``Unemployed,'' as set forth below.


Sec.  641.140  What definitions apply to this part?

* * * * *
    Authorized position level means the number of SCSEP enrollment 
opportunities that can be supported for a 12-month period based on the 
average national unit cost. The authorized position level is derived by 
dividing the total amount of funds appropriated for a Program Year by 
the national average unit cost per participant for that Program Year as 
determined by the Department. The national average unit cost includes 
all costs of administration, other participant costs, and participant 
wage and benefit costs as defined in section 506(g) of the OAA.
    Community service means:
    (a) Social, health, welfare, and educational services (including 
literacy tutoring), legal and other counseling services and assistance, 
including tax counseling and assistance and financial counseling, and 
library, recreational, and other similar services;
    (b) Conservation, maintenance, or restoration of natural resources;
    (c) Community betterment or beautification;
    (d) Antipollution and environmental quality efforts;
    (e) Weatherization activities;
    (f) Economic development; and
    (g) Other such services essential and necessary to the community as 
the Secretary determines by rule to be appropriate. (OAA sec. 
518(a)(1)).
* * * * *
    Equitable distribution report means a report based on the latest 
available Census data which lists the optimum number of participant 
positions in each designated area in the State, and the number of 
authorized participant positions each grantee serves in that area, 
taking the needs of underserved jurisdictions into account. This report 
provides a basis for improving the distribution of SCSEP positions.
* * * * *
    Grantee means an entity receiving financial assistance directly 
from the Department to carry out SCSEP activities. The grantee is the 
legal entity that receives the award and is legally responsible for 
carrying out the SCSEP, even if only a particular component of the 
entity is designated in the grant award document. Grantees include 
public and nonprofit private agencies and organizations, agencies of a 
State, tribal organizations, and Territories, that receive SCSEP grants 
from the Department. (OAA secs. 502(b)(1), 506(a)(2)). As used here, 
``grantee'' includes ``grantee'' as defined in 29 CFR 97.3 and 
``recipient'' as defined in 29 CFR 95.2(gg).
    Greatest economic need means the need resulting from an income 
level at or below the poverty guidelines established by the Department 
of Health and Human Services and approved by the Office of Management 
and Budget (OMB). (42 U.S.C. 3002(23)).
    Greatest social need means the need caused by non-economic factors, 
which include: physical and mental disabilities; language barriers; and 
cultural, social, or geographical isolation, including isolation caused 
by racial or ethnic status, that restricts the ability of an individual 
to perform normal daily tasks or threatens the capacity of the 
individual to live independently. (42 U.S.C. 3002(24)).
* * * * *
    Host agency means a public agency or a private nonprofit 
organization exempt from taxation under section 501(c)(3) of the 
Internal Revenue Code of 1986 which provides a training work site and 
supervision for one or more participants. Political parties cannot be 
host agencies. A host agency may be a religious organization as long as 
the projects in which participants are being trained do not involve the 
construction, operation, or maintenance of any facility used or to be 
used as a place for sectarian religious instruction or worship. (OAA 
sec. 502(b)(1)(D)).
    Indian means a person who is a member of an Indian tribe. (42 
U.S.C. 3002(26)).
    Indian tribe means any tribe, band, nation, or other organized 
group or community of Indians (including Alaska Native village or 
regional or village corporation as defined in or established pursuant 
to the Alaska Native Claims Settlement Act, 43 U.S.C. 1601 et seq.) 
which: (1) Is recognized as eligible for the special programs and 
services provided by the United States to Indians because of their 
status as Indians; or (2) is located on, or in proximity to, a Federal 
or State reservation or rancheria. (42 U.S.C. 3002(27)).
    Individual employment plan or IEP means a plan for a participant 
that is based on an assessment of that participant conducted by the 
grantee or sub-recipient, or a recent assessment or plan developed by 
another employment and training program, and a related service 
strategy. The IEP must include an appropriate employment goal, 
objectives that lead to the goal, a timeline for the achievement of the 
objectives; and be jointly agreed upon with the participant. (OAA sec. 
502(b)(1)(N)).
* * * * *
    Jobs for Veterans Act means Public Law 107-288 (2002). Section 2(a) 
of the Jobs for Veterans Act, codified at 38 U.S.C. 4215(a), provides a 
priority of service for Department of Labor employment and training 
programs for veterans, and certain spouses of veterans, who otherwise 
meet the eligibility requirements for participation. Priority is 
extended to veterans. Priority is also extended to the spouse of a 
veteran who died of a service-connected disability; the spouse of a 
member of the Armed Forces on active duty who has been listed for a 
total of more than 90 days as missing in action, captured in the line 
of duty by a hostile force, or forcibly detained by a foreign 
government or power; the spouse of any veteran who has a total 
disability resulting from a service-connected disability; and the 
spouse of any veteran who died while a disability so evaluated was in 
existence. (See Sec.  641.520(b)).
* * * * *
    OAA means the Older Americans Act, 42 U.S.C. 3001 et seq., as 
amended.
* * * * *
    Other participant (enrollee) costs means the costs of participant 
training, including the payment of reasonable costs to instructors, 
classroom rental, training supplies, materials, equipment, and tuition, 
and which may be provided on the job, prior to or concurrent with a 
community service employment assignment, in a classroom setting, or 
under other appropriate arrangements; job placement assistance, 
including job development and job search assistance; participant 
supportive services to enable a participant to successfully participate 
in a project, including the payment of reasonable costs of 
transportation, health care and medical services, special job-related 
or personal counseling, incidentals (such as work shoes, badges, 
uniforms, eyeglasses, and tools), child and adult care, temporary 
shelter, and follow-up services; and outreach, recruitment and 
selection,

[[Page 47798]]

intake orientation, and assessments. (OAA sec. 502(c)(6)(A)).
    Pacific Island and Asian Americans means Americans having origins 
in any of the original peoples of the Far East, Southeast Asia, the 
Indian Subcontinent, or the Pacific Islands. (OAA sec. 518(a)(5)).
    Participant means an individual who is determined to be eligible 
for the SCSEP, is given a community service employment assignment, and 
is receiving any service funded by the program as described in subpart 
E.
* * * * *
    Poor employment prospects means the likelihood that an individual 
will not obtain employment without the assistance of the SCSEP or 
another workforce development program. Persons with poor employment 
prospects have a significant barrier to employment; significant 
barriers to employment include but are not limited to: Lacking a 
substantial employment history, basic skills, and/or English-language 
proficiency; lacking a high school diploma or the equivalent; having a 
disability; being homeless; or residing in socially and economically 
isolated rural or urban areas where employment opportunities are 
limited.
    Program operator means a sub-recipient that receives SCSEP funds 
from a SCSEP grantee or a higher-tier SCSEP sub-recipient and performs 
the following activities for all its participants: eligibility 
determination, participant assessment, and development of and placement 
into community service employment assignments.
    Program Year means the one-year period beginning on July 1 and 
ending on June 30.
    Project means an undertaking by a grantee or sub-recipient in 
accordance with a grant or contract agreement that provides service to 
communities and training and employment opportunities to eligible 
individuals.
    Recipient means grantee. As used here, ``recipient'' includes 
``recipient'' as defined in 29 CFR 95.2(gg) and ``grantee'' as defined 
in 29 CFR 97.3.
* * * * *
    Secretary means the Secretary of the Department of Labor.
    Service area means the geographic area served by a local SCSEP 
project in accordance with a grant agreement.
* * * * *
    State grantee means the entity designated by the Governor, or the 
highest government official, to enter into a grant with the Department 
to administer a State or Territory SCSEP project under the OAA. Except 
as applied to funding distributions under section 506 of the OAA, this 
definition applies to the 50 States, Puerto Rico, the District of 
Columbia and the following Territories: Guam, American Samoa, U.S. 
Virgin Islands, and the Commonwealth of the Northern Mariana Islands.
    State Plan means a plan that the Governor, or the highest 
government official, of a State must submit to the Secretary that 
outlines a four-year strategy, and describes the planning and 
implementation process, for the statewide provision of community 
service and other authorized activities for eligible individuals under 
SCSEP. (See Sec.  641.300).
    Sub-recipient means the legal entity to which a sub-award of 
financial assistance is made by the grantee (or by a higher-tier sub-
recipient), and that is accountable to the grantee for the use of the 
funds provided. As used here, ``sub-recipient'' includes ``sub-
grantee'' as defined in 29 CFR 97.3 and ``sub-recipient'' as defined in 
29 CFR 95.2(kk).
    Supportive services mean 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 the SCSEP. (OAA sec. 518(a)(7)).
    Title V of the OAA means 42 U.S.C. 3056 et seq., as amended.
* * * * *
    Tribal organization means the recognized governing body of any 
Indian tribe, or any legally established organization of Indians which 
is controlled, sanctioned, or chartered by such governing body. (42 
U.S.C. 3002(54)).
    Unemployed means an individual who is without a job and who wants 
and is available for work, including an individual who may have 
occasional employment that does not result in a constant source of 
income. (OAA sec. 518(a)(8)).
* * * * *
    Workforce Investment Act or WIA means the Workforce Investment Act 
of 1998 (Pub. L. 105-220 [Aug. 7, 1998]), 29 U.S.C. 2801 et seq., as 
amended.
* * * * *
    7. Revise subparts B through F of part 641 to read as follows:
Subpart B--Coordination With the Workforce Investment Act
Sec.
641.200 What is the relationship between the SCSEP and the Workforce 
Investment Act?
641.210 What services, in addition to the applicable core services, 
must SCSEP grantees/sub-recipients provide through the One-Stop 
Delivery System?
641.220 Does title I of WIA require the SCSEP to use OAA funds for 
individuals who are not eligible for SCSEP services or for services 
that are not authorized under the OAA?
641.230 Must the individual assessment conducted by the SCSEP 
grantee/sub-recipient and the assessment performed by the One-Stop 
Delivery System be accepted for use by either entity to determine 
the individual's need for services in the SCSEP and adult programs 
under title I-B of WIA?
641.240 Are SCSEP participants eligible for intensive and training 
services under title I of WIA?
Subpart C--The State Plan
641.300 What is the State Plan?
641.302 What is a four-year strategy?
641.305 Who is responsible for developing and submitting the State 
Plan?
641.310 May the Governor, or the highest government official, 
delegate responsibility for developing and submitting the State 
Plan?
641.315 Who participates in developing the State Plan?
641.320 Must all national grantees operating within a State 
participate in the State planning process?
641.325 What information must be provided in the State Plan?
641.330 How should the State Plan reflect community service needs?
641.335 How should the Governor, or the highest government official, 
address the coordination of SCSEP services with activities funded 
under title I of WIA?
641.340 How often must the Governor, or the highest government 
official, update the State Plan?
641.345 What are the requirements for modifying the State Plan?
641.350 How should public comments be solicited and collected?
641.355 Who may comment on the State Plan?
641.360 How does the State Plan relate to the equitable distribution 
report?
641.365 How must the equitable distribution provisions be reconciled 
with the provision that disruptions to current participants should 
be avoided?
Subpart D--Grant Application and Responsibility Review Requirements for 
State and National SCSEP Grants
641.400 What entities are eligible to apply to the Department for 
funds to administer SCSEP projects?
641.410 How does an eligible entity apply?
641.420 What are the eligibility criteria that each applicant must 
meet?
641.430 What are the responsibility conditions that an applicant 
must meet?
641.440 Are there responsibility conditions that alone will 
disqualify an applicant?
641.450 How will the Department examine the responsibility of 
eligible entities?
641.460 What factors will the Department consider in selecting 
national grantees?
641.465 Under what circumstances may the Department reject an 
application?

[[Page 47799]]

641.470 What happens if an applicant's application is rejected?
641.480 May the Governor, or the highest government official, make 
recommendations to the Department on national grant applications?
641.490 When will the Department compete SCSEP grant awards?
641.495 When must a State compete its SCSEP award?
Subpart E--Services to Participants
641.500 Who is eligible to participate in the SCSEP?
641.505 When is eligibility determined?
641.507 How is applicant income computed?
641.510 What types of income are included and excluded for 
participant eligibility determinations?
641.512 May grantees/sub-recipients enroll otherwise eligible 
individuals and place them directly into unsubsidized employment?
641.515 How must grantees/sub-recipients recruit and select eligible 
individuals for participation in the SCSEP?
641.520 Are there any priorities that grantees/sub-recipients must 
use in selecting eligible individuals for participation in the 
SCSEP?
641.535 What services must grantees/sub-recipients provide to 
participants?
641.540 What types of training may grantees/sub-recipients provide 
to SCSEP participants in addition to the training received at the 
community service employment assignment?
641.545 What supportive services may grantees/sub-recipients provide 
to participants?
641.550 What responsibility do grantees/sub-recipients have to place 
participants in unsubsidized employment?
641.565 What policies govern the provision of wages and benefits to 
participants?
641.570 Is there a time limit for participation in the program?
641.575 May a grantee/sub-recipient establish a limit on the amount 
of time its participants may spend at each host agency?
641.577 Is there a limit on community service employment assignment 
hours?
641.580 Under what circumstances may a grantee/sub-recipient 
terminate a participant?
641.585 What is the employment status of SCSEP participants?
Subpart F--Pilot, Demonstration, and Evaluation Projects
641.600 What is the purpose of the pilot, demonstration, and 
evaluation projects authorized under section 502(e) of the OAA?
641.610 How are pilot, demonstration, and evaluation projects 
administered?
641.620 How may an organization apply for pilot, demonstration, and 
evaluation project funding?
641.630 What pilot, demonstration, and evaluation project activities 
are allowable under section 502(e)?
641.640 Should pilot, demonstration, and evaluation project entities 
coordinate with SCSEP grantees/sub-recipients, including area 
agencies on aging?

Subpart B--Coordination With the Workforce Investment Act


Sec.  641.200  What is the relationship between the SCSEP and the 
Workforce Investment Act?

    The SCSEP is a required partner under the Workforce Investment Act. 
As such, it is a part of the One-Stop Delivery System. SCSEP grantees/
sub-recipients are required to follow all applicable rules under WIA 
and its regulations. (29 U.S.C. 2841(b)(1)(B)(vi) and 29 CFR 662.200 
through 662.280).


Sec.  641.210  What services, in addition to the applicable core 
services, must SCSEP grantees/sub-recipients provide through the One-
Stop Delivery System?

    In addition to providing core services, as defined at 20 CFR 
662.240 of the WIA regulations, SCSEP grantees/sub-recipients must make 
arrangements through the One-Stop Delivery System to provide eligible 
and ineligible individuals with referrals to WIA intensive and training 
services and access to other activities and programs carried out by 
other One-Stop partners.


Sec.  641.220  Does title I of WIA require the SCSEP to use OAA funds 
for individuals who are not eligible for SCSEP services or for services 
that are not authorized under the OAA?

    No, SCSEP requirements continue to apply. Title V resources may not 
be used to serve individuals who are not SCSEP-eligible. The Workforce 
Investment Act creates a seamless service delivery system for 
individuals seeking workforce development services by linking the One-
Stop partners in the One-Stop Delivery System. Although the overall 
effect is to provide universal access to core services, SCSEP resources 
may only be used to provide services that are authorized and provided 
under the SCSEP to eligible individuals. (Note, however, that one 
allowable SCSEP cost is a SCSEP project's proportionate share of One-
Stop costs; see Sec.  641.850(d).) Title V funds can be used to pay 
wages to SCSEP participants receiving intensive and training services 
under title I of WIA provided that the SCSEP participants have each 
received a community service employment assignment. All other 
individuals who are in need of the services provided under the SCSEP, 
but who do not meet the eligibility criteria to enroll in the SCSEP, 
should be referred to or enrolled in WIA or other appropriate partner 
programs. (29 U.S.C. 2841(b)(1)). These arrangements should be 
negotiated in the Memorandum of Understanding (MOU), which is an 
agreement developed and executed between the Local Workforce Investment 
Board, with the agreement of the chief local elected official, and the 
One-Stop partners relating to the operation of the One-Stop Delivery 
System in the local area. The MOU is further described in the WIA 
regulations at Sec. Sec.  662.300 and 662.310 of this title.


Sec.  641.230  Must the individual assessment conducted by the SCSEP 
grantee/sub-recipient and the assessment performed by the One-Stop 
Delivery System be accepted for use by either entity to determine the 
individual's need for services in the SCSEP and adult programs under 
title I-B of WIA?

    Yes, section 502(b)(3) of the OAA provides that an assessment or 
IEP completed by the SCSEP satisfies any condition for an assessment, 
service strategy, or IEP completed at the One-Stop and vice-versa. (OAA 
sec. 502(b)(3)). These reciprocal arrangements and the contents of the 
SCSEP IEP and WIA IEP should be negotiated in the MOU.


Sec.  641.240  Are SCSEP participants eligible for intensive and 
training services under title I of WIA?

    (a) Although SCSEP participants are not automatically eligible for 
intensive and training services under title I of WIA, Local Boards may 
deem SCSEP participants, either individually or as a group, as 
satisfying the requirements for receiving adult intensive and training 
services under title I of WIA.
    (b) SCSEP participants who have been assessed and for whom an IEP 
has been developed have received an intensive service according to 20 
CFR 663.240(a) of the WIA regulations. In order to enhance skill 
development related to the IEP, it may be necessary to provide training 
beyond the community service employment assignment to enable 
participants to meet their unsubsidized employment objectives. The 
SCSEP grantee/sub-recipient, the host agency, the WIA program, or 
another One-Stop partner may provide training as appropriate and as 
negotiated in the MOU. (See Sec.  641.540 for a further discussion of 
training for SCSEP participants.)

Subpart C--The State Plan


Sec.  641.300  What is the State Plan?

    The State Plan is a plan, submitted by the Governor, or the highest 
government official, in each State, as an independent document or as 
part of the WIA Unified Plan, that outlines a four-year strategy for 
the statewide provision of community service employment and other 
authorized activities for eligible individuals under the SCSEP as

[[Page 47800]]

described in Sec.  641.302. The State Plan also describes the planning 
and implementation process for SCSEP services in the State, taking into 
account the relative distribution of eligible individuals and 
employment opportunities within the State. The State Plan is intended 
to foster coordination among the various SCSEP grantees/sub-recipients 
operating within the State and to facilitate the efforts of 
stakeholders, including State and Local Boards under WIA, to work 
collaboratively through a participatory process to accomplish the 
SCSEP's goals. (OAA sec. 503(a)(1)). The State Plan provisions are 
listed in Sec.  641.325.


Sec.  641.302  What is a four-year strategy?

    The State Plan must outline a four-year strategy for the statewide 
provision of community service employment and other authorized 
activities for eligible individuals under the SCSEP program. (OAA sec. 
503(a)(1)). The four-year strategy must specifically address the 
following:
    (a) The State's long-term strategy for achieving an equitable 
distribution of SCSEP positions within the State that:
    (1) Moves positions from over-served to underserved locations 
within the State, pursuant to Sec.  641.365;
    (2) Equitably serves rural and urban areas; and
    (3) Serves individuals afforded priority for service, pursuant to 
Sec.  641.520;
    (b) The State's long-term strategy for avoiding disruptions to the 
program when new Census data become available, or when there is over-
enrollment for any other reason;
    (c) The State's long-term strategy for serving minority older 
individuals under SCSEP;
    (d) Long-term projections for job growth in industries and 
occupations in the State that may provide employment opportunities for 
older workers, and how those relate to the types of unsubsidized jobs 
for which SCSEP participants will be trained, and the types of skill 
training to be provided;
    (e) The State's long-term strategy for engaging employers to 
develop and promote opportunities for the placement of SCSEP 
participants in unsubsidized employment;
    (f) The State strategy for continuous increase in the level of 
performance for entry into unsubsidized employment, and to achieve, at 
a minimum, the levels specified in section 513(a)(2)(E)(ii) of the OAA;
    (g) Planned actions to coordinate activities of SCSEP grantees with 
the activities being carried out in the State under title I of WIA, 
including plans for utilizing the WIA One-Stop Delivery System and its 
partners to serve individuals aged 55 and older;
    (h) Planned actions to coordinate activities of SCSEP grantees with 
the activities being carried out in the State under other titles of the 
OAA;
    (i) Planned actions to coordinate the SCSEP with other public and 
private entities and programs that provide services to older Americans, 
such as community and faith-based organizations, transportation 
programs, and programs for those with special needs or disabilities;
    (j) Planned actions to coordinate the SCSEP with other labor market 
and job training initiatives; and
    (k) The State's long-term strategy to improve SCSEP services, 
including planned longer-term changes to the design of the program 
within the State, and planned changes in the utilization of SCSEP 
grantees and program operators so as to better achieve the goals of the 
program; this may include recommendations to the Department, as 
appropriate.


Sec.  641.305  Who is responsible for developing and submitting the 
State Plan?

    The Governor, or the highest governmental official, of each State 
is responsible for developing and submitting the State Plan to the 
Department.


Sec.  641.310  May the Governor, or the highest government official, 
delegate responsibility for developing and submitting the State Plan?

    Yes, the Governor, or the highest governmental official of each 
State, may delegate responsibility for developing and submitting the 
State Plan, provided that any such delegation is consistent with State 
law and regulations. To delegate responsibility, the Governor, or the 
highest government official, must submit to the Department a signed 
statement indicating the individual and/or organization that will be 
submitting the State Plan on his or her behalf.


Sec.  641.315  Who participates in developing the State Plan?

    (a) In developing the State Plan the Governor, or the highest 
government official, must seek the advice and recommendations of 
representatives from:
    (1) The State and Area Agencies on Aging;
    (2) State and Local Boards under the Workforce Investment Act 
(WIA);
    (3) Public and private nonprofit agencies and organizations 
providing employment services, including each grantee operating a SCSEP 
project within the State, except as provided for in Sec.  641.320(b);
    (4) Social service organizations providing services to older 
individuals;
    (5) Grantees under title III of the OAA;
    (6) Affected communities;
    (7) Unemployed older individuals;
    (8) Community-based organizations serving older individuals;
    (9) Business organizations; and
    (10) Labor organizations.
    (b) The Governor, or the highest government official, may also 
obtain the advice and recommendations of other interested organizations 
and individuals, including SCSEP program participants, in developing 
the State Plan. (OAA sec. 503(a)(2)).


Sec.  641.320  Must all national grantees operating within a State 
participate in the State planning process?

    (a) The eligibility provision at OAA section 514(c)(6) requires 
national grantees to coordinate activities with other organizations at 
the State and local levels. Therefore, except as provided in paragraph 
(b) of this section, any national grantee that does not participate in 
the State planning process may be deemed ineligible to receive SCSEP 
funds in the following Program Year.
    (b) National grantees serving older American Indians, or Pacific 
Island and Asian Americans, with funds reserved under OAA section 
506(a)(3), are exempted from the requirement to participate in the 
State planning processes under section 503(a)(8) of the OAA. Although 
these national grantees may choose not to participate in the State 
planning process, the Department encourages their participation. Only 
those grantees using reserved funds are exempt; if a grantee is awarded 
one grant with reserved funds and another grant with non-reserved 
funds, the grantee is required under paragraph (a) of this section to 
participate in the State planning process for purposes of the non-
reserved funds grant.


Sec.  641.325  What information must be provided in the State Plan?

    The Department issues instructions detailing the information that 
must be provided in the State Plan. At a minimum, the State Plan must 
include the State's four-year strategy, as described in Sec.  641.302, 
and information on the following:
    (a) The ratio of eligible individuals in each service area to the 
total eligible population in the State;
    (b) The relative distribution of:
    (1) Eligible individuals residing in urban and rural areas within 
the State;
    (2) Eligible individuals who have the greatest economic need;

[[Page 47801]]

    (3) Eligible individuals who are minorities;
    (4) Eligible individuals who are limited English proficient; and
    (5) Eligible individuals who have the greatest social need;
    (c) The current and projected employment opportunities in the State 
(such as by providing information available under section 15 of the 
Wagner-Peyser Act (29 U.S.C. 491-2) by occupation), and the types of 
skills possessed by eligible individuals;
    (d) The localities and populations for which projects of the type 
authorized by title V are most needed;
    (e) Actions taken and/or planned to coordinate activities of SCSEP 
grantees in the State with activities carried out in the State under 
title I of WIA;
    (f) A description of the process used to obtain advice and 
recommendations on the State Plan from representatives of organizations 
and individuals listed in Sec.  641.315, and advice and recommendations 
on steps to coordinate SCSEP services with activities funded under 
title I of WIA from representatives of organizations listed in Sec.  
641.335;
    (g) A description of the State's procedures and time line for 
ensuring an open and inclusive planning process that provides 
meaningful opportunity for public comment as required by Sec.  641.350;
    (h) Public comments received, and a summary of the comments;
    (i) A description of the steps taken to avoid disruptions to the 
greatest extent possible as provided in Sec.  641.365; and
    (j) Such other information as the Department may require in the 
State Plan instructions. (OAA sec. 503(a)(3)-(4), (6)).


Sec.  641.330  How should the State Plan reflect community service 
needs?

    The Governor, or the highest government official, must ensure that 
the State Plan identifies the types of community services that are 
needed and the places where these services are most needed. The State 
Plan should specifically identify the needs and locations of those 
individuals most in need of community services and the groups working 
to meet their needs. (OAA section 503(a)(4)(E)).


Sec.  641.335  How should the Governor, or the highest government 
official, address the coordination of SCSEP services with activities 
funded under title I of WIA?

    The Governor, or the highest government official, must seek the 
advice and recommendations from representatives of the State and Area 
Agencies on Aging in the State and the State and Local Boards 
established under title I of WIA. (OAA sec. 503(a)(2)). The State Plan 
must describe the steps that are being taken to coordinate SCSEP 
activities within the State with activities being carried out under 
title I of WIA. (OAA sec. 503(a)(4)(F)). The State Plan must describe 
the steps being taken to ensure that the SCSEP is an active partner in 
each One-Stop Delivery System and the steps that will be taken to 
encourage and improve coordination with the One-Stop Delivery System.


Sec.  641.340  How often must the Governor, or the highest government 
official, update the State Plan?

    Pursuant to instructions issued by the Department, the Governor, or 
the highest government official, must review the State Plan and submit 
an update to the State Plan to the Secretary for consideration and 
approval not less often than every two years. OAA section 503(a)(1). 
States are encouraged to review their State Plan more frequently than 
every two years, however, and make modifications as circumstances 
warrant, pursuant to Sec.  641.345. Prior to development of the update 
to the State Plan, the Governor, or the highest government official, 
must seek the advice and recommendations of the individuals and 
organizations identified in Sec.  641.315 about what, if any, changes 
are needed, and must publish the State Plan, showing the changes, for 
public comment. OAA sections 503(a)(2), 503(a)(3).


Sec.  641.345  What are the requirements for modifying the State Plan?

    (a) Modifications may be submitted anytime circumstances warrant.
    (b) Modifications to the State Plan are required when:
    (1) There are changes in Federal or State law or policy that 
substantially change the assumptions upon which the State Plan is 
based;
    (2) There are significant changes in the State's vision, four-year 
strategy, policies, performance indicators, or organizational 
responsibilities;
    (3) The State has failed to meet performance goals and must submit 
a corrective action plan; or
    (4) There is a change in a grantee or grantees.
    (c) Modifications to the State Plan are subject to the same public 
review and comment requirements that apply to the development of the 
State Plan under Sec.  641.350.
    (d) States are not required to seek the advice and recommendations 
of the individuals and organizations identified in Sec.  641.315 when 
modifying the State Plan.
    (e) The Department will issue additional instructions for the 
procedures that must be followed when requesting modifications to the 
State Plan. (OAA sec. 503(a)(1)).


Sec.  641.350  How should public comments be solicited and collected?

    The Governor, or the highest government official, should follow 
established State procedures to solicit and collect public comments. 
The State Plan must include a description of the State's procedures and 
schedule for ensuring an open and inclusive planning process that 
provides meaningful opportunity for public comment.


Sec.  641.355  Who may comment on the State Plan?

    Any individual or organization may comment on the Plan.


Sec.  641.360  How does the State Plan relate to the equitable 
distribution report?

    The two documents address some of the same areas, but are prepared 
at different points in time. The equitable distribution report is 
prepared by State grantees at the beginning of each fiscal year and 
provides a ``snapshot'' of the actual distribution of all of the 
authorized positions within the State, grantee-by-grantee, and the 
optimum number of participant positions in each designated area based 
on the latest available Census data. The State Plan is prepared by the 
Governor, or the highest government official, and covers many areas in 
addition to equitable distribution, as discussed in Sec.  641.325, and 
sets forth a proposed plan for distribution of authorized positions in 
the State. Any distribution or redistribution of positions made as a 
result of a State Plan proposal will be reflected in the next equitable 
distribution report, which then forms the basis for the proposed 
distribution in the next State Plan update. This process is iterative 
in that it moves the authorized positions from over-served areas to 
underserved areas over a period of time.


Sec.  641.365  How must the equitable distribution provisions be 
reconciled with the provision that disruptions to current participants 
should be avoided?

    Governors, or highest government officials, must describe in the 
State Plan the steps that are being taken to comply with the statutory 
requirement to avoid disruptions in the provision of services for 
participants. (OAA sec. 503(a)(6)). When there are new Census data 
indicating that there has been a shift in the location of the eligible 
population or when there is over-enrollment for any

[[Page 47802]]

other reason, the Department recommends a gradual shift that encourages 
current participants in subsidized community service employment 
assignments to move into unsubsidized employment to make positions 
available for eligible individuals in the areas where there has been an 
increase in the eligible population. The Department does not define 
disruptions to mean that participants are entitled to remain in a 
subsidized community service employment assignment indefinitely. As 
discussed in Sec.  641.570, there is a time limit on SCSEP 
participation, thus permitting positions to be transferred over time. 
Grantees and sub-recipients must not transfer positions from one 
geographic area to another without first notifying the State agency 
responsible for preparing the State Plan and equitable distribution 
report. Grantees must submit, in writing, any proposed changes in 
distribution that occur after submission of the equitable distribution 
report to the Federal Project Officer for approval. All grantees are 
strongly encouraged to coordinate any proposed changes in position 
distribution with the other grantees in the State, including the State 
project director, prior to submitting the proposed changes to their 
Federal Project Officer for approval.

Subpart D--Grant Application and Responsibility Review Requirements 
for State and National SCSEP Grants


Sec.  641.400  What entities are eligible to apply to the Department 
for funds to administer SCSEP projects?

    (a) National Grants. Entities eligible to apply for national grants 
include nonprofit organizations, Federal public agencies, and tribal 
organizations. These entities must be capable of administering a multi-
State program. State and local agencies may not apply for these funds.
    (b) State Grants. (1) Section 506(e) of the OAA requires the 
Department to award each State a grant to provide SCSEP services. 
Governors, or highest government officials, designate an individual 
State agency as the organization to administer SCSEP funds.
    (2) If the State fails to meet its expected levels of performance 
for the core indicators for three consecutive years, it is not eligible 
to designate an agency to administer SCSEP funds in the following year. 
Instead, the State must conduct a competition to select an organization 
as the grantee of the funds allotted to the State under section 506(e). 
Public and nonprofit private agencies and organizations, State agencies 
other than the previously designated, failed agency, and tribal 
organizations, are eligible to be selected as a grantee for the funds. 
Other States may not be selected as a grantee for this funding.


Sec.  641.410  How does an eligible entity apply?

    (a) General. An eligible entity must follow the application 
guidelines issued by the Department. The Department will issue 
application guidelines announcing the availability of national funds 
and State funds, whether they are awarded on a competitive or 
noncompetitive basis. The guidelines will contain application due 
dates, application instructions, evaluation criteria, and other 
necessary information.
    (b) National Grant Applicants. All applicants for SCSEP national 
grant funds, except organizations proposing to serve older Indians and 
Pacific Island and Asian Americans with funds reserved under OAA 
section 506(a)(3), must submit their applications to the Governor, or 
the highest government official, of each State in which projects are 
proposed so that he or she has a reasonable opportunity to make the 
recommendations described in Sec.  641.480, before submitting the 
application to the Department. (OAA sec. 503(a)(5)).
    (c) State Applicants. A State that submits a Unified Plan under WIA 
section 501 may include the State's SCSEP grant application in its 
Unified Plan. Any State that submits a SCSEP grant application as part 
of its WIA Unified Plan must address all of the application 
requirements as published in the Department's instructions. Sections 
641.300 through 641.365 address State Plan applications and 
modifications.


Sec.  641.420  What are the eligibility criteria that each applicant 
must meet?

    To be eligible to receive SCSEP funds, each applicant must be able 
to demonstrate:
    (a) An ability to administer a program that serves the greatest 
number of eligible participants, giving particular consideration to 
individuals with greatest economic need, individuals with greatest 
social need, and individuals described in Sec.  641.570(b) or Sec.  
641.520(a)(2) through (a)(8);
    (b) An ability to administer a program that provides employment for 
eligible individuals in communities in which they reside, or in nearby 
communities, that will contribute to the general welfare of the 
community;
    (c) An ability to administer a program that moves eligible 
participants into unsubsidized employment;
    (d) Where the applicant has previously received a SCSEP grant, the 
applicant's prior performance in meeting SCSEP core measures of 
performance and addressing SCSEP additional measures of performance; 
and where the applicant has not received a SCSEP grant, the applicant's 
prior performance under other Federal or State programs;
    (e) An ability to move participants with multiple barriers to 
employment, including individuals described in Sec.  641.570(b) or 
Sec.  641.520(a)(2) through (a)(8), into unsubsidized employment;
    (f) An ability to coordinate activities with other organizations at 
the State and local levels, including the One-Stop Delivery System;
    (g) An ability to properly manage the program, as reflected in its 
plan for fiscal management of the SCSEP;
    (h) An ability to administer a project that provides community 
service;
    (i) An ability to minimize program disruption for current 
participants and in community services provided if there is a change in 
project sponsor and/or location, and its plan for minimizing 
disruptions;
    (j) Any additional criteria that the Department deems appropriate 
to minimize disruptions for current participants. (OAA sec. 514(c)).


Sec.  641.430  What are the responsibility conditions that an applicant 
must meet?

    Subject to Sec.  641.440, each applicant must meet each of the 
listed responsibility ``tests'' by not having committed any of the 
following acts:
    (a) The Department has been unable to recover a debt from the 
applicant, whether incurred by the applicant or by one of its sub-
recipients, or the applicant has failed to comply with a debt repayment 
plan to which it agreed. In this context, a debt is established by 
final agency action, followed by three demand letters to the applicant, 
without payment in full by the applicant.
    (b) Established fraud or criminal activity of a significant nature 
within the applicant's organization.
    (c) Serious administrative deficiencies identified by the 
Department, such as failure to maintain a financial management system 
as required by Federal regulations.
    (d) Willful obstruction of the auditing or monitoring process.
    (e) Failure to provide services to applicants as agreed to in a 
current or recent grant or to meet applicable core performance measures 
or address other applicable indicators of performance.

[[Page 47803]]

    (f) Failure to correct deficiencies brought to the grantee's 
attention in writing as a result of monitoring activities, reviews, 
assessments, or other activities.
    (g) Failure to return a grant closeout package or outstanding 
advances within 90 days after the grant expiration date or receipt of 
closeout package, whichever is later, unless an extension has been 
requested and granted.
    (h) Failure to submit required reports.
    (i) Failure to properly report and dispose of Government property 
as instructed by the Department.
    (j) Failure to have maintained effective cash management or cost 
controls resulting in excess cash on hand.
    (k) Failure to ensure that a sub-recipient complies with applicable 
audit requirements, including OMB Circular A-133 and the audit 
requirements specified at Sec.  641.821.
    (l) Failure to audit a sub-recipient within the period required 
under Sec.  641.821.
    (m) Final disallowed costs in excess of five percent of the grant 
or contract award if, in the judgment of the Grant Officer, the 
disallowances are egregious findings.
    (n) Failure to establish a mechanism to resolve a sub-recipient's 
audit in a timely fashion. (OAA sec. 514(d)(4)).


Sec.  641.440  Are there responsibility conditions that alone will 
disqualify an applicant?

    (a) Yes, an applicant may be disqualified if
    (1) Either of the first two responsibility tests listed in Sec.  
641.430 is not met, or
    (2) The applicant substantially, or persistently for two or more 
consecutive years, fails one of the other responsibility tests listed 
in Sec.  641.430.
    (b) The second responsibility test addresses ``fraud or criminal 
activity of a significant nature.'' The Department will determine the 
existence of significant fraud or criminal activity which typically 
will include willful or grossly negligent disregard for the use or 
handling of, or other fiduciary duties concerning, Federal funding, 
where the grantee has no effective systems, checks, or safeguards to 
detect or prevent fraud or criminal activity. Additionally, significant 
fraud or criminal activity will typically include coordinated patterns 
or behaviors that pervade a grantee's administration or are focused at 
the higher levels of a grantee's management or authority. The 
Department will determine whether ``fraud or criminal activity of a 
significant nature'' has occurred on a case-by-case basis, regardless 
of what party identifies the alleged fraud or criminal activity.


Sec.  641.450  How will the Department examine the responsibility of 
eligible entities?

    The Department will review available records to assess each 
applicant's overall fiscal and administrative ability to manage Federal 
funds. The Department's responsibility review may consider any 
available information, including the organization's history with regard 
to the management of other grants awarded by the Department or by other 
Federal agencies. (OAA sec. 514(d)(1) and(d)(2)).


Sec.  641.460  What factors will the Department consider in selecting 
national grantees?

    The Department will select national grantees from among applicants 
that are able to meet the eligibility and responsibility review 
criteria at section 514 of the OAA. (Section 641.420 contains the 
eligibility criteria and Sec.  641.430 and Sec.  641.440 contain the 
responsibility criteria.) The Department also will take the rating 
criteria described in the Solicitation for Grant Application or other 
instrument into consideration.


Sec.  641.465  Under what circumstances may the Department reject an 
application?

    (a) The Department may question any proposed project component of 
an application if it believes that the component will not serve the 
purposes of the SCSEP. The Department may reject the application if the 
applicant does not submit or negotiate an acceptable alternative.
    (b) The Department may reject any application that the Grant 
Officer determines unacceptable based on the content of the 
application, rating score, past performance, fiscal management, or any 
other factor the Grant Officer believes serves the best interest of the 
program, including the application's comparative rating in a 
competition.


Sec.  641.470  What happens if an applicant's application is rejected?

    (a) Any entity whose application is rejected in whole or in part 
will be informed that they have not been selected. The non-selected 
entity may request an explanation of the Department's basis for its 
rejection. If requested, the Department will provide the entity with 
feedback on its proposal. See Sec.  641.900.
    (b) Incumbent grantees will not have an opportunity to obtain 
technical assistance provided by the Department under OAA section 
513(d)(2)(B)(i) to cure in an open competition any deficiency in a 
proposal because that will create inequity in favor of incumbents.
    (c) If the Administrative Law Judge (ALJ) rules, under Sec.  
641.900, that the organization should have been selected, in whole or 
in part, the matter must be remanded to the Grant Officer. The Grant 
Officer must, within 10 working days, determine whether the 
organization continues to meet the requirements of this part, and 
whether the positions which are the subject of the ALJ's decision will 
be awarded, in whole or in part, to the organization and the timing of 
the award. In making this determination, the Grant Officer must take 
into account disruption to participants, disruption to grantees, and 
the operational needs of the SCSEP.
    (d) In the event that the Grant Officer determines that it is not 
feasible to award any positions to the appealing applicant, the 
applicant will be awarded its bid preparation costs, or a pro rata 
share of those costs if the Grant Officer's finding applies to only a 
portion of the funds that would be awarded. If positions are awarded to 
the appealing applicant, that applicant is not entitled to the full 
grant amount but will only receive the funds remaining in the grant 
that have not been expended by the current grantee through its 
operation of the grant and its subsequent closeout. The available 
remedy in a SCSEP non-selection appeal is neither retroactive nor an 
immediately effective selection; rather it is the potential to be 
selected as a SCSEP grantee as quickly as administratively feasible in 
the future, for the remainder of the grant cycle.
    (e) In the event that any party notifies the Grant Officer that it 
is not satisfied with the Grant Officer's decision, the Grant Officer 
must return the decision to the ALJ for review.
    (f) Any organization selected and/or funded as a SCSEP grantee is 
subject to having its positions reduced or to being removed as a SCSEP 
grantee if an ALJ decision so orders. The Grant Officer provides 
instructions on transition and closeout to both the newly designated 
grantee and to the grantee whose positions are affected or which is 
being removed. All parties must agree to the provisions of this 
paragraph as a condition of being a SCSEP grantee.


Sec.  641.480  May the Governor, or the highest government official, 
make recommendations to the Department on national grant applications?

    (a) Yes, in accordance with Sec.  641.410(b), each Governor, or 
highest government official, will have a reasonable opportunity to make 
comments on any application to operate

[[Page 47804]]

a SCSEP project located in the Governor's, or the highest government 
official's, State before the Department makes a final decision on a 
grant award. The Governor's, or the highest government official's, 
comments should be directed to the Department and may include the 
anticipated effect of the proposal on the overall distribution of 
program positions within the State; recommendations for redistribution 
of positions to underserved areas as vacancies occur in previously 
encumbered positions in other areas; and recommendations for 
distributing any new positions that may become available as a result of 
an increase in funding for the State. The Governor's, or the highest 
government official's, recommendations should be consistent with the 
State Plan. (OAA sec. 503(a)(5)).
    (b) The Governor, or the highest government official, has the 
option of making the authorized recommendations on all applications or 
only on those applications proposed for award following the rating 
process. It is incumbent on each Governor, or the highest government 
official, to inform the Department of his or her intent to review the 
applications before or after the rating process.


Sec.  641.490  When will the Department compete SCSEP grant awards?

    (a)(1) As provided in a Solicitation for Grant Applications 
published in the Federal Register, the Department will hold a full and 
open competition for national grants every four years. (OAA sec. 
514(a)(1)).
    (2) If a national grantee meets the expected level of performance 
for each of the core indicators for each of the four years, the 
Department may provide an additional one-year grant to the national 
grantee. (OAA sec. 514(a)(2)).


Sec.  641.495  When must a State compete its SCSEP award?

    If a State grantee fails to meet its expected levels of performance 
for three consecutive Program Years, the State must hold a full and 
open competition, under such conditions as the Secretary may provide, 
for the State SCSEP funds for the full Program Year following the 
determination of consecutive failure. (OAA sec. 513(d)(3)(B)(iii)). The 
incumbent (failed) grantee is not eligible to compete. Other states are 
also not eligible to compete for these funds. (See Sec.  641.400(b)(2))

Subpart E--Services to Participants


Sec.  641.500  Who is eligible to participate in the SCSEP?

    Anyone who is at least 55 years old, unemployed (as defined in 
Sec.  641.140), and who is a member of a family with an income that is 
not more than 125 percent of the family income levels prepared by the 
Department of Health and Human Services and approved by OMB (Federal 
poverty guidelines) is eligible to participate in the SCSEP. (OAA sec. 
518(a)(3), (8)). A person with a disability may be treated as a 
``family of one'' for income eligibility determination purposes.


Sec.  641.505  When is eligibility determined?

    Initial eligibility is determined at the time individuals apply to 
participate in the SCSEP. Once individuals become SCSEP participants, 
the grantee/sub-recipient is responsible for verifying their continued 
eligibility at least once every 12 months. Grantees/sub-recipients may 
also verify an individual's eligibility as circumstances require, 
including instances when enrollment is delayed.


Sec.  641.507  How is applicant income computed?

    An applicant's income is computed by calculating the includable 
income received by the applicant during the 12-month period ending on 
the date an individual submits an application to participate in the 
SCSEP, or the annualized income for the 6-month period ending on the 
application date, whichever the grantee involved selects. (OAA sec. 
518(a)(4)).


Sec.  641.510  What types of income are included and excluded for 
participant eligibility determinations?

    (a) With certain exceptions, the Department will use the definition 
of income from the U.S. Census Bureau's Current Population Survey (CPS) 
as the standard for determining SCSEP applicant income eligibility.
    (b) Any income that is unemployment compensation, a benefit 
received under title XVI of the Social Security Act (42 U.S.C. 1381 et 
seq.), a payment made to or on behalf of veterans or former members of 
the Armed Forces under the laws administered by the Secretary of 
Veterans Affairs, or 25 percent of a benefit received under title II of 
the Social Security Act (42 U.S.C. 401 et seq.), must be excluded from 
SCSEP income eligibility determinations. (OAA sec. 518(a)(3)(A)).
    (c) The Department has issued administrative guidance on income 
inclusions and exclusions and procedures for determining SCSEP income 
eligibility. This guidance may be updated periodically.


Sec.  641.512  May grantees/sub-recipients enroll otherwise eligible 
individuals and place them directly into unsubsidized employment?

    No, grantees/sub-recipients may not enroll as SCSEP participants 
individuals who can be directly placed into unsubsidized employment. 
Such individuals should be referred to an employment provider, such as 
the One-Stop Center for job placement assistance under WIA.


Sec.  641.515  How must grantees/sub-recipients recruit and select 
eligible individuals for participation in the SCSEP?

    (a) Grantees and sub-recipients must develop methods of recruitment 
and selection that assure that the maximum number of eligible 
individuals have an opportunity to participate in the program. To the 
extent feasible, grantees and sub-recipients should seek to enroll 
minority and Indian eligible individuals, eligible individuals with 
limited English proficiency, and eligible individuals with greatest 
economic need, at least in proportion to their numbers in the area, 
taking into consideration their rates of poverty and unemployment. (OAA 
sec. 502(b)(1)(M)).
    (b) Grantees and sub-recipients must use the One-Stop Delivery 
System in the recruitment and selection of eligible individuals to 
ensure that the maximum number of eligible individuals have an 
opportunity to participate in the project. (OAA sec. 502(b)(1)(H)).
    (c) States may enter into agreements among themselves to permit 
cross-border enrollment of eligible participants. Such agreements 
should cover both State and national grantee positions and must be 
submitted to the Department for approval.


Sec.  641.520  Are there any priorities that grantees/sub-recipients 
must use in selecting eligible individuals for participation in the 
SCSEP?

    (a) Yes, in selecting eligible individuals for participation in the 
SCSEP, priority must be given to individuals who have one or more of 
the following characteristics:
    (1) Are 65 years of age or older;
    (2) Have a disability;
    (3) Have limited English proficiency or low literacy skills;
    (4) Reside in a rural area;
    (5) Are veterans (or, in some cases, spouses of veterans) for 
purposes of section 2(a) of the Jobs for Veterans Act, 38 U.S.C. 
4215(a) as set forth in paragraph (b) of this section;
    (6) Have low employment prospects;

[[Page 47805]]

    (7) Have failed to find employment after utilizing services 
provided through the One-Stop Delivery System; or
    (8) Are homeless or are at risk for homelessness.(OAA sec. 518(b)).
    (b) Section 2(a) of the Jobs for Veterans Act creates a priority 
for service for veterans (and, in some cases, spouses of veterans) who 
otherwise meet the program eligibility criteria for the SCSEP. 38 
U.S.C. 4215(a). Priority is extended to veterans. Priority is also 
extended to the spouse of a veteran who died of a service-connected 
disability; the spouse of a member of the Armed Forces on active duty 
who has been listed for a total of more than 90 days as missing in 
action, captured in the line of duty by a hostile force, or forcibly 
detained by a foreign government or power; the spouse of any veteran 
who has a total disability resulting from a service-connected 
disability; and the spouse of any veteran who died while a disability 
so evaluated was in existence.
    (c) Grantees/sub-recipients must apply these priorities in the 
following order:
    (1) Persons who qualify as a veteran or qualified spouse under 
section 2(a) of the Jobs for Veterans Act, 38 U.S.C. 4215(a), and who 
possess at least one of the other priority characteristics;
    (2) Persons who qualify as a veteran or qualified spouse under 
section 2(a) of the Jobs for Veterans Act, 38 U.S.C. 4215(a), who do 
not possess any other of the priority characteristics;
    (3) Persons who do not qualify as a veteran or qualified spouse 
under section 2(a) of the Jobs for Veterans Act (non-veterans), and who 
possess at least one of the other priority characteristics.


Sec.  641.535  What services must grantees/sub-recipients provide to 
participants?

    (a) When individuals are selected for participation in the SCSEP, 
the grantee/sub-recipient is responsible for:
    (1) Providing orientation to the SCSEP, including information on 
project goals and objectives, community service employment assignments, 
training opportunities, available supportive services, the availability 
of a free physical examination, participant rights and 
responsibilities, and permitted and prohibited political activities 
(OAA sec. 502);
    (2)(i) Assessing participants' work history, skills and interests, 
talents, physical capabilities, aptitudes, needs for supportive 
services, occupational preferences, training needs, potential for 
performing community service employment assignments, and potential for 
transition to unsubsidized employment;
    (ii) Performing an initial assessment upon program entry, unless an 
assessment has already been performed under title I of WIA as provided 
in Sec.  641.230. Subsequent assessments may be made as necessary, but 
must be made no less frequently than two times during a twelve month 
period (including the initial assessment);
    (3)(i) Using the information gathered during the initial assessment 
to develop an IEP that includes an appropriate employment goal for each 
participant, except that if an assessment has already been performed 
and an IEP developed under title I of WIA, the WIA assessment and IEP 
will satisfy the requirement for a SCSEP assessment and IEP as provided 
in Sec.  641.230;
    (ii) Updating the IEP as necessary to reflect information gathered 
during the subsequent participant assessments (OAA sec. 502(b)(1)(N));
    (4) Placing participants in appropriate community service 
employment assignments in the community in which they reside, or in a 
nearby community (OAA sec. 502(b)(1)(B));
    (5) Providing or arranging for training identified in participants' 
IEPs and consistent with the SCSEP's goal of unsubsidized employment 
(OAA secs. 502(a)(1), 502(b)(1)(B), 502(b)(1)(I), 502(b)(1)(N)(ii));
    (6) Assisting participants in arranging for needed supportive 
services identified in their SCSEP IEPs (OAA sec. 502(b)(1)(N));
    (7) Providing appropriate services for participants, or referring 
participants to appropriate services, through the One-Stop Delivery 
System established under WIA (OAA sec. 502(b)(1)(O));
    (8) Providing counseling on participants' progress in meeting the 
goals and objectives identified in their IEPs, and in meeting their 
supportive service needs (OAA sec. 502(b)(1)(N)(iii));
    (9) Providing participants with wages and benefits for time spent 
in the community service employment assignment, orientation, and 
training (OAA secs. 502(b)(1)(I), 502(b)(1)(J), 502(c)(6)(A)(i)) (see 
also Sec. Sec.  641.565 and 641.540(f), addressing wages and benefits);
    (10) Ensuring that participants have safe and healthy working 
conditions at their community service employment worksites (OAA sec. 
502(b)(1)(J));
    (11) Assisting participants in obtaining unsubsidized employment, 
including providing or arranging for employment counseling in support 
of their IEPs;
    (b) In addition to the services listed in paragraph (a) of this 
section, grantees/sub-recipients must provide services to participants 
according to administrative guidelines that may be issued by the 
Department.
    (c) Grantees may not use SCSEP funds for individuals who only need 
job search assistance or job referral services. Grantees may provide 
job search assistance and job club activities to participants who are 
enrolled in the SCSEP and are assigned to community service employment 
assignments. (See also Sec.  641.512).


Sec.  641.540  What types of training may grantees/sub-recipients 
provide to SCSEP participants in addition to the training received at 
the community service employment assignment?

    (a) In addition to the training provided in a community service 
employment assignment, grantees and sub-recipients must arrange skill 
training that is realistic and consistent with the participants' IEP, 
that makes the most effective use of their skills and talents, and that 
prepares them for unsubsidized employment.
    (b) Training may be provided prior to beginning or concurrent with 
a community service employment assignment.
    (c) Training may be in the form of lectures, seminars, classroom 
instruction, individual instruction, online instruction, on-the-job 
experiences, or other arrangements, including but not limited to, 
arrangements with other workforce development programs such as WIA. 
(OAA sec. 502(c)(6)(A)(ii)).
    (d) Grantees/sub-recipients are encouraged to obtain training 
through locally available resources, including host agencies, at no 
cost or reduced cost to the SCSEP.
    (e) Grantees/sub-recipients may pay for participant training, 
including the payment of reasonable costs of instructors, classroom 
rental, training supplies, materials, equipment, and tuition. (OAA sec. 
502(c)(6)(A)(ii)).
    (f) Participants must be paid wages while in training, as described 
in Sec.  641.565(a). (OAA sec. 502(b)(1)(I)).
    (g) Grantees/sub-recipients may pay for costs associated with 
supportive services, such as transportation, necessary to participate 
in training. (OAA sec. 502(b)(1)(L)).
    (h) Nothing in this section prevents or limits participants from 
engaging in self-development training available through other sources, 
at their own expense, during hours when not performing their community 
service employment assignments.

[[Page 47806]]

Sec.  641.545  What supportive services may grantees/sub-recipients 
provide to participants?

    (a) Grantees/sub-recipients may provide or arrange for supportive 
services that are necessary to enable an individual to successfully 
participate in a SCSEP project, including but not limited to payment of 
reasonable costs of transportation; health and medical services; 
special job-related or personal counseling; incidentals such as work 
shoes, badges, uniforms, eyeglasses, and tools; dependent care; 
housing; needs-related payments; and follow-up services. (OAA secs. 
502(c)(6)(A)(iv), 518(a)(7)).
    (b) To the extent practicable, the grantee/sub-recipient should 
provide for the payment of these expenses from other resources.
    (c) Grantees/sub-recipients are encouraged to contact placed 
participants throughout the first 12 months following placement to 
determine if they have the necessary supportive services to remain in 
the job.


Sec.  641.550  What responsibility do grantees/sub-recipients have to 
place participants in unsubsidized employment?

    Because one goal of the program is to foster economic self-
sufficiency, and because the SCSEP limits the amount of time a 
participant can remain in the program, grantees and sub-recipients must 
make every effort to place participants in unsubsidized employment. 
Grantees/sub-recipients are responsible for working with participants 
to ensure that the participants are receiving services and taking 
actions designed to help them achieve this goal. Grantees/sub-
recipients must contact private and public employers directly or 
through the One-Stop Delivery System to develop or identify suitable 
unsubsidized employment opportunities. They must also encourage host 
agencies to assist participants in their transition to unsubsidized 
employment, including unsubsidized employment with the host agency.


Sec.  641.565  What policies govern the provision of wages and benefits 
to participants?

    (a) Wages. (1)(i) Grantees/sub-recipients must pay participants the 
highest applicable required wage for time spent in orientation, 
training, and community service employment assignments.
    (ii) SCSEP participants may be paid the highest applicable required 
wage while receiving intensive services.
    (2) The highest applicable required wage is either the minimum wage 
applicable under the Fair Labor Standards Act of 1938; the State or 
local minimum wage for the most nearly comparable covered employment; 
or the prevailing rate of pay for persons employed in similar public 
occupations by the same employer.
    (3) Grantees/sub-recipients must make any adjustments to minimum 
wage rates payable to participants as may be required by Federal, 
State, or local statute during the grant term.
    (b) Benefits. (1) Required benefits. Except as provided in 
paragraph (b)(2) of this section, grantees/sub-recipients must ensure 
that participants receive such benefits as are required by law.
    (i) Grantees/sub-recipients must provide benefits uniformly to all 
participants within a project or subproject, unless the Department 
agrees to waive this provision due to a determination that such a 
waiver is in the best interests of applicants, participants, and 
project administration.
    (ii) Grantees/sub-recipients must offer participants the 
opportunity to receive physical examinations annually.
    (A) Physical examinations are a benefit, and not an eligibility 
criterion. The examining physician must provide, to participants only, 
a written report of the results of the examination. Participants may, 
at their option, provide the grantee or sub-recipient with a copy of 
the report.
    (B) Participants may choose not to accept the physical examination. 
In that case, the grantee or sub-recipient must document this refusal, 
through a signed statement or other means, within 60 workdays after 
commencement of the community service employment assignment. Each year 
thereafter, grantees and sub-recipients must offer the physical 
examination and document the offer and any participant's refusal.
    (C) Grantees/sub-recipients may use SCSEP funds to pay the costs of 
physical examinations.
    (iii) When participants are not covered by the State workers' 
compensation law, the grantee or sub-recipient must provide 
participants with workers' compensation benefits equal to those 
provided by law for covered employment. OAA section 504(b).
    (iv) If required by State law, grantees/sub-recipients must provide 
unemployment compensation coverage for participants.
    (v) Grantees/sub-recipients must provide compensation for scheduled 
work hours during which a host agency's business is closed for a 
Federal holiday.
    (vi) Grantees/sub-recipients must provide necessary sick leave, 
whether paid or unpaid, that is not part of an accumulated sick leave 
program.
    (2) Prohibited wage and benefits costs.
    (i) Participants may not carry over allowable benefits (including 
sick leave) from one Program Year to the next;
    (ii) Grantees/sub-recipients may not provide payment or otherwise 
compensate participants for unused benefits such as sick leave or 
holidays;
    (iii) Grantees/sub-recipients may not use SCSEP funds to cover 
costs associated with the following participant benefits:
    (A) Retirement. Grantees/sub-recipients may not use SCSEP funds to 
provide contributions into a retirement system or plan, or to pay the 
cost of pension benefits for program participants.
    (B) Annual leave.
    (C) Accumulated sick leave.
    (D) Bonuses.
    (OAA sec. 502(c)(6)(A)(i)).


Sec.  641.570  Is there a time limit for participation in the program?

    (a) Individual Time Limit. (1) Eligible individuals may participate 
in the program for a maximum duration of 48 months in the aggregate 
(whether or not consecutive), from the later of July 1, 2007, or the 
date of the individual's enrollment in the program.
    (2) At the time of enrollment, the grantee/sub-recipient must 
inform the participant of the time limit and the possible extension, 
and the grantee/sub-recipient must provide for a system to transition 
participants to unsubsidized employment or other assistance before the 
maximum enrollment duration has expired. Provisions for transition must 
be reflected in the participant's IEP.
    (3) Pursuant to a request from a grantee/sub-recipient, the 
Department will authorize an extension for individuals who meet the 
criteria in paragraph (b) of this section. Notwithstanding any 
individual extensions granted, grantees/sub-recipients must ensure that 
projects do not exceed the overall average participation cap for all 
participants, as described in paragraph (c) of this section.
    (b) Increased periods of individual participation. Pursuant to a 
request by a grantee, the Department will authorize a one-time 
increased period of participation up to an additional 12 months for 
individuals who:
    (1) Have a severe disability;
    (2) Are frail or are age 75 or older;
    (3) Meet the eligibility requirements related to age for, but do 
not receive, benefits under title II of the Social Security Act (42 
U.S.C. 401 et seq.);
    (4) Live in an area with persistent unemployment and are 
individuals with severely limited employment prospects; or

[[Page 47807]]

    (5) Have limited English proficiency or low literacy skills.
    (c) Average participation cap. (1) Notwithstanding any individual 
extension authorized pursuant to paragraph (b) of this section, each 
grantee must manage its SCSEP project in such a way that the grantee 
does not exceed an average participation cap for all participants of 27 
months (in the aggregate).
    (2) A grantee may request, and the Department may authorize, an 
extended average participation period of up to 36 months (in the 
aggregate) for a particular project area in a given Program Year if the 
Department determines that extenuating circumstances exist to justify 
an extension, due to one more of the following factors:
    (i) High rates of unemployment or of poverty or participation in 
the program of block grants to States for temporary assistance for 
needy families established under part A of title IV of the Social 
Security Act, in the areas served by a grantee, relative to other areas 
of the State involved or Nation;
    (ii) Significant downturns in the areas served by the grantee or in 
the national economy;
    (iii) Significant numbers or proportions of participants with one 
or more barriers to employment, including ``most-in-need'' individuals 
described in Sec.  641.710(a)(6), served by a grantee relative to such 
numbers or proportions for grantees serving other areas of the State or 
Nation;
    (iv) Changes in Federal, State, or local minimum wage requirements; 
or
    (v) Limited economies of scale for the provision of community 
service employment and other authorized activities in the areas served 
by the grantee.
    (3) For purposes of the average participation cap, each grant will 
be considered to be one project.
    (d) Authorized break in participation. On occasion a participant 
takes an authorized break in participation from the program, such as a 
formal leave of absence necessitated by personal circumstances or a 
break caused because a suitable community service employment assignment 
is not available. Such an authorized break, if taken pursuant to a 
formal grantee policy allowing such breaks and formally entered into 
the SCSEP Performance and Results Quarterly Performance Reporting 
(SPARQ) system, will not count toward the individual time limit 
described in paragraph (a) or the average participation cap described 
in paragraph (c).
    (e) Administrative guidance. The Department will issue 
administrative guidance detailing the process by which a grantee may 
request an increased period of participation for a participant(s), and 
the process by which a grantee may request an extension of the average 
participation cap.
    (f) Grantee authority. Grantees may limit the time of participation 
for individuals to less than the 48 months described in paragraph (a) 
of this section, if the grantee uniformly applies the lower 
participation limit, and if the grantee submits a description of the 
lower participation limit policy in its grant application. (OAA secs. 
502(b)(1)(C), 518(a)(3)(B)).


Sec.  641.575  May a grantee/sub-recipient establish a limit on the 
amount of time its participants may spend at each host agency?

    Yes, grantees/sub-recipients may establish limits on the amount of 
time that participants spend at a particular host agency, and are 
encouraged to rotate participants among different host agencies, or to 
different assignments within the same host agency, as such rotations 
may increase participants' skills development and employment 
opportunities. Such limits are established in the grant agreement, as 
approved by the Department, and must be consistent with the 
participants' IEPs. Host agency rotations have no effect on either the 
individual participation limit or the average participation cap (see 
Sec.  641.570).


Sec.  641.577  Is there a limit on community service employment 
assignment hours?

    Yes. Each participant's community service employment assignment 
must not exceed 1,300 hours during a Program Year. The 1,300 hours 
includes all paid hours directly related to the community service 
employment assignment, including any hours of scheduled work during a 
Federal holiday and any hours of compensated or uncompensated leave. 
Hours spent by a participant in SCSEP orientation and training do not 
count toward the 1,300 hour limit.


Sec.  641.580  Under what circumstances may a grantee/sub-recipient 
terminate a participant?

    (a) If, at any time, a grantee or sub-recipient determines that a 
participant was incorrectly declared eligible as a result of false 
information knowingly given by that individual, the grantee/sub-
recipient must give the participant immediate written notice explaining 
the reason(s) for termination and immediately terminate the 
participant.
    (b) If, during eligibility verification under Sec.  641.505, a 
grantee/sub-recipient finds a participant to be no longer eligible for 
enrollment, the grantee/sub-recipient must give the participant written 
notice explaining the reason(s) for termination within 30 days, and 
must terminate the participant 30 days after the participant receives 
the notice.
    (c) If, at any time, the grantee/sub-recipient determines that it 
incorrectly determined a participant to be eligible for the program 
through no fault of the participant, the grantee/sub-recipient must 
give the participant immediate written notice explaining the reason(s) 
for termination and must terminate the participant 30 days after the 
participant receives the notice.
    (d) A grantee/sub-recipient may terminate a participant for cause. 
In doing so, the grantee/sub-recipient must give the participant 
written notice explaining the reason(s) for termination. Grantees must 
include their policies concerning for-cause terminations in the grant 
application.
    (e) A grantee/sub-recipient may terminate a participant if the 
participant refuses to accept a reasonable number of job offers or 
referrals to unsubsidized employment consistent with the SCSEP IEP and 
there are no extenuating circumstances that would hinder the 
participant from moving to unsubsidized employment. The grantee/sub-
recipient must give the participant written notice explaining the 
reason(s) for termination and must terminate the participant 30 days 
after the participant receives the notice.
    (f) When a grantee/sub-recipient makes an unfavorable determination 
of enrollment eligibility under paragraphs (b) and (c) of this section, 
it should refer the individual to other potential sources of 
assistance, such as the One-Stop Delivery System. When a grantee/sub-
recipient terminates a participant under paragraphs (d) and (e) of this 
section, it may refer the individual to other potential sources of 
assistance, such as the One-Stop Delivery System.
    (g) Grantees and sub-recipients must provide each participant at 
the time of enrollment with a written copy of its policies for 
terminating a participant for cause or otherwise, and must verbally 
review those policies with each participant.
    (h) Any termination, as described in paragraphs (a) through (e) of 
this section, must be consistent with administrative guidelines issued 
by the Department, and the termination must be subject to the 
applicable grievance procedures described in Sec.  641.910.
    (i) Participants may not be terminated from the program solely on 
the basis of their age. Grantees/sub-recipients may not impose an upper 
age limit for participation in the SCSEP.

[[Page 47808]]

Sec.  641.585  What is the employment status of SCSEP participants?

    (a) Participants are not considered Federal employees solely as a 
result of their participation in the SCSEP. (OAA sec. 504(a)).
    (b) Grantees must determine whether or not a participant qualifies 
as an employee of the grantee, sub-recipient, local project, or host 
agency, under applicable law. Responsibility for this determination 
rests with the grantee even when a Federal agency is a grantee or host 
agency.

Subpart F--Pilot, Demonstration, and Evaluation Projects


Sec.  641.600  What is the purpose of the pilot, demonstration, and 
evaluation projects authorized under section 502(e) of the OAA?

    The purpose of the pilot, demonstration, and evaluation projects 
authorized under section 502(e) of the OAA is to develop and implement 
techniques and approaches, and to demonstrate the effectiveness of 
these techniques and approaches, in addressing the employment and 
training needs of individuals eligible for SCSEP.


Sec.  641.610  How are pilot, demonstration, and evaluation projects 
administered?

    The Department may enter into agreements with States, public 
agencies, nonprofit private organizations, or private business 
concerns, as may be necessary, to conduct pilot, demonstration, and 
evaluation projects.


Sec.  641.620  How may an organization apply for pilot, demonstration, 
and evaluation project funding?

    Organizations applying for pilot, demonstration, and evaluation 
project funding must follow the instructions issued by the Department.


Sec.  641.630  What pilot, demonstration, and evaluation project 
activities are allowable under section 502(e)?

    Allowable pilot, demonstration and evaluation projects include:
    (a) Activities linking businesses and eligible individuals, 
including activities providing assistance to participants transitioning 
from subsidized activities to private sector employment;
    (b) Demonstration projects and pilot projects designed to:
    (1) Attract more eligible individuals into the labor force;
    (2) Improve the provision of services to eligible individuals under 
One-Stop Delivery Systems established under title I of WIA;
    (3) Enhance the technological skills of eligible individuals; and
    (4) Provide incentives to SCSEP grantees for exemplary performance 
and incentives to businesses to promote their participation in the 
SCSEP;
    (c) Demonstration projects and pilot projects, as described in 
paragraph (b) of this section, for workers who are older individuals 
(but targeted to eligible individuals) only if such demonstration 
projects and pilot projects are designed to assist in developing and 
implementing techniques and approaches in addressing the employment and 
training needs of eligible individuals;
    (d) Provision of training and technical assistance to support a 
SCSEP project;
    (e) Dissemination of best practices relating to employment of 
eligible individuals; and
    (f) Evaluation of SCSEP activities.


Sec.  641.640  Should pilot, demonstration, and evaluation project 
entities coordinate with SCSEP grantees/sub-recipients, including area 
agencies on aging?

    (a) To the extent practicable, the Department will provide an 
opportunity, prior to the development of a demonstration or pilot 
project, for the appropriate area agency on aging to submit comments on 
such a project in order to ensure coordination of SCSEP activities with 
activities carried out under this subpart.
    (b) To the extent practicable, entities carrying out pilot, 
demonstration, and evaluation projects must consult with appropriate 
area agencies on aging and with other appropriate agencies and entities 
to promote coordination of SCSEP and pilot, demonstration, and 
evaluation activities. (OAA sec. 502(e)).
    8. Revise subparts H and I of part 641 to read as follows:
Subpart H--Administrative Requirements
Sec.
641.800 What uniform administrative requirements apply to the use of 
SCSEP funds?
641.803 What is program income?
641.806 How must SCSEP program income be used?
641.809 What non-Federal share (matching) requirements apply to the 
use of SCSEP funds?
641.812 What is the period of availability of SCSEP funds?
641.815 May the period of availability be extended?
641.821 What audit requirements apply to the use of SCSEP funds?
641.824 What lobbying requirements apply to the use of SCSEP funds?
641.827 What general nondiscrimination requirements apply to the use 
of SCSEP funds?
641.833 What policies govern political patronage?
641.836 What policies govern political activities?
641.839 What policies govern union organizing activities?
641.841 What policies govern nepotism?
641.844 What maintenance of effort requirements apply to the use of 
SCSEP funds?
641.847 What uniform allowable cost requirements apply to the use of 
SCSEP funds?
641.850 Are there other specific allowable and unallowable cost 
requirements for the SCSEP?
641.853 How are costs classified?
641.856 What functions and activities constitute costs of 
administration?
641.859 What other special rules govern the classification of costs 
as administrative costs or programmatic activity costs?
641.861 Must SCSEP recipients provide funding for the administrative 
costs of sub-recipients?
641.864 What functions and activities constitute programmatic 
activity costs?
641.867 What are the limitations on the amount of SCSEP 
administrative costs?
641.870 Under what circumstances may the administrative cost 
limitation be increased?
641.873 What minimum expenditure levels are required for participant 
wages and benefits?
641.874 What conditions apply to a SCSEP grantee request to use 
additional funds for training and supportive service costs?
641.876 When will compliance with cost limitations and minimum 
expenditure levels be determined?
641.879 What are the financial and performance reporting 
requirements for recipients?
641.881 What are the SCSEP recipient's responsibilities relating to 
awards to sub-recipients?
641.884 What are the grant closeout procedures?
Subpart I--Grievance Procedures and Appeals Process
641.900 What appeal process is available to an applicant that does 
not receive a grant?
641.910 What grievance procedures must grantees make available to 
applicants, employees, and participants?
641.920 What actions of the Department may a grantee appeal and what 
procedures apply to those appeals?
641.930 Is there an alternative dispute resolution process that may 
be used in place of an OALJ hearing?

Subpart H--Administrative Requirements


Sec.  641.800  What uniform administrative requirements apply to the 
use of SCSEP funds?

    (a) SCSEP recipients and sub-recipients must follow the uniform 
administrative requirements and allowable cost requirements that apply 
to their type of organization. (OAA sec. 503(f)(2)).
    (b) Governments, State, local, and Indian tribal organizations, 
that receive SCSEP funds under grants or cooperative agreements must 
follow the

[[Page 47809]]

common rule implementing OMB Circular A-102, ``Grants and Cooperative 
Agreements with State and Local Governments'' (10/07/1994) (further 
amended 08/29/1977), codified at 29 CFR part 97.
    (c) Nonprofit and commercial organizations, institutions of higher 
education, hospitals, other nonprofit organizations, and commercial 
organizations that receive SCSEP funds under grants or cooperative 
agreements, must follow the common rule implementing OMB Circular A-
110, codified at 29 CFR part 95.


Sec.  641.803  What is program income?

    Program income, as described in 29 CFR 97.25 (State and local 
governments) and 29 CFR 95.2(bb) (non-profit and commercial 
organizations), is income earned by the recipient or sub-recipient 
during the grant period that is directly generated by an allowable 
activity supported by grant funds or earned as a result of the award of 
grant funds. Program income includes income earned from license fees 
and royalties for copyrighted material, patents, patent applications, 
trademarks, and inventions produced under an award. (See 29 CFR 
95.24(e) (non-profit and commercial organizations) and 29 CFR 97.25(e) 
(State and local governments)). Costs of generating SCSEP program 
income may be deducted from gross income received by SCSEP recipients 
and sub-recipients to determine SCSEP program income earned or 
generated provided these costs have not been charged to the SCSEP.


Sec.  641.806  How must SCSEP program income be used?

    (a) SCSEP recipients that earn or generate program income during 
the grant period must add the program income to the Federal and non-
Federal funds committed to the SCSEP and must use it for the program, 
during the grant period in which it was earned, as provided in 29 CFR 
95.24(a) (non-profit and commercial organizations) or 29 CFR 97.25(g) 
(2) (State and local governments), as applicable.
    (b) Recipients that continue to receive a SCSEP grant from the 
Department must spend program income earned or generated from SCSEP-
funded activities after the end of the grant period for SCSEP purposes 
in the Program Year it was received.
    (c) Recipients that do not continue to receive a SCSEP grant from 
the Department must remit unexpended program income earned or generated 
during the grant period from SCSEP funded activities to the Department 
after the end of the grant period. These recipients have no obligation 
to the Department for program income earned after the end of the grant 
period.


Sec.  641.809  What non-Federal share (matching) requirements apply to 
the use of SCSEP funds?

    (a) The Department will pay no more than 90 percent of the total 
cost of activities carried out under a SCSEP grant. (OAA sec. 
502(c)(1)).
    (b) All SCSEP recipients, including Federal agencies if there is no 
statutory exemption, must provide or ensure that at least 10 percent of 
the total cost of activities carried out under a SCSEP grant (non-
Federal share of costs) consists of allowable costs paid for with non-
Federal funds, except as provided in paragraphs (e) and (f) of this 
section.
    (c) Recipients must determine the non-Federal share of costs in 
accordance with 29 CFR 97.24 for governmental units, or 29 CFR 95.23 
for nonprofit and commercial organizations.
    (d) The non-Federal share of costs may be provided in cash, or in-
kind, or a combination of the two. (OAA sec. 502(c)(2)).
    (e) A recipient may not require a sub-recipient or host agency to 
provide non-Federal resources for the use of the SCSEP project as a 
condition of entering into a sub-recipient or host relationship. This 
does not preclude a sub-recipient or host agency from voluntarily 
contributing non-Federal resources for the use of the SCSEP project.
    (f) The Department may pay all of the costs of activities in an 
emergency or disaster project or a project in an economically 
distressed area. (OAA sec. 502(c)(1)).


Sec.  641.812  What is the period of availability of SCSEP funds?

    (a) Except as provided in Sec.  641.815, recipients must expend 
SCSEP funds during the Program Year for which they are awarded (July 1-
June 30). (OAA sec. 515(b)).
    (b) SCSEP recipients must ensure that no sub-agreement provides for 
the expenditure of any SCSEP funds before July 1 of the grant year, or 
after the end of the grant period, except as provided in Sec.  641.815.


Sec.  641.815  May the period of availability be extended?

    SCSEP recipients may request in writing, and the Department may 
grant, an extension of the period during which SCSEP funds may be 
obligated or expended. SCSEP recipients requesting an extension must 
justify that an extension is necessary. (OAA sec. 515(b)). The 
Department will notify recipients in writing of the approval or 
disapproval of any such requests.


Sec.  641.821  What audit requirements apply to the use of SCSEP funds?

    (a) Recipients and sub-recipients receiving Federal awards of SCSEP 
funds must follow the audit requirements in paragraphs (b) and (c) of 
this section that apply to their type of organization. As used here, 
Federal awards of SCSEP funds include Federal financial assistance and 
Federal cost-reimbursement contracts received directly from the 
Department or indirectly under awards by SCSEP recipients or higher-
tier sub-recipients. (OAA sec. 503(f)(2)).
    (b) All governmental and nonprofit organizations that are 
recipients or sub-recipients must follow the audit requirements of OMB 
Circular A-133. These requirements are codified at 29 CFR parts 96 and 
99 and referenced in 29 CFR 97.26 for governmental organizations; and 
in 29 CFR 95.26 for institutions of higher education, hospitals, and 
other nonprofit organizations.
    (c)(1) The Department is responsible for audits of SCSEP recipients 
that are commercial organizations.
    (2) Commercial organizations that are sub-recipients under the 
SCSEP and that expend more than the minimum level specified in OMB 
Circular A-133 ($500,000, for fiscal years ending after December 31, 
2003) must have either an organization-wide audit or a program-specific 
financial and compliance audit conducted in accordance with OMB 
Circular A-133.


Sec.  641.824  What lobbying requirements apply to the use of SCSEP 
funds?

    SCSEP recipients and sub-recipients must comply with the 
restrictions on lobbying codified in the Department's regulations at 29 
CFR part 93. (Also refer to Sec.  641.850(c), ``Lobbying costs.'')


Sec.  641.827  What general nondiscrimination requirements apply to the 
use of SCSEP funds?

    (a) SCSEP recipients, sub-recipients, and host agencies are 
required to comply with the nondiscrimination provisions codified in 
the Department's regulations at 29 CFR parts 31 and 32 and the 
provisions regarding the equal treatment of religious organizations at 
29 CFR part 2 subpart D.
    (b) Recipients and sub-recipients of SCSEP funds are required to 
comply with the nondiscrimination provisions codified in the 
Department's regulations at 29 CFR part 37 if:
    (1) The recipient:
    (i) Is a One-Stop partner listed in section 121(b) of WIA, and
    (ii) Operates programs and activities that are part of the One-Stop 
Delivery System established under WIA; or

[[Page 47810]]

    (2) The recipient otherwise satisfies the definition of 
``recipient'' in 29 CFR 37.4.
    (c) Recipients must ensure that participants are provided 
informational materials relating to age discrimination and/or their 
rights under the Age Discrimination in Employment Act of 1975 that are 
distributed to recipients by the Department pursuant to section 
503(b)(3) of the OAA.
    (d) Questions about, or complaints alleging a violation of, the 
nondiscrimination requirements cited in this section may be directed or 
mailed to the Director, Civil Rights Center, U.S. Department of Labor, 
Room N-4123, 200 Constitution Avenue, NW., Washington, DC 20210, for 
processing. (See Sec.  641.910(d)).
    (e) The specification of any right or protection against 
discrimination in paragraphs (a) through (d) of this section must not 
be interpreted to exclude or diminish any other right or protection 
against discrimination in connection with a SCSEP project that may be 
available to any participant, applicant for participation, or other 
individual under any applicable Federal, State, or local laws 
prohibiting discrimination, or their implementing regulations.


Sec.  641.833  What policies govern political patronage?

    (a) A recipient or sub-recipient must not select, reject, promote, 
or terminate an individual based on political services provided by the 
individual or on the individual's political affiliations or beliefs. In 
addition, as indicated in Sec.  641.827(b), certain recipients and sub-
recipients of SCSEP funds are required to comply with WIA 
nondiscrimination regulations in 29 CFR part 37. These regulations 
prohibit discrimination on the basis of political affiliation or 
belief.
    (b) A recipient or sub-recipient must not provide funds to any sub-
recipient, host agency, or other entity based on political affiliation.
    (c) SCSEP recipients must ensure that every entity that receives 
SCSEP funds through the recipient is applying the policies stated in 
paragraphs (a) and (b) of this section.


Sec.  641.836  What policies govern political activities?

    (a) No project under title V of the OAA may involve political 
activities. SCSEP recipients must ensure compliance with the 
requirements and prohibitions involving political activities described 
in paragraphs (b) and (c) of this section.
    (b) State and local employees involved in the administration of 
SCSEP activities may not engage in political activities prohibited 
under the Hatch Act (5 U.S.C. chapter 15), including:
    (1) Seeking partisan elective office;
    (2) Using official authority or influence for the purpose of 
affecting elections, nominations for office, or fund-raising for 
political purposes. (5 U.S.C. 1502).
    (c) SCSEP recipients must provide all persons associated with SCSEP 
activities with a written explanation of allowable and unallowable 
political activities under the Hatch Act. A notice explaining these 
allowable and unallowable political activities must be posted in every 
workplace in which SCSEP activities are conducted. The Department will 
provide the form and content of the notice and explanatory material by 
administrative issuance. (OAA sec. 502(b)(l)(P)).
    (d) SCSEP recipients must ensure that:
    (1) No SCSEP participants or staff persons engage in partisan or 
nonpartisan political activities during hours for which they are being 
paid with SCSEP funds.
    (2) No participants or staff persons engage in partisan political 
activities in which such participants or staff persons represent 
themselves as spokespersons for the SCSEP.
    (3) No participants are employed or out-stationed in the offices of 
a Member of Congress, a State or local legislator, or on the staff of 
any legislative committee.
    (4) No participants are employed or out-stationed in the immediate 
offices of any elected chief executive officer of a State or unit of 
general government, except that:
    (i) Units of local government may serve as host agencies for 
participants, provided that their assignments are non-political; and
    (ii) While assignments may technically place participants in such 
offices, such assignments actually must be concerned with program and 
service activities and not in any way involved in political functions.
    (5) No participants are assigned to perform political activities in 
the offices of other elected officials. Placement of participants in 
such offices in non-political assignments is permissible, however, 
provided that:
    (i) SCSEP recipients develop safeguards to ensure that participants 
placed in these assignments are not involved in political activities; 
and
    (ii) These safeguards are described in the grant agreement and are 
subject to review and monitoring by the SCSEP recipient and by the 
Department.


Sec.  641.839  What policies govern union organizing activities?

    Recipients must ensure that SCSEP funds are not used in any way to 
assist, promote, or deter union organizing.


Sec.  641.841  What policies govern nepotism?

    (a) SCSEP recipients must ensure that no recipient or sub-recipient 
hires, and no host agency serves as a worksite for, a person who works 
in a SCSEP community service employment assignment if a member of that 
person's immediate family is engaged in a decision-making capacity 
(whether compensated or not) for that project, subproject, recipient, 
sub-recipient, or host agency. The Department may exempt worksites on 
Native American reservations and in rural areas from this requirement 
provided that adequate justification can be documented, such as that no 
other persons are eligible and available for participation in the 
program.
    (b) To the extent that an applicable State or local legal 
requirement regarding nepotism is more restrictive than this provision, 
SCSEP recipients must ensure that the more restrictive requirement is 
followed.
    (c) For purposes of this section, ``immediate family'' means wife, 
husband, son, daughter, mother, father, brother, sister, son-in-law, 
daughter-in-law, mother-in-law, father-in-law, brother-in-law, sister-
in-law, aunt, uncle, niece, nephew, stepparent, stepchild, grandparent, 
or grandchild.


Sec.  641.844  What maintenance of effort requirements apply to the use 
of SCSEP funds?

    (a) A community service employment assignment for a participant 
under title V of the OAA is permissible only when specific maintenance 
of effort requirements are met.
    (b) Each project funded under title V:
    (1) Must not reduce the number of employment opportunities or 
vacancies that would otherwise be available to individuals not 
participating in the program;
    (2) Must not displace currently employed workers (including partial 
displacement, such as a reduction in the hours of non-overtime work, 
wages, or employment benefits);
    (3) Must not impair existing contracts or result in the 
substitution of Federal funds for other funds in connection with work 
that would otherwise be performed; and
    (4) Must not employ or continue to employ any eligible individual 
to perform the same work or substantially the same work as that 
performed by any other individual who is on layoff. (OAA sec. 
502(b)(1)(G)).

[[Page 47811]]

Sec.  641.847  What uniform allowable cost requirements apply to the 
use of SCSEP funds?

    (a) General. Unless specified otherwise in this part or the grant 
agreement, recipients and sub-recipients must follow the uniform 
allowable cost requirements that apply to their type of organization. 
For example, a local government sub-recipient receiving SCSEP funds 
from a nonprofit organization must use the allowable cost requirements 
for governmental organizations in OMB Circular A-87. The Department's 
regulations at 29 CFR 95.27 (nonprofit and commercial organizations) 
and 29 CFR 97.22 (State and local governments) identify the Federal 
principles for determining allowable costs that each kind of 
organization must follow. The applicable Federal principles for each 
kind of organization are described in paragraphs (b)(1) through (b)(5) 
of this section. (OAA sec. 503(f)(2)).
    (b) Allowable costs/cost principles.
    (1) Allowable costs for State, local, and Indian tribal government 
organizations must be determined under OMB Circular A-87, ``Cost 
Principles for State, Local and Indian Tribal Governments.''
    (2) Allowable costs for nonprofit organizations must be determined 
under OMB Circular A-122, ``Cost Principles for Non-Profit 
Organizations.''
    (3) Allowable costs for institutions of higher education must be 
determined under OMB Circular A-21, ``Cost Principles for Educational 
Institutions.''
    (4) Allowable costs for hospitals must be determined in accordance 
with appendix E of 45 CFR part 74, ``Principles for Determining Costs 
Applicable to Research and Development Under Grants and Contracts with 
Hospitals.''
    (5) Allowable costs for commercial organizations and those 
nonprofit organizations listed in Attachment C to OMB Circular A-122 
must be determined under the provisions of the Federal Acquisition 
Regulation (FAR), at 48 CFR part 31.


Sec.  641.850  Are there other specific allowable and unallowable cost 
requirements for the SCSEP?

    (a) Yes, in addition to the generally applicable cost principles in 
Sec.  641.847(b), the cost principles in paragraphs (b) through (g) of 
this section apply to SCSEP grants.
    (b) Claims against the Government. For all types of entities, legal 
expenses for the prosecution of claims against the Federal Government, 
including appeals to an Administrative Law Judge, are unallowable.
    (c) Lobbying costs. In addition to the prohibition contained in 29 
CFR part 93, SCSEP funds must not be used to pay any salaries or 
expenses related to any activity designed to influence legislation or 
appropriations pending before the Congress of the United States or any 
State legislature. (See Sec.  641.824).
    (d) One-Stop Costs. Costs of participating as a required partner in 
the One-Stop Delivery System established in accordance with section 
134(c) of the Workforce Investment Act of 1998 are allowable, provided 
that SCSEP services and funding are provided in accordance with the MOU 
required by the Workforce Investment Act and section 502(b)(1)(O) of 
OAA, and costs are determined in accordance with the applicable cost 
principles. The costs of services provided by the SCSEP, including 
those provided by participants/enrollees, may comprise a portion or the 
total of a SCSEP project's proportionate share of One-Stop costs.
    (e) Building repairs and acquisition costs. Except as provided in 
this paragraph and as an exception to the allowable cost principles in 
Sec.  641.847(b), no SCSEP funds may be used for the purchase, 
construction, or renovation of any building except for the labor 
involved in:
    (1) Minor remodeling of a public building necessary to make it 
suitable for use for project purposes;
    (2) Minor repair and rehabilitation of publicly used facilities for 
the general benefit of the community; and
    (3) Minor repair and rehabilitation by participants of housing 
occupied by persons with low incomes who are declared eligible for such 
services by authorized local agencies.
    (f) Accessibility and reasonable accommodation. Recipients and sub-
recipients may use SCSEP funds to meet their obligations under section 
504 of the Rehabilitation Act of 1973, as amended, and the Americans 
with Disabilities Act of 1990, and any other applicable Federal 
disability nondiscrimination laws, to provide physical and programmatic 
accessibility and reasonable accommodation/modifications for, and 
effective communications with, individuals with disabilities. (29 
U.S.C. 794).
    (g) Participants' benefit costs. Recipients and sub-recipients may 
use SCSEP funds for participant benefit costs only under the conditions 
set forth in Sec.  641.565.


Sec.  641.853  How are costs classified?

    (a) All costs must be classified as ``administrative costs'' or 
``programmatic activity costs.'' (OAA sec. 502(c)(6)).
    (b) Recipients and sub-recipients must assign participants' wage 
and benefit costs and other participant (enrollee) costs such as 
supportive services to the programmatic activity cost category. (See 
Sec.  641.864). When a participant's community service employment 
assignment involves functions whose costs are normally classified as 
administrative costs, compensation provided to the participants must be 
charged as programmatic activity costs instead of administrative costs, 
since participant wage and benefit costs are always charged to the 
programmatic activity cost category.


Sec.  641.856  What functions and activities constitute administrative 
costs?

    (a) Administrative costs are that allocable portion of necessary 
and reasonable allowable costs of recipients and program operators that 
are associated with those specific functions identified in paragraph 
(b) of this section and that are not related to the direct provision of 
programmatic activities specified in Sec.  641.864. These costs may be 
both personnel and non-personnel and both direct and indirect costs.
    (b) Administrative costs are the costs associated with:
    (1) Performing general administrative and coordination functions, 
including:
    (i) Accounting, budgeting, financial, and cash management 
functions;
    (ii) Procurement and purchasing functions;
    (iii) Property management functions;
    (iv) Personnel management functions;
    (v) Payroll functions;
    (vi) Coordinating the resolution of findings arising from audits, 
reviews, investigations, and incident reports;
    (vii) Audit functions;
    (viii) General legal services functions;
    (ix) Developing systems and procedures, including information 
systems, required for these administrative functions;
    (x) Preparing administrative reports; and
    (xi) Other activities necessary for general administration of 
government funds and associated programs.
    (2) Oversight and monitoring responsibilities related to 
administrative functions;
    (3) Costs of goods and services used for administrative functions 
of the program, including goods and services such as rental or purchase 
of equipment, utilities, office supplies, postage, and rental and 
maintenance of office space;
    (4) Travel costs incurred for official business in carrying out 
administrative activities or the overall management of the program;

[[Page 47812]]

    (5) Costs of information systems related to administrative 
functions (for example, personnel, procurement, purchasing, property 
management, accounting, and payroll systems) including the purchase, 
systems development, and operating costs of such systems; and
    (6) Costs of technical assistance, professional organization 
membership dues, and evaluating results obtained by the project 
involved against stated objectives. (OAA sec. 502(c)(4)).


Sec.  641.859  What other special rules govern the classification of 
costs as administrative costs or programmatic activity costs?

    (a) Recipients and sub-recipients must comply with the special 
rules for classifying costs as administrative costs or programmatic 
activity costs set forth in paragraphs (b) through (e) of this section.
    (b)(1) Costs of awards by recipients and program operators that are 
solely for the performance of their own administrative functions are 
classified as administrative costs.
    (2) Costs incurred by recipients and program operators for 
administrative functions listed in Sec.  641.856(b) are classified as 
administrative costs.
    (3) Costs incurred by vendors and sub-recipients performing the 
administrative functions of recipients and program operators are 
classified as administrative costs. (See 29 CFR 99.210 for a discussion 
of factors differentiating sub-recipients from vendors.)
    (4) Except as provided in paragraph (b)(3) of this section, all 
costs incurred by all vendors, and only those sub-recipients below 
program operators, are classified as programmatic activity costs. (See 
29 CFR 99.210 for a discussion of factors differentiating sub-
recipients from vendors.)
    (c) Personnel and related non-personnel costs of staff who perform 
both administrative functions specified in Sec.  641.856(b) and 
programmatic services or activities must be allocated as administrative 
or programmatic activity costs to the benefiting cost objectives/
categories based on documented distributions of actual time worked or 
other equitable cost allocation methods.
    (d) The allocable share of indirect or overhead costs charged to 
the SCSEP grant are to be allocated to the administrative and 
programmatic activity cost categories in the same proportion as the 
costs in the overhead or indirect cost pool are classified as 
programmatic activity or administrative costs.
    (e) Costs of the following information systems including the 
purchase, systems development and operating (e.g., data entry) costs 
are charged to the programmatic activity cost category:
    (1) Tracking or monitoring of participant and performance 
information;
    (2) Employment statistics information, including job listing 
information, job skills information, and demand occupation information; 
and
    (3) Local area performance information.


Sec.  641.861  Must SCSEP recipients provide funding for the 
administrative costs of sub-recipients?

    (a) Recipients and sub-recipients must obtain funding for 
administrative costs to the extent practicable from non-Federal 
sources. (OAA sec. 502(c)(5)).
    (b) SCSEP recipients must ensure that sufficient funding is 
provided for the administrative activities of sub-recipients that 
receive SCSEP funding through the recipient. Each SCSEP recipient must 
describe in its grant application the methodology used to ensure that 
sub-recipients receive sufficient funding for their administrative 
activities. (OAA sec. 502(b)(1)(R)).


Sec.  641.864  What functions and activities constitute programmatic 
activity costs?

    Programmatic activity costs include, but are not limited to, the 
costs of the following functions:
    (a) Participant wages, such benefits as are required by law (such 
as workers' compensation or unemployment compensation), the costs of 
physical examinations, compensation for scheduled work hours during 
which a host agency is closed for a Federal holiday, and necessary sick 
leave that is not part of an accumulated sick leave program, except 
that no amounts provided under the grant may be used to pay the cost of 
pension benefits, annual leave, accumulated sick leave, or bonuses, as 
described in Sec.  641.565;
    (b) Outreach, recruitment and selection, intake, orientation, 
assessment, and preparation and updating of IEPs;
    (c) Participant training, as described in Sec.  641.540, which may 
be provided prior to commencing or concurrent with a community service 
employment assignment, and which may be provided at a host agency, in a 
classroom setting, or utilizing other appropriate arrangements, which 
may include reasonable costs of instructors' salaries, classroom space, 
training supplies, materials, equipment, and tuition;
    (d) Subject to the restrictions in Sec.  641.535(c), job placement 
assistance, including job development and job search assistance, job 
fairs, job clubs, and job referrals; and
    (e) Participant supportive services, to enable an individual to 
successfully participate in a SCSEP project, as described in Sec.  
641.545. (OAA sec. 502(c)(6)(A)).


Sec.  641.867  What are the limitations on the amount of SCSEP 
administrative costs?

    (a) Except as provided in paragraph (b), no more than 13.5 percent 
of the SCSEP funds received for a Program Year may be used for 
administrative costs.
    (b) The Department may increase the amount available for 
administrative costs to not more than 15 percent, in accordance with 
Sec.  641.870. (OAA sec. 502(c)(3)).


Sec.  641.870  Under what circumstances may the administrative cost 
limitation be increased?

    (a) SCSEP recipients may request that the Department increase the 
amount available for administrative costs. The Department may honor the 
request if:
    (1) The Department determines that it is necessary to carry out the 
project; and
    (2) The recipient demonstrates that:
    (i) Major administrative cost increases are being incurred in 
necessary program components, including liability insurance, payments 
for workers' compensation for staff, costs associated with achieving 
unsubsidized placement goals, and other operation requirements imposed 
by the Department;
    (ii) The number of community service employment assignment 
positions in the project or the number of minority eligible individuals 
participating in the project will decline if the amount available for 
paying the cost of administration is not increased; or
    (iii) The size of the project is so small that the amount of 
administrative costs incurred to carry out the project necessarily 
exceeds 13.5 percent of the grant amount. (OAA sec. 502(c)(3)).
    (b) A request by a recipient or prospective recipient for an 
increase in the amount available for administrative costs may be 
submitted as part of the grant application or as a separate submission 
at any time after the grant award.


Sec.  641.873  What minimum expenditure levels are required for 
participant wages and benefits?

    (a) Except as provided in Sec.  641.874, not less than 75 percent 
of the SCSEP funds provided under a grant from the Department must be 
used to pay for wages and benefits of participants as described in 
Sec.  641.864(a). (OAA sec. 502(c)(6)(B)).

[[Page 47813]]

    (b) A SCSEP recipient is in compliance with this provision if at 
least 75 percent of the total award amount of SCSEP funds provided to 
the recipient was spent for wages and benefits, even if one or more 
sub-recipients did not expend at least 75 percent of their SCSEP sub-
recipient award for wages and benefits.
    (c) A SCSEP grantee may submit to the Department a request for 
approval to use not less than 65 percent of the grant funds to pay 
wages and benefits pursuant to Sec.  641.874.


Sec.  641.874  What conditions apply to a SCSEP grantee request to use 
additional funds for training and supportive service costs?

    (a) A grantee may submit to the Department a request for approval--
    (1) To use not less than 65 percent of the grant funds to pay the 
wages and benefits described in Sec.  641.864(a);
    (2) To use the percentage of grant funds specified in Sec.  641.867 
to pay for administrative costs as described in Sec.  641.856;
    (3) To use the 10 percent of grant funds that would otherwise be 
devoted to wages and benefits under Sec.  641.873 to provide 
participant training (as described in Sec.  641.540(e)) and participant 
supportive services to enable a participant to successfully participate 
in a SCSEP project (as described in Sec.  641.545), in which case the 
grantee must provide (from the funds described in this paragraph) the 
subsistence allowance described in Sec.  641.565(a) for those 
individual participants who are receiving training from the funds 
described in this paragraph, but may not use the funds described in 
this paragraph to pay for any administrative costs; and
    (4) To use the remaining grant funds to provide participant 
training, job placement assistance, participant supportive services, 
and outreach, recruitment and selection, intake, orientation and 
assessment.
    (b) In submitting the request the grantee must include in the 
request--
    (1) A description of the activities for which the grantee will 
spend the grant funds described in paragraphs (a)(3) and (a)(4) of this 
section;
    (2) An explanation documenting how the provision of such activities 
will improve the effectiveness of the project, including an explanation 
concerning whether any displacement of eligible individuals or 
elimination of positions for such individuals will occur, information 
on the number of such individuals to be displaced and of such positions 
to be eliminated, and an explanation concerning how the activities will 
improve employment outcomes for individuals served, based on the 
assessment conducted pursuant to Sec.  641.535(a)(2); and
    (3) A proposed budget and work plan for the activities, including a 
detailed description of the funds to be spent on the activities 
described in paragraphs (a)(3) and (a)(4) of this section.
    (c)(1) If a grantee wishes to amend an existing grant agreement to 
use additional funds for training and supportive service costs, the 
grantee must submit such a request not later than 90 days before the 
proposed date of implementation contained in the request. Not later 
than 30 days before the proposed date of implementation, the Department 
will approve, approve as modified, or reject the request, on the basis 
of the information included in the request.
    (2) If a grantee submits a request to use additional funds for 
training and supportive service costs in the grant application, the 
request will be accepted and processed as a part of the grant review 
process.
    (d) Grantees may apply this provision to individual sub-recipients 
but need not provide this opportunity to all their sub-recipients.


Sec.  641.876  When will compliance with cost limitations and minimum 
expenditure levels be determined?

    The Department will determine compliance by examining expenditures 
of SCSEP funds. The cost limitations and minimum expenditure level 
requirements must be met at the time all such funds have been expended 
or the period of availability of such funds has expired, whichever 
comes first.


Sec.  641.879  What are the financial and performance reporting 
requirements for recipients?

    (a) In accordance with 29 CFR 97.41 (State and local governments) 
or 29 CFR 95.52 (non-profit and commercial organizations), each SCSEP 
recipient must submit a SCSEP Financial Status Report (FSR, ETA Form 
9130) in electronic format to the Department via the Internet within 45 
days after the ending of each quarter of the Program Year. Each SCSEP 
recipient must also submit a final closeout FSR to the Department via 
the Internet within 90 days after the end of the grant period. The 
Department will provide instructions for the preparation of this 
report. (OAA sec. 503(f)(3)).
    (1) Financial data must be reported on an accrual basis, and 
cumulatively by funding year of appropriation. Financial data may also 
be required on specific program activities.
    (2) If the SCSEP recipient's accounting records are not normally 
kept on the accrual basis of accounting, the SCSEP recipient must 
develop accrual information through an analysis of the documentation on 
hand.
    (b) In accordance with 29 CFR 97.40 (State and local governments) 
or 29 CFR 95.51 (non-profit and commercial organizations), each SCSEP 
recipient must submit updated data on participants, host agencies, and 
employers in electronic format via the Internet within 30 days after 
the end of each of the first three quarters of the Program Year, on the 
last day of the fourth quarter of the Program Year, and within 90 days 
after the last day of the Program Year. Recipients wishing to correct 
data errors or omissions for their final Program Year report must do so 
within 90 days after the end of the Program Year. The Department will 
generate SCSEP Quarterly Progress Reports (QPRs), as well as the final 
QPR, as soon as possible after receipt of the data. (OAA sec. 
503(f)(3)).
    (c) Each State agency receiving title V funds must annually submit 
an equitable distribution report of SCSEP positions by all recipients 
in the State. The Department will provide instructions for the 
preparation of this report. (OAA sec. 508).
    (d) Each SCSEP recipient must collect data and submit reports 
regarding the performance measures. See Subpart F. The Department will 
provide instructions detailing these measures and how recipients must 
prepare this report.
    (e) Each SCSEP recipient may be required to collect data and submit 
reports about the demographic characteristics of program participants. 
The Department will provide instructions detailing these measures and 
how recipients must prepare these reports.
    (f) Federal agencies that receive and use SCSEP funds under 
interagency agreements must submit project financial and progress 
reports in accordance with this section. Federal recipients must 
maintain the necessary records that support required reports according 
to instructions provided by the Department. (OAA sec. 503(f)(3)).
    (g) Recipients may be required to maintain records that contain any 
other information that the Department determines to be appropriate in 
support of any other reports that the Department may require. (OAA sec. 
503(f)(3)).
    (h) Grantees submitting reports that cannot be validated or 
verified as accurately counting and reporting activities in accordance 
with the reporting instructions may be treated as

[[Page 47814]]

failing to submit reports, which may result in failing one of the 
responsibility tests outlined in Sec.  641.430 and section 514(d) of 
the OAA.


Sec.  641.881  What are the SCSEP recipient's responsibilities relating 
to awards to sub-recipients?

    (a) Recipients are responsible for ensuring that all awards to sub-
recipients are conducted in a manner to provide, to the maximum extent 
practicable, full and open competition in accordance with the 
procurement procedures in 29 CFR 95.43 (non-profit and commercial 
organizations) and 29 CFR 97.36 (State and local governments).
    (b) The SCSEP recipient is responsible for all grant activities, 
including the performance of SCSEP activities by sub-recipients, and 
ensuring that sub-recipients comply with the OAA and this part. (See 
also OAA sec. 514 and Sec.  641.430 of this part on responsibility 
tests).
    (c) Recipients must follow their own procedures for allocating 
funds to other entities. The Department will not grant funds to another 
entity on the recipient's behalf.
    (d)(1) National grantees that receive grants to provide services in 
an area where a substantial population of individuals with barriers to 
employment exists must, in selecting sub-recipients, give special 
consideration to organizations (including former national grant 
recipients) with demonstrated expertise in serving such individuals. 
(OAA sec. 514(e)(2)).
    (2) For purposes of this section, the term ``individuals with 
barriers to employment'' means minority individuals, Indian 
individuals, individuals with greatest economic need, and most-in-need 
individuals. (OAA sec. 514(e)(1)).


Sec.  641.884  What are the grant closeout procedures?

    SCSEP recipients must follow the grant closeout procedures at 29 
CFR 97.50 (State and local governments) or 29 CFR 95.71 (non-profit and 
government organizations), as appropriate. The Department will issue 
supplementary closeout instructions to title V recipients as 
necessary.XXX

Subpart I--Grievance Procedures and Appeals Process


Sec.  641.900  What appeal process is available to an applicant that 
does not receive a grant?

    (a) An applicant for financial assistance under title V of the OAA 
that is dissatisfied because the Department has issued a notification 
that it has not awarded financial assistance, in whole or in part, to 
such applicant, may request that the Grant Officer provide an 
explanation for not awarding financial assistance to that applicant. 
The request must be filed within 10 days of the date of notification 
indicating that financial assistance would not be awarded. The Grant 
Officer must provide the protesting applicant with feedback concerning 
its proposal within 21 days of the protest. Applicants may appeal to 
the U.S. Department of Labor, Office of Administrative Law Judges 
(OALJ), within 21 days of the date of the Grant Officer's feedback on 
the proposal, or within 21 days of the Grant Officer's notification 
that financial assistance would not be awarded if the applicant does 
not request feedback on his proposal. The appeal may be for a part or 
the whole of a denial of funding. This appeal will not in any way 
interfere with the Department's decisions to fund other organizations 
to provide services during the appeal period.
    (b) Failure to file an appeal within the 21 days provided in 
paragraph (a) of this section constitutes a waiver of the right to a 
hearing.
    (c) A request for a hearing under this section must state 
specifically those issues in the Grant Officer's notification upon 
which review is requested. Those provisions of the Grant Officer's 
notification not specified for review, or the entire notification when 
no hearing has been requested within 21 days, are considered resolved 
and not subject to further review.
    (d) A request for a hearing must be transmitted by certified mail, 
return receipt requested, to the Chief Administrative Law Judge, U.S. 
Department of Labor, Suite 400 North, 800 K Street, NW., Washington, DC 
20001, with one copy to the Departmental official who issued the 
determination.
    (e) The decision of the ALJ constitutes final agency action unless, 
within 21 days of the decision, a party dissatisfied with the ALJ's 
decision, in whole or in part, has filed a petition for review with the 
Administrative Review Board (ARB) (established under Secretary's Order 
No. 2-96, published at 61 FR 19978, May 3, 1996), specifically 
identifying the procedure, fact, law, or policy to which exception is 
taken. The Department will deem any exception not specifically urged to 
have been waived. A copy of the petition for review must be sent to the 
opposing party at that time. Thereafter, the decision of the ALJ 
constitutes final agency action unless the ARB, within 30 days of the 
filing of the petition for review, notifies the parties that the case 
has been accepted for review. Any case accepted by the ARB must be 
decided within 180 days of acceptance. If not so decided, the decision 
of the ALJ constitutes final agency action.
    (f) The Rules of Practice and Procedures for Administrative 
Hearings Before the Office of Administrative Law Judges, set forth at 
29 CFR part 18, govern the conduct of hearings under this section, 
except that:
    (1) The appeal is not considered as a complaint; and
    (2) Technical rules of evidence, such as the Federal Rules of 
Evidence and subpart B of 29 CFR part 18, will not apply to any hearing 
conducted under this section. However, rules designed to assure 
production of the most credible evidence available and to subject 
testimony to test by cross-examination will be applied when the ALJ 
conducting the hearing considers them reasonably necessary. The 
certified copy of the administrative file transmitted to the ALJ by the 
official issuing the notification not to award financial assistance 
must be part of the evidentiary record of the case and need not be 
moved into evidence.
    (g) The ALJ should render a written decision no later than 90 days 
after the closing of the record.
    (h) The remedies available are provided in Sec.  641.470.
    (i) This section only applies to multi-year grant awards.


Sec.  641.910  What grievance procedures must grantees make available 
to applicants, employees, and participants?

    (a) Each grantee must establish, and describe in the grant 
agreement, grievance procedures for resolving complaints, other than 
those described by paragraph (d) of this section, arising between the 
grantee, employees of the grantee, sub-recipients, and applicants or 
participants.
    (b) The Department will not review final determinations made under 
paragraph (a) of this section, except to determine whether the 
grantee's grievance procedures were followed, and according to 
paragraph (c) of this section.
    (c) Allegations of violations of Federal law, other than those 
described in paragraph (d) of this section, which are not resolved 
within 60 days under the grantee's procedures, may be filed with the 
Chief, Division of Adult Services, Employment and Training 
Administration, U.S. Department of Labor, 200 Constitution Avenue, NW., 
Washington, DC 20210. Allegations determined to be substantial and 
credible will be investigated and addressed.

[[Page 47815]]

    (d) Questions about, or complaints alleging a violation of, the 
nondiscrimination requirements of title VI of the Civil Rights Act of 
1964, section 504 of the Rehabilitation Act of 1973, section 188 of the 
Workforce Investment Act of 1998 (WIA), or their implementing 
regulations, may be directed or mailed to the Director, Civil Rights 
Center, U.S. Department of Labor, Room N-4123, 200 Constitution Avenue, 
NW., Washington, DC 20210. In the alternative, complaints alleging 
violations of WIA section 188 may be filed initially at the grantee 
level. See 29 CFR 37.71, 37.76. In such cases, the grantee must use 
complaint processing procedures meeting the requirements of 29 CFR 
37.70 through 37.80 to resolve the complaint.


Sec.  641.920  What actions of the Department may a grantee appeal and 
what procedures apply to those appeals?

    (a) Appeals from a final disallowance of costs as a result of an 
audit must be made under 29 CFR 96.63.
    (b) Appeals of suspension or termination actions taken on the 
grounds of discrimination are processed under 29 CFR 31 or 29 CFR 37, 
as appropriate.
    (c) Protests and appeals of decisions not to award a grant, in 
whole or in part, will be handled under Sec.  641.900.
    (d) Upon a grantee's receipt of the Department's final 
determination relating to costs (except final disallowance of costs as 
a result of an audit, as described in paragraph (a) of this section), 
payment, suspension or termination, or the imposition of sanctions, the 
grantee may appeal the final determination to the Department's Office 
of Administrative Law Judges, as follows:
    (1) Within 21 days of receipt of the Department's final 
determination, the grantee may transmit by certified mail, return 
receipt requested, a request for a hearing to the Chief Administrative 
Law Judge, United States Department of Labor, Suite 400 North, 800 K 
Street, NW., Washington, DC 20001 with a copy to the Department 
official who signed the final determination.
    (2) The request for hearing must be accompanied by a copy of the 
final determination, and must state specifically those issues of the 
determination upon which review is requested. Those provisions of the 
determination not specified for review, or the entire determination 
when no hearing has been requested within the 21 days, are considered 
resolved and not subject to further review.
    (3) The Rules of Practice and Procedures for Administrative 
Hearings Before the Office of Administrative Law Judges, set forth at 
29 CFR part 18, govern the conduct of hearings under this section, 
except that:
    (i) The appeal is not considered as a complaint; and
    (ii) Technical rules of evidence, such as the Federal Rules of 
Evidence and subpart B of 29 CFR part 18, will not apply to any hearing 
conducted under this section. However, rules designed to assure 
production of the most credible evidence available and to subject 
testimony to test by cross-examination will be applied when the 
Administrative Law Judge conducting the hearing considers them 
reasonably necessary. The certified copy of the administrative file 
transmitted to the Administrative Law Judge by the official issuing the 
final determination must be part of the evidentiary record of the case 
and need not be moved into evidence.
    (4) The Administrative Law Judge should render a written decision 
no later than 90 days after the closing of the record. In ordering 
relief, the ALJ may exercise the full authority of the Secretary under 
the OAA.
    (5) The decision of the ALJ constitutes final agency action unless, 
within 21 days of the decision, a party dissatisfied with the ALJ's 
decision, in whole or in part, has filed a petition for review with the 
ARB (established under Secretary's Order No. 2-96), specifically 
identifying the procedure, fact, law, or policy to which exception is 
taken. The Department will deem any exception not specifically urged to 
have been waived. A copy of the petition for review must be sent to the 
opposing party at that time. Thereafter, the decision of the ALJ 
constitutes final agency action unless the ARB, within 30 days of the 
filing of the petition for review, notifies the parties that the case 
has been accepted for review. Any case accepted by the ARB must be 
decided within 180 days of acceptance. If not so decided, the decision 
of the ALJ constitutes final agency action.


Sec.  641.930  Is there an alternative dispute resolution process that 
may be used in place of an OALJ hearing?

    (a) Parties to a complaint that has been filed according to the 
requirements of Sec.  641.920 (a), (c), and (d) may choose to waive 
their rights to an administrative hearing before the OALJ. Instead, 
they may choose to transfer the settlement of their dispute to an 
individual acceptable to all parties who will conduct an informal 
review of the stipulated facts and render a decision in accordance with 
applicable law. A written decision must be issued within 60 days after 
submission of the matter for informal review.
    (b) Unless the parties agree in writing to extend the period, the 
waiver of the right to request a hearing before the OALJ will 
automatically be revoked if a settlement has not been reached or a 
decision has not been issued within the 60 days provided in paragraph 
(a) of this section.
    (c) The decision rendered under this informal review process will 
be treated as the final agency decision.

    Signed at Washington, DC, this 30th day of July 2008.
Brent R. Orrell,
Deputy Assistant Secretary, Employment and Training Administration.
 [FR Doc. E8-17802 Filed 8-13-08; 8:45 am]
BILLING CODE 4510-FN-P