[Federal Register Volume 77, Number 31 (Wednesday, February 15, 2012)]
[Rules and Regulations]
[Pages 9112-9136]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-2373]



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Vol. 77

Wednesday,

No. 31

February 15, 2012

Part IV





Department of Labor





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Employment and Training Administration





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20 CFR Part 672





 YouthBuild Program; Final Rule

  Federal Register / Vol. 77 , No. 31 / Wednesday, February 15, 2012 / 
Rules and Regulations  

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DEPARTMENT OF LABOR

Employment and Training Administration

20 CFR Part 672

RIN 1205-AB49


YouthBuild Program

AGENCY: Employment and Training Administration, Labor.

ACTION: Final rule.

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SUMMARY: The Employment and Training Administration (ETA) of the U.S. 
Department of Labor (Department) issues this final rule to implement 
the YouthBuild Transfer Act of 2006 (Transfer Act), which establishes 
the YouthBuild program in the Department under subtitle D of Title I of 
the Workforce Investment Act of 1998 (WIA) as amended. The final rule 
clarifies the requirements of the Transfer Act for YouthBuild program 
providers and participants. The final rule sets the standards under 
which YouthBuild program providers can carry out the goals of the 
program, which are to assist at-risk youth in obtaining a High School 
diploma or General Educational Development (GED) diploma and acquiring 
occupational skills training that leads to employment through the 
construction/rehabilitation of housing for low-income or homeless 
individuals and families in the community.

DATES: Effective date: This final rule is effective April 16, 2012.

FOR FURTHER INFORMATION CONTACT: Sanzanna Toles, Program Manager, 
Division of Youth Services, Office of Workforce Investment, U.S. 
Department of Labor, 200 Constitution Avenue, Room N-4508, Washington, 
DC 20210; telephone 202-693-3030 (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:

Executive Summary

I. Purpose of the Regulatory Action

    a. The ETA of the Department issues this final rule to implement 
the Transfer Act, which establishes the YouthBuild program in the 
Department under subtitle D of Title I of the WIA as amended.
    b. On September 22, 2006, the Transfer Act, codified at Section 
173A of the WIA, 29 U.S.C. 2918a, was signed into law. The Transfer Act 
authorizes grants for job training and educational activities for at-
risk youth who, as part of their training, help construct or 
rehabilitate housing for homeless individuals and families and low-
income families in their respective communities. Participants receive a 
combination of classroom training, job skills development, and on-site 
training in the construction trades.

II. Summary of the Major Provisions of the Regulatory Action In 
Question

    The final rule clarifies the requirements of the Transfer Act for 
YouthBuild program providers and participants. The final rule sets the 
standards under which YouthBuild program providers can carry out the 
goals of the program, which are to assist at-risk youth in obtaining a 
High School diploma or GED and acquiring occupational skills training 
that leads to employment through the construction/rehabilitation of 
housing for low-income or homeless individuals and families in the 
community. Furthermore, the final rule expands the occupational skills 
training opportunities in YouthBuild beyond construction skills 
training. We have determined, based on comments received advocating the 
expansion of the training offered to include occupational skills 
training and our program administration experience, that allowing other 
occupational skills training will help YouthBuild programs provide more 
successful job placement outcomes and secondary schools placements for 
program participants.

III. Costs and Benefits

    This rule has not been designated an economically significant rule 
under section 3(f) of Executive Order 12866. However, we provide an 
analysis of the impact of the final rule, including a costs and 
benefits analysis under Executive Order 13563, in the Administrative 
Section of this final rule.
    The Preamble of this final rule is organized as follows:

I. Background--provides a brief description of the development of 
the final rule;
II. General Discussion of the Rulemaking;
III. Section-by-Section Review of the Final Rule--analyzes comments 
and summarizes and discusses the structure and requirements of the 
YouthBuild Program;
IV. Administrative Section--sets forth the applicable regulatory 
requirements.

I. Background

    On September 22, 2006, the YouthBuild Transfer Act of 2006, Public 
Law 109-281 (Transfer Act), codified at Section 173A of the Workforce 
Investment Act of 1998 (WIA), 29 U.S.C. 2918a, was signed into law. The 
Transfer Act authorizes grants for job training and educational 
activities for at-risk youth who, as part of their training, help 
construct or rehabilitate housing for homeless individuals and families 
and low-income families in their respective communities. Participants 
receive a combination of classroom training, job skills development, 
and on-site training in the construction trades.
    The White House Task Force for Disadvantaged Youth recommended 
transferring the administration of the YouthBuild program, also known 
as ``Hope for Youth,'' from the U.S. Department of Housing and Urban 
Development (HUD) to the Department. The White House Task Force for 
Disadvantaged Youth Final Report. Pg. 4, October 2003.
    The transfer allows for greater coordination of the YouthBuild 
program with Job Corps, WIA Youth Programs, the workforce investment 
system, including local workforce investment boards (WIBs), One-Stop 
Career Centers, and their partner programs (for example, Federal, 
State, and local education agencies), while at the same time retaining 
many of the same affordable housing goals as the HUD program. The 
Transfer Act transfers the authority for the YouthBuild program from 
the Cranston-Gonzalez National Affordable Housing Act (49 U.S.C. 12899 
et seq.) (Cranston-Gonzales Act) to subtitle D of Title I of WIA, and 
it makes modifications and changes to the programs that focus on 
increasing the skilled workforce available for the construction trades.
    The Transfer Act authorizes the expansion of activities authorized 
under the YouthBuild program to include many activities authorized 
under the WIA Title I youth formula program. This rule maintains all 
the goals of the YouthBuild program as originally developed under HUD, 
but shifts the emphasis to education and skills training for at-risk 
youth participants. The Department will continue to support the 
development of affordable housing which was a goal of the HUD program.
    The Transfer Act retains the out-of-school and age requirements 
that were in the Cranston-Gonzalez Act for YouthBuild, targeting 
eligible youth who are school dropouts and are between the ages of 16 
and 24 years old. The Transfer Act further provides that at least 75 
percent of participants must be school drop-outs who are members of 
low-income families, foster care youth, youth offenders, youths with a 
disability, children of an incarcerated parent, or migrant youths. In 
addition,

[[Page 9113]]

to ensure that other at-risk youths have access to the program, the 
Transfer Act includes a 25 percent eligibility exception. This 
exception permits secondary schools to refer students to a YouthBuild 
program that offers a secondary school diploma if the program is 
determined to be a better fit for the youth. The exception also allows 
youth who have a diploma or GED but test as basic skills deficient to 
participate in a YouthBuild program.

II. General Discussion of the Rulemaking

    We have administered the YouthBuild program, including making 
grants, since the passage of the Transfer Act. In drafting the Notice 
of Proposed Rulemaking (NPRM), we relied on the knowledge gained from 
administering the program, along with the experience gained in 
developing the WIA Youth Program. Consistent with the Transfer Act, the 
rule incorporates technical modifications to the YouthBuild program to 
make it consistent with WIA job training, education, and employment 
goals. Moreover, the rule authorizes education and workforce investment 
activities such as occupational skills training, internships, and job 
shadowing, as well as community service and peer-centered activities. 
In addition, the rule describes how we will use performance indicators 
developed for Federal youth employment and training programs to enhance 
the accountability of YouthBuild programs.
    On August 27, 2010, ETA published the YouthBuild NPRM at 75 FR 
52671 (Aug 27, 2010). The NPRM explained our main focus is to prepare 
at-risk youth for employment, although the construction and 
rehabilitation of affordable housing continues to be a major component 
of the YouthBuild training program. Therefore, the NPRM increased the 
emphasis on the education and occupational skills training provided by 
YouthBuild programs. Specifically, the NPRM proposed that the 
occupational skills training offered in YouthBuild programs must begin 
upon program enrollment and be tied to the award of an industry-
recognized credential; i.e., the National Center for Construction 
Education and Research (NCCER), the Home Builder's Institute's (HBI) 
HPACT curriculum, or the Building Trades Multi-Craft Core curriculum. 
Additionally, the NPRM placed emphasis on coordinating training with 
registered apprenticeship programs, which will allow participants to 
enter such programs upon exiting YouthBuild.
    The NPRM proposed the use of some YouthBuild funds to pay for 
supervision and training costs to allow participants to develop skills 
and obtain work experience in the rehabilitation or construction of 
community buildings and other public facilities. The NPRM advanced 
these and other new activities to better assist at-risk youth in 
preparing for employment.
    Finally, in the NPRM, we solicited comments on whether YouthBuild 
should continue to focus on construction skills training or whether 
skills training should be expanded to other industry areas.

Overview of the Comments Received on the NPRM

    The comment period for the NPRM was open from August 27, 2010 to 
October 26, 2010. We received twenty-nine comment letters in response 
to the NPRM. The commenters represented a broad range of constituencies 
for the YouthBuild program, including seven private citizens, five 
local and community employment and training organizations, two union 
organizations, five local YouthBuild programs, two local governments, 
two Federal agencies, three state governments, one advocacy 
organization, and two individuals with YouthBuild U.S.A.
    The comments raised a variety of concerns, some general and some 
pertaining to specific provisions or specific proposals. After 
reviewing the comments, we have modified some provisions and retained 
others as originally proposed in the NPRM. The issue most frequently 
raised in the comments concerned the NPRM's specific proposals for 
various program requirements. Most of these comments were requests for 
clarification about specific program requirements, such as the time 
allowed for follow-up services for program participants. Several 
commenters also addressed the question whether the YouthBuild program 
should continue to focus on construction skills training or if we 
should allow other occupational skills training in YouthBuild.
    We received several comments that were beyond the scope of the 
proposed rule and included issues with the YouthBuild Solicitation for 
Grant Applications, published at 73 FR 58653 (October 7, 2008), and 
individual State laws. These are issues that cannot be resolved or 
implemented through this regulatory process or are not within the 
Department's purview. Additionally, comments submitted in a manner 
inconsistent with the specific directions of the NPRM or submitted 
after the comment period closed were not considered.

III. Section-by-Section Review of the Final Rule

    When developing this final rule the substantive issues raised by 
the comments were taken into careful consideration. These issues and 
our reasons for developing the final rule as it is written are 
discussed below.

Subpart A--Purpose and Definitions

    Sections 672.100, .105, and .110 deal with the purpose, scope, and 
definitions related to the YouthBuild program. Significantly, under 
Sec.  672.100, we emphasize that YouthBuild is a workforce development 
program in addition to a program that aims to increase the amount of 
affordable housing for low-income and homeless individuals and 
families. This emphasis implements one of the primary goals of the 
Transfer Act, which, in moving the administration of YouthBuild from 
HUD to the Department, was to make YouthBuild a program that focuses on 
occupational skills development.
What is YouthBuild? (Sec.  672.100)
    This section describes the YouthBuild program as administered by 
the Department. One commenter requested either an expansion or 
clarification of the description of the YouthBuild program. The 
commenter suggested changing the description of the program as being 
for secondary school dropouts, to read ``at least 75 [percent] of whom 
have left school without a diploma.'' The commenter states this would 
make it clear at the outset that not all YouthBuild participants must 
lack a High-School diploma.
    We believe that Sec.  672.300 clearly articulates who may be an 
eligible participant by stating that at least 75 percent of 
participants must lack a High-School diploma, while no more than 25 
percent of participants may have a diploma but are still basic skills 
deficient as defined in section 101(4) of WIA. Nevertheless, we have 
accommodated the commenter's concern by adding the words ``most of 
whom'' to make clear that there are some YouthBuild participants who 
need not be high school dropouts.
What are the purposes of the YouthBuild program? (Sec.  672.105)
    This section details the goals of the YouthBuild program. We 
received four comments from two commenters on this section. We changed 
Sec.  672.105(a) by emphasizing that YouthBuild participants should 
obtain education and training for high-demand and local

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in-demand jobs to achieve economic self-sufficiency. We believe this 
change better reflects WIA Sec. 173(A)(a) which states that the purpose 
of YouthBuild is to provide education and employment skills for 
participants for occupations in demand. One commenter made a 
recommendation to insert the following sentence, ``[t]o assist 
participants in overcoming barriers, the program provides a variety of 
case management and counseling supports, as well as training in life 
skills'' in Sec.  672.105(a). The commenter suggests that the purpose 
for the change is to appropriately emphasize key components of 
successful programs. We agree that case management and counseling are 
key components to a YouthBuild program but we do not think it is 
appropriate to highlight these components in this section which is a 
broad statement of the program's goals. Instead, these services are 
more appropriately addressed in the discussion of Sec.  672.210.
    The commenter also recommended changing Sec.  672.105(a)(3) from 
the goal being to ``reduce the rate of homelessness in communities with 
YouthBuild programs,'' to the goal being ``to expand the supply of 
permanent affordable housing * * *'' The commenter believes the change 
is more accurate and is a direct reflection of the Transfer Act. We 
agree with the commenter and have changed the language at Sec.  
672.105(a)(3) to more accurately reflect the language of the Transfer 
Act.
    The other commenter requested that the final rule articulate the 
importance of recruiting young women and young women with children as 
provided in the Transfer Act. The commenter went on to explain that 
special efforts to recruit young women into YouthBuild are essential to 
increasing their participation because few women are exposed to the 
construction trades and other non-traditional occupations while they 
are in school.
    We agree with the commenter about the importance of recruiting 
young women and participants with children but we don't feel it is 
appropriate to amend the statement of goals. Instead, we will consider 
the effort to recruit, or plans to recruit young women put forth by 
YouthBuild programs and applicants as an important factor in the 
Solicitation for Grant Application selection process.
What definitions apply to this part? (Sec.  672.110)
    This section explains the definitions applicable to this final 
rule. We received comments, which we discuss below, on several of the 
definitions. Those definitions on which we did not receive comments 
have been adopted as proposed.

Alternative School

    In part, the proposed definition of ``alternative school'' reads, 
``An `alternative school' must be recognized by the authorizing entity 
designated by the State, must award a high school diploma and, must be 
affiliated with YouthBuild programs. * * *'' One commenter pointed out 
that some YouthBuild programs are recognized by authorizing entities 
but only offer GEDs while other YouthBuild programs offer GEDs and High 
School Diplomas and are recognized by authorizing entities. The 
commenter goes on to ask what the impact of these regulations would be 
on the alternative school status of those YouthBuild programs that 
offer GEDs and High School Diplomas.
    We have changed the rule so that schools offering both a high 
school diploma and a GED, when authorized by the appropriate entity, 
can be included as an alternative school. For the purposes of 
participation in a sequential services strategy, schools that offer 
only High School Diplomas will continue to be considered alternative 
schools. In order for a YouthBuild Program's academic component to meet 
the definition of a ``sequential service strategy,'' as defined in 
Sec.  672.110, the program's alternative school must award a high 
school diploma and not a GED. This allows YouthBuild programs with 
alternative schools to enroll out-of-school youth participants into 
their alternative school prior to enrollment into their YouthBuild 
program, while enabling them to maintain their out-of-school youth 
eligibility at the time of their enrollment into the YouthBuild program 
as long as it is part of a ``sequential service strategy.'' This 
flexibility is only granted to YouthBuild programs with alternative 
schools that award high school diplomas and not GEDs because research 
establishes that individuals who receive a high school diploma have a 
higher long-term earning potential than individuals who receive a GED. 
GEDs are also generally achieved by participants within the first year 
of service. The flexibility for YouthBuild grantees to use a 
``sequential service strategy'' is an incentive for more programs to 
move towards high school diploma granting academic components, and 
supports earlier dropout recovery of future YouthBuild participants and 
prevents programs from having to drop youth out of their program so 
they can then reenroll as an out-of-school youth.

Community or Other Public Facility

    We received several comments seeking to expand the definition for 
``Community or Other Public Facility.'' The NPRM explained that 
``community or other public facility'' means those facilities which are 
publicly owned and publicly used for the benefit of the community. 
Examples include public-use buildings such as recreation centers, 
libraries, public park shelters, or public schools. This term may also 
encompass facilities used by the program but only if the facility is 
available for public entry and use.
    One commenter wanted the definition to include churches or faith-
based facilities. Another commenter agreed that buildings owned by 
faith-based, non-profit organizations should be included in the 
definition. Another commenter also suggested that if the definition of 
community and public facilities could be expanded, it would increase 
opportunities for employment training and community benefits. The 
commenter further stated that proposed projects should be individually 
evaluated based on several factors including the extent of 
rehabilitation or construction required to make the project habitable, 
the project's likelihood to provide comprehensive training value to 
young people, and the project's projected value to the broader 
community, regardless of ownership or public use. Two other comment 
letters contend that since the Transfer Act does not state that 
``community or other public facilities'' must be publicly owned, the 
definition should include privately held non-profit facilities.
    We agree with the commenters and revise the definition of 
``community or other public facilities'' to include privately owned 
non-profit facilities, including facilities owned by faith-based 
organizations, as well as publicly owned facilities, as long as those 
facilities are available for public entry and used for the benefit of 
the public. While grant funds can be used in the rehabilitation or 
construction of buildings owned by faith-based organization, funds may 
not be used to rehabilitate or construct a facility, or portion of a 
facility, that will be used for religious purposes.
    Any work done by YouthBuild participants on a community or public 
facility must be directly related to training for YouthBuild 
participants and follow the relevant Office of Management and Budget's 
(OMB) cost principles for grants. (OMB Circulars A-87, 2 CFR part 225 
and A-122, 2 CFR part 230). Under these cost principles, any activity 
funded with grant funds

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that would result in the Department obtaining an equity interest in 
equipment, buildings, or land, is unallowable. Of particular relevance 
to the YouthBuild program, under Circulars A-87 and A-122, capital 
expenditures for improvements to land, buildings, or equipment which 
materially increase their value or useful life are unallowable. 2 CFR 
part 225, Appendix B, Sec.  15(b); 2 CFR part 230, Appendix B, Sec.  
15(b). While Circulars A-87 and A-122 permit these costs with advance 
approval from the Department, as a matter of policy the Department will 
not approve these costs in order to avoid taking an equity interest in 
the relevant capital asset (i.e.: land, building, and equipment).
    However, costs for normal maintenance and upkeep that does not add 
to the value or prolong the useful life of land, buildings, or 
equipment are allowable costs not subject to pre-approval by the 
Department. 2 CFR part 225, Appendix B, Sec.  25; 2 CFR part 230, 
Appendix B, Sec.  27.
    The NPRM contemplates that buildings privately owned by non-profit 
grantees fall within the definition of ``community or other public 
facilities.'' We do not think that there is any reason to distinguish 
between grantee and non-grantee owned non-profit facilities that are 
privately owned, thus we agree with the commenters that the definition 
should be expanded. However, proposed projects on privately owned 
facilities, including facilities owned by faith-based organizations, 
must meet the public entry and use restrictions outlined in the 
definition and the cost principles already discussed.

Homeless Individual

    We received no comments on the definition for ``homeless 
individual''. However, the definition for ``homeless individual'' from 
the McKinney-Vento Homeless Assistance Act (42 U.S.C. 11302) provided 
in the NPRM was amended before publication of this final rule by sec. 
1003(a)(2) of the Homeless Emergency Assistance and Rapid Transition to 
Housing Act of 2009. 42 U.S.C. 11302(a). As a result, we are changing 
the rule text by removing the detailed definition of ``homeless 
individual'' to cite only the McKinney-Vento Homeless Assistance Act in 
the final rule to incorporate any future changes in the definition. 
Therefore, for the purposes of YouthBuild, the definition of ``homeless 
individual'' at Section 103 of the McKinney-Vento Homeless Assistance 
Act applies.

Indian and Indian Tribe

    One commenter described the definition of ``Indian''' and ``Indian 
tribe'' as too limiting and potentially offensive to Native Alaskans. 
The commenter suggested that we replace the term ``Indian and Indian 
Tribe'' with ``American Indian/Alaska Native. We appreciate the 
sensitivity explicit in the commenter's suggestion. However, in this 
instance we are constrained from changing the term because the final 
rule reflects the Transfer Act's adoption of the definitions of these 
terms from sec. 4 of the Indian Self-Determination and Education 
Assistance Act (25 U.S.C. 450(b)).

Low Income Family

    In the NPRM, we defined ``Low-Income Family'' as a family whose 
income does not exceed 80 percent of the median income for the area 
unless the U.S. Secretary of Labor (Secretary) determines that a higher 
or lower ceiling is warranted. This term is defined in the Transfer 
Act. One commenter wanted the rule to increase the median income level 
from 80 percent of the median income for the area to 120 percent of the 
median income for a low-income family, due to the difficulty some 
YouthBuild programs are having finding low-income homebuyers.
    We have determined that the definition of ``Low-income family'' 
will remain unchanged in the rule to mean a family whose income does 
not exceed 80 percent of the median income for the area unless the 
Secretary determines that a higher or lower ceiling is warranted. The 
term ``low-income family'' was taken from United States Housing Act of 
1937 (42 U.S.C. 1437a(b)(2)) and is a widely recognized term and 
metric. However, at the discretion of the Secretary, we may consider 
temporary increases in the median income level based on economic 
conditions. If such a temporary increase is determined to be necessary 
it will be done so in future SGAs or through guidance.
    Further, we have made several non-substantive changes to this 
definition to improve readability.

Migrant Youth

    We received one comment on the definition of ``Migrant Youth.'' The 
commenter stated that the proposed definition was too limiting because 
it did not include workers affiliated with the seasonal fishing 
industry. We understand the commenter's concern with the possible 
limitations of the definition of ``migrant youth.'' Because YouthBuild 
is a WIA-funded program, we first considered using a definition for 
``Migrant Youth'' that incorporates the WIA definition for migrant 
farmworker from the National Farmworker Jobs Program found at WIA Sec. 
167(h)(3). Under WIA, a ``Migrant seasonal farmworker'' is a seasonal 
farmworker whose agricultural labor requires travel to a job site such 
that the farmworker is unable to return to a permanent place of 
residence within the same day. (WIA sec. 167 (h)(3)(A)(4)(A)). However, 
we believed that using the definition found in the statute limited the 
number of potential program participants. Accordingly, we chose to 
adapt our definition of ``Migrant Youth'' from the broader definition 
of ``migrant farmworker'' found in Farmworker Bulletin 00-02, which 
relates to eligibility in the Migrant Seasonal Farmworker Youth 
Program, and expands on the definition of ``migrant seasonal 
farmworker'' found in WIA. Using this broader definition allows a 
larger population of potential YouthBuild participants to be served by 
the program. The definition of ``migrant farmworker'' found in 
Farmworker Bulletin 00-02 uses the North American Industry 
Classification System (NAICS) codes to determine whether or not a 
worker is a ``migrant farmworker.'' The definition of ``migrant 
farmworker'' in the Farmworker Bulletin excludes workers whose work is 
classified as ``aqua-culture,'' which includes the seasonal fishing 
industry. In addition, using the definition of ``migrant seasonal 
farmworker'' from Farmworker Bulletin 00-02 allows for consistency 
throughout ETA programs, as both the National Farmworker Jobs Program 
and the Office of Foreign Labor Certifications use similar definitions 
that exclude the seasonal fishing industry. Because we have based our 
definition on Farmworker Bulletin 00-02, and because that definition 
does not include workers in the seasonal fishing industry, we have 
decided not to include seasonal fishing industry workers as part of the 
definition of migrant youth.
    We received no comments on the remaining definitions, and therefore 
have adopted each as proposed.

Subpart B--Funding and Grant Applications

    This subpart deals with the selection process, the funding process, 
and the application process for potential grantees to apply through an 
SGA.

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How are YouthBuild grants funded and administered? (Sec.  672.200)
    We did not receive any comments on this section. The final rule 
adopts the regulation as proposed.
How does an eligible entity apply for grant funds to operate a 
YouthBuild program? (Sec.  672.205)
    We did not receive any comments on this section. The final rule 
adopts proposed regulation as proposed.
How are eligible entities selected to receive grant funds? (Sec.  
672.210)
    This section describes the criteria for selecting grantees. One 
commenter requested that we offer separate funding for rural programs, 
urban programs, and new programs as was the case when HUD administered 
YouthBuild. The commenter maintained that it is difficult for rural 
programs to compete against urban programs. Additionally, the commenter 
believed the minimum amount of funds for which a program can apply is 
an amount too large for smaller YouthBuild programs. We acknowledge the 
commenter's concerns in that some rural programs may have difficulty in 
obtaining grant awards because often the suggested minimum amount of a 
YouthBuild grant award is more than some rural programs need to operate 
successfully. We believe, however, that the commenter's concerns are 
addressed in the annual SGAs. When awarding grant funds the Grant 
Officer considers a variety of factors, including geographic diversity 
and the need for affordable housing in an area. Additionally, 
YouthBuild SGAs do not have a minimum level of funding which applicants 
must request; the minimum amounts in the SGA are only suggested 
amounts. Applicants may request an amount of funding that is less than 
the suggested minimum grant award amount.
    Two commenters expressed some difficulties in obtaining data 
addressing the required indicators of need, poverty, unemployment 
rates, and high school drop-out rates referenced in Sec.  672.210(c). 
They further related that there is no standardized methodology for 
calculating unemployment or drop-out rates among States and local 
communities. The commenters believe this situation makes it unfair to 
rate applications from different regions against each other.
    We understand it may be difficult to obtain data which demonstrates 
the various indicators of need in Sec.  672.210(c) for different State 
and local communities. However, contrary to the commenters' assertion, 
we do not evaluate grant applications by comparing them to one another 
or measuring them against other grant applications. Each respective 
YouthBuild application submitted in response to an SGA is rated only 
against the criteria established in the SGA. Furthermore, we do not 
mandate that applicants obtain data which demonstrates the various 
indicators of need from specific sources. YouthBuild applicants are 
free to use whatever source they prefer for data showing indicators of 
need as long as they can demonstrate in their grant application the 
validity of the data and its accuracy in showing he community's need 
for the YouthBuild program.
    One commenter suggested adding ``counseling and case management'' 
to Sec.  672.210(d) which reads, ``[t]he commitment of an applicant to 
provide skills training, leadership development, and education to 
participants.'' The commenter contends that without the commitment of 
personal support for the individual participant offered by YouthBuild 
programs through counseling and case management, the ability of 
participants to achieve the desired outcomes would be dramatically 
reduced.
    We agree that the offer of counseling and case management is 
important for participants' success in YouthBuild. We also believe that 
these services are being provided by YouthBuild programs as part of 
their commitment to provide skills training, leadership development, 
and education to participants. Furthermore, Sec.  672.310(a)(2) details 
some of the eligible activities, including counseling services, that 
may be funded in YouthBuild programs. However, we agree with the 
commenter that counseling and case management should be included as a 
basis for selection in the grant application process. Accordingly, we 
have added counseling and case management to Sec.  672.210(d) as part 
of the required selection criteria.
    Two commenters proposed new language to be added to Sec.  
672.210(e). Proposed Sec.  672.210(e) establishes that one, of many, 
selection criteria is, ``[t]he focus of a proposed program on preparing 
youth for postsecondary education and training opportunities or in-
demand occupations in the construction industry.'' The commenters 
proposed that this section be changed to read, ``[t]he focus of a 
proposed program on preparing youth for postsecondary education or jobs 
within their communities, including high-demand occupations and 
entrepreneurship opportunities.'' The commenters stated the reason the 
change is necessary is because in rural and Native communities, 
``demand'' occupations may not be reflected accurately in data due to 
the small size of many employers. Further, the complete absence of 
products and services in a community often reflects need but this need 
is not captured by actual employment data. One of these commenters 
suggests that these factors place programs in these communities in the 
awkward position of encouraging young people to leave their 
communities, and also may encourage young people to apply for jobs for 
which they have no transportation or cannot afford the transportation 
to access.
    We agree with the commenters' concern. The selection criteria and 
the process through which grantees are selected, as stated at Sec.  
672.210(e), is specifically described in sec. 173A(c)(4)(E) of WIA. 
Section 173A(c)(4)(E) states that applicants will be judged based on 
``the focus of a proposed program on preparing youth for occupations in 
demand or postsecondary education and training opportunities.'' 
Therefore, we have amended the text in Sec.  672.210(e) by adding the 
word ``local'' to address the commenters' concerns about demand 
occupations.
    Two commenters noted that rural and Tribal programs are 
disadvantaged by the criteria in Sec.  672.210(f)(1) because they have 
limited partnership choices which affect the applicant's performance 
under the selection criterion that deals with an applicant's 
demonstrated ability to enter partnerships with various entities. One 
commenter went on to explain that the lack of One-Stop Centers and 
other workforce investment systems in rural areas and Tribal lands make 
it difficult for programs in these areas to seek partnerships with 
those entities as required in Sec.  672.210(f)(1). To remedy this, the 
commenter suggested that Job Corps be added as a specific workforce 
investment partner in the rule.
    We are aware that rural and Tribal programs may have limited 
partnership choices and that Job Corps would make a good partner for 
the YouthBuild program. However, we do not believe it is necessary to 
specifically mention Job Corps in the text of Sec.  672.210(f)(1) 
because Job Corps is a One-Stop partner and applicants are already 
evaluated on the extent to which they propose to coordinate activities 
with such partners. Therefore, specifically adding in a Job Corps 
provision to this section would be redundant. To address the issue 
about potential partners that the commenter raised, we issued Training 
and Employment Notice (TEN) 50-08, on

[[Page 9117]]

June 24, 2009 to provide strategies to YouthBuild Programs on 
collaborating with Job Corps Programs. The TEN is available at the ETA 
Advisories Web site at http://wdr.doleta.gov/directives/attach/TEN/ten2008/TEN50-08acc.pdf, and is made available to any new YouthBuild-
funded programs.
    We understand the difficult task of obtaining partnerships, 
especially for those applicants in rural areas or Tribal lands, this is 
why the workforce system coordination clause in Sec.  672.210(f)(1) 
contains the caveat, ``or the extent of the applicant's good faith 
efforts, as determined by the Secretary, in achieving such 
coordination''.'' This clause allows the Grant Officer to credit an 
applicant's effort to obtain partnerships, even if that effort was 
ultimately unsuccessful.
    One commenter suggested that we strengthen in Sec.  672.210(i)(1) 
through (5) the emphasis on the quality and coordination of the 
partnerships and the nature of the partnering relationship, rather than 
on the number of partnerships. The commenter stated that, ``while 
partnerships are desirable and often essential, both for delivering 
services and leveraging resources, we see risks in over-emphasizing and 
incentivizing partnerships as the way to deliver services.''
    We believe that we have appropriate measures in place to prevent 
the over-emphasis on the number of partnerships versus the quality of 
partnerships in the grant selection process. In our SGAs, YouthBuild 
applicants are not rated simply on the number of partners, but also 
must demonstrate the level of commitment, the qualifications, and the 
abilities of the partners to contribute to participants' success, and 
the strength and the maturity of the partnership. Therefore, in 
assessing the selection criteria in Sec.  672.210(i)(1) through (5), we 
seek to analyze the qualitative aspects of the described partnership 
and how likely the partnership will contribute to the overall success 
of a YouthBuild participant.
    The same commenter suggested adding the adult justice system to 
proposed Sec.  672.210(i)(4) which describes the extent to which an 
applicant should partner with the juvenile justice system, because many 
of the participants are classified as adults. Additionally, the 
commenter suggested that we add a paragraph to Sec.  672.210(i)(4) 
stating that a selection criterion for YouthBuild applicants is the 
demonstrated service they can receive from partnerships with the adult 
and juvenile justice system for referrals of eligible participants 
through diversion or re-entry from incarceration.
    We agree with the commenter's two suggestions and have made the 
suggested changes in the rule, because many possible YouthBuild 
participants are classified as adults in the justice system. 
Consequently, it would be the adult justice system that would be able 
to provide assistance with reporting recidivism rates and referrals of 
these potential participants. This will enable YouthBuild to better 
attract participants from its targeted population.
How are eligible entities notified of approval for grant funds? (Sec.  
672.215)
    This section describes the process and timeline for notifying a 
grant applicant of a YouthBuild grant application approval or 
disapproval.
    One commenter recommended the addition of the following: ``The 
[Department] will establish a threshold level of points required to be 
eligible for funding, and will make known what was the actual cut-off 
point for funding, if it was above that threshold as a result of high 
quality competition, in each round. Upon request the [Department] will 
provide the specific scores for each proposal and written feedback 
regarding the weaknesses of the proposal. It will also accept appeals 
from applicants who can demonstrate after reviewing the scores that a 
specific error in scoring was made on a technical point, such as 
whether a particular item of required documentation was provided. If 
the Secretary determines a correction is warranted, the Secretary may 
make that correction from subsequent year appropriations.''
    We find that these suggestions are unnecessary. As explained in our 
YouthBuild SGAs, proposals that are timely and responsive to the 
requirements of the SGA are rated against listed criteria by an 
independent panel comprised of representatives from the Department, 
HUD, the U.S. Department of Justice, the U.S. Department of Health and 
Human Services, and other peers. The ranked scores serve as the primary 
basis for selecting applications for funding, in conjunction with other 
factors such as: urban, rural, and geographic balance; whether the 
areas to be served have previously received grants for YouthBuild 
programs; the availability of funds; and which proposals are most 
advantageous to the Department. Also in the SGAs, we state that, upon 
request, we provide feedback to applicants on portions of their 
specific application we believe can be improved. However, we do not 
provide guidance on any portions that we believe are strengths in an 
application. We take this approach because we understand that what 
works for one grant applicant may not work for other grant applicants 
that have different challenges and needs that YouthBuild may help in 
addressing. Further, we do not provide a threshold for scores in the 
regulation or in the current SGAs because the numerical scores are only 
one part of the overall final award decision, other factors (listed 
above) are also brought into consideration. Also, the Department has 
routinely received enough high scoring applications submitted in 
response to SGAs, thus there is no need to set a threshold score to 
ensure that enough high quality grants given out. In addition, an 
applicant has a right to appeal the decision on their grant application 
under sec. 186 of WIA. Finally, the Secretary reserves the right to 
make any corrections she believes necessary in awarding grants for 
YouthBuild.

Subpart C--Program Requirements

    Subpart C deals with eligibility determinations of YouthBuild 
program participants, required program activities, designated minimum 
timeframes for certain activities, and services that must be carried 
out by programs.
Who is an eligible participant? (Sec.  672.300)
    Section 672.300 implements sec. 173A(e)(1) of WIA. This section 
defines who is eligible to become a YouthBuild participant. 
Specifically, Sec.  672.300(a)(1) through (3), implementing sec. 
173A(e)(1)(A) of WIA, states that an individual eligible for YouthBuild 
participation must be between 16 and 24 years old, a school dropout or 
a dropout who is enrolled in an alternative school as defined Sec.  
672.110, and either is a member of a low-income family, in foster care, 
a youth offender, disabled, a child of an incarcerated parent, or a 
migrant youth. Under sec. 173A(e)(1)(B) of WIA no more than 25 percent 
of the participants in a particular YouthBuild program may be 
individuals that do not meet the criteria described above, provided 
that they meet one of the exceptions listed in sec. 173A(e)(1)(B) of 
WIA. These exceptions are set out in Sec.  672.300(b) of the final 
rule.
    One commenter suggested increasing YouthBuild's current exception 
in Sec.  672.300(b)(1) for participants who have a high school diploma 
or GED and an educational deficiency from 25 percent to 40 percent, 
because this would aid recruitment and broaden YouthBuild's participant 
base, and enable YouthBuild programs to move even more participants 
more quickly

[[Page 9118]]

into employment, enhancing placement rates. While this suggestion would 
help broaden the number of potential eligible participants, the 25 
percent cap is mandated by the statute. Section 173A(e)(1)(B) of WIA 
states that no more than 25 percent of YouthBuild participants in a 
particular program may be individuals who do not meet the educational 
deficiency requirements in sec. 173A(e)(1)(A)(ii) and (iii) of WIA.
    One commenter suggested that the rule include guidance on what 
documentation is acceptable for determining the eligibility of a 
participant.
    We do not view the regulations as the proper place to provide 
detailed operational guidance. The regulations set the general rules 
governing the YouthBuild program and we provide administrative guidance 
to provide the detailed operational procedures. The type of 
documentation we accept to establish participant eligibility is broad, 
and often changing due to changes made at the Federal, State, or local 
level to the forms required, changes in the relevant legal definitions 
at the Federal, State, and local level, or because of other changes to 
the documentation that we currently accept. By including this 
information in the regulation, we could not easily adapt to the changes 
described above and could not make the changes that we believe are 
necessary in a timely fashion. In addition, upon award of a YouthBuild 
grant, each grantee is provided with a Department-issued YouthBuild 
handbook that helps grantees understand what documentation is 
acceptable to be used to determine a participant's eligibility. This 
handbook also provides eligibility guidelines for grantees to use when 
selecting participants. Finally, each grantee is required to have in 
place written policies it will use to determine the eligibility status 
of a perspective participant.
    Another commenter recommended that rather than calling the young 
people ``dropouts,'' the regulation should describe them as young 
people who left school without a diploma. The commenter reasoned that 
language used to describe the participants should carefully avoid 
labels of all kinds, and in many quarters ``dropout'' has a negative 
connotation. We understand the commenter's concerns about labeling 
participants with a word that could have a negative connotation. 
However the term ``drop out,'' as currently used in WIA sec. 
173A(e)(1)(A)(iii) and as defined in WIA sec. 101(39), is a clear, 
fair, commonly-used and concise term used to describe the actions of 
youth who voluntarily left high school without a diploma.
Are there special rules that apply to veterans? (Sec.  672.305)
    We did not receive any comments on this section. The final rule 
adopts the regulation as proposed.
What eligible activities may be funded under the YouthBuild program? 
(Sec.  672.310)
    This section implements sec. 173A(e)(3) and 173A(c)(2)(A) of WIA, 
which outline new education and workforce investment activities. These 
activities, newly permitted under the YouthBuild program, consist of 
postsecondary education services and activities, including tutoring, 
study skills training and dropout prevention activities; other paid and 
unpaid work experiences, including internships and job shadowing; 
alternative secondary school services, occupational skills training, 
and counseling services and related activities, such as comprehensive 
guidance and counseling on drug and alcohol abuse and referral.
    One commenter had a general concern that the wording of Sec.  
672.310 may leave some YouthBuild programs and applicants with the 
impression that it will be at the individual program's discretion as to 
whether or not they will provide certain services. The commenter is 
correct that the intent of the regulation is to provide program 
operators with some discretion over the services they may provide. 
While a YouthBuild program must offer several required services, we 
allow some variation in the overall services available in a program 
because we do not believe that a one-size fits all approach would help 
programs be successful. We recognize that because YouthBuild is a 
nation-wide program, there will be differences between the needs and 
resources between regions and among individual programs. This is not to 
say that YouthBuild programs can pick and choose services in a vacuum. 
Grantees must structure programs so that at least 90% of the 
participants' time is spent on eligible education activities (50%) and 
eligible workforce investment activities (40%). YouthBuild Federal 
project officers monitor program progress and work with grantees to 
make sure that grantees' programs produce positive outcomes for the 
program and for the participants, while giving detailed information on 
required activities and allowable activities.
    The same commenter stated that Mental Toughness is an important 
element that contributes greatly to cohesive culture-building, and 
motivates young people to engage with the program and with each other. 
Consequently, the commenter recommended that Mental Toughness/
Orientation be mentioned in the regulations and that programs be 
allowed to use their grant funds for this activity. We agree that 
Mental Toughness can be an important component of a YouthBuild program. 
Because of its potential positive impact, we issued guidance on Mental 
Toughness/Orientation (Training and Employment Guidance Letter (TEGL) 
14-09 issued on February 25, 2010), which discusses the allowable costs 
for initial intake or informal interviews with YouthBuild participants 
to gauge prospective participants and their readiness for the rigors of 
the YouthBuild program. While we recognize that Mental Toughness can 
have a very positive impact on programmatic and participant success, we 
do not feel it is appropriate to mandate this technique to all 
grantees. Since YouthBuild is a nation-wide program, there will be 
differences in the needs, resources, and approaches between regions and 
among individual programs.
    One commenter recommended that we clarify that YouthBuild programs 
are permitted to use grant funds for post-secondary educational 
training costs where a participant completes secondary education while 
still enrolled in the program, or where a participant is otherwise 
ready for post-secondary study. Section 672.310(a)(1)(iv), which 
mirrors Sec. 173A(c)(2)(A)(iv)(IV) of WIA, provides that counseling and 
assistance in obtaining post-secondary education and required financial 
aid is an eligible education activity for grant funds and is available 
to the participant whether the participant is still in the program or 
has exited and is receiving follow-up services. The regulation follows 
the language of the statute. It is an allowable activity under Sec.  
672.310(a) for grantees to spend grant funds on post-secondary 
education costs described in Sec.  672.530(e)(1) and (2). We urge 
grantees to use these funds reasonably for participants, both during 
their time in YouthBuild and after they exit and are receiving follow-
up services, so that they may assist as many participants as possible 
with post-secondary education costs such as application fees or fees 
associated with financial aid. However, grantees have discretion to 
determine whether to spend grant funds to directly fund the costs of 
post-secondary education.
    Another commenter recommended that funding rules should allow

[[Page 9119]]

YouthBuild sites to offer relationship skills training so that 
participants may learn communication skills and problem solving skills. 
The commenter believes this will help young people acquire necessary 
skills and keep jobs they may get with the skills learned through 
YouthBuild participation. We agree with the importance of offering 
relationship skills training for YouthBuild participants. Many of the 
young people who eventually enter YouthBuild lack the communication 
skills needed to build strong inter-personal and work-centered 
relationships. In our experience, the development of these ``soft'' 
skills is critical to participant success in the workforce once an 
individual leaves YouthBuild. Therefore, at Sec.  672.310(a)(3), we 
provide for employment and leadership skills training to encourage 
positive social behaviors, which includes the type of training 
suggested by the commenter.
    One commenter wanted the final rule to offer participants a stipend 
for transportation because it would aid in their ability to participate 
successfully in a YouthBuild program. The commenter stated that many 
low to very low income individuals lack dependable transportation and 
that providing participants with a stipend for public transportation 
would improve successful outcomes. We agree with the commenter's 
understanding of the importance of transportation to the success of 
participants. The NPRM, at Sec.  672.310(a)(4) would permit programs to 
use grant funds to provide supportive services, which includes aiding 
participants in obtaining transportation, including public 
transportation, to and from YouthBuild locations and worksites because 
it is considered a supportive service under WIA sec. 101(46). We have 
carried this provision into the Final Rule.
    Another commenter wanted the final rule to provide guidance on how 
programs are authorized to provide funds for childcare. Childcare is 
another supportive service available under Sec.  672.310(a)(4).
    One commenter stated that the 10 percent restriction on grant 
funding in Sec.  672.310(c)(2) should be increased to allow for 
additional exposure to other sectors of the construction industry 
beyond residential construction. We are constrained by WIA sec. 
173A(c)(2)(C), which states that no more than ten percent of grant 
funds may be used for the supervision and training for participants in 
the rehabilitation or construction of community and other public 
facilities.
What timeframes apply to participation? (Sec.  672.315)
    We received two comments about the amount of time a participant is 
permitted to be enrolled in the YouthBuild program. One commenter 
wanted to know if there was an exception to the requirement that 
participants must be offered full-time participation for a period of at 
least six months and not more than 24 months. Section 173A(e)(2) of WIA 
provides no exception to this requirement. Therefore we cannot permit 
an exception in the final rule.
    The other commenter requested that the rule discourage programs 
from establishing their program length at the minimum level because 
many YouthBuild students' incoming reading and math skill levels and 
workforce readiness are typically so limited that YouthBuild 
participation and program engagement longer than six months is required 
to help improve these skills. The same commenter went on to recommend 
that the rule make it clear that every enrollee may participate for up 
to 24 months, or for however long the program receives funding, 
whichever is shorter.
    The suggested change is not needed. Because we are focused on 
outcomes within the requirements of the Transfer Act, we work with 
programs to ensure participants' success regardless of the time spent 
in a YouthBuild program. We understand that the various programs and 
participants face different challenges and, therefore, we encourage 
programs to work towards successful outcomes for participants, whether 
occurring after six months or longer. In addition, Sec.  672.325 
requires that each participant exiting a YouthBuild program be provided 
follow-up services for a minimum of nine months to assist participants 
in obtaining or retaining employment, or applying for and transitioning 
to post-secondary education or training. Therefore, each participant 
who exits a YouthBuild program, even after only six months, receives 
additional services to help ensure a successful transition into 
employment or post-secondary education.
What timeframes must be devoted to education and workforce investment 
or other activities? (Sec.  672.320)
    This section explains the required structure of YouthBuild programs 
so that participants in the program are offered specific educational 
and related services and activities during at least 50 percent of their 
participation time, workforce investment activities during at least 40 
percent of their participation time, with the 10 percent time remaining 
designated for YouthBuild participants to conduct leadership 
development and community service activities, or additional workforce 
investment activities or educational activities. The 40 percent 
workforce investment activities participation time is a new requirement 
under sec. 173A(e)(3)(B) of WIA.
    We received two comments on the 10 percent time limit designated 
for YouthBuild participants to conduct construction skills training and 
construction on affordable housing and public facilities. One commenter 
suggested that YouthBuild programs be permitted to use the 10 percent 
time limit for YouthBuild participants to work on community projects to 
include the opportunity for participants to work on commercial 
projects. Both commenters stated that such a broadening of the use of 
the additional time could serve to bring YouthBuild programs and 
Registered Apprenticeship programs into closer mutual understanding and 
alignment and allow additional exposure to these other sectors of the 
construction industry.
    We agree with the commenter that permission to work on commercial 
projects would expose participants to other sectors of the construction 
industry. Therefore, we will allow YouthBuild participants to work on 
commercial projects as long as those commercial projects directly 
involve the building of affordable housing for low income and homeless 
families and individuals. One of the goals of the YouthBuild program, 
as articulated in sec. 173A(a)(4), is to increase the amount of 
permanent affordable housing for homeless individuals and low-income 
families. Therefore, due to the limited amount of time for YouthBuild 
participants to do construction, coupled with our goal of increasing 
affordable housing for homeless individuals and low-income families, we 
will permit participants to work on public facility-based projects and 
commercial projects, as long as those commercial projects are building 
affordable housing.

YouthBuild Programs May Offer Other Occupational Skills Training

    In response to comments solicited in the NPRM, we have determined 
that YouthBuild programs may offer participants other occupational 
skills training besides construction skills training. Each YouthBuild 
program is required to offer construction skills training, but 
participants do not need to

[[Page 9120]]

complete construction skills training as a prerequisite to engage in 
other occupational skills training.
    In addition, we will continue to require YouthBuild programs to 
provide community service and leadership development opportunities for 
every YouthBuild participant. We expect that, when possible, YouthBuild 
programs will align community service projects and leadership 
development activities with the participant's occupational training and 
will provide participants with an opportunity for community service 
relevant to their training, allowing participants to use their skills 
and training to serve their communities. For example, relevant 
community service opportunities for a participant pursuing health care 
career training might include volunteering at a local clinic or 
volunteering to educate the community about preventative health care. 
Other current examples include participants volunteering at a community 
food pantry, tutoring younger youth, participating in a graffiti 
removal campaign, cleaning a city park, or organizing and speaking at 
voter registration drives.
    These community service opportunities should intend to address real 
needs in the community. It is expected that participants will play a 
key role in the design, selection, and implementation of service 
projects. Additionally, participants are encouraged to perform 
additional community service or volunteer in local non-profit 
organizations independent of the YouthBuild program.
    We discuss the options we considered for expanding occupational 
skills training beyond construction skills training in detail below.

Options Considered for Expanding YouthBuild Training for Participants

    In the NPRM, we explained that current grantees have expressed an 
interest in expanding their program training beyond construction to 
other occupational skills training because YouthBuild programs have 
difficulty in placing participants in the construction industry when 
demand for construction workers in a local area is low. Additionally, 
we learned from grantees that many youth can benefit from the 
YouthBuild program, but are not interested in ultimately entering 
careers in the construction industry. Because of these concerns, we 
asked for comments in the NPRM on whether YouthBuild should continue to 
focus on construction skills training or if the skills training should 
be expanded to other industry areas. See 75 FR 52671, 52676 (Aug. 27, 
2010).
    In response, we received fourteen comments on the issue of whether 
to allow YouthBuild programs to provide occupational skills training in 
addition to construction skills training. One comment was outside the 
scope of this rulemaking. Ten commenters stated that we should allow 
programs to focus on other occupational skills training besides 
construction. Three commenters wanted to keep the focus of occupational 
skills training on construction in YouthBuild programs.
    Based on our analysis of the comments, we developed three options. 
The first option was to maintain the current program approach which is 
to allow construction skills training only. The second and third 
options both involved allowing other occupational skills training in 
YouthBuild besides construction. The second option would require some 
construction skills training as a prerequisite for participants to 
undergo other occupational skills training. The third option allowed 
participants to do other occupational skill straining without first 
engaging in construction skills training.

Option 1: Allow Construction Skills Training Only

    Three commenters advocated allowing only construction skills 
training in YouthBuild. One commenter stated that it was important to 
support youth who have the technical skills and industry-recognized 
credentials to fill future jobs in the construction industry. This 
commenter went on to suggest that YouthBuild participants should be 
helped to understand that many skills acquired through YouthBuild 
constructions skills training are transferable to other industries.
    Another commenter supported maintaining construction skills 
training because the growing U.S. population and the aging building 
environment in the U.S. will combine to drive demand for construction 
workforce development efforts like YouthBuild. This commenter also 
stated that the increasingly complex skills necessary for construction 
due to the energy efficiency and sustainable construction movement will 
drive demand for programs like YouthBuild. The commenter also addressed 
the benefits of using construction skills training in YouthBuild by 
explaining that it provides a step-by-step learning opportunity with 
well-defined knowledge benchmarks. The commenter explained that once 
construction skills were learned, the participant could immediately 
apply this knowledge in the participant's non-construction work 
experiences. The commenter also stated that through construction skills 
training, YouthBuild participants could see tangible results of their 
training. Furthermore, the commenter felt that YouthBuild participants 
would be better prepared to address home maintenance or repair issues 
themselves through construction skills learned in training. Finally, 
this commenter addressed the statement made in the NPRM that many 
YouthBuild participants are not interested ultimately in entering 
construction careers. The commenter said that participants are not 
limited to placement in construction occupations and that plans 
targeting the participant's ultimate career goal could be part of an 
individual's ``placement plan''.
    The third commenter in support of only construction skill training 
stated that from personal experience in operating a YouthBuild program 
for more than a decade, the commenter has found that participants may 
discover an interest in careers other than construction as a result of 
construction skills training in YouthBuild. The commenter also stated 
that emphasizing construction skills training enables programs to teach 
a work-ethic, provide hands-on training in a demand occupation that may 
lead to apprenticeship opportunities, increase the supply of affordable 
housing for low-income and homeless individuals and families, and 
promote and assist students interested in other in demand occupations 
after exiting YouthBuild.
    While we agree with many of the commenters' arguments, we have 
decided not to continue to require YouthBuild grantees to provide only 
construction skills training for a number of reasons. Sec. 
173A(c)(2)(A)(ii) of WIA allows other occupational skills training. 
Additionally, sec. 173A(a)(1) states that one of the purposes of the 
program is to enable participants to obtain the skills necessary to 
achieve economic self-sufficiency in occupations in demand, which may 
not include jobs in the construction industry in a local area. We agree 
with the commenters that a program allowing for other occupational 
skills training besides or in addition to construction skills affords 
YouthBuild programs and participants more flexibility in matching 
available training opportunities to participants' interests. This 
approach also allows programs to try and match skills training with 
local job market data when appropriate or possible, to develop a 
program better suited to both the needs of the community and the 
interests of the participants, which we believe will lead to better 
employment outcomes for participants.

[[Page 9121]]

Option 2: Allow Other Occupational Skills Training But Require 
Construction Skills Training

    Four of the commenters recommended allowing other occupational 
skills training but stated that construction skills training should 
remain a core or primary component of YouthBuild training. Three of the 
commenters recommended that YouthBuild should continue to focus on 
construction skills training as the primary mode by which participants 
learn job-related and leadership skills. One of these commenters stated 
that some programs have identified innovative and unique opportunities 
to impart in-demand skills to participants including agricultural and 
forestry skills, technology-based skills like computer repair, 
cosmetology, and entrepreneurship skills. This commenter further 
recommended that YouthBuild programs should be provided with an 
approved list of other occupational skills training based on sound 
models proposed or implemented by local programs, including rural and 
Native-serving programs. However, this commenter stressed that 
construction [skills training] should continue to be the primary mode 
by which young people learn job-related and leadership skills. The 
commenter went on to suggest that any other occupational skills 
training ``track'' should be pre-approved by the Department and should 
be secondary to construction skills training.
    Another commenter supported allowing YouthBuild programs the 
flexibility to include additional high-demand, service-oriented skills 
training that would provide access to entry-level jobs and post-
secondary placement in promising career tracks. However, the commenter 
stated that additional occupational skills training should be offered 
as an enhancement to accompany constructions skills training, not as a 
replacement for construction as the core element of YouthBuild 
training. The commenter stated that construction skills training 
continues to be of value to YouthBuild participants because it is 
attractive to young men who are underrepresented in youth employment 
programs. The commenter pointed out that more than 30 percent of 
YouthBuild graduates enter construction jobs and that construction 
careers should recover as green building expands. Finally, the 
commenter asserted that Public Housing authorities seek to hire 
disadvantaged youth to ``green'' public housing, and construction 
companies will hire youth with criminal records who have gotten back on 
track.
    We understood these four comments as advocating an approach that 
would make construction skills training a required element for all 
YouthBuild participants. While we appreciate the approach these 
commenters recommend, we have determined that we will not require 
YouthBuild programs to make construction skills training a prerequisite 
for other occupational skills training. We agree with the commenters 
that construction skills training is important to YouthBuild because it 
is a vehicle that allows programs to teach transportable skills sets to 
participants while imparting them with experiences in team work in a 
community service context. We want to make it clear that, based on sec. 
173A(c)(2)(A)(i) of WIA, YouthBuild programs have to make construction 
skills training available as a part of every program. However, when 
possible, we believe that participants, working with YouthBuild 
administrators and educators, should able to make a decision about the 
occupational skills training they want to undertake. Feedback received 
from several YouthBuild programs suggests this approach, matching 
training opportunities based on local, in-demand jobs with 
participants' interests, will lead to better educational and job 
placement outcomes. We will work with YouthBuild programs to develop 
innovative job training programs as one commenter suggested.

Option 3: Allow Other Occupational Skills Training Without Requiring 
Construction Skills Training

    Six commenters recommended that YouthBuild programs should be 
allowed to train participants in other occupational skills besides 
construction without first going through construction training.
    Of the six commenters that recommended a change from construction 
skills training to other occupational skills training, four of these 
commenters cited the depressed construction industry labor demand as a 
reason to expand the skills training in YouthBuild. Two of these 
commenters went on to explain that limiting skills training in 
YouthBuild to construction work harms existing skilled workers by 
reducing their ability to find a job in a time of high unemployment in 
the construction industry since there is a surplus of construction 
workers seeking limited job opportunities.
    Another commenter stated that workforce training in construction 
does not offer participants useful employment skills to enter the labor 
market in communities where there are few or no jobs in construction. 
This commenter explained that allowing YouthBuild programs to tailor 
the training offered to more closely mirror employment opportunities 
available within local labor markets would increase the number of 
participants who successfully achieve job placements after completion 
of the program.
    Additionally, three of the commenters cited the lack of participant 
interest in construction skills training as a basis for supporting 
other occupational skills training. Another commenter stated that, in 
one particular YouthBuild program, most female students, when asked, 
preferred a different career track than construction. One commenter 
stated that the heart of YouthBuild is a project-based learning 
environment and that construction skills training is simply one method 
of conducting it. Furthermore, the commenter believed that because 
participants' needs, interests, and abilities may not support 
construction skills training, grantees should be given flexibility to 
train young people for any high demand field, as long as programs can 
demonstrate use of an effective project-based learning environment. 
This commenter stated that what is essential to the YouthBuild program 
is that participants' experiences in YouthBuild include hands-on 
training that meet real community needs in a team-based setting.
    In response to the comments received, we have carefully considered 
the issue of whether to expand the skills training offered by 
YouthBuild from construction skills to other occupational skills 
training. As discussed, we have determined that we will allow other 
occupational skills training in YouthBuild programs, because we believe 
that allowing programs to be able to match job training opportunities 
with local, in-demand jobs will lead to more successful employment 
outcomes for YouthBuild participants. This will also allow programs, 
when possible, a better way to match training opportunities with 
participants' interests. However, because the Transfer Act made clear 
that the YouthBuild program continues to be a construction training 
program, we have determined that YouthBuild programs must continue to 
offer construction skills training as an element in all YouthBuild 
programs.
    Section 173A(c)(2)(A)(i) and (ii) of WIA permits grantees to use 
grant funds for workforce investment activities including work 
experience and skills training in rehabilitation and construction 
activities and occupational skills training. We have determined,

[[Page 9122]]

based on comments received advocating the expansion of the training 
offered to include occupational skills training and our program 
administration experience, that allowing other occupational skills 
training will help YouthBuild programs provide more successful job 
placement outcomes and secondary schools placements for program 
participants. As we have learned from the most recent recession, 
allowing only construction skills training makes job placement 
especially difficult for YouthBuild participants during downturns in 
the construction industry. Also, we believe that this approach will 
enable programs to take innovative approaches to providing training 
opportunities that may benefit more participants, especially female 
participants who many commenters pointed out do not, ultimately, pursue 
construction careers.
    In addition, sec. 173A(c)(3)(B)(i) and (v) of WIA require grant 
applications to include information about the local labor market, 
including projections on career opportunities in growing industries and 
descriptions of educational and job training activities that will 
prepare participants for employment in in-demand occupations in local 
labor markets. We believe that allowing other occupational skills 
training in YouthBuild in addition to construction, especially for 
local in-demand occupations such as healthcare, ``green'' jobs, and 
information technology allows the Department and grantees to better 
achieve the purposes of the Transfer Act.
    We will work to ensure that the other occupational skills training 
should lead to some benchmarked outcome such as a nationally recognized 
certificate or certification, an associate degree, or a recognizable 
skills achievement that will assist the participant in pursuing a 
sustainable career pathway. We will provide further guidance on this 
issue as necessary.
    While we believe that occupational skills training can be a 
valuable part of any YouthBuild program, we stress that construction 
skills training remains a mandatory offering for all YouthBuild 
programs. Construction skills training is a project-based, easily 
benchmarked method for teaching occupational and teamwork skills that 
are transferable to virtually any part of the country. As we discussed 
in the NPRM, YouthBuild creates a sense of self-worth for its 
participants by providing job skills training in the construction 
industry and highlighting the important role that each individual can 
have on community development and engagement. In addition, youth can 
witness their success and contributions through the rehabilitation and 
construction of affordable housing for homeless individuals and 
families and low-income families. This provides a sense of 
accomplishment that many participants will experience for the first 
time through a YouthBuild program.

Other Comments

    Another commenter suggested changes to Sec.  672.320(a) and (b). 
The commenter felt the language in paragraphs (a) and (b) could lead to 
the misunderstanding that a program might be out of compliance if a 
participant leaves the program before actually participating in 
education or workforce investment activities at the specified 
percentages. The commenter pointed out that the operative word in the 
statute is ``offered'' and argued that programs should not be penalized 
for the actual levels of participation that are demonstrated by 
participants who do not complete the program. Finally, the commenter 
suggested modifying these paragraphs to read: ``(a) Eligible education 
activities * * * during at least 50 percent of the program cycle in 
which they have enrolled;'' and ``(b) Eligible workforce investment 
activities * * * during at least 40 percent of the program cycle in 
which they have enrolled.''
    We believe the language as written is sufficient to avoid any 
unfair penalties for non-compliance. The current language in Sec.  
672.320(a) and (b) focuses on the services that participants are 
offered during the time they participate in the program because it is 
the structure of the program and not participant activity in those 
services that governs compliance.
What timeframes apply for follow-up services? (Sec.  672.325)
    This section requires that follow-up services be provided to 
YouthBuild participants for a period of not less than 9 months but no 
more than 12 months after participants exit a YouthBuild program. One 
commenter wanted clarification whether the rule required that all 
participants be provided follow-up services or if only those 
participants that achieve placement were to be provided follow-up 
services. All participants that exit the program must be provided 
follow-up services, whether or not they achieve placement. The text of 
the Final Rule has been changed to clarify this provision.
    Another commenter suggested that the follow-up period be no less 
than six months with the cap on follow-up periods being the end of the 
grant period. The commenter felt that some YouthBuild programs have 
excellent post-exit follow-up services, and that some participants 
require more intensive follow-up services. Similarly, another commenter 
wanted to extend the period of follow-up for up to two years. We agree 
that some participants need intensive services. However, the length of 
time allotted for follow-up services is set by law in sec. 
173A(c)(2)(A)(vii) of WIA at a maximum of 12 months. Additionally, the 
9 month minimum for follow-up services is essential for measuring 
programmatic outcomes. Specific outcomes for the program are measured 
in 3 quarter (or 9 month) increments. For participants and programs to 
be measured properly throughout their time in YouthBuild, a minimum 9 
month follow-up period is required by the common performance measures.

Subpart D--Performance Indicators

    Subpart D deals with the required performance indicators for 
grants, required levels of grant performance, grant reporting 
requirements, and grant reporting due dates.
What are the performance indicators for YouthBuild grants? (Sec.  
672.400)
    This section explains the required indicators, such as certificate 
attainment, that must be reported by YouthBuild grantees.
    One commenter recommended that OSHA-10, First-Aid/CPR, 
Weatherization Tactics, and the 48 hour HAZWOPER certificates all be 
considered recognized credentials and counted towards program 
performance. Another commenter asked about other industry-recognized 
credentials, particularly for weatherization and green construction or 
other green industries that may be applicable to YouthBuild and can be 
reported in the performance indicators.
    We appreciate the time and effort necessary to earn these 
certificates and the benefits that accrue from them. Credential 
attainment is a common measure for WIA and other workforce programs. As 
a result, certifications that may be counted towards program 
performance must meet the requirements established in TEGL 17-05. This 
TEGL explains that the parameters for recognized credential are, 
``participation in secondary school, post-secondary school, adult 
education program, or any other organized program of study leading to a 
degree or certificate.'' The parameters for credentials were further 
clarified in TEGL 15-10, which says that ``a credential is awarded in 
recognition of an individual's attainment of measurable technical or 
occupational

[[Page 9123]]

skills necessary to gain employment or advance within an occupation.'' 
The certificates specifically mentioned by the commenter do not meet 
the criteria to be considered a credential under TEGLs 17-05 and 15-10.
    Examples of industry-recognized credentials in the construction 
field include the credentials earned through the National Center for 
Construction Education and Research's program, the Home Builder's 
Institute's (HBI) HPACT curriculum, and the Building Trades Multi-Craft 
Core curriculum, are the ones most widely used throughout YouthBuild. 
Examples of credentials that are recognized in industries other than 
construction include, Certified Nursing Assistant, Certified Java 
Programmer, National Institute for Automotive Service Excellence 
Certificate, Certified Novell Engineer, and industry-recognized 
licensure. While these lists are not exhaustive, they give a few 
examples of credentials that would qualify for the performance 
measures.
What are the required levels of performance for the performance 
indicators? (Sec.  672.405)
    This section explains that expected levels of performance for each 
of the common performance indicators are national standards that will 
be established at a later date and will be provided in separately 
issued guidance.
    Three commenters requested that we consider basing performance 
level expectations on peer group data, specifically rural, urban and 
tribal data, and or statewide data or negotiations for other WIA 
programs, and that accommodations for sustained economic downturn be 
factored into these expectations in some manner. One commenter 
suggested that sustained economic distress (which can vary regionally) 
and urban, rural and tribal data warrant less uniform and more 
individualized performance level expectations without compromising the 
goal of continuous improvement in performance. Additionally, according 
to a commenter, performance measures should be, in part, based on 
average entrance scores--not just Educational Functioning Levels 
(levels that measure a defined set of skills and competencies as 
developed by the U.S. Department of Education, 34 CFR 462.3), and on 
placement outcomes as well. One of the commenters additionally 
recommended that all students should be required to meet the outcome 
measures for literacy and numeracy, but that only the more advanced 
students should be held to criteria concerning academic or occupational 
credentials and placement.
    We have determined it is not necessary to change the performance 
measures. In 2006, we issued TEGL No. 17-05, which dealt with Common 
Measures and performance accountability in ETA programs such as 
YouthBuild. This guidance set forth one set of measures to be used for 
common measure performance purposes. Furthermore, this TEGL describes 
the participant information that must be collected and reported for ETA 
programs that will be used to assess the performance of grantees under 
the common measures. We appreciate the commenters' concerns but the 
purpose a common set of measures that apply across similar programs is 
to enable us to compare the accomplishments of different programs and 
to determine which strategies are successful so that we can apply them 
to improve similar programs.
    Developing individualized performance targets based on individual 
and unique situations would result in performance reports based on 
varying definitions and methodologies. This would make it difficult 
both to assess the YouthBuild program as a whole and to determine 
YouthBuild's impact on the workforce system. Furthermore, since the 
Department began administration of the YouthBuild program, we have held 
the program to goals that are higher than the Government Performance 
Results Act (GPRA) goals. We do not want to lower the expected 
performance outcomes based on individualized factors because we believe 
that doing so would be detrimental to YouthBuild participants. 
YouthBuild programs should strive to meet the performance goals set by 
the Department to ensure successful post-secondary and job placement 
outcomes for participants. We believe that these aggregate goals have 
motivated and will continue to motivate YouthBuild grantees to continue 
working towards improved performance outcomes. For these reasons, and 
for the reasons discussed above, we will continue to use the standards 
announced in TEGL 17-05 that apply to ETA programs such as YouthBuild.
    Another commenter stated that it is essential that data collected 
to develop the performance indicators for YouthBuild be disaggregated 
by gender and other characteristics, so that young women's 
participation in the program can be evaluated. We do track this data 
and disaggregate participation by, among other things, gender for 
review of program activity. We have an electronic management 
information system (MIS) that performs this operation for internal 
analysis. This information allows us to craft policy to address program 
concerns as they arise.
    Another commenter recommended that we mention reduction in 
recidivism as a performance measure that the Secretary may require to 
be tracked. As explained above, we have determined that it is important 
to use the Common Measures for the YouthBuild program which are also 
required by sec. 173A(c)(3)(B)(xii) of WIA. We will provide the details 
of the performance indicators in administrative guidance and will take 
the comments into consideration as performance standards are 
established. If we later conclude that the standard identified by the 
commenter, or any other performance standard is appropriate, Sec.  
672.400(a)(4) allows us to require additional performance indicators 
not listed in Sec.  672.400(a)(1) through (3).
    Another commenter recommended that YouthBuild programs be held to 
the same or equivalent standards required of apprenticeship programs 
under 29 CFR part 29. The commenter reasoned that the standards set 
forth at 29 CFR 29.5, would ensure a quality program.
    We appreciate the commenter's suggestions as means to enhance 
YouthBuild standards. However, if we were to apply all of the 
requirements of 29 CFR part 29 to YouthBuild, we would extend the 
period of training beyond the period of performance authorized in the 
Transfer Act.
What are the reporting requirements for YouthBuild grantees? (Sec.  
672.410)
    We did not receive any comments on this section. The final rule 
adopts the regulation as proposed.
What are the due dates for quarterly reporting? (Sec.  672.415)
    We did not receive any comments on this section. The final rule 
adopts the regulation as proposed.

Subpart E--Administrative Rules, Costs and Limitations

    This subpart deals with other Federal regulations that apply to 
YouthBuild programs, and cost limitations and fund matching 
requirements.
What administrative regulations apply to the YouthBuild program? (Sec.  
672.500)
    This section explains the other regulations focusing on 
administrative standards, non-discrimination requirements, audit 
requirements, and other requirements that apply to YouthBuild programs.
    One commenter recommended that the occupational skills and safety 
training provided by grantees include comprehensive training on equal

[[Page 9124]]

employment opportunity laws, rights, and responsibilities. The 
commenter believes that training YouthBuild participants about their 
equal employment opportunity rights and responsibilities will help 
create a work environment free of discrimination for all workers.
    We agree that a work environment free of unlawful discrimination is 
very important. Therefore, Sec.  672.500 specifically refers to the WIA 
nondiscrimination regulations at 29 CFR part 37 that apply to 
YouthBuild. Furthermore, the nondiscrimination provisions of WIA in 
sec. 188 require YouthBuild grantees to ensure equal opportunity and 
prevent discrimination in their programs. WIA sec. 188 ensures 
nondiscrimination and equal opportunity for various categories of 
persons, including persons with disabilities, who apply for and 
participate in programs and activities operated by recipients of WIA 
Title I financial assistance. Finally, while we do not require 
YouthBuild grantees to conduct comprehensive Equal Employment 
Opportunity training for program participants, the programs are 
required by 29 CFR 37.29 through 37.32 to post, in a conspicuous place 
in the YouthBuild facility, an equal opportunity hiring policy 
applicable to YouthBuild program staff.
    Another commenter requested that we specify young women as a target 
population in YouthBuild's nondiscrimination regulations in Subpart E 
of the Rule. Section 672.500 explicitly states that the non-
discrimination provisions in 29 CFR part 37 are applicable to 
YouthBuild. Part 37 broadly prohibits all forms of discrimination for 
WIA Title I programs (which include YouthBuild), including against 
women. Specifically, 29 CFR 37.5 states that ``[n]o individual in the 
United States may, on the ground of race, color, religion, sex, 
national origin, age, disability, political affiliation or belief 
[hellip] be excluded from participation in, denied the benefits of, 
subjected to discrimination under, or denied employment in the 
administration of or in connection with any WIA Title I--funded program 
or activity.'' We believe that these applicable non-discrimination 
provisions sufficiently protect YouthBuild participants, including 
young women
How may grantees provide services under the YouthBuild program? (Sec.  
672.505)
    We did not receive any comments on this section. The final rule 
adopts the regulation as proposed.
What cost limits apply to the use of YouthBuild program funds? (Sec.  
672.510)
    Two commenters recommended that the restriction or cap of the cost 
of supervision and training for participants in the rehabilitation or 
construction of community and other public facilities be raised from 10 
percent to 25 percent or 30 percent, or be eliminated. One commenter 
explained that the current housing crisis has affected rural and tribal 
YouthBuild programs by making it difficult for these programs to 
maintain a pipeline of rehabilitation and construction projects for 
skills training.
    We understand that the comments are aimed at increasing training 
projects for YouthBuild participants and producing projects that may 
bring added value to the broader community. However, we may not alter 
the cost limitation by regulation because it is statutorily mandated in 
WIA Section 173A(c)(2)(C).
What are the cost-sharing or matching requirements of the YouthBuild 
program? (Sec.  672.515)
    We did not receive any comments on this section. The final rule 
adopts the regulation as proposed.
What are considered to be leveraged funds? (Sec.  672.520)
    This section provides that funds must be applied toward allowable 
costs to be counted as leveraged funds.
    One commenter stated that by focusing solely on allowable costs, 
the regulations penalize rural and Native groups, which have fewer 
opportunities to match and to leverage funds, as well as any group that 
raises funds for unallowable costs to advance their program goals. The 
commenter suggests creating a third category for which programs are 
acknowledged and rewarded (with application review points or monitoring 
visit assessment ratings) called ``Other Funds Raised to Support the 
Program.'' The commenter states this would encourage programs to 
fundraise for legitimate needs (but ``unallowable'' costs) while 
assisting us to fully capture local support for YouthBuild. The 
commenter also suggested that match and leveraged funding level 
requirements and criteria be lowered for rural and tribal programs in 
high-poverty and/or persistently poor census tracts or counties, in 
recognition of very limited assets and resources in these communities.
    While we recognize that rural and tribal programs are often located 
in high-poverty and/or persistently poor census tracts, we have decided 
not to lower the match requirement. We believe that well -run 
YouthBuild programs can not rely solely on Federal grant funds. 
YouthBuild programs, to be effective, must have several different 
funding sources in order to be able to provide the various services 
participants need. The required match over a three year period of 
performance brings necessary resources and partners to the program. 
Therefore, we do not believe that the requirement is so onerous that it 
prevents these kinds of grantees from serving as YouthBuild grantees.
    Furthermore, the match requirement demonstrates the commitment of 
the community and the program to provide the necessary resources for 
the success of the YouthBuild program. Our program experience is that 
that a significant number of rural and native applicants have been able 
to meet the match requirement, therefore we do not believe that that 
requirement prevents rural and tribal programs from serving as 
YouthBuild grantees.
    We want to clarify that costs which benefit the grant program 
(whether paid for with Federal or non-Federal resources) and are 
otherwise allowable under the cost principles are allowable under the 
grant and may be used as leveraged funds as long as no other statutory, 
regulatory, or grant provision prohibits the use of such funds for that 
purpose. In response to the commenter's proposed third category, the 
type of funds the commenter characterizes are already taken into 
account. An additional category is not needed since leveraged or 
matched funds are already considered in the review of the application.
How are the costs associated with real property treated in the 
YouthBuild program? (Sec.  672.525)
    This section explains the costs associated with real property that 
are allowable solely for the purpose of training YouthBuild 
participants.
    We received four comments on this section, one of which was outside 
the scope of the NPRM. One commenter recommended that personal 
protective equipment (PPE) be allowed as an expense for YouthBuild 
training activities in Sec.  672.525(c)(1) in order to ensure that 
YouthBuild participants comply with Federal and State health and safety 
standards.
    We agree that the protection and safety of YouthBuild participants 
during construction training is of the highest importance. Therefore, 
we have amended the final rule to include PPE as an allowable expense 
for YouthBuild training activities under Sec.  675.525(c)(1).
    Two commenters asked that the cost of land acquisition for the 
construction of a new building for the purposes of

[[Page 9125]]

YouthBuild construction training be an allowable cost for match and 
leverage requirements. Because YouthBuild is a job skills training 
program, as a matter of policy, the allowable costs for match and 
leverage must be made up of training-related costs and not property 
costs. Therefore, the final rule continues to disallow land acquisition 
as an allowable cost.
What participant costs are allowable under the YouthBuild program? 
(672.530)
    We did not receive any comments on this section. However, as 
described above in the discussion of Sec.  672.310, we have added 
language to Sec.  672.530(e) to clarify that the costs for providing 
additional benefits, described in Sec.  672.530(e)(1) through (3), to 
participants or individuals who have exited the program and are 
receiving follow-up services, can still be incurred after participants 
terminate participation in the program.
What effect do payments to YouthBuild participants have on eligibility 
for other Federal needs-based benefits? (Sec.  672.535)
    This section explains what effect stipends and other assistance 
received from YouthBuild have on a participant's income for purposes of 
establishing need for other Federally sponsored needs-based programs.
    One commenter stated that wages paid to participating youth as part 
of construction skills training should be exempt from income 
considerations for Temporary Assistance for Needy Families (TANF), 
Section 8 rental assistance programs, and Medicaid income thresholds. 
The commenter goes on to explain that access to nutrition, housing, and 
health care should not be diminished by participating in an employment 
and training program that will help participants become self-
sufficient.
    We agree. Under the WIA regulations at 20 CFR 667.272(c), 
allowances, earnings, and payments to individuals participating in 
programs under Title I of WIA are not considered as income for purposes 
of determining eligibility for and the amount of income transfer and 
in-kind aid furnished under any Federal or Federally-assisted program 
based on need other than as provided under the Social Security Act (42 
U.S.C. 301). Since YouthBuild is a WIA Title I Program, income earned 
from participation in the YouthBuild program should not disqualify 
participants from benefitting from other Federally-sponsored needs-
based programs that are available to them.
What program income requirements apply under the YouthBuild program? 
(Sec.  672.540)
    This section deals with program income requirements, as specified 
in the applicable Uniform Administrative Requirements at 29 CFR 95.24 
and 97.25.
    One commenter stated that it was disappointing to learn that, in 
the NPRM, we proposed that revenue from the sale or rental of 
YouthBuild construction and rehabilitation projects would not be 
counted as program income because it would be discouraging to 
participants to see the fruits of their labors not reinvested in 
improving and sustaining their program.
    We agree with the commenter that under the Uniform Administrative 
Requirements rental income is considered program income and can be used 
to pay for allowable costs incurred by the program. We have amended 
Sec.  672.540(b) to reflect this change. However, under the Uniform 
Administrative Requirements, income derived from the sale of YouthBuild 
construction and rehabilitation projects is not considered program 
income. We encourage grantees to reinvest any revenue realized through 
sales back into the YouthBuild programs to promote long-term 
sustainability.
Are YouthBuild programs subject to the Davis-Bacon Act labor standards? 
(Sec.  672.545)
    This section deals with the Davis-Bacon wage rules that cover 
prevailing wage rates on Federally-funded or -assisted construction 
projects. We received five comments on this section. Two commenters 
stated that many groups may be confused by the Davis-Bacon Act labor 
standards and its application to YouthBuild. One commenter suggested 
that we offer separate guidance on this issue. At this time, ETA has no 
plans to offer guidance on Davis-Bacon labor standards' applicability 
to YouthBuild. However, the Department's Wage and Hour Division (WHD), 
which is responsible for the administration of the Davis-Bacon Act 
labor standards, does offer compliance guidance at its Web site at 
http://www.dol.gov/whd/regs/compliance/ca_main.htm.
    The other commenter requested a definition of ``Davis-Bacon-covered 
laborer or mechanic work.'' The definition of laborer or mechanic work 
for Davis-Bacon purposes can be found at 29 CFR 5.2.
    Proposed Sec.  672.545(b)(1) of the NPRM explained that YouthBuild 
participants could be classified as ``trainees'' for Davis-Bacon 
purposes if they are individually registered in a trainee program 
approved by ETA. Two commenters objected to classifying YouthBuild 
participants as ``trainees'' on Davis-Bacon covered projects that would 
allow the YouthBuild ``trainee'' to be paid less than the Davis-Bacon 
Labor Standards require. Both commenters go on to say that allowing 
YouthBuild ``trainees'' to be paid lower rates than workers subject to 
the Davis-Bacon wage requirements would provide an incentive to hire 
YouthBuild ``trainees'' for construction work instead of journey-level 
construction workers and apprentices in many of the building and 
construction trades. It also, according to one commenter, could result 
in the loss of jobs and job opportunities for laborers. The commenters 
also suggest that establishing YouthBuild programs as ``trainee'' 
programs would place them in direct competition with many formal 
apprenticeship programs registered with the Department because in many 
instances, according to the commenters, the two training programs draw 
upon the same pool of candidates. Both commenters argue that because 
there are other benefits attached to participation in YouthBuild such 
as needs-based stipends and other services, this would place YouthBuild 
``trainees'' at a competitive advantage with apprentices and journey-
workers by making YouthBuild ``trainees'' cheaper to employ. One 
commenter states that this affects the construction industry by 
weakening its ability to attract and retain skilled workers. This 
commenter goes on to argue that the YouthBuild program does not qualify 
as a certified and registered training program under ETA and therefore, 
YouthBuild participants should not be classified as ``trainees'' for 
Davis-Bacon purposes.
    However, this commenter encourages us to promote cooperation and 
partnerships between YouthBuild and registered apprenticeship programs 
and to promote the transfer of YouthBuild training credit within these 
apprentice programs. Furthermore, the other commenter argues that there 
is nothing in the Transfer Act that indicates the purpose of YouthBuild 
is to create trainee programs registered with ETA. Finally, the 
commenter states that it seems clear that Congress intended YouthBuild 
to serve as a source of qualified applicants for formal pre-
apprenticeship and registered apprenticeship training programs in the 
building and construction industry.
    The two commenters linked comments about the YouthBuild Trainee--
Apprenticeship Preparation

[[Page 9126]]

Standards (YB-TAP) to the NPRM section that addresses certified 
``trainee'' programs under the Davis-Bacon Act in Sec.  672.545.
    The YB-TAP standards are a set of national standards developed in 
close consultation with ETA's Office of Apprenticeship (OA). The 
standards provide the basis for a YouthBuild program to establish an 
OA-approved trainee training program. By using the YB-TAP standards, a 
YouthBuild program can participate in a nationally approved trainee 
training program that allows it to pay participants less than the 
Davis-Bacon journey worker wage rates when performing work on Federal 
and federally assisted construction projects to which Davis-Bacon 
requirements apply.
    Our intent in developing the YB-TAP was to design standards 
specifically for YouthBuild to create a more formal pathway into 
registered apprenticeships for YouthBuild participants, to create 
consistency in the construction skills training offered by YouthBuild 
programs across the country, and to provide another portable credential 
for YouthBuild program participants. Additionally, YB-TAP provided 
greater flexibility for YouthBuild programs to work on sites covered by 
Davis-Bacon, and thus expand the pool of potential worksites for 
grantees which often struggle to find suitable projects for worksite 
training. Of the 223 DOL-funded YouthBuild programs, 28 have registered 
with YB-TAP to-date; 12 of those requested and received a certification 
to have participants work at Davis-Bacon-covered sites, which allows 
them to be paid at less than the journey worker prevailing wage.
    However, as a result of implementing YB-TAP, we found unintended 
consequences have arisen that are a concern for YouthBuild programs. 
Many of the organizations that YouthBuild seeks to partner with see YB-
TAP as being in direct competition because programs are allowed to pay 
their participants, as trainees, less than the prevailing wage rate. 
The lower ratio of journey workers to trainees approved in the YB-TAP 
program makes it less expensive for a contractor to hire a YouthBuild-
sponsored construction crew versus a journey worker staffed crew, and 
the YB-TAP standards, in effect, create a competing apprenticeship-like 
program approved by the Department.
    Therefore, while these provisions for trainees who may be paid less 
than Davis-Bacon journeyman wage rates remain in effect as part of the 
Davis-Bacon Act labor standards, we have deleted the references to 
trainees and registered trainee programs in Sec.  672.545(b)(1) to 
indicate that we will not approve programs as ``trainee'' programs for 
Davis-Bacon wage rate purposes without further notice. We believe this 
change is currently in the best interests of the YouthBuild program for 
the reasons discussed above.
What are the recordkeeping requirements for YouthBuild programs? (Sec.  
672.550)
    We did not receive any comments on this section. The final rule 
adopts the regulation as proposed.

Subpart F--Additional Requirements

    This subpart deals with other requirements, such as safety 
requirements and YouthBuild housing requirements, with which all 
programs must comply.
What are the safety requirements for the YouthBuild program? (Sec.  
672.600)
    This section explains the safety standards that YouthBuild grantees 
must meet.
    A commenter wrote that though safety is a preeminent concern for 
YouthBuild grantees, following National Institute for Occupational 
Safety and Health (NIOSH) and Occupational Safety and Health 
Administration (OSHA) standards can present significant challenges. 
That commenter explains that Mental Toughness is only effective if 
young people gain some exposure to the worksite, and it is not 
practical to provide such training at the beginning of Mental 
Toughness. The commenter asks that grantees be given some discretion in 
the timing of OSHA safety training to accommodate the purpose of Mental 
Toughness. The commenter also suggests that many YouthBuild grantees do 
not own or manage their own construction sites. They build in 
cooperation with a housing partner, such as Habitat for Humanity. The 
commenter believes it would be appropriate to follow the safety 
standards used by the housing partner.
    On November 14, 2006, we published, at 71 FR 66349, a Federal 
Register notice requesting public comments and announcing public 
meetings on the design of YouthBuild grants. The notice sought public 
input and observations on the optimum number of years and amount of 
grant awards, ways to ensure grantees meet educational and employment 
outcomes, how capacity building grants can be strengthened, and ways to 
improve any other aspect of the program. We received four comments, 
including comments from NIOSH and OSHA, relating to safety issues in 
response to the Federal Register notice. The NIOSH comments emphasized 
the dangers of youth working in construction and noted that youth 
fatalities in construction are related to noncompliance with child 
labor laws and occupational safety and health regulations. The comments 
from OSHA similarly stressed the importance of safety training and 
identification of worksite hazards.
    Based upon the concerns raised by these commenters and others, the 
NPRM required that YouthBuild grantees not only comply with Federal and 
State health and safety standards, including the hazardous orders in 
the WHD child labor regulations, but also that they: Provide 
comprehensive safety training for youth working on YouthBuild 
construction projects; have written, jobsite-specific, safety plans 
overseen by an on-site supervisor with authority to enforce safety 
procedures as part of the grant application; provide necessary personal 
protective equipment to youth working on YouthBuild projects; and 
submit injury incident reports to ETA. The intent of these requirements 
is to protect the health and safety of YouthBuild participants on 
YouthBuild work sites, and to ensure that YouthBuild grantees comply 
with child labor laws.
    We reiterate the importance of the NIOSH and OSHA safety standards 
for YouthBuild programs to ensure participant safety; therefore, we 
will not grant programs the discretion to provide the training after 
youth have already been on the worksite. The dangers inherent in youth 
working in construction and the well documented youth fatalities in 
construction which are directly related to noncompliance with child 
labor laws and occupational safety and health regulations makes it 
imperative that YouthBuild participants receive NIOSH and OSHA training 
before admittance to the work site. However, we recommend that any 
safety standards that may exist in addition to the required safety 
standards already discussed should be observed by YouthBuild 
participants. Therefore, it is appropriate for participants also to 
follow the safety standards of a YouthBuild housing partner, as the 
commenter suggested, as long as the standards compliment Federal, 
State, and local safety standards and provide at least the same level 
of safety as the required Federal, State and local standards.
    Another commenter recommended that the requirement that grantees 
comply with Federal child labor laws be extended to include state child 
labor laws as well. We agree it is important for programs to comply 
with state child

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labor laws as well and therefore has included the requirement in Sec.  
672.600.
    The same commenter contended that we need to develop an injury 
surveillance system to routinely collect, analyze and report the injury 
data that grantees will be required to submit under the proposed rules. 
We agree with the importance of capturing this information and already 
have a system in place in which to capture the data.
    Further, the commenter stressed the need to conceptualize and 
implement health and safety training as an integral and essential 
component of occupational skills development. The commenter felt that 
health and safety training was an ``add-on'' to occupational skills 
training instead of being an integral component of occupational skills 
development. We disagree with this assessment. Safety of the 
participants and the program staff is of significant importance to the 
Department. This is expressed not only in the proposed rule, but in all 
of the YouthBuild SGAs.
What are the reporting requirements for youth safety? (Sec.  672.605)
    This section explains the requirements and process for filing 
reports when youth are injured while working on YouthBuild projects.
    One commenter asked that we specify the process of reporting and 
filing injury incident reports for accidents involving youth that occur 
while youth are working on YouthBuild projects. This commenter goes on 
to ask that we provide details on what forms must be used in filing 
injury incidents, where to obtain the reports, and where the form is 
filed.
    As we explained in Sec.  672.605 of the NPRM and in this final 
rule, a YouthBuild grantee is responsible for sending a copy of OSHA's 
injury incident report form, to the U.S. Department of Labor, 
Employment and Training Administration within 7 days of any reportable 
injury suffered by a YouthBuild participant. The injury incident report 
form is available from OSHA and can be downloaded at http://www.osha.gov/recordkeeping/RKforms.html.
What environmental protection laws apply to the YouthBuild program? 
(Sec.  672.610)
    We did not receive any comments on this section. The final rule 
adopts the regulation as proposed.
What requirements apply to YouthBuild housing? (Sec.  672.615)
    This section explains that, for a period of at least ten years, all 
YouthBuild housing must be rented or sold to low income or homeless 
individuals and families, and that housing must be kept in a clean and 
sanitary condition. In addition, this section outlines some of the 
rules that must be followed when leasing YouthBuild housing to homeless 
or low income families and individuals.
    One commenter expressed concern that there is a potential for 
exploitation for private benefit without requiring grantees to have 
written policies governing the rehabilitation of low income houses that 
are occupied. The same commenter went on to suggest that the 
Department's lawyers examine what impact, if any, Federal rules 
relating to relocation may have on the rehabilitation of occupied 
housing. The commenter pointed out that the Uniform Relocation Act and 
related statutes provide certain rights to residents who are relocated 
as a result of Federally-assisted housing activities.
    We share the commenter's concern that there is a chance for 
exploitation for private benefit without requiring grantees to have a 
written policy. Furthermore, we appreciate the commenter's concerns 
over the applicability of the Uniform Relocation Act as it pertains to 
grantees rehabilitating occupied low income housing. We will examine 
the issues and, if necessary, will produce guidance addressing both of 
these issues.

IV. Administrative Information

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

    The Regulatory Flexibility Act (RFA) at 5 U.S.C. 603(a) requires 
agencies to prepare and make available for public comment an initial 
regulatory flexibility analysis (IRFA) which will describe the impact 
of a regulation on small entities. Section 605 of the RFA allows an 
agency to certify a rule, in lieu of preparing an IRFA, if the final 
rule is not expected to have a significant economic impact on a 
substantial number of small entities. Furthermore, under the Small 
Business Regulatory Enforcement Fairness Act of 1996, 5 U.S.C. 801 
(SBREFA), an agency is required to produce compliance guidance for 
small entities if the rule has a significant economic impact on a 
substantial number of small entities. The RFA defines small entities as 
small business concerns, small not-for-profit enterprises, or small 
governmental jurisdictions. The final rule directly affects all 
YouthBuild grantees, of which there are currently 226. About half of 
these are small entities (generally non-profit, community-based 
organizations). We do not believe that the final rule will have a 
significant economic impact on a substantial number of these small 
entities. We have certified this to the Chief Counsel for Advocacy, 
Small Business Administration, under the Regulatory Flexibility Act. 
The primary issues affected by the final rule are discussed below.
    The YouthBuild program has existed since 1978. YouthBuild began as 
a Federal grant program in 1994 and was administered by HUD until 2006 
when it was transferred to the Department. YouthBuild operates as a 
voluntary grant program. While there are matching and leverage 
requirements, organizations apply for Federal grant funds. Also, grant 
funds may be used to pay for requirements in the final rule that 
address participant safety, worksite environmental standards, and a 
required follow-up time period for YouthBuild enrollees.
    The final rule requires that all applicable National Institute for 
Occupational Safety and Health (NIOSH) and Occupational Safety and 
Heath Administration (OSHA) regulations be followed for youth who are 
on YouthBuild participant construction sites. The NIOSH safety 
standards are standard requirements for all Federally-funded 
construction worksites across the United States. The requirements will 
not add demonstrably to the cost of any YouthBuild program because 
safety equipment required by NIOSH standards can be purchased using 
YouthBuild grant funds provided by the Department. Further, the cost of 
the other requirements--supervisor training, development of safety 
plans, safety reporting, etc.--can be paid for with grant funds as 
well.
    In addition, the final rule requires that all Federal environmental 
standards, including National Environmental Policy Act of 1969 (NEPA), 
be followed. This is a standard for all Federally-funded construction 
worksites across the United States and is already established procedure 
at many YouthBuild work sites. YouthBuild grant funds may be used to 
ensure compliance with the required environmental standards.
    The YouthBuild program will have a beneficial economic impact on 
small entity program participants. While there are match and leverage 
requirements under YouthBuild, the grantees are applying to receive 
additional resources to carry out their purposes for the benefit of 
participants. Finally, we are aware of no public concern that the rule 
will have a significant economic impact

[[Page 9128]]

on a substantial number of small entities. We specifically invited 
comments from members of the public who believe there will be such an 
impact on small entities. We did not receive any comments in response.
    Accordingly, we certify that this final rule will not have a 
significant economic impact on a substantial number of small entities.

Paperwork Reduction Act

    One of the purposes of the Paperwork Reduction Act of 1995 (PRA), 
44 U.S.C. 3501 et seq., is to minimize 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.
    The collection of data described in this final rule contains 
requirements to implement reporting and recordkeeping requirements for 
the YouthBuild program. This reporting structure features standardized 
data collection for program participants, and quarterly narrative and 
Management Information System (MIS) performance report formats. All 
data collection and reporting will be done by YouthBuild grantees.
    These requirements were previously reviewed and approved for use by 
OMB under 44 U.S.C. 3507 and 5 CFR part 1320, and assigned OMB control 
number 1205-0464 under the provisions of the PRA. YouthBuild grantees 
will collect and report selected standardized information on 
participants in YouthBuild programs for the purposes of general program 
oversight, evaluation, and performance assessment. ETA will provide all 
grantees with a YouthBuild management information system (MIS) to use 
for collecting participant data and for preparing and submitting the 
required quarterly reports. We have determined that this final rule 
contains no new information collection requirements.
    We estimate that the public reporting burden for this collection of 
information will amount to 16,280 hours. This total includes all 
paperwork required by this rule over the course of one program year for 
all grantees nationwide.

Executive Orders 12866 and 13563

    Executive Orders (E.O.) 13563 and 12866 direct agencies to assess 
all costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). Executive 
Order 13563 emphasizes the importance of quantifying both costs and 
benefits, of reducing costs, of harmonizing rules, and of promoting 
flexibility.
    Section 3(f) of E.O. 12866 defines a ``significant regulatory 
action'' as an action that is likely to result in a rule that: (1) Has 
an annual effect on the economy of $100 million or more or adversely 
and materially affects a sector of the economy, productivity, 
competition, jobs, the environment, public health or safety, or State, 
local or Tribal governments or communities (also referred to as 
``economically significant''); (2) creates serious inconsistency or 
otherwise interferes with an action taken or planned by another agency; 
(3) materially alters the budgetary impacts of entitlement grants, user 
fees, or loan programs or the rights and obligations of recipients 
thereof; or (4) raises novel legal or policy issues arising out of 
legal mandates, the President's priorities, or the principles set forth 
in E.O. 12866
    We received one comment on E.O. 12866 addressing whether this rule 
is a significant regulatory action. The commenter was concerned that 
YouthBuild participants who were employed on Davis-Bacon sites would 
displace skilled construction apprentices and journey workers because 
the YouthBuild participant could be paid a lower than Davis-Bacon 
required wage. The commenter suggested that this would result in the 
unemployment of these trade workers and the effect on the economy could 
be large, ranging from loss of income and loss of buying power, to 
increased Federal unemployment support and increased need for other 
social services. However, in response to the comment, we have 
determined that YouthBuild participants that work on Davis-Bacon 
worksites will be subject to Davis-Bacon wage rates. Therefore, 
YouthBuild participants could not be employed at lower than Davis-Bacon 
wage rates.
    E.O. 13563, issued after publication of the NPRM, asked agencies to 
identify, to the extent possible, the necessity of the regulation as 
well as the costs and benefits of the regulation.
    YouthBuild is a workforce development program that provides 
employment, education, leadership development, and training 
opportunities to disadvantaged and low-income youth between the ages of 
16 and 24, most of whom are secondary school drop outs and are either a 
member of a low-income family, a foster care youth, a youth offender, a 
youth with a disability, a child of an incarcerated parent, or a 
migrant youth. This regulation is necessary for the orderly operation 
and management of the YouthBuild program because the Department has not 
published regulations governing the YouthBuild program since it was 
transferred from HUD to the Department in 2006.
    Program participants receive numerous benefits through their 
participation in the YouthBuild program. Participants receive education 
services that may lead to either a high school diploma or GED. Further, 
they receive occupational skills training and are encouraged to pursue 
a post- secondary education or additional training, including 
registered apprenticeship programs. The program is designed to create a 
skilled workforce either in the construction industry, through the 
rehabilitation and construction of housing for homeless individuals and 
families and low- income families, as well as public facilities, or in 
other high wage, high-demand jobs. The program also benefits the larger 
community because it provides more new and rehabilitated affordable 
housing.
    In contrast to the benefits provided to both program participants 
and their communities, the cost to YouthBuild programs to provide these 
services is minimal. The money to provide these benefits to program 
participants is provided to YouthBuild programs both through an annual 
grant competition overseen by the Department, as well as any additional 
leveraged resources obtained by YouthBuild programs. Based on these 
factors, we have reviewed the costs and benefits of the regulation and 
have determined that this regulatory approach maximizes net benefits.
    While the regulatory requirements defined and implemented by this 
final rule for this grant program will not have an annual, measurable 
effect on the economy of $100 million or more, the final rule raises 
novel policy issues about, among other things, application of Davis-
Bacon wage rules, Federal cost limitations, and the expansion of the 
YouthBuild program approved training to other occupational skills 
besides construction skills training. Therefore, this rule has been 
designated a ``significant regulatory action'' although not 
economically significant, under section 3(f) of E.O. 12866 and 
submitted to OMB for review.

Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 
1531)

[[Page 9129]]

directs agencies to assess the effects of Federal regulatory actions on 
State, local, and tribal governments, and the private sector. This 
final rule has no ``Federal mandate,'' which is defined in 2 U.S.C. 
658(6) to include either a ``Federal intergovernmental mandate'' or a 
``Federal private sector mandate.'' A Federal mandate is any provision 
in a regulation that imposes an enforceable duty upon State, local, or 
tribal governments, or imposes a duty upon the private sector which is 
not voluntary. The YouthBuild program is a grant program. Grantee 
participation in YouthBuild is voluntary. Furthermore, this final rule 
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--12630 Government Actions and Interference With 
Constitutionally Protected Property Rights

    The YouthBuild Transfer Act requires that housing rehabilitated or 
constructed with YouthBuild grant funds be for the purposes of housing 
homeless individuals and families or low-income families. In order for 
the Department to ensure that the YouthBuild program is administered in 
compliance with the legislation, each grantee must ensure that the 
owner of the property where YouthBuild funds are spent to construct or 
rehabilitate residential units records a restrictive covenant on the 
property, limiting the use of the units to housing for homeless 
individuals and families and low-income families. Such a restrictive 
covenant will not result in a taking without just compensation. This is 
a contractually-based restriction and therefore property owners are 
compensated for any limitations on the use of their land. Property 
owners enter into these contracts creating the restriction voluntarily 
and they receive consideration in the form of services from the 
YouthBuild program to build or rehabilitate their housing for the 
burden on their property. Subsequent purchasers will have notice of the 
covenant and will be able to determine purchase price with knowledge of 
the limitations on the use of the property. Furthermore, the 
restrictive covenant will expire 10 years from the date of issuance of 
occupancy permit, giving flexibility to the grantee and/or property 
owner within a reasonable time period. We are committed to upholding 
the integrity of the YouthBuild program in all its aspects and believe 
that a restrictive covenant is the best way to meet the purpose of the 
legislation to increase the supply of housing for homeless individuals 
and families and low-income families.

Executive Order 12988--Civil Justice

    This final rule has been drafted and reviewed in accordance with 
Executive Order 12988, Civil Justice Reform, and will not unduly burden 
the Federal court system. The final rule 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 13045

    Executive Order 13045 concerns the protection of children from 
environmental health risks and safety risks. This final rule has no 
impact on the environmental health or safety of 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 before 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.
    This final rule addresses a voluntary grant program, YouthBuild, 
which is administered by the U.S. Department of Labor. Although there 
are tribal YouthBuild grantees, we conclude that this final rule does 
not directly affect one or more Indian Tribes, the relationship between 
the Federal Government and Indian Tribes, or the distribution of power 
and responsibilities between the Federal Government and Indian Tribes.

Environmental Impact Assessment

    We have reviewed this final rule in accordance with the 
requirements of the National 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 final rule will not have a 
significant impact on the quality of the human environment, and, thus, 
we have 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 us to assess the impact of this final rule on family 
well-being. A rule that is determined to have a negative effect on 
families must be supported with an adequate rationale.
    We have assessed this final rule and determines that it will not 
have a negative effect on families. Indeed, we maintain that this rule 
will strengthen families by providing low-income housing and 
occupational training for low-income families and others.

Executive Order 13211

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

Privacy Act of 1974

    The Privacy Act of 1974 is implicated when a regulation: (1) 
Requires either collection of information that the agency will retrieve 
by an individual's name or other personal identifier or would create a 
program where the agency's program records will be retrieved by an 
individual's name or personal identifier; and (2) involves computerized 
matching of records from a Privacy Act System of Records with any other 
records.
    This final rule is not affected by the Privacy Act of 1974 as it 
does not require the Department to collect information on an 
individual's name or other personal identifier or involve computerized 
matching of records from a Privacy Act System of Records with any other 
records.
Plain Language
    We drafted this final rule in plain language.
    Therefore, according to the preamble, ETA amends 20 CFR chapter V 
by adding part 672 to read as follows:

PART 672--PROVISIONS GOVERNING THE YOUTHBUILD PROGRAM

Subpart A--Purpose and Definitions
Sec.
672.100 What is YouthBuild?
672.105 What are the purposes of the YouthBuild program?
672.110 What definitions apply to this part?

[[Page 9130]]

Subpart B--Funding and Grant Applications

672.200 How are YouthBuild grants funded and administered?
672.205 How does an eligible entity apply for grant funds to operate 
a YouthBuild program?
672.210 How are eligible entities selected to receive grant funds?
672.215 How are eligible entities notified of approval for grant 
funds?

Subpart C--Program Requirements

672.300 Who is an eligible participant?
672.305 Are there special rules that apply to veterans?
672.310 What eligible activities may be funded under the YouthBuild 
program?
672.315 What timeframes apply to participation?
672.320 What timeframes must be devoted to education and workforce 
investment or other activities?
672.325 What timeframes apply for follow-up services?

Subpart D--Performance Indicators

672.400 What are the performance indicators for YouthBuild grants?
672.405 What are the required levels of performance for the 
performance indicators?
672.410 What are the reporting requirements for YouthBuild grantees?
672.415 What are the due dates for quarterly reporting?

Subpart E--Administrative Rules, Costs, and Limitations

672.500 What administrative regulations apply to the YouthBuild 
program?
672.505 How may grantees provide services under the YouthBuild 
program?
672.510 What cost limits apply to the use of YouthBuild program 
funds?
672.515 What are the cost-sharing or matching requirements of the 
YouthBuild program?
672.520 What are considered to be leveraged funds?
672.525 How are the costs associated with real property treated in 
the YouthBuild program?
672.530 What participant costs are allowable under the YouthBuild 
program?
672.535 What effect do payments to YouthBuild participants have on 
eligibility for other Federal need-based benefits?
672.540 What program income requirements apply under the YouthBuild 
program?
672.545 Are YouthBuild programs subject to the Davis-Bacon Act labor 
standards?
672.550 What are the recordkeeping requirements for YouthBuild 
programs?

Subpart F--Additional Requirements

672.600 What are the safety requirements for the YouthBuild Program?
672.605 What are the reporting requirements for youth safety?
672.610 What environmental protection laws apply to the YouthBuild 
Program?
672.615 What requirements apply to YouthBuild Housing?

    Authority:  29 U.S.C. 2918a.

Subpart A--Purpose and Definitions


Sec.  672.100  What is YouthBuild?

    (a) YouthBuild is a workforce development program that provides 
employment, education, leadership development, and training 
opportunities to disadvantaged and low-income youth between the ages of 
16 and 24, most of whom are secondary school drop outs and are either a 
member of a low-income family, a foster care youth, a youth offender, a 
youth with a disability, a child of an incarcerated parent, or a 
migrant youth.
    (b) Program participants receive education services that may lead 
to either a high school diploma or General Educational Development 
(GED). Further, they receive occupational skills training and are 
encouraged to pursue a post- secondary education or additional 
training, including registered apprenticeship programs. The program is 
designed to create a skilled workforce either in the construction 
industry, through the rehabilitation and construction of housing for 
homeless individuals and families and low- income families, as well as 
public facilities, or in other high wage, high-demand jobs. The program 
also benefits the larger community because it provides more new and 
rehabilitated affordable housing.


Sec.  672.105  What are the purposes of the YouthBuild program?

    (a) The overarching goal of the YouthBuild program is to provide 
disadvantaged and low-income youth the opportunity to obtain education 
and employment skills in local in-demand and high-demand jobs to 
achieve economic self-sufficiency. Additionally, the YouthBuild program 
has as goals:
    (1) To promote leadership skills development and community service 
activities. YouthBuild programs will foster the development of 
leadership skills and a commitment to community improvement among youth 
in low-income communities.
    (2) To enable youth to further their education and training. 
YouthBuild programs will provide counseling and assistance in obtaining 
post-secondary education and/or employment and training placements that 
allow youth to further their education and training.
    (3) To expand the supply of permanent affordable housing and reduce 
the rate of homelessness in communities with YouthBuild programs. The 
program seeks to increase the number of affordable housing units 
available and to decrease the number of homeless individuals and 
families in their communities.
    (b) Through these educational and occupational opportunities, to 
enable youth participants to provide a valuable contribution to their 
communities. The YouthBuild program will add skilled workers to the 
workforce by educating and training youth who might have otherwise 
succumbed to the negative influences within their environments.


Sec.  672.110  What definitions apply to this part?

    Alternative school. The term ``alternative school'' means a school 
or program that is set up by a State, school district, or other 
community-based entity to serve young people who are not succeeding in 
a traditional public school environment. In order for an ``alternative 
school'' to qualify as of part of a ``sequential service strategy'' it 
must be recognized by the authorizing entity designated by the State, 
award a high school diploma or both a high school diploma and a GED 
and, must be affiliated with a YouthBuild program.
    Community or other public facility. The term ``community or other 
public facility'' means those facilities which are either privately 
owned by non-profit organizations, including faith-based and community-
based organizations, and publicly used for the benefit of the 
community, or publicly owned and publicly used for the benefit of the 
community.
    Core construction. The term ``core construction'' means activities 
that are directly related to the construction or rehabilitation of 
residential, community, or other public facilities. These activities 
include, but are not limited to, job skills that can be found under the 
Standard Occupational Classification System (SOC) major group 47, 
Construction and Extraction Occupations, in codes 47-1011 through 47-
4099. These activities may also include, but are not limited to, 
construction skills that may be required by green building and 
weatherization industries but are not yet standardized. A full list of 
the SOC's can be found at the Bureau of Labor Statistics (BLS) Web 
site, http://www.bls.gov/soc.
    Eligible entity. The term ``eligible entity'' means a public or 
private nonprofit agency or organization (including a consortium of 
such agencies or organizations), including--
    (1) A community-based organization;
    (2) A faith-based organization;
    (3) An entity carrying out activities under this Title, such as a 
local school board;
    (4) A community action agency;

[[Page 9131]]

    (5) A State or local housing development agency;
    (6) An Indian tribe or other agency primarily serving Indians;
    (7) A community development corporation;
    (8) A State or local youth service or conservation corps; and
    (9) Any other entity eligible to provide education or employment 
training under a Federal program (other than the program carried out 
under this part).
    Homeless individual. For purposes of YouthBuild, the definition of 
``homeless individual'' at Section 103 of the McKinney-Vento Homeless 
Assistance Act (42 U.S.C. 11302) applies.
    Housing development agency. The term ``housing development agency'' 
means any agency of a Federal, State or local government, or any 
private nonprofit organization, that is engaged in providing housing 
for homeless individuals or low-income families.
    Income. As defined in 42 U.S.C. 1437a(b), ``income'' is: Income 
from all sources of each member of the household, as determined in 
accordance with the criteria prescribed by the Secretary of Labor, in 
consultation with the Secretary of Agriculture, except that any amounts 
not actually received by the family and any amounts which would be 
eligible for exclusion under sec. 1382b(a)(7) of the United States 
Housing Act of 1937, may not be considered as income under this 
paragraph.
    Indian; Indian tribe. As defined in 25 U.S.C. 450b of sec. 4 of the 
Indian Self- Determination and Education Assistance Act, the term 
``Indian'' is a person who is a member of an Indian tribe; and the term 
``Indian tribe'' is any Indian tribe, band, nation, or other organized 
group or community, including any Alaska Native village or regional or 
village corporation as defined in or established pursuant to the Alaska 
Native Claims Settlement Act (85 Stat. 688) (43 U.S.C. 1601 et seq.), 
which is recognized as eligible for the special programs and services 
provided by the United States to Indians because of their status as 
Indians.
    Individual of limited English proficiency. As defined in 20 U.S.C. 
9202(10), an ``individual of limited English proficiency'' is: An adult 
or out- of-school youth who has limited ability in speaking, reading, 
writing, or understanding the English language, and:
    (1) Whose native language is a language other than English; or
    (2) Who lives in a family or community environment where a language 
other than English is the dominant language.
    Low-income family. As defined in 42 U.S.C. 1437a(b)(2), a ``low-
income family'' is: A family whose income does not exceed 80 percent of 
the median income for the area, as determined by the Secretary of Labor 
with adjustments for smaller and larger families, except that the 
Secretary of Labor may establish income ceilings higher or lower than 
80 percent of the median for the area if the Secretary finds that such 
variations are necessary because of prevailing levels of construction 
costs or unusually high or low family incomes. Further, as defined by 
42 U.S.C. 1437a(b)(2)(3), the term families includes families 
consisting of one person.
    Migrant youth. The term ``migrant youth'' means a youth, or a youth 
who is the dependent of someone who, during the previous 12 months has:
    (1) Worked at least 25 days in agricultural labor that is 
characterized by chronic unemployment or underemployment;
    (2) Made at least $800 from agricultural labor that is 
characterized by chronic unemployment or underemployment, if at least 
50 percent of his or her income came from such agricultural labor;
    (3) Was employed at least 50 percent of his or her total employment 
in agricultural labor that is characterized by chronic unemployment or 
underemployment; or
    (4) Was employed in agricultural labor that requires travel to a 
jobsite such that the farmworker is unable to return to a permanent 
place of residence within the same day.
    Needs-based stipend. The term ``Needs-based stipends'' means 
additional payments (beyond regular stipends for program participation) 
that are based on defined needs that enable youth to participate in the 
program. To provide needs-based stipends the grantee must have a 
written policy in place, which defines: Eligibility; the amounts; and 
the required documentation and criteria for payments. This policy must 
be applied consistently to all program participants.
    Occupational skills training. The term ``Occupational skills 
training'' means an organized program of study that provides specific 
vocational skills that lead to proficiency in performing the actual 
tasks and technical functions required by certain occupational fields 
at entry, intermediate, or advanced levels. The occupational skills 
training offered in YouthBuild programs must begin upon program 
enrollment and be tied to the award of an industry-recognized 
credential.
    Partnership. The term ``partnership'' means an agreement that 
involves a Memorandum of Understanding (MOU) or letter of commitment 
submitted by each organization and applicant, as defined in the 
YouthBuild Transfer Act, that plan on working together as partners in a 
YouthBuild program. Each partner must have a clearly defined role. 
These roles must be verified through a letter of commitment, not just a 
letter of support, or an MOU submitted by each partner. The letter of 
commitment or MOU must detail the role the partner will play in the 
YouthBuild Program, including the partner's specific responsibilities 
and resources committed, if appropriate. These letters or MOUs must 
clearly indicate the partnering organization's unique contribution and 
commitment to the YouthBuild Program.
    Public housing agency. As defined in 42 U.S.C. 1437a(b), a ``public 
housing agency'' is: Any State, county, municipality or other 
government entity or public body, or agency or instrumentality of these 
entities, that is authorized to engage or assist in the development or 
operation of low- income housing.
    Registered apprenticeship program. The term ``registered 
apprenticeship program'' means:
    (1) Registered under the Act of August 16, 1937 (commonly known as 
the ``National Apprenticeship Act''; 50 Stat. 664, chapter 663; 20 
U.S.C. 50 et seq.); and
    (2) A program with a plan containing all terms and conditions for 
the qualification, recruitment, selection, employment and training of 
apprentices, as required under 29 CFR parts 29 and 30, including such 
matters as the requirement for a written apprenticeship agreement.
    Sequential service strategy. The term ``sequential service 
strategy'' means the educational and occupational skills training plan 
developed for individuals who have dropped out of high school and want 
to enroll in a YouthBuild program. The plan is designed so that the 
individual sequentially enrolls in an alternative school, and after 
receiving a year or more of educational services, enrolls in the 
YouthBuild program.
    Transitional housing. The term ``transitional housing'' means 
housing provided for the purpose of facilitating the movement of 
homeless individuals to independent living within a reasonable amount 
of time. The term includes housing primarily designed to serve 
deinstitutionalized homeless individuals and other homeless individuals 
who are individuals with

[[Page 9132]]

disabilities or are members of families with children.
    Youth in foster care. The term ``youth in foster care'' means youth 
currently in foster care or youth who have ever been in foster care.
    Youth who is an individual with a disability. The term youth who is 
an individual with a disability means a youth with any disability (as 
defined in section 3 of the Americans with Disabilities Act of 1990 (42 
U.S.C. 12102)) or a student receiving special education and related 
services under the Individuals with Disabilities Education Act (IDEA).

Subpart B--Funding and Grant Applications


Sec.  672.200  How are YouthBuild grants funded and administered?

    The Secretary uses funds authorized for appropriation under sec. 
173A of the Workforce Investment Act (WIA) to administer YouthBuild as 
a national program under Title I, Subtitle D of the Act. YouthBuild 
grants are awarded to eligible entities, as defined in Sec.  672.110, 
through a competitive selection process described in Sec.  672.205.


Sec.  672.205  How does an eligible entity apply for grant funds to 
operate a YouthBuild program?

    The Secretary announces the availability of grant funds through a 
Solicitation for Grant Applications (SGA). The SGA contains 
instructions for what is required in the grant application, describes 
eligibility requirements, the rating criteria that will be used in 
reviewing grant applications, and special reporting requirements to 
operate a YouthBuild project.


Sec.  672.210  How are eligible entities selected to receive grant 
funds?

    In order to receive funds under the YouthBuild program, an eligible 
entity applying for funds (applicant) must meet selection criteria 
established by the Secretary which include:
    (a) The qualifications or potential capabilities of an applicant;
    (b) An applicant's potential to develop a successful YouthBuild 
program;
    (c) The need for an applicant's proposed program, as determined by 
the degree of economic distress of the community from which 
participants would be recruited (measured by indicators such as 
poverty, youth unemployment, and the number of individuals who have 
dropped out of secondary school) and of the community in which the 
housing and public facilities proposed to be rehabilitated or 
constructed are located (measured by indicators such as incidence of 
homelessness, shortage of affordable housing, and poverty);
    (d) The commitment of an applicant to provide skills training, 
leadership development, counseling and case management, and education 
to participants;
    (e) The focus of a proposed program on preparing youth for 
postsecondary education and training opportunities or local in-demand 
occupations;
    (f) The extent of an applicant's coordination of activities to be 
carried out through the proposed program with:
    (1) Local boards, One-Stop Career Center operators, and One-Stop 
partners participating in the operation of the One-Stop delivery system 
involved, or the extent of the applicant's good faith efforts, as 
determined by the Secretary, in achieving such coordination;
    (2) Public education, criminal justice, housing and community 
development, national service, or postsecondary education or other 
systems that relate to the goals of the proposed program; and
    (3) Employers in the local area.
    (g) The extent to which a proposed program provides for inclusion 
of tenants who were previously homeless individuals or families in the 
rental of housing provided through the program;
    (h) The commitment of additional resources to the proposed program 
(in addition to the funds made available through the grant) by:
    (1) An applicant;
    (2) Recipients of other Federal, State, or local housing and 
community development assistance who will sponsor any part of the 
rehabilitation, construction, operation and maintenance, or other 
housing and community development activities undertaken as part of the 
proposed program; or
    (3) Entities carrying out other Federal, State, or local activities 
or activities conducted by Indian tribes, including vocational 
education programs, adult and language instruction educational 
programs, and job training using funds provided under WIA,
    (i) An applicant's ability to enter partnerships with:
    (1) Education and training providers including:
    (i) The kindergarten through twelfth grade educational system;
    (ii) Adult education programs;
    (iii) Community and technical colleges;
    (iv) Four-year colleges and universities;
    (v) Registered apprenticeship programs; and
    (vi) Other training entities.
    (2) Employers, including professional organizations and 
associations. An applicant will be evaluated on the extent to which 
employers participate in:
    (i) Defining the program strategy and goals;
    (ii) Identifying needed skills and competencies;
    (iii) Designing training approaches and curricula;
    (iv) Contributing financial support; and
    (v) Hiring qualified YouthBuild graduates.
    (3) The workforce investment system which may include:
    (i) State and local workforce investment boards;
    (ii) State workforce agencies; and
    (iii) One-Stop Career Centers and their cooperating partners.
    (4) The juvenile and adult justice systems, and the extent to which 
they provide:
    (i) Support and guidance for YouthBuild participants with court 
involvement;
    (ii) Assistance in the reporting of recidivism rates among 
YouthBuild participants; and
    (iii) Referrals of eligible participants through diversion or re-
entry from incarceration.
    (5) Faith-based and community organizations, and the extent to 
which they provide a variety of grant services such as:
    (i) Case management;
    (ii) Mentoring;
    (iii) English as a Second Language courses; and
    (iv) Other comprehensive supportive services, when appropriate.
    (j) The applicant's potential to serve different regions, including 
rural areas and States that may not have previously received grants for 
YouthBuild programs; and
    (k) Such other factors as the Secretary determines to be 
appropriate for purposes of evaluating an applicant's potential to 
carry out the proposed program in an effective and efficient manner.
    (l) The weight to be given to these factors will be described in 
the SGA issued under Sec.  672.205.


Sec.  672.215  How are eligible entities notified of approval for grant 
funds?

    The Secretary will, to the extent practicable, notify each eligible 
entity applying for funds no later than 5 months from the date the 
application is received, whether the application is approved or 
disapproved. In the event additional funds become available, ETA 
reserves the right to use such funds to

[[Page 9133]]

select additional grantees from applications submitted in response to 
an SGA.

Subpart C--Program Requirements


Sec.  672.300  Who is an eligible participant?

    (a) Eligibility criteria. Except as provided in paragraph (b) of 
this section, an individual is eligible to participate in a YouthBuild 
program if the individual is:
    (1) Not less than age 16 and not more than age 24 on the date of 
enrollment; and
    (2) A school dropout or an individual who has dropped out of school 
and reenrolled in an alternative school, if that reenrollment is part 
of a sequential service strategy; and
    (3) Is one or more of the following:
    (i) A member of a low-income family as defined in Sec.  672.110;
    (ii) A youth in foster care;
    (iii) A youth offender;
    (iv) A youth who is an individual with a disability;
    (v) The child of a current or formerly incarcerated parent; or
    (vi) A migrant youth as defined in Sec.  672.110.
    (b) Exceptions. Not more than 25 percent of the participants in a 
program, under this section, may be individuals who do not meet the 
requirements of paragraph (a)(2) or (3) of this section, if such 
individuals:
    (1) Are basic skills deficient as defined in section 101(4) of WIA, 
even if they have their high school diploma, GED credential, or other 
State-recognized equivalent; or
    (2) Have been referred by a local secondary school for 
participation in a YouthBuild program leading to the attainment of a 
secondary school diploma.


Sec.  672.305  Are there special rules that apply to veterans?

    Special rules for determining income for veterans are found in 20 
CFR 667.255 and for the priority of service provisions for qualified 
persons are found in 20 CFR part 1010. Those special rules apply to 
covered persons who are eligible to participate in the YouthBuild 
program.


Sec.  672.310  What eligible activities may be funded under the 
YouthBuild program?

    Grantees may provide one or more of the following education and 
workforce investment and other activities to YouthBuild participants--
    (a) Eligible education activities include:
    (1) Services and activities designed to meet the educational needs 
of participants, including:
    (i) Basic skills instruction and remedial education;
    (ii) Language instruction educational programs for individuals with 
limited English proficiency;
    (iii) Secondary education services and activities, including 
tutoring, study skills training, and dropout prevention activities, 
designed to lead to the attainment of a secondary school diploma, GED 
credential, or other State- recognized equivalent (including recognized 
alternative standards for individuals with disabilities);
    (iv) Counseling and assistance in obtaining post-secondary 
education and required financial aid; and
    (v) Alternative secondary school services;
    (2) Counseling services and related activities, such as 
comprehensive guidance and counseling on drug and alcohol abuse and 
referral to appropriate treatment;
    (3) Activities designed to develop employment and leadership 
skills, which may include community service and peer-centered 
activities encouraging responsibility and other positive social 
behaviors, and activities related to youth policy committees that 
participate in decisionmaking related to the program; and
    (4) Supportive services, as defined under Title I of WIA Section 
101(46), and provision of need-based stipends, as defined in Sec.  
672.110.
    (b) Eligible workforce investment activities include:
    (1) Work experience and skills training (coordinated, to the 
maximum extent feasible, with registered apprenticeship programs) in 
housing rehabilitation and construction activities described in 
paragraphs (c)(1) and (2) of this section;
    (2) Occupational skills training;
    (3) Other paid and unpaid work experiences, including internships 
and job shadowing; and
    (4) Job search assistance.
    (c) Other eligible activities include:
    (1) Supervision and training for participants in the rehabilitation 
or construction of housing, including residential housing for homeless 
individuals and families or low-income families, or transitional 
housing for homeless individuals and families;
    (2) Supervision and training for participants in the rehabilitation 
or construction of community or other public facilities, except that, 
as provided in Sec.  672.505(b), not more than 10 percent of the funds 
awarded for each grant may be used for such supervision and training;
    (3) Ongoing training and technical assistance for staff of grant 
recipients that is related to developing and carrying out the 
YouthBuild program;
    (4) Payment of a portion of the administrative costs of the program 
as provided in Sec.  672.505(a);
    (5) Adult mentoring;
    (6) Provision of wages, stipends, or additional benefits to 
participants in the program as provided in Sec.  672.530; and
    (7) Follow-up services as provided in Sec.  672.325.


Sec.  672.315  What timeframes apply to participation?

    An eligible individual selected for participation in the program 
must be offered full-time participation in the program for not less 
than 6 months and not more than 24 months.


Sec.  672.320  What timeframes must be devoted to education and 
workforce investment or other activities?

    YouthBuild grantees must structure programs so that participants in 
the program are offered:
    (a) Eligible education activities, as specified in Sec.  
672.310(a), during at least 50 percent of the time during which they 
participate in the program; and
    (b) Eligible workforce investment activities, as specified in Sec.  
672.310(b), during at least 40 percent of the time during which they 
participate in the program. Grantees must provide the eligible 
workforce investment activities described in Sec.  672.310(b)(1) as 
part of their program of eligible workforce investment activities.
    (c) The remaining 10 percent of the time of participation can be 
used for the activities described in paragraphs (a) and (b) of this 
section and/or for leadership development and community service 
activities.


Sec.  672.325  What timeframes apply for follow-up services?

    Follow-up services must be provided to all YouthBuild participants 
for a period of not less than 9 months but no more than 12 months after 
participants exit a YouthBuild program. These are services that assist 
participants in obtaining or retaining employment, or applying for and 
transitioning to post-secondary education or training.

Subpart D--Performance Indicators


Sec.  672.400  What are the performance indicators for YouthBuild 
grants?

    (a) The performance indicators for YouthBuild grants are:
    (1) Placement in employment or education;
    (2) Attainment of a degree or certificate;
    (3) Literacy and numeracy gains; and

[[Page 9134]]

    (4) Such other indicators of performance as may be required by the 
Secretary.
    (b) We will provide the details of the performance indicators in 
administrative guidance.


Sec.  672.405  What are the required levels of performance for the 
performance indicators?

    (a) Expected levels of performance for each of the common 
performance indicators are national standards that are provided in 
separately issued guidance. Short-term or other performance indicators 
will be provided in separately issued guidance or as part of the SGA or 
grant agreement. Performance level expectations are based on available 
YouthBuild data and data from similar WIA Youth programs and may change 
between grant competitions. The expected national levels of performance 
will take into account the extent to which the levels promote 
continuous improvement in performance.
    (b) The levels of performance established will, at a minimum:
    (1) Be expressed in an objective, quantifiable, and measurable 
form; and
    (2) Indicate continuous improvement in performance.


Sec.  672.410  What are the reporting requirements for YouthBuild 
grantees?

    Each grantee must provide such reports as are required by the 
Secretary in separately issued guidance, including:
    (a) The Quarterly Performance Report;
    (b) The quarterly narrative progress report;
    (c) The financial report; and
    (d) Such other reports as may be required by the grant agreement.


Sec.  672.415  What are the due dates for quarterly reporting?

    (a) Quarterly reports are due no later than 45 days after the end 
of the reporting quarter, unless otherwise specified in the reporting 
guidance issued under Sec.  672.410; and
    (b) A final financial report is required 90 days after the 
expiration of a funding period or the termination of grant support.

Subpart E--Administrative Rules, Costs, and Limitations


Sec.  672.500  What administrative regulations apply to the YouthBuild 
program?

    Each YouthBuild grantee must comply with the following:
    (a) The regulations found in this part.
    (b) The general administrative requirements found in 20 CFR part 
667, except those that apply only to the WIA Title I-B program and 
those that have been modified by this section.
    (c) The Department's regulations on government-wide requirements, 
which include:
    (1) The regulations codifying the Office of Management and Budget's 
government-wide grants requirements: Circular A-110 (codified at 2 CFR 
part 215), and Circular A-102 at 29 CFR parts 95 and 97, as applicable;
    (2) The Department's regulations at 29 CFR part 37, which implement 
the nondiscrimination provisions of WIA section 188;
    (3) The Department's regulations at 29 CFR parts 93, 94, and 98 
relating to restrictions on lobbying, drug free workplace, and 
debarment and suspension; and
    (4) The audit requirements of OMB Circular A-133 stated at 29 CFR 
part 99, as required by 29 CFR 96.11, 95.26, and 97.26, as applicable.


Sec.  672.505  How may grantees provide services under the YouthBuild 
program?

    Each recipient of a grant under the YouthBuild program may provide 
the services and activities described in these regulations either 
directly or through subgrants, contracts, or other arrangements with 
local educational agencies, postsecondary educational institutions, 
State or local housing development agencies, other public agencies, 
including agencies of Indian tribes, or private organizations.


Sec.  672.510  What cost limits apply to the use of YouthBuild program 
funds?

    (a) Administrative costs for programs operated under YouthBuild are 
limited to no more than 15 percent of the grant award. The definition 
of administrative costs can be found in 20 CFR 667.220.
    (b) The cost of supervision and training for participants involved 
in the rehabilitation or construction of community and other public 
facilities is limited to no more than 10 percent of the grant award.


Sec.  672.515  What are the cost-sharing or matching requirements of 
the YouthBuild program?

    (a) The cost-sharing or matching requirements applicable to a 
YouthBuild grant will be addressed in the grant agreement.
    (b) The value of construction materials used in the YouthBuild 
program is an allowable cost for the purposes of the required non-
Federal share or match.
    (c) The value of land acquired for the YouthBuild program is not an 
allowable cost-sharing or match.
    (d) Federal funds may not be used as cost-sharing or match 
resources except as provided by Federal law.
    (e) The value of buildings acquired for the YouthBuild program is 
an allowable match, provided that the following conditions apply:
    (1) The purchase cost of buildings used solely for training 
purposes is allowable; and
    (2) For buildings used for training and other purposes, the 
allowable amount is determined based on the proportionate share of the 
purchase price related to direct training activities.
    (f) Grantees must follow the requirements of 29 CFR 95.23 or 29 CFR 
97.24 in the accounting, valuation, and reporting of the required non-
Federal share.


Sec.  672.520  What are considered to be leveraged funds?

    (a) Leveraged funds may be used to support allowable YouthBuild 
program activities and consist of payments made for allowable costs 
funded by both non-YouthBuild Federal, and non-Federal, resources which 
include:
    (1) Costs which meet the criteria for cost-sharing or match in 
Sec.  672.515 and are in excess of the amount of cost-sharing or match 
resources required;
    (2) Costs which would meet the criteria in Sec.  672.515 except 
that they are paid for with other Federal resources; and
    (3) Costs which benefit the grant program and are otherwise 
allowable under the cost principles but are not allowable under the 
grant because of some statutory, regulatory, or grant provision, 
whether paid for with Federal or non-Federal resources.
    (b) The use of leveraged funds must be reported in accordance with 
Departmental instructions.


Sec.  672.525  How are the costs associated with real property treated 
in the YouthBuild program?

    (a) As provided in paragraphs (b) and (c) of this section, the 
costs of the following activities associated with real property are 
allowable solely for the purpose of training YouthBuild participants:
    (1) Rehabilitation of existing structures for use by homeless 
individuals and families or low-income families or for use as 
transitional housing.
    (2) Construction of buildings for use by homeless individuals and 
families or low-income families or for use as transitional housing.
    (3) Construction or rehabilitation of community or other public 
facilities, except, as provided in Sec.  672.510(b), only

[[Page 9135]]

10 percent of the grant award is allowable for such construction and 
rehabilitation.
    (b) The costs for acquisition of buildings that are used for 
activities described in paragraph (a) of this section are allowable 
with prior grant officer approval and only under the following 
conditions:
    (1) The purchase cost of buildings used solely for training 
purposes is allowable; and
    (2) For buildings used for training and other purposes, the 
allowable amount is determined based on the proportionate share of the 
purchase cost related to direct training.
    (c) The following costs are allowable to the extent allocable to 
training YouthBuild participants in the construction and rehabilitation 
activities specified in paragraph (a) of this section:
    (1) Trainees' tools and clothing including personal protective 
equipment (PPE);
    (2) On-site trainee supervisors;
    (3) Construction management;
    (4) Relocation of buildings; and
    (5) Clearance and demolition.
    (d) Architectural fees, or a proportionate share thereof, are 
allowable when such fees can be related to items such as architectural 
plans or blueprints on which participants will be trained.
    (e) The following costs are unallowable:
    (1) The costs of acquisition of land.
    (2) Brokerage fees.


Sec.  672.530  What participant costs are allowable under the 
YouthBuild program?

    Allowable participant costs include:
    (a) The costs of payments to participants engaged in eligible work-
related YouthBuild activities.
    (b) The costs of payments provided to participants engaged in non-
work- related YouthBuild activities.
    (c) The costs of needs-based stipends.
    (d) The costs of supportive services.
    (e) The costs of providing additional benefits to participants or 
individuals who have exited the program and are receiving follow-up 
services, which may include:
    (1) Tuition assistance for obtaining college education credits;
    (2) Scholarships to an Apprenticeship, Technical, or Secondary 
Education program; and
    (3) Sponsored health programs.


Sec.  672.535  What effect do payments to YouthBuild participants have 
on eligibility for other Federal need-based benefits?

    Under 20 CFR 667.272(c), allowances, earnings, and payments to 
individuals participating in programs under Title I of WIA are not 
considered as income for purposes of determining eligibility for and 
the amount of income transfer and in-kind aid furnished under any 
Federal or Federally-assisted program based on need other than as 
provided under the Social Security Act (42 U.S.C. 301).


Sec.  672.540  What program income requirements apply under the 
YouthBuild program?

    (a) Except as provided in paragraph (b) of this section, program 
income requirements, as specified in the applicable Uniform 
Administrative Requirements at 29 CFR 95.24 and 97.25, apply to 
YouthBuild grants.
    (b) Revenue from the sale of buildings rehabilitated or constructed 
under the YouthBuild program to homeless individuals and families and 
low-income families is not considered program income. Grantees are 
encouraged to use that revenue for the long-term sustainability of the 
YouthBuild program.


Sec.  672.545  Are YouthBuild programs subject to the Davis-Bacon Act 
labor standards?

    (a) YouthBuild programs and grantees are subject to Davis-Bacon 
labor standards requirements under the circumstances set forth in 
paragraph (b) of this section. In those instances where a grantee is 
subject to Davis-Bacon requirements, the grantee must follow applicable 
requirements in the Department's regulations at 29 CFR parts 1, 3, and 
5, including the requirements contained in the Davis-Bacon contract 
provisions set forth in 29 CFR 5.5.
    (b) YouthBuild participants are subject to Davis-Bacon Act labor 
standards when they perform Davis-Bacon-covered laborer or mechanic 
work, defined at 29 CFR 5.2, on Federal or Federally-assisted projects 
that are subject to the Davis-Bacon Act labor standards. The Davis-
Bacon prevailing wage requirements apply to hours worked on the site of 
the work.
    (c) YouthBuild participants who are not registered and 
participating in a training program approved by the Employment and 
Training Administration must be paid not less than the applicable wage 
rate on the wage determination for the classification of work actually 
performed.


Sec.  672.550  What are the recordkeeping requirements for YouthBuild 
programs?

    (a) Grantees must follow the recordkeeping requirements specified 
in the Uniform Administrative Requirements, at 29 CFR 95.53 and 29 CFR 
97.42, as appropriate.
    (b) Grantees must maintain such additional records related to the 
use of buildings constructed or rehabilitated with YouthBuild funds as 
specified in the grant agreement or in the Department's guidance.

Subpart F--Additional Requirements


Sec.  672.600  What are the safety requirements for the YouthBuild 
program?

    (a) YouthBuild Grantees must comply with 20 CFR 667.274, which 
applies Federal and State health and safety standards to the working 
conditions under WIA-funded projects and programs. These health and 
safety standards include ``hazardous orders'' governing child labor 
under 29 CFR part 570 prohibiting youth ages 16 and 17 from working in 
identified hazardous occupations.
    (b) YouthBuild grantees are required to:
    (1) Provide comprehensive safety training for youth working on 
YouthBuild construction projects;
    (2) Have written, jobsite-specific, safety plans overseen by an on-
site supervisor with authority to enforce safety procedures;
    (3) Provide necessary personal protective equipment to youth 
working on YouthBuild projects; and
    (4) Submit required injury incident reports.


Sec.  672.605  What are the reporting requirements for youth safety?

    YouthBuild grantees must ensure that YouthBuild program sites 
comply with the Occupational Safety and Health Administration's (OSHA) 
reporting requirements in 29 CFR part 1904. A YouthBuild grantee is 
responsible for sending a copy of OSHA's injury incident report form, 
to U.S. Department of Labor, Employment and Training Administration 
within 7 days of any reportable injury suffered by a YouthBuild 
participant. The injury incident report form is available from OSHA and 
can be downloaded at http://www.osha.gov/recordkeeping/RKforms.html. 
Reportable injuries include those that result in death, days away from 
work, restricted work or transfer to another job, medical treatment 
beyond first aid, or loss of consciousness.


Sec.  672.610  What environmental protection laws apply to the 
YouthBuild program?

    YouthBuild Program grantees are required, where applicable, to 
comply with all environmental protection statutes and regulations.

[[Page 9136]]

Sec.  672.615  What requirements apply to YouthBuild housing?

    (a) YouthBuild grantees must ensure that all residential housing 
units which are constructed or rehabilitated using YouthBuild funds 
must be available solely for:
    (1) Sale to homeless individuals and families or low-income 
families;
    (2) Rental by homeless individuals and families or low-income 
families;
    (3) Use as transitional or permanent housing for the purpose of 
assisting in the movement of homeless individuals and families to 
independent living; or
    (4) Rehabilitation of homes for low-income homeowners.
    (b) For rentals of residential units located on the property which 
are constructed or rehabilitated using YouthBuild funds:
    (1) The property must maintain at least a 90 percent level of 
occupancy for low-income families. The income test will be conducted 
only at the time of entry for each available unit or rehabilitation of 
occupant-owned home. If the grantee cannot find a qualifying tenant to 
lease the unit, the unit may be leased to a family whose income is 
above the income threshold to qualify as a low-income family but below 
the median income for the area. Leases for tenants with higher incomes 
will be limited to not more than two years. The leases provided to 
tenants with higher incomes are not subject to the termination clause 
that is described in paragraph (b)(2) of this section.
    (2) The property owner must not terminate the tenancy or refuse to 
renew the lease of a tenant occupying a residential rental housing unit 
constructed or rehabilitated using YouthBuild funds except for serious 
or repeated violations of the terms and conditions of the lease, for 
violation of applicable Federal, State or local laws, or for good 
cause. Any termination or refusal to renew the lease must be preceded 
by not less than a 30-day written notice to the tenant specifying the 
grounds for the action. The property owner may waive the written notice 
requirement for termination in dangerous or egregious situations 
involving the tenant.
    (c) All transitional or permanent housing for homeless individuals 
or families or low-income families must be safe and sanitary. The 
housing must meet all applicable State and local housing codes and 
licensing requirements in the jurisdiction in which the housing is 
located.
    (d) For sales or rentals of residential housing units constructed 
or rehabilitated using YouthBuild funds, YouthBuild grantees must 
ensure that owners of the property record a restrictive covenant at the 
time that an occupancy permit is issued against such property which 
includes the use restrictions set forth in paragraphs (a), (b), and (c) 
of this section and incorporates the following definitions at Sec.  
672.110: Homeless Individual; Low- Income Housing; and Transitional 
Housing. The term of the restrictive covenant must be at least 10 years 
from the time of the issuance of the occupancy permit, unless a time 
period of more than 10 years has been established by the grantee. Any 
additional stipulations imposed by a grantee or property owner should 
be clearly stated in the covenant.
    (e) Any conveyance document prepared in the 10-year period of the 
restrictive covenant must inform the buyer of the property that all 
residential housing units constructed or rehabilitated using YouthBuild 
funds are subject to the restrictions set forth in paragraphs (a), (b), 
(c), and (d) of this section.

    Signed at Washington, DC, this 26th day of January 2012.
Jane Oates,
Assistant Secretary, Employment and Training Administration.
[FR Doc. 2012-2373 Filed 2-14-12; 8:45 am]
BILLING CODE 4510-FT-P