[Excerpt from Federal Register / Vol. 59, No. 170 / Friday, September 2, 1994 / 45815 (amendments to JTPA regulations)] Title II-A--The Adult Program Most of the general requirements of title II-A appear in subpart E of part 628 of the interim final rule. There are a few specific requirements of title II-A which appear in part 628, subpart F. These include sections on eligibility; requirements to assist hard-to-serve individuals; types of training services, counseling and supportive services; and linkages and coordination. In response to commenters who were confused about whether the provisions of the formula for allocation of funds set a maximum age of participation at 72 years, Sec. 628.605(a) is amended to clarify that there is no maximum age of participation. A few commenters asked for clarification on the determination of the 65-percent threshold of serving the hard-to-serve. Section 628.605(c)(1) is amended to clarify that all participants, including the non-disadvantaged (10 percent window), are considered in determining the 65 percent who are hard-to-serve. Section 628.605(c)(2) now addresses the question of when, in the service continuum, an individual is counted for determining compliance with the 65-percent barrier requirement by clarifying, as discussed earlier, that it is calculated upon participants who have received a service subsequent to objective assessment. Several commenters questioned the inconsistency in the provisions regarding the ten-percent window in section 204(d) of the Act and the provisions for eligibility in the basic title II-A program, set forth in Sec. 628.605(e), when an older worker is in a joint program between JTPA and title V of the Older Americans Act. As discussed in connection with the provisions of Sec. 628.320, this inconsistency has been addressed by the Congress in amendments to the Older Americans Act. Finally, on the regulatory provisions of Sec. 628.605(c) and Sec. 628.803(d) addressing the 65-percent requirement, several commenters asked what would be the ramifications of non-compliance. Of course, the Department does not expect difficulty in meeting these requirements. Since the Act imposes these percentage service requirements, as well as the requirement on the in-school, out-of- school 50/50-percent ratio, on participants and not to funds, the Department believes that they would be the subject of administrative corrective action by the SDA and, subsequent action by the Governor under the provisions of section 164(b)(1) of the Act and part 628, subpart G of the final rule, as appropriate. Summer Youth Employment and Training Program Subpart G of part 628 covers the Summer Youth Employment and Training Program (SYETP under title II-B, effective with calendar year 1994. It reflects the policy of closer integration for youth between academic fundamentals (such as reading and mathematics) and work requirements. A number of commenters raised issues related to the SYETP authorized under title II-B. Several commenters requested broad flexibility in the scope of the objective assessment and ISS required for summer program participants. Some expressed the fear that these requirements will result in a reduction of the number of SYETP participants due to the increased burden on current staff. The Department recognizes that the achievement objectives and resulting service strategies for summer youth differ from what might be expected in the adult program and that the corresponding assessment processes would vary accordingly. Section 253(c)(1)(A) of the Act states that SYETP programs shall include objective assessment of the basic skills and the supportive service needs of each participant. The SDA may use school records on math and reading levels to determine basic skills. Similarly, the fully developed ISS, described in subpart E, is not required for a participant who is enrolled only in the SYETP, as is reflected in Sec. 628.515(b)(2). For those participants transferring to the year-round program under title II-C, the full objective assessment and ISS would be required. The results of any post-title II-B participation test should be used as part of the assessment process when transferring the individual to a program under title II-C. Within the limits imposed by any applicable state or local privacy laws or rules, SDA's are encouraged to make as much use as possible of existing information from schools and from title II-B participation in developing the full objective assessment for a transferring participant, as well as sharing available JTPA information with school counselors and other appropriate school officials. A few commenters addressed the inability of SDA's to provide the required basic and remedial education services without reducing the number of youth served or other services to youth. While this is a difficult tradeoff in some areas, the Department is bound by the emphasis in the amendments to provide educational services to participants. In some instances, it may be necessary to reduce the number of participants served in order to get high-quality experiences under title II-B. Coordination and leveraging of resources is recommended to allow more participants to receive educational services. In order to more closely conform to sections 251 and 253(a) of the Act, Sec. 628.701(a), on Program Goals and Objectives, is amended. The ``enhancement of basic educational skills'' is added to the list of possible SDA goals and objectives. Other additions include ``encouragement of school completion or enrollment in supplementary or alternative school programs'' and ``improvement of employability skills including provision of vocational exploration opportunities and exposure to the world of work, and enhancement of youth citizenship skills.'' A few commenters spoke of various difficulties involved with the determination and documentation of eligibility under the National School Lunch Act. Guidance on eligibility verification pertaining to the determination and documentation of eligibility under the National School Lunch Act will be developed in consultation with the Department of Agriculture and will be provided outside of these regulations. See the further discussion of this subject in the section pertaining to programs under title II-C. For the reasons discussed previously, in connection with eligibility for the education coordination grant program, the Department has determined that the criteria for eligibility, as they relate to the ``economically disadvantaged'' eligibility criterion and alternatives for in-school youth, should be consistently applied across programs under parts A, B, and C of title II of the Act. Therefore, in addition to eligibility for free lunch under the National School Lunch Act, the Department adds participation in a compensatory education program under title I chapter I of the Elementary and Secondary Education Act and in a schoolwide program, as specified at section 263(g) of the Act, to the criteria at Sec. 628.702 of the final rule. In response to commenters who raised the issue of the perceived limitation of 500 hours on the duration of work experience for youth and its effect on the summer program, the Department refers to the discussion of work experience that appears in connection with Sec. 627.245 and the fact that the limitations on duration of work experience are removed. Section 628.705(d), dealing with concurrent enrollment, is amended to clarify that 65 percent of the total number of title II-C participants shall have one or more barriers to employment. This is necessary because no such additional barrier to employment requirement exists in title II-B. The SDA must decide who is enrolled in title II-C programs from title II-B or elsewhere. A new paragraph (e) on follow-up services is added to Sec. 628.705. Section 253(d) of the Act requires that followup services be provided for participants if the ISS indicates that such services are appropriate. Title II-B funds may be used such follow-up services up to one year after program participation, including when this coincides with title II-C participation when determined appropriate during participation in the title II-B program and recorded in the participant record. All supportive services in section 4(24), except financial assistance, are included in followup services. Appropriate followup activities for title II-B participants include counseling, mentoring, or tutoring. Finally, with the enactment of the Goals 2000: Educate America Act, there were amendments to the program under Title II-B. The Department believes that these are important changes and wishes to call attention to them in this rulemaking process. Therefore, some of the statutory provisions have been directly included in this final rule at Sec. 628. Subpart H--Youth Training Program A number of commenters suggested that the term ``out-of-school youth'' be clarified or defined in Sec. 628.803(h). Several commenters specifically cited attendance in an alternative school or education program as a criterion. A few commenters specifically said that the Congressional Conference Committee Report makes clear that this definition encompasses youth enrolled in alternative education programs. They encouraged the inclusion of alternative education programs in the definition of ``out-of-school youth''. Other comments stressed a combination of options including students attending area learning centers, adult basic education classes, general educational development (GED) preparation, vocational schools, or colleges. Others wanted truants, dropouts, and those on suspension status specifically included. One recommended that the State define out-of-school. A few commenters wanted the term ``in-school youth'' clarified or defined. Some commenters had specific suggestions such as leaving the definition up to the Governor or placing it in Sec. 625.5, Definitions. In an earlier attempt to provide administrative clarification in this area, the Department had provided guidance to the Regional Offices on the definition of ``in-school youth'' and out-of-school youth'' in Field Memorandum No. 34-93. This guidance indicated that an in-school youth was a youth who had not received a high school degree and was attending school on a full-time compulsory basis. An out-of-school youth was a youth who was not in school, or as suggested by the report of the Conferees, was attending alternative school or was habitually truant. In comments to the Department, it was indicated that the interim guidance was problematic for two reasons. First, a 14 or 15-year-old youth attending alternative school would not be eligible to participate if defined as out-of-school since a 14 or 15-year-old could only be eligible as in-school youth. Second, if a youth was in alternative school and considered in-school by the school system, but defined as out-of-school for JTPA, the eligibility criteria of participation in a compensatory education program or eligibility for free lunch could not be applied. The issue is of some interest to the JTPA system, especially in light of the requirement that at least 50 percent of the youth served be out-of-school youth. The Department has given careful consideration to this matter and has determined to take a slightly different course. The regulations define ``in-school youth'' at Sec. 628.803(b). The Department has not included the concept of being subject to compulsory attendance requirements because in some States these requirements end at an age before a youth has attained a diploma and the Department believes that attainment of a diploma is key to the criteria for being in school. The word ``diploma'' is substituted for ``degree'' to distinguish from post-secondary attainment. Any other youth is out-of- school. Rather than further define ``out-of-school'' in a way that would create the problems noted above or create a number of unnecessary exceptions, the Department has decided to adopt, in Sec. 628.803(h), the exceptions suggested in the Conference Report which set forth the requirement that 50-percent of youth served must be out-of-school. The Conference Report indicates that youth in alternative schools or who are ``habitually truant'' may be considered as out-of-school for purposes of meeting the statutory requirement. ``Alternative school'' also is defined. Section 628.803(h) is revised accordingly so that paragraph (h)(2) is redesignated as paragraph (h)(3) and a new paragraph (h)(2) is added. Several commenters were concerned that the status of high school graduates was unclear. The intent of the revision of the definitions in the final rule is to make it clear that all youth who are not in-school are out-of-school. Thus, high school graduates or GED recipients, who are not enrolled in post-secondary education programs, would qualify as out-of-school youth. It should be stressed, however, that the primary intent of including the ``out-of-school'' eligibility category in title II-C was to stress services to high school dropouts. SDA's should focus their services on this group. A few commenters noted the problems with documenting the free lunch program as an eligibility criterion for youth. That program has strict confidentiality provisions. One urged the Department to work with the appropriate agency to improve the existing process. While section 9 of the National School Lunch Act assures confidentiality, schools may release summary information such as the number of eligible children in a school. Parents may sign waivers of confidentiality for specific programs. Households may voluntarily provide evidence of eligibility. The U.S. Department of Agriculture (USDA) is requesting that their regional offices notify State agencies of these regulations and suggest they share this information with local school administrators. The Department plans to work with USDA staff to coordinate this effort. Section 628.803(c) is amended to reflect that the Department will provide further guidance on the verification of documentation regarding the free lunch program. Regarding the requirement to serve hard-to-serve individuals, Sec. 628.803(d)(2) is amended to state that all Job Corps participants shall be considered as out-of-school and shall be automatically considered to have a barrier to employment. This change is made to foster JTPA/Job Corps coordination. SDA's now will have an incentive to provide job development and placement services for Job Corps participants. All positive program terminations will be enjoyed by both systems. A commenter sought clarification as to whether non-economically disadvantaged youth enrolled as a part of a schoolwide project are to be counted as part of the 10 percent non-economically disadvantaged stated in Sec. 628.803(f). As stated in Sec. 628.803(h)(2), these youth do not count against the 10-percent window. Commenters sought clarification of the provisions of the regulations regarding title II-C eligibility based on schoolwide project participation. Section 628.803 is amended to add a paragraph (g)(3) to restate the provisions of the Act on the criteria for schools that qualify for schoolwide projects, and a paragraph (g)(4) which states that the SDA determines its schoolwide projects and provides a list of examples of possible projects. One commenter pointed out that section 263(g)(1)(C) of the Act requires that projects be in schools in which not less than 70 per cent are hard-to-serve and that the regulations should define a reasonable standard to determine this. This is addressed in DOL's Technical Assistance Guide on Eligibility which specifies that the school makes the certification that 70 percent of its students meet the criteria. The SDA may rely upon the school's certification for purposes of compliance. A few commenters suggested that for a school-wide project, an entire school district should be allowed to qualify and not just an individual school. The Department believes that the provisions of the Act clearly apply to an individual school. No change is made to the final rule. Several commenters sought clarification of when SDAs would be required to have complied with the requirement to serve 50-percent youth who are out-of-school. Section 628.803(h)(1) is amended to state that the Governor has the responsibility to determine the period for which the 50 percent out-of-school requirement will be calculated based either on the period covered by the job training plan or on a program year. A few commenters maintained that the term ``dropout'' needed clarification. ``School dropout'' is defined at section 4(38) of the Act as an individual who is no longer attending any school and who has not received a secondary school diploma or a certificate from a program of equivalency for such a diploma. That definition is now referenced at Sec. 628.804(c). There were many comments on title II-C authorized services including limited internships, entry employment experiences, cooperative education, tryout employment, youth work experience, youth OJT, and others. Most of these comments indicated confusion and asked for clarification in a variety of ways. A few commenters wanted limited internships clarified. A few commenters expressed surprise at how open limited internships were compared to OJT with 100-percent wage reimbursement at a private-for- profit employer and no classroom training component. A few commenters thought the provision on entry employment experience was poorly written and confusing. Some wanted clarification on cooperative education. Entry employment experience, cooperative education, and limited internship offer work-based training experiences in a work setting. The Department believes that the particulars of how they are designed and carried out should be a matter of State and local policy, so long as they are consistent with general provisions of the regulations. The Department encourages the development of such work-based training programs in conjunction with education components that reinforce the experience. The 500-hour limitation on entry employment experience and limited internship is removed and Sec. 628.804(h)(2) of the final rule is amended accordingly. With regard to cooperative education programs, the Department wishes to emphasize that, as has been the practice, no subsidized wages may be paid to participants in this activity. In response to commenters who sought clarification of what constituted an alternative course of study, the Sec. 628.803(h)(2) includes examples of an alternative school program including an alternative course of study in connection with the in-school, out-of- school ratio. Section 628.804(b) indicates that the alternative course of study shall be approved by the local educational authority and may be delivered by a CBO. The Department believes that the JTPA rules should not specify the characteristics of an alternative course of study when, in almost all instances, this falls within the responsibility of the local educational authorities. A commenter asked whether tryout employment is allowable under title II-C. Tryout employment previously was described in section 205 of the Act. If conducted under the provisions of title II-C, it would be a kind of entry employment experience. The design of such an activity and the decision to use it is made at the local level. A few commenters stressed that youth work experience should not be limited to 500 hours. As previously discussed, the final rule is revised to clarify that work experience has no duration limitation. Several commenters expressed alarm over the title II-C OJT requirement that the youth OJT wage equal or exceed the average wage at placement of title II-A wage. Commenters stated, in various ways, that the new provisions on OJT for youth will eliminate youth OJT as a program option and that JTPA will lose its ability to serve this special needs population. There were several recommendations on how to compute wage. Several wanted the wage to be computed based totally on youth wages. It is clear that the language at section 264(d)(3)(C)(i)(I) of the Act intends the youth OJT wage to be based on the adult wage in title II-A. Section 628.804(j)(1)(i) is amended to clarify that wages for OJT positions meet or exceed the average wage at placement in the SDA for participants under title II-A ``based on the most recent available data.'' This replaces the language in the interim final rule of ``in the preceding program year.'' Some may still view these provisions as eliminating private sector work for youth. The Act, however, provides other opportunities for youth in the private sector, such as entry employment experience, limited internships, and cooperative education. A few commenters expressed concern that disabled youth will be hurt by the new wage restrictions for youth OJT. These new training options may be developed with the disabled in mind. These options can be used to provide sheltered or supported work experiences for disabled youth similar to those available under OJT. Section 628.804(k) is amended to clarify that supportive services may be provided after termination. They include the full range of supportive services defined at section 4(24) of the Act, except for financial assistance, for up to a year after termination. In the title II-B section of this Preamble, ``follow-up services'' that would help bring JTPA closer to the goal of a year round program for youth are discussed. Part 631--Programs Under Title III of the Job Training Partnership Act A number of comments received by the Department in response to the December 29, 1992, interim final rule specifically addressed title III issues and concerns. The revisions to the regulations for part 631, Programs under Title III of the Job Training Partnership Act, were driven by changes to the legislative provisions contained in the Job Training Amendments of 1992 and the Defense Authorization Act for Fiscal Year 1993. Only those comments pertaining to the proposed regulatory revisions stemming from the legislative changes were considered. After the issuance of the interim final rule, the enactment of the NAFTA Worker Security Act required additional revisions to the regulations. Several commenters recommended editorial changes to the proposed regulatory language. These suggestions were incorporated depending on their accuracy and usefulness. Major comments on the proposed revisions to Part 631, the Department's analysis of and reaction to those comments, and major changes to the final rule are discussed below. Definitions The interim final rule at Sec. 631.2 added an additional definition of ``substantial layoff (for rapid response assistance)'', which establishes a minimum threshold for the provision of rapid response assistance. This minimum threshold cannot be waived, but a new provision, at Sec. 631.30(b)(6), which provides the Governor with alternatives for complying with the threshold and providing rapid response assistance in exceptional circumstances has been clarified. In addition, that provision has been expanded to reflect a requirement of the NAFTA Worker Security Act. A few commenters questioned whether the ``employment loss'' in this new definition relates to a single business or to the geographic area. To maintain consistency with the Worker Adjustment and Retraining Notification (WARN) Act, ``employment loss'' in this context relates to a single site of employment . Regarding the new definition of ``substantial layoff'', another commenter stated that employers periodically lay off, temporarily, 50 or more employees during a 30-day period and then recall these individuals. Therefore, the commenter recommends that rapid response assistance should only be authorized if the duration of a layoff is expected to last for 6 months or more. The Department believes that, after determining a layoff meets the definition of substantial layoff for rapid response assistance purposes, a State is still required to determine, among other things, the expected duration of the layoff, the level of need of the affected individuals and their individual eligibility for services. Ascertaining their need for assistance should include contacting the employer and a representative of the workers. The State should then decide whether or not to offer services based on these determinations. A few commenters believed the new definition would exclude rapid response assistance for numerous small scale reductions and stated that, if the definition could not be altered, more latitude should be given to the States under the ``exceptional circumstances'' provision to respond to smaller layoffs. A commenter suggested expanding ``exceptional circumstances'' to include other situations, and another commenter suggested alternative language for Sec. 631.30(b)(6) to allow the Governor to establish a threshold below 50 for rapid response assistance purposes. Finally, one commenter thought Sec. 631.30(b)(6) directly contradicted the definition of ``substantial layoff (for rapid response assistance)'' and questioned the legislative basis for this new provision. As a statutory provision, the minimum threshold of 50 employees established by the new definition of substantial layoff cannot be waived. However, through Sec. 631.30(b)(6), the regulations do provide flexibility to States to establish policies that allow rapid response assistance to be provided to layoffs of less than 50 workers at a single site. The Governor must establish guidelines defining parameters for ``impact on a local community.'' The only limitation is that States must maintain a capability to respond to single site layoffs of 50 workers or more. In other words, States cannot establish policies which would exhaust their ability to provide effective and timely rapid response to layoffs of at least 50 workers. A few comments reflected concerns with both definitions of substantial layoff or with having two separate definitions. One commenter believed the Governor should have the discretion to reduce the worker threshold below 50, while another believed the definitions must be flexible enough to accommodate local circumstances. A few commenters stated that having two different definitions was administratively confusing and could lead to disallowed costs as a result of the difficulty of ascertaining if the 33 percent threshold had been met. To promote consistency, they recommended using the definition of ``substantial layoff for rapid response purposes'' as the sole definition of the term. Other commenters believed having two distinct definitions established a possible conflict (i.e., individuals who receive services through rapid response assistance may not meet the title III eligibility criteria), and indicated that a single definition of rapid response was preferable. The definitions of ``substantial layoff for participant eligibility'' and of ``substantial layoff for rapid response purposes'' are different as a result of responsive title III policy evolution. Originally, the Department used the WARN definition of ``mass layoff'' to establish a linkage between title III programs and WARN, and to set forth a minimum threshold for the provision of State rapid response services. To provide greater flexibility for State rapid response assistance, Congress provided an additional definition of substantial layoff, but clearly made it exclusively for rapid response purposes. Therefore, the two definitions of substantial layoff will remain intact. Participant Eligibility Broader eligibility rules (criteria) are established in Sec. 631.3(b) for the receipt of selected readjustment and retraining services in instances where an employer makes a public announcement of a plant closure, pursuant to section 314(h) of the Act. A few commenters asked what constitutes a public announcement of a planned closure. One commenter specifically asked what constitutes a public announcement for the State, and if a WARN notice or a letter to the Governor or locally elected official from the employer would suffice. Section 631.3(b)(4) states that ``the Governor shall establish criteria defining `public announcement'. Such criteria shall include provisions that the public announcement shall be made by the employer and shall indicate a planned closure date for the facility (section 314(h) of the Act).'' The Department believes a WARN notice, and most likely a less formal declaration by an employer, would meet these criteria. However, within the parameters established in the regulations, the Governor ultimately determines what constitutes a public announcement of a planned closure. A few commenters questioned what would happen if a decision to close a plant was changed. A few commenters specifically asked what would occur if a decision was reversed (e.g., Would the project be canceled? What happens to the workers who were determined eligible and enrolled? Are they terminated? What impact would a reversal have on cost category limitation, performance standards and outcomes?). They recommended the institution of a hold harmless provision. One commenter asked if an individual would remain eligible for retraining should a closure date be delayed or if an individual in classroom training never received a notice of layoff. Finally, another commenter stated that the participants should not be denied service or experience an interruption in enrollment due to delays in closing dates. The determination of EDWAA eligibility for any of the program's services and activities is determined based on the best information available at the time. If the circumstances upon which the eligibility decision(s) were based change, a reevaluation of the continued need for the services/activities is appropriate. It is expected that consideration would be given to such factors as the exact nature of the employer action (postponement or reversal), where the participant is in the system (e.g., whether the participant is enrolled and participating in a retraining activity), and the impact of a termination on the individual. However, title III expenditures for services/activities to a participant who was correctly determined to be eligible are not, in and of themselves, disallowed costs. A commenter asked how States should define ``plant or facility closing'' within the context of Sec. 631.3(b). Specifically, they asked if WARN rules should be used in defining these terms (i.e., whether line closings within a plant or the elimination of a shift should be considered a plant closing). While the Department believes the WARN rules provide helpful guidance, this determination is left to the discretion of the Governor. Another commenter requested the addition of language requiring the availability of ``rapid response-like activities'' to a firm entering bankruptcy, whether or not a formal public announcement has been made. Section 631.3(b)(1) provides for participant eligibility in the event of a formal public announcement of a plant closure. While no change is made in the final rule, a State may, pursuant to section 314(b) of the Act, provide rapid response assistance after becoming aware of a current or projected permanent closure or substantial layoff. Moreover, the firm's employees may receive the services authorized in section 314 of the Act if they meet the eligibility criteria established at section 301. In assessing the circumstances of an impending bankruptcy, it is expected that the Governor would determine whether the filing would result in a closing, a layoff, or a Chapter 11 restructuring with no contemplated change in manpower. A commenter questioned whether or not a participant had to be enrolled to receive basic readjustment services and if limited basic readjustment services could be provided to eligible workers prior to enrollment into a title III program. Section 314(c) of the Act (Basic Readjustment Services), of course, includes outreach and intake. The Department believes that outreach and intake services include limited assessment of an eligible applicant to allow service providers to evaluate an applicant's suitability for JTPA training and services. The definition of ``participant'' at section 4 of the Act provides that: ``Participation shall be deemed to commence on the first day, following determination of eligibility, on which the participant began receiving subsidized employment, training or other services.'' A few commenters felt that Sec. 631.3(b)(3) inappropriately excluded certain groups from consideration as ``eligible dislocated workers'' pursuant to Sec. 631.3(b). A few believed involuntary, forced and early retirements should be excepted from this provision, since many individuals falling into this category have lost jobs through no fault of their own. Stating that individuals are often forced or ``seduced'' into early retirement, another commenter wished to except any individual who is likely to retire. The exclusion of individuals ``likely to retire instead of seeking new employment'' is statutorily required at section 314(h)(1) of the Act and, therefore, will remain. The Department interprets the Act to preclude services to those who are unlikely to need them because they will remain employed with the employer or because they will retire. The decision about whether any individual who has ``voluntarily'' retired does, in fact, intend to remain unemployed must be made on a case-by- case basis. This decision is best made at the state or local level. Therefore, the Governor is responsible for the interpretation of this phrase and its subsequent application. Another commenter questioned what was acceptable documentation that a person is ``likely to remain employed with the employer or to retire'' when no individual notice is provided. It is within the Governor's discretion to determine what would be acceptable documentation. A new Sec. 631.3(j) is added to set forth the requirements of section 250(b)(2)(C) of the Trade Act of 1974 (19 U.S.C. 2271, et seq.), as amended by the NAFTA Worker Security Act (Title V of Pub. L. 103-182). Approved Training Rule Section 314(f)(2) of the Act states that eligible individuals participating in title III programs may receive unemployment compensation benefits consistent with State policies under the Approved Training Rule and defines eligible workers as those ``participating in training (except on-the-job training).'' The language in the final rule at Sec. 631.4 is revised from participation in ``any of the programs'' to ``any retraining activity, except on-the-job training.'' One commenter thought that limiting the receipt of unemployment compensation benefits to only those trainees participating in a retraining activity was inappropriate. Specifically, the commenter believed trainees in a class providing assessment and the preparation of an individual service strategy (ISS) are not available and looking for work, and they too need compensation. Objective assessment and preparation of an individual readjustment plan are defined in section 314(c) of the Act as basic readjustment services and, therefore, individuals participating solely in these activities fail to meet the criteria established under section 314(f)(2) of the Act and Sec. 631.4. Classification of Costs at State and Substate Levels Section 631.13 was not altered in the interim final regulations. However, a few commenters suggested redefining ``retraining'' to be consistent with ``direct training services'' under titles II-A and II-C and ``basic readjustment services'' to be consistent with ``training- related services'' under titles II-A and II-C. While the Department acknowledges that statutory requirements often present barriers to coordination, it must be pointed out that titles II-A and II-C and title III authorize separate programs with distinct goals, structures, services and requirements. For example, objective assessment is defined in titles II-A and II-C as a direct training service while it is defined in title III as a basic readjustment service. The statute and, in turn, the regulations reflect this fact. Therefore, the different terms with their distinct definitions remain intact in the final rule. Limitations on Certain Costs The basis for computing the cost limitations which apply to expenditures of title III funds has been changed from annual expenditures to program year allocation (for substate grantees), or to funds reserved by the Governor from the program year allotment (for States). This change reflects the amendments to section 315 and recognizes that grantees are permitted to have up to 3 years in which to spend allotted funds, subject to certain adjustments applied through the reallotment process for under-expenditure. Other major changes to this subject area include the addition of Sec. 631.14(i) to clarify that the funds allocated (or distributed) to a substate grantee under the provisions of section 302(c)(1)(E) of the Act shall be included in the substate areas formula allocation for purposes of applying the cost limits, and the addition of Sec. 631.14(h) to allow neighboring substate grantees to combine funds to serve dislocated workers from two or more substate areas. A few commenters asked if it is allowable to provide funds to substate grantees under the provisions of section 302(c)(1)(A)-(D) of the Act and, if so, whether these funds must be considered funds allocated to a substate grantee for the program year of the funds' initial allotment to the State and included in the cost limitations of Sec. 631.14(a)-(c). While funds reserved by a State for activities under section 302(c)(1)(A)-(D) of the Act may be expended through a subgrant or contract with a substate grantee, these funds would still be considered funds allocated to the Governor, as defined at Sec. 631.14(i)(3), for the program year of the funds' initial allotment to the State and included in the cost limitations applicable to the Governor. As the statute allocates these funds to the Governor for the explicit purpose of carrying out responsibilities assigned to the State, expenditures of these funds are to be treated as State-level expenditures, regardless of the operator incurring those expenses. One commenter asked whether TEGL No. 1-90, Change 1, which specified that cost limitations would be calculated based on ``total maximum allowable expenditures'', would remain in effect after July 1, 1993 and if new guidelines would be issued for calculating/determining title III cost limitation compliance. TEGL 1-90, Change 1 was issued on June 18, 1991, and its content was based on the statutory and regulatory provisions effective at that time. The Department will review this TEGL and issue appropriate guidance. This same commenter also asked if the minimum/maximum percentage requirements would be applied to the total final expenditures for each cost category to determine the minimum/maximum amounts after July 1, 1993. In a separate issuance, the Department will issue reporting requirements which will clarify the application of the cost limitations. One commenter discussed the inconsistency between the 15 percent cap on administrative costs under the title III program and the 20 percent cap on administrative costs under the title II-A and II-C programs. For titles II-A and II-C, section 108 of the Act established a revised limit of 20 percent of funds that may be expended for administration. However, as noted above, while the basis for computing the cost limitations which apply to expenditures of title III funds has changed, the statutory provision requiring a 15 percent cap on administrative cost has not. Therefore, this difference between the programs shall remain. Questioning the application of Sec. 631.14(g), one commenter asked if cost limitations must be complied with immediately if funds are deobligated and, therefore, are no longer available. Cost limitations are applied at the time funds are no longer available for expenditure, in other words, when the 3-year availability period ends. When funds are deobligated, the total pool of funds which is available for expenditure is reduced and becomes the new base on which cost limitations will be applied. However, a State or substate grantee still has the entire period of fund availability to comply with the cost limitations as they apply to this new base. Federal Reporting Requirements A new provision was added in the interim final regulations, at Sec. 631.15, requiring the State to provide a breakdown of all administrative expenditures by the dislocated worker unit, pursuant to section 311(b)(11) of the Act. A few commenters asked what cost breakdowns and line items are required in the reports. As indicated in Sec. 631.15, the specifics regarding the reports' content and format will be addressed through instructions to be issued by the Secretary. These were included in the reporting instructions for title III programs for PY 1993. Federal Monitoring and Oversight A new provision is added, at Sec. 631.17, clarifying the Secretary's authority to oversee the State's provision of rapid response assistance and to require corrective action as necessary, as provided for in section 314(b)(3) of the Act. One commenter questioned why the word ``may'' was used in Sec. 631.17 in lieu of the word ``shall'' which is found in the language of section 314(b)(3) of the Act. This section is revised to reflect the language of the Act. By prescribing how rapid response is to occur, another commenter thought this new provision, along with other sections of the regulations, resulted in ``micro-management by the Department'' and reduced the flexibility available to the States and local areas. The Amendments direct the Secretary to conduct oversight of rapid response to ensure the ``effectiveness, efficiency and timeliness'' of these actions. It remains the responsibility of the State to manage its program in accordance with the Act and the regulations. Needs-Related Payments An amended provision in section 314(e)(1) regarding eligibility for needs-related payments requires that a participant be unemployed, and this requirement is incorporated in Sec. 631.20(c). One commenter disapproved of the change since it denies needs- related payments to participants working any number of hours. This commenter indicated that not only were they able to keep the costs of these payments down by having participants work part-time, but full- time students could work part-time and have these earnings supplemented by the payments to allow them to complete their program. As stated above, section 314(e)(1) of the Act clearly states that a participant must be unemployed to receive needs-related payments. As a result, the final rule remains unchanged. Designation or Creation and Functions of a State Dislocated Worker Unit or Office, and Rapid Response Assistance A provision at Sec. 631.30(a)(8) requires the State to immediately (within 48 hours) notify the substate grantee of current or projected layoffs and closures in the local area for the purpose of continuing and expanding upon the services initiated by the rapid response team, as required in section 311(b)(3)(D) of the Act. Moreover, section 311(b)(12) of the Act stipulates that accountability for rapid response assistance resides in the dislocated worker unit (DWU), although the DWU may contract with other entities for the provision of these services. This is reflected in the provisions at Sec. 631.30(b). One commenter questioned whether 48 hours meant 48 working hours and what would happen if the information was made available on a Friday afternoon. The Department believes the Governor is responsible for the interpretation and application of the term ``48 hours.'' Another commenter indicated stronger language needed to be incorporated into the regulations to ensure that the State did not pass off its rapid response responsibilities to the substate grantees. After reviewing Sec. 631.30(b), the Department feels the language adequately addresses this concern. The regulatory provision remains unchanged. Allocation of Funds by the Governor In the Interim Final Regulations, a provision was added to Sec. 631.32(b)(2) to clarify that Governors must give consideration to each of the substate allocation formula factors required by section 302(d) of the Act unless the factor is not relevant to economic dislocation conditions of the State. A few commenters had questions regarding the formula for making substate allocations. One commenter indicated that Sec. 631.32(b)(3) should also allow a zero weight factor to be used where data are not adequate or not provided or funded by a Federal partner. Specifically, they mentioned that plant closing and mass layoff data are no longer funded and farmer-rancher economic hardship data have never been provided by the Department and the USDA. The Mass Layoff Statistics program was temporarily suspended by the Bureau of Labor Statistics. The Department intends to resume the Mass Layoff Statistics Program early in 1995. During the interim period, however, States will have to develop their own data and proxies for mass layoffs. Similarly, States have been responsible for developing their own data and proxies for farmer-rancher economic hardship data. It is inconceivable that a State government would have no idea as to economic circumstances in its own State. If ``a review of the available data indicates that the factor is not relevant to determining the incidence of need for worker dislocation assistance within the State'', then a zero weight may be assigned (Sec. 631.32(b)(3)). However, current lack of data is not an adequate reason for invalidating a factor which is relevant to dislocation activity in the State. Another commenter wondered if the Governor had an obligation beyond the requirements of Sec. 627.463 (public access to records) to publicize the elements of the formula or describe the rationales for them. The Department requires each State Plan to include a description of the State's substate allocation formula methodology, including the data elements and allocation formula to be used. Moreover, pursuant to section 311(b)(9) of the Act, the Plan must be made available to the State job training coordinating council to review and comment on prior to its submittal to the Department. Therefore, through this process, both the State Council and the Department will have an opportunity to examine the within-State distribution formula. Substate Plan While no significant revisions were made to Sec. 631.50 of the regulations, one commenter stated that the interim final rule omits any requirement for SSG's to meet program goals, develop an oversight plan and build capacity and noted that comparable provisions for SDA's are at Sec. 628.420(b)(2), (3) and (c). As stated earlier, the proposed revisions to the regulations for part 631 were driven by changes to the legislative provisions contained in the Job Training Amendments of 1992 and the Defense Authorization Act for Fiscal Year 1993. The Department has chosen not to regulate in areas unaffected by statutory change. Only those comments pertaining to the proposed regulatory revisions stemming from the legislative changes were considered for incorporation into the final rule. Therefore, Sec. 631.50 remains unchanged. Cost Limitations Section 631.62 of the interim final rule stipulated that the cost limitations under part A of title III will apply to projects operated under part B of title III, except when waived or altered by the application guidelines, or by the Grant Officer in the terms of the grant. In response to comments, the Department has modified this provision in the final rule. The Department still intends to use the title III-A cost limitations in cases where applicants for grants do not ask for a different allocation of costs among the cost categories, but the Department does not wish to discourage applicants from designing their programs in the manner that will best serve the affected population. The final rule is revised to make it clear that applicants for grants can propose costs and that the Grant Officer has the discretion to accept them. It is the Department's intent to provide grant applicants flexibility in designing the mix of services in their programs. However, the Department will agree to proposals with administrative cost in excess of 15% only in extraordinary circumstances. One commenter asked if this provision will apply to the Defense Conversion Adjustment (DCA) Program projects currently in operation or whether these projects will continue to operate under the regulations in effect at the time of award. Each discretionary project is subject to the grant agreement and modifications as approved by the Grant Officer. Modifications to an existing grant may be requested by the grantee and agreed to by the Grant Officer according to the provisions of this final rule. Finally, three commenters discussed the difficulty of applying the Act's section 315 cost limitations to Clean Air Employment Transition Assistance projects. As stated above, the cost limitations in the grant agreement control, however, modifications to existing grants may be requested. For future grants, applicants are free to apply for other cost limits that fit their programs. Reporting A provision was added at Sec. 631.63 of the interim final rule, setting forth the Federal reporting requirements for recipients of title III discretionary grants, consistent with section 322(a)(4) of the Act. One commenter thought the process for notifying the Secretary regarding significant developments concerning the grant or subgrant was too complicated and could delay the implementation of the project and workers' access to services. Section 631.63(b) simply requires the grantees to provide information to the Department on any significant developments that impact the project. This reporting requirement should not affect or delay the project's execution. Special Provisions for CAETA and DDP Programs Section 631.60 has been clarified to state that Subpart G relates to programs and funds reserved to the Secretary for use under part B of title III of the Act: Including section 323 (20% discretionary funds); section 324 (Demonstration Programs); section 325 (Defense Conversion Adjustment Program); section 325A (Defense Diversification Program); and section 326 (Clean Air Employment Transition Assistance). The National Defense Authorization Act for 1993 authorized the Defense Diversification Program (DDP) as an amendment to JTPA, at section 325A. Its purpose is to provide retraining and readjustment assistance to workers and military personnel dislocated by defense cutbacks and closures of military facilities; and to provide planning support and conversion assistance for diversification of affected facilities within an area impacted by reductions in military expenditures or closure of military facilities. Section 631.65(c) of this final rule prescribes the needs-related payments procedure in accordance with the requirements in section 326(f) of the Act, as required by section 325A(i) of the Act. The Clean Air Act is administered by the Environmental Protection Agency; however, the Clean Air Act Amendments of 1990, Pub. L. 101-549, at section 110(a), amended the Job Training Partnership Act by adding a new section 326, establishing the Clean Air Employment Transition Assistance (CAETA) program. Section 326 is designed to assure the establishment of programs to provide assistance to workers dislocated as a result of a firm's compliance with the Clean Air Act. The purpose of these programs is to provide readjustment and retraining assistance to eligible workers to enable such workers to return to work. The Department published proposed CAETA regulations for comment on March 24, 1992 (57 FR 10232). Thirteen State, substate entities and other organizations submitted comments. Upon review, the Department has determined that there is no programmatic justification to have separate regulations for Clean Air. It is necessary, however, to make specific provision in the JTPA regulations for specific statutory requirements applicable to the CAETA program. The specific statutory requirements for that program are implemented herein at Sec. 631.65. Most of the comments received pursuant to the proposed regulations requested clarification of general JTPA title III areas that were subsequently addressed in the Interim Final Regulations on December 29, 1992 (57 FR 62004). The following discussion relates to comments on issues specific to the Clean Air Act. Administration of Clean Air Act One commenter suggested including a statement that the Clean Air Act is administered by the Environmental Protection Agency. DOL agrees with this comment and has added this statement in the preamble. Needs-Related Payments Several comments were received on the provisions of needs-related payments. One commenter indicated that the language in the proposed regulations might discourage grant applicants from serving those eligible for payments so they can conserve funds for training, and that applicants could perceive ETA as biased toward proposed grants with limited needs-related payments (NRP's). It was also believed that grant applicants should be encouraged to seek eligible dislocated workers most-in-need, particularly those requiring income support during training. The language at Sec. 631.65(c) of the final rule is intended to reflect the statutory requirement that CAETA programs provide for adequate needs-related payments. The language is not intended to permit a programmatic restriction against those dislocated workers who are eligible to receive NRP's. Another commenter raised a question about when grantees should start using family income to determine eligibility for needs-related payments. The Department agrees that there should be a time frame; it is only upon actual enrollment in a training and/or education program that one becomes eligible for consideration to receive needs-related payments. Individual or family income for the six-month period immediately prior to a participant's enrollment in training and education programs is to be annualized to determine eligibility for needs-related payments. One commenter stated that the determination of family income at the time of eligibility determination, and that the three-month re- determination requirement in the proposed rule would create administrative burdens. The determination of family income only applies to those dislocated workers who (1) have been determined eligible pursuant to section 326(a) of the Act, (2) have exhausted or are not eligible for unemployment compensation benefits, and (3) have been enrolled in training and education programs pursuant to section 326(f) of the Act. Section 326(f)(4) of the Act requires adjustments reflecting changes in family income. The final rule is revised to require that eligibility determinations ``shall be reviewed periodically;'' however, it is expected that an equitable system would be outlined in a grant application. It is expected that a grantee's system would be sensitive to participants' probable decreasing family income (depending upon the date of layoff) under the six-month income determination rule. Another commenter suggested clarifying restrictions on needs- related payments to participants when relocation, out-of-area job search, or TAA allowances have ceased, or when OJT has been completed. The statute requires that needs-related payments be available to enable participants to complete training or education programs. Relocation and out-of-area job search allowances would normally be provided to participants who possess marketable skills, and, therefore, are not enrolled in training or education. If TAA allowances were being provided for training or education, needs-related payments may be used when TAA allowances are exhausted (if a participant is otherwise eligible for and enrolled in an education or training program under CAETA). After OJT, a participant ordinarily is employed and receives wages from the employer. If the participant is not employed, NRP's could only be made if the participant is enrolled in other training. Two commenters asked what constitutes ``satisfactory progress'' in order for a participant to continue to receive NRP's, and how often this determination must be made. The Department expects a grant application to define a system to address this issue, based upon the training to be provided. A commenter believed that the wording in the proposed rule, that grantees must provide needs-related payments, seemed less definitive and suggested stating whether the projects will be funded without providing for payments to any participant. Another commenter suggested having States check the needs-related payment policies of SDA's before initiating the needs-related payments requirement. Two commenters suggested using the same eligibility criteria for needs-related payments for CAETA as are used in other title III programs. Two commenters suggested allowing State or local flexibility in determining who receives payments and payments policy. Another commenter suggested that it would be confusing to make the needs-related payment rate applicable to the weekly unemployment compensation payment level or to the poverty level, which the commenter believed would limit the number of eligible individuals in classroom training. The Department is unable to accede to the requests of these commenters. Needs-related payments are discretionary under title III of JTPA, and grantees have some flexibility in providing such payments. However, under section 326(c)(2) of the Act, CAETA funds must be used to provide needs-related payments in accordance with the requirements set forth at section 326(f) of the Act. Similarly, section 325A(i) of the Act provides that in DDP programs, needs-related payments must be made in accordance with section 326(f). The Act requires that the Secretary prescribe regulations with respect to needs-related payments for CAETA and DDP. The needs-related payments regulations at Sec. 631.65(c) follow the statutory requirements at section 326(f) of the Act. Because of these statutory requirements of CAETA and DDP, grantees have little discretion and must provide needs-related payments in the manner set forth in Sec. 631.65(c). One commenter suggested developing regulations that require grantees to document reasons for denial of payments and give opportunities for participants who had payments suspended to seek redress up to and including the federal level. The Department agrees that grantees should include descriptions of systems in grant applications which document payments, reasons for denial of payments and suspensions. In addition, the regulations at Sec. 631.64 require each grantee to establish and to maintain a grievance procedure which, among other things, would handle grievances related to needs-related payments. The regulations at subpart F of 20 CFR part 627 provide procedures for the federal handling of allegations of violations of the Act or regulations. Participant Eligibility Nine commenters raised questions regarding participant eligibility provisions for dislocated workers under CAETA. One commenter suggested expanding the eligible population to workers needing skills upgrading or retraining on new or modified equipment. Sections 301 and 326(a) of the Act establish eligibility criteria for CAETA. Dislocated workers may receive skills training in the same occupation in which they were previously employed if their current skills are obsolete, and such training is required for them to meet the local labor market hiring requirements for that occupation. Two commenters suggested including a statement regarding the eligibility of workers who had been laid off from mines that supply coal to plants. The Department agrees that workers dislocated from mines as a result of compliance with the Clean Air Act would be eligible. Another commenter raised the question of how one determines that an individual's dislocation is the consequence of compliance with the Act if the layoff notice does not specifically mention the impact of the Clean Air Act, and whether the grantee has to assure verification is done for each applicant. The CAETA grantee must determine and document that a layoff is Clean Air Act-related and must verify that each applicant was a part of such layoff. The application guidelines will provide for reasonable documentation which could establish that the layoff was related to the Clean Air Act. Another commenter suggested allowing temporary employment with the employer from which the worker was dislocated. Participant eligibility for enrollment in CAETA is specified at section 326(a) of the Act. The Department believes that temporary employment with the same employer is inconsistent with the definition of dislocation and is restricted at Sec. 631.3(i)(2). Eligible Grantees The Department received seven comments regarding entities eligible to apply for grants under CAETA. Three commenters indicated that submitting applications directly to the Department of Labor, rather than through the State, could lead to such problems as a lack of coordination, and duplication. Another commenter suggested that recipients should provide assurances that they are administratively capable of operating the program. Two commenters suggested that limiting eligible grantees to States and territories of the United States would ensure coordination with State entities and SSGs. Section 326(b) of the Act permits the Secretary to recognize five types of eligible grantees, and it does not require applicants to apply through the State. The Department recognizes that there would be benefits to submitting all applications through the States, and encourages such action. It should be noted, however, that an ``eligible grantee'' may not be an appropriate applicant for a particular project. The nature and extent of the proposed project, and the capacity of an applicant, will be factors in evaluating an application and an applicant's ability to perform the work. Subpart I--Disaster Relief Employment Assistance A new Subpart I, to be administered under the title III National Reserve Grants program, provides for Disaster Relief Employment Assistance, as authorized by the new Amendments to title IV-J of the Act. Section 631.84(a) discusses the projects that a unit of general local government in a disaster area may operate under this subpart. One commenter suggested substituting the phrase, ``Davis-Bacon provisions shall apply on all projects related to demolition, cleanup, repair * * *'' for ``on projects regarding demolition, cleanup, repair * * *.'' While Davis-Bacon does apply to Federal programs, the inclusion of this phrase does not change or clarify the meaning of this provision. Therefore, the section will remain unchanged. Section 631.85 outlines the participant eligibility criteria under the Disaster Relief Employment Assistance Program. The statutory language regarding eligibility is not accurately reflected in this section. The final rule is revised to correct this problem. In addition, one commenter thought the Department should have the authority to declare persons who are eligible for titles II-A and II-C programs eligible for title III Disaster Relief Programs. Since the statute does not grant the Department this blanket authority, expansion of participant eligibility criteria will not occur. Section 631.86 limits the length of disaster relief employment. One commenter questioned the difference between this type of employment and public service employment which is prohibited under titles II and III. Although the statute prohibits public service employment funded under title II-A and C and title III-A, public service employment is contemplated under title IV-J of the Act. Disaster relief employment is narrowly defined and exclusively limited to the activities described under Sec. 631.84. Allowable activities will not be expanded beyond the statutorily established parameters. This same commenter asked how costs incurred for disaster relief employment should be classified and what criteria should be used in determining the monetary extent to which a cost category has benefited. The Department has chosen not to issue detailed regulations for this program. Specific information regarding Disaster Relief Employment Assistance projects, including any guidance on cost classification issues, will be contained in application guidelines published by the Secretary. Until they are issued, an applicant for these funds should follow the guidelines and information published in the July 9, 1992 Federal Register regarding Emergency Dislocated Worker Projects. PART 637--JOBS FOR EMPLOYABLE DEPENDENT INDIVIDUALS (JEDI) Several commenters addressed this section of the interim final regulations. The majority of the comments addressed inconsistencies in the numbering of the sections and in the cross-references. The part has been revised to correct the numbering. In addition, several of the commenters raised questions concerning how the program can be implemented in the absence of any Congressional appropriation. While bonuses will not be awarded under title V of the Act until funds are appropriated by Congress, individuals who are eligible to be counted for title V purposes may be served under other titles of the Act. Since those individuals who would be eligible to be counted for the incentive bonuses under title V must also be eligible for, and have participated in, other activities under the Act, the costs associated with their participation in these activities would be charged to the appropriate program(s) and title(s) of the Act. If a State wishes to participate in the title V bonus program, if it is ever funded, the State may wish to keep track of the outcomes of training for individuals eligible to be counted for bonus purposes. Effective Date The Department recognizes that the regulations are being issued after the beginning of a program year. To avoid administrative difficulties, the Department has made the effective date of the regulations June 30, 1995, the beginning of Program Year 1995. This will give states and SDA's/SSG's time to plan for the changes that may result from the amendments made in this final rule. States or SDA's/ SSG's are, of course, free to implement any of the changes that they find will benefit their programs earlier than the effective date and the Department will treat those changes as legally effective when adopted in any subsequent monitoring or audit resolution activity. Consistent with the Department's desire to enable states and SDAs to implement the beneficial changes in the final rule as quickly as they choose, the provisions of Sec. 627.210, authorizing the Department to grant waivers of regulatory requirements are made effective within 30 days of publication to enable states to apply for waivers to be effective before the beginning of PY 1995. Catalog of Federal Domestic Assistance Number These programs are listed in the Catalog of Federal Domestic Assistance at No. 17-246, ``Employment and Training Assistance-- Dislocated Workers'' (JTPA Title III Programs); and No.17-250, ``Job Training Partnership Act (JTPA)'' (JTPA Titles I, II, and V Programs). List of Subjects in 20 CFR Parts 626 Through 631 and 637 Dislocated worker programs, Grant programs, Labor, Manpower training programs. [click on ''Back'' to return to Index to continue]