[Federal Register Volume 75, Number 63 (Friday, April 2, 2010)]
[Rules and Regulations]
[Pages 16988-17002]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-6697]
[[Page 16987]]
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Part IV
Department of Labor
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Employment and Training Administration
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20 CFR Part 618
Trade Adjustment Assistance; Merit Staffing of State Administration and
Allocation of Training Funds to States; Final Rule
Federal Register / Vol. 75 , No. 63 / Friday, April 2, 2010 / Rules
and Regulations
[[Page 16988]]
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DEPARTMENT OF LABOR
Employment and Training Administration
20 CFR Part 618
RIN 1205-AB56
Trade Adjustment Assistance; Merit Staffing of State
Administration and Allocation of Training Funds to States
AGENCY: Employment and Training Administration, Labor.
ACTION: Final rule.
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SUMMARY: The Employment and Training Administration (ETA) of the
Department of Labor (Department) issues this final rule to implement
changes to the regulations for the Trade Adjustment Assistance for
Workers (TAA) program under the Trade Act of 1974, as amended (Trade
Act). This rule requires that personnel engaged in TAA-funded functions
undertaken to carry out the worker adjustment assistance provisions
must be State employees covered by a merit system of personnel
administration. This rule also prescribes the system for allocating
training funds to the States, as required by amendments to the Trade
Act contained in the American Recovery and Reinvestment Act of 2009,
commonly called the Recovery Act. The Recovery Act included provisions
which reauthorized and significantly amended the TAA program.
DATES: Effective Date: This final rule is effective May 3, 2010.
FOR FURTHER INFORMATION CONTACT: Erin FitzGerald, Office of Trade
Adjustment Assistance, U.S. Department of Labor, 200 Constitution
Avenue, NW., Room N-5428, Washington, DC 20210; telephone (202) 693-
3560 (this is not a toll-free number).
Individuals with hearing or speech impairments may access the
telephone number above via TTY by calling the toll-free Federal
Information Relay Service at 1-800-877-8339.
SUPPLEMENTARY INFORMATION: The Department issued a notice of proposed
rulemaking (NPRM) proposing these TAA regulations on August 5, 2009.
This final rule takes into consideration all comments received on the
NPRM. This rule creates a new 20 CFR part 618.
The preamble to this final rule is organized as follows:
I. Background--provides a brief description of the development of
the rule.
II. Subpart-by-Subpart Review--summarizes and discusses comments on
the TAA regulations.
III. Administrative Information--sets forth the applicable
regulatory requirements.
I. Background
The TAA program, authorized under Chapter 2 of Title II of the
Trade Act (19 U.S.C. 2271 et seq.), provides adjustment assistance for
workers whose jobs have been adversely affected by international trade.
TAA assistance includes training, case management and reemployment
services, income support, job search and relocation allowances, a wage
supplement option for older workers, and eligibility for a health
coverage tax credit. There are two steps for workers to obtain program
benefits. A group of workers, or specified entities, must file with the
Department and the State in which the jobs are located a petition for
certification of eligibility to apply for TAA benefits and services. If
the Department certifies the petition, based upon statutory criteria
that test whether the group of workers was adversely affected by
international trade, then the workers may individually apply with the
Cooperating State Agency (CSA) for TAA benefits and services.
The States administer the provision of benefits and services in the
TAA program as agents of the United States. Each State does so through
a State agency designated as the CSA in a Governor-Secretary Agreement
between the State's Governor and the United States Secretary of Labor
(Secretary), as required under section 239 of the Trade Act. The CSA
may also include the State Workforce Agency (if different) and other
State or local agencies that cooperate in the administration of the TAA
program, as provided in the Governor-Secretary Agreement.
The Trade and Globalization Adjustment Assistance Act of 2009
(TGAAA), part of the Recovery Act (Pub. L. 111-5, Div. B, Title I,
Subtitle I, 123 Stat. 115), reauthorized and substantially amended the
TAA program by revising the certification criteria to expand the types
of workers who may be certified and by expanding the program benefits
available to workers who are covered by a certification (adversely-
affected workers or adversely-affected incumbent workers, referred to
collectively in this notice as ``adversely-affected workers''). The
TGAAA amendments generally apply to adversely-affected workers covered
under petitions for certification filed on or after May 18, 2009, and
before January 1, 2011. To incorporate into regulations the substantial
changes to the TAA program, the Department is creating a new 20 CFR
part 618, which will implement the TAA program regulations that will
succeed the current TAA program regulations in 20 CFR part 617. This
rulemaking is relatively narrow in scope; it addresses only the
staffing of TAA-funded functions and the allocation of TAA training
funds to the States. A later NPRM will propose the remainder of 20 CFR
part 618.
On August 5, 2009, the Department published an NPRM proposing two
actions (74 FR 39198). The first was a requirement that, after a
transition period, a State must engage only State government personnel
to perform TAA-funded functions undertaken to carry out the worker
adjustment assistance provisions of the Trade Act, and must apply to
these personnel the standards for a merit system of personnel
administration, in accordance with Office of Personnel Management (OPM)
regulations at 5 CFR part 900, subpart F. These OPM regulations specify
the merit system standards required for certain Federal grant programs.
These standards have always been required for personnel administering
Unemployment Insurance (UI) (section 303(a)(1) of the Social Security
Act) and Wagner-Peyser Act--funded Employment Service (ES) programs in
the States (20 CFR 652.215), and were required for personnel
administering TAA from 1975 until 2005 under the Governor-Secretary
Agreements.
The merit system standards contained in the OPM regulations at 5
CFR 900.603 are as follows:
(a) Recruiting, selecting, and advancing employees on the basis
of their relative ability, knowledge, and skills, including open
consideration of qualified applicants for initial appointment.
(b) Providing equitable and adequate compensation.
(c) Training employees, as needed, to assure high quality
performance.
(d) Retaining employees on the basis of the adequacy of their
performance, correcting inadequate performance, and separating
employees whose inadequate performance cannot be corrected.
(e) Assuring fair treatment of applicants and employees in all
aspects of personnel administration without regard to political
affiliation, race, color, national origin, sex, religious creed, age
or handicap and with proper regard for their privacy and
constitutional rights as citizens. This ``fair treatment'' principle
includes compliance with the Federal equal employment opportunity
and nondiscrimination laws.
(f) Assuring that employees are protected against coercion for
partisan political purposes and are prohibited from using their
official authority for the purpose of interfering with or affecting
the result of an election or a nomination for office.
In the NPRM, the Department stated that the purpose of requiring
the application of these merit principles to State administration of
the TAA program is to promote consistency,
[[Page 16989]]
efficiency, accountability, and transparency.
In addition to the merit staffing requirement, the second
regulatory action proposed in the NPRM concerned the methodology by
which the Department allocates training funds to the States. (The TGAAA
uses the term ``apportion'' when discussing the dividing of training
funds among the States. However, this final rule uses the term
``allocation''' to avoid confusion, since customarily the Office of
Management and Budget (OMB) ``apportions'' appropriated funds to the
Department, which then ``allocates'' them to the States.) Before fiscal
year (FY) 2004, the Department allocated training funds through a
request process on a first-come, first-served basis; all distributions
of TAA training funds were made in response to a State's request. This
resulted in the Department distributing the majority of available TAA
training funds early in the year, resulting in early exhaustion as TAA
training funds are subject to a statutory maximum annual funding level,
or ``cap.'' Later needs were addressed through National Emergency Grant
funds, provided under Section 173 of the Workforce Investment Act of
1998 (WIA) (29 U.S.C. 2918). However, this process proved to be
inefficient, lengthy, and cumbersome, because it did not provide States
with a predictable level of funding.
Therefore, starting in fiscal year 2004, the Department issued
annual guidance establishing a formula for distributing TAA training
funds to the States. The Department initially allocated 75 percent of
the year's training funds, and held the remaining 25 percent in
reserve, for later use by high-need States. The formula included a
``hold harmless'' feature, whereby the initial allocation to a State
was at least 85 percent of the amount the State received in its initial
allocation the prior fiscal year.
The formula instituted in 2004 had some limitations. Most
significant was the relative inability of the Department to shift TAA
training funds in response to changing economic conditions. This
shortcoming was due in part to the 85 percent hold harmless feature,
and in part to the details of the formula itself. This shortcoming was
compounded by the fact that, under the Department's annual
appropriations acts, appropriated funds, including funds for TAA, must
be obligated (and re-obligated) by the Department within the fiscal
year in which the funds are appropriated; therefore, the Department has
very limited authority to move money between States once the funds are
distributed. The Department is allowed to reclaim unexpended training
funds from a given State, with the State's agreement, and to re-
obligate such funds to other States, if the obligation is carried out
within the same fiscal year the funds were appropriated. As a result,
if a State is allocated FY 2009 training funds, those funds may be
returned to the Department and provided to another State only during FY
2009. After the end of the fiscal year, the Department has no authority
to redistribute any unused funds. Since States have three fiscal years
to expend the funds obligated in any fiscal year, it is often not
apparent that a State does not need all of the funds obligated to it in
the fiscal year in which the funds were allocated. Thus, TAA training
funds that the Department obligates to States within a fiscal year but
remain unexpended by the States after three years are returned directly
to the U.S. Treasury.
Section 1828(a) of the TGAAA amended section 236(a)(2) of the Trade
Act to establish an annual training funding cap of $575 million,
increased from $220 million annually, for fiscal years 2009 and 2010
and $143,750,000 for the period October 1, 2010 through December 31,
2010. The Conference Report on the Recovery Act makes clear that
Congress increased the cap in part because the TGAAA amendments would
result in more individuals being eligible for training benefits, and in
part because in past times of high program participation, training
funding was insufficient. H.R. Rep. No. 111-16, at 672 (2009) (Conf.
Rep.).
The amended section 236(a)(2) also established a methodology for
distributing TAA training funds based on a formula to be determined by
the Department. The Trade Act now provides that the initial
distribution of training funds must equal 65 percent of the training
funds appropriated and that the remaining 35 percent will be held in
reserve. The Department's initial allocation formula must be based on
four factors set forth in the statute.
Section 236(f)(1) of the Trade Act (added by Section 1828(c) of the
TGAAA) directs the Department to issue ``such regulations as may be
necessary to carry out the [allocation] provisions'' on or before
February 17, 2010. This final rule fulfills that statutory requirement.
II. Subpart-by-Subpart Review of the Final Rule
The Department issued a notice proposing these regulations on
August 5, 2009, and received 42 comments. The Department read and
carefully considered each comment in the process of developing this
final rule; the substantive issues raised by the comments that are
germane to the rule are responded to below. Most significantly, the
NPRM proposed that a State not already in compliance with the merit
staffing requirement must comply with this requirement with respect to
the personnel responsible for employment and case management services
under section 235 of the Trade by October 1, 2010. All other TAA
administrative activities would have had to have been merit staffed by
July 1, 2010. The Department has decided, in response to concerns
raised in the comments, to now apply a single, later transition period
for the merit staffing of both administration and employment and case
management services with a compliance deadline of December 15, 2010.
Subpart H--Administration by Applicable State Agencies
As proposed, Sec. 618.890, establishing the merit staffing
requirement, contained four paragraphs. Paragraph (a) set forth the
merit staffing requirement. Paragraph (b) detailed a transition period
for States to come into compliance with this requirement. Paragraph (c)
partially exempted from this merit staffing requirement those States
whose employment service was exempted from the merit staffing
requirement under Wagner-Peyser Act regulations. Paragraph (d)
permitted a State to outsource TAA functions that are not inherently
governmental, as defined in OMB Circular No. A-76 (Revised).
All 42 submissions received in response to the NPRM included
comments on the proposed merit staffing requirement. As explained
below, in response to several comments, the Department revised Sec.
618.890(b) to reflect the adoption of a single transition deadline of
December 15, 2010, for merit staffing of both administrative activities
and employment and case management services.
Merit-Based State Personnel (Sec. 618.890(a))
Paragraph (a) provides that States must engage only State
government personnel to perform TAA-funded functions undertaken to
carry out the worker adjustment assistance provisions of the Trade Act,
and must apply to such personnel the standards for a merit system of
personnel administration applicable to personnel covered under 5 CFR
part 900, subpart F. Section 618.890(a) restores the longstanding
practice of requiring State merit staffed personnel to administer the
TAA
[[Page 16990]]
program. From 1975 through 2005, the Governor-Secretary Agreements
under which the States administer the TAA program as agents of the
United States required that all administrative functions performed by
the States in carrying out the TAA program be performed exclusively by
staff subject to the merit system standards at 5 CFR 900.603. In 2005,
the Governor-Secretary Agreements were modified to provide that TAA
program staff need not be merit staffed, except that employees who
perform functions under both the TAA program and the UI and/or ES
programs must be merit staffed. However, in 2009, the Department
provided advance notice in the Governor-Secretary Agreements that it
would address merit staffing in rulemaking. This rule reinstates, and
codifies in regulation, what had been the Department's longstanding
practice of requiring merit staffing by the States in administering the
TAA program.
The Department presented several rationales in the NPRM for this
requirement. The Department will address the comments made on each
rationale.
Authority
In the NPRM, the Department found authority to promulgate this rule
in section 239 of the Trade Act. The Department received several
comments on this issue.
Some of the commenters questioning our authority asserted that
requiring the use of merit staff runs counter to the clear intent of
Congress in passing the TGAAA. A small number of these commenters
simply pointed out their belief that the proposed rule runs counter to
Congress' intent, while others argued that Congress' intent to exclude
merit staffing is clear from the actions of the Conference Committee
tasked with reconciling the House and Senate bills to reauthorize and
amend the Trade Act. One commenter focused on the House-passed bill,
the Senate bill introduced by Senator Max Baucus, and the actions of
the Conference Committee as relevant legislative history. Another
commenter cited the minority views of the House Committee Report from
2007 (H.R. Rep. No. 110-414, pt. 1, at 119-120) as relevant legislative
history. One commenter asserted that ``because Congress specifically
considered and intentionally rejected [merit staffing] in passing the
TGAAA,'' the Department does not now have the authority to promulgate
such a rule. Another commenter argued that the actions of the
Conference Committee ``precludes an interpretation of section 239 of
the Trade Act that would grant the Department'' the authority to enact
this rule. One commenter suggested that if Congress had intended that
certain TAA functions be provided by State merit staff, it would have
included that provision in the TGAAA.
As an initial matter, the minority opinion in the House Committee
Report is not indicative of Congressional intent. Regarding these
commenters' broader arguments, the Department acknowledges that the
TGAAA did not incorporate provisions that had been included in a bill
passed by the House in the previous Congress during the previous
Administration that would have statutorily mandated the use of merit
staff in the TAA program, but the Conference Committee's failure to
explain its actions precludes a finding that Congress clearly intended
to prohibit the Department from enacting such a requirement through
rulemaking. Courts have consistently stated as a general rule that
Congressional intent cannot be clearly understood where actions taken
by a committee in Congress, including the Conference Committee, are not
explained. Because the Conference Report is silent on this matter, the
legislative history cited by these commenters is insufficient to
determine what Congress intended when it passed the TGAAA. Further
weakening these commenters' assertions is the general rule that the
opinion and understanding of a subsequent Congress is a poor indicator
of what a previous Congress intended when it passed a specific
provision of a bill. In the absence of any clear Congressional intent
prohibiting it, the Department believes that promulgation of the merit
staffing rule is within the discretionary authority delegated to it to
interpret the Trade Act and administer the TAA program.
The Federal court opinion in Michigan v. Herman, 81 F.Supp.2d 840
(W.D. Mich. 1998), provides support for the Department's position. In
that case the court upheld the Department's requirement that ES
services be provided by merit staff under the Department's
interpretation of the Wagner-Peyser Act. In its decision, the court
noted that the Wagner-Peyser Act is silent on the issue, the
legislative history is ambiguous on the matter, and that Congress'
failure to alter the Department's longstanding interpretation of the
Wagner-Peyser Act indicated that Congress intended to defer to the
Department's interpretation of the Act. Michigan, 81 F.Supp.2d at 847-
848. As in Michigan, the Trade Act does not directly address merit
staffing; the legislative history is ambiguous, and for 30 years
Congress did not expressly repudiate the Department's longstanding
interpretation of the Trade Act as requiring merit staffing in the face
of silence in the statute and ambiguity in the legislative history; and
Congress failed to alter the Department's State merit staffing
requirement despite amending the Trade Act several times between 1975
and 2005 when the Governor-Secretary Agreement expressly required merit
staffing. Accordingly, only a clear, unambiguous statement from
Congress would be sufficient to prohibit the Department from exercising
its discretion and requiring merit staffing through rulemaking.
A few commenters asserted that section 239 of the Trade Act does
not provide the Department authority to require State use of merit
staffing in implementing the TAA program. Some of these commenters
generally asserted that the TGAAA does not require the use of merit
staffing. As discussed above, the Department is acting within its
discretion in requiring merit staffing. One of these commenters
disagreed that sections 239(a)(4) (cooperation with the Secretary and
other State and Federal agencies in providing payments and services),
239(f) (advising and interviewing adversely-affected workers), and
239(i) (control measures) of the Trade Act provided the authority for
the Department to require merit staffing. This commenter asserted that
Congress did not intend to provide authority to require merit staffing
under section 239(a)(4), an assertion it supported by stating that
``neither the statutory text itself nor the legislative history to
section 239(a)(4)'' provide the authority cited by the Department. The
commenter asserted that ``neither the statutory text itself nor the
legislative history to section 239(f) says anything about merit
staffing,'' and therefore the Department does not have the authority to
issue such a rule. The commenter additionally asserted that section
239(i) cannot be used to support this rule as this section was added
``at the insistence of Senate negotiators opposed to the imposition of
a [S]tate merit staffing requirement.''
The Conference Report on section 239 is silent on the issue of
merit staffing, while these provisions in section 239 provide the
Department with broad authority to prescribe rules to govern the
efficient administration of the TAA program. In the face of legislative
silence, the Department believes that these provisions in section 239
provide it with sufficient authority to ensure the effective
administration of the TAA program in any manner that will meet the goal
of efficient and effective
[[Page 16991]]
program administration. As explained throughout this preamble, the
Department's promulgation of this rule is necessary for the most
effective administration of the TAA program.
Finally, one commenter faulted the Department's reliance on
``Congress' decision to require the provision of TAA-funded employment
and case management services to TAA-eligible workers as a justification
for imposing'' the merit staffing requirement because ``the agreement
on this portion of the TGAAA Act was directly linked'' to the
compromise that included the dropping of the merit staffing provision
from the House version of the bill. As with the assertions about
sections 239(a)(4), (f), and (i), the commenter did not cite to any
legislative history to support this contention, and the Department is
aware of none.
Principal-Agent Relationship
In the NPRM, the Department discussed the principal-agent
relationship, under which the Department directs the State
administration of the TAA program, as support for the use of State
merit staff to administer the TAA program. The Department explained
that implementing the TAA program requires States to make
determinations concerning the Federally-funded services and benefits to
which adversely-affected workers are entitled.
The Department received a small number of comments on this
discussion. One of the commenters agreed that the Department has
``broad authority to ensure that the TAA program functions in a proper
and efficient manner,'' including through implementation of a State
merit staffing requirement for use of TAA funds, since States act as
agents of the United States. Another commenter suggested that the
principal-agent provisions have long been part of the Trade Act, so the
Department may not use that longstanding relationship as a basis for
implementing a new merit staffing requirement at this time. This
commenter also asserted that the Department failed to identify any way
in which the current method of providing services using non-merit staff
has undermined the principal-agent relationship.
The principal-agent relationship, present in all Federal UC
programs, invests the Department, as principal, with broad discretion
to interpret the statute and to prescribe the operational and
administrative details of the TAA program. This differs from the
grantor-grantee relationship, found in programs like WIA, in which
substantial operational and administrative discretion reposes in the
grantee. The Department's broad discretion as the principal provides it
ample authority to prescribe administrative rules, including a merit
staffing requirement. The fact that the principal-agent relationship is
longstanding does not limit the role of the principal, just as it did
not limit that role in 2005.
The TGAAA created additional entitlements to benefits within that
relationship. The TGAAA created a requirement to provide employment and
case management services to TAA-certified workers, almost tripled the
training funding authorization to provide longer-term training to an
expanded pool of certified workers, increased by 26 the number of weeks
of income support for workers within a 91-week period, added the
reemployment trade adjustment assistance (RTAA) benefit for older
workers, enhanced other benefits and services, and expanded group
eligibility. The Department anticipates the total funding for these
features to virtually double, and of course these new features add
complexity and additional challenges in administering the program. It
is, therefore, appropriate at this time for the Department to
reconsider the minimum requirements to which States, on behalf of the
Department and the United States, must adhere in order to effectively
administer the TAA program.
Further, the Department disagrees with the commenter's assertion
that in order to promulgate this rule the Department must show how the
past use of non-merit staff has undermined the principal-agent
relationship. The principal-agent relationship, which existed before
this rulemaking and was reinforced in the provisions of all of the
Governor-Secretary Agreements on TAA program administration, provides
the Department the authority to direct States as to the manner of
administering the TAA program. The Department's authority as principal
is reinforced by its authority to interpret and apply the statute as
the agency designated by Congress to administer the TAA program.
Complex Entitlement Program
In the NPRM, the Department stated that the TAA program is a
complex entitlement program, similar to the UI program which is also
administered by State merit staff. The Department also noted that the
TAA and UI programs are integrally related. For example, the TAA
program's trade readjustment allowance (TRA) is a UI benefit payable
after exhaustion of other forms of UI and is subject to many of the
same or similar requirements and procedures that apply to State UI
programs.
The Department received several comments agreeing that the integral
relationship between the TAA program and UI programs would benefit from
the requirement that TAA program funds be administered by State merit
staff. Some of these commenters cited the need for State merit staff
especially because, in their experience, personnel who determine
eligibility for TRA benefits must thoroughly understand UI eligibility
requirements and program complexities.
A small number of commenters disagreed. One of these commenters
asserted that WIA programs have equally complex requirements, yet those
programs are often effectively administered by non-merit staff. Another
of these commenters stated that the TAA program ``is more closely
aligned with the [WIA]-funded rapid response and dislocated worker
programs,'' because both of these programs ``address the training and
reemployment needs of workers affected by a dislocation event * * *,''
and therefore, the administration of the program should be designed to
more closely coordinate with WIA, which can be done most effectively at
the local level under the existing system. Similarly, another commenter
averred that the responsibilities of TAA staff more closely resemble
WIA staff activities than those of UI and ES program staff.
The Department recognizes that there are similarities between WIA
and TAA, and requires coordination between the two programs. However,
the structure of the TAA program, by operating within a principal-agent
relationship, reflects greater Federal authority and responsibility
than is present in the grantor-grantee relationship under which WIA
operates. Unlike TAA, WIA participants are not entitled by law to
program benefits, and any eligibility for UI payments that a WIA
participant may have is not affected by determinations of eligibility
to receive WIA services. In the TAA program, TRA eligibility is an
extension of UI eligibility that takes into account State and Federal
eligibility criteria. Maintaining eligibility for TRA requires
continuing eligibility determinations, taking into account factors such
as enrollment in training, length of training, employment decisions,
and earnings. By adding employment and case management services as a
required benefit of the program, Congress recognized that the proper
provision of these services, including quality case management, is
essential to the adjustment of adversely-
[[Page 16992]]
affected workers. For example, if a TAA case manager is not familiar
with the requirements for enrollment in training in order to receive
TRA, or does not possess a full understanding of the rules setting the
amount of income an adversely-affected worker may earn while still
receiving TRA, an adversely-affected worker may be incorrectly
determined ineligible for TRA. By losing eligibility for TRA, the
worker may lose eligibility for the health coverage tax credit, and
find it difficult to continue training. As one commenter noted,
``meeting these complicated requirements requires a very specialized,
highly-trained workforce with expertise that cannot be easily
outsourced or transferred to other organizations.''
A few commenters encouraged the Department to let each State choose
its own staffing strategy. According to these comments, the Department
is imposing a ``one size fits all'' approach by requiring State merit
staffing. The Department is promulgating this requirement because it
has determined that nationwide consistency in the TAA program is of
paramount importance. The Department has also determined that the State
merit staffing requirement will promote program efficiency,
accountability and transparency.
The important point is that adversely-affected workers now are
entitled to receive a range of tailored services under the TAA program.
The Department recognizes that many adversely-affected workers receive
services under other programs for which they are also eligible, such as
WIA, which are not delivered by State merit-staffed personnel. In
contrast, since TAA is a complex entitlement program that requires
States to make substantive determinations of benefit entitlement, as
agents of the United States, the Department is requiring State merit-
staffed administration of the TAA-funded services to which adversely-
affected workers are entitled. However, while the Department expects
the primary delivery of case management services for TAA participants
will be through TAA-funded State merit staff, non-merit staff funded by
partner programs may provide those services when, for example, TAA
funds have been exhausted, when demand for services exceeds TAA-funded
staff capacity to deliver those services, or when specific services
have already been provided under another Federal program. In fact,
section 235 of the Trade Act requires the Secretary to make employment
and case management services available to adversely-affected workers
directly or through agreements with the States and section 235a makes
provides funding for States to provide those services. Section
239(g)(5) of the Trade Act specifically requires States acting under
such agreements to provide such services through other Federal programs
in the event that allocated TAA funding for employment and case
management services is insufficient to make these required services
available to all adversely-affected workers in a State.
Relationship With WIA
Many commenters argued for the continuation of a structure
involving co-enrollment and integration with WIA services. These
commenters remarked that their State's integrated service delivery
system is highly efficient, responsive, and consistent; has good
coverage throughout the State; has worked well for many years; and
provides the full range of ``wrap-around'' services and in-depth
assessments. One commenter stated that a merit staff requirement is
diametrically opposed to the Department's stated goal of program
integration. One commenter added that having the WIA and TAA programs
administered by two different entities and staff would result in a
potential loss of co-enrollment opportunities. One commenter supported
State practices that respect the principles of local governance,
community-based service delivery, and system-wide accountability.
Some of these commenters noted that 27 States and Puerto Rico have
opted to allow a variety of State and local government employees and
contractors to provide services to TAA participants. These commenters
noted that this has allowed for a high degree of integration of the
services provided through TAA and the One-Stop delivery system. Along
the same line, other commenters suggested that local workforce areas
are better poised to assist participants with training choices and
reemployment services than State merit staff because of awareness of
demand occupations, local resources, and the local economic climate.
One commenter added that in some local areas, non-merit staff currently
providing TAA benefits show higher job retention rates and higher
salaries than merit staff. Several commenters mentioned the requirement
to provide case management, and expressed concern that the proposed
rule would require States to establish redundant, costly, and
disruptive public structures because the States would be prohibited
from using existing local workplace resources.
The use of merit staff in the TAA program has not previously
impeded, and will not in the future impede, the provision of services
to adversely-affected workers in the centers of the One-Stop delivery
system (One-Stop centers) established under WIA. The TAA program will
continue to be a One-Stop partner, as are other merit-staffed programs,
including UI and the ES, which are integrally related to TAA. As the
Governor-Secretary Agreement provides, the States will continue to use
One-Stop centers as the main point of participant intake and delivery
of TAA benefits and services.
Consistent with Trade Act section 239(g)(5), there is nothing in
this rule prohibiting the delivery, in appropriate circumstances, of
employment and case management services to adversely-affected workers
by staff funded by WIA or other Federal programs through co-enrollment.
As a partner in the One-Stop delivery system, the TAA program will
continue to coordinate with the other partners in the system to ensure
adversely-affected workers are provided access to a broad array of
comprehensive services. In light of the current mix of merit staffed
and non-merit staffed One-Stop partners already participating in the
One-Stop delivery system, the restoration of the TAA merit-staffing
requirement will not preclude effective coordination and integration
within that system.
Under the amendments, the TAA program for the first time will be
able to devote TAA funding to the provision of employment and case
management services. These services were previously not allowable uses
of funds under the TAA program. To the extent that adversely-affected
workers received these services, they received them through other
programs, generally WIA or the ES. Now, dedicated TAA funds will allow
the TAA program to ensure that these services are provided to
adversely-affected workers in a high-quality and in-depth manner.
However, the WIA, ES and other resources and structures that were used
to provide these services to adversely-affected workers in the past are
not being eliminated or dismantled. They will continue to be available
to provide services to the dislocated workers and adults who continue
to be eligible for those programs, including adversely-affected
workers, and the provision of these benefits should continue to be
coordinated with the TAA program facilitated through the One-Stop
delivery system established under WIA.
Adversely-affected workers currently receive many services in
addition to case management and employment services, including
supportive services and other wrap-around services, which
[[Page 16993]]
are funded and provided under other programs for which adversely-
affected workers also qualify. The Department will continue to
encourage the provision of services to adversely-affected workers by
such other programs in order to supplement TAA-funded services. In
fact, section 239(g)(5) of the Trade Act specifically requires States
to provide employment and case management services through other
Federal programs, in the event that allocated TAA funding for
employment and case management services is insufficient to make these
required services available to all adversely-affected workers in a
State. Moreover, the Governor-Secretary Agreements require coordination
of the TAA program with activities carried out under WIA to help ensure
that a comprehensive array of services is available to adversely-
affected workers. The operating instructions to implement the TGAAA
amendments (TEGL No. 22-08) also affirmed the desirability of co-
enrollment of adversely-affected workers in WIA and other programs to
ensure comprehensive services are available. The commenters have not
explained how the merit-staffing requirement precludes co-enrollment in
other programs or effective coordination by TAA with the other
programs, including both merit staffed and non-merit staffed programs,
which also are partners in the One-Stop delivery system under WIA. In
sum, this rule does not undermine the feasibility or importance of the
co-enrollment of adversely-affected workers in WIA and other Federal
programs.
State Merit System Advantages
In the NPRM, the Department described various desirable features of
State merit personnel systems. The Department stated that State merit
staff employees are directly accountable to State government entities.
Also, the Department noted that the standards for State merit staff
performance and their determinations on the use of public funds require
that decisions be made in the best interest of the public and of the
population to be served.
The Department received several comments on this topic. Some
commenters extolled the benefits of using State merit staff for the TAA
program. One commenter expressed the opinion that it would be
preferable to have TAA eligibility determinations made by public agency
merit staff that are hired according to objective personnel standards
and are insulated from political and other pressures. Another commenter
claimed that if State merit staffing is required, then citizens and
elected officials could more easily locate the entity to hold
accountable for TAA program issues.
In contrast, several commenters argued that non-merit staffing
models are equally effective. These commenters argued that their
experience with local TAA staff is that they have provided quality
service to adversely-affected workers. For example, one commenter noted
that local staff have correctly applied eligibility criteria and have
effectively performed their TAA duties. One commenter noted that
agreements between the States and local entities can, and have,
addressed some of the features attributed to State merit staff such as
strict government standards on the use of personal information. This
commenter also remarked that the State is always responsible for
administering TAA, regardless of how the program is staffed.
Other commenters contended that local staff who have been providing
TAA services in recent years have become knowledgeable about the
program and have gained valuable experience that benefits adversely-
affected workers. These commenters cautioned that losing that
background and expertise would harm the TAA program.
There are unique advantages to using the State merit personnel
system for staffing the TAA program. State merit staff employees are
hired into and operate within a publicly accountable organization with
a State-wide perspective and are responsible to the general public.
Some features of the State merit staffing model that add value to the
TAA program are the objective nature of public personnel systems; the
strict government standards governing the use of personal information;
and that State agencies already address such issues as the impartial
treatment of applicants to and beneficiaries of public programs, and
operating with high standards of public transparency.
Further, the direct employer-employee relationship between State
merit staff and the State agency (or agencies) responsible for delivery
of TAA services makes it easier for adversely-affected workers to hold
their State government accountable for the services to which they are
entitled. Although it is certainly possible to hold local and/or non-
merit staff and their employers accountable, the attenuated lines of
authority between State agencies, local entities, contactors, etc.,
creates a more amorphous web of relationships that can make it more
difficult for adversely-affected workers to locate the source of TAA
program responsibility.
The Department does not question that there are local staff who
have effectively served the TAA program, and understands that some
local staff have attained knowledge and experience. Indeed, this rule
does nothing to disturb the local delivery of TAA services. State
personnel may and do perform TAA functions at the local level. Further,
States may hire persons who are knowledgeable about and experienced in
delivering TAA services consistent with State merit standards. This
rule simply requires that personnel engaged in TAA-funded functions,
except as specified in Sec. 618.890, must be employees covered by the
State merit system of personnel administration, permitting non-merit
staff to be converted to State employment, if accomplished in
accordance with the merit principles.
Consistency, Efficiency, Accountability and Transparency
In the NPRM, the Department explained that its purpose in requiring
State merit staffing of TAA-funded functions ``is to promote
consistency, efficiency, accountability, and transparency in the
administration of the TAA program.'' 74 FR 39199, Aug. 5, 2009. The
Department received several comments about this purpose. Several of
these agreed that requiring State merit staff personnel to administer
the TAA program would ensure better consistency, efficiency,
transparency, and accountability. Some of these commenters focused on
the disadvantages of and inconsistencies in local implementation of the
program.
One commenter expressed the belief that the proposed rule would
help prevent a proliferation of different management practices and
structures that make accountability and equal access more difficult to
achieve. In addition, this commenter stated that One-Stop centers vary
considerably with respect to size, capacity, and type of operator, and
there is variation in services and quality depending on location. One
commenter warned that the priorities of other local programs can
sometimes take precedence over the TAA program. Another commenter
observed that ``the diversified WIA structure results in a degree of
impenetrability for service recipients and policy makers,'' and
asserted that requiring State merit employees to perform TAA-funded
functions would ensure that citizens and elected officials are able to
``place accountability where it belongs.'' One commenter noted that
staff turnover combined with inconsistency of service from one local
workforce board area to another is not
[[Page 16994]]
conducive to an efficient operation of the TAA program.
One commenter provided a detailed argument supporting the idea that
Federal benefit entitlement programs must be carried out by State
employees who are free from political pressures and the for-profit
motives of private-sector contractors. According to this commenter, the
TAA program should be operated at the State level by personnel who have
been recruited, selected, compensated, and evaluated according to a
merit system of personnel administration. This commenter asserted that
local One-Stop centers have divergent policies, which sometimes result
in significant variances in the treatment received by persons who have
worked at the same workplace, depending on where they live. Moreover,
the commenter explained that the speed and consistency by which workers
are determined to be eligible for benefits and may actually begin
receiving benefits can differ from worker to worker in the same One-
Stop center. Another commenter described a situation where workers were
denied eligibility for TAA benefits in a One-Stop center, but the
workers travelled to another One-Stop center in a different area and
were declared eligible for TAA benefits.
A commenter also expressed the opinion that State merit staff
administration of the program would provide the flexibility to respond
to layoffs regardless of where they occur in the State, and that well-
trained ``State-level'' staff will bring stability and continuity to
the provision of services. This commenter contended that the civil
service system ensures hiring and promotions are based on competence,
rather than nepotism, political connections, or favoritism. In
addition, the commenter explained that public administration provides
important due process protections for benefit recipients who might be
subject to discrimination by private contractors who are subject to
standards different from State merit staff.
Some commenters, however, disagreed with the Department's assertion
that State merit staff would promote consistency, efficiency,
transparency, and accountability in the TAA program. These commenters
generally agreed that the TAA program should strive for consistency,
efficiency, accountability, and transparency, but asserted that these
goals were already being achieved through the locally-administered
approach used in their jurisdiction.
For example, one commenter maintained that consistency can be
accomplished by focusing on applying policies and procedures rather
than on who delivers the service. Another commenter contended that
State-wide training and monitoring of local staff can help to produce
consistency. Another commenter suggested that technical assistance is a
tool that can support consistency.
Other commenters stated that local delivery of TAA services is
efficient. A few of these commenters argued that the local staff model
is more flexible and can more nimbly respond to layoff events and
training opportunities than a larger bureaucracy. Some of these
commenters contended that it would be inefficient and potentially
confusing to have merit staff TAA case managers because some recipients
of TAA services also have WIA case managers. According to one
commenter, TAA and other Federal programs have been effectively
administered at the local level by professionals who have earned the
trust of constituents.
A few commenters maintained that performance measures, oversight,
and monitoring are tools through which local delivery entities may be
held accountable. Another commenter averred that accountability is
ensured by the separation of program administration and operations,
regardless of whether State staff is merit-based.
Similarly, some commenters stated that local delivery options are
transparent. A few commenters contended that strict government
standards on the use of personal information and transparency have been
addressed in data sharing agreements between the commenters' State and
local areas. One commenter asserted that transparency is the product of
frequent and thorough monitoring, and one commenter suggested that a
merit staffing requirement be used as a corrective-action recourse
based upon a finding of deficiencies in State performance. Another
commenter stated that an adversely-affected worker should receive
services required to return to work, no matter where he or she enters
the system, and service administration should not be differentiated by
whether or not the adversely-affected worker first makes contact with a
merit staff employee.
It is clear that in many areas using local delivery options,
significant effort has been expended to achieve the goals of
consistency, efficiency, accountability and transparency. The
Department remains committed to the local delivery of services, which
is in fact how services in the Department's workforce programs--
including State-administered programs such as TAA--are delivered. The
merit staffing requirement ensures that the services provided locally
to adversely-affected workers will be administered uniformly within
States and across States. Accordingly, commenters should not be
concerned that this rule will force a ``dismantling'' of a local
service delivery system. In fact, the new funding stream provided under
the TGAAA for case management and employment services allows resources
under WIA and the ES that were previously used for that purpose for
adversely-affected workers to be used to provide services to the many
other dislocated workers and adults eligible for those programs who are
not eligible to apply for TAA. TAA services will continue to be
provided through the local One-Stop delivery system established under
WIA.
The Department agrees with the comment that adversely-affected
workers should receive services that will help them return to work even
if their first contact in the system is not with a merit staff
employee. As a result, co-enrollment of workers in both WIA and TAA
programs will continue to be encouraged, as discussed more fully above.
The different approaches to consistency, efficiency, accountability
and transparency described by the various commenters illustrate that
the States are employing a patchwork approach that could lead to
inconsistent service delivery. The Department believes that consistency
in the application of eligibility criteria and the treatment of workers
nationally is imperative. Consistency should be the overarching design
of the service delivery system for services delivered with TAA funds,
rather than a corrective action approach that could be used if
performance goals are missed. Consistency is best achieved by
administering the TAA program through merit staff who are hired,
trained, and employed by one or two State agencies under the same merit
system, operate under the same personnel rules, and are accountable to
the same State agency or agencies. Non-merit staff personnel employed
outside of the State agency, often by either local agencies or private
entities, are subject to varying procedures and work rules, and
different, and potentially conflicting, obligations to their actual
employers. This structure is more likely to produce an inconsistent
application of the eligibility criteria for the various TAA benefits
and services.
[[Page 16995]]
Similarly, placing administrative responsibility with the merit-
staffed personnel of one or two State agencies promotes efficiency and
makes it easier to hold the State agencies accountable. For example,
layoff events may trigger TAA certifications covering large numbers of
workers who seek TAA at the same time. A State agency may quickly move
funding and personnel to areas in the State where TAA services are most
needed to advise these adversely-affected workers as soon as
practicable of the TAA program benefits and services and the procedures
and deadlines for applying for such benefits and services, as required
by the Governor-Secretary Agreement. In contrast, funds allocated to
local workforce boards and contractors are generally restricted to
serve a specified area which impedes a State's ability to move funds as
needs change. Focusing TAA administration in one or two State agencies
also reduces the number of entities responsible across a State, thereby
making it easier for the public to know who administers the program and
promoting accountability and transparency.
On a related point, one commenter asserted that this rule will
``likely inhibit the ability of [S]tates to comply with section
239(f)'' requiring the coordination of services because it will lead to
``duplicative staffing and increased inefficiency'' in States currently
using non-merit staff to provide services to both WIA and TAA
participants. The Department disagrees that this rule will lead to
duplicative staffing and inefficiencies in administering the program.
As discussed throughout this preamble, the TAA program continues to be
a required partner in the One-Stop delivery system, and co-enrollment
with WIA is still encouraged. In the absence of any evidence suggesting
otherwise, the Department reasonably believes that requiring States to
use merit staffing will improve the administration of the TAA program.
State personnel serving under a merit system are non-partisan
public officials who are directly accountable to elected officials. The
standards for their performance and their determinations on the use of
public funds require that decisions be made in the best interest of the
public and of the population to be served. The use of a State merit
system is further intended to ensure that the administrative personnel
meet objective professional qualifications, provide fair treatment to
participants, comply with strict government standards on the use of
personal information, and perform in a setting where decisions are made
in accordance with high standards of public transparency. These
features of a State merit system are appropriate to apply to State
administration of the TAA program.
A few commenters questioned whether the Department has any data
supporting the assertion that State merit staff is inherently better
qualified to deliver TAA services than other providers. The Department
is acting on the experience it has gained in overseeing the State
administration of the TAA program under a merit staffing system that
had been in place for approximately 30 years of the TAA program's 35-
year existence. In addition, UI, a program similar to TAA and one that
actually works in conjunction with TAA, is efficiently administered by
State merit staff. ES also is efficiently administered by State merit
staff and works in conjunction with TAA. Based on this experience and
the similarities to other programs successfully staffed by State merit
personnel, the Department believes a return to a State merit based
system will help to promote consistency, efficiency, accountability,
and transparency in the administration of the TAA program.
Costs
Various comments addressed the cost of the State merit staffing
requirement. One commenter noted that, given the number of TAA
petitions that are pending, requiring State merit staffing of TAA-
funded functions would mean ``the [S]tate would need significantly more
* * * merit staff [S]tatewide at an additional annual cost of at least
$10 Million.'' Other commenters opined more generally that the merit
staffing requirement could result in a ``substantial'' cost increase.
One commenter stated simply that it will be ``more'' costly for case
management services to be provided by State merit staff. Another
commenter stated that there would be ``financial burdens attached to
staffing and additional staffing needs.'' One commenter suggested that
this rule would result in ``a system backlog'' because of an
insufficient number of State merit staff. Finally, one commenter argued
that the TAA funds provided by the Department will not be adequate to
address ``long term costs'' of State personnel such as pension
payments.
The TAA allocation provided to the States by the Department covers
the costs of the program. TAA allocations include funding for
employment and case management services and administrative costs. Under
the TGAAA, significantly more funding is available for the TAA program.
The training cap for the program has increased from $220 million to
$575 million, and an additional amount equal to 15 percent of the
allocation to each State for training will be allocated to the State
for TAA administration and employment and case management services, as
well as an additional $350,000 to each State specifically for
employment and case management services. This will result in States
having a considerably greater sum available for administration than
under the lower training cap. And in fact, none of the commenters
provided any empirical data to support the contention that the funding
would be insufficient for this purpose.
The final rule requires States to use merit staff to perform TAA-
funded functions. Such staff may be staff new to TAA, or they may be
staff who have been providing TAA services in the past, including non-
merit staff who are converted to State employment. Each State will
comply with this rule's merit staffing requirement with the Federal
funds allocated to that State for TAA administration and case
management and employment services. In that way, any costs incurred in
implementing this requirement will be funded by the TAA program.
Commenters provided with no data that suggests that States cannot
comply with this rule with the available funds, and the Department is
aware of no such data. The Department is available to provide
assistance to any State with questions about what costs are allowable
charges to TAA funds.
Transition Period (Sec. 618.890(b))
As proposed, Sec. 618.890(b) provided that States must comply with
the merit staffing requirement by October 1, 2010 for employment and
case management services under section 235 of the Trade Act, and by
July 1, 2010 for all other TAA administrative activities that are
required to be merit staffed. The Department received several comments
on this provision. One commenter stated that the proposed transition
period is reasonable and provides sufficient time for States to plan
implementation. One commenter generally stated that the transition
period would delay, not reduce, the costs and disruptions to States.
Other commenters stated that the aggressive transition period for
implementing the merit staff requirements would make it impossible for
a State to hire and train an adequate number of qualified staff before
the implementation date. One of these commenters specifically asserted
that, assuming that this final rule publishes in mid-February 2010, the
four and one-half month time frame to implement merit staffing for TAA
[[Page 16996]]
administrative functions by July 1 is ``very aggressive.'' This
commenter argued that being unprepared at the implementation date would
lead to a loss of consistency and effectiveness of the program. A
couple of commenters noted that their States are currently subject to
hiring restrictions that could impact the ability to hire and train
staff by the implementation deadline. One of these commenters also
noted that the rule would require States to move the delivery of
employment and case management services to merit staff a mere three
months before the TGAAA amendments expire.
The Department recognizes the concern raised by several commenters
that, at least for their States, the transition period proposed in the
NPRM was too short. Accordingly, the Department has decided to extend
the transition period to allow States more time to effect this change.
The deadline for implementing the merit staffing requirement for both
employment and case management services and administrative services now
is December 15, 2010. Thus, paragraph (b) of Sec. 618.890 is revised
to provide a new transition deadline of December 15, 2010.
As for the comments regarding State hiring freezes, the positions
subject to the merit staffing requirement are Federally funded
positions that should not be subject to State-imposed hiring freezes
because merit staff are hired using those Federal funds provided.
Unemployment Insurance Program Letter (UIPL) No. 18-09, titled
``Application of State-Wide Personnel Actions, including Hiring
Freezes, to the Unemployment Insurance Program'' addresses precisely
this issue. It provides that any State-wide personnel action that does
not take into account the needs of the State UI program is not a
``method of administration'' under section 303(a)(1) of the Social
Security Act for assuring the proper and prompt payment of UI. This
principle, and thus the UIPL, applies equally to the TAA program under
20 CFR 617.50(f), requiring ``[f]ull payment of TAA when due * * * with
the greatest promptness that is administratively feasible.'' Also,
consistent with Federal UI programs, States are required, through their
agreements to administer the program as agents of the Department, to
use the TAA funds provided by the Department consistent with the rules
and regulations in effect for the program--including this rule.
Therefore, if a State does not have merit staff it must hire merit
staff using the funds allocated by the Federal Government.
The transition deadline falls 15 days before the expiration of the
TGAAA amendments. The transition period was developed taking into
account the need for a reasonable amount of time for implementation,
weighed against the need to ensure program consistency, efficiency,
accountability, and transparency as quickly as possible. The regulatory
provision requiring merit staffing is not dependent on the program
changes made by the TGAAA, or the expiration date it provided for those
changes. The Department's legal authority and rationales for requiring
State merit staffing for TAA-funded functions are based on the
Department's responsibility for assuring that the TAA program is
properly and efficiently administered. While the additional complexity
and new entitlement created by the TGAAA provide additional support for
the decision to require State merit staffing, the requirement does not
depend solely on the TGAAA. We note that the President's FY 2011 Budget
supports extension of the TGAAA provisions.
In the NPRM, the Department proposed to title part 618 ``Trade
Adjustment Assistance under the Trade Act of 1974 For Workers Certified
under Petitions Filed After May 17, 2009.'' However, in response to the
comment concerning the TGAAA's sunset provision, and to avoid any
confusion that the merit staffing requirement applies only with respect
to workers certified under petitions filed after May 17 2009, the
Department changes the title to ``Trade Adjustment Assistance under the
Trade Act of 1974, As Amended.'' This change clarifies that part 618
will contain all the regulations for administering the program operated
under the Trade Act, not just the regulations implementing amendments
specific to the TGAAA--and that the merit staffing requirement applies
with respect to all workers regardless of the date of the petition
under which they were certified.
As mentioned above, there are different eligibility criteria for
and different services available to adversely-affected workers,
depending on the date on which their petition was filed. Workers
covered by petitions filed before May 18, 2009 are subject to the
requirements relating to benefits and services that were contained in
the Trade Act prior to the TGAAA, while workers covered by petitions
filed on or after May 18, 2009 are subject to the requirements added
under the TGAAA. Such variances add to program complexity, as also
noted above. However, the requirement of merit staffing transcends
these programmatic distinctions. Once a State has converted to merit
staff as required by this rule, those staff members serve all workers,
regardless of the date a petition was filed.
The revised title of part 618 also more accurately describes these
regulations. Although certain provisions of the TGAAA only relate to
petitions filed on or after May 18, 2009, not all provisions of the law
relate to that filing date. Different provisions have different
effective dates, including the provisions relating to the formula for
distribution of the training funds, which went into effect on October
1, 2009. Therefore, ``Trade Adjustment Assistance under the Trade Act
of 1974, As Amended'' is a more appropriate title.
Exemptions for States With Employment Service Operation Exemptions
(Sec. 618.890(c))
Section 618.890(c) partially exempts from the TAA State merit
staffing requirement those States that have received an exemption from
the ES merit staffing requirements under the Wagner-Peyser Act. These
States are Colorado, Massachusetts, and Michigan. The Department has
concluded that allowing this limited exemption will prevent
complications and confusion in these three States, thereby allowing the
efficient administration of the TAA program. The paragraph (c)
exemption does not apply to the administration of TRA, and also it
applies in each of these States only in the same scope that the ES
merit staffing exemption applies.
The Department received several comments on the issue of these
exemptions. Several of these commenters expressed general support for
permitting the States of Colorado, Massachusetts, and Michigan to
continue to use non-State and non-merit personnel to administer the TAA
program. One commenter argued that the challenges of implementing the
merit staffing requirement are as great for its State, which is not
exempted under paragraph (c), as they would be for the exempted States.
One commenter stated that the Department does not possess the legal
authority under TAA to relieve any State from the requirement of merit
staffing. Another commenter urged the Department to add a particular
State to the exemption; similarly, a small number of commenters
suggested that the Department allow waivers from the merit staffing
requirement.
The legal authority to exempt States under paragraph (c) is based
on the Department's authority to interpret the Trade Act and administer
the TAA program, as explained more fully above.
[[Page 16997]]
The Department granted the ES exemptions as demonstrations under the
Wagner-Peyser Act, and decided that no additional demonstrations or
exemptions would be granted. See 20 CFR 652.215. The Department has
considered the issue of additional TAA exemptions, but has decided
that, because of the importance of merit staffing, declining to permit
additional exemptions (or waivers) will better serve workers under the
TAA program. And, whereas the ES exemptions would result in
inconsistent service delivery to adversely-affected workers if the
three exempt States were required to implement the TAA merit staffing
requirement, it is fully consistent and reasonable for States with ES
State merit staff to comply with this rule.
The Department makes no change to this paragraph as proposed.
Exceptions for Non-Inherently Governmental Functions (Sec. 618.890(d))
Proposed paragraph (d) provided that the merit staffing requirement
would not prohibit a State from outsourcing TAA functions that are not
inherently governmental, as defined by OMB Circular No. A-76 (Revised).
The Department received no comments opposing this paragraph, but is
changing this provision very slightly by adding ``any supplemental OMB
guidance or superseding authority, and in DOL guidance.'' This addition
acknowledges that the definition of ``inherently governmental'' in OMB
Circular No. A-76 (Revised) could be expanded upon in subsequent
guidance or superseded by subsequent authority and that DOL may issue
an authoritative interpretation of OMB guidance for purposes of the TAA
program.
Subpart I--Allocation of Training Funds to States
In the NPRM, the Department proposed subpart I to implement the
funding provisions of the TGAAA. In addition to increasing the funds
available under the training cap, the TGAAA prescribed a formula for
allocating training funds to the States. As required by the TGAAA and
proposed in Sec. 618.910, the initial allocation of training funds is
determined by the application of four factors: (1) The trend in the
number of workers covered by certifications of eligibility during the
most recent four consecutive calendar quarters for which data is
available; (2) the trend in the number of workers participating in
training during the most recent four consecutive calendar quarters for
which data is available; (3) the number of workers estimated to be
participating in training during the fiscal year; and (4) the amount of
funding estimated to be necessary to provide approved training during
the fiscal year. At present, the Department will assign each of these
factors an equal weight. However, proposed Sec. 618.910(f)(4) provided
that the Department may, after December 31, 2010, change the weighting
of these factors after an opportunity for public comment.
For each of the four factors, the Department will determine the
national total and each State's percentage of the national total. Based
on a State's percentage of each of these factors, the Department will
determine the percentage that the State will receive of the amount
available for initial allocations, and will adjust that percentage to
account for the hold harmless provision. The total initial allocations
to the States will total 65 percent of the training funds appropriated,
as mandated by section 236(a)(2)(C) of the Trade Act, as amended by the
TGAAA.
The formula will still include a ``hold harmless'' feature, but at
a much lower level than the Department has been using to date. Although
the initial allocation to a State had been at least 85 percent of the
amount the State received in its initial allocation the prior fiscal
year, the statute now requires that a State's initial allocation be at
least 25 percent of the amount the State received in its initial
allocation the prior fiscal year.
The Department's practice has been that, if the formula would
result in an initial allocation of less than $100,000 to a State, then
that State's allocation was reallocated to the other States. Where a
State had an initial allocation of less than $100,000, it could request
reserve funds in order to obtain the limited TAA funding that the State
required. The NPRM proposed to codify that practice in regulations.
The TGAAA amended the Trade Act to require the Department to make
the initial distribution to States ``as soon as practicable after the
beginning of each fiscal year,'' and to require that 90 percent of a
fiscal year's training funds be distributed to the States by July 15 of
that fiscal year. As stated above, the initial allocations will equal
65 percent of the funds available for training. In accordance with the
amendments, the Department will also provide to States which receive
training funds, either through an initial allocation or through a
request for reserve funds, an additional 15 percent for TAA
administration and employment and case management services, as well as
an additional $350,000 to each State specifically for employment and
case management services.
The 35 percent of the total training funds held in reserve is
higher than the previous 25 percent reserve. Subject to the requirement
in section 236(a)(2)(B)(ii) of the Act that 90 percent of the funds be
distributed by July 15 of the fiscal year, these reserve funds will, as
in the past, be available to be distributed to States on an as-needed
basis to provide funding to States experiencing high activity levels
that cannot be addressed with the funds received in the initial
allocation.
The Department received several comments on the proposed rules
governing the allocation of training funds to States. The majority of
the comments were generally supportive of the allocation methodology,
calling it ``much improved over the current practice,'' because it
``faithfully executes the language of the TAA law'' and because ``the
proposed funding distribution would bring funding levels to a more
equitable level * * * [and] will allow for a more accurate distribution
of funds.'' One commenter noted that the allocation portion of the rule
``will look at each [S]tate's recent TAA use, and will better allocate
funding among [S]tates based on current realities, instead of using
more stale data,'' concluding that ``[s]uch open-mindedness and ability
to adapt will make for a better program.'' The Department will address
the comments by topic below.
Annual Training Cap (Sec. 618.900)
This section implements section 236(a)(2)(A) of the Trade Act which
caps the amount of TAA training funds available in each fiscal year.
The Department received no comments on, and makes no change to, this
section as proposed.
Distribution of the Initial Allocation of Training Funds (Sec.
618.910)
This section implements the initial distribution of TAA training
funds requirements in section 236(a)(2)(B) and section 236(a)(C)(ii) of
the Trade Act. The Department received no comments on paragraphs (a)
(initial allocation), (b) (timing of the distribution of the initial
allocation), (d) (minimum initial allocation), or (e) (process of
determining initial allocation) of this section.
The Department received one comment on paragraph (c) of Sec.
618.910, implementing amended section 236(a)(2)(C)(iii) of the Trade
Act. That section is the hold harmless provision, providing that the
amount of the initial distribution to a State will not be less
[[Page 16998]]
than 25 percent of the State's prior year initial distribution.
Paragraph (c) adopts the minimum hold harmless, 25 percent, permitted
by the Trade Act. This commenter argued that reducing the hold harmless
to 25 percent (from the 85 percent the Department previously used)
``may create significant fluctuations in yearly allocations to
States.'' The commenter noted that these fluctuations will extend to
administrative funds as States' administrative allocations are a
percentage of their total training allocations. The commenter suggested
that instead, the Department set the hold harmless provision at 50
percent of the prior year's allocation.
The Department recognizes that the 25 percent hold harmless may
result in a State receiving an initial allocation that is significantly
lower than the State's initial allocation in the previous year. And,
the commenter is correct that States' administrative allocations will
fluctuate in sync with their initial training allocations. However,
these fluctuations would occur because of an attendant fluctuation
among the States' need for TAA training funds. It was Congress's clear
intent that the hold harmless percentage be set at 25 percent. See
Conf. Rep. at 672-73 (``[t]he provision addresses these problems by
lowering the ``hold harmless'' provision to 25 percent''). However, the
Department will monitor the effects of the ``hold harmless'' and, if
warranted, will modify it. Further, Sec. 618.920 will permit a State
to receive reserve funds should the initial allocation be insufficient
to meet the State's training needs.
The Department received two comments on paragraph (f) of Sec.
618.910 implementing section 236(a)(2)(C)(ii) of the Trade Act. That
section establishes four factors that the Department must use in
determining the amount of each State's initial allocation, and permits
the Department to add ``such other factors as [it] considers
appropriate. * * *'' Paragraph (4) explains the steps the Department
will follow in determining the initial allocation of training funds.
The first comment on paragraph (f) was on paragraph (1)(iv), which
describes the fourth initial allocation factor: the amount of funding
estimated to be necessary to provide approved training during the
fiscal year. This commenter expressed concern that the fourth factor
fails to address job search and relocation expenditures, and that funds
for those expenditures are not allocated elsewhere. To the extent that
this commenter has suggested variance from the fourth statutory factor,
the Department is without discretion to change the factor prescribed in
the Trade Act. To the extent that the commenter is discussing job
search and relocation funding, the comment is outside the scope of this
rulemaking but the process is described in TEGL No. 9-09. The
allocation addressed in this rule is limited to TAA training funds.
The second comment requested that the Department consider ``such
other factors as National Emergency Grants, demographics of the
affected workforce, technology requirements (such as new reporting and
new IT system functionality), petition certification volume, and funds
allocated under WIA.'' While additional factors to determine the
initial allocation may be helpful at a later date, and are within the
Department's discretion to adopt, for now, the Department will maintain
only the four factors specified in the statute and laid out in the
proposed rule. The Department needs to acquire experience with the four
statutory factors before deciding whether to add other factors, and may
seek public comment on potential additional factors in the future.
The Department makes no change to this section as proposed.
Reserve Fund Distribution (Sec. 618.920)
This section addresses the distribution of the funds that remain in
reserve after the initial allocations to the States. As required by
section 236(a)(2)(C)(i) of the Trade Act, this section provides that
the remaining 35 percent of the total annual training funds will be
held in reserve for later distribution in response to requests by
States that can show need for additional training funds. The Department
received one comment in favor of the reserve fund distribution.
The Department makes no change to this section as proposed.
Second Distribution (Sec. 618.930)
This section provides that at least 90 percent of the total
training funds for a fiscal year will be distributed to the States by
July 15 of that fiscal year, as required by section 236(a)(2)(B)(ii) of
the Trade Act. The Department received no comments on this issue, and
makes no change to this section as proposed.
Insufficient Funds (Sec. 618.940)
This section provides that if, in a given fiscal year, the
Secretary estimates that the amount of funds necessary to pay for
approved training will exceed the legislative cap, and therefore there
will be insufficient funds to meet the needs of all States for the
year, the Department will decide how the funds remaining in reserve at
that time will be allocated among the States, as provided by section
236(a)(2)(E) of the Trade Act. The Department received no comments on
this issue, and makes no change to this section as proposed.
Technical Corrections
The Department is making two technical corrections to the rule. The
first correction is in the title of Subpart I as it appeared in the
table of contents in the NPRM. In the table of contents, the NPRM
indicated that subpart I would be titled, ``Apportionment of Training
Funds to States.'' However, as explained above, the Department is using
the word ``allocation'' to describe the distribution of training funds
to the States. Accordingly, the table of contents in this final rule
correctly reads, ``Allocation of Training Funds to States.''
The second correction is to the title of Sec. 618.890(d). In the
NPRM, the paragraph was titled, ``Exemptions for Non-inherently
Governmental Functions.'' The Department is correcting the title to the
more technically accurate, ``Exceptions for Non-inherently Governmental
Functions.''
III. Administrative Information
Regulatory Flexibility Analysis, Executive Order 13272, Small Business
Regulatory Enforcement Fairness Act
The Regulatory Flexibility Act (RFA), 5 U.S.C. Chapter 6, requires
the Department to evaluate the economic impact of this final rule on
small entities. The RFA defines small entities to include small
businesses, small organizations, including not-for-profit
organizations, and small governmental jurisdictions. The Department
must determine whether the final rule imposes a significant economic
impact on a substantial number of such small entities. The Department
concludes that this rule directly regulates only States and does not
directly regulate any small entities; any regulatory effect on small
entities would be indirect. Accordingly, the Department has determined
this rule will not have a significant economic impact on a substantial
number of small entities within the meaning of the RFA.
The Department has also determined that this final rule is not a
``major rule'' for purposes of the Small Business Regulatory
Enforcement Fairness Act of 1996, as amended (SBREFA), Public Law 104-
121, 110 Stat. 847. SBREFA requires agencies to take certain actions
when a ``major rule'' is promulgated. SBREFA defines a ``major rule''
as one that will have an annual effect on the economy of $100 million
or more; that
[[Page 16999]]
will result in a major increase in costs or prices for, among others,
State or local government agencies; or that will significantly and
adversely affect the business climate.
This final rule will not result in a major increase in costs or
prices for States or local government agencies. In this instance the
States, acting as agents of the Federal Government, are administering
TAA benefits and services to adversely-affected workers while the
Federal Government provides appropriated funds to States to operate the
program. Nor will this rule significantly and adversely affect the
business climate. The opposite is true: the TAA program provides funds
to train adversely-affected workers for employment in positions that
are in economic demand, thereby assisting in meeting businesses' needs.
Finally, the final rule will not have an annual effect on the economy
of $100 million or more.
For the foregoing reasons, the Department determines that the final
rule is not a ``major rule'' for SBREFA purposes.
Executive Order 12866
Executive Order 12866 requires that for each ``significant
regulatory action'' by the Department, the Department conduct an
assessment of the regulatory action and provide OMB with the regulation
and the requisite assessment prior to publishing the regulation. A
significant regulatory action is defined to include an action that will
have an annual effect on the economy of $100 million or more, as well
as an action that raises a novel legal or policy issue. As discussed in
the SBREFA analysis, this final rule will not have an annual effect on
the economy of $100 million or more. However, the rule does raise novel
policy issues about the allocation of TAA training funds. Therefore,
the Department submitted this final rule to OMB for review under
Executive Order 12866.
Paperwork Reduction Act
The purposes of the Paperwork Reduction Act of 1995 (PRA), 44
U.S.C. 3501 et seq., include minimizing the paperwork burden on
affected entities. The PRA requires certain actions before an agency
can adopt or revise a 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. This final rule does not
require the collection of any new information. The data collection
relevant to this rule, related to the Reserve Funding Request Form
(ETA-9117), is currently approved by OMB under control number 1205-0275
(expires February 28, 2013).
Because this final rule does not require the collection of any new
information nor revises an existing collection of information, the PRA
is not implicated.
Unfunded Mandates Reform Act
For purposes of the Unfunded Mandates Reform Act of 1995, 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. State governments administer
TAA as agents of the United States and are provided appropriated
Federal funds for all TAA expenses.
Executive Order 13132
Executive Order 13132 at section 6 requires Federal agencies to
consult with State entities when a regulation or policy may have a
substantial direct effect on the States or the relationship between the
National Government and the States, or the distribution of power and
responsibilities among the various levels of government, within the
meaning of the Executive Order. Section 3(b) of the Executive Order
further provides that Federal agencies must implement regulations that
have a substantial direct effect only if statutory authority permits
the regulation and it is of national significance. Further, section
239(f) of the Trade Act requires consultation with the States in the
coordination of the administration of the provisions for employment
services, training, and supplemental assistance under sections 235 and
236 of the Trade Act and under title I of the WIA.
As the Department explained in the NPRM, 74 FR 39206, because a
merit staffing requirement may fall within the requirements of Section
3(b), and because of the consultation requirement in section 239(f) of
the Trade Act, the Department has consulted on a variety of issues
arising from the TGAAA amendments. These consultations have been with
the States both directly and through communication with the National
Association of State Workforce Agencies, the National Association of
Workforce Boards, and the National Governors Association, during the
formation of the Governor-Secretary Agreements between the States and
the Department. Additionally, the Department has consulted with the
public at large through this rulemaking's notice and comment process.
In the NPRM, the Department recognized that there may be some costs
to the States that have to convert some TAA-related staff to their
merit staffing system. The Department received a small number of
comments on this matter. These commenters thought that the Department
should have gathered data on and better assessed the costs to States
before proposing the merit staffing requirement.
The Department provides States with appropriated Federal funds for
TAA employment and case management services, including staff, and for
administration of the TAA program. These Federal funds are intended to
cover the costs of the TAA program. And in fact, under the TGAAA, TAA
funds (including funds for administration) have increased
significantly. The Department expects that the amount of State dollars
that will be required to fund this conversion to State merit staffing
is insubstantial. None of the commenters provided any data to the
contrary. As noted above, the TAA program operated successfully for
years with merit staffing required in the Governor-Secretary
Agreements, and with less funding, so there is no reason to believe
that the costs will be substantial or will exceed the available amounts
of administrative funds. Nevertheless, the Department is willing to
work with those States that have to convert some of their TAA-related
staff to their merit staffing system to ensure that these States are
utilizing Federal funds to the fullest extent possible within allowable
cost categories. In the end, though, States are responsible for
staffing the TAA program in their State at a level commensurate with
their Federal funding allocation.
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 safety or health risks to children.
Executive Order 13175
Executive Order 13175 addresses the unique relationship between the
Federal Government and Indian Tribal governments. The order requires
Federal agencies to take certain actions when regulations have ``Tribal
implications.'' Required actions include consulting with Tribal
governments 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
[[Page 17000]]
Federal Government and Indian Tribes, or on the distribution of power
and responsibilities between the Federal Government and Indian Tribes.
This final rule addresses how the Department will allocate to the
States training funds under the Trade Act, and requires that personnel
engaged in TAA-funded functions undertaken to carry out the worker
adjustment assistance provisions must be State employees covered by the
merit system of personnel administration. Accordingly, the Department
concludes that this final rule does not have Tribal implications.
Environmental Impact Assessment
The Department has 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, the
Department has not prepared an environmental assessment or an
environmental impact statement.
Assessment of Federal Regulations and Policies on Families
Section 654 of the Treasury and General Government Appropriations
Act, enacted as part of the Omnibus Consolidated and Emergency
Supplemental Appropriations Act of 1999 (Pub. L. 105-277, 112 Stat.
2681), requires the Department to assess the impact of this 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.
The Department has assessed this final rule and determines that it
will not have a negative effect on families.
Executive Order 12630
This final rule is not subject to Executive Order 12630,
Governmental Actions and Interference with Constitutionally Protected
Property Rights, because it does not involve implementation of a policy
with takings implications.
Executive Order 12988
This 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 to minimize
litigation and provide a clear legal standard for affected conduct, and
has been reviewed carefully to eliminate drafting errors and
ambiguities.
Executive Order 13211
This 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.
Plain Language
The Department drafted this rule in plain language.
List of Subjects in 20 CFR Part 618
Administrative practice and procedure, Grant programs--Labor,
Reporting and recordkeeping requirements, Trade adjustment assistance.
0
For the reasons discussed in the preamble, and under authority of 19
U.S.C. 2320, the Department of Labor adds 20 CFR part 618 to read as
follows:
PART 618--TRADE ADJUSTMENT ASSISTANCE UNDER THE TRADE ACT OF 1974,
AS AMENDED
Subpart A-G [Reserved]
Subpart H--Administration by Applicable State Agencies
Sec.
618.890 Merit staffing.
Subpart I--Allocation of Training Funds to States
618.900 Annual training cap.
618.910 Distribution of initial allocation of training funds.
618.920 Reserve fund distributions.
618.930 Second distribution.
618.940 Insufficient funds.
Subpart A-G [Reserved]
Subpart H--Administration by Applicable State Agencies
Authority: 19 U.S.C. 2320; Secretary's Order No. 03-2009, 74 FR
2279, Jan. 14, 2009.
Sec. 618.890 Merit staffing
(a) Merit-based State personnel. The State must, subject to the
transition period in paragraph (b) of this section, engage only State
government personnel to perform Trade Adjustment Assistance (TAA)-
funded functions undertaken to carry out the worker adjustment
assistance provisions of the Trade Act of 1974, as amended, and must
apply to such personnel the standards for a merit system of personnel
administration applicable to personnel covered under 5 CFR part 900,
subpart F.
(b) Transition period. A State not already in compliance with the
merit system requirement of paragraph (a) of this section must comply
by December 15, 2010.
(c) Exemptions for States with employment service operation
exemptions. A State whose employment service received an exemption from
merit staffing requirements from the Secretary of Labor (Secretary)
under the Wagner-Peyser Act will retain an exemption from the
requirements of paragraph (a) of this section. The exemption does not
apply to the State's administration of trade readjustment allowances
which remain subject to the requirements of paragraph (a) of this
section. To the extent that a State with an authorized ES exemption
provides TAA-funded services using staff not funded under the Wagner-
Peyser Act, the exemption in this paragraph does not apply, and they
remain subject to the requirements of paragraph (a) of this section.
(d) Exceptions for non-inherently governmental functions. The
requirements of paragraph (a) of this section do not prohibit a State
from outsourcing functions that are not inherently governmental, as
defined in Office of Management and Budget (OMB) Circular No. A-76
(Revised), in any supplemental OMB guidance or superseding authority,
and in DOL guidance.
Subpart I--Allocation of Training Funds to States
Authority: 19 U.S.C. 2320; 19 U.S.C. 2296(g); Secretary's Order
No. 03-2009, 74 FR 2279, Jan. 14, 2009.
Sec. 618.900 Annual training cap.
The total amount of payments that may be made for the costs of
training will not exceed the cap established under section 236(a)(2)(A)
of the Trade Act.
(a) For each of the fiscal years 2009 and 2010, this cap is
$575,000,000; and
(b) For the period beginning October 1, 2010, and ending December
31, 2010, this cap is $143,750,000.
Sec. 618.910 Distribution of initial allocation of training funds.
(a) Initial allocation. The initial allocation for a fiscal year
will total 65 percent of the training funds available for that fiscal
year. The Department of Labor (Department) will announce the amount of
each State's initial allocation of funds in accordance with the
requirements of this section at the beginning of each fiscal year. The
Department will determine this initial allocation on the basis of the
full amount of the training cap for that year, even if the full amount
has not been
[[Page 17001]]
appropriated to the Department at that time.
(b) Timing of the distribution of the initial allocation. The
Department will, as soon as practical after the beginning of each
fiscal year, distribute the initial allocation announced under
paragraph (a) of this section. However, the Department will not
distribute the full amount of the initial allocation until it receives
the entire fiscal year's appropriation of training funds. If the full
year's appropriated amount of training funds is less than the training
cap, then the Department will distribute 65 percent of the amount
appropriated.
(c) Hold harmless provision. Except as provided in paragraph (d) of
this section, in no case will the amount of the initial allocation to a
State in a fiscal year be less than 25 percent of the initial
allocation to that State in the preceding fiscal year.
(d) Minimum initial allocation. If a State has an adjusted initial
allocation of less than $100,000, as calculated in accordance with
paragraph (e)(2) of this section, that State will not receive any
initial allocation, and the funds that otherwise would have been
allocated to that State instead will be allocated among the other
States in accordance with this section. A State that does not receive
an initial distribution may apply under Sec. 618.920(b) for reserve
funds to obtain the training funding that it requires.
(e) Process of determining initial allocation. (1) The Department
will first apply the factors described in paragraph (f) of this section
to determine an unadjusted initial allocation for each State.
(2) The Department will then apply the hold harmless provision of
paragraph (c) of this section to the unadjusted initial allocation, as
follows:
(i) A State whose unadjusted initial allocation is less than its
hold harmless amount but is $100,000 or more, will have its initial
allocation adjusted up to its hold harmless amount. If a State's
unadjusted allocation is less than $100,000, the State will receive no
initial allocation, in accordance with paragraph (d) of this section.
Those funds will be shared among other States as provided in paragraph
(e)(3) of this section.
(ii) A State whose unadjusted initial allocation is no less than
its hold harmless threshold will receive its hold harmless amount and
will also receive an adjustment equal to the State's share of the
remaining initial allocation funds, as provided in paragraph (e)(3) of
this section.
(3) The initial allocation funds remaining after the adjusted
initial allocations are made to those States receiving only their hold
harmless amounts, as described in paragraph (e)(2)(i) of this section,
will be distributed among the States with unadjusted initial
allocations that were no less than their hold harmless amounts, as
described in paragraph (e)(2)(ii) of this section (the remaining
States). The distribution of the remaining initial allocation funds
among the remaining States will be made by reapplying the calculation
in paragraph (f) of this section. This recalculation will disregard
States receiving only their hold harmless amount under paragraph
(e)(2)(i) of this section, so that the combined percentages of the
remaining States total 100 percent.
(f) Initial allocation factors. (1) In determining how to make the
initial allocation of training funds, the Department will apply, as
provided in paragraph (f)(3) of this section, the following factors
with respect to each State:
(i) The trend in the number of workers covered by certifications of
eligibility during the most recent four consecutive calendar quarters
for which data are available. The trend will be established by
assigning a greater weight to the most recent quarters, giving those
quarters a larger share of the factor;
(ii) The trend in the number of workers participating in training
during the most recent four consecutive calendar quarters for which
data are available. The trend will be established by assigning a
greater weight to the most recent quarters, giving those quarters a
larger share of the factor;
(iii) The number of workers estimated to be participating in
training during the fiscal year. The estimate will be calculated by
dividing the weighted average number of training participants for the
State determined in paragraph (f)(1)(ii) of this section by the sum of
the weighted averages for all States and multiplying the resulting
ratio by the projected national average of training participants for
the fiscal year, using the estimates underlying the Department's most
recent budget submission or update; and
(iv) The amount of funding estimated to be necessary to provide
approved training to such workers during the fiscal year. The estimate
will be calculated by multiplying the estimated number of participants
in paragraph (f)(1)(iii) of this section by the average training cost
for the State. The average training cost will be calculated by dividing
total training expenditures for the most recent four quarters by the
average number of training participants for the same time period.
(2) The Department may use such other factors that it considers
appropriate.
(3) The Department will assign each of the factors listed in
paragraphs (f)(1)(i) through (f)(1)(iv) of this section an equal
weight. For each of these weighted factors, the Department will
determine the national total and each State's percentage of the
national total. Based on a State's percentage of each of these weighted
factors, the Department will determine the percentage that the State
will receive of the amount available for initial allocations. The
percentages of initial allocation amounts calculated for all States
combined will total 100 percent of initial allocation funds.
(4) The Department may, by administrative guidance published for
comment, change the weights provided in paragraphs (f)(1) and (f)(3) of
this section, or add additional factors. No such changes or additions
will take effect before December 31, 2010.
Sec. 618.920 Reserve fund distributions.
(a) The remaining 35 percent of the training funds for a fiscal
year will be held by the Department as a reserve. Reserve funds will be
used, as needed, for additional distributions during the remainder of
the fiscal year and for those States that do not receive an initial
distribution. States may not receive reserve funds for TAA
administration or employment and case management services without a
request for training funds.
(b) A State requesting reserve funds must demonstrate that at least
50 percent of its training funds have been expended, or that it needs
more funds to meet unusual and unexpected events. A State requesting
reserve funds also must provide a documented estimate of expected
funding needs through the end of the fiscal year. That estimate must be
based on an analysis that includes at least the following:
(1) The average cost of training in the State;
(2) The expected number of participants in training through the end
of the fiscal year; and
(3) The remaining funds the State has available for training.
Sec. 618.930 Second distribution.
The Department will distribute at least 90 percent of the total
training funds for a fiscal year to the States no later than July 15 of
that fiscal year. The Department will first fund all acceptable
requests for reserve funds filed before June 1. If there are any funds
remaining
[[Page 17002]]
to be distributed after these reserve fund requests are satisfied,
those funds will be distributed to those States that received an
initial allocation in an amount greater than their hold harmless
amount, using the methodology described in Sec. 618.910.
Sec. 618.940 Insufficient funds.
If, during a fiscal year, the Department estimates that the amount
of funds necessary to pay the costs of approved training will exceed
the training cap under Sec. 618.900, the Department will decide how
the amount of available training funds that have not been distributed
at the time of the estimate will be allocated among the States for the
remainder of the fiscal year. That decision will be communicated
through administrative notice.
Signed at Washington, DC, this 22nd day of March 2010.
Jane Oates,
Assistant Secretary, Employment and Training Administration.
[FR Doc. 2010-6697 Filed 4-1-10; 8:45 am]
BILLING CODE 4510-FN-P