[Federal Register Volume 76, Number 34 (Friday, February 18, 2011)]
[Proposed Rules]
[Pages 9517-9525]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-3536]


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DEPARTMENT OF LABOR

Veterans' Employment and Training Service

20 CFR Part 1001

RIN 1293-AA18


Uniform National Threshold Entered Employment Rate for Veterans

AGENCY: Veterans' Employment and Training Service, Labor.

ACTION: Notice of proposed rulemaking; request for comments.

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SUMMARY: The Veterans' Employment and Training Service (VETS) of the 
Department of Labor (the Department) is proposing a rule to implement a 
uniform national threshold entered employment rate for veterans 
applicable to State employment service delivery systems. The Department 
undertakes this rulemaking in accordance with the Jobs for Veterans 
Act, which requires the Department to implement that threshold rate by 
regulation.

DATES: To ensure consideration, comments must be received on or before 
April 19, 2011.

ADDRESSES: You may submit comments, identified by Regulatory 
Information Number (RIN) 1293-AA18, by any one of the three following 
methods:
    <bullet> Federal e-Rulemaking Portal: http://www.regulations.gov. 
Follow the Web site instructions for submitting comments.
    <bullet> Mail/Hand Delivery/Courier: Written comments, disk, and 
CD-ROM submissions may be mailed or delivered by hand delivery/courier 
to The Veterans' Employment and Training Service, U.S. Department of 
Labor, 200 Constitution Avenue, NW., Room S-1325, Washington, DC 20210.
    <bullet> Fax: Comments may be submitted by fax, with a cover page 
to the attention of Patrick Hecker, at (202) 693-4755 (this is not a 
toll-free number).
    Instructions: Please submit your comments by only one method. All 
submissions received must include the agency name, as well as RIN 1293-
AA18. The Department will post all comments received on http://www.regulations.gov without making any change to the comments, 
including any personal information provided. The http://www.regulations.gov Web site is the Federal e-rulemaking portal and all 
comments posted there are available and accessible to the public. 
Therefore, the Department recommends that commenters safeguard their 
personal information such as Social Security Numbers, personal 
addresses, telephone numbers, and e-mail addresses. It is the 
responsibility of the commenter to safeguard his or her information. 
Also, please note that due to security concerns, postal mail delivery 
in Washington, DC, may be delayed. Therefore, in order to ensure that 
comments receive full consideration, the Department encourages the 
public to submit comments via the Internet as indicated above.
    Docket: The Department will make all the comments it receives 
available for public inspection during normal business hours at the 
above address. If you need assistance to review the comments, the 
Department will provide you with appropriate aids such as readers or 
print magnifiers. The Department will make copies of the proposed rule 
available, upon request, in large print or electronic file on computer 
disk. The Department will consider providing the proposed rule in other 
formats upon request. To schedule

[[Page 9518]]

an appointment to review the comments and/or obtain the proposed rule 
in an alternate format, contact the office of Gordon Burke at (202) 
693-4730 (VOICE) (this is not a toll-free number) or (202) 693-4760 
(TTY/TDD). You may also contact Mr. Burke's office at the address 
listed above.

FOR FURTHER INFORMATION CONTACT: Patrick Hecker, State Grants Lead, 
Veterans' Employment and Training Service, U.S. Department of Labor, 
200 Constitution Avenue, NW., Room S-1312, Washington, DC 20210, at 
<a href="/cdn-cgi/l/email-protection#ffb79a9c949a8dd1af9e8b8d969c94bf9b9093d1989089"><span class="__cf_email__" data-cfemail="7e361b1d151b0c502e1f0a0c171d153e1a111250191108">[email protected]</span></a>, or at (202) 693-4709 (this is not a toll-free 
number).

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

I. Background--provides a brief description of the development of 
the proposed rule.
II. Section-by-Section Review of the Proposed Rule--summarizes and 
discusses the proposed regulations.
III. Administrative Information--sets forth the applicable 
regulatory requirements.

I. Background

    On November 7, 2002, the Jobs for Veterans Act (JVA), Public Law 
107-288 (Nov. 7, 2002) was signed into law. Section 4(a)(1) of the JVA 
amended 38 U.S.C. 4102A to require that the Secretary of Labor 
``establish, and update as appropriate, a comprehensive performance 
accountability system (as described in subsection (f)) and carry out 
annual performance reviews of veterans employment, training, and 
placement services provided through employment service delivery 
systems, including through disabled veterans' outreach program 
specialists and through local veterans' employment representatives in 
States receiving grants, contracts, or awards under this chapter.'' 38 
U.S.C. 4102A(b)(7).
    Section 4102A(f) referred to in the statutory quote above requires 
the establishment of performance standards and outcome measures to 
measure the performance of State employment service delivery systems. 
Section 4101(7) of the statute defines ``employment service delivery 
system'' to include ``labor exchange services * * * offered in 
accordance with the Wagner-Peyser Act.'' The Department interprets this 
definition to include the services delivered through the Wagner-Peyser 
State Grants, funded by the Employment and Training Administration 
(ETA), as well as the services delivered through the Jobs for Veterans 
State Grants (JVSG), funded by VETS. In addition, the Department 
interprets this definition to exclude the services funded through the 
Workforce Investment Act of 1998 (WIA) (Pub. L. 105-220).
    Under section 4102A(f), the standards and measures used to assess 
performance of veterans' programs must be consistent with State 
performance measures applicable under section 136(b) of the WIA. 38 
U.S.C. 4102A(f)(2)(A); see also WIA section 136(b) (codified at 29 
U.S.C. 2871(b)). The basic standards and measures applied by the 
Department to measure performance under WIA are referred to in the 
State employment service delivery systems as ``common measures.'' The 
current methods of calculating the common measures are specified in 
Training and Employment Guidance Letter (TEGL) No.17-05, issued on 
February 17, 2006. This TEGL can be accessed at http://wdr.doleta.gov/directives/attach/TEGL17-05.pdf. The common measures for adult 
workforce programs include a measure of the rate at which enrollees of 
State employment service delivery systems enter employment. This is 
referred to as the ``entered employment rate'' or EER. Under the common 
measures, there is a comparable EER specifically applicable to veterans 
and eligible persons. Application of that measure to all State 
employment service delivery systems is implemented each year through 
issuance of a Veterans' Program Letter (VPL), most recently VPL 08-10, 
issued on June 29, 2010, which established the reporting and 
performance measurement requirements for PY 2010. This VPL can be 
accessed at: http://www.dol.gov/vets/VPLS/VPLDirectory.html.
    This Proposed Rule establishes a uniform national threshold only 
for the EER for veterans and eligible persons. If the calculation of 
the standards and measures applied by the Department to measure 
performance under WIA or under a successor program to WIA are revised 
in the future by the Department through issuance of policy guidance, 
the Proposed Rule provides that the revised method of calculating the 
EER for veterans and eligible persons will be used in calculating the 
uniform threshold EER for the purposes of the Proposed Rule. The method 
of calculating the uniform national threshold EER for veterans and 
eligible persons will be specified to State employment service delivery 
systems in the annual VPL, as mentioned above.
    As part of its responsibility for measuring the performance of 
veterans' programs, the Department is required to establish a uniform 
national threshold EER to be used in determining whether a State is 
deficient with regard to its EER for veterans and eligible persons. 
Section 4102A(c)(3) of Title 38 provides:

    (A)(i) As a condition of a grant or contract under this section 
for a program year, in the case of a State that the Secretary 
determines has an entered employment rate for veterans that is 
deficient for the preceding program year, the State shall develop a 
corrective action plan to improve that rate for veterans in the 
State. (ii) The State shall submit the corrective action plan to the 
Secretary for approval, and if approved, shall expeditiously 
implement the plan. (iii) If the Secretary does not approve a 
corrective action plan submitted by the State under clause (i), the 
Secretary shall take such steps as may be necessary to implement 
corrective actions in the State to improve the entered-employment 
rate for veterans in that State. (B) To carry out subparagraph (A), 
the Secretary shall establish in regulations a uniform national 
threshold entered-employment rate for veterans for a program year by 
which determinations of deficiency may be made under subparagraph 
(A). (C) In making a determination with respect to a deficiency 
under subparagraph (A), the Secretary shall take into account the 
applicable annual unemployment data for the State and consider other 
factors, such as prevailing economic conditions, that affect 
performance of individuals providing employment, training, and 
placement services in the State.

    The purpose of this Proposed Rule is to establish the uniform 
national threshold EER, as required of the Secretary in 38 U.S.C. 
4102A(c)(3)(B), for use in determining deficiencies in States' 
performance in assisting veterans to meet their employment needs. The 
Proposed Rule also explains how the threshold will be used in the 
process of identifying those States to be reviewed for a potential 
determination of deficiency, and it identifies certain factors, in 
addition to the threshold, that will be included in the Department's 
review to determine deficiency. 38 U.S.C. 4102A(c)(3)(C). Finally, in 
those cases in which a State's EER is determined to be deficient, the 
Proposed Rule identifies the procedure for the subsequent submission 
and review of a corrective action plan (CAP), the delivery of technical 
assistance (TA), and the initiation of the necessary steps to implement 
corrective actions to improve the State's performance in assisting 
veterans to meet their employment needs. 38 U.S.C. 4102A(c)(3)(A).
    VETS is the agency of the Department with principal responsibility 
for monitoring the performance of all State employment service delivery 
systems with respect to the services received and outcomes experienced 
by veterans. Since Program Year 2005 (July 1, 2005 through June 30, 
2006), VETS has been collecting data from each State on the

[[Page 9519]]

EER achieved for veterans and eligible persons, and annually VETS 
calculates the national EER for veterans and eligible persons. VETS is 
taking this rulemaking action to establish the uniform national 
threshold EER now since the common measures, including the EER for 
veterans and eligible persons, have been in place for several years in 
the State employment service delivery systems and there is empirical 
data and a rational basis for proposing a uniform national threshold 
EER for veterans and eligible persons.
    To establish the uniform national threshold, VETS has considered a 
variety of methodologies and has used actual EER results from Program 
Years 2005 through (3rd Quarter) 2009 in order to test the validity of 
the methodologies. VETS' goal was to establish a uniform national 
threshold that would meet five criteria: the threshold should produce 
reasonable results under varying economic conditions; the threshold 
should relate directly to the national EER because the national EER is 
the overall program performance measure related to entered employment 
rates; the threshold should identify State agencies whose EERs are 
demonstrably low; the threshold methodology should be easily explained 
and readily grasped; and the annual threshold-setting process should 
not conflict with or introduce confusion into the annual performance 
goal-setting process conducted between VETS and each State agency.
    VETS first developed and tested a two-step process setting the 
uniform national threshold EER for veterans and determining which, if 
any State agencies would be subject to a formal review to determine 
whether or not a Corrective Action Plan would be required. First, VETS 
would compare each State's program year EER with the national EER for 
that program year. Then, the State's program year EER would be compared 
to the State's average EER for the prior three program years. Those two 
comparisons would provide the basis for identifying those States that 
would undergo further review of their program year EERs. By comparing 
each State's program year EER to the national EER for the same program 
year while also comparing each State's program year EER to its own 
average EER for the prior three program years, the process was intended 
to balance application of a standard criterion with application of a 
relative measure reflecting the variation among the States with respect 
to economic conditions and other relevant factors. However, empirical 
tests with State performance data from Program Years 2008 and 2009 
demonstrated that this methodology did not produce reasonable results 
under the conditions created by the economic recession experienced 
during that period.
    Another formula that was developed and tested involved averaging of 
the annual national EERs, measuring the percentage of change over time, 
and using the resultant change percentage as the uniform national 
threshold EER; that benchmark would be used for comparisons of the 
change percentages in the program year EERs achieved by each State for 
the same time period. This methodology added complexity to the process, 
and testing also demonstrated that averaging tends to skew the 
resultant measure up or down. Therefore, VETS determined that the use 
of a method involving averaging adds complexity without producing 
reasonable results.
    VETS then looked at simpler designs for calculating and applying 
the uniform national threshold EER. One methodology used the national 
EER for the program year before the subject program year as the basis 
for calculating the threshold EER. The process would have involved 
simply setting the threshold at a particular percentage of the national 
EER from the prior year and comparing the State agencies' actual 
achievements in the subject program year to that threshold percentage. 
However, testing at several different levels, that is, percentages, 
indicated that using the prior year's national EER as the basis for a 
threshold also produces unreasonable results in years when there are 
relatively unusual declines or upturns in economic conditions.
    VETS then tested and selected a similar one-step methodology using 
the national EER for the subject program year as the basis for 
calculating the threshold EER. VETS chose to propose a 90% (of the 
national EER) level as the threshold for identifying the State agencies 
to be subject to a deficiency review each year because testing of that 
threshold level most completely satisfies the five criteria stated 
above. Testing of higher and lower threshold levels (e.g., 80 to 95% of 
the national EER) produced results that in one or more ways failed to 
satisfy those criteria.

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

    The Proposed Rule includes a total of eight sections. Sections 
1001.160 through 1001.162 address the general aspects of the Proposed 
Rule, such as purpose, scope and definitions. Sections 1001.163 and 
1001.164 address the two EER measures that are at the heart of the 
Proposed Rule: (a) A State's program year EER, which will be reviewed 
annually for each State against the national threshold EER; and (b) the 
uniform national threshold EER, which is the benchmark used in the 
annual review of each State's program year EER. VETS proposes to use 
the uniform national threshold EER as the criterion for evaluating each 
State's program year EER because this methodology is reasonable, easy 
to understand, and likely to promote continuous improvement in the 
entered employment outcomes achieved for veterans and eligible persons. 
Section 1001.165 states when the uniform national threshold EER will be 
published each year, and Sec.  1001.166 explains how the two proposed 
EER measures will be used in the process of determining whether or not 
a State agency will be subject to a CAP in order to receive its next-
due Jobs for Veterans State grant. Section 1001.167 addresses other 
monitoring of compliance regarding services to veterans.

What is the purpose and scope of this part? (Sec.  1001.160)

    Section 1001.160 briefly describes the purpose of this regulation 
and supplies the citation of the requirement in the JVA. It also 
identifies the service providers to which this regulation applies, that 
is, the agencies that comprise State employment service delivery 
systems.

What definitions apply to this part? (Sec.  1001.161)

    Section 1001.161 defines the terms used in this proposed rule. For 
purposes of this Proposed Rule, the Department is interpreting the 
statutory term ``employment service delivery system'' to include the 
employment service delivery infrastructure, personnel, and services 
provided through the combined funding of Wagner-Peyser State Grants and 
JVSGs, but excluding those delivery systems provided through WIA grants 
and governed by a separate performance system. A program year, which is 
the performance period applicable to State employment service delivery 
systems, is defined as the period from July 1 of a year through June 30 
of the following year. A program year is numbered according to the 
calendar year during which it begins.

How does the Department define veteran for purposes of this subpart? 
(Sec.  1001.162)

    The definition of veteran currently in effect for the State 
employment service delivery systems operating under the Wagner-Peyser 
and JVSG funding is

[[Page 9520]]

based on the definition of the term eligible veteran in 38 U.S.C. 
4211(4), as referenced in 38 U.S.C. 4101(4). That definition of 
eligible veteran includes a criterion requiring the individual to have 
served over 180 days on active military duty. That definition of 
veteran currently applies to eligibility for JVSG services and also 
applies to the State employment service delivery systems (both the 
Wagner-Peyser and JVSG components) for program reporting purposes.
    The JVA enacted a new priority of service requirement for veterans 
and eligible spouses in all employment and training programs funded by 
the Department. The Department has implemented that requirement through 
issuance of a final rule on veterans' priority of service at 20 CFR 
Part 1010. Section 1010.110 of that rule clarifies that the definition 
of veteran enacted for priority of service purposes at 38 U.S.C. 
4215(a)(1)(A) refers to the definition of veteran at 38 U.S.C. 101(2), 
which does not include the criterion requiring over 180 days of active 
duty service. Section 1010.330(c)(2)(i) of the priority of service rule 
further specifies that the latter, less restrictive, definition of 
veteran will be applied in the future for reporting the services 
received and the outcomes experienced by veterans and eligible spouses 
served by employment and training programs funded by the Department.
    In conjunction with issuance of the final rule on priority of 
service, the Department also published an Information Collection 
Request (ICR) which was approved by the Office of Management and Budget 
(OMB) under OMB Control Number 1205-0468. The reporting specifications 
authorized under that approval call for application of the less 
restrictive definition of veteran to the Wagner-Peyser component of 
State employment service delivery systems. The Department delayed 
implementing this new requirement in light of the impact of the current 
recession on the public workforce system, as well as the impact upon 
the system of the various initiatives in response to the recession, 
which were authorized under the American Recovery and Reinvestment Act. 
It is not certain when the Department will implement the new reporting 
specifications.
    To accommodate the anticipated addition of the less restrictive 
veteran definition for reporting by the Wagner-Peyser component of 
State employment service delivery systems, the Department intends the 
proposed rule's definition of veteran to have two stages. The first 
stage will begin with application of the rule to the first program year 
that begins following the effective date of the final rule. During the 
first stage, all the EER measures implemented under the proposed rule 
will reflect the more restrictive veteran definition. The second stage 
will begin two years after the program year for which data are first 
collected and reported on the less restrictive veteran definition. For 
example, if priority of service reporting first applies to Wagner-
Peyser for PY 2011, the second stage of implementation of the proposed 
rule will first apply for PY 2013. During the second stage, all the EER 
measures implemented under the proposed rule will reflect the less 
restrictive veteran definition. During the second stage of 
implementation, any veteran who meets the more restrictive definition 
will be considered to meet the less restrictive definition.
    Applying the definition of veteran in two stages will enable 
immediate implementation of the uniform national threshold EER under 
the more restrictive veteran definition, while also establishing the 
necessary period for implementing the uniform national threshold EER 
using the less restrictive veteran definition. This addition of the new 
definition of veteran for the Wagner-Peyser component of State 
employment delivery systems will not increase the information 
collection burden for the States, nor will it alter the calculation, 
publication, or use of the EER for veterans and eligible persons, as 
described in the sections that follow.
    When the less restrictive definition of veteran takes effect for 
these regulations and is applied to the Wagner-Peyser component of 
State employment service delivery systems as required by the priority 
of service final rule and the accompanying reporting specifications, 
the more restrictive definition (i.e., 180+ days of active duty 
service) also will be retained. That is because the Secretary is 
required, by 38 U.S.C. 4107(c)(1), to report annually to the Senate and 
House Veterans' Affairs Committees on employment and training services 
for veterans. The statutory requirement for that report specifies that 
it is to include information on the characteristics, services and 
outcomes of ``eligible'' veterans who meet the more restrictive veteran 
definition. Therefore, unless that specific reporting requirement is 
amended through legislative action, the Wagner-Peyser component of 
State employment service delivery systems will be reporting information 
for veterans about their characteristics (such as their veteran 
status), services received and outcomes experienced, under both 
definitions.

What is the national entered employment rate (EER) and what is a 
State's program year EER for purposes of this part? (Sec.  1001.163)

    This proposed section discusses the two EER measures that will be 
used in the evaluation process described by the proposed rule. 
Generally, an EER for veterans and eligible persons looks at the 
veterans and eligible persons who have participated in an employment 
service delivery system and then exited that system. The EER measures 
the number of these participants who are employed after exiting 
compared to the total number of the participants who exited. The 
calculation of the EER, as discussed above, is specified through 
Departmental policy guidance issued in TEGL No.17-05, which describes 
the calculation of all the common measures. The TEGL describes the 
entered employment rate as:

    Of those who are not employed at the date of participation: The 
number of adult participants who are employed in the first quarter 
after the exit quarter divided by the number of adult participants 
who exit during the quarter.

    This Proposed Rule uses this calculation of the EER as applied to 
veterans and eligible persons who participate in State employment 
service delivery systems, consistent with VPL 08-10. This calculation 
is stated in proposed Sec.  1001.163(b).
    Using this calculation method, VETS annually calculates the 
national EER for veterans and eligible persons. As stated in proposed 
Sec.  1001.163(c), the calculation of the national EER for veterans and 
eligible persons measures the employment results for the group of 
veterans and eligible persons who are not employed at the date of their 
participation in the nationwide set of State employment service 
delivery systems and then exit those systems during the set of four 
exit quarters that is associated with the EER measure for a specific 
four-quarter reporting period. This nationwide perspective on the State 
employment service delivery systems looks at all the employment service 
delivery systems in each State together as one national employment 
service delivery system. The national EER for veterans and eligible 
persons currently is computed by: (1) Summing, for the set of four exit 
quarters, the total number of these veterans and eligible persons who 
are employed in the first quarter after their exit quarter; (2) 
summing, for the set of four exit quarters, the total number of these 
veterans and eligible persons who exit

[[Page 9521]]

during the exit quarters; and, (3) dividing the first sum by the second 
sum. This measure currently is compiled by the Labor Exchange Reporting 
System (LERS), implemented by ETA, and currently is displayed in the 
cell that appears in Row 6 at Column A-4 of the ETA 9002-D Report, as 
defined in the ETA 9002 and VETS 200 DATA PREPARATION HANDBOOK; ET 
HANDBOOK NO. 406 (OMB Approval No.: 1205-0240; Expiration Date: 03/31/
2012). The national EER resulting from this calculation is expressed as 
a percentage that is rounded to the nearest tenth of a percent.
    A State's program year EER is the EER for veterans and eligible 
persons achieved by a single State's employment service delivery system 
for the program year under review. It is calculated using the same 
method as the national EER. A State's program year EER is discussed in 
proposed Sec.  1001.163(d). A State's program year EER is expressed as 
a percentage that is rounded to the nearest tenth of a percent. For the 
balance of this preamble, a ``State's program year EER'' also may be 
referred to simply as a ``program year EER.''
    Section 1001.163(b) of the Proposed Rule specifies that the method 
of calculation of the EER for veterans and eligible persons is 
established based on policy guidance issued by the Department. As 
indicated above, that method of calculation currently is: (a) 
Established by TEGL No. 17-05; (b) implemented for reporting purposes 
by ET HANDBOOK NO. 406; and, (c) applied to State employment service 
delivery systems for veterans and eligible persons by VPL 08-10. If the 
Department revises the calculation of the EER in the future through new 
policy guidance, the revised method of calculation will apply to the 
calculation of the national EER and a State's program year EER.

What is the uniform national threshold EER, and how is it calculated? 
(Sec.  1001.164)

    The uniform national threshold EER is equal to 90% of the national 
EER for veterans and eligible persons (as defined in Sec.  
1001.163(c)).
    As discussed above for Sec.  1001.163 of the Proposed Rule, the 
method of calculating the EER for veterans and eligible persons is 
established through policy guidance. The Department may revise the 
method of calculating the EER through the issuance of new policy 
guidance. If this occurs, the uniform national threshold EER will 
remain 90% of that newly-calculated national EER for veterans and 
eligible persons.
    VETS chose to propose the 90% (of the national EER) level as the 
threshold for identifying the State agencies to be subject to a 
deficiency review each year because testing of that threshold level 
(using the empirical data available) most completely satisfies the five 
criteria stated in the Background section above. Testing of higher and 
lower threshold levels (e.g., 80 to 95% of the national EER) using 
empirical data from prior years produced results that in one way or 
another failed to satisfy those criteria.

When will the uniform national threshold EER be published? (Sec.  
1001.165)

    Complete, final program year results for the entered employment 
outcomes achieved by each State agency typically are compiled by VETS 
during the month of October following the end of each program year (on 
June 30). For each program year, VETS will: (a) Finalize its 
calculation of the uniform national threshold EER; (b) finalize its 
calculation of each State's program year EER; and, (c) when 
practicable, publish those results in December following the end of the 
program year.

How will the uniform national threshold EER be used to evaluate whether 
a State will be required to submit a corrective action plan (CAP)? 
(Sec.  1001.166)

    The JVA requires that the Department develop a uniform national 
threshold EER by which determinations of deficiency may be made. 38 
U.S.C. 4102A(c)(3)(B). If the Department determines that a State's 
program year EER is deficient, the State must develop a CAP. 38 U.S.C. 
4102A(c)(3)(A)(i). The law requires the Secretary to take into account 
the annual unemployment data for the State and to consider other 
factors that may have affected the program year EER for veterans and 
eligible persons, such as prevailing economic conditions, before 
requiring a CAP. 38 U.S.C. 4102A(c)(3)(C).
    The Department proposes to use a simple comparison process to 
identify those State agencies that need to undergo further review to 
determine whether their program year EERs are deficient, resulting in 
the need for a CAP. First, the Department will compare each State's 
program year EER with the uniform national threshold EER (90% of the 
national EER) for that program year. A State agency whose program year 
EER does not meet or exceed the uniform national threshold will be 
subject to a review by VETS to determine whether the program year EER 
is deficient. For those States whose program year EER is determined to 
be deficient, a CAP will be required.
    VETS' review to determine deficiency will consider the degree to 
which the State's program year EER fell short of the uniform national 
threshold EER for that program year, as well as the annual unemployment 
data for the State. The review also may include other relevant factors, 
including other measures of prevailing economic conditions and regional 
economic conditions, other measures of workforce program performance, 
and/or any information the State may submit. The review will include 
consultation with VETS field staff about findings from their on-site 
reviews and desk audits of the State agency's implementation of 
policies and procedures for services to veterans. The review also may 
include consultation with staff affiliated with other agencies of the 
Department, as appropriate.
    The determination that a program year EER for any State is 
deficient will be made on the basis of this review. Once a State's 
program year EER has been determined to be deficient, the governing 
statute envisions a cooperative relationship between that State and the 
Department. Evidence of that intent is the inclusion in the statute of 
specific authorization (at 38 U.S.C. 4102A(g)) for the Secretary to 
provide technical assistance (TA) to any State whose program year EER 
is determined to be deficient, including TA in the development of a 
CAP.
    The following illustrates how the uniform national threshold EER 
and the State's program year EER will be compared. In these examples, 
the program year hypothetically is Program Year (PY) 2009, the national 
EER is 65.2%, and the uniform national threshold EER is 58.7%.
    1. State agency <greek-i>1 achieved a program year EER of 63.5%. 
This State would be exempt from a deficiency review based solely on the 
statistics because its program year EER exceeds the uniform national 
threshold EER.
    2. State agency <greek-i>2 achieved a program year EER of 58.7%. 
This State would be exempt from a deficiency review based solely on the 
statistics because its program year EER equals the uniform national 
threshold EER.
    3. State <greek-i>3 achieved a program year EER of 58.0%. This 
State would be considered subject to a deficiency review because it 
failed to meet or exceed the uniform national threshold EER.
    If VETS' review determines a State's program year EER to be 
deficient, the State will be required, as a condition for receipt of 
the upcoming program year's JVSG grant, to submit a CAP to the Grant 
Officer's Technical Representative by June 30 of the year following the

[[Page 9522]]

calendar year in which the program year under review ended. For any 
State required to submit a CAP, VETS will provide TA in the development 
of the CAP. The Department's review and (as required) comment on the 
CAP will be handled in conjunction with the Department's review of that 
State's annual application for funds under the JVSG program for the 
upcoming fiscal year (which begins on October 1 of the year following 
the calendar year in which the program year under review ended). Based 
on review of the CAP submitted, VETS may provide additional TA to the 
State. If the CAP is approved, the approval of the CAP will be 
transmitted in conjunction with the approval of that State's JVSG 
funding for the upcoming fiscal year. The State then must expeditiously 
implement the CAP. If the CAP is not approved, VETS will take such 
steps as necessary to implement corrective actions to improve the 
State's EER for veterans and eligible persons. If the State fails to 
cooperate with these corrective actions, VETS may take any actions 
available to remedy non-compliance under 20 CFR part 658, subpart H. 
These are the compliance measures available to the Assistant Secretary 
for Veterans' Employment and Training through 20 CFR 1001.130(a).

In addition to the procedures specified in these regulations, will the 
Department be conducting any other monitoring of compliance regarding 
services to veterans? (Sec.  1001.167)

    Yes. VETS, as the grantor agency for the JVSG, has primary 
responsibility for initiating comprehensive compliance and performance 
reviews of each State's employment service delivery system with respect 
to the services received and outcomes experienced by veterans. The 
specific procedures prescribed in this Proposed Rule are distinct from, 
but related to, that overall monitoring responsibility.
    These procedures also relate in a somewhat different way to the 
joint monitoring of priority of service, to be conducted by VETS and 
ETA according to 20 CFR 1010.240(b). Specifically, if a State's program 
year EER is determined to be deficient for a given program year, that 
fact would be one of the elements considered in monitoring priority of 
service, since failure to fully implement priority of service could be 
one of the contributors to a deficient program year EER.

III. Administrative Information

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

    The Regulatory Flexibility Act (RFA), 5 U.S.C. Chapter 6, requires 
the Department to evaluate the economic impact of this proposed rule 
with regard to small entities. The RFA defines small entities to 
include small businesses, small organizations including not-for-profit 
organizations, and small governmental jurisdictions. The Department has 
determined, and has certified to the Chief Counsel for Advocacy, Small 
Business Administration, that the proposed rule does not impose a 
significant economic impact on a substantial number of such small 
entities, because this Rule would directly impact only States and the 
definition of small entities does not include States.

Executive Order 12866

    Executive Order 12866 requires that for each ``significant 
regulatory action'' proposed by the Department, the Department conduct 
an assessment of the proposed regulatory action and provide OMB with 
the proposed regulation and the requisite assessment prior to 
publishing the regulation. A significant regulatory action is defined 
to include an action that will have an annual effect on the economy of 
$100 million or more, and/or an action that raises a novel legal or 
policy issue. The uniform national threshold EER implemented by this 
proposed rule will not have an annual effect on the economy of $100 
million or more.
    VETS estimates that the costs specifically attributable to 
submitting and implementing a CAP would be about one percent of a State 
agency's annual grant amount. Although VETS has not had recent 
experience with a CAP and associated costs, past experience suggests 
that one percent would be a reasonable estimate. States' JVSG grants 
average about $3 million per year, so a typical State agency would be 
expected to use an average of about $30,000 for CAP costs if a CAP were 
to be required. Based on an analysis of the number of States that in 
the past would have failed to meet the proposed uniform national 
threshold level, VETS estimates that there would be no more than four 
to six CAPS per year, and allowing for the possible inclusion of some 
of the State agencies from larger States whose funding levels exceed 
the average, VETS estimates that the upper range of the average annual 
total cost for CAPs will not exceed $200,000 to $300,000. Furthermore, 
if this estimate falls short of CAP development costs or if a CAP 
requires the State agency to fund additional services for which its 
JVSG is not adequate, the funds for developing the CAP or any 
additional services will be provided through VETS' routine reallocation 
procedure, which requires no additional appropriation and thus would 
have no net effect on the economy.
    This Proposed Rule could raise a novel legal or policy issue 
arising out of legal mandates, the President's priorities, or the 
principles set forth in the Executive Order. Therefore, the Department 
has submitted this Proposed Rule to OMB for review.

Paperwork Reduction Act

    The purposes of the Paperwork Reduction Act of 1995 (PRA), 44 
U.S.C. 3501 et seq., include minimizing the paperwork burden on 
affected entities. The PRA requires certain actions before an agency 
can adopt or revise the collection of information, including publishing 
a summary of the collection of information and a brief description of 
the need for and proposed use of the information. This rule will not 
require new or additional information collections, as defined in the 
Act, from the affected entities. The Department has determined that a 
State's obligation to develop and submit a CAP for approval does not 
qualify as a collection of information, as defined by 5 CFR 1320.3(c), 
because after receiving a determination of deficiency from VETS that 
excludes the systemic factors beyond the State's control, the State is 
required to develop and submit a CAP based on a self-diagnosis and 
prescription that addresses the unique set of deficiencies embodied in 
that State's policies and procedures. Therefore, a CAP does not qualify 
as a ``collection of information'' under 5 CFR 1320.3(c), because it 
does not result from identical questions nor is the content across 
multiple CAPs in any way identical. In addition, a CAP does not qualify 
as ``information'' under 5 CFR 1320.3(h) because the individuality of 
the information provided in each State's CAP is consistent with a 
response to a ``request for facts or opinions addressed to a single 
person,'' which is excluded under 5 CFR 1320.3(h)(6).
    Current reporting systems and requirements are not changed by this 
Proposed Rule. VETS will calculate the uniform national threshold EER 
using data from the existing approved data collection included in the 
ETA 9002 and VETS 200 DATA PREPARATION

[[Page 9523]]

HANDBOOK; ET HANDBOOK NO. 406 (OMB Approval No.: 1205-0240; Expiration 
Date: 03/31/2012). Therefore, this regulation does not impose on the 
State employment service delivery systems any new information 
collection that would require approval under the PRA.

Executive Order 13132

    The Department has reviewed this proposed rule in accordance with 
Executive Order 13132 regarding federalism and has determined that it 
does not have ``federalism implications.'' The rule does not ``have 
substantial direct effects on the States, on the relationship between 
the national government and the States, or on the distribution of power 
and responsibilities among the various levels of government.'' This 
proposed rule implements the uniform national threshold EER for 
veterans and eligible persons applicable to State employment service 
delivery systems. This proposed rule does nothing to alter either the 
relationship between the national government and the States, or the 
distribution of power and responsibilities among the various levels of 
government. Accordingly, this proposed rule does not have ``federalism 
implications.''

Unfunded Mandates Reform Act of 1995

    For purposes of the Unfunded Mandates Reform Act (UMRA) of 1995, 
this rule does not include any Federal mandate that may result in 
increased expenditures by State, local and Tribal governments, or by 
the private sector. As this proposed rule does not impose any unfunded 
Federal mandate, the UMRA is not implicated. As explained above, 
current reporting requirements on the States are not changed by this 
Proposed Rule. The Labor Exchange Reporting System (LERS) produces 
program year EER results for 52 of the 54 reporting State employment 
service delivery systems and calculates the first step toward a 
national EER, based on inclusion of those 52 reporting units. For each 
program year, VETS will supplement the results available from the LERS 
by: (a) Incorporating the program year EER results for the two States 
that are piloting a separate reporting system; and, (b) calculating the 
uniform national threshold EER based on inclusion of the results for 
all 54 reporting units. Therefore, this regulation does not impose any 
new reporting or calculation requirement upon the State employment 
service delivery systems. Some States may be required to institute 
corrective actions under this rule. However, such actions are required 
by statute. Moreover, the Department provides grant funds for the 
administration of the JVSG program which may be used for any costs 
associated with the imposition of a CAP.

Executive Order 13045

    Executive Order 13045 concerns the protection of children from 
environmental health risks and safety risks. This proposed rule 
implements the uniform national threshold EER for veterans and eligible 
persons applicable to State employment service delivery systems funded 
by the Department. This proposed 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.'' The order defines regulations as having ``Tribal 
implications'' when they have substantial direct effects on one or more 
Indian Tribes, on the relationship between the Federal Government and 
Indian Tribes, or on the distribution of power and responsibilities 
between the Federal Government and Indian Tribes. The Department has 
reviewed this proposed rule and concludes that it does not have Tribal 
implications for purposes of Executive Order 13175, as it does nothing 
to affect either the relationship or the distribution of power and 
responsibilities between the Federal Government and Indian Tribes.

Environmental Impact Assessment

    The Department has reviewed this proposed 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 proposed 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 the Impact of Federal Regulations and Policies on 
Families

    Section 654 of the Treasury and General Government Appropriations 
Act, enacted as part of the Omnibus Consolidated and Emergency 
Supplemental Appropriations Act of 1999 (Pub. L. 105-277, 112 Stat. 
2681), requires the Department to assess the impact of this rule on 
family well-being. A rule that is determined to have a negative effect 
on families must be supported with an adequate rationale. The 
Department has assessed this proposed rule and has determined that it 
will not have a negative effect on families.

Privacy Act

    The Privacy Act of 1974 (5 U.S.C. 552a) provides safeguards to 
individuals for their personal information which the Government 
collects. The Act requires certain actions by an agency that collects 
information on individuals when that information contains personally 
identifying information such as Social Security Numbers or names. 
Because this proposed rule does not require a new collection of 
personally identifiable information, the Privacy Act does not apply in 
this instance.

Executive Order 12630

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

Executive Order 13211

    This proposed 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 proposed rule in plain language.

Catalog of Federal Domestic Assistance Number

    State employment service delivery systems consist of three formula 
grant programs, operating within an integrated service delivery 
infrastructure. Each of these three programs has been assigned a 
Catalog of Federal Domestic Assistance (CFDA) Number. The three 
programs are the Employment Service/Wagner-Peyser Funded Activities 
(CFDA <greek-i>17.207), the Disabled Veterans' Outreach Program (CFDA 
<greek-i>17.801), and the Local Veterans'

[[Page 9524]]

Employment Representative Program (CFDA <greek-i>17.804).

    Signed at Washington, DC, this 10th day of February 2011.
Raymond M. Jefferson,
Assistant Secretary for Veterans' Employment and Training.

List of Subjects in 20 CFR Part 1001

    Employment, Grant programs--Labor, Veterans.

    For reasons stated in the preamble, the Department proposes to 
amend 20 CFR Chapter IX as follows:

PART 1001--SERVICES FOR VETERANS

    1. The authority citation for part 1001 continues to read as 
follows:

    Authority: 29 U.S.C. 49k; 38 U.S.C. chapters 41 and 42.

    2. Add subpart G, consisting of Sec. Sec.  1001.160 through 
1001.167, to read as follows:
Subpart G--Purpose and Definitions
Sec.
1001.160 What is the purpose and scope of this part?
1001.161 What definitions apply to this part?
1001.162 How does the Department define veteran for purposes of this 
subpart?
1001.163 What is the national entered employment rate (EER) and what 
is a State's program year EER for purposes of this part?
1001.164 What is the uniform national threshold EER, and how will it 
be calculated?
1001.165 When will the uniform national threshold EER be published?
1001.166 How will the uniform national threshold EER be used to 
evaluate whether a State will be required to submit a corrective 
action plan (CAP)?
1001.167 In addition to the procedures specified in these 
regulations, will the Department be conducting any other monitoring 
of compliance regarding services to veterans?

Subpart G--Purpose and Definitions


Sec.  1001.160  What is the purpose and scope of this part?

    (a) The purpose of this regulation is to fulfill the requirement of 
38 U.S.C. 4102A(c)(3)(B) to establish a uniform national threshold 
entered employment rate (EER) achieved for veterans and eligible 
persons by the State employment service delivery systems. The 
Department will use the threshold rate as part of its process for 
determining whether a State's program year EER is deficient and whether 
a corrective action plan (CAP) will be required of a State employment 
service delivery system.
    (b) This regulation is applicable to all State agencies that are 
recipients of Wagner-Peyser State Grants, and/or Jobs for Veterans 
State Grants.


Sec.  1001.161  What definitions apply to this part?

    Department means the United States Department of Labor, including 
its agencies and organizational units and their representatives.
    Eligible person, as defined at 38 U.S.C. 4101(5), means:
    (1) The spouse of any person who died of a service-connected 
disability;
    (2) The spouse of any member of the Armed Forces serving on active 
duty who, at the time of application for assistance under this chapter, 
is listed, pursuant to 37 U.S.C. 556 and regulations issued thereunder 
by the Secretary concerned, in one or more of the following categories 
and has been so listed for a total of more than ninety days:
    (i) Missing in action,
    (ii) Captured in line of duty by a hostile force, or
    (iii) Forcibly detained or interned in line of duty by a foreign 
government or power; or
    (3) The spouse of any person who has a total disability permanent 
in nature resulting from a service-connected disability or the spouse 
of a veteran who died while a disability so evaluated was in existence.
    Employment service delivery system, as defined at 38 U.S.C. 
4101(7), means a service delivery system at which or through which 
labor exchange services, including employment, training, and placement 
services, are offered in accordance with the Wagner-Peyser Act.
    Jobs for Veterans Act (JVA) means Public Law 107-288, 116 Stat. 
2033 (2002).
    Jobs for Veterans State Grant (JVSG) means an award of Federal 
financial assistance by the Department to a State for the purposes of 
the Disabled Veterans' Outreach Program or the Local Veterans' 
Employment Representative Program.
    Program year is the period from July 1 of a year through June 30 of 
the following year and is numbered according to the calendar year in 
which it begins.


Sec.  1001.162  How does the Department define veteran for purposes of 
this subpart?

    The Department applies two definitions of veteran for the purposes 
of this subpart and has established two stages for the implementation 
of these definitions.
    (a) The first stage of implementation begins with application of 
this subpart G to the first program year following [EFFECTIVE DATE OF 
THE FINAL RULE]. As of that date, Veteran is defined as it is in 38 
U.S.C. 4211(4):
    (1) A person who served on active duty for a period of more than 
180 days and was discharged or released therefrom with other than a 
dishonorable discharge;
    (2) Was discharged or released from active duty because of a 
service-connected disability;
    (3) As a member of a reserve component under an order to active 
duty pursuant to 10 U.S.C. 12301(a), (d), or (g), 12302, or 12304, 
served on active duty during a period of war or in a campaign or 
expedition for which a campaign badge is authorized and was discharged 
or released from such duty with other than a dishonorable discharge; or
    (4) Was discharged or released from active duty by reason of a sole 
survivorship discharge (as that term is defined in 10 U.S.C.1174(i)).
    (b) The second stage of implementation begins with the first day of 
the program year that begins two years after the first day of the 
program year that State grantees begin collecting and maintaining data 
as required by 20 CFR 1010.330(c). As of that date, Veteran will be 
defined as it is for purposes of 38 U.S.C. 4215(a):
    (1) A person who served in the active military, naval, or air 
service, and who was discharged or released therefrom under conditions 
other than dishonorable, as specified in 38 U.S.C. 101(2).
    (2) Active service includes full-time Federal service in the 
National Guard or a Reserve component, other than full-time duty for 
training purposes.
    (c) During the second stage of implementation, any veteran who 
meets the definition specified in paragraph (a) of this section will be 
considered to meet the definition specified in paragraph (b) of this 
section.
    (d) The Department will notify State grantees when they are 
required to begin implementing 20 CFR 1010.330(c).


Sec.  1001.163  What is the national entered employment rate (EER) and 
what is a State's program year EER for purposes of this part?

    (a) For purposes of this part, the Department uses the EER for 
veterans and eligible persons. This is the EER as applied to veterans 
(as defined in Sec.  1001.162) and eligible persons (as defined in 
Sec.  1001.161) who are participants in State employment service 
delivery systems.
    (b) The EER for veterans and eligible persons measures the number 
of the participants described in paragraph (a)

[[Page 9525]]

of this section who are employed after exiting an employment service 
delivery system compared to the total number of those participants who 
exited. The method of calculation will be established through policy 
guidance issued by the Department.
    (c) The national EER for veterans and eligible persons is the EER 
achieved by the national State employment service delivery system for 
those veterans and eligible persons who are participants in all of the 
State employment service delivery systems for the program year under 
review. The national EER resulting from this calculation is expressed 
as a percentage that is rounded to the nearest tenth of a percent.
    (d) A State's program year EER is the EER for veterans and eligible 
persons (as calculated in paragraph (b) of this section) achieved by a 
single State's employment service delivery system for those veterans 
and eligible persons who are included in the EER measure for that 
State's employment service delivery system for the program year under 
review. The program year EER resulting from this calculation is 
expressed as a percentage that is rounded to the nearest tenth of a 
percent.


Sec.  1001.164  What is the uniform national threshold EER, and how 
will it be calculated?

    (a) The uniform national threshold EER for a program year is equal 
to 90% of the national EER for veterans and eligible persons (as 
defined in Sec.  1001.163(c)).
    (b) The uniform national threshold EER resulting from this 
calculation is expressed as a percentage that is rounded to the nearest 
tenth of a percent.


Sec.  1001.165  When will the uniform national threshold EER be 
published?

    When practicable, the Veterans' Employment and Training Service 
(VETS) will publish the uniform national threshold EER for a given 
program year by the end of December of the calendar year in which that 
program year ends.


Sec.  1001.166  How will the uniform national threshold EER be used to 
evaluate whether a State will be required to submit a corrective action 
plan (CAP)?

    (a) Comparison. Each State's program year EER will be compared to 
the uniform national threshold EER for that program year. State 
agencies that do not achieve a program year EER that equals or exceeds 
the national threshold EER (90% of the national EER) for the year under 
review will be subject to a review by VETS to determine whether the 
program year EER is deficient.
    (b) Review. For each State whose program year EER is subject to 
review to determine deficiency, the review will consider the degree of 
difference between the State's program year EER and the uniform 
national threshold EER for that program year, as well as the annual 
unemployment data for the State as compiled by the Bureau of Labor 
Statistics.
    (1) The review also may consider other relevant measures of 
prevailing economic conditions and regional economic conditions, as 
well as other measures of the performance of workforce programs and/or 
any information the State may submit.
    (2) The review will include consultation with VETS field staff 
about findings from their on-site reviews and desk audits of State 
agency implementation of policies and procedures for services to 
veterans, and also may include consultation with staff affiliated with 
other agencies of the Department, as appropriate.
    (c) Requirement of a CAP. A State whose program year EER is 
determined to be deficient will be required to submit a CAP to improve 
the State's performance in assisting veterans to meet their employment 
needs as a condition of receiving its next-due JVSG.
    (1) Any State whose program year EER has been determined to be 
deficient will be notified by March 31 of the year following the 
calendar year in which the program year under review ended.
    (2) For any State that is required to submit a CAP, VETS will 
provide technical assistance (TA) regarding the development of the CAP. 
The CAP must be submitted to the Grant Officer's Technical 
Representative by June 30 of the year following the calendar year in 
which the program year under review ended.
    (3) VETS will review the CAP submitted by the State and determine 
whether to approve it or to provide additional TA to the State.
    (i) If VETS approves the CAP, the State must expeditiously 
implement it.
    (ii) If VETS does not approve the CAP, it will take such steps as 
are necessary to implement corrective actions to improve the State's 
EER for veterans and eligible persons.
    (4) If a State fails to cooperate with the actions imposed by the 
Department under paragraph (c)(3)(ii) of this section, the Assistant 
Secretary for Veterans' Employment and Training may take any actions 
available to remedy non-compliance under 20 CFR 1001.130(a) (referring 
to the compliance measures discussed in 20 CFR part 658, subpart H).


Sec.  1001.167  In addition to the procedures specified in these 
regulations, will the Department be conducting any other monitoring of 
compliance regarding services to veterans?

    Yes. VETS will continue to monitor compliance with the regulations 
related to veterans' priority of service at 20 CFR 1010.240(b) jointly 
with the Employment and Training Administration. If a State's program 
year EER is determined to be deficient for a given program year, that 
deficiency would constitute information to be considered in monitoring 
priority of service, since failure to fully implement priority of 
service could be one of the contributors to a deficient program year 
EER.

[FR Doc. 2011-3536 Filed 2-17-11; 8:45 am]
BILLING CODE P


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