[Federal Register Volume 65, Number 123 (Monday, June 26, 2000)]
[Proposed Rules]
[Pages 39492-39497]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-15991]



[[Page 39491]]

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Part III





Department of Education





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34 CFR Part 361



State Vocational Rehabilitation Services Program; Proposed Rule

Federal Register / Vol. 65, No. 123 / Monday, June 26, 2000 / 
Proposed Rules

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DEPARTMENT OF EDUCATION

34 CFR Part 361

RIN 1820-AB52


State Vocational Rehabilitation Services Program

AGENCY: Office of Special Education and Rehabilitative Services, 
Department of Education.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Secretary proposes to amend the regulations governing the 
State Vocational Rehabilitation Services Program (VR program) by 
revising the scope of available employment outcomes under the VR 
program. The proposed regulations would redefine the term ``employment 
outcome'' to include only those outcomes in which an individual with a 
disability works in an integrated setting. This action is necessary to 
reflect the purpose of Title I of the Rehabilitation Act of 1973, as 
amended (Act) (29 U.S.C. 701-744), which is to enable individuals with 
disabilities who participate in the VR program to achieve an 
appropriate employment outcome in the competitive, integrated labor 
market.

DATES: We must receive your comments by August 25, 2000.

ADDRESSES: Address all comments about these proposed regulations to 
Fredric K. Schroeder, U.S. Department of Education, 400 Maryland 
Avenue, SW., room 3028, Mary E. Switzer Building, Washington, DC 20202-
2531. Comments also may be sent by facsimile to (202) 205-9874. If you 
prefer to send your comments through the Internet, use the following 
address: <a href="/cdn-cgi/l/email-protection#eb888486868e859f98ab8e8fc58c849d"><span class="__cf_email__" data-cfemail="31525e5c5c545f45427154551f565e47">[email protected]</span></a>.
    You must include the term ``VR Regulations--Employment Outcome'' in 
the subject line of your electronic message.
    If you want to comment on the information collection requirements, 
you must send your comments to the Office of Management and Budget at 
the address listed in the Paperwork Reduction Act section of this 
preamble. You may also send a copy of these comments to the Department 
representative named in this section.

FOR FURTHER INFORMATION CONTACT: Beverlee Stafford, U.S. Department of 
Education, 400 Maryland Avenue, SW., room 3014, Mary E. Switzer 
Building, Washington, DC. 20202-2531. Telephone (202) 205-8831. If you 
use a telecommunications device for the deaf (TDD), you may call (202) 
205-5538.
    Individuals with disabilities may obtain this document in an 
alternate format (e.g., Braille, large print, audiotape, or computer 
diskette) on request to Katie Mincey, Director, Alternate Formats 
Center, U.S. Department of Education, 400 Maryland Avenue, SW., room 
1000, Mary E. Switzer Building, Washington, DC. 20202-2531. Telephone 
(202) 260-9895. If you use a telecommunications device for the deaf 
(TDD), you may call the Federal Information Relay Service (FIRS) at 1-
800-877-8339.

SUPPLEMENTARY INFORMATION:

Invitation To Comment

    We invite you to submit comments regarding these proposed 
regulations. To ensure that your comments have maximum effect in 
developing the final regulations, we urge you to identify clearly the 
specific section or sections of the proposed regulations that each of 
your comments addresses and to arrange your comments in the same order 
as the proposed regulations.
    We invite you to assist us in complying with the specific 
requirements of Executive Order 12866 and its overall requirement of 
reducing regulatory burden that might result from these proposed 
regulations. Please let us know of any further opportunities we should 
take to reduce potential costs or increase potential benefits while 
preserving the effective and efficient administration of the VR 
program.
    During and after the comment period, you may inspect all public 
comments about these proposed regulations in room 3214, Mary E. Switzer 
Building, 330 C Street, SW., Washington, DC, between the hours of 8:30 
a.m. and 4 p.m., Eastern time, Monday through Friday of each week 
except Federal holidays.

Assistance to Individuals With Disabilities in Reviewing the 
Rulemaking Record

    On request, we will supply an appropriate aid, such as a reader or 
print magnifier, to an individual with a disability who needs 
assistance to review the comments or other documents in the public 
rulemaking record for these proposed regulations. If you want to 
schedule an appointment for this type of aid, you may call (202) 205-
8113 or (202) 260-9895. If you use a TDD, you may call the Federal 
Information Relay Service at 1-800-877-8339.

Background

    The State Vocational Rehabilitation Services Program (VR program) 
makes available to individuals with disabilities, particularly those 
with significant disabilities, necessary vocational rehabilitation (VR) 
services so that they may enter or continue to work in the competitive, 
integrated labor market along with the general population. The chief 
measure of success of a State VR agency's efforts in serving a 
participant in the VR program is whether the individual has achieved an 
appropriate employment outcome, in particular a high-quality, 
competitive job in an integrated setting. Integrated employment 
settings generally refer to those settings that are typically found in 
the community in which individuals with disabilities have the same 
opportunity to interact with others as is given to any other person 
(see 34 CFR 361.5(b)(30)(ii) of the current VR program regulations for 
a detailed definition). Accordingly, this notice of proposed rulemaking 
(NPRM) addresses the scope of available outcomes under the VR program 
in order to ensure that program participants attain jobs in the 
competitive, integrated labor market as the Act intends.
    The statutory authority for the VR program, Title I of the Act, 
has, over time, placed greater and greater emphasis on integration, a 
fact further reflected in recent reauthorizations. As indicated in 
section 100(a)(1) of the Act, a provision retained in the 1998 
Amendments to the Act, individuals with disabilities, including 
individuals with the most significant disabilities, have demonstrated 
their ability to achieve gainful employment in integrated settings if 
appropriate services and supports are provided. Recent legislative 
history also reflects Congress' commitment to ensuring that individuals 
with significant disabilities be able to progress to jobs in the 
competitive integrated job market (see e.g., Senate Report 105-166, p. 
13).
    The scope of employment outcomes authorized under the VR program 
must be consistent with the definition of ``employment outcome'' in 
section 7(11) of the Act. That section of the Act, which explicitly 
refers only to employment outcomes that occur in integrated settings, 
defines ``employment outcome'' as full-time or, if appropriate, part-
time competitive employment in the integrated labor market, supported 
employment, or any other vocational outcome the Secretary may determine 
to be appropriate (including the vocational outcome of self-employment, 
telecommuting, or business ownership), consistent with the requirements 
of the Act [emphasis added].
    Thus, the Act entrusts the Secretary to determine the scope of 
employment outcomes, other than competitive employment (i.e., 
integrated work at or

[[Page 39493]]

above minimum wage--see 34 CFR 361.5(b)(10)) and supported employment 
(integrated work with ongoing support services--see 34 CFR 
361.5(b)(46)), which individuals with disabilities should pursue under 
the VR program consistent with the Act's requirements.
    Through this NPRM, we are proposing to amend the current 
regulations governing the VR program (34 CFR part 361) to no longer 
consider extended employment (also referred to as non-integrated or 
sheltered employment) as an employment outcome under the VR program. We 
believe the proposed regulatory changes are necessary to implement the 
clear emphasis that the Act places on competitive employment and 
supported employment--outcomes that occur in integrated settings. At 
the same time, however, the proposed changes would not prohibit State 
VR agencies from serving individuals, or enabling individuals to work, 
in extended employment settings (also referred to as non-integrated or 
sheltered settings) if appropriate to the individual, but would ensure 
that those individuals are provided the services that they need to 
transition to the competitive labor market in the community.
    On February 28, 2000, we published an NPRM (65 FR 10620) that would 
implement extensive changes to the current VR program regulations to 
reflect statutory changes made by the Rehabilitation Act Amendments of 
1998 (1998 Amendments). As mentioned previously, the proposal in this 
new NPRM to change the regulatory definition of the term ``employment 
outcome,'' and to implement corresponding changes to other sections of 
the current regulations affected by the revised definition, are based 
not only on the 1998 Amendments, but on the emphasis that the Act, over 
time, has placed on enabling individuals in sheltered employment to 
transition to employment outcomes in the competitive, integrated labor 
market. Although these proposed changes were not developed in time to 
be included in the February 28 NPRM, we consider this new NPRM critical 
to realizing the full potential of individuals with significant 
disabilities. Thus, it is our intent to implement these new changes as 
part of the final regulations that follow the February 28 proposed 
regulations.
    We also note that the proposed regulations would not exclude from 
the scope of ``employment outcomes'' under the VR program all positions 
obtained by individuals with disabilities under certain types of set-
aside contracts authorized by the Javits-Wagner-O'Day Act (JWOD), 41 
U.S.C. 46-48. For example, service-related jobs performed under JWOD 
contracts and in settings that satisfy the definition of ``integrated 
setting'' in 34 CFR 361.5(b)(30)(ii) (i.e., a setting typically found 
in the community in which the VR program participant's interaction with 
non-disabled persons is the same as that experienced by a non-disabled 
person in a comparable position) would meet the definition of 
``employment outcome'' in the proposed regulations. Those positions are 
to be contrasted with jobs in sheltered settings performed under JWOD 
contracts or other arrangements that are not integrated and would not 
be considered employment outcomes. The determination as to whether any 
job, including those obtained under JWOD contracts, meets the 
regulatory definition of ``integrated setting,'' and therefore 
qualifies as an ``employment outcome'' under the proposed regulations, 
should be made on a case-by-case basis.

Section-by-Section Summary

Section 361.5  Applicable Definitions

Employment Outcome; Extended Employment
    The chief revision to the current regulations that would be 
implemented by this NPRM concerns the scope of outcomes, other than 
competitive employment and supported employment, covered under the 
definition of ``employment outcome.'' Specifically, the current 
regulatory definition would be changed to include only employment in 
integrated settings, meaning that jobs in sheltered or other non-
integrated settings would no longer be recognized as ``employment 
outcomes'' under the VR program. In particular, ``extended 
employment,'' which is defined in both the current and proposed 
regulations as work in a non-integrated or sheltered setting for a 
nonprofit entity along with any support services that the individual 
needs in order to prepare for competitive employment, would not be an 
authorized employment outcome under the proposed regulations.
    The changes to the current regulations proposed in this NPRM, while 
essential to fulfilling the expectation in the Act that individuals 
with disabilities are generally capable of pursuing competitive, 
integrated work in the community, should not cause great difficulty to 
State VR units in administering their programs. Under the current 
regulations, the VR program pays the short-term costs of services 
(e.g., vocational evaluation, work adjustment, and other training 
services) that enable an individual to perform work in an extended 
employment setting. The ongoing costs of services associated with an 
individual who remains in extended employment are typically borne by 
other State and local resources. In addition, only a relatively small 
number of individuals exit the VR program after obtaining non-
integrated employment (about 3.5% of outcomes nationwide in 1998, the 
most current data available). Thus, it is evident that many State units 
already have been deemphasizing non-integrated work as a final 
employment goal for some time. Those units have come to realize, as is 
reflected throughout the Act's legislative history, that in the past 
individuals with disabilities were too often inappropriately placed in 
sheltered settings as a final outcome rather than as a temporary 
placement from which the individual could transition to a job in the 
community.
    The proposed regulations would continue to allow State units to use 
extended employment jobs as interim steps for VR program participants. 
The State unit, however, could only consider the individual to have 
achieved an employment outcome after the individual transitions to 
integrated work in the community. We believe this approach better 
reflects the relationship between the VR program and sheltered 
employment and is further supported by the relatively few VR program 
participants who engage in extended employment. To the extent extended 
employment continues to be used as a temporary worksite for an eligible 
individual under the VR program, the State unit should continue to 
provide services to that individual, but should not identify (for State 
or Federal reporting purposes, for purposes of satisfying VR program 
performance measures, etc.) that person's job as a successful outcome 
until the individual enters the integrated labor market in the 
community.
    In addition, Secs. 361.47 and 361.55 of the proposed regulations, 
which are discussed in the following paragraphs, specify recordkeeping 
and annual review requirements, respectively, that are designed to 
ensure that persons in extended employment receive necessary support in 
order to continue to pursue integrated employment. We believe that 
these proposed requirements, which are much the same as the 
recordkeeping and review requirements in the current regulations, and 
any burden associated with the proposed requirements, are necessary to 
ensure that persons are able to pursue high-quality competitive 
employment in the integrated labor market as the Act intends.

[[Page 39494]]

Section 361.37  Establishment and Maintenance of Information and 
Referral Programs

    In order to ensure that individuals with disabilities who choose to 
work in an extended employment setting long-term, rather than pursue 
employment in an integrated setting under the VR program, are able to 
access the services they need, Sec. 361.37(a) of the proposed 
regulations would require that State VR agencies refer these 
individuals to local extended employment providers. We are particularly 
interested in comments from community rehabilitation programs and other 
State and local service providers on the impact that the proposed 
regulations would have on those resources that currently pay most of 
the costs of serving individuals in extended employment. We also note 
that persons who initially choose to pursue extended employment and 
subsequently change their minds and seek competitive or other 
integrated employment can still access the VR system. Also, while we 
recognize that this proposed change would result in an additional 
responsibility being placed on the State VR agency, we believe that any 
burden associated with that responsibility is outweighed by the need to 
ensure that individuals who choose sheltered work can access State and 
local resources that support extended employment programs.

Section 361.47  Record of Services

    We are proposing limited changes to the current regulations to 
reflect the proposed revisions to the definition of ``employment 
outcome'' and the review requirements in Sec. 361.55.
    In sum, proposed changes to paragraph (g) of this section would 
require a justification in the record of services for any decision on 
the part of the State unit to provide a VR program participant services 
in a non-integrated setting, including a decision to support the 
individual in extended employment as an initial step toward integrated 
employment. In addition, proposed paragraph (k) of this section would 
be added to the current regulations to require documentation of the 
annual reviews required under section 101(a)(14) of the Act and 
Sec. 361.55 of the proposed regulations for individuals who achieved an 
authorized (i.e., integrated) employment outcome but are compensated 
through a wage certificate under section 14(c) of the Fair Labor 
Standards Act (FLSA) (e.g., individuals in supported employment who 
earn less than the minimum wage).
    Finally, a State unit would also be required under the proposed 
changes to this section to document follow-up reviews when it closes 
the record of services for an individual in extended employment who 
chooses to remain there long-term or who the State unit determines 
cannot achieve integrated employment. As explained in the discussion on 
Sec. 361.55, these individuals would not be considered to have achieved 
an employment outcome under the VR program.
    It should be noted that each of the documentation requirements in 
the proposed regulations also is reflected in the February 28 NPRM 
referred to in the Background section of this preamble.

Section 361.55  Annual Review of Individuals in Extended Employment and 
Other Employment Under Special Certificate Provisions of the Fair Labor 
Standards Act

    Removing extended employment from the scope of available employment 
outcomes under the discretion given to the Secretary under section 
7(11)(C) of the Act necessitates changes to this section of the current 
regulations. Initially, it should be noted that the proposed 
regulations reflect the requirement in section 101(a)(14) of the Act 
and the current regulations that the State unit conduct an annual 
review of any VR program participant who has achieved an employment 
outcome (i.e., integrated employment under the proposed regulations) 
but is compensated under a wage certificate as authorized in section 
14(c) of the FLSA. With regard to those participants in the VR program 
who are still placed in extended employment, however, the State unit's 
future obligations under the proposed regulations would depend on a 
number of factors.
    As indicated previously, we expect that most individuals in 
extended employment would perform that work temporarily as a means of 
training or otherwise preparing for competitive employment. Because the 
State unit would continue to provide services to these individuals and 
to review the individual's plan of services consistent with 
102(b)(2)(E) of the Act until they successfully transition to a job in 
an integrated setting, that individual's record of services would 
remain open, and the review requirements in this revised section need 
not apply.
    On the other hand, if the State unit decides to close the record of 
services of an individual in extended employment because it does not 
believe the individual can achieve integrated employment (i.e., an 
employment outcome under the proposed regulations) or because the 
individual chooses to remain in extended employment, then the proposed 
regulations would continue to require that the State unit conduct an 
annual review and reevaluation (for 2 years and thereafter if requested 
by the individual) of the individual's readiness for competitive 
employment, that the individual be able to provide input into each 
review, and that the State unit make maximum efforts to assist the 
individual in transitioning to competitive employment.

Effective Date of Changes

    Finally, we recognize that the proposed changes in this NPRM, while 
supported by the Act, represent a departure from the past practice of 
including non-integrated jobs among the scope of authorized employment 
outcomes. Thus, in order to minimize the impact that these proposed 
changes would have on State units or eligible individuals under the VR 
program, we are proposing that the changes to the current regulations 
in this NPRM take effect beginning in FY 2002 (i.e., October 1, 2001). 
This delayed implementation date would give State units and other 
providers of VR services more than a year to take whatever steps may be 
necessary to meet the revised regulatory requirements. Most 
importantly, we expect that the time afforded will enable States to 
implement the proposed changes in a manner that is least disruptive to 
VR program beneficiaries. Nonetheless, we intend to provide necessary 
technical assistance to State units in order to assist those agencies 
in making the transition required by the proposed regulations. We also 
are particularly interested in comments on whether persons agree that 
the delayed implementation date will give States sufficient time to 
implement the proposed policy.

Goals 2000: Educate America Act

    The Goals 2000: Educate America Act (Goals 2000) focuses the 
Nation's education reform efforts on the eight National Education Goals 
and provides a framework for meeting them. Goals 2000 promotes new 
partnerships to strengthen schools and expands the Department's 
capacities for helping communities to exchange ideas and obtain 
information needed to achieve the goals.
    These proposed regulations would address the National Education 
Goal that every adult American, including individuals with 
disabilities, will possess the knowledge and skills necessary to 
compete in a global economy and exercise the rights and 
responsibilities of citizenship.

[[Page 39495]]

Executive Order 12866

1. Potential Costs and Benefits

    Under Executive Order 12866, we have assessed the potential costs 
and benefits of this regulatory action. The potential costs associated 
with the proposed regulations are those resulting from statutory 
requirements and those we have determined as necessary for 
administering this program effectively and efficiently. Elsewhere in 
this SUPPLEMENTARY INFORMATION section we identify and explain burdens 
specifically associated with information collection requirements. See 
the heading Paperwork Reduction Act of 1995.
    In assessing the potential costs and benefits--both quantitative 
and qualitative--of these proposed regulations, we have determined that 
the benefits would justify the costs.
    We have also determined that this regulatory action would not 
unduly interfere with State, local, and tribal governments in the 
exercise of their governmental functions.

Summary of Potential Costs and Benefits

    We believe that the NPRM would substantially improve the State VR 
Services Program and would yield substantial benefits in terms of 
program management, efficiency, and effectiveness. The proposed 
regulatory changes would align the VR program appropriately with the 
statutory expectation that individuals with disabilities can in fact 
achieve employment in the competitive labor market. The proposed 
changes also include program requirements (e.g., those related to 
referrals, documentation of service records, and reviews of persons in 
extended employment) that are designed to ensure that individuals with 
disabilities are supported in pursuing competitive jobs or are able to 
access other resources that can assist those who choose extended 
employment. We believe that the proposed regulations represent the 
least burdensome way to implement the Act and fulfill important policy 
objectives that we consider to be essential to the success of the 
program and to persons with disabilities.
    Elsewhere in this preamble we discuss other potential costs and 
benefits of these proposed regulations under the following heading: 
Section-by-Section Summary.

2. Clarity of the Regulations

    Executive Order 12866 and the President's Memorandum of June 1, 
1998 on ``Plain Language in Government Writing'' require each agency to 
write regulations that are easy to understand.
    The Secretary invites comments on how to make these proposed 
regulations easier to understand, including answers to questions such 
as the following:
    <bullet> Are the requirements in the proposed regulations clearly 
stated?
    <bullet> Do the proposed regulations contain technical terms or 
other wording that interferes with their clarity?
    <bullet> Does the format of the proposed regulations (grouping and 
order of sections, use of headings, paragraphing, etc.) aid or reduce 
their clarity?
    Would the proposed regulations be easier to understand if we 
divided them into more (but shorter) sections? (A ``section'' is 
preceded by the symbol and a numbered heading; for example, Sec. 361.47  
Record of services.)
    <bullet> Could the description of the proposed regulations in the 
SUPPLEMENTARY INFORMATION section of this preamble be more helpful in 
making the proposed regulations easier to understand? If so, how?
    <bullet> What else could we do to make the proposed regulations 
easier to understand?
    Send any comments that concern how the Department could make these 
proposed regulations easier to understand to the person listed in the 
ADDRESSES section of the preamble.

Regulatory Flexibility Act Certification

    The Secretary certifies that these proposed regulations would not 
have a significant economic impact on a substantial number of small 
entities. These proposed regulations would impact some community 
rehabilitation programs that currently operate extended employment 
programs, or execute Federal contracts under the Javits-Wagner-O'Day 
Act, for individuals with disabilities. Those facilities rely on the 
State VR Services Program, as well as other programs, for referrals of 
persons for whom sheltered employment is appropriate. However, since 
most costs of employing persons with disabilities in a sheltered 
setting are born by programs other than the State VR Services Program, 
and since State VR agencies could continue to provide support to 
persons in extended employment settings (without considering that work 
a successful employment outcome), we do not believe potential impact 
would be significant.

Paperwork Reduction Act of 1995

    Section 361.47 contains information collection requirements that 
pertain to State recordkeeping, and section 361.55 contains information 
collection requirements under the State plan. Under the Paperwork 
Reduction Act of 1995 (44 U.S.C. 3507(d)), the Department of Education 
has submitted a copy of these sections to the Office of Management and 
Budget (OMB) for its review.

Collection of Information: State Vocational Rehabilitation Services 
Program

    The information to be collected includes State plan assurances to 
meet statutory requirements and other required information that the 
Department considers important to the efficient and effective 
administration of the VR program. Required information that is 
unrelated to the State plan is necessary for purposes of Department 
monitoring of program performance and compliance.
    The Department needs and uses the information related to the State 
plan for the VR program in order to ensure compliance with Federal 
requirements. An approved State plan is necessary for a State to 
receive a grant under the VR program. All State plan assurances are 
reported once unless the State has submitted the information previously 
or determines that modifications are necessary, or the Secretary 
requires modifications due to changes in State policy, Federal law 
(including regulations), interpretation of the Act by a Federal court 
or the highest court in the State, or a finding by the Secretary of 
State noncompliance with the requirements of the Act.
    As previously noted, the Department published an NPRM on February 
28, 2000 (65 FR 10620) that proposed extensive changes to the 
regulations under this part in order to conform to the 1998 Amendments 
to the Act. In the February 28, 2000 NPRM, we estimated an annual 
reporting and recordkeeping burden for the collection of information to 
average 12,220 hours for each response for 82 respondents, or a total 
of 1,002,050 burden hours. The annual reporting and recordkeeping 
burden for the collection of information in this new NPRM is included 
in that total since the information collection requirements proposed in 
the new NPRM were included in the February 28, 2000 NPRM as well 
(although some of the requirements were located in other sections in 
the prior NPRM). Nonetheless, it is estimated that the actual burden 
for the information collection requirements in sections 361.47(g) and 
(k) and 361.55 would average 87 hours for each response for 82 
respondents, including the time for reviewing instructions, searching 
existing data sources, gathering and

[[Page 39496]]

maintaining the data needed, and completing and reviewing the 
collection of information. Thus, we estimate the total annual reporting 
and recordkeeping burden for this specific collection to be 7,134 hours 
of the total 1,002,050 hours identified in the NPRM published on 
February 28, 2000.
    If you want to comment on the information collection requirements, 
please send your comments to the Office of Information and Regulatory 
Affairs, OMB, room 10235, New Executive Office Building, Washington, DC 
20508; Attention: Desk Officer for U.S. Department of Education. You 
may also send a copy of these comments to the Department representative 
named in the ADDRESSES section of this preamble.
    We consider your comments on this proposed collection of 
information in--
    <bullet> Deciding whether the proposed collection is necessary for 
the proper performance of our functions, including whether the 
information will have practical use;
    <bullet> Evaluating the accuracy of our estimate of the burden of 
the proposed collection, including the validity of our methodology and 
assumptions;
    <bullet> Enhancing the quality, usefulness, and clarity of the 
information we collect; and
    <bullet> Minimizing the burden on those who must respond. This 
include exploring the use of appropriate automated, electronic, 
mechanical, or other technological collection techniques or other forms 
of information technology; e.g., permitting electronic submission of 
responses.
    OMB is required to make a decision concerning the collection of 
information contained in these proposed regulations between 30 and 60 
days after publication of this document in the Federal Register. 
Therefore, to ensure that OMB gives your comments full consideration, 
it is important that OMB receives the comments within 30 days of 
publication. This does not affect the deadline for your comments to us 
on the proposed regulations.

Intergovernmental Review

    This program is subject to Executive Order 12372 and the 
regulations in 34 CFR part 79. One of the objectives of the Executive 
order is to foster an intergovernmental partnership and a strengthening 
federalism. The Executive order relies on processes developed by State 
and local governments for coordination and review of proposed Federal 
financial assistance.
    This document provides early notification of our specific plans and 
actions for this program.

Assessment of Educational Impact

    The Secretary particularly requests comments on whether these 
proposed regulations would require transmission of information that any 
other agency or authority of the United States gathers or makes 
available.

Electronic Access to This Document

    You may view this document, as well as all other Department of 
Education documents published in the Federal Register, in the text or 
Adobe Portable Document Format (PDF) on the Internet at either of the 
following sites:

http://ocfo.ed.gov/fedreg.htm
 http://www.ed.gov/news.html

To use the PDF you must have Adobe Acrobat Reader, which is available 
free at either of the previous sites. If you have questions about using 
the PDF, call the U.S. Government Printing Office (GPO), toll free, at 
1-888-293-6498; or in the Washington, DC, area at (202) 512-1530.

    Note: The official version of this document is the document 
published in the Federal Register. Free Internet access to the 
official edition of the Federal Register and the Code of Federal 
Regulations is available on GPO Access at: http://www.access.gpo.gov/nara/index.html

(Catalog of Federal Domestic Assistance Number: 84.126 State 
Vocational Rehabilitation Services Program)

List of Subjects in 34 CFR Part 361

    Reporting and recordkeeping requirements, State-administered grant 
program--education, Vocational rehabilitation.

    Dated: June 20, 2000.
Richard W. Riley,
Secretary of Education.
    For the reasons discussed in the preamble, the Secretary proposes 
to amend part 361 of title 34 of the Code of Federal Regulations as 
follows:

PART 361--STATE VOCATIONAL REHABILITATION SERVICES PROGRAM

    1. The authority citation for part 361 continues to read as 
follows:

    Authority: 29 U.S.C. 709(c), unless otherwise noted.

    2. Section Sec. 361.5 is amended by revising paragraphs (b)(15) and 
(b)(18), and the authority citations following each of those 
paragraphs, to read as follows:


Sec. 361.5  Applicable definitions

* * * * *
    (b) * * *
    (15) Employment outcome means, with respect to an individual, 
entering or retaining full-time or, if appropriate, part-time 
competitive employment in the integrated labor market, supported 
employment, or any other type of employment in an integrated setting, 
including self-employment, telecommuting, or business ownership, that 
is consistent with an individual's strengths, resources, priorities, 
concerns, abilities, capabilities, interests, and informed choice.

(Authority: Sections 7(11), 12(c), 100(a)(2), and 102(b)(3)(A) of 
the Act; 29 U.S.C. 705(11), 709(c), 720(a)(2), and 722(b)(3)(A))
* * * * *
    (18) Extended employment means work in a non-integrated or 
sheltered setting for a public or private nonprofit agency or 
organization that an eligible individual performs for the purposes of 
training or otherwise preparing for competitive employment and for 
which the individual receives--
    (i) Compensation in accordance with the Fair Labor Standards Act; 
and
    (ii) Any support services that the individual needs in order to 
prepare for competitive employment.
    (Authority: Section 12(c) of the Act; 29 U.S.C. 709(c))
* * * * *
    3. Section 361.37 is amended by removing the word ``and'' at the 
end of paragraph (a)(2); removing the period at the end of paragraph 
(a)(3), and adding, in its place, ``; and''; adding a new paragraph 
(a)(4); and revising the authority citation following the section to 
read as follows:


Sec. 361.37  Establishment and maintenance of information and referral 
programs.

    (a) General provisions. The State plan must assure that--
* * * * *
    (4) The State unit will refer to local extended employment 
providers an individual with a disability who makes an informed choice 
to pursue extended employment as the individual's employment goal.
* * * * *
(Authority: Sec. 12(c) and 101(a)(20) of the Act; 29 U.S.C. 709(c) 
and 721(a)(20))

    4. Section 361.47 is amended by revising paragraph (g), adding a 
new paragraph (k), and revising the authority citation following the 
section to read as follows:


Sec. 361.47  Record of services.

* * * * *
    (g) In the event that an individual's IPE provides for vocational 
rehabilitation services in a non-integrated setting, including an 
extended employment setting, a

[[Page 39497]]

justification to support the need for the non-integrated setting.
* * * * *
    (k) In the event an individual achieves an employment outcome in 
which the individual is compensated in accordance with section 14(c) of 
the Fair Labor Standards Act or the designated State unit closes the 
record of services of an individual in extended employment on the basis 
that the individual is unable to achieve an employment outcome 
consistent with Sec. 361.5(b)(15) or that the individual through 
informed choice chooses to remain in extended employment, documentation 
of the results of the annual reviews required under Sec. 361.55, the 
individual's input into those reviews, and the individual's or, if 
appropriate, the individual's representative's acknowledgement that 
those reviews were conducted.

(Authority: Sections 101(a)(6), (9), (14), (20) and 102(a), (b), and 
(d) of the Act; 29 U.S.C. 721(a)(6), (9), (14), (20) and 722(a), 
(b), and (d))
* * * * *
    5. Section 361.55 is revised to read as follows:


Sec. 361.55  Annual review of individuals in extended employment and 
other employment under special certificate provisions of the Fair Labor 
Standards Act.

    (a) The State plan must assure that the designated State unit 
conducts an annual review and reevaluation in accordance with the 
requirements in paragraph (b) of this section for an individual with a 
disability served under this title--
    (1) Who has achieved an employment outcome in which the individual 
is compensated in accordance with section 14(c) of the Fair Labor 
Standards Act; or
    (2) Whose record of services is closed while the individual is in 
extended employment on the basis that the individual is unable to 
achieve an employment outcome consistent with Sec. 361.5(b)(15) or the 
individual through informed choice chooses to remain in extended 
employment.
    (b) For each individual with a disability who meets the criteria in 
paragraph (a) of this section, the designated State unit must--
    (1) Annually review and reevaluate the status of each individual 
for 2 years after the individual's record of services is closed (and 
thereafter if requested by the individual or, if appropriate, the 
individual's representative) to determine the interests, priorities, 
and needs of the individual with respect to competitive employment or 
training for competitive employment;
    (2) Enable the individual or, if appropriate, the individual's 
representative to provide input into the review and reevaluation and 
must document that input in the record of services, consistent with 
Sec. 361.47(k), with the individual's or, as appropriate, the 
individual's representative's signed acknowledgment that the review and 
reevaluation have been conducted; and
    (c) Make maximum efforts, including identifying and providing 
vocational rehabilitation services, reasonable accommodations, and 
other necessary support services, to assist the individual in engaging 
in competitive employment as defined in Sec. 361.5(b)(10).

(Authority: Sections 12(c) and 101(a)(14) of the Act; 29 U.S.C. 
709(c) and 721(a)(14))

[FR Doc. 00-15991 Filed 6-23-00; 8:45 am]
BILLING CODE 4000-01-U


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