Friday, 

April 2, 2010 

Part IV 

Department of Labor 

Employment and Training Administration 

20 CFR Part 618 

Trade Adjustment Assistance; Merit 

Staffing of State Administration and 

Allocation of Training Funds to States; 

Final Rule 

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16988 Federal Register / Vol. 75, No. 63 / Friday, April 2, 2010 / Rules and Regulations 

DEPARTMENT OF LABOR 

Employment and Training 

Administration 

20 CFR Part 618 

RIN 1205–AB56 

Trade Adjustment Assistance; Merit 

Staffing of State Administration and 

Allocation of Training Funds to States 

AGENCY: Employment and Training 

Administration, Labor. 

ACTION: Final rule. 

SUMMARY: The Employment and 

Training Administration (ETA) of the 

Department of Labor (Department) 

issues this final rule to implement 

changes to the regulations for the Trade 

Adjustment Assistance for Workers 

(TAA) program under the Trade Act of 

1974, as amended (Trade Act). This rule 

requires that personnel engaged in TAAfunded functions undertaken to carry 

out the worker adjustment assistance 

provisions must be State employees 

covered by a merit system of personnel 

administration. This rule also prescribes 

the system for allocating training funds 

to the States, as required by 

amendments to the Trade Act contained 

in the American Recovery and 

Reinvestment Act of 2009, commonly 

called the Recovery Act. The Recovery 

Act included provisions which 

reauthorized and significantly amended 

the TAA program. 

DATES: Effective Date: This final rule is 

effective May 3, 2010. 

FOR FURTHER INFORMATION CONTACT: Erin 

FitzGerald, Office of Trade Adjustment 

Assistance, U.S. Department of Labor, 

200 Constitution Avenue, NW., Room 

N–5428, Washington, DC 20210; 

telephone (202) 693–3560 (this is not a 

toll-free number). 

Individuals with hearing or speech 

impairments may access the telephone 

number above via TTY by calling the 

toll-free Federal Information Relay 

Service at 1–800–877–8339. 

SUPPLEMENTARY INFORMATION: The 

Department issued a notice of proposed 

rulemaking (NPRM) proposing these 

TAA regulations on August 5, 2009. 

This final rule takes into consideration 

all comments received on the NPRM. 

This rule creates a new 20 CFR part 618. 

The preamble to this final rule is 

organized as follows: 

I. Background—provides a brief description 

of the development of the rule. 

II. Subpart-by-Subpart Review—summarizes 

and discusses comments on the TAA 

regulations. 

III. Administrative Information—sets forth 

the applicable regulatory requirements. 

I. Background 

The TAA program, authorized under 

Chapter 2 of Title II of the Trade Act (19 

U.S.C. 2271 et seq.), provides 

adjustment assistance for workers 

whose jobs have been adversely affected 

by international trade. TAA assistance 

includes training, case management and 

reemployment services, income support, 

job search and relocation allowances, a 

wage supplement option for older 

workers, and eligibility for a health 

coverage tax credit. There are two steps 

for workers to obtain program benefits. 

A group of workers, or specified 

entities, must file with the Department 

and the State in which the jobs are 

located a petition for certification of 

eligibility to apply for TAA benefits and 

services. If the Department certifies the 

petition, based upon statutory criteria 

that test whether the group of workers 

was adversely affected by international 

trade, then the workers may 

individually apply with the Cooperating 

State Agency (CSA) for TAA benefits 

and services. 

The States administer the provision of 

benefits and services in the TAA 

program as agents of the United States. 

Each State does so through a State 

agency designated as the CSA in a 

Governor-Secretary Agreement between 

the State’s Governor and the United 

States Secretary of Labor (Secretary), as 

required under section 239 of the Trade 

Act. The CSA may also include the State 

Workforce Agency (if different) and 

other State or local agencies that 

cooperate in the administration of the 

TAA program, as provided in the 

Governor-Secretary Agreement. 

The Trade and Globalization 

Adjustment Assistance Act of 2009 

(TGAAA), part of the Recovery Act 

(Pub. L. 111–5, Div. B, Title I, Subtitle 

I, 123 Stat. 115), reauthorized and 

substantially amended the TAA 

program by revising the certification 

criteria to expand the types of workers 

who may be certified and by expanding 

the program benefits available to 

workers who are covered by a 

certification (adversely-affected workers 

or adversely-affected incumbent 

workers, referred to collectively in this 

notice as ‘‘adversely-affected workers’’). 

The TGAAA amendments generally 

apply to adversely-affected workers 

covered under petitions for certification 

filed on or after May 18, 2009, and 

before January 1, 2011. To incorporate 

into regulations the substantial changes 

to the TAA program, the Department is 

creating a new 20 CFR part 618, which 

will implement the TAA program 

regulations that will succeed the current 

TAA program regulations in 20 CFR part 

617. This rulemaking is relatively 

narrow in scope; it addresses only the 

staffing of TAA-funded functions and 

the allocation of TAA training funds to 

the States. A later NPRM will propose 

the remainder of 20 CFR part 618. 

On August 5, 2009, the Department 

published an NPRM proposing two 

actions (74 FR 39198). The first was a 

requirement that, after a transition 

period, a State must engage only State 

government personnel to perform TAAfunded functions undertaken to carry 

out the worker adjustment assistance 

provisions of the Trade Act, and must 

apply to these personnel the standards 

for a merit system of personnel 

administration, in accordance with 

Office of Personnel Management (OPM) 

regulations at 5 CFR part 900, subpart F. 

These OPM regulations specify the 

merit system standards required for 

certain Federal grant programs. These 

standards have always been required for 

personnel administering Unemployment 

Insurance (UI) (section 303(a)(1) of the 

Social Security Act) and Wagner-Peyser 

Act—funded Employment Service (ES) 

programs in the States (20 CFR 652.215), 

and were required for personnel 

administering TAA from 1975 until 

2005 under the Governor-Secretary 

Agreements. 

The merit system standards contained 

in the OPM regulations at 5 CFR 

900.603 are as follows: 

(a) Recruiting, selecting, and advancing 

employees on the basis of their relative 

ability, knowledge, and skills, including 

open consideration of qualified applicants for 

initial appointment. 

(b) Providing equitable and adequate 

compensation. 

(c) Training employees, as needed, to 

assure high quality performance. 

(d) Retaining employees on the basis of the 

adequacy of their performance, correcting 

inadequate performance, and separating 

employees whose inadequate performance 

cannot be corrected. 

(e) Assuring fair treatment of applicants 

and employees in all aspects of personnel 

administration without regard to political 

affiliation, race, color, national origin, sex, 

religious creed, age or handicap and with 

proper regard for their privacy and 

constitutional rights as citizens. This ‘‘fair 

treatment’’ principle includes compliance 

with the Federal equal employment 

opportunity and nondiscrimination laws. 

(f) Assuring that employees are protected 

against coercion for partisan political 

purposes and are prohibited from using their 

official authority for the purpose of 

interfering with or affecting the result of an 

election or a nomination for office. 

In the NPRM, the Department stated 

that the purpose of requiring the 

application of these merit principles to 

State administration of the TAA 

program is to promote consistency, 

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efficiency, accountability, and 

transparency. 

In addition to the merit staffing 

requirement, the second regulatory 

action proposed in the NPRM concerned 

the methodology by which the 

Department allocates training funds to 

the States. (The TGAAA uses the term 

‘‘apportion’’ when discussing the 

dividing of training funds among the 

States. However, this final rule uses the 

term ‘‘allocation’’’ to avoid confusion, 

since customarily the Office of 

Management and Budget (OMB) 

‘‘apportions’’ appropriated funds to the 

Department, which then ‘‘allocates’’ 

them to the States.) Before fiscal year 

(FY) 2004, the Department allocated 

training funds through a request process 

on a first-come, first-served basis; all 

distributions of TAA training funds 

were made in response to a State’s 

request. This resulted in the Department 

distributing the majority of available 

TAA training funds early in the year, 

resulting in early exhaustion as TAA 

training funds are subject to a statutory 

maximum annual funding level, or 

‘‘cap.’’ Later needs were addressed 

through National Emergency Grant 

funds, provided under Section 173 of 

the Workforce Investment Act of 1998 

(WIA) (29 U.S.C. 2918). However, this 

process proved to be inefficient, 

lengthy, and cumbersome, because it 

did not provide States with a 

predictable level of funding. 

Therefore, starting in fiscal year 2004, 

the Department issued annual guidance 

establishing a formula for distributing 

TAA training funds to the States. The 

Department initially allocated 75 

percent of the year’s training funds, and 

held the remaining 25 percent in 

reserve, for later use by high-need 

States. The formula included a ‘‘hold 

harmless’’ feature, whereby the initial 

allocation to a State was at least 85 

percent of the amount the State received 

in its initial allocation the prior fiscal 

year. 

The formula instituted in 2004 had 

some limitations. Most significant was 

the relative inability of the Department 

to shift TAA training funds in response 

to changing economic conditions. This 

shortcoming was due in part to the 85 

percent hold harmless feature, and in 

part to the details of the formula itself. 

This shortcoming was compounded by 

the fact that, under the Department’s 

annual appropriations acts, 

appropriated funds, including funds for 

TAA, must be obligated (and reobligated) by the Department within the 

fiscal year in which the funds are 

appropriated; therefore, the Department 

has very limited authority to move 

money between States once the funds 

are distributed. The Department is 

allowed to reclaim unexpended training 

funds from a given State, with the 

State’s agreement, and to re-obligate 

such funds to other States, if the 

obligation is carried out within the same 

fiscal year the funds were appropriated. 

As a result, if a State is allocated FY 

2009 training funds, those funds may be 

returned to the Department and 

provided to another State only during 

FY 2009. After the end of the fiscal year, 

the Department has no authority to 

redistribute any unused funds. Since 

States have three fiscal years to expend 

the funds obligated in any fiscal year, it 

is often not apparent that a State does 

not need all of the funds obligated to it 

in the fiscal year in which the funds 

were allocated. Thus, TAA training 

funds that the Department obligates to 

States within a fiscal year but remain 

unexpended by the States after three 

years are returned directly to the U.S. 

Treasury. 

Section 1828(a) of the TGAAA 

amended section 236(a)(2) of the Trade 

Act to establish an annual training 

funding cap of $575 million, increased 

from $220 million annually, for fiscal 

years 2009 and 2010 and $143,750,000 

for the period October 1, 2010 through 

December 31, 2010. The Conference 

Report on the Recovery Act makes clear 

that Congress increased the cap in part 

because the TGAAA amendments 

would result in more individuals being 

eligible for training benefits, and in part 

because in past times of high program 

participation, training funding was 

insufficient. H.R. Rep. No. 111–16, at 

672 (2009) (Conf. Rep.). 

The amended section 236(a)(2) also 

established a methodology for 

distributing TAA training funds based 

on a formula to be determined by the 

Department. The Trade Act now 

provides that the initial distribution of 

training funds must equal 65 percent of 

the training funds appropriated and that 

the remaining 35 percent will be held in 

reserve. The Department’s initial 

allocation formula must be based on 

four factors set forth in the statute. 

Section 236(f)(1) of the Trade Act 

(added by Section 1828(c) of the 

TGAAA) directs the Department to issue 

‘‘such regulations as may be necessary to 

carry out the [allocation] provisions’’ on 

or before February 17, 2010. This final 

rule fulfills that statutory requirement. 

II. Subpart-by-Subpart Review of the 

Final Rule 

The Department issued a notice 

proposing these regulations on August 

5, 2009, and received 42 comments. The 

Department read and carefully 

considered each comment in the process 

of developing this final rule; the 

substantive issues raised by the 

comments that are germane to the rule 

are responded to below. Most 

significantly, the NPRM proposed that a 

State not already in compliance with the 

merit staffing requirement must comply 

with this requirement with respect to 

the personnel responsible for 

employment and case management 

services under section 235 of the Trade 

by October 1, 2010. All other TAA 

administrative activities would have 

had to have been merit staffed by July 

1, 2010. The Department has decided, in 

response to concerns raised in the 

comments, to now apply a single, later 

transition period for the merit staffing of 

both administration and employment 

and case management services with a 

compliance deadline of December 15, 

2010. 

Subpart H—Administration by 

Applicable State Agencies 

As proposed, § 618.890, establishing 

the merit staffing requirement, 

contained four paragraphs. Paragraph (a) 

set forth the merit staffing requirement. 

Paragraph (b) detailed a transition 

period for States to come into 

compliance with this requirement. 

Paragraph (c) partially exempted from 

this merit staffing requirement those 

States whose employment service was 

exempted from the merit staffing 

requirement under Wagner-Peyser Act 

regulations. Paragraph (d) permitted a 

State to outsource TAA functions that 

are not inherently governmental, as 

defined in OMB Circular No. A–76 

(Revised). 

All 42 submissions received in 

response to the NPRM included 

comments on the proposed merit 

staffing requirement. As explained 

below, in response to several comments, 

the Department revised § 618.890(b) to 

reflect the adoption of a single transition 

deadline of December 15, 2010, for 

merit staffing of both administrative 

activities and employment and case 

management services. 

Merit-Based State Personnel 

(§ 618.890(a)) 

Paragraph (a) provides that States 

must engage only State government 

personnel to perform TAA-funded 

functions undertaken to carry out the 

worker adjustment assistance provisions 

of the Trade Act, and must apply to 

such personnel the standards for a merit 

system of personnel administration 

applicable to personnel covered under 5 

CFR part 900, subpart F. Section 

618.890(a) restores the longstanding 

practice of requiring State merit staffed 

personnel to administer the TAA 

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program. From 1975 through 2005, the 

Governor-Secretary Agreements under 

which the States administer the TAA 

program as agents of the United States 

required that all administrative 

functions performed by the States in 

carrying out the TAA program be 

performed exclusively by staff subject to 

the merit system standards at 5 CFR 

900.603. In 2005, the GovernorSecretary Agreements were modified to 

provide that TAA program staff need 

not be merit staffed, except that 

employees who perform functions 

under both the TAA program and the UI 

and/or ES programs must be merit 

staffed. However, in 2009, the 

Department provided advance notice in 

the Governor-Secretary Agreements that 

it would address merit staffing in 

rulemaking. This rule reinstates, and 

codifies in regulation, what had been 

the Department’s longstanding practice 

of requiring merit staffing by the States 

in administering the TAA program. 

The Department presented several 

rationales in the NPRM for this 

requirement. The Department will 

address the comments made on each 

rationale. 

Authority 

In the NPRM, the Department found 

authority to promulgate this rule in 

section 239 of the Trade Act. The 

Department received several comments 

on this issue. 

Some of the commenters questioning 

our authority asserted that requiring the 

use of merit staff runs counter to the 

clear intent of Congress in passing the 

TGAAA. A small number of these 

commenters simply pointed out their 

belief that the proposed rule runs 

counter to Congress’ intent, while others 

argued that Congress’ intent to exclude 

merit staffing is clear from the actions 

of the Conference Committee tasked 

with reconciling the House and Senate 

bills to reauthorize and amend the 

Trade Act. One commenter focused on 

the House-passed bill, the Senate bill 

introduced by Senator Max Baucus, and 

the actions of the Conference Committee 

as relevant legislative history. Another 

commenter cited the minority views of 

the House Committee Report from 2007 

(H.R. Rep. No. 110–414, pt. 1, at 119– 

120) as relevant legislative history. One 

commenter asserted that ‘‘because 

Congress specifically considered and 

intentionally rejected [merit staffing] in 

passing the TGAAA,’’ the Department 

does not now have the authority to 

promulgate such a rule. Another 

commenter argued that the actions of 

the Conference Committee ‘‘precludes 

an interpretation of section 239 of the 

Trade Act that would grant the 

Department’’ the authority to enact this 

rule. One commenter suggested that if 

Congress had intended that certain TAA 

functions be provided by State merit 

staff, it would have included that 

provision in the TGAAA. 

As an initial matter, the minority 

opinion in the House Committee Report 

is not indicative of Congressional intent. 

Regarding these commenters’ broader 

arguments, the Department 

acknowledges that the TGAAA did not 

incorporate provisions that had been 

included in a bill passed by the House 

in the previous Congress during the 

previous Administration that would 

have statutorily mandated the use of 

merit staff in the TAA program, but the 

Conference Committee’s failure to 

explain its actions precludes a finding 

that Congress clearly intended to 

prohibit the Department from enacting 

such a requirement through rulemaking. 

Courts have consistently stated as a 

general rule that Congressional intent 

cannot be clearly understood where 

actions taken by a committee in 

Congress, including the Conference 

Committee, are not explained. Because 

the Conference Report is silent on this 

matter, the legislative history cited by 

these commenters is insufficient to 

determine what Congress intended 

when it passed the TGAAA. Further 

weakening these commenters’ assertions 

is the general rule that the opinion and 

understanding of a subsequent Congress 

is a poor indicator of what a previous 

Congress intended when it passed a 

specific provision of a bill. In the 

absence of any clear Congressional 

intent prohibiting it, the Department 

believes that promulgation of the merit 

staffing rule is within the discretionary 

authority delegated to it to interpret the 

Trade Act and administer the TAA 

program. 

The Federal court opinion in 

Michigan v. Herman, 81 F.Supp.2d 840 

(W.D. Mich. 1998), provides support for 

the Department’s position. In that case 

the court upheld the Department’s 

requirement that ES services be 

provided by merit staff under the 

Department’s interpretation of the 

Wagner-Peyser Act. In its decision, the 

court noted that the Wagner-Peyser Act 

is silent on the issue, the legislative 

history is ambiguous on the matter, and 

that Congress’ failure to alter the 

Department’s longstanding 

interpretation of the Wagner-Peyser Act 

indicated that Congress intended to 

defer to the Department’s interpretation 

of the Act. Michigan, 81 F.Supp.2d at 

847–848. As in Michigan, the Trade Act 

does not directly address merit staffing; 

the legislative history is ambiguous, and 

for 30 years Congress did not expressly 

repudiate the Department’s 

longstanding interpretation of the Trade 

Act as requiring merit staffing in the 

face of silence in the statute and 

ambiguity in the legislative history; and 

Congress failed to alter the Department’s 

State merit staffing requirement despite 

amending the Trade Act several times 

between 1975 and 2005 when the 

Governor-Secretary Agreement 

expressly required merit staffing. 

Accordingly, only a clear, unambiguous 

statement from Congress would be 

sufficient to prohibit the Department 

from exercising its discretion and 

requiring merit staffing through 

rulemaking. 

A few commenters asserted that 

section 239 of the Trade Act does not 

provide the Department authority to 

require State use of merit staffing in 

implementing the TAA program. Some 

of these commenters generally asserted 

that the TGAAA does not require the 

use of merit staffing. As discussed 

above, the Department is acting within 

its discretion in requiring merit staffing. 

One of these commenters disagreed that 

sections 239(a)(4) (cooperation with the 

Secretary and other State and Federal 

agencies in providing payments and 

services), 239(f) (advising and 

interviewing adversely-affected 

workers), and 239(i) (control measures) 

of the Trade Act provided the authority 

for the Department to require merit 

staffing. This commenter asserted that 

Congress did not intend to provide 

authority to require merit staffing under 

section 239(a)(4), an assertion it 

supported by stating that ‘‘neither the 

statutory text itself nor the legislative 

history to section 239(a)(4)’’ provide the 

authority cited by the Department. The 

commenter asserted that ‘‘neither the 

statutory text itself nor the legislative 

history to section 239(f) says anything 

about merit staffing,’’ and therefore the 

Department does not have the authority 

to issue such a rule. The commenter 

additionally asserted that section 239(i) 

cannot be used to support this rule as 

this section was added ‘‘at the insistence 

of Senate negotiators opposed to the 

imposition of a [S]tate merit staffing 

requirement.’’ 

The Conference Report on section 239 

is silent on the issue of merit staffing, 

while these provisions in section 239 

provide the Department with broad 

authority to prescribe rules to govern 

the efficient administration of the TAA 

program. In the face of legislative 

silence, the Department believes that 

these provisions in section 239 provide 

it with sufficient authority to ensure the 

effective administration of the TAA 

program in any manner that will meet 

the goal of efficient and effective 

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program administration. As explained 

throughout this preamble, the 

Department’s promulgation of this rule 

is necessary for the most effective 

administration of the TAA program. 

Finally, one commenter faulted the 

Department’s reliance on ‘‘Congress’ 

decision to require the provision of 

TAA-funded employment and case 

management services to TAA-eligible 

workers as a justification for imposing’’ 

the merit staffing requirement because 

‘‘the agreement on this portion of the 

TGAAA Act was directly linked’’ to the 

compromise that included the dropping 

of the merit staffing provision from the 

House version of the bill. As with the 

assertions about sections 239(a)(4), (f), 

and (i), the commenter did not cite to 

any legislative history to support this 

contention, and the Department is aware 

of none. 

Principal-Agent Relationship 

In the NPRM, the Department 

discussed the principal-agent 

relationship, under which the 

Department directs the State 

administration of the TAA program, as 

support for the use of State merit staff 

to administer the TAA program. The 

Department explained that 

implementing the TAA program 

requires States to make determinations 

concerning the Federally-funded 

services and benefits to which 

adversely-affected workers are entitled. 

The Department received a small 

number of comments on this discussion. 

One of the commenters agreed that the 

Department has ‘‘broad authority to 

ensure that the TAA program functions 

in a proper and efficient manner,’’ 

including through implementation of a 

State merit staffing requirement for use 

of TAA funds, since States act as agents 

of the United States. Another 

commenter suggested that the principalagent provisions have long been part of 

the Trade Act, so the Department may 

not use that longstanding relationship as 

a basis for implementing a new merit 

staffing requirement at this time. This 

commenter also asserted that the 

Department failed to identify any way in 

which the current method of providing 

services using non-merit staff has 

undermined the principal-agent 

relationship. 

The principal-agent relationship, 

present in all Federal UC programs, 

invests the Department, as principal, 

with broad discretion to interpret the 

statute and to prescribe the operational 

and administrative details of the TAA 

program. This differs from the grantorgrantee relationship, found in programs 

like WIA, in which substantial 

operational and administrative 

discretion reposes in the grantee. The 

Department’s broad discretion as the 

principal provides it ample authority to 

prescribe administrative rules, 

including a merit staffing requirement. 

The fact that the principal-agent 

relationship is longstanding does not 

limit the role of the principal, just as it 

did not limit that role in 2005. 

The TGAAA created additional 

entitlements to benefits within that 

relationship. The TGAAA created a 

requirement to provide employment and 

case management services to TAAcertified workers, almost tripled the 

training funding authorization to 

provide longer-term training to an 

expanded pool of certified workers, 

increased by 26 the number of weeks of 

income support for workers within a 91- 

week period, added the reemployment 

trade adjustment assistance (RTAA) 

benefit for older workers, enhanced 

other benefits and services, and 

expanded group eligibility. The 

Department anticipates the total funding 

for these features to virtually double, 

and of course these new features add 

complexity and additional challenges in 

administering the program. It is, 

therefore, appropriate at this time for 

the Department to reconsider the 

minimum requirements to which States, 

on behalf of the Department and the 

United States, must adhere in order to 

effectively administer the TAA program. 

Further, the Department disagrees 

with the commenter’s assertion that in 

order to promulgate this rule the 

Department must show how the past use 

of non-merit staff has undermined the 

principal-agent relationship. The 

principal-agent relationship, which 

existed before this rulemaking and was 

reinforced in the provisions of all of the 

Governor-Secretary Agreements on TAA 

program administration, provides the 

Department the authority to direct 

States as to the manner of administering 

the TAA program. The Department’s 

authority as principal is reinforced by 

its authority to interpret and apply the 

statute as the agency designated by 

Congress to administer the TAA 

program. 

Complex Entitlement Program 

In the NPRM, the Department stated 

that the TAA program is a complex 

entitlement program, similar to the UI 

program which is also administered by 

State merit staff. The Department also 

noted that the TAA and UI programs are 

integrally related. For example, the TAA 

program’s trade readjustment allowance 

(TRA) is a UI benefit payable after 

exhaustion of other forms of UI and is 

subject to many of the same or similar 

requirements and procedures that apply 

to State UI programs. 

The Department received several 

comments agreeing that the integral 

relationship between the TAA program 

and UI programs would benefit from the 

requirement that TAA program funds be 

administered by State merit staff. Some 

of these commenters cited the need for 

State merit staff especially because, in 

their experience, personnel who 

determine eligibility for TRA benefits 

must thoroughly understand UI 

eligibility requirements and program 

complexities. 

A small number of commenters 

disagreed. One of these commenters 

asserted that WIA programs have 

equally complex requirements, yet those 

programs are often effectively 

administered by non-merit staff. 

Another of these commenters stated that 

the TAA program ‘‘is more closely 

aligned with the [WIA]-funded rapid 

response and dislocated worker 

programs,’’ because both of these 

programs ‘‘address the training and 

reemployment needs of workers affected 

by a dislocation event * * *,’’ and 

therefore, the administration of the 

program should be designed to more 

closely coordinate with WIA, which can 

be done most effectively at the local 

level under the existing system. 

Similarly, another commenter averred 

that the responsibilities of TAA staff 

more closely resemble WIA staff 

activities than those of UI and ES 

program staff. 

The Department recognizes that there 

are similarities between WIA and TAA, 

and requires coordination between the 

two programs. However, the structure of 

the TAA program, by operating within 

a principal-agent relationship, reflects 

greater Federal authority and 

responsibility than is present in the 

grantor-grantee relationship under 

which WIA operates. Unlike TAA, WIA 

participants are not entitled by law to 

program benefits, and any eligibility for 

UI payments that a WIA participant may 

have is not affected by determinations of 

eligibility to receive WIA services. In 

the TAA program, TRA eligibility is an 

extension of UI eligibility that takes into 

account State and Federal eligibility 

criteria. Maintaining eligibility for TRA 

requires continuing eligibility 

determinations, taking into account 

factors such as enrollment in training, 

length of training, employment 

decisions, and earnings. By adding 

employment and case management 

services as a required benefit of the 

program, Congress recognized that the 

proper provision of these services, 

including quality case management, is 

essential to the adjustment of adverselymstockstill on DSKH9S0YB1PROD with RULES3

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affected workers. For example, if a TAA 

case manager is not familiar with the 

requirements for enrollment in training 

in order to receive TRA, or does not 

possess a full understanding of the rules 

setting the amount of income an 

adversely-affected worker may earn 

while still receiving TRA, an adverselyaffected worker may be incorrectly 

determined ineligible for TRA. By losing 

eligibility for TRA, the worker may lose 

eligibility for the health coverage tax 

credit, and find it difficult to continue 

training. As one commenter noted, 

‘‘meeting these complicated 

requirements requires a very 

specialized, highly-trained workforce 

with expertise that cannot be easily 

outsourced or transferred to other 

organizations.’’ 

A few commenters encouraged the 

Department to let each State choose its 

own staffing strategy. According to these 

comments, the Department is imposing 

a ‘‘one size fits all’’ approach by 

requiring State merit staffing. The 

Department is promulgating this 

requirement because it has determined 

that nationwide consistency in the TAA 

program is of paramount importance. 

The Department has also determined 

that the State merit staffing requirement 

will promote program efficiency, 

accountability and transparency. 

The important point is that adverselyaffected workers now are entitled to 

receive a range of tailored services 

under the TAA program. The 

Department recognizes that many 

adversely-affected workers receive 

services under other programs for which 

they are also eligible, such as WIA, 

which are not delivered by State meritstaffed personnel. In contrast, since 

TAA is a complex entitlement program 

that requires States to make substantive 

determinations of benefit entitlement, as 

agents of the United States, the 

Department is requiring State meritstaffed administration of the TAAfunded services to which adverselyaffected workers are entitled. However, 

while the Department expects the 

primary delivery of case management 

services for TAA participants will be 

through TAA-funded State merit staff, 

non-merit staff funded by partner 

programs may provide those services 

when, for example, TAA funds have 

been exhausted, when demand for 

services exceeds TAA-funded staff 

capacity to deliver those services, or 

when specific services have already 

been provided under another Federal 

program. In fact, section 235 of the 

Trade Act requires the Secretary to 

make employment and case 

management services available to 

adversely-affected workers directly or 

through agreements with the States and 

section 235a makes provides funding for 

States to provide those services. Section 

239(g)(5) of the Trade Act specifically 

requires States acting under such 

agreements to provide such services 

through other Federal programs in the 

event that allocated TAA funding for 

employment and case management 

services is insufficient to make these 

required services available to all 

adversely-affected workers in a State. 

Relationship With WIA 

Many commenters argued for the 

continuation of a structure involving coenrollment and integration with WIA 

services. These commenters remarked 

that their State’s integrated service 

delivery system is highly efficient, 

responsive, and consistent; has good 

coverage throughout the State; has 

worked well for many years; and 

provides the full range of ‘‘wrap-around’’ 

services and in-depth assessments. One 

commenter stated that a merit staff 

requirement is diametrically opposed to 

the Department’s stated goal of program 

integration. One commenter added that 

having the WIA and TAA programs 

administered by two different entities 

and staff would result in a potential loss 

of co-enrollment opportunities. One 

commenter supported State practices 

that respect the principles of local 

governance, community-based service 

delivery, and system-wide 

accountability. 

Some of these commenters noted that 

27 States and Puerto Rico have opted to 

allow a variety of State and local 

government employees and contractors 

to provide services to TAA participants. 

These commenters noted that this has 

allowed for a high degree of integration 

of the services provided through TAA 

and the One-Stop delivery system. 

Along the same line, other commenters 

suggested that local workforce areas are 

better poised to assist participants with 

training choices and reemployment 

services than State merit staff because of 

awareness of demand occupations, local 

resources, and the local economic 

climate. One commenter added that in 

some local areas, non-merit staff 

currently providing TAA benefits show 

higher job retention rates and higher 

salaries than merit staff. Several 

commenters mentioned the requirement 

to provide case management, and 

expressed concern that the proposed 

rule would require States to establish 

redundant, costly, and disruptive public 

structures because the States would be 

prohibited from using existing local 

workplace resources. 

The use of merit staff in the TAA 

program has not previously impeded, 

and will not in the future impede, the 

provision of services to adverselyaffected workers in the centers of the 

One-Stop delivery system (One-Stop 

centers) established under WIA. The 

TAA program will continue to be a OneStop partner, as are other merit-staffed 

programs, including UI and the ES, 

which are integrally related to TAA. As 

the Governor-Secretary Agreement 

provides, the States will continue to use 

One-Stop centers as the main point of 

participant intake and delivery of TAA 

benefits and services. 

Consistent with Trade Act section 

239(g)(5), there is nothing in this rule 

prohibiting the delivery, in appropriate 

circumstances, of employment and case 

management services to adverselyaffected workers by staff funded by WIA 

or other Federal programs through coenrollment. As a partner in the OneStop delivery system, the TAA program 

will continue to coordinate with the 

other partners in the system to ensure 

adversely-affected workers are provided 

access to a broad array of 

comprehensive services. In light of the 

current mix of merit staffed and nonmerit staffed One-Stop partners already 

participating in the One-Stop delivery 

system, the restoration of the TAA 

merit-staffing requirement will not 

preclude effective coordination and 

integration within that system. 

Under the amendments, the TAA 

program for the first time will be able 

to devote TAA funding to the provision 

of employment and case management 

services. These services were previously 

not allowable uses of funds under the 

TAA program. To the extent that 

adversely-affected workers received 

these services, they received them 

through other programs, generally WIA 

or the ES. Now, dedicated TAA funds 

will allow the TAA program to ensure 

that these services are provided to 

adversely-affected workers in a highquality and in-depth manner. However, 

the WIA, ES and other resources and 

structures that were used to provide 

these services to adversely-affected 

workers in the past are not being 

eliminated or dismantled. They will 

continue to be available to provide 

services to the dislocated workers and 

adults who continue to be eligible for 

those programs, including adverselyaffected workers, and the provision of 

these benefits should continue to be 

coordinated with the TAA program 

facilitated through the One-Stop 

delivery system established under WIA. 

Adversely-affected workers currently 

receive many services in addition to 

case management and employment 

services, including supportive services 

and other wrap-around services, which 

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are funded and provided under other 

programs for which adversely-affected 

workers also qualify. The Department 

will continue to encourage the provision 

of services to adversely-affected workers 

by such other programs in order to 

supplement TAA-funded services. In 

fact, section 239(g)(5) of the Trade Act 

specifically requires States to provide 

employment and case management 

services through other Federal 

programs, in the event that allocated 

TAA funding for employment and case 

management services is insufficient to 

make these required services available 

to all adversely-affected workers in a 

State. Moreover, the Governor-Secretary 

Agreements require coordination of the 

TAA program with activities carried out 

under WIA to help ensure that a 

comprehensive array of services is 

available to adversely-affected workers. 

The operating instructions to implement 

the TGAAA amendments (TEGL No. 22– 

08) also affirmed the desirability of coenrollment of adversely-affected 

workers in WIA and other programs to 

ensure comprehensive services are 

available. The commenters have not 

explained how the merit-staffing 

requirement precludes co-enrollment in 

other programs or effective coordination 

by TAA with the other programs, 

including both merit staffed and nonmerit staffed programs, which also are 

partners in the One-Stop delivery 

system under WIA. In sum, this rule 

does not undermine the feasibility or 

importance of the co-enrollment of 

adversely-affected workers in WIA and 

other Federal programs. 

State Merit System Advantages 

In the NPRM, the Department 

described various desirable features of 

State merit personnel systems. The 

Department stated that State merit staff 

employees are directly accountable to 

State government entities. Also, the 

Department noted that the standards for 

State merit staff performance and their 

determinations on the use of public 

funds require that decisions be made in 

the best interest of the public and of the 

population to be served. 

The Department received several 

comments on this topic. Some 

commenters extolled the benefits of 

using State merit staff for the TAA 

program. One commenter expressed the 

opinion that it would be preferable to 

have TAA eligibility determinations 

made by public agency merit staff that 

are hired according to objective 

personnel standards and are insulated 

from political and other pressures. 

Another commenter claimed that if 

State merit staffing is required, then 

citizens and elected officials could more 

easily locate the entity to hold 

accountable for TAA program issues. 

In contrast, several commenters 

argued that non-merit staffing models 

are equally effective. These commenters 

argued that their experience with local 

TAA staff is that they have provided 

quality service to adversely-affected 

workers. For example, one commenter 

noted that local staff have correctly 

applied eligibility criteria and have 

effectively performed their TAA duties. 

One commenter noted that agreements 

between the States and local entities 

can, and have, addressed some of the 

features attributed to State merit staff 

such as strict government standards on 

the use of personal information. This 

commenter also remarked that the State 

is always responsible for administering 

TAA, regardless of how the program is 

staffed. 

Other commenters contended that 

local staff who have been providing 

TAA services in recent years have 

become knowledgeable about the 

program and have gained valuable 

experience that benefits adverselyaffected workers. These commenters 

cautioned that losing that background 

and expertise would harm the TAA 

program. 

There are unique advantages to using 

the State merit personnel system for 

staffing the TAA program. State merit 

staff employees are hired into and 

operate within a publicly accountable 

organization with a State-wide 

perspective and are responsible to the 

general public. Some features of the 

State merit staffing model that add value 

to the TAA program are the objective 

nature of public personnel systems; the 

strict government standards governing 

the use of personal information; and 

that State agencies already address such 

issues as the impartial treatment of 

applicants to and beneficiaries of public 

programs, and operating with high 

standards of public transparency. 

Further, the direct employeremployee relationship between State 

merit staff and the State agency (or 

agencies) responsible for delivery of 

TAA services makes it easier for 

adversely-affected workers to hold their 

State government accountable for the 

services to which they are entitled. 

Although it is certainly possible to hold 

local and/or non-merit staff and their 

employers accountable, the attenuated 

lines of authority between State 

agencies, local entities, contactors, etc., 

creates a more amorphous web of 

relationships that can make it more 

difficult for adversely-affected workers 

to locate the source of TAA program 

responsibility. 

The Department does not question 

that there are local staff who have 

effectively served the TAA program, and 

understands that some local staff have 

attained knowledge and experience. 

Indeed, this rule does nothing to disturb 

the local delivery of TAA services. State 

personnel may and do perform TAA 

functions at the local level. Further, 

States may hire persons who are 

knowledgeable about and experienced 

in delivering TAA services consistent 

with State merit standards. This rule 

simply requires that personnel engaged 

in TAA-funded functions, except as 

specified in § 618.890, must be 

employees covered by the State merit 

system of personnel administration, 

permitting non-merit staff to be 

converted to State employment, if 

accomplished in accordance with the 

merit principles. 

Consistency, Efficiency, Accountability 

and Transparency 

In the NPRM, the Department 

explained that its purpose in requiring 

State merit staffing of TAA-funded 

functions ‘‘is to promote consistency, 

efficiency, accountability, and 

transparency in the administration of 

the TAA program.’’ 74 FR 39199, Aug. 

5, 2009. The Department received 

several comments about this purpose. 

Several of these agreed that requiring 

State merit staff personnel to administer 

the TAA program would ensure better 

consistency, efficiency, transparency, 

and accountability. Some of these 

commenters focused on the 

disadvantages of and inconsistencies in 

local implementation of the program. 

One commenter expressed the belief 

that the proposed rule would help 

prevent a proliferation of different 

management practices and structures 

that make accountability and equal 

access more difficult to achieve. In 

addition, this commenter stated that 

One-Stop centers vary considerably 

with respect to size, capacity, and type 

of operator, and there is variation in 

services and quality depending on 

location. One commenter warned that 

the priorities of other local programs 

can sometimes take precedence over the 

TAA program. Another commenter 

observed that ‘‘the diversified WIA 

structure results in a degree of 

impenetrability for service recipients 

and policy makers,’’ and asserted that 

requiring State merit employees to 

perform TAA-funded functions would 

ensure that citizens and elected officials 

are able to ‘‘place accountability where 

it belongs.’’ One commenter noted that 

staff turnover combined with 

inconsistency of service from one local 

workforce board area to another is not 

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conducive to an efficient operation of 

the TAA program. 

One commenter provided a detailed 

argument supporting the idea that 

Federal benefit entitlement programs 

must be carried out by State employees 

who are free from political pressures 

and the for-profit motives of privatesector contractors. According to this 

commenter, the TAA program should be 

operated at the State level by personnel 

who have been recruited, selected, 

compensated, and evaluated according 

to a merit system of personnel 

administration. This commenter 

asserted that local One-Stop centers 

have divergent policies, which 

sometimes result in significant 

variances in the treatment received by 

persons who have worked at the same 

workplace, depending on where they 

live. Moreover, the commenter 

explained that the speed and 

consistency by which workers are 

determined to be eligible for benefits 

and may actually begin receiving 

benefits can differ from worker to 

worker in the same One-Stop center. 

Another commenter described a 

situation where workers were denied 

eligibility for TAA benefits in a OneStop center, but the workers travelled to 

another One-Stop center in a different 

area and were declared eligible for TAA 

benefits. 

A commenter also expressed the 

opinion that State merit staff 

administration of the program would 

provide the flexibility to respond to 

layoffs regardless of where they occur in 

the State, and that well-trained ‘‘Statelevel’’ staff will bring stability and 

continuity to the provision of services. 

This commenter contended that the 

civil service system ensures hiring and 

promotions are based on competence, 

rather than nepotism, political 

connections, or favoritism. In addition, 

the commenter explained that public 

administration provides important due 

process protections for benefit 

recipients who might be subject to 

discrimination by private contractors 

who are subject to standards different 

from State merit staff. 

Some commenters, however, 

disagreed with the Department’s 

assertion that State merit staff would 

promote consistency, efficiency, 

transparency, and accountability in the 

TAA program. These commenters 

generally agreed that the TAA program 

should strive for consistency, efficiency, 

accountability, and transparency, but 

asserted that these goals were already 

being achieved through the locallyadministered approach used in their 

jurisdiction. 

For example, one commenter 

maintained that consistency can be 

accomplished by focusing on applying 

policies and procedures rather than on 

who delivers the service. Another 

commenter contended that State-wide 

training and monitoring of local staff 

can help to produce consistency. 

Another commenter suggested that 

technical assistance is a tool that can 

support consistency. 

Other commenters stated that local 

delivery of TAA services is efficient. A 

few of these commenters argued that the 

local staff model is more flexible and 

can more nimbly respond to layoff 

events and training opportunities than a 

larger bureaucracy. Some of these 

commenters contended that it would be 

inefficient and potentially confusing to 

have merit staff TAA case managers 

because some recipients of TAA 

services also have WIA case managers. 

According to one commenter, TAA and 

other Federal programs have been 

effectively administered at the local 

level by professionals who have earned 

the trust of constituents. 

A few commenters maintained that 

performance measures, oversight, and 

monitoring are tools through which 

local delivery entities may be held 

accountable. Another commenter 

averred that accountability is ensured 

by the separation of program 

administration and operations, 

regardless of whether State staff is 

merit-based. 

Similarly, some commenters stated 

that local delivery options are 

transparent. A few commenters 

contended that strict government 

standards on the use of personal 

information and transparency have been 

addressed in data sharing agreements 

between the commenters’ State and 

local areas. One commenter asserted 

that transparency is the product of 

frequent and thorough monitoring, and 

one commenter suggested that a merit 

staffing requirement be used as a 

corrective-action recourse based upon a 

finding of deficiencies in State 

performance. Another commenter stated 

that an adversely-affected worker 

should receive services required to 

return to work, no matter where he or 

she enters the system, and service 

administration should not be 

differentiated by whether or not the 

adversely-affected worker first makes 

contact with a merit staff employee. 

It is clear that in many areas using 

local delivery options, significant effort 

has been expended to achieve the goals 

of consistency, efficiency, 

accountability and transparency. The 

Department remains committed to the 

local delivery of services, which is in 

fact how services in the Department’s 

workforce programs—including Stateadministered programs such as TAA— 

are delivered. The merit staffing 

requirement ensures that the services 

provided locally to adversely-affected 

workers will be administered uniformly 

within States and across States. 

Accordingly, commenters should not be 

concerned that this rule will force a 

‘‘dismantling’’ of a local service delivery 

system. In fact, the new funding stream 

provided under the TGAAA for case 

management and employment services 

allows resources under WIA and the ES 

that were previously used for that 

purpose for adversely-affected workers 

to be used to provide services to the 

many other dislocated workers and 

adults eligible for those programs who 

are not eligible to apply for TAA. TAA 

services will continue to be provided 

through the local One-Stop delivery 

system established under WIA. 

The Department agrees with the 

comment that adversely-affected 

workers should receive services that 

will help them return to work even if 

their first contact in the system is not 

with a merit staff employee. As a result, 

co-enrollment of workers in both WIA 

and TAA programs will continue to be 

encouraged, as discussed more fully 

above. 

The different approaches to 

consistency, efficiency, accountability 

and transparency described by the 

various commenters illustrate that the 

States are employing a patchwork 

approach that could lead to inconsistent 

service delivery. The Department 

believes that consistency in the 

application of eligibility criteria and the 

treatment of workers nationally is 

imperative. Consistency should be the 

overarching design of the service 

delivery system for services delivered 

with TAA funds, rather than a 

corrective action approach that could be 

used if performance goals are missed. 

Consistency is best achieved by 

administering the TAA program through 

merit staff who are hired, trained, and 

employed by one or two State agencies 

under the same merit system, operate 

under the same personnel rules, and are 

accountable to the same State agency or 

agencies. Non-merit staff personnel 

employed outside of the State agency, 

often by either local agencies or private 

entities, are subject to varying 

procedures and work rules, and 

different, and potentially conflicting, 

obligations to their actual employers. 

This structure is more likely to produce 

an inconsistent application of the 

eligibility criteria for the various TAA 

benefits and services. 

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Similarly, placing administrative 

responsibility with the merit-staffed 

personnel of one or two State agencies 

promotes efficiency and makes it easier 

to hold the State agencies accountable. 

For example, layoff events may trigger 

TAA certifications covering large 

numbers of workers who seek TAA at 

the same time. A State agency may 

quickly move funding and personnel to 

areas in the State where TAA services 

are most needed to advise these 

adversely-affected workers as soon as 

practicable of the TAA program benefits 

and services and the procedures and 

deadlines for applying for such benefits 

and services, as required by the 

Governor-Secretary Agreement. In 

contrast, funds allocated to local 

workforce boards and contractors are 

generally restricted to serve a specified 

area which impedes a State’s ability to 

move funds as needs change. Focusing 

TAA administration in one or two State 

agencies also reduces the number of 

entities responsible across a State, 

thereby making it easier for the public 

to know who administers the program 

and promoting accountability and 

transparency. 

On a related point, one commenter 

asserted that this rule will ‘‘likely inhibit 

the ability of [S]tates to comply with 

section 239(f)’’ requiring the 

coordination of services because it will 

lead to ‘‘duplicative staffing and 

increased inefficiency’’ in States 

currently using non-merit staff to 

provide services to both WIA and TAA 

participants. The Department disagrees 

that this rule will lead to duplicative 

staffing and inefficiencies in 

administering the program. As 

discussed throughout this preamble, the 

TAA program continues to be a required 

partner in the One-Stop delivery system, 

and co-enrollment with WIA is still 

encouraged. In the absence of any 

evidence suggesting otherwise, the 

Department reasonably believes that 

requiring States to use merit staffing 

will improve the administration of the 

TAA program. 

State personnel serving under a merit 

system are non-partisan public officials 

who are directly accountable to elected 

officials. The standards for their 

performance and their determinations 

on the use of public funds require that 

decisions be made in the best interest of 

the public and of the population to be 

served. The use of a State merit system 

is further intended to ensure that the 

administrative personnel meet objective 

professional qualifications, provide fair 

treatment to participants, comply with 

strict government standards on the use 

of personal information, and perform in 

a setting where decisions are made in 

accordance with high standards of 

public transparency. These features of a 

State merit system are appropriate to 

apply to State administration of the 

TAA program. 

A few commenters questioned 

whether the Department has any data 

supporting the assertion that State merit 

staff is inherently better qualified to 

deliver TAA services than other 

providers. The Department is acting on 

the experience it has gained in 

overseeing the State administration of 

the TAA program under a merit staffing 

system that had been in place for 

approximately 30 years of the TAA 

program’s 35-year existence. In 

addition, UI, a program similar to TAA 

and one that actually works in 

conjunction with TAA, is efficiently 

administered by State merit staff. ES 

also is efficiently administered by State 

merit staff and works in conjunction 

with TAA. Based on this experience and 

the similarities to other programs 

successfully staffed by State merit 

personnel, the Department believes a 

return to a State merit based system will 

help to promote consistency, efficiency, 

accountability, and transparency in the 

administration of the TAA program. 

Costs 

Various comments addressed the cost 

of the State merit staffing requirement. 

One commenter noted that, given the 

number of TAA petitions that are 

pending, requiring State merit staffing of 

TAA-funded functions would mean ‘‘the 

[S]tate would need significantly more 

* * * merit staff [S]tatewide at an 

additional annual cost of at least $10 

Million.’’ Other commenters opined 

more generally that the merit staffing 

requirement could result in a 

‘‘substantial’’ cost increase. One 

commenter stated simply that it will be 

‘‘more’’ costly for case management 

services to be provided by State merit 

staff. Another commenter stated that 

there would be ‘‘financial burdens 

attached to staffing and additional 

staffing needs.’’ One commenter 

suggested that this rule would result in 

‘‘a system backlog’’ because of an 

insufficient number of State merit staff. 

Finally, one commenter argued that the 

TAA funds provided by the Department 

will not be adequate to address ‘‘long 

term costs’’ of State personnel such as 

pension payments. 

The TAA allocation provided to the 

States by the Department covers the 

costs of the program. TAA allocations 

include funding for employment and 

case management services and 

administrative costs. Under the TGAAA, 

significantly more funding is available 

for the TAA program. The training cap 

for the program has increased from $220 

million to $575 million, and an 

additional amount equal to 15 percent 

of the allocation to each State for 

training will be allocated to the State for 

TAA administration and employment 

and case management services, as well 

as an additional $350,000 to each State 

specifically for employment and case 

management services. This will result in 

States having a considerably greater sum 

available for administration than under 

the lower training cap. And in fact, none 

of the commenters provided any 

empirical data to support the contention 

that the funding would be insufficient 

for this purpose. 

The final rule requires States to use 

merit staff to perform TAA-funded 

functions. Such staff may be staff new 

to TAA, or they may be staff who have 

been providing TAA services in the 

past, including non-merit staff who are 

converted to State employment. Each 

State will comply with this rule’s merit 

staffing requirement with the Federal 

funds allocated to that State for TAA 

administration and case management 

and employment services. In that way, 

any costs incurred in implementing this 

requirement will be funded by the TAA 

program. Commenters provided with no 

data that suggests that States cannot 

comply with this rule with the available 

funds, and the Department is aware of 

no such data. The Department is 

available to provide assistance to any 

State with questions about what costs 

are allowable charges to TAA funds. 

Transition Period (§ 618.890(b)) 

As proposed, § 618.890(b) provided 

that States must comply with the merit 

staffing requirement by October 1, 2010 

for employment and case management 

services under section 235 of the Trade 

Act, and by July 1, 2010 for all other 

TAA administrative activities that are 

required to be merit staffed. The 

Department received several comments 

on this provision. One commenter 

stated that the proposed transition 

period is reasonable and provides 

sufficient time for States to plan 

implementation. One commenter 

generally stated that the transition 

period would delay, not reduce, the 

costs and disruptions to States. Other 

commenters stated that the aggressive 

transition period for implementing the 

merit staff requirements would make it 

impossible for a State to hire and train 

an adequate number of qualified staff 

before the implementation date. One of 

these commenters specifically asserted 

that, assuming that this final rule 

publishes in mid-February 2010, the 

four and one-half month time frame to 

implement merit staffing for TAA 

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administrative functions by July 1 is 

‘‘very aggressive.’’ This commenter 

argued that being unprepared at the 

implementation date would lead to a 

loss of consistency and effectiveness of 

the program. A couple of commenters 

noted that their States are currently 

subject to hiring restrictions that could 

impact the ability to hire and train staff 

by the implementation deadline. One of 

these commenters also noted that the 

rule would require States to move the 

delivery of employment and case 

management services to merit staff a 

mere three months before the TGAAA 

amendments expire. 

The Department recognizes the 

concern raised by several commenters 

that, at least for their States, the 

transition period proposed in the NPRM 

was too short. Accordingly, the 

Department has decided to extend the 

transition period to allow States more 

time to effect this change. The deadline 

for implementing the merit staffing 

requirement for both employment and 

case management services and 

administrative services now is 

December 15, 2010. Thus, paragraph (b) 

of § 618.890 is revised to provide a new 

transition deadline of December 15, 

2010. 

As for the comments regarding State 

hiring freezes, the positions subject to 

the merit staffing requirement are 

Federally funded positions that should 

not be subject to State-imposed hiring 

freezes because merit staff are hired 

using those Federal funds provided. 

Unemployment Insurance Program 

Letter (UIPL) No. 18–09, titled 

‘‘Application of State-Wide Personnel 

Actions, including Hiring Freezes, to the 

Unemployment Insurance Program’’ 

addresses precisely this issue. It 

provides that any State-wide personnel 

action that does not take into account 

the needs of the State UI program is not 

a ‘‘method of administration’’ under 

section 303(a)(1) of the Social Security 

Act for assuring the proper and prompt 

payment of UI. This principle, and thus 

the UIPL, applies equally to the TAA 

program under 20 CFR 617.50(f), 

requiring ‘‘[f]ull payment of TAA when 

due * * * with the greatest promptness 

that is administratively feasible.’’ Also, 

consistent with Federal UI programs, 

States are required, through their 

agreements to administer the program as 

agents of the Department, to use the 

TAA funds provided by the Department 

consistent with the rules and 

regulations in effect for the program— 

including this rule. Therefore, if a State 

does not have merit staff it must hire 

merit staff using the funds allocated by 

the Federal Government. 

The transition deadline falls 15 days 

before the expiration of the TGAAA 

amendments. The transition period was 

developed taking into account the need 

for a reasonable amount of time for 

implementation, weighed against the 

need to ensure program consistency, 

efficiency, accountability, and 

transparency as quickly as possible. The 

regulatory provision requiring merit 

staffing is not dependent on the program 

changes made by the TGAAA, or the 

expiration date it provided for those 

changes. The Department’s legal 

authority and rationales for requiring 

State merit staffing for TAA-funded 

functions are based on the Department’s 

responsibility for assuring that the TAA 

program is properly and efficiently 

administered. While the additional 

complexity and new entitlement created 

by the TGAAA provide additional 

support for the decision to require State 

merit staffing, the requirement does not 

depend solely on the TGAAA. We note 

that the President’s FY 2011 Budget 

supports extension of the TGAAA 

provisions. 

In the NPRM, the Department 

proposed to title part 618 ‘‘Trade 

Adjustment Assistance under the Trade 

Act of 1974 For Workers Certified under 

Petitions Filed After May 17, 2009.’’ 

However, in response to the comment 

concerning the TGAAA’s sunset 

provision, and to avoid any confusion 

that the merit staffing requirement 

applies only with respect to workers 

certified under petitions filed after May 

17 2009, the Department changes the 

title to ‘‘Trade Adjustment Assistance 

under the Trade Act of 1974, As 

Amended.’’ This change clarifies that 

part 618 will contain all the regulations 

for administering the program operated 

under the Trade Act, not just the 

regulations implementing amendments 

specific to the TGAAA—and that the 

merit staffing requirement applies with 

respect to all workers regardless of the 

date of the petition under which they 

were certified. 

As mentioned above, there are 

different eligibility criteria for and 

different services available to adverselyaffected workers, depending on the date 

on which their petition was filed. 

Workers covered by petitions filed 

before May 18, 2009 are subject to the 

requirements relating to benefits and 

services that were contained in the 

Trade Act prior to the TGAAA, while 

workers covered by petitions filed on or 

after May 18, 2009 are subject to the 

requirements added under the TGAAA. 

Such variances add to program 

complexity, as also noted above. 

However, the requirement of merit 

staffing transcends these programmatic 

distinctions. Once a State has converted 

to merit staff as required by this rule, 

those staff members serve all workers, 

regardless of the date a petition was 

filed. 

The revised title of part 618 also more 

accurately describes these regulations. 

Although certain provisions of the 

TGAAA only relate to petitions filed on 

or after May 18, 2009, not all provisions 

of the law relate to that filing date. 

Different provisions have different 

effective dates, including the provisions 

relating to the formula for distribution 

of the training funds, which went into 

effect on October 1, 2009. Therefore, 

‘‘Trade Adjustment Assistance under the 

Trade Act of 1974, As Amended’’ is a 

more appropriate title. 

Exemptions for States With Employment 

Service Operation Exemptions 

(§ 618.890(c)) 

Section 618.890(c) partially exempts 

from the TAA State merit staffing 

requirement those States that have 

received an exemption from the ES 

merit staffing requirements under the 

Wagner-Peyser Act. These States are 

Colorado, Massachusetts, and Michigan. 

The Department has concluded that 

allowing this limited exemption will 

prevent complications and confusion in 

these three States, thereby allowing the 

efficient administration of the TAA 

program. The paragraph (c) exemption 

does not apply to the administration of 

TRA, and also it applies in each of these 

States only in the same scope that the 

ES merit staffing exemption applies. 

The Department received several 

comments on the issue of these 

exemptions. Several of these 

commenters expressed general support 

for permitting the States of Colorado, 

Massachusetts, and Michigan to 

continue to use non-State and non-merit 

personnel to administer the TAA 

program. One commenter argued that 

the challenges of implementing the 

merit staffing requirement are as great 

for its State, which is not exempted 

under paragraph (c), as they would be 

for the exempted States. One commenter 

stated that the Department does not 

possess the legal authority under TAA 

to relieve any State from the 

requirement of merit staffing. Another 

commenter urged the Department to add 

a particular State to the exemption; 

similarly, a small number of 

commenters suggested that the 

Department allow waivers from the 

merit staffing requirement. 

The legal authority to exempt States 

under paragraph (c) is based on the 

Department’s authority to interpret the 

Trade Act and administer the TAA 

program, as explained more fully above. 

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The Department granted the ES 

exemptions as demonstrations under the 

Wagner-Peyser Act, and decided that no 

additional demonstrations or 

exemptions would be granted. See 20 

CFR 652.215. The Department has 

considered the issue of additional TAA 

exemptions, but has decided that, 

because of the importance of merit 

staffing, declining to permit additional 

exemptions (or waivers) will better 

serve workers under the TAA program. 

And, whereas the ES exemptions would 

result in inconsistent service delivery to 

adversely-affected workers if the three 

exempt States were required to 

implement the TAA merit staffing 

requirement, it is fully consistent and 

reasonable for States with ES State merit 

staff to comply with this rule. 

The Department makes no change to 

this paragraph as proposed. 

Exceptions for Non-Inherently 

Governmental Functions (§ 618.890(d)) 

Proposed paragraph (d) provided that 

the merit staffing requirement would 

not prohibit a State from outsourcing 

TAA functions that are not inherently 

governmental, as defined by OMB 

Circular No. A–76 (Revised). The 

Department received no comments 

opposing this paragraph, but is changing 

this provision very slightly by adding 

‘‘any supplemental OMB guidance or 

superseding authority, and in DOL 

guidance.’’ This addition acknowledges 

that the definition of ‘‘inherently 

governmental’’ in OMB Circular No. A– 

76 (Revised) could be expanded upon in 

subsequent guidance or superseded by 

subsequent authority and that DOL may 

issue an authoritative interpretation of 

OMB guidance for purposes of the TAA 

program. 

Subpart I—Allocation of Training Funds 

to States 

In the NPRM, the Department 

proposed subpart I to implement the 

funding provisions of the TGAAA. In 

addition to increasing the funds 

available under the training cap, the 

TGAAA prescribed a formula for 

allocating training funds to the States. 

As required by the TGAAA and 

proposed in § 618.910, the initial 

allocation of training funds is 

determined by the application of four 

factors: (1) The trend in the number of 

workers covered by certifications of 

eligibility during the most recent four 

consecutive calendar quarters for which 

data is available; (2) the trend in the 

number of workers participating in 

training during the most recent four 

consecutive calendar quarters for which 

data is available; (3) the number of 

workers estimated to be participating in 

training during the fiscal year; and (4) 

the amount of funding estimated to be 

necessary to provide approved training 

during the fiscal year. At present, the 

Department will assign each of these 

factors an equal weight. However, 

proposed § 618.910(f)(4) provided that 

the Department may, after December 31, 

2010, change the weighting of these 

factors after an opportunity for public 

comment. 

For each of the four factors, the 

Department will determine the national 

total and each State’s percentage of the 

national total. Based on a State’s 

percentage of each of these factors, the 

Department will determine the 

percentage that the State will receive of 

the amount available for initial 

allocations, and will adjust that 

percentage to account for the hold 

harmless provision. The total initial 

allocations to the States will total 65 

percent of the training funds 

appropriated, as mandated by section 

236(a)(2)(C) of the Trade Act, as 

amended by the TGAAA. 

The formula will still include a ‘‘hold 

harmless’’ feature, but at a much lower 

level than the Department has been 

using to date. Although the initial 

allocation to a State had been at least 85 

percent of the amount the State received 

in its initial allocation the prior fiscal 

year, the statute now requires that a 

State’s initial allocation be at least 25 

percent of the amount the State received 

in its initial allocation the prior fiscal 

year. 

The Department’s practice has been 

that, if the formula would result in an 

initial allocation of less than $100,000 

to a State, then that State’s allocation 

was reallocated to the other States. 

Where a State had an initial allocation 

of less than $100,000, it could request 

reserve funds in order to obtain the 

limited TAA funding that the State 

required. The NPRM proposed to codify 

that practice in regulations. 

The TGAAA amended the Trade Act 

to require the Department to make the 

initial distribution to States ‘‘as soon as 

practicable after the beginning of each 

fiscal year,’’ and to require that 90 

percent of a fiscal year’s training funds 

be distributed to the States by July 15 

of that fiscal year. As stated above, the 

initial allocations will equal 65 percent 

of the funds available for training. In 

accordance with the amendments, the 

Department will also provide to States 

which receive training funds, either 

through an initial allocation or through 

a request for reserve funds, an 

additional 15 percent for TAA 

administration and employment and 

case management services, as well as an 

additional $350,000 to each State 

specifically for employment and case 

management services. 

The 35 percent of the total training 

funds held in reserve is higher than the 

previous 25 percent reserve. Subject to 

the requirement in section 

236(a)(2)(B)(ii) of the Act that 90 percent 

of the funds be distributed by July 15 of 

the fiscal year, these reserve funds will, 

as in the past, be available to be 

distributed to States on an as-needed 

basis to provide funding to States 

experiencing high activity levels that 

cannot be addressed with the funds 

received in the initial allocation. 

The Department received several 

comments on the proposed rules 

governing the allocation of training 

funds to States. The majority of the 

comments were generally supportive of 

the allocation methodology, calling it 

‘‘much improved over the current 

practice,’’ because it ‘‘faithfully executes 

the language of the TAA law’’ and 

because ‘‘the proposed funding 

distribution would bring funding levels 

to a more equitable level * * * [and] 

will allow for a more accurate 

distribution of funds.’’ One commenter 

noted that the allocation portion of the 

rule ‘‘will look at each [S]tate’s recent 

TAA use, and will better allocate 

funding among [S]tates based on current 

realities, instead of using more stale 

data,’’ concluding that ‘‘[s]uch openmindedness and ability to adapt will 

make for a better program.’’ The 

Department will address the comments 

by topic below. 

Annual Training Cap (§ 618.900) 

This section implements section 

236(a)(2)(A) of the Trade Act which 

caps the amount of TAA training funds 

available in each fiscal year. The 

Department received no comments on, 

and makes no change to, this section as 

proposed. 

Distribution of the Initial Allocation of 

Training Funds (§ 618.910) 

This section implements the initial 

distribution of TAA training funds 

requirements in section 236(a)(2)(B) and 

section 236(a)(C)(ii) of the Trade Act. 

The Department received no comments 

on paragraphs (a) (initial allocation), (b) 

(timing of the distribution of the initial 

allocation), (d) (minimum initial 

allocation), or (e) (process of 

determining initial allocation) of this 

section. 

The Department received one 

comment on paragraph (c) of § 618.910, 

implementing amended section 

236(a)(2)(C)(iii) of the Trade Act. That 

section is the hold harmless provision, 

providing that the amount of the initial 

distribution to a State will not be less 

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than 25 percent of the State’s prior year 

initial distribution. Paragraph (c) adopts 

the minimum hold harmless, 25 

percent, permitted by the Trade Act. 

This commenter argued that reducing 

the hold harmless to 25 percent (from 

the 85 percent the Department 

previously used) ‘‘may create significant 

fluctuations in yearly allocations to 

States.’’ The commenter noted that these 

fluctuations will extend to 

administrative funds as States’ 

administrative allocations are a 

percentage of their total training 

allocations. The commenter suggested 

that instead, the Department set the 

hold harmless provision at 50 percent of 

the prior year’s allocation. 

The Department recognizes that the 

25 percent hold harmless may result in 

a State receiving an initial allocation 

that is significantly lower than the 

State’s initial allocation in the previous 

year. And, the commenter is correct that 

States’ administrative allocations will 

fluctuate in sync with their initial 

training allocations. However, these 

fluctuations would occur because of an 

attendant fluctuation among the States’ 

need for TAA training funds. It was 

Congress’s clear intent that the hold 

harmless percentage be set at 25 

percent. See Conf. Rep. at 672–73 (‘‘[t]he 

provision addresses these problems by 

lowering the ‘‘hold harmless’’ provision 

to 25 percent’’). However, the 

Department will monitor the effects of 

the ‘‘hold harmless’’ and, if warranted, 

will modify it. Further, § 618.920 will 

permit a State to receive reserve funds 

should the initial allocation be 

insufficient to meet the State’s training 

needs. 

The Department received two 

comments on paragraph (f) of § 618.910 

implementing section 236(a)(2)(C)(ii) of 

the Trade Act. That section establishes 

four factors that the Department must 

use in determining the amount of each 

State’s initial allocation, and permits the 

Department to add ‘‘such other factors as 

[it] considers appropriate. * * *’’ 

Paragraph (4) explains the steps the 

Department will follow in determining 

the initial allocation of training funds. 

The first comment on paragraph (f) 

was on paragraph (1)(iv), which 

describes the fourth initial allocation 

factor: the amount of funding estimated 

to be necessary to provide approved 

training during the fiscal year. This 

commenter expressed concern that the 

fourth factor fails to address job search 

and relocation expenditures, and that 

funds for those expenditures are not 

allocated elsewhere. To the extent that 

this commenter has suggested variance 

from the fourth statutory factor, the 

Department is without discretion to 

change the factor prescribed in the 

Trade Act. To the extent that the 

commenter is discussing job search and 

relocation funding, the comment is 

outside the scope of this rulemaking but 

the process is described in TEGL No. 9– 

09. The allocation addressed in this rule 

is limited to TAA training funds. 

The second comment requested that 

the Department consider ‘‘such other 

factors as National Emergency Grants, 

demographics of the affected workforce, 

technology requirements (such as new 

reporting and new IT system 

functionality), petition certification 

volume, and funds allocated under 

WIA.’’ While additional factors to 

determine the initial allocation may be 

helpful at a later date, and are within 

the Department’s discretion to adopt, for 

now, the Department will maintain only 

the four factors specified in the statute 

and laid out in the proposed rule. The 

Department needs to acquire experience 

with the four statutory factors before 

deciding whether to add other factors, 

and may seek public comment on 

potential additional factors in the 

future. 

The Department makes no change to 

this section as proposed. 

Reserve Fund Distribution (§ 618.920) 

This section addresses the 

distribution of the funds that remain in 

reserve after the initial allocations to the 

States. As required by section 

236(a)(2)(C)(i) of the Trade Act, this 

section provides that the remaining 35 

percent of the total annual training 

funds will be held in reserve for later 

distribution in response to requests by 

States that can show need for additional 

training funds. The Department received 

one comment in favor of the reserve 

fund distribution. 

The Department makes no change to 

this section as proposed. 

Second Distribution (§ 618.930) 

This section provides that at least 90 

percent of the total training funds for a 

fiscal year will be distributed to the 

States by July 15 of that fiscal year, as 

required by section 236(a)(2)(B)(ii) of 

the Trade Act. The Department received 

no comments on this issue, and makes 

no change to this section as proposed. 

Insufficient Funds (§ 618.940) 

This section provides that if, in a 

given fiscal year, the Secretary estimates 

that the amount of funds necessary to 

pay for approved training will exceed 

the legislative cap, and therefore there 

will be insufficient funds to meet the 

needs of all States for the year, the 

Department will decide how the funds 

remaining in reserve at that time will be 

allocated among the States, as provided 

by section 236(a)(2)(E) of the Trade Act. 

The Department received no comments 

on this issue, and makes no change to 

this section as proposed. 

Technical Corrections 

The Department is making two 

technical corrections to the rule. The 

first correction is in the title of Subpart 

I as it appeared in the table of contents 

in the NPRM. In the table of contents, 

the NPRM indicated that subpart I 

would be titled, ‘‘Apportionment of 

Training Funds to States.’’ However, as 

explained above, the Department is 

using the word ‘‘allocation’’ to describe 

the distribution of training funds to the 

States. Accordingly, the table of 

contents in this final rule correctly 

reads, ‘‘Allocation of Training Funds to 

States.’’ 

The second correction is to the title of 

§ 618.890(d). In the NPRM, the 

paragraph was titled, ‘‘Exemptions for 

Non-inherently Governmental 

Functions.’’ The Department is 

correcting the title to the more 

technically accurate, ‘‘Exceptions for 

Non-inherently Governmental 

Functions.’’ 

III. Administrative Information 

Regulatory Flexibility Analysis, 

Executive Order 13272, Small Business 

Regulatory Enforcement Fairness Act 

The Regulatory Flexibility Act (RFA), 

5 U.S.C. Chapter 6, requires the 

Department to evaluate the economic 

impact of this final rule on small 

entities. The RFA defines small entities 

to include small businesses, small 

organizations, including not-for-profit 

organizations, and small governmental 

jurisdictions. The Department must 

determine whether the final rule 

imposes a significant economic impact 

on a substantial number of such small 

entities. The Department concludes that 

this rule directly regulates only States 

and does not directly regulate any small 

entities; any regulatory effect on small 

entities would be indirect. Accordingly, 

the Department has determined this rule 

will not have a significant economic 

impact on a substantial number of small 

entities within the meaning of the RFA. 

The Department has also determined 

that this final rule is not a ‘‘major rule’’ 

for purposes of the Small Business 

Regulatory Enforcement Fairness Act of 

1996, as amended (SBREFA), Public 

Law 104–121, 110 Stat. 847. SBREFA 

requires agencies to take certain actions 

when a ‘‘major rule’’ is promulgated. 

SBREFA defines a ‘‘major rule’’ as one 

that will have an annual effect on the 

economy of $100 million or more; that 

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will result in a major increase in costs 

or prices for, among others, State or 

local government agencies; or that will 

significantly and adversely affect the 

business climate. 

This final rule will not result in a 

major increase in costs or prices for 

States or local government agencies. In 

this instance the States, acting as agents 

of the Federal Government, are 

administering TAA benefits and 

services to adversely-affected workers 

while the Federal Government provides 

appropriated funds to States to operate 

the program. Nor will this rule 

significantly and adversely affect the 

business climate. The opposite is true: 

the TAA program provides funds to 

train adversely-affected workers for 

employment in positions that are in 

economic demand, thereby assisting in 

meeting businesses’ needs. Finally, the 

final rule will not have an annual effect 

on the economy of $100 million or 

more. 

For the foregoing reasons, the 

Department determines that the final 

rule is not a ‘‘major rule’’ for SBREFA 

purposes. 

Executive Order 12866 

Executive Order 12866 requires that 

for each ‘‘significant regulatory action’’ 

by the Department, the Department 

conduct an assessment of the regulatory 

action and provide OMB with the 

regulation and the requisite assessment 

prior to publishing the regulation. A 

significant regulatory action is defined 

to include an action that will have an 

annual effect on the economy of $100 

million or more, as well as an action 

that raises a novel legal or policy issue. 

As discussed in the SBREFA analysis, 

this final rule will not have an annual 

effect on the economy of $100 million 

or more. However, the rule does raise 

novel policy issues about the allocation 

of TAA training funds. Therefore, the 

Department submitted this final rule to 

OMB for review under Executive Order 

12866. 

Paperwork Reduction Act 

The purposes of the Paperwork 

Reduction Act of 1995 (PRA), 44 U.S.C. 

3501 et seq., include minimizing the 

paperwork burden on affected entities. 

The PRA requires certain actions before 

an agency can adopt or revise a 

collection of information, including 

publishing a summary of the collection 

of information and a brief description of 

the need for and proposed use of the 

information. This final rule does not 

require the collection of any new 

information. The data collection 

relevant to this rule, related to the 

Reserve Funding Request Form (ETA– 

9117), is currently approved by OMB 

under control number 1205–0275 

(expires February 28, 2013). 

Because this final rule does not 

require the collection of any new 

information nor revises an existing 

collection of information, the PRA is not 

implicated. 

Unfunded Mandates Reform Act 

For purposes of the Unfunded 

Mandates Reform Act of 1995, this final 

rule does not include any Federal 

mandate that may result in increased 

expenditure by State, local, and Tribal 

governments in the aggregate of more 

than $100 million, or increased 

expenditures by the private sector of 

more than $100 million. State 

governments administer TAA as agents 

of the United States and are provided 

appropriated Federal funds for all TAA 

expenses. 

Executive Order 13132 

Executive Order 13132 at section 6 

requires Federal agencies to consult 

with State entities when a regulation or 

policy may have a substantial direct 

effect on the States or the relationship 

between the National Government and 

the States, or the distribution of power 

and responsibilities among the various 

levels of government, within the 

meaning of the Executive Order. Section 

3(b) of the Executive Order further 

provides that Federal agencies must 

implement regulations that have a 

substantial direct effect only if statutory 

authority permits the regulation and it 

is of national significance. Further, 

section 239(f) of the Trade Act requires 

consultation with the States in the 

coordination of the administration of 

the provisions for employment services, 

training, and supplemental assistance 

under sections 235 and 236 of the Trade 

Act and under title I of the WIA. 

As the Department explained in the 

NPRM, 74 FR 39206, because a merit 

staffing requirement may fall within the 

requirements of Section 3(b), and 

because of the consultation requirement 

in section 239(f) of the Trade Act, the 

Department has consulted on a variety 

of issues arising from the TGAAA 

amendments. These consultations have 

been with the States both directly and 

through communication with the 

National Association of State Workforce 

Agencies, the National Association of 

Workforce Boards, and the National 

Governors Association, during the 

formation of the Governor-Secretary 

Agreements between the States and the 

Department. Additionally, the 

Department has consulted with the 

public at large through this rulemaking’s 

notice and comment process. 

In the NPRM, the Department 

recognized that there may be some costs 

to the States that have to convert some 

TAA-related staff to their merit staffing 

system. The Department received a 

small number of comments on this 

matter. These commenters thought that 

the Department should have gathered 

data on and better assessed the costs to 

States before proposing the merit 

staffing requirement. 

The Department provides States with 

appropriated Federal funds for TAA 

employment and case management 

services, including staff, and for 

administration of the TAA program. 

These Federal funds are intended to 

cover the costs of the TAA program. 

And in fact, under the TGAAA, TAA 

funds (including funds for 

administration) have increased 

significantly. The Department expects 

that the amount of State dollars that will 

be required to fund this conversion to 

State merit staffing is insubstantial. 

None of the commenters provided any 

data to the contrary. As noted above, the 

TAA program operated successfully for 

years with merit staffing required in the 

Governor-Secretary Agreements, and 

with less funding, so there is no reason 

to believe that the costs will be 

substantial or will exceed the available 

amounts of administrative funds. 

Nevertheless, the Department is willing 

to work with those States that have to 

convert some of their TAA-related staff 

to their merit staffing system to ensure 

that these States are utilizing Federal 

funds to the fullest extent possible 

within allowable cost categories. In the 

end, though, States are responsible for 

staffing the TAA program in their State 

at a level commensurate with their 

Federal funding allocation. 

Executive Order 13045 

Executive Order 13045 concerns the 

protection of children from 

environmental health risks and safety 

risks. This final rule has no impact on 

safety or health risks to children. 

Executive Order 13175 

Executive Order 13175 addresses the 

unique relationship between the Federal 

Government and Indian Tribal 

governments. The order requires Federal 

agencies to take certain actions when 

regulations have ‘‘Tribal implications.’’ 

Required actions include consulting 

with Tribal governments before 

promulgating a regulation with Tribal 

implications and preparing a Tribal 

impact statement. The order defines 

regulations as having Tribal 

implications when they have substantial 

direct effects on one or more Indian 

Tribes, on the relationship between the 

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Federal Government and Indian Tribes, 

or on the distribution of power and 

responsibilities between the Federal 

Government and Indian Tribes. 

This final rule addresses how the 

Department will allocate to the States 

training funds under the Trade Act, and 

requires that personnel engaged in TAAfunded functions undertaken to carry 

out the worker adjustment assistance 

provisions must be State employees 

covered by the merit system of 

personnel administration. Accordingly, 

the Department concludes that this final 

rule does not have Tribal implications. 

Environmental Impact Assessment 

The Department has reviewed this 

final rule in accordance with the 

requirements of the National 

Environmental Policy Act (NEPA) of 

1969 (42 U.S.C. 4321 et seq.), the 

regulations of the Council on 

Environmental Quality (40 CFR part 

1500), and the Department’s NEPA 

procedures (29 CFR part 11). The final 

rule will not have a significant impact 

on the quality of the human 

environment, and, thus, the Department 

has not prepared an environmental 

assessment or an environmental impact 

statement. 

Assessment of Federal Regulations and 

Policies on Families 

Section 654 of the Treasury and 

General Government Appropriations 

Act, enacted as part of the Omnibus 

Consolidated and Emergency 

Supplemental Appropriations Act of 

1999 (Pub. L. 105–277, 112 Stat. 2681), 

requires the Department to assess the 

impact of this final rule on family wellbeing. A rule that is determined to have 

a negative effect on families must be 

supported with an adequate rationale. 

The Department has assessed this 

final rule and determines that it will not 

have a negative effect on families. 

Executive Order 12630 

This final rule is not subject to 

Executive Order 12630, Governmental 

Actions and Interference with 

Constitutionally Protected Property 

Rights, because it does not involve 

implementation of a policy with takings 

implications. 

Executive Order 12988 

This final rule has been drafted and 

reviewed in accordance with Executive 

Order 12988, Civil Justice Reform, and 

will not unduly burden the Federal 

court system. The final rule has been 

written to minimize litigation and 

provide a clear legal standard for 

affected conduct, and has been reviewed 

carefully to eliminate drafting errors and 

ambiguities. 

Executive Order 13211 

This final rule is not subject to 

Executive Order 13211, because it will 

not have a significant adverse effect on 

the supply, distribution, or use of 

energy. 

Plain Language 

The Department drafted this rule in 

plain language. 

List of Subjects in 20 CFR Part 618 

Administrative practice and 

procedure, Grant programs—Labor, 

Reporting and recordkeeping 

requirements, Trade adjustment 

assistance. 

■ For the reasons discussed in the 

preamble, and under authority of 19 

U.S.C. 2320, the Department of Labor 

adds 20 CFR part 618 to read as follows: 

PART 618—TRADE ADJUSTMENT 

ASSISTANCE UNDER THE TRADE ACT 

OF 1974, AS AMENDED 

Subpart A–G [Reserved] 

Subpart H—Administration by Applicable 

State Agencies 

Sec. 

618.890 Merit staffing. 

Subpart I—Allocation of Training Funds to 

States 

618.900 Annual training cap. 

618.910 Distribution of initial allocation of 

training funds. 

618.920 Reserve fund distributions. 

618.930 Second distribution. 

618.940 Insufficient funds. 

Subpart A–G [Reserved] 

Subpart H—Administration by 

Applicable State Agencies 

Authority: 19 U.S.C. 2320; Secretary’s 

Order No. 03–2009, 74 FR 2279, Jan. 14, 

2009. 

§ 618.890 Merit staffing 

(a) Merit-based State personnel. The 

State must, subject to the transition 

period in paragraph (b) of this section, 

engage only State government personnel 

to perform Trade Adjustment Assistance 

(TAA)-funded functions undertaken to 

carry out the worker adjustment 

assistance provisions of the Trade Act of 

1974, as amended, and must apply to 

such personnel the standards for a merit 

system of personnel administration 

applicable to personnel covered under 5 

CFR part 900, subpart F. 

(b) Transition period. A State not 

already in compliance with the merit 

system requirement of paragraph (a) of 

this section must comply by December 

15, 2010. 

(c) Exemptions for States with 

employment service operation 

exemptions. A State whose employment 

service received an exemption from 

merit staffing requirements from the 

Secretary of Labor (Secretary) under the 

Wagner-Peyser Act will retain an 

exemption from the requirements of 

paragraph (a) of this section. The 

exemption does not apply to the State’s 

administration of trade readjustment 

allowances which remain subject to the 

requirements of paragraph (a) of this 

section. To the extent that a State with 

an authorized ES exemption provides 

TAA-funded services using staff not 

funded under the Wagner-Peyser Act, 

the exemption in this paragraph does 

not apply, and they remain subject to 

the requirements of paragraph (a) of this 

section. 

(d) Exceptions for non-inherently 

governmental functions. The 

requirements of paragraph (a) of this 

section do not prohibit a State from 

outsourcing functions that are not 

inherently governmental, as defined in 

Office of Management and Budget 

(OMB) Circular No. A–76 (Revised), in 

any supplemental OMB guidance or 

superseding authority, and in DOL 

guidance. 

Subpart I—Allocation of Training 

Funds to States 

Authority: 19 U.S.C. 2320; 19 U.S.C. 

2296(g); Secretary’s Order No. 03–2009, 74 

FR 2279, Jan. 14, 2009. 

§ 618.900 Annual training cap. 

The total amount of payments that 

may be made for the costs of training 

will not exceed the cap established 

under section 236(a)(2)(A) of the Trade 

Act. 

(a) For each of the fiscal years 2009 

and 2010, this cap is $575,000,000; and 

(b) For the period beginning October 

1, 2010, and ending December 31, 2010, 

this cap is $143,750,000. 

§ 618.910 Distribution of initial allocation 

of training funds. 

(a) Initial allocation. The initial 

allocation for a fiscal year will total 65 

percent of the training funds available 

for that fiscal year. The Department of 

Labor (Department) will announce the 

amount of each State’s initial allocation 

of funds in accordance with the 

requirements of this section at the 

beginning of each fiscal year. The 

Department will determine this initial 

allocation on the basis of the full 

amount of the training cap for that year, 

even if the full amount has not been 

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appropriated to the Department at that 

time. 

(b) Timing of the distribution of the 

initial allocation. The Department will, 

as soon as practical after the beginning 

of each fiscal year, distribute the initial 

allocation announced under paragraph 

(a) of this section. However, the 

Department will not distribute the full 

amount of the initial allocation until it 

receives the entire fiscal year’s 

appropriation of training funds. If the 

full year’s appropriated amount of 

training funds is less than the training 

cap, then the Department will distribute 

65 percent of the amount appropriated. 

(c) Hold harmless provision. Except as 

provided in paragraph (d) of this 

section, in no case will the amount of 

the initial allocation to a State in a fiscal 

year be less than 25 percent of the initial 

allocation to that State in the preceding 

fiscal year. 

(d) Minimum initial allocation. If a 

State has an adjusted initial allocation 

of less than $100,000, as calculated in 

accordance with paragraph (e)(2) of this 

section, that State will not receive any 

initial allocation, and the funds that 

otherwise would have been allocated to 

that State instead will be allocated 

among the other States in accordance 

with this section. A State that does not 

receive an initial distribution may apply 

under § 618.920(b) for reserve funds to 

obtain the training funding that it 

requires. 

(e) Process of determining initial 

allocation. (1) The Department will first 

apply the factors described in paragraph 

(f) of this section to determine an 

unadjusted initial allocation for each 

State. 

(2) The Department will then apply 

the hold harmless provision of 

paragraph (c) of this section to the 

unadjusted initial allocation, as follows: 

(i) A State whose unadjusted initial 

allocation is less than its hold harmless 

amount but is $100,000 or more, will 

have its initial allocation adjusted up to 

its hold harmless amount. If a State’s 

unadjusted allocation is less than 

$100,000, the State will receive no 

initial allocation, in accordance with 

paragraph (d) of this section. Those 

funds will be shared among other States 

as provided in paragraph (e)(3) of this 

section. 

(ii) A State whose unadjusted initial 

allocation is no less than its hold 

harmless threshold will receive its hold 

harmless amount and will also receive 

an adjustment equal to the State’s share 

of the remaining initial allocation funds, 

as provided in paragraph (e)(3) of this 

section. 

(3) The initial allocation funds 

remaining after the adjusted initial 

allocations are made to those States 

receiving only their hold harmless 

amounts, as described in paragraph 

(e)(2)(i) of this section, will be 

distributed among the States with 

unadjusted initial allocations that were 

no less than their hold harmless 

amounts, as described in paragraph 

(e)(2)(ii) of this section (the remaining 

States). The distribution of the 

remaining initial allocation funds 

among the remaining States will be 

made by reapplying the calculation in 

paragraph (f) of this section. This 

recalculation will disregard States 

receiving only their hold harmless 

amount under paragraph (e)(2)(i) of this 

section, so that the combined 

percentages of the remaining States total 

100 percent. 

(f) Initial allocation factors. (1) In 

determining how to make the initial 

allocation of training funds, the 

Department will apply, as provided in 

paragraph (f)(3) of this section, the 

following factors with respect to each 

State: 

(i) The trend in the number of workers 

covered by certifications of eligibility 

during the most recent four consecutive 

calendar quarters for which data are 

available. The trend will be established 

by assigning a greater weight to the most 

recent quarters, giving those quarters a 

larger share of the factor; 

(ii) The trend in the number of 

workers participating in training during 

the most recent four consecutive 

calendar quarters for which data are 

available. The trend will be established 

by assigning a greater weight to the most 

recent quarters, giving those quarters a 

larger share of the factor; 

(iii) The number of workers estimated 

to be participating in training during the 

fiscal year. The estimate will be 

calculated by dividing the weighted 

average number of training participants 

for the State determined in paragraph 

(f)(1)(ii) of this section by the sum of the 

weighted averages for all States and 

multiplying the resulting ratio by the 

projected national average of training 

participants for the fiscal year, using the 

estimates underlying the Department’s 

most recent budget submission or 

update; and 

(iv) The amount of funding estimated 

to be necessary to provide approved 

training to such workers during the 

fiscal year. The estimate will be 

calculated by multiplying the estimated 

number of participants in paragraph 

(f)(1)(iii) of this section by the average 

training cost for the State. The average 

training cost will be calculated by 

dividing total training expenditures for 

the most recent four quarters by the 

average number of training participants 

for the same time period. 

(2) The Department may use such 

other factors that it considers 

appropriate. 

(3) The Department will assign each 

of the factors listed in paragraphs 

(f)(1)(i) through (f)(1)(iv) of this section 

an equal weight. For each of these 

weighted factors, the Department will 

determine the national total and each 

State’s percentage of the national total. 

Based on a State’s percentage of each of 

these weighted factors, the Department 

will determine the percentage that the 

State will receive of the amount 

available for initial allocations. The 

percentages of initial allocation amounts 

calculated for all States combined will 

total 100 percent of initial allocation 

funds. 

(4) The Department may, by 

administrative guidance published for 

comment, change the weights provided 

in paragraphs (f)(1) and (f)(3) of this 

section, or add additional factors. No 

such changes or additions will take 

effect before December 31, 2010. 

§ 618.920 Reserve fund distributions. 

(a) The remaining 35 percent of the 

training funds for a fiscal year will be 

held by the Department as a reserve. 

Reserve funds will be used, as needed, 

for additional distributions during the 

remainder of the fiscal year and for 

those States that do not receive an 

initial distribution. States may not 

receive reserve funds for TAA 

administration or employment and case 

management services without a request 

for training funds. 

(b) A State requesting reserve funds 

must demonstrate that at least 50 

percent of its training funds have been 

expended, or that it needs more funds 

to meet unusual and unexpected events. 

A State requesting reserve funds also 

must provide a documented estimate of 

expected funding needs through the end 

of the fiscal year. That estimate must be 

based on an analysis that includes at 

least the following: 

(1) The average cost of training in the 

State; 

(2) The expected number of 

participants in training through the end 

of the fiscal year; and 

(3) The remaining funds the State has 

available for training. 

§ 618.930 Second distribution. 

The Department will distribute at 

least 90 percent of the total training 

funds for a fiscal year to the States no 

later than July 15 of that fiscal year. The 

Department will first fund all acceptable 

requests for reserve funds filed before 

June 1. If there are any funds remaining 

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to be distributed after these reserve fund 

requests are satisfied, those funds will 

be distributed to those States that 

received an initial allocation in an 

amount greater than their hold harmless 

amount, using the methodology 

described in § 618.910. 

§ 618.940 Insufficient funds. 

If, during a fiscal year, the Department 

estimates that the amount of funds 

necessary to pay the costs of approved 

training will exceed the training cap 

under § 618.900, the Department will 

decide how the amount of available 

training funds that have not been 

distributed at the time of the estimate 

will be allocated among the States for 

the remainder of the fiscal year. That 

decision will be communicated through 

administrative notice. 

Signed at Washington, DC, this 22nd day 

of March 2010. 

Jane Oates, 

Assistant Secretary, Employment and 

Training Administration. 

[FR Doc. 2010–6697 Filed 4–1–10; 8:45 am] 

BILLING CODE 4510–FN–P 

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