[Federal Register Volume 79, Number 207 (Monday, October 27, 2014)]
[Proposed Rules]
[Pages 63859-63879]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-24314]


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DEPARTMENT OF LABOR

Employment and Training Administration

20 CFR Part 615

RIN 1205-AB62


Federal-State Unemployment Compensation Program; Implementing the 
Total Unemployment Rate as an Extended Benefits Indicator and Amending 
for Technical Corrections; Notice of Proposed Rulemaking

AGENCY: Employment and Training Administration, Labor.

ACTION: Notice of proposed rulemaking; request for comments.

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SUMMARY: The Employment and Training Administration (ETA) of the U.S. 
Department of Labor (Department) issues this notice of proposed 
rulemaking (NPRM) to implement statutory amendments to the Extended 
Benefits (EB) program, which pays extra weeks of unemployment 
compensation during periods of high unemployment in a State. 
Specifically, this NPRM proposes a methodology for computing the Total 
Unemployment Rate (TUR) indicator which is an optional indicator used 
to measure unemployment in a state. We also propose amendments to make 
technical corrections to the current regulations and to correct minor 
mistakes.

DATES: To be ensured consideration, comments must be submitted in 
writing on or before December 26, 2014.

ADDRESSES: You may submit comments, identified by Regulatory 
Information Number (RIN) 1205-AB62, by only one of the following 
methods:
    <bullet> Federal e-Rulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
    <bullet> Mail/Hand Delivery/Courier:
    Submit comments to Adele Gagliardi, Administrator, Office of Policy 
Development and Research (OPDR), U.S. Department of Labor, Employment 
and Training Administration, 200 Constitution Avenue NW., Room N-5641, 
Washington, DC 20210. Because of security-related concerns, there may 
be a significant delay in the receipt of submissions by United States 
Mail. You must take this into consideration when preparing to meet the 
deadline for submitting comments. The Department will post all comments 
received on http://www.regulations.gov without making any changes to 
the comments or redacting any information, including any personal 
information provided. The http://www.regulations.gov Web site is the 
Federal e-rulemaking portal and all comments posted there are available 
and accessible to the public. The Department recommends that commenters 
not include personal information such as Social Security Numbers, 
personal addresses, telephone numbers, and email addresses that they do 
not want made public in their comments as such submitted information 
will be available to the public via the http://www.regulations.gov Web 
site. Comments submitted through http://www.regulations.gov will not 
include the email address of the commenter unless the commenter chooses 
to include that information as part of his or her comment. It is the 
responsibility of the commenter to safeguard personal information.
    Instructions: All submissions received must include the agency name 
and the RIN for this rulemaking: RIN 1205-AB62. Please submit your 
comments by only one method.
    Docket: All comments will be available for public inspection and 
copying during normal business hours by contacting OPDR at (202) 693-
3700. You may also contact OPDR at the address listed above. As noted 
above, the Department also will post all comments it receives on http://www.regulations.gov. Copies of the proposed rule are available in 
alternative formats of large print and electronic file on computer 
disk, which may be obtained at the above-stated address. The proposed 
rule is available on the Internet at the Web address http://www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: Adele Gagliardi, Administrator, OPDR, 
Employment and Training Administration, (202) 693-3700 (this is not a 
toll-free number) or 1-877-889-5627 (TTY). Individuals with hearing or 
speech impairments may access the telephone number above via TTY by 
calling the toll-free Federal Information Relay Service at (800) 877-
8339.

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

    I. Background--provides a brief description of the development 
of the proposed rule.
    II. Section-by-Section Review of the Proposed Rule--summarizes 
and discusses proposed changes to the Federal-State Unemployment 
Compensation Program.
    III. Administrative Information--sets forth the applicable 
regulatory requirements.

I. Background

    EB is payable in a State only during an EB period of unusually high 
unemployment in the State. Section 203 of the Federal-State Extended 
Unemployment Compensation Act of 1970 (EUCA), Public Law 91-373, 
provides methods for determining whether a State's current unemployment 
situation qualifies as an EB period. EB periods are determined by 
``on'' and ``off'' indicators (commonly referred to as triggers) in the 
State. Section 203(d), EUCA, provides for an ``on'' indicator based on 
the insured unemployment rate (IUR). The IUR is computed weekly by the 
States using administrative data on State unemployment compensation 
claims filed and the total population of employed individuals covered 
by unemployment insurance. States trigger ``on'' EB if the IUR trigger 
value for the

[[Page 63860]]

most recent 13-week period equals or exceeds 5 percent and equals or 
exceeds 120 percent of the average of such trigger values for the 
corresponding 13-week period ending in each of the preceding two 
calendar years. The calculation of the relationship between the current 
rate and prior two years' rates is commonly referred to as the ``look-
back.''
    The Unemployment Compensation Amendments of 1992, Public Law 102-
318, added Section 203(f), EUCA, to provide for an optional alternative 
indicator that States may use to trigger ``on'' EB based on the TUR. 
That indicator requires that, for the most recent three months for 
which data for all States is published, the average TUR in the State 
(seasonally adjusted) for the most recent three-month period equals or 
exceeds 6.5 percent and the average TUR in the State (seasonally 
adjusted) equals or exceeds 110 percent of the average TUR for either 
or both of the corresponding three-month periods in the two preceding 
calendar years (look-back). The 1992 amendments also provided for a 
calculation of a ``high unemployment period'' when the TUR in a State 
equals or exceeds 8 percent and meets the 110 percent look-back 
described above, permitting the payment of additional weeks of EB. 
Section 203(f)(3), EUCA, provides that ``determinations of the rate of 
total unemployment in any State for any period . . . shall be made by 
the Secretary.'' An EB period ends when the state no longer meets any 
of the ``on'' triggers provided for in State law.
    Regulations at 20 CFR 615 implement the provisions of EUCA relating 
to the IUR indicators, including how they will be computed. The 
regulation, at 20 CFR 615.12, explains the IUR triggers and how the 
rates are computed. The regulation does not address the TUR indicator 
although the Department issued UIPLs No. 45-92 and No. 16-11, 
respectively, addressing the TUR indicator and its computation. To 
conform our regulations to current practice, the Department is issuing 
this proposed rule to describe how the TUR indicators are computed for 
purposes of determining whether a State meets the 110 percent look-back 
requirements.
    In the absence of explicit guidance and regulation, the Department 
previously adapted a portion of the existing guidance for the IUR look-
back as a basis for calculating the TUR look-back. Specifically, in 
computing the look-back percentage for the TUR trigger the procedure 
for determining the number of significant digits from the resulting 
fraction followed 20 CFR 615.12(c)(3).
    The TUR indicator uses total unemployment rates determined by the 
Bureau of Labor Statistics (BLS). These rates are measured using 
sampled data and therefore are imprecise due to sampling error. TUR 
measured by BLS can be lower or higher than the true levels of 
unemployment and there is no systematic tendency in estimation. In 
order to ensure to the extent possible that the TUR indicator is 
measured with total unemployment rates that reflect the true levels of 
unemployment that can be often higher than the rates measured by BLS, 
the Department has determined that an appropriate methodology for 
computing the look-back on the TUR indicator is to switch from 
truncation to rounding to the nearest hundredth, or second decimal 
place. Additionally, rounding, rather than truncating, is consistent 
with BLS practices in treating the TUR data. UIPL No. 16-11, dated May 
20, 2011, informed the SWAs that the full effect of this new rounding 
procedure was implemented retroactive to April 16, 2011.
    The Tax Relief, Unemployment Insurance Reauthorization, and Job 
Creation Act of 2010, Section 502, permitted States to amend State law 
in order to make determinations of whether there is an ``on'' or 
``off'' indicator by comparing current unemployment rates to the 
unemployment rates for the corresponding period in the three preceding 
years. Authority to use this three-year look-back applies only for 
weeks of unemployment beginning after December 17, 2010, and ending on 
or before December 31, 2013.

General

    Section 3304(a)(11) of the Federal Unemployment Tax Act (26 U.S.C. 
3301 et seq.) (FUTA) requires, as a condition of employers in States 
receiving credits against the Federal unemployment tax, that the 
States' unemployment compensation laws provide for the payment of 
extended unemployment compensation during periods of high unemployment 
to eligible individuals. EUCA established the EB Program by which, if 
certain conditions are met in a State under its law, extended 
unemployment compensation is provided to workers in the State who have 
exhausted their regular compensation during a period of high 
unemployment referred to as an EB period. EUCA provides methods for 
determining whether an EB period exists in the State. These methods are 
referred to as ``on'' or ``off'' indicators.
    There were two ``on'' and ``off'' indicators in existence before 
the enactment of the UC Amendments. These indicators were based on the 
IUR. The IUR indicator's trigger value is, under section 203(e) of 
EUCA, the ratio of the average number of unemployment claims filed in a 
State during the most recent 13 weeks to the average monthly number of 
employed individuals covered by UC in that State during the first four 
of the last six completed calendar quarters. The first indicator has 
two conditions which must be met and is required to be in State law. 
Under section 203(d) of EUCA, the EB Program is activated if a State's 
IUR trigger value (first condition) is at least 5 percent (referred to 
as the regular IUR trigger threshold with ``look-back''), and is at 
least 120 percent of the average of the trigger values in the prior two 
years for the corresponding 13-week calendar periods (second 
condition). The second condition--that the most recent 13-week period 
must be at least 120 percent of the average of the corresponding 
periods in the last two years--is commonly referred to as the ``look-
back'' provision. The Tax Relief, Unemployment Insurance 
Reauthorization, and Job Creation Act of 2010, Public Law 111-312, 
allowed States to temporarily modify provisions in their EB laws to use 
the prior three years in applying the look-back. The look-back 
provision supports activation of a State's EB Program only when the 
current unemployment rate is both high and increasing, which indicates 
that the State's labor market is worsening and additional compensation 
is warranted. Under the second indicator, which is an option for a 
State, section 203(d) of EUCA provides the EB Program may be triggered 
``on'' with an IUR trigger value of at least 6 percent regardless of 
its relation to the IUR trigger values in the preceding two years. The 
6 percent value is referred to as the regular IUR trigger threshold 
without look-back.
Alternative Indicator
    The UC Amendments amended the EUCA to permit States to adopt an 
alternative indicator based on the TUR to trigger ``on'' and ``off'' 
the EB Program. Specifically, paragraph (f) of section 203 of EUCA 
provides for a TUR indicator comprised of a Trigger Value and look-back 
provision. The Trigger Value for this indicator is the three-month 
average of seasonally adjusted TURs for the most recent three months 
for which data for all States is published. The regular TUR trigger 
threshold is 6.5 percent. The look-back provision requires that the 
Trigger Value equals or exceeds 110 percent of the TUR Trigger Values 
for either or both of the corresponding three-month periods

[[Page 63861]]

in the two preceding calendar years (the Tax Relief, Unemployment 
Insurance Reauthorization, and Job Creation Act of 2010, Pub. L. 111-
312, allowed States to temporarily modify provisions in their EB laws 
to use the prior three years in applying the look-back). The TUR 
Trigger Value is determined by the Department based on data from BLS.
    As with the IUR indicator, the look-back provision ensures that the 
State's TUR Trigger Value is both high and increasing, indicating that 
the State's labor market is worsening and additional compensation is 
warranted. A State will trigger ``off'' its EB Program when either the 
TUR Trigger Value falls below 6.5 percent, or the requirements 
pertaining to the look-back provision are not satisfied.
    Regardless of whether a State's EB Program is triggered ``on'' 
based on the IUR or TUR indicators, sections 203(d)(2) and 203(f)(1)(B) 
of EUCA provide that the EB period is triggered ``off' when the 
conditions supporting the activation of the EB Program are no longer 
satisfied. Additionally, when the program triggers ``on'' or ``off'' EB 
payments, it must remain in the new status (``on'' or ``off'' EB 
payments) for a minimum of 13 weeks regardless of changes in future 
trigger values.
    The Department implemented EUCA's provisions on the IUR indicator 
at 20 CFR part 615, published in 53 FR 27928, Jul. 25, 1988. The 
Department implemented the alternative TUR indicator provided by the UC 
Amendments through guidance on August 31, 1993 (UIPL No. 45-92). The 
Department now proposes to place the TUR indicator into regulations.
Payments of Additional Weeks of Extended Benefits
    The UC Amendments provided that States electing to use the new TUR 
indicator must also provide for the payment of additional weeks of EB 
during a ``high unemployment period'' that occurs during an EB period. 
These additional weeks of EB are available if State law provides for 
the use of the alternative TUR indicator.
    Consistent with EUCA Sec.  203(b)(1), no EB period or high 
unemployment period may begin in any State by reason of a State ``on'' 
indicator before the 13-week minimum status period expires after the 
ending of a prior EB period with respect to such State. Conversely, no 
EB period or high unemployment period may end in any State by reason of 
a State ``off'' indicator before the 13-week minimum status period 
expires after the beginning of an EB period with respect to such State.
    EUCA originally provided for the establishment of an EB account, 
and the amount in the account is the least of one of three amounts 
which is payable for regular extended compensation. The UC amendments 
added a new paragraph to section 202(b) of EUCA that increases the 
amount in these accounts during a high unemployment period. The amount 
payable in a high unemployment period is equal to whichever of the 
following is the least and is referred to as ``high unemployment 
extended compensation'':

--80 percent (as opposed to 50 percent in a ``normal'' EB period) of 
the total amount of regular UC (including dependent's allowances) 
payable to the individual during the benefit year;
--20 (as opposed to 13) times the individual's weekly benefit amount; 
or
--46 (as opposed to 39) times the individual's weekly benefit amount, 
reduced by the regular UC paid (or deemed paid) during the benefit 
year.

    The term ``high unemployment period'' is defined in Section 
202(b)(3)(B), EUCA, as any period during which an EB Program would be 
in effect if the TUR indicator equaled or exceeded 8 percent and the 
TUR indicator equals or exceeds 110 percent of the TUR indicators for 
either or both the corresponding three-month periods in the two 
previous calendar years.
    Whether a high unemployment period exists in a State for a 
particular week is determined in accordance with provisions of State 
law implementing sections 202(b)(3) and 203(f) of EUCA and the 
seasonally-adjusted TUR indicator determined by BLS. When this 
determination is made, the State follows the requirements of sections 
203(a) and (b) of EUCA for determining the first and last week for 
which high unemployment EB is payable. Specifically, a high 
unemployment EB period begins on the first day of the third calendar 
week after the TUR indicator requirements are satisfied, and ends on 
the last day of the third week after the first week for which the TUR 
indicator requirements are not met. However, as stated above, no EB 
period or high unemployment period may begin in any State by reason of 
a State ``on'' indicator before the 13-week minimum status period 
expires after the ending of a prior EB period with respect to such 
State.
Alternative Indicator Rounding Methodology
    Before April 16, 2011, in absence of explicit statutory guidance 
and regulation, the Department adapted a portion of the requirement (in 
20 CFR 615.12) for calculating the look-back percentage for the IUR 
indicator as a basis for determining the significant number of digits 
from the look-back percentage for the TUR indicator. Specifically, the 
quotient is computed to two decimal places and multiplied by 100 with 
all numbers to the right of the decimal point being dropped (known as 
``truncation''). The result is expressed as a percentage.
    The UC Amendments provide for a State to trigger ``on'' EB using 
the TURs determined by BLS. As discussed above, because the TUR 
indicator uses unemployment rates determined by BLS using sampled data, 
the rates are imprecise due to sampling error. Total unemployment rates 
measured by the BLS can be lower or higher than the true levels of 
unemployment and there is no systematic tendency in estimation. In 
order to ensure to the extent possible that the TUR indicator is 
measured with total unemployment rates that reflect the true levels of 
unemployment that can be often higher than the rates measured by the 
BLS, the Department has determined that an appropriate methodology for 
computing the look-back on the TUR indicator is to switch from 
truncation to rounding to the nearest hundredth. In contrast, the IUR 
indicator values are computed from administrative data and thus 
represent the full universe. Because of these differences in the 
calculation of the insured and total unemployment rates, on May 20, 
2011 the Department announced, in UIPL No. 16-11, that an appropriate 
methodology for computing the look-back percentage for the TUR 
indicator is to switch from truncation at the second decimal place to 
rounding to the second decimal place.
    UIPL No. 16-11 informed States of the new rounding methodology the 
Department now employs when computing the current trigger rate as a 
percent of the comparable trigger rates in prior years for the TUR 
indicator. Since TURs have been rounded, an expression of a ratio of 
two TURs must also be rounded.
    On a monthly basis, the three-month average of the seasonally 
adjusted TUR is divided by the same measure for the corresponding three 
months in each of the applicable two prior years (the Tax Relief, 
Unemployment Insurance Reauthorization, and Job Creation Act of 2010, 
Pub. L. 111-312, allowed States to temporarily modify provisions in 
their EB laws to use the prior three years in applying the look-back). 
The resulting decimal fraction is then rounded to the hundredths place 
(the second digit to

[[Page 63862]]

the right of the decimal place). The resulting number is multiplied by 
100, reported as an integer, and compared to the statutory threshold to 
determine if the State triggers ``on'' EB. UIPL No. 16-11 informed the 
SWAs that the full effect of this new rounding procedure was 
implemented retroactive to April 16, 2011.

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

    We propose to update 20 CFR part 615 so that it includes the TUR 
indicator. In addition, in updating Part 615 to incorporate the TUR 
indicator, we propose to incorporate the rounding method adopted for 
the look-back. We also propose technical amendments to this part to 
update its provisions since the last regulatory revision and to correct 
minor errors in the text of the rule.
    First, we propose replacing all uses of the term ``the Act'' with 
``EUCA'' to mean the Federal-State Extended Unemployment Compensation 
Act of 1970. Additionally, we propose to replace all instances of the 
term ``Extended Benefits'' with ``extended unemployment compensation'' 
to mean the funds actually paid out to UI recipients and to avoid 
confusion.
    We propose to amend Sec.  615.1 (Purpose) by clarifying that FUTA, 
26 U.S.C. 3304(a)(11), requires, as a condition of tax offset, that 
States' unemployment compensation laws provide for the payment of 
extended unemployment compensation during periods of high unemployment 
to eligible individuals. We also propose to revise Sec.  615.1 by 
deleting the reference to Extended Benefits and the Extended Benefit 
program at the end of the section to avoid confusion with the proposed 
definition of Extended Benefits in Sec.  615.2 (Definitions).
    We propose to amend 615.2 (Definitions) by adding several new 
definitions for clarity and to implement parts of EUCA in the 
regulation. Furthermore, while ``EUCA'' is a new definition, it merely 
replaces ``Act'' as a defined term. The new definitions we propose to 
add to Sec.  615.2 follow.
    Extended benefit period means the weeks during which extended 
compensation is payable in a State in accordance with Sec.  615.11 
(Extended Benefit Period or High Unemployment Period).
    Extended Benefits Program, or EB Program, means the entire program 
under which monetary payments are made to workers who have exhausted 
their regular compensation including during a high unemployment period. 
In contrast, ``extended compensation'' refers narrowly to the actual 
monetary payment made to individuals eligible for benefits under the EB 
Program. Under the EB Program, an individual may be eligible to receive 
payments under distinct statutory entitlements, which the statute 
refers to as ``plans,'' ``programs,'' or ``criteria,'' that comprise 
the EB Program. For example, the regular EB Program can provide for 
compensation up to 50 percent of the benefit amount claimants were 
eligible for in the regular UI program. For States in a high 
unemployment period, the EB Program can provide for compensation up to 
80 percent of the benefit amount claimants were eligible for in the 
regular compensation.
    Extended compensation account is the account established for each 
individual claimant for the payment of regular extended compensation or 
high extended compensation.
    Extended unemployment compensation means the funds actually paid 
out to UI recipients. To avoid confusion, we propose to replace all 
instances of the term ``Extended Benefits'' with ``extended 
unemployment compensation.''
    High unemployment extended compensation means the benefits payable 
to an otherwise eligible individual for weeks of unemployment which 
begin in a high unemployment period, under those provisions of a State 
law which satisfy the requirements of EUCA and this part with respect 
to the payment of extended unemployment compensation, and, when so 
payable, includes compensation payable under 5 U.S.C. chapter 85, but 
does not include regular compensation or additional compensation. 
Regular extended compensation (as defined in this section), together 
with high unemployment extended compensation, comprise Extended 
compensation.
    High unemployment period (HUP) means a period where the Department 
determines that the Trigger Value in a State, which has enacted the 
alternative TUR trigger in law, for the most recent three months for 
which data for all States is published, equals or exceeds 8 percent, 
and such Trigger Value equals or exceeds 110 percent of such Trigger 
Values for either or both of the corresponding three-month periods 
ending in the two preceding calendar years (the Tax Relief, 
Unemployment Insurance Reauthorization, and Job Creation Act of 2010, 
Pub. L. 111-312, allowed States to temporarily modify provisions in 
their EB laws to use the prior three years in applying the look-back). 
If a State triggers ``on'' to a HUP, it must remain ``on'' for at least 
13 weeks; if it triggers ``off'' a HUP, it must remain in a mandatory 
``off'' period for at least 13 weeks.
    Insured Unemployment Rate (IUR) means the percentage derived by 
dividing the average weekly number of individuals filing claims for 
regular compensation in a State for weeks of unemployment in the most 
recent thirteen-consecutive-week period as determined by the State on 
the basis of State reports to the Secretary, by the average monthly 
employment covered under State law for the first four of the most 
recent six completed calendar quarters before the end of such 13-
consecutive-week period.
    Regular extended compensation means the benefits payable to an 
otherwise eligible individual for weeks of unemployment which begin in 
an EB Period, under those provisions of a State law which satisfy the 
requirements of EUCA for the payment of extended unemployment 
compensation, and, when so payable, includes compensation payable under 
5 U.S.C. chapter 85, but does not include regular compensation or 
additional compensation. Regular extended compensation, together with 
high unemployment extended compensation, comprises the monetary 
benefits payable under the Extended Benefits program.
    Regular EB period means a period during which a state is triggered 
``on'' the EB Program because either the mandatory or optional IUR 
indicator satisfies the criteria to be ``on'' and the state is not in a 
13-week mandatory ``off'' period; or the state is triggered ``on'' the 
EB Program because the TUR indicator's Trigger Value is both at least 
6.5 percent, and at least 110 percent of the Trigger Value for the 
comparable three months in either of the prior two years.
    Total Unemployment Rate means the number of unemployed individuals 
in a State (seasonally adjusted) divided by the civilian labor force 
(seasonally adjusted) in the State for the same period. The calculation 
uses BLS data.
    Trigger Value or average rate of total unemployment means the ratio 
computed by adding three consecutive months of the level of seasonally 
adjusted unemployment in a State for the numerator and adding for the 
same consecutive three months the level of the seasonally adjusted 
civilian labor force in the State for the denominator. This ratio is an 
optional indicator used for triggering States ``on'' and ``off'' the EB 
Program and is added in Sec.  615.12(e)(2)-(e)(3)).
    In addition to these proposed new definitions, we propose to revise 
the existing definitions (with citations to

[[Page 63863]]

current regulations included), primarily for consistency:
    <bullet> 615.2(a)--We propose to revise the definition of Act by 
replacing it with EUCA. EUCA means the Federal-State Extended 
Unemployment Compensation Act of 1970, Public Law 91-373, 84 Stat. 708 
(codified in 26 U.S.C. 3304, note), as amended. We propose to replace 
all instances of the term ``the Act'' with ``EUCA.''
    <bullet> 615.2(c)(2)--We propose to revise the definition of 
``Applicable benefit year'' to incorporate the concept that an 
individual's EB claims may expire in either a regular EB period or a 
high unemployment period;
    <bullet> 615.2(j)(2)--We propose to revise the definition of 
``Department'' to update the Secretary's Orders which delegate 
authority under EUCA from the Secretary of Labor to the Assistant 
Secretary for Employment and Training. Specifically, we propose to 
insert Secretary's Order No. 6-2010 (75 FR 66268) and delete 
Secretary's Order No. 4-75 (40 FR 18515) and Secretary's Order No. 14-
75 in the definition because Secretary's Order No. 6-2010 is the most 
up-to-date order delegating authority to the Assistant Secretary for 
Employment and Training under EUCA.
    <bullet> 615.2(g)--We propose to revise the definition of 
``extended compensation'' to mean the funds payable to an individual 
for weeks of unemployment which begin in an extended benefit period or 
high unemployment period, under those provisions of a State law which 
satisfy the requirements of EUCA, and, when so payable, includes 
compensation payable under 5 U.S.C. chapter 85 (unemployment 
compensation for former Federal employees and ex-servicememebers), but 
does not include regular compensation or additional compensation. 
Throughout the current 20 CFR 615, the term ``extended benefits 
``refers to both the program as a whole, and the benefits payable to 
claimants. The new terminology clarifies that for the purposes of this 
regulation, Extended Benefits refers to the whole program while 
extended compensation refers to benefits payable to claimants.
    <bullet> 615.2(h)--We propose to revise the definition of 
``Eligibility Period'' to include references to a high unemployment 
period, in addition to the existing references to an EB period which we 
propose amending to ``regular EB period.''
    <bullet> 615.2(i)--We propose to revise paragraph (1) of the 
definition of ``Sharable Compensation'' by replacing the phrase 
``extended benefits'' with ``extended compensation'' to be consistent 
with proposed amendments made throughout the regulation text, and to 
clarify that this refers to the availability of up to 50 percent of the 
compensation available to the claimant in the regular program. In 
paragraph (1)(ii) of this definition, we propose replacing the phrase 
``extended benefits'' with ``regular extended compensation'' to be 
consistent. We propose to add a new paragraph (2) to this definition 
that defines how the entitlement for an individual claimant is computed 
in the EB Program when the State has enacted the optional TUR indicator 
and the State is in a high unemployment period. Because of this 
proposed paragraph addition, we further propose to renumber what were 
paragraphs (2) and (3) of section 615.2(i) as paragraphs (3) and (4).
    <bullet> 615.2(m)--We propose to revise the definition of ``Week'' 
by replacing the word ``benefits'' with the term ``compensation.'' 
Further, we propose to add the phrase ``calendar week'' to clarify that 
the time period used to compute trigger values may differ from a week 
as defined in State law for program implementation purposes.
    <bullet> 615.2(o)--Current Sec.  615.2(o) defines a variety of 
terms used in operation of the EB Program. Section 615.2(o) makes a 
reference to section 202(a)(3) of EUCA. However, within the definitions 
in paragraphs (o)(1) through (o)(8), there are more specific citations 
to EUCA that render the general citation to 202(a)(3) in the header 
unnecessary. Therefore, we propose to remove the citation to section 
202(a)(3) of EUCA in Sec.  615.2(o) for clarity. In the definition for 
the ``Provisions of the applicable State law'' in Sec.  615.2(o)(7), we 
propose to replace the citation to Trade Act section 236(e) with 
section 236(d). Section 236(e) discusses ``suitable employment.'' Since 
the reference is to training in paragraph (o)(7), we propose to cite 
236(d) which discusses training under the Trade Act. Similarly, in 
paragraph (o)(8)(v) of Sec.  615.2, which describes the requirements 
and conditions under which a claimant is entitled to extended 
compensation, we propose to replace the citation to Trade Act ``section 
236(e)'' with ``section 236(d).'' Section 236(e) of the Trade Act 
refers to a definition of ``suitable work.'' Section 236(d) refers to 
an adversely affected worker not being determined to be ineligible or 
disqualified because of training or other reasons. The change in 
section reference from section 236(e) to 236(d) is made because section 
236(d) is the proper reference as discussed above to the Trade Act in 
this paragraph.
    Furthermore, the proposed rule amends the existing definitions by 
removing the separate paragraph designations and re-ordering the 
definitions in alphabetical order for clarity. This proposed change 
makes any future amendments to the definitions easier to implement by 
removing concerns of paragraph citation changes.
    We propose to revise Sec.  615.7 (Extended Benefits; maximum 
amount) to include a reference to a high unemployment period to 
incorporate a term necessitated by the addition of the TUR indicator, 
in addition to the existing reference to an EB period. In Sec.  
615.7(b), we propose to create a new paragraph (b)(3) to describe the 
method for computing the total monetary entitlement for claimants 
during a high unemployment period. Also, in paragraph (b)(2), we 
include a note providing how a State must re-compute the monetary 
eligibility of claimants at the conclusion of a high unemployment 
period if the State returns to a regular EB payable period. Also, we 
propose to replace all instances of the word ``totalling'' with 
``totaling,'' to correct a minor spelling error including instances in 
paragraphs (f)(1) and (g)(2).
    In Sec.  615.8(e)(5)(iii), we propose to move the phrase ``without 
regard to any exemption'' from the middle of the sentence to the end, 
and also add the phrase ``elsewhere in those laws'' after it. This 
change would enhance clarity.
    In Sec.  615.8(f)(2)(i), we propose to remove the reference to the 
acronym ``SUB'' as it refers to ``supplemental unemployment benefits'' 
as defined in the Internal Revenue Code. The Internal Revenue Code 
definition has changed the wording of ``supplemental unemployment 
benefits'' to ``supplemental unemployment compensation benefits'' (as 
defined in section 501(c)(17)(D)) of the Internal Revenue Code of 
1986). Therefore, the acronym SUB is no longer correct. In paragraph 
(f)(2)(iii), we propose to add to the paragraph the phrase ``or any 
applicable State or local minimum wage'' after ``the Fair Labor 
Standards Act of 1938'' and before ``without regard to any exemption 
elsewhere in those laws.'' We propose this change to clarify that State 
minimum wage laws apply instead of Federal minimum wage laws in this 
instance.
    We propose to revise paragraphs 615.8(h)(3)and (h)(4) to to add 
requirements that States must, respectively, inform claimants that they 
are required to apply for and accept suitable work, and inform 
claimants when they are disqualified for failing to apply for, to 
accept, or to actively seek work. This amendment would call attention 
to State responsibility to help ensure claimants understand their

[[Page 63864]]

responsibility to seek and accept suitable employment.
    We propose to revise Sec.  615.11 (Extended Benefit Periods) to 
include a reference to a high unemployment period (HUP), in addition to 
the existing reference to an EB period. We further propose to add, for 
clarity, that a payable period may not begin before the date of the 
most recent data released for the purposes of triggering States ``on'' 
and ``off.'' In addition, we propose to add, for clarity, two new 
paragraphs (e) and (f), to provide explicit guidance on which trigger 
values, the TUR indicator and the IUR indicator, will determine the 
status of the EB Program when States are concluding mandatory ``on'' 
and ``off'' periods. This is necessary because of differences in timing 
of the release of the different trigger values as there may be 
instances when one is ``on'' and the other is ``off'' and this can be 
confusing.
    Specifically, proposed paragraph (e) provides details on 
determining when a State may continue an extended benefit period beyond 
the 13-week mandatory ``on'' period. Proposed paragraph (e)(1) explains 
that if the IUR indicator triggers ``off'' by the end of the 13-week 
mandatory status period, but the TUR indicator triggers on by the 11th 
week of the 13-week period, then the extended benefit period continues. 
Proposed paragraph (e)(2) explains a similar scenario but, instead, the 
TUR indicator triggers ``off'' by the end of the 13-week mandatory 
status period and the IUR indicator triggers ``on'' by the 11th week of 
the 13-week period, allowing the extended benefit period to continue.
    Proposed paragraph (f) explains that a State will remain in a 
mandatory 13-week ``off'' period if the IUR indicator triggers ``off'' 
by the 11th week of the 13-week period and the TUR indicator triggers 
``off'' for at least 3 weeks before the last week of the mandatory 13-
week ``off'' period.
    Section 615.11(b), (c), and (d) would be amended to clarify that if 
a state enters a changed EB Program status, it remains in that changed 
status for at least 13 weeks even though an indicator may show the 
state satisfies the requirements for the status to be changed. The 
amendments also would provide guidance on what is the status of the EB 
Program in a state when different indicators reflect different EB 
Program status.
    Section 615.12 (Determination of ``on'' and ``off'' indicators) 
describes the criteria for determining when States will begin and end 
payable periods in the EB Program, and the revisions to this section 
reflect the Department's primary purpose in the NPRM, as noted above, 
to incorporate the TUR indicator and the methodology used for rounding 
in the look-back calculation. Accordingly, the proposed revisions 
largely function to update the regulations so that they accurately 
reflect the amendments to EUCA that were enacted in 1992 in the UC 
Amendments.
    We propose to replace the phrase ``standard State indicators'' with 
``required State indicators'' in the title of paragraph 615.12(a) and 
the text of paragraph 615.12(a)(3) to more clearly reflect their 
mandatory nature, and to differentiate them from the optional 
indicators. The remaining triggers will continue to be described as 
optional triggers, with no change from the existing language.
    We propose to amend section 615.12(a)(1) to clarify that revisions 
to BLS TUR data after the initial release will not change EB Program 
status once it has been determined using the initially released TUR 
data.
    We propose to add paragraph 615.12(d)(3) to establish in these 
regulations a requirement that a state adopting an optional indicator 
may not enter into an ``on'' period before the later of the date of 
adoption of the indicator or its effective date. Further, an adopted 
optional indicator remains effective until the effective date cited in 
state law of repeal of the optional trigger. The current regulations do 
not prohibit implementation of an optional indicator on a date in the 
past, and this change does so. The IUR, defined at 20 CFR 615.12, is a 
weekly measure, so there is no ambiguity about which IUR measure should 
be used for each week's trigger value determinations. However, the 
monthly publication of TUR indicators means that it is not always clear 
which monthly rate should be used at the conclusion of a mandatory 
``on'' or ``off'' period when monthly releases of the TUR Trigger 
Values during the mandatory period show a change in status. The 
proposed amended language in Sec.  615.12 clarifies which monthly TUR 
Trigger Value is to be used.
    TUR indicators are estimated and published monthly. The trigger 
notice published by the Department for any given week will show the 
most recent TUR indicator for each State. For consistency with 
paragraphs (a) and (b) of 20 CFR 615.12, the TUR indicator impacts the 
beginning and ending of EB periods in the third week following the 
release of a new TUR Trigger Value, i.e., an ``on'' period begins at 
the beginning of the third week following the TUR Trigger Value release 
if it equals or exceeds the TUR trigger threshold and satisfies the 
look-back condition, and an ``off'' period ends at the end of the third 
week if either Trigger Value falls below the TUR trigger threshold or 
the look-back condition is not met. If the State is in a 13-week 
mandatory ``on'' or ``off'' period, that status continues until the 
conclusion of the mandatory period.
    We propose to move paragraph 615.12(e) and designate it as 
paragraph 615.12(f) because the required notices in the re-designated 
paragraph 615.12(f) will apply to a new paragraph (e) that we propose 
to add and which is addressed below. Also, we propose to change 
instances of the word ``Department'' to the word ``Secretary'' for 
clarity and to be consistent with the title of the re-designated 
paragraph (f), which is ``Notice to Secretary.''
    We propose to add paragraph 615.12(e) to implement section 203(f) 
of EUCA, which establishes the TUR indicator. Proposed paragraph 
615.12(e)(1) describes the 6.5 percent TUR threshold and how it is used 
to determine a State's EB Program status. Proposed paragraph 
615.12(e)(2) describes the 8.0 percent TUR threshold and how it is used 
to determine whether a State is in a high unemployment period, as 
defined in Sec.  615.2 (Definitions), that can lead to the payment of 
high unemployment extended compensation.
    Paragraph (e)(2)(ii) of Sec.  615.12 sets forth the method for 
computing the look-back percentage for the TUR indicator (as explained 
in the ``Background'') most recently conveyed in guidance to the States 
in UIPL No. 16-11. As discussed above, when the TUR indicator option 
was added to EUCA, and later adopted by a number of States, the 
regulations were not revised to include explicit instructions for the 
computation of the TUR indicator or its look-back component. Section 
203(e)(3) of EUCA, added by the UC Amendments, set the threshold rates 
(6.5 percent and 8 percent) and the look-back percentage (110 percent) 
necessary for a State to become eligible to pay benefits under this 
program. It did not specify whether the quotient computed for the look-
back percentage should be rounded, or instead truncated, to two decimal 
places before multiplying by 100 to obtain the look-back percentage.
    For the reasons discussed in the Background section above, we 
propose to use rounding to two decimal places before multiplying by 100 
in calculating the TUR.
    Finally, we propose to update nomenclature to help clarify the 
differences that can exist between the indicators and the benefit 
periods. If a State, under its State law, meets either

[[Page 63865]]

of two criteria under the IUR indicator or the criterion using the 6.5 
percent TUR Trigger Value, it will begin a ``regular EB period,'' and 
provide benefits referred to as ``regular extended compensation.'' 
Similarly, if a State, under its State law, meets the criterion using 
the 8.0 percent TUR Trigger Value, it will begin a ``high unemployment 
period,'' and provide ``high unemployment extended compensation'' as 
described above.
    Section 615.13 (Announcement of the beginning and ending of 
Extended Benefit Periods) provides for public notice of the start and 
end of payable periods in the EB Program. We propose to include a 
reference to a high unemployment period, in the title and individual 
sections, in addition to the existing reference to an EB period which 
would change to ``EB payable period.''
    We propose to amend paragraph (a)(1) by adding that we will publish 
in a Federal Register notice any change in a State's ``on'' or ``off'' 
status for the EB Program as determined by the TUR indicator. This is 
consistent with the current practice of publishing EB Program status 
changes determined by the IUR indicator.
    The proposed amendments to paragraph (b) require the States to 
notify the public through their local media, a procedure that is better 
suited given States' knowledge of their jurisdictions. In paragraph 
(b), we propose to split the single existing requirement for public 
notification into three paragraphs. Proposed paragraph (b)(1) requires 
notification from States that trigger ``on'' or ``off'' via the IUR 
indicator. Proposed paragraph (b)(2) requires notification from States 
that trigger ``on'' or ``off'' via the TUR indicator. Proposed 
paragraph (b)(3) takes the existing requirements for public 
notification and applies them regardless of the indicator that caused 
the State to trigger ``on'' or ``off.'' The requirements of new 
paragraph (b) would ensure that all requirements for public 
notification will be met regardless of how the State begins or ends a 
payable period in the EB Program.
    In Sec.  615.14 (Payments to States), we propose to include a 
reference to a high unemployment period, in addition to amending the 
existing reference to ``EB period'' to ``extended benefit period.'' In 
addition, references to ``Extended Benefits'' would be changed to 
``extended compensation'' in order to eliminate inconsistencies and to 
clarify meaning. In paragraph (b), we reduce the burden on the reader 
by providing the specific sections of 20 CFR part 615 with which States 
must comply in order to receive the Federal share of compensation 
provided, rather than cite the pertinent sections of EUCA. This 
amendment eliminates the need for the reader to consult a separate 
document to determine the requirements a State must enforce in order to 
receive payment for the Federal share of compensation paid.
    In Sec.  615.15 (Records and reports), we propose to revise 
paragraphs (a) and (b) for clarity by deleting unnecessary language 
regarding the Secretary's authority to request EB Program reports and 
to appoint audit officials for those reports. Furthermore, we propose 
to delete paragraphs (c) and (d) which were not required by EUCA, but 
by 42 U.S.C. 503(a)(6). The reporting instructions for the proper and 
timely submission of data are provided in ET Handbook No. 401, which 
governs UC required reporting. The ET Handbook is a more effective way 
to communicate reporting requirements because codifying the reporting 
requirements in paragraphs (c) and (d) of the regulation prevents the 
Department from adapting reporting instructions to changing conditions 
or needs. Furthermore, paragraph (d) existed during the implementation 
phase of the IUR indicator to ensure that States were consistent and 
comparable in their methods. With 30 years of experience, as well as 
numerous data validation and data quality programs in effect, it is 
unnecessary to compel State administrators to provide this information. 
Current reporting guidelines contained in UIPLs are clear enough that 
States continue to have clear standards about which claims are used for 
constructing totals used to compute trigger values, thus permitting the 
deletion of this paragraph.

Request for Comments

    The Department looks forward to receiving comments on the proposed 
changes discussed in the NPRM.

III. Administrative Information

Executive Orders 12866 and 13563

    Executive Orders (E.O.) 13563 and 12866 direct agencies to assess 
all costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects; distributive impacts; and equity). E.O. 
13563 emphasizes the importance of quantifying both costs and benefits, 
reducing costs, harmonizing rules, and promoting flexibility.
    Section 3(f) of E.O. 12866 defines a ``significant regulatory 
action'' as an action that is likely to result in a rule that: (1) Has 
an annual effect on the economy of $100 million or more or adversely 
and materially affects a sector of the economy, productivity, 
competition, jobs, the environment, public health or safety, or State, 
local or Tribal governments or communities (also referred to as 
``economically significant''); (2) creates serious inconsistency or 
otherwise interferes with an action taken or planned by another agency; 
(3) materially alters the budgetary impacts of entitlement grants, user 
fees, or loan programs or the rights and obligations of recipients 
thereof; or (4) raises novel legal or policy issues arising out of 
legal mandates, the President's priorities, or the principles set forth 
in E.O. 12866. Regarding item (4), any novel legal or policy issues 
raised by this rule do not arise from legal mandates, Presidential 
priorities, or the principles set forth in E.O. 12866.
    For a ``significant regulatory action,'' E.O. 12866 asks agencies 
to describe the need for the regulatory action and explain how the 
regulatory action will meet that need, as well as assess the costs and 
benefits of the regulation.\1\ In the Unemployment Compensation 
Amendments of 1992 (UC Amendments), Congress adopted an optional 
indicator for the existing EB Program that is based on both the level 
of the TUR Trigger Value and the percentage the Trigger Value is of 
Trigger Values in comparable periods in each of the prior years 
(referred to as the look-back).\2\ Although the TUR indicator was 
implemented in the early 1990s, there was never any regulation put in 
place defining its computation and its application. We now propose to 
establish regulations for the TUR indicator which would interpret the 
law related to the TUR indicator and clarify the computation of its 
look-back provision. As discussed in more detail in the Background 
section above, we propose to use rounding to calculate the TUR because 
it is consistent with the BLS's calculation of unemployment rates. 
Based on the economic impact analysis that follows, the Department 
believes this is not an economically significant regulatory action.
---------------------------------------------------------------------------

    \1\ Executive Order No. 12866, Sec.  6(a)(3)(B).
    \2\ Unemployment Compensation Amendments of 1992, Public Law 
102-318 (1992). This law added Section 203(f) to EUCA to provide for 
an optional alternative indicator that States may use to trigger 
``on'' or ``off'' EB based on the total unemployment rate. EUCA 
originally provided for an ``on'' indicator based only on the IUR. 
EUCA, Sec.  203(d)-(e).
---------------------------------------------------------------------------

    EUCA, as amended by the UC Amendments, requires two conditions be 
met for a TUR-based ``on'' indicator

[[Page 63866]]

to occur in a State: (1) For the most recent three months for which 
data for all States is published, the three-month average seasonally-
adjusted TUR in the State equals or exceeds 6.5 percent, and (2) that 
the Trigger Value equals or exceeds 110 percent of the Trigger Values 
for either or both of the corresponding three-month periods in the two 
preceding calendar years (look-back). (The Tax Relief, Unemployment 
Insurance Reauthorization, and Job Creation Act of 2010, Pub. L. 111-
312, allowed States to temporarily modify provisions in their EB laws 
to use the prior three years in applying the look-back.) The UC 
Amendments also provide for a ``high unemployment period'' when the TUR 
Trigger Value in a State equals or exceeds 8 percent and meets the 110 
percent look-back described above, permitting the payment of additional 
weeks of compensation.\3\ States that want to use the optional TUR 
indicator must have authority under State law which may require States 
to enact legislation that implements the Federal requirements. An EB 
period ends when the State no longer meets any of the ``on'' 
requirements provided for in State law.
---------------------------------------------------------------------------

    \3\ EUCA, Sec.  202(b)(3)(B). Meeting the 6.5 percent TUR 
indicator permits eligible claimants to receive up to an additional 
50 percent of their regular entitlement during an EB period. Meeting 
the 8.0 percent indicator permits eligible claimant to receive up to 
a total of 80 percent of their regular entitlement during a high EB 
period.
---------------------------------------------------------------------------

    Under the original methodology by which the Department determined 
the look-back criterion for the optional TUR indicator, the indicator's 
Trigger Value was divided by the indicator's Trigger Value for the 
comparable period in the preceding year and second preceding year. 
Digits beyond the hundredths place (the second digit to the right of 
the decimal place) in the resultant decimal fractions were truncated 
and the results multiplied by 100 to determine the percent the current 
indicator Trigger Value was of the indicator Trigger Value in the 
comparable periods in the prior years. If the result was greater than 
or equal to 110 for one of the fractions, the look-back criterion was 
met. This approach paralleled the method used for the IUR look-back 
computation established in regulations at 20 CFR 615.12(c)(3); however, 
neither the law nor regulations specify the method for computing the 
TUR indicator look-back.\4\
---------------------------------------------------------------------------

    \4\ EUCA provides that ``determinations of the rate of total 
unemployment in any State for any period . . . shall be made by the 
Secretary.'' EUCA, Sec.  203(f)(3).
---------------------------------------------------------------------------

    We propose to change the method for computing the TUR look-back by 
rounding to the hundredths place, rather than truncating. The TUR 
indicator uses total unemployment rates determined by BLS. These rates 
are measured using sampled data and therefore are imprecise due to 
sampling error. TUR measured by BLS can be lower or higher than the 
true level of unemployment and there is no systematic tendency in 
estimation. In order to ensure to the extent possible that the TUR 
indicator is measured with total unemployment rates that reflect the 
true levels of unemployment that can be often higher than the rates 
measured by BLS, the Department has determined that an appropriate 
methodology for computing the look-back on the TUR indicator is to 
switch from truncation to rounding to the nearest hundredth, or second 
decimal place. In contrast, IUR indicators are computed from 
administrative data and thus represent the full universe. Because of 
these differences in the computation of the insured and total 
unemployment rates, the Department has determined that an appropriate 
methodology for computing the look-back for the TUR indicator is to 
switch from truncation at the second decimal place, to rounding to the 
second decimal place. Rounding, rather than truncating, is consistent 
with BLS practices for TUR data. UIPL No. 16-11, dated May 20, 2011, 
informed the SWAs that the full effect of this new rounding procedure 
was implemented retroactive to April 16, 2011.
Proposed Rounding Change in the TUR Look-Back Computation
[GRAPHIC] [TIFF OMITTED] TP27OC14.001

Where:

Three Mo. SATUR = three-month average seasonally-adjusted total 
unemployment rate.
Three Mo. SATUR (-1) = three-month average seasonally-adjusted total 
unemployment rate for the corresponding period in the prior year 
period.
Potential Impacts
    Changing the look-back computational method will have a marginal 
economic impact because of the new rounding method and no increased 
operational burden because it would result in no change in claimant 
behavior or in procedure from the existing process.\5\ The TUR 
indicator and new rounding method are currently implemented for the 
States to use; however, because we propose to implement in regulations 
the TUR indicator as well as the new rounding

[[Page 63867]]

method for the TUR look-back, we offer estimates of both impacts.
---------------------------------------------------------------------------

    \5\ The process of look-back calculation is done in the Division 
of Fiscal and Actuarial Services, Employment and Training 
Administration of the U.S. Department of Labor, using data from the 
Bureau of Labor Statistics which calculates the trigger values. The 
operational procedure will remain exactly the same as done 
previously by State and Federal staff.
---------------------------------------------------------------------------

    The UI program is a transfer payment program. For the purposes of a 
cost-benefit analysis under E.O.s 13563 and 12866, transfer payments 
are not considered a cost. Therefore, the analysis will be on the 
possible redistribution of wealth that may take place, as opposed to 
any impact on aggregate social welfare.\6\ In this case, the 
redistribution is primarily one that takes place over time rather than 
between groups. More specifically, the UI program is structured to act 
as a counter-cyclical program in terms of its impact on the economy--
during recessions increased benefit payments (much higher than taxes 
paid) provide temporary income support and greater economic stimulus 
which prevents greater economic distress, while during expansions the 
program acts through higher taxes to lower overall employment and 
demand levels. Because a State whose Trigger Value meets or exceeds the 
threshold and whose look-back falls short of meeting the requirement by 
0.05 percentage point or less would trigger ``on'' under the proposed 
rounding computation while under the truncation method would keep the 
State ``off,'' the proposed change would marginally increase extended 
compensation as the TUR Trigger Value increases in a recession. A 
change to increase the duration of benefits during recessions will 
ultimately increase the counter-cyclical nature of the program by 
increasing stimulus during recessions while slightly decreasing 
economic activity during expansions. Following is an impact analysis 
which estimates the change in the level and timing of the UI benefits 
paid and taxes collected as a result of the proposed change for the 
look-back provision of the TUR indicator.
---------------------------------------------------------------------------

    \6\ See Office of Management and Budget, Circular A-4: 
Regulatory Analysis, p. 46 (Sept. 17, 2003), available at http://www.whitehouse.gov/omb/circulars_default.
---------------------------------------------------------------------------

    The actual future impacts of changing the look-back calculation on 
the flow of UI benefits and taxes are dependent upon the unemployment 
rate in relation to the TUR trigger threshold and the number of States 
that have actually implemented the optional TUR indicator. 
Historically, the proportion of months that the EB Program has been in 
effect was extremely low, due primarily to a relatively high threshold 
in relation to the level of unemployment, unwillingness by States to 
adopt the optional indicators, and Federal emergency benefit programs 
that at times can and have supplanted the EB Program. For example, on 
average for the 1991 and 2001 high unemployment periods, State 
indicators were ``on'' in roughly 3 percent of the State trigger 
months.\7\ In contrast, this past recession a high unemployment period 
(2007-2011) has been quite unique: in over 40 percent of the State 
trigger months, the EB Program has been ``on,'' due primarily to the 
large number of States adopting the optional TUR indicator once the 
Federal Government began paying 100 percent of the costs (see Table 1). 
However, the low number of States permanently enacting the optional TUR 
indicator will cause the number of States triggering ``on'' to the EB 
Program in the future to return to the historically low levels once the 
full Federal funding expires.
---------------------------------------------------------------------------

    \7\ State trigger months are the number of months during high 
unemployment periods (see notes to Table 1) multiplied by the number 
of States, i.e., 53. During non-recessionary the percentage would be 
even less and close to zero. Extended Benefit Program data is found 
in the DOL ETA-394 annual report. http://www.workforcesecurity.doleta.gov/unemploy/hb394.asp.

                            Table 1--How Often the Extended Benefit Program Is ``On''
----------------------------------------------------------------------------------------------------------------
                                                                                                    Percent of
                                                                   State trigger   State trigger  trigger months
                    High unemployment periods                         months       months EB was   EB was ``on''
                                                                                      ``on''         (percent)
----------------------------------------------------------------------------------------------------------------
1991-1994 \1\...................................................           2,226             111             5.0
2001-2004 \2\...................................................           2,438              38             1.4
2007-2011 \3\...................................................           2,392           1,055              44
----------------------------------------------------------------------------------------------------------------
\1\ Period begins in July 1991 and goes to Dec. 1994 to include the post recessionary period of high
  unemployment.
\2\ Period begins in Mar. 2001 and goes to Dec. 2004 to include the post recessionary period of high
  unemployment.
\3\ Period begins in Dec. 2007 and goes to Sept. 2011 to include the post recessionary period of high
  unemployment.

    Only seven States adopted the optional TUR indicator upon its 
introduction in 1993. Then from 1994 through 2008, only four more 
States added the TUR indicator to their State law, bringing the number 
to 11 at the start of 2009 (see Table 2). The number of States 
implementing the optional TUR indicator and how often the EB Program is 
actually activated are critical pieces of information for estimating 
the impacts of the proposed look-back rounding methodology change. In 
2009, as part of the American Recovery and Reinvestment Act (Recovery 
Act), the Federal government began paying 100 percent of extended 
compensation and high unemployment extended compensation, so the number 
of States that adopted the optional TUR indicator went up to 38 in 
2009, then 39 in 2011.\8\ All of the 28 States that adopted the TUR 
indicator post-Recovery Act instituted the TUR indicator on a temporary 
basis--for as long as the Federal government was paying 100 percent of 
the compensation for the EB Program. Therefore, the number of States 
that are expected to continue using the TUR indicator is anticipated to 
decrease back to 11 when the Federal financing provisions expire.
---------------------------------------------------------------------------

    \8\ An additional feature of the TUR trigger that should be 
noted is that for claims beginning after December, 2010, Congress 
added a third year to the look-back calculation, so that if for the 
most recent three-month period the TUR equals or exceeds 6.5 percent 
(or 8.0 percent) and the average TUR in the State equals or exceeds 
110 percent of the average TUR for any or all three of the 
corresponding three-month periods in the three preceding calendar 
years, then EB will trigger ``on.'' Tax Relief, Unemployment 
Insurance Reauthorization, and Job Creation Act of 2010, Pub. L. 
111-312, Sec.  502 (Dec. 17, 2010). This feature expired on January 
1, 2012, and was not included in the impact analysis.

                         Table 2--States That Have Adopted the Optional EB TUR Indicator
----------------------------------------------------------------------------------------------------------------
 
----------------------------------------------------------------------------------------------------------------
Years.........................  1993-1998   1999-2001   2002        2003-2004   2005-2008   2009-2010  2011
Total TUR Indicator States....  7           8           9           10          11          38         39.

[[Page 63868]]

 
States........................  Alaska      New         North       New Mexico  New Jersey  Alabama    Maryland.
                                Connecticu   Hampshire   Carolina                           Arizona
                                 t                                                          Californi
                                Kansas                                                       a
                                Oregon                                                      Colorado
                                Rhode                                                       Delaware
                                 Island                                                     District
                                Vermont                                                      of
                                Washington                                                   Columbia
                                                                                            Florida
                                                                                            Georgia
                                                                                            Idaho
                                                                                            Illinois
                                                                                            Indiana
                                                                                            Kentucky
                                                                                            Maine
                                                                                            Massachus
                                                                                             etts
                                                                                            Michigan
                                                                                            Minnesota
                                                                                            Missouri
                                                                                            Nevada
                                                                                            New York
                                                                                            Ohio
                                                                                            Pennsylva
                                                                                             nia
                                                                                            South
                                                                                             Carolina
                                                                                            Tennessee
                                                                                            Texas
                                                                                            Virginia
                                                                                            West
                                                                                             Virginia
                                                                                            Wisconsin
----------------------------------------------------------------------------------------------------------------

Impact Assessment Methodology
    ETA used two distinct methodologies, a time-series simulation and a 
Monte Carlo-type simulation analysis (each explained more fully below), 
to provide quantitative impact estimates for the change in the level 
and timing of the UI benefits paid and taxes collected as a result of 
the proposed change in formulation of the TUR indicator. The specific 
goal of these two analyses is to provide a quantitative measure for: 
(1) The increased probability of a State turning ``on'' the EB Program 
under the new rounding rules, and (2) the likely change in the 
aggregate level of UI benefits and taxes with each instance of 
additional EB benefits paid. The results of these measures will allow a 
determination of the economic impact of that occurrence of additional 
EB benefits paid on the overall economy and on any subgroups.
    The time-series simulation estimates are developed using a 
historical simulation methodology: By first applying the existing TUR 
indicator computation, and then applying the new rounding rules to data 
from a specified period of time and measuring the difference in 
outcomes. To examine the impact on outcomes, the data used is from the 
introduction of the optional TUR indicator in 1993 through September 
2011 when this analysis was completed. This period encompasses two 
recessions of varying severity, two complete economic cycles, and a 
large number of States turning ``on'' the EB Program. This period also 
includes the temporary period of 100 percent Federal reimbursement of 
EB benefit payments when a majority of States, 39, adopted the TUR 
indicator.\9\
---------------------------------------------------------------------------

    \9\ The analysis does not include the computation of the three 
year look-back or the periods under which any State may have 
triggered ``on'' the EB Program by using the three year look-back. 
State data on adoption of the TUR trigger can be found on the weekly 
trigger notice at http://www.workforcesecurity.doleta.gov/unemploy/claims_arch.asp .
---------------------------------------------------------------------------

    The baseline case is considered to be the simulated outcomes under 
the current TUR look-back computation for the States that had adopted 
the optional TUR indicator. For each month during this historical 
period (January 1993 through September 2011), the actual seasonally-
adjusted three-month average TUR \10\ was used as well as the actual 
look-back percentages for each State that had adopted the TUR 
indicator. The number of months in EB periods was then estimated for 
each state.\11\ The TUR look-back percentage was then computed using 
the new rounding methodology and the analysis rerun. These computations 
enabled measurement of the differences between the two types of trigger 
formulations in the number months when the EB Program is triggered 
``on,'' and then the amount of extended benefits paid.\12\
---------------------------------------------------------------------------

    \10\ The data for monthly seasonally adjusted State total 
unemployment rates is from Bureau of Labor Statistics LASST01000006 
(http://data.bls.gov/timeseries/LASST01000006). The total amount of 
monthly EB benefits paid is from the Division of Fiscal and 
Actuarial Services in the Employment and Training Administration of 
the Department of Labor report 394 can be found here: http://www.workforcesecurity.doleta.gov/unemploy/hb394.asp.
    \11\ The ``on'' period was computed for each state rather than 
using the actual historical outcome.
    \12\ Under the new rounding of the look-back formulation there 
will only be cases when the look back percentage in either of the 
two years, will be higher than the original so the EB Program will 
turn ``on'' while the original method will have the EB Program as 
``off.''
---------------------------------------------------------------------------

    Probability of Turning ``On'' EB. Using just the States that had 
adopted the TUR indicator, there were 2,271 monthly observations in 
this simulation, of which there were 1,170 instances when a State 
triggered ``on'' the EB Program by using the TUR indicator under the 
current methodology. When the new rounding rules were applied there 
were 1,177 instances--only 7 additional instances when a State would 
have triggered ``on'' EB, an increase of 0.6 percent (see Table 3).

[[Page 63869]]



                    Table 3--Extended Benefit Periods Under the Old and New TUR Indicator \1\
                                                   [1993-2011]
----------------------------------------------------------------------------------------------------------------
                                                                                     Number of       Number of
                                                                  Estimated # of   instances of    instances of
                                                                   instances of      EB w/TUR        EB w/TUR
                                                                     EB ``on''       indicator       indicator
                                                                                      >=6.0%          >=8.0%
----------------------------------------------------------------------------------------------------------------
Old Method......................................................           1,170             362             808
New Method......................................................           1,177             365             812
----------------------------------------------------------------------------------------------------------------
Source: Periods of EB are estimated using federal law and data from the Bureau of Labor Statistics seasonally
  adjusted Total Unemployment Rate series by State LASST01000006.
\1\ Data consists of measuring only the periods when the EB Program triggered ``on'' based on the TUR indicator
  and included only the States that had adopted the optional TUR indicator. The number of instances refers to
  the number of State months.

    The seven instances included six different States. In four of the 
instances, the State was triggering ``on'' because of the 8.0 percent 
high unemployment period. In none of the instances were there two 
consecutive months in which a State had a different EB triggering 
outcome under the new rounding methodology compared to the truncation 
method. Two of the instances when States triggered ``on'' EB due to the 
rounding calculation occurred following the 1991 recession, one 
occurred following the 2001 recession, and four occurred following the 
2007 recession when 39 States had adopted the optional TUR indicator 
(see Table 4). In six of the seven occurrences, the difference in the 
look-back calculation occurred in the second prior year look-back 
calculation.

                                    Table 4--Periods When EB Was Triggered ``on'' Under the New Rounding Formulation
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                            First year      Second year     First year      Second year
                          State                             EB Trigger      Rounded 3-       look-back       look-back       look-back       look-back
                                                               date         month SATUR      truncated       truncated        rounded         rounded
--------------------------------------------------------------------------------------------------------------------------------------------------------
Alaska..................................................       2/28/1993             8.0           86.02          109.58              86             110
Connecticut.............................................       5/31/1993             6.8           91.89          109.67              92             110
Oregon..................................................      11/30/2003             8.0          106.66          109.58             107             110
Alaska..................................................       1/31/2009             6.8          109.67          109.67             110             110
Alabama.................................................       3/31/2011             9.2           90.19          109.52              90             110
Kansas..................................................       3/31/2011             6.8           94.44          109.67              94             110
Georgia.................................................       4/30/2011            10.0           98.03          109.89              98             110
--------------------------------------------------------------------------------------------------------------------------------------------------------

    The 0.6 percent increase in the EB Program's being ``on'' in this 
simulation represents the percentage likelihood change in the number of 
times that the EB Program would trigger ``on'' due solely to the change 
in formulation of the look-back mechanism for, on average, 13 States 
having the TUR indicator in place. Therefore, the likelihood of a State 
turning ``on'' the EB Program with the new rounding formulation may be 
represented by .04 percent (.6/13).
    The time series estimates used the actual State unemployment rates 
as they occurred from 1993 through September 2011 and include only the 
States which had adopted the optional TUR indicator. To provide further 
support for the estimate of the difference in the number of times the 
EB Program may trigger ``on'' due to rounding in the look-back 
calculation during a recession, an additional analysis was employed 
based on a Monte Carlo-type methodology. The Monte-Carlo methodology 
allows the simulation of thousands of possible State TUR values rather 
than just the historical values used in the time series analysis. 
Thirteen States--the seven original States that adopted the optional 
TUR indicator and six additional randomly selected States--were 
chosen,\13\ and then, using the mean and standard deviation of their 
total unemployment rates during the past four recessions,\14\ one 
thousand TUR periods were created for each State using a random number 
generator with a normal distribution. The number of periods when the EB 
Program would trigger ``on'' by rounding (proposed method) as opposed 
to truncating (current method) was computed. Of the 13,000 total State 
observation periods (each representing recessionary periods), the EB 
Program would have triggered ``on'' in 4,822 periods using the original 
method of truncation for the look-back computation, while the EB 
Program would have triggered ``on'' in 4,903 periods using the proposed 
method of rounding, an increase of 81 additional periods (see Table 5).
---------------------------------------------------------------------------

    \13\ Thirteen States were used as a number of States likely to 
maintain the TUR indicator in the future. The six States were 
randomly selected to insure a representative group from the 
remaining States. The six States randomly chosen were: Colorado; 
Delaware; Illinois; Kentucky; Maine; and Maryland.
    \14\ The mean and standard deviation were taken from actual 
monthly observations over the recession and post-recession periods 
of: 1980-1983; 1991-1993; 2001-2003; and 2008-2011.

                                  Table 5--Difference Between EB Trigger Formulations Under Simulated Recessionary TURs
                                                         [For 1,000 simulations for each State]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                            Mean TUR in      Standard
                                                             recession     deviation of   Instances when  Instances when                  % increase due
                        State \1\                           periods (%)      recession     EB ``on'' w/    EB ``on'' w/     Difference      to rounding
                                                                \2\         period \2\      truncating       rounding
--------------------------------------------------------------------------------------------------------------------------------------------------------
Alaska..................................................            8.14            1.21             448             459              11            2.40

[[Page 63870]]

 
Colorado................................................            6.35            1.48             226             229               3            1.31
Connecticut.............................................            6.31            1.59             363             375              12            3.20
Delaware................................................            6.23            1.80             367             371               4            1.62
Illinois................................................            8.22            1.98             499             507               8            1.58
Kansas..................................................            5.32            1.08             119             120               1            0.83
Kentucky................................................            8.04            2.07             510             517               7            1.35
Maine...................................................            6.70            1.48             418             425               7            1.65
Maryland................................................            5.24            1.30             183             185               2            1.08
Oregon..................................................            8.53            2.03             512             521               9            1.73
Rhode Island............................................            8.01            2.08             497             506               9            1.78
Vermont.................................................            5.66            1.21             221             223               2            0.90
Washington..............................................            8.06            1.95             459             465               6            1.29
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Original seven States to adopt the optional TUR indicator are in bold.
\2\ The mean and standard deviation were taken from actual monthly TUR observations over the recession and post-recession periods of: 1980-1983; 1991-
  1993; 2001-2003; 2008-2011.

    Across the States this represents, on average, a 1.7 percent (81/
4822) increase in the likelihood of turning ``on'' the EB Program under 
the new rounding rules (see Table 6). This also represents the 
cumulative difference of the 13 States, meaning that each State in this 
simulation could be considered to have added a 0.13 percent increase of 
an added instance of turning ``on'' the EB Program (1.7/13). This value 
will be used as the per-State increase in the likelihood of turning 
``on'' the EB Program under the new rounding rules in this simulation.

                   Table 6--Monte Carlo-Type Analysis of Difference in EB Trigger Formulation
                             [For 1,000 simulated monthly trigger values per State]
----------------------------------------------------------------------------------------------------------------
                                                      Number          Number
                                                   instances EB    instances EB
                      State                          ``on'' w/       ``on'' w/      Difference     % Difference
                                                    truncating       rounding
----------------------------------------------------------------------------------------------------------------
13 States.......................................           4,822           4,903              81             1.7
Per State Average...............................             371             377               6  ..............
----------------------------------------------------------------------------------------------------------------
Source: Computations made by U.S. DOL ETA/OUI/DFAS.

Transfer to EB Recipients: Temporary Income Support (During Recession)
    The proposed revision to the TUR indicator computation methodology 
would result in increased benefits payments during a recession, which 
provide temporary income support and greater economic stimulus than 
would otherwise exist during that economic time period. This increased 
economic stimulus would prevent greater economic distress during a 
recession. This impact is not a true benefit of the proposed rule 
because, as explained above, the proposed TUR indicator formulation 
would redistribute existing transfer payments only over time. That is, 
a change to increase extended benefits during recessions will 
ultimately increase the counter-cyclical nature of the program by 
increasing stimulus during recessions while slightly decreasing 
economic activity during expansions.
    Increased Compensation. A value for the amount of additional 
extended compensation and number of people who would receive the 
extended compensation under the proposed rounding rules was estimated 
using a time-series methodology. The estimated total level of extended 
compensation that would have been paid under the proposed look-back 
computation was estimated using a weekly survival rate method. In this 
methodology, for each week that the EB Program is ``on,'' the number of 
State EB claimants is multiplied by the State average weekly benefit 
amount to get the weekly total benefit amount. To arrive at the weekly 
number of EB claimants, a weekly survival rate is applied for each week 
of EB to a beginning number of regular UI program exhaustees.\15\ This 
was done for each week of the EB period (either 13 or 20 weeks) and 
aggregated to get total EB payments for the applicable period, i.e., 
the period during which each State was ``on'' EB. This computation is 
represented in the formula below.
---------------------------------------------------------------------------

    \15\ Survival rate is the probability that a claimant will 
collect Unemployment Compensation from one week to the next. An 
exhaustee is a person collecting Unemployment Compensation who would 
be in their last week of compensation but for the EB Program.
---------------------------------------------------------------------------

Computation of Total Extended Compensation Paid:
Total Wkly Extended Compensation EB Benefits =
[Sigma] (Reg. Program Wkly Exhaustions \16\ * Wkly Survival Rate \17\) 
* Avg. Wkly Benefit \18\
---------------------------------------------------------------------------

    \16\ ETA-5159 report includes monthly regular program exhaustees 
which were divided by the number of weeks in a month to get weekly 
data.
    \17\ The weekly survival rate is the proportion of individuals 
claiming unemployment compensation in week n that will also claim 
unemployment compensation in week n+1. A weekly survival rate of 
0.97 was used as a constant for each week of extended benefits. This 
level is derived from the Division of Fiscal and Actuarial Services 
State Benefit Forecasting Model.
    \18\ State average weekly benefit is derived from the ETA-5159 
monthly claims report: http://www.workforcesecurity.doleta.gov/unemploy/finance.asp .
---------------------------------------------------------------------------

(Summed over each week of the EB period.)


[[Page 63871]]


    Applying this computation to the seven State periods that turned 
``on'' the EB Program under the proposed rounding formulation in the 
time series simulation, it was estimated that in total $294 million 
\19\ more would have been paid out in extended compensation, and there 
would be an increase of 148,000 new first payments in the EB Program. 
This translates into an estimated 1.2 percent increase ($294 million/
$24,897 million - total extended compensation in the simulation) in 
extended compensation and a 1.5 percent increase ($151,000/$9.6 million 
- total EB first pays in the simulation) of EB first payments under the 
proposed rounding rules compared to the current methodology (i.e., 
truncating the look-back computation after two decimal places).
---------------------------------------------------------------------------

    \19\ This amount is, of course, dependent on the size of the 
States, but it does represent a reasonable estimate since these are 
the States most likely to have the TUR indicator in the future. 
Also, this amount is considered a high estimate, since 4 of the 
States triggered on to 20 weeks of benefits, and the average is a 
reasonable expected value for the level of per State extended 
benefits. For all of the periods except one (Alaska, 1/2009) during 
the State EB period triggered on by the rounding calculation, there 
was no ``on'' period for the truncation calculation. The Alaska data 
was adjusted for the truncation period.

              Table 7--Compensation Paid Under New Rounding Formulation During Recessionary Periods
----------------------------------------------------------------------------------------------------------------
                                                                    Increase in
                                                  Total extended     extended                       Increase in
                   Period \1\                      compensation   compensation w/ Total EB first   first pays w/
                                                      (mil.)         rounding       pays (mil.)      rounding
                                                                      (mil.)
----------------------------------------------------------------------------------------------------------------
Recession 2001-2003.............................            $478             $66             1.1          30,385
Recession 2007-2011.............................          23,844             201             5.7          91,362
----------------------------------------------------------------------------------------------------------------
Source: U.S. DOL ETA/OUI/DFAS--computations from constructed database.
\1\ Recessionary periods for this purpose are defined as beginning with the start of the official recession and
  ending with the end of any Federal Emergency benefit program or a subjective determination for the end of the
  high unemployment period.

    Again, dividing these results into the per State added percentage 
point increase for each instance of triggering ``on'' the EB Program 
means there would be a 0.17 percent increase in extended compensation 
paid \20\ and a 0.22 percent increase \21\ in first payments.
---------------------------------------------------------------------------

    \20\ Total additional extended compensation from rounding, $294 
million divided by the number of State periods, 7, and then divided 
by the total extended compensation for the entire period, $24,897 
million.
    \21\ The increase in first pays due to rounding, 148,000, 
divided by the number of State periods, 7, and then dividing by the 
total number of EB first pays during the period of 9.6 million.
---------------------------------------------------------------------------

    In terms of how the increased extended compensation paid would be 
distributed among subgroups of EB recipients, attempting to 
disaggregate this level of benefits into numerically small select 
subgroups of claimants such as low-wage workers, or minority claimants, 
would mean working with monetary flows of very little statistical 
consequence. Therefore, the Department has determined that no 
distributional analysis is necessary.
Transfer From State Unemployment Insurance Accounts: Increased Employer 
Taxes (During Expansions)
    The proposed revision to the TUR indicator computation methodology 
would result in increased economic stimulus during recessions, while 
dampening overall activity with higher taxes during expansions. In 
particular, a significant increase in extended compensation may result 
in a State UI tax increase on employers. An increased UI tax on 
employers might result in dampened overall economic activity as 
employers postpone equipment purchases or hiring. This impact does not 
represent a true cost of the proposed rule because it is associated 
with a corresponding transfer of payments to EB recipients during 
recessions. That is, the proposed regulation would result in 
redistribution of wealth over time (based on the counter-cyclical 
nature of the EB Program), rather than have a net social welfare 
impact.
    UI Taxes. Except for the temporary provisions that are no longer in 
effect, Federal statutes specify that 50 percent of extended 
compensation is paid from the Extended Unemployment Compensation 
Account (EUCA) in the Unemployment Trust Fund (UTF), which is funded 
through the Federal Unemployment Tax Act (FUTA), and 50 percent is paid 
by the liable State from its account in the UTF.
    The Federal monies for extended compensation flow from EUCA, which 
is also used to fund additional Federal emergency benefit programs. 
Historically, the balance of this account has been sufficient to pay 
the level of extended compensation during a recession and would 
therefore be much greater than the estimated amounts that may result 
from the proposed change in the look-back mechanism.\22\ Nevertheless, 
even if EUCA, together with the other Federal accounts in the UTF is 
depleted, the account can obtain advances from the General Fund with no 
impact on the FUTA tax, which means there would be no expected increase 
in Federal taxes from the change in formulation of the TUR indicator.
---------------------------------------------------------------------------

    \22\ Historical balances of the EUCA fund can be found here: 
http://www.treasurydirect.gov/govt/reports/tfmp/tfmp_utf.htm.
---------------------------------------------------------------------------

    On the State side, every State has a tax structure that responds 
with higher taxes when the amount of reserves in its UTF account 
declines.\23\ Thus, a significant increase in paid extended 
compensation may result in a State UI tax increase on employers. 
However, the tax response takes place only with relatively large 
changes in the State trust fund account balance, and differs by State 
depending on the size of the account balance; small changes in a State 
trust fund account balance may actually have no impact in a State's UI 
taxes. To gauge the magnitude of the tax impact from an increase in 
extended compensation paid, a generalized rule of State UI tax 
collections can be applied: For any specified increase in unemployment 
compensation, 100 percent of the increase will be collected in UI taxes 
over a 10-year period.\24\
---------------------------------------------------------------------------

    \23\ For applicable State triggering laws see Comparison of 
State UI Laws: http://www.workforcesecurity.doleta.gov/unemploy/comparison2011.asp.
    \24\ Recoupment rule of UI taxes in response to a compensation 
increase is from an Office of Unemployment Insurance, Division of 
Fiscal and Actuarial Services State Revenue model run over a range 
of scenarios, 12/2011.
---------------------------------------------------------------------------

    Using the estimated increase of extended compensation paid (due to 
the TUR indicator rounding computation) from the time-series 
simulation, $294 million, an estimate was derived for the amount of 
potential State tax increases by assuming the increase in extended 
compensation was divided among the average number of States that

[[Page 63872]]

experienced an increase in extended EB compensation paid over a 10-year 
period. To arrive at an estimate for the expected increase in State 
unemployment compensation taxes due to a change in the rounding rule 
for the look-back feature of the TUR indicator, 50 percent of the total 
extended compensation, $147 million, is assumed to be financed by seven 
States for an average of $21 million per State. The amount is assumed 
to be financed by increased State taxes over a 10-year period for an 
average of $2.1 million per year. This amount represents an estimated 
increase of 0.14 percent \25\ in State unemployment compensation taxes 
for each State that turns ``on'' the EB Program under the proposed new 
rounding rules.
---------------------------------------------------------------------------

    \25\ Derived by taking the average estimated yearly tax increase 
per State, $2.1 million, divided by the estimated amount of 
contributions per State per year, $1.4 billion. This is certainly a 
very rough estimate that depends on the size of the States having 
the optional TUR indicator in the simulation. However, because those 
States would be expected to continue having the indicator, it is 
considered a reasonable level.

               Table 8--Estimated Increase in State Taxes Collected Under New Rounding Formulation
               [Based on the estimated extended compensation from the time-series data, 1993-2011]
----------------------------------------------------------------------------------------------------------------
                                                Est. amt. of
                                               added extended   Amt. financed      Avg. amt.      % Increase in
                   Period                     compensation to   per state \2\     financed per   taxes per state
                                                finance \1\         (mil.)        year (mil.)          \3\
                                                   (mil.)
----------------------------------------------------------------------------------------------------------------
1993-2011 data period.......................            $147              $21             $2.1             0.14
----------------------------------------------------------------------------------------------------------------
\1\ Fifty percent of total estimated amount of increased extended compensation paid due to rounding from the
  Time-Series Data.
\2\ Derived from 50 percent of the estimated increase in extended compensation payments under the Time Series
  data divided by the number of States that experienced an increase.
\3\ Total extended compensation to be financed divided by the total unemployment compensation contributions over
  the period: http://www.workforcesecurity.doleta.gov/unemploy/hb394.asp

    In terms of specific distribution of these impacts, disaggregating 
the tax increases into subgroups of employers such as small businesses 
would mean working with monetary flows of very little consequence. 
Therefore, the Department has determined that no distributional 
analysis is necessary.
Non-Quantified Impacts
    OMB Circular No. A-4 requires the identification of any non-
quantifiable benefits and costs that cannot be reasonably measured.\26\ 
One primary non-quantifiable benefit of implementing regulations for 
the TUR indicator and the associated rounding rule, and which is a 
driving factor for its adoption, is that by codifying the TUR indicator 
the Department will explicitly clarify a methodology for computing the 
TUR look-back that regulations previously left unspecified. The 
proposed regulation would remove the potential for future 
misunderstanding in the computation of the optional TUR indicator, as 
compared to the current status quo where the TUR look-back computation 
method is not specified in Department regulations.
---------------------------------------------------------------------------

    \26\ See Office of Management and Budget, Circular A-4: 
Regulatory Analysis, pp. 2-3, 10, 26-27 (Sept. 17, 2003), available 
at http://www.whitehouse.gov/omb/circulars_default.
---------------------------------------------------------------------------

    Regarding the secondary impacts from increased temporary income 
during recessions and increased employer taxes during expansions, the 
Department has determined that the estimates of extended compensation 
and UI tax increases are too small to meaningfully model their impact 
on the macro economy. With a likely impact of increasing the number of 
instances the EB Program triggers ``on'' by two during an average 
recession and nine instances during a severe recession (as computed in 
detail in the scenarios below), these impact numbers are too small to 
model any stimulus impact during a recession or a dampening effect of 
the tax increases during expansions. Not only are the impacts on 
extended compensation and taxes small compared to the U.S. economy 
(e.g., far below the $1 billion limit for use of an economic multiplier 
effect on the level of employment or economic activity \27\), but even 
compared to aggregate unemployment compensation payments and taxes the 
numbers are rather insignificant.
---------------------------------------------------------------------------

    \27\ In OMB Circular A-4 in reference to the size of stimulative 
impacts: ``. . . that rules with annual costs that are less than one 
billion dollars are likely to have a minimal effect on economic 
growth.''
---------------------------------------------------------------------------

Summary: Potential Future Stimulative and Distributional Impacts 
Scenarios
    By increasing the overall level of benefits paid by States during 
recessionary periods, the proposed change in TUR indicator computation 
methodology would aid in the counter-cyclical nature of the 
Unemployment Compensation program by increasing the economic stimulus 
during recessions and then tend to dampen the overall activity with 
higher taxes during expansions. The estimates for the increased 
probability of States triggering ``on'' the EB Program, increased 
benefits, higher first payments, and potential changes to UI taxes, can 
provide estimates for the change in flows of the Unemployment 
Compensation program that this proposal may cause under various future 
recessionary scenarios.
    Scenario 1 (11 States with the optional TUR indicator; typical 
severity three-year recession and post-recession period).\28\ In a 
likely scenario, assuming a recession and post-recession high 
unemployment period lasting three years, with 11 States having the 
optional TUR indicator in place, it would mean 396 possible State 
months (11 States * 36 months) of high enough unemployment for the EB 
Program to trigger ``on.'' Using the results from the high unemployment 
periods in the Monte Carlo-type analysis, we could expect approximately 
147 periods of the EB Program to be triggered ``on'' in States with the 
optional TUR indicator (37 percent \29\ * 396 State months) using the 
original truncation methodology. With 11 States having the optional TUR 
indicator, the likelihood of turning ``on'' the EB Program under the 
rounding methodology would be 1.4 percent (11 States * 0.13 percent per 
State likelihood), this would increase the number of EB Program periods 
by two instances (1.4 percent * 147 periods). Assuming a recession with 
$2 billion in total extended compensation paid and 1.5 million first 
payments in the EB

[[Page 63873]]

Program, then with two more instance of the EB Program triggering 
``on'' we would expect an increase in extended compensation paid of $7 
million (0.34 percent * $2 billion) and an increase of 9,000 in the 
number of first payments (1.5 million * 0.44 percent). The resulting 
tax increases spread over a 10-year period in one State would then be 
expected to be approximately $350,000 per year (($7 million * 0.5 State 
cost)/10 years).
---------------------------------------------------------------------------

    \28\ Similar in severity to the 1991 recession.
    \29\ A value similar to the percentage of State months that 
triggered on to EB in the 1991 and 2001 recessions.
---------------------------------------------------------------------------

    Scenario 2 (20 States with optional TUR indicator; more severe 
three-year recession and post-recession period).\30\ In a less likely 
scenario, but one with possibly the highest expected impact, assuming a 
recession and post-recession period lasting three years, with 20 States 
having the optional TUR indicator in place--720 State months (20 States 
* 36 months). In a more severe recession we could expect 360 periods of 
the EB Program to be triggered ``on'' with the optional TUR indicator 
(720 * 50 percent). With 20 States having the optional TUR indicator 
the likelihood of triggering ``on'' the EB Program under the new 
rounding rules would be 2.6 percent (20 States * 0.13 percent) this 
would increase the number of periods the EB Program would be triggered 
``on'' by nine instances (2.6 percent * 360 periods). Assuming a 
recession with $5 billion in total extended compensation paid and 3.0 
million first payments for the program, with nine more instances of the 
EB Program triggering ``on,'' we would expect an increase in extended 
compensation of $77 million (0.17 percent * 9 periods * $5 billion) and 
an increase of 60,000 in the number of first payments for the program 
(3 million * 8 periods * 0.22 percent). The resulting tax increases 
spread over a 10-year period in one State would then be expected to be 
approximately $190,000 per year ($77 million * 0.5 State cost)/20 
States)/10 years).
---------------------------------------------------------------------------

    \30\ Similar in severity to the 2007 recession.
---------------------------------------------------------------------------

Impact of the TUR Option
    The preceding impact analysis focused on changing the computational 
methodology of the TUR look-back provision. Since the Department is not 
considering the removal of the optional TUR indicator, the analysis 
does not measure the impact of the original adoption of the TUR 
indicator in 1992. However, it should be noted that a review of the 
most evident differences caused by the implementation of this option 
shows a rather small impact.
    From 1993 to 2006, for the 11 States that adopted the TUR indicator 
by 2006 (Table 2), EB costs are totaled for each period when one of 
these States triggered on to the EB Program with the TUR option but 
would not have turned on extended compensation under the IUR 
option.\31\ During this 14-year period, there were 28 instances when a 
State triggered on to the EB Program using the TUR option and would not 
have triggered on using the IUR trigger. The total extended 
compensation costs of these instances were approximately $310 million 
and the number of First Payments was 330,000.
---------------------------------------------------------------------------

    \31\ For a state to trigger on extended compensation using the 
IUR, its insured unemployment rate (IUR) for the previous 13 weeks 
is at least 5 percent and is 120 percent of the average of the rates 
for the corresponding 13-week period in each of the two previous 
years.

                      Table 9--States Triggering on to the EB Program Using the TUR Option
                                    [Without qualifying with the IUR option]
----------------------------------------------------------------------------------------------------------------
      1993             1994            1995            1996            1997            1998            1999
----------------------------------------------------------------------------------------------------------------
Alaska            Alaska          Alaska          Alaska          Alaska          Alaska          Alaska
Oregon            Oregon          Rhode Is.
Rhode Is.         Rhode Is.
Washington
----------------------------------------------------------------------------------------------------------------
2000                   2001            2002            2003            2004            2005            2006
----------------------------------------------------------------------------------------------------------------
Alaska            Alaska          Alaska          Alaska          Alaska          Alaska          ..............
                  ..............  ..............  N. Carolina     Michigan        Michigan        ..............
                  ..............  ..............  Oregon          N. Carolina     Oregon          ..............
                  ..............  ..............  ..............  Oregon          Washington      ..............
                  ..............  ..............  ..............  Washington      ..............  ..............
----------------------------------------------------------------------------------------------------------------

    This is a relatively small number of States and amount spent, on 
average approximately $22 million per year, and in no year did the 
amount spent on extended compensation from States that triggered on 
using the TUR option ever exceed $100 million. Indeed, measuring the 
change in cyclical financial flows of the UI program does not seem 
necessary under these aggregates.
Conclusion
    Placing the optional TUR indicator in regulations does not impose 
any additional change in burden, since no change in the operational 
procedure will occur. In addition, it incorporates in regulations the 
computational methodology previously communicated in UIPL No. 16-11 for 
the TUR's look-back.
    Changing the look-back computation does have an impact, although it 
is estimated to be small. For each State that adopted the optional TUR 
indicator, it was found that the new rounding rule would likely add a 
0.13 percentage point increase in the likelihood of a single State 
triggering ``on'' the EB Program during a recession. For each State 
that triggered ``on'' the EB Program, it would likely add a 0.17 
percent increase in the level of extended compensation paid, a 0.22 
percent increase in people receiving extended compensation, and a per 
State increase in unemployment compensation taxes of 0.14 percent per 
year. These numbers indicate a negligible impact on the redistribution 
of the flows (unemployment compensation and taxes) in the Unemployment 
Compensation program. These impacts are so small that any stimulative 
or distributional effects would be considered of little consequence. 
Indeed, the probable economic impact encompasses the likely possibility 
(depending on the future level of the TUR) that there would be no 
measurable impact from a change in the derivation of the TUR indicator 
due to rounding the look-back proportion as opposed to truncating that 
value.

[[Page 63874]]

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.
    A Federal agency may not conduct or sponsor a collection of 
information unless it is approved by OMB under the PRA, and displays a 
currently valid OMB control number, and the public is not required to 
respond to a collection of information unless it displays a currently 
valid OMB control number. Also, notwithstanding any other provisions of 
law, no person shall be subject to penalty for failing to comply with a 
collection of information if the collection of information does not 
display a currently valid OMB control number (44 U.S.C. 3512).
    The Department has determined that this rule does not contain new 
information collection requiring it to submit a paperwork package to 
OMB.

Executive Order 13132

    Section 6 of Executive Order 13132 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.
    This proposed rule does not 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 
13132. Any action taken by a State as a result of the proposed rule 
would be at its own discretion as the rule imposes no requirements.

Unfunded Mandates Reform Act of 1995

    This regulatory action has been reviewed in accordance with the 
Unfunded Mandates Reform Act of 1995 (Reform Act). Under the Reform 
Act, a Federal agency must determine whether a regulation proposes a 
Federal mandate that would result in the increased expenditures by 
State, local, or tribal governments, in the aggregate, or by the 
private sector, of $100 million or more in any single year. The 
Department has determined this proposed 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.
    Accordingly, it is unnecessary for the Department to prepare a 
budgetary impact statement. Further, as noted above in the conclusion 
of the economic impact analysis, the impact is positive for State UTF 
accounts.

Effect on Family Life

    The Department certifies that this proposed rule has been assessed 
according to 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), for its effect on family well-being. It will not adversely 
affect the well-being of the nation's families. Therefore, the 
Department certifies that this proposed rule does not adversely impact 
family well-being.

Regulatory Flexibility Act/SBREFA

    The Regulatory Flexibility Act (RFA) at 5 U.S.C. 603(a) requires 
agencies to prepare and make available for public comment an initial 
regulatory flexibility analysis which will describe the impact of the 
proposed rule on small entities. Section 605 of the RFA allows an 
agency to certify a rule, in lieu of preparing an analysis, if the 
proposed rulemaking is not expected to have a significant economic 
impact on a substantial number of small entities. Furthermore, under 
the Small Business Regulatory Enforcement Fairness Act of 1996, 5 
U.S.C. 801 (SBREFA), an agency is required to produce compliance 
guidance for small entities if the rule has a significant economic 
impact on a substantial number of small entities.
    The RFA defines small entities as small business concerns, small 
not-for-profit enterprises, or small governmental jurisdictions. The 
proposed rule does not regulate small entities. As a result, any 
indirect impact on small entities would be from a tax increase 
resulting from a State triggering ``on'' because of the new computation 
method for the look-back. Therefore, the Department certifies that the 
proposed rule will not have a significant economic impact on a 
substantial number of these small entities.

Plain Language

    The Department drafted this rule in plain language.

List of Subjects in 20 CFR Part 615

    Grant programs--labor; Reporting and recordkeeping requirements; 
Unemployment compensation.

    For the reasons discussed in the preamble, ETA proposes to amend 20 
CFR part 615 as follows:

PART 615--EXTENDED BENEFITS IN THE FEDERAL-STATE UNEMPLOYMENT 
COMPENSATION PROGRAM

0
1. The authority citation for 20 CFR part 615 is revised to read as 
follows:

    Authority:  26 U.S.C. 7805; 26 U.S.C. 1102; Secretary's Order 
No. 6-10.

0
2. In part 615 remove the words ``the Act'' and add, in their place, 
the acronym ``EUCA'' in the following places:
0
a. Section 615.1 introductory text (two places);
0
b. Section 615.2 introductory text;
0
c. Section 615.2(g);
0
d. Section 615.2(i)(1);
0
e. Section 615.2(i)(1);
0
f. Section 615.2(i)(2);
0
g. Section 615.2(i)(3);
0
h. Section 615.2(j)(2);
0
i. Section 615.2(n)(2);
0
j. Section 615.2(o);
0
k. Section 615.2(o)(1) (three places);
0
l. Section 615.2(o)(4);
0
m. Section 615.3 introductory text (four places);
0
n. Section 615.4(a);
0
o. Section 615.4(b);
0
p. Section 615.7(d);
0
q. Section 615.8(a);
0
r. Section 615.8(c);
0
s. Section 615.8(c)(2);
0
t. Section 615.8(d);
0
u. Section 615.8(d)(3) (two places);
0
v. Section 615.8(d)(4);
0
w. Section 615.8(e);
0
x. Section 615.8(e)(8);
0
y. Section 615.8(f);
0
z. Section 615.8(f)(1)(ii);
0
aa. Section 615.8(f)(4);
0
bb. Section 615.8(g)(1);
0
cc. Section 615.8(g)(5);
0
dd. Section 615.9(d);
0
ee. Section 615.12(e);
0
ff. Section 615.14(a);
0
gg. Section 615.14(a)(2);
0
hh. Section 615.14(a)(3);
0
ii. Section 615.14(a)(4);
0
jj. Section 615.14(b);
0
kk. Section 615.14(c)(1);
0
ll. Section 615.14(c)(2) (two places);
0
mm. Section 615.14(c)(3);

[[Page 63875]]

0
nn. Section 615.14(c)(4);
0
oo. Section 615.14(c)(5);
0
pp. Section 615.14(c)(6);
0
qq. Section 615.14(c)(7)(i);
0
rr. Section 615.14(c)(7)(ii);
0
ss. Section 615.14(c)(7)(iii);
0
tt. Section 615.14(d);
0
uu. Section 615.14(d)(2) (two places);
0
vv. Section 615.14(d)(3)(four places);
0
ww. Section 615.14(d)(6); and
0
xx. Section 615.15(a).
0
3. Revise Sec.  615.1 to read as follows:


Sec.  615.1  Purpose.

    This part implements the ``Federal-State Extended Unemployment 
Compensation Act of 1970'' (EUCA). Under the Federal Unemployment Tax 
Act, 26 U.S.C. 3304(a)(11), an approved State law must provide for the 
payment of extended compensation to eligible individuals who have 
exhausted all rights to regular compensation during specified periods 
of unemployment, as prescribed in EUCA and this part.
0
4. Amend Sec.  615.2 by:
0
a. Removing the paragraph designations wherever they may occur and 
reorder the definitions alphabetically; and
0
b. Adding alphabetical order the definitions for ``EUCA,'' ``Extended 
benefit period,'' ``Extended Benefits Program or EB Program,'' 
``Extended compensation account,'' ``Extended unemployment 
compensation,'' ``High unemployment extended compensation,'' ``High 
unemployment period,'' ``Insured Unemployment Rate,'' ``Regular 
extended compensation,'' ``Regular EB period,'' ``Total Unemployment 
Rate,'' ``Trigger Value or average rate of total unemployment'' as set 
forth below;
0
c. Revising the definitions for ``Applicable Benefit Year,'' 
``Department,'' ``Eligibility Period,'' ``Extended Compensation,'' 
``Provisions of Applicable State Law,'' ``Sharable Compensation,'' and 
``Week;'' and
0
d. Removing introductory paragraph (o) and redesignating them 
accordingly.
    The revisions and additions read as follows:


Sec.  615.2  Definitions.

* * * * *
    Applicable benefit year means, with respect to an individual, the 
current benefit year if, at the time an initial claim for extended 
compensation is filed, the individual has an unexpired benefit year 
only in the State in which such claim is filed, or, in any other case, 
the individual's most recent benefit year. For this purpose, the most 
recent benefit year for an individual who has unexpired benefit years 
in more than one State when an initial claim for extended compensation 
is filed, is the benefit year with the latest ending date or, if such 
benefit years have the same ending date, the benefit year in which the 
latest continued claim for regular compensation was filed. The 
individual's most recent benefit year which expires in an extended 
benefit period, when either extended compensation or high unemployment 
extended compensation is payable, is the applicable benefit year if the 
individual cannot establish a second benefit year or is precluded from 
receiving regular compensation in a second benefit year solely by 
reason of a State law provision which meets the requirement of section 
3304(a)(7) of the Internal Revenue Code of 1986 (26 U.S.C. 3304(a)(7)).
    Department means the United States Department of Labor, and shall 
include the Employment and Training Administration, the agency of the 
United States Department of Labor headed by the Assistant Secretary of 
Labor for Employment and Training to whom has been delegated the 
Secretary's authority under the Act in Secretary's Order No. 6-2010 (75 
FR 66268).
    Eligibility period means, for an individual, the period consisting 
of--
    (1) The weeks in the individual's applicable benefit year which 
begin in an extended benefit period or high unemployment period, or for 
a single benefit year, the weeks in the benefit year which begin in 
more than one extended benefit period or high unemployment period, and
    (2) If the applicable benefit year ends within an extended benefit 
period or high unemployment period, any weeks thereafter which begin in 
such extended benefit period or high unemployment period,
    (3) An individual may not have more than one eligibility period for 
any one exhaustion of regular benefits, or carry over from one 
eligibility period to another any entitlement to extended compensation.
    EUCA means the Federal-State Extended Unemployment Compensation Act 
of 1970, title II of Public Law 91-373, 84 Stat. 695, 708 (codified in 
note to 26 U.S.C. 3304), as amended.
    Extended benefit period means the weeks during which extended 
compensation is payable in a State in accordance with Sec.  615.11.
    Extended Benefits Program or EB Program means the entire program 
under which monetary payments are made to workers who have exhausted 
their regular compensation during periods of high unemployment.
    Extended compensation means the funds payable to an individual for 
weeks of unemployment which begin in a regular EB period or high 
unemployment period (HUP), under those provisions of a State law which 
satisfy the requirements of EUCA and this part with respect to the 
payment of extended unemployment compensation, and, when so payable, 
includes compensation payable under 5 U.S.C. chapter 85, but does not 
include regular compensation or additional compensation.
    Extended compensation account is the account established for each 
individual claimant for the payment of regular extended compensation or 
high unemployment extended compensation.
    Extended unemployment compensation means:
    (1) Regular extended compensation paid to an eligible individual 
under those provisions of a State law which are consistent with EUCA 
and this part, and that does not exceed the smallest of the following:
    (i) 50 percent of the total amount of regular compensation payable 
to the individual during the applicable benefit year; or
    (ii) 13 times the individual's weekly amount of extended 
compensation payable for a week of total unemployment, as determined 
under Sec.  615.6(a); or
    (iii) 39 times the individual's weekly benefit amount, referred to 
in paragraph (1)(ii) of this definition, reduced by the regular 
compensation paid (or deemed paid) to the individual during the 
applicable benefit year; or
    (2) High unemployment extended compensation paid to an eligible 
individual under an optional TUR indicator enacted under State law when 
the State is in a high unemployment period, in accordance with Sec.  
615.11(e) of this part, and that does not exceed the smallest of the 
following:
    (i) 80 percent of the total amount of regular compensation payable 
to the individual during the applicable benefit year; or
    (ii) 20 times the individual's weekly amount of extended 
compensation payable for a week of total unemployment, as determined 
under Sec.  615.6(a); or
    (iii) 46 times the individual's weekly benefit amount, referred to 
in paragraph (1)(ii) of this definition, reduced by the regular 
compensation paid (or deemed paid) to the individual during the 
applicable benefit year.
    (3) Regular extended compensation paid to an eligible individual 
for weeks of unemployment in the individual's eligibility period, but 
only to the extent

[[Page 63876]]

that the sum of such compensation, plus the regular compensation paid 
(or deemed paid) to the individual for prior weeks of unemployment in 
the applicable benefit year, exceeds 26 times the individual's weekly 
benefit amount and does not exceed 39 times the individual's weekly 
benefit amount (including allowances for dependents) for weeks of total 
unemployment payable to the individual under the State law in such 
benefit year: Provided, that such regular compensation is paid under 
provisions of a State law which is consistent with EUCA and this part.
    (4) Notwithstanding the preceding provisions of this paragraph, 
sharable compensation does not include any regular or extended 
compensation for which a State is not entitled to a payment under 
section 202(a)(6) or 204 of EUCA or Sec.  615.14 of this part.
    High unemployment extended compensation means the benefits payable 
to an individual for weeks of unemployment which begin in a high 
unemployment period, under those provisions of a State law which 
satisfy the requirements of EUCA and this part for the payment of high 
unemployment extended compensation. When so payable, high unemployment 
extended compensation includes compensation payable under 5 U.S.C. 
chapter 85, but does not include regular compensation or additional 
compensation. Regular extended unemployment compensation, along with 
high unemployment extended compensation, are part of the program 
referred to in this part as Extended Benefits.
    High unemployment period (or HUP) means a period where the 
Department determines that the Trigger Value in a State, which has 
enacted the alternative Total Unemployment Rate indicator in law, for 
the most recent three months for which data for all States is published 
equals or exceeds 8 percent and such Trigger Value equals or exceeds 
110 percent of such Trigger Value for either or both of the 
corresponding three-month periods ending in the two preceding calendar 
years.
    Insured Unemployment Rate means the percentage derived by dividing 
the average weekly number of individuals filing claims for regular 
compensation in a State for weeks of unemployment in the most recent 
13-consecutive-week period as determined by the State on the basis of 
State reports to the United States Secretary of Labor by the average 
monthly employment covered under State law for the first four of the 
most recent six completed calendar quarters before the end of such 13-
week period.
    Provisions of the applicable State law, as used in section 
202(a)(3)(D)(iii) of EUCA, means that State law provisions must not be 
inconsistent with sections 202(a)(3)(C) and 202(a)(3)(E). Therefore, 
decisions based on State law provisions must not require an individual 
to take a job which requires traveling an unreasonable distance to 
work, or which involves an unreasonable risk to the individual's 
health, safety or morals. Such State law provisions must also include 
labor standards and training provisions required under sections 
3304(a)(5) and 3304(a)(8) of the Internal Revenue Code of 1986 and 
section 236(d) of the Trade Act of 1974.
    Regular extended compensation means the benefits payable to an 
individual for weeks of unemployment which begin in an extended benefit 
period, under those provisions of a State law which satisfy the 
requirements of EUCA and this part for the payment of extended 
unemployment compensation, and, when so payable, includes compensation 
payable under 5 U.S.C. chapter 85, but does not include regular 
compensation or additional compensation. Regular extended compensation, 
along with high unemployment extended compensation, are part of the 
program referred to in this part as Extended Benefits.
    Regular EB period means a period in which a state is ``on'' the EB 
Program because either the mandatory or optional IUR indicator 
satisfies the criteria to be ``on'' and the state is not in a 13-week 
mandatory ``off'' period; or the State is ``on'' the EB Program because 
the TUR indicator's Trigger Value is at least 6.5 percent and it is at 
least 110 percent of the Trigger Value for the comparable three months 
in either of the prior two years.
    Sharable compensation means:
    (1) Extended compensation paid to an eligible individual under 
those provisions of a State law which are consistent with EUCA and this 
part, and that does not exceed the smallest of the following:
    (i) 50 percent of the total amount of regular compensation payable 
to the individual during the applicable benefit year; or
    (ii) 13 times the individual's weekly amount of extended 
compensation payable for a week of total unemployment, as determined 
under Sec.  615.6(a); or
    (iii) 39 times the individual's weekly benefit amount, referred to 
in paragraph (1)(ii) of this definition, reduced by the regular 
compensation paid (or deemed paid) to the individual during the 
applicable benefit year.
    (2) Extended compensation paid to an eligible individual under an 
optional TUR indicator enacted under State law when the State is in a 
high unemployment period, in accordance with Sec.  615.12(f) of this 
part, and that does not exceed the smallest of the following:
    (i) 80 percent of the total amount of regular compensation payable 
to the individual during the applicable benefit year; or
    (ii) 20 times the individual's weekly amount of extended 
compensation payable for a week of total unemployment, as determined 
under Sec.  615.6(a); or
    (iii) 46 times the individual's weekly benefit amount, referred to 
in paragraph (1)(ii) of this definition, reduced by the regular 
compensation paid (or deemed paid) to the individual during the 
applicable benefit year.
    (3) Regular compensation paid to an eligible individual for weeks 
of unemployment in the individual's eligibility period, but only to the 
extent that the sum of such compensation, plus the regular compensation 
paid (or deemed paid) to the individual for prior weeks of unemployment 
in the applicable benefit year, exceeds 26 times and does not exceed 39 
times the average weekly benefit amount (including allowances for 
dependents) for weeks of total unemployment payable to the individual 
under the State law in such benefit year: Provided, that such regular 
compensation is paid under provisions of a State law which are 
consistent with EUCA and this part.
    (4) Notwithstanding the preceding provisions of this paragraph, 
sharable compensation does not include any regular or extended 
compensation for which a State is not entitled to a payment under 
section 202(a)(6) or 204 of EUCA or Sec.  615.14 of this part.
    Total Unemployment Rate means the number of unemployed individuals 
in a State (seasonally adjusted) divided by the civilian labor force 
(seasonally adjusted) in the State for the same period.
    Trigger Value or average rate of total unemployment means the ratio 
computed using three months of the level of seasonally adjusted 
unemployment in a State in the numerator and three months of the level 
of the seasonally adjusted civilian labor force in the State in the 
denominator. This rate is used for triggering States ``on'' and ``off'' 
the optional Total Unemployment Rate indicator is described in Sec.  
615.12(e).
    Week means:
    (1) For purposes of eligibility for and payment of extended 
compensation, a week as defined in the applicable State law.

[[Page 63877]]

    (2) For purposes of computation of extended compensation ``on'' and 
``off'' and ``no change'' indicators and insured unemployment rates and 
the beginning and ending of an EB Period or a HUP, a calendar week.
* * * * *
0
5. Amend section 615.3 by revising the third sentence in the paragraph 
to read as follows:


Sec.  615.3  Effective period of the program.

    * * * Conformity with EUCA and this part in the payment of regular 
compensation, regular extended compensation, and high unemployment 
extended compensation (if State law so provides) to any individual is a 
continuing requirement, applicable to every week as a condition of a 
State's entitlement to payment for any compensation as provided in EUCA 
and this part.
0
6. Amend Sec.  615.7 by:
0
a. Removing the term ``Extended Benefits'' wherever it appears and 
replacing it with the term ``Extended compensation'' throughout;
0
b. Adding paragraph (b)(3); and
0
c. Revising introductory paragraph (d).
    The additions and revisions read as follows:


Sec.  615.7  Extended Benefits; maximum amount.

* * * * *
    (b) * * *
    (3) If State law provides, in accordance with Sec.  615.12(e), for 
a high unemployment period for weeks of unemployment beginning after 
March 6, 1993, the provisions of paragraph (b)(1) of this section are 
applied by substituting:
    (i) 80 percent for 50 percent in (b)(1)(i),
    (ii) 20 for 13 in (b)(1)(ii), and
    (iii) 46 for 39 in (b)(1)(iii).
    Note to paragraph (b)(3). Provided, that if an individual's 
extended compensation account is determined in accordance with the 
provisions of paragraphs (b)(3)(i) through (b)(3)(iii) (for a ``high 
unemployment period'' as defined in Sec.  615.2) during the 
individual's eligibility period, upon termination of the high 
unemployment period, such individual's account must be reduced by the 
amount in the account that is more than the maximum amount of extended 
compensation or high extended compensation payable to the individual. 
Provided further, if the account balance is equal to or less than the 
maximum amount of extended compensation or high unemployment extended 
compensation payable, there will be no reduction in the account balance 
upon termination of a high unemployment period. In no case will the 
individual receive more regular extended compensation or high 
unemployment extended compensation than the amount determined in 
accordance with paragraphs (b)(1)(i) through (b)(1)(iii) of this 
section, nor more extended compensation or high unemployment extended 
compensation than as provided in paragraphs (b)(2)(i) through 
(b)(2)(iii) of this section.
    * * *
    (d) Reduction because of trade readjustment allowances. Section 
233(c) of the Trade Act of 1974 (and section 204(a)(2)(C) of EUCA), 
requiring a reduction of extended compensation because of the receipt 
of trade readjustment allowances, must be applied as follows:
* * * * *
0
7. Amend Sec.  615.8 by revising paragraph (e)(5)(iii), (f)(2)(i), 
(f)(2)(iii), (h)(3) and (h)(4) to read as follows:


Sec.  615.8  Provisions of State law applicable to claims.

* * * * *
    (e) * * *
    (5) * * *
    (iii) The work pays less than the higher of the minimum wage set in 
section 6(a)(1) of the Fair Labor Standards Act of 1938, or any 
applicable State or local minimum wage, without regard to any exemption 
elsewhere in those laws, or
* * * * *
    (f) * * *
    (2) * * *
    (i) The gross average weekly remuneration for the work for any week 
does not exceed the sum of the individual's weekly benefit amount plus 
any supplemental unemployment compensation benefits (as defined in 
section 501(c)(17)(D) of the Internal Revenue Code of 1986) payable to 
the individual,
    (ii) * * *
    (iii) The work pays less than the higher of the minimum wage set in 
section 6(a)(1) of the Fair Labor Standards Act of 1938, or any 
applicable State or local minimum wage, without regard to any exemption 
elsewhere in those laws, or
* * * * *
    (h) * * *
    (3) What kind of jobs he/she must be actively engaged in seeking 
each week depending on the classification of his/her job prospects, and 
what tangible evidence of such search must be furnished to the State 
agency with each claim for benefits. In addition, the State must inform 
the claimant that he/she is required to apply for and accept suitable 
work, and
    (4) The resulting disqualification if he/she fails to apply for 
work to which referred, or fails to accept work offered, or fails to 
actively engage in seeking work or to furnish tangible evidence of such 
search for each week for which extended compensation or sharable 
regular benefits is claimed, beginning with the week following the week 
in which such information shall be furnished in writing to the 
individual.
0
8. Revise Sec.  615.11 to read as follows:


Sec.  615.11  Extended Benefit Periods.

    (a) Beginning date. Except as provided in paragraph (d) of this 
section, an extended benefit period or high unemployment period begins 
in a State on the first day of the third calendar week after a week for 
which there is a State ``on'' indicator in that State under either 
Sec.  615.12(a) or (b).
    (b) Ending date. Except as provided in paragraphs (c) and (e) of 
this section, an extended benefit period or high unemployment period in 
a State ends on the last day of the third week after the first week for 
which there is a State ``off'' indicator in that State, unless another 
indicator is in ``on'' status.
    (c) Duration. When an extended benefit period and/or high 
unemployment period becomes effective in any State, or triggers 
``off,'' the attained status must continue in effect for not less than 
13 consecutive weeks.
    (d) Limitation. No extended benefit period or high unemployment 
period may begin in any State by reason of a State ``on'' indicator 
before the 14th week after the ending of a prior extended benefit 
period or high unemployment period in such State. Conversely, no 
extended benefit period or high unemployment period may end in any 
State by reason of a State ``off'' indicator before the 14th week after 
the beginning of an extended benefit period or high unemployment period 
in such State. In addition, no extended benefit period or high 
unemployment period may begin or end in any State before the most 
recent week for which data used to trigger the State ``on'' or ``off'' 
or ``no change'' indicator has been published.
    (e) Specific applications of the 13-week rule:
    (1) If a State concludes a 13-week mandatory ``on'' period by 
virtue of the IUR indicator which, at the end of the 13-week period no 
longer satisfies the requirements for a State to be ``on,'' the 
extended benefit period continues if the TUR indicator is ``on'' during 
the 11th week of the 13-week mandatory ``on'' period.

[[Page 63878]]

    (2) If a State concludes a 13-week mandatory ``on'' period by 
virtue of the TUR indicator which, at the end of the 13-week period no 
longer satisfies the requirements for a State to be ``on,'' the 
extended benefit period continues if the IUR indicator is ``on'' during 
the 11th week of the 13-week mandatory ``on'' period.
    (f) Determining if a State remains ``off'' as a result of a total 
unemployment rate indicator after the 13-week mandatory ``off'' period 
ends:
    (1) The State remains ``off'' if there is not an IUR ``on'' 
indicator the 11th week of the 13-week mandatory ``off'' period, and 
there is a TUR ``off'' indicator for the third week before the last 
week of the 13-week mandatory ``off'' period.
0
9. Amend Sec.  615.12 by:
0
a. Revising paragraph (d)(1) and (d)(2);
0
b. Adding paragraph (d)(3);
0
c. Revising and redesignating paragraph (e) as paragraph (f);and
0
d. Adding new paragraph (e).
    The additions and revisions read as follows:


Sec.  615.12  Determination of ``on'' and ``off'' indicators.

* * * * *
    (d) * * *
    (1) Any determination by the head of a State agency of an ``on'' or 
``off'' or ``no change'' IUR indicator may not be corrected more than 
three weeks after the close of the week to which it applies. If any 
figure used in the computation of a rate of insured unemployment is 
later found to be wrong, the correct figure must be used to redetermine 
the rate of insured unemployment and the 120 percent factor for that 
week and all later weeks, but no determination of previous ``on'' or 
``off'' or ``no change'' indicator shall be affected unless the 
redetermination is made within the time the indicator may be corrected 
under the first sentence of this paragraph (d)(1). Any change is 
subject to our concurrence as provided in paragraph (e) of this 
section.
    (2) The initial release of the TUR by BLS is subject to revision. 
However, a State's TUR indicator will be determined by the initial 
release of the TUR data and is not subject to revision even if the BLS 
TUR is revised.
    (3) The ``on'' period under a State's optional IUR or TUR indicator 
may not begin before the later of the date of the State's adoption of 
the optional insured unemployment rate or total unemployment rate 
indicator, or the effective date of that enactment. The ``off'' period 
under a State's optional insured unemployment rate or total 
unemployment rate indicator may not occur until after the effective 
date of the repeal of the optional insured unemployment rate or total 
unemployment rate indicator from State law.
    (e) Other optional indicators.
    (1) A State may, as an option, in addition to the State indicators 
in paragraphs (a) and (b) of this section, provide by its law that 
there is a State ``on'' or ``off'' indicator in the State for a week if 
we determine that--
    (i) The Trigger Value in such State computed using the most recent 
three months for which data for all States are published before the 
close of such week equals or exceeds 6.5 percent; and
    (ii) The Trigger Value computed using data from the three-month 
period referred to in paragraph (e)(1)(i) of this section equals or 
exceeds 110 percent of the Trigger Value for either (or both) of the 
corresponding three-month periods ending in the two preceding calendar 
years, (The Tax Relief, Unemployment Insurance Reauthorization, and Job 
Creation Act of 2010, Pub. L. 111-312, allowed States to temporarily 
modify provisions in their EB laws to use the prior three years in 
applying the ``look-back''. This provision has been extended in the 
past and could be again.) This ``look-back'' is computed by dividing 
the Trigger Value by the same measure for the corresponding three 
months in each of the applicable prior years, and the resulting decimal 
fraction is rounded to the hundredths place, multiplied by 100 and 
reported as an integer and compared to the statutory threshold to help 
determine the State's EB Program status; and
    (iii) There is a State ``off'' indicator for a week if either the 
requirements of paragraph (e)(1)(i) or (e)(1)(ii) of this section are 
not satisfied.
    (2) Where a State adopts the optional indicator under paragraph 
(e)(1) of this section, there is a State ``on'' indicator for a high 
unemployment period (as defined in Sec.  615.2) under State law if--
    (i) The Trigger Value in the State computed using the most recent 
three months for which data for all State are published before the 
close of such week equals or exceeds 8.0 percent, and
    (ii) The Trigger Value in the State computed using data from the 
three-month period referred to in paragraph (e)(2)(i) of this section 
equals or exceeds 110 percent of the Trigger Value for either (or both) 
of the corresponding three-month periods ending in the two preceding 
calendar years. (The Tax Relief, Unemployment Insurance 
Reauthorization, and Job Creation Act of 2010, Pub. L. 111-312, allowed 
States to temporarily modify provisions in their EB laws to use the 
prior three years in applying the ``look-back.'' This provision has 
been extended in the past and could be again.) This ``look-back'' is 
computed by dividing the Trigger Value by the same measure for the 
corresponding three months in each of the applicable prior years, and 
the resulting decimal fraction is rounded to the hundredths place, 
multiplied by 100 and reported as an integer and compared to the 
statutory threshold to help determine the State's EB Program status; 
and
    (iii) There is a State ``off'' indicator for high unemployment 
period for a week if either the requirements of paragraph (e)(2)(i) or 
(e)(2)(ii) of this section are not satisfied.
    (3) Method of computing the average rate of total unemployment. The 
average rate of total unemployment is computed by dividing the average 
of three months of the level of seasonally adjusted unemployment in the 
State by the average of three months of the level of seasonally 
adjusted unemployment and employment in the State. The resulting rate 
is multiplied by 100 to convert it to a percentage basis and then 
rounded to the tenths place (the first digit to the right of the 
decimal place).
    (4) Method of computing the State ``look-back.'' The average rate 
of total unemployment, ending with a given month, is divided by the 
same measure for the corresponding three months in each of the 
applicable prior years. The resultant decimal fraction is then rounded 
to the hundredths place (the second digit to the right of the decimal 
place). The resulting number is then multiplied by 100 and reported as 
an integer (no decimal places) and compared to the statutory threshold 
to help determine the State's EB Program status.
    (f) Notice to Secretary. Within 10 calendar days after the end of 
any week for which the head of a State agency has determined that there 
is an ``on,'' or ``off,'' or ``no change'' IUR indicator in the State, 
the head of the State agency must notify the Secretary of the 
determination. The notice must state clearly the State agency head's 
determination of the specific week for which there is a State ``on'' or 
``off'' or ``no change'' indicator. The notice must include also the 
State agency head's findings supporting the determination, with a 
certification that the findings are made in accordance with the 
requirements of Sec.  615.15. However, the Secretary may provide 
additional instructions for the contents of the notice to assure the 
correctness and verification of notices given under this paragraph. The 
Secretary will accept determinations and findings made in accordance 
with the provisions of this

[[Page 63879]]

paragraph and of any instructions issued under this paragraph. A notice 
does not become final for purposes of EUCA and this part until the 
Secretary accepts the notice.
0
10. Amend Sec.  615.13 by:
0
a. Adding the term ``or High Unemployment Periods'' after the term 
``Extended Benefit Periods'' throughout so that it reads as 
``Announcement of the beginning and ending of Extended Benefit Periods 
or High Unemployment Period'';
0
b. Adding paragraphs (a)(1), (a)(2), (b)(1), (b)(2), and (b)(3);
0
c. Revising paragraphs (c)(1) through (c)(4).
    The additions and revisions read as follows:


Sec.  615.13  Announcement of the beginning and ending of Extended 
Benefit Periods.

* * * * *
    (a) * * *
    (1) Extended benefit period. Upon receipt of the notice required by 
Sec.  615.12(f) which is acceptable to us, we publish in the Federal 
Register a notice of the State agency head's determination that there 
is an ``on'' or an ``off'' indicator in the State, as the case may be, 
the name of the State and the beginning or ending of the extended 
benefit period, whichever is appropriate. If an ``on'' or ``off'' EB 
period is a result of our determination based on a State's TUR Trigger 
Value, we publish that information in the Federal Register as well.
    (2) Notification. We also notify the heads of all other State 
agencies, and the Regional Administrators of the Employment and 
Training Administration of the State agency head's determination of the 
State ``on'' or ``off'' indicator for an extended benefit period (based 
on the insured unemployment rate in the State) or our determination of 
an ``on'' or ``off'' indicator (based on the total unemployment rate in 
a State) for an extended benefit period or high unemployment period and 
of the indicator's effect.
    (b) * * *
    (1) Whenever a State agency head determines that there is an ``on'' 
indicator in the State by reason of which an extended benefit period 
(based on the insured unemployment rate in the State) will begin in the 
State, or an ``off'' indicator by reason of which an extended benefit 
period in the State (based on the insured unemployment rate) will end, 
the head of the State agency must promptly announce the determination 
through appropriate news media in the State after the Department 
accepts notice from the agency head in accordance the 615.12(f).
    (2) Whenever the head of a State agency receives notification from 
us in accordance with Sec.  615.12(f) that there is an ``on'' indicator 
by reason of which an extended benefit period or high unemployment 
period (based on the total unemployment rate in the State) will begin 
in the State, or an ``off'' indicator by reason of which a regular 
extended benefit period or high unemployment period (based on the total 
unemployment rate) will end, the head of the State agency must promptly 
announce the determination through the appropriate news media in the 
State.
    (3) Announcements made in accordance with paragraphs (b)(1) or 
(b)(2) of this section must include the beginning or ending date of the 
extended benefit period or high unemployment period, whichever is 
appropriate. In the case of a regular EB period or high unemployment 
period that is about to begin, the announcement must describe clearly 
the unemployed individuals who may be eligible for extended 
compensation or high extended compensation during the period, and in 
the case of a regular EB period or high unemployment period that is 
about to end, the announcement must also describe clearly the 
individuals whose entitlement to extended compensation or high extended 
compensation will be terminated. If a high unemployment period is 
ending, but an extended benefit period will remain ``on,'' the 
announcement must clearly state that fact and the effect on entitlement 
to extended compensation.
    (c) * * *
    (1) Whenever there has been a determination that a regular extended 
benefit period or high unemployment period will begin in a State, the 
State agency must provide prompt written notice of potential 
entitlement to Extended Benefits to each individual who has established 
a benefit year in the State that will not end before the beginning of 
the regular extended benefit period or high unemployment period, and 
who exhausted all rights under the State law to regular compensation 
before the beginning of the regular extended benefit period or high 
unemployment period.
    (2) The State agency must provide the notice promptly to each 
individual who begins to claim sharable regular benefits or who 
exhausts all rights under the State law to regular compensation during 
a regular extended benefit period or high unemployment period, 
including exhaustion by reason of the expiration of the individual's 
benefit year.
    (3) The notices required by paragraphs (c)(1) and (c)(2) of this 
section must describe the actions required of claimants for sharable 
regular compensation and extended compensation and those 
disqualifications which apply to the benefits which are different from 
those applicable to other claimants for regular compensation which is 
not sharable.
    (4) Whenever there is a determination that a regular extended 
benefit period or high unemployment period will end in a State, the 
State agency must provide prompt written notice to each individual who 
is currently filing claims for extended compensation of the forthcoming 
end of the regular extended benefit period or high unemployment period 
and its effect on the individual's right to extended compensation.
0
11. Amend Sec.  615.14 by revising paragraph (a)(4) to read as follows:


Sec.  615.14  Payments to States.

    (a) * * *
    (4) As provided in section 204(a)(2)(C) of EUCA, for any week in 
which extended compensation is not payable because of the payment of 
trade readjustment allowances, as provided in section 233(c) of the 
Trade Act of 1974, and Sec.  615.7(d).
* * * * *
0
12. Amend Sec.  615.15 by removing paragraphs (c) and (d) and revising 
paragraphs (a) and (b) to read as follows:


Sec.  615.15  Records and reports.

    (a) General. State agencies must furnish to the Secretary such 
information and reports and make such studies as the Secretary decides 
are necessary or appropriate for carrying out the purposes of this 
part.
    (b) Recordkeeping. Each State agency must make and maintain records 
pertaining to the administration of the Extended Benefit Program as we 
require, and must make all such records available for inspection, 
examination and audit by such Federal officials or employees as we may 
designate or as may be required by law.

Portia Wu,
Assistant Secretary for Employment and Training.
[FR Doc. 2014-24314 Filed 10-24-14; 8:45 am]
BILLING CODE 4510-FW-P